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EXHIBIT 10.1
 
EMPLOYMENT AGREEMENT
 
THIS AGREEMENT, made this 27 day of January 2012, is by and between Vascular
Solutions, Inc., a Minnesota corporation (the "Company"), and Howard C. Root, a
resident of the State of Minnesota (the "Employee").
 
WHEREAS, Employee and the Company have previously entered into an employment
relationship; and
 
WHEREAS, Employee and the Company desire to amend and supercede in its entirety
the prior Employment Agreement dated April 13, 2004; and
 
WHEREAS, Employee and the Company desire to specify all benefits payable to
Employee in connection with the employment.
 
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Company and the Employee, each intending to be legally bound, agree as follows:
 
1.             Employment. This agreement shall supercede and replace all prior
agreements between the Company and the Employee. Subject to all of the terms and
conditions of this Agreement, the Company agrees to employ the Employee as a
Chief Executive Officer, and the Employee accepts this employment.
 
2.             Duties. The Employee will make the best use of his energy,
knowledge, and training in advancing the Company's interests on a full-time
basis. He will diligently and conscientiously perform the duties of his position
as well as such other duties as are directed by the Company's management. The
Employee will make every effort to avoid using any trade secrets or confidential
information that he may have in his possession from any previous employer in
connection with his employment by the Company.
 
3.             Term. The employment relationship created by this agreement shall
continue on an "at will" basis. Except as specifically provided in Sections 10
and 11 of this Agreement, either party may terminate the employment relationship
created by this Agreement for any reason or no reason by giving 10 working days
prior written notice to the other party. Because the employment relationship is
"at will," the Employee shall have no right to continued employment, and the
Company may terminate the Employee (other than because of Employee's race, sex,
age or other legally protected category) at any time. No document or statement
(oral or written) by the Company or its officers or Board of Directors will
create a right to continued employment.
 
 
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4.             Compensation.
 
(a)           Salary: The Company shall pay the Employee an annualized base
salary of $465,000 for calendar year 2012, payable not less frequently than
twice monthly, to be reviewed and adjusted by December 31, 2012 for calendar
year 2013, and no less frequently than annually thereafter.
 
(b)           Bonus:  Employee shall be eligible to receive annual bonus
compensation, based on Employee’s performance and the overall financial
performance of the Company, as may be awarded at the sole discretion of the
Board of Directors, in an amount up to fifty percent (50%) of Employee’s base
annual salary.  Employee understands that the award and determination of the
amount of any such bonus is solely in the discretion of the Company and that,
unless and to the extent awarded and determined, Employee has no entitlement to
any bonus.  Employee must be in compliance with his obligations under this
Agreement, be actively employed with the Company for the entire year in
question, and be actively employed by the Company on the date the annual bonus
is paid to be eligible to receive this bonus.
 
(c)           Benefits: Other than as specified above, the Employee shall not
have any entitlement to any benefits or options.
 
(d)           Expenses: The Company shall reimburse the Employee for all
ordinary and necessary business expenses the Employee incurs while performing
his duties under this Agreement, provided that the Employee accounts properly
for such expenses to the Company in accordance with the general corporate policy
of the Company as determined by the Company's Board of Directors and in
accordance with the requirements of Internal Revenue Service regulations
relating to substantiation of expenses.
 
5.             Inventions.
 
(a)           "Inventions," as used in this Section 5, means any discoveries,
designs, improvements or software (whether or not they are in writing or reduced
to practice) or works of authorship (whether or not they can be patented or
copyrighted) that the Employee makes, authors, or conceives (either alone or
with others) and that:
 
 
(i)
concern directly the Company's products, research or development;

 
 
(ii)
result from any work the Employee performs for the Company; or

 
 
(iii)
use in any significant respect the Company's equipment, facilities, or trade
secret information.

 
(b)           The Employee agrees that all inventions he makes during the term
of this Agreement will be the sole and exclusive property of the Company. The
Employee will, with respect to any such invention:
 
 
(i)
keep current, accurate, and complete records which will belong to the Company
and be kept and stored on the Company's premises while the Employee is employed
by the Company;

 
 
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(ii)
promptly and fully disclose the existence and describe the nature of the
invention to the Company and in writing (and without request);

 
 
(iii)
assign (and the Employee does hereby assign) to the Company all of his rights to
the invention, and applications he makes for patents or copyrights in any
country, and any patents or copyrights granted to him in any country; and

 
 
(iv)
acknowledge and deliver promptly to the Company any written instruments, and
perform any other reasonable acts necessary in the Company's opinion and at its
expense to preserve property rights in the invention against forfeiture,
abandonment, or loss and to obtain and maintain letters patent and/or copyrights
on the invention and to vest the entire right and title to the invention in the
Company, provided that the Employee makes no warranty or representation to the
Company as to rights against third parties hereunder.

