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CONSULTING AGREEMENT
BETWEEN
I-STAT CORPORATION (THE "COMPANY")
AND
XXXXXX X. LAUKS ("LAUKS")
DATED SEPTEMBER 1, 1999
1. POSITION: Senior Consultant.
2. CONSULTING
SERVICES: Lauks shall render exclusive consulting services to
the Company in connection with the manufacture and
marketing of medical diagnostic products, and in
connection with the completion of development of
coagulation products currently under development and
the redesign of the Company's existing products for
point-of-care blood analysis based on the Company's
core technology. The Consulting Agreement does not
extend to work on new products, whether or not based
on the Company's core technology and whether or not
for point-of-care blood analysis applications. It is
the expectation that Lauks shall make himself
available to the Company for consulting services for
up to 80 full working days during the first 12 months
of the Term (as defined below) and up to 44 full
working days during the last 6 months of the Term.
While the operating assumption will be that Lauks
will perform the consulting services on the basis of
two days per week, the parties acknowledge the need
for mutual flexibility in the work schedule.
Accordingly, the parties will cooperate in designing
a work schedule that gives due weight to the need for
reliability, dependability and continuity in the
performance of services as well as the need to
respond to operational emergencies, while at the same
time recognizing Lauks' desire to pursue other,
non-conflicting interests. Notwithstanding anything
contained in the Consulting Agreement to the
contrary, the Company shall be entitled to request
that no services be provided at any given time,
without affecting any of the Company's obligations to
Lauks.
3. RESIGNATION: Lauks hereby resigns from all of his positions at the
Company and i- STAT Canada, Ltd., including his
positions as Executive Vice President and Chief
Technology Officer of the Company, and as Vice
President of Research and Development of i-STAT
Canada, Ltd.
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4. TERM: Eighteen (18) months.
5. COMPENSATION: $412,500 payable over the term of the Consulting
Agreement in accordance with the Company's customary
payroll practices for its senior management
personnel.
6. EXPENSES: During the term of the Consulting Agreement, the
Company shall reimburse Lauks for his reasonable
out-of-pocket expenses incurred in the performance of
his duties under the Consulting Agreement, upon
receipt by the Company of reasonably satisfactory
documentation of such expenses.
7. BENEFITS: The Company shall continue to provide Lauks with
medical and dental benefits in accordance with
existing policy so long as Lauks is providing
consulting services to the Company in accordance with
the terms of the Consulting Agreement.
8. STATUS OF CURRENT
STOCK OPTIONS: Upon execution of the Consulting Agreement, of the
non-statutory options held by Lauks to purchase up to
306,440 shares of Common Stock, (i) options to
purchase up to 58,234 shares will be canceled; (ii)
options to purchase up to 25,400 shares (the
"Remaining Unvested Options") will continue to vest
and remain exercisable in accordance with the terms
of their respective agreements (except that vesting
and exercisability will be tied to Lauks' continued
service as a consultant rather than as an employee);
and (iii) options to purchase up to 222,806 shares
(which currently are fully vested) will remain
exercisable in accordance with the terms of their
respective agreements (except that exercisability
will be tied to Lauks' continued service as a
consultant rather than an employee). In accordance
with the terms of the Company's 1985 Stock Option
Plan, Lauks' outstanding incentive stock options to
purchase up to 30,705 shares of Common Stock shall
terminate three months after termination of Lauks'
employment with the Company. Lauks shall no longer be
required to comply with the reporting, limited
"window" sales periods and other obligations
applicable to the Company's executive officers and
directors under the Company's "Policy Regarding
Confidential Information and Xxxxxxx Xxxxxxx".
However, Lauks will acknowledge that in the
performance of his consulting services he may become
privy to information which may render him an
"insider" for purposes of both such Policy and the
trading proscriptions applicable under U.S.
securities laws.
9. TAX EQUALIZATION
BENEFITS: So long as Lauks continues to provide consulting
services under the Consulting Agreement, and Lauks
resides in Canada, the Company shall reimburse Lauks
for any income taxes paid in Canada by Lauks in
respect of (i) any compensation paid to Lauks under
the Consulting Agreement, (ii) the exercise of stock
options during the term of the Consulting Agreement
and (iii) the sale of the shares of Common
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Stock issued upon such exercise during the term of the
Consulting Agreement, but only (A) to the extent such
taxes exceed the taxes payable by Lauks under the
highest combined United States Federal marginal income
tax rate applicable to Lauks were Lauks a United
States and Pennsylvania resident during the period in
question; and (B) to the extent of $300,000 in the
aggregate over the term of the Consulting Agreement.
The parties hereby agree that Lauks owes the Company
$59,822.62 in respect of past tax equalization advance
payments made by the Company on behalf of Lauks
through December 31, 1998. Such amount shall be paid
upon execution of the Consulting Agreement. In
addition, Lauks shall execute the promissory note
attached as Exhibit A (the "Promissory Note") in the
principal amount of $82,660.25, as such amount may be
adjusted pursuant to the terms of the Promissory Note,
in respect of tax equalization advance payments made
by the Company on behalf of Lauks for calendar year
1999.
10. TERMINATION
OF CONSULTING
AGREEMENT AND
PAYMENTS UPON
TERMINATION: Either the Company or Lauks may terminate the
Consulting Agreement, as provided below upon thirty
(30) days written notice to the other, subject to the
continuing obligations set forth elsewhere in the
Consulting Agreement.
