Exhibit 10.17


 


EMPLOYMENT AGREEMENT


 


AGREEMENT made an entered into by and between AGA Medical Corporation,
a Minnesota corporation (the “Company”), and Ronald Lund of 9002 Riley
Lake Rd., Eden Prairie, MN 55347 (the “Executive”), effective as of the 1st
day of July, 2008 (the “Effective Date”).


 


WHEREAS, the Executive desires to continue to be employed by the
Company, and the Company desires to continue to employ the Executive pursuant
to the terms set forth herein.


 


NOW, THEREFORE, in consideration of the mutual promises, terms,
provisions and conditions set forth in this employment agreement (the “Agreement”),
the parties hereby agree:


 


1.                                      Employment.  Subject to the terms and conditions set forth
in this Agreement, The Company hereby offers and the Executive hereby accepts
employment.


 


2.                                      Term.  The Company hereby agrees to continue the employment
of Executive as Senior Vice President, General Counsel and Secretary, and
Executive hereby agrees to accept such employment, on the terms and conditions
set forth herein, for the period commencing on Effective Date and terminating
on the third (3rd) anniversary of the Effective Date unless sooner
terminated as hereinafter set forth) (the “Term”); provided, however,
that commencing on such third (3rd) anniversary date, and each
anniversary of the date hereof thereafter, the Term of the Agreement shall
automatically be extended for one additional year unless at least thirty (30)
calendar days prior to each such anniversary date, the Company or Executive
shall have given notice that it or Executive, as applicable, does not wish to
extend this Agreement.  Following the
date on which the Executive’s employment so terminates, unless specifically
otherwise agreed between Executive and the Company, the Executive shall cease
to hold any position (whether as an officer, director, manager, executive,
trustee, fiduciary or otherwise) with the Company, its parent, AGA Medical
Holdings, Inc. (“Holdings”), or any of its Subsidiaries or
Affiliates.


 


3.                                      Capacity and
Performance.


 


(a)                                  During
the term of Executive’s employment hereunder, Executive shall serve the Company
as its Senior Vice President, General Counsel and Secretary and shall report to
the Chief Executive Officer.  In
addition, and without further compensation, Executive shall serve as a director
and/or officer of Holdings and/or one or more of the Company’s Subsidiaries if
so elected or appointed from time to time.


 


(b)                                 During
the term of Executive’s employment hereunder, the Executive shall be employed
by the Company on a full-time basis and shall perform 


 

















 


such duties and responsibilities on behalf of
the Company, Holdings, and the Company’s Subsidiaries as may be designated from
time to time by the Chief Executive Officer of Holdings.


 


(c)                                  During
the term of Executive’s employment hereunder, Executive shall devote Executive’s
business time to the advancement of the business and interest of the Company,
Holdings and the Company’s Subsidiaries and to the discharge of Executive’s
duties and responsibilities hereunder.  Executive
shall not engage in any other business activity during the Term that may
interfere with the discharge of Executive’s duties hereunder, except as may be
expressly approved in advance by the Chief Executive Officer or the Board of
Directors of Holdings (the “Board”) in writing.  Notwithstanding the preceding, the Executive
may, without being in violation of the Executive’s obligations hereunder, (i) serve
on corporate, civic or charitable boards, or committees which are not engaged
in business competition with the Company, and (ii) invest the Executive’s
personal assets in such form or manner as will not require any material
services by the Executive in the operation of the entities in which such
investments are made, provided the Executive shall use the Executive’s best
efforts to pursue such activities in such a manner so that such activities
shall not prevent the Executive from fulfilling the Executive’s obligations to
the Company hereunder.


 


4.                                       Compensation
and Benefits.  During the term of
Executive’s employment hereunder as compensation for all services performed by
the Executive:


 


(a)                                  Base
Salary.  The Company shall pay the
Executive a base salary at the rate of Three Hundred and Seventy Five Thousand
and No/100 dollars ($375,000.00) per year, payable in accordance with the
payroll practices of the Company for its executives and subject to increase
(but not subject to decrease without the consent of Executive) from time to
time by the Board, in its sole discretion (such base salary, including any increase
from time to time, is hereafter referred to as the “Base Salary”).


