Exhibit 10.13 to Electromed, Inc. Form S1



Exhibit 10.13 


NEW EMPLOYMENT AGREEMENT


          This
New Employment Agreement (“Agreement”) is effective as of January 1, 2010 (the
“Effective Date”), by and among Electromed, Inc., a Minnesota corporation (the
“Corporation”), and Terry Belford (“Employee”). 


RECITALS


	
  

 	
  

 
	
 A.

 	
 Employee is
 currently employed by the Corporation in the capacity of Chief Financial
 Officer. 

 
	
  

 	
  

 
	
 B.

 	
 The
 Corporation wishes to provide incentives for the Employee to continue to
 remain with the Corporation.

 
	
  

 	
  

 
	
 C.

 	
 The
 Corporation and Employee desire to enter into this Agreement, and it is the
 intention of the Corporation and Employee that this Agreement entirely
 supersedes any prior agreements with respect hereto. 

 


AGREEMENT


          In
consideration of the above recitals and the mutual promises set forth in this
Agreement, the parties agree as follows: 


          1.
     Nature and Capacity of Employment. The
Corporation hereby agrees to employ the Employee as its Chief Financial
Officer, subject to the direction of the Board of Directors of the Corporation
and pursuant to the terms and conditions set forth in this Agreement. The
Employee hereby accepts employment under the terms and conditions set forth in
this Agreement. The Employee agrees to perform or be available to perform the functions
of this position, pursuant to the terms of this Agreement. 


          2.
     Term of Employment. The term of the
Employee’s employment hereunder
shall commence on the Effective Date of this Agreement and shall continue
thereafter through the last day of Calendar Year 2013 (“Initial Expiration
Date”), unless terminated earlier in accordance with Paragraph 4 of this
Agreement. The term of this Agreement and the Employee’s employment hereunder
shall automatically renew for successive one year periods beyond the Initial
Expiration Date, unless at least ninety (90) days prior to the anniversary date
of this Agreement either party hereto gives written notice to the other party
that it does not intend to renew this Agreement for the coming Calendar Year.
During any Renewal Term, this Agreement may be terminated pursuant to the terms
of Paragraph 4 of this Agreement.  


          3.     Compensation
and Benefits. 


	
  

 	
  

 
	
  

 	
           3.1.     Base
 Salary. As of the Effective Date, the Corporation agrees to pay the
 Employee an annualized base salary of $146,000.00, which amount shall be
 earned by the Employee on a pro rata basis as the Employee performs services
 and which shall be paid according to the Corporation’s normal payroll
 practices. For the Calendar Year ending in December 31, 2011 and thereafter
 during the term of this Agreement or any Renewal Term, the 

 


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Exhibit 10.13 


	
  

 	
  

 
	
  

 	
 Board of
 Directors acting reasonably shall determine the amount of Base Salary payable
 pursuant to this Paragraph 3.1.

 
	
  

 	
  

 
	
  

 	
           3.2.     Annual
 Bonus. For the Calendar Year ending December 31, 2010, provided that the
 gross sales revenue of the Corporation reaches at least $10,000,000, the
 Employee shall receive an Annual Bonus as follows: For every $250,000 above
 $10,000,000 of gross sales revenue reached by the Corporation for the
 Calendar Year ending December 31, 2010, the Employee shall receive an
 additional $1,875. Notwithstanding anything to the contrary set forth herein,
 the Employee shall not be entitled to any Annual Bonus if the gross sales
 revenue for the Calendar Year ending December 31, 2010, is less than
 $10,000,000. Unless an exception is approved by the Board of Directors, the
 Employee’s Annual Bonus, if any, will be paid to the Employee in equal
 bi-monthly installments throughout the first ten months of the subsequent
 Calendar Year according to the Corporation’s normal payroll practices. For
 the Calendar Year ending December 31, 2011 and thereafter during the term of
 this Agreement or any Renewal Term, the Board of Directors acting reasonably
 shall determine the amount of, and related gross sales revenue levels for,
 the Annual Bonus payable pursuant to this Paragraph 3.2.

