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Exhibit 10.23
EMPLOYMENT AGREEMENT
This Employment Agreement
("Agreement") is made and entered as of December 12, 2006 (the
"Commencement Date"), between Enpath Medical, Inc., a Minnesota
corporation (the "Company"), and Mark C. Kraus ("Executive"), a
resident of Minnesota.
RECITALS
WHEREAS , the Company
considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best
interests of the Company and its shareholders; and
WHEREAS , due to the
Executive’s experience and knowledge, the Executive has made
and is expected to continue to make a significant contribution to
the profitability, growth and financial strength of the Company;
and
WHEREAS , the Executive is
willing to continue employment with the Company upon the
understanding that the Company will provide income security if the
Executive’s employment is terminated under certain terms and
conditions;
WHEREAS , it is in the
best interests of the Company, as a publicly held corporation, and
its shareholders to reinforce and encourage the Executive’s
continued attention and dedication to the assigned duties without
distraction and to ensure the Executive’s continued
availability to the Company in the event of a change in
control;
AGREEMENT
NOW, THEREFORE , in
consideration of the Executive’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 the Executive
agree as follows:
ARTICLE 1: EMPLOYMENT, TERM AND DUTIES
1.1 Employment . The
Company hereby continues to employ the Executive as Vice-President
and General Manager of Introducers and the Executive accepts this
continued employment and agrees to perform services for the
Company, for the period and upon the other terms and conditions set
forth in this Agreement
1.2 Term . This
Agreement will be effective from and after the date hereof and
will, unless terminated early as provided herein, continue in
effect through December 31, 2008, and will automatically be
extended for successive one-year periods thereafter unless either
the Company or the Executive provides written notice to the other
party no later than the September 30 prior to the expiration
of the Agreement of the intent not to extend. If, however, a Change
in Control has occurred during the original or any extended term of
this Agreement, this Agreement will continue in effect for a period
of the later of:
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(a)
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12 months from the date of the occurrence of
a Change in Control;
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(b)
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if an event triggering the Company’s
severance payment obligations to the Executive under
Section 3.2.4 has occurred, until the benefits payable to the
Executive hereunder have been paid in full; or
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(c)
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the date the Executive enters into a new
employment agreement with the Company or its successor. This
Agreement neither imposes nor confers any further rights or
obligations on the Company or the Executive on the day after the
end of the term of this Agreement. Expiration of the term of this
Agreement of itself and without subsequent action by the Company or
the Executive will not end the employment relationship between the
Company and the Executive.
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1.3 Position
and Duties . The Executive agrees to serve the Company and
to perform the duties of this position and such other duties not
inconsistent with this position as the Chief Executive Officer of
the Company will assign to the Executive from time to time. During
the Term, the Executive agrees to serve Company faithfully and to
the best of the Executive’s ability and to devote the
Executive’s full business time, attention and efforts to the
business and affairs of Company. Executive will perform all of the
Executive’s responsibilities in compliance with all
applicable laws and with all of the applicable policies generally
in effect for employees of the Company, including without
limitation, the Company’s Code of Conduct and related
policies, as the same may be amended from time to time.
ARTICLE 2: COMPENSATION, BENEFITS AND EXPENSES
2.1 Base Salary . As
the initial base compensation for all services the Executive
renders under this Agreement, the Executive will receive an
annualized base salary ("Annual Base Salary") of $181,000. The
Annual Base Salary will be paid in accordance with the
Company’s normal payroll procedures and policies, as these
procedures and policies may be modified from time to time. The
Annual Base Salary will be reviewed and increased in the sole
discretion of the Company according to a schedule and in a manner
consistent with the Company’s practices for salary
adjustment, which practices may be revised from time to time.
2.2 Incentive
Compensation . The Executive will be eligible to
participate in any incentive compensation plans established by the
Company to the extent the Company in its sole discretion may
determine from time to time. The Company does not guarantee the
adoption or continuance of any particular incentive plan during the
Term, and nothing in this Agreement is intended to, or will in any
way restrict the right of the Company, to amend, modify or
terminate any of its incentive plans during the Term.
2.3 Benefit Plans .
During the Term, the Executive will be entitled to paid time off
consistent with the Company’s policies and to participate in
the employee benefits offered generally by the Company to its
salaried employees, to the extent that the Executive’s
position, tenure, salary, health, and other qualifications make the
Executive eligible to participate. The Executive’s
participation in these benefits will be subject to the terms of the
applicable plans, as the same may be amended from time to time. The
Company does not guarantee the adoption or
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continuance of any particular employee benefit or benefit plan
during the Term, and subject to the rights of the Executive in
accordance with Section 3.2.4, nothing in this Agreement is
intended to, or will in any way restrict the right of the Company,
to amend, modify or terminate any of its benefits or benefit plans
during the Term.
