EXHIBIT 10.10
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made as of February 12, 1999 (the "Effective Date") between
CNS, INC. a Delaware corporation ("CNS") and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Employee").
WHEREAS, CNS considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of CNS
and its shareholders; and
WHEREAS, Employee has made and is expected to continue to make, due to his
experience and knowledge, a significant contribution to the profitability,
growth and financial strength of CNS; and
WHEREAS, CNS, as a publicly held corporation, recognizes that the possibility of
a change in control may exist and that such possibility and the uncertainty and
questions which it may raise among management may result in the departure or
distraction of the performance of Employee's duties to the detriment of CNS and
its shareholders; and
WHEREAS, Employee is willing to continue his employment with CNS upon the
understanding that CNS will provide income security if Employee's employment is
terminated under certain terms and conditions;
WHEREAS, it is in the best interests of CNS and its stockholders to employ
Employee and to reinforce and encourage his continued attention and dedication
to his assigned duties without distraction and to ensure his continued
availability to CNS in the event of a Change in Control; and
WHEREAS, it is further in CNS's best interests to receive certain assurances
from Employee regarding CNS's confidentiality, competition and other proprietary
business concerns;
THEREFORE, in consideration of the foregoing and of this agreement, certain
change in control protection, continued employment and other benefits hereunder,
as well as other mutual covenants and obligations hereinafter set forth, CNS and
Employee agree as follows:
1. Employment. CNS agrees to continue to employ Employee as its President
& COO under the terms, conditions and benefits set forth herein and
Employee accepts continued employment with CNS on said terms,
conditions and benefits.
2. Term. The term of Employee's employment shall continue until terminated
pursuant to paragraph 6, 7, or 8 herein.
3. Duties. In his position as President & COO, Employee will continue to
faithfully and diligently perform such executive management
responsibilities as may be assigned to him from time to time by the
Chief Executive Officer, President or Chairman of the
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Board of Directors of CNS (the "Board"); devote his full time, energy
and skill to CNS's business, as is reasonably necessary to execute
fully his duties hereunder, except for vacations, absences made
necessary because of illness, and service on other corporate, civic, or
charitable boards or committees not significantly interfering with his
duties hereunder; and promote CNS's best interests. The principal place
of employment and the location of Employee's principal office and
normal place of work shall be in the Minneapolis, Minnesota
metropolitan area. Employee will be expected to travel to other
locations, as necessary, in the performance of his duties during the
term of this Agreement. Employee shall notify the President of any
other paid position which he is considering accepting, including but
not limited to a board of directors position, a position as an employee
or an independent consultant, or any position, whether or not for pay,
which could constitute a conflict of interest with CNS. The Employee
agrees not to accept any such position without the President of CNS's
prior approval.
4. Compensation. For all services rendered by Employee, CNS shall pay
Employee the compensation described in Exhibit A, payable at such times
as salaried employees of CNS are customarily paid. The President of CNS
shall, from time to time during Employee's employment, review his
annual salary in connection with possible increases, giving
consideration to inflation factors, performance of Employee and CNS,
salaries paid for positions of similar responsibility for other
companies, and other relevant factors, and shall provide for such
increases when deemed appropriate. Employee shall in addition be
eligible to participate in the annual management incentive bonus
program, as approved by the Board of Directors. In the event of
termination of this Agreement by CNS without Good Cause, as defined in
paragraph 7 herein, the Board may, in good faith and in its sole
discretion, determine and cause to be paid a partial bonus based on
Employee's performance through the date of termination, and such
determination shall be final and binding.
5. Benefits. Employee shall be entitled to Paid Time Off consistent with
CNS policy and such insurance, 401(k) program and other benefits
available to all salaried employees of CNS, subject to any limitations
on such benefits to officers, directors or highly paid employees in
order that such benefit programs qualify under federal or state law for
favored tax or other treatment. Such benefit programs may be changed
from time to time by the Board. Employee shall also be entitled to
reimbursement of his reasonable and necessary expenses incurred in
connection with the performance of his duties hereunder.