 
	
  

 	
  

 
	
  

 	
           3.3.     Deferred
 Compensation. The Employee shall not be entitled to deferred compensation
 and by signing this Agreement, Employee knowingly waives and forfeits any
 existing rights to deferred compensation under the Corporation’s Deferred
 Compensation Plan effective January 1, 2010.

 
	
  

 	
  

 
	
  

 	
           3.4.     Employee
 Benefits. During the Employee’s employment with the Corporation, the
 Employee shall be entitled to participate in the retirement plans, health
 plans, and all other employee benefits made available by the Corporation, and
 as they may be changed from time to time. The Employee acknowledges and
 agrees that he will be subject to all eligibility requirements and all other
 provisions of these benefits plans, and that the Corporation is under no
 obligation to the Employee to establish and maintain any employee benefit
 plan in which the Employee may participate. The terms and provisions of any
 employee benefit plan of the Corporation are matters within the exclusive
 province of the Corporation’s Board of Directors, subject to applicable law. 

 
	
  

 	
  

 
	
  

 	
           3.5.     Paid
 Time Off. The Corporation agrees that the Employee shall be entitled to
 Paid Time Off (“PTO”) of up to three (3) weeks per year without reduction of
 the minimum annual base salary payable to the Employee pursuant to Paragraph
 3.1 of this Agreement. PTO which is unused at the end of any Calendar year will carry over to
 the next Calendar year. 

 
	
  

 	
  

 
	
  

 	
           3.6.     Other
 Benefits: During the Term or Renewal Term, the Corporation shall directly
 pay the cost of a cell phone or wireless handheld device for the Employee’s use.
 Additionally, during the Term or any Renewal Term, the Corporation shall
 promptly reimburse the Employee, upon receipt of appropriate documentation,
 for any reasonable automobile lease payments up to an amount of $375 per
 month. The Corporation shall also provide a corporate credit card for
 approved business expenses and shall otherwise reimburse the Employee for, or
 pay directly, all reasonable business expenses incurred by the Employee in
 the performance of his duties under this Agreement, provided that the
 Employee incurs and accounts for such expenses in accordance with all
 Corporation policies and directives in effect from time to time.

 


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Exhibit 10.13 


          4.
     Termination of Employment Prior to the End of
the Term or Renewal Term. The Employee’s employment may be terminated prior
to the expiration of the Term or a Renewal Term as follows: 


	
  

 	
  

 
	
  

 	
           4.1.     For
 Cause Termination, Without Severance. Notwithstanding anything contained
 herein to the contrary, the Corporation may discharge the Employee for Cause
 and terminate this Agreement immediately upon written notice to the Employee.
 For the purposes of this Agreement, “Cause” shall mean the occurrence of any
 of the following:

 
	
  

 	
  

 
	
  

 	
           (i)     gross
 misconduct by the Employee which the Corporation’s Board of Directors
 determines is (or will be if continued) demonstrably and materially damaging
 to the Corporation; or 

 
	
  

 	
  

 
	
  

 	
           (ii)     fraud,
 misappropriation, or embezzlement by the Employee; or 

 
	
  

 	
  

 
	
  

 	
           (iii)    conviction
 of a felony crime or a crime of moral turpitude; or 

 
	
  

 	
  

 
	
  

 	
           (iv)    conduct
 in the course of employment that the Corporation’s Board of Directors
 determines is unethical; or 

 
	
  

 	
  

 
	
  

 	
           (v)     the
 material breach of this Agreement by the Employee. 

 
	
  

 	
  

 
	
  

 	
           If
 the Corporation terminates the Employee’s employment for Cause pursuant to
 this Paragraph 4.1, the Employee shall not be entitled to severance pay under
 Paragraph 4.2 or to any bonus or incentive compensation of any kind. 

