Exhibit 10.24
CHANGE IN CONTROL AGREEMENT
This Agreement, made and entered into this 3rd day of November 2000, 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 Xxxxx X. Xxxxxxx (the "Employee"), residing at 0000
Xxxxxxx Xxxxx, 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 Company under any of the circumstances
described herein; and
WHEREAS, this Agreement is 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 notwithstanding 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. In the event of a termination prior to a Change in
Control (as defined in section 3(a) hereof) or in the event of a termination
which occurs more than twelve (12) months after a Change in Control (as defined
in section 3(a) hereof), the parties' rights and obligations in the event of
termination shall be governed by the terms of the Employment and Non-Competition
Agreement dated November 3, 2000.
(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
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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 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 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 (as defined in section 3(e)
hereof) 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) hereto), 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 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 a Change in Control (as
defined in section 3(a) hereof);
(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;
(iv) The Company's requiring the Employee to be based at
a location that is in excess of 50 miles from the location of the Employee's
principal office immediately prior to a Change in Control (as defined in section
3(a) hereof); or
(v) Any other material breach of this Agreement by the
Company which is not cured within 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
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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;
(ii) Any act or acts of personal dishonesty by the
Employee which are 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 indictment, presentment, or
conviction for a felony, whether or not the Company is the victim of such
offense.
(d) "Disability" shall mean Employee's total disability which
results in Employee's inability to perform the essential functions of Employee's
position, with or without reasonable accommodation, provided Employee has
exhausted Employee's entitlement to any applicable leave, if Employee desires to
take and satisfies all eligibility requirements for such leave.
(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 meanings
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 defined in section 3(a) hereof) occurs
during the first twelve (12) months following a Change in Control (as defined in
section 3(a) hereof), payments equal to eighteen (18) 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
more than twelve (12) months after a Change in Control (as defined in section
3(a) hereof), 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 be paid, in the sole discretion of the Company, in a lump sum or
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 not 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 not be
reduced by any compensation earned by the Employee as a result of any employment
by an employer.
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 to 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
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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 this 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 inure to the benefit of, and be enforceable
by, the Employee's personal or legal representatives, executors, administrators,
heirs, distributees, devisees, 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.
(b) The arbitrator(s) 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
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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 the 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 to
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. In
the event of a termination prior to a Change in Control (as defined in section
3(a) hereof) or in the event of a termination which occurs more than twelve (12)
months after a Change in Control (as defined in section 3(a) hereof), the
parties' rights and obligations in the event of termination shall be governed by
the terms of the Employment and Non-Competition Agreement dated November 3,
2000.
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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 /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Its Director
---------------------------------
XXXXX X. XXXXXXX
/s/ Xxxxx X. Xxxxxxx
---------------------------------
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