July 8, 2011

Mr. Greg H. Guettler
1716 Pinehurst Avenue
St. Paul, MN  55116

RE:  Retention Bonus

Dear Greg:

As you know, Hypertension Diagnostics, Inc. (“HDI” or the “Company” as defined
on page 3 of this agreement) is in the process of exploring various strategic
alternatives for the Company.  In order to maintain your services during this
period and to assist in the successful consummation of such strategic
alternatives, the board of directors has approved and the Company has agreed to
provide you with a “Retention Bonus” as outlined below subject to the terms and
conditions in this agreement (the “Agreement”).

Should HDI or any company (‘Successor”) that acquires any portion or all of
HDI’s medical device business, including but not limited to a sale of HDI’s
intellectual property or the software algorithm used in its current products
(“Sale”), (A) not provide you employment that is acceptable to you; or (B)
involuntarily terminates your employment, except Termination for Cause, (as
defined below) then HDI will provide you with the following:
 
1.  
Six (6) months of salary at your current annual salary of $180,000, payable in
one lump sum within thirty (30) days of your final date of employment at HDI or
its successor.  This amount is $90,000;

2.  
Six (6) months of your current employee benefit for medical and dental insurance
(80% of the premium cost will be paid by HDI and 20% by you), payable in one
lump sum within thirty (30) days of final date of employment.  Based on current
insurance premium payments this amount is estimated to be approximately $10,000;

3.  
Full vesting of any and all unvested options.

 
4.  
For purposes of this Agreement, Termination for Cause shall be defined as one or
more of the following actions undertaken by you: theft of company property,
perpetuation of fraud, falsifying HDI records, failure to perform duties as an
employee of HDI, embezzlement, misappropriation, deliberately violating HDI
policy or rules, conviction of a serious crime or misdemeanor (excluding minor
traffic violations), or material misconduct.

 
 

Should there be a Sale, HDI will pay you 10% of the cash proceeds received by
the Company after any fees paid by HDI to finders or brokers in connection with
that transaction, payable within thirty (30) days of HDI’s receipt of such cash
proceeds.  Any assumption of HDI liabilities or assumption of other ongoing
future commitments required by HDI that are transferred to a third party will
not be considered part of the cash proceeds for the purposes of calculating the
fee described in this paragraph.
 
The Retention Bonus is subject to the following terms and conditions:
 
1.  
If you, at any time, voluntarily terminate your employment with HDI or its
Successor, you will forfeit all of the consideration outlined in this Agreement;

 
2.  
HDI will provide you with thirty (30)-days notice of its termination of your
employment at HDI;

 
3.  
Should the Company decide that it needs your services on a part-time basis after
termination of your employment at HDI, you agree to provide consulting services
to HDI at the rate of $125 per hour.  Should you not provide such services to
HDI, then you will forfeit all of the consideration outlined in this Agreement;

 
4.  
Should you be offered and accept employment at the Successor and are
subsequently involuntarily terminated within the first twelve (12) months of
your employment, you will be entitled to receive a payment equal to $50,000,
which is approximately equal to: three (3) months of your current salary and
three (3) months of your current medical and dental benefits.

 
5.  
For your agreement to provide reasonable consulting to the buyers of HDI assets,
should they request you to provide consulting services to them and be willing to
engage you for reasonable compensation for your providing such consulting
services, HDI will not consider any consulting services that you provide to
purchasers of HDI assets as full employment.  Therefore, even if you provide
consulting work to the purchasers of HDI assets after you have been
involuntarily terminated by HDI, HDI will pay your full retention bonus in
accordance with the terms and conditions of the Agreement.

 
HDI shall deposit $100,000 into a separate account to segregate the funds
eligible for payment to you as part of your Retention Bonus.

As a condition of this Agreement, you hereby agree that as of the effective date
of your termination from the Company, you agree to resign as a member of the
board of directors of the Company.

Nothing in this Agreement shall preclude you from receiving payment for your
unused and accrued paid time off up to a maximum of 120 hours and any unused and
accrued personal days, both subject to required withholding.

Specifically in consideration of the Retention Bonus described in this
Agreement, by signing this Agreement you, for yourself and anyone who has or
obtains legal rights or claims through you, agree to the following:

1.  
You hereby do release, agree not to sue, and forever discharge HDI of and from
any and all manner of claims, demands, actions, causes of action, administrative
claims, liability, damages, claims for punitive or liquidated damages, claims
for attorney's fees, costs and disbursements, individual or class action claims,
or demands of any kind whatsoever, you have or might have against them or any of
them, whether known or unknown, in law or equity, contract or tort, arising out
of or in connection with your employment with HDI, or the termination of that
employment, or otherwise, and however originating or existing, from the
beginning of time through the date of your signing this Agreement.