 


(b)                                 Stock
Options.  On the Effective Date, or
upon approval of the Compensation Committee of the Board, whichever is later,
the Company shall grant Executive stock options to purchase 300,000 additional pre-IPO
shares of Class B common stock of the Company (“Options”) which shall be
reverse split on or before the effective date of the Company’s initial public
offering.  The Options shall consist of
the maximum amount of incentive stock options as permitted by law and the
balance of the Options shall consist of nonqualified stock options.  The Options will have a ten-year term and an
exercise price equal to the opening selling price per share as of the effective
date of the Company’s initial public offering. 
In the event the Company’s initial public offering is not effective on
or before December 31, 2008, the exercise price of the stock Options will
be 


 


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the fair market value as of the Effective
Date.  Options will vest in three (3) years
from the Effective Date upon a vesting schedule equal to one-third (33%) of the
total Option shares per year subject to rounding in the Company’s discretion. The
Options will be subject to the terms and conditions of the 2006 Equity
Investment Plan and applicable Form of Stock Option Agreement, as they may
be amended from time to time by the Compensation Committee of the Board in its
sole discretion.  Upon a Change of
Control, the Options and all prior awards of options granted to Executive to
purchase shares of Class B common stock of the Company will automatically
vest provided Executive is employed at the time of the Change of Control.  Pre-IPO Options and option shares shall be
nonvoting ownership and shall have only those rights as determined by the
Compensation Committee of the Board in its sole discretion.


 


If Executive’s employment
is terminated for Cause, all vested and unvested Options and option shares will
be forfeited without further action.  If
Executive’s employment is terminated for any other reason other than for Cause
then (i) Executive shall retain Options and option shares that were vested
as of the date immediately preceding the Termination Date; and (ii) Executive
shall become vested in additional Options automatically on the Termination Date
which shall be calculated by the following formula (which shall be rounded to
the nearest whole number of Options): (F/365) X 100,000 (as adjusted upon the
reverse split of the Options to a sum equal one-third of the total post-split
shares), where F is the number of calendar days between the immediately
preceding anniversary of the Effective Date (or the Effective Date if no such
anniversary thereof shall have occurred) and the Termination Date; and (iii) remaining
unvested Options and option shares will be forfeited.  Options not exercised by Executive within
ninety (90) days after the Termination Date will be forfeited.


 


If Executive’s employment is terminated for any other reason other than
for Cause, Executive shall retain vested Options and option shares, and only
unvested Options and option shares will be forfeited.  Options not exercised by Executive within
ninety (90) days after the Termination Date will be forfeited.


 


(c)                                  Employee
Incentive Plan.    So long as
Executive is still employed by Company on the payment dates in this paragraph,
the company shall pay Executive a cash bonus for each calendar year ending
during the Term no later then the March 15th following the
close of each such calendar year, in an amount determined by the Compensation
Committee of the Board in its sole discretion and subject to the terms of the
then current Employee Incentive Plan; provided, however, that the
cash bonus shall not exceed 50% of the Base Salary of Executive at the close of
such preceding calendar year; provided, further, that the cash
bonus payable on or before 


 


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March 15, 2009, shall be calculated
based on the Base Salary of Executive had executive been employed for the full
2008 calendar year.


 


(d)                                 Paid
Time Off.  Executive shall be
entitled to no less than twenty-four (24) days of paid time off per calendar
year during the Term subject to the reasonable business needs of the Company to
be used by Executive for vacation, illness and/or personal time.  Paid time off shall be shall be governed by
the policies of the Company, as in effect from time to time.


