NewCardio, Inc. EMPLOYMENT AGREEMENT
Exhibit
10.19
THIS
EMPLOYMENT AGREEMENT (the “Agreement”)
is made and entered into as of March 1, 2008 (the “Effective
Date”) by and between NewCardio, Inc., a Delaware corporation (the “Company”),
and Xxxxxxx Xxxxxxxxxx (the “Executive”).
BACKGROUND
A. The
Company desires to retain the services of the Executive as the Chief Financial
Officer and Executive Vice President of the Company from the Effective
Date. The Company also desires to provide employment security to the
Executive, thereby inducing the Executive to continue employment with the
Company and enhancing the Executive’s ability to perform
effectively.
B. The
Executive is willing to be employed by the Company on the terms and subject to
the conditions set forth in this Agreement.
THE
PARTIES AGREE AS FOLLOWS:
1. Title, Duties and
Responsibilities.
1.1 Title. The
Executive will be employed by the Company as its Chief Financial Officer and
Executive Vice President, at the pleasure of the Board of Directors of the
Company (the “Board”). Executive
shall report to the Chief Executive Officer.
1.2 Duties. The
Executive will devote all of the Executive’s business time, energy, and skill to
the affairs of the Company; provided, however, that
reasonable time for the activities set forth on Exhibit A and such
other activities which have been approved in advance by the Board will be
permitted, in any case so long as such activities do not materially interfere
with the Executive’s performance of services under this Agreement.
1.3 Performance of
Duties. The Executive will discharge the duties described
herein and duties as set forth by the Board from time to time, in a diligent and
professional manner. The Executive will report to the Board, and will
further comply with the Company’s business policies, rules and regulations, as
adopted from time to time by the Board.
2. Terms of
Employment.
2.1 Definitions. For
purposes of this Agreement, the following terms will have the following
meanings:
(a) “Accrued
Compensation” means any accrued Total Cash Compensation, any benefits
under any plan of the Company in which the Executive is a participant to the
full extent of the Executive’s rights under such plans, any accrued vacation
pay, and any appropriate business expenses incurred by the Executive in
connection with the performance of the Executive’s duties hereunder, all to the
extent unpaid on the date of termination.
(b) “Base
Salary” will have the meaning set forth in Section 3.1
hereof.
(c) “Change of
Control” means the occurrence of any one of the following: (i) any
“person”, as such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”) (other than the Company, a subsidiary, an affiliate, or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Company representing 50% or more
of the combined voting power of the Company’s then outstanding securities; or
(ii) a sale of all or substantially all of the assets of the Company; or (iii)
any merger, reorganization or other transaction of the Company whether or not
another entity is the survivor, pursuant to which holders of all the shares of
capital stock of the Company outstanding prior to the transaction hold, as a
group, less than 50% of the shares of capital stock of the Company outstanding
after the transaction; provided, however, that neither (A) a merger effected
exclusively for the purpose of changing the domicile of the Corporation in which
the holders of all the shares of capital stock of the Company immediately prior
to the merger hold the voting power of the surviving entity following the merger
in the same relative amounts with substantially the same rights, preferences and
privileges, nor (B) a transaction the primary purpose of which is to raise
capital for the Company, will constitute a Change of Control.
(d) “Death
Termination” means termination of the Executive’s employment due to the
death of the Executive.
(e) “Disability
Termination” means termination of the Executive’s employment by the
Company due to the Executive’s incapacitation due to disability. The
Executive will be deemed to be incapacitated due to disability if at the end of
any month the Executive is unable to perform substantially all of the
Executive’s duties under this Agreement in the normal and regular manner due to
illness, injury or mental or physical incapacity, and has been unable so to
perform for either (i) three consecutive full calendar months then ending, or
(ii) 90 or more of the normal working days during the 12 consecutive full
calendar months then ending. Nothing in this paragraph will alter the
Company’s obligations under applicable law, which may, in certain circumstances,
result in the suspension or alteration of the foregoing time
periods.
