EXHIBIT 10.21
 
SEVERANCE AGREEMENT AND RELEASE
 
RECITALS
 
This Severance Agreement and Release (“Agreement”) is made by and between
Lucille A. Ferus (“Employee”) and Natus Medical, Inc. (“Company”) (collectively
referred to as the “Parties”):
 
WHEREAS, Employee was employed by the Company;
 
WHEREAS, the Company and Employee entered into a Employee Confidential
Information and Invention Assignment Agreement (the “Confidentiality
Agreement”);
 
WHEREAS, the Company and Employee have entered into Stock Option Agreements
dated November 6, 1996, December 17, 1997, March 4, 1998, October 23, 1998, July
6, 1999 and May 9, 2000 granting Employee the option to purchase shares of the
Company’s common stock subject to the terms and conditions of the Company’s 1991
Stock Option Plan and the Stock Option Agreement (the “Stock Agreements”);
 
WHEREAS, the Company has terminated the Employee’s employment due to business
necessity as part of a reduction in force on September 30, 2002 (the
“Termination Date”);
 
WHEREAS, the Parties, and each of them, wish to resolve any and all disputes,
claims, complaints, grievances, charges, actions, petitions and demands that the
Employee may have against the Company as defined herein, including, but not
limited to, any and all claims arising or in any way related to Employee’s
employment with, or separation from, the Company;
 
NOW THEREFORE, in consideration of the promises made herein, the Parties hereby
agree as follows:
 
COVENANTS
 
1.    Consideration.
 
(a)    The Company agrees to pay Employee a lump sum equivalent to six (6)
months of Employee’s base salary, less applicable withholding. This payment will
be made to employee within ten (10) business days after the Effective Date.
 
(b)    Stock.    The Parties agree that for purposes of determining the number
of shares of the Company’s common stock that Employee is entitled to purchase
from the Company, pursuant to the exercise of outstanding options, the Employee
will be considered to have vested only up to the Termination Date. Employee
acknowledges that as of the Termination Date, he/she will have vested in 68,301
options and no more. The exercise of any stock options shall continue to be
subject to the terms and conditions of the Stock Agreements.
 
(c)    Benefits.    Employee’s health insurance benefits will cease January 31,
2003, subject to Employee’s right to continue his/her health insurance under
COBRA. Employee’s participation in all other benefits and incidents of
employment ceased on the Termination Date. Employee ceased accruing employee
benefits, including, but not limited to, vacation time and paid time off, as of
the Termination Date.
 
(d)    Business Equipment.    The Company agrees to allow Employee to retain
possession of the following Company-provided equipment:

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(i)      Laptop computer (to be provided)
 
(ii)     Computer at Employee’s home
 
(iii)    Personal Data Assistant (PDA)
Employee agrees to provide the Company with copies of work data contained on
this equipment.
 
(e)    Outplacement Services.    Company will provide $5,000.00 for outplacement
services directly billed to the Company.
 
2.    Confidential Information.    Employee shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company
and shall continue to comply with the terms and conditions of the
Confidentiality Agreement between Employee and the Company. Employee shall
return all of the Company’s property and confidential and proprietary
information in his/her possession to the Company on the Effective Date of this
Agreement.
 
3.    Payment of Salary.    Employee acknowledges and represents that the
Company has paid all salary, wages, bonuses, accrued vacation, commissions and
any and all other benefits due to Employee once the above noted payments and
benefits are received. In addition, any outstanding expense reports will be paid
within seven (7) days of receipt by the Company.
 
