CARDIAC SCIENCE, INC.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
dated as of December 31, 2002, by and between XXXXXXX X. XXXXX ("Employee") and
CARDIAC SCIENCE, INC., a Delaware corporation whose headquarters offices are at
00000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, (together with its successors and
assigns, the "Company"). Employee and the Company together shall be referred to
as the "Parties" and separately shall be referred to as a "Party."
1. Term of Agreement. This Agreement shall commence on the date
hereof and shall be effective through December 31, 2005 (the "Original Term").
This Agreement shall automatically renew on January 1 of each year thereafter
for successive 12-month periods (such period, or periods, being the "Additional
Term") unless at least 90 days prior to any such January 1 either Party gives
written notice to the other Party as provided in Section 11(c) hereof that this
Agreement is not to renew or unless either Party earlier terminates this
Agreement pursuant to Section 7 hereof. The Original Term and the Additional
Term, if applicable, shall be referred to as the "Term."
2. Positions and Duties.
(a) Positions. Employee shall serve as President and Chief
Executive Officer of the Company and it is the intention of the Parties that,
throughout the Term, he shall also be a member of its Board of Directors (the
"Board"), and as such shall have responsibility for the duties typically
associated with such positions in a company the nature and size of the Company
and shall report directly to the Board.
(b) Obligations to the Company. During the Term, Employee
agrees to use his best reasonable efforts to perform to the best of his ability
and experience the duties and obligations reasonably required of and from
Employee pursuant to the terms hereof. During the Term, Employee further agrees
that he shall devote substantially all of his business time and attention to the
business of the Company. Nothing herein shall preclude Employee from (i) serving
on the boards of a reasonable number of other business entities, trade
associations, and/or civic or charitable organizations, (ii) engaging in
charitable activities and community affairs and (iii) managing his personal
investments and affairs, provided that such activities do not conflict or
materially interfere with the effective discharge of his duties and
responsibilities under this Section 2.
3. At-Will Employment. The Company and Employee acknowledge that
Employee's employment, subject to the provisions of Section 7 below, may be
terminated by either Party at any time for any or no reason. The rights and
duties created by this Section 3 may not be modified in any way except by a
written agreement executed by both Parties in accordance with Section 11(b)
hereof.
4. Compensation. For the duties and services to be performed by
Employee hereunder and pursuant to this Agreement, the Company shall pay
Employee, and Employee agrees to accept, the salary, stock options, bonuses and
other benefits described below in this Section 4 subject to such future changes
as are consistent with the terms of this Agreement.
(a) Salary. Employee shall receive an annual base salary of
$349,500 ("Base Salary") for 2003, payable pursuant to the Company's normal
payroll practices. Employee's Base Salary shall be increased five percent (5%)
per year thereafter for the remainder of the Term. After any increase, the term
"Base Salary" as utilized in this Agreement shall thereafter refer to the
increased amount.
(b) Bonuses. Employee's entitlement to incentive bonuses
from the Company is 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. Employee's entitlement to an
incentive bonus shall be determined on a basis consistent with that applied to
other senior-level executives of the Company.
Employee's Minimum Target Bonus shall be as follows:
Percentage of Base Salary
-------------------------
2003-2005 70%
Prior to the end of the first quarter of the relevant calendar year, Employee's
performance goals shall be reviewed by the Board with Employee and a set of
performance goals shall be agreed upon for that year. If performance exceeds
targets, the Board shall have the discretion to increase the actual bonus from
the Target Bonus based upon such performance, up to a maximum of 100% of
Employee's Base Salary.
Any bonus shall be paid when other senior-level executives of the
Company are paid their bonuses, but in no event later than ninety (90) days
after the end of the bonus period for which it is payable.
(c) Additional Benefits. Employee shall be eligible to
participate, on a basis at least as favorable as applied to other senior-level
executives of the Company, in the Company's employee benefit plans of general
application, including, without limitation, those plans providing medical,
disability and life insurance, in accordance with the rules established for
individual participation in any such plan and under applicable law. Employee
shall be entitled to the use of a Company vehicle for which the Employee shall
reimburse the Company for lease costs exceeding $1,000 per month. Employee shall
receive six (6) weeks paid vacation per year, which shall be taken at such times
as are consistent with the needs of the Company. Employee shall be eligible for
(i) a disability benefit amount of no less than 60% of his Base Salary as
provided in Section 7(b)(iv) hereof and (ii) Company-paid life insurance with a
benefit amount of at least one (1) times his Base Salary determined as of each
January 1st during the Term. Employee shall be eligible for sick leave in
accordance with the policies in effect during the term of this Agreement and
shall receive such other benefits as the Company generally provides to its other
senior-level executives on terms no less favorable than provided to such
executives.
