Exhibit
10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT, entered into August
10, 2009, by and between CAS Medical Systems, Inc., a Delaware
corporation (the “Company”, which term includes any
successor to CAS Medical Systems, Inc., by merger or otherwise),
and Andrew E. Kersey (the “Employee”).
WITNESSETH:
WHEREAS, the Company desires that the Employee
continue to serve as President and Chief Executive Officer of the
Company and the Employee is willing to continue to serve the
Company in such capacity.
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and other good and valuable
consideration, the parties hereto agree as follows:
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”).
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 the Employee’s
position. 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’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.
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 and
Fifty Thousand Dollars, 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. It is also agreed that during such annual
review the annual base salary can be reduced.
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. Any bonus payable hereunder shall be
calculated after the close of the end of the calendar year, and
thereafter paid in a lump sum by no later than the 15
th day of the third month following the end of the
calendar year in which the right to the bonus is no longer subject
to a substantial risk of forfeiture (as defined for purposes of
Internal Revenue Code Section 409A, including Treasury Regulations
Section 1.409A-1(d)).
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 applicable to senior officers 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).
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. All reimbursements will be paid in the same
taxable year in which the expense is incurred; provided that
expenses incurred toward the end of the calendar year that cannot
administratively be reimbursed before the year end shall be
reimbursed by no later than March 15 th of the
following calendar year.
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.
(a) Termination of
Agreement by the Company for Convenience . The
Company may terminate the Employee’s employment and the Term
of Employment for convenience at any time upon written notice to
the Employee, which termination shall be effective upon delivery of
such notice unless such notice specifically provides for
termination to be effective at a later date.
(b) Termination of
Employment 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.
(c) Termination of
Employment by Employee for Good Reason . The Employee may
terminate his employment and the Term of Employment in the event of
“Good Reason.” Termination for Good Reason
means a resignation of employment and Separation from Service (as
such term is defined for purposes of Internal Revenue Code Section
409A) within six (6) months following the initial existence of one
or more of the following conditions arising without the
Employee’s written consent:
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a reduction
greater than five (5) percent in the aggregate in the
Employee’s base salary or benefits, other than an
across-the-board reduction affecting substantially all members of
senior management;
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a material
reduction in the Employee’s duties and significant
responsibilities hereunder following the occurrence of a Change of
Control, as defined in Section 10(b) hereof (not including
reasonable changes in title or in corporate structure);
or
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a material
breach of this Agreement by the Company (which shall include a
failure to make payments due hereunder);
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provided, in
any such case, that (1) the Employee shall provide, pursuant to
Section 18 hereof, a prior written notice specifying the reasons
for his termination to the Company’s Board of Directors
within sixty (60) days after the initial existence of the
condition, and give Company an opportunity to cure such condition
(if curable), and (2) “Good Reason” shall exist only if
the Company shall fail to cure such condition within thirty-one
(31) days after its receipt of such prior written
notice. In addition, until the actual Separation from
Service, the Employee must remain willing and able to continue to
perform services in accordance with the terms of this Agreement and
the Employee must not be in breach of any of the Employee’s
obligations hereunder.
(d) 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 accruing 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.
(e) 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, but unpaid, 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.
(f) Effect of
Termination Without Serious Cause or With Good Reason
. If (i) the Company terminates the Employee’s
employment without Serious Cause, or (ii) the Employee terminates
his employment for Good Reason (other than, in the case of each of
clause (i) and (ii) above, within the period beginning on the date
that a Change in 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),
the Company shall pay the Employee a separation pay benefit (the
“Severance Payment”) equal to six (6) months of the
Employee’s annual rate of base salary (as of the
Employee’s Separation from Service date) and will make
available a subsidized healthcare benefit, as described
below.
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Payment of the
Severance Payments shall commence as of the Employee’s
Separation from Service date, and shall continue thereafter in
equal fixed installments over a six month period in accordance with
the Company’s standard payroll procedures and normal payroll
dates then in effect.
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In the event
the value of the Severance Payments shall exceed two times the
lesser of the Employee’s annualized compensation or the
maximum amount that may be taken into account for qualified plan
purposes (in each case, as determined in accordance with Treasury
Regulation Section 1.409A-1(b)(9)(iii)(A)), the excess shall not be
paid as provided in (1), above, but instead shall be withheld and
paid on the first regularly scheduled payroll date immediately
following the date that is six mont
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