DATA CRITICAL CORP
EMPLOYMENT AGREEMENT WITH STEPHEN E. HANNAH
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>11
<FILENAME>dex109.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT WITH STEPHEN E. HANNAH
<TEXT>

<PAGE>

                                                                    Exhibit 10.9

                           Data Critical Corporation
                     19820 North Creek Parkway, Suite 100
                               Bothell, WA 98011


                                March 12, 2001


Mr. Steve Hannah
1806 Geeting Pl
Placentia CA 92870

Dear Steve:

     It is my pleasure to offer you the following terms and conditions in
consideration of (and effective upon) your becoming an employee of Data Critical
Corporation (the "Company"). References to "you" and "Employee" mean Steve
Hannah.

     1.   Effectiveness of Agreement.  Notwithstanding anything contained herein
          --------------------------
to the contrary, this agreement (this "Agreement") shall become effective only
if and to the extent the Effective Date (as defined below) shall occur;
whereupon this Agreement shall become effective with no further action on the
part of either of the parties hereto, and failing which this Agreement shall be
null and void. This Agreement shall not convey or impose any rights on either
party prior to the Effective Date. Upon becoming effective, this Agreement will
supercede all prior agreements relating to the employment of the Employee with
the Company or its predecessors (including, VitalCom Inc. and its predecessors,
collectively "VitalCom"), all of which other agreements shall cease to be of any
further force or effect.

     For purposes of this Agreement, the "Effective Date" shall mean the date
upon which the following conditions shall have been satisfied:

         (i)    the merger (the "Merger") of VitalCom and Viper Acquisition
     Corp., a Delaware corporation ("VAC"), shall have been consummated in
     accordance with that certain Agreement and Plan of Merger dated of even
     date herewith (as the same may be amended, restated, supplemented or
     otherwise modified from time to time hereafter,the "Merger Agreement")
     between VitalCom, VAC and the Company; and

         (ii)   Employee remains employed by Company at the time such Merger is
     consummated.

     2.  Position.  Employee's position shall be Vice President of Engineering,
         --------
and in such capacity you shall perform such duties as shall be designated for
you by the management of the Company. You will report to the Chief Executive
Officer of the Company unless otherwise designated by the Board of Directors of
the Company (the "Board").

     3.  Compensation and Benefits.  Your compensation shall consist of the
         -------------------------
following:
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     .    A monthly salary of $15,000 (equating to $180,000 per year), subject
          to customary withholding.

     .    Upon achievement of agreed upon objectives, an annual bonus of 25% of
          your annual base salary; it being agreed however that if you remain
          employed with the Company through December 31, 2001, in no event will
          your bonus in respect of 2001 be less than $50,000.

     .    Within 45 days after the Effective Date, the Board of Directors of the
          Company (the "Board") will grant you 20,000 options for the purchase
          of the Company's common stock pursuant to the Company's 1999 Stock
          Option Plan, which options shall vest over 4 years (vesting 25% after
          1 year and monthly thereafter), have a 10 year expiration and have an
          exercise price equal to the market price on the date of grant. These
          options, together with the options into which your VitalCom options
          have been converted, shall become fully-vested and exercisable upon
          any "change of control" of the Company. For purposes hereof, a change
          of control shall be any merger, consolidation, amalgamation or other
          similar transaction pursuant to which the stockholders of Data
          Critical Corporation immediately prior to such transaction will cease
          to own at least 51% of the outstanding voting stock of the entity
          surviving such transaction (other than any such transaction intended
          only to change the domocile of the Company) or the sale by the Company
          of all or substantially all of its assets. The terms of this
          particular item are intended to survive any termination of this
          Agreement or Employee's employment relationship with the Company.

     .    You shall also be eligible to receive subsequent grants of options for
          the purchase of the Company's common stock at the discretion of the
          Board.

     .    You shall be entitled to participate in all other benefit programs
          offered to other similarly situated employees of the Company.

     You will be eligible to participate in our employee benefits program. The
Company currently pays all premiums for its employees and their dependents'
medical, dental, vision, prescription drug card coverage and employee assistance
program through group plans. In addition, the Company pays for basic life,
accidental death and dismemberment and long-term disability insurance for its
employees. All group insurance benefits and Company benefits are subject to
change from time to time.

     The Company offers a 401(k) plan to all eligible employees. Currently, this
is an employee-contribution-only plan provided as a retirement vehicle and as
means of deferring federal income taxes. You may elect to participate in such
plan and to make contributions through payroll deduction.

     4.     Term of Agreement; At-Will Employment.
            -------------------------------------

            (a)  This letter agreement shall have a term of one (1) year,
subject to earlier termination as set forth below (the "Original Term").
                                                        -------------

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<PAGE>

          (b)  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, subject to the terms of this letter agreement. 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 letter agreement or as otherwise required by law. Any payments,
benefits, damages, awards, or other compensation provided for hereunder upon any
termination hereof shall be inclusive of (and not additive to) any such amounts
required pursuant to any applicable law. The rights and duties created by this
Section 4 may not be modified in any way except by a written agreement executed
by the Company and the Employee. Notwithstanding anything contained in this
Agreement to the contrary, the Company agrees that it will not terminate your
employment for any reason other than Cause (as defined below) at any time prior
to January 1, 2002.