(f) “Termination For
Cause” means termination of the Executive’s employment by the Company due
to (i) the Executive’s dishonesty or fraud, gross negligence in the
performance of the Executive’s duties and responsibilities; (ii) the Executive’s
conviction of a felony involving moral turpitude; (iii) the Executive’s
incurable material breach of the terms of this Agreement or the Confidentiality
Agreement (as defined below); or (iv) the willful and continued refusal by
Executive to substantially perform Executive’s duties or responsibilities for
the Company described herein and as set forth by the Board from time to
time.
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(g) “Termination Other
Than For Cause” means termination of the Executive’s employment by the
Company due to any reason other than as specified in Sections 2.1(d), (e),
or (f) hereof.
(h) “Total Cash
Compensation” means the Executive’s Base Salary plus any cash bonuses,
commissions or similar payment accrued during the preceding calendar year, and
if there is no complete preceding calendar year, then the preceding twelve (12)
month period, and if there is no complete preceding twelve (12) month period,
then the preceding employment period annualized to a twelve (12) month
period.
(i) “Voluntary
Termination” means termination of the Executive’s employment by the
voluntary action of the Executive, other than by reason of a Disability
Termination or a Death Termination or as described in 2.1(j).
(j) “Voluntary
Resignation for Good Reason” means Executive’s voluntary resignation of
Executive’s employment with the Company within thirty (30) days following the
expiration of any Company cure period (discussed below) following the occurrence
of one or more of the following, without Executive’s consent: (i) the
assignment to Executive of any authority, duties, or responsibilities, or the
reduction of Executive’s authority, duties, or responsibilities, either of which
results in a material diminution of Executive’s authority, duties, or
responsibilities with the Company in effect immediately prior to such
assignment, or the removal of Executive from Executive’s authority, duties, or
responsibilities with the Company in effect immediately prior to such removal;
provided, however, that a reduction in duties, position or responsibilities
solely by virtue of the Company being acquired and made part of a larger entity
(as, for example, when the Chief Financial Officer of the Company remains as
such following a Change of Control but is not made the Chief Financial Officer
of the acquiring corporation) shall not constitute a "Voluntary Resignation for
Good Reason" hereunder; (ii) a material reduction of Executive’s Base Salary (in
other words, a reduction of more than ten percent of Executive’s Base Salary in
any one year); (iii) a material change in the geographic location at which
Executive must perform services (in other words, the relocation of Executive to
a facility that is more than fifty (50) miles from Executive’s current
location); and (iv) the failure of the Company to obtain assumption of this
Agreement by any successor. Executive will not tender Voluntary
Resignation for Good Reason without first providing the Company with written
notice of the acts or omissions constituting the grounds for such Voluntary
Resignation for Good Reason within ninety (90) days of the initial existence of
the grounds such Voluntary Resignation for Good Reason and a reasonable cure
period of not less than thirty (30) days following the date of such
notice.
2.2 Employee at
Will. The Executive is an “at will” employee of the Company,
and the Executive’s employment may be terminated by the Company at any time by
giving the Executive written notice thereof, subject to the terms and conditions
of this Agreement and the At-Will Employment, Confidential Information,
Invention Assignment and Arbitration Agreement signed by Executive in favor of
the Company on January 22, 2008 and attached as Exhibit B hereto (the
“Confidentiality
Agreement”), the terms of which are herein incorporated by
reference.
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2.3 Termination For
Cause. Upon a Termination For Cause, the Company will pay the
Executive Accrued Compensation, if any.
2.4 Termination Other
Than For Cause.
(a) Upon a
Termination Other Than For Cause following December 1, 2008, but prior to
March 1, 2009, and provided Executive executes and delivers to the Company a
release and waiver of claims in the form attached hereto as Exhibit C and such
release and waiver of claims is not revoked and has become effective
pursuant to its terms, the Company will pay or reimburse, as applicable, the
Executive upon the effectiveness of such release and waiver of claims: (a)
Accrued Compensation, if any, (b) a monthly cash severance payment equal to (x)
Executive’s then Base Salary, divided by (y) twelve (12), for a period of time
equal to the total number of whole months which have then elapsed since the
Effective Date, and (c) Executive’s COBRA-related expenses for such period,
provided that such COBRA-related reimbursement shall cease upon such date that
Executive is afforded health benefits from a subsequent employer.