 
	
  

 	
  

 
	
  

 	
           4.2.     Without
 Cause, With Severance. The Corporation may terminate the Employee’s
 employment immediately at any time and for any reason without Cause upon
 providing notice to the Employee. However, in such event the Corporation
 shall pay the Employee any earned and unpaid bonus, if any, on a pro rata
 basis for the period through the Employee’s termination date. The amount of
 such bonus, if any, shall be calculated based on the Corporation’s annualized
 gross sales revenue as of the last day of Employee’s employment and shall be
 paid in a lump sum approximately sixty (60) days after termination. In
 addition, provided that the Employee meets all of the conditions set forth in
 this paragraph for receiving severance pay, the Corporation shall pay the
 Employee severance pay in a lump sum equal to one year’s base salary within
 sixty (60) days after termination. The Employee shall only be entitled to
 receive the severance pay described herein if the Employee signs and does not
 rescind a Confidential Separation Agreement at the time of termination in a
 form prepared by the Corporation that includes: (i) agreement to a general
 release of any and all legal claims; (ii) return of all of the Corporation’s
 property in the Employee’s possession; and (iii) agreement not to disparage
 the Corporation and its representatives.

 
	
  

 	
  

 
	
  

 	
           4.3.     Resignation
 by the Employee Due to Change of Control, With Severance.
For purposes of
 this Agreement, “Change of Control” means:

 






	
  

 	
  

 	
  

 
	
  

 	
  

 	
     i.     A
 “change in ownership,” as described in Section 1.409A-3(i)(5)(v) of the
 Treasury Regulations. 

 


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Exhibit 10.13 


	
  

 	
  

 	
  

 
	
  

 	
  

 	
      ii.   A
 “change in effective control,” as described in Section 1.409A-3(i)(5)(vi) of
 the Treasury Regulations. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
     iii.   A
 “change in ownership of a substantial portion of the assets,” as described in
 Section 1.409A-3(i)(5)(vii) of the
 Treasury Regulations. 

 






	
  

 	
  

 
	
  

 	
           Employee
 shall have the right to terminate the Employee’s employment for any reason
 within six (6) months following a Change of Control in the Corporation upon
 providing thirty (30) days advance written notice to the Corporation. The
 Corporation may then elect either (a) to have the Employee continue
 performing work for the Corporation throughout the 30 day notice period; or
 (b) to accept the Employee’s resignation effective immediately. 

 
	
  

 	
  

 
	
  

 	
           In
 the event of the Employee’s termination of employment with the Corporation
 following a Change of Control under this Paragraph 4.3, the Corporation shall
 pay the Employee any earned and unpaid bonus or incentive compensation, if
 any, on a pro rata basis for the period through the Employee’s termination
 date. The amount of such bonus, if any, shall be calculated based on the
 Corporation’s annualized gross sales revenue as of the last day of Employee’s
 employment and shall be paid in a lump sum approximately sixty (60) days
 after termination. In addition, provided that the Employee meets all of the
 conditions set forth in this paragraph for receiving severance pay, the
 Corporation shall pay the Employee severance pay in a lump sum equal to two
 years’ base salary within sixty (60) days after termination. The Employee
 shall only be entitled to receive the severance pay described herein if the
 Employee signs and does not rescind a Confidential Separation Agreement at
 the time of termination in a form prepared by the Corporation that includes:
 (i) agreement to a general release of any and all legal claims; (ii) return
 of all of the Corporation’s property in the Employee’s possession; and (iii)
 agreement not to disparage the Corporation and its representatives. 

 
	
  

 	
  

 
	
  

 	
           4.4.     Other
 Resignation by the Employee, Without Severance. The Employee may resign
 the Employee’s position upon providing ninety (90) days advance, written
 notice to the Corporation. The Corporation may then elect either (a) to have
 the Employee continue performing work for the Corporation throughout the 90
 day notice period; or (b) to accept the Employee’s resignation effective
 immediately. In the event of the Employee’s termination of employment with
 the Corporation under this Paragraph 4.4, the Employee shall not be paid any
 severance pay as provided in Paragraph 4.2, but shall be paid any earned and
 unpaid bonus, if any, on a pro rata basis for the period through the
 Employee’s termination date. The amount of such bonus, if any, shall be
 calculated based on the Corporation’s annualized gross sales revenue as of
 the last day of Employee’s employment and shall be paid in a lump sum
 approximately sixty (60) days after termination. 

