EXHIBIT 10.18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of December 13,
1993 by and between OmniCell Technologies, Inc., a California corporation
(hereinafter referred to as the "Company"), and Xxxxxxx X. Xxxxx (hereinafter
referred to as the "Executive").
WITNESSETH:
The company desires to enter into this Agreement and to employ the
Executive and the Executive desires to enter into this Agreement and be employed
by the Company, upon the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, the Executive and the Company, in consideration of the
agreements, covenants and conditions contained herein, hereby agree as follows:
1. AGREEMENT TO EMPLOY
The Company hereby employs the Executive, and the Executive hereby agrees
to work in the employ of the Company, according to terms and conditions provided
herein.
2. TERM OF EMPLOYMENT
The employment term shall commence on December 13, 1993 (the "Commencement
Date") and shall be on an at-will basis with either party having a right to
terminate such employment, subject to the terms and provisions of this
Agreement, including but not limited to those contained in Section 9 hereof
(such period of employment being herein called the "Employment Period"),
provided that for the period from December 13, 1993 through December 31, 1993,
the Executive's base salary shall be 33% of the Base Rate as set forth in
Section 4.01 hereof.
3. DUTIES; SERVICE AS DIRECTOR
(a) The Executive shall be employed (i) in the capacity of
President and Chief Executive Officer of the Company to perform, subject to the
direction and control of the Board of Directors of the Company, such duties as
are customarily attendant to such office and such other duties as are reasonably
assigned from time to time by such Board of Directors, and (ii) in such
executive capacities as may be mutually agreed upon by the Board of Directors of
the Company and the Executive in subsidiaries or affiliates of the Company.
(b) Upon the Commencement Date, the Company's management shall
take such action as may be necessary to cause the
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Executive to be named as a director of the Company. So long as the Executive is
employed hereunder, the company will use its best efforts to cause the Executive
to continue to serve as a director of the Company without any additional
compensation to the Executive, and the company will nominate the Executive and
recommend to its shareholders that they vote for the Executive as a director of
the Company.
(c) The Company agrees that, from and after an initial public
offering of the Company's Common Stock and for so long thereafter as the
Executive serves as a director of the Company, the Company will use its best
efforts to maintain in effect policies of directors' and officers' liability
insurance in an amount of coverage of at least $1,000,000 subject to a
deductible of not more than $100,000.
4. COMPENSATION OF THE EXECUTIVE
For the performance of his duties hereunder in all capacities, the
Executive shall be compensated by and entitled to compensation by the Company as
follows:
4.1 Regular Salary. Subject to Section 2 hereof, Employee shall be
entitled to receive a regular salary during the Employment Period at a rate
equal to the Base Rate (as hereinafter defined), payable in accordance with the
normal custom of the Company for its other executive employees. As used herein,
"Base Rate" shall mean an amount of compensation as determined by the Board of
Directors from time to time, which shall be reviewed at least annually, but
shall be at least $200,000 per year.
4.2 Performance Bonus. (a) In addition to such salary, commencing
January 1, 1994 and thereafter during the Employment Period the Executive shall
be entitled to receive additional compensation for his services ("Bonus
Compensation") in respect of each calendar year of the Company ("Calendar Year")
beginning or ending during the term of this Agreement, subject to subsection (b)
below, in an amount based on the performance of the Executive during such
Calendar Year as determined by the Board of Directors of the Company, provided
that such amount shall be at least $50,000 in each Calendar Year or, if greater,
for Calendar Year 1994, 1% of the gross revenues of the Company determined in
accordance with generally accepted accounting principles and as set forth in the
Company's financial statements, and for Calendar Years 1995 and thereafter, an
amount determined pursuant to a formula to be established by the Company's Board
of Directors based on relevant operating and other criteria. Bonus Compensation
of $12,500 shall be paid in respect of each of the first three calendar quarters
of the Company (each a "Calendar Quarter") (or, if greater, for each Calendar
Quarter in Calendar Year 1994, 1% of the Company's gross revenues for such
Calendar Quarter) within 10 days after the end
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of the corresponding Calendar Quarter and the remaining Bonus Compensation shall
be paid within ninety (90) days after the end of the corresponding Calendar
Year. All Bonus Compensation will be payable in cash or, for Calendar Year 1994,
at the election of Executive, which election shall be made by written notice
given by the Executive to the Company no later than the last day of the
corresponding Calendar Quarter or Calendar Year, in any combination of cash or
the Company's stock as is mutually agreed upon.
