Employment Agreement - Cardiac Science Inc. and Raymond W. Cohen
CARDIAC SCIENCE, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is dated as of
December 31, 2000 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 be effective through December 31, 2001 (the "Original
Term"). This Agreement shall automatically renew for successive 12-month periods
(each, an "Additional Term") unless terminated by either party. The Original
Term and each Additional Term shall each be referred to as a "Term."
2. Duties.
(a) Position. Employee shall be employed as
President and 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 (the "Board").
(b) Obligations to the Company. Employee agrees
to perform to the best of his ability and experience 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, awards 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 salary of
$21,000 per month, 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, and any
increase will be effective as of the date determined appropriate by the Board.
(b) Bonuses. Employee's entitlement to
incentive bonuses from the Company is discretionary and shall be determined by
the Board in good faith based upon the extent to which Employee's individual
performance objectives and the Company's financial and non-financial objectives
are achieved during the applicable bonus period.
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Notwithstanding the foregoing, Employee's target bonus for the Original Term is
$200,000. Employee shall receive an incentive bonus of $33,333 each for six
performance objectives achieved by the Company during the Original Term, of
which five are as follows:
(a) Signing of a (one or more) strategic partner(s) for
the ADM product;
(b) Attainment of (one or more) analyst research
report(s) with buy recommendations;
(c) Completion of equity financing of at least $35.5
million in Q2 2001;
(d) Completion of Artema and Survivalink acquisitions;
(e) Integration of acquired entities' product lines,
distribution channels and administrative operations;
and
(f) To be determined
(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 $1,500 per month. Employee will receive
six (6) weeks paid vacation, which shall be taken at such times as are
consistent with the needs of the Company. Employee 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.
(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 business expenses, provided that such expenses
are substantiated in accordance with Company policies.
5. Confidential Information
(a) 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"):
(i) 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;
(ii) marketing plans, materials and
techniques; and
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(iii) all know-how, devices,
compilations of information, copyrightable material and technology and technical
information, relating to the business of the Company.
(b) 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.
(c) This Section 5 shall survive termination of
this Agreement.
6. Company Property.
(a) 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.
(b) 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.
(c) This Section 6 shall survive termination of
this Agreement.
7. Termination of Employment and Severance Benefits.
(a) Termination of Employment. Employee's
employment shall terminate immediately upon a Change of Control (as defined
below) or his death, and may be terminated 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 other than as a result of a
"Constructive Termination" (as defined below) ("Voluntary Termination");
(ii) The Company's determination that
it is terminating Employee without Cause (as defined below), 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) Employee's Constructive
Termination (as defined below);
(iv) The Company's reasonable, good
faith determination that it is terminating Employee for Cause ("Termination for
Cause"); or
(v) Employee's 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 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"):
(1) Employee will be entitled
to receive payment of severance benefits equal to Employee's regular
monthly salary for an additional twenty four (24) months following the
date of such Involuntary Termination (the "Severance Period"), such
payment to be made ratably over the Severance Period according to the
Company's standard payroll schedule;
(2) Employee shall receive the
Employee's target bonus for the then current Term;
(3) 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; and
(4) 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 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.
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(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 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 receive the Employee's target bonus for the then current Term.
(v) Change of Control. Notwithstanding
the preceding clauses of this Section 7(b), upon a Change of Control:
(1) Employee will be entitled to
receive payment of severance benefits equal to Employee's regular
monthly salary for a period of twenty four (24) 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;
(2) Employee shall receive the
Employee's target bonus for the then current Term;
(3) 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; and
(4) Any unvested stock options
or shares of restricted stock held by Employee on 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; provided,
however, if the Change of Control constitutes a "Corporate Transaction"
as defined under the Plan, such securities shall vest immediately.
(vi) Noncompete. If Employee, directly or
indirectly, 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), officer, principal, agent, advisor, partner, member, director, or
employee of a business that directly competes with the business conducted by the
Company on the date of Employee's termination of employment, then, effective
upon Employee's commencement of such activities, 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. The term "directly
competes" as set forth in this Section shall be limited to companies that derive
at least 50% of their revenue from the sale of external cardioverter
defibrillators and accessories.
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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 Board
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 of this 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)(1) there is a significant reduction in Employee's duties,
positions or responsibilities causing such position to be of reduced stature or
responsibility or, (2) a reduction in Employee's base compensation or benefits,
or (3) 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
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immediately after such Merger were not members of the Board of Directors of the
Company immediately prior to such Merger.
9. Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) or 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, including the Employment Agreement, dated May 1, 2000, between
the Company and Employee.
(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.
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(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 as of the date first
written above.
CARDIAC SCIENCE, INC.
By:
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Name:
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Title:
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Address: 16931 Millikan Ave.
Irvine, CA 92606
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Raymond W. Cohen
Address:
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