(b) Upon a
Termination Other Than For Cause upon or following March 1, 2009, and provided
Executive executes and delivers to the Company a release and waiver of claims in
the form attached hereto as Exhibit C and such
release and waiver of claims is not revoked and has become effective
pursuant to its terms, the Company will pay or reimburse, as applicable, the
Executive upon the effectiveness of such release and waiver of claims: (a)
Accrued Compensation, if any, (b) a monthly cash severance payment equal to (x)
Executive’s then Base Salary, divided by (y) twelve (12), for the following
twelve (12) month period, and (c) Executive’s COBRA-related expenses for such
period, provided that such COBRA-related reimbursement shall cease upon such
date that Executive is afforded health benefits from a subsequent
employer.
2.5 Voluntary
Resignation For Good Reason.
(a) Upon a
Voluntary Resignation For Good Reason following December 1, 2008, but prior
to March 1, 2009, and provided Executive executes and delivers to the Company a
release and waiver of claims in the form attached hereto as Exhibit C and such
release and waiver of claims is not revoked and has become effective
pursuant to its terms, the Company will pay or reimburse, as applicable, the
Executive upon the effectiveness of such release and waiver of claims: (a)
Accrued Compensation, if any, (b) a monthly cash severance payment equal to (x)
Executive’s then Base Salary, divided by (y) twelve (12), for a period of time
equal to the total number of whole months which have then elapsed since the
Effective Date, and (c) Executive’s COBRA-related expenses for such period,
provided that such COBRA-related reimbursement shall cease upon such date that
Executive is afforded health benefits from a subsequent employer.
(b) Upon a
Voluntary Resignation For Good Reason upon or following March 1, 2009, and
provided Executive executes and delivers to the Company a release and waiver of
claims in the form attached hereto as Exhibit C and such
release and waiver of claims is not revoked and has become effective
pursuant to its terms, the Company will pay or reimburse, as applicable, the
Executive upon the effectiveness of such release and waiver of claims: (a)
Accrued Compensation, if any, (b) a monthly cash severance payment equal to (x)
Executive’s then Base Salary, divided by (y) twelve (12), for the following
twelve (12) month period, and (c) Executive’s COBRA-related expenses for such
period, provided that such COBRA-related reimbursement shall cease upon such
date that Executive is afforded health benefits from a subsequent
employer.
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2.6 Disability
Termination. The Company will have the right to effect a
Disability Termination by giving written notice thereof to the
Executive. Upon a Disability Termination, the Company will pay the
Executive Accrued Compensation, if any.
2.7 Death
Termination. Upon a Death Termination, the Executive’s
employment will be deemed to have terminated as of the last day of the month
during which her death occurs, and the Company will promptly pay to the
Executive’s estate Accrued Compensation, if any.
2.8 Voluntary
Termination. In the event the Executive wishes to consummate a
Voluntary Termination, the Company requests that Executive give the Company at
least ninety (90) days advance written notice. During such period,
the Executive will continue to receive regularly scheduled Base Salary payments
and benefits. Following the effective date of a Voluntary
Termination, the Company will pay the Executive Accrued Compensation, if
any.
2.9 Timing of
Termination Payments. Unless expressly provided otherwise, the
foregoing termination payments will be made at the usual and agreed times
provided for in Section 3.1 of this Agreement.
3. Compensation and
Benefits.
3.1 Base
Salary. As payment for the services to be rendered by the
Executive as provided in Section 1 and subject to the provisions of Section 2 of
this Agreement, the Company will pay the Executive a “Base
Salary” at the rate of $240,000 per year, payable on the Company’s normal
payroll schedule. The Executive’s “Base
Salary” may be increased in accordance with the provisions hereof or as
otherwise determined from time to time, but reviewed at least annually, by the
Board or the Compensation Committee of the Board.
