CHANGE IN CONTROL AGREEMENT
This Agreement, made and entered into this 28th day of June, 1996, by and
between Endocardial Solutions, Inc., a Minnesota corporation (the "Company"),
with its principal offices at 0000 Xxxxxx Xxxx, Xxxxx 000, Xx. Xxxx, Xxxxxxxxx,
00000-0000, and Xxxxxx X. XxXxxxxx (the "Employee"), residing at 0000 Xxxxxx
Xxxx, Xxxxxxx, Xxxxxxxxx 00000.
WHEREAS, this Agreement is intended to specify the financial arrangements
that the Company will provide to the Employee upon the Employee's separation
from employment with the under any of the circumstances described herein; and
WHEREAS, this Agreement entered into by the Company in the belief that it
is in the best interest of the Company to provide stable conditions of
employment for the Employee no withstanding the possibility, threat, or
occurrence of certain types of changes in control, thereby enhancing the
Company's ability to attract and retain highly qualified people;
NOW, THEREFORE, in lieu of the foregoing recitals and in consideration of
the mutual covenants, promises, payments, and undertakings of the parties
hereto, the parties agree as follows
1. TERM OF AGREEMENT. The Employee shall be employed on an at-will
basis. This Agreement is not, and shall not be construed as, an employment
contract affecting in any way the duration of the Employee's employment or any
terms and conditions thereof except those set forth herein. The Employee and
the Company may terminate their employment relationship at any time, for any
reason, or for no reason.
2. TERMINATION OF EMPLOYMENT.
(a) PRIOR TO A CHANGE IN CONTROL. Prior to a Change in Control (as
defined in section 3(a) hereof), the Company may terminate the Employee from
employment with the Company at-will with or without Cause (as defined in section
3(c) hereof), at any time.
(b) AFTER A CHANGE IN CONTROL.
(i) From and after the date of a Change in Control (as defined
in section 3(a) hereof) during the term of this Agreement, the Company shall not
terminate the Employee from employment with the Company except as provided in
this section 2(b), or as a result of the Employee's Disability (as defined in
section 3(d) hereof) or his death.
(ii) From and after the date of a Change in Control (as defined
in section 3(a) hereof) during the term of this Agreement, the Company shall
have the right to terminate the Employee from employment with the Company at any
time during the term of this Agreement for Cause (as defined in section 3(c)
hereof), by written notice to the Employee, specifying the particulars of the
conduct of the Employee forming the basis for such termination.
(iii) From and after the date of a Change in Control (as defined
in section 3(a) hereof) during the term of this Agreement: (a) the Company shall
have the right to terminate the Employee's employment without Cause (as defined
in section 3(c) hereof), at any time; and (b) the Employee shall, upon the
occurrence of such termination by the Company without Cause or upon the
voluntary termination of the Employee's employment by the Employee for Good
Reason (as defined in section 3(b) hereof), be entitled to receive the benefits
provided in section 4 hereof. The Employee shall evidence a voluntary
termination for Good Reason by written notice to the Company given within ten
(10) days after the date of the occurrence of any event that the Employee knows
or should reasonably have known constitutes Good Reason on for voluntary
termination. Such notice need only identify the Employee and set forth in
reasonable detail the facts and circumstances claimed by the Employee to
constitute Good Reason. Any notice given by the Employee pursuant to this
section 2 shall be effective ten (10) days after the date it is given by the
Employee.
3. DEFINITIONS.
(a) A "Change in Control" shall mean:
(i) A change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company "is then subject to such reporting
requirement;
(ii) The public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or any "person" (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act) that such person has
become the "beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act) directly or indirectly, of securities of the Company representing
twenty percent (20%) or more of the combined voting power of the Company's then
outstanding securities;
(iii) The Continuing Directors cease to constitute a majority of
the Company's Board of Directors;
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(iv) The shareholders of the Company approve: (a) any
consolidation or Merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Company stock
would be converted into cash, securities, or other property, other than a merger
of the Company in which shareholders immediately prior to the merger have the
same proportionate ownership of stock of the surviving corporation immediately
after the merger; (b) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company; or (c) any plan of liquidation or dissolution of the
Company; or
(v) The majority of the Continuing Directors (as defined in
section 3(e) hereof) determine in their sole and absolute discretion that there
has been a Change in Control of the Company.
