Exhibit 99.2
January 31, 2009
Alex Martin
9 Orion Way
Coto de Caza, CA 92679
Dear Alex,
On behalf of World Heart Corporation (the “Company”), I am very pleased to offer you the position of President and Chief Executive Officer. Speaking for myself, as well as the other members of the Company’s Board of Directors (the “Board”), and the members of the Company’s management team, we are all very impressed with you and what you will bring to the Company. We believe that with your background, you will make significant contributions to the success of the Company.
The terms of your new position with the Company are as set forth below:
1. Duties and Scope of Employment.
(a) Position. As of the Start Date (as defined below), you will serve as President and Chief Executive Officer of the Company. In such capacity you will report to and be subject to the direction and control of the Board. You will render such business and professional services in the performance of your duties, consistent with your position within the Company, as shall reasonably be assigned to you by the Board, and perform your services on a full-time basis at the Company’s offices in Salt Lake City, Utah. You will devote substantially all of your full working time and attention to the business affairs of the Company, provided that you may serve on boards of directors of other companies or in any other capacity with civic, educational, or charitable organizations upon consent from the Board, which shall not be unreasonably withheld. You will comply with and be bound by the Company’s operating policies, procedures and practices from time to time in effect during the Employment Term (as defined below).
(b) Start Date. Subject to fulfillment of any conditions imposed by this Letter Agreement, you will commence full-time employment with the Company on February 4, 2009 (the “Start Date”). The period of your employment under this Letter Agreement is referred to herein as the “Employment Term.”
2. Compensation.
(a) Base Salary. You will receive an annual base salary of $320,000 for all hours worked to be paid in accordance with the Company’s customary payroll procedures, less payroll deductions and withholdings (the “Base Salary”).
(b) Bonus. You will be eligible for a target annual bonus of up to 30% of your annual Base Salary (the “Bonus”) based on achievement of fiscal year objectives mutually agreed upon by you and the Board or its Compensation Committee, payable on or before March 15 of the year following the year in which the Bonus is earned, and conditioned upon your employment as of the date of the Board’s determination of the Bonus payment, if any, payable to you for a particular year. The Board will work with you to determine and document those specific objectives for 2009 within 45 days of your Start Date. For 2010 and subsequent years, the Board and you will work together to determine and document the specific objectives for the relevant year, using reasonable efforts to finalize such objectives by January 31 of that year. Any bonus earned under this paragraph will be paid to you net of payroll deductions and withholdings.
3. Stock Options.
(a) Initial Grant. In connection with the commencement of your employment, the Company will recommend that the Board grant you a stock option (the “Initial Option”) to purchase 397,618 common shares of the Company (representing approximately 3% the Company’s total issued and outstanding shares as of the Start Date). The Initial Option will vest and become exercisable, contingent on your continued employment with the Company, on each respective vesting date, at the rate of 25% of the shares, or 99,404 common shares, on the twelve (12) month anniversary of your Start Date, and the remaining shares will vest monthly thereafter at the rate of 1/48 of the total number of shares underlying the Initial Option, or approximately 8,283 common shares.
(b) Performance Options. On each of the first and second anniversaries of your Start Date and conditioned upon your continued employment with the Company and your achievement of certain performance metrics to be mutually agreed upon following the Start Date, the Company will grant you a stock option to purchase that number of common shares of the Company representing 0.5% of the Company’s total issued and outstanding shares as of each such grant date (each a “Performance Option”). Each Performance Option will vest and become exercisable, contingent on your continued employment with the Company on each respective vesting date, at the rate of 1/48 of the total number of shares underlying such Performance Option each month.
(c) Other Option Terms. Both the Initial Option and the Performance Options (collectively, the “Options”) shall also be subject to the terms and conditions specified in this Section 3(c). The Options shall be granted with an exercise price equal to the closing sales price of a common share of the Company as reported on the NASDAQ Stock Market on the trading day prior to the applicable date of grant. The Options shall have ten (10) year terms unless they expire earlier in connection with a change of control of the Company or your termination of service to the Company. The Options shall be granted under the Company’s 2006 Equity Incentive Plan, as may be amended from time to time (the “Stock Plan”), and shall be subject to the further terms and conditions of the Stock Plan and the stock option agreements to be entered into between you and the Company. The Options will be intended to qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), to the maximum extent possible within the limitations of the Code.
