EXHIBIT 10.19
DATA CRITICAL CORPORATION
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of June 14, 1999,
by and between Xxxxxxx X. Xxxxxx ("Employee") and Data Critical Corporation, a
Delaware corporation (the "Company").
1. Term of Agreement. This Agreement shall commence on the date hereof
and shall have a term of five (5) years (the "Original Term"). During the first
year of the Original Term, the Company may only terminate this Agreement for
Cause (as defined in Section 6 below). Thereafter, subject to Section 5, this
Agreement may be terminated by either party, with or without cause, on thirty
(30) days' written notice to the other party. This Agreement may be extended for
an additional one (1) year term after the end of the Original Term if the
parties mutually agree in writing to such extension.
2. Duties.
(a) Position. Employee shall be employed as the Company's Chief
Financial Officer, and as such will have responsibility for the Company's
finance, accounting and treasury functions, mergers and acquisitions, investor
relations, oversight of human resources and other operational duties that may
change from time to time. Employee will report to the Company's Chief Executive
Officer.
(b) Obligations to the Company. Employee agrees to the best of his
ability and experience that he will at all times loyally and conscientiously
perform all of the duties and obligations required of and from Employee pursuant
to the express and implicit terms hereof, and to the reasonable satisfaction of
the Company. During the term of Employee's employment relationship with the
Company, Employee further agrees that he will devote all of his or her business
time and attention to the business of the Company, the Company will be entitled
to all of the benefits and profits arising from or incident to all such work
services and advice, Employee will not render commercial or professional
services of any nature to any person or organization, whether or not for
compensation, without the prior written consent of the Company's Board of
Directors, and Employee will not directly or indirectly engage or participate in
any business that is competitive in any manner with the business of the Company.
Nothing in this Agreement will prevent Employee from accepting speaking or
presentation engagements in exchange for honoraria or from serving on boards of
charitable organizations, or from owning no more than 1% of the outstanding
equity securities of a corporation whose stock is listed on a national stock
exchange or the Nasdaq National Market. Employee will comply with and be bound
by the Company's operating policies, procedures and practices from time to time
in effect during the term of Employee's employment.
3. At-Will Employment. Except as provided in Section 1 above, the Company
and Employee acknowledge that Employee's employment is and shall continue to be
at-will, as defined under applicable law, and that Employee's employment with
the Company may be terminated by either party at any time for any or no reason.
If Employee's employment
terminates for any reason, Employee shall not be entitled to any payments,
benefits, damages, award or compensation other than as provided in this
Agreement. The rights and duties created by this Section 3 may not be modified
in any way except by a written agreement executed by the Chief Executive Officer
of the Company.
4. Compensation. For the duties and services to be performed by Employee
hereunder, the Company shall pay Employee, and Employee agrees to accept, the
salary, stock options, bonuses and other benefits described below in this
Section 4.
(a) Salary. Employee shall receive a minimum monthly salary of
$13,333, which is equivalent to $160,000 on an annualized basis. Employee's
salary shall be reviewed on at least an annual basis. Employee's monthly salary
will be payable pursuant to the Company's normal payroll practices. In the
event this Agreement is extended beyond the Original Term, the base salary shall
be reviewed at the time of such extension by the Board, its Compensation
Committee or the Chief Executive Officer of the Company, and any increase will
be effective as of the date determined appropriate by the Board, its
Compensation Committee or the Chief Executive Officer.
(b) Bonus
(i) If Employee is still employed by the Company, the Company
shall issue Employee 7,500 shares of the Company's Common Stock on August 10,
1999. Employee shall surrender these shares to the Company for cancellation if
he leaves his employment with the Company prior to December 31, 1999. Employee
acknowledges that he shall be liable for the payment of income taxes related to
receipt of these shares.
(ii) For each calendar year beginning in the year 2000, Employee
shall be eligible to receive a bonus based on achievement of goals to be
determined by the Company's Board of Directors.
(c) Stock Options and Other Incentive Programs.
(i) In connection with the commencement of Employee's employment,
the Board of Directors shall grant to Employee an option to purchase 100,000
shares of the Company's Common Stock, which will have an exercise price of
$6.00, the fair market value on the date of the grant. Twenty-five percent (25%)
of the option shares shall be vested and immediately exercisable on the date of
grant. Twenty-five percent (25%) of the remaining option shares will vest on the
one-year anniversary of commencement of employment, and the remainder will vest
quarterly over the following three years. Vesting will, of course, depend on
Employee's continued employment with the Company. If, during the term of his
employment, Employee dies or suffers a Disability (as defined in Section 7
below), the option shares shall become full vested and exercisable. In the event
of a sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, or other change in
control (a "Change in Control"), the exercisability of each outstanding option
shall automatically be accelerated completely so that one hundred percent (100%)
of the number of shares of Common Stock covered by such Option shall be fully
vested.