(b) "Good Reason" shall mean the occurrence of any of the following
events, except for the occurrence of such an event in connection with the
termination or reassignment of the Employee's employment by the Company for
Cause (as defined in section 3(c) hereof), for Disability (as defined in section
3(d) hereof), or for death:
(i) The assignment to the Employee of employment
responsibilities which are not of comparable responsibility and status as of the
employment responsibilities held by the Employee immediately prior to a Change
in Control (as defined in section 3(a) hereof);
(ii) Any unreasonable reduction by the Company in the
Employee's base salary as in effect immediately prior to the change in control;
(iii) The failure by the Company to obtain, as specified in
section 5(a) hereof, an assumption of the obligations of the Company to perform
this Agreement by any successor to the Company; or
(iv) Any other material breach of this Agreement by the Company
which is not cured thirty (30) days after written notice thereof from the
Employee.
(c) "'Cause" shall mean termination by the Company of the Employee's
employment based upon:
(i) Repeated violations by the Employee of any of his duties
or his repeated failures or omissions to carry out lawful and reasonable orders
which, in the reasonable judgment of the Company, are willful and deliberate and
which are not cured within a reasonable period after the Employee's receipt of
written notice thereof from the Company;
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(ii) Any act or acts of personal dishonesty by the Employee and
intended to result in the personal enrichment of the Employee at the expense of
the Company;
(iii) Any willful and deliberate misconduct that is materially
and demonstrably injurious to the Company; or
(iv) Any criminal inditement, presentment, or conviction for a
felony, whether or not the Company is the victim of such offense.
(d) "Disability" shall mean any physical or mental condition which
causes the Employee to fail to render services to the Company over a period of
ninety (90) days during any one hundred eight (180) day period. The existence
or nonexistence of the Employee's disability will be determined in good faith by
the Board of Directors after notice in writing given to the Employee at least
thirty (30) thirty days period to such determination. During such (30) day
period, the Employee shall be permitted to make a presentation to the Board of
Directors for its
consideration.
(e) "Continuing Director" shall mean any person who is a member of
the Board of Directors of the Company, while such person is a member of the
Board of Directors, who is not an Acquiring Person (as defined herein) or an
Affiliate or Associate (as defined herein) of an Acquiring Person, or a
representative of an Acquiring Person or any such Affiliate or Associate, and
who:
(i) was a member of the Board of Directors on the date of this
Agreement as first written above; or
(ii) subsequently becomes a member of the Board of Directors,
if such person's initial nomination for election or initial election to the
Board of Directors is recommended or approved by a majority of the Continuing
Directors. For purposes of this section 3(e) "Acquiring Person" shall mean any
"person" (as such term is used in sections 13(d) and 14(d) of the Exchange Act)
who or which, together with all Affiliates and Associates of such person, is the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the Company's then
outstanding securities, but shall not include the Company, any subsidiary of the
Company, or any employee benefit plan of the Company, or of any subsidiary of
the Company, or any entity holding shares of common stock organized, appointed,
or established for, or pursuant to the terms of, any such plan; and "Affiliate"
and "Associate" shall have the respective meaning described to such terms in
Rule 12b-2 promulgated under the Exchange Act.
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4. BENEFITS UPON TERMINATION UNDER SECTION 2(b)(iii).
(a) Upon the termination (voluntary or involuntary) of the employment
of the Employee pursuant to section 2(b)(iii) hereof, the Company shall pay to
the Employee, in lieu of any further base salary or bonus payments to the
Employee for periods subsequent to the date that the termination of the
Employee's employment becomes effective, as severance pay, payments as follows:
(i) if the termination pursuant to section 2(b)(iii) hereof
following a Change in Control (as define in section 3(a) hereof) occurs during
the first six (6) months following the commencement of the Employee's
employment, payments equal to twelve (12) times the Employee's monthly base
salary;
(ii) if the termination pursuant to section 2(b)(iii) hereof
following a Change in Control (as defined in section 3(a) hereof) occurs during
the period beginning more than six (6) months and ending twelve (12) months
after the commencement of the Employee's employment, payments equal to nine (9)
times the Employee's monthly base salary;
(iii) if the termination pursuant to section 2(b)(iii) hereof
following a Change in Control (as defined in section 3(a) hereof) occurs during
the period beginning more than twelve (12) months and ending eighteen (18)
months after the commencement of the Employee's employment, payments equal to
six (6) times the Employee's monthly base salary.
(iv) if the termination pursuant to section 2(b)(iii) hereof
following a Change in Control (as defined in section 3(a) hereof) occurs more
than eighteen (18) months after the commencement of the Employee's employment,
the Employee will not be entitled to any payments pursuant to this section 4.
(b) For purposes of this section 4, "the Employee's monthly base
salary" shall mean the Employee's monthly base salary as in effect in the month
preceding the month in which the termination becomes effective or as in effect
in the month preceding the Change in Control whichever is higher.
