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EXHIBIT 10.19
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of this 3rd day of October, 1997, between
VITALCOM INC., a Delaware corporation (the "Company"), and Xxxxx X. Sample (the
"Executive").
RECITALS:
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WHEREAS, the Company recognizes that the future growth, profitability
and success of the Company's business will be substantially and materially
enhanced by the employment of the Executive by the Company;
WHEREAS, the Company desires to employ the Executive and the Executive
has indicated Executive's willingness to provide services, on the terms and
conditions set forth herein;
NOW, THEREFORE, on the basis of the foregoing premises and in
consideration of the mutual covenants and agreements contained herein, the
parties hereto agree as follows:
SECTION 1. EMPLOYMENT. The Company hereby agrees to employ the Executive
and the Executive hereby accepts employment with the Company, on the terms and
subject to the conditions hereinafter set forth. Subject to the terms and
conditions contained herein, the Executive shall serve as President and Chief
Executive Officer of the Company and, in such capacity, shall report directly to
the Board of Directors of the Company (the "Board of Directors") and shall have
such duties as are typically performed by a President and Chief Executive
Officer of the Company in the areas of managing the Company's operations and
setting the strategic direction for the Company, together with such additional
duties, commensurate with the Executive's position as a President and Chief
Executive Officer of the Company, as may be assigned to the Executive from time
to time by the Board of Directors. The location of the Executive's employment
shall be at the Company's offices located in Orange County, California and Kings
County, Washington, although the Executive understands and agrees that Executive
may be required to travel from time to time for business reasons.
SECTION 2. TERM. Subject to the provisions and conditions of this
Agreement (including Section 6), the Executive's employment hereunder shall
commence on the date hereof and shall continue during the period ending on the
third anniversary of the date hereof (the "Employment Term").
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SECTION 3. COMPENSATION.
(a) SALARY. As compensation for the performance of the Executive's
services hereunder, the Company shall pay to the Executive a salary (the
"Salary") of $250,000.00 per annum with increases, if any, as may be approved by
the Board of Directors. The Salary shall be payable in accordance with the
payroll practices of the Company as the same shall exist from time to time. In
no event shall the Salary be decreased during the Employment Term.
(b) BONUS PLAN. A signing bonus of $50,000.00 will be paid 10 days after
commencement of employment. An additional bonus of $75,000.00 will be paid six
months from the date of acceptance of employment with the Company if the
Executive is an active employee of the Company on the date six months from the
date of acceptance of employment. For calendar year 1998 and subsequent calendar
years, the Executive will be eligible for a performance bonus opportunity of 50%
of the Executive's salary, with performance objectives set by the Board of
Directors at the beginning of each calendar year.
(c) BENEFITS. In addition to the Salary and Bonus, the Executive shall
be entitled to participate in health insurance, pension, and other benefits
provided to other senior executives of the Company on terms no less favorable
than those available to such senior executives of the Company. The Executive
shall also be entitled to the same number of vacation days, holidays, sick days
and other benefits as are generally allowed to other senior executives of the
Company in accordance with the Company policy in effect from time to time.
(d) STOCK OPTIONS. Upon commencement of employment of the Executive, the
Board of Directors will grant executive stock options to purchase an aggregate
of 780,000 shares of the Company's Common stock at the fair market value per
share of the Company's Common Stock as determined by the closing price of the
Company's Common Stock on the date of grant on the Nasdaq National Market, as
published in the Wall Street Journal. The foregoing options shall become
exercisable as follows: (a) 97,500 options six months from the date the
Executive accepted employment with the Company; and (b) 48,750 options on the
last day of each calendar quarter thereafter, so that all of such options shall
be fully exercisable three and one half years from the grant date.
(e) RELOCATION. The Company will reimburse the Executive for necessary
and reasonable relocation expenses for the Executive and Executive's family to
move from Washington State to Southern California. Included in such relocation
expenses will be temporary living expenses, not to exceed 12 months, a
reasonable number of house hunting trips for the Executive and his family,
moving of household goods and up to three vehicles, necessary closing costs on
the Executive's primary residence in Washington State, including realtor's fees
and closing costs on the Executive's purchase of a residence in Southern
California. All relocation expenses which are not tax deductible by the
Executive will be grossed up to pay the taxes on the taxable portion of the
Company reimbursed relocation expenses.