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(ii) The Board of Directors shall also grant to Employee an
option to purchase 75,000 shares of the Company's Common Stock, which will have
an exercise price of $6.00, the fair market value on the date of the grant. This
option will become fully vested and exercisable on the earlier of (1) five (5)
years after the date of grant or (2) on the date of consummation of a Sale of
the Company (as defined below) or (3) on a Pro Rata basis on the date (or dates)
of consummation of Acquisition(s) by the Company (as defined below) having a
Fair Market Value (as defined below) of $60 million or more.
As used herein, "Acquisition by the Company" means any
purchase of assets, merger, acquisition, acquisition of any interest in any
joint venture, partnership, limited liability company or any other form of
acquisition of all or any part of another business by the Company, and "Sale of
the Company" means a transaction or series of related transactions whereby,
directly or indirectly, control of the Company or all or substantially all of
its business or assets is acquired by or merged with another entity in a sale or
exchange of stock, merger or consolidation, sale of assets or other similar
transaction. As used herein, a "Transaction" means an Acquisition by the Company
or a Sale of the Company.
As used herein, "Fair Market Value" means the sum of (1)
cash paid or payable, fair market value of marketable equity securities or
interests, fair value of unmarketable equity securities or interests, face
amount of straight and convertible debt instruments or obligations issued or
issuable (including any amounts paid into escrow) from the Company or any entity
affiliated with the Company in connection with aTransaction, (2) the amount of
indebtedness (excluding trade payables) of an acquired company assumed directly
or indirectly by the Company or any entity affiliated with the Company in
connection with a Transaction and (3) the fair value of contingent future
payment obligations (e.g. earn-outs) arising in connection with a Transaction.
Fair Market Value will be determined at the time the Company reaches a
definitive agreement for a Transaction.
As used herein, "Pro Rata" means the Fair Market Value of
any Transaction divided by $60 million.
For example, if the Company consummates an Acquisition by
the Company with a Fair Market Value of $20 million, followed by an Transaction
with a Fair Market Value of $10 million, Employee's option will become vested
with respect to 25,000 shares and then 12,500 shares, for an aggregate vesting
of 37,500 shares or fifty percent (50%) of the shares subject to the option.
Vesting will, of course, depend on Employee's continued employment with the
Company.
(iii) Both of Employee's options will be incentive stock options
to the maximum extent allowed by the Internal Revenue Code of 1986, as amended,
and will be subject to the terms of the Company's 1999 Stock Plan and the Stock
Option Agreement between Employee and the Company. Subject to the discretion of
the Company's Board of Directors, you may be eligible to receive additional
grants of stock options or purchase rights from time to time in the future, on
such terms and subject to such conditions as the Board of Directors shall
determine as of the date of any such grant.
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(d) Additional Benefits. Employee will be eligible to participate in
the Company's employee benefit plans of general application, including without
limitation, those plans covering medical, disability and life insurance in
accordance with the rules established for individual participation in any such
plan and under applicable law. Employee will be eligible for vacation and sick
leave in accordance with the policies in effect during the term of this
Agreement and will receive such other benefits as the Company generally provides
to its other employees of comparable position and responsibility.
(e) Reimbursement of Expenses.
(i) Employee shall be authorized to incur on behalf and for the
benefit of, and shall be reimbursed by, the Company for reasonable expenses,
provided that such expenses are substantiated in accordance with Company
policies.
(ii) In addition, the Company will reimburse Employee for (1)
reasonable expenses incurred in making two trips from San Francisco to the
Seattle area to look for housing, (2) the rental of an apartment in the Seattle
area from June 1999 through the end of July 1999, (3) reimbursement of expenses
incurred up to an aggregate of $2,000 for weekend trips from Seattle to San
Francisco until Employee's family relocates to the Seattle area and (4)
reasonable relocation expenses incurred for Employee and his family to move from
San Francisco to the Seattle area (collectively, "Moving Expenses"). The
Company will gross up Employee's reimbursement of Moving Expenses for any income
taxes incurred by Employee thereon.
(iii) The Company shall reimburse Employee for up to $6,000 in
hourly legal and accounting fees incurred by Employee in connection with (i)
entering into this Agreement and (ii) analyzing the tax consequences of
compensation paid to Employee upon consummation of a change of control
transaction of the Company.
5. Termination of Employment and Severance Benefits.
(a) Termination of Employment. This Agreement may be terminated
during its Original Term (or any extension thereof) upon the occurrence of any
of the following events:
(i) The Company's determination in good faith that it is
terminating Employee for Cause (as defined in Section 6 below) ("Termination for
Cause");
(ii) The Company's determination that it is terminating Employee
without Cause, which determination may be made by the Company at any time at the
Company's sole discretion, for any or no reason ("Termination Without Cause");
(iii) The effective date of a written notice sent to the Company
from Employee stating that Employee is electing to terminate his or her
employment with the Company ("Voluntary Termination");
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(iv) A change in Employee's status such that a Constructive
Termination (as defined in Section 5(b)(iv) below) has occurred; or
(v) Following Employee's death or Disability (as defined in
Section 7 below).