4. Relocation Benefits.
(a) Relocation Allowance. You will be provided a relocation allowance of up to $70,000 (the “Relocation Allowance”) to reimburse the reasonable costs related to your move to the Salt Lake City area for the following specific expenses incurred within 12 months following your Start Date: moving of your household goods and effects (including in-transit storage expenses), pre-move house hunting expenses, expenses of buying a home in Salt Lake City (including mortgage fees and costs), security deposits, storage expenses and travel expenses (including lodging and meals) for your trip to your new residence in Salt Lake City, subject to the terms and conditions of this Section 4(a). In addition, in the event that you incur real estate commission expenses in connection with selling your home in the Orange County Area at any time within three (3) years following your Start Date, the Company will reimburse you for such expenses using the remainder of the Relocation Allowance, if any, and to the extent such expenses exceed $45,000, up to an additional $25,000 (the “Real Estate Allowance”), subject to the terms and conditions of this Section 4(a). The Company will not reimburse you for any other relocation-related expenses without the prior written approval of the Compensation Committee. Payments of the Relocation Allowance and the Real Estate Allowance will be made within thirty (30) days following your submission of receipts for your eligible relocation-related expenses. The Company will also provide you with a tax gross-up payment of up to 50% of the amount of any taxable relocation-related expenses (up to a maximum tax gross-up payment of $35,000; $47,500 in the event the full amount of the Real Estate Allowance is paid to you) to defray your state and federal tax liabilities (each a “Gross-Up Payment”). If you resign from the Company or are terminated for cause (as determined in the sole discretion of the Board) within the first twelve (12) months following your Start Date, you agree to repay the Company 100% of your Relocation Allowance and Real Estate Allowance payments, including any Gross-Up Payments.
(b) Housing Allowance. The Company will also provide you with a temporary housing allowance for up to six (6) months following your Start Date, up to a maximum of $2,000 per month.
(c) Other Reimbursement Terms. In all cases, the relocation-related reimbursements are payable only while you remain employed by the Company, any such reimbursements shall be paid no later than December 31 of the year following the year in which the expense was incurred, and the right to reimbursement will not be subject to liquidation or exchange for another benefit. Subject to your right to receive the Gross-Up Payments, you will be responsible for all applicable income and employment taxes on these relocation-related reimbursements. Any Gross-Up Payments shall be paid no later than December 31 following the year in which you remit the related taxes to the relevant taxing authority.
5. Benefits. During your employment by the Company, you will be eligible to participate in any medical insurance plans, 401(k) plans, deferred compensation plans, life insurance plans, vacation, or other benefit plans which are generally available to its senior executives, pursuant to the terms and conditions of such plans. The Company will be under no obligation to institute or continue the existence of any such benefit plan and may from time to time amend, modify or terminate any such benefit plan. The Board is also currently evaluating the advisability of adopting a program for its senior executives in connection with certain terminations of employment, including in connection with a change of control of the Company. In the event that the Company adopts such a program, you will be eligible to receive termination-related
and other benefits under such a program to the same extent as the Company’s other senior executives.
6. Business Expenses. You shall be entitled to timely reimbursement for all ordinary and reasonable out-of-pocket business expenses which are incurred by you in furtherance of the Company’s business and in accordance with the Company’s standard policies.
7. At-Will Employment. Your employment with the Company will at all times be “at will,” which means that either you or the Company may terminate your employment at any time, for any or no reason, with or without cause, subject only to the specific provisions of this Letter Agreement. This Letter Agreement shall constitute the full and complete agreement between you and the Company on the “at will” nature of your employment, which may only be changed in an express written agreement signed by you and a duly authorized officer of the Company.
8. Pre-employment Conditions.
(a) Proprietary Rights Agreement; Code of Conduct ; Insider Trading Policy. Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution and delivery of the Proprietary Rights Agreement in the form attached hereto as Exhibit A (the “Proprietary Rights Agreement”), the Amended and Restated Code of Conduct in the form attached hereto as Exhibit B (the “Code of Conduct’), and a counterpart signature to the Company’s Insider Trading Policy attached hereto as Exhibit C (the “Insider Trading Policy”). You hereby agree to abide by the terms of the Proprietary Rights Agreement and further agree that the provisions of the Proprietary Rights Agreement shall survive any termination of this Letter Agreement or of your employment relationship with the Company.
(b) Right to Work. For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your Start Date, or our employment relationship with you may be terminated.
9. Conflicting Obligations. You represent that your performance of all the terms of this Letter Agreement will not breach any other agreement to which you are a party. You have not, and will not during the term of this Letter Agreement, enter into any oral or written agreement in conflict with any of the provisions of this Letter Agreement.