2.  
This release includes, without limiting the generality of the foregoing, any
claims you may have for wages, salary, bonuses, commissions, penalties,
compensation, deferred compensation, vacation pay, paid time off, separation
benefits, defamation, invasion of privacy, negligence, improper discharge (based
on contract, common law, or statute, including any federal, state or local
statute or ordinance prohibiting discrimination or retaliation in employment),
alleged violation of the United States Constitution, the Minnesota Constitution,
the Minnesota Human Rights Act, Minn. Stat. § 363A.01 et seq., the Age
Discrimination in Employment Act, 29 U.S.C. § 621 et seq., Title VII of the
Civil Rights Act, 42 U.S.C. § 2000e et seq., the Americans with Disabilities
Act, 42 U.S.C. § 12101 et seq., the Employment Retirement Income Security Act of
1976, 29 U.S.C. § 1001 et seq., the Family and Medical Leave Act, 29 U.S.C. §
2601 et seq., the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq., the
Sarbanes-Oxley Act, 15 U.S.C. § 7201 et seq., the Genetic Information
Non-discrimination Act of 2008, Pub. L. No. 110-233, 122 Stat. 881 (codified as
amended in scattered sections of 29 U.S.C. and 42 U.S.C.), any claim arising
under Minn. Stat. Chapters 177 and 181, any claim for discrimination, harassment
or retaliation based on sex, race, color, creed, religion, age, national origin,
marital status, sexual orientation, disability, genetic information, status with
regard to public assistance, sexual harassment or any other protected status,
and any claim for retaliation under Minn. Stat. Chapter 176 or any other claim
for retaliation.  You understand and agree that, by signing this Agreement, you
waive and release any past, present, or future claim relating to your employment
with HDI except as provided in Paragraph 4 below.

3.  
You hereby waive any and all relief not provided for in this Agreement.

4.  
By entering into this Agreement, the parties do not intend to release any claim
for constructive discharge, which may arise from your employment relationship
with HDI.  You expressly reserve the right to pursue any claim(s) you may have
for constructive discharge.  For purposes of this

Agreement, “Constructive Discharge” is defined as a situation where you
voluntarily resign because HDI has intentionally or deliberately created
“Unbearable Working Conditions” for you.   “Unbearable Working Conditions”
mean:  (i) a continuous pattern of discriminatory harassment by HDI; (ii)
receiving a negative change in pay, benefits or workload for reasons that are
not performance-related; or, (iii) requesting you to engage in misappropriation
or embezzlement in connection with HDI’s business, conduct business in an
illegal or fraudulent manner, falsify HDI records, engage in material
misconduct, violate HDI policy or rules, or misrepresent HDI to potential
buyers..  Additionally, for Constructive Discharge to have occurred, you must
provide 15 calendar days notice (the “Discharge Notice Period”) to HDI’s CEO
that you intend to resign because of Unbearable Working Conditions, and, prior
to the end of the Discharge Notice Period, HDI’s CEO shall have failed, on a
reasonable basis, to respond and remediate your Unbearable Working Conditions.

5.  
You are not, by signing this Agreement, releasing or waiving (i) any vested
interest you may have in any 401(k), pension or profit sharing plan by virtue of
employment with HDI, (ii) any rights or claims that may arise after it is
signed, (iii) the post-employment benefits and payments specifically promised to
you herein, (iv) the right to institute legal action for the purpose of
enforcing the provisions of this Agreement, (v) the right to apply for
unemployment compensation benefits, (vi) the right to file a charge of
discrimination with a governmental agency, although you agree that you will not
be able to recover any award of money or damages if you file such a charge or
have a charge filed on your behalf, (vii) the right to testify, assist, or
participate in an investigation, hearing, or proceeding conducted by the EEOC,
or (viii) any rights you have under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”).

6.  
HDI, as used in this Agreement, shall mean Hypertension Diagnostics, Inc. and
its parent, subsidiaries, divisions, affiliated entities, insurers, if any, and
its and their present and former officers, directors, shareholders, trustees,
employees, agents, representatives and consultants, and the successors and
assigns of each, whether in their individual or official capacities, and the
current and former trustees or administrators of any pension or other benefit
plan applicable to the employees or former employees of HDI, in their official
and individual capacities.

By signing this Agreement, you acknowledge and agree that HDI has informed you
by this Agreement that (a) you have the right to consult with an attorney of
your choice prior to signing this Agreement, and (b) you are entitled to
twenty-one (21) calendar days from the receipt of this Agreement to consider
whether the terms are acceptable to you.  HDI encourages you to use the full
twenty-one (21) day period to consider this Agreement.

