CARDIAC SCIENCE, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "AGREEMENT") is dated as of July 1, 1998
by and between XXXXXXXX XXX ("EMPLOYEE") and CARDIAC SCIENCE INC., a Delaware
corporation (the "COMPANY").
1. TERM OF AGREEMENT. This Agreement shall commence on the date
hereof and shall have a term of twelve (12) months (the "ORIGINAL TERM").
This Agreement may be terminated by either party, with or without cause, on
thirty (30) days' written notice to the other party. This Agreement shall
continue after the end of the Original Term unless either party shall give
the other written notice of termination. The Original Term and any 12 month
period commencing immediately after the end of any Term shall each be
referred to as a "TERM."
2. DUTIES.
(a) POSITION. Employee shall be employed as Chief Technical
Officer, and as such will have responsibility for the duties typically
associated with such positions and will report to the Company's Chief
Executive Officer and Board of Directors.
(b) OBLIGATIONS TO THE COMPANY. Employee agrees to the best of
his ability and experience that he will perform all of the duties and
obligations reasonably required of and from Employee pursuant to the express
and implicit terms hereof. During the term of Employee's employment
relationship with the Company, Employee further agrees that he will devote
his business time and attention to the business of the Company.
3. AT-WILL EMPLOYMENT. 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 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 monthly salary of $10,416.00
per month. 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 of Directors, 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) BONUSES. Employee will receive an incentive bonus of $20,000
from the Company payable on September 30, 1998. Employee will be eligible to
receive and additional bonus of $25,000 upon successful completion of the
software component of the production model of the Powerheart-Registered
Trademark- AECD-Registered Trademark-. Payment of said bonus amount and is
anticipated to be payable at the end of the 1998 calendar year. Future
incentive bonuses will be determined by the Board, its Compensation Committee
or the Chief Executive Officer of the Company.
In the event of Employee's Involuntary Termination (as defined
below), death or Disability (as defined below) or a Change of Control (as
defined below) during the term of this Agreement, the Company shall pay to
Employee or Employee's estate a pro rata portion of Employee's target bonus
for such year based on the portion of the year Employee worked for the
Company.
(c) 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
receive three (3) weeks paid vacation and will be eligible for 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 experience.
(d) STOCK OPTIONS AND OTHER INCENTIVE PROGRAMS. Employee shall be
eligible to participate in any stock option or other incentive programs
available to officers or employees of the Company. Employee shall be granted
30,000 stock options (in addition to options already issued to the employee)
under the terms and conditions of the 1997 Stock Option Plan which was
approved by the board of directors and by a vote of its shareholders in May
1998. Moreover, in the event that the Company issues additional shares of
common stock after July 1, 1998, employee shall receive additional stock
options in order maintain the employees overall percent of ownership in the
Company equal to a minimum of 1.5% based on the Company's outstanding shares
to be calculated on a fully diluted basis.
(e) REIMBURSEMENT OF EXPENSES. 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.
5. CONFIDENTIAL INFORMATION
5.1 Employee acknowledges that, because of his employment
hereunder, he will be in a confidential relationship with the Company and
will have access to confidential information and trade secrets of the
Company. Employee acknowledges and agrees that the following constitutes
confidential and/or trade secret information belonging exclusively to Company
(collectively "Confidential Information"):
(a) all information related to customers including, without
limitation, customer lists, the identities of existing, past or prospective
customers, prices charged or
proposed to be charged to customers, customer contacts, special customer
requirements and all related information;
(b) research and development plans, materials and techniques; and
(c) all know-how, devices, compilations of information,
copyrightable material and technology and technical information, relating to
the business of the Company.
5.2 Employee agrees that except in the limited performance of his
duties under this Agreement, Employee shall not use for his own benefit or
disclose to any third-party Confidential Information acquired by reason of
his employment under this Agreement or his former status as officer of the
Company.
5.3 This Section 5 shall survive termination of this Agreement.
6. COMPANY PROPERTY.
6.1 Any patents, inventions, discoveries, applications or
processes, software and computer programs devised, planned, applied, created,
discovered or invented by Employee in the course of his employment under this
Agreement and which pertain to any aspect of the business of the Company, or
its subsidiaries, affiliates or customers, shall be the sole and absolute
property of the Company, and Employee shall make prompt report thereof to the
Company and promptly execute any and all documents reasonably requested to
assure the Company the full and complete ownership thereof.
6.2 All records, files, lists, drawings, documents, equipment and
similar items relating to the Company's business which Employee shall prepare
or receive from the Company shall remain the Company's sole and exclusive
property. Upon termination of this Agreement, Employee shall return promptly
to the Company all property of the Company in his possession and Employee
represents that he will not copy, or cause to be copied, printed, summarized
or compiled, any software, documents or other materials originating with
and/or belonging to the Company. Employee further represents that he will
not retain in his possession any such software, documents or other materials
in machine or human readable forms.
6.3 This Section 6 shall survive termination of this Agreement.
7. TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS.
(a) TERMINATION OF EMPLOYMENT. Employee's employment under this
Agreement shall terminate immediately upon a Change of Control (as defined
below) and may be terminated during the Original Term (or any subsequent
Term) upon the occurrence of any of the following events:
(i) The effective date of a written notice sent to the
Company from Employee stating that Employee is electing to terminate his
employment with the Company voluntarily ("VOLUNTARY TERMINATION");
(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 reason or no reason
("TERMINATION WITHOUT CAUSE");
(iii) A change in Employee's status such that a Constructive
Termination (as defined below) has occurred;
(iv) The Company's reasonable, good faith determination that
it is terminating Employee for Cause (as defined below) ("TERMINATION FOR
CAUSE"); or
(v) Following Employee's death or Disability.