     5.   Severance.  In the event that the Company terminates you at any point
          ---------
in time without Cause (as defined below) at any time during the Original Term of
this letter agreement, the Company will continue to pay your monthly salary of
$15,000 per month (subject to customary withholding) for a period of six months
after such termination in accordance with its standard payroll procedures. For
purposes of this letter, "Cause" shall mean, (a) the commission of an act of
fraud or dishonesty in the course of your employment with the Company; (b)
conviction of, or plea of nolo contendre to, a crime constituting a felony or in
respect of any act of fraud, dishonesty or moral turpitude, (c) willful
misconduct or gross negligence in performance of your duties, including refusal
to comply in any material respect with the directives of the Board or Employee's
supervisors or the Company's policies and procedures, or (d) any willful attempt
to do an injury to the Company, or conduct that materially discredits the
Company or is materially detrimental to the reputation or business of the
Company.

     6.   Covenant.  Employee hereby agrees that he shall not, during the term
          --------
of his employment and for a period of one year after termination of his
employment with the Company and/or any of its affiliates for any reason, do any
of the following without the prior written consent of the Board of Directors of
the Company (for purposes of this Section, the term "Company" shall mean the
Company and each of its subsidiaries):

     (a)  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 Competitor (as
defined below). As used in this Section, a "Competitor" shall mean any company
or other enterprise carrying on or proposing to carry on any business or having
any product line related to the business of the Company, including, without
limitation, in-hospital wireless products or systems; enterprise monitoring or
telemetry products; handheld communications products for doctors, nurses and
other health care professionals; remote monitoring of, or transmission of, ECGs
or other patient medical information; any pacemaker, arrhythmia follow-up or
patient charting software or hardware products or technology for cardiologists
or cardiac surgeons; wireless physician charting products; or any other current
or currently planned (at the time of Employee's termination) products or
businesses by the Company, or that are otherwise competitive with the business
conducted by or planned to be conducted by the Company, nor engage in any other
activities that conflict with Employee's obligations to the Company.

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<PAGE>

     (b)  No-Hire.  Solicit or influence or attempt to influence, directly or
          -------
indirectly, any person employed by the Company or any of its affiliates to
terminate or otherwise cease his employment with the Company or hire any such
person within 6 months after such person's leaving the Company's employ.

     (c)  Equitable Remedies. Employee acknowledges and agrees that Employee's
          ------------------
breach of this letter agreement will cause irreparable injury to the Company for
which money damages and other remedies at law would be inadequate, and as such
that the Company and/or its affiliates shall be entitled to equitable remedies,
including, without limitation, specific performance and/or temporary or
permanent injunctive relief.

     (d)  Scope.  Employee acknowledges and agrees that the Company has relied
          -----
and is relying on the covenants contained herein in their decision to enter into
this letter agreement and that in light of such reliance the covenants contained
herein are fair and reasonable.

     7.   Confidentiality Agreement.  Employee shall sign, or has signed, a
          -------------------------
Proprietary Information and Invention Assignment 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.

     8.   Miscellaneous Provisions.
          ------------------------

     (a)  Amendments and Waivers.  The terms of this letter agreement may only
          ----------------------
be amended or waived only with the written consent of the parties.

     (b)  Sole Agreement.  This letter 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.

     (c)  Notices.  Any notice required or permitted by this letter 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.

     (d)  Choice of Law.  The validity, interpretation, construction and
          -------------
performance of this letter agreement shall be governed by the laws of the State
of California without giving effect to the principles of conflict of laws.

     (e)  Severability.  If one or more provisions of this letter 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 letter 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.

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<PAGE>

     (f)  Counterparts.  This letter 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.

     (g)  Arbitration.  Any dispute or claim arising out of or in connection
          -----------
with this letter 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. 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 preliminary or interim equitable relief,
or to compel arbitration in accordance with this paragraph, without breach of
this arbitration provision.

     (h)  Survival.  The provision of Sections 5, 6, 7, and 8(g) of this
          --------
Agreement shall survive both the termination of this letter agreement and/or the
termination of the Employee's employment with the Company and/or its affiliates.

     (i)  Advice of Counsel.  EACH PARTY TO THIS LETTER AGREEMENT ACKNOWLEDGES
          -----------------
THAT, IN EXECUTING THIS LETTER 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 LETTER AGREEMENT. THIS LETTER AGREEMENT SHALL
NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION
HEREOF.


                           [Signature Page Follows]

                                       5
<PAGE>

     The parties have executed this letter agreement the date first written
above.

                                    DATA CRITICAL CORPORATION:



                                    By:  /s/ Michael E. Singer
                                         ---------------------------------------

                                    Title:  Executive Vice President and Chief
                                            Financial Officer

                                    19820 North Creek Parkway
                                    Suite 100
                                    Bothell, WA  98011


                                    STEPHEN HANNAH


                                    Signature:  /s/ Stephen Hannah
                                              ----------------------------------

                                    1806 Geeting Pl
                                    Placentia CA 92870

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