 


(e)                                  Other
Benefits.  Subject to any
contribution therefore generally required of executives of the Company,
Executive shall be entitled to participate in, or benefit under, any and all
executive benefit plans, policies or perquisites from time to time in effect
for executives of the Company, generally except to the extent such plans are in
a category of benefit specifically otherwise provided to Executive under this
Agreement (e.g., severance pay).  Such participation shall be subject to the
terms of the applicable plan documents and generally applicable Company
policies.  The Board may alter, modify,
add to or delete executive benefit plans at any time as it, in its sole
judgment, determines to be appropriate, unless otherwise provided under any
executive benefit plan.


 


(f)                                    Business
Expenses.  The Company shall pay or
reimburse Executive for all reasonable and necessary business expenses incurred
or paid by Executive in the performance of Executive’s duties and
responsibilities hereunder, subject to any maximum annual limit or other
restrictions on such expenses set by the Board and to such reasonable
substantiation and documentation as may be specified by the Company from time
to time.


 


(g)                                 Automobile
Allowance.  The Company shall pay
Executive an automobile allowance at the rate of Seven Hundred Fifty dollars
($750) per month, payable as additional ordinary income according to the
standard payroll practices of the Company.


 


5.                                       Termination
of Employment.  The Executive’s
employment hereunder shall terminate under the following circumstances (the
date of each event of termination set forth below, by whatever cause, is
referred to as the “Termination Date”):


 


(a)                                  Expiration.  Executive’s employment shall terminate upon
the expiration of this Agreement, without renewal, pursuant to Section 2
hereof.


 


(b)                                 Death.  In the event of Executive’s death during the
term of Executive’s employment hereunder, Executive’s employment shall
immediately and automatically terminate.


 


(c)                                  Disability.  The Company may terminate Executive’s
employment hereunder, upon notice to Executive, in the event that Executive
becomes 


 


4

















 


disabled during Executive’s employment
hereunder through any illness, injury, accident or condition of either a
physical or psychological nature and, as a result, is unable to satisfactorily
perform Executive’s duties and responsibilities hereunder on a full-time basis,
with reasonable accommodation, for ninety (90) days during any period of three
hundred and sixty-five (365) consecutive calendar days.   If any question shall arise as to whether
during any period Executive is disabled through any illness, injury, accident
or condition of either a physical or psychological nature so as to be unable to
perform substantially all of Executive’s duties and responsibilities hereunder,
Executive, at the request of the Company, shall submit to a medical examination
by a physician selected by the Company (“Company Physician”) to
determine whether Executive is so disabled which determination shall be binding
on the Executive.  If such question shall
arise and Executive shall fail to submit to such medical examination by the
Company Physician, the Company’s determination of the issue shall be binding on
Executive.


 


(d)                                 By
the Company for Cause.  The Company
may terminate Executive’s employment hereunder for Cause at any time upon
notice to Executive setting forth the nature of such Cause.  The following shall constitute “Cause”
for termination:  (i) Executive’s
conviction of or plea of nolo contendere
to a felony or other crime involving moral turpitude; (ii) Executive’s
fraud, theft or embezzlement committed with respect to the Company, Holdings or
the Company’s Subsidiaries; (iii) breach by Executive of any of the
provisions of Sections 7, 8, 9 and/or 11 hereof in Executive’s responsibilities
to the Company, Holdings or any of the Company’s Subsidiaries; (iv) Executive’s
willful and continued failure to perform Executive’s material duties to the
Company and its Subsidiaries; or (v) Executive’s willful failure to comply
with or follow the directions or orders of the Board; provided, however,
that the Company may terminate Executive’s employment hereunder for Cause
within the meaning of these clauses (iv) or (v) only after the
Company has provided written notice to Executive of the failure and Executive
shall have not have remedied such failure within fifteen (15) days following
the effectiveness of such notice.


 


(e)                                  By
the Company Other than for Cause. 
The Executive’s employment may be terminated by the Company at any time
without Cause.


 


(f)                                    By
the Executive.  The Executive may
terminate Executive’s employment hereunder at any time upon the provision of
sixty (60) days written notice to the Company.