You are hereby notified of your right to rescind the release of claims contained
in Section 3 with regard to claims arising under the Minnesota Human Rights Act,
Minnesota Statutes Chapter 363A, within fifteen (15) calendar days of your
signing this Agreement, and with regard to your rights arising under the federal
Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., within seven (7)
calendar days of your signing this Agreement.  The two rescission periods shall
run concurrently.  In order to be effective, the rescission must: (a) be in
writing; (b) be delivered to Kenneth W. Brimmer, 10275 Wayzata Blvd., Suite 310,
Minnetonka, MN  55305 by hand or mail within the required period; and (c) if
delivered by mail, the rescission must be postmarked within the required period,
properly addressed to Mr. Brimmer, as set forth above, and sent by certified
mail, return receipt requested.  This Agreement will be effective upon the
expiration of the 15-day period without rescission.  You understand that if you
rescind any part of this Agreement in accordance with this Section 5, you will
not receive the payments described in this Agreement.

By signing this Agreement you agree to be bound by the Company’s policies and
procedures and your employment agreement regarding: (i) return of Company
property, (ii) treatment of confidential and/or proprietary information of HDI;
and (iii) covenant not to compete.

You promise and agree not to disparage HDI.  You also promise and agree not to
disclose or discuss, directly or indirectly, in any manner whatsoever, any
information regarding either (a) the contents and terms of this Agreement, or
(b) the substance and/or nature of any dispute between HDI and any employee or
former employee, including yourself.  You agree that the only people with whom
you may discuss this confidential information are your legal and financial
advisors and your immediate family, provided they agree to keep the information
confidential, or as otherwise required by law.  Provided, however, that nothing
in this paragraph shall: (i) prevent you from providing a copy of this Agreement
to a human rights agency including, but not limited to, the Equal Employment
Opportunity Commission, to demonstrate that you have knowingly and voluntarily
executed a general release of claims; (ii) limit your obligation to give
truthful testimony or information to a court or governmental agency, when
required to do so by subpoena, court order, law, or administrative regulation;
or (iii) limit your legal right to testify, assist, or participate in an
investigation, hearing or proceeding conducted regarding a charge of
discrimination filed with a governmental agency.

If you breach any term of this Agreement, HDI may commence legal action and
pursue its available legal and equitable remedies.  If HDI seeks and/or obtains
relief from an alleged breach of this Agreement, all of the provisions of this
Agreement shall remain in full force and effect.

It is expressly understood that this Agreement does not constitute, nor shall it
be construed as, an admission by HDI or you of any liability or unlawful conduct
whatsoever.  HDI and you specifically deny any liability or unlawful conduct.

This Agreement is personal to you and may not be assigned by you without the
written agreement of HDI.  The rights and obligations of this Agreement shall
inure to the successors and assigns of HDI.

If a court finds any term of this Agreement to be invalid, unenforceable, or
void, the parties agree that the court shall modify such term to make it
enforceable to the maximum extent possible.  If the term cannot be modified, the
parties agree that the term shall be severed and all other terms of this
Agreement shall remain in effect.

This Agreement shall be governed and construed in accordance with the laws of
the State of Minnesota.

This Agreement contains the full agreement between you and HDI and may not be
modified, altered, or changed in any way except by written agreement signed by
both parties.  The parties agree that this Agreement supersedes and terminates
any and all other written and oral agreements and understandings between the
parties, except for any agreements you have with HDI will respect to
confidentiality, non-competition, non-solicitation and the like, which shall
remain in full force and effect.

By signing this Agreement, you acknowledge that you have read this Agreement,
including the release of claims, and understand that the release of claims is a
full and final release of all claims you may have against HDI and the other
entities and individuals covered by the release.  By signing, you also
acknowledge and agree that you have entered into this Agreement knowingly and
voluntarily.

After you have reviewed this Agreement and obtained whatever advice and counsel
you consider appropriate regarding it, you should evidence your agreement to the
terms of this Agreement by dating and signing both copies.

Sincerely,

HYPERTENSION DIAGNOSTICS, INC.

Mark N. Schwartz
Chairman and Chief Executive Officer

ACKNOWLEDGMENT AND SIGNATURE

By signing below, I, Greg H. Guettler, acknowledge and agree that I have read
this Agreement carefully.  I understand all of its terms.  In signing this
Agreement, I have not relied on any statements or explanations made by HDI
except as specifically set forth in this Agreement.  I have had adequate time to
consider whether to sign this Agreement and I am voluntarily and knowingly
releasing my claims against HDI as defined in this Agreement.  I intend this
Agreement to be legally binding.

Accepted this                                            day
of                      July                       , 2011.

Greg H. Guettler
 
 

 

 
 

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