(c) All payments to the Employee subject to this section 4 shall not
be paid in a lump sum, but, rather, shall be paid periodically in accordance
with the Company's normal payroll practices in effect from time-to-time. All
payments to the Employee subject to this section 4 shall be subject to any
applicable payroll or other taxes required by law to be withheld.
(d) The Employee shall be required to mitigate the amount of any
payment provided for in this section 4 by seeking other employment or otherwise.
The amount of any payment provided in this section 4 shall be reduced by any
compensation earned by the Employee as a result of any employment by an
employer.
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5. SUCCESSORS AND BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect) by purchase, merger, consolidation, or otherwise to all or
substantially all of the business and/or of the assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
agreement and shall entitle the Employee the compensation from the Company in
the same amount and on the same terms as the Employee would be entitled
hereunder if the Employee terminated his employment after a Change in Control
for Good Reason, except that, for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the date
that the termination of the Employee's employment becomes effective. As used in
this Agreement, "Company" shall mean the Company and any successor to its
business and/or assets which executes and delivers the Agreement provided for in
section 5(a) or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) This Agreement is personal to the Employee, and the Employee may
not assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person. Notwithstanding the
foregoing, this Agreement shall enure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
heirs, distributees, devicees, and legatees.
6. LIMITATION OF DAMAGES . If for any reason the Employee believes the
severance provisions of this Agreement have not been properly adhered to by the
Company, and if, pursuant to section 7 hereof, it is determined that the Company
has not, in fact, properly adhered to the severance provisions of this
Agreement, the sole and exclusive remedy to which the Employee is entitled is
the severance payment to which he is entitled under the provisions of this
Agreement.
7. DISPUTE RESOLUTION. Any controversy, claim, or dispute arising out of
or relating to the making, performance, breach, termination, expiration,
application, or meaning of this Agreement shall be resolved exclusively by
arbitration before the American Arbitration Association in Minneapolis,
Minnesota, pursuant to the American Arbitration Association's rules then in
effect.
(a) The decision of the arbitrator(s) shall be final and binding on
both parties. Judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. In the event of submission of
any dispute to arbitration, each party shall, not later than thirty (30) days
prior to the date set for hearing, provide to the other party and to the
arbitrator(s) a copy of all exhibits upon which the party intends to rely at the
hearing and a list of all persons whom the party intends to call as witnesses at
the hearing.
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(b) The arbitrator(c) shall strictly adhere to the sole and exclusive
remedy set forth in section 6 hereof and may not award or assess punitive
damages against either party.
(c) Each party shall bear its own costs and expenses of the
arbitration and one-half (1/2) of the fees and costs of the arbitrator(s).
8. MODIFICATION; WAIVER. No provisions of this Agreement may be
modified, waived, or discharged unless such waiver, modification, or discharge
is agreed to in a writing signed by the Employee and such officer as may be
specifically designated by the Board of Directors of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
9. NOTICE. All notices, requests, demands, and all other communications
required or permitted by either party to the other party by this Agreement
(including, without limitation, any notice of termination of employment) shall
be in writing and shall be deemed to have been duly given when delivered
personally or received by certified or registered mail, return receipt
requested, postage prepaid, at the address of the other party as first written
above (directed to the attention of the Board of Directors in the case of the
Company). Either party hereto may change its address for purposes of this
section 9 by giving fifteen (15) days' prior written notice to the other party
hereto.
10. SEVERABILITY. If any term or provision of this Agreement or the
application hereof to any person or circumstances shall to any extent be invalid
or unenforceable, the remainder of this Agreement or the application of such
term or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be effected thereby and each term and
provision of this Agreement shall be valid and enforceable to fullest extent
permitted by law.
11. GOVERNING LAW. This Agreement has been executed and delivered in the
State of Minnesota and shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the State of Minnesota, including all
matters of construction, validity, and performance.
12. EFFECT OF AGREEMENT; ENTIRE AGREEMENT. The Company and the Employee
understand and agree that this Agreement is intended to reflect their agreement
only with respect to the subject matter hereof and is not intended create any
obligation on the part of either party to continue employment. This Agreement
supersedes any and all other oral or written agreements or policies made
relating to the subject matter hereof and constitutes the entire agreement of
the parties relating to the subject matter hereof; provided that this Agreement
shall not supersede or limit in any way the Employee's rights under any benefit
plan, program, or arrangements in accordance with their terms.
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IN WITNESS WHEREOF,, the Company and the Employee have executed this Agreement
as of the date first written above.
ENDOCARDIAL SOLUTIONS, INC.
By
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Xxxxx Xxxxxxx Xxxxxx X. XxXxxxxx
Its President
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