EXHIBIT 10.19
FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDMENT to the Executive Employment Agreement dated February 12,
1999 (the "Agreement") between CNS, Inc. (the "Company") and Xxxxxx Xxxxx (the
"Employee") is made and entered into as of the 29th day of June 2001.
1. PURPOSE: The purpose of this Amendment is to set forth the agreement
between the Company and the Employee with respect to their mutual rights
and responsibilities from and after June 30, 2001, in connection with the
Employee's transition to the position and duties of Chairman of the Board
of CNS, Inc. The Amendment is intended to modify the Agreement to the
extent set forth herein.
2. EMPLOYMENT: Employee's sole duties and responsibilities will be that of
Chairman of the Board of Directors of CNS, Inc., a part-time, regular
executive position with the Company. As such, Employee will no longer be
Chief Executive Officer nor responsible for directing the management and
operations of the Company. Rather, Employee will continue to perform the
duties of Board Chairman and Director, which shall include regular
interaction with the new Chief Executive Officer, chairing Board meetings,
as appropriate. Employee also agrees to make himself available to the CEO
to assist with, as requested, intellectual property and legal issues
related to patents, product development, screening of inventor submissions,
medical marketing, and such other duties as are consistent such part-time
status.
3. TERM OF EMPLOYMENT: The Company agrees to retain Employee as an employee of
the Company under the terms of the Agreement, as modified by this
Amendment, until June 30, 2003, at which time, unless the Agreement is
extended by mutual agreement of the parties, the Agreement shall terminate
except with respect to the provisions of Sections 9, 10, 11, 12, 13 and 14
of the Agreement, which shall survive. Effective June 30, 2003, Employee
will cease to be an employee of the Company, and Employee's base salary,
bonus, perquisites and all pension, welfare and fringe benefits, provided
to him as an employee shall thereupon cease. Employee shall not be entitled
to any salary continuation, severance or similar payment from the Company
under the Agreement or any policy or practice of the Company because of
such termination on June 30, 2003.
4. BASE SALARY AND BONUS: As full compensation during the term of employment
for services as Chairman, the Company will pay Employee, effective July 1,
2001, a base salary at a rate of One Hundred Forty Thousand Four Hundred
Dollars ($140,400) per annum, payable in semi-monthly installments, subject
to tax withholding to the extent required by law. The Company will pay to
Employee, as soon as administratively feasible, all paid time off (PTO)
accrued by the Employee through June 30, 2001. Employee will cease to
accrue PTO after June 30, 2001, but shall be entitled to take time off as
required without any change in base salary. The Employee shall continue to
be eligible to earn a bonus under the Company's annual bonus plan based
only on his base salary.
5. SEVERANCE: In addition to the base salary, the Company will pay Employee,
effective July 1, 2001, severance in the aggregate amount of One Hundred
Forty Thousand Four Hundred Dollars ($140,400), payable in semi-monthly
installments of Two Thousand Nine Hundred
Twenty Five Dollars ($2,925) over a period of two years, subject to the
withholding to the extent required by law. In the event the Employee
voluntarily terminates his employment prior to a Change in Control (as
defined in Section 8(a) of the Agreement), the Company will continue to pay
the Employee such installments for the remainder of the two year period,
but all other payments and benefits shall thereafter cease, except to the
extent benefits continue as required by law. In the event the Employee
voluntarily terminates his employment (other than for Good Reason as
defined in Section 8(b)(i) of the Agreement) after a Change in Control, the
Company shall continue to pay Employee such installments for the remainder
of the two year period, but all other payments and benefits shall
thereafter cease, except to the extent benefits continue as required by
law.
6. STOCK OPTIONS: The Company will modify, in the form attached hereto as
Exhibit A and B, the incentive and nonqualified stock options granted to
Employee in 1995 and the incentive stock option granted in 2001 to permit
such options to be exercisable for the original term of the option (i.e.,
ten years from the Option Date, as defined in the option agreements), but
only to the extent then exercisable as of the date of the Employee's
termination. All other terms of each option agreement, including the
installment exercise of options as set forth in Section 2 of the option
agreements, shall remain in effect.
