Executive Employment Agreement

Hinson Employment Agreement

Consulting Agreement with Hinson

 

 

EX-10.13 4 v55247exv10w13.htm EX-10.13

Exhibit 10.13

Form of Executive Employment Agreement

CARDIAC SCIENCE CORPORATION

 

    Executive Employment Agreement

     This executive employment agreement (“Agreement”), effective                                         , is between Cardiac Science Corporation, a Delaware corporation (the “Company”), and [                    ] (“Executive”).

     W I T N E S S E T H:

     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; and

     WHEREAS, Executive and the Company are parties to an Employment Agreement, dated by Executive as of [                    ], that the parties wish to void and replace with this Agreement as of the effective date of this Agreement;

     A G R E E M E N T S:

     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 [                    ] and report to the [                    ]. Subject to Sections 3.3 and 3.4, changes may be made from time to time by the Company in its sole discretion to the duties, reporting relationships and title of Executive. Executive will perform the duties of [                    ] and will devote [his/her] 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 Company, which relate to the business of the Company and are reasonably consistent with Executive’s position. During Executive’s employment, Executive will not engage in any business activity that, in the reasonable judgment of the Chief Executive Officer or Board of Directors, conflicts with the duties of Executive under this Agreement, whether or not such activity is pursued for gain, profit or other advantage. Executive will comply with Company policies and procedures, and with all applicable laws and regulations, and will take reasonable steps to ensure that the operations 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 the following compensation and benefits:

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     2.1 Annual Salary

     Executive’s compensation shall consist of an annual base salary (the “Salary”) of $[INSERT BASE SALARY], payable in accordance with the payroll practices of the Company. The Salary shall be reviewed, and shall be subject to change, by the Chief Executive Officer and/or 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 the Company’s incentive bonus plan and in such other executive bonus plans as may be adopted from time to time by the Board of Directors of the Company (or the Compensation Committee thereof), subject to and in accordance with any applicable eligibility requirements.

     2.3 Benefits

     Executive shall be eligible to participate, subject to and in accordance with applicable eligibility requirements, in such benefit programs as are generally provided to the Company’s executives, which shall include, at a minimum, basic health, dental and vision insurance.

     2.4 Vacation and Other Paid Time-Off Benefits

     Each calendar year, Executive shall be entitled to up to five (5) weeks’ paid vacation or the amount of paid vacation provided under the Company vacation policy, whichever is longer. Vacation will be scheduled by mutual agreement and otherwise governed by the terms of such policy except as stated herein. Executive will also be provided such holidays and sick leave as the Company makes available to all of its other employees. Notwithstanding any other policy or practice, Executive’s unused vacation days shall expire at the end of each calendar year and upon the termination of Executive’s employment with the Company.

     2.5 Business Expenses

     Executive shall be reimbursed for all reasonable out-of-pocket expenses actually incurred by Executive in the conduct of the business of the Company, provided that Executive submits substantiation of all such expenses to the Company on a timely basis in accordance with standard policies of the Company.

3. TERMINATION

     3.1 Employment At Will

     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. Either the Company or Executive may terminate this agreement at any time for any reason, with or without notice. Except as expressly provided for in this Agreement, upon any termination of employment, Executive shall not be entitled to receive any payments or benefits under this Agreement other than any unpaid Salary earned

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through the date of termination. Such amounts shall be paid in a lump sum on the next regularly scheduled payroll date following the date on which Executive’s employment terminated.

     3.2 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. “Total Disability” shall mean Executive’s inability, with reasonable accommodation, to perform the duties of his position for a period or periods aggregating ninety (90) calendar days in any period of one hundred eighty days (180) consecutive days as a result of physical or mental illness, loss of legal capacity or any other cause beyond Executive’s control. Executive and the Company hereby acknowledge that Executive’s ability to perform the duties specified in Section 1 is 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. In the case of termination of employment under this Section 3.2, Executive shall not be entitled to receive any payments or benefits under this Agreement other than any unpaid Salary, which shall be paid in a lump sum on the next regularly scheduled payroll date following the date on which Executive’s employment terminated.

