Employment Agreement - Cardiac Science Inc. and Raymond W. Cohen
CARDIAC SCIENCE, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "AGREEMENT") is dated as of May 1, 1998, by
and between RAYMOND W. COHEN ("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 ninety
(90) 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 President & Chief
Executive Officer, and as such will have responsibility for the duties typically
associated with such positions and will report to the Company's 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 $10,000.00
for the month of May 1998, and commencing June 1, 1998 for each month thereafter
shall receive a monthly salary of $15,000. 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 of the Company, and any increase will be effective as of
the date determined appropriate by the Board, its Compensation Committee.
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(b) BONUSES. Employee's entitlement to incentive bonuses from the
Company is discretionary and shall be determined by the Board, its Compensation
Committee or the Chief Executive Officer of the Company in good faith based upon
the extent to which Employee's individual performance objectives and the
Company's profitability objectives and other financial and non-financial
objectives are achieved during the applicable bonus period. In the event of
Employee's Involuntary Termination (as defined below), death or Disability (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 an automobile allowance of
$500 per month. Employee will receive four (4) weeks paid vacation, which shall
be taken at such times as are consistent with the needs of the Company 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.
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) marketing 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.
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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");
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(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
12 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
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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.
(vi) 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 twelve (12) 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.
(v) 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 competeing
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
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(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 90 consecutive
calendar days or 120 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
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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]
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The parties have executed this Agreement the date first written above.
CARDIAC SCIENCE INC.
By:
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Title:
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Address: 1176 Main Street
Building "C"
Irvine, CA 92614
Fax: (714) 587-0357
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Raymond W. Cohen
Address: 1026 Timberline Lane
Santa Ana, CA 92705
Fax: (714) 568-1771