4.    Release of Claims.    Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company and its officers, managers, supervisors, agents and employees.
Employee, on his/her own behalf, and on behalf of his/her respective heirs,
family members, executors, agents, and assigns, hereby fully and forever
releases the Company and its officers, directors, employees, agents, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations, and assigns, from, and agree not to sue concerning,
any claim, duty, obligation or cause of action relating to any matters of any
kind, whether presently known or unknown, suspected or unsuspected, that
Employee may possess arising from any omissions, acts or facts that have
occurred up until and including the Effective Date of this Agreement including,
without limitation:
 
(a)    any and all claims relating to or arising from Employee’s employment
relationship with the Company and the termination of that relationship;
 
(b)    any and all claims relating to, or arising from, Employee’s right to
purchase, or actual purchase of shares of stock of the Company, including,
without limitation, any claims for fraud, misrepresentation, breach of fiduciary
duty, breach of duty under applicable state corporate law, and securities fraud
under any state or federal law;
 
(c)    any and all claims under the law of any jurisdiction including, but not
limited to, wrongful discharge of employment; constructive discharge from
employment; termination in violation of public policy; discrimination; breach of
contract, both express and implied; breach of a covenant of good faith and fair
dealing, both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;
 
(d)    any and all claims for violation of any federal, state or municipal
statute, including, but not limited to, Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of
1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act,
the Employee Retirement Income Security Act of 1974, The Worker Adjustment and
Retraining Notification Act, Older Workers Benefit Protection Act; the
California Fair Employment and Housing Act, and the California Labor Code.;
 
(e)    any and all claims for violation of the federal, or any state,
constitution;

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(f)    any and all claims arising out of any other laws and regulations relating
to employment or employment discrimination;
 
(g)    any claim for any loss, cost, damage, or expense arising out of any
dispute over the non-withholding or other tax treatment of any of the proceeds
received by Employee as a result of this Agreement; and
 
(h)    any and all claims for attorneys’ fees and costs.
 
The Company and Employee agree that the release set forth in this section shall
be and remain in effect in all respects as a complete general release as to the
matters released. This release does not extend to any obligations incurred under
this Agreement.
 
Employee acknowledges and agrees that any breach of any provision of this
Agreement shall constitute a material breach of this Agreement and shall entitle
the Company immediately to recover the severance benefits provided to Employee
under this Agreement.
 
5.    Acknowledgement of Waiver of Claims Under ADEA.    Employee acknowledges
that he/she is waiving and releasing any rights he/she may have under the Age
Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and
release is knowing and voluntary. Employee and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date of this Agreement. Employee acknowledges that the
consideration given for this waiver and release Agreement is in addition to
anything of value to which Employee was already entitled. Employee further
acknowledges that he/she has been advised by this writing that
 
(a)    he/she should consult with an attorney prior to executing this Agreement;
 
(b)    he/she has up to forty-five (45) days within which to consider this
Agreement;
 
(c)    he/she has been advised in writing by the Company of the class, unit, or
group of individuals affected by the reduction in force, and the job titles and
ages of all individuals who were and were not affected;
 
(d)    he/she has seven (7) days following his/her execution of this Agreement
to revoke the Agreement;
 
(e)    this ADEA waiver shall not be effective until the revocation period has
expired; and
 
(f)    nothing in this Agreement prevents or precludes Employee from challenging
or seeking a determination in good faith of the validity of this waiver under
the ADEA, nor does it impose any condition precedent, penalties or costs for
doing so, unless specifically authorized by federal law.
 
6.    Civil Code Section 1542.    The Parties represent that they are not aware
of any claim by either of them other than the claims that are released by this
Agreement. Employee acknowledges that he/she has the opportunity to seek the
advice of legal counsel and is familiar with the provisions of California Civil
Code Section 1542, which provides as follows:
 
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
 
Employee, being aware of said code section, agrees to expressly waive any rights
he/she may have thereunder, as well as under any other statute or common law
principles of similar effect.

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7.    No Pending or Future Lawsuits.    Employee represents that he/she has no
lawsuits, claims, or actions pending in his/her name, or on behalf of any other
person or entity, against the Company or any other person or entity referred to
herein. Employee also represents that he/she does not intend to bring any claims
on his/her own behalf or on behalf of any other person or entity against the
Company or any other person or entity referred to herein.
 