(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 on a basis at least as
favorable as other senior-level executives 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 customary and reasonable
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business expenses. In addition, Employee shall be reimbursed for the legal fees
and other expenses incurred by him in the negotiation and preparation of this
Agreement.
5. Confidential Information.
(a) Employee acknowledges that, because of his employment
hereunder, he shall be in a confidential relationship with the Company and shall
have access to confidential information and trade secrets of the Company
(collectively "Confidential Information") as follows:
(i) all Company information related to customers of
the Company, including, without limitation, customer lists, the identities,
needs, and preferences 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) Company marketing plans, materials and
techniques; and
(iii) all know-how, devices, compilations of
information, copyrightable or patentable material and technology and technical
information of the Company, relating to the business of the Company.
(b) Employee agrees that except in the course of performing
his duties for the Company, 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.
Employee further agrees that at all times after the termination of his
employment with the Company he shall not directly or indirectly use, disclose,
or otherwise exploit any Confidential Information. Anything herein to the
contrary notwithstanding, the provisions of this Section 5 shall not apply (i)
when disclosure is required by law or by any court, arbitrator, mediator or
administrative or legislative body (including any committee thereof) with
apparent jurisdiction to order Employee to disclose or make accessible any
information, (ii) with respect to any other litigation, arbitration or mediation
involving this Agreement, including, but not limited to, the enforcement of this
Agreement or (iii) as to Confidential Information that is known to the public or
within the relevant trade or industry other than due to Employee's violation of
this Section 5.
(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 or affiliates, shall be the sole and absolute property of the
Company, and Employee shall make prompt report thereof to the Company and, at
Company's sole expense, 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 during the course of Employee's
employment shall remain the Company's sole and exclusive property. Upon
termination of this Agreement, Employee shall return promptly to the Company all
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property of the Company in his possession and Employee represents that he shall
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 shall not retain in his possession any such
software, documents or other materials in machine or human readable forms.
Anything herein to the contrary notwithstanding, Employee shall be entitled to
retain (i) a home computer and any other home office or personal equipment, (ii)
papers and other materials of a personal nature, including, but not limited to,
photographs, correspondence, personal diaries, calendars and Rolodexes, personal
files and phone books, (iii) information showing his compensation or relating to
reimbursement of expenses, (iv) information that he reasonably believes may be
needed for tax purposes, (v) copies of plans, programs and agreements relating
to his employment, or termination thereof, with the Company and (vi) minutes,
presentation materials and personal notes from any meeting of the Board, or any
committee thereof, while he was a member of the Board.
(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 upon his death, or upon the occurrence of any of the following:
(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 in Section 9(b) below) or "Disability" (as defined in
Section 9(c) below) ("Voluntary Termination");
(ii) The effective date of a written notice sent to
Employee from the Company stating the Company's termination of Employee's
employment without Cause (as defined in Section 9(a) below), which, subject to
Section 7(b) below, may be made by the Company at any time at the Company's sole
discretion, for any reason or no reason ("Termination Without Cause");
(iii) The effective date of a written notice sent to
the Company from Employee stating that Employee is terminating his employment
with the Company due to Employee's Constructive Termination (as defined in
Section 9(b) below);
(iv) The effective date of a written notice sent to
Employee by the Company stating the Company's termination of Employee's
employment for Cause in accordance with Section 9(a) below ("Termination for
Cause"); or
(v) The effective date of a written notice sent by
either Party to the other Party stating Employee's termination of employment
with the Company due to Disability (as defined in Section 9(c) below).
(b) Severance Benefits. Employee shall be entitled to
receive severance benefits upon termination of employment as set forth in this
Section 7(b).
