EXHIBIT 10.18
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, entered into this 16th day of March, 2007,
by and between CAS Medical Systems, Inc., a Delaware corporation (the
"Company"), and Xxxxxx Xxxxxx (hereinafter called the "Employee").
WITNESSETH:
WHEREAS, the Company desires that the Employee serve as the President
and Chief Executive Officer of the Company and the Employee is willing to serve
the Company in such capacities.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the parties hereto agree as
follows:
SECTION 1. EMPLOYMENT
Effective as of April 1, 2007, the Company will employ the Employee and
the Employee will perform services for the Company and its subsidiaries on the
terms and conditions set forth in this Agreement and for the period specified in
Section 3 hereof ("Term of Employment").
SECTION 2. DUTIES
The Employee, during the Term of Employment, will serve the Company as
its President and Chief Executive Officer. The Employee will have such duties
and responsibilities as are assigned to him by the Board of Directors of the
Company commensurate with his positions as President and Chief Executive Officer
of the Company. The Employee will perform his duties hereunder faithfully and to
the best of his abilities and in furtherance of the business of the Company and
its subsidiaries, and will devote his full business time, energy, attention and
skill to the business of the Company and its subsidiaries and to the promotion
of its interests, except as otherwise agreed by the Company. The Employee
warrants and represents that he is free to enter into this Agreement and is not
restricted by any prior or existing agreement and the Company may rely on such
representation in entering into this Agreement.
SECTION 3. TERM OF EMPLOYMENT
The Employee's employment hereunder shall be "at will" and is
terminable at any time by either party, subject to the provisions of Sections 9
and 10 hereof.
SECTION 4. SALARY
The Employee will receive, as compensation for his duties and
obligations to the Company pursuant to this Agreement, a base salary at the
annual rate of Two Hundred Fifty Thousand Dollars ($250,000), payable in
substantially equal installments in accordance with the Company's payroll
practice. It is agreed between the parties that the Company will review the base
annual salary annually and in light of such review may (but will not be
obligated to), in the discretion of the Compensation Committee of the Board of
Directors of the Company, increase such annual base salary taking into account
any change in the Employee's responsibilities, increases in the cost of living,
performance by the Employee, and other pertinent factors.
SECTION 5. BONUS
During the Term of Employment, the Employee will be eligible for an
annual bonus in the form of cash or Company common stock as determined at the
sole discretion of the Compensation Committee of the Board of Directors.
SECTION 6. EMPLOYEE BENEFITS
Subject to any applicable probationary or similar periods, during the
Term of Employment, the Employee will be entitled to participate in all employee
benefit programs of the Company, as such programs may be in effect from
time to time. Subject to any applicable probationary or similar periods, during
the Term of Employment, the Employee will also be entitled to participate in all
retirement programs of the Company for which current employees are eligible, as
such programs may be in effect from time to time (including the Company's 401(k)
plan).
SECTION 7. BUSINESS EXPENSES
All reasonable travel and other out-of-pocket expenses incidental to
the rendering of services by the Employee hereunder will be paid by the Company
and if expenses are paid in the first instance by the Employee, the Company will
reimburse him therefor upon presentation of proper invoices; subject in each
case to compliance with the Company's reimbursement policies and procedures.
SECTION 8. VACATIONS AND SICK LEAVE
The Employee will be entitled to holidays, reasonable vacation and
reasonable sick leave each year, in accordance with policies of the Company, as
determined by the Board of Directors, provided, however, that the Employee will
be entitled to a minimum of four (4) weeks vacation per year.
SECTION 9. TERMINATION
(a) Termination by the Company for Serious Cause. In the event of
Serious Cause (as defined below), the Company may terminate the Employee's
employment and the Term of Employment upon written notice of such termination
stating the Serious Cause upon which the Company relies for its termination. The
Employee's employment and the Term of Employment will be terminated effective as
of the date specified in such notice, which will in no event be earlier than the
effective date of such notice as provided in Section 18.
