Document:

exv10w1

 

Exhibit 10.1

TD AMERITRADE HOLDING CORPORATION

ELLEN L.S. KOPLOW EMPLOYMENT AGREEMENT

     This Agreement is entered into as of September 26, 2006, by and between TD Ameritrade Holding
Corporation (the “Company”) and Ellen L.S. Koplow (“Executive”).

     1. Duties and Scope of Employment.

          (a) Positions and Duties. As of September 26, 2006 (the “Effective Date”), Executive
serves, and will continue to serve, as Executive Vice President, General Counsel and Secretary,
reporting to the Company’s Chief Executive Officer (the “CEO”). Executive will render such
business and professional services in the performance of her duties, consistent with Executive’s
position within the Company, as will reasonably be assigned to her by the CEO. The period
Executive is employed by the Company under this Agreement is referred to herein as the “Employment
Term”.

          (b) Obligations. During the Employment Term, Executive will devote Executive’s full
business efforts and time to the Company and will use good faith efforts to discharge Executive’s
obligations under this Agreement to the best of Executive’s ability and in accordance with each of
the Company’s corporate guidance and ethics guidelines, conflict of interests policies and code of
conduct. For the duration of the Employment Term, Executive agrees not to actively engage in any
other employment, occupation, or consulting activity for any direct or indirect remuneration
without the prior approval of the applicable committee of the Board of Directors (the “Board”) or
the CEO (which approval will not be unreasonably withheld); provided, however, that Executive may,
without the approval of the Board, serve in any capacity with any civic, educational, or charitable
organization, provided such services do not interfere with Executive’s obligations to Company.

               (i) Executive hereby represents and warrants to the Company that Executive is not party to any
contract, understanding, agreement or policy, written or otherwise, that would be breached by
Executive’s entering into, or performing services under, this Agreement. Executive further
represents that he has disclosed to the Company in writing all threatened, pending, or actual
claims that are unresolved and still outstanding as of the Effective Date, in each case, against
Executive of which he is aware, if any, as a result of her employment with her current employer (or
any other previous employer) or her membership on any boards of directors.

          (c) Other Entities. Executive agrees to serve, if requested and without additional
compensation, as an officer and director for each of the Company’s subsidiaries, partnerships,
joint ventures, limited liability companies and other affiliates, including entities in which the
Company has a significant investment as determined by the Company. As used in this Agreement, the
term “affiliates” will include any entity controlled by, controlling, or under common control of
the Company.

     2. At-Will Employment. Executive and the Company agree that Executive’s employment
with the Company constitutes “at-will” employment. Executive and the Company

 

 

acknowledge that this employment relationship may be terminated at any time, upon written
notice to the other party, with or without good cause or for any or no cause, at the option either
of the Company or Executive. However, as described in this Agreement, Executive may be entitled to
severance benefits depending upon the circumstances of Executive’s termination of employment.

     3. Term of Agreement. This Agreement will have an initial term of three (3) years
commencing on the Effective Date (the “Initial Term”). On the third anniversary of the Effective
Date, this Agreement automatically will renew for an additional one (1) year term (the “Additional
Term”) unless either party provides the other party with written notice of non-renewal at least
sixty (60) days prior to the date of automatic renewal. Following the Additional Term, the
Agreement will renew for an additional one (1) year term upon the mutual consent of Executive and
the Company.

     4. Compensation.

          (a) Base Salary. Subject to periodic review by the Board, the Company will pay
Executive an annual salary of $300,000 as compensation for her services (such annual salary, as is
then effective, to be referred to herein as “Base Salary”). The Base Salary will be paid
periodically in accordance with the Company’s normal payroll practices and be subject to the usual,
required withholdings.

          (b) Annual Incentive. With respect to each full fiscal year during the Employment
Term, Executive will be eligible to participate in the Ameritrade Holding Corporation Management
Incentive Plan (“MIP”), pursuant to which Executive will be eligible to earn an annual incentive
award (the “Annual Incentive”) based upon the achievement of applicable performance criteria
established by the Board within the first ninety (90) days of each fiscal year during the
Employment Term and communicated to Executive. Each Annual Incentive will have a target value of
$350,000 (the “Target”).

          (c) Equity Awards. During the Employment Term, Executive will be eligible to
participate in the Ameritrade Holding Corporation 1996 Long-Term Incentive Plan (the “LTIP”).

               (i) Special Grant. On March 10, 2006, Executive was granted a special award under the
LTIP of 34,832 performance restricted share units (the “Special Grant”). The Special Grant will be
scheduled to vest and be settled in accordance with the performance criteria and vesting schedule
set forth on Exhibit B of the applicable Special Grant Award Agreement.

               (ii) Annual Award. With respect to each full fiscal year during the Employment Term,
Executive will be eligible for an award under the LTIP of performance restricted share units with a
target value, determined by the Company pursuant to a reasonable and uniform methodology, equal to
$150,000 on the date of grant (the “Annual Award”), and will be scheduled to vest and be settled in
accordance with the applicable performance criteria and vesting schedule provided in the applicable
Award Agreement.

     5. Employee Benefits. Executive will be eligible to participate in accordance with
the terms of all Company employee benefit plans, policies and arrangements that are applicable to
other executive officers of the Company, as such plans, policies and arrangements may exist from
time to time.

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     6. Expenses. The Company will reimburse Executive for reasonable travel,
entertainment and other expenses incurred by Executive in the furtherance of the performance of
Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in
effect from time to time.

     7. Termination of Employment. In the event Executive’s employment with the Company
terminates for any reason, Executive will be entitled to any (a) unpaid Base Salary accrued up to
the effective date of termination, (b) unpaid, but earned and accrued Annual Incentive for any
completed fiscal year as of her termination of employment, (c) pay for accrued but unused vacation
that the Company is legally obligated to pay Executive, (d) benefits or compensation as provided
under the terms of any employee benefit and compensation agreements or plans applicable to
Executive, (e) unreimbursed business expenses required to be reimbursed to Executive, and (f)
rights to indemnification Executive may have under the Company’s Articles of Incorporation, Bylaws,
the Agreement, or separate indemnification agreement, as applicable. In addition, if the
termination is by the Company without Cause or if Executive resigns for Good Reason, Executive will
be entitled to the amounts and benefits specified in Section 8.

