Document:

ex10-14.htm

 

Exhibit 10.14

 

NEW CENTURY BANK

BONUS RECOGNITION AND RETENTION PROGRAM

 

Effective January 1, 2011

 

 

ARTICLE I

PURPOSE

 

The purpose of this Plan is to provide specified benefits to a select group of management and highly compensated Employees who contribute materially to the continued growth, development and future business success of New Century Bank and its Subsidiaries that are Employers under this Plan from time to time.

 

 

ARTICLE II

DEFINITIONS

 

For purposes of this Plan, unless otherwise clearly apparent from the context,  the following phrases and terms shall have the indicated meanings:

 

2.1 “Annual Deferral Account” means, with respect to an individual who is a Participant for a given Plan Year, an unfunded account established on the books of the Company to record the notional investment and reinvestment of the deferred Bonus, the Matching Amount, and any earnings thereon, as described in Section 4.4 below.  Such accounts will be established for each Plan Year in which an individual actively participates in the Plan.

 

2.2 “Beneficiary” means the person or persons designated as such under a valid Beneficiary Designation Form. For purposes of the preceding sentence the term “person” shall include an individual, trust and estate. In default of a valid Beneficiary Designation Form, a Participant’s Beneficiary shall be his or her estate.

 

2.3 “Beneficiary Designation Form” means such form as shall be prescribed from time to time by the Committee for purposes of permitting a Participant to specify who should receive the balance in his or her Annual Deferral Account(s) in the event of his or her death prior to the receipt thereof.  No such form shall be valid unless it is signed and filed with the Committee (or its designee) prior to the death of a Participant.

 

2.4 “Board” means the Board of Directors of the Company.

 

2.5 “Bonus” means the amount payable to an individual with respect to any relevant calendar year, other than regular salary, wages and perquisites, under such incentive compensation plan or other bonus program established by the Company.

 

2.6 “Cause” means actions of or failure to act by a Participant which would authorize the forfeiture of fringe benefits or other remuneration under his or her written contract of employment with the Employer or, if there is no written contract of employment, (i) the willful material failure to perform the duties to the Employer required of the Participant (other than any such failure resulting from incapacity due to physical or mental illness of the Participant or material changes in the direction and policies of the Board of Directors of Company), if such failure continues for fifteen (15) days after a written demand for substantial performance is delivered to the Participant by the Employer which specifically identifies the manner in which it is believed that the Participant has failed to attempt to perform his duties hereunder; (ii) the willful engaging by the Participant in misconduct materially injurious to the Company; (iii) receipt by the Employer of a notice (which shall not have been appealed by the Participant  or shall have become final and non-appealable) of any governmental body or entity having jurisdiction over the Employer requiring termination or removal of the Participant from his then present position, or receipt of a written directive or order of any governmental body or entity having jurisdiction over the Employer (which shall not have been appealed by Participant or shall have become final and non-appealable) requiring termination or removal of the Participant from his then present position; or (iv) personal dishonesty, incompetence, willful misconduct, willful breach of fiduciary duty involving personal profit or conviction of a felony.  For purposes of this paragraph, no act, or failure to act, on the Participant's part shall be considered ''willful'' unless done or omitted to be done by the Participant in bad faith and without reasonable belief that his action or omission was in the best interest of Employer.  Any act or omission to act by the Participant in reliance upon a written opinion of counsel to the Employer shall not be deemed to be willful.

 

 

 

  

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2.7 “Change in Control” means (a) there occurs a merger, consolidation or other business combination or reorganization to which the Company is a party, whether or not approved in advance by the Board of Directors, in which (i) the members of the Board of Directors immediately preceding the consummation of such transaction do not constitute a majority of the members of the Board of Directors of the resulting corporation and of any parent corporation thereof immediately after the consummation of such transaction, and (ii) the shareholders of the Bank immediately before such transaction do not hold more than fifty  percent (50%) of the voting power of securities of the resulting corporation; (b) there occurs a sale, exchange, transfer, or other disposition of substantially all of the assets of the Company to another entity, whether or not approved in advance by the Board of Directors (for purpose of this Plan, a sale of more than one-half of the branches of the Company would constitute a Change in Control, but for purposes of this paragraph, no branches or assets will be deemed to have been sold if they are leased back contemporaneously with or promptly after their sale); (c) a plan of liquidation or dissolution is adopted for the Company; or (d) during any 12-month period, any “person” or any group of “persons” (as such term is defined in Sections 13(d) and 14(d) of the Exchange Act), as if such provisions were applicable to the Company, other than the holders of shares of the Company’s common stock immediately prior to the commencement of such 12-month period, is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), as if such rule were applicable to the Company, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities.

