CEO Key Employee Agreement - JOSEPH D. KEEGAN

EXHIBIT 10.19


MOLECULAR DEVICES CORPORATION


KEY EMPLOYEE AGREEMENT
for
JOSEPH D. KEEGAN


This Employment Agreement ("Agreement") is entered into as of the 11th day of March, 1998, by and between Joseph D. Keegan ("Executive") and Molecular Devices Corporation, a Delaware corporation (the "Company").


Whereas, the Company desires to employ Executive to provide personal services to the Company, and wishes to provide Executive with certain compensation and benefits in return for his services; and


Whereas, Executive wishes to be employed by the Company and provide personal services to the Company in return for certain compensation and benefits;


Now, Therefore, in consideration of the mutual promises and covenants contained herein, it is hereby agreed by and between the parties hereto as follows:


1. Employment by the Company.


1.1 Subject to terms set forth herein, the Company agrees to employ Executive in the position of President and Chief Executive Officer ("CEO") of the Company and Executive hereby accepts such employment effective as of March 30, 1998. During the term of his employment with the Company, Executive will devote his best efforts and substantially all of his business time and attention (except for vacation periods as set forth herein and reasonable periods of illness or other incapacities permitted by the Company's general employment policies) to the business of the Company.


1.2 Executive shall serve in an executive capacity and shall perform such duties as are customarily associated with his then current title, consistent with the Bylaws of the Company and as required by the Company's Board of Directors (the "Board").


1.3 The employment relationship between the parties shall also be governed by the general employment policies and practices of the Company, including those relating to protection of confidential information and assignment of inventions, except that when the terms of this Agreement differ from or are in conflict with the Company's general employment policies or practices, this Agreement shall control. In addition, as an executive officer of the Company Executive will be covered by the Company's directors and officers liability insurance coverage, as in effect from time to time, as well as the Company's bylaw indemnification and indemnity agreement for executive officers and directors.


2. Board of Directors.


2.1 Board of Directors. The Company shall use its best efforts to elect Executive to the Board for so long as Executive holds the position of President and Chief Executive Officer of the Company. Executive agrees to serve as a director if elected by the shareholders and the Board, as the case may be.


3. Compensation.


3.1 Salary. Executive shall receive for services to be rendered hereunder an annualized base salary of $280,000, payable according to the Company's regular payroll schedule.


3.2 Signing Bonus. Upon his first performance of services under this Agreement, Executive shall receive a one time payment of $150,000, minus standard payroll withholdings and deductions ("Signing Bonus"). If Executive voluntarily terminates his employment with Company within his first year of employment, Executive shall repay the gross amount of the Signing Bonus to the Company.


3.3 Performance Bonus. Executive will be eligible for a discretionary performance bonus of up to 50% of base salary, earned under the following conditions, if Executive achieves the goals established in agreement with the Board. The Board shall determine, in its sole discretion, whether any or all of the goals have been achieved and conditions have been met, and if so, the amount of the bonus.


(a) Company Corporate Financial Goals. The Company must meet or exceed its planned profit objectives for the bonus year; and


(b) Executive's Performance. Executive must demonstrate performance equal to or above that required to meet the ordinary expectations of his job position, as determined by the Board in its sole discretion; and


(c) Achievement of Goals. Executive shall achieve each of the goals agreed upon with the Board. Goals will be set in the following areas: (1) product development schedule; (2) product introduction schedule; and


(d) Active Employment. Executive must remain an active employee through the end of the bonus year. Executive forfeits any bonus for which he would otherwise be eligible, if his employment terminates for any reason before the end of the bonus year. No prorated bonus can be earned.


3.4 Standard Company Benefits. Executive shall be entitled to all rights and benefits for which he is eligible under the terms and conditions of the standard Company benefits and compensation practices which may be in effect from time to time and provided by the Company to its employees generally.