     8. Severance.

          (a) Termination Without Cause or Resignation for Good Reason. If during the
Employment Term Executive’s employment is terminated by the Company without Cause or if Executive
resigns for Good Reason, then, subject to Sections 9 and 10, Executive will receive: (i) continued
payment of Base Salary for two (2) years in accordance with the Company’s normal payroll policies;
(ii) continued payment of Executive’s Annual Incentive at the target level applicable during the
year of Executive’s termination for a period of time equal to two (2) years in accordance with the
Company’s normal payroll policies, (iii) the current year’s Annual Incentive pro-rated to the date
of termination, with such pro-rated amount to be calculated by multiplying the current year’s
target incentive compensation by a fraction with a numerator equal to the number of days between
the start of the current fiscal year and the date of termination and a denominator equal to 365,
(iv) for a period of two (2) years, if the Executive or any of her dependents is eligible for and
elects COBRA continuation coverage (as described in Section 4980B of the Internal Revenue Code of
1986, as amended (the “Code”)) under any Company group medical or dental plan, Executive will not
be charged any premiums for such coverage; provided, however, Executive will be responsible for any
income tax due with respect to such premiums, and (v) performance restricted share units granted
under the LTIP as part of any Annual Awards or the Special Grant which would have become vested
within two (2) years of the end of the calendar year of such termination will be considered earned
and vested and such vested shares will be settled according to the original vesting schedule as set
forth in the Award Agreement.

          (b) Termination due to Death or Disability. In the event of a termination of
Executive’s employment during the Employment Term due to death or Disability, then, subject to
Sections 9 and 10, Executive, or Executive’s estate as applicable, will be entitled to receive the
current year’s Annual Incentive pro-rated to the date of termination, with such pro-rated amount to
be calculated by multiplying the current year’s target incentive compensation by a fraction with a
numerator equal to the number of days between the start of the current fiscal year and the date of
termination and a denominator equal to 365.

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     9. Release of Claims; Non-solicitation and Non-competition; Conditions to Receipt of
Severance; No Duty to Mitigate.

          (a) Separation Agreement and Release of Claims. The receipt of any severance pursuant
to Section 8 will be subject to Executive signing and not revoking a separation and release of
claims agreement in substantially the form attached as Exhibit A, but with any appropriate
reasonable modifications, reflecting changes in applicable law, as is necessary to provide the
Company with the protection it would have if the release were executed as of the Effective Date.
No severance will be paid or provided until the separation agreement and release agreement becomes
effective. The Company agrees that it will execute and deliver to Executive said separation and
release of claims agreement no later than eight (8) days after it receives a copy of such agreement
executed by Executive. Company agrees that it will be bound by such separation and release of
claims agreement and that same will become effective from and after the “Effective Date” thereof
(as defined in Section 28 of such separation and release of claims agreement), even if Company
fails or refuses to execute and deliver same to Executive.

          (b) Non-solicitation and Non-competition. During the Employment Term and the
Restricted Period (and with respect to the Restricted Period, only as permitted by applicable law
and the Maryland Rules of Professional Conduct, or such other applicable rules of ethical conduct
in effect in any other State under which the Executive might be, or might become, authorized to
practice law), the Executive will not (without the written consent of the CEO) engage or
participate in any business within any state in the United States where the Company conducts
business (as an owner, partner, stockholder, holder of any other equity interest, or financially as
an investor or lender, or in any capacity calling for the rendition of personal services or acts of
management, operation or control) which is engaged in any activities and for any business
competitive with any of the primary businesses conducted by the Company or any of its Affiliates
(as defined below). For purposes of this Agreement, the term “primary businesses” is defined as an
on-line brokerage business, including active trader and long term investor client segments, and
also includes any such other business formally proposed (and considered at a meeting of the Board)
to be conducted by the Company or any of its Affiliates during the twelve (12) month period prior
to the date of termination (collectively a “Competitive Business”). Provided that this restriction
will not restrict Executive from being employed by or consulting with a business, firm,
corporation, partnership or other entity that owns or operates an on-line brokerage, provided that
(i) the on-line brokerage business is de minimis as compared to its core business in terms of
revenue and/or resources, and (ii) Executive’s involvement with the company excludes, directly or
indirectly, the on-line brokerage business during the Restriction Period. Notwithstanding the
foregoing, Executive may (i) own securities of a Competitive Business so long as the securities of
such corporation or other entity are listed on a national securities exchange or on the NASDAQ
National Market and the securities owned directly or indirectly by Executive do not represent more
than 2% of the outstanding securities of such corporation or other entity; and (ii) during the
Restricted Period, practice law as an attorney in private practice (e.g., as an attorney affiliated
with a law firm or as a solo practitioner) so long as Executive agrees, to the extent permitted by
applicable law and the Maryland Rules of Professional Conduct, or such other applicable rules of
ethical conduct in effect in any other State under which the Executive might be, or might become,
authorized to practice law), to not provide legal advice or any assistance of any nature to any
Competitive Business;

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               (i) During the Restricted Period, neither Executive, nor any business in which Executive may
engage or participate in, will directly or indirectly, (A) knowingly induce any customer or vendor
of the Company or of corporations or businesses which directly or indirectly are controlled by the
Company (collectively, the “Affiliates”) to patronize any Competitive Business; (B) knowingly
request or advise any customer or vendor to withdraw, curtail or cancel such customer’s or vendor’s
business with the Company or any of its Affiliates; or (C) compete with the Company or any of its
Affiliates in merging with or acquiring any other company or business (whether by a purchase of
stock or other equity interests, or a purchase of assets or otherwise) which is a Competitive
Business;

               (ii) During the Restricted Period, neither Executive nor any business in which Executive may
engage or participate in will (A) knowingly hire, solicit for hire or attempt to hire any employee
of the Company or any of its Affiliates, or (B) encourage any employee of the Company or any of its
Affiliates to terminate such employment. For purposes of this Agreement, “employee” means current
employees as well as anyone employed by the Company or any of its Affiliates within the prior six
(6) months from Executive’s date of termination; provided, however, that this provision will not
preclude any business in which Executive may engage or participate in from soliciting any such
employee by means of or hiring any such employee who responds to a public announcement placed by
the business as long as Executive otherwise complies with subsections (A) and (B) above; and

               (iii) In the event that any of the provisions of this Section should ever be deemed to exceed
the time, geographic or occupational limitations permitted by applicable laws, then such provisions
will and are hereby reformed to the maximum time, geographic or occupational limitations permitted
by applicable law.

          (c) Nondisparagement. During the Employment Term and Restricted Period, Executive
will not knowingly disparage, criticize, or otherwise make any derogatory statements regarding the
Company, its directors, or its officers. The Company will instruct its officers and directors to
not knowingly disparage, criticize, or otherwise make any derogatory statements regarding Executive
during the Employment Term and Restricted Period. Notwithstanding the foregoing, nothing contained
in this agreement will be deemed to restrict Executive, the Company or any of the Company’s current
or former officers and/or directors from providing information to any governmental or regulatory
agency (or in any way limit the content of any such information) to the extent they are requested
or required to provide such information pursuant to applicable law or regulation.

