Employment Agreement
Exhibit 10.61
cardiac science corporation
Xxxxx Xxxxxx
Vice President, Marketing
Dated
as of 9-20-2006
0000 Xxxxx Xxxxx Xxxxxxx, Xxxxxxx, XX 00000-0000
Phone: 000.000.0000 xxx.xxxxxxxxxxxxxx.xxx
Phone: 000.000.0000 xxx.xxxxxxxxxxxxxx.xxx
This
Employment Agreement (this “Agreement”), dated as of Sept 20, 2006, is between
Cardiac Science Corporation, a Delaware corporation (“the Company”), and Xxxxx Xxxxxx, Vice
President, Marketing (“Executive”);
WITNESSETH:
WHEREAS, the Company desires to continue to retain the services of Executive upon the
terms and conditions set forth herein; and
WHEREAS, Executive is willing to continue to provide services to the Company upon the
terms and conditions set forth herein.
AGREEMENTS:
NOW, THEREFORE, for and in consideration of the foregoing premises and for other good and
valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Company
and Executive hereby agree to enter into an employment relationship in accordance with the terms
and conditions set forth below.
| 1. | EMPLOYMENT |
The Company will continue to employ Executive and Executive will continue to accept employment
by the Company as its Vice President, Marketing, and continue to report to the Chief Executive
Officer. Changes may be made from time to time by Employer in its sole discretion to the duties,
reporting relationships and title of Executive. Executive will perform the duties of Vice
President, Marketing and will devote full time and attention to achieving the purposes and
discharging of responsibilies afforded the position, and such other duties as may be assigned from
time to time by the Chief Executive Officer, which relate to the business of the Company and are
reasonably consistent with Executive’s position.
During Executive’s employment, the Executive will not engage in any other business activity which,
in reasonable judgment of the Chief Executive Officer, conflicts with the duties of the Executive
under this agreement, whether or not such activity is pursued for gain, profit or other advantage.
Executive will comply with the policies, procedures, and applicable laws and regulations that
govern the Company, and will take reasonable steps to ensure that the
operations the Executive manages are in compliance with all applicable policies, procedures,
laws and regulations.
| 2. | COMPENSATION AND BENEFITS |
The Company agrees to pay or cause to be paid to Executive, and Executive agrees to accept in
exchange for the services rendered hereunder by him, the following compensation:
| 2.1 | Annual Salary |
Executive’s compensation shall consist of an annual base salary (the “ Salary”) of two hundred
twenty-five thousand dollars ($225,000), payable bi-weekly and in accordance with the payroll
practices of the company. The Salary shall be reviewed, and shall be subject to change, by the
Board of Directors of the Company (or the Compensation Committee thereof) at least annually while
Executive is employed hereunder.
| 2.2 | Bonus |
Executive shall be eligible to participate in Employer’s annual incentive bonus plan, and in
accordance with executive bonus plans, which shall be adopted and modified from time to time in the
sole discretion of the Board of Directors (or the Compensation Committee of the Board of Directors)
of the Company.
| 2.3 | Benefits |
Executive will be eligible to participate, subject to and in accordance with applicable
eligibility requirements, in such benefit programs as shall be provided from time to time by action
of the Company’s Board of Directors, which shall include, at a minimum, basic health, dental and
vision insurance.
| 2.4 | Vacation and Other Paid Time-Off Benefits |
Executive shall be entitled to four (4) weeks vacation each year, unless years of service
warrant additional vacation under the Company vacation policy as offered all other employees, and
during which time Executive’s base compensation will continue in full. Vacation will be scheduled
by mutual agreement. Executive will be provided such holidays and sick leave as Employer makes
available to its all other employees.
