EX-10.8 9 dex108.htm EXECUTIVE SERVICE AGREEMENT EXECUTIVE SERVICE AGREEMENT
Exhibit 10.8
AGREEMENT (this “Agreement”) made this 17th day of September, 2003, by and between LEMAITRE VASCULAR, INC., f/k/a Vascutech, Inc., a Delaware corporation with a principal place of business at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 (“LeMaitre”), successor-in-interest to Vascutech, Inc., a Massachusetts corporation, and XXXXX XXXXXXX an individual residing at Am Xxxxxxxx 00, Xxx Xxxxx, Xxxxxxx (“Executive”).
Section 1. Status; Duties; Compensation.
Germany, or at such other location, including LeMaitre’s principal offices in Burlington, Massachusetts, as LeMaitre may direct from time to time.
(b) Split Pay. LeMaitre shall apportion payment obligations due hereunder between LeMaitre and LV GmbH as appropriate in the sole opinion of LeMaitre, and all references herein to payments by LeMaitre to Executive shall be deemed to be references to payments by LeMaitre or LV GmbH. Executive may elect to receive split pay as allowed by applicable law in the sole opinion of LeMaitre. If LeMaitre determines that applicable laws do not permit at least twenty (20%) percent of the amounts due Executive hereunder to be paid by LeMaitre rather than LV GmbH, then LeMaitre agrees to pursue commercially reasonable efforts to loan Executive an amount such that, on an after-tax basis, Executive has received such amount as Executive would have received had applicable laws permitted twenty (20%) percent of the amounts due Executive hereunder to be paid by LeMaitre rather than LV GmbH, the amount of which loan, if not yet repaid by Executive, shall be set-off from the next “Tax Equalization Payment” (defined below). Executive understands and acknowledges that any loans from LeMaitre to Executive are currently subject to the prior approval of Xxxxx Brothers Xxxxxxxx & Co. and that additional third-party approvals may be required.
(c) Exchange Rate. Payment of any amounts made to Executive under this Agreement in the currency of the European Union shall be received at a fixed exchange rate of one dollar and twelve cents per euro retroactively from May 16, 2003 through December 31, 2003, which fixed exchange rate shall thereafter be adjusted on January 1 of each subsequent year to equal the median of the buy and
2
sell prices of the euro as published in the Wall Street Journal on the last business day of the foregoing year. If the currency of the European Union shall cease to be available or accepted where Executive resides, then the applicable local currency may be substituted at a fixed exchange rate equal to the median of the buy and sell prices of such local currency as published in the Wall Street Journal on the last business day prior to the inapplicability of the currency of the European Union, which exchange rate shall be adjusted annually in the foregoing manner.
(f) One-Time Cost-of-Living Benefits. As an incentive to execute this Agreement, LeMaitre shall provide Executive with the following benefits, which shall be provided to Executive once only and shall in no event be recurring:
(i) Within ten (10) days of the execution hereof, LeMaitre shall reimburse Executive for the cost of Xxxx Xxxxxxx’x school tuition for the 2003-2004 scholastic year, contingent upon Executive’s submission of such appropriate receipts and other documentation as LeMaitre may reasonably request, provided, however, that such reimbursement shall in no event exceed sixteen thousand two hundred fifty euro (€16.250). Such reimbursement shall be accompanied by an additional tax “gross-up” payment such that Executive has been fully-reimbursed for such tuition on
3
an after-tax basis, which shall be calculated by the Controller of LV GmbH subject to the prior approval of the President of LeMaitre.
(ii) Within ten (10) days of the execution hereof, LeMaitre shall pay to Executive a twelve thousand euro (€12.000) housing differential bonus.
(i) On January 30, 2004, LV GmbH shall pay Executive the sum of eleven thousand seven hundred eighty-one euro and eighty-two cent (€11.781,82), regardless of whether Executive is then employed or engaged by LeMaitre, which represents the payment of a previously earned performance bonus for the period January 1, 2003 through May 15, 2003. The provisions of Section 1.3(b) do not apply to this payment.