          (d) Other Requirements. Executive’s initial receipt of severance and/or the receipt
of continued severance payments will be subject to Executive complying with the terms and
provisions of Sections 9 and 10. Executive will not be obligated to comply with Section 9 of this
Agreement while the Company is in material default of its payment and reimbursement obligations
under Sections 7, 8, or 10 of this Agreement. Notwithstanding the foregoing, the Company will not
be considered to be in default of its payments and reimbursement obligations unless Executive
provides written notice to the Board setting forth her reasons why he believes the Company is in
default and giving the Company fifteen (15) days to cure such default, if any.

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          (e) No Duty to Mitigate. Executive will not be required to mitigate the amount of any
payment or consideration contemplated by this Agreement, nor will any earnings that Executive may
receive from any other source reduce any such payment or consideration.

     10. Confidential Information and Intellectual Property.

          (a) Except as may be required by law, or except to the extent required to perform Executive’s
duties and responsibilities hereunder, Executive will keep secret and confidential indefinitely all
non-public confidential information (including, without limitation, information regarding cost of
new accounts, activity rates of different market niche customers, advertising results, technology
(hardware and software), architecture, discoveries, processes, algorithms, maskworks, strategies,
intellectual properties, customer lists and other customer information) concerning any of the
Company and its affiliates which was acquired by or disclosed to Executive during the course of
Executive’s employment with the Company (“Confidential Information”) and not use in any manner or
disclose the same, either directly or indirectly, to any other person, firm or business entity.

          (b) At the end of the Employment Term (whether by expiration or termination) or at the
Company’s earlier request, Executive will promptly return to the Company any and all records,
documents, physical property, information, computer disks, drives or other materials relative to
the business of any of the Company and its affiliates obtained by Executive during the course of
her employment with the Company and not keep any copies thereof.

          (c) Executive acknowledges and agrees that all right, title and interest in inventions,
discoveries, improvements, trade secrets, developments, processes and procedures made by Executive,
in whole or in part, or conceived by Executive either alone or with others, when employed by the
Company, including such of the foregoing items conceived during the course of employment which are
developed or perfected after Executive’s termination of employment, are owned by the Company
(“Company IP”). Executive assigns any and all right, title and interest he may have to Company IP
to the Company and will promptly assist the Company or its designee, at the Company’s expense, to
obtain patents, trademarks, copyrights and service marks concerning Company IP made by Executive
and Executive will promptly execute all reasonable documents prepared by the Company or its
designee and take all other reasonable actions which are necessary or appropriate to secure to the
Company and its affiliates the benefits of Company IP. Such patents, trademarks, copyrights and
service marks will at all times be the property of the Company and its affiliates. Executive
promptly will keep the Company informed of, and promptly will execute such assignments prepared by
the Company or its designee as may be necessary to transfer to the Company or its affiliates the
benefits of, any Company IP.

          (d) To the extent that any court or agency seeks to require Executive to disclose Confidential
Information, Executive promptly will inform the Company and take reasonable steps to endeavor to
prevent the disclosure of Confidential Information until the Company has been informed of such
requested disclosure, and the Company has an opportunity to respond to such court or agency. To
the extent Executive obtains information on behalf of the Company or any of its affiliates that may
be subject to attorney-client privilege as to the Company’s attorneys, Executive will promptly
inform the Company and take reasonable steps to endeavor to maintain the confidentiality of such
information and to preserve such privilege.

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          (e) Confidential Information does not include information already in the public domain or
information which has been released to the public by the Company. Nothing in this Section 10 will
be construed so as to prevent Executive from using, in connection with her employment for himself
or an employer other than the Company, knowledge which was acquired by him during the course of her
employment with the Company and which is generally known to persons of her experience in other
companies in the same industry. Subject to Section 10(d), Executive will be permitted to disclose
Confidential Information if required by a subpoena or court or administrative order.

          (f) The receipt of any severance pursuant to Section 8 will be subject to Executive complying
with the terms of this Section 10.

     11. Excise Taxes. In the event that the benefits provided for in this Agreement
constitute “parachute payments” within the meaning of Section 280G of the Code and will be subject
to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s
severance benefits payable under the terms of this Agreement will be either (i) delivered in full,
or (ii) delivered as to such lesser extent which would result in no portion of such severance
benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account
the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by
Executive on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that
all or some portion of such severance benefits may be taxable under Section 4999 of the Code.
Unless the Company and Executive otherwise agree in writing, any determination required under this
Section 11 will be made in writing by the Company’s independent public accountants (the
“Accountants”), whose determination will be conclusive and binding upon Executive and the Company
for all purposes. For purposes of making the calculations required by this Section 11, the
Accountants may make reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999
of the Code. The Company and Executive will furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a determination under this
Section 11. The Company will bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 11.

     12. Definitions.

          (a) Award Agreement. For purposes of this Agreement, “Award Agreement” will mean the
form of award agreement entered into between Executive and the Company in connection with the
Special Grant and Annual Awards.

          (b) Cause. For purposes of this Agreement, “Cause” will mean:

               (i) Executive’s willful and continued failure to perform the duties and responsibilities of
her or her position after there has been delivered to Executive a written demand for performance
from the Board which describes the basis for the Board’s belief that Executive has not
substantially performed her or her duties and provides Executive with thirty (30) days to take
corrective action;

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               (ii) Any act of personal dishonesty taken by Executive in connection with her or her
responsibilities as an employee of the Company with the intention or reasonable expectation that
such action may result in the substantial personal enrichment of Executive;

               (iii) Executive’s conviction of, or plea of nolo contendere to, a felony that the Board
reasonably believes has had or will have a material detrimental effect on the Company’s reputation
or business;

               (iv) A breach of any fiduciary duty owed to the Company by Executive that has a material
detrimental effect on the Company’s reputation or business;

               (v) Executive being found liable in any Securities and Exchange Commission or other civil or
criminal securities law action or entering any cease and desist order with respect to such action
(regardless of whether or not Executive admits or denies liability);

               (vi) Executive (A) obstructing or impeding; (B) endeavoring to influence, obstruct or impede,
or (C) failing to materially cooperate with, any investigation authorized by the Board or any
governmental or self-regulatory entity (an “Investigation”). However, Executive’s failure to waive
attorney-client privilege relating to communications with Executive’s own attorney in connection
with an Investigation will not constitute “Cause”; or

               (vii) Executive’s disqualification or bar by any governmental or self-regulatory authority
from serving in the capacity contemplated by this Agreement or Executive’s loss of any governmental
or self-regulatory license that is reasonably necessary for Executive to perform her
responsibilities to the Company under this Agreement, if (A) the disqualification, bar or loss
continues for more than thirty (30) days, and (B) during that period the Company uses its good
faith efforts to cause the disqualification or bar to be lifted or the license replaced. While any
disqualification, bar or loss continues during Executive’s employment, Executive will serve in the
capacity contemplated by this Agreement to whatever extent legally permissible and, if Executive’s
employment is not permissible, Executive will be placed on leave (which will be paid to the extent
legally permissible).