| 3. | TERMINATION |
The employment of Executive pursuant to this Agreement may be terminated as follows:
| 3.1 | Automatic Termination on Death or Total Disability |
This Agreement and Executive’s employment hereunder shall terminate automatically upon the
death or total disability of Executive. The term “total disability” as used herein shall
mean Executive’s inability, with or without reasonable accommodation, provided that no
accommodation that imposes undue hardship on Employer will be required to perform the essential
responsibilities associated with Executive’s position set forth in Section 1 hereof for a period or
periods aggregating ninety (90) days during any period of one hundred eighty days (180) consecutive
days (or such other period as may be required by disability law) in any twelve-month period as a
result of physical or mental illness, loss of legal capacity or any other cause beyond Executive’s
control, unless Executive is granted a leave of absence by the Board of Directors of the Company
(or the Compensation Committee thereof). Executive and the Company hereby acknowledge that
Executive’s ability to perform the duties specified in paragraph 1 hereof is of the essence of this
Agreement. Termination hereunder shall be deemed to be effective (a) at the end of the calendar
month in which Executive’s death occurs or (b) immediately upon a determination by the Board of
Directors of the Company (or the Compensation Committee thereof) of Executive’s total disability,
as defined herein. In the case of termination of employment under this Section 3.1, Executive shall
not be entitled to receive any payments or benefits under this Agreement other than any unpaid
Salary and unused vacation which has accrued as of the date Executive’s employment terminates.
| 3.2 | Other Termination Excluding Change of Control |
Either the Company or Executive may terminate this agreement at any time for any reason, with
or without notice. Except as provided in Section 3.3.1 below, upon such termination, Executive
shall not be entitled to receive any payments or benefits under this Agreement other than any
unpaid Salary for the bi-weekly period up to the date of termination and vacation time which has
accrued as of the date Executive’s employment terminates.
Executive acknowledges and understands that employment with the Company is at-will and can be
terminated by either party for no reason or for any reason not otherwise specifically prohibited by
law or provided for in this Agreement. Nothing in this Agreement is intended to alter Executive’s
at-will employment status or obligate
the Company to continue to employ Executive for any specific period of time, or in any specific
role or geographic location.
| 3.3 | Termination as a Result of Change of Control |
| 3.3.1 | Termination by the Company or Successor Employer |
If (a) during the period commencing on the date the Company enters into a definitive agreement
with respect to a transaction that would constitute a Change of Control (as defined below) and
ending on the date the definitive agreement therefore is terminated or the Change of Control is
consummated, the Company terminates Executive’s employment without cause (as defined below), (b)
during the period commencing upon the consummation of the Change of Control and ending twenty-four
months thereafter, the Company or, if applicable, the surviving or successor employer
(“Successor Employer”) terminates Executive’s employment without Cause (as defined below),
or (c) during the period commencing upon the consummation of the Change of Control and ending
twenty-four (24) months thereafter, Executive resigns for Good Reason (as defined below), then
Executive shall be entitled to receive the following termination payments and benefits:
(1) severance payments equal to six (6) months salary (the higher of
that in effect immediately prior to Change of Control or that in effect
immediately prior to termination), to be paid out over six (6) months in the
course of the Company’s or the Surviving Employer’s regularly scheduled
payroll;
(2) continuation of health, dental and vision insurance, at
substantially equivalent coverage to those in place as of the termination date,
and Life Insurance, including supplemental coverage, if and as allowed under
the policy’s portability clause, for no less than six (6) months, and other
benefits substantially equivalent to those in place as of the termination date, for
six (6) months;
(3) any unpaid salary and accrued, unused vacation as of the date
Executive’s employment terminates;
(4) bonus at the target or budgeted amount for the year in which
termination occurs, based on any bonus plan in place for that year, pro-rated for
through the date of termination; and
(5) accelerated vesting of 100% of Executive’s then unvested options
to purchase shares of the Company’s common stock or the options to purchase
common stock of the Successor Employer issued in substitution therefor in connection with
the Change of Control, any restricted stock units or other similar stock based awards.