(i) Voluntary Termination. If Employee terminates
his employment by Voluntary Termination, then Employee shall not be entitled to
receive payment of any severance benefits. Employee shall be entitled to the
following (collectively referred to as "Accrued
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Obligations"): (1) payment for all salary and unused vacation accrued as of the
date of Employee's termination of employment, (2) payment of the balance of any
incentive awards that have been earned but not yet paid for performance periods
which have been completed, (3) any expense reimbursement due Employee and (4)
other benefits, rights and entitlements, if any, in accordance with applicable
plans, programs, agreements and arrangements of the Company, including, but not
limited to, the Plan.
(ii) Involuntary Termination. If Employee's
employment terminates due to Termination Without Cause, Change of Control or
Constructive Termination (collectively, "Involuntary Termination"), Employee
shall be entitled to:
(1) In the event of Termination Without
Cause, severance payment equal to one (1) time Base Salary, such payment to be
made ratably over the twelve (12) months following the date of such Involuntary
Termination but in no event less frequently than semi-monthly in accordance with
the Company's normal payroll practices for senior-level executives as in effect
immediately prior to such termination, and a lump-sum payment equal to a pro
rata portion of any Annual Bonus that the Executive would have been entitled to
receive pursuant to Section 4(b) hereof in such year based upon the percentage
of the calendar year that shall have elapsed through the date of Employee's
termination of employment, payable within 30 days of the date of termination of
employment.
(2) In the event of Constructive Termination
or Change of Control, if such termination is within 2 years following a Change
of Control or within 6 months preceding a Change of Control, but following the
initiation of discussions by the Board or Company executives contemplating a
Change of Control, the severance payment shall be equal to two (2) times Base
Salary, such payment to be made ratably over the twenty-four (24) months
following the date of such termination of employment but in no event less
frequently than semi-monthly in accordance with the Company's normal payroll
practices for senior-level executives as in effect immediately prior to such
termination, and a lump-sum payment equal to a pro rata portion of any Annual
Bonus that the Executive would have been entitled to receive pursuant to Section
4(b) hereof in such year based upon the percentage of the calendar year that
shall have elapsed through the date of Employee's termination of employment,
payable within 30 days of the date of termination of employment.
(3) continued employee retirement and
welfare benefits (whether provided by insurance or otherwise) with the same
coverage provided to Employee and his eligible dependents prior to the
termination (e.g. medical, dental, optical, mental health, life and disability
coverage) and in all other respects comparable to those in place immediately
prior to the termination for Employee and his eligible dependents at the
Company's cost over 12 or 24 months following the date of such Involuntary
Termination determined in the same manner as the period of severance payment is
determined in Sections 7(b)(ii)(1) and (2) above; provided that, to the extent
the Company's plans, programs and arrangements do not permit such continuation
of Employee's participation following his termination (including participation
by dependants, if any, as noted above), the Company shall provide Employee, no
less frequently than quarterly in advance, with an amount which, after taxes, is
sufficient for him to purchase equivalent benefits;
(4) in the event of Termination Without
Cause, any unvested stock options or shares of restricted stock held by Employee
shall continue to vest through the end of the severance period according to the
vesting schedule set forth in any agreement between Employee
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and the Company governing the issuance to Employee of such securities, however,
in the event of termination due to Change of Control or Constructive Termination
there shall be immediate vesting of any unvested stock options or shares of
restricted stock held by Employee.
(iii) Termination for Cause. If Employee's employment
is terminated for Cause in accordance with Section 9(a) below, then Employee
shall have the same entitlements as provided in the event of a Voluntary
Termination pursuant to Section 7(b)(i) hereof.
(iv) Termination by Reason of Disability or Death. In
the event that Employee's employment with the Company terminates as a result of
Employee's Disability (as defined below), or as a result of Employee's death,
the Applicable Party (as defined below) shall be entitled to (1) in the case of
Disability, Disability benefits in an annual amount equal to at least 60% of his
Base Salary in the year of Termination, payable on the same schedule as his Base
Salary, until the earlier of his death or 65th birthday (to be offset by any
payments received from any other Company provided disability program), (2) a
lump-sum payment equal to the pro-rata portion of Employee's Target Bonus in
effect for the portion of the calendar year in which termination of employment
occurs, payable within 30 days of the date of termination, (3) a lump sum
payment equal to 6 months of Base Salary, in the case of Disability to be offset
against Disability Benefits provided in (1) above, and (4) the immediate vesting
of all stock options with the right to exercise any vested stock options
pursuant to the Plan for a period of 12 months following termination of
employment. For purposes of this Section 7(b)(iv), "Applicable Party" shall
mean, in the event of Employee's Disability (as defined below), Employee (or his
legal representative if any has been appointed) or, in the event of Employee's
death, the beneficiary designated by Employee in writing to the Company (or if
there is no such other beneficiary, Employee's estate).