          (c) Change of Control. For purposes of this Agreement, “Change of Control” will have
the meaning set forth in the LTIP.

          (d) Disability. For purposes of this Agreement, Disability means, by reason of any
medically determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than twelve (12) months, or receipt by
Executive of income replacement benefits for a period of not less than three (3) months under an
applicable disability benefit plan of the Company.

          (e) Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence
of any of the following, without Executive’s express written consent:

               (i) A significant reduction of Executive’s duties, position, or responsibilities, relative to
Executive’s duties, position or responsibilities in effect immediately prior to such reduction;

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               (ii) A material reduction in the kind or level of employee benefits to which Executive is
entitled immediately prior to such reduction with the result that Executive’s overall benefits
package is significantly reduced. Notwithstanding the foregoing, a one-time reduction that also is
applied to substantially all other executive officers of the Company and that reduces the level of
employee benefits by a percentage reduction of 10% or less will not constitute Good Reason;

               (iii) A reduction in Executive’s Base Salary, Target Annual Incentive, or Annual Award as in
effect immediately prior to such reduction. Notwithstanding the foregoing, a one-time reduction
that also is applied to substantially all other executive officers of the Company and which
one-time reduction reduces the Base Salary, Target Annual Incentive, or Annual Award by a
percentage reduction of 10% or less in the aggregate will not constitute Good Reason;

               (iv) The relocation of Executive to a facility or location more than twenty-five (25) miles
from her current place of employment; or

               (v) The failure of the Company to obtain the assumption of the Agreement by a successor.

          (f) In Connection with a Change of Control. For purposes of this Agreement, a
termination of Executive’s employment with the Company is “in Connection with a Change of Control”
if Executive’s employment is terminated within twelve (12) months following a Change of Control.

          (g) Restricted Period. For purposes of this Agreement, “Restricted Period” will mean
the period of time commencing on the date of the termination of Executive’s employment and
continuing for two (2) years (or in the case of a termination in Connection with a Change of
Control continuing for a period equal to one (1) year). Notwithstanding the foregoing, if
Executive terminates her employment voluntarily, and such termination is not a termination for Good
Reason, then at the discretion of the Company, the Restricted Period will mean a period of time
commencing on the date of the termination of Executive’s employment and continuing for one (1)
year; provided, however, that the Company agrees to pay to Executive continued payment of her Base
Salary for a period of one (1) year.

     13. Indemnification. Subject to applicable law, Executive will be provided
indemnification to the maximum extent permitted by the Company’s Articles of Incorporation or
Bylaws, including, if applicable, any directors and officers insurance policies, with such
indemnification to be on terms determined by the Board or any of its committees, but on terms no
less favorable than provided to any other Company executive officer or director and subject to the
terms of any separate written indemnification agreement.

     14. Assignment. This Agreement will be binding upon and inure to the benefit of (a)
the heirs, executors and legal representatives of Executive upon Executive’s death, and (b) any
successor of the Company. Any such successor of the Company will be deemed substituted for the
Company under the terms of this Agreement for all purposes. For this purpose, “successor” means
any person, firm, corporation, or other business entity which at any time, whether by purchase,
merger, or otherwise, directly or indirectly acquires all or substantially all of the assets or
business of the Company. None of the rights of Executive to receive any form of compensation
payable

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pursuant to this Agreement may be assigned or transferred except by will or the laws of
descent and distribution. Any other attempted assignment, transfer, conveyance, or other
disposition of Executive’s right to compensation or other benefits will be null and void.

     15. Notices. All notices, requests, demands and other communications called for
hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered
personally, (b) one (1) day after being sent overnight by a well established commercial overnight
service, or (c) four (4) days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:

          If to the Company:

          Attn: Chairman of the HR and Compensation Committee

          c/o Chief Human Resources Officer

          TD Ameritrade Holding Corporation

          4211 South 102nd Street

          Omaha, NE 68127

          If to Executive:

          at the last residential address known by the Company.

     16. Severability. If any provision hereof becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full
force and effect without said provision.

     17. Arbitration. The Parties agree that any and all disputes arising out of the terms
of this Agreement, Executive’s employment by the Company, Executive’s service as an officer or
director of the Company, or Executive’s compensation and benefits, their interpretation and any of
the matters herein released, will be subject to binding arbitration in Omaha, Nebraska before the
American Arbitration Association under its National Rules for the Resolution of Employment
Disputes, supplemented by the Nebraska Rules of Civil Procedure. The Parties agree that the
prevailing party in any arbitration will be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties hereby agree to waive their right to
have any dispute between them resolved in a court of law by a judge or jury. This paragraph will
not prevent either party from seeking injunctive relief (or any other provisional remedy) from any
court having jurisdiction over the Parties and the subject matter of their dispute relating to
Executive’s obligations under this Agreement.

     18. Integration. This Agreement and the standard forms of equity award grant that
describe Executive’s outstanding equity awards, represents the entire agreement and understanding
between the parties as to the subject matter herein and supersedes all prior or contemporaneous
agreements whether written or oral, including, but not limited to, the Employment Agreement entered
into between Executive and Ameritrade Holding Corporation, dated September 9, 2002. No waiver,
alteration, or modification of any of the provisions of this Agreement will be binding unless in a
writing and signed by duly authorized representatives of the parties hereto. In entering into this

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Agreement, no party has relied on or made any representation, warranty, inducement, promise,
or understanding that is not in this Agreement.

     19. Waiver of Breach. The waiver of a breach of any term or provision of this
Agreement, which must be in writing, will not operate as or be construed to be a waiver of any
other previous or subsequent breach of this Agreement.

     20. Survival. The Company’s and Executive’s responsibilities under Sections 8, 9, 10,
and 13 will survive the termination of this Agreement.

     21. Headings. All captions and Section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

     22. Tax Withholding. All payments made pursuant to this Agreement will be subject to
withholding of applicable taxes.

     23. Governing Law. This Agreement will be governed by the laws of the State of New
York without regard to its conflict of laws provisions.