"Serious Cause" means (i) the willful and continued failure by the
Employee to perform substantially his duties hereunder, other than by reasons of
health, after demand for substantial performance is delivered by the Company
that identifies the manner in which the Company believes the Employee has not
substantially performed his duties; (ii) the Employee will have been indicted by
any federal, state or local authority in any jurisdiction for, or will have
pleaded guilty or nolo contendere to, an act constituting a felony, (iii) the
Employee will have habitually abused any controlled substance (such as narcotics
or alcohol), or (iv) the Employee will have (A) engaged in acts of fraud,
material dishonesty or gross misconduct in connection with the business of the
Company, or (B) committed a material breach of this Agreement.
(b) Termination by Employee for Good Reason. The Employee may terminate
his employment and the Term of Employment in the event of Good Reason (as
defined below) upon thirty (30) days' prior written notice of such termination
stating the Good Reason upon which the Employee relies for his termination. The
Employee's employment and the Term of Employment will be terminated effective as
of the date specified in such notice, which in no event will be earlier than the
effective date of such notice as provided in Section 18.
"Good Reason" means a material breach of this Agreement by the Company,
such as (i) a reduction in the Employee's salary or benefits other than an
across-the-board reduction of benefits affecting all members of senior
management, (ii) a material reduction of the Employee's duties and significant
responsibilities hereunder (not including reasonable changes in title or in
corporate structure), or (iii) other material breach of this Agreement by the
Company.
(c) Effect of Termination for Serious Cause or Without Good Reason. In
the event of termination of the Employee's employment and the Term of Employment
by the Company for Serious Cause or by the Employee without Good Reason, the
Employee will forfeit all bonus amounts for the then current fiscal year, and
the Company will be liable to the Employee only for (i) any accrued but unpaid
base salary and vacation, (ii) any earned but unpaid bonus from a prior fiscal
year (subject, if applicable, to the terms of any deferred compensation
arrangements), and (iii) reimbursement of business expenses incurred prior to
the date of termination.
(d) Death, Retirement, Disability. In the event of the death,
Retirement or Disability of the Employee, the Employee's employment and Term of
Employment will be terminated as of the date of such death, Retirement or
Disability and the Company will pay the Employee, or the Employee's estate or
legal representative, as appropriate, (i) any accrued but unpaid base salary and
vacation, (ii) any earned but unpaid bonus from a prior fiscal year (subject, if
applicable, to the terms of any deferred compensation arrangements), and (iii)
reimbursement of business expenses
incurred prior to the date of termination.
"Disability" means the Employee's inability, for reasons of health, to
carry out the functions of his position for a total of one hundred eighty (180)
days during any twelve (12) month period. "Retirement" will mean retirement from
employment upon or after attaining age sixty-five (65) or such earlier age
agreed to by the Company.
(e) Effect of Termination Without Serious Cause or With Good Reason. If
(i) the Company terminates the Term of Employment and the Employee's employment
herein without Serious Cause, or (ii) the Employee terminates the Term of
Employment and his employment hereunder for Good Reason, the Company will
continue to pay the Employee his then-current base salary provided under this
Agreement for a period of six (6) months from the date of such termination. In
addition, the Employee will be entitled to prompt payment of (A) any accrued but
unpaid salary and vacation, (B) any earned but unpaid bonus from a prior fiscal
year (subject, if applicable, to the terms of any deferred compensation
arrangements), (C) the Company's health benefit plans (with standard employee
payment in an amount not to exceed the payment level immediately prior to
termination) for the period of six (6) months, and (D) reimbursement of business
expenses incurred prior to the date of termination. In addition if the Company
terminates the Term of Employment and the Employee's employment herein without
Serious Cause or the Employee terminates the Term of Employment and his
employment hereunder for Good Reason, all of the Employee's equity-linked grants
(e.g. stock options, restricted stock) shall thereupon immediately accelerate
and vest in full.
(f) No Other Obligations. In the event of the termination of the
Employee's employment and the Term of Employment pursuant to Sections 9 or 10
herein, the Company will have no obligations to the Employee other than those
set forth in Sections 9 and 10 herein.