10. Indemnification. The Company agrees to indemnify you and hold you harmless to the fullest extent permitted by applicable law and under the bylaws of the Company against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees), losses and damages resulting from your good-faith performance of your duties and obligations to the Company. The Company shall cover you under directors and officers liability insurance both during and, while potential liability exists (but in any case not for more than six years), after the term of this Letter Agreement in the same amount and on the same terms as the Company covers its other active officers and directors, if such coverage is obtainable, but in all events such coverage shall be at least in substantially the
same amount and on substantially the same terms as the Company covers its other active officers and directors.
11. Tax Matters. Except as otherwise provided in this Letter Agreement, you agree that you are responsible for any applicable taxes of any nature (including any penalties or interest that may apply to such taxes) that the Company reasonably determines apply to any payment or equity award made to you hereunder (or any arrangement contemplated hereunder), that your receipt of any benefit hereunder is conditioned on your satisfaction of any applicable withholding or similar obligations that apply to such benefit, and that any cash payment owed to you hereunder will be reduced to satisfy any such withholding or similar obligations that may apply thereto.
12. Miscellaneous Provisions.
(a) Severability. If one or more provisions of this Letter Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Letter Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Letter Agreement shall be enforceable in accordance with its terms.
(b) Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.
(c) Advice of Counsel. Each party to this Letter Agreement acknowledges that, in executing this Letter Agreement, such party has had the opportunity to seek the advice of independent legal counsel, and has read and understood all of the terms and provisions of this Letter Agreement. This Letter Agreement shall not be construed against any party by reason of the drafting of preparation hereof.
(d) Dispute Resolution. To ensure the rapid and economical resolution of any and all disputes that arise in connection with this Letter Agreement or your employment with the Company, you and the Company agree that any and all disputes, claims, or causes of action, in law or equity, arising from or relating to the enforcement or interpretation of this Agreement, your employment or the termination of your employment (collectively, “Claims”), shall be resolved to the fullest extent permitted by law exclusively by final, binding, and confidential arbitration in Salt Lake City, Utah, conducted by the American Arbitration Association (“AAA”) or its successors, under the then applicable AAA rules by a single arbitrator. Claims subject to this arbitration provision shall (a) include, but not be limited to, Claims pursuant to any federal, state or local law or statute, including (without limitation) the Age Discrimination in Employment Act, as amended; Title VII of the Civil Rights Act of 1964, as amended; the Americans With Disabilities Act of 1990; the federal Fair Labor Standards Act; and state anti-discrimination statutes; and Claims pursuant to any common law, tort law or contract law, including (without limitation) breach of contract or other promise, discrimination, harassment, retaliation, wrongful discharge, fraud, misrepresentation, defamation, and emotional distress; and (b) exclude Claims that by law are not subject to arbitration. The arbitrator shall: (1) have the
authority to compel adequate discovery for the resolution of all Claims and to award such relief as would otherwise be permitted by law; and (2) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award. The Company shall pay all of the arbitrator’s fees. You and the Company acknowledge that, by agreeing to this arbitration procedure, both you and the Company waive the right to resolve any Claims through a trial by jury or judge or by administrative proceeding. Nothing in this Agreement is intended to prevent you or the Company from obtaining injunctive relief in court if the award to which such party might obtain in arbitration may be rendered ineffectual without provisional relief. As provided in the AAA rules, any arbitration award may be enforced by any court of competent jurisdiction.
We are all delighted to be able to extend this offer and look forward to working with you. To indicate your acceptance of the Company’s offer, please sign and date this letter in the space provided below, and also sign and date the enclosed Proprietary Rights Agreement, and return both to me. This Letter Agreement, together with the Proprietary Rights Agreement and the agreements expressly referenced herein, set forth the terms of your employment with the Company and supersede any prior representations or agreements, whether written or oral. This Letter Agreement will be governed by the laws of Utah, without regard to its conflict of laws provisions. In the event of any conflict in terms between this Letter Agreement and any other agreement between you and the Company (including without limitation the two exhibits and the other agreements referenced herein), the terms of this Letter Agreement shall prevail. This Letter Agreement may not be modified or amended except by a written agreement, signed by a member of the Board (other than you) and yourself.
This offer, if not accepted, will expire at close of business on January 28, 2009.
| Very truly yours, |
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| World Heart Corporation |
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| Michael Sumner Estes |
| Chairman, on behalf of the Board of Directors |
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ACCEPTED AND AGREED: | |
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Alex Martin | |
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/s/ Alex Martin | |
Signature | |
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February 2, 2009 | |
Date | |
Exhibit A: | | Proprietary Rights Agreement |
Exhibit B: | | Code of Conduct |
Exhibit C: | | Insider Trading Policy |