3.5 Car Allowance. The Company will pay Executive, in lieu of providing a Company-leased car, an allowance of $1,000 per month, to cover transportation expenses in the performance of his job duties.


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3.6 Administrative Expenses. The Company will pay Executive for administrative expenses, such as tax preparation, which Executive incurs, up to a maximum of $5,000 per year.


3.7 Relocation Expenses. Executive will receive relocation expenses to move his household from New York to California provided that such relocation occurs prior to December 31, 1998. The Company will pay the lower of two submitted bids, pursuant to the Relocation Agreement attached hereto as Exhibit A.


3.8 Commuting Expenses. The Company will provide Executive or his immediate family with one round trip per week between California and New York, for up to six months after the start of Executive's employment.


3.9 Taxation. Any amount received by the Executive for administrative expenses, car allowance, relocation expenses or commuting expenses that is required to be so treated will be treated as taxable income and reflected on the Company's Form W-2 report.


3.10 Compensation Review. The Board will annually review Executive's salary, performance bonus, and incentive stock options to ensure that they are commensurate with work performed. In addition, the Company will annually review and mutually establish with Executive the goals to be used in evaluating Executive's performance bonus.


4. Stock.


4.1 Stock Options. The Board will grant Executive a nonstatutory stock option to purchase one hundred seventy thousand (170,000) shares of the Company's Common Stock under the Company's 1995 Stock Option Plan (the "Plan"). The exercise price of such option will be the fair market value of the Common Stock on the date on which Executive begins employment with the Company (the "Employment Date"). The option will vest over five years, with thirty four thousand (34,000) shares vesting on the first anniversary of Employmenet Date, and eight thousand five hundred (8,500) shares vesting every June 30, September 30, December 30, and March 30 thereafter. Vesting ceases if Executive's employment terminates at any time for any reason, with the following exceptions. (a) Executive is retained by the Company in a post-employment consulting agreement as described in Section 8 below, providing for additional year of vesting; and (b) if a transaction described in Section 10(b) of the Plan occurs, and Executive is either demoted or terminated without cause (as defined in Section 7.2 below) within two years following such transaction, then vesting of the remaining unvested options will accelerate, such that Executive will be vested in options with respect to a toal of one hundred seventy thousand (170,000) shares of the Company's Common Stock. For purposes of this Agreement, "demoted" means that, without Executive's consent, a material reduction in or modification to, Executive's base salary, duties and responsibilities, title, or reporting relationship has occurred.


4.2 Stock Grant. The Board will grant Executive an aggregate of thirty thousand (30,000) shares of the Company's Common Stock, subject to applicable securities law restrictions, over two years. Three thousand seven hundred and fifty (3,750) shares will be granted following the completion of each quarter of service with the Company in an executive capacity, on June 30, 1998 and 1999; September 30, 1998 and 1999; December 30, 1998 and 1999; and March 30, 1999 and 2000. Executive will bear all tax responsibilities for these grants and will make arrangements with the Company to ensure payment of taxes and compliance with tax withholdings. In lieu of Executive's having to sell stock in order to make any of the required tax payments, the Company agrees to lend him, for up to two (2) years, at the minimum interest rate required by the taxing authorities to avoid the imputation of taxes, an amount equal to the Executive's state and federal tax withholding obligation arising from the stock grant, any such loans to be secured by Executive's stock. Granting ceases if Executive's employment terminates at any time for any reason, with the following


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exceptions. If a transaction described in Section 10(b) of the Plan occurs and Executive is either demoted or terminated without cause (as defined in Section 7.2 below) within two years following such transaction, granting of the remaining ungranted shares will accelerate such that Executive will be granted a total of thirty thousand (30,000) shares of the Company's Common Stock. Upon granting, each individual grant will be fully earned and vested.


5. Proprietary Information Obligations.


5.1 Agreement. Executive agrees to execute and abide by the Proprietary Information and Inventions Agreement attached hereto as Exhibit B.


