Exhibit 10.9

 

 

VIVEVE, INC.

150 COMMERCIAL STREET
SUNNYVALE, CA 94086

 

May 14, 2012

 

Patricia K. Scheller

3013 Comfort Road

P.O. Box 142

Solebury, Pennsylvania 18963-0142

 

Dear Pat:

 

Viveve, Inc. (the "Company") is pleased to offer you employment as its Chief
Executive Officer reporting to the Board of Directors ("Board"). Subject to
formal appointment, in your capacity as Chief Executive Officer you will also
serve as a Director on the Board. This offer of employment is subject to (i) the
Company's completion of a formal background check to which you hereby consent
and (ii) the following terms and conditions:

 

1.     Position. Your initial title will be Chief Executive Officer. This is a
full-time position. While you are an employee of the Company, you will not
engage in any other employment, consulting or other business activity (whether
full-time or part-time) or serve as a director on the board of any other company
("External Activities") in each case which (a) would create a conflict of
interest with the Company, or (b) is not approved by the Board in a written
acknowledgment. By signing this letter agreement, you confirm to the Company
that you currently have no such External Activities and that you have no
contractual commitments or other legal obligations that would prohibit you from
performing or would materially limit you capability to perform your duties for
the Company.

 

2.     Cash Compensation. The Company will pay you a base salary at the annual
rate of three hundred thirty-five thousand dollars ($335,000) per year, payable
in accordance with the Company's standard payroll schedule. In addition, subject
to the discretion of the Board, you will be eligible to be considered for an
annual incentive bonus, typically for each fiscal year of the Company. The bonus
(if any) will be awarded based on objective or subjective criteria relating to
the performance of the Company and/or your own personal performance and in each
case as established by the Board. A determination of the satisfaction of any
such criteria, and the ultimate award of any bonus will be at the sole
discretion of the Board. Your initial target bonus will be equal to thirty
percent (30%) of your annual base salary. Any bonus for the fiscal year in which
your employment begins will be prorated, based on the number of days you are
employed by the Company during that fiscal year. Any bonus for a fiscal year
will typically be paid within 2½ months after the close of that fiscal year, but
only if you are still employed by the Company at the time of payment. The
determinations by the Board with respect to your bonus will be final and
binding.

  

 
 

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Patricia K. Scheller

May 14, 2012

Page 2

 

 

Your base salary will generally be subject to adjustment pursuant to the
Company's employee compensation policies in effect from time to time. As an
additional performance incentive, subject to approval by the Board, upon or near
the one (1) year anniversary of the start of your employment with the Company,
your base salary shall be eligible for an increase in an amount of one thousand
dollars ($1,000) for each one million dollars ($1,000,000) of capital raised
from new investors in qualified equity financing(s) completed during your first
year of employment with the Company; provided, however, that capital raised from
existing investors shall not be considered in connection with such adjustment
and that, notwithstanding the foregoing, any such adjustment of your base salary
shall not exceed twenty thousand dollars ($20,000). Accordingly, your base
salary may be adjusted pursuant to the foregoing up to a maximum of three
hundred fifty-five thousand dollars ($355,000) per year at such one-year
anniversary.

 

3.     Employee Benefits. As a regular employee of the Company, you will be
eligible to participate in a number of Company-sponsored benefits, as in effect
from time to time. In addition, you will be entitled to paid vacation in
accordance with the Company's vacation policy, as in effect from time to time.

 

4.     Stock Options. Subject to the approval of the Board, you will be granted
an option to purchase 27,539,116 shares of the Company's Common Stock (the
"Option"), such shares representing upon vesting and exercise approximately five
percent (5%) of the equity shares of the company on a fully-diluted basis, which
for purposes hereof shall include those shares issued and outstanding (which,
with respect to preferred shares, shall be on an as-converted basis), those
shares reserved for issuance upon exercise of stock options already granted or
included within an option pool authorized for future grant under the Company's
2006 Stock Plan (the "Plan"), as well as those shares reserved for issuance upon
exercise of any outstanding warrants, in each case, as of the first date of your
employment with the Company. The exercise price per share of the Option will be
determined by the Board based on the fair market value of the Common Stock of
the Company on the date the Option is granted. The Option will be subject to the
terms and conditions applicable to options granted under the Plan, as described
in the Plan and the. applicable Stock Option Agreement.

 

In general, you will vest in 25% of the Option shares after 12 months of
continuous service, and the balance will vest in equal monthly installments over
the next 36 months of continuous service, as described in the applicable Stock
Option Agreement. In addition, you will vest in one hundred percent (100%) of
your remaining unvested Option shares if both (a) the Company is subject to a
Change in Control before your service with the Company terminates, and (b) you
are subject to an Involuntary Termination within 12 months after that Change in
Control. Also, if you are subject to an Involuntary Termination prior to a
Change in Control, then the vested percentage of your Option will be determined
by adding six (6) months to the actual period of services that you have
completed.