 

2.8 “Code” means the Internal Revenue Code of 1986, as amended and as the same may hereafter be amended.

 

2.9 “Committee” means the compensation committee of the Board or such other committee as may be appointed by the Board to administer this Plan.  Such term also includes the whole Board to the extent it takes action with respect to administrative or operational matters relating to the Plan.

 

2.10 “Common Stock” means the voting common stock of the Company, or such other securities of the Company as may be substituted therefor.

 

2.11 “Company” means New Century Bank, a Pennsylvania bank, and any successor thereto.

 

2.12 “Deferral Election” means an irrevocable election by a Participant, on a form prescribed by the Committee, to defer receipt of a portion of his or her Bonus for a given calendar year.

 

2.13 “Disability” means a physical or mental impairment with respect to which a Participant qualifies for permanent disability benefits under his or her Employer’s long-term disability plan, or, if such Participant does not participate in such a plan, such an impairment that qualifies as “permanent and total disability” under Code Section 22(e)(3).

 

2.14 “Effective Date” means January 1, 2011.

 

2.15 “Employee” means an individual who is a common law employee of any Employer.

 

2.16 “Employer” means the Company and/or any Subsidiary of the Company that has been selected by the Board as eligible to have certain of its management and highly compensated personnel participate in the Plan.

 

2.17 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended and as the same may hereafter be amended.

 

 

  

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2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended and as the same may hereafter be amended.

 

2.19 “Fair Market Value” means, with respect to Common Stock, (a) if the Common Stock is readily tradable on an established securities market, the closing price on the date of determination, or the last trading day preceding the date of determination if the date of determination is not a trading date, or (b) if the Common Stock is not readily tradable on an established securities market, the value determined by application of a reasonable valuation method selected by the Committee.

 

2.20  “Matching Amount” means, with respect to the amount of a Bonus deferred for any year by a Participant, an amount equal to 100% of such deferred Bonus amount.

 

2.21 “Participant” means an individual who (i) has executed and timely filed a Deferral Election Form with the Committee  (or its designee) and (ii) remains an Employee or,  if not, has a balance standing to his or her credit in one or more Annual Deferral Accounts. Such term also includes a deceased Participant’s Beneficiary, who is entitled to a Plan benefit, until such benefit is paid.

 

2.22 “Payment Election” means an election, on a form prescribed by the Committee, by a Participant as to when the vested balance in one of his or her Annual Deferral Accounts shall be paid.  A separate Payment Election shall be made with respect to each Deferral Election and shall be subject to the same timing requirements and revocation restrictions as the corresponding Deferral Election pursuant to Section 3.2 below.

 

2.23 “Plan” means the New Century Bank Bonus Recognition and Retention Program as evidenced by this document and as the same may hereafter be amended.

 

2.24 “Plan Year” means a calendar year, or such other fiscal year as may be designated by the Board from time to time.

 

2.25 “Retirement” means the voluntary Separation from Service by a Participant on or after attainment of age sixty-five (65).

 

2.26 “Securities Act” means the Securities Act of 1933, as amended and as the same may hereafter be amended.

 

2.27 “Separation from Service,” in the case of any Participant with respect to his or her Employer, shall have the same meaning as the meaning set forth in regulations promulgated by the United States Treasury Department under Section 409A of the Code.

 

2.28 “Subsidiary” means a subsidiary corporation, as defined in Code Section 424(f), that is a subsidiary of the corporation to which reference is being made.

 

2.29 “Year of Service” means a one-year period of continuous employment by one or more Employers.

 

 

ARTICLE III

SELECTION.  ELIGIBILITY AND ENROLLMENT

 

3.1 Selection and Eligibility of Participants: Participation in the Plan shall be limited to a select group of management and highly compensated Employees, as determined by the Committee in its sole discretion. From that group, the Committee shall select, in its sole discretion, the Employees who shall be eligible to participate in the Plan from time to time. The Company’s Chief Executive Officer shall at all times be deemed eligible to participate in the Plan.

