EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (the “Agreement”)
is
entered into by and between iCardia Healthcare Corporation (the “Company”),
and
Xxxxx Xxxxxxx (the “Executive”),
and
will be effective as of the Effective Date (defined in Paragraph 1(a)
below).
In
consideration of the mutual covenants and agreements set forth in this Agreement
and other good and valuable consideration the receipt of which is hereby
acknowledged, the Company and the Executive agree as follows:
1. Employment.
(a) Effectiveness.
The
Company hereby employs the Executive and the Executive hereby agrees to be
employed by the Company upon the terms and subject to the conditions contained
in this Agreement, effective January 1, 2006 (such day being the “Effective
Date”).
(b) Term.
The
term of employment of the Executive by the Company pursuant to this Agreement
(the “Employment
Period”)
shall
commence as of the Effective Date and, except as otherwise set forth in
Paragraph 4, shall end on the third anniversary of the Effective Date. Upon
the expiration of the Employment Period, the term of employment may be renewed
on terms mutually agreeable to the parties (a “Renewal
Term”).
2. Position
and Duties.
(a) Positions.
The
Company shall employ the Executive during the Employment Period in the position
of President and Chief Executive Officer of the Company and shall elect the
Executive to serve as Chairman of the Board of Directors (the “Board”)
of the
Company. The Executive shall report directly to the Board.
(b) Responsibilities.
During
the Employment Period, the Executive shall have primary responsibility and
authority (subject to the terms of this Agreement) for the long-term planning,
strategic direction, general management, administration and day-to-day
operations of the Company's business, including, but not limited to: personnel
selection and termination; compensation levels and titles for all employees;
recruiting and training; allocation of resources and time management; customer
selection and rejection; and accounting, billing and invoicing standards and
policies. The Executive shall perform his duties hereunder in a competent and
professional manner, faithfully and to the best of his abilities, and shall
devote substantially all of his business time to the performance of his duties
hereunder. Notwithstanding the foregoing, the Executive may (i) engage in
various professional, charitable, civic, community, religious or other
activities, and (ii) manage his personal investments or financial affairs,
provided neither such activities nor management significantly interfere with
the
performance of the Executive’s business duties hereunder.
Exhibit
10.1
Page
1 of
8 Pages
3. Compensation.
(a) Annual
Base Salary.
The
Company shall pay the Executive a base salary at a rate of not less than
$160,000 per annum (“Base
Salary”),
payable in accordance with the Company’s regular payroll practices from time to
time in effect. The Board, in its sole discretion, may increase the Base Salary
on an annual basis. The Base Salary shall not be reduced, and the term Base
Salary shall refer hereafter to the Base Salary as it may be increased from
time
to time.
(b) Bonus.
The
Company agrees to provide the Executive an annual targeted bonus of fifteen
(15%) to forty percent (40%) of the Base Salary, based upon performance criteria
to be mutually agreed upon by the Executive and the Board. Bonuses for each
fiscal year will be payable within 30 days after completion of the audit of
the
Company’s financial statements for that fiscal year. For the first year of this
Agreement, Executive shall receive a minimum bonus of $40,000 (25%) guaranteed
by the Company, and paid out monthly or quarterly. In the event that Executive’s
employment terminates pursuant to Paragraphs 4(d) or 4(f) during a fiscal year,
the bonus for that fiscal year will be the targeted bonus for such fiscal year,
payable within 30 days of such termination.
(c) Options.
The
Company will grant 240,000 options to the Executive on the Effective Date.
All
options will be issued under the Company’s Long-Term Incentive Plan, a copy of
which has been provided to Executive. The options will carry a purchase price
of
$.50 per share. Those options will vest as follows: Twenty-five percent (25%)
of
the shares subject to the option will vest on the first anniversary of the
grant
date. The remainder of the options shall vest on a monthly basis, beginning
on
the last day of the first month coincident with the first anniversary of the
date of grant and ending on the last day of the month preceding the third
anniversary of the grant date; provided, however, the options will vest
immediately upon termination of employment by Executive for “Good Reason” as
described in Section 4(d).
(d) Benefits.
During
the Employment Period, the Company shall:
(i) include
the Executive in such perquisites as the Company may establish from time to
time
that are commensurate with his position, including, but not limited to providing
the Executive with an automobile allowance of $600.00 per month.
(ii) provide
the Executive with four (4) weeks paid vacation per fiscal year of the
Company.
(iii) permit
the Executive to participate in such other various fringe benefit programs,
policies and plans which the Company may establish and maintain for its
executive employees, including, but not limited to, group life insurance,
short-term and long-term disability insurance, savings, pension, retirement,
401(k) or profit sharing plans, subject to the terms of such programs, policies
or plans.
Exhibit
10.1
Page
2 of
8 Pages
(e) Expense
Reimbursement.