 


6.                                       Compensation
Upon Termination.


 


(a)                                  Expiration.  In the event of Executive’s termination
hereunder upon the expiration of any Term as contemplated by Section 2,
the Company shall 


 


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pay Executive any amounts due and payable in
accordance with Section 4(c), plus one lump cash payment equal to six (6) months
of the Base Salary at the rate that was in effect during the Term prior to Executive’s
Termination Date, within the 30 day period following Executive’s Termination
Date.


 


(b)                                 Death.  In the event of a termination of Executive’s
employment hereunder by reason of death as contemplated by Section 5(b),
the Company shall pay Executive’s designated beneficiary or, if no beneficiary
has been designated by the Executive, to Executive’s estate, the following
amounts; (i) the sum of the Base Salary earned but not paid through the Termination
Date plus the balance of the Executive’s earned but unused vacation days
as of the Termination Date for the calendar year in which the Termination Date
occurs, and (ii) any life insurance carried on behalf of the Executive for
the benefit of Executive’s beneficiaries and Executive’s estate.


 


(c)                                  Disability.  In the event of a termination of Executive’s
employment hereunder by reason of disability as contemplated by Section 5(c),
the Company shall pay (i) the Base Salary at the rate in effect on the
Termination Date for another six (6) months and (ii) a one time lump
sum payment equal to the balance of the Executive’s earned but unused vacation
days as of the Termination Date, and the Company shall continue to provide
Executive and Executive’s dependents with continued coverage under all Company
provided medical and dental benefit plans and policies for the time period
commencing on Executive’s Termination Date for another eighteen (18) months
(but only if the Executive does not have access at reasonable cost to
substantially equivalent benefits through another employer).  Any participation in such benefit plans and
policies may be pursuant to the continuation coverage rights of Executive
pursuant to Part 6 of Title I of ERISSA (“COBRA”) or the Company
may provide such benefits directly through the purchase of insurance or
otherwise. If benefits are provided pursuant to COBRA continuation rights, the
Company shall pay a cash amount to Executive at the time of the Termination
Date that is sufficient to cover all premiums required for such COBRA coverage
under the appropriate benefit plans. 
Notwithstanding the foregoing, unless the Company so elects, the period
for participation in any medical or dental plan pursuant to this paragraph
shall not exceed the maximum period of continuation coverage provided under
COBRA; provided, that (unless such participation period continues at the
election of the Company) at the end of such period of COBRA continuation
coverage, the Company will pay the Executive the additional dollar amount that
the Company would have contributed if the Executive were to have remained a
participant through the end of such 18-month period.


 


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(d)                                 By
the Company for Cause, or By Executive. 
In the event of a termination of Executive’s employment hereunder by the
Company for Cause as contemplated by Section 5(d), or by Executive as
contemplated by Section 5(f), the Company shall pay in a lump sum within
30 days of the Terminate Date, to the Executive the sum of the Base Salary
earned but not paid through the Termination Date plus the balance of
Executive’s earned but unused vacation days as of the Termination Date for the
calendar year in which the Termination Date occurs.


 


(e)                                  By
the Company Other than for Cause.  In
the event of any termination of Executive’s employment hereunder by the Company
other than for Cause as contemplated by Section 5(e), the Company shall
pay Executive (i) the Base Salary at the rate in effect on the Termination
Date for another twelve (12) months, and (ii) a one-time lump sum payment
equal to the balance of Executive’s earned but unused vacation days as of the
Termination Date.  Any obligation of the
Company to the Executive pursuant to this paragraph is conditioned upon (i) the
Executive signing a release of claims in the form appended hereto as Attachment A
(the “Executive Release”) within twenty-one (21) days (or such greater
period as the Company may specify) following the date notice of termination of
employment is given under either Section 5(e) or Section 5(f) and
upon the Executive’s not revoking the Executive Release in a timely manner
thereafter and (ii) the Executive’s continued full performance of Executive’s
continuing obligations under Sections 7, 8 and/or 9 hereof.  Base Salary to which the Executive is
entitled under this Section 6(e) shall be payable in accordance with
the normal payroll practices of the Company and will begin at the Company’s
next regular payroll period which is at least five business days following the
effect date of the Executive Release, but shall be retroactive to the next
business day following the Termination Date. 
The lump-sum payment in respect of accrued vacation required by this Section 6(e) shall
be due and payable five business days following the effective date of the
Executive Release.