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SECTION 4. EXCLUSIVITY. During the Employment Term, the Executive shall
devote Executive's full time to the business of the Company, shall faithfully
serve the Company, shall in all respects conform to and comply with the lawful
and reasonable directions and instructions given to him by the Board of
Directors in accordance with the terms of this Agreement, shall use Executive's
best efforts to promote and serve the interests of the Company and shall not
engage in any other business activity, whether or not such activity shall be
engaged in for pecuniary profit, except that the Executive may: (i) participate
in the activities of professional trade organizations related to the business of
the Company; (ii) engage in personal investing activities; and (iii) participate
on one or more boards of directors of entities which are not directly
competitive with the Company or its affiliates, (iv) participate in community,
charitable or similar activities and associations which are not competitive with
the Company for other than pecuniary profit; provided that activities set forth
in these clauses (i) through (iv), either singly or in the aggregate, do not
interfere in any material respect with the services to be provided by the
Executive hereunder.
SECTION 5. REIMBURSEMENT FOR EXPENSES. The Executive is authorized to
incur reasonable expenses in the discharge of the services to be performed
hereunder, including expenses for travel, entertainment, lodging and similar
items in accordance with the Company's expense reimbursement policy, as the same
may be modified by the Company from time to time. The Company shall reimburse
the Executive for all such proper expenses upon presentation by the Executive of
itemized accounts of such expenditures in accordance with the financial policy
of the Company, as in effect from time to time.
SECTION 6. TERMINATION AND DEFAULT.
(a) DEATH. This Agreement shall automatically terminate upon the death
of the Executive and upon such event, the Executive's estate shall be entitled
to receive the amounts specified in Section 6(f) below.
(b) DISABILITY. If the Executive is unable to perform the duties
required of him under this Agreement because of illness, incapacity, or physical
or mental disability, this Agreement shall remain in full force and effect and
the Company shall pay all compensation required to be paid to the Executive
hereunder, unless the Executive is unable to perform the duties required of him
under this Agreement for an aggregate of 180 days (whether or not consecutive)
during any 12-month period during the term of this Agreement, in which event
this Agreement (other than Sections 6(f), 7, 8, 9 and 12 hereof), including, but
not limited to, the Company's obligations to pay any Salary or to provide any
privileges under this Agreement, shall terminate.
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(c) JUST CAUSE. The Company may terminate this Agreement (other than
Sections 6(f), 7, 8, 9 and 12 hereof) at any time. If the Executive's employment
is terminated pursuant to this Section 6(c), the Executive shall be entitled to
receive the amounts specified in Section 6(f) below. In the event of termination
pursuant to this Section 6(c) for Just Cause, the Company shall deliver to the
Executive written notice setting forth the basis for such termination; which
notice shall specifically set forth the nature of the Just Cause which is the
reason for such termination. Termination of the Executive's employment hereunder
shall be effective upon delivery of such notice of termination. For purposes of
this Agreement, "Just Cause" shall mean: (i) any willful or intentional act of
the Executive that has the effect of injuring the business prospects of the
Company or its affiliates in any material respect; (ii) any continued or
repeated absence from the Company, unless such absence is (A) approved or
excused by the Board of Directors or (B) is the result of the Executive's
illness, disability or incapacity (in which event the provisions of Section 6(b)
hereof shall control), (iii) use of illegal drugs by the Executive or repeated
drunkenness; (iv) conviction of the Executive for the commission of a felony
involving moral turpitude or (v) the commission by the Executive of a material
act of fraud or embezzlement against the Company.
(d) GOOD REASON. The Executive may terminate this Agreement (other than
Sections 6(b), 7, 8, 9 and 12) for "Good Reason" if Executive resigns from
Executive's employment hereunder following a Substantial Breach (as hereinafter
defined) and such Substantial Breach shall not have been corrected by the
Company within thirty (30) days of receipt by the Company of written notice from
the Executive of the occurrence of such Substantial Breach, which notice shall
specifically set forth the nature of the Substantial Breach which is the reason
for such resignation. The term "Substantial Breach" means: (i) the failure by
the Company to pay to the Executive the Salary and Bonus, if any, in accordance
with Sections 3(a) and 3(b) hereof; (ii) the failure by the Company to allow the
Executive to participate in the Company's employee benefit plans generally
available from time to time to senior executives of the Company; or (iii) the
failure of any successor to all or substantially all of the business and/or
assets of the Company to assume this Agreement; or (iv) the Board of Directors
so acting shall assign or delegate to any other person any of the material
powers, authority, duties or responsibilities then being performed or exercised
by Executive; or (v) if the Company acquires, is acquired by or merges or
consolidates with or into any other entity, and Executive shall cease to be,
with respect to the Company, or any successor entity to the Company, the person
exercising the powers and authorities and performing the duties and
responsibilities usually performed and exercised by the president or chief
executive officer of an entity, provided, however, that the term "Substantial
Breach" shall not include a termination of the Executive's employment hereunder
pursuant to Sections 6(b) or (c) hereof. The date of termination of the
Executive's employment under this Section 6(d) shall be the effective date of
any resignation specified in writing by the Executive, which shall not be less
than thirty (30) days after receipt by the Company of written notice of such
resignation, provided that such resignation shall not be effective pursuant to
this Section 6(d) and the Substantial Breach shall be deemed to have been cured
if such Substantial Breach is corrected by the Company during such 30-day
period.