6. Termination by Employee. Employee may resign his employment with CNS
effective upon 30 days' advance written notice to the President. If
Employee resigns under this paragraph, the President retains the right
to terminate his employment, effective upon written notice to Employee,
at any time during the 30-day notice period, provided, however, that
base salary and the employer portion of his health insurance premiums
will continue to be paid by CNS for the duration of the 30-day notice
period. In connection
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with his termination, Employee will receive any accrued unused Paid
Time Off to which he is entitled.
7. Termination by CNS. CNS shall have the right to terminate Employee's
employment in any of the following ways:
a. CNS may, by written notice to Employee, terminate his
employment without Good Cause, in which event Employee will be
paid his base salary up to the date of termination. Employee
is also entitled to receive Salary Continuation for one year
from his termination date. "Salary Continuation" shall mean
payment by CNS of the Employee's base salary as of his
termination date, payable to Employee on the same schedule and
in the same amount as the payment of base salary prior to
termination of his employment, until such time as the full
Salary Continuation obligation shall be discharged, as
provided in this paragraph 7. During the period when Salary
Continuation is payable to Employee, CNS will also continue to
provide to Employee all group medical, dental and life plan
benefits provided to its other senior executives. Employee
shall also receive any accrued unused Paid Time Off to which
he is entitled. Receipt of Salary Continuation is subject to
Employee's compliance with his obligations under paragraphs 9,
10, 11 and 12 of this Agreement and his execution of a
standard release agreement which includes, in addition to
release of claims against CNS and related releasees, an
obligation not to speak negatively about or harm CNS,
confidentiality with respect to the termination process, and
cooperation with the transition of responsibilities. Payment
of the employer portion of Employee's group medical, dental
and life plan premiums under this paragraph and under
paragraphs 6 and 8 herein shall cease as of the date on which
Employee is covered under other such group plans if such
coverage occurs prior to termination of any salary
continuation periods set forth in said paragraphs.
b. CNS, by written notice to Employee, may terminate his
employment for Good Cause, as defined below. In the event of
termination under this subparagraph 7.b., Employee shall be
paid his base salary up to the date of termination. "Good
Cause" for the purpose of this Agreement shall mean one or
more of the following: (i) willful and premeditated failure or
refusal of Employee to render services to CNS in accordance
with his obligations under paragraph 3; (ii) the commission by
Employee of an act of fraud or embezzlement against CNS; (iii)
the commission by Employee of any other willful or reckless
act which injures CNS in a substantial or material way (it
being understood that mere negligence in performance of duties
is not Good Cause under this Agreement); (iv) the breach by
Employee of any provision of this Agreement; or (v) the
commission of a substantial act of moral turpitude by Employee
which is deemed by CNS's Board to have a material adverse
effect on CNS; or (vi) unsatisfactory performance after
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specific notice of performance deficiencies, description of
expectations and opportunity to cure.
c. CNS, by written notice to Employee, may terminate Employee's
employment under this Agreement if he becomes physically or
mentally disabled during the term so that he has not been able
to substantially perform, for a period of 120 consecutive
days, with reasonable accommodation, the usual duties assigned
to him hereunder ("Disability"). Upon such determination, CNS
shall pay to Employee his base salary up to the date of such
termination to the extent not covered by any disability plan.
d. This Agreement shall terminate upon the Employee's death
during its term, except that CNS shall pay to the legal
representative of Employee's estate all base salary due him up
to the date of his death.