 


7.                                       Restricted
Activities.   The Executive agrees
that some restrictions on Executive’s activities during and after Executive’s
employment are necessary to protect the goodwill, Confidential Information and
other legitimate interest of the Company and its Subsidiaries:


 


(a)                                  While
Executive is employed by the Company and for eighteen (18) months after Executive’s
employment terminates (in the aggregate, the “non-Competition Period”),
Executive shall not, directly or indirectly, whether as owner, partner,
investor, consultant, agent, Executive, co-venturer or otherwise (other than
through ownership of publicly-traded capital stock of a corporation which
represents less than one percent (1%) of the outstanding capital stock of such
corporation), (i) compete with the Company, Holdings or any of the Company’s
Subsidiaries in any business 


 


7

















 


related to developing, selling, licensing or
otherwise providing Products and related services to physicians, hospitals or
other medical establishments in the United States or such other business
activities which the Company, Holdings or any of the Company’s Subsidiaries
shall conduct or intend to conduct as of the Termination Date, or (ii) undertake
any planning for any business competitive with the Company, Holdings or any of
the Company’s Subsidiaries. Specifically, but without limited the foregoing,
Executive agrees not to engage in any manner in any activity that is directly
or indirectly competitive or potentially competitive with the business of the
Company, Holdings or any of the Company’s Subsidiaries as conducted or under
consideration at any time during Executive’s employment with the Company or an
of its Subsidiaries (including prior to the date hereof).


 


(b)                                 Executive
agrees that, during Executive’s employment with the Company, Executive will not
undertake any outside activity, whether or not competitive with the business of
the Company, Holdings or the Company’s Subsidiaries, that could reasonably give
rise to a conflict of interest or otherwise interfere with Executive’s duties
and obligations to the Company, Holdings or any of the Company’s Subsidiaries.


 


(c)                                  Executive
further agrees that while Executive is employed by the Company and during the
Non-Competition Period, Executive will not, directly or indirectly, (i) hire
or attempt to hire any Executive of the Company, Holdings or any of the Company’s
Subsidiaries or anyone who was such an Executive within the six (6) months
preceding such hire or attempt to hire, (ii) hire or attempt to hire any
independent contractor providing services to the Company, Holdings or any of
the Company’s Subsidiaries or anyone who was such an independent contractor
within six (6) months preceding such hire or attempt to hire, (iii) assist
in hiring or any attempt to hire of anyone identified in clauses (i) or (ii) of
this sentence by any other Person, (iv) encourage any Executive or
independent contractor of the Company, Holdings or any of the Company’s
Subsidiaries to terminate his or Executive’s relationship with the Company,
Holdings or any of the Company’s Subsidiaries, or (v) solicit or encourage
any customer or vendor of the Company, Holdings, or any of the Company’s Subsidiaries
to terminate or diminish its relationship with any of them, or, in the case of
a customer, to conduct with any Person any business or activity which such
customer conducts or could conduct with the Company, Holdings or any of the
Company’s Subsidiaries.


 


8.                                       Confidential
Information.


 


(a)                                  Executive
acknowledges that the Company, Holdings or any of the Company’s Subsidiaries
continually develop Confidential Information, 


 


8

















 


that Executive has in the past and may in the
future develop Confidential Information for the Company, Holdings or any of the
Company’s Subsidiaries and that Executive has in the past and may in the future
learn of Confidential Information during the course of employment.. Executive will
comply with the policies and procedures of the Company and its Subsidiaries for
protecting Confidential Information and shall never use or disclose to any
Person (except as required by applicable law or for the proper performance of Executive’s
duties and responsibilities to the Company and its Subsidiaries), any
Confidential Information obtained by Executive incident to Executive’s
employment or other association with the Company, Holdings or any of the
Company’s Subsidiaries.  Executive
understands that this restriction shall continue to apply after Executive’s
employment terminates, regardless of the reason for such termination.


