December 21, 1999
Xx. Xxxxxxx X. Xxxxxx
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
The execution of this letter agreement is a condition of Angeion Corporation
("the Company") to the closing of the merger of Medical Graphics Corporation
("Medical Graphics") with a wholly-owned subsidiary of the Company pursuant to
an Agreement and Plan of Merger by and among Medical Graphics, the Company and
ANG Acquisition Corp., dated September 22, 1999 (the "Merger" and the "Merger
Agreement"). As a result of the Merger, Medical Graphics will become a wholly
owned subsidiary of the Company. In connection with the Merger each of us
desires to enter into a new employment agreement with the Company that would
supercede the terms of your existing employment with Medical Graphics, effective
at the Effective Time of the Merger.
1. EMPLOYMENT.
The Company hereby agrees to employ you, and you agree to be employed by
the Company, on the terms and conditions hereinafter set forth. Effective
January 3, 2000, you will serve as the President and Chief Executive Officer of
the Company and, at no additional compensation, be elected as a member of the
Board of Directors of the Company, and in such other directorships, Board
committee memberships and offices of the Company and its subsidiaries to which
you may from time to time be elected or appointed by the Chairman of the Board
of the Company (including President and Chief Executive Officer of Medical
Graphics). You agree to serve the Company faithfully and, to the best of your
ability, to promote the Company's interest, and to devote your full working
time, energy and skill to the Company's business. You may attend to personal
business and investment, engage in charitable activities and community affairs,
and serve on a reasonable number of corporate, educational and civic boards, so
long as those activities do not interfere with your duties under this Agreement
and provided that service on any corporate boards on which you did not serve as
of the date hereof shall be subject to prior approval by the Board of Directors.
You will have such authority, powers, functions, duties, and
responsibilities as are normally accorded chief executive officers. You will
discharge your duties at all times in accordance with any and all policies
established by the Board of Directors and will report to, and be subject to the
direction of, the Board of Directors.
2. BASE SALARY.
As partial compensation for all of your services (including services as
director, Board committee member or officer of the Company and its subsidiaries)
during your
term of employment hereunder, you will receive a base salary at an annual
rate of Two Hundred Sixty-five Thousand Dollars ($265,000), payable in
biweekly installments. Such base salary shall be reviewed annually at the
discretion of the Board.
3. CASH BONUS; STOCK AWARDS AND OPTIONS.
(a) As additional compensation for your services, you shall be eligible to
earn cash bonus compensation for each fiscal year up to a target of 35% of your
annual salary, and an over achievement bonus of up to an additional 35% of your
annual salary. Bonuses each year will be determined by the Board of Directors in
accordance with a bonus plan to be established by mutual agreement between you
and the Board of Directors for that year.
(b) Your eligibility for stock awards and stock options of the Company is
set forth in a separate letter from the Company to you dated September 22, 1999
and embodied in separate stock award and stock option agreement executed
concurrently herewith.
4. FRINGE BENEFITS.
(a) You will be eligible to participate in any and all Company sponsored
insurance (including medical, dental, life and disability insurance),
retirement, and other fringe benefit programs that it maintains for its
executive officers, subject to and on a basis consistent with the terms of each
such plan or program.
(b) You will be entitled to four weeks of paid vacation annually.
(c) The Company will pay or reimburse you $600 per month for all costs
associated with a private automobile selected by you, including, but not limited
to, lease costs, gas, repairs, general maintenance and insurance.
5. EXPENSES.
During the term of your employment, the Company will reimburse you for your
reasonable travel and other expenses incident to your rendering of services in
conformity with its regular policies regarding reimbursement of expenses as in
effect from time to time. Payments to you under this paragraph will be made upon
presentation of expense vouchers in such detail as the Company may from time to
time reasonably require.
6. TERM AND TERMINATION.
(a) TERM. Your employment with the Company will continue unless and until
terminated in accordance with the terms of this Agreement.
(b) TERMINATION. Your employment under this Agreement may be terminated as
follows:
(i) By your resignation upon 30 days prior written notice to the
Company.
(ii) By the Company for Cause (as defined in this Agreement)
immediately upon written notice to you.
(iii) By the Company for any reason and at any time upon 30 days prior
written notice to you.
