Exhibit 10.12
AMENDMENT TO EXECUTIVE EMPLOYMENT
AGREEMENT
This Amendment to Executive
Employment Agreement (the “Amendment”) is entered into
as of July 2, 2009, by and between NovaRay Medical, Inc., a
Delaware corporation with its principal place of business at 39655
Eureka Drive, Newark, California 94560 (“Company”) and
William Frederick (“Executive”) (collectively, the
“parties”). All capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in that certain
Executive Employment Agreement dated as of November 18, 2008
by and between the Company and Executive (the
“Agreement”).
RECITALS
WHEREAS, the Company and Executive
entered into the Agreement;
WHEREAS, the Company and Executive
desire to amend the Agreement to be as set forth herein.
NOW, THEREFORE, in compliance with
Section 15 of the Agreement and in consideration of the mutual
promises and covenants set forth herein and in the Agreement and
Statement of Work, the Client and the Company hereby agree as
follows:
Section 4.1 of the Agreement is
hereby amended to read in its entirety:
“ Salary . As
compensation for the proper and satisfactory performance of all
duties to be performed by Executive hereunder, Company shall pay to
Executive a base salary of $225,000.00 per year, less applicable
withholdings (the “Base Salary”). Until the receipt of
gross proceeds from equity or debt or other financing obtained by
Company of at least Five Million Dollars ($5,000,000) in the
aggregate after July 7, 2009, eighty percent (80%) of the
Base Salary or $7,500 for each applicable semi-monthly pay period,
less applicable withholdings, shall be paid in accordance with the
Company’s regularly established payroll practice. The
remaining $1,875 for each applicable semi-monthly pay period, less
applicable withholdings, shall be paid in the event of (i) a
receipt of gross proceeds from equity or debt or other financing
obtained by Company of at least Five Million Dollars ($5,000,000)
in the aggregate after July 7, 2009, (ii) a termination
of Executive’s employment under the Agreement by the Company
without Cause or (iii) a termination of Executive’s
employment under the Agreement by Executive for Good Reason. After
the receipt of gross proceeds from equity or debt or other
financing obtained by Company of at least Five Million Dollars
($5,000,000) in the aggregate after
July 7, 2009, the Base Salary
shall be paid in accordance with the Company’s regularly
established payroll practice. In the event Executive’s
employment under this Agreement is terminated by either party, for
any reason, Executive will be entitled to receive such amount of
his salary earned as provided in this Section through the date of
such termination.”
Section 4.2 of the Agreement is
hereby amended to read in its entirety:
Incentive Compensation
.
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(a)
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Discretionary Incentive Compensation
. Executive may be granted incentive
compensation in the Company’s discretion. If Company, in its
sole and absolute discretion, grants Executive incentive
compensation, the terms, amount and payment of such incentive
compensation will be determined solely by Company. Such incentive
compensation may be payable in either cash or stock of the Company
or any combination thereof at the election of the Company and
pursuant to terms and conditions established by the Board of
Directors of the Company.
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(b)
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Debt or
Equity Financing . In the
event the Company receives aggregate gross proceeds not less than
$3,000,000 from debt or equity financings after July 7, 2009
and prior to December 31, 2010 (excluding proceeds from funds
managed by Vision Capital Advisors, LLC), Executive shall receive
incentive compensation set forth in Section 4.3(c) below for
raising such additional debt or equity financing provided that
Executive is employed with the Company at the time of such receipt
of gross proceeds.
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(c)
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Calculation
. The method described in this
section are to be used as guidelines for determining such incentive
compensation. The Board of Directors of the Company in its sole and
absolute discretion may adjust percentages up or down based on the
terms of such debt or equity financing transaction and based on any
amounts received by Executive pursuant to Section 4.2(d)
below. In the event the Company receives aggregate gross proceeds
not less than $3,000,000 from equity financings after July 7,
2009 and prior to December 31, 2010 (excluding proceeds from
funds managed by Vision Capital Advisors, LLC), such compensation
will be initially based on a percentage of Executive’s base
salary listed in Table 1 below taking into account the amount
raised and the pre-money valuation. In the event the Company
receives aggregate gross proceeds not less than $3,000,000 from
straight debt financings after July 7, 2009 and prior to
December 31, 2010 (excluding proceeds from funds managed by
Vision Capital Advisors, LLC), such compensation will be initially
based on a percentage of Executive’s base salary listed in
the $80M pre-money valuation row in Table 1 below. In the event the
Company receives aggregate gross proceeds not less than $3,000,000
from convertible debt financings after July 7, 2009
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and prior to December 31, 2010
(excluding proceeds from funds managed by Vision Capital Advisors,
LLC), such compensation will be initially based on a percentage of
Executive’s base salary listed in Table 1 below taking into
account the amount raised and the pre-money valuation assuming
conversion of such convertible debt. In the event such converted
pre-money valuation is unknown, the Board of Directors of the
Company will determine the appropriate percentage. Such incentive
compensation may be payable in either (i) cash or (ii) a
combination of cash and up to 60 to 70% of such incentive
compensation in Incentive Stock Options issued pursuant to the
Company’s 2008 Stock Incentive Plan in lieu of cash with the
value of such options determined by the Black Scholes valuation
method used the Company to value stock options in its audited
financial statements.
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Table 1