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(e) RESIGNATION. The Executive shall have the right immediately to
terminate this Agreement (other than Sections 6(f), 7, 8, 9 and 12) by giving
notice of the Executive's resignation other than for Good Reason. Upon receipt
of such notice, this Agreement, other than Sections 6(f), 7, 8, 9 and 12, shall
terminate immediately.
(f) PAYMENTS. In the event that the Executive's employment hereunder
terminates for any reason, the Company shall pay to the Executive all amounts
accrued but unpaid hereunder through the date of termination in respect of
Salary, accrued vacation, and unreimbursed expenses. In the event the
Executive's employment hereunder is terminated by the Company without Just Cause
or by the Executive with Good Reason, in addition to the amounts specified in
the foregoing sentence, (i) the Executive shall continue to receive the Salary
(less any applicable withholding or similar taxes) at the rate in effect
hereunder on the date of such termination periodically, in accordance with the
Company's prevailing payroll practices, for a period of twelve months following
the date of such termination (the "Severance Term") and (ii) the Executive shall
continue to receive any health or other insurance benefits (including, but not
limited to, self-insured dental, eye care or other benefits) provided to him as
of the date of such termination in accordance with the Section 3(c) hereof
during the Severance Term; provided, however, that Executive shall not be
entitled to participate in any pension, profit sharing or 401-K plan benefits,
or to accrue any vacation time or benefits, during the Severance Term. In the
event the Executive accepts other employment or engages in his own business
prior to the last date of the Severance Term, the Executive shall forthwith
notify the Company and the Company shall be entitled to set off from amounts due
the Executive under this Section 6(f) the amounts paid to the Executive in
respect of such other employment or business activity. Amounts owed by the
Company in respect of the Salary or reimbursement for expenses under the
provisions of Section 5 hereof shall, except as otherwise set forth in this
Section 6(f), be paid promptly upon any termination. Upon any termination of
this Agreement, all of the rights, privileges and duties of the Executive
hereunder shall cease, except for Executive's rights under this Section 6(f) and
Executive's obligations under Sections 7, 8, 9, and 12 hereunder.
SECTION 7. SECRECY AND NON-COMPETITION.
(a) NON COMPETING EMPLOYMENT. The Executive acknowledges that the
agreements and covenants contained in this Section 7 are essential to protect
the value of the Company's business and assets and by Executive's current
employment with the Company and its subsidiaries, the Executive has obtained and
will obtain such knowledge, contacts, knowhow, training and experience and there
is a substantial probability that such knowledge, knowhow, contacts, training
and experience could be used to the substantial advantage of a competitor of the
Company and to the Company's substantial detriment. Therefore, the Executive
agrees that for the period commencing on the date of this Agreement and ending
on the second anniversary (or, in the event of termination by the Company
without Just Cause, or by the Executive with Good Reason, ending on the first
anniversary) of the termination of the Executive's employment
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hereunder, (such period is hereinafter referred to as the "Restricted Period")
with respect to any county or parish in the United States in which the Company
or any of its subsidiaries or affiliates is actively providing services or
otherwise doing business on the date of the termination of the Executive's
employment hereunder, the Executive shall not participate or engage, directly or
indirectly, for himself or on behalf of or in conjunction with any person,
partnership, corporation or other entity whether as an employee, agent, officer,
director, shareholder, partner, joint venturer, investor (other than owning or
holding not greater than a two percent (2%) interest in a publicly held entity),
or otherwise, in any business activities if such activity consists of any
activity undertaken or expressly contemplated to be undertaken by the Company or
any of its subsidiaries or affiliates or by the Executive at any time during the
Employment Term.
(b) NO INTERFERENCE. During the Restricted Period, the Executive shall
not, whether for Executive's own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company), directly or indirectly solicit, endeavor to entice away from
the Company, its affiliates or subsidiaries, or otherwise directly interfere
with the relationship of the Company, its affiliates or subsidiaries with any
person who, to the knowledge of the Executive, is employed by or otherwise
engaged to perform services for the Company, its affiliates or subsidiaries
(including, but not limited to, any independent sales representatives or
organizations) or who is, or was within the then most recent twelve-month
period, a customer or client, of the Company, its predecessors or any of its
subsidiaries or affiliates. The placement of any general classified or "help
wanted" advertisements and/or general solicitations to the public at large shall
not constitute a violation of this Section 7(b) unless the Executive's name is
contained in such advertisements or solicitations.