8.    Confidentiality.    The Parties acknowledge that Employee’s agreement to
keep the terms and conditions of this Agreement confidential was a material
factor on which all parties relied in entering into this Agreement. Employee
hereto agrees to use his/her best efforts to maintain in confidence: (i) the
existence of this Agreement, (ii) the contents and terms of this Agreement,
(iii) the consideration for this Agreement, and (iv) any allegations relating to
the Company or its officers or employees with respect to Employee’s employment
with the Company, except as otherwise provided for in this Agreement
(hereinafter collectively referred to as “Settlement Information”). Employee
agrees to take every reasonable precaution to prevent disclosure of any
Settlement Information to third parties, and agrees that there will be no
publicity, directly or indirectly, concerning any Settlement Information.
Employee agrees to take every precaution to disclose Settlement Information only
to those attorneys, accountants, governmental entities, and family members who
have a reasonable need to know of such Settlement Information. The Parties agree
that if Company proves that Employee breached this Confidentiality provision, it
shall be entitled to an award of its costs spent enforcing this provision,
including all reasonable attorneys’ fees associated with the enforcement action,
without regard to whether the Company can establish actual damages from the
breach by Employee.
 
9.    No Cooperation.    Employee agrees he/she will not act in any manner that
might damage the business of the Company. Employee agrees that he/she will not
counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the Company and/or any officer, director,
employee, agent, representative, shareholder or attorney of the Company, unless
under a subpoena or other court order to do so. Employee further agrees both to
immediately notify the Company upon receipt of any court order, subpoena, or any
legal discovery device that seeks or might require the disclosure or production
of the existence or terms of this Agreement, and to furnish, within three (3)
business days of its receipt, a copy of such subpoena or legal discovery device
to the Company.
 
10.    Non-Disparagement.    Employee agrees to refrain from any defamation,
libel or slander of the Company or tortious interference with the contracts and
relationships of the Company. All inquiries by potential future employers of
Employee will be directed to Human Resources. Upon inquiry, the Company shall
only state the following: Employee’s last position and dates of employment.
 
11.    Non-Solicitation.    Employee agrees that for a period of twelve (12)
months immediately following the Effective Date of this Agreement, Employee
shall not either directly or indirectly solicit, induce, recruit or encourage
any of the Company’s employees to leave their employment, or take away such
employees, or attempt to solicit, induce, recruit, encourage, take away or hire
employees of the Company, either for him/herself or any other person or entity.
 
12.    No Admission of Liability.    The Parties understand and acknowledge that
this Agreement constitutes a compromise and settlement of disputed claims. No
action taken by the Parties hereto, or either of them, either previously or in
connection with this Agreement shall be deemed or construed to be: (a) an
admission of the truth or falsity of any claims heretofore made or (b) an
acknowledgment or admission by either party of any fault or liability whatsoever
to the other party or to any third party.
 
13.    No Knowledge of Wrongdoing.    Employee represents that he/she has no
knowledge of any wrongdoing involving improper or false claims against a federal
or state governmental agency, or any other wrongdoing that involves Employee or
other present or former Company employees.
 
14.    Costs.    The Parties shall each bear their own costs, expert fees,
attorneys’ fees and other fees incurred in connection with this Agreement.
 
15.    Indemnification.    Employee agrees to indemnify and hold harmless the
Company from and against any and all loss, costs, damages or expenses,
including, without limitation, attorneys’ fees or expenses incurred by the
Company arising out of the breach of this Agreement by Employee, or from any
false representation made herein by

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Employee, or from any action or proceeding which may be commenced, prosecuted or
threatened by Employee or for Employee’s benefit, upon Employee’s initiative, or
with Employee’s aid or approval, contrary to the provisions of this Agreement.
Employee further agrees that in any such action or proceeding, this Agreement
may be pled by the Company as a complete defense, or may be asserted by way of
counterclaim or cross-claim.
 