SECTION 10. CHANGE OF CONTROL
(a) Effect of Termination. If (i) the employment of the Employee is
terminated by the Company (or successor thereto) without Serious Cause or (ii)
the Employee terminates employment with the Company (or successor thereto) for
Good Reason, within the period commencing on the date that a Change of Control
is formally proposed to the Company's Board of Directors and ending on the
second anniversary of the date on which such Change of Control occurs, then the
Employee will be entitled to receive his then-current base salary provided under
this Agreement for a period of one (1) year from the date of such termination
and in addition, the Employee will be entitled to prompt payment of (A) any
accrued but unpaid salary and vacation, (B) any earned but unpaid bonus from a
prior fiscal year (subject, if applicable, to the terms of any deferred
compensation arrangements), (C) the Company's health benefit plans (with
standard employee payment in an amount not to exceed the payment level
immediately prior to the Change of Control) for the period of one (1) year, and
(D) reimbursement of business expenses incurred prior to the date of
termination.
If any portion of the payments which the Employee has the right to
receive from the Company, or any affiliated entity or successor, hereunder would
constitute "excess parachute payments" (as defined in Section 280G of the
Internal Revenue Code) subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, such excess parachute payments shall be reduced to the
largest amount that will result in no portion of such excess parachute payments
being subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code.
The Employee will not be entitled to any benefits or other entitlements
under this section unless a Change of Control actually occurs. Any amounts
payable pursuant to this Section 10 shall not duplicate amounts payable under
Section 9 and vice versa.
(b) Change of Control. A "Change of Control" of the Company will be
deemed to have occurred if (i) any "person" (as such term is defined in Section
3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934 (the "Exchange Act"), excluding the Company or any of its subsidiaries,
a trustee or any fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, an underwriter temporarily holding
securities pursuant to an offering of such securities or a corporation owned,
directly or indirectly, by shareholders of the Company in substantially the same
proportion as their ownership of the Company, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing an increase from less than Twenty Percent
(20%) to Fifty Percent (50%) or more of the combined voting power of the
Company's then outstanding securities ("Voting Securities"); (ii) during any
period of not more than two (2) years, individuals who constitute the Board of
Directors of the Company (the "Board") as of the beginning of the period and any
new director (other than a director designated by a person who has entered into
an
agreement with the Company to effect a transaction described in clause (i) or
(iii) of this sentence) whose election by the Board or nomination for election
by the Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at such
time or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; (iii) the stockholders of
the Company approve a merger, consolidation or reorganization or a court of
competent jurisdiction approves a scheme or arrangement of the Company, other
than a merger, consolidation, reorganization or scheme which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least Fifty Percent (50%) of
the combined voting power of the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger, consolidation,
reorganization or scheme or arrangement, and such transaction is completed; or
(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or any agreement for the sale of substantially all of the Company's
assets, and such transaction is completed.
SECTION 11. AGREEMENT NOT TO COMPETE OR SOLICIT
(a) Covenant Not to Compete. The Employee hereby covenants and agrees
that at no time during the Term of Employment nor for a period of six (6) months
(such period to be one (1) year in the case of a termination resulting in
payments pursuant to Section 10) immediately following the termination of the
Employee's employment will he for himself or on behalf of any other person,
partnership, company or corporation, directly or indirectly, acquire any
financial or beneficial interest in (except as provided in the next sentence),
provide consulting or other services to, be employed by, or own, manage, operate
or control any entity engaged in the medical device business substantially
similar to the business engaged in by the Company or its subsidiaries at the
time of such termination of employment. Notwithstanding the preceding sentence,
the Employee will not be prohibited from owning less than one percent (1%) of
any publicly traded corporation, whether or not such corporation is in
competition with the Company.