(c) COORDINATION WITH OTHER AGREEMENT. In addition to the foregoing
provisions of this Section 7, Executive hereby ratifies and confirms all of the
terms, provisions, and obligations set forth in that certain Proprietary
Information and Inventions Agreement entered into by Executive and the Company
dated October 3, 1997, all of the terms and provisions of which are hereby
incorporated herein by this reference.
SECTION 8. INJUNCTIVE RELIEF. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in Section 7 hereof may result in material irreparable
injury to the Company or its subsidiaries or affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction, without the necessity of proving
irreparable harm or injury as a result of such breach or threatened breach of
Section 7 hereof, restraining the Executive from engaging activities prohibited
by Section 7 hereof or such other relief as may be required specifically to
enforce any of the covenants in Section 7 hereof.
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SECTION 9. EXTENSION OF RESTRICTED PERIOD. In addition to the
remedies the Company may seek and obtain pursuant to Section 8 of this
Agreement, the Restricted Period shall be extended by any and all periods during
which the Executive shall be found by a court to have been in violation of the
covenants contained in Section 7 hereof.
SECTION 10. SUCCESSORS AND ASSIGNS: NO THIRD-PARTY BENEFICIARIES.
This Agreement shall inure to the benefit of, and be binding upon, the
successors and assigns of each of the parties, including, but not limited to,
the Executive's heirs and the personal representatives of the Executive's heirs
and the personal representatives of the Executive's estate; provided, however,
that neither party shall assign or delegate any of the obligations created under
this Agreement without the prior written consent of the other party.
Notwithstanding the foregoing, the Company shall have the unrestricted right to
assign this Agreement and to delegate all or any part of its obligations
hereunder to any of its subsidiaries or affiliates, but in such event such
assignee shall expressly assume all obligations of the Company hereunder and the
Company shall remain fully liable for the performance of all of such obligations
in the manner prescribed in this Agreement. Nothing in this Agreement shall
confer upon any person or entity not a party to this Agreement, or the legal
representatives of such person or entity, any rights or remedies of any nature
or kind whatsoever under or by reason of this Agreement.
SECTION 11. WAIVER AND AMENDMENTS. Any waiver, alteration,
amendment or modification of any of the terms of this Agreement shall be valid
only if made in writing and signed by the parties hereto; provided, however,
that any such waiver, alteration, amendment or modification is consented to on
the Company's behalf by the Board of Directors. No waiver by either of the
parties hereto of their rights hereunder shall be deemed to constitute a waiver
with respect to any subsequent occurrences or transactions hereunder unless such
waiver specifically states that it is to be construed as a continuing waiver.
SECTION 12. SEVERABILITY AND GOVERNING LAW. The Executive
acknowledges and agrees that the covenants set forth in Section 7 hereof are
reasonable and valid in geographical and temporal scope and in all other
respects. If any of such covenants or such other provisions of this Agreement
are found to be invalid or unenforceable by a final determination of a court of
competent jurisdiction, (a) the remaining terms and provisions hereof shall be
unimpaired and (b) the invalid or unenforceable term or provision shall be
deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
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SECTION 13. NOTICES.
(i) All communications under this Agreement shall be in writing and
shall be delivered by hand or mailed by overnight courier or by registered or
certified mail, postage prepaid:
(1) if to the Executive, at 0000 000xx Xxxxxx, X.X.,
Xxxxxxxx, XX 00000, or at such other address as the
Executive may have furnished the Company in writing, or
(2) if to the Company, at 00000 Xxx Xxx Xxx., Xxxxxx,
Xxxxxxxxxx 00000, marked for the attention of Chairman
of the Board, or at such other address as it may have
furnished in writing to the Executive.
(ii) Any notice so addressed shall be deemed to be given: if delivered
by hand, on the date of such delivery; if mailed by overnight courier, on the
first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
SECTION 14. SECTION HEADINGS. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof, affect the meaning or interpretation of
this Agreement or of any term or provision hereof.
SECTION 15. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement of the parties hereto regarding the employment of
the Executive. Except as expressly provided herein, this Agreement supersedes
all prior negotiations, discussions, correspondence, communications,
understandings and agreements between the parties relating to the subject matter
of this Agreement.
SECTION 16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
VITALCOM INC.,
a Delaware corporation
By:
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Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
By:
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Name: Xxxxx X. Sample
Title: Executive
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