     24. Acknowledgment. Executive acknowledges that he has had the opportunity to discuss
this matter with and obtain advice from her private attorney, has had sufficient time to, and has
carefully read and fully understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

     25. Code Section 409A. Notwithstanding anything to the contrary in this Agreement, if
the Company reasonably determines that Section 409A of the Code will result in the imposition of
additional tax to an earlier payment of any severance or other benefits otherwise due to Executive
on or within the six (6) month period following Executive’s termination, the severance benefits
will accrue during such six (6) month period and will become payable in a lump sum payment on the
date six (6) months and one (1) day following the date of Executive’s termination. All subsequent
payments, if any, will be payable as provided in this Agreement.

     26. Counterparts. This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will constitute an effective,
binding agreement on the part of each of the undersigned.

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by a duly authorized officer, as of the day and year written below.

	 	 	 
	COMPANY:
	 	 
	 
	 	 
	TD AMERITRADE HOLDING CORPORATION
	 	 
	 
	 	 
	 /s/
Joseph H. Moglia
	 	Date: September 26, 2006
	 

Joseph H. Moglia

Chief Executive Officer

	 	 
	 
	 	 
	EXECUTIVE:
	 	 
	 
	 	 
	 /s/
Ellen L.S. Koplow
	 	Date: September 26, 2006
	 

Ellen L.S. Koplow

	 	 

[SIGNATURE PAGE TO KOPLOW EMPLOYMENT AGREEMENT]

-12-

 

Exhibit A

Separation and Release of Claims Agreement

-13-

 

SEPARATION AND RELEASE OF CLAIMS AGREEMENT

RECITALS

     This Separation and Release of Claims Agreement (“Agreement”) is made by and between Ellen
L.S. Koplow (“Employee”) and TD Ameritrade Holding Corporation (“Company”) (collectively referred
to as the “Parties”):

     WHEREAS, Employee and Company entered into an Employment Agreement dated [DATE] (the
“Employment Agreement”);

     WHEREAS, the Company and Employee have entered into Performance Restricted Stock Unit
Agreements, dated [DATES], (collectively the “Restricted Stock Unit Agreements) pursuant to which
the Employee was eligible to participate in the Ameritrade Holding Corporation 1996 Long-Term
Incentive Plan (the “Plan”);

     WHEREAS, Employee was employed by the Company;

     WHEREAS, Employee’s employment with Company was terminated on or about [DATE] (the
“Termination Date”);

     WHEREAS, the Parties, and each of them, wish to resolve any and all disputes, claims,
complaints, grievances, charges, actions, petitions and demands that the Employee may have against
the Company as defined herein, including, but not limited to, any and all claims arising or in any
way related to Employee’s employment with, or separation from, the Company;

     NOW THEREFORE, in consideration of the promises made herein, the Parties hereby agree as
follows:

COVENANTS

     1. Consideration.

          (a) The Company agrees to pay Employee pursuant to Section 8 of the Employment Agreement, as
appropriate, subject to Section 9 of the Employment Agreement. Payment shall commence on the first
regular payroll date following the Effective Date. Except as expressly provided in the Employment
Agreement, following the Effective Date Employee shall not be entitled to the accrual of any
employee benefits.

          (b) Stock. The Parties agree that Employee’s vesting with respect to those unvested
equity awards outstanding as of the Effective Date shall accelerate pursuant to Section 8 of the
Employment Agreement, as appropriate, subject to Section 9 of the Employment Agreement. All shares
shall continue to be subject to all other terms of the Restricted Stock Unit Agreements.

          (c) Benefits. The Company agrees to reimburse Employee for premiums paid for continued
health benefits for Employee (and any eligible dependents) pursuant to Section 8 of the

 

 

Employment Agreement, as appropriate, subject to Section 9 of the Employment Agreement.
Except as expressly provided in the Employment Agreement, Employee’s participation in all other
benefits and incidents of employment ceased on the Termination Date. Employee ceased accruing
employee benefits, including, but not limited to, vacation time and paid time off, as of the
Termination Date.

     2. Confidential Information. Employee shall continue to maintain the confidentiality
of all confidential and proprietary information of the Company and shall continue to comply with
the terms and conditions of Section 10 of the Employee’s Employment Agreement. Employee shall
return all of the Company’s property and confidential and proprietary information in his possession
to the Company on the Effective Date of this Agreement.

     3. Payments. Employee acknowledges and represents that the Company has paid all
salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to
Employee once the above noted payments and benefits are received.

     4. Release of Claims. Employee agrees that the foregoing consideration represents
settlement in full of all outstanding obligations owed to Employee by the Company and its officers,
managers, supervisors, agents and employees. Employee, on his own behalf, and on behalf of his
respective heirs, family members, executors, agents, and assigns, hereby fully and forever releases
the Company and its officers, directors, employees, agents, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations, and
assigns, from, and agree not to sue concerning, any claim, duty, obligation or cause of action
relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected,
that Employee may possess arising from any omissions, acts or facts that have occurred up until and
including the Effective Date of this Agreement including, without limitation:

          (a) any and all claims relating to or arising from Employee’s employment relationship with the
Company and the termination of that relationship;

          (b) any and all claims relating to, or arising from, Employee’s right to purchase, or actual
purchase of shares of stock of the Company, including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law;

          (c) any and all claims under the law of any jurisdiction including, but not limited to,
wrongful discharge of employment; constructive discharge from employment; termination in violation
of public policy; discrimination; breach of contract, both express and implied; breach of a
covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent
or intentional infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic advantage; unfair
business practices; defamation; libel; slander; negligence; personal injury; assault; battery;
invasion of privacy; false imprisonment; and conversion;

          (d) any and all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990,

2

 

the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker
Adjustment and Retraining Notification Act, Older Workers Benefit Protection Act; the Massachusetts
Fair Employment Practice Act;

          (e) any and all claims for violation of the federal, or any state, constitution;

          (f) any and all claims arising out of any other laws and regulations relating to employment or
employment discrimination;

          (g) any claim for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by Employee as a result of
this Agreement; and

          (h) any and all claims for attorneys’ fees and costs.

     The Company and Employee agree that the release set forth in this section shall be and remain
in effect in all respects as a complete general release as to the matters released. This release
does not extend to any obligations incurred under this Agreement.

     Employee acknowledges and agrees that any breach of any provision of this Agreement shall
constitute a material breach of this Agreement and shall entitle the Company immediately to recover
and cease the severance benefits provided to Employee under this Agreement.