(ii) If Executive is employed or engaged by LeMaitre in a full time capacity on December 31, 2003, Executive shall be eligible to receive a further performance bonus payment on January 30, 2004 based upon achievement of certain sales, operating income and operating profit criteria set forth in LeMaitre’s 2003 strategic plan, as amended by LeMaitre from time to time. The total performance bonus for which
4
Executive shall be eligible shall be fifty-five thousand dollars ($55,000), but shall be pro-rated for the period commencing May 16, 2003 and ending December 31, 2003, resulting in a maximum performance bonus of thirty-four thousand three hundred seventy-five dollars ($34,375).
(iii) Commencing in 2004, and subject to the final sentence of this paragraph, Executive shall be eligible to earn an annual incentive bonus, as LeMaitre shall determine from time to time, based upon achievement in the prior year of tangible, pre-determined milestones, sales levels, net income levels and other success measures as may be designated by LeMaitre from time to time (the total amount for which Executive shall be eligible to earn, based on the achievement of such expectation levels, the “Performance Bonus”). LeMaitre shall determine the expectation levels from time to time, in consultation with the Executive. Approximately twenty (20%) percent of the Performance Bonus shall relate to the worldwide consolidated results of LeMaitre and the remainder shall relate to the results of LV GmbH. The Performance Bonus shall equal approximately twenty-two (22%) percent of the sum of (a) the then-current Base Salary plus (b) the Performance Bonus. The earned portion of the Performance Bonus shall vest as due and payable to Executive on December 31 of a given year if, and only if, Executive is then employed or engaged by LeMaitre in a full-time capacity, and shall be paid to Executive on or about January 31 of the following year.
(m) Tax Equalization Payment. For such time as Executive’s service is based in Germany, LeMaitre shall pay Executive a Tax Equalization Payment. The “Tax Equalization Payment” shall equal, for any calendar year, an amount on an after-tax basis equal to the difference between (i) the income taxes that Executive is actually required to pay in Germany on account of amounts paid to Executive by LV GmbH under Sections 1.3(a), 1.3(d), 1.3(k)(i), and 1.3(k)(ii) hereof in to the prior year (but not any other amounts due Executive hereunder or otherwise), after giving effect to split pay, and (ii) the amount that Executive would otherwise be required to pay on account of such amounts from that year had Executive been resident and working solely in Massachusetts during that year. The amount of the Tax Equalization Payment shall be determined prior to June 30 of each year based upon the calculation set forth on Exhibit B hereto by
5
both an accountant selected by LeMaitre and an accountant selected by Executive. If LeMaitre’s accountant and Executive’s accountant are unable to agree upon the amount of the Tax Equalization Payment, then LeMaitre and Executive shall cause their accountants to jointly select a third accountant to determine the amount of Tax Equalization Payment prior to June 30 of that year, which amount shall not be greater than the amount determined by Executive’s accountant or less than the amount determined by LeMaitre’s accountant. LeMaitre shall pay Executive the Tax Equalization Payment in four equal quarterly installments. LeMaitre and Executive agree that the Tax Equalization Payment to be paid commencing in 2003 shall equal thirty-eight thousand euro (€38.000), but shall be pro-rated for the period commencing May 16, 2003 and ending December 31, 2003, resulting in a Tax Equalization Payment of twenty-three thousand seven hundred fifty euro (€23.750).
Section 2. Executive Obligations.
Following the execution of this Agreement, LeMaitre and Executive intend to enter an Executive Obligations Agreement in the form attached hereto as Exhibit C (the “Executive Obligations Agreement”). Notwithstanding anything to the contrary contained herein, including, without limitation, Section 3.1(e) and Section 3.1(f)(ii) hereof, this Agreement shall terminate without any liability to LeMaitre if Executive has not delivered a duly executed Executive Obligations Agreement within 30 days of the date hereof.
