CLASS I EMPLOYEE EMPLOYMENT AGREEMENT
Exhibit 10.1
Xxxxxxx Employment Agreement
CLASS I EMPLOYEE EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is made on February 10, 2008, to be effective on
the Acceptance Date (as defined in the Agreement and Plan of Merger, dated as of the date hereof,
by and among Phoenix Acquisition Corp., MEDRAD, Inc. (“Medrad”) and the Company (the “Agreement and
Plan of Merger”)) (the “Effective Date”), between Possis Medical, Inc., a Minnesota corporation,
(the “Company”), and Xxxxxx X. Xxxxxxx, an individual residing in the state of Minnesota (the
“Executive”).
The Company currently employs the Executive as its President, Chairman and Chief Executive
Officer.
Effective as of September 15, 1999, the Company created a change in control termination pay
plan for the benefit of certain of its employees in the event of change of control (as amended, the
“Change of Control Plan”), and the Executive is a participant in such plan.
The Company established on January 28, 2004 that certain Supplemental Executive Retirement
Deferred Compensation Agreement (the “SERP Agreement”), pursuant to which the Company agreed to
maintain and fund for the benefit of the Executive a SERP account that would become payable to the
Executive, among other times, upon a change of control (as defined under the SERP Agreement).
Pursuant to the Agreement and Plan of Merger Medrad proposes to form a subsidiary that would
acquire substantially all of the Company’s capital stock through a tender offer, followed by a
merger of such subsidiary with and into the Company, after which the Company would become a
wholly-owned subsidiary of Medrad.
The Company hereby acknowledges that, by virtue of Medrad’s acquiring more than 50% of the
outstanding shares of the Company, a Change of Control (as defined in the Change of Control Plan)
will have occurred on the Effective Date, and that the duties hereunder are a material diminution
in Executive’s authority, duties and responsibilities that constitute “Good Reason” for Executive
to cause “Termination of Employment” by Executive under the Change of Control Plan, but the Company
desires to retain the future services of Executive and is willing to provide additional benefits in
consideration therefor, subject to the terms and conditions of this Agreement. .
(a) Salary. Commencing on the Effective Date, the Company shall pay the Executive a
salary at an annual rate of Three Hundred Ninety Thousand Dollars ($390,000.00) (the “Base
Salary”), payable in accordance with the Company’s standard payroll schedule and policies, as in
effect from time to time. The Company shall withhold from all payments that it makes pursuant to
this Agreement as it determines to be required by applicable law.
(b) Additional Benefits.
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contained in Section 4.2.1. No payment hereunder shall be recognized as additional
compensation for purposes of any other employee benefit plan sponsored by the Company.
(c) Incentive Compensation. At the end of the Term, the Executive shall be entitled
to receive as incentive compensation a bonus in the amount of Two Hundred Sixty Thousand Dollars
($260,000.00) (the “Incentive Bonus”) payable upon the achievement of such reasonable post-merger
objective performance targets as may be established by the Company consistent with similar
performance targets established by Medrad for its executives and payable within 30 business days
after the relevant financial information becomes available for the period up to and including the
end of the Term, but no later than 75 days following the end of the Term.
(d) SERP. The Company shall honor Executive’s pre-existing SERP Agreement, and shall
make the accelerated funding set forth in that SERP Agreement in recognition that a change in
control as defined therein has occurred prior to Executive’s sixty-fifth (65th)
birthday. Executive will receive payments from the SERP account established pursuant to that SERP
Agreement in accordance with the express terms thereof. The Company will not maintain or fund any
new or additional supplemental executive retirement deferred compensation agreement account on
behalf of Executive beyond that to which Executive is already entitled under the SERP Agreement.
(a) Term. The Executive’s employment hereunder shall commence on the Effective Date
and shall terminate on the one year anniversary of the Effective Date (the “Term”), unless sooner
terminated pursuant to this Section 4. The Company shall have the right to automatically terminate
this Agreement for Cause upon providing written notice to the Executive. For purposes of this
Agreement, “Cause” means the occurrence of any one or more of the following events: (i) the
commission by the Executive of an act of fraud, embezzlement or willful breach of a fiduciary duty
to the Company or an Affiliate (including the willful unauthorized disclosure of confidential or
proprietary material information of the Company or an Affiliate), (ii) a conviction of the
Executive (or a plea of nolo contendere in lieu thereof) for a felony or a crime involving fraud,
dishonesty or moral turpitude, (iii) willful failure of the Executive to follow the reasonable and
lawful written directions of the President of the Company, Company management, or the Board of
Directors, in the case of executive officers of the Company, when such directions are consistent
with the Executive’s customary duties and
responsibilities and where such refusal has continued for more than 10 days following written
notice; (iv) willful misconduct as an employee of the Company or an Affiliate which includes the
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Executive’s failure to adhere to Company’s ethical code of conduct; (v) gross negligence or willful
failure of the Executive to render services to the Company or an Affiliate in accordance with his
or her employment arrangement, which negligence or failure amounts to a material neglect of his or
her duties to the Company or an Affiliate (except for such failure that results from physical or
mental illness); (vi) recurring and regular use of drugs or alcohol or other substance such that
Executive becomes significantly impaired in the performance of his or her duties; or (vii) material
breach of this Agreement or any other written agreement Executive may have with the Company.