     5. Acknowledgement of Waiver of Claims Under ADEA. Employee acknowledges that he is
waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967
(“ADEA”) and that this waiver and release is knowing and voluntary. Employee and the Company agree
that this waiver and release does not apply to any rights or claims that may arise under ADEA after
the Effective Date of this Agreement. Employee acknowledges that the consideration given for this
waiver and release Agreement is in addition to anything of value to which Employee was already
entitled. Employee further acknowledges that he has been advised by this writing that:

          (a) he should consult with an attorney prior to executing this Agreement;

          (b) he has up to twenty-one (21) days within which to consider this Agreement;

          (c) he has seven (7) days following his execution of this Agreement to revoke this Agreement;

          (d) this Agreement shall not be effective until the revocation period has expired; and,

          (e) nothing in this Agreement prevents or precludes Employee from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor does it impose any
condition precedent, penalties or costs for doing so, unless specifically authorized by federal
law.

3

 

     6. Unknown Claims. The Parties represent that they are not aware of any claim by
either of them other than the claims that are released by this Agreement. Employee acknowledges
that he has been advised by legal counsel and is familiar with the principle that a general release
does not extend to claims which the releasor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have materially affected his settlement
with the releasee. Employee, being aware of said principle, agrees to expressly waive any rights
Employee may have to that effect, as well as under any other statute or common law principles of
similar effect.

     7. No Pending or Future Lawsuits. Employee represents that he has no lawsuits,
claims, or actions pending in his name, or on behalf of any other person or entity, against the
Company or any other person or entity referred to herein. Employee also represents that he does
not intend to bring any claims on his own behalf or on behalf of any other person or entity against
the Company or any other person or entity referred to herein.

     8. Application for Employment. Employee understands and agrees that, as a condition
of this Agreement, he shall not be entitled to any employment with the Company, its subsidiaries,
or any successor, and he hereby waives any right, or alleged right, of employment or re-employment
with the Company, its subsidiaries or related companies, or any successor.

     9. Confidentiality. The Parties acknowledge that Employee’s agreement to keep the
terms and conditions of this Agreement confidential was a material factor on which all parties
relied in entering into this Agreement. Employee hereto agrees to use his best efforts to maintain
in confidence: (i) the existence of this Agreement, (ii) the contents and terms of this Agreement,
(iii) the consideration for this Agreement, and (iv) any allegations relating to the Company or its
officers or employees with respect to Employee’s employment with the Company, except as otherwise
provided for in this Agreement (hereinafter collectively referred to as “Settlement Information”).
Employee agrees to take every reasonable precaution to prevent disclosure of any Settlement
Information to third parties, and agrees that there shall be no publicity, directly or indirectly,
concerning any Settlement Information. Employee agrees to take every precaution to disclose
Settlement Information only to those attorneys, accountants, governmental entities, and family
members who have a reasonable need to know of such Settlement Information. The Parties agree that
if Company proves that Employee breached this Confidentiality provision, it shall be entitled to an
award of its costs spent enforcing this provision, including all reasonable attorneys’ fees
associated with the enforcement action, without regard to whether the Company can establish actual
damages from the breach by Employee.

     10. No Cooperation. Employee agrees he shall not act in any manner that might damage
the business of the Company. Employee agrees that he shall not counsel or assist any attorneys or
their clients in the presentation or prosecution of any disputes, differences, grievances, claims,
charges, or complaints by any third party against the Company and/or any officer, director,
employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or
other court order to do so. Employee further agrees both to immediately notify the Company upon
receipt of any court order, subpoena, or any legal discovery device that seeks or might require the
disclosure or production of the existence or terms of this Agreement, and to furnish, within three
(3) business days of its receipt, a copy of such subpoena or legal discovery device to the Company.

4

 

     11. Non-Disparagement. Employee agrees to refrain from any defamation, libel or
slander of the Company or tortious interference with the contracts and relationships of the
Company. All inquiries by potential future employers of Employee shall be directed to the
Company’s Human Resources Department. Upon inquiry, the Company shall only state the following:
Employee’s last position and dates of employment.

     12. Non-Solicitation. Employee agrees to comply with the provisions of Section 9 of
the Employee’s Employment Agreement.

     13. No Admission of Liability. The Parties understand and acknowledge that this
Agreement constitutes a compromise and settlement of disputed claims. No action taken by the
Parties hereto, or either of them, either previously or in connection with this Agreement shall be
deemed or construed to be: (a) an admission of the truth or falsity of any claims heretofore made
or (b) an acknowledgment or admission by either party of any fault or liability whatsoever to the
other party or to any third party.

     14. No Knowledge of Wrongdoing. Employee represents that he has no knowledge of any
wrongdoing involving improper or false claims against a federal or state governmental agency, or
any other wrongdoing that involves Employee or other present or former Company employees.

     15. Tax Consequences. The Company makes no representations or warranties with respect
to the tax consequences of the payment of any sums to Employee under the terms of this Agreement.
Employee agrees and understands that he is responsible for payment, if any, of local, state and/or
federal taxes on the sums paid hereunder by the Company and any penalties or assessments thereon.
Employee further agrees to indemnify and hold the Company harmless from any claims, demands,
deficiencies, penalties, assessments, executions, judgments, or recoveries by any government agency
against the Company for any amounts claimed due on account of Employee’s failure to pay federal or
state taxes or damages sustained by the Company by reason of any such claims, including reasonable
attorneys’ fees.

     16. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees
and other fees incurred in connection with this Agreement.

     17. Indemnification. Employee agreed to indemnify and hold harmless the Company from
and against any and all loss, costs, damages or expenses, including, without limitation, attorneys’
fees or expenses incurred by the Company arising out of the breach of this Agreement by Employee,
or from any false representation made herein by Employee, or from any action or proceeding which
may be commenced, prosecuted or threatened by Employee or for Employee’s benefit, upon Employee’s
initiative, or with Employee’s aid or approval, contrary to the provisions of this Agreement.
Employee further agrees that in any such action or proceeding, this Agreement may be pled by the
Company as a complete defense, or may be asserted by way of counterclaim or cross-claim.

     18. Cooperation in Litigation. Employee agrees to cooperate fully with the Company in
any matters that have or may result in a legal claim against the Company, and of which Employee may
have knowledge as a result of Employee’s employment with the Company. This requires Employee,
without limitation, to (1) make himself available upon reasonable request to provide information
and

5

 

assistance to the Company on such matters without additional compensation, except for
Employee’s out-of-pocket costs, and (2) notify the Company promptly of any requests to Employee for
information related to any pending or potential legal claim or litigation involving the Company,
reviewing any such request with a designated representative of the Company prior to disclosing any
such information, and permitting the representative of the Company to be present during any
communication of such information.

