Exhibit 10.62

 

 

ENGAGEMENT LETTER & AGREEMENT

 

This Confidential Engagement Letter and Agreement (“the Agreement”) between
Barry D. Michaels (“Consultant”), an independent consultant, and Cardima, Inc.
(“the Company”), a Delaware corporation, dated as of June 30, 2003, sets forth
an understanding and agreement between the Company and the Consultant regarding
the terms and conditions of the Consultant’s engagement by the Company to
provide certain management services to the Company. In consideration of the
mutual promises and commitments made in this agreement, and intending to be
legally bound, the Consultant on the one hand, and the Company on the other
hand, agree to the terms set forth in this Agreement.

 

1. Nature of Engagement: Consultant is to perform various management services as
requested by the Company to fulfill the Company’s interim requirements for
financial leadership and direction through acting as the interim Chief Financial
Officer of the Company (the “Services”). Such services will be provided as an
independent contractor to the Company and is not considered a common law
employee of Company for any purpose. Consultant is not entitled to any of the
benefits that Company provides its common law employees, including but not
limited to vacation, sick leave, health insurance, life insurance, participation
in Company’s stock plans, other than as may be set forth herein. To the extent
required by law, Consultant shall be solely responsible for and shall make
proper and timely payment of any withholding or other taxes, such as the
Consultant’s estimated state and federal income taxes and self-employment tax.

 

2. Duration of the Engagement: The duration of the engagement is open and is not
limited to a specific time period; however, the consultant has agreed to be
available to provide such service for a minimum of six months from the signing
of this Agreement. The Company may, at its option, terminate this engagement
without cause upon 30 days notice. The consultant may, with 30 days notice,
terminate this engagement if such termination occurs on or after six months of
service has been provided to the Company. The engagement may be terminated at
anytime and without advance notice (a) if both parties agree, or (b) by the
Company if consultant is grossly negligent, or (c) by Consultant if Cardima
fails to pay consultant as specified elsewhere in this engagement letter or
otherwise fails to live up to the terms of the Agreement. This engagement is to
begin effective June 30, 2003.

 

3. Service Fees and Expenses: Consultant agrees to provide services in exchange
for the payment of service fees, certain overhead expenses, and out-of-pocket
expenses related to the services provided to Cardima by the Consultant as set
forth herein.

 

Base service Fee: $1,137 per day of service ( approximately $250,000 per annum,
assuming 220 bill days) for each day the Consultant has devoted a substantial
portion of any given day in his efforts to provide the Company services as set
forth herein.

 

Overhead Charges: Applied each calendar year on base service fees as follows:

 

17.25%    applied to the first $7,000 of base service fees in each calendar year
7.65%    applied to base service fees from $7,001 - $87,000 in each calendar
year 1.45%    applied to base service fees above $87,000 in each calendar year

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Rates and ranges will be held constant for calendar year 2003, but will be
adjusted in subsequent years as required to offset government imposed payroll
taxes. Overhead Charges will be reduced to the extent that Consultant has
already met Consultant’s Social Security Insurance and California State
Disability Insurance tax obligation from other income sources for 2003. In
addition, if engagement remains active beyond 2003, overhead charges will be
increased so as to cover the cost of preferred provider family insurance
policies for medical, dental, vision and life insurance for the Consultant,
commensurate with coverage provided to the executive officers of the Company.

 

Incentive Bonus: Consultant shall be eligible, at the discretion of the Board of
Directors, for a cash incentive bonus, commensurate with incentive bonuses paid
to the executive officers of the Company. If this engagement is terminated
without cause prior to the payment of such bonus, the Company will pay
consultant a pro-rata share of the bonus earned.

 

Stock Options: The Company will issue the Consultant a non-qualified stock
option consisting of 100,000 shares of common stock at a per-share price equal
to closing price of the stock on the execution date of this engagement
agreement. The options will have a ten year life. One-third of the options will
vest immediately upon the signing of this agreement. 1/24 of the remaining
shares granted in the stock option will vest each month on the monthly
anniversary of the signing of this engagement letter. If this agreement is
terminated for any reason other than gross negligence or malfeasance on the part
of the consultant, consultant shall have the full term of the options in which
to exercise those shares vested at the time of termination. If the Company is
sold, liquidated, or experiences a change-in-control, or if this engagement is
cancelled in anticipation of those events, all unvested shares will immediately
vest.