1. Termination By Lauks
a. No Reason
Payments: None.
b. Breach by Company of its material obligations under
the Consulting Agreement, provided that the Company
shall be entitled to a reasonable opportunity to
cure (the term "reasonable" to be judged in
relation to the circumstances applicable at the
time, but in no event to exceed 10 days)
Payments: Payments equal to the amount required
to be paid over the balance of the Term,
payable at Lauks' option in a lump sum or in
accordance with the Company's customary payroll
practices for its senior management personnel.
The Company also shall be obligated to make tax
equalization payments as described above as if
the Consulting Agreement had not been
terminated.
Remaining Unvested Options Acceleration: All
Remaining Unvested Options then held by Lauks
shall become fully exercisable.
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In the event of a breach by the Company, in
addition to and without prejudice to Lauks'
right to terminate this Consulting Agreement,
Lauks shall have the right to demand the
payments referred to in 1(b) above without
terminating the Consulting Agreement, and in
such event Lauks' stock options shall continue
to vest and remain exercisable for the
remainder of the term of the Consulting
Agreement.
2. Termination By Company
a. For Cause, as defined as: (i) any felony conviction
or admission of felonious guilt, (ii) any breach or
nonobservance by Lauks of any material covenant in
the Consulting Agreement (including the Existing
Confidentiality Agreement, defined below), or (iii)
any willful or deliberate conduct by Lauks which is
materially injurious to the Company. In the case of
(ii), Lauks shall be entitled to a reasonable
opportunity to cure (the term "reasonable" to be
judged in relation to the circumstances applicable
at the time, but in no event to exceed 10 days).
Payments: Accrued payments to that date. No
further compensation payable.
Stock Options: Lauks shall have no right to
exercise any stock options to purchase Common
Stock if he breaches any non-competition
covenant contained in the Existing
Confidentiality Agreement.
11. CONTINUATION OF
EMPLOYEE
CONFIDENTIALITY,
NON-SOLICITATION AND
NON-COMPETITION
COVENANTS: The existing agreement between Lauks and the Company
regarding confidentiality, non-solicitation and
non-competition (the "Existing Confidentiality Agreement")
shall remain in place as if Lauks remained employed by the
Company, except that the covenants regarding
non-competition shall run for 18 months after the
execution of the Consulting Agreement.
12. RELEASE: Lauks shall release the Company and each of its officers,
directors, shareholders, employees and representatives
from and against any and all known and unknown claims
Lauks may have against the Company or any such officer,
director, shareholder, employee or representative.
Accordingly, as a term and condition of this Consulting
Agreement, Lauks shall execute and not revoke the release
attached as Exhibit B
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hereto. Excluded from this release is any claim that
may arise under the Consulting Agreement, the
Promissory Note or the Director Indemnification
Agreement between the Company and Lauks. The Company
hereby represents that it has no present knowledge of
any claims it may have against Lauks.
13. APPLICABLE LAW/
ARBITRATION OF
DISPUTES: The Consulting Agreement shall be governed by the
laws of the State of New Jersey. All controversies
and claims arising under the Consulting Agreement
that cannot be settled by the parties shall be
settled by arbitration in Toronto, Ontario or
Princeton, New Jersey (at the option of Lauks) in
accordance with the rules of the American Arbitration
Association and there shall be no action taken in any
other court or in any other jurisdiction. This
arbitration provision shall not affect the Company's
rights under the Existing Confidentiality Agreement
to seek specific enforcement of the provisions
thereof as provided therein.
14. RENEWAL
OF TERM: The Term of the Consulting Agreement may be extended
upon the written agreement of each of Lauks and the
Company.
15. LEGAL FEES: The Company shall reimburse Lauks for up to U.S.
$10,000 for legal fees incurred in connection with
the preparation of the Consulting Agreement.
16. ASSIGNABILITY: Lauks acknowledges that the services to be rendered
to the Company are unique and personal. Accordingly,
Lauks may not assign his rights or delegate his
duties or obligations under the Consulting Agreement.
The Company's rights and obligations under the
Consulting Agreement shall inure to the benefit of
the Company's successors and assigns.
17. AMENDMENT AND
WAIVER: No provision in the Consulting Agreement may be
amended unless such amendment is agreed to in writing
and signed by the party against whom enforcement is
sought . The waiver of any breach of any duty, term
or condition of the Consulting Agreement shall not be
deemed to constitute a waiver of any preceding or
succeeding breach of the same or any other duty, term
or condition of the Consulting Agreement.
18. SEVERABILITY: If any provision of the Consulting Agreement shall be
determined to be invalid or unenforceable for any
reason, in whole or in part, in any jurisdiction, the
provision shall be enforceable to the fullest extent
permitted by law in such jurisdiction and shall
continue to be enforceable in accordance with its
terms in any other jurisdiction and the validity,
legality and enforceability of the remaining
provisions contained in the Consulting Agreement
shall not be affected.
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19. WITHHOLDING: All amounts required to be paid by the Company herein
shall be subject to reduction in order to comply with
applicable U.S. Federal, state and local tax withholding
requirements.
i-STAT CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
/s/ Xxxxxx X. Lauks
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Xxxxxx X. Lauks
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