8. Termination Following a Change in Control.
DEFINITION.
a. For purposes of this Agreement, "Change in Control" shall mean
the occurrence of one of the following events:
i. ACQUISITION OF 25% OF STOCK IN CNS
any "person" [as such term is used in Section 13(d)
and 4(d) of the Securities Exchange Act of 1934, as
amended ("Exchange Act")], other than a trustee or
other fiduciary holding securities under an employee
benefit plan of CNS is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly of securities
representing 25% or more of the combined voting power
of CNS's then outstanding securities;
ii. CHANGE IN 50% OF BOARD DIRECTORS WHO WERE NOT
APPROVED BY BOARD
during any period of two consecutive years (not
including any period ending prior to the effective
date of this Agreement), individuals who at the
beginning of such period constitute the Board of
Directors of CNS, and any new director [other than a
director designated by a person who has entered into
agreement with CNS to effect a transaction permitted
by Section 6(a)(I), (iii) or (iv)] whose election by
the Board of Directors of CNS or nomination for
election by CNS's stockholders was approved by vote
of at least two-thirds of the directors then still in
office who either were directors at the beginning of
the period or whose election or nomination for
election was previously so approved ("Continuing
Directors"), cease for any reason to constitute at
least a majority of the
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Board of Directors of CNS;
iii. MERGER OR CONSOLIDATION WHERE CNS SHAREHOLDERS OWN
LESS THAN 50% OF SURVIVING COMPANY'S STOCK
the stockholders of CNS approve a merger or
consolidation of CNS with any other corporation,
other than (A) a merger or consolidation which would
result in the voting securities of CNS outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the merged or
consolidated entity) 50% or more of the combined
voting power of the voting securities of CNS or such
merged or consolidated entity outstanding immediately
after such merger or consolidation, or (B) a merger
or consolidation effected to implement a
recapitalization of CNS or similar transaction in
which no "person" acquires more than 25% of the
combined voting power of CNS's then outstanding
securities;
iv. SALE OF CNS ASSETS FOR VALUE TOTALING 50% OR MORE OF
CNS STOCK MARKET VALUE
the stockholders of CNS approve a plan of complete
liquidation or a sale or disposition by CNS of all or
substantially all of CNS's assets. "The sale or
disposition by CNS of all or substantially all of
CNS's assets" shall mean a sale or other disposition
transaction or series of related transactions
involving assets of CNS or of any direct or indirect
subsidiary of CNS (including the stock of any direct
or indirect subsidiary of CNS) in which the value of
the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid
therefor or by such other method as the Board of
Directors of CNS determines is appropriate in a case
where there is no readily ascertainable purchase
price) constitutes more than 50% of the fair market
value of CNS. For purposes of the preceding sentence,
the "fair market value of CNS" shall be the aggregate
market value of CNS's outstanding common stock (on a
fully diluted basis) plus the aggregate market value
of CNS's other outstanding equity securities. The
aggregate market value of CNS's common stock shall be
determined by multiplying the number of shares of CNS
common stock (on a fully diluted basis) outstanding
on the date of the execution and delivery of a
definitive agreement ("Transaction Date") with
respect to the sale or disposition by CNS of all or
substantially all of CNS's assets by the average
closing price for CNS's common stock for the ten
trading days immediately preceding the Transaction
Date. The aggregate market value of any other equity
securities of CNS shall be determined in a manner
similar to that prescribed in the immediately
preceding sentence for determining the aggregate
market value of CNS's common stock or by such other
method as the Board of Directors of CNS shall
determine is
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appropriate; and Employee agrees that, subject to the
terms and conditions of this Agreement, in the event
of a Change in Control of CNS occurring after the
date hereof, Employee will remain in the employ of
CNS for a period of 30 days from the occurrence of
such Change in Control.
b. Applicability. In the event of a Change in Control, the terms
of this subparagraph 8.b shall be effective for a period of 24
months following the Change in Control. At the expiration of
such 24 month period this Agreement in its entirety shall be
terminated and be of no further effect. Employee shall be
entitled to receive the benefits set forth in subparagraph 8.f
if, within 24 months of such Change in Control, his employment
is terminated by CNS or its successor without Good Cause (as
defined in paragraph 7.a above), or by Employee for Good
Reason (as defined in subparagraph 8.b.i, below). Employee
shall, in return for the benefits provided under subparagraph
8.f., sign a standard release agreement with CNS, in which he
agrees to release any and all claims and causes of action
which he might have against CNS and in which he affirms and
acknowledges his obligations under paragraphs 9, 10, 11 and 12
of this Agreement.