3.2 Additional
Benefits.
(a) Benefit
Plans. The Executive will be eligible to participate in such
of the Company’s benefit plans as are now generally available or later made
generally available to senior officers of the Company, including, without
limitation, medical, dental, life, and disability insurance plans.
(b) Expense
Reimbursement. The Company agrees to reimburse the Executive
for all reasonable, ordinary and necessary travel and entertainment expenses
incurred by the Executive in conjunction with the Executive’s services to the
Company consistent with the Company’s standard reimbursement
policies. The Company will pay travel costs incurred by the Executive
in conjunction with the Executive’s services to the Company consistent with the
Company’s standard travel policies.
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(c) Vacation. The
Executive will be entitled to vacation as fitting the position, whereby it is
discretionary and the Executive will provide contact information while away.
Vacation is not specifically accrued.
3.3 Bonus. For
fiscal year 2008, the Executive will be entitled to earn a prorated annual bonus
based on Executive’s achievement of certain milestones to be defined by the
Board and discussed with the Executive as soon as practicable following the date
hereof, not exceed twenty-five percent (25%) of Executive’s Base Salary as of
the Effective Date. Bonuses to be paid to Executive in subsequent years shall be
on terms and conditions determined by the Board.
3.4 Option to
Purchase Common Stock. Promptly following the Effective Date,
the senior management of the Company will recommend that the Board grant the
Executive an option (the “Option”)
to purchase 630,000 shares of the Company’s Common Stock pursuant to the
Company’s 2004 Equity Incentive Plan (the “Plan”) at
an exercise price per share equal to the fair market value of a share of the
Company’s Common Stock as of the date of such grant, as determined by the Board,
and subject to the following vesting schedule: (i) 30,000 of the shares shall be
fully vested as of the Effective Date, and (ii) with respect to the remaining
600,000 shares, such shares shall vest monthly over 48 months in equal monthly
amounts subject to Executive’s Continuous Service (as defined in the Plan)
through each such date. Notwithstanding the above, upon the closing a
Change of Control and subject to Executive’s Continuous Service (as defined in
the Plan) as of such date, the Option will vest immediately with respect to an
additional six (6) months of vesting of any then unvested or unreleased
shares. In addition, notwithstanding anything to the contrary set
forth in the Plan, the 30,000 shares which are fully vested as of the Effective
Date shall be exercisable until the first to occur of (i) the five (5) year
anniversary of the date of Executive’s termination, (ii) a Change of Control, or
(iii) ten (10) years from the date of grant.
4. Miscellaneous.
4.1 Waiver. The
waiver of the breach of any provision of this Agreement will not operate or be
construed as a waiver of any subsequent breach of the same or other provision
hereof.
4.2 Notices. All
notices and other communications under this Agreement will be in writing and
will be given by personal or courier delivery, facsimile or first class mail,
certified or registered with return receipt requested, and will be deemed to
have been duly given upon receipt if personally delivered or delivered by
courier, on the date of transmission if transmitted by facsimile, or three
business days after mailing if mailed, to the addresses of the Company and the
Executive contained in the records of the Company at the time of such
notice. Any party may change such party’s address for notices by
notice duly given pursuant to this Section 4.2.
4.3 Headings. The
section headings used in this Agreement are intended for convenience of
reference and will not by themselves determine the construction or
interpretation of any provision of this Agreement.
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4.4 Governing
Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California, excluding those laws that
direct the application of the laws of another jurisdiction.
4.5 Survival of
Obligations. This Agreement will be binding upon and inure to
the benefit of the executors, administrators, heirs, successors, and assigns of
the parties; provided, however, that except as herein expressly provided, this
Agreement will not be assignable either by the Company (except to an affiliate
or successor of the Company) or by the Executive without the prior written
consent of the other party.
4.6 Counterparts and
Facsimile Signatures. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement
may be executed by facsimile signature (including signatures in Adobe PDF or
similar format).
4.7 Withholding. All
sums payable to the Executive hereunder will be reduced by all federal, state,
local, and other withholdings and similar taxes and payments required by
applicable law.