(a) To the extent that any Bonus Compensation is being paid in
respect of a Calendar Quarter or Calendar Year during which the termination of
this Agreement occurs, the amount of such Bonus Compensation to be paid shall be
subject to proration based on the number of days in such Calendar Quarter or
Calendar Year occurring during the term of this Agreement.
4.3 Stock Options. Executive will receive as of the Commencement Date
the grant to Executive of (i) an incentive stock option qualified as such
pursuant to the Internal Revenue Code to purchase from the Company 330,000
shares of the company's common stock at a price equal to fair market value per
share at the date of grant, which shall be $0.21 per share. Such options shall
be granted pursuant to the Company's existing stock option plan (the "Plan") and
shall be evidenced by an appropriate option agreement. This option will become
exercisable with respect to one-sixtieth (1/60) of the total number of shares an
each successive monthly anniversary of the Commencement Date until all shares
covered thereby have become exercisable, provided that in the event that the
Executive's employment by the Company is terminated without cause pursuant to
Section 9(d) hereof or is terminated as a result of the Executive's death or
disability (i) within the first twelve months after the Commencement Date, this
option will accelerate and become immediately exercisable with respect to an
additional one-fifth (1/5) of the total number of shares subject to this option
and (ii) at or subsequent to twelve months after the Commencement Date, this
option will accelerate and become immediately exercisable with respect to the
greater of (A) an additional one-fifth (1/5) of the total number of shares
subject to this option and (B) 40% of the then-unvested shares subject to this
option, and provided further, that in the event that, as the result of any sale
of the Company's equity securities, merger, consolidation, sale of assets, or
proxy contest, the persons who were directors of the Company immediately prior
to such transaction shall not constitute a majority of the Board of Directors of
the Company (or of the board of directors of any successor to or assign of the
Company) immediately after the next election of directors of the Company (or
such successor or assign) following such transaction, this option will
accelerate and become immediately exercisable with respect to the total number
of shares subject to this option. Once the option becomes exercisable with
respect to a number of shares, the option will remain so
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exercisable for the remainder of its term. The option will have a term of ten
years from the date of grant but would terminate in accordance with the Plan
after the Executive's employment by the Company or any of its affiliates
terminates.
5. VON-DISCLOSURE AND NON-COMPETITION
The Company and the Executive agree that they will enter into a mutually
acceptable agreement containing provisions with respect to non-disclosure by the
Executive of confidential information relating to the Company and restricting
the right of the Executive to compete with the Company during the period the
Company shall continue to pay Executive's compensation as set forth in Section
9(g) hereof.
6. EMPLOYEE BENEFITS
(a) During the Employment Period, the Executive and his
dependents shall be entitled to participate in such employee benefits,
including, but not limited to, sick days, holidays, group pension, life and
health insurance and other medical and dental benefits, as the %Company may from
time to time generally make available to its executive employees, provided that
the Executive may in addition elect to continue coverage for him and his
dependents pursuant to COBRA under his former employer's benefit plans for a
period not to exceed 90 days and the Company will reimburse Executive for the
cost thereof so long as such election is in effect. The Executive shall be
entitled, during the term of his employment hereunder, to a paid vacation
aggregating four (4) weeks per year, at a time or times mutually convenient to
the Company and the Executive.
(b) The Company shall pay or reimburse the Executive for (i) the
cost of a $1,000,000 term life insurance policy on the life of the Executive,
the owner and the beneficiaries of which may be designated by the Executive,
subject to the Executive satisfactorily completing any required physical
examination and (ii) a housing allowance which, for the period commencing on the
earlier of July 1, 1994 or the date on which the Executive closes on the
purchase of a home in the San Francisco Bay area, shall equal $50,000 per year,
payable monthly, through the earlier of (A) the first anniversary of the closing
of an initial public offering of the Company's common stock or of the
acquisition of the Company in which its shareholders receive cash or publicly
traded securities, (B) the closing of an acquisition of the Company in which its
shareholders receive all cash, and (C) the month in which the aggregate of the
Executive's Base Rate compensation plus his Bonus Compensation for the preceding
12 months equals or exceeds $350,000, provided that in any event, the $50,000
per year housing allowance will be paid for a minimum of 36 months after the
commencement of such period.