     3.3 Termination Without Cause or for Good Reason, Other Than in Connection with a Change of Control

     If (a) the Company terminates Executive’s employment without Cause (as defined below), or (b) Executive resigns for Good Reason (as defined below), then Executive shall be entitled to receive the following termination payments, except that this Section 3.3 shall not apply to, and shall have no effect in connection with, any termination to which Section 3.2 or Section 3.4 of this Agreement applies:

     (1) An amount totaling [INSERT SEVERANCE PAYMENT PERIOD – 18, 12, 9] months’ Salary, at the rate in effect immediately prior to termination, to be paid to Executive in accordance with the terms below (“Severance Payments”).

     (2) Company-paid premiums for Executive and Executive’s spouse’s and dependents’ continuing health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, (“COBRA”), for the shorter of (i) [INSERT BENEFITS PERIOD – 18, 12, 9] months; (ii) until such date as Executive is no longer entitled to COBRA continuation coverage under the Company’s group health plan(s); or (iii) until such date as Executive obtains health coverage through another employer, provided that such benefits will be provided only if, as a result of Executive’s termination without Cause or resignation for Good Reason, Executive is eligible for and timely (and properly) elects COBRA continuation coverage for Executive under the Company’s group health plan(s).

     (3) Unpaid Salary, paid in a lump sum on the next regularly scheduled payroll date following the date on which Executive’s employment terminated.

     (4) Executive’s earned and unpaid bonuses for the year in which Executive’s employment terminates, calculated according to the bonus plan criteria in place for that year, but pro-rated through the date of termination. Such bonus, if any, shall be paid in a lump-sum payment on the date such bonuses are paid to eligible employees; provided that such

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payment shall be paid no later than the 15th day of the third calendar month following the end of the calendar year in which Executive’s employment terminated.

     The Severance Payments, bonus equivalent and benefits described above are expressly contingent upon Executive’s signing upon termination a full release in a form acceptable to the Company, and are further contingent upon Executive’s full and continued compliance with the terms of Section 4 of this Agreement. Severance Payments shall be paid to Executive through the Company’s or Successor Employer’s normally scheduled payroll during the [INSERT SEVERANCE PAYMENT PERIOD – 18, 12, 9] month period immediately following the date on which Executive’s employment was terminated without Cause or Executive resigned for Good Reason. Each such installment payment shall be treated as a separate payment for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     3.4 Termination in Connection with a Change of Control

 

3.4.1

 

Severance Benefits for Qualified Terminations in Connection with a Change of Control

     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 therefor 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 (24) 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 payments and benefits:

     (1) An amount equal to [INSERT SEVERANCE PAYMENT PERIOD – 24, 18, 12] months’ Salary (measured as the higher of the Salary in effect immediately prior to the Change of Control or the Salary in effect immediately prior to termination) plus [INSERT BONUS PAYMENT PERCENTAGE – 200, 150, 100]% of Executive’s Target Bonus for the year in which termination occurs, paid to Executive in accordance with the terms below (“CIC Severance Payments”).

     (2) Company-paid premiums for Executive and Executive’s spouse’s and dependents’ continuing health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, (“COBRA”), for the shorter of (i) [INSERT BENEFITS PERIOD – 24, 18, 12] months; (ii) until such date as Executive is no longer entitled to COBRA continuation coverage under the Company’s group health plan(s); or (iii) until such date as Executive obtains health coverage through another employer, provided that such benefits will be provided only if, as a result of Executive’s termination without Cause or resignation for Good Reason, Executive is eligible for and timely (and properly) elects COBRA continuation coverage for Executive under the Company’s group health plan(s).

     (3) Unpaid Salary as of the date Executive’s employment terminates, paid in a lump sum on the next regularly scheduled payroll date following the date on which Executive’s employment terminated.

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     (4) Executive’s earned and unpaid bonuses for the year in which Executive’s employment terminates, calculated according to the bonus plan criteria in place for that year, but pro-rated through the date of termination. Such bonus, if any, shall be paid in a lump-sum payment on the date such bonuses are paid to eligible employees; provided that such payment shall be paid no later than the 15th day of the third calendar month following the end of the calendar year in which Executive’s employment terminated.

     (5) Accelerated vesting of one hundred percent (100%) of (A) 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, (B) any restricted stock units, or (C) other similar stock-based awards.