 

3.2 Enrollment Requirements.  As a condition of Plan participation, each selected Employee shall annually (or more frequently)  complete and return to the Committee (or its designee) such forms as it may prescribe from time to time.  Each Deferral Election shall be filed no later than, and shall be irrevocable after, December 31 prior to the calendar year with respect to which any portion of the relevant Bonus may be earned; provided, however, that in the event an Employee is hired during a Plan Year and is designated as being eligible to participate for such year, such Employee may commence participation for such year by filing a Deferral Election within thirty (30) days of employment, which election shall be irrevocable after such thirtieth (30th) day.  Each eligible Employee must file a new Deferral Election for each year with respect to which he or she desires to defer receipt of a portion of a Bonus.

 

 

 

  

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ARTICLE IV

PLAN CONTRIBUTIONS AND INVESTMENTS

 

4.1 Bonus Deferral.  A Participant may elect to defer receipt of not less than 25%, nor more than 50%, of his or her Bonus payable with respect to each year of participation.

 

4.2 Allocation of Deferred Bonus.  That number of shares of Common Stock having a Fair Market Value equal to the portion of the Bonus deferred by a Participant, measured as of the date on which such portion of the Bonus would have been paid to the Participant but for the deferral, shall be allocated and recorded to an Annual Deferral Account established by the Company for the year of deferral.

 

4.3 Allocation of Matching Amount.  At the same time that shares of Common Stock are allocated to an Annual Deferral Account for a Participant pursuant to Section 4.3 above, a Matching Amount, in the form of the same number of shares of Common Stock so allocated, shall be allocated and recorded by the Company to such Annual Deferral Account.

 

4.4 Notional Investments; Reinvestment of Earnings.  No trust or other segregated fund shall be established to hold deferred Bonus amounts, Matching Amounts, or shares of Common Stock allocated to Annual Deferral Accounts for Participants pursuant to Section 4.2 and Section 4.3 above.  Shares of Common Stock allocated to Annual Deferral Accounts shall reflect merely the notional investment of Participants’ deferred Bonus amounts and their respective Matching Amounts.  To the extent that a cash dividend is paid with respect to the Common Stock, each Annual Deferral Account shall be adjusted to reflect the notional reinvestment of such dividend on the dividend payment date in additional shares of Common Stock as if the amount of the dividend had been paid on that number of shares then allocated to the Annual Deferral Account.  Similarly, to the extent that a stock dividend is paid with respect to the Common Stock, each Annual Deferral Account shall be increased by that number of additional shares of Common Stock which would have been paid on that number of shares then allocated to the Annual Deferral Account.

 

4.5 Effect on Deferral Election Upon Certain Terminations of Employment.  In the event a Participant files a Deferral Election and subsequently terminates as an Employee prior to the date Bonuses are paid for the relevant year, the Deferral Election filed for such year shall be administered as provided in this section in lieu of any otherwise applicable provision of this Plan document.  In such event,  if (a) he or she is entitled to a Bonus notwithstanding such termination and (b) the termination of employment is described in Section 5.2, 5.3 or 5.5 or occurs following the event described in Section 5.4, then such Bonus and the related Matching Amount shall be distributed to such individual or his or her Beneficiary in (i) cash or (ii) shares of Common Stock of equivalent Fair Market Value as of the date such Bonus would otherwise be paid in cash, at the Committee’s election, within 60 days following the date such year’s Bonuses are paid.

 

 

ARTICLE V

VESTING

 

5.1 In General.  A Participant shall become 100% vested in an Annual Deferral Account on the fifth anniversary of the date of the initial allocations to such account, provided, he or she remains continuously employed by an Employer from the date of such initial allocations to such fifth anniversary date.

 

 

 

  

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5.2 Death; Disability.  Notwithstanding the provisions of Section 5.1, in the event of the death of a Participant or the termination of the Participant’s employment by reason of Disability, he or she will thereupon become 100% vested in each of his or her Annual Deferral Accounts.

 

5.3 Retirement.  Notwithstanding the provisions of Section 5.1, in the event of the Retirement of a Participant, he or she will thereupon become 100% vested in each of his or her Annual Deferral Accounts.

