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Exhibit 10.1
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement (together with any Exhibits hereto, this “Agreement”)
is made and entered into effective this 6th day of June, 2016, between Cogentix
Medical, Inc., a Minnesota corporation (the “Company”) and Brett Reynolds
(“Employee”) (each a “Party” and together the “Parties.”).
 
WHEREAS, the Company is a global medical company that provides proprietary,
innovative technologies to specialty markets including urology, gynecology,
bariatric medicine, critical care, gastroenterology, otolaryngology, and
pulmonology.
 
WHEREAS, the Company and the Employee desire to set forth in this Agreement the
terms under which Employee will serve as Chief Financial Officer of the Company.
 
NOW, THEREFORE, the Parties agree as follows.
 
1.             EMPLOYMENT. The Company hereby employs Employee as the Senior
Vice President and Chief Financial Officer of the Company and Employee accepts
such employment. Employee agrees to serve the Company with undivided loyalty, to
the best of his ability promote the interests and business of the Company, and
devote his full business time, energy and skill to such employment.
 
2.             DUTIES AND POWERS.
 
(a)            Employee shall report to the President and Chief Executive
Officer of the Company.
 
(b)           Employee shall perform such duties as a Chief Financial Officer
would customarily perform and such other duties as may be assigned to him from
time to time by the President and Chief Executive Officer.
 
3.             TERM. The term of this Agreement shall commence on June 13, 2016
(the “Start Date”) and shall continue indefinitely, until such time, if any,
that this Agreement is terminated pursuant to Section 11 herein.
 
4.             BASE SALARY. The Company shall pay to Employee a Base Salary of
Two Hundred Sixty Thousand Dollars ($260,000) per year, which shall be paid in
installments at least twice per month in accordance with the Company’s normal
payroll practices as are in effect from time to time. Such amount shall be
reviewed on an annual basis and may be adjusted pursuant to the mutual agreement
of the Company and Employee.
 
5.             BONUS. During the Term, beginning with the fiscal year ending
December 31, 2016, Employee shall be entitled to participate in the annual cash
incentive program established by the Board of Directors, and such bonus program
shall include provisions allowing Employee to achieve a bonus equal to 40% of
the base salary paid to Employee for such fiscal year if performance is achieved
at the target performance established for such plan, prorated for days of
service in Calendar Year 2016 to include days of service from previous
employment dates The Bonus, if any, will be paid no later than seventy-five (75)
days following the last day of the fiscal year in which such incentive
compensation is earned. Employee must be employed on the date the Bonus is paid
to be eligible for the Bonus, except as otherwise provided in Section II of this
Agreement.
 

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6.             OPTIONS AND RESTRICTED STOCK. Effective upon the Start Date,
Employee shall be granted (a) an option to purchase 150,000 shares of the
Company’s common stock (the “Option”) and (b) 70,000 shares of restricted stock
(the “Restricted Stock”). The Option shall have an exercise price equal to the
last sale price of such Common Stock as quoted on the Nasdaq on the Start Date,
shall have a term of seven years, shall not be exercisable on the date of grant,
but shall become exercisable with respect to a cumulative 50,000 shares on the
first, second and third anniversaries of the Start Date (provided that the
Employee remains an employee of the Company on such dates), and shall have other
provisions, including provisions relating to the acceleration of vesting in the
event of a Change of Control, as are contained in the Company’s 2006 Amended
Stock and Incentive Plan and form stock option agreement. The Restricted Stock
shall be subject to a risk of forfeiture back to the Company in the event the
Employee’s employment with the Company is terminated, for any reason, which risk
of forfeiture shall lapse (the Restricted Stock shall vest) with respect to a
cumulative one-third of the shares on the first, second and third anniversary of
the Start Date, but shall also lapse in the event of a Change of Control, as set
forth in the Company’s 2015 Omnibus Incentive Plan award agreement.
 
7.             LONG TERM INCENTIVE PLAN. During the term of Employee’s
employment with the Company, the Company shall provide to Employee the right to
participate in the Company’s Long Term Incentive Plan, as may be amended from
time to time, per the terms set forth in Exhibit A to this Agreement.
 
8.             FRINGE BENEFITS. During the term of Employee’s employment with
the Company, the Company shall provide to Employee the right to participate in
all fringe benefits and perquisites are made available to employees or
executives of the Company from time to time, including, without limitation,
health-care coverage provided by the Company or a third party under contract
with the Company, and four weeks per year paid vacation. Vacation will be
administered in accordance with Company policy. Fringe benefits may be modified
or discontinued at the sole discretion of the Company.
 