     The CIC Severance Payments, bonus equivalent and benefits described above are expressly contingent upon Executive’s signing upon termination a full release in a form acceptable to the Company and/or a Successor Employer, as applicable, and are further contingent upon Executive’s full and continued compliance with the terms of Section 4 of this Agreement. CIC Severance Payments shall be paid to Executive through the Company’s or Successor Employer’s normally scheduled payroll during the [INSERT SEVERANCE PAYMENT PERIOD – 24, 18, 12] month period immediately following the date on which Executive’s employment was terminated without Cause or Executive resigned for Good Reason. Each such installment payment shall be treated as a separate payment for purposes of Code Section 409A.

 

3.4.2

 

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;

     (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;

     (c) the purchase of a significant portion of the Company’s common stock without approval of a majority of the Company’s incumbent directors; or

     (d) a successful proxy contest, which is stated in terms of the Board of Directors becoming composed of a majority of persons that are not incumbent directors (or appointed or nominated by incumbent directors)..

     Notwithstanding the foregoing, a Change of Control shall not include a Related Party Transaction. 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;

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     (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.

           3.4.3

 

Code Section 280G

     (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 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 Code Section 4999, or any similar or successor provision (the “Excise Tax”), the Company shall pay to Executive either (i) the full amount of the Total Payments or (ii) an amount equal to the Total Payments, reduced by the minimum amount necessary to prevent any portion of the Total Payments from being an “excess parachute payment” (within the meaning of Code Section 280G) (the “Capped Payments”), whichever of the foregoing amounts results in the receipt by Executive, on an after-tax basis, of the greatest amount of Total Payments notwithstanding that all or some portion of the Total Payments may be subject to the Excise Tax. For purposes of determining whether Executive would receive a greater after-tax benefit from the Capped Payments than from receipt of the full amount of the Total Payments, (i) there shall be taken into account any Excise Tax and all applicable federal, state and local taxes required to be paid by Executive in respect of the receipt of such payments and (ii) such payments 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 effective date of the Change in Control occurs, 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 effective date of the Change in Control, 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 Code Section 68 and any other limitations applicable to the deduction of state and local income taxes under the Code).

     (b) All computations and determinations called for by this Section 3.4.3 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 3.4.3 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 3.4.1, or such earlier time as is requested by the Company. For purposes of making its determinations under this Section 3.4.3, the Firm may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999. The Company and Executive shall furnish to the Firm such information and

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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) In the event that Section 3.4.3(a) applies and a reduction is required to be applied to the Total Payments thereunder, the Total Payments shall be reduced by the Company in its reasonable discretion in the following order: (i) reduction of any Total Payments that are subject to Code Section 409A on a pro-rata basis or such other manner that complies with Code Section 409A, as determined by the Company, and (ii) reduction of any Total Payments that are exempt from Code Section 409A.

     3.5 Definitions of “Cause” and “Good Reason”

          3.5.1

 

Cause

     Wherever reference is made in this Agreement to termination being with or without Cause, "Cause” shall mean the occurrence of one or more of the following events:

     (a) willful misconduct, insubordination or dishonesty in the performance of Executive’s duties or a 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 Executive of a felony or misdemeanor, conduct by Executive that the Company reasonably believes violates any statute, rule or regulation governing the Company, or conduct by Executive that the Company reasonably believes constitutes unethical practices, dishonesty or disloyalty and that results in a material adverse effect on the Company or the Successor Employer;

     (e) current use by Executive of illegal substances;

     (f) any material violation by Executive of the Confidentiality Agreement; or

     (g) solely for purposes of a termination without Cause to which Section 3.3 applies, the Company fails as a business enterprise, as evidenced by the Company’s (i) voluntary or involuntary entry into bankruptcy proceedings or (ii) winding up its affairs because in the judgment of the Board of Directors of the Company the Company is no longer economically viable.

 

3.5.2

 

Good Reason

     For the purposes of this Agreement, “Good Reason” shall mean that Executive, without his or her consent, has:

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     (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 material 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 fifty (50) miles from his 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).