i. Termination for Good Reason shall be effective
immediately upon written notice from the Employee to
the President. Good Reason shall exist if CNS has
materially breached any of the terms of this
Agreement; Employee is assigned duties which are
materially inconsistent with his position, duties,
responsibilities and status as President & COO; his
compensation, including any incentive compensation or
bonus plan, is reduced; or relocation of CNS would
require him to relocate his principal residence
outside reasonable commuting distance of the Twin
Cities Metropolitan area.
ii. Termination without Good Cause shall be effective
upon 30 days' advance notice by CNS to the Employee.
For purposes of this paragraph 8, Good Cause shall be
defined as in subparagraph 7.b.
c. Notice of Termination. Any purported termination of employment
under this paragraph 8 and also under paragraphs 6 and 7 shall
be communicated by written Notice of Termination to the other
party hereto in accordance with paragraph 20 hereunder. For
purposes of this Agreement, a "Notice of Termination" shall
mean a notice which indicates the specific termination
provision in this Agreement relied upon and which sets forth
the facts and circumstances claimed to provide a basis for
termination of Employee's employment.
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d. Date of Termination. For purposes of this paragraph 8 and also
paragraphs 6 and 7 of this Agreement, "Date of Termination"
shall mean:
i. if Employee's employment is terminated for
Disability, as defined in paragraph 7.c. hereunder,
30 days after Notice of Termination is given
(provided that Employee shall not have returned to
the full-time performance of Employee's duties during
such 30 day period); and
ii. if Employee's employment is terminated pursuant to a
provision contained in paragraph 6, 7 or 8 herein or
for any other reason (other than Disability), the
date specified in the Notice of Termination,
consistent with the provisions in said paragraphs.
e. Dispute of Termination. If, within ten days after any Notice
of Termination is given under this paragraph 8, the party
receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties,
or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or the time
for appeal therefrom having expired and no appeal having been
perfected); provided, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given
in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, CNS shall
continue to pay Employee full compensation in effect when the
notice giving rise to the dispute was given (including, but
not limited to, base salary) and continue Employee as a
participant in all compensation, benefit and insurance plans
in which Employee was participating when the notice giving
rise to the dispute was given, to the extent permissible under
the terms of the applicable group plans and state and federal
law, until the dispute is finally resolved in accordance with
this subparagraph. Amounts paid under this subsection are in
addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts under
this Agreement.
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f. Compensation Upon Termination. Following a Change in Control,
as defined in subparagraph 8.a. above, to the extent provided
in subparagraph 8.b. above, Employee shall be entitled to the
following benefits in lieu of any benefits which would
otherwise be available to him upon termination under
paragraphs 6 or 7 hereunder:
i. CNS shall pay Employee through the Date of
Termination Employee's base salary at the rate in
effect at the time the Notice of Termination is given
and any other form or type of other compensation
otherwise payable for such period, including any
applicable incentive bonus, commensurate with his
performance and the performance of CNS.
ii. In lieu of any further salary payments for periods
subsequent to the Date of Termination, CNS shall pay
a severance payment (the "Severance Payment") equal
to 24 months of Employee's Compensation as defined
below based on the average monthly Compensation paid
to Employee during the 24 month period ending
immediately prior to the Date of Termination (without
giving effect to any reduction in such Compensation
which would constitute a breach of this Agreement).