 
6.             Confidential Information.
 
(a)           "Confidential Information," as used in this Section 6, means
information that is not generally known and that is proprietary to the Company
or that the Company is obligated to treat as proprietary. This information
includes, without limitation:
 

 
(i)
trade secret information about the Company and its products or services;

 
 
(ii)
"Inventions," as defined in subsection 5 (a) above;

 
 
(iii)
information concerning the Company's business, as the Company has conducted it
or as it may conduct it in the future; and

 
 
(iv)
information concerning any of the Company's past, current, or possible future
products, including (without limitation) information about the Company's
research, development, engineering, purchasing, manufacturing, servicing,
finances, marketing or selling.

 
Any information that reasonably can be expected to be treated as Confidential
Information will be presumed to be Confidential Information (whether the
Employee or other originated it and regardless of how he obtained it).
 
(b)           Except as required in his duties to the Company, the Employee will
not, during his employment or for a period of three (3) years after termination
of his employment with the Company, use or disclose Confidential Information to
any person not authorized by the Company to receive it, excluding Confidential
Information:
 
 
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(i)
which is or becomes publicly available by a source other than the Employee;

 
 
(ii)
which is received by the Employee after termination of his employment hereunder
from a source who, to the Employee's knowledge, did not obtain the information
directly or indirectly from employees or agents of the Company; or

 
 
(iii)
for which disclosure thereof the Company has consented in writing.

 
When the Employee's employment with the Company ends, he will promptly turn over
to the Company all records and any compositions, articles, devices, apparatus,
and other items that disclose, describe, or embody Confidential Information,
including all copies, reproductions, and specimens of Confidential Information
in his possession, regardless of who prepared them.
 
7.             Competitive Activities. The Employee agrees that during his
employment with the Company and for a period of one (1) year after his
employment with the Company ends:
 

 
(a) 
He will not alone, or in any capacity with another firm:

 
 
(i)
directly or indirectly engage in the manufacture or distribution of products
directly competitive with the Company's, nor will he participate in the
management or operation of, or become a significant investor in, any venture or
enterprise of whatever kind as a principal, officer, director, employee,
representative, agent or shareholder or any entity whose business is directly
competitive with the Company's;

 
 
(ii)
solicit for competitive business or in any way intentionally interfere or
attempt to interfere with the Company's relationships with any of its current or
potential customers; or

 
 
(iii)
employ or attempt to employ any of the Company's employees on behalf of any
other entity competing with the Company, provided that, nothing in this Section
7 shall restrict the employee's employment by or association with any entity,
venture, or enterprise which engages in a business with a product or service
competitive with any product or service of the Company so long as the following
conditions are complied with: (a) the Employee's employment or association with
such entity, venture or enterprise is limited to work which does not involve or
relate to the design, development, production, marketing or servicing of a
product or service which is directly competitive with any product or service of
the Company and (b) the Employee's employer takes reasonable measures to insure
that the Employee is not involved with or consulted in any aspect of the design,
development, production, marketing, or servicing of such competitive product or
service.

 
(b)  Employee will, prior to accepting employment with any new employer, inform
that employer of this Agreement and provide that employer with a copy of Section
7 of this Agreement, provided that he reasonably believed his new position is or
may be contrary to this Agreement.
 
 
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8.             Conflicting Business. The Employee agrees that he will not
transact business with the Company personally, or as agent, owner, partner, or
shareholder of any other entity without the prior approval of the Board of
Directors. The Employee further agrees that he will not engage in any business
activity or outside employment that is likely to conflict with the Company's
proprietary or business interests during the term of this Agreement.
 