 

5.4 Change in Control.  Notwithstanding the provisions of Section 5.1, a Participant shall become 100% vested in each of his or her Annual Deferral Accounts upon the occurrence of a Change in Control.

 

5.5 Involuntary Termination.  Notwithstanding the provisions of Section 5.1, in the event a Participant is involuntarily terminated as an Employee, other than for Cause, prior to the attainment of 100% vesting in any of his or her Annual Deferral Accounts, he or she shall become 100% vested in each of the otherwise non-vested accounts.

 

5.6 Termination for Cause; Certain Voluntary Termination. In the event a Participant is terminated as an Employee for Cause or voluntarily terminates as an Employee (other than by reason of Retirement) prior to the attainment of 100% vesting in an Annual Deferral Account, then, in either case, he or she shall forfeit the balance in each such non-vested account.

 

 

ARTICLE VI

DISTRIBUTION OF BENEFITS

 

6.1 Distribution In General.  Following the occurrence of an event occasioning a distribution, the vested portion of a Participant’s Annual Deferral Account shall be paid to him or her or, in the case of death, his or her Beneficiary.  The number of days within which payment shall be made shall be as set forth in Section 6.3.

 

6.2 Events Occasioning Distribution.  For purposes of Section 6.1, each of the following shall be an event occasioning a distribution with respect to a relevant Annual Deferral Account:

 

(a) If a Participant has in effect a valid Payment Election with respect to such account providing for its distribution upon 100% vesting therein and satisfies the provisions of Section 5.1, such event shall be the fifth anniversary of the initial funding of such account.

 

(b) If a Participant has in effect a valid Payment Election with respect to such account providing for its distribution upon his or her Separation from Service and he or she experiences a Separation from Service after having previously satisfied the provisions of Section 5.1, such event shall be the date of such Separation from Service.

 

(c) If a Participant dies or Separates from Service by reason of Disability, such event shall be the date of Separation from Service.

 

(d) In the event of the Retirement of a Participant, such event shall be the date of Retirement.

 

(e) If a Participant has in effect a valid Payment Election with respect to such account providing for its distribution upon 100% vesting therein and a Change in Control occurs,  such event shall be the date of the Change in Control.

 

(f) If a Participant has in effect a valid Payment Election with respect to such account providing for its distribution upon Separation from Service and he or she experiences a Separation from Service after having previously become 100% vested therein by reason of a Change in Control, such event shall be the date of such termination.

 

 

  

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(g) If a Participant is involuntarily terminated under circumstances described in Section 5.5, such event shall be the date of such Separation from Service.

 

(h) In the absence of a valid Payment Election with respect to an Annual Deferral Account, the Participant shall be deemed to have made an election to provide for distribution of such account upon 100% vesting therein.

 

6.3 Time of Distribution.  Distributions of vested benefits from Annual Deferral Accounts shall be made within ninety (90) days following an event described in Section 6.2 as directed by the Company, but in no event later than March 15 of the calendar year following the calendar year in which such event occurs.

 

6.4 Mode of Distribution.  All Plan distributions shall be made in one lump sum in Common Stock, except to the extent that cash is to be distributed pursuant to Section 4.5(i) above.

 

 

ARTICLE VII

ADDITIONAL OPERATIONAL PROVISIONS

 

7.1 Status of Participants as Creditors.  Participants in the Plan shall be general unsecured creditors of each relevant Employer with respect to their Plan benefits, and they shall have no right to or interest in any specific asset of the Company or any Employer.  This Plan shall at all times be an “unfunded plan” for purposes of the Code and ERISA.

 

7.2 Income and Other Tax Withholding.  By agreeing to participate in the Plan, each Participant authorizes the Employer to make such tax withholdings with respect to amounts paid or distributed to him or to her pursuant to the Plan as may be necessary to discharge its tax withholding obligations.  Except to the extent that cash is distributed to a Participant pursuant to Section 4.5(i) above, tax withholding shall be funded by means of a reduction in the number of shares of Common Stock distributable to a Participant or Beneficiary by that number of shares having a Fair Market Value on the distribution date equal to the minimum amount of taxes required to be withheld and the Employer’s satisfaction of that amount through cash deposits.