(v) Coordination with the Plan. In the event
Employee's employment is terminated for "Misconduct" as defined under the Plan,
but such termination of employment does not constitute a Termination for Cause
pursuant to Section 9(a) below, or Employee's employment is terminated by the
Company for Disability as defined in the Plan, but such termination does not
constitute a Termination for Disability pursuant to Section 9(c) below, then
Employee's equity awards, including any outstanding stock options and restricted
shares, shall be treated in accordance with Section 7(b)(ii)(4) above.
(vi) Unfair Competition. If Employee, directly or
indirectly, shall at any time during the period in which Employee is receiving
severance payments under Section 7(b)(ii)(1), violates any provision of this
Agreement including but not limited to Section 5 or any other applicable law
concerning trade secret protection, unfair competition, or intellectual property
rights, the Company shall have the right to terminate immediately all continuing
payments and benefits under the Agreement, beyond what he would have received
had he been Terminated for Cause and what he has received prior to commencement
of such activities. 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 defibrillators and accessories. Anything herein to the contrary
notwithstanding, Employee shall not be prevented from (i) providing services to
a subsidiary, division or affiliate of any business that directly competes with
the Company provided such subsidiary, division or affiliate is not itself
primarily engaged in the sale of external cardioverter defibrillators and
accessories and Employee's duties and responsibilities do not involve the
directly competing business, (ii) owning not more than two percent (2%) of any
private or public entity or (iii) serving as a member of the board of directors
of any entity on whose board Employee was serving prior to his termination of
employment.
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8. Consequences of a Change of Control.
(a) Upon a Change of Control, all amounts, entitlements or
benefits in which Employee is not yet vested shall become fully vested
including, without limitation, all equity awards (including any unvested stock
options and restricted shares), with all vested options (including those vesting
pursuant to this Section 8(a)) remaining exercisable for their original terms.
(b) In the event that any payment or benefit made or
provided to or for the benefit of Employee in connection with this Agreement or
his employment with the Company or the termination thereof (a "Payment") is
determined to be subject to any excise tax ("Excise Tax") imposed by Section
4999 of the Code (or any successor to such Section), the Company shall pay to
Employee, prior to the time any Excise Tax is due in respect of such Payment
(through withholding or otherwise), an additional amount which, after the
imposition of all income, employment, excise and other taxes thereon, is equal
to the sum of (i) the Excise Tax on such Payment plus (ii) any penalty and
interest assessments associated with such Excise Tax. The amount and timing of
any payment shall promptly be determined by an independent accounting firm
selected by the Parties and paid for by the Company.
9. Definitions. For purposes of this Agreement,
(a) "Cause" shall mean:
(i) Employee's willful gross misconduct or willful
gross neglect in performance of his duties hereunder resulting, in either case,
in material economic harm to the Company;
(ii) Employee's willful refusal to comply in any
material respect with the reasonable legal directives of the Board so long as
such directives are (1) specified in a written Board resolution furnished to
Employee, (2) are not inconsistent with Employee's position and duties, (3) such
directives relate to matters within Employee's direct control and are achievable
through his best reasonable efforts to perform to the best of his ability and
experience, and (4) 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;
(iii) Willfully dishonest or willfully fraudulent
conduct related and materially adverse to the Company, a willful attempt to do a
material injury to the Company, or conviction of a felony or other crime
involving moral turpitude; or
(iv) Employee's willful material breach of this
Agreement, including without limitation, Employee's theft or other
misappropriation of the Company's proprietary information.
(b) "Change of Control" shall mean the occurrence of any of
the following events:
Anything herein to the contrary notwithstanding, Employee shall not be
terminated for "Cause," within the meaning of this Section, unless Employee has
an opportunity to be heard before the full Board of the Company, and after such
hearing, there is a unanimous vote of the Board
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to terminate Employee for Cause, provided that any employee of the Company that
is a Board member shall not participate in said vote.