     19. Arbitration. The Parties agree that any and all disputes arising out of, or
relating to, the terms of this Agreement, their interpretation, and any of the matters herein
released, shall be subject to binding arbitration in Omaha, Nebraska before the American
Arbitration Association under its National Rules for the Resolution of Employment Disputes. The
Parties agree that the prevailing party in any arbitration shall be entitled to injunctive relief
in any court of competent jurisdiction to enforce the arbitration award. The Parties agree that
the prevailing party in any arbitration shall be awarded its reasonable attorneys’ fees and costs.
The Parties hereby agree to waive their right to have any dispute between them resolved in a court
of law by a judge or jury. This section shall not prevent either party from seeking injunctive
relief (or any other provisional remedy) from any court having jurisdiction over the Parties and
the subject matter of their dispute relating to Employee’s obligations under this Agreement and the
agreements incorporated herein by reference.

     20. Authority. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all who may claim through it
to the terms and conditions of this Agreement. Employee represents and warrants that he has the
capacity to act on his own behalf and on behalf of all who might claim through him to bind them to
the terms and conditions of this Agreement. Each party warrants and represents that there are no
liens or claims of lien or assignments in law or equity or otherwise of or against any of the
claims or causes of action released herein.

     21. No Representations. Each party represents that it has had the opportunity to
consult with an attorney, and has carefully read and understands the scope and effect of the
provisions of this Agreement. Neither party has relied upon any representations or statements made
by the other party hereto which are not specifically set forth in this Agreement.

     22. Severability. In the event that any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision so long as the remaining provisions remain
intelligible and continue to reflect the original intent of the Parties.

     23. Entire Agreement. This Agreement represents the entire agreement and understanding
between the Company and Employee concerning the subject matter of this Agreement and Employee’s
relationship with the Company, and supersedes and replaces any and all prior agreements and
understandings between the Parties concerning the subject matter of this Agreement and Employee’s
relationship with the Company, with the exception of the Restricted Stock Unit Agreements, and the
applicable Sections of the Employment Agreement.

     24. No Waiver. The failure of any party to insist upon the performance of any of the
terms and conditions in this Agreement, or the failure to prosecute any breach of any of the terms
and conditions of this Agreement, shall not be construed thereafter as a waiver of any such terms
or

6

 

conditions. This entire Agreement shall remain in full force and effect as if no such
forbearance or failure of performance had occurred.

     25. No Oral Modification. Any modification or amendment of this Agreement, or
additional obligation assumed by either party in connection with this Agreement, shall be effective
only if placed in writing and signed by both Parties or by authorized representatives of each
party.

     26. Governing Law. This Agreement shall be deemed to have been executed and delivered
within the state of New York, and it shall be construed, interpreted, governed, and enforced in
accordance with the laws of the state of New York, without regard to conflict of law principles.
To the extent that either party seeks injunctive relief in any court having jurisdiction for any
claim relating to the alleged misuse or misappropriation of trade secrets or confidential or
proprietary information, each party hereby consents to personal and exclusive jurisdiction and
venue in the state and federal courts of the state of New York.

     27. Attorneys’ Fees. In the event that either Party brings an action to enforce or
effect its rights under this Agreement, the prevailing party shall be entitled to recover its costs
and expenses, including the costs of mediation, arbitration, litigation, court fees, plus
reasonable attorneys’ fees, incurred in connection with such an action.

     28. Effective Date. This Agreement is effective after it has been signed by both
parties and after eight (8) days have passed since Employee has signed the Agreement (the
“Effective Date”), unless revoked by Employee within seven (7) days after the date the Agreement
was signed by Employee.

     29. Counterparts. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall constitute an effective,
binding agreement on the part of each of the undersigned.

     30. Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties hereto, with the full
intent of releasing all claims. The Parties acknowledge that:

          (a) they have read this Agreement;

          (b) they have been represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such
counsel;

          (c) they understand the terms and consequences of this Agreement and of the releases it
contains; and

          (d) they are fully aware of the legal and binding effect of this Agreement.

     IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth
below.

7

 

	 	 	 	 	 
	 	TD AMERITRADE HOLDING CORPORATION
 	 
	Dated:                                           	By  	 	 
	 	[NAME] 	 
	 	[TITLE] 	 
	 
	 	ELLEN L. S. KOPLOW, an individual
 	 
	Dated:                                           	 	 
	 	Ellen L. S. Koplow	 

8<PAGE>

                                                                    EXHIBIT 10.1

                               ATS MEDICAL, INC.

    1998 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED THROUGH SEPTEMBER 25, 2006

                                   ARTICLE I.

                                  INTRODUCTION

     SECTION 1.01  Purpose.  The purpose of the ATS Medical, Inc. Employee Stock
Purchase Plan (the "Plan") is to provide employees of ATS Medical, Inc., a
Minnesota corporation (the "Company"), and its Affiliates with an opportunity to
share in the ownership of the Company by providing them with a convenient means
for regular and systematic purchases of the Company's Common Stock and, thus, to
develop a stronger incentive to work for the continued success of the Company.

     SECTION 1.02  Rules of Interpretation.  It is intended that the Plan be an
"employee stock purchase plan" as defined in Section 423(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations
promulgated thereunder. Accordingly, the Plan shall be interpreted and
administered in a manner consistent therewith if so approved. All Participants
in the Plan will have the same rights and privileges consistent with the
provisions of the Plan.

     SECTION 1.03  Definitions.  For purposes of the Plan, the following terms
will have the meanings set forth below:

          (a) "Acceleration Date" means the earlier of the date of shareholder
     approval or approval by the Company's Board of Directors of (i) 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
     Common Stock would be converted into cash, securities or other property,
     other than a merger of the Company in which shareholders of the Company
     immediately prior to the merger have the same proportionate ownership of
     stock in the surviving corporation immediately after the merger; (ii) any
     sale, 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
     (iii) any plan of liquidation or dissolution of the Company.

          (b) "Affiliate" means any subsidiary corporation of the Company, as
     defined in Section 424(f) of the Code, whether now or hereafter acquired or
     established.

          (c) "Committee" means the committee described in Section 10.01.

          (d) "Company" means ATS Medical, Inc., a Minnesota corporation, and
     its successors by merger or consolidation as contemplated by Article XI
     herein.

          (e) "Current Compensation" means all regular wage, salary and
     commission payments paid by the Company to a Participant in accordance with
     the terms of his or her employment, but excluding annual bonus payments and
     all other forms of special compensation.