Section 3. Termination of Agreement.
(a) Death. This Agreement shall terminate immediately upon Executive’s death.
6
Executive’s service hereunder, (i) if Executive fails to cure such breach or failure to comply, if curable, within ten (10) days after the giving of such notice; and (ii) upon the expiration of such ten (10) day period if such breach or failure to comply cannot be cured.
(e) Other. LeMaitre shall have the right, in its sole discretion, to terminate Executive’s service hereunder for any other reason not specified in this Section 3.1 upon ten (10) days prior written notice to Executive; provided, however, that in the event that LeMaitre shall terminate Executive’s service pursuant to this Section 3.1(e), LeMaitre shall pay a lump sum severance payment to Executive equal to ninety-thousand dollars ($90,000). If Executive is terminated pursuant to this Section 3.1(e) following the sale of all or substantially all of LeMaitre’s assets to an unrelated company, then the lump sum severance payment shall instead equal Executive’s then-current Base Salary. The payment of such lump sum severance payment by LeMaitre to Executive shall be subject to and contingent upon Executive executing and delivering to LeMaitre a full and complete release of any and all claims, demands, and liabilities relating to this Executive Service Agreement and Executive’s service to LeMaitre and/or the termination thereof, such release to be in such form as shall be designated by LeMaitre. In the event that Executive fails or refuses to execute such release within thirty (30) days of the effective date of Executive’s termination by LeMaitre under this Section 3.1(e), then the obligation of LeMaitre hereunder to make any lump sum severance payment shall be null and void and of no further force and effect. LeMaitre shall pay the lump sum severance payment to Executive no later than thirty (30) days from the execution and delivery of such release.
(f) Rights and Obligations of Executive Upon Termination.
(i) Upon the termination of Executive’s service pursuant to Sections 3.1(a), (b), (c), (d) or (e) of this Agreement, except as specified in
7
Sections 1.3(d), 1.3(e), 1.3(f), 1.3(k)(i), 3.1(e) and 3.1(f)(ii), LeMaitre shall not have any further obligation to Executive under this Agreement except to distribute to Executive his Base Salary due pursuant to Section 1.3(a) hereof (and accrued vacation pay) up to the date of termination.
(ii) Upon the termination of Executive’s service pursuant to this Section 3.1 or otherwise, and regardless of the reason for or manner of termination, in addition to, and not in lieu of any other benefits to which Executive may be entitled hereunder, LeMaitre shall pay to Executive a one-time lump supplemental sum severance payment in an amount equal to the purchase price payable by Executive to LeMaitre for all then vested and exercisable stock options granted to Executive by LeMaitre on June 2, 1997 under LeMaitre’s 1997 Stock Option Plan. For the avoidance of doubt, this section shall not apply to any other stock incentive granted to Executive.
(iii) Upon the termination of this Agreement and Executive’s service hereunder, whether voluntary or involuntary, and regardless of the reason for or manner of termination, all of the obligations of Executive under the Executive Obligations Agreement shall survive or terminate as provided therein.
4.1 Amendment. This Agreement may be amended only by a writing duly executed by the parties hereto.
8
States registered or certified mail, return receipt requested, postage prepaid to the parties at their addresses set forth above, or at such other addresses as either may designate in writing as aforesaid from time to time.
4.5 Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts, without regard to conflicts of laws principles thereof.