9.             REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall reimburse
Employee for the reasonable and necessary expenses incurred in connection with
the performance of him duties in accordance with the rules and regulations of
the Internal Revenue Service under the Internal Revenue Code of 1986, as amended
(the “Code”) and the policies and procedures of the Company governing such
expenses, upon presentation of appropriate vouchers for said expenses.
 
10.          CONFIDENTIALITY AGREEMENT. Employee confirms that he executed that
certain Team Member Confidentiality, Inventions, Non-Compete and
Non-Solicitation Agreement dated as of the same date as this Agreement (the
“Confidentiality Agreement”), and that such Confidentiality Agreement is, and
shall remain effective during and, to the extent specified therein, beyond the
Term of this Agreement.
 
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11.          TERMINATION. Employee’s employment with the Company may be
terminated by the Company or Employee, with or without Cause, upon thirty (30)
days’ written notice to the other Party. Such employment may also be terminated
immediately by the Company by written notice to Employee for the following
events which would constitute “Cause”: (a) Employee’s commission of a felony or
any other crime that in the Company’s judgment has an adverse effect on the
Company, its standing or reputation; (b) Employee’s theft or embezzlement of the
intellectual or physical property of the Company or any of its customers,
clients, agents or employees; (c) Employee’s fraudulent or dishonest act with
respect to any business of the Company; or (d) Employee’s breach of his
fiduciary duty to the Company or of any agreement made between Employee and the
Company, including, without limitation, the Confidentiality Agreement. In no
event shall termination for Cause be based solely on Employee’s employment
performance.
 
12.          SEVERANCE PAYMENT.
 
(a)            Subject to the provisions of this Section 12, if Employee’s
employment under this Agreement is terminated:
 

(i) by the Company or its successors or assigns without Cause at any time other
than during the two years following a Change of Control, the Company, or such
successors or assigns, shall pay to Employee an amount equal to twelve times his
monthly base salary and an amount equal to the Employee’s targeted bonus; or

 

(ii) by the Company or its successors or assigns without Cause, or by the
Employee for Good Reason, within the two years following a Change of Control,
the Company, or such successors or assigns, shall pay to Employee an amount
equal to twelve times Employee’s monthly base salary and an amount equal to
Employee’s targeted bonus.

 
(b)           For purposes of this Section 12:
 

(i) “Change in Control” shall have the meaning set forth in Section 12(i) of the
Company’s 2015 Omnibus Incentive Plan award agreement.

 

(ii) “Good Reason” shall mean:

 

(A) the Company’s imposition of material and adverse changes, without the
Employee’s consent, in the Employee’s principal duties, responsibilities,
status, reporting relationship, title or authority, or the Company’s assignment
of duties inconsistent with the Employee’s position;

 

(B) a material reduction in the Employee’s annual base salary or target annual
incentive compensation opportunity;

 
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(C) the Company moving its principal executive offices (Minnetonka, MN) more
than 50 miles from its current location without the Employee’s consent; or

 

(D) the Company’s material breach of this Agreement; and

 
 in the case of each of (iii)(A)— (D), such condition remains uncured by the
Company after receipt of thirty (30) days prior written notice of the existence
of such condition.
 
(c)            The Company shall have no obligation to make any payment under
this Section 12 if the Employee is in material breach of this Agreement or the
Confidentiality Agreement.
 
(d)           Payment of severance compensation shall be subject to and
contingent upon the Executive’s execution of a full and final Release of Claims
in a form satisfactory to the Company. Such payments will not commence until
after the expiration of all applicable revocation periods set forth in the
Release.
 
(e)            The Company has also agreed to reimburse Employee for an amount
equal to twelve (12) full month(s) of COBRA premiums to continue Employee’s
coverage, should Employee be eligible for and elect COBRA coverage. It is solely
Employee’s responsibility to enroll in COBRA and to make the monthly premium
payments on a timely basis. If Employee does not timely enroll in and pay for
COBRA, Employee will not be eligible to receive COBRA reimbursement. Employee
can submit a request for reimbursement to the Company after each premium payment
is made. The Company will reimburse Employee within 20 days of receipt of
Employee’s request.
 