(iv) By the Company at any time in the event of your Disability (as
defined in this Agreement).
In the event of your termination of employment for any of the foregoing reasons,
you shall immediately resign as a director of the Company and any of its
subsidiaries.
(c) DEATH. This Agreement will automatically terminate upon your death.
7. CONSEQUENCES OF TERMINATION.
(a) TERMINATION FOR CAUSE; RESIGNATION PRIOR TO CHANGE IN CONTROL OR
MORE THAN 24 MONTHS AFTER CHANGE IN CONTROL. If your employment is
terminated at any time by the Company for Cause or if you resign
prior to a Change in Control (as defined in the separate
Change-in-Control Agreement attached hereto (the "Change-in-Control
Agreement")) or more than 24 months after a Change in Control, then
you will be paid your base salary to the date of termination and the
unpaid portion of any bonus or incentive amount earned by you for
the fiscal year ending prior to the termination of your employment
which you are entitled to receive under the terms of the annual
incentive plan. You will not be entitled to receive any base salary
or fringe benefits for any period after the date of termination,
except for the right to receive benefits which have become vested
under any benefit plan or to which you are entitled as a matter of
law.
(b) TERMINATION WITHOUT CAUSE PRIOR TO CHANGE IN CONTROL OR MORE THAN 24
MONTHS AFTER CHANGE IN CONTROL. If the Company terminates your
employment without Cause prior to a Change in Control or more than 24
months after a Change in Control, then:
(i) The Company will pay you a lump sum equal to 18 months of your
current base salary, less applicable tax withholdings; and
(ii) The Company will pay the unpaid portion of any bonus or
incentive amount earned by you for the fiscal year
ending prior to the termination of your employment which you are
entitled to receive under the terms of the applicable incentive
plan; and
(iii) You will be entitled to continued participation in the health
care coverage, and life insurance benefit plans of the
Company, as in effect on the date of your termination as
permitted by law. The Company will continue to pay its share
of the health care and life insurance premiums for this
coverage for a period of up to 18 months, and YOU SHALL PAY
YOUR SHARE OF THE COST ASSOCIATED WITH THAT coverage as if
you were still actively employed by the Company. If you
cannot be covered under any of the Company's group plans or
policies, the Company will reimburse you for your full cost
of obtaining comparable alternative or individual coverage
elsewhere, less any contribution that you would have been
required to make under the Company's group plans or policies.
If, during the aforesaid 18-month period, you are employed by
a third party and become eligible for any health care and/or
life insurance coverage provided by that third party, the
Company will not, thereafter, be obligated to provide you
with the insurance benefits described in this paragraph
(b)(iii). This 18-month coverage shall run concurrently with
COBRA and thereafter you shall be responsible for the full
cost of any coverage thereafter.
(c) TERMINATION IN THE EVENT OF DEATH OR DISABILITY. If your employment
terminates due to your death or if the Company terminates your
employment due to a Disability, then
(i) The Company will continue to pay your base salary to your estate
or to you for the remainder of the month in which your death
occurs or in which your employment is terminated due to
Disability, together with the unpaid portion of any bonus or
incentive amount earned by you for the fiscal year ending prior
to the termination of your employment which you are entitled to
receive under the terms of the applicable incentive plan; and in
the event of termination due to Disability, you will continue to
receive, during that month, all of the fringe benefits then being
paid or provided to you;
(ii) You will be entitled to receive all Disability and other
benefits, such as continued health coverage or life
insurance proceeds, provided in accordance with the terms and
conditions of the health care coverage, life insurance,
disability, or other employee benefit plans of the Company and
applicable law.
(d) TERMINATION WITHIN 24 MONTHS AFTER CHANGE IN CONTROL. If, within 24
months after a Change in Control, your employment terminates, your
rights shall be governed by the Change-in-Control Agreement attached
hereto and executed concurrently herewith.
(e) The benefits provided you under this Section 7 or in the
Change-in-Control Agreement are in lieu of any benefits that would
otherwise be provided to you under any severance pay or other policies
of the Company.
