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EXHIBIT 10.3
AMENDMENT NO. 1 TO
SERVICE AGREEMENT
CardioDynamics International Corporation (the "Company") and Rivertek
Medical Systems, Inc. ("Rivertek") entered into a Service Agreement dated as of
July 1, 1995 (the "Agreement"). This Amendment No. 1 (dated July 25, 1997)
amends the Agreement. Xxxxxx X. Xxxx ("Xxxx") is also a party to this Amendment
No. 1. Capitalized terms not otherwise defined herein shall have the meanings
given in the Agreement.
1. As part of the Services, Rivertek shall make Xxxx available to
provide an unusual quantity of on-site hours through February 1, 1998
(extendable upon agreement of all parties) to accomplish critical Engineering
and Product Development objectives. Xxxx shall spend about every third week at
the Company, from noon Monday to 1:30 p.m. Friday, with occasional stayovers
and modified week selections as required. Including travel (and also including
executive committee and engineering staff meetings), Xxxx shall spend at least
80 hours per month on Company activities.
2. Xxxx shall be a Company officer with the title of Chief
Technology Officer and with the powers and duties of such officer position. The
Company shall provide coverage for Xxxx under its directors and officers
liability insurance policy. The Company shall indemnify Xxxx against claims as
it would any other Company officer.
3. Xxxx shall provide all services as a Rivertek Employee, and
shall for all purposes not be, and shall not be treated as being, a Company
employee. He shall receive no Company fringe benefits. Payments with respect to
his hours worked shall be to Rivertek (which shall be solely responsible for
cash compensation to Xxxx as its employee, and for all tax withholding on
Rivertek's cash compensation to Xxxx).
4. To avoid conflict of interest, Xxxx shall not be responsible,
within the Company, for awarding work to or approving payment to Rivertek.
These functions shall be handled by the Company's President.
5. The hourly rate payable by the Company to Rivertek for Xxxx'x
time for the duration of the special arrangement contemplated by this Amendment
No. 1 shall be 65% of Rivertek's rate for Xxxx'x time on Rivertek's standard
hourly rate list. Although the rate list may be changed quarterly, in no event
will Xxxx'x full list rate exceed the average rate Rivertek then actually
charges other Rivertek clients for Xxxx'x time. For convenience, Rivertek's
current rate list is attached hereto. Xxxx'x travel time is billable to the
Company unless he works for other Rivertek clients while traveling.
6. To further incentivize Xxxx, the Company shall on July 30, 1997
xxxxx Xxxx a nonqualified stock option under the Company's 1995 Stock
Option/Stock Issuance Plan to purchase 150,000 shares of Company Common Stock
at an exercise
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price equal to that day's fair market value of the Company Common Stock. As to
the following number of shares, the option shall not become exercisable unless
and until, during Xxxx'x service as Chief Technology Officer, the following
occur:
8,000 shares Written approval before September 1, 1997 per QSR-107
of the Design Input Deliverables for the Compass Project
8,000 shares Written approval before November 15, 1997 per QSR-107
of the Design Output Deliverables for the Rev. C Board
Project
8,000 shares Written approval before February 1, 1998 per QSR-107
of the Design Output Deliverables for the Compass
Project
8,000 shares Written approval before February 15, 1998 per QSR-107
of the Design Verification Deliverables for the Compass
Project
15,000 shares 510(k) submission for a Compass device before December
15, 1997
20,000 shares FDA 510(k) clearance of a Compass device before March
30, 1998
4,000 shares Submission of CE Xxxx approval materials for a Compass
device to Company's Notified Body before April 30, 1998
4,000 shares Grant of the CE Xxxx for a Compass device before June
1, 1998
75,000 shares Upon completion of each 100-hour block of service,
7,500 shares become exercisable at the end of the
Company fiscal quarter in which the block is completed
After the option become exercisable for the applicable shares, it remains
exercisable throughout the option's 10-year term notwithstanding any ending of
Rivertek's or Xxxx'x service to the Company. Xxxx acknowledges not all the
shares may become exercisable before February 1, 1998; nonetheless he has no
right to remain in his role with the Company after (or, for that matter,
before) February 1, 1998.
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7. Xxxx shall enter into a Company Consulting Services Agreement,
which contains proprietary-information and intellectual-property-assignment
provisions consistent with those applicable to Rivertek in the Agreement.
8. Rivertek's agreement in Section 8.10 of the Agreement shall
expire no sooner than nine months after the end of Xxxx'x tenure as Chief
Technology Officer. Such agreement shall also apply to Xxxx, as if he were
Rivertek, from now until nine months after the end of Xxxx'x tenure as Chief
Technology Officer.
9. The parties agree that Xxxx shall benefit from and be bound by
Article VIII of the Agreement, with respect to this Agreement No. 1. Xxxx'x
address for notice is c/o Rivertek.
10. The Company waives any past noncompliance by Rivertek with
Section 5.04 of the Agreement, provided that within 60 days from today Rivertek
cures such noncompliance as to Persons who are listed on the current rate list
attached hereto and who have provided Services.
11. Except as expressly set forth herein, the Agreement remains
unchanged and in full force and effect.
Dated: July 25, 1997
CARDIODYNAMICS INTERNATIONAL
CORPORATION
By: /s/ XXXXXXX XXXX
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CEO
RIVERTEK MEDICAL SYSTEMS, INC.
By: /s/ X. X. XXXX
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Managing Director
By: /s/ X. X. XXXX
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XXXXXX X. XXXX
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