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7. RELOCATION EXPENSES
(a) Expenses incurred on or prior to July 1, 1995 relating to
Executive's relocation from the Chicago metropolitan area to the San Francisco
Bay area will be borne as follows:
(i) customary closing costs (including real estate
commissions) payable by the seller relating to the sale of Executive's home in
Lake Bluff, Illinois will be borne by the Company;
(ii) costs associated with the relocation of Executive's
household (including 3 automobiles and packing and unpacking) from Lake Bluff,
Illinois to either rental or purchased housing in the San Francisco Bay area,
and, if to rental housing, from such rental -housing to purchased housing, will
be borne by the Company;
(iii) living expenses in transit and temporary housing in
the San Francisco Bay area (including apartment rental in lieu of hotel
estimated at $1,500 per month) will be borne by the Company:
(iv) customary closing costs (including up to a maximum of
three points) associated with obtaining a mortgage on and closing on Executive's
new residence in the San Francisco Bay area will be borne by the Company;
(v) costs associated with air fare between Chicago and the
San Francisco Bay area for the Executive and his family for the purpose of
seeking housing or schooling in the San Francisco Bay area will be borne by the
Company; and
(vi) 75% of the difference, if any, between the purchase
price of Executive's Lake Bluff, Illinois home and capital improvements thereon
and the selling price of such home (which difference, for purposes of
determining the amount to be borne by the Company, will not exceed $50,000
without the approval of the Board of Directors of the Company), will be borne by
the Company.
(b) With respect to any payment by the Company for relocation
expenses for the benefit of the Executive or his family pursuant to Section 7(a)
(a "Payment") which is subject to any state, federal, Medicare, FICA or other
income tax or would increase any such tax because of the deduction phase-out
penalty provisions, the Executive shall be entitled to receive an additional
payment (the "Gross-Up Payment") in an amount such that after payment by the
Executive of all income taxes on such Payment, including, without limitation,
any taxes imposed upon the Gross-Up Payment, or due as a
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result of such deduction phaseout penalty provisions, the Executive retains an
amount of the Gross-Up Payment equal to the income taxes imposed upon and/or
deductions lost as a result of such Payment. The Executive's accountant will
submit documentation to the Company evidencing the calculation of the amount of
any such Gross-Up Payment.
8. PURCHASE OF COMPANY STOCK
(a) The Company hereby agrees to sell to the Executive-, or if
designated by the Executive, to the Xxxxx Family Trust and/or trusts for the
benefit of the Executive's children (the "Purchaser(s)"), 100,000 shares of
Series D preferred stock of the Company on the Commencement Date at a price
equal to $2.17 per share, payable in cash, and simultaneously therewith the
Company agrees to make five loans to the Purchaser(s) of $40,000 each (for an
aggregate of $200,000) in principal amount, each such loan to relate to 20,000
shares of such stock, such loans bearing interest at 4% per year, and the
principal of and accrued interest on such loans shall be repayable serially, the
first on January 1, 1995 and the second through the fifth on each successive
January 1 thereafter, Provided that so long as the Executive's employment by the
Company has not been terminated prior to the date of maturity of any such loan
the repayment of the principal of and all accrued interest on such 'loan shall
be forgiven by the Company on such date of maturity.
(b) Upon payment of the purchase price for the preferred stock
referred to above, the Purchaser(s) shall have all of the rights of a
stockholder with respect to the shares of preferred stock purchased by the
Purchaser(s) pursuant to this Section 8, including the right to receive
dividends and to vote such shares, except as provided in Subsection (c) hereof.
(c) All certificates representing the shares of preferred stock
of the Company purchased by the Purchaser(s) pursuant to this Section 8, shall
be kept in the stock records of the Company and shall be delivered to the
Purchaser(s) in installments of 20,000 shares each on January 1 in each year in
which a loan matures as such loan is repaid or forgiven. Upon such repayment or
forgiveness with respect to shares so held in the stock records of the Company,
the Company shall deliver to the Purchaser(s) the certificates representing such
shares and the Company shall pay any fees and expenses incident to such
delivery.
(d) The purchase of such shares by the Purchaser(s) shall be
subject to the condition subsequent that the Company shall raise at least
$5,000,000 in equity capital through the issuance and sale of Series E preferred
stock by no later than December 24, 1993.
6.
9. TERMINATION
(a) The employment of the Executive hereunder shall terminate
automatically upon his death.
(b) In the event of the disability or incapacity of the
Executive, the Company may at any time thereafter elect to terminate the
employment of the Executive hereunder by giving written notice of such
termination to the Executive. For purposes hereof, "disability or incapacity"
shall be deemed to exist-at such time as either of the following conditions has
been met:
(i) The Executive - is unable to perform his basic duties
hereunder after reasonable accommodation by reason of physical or mental illness
or other incapacity and such disability shall exist for a continuous period in
excess of 90 days, or
(ii) The Executive shall refuse to submit to a medical
examination by a medical doctor reasonably acceptable to the Board of Directors
of the Company and to the Executive to determine whether the Executive is unable
to perform his basic duties hereunder by reason of physical or mental illness or
other incapacity.