During
the Employment Period, the Company shall pay or reimburse the Executive for
all
reasonable business-related expenses incurred by him in the performance of
his
duties hereunder. The Executive shall submit appropriate invoices for all
expenses for which he seeks reimbursement. The Company will reimburse the
Executive for all such expenses upon the presentation by him of an itemized
account of such expenditures, together with supporting receipts and other
appropriate documentation.
4. Termination
of Employment.
The
Executive’s services shall terminate upon the first to occur of the following
events:
(a) Upon
the
expiration of the Employment Period without the written agreement of both
parties to renew the term. If the Company does not renew the term of employment,
Executive shall be entitled to the continuation of his Base Salary plus the
bonus amount as described in section 3(b) for a period of time equal to six
months (the “Salary
Continuation Period”).
The
amount due hereunder shall be payable in accordance with the Company’s payroll
policy from time to time in effect. The Executive shall also, during the Salary
Continuation Period, be entitled to the continuation of all benefits set forth
in Paragraph 3(d) of this Agreement.
(b) Upon
the
Executive’s date of death or the date the Executive is given written notice that
he has been determined to be disabled by the Company. The Executive shall be
deemed to be “disabled”
if
he
is unable, even with reasonable accommodation, to perform regularly his duties
hereunder by reason of illness or incapacity for a period of more than six
(6)
months, whether or not consecutive, in any twelve (12) month period. A
termination of the Executive's employment by the Company for disability shall
be
communicated to the Executive by written notice and shall be effective on the
thirtieth (30th)
calendar day after receipt of such notice by the Executive, unless the Executive
returns to full-time performance of his duties before such thirtieth
(30th)
calendar day.
(c) On
the
date the Company provides the Executive with written notice that he is being
terminated for “Cause.”
For
purposes of this Agreement, Cause shall mean (i) the Executive’s admission,
confession, plea of “guilty” or “no contest” to or conviction in a court of law
of any felony involving misuse or misappropriation of money or other property,
(ii) a willful act by the Executive, which constitutes gross misconduct or
fraud, or (iii) a material and willful breach by the Executive of the
duties and responsibilities of the Executive hereunder (other than as a result
of incapacity due to physical or mental illness) or any willful breach by the
Executive of any material term of this Agreement, in each case if such breach
is
not cured within thirty (30) calendar days after written notice thereof to
the
Executive by the Company. No act or failure to act on the part of the Executive
shall be considered “willful” unless it is done, or omitted to be done, by the
Executive in bad faith or without reasonable belief that his action or omission
was in the best interests of the Company. A termination of the Executive’s
employment for Cause shall be effected in accordance with the following
procedures. The Company shall give the Executive written notice (“Notice
of Cause for Termination”)
of its
intention to terminate the Executive’s employment for Cause, setting forth in
reasonable detail the specific conduct of the Executive that it considers to
constitute Cause and the specific provision(s) of this Agreement on which it
relies, and stating the date, time and place of the Board Meeting for Cause.
The
“Board
Meeting for Cause”
means
a
meeting of the Board at which the Executive’s termination for Cause will be
considered, that takes place not less than ten (10) and not more than twenty
(20) business days after the Executive receives the Notice of Cause for
Termination. The Executive shall be given an opportunity, together with counsel,
to be heard at the Board Meeting for Cause. The Executive’s termination for
Cause shall be effective when and if a resolution is duly adopted at the Board
Meeting for Cause by a two-thirds vote of the entire membership of the Board
of
the Company, stating that in the good faith opinion of the Board of the Company,
the Executive conducted himself as described in the Notice of Cause for
Termination, and that such conduct constitutes Cause under this
Agreement.
Exhibit
10.1
Page
3 of
8 Pages
(d) On
the
date the Executive terminates his employment for “Good Reason.” For purposes of
this Agreement, “Good
Reason”
means:
(i) the
assignment to the Executive of any duties materially inconsistent in any respect
with Paragraph 2 of this Agreement, or any other action by the Company that
results in a diminution in the Executive’s position, authority, duties or
responsibilities, other than an isolated, insubstantial and inadvertent action
that is not taken in bad faith and is remedied by the Company within thirty
(30)
days after receipt of notice thereof from the Executive;
(ii) any
breach of this Agreement by the Company that is not remedied by the Company
within thirty (30) days after receipt of notice thereof from the
Executive;
(iii) any
failure by the Company to comply with any provision of Paragraph 3 of this
Agreement, other than an isolated, insubstantial and inadvertent failure that
is
not taken in bad faith and is remedied by the Company within thirty (30) days
after receipt of notice thereof from the Executive;
(iv) any
purported termination of the Executive’s employment by the Company for a reason
or in a manner not expressly permitted by this Agreement; or
(v) the
resignation by the Executive following a "Change in Control”. A "Change
in Control"
shall
be deemed to occur on the earliest of (a) the completion of the acquisition
by any entity, person, or group (other than Primedical International, Inc.