7. BUSINESS EXPENSES: The Company shall pay or reimburse Employee for the
reasonable and necessary costs associated with a home office maintained by
the Employee, provided that the Employee provides reasonable proof of such
expenses in accordance with general Company policies.
8. PAYMENTS UPON TERMINATION WITHOUT GOOD CAUSE PRIOR TO A CHANGE IN CONTROL:
In the event that, prior to a Change in Control, the Company terminates the
Employee's employment other than for Good Cause (as defined in Section 7(b)
of the Agreement) prior to June 30, 2003, in consideration for the Employee
executing a standard release agreement covering all claims against the
Company as defined in the Agreement, the Company will: (a) pay to the
Employee Eleven Thousand Seven Hundred Dollars ($11,700) per month, payable
in semi-monthly installments and subject to tax withholding as required by
law, until June 30, 2003; and (b) pay the COBRA premium on the Company's
health plan on behalf of the Employee until the earliest of (i) June 30,
2003; (ii) the end of the twelfth month after such termination; or (iii)
the date Employee otherwise ceases to be eligible for COBRA continuation
coverage. Such payments shall be in lieu of any salary continuation,
severance or other similar payment due upon termination of employment by
the Company prior to a Change in Control under any policy, practice or
arrangement of the Company. Employee shall be entitled to any benefits
thereafter under any of the Company's benefit plans to which terminated
employees are entitled in accordance with law.
9. PAYMENTS UPON TERMINATION AFTER A CHANGE IN CONTROL: In the event that,
after a Change in Control, the Company terminates the Employee's employment
other than for Good Cause, or in the event the Employee voluntarily
terminates employment for Good Reason, the Employee will be entitled to all
of the rights or benefits set forth in Section 8 of the Agreement, which
shall be in lieu of, and not in addition to, any amounts to which the
Employee would be entitled under paragraph 8 of this Amendment and under
any other policy, practice or arrangement of the Company covering salary
continuation, severance or other similar benefit.
10. DIRECTOR'S DUTIES: Effective July 1, 2003, Employee agrees to continue to
serve as Chairman of the Board and as a Director at the pleasure of the
Board and thereafter shall be entitled to any and all fees, option grants
and other benefits provided to Directors of the Company, or as otherwise
required by law.
11. EFFECT ON AGREEMENT: Except as specifically modified herein, all of the
terms and conditions set forth in the Agreement shall continue in full
force and effect.
IN WITNESS WHEREOF, this Amendment is executed on behalf of the Company
by an Executive Officer who has the authority and approval of the Board and by
the Employee as of the day and date set forth above.
CNS, INC.
By: /s/ Xxxxx Xxxxxxx
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Its: President, CEO
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/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
Exhibit A
AMENDMENT TO STOCK OPTION AGREEMENTS
THIS AGREEMENT, made as of this 29th day of June, 2001, amends the
following Stock Option Agreements between CNS, INC., a Minnesota corporation
(hereinafter called the "Company"), and XXXXXX XXXXX, an employee of the Company
or one or more of its subsidiaries (hereinafter called the "Employee"):
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GRANT DATE OF OPTION ORIGINAL NUMBER OF SHARES SUBJECT TO
OPTIONS TYPE OPTION
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1995 ISO 72,270
1995 NQSO 127,280
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WHEREAS, the Company and Employee have entered into an Amendment to the
Employee's Executive Employment Agreement of even date herewith, which, among
other terms, requires that the exercise period of the above options be extended
as set forth herein; and
WHEREAS, Section 3(c) of the 1994 Stock Option Plan provides that the
Compensation Committee of the Board may modify an option grant if it determines
that such modification is in the best interest of the Company.