(b) Total and Permanent Disability or Death. In the event of the death of the
Executive, or the Executive’s Total and Permanent Disability (as determined by the Company’s Board
of Directors in its sole discretion), this Agreement shall terminate without any further obligation
of one party to the other except payment to the legal representative of the Executive of his
compensation hereunder to the date of the Executive’s death or the date on which the President has
determined that the Executive has suffered a Total and Permanent Disability. For purposes of this
Agreement, the term “Total and Permanent Disability” shall mean a mental or physical disability,
illness or incapacity of the Executive which renders the Executive unable to perform a substantial
portion of his duties as an employee of the Company for a period of three (3) consecutive months or
an aggregate period of four (4) months in any twelve (12) month period or that renders the
Executive unable to earn a livelihood as an employee of a business comparable to the Company’s
business, unless further time is required as a reasonable accommodation under federal or state law
or regulation.
(a) Certain Definitions. As used in this Agreement the following terms have the
following meanings:
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“Affiliate” means any corporation, partnership, limited liability company or partnership,
association, trust or other organization which, directly or indirectly, controls, is controlled by,
or is under common control with, the Company. For purposes of the preceding sentence, “control”
(including, with correlative meanings, the terms “controlled by” and “under common control with”),
as used with respect to any entity or organization, shall mean the possession, directly or
indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power
for the election of directors of the controlled entity or organization, or (ii) to direct or cause
the direction of management and policies of the controlled entity or organization, whether through
the ownership of voting securities or by contract or otherwise.
“Confidential Information” means all information concerning or related to the business,
operations, financial condition or prospects of the Company or any of its Affiliates, regardless of
the form in which such information appears and whether or not such information has been reduced to
a tangible form, and specifically includes (i) all information regarding the officers, directors,
employees, equity holders, customers, suppliers, distributors, sales representatives and licensees
of the Company and its Affiliates, in each case whether past, present or prospective, including
sales and pricing information and procedures, customer lists, and business and marketing plans;
(ii) all inventions, discoveries, trade secrets, processes, techniques, methods, formulae, ideas,
system designs, program materials (including source and object code and system and user
documentation), operating processes, equipment design, product specifications, and know-how of the
Company and its Affiliates and (iii) all financial statements, audit reports, budgets and business
plans or forecasts of the Company and its Affiliates; provided, that Confidential Information does
not include (A) information which is or becomes generally known to the public through no act or
omission of the Executive and (B) information which has been or hereafter is lawfully obtained by
the Executive from a source other than the Company or any of its Affiliates (or their respective
officers, directors, employees, equity holders or agents) so long as, in the case of information
obtained from a third party, such third party was or is not, directly or indirectly, subject to an
obligation of confidentiality owed to the Company or any of its Affiliates at the time such
Confidential Information was or is disclosed to the Executive.
“Executive Work” means all written and graphic materials, computer software, inventions,
discoveries and improvements authored, prepared, conceived or made by the Executive during the term
of his employment with the Company and which are related to the business of the Company.
(i) Except as provided in clause (ii) below, the Executive will not disclose or use for the
Executive’s benefit any Confidential Information.
(ii) Notwithstanding clause (i) above, the Executive shall be permitted to disclose
Confidential Information to the extent, but only to the extent, (1) reasonably necessary to perform
the duties hereunder or (2) required by law; provided, that prior to making any disclosure of
Confidential Information required by law, the Executive will notify the Company of the Executive’s
intent to make the disclosure, and the Company will have the right to
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participate with the
Executive in determining the amount and type of Confidential Information, if any, which must be
disclosed in order to comply with applicable law.
(iii) Promptly after termination of the Executive’s employment with the Company for any
reason, the Executive or his/her personal representative will return to the Company any
Confidential Information which is in tangible form and which is then in the Executive’s possession.
(c) Executive Work. All Executive Work is the sole property of the Company and, to
the extent applicable, is “work made for hire” under and as defined in the Copyright Act of 1976,
17 U.S.C. §1 et seq. The Executive will promptly disclose to the Company all
Executive Work and will execute all such documents and instruments as the Company may reasonably
determine are necessary or desirable in order to give effect to the preceding sentence or to
preserve, protect or enforce the Company’s rights with respect to any Executive Work.