8. NO MITIGATION. Following termination of your employment for any reason
you will be under no obligation to mitigate your damages by seeking other
employment, and there will be no offset against the amounts due you under
Section 7, except as specifically provided in Section 7(b)(iii) or for any
claims which the Company may have against you.
9. PROPERTY RIGHTS, CONFIDENTIALITY, NON-SOLICIT AND NON-COMPETE
PROVISIONS.
(a) COMPANY'S PROPERTY.
(i) You shall promptly disclose to the Company in writing all
inventions, discoveries, and works of authorship, whether or not patentable
or copyrightable, which are conceived, made, discovered, written, or
created by you alone or jointly with another person, group, or entity,
whether during the normal hours of employment at the Company or on your own
time, during the term of this Agreement. You agree to assign all rights to
all such inventions and works of authorship to the Company. You further
agree to give the Company any of the assistance it reasonably requires in
order for the Company to perfect, protect and use its rights to inventions
and works of authorship.
This provision shall not apply to an invention, discovery, or work of
authorship for which no equipment, supplies, facility, or trade secret
information of the Company was used and which was developed entirely on
your own time and which does not relate to the business of the Company, to
the Company's anticipated research or developments, or does not result from
any work performed by you for the Company.
(ii) You shall not remove any records, documents, or any other
tangible items (excluding your personal property) from the premises of the
Company in either original or duplicate form, except as is needed in the
ordinary course of conducting business for the Company.
(iii) You shall immediately deliver to the Company, upon termination
of employment with the Company, or at any other time upon the Company's
request, any property, records, documents, and other tangible items
(excluding your personal property) in your possession or control, including
data incorporated in word processing, computer, and other data storage
media, and all copies of such records, documents, and information,
including all Confidential Information, as defined below.
(b) CONFIDENTIAL INFORMATION. During the course of your employment you will
develop, become aware of, and accumulate expertise, knowledge, and information
regarding the Company's and its subsidiaries' organization strategies, business,
and operations and their past, current, or potential customers, and suppliers.
The Company considers such expertise, knowledge, and information to be valuable,
confidential, and proprietary, and it shall be considered Confidential
Information for purposes of this Agreement. During this Agreement and at all
times thereafter you will agree not to use such Confidential Information or
disclose it to other persons or entities except as is necessary for the
performance of your duties for the Company or as has been expressly permitted in
writing by the Company. Provided, however, that the foregoing covenant shall not
apply to any information possessed by you prior to your employment by the
Company, or to any information which is in or has entered the pubic domain or
has been disclosed with any industry segment in which the Company or any
subsidiary or affiliated company of the Company operates by or pursuant to the
authority of the Company or any subsidiary or affiliated company of the Company.
(c) NON-SOLICITATION. During (i) the term of this Agreement, and (ii) the
greater of (A) any period for which you are receiving payments under Section 7
of this Agreement, or (B) one year after the termination of this Agreement or
the date on which you are no longer employed by the Company in any capacity,
whichever shall last occur, you shall not directly or indirectly attempt to hire
away any then-current employee of the Company or any subsidiary or to persuade
any such employee to leave employment with the Company or any subsidiary.
(d) NON-COMPETITION. During (i) the term of this Agreement and (ii) the
greater of (A) any period for which you are receiving payments under Section 7
of this Agreement, or (B) one year after termination of this Agreement or the
date on which you are no longer employed by the Company in any capacity,
whichever shall last occur, you shall not engage or participate, either
individually or as an employee, consultant, or principal, partner, agent,
trustee, officer, or director of a corporation, partnership, or other business
entity, in any business in which the Company or any subsidiary of the Company
has a more than 20 percent equity interest, was engaged prior to the termination
of this Agreement. Provided, however, that mere ownership of not more than 5% of
the outstanding common stock of a company the securities of which are publicly
traded shall not constitute competition for purposes of this Section 9(d).
The provisions of this Section 9 shall survive the termination of this
Agreement.