(b) Severance Benefits. Employee shall be entitled to receive
severance benefits upon termination of employment only as set forth in this
Section 5(b):
(i) Voluntary Termination. If Employee's employment terminates
by Voluntary Termination, then Employee shall not be entitled to receive payment
of any severance benefits. Employee will receive payment(s) for all salary and
unpaid vacation accrued as of the date of Employee's termination of employment
and Employee's benefits will be continued under the Company's then existing
benefit plans and policies in accordance with such plans and policies in effect
on the date of termination and in accordance with applicable law.
(ii) Involuntary Termination. If Employee's employment is
terminated under Section 5(a)(ii) or 5(a)(iv) (such termination, an "Involuntary
Termination"), Employee will be entitled to receive payment of severance
benefits equal to Employee's regular salary for one year (the "Severance
Period"). Such payments shall be made at the time of termination. Employee will
receive payment(s) for all salary and unpaid vacation accrued as of the date of
Employee's termination of employment, and Employee's benefits will be continued
under the Company's then existing benefit plans and policies in accordance with
such plans and policies in effect on the date of termination and in accordance
with applicable law. (iii)
(iii) Termination for Cause. If Employee's employment is
terminated for Cause, then Employee shall not be entitled to receive payment of
any severance benefits. Employee will receive payment(s) for all salary and
unpaid vacation accrued as of the date of Employee's termination of employment
and Employee's benefits will be continued under the Company's then existing
benefit plans and policies in accordance with such plans and policies in effect
on the date of termination and in accordance with applicable law.
(iv) Constructive Termination. "Constructive Termination" shall
be deemed to occur if (A)(1) there is a change in Employee's position that in
Employee's reasonable judgment represents a substantial reduction in status,
title, position or responsibilities, (2) a reduction of Employee's base
compensation or (3) Employee's refusal to relocate to a facility or location
more than 30 miles from the Company's current location; and (B) within the 30-
day period immediately following such material change or reduction Employee
elects to terminate his employment voluntarily.
(v) Termination by Reason of Death or Disability. In the event
that Employee's employment with the Company terminates as a result of Employee's
death or Disability (as defined in Section 7 below), Employee or Employee's
estate or representative will receive all salary and unpaid vacation accrued as
of the date of Employee's death or Disability and any other benefits payable
under the Company's then existing benefit plans and policies in accordance with
such plans and policies in effect on the date of death or Disability and in
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accordance with applicable law. In addition, Employee's estate or representative
will receive the amount of Employee's target bonus for the fiscal year in which
the death or Disability occurs to the extent that the bonus has been earned as
of the date of Employee's death or Disability, as determined by the Board of
Directors or its Compensation Committee based on the specific corporate and
individual performance targets established for such fiscal year.
6. Definition of Cause. For purposes of this Agreement, "Cause" for
Employee's termination will exist at any time after the happening of one or more
of the following events:
(a) Employee's willful misconduct or gross negligence in performance
of his duties hereunder, including Employee's refusal to comply in any material
respect with the legal directives of the Company's Board of Directors so long as
such directives are not inconsistent with the Employee's position and duties,
and such refusal to comply is not remedied within 10 working days after written
notice from the Company, which written notice shall state that failure to remedy
such conduct may result in Termination for Cause;
(b) Dishonest or fraudulent conduct, a deliberate attempt to do an
injury to the Company, or conduct that materially discredits the Company or is
materially detrimental to the reputation of the Company, including conviction of
a felony; or
(c) Employee's incurable material breach of any element of the
Company's Confidential Information and Invention Assignment Agreement, including
without limitation, Employee's theft or other misappropriation of the Company's
proprietary information.
7. Definition of Disability. For purposes of this Agreement,
"Disability" shall mean that Employee has been unable to perform his duties
hereunder as the result of his incapacity due to physical or mental illness, and
such inability, which continues for at least one hundred twenty (120)
consecutive calendar days or one hundred fifty (150) calendar days during any
consecutive twelve-month period, if shorter, after its commencement, is
determined to be total and permanent by a physician selected by the Company and
its insurers and acceptable to Employee or to Employee's legal representative
(with such agreement on acceptability not to be unreasonably withheld).
8. Confidentiality Agreement. Employee shall sign, or has signed, a
Proprietary Information and Inventions Agreement (the "Confidentiality
Agreement") substantially in the form attached hereto as Exhibit A. Employee
hereby represents and warrants to the Company that he has complied with all
obligations under the Confidentiality Agreement and agrees to continue to abide
by the terms of the Confidentiality Agreement and further agrees that the
provisions of the Confidentiality Agreement shall survive any termination of
this Agreement or of Employee's employment relationship with the Company.