(i) any "person," as such term is used in Sections
3(a)(9) and 13(d) of the Securities Exchange Act of 1934, becomes a "beneficial
owner," as such term is used in Rule 13d-3 promulgated under that act, of 25% or
more of the Voting Stock of the Company;
(ii) the majority of the Board consists of
individuals other than Incumbent Directors, which term means the members of the
Board on the date of this Agreement; provided that any person becoming a
director subsequent to such date whose election or nomination for election was
supported by two-thirds of the directors who then comprised the Incumbent
Directors shall be considered to be an Incumbent Director;
(iii) the Company adopts any plan of liquidation
providing for the distribution of all or substantially all of its assets;
(iv) all or substantially all of the assets or
business of the Company is disposed of pursuant to a merger, consolidation or
other transaction (unless the shareholders of the Company immediately prior to
such merger, consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned the Voting Stock
of the Company, all of the Voting Stock or other ownership interests of the
entity or entities, if any, that succeed to the business of the Company);
(v) the Company combines with another company and is
the surviving corporation but, immediately after the combination, the
shareholders of the Company immediately prior to the combination hold, directly
or indirectly, 50% or less of the Voting Stock of the combined company (there
being excluded from the number of shares held by such shareholders, but not from
the Voting Stock of the combined company, any shares received by Affiliates of
such other company in exchange for stock of such other company); or
(vi) a "Corporate Transaction" as defined under the
Plan.
For purposes of the Change of Control definition, (A)
"the Company" shall include any entity that succeeds to all or substantially all
of the business of the Company, (B) "Affiliate" of a person or other entity
shall mean a person or other entity that directly controls, is controlled by, or
is under common control with the person or other entity specified and (C)
"Voting Stock" shall mean securities of any class or classes having general
voting power under ordinary circumstances, in the absence of contingencies, to
elect the directors of a corporation or their equivalent in the event the
business of the Company is conducted in a form other than a corporation.
(c) "Constructive Termination" shall mean: (i) the
occurrence of any of the following without Employee's prior written consent,
provided that Employee first gives the Company written notice of such occurrence
and allows the Company at least thirty (30) days to cure such occurrence, and if
not so cured, Employee then notifies the Company that he is terminating his
employment hereunder following such failure to cure: (1) a significant change or
reduction in Employee's duties, positions or responsibilities causing such
position to be of a stature that is materially inconsistent with duties,
positions, and responsibilities customarily exercised by comparable level
executives at similar companies; (2) the failure to elect or re-elect Employee
to the positions of President, Chief Executive Officer and member of the Board
or the removal of
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Employee from any such position, (3) a change in reporting structure so that
Employee reports to someone other than the Board, (4) a reduction in Employee's
Base Salary, Target Bonus or other benefits other than a reduction implemented
for economic reasons applicable to all management level employees, (5)
relocation of the Company's headquarters office, or Employee's own principal
office, to a location more than 30 miles from the Company's location or
Employee's location, as the case may be, immediately prior to such relocation,
(6) any purported termination of Employee's employment by the Company that is
not effected in accordance with this Agreement, (7) the failure of the Company
to obtain the assumption in writing of its obligation to perform this Agreement
by a successor to all or substantially all of the assets of the Company within
15 days after a merger, consolidation, sale or similar transaction, (8) a breach
by the Company of any material provision of this Agreement, or (ii) the
occurrence of a Change of Control (without regard to whether Employee consented
to such Change of Control or whether a successor assumes this Agreement pursuant
to subclause (7) hereunder), provided that Employee notifies the Company that he
is terminating his employment for Constructive Termination.
(d) "Disability" shall mean that Employee has been unable to
substantially perform his duties hereunder as the result of his incapacity due
to physical or mental illness, even with reasonable accommodations as required
by law, and such inability, which continues for at least 180 consecutive
calendar days 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). In no event shall
any termination of Employee's employment for Disability occur until the Party
terminating his employment gives 30 days prior written notice to the other Party
in accordance with Section 11(c).
(e) "Plan" shall mean the Company's 1997 Stock Option/Stock
Issuance Plan, as amended from time to time.