(“Primedical”)
and/or
any subsidiary directly or indirectly owned or controlled by Primedical or
any
such subsidiary) (the “Primedical
Group”)
of
beneficial ownership, as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, of more than 50% of the outstanding capital stock of
the
Company entitled to vote for the election of directors ("Voting
Stock");
(b) the consummation by any entity, person, or group (other than a member
of the Primedical Group) of a tender offer or an exchange offer for more than
50% of the outstanding Voting Stock of the Company; (c) the effective time
of (1) a merger or consolidation of the Company with one or more
corporations (other than a member of the Primedical Group) as a result of which
the holders of the outstanding Voting Stock of the Company immediately prior
to
such merger hold less than 50% of the Voting Stock of the surviving or resulting
corporation, or (2) a transfer of substantially all of the property or
assets of the Company other than to a member of the Primedical Group; and
(d) the election to the Board, without the recommendation or approval of
the incumbent Board, of directors constituting a majority of the number of
directors of the Company then in office.
Exhibit
10.1
Page
4 of
8 Pages
A
termination of employment by the Executive for Good Reason shall be effectuated
by giving the Company written notice (“Notice
of Termination for Good Reason”)
of the
termination within three (3) months of the event constituting Good Reason (six
(6) months in the event of a Change in Control), setting forth in reasonable
detail the specific conduct of the Company that constitutes Good Reason and
the
specific provisions of this Agreement on which the Executive relies. A
termination of employment by the Executive for Good Reason shall be effective
on
the fifth (5th) business day following the date when the Notice of Termination
for Good Reason is given, unless the notice sets forth a later date (which
date
shall in no event be later than thirty (30) business days after the notice
is
given).
(e) On
the
date the Executive terminates his employment for any reason (other than for
Good
Reason as defined in Paragraph 4(d)), provided that the Executive shall give
the
Company thirty (30) days written notice prior to such date of his intention
to
terminate this Agreement.
(f) On
the
date the Company terminates the Executive’s employment for any reason, other
than a reason otherwise set forth in this Paragraph 4, provided that the
Company shall give the Executive thirty (30) days written notice prior to such
date of its intention to terminate this Agreement.
5. Consequences
of Termination of Employment Period.
If the
Executive’s services are terminated pursuant to Paragraph 4, the Executive
shall be entitled to the continuation of his salary through his final date
of
active employment, plus any accrued but unused vacation pay. The Executive
also
shall be entitled to any benefits mandated under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) or required under any death, insurance or
retirement plan, program or agreement provided by the Company to which the
Executive is a party or in which the Executive is a participant including,
but
not limited to, any short term or long term disability plan or program, if
applicable. In addition to the salary and benefits set forth above, if the
Executive’s employment is terminated prior to the end of the Employment Period,
other than pursuant to Paragraph 4(b), 4(c) or 4(e), the Executive (or his
estate which shall receive all payments otherwise owed to the Executive
hereunder) shall (A) vest in any options otherwise unvested under
Paragraph 3(c) and (B) shall be entitled to the continuation of his
Base Salary plus the bonus amount as described in section 3(b) for a period
of
time equal to six months (the “Salary
Continuation Period”).
The
amount due hereunder shall be payable in accordance with the Company’s payroll
policy from time to time in effect. The Executive shall also, during the Salary
Continuation Period, be entitled to the continuation of all benefits set forth
in Paragraph 3(d) of this Agreement.
Exhibit
10.1
Page
5 of
8 Pages
6. Confidentiality
and Non Competition.
Confidential Information shall be exchanged between the parties in the course
of
this agreement and as such shall remain at all times the property of the
Company. Except as expressly permitted by the terms of this Agreement, the
Executive shall not disclose the Company’s Information to any third party
outside the due course of business unless previously agreed in writing by the
Company or required to do so by law. The Executive does not acquire any rights
to the Information disclosed to it under this Agreement, shall not use it for
any purpose other than the Agreed Purpose and shall use the same degree of
care
as it uses to protect its own strictly confidential information to prevent
the
unauthorized use, dissemination or publication of the Company’s Information.
During
the Non-Compete Period (as defined below), the Executive will not, either
directly or indirectly, solely or jointly with any other individual or
individuals or entity or entities, whether or not engaged in business for
profit, as a consultant, advisor, individual proprietor, partner, shareholder,
member, director, manager, officer, joint venturer, investor, lender or in
any
other capacity, compete with iCardia.
“Non-Compete
Period” means the period commencing on the date of signature of this Agreement,
and continuing through for a one (1) year period immediately following the
termination or expiration of this agreement. Should this Agreement be terminated
prior to the first anniversary of the Effective Date, then the Non-Compete
Period shall in such case be reduced to a period of six (6) months following
termination of this agreement.