     Notwithstanding the foregoing, termination of employment by Executive will not be for Good Reason unless (x) Executive notifies the Company in writing of the existence of the condition which Executive believes constitutes Good Reason within thirty (30) days of the initial existence of such condition (which notice specifically identifies such condition), (y) the Company fails to remedy such condition within thirty (30) days after the date on which it receives such notice (the “Remedial Period”), and (z) Executive actually terminates employment within thirty (30) days after the expiration of the Remedial Period and before the Company remedies such condition. If Executive terminates employment before the expiration of the Remedial Period or after the Company remedies the condition (even if after the end of the Remedial Period), then Executive’s termination will not be considered to be for Good Reason.

4. CONFIDENTIALITY; NON-SOLICITATION; NON-COMPETITION

     4.1 Confidentiality Agreement

     Executive recognizes that the Company’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 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.

     4.2 Non-Solicitation Agreement

     (a) During Executive’s employment with the Company and/or a Successor Employer and for one year after the termination of such employment, Executive will not induce, or attempt to induce, any employee or independent contractor of the Company and/or a Successor Employer to cease such employment or relationship to engage in, be employed by, perform services for, participate in the ownership, management, control or operation of, or otherwise be connected with, either directly or indirectly, any Competing Business (defined below).

     (b) During Executive’s employment with the Company and/or a Successor Employer and for one year after the termination of such employment, Executive will not, directly or indirectly (i) solicit, divert, appropriate to or accept on behalf of any Competing Business, or (ii) attempt to

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solicit, divert, appropriate to or accept on behalf of any Competing Business, any business from any customer or actively sought prospective customer of the Company with whom Executive has dealt, whose dealings with the Company have been supervised by Executive or about whom Executive has acquired confidential information in the course of his employment.

     4.3 Non-Competition Agreement

     During Executive’s employment with the Company and/or a Successor Employer and for one year after the termination of such employment, Executive will not engage in, be employed by, perform services for, participate in the ownership, management, control or operation of, or otherwise be connected with, either directly or indirectly, any Competing Business. For purposes of this Section 4.3, Executive will not be considered to be connected with any Competing Business solely on account of ownership of less than five percent of the outstanding capital stock or other equity interests in any Competing Business. Executive agrees that this restriction is reasonable, but further agrees that should a court exercising jurisdiction with respect to this Agreement find any such restriction invalid or unenforceable due to unreasonableness, either in period of time, geographical area, or otherwise, then in that event, such restriction is to be interpreted and enforced to the maximum extent which such court deems reasonable.

     4.4 Competing Business

     “Competing Business” means any business whose efforts are in competition with the efforts of the Company. A Competing Business includes any business whose efforts involve any research and development, products or services in competition with products or services which are, during and at the end of Executive’s employment with the Company and/or a Successor Employer, (a) produced, marketed or otherwise commercially exploited by the Company and/or a Successor Employer, or (b) in actual research or development by the Company and/or a Successor Employer, or (c) planned for future research and development by the Company and/or a Successor Employer, as demonstrated by objective evidence, such as budget allocations, work assignments, hiring decisions, planning documents, or other similar documentation.

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; (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; or (d) any subsidiary, parent or other affiliate of the Company. 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. AMENDMENTS IN WRITING

     No amendment, modification, waiver, termination or discharge of any provision of this Agreement, or 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

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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.

7. 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.

8. 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.

9. SEVERABILITY

     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.

10. CODE SECTION 409A

     With respect to any payments or benefits hereunder that are subject to Code Section 409A and any official guidance and regulations issued thereunder (together “Code Section 409A”) and that are payable on account of Executive’s termination of employment, such payments shall only be made if such termination of employment constitutes a “separation from service” within the meaning of Code Section 409A. Notwithstanding anything to the contrary contained in this Agreement, all reimbursements for costs and expenses under this Agreement will be paid in no event later than the end of the calendar year following the calendar year in which Executive incurs such expense. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (ii) the amount of expenses eligible for reimbursements or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year.

