EMPLOYMENT AND CHANGE IN CONTROL SUPPLEMENTAL AGREEMENT
Exhibit 10.3A
EMPLOYMENT AND CHANGE IN CONTROL SUPPLEMENTAL AGREEMENT
This Employment and Change in Control Supplemental Agreement (“Supplemental Agreement”) is
made effective as of March 15, 2006, by and between Restore Medical Inc., a Minnesota corporation
(the “Company”), and J. Xxxxxx Xxxxxxx, an individual resident of Minnesota (the “Employee”).
WHEREAS, the parties executed an Employment and Change in Control Agreement (“Original
Agreement”) on April 11, 2005;
WHEREAS, the parties have decided it is in their mutual best interests to modify certain terms
of that Original Agreement; and
WHEREAS, the parties desire that the portions of the Original Agreement that are not expressly
revised by this Supplemental Agreement remain in full effect and are not modified or abrogated by
this Supplemental Agreement;
NOW, THEREFORE, in consideration of Employee’s employment with the Company and the foregoing
premises, the mutual covenants set forth below, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company and Employee agree as follows.
1. Term of Agreement. The Term of Agreement section in the Original Agreement shall
remain unmodified.
2. Position and Duties. The Position and Duties section in the Original Agreement
shall remain unmodified.
3. Compensation and BenefitsSection 3(b) of the Original Agreement is hereby
modified in its entirety as follows:
(b) Additional Performance Incentive. In addition to Base Salary,
the Employee will be eligible to receive an additional performance incentive
pursuant to a Management Incentive Plan expected to be adopted by the Board
of Directors seasonably after the commencement of Employee’s employment, as
such plan may be amended from time to time. The details of Employee’s
eligibility for and receipt of this additional performance incentive shall
be governed by the terms and conditions of the Management Incentive Plan;
however, Employee will be eligible to receive annually an additional
performance incentive target equal to 30% of Base Salary, based on the level
of attainment of corporate and individual performance goals established and
approved by the Board of Directors initially within 60 days from the date of
this Agreement and reestablished for each new calendar year thereafter. If paid, the value of
the additional performance incentive may be paid to Employee in some
combination of cash and stock option grants, as established by the Board
of Directors, with any such amounts received by the Employee subject to all
required withholdings, deductions, and tax reporting requirements.
Compensation and Benefits section in the Original Agreement shall remain unmodified, except
that Employee and the Company agree that the Company will, to the extent necessary and only to the
extent necessary, modify the timing of delivery of severance benefits if the Company determines
that the timing would subject the severance benefits to any additional tax or interest assessed
under Section 409A of the Internal Revenue Code. In such event, the payments will occur as soon as
practicable without causing the severance benefits to trigger such additional tax or interest under
Section 409A of the Internal Revenue Code. Employee and the Company agree that such revision is in
their mutual best interest, and the benefits of such revision to each party constitute sufficient
consideration for such revision.
4. Termination of Employment. The Termination of Employment section in the Original
Agreement shall remain unmodified.
5. Definitions. The Definitions section in the Original Agreement is modified as
follows:
(a) A “Change in Control” shall be deemed to have occurred if:
(i) Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) who did not own shares of the capital stock of the Company on the date of grant of the Option shall,
together with his, her or its “Affiliates” and “Associates” (as such terms are
defined in Rule 12b-2 promulgated under the Exchange Act), become the “Beneficial
Owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities (any such person
being hereinafter referred to as an “Acquiring Person”);
(ii) The “Continuing Directors” (as hereinafter defined) shall cease to
constitute a majority of the Company’s Board of Directors; or
(iii) There should occur (A) any consolidation or merger involving the Company
and the Company shall not be the continuing or surviving corporation or the shares
of the Company’s capital stock shall be converted into cash, securities or other
property; provided, however, that this subclause (A) shall not apply
to a merger or consolidation in which (i) the Company is the surviving
corporation and (ii) the shareholders of the Company immediately prior to the
transaction have the same proportionate ownership of the capital stock of the
surviving corporation immediately after the transaction; (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 liquidation or
dissolution of the Company.
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(b) “Termination” shall mean separation from service as defined by Section 409A of the
Internal Revenue Code.
(c) “Constructive Termination” 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 or due to the Employee’s
death or disability or otherwise approved by the Employee in writing:
(i) A material diminution in the Employee’s job responsibilities or duties as
they existed immediately prior to a Change in Control;
(ii) A reduction by the Company in the Employee’s Base Salary as in effect
immediately prior to a Change in Control;
(iii) Relocation, following a Change in Control, of the Company’s principal
office more than 40 miles from its current location; or
(iv) Any other material breach of this Agreement by the Company, following a
Change in Control, which is not cured within 30 days after written notice thereof
from the Employee.
(d) “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;
(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 indictment, presentment, or conviction for a felony, whether
or not the Company is the victim of such offense.
(e) “Disability” shall mean any physical or mental condition which causes the Employee
to fail to perform the Employee’s essential job functions on behalf of the Company over a
period of 90 days during any 180 day period. The existence or nonexistence of the
Employee’s disability will be determined in good faith and subject to applicable law by the
Board of Directors, after giving notice in writing to the Employee at least 30 days prior 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.
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(f) “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, 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 5(e), “Affiliate” and “Associate” shall have the respective meanings
described to such terms in Rule 12-b-2 promulgated under the Exchange Act.
6. Successors and Binding Agreement. The Successors and Binding Agreement section of
the Original Agreement shall remain unmodified.
7. Limitation of Damages. The Limitation of Damages section in the Original Agreement
shall remain unmodified.
8. Dispute Resolution. The Dispute Resolution section in the Original Agreement shall
remain unmodified.
9. Modification; Waiver. The Modification; Waiver section of the Original Agreement
shall remain unmodified.
10. Notice. The Notice section of the Original Agreement shall remain unmodified.
11. Severability. The Severability section of the Original Agreement shall remain
unmodified.
12. Governing Law. The Governing Law section of the Original Agreement shall remain unmodified.
13. Effect of Agreement; Entire Agreement. The Effect of Agreement; Entire Agreement
section of the Original Agreement shall remain unmodified.
IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as of the date
first written above.
Restore Medical Inc.
By:
|
/s/ Xxxx. X. Xxxxxxx | /s/ J. Xxxxxx Xxxxxxx, Xx. | ||||
| Name: Xxxx X. Xxxxxxx, Ph.D. Title: Chairman of the Board |
J. Xxxxxx Xxxxxxx, Xx. |
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