9.             No Adequate Remedy. The Employee understands that if he fails to
fulfill his obligations under Sections 5, 6, 7 or 8 of this Agreement, the
damages to the Company would be very difficult to determine. Therefore, in
addition to any other rights or remedies available to the Company at law, in
equity or by statute, the Employee hereby consents to the specific enforcement
of Sections 5, 6, 7 or 8 of this Agreement by the Company through an injunction
or restraining order issued by any appropriate court.
 
10.           Termination Without Cause.  Except as set forth in Section 11
herein, if, at any time, the Company terminates Employee’s employment with the
Company other than for Cause, as that term is defined in Section 11(b)(iii)
herein, Employee will be entitled to severance pay of twelve (12) times
Employee’s then-current monthly base salary.  Receipt of such severance shall
not entitle Employee to any further benefits or compensation.  The receipt of
any severance pursuant to this Section will be subject to Employee signing and
not timely revoking a separation agreement and release of claims in a form
reasonably satisfactory to the Company.  This Agreement is intended to comply
with the requirements of section 409A (“Section 409A”) of the Internal Revenue
Code of 1986, as amended (“Code”), insofar as it relates to amounts subject to
Section 409A, and this Agreement will be construed and administered
accordingly.  To the extent that any provision hereof is modified in order to
comply with or be exempt from Section 409A, such modification shall be made in
good faith and shall, to the maximum extent reasonably possible, maintain the
original intent and economic benefit to Employer and Employee of the applicable
provision without violating the provisions of Section 409A.
 
11.           Effect of Termination After a Change In Control.
 
(a)           Termination After a Change in Control.
 
 
(i)
From and after the date of a Change in Control (as defined in Section 11(b)(i)
hereof), the Company shall have the right to terminate the Employee from
employment with the Company at any time (A) for Cause (as defined in Section
11(b)(iii) hereof) by written notice to the Employee specifying the particulars
of the conduct of the Employee forming the basis for such termination, or (B) as
a result of the Employee's Disability (as defined in Section 11(b)(iv) hereof)
or his death.

 
 
(ii)
From and after the date of a Change in Control (as defined in Section 11(b)(i)
hereof) (A) the Company shall have the right to terminate the Employee's
employment without Cause (as defined in Section 11(b)(iii) hereof), at any time;
and (B) the Employee shall have the right to voluntarily terminate his
employment by the Company at any time for Good Reason (as defined in Section 1
0(b)(ii) hereof). Upon the occurrence of any such termination by the Company
without Cause or upon the voluntary termination of the Employee's employment by
the Employee for Good Reason, the Employee shall be entitled to receive the
benefits provided in Section 11(c) hereof.

 
 
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(b)           Definitions.
 

 
(i) 
A "Change in Control" shall mean:

 
 
(A)
A change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Company is then subject 'to such reporting requirement;

 
 
(B)
Any "person" (as such term is used in Sections 3(d) and 14(d) of the Exchange
Act) (other than any employee benefit plan of the Company or any entity which
reports beneficial ownership of the Company's outstanding securities on Schedule
13G pursuant to Rule 13d-1 under the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly,
of securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding securities;

 
 
(C)
The Continuing Directors (as defined in Section 11(b)(v) hereof) cease to
constitute a majority of the Company's Board of Directors; provided that such
change is the direct or indirect result of a proxy fight and contested election
or elections for positions on the Board of Directors;

 
 
(D)
The shareholders of the Company approve: (1) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of Company stock would be converted into cash,
securities, or other property, other than a merger of the Company in which
shareholders immediately prior to the merger have the same proportionate
ownership of stock of the surviving corporation immediately after the merger;
(2) 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 (3) any plan of liquidation or dissolution of the Company; or

 
 
(E)
The majority of the Continuing Directors (as defined in Section 11(b)(v) hereof)
determine in their sole and absolute discretion that there has been a Change in
Control of the Company.