     The Company makes no representations or warranties to Executive with respect to any tax, economic or legal consequences of this Agreement or any payments or other benefits provided hereunder, including without limitation under Code Section 409A, and no provision of the Agreement shall be interpreted or construed to transfer any liability for failure to comply with Code Section 409A from Executive or any other individual to the Company or any of its affiliates. Executive, by executing this Agreement, shall be deemed to have waived any claim against the Company and its affiliates with respect to any such tax, economic or legal consequences. However, the parties intend that this Agreement and the payments and other benefits provided hereunder be exempt from the requirements of Code Section 409A to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4),

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the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Code Section 409A is applicable to this Agreement (and such payments and benefits), the parties intend that this Agreement (and such payments and benefits) comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A. Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions. In addition, if Executive is a “specified employee,” within the meaning of Code Section 409A, then to the extent necessary to avoid subjecting Executive to the imposition of any additional tax under Code Section 409A, amounts that would otherwise be payable under this Agreement during the six (6) month period immediately following Executive’s “separation from service” for reasons other than Executive’s death shall not be paid to Executive during such period, but shall instead be accumulated and paid to Executive in a lump sum on the first business day after the earlier of the date that is six (6) months following Executive’s separation from service.

     IN WITNESS WHEREOF, the parties have executed and entered into this Agreement effective on the date first set forth above.

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date

 

 

 

 

 

 

 

 

 

 

 

 

CARDIAC SCIENCE CORPORATION

 

 

 

 

 

 

 

 

 

By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Its

 

 

 

 

 

 

 

 

 

 

 

Date

 

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                                                                   EXHIBIT 10.57

 

                         AMENDED AND RESTATED EMPLOYMENT

                                    AGREEMENT

 

                           CARDIAC SCIENCE CORPORATION

 

                                 JOHN R. HINSON

 

                       PRESIDENT & CHIEF EXECUTIVE OFFICER

 

                                                  DATED AS OF SEPTEMBER 20, 2006

 

<PAGE>

 

                    AMENDED AND RESTATED EMPLOYMENT

                                   AGREEMENT

 

      This Amended and Restated Employment Agreement (this "Agreement"), dated

as of September 20, 2006, is between Cardiac Science Corporation, a Delaware

corporation (the "the Company"), and John R. Hinson, President & Chief Executive

Officer ("Executive");

 

                                  WITNESSETH:

 

      WHEREAS, Executive and Quinton Cardiology Systems, Inc. ("Quinton

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, Quinton Cardiology and Cardiac Science, Inc. were combined

by means of the merger of Quinton 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 President and Chief Executive Officer

(CEO), and continue to report to the Board of Directors. 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

President and CEO, and will devote full time and attention to achieving the

purposes and discharging of

 

<PAGE>

 

responsibilies afforded the position, and such other duties as may be assigned

from time to time by the Board of Directors, 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 Board of Directors,

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 three-hundred fifty thousand dollars ($350,000), 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.

 

<PAGE>

 

      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

 

<PAGE>

 

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 eighteen (18) 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 eighteen

      (18) 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 eighteen

      (18) months, and other benefits substantially equivalent to those in place

      as of the termination date, for eighteen (18) months;

 

            (3) any unpaid salary and accrued, unused vacation as of the date

      Executive's employment terminates;

 

<PAGE>

 

            (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

 

<PAGE>

 

      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).

 

<PAGE>

 

      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

 

<PAGE>

 

      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

 

<PAGE>

 

      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

 

<PAGE>

 

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.

 

<PAGE>

 

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.

 

<PAGE>

 

      IN WITNESS WHEREOF, the parties have executed and entered into this

Agreement on the date set forth above.

 

                                     EXECUTIVE:

 

                                     /s/ JOHN R. HINSON

                                     ------------------------------------------

 

                                     CARDIAC SCIENCE CORPORATION

 

                                     By  /s/ MICHAEL K. MATYSIK

                                         --------------------------------------

 

 

                                     Its  Senior Vice President and CFO

 

 

</TEXT>

</DOCUMENT>

 

 

EX-10.2 3 v52405exv10w2.htm EX-10.2

Exhibit 10.2

CONSULTING AGREEMENT

THIS AGREEMENT, with an effective date of March 30, 2009, is by and between Cardiac Science Corporation (the “Company”) and John R. Hinson (“Hinson”). Hinson has voluntarily resigned from his position as President and Chief Executive Officer of the Company. This resignation shall be effective March 30, 2009.