9
LeMaitre: | Executive: | |||||
LEMAITRE VASCULAR, INC. | ||||||
By: | /s/ Xxxxxx X. XxXxxxxx | /s/ Xxxxx Xxxxxxx | ||||
Xxxxxx X. XxXxxxxx | Xxxxx Xxxxxxx | |||||
President and Chief Executive Officer |
10
EXHIBIT A
Duties
Executive shall act as LeMaitre’s President - International. Executive shall be responsible for all aspects of the Company’s operations and business in Europe, the Middle East, Africa, South America and the Pacific Rim/Asia, including all revenues and expenses. Executive shall be responsible for the transaction of business with, and sales of products to, LeMaitre’s distributors and/or hospital customers in the aforementioned territories and such other territories as may be designated by LeMaitre from time to time. Executive shall also be responsible for marketing and development of new business opportunities in all of the aforementioned territories. In addition to the foregoing, Executive shall provide such assistance and sales and marketing efforts in all other territories in which LeMaitre conducts business as may be directed by LeMaitre from time to time. The foregoing is not to be deemed or construed as an exclusive statement of Executive’s duties, and, in accordance with the provisions of the Executive Service Agreement, Executive shall perform such other executive and managerial responsibilities and duties as may be assigned to him from time to time by LeMaitre.
11
EXHIBIT B
Calculation of Tax Equalization Payment
1. | Determine Total Eligible Compensation: |
Total Eligible Compensation = LV GmbH Base Salary (Section 1.3(a)) of €174.107+ LV GmbH Performance Bonus (Section 1.3(k)(ii)) of €11.781,82
(For 2004 Tax Equalization Payment, also include retroactive base salary (Section 1.3(d)) and previously earned 2003 bonus (Section 1.3(k)(i)).)
3. | Accountants determine Hypothetical U.S. Tax (in dollars) on the Total Eligible Compensation, which shall include federal income tax, Massachusetts state income tax, social security tax, and Medicare tax. In determining Hypothetical U.S. Tax on the Total Eligible Compensation, accountants shall take into consideration all amounts paid to Executive by LeMaitre (e.g. with respect to applicable tax brackets and FICA limits), and shall assume Executive has a $350,000 mortgage with 5% interest coupons and annual real estate taxes of $5,000. |
4. | Convert Hypothetical U.S. Tax from dollars to euros based on then-current fixed exchange rate provided for in Section 1.3(c). |
5. | Determine Tax Differential: |
Tax Differential = Actual German Tax (in euros) - Hypothetical U.S. Tax (in euros)
6. | Accountants calculate “Grossed-Up” Tax Differential making the following assumptions: |
a. | Base Salary remains constant; |
b. | Performance Bonus targets are achieved at “plan” level; and |
c. | Executive’s tax deductions remain unchanged from previous actual U.S. and Germany tax returns. |
7. | Tax Equalization Payment = Grossed-Up Tax Differential |
12
FIRST AMENDMENT TO EXECUTIVE SERVICE AGREEMENT
WHEREAS, LEMAITRE VASCULAR, INC., a Delaware corporation with a principal place of business at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 (“LeMaitre”), and XXXXX XXXXXXX, an individual residing at Am Xxxxxxxx 00, Xxx Xxxxx, Xxxxxxx (“Executive”), are party to an Executive Service Agreement dated September 17, 2003 (the “Agreement”); and
WHEREAS, LeMaitre and Executive each desire to amend the Agreement as set forth below;
Section 1. Amendment. Section 1.3 of the Agreement is hereby amended by the addition of new Sections 1.3(n) and 1.3(o) immediately following Section 1.3(m) as follows:
Section 2. Miscellaneous.
All terms and provisions of the Agreement, as amended hereby, remain in full force and effect and are hereby ratified and affirmed as of the date hereof. This Amendment may be executed in any number of counterparts, which together shall constitute one instrument, and shall bind and inure to the benefit of the parties and their respective successors and assigns. This Amendment shall be construed in accordance with the laws (other than conflict of laws rules) of the Commonwealth of Massachusetts, United States of America.
13
LeMaitre: | Executive: | |||||
LEMAITRE VASCULAR, INC. | ||||||
By: | /s/ Xxxxxx X. XxXxxxxx | /s/ Xxxxx Xxxxxxx | ||||
Xxxxxx X. XxXxxxxx | Xxxxx Xxxxxxx | |||||
President and Chief Executive Officer |
14