4.8 Enforcement. If
any portion of this Agreement is determined to be invalid or unenforceable, such
portion will be adjusted, rather than voided, to achieve the intent of the
parties to the extent possible, and the remainder will be enforced to the
maximum extent possible.
4.9 Entire Agreement;
Modifications. Except as otherwise provided herein or in the
exhibits hereto, this Agreement and all exhibits hereto represent the entire
understanding among the parties with respect to the subject matter of this
Agreement, and supersedes any and all prior and contemporaneous understandings,
agreements, plans, and negotiations, whether written or oral, with respect to
the subject matter hereof, including, without limitation, any understandings,
agreements, or obligations respecting any past or future compensation, bonuses,
reimbursements, or other payments to the Executive from the
Company. All modifications to the Agreement must be in writing and
signed by each of the parties hereto. The Company and Executive
acknowledge that upon the execution of this Agreement, the offer letter dated
January 22, 2008 between the Company and Executive is hereby terminated and of
no further force or effect, and no further compensation is owing to Executive
thereunder as of the Effective Date, including without limitation the stock
option grant to purchase 90,000 shares of Common Stock pursuant to the
Plan.
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4.10 Section
409A.
(a) Notwithstanding
anything to the contrary in this Agreement, if Executive is a “specified
employee” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and
the final regulations and any guidance promulgated thereunder (“Section
409A”) at the time of Executive’s termination, and the severance payable
to Executive, if any, pursuant to this Agreement, when considered together with
any other severance payments or separation benefits which may be considered
deferred compensation under Section 409A (together, the “Deferred
Compensation Separation Benefits”) will not and could not under any
circumstances, regardless of when such termination occurs, be paid in full by
March 15 of the year following Executive’s termination, then only that portion
of the Deferred Compensation Separation Benefits which do not exceed the
Section 409A Limit (as defined below) may be made within the first six (6)
months following Executive’s termination of employment in accordance with the
payment schedule applicable to each payment or benefit. For these purposes,
each severance payment is hereby designated as a separate payment and will not
collectively be treated as a single payment. Any portion of the
Deferred Compensation Separation Benefits in excess of the Section 409A Limit
shall accrue and, to the extent such portion of the Deferred Compensation
Separation Benefits would otherwise have been payable within the first six (6)
months following Executive’s termination of employment, will become payable on
the first payroll date that occurs on or after the date six (6) months and
one (1) day following the date of Executive’s termination of
employment. All subsequent Deferred Compensation Separation Benefits,
if any, will be payable in accordance with the payment schedule applicable to
each payment or benefit.
(b) The
foregoing provision is intended to comply with the requirements of Section 409A
so that none of the severance payments and benefits to be provided hereunder
will be subject to the additional tax imposed under Section 409A, and any
ambiguities herein will be interpreted to so comply. The Company and
Executive agree to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Executive under Section 409A.
(c) For
purposes of this Agreement, “Section 409A
Limit” means the lesser of two (2) times: (i) Executive’s annualized
compensation based upon the annual rate of pay paid to Executive during the
Company’s taxable year preceding the Company’s taxable year of Executive’s
termination of employment as determined under Treasury Regulation
1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with
respect thereto; or (ii) the maximum amount that may be taken into account
under a qualified plan pursuant to Section 401(a)(17) of the Code for the year
in which Executive’s employment is terminated.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as
of the Effective Date.
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By:
/s/ Brainislav Vajdic
Name:
Brainislav Vajdic
Title:
President and Chief Executive Officer
/s/
Xxxxxxx
Xxxxxxxxxx
Xxxxxxx
Xxxxxxxxxx
Address:
____________________________
____________________________
____________________________
Telephone:
____________________________
Facsimile:
_____________________________
Email:
________________________________
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EXHIBIT
A
OTHER
ACTIVITIES
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1..
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Member
of the Board of Directors of The CFO
Network.
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2.
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Member
of the Board of Directors of Contego Healthcare,
Inc..