The Parties desire to enter into this consulting agreement to ensure continuity during the transition to a new CEO and to retain access to Hinson’s skills and relationships resulting from his ten years of unique experience with the Company.

1. SERVICES

Commencing March 31, 2009 and continuing through March 30, 2010 (the “Consultancy Period”), the Company agrees to retain Hinson as a consultant.

During the Consultancy Period, Hinson agrees to assist the Company’s new President and Chief Executive Officer in transitioning to his new role and to perform such other duties as are assigned to him from time to time by the Chairman of the Board of Directors or his designee (the “Services”). Without either requiring such activities to be performed, or limiting the scope of any potential activities that may be assigned by the Chairman or his designee, the Services may include the following:

 

a.

 

maintaining relationships with important customers and key partners;

 

 

 

 

 

b.

 

transferring industry-related board memberships;

 

 

 

 

 

c.

 

supporting the company with respect to employee matters;

 

 

 

 

 

d.

 

providing industry and competitive perspective;

 

 

 

 

 

e.

 

participating in business development activities;

 

 

 

 

 

f.

 

performing strategic planning and analysis; and

 

 

 

 

 

g.

 

offering background and historical context for various issues.

2. NONCOMPETITION CONSIDERATION, CONSULTING FEES AND BENEFITS

In consideration for the promises in Section 6 below, the Company shall pay Hinson an initial lump sum payment of $10,000, plus a set of twelve payments totaling $180,000 to be paid in 12 equal monthly payments of $15,000 (collectively, this $190,000 shall be referred to herein as the “Noncompetition Consideration”). In consideration for the Services, the Company shall pay Hinson $250 for each hour of the Services (the “Hourly Fee”). All payments made under this Agreement

1


 

will be subject to applicable taxes and withholdings. No later than the 25th of each month, Hinson will provide the Company with a statement of time and a description of activity for all services performed over the previous 30 days. The Company will pay the initial lump sum component of the Noncompetition Consideration on or before May 31, 2009. The Company will pay the monthly component of the Noncompetition Consideration and the Hourly Fee on the last day of each month.

The Company will pay Hinson all accrued and unused vacation pay on or before April 15, 2009. Hinson will not accrue vacation pay during the Consultancy Period and except as otherwise provided herein and except as otherwise provided under any applicable Cardiac Science Employee Stock Option Plan, during the Consultancy Period, Hinson will not be eligible for any other compensation or employment-related benefits. Notwithstanding any provision of a plan or policy to the contrary, Hinson hereby waives any and all rights to such other compensation and employment-related benefits.

3. EXPENSES

The Company shall reimburse Hinson for his reasonable expenses incurred in performing services rendered at the direction of the Company. In addition, during the term of this agreement, Hinson will be permitted to continue to use his Company-owned computer and Blackberry device, with related expenses to be paid by the Company, to assist with fulfilling his obligations under this agreement. Hinson will provide the Company with receipts or other documentation for all expenses submitted for reimbursement. Payment by Company shall be due within 15 days of receipt of each invoice. Without limitation on the foregoing, any reimbursement payment made under this Section 3 shall be made in accordance with applicable Company policies and procedures for such reimbursements and within 30 days after the month during which the expense was incurred.

4. TERM AND TERMINATION

This Agreement will become effective on March 31, 2009 and will continue until March 30, 2010, provided, however, that the Company may terminate the Agreement prior to March 30, 2010 upon 20 days written notice if, at any time, (a)(i) Hinson willfully and materially fails to provide, within a reasonable time frame, services requested by the Chairman of the Board of Directors or his designee or (ii) Hinson materially violates Section 6 of this Agreement or his Quinton Instrument Company Non-Disclosure Agreement; and (b) Hinson does not cure any such failure or violation within 20 days of receipt of such written notice. Any such early termination, if not subsequently cured as provided herein, shall be deemed effective upon Hinson’s receipt of such written notice of termination. Hinson’s obligations under Section 6 of this Agreement shall continue through March 30, 2010 notwithstanding any early termination of this Agreement.