THEREFORE, in consideration for the mutual covenants in that Agreement,
the parties hereto agree that the above described Stock Option Agreements be and
hereby are amended as follows:
1. Paragraph 3 of each Option Agreement be amended in its entirety to read as
follows:
3. Term of Option. This Option is exercisable by the Employee,
as provided in paragraph 2 above during the period beginning on the
date hereof and ending February 9, 2005; provided, however, that: (a)
in the event Employee is terminated because of deliberate, willful or
gross misconduct as determined by the Company, all rights under the
Option shall terminate and expire upon such termination; and (b) in the
event the Employee dies, the Employee's Option may be exercised at any
time within 12 months following his or her death by his or her personal
representative or by the person or persons to who the Employee's right
under the Option shall pass by will or by the laws of descent and
distribution. None of the provisions of this Agreement shall be
considered to permit, under any circumstances, the exercise of this
Option, by any person after February 9, 2005. Nothing in this Option
Agreement shall confer upon the Optionee any right to continue in the
employ of the Company or any of its subsidiaries or interfere in any
way with the right of the Company or any such subsidiary to terminate
the employment of the Optionee at any time.
2. Except as set forth above, the terms and conditions of each Stock Option
Agreement be and hereby shall remain in full force and effect including,
but not limited to, the exercise price per Share upon exercise. Nothing
herein is intended to, nor shall it be construed so as to cause the
incentive stock option granted to fail to so qualify under Section 421 of
the Code if and to the extent such option is exercised within 90 days of
the Optionee's termination of employment or within twelve months of the
date of death while employed.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Amendment to the above-described Option Agreements as of the day and year first
above written.
CNS, INC.
By:
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Its:
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Xxxxxx Xxxxx, Optionee
Exhibit B
AMENDMENT TO STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of this 29th day of June, 2001, amends the
following Stock Option Agreements between CNS, INC., a Minnesota corporation
(hereinafter called the "Company"), and XXXXXX XXXXX, an employee of the Company
or one or more of its subsidiaries (hereinafter called the "Employee"):
-----------------------------------------------------------------------
GRANT DATE OF OPTION ORIGINAL NUMBER OF SHARES SUBJECT TO
OPTIONS TYPE OPTION
-----------------------------------------------------------------------
2001 ISO 50,000
=======================================================================
WHEREAS, the Company and Employee have entered into an Amendment to the
Employee's Executive Employment Agreement of even date herewith, which, among
other terms, requires that the exercise period of the above option be extended
as set forth herein; and
WHEREAS, Section 3(c) of the 2000 Stock Option Plan provides that the
Compensation Committee of the Board may modify an option grant if it determines
that such modification is in the best interest of the Company.
THEREFORE, in consideration for the mutual covenants in that Agreement,
the parties hereto agree that the above described Stock Option Agreement be and
hereby is amended as follows:
1. Paragraph 3 of the Option Agreement be amended in its entirety to read as
follows:
3. Term of Option. This Option is exercisable by the Employee,
as provided in paragraph 2 above during the period beginning on the
date hereof and ending March 15, 2011; provided, however, that: (a) in
the event Employee is terminated because of deliberate, willful or
gross misconduct as determined by the Company, all rights under the
Option shall terminate and expire upon such termination; and (b) in the
event the Employee dies, the Employee's Option may be exercised at any
time within 12 months following his or her death by his or her personal
representative or by the person or persons to who the Employee's right
under the Option shall pass by will or by the laws of descent and
distribution. None of the provisions of this Agreement shall be
considered to permit, under any circumstances, the exercise of this
Option, by any person after March 15, 2011. Nothing in this Option
Agreement shall confer upon the Optionee any right to continue in the
employ of the Company or any of its subsidiaries or interfere in any
way with the right of the Company or any such subsidiary to terminate
the employment of the Optionee at any time.
2. Except as set forth above, the terms and conditions of each Stock Option
Agreement be and hereby shall remain in full force and effect including,
but not limited to, the exercise price per Share upon exercise. Nothing
herein is intended to, nor shall it be construed so as to cause the
incentive stock option to fail to so qualify under Section 421 of the Code
if and to the extent such option is exercised within 90 days of the
Optionee's termination of employment or within twelve months of the date of
death while employed.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Amendment to the above-described Option Agreements as of the day and year first
above written.
CNS, INC.
By:
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Its:
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Xxxxxx Xxxxx, Optionee