If the Employee has not been employed by CNS for 24
months as of the Date of Termination, average monthly
Compensation shall be the Employee's average monthly
Compensation for the number of months during which
the Employee has been employed at CNS. For purposes
of this subparagraph, Compensation shall mean and
include every type and form of compensation paid to
Employee by CNS (or any corporation ("Affiliate")
affiliated with CNS within the meaning of Section
1504 of the Internal Revenue Code of 1986, as may be
amended from time to time (the "Code")) and included
in Employee's gross income for federal income tax
purposes, but excluding compensation income arising
from (1) hiring bonuses and (2) compensation income
recognized as a result of the exercise of stock
options or sale of the stock so acquired. All of
Employee's contributions to any qualified plan
pursuant to Section 401(k) of the Code or any
flexible benefit plan pursuant to Section 125 of the
Code shall be deemed to be included in gross income
for federal tax purposes for purposes of this
subparagraph. The Severance Payment shall be made in
a single lump sum within 60 days after the Date of
Termination.
iii. For 18 months following the Employee's Date of
Termination, CNS shall arrange to provide, at its
sole expense, Employee with group medical, dental and
life plan benefits substantially similar to those
which Employee was receiving or entitled to receive
immediately prior to the Notice of Termination. The
cost of providing such benefits shall be in addition
to (and shall not reduce) the Severance Payment.
Benefits otherwise
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receivable by Employee pursuant to this paragraph
(iii) shall be reduced to the extent comparable
benefits are actually received by Employee during
such period from any third party, and any such
benefits actually received by Employee shall be
reported to CNS.
iv. CNS shall also pay to Employee all legal fees and
expenses incurred by Employee as a result of such
termination (including all such fees and expenses, if
any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any
right or benefit provided by this paragraph).
v. The Severance Payment shall be reduced and offset by
the amount of any other payment received or to be
received by Employee in connection with his
termination of employment pursuant to any policies of
CNS.
vi. If a determination is made by legislation,
regulations, rulings directed to CNS or Employee, or
court decision that the aggregate amount of any
payment made to Employee hereunder, or pursuant to
any plan, program or policy of CNS in connection
with, on account of, or as a result of, a Change of
Control constitutes an "excess parachute payment" as
defined in Section 280G of the Code subject to the
excise tax provisions of Section 4999 of the Code, or
any successor sections thereof, Employee shall be
entitled to receive from CNS, in addition to any
other amounts payable hereunder, an amount which
shall be equal to such excise tax, plus, on a net
after-tax basis, an amount equal to the aggregate
amount of any interest, penalties, fines or additions
to any tax, including income tax, which are imposed
in connection with the imposition of such excise tax.
Such amount shall be payable to Employee as soon as
may be practicable after such final determination is
made. Employee and CNS shall mutually and reasonably
determine whether or not such determination has
occurred or whether any appeal to such determination
should be made.
vii. Employee shall be entitled to receive all benefits
payable to Employee under the CNS, Inc. Profit
Sharing Plan and Trust or any successor of such Plan
and Trust and any other plan or agreement relating to
retirement benefits, and, in addition, if Employee is
not fully vested in his account balance under such
Plan, a single lump sum payment in cash from CNS
representing the nonvested portion of his account,
which shall be in addition to, and not reduced by,
any other amounts payable to Employee under this
paragraph 8.
viii. Employee shall not be required to mitigate the amount
of any payment provided for in this paragraph 8 by
seeking other employment or
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otherwise, nor shall the amount of any payment or
benefit provided for in this paragraph 8 be reduced
by any compensation earned by Employee as the result
of employment by another employer or by retirement
benefits after the Date of Termination, or otherwise
except as specifically provided in this paragraph 8.