2


 

5. OUTSTANDING EQUITY AWARDS

     5.1 Restricted Stock Units

Hinson and the Company are parties to a certain restricted stock unit agreement dated March 7, 2008, under which 22,500 unvested restricted stock units are scheduled to vest in three equal parts of 7,500 units each on March 7, 2010, March 7, 2011 and March 7, 2012. In consideration for the promises herein by Hinson, the Company agrees to accelerate the vesting date of such 22,500 restricted stock units to March 30, 2009.

     5.2 Stock Options

Any non-vested stock options will be cancelled on March 30, 2009. Any vested unexercised stock options will be cancelled as of 5:00 PM Pacific Time on June 30, 2009.

6. EXCLUSIVITY AND NON-COMPETITION

     6.1 Non-Competition and Non-Solicitation

During the Consultancy Period, Hinson shall not, directly or indirectly, and whether or not for compensation, either on his own behalf or as an employee, officer, agent, consultant, director, owner, partner, joint venturer, shareholder, investor, or in any other capacity (except when acting for the benefit of the Company pursuant to this Agreement), knowingly:

          (a) accept or solicit investment capital, directly or indirectly, from any individual or entity, or from an officer, partner, or principal of any entity, from which the Company has accepted investment capital, or with which, prior to March 30, 2009, the Company has held serious discussions regarding the possibility of securing investment capital (“Investors or Prospective Investors”) if such acceptance or solicitation would be competitive with or otherwise harmful to the Company’s interests; or

          (b) accept or solicit business from, any individual or entity that is a customer or client of the Company if such acceptance or solicitation would be competitive with or otherwise harmful to the Company’s own business relationship or anticipated business relationship with such customer or client; or

          (c) accept or solicit business from any purchaser in any market sector, segment, or group that the Company has solicited, targeted, or accepted business from or has actively planned to solicit, target, or accept business from if such acceptance or solicitation would be competitive with or otherwise harmful to the Company’s interests;

3


 

          (d) assist in any way, whether as an employee, officer, agent, consultant, director, owner, partner, joint venturer, shareholder, investor, or in any other capacity, any person or entity whose activities are competitive with or otherwise harmful to the Company’s own business activities; or

          (e) enter into or propose to enter into any business arrangement with any entity with which the Company was involved in substantially the same business arrangement, or with which the Company has held discussions regarding the possibility of entering into such an arrangement, if such arrangement would be competitive with or otherwise harmful to the interests of the Company; or

          (f) solicit, induce, or attempt to induce any employee or consultant of the Company to leave such employment or relationship; or

          (g) induce, attempt to induce, assist or participate in, any attempt to purchase, acquire, or merge with the Company or any part of the Company; or

          (h) otherwise engage in, be employed by, perform services for, participate in the ownership, management, control or operation of, or otherwise be connected with, either directly or indirectly, any Competing Business. For purposes of subpart (h) of this paragraph, Hinson will not be considered to be connected with any Competing Business solely on account of ownership of less than five percent of the outstanding capital stock or other equity interests in any Competing Business.

     6.2 Competing Business

“Competing Business” means any business whose efforts are in competition with the efforts of the Company. A Competing Business includes any business whose efforts involve any research and development, products or services in competition with products or services which are, before or during the Consultancy Period, (a) produced, marketed or otherwise commercially exploited by the Company (b) in actual research or development by the Company or (c) planned for future research and development by the Company, as demonstrated by objective evidence, such as budget allocations, work assignments, hiring decisions, planning documents, or other similar documentation.

     6.3 Venue and Jurisdiction

In any action brought to enforce, or remedy of a breach of, this Section 6, Hinson consents to the exclusive jurisdiction of the state or federal courts located in Seattle, Washington.

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     6.4 Construction

This Section 6 shall be enforced to the fullest extent permitted by applicable law. If for any reason any provision of this Section 6 is held to be invalid or unenforceable to any extent, then (a) such provision will be interpreted, construed or reformed to the extent reasonably required to render the same valid, enforceable and consistent with the original intent underlying such provision, and (b) such invalidity or unenforceability will not affect any other provision of this Agreement or any other agreement between the Company and Hinson. If the invalidity or unenforceability is due to the unreasonableness of the scope or duration of the provision, the provision will remain effective for such scope and duration as may be determined to be reasonable. The failure of the Company to insist upon or enforce strict performance of any other provisions of this Agreement or to exercise any of its rights or remedies under this Agreement will not be construed as a waiver or a relinquishment to any extent of the Company’s rights to assert or rely on any such provision, right or remedy in that or any instance; rather, the same will be and remain in full force and effect.