 

 

ARTICLE VIII

ADMINISTRATION

 

8.1 In General.  The Plan shall be administered from time to time by the Committee.

 

8.2 Meetings and Action.  The Committee shall hold such meetings at such times as it deems necessary or appropriate for the proper and efficient management and operation of the Plan.  Notices of meetings shall be given as provided in guidelines adopted by the Committee or as otherwise specified in relevant documents pertaining thereto.  Unless otherwise provided in such documents, a majority of the members of the Committee shall constitute a quorum for holding a meeting, and binding action may be taken by a vote of a majority of those Committee members present at such meeting.

 

8.3 Administration of Plan; Interpretation of Plan Document.  The Committee shall administer the Plan in accordance with the terms of this Plan document insofar as it is consistent with the provisions of applicable law, including, without limitation, ERISA. In connection with such administration, it may adopt such rules of interpretation as may be necessary or appropriate to facilitate the proper and nondiscriminatory administration of the Plan.

 

8.4 Binding Effect of Committee Actions and Determinations. Unless overridden by the Board, any action taken or determination made by the Committee shall be final and binding on the person affected; provided, however, that, prior to taking any action or making any determination that may be adverse, in whole or in part, to any person, the Committee shall accord such person the right to be heard with respect to such matter. The procedures to be followed in connection therewith shall be governed by a claims procedure established for such purpose and consistent with the claims procedure provisions of ERISA.

 

 

 

  

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8.5 Liability of Committee Members.  No member of the Committee shall be personally liable for any act or failure to act in connection with the good faith administration of the Plan.  Unless prohibited by law or the Company’s by-laws, in the event any such member is nonetheless held so liable by a court of competent jurisdiction or otherwise, the Company shall indemnify such member and hold him or her harmless from any and all liability imposed with respect to such administration, including, without limitation, compensatory and punitive damages, professional fees, and other related out-of-pocket expenses.

 

 

ARTICLE IX

MISCELLANEOUS MATTERS

 

9.1 Amendment and Termination.  The Plan may be amended from time to time and may be terminated at any time by appropriate action of the Board; provided, however, that no such action shall be taken which (i) would adversely affect the rights of Plan Participants with respect to their then Annual Deferral Accounts, or (ii)  requires shareholder approval under applicable law until such approval is secured .  In the event of Plan termination or the suspension of Plan contributions, Participants may be required to satisfy the Plan’s vesting requirements, as set forth herein, as a condition of receiving a distribution from a given Annual Deferral Account.

 

9.2 No Right to Continued Employment.  Participation in the Plan shall not give any Participant the right to remain in the employ of his or her Employer or any company affiliated with such Employer, nor shall such participation limit in any respect the right of such Employer to terminate the Participant’s employment at any time and for any reason.

 

9.3 No Right to Continued Participation.  Except in the case of the Company’s Chief Executive Officer, participation in the Plan with respect to one Plan Year shall not give the Participant the right to participate in the Plan in any future year.

 

9.4 Plan Independent of Other Plans and Arrangements. This Plan is independent of and shall not be affected by (a) any other plans of deferred compensation which may be maintained by the Company or any of its Subsidiaries from time to time, or (b) any deferred compensation arrangements to which a Participant may be a party.

 

9.5 Certain Securities Law Matters.

 

(a) Distribution of Plan benefits may be suspended or modified to the extent necessary to comply with any applicable federal or state securities law.

 

(b) Shares of Common Stock distributed from the Plan may be marked with such legend as the Company, after consultation with counsel, deems necessary or appropriate to comply with any applicable federal or state securities or other law.

 

9.6 Recovery.  Plan benefits shall be subject to recovery by the Company under any clawback, recovery, recoupment or similar policy hereafter adopted by the Company, whether in connection with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended from time to time, or otherwise as required by law.

 

9.7 Captions.  The captions of the several articles and sections of this Plan document have been inserted for convenience of reference only and shall not be considered in the construction hereof.

 

9.8 Number.  Words used herein in the singular shall include the plural, as clearly appropriate, and vice versa.

 

 

 

  

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9.9 Applicable Law.  Except to the extent provided herein or otherwise preempted by federal law, this Plan document shall be construed, administered and enforced in accordance with the domestic internal law of the Commonwealth of Pennsylvania.

 

9.10 Effective Date.  This Plan shall become effective as of the date specified in Section 2.14.

 

 

 

 8Unassociated 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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