2.4 Expenses .
During the Term, the Executive will be entitled to reimbursement
for all reasonable business expenses the Executive incurs in
carrying out the duties under this Agreement in accordance with the
policies and practices of the Company for submission of expense
reports, receipts, or similar documentation of these expenses as in
effect from time to time by the Company.
ARTICLE 3: TERMINATION OF EMPLOYMENT
3.1 Termination .
The Executive’s employment under this Agreement may be
terminated during the Term as described in this Article 3.
3.1.1 Death or Disability . The Executive’s
employment will terminate automatically upon the Executive’s
death. The Executive’s employment will terminate due to the
Executive’s Disability (as defined in Appendix A)
immediately after 30 days’ written notice to the
Executive if the Executive has not returned to the full-time
performance of the Executive’s duties during this period.
3.1.2 Termination by Company Prior to a Change in Control
. Prior to a "Change in Control" (as defined in
Appendix A), the Company may terminate this Agreement and the
Executive’s employment hereunder at any time and for any
reason after providing written notice to the Executive. If,
however, the Company terminates the Executive’s employment
prior to a Change in Control for any reason other than "Cause" (as
defined in Appendix A), the Company must pay the Executive in
accordance with Section 3.2.2.
3.1.3 Resignation by the Executive . The Executive
may, whether prior to or after a Change in Control, resign
employment with the Company effective upon 30 days’
advance written notice to the Chief Executive Officer of the
Company. In that event, the Chief Executive Officer may terminate
the Executive’s employment effective immediately upon
delivery of written notice to the Executive, at any time during the
30-day notice period, and the Company will continue to pay the
Executive’s Base Salary and the Company’s portion of
the Executive’s health insurance premiums for the duration of
the 30-day notice period. Thereafter, except as provided in
Section 3.2.4, the Company will pay the Executive in
accordance with Section 3.2.3.
3.1.4 Termination by the Company other than for Cause or
Resignation by the Executive for Good Reason After a Change in
Control . If a Change in Control occurs and during the
12-month period following a Change in Control, the Company
terminates the Executive’s employment for any reason other
than Cause, or the Executive resigns employment for "Good Reason"
(as defined in Appendix A), then the terms of
Section 3.2.4 will apply. The Executive will have Good Reason
to terminate employment if: (a) within 45 days following
the Executive’s actual knowledge of the event which the
Executive determines constitutes Good Reason, the Executive
notifies the Company in writing that the Executive has determined a
Good
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Reason exists and specifies the event creating Good Reason, and
(b) following receipt of the notice, the Company fails to
remedy the event within 45 days. If either condition is not
met, the Executive will not have a Good Reason to terminate
employment.
3.2 Compensation Following
Termination Prior to the End of the Term . In the event
that the Executive’s employment is terminated prior to the
end of the Term, the Executive will be entitled only to the
following compensation and benefits upon termination, and only if
the Executive is in compliance with the covenants contained in the
Confidentiality, Noncompetition and Inventions Agreement (Technical
and Executive Employees) described in Article 4. No rights to
other compensation or benefits will accrue to Executive.
3.2.1 Termination by Reason of the Executive’s Death or
Disability . If Executive’s employment is terminated
prior to the expiration of the Term by reason of the
Executive’s death or Disability as provided in
Section 3.1.1, the Company will pay to the Executive, the
Executive’s spouse or estate, as the case may be, any amounts
due to the Executive for Base Salary through the date of employment
termination, together with any other unpaid and pro rata amounts to
which the Executive is entitled as of the date of termination
pursuant to Article 2, including, without limitation, accrued
paid time off in accordance with Company policy and amounts that
the Executive is entitled to under any benefit plan of the Company
in accordance with the terms of the plan. The Executive will have
no rights to any unvested benefits or any other compensation or
payments coming due after the date of the Executive’s
employment termination.
3.2.2 Termination by the Company other than for Cause Prior
to a Change in Control. If the Executive’s employment
is terminated other than for Cause as provided in
Section 3.1.2, and provided the Executive has executed a
written release of any and all claims arising out of
Executive’s employment in form acceptable to the Company and
the rescission period specified therein has expired, the Company
will pay to the Executive:
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(a)
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any Annual Base Salary earned but not paid
through the date of the Executive’s employment termination
and payment of any accrued but unpaid time off in accordance with
Company’s policy; and
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(b)
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continuation of Executive’s Base Salary in
accordance with the Company’s regular payroll policies for a
period equal to the greater of (i) 17 weeks or (ii) two
weeks severance for each completed whole year of employment from
the Executive’s date of hire through the date of the
Executive’s termination, and
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(c)
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the amount of any other benefits to which the
Executive is legally entitled as of such date under the terms and
conditions of any benefit plans of the Company in which the
Executive is participating as of such date.
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Except as provided in (a) through
(c) above, the Company will have no further obligations under
this Agreement.