10. Non-assignability. No rights or obligation of the Company under
this Agreement may be assigned or transferred by the Company without Employee's
prior written consent, except that such rights or obligations may be assigned or
transferred pursuant to a merger or consolidation in which the Company is not
the continuing entity, or a sale, liquidation or other disposition of all or
substantially all of the business and assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of the
business and assets of the Company and assumes the liabilities, obligations and
duties of the Company under this Agreement, either contractually or as a matter
of law. The Company further agrees that, in the event of any disposition of its
business and assets described in the preceding sentence, it shall take whatever
action it can in order to cause such assignee or transferee expressly to assume
the liabilities, obligations and duties of the Company hereunder. No rights or
obligations of Employee under this Agreement may be assigned or transferred by
Employee, without the Company's prior written consent, other than his rights to
compensation and benefits, which may be transferred only by will, operation of
law or in accordance with the applicable plan; provided, however that Employee
shall be entitled, to the extent permitted under applicable law or relevant
plans, to select and change a beneficiary or beneficiaries to receive any
compensation or benefit hereunder following his death by giving the Company
written notice thereof.
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
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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.
11. Miscellaneous Provisions.
(a) No Duty to Mitigate; No Offset. 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 and the Company's
obligation to make any payment pursuant to, and otherwise to perform its
obligations under, this Agreement shall not be affected by any offset,
counterclaims or other right that the Company may have against Employee for any
reason.
(b) Sole Agreement; Amendment; Waiver. This Agreement amends
and restates the February Agreement. Except as expressly set forth herein, this
Agreement contains the entire agreement between the Parties concerning the
subject matter hereof and, except for the February Agreement, supersedes all
prior agreements, understandings, discussions, negotiations, and undertakings,
whether written or oral, between the Parties with respect thereto. This
Agreement may be amended only by a written document signed by Employee and a
duly authorized officer of the Company. Any waiver by any person of any
provision of this Agreement shall be effective only if in writing and signed by
the person against whom enforcement of the waiver is sought. For any waiver or
modification to be effective, it must specifically refer to this Agreement and
to the terms or provisions being modified or waived. No waiver of any provision
of this Agreement shall be effective as to any other provision of this Agreement
except to the extent specifically provided in an effective written waiver. In
the event of any inconsistency between the terms of this Agreement and the
present or future terms of any other Company program, plan or policy, including,
but not limited to, the Plan, the terms of this Agreement shall control to the
extent more favorable to Employee.
(c) Notices. Any notice, request or other communication
given in connection with this Agreement shall be in writing and shall be deemed
to have been given (i) when personally delivered to the recipient or (ii)
provided that a written acknowledgement of receipt is obtained, three days after
being sent by prepaid certified or registered mail, or two days after being sent
by a nationally recognized overnight courier, to the address specified below (or
such other address as the recipient shall have specified by ten (10) days'
advance written notice given in accordance with this Section 11(c). Such
communication should be addressed to Employee at his principal residence and to
the Company at its corporate headquarters.
(d) 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.
(e) 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
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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.
(f) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Arbitration. Any controversy, dispute or claim arising
out of or relating to this Agreement, any other agreement or arrangement between
Employee and the Company, Employee's employment with the Company, or the
termination thereof (collectively, "Covered Claims") shall be resolved by
binding arbitration, to be held in the City of Irvine, California, in accordance
with the Commercial Arbitration Rules (and not the National Rules for the
Resolution of Employment Disputes) of the American Arbitration Association and
this Section 10(g). Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Employee (and his
beneficiaries) shall recover any and all costs and expenses (including without
limitation attorneys' fees and other charges of counsel) incurred by Employee
(or any of his beneficiaries) in resolving any such Covered Claim if Employee
(or any of his beneficiaries) is the prevailing party; otherwise, the parties
shall bear their own costs and attorneys' fees Pending the resolution of any
Covered Claim, Employee (and his beneficiaries) shall continue to receive all
payments and benefits due under this Agreement or otherwise.
(h) Survivorship. Except as otherwise expressly set forth in
this Agreement, upon the expiration of the Term of this Agreement, the
respective rights and obligations of the Parties shall survive such expiration
to the extent necessary to carry out the intentions of the Parties as embodied
in the rights (such as vested rights) and obligations of the Parties under this
Agreement.
(i) Headings. The headings of the clauses of this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
(j) Non Exclusivity of Rights. Nothing in this Agreement
shall prevent or limit Employee's continuing or future participation in, or
entitlements under, any benefit, bonus, incentive or other plan or program of
the Company or any of its subsidiaries or affiliates and for which Employee may
qualify, nor shall anything herein limit or reduce such rights as Employee may
have under any other agreement with the Company or its subsidiaries or
affiliates.