ix. In order to assure the performance of CNS or its
successor of its obligations under this paragraph,
CNS may deposit in trust an amount equal to the
maximum payment that will be due Employee under the
terms hereof. Under a written trust instrument, the
Trustee shall be instructed to pay to Employee (or
Employee's legal representative, as the case may be)
the amount to which Employee shall be entitled under
the terms hereof, and the balance, if any, of the
trust not so paid or reserved for payment shall be
repaid to CNS. If CNS deposits funds in trust,
payment shall be made no later than the occurrence of
a Change in Control. If and to the extent there are
not amounts in trust sufficient to pay Employee under
this Agreement, CNS shall remain liable for any and
all payments due to Employee. In accordance with the
terms of such trust, at all times during the term of
this Agreement, Employee shall have no rights, other
than as an unsecured general creditor of CNS, to any
amounts held in trust and all trust assets shall be
general assets of CNS and subject to the claims of
creditors of CNS. Failure of CNS to establish or
fully fund such trust shall not be deemed a
revocation or termination of this Agreement by CNS.
x. As a condition of receiving the Severance Payment and
other benefits provided in this subparagraph 8.f and
in subparagraph 8.g, Employee shall be required to
sign a standard release agreement with CNS in which
he agrees to release any and all claims and causes of
action which he might have against CNS and in which
he affirms and acknowledges his obligations under
paragraphs 9, 10, 11 and 12 of this Agreement.
g. Stock Options. Employee shall, immediately upon a Change in
Control, vest in all stock options which have been granted to
him and he shall be entitled to exercise all rights and to
receive all benefits accruing to him under any and all CNS
stock purchase and stock option plans or programs, including
the CNS, Inc. 1994 Amended Stock Plan, or any successor to any
such plan or program, which shall be in addition to and not
reduced by any other amounts payable to Employee under this
paragraph 8.
9. Confidential Information. All knowledge and information not already
available to the public which Employee may acquire or has acquired with
respect to product development, improvements, modifications,
discoveries, designs, methods, systems, computer software, programs,
codes and documentation, research, designs, formulas, instructions,
methods,
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inventions, trade secrets, services or other private or confidential
matters of CNS (such as those concerning sales, costs, profits,
organizations, customer lists, pricing methods, etc.), or of any third
party which CNS is obligated to keep confidential, shall be regarded by
Employee as strictly confidential and shall not be used by Employee
directly or indirectly or disclosed to any persons, corporations or
firms. All of the foregoing knowledge and information are collectively
termed "Confidential Information" herein. Employee's obligations under
this paragraph will not apply to any information which (a) is or
becomes known to the general public under circumstances involving no
breach by Employee of the terms of this paragraph, (b) is generally
disclosed to third parties by CNS as a continuing practice without
restriction on such third parties, (c) is approved for release by
written authorization of CNS's Board, or (d) Employee is obligated by
law to disclose.
10. Disclosure and Transfer of Product Developments, etc.
a. Employee will make full and prompt disclosure to CNS or all
product developments, improvements, modifications,
discoveries, computer software, programs, codes and
documentation, research, designs, formulas, configurations,
instructions, methods and inventions (all of which are
collectively termed "Developments" herein), whether patentable
or not, made, discovered, conceived or first reduced to
practice by Employee or under his direction during his
employment, alone or with others, whether or not made or
conceived during normal working hours or on the premises of
CNS which relate in any material way to the business or to
research or development work of CNS. Employee confirms by his
acceptance of this Agreement that CNS owns and shall own all
of the Developments.
b. Employee also agrees on behalf of himself and his heirs and
legal representatives that he will promptly communicate,
disclose and transfer to CNS, free of encumbrances and
restrictions, all of his right, title and interest in the
Developments covered by subparagraph 10.a. and any patents or
patent applications covering such Developments and to execute
and deliver such assignments, patents and applications, and
any other documents as CNS may direct, and to cooperate fully
with CNS to enable it to secure any patents or otherwise
protect such Developments in any and all countries. Employee
shall assign to CNS any and all copyrights and reproduction
rights to all material prepared by Employee in connection with
his employment.
c. Notwithstanding subparagraphs 10.a. and b., however, this
paragraph 10 shall not apply to Developments for which no
equipment, supplies, facility or trade secret information of
CNS was used and which was developed entirely on the
Employee's own time, and (1) which do not relate (a) directly
to the business of CNS or (b) to CNS's actual or demonstrably
anticipated research or development, or (2) which does not
result from any work performed by Employee for CNS.
