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Exhibit 10.8
EMPLOYMENT AGREEMENT
This
Employment Agreement (“
Agreement ”)
is entered into as of August 10, 2007, between Xcorporeal,
Inc., a Delaware corporation (“
Company ”),
and Robert Weinstein, an individual (“
Executive ”).
Recitals
A. The
Company is engaged in the business of developing and marketing
Hospital Artificial Kidney (HAK), Wearable Artificial Kidney
(WAK), Hospital Ultrafiltration Device (HUD) and Wearable
Ultrafiltration Device (WUD) products, including
performing lab experimentation, equipment testing, design
review, verification, validation, development of prototypes
and reporting, and U.S. Food & Drug Administration and
other regulatory approval processes (the “
Business ”).
B. The
Company desires to employ the Executive as its Chief Financial
Officer, and the Executive desires to be so employed by the
Company, on the terms and conditions hereinafter set
forth.
NOW,
THEREFORE, in consideration thereof and of the covenants and
conditions contained herein, the parties agree as
follows:
Agreement
1.
Board Approval .
The Company and the Executive acknowledge that this entire
Agreement is subject to approval by the Company’s Board of
Directors (“
Board ”).
2.
Employment .
The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve as the Chief Financial Officer of
the Company. The Executive agrees to perform such lawful services
customary to that office and to perform those services assigned to
him from time to time by the Company’s Executive Chairman,
Chief Executive Officer, President, Chief Operating Officer, or
Board. The Executive further agrees to use his best ability and
skills to promote the interests of the Company and to devote his
full business time and energies to the business and affairs of the
Company.
3.
Term of Agreement .
The Executive’s employment with the Company shall commence on
a date to be determined by the parties, subject to the
Board’s approval of this Agreement, which date when
determined will be the “
Effective Date ”
and provided in Section 10 below. Subject to the terms of
Sections 5 and 6 of this Agreement, the Term of this Agreement
will commence on the Effective Date for a period of three
(3) years, if the Executive relocates his residence to
Southern California within one year after the Effective Date, and
thereafter will renew automatically for one (1) year terms
unless either the Company or the Executive provides written notice
of non-renewal to the other party not later than ninety
(90) days prior to the scheduled expiration of the Term in
effect. In the event the Executive does not relocate his residence
to Southern California within one year after the Effective Date,
the Term of this Agreement will be for a period of one
(1) year, and thereafter will continue on a month-to-month
basis subject to the terms of Sections 5 and 6 of this
Agreement.
4.
Compensation and Other Related Matters .
(a)
Salary .
As compensation for services rendered hereunder, the Executive
shall receive an annual base salary (“
Base Salary ”)
of Two Hundred Seventy-Five Thousand Dollars ($275,000.00), which
salary shall be paid in accordance with the Company’s then
prevailing payroll practices. The Company shall not decrease the
Executive’s Base Salary. At the Company’s sole
discretion the Executive’s Base Salary may be increased
annually. Notwithstanding the foregoing, commencing January 1,
2008 and annually thereafter, the Base Salary shall be increased by
at least the Consumer Price Index for Los Angeles, California (or a
reasonable proxy thereof).
(b)
Bonus .
During the term of this Agreement, and in the Company’s sole
discretion, the Executive shall be eligible to receive an annual
discretionary bonus of up to 50% of the Executive’s base
salary at the end of each calendar year, subject to the Executive
and the Company achieving annual performance objectives. The annual
performance objectives will be agreed before the start of each
calendar year between the Executive and the Chief Operating
Officer, subject to the approval of the Company’s Board of
Directors or its Compensation Committee. To receive each annual
discretionary bonus, the Executive must still be employed with the
Company as of December 31 of the year for which the annual
discretionary bonus is payable and not be in breach at the time the
bonus is payable. The Company agrees that the Executive shall
receive a guaranteed bonus of no less than 20% of the
Executive’s Base Salary at the end of calendar year 2007
(“
2007 Bonus ”).
The 2007 Bonus shall be calculated based on the total Base Salary
actually earned by the Executive between the Effective Date and
December 31, 2007. Subject to achievement of the 2007
performance objectives agreed upon the parties set forth in
Schedule I attached hereto, and at the Company’s sole
discretion, the Executive shall be eligible to receive a
discretionary bonus (in addition to the 2007 Bonus) at the end of
calendar year 2007.
(c)
Stock Options .
(i)
Grant of Shares .
On the Effective Date, the Executive shall be granted options to
purchase three hundred thousand (300,000) shares of common stock
under the 2006 Incentive Compensation Plan (the “
Plan ”).
Such options will vest and be exercisable at a rate of twenty-five
percent (25%) per year commencing on the first anniversary of the
date of grant and will have an exercise price equal to the Fair
Market Value, as such term is defined in the Plan, on the date of
grant.
(ii)
Acceleration .