(k) Representation of the Company. The Company represents
and warrants that (i) all corporate action required to be taken by the Company
to fully authorize the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby (including, without
limitation, any action required to be taken by the Board, any committee of the
Board or any other person or body to interpret or otherwise act with respect to
any company plan, program, policy, arrangement or agreement) has been duly and
effectively taken, (ii) the officer signing this Agreement on behalf of the
Company is duly authorized to do so, (iii) the execution, delivery and
performance of this Agreement does not violate any applicable law, regulation,
order, judgment or decree or any agreement, plan or corporate governance
document to which the Company is a party or by which it is bound and (iv) upon
execution and delivery of this agreement by the Parties, it shall be a valid and
binding obligation of the Company enforceable against it in accordance with its
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally. The Company
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also represents that by approving this Agreement, the Plan Administrator of the
Plan has exercised its discretion pursuant to Article Two of the Plan to approve
the vesting and exercisability of options not vested on the date of termination
of Employee's employment or, if sooner, the occurrence of a Change in Control
and to approve any extension of time to exercise options upon any such
termination or occurrence.
12. Indemnification and Liability Insurance
(a) The Company agrees that, if Employee is made a party to,
is threatened to be made a party to, receives any legal process in, or receives
any discovery request or request for information in connection with, any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he was a director, officer, employee,
consultant or agent of the Company, or was serving at the request of, or on
behalf of, the Company as a director, officer, employee, consultant or agent of
another corporation, limited liability corporation, partnership, joint venture,
trust or other entity, including service with respect to employee benefit plans,
whether or not the basis of such Proceeding is Employee's alleged action in an
official capacity while serving as a director, officer, member, employee,
consultant or agent of the Company or other entity, Employee shall be
indemnified and held harmless by the Company to the fullest extent permitted or
authorized by the Company's Certificate of Incorporation and By-Laws or, if
greater, by the laws of the State of Delaware, against any and all costs,
expenses, liabilities and losses (including, without limitation, attorneys' fees
reasonably incurred, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement and any reasonable cost and fees
incurred in enforcing his rights to indemnification or contribution) incurred or
suffered by Employee in connection therewith, and such indemnification shall
continue as to Employee even though he has ceased to be a director, officer,
member, employee, consultant or agent of the Company or other entity and shall
inure to the benefit of Employee's heirs, executors and administrators. The
Company shall reimburse Employee for all costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by him in connection with any
Proceeding within 20 business days after receipt by the Company of a written
request for such reimbursement and appropriate documentation associated with
these expenses. Such request shall include an undertaking by Employee to repay
the amount of such advance if it shall ultimately be determined that he is not
entitled to be indemnified against such costs and expenses; provided that the
amount of such obligation to repay shall be limited to the after-tax amount of
any such advance except to the extent Employee is able to offset such taxes
incurred on the advance by the tax benefit, if any, attributable to a deduction
for repayment.
(b) Neither the failure of the Company (including its Board,
independent legal counsel or stockholders) to have made a determination prior to
the commencement of any proceeding concerning payment of amounts claimed by
Employee under Section 12(a) above that indemnification of Employee is proper
because he has met the applicable standard of conduct, nor a determination by
the Company (including its Board, independent legal counsel or stockholders)
that Employee has not met such applicable standard of conduct, shall create a
presumption in any judicial proceeding that Employee has not met the applicable
standard of conduct.
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(c) The Company agrees to continue and maintain a directors'
and officers' liability insurance policy covering Employee at a level, and on
terms and conditions, no less favorable to him than the coverage the Company
provides other similarly situated employees and directors until such time as
suits against Employee are no longer permitted by law.
(d) Nothing in this Section 12 shall be construed as
reducing or waiving any right to indemnification, or advancement of expenses,
Employee would otherwise have under the Company's Certificate of Incorporation,
by-laws or under the laws of the State of Delaware.
[Signatures on Next Page]
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The Parties have executed this Agreement as of the date first written
above.
"Company"
CARDIAC SCIENCE, INC.
------------------------------------------------
Xxxxx Xxxxx, Chairman, Compensation Committee of
the Company's Board of Directors
00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
"Employee"
------------------------------------------------
Xxxxxxx X. Xxxxx
00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
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