 


(b)                                 All
documents, records, tapes and other media of every kind and description
relating to the business, present or otherwise, of the Company, Holdings or any
of the Company’s Subsidiaries and any copies, in whole or in part, thereof (the
“Documents”), whether or not prepared by Executive, shall be the sole
and exclusive property of the Company, Holdings and the Company’s Subsidiaries.  Executive shall safeguard all Documents and
shall surrender to the Company at the time Executive’s employment terminates,
or at such earlier time or times as the Board or its designee may specify, all
Documents then in Executive’s possession or control.


 


9.                                       Assignment
of Rights to Intellectual Property. 
Executive shall promptly and fully disclose all Intellectual Property to
the Company, and Executive hereby acknowledges that all such Intellectual
Property is the property of the Company. 
Executive hereby assigns and agrees to assign to the Company (or as
otherwise directed by the Company) Executive’s full right, title and interest
in and to all Intellectual Property. 
Executive agrees to execute any and all applications for domestic and
foreign patents, copyrights or other proprietary rights and to do such other
acts (including without limitation the execution and delivery of instruments of
further assurance or confirmation) requested by the Company to assign the
Intellectual Property to the Company and to permit the Company to enforce any
patents, copyrights or other proprietary rights to the Intellectual Property.
Executive will not charge the Company for time spent in complying with these
obligations. All copyrightable works that Executive creates shall be considered
“work made for hire”. Notwithstanding the foregoing, this Section 9 shall
not apply to any Intellectual Property which no equipment, supplies, facility
or trade secret information of the Company, Holdings or any of the Company’s Subsidiaries
was used and which was developed entirely on Executive’s own time, and (i) which
does not relate (A) directly to the business of the Company, Holdings or
any of the Company’s Subsidiaries or (B) such entities’ actual or
demonstrably anticipated research development, or (ii) which does not
result from any work performed by the Executive for the Company, Holdings or
any of the Company’s Subsidiaries.


 


9

















 


10.                                 Enforcement of
Covenants. Executive acknowledges that he has carefully read and considered
all the terms and conditions of this Agreement, including the restraints
imposed upon him pursuant to Sections 7, 8 and/or 9 hereof. Executive agrees
that said restraints are necessary for the reasonable and proper protection of
the Company, Holdings and the Company’s Subsidiaries and that each and every
one of the restraints is reasonable in respect to subject matter, length of
time and geographic area. Executive further acknowledges that, were Executive
to breach any of the covenants contained in Sections 7, 8 and/or 9 hereof, the
damage to the Company would be irreparable. Executive therefore agrees that the
Company, in addition to any other remedies available to it, shall be entitled
to preliminary and permanent injunctive relief against any breach or threatened
breach by Executive of any of said covenants. The parties further agree that in
the event that any provision of Sections 7, 8 and/or 9 hereof shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of its being extended over too great a time, too large a geographic area or too
great a range of activities, such provision shall be deemed to be modified to
permit its enforcement to the maximum extent permitted by law.  Executive further ratifies all prior
covenants with the Company and agrees that this Agreement is a continuation of
Executive’s prior employment and that the payment of any sums hereunder, the
granting and/or vesting of any Options hereunder, and continued access to the
Company’s Confidential Information all constitute independent consideration for
the covenants set forth herein.


 


11.                                 Conflicting
Agreements. Executive hereby represents and warrants that the execution of
this Agreement and the performance of Executive’s obligations hereunder will
not breach or be in conflict with any other agreement to which Executive is a
party or is bound during Executive’s employment with the Company, and that
Executive is not now subject to any covenants against competition or similar
covenants or any court order or other legal obligation that would affect the
performance of Executive’s obligations hereunder. Executive will not disclose
to or use on behalf of the Company any proprietary information of a third party
without such party’s consent.