 

5.     Severance Benefits.

 

 
 

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Patricia K. Scheller

May 14, 2012

Page 3

 

 

 (a)     General. If you are subject to an Involuntary Termination, then you
will be entitled to the benefits described in this Section 5. However, this
Section 5 will not apply unless you (i) have returned all Company property in
your possession, (ii) have resigned as a member of the Boards of Directors of
the Company and all of its subsidiaries, to the extent applicable, and (iii)
have executed a general release of all claims that you may have against the
Company or persons affiliated with the Company. The release must be in the form
prescribed by the Company, without alterations. You must execute and return the
release on or before the date specified by the Company in the prescribed form
(the "Release Deadline"). The Release Deadline will in no event be later than 50
days after your Separation. If you fail to return the release on or before the
Release Deadline, or if you revoke the release, then you will not be entitled to
the benefits described in this Section 5.

 

(b)     Salary Continuation. If you are subject to an Involuntary Termination,
then the Company will continue to pay your base salary for a period of twelve
(12) months after your Separation. Your base salary will be paid at the rate in
effect at the time of your Separation and in accordance with the Company's
standard payroll procedures. The salary continuation payments will commence
within 60 days after your Separation and, once they commence, will include any
unpaid amounts accrued from the date of your Separation. However, if the 60-day
period described in the preceding sentence spans two calendar years, then the
payments will in any event begin in the second calendar year.

 

(c)     COBRA Health Benefit. Subject to the Company's right of election for an
alternative lump-sum payment under Section 5(d) hereof, if you are subject to an
Involuntary Termination and you elect to continue your health insurance coverage
under the Consolidated Omnibus Budget Reconciliation Act ("COBRA") following
your Separation, then the Company will pay the same portion of your monthly
premium under COBRA as it pays for active employees and their eligible
dependents until the earliest of (i) the close of the twelve (12)-month period
following your Separation, (ii) the expiration of your continuation coverage
under COBRA or (iii) the date when you become eligible for substantially
equivalent health insurance coverage in connection with new employment or
self-employment.

 

(d)     Lump-Sum Payment in Lieu of COBRA Health Benefit. If you are subject to
an Involuntary Termination, the Company may elect, at its sole discretion and in
lieu of any payment obligations of the Company under Section 5(c) hereof, to pay
you a lump-sum amount equal to the product of (A) twelve (12) months and (B) the
amount per month the Company was paying on behalf of you and your eligible
dependents with respect to the Company's health insurance plans in which you and
your eligible dependents were participants as of the date of your Separation.
Subject to the Company's having first received an effective Release pursuant to
Section 5(a) above, such payment will be made within 60 days after your
Separation; however, if such 60-day period spans two calendar years, then the
payment will be made in the second calendar year.

 

6.     Proprietary Information and Inventions Agreement. You will berequired, as
a condition of your employment with the Company, to sign the Company's standard
At-Will Employment, Confidential Information and Invention Assignment Agreement,
in the form attached hereto as Exhibit A.

  

 
 

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Patricia K. Scheller

May 14, 2012

Page 4

 

 

7.     Indemnification Agreement. You and the Company shall enter into a
Indemnification Agreement in the form attached hereto as Exhibit B.

 

8.     Employment Relationship. Employment with the Company is for no specific
period of time. Your employment with the Company will be "at will," meaning that
either you or the Company may terminate your employment at any time and for any
reason, with or without cause. Any contrary representations that may have been
made to you are superseded by this letter agreement. This is the full and
complete agreement between you and the Company on this term. Although your job
duties, title, compensation and benefits, as well as the Company's personnel
policies and procedures, may change from time to time, the "at will" nature of
your employment may only be changed in an express written agreement signed by
you and a duly authorized officer of the Company (other than you).

 

9.     Tax Matters.

 

(a)     Withholding. All forms of compensation referred to in this letter
agreement are subject to reduction to reflect applicable withholding and payroll
taxes and other deductions required by law.

 

(b)     Section 409A. For purposes of Section 409A of the Internal Revenue Code
of 1986, as amended (the "Code"), each salary continuation payment under Section
5(b) is hereby designated as a separate payment. If the Company determines that
you are a "specified employee" under Section 409A(a)(2)(B)(i) of the Code at the
time of your Separation, then (i) the salary continuation payments under Section
5(b), to the extent that they are subject to Section 409A of the Code, will
commence on the first business day following (A) expiration of the six-month
period measured from your Separation or (B) the date of your death and (ii) the
installments that otherwise would have been paid prior to such date will be paid
in a lump sum when the salary continuation payments commence.

 

(c)     Tax Advice. You are encouraged to obtain your own tax advice regarding
your compensation from the Company. You agree that the Company does not have a
duty to design its compensation policies in a manner that minimizes your tax
liabilities, and you will not make any claim against the Company or its Board of
Directors related to tax liabilities arising from your compensation.