Notwithstanding provision (i) above, and provided that the
Executive has already relocated to Southern California:
(A) any options not vested upon Executive’s death or the
termination of the Executive’s employment because he has
become Disabled (as defined below) will immediately vest and be
exercisable in accordance with the Plan; (B) if the Company
terminates the Executive without Cause (as defined below) before
the end of twelve (12) months from the Effective Date, the first
tranche of twenty-five percent (25%) of the Executive’s
options will immediately vest and be exercisable in accordance with
the Plan upon termination; (C) if the Company terminates the
Executive without Cause after twelve (12) months but before
the end of eighteen (18) months from the Effective Date, the
second tranche of twenty-five percent (25%) of the
Executive’s options will immediately vest and be
exercisable
in
accordance with the Plan; (D) if the Company terminates
the Executive without Cause after eighteen (18) months
but before the end of thirty (30) months from the
Effective Date, the third tranche of twenty-five percent (25%)
of the Executive’s options will immediately vest and be
exercisable in accordance with the Plan; and (E) if the
Company terminates the Executive without Cause after thirty
(30) months from the Effective Date, the entire grant of
three hundred thousand (300,000) options described in 4(c)(i)
will immediately vest and be exercisable in accordance with
the Plan.
(iii)
Fair Market Value .
In the event, at the time the Executive elects to exercise any
options, the common stock of Employer is not trading in sufficient
volume to permit the Executive to immediately sell the common stock
acquired upon exercise in the open market (subject to any then
applicable securities laws), the Executive may pay the exercise
price for such shares by either (A) the surrender of that
portion of the exercised option shares having a Fair Market Value
on the date of exercise equal to the aggregate exercise price of
the options so exercised or (B) the surrender of
Employer’s common stock having a Fair Market Value on the
date of exercise equal to the exercise price of the options so
exercised and, in the case of common stock acquired by the
Executive directly or indirectly from Employer, has been owned by
the Executive for a sufficient period to avoid a compensation
expense to Employer under then applicable accounting
rules.
(iv)
Change of Control .
(A) Provided
the Executive has relocated to Southern California prior to
the effective date of a Change in Control, if the acquirer in
the Change in Control does not adopt the Executive’s
option grant under the Plan in accordance with 26 C.F.R.
1.424-1 or offer the Executive a substitute grant under the
acquirer’s plan having similar economic value to the
Executive’s option grant under the Plan, any options
granted to the Executive under the Plan that would not
otherwise be vested on the effective date of the Change in
Control shall immediately vest and be exercisable immediately
prior to the effective date of the Change in
Control.
(B) Provided
the Executive has relocated to Southern California before the
effective date of a Change in Control, if the acquirer in the
Change in Control adopts the Executive’s option grant
under the Plan in accordance with 26 C.F.R. 1.424-1, or offers
the Executive a substitute grant under the acquirer’s
stock option plan having similar economic value to the
Executive’s option grant under the Plan, and
(1) within six (6) months following the effective
date of the Change in Control the acquirer terminates the
Executive’s employment without Cause, or (2) if
within twelve (12) months of the Effective Date and
within six (6) months of the effective date of the Change
in Control if the acquirer terminates the Executive with or
without cause, then to the extent that twenty-five percent
(25%) or more of the Executive’s total granted options
remain unvested on the date his employment terminates,
twenty-five percent (25%) of the Executive’s total
granted options from the acquirer (by adoption or grant) shall
immediately vest and be exercisable. For the avoidance of
doubt, if the acquirer does not agree to include this right in
its substitute grant to the Executive, the Executive’s
option grant under the Plan shall be treated as under Section
4(c)(iv)(A) above.
(C) If
the Executive has not relocated to Southern California prior
to the effective date of the Change in Control, the Executive
shall not be entitled to any acceleration in the vesting of
his options under the Plan in connection with the Change in
Control.
(D) For
purposes of this Agreement, a “
Change in Control ”
shall be defined as (1) the acquisition of the Company by
another entity by means of a transaction or series of related
transactions (including, without limitation, any reorganization,
merger, stock purchase or consolidation) or (2) the sale,
transfer or other disposition of all or substantially all of the
Company’s assets.
(v) In
all other respects, the stock options granted under this
paragraph 4(c) shall be subject to the Plan.
(vi) In
addition to the stock options described above, the Executive
will be eligible to receive stock, stock options, or other
securities of the Company under plans that are provided to
other similar executives of the Company. Future grants, if
any, will vest according to the terms at time of
grant.
(d)
Other Benefits .
The fringe benefits, perquisites, and other benefits of employment
to be provided to the Executive shall be equivalent to such
benefits and perquisites as are provided to other similar
executives of the Company as amended from time to time. The
Executive’s Paid Time Off is defined and will accrue pursuant
to the Paid Time Off provisions of the Company’s Employee
Handbook, except that the Executive will be entitled to vacation of
four (4) weeks during each year of employment, which may be taken
by the Executive upon prior notice in accordance with the
Company’s policies applicable to Company executives. In
addition, the Executive will be provided with accidental death and
disability and long-term disability insurance in amounts each no
less than the Executive’s annual Base Salary then in effect,
or reimbursed for the reasonably equivalent cost of a private
disability policy up to $1000 per month. If necessary, the Company
will reimburse the Executive for COBRA coverage until such time as
the Executive is covered under the Company’s group medical
and dental plans.
(e)
Equipment .
Company will provide Executive with a suitable notebook computer
and related equipment to enable Executive to conduct business from
his New York home office. The Company agrees to provide other
personal computer equipment necessary for the Executive to perform
his duties upon submission of request by the Executive and approval
by the Company. All equipment provided will remain the
Company’s property and the Executive agrees to provide the
Compan
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