Unassociated Document


Exhibit 10.8


 


NewCardio, Inc.







EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of July 30, 2008 (the “Effective Date”) by and between NewCardio, Inc., a Delaware corporation (the “Company”), and Ihor Gussak, MD, PhD, FACC (the “Executive”).


 


BACKGROUND


 


A. The Company desires to retain the services of the Executive 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 Vice President & Chief Medical Officer, at the pleasure of the Chief Executive Officer.  Executive shall report directly to the Chief Executive Officer, and will not initially be a named Officer of the Company as defined by law.


 


1.2 Duties.  The Executive’s duties shall be described generally to include, but not be limited to leading the Company related medical efforts such as clinical studies, regulatory affairs, FDA affairs, medical public relations affairs, as defined by the CEO, and the Board from time to time, and any other duties that the CEO deems appropriate for the position from time to time.  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 CEO, and will further comply with the Company’s business policies, rules and regulations, as adopted from time to time by the Board.  Executive’s initial position will be based in the New Jersey area offices of the Company, but will require Executive to travel on Company business, including within the USA, Europe, and Asia.  Executive must co-ordinate travel with that of the CEO and other staff. The Company headquarters are located in Santa Clara, CA but in the future it may relocate to another location.


 


 

 




  





  











  






 


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)  “Death Termination” means termination of the Executive’s employment due to the death of the Executive.


 


(d) “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.


 


(e) “Termination For Cause” means termination of the Executive’s employment by the Company due to (i) the Executive’s dishonesty or fraud, or 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.


 


(f) “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(c), (d), or (e) hereof.


 


(g) “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.


 


(h) “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.


 


 


 


 



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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 and attached as Exhibit B hereto (the “Confidentiality Agreement”), the terms of which are herein incorporated by reference.


 


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 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, and (b) a monthly cash severance payment equal to six (6) months of Executive’s then Base Salary, and (c) six (6) months of Executive’s COBRA-related expenses, provided that such COBRA-related reimbursement shall cease upon such date that Executive is afforded health benefits from a subsequent employer, , and (d)  six (6) months of accelerated vesting of the unvested common stock held by Executive at the time of such termination.


 


2.5 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.


 


2.6 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.


 


2.7 Voluntary Termination.  In the event the Executive wishes to consummate a Voluntary Termination, the Company requests that Executive give the Company at least thirty (30) 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.


 


2.8 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 or as otherwise made during the normal course of employment.


 


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 $260,000.00 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.


 


 



 



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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.


 


(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(es).


 


(a)  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 30 percent (30%) 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.  Each annual (or prorated) bonus shall be paid not later than March 15 of the year following the year (or prorated year) for which the bonus is being paid.


 


(b)  If Executive commences employment not later than August 4, 2008, then you will be eligible to receive a one time hiring bonus of $65,000.00 within 30 days following your commencement of full time employment, as determined by the CEO of the Company.


 


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 seven hundred thousand (700,000) shares of the Company’s Common Stock (the “Shares”) pursuant to the Company’s 2004 Equity Incentive Plan as Amended (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:


 


(a)  One quarter (25%) of the Shares subject to the Option shall vest on the date that is twelve (12) months after the date that your vesting begins - subject to your continuous employment with the Company, and no Shares shall vest before such date.  The remaining three quarters (75%) of the Shares shall vest monthly over the next thirty six (36) months (immediately following the said twelve (12) months) in equal monthly increments subject to your continuous employment with the Company.  Hence, after four (4) years of continuous service with the Company, one hundred percent (100%) of the Shares would be vested.


 


 


 



 



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(b)  No right to any Shares is earned or accrued until such time as that vesting occurs, nor does the grant confer any right to continue vesting or continued employment.  The Company shall have the full right to repurchase any and all unvested Shares under the terms of the stock option agreement memorializing the option 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.


 


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.


 



 



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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.


 


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.


 



 



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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the Effective Date.


 




	 	

NewCardio, Inc.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Richard Brounstein	 
	 	 	

Name:  Richard Brounstein

	 
	 	 	

Title:    CFO

	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Ihor Gussak	 
	 	 	Ihor Gussak, MD, PhD, FACC	 
	 	 	 	 




















 


 



 



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EXHIBIT A







OTHER ACTIVITIES













	
1.  

	
Adjunct clinical professor duties








	
2.  

	
Journal editor








	
3.  

	
Manuscripts








	
4.  

	
Book








	
5.  

	
Consulting jobs which will benefit the company

















 


 


 


 


 



 



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EXHIBIT B







AT-WILL EMPLOYMENT, CONFIDENTIAL INFORMATION, INVENTION ASSIGNMENT AND ARBITRATION AGREEMENT







(Previously provided to Employee)


 


 


 


 


 


 


 


 


 


 


 



 



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EXHIBIT C







RELEASE AND WAIVER OF CLAIMS







In consideration of the payments and other benefits set forth in the Employment Agreement dated ________________________ , 2008, to which this form is attached (the “Employment Agreement”), I, Ihor Gussak, MD, 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:    _______________________________                                                          


Ihor Gussak, MD, PhD, FACC



















 


 


 


 


 


 



 



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