 
	
  

 	
  

 
	
  

 	
           4.5.     Because
 of Death, Disability or Incapacity of the Employee, Without Severance. In
 the event of the Employee’s death, this Agreement shall terminate
 immediately. If the Employee is unable to perform the Employee’s duties and
 responsibilities for more than ninety (90) days in any consecutive twelve
 (12) month period by reason of physical or mental disability or incapacity,
 the Corporation may terminate the Employee’s employment upon thirty (30) days
 advance written notice to the Employee. This Paragraph does not relieve the
 Corporation of any duty to reasonably accommodate a qualifying disability
 under the Americans with Disabilities Act, any legal duty under the Family
 Medical Leave Act, or any of its other duties pursuant to applicable law. If
 the Employee’s employment is terminated 

 


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Exhibit 10.13 


	
  

 	
  

 	
  

 
	
  

 	
  

 	
 pursuant to
 this Paragraph, the Employee shall not be entitled to severance pay under
 Paragraph 4.2, but shall be paid any earned and unpaid bonus, if any, on a
 pro rata basis for the period through the Employee’s termination date. The
 amount of such bonus, if any, shall be calculated based on the Corporation’s
 annualized gross sales revenue as of the last day of Employee’s employment
 and shall be paid in a lump sum approximately sixty (60) days after
 termination.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 5.          Miscellaneous.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           5.1.     Integration.
 This Agreement embodies the entire agreement and understanding among the
 parties relative to subject matter hereof and supersedes all prior agreements
 and understandings relating to such subject matter, including but not limited
 to any earlier employment agreements of the Employee. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           5.2.     Applicable
 Law. This Agreement and the rights of the parties shall be governed by
 and construed and enforced in accordance with the laws of the state of
 Minnesota. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           5.3.     Payments.
 All amounts paid under this Agreement shall be subject to normal withholdings
 or such other treatment as required by law. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           5.4.     Counterparts.
 This Agreement may be executed in several counterparts and as so executed
 shall constitute one agreement binding on the parties hereto. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           5.5.     Binding
 Effect. Except as herein or otherwise provided to the contrary, this
 Agreement shall be binding upon and inure to the benefit of the Corporation
 and its successors, assigns and personal representatives without any
 requirement of the consent of the Employee for assignment of its rights or
 obligations hereunder. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           5.6.     Modification.
 This Agreement shall not be modified or amended except by a written
 instrument signed by the parties. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           5.7.     Severability.
The invalidity or partial invalidity of any portion of this Agreement shall
not invalidate the remainder thereof, and said remainder shall remain in
fully force and effect.  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           5.8.     Opportunity
 to Obtain Advice of Counsel. The Employee acknowledges that the Employee
 has been advised by the Corporation to obtain legal advice prior to executing
 this Agreement, and that the Employee had sufficient opportunity to do so
 prior to signing this Agreement. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           5.9     Public
 Company Savings Clause. Notwithstanding anything in this Agreement to the
 contrary, if any of the payments described in this Agreement are subject to
 the requirements of Code Section 409A and the Corporation determines that
 Employee is a “specified employee” as defined in Code Section 409A as of the
 date of Employee’s termination of employment, such payments shall not be paid
 or commence earlier than the first day of the seventh month following the
 date of Employee’s termination of employment. In addition, notwithstanding
 anything in this Agreement to the contrary, the Corporation expressly
 reserves the right to amend this Agreement to the extent necessary to comply
 with Code 

 


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Exhibit 10.13 


	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Section
 409A, as it may be amended from time to time, and the regulations, notices
 and other guidance of general applicability issued thereunder. 

 



THIS AGREEMENT was
voluntarily and knowingly executed by the parties as of date and year first set
forth above. 


	
  

 	
  

 	
  

 	
  

 
	
 ELECTROMED, INC.

 	
  

 	
 EMPLOYEE:

 
	
  

 	
  

 	
  

 	
  

 
	
 By: 

 	
/s/ Robert D. Hansen



 	
  

 	
/s/ Terry Belford



 
	
  

 	
  

 	
  

 	
 Terry
 Belford

 


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