 


12.                                 Definitions.
Words or phrases which are initially capitalized or are within quotation marks
shall have the meanings provided in this Section 12 and as provided
elsewhere herein. For purposes of this Agreement, the following definitions
apply:


 


(a)          “Affiliate” means, with respect to the
Company or any other specified Person, any other Person directly or indirectly
controlling, controlled by or under common control with the Company or such
other specified Person, where control may be by management authority, equity
interest or other means.


 


(b)         “Change of Control” means (i) a
consolidation or merger of the Company or Holdings with or into any other
corporation (other than a merger in which the Company or Holdings is the
surviving corporation and which will not result in more than 50% of the capital
stock of the Company or Holdings being owned of record or beneficially by
persons other than the holders of such capital stock immediately prior to such
merger), (ii) a sale or disposition of all or substantially all of the
properties and assets of the Company as an 


 


10

















 


entirety to any other person or persons,
other than Permitted Holders, in a single transaction or series of related
transactions, (iii) an acquisition of beneficial ownership by any person
or group, other than Permitted Holders, of voting stock of the Company
representing more than 50% of the voting power of all outstanding shares of
such voting stock, whether by way of merger or consolidation or otherwise, or (iv) any
other transaction which results in the disposition of 50% or more of the voting
power of all classes of capital stock of the Company on a combined basis, other
than Permitted Holders.


 


(c)          “Confidential Information” means any
and all information of the Company, Holdings and the Company’s Subsidiaries
that is not generally known by others with whom they compete or do business, or
with whom they plan to compete or do business and any and all information
which, if disclosed by the Company, Holdings or the Company’s Subsidiaries,
would assist in competition against them. Confidential Information includes
without limitation such information relating to (i) the development,
research, testing, manufacturing, marketing and financial activities of the
Company, Holdings or the Company’s Subsidiaries, (ii) the Products, (iii) the
costs, sources of supply, financial performance and strategic plans of the
Company, Holdings or the Company’s Subsidiaries, (iv) the identity and
special needs of the customers of the Company, Holdings or the Company’s
Subsidiaries and (v) the people and organizations with whom the Company,
Holdings or the Company’s Subsidiaries have business relationships and those
relationships. Confidential Information also includes any information that the
Company, Holdings or any of the Company’s Subsidiaries have received, or may
receive hereafter, from others which was received by the Company, Holdings or
any of the Company’s Subsidiaries with any understanding, express or implied,
that the information would not be disclosed.


 


(d)         “Intellectual Property” means
inventions, discoveries, developments, methods, processes, compositions, works,
concepts and ideas (whether or not patentable or copyrightable or constituting
trade secrets) conceived, made, created, developed or reduced to practice by
Executive (whether alone or with others and whether or not during normal
business hours or on or off the premises of the Company, Holdings or any of the
Company’s Subsidiaries) during the  Term
of Executive’s employment with the Company or any of its Subsidiaries
(including prior to the Effective Date) that relate to either the Products or
any prospective activity of the Company, Holdings or any of the Company’s
Subsidiaries or that make use of Confidential Information or any of the
equipment or facilities of the Company, Holdings or any of the Company’s
Subsidiaries.


 


(e)          “Permitted Holder” means, as of the
date of determination, any and all of: (i) an employee benefit plan (or trust
forming a part thereof) maintained by (A) Holdings or (B) any
corporation or other Person of which a majority of its voting power of its
voting equity securities or equity interest is owned, directly or indirectly,
by Holdings; (ii) any current stockholders of Holdings 


 


11

















 


as of the date hereof; (iii) any trust
or other entity created by any such current stockholder of Holdings, the
principal beneficiaries of which are such current stockholder of Holdings
and/or members of his family; (iv) any spouse of such current stockholder
of Holdings or any lineal descendants (whether natural or adopted) of such
current stockholder of Holdings’s grandparents and their spouses; (v) any
personal representative of such current stockholder of Holdings or any of the
Persons referred to in (iv) above acting within that capacity; and (vii) any
Person who is an Affiliate of any Person referred to in (ii) through (v) above
or by any combination of them.


 


(f)            “Person” means an individual, a
corporation, a limited liability company, an association, a partnership, an
estate, a trust and any other entity or organization, including an Affiliate or
a Subsidiary.