     6.5 Reaffirmation of Quinton Instrument Company Non-Disclosure Agreement

Hinson expressly reaffirms and incorporates herein as part of this Agreement the Quinton Instrument Company Non-Disclosure Agreement, dated March 31, 1998, which Hinson signed as part of his employment with the Company and which shall remain in full effect.

     6.6 Essence of the Agreement; Penalty for Breach

Hinson acknowledges that the restrictions of this Section 6 are the essence of the consideration provided by Hinson to induce the Company to enter into this Agreement. Hinson further acknowledges that the restrictions of this Section 6 are of very special and extraordinary value to the Company, and that breach by Hinson of any part of this Section 6 will cause the Company immediate and irreparable injury. Hinson therefore agrees that in the event he were to materially breach any provision of this Section 6, (a) all future Noncompetition Consideration payment obligations by the Company under Section 2 of this Agreement shall immediately be canceled; (b) Hinson shall repay to the Company all Noncompetition Consideration previously paid to him under Section 2; and (c) Hinson shall forfeit to the Company the 22,500 stock shares acquired through accelerated vesting of RSUs pursuant to Section 5.1 of this Agreement. The liquidated damages of this subpart 6.6 will be the exclusive damages remedy against Hinson for his breach of Section 6, but the Company will retain all rights to pursue equitable remedies, including temporary or permanent injunctive relief against any breach or threatened breach by Hinson.

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7. MISCELLANEOUS

 

A.

 

Tax Withholding and Reporting: Company is entitled to deduct and withhold from the payments made under this Agreement any taxes as required by any applicable law or regulation and to report any payments made under this Agreement to applicable taxing authorities in accordance with applicable law.

 

 

 

 

 

B.

 

Section 409A: The parties intend that this Agreement be exempt from the requirements of Section 409A to the maximum extent possible. Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intention. Notwithstanding the foregoing, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with Section 409A from Hinson or any other individual to the Company or any of its affiliates, employees or agents.

 

 

 

 

 

C.

 

No Assignment: This Agreement is not assignable by Hinson without the prior written consent of Company. The Company may assign its rights under this Agreement to any successor or affiliate of the Company and, in the event of a Change of Control occurring prior to March 30, 2010, the Company agrees to take all possible steps to require the surviving entity following such Change of Control to assume the rights and obligations of this Agreement. Should such assignment not be possible for whatever reason, all amounts due to Hinson under this agreement will be paid immediately and Hinson shall be released from any further obligation to provide the Services, but shall not be released from his obligations under Section 6.

 

 

 

 

 

 

 

For purposes of this paragraph, “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).

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D.

 

No Waivers: No failure by either party to exercise any power given it under this Agreement, or to insist upon strict compliance by the other party of any obligation hereunder, and no custom or practice of the parties at variance with the terms of this Agreement will constitute a waiver of the party’s right to demand exact compliance with the terms hereof.

 

 

 

 

 

E.

 

Choice of Law: This Agreement shall be deemed to have been negotiated and executed in Seattle, Washington and will be governed and construed in accordance with the laws of the State of Washington.

 

 

 

 

 

F.

 

Modification: This Agreement cannot be altered or modified except by a writing signed by both parties.

 

 

 

 

 

G.

 

Entire Agreement: This Agreement constitutes the entire understanding and agreement of the parties, and no representations, documents, promises or agreements, oral or otherwise, trade usage, or course of conduct between the parties not embodied herein or therein will be of any force or effect.

 

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     IN WITNESS WHEREOF, the parties by their duly authorized representative have executed this Agreement as of the date hereinafter set forth.

 

 

 

 

 

 

 

 

 

 

 

Cardiac Science Corporation

 

 

 

John R. Hinson

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Ruediger Naumann - Etienne

 

 

 

/s/ John R. Hinson

 

 

 

 

 

 

 

 

 

 

 

 

 

Its

 

Chairman of the Board of Directors

 

 

 

 

 

 

 

 

Date:

 

3/26/09

 

 

 

Date:

 

3/25/09

 

 

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