(c) In the event of the engagement by the Executive in serious
misconduct, the Company may at any time thereafter elect to terminate the
employment of the Executive hereunder by giving written notice of such
termination to the Executive. For purposes hereof, "serious misconduct" shall
mean (i) fraud, misappropriation, embezzlement or other similar act of
dishonesty or material misconduct against the Company or any subsidiaries or
affiliates thereof or act materially contrary to their best interests, or (ii)
alcohol or drug abuse, or (iii) conviction of a felony.
(d) The Company, in its discretion, may elect to terminate the
employment of the Executive hereunder, whether or not there is an event of
disability or incapacity or serious misconduct (i.e., without cause), by giving
at least 20 days, prior written notice of such termination to the Executive.
(e) The Executive may elect to terminate his employment
hereunder for good reason. For purposes hereof, "good reason" shall mean the
occurrence of any of the following without the consent of the Executive:
(i) a change in the Executive's title or position which
represents a demotion from his title or position as in effect at the
Commencement Date;
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(ii) the assignment to the Executive of material duties or
responsibilities which are not commensurate with such title or position or of
any duties, responsibilities or directions which violate law; or
(iii) a failure by the Company to pay the compensation
specified in section 4.01 or 4.02 or Sections 6, 7 or 8 hereof.
(f) In the event of the termination of the employment of the
Executive hereunder by reason of any of the events or circumstances described in
subsection (a) or (c) above, the Company shall pay to the Executive, as of the
effective date of such termination, any accrued and unpaid portion of his salary
hereunder through the date of such termination, and, except as may be provided
in the stock option agreement, Employer shall have no obligation to pay any
other or additional compensation to the Executive hereunder.
(g) In the event of the termination of the employment of the
Executive hereunder by the Company under subsection (b) or (d) above or by the
Executive under subsection (e) above, but in each case not under circumstances
permitting termination under subsection (a) or (c) above (it being agreed that
circumstances permitting termination under subsection (c) above shall be deemed
not to exist unless the Company has otherwise notified the Executive by the
effective date of such termination, in which event whether such circumstances
exist shall be determined as a matter of fact), the Executive shall be entitled
to receive compensation at the Base Rate in effect at the effective date of such
termination plus $50,000 for a period equal to one year following the effective
date of such termination, provided that in the event of termination under
subsection (b), such amounts may be paid by the Company's insurance carrier and
shall be reduced by the amount of proceeds received by Executive from federal or
state disability insurance. Any amount payable under the preceding sentence
shall be payable in three lump sum payments, the first 40% within 30 days after
the effective date of such termination, the next 40% within 180 days after the
effective date of such termination, and the final 20% within 360 days after the
effective date of such termination.
(h) In the event of the termination of the employment of the
Executive hereunder for any reason, the maturity date of all loans referred to
in Section 8 hereof shall be reset to the date which is 18 months after the
effective date of such termination, provided that if the employment of the
Executive is terminated without cause, the repayment of a pro rata portion of
the principal of and accrued interest on any such loans which would otherwise
have been due on the January 1 immediately after the effective date of such
termination (such proration to be based on the number of days worked by the
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Executive in the year in which the effective date of such termination occurs)
shall be forgiven by the Company.
10. NOTICES
Any notice to be given hereunder by either party to the other may be
effected either by delivery of written notice in person or by mail, registered
or certified, postage prepaid, with return receipt requested. Mailed notices
shall be addressed to the party at the address as follows:
If to the Company, to:
OmniCell Technologies, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
If to the Executive, to:
Xx. Xxxxxxx Xxxxx
000 Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Each party may change his or its address by written notice in accordance with
this Section. Notices delivered personally shall be deemed communicated as of
actual receipt. Mailed notices shall be deemed communicated as of three (3) days
after mailing.
11. AMENDMENTS
Any modifications to this Agreement shall be effective only if they are in
writing, signed by the Executive, and approved by the Board of Directors of the
Company.
12. APPLICABLE LAW
The rights, duties, and obligations of the Executive and the Company
hereunder shall be construed in accordance with the laws of the State of
California.
9.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Employment Agreement as of the date first above written.
OmniCell Technologies, Inc.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chairman
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
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