16.    Arbitration.    The Parties agree that any and all disputes arising out
of, or relating to, the terms of this Agreement, their interpretation, and any
of the matters herein released, shall be subject to binding arbitration in San
Mateo County before the American Arbitration Association under its National
Rules for the Resolution of Employment Disputes. The Parties agree that the
prevailing party in any arbitration shall be entitled to injunctive relief in
any court of competent jurisdiction to enforce the arbitration award. The
Parties agree that the prevailing party in any arbitration shall be awarded its
reasonable attorneys’ fees and costs. The Parties hereby agree to waive their
right to have any dispute between them resolved in a court of law by a judge or
jury. This section will not prevent either party from seeking injunctive relief
(or any other provisional remedy) from any court having jurisdiction over the
Parties and the subject matter of their dispute relating to Employee’s
obligations under this Agreement and the agreements incorporated herein by
reference.
 
17.    Authority.    The Company represents and warrants that the undersigned
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.
Employee represents and warrants that he/she has the capacity to act on his/her
own behalf and on behalf of all who might claim through him/her to bind them to
the terms and conditions of this Agreement. Each party warrants and represents
that there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.
 
18.    No Representations.    Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.
 
19.    Severability.    In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision so long as the remaining provisions remain intelligible and continue
to reflect the original intent of the Parties.
 
20.    Entire Agreement.    This Agreement represents the entire agreement and
understanding between the Company and Employee concerning the subject matter of
this Agreement and Employee’s relationship with the Company, and supersedes and
replaces any and all prior agreements and understandings between the Parties
concerning the subject matter of this Agreement and Employee’s relationship with
the Company, with the exception of the Confidentiality Agreement.
 
21.    No Waiver.    The failure of any party to insist upon the performance of
any of the terms and conditions in this Agreement, or the failure to prosecute
any breach of any of the terms and conditions of this Agreement, shall not be
construed thereafter as a waiver of any such terms or conditions. This entire
Agreement shall remain in full force and effect as if no such forbearance or
failure of performance had occurred.
 
22.    No Oral Modification.    Any modification or amendment of this Agreement,
or additional obligation assumed by either party in connection with this
Agreement, shall be effective only if placed in writing and signed by both
Parties or by authorized representatives of each party.
 
23.    Governing Law.    This Agreement shall be deemed to have been executed
and delivered within the State of California, and it shall be construed,
interpreted, governed, and enforced in accordance with the laws of the State of
California, without regard to conflict of law principles. To the extent that
either party seeks injunctive relief in any court having jurisdiction for any
claim relating to the alleged misuse or misappropriation of trade secrets or
confidential or proprietary information, each party hereby consents to personal
and exclusive jurisdiction and venue in the state and federal courts of the
State of California.

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24.    Attorneys’ Fees.    In the event that either Party brings an action to
enforce or effect its rights under this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including the costs of mediation,
arbitration, litigation, court fees, plus reasonable attorneys’ fees, incurred
in connection with such an action.
 
25.    Effective Date.    This Agreement is effective after it has been signed
by both parties and after eight (8) days have passed since Employee has signed
the Agreement (the “Effective Date”), unless revoked by Employee within seven
(7) days after the date the Agreement was signed by Employee.
 
26.    Counterparts.    This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.
 
27.    Voluntary Execution of Agreement.    This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:
 
(a)    They have read this Agreement;
 
(b)    They have been represented in the preparation, negotiation, and execution
of this Agreement by legal counsel of their own choice or that they have
voluntarily declined to seek such counsel;
 
(c)    They understand the terms and consequences of this Agreement and of the
releases it contains; and
 
(d)    They are fully aware of the legal and binding effect of this Agreement.
 
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.
 

       
Natus Medical Inc.
Dated   October 7, 2002
 
     
By  /s/  Tim C. Johnson                

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Tim C. Johnson
President and CEO
       
LUCILLE A. FERUS, an individual
Dated:  October 7, 2002
 
     
/s/  Lucille A. Ferus        

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Lucille A. Ferus

 
 

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