 
 
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(ii) 
"Good Reason" 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 (as defined
in Section 11(b)(iii) hereof), for Disability (as defined in Section 11(b)(iv)
hereof), or for death:

 

 
(A)
The assignment to the Employee of employment responsibilities which are not of
comparable responsibility and status as the employment responsibilities held by
the Employee immediately prior to a Change in Control (as defined in Section
11(b)(i) hereof);

 

 
(B)
Any reduction by the Company in the Employee's base salary as in effect
immediately prior to a Change in Control (as defined in Section 11(b)(i)
hereof);

 

 
(C)
An amendment or modification of the Company's cash incentive compensation
program (except as may be required by applicable law) which affects the terms or
administration of the program in a manner adverse to the interest of Employee as
compared to the terms and administration of such program immediately prior to a
Change in Control;

 

 
(D)
Except to the extent otherwise required by applicable law, the failure by the
Company to provide employee benefit plans (including, without limitation, a
retirement plan, stock option plan, stock purchase plan, life insurance plan,
health-and-accident plan, and disability plan) that provide substantially
similar benefits in terms of aggregate monetary value to Employee as the
benefits provided by those plans immediately prior to a Change in Control, or
the taking of any action by the Company which would adversely affect Employee's
participation in, or materially reduce Employee's benefits under, any of such
plans or deprive Employee of any material fringe benefit enjoyed by Employee
immediately prior to such Change in Control;

 

 
(E)
The failure by the Company to obtain, as specified in Section 12(a) hereof, an
assumption of the obligations of the Company to perform this Agreement by any
successor to the Company;

 

 
(F)
The Company's requiring the Employee to be based at a location that is in excess
of 50 miles from the location of the Employee's principal office immediately
prior to a Change in Control (as defined in Section 11(b)(i) hereof); or

 

 
(G)
Any other material breach of this Agreement by the Company which is not cured
within thirty (30) days after written notice thereof from the Employee.

 
 
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(iii)
"Cause" shall mean termination by the Company of the Employee's employment based
upon:

 

 
(A)
The willful and continued failure by Employee substantially to perform his
duties and obligations (other than any such failure resulting from his
incapacity due to physical or mental illness or any such actual or anticipated
failure resulting from Employee's termination for Good Reason);

 

 
(B)
The breach by Employee of any covenant set forth in this Agreement (including
without limitation the provisions in Section 5, 6 and 7 of this Agreement); or

 

 
(C)
The willful engaging by Employee in misconduct which is materially injurious to
the Company, monetarily or otherwise, provided that, for purposes of this
Section 11(b)(iii)(C), no action or failure to act on Employee's part shall be
considered "willful" unless done, or omitted to be done, by Employee in bad
faith and without reasonable belief that his action or omission was in the best
interests of the Company.

 

 
(iv)
"Disability" shall mean Employee's total disability which results in Employee's
inability to perform the essential functions of Employee's position, with or
without reasonable accommodation, provided Employee has exhausted Employee's
entitlement to any applicable leave, if Employee desires to take and satisfies
all eligibility requirements for such leave.

 

 
(v)
"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 (as defined herein) or an Affiliate or
Associate (as defined herein) of an Acquiring Person, or a representative of an
Acquiring Person or any such Affiliate or Associate, and who:

 

 
(A)
was a member of the Board of Directors on the date of this Agreement as first
written above; or

 

 
(B)
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 11(b)(v), "Acquiring Person" shall mean any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) who or which,
together with all Affiliates and Associates of such person, is the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities,
but shall not include the Company, any subsidiary of the Company, or any
employee benefit plan of the Company, or of any subsidiary of the Company, or
any entity holding shares of common stock organized, appointed, or established
for, or pursuant to the teens of, any such plan; and "Affiliate" and "Associate"
shall have the respective meanings described to such terms in Rule 12b-2
promulgated under the Exchange Act.

 
 
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(c)           Benefits Upon Termination Under Section 11(a)(ii).
 

 
(i)
Upon the termination (voluntary or involuntary) of the employment of the
Employee pursuant to Section 11(a)(ii) hereof, the Company shall pay to the
Employee, in lieu of any further base salary or bonus payments to the Employee
for periods subsequent to the date that the termination of the Employee's
employment becomes effective, as severance pay, payments as follows:

 

 
(A)
if the termination pursuant to Section 11(a)(ii) hereof following a Change in
Control (as defined in Section 11(b) hereof) occurs during the first twelve (12)
months following a Change in Control (as defined in Section 11(b) hereof),
payments equal to twenty-four (24) times the Employee's monthly base salary;

 

 
(B)
if the termination pursuant to Section 11(a)(ii) hereof following a Change in
Control (as defined in Section 11(b) hereof) occurs more than twelve (12) months
after a Change in Control (as defined in Section 11(b) hereof), the Employee
will not be entitled to any payments pursuant to this Section 11(c).