The severance payments and benefits described in this paragraph are expressly contingent upon
Executive’s signing upon termination a full release in a form acceptable to Successor Employer, and
are further contingent upon Executive’s full compliance with the terms of the Confidentiality
Agreement (as defined in paragraph 5 below) with the Company.
| 3.3.2 | Termination for Cause |
If, during either of the periods set forth in clauses (a) or (b) of Section 3.3.1, Executive
is terminated by the Company or the Successor Company for Cause, Executive shall not be entitled to
receive any payments or benefits hereunder other than any unpaid Salary and accrued, unused
vacation as of the date Executive’s employment terminates, payable on the next regularly scheduled
payroll following the Executive’s termination date.
| 3.3.3 | Termination by Executive |
If, during either of the periods set forth in clauses (a) or (b) of Section 3.3.1, Executive
voluntarily terminates his employment other than for Good Reason, Executive shall not be entitled
to receive any payments or benefits hereunder other than any unpaid Salary and accrued, unused
vacation as of the date Executive’s employment terminates, payable on the next regularly scheduled
payroll following the Executive’s termination date.
| 3.3.4 | Cause |
Wherever reference is made in this Agreement to termination being with or without Cause,
“Cause” shall be limited to the occurrence of one or more of the following events:
(a) willful misconduct, insubordination, or dishonesty in the
performance of Executive’s duties or other knowing and material violation of
the Company’s or the Successor Employer’s policies and procedures in effect
from time to time which results in a material adverse effect on the Company or
the Successor Employer;
(b) the continued failure of Executive to satisfactorily perform her
duties after receipt of written notice that identifies the areas in which
Executive’s performance is deficient;
(c) willful actions in bad faith (or intentional failures to act in good
faith) by Executive with respect to the Company or the Successor Employer
that materially impair the Company’s or the Successor Employer’s business,
goodwill or reputation;
(d) conviction of a felony or midsdemeanor or failure to contest
prosecution for a felony or misdemeanor; the Employer’s reasonable belief that
Executive engaged in a violation of any statute, rule or regulation governing
the Company, any of which is harmful to the Employer’s business or
reputation; the Employer’s reasonable belief that Employee engage in unethical
practices, dishonesty or disloyalty.
(e) current use by the Executive of illegal substances; or
(f) any material violation by Executive of Executive’s
Confidentiality Agreement.
| 3.3.5 | Good Reason |
For the purposes of this Agreement, “Good Reason” shall mean that Executive,
without his/her consent, has either:
(a) incurred a material reduction in title, status, authority or
responsibility at the Company or the Successor Employer (relative to title,
status, authority or responsibility immediately prior to the Change of Control);
(b) incurred a reduction in Executive’s Annual Salary or bonus
opportunity; or material adverse modifications to the stock option awarded to
Executive, or the Stock Plan (or any similar stock option plan);
(c) suffered a material breach of this Agreement by the Company or
the Successor Employer; or
(d) been required to relocate or travel more than 50 miles from
his/her then current place of employment in order to continue to perform the
duties and responsibilities of his/her position (not including customary travel as
may be required by the nature of his/her position).
Employer, or Successor Employer, shall have thirty (30) days to cure any such alleged breach,
assignment, reduction or requirement under subsections (a), (b), (c) and (d) above, after Executive
provides Employer written notice of the actions or omissions constituting such breach, assignment,
reduction or requirement.
| 3.3.6 | Change of Control |
For purposes of this Agreement, “Change of Control” means:
(a) a merger or consolidation of the Company with or into any other
company, entity or person or
(b) a sale, lease, exchange or other transfer in one transaction or a
series of transactions undertaken with a common purpose of all or substantially
all of the Company’s then outstanding securities or all or substantially all of the
Company’s assets; provided, however, that a Change of Control shall not
include a Related Party Transaction. A Change of Control shall also include (i)
the purchase of a significant portion of the Company’s common stock without
approval of a majority of the Company’s incumbent directors and (ii) a
successful proxy contest, which is stated in terms of the board becoming
composed of a majority of persons that are not incumbent directors (or
appointed or nominated by incumbent directors).