(d) Cessation of Payments. Without limiting the Company’s rights and remedies
hereunder, at law or in equity, the Executive acknowledges and agrees that the right of the
Executive to receive and retain any payments otherwise due will be suspended and cancelled if and
for so long as the Executive is in breach of any provision of this Section 6. If and when the
Executive has cured any such breach and has tendered to the Company any and all economic benefits
directly or indirectly received or receivable by the Executive arising therefrom, such right will
automatically be reinstated, but only for the remainder of the period, if any, during which such
payments are due.
(e) Employee Affirmation. The Employee acknowledges and agrees that the restrictions
set forth in this Section (i) are critical and necessary to protect the Company’s legitimate
business interests (including, without limitation, the protection of its confidential or
proprietary information, its good will, and its relationship with its customers, clients,
employees, and consultants), (ii) are reasonably drawn to this end with respect to duration, scope
and otherwise, (iii) are not unduly burdensome or injurious to the public interest, (iv) are
supported by adequate consideration and (v) shall inure to the benefit of the Company and its
successors and assigns.
(f) Survival. The provisions of this Section 6 will survive any termination of this
Agreement. If the Employee violates any of the restrictions set forth in this Section 6, the
duration of the restrictions shall be extended for a period of time equal to the period of time in
which the Employee has been in violation.
(g) Damages. The Executive hereby acknowledges and agrees that the claim for the
payment of any damages for breach of the provisions herein contained shall not preclude the Company
from seeking injunctive or such other forms of relief as may be obtained in a court
of law or equity, and that the Company, in lieu of or in addition to the remedy of damages, may
seek injunctive relief prohibiting the Executive from breaching the provisions of this Agreement.
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or the breach thereof, or its termination shall be finally settled by arbitration in
Minneapolis, Minnesota pursuant to the rules of the American Arbitration Association regarding
employment disputes. In such instances, it is agreed that the Dispute shall be submitted to final
and binding arbitration by one arbitrator; provided, however, that either party may request that
there be three (3) arbitrators, in which case each party shall select one (1) arbitrator, and the
two (2) arbitrators so selected shall select a third. The Executive hereby irrevocably consents to
the jurisdiction of the state and federal courts located in the State of Minnesota for the purposes
of deciding any claim seeking injunctive relief for any alleged violation of Section 6 hereof, and
agrees that any judgment rendered by such courts against the Executive may be entered or executed
in any court of competent jurisdiction for enforcement purposes.
To the Executive:
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To the Company: | |
Xxxxxx X. Xxxxxxx
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Possis Medical, Inc. | |
0000 Xxxxxx Xxx. X.X.
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Attn: Director of Corporate Services | |
Xxxxxxxxx, XX 00000
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0000 Xxxxxxxxx Xxxxxxxxx XX | |
| Xxxxxxxxxxx, XX 00000 | ||
With a cc to:
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With a cc to: | |
Xxxxxx & Xxxxxxx LLP
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MEDRAD, INC. | |
00 Xxxxx Xxxxx Xxxxxx
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000 Xxxxxx Xxxx Xxxxx | |
Xxxxxxxxxxx, XX 00000
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Xxxxxxxxxx, XX 00000 | |
Attn: Xxxxxx Xxxxxx
|
Attn: General Counsel |
or to such other address as any party shall have furnished to the others in writing in accordance
herewith. Notices and communications shall be effective when actually received by the addressee.
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entire Agreement between the parties hereto and supersedes any and all prior or contemporaneous,
oral or written understandings, negotiations, or communications on behalf of such parties. This
Agreement may be executed in several counterparts, each of which shall be deemed original, but all
of which together shall constitute one and the same instrument. This Agreement may be delivered by
telefax, and such telefax copy shall be as effective as delivery of a manually executed
counterpart. The waiver by either party of any breach or violation of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach or violation
hereof. This Agreement is executed in and shall be governed by and construed in accordance with
the laws of Minnesota without giving effect to any conflict of laws provision. This Agreement
shall be amended only by written agreement of both parties hereto. This Agreement shall inure to
the benefit of the Company and its successors and assigns. The parties waive the application of
any law, regulation, holding or rule of construction providing that ambiguities in the Agreement
will be construed against the party drafting such agreement. The language used in this Agreement
shall be deemed to be the language chosen by the parties to express their mutual agreement, and
this Agreement shall not be deemed to have been prepared by any single party.
| Executive |
POSSIS MEDICAL, INC. |
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| /s/ Xxxxxx X. Xxxxxxx | By: | ||||
| Executive's Name | Name: | ||||
| Title: | |||||
| WITNESS: |
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| /s/ Xxxxxx Xxxxxx | ||||
| Xxxxxx Xxxxxx | ||||
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