Amended And Restated Employment Agreement
Exhibit
10.9
Amended And Restated Employment
Agreement
Agreement
CARDIAC SCIENCE CORPORATION
Xxxxxx Xxxxxxxx
Vice President, Operations
Dated
as of September 20, 2006
0000 Xxxxx Xxxxx Xxxxxxx, Xxxxxxx, XX 00000-0000
Phone: 000.000.0000 xxx.xxxxxxxxxxxxxx.xxx
Phone: 000.000.0000 xxx.xxxxxxxxxxxxxx.xxx
Amended And Restated Employment
Agreement
Agreement
This
Amended and Restated Employment Agreement (this “Agreement”), dated as of Sept.
20, 2006, is between Cardiac Science Corporation, a Delaware corporation (the “the
Company”), and Xxxxxx Xxxxxxxx, Vice President, Operations (“Executive”);
WITNESSETH:
WHEREAS, Executive and Xxxxxxx Cardiology Systems, Inc. (“Xxxxxxx Cardiology”) are
parties to an Employment Agreement dated as of February 6, 2004 (the “Original
Agreement”);
WHEREAS, pursuant to an Agreement and Plan of Merger dated as of February 28, 2005,
as amended, Xxxxxxx Cardiology and Cardiac Science, Inc. were combined by means of the
merger of Xxxxxxx Cardiology into the Company and the merger of a subsidiary of the
Company into Cardiac Science, Inc. (the “Merger”);
WHEREAS, as a result of the Merger, the Original Agreement was assigned to the
Company by operation of law;
WHEREAS, the Company and Executive desire to amend and restate the Original
Agreement 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, Operations, 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, Operations, and will devote full time and
attention to achieving the purposes and discharging of
responsibilities 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 thousand dollars ($200,000), 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 his
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. CONFIDENTIALITY 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.
11. ORIGINAL AGREEMENT
The Original Agreement is amended, restated and superseded in its entirety by this
Agreement; provided, however, that notwithstanding the amendment, restatement and
supersedure of the Original Agreement, the parties acknowledge and agree that for
purposes of Section 4.3, the Merger is deemed to have been a Change of Control and
Executive shall be entitled to the benefits set forth in Section 4.3.1 in the event
Executive’s employment is terminated by the Company without Cause or by Executive for
Good Reason on or prior to September 1, 2007.
IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the date set forth above.
| EXECUTIVE |
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| /s/ Xxxxxx Xxxxxxxx | ||||
| CARDIAC SCIENCE CORPORATION |
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| By | /s/ Xxxxxxx X. Xxxxxxx | |||
| Its | Chief Financial Officer | |||