A “Related Party Transaction” means:
(a) a merger or consolidation of the Company in which the holders of
the outstanding voting securities of the Company outstanding immediately
prior to the merger or consolidation hold at least a majority of the outstanding
voting securities of the surviving or successor entity immediately after the
merger or consolidation,
(b) a sale, lease, exchange or other transfer of the Company’s assets
to a majority-owned subsidiary company,
(c) a transaction undertaken for the principal purpose of restructuring
the capital of the Company, including but not limited to reincorporating the
Company in a different jurisdiction, or
(d) a corporate dissolution or liquidation.
| 3.3.7 | Gross-Up Payment |
(a) Notwithstanding anything in this Agreement to the contrary, in the event that
Executive becomes entitled to receive or receives any payment or benefit under this Agreement or
under any other plan, agreement, or arrangement with the Company, any person whose actions result
in a Change of Control or any person affiliated with the Company or such person (all such payments
and benefits, excluding the Gross-Up Payment, being referred to
herein as the “Total Payments”) and it is determined that any of the Total Payments will be subject
to any excise tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”) or any similar or successor provision (the “Excise Tax”), the Company shall make an
additional lump-sum cash payment to Executive (the “Gross-Up Payment”) in an amount such that the
net amount retained by Executive from the Total Payments, after deduction of (i) the Excise Tax on
the Total Payments, and (ii) any federal, foreign, state or local income or employment tax and
Excise Tax imposed on the Gross-Up Payment, but before deduction for any federal, foreign, state or
local income or employment tax withholding on the Total Payments, shall be equal to the Total
Payments. For purposes of determining the amount of the Gross-Up Payment, the Gross-Up Payment
shall be deemed to be subject to federal income taxes at the highest rate of federal income
taxation applicable to individuals that is in effect for the calendar year in which the Gross-Up
Payment is to be made, and state and local income taxes at the highest rate of taxation applicable
to individuals in the state and locality of Executive’s residence on the date of termination of
Executive’s employment, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes (as determined by assuming that such
deduction is subject to the maximum limitation applicable to itemized deductions under Section 68
of the Code and any other limitations applicable to the deduction of state and local income taxes
under the Code).
(b) All determinations required to be made under this Section 3.3.7, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a reputable
independent public accounting firm or independent tax counsel appointed by the Company (the
“Firm”). All determinations made by the Firm under this Section 3.3.7 shall be conclusive and
binding on both the Company and Executive, and the Firm shall provide its determinations and any
supporting calculations to the Company and Executive within ten (10) business days after
Executive’s employment terminates under any of the circumstances described in Section 3.3.1, or
such earlier time as is requested by the Company. In the event that the Firm determines that a
Gross-Up Payment is required, the Company shall pay such Gross-Up Payment to or for the benefit of
Executive as promptly as practical after the Company’s receipt of the Firm’s determination, but not
later than ten (10) days after such receipt. For purposes of making its determinations under this
Section 3.3.7, the Firm may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Company and Executive shall furnish to the
Firm such information and documents as the Firm may reasonably request in making its
determinations.
The Company shall bear all fees and expenses charged by the Firm in connection
with its services.
(c) As a result of the uncertainty in the application of Section 280G and
Section 4999 of the Code, it is possible that amounts will have been paid or distributed by
the Company to or for the benefit of Executive pursuant to this Agreement (including a
Gross-Up Payment) that should not have been so paid or distributed (an “Overpayment”) or
that the Company will fail to pay or distribute amounts to or for the benefit of Executive
pursuant to this Agreement (including a Gross-Up Payment) that should have been made (an
“Underpayment”). In the event it is established pursuant to a final determination of a
court or an Internal Revenue Service proceeding (a “Final Determination”) that an
Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan
by the Company to Executive, which loan shall be repaid by Executive upon demand together
with interest calculated at the lowest interest rate authorized for such loans under the
Code without a requirement that further interest be imputed. In the event it is established
pursuant to a Final Determination that an Underpayment has occurred, any such Underpayment
promptly shall be paid by the Company to Executive, together with interest calculated at
the lowest interest rate authorized for such loans under the Code without a requirement
that further interest be imputed. The determination of Overpayment or Underpayment, as the
case may be, for purposes of this Section 3.3.7 shall be subject to the confirmation by the
Firm.