9. Noncompetition Covenant. Employee hereby agrees that he shall not,
during the term of his employment pursuant to this Agreement and until the later
of (a) one year after termination of Employee's employment with the Company or
(b) the end of the Severance Period, if any, do any of the following without the
prior written consent of the Company's Board of Directors:
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(a) Compete. Carry on any business or activity (whether directly or
indirectly, as a partner, stockholder, principal, agent, director, affiliate,
employee or consultant) relating to wireless telecommunications products or
services or medical equipment or products, in each case that directly compete
with the Company's products or services then commercially available or under
development during the term of Employee's employment, or engage in any other
activities that conflict with Employee's obligations to the Company.
(b) Solicit Business. Solicit or influence or attempt to influence
any client, customer or other person either directly or indirectly, to direct
his or its purchase of the Company's products and/or services to any person,
firm, corporation, institution or other entity in competition with the business
of the Company.
(c) Solicit Personnel. Solicit or influence or attempt to influence
any person employed by the Company to terminate or otherwise cease his
employment with the Company or become an employee of any competitor of the
Company. This Section 9(c) is to be read in conjunction with Section 6 of the
Confidential Information and Invention Assignment Agreement executed by
Employee.
10. Limitation on Stock Option Acceleration Benefits.
The Company shall use its best efforts to obtain approval of the terms of
this Agreement from at least seventy-five percent (75%) of the Company's
stockholders prior to the Company's initial public offering. If the Company is
unable to obtain such stockholder approval, or if notwithstanding such
stockholder approval any stock option acceleration benefits provided to Employee
under this Agreement (i) constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") and
(ii) are subject to the excise tax imposed by Section 4999 of the Code ("Excise
Tax"), then the Company shall reimburse Employee for the full amount of the
Excise Tax imposed upon Employee as a direct result of such parachute payments
(which shall include a "gross up" for income taxes on the amounts reimbursed by
the Company such that Employee shall have no liability as a result of the
imposition of any Excise Tax).
11. Conflicts. Employee represents that his performance of all the terms
of this Agreement will not breach any other agreement to which Employee is a
party. Employee has not, and will not during the term of this Agreement, enter
into any oral or written agreement in conflict with any of the provisions of
this Agreement. Employee further represents that he is entering into or has
entered into an employment relationship with the Company of his or her own free
will and that he has not been solicited as an employee in any way by the
Company.
12. Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise)
to all or substantially all of the Company's business and/or assets shall assume
the obligations under this Agreement and agrees expressly to perform the
obligations under this Agreement in the same manner and to the same extent as
the Company would be required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of Employee's rights hereunder
shall inure to
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the benefit of, and be enforceable by, Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
13. Miscellaneous Provisions.
(a) No Duty to Mitigate. Employee shall not be required to mitigate
the amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor, except as otherwise provided in this
Agreement, shall any such payment be reduced by any earnings that Employee may
receive from any other source.
(b) Amendments and Waivers. Any term of this Agreement may be
amended or waived only with the written consent of the parties.
(c) Sole Agreement. This Agreement, including any Exhibits hereto,
constitutes the sole agreement of the parties and supersedes all oral
negotiations and prior writings with respect to the subject matter hereof.
(d) Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by a nationally-recognized delivery service (such as Federal
Express or UPS), or 48 hours after being deposited in the U.S. mail as certified
or registered mail with postage prepaid, if such notice is addressed to the
party to be notified at such party's address as set forth below or as
subsequently modified by written notice.
(e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Washington, without giving effect to the principles of conflict of laws.
(f) Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
(g) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
(h) Arbitration. Any dispute or claim arising out of or in
connection with this Agreement will be finally settled by binding arbitration in
Seattle, Washington in accordance with the rules of the American Arbitration
Association by one arbitrator appointed in accordance with said rules. The
arbitrator shall apply Washington law, without reference to rules of conflicts
of law or rules of statutory arbitration, to the resolution of any dispute.
Judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Notwithstanding the foregoing, the parties may
apply to any court of competent jurisdiction for
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preliminary or interim equitable relief, or to compel arbitration in accordance
with this paragraph, without breach of this arbitration provision. This Section
13(h) shall not apply to the Confidentiality Agreement.
(i) Advice of Counsel. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES
THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK
THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE
TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED
AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.
[Signature Page Follows]
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The parties have executed this Agreement the date first written above.
DATA CRITICAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Title: President and Chief Executive Officer
Address: 0000 000xx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
XXXXXXX X. XXXXXX
Signature: /s/ Xxxxxxx X. Xxxxxx
---------------------
Address: 0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
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