3.2.3
Termination by the Executive . If the
Executive’s employment is terminated as provided in
Section 3.1.3, the Company will pay to the Executive
(a) any Annual
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Base Salary earned but not paid through the date of the
Executive’s employment termination, plus (b) the amount
of any other benefits to which the Executive is legally entitled as
of such date under the terms and conditions of any benefit plans of
the Company in which the Executive is participating as of such
date. Thereafter, the Company will have no further obligations
under this Agreement
3.2.4 Termination by the Company other than for Cause or
Resignation by the Executive for Good Reason After a Change in
Control . In the event the Executive’s employment is
terminated by the Company without Cause or by the Executive for
Good Reason as provided in Section 3.1.4, and provided in
either case that the Executive has executed a written release of
any and all claims arising during the Executive’s employment
in form acceptable to the Company and the rescission period
specified therein has expired, the Company will pay or provide the
following amounts or benefits to the Executive:
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(a)
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any accrued but unpaid Annual Base Salary and any
other form or type of compensation, benefit or perquisite that is
vested or accrued at the date of termination of the
Executive’s employment with the Company for services rendered
to such date, and payment for any accrued paid time off in
accordance with Company policy; and
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(b)
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the annual incentive bonus for that fiscal year
at target performance (or if the target goals have not been set at
the time of Executive’s employment termination, then the
target goals in effect for the prior fiscal year), waiving any
other condition precedent, such as continued employment, multiplied
by a fraction, the numerator of which is the number of days worked
by the Executive in the bonus period prior to the termination of
employment, and the denominator of which is the number of days in
the bonus period, less any amount of any such incentive bonus that
has been paid. The pro-rated incentive bonus will be payable and
paid, however, only if senior management of the Company are paid a
bonus based on achievement of goals at or above target for the year
in which the termination occurs, and will be paid to the Executive
at the same time and manner as the bonus is paid to other senior
management of the Company; and
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(c)
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a severance payment equal to 39 weeks, based
upon the weekly equivalent of the Executive’s Annual Base
Salary in effect on the date of termination (without regard to any
reduction that is in breach of this Agreement), to be paid in cash
in a single sum within 30 days of the date of the
Executive’s termination of employment; and
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(d)
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the amount of any other benefits to which the
Executive is legally entitled as of such date under the terms and
conditions of any benefit plans of the Company in which the
Executive is participating as of the date of termination (without
regard to any reduction in such benefit that is in breach of this
Agreement).
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Except as provided in (a) through
(d) above, the Company will have no further obligations under
this Agreement.
3.2.5 Dispute of Termination . If, following a Change
in Control, within 10 days after any notice of termination by
the Executive for Good Reason or by the Company for Cause, the
party receiving the notice notifies the other party that a dispute
exists concerning the termination, the effective date of the
termination will be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or
by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or the time for appeal has
expired and no appeal having been perfected). A notice of dispute
will extend the date of termination only if the notice is given in
good faith and the party giving the notice pursues the resolution
of the dispute with reasonable diligence. Notwithstanding the
pendency of any dispute, the Company will continue to pay the
Executive full compensation in effect when the notice giving rise
to the dispute was given (including, but not limited to, base
salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive
was participating when the notice giving rise to the dispute was
given, to the extent permissible under the terms of the applicable
group plans and state and federal law, until the dispute is finally
resolved in accordance with this subparagraph. Amounts paid under
this Section 3.2.5 are in addition to any amounts otherwise
due under this Agreement, but in no event must the Company pay more
than 25% of the severance payment set forth in
Section 3.2.4(c) pursuant to this Section 3.2.5.
3.2.6 Payments Subject to Code 409A . Notwithstanding
anything herein to the contrary, if the Executive is designated as
a "specified employee" as defined in Code §409A and
Regulations applicable thereto at the time any payment is due, any
payments that would constitute "deferred compensation" under Code
§409A will be paid on the 181st day following the
Executive’s separation from service (as defined in Code
§409A), and any delay in payment will accrue interest at the
applicable federal short term rate as determined under Code §
1274 in effect on the date payment was otherwise due.
3.3 No Other Benefits
. If the Executive receives the payments and benefits described
in this Article 3, the Executive will not be eligible to
receive from the Company or any Affiliate any other severance
payments provided by the Company under any plan or policy or
arrangement to which the Executive is otherwise eligible. Nothing
in this Agreement will extend the continuation period of any
benefit beyond the maximum period otherwise required by law and
regulation.
ARTICLE 4: CONFIDENTIALITY, NONCOMPETITION AND
INVENTIONS
As a condition to and in consideration of the benefits to be
provided by the Company to the Executive pursuant to the terms of
this Agreement, the Executive agrees to execute and be bound by the
provisions of the Confidentiality, Noncompetition and Inventions
Agreement (Technic
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