| 4. | CONFIDENTIALTY AGREEMENT |
Executive recognizes that Employer’s business and continued success depend upon the use and
protection of confidential information and proprietary information, and therefore Executive is
subject to, and this Employment Agreement is conditioned on agreement to, the terms of the
Non-Disclosure Agreement (the “Confidentiality Agreement”) entered into by Executive and the terms
of the Confidentiality Agreement shall survive the termination of Executive’s employment with the
Company or Successor Employer.
| 5. | ASSIGNMENT |
This Agreement is personal to Executive and shall not be assignable by Executive. The Company
may assign its rights hereunder to (a) any Successor Employer; (b) any other corporation resulting
from any merger, consolidation or other reorganization to which the Company is a party or (c) any
other corporation, partnership, association or other person to which the Company may transfer all
or
substantially all of the assets and business of the Company existing at such time. All of the terms
and provisions of this Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted assigns.
| 6. | ARBITRATION |
Any controversies or claims arising out of or relating to this Agreement shall be fully and
finally settled by arbitration in accordance with the Employment Arbitration Rules of the American
Arbitration Association then in effect (the “AAA Rules”), conducted by one arbitrator
either mutually agreed upon by the Company and Executive or chosen in accordance with the AAA
Rules, except that the parties thereto shall have any right to discovery as would be permitted by
the Federal Rules of Civil Procedure for a period of 90 days following the commencement of such
arbitration and the arbitrator thereof shall resolve any dispute which arises in connection with
such discovery. The prevailing party shall be entitled to costs, expenses and reasonable attorneys’
fees, and judgment upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. It is further agreed by the parties that the venue for any arbitration
proceedings shall be within the state of Washington.
| 7. | AMENDMENTS IN WRITING |
No amendment, modification, waiver, termination or discharge of any provision of this
Agreement, nor consent to any departure therefrom by either party hereto, shall in any event be
effective unless the same shall be in writing, specifically identifying this Agreement and the
provision intended to be amended, modified, waived, terminated or discharged and signed by the
Company and Executive, and each such amendment, modification, waiver, termination or discharge
shall be effective only in the specific instance and for the specific purpose for which given. No
provision of this Agreement shall be varied, contradicted or explained by any oral agreement,
course of dealing or performance or any other matter not set forth in an agreement in writing and
signed by the Company and Executive.
| 8. | APPLICABLE LAW |
This Agreement shall in all respects, including all matters of construction, validity and
performance, be governed by, and construed and enforced in accordance with, the laws of the State
of Washington, without regard to any rules governing conflicts of laws.
| 9. | ENTIRE AGREEMENT |
This Agreement, on and as of the date hereof, constitutes the entire agreement between the
Company and Executive with respect to the subject matter hereof and all prior or contemporaneous
oral or written communications, understandings or agreements between the Company and Executive with
respect to such subject matter are hereby superseded.
| 10. | SEVERABILITY |
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law and in compliance with the requirements of Section 409A
of the Code (“Section 409A”), but if any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision of this Agreement
or any action in any other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been
contained herein. Moreover, upon a determination by either party that any provision of this
Agreement may subject Executive to additional tax under Section 409A, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible to the end that the transactions contemplated hereby are fulfilled to the
fullest extent possible and such transactions either do not constitute nonqualified deferred
compensation subject to the requirements of Section 409A or satisfy such requirements in all
material respects.
IN WITNESS WHEREOF, the parties have executed and entered into this Agreement on the
date set forth above.
| EXECUTIVE: |
||||
| /s/ Xxxxx Xxxxxx | ||||
| CARDIAC SCIENCE CORPORATION |
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| By | /s/ Xxxxxxx Xxxxxxx | |||
| Its Chief Financial Officer | ||||