 

10.     Interpretation, Amendment and Enforcement. This letter agreement and
Exhibit A supersede and replace any prior agreements, representations or
understandings (whether written, oral, implied or otherwise) between you and the
Company and constitute the complete agreement between you and the Company
regarding the subject matter set forth herein. This letter agreement may not be
amended or modified, except by an express written agreement signed by both you
and a duly authorized officer of the Company. The terms of this letter agreement
and the resolution of any disputes as to the meaning, effect, performance or
validity of this letter agreement or arising out of, related to, or in any way
connected with, this letter agreement, your employment with the Company or any
other relationship between you and the Company (the "Disputes") will be governed
by California law, excluding laws relating to conflicts or choice of law. You
and the Company submit to the exclusive personal jurisdiction of the federal and
state courts located in Santa Clara County, California, in connection with any
Dispute or any claim related to any Dispute.

 

 
 

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Patricia K. Scheller

May 14, 2012

Page 5

 

 

11.     Definitions. The following terms have the meaning set forth below
wherever they are used in this letter agreement:

 

"Cause" means (a) your unauthorized use or disclosure of the Company's
confidential information or trade secrets, which use or disclosure causes
material harm to the Company, (b) your material breach of any agreement between
you and the Company, (c) your material failure to comply with the Company's
written policies or rules, (d) your conviction of, or your plea of "guilty" or
"no contest" to, a felony under the laws of the United States or any State, (e)
your gross negligence or willful misconduct, (f) your continuing failure to
perform assigned duties after receiving written notification of the failure from
the Company's Board of Directors or (g) your failure to cooperate in good faith
with a governmental or internal investigation of the Company or its directors,
officers or employees, if the Company has requested your cooperation.

 

"Change in Control" means (a) the consummation of a merger or consolidation of
the Company with or into another entity or (b) the dissolution, liquidation or
winding up of the Company. The foregoing notwithstanding, a merger or
consolidation of the Company does not constitute a "Change in Control" if
immediately after the merger or consolidation a majority of the voting power of
the capital stock of the continuing or surviving entity, or any direct or
indirect parent corporation of the continuing or surviving entity, will be owned
by the persons who were the Company's stockholders immediately prior to the
merger or consolidation in substantially the same proportions as their ownership
of the voting power of the Company's capital stock immediately prior to the
merger or consolidation.

 

"Involuntary Termination" means either (a) your Termination Without Cause,(b)
your Resignation for Good Reason, or (c) your Termination Due to Death or
Disability.

 

"Resignation for Good Reason" means a Separation as a result of your resignation
within 12 months after one of the following conditions has come into existence
without your consent:

 

(a)     A reduction in your base salary by more than 20% which is independent of
a general across-the-board salary reduction for other senior management; or

 

(b)     A material diminution of your authority, duties or responsibilities not
warranted by your continuing failure to perform assigned duties after receiving
written notification of the failure from the Company's Board of Directors.

 

A Resignation for Good Reason will not be deemed to have occurred unless you
give the Company written notice of the condition within 90 days after the
condition comes into existence and the Company fails to remedy the condition
within 30 days after receiving your written notice.

  

 
 

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Patricia K. Scheller

May 14, 2012

Page 6

 

 

"Separation" means a "separation from service," as defined in the regulations
under Section 409A of the Internal Revenue Code of 1986, as amended.

 

"Termination Due to Death or Disability" means a Separation as a result of a
termination of your employment by the Company due to your death, or due to a
disability which in the sole and reasonable discretion of the Board materially
impairs your ability to adequately perform assigned duties and carry out
required responsibilities.

 

"Termination Without Cause" means a Separation as a result of a termination of
your employment by the Company without Cause, provided you are willing and able
to continue performing services within the meaning of Treasury Regulation
1.409A-1(n)(1).

 

We believe that you will add substantial value to Viveve, Inc., and sincerely
hope that you will accept our offer to join the Company. You may indicate your
agreement with these terms and accept this offer by signing and dating both the
enclosed duplicate original of this letter agreement and the enclosed
Proprietary Information and Inventions Agreement and returning them to me. This
offer, if not accepted, will expire at the close of business on Wednesday, May
16, 2012. As required by law, your employment with the Company is contingent
upon your providing legal proof of your identity and authorization to work in
the United States. Your employment is also contingent upon your starting work
with the Company on or before May 21, 2012, or other date mutually agreeable
between you and the Company.

 

Please contact me if you have any questions or concerns.

 

 

Sincerely,

 

 

 

VIVEVE, INC.

 

 

 

 

 

 

 

By: 

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Mark S. Colella

 

 

Director, Viveve, Inc.

 

 
 

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Patricia K. Scheller

May 14, 2012

Page 7

 

 

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Attachments

 

Exhibit A: At-Will Employment, Confidential Information and Invention Assignment
Agreement

 

Exhibit B: Indemnification Agreement