5.2 Remedies. Executive's duties under the Proprietary Information and Inventions Agreement shall survive termination of his employment with the Company. Executive acknowledges that a remedy at law for any breach or threatened breach by him of the provisions of the Proprietary Information and Inventions Agreement would be inadequate, and he therefore agrees that the Company shall be entitled to injunctive relief in case of any such breach or threatened breach.


6. Outside Activities.


6.1 Except with the prior written consent of the Company's Board of Directors, Executive will not during the term of this Agreement undertake or engage in any other employment, occupation or business enterprise, other than ones in which Executive is a passive investor within the limitations set forth in Section 6.3 below. Executive may engage in civic and not-for-profit activities so long as such activities do not materially interfere with the performance of his duties hereunder.


6.2 Except as permitted by Section 6.3, Executive agrees not to acquire, assume or participate in, directly or indirectly, any position, investment or interest known by him to be adverse or antagonistic to the Company, its business or prospects, financial or otherwise.


6.3 During the term of his employment by the Company, except on behalf of the Company, Executive will not directly or indirectly, whether as an officer, director, stockholder, partner, proprietor, associate, representative, consultant, or in any


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capacity whatsoever engage in, become financially interested in, be employed by or have any business connection with any other person, corporation, firm, partnership or other entity whatsoever which were known by him to compete directly with the Company, throughout the world, in any line of business engaged in (or planned to be engaged in) by the Company; provided, however, that anything above to the contrary notwithstanding, he may own, as a passive investor, securities of any competitor corporation, so long as his direct holdings in any one such corporation shall not in the aggregate constitute more than 1% of the voting stock of such corporation.


7. Termination Of Employment.


7.1 Termination Without Cause Or With Good Reason.


(a) The Company shall have the right to terminate Executive's employment with the Company at any time without cause.


(b) In the event Executive's employment is terminated without cause, or in the event Executive resigns for Good Reason (defined as the Company's having appointed another person as Chief Executive Officer), the Company shall provide Executive with the following: (i) a one-year consulting agreement as described in Sections 8 and 9 below; and (ii) outplacement services.


7.2 Termination for Cause.


(a) The Company shall have the right to terminate Executive's employment with the Company at any time for cause.


(b) "Cause" for termination shall be determined by the Company based on the Board's reasonable belief that one or more of the following has occurred: (a) Executive's indictment or conviction of any felony or of any crime involving dishonesty; (b) Executive's participation in any fraud against the Company; (c) breach of Executive's duties to the Company, including persistent unsatisfactory performance of job duties, provided that the Company has provided advance written notice to Executive for at least thirty (30) days and Executive has not cured such breach to the satisfaction of the Board within said 30-day period; (d) Executive's intentional damage to any property of the Company; or (e) conduct by Executive which in the good faith and reasonable determination of the Board demonstrates gross unfitness to serve, provided that the Company has provided advance written notice to Executive for at least thirty (30) days and Executive has not cured such breach to the satisfaction of the Board within said 30-day period.


(c) In the event Executive's employment is terminated at any time with cause, he will not be entitled to severance pay, pay in lieu of notice or any other such compensation.


7.3 Voluntary or Mutual Termination.


(a) Executive may voluntarily terminate his employment with the Company at any time, after which no further compensation will be paid to Executive.


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(b) In the event Executive voluntarily terminates his employment, he will not be entitled to severance pay, pay in lieu of notice or any other such compensation.


8. Post-Employment Consultation.


Upon the termination of Executive's employment with the Company pursuant to Section 7.1(b), the Company shall retain Executive as a consultant to be available to render consulting services in Executive's area of expertise or special competence for one year ("Consulting Period"), for up to ten (10) hours each month, for which the Company shall pay Executive Executive's monthly base salary, whether or not Executive shall be called upon to render any services in any such month. During the Consulting Period, Executive's stock options and stock grant will continue to vest at the rate in effect ...