 

 
(ii)
For purposes of this Section 11(c), "the Employee's monthly base salary" shall
mean the Employee's monthly base salary as in effect in the month preceding the
month in which the termination becomes effective or as in effect in the month
preceding the Change in Control, whichever is higher.

 

 
(iii)
All payments to the Employee subject to this Section 11(c) shall be paid, in the
sole discretion of the Company, in a lump sum or periodically in accordance with
the Company's normal payroll practices in effect from time-to-time. All payments
to the Employee subject to this Section 11(c) shall be subject to any applicable
payroll or other taxes required by law to be withheld.

 

 
(iv)
The Employee shall not be required to mitigate the amount of any payment
provided for in this Section 11(c) by seeking other employment or otherwise. The
amount of any payment provided in this Section 11(c) shall not be reduced by any
compensation earned by the Employee as a result of any employment by an
employer.

 

 
(v)
Any termination of the employment of the Employee by the Company without Cause
prior to a Change in Control (as defined in Section 11(b) which occurs at the
request or insistence of any person (other than the Company) in connection with
a Change in Control (as defined in Section 11(b) shall be deemed to be a
termination pursuant to Section 11(a)(ii) hereof and to have occurred after the
Change in Control (as defined in Section 11(b) for purposes of this Section
11(c).

 
 
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12.           Miscellaneous.
 
(a)           Successors and Assigns. This Agreement may not be assigned by the
Employee. Except as provided in the next sentence, this Agreement may not be
assigned by the Company without the Employee's consent, which consent shall not
be unreasonably withheld. In any event, the Company may assign this Agreement
without the consent of the Employee in connection with a merger, consolidation,
assignment, sale or other disposition of substantially all of its assets or
business or the assets or business of a division of the Company, provided that
the Company obtains from any such acquiror of or successor to its business or
assets (a "Successor") an express written assumption and agreement to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession or acquisition had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession or acquisition shall be a breach of this Agreement and shall
entitle the Employee to compensation from the Company in the same amount and on
the same terms as the Employee would be entitled hereunder if the Employee
terminated his employment after a Change in Control for Good Reason, except
that, for purposes of implementing the foregoing, the date on which any such
succession or acquisition becomes effective shall be deemed the date that the
termination of the Employee's employment becomes effective. As used in this
Agreement, "Company" shall mean the Company and any Successor which executes and
delivers the agreement provided for in this Section 12(a) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
 
(b)           Modification. This Agreement may be modified or amended only by a
writing signed by each of the parties hereto.
 
(c)           Governing Law. The laws of the State of Minnesota shall govern the
validity, construction, and performance of this Agreement.
 
(d)           Construction. Wherever possible, each provision of this Agreement
shall be interpreted so that it is valid under applicable law. If any provision
of this Agreement is to any extent invalid under applicable law in any
jurisdiction, that provision shall still be effective to the extent it remains
valid. The remainder of this Agreement also shall continue to be valid, and the
entire Agreement shall continue to be valid in other jurisdictions.
 
(e)           Non-Waiver. No failure or delay by any of the parties hereto in
exercising any right or remedy under this Agreement shall waive any provision of
this Agreement. Any single or partial exercise by either of the parties hereto
of any right or remedy under this Agreement shall not preclude the party from
otherwise or further exercising its rights or remedies, or any other rights or
remedies granted by any law or any related document.
 
(f)           Captions. The headings in this Agreement are for convenience only
and shall not affect the interpretation of this Agreement.
 
 
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(g)           Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and hand delivered or sent by
registered first-class mail, postage prepaid. Such notices and other
communication shall be effective upon receipt if hand delivered and shall be
effective five (5) business days after mailing if sent by mail to the following
addresses, or such other addresses as either party shall have notified the other
party:
 
If to the Company:
Vascular Solutions, Inc.
 
6464 Sycamore Court
 
Minneapolis, Minnesota 55369
 
Attention: Chief Financial Officer
   
If to the Employee:
Howard C. Root
 
25 Fairhope Ave,
 
Tonka Bay, MN 55331

 
IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as
of the date first above written.
 

    VASCULAR SOLUTIONS, INC.             Date:
Feb 7, 2012
 
By:
/s/ John E. Erb
                    Its: Chairman                   EMPLOYEE               Date:
Feb 7, 2012   By:  /s/ Howard C. Root                   Howard C. Root  

 
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