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This will confirm that Employee's obligations to CNS under paragraphs
9, 10 and 11 will continue after the termination of Employee's
employment.
11. Non-Competition. During the term of Employee's employment by CNS and
for twelve (12) months thereafter, Employee shall not directly or
indirectly engage in, enter into or participate in the business of CNS
or in any business or commercial activity which does or is reasonably
likely to compete with or adversely affect the Business or products of
CNS, either as an individual for Employee's own account, as a partner
or a joint venturer, or as an officer, director, consultant or holder
of more than five percent (5%) of the entity interest in, any other
person, firm, partnership or corporation, or an employee, agent or
salesman for any person. In addition, during such period Employee shall
not: avail himself of any advantages or acquaintances he has made with
any person who has, within the twelve (12) month period ended on the
date of termination of his employment, been a customer of CNS or its
affiliates, and which would, directly or indirectly, materially divert
business from or materially and adversely affect the Business of CNS;
interfere with the contractual relations between CNS and any of its
employees; or employ or cause to be employed in any capacity or retain
or cause to be retained as a consultant any person who was employed in
any capacity by CNS during the twelve (12) month period ended on the
date of termination of Employee's employment.
For purposes of this Agreement, the "Business of CNS" or "Business"
means and includes the business of the manufacture, production, sale,
marketing and distribution of the Breathe Right strip and any other
products currently offered or currently under development by CNS or
offered or currently under development by CNS during one (1) year prior
to the date of termination of Employee's employment.
Inasmuch as the activities of CNS are conducted on an international
basis, the restrictions of this paragraph 11 shall apply throughout the
United States, Canada, Japan and Europe.
12. Non-Solicitation. During the term of Employee's employment by CNS and
for twelve (12) months thereafter, Employee shall not directly or
indirectly solicit any current or prospective CNS customer, broker,
vendor or distributor for the purpose of providing products or services
for or on behalf of said customer, broker, vendor or distributor which
are competitive with the products or services being provided by CNS,
which are in the development stages of being competitive with the
products or services being provided by CNS, or which would in any way
cause said customer, broker, vendor or distributor to discontinue or
reduce its business relationship with CNS. Current CNS customers,
brokers, vendors or distributors include those customer, brokers,
vendors or distributors with whom CNS has had a business relationship
at any time within one year immediately preceding Employee's
termination date. Prospective CNS customers, brokers, vendors and
distributors include those with whom (a) a CNS representative has been
in direct personal contact and (b) CNS has a reasonable opportunity of
entering into a business
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relationship within six months following Employee's termination date.
Employee also agrees that during his employment in the one year period
following his employment, he will not directly or indirectly solicit
any CNS employees to terminate his or her employment with CNS. This
Employee non-solicitation obligation applies to Employees of CNS during
Employee's employment and as of his termination date.
13. Remedies. Employee acknowledges that the restrictions set forth in
paragraphs 9, 10,11 and 12 hereof are reasonably necessary to protect
legitimate business interests of CNS. It is understood that if Employee
violates his obligations under any of these paragraphs, CNS would
suffer irreparable harm for which a recovery of money damages would be
an incomplete and inadequate remedy. It is therefore agreed that CNS,
in addition to any remedies at law, shall be entitled, as a matter of
right, in any court of competent jurisdiction, to a mandatory
injunction restraining Employee pending litigation, as well as upon
final determination thereof, from violating this Agreement. In
addition, CNS will discontinue payment to Employee of any Severance or
Salary Continuation Payments, benefits or bonus which he may be
entitled to receive or is receiving under paragraphs 6, 7 or 8
hereunder or otherwise, in the event of his violation of any of his
obligations under this Agreement. In the event of cessation of payments
and benefits, Employee's release of his claims against CNS shall remain
valid and fully enforceable in consideration of the benefits which
Employee received prior to set breach.