13.          SECTION 409A COMPLIANCE. The payments under this Agreement are
intended to be exempt from the requirements of sections 409A(a)(2), (3), and (4)
of the Code as (i) non-taxable benefits, (ii) welfare benefits within the
meaning of Treas. Reg. Sec. 1.409A-1(a)(5), and (iii) short-term deferrals under
Treas. Reg. Sec. 1.409A-1(b)(4); provided, however, if any payment is or becomes
subject to the requirements of Code section 409A, the Agreement as it relates to
such payment is intended to comply with the requirements of section 409A of the
Code. For all purposes under section 409A of the Code, each payment under this
Agreement shall be treated as a separate payment. Notwithstanding anything in
the Agreement to the contrary, if, at the time of Employee’s termination of
employment, Employee is a “specified employee” (within the meaning of section
409A of the Code), then to the extent any payment under this Agreement is
determined by the Company to be deferred compensation subject to the
requirements of section 409A of the Code, payment of such deferred compensation
shall be suspended and not made until the first day of the month next following
the end of the 6-month period following Employee’s termination, or, if earlier,
upon Employee’s death.
 
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14.          EXCISE TAX. Notwithstanding anything contained in this Agreement to
the contrary, to the extent that the payments and benefits provided under this
Agreement and benefits provided to, or for the benefit of, the Employee under
any other Company plan or agreement (such payments or benefits are collectively
referred to as the “Payments”) would be subject to the excise tax (the “Excise
Tax”) imposed under Section 4999 of the Code, the Payments shall be reduced (but
not below zero) if and to the extent necessary so that no Payment to be made or
benefit to be provided to Employee shall be subject to the Excise Tax (such
reduced amount is hereinafter referred to as the “Limited Payment Amount”).
Unless the Employee shall have given prior written notice specifying a different
order to the Company to effectuate the foregoing, the Company shall reduce or
eliminate the Payments, by first reducing or eliminating the portion of the
Payments which are not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination (as hereinafter
defined). Any notice given by Employee pursuant to the preceding sentence shall
take precedence over the provisions of any other plan, arrangement or agreement
governing the Employee’s rights and entitlements to any benefits or
compensation.
 
15.          SEVERABILITY. If any provision of this Agreement shall be held by
any court of competent jurisdiction to be illegal, invalid or unenforceable,
such provision shall be construed and enforced as if it had been more narrowly
drawn so as not to be illegal, invalid or unenforceable, and such illegality,
invalidity or unenforceability shall have no effect upon and shall not impair
the enforceability of any other provision of this Agreement.
 
16.          ATTORNEYS’ FEES AND COSTS. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
Party shall be entitled to reasonable attorneys’ fees, costs and necessary
disbursements in addition to any other relief to which he or it may be entitled.
 
17.          WAIVER OF BREACH. Any waiver by either Party of compliance with any
provision of this Agreement by the other Party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such Party of a provision of this Agreement.
 
18.           AMENDMENT. This Agreement may be amended only in writing, manually
signed by both Parties.
 
19.           ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the Parties with regard to all matters contained herein. Other than those
agreements referred to in this Agreement, there are no other agreements,
conditions or representations, oral or written, expressed or implied, with
regard thereto. This Agreement supersedes all prior agreements, if any, relating
to the employment of Employee by the Company.
 
20.           BINDING EFFECT. This Agreement is and shall be binding upon the
heirs, personal representatives, legal representatives, successors and assigns
of the Parties hereto; provided, however, Employee may not assign this
Agreement.
 
21.           NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied
is intended or shall be construed as conferring upon or giving to any person,
firm or corporation other than the Parties hereto any rights or benefits under
or by reason of this Agreement.
 
22.           NOTICES. Any notice to be given under this Agreement by either
Employee or the Company shall be in writing and shall be effective upon personal
delivery, or delivery by mail, registered or certified, postage prepaid with
return receipt requested. Mailed notices shall be addressed to the Party at the
Party’s last known address of record. Notice delivered personally shall be
deemed given as of actual receipt and mailed notices shall be deemed given as of
three business days after mailing.
 
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23.          COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one and the same agreement.
 
24.          GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Minnesota, without giving effect to
conflict of law principles of any jurisdiction. In the event of any controversy,
claim or dispute between the Parties arising out of or relating to this
Agreement, such controversy, claim or dispute must be filed exclusively in state
or federal court in Hennepin County, Minnesota. .
 
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above:
 
COGENTIX MEDICAL INC.
 
EMPLOYEE
     
By:
 /s/ Darin Hammers  
By:
 /s/ Brett Reynolds
Darin Hammers, President and CEO
 
Brett Reynolds

 
 

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