 


(f)            “Products” mean all products
planned, researched, developed, tested, manufactured, sold, licensed, leased or
otherwise distributed or put into use by the Company or any of its  Subsidiaries, together with all services
provided or planned by the Company or any of its Subsidiaries, during Executive’s
employment with the Company or any of its Subsidiaries (including prior to the
Effective Date).


 


(g)         “Subsidiary” shall mean any Person of
which the Company (or other specified Person) shall, directly or indirectly,
own beneficially or control the voting of at least a majority of the
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally or at least a majority of the partnership, membership, joint
venture of similar interests, or in which the Company (or other specified
Person) or a Subsidiary thereof shall be a general partner o joint venturer
without limited liability.


 


13.                         Survival. The
provisions of this Agreement shall survive following the Termination Date if so
provided herein or desirable to accomplish the purposes of other surviving
provisions, including without limitation the provisions of Section 6, 7, 8
and 9 hereof.


 


14.                         Withholding. All
payments made by the Company under this Agreement shall be reduced by any tax
or other amounts required to be withheld by the Company under applicable law.


 


15.                         Assignment.  Neither the Company nor Executive may make
any assignment of the Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of Executive in the vent that the Company shall hereafter
effect a reorganization, consolidation or merger or to whom the Company
transfers all or substantially all of its properties or assets. This Agreement
shall inure to the benefit of and be binding upon the Company and Executive,
their respective successors, executors, administrators, heirs and permitted
assigns.


 


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16.                         Severability. If any
portion or provision of this Agreement shall to any extent be declared illegal
or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted
by law.


 


17.                         Waiver. No waiver of
any provision hereof shall be effective unless made in writing and signed by
the waiving party. The failure of either party to require the performance of
any term obligation of this Agreement, or the waiver by either party of any
breach of this Agreement, shall not prevent any subsequent enforcement of such
term or obligation or be deemed a waiver of any subsequent breach.


 


18.                         Notices. Any and all
notices, requests, demands and other communications provided for by this
Agreement shall be in writing and shall be effective when delivered in person,
when delivered by courier at Executive’s last known address on the books of the
Company, or five (5) business days following deposit in the United States
mail, postage prepaid, registered or certified, and addressed to Executive at Executive’s
last known address on the books of the Company or, in the case of the Company,
at is principal place of business, attention of the Chairman of the Board, or
to such other address as either party may specify by notice to the other
actually received.


 


19.                         Entire Agreement. This
Agreement and the other plans and documents specifically referred to herein
constitute the entire agreement between the parties regarding the subject
matter of this Agreement and such other plans and documents and supersede all
prior communications, agreements and understandings, written or oral, with
respect to such subject matter, including any prior employment or similar
agreements between Executive and the Company.


 


20.                         Amendment. This
Agreement may be amended or modified only by a written instrument signed by
Executive and by an expressly authorized representative of the Company.


 


21.                         Headings. The headings
and captions in this Agreement are for convenience only and in no way define or
describe the scope or content of any provision of this Agreement.


 


22.                         Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.


 


23.                         Compliance with Laws.
If the Company or Executive reasonably determine that the terms of this
Agreement are not in compliance with applicable laws or regulations, including
without limitation as would result in the imposition of extraordinary current
taxation, the Company and Executive agree to undertake commercially reasonable
efforts to amend this Agreement to cure such noncompliance. In furtherance of
the foregoing, it is the intent of the Company and Executive that this
Agreement comply with the 


 


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provisions and principles established by the
Internal Revenue Service pursuant to Section 409A of the Internal Revenue
Code of 1986, as amended.


 


IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by
Executive, as of the date first above written.


 


	
  THE EXECUTIVE:

  	
   

  	
  AGA MEDICAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Ronald Lund

  	
   

  	
  By: 

  	
  /s/ John Barr

  
	
  Ronald Lund

  	
   

  	
  John Barr

  
	
   

  	
   

  	
  Its: President and CEO

  



 


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