(b) Non-Solicitation. The Employee hereby covenants and agrees that, at
all times during the Term of Employment and for a period of six (6) months (such
period to be one (1) year in the case of a termination resulting in payments
pursuant to Section 10) immediately following the termination thereof, the
Employee will not directly or indirectly employ or seek to employ any person or
entity employed at that time by the Company or any of its subsidiaries, or
otherwise encourage or entice such person or entity to leave such employment.
SECTION 12. CONFIDENTIAL INFORMATION
The Employee agrees to keep secret and retain in the strictest
confidence all confidential matters which relate to the Company or any affiliate
of the Company, including, without limitation, customer lists, client lists,
trade secrets, pricing policies and other business affairs of the Company and
any affiliate of the Company learned by him from the Company or any such
affiliate or otherwise before or after the date of this Agreement, and not to
disclose any such confidential matter to anyone outside the Company, or any of
its affiliates, whether during or after his period of service with the Company,
except as may be required in the course of a legal or governmental proceeding.
Upon request by the Company, the Employee agrees to deliver promptly to the
Company upon termination of his services for the Company, or at any time
thereafter as the Company may request, all Company or affiliate memoranda,
notes, records, reports, manuals, drawings, designs, computer files in any media
and other documents (and all copies thereof) relating to the Company's or any
affiliate's business and all property of the Company or any affiliate associated
therewith, which he may then possess or have under his control.
SECTION 13. REMEDY
(a) Should the Employee engage in or perform, either directly or
indirectly, any of the acts prohibited by Sections 11 or 12 hereof, it is agreed
that any and all severance payments and related benefits hereunder shall
immediately terminate and the Company will also be entitled to full injunctive
relief, to be issued by any competent court of equity, enjoining and restraining
the Employee and each and every other person, firm, organization, association,
or corporation concerned therein, from the continuance of such violative acts.
The foregoing remedies available to the Company will not be deemed to limit or
prevent the exercise by the Company of any or all further rights and remedies
which may be available to the Company hereunder or at law or in equity.
(b) The Employee acknowledges and agrees that the covenants contained
in this Agreement are fair and reasonable in light of the consideration paid
hereunder, and the invalidity or unenforceability of any particular provision,
or part of any provision, of this Agreement will not affect the other provisions
or parts hereof. If any provision hereof is determined to be invalid or
unenforceable and if any such provision will be so determined to be invalid or
unenforceable by reason of the duration or geographical scope of the covenants
contained therein, such duration or geographical scope, or both, will be reduced
to a duration or geographical scope solely to the extent necessary to cure such
invalidity.
SECTION 14. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon and inure to the benefit of the
Employee, his heirs, executors, administrators and beneficiaries, and the
Company and its successors and assigns.
SECTION 15. GOVERNING LAW
This Agreement will be governed by and construed and enforced in
accordance with the laws of the State of Connecticut, without reference to rules
relating to conflicts of law.
SECTION 16. ENTIRE AGREEMENT
This Agreement constitutes the full and complete understanding and
agreement of the parties and supersedes all prior understandings and agreements
as to employment of the Employee. This Agreement cannot be amended, changed,
modified or terminated without the written consent of the parties hereto.
SECTION 17. WAIVER OF BREACH
The waiver of either party of a breach of any term of this Agreement
will not operate nor be construed as a waiver of any subsequent breach thereof.
SECTION 18. NOTICES
Any notice, report, request or other communication given under this
Agreement will be written and will be effective upon delivery when delivered
personally, by overnight courier or by fax. Unless otherwise notified by any of
the parties, notices will be sent to the parties as follows: (i) if to the
Employee, at the address set forth in the Company's records, and (ii) if to the
Company, to CAS Medical Systems, Inc., 00 Xxxx Xxxxxxxxxx Xxxx, Xxxxxxxx, XX
00000, Attention: Board of Directors.
SECTION 19. SEVERABILITY
If any one or more of the provisions contained in this Agreement will
be invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby.
SECTION 20. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original but all of which together will constitute
one and the same instrument. Delivery of signatures by facsimile or electronic
image shall be valid for all purposes hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
The Company:
CAS MEDICAL SYSTEMS, INC.
/s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
Employee:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