 

Out-of-Pocket Costs: The Company will reimburse Consultant for reasonable
out-of-pocket expenses incurred by the Consultant in the performance of his
service to the Company. Expenses will include but are not limited to Fremont, CA
area lodging, travel to/from the Company and the consultants primary or
satellite offices (Tucson, AZ and Laguna Beach, CA, respectively), telephone,
and all travel or other expenses incurred by Consultant in the performance of
service to the Company or on behalf of the Company.

 

3. Termination of the Agreement for Death or Disability This agreement will be
terminated, without penalty, upon the death or disability of the Consultant. The
Company agrees to pay all sums due Consultant, including fees earned, applicable
overhead, pro-rata bonus, or expenses incurred, to the heirs of the Consultant.

 

4. Termination for Cause This agreement may be immediately terminated for cause.
Cause is defined as gross negligence or malfeasance on the part of the
Consultant. Cause is further defined, as pertains to the Company, as failure to
pay Consultant’s invoices per the terms agreed to in this Agreement or causing
Consultant, in the performance of his service to the Company, to unknowingly
misrepresent the financial status or business prospects for the Company to any
third party, including but not limited to the public market.

 

5. Open, Honest and Fair Disclosure The Company agrees to provide Consultant
with full access to all financial and operation data, knowledge and records
pertaining to the Company and to, at all times, notify Consultant of existing,
threatened, or potential problems, opportunities or situations that could effect
required public disclosure. Moreover, the Company agrees to operate in a manner
that promotes open communication, honesty, and integrity.

 

6. Indemnification The Company and Consultant will enter into the Company’s
standard form of Indemnification Agreement (a copy of which is attached).

 

7. Non-Disclosure Concurrently with the execution of this Agreement, the
Consultant will enter into the Company’s standard form of proprietary
information and inventions agreement (a copy of which is attached).

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8. Payment Terms The consultant will invoice the Company for earned fees,
overhead and expenses every-other week. The Company agrees to pay Consultant’s
invoice within ten calendar days of the date of the invoice. Late payments are
subject to a 15% late charge. Failure to pay on a timely basis will allow
Consultant, at his option, to terminate this Agreement without penalty.

 

9. Enforcement; Severability All provisions and portions of this Agreement are
severable. If any provision or portion of this Agreement or the application of
any provision or portion of this Agreement to any person, to any circumstance,
or to any claims, are determined to be invalid, void, voidable or unenforceable
to any extent for any reason, (a) the application of such provision or portion
of this Agreement to any other person, to any other circumstance, or to any
other Claims shall be unaffected thereby, and the remaining provisions and
portions of this Agreement shall also be unaffected thereby; (b) all other
provisions and portions of this Agreement shall remain in full force and shall
continue to be enforceable to the fullest and greatest extent permitted by law;
and (c) any provision or part of the Agreement found by any Court with
jurisdiction to be invalid, void, voidable or unenforceable, may be construed or
changed by the Court to the extent reasonably necessary to make the provision or
part (as construed or changed), valid, enforceable and binding.

 

10. Governing Law; Amendment. This Agreement is made and entered into by the
Company in the State of California. The Agreement shall in all respects be
governed by and interpreted under and in accordance with the laws of the State
of California without regard to its choice of law principles. The breach of any
promise in this Agreement by any party shall not invalidate the Agreement and
shall not be a defense to the enforcement of the Agreement against any party.
This Agreement may be amended or its provisions waived only in writing signed by
both Consultant and the Company. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof and supersedes all prior agreements and understandings between the
parties.

 

11. Successors. This agreement shall inure to the benefit of the Company and its
predecessors, successors and assigns, and to the benefit of the Consultant and
the Consultant’s heirs, administrators and executors.

 

Dated  

 

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   Consultant  

 

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             Barry D Michaels Dated  

 

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   Cardima, Inc.  

 

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             Gabriel B. Vegh              Chief Executive Officer