14. Severability. The parties intend that the covenants and agreements
contained herein shall be deemed to be a series of separate covenants
and agreements, one for each and every state of the United States and
political subdivision outside the United States where the business
described is conducted. If, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants deemed included in such
action, then such unenforceable covenants shall be deemed eliminated
from the provisions of this Agreement for the purpose of such
proceeding to the extent necessary to permit the remaining covenants to
be enforced in such proceeding. Further, in the event that any
provision is held to be overbroad as written, such provision shall be
deemed amended to narrow its application to the extent necessary to
make the provision enforceable according to applicable law and enforced
as amended.
15. Binding Effect.
Executive Employment Agreement
Page 14
a. CNS will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets as defined in
subparagraph 8.a of CNS to expressly assume and agree to
perform this Agreement in the same manner and to the same
extent that CNS would be required to perform it if no such
succession had taken place, in which case, the term "CNS" as
used in this Agreement shall instead refer to CNS' successor.
Failure of CNS to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Employee to compensation
from CNS in the same amount and on the same terms as he would
be entitled hereunder if he terminated his employment for Good
Reason following a Change in Control, except that for purposes
of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of
Termination.
b. This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives,
successors, heirs, and designated beneficiaries. If Employee
should die while any amount would still be payable to Employee
hereunder if Employee had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Employee's designated
beneficiaries, or, if there is no such designated beneficiary,
to Employee's estate.
16. Entire Agreement. From and after the date of this Agreement the terms
and provisions of this Agreement constitute the entire agreement
between the parties and this Agreement supersedes any previous oral or
written communications, representations, or agreements with respect to
any subject, including the subject matter of compensation, bonus,
participation and profit sharing and termination compensation.
17. Waiver and Interpretation. The waiver by either party of a breach of
any provision of this Agreement by the other party shall not operate or
be construed as a waiver of any subsequent breach by the breaching
party. No waiver shall be valid unless in writing and signed by the
party providing such waiver. If any provision of this Agreement is held
by any court to be unenforceable, then such provision shall be deemed
to be eliminated from the Agreement to permit enforceability of the
remaining provisions. If any provision is held to be overbroad, such
provision shall be amended to narrow its application to the extent
necessary for enforceability. For purposes of the release agreement
which Employee shall be required to execute as a condition of receiving
any payments and benefits hereunder, "CNS", as referred to in this
Agreement, shall include CNS and all its affiliates, shareholders,
officers, directors, employees, agents, attorneys, insurers and
indemnitors.
Executive Employment Agreement
Page 15
18. Applicable Law. All questions pertaining to the validity, construction,
execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the State of Minnesota. The
parties consent to the personal jurisdiction of the State of Minnesota,
waive any argument that such a forum is not convenient, and agree that
any litigation relating to this Agreement shall be venued in
Minneapolis, Minnesota.
19. Tax Withholding. CNS may withhold from any payment of benefits under
this Agreement (and forward to the appropriate taxing authority) any
taxes required to be withheld under applicable law.
20. Notice. Any notice required or desired to be given under this Agreement
shall be deemed given if in writing sent by certified mail to his
residence in the case of Employee, or to its principal office in the
case of CNS.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first set forth above.
CNS, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Its Chairman & CEO
-------------------------------------
EMPLOYEE
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
15
EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT A
NAME: ▇▇▇▇▇ ▇▇▇▇▇▇▇
DATE: February 12, 1999
POSITION: President & COO
DEPARTMENT: Corporate Administration
BASE SALARY: $245,000
CAR ALLOWANCE: (INCLUDE ONLY IF APPLICABLE) $500.00/month
MANAGEMENT INCENTIVE PLAN LEVEL: 25 at Threshold
50 at Plan
100 at Maximum