10. ARBITRATION. Any disputes arising under or in connection with this
Agreement (including without limitation the making of this Agreement) shall be
resolved by final and binding arbitration to be held in Minneapolis, Minnesota
in accordance with the rules and procedures of the American Arbitration
Association. The parties shall select a mutually agreeable single arbitrator to
resolve the dispute or if they fail or are unable to do so, each side shall
within the following ten (10) business days select a single arbitrator and the
two so selected shall select a third arbitrator within the following ten (10)
business days. The arbitration award or other resolution may be entered as a
judgment at the request of the prevailing party by any court of competent
jurisdiction in Minnesota or elsewhere. The arbitrator shall have no power to
award any punitive or exemplary damages. The arbitrator may construe or
interpret, but shall not ignore or vary the terms of this Agreement, and shall
be bound by controlling law. You acknowledge that your failure to comply with
the terms of the Agreement regarding Confidential Information, Inventions, and
Non-Competition could cause immediate and irreparable injury to the Company and
that therefore, the arbitrators, or a court of competent jurisdiction, if an
arbitration panel cannot immediately be convened, will be empowered to provide
injunctive relief, including temporary or preliminary relief, to restrain any
such failure to comply. Each party shall bear its own costs and attorneys' fees
in connection with the arbitration.
11. DEFINITIONS. For purposes of this Agreement, the following terms will
have the meanings set forth below:
(a) CAUSE. "Cause" has the meaning given to it in the Change-in-Control
Agreement.
(b) DISABILITY. "Disability" means that you are deemed to be disabled
under the terms of the Company's long term disability plan and have satisfied
the qualifying period for entitlement to benefits under such plan.
12. GENERAL PROVISIONS.
(a) This Agreement may not be amended or modified except by a written
agreement signed by both of us.
(b) In the event that any provision or portion of this agreement is
determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement will remain in full force and
effect to the fullest extent permitted by law.
(c) This Agreement shall bind and benefit the parties hereto and their
respective successors and assigns, but none of your rights or
obligations hereunder may be assigned by either party hereto without
the written consent of the other, except by operation of law upon your
death.
(d) This Agreement has been made in and shall be governed and construed in
accordance with the laws of the State of Minnesota without giving
effect to the principles of conflict of laws of any jurisdiction.
(e) No failure on the part of either party to exercise, and no delay in
exercising, any right or remedy under this Agreement will operate as a
waiver; nor will any single or partial exercise of any right or remedy
preclude any other or further exercise of any right or remedy.
(f) Any notice or other communication under this Agreement must be in
writing and will be deemed given when delivered in person, by
overnight courier (with receipt confirmed), by facsimile transmission
(with receipt confirmed by telephone or by automatic transmission
report), or upon receipt if sent by certified mail, return receipt
requested, as follows (or to such other persons and/or addresses as
may be specified by written notice to the other party):
If to Angeion Corporation.:
Angeion Corporation
Attention: Chairman of the Board of Directors
000 Xxx Xxxxx Xxxxxxx
Xx. Xxxx, XX 00000
If to Xxxxxxx X. Xxxxxx:
Xxxxxxx X. Xxxxxx
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
(g) This Agreement, the Change-in-Control Agreement and the stock awards
and stock option agreements ancillary hereto, contains our entire
understanding and agreement with respect to these matters and
supersedes all previous agreements, discussions, or understandings,
whether written or oral, between or on the same subjects.
(h) In the event any provision of this Agreement is held unenforceable,
that provision will be severed and shall not affect the validity or
enforceability of the remaining provisions. In the event any provision
is held to be overbroad, that provision shall be deemed amended to
narrow its application to the extent necessary to render the provision
enforceable according to applicable law.
(i) All terms of this Agreement intended to be observed and performed
after the termination of this Agreement will survive such termination
and will continue in full force and effect thereafter, including
without limitation, Sections 7, 8, 9, 10, 11 and 12.
(j) The headings contained in this Agreement are for convenience only and
shall in no way restrict or otherwise affect the construction of the
provisions hereof. Unless otherwise specified herein, references in
this Agreement to Sections or Exhibits are to the sections or exhibits
to this Agreement. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth your understanding of our agreement,
please indicate so by signing and returning to us a copy of this letter.
Very truly yours,
ANGEION CORPORATION
/s/ Xxxxx X. Xxxxxx, Xx.
------------------------
Its President
Accepted and agreed to:
/s/ Xxxxxxx X. Xxxxxx
-----------------------
Xxxxxxx X. Xxxxxx