(b) SEVERANCE BENEFITS. Employee shall be entitled to receive
severance benefits upon termination of employment only as set forth in this
Section 7(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 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
terminates due to Termination Without Cause or Constructive Termination
(collectively, "INVOLUNTARY TERMINATION"), Employee will be entitled to
receive payment of severance benefits equal to Employee's regular monthly
salary through the 6 months following the date of such Involuntary
Termination (the "SEVERANCE PERIOD"). Such payment shall be made ratably
over the Severance Period according to the Company's standard payroll
schedule. On the date of such Involuntary Termination, Employee shall also
receive the pro rata portion of Employee's target bonus for such then current
Term, based on the portion of the current Term that Employee has worked.
Health insurance benefits with the same coverage provided to Employee prior
to the termination (e.g. medical, dental, optical, mental health) and in all
other respects significantly comparable to those in place immediately prior
to the termination will be provided at the Company's cost over the Severance
Period. Any unvested stock options or shares of restricted stock held by
Employee as of the date of Employee's termination of employment shall
continue to vest through the end of the Severance Period according to the
vesting schedule set forth in any agreement between Employee and the Company
governing the issuance to Employee of such securities.
(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 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) 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 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 accordance with applicable law. In addition, Employee's
estate or representative shall also receive the pro rata portion of
Employee's target bonus for the current Term, based on the portion of the
current Term that Employee has worked.
(v) CHANGE OF CONTROL. Notwithstanding the preceding clauses
of this Section 7(b), upon a Change of Control, Employee will be entitled to
receive payment of severance benefits equal to Employee's regular monthly
salary for a period of six (6) months following said Change of Control. (the
"CHANGE OF CONTROL SEVERANCE PERIOD"). Such payment shall be made ratably
over the Change of Control Severance Period according to the Company's
standard payroll schedule. On the date of such Change of Control, Employee
shall also receive the pro rata portion of Employee's target bonus for the
current Term, based on the portion of the current Term that Employee has
worked. Health insurance benefits with the same coverage provided to Employee
prior to the Change of Control (e.g. medical, dental, optical, mental health)
and in all other respects significantly comparable to those in place
immediately prior to the Change of Control will be provided at the Company's
cost over the Change of Control Severance Period. Any unvested stock options
or shares of restricted stock held by Employee as of the date of Employee's
termination of employment shall continue to vest through the end of the
Change of Control Severance Period according to the vesting schedule set
forth in any agreement between Employee and the Company governing the
issuance to Employee of such securities.
(vi) NONCOMPETE. If Employee shall at any time during a
Severance Period or a Change of Control Severance Period, act as an owner
(other than a shareholder in a publicly traded company) or employee of a
business that directly competes with the business conducted by the Company as
conducted on the date of Employee's termination of employment, then,
effective upon Employee's commencement of such activities as a competing
owner or employee, Employee shall not receive any severance payment or other
benefits under Sections 7(b)(ii) or (v) beyond what he would have received
had he been Terminated for Cause.
8. DEFINITIONS. For purposes of this Agreement,
(a) "CAUSE" for Employee's termination will exist at any time
after the happening of one or more of the following events:
(i) 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 fifteen (15) 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;
(ii) Dishonest or fraudulent conduct related and materially
adverse to the activities of the Company, a deliberate attempt to do a material
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
(iii) Employee's knowing and intentional material breach
(which can not be cured) 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.
(b) "CONSTRUCTIVE TERMINATION" shall be deemed to occur if (i)(A)
there is a significant reduction in Employee's duties, positions or
responsibilities causing such position to be of reduced stature or
responsibility, (B) a reduction in Employee's base compensation or benefits,
or (C) Employee's refusal to relocate to a facility or location more than 30
miles from the Company's current location; and (ii) within the 60-day period
immediately following such material change or reduction Employee elects to
terminate his employment voluntarily.
(c) "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 60
consecutive calendar days or 90 calendar days during any consecutive
twelve-month period, if shorter, after its commencement, is determined to be
total and permanent by an independent and impartial 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).
(d) "CHANGE OF CONTROL" shall mean the occurrence of any of the
following events: (i) an acquisition of the Company by another entity by
means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation but excluding
any merger effected exclusively for the purpose of changing the domicile of
the Company), or (ii) a sale of all or substantially all of the assets of the
Company (collectively, a "MERGER"), so long as in either case (x) the
Company's stockholders of record immediately prior to such Merger will,
immediately after such Merger, hold less than 50% of the voting power of the
surviving or acquiring entity, or (y) the Company's stockholders of record
immediately prior to such Merger will, immediately after such Merger, hold
less than 60% of the voting power of the surviving or acquiring entity AND a
majority of the members of the Board of Directors of the surviving or
acquiring entity immediately after such Merger were NOT members of the Board
of Directors of the Company immediately prior to such Merger.
Notwithstanding the above, in the event that (i) Employee's employment
is terminated by the Company or a successor to the Company other than for
Cause (as defined below), or (ii) Employee's job duties, responsibilities and
requirements are materially reduced or changed such that they are
inconsistent with Employee's prior duties, responsibilities and requirements,
in
either case in connection with, or as a result of, a Change of Control,
100% of the option that has not yet become exercisable shall become
exercisable on the effective date of such termination, reduction or change.
9. 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 the benefit of, and be enforceable
by, Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
10. 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
California, 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.
[SIGNATURE PAGE FOLLOWS]
The parties have executed this Agreement the date first written above.
CARDIAC SCIENCE INC.
By:
----------------------------------
Xxxxxxx X. Xxxxx
Title:
-------------------------------
Chief Executive Officer
Address: 0000 Xxxx Xxxxxx
Xxxxxxxx "X"
Xxxxxx, XX 00000
Fax: (000) 000-0000
-------------------------------------
Xxxxxxxx Xxx