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EXHIBIT B
AT-WILL EMPLOYMENT, CONFIDENTIAL
INFORMATION, INVENTION ASSIGNMENT AND ARBITRATION AGREEMENT
1
EXHIBIT
C
RELEASE
AND WAIVER OF CLAIMS
In
consideration of the payments and other benefits set forth in the Employment
Agreement dated March 1, 2008, to which this form is attached (the “Employment
Agreement”), I, Xxxxxxx Xxxxxxxxxx, hereby furnish NewCardio, Inc. (the
“Company”)
with the following release and waiver (“Release and
Waiver”).
In
exchange for the consideration provided to me by the Employment Agreement that I
am not otherwise entitled to receive, I hereby generally and completely release
the Company and its directors, officers, employees, stockholders, partners,
agents, attorneys, predecessors, successors, parent and subsidiary entities,
insurers, affiliates, and assigns from any and all claims, liabilities and
obligations, both known and unknown, that arise out of or are in any way related
to events, acts, conduct, or omissions occurring prior to my signing this
Release and Waiver. This general release includes, but is not limited
to: (1) all claims arising out of or in any way related to my employment with
the Company or the termination of that employment; (2) all claims related to my
compensation or benefits from the Company, including, but not limited to,
salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership interests in
the Company; (3) all claims for breach of contract, wrongful termination,
and breach of the implied covenant of good faith and fair dealing; (4) all
tort claims, including, but not limited to, claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all
federal, state, and local statutory claims, including, but not limited to,
claims for discrimination, harassment, retaliation, attorneys’ fees, or other
claims arising under the federal Civil Rights Act of 1964 (as amended), the
federal Americans with Disabilities Act of 1990, the federal Age Discrimination
in Employment Act of 1967 (as amended) (“ADEA”),
and the California Fair Employment and Housing Act (as amended).
I also
acknowledge that I have read and understand Section 1542 of the California Civil
Code which reads 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.” I hereby expressly waive
and relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
I
acknowledge that, among other rights, I am waiving and releasing any rights I
may have under ADEA, that this Release and Waiver is knowing and voluntary, and
that the consideration given for this Release and Waiver is in addition to
anything of value to which I was already entitled as an executive of the
Company. I further acknowledge that I have been advised, as required
by the Older Workers Benefit Protection Act, that: (a) the release
and waiver granted herein does not relate to claims under the ADEA which may
arise after this Release and Waiver is executed; (b) I should consult with an
attorney prior to executing this Release and Waiver; (c) if I am over the age of
forty (40) on the date I am signing this Release and Waiver, I have 21 days in
which to consider this Release and Waiver (although I may choose voluntarily to
execute this Release and Waiver earlier); (d) if I am over the age of forty (40)
on the date I am signing this Release and Waiver, I have seven days following
the execution of this Release and Waiver to revoke my consent to this Release
and Waiver; and (e) if I am over the age of forty (40) on the date I am signing
this Release and Waiver, this Release and Waiver shall not be effective until
the eighth day after I execute this Release and Waiver and the revocation period
has expired; otherwise it shall be effective upon the date of my signature
below.
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I acknowledge my continuing obligations
under the At-Will Employment, Confidential Information, Invention Assignment and
Arbitration Agreement a copy of which is attached hereto (the “Confidentiality
Agreement”). Pursuant to the Confidentiality Agreement, I
understand that among other things, I must not use or disclose any confidential
or proprietary information of the Company and I must immediately return all
Company property and documents (including all embodiments of proprietary
information) and all copies thereof in my possession or control. I
understand and agree that my right to the severance pay I am receiving is in
exchange for my agreement to the terms of this Release and Waiver and is
contingent upon my continued compliance with my Confidentiality
Agreement.
This Release and Waiver, including the
Confidentiality Agreement, constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company and me with regard to the
subject matter hereof. I am not relying on any promise or
representation by the Company that is not expressly stated
herein. This Release and Waiver may only be modified by a writing
signed by both me and a duly authorized officer of the Company.
| Date: __________________ |
By:
Xxxxxxx
Xxxxxxxxxx
|
2