7. Federal
and State Withholding.
The
Company shall deduct from the amounts payable to the Executive pursuant to
this
Agreement the amount of all required federal and state withholding taxes in
accordance with the Executive’s Form W-4 on file with the Company and all
applicable social security and Medicare taxes.
8. Notices.
All
notices and other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered
or
five (5) days after deposit in the United States mail, certified and return
receipt required, postage prepaid, addressed: (a) if to the Executive, to the
most recent address then shown on the employment records of the Company, and
if
to the Company, to Xxxxxxx Xxxxxxx, Primedical International Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxxx, XX 00000 or (b) to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
9. Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is determined to be invalid, illegal or unenforceable in
any
respect under applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Agreement or the validity,
legality or enforceability of such provision 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.
Exhibit
10.1
Page
6 of
8 Pages
10. Entire
Agreement.
This
Agreement and the agreements referenced herein constitute the entire agreement
and understanding between the parties and supersede and preempt any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related in any manner to the subject matter
hereof.
11. Successors
and Assigns.
This
Agreement shall be enforceable by the Executive and the Executive’s heirs,
executors, administrators and legal representatives, and by the Company and
its
successors and permitted assigns. Any successor or permitted assign of the
Company shall be required to assume by instrument delivered to the Executive
the
liabilities of the Company hereunder. This Agreement shall not be assigned
by
the Company other than to a successor pursuant to a merger, consolidation,
reorganization or transfer of all or substantially all of the capital stock
or
assets of the Company.
12. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Illinois, without reference to its conflict of law
provisions.
13. Dispute
Resolution.
Any and
all disputes between the parties arising under this Agreement initially shall
be
referred by the parties to non-binding mediation for resolution. If such
mediation is unsuccessful in resolving any such dispute, the parties agree
to
submit the dispute to final and binding arbitration. The arbitration shall
be
administered by and conducted pursuant to the JAMS Employment Arbitration Rules
and Procedures. The decision of the arbitrator(s) shall be final and may be
recorded as a judgment in a court of competent jurisdiction. The arbitrator
shall have no authority to add to, modify, change or disregard any lawful term
of this Agreement. Any decision by the arbitrator must be supported by findings
of fact and conclusions of law. The arbitrator’s findings of fact must be
supported by substantial evidence on the record as a whole and the conclusions
of law and any remedy must be consistent with and provided for under the laws
of
the State of Illinois or federal law.
14. Amendment
and Waiver.
The
provisions of this Agreement may be amended or waived only by the written
agreement of the Company and the Executive, and no course of conduct or failure
or delay in enforcing the provisions of this Agreement shall affect the
validity, binding effect or enforceability of this Agreement. A waiver of a
breach on any one occasion will not be construed as a waiver of any other
breach.
15. Counterparts.
This
Agreement may be executed in two counterparts, each of which shall be deemed
to
be an original and both of which together shall constitute one and the same
instrument.
16. Indemnification.
To the
fullest extent permitted by law, the Company agrees to indemnify the Executive
against, and to hold the Executive harmless from any and all claims, lawsuits,
losses, damages, assessments, penalties, expenses, costs and liabilities of
any
kind or nature, including without limitation, court costs and attorneys’ fees,
which the Executive may sustain directly as a result of, or in connection with,
the Company’s breach or violation of any provision of this Agreement or any
other act or omission by the Company or its employees or any suit or other
proceeding brought by a third party (including but not limited to governmental
or regulatory agencies or bodies) in connection with the foregoing or in
connection with any act or omission of the Executive while he was employed
or
serves as an officer or director of the Company or any affiliate thereof, unless
such claim, lawsuit, loss, damage, assessment, penalty, expense, cost or
liability is the result of the Executive’s gross negligence or willful
misconduct.
Exhibit
10.1
Page
7 of
8 Pages
17. Attorneys’
Fees. The
Company agrees to reimburse the Executive for attorney’s fees and expenses
incurred by the Executive in connection with the negotiation, preparation,
and
review of this Agreement. In addition, the Company agrees to pay all legal
fees
and related expenses (including the costs of experts, evidence and counsel)
incurred by the Executive as they become due as a result of the Executive
seeking to obtain or enforce any right or benefit set out in this Agreement
or
by any other plan or arrangement maintained by the Company under which the
Executive may be entitled to receive benefits.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the date first above
written.
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iCardia
Healthcare Corporation
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EXECUTIVE:
|
||
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By: /s/
Xxxxx X. Xxxxx
|
/s/
Xxxxx Xxxxxxx
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||
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Its:
Chief Executive Officer
|
Xxxxx
Xxxxxxx
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Exhibit
10.1
Page
8 of
8 Pages