          (f) "Fair Market Value" as of a given date means such value of the
     Common Stock as reasonably determined by the Committee, but shall not be
     less than (i) the closing price of the Common Stock as reported for
     composite transactions if the Common Stock is then traded on a national
     securities exchange, or (ii) the average of the closing representative bid
     and asked prices of the Common Stock as reported on the Nasdaq National
     Market System on the date as of which the fair market value is being
     determined. If on the date of grant of any option hereunder the Common
     Stock is not traded on an established securities market, the Committee
     shall make a good faith attempt to satisfy the requirements of this Section
     1.03 and in connection therewith shall take such action as it deems
     necessary or advisable.

          (g) "Participant" means a Permanent Full-Time Employee who is eligible
     to participate in the Plan under Section 2.01 and who has elected to
     participate in the Plan.

<PAGE>

          (h) "Participating Affiliate" means an Affiliate which has been
     designated by the Committee in advance of the Purchase Period in question
     as a corporation whose eligible Permanent Full- Time Employees may
     participate in the Plan.

          (i) "Permanent Full-Time Employee" means an employee of the Company or
     a Participating Affiliate as of the first day of a Purchase Period,
     including an officer or director who is also an employee, but excluding (i)
     an employee whose customary employment is less than twenty (20) hours per
     week and (ii) an employee who has been employed by the Company for less
     than thirty (30) days.

          (j) "Plan" means the ATS Medical, Inc. 1998 Employee Stock Purchase
     Plan, as amended, the provisions of which are set forth herein.

          (k) "Purchase Period" means the approximate three-month periods
     beginning (i) on the first business day in May and ending on the last
     business day in July of each year; (ii) on the first business day in August
     and ending on the last business day in October of each year; (iii) on the
     first business day in November of one year and ending on the last business
     day in January of the following year; and (iv) on the first business day in
     February and ending on the last business day in April of each year;
     provided, however, that the initial Purchase Period will commence on May 3,
     1998 and will terminate on the last business day in July 1998, and provided
     further that the then current Purchase Period will end upon the occurrence
     of an Acceleration Date.

          (l) "Common Stock" means the Company's Common Stock, $.01 par value,
     as such stock may be adjusted for changes in the stock or the Company as
     contemplated by Article XI herein.

          (m) "Stock Purchase Account" means the account maintained on the books
     and records of the Company recording the amount received from each
     Participant through payroll deductions made under the Plan and from the
     Company through matching contributions.

                                  ARTICLE II.

                         ELIGIBILITY AND PARTICIPATION

     SECTION 2.01  Eligible Employees.  All Permanent Full-Time Employees shall
be eligible to participate in the Plan beginning on the first day of the first
Purchase Period to commence after such person becomes a Permanent Full-Time
Employee. Subject to the provisions of Article VI, each such employee will
continue to be eligible to participate in the Plan so long as such employee
remains a Permanent Full-Time Employee.

     SECTION 2.02  Election to Participate.  An eligible Permanent Full-Time
Employee may elect to participate in the Plan for a given Purchase Period by
filing with the Company, in advance of that Purchase Period and in accordance
with such terms and conditions as the Committee in its sole discretion may
impose, a form provided by the Company for such purpose (which authorizes
regular payroll deductions from Current Compensation beginning with the first
payday in that Purchase Period and continuing until the employee withdraws from
the Plan or ceases to be eligible to participate in the Plan).

     SECTION 2.03  Limits on Stock Purchase.  No employee shall be granted any
right to purchase Common Stock hereunder if such employee, immediately after
such a right to purchase is granted, would own, directly or indirectly, within
the meaning of Section 423(b)(3) and Section 424(d) of the Code, Common Stock
possessing 5% or more of the total combined voting power or value of all the
classes of the capital stock of the Company or of all Affiliates.

     SECTION 2.04  Voluntary Participation.  Participation in the Plan on the
part of a Participant is voluntary and such participation is not a condition of
employment nor does participation in the Plan entitle a Participant to be
retained as an employee.

<PAGE>

                                  ARTICLE III.

                 PAYROLL DEDUCTIONS AND STOCK PURCHASE ACCOUNT

     SECTION 3.01  Deduction from Pay.  The form described in Section 2.02 will
permit a Participant to elect payroll deductions of any multiple of 1%, but not
less than 1% or more than 10% of such Participant's Current Compensation for
each pay period, subject to such other limitations as the Committee in its sole
discretion may impose. A Participant may cease making payroll deductions at any
time, subject to such limitations as the Committee in its sole discretion may
impose. In the event that during a Purchase Period the entire credit balance in
a Participant's Stock Purchase Account exceeds the product of (i) 85% of the
Fair Market Value of the Common Stock on the first business day of that Purchase
Period, and (ii) 10,000 then payroll deductions for such Participant shall
automatically cease, and shall resume on the first pay period of the next
Purchase Period.

     SECTION 3.02  Credit to Account.  Payroll deductions will be credited to
the Participant's Stock Purchase Account on each payday.

     SECTION 3.03  Interest.  No interest will be paid upon payroll deductions
or on any amount credited to, or on deposit in, a Participant's Stock Purchase
Account.

     SECTION 3.04  Nature of Account.  The Stock Purchase Account is established
solely for accounting purposes, and all amounts credited to the Stock Purchase
Account will remain part of the general assets of the Company or the
Participating Affiliate (as the case may be).

     SECTION 3.05  No Additional Contributions.  A Participant may not make any
payment into the Stock Purchase Account other than the payroll deductions made
pursuant to the Plan.

                                  ARTICLE IV.

                            RIGHT TO PURCHASE SHARES

     SECTION 4.01  Number of Shares.  Each Participant will have the right to
purchase on the last business day of the Purchase Period up to the largest
number of whole shares of Common Stock that can be purchased at the price
specified in Section 4.02 with up to the entire credit balance in the
Participant's Stock Purchase Account, subject to the limitations that (i) no
more than 10,000 shares of Common Stock may be purchased under the Plan by any
one Participant for a given Purchase Period, (ii) in accordance with Section
423(b)(8) of the Code, no more than $25,000 in Fair Market Value (determined at
the beginning of each Purchase Period) of Common Stock and other stock may be
purchased under the Plan and all other employee stock purchase plans (if any) of
the Company and the Affiliates by any one Participant for any calendar year and
(iii) the Committee may reasonably impose. If the purchases for all Participants
would otherwise cause the aggregate number of shares of Common Stock to be sold
under the Plan to exceed the number specified in Section 10.03, each Participant
shall be allocated a pro rata portion of the Common Stock to be sold.

     SECTION 4.02  Purchase Price.  Except as provided in Section 6.03, the
purchase price for any Purchase Period shall be the lesser of (i) 85% of the
Fair Market Value of the Common Stock on the first business day of that Purchase
Period or (ii) 85% of the Fair Market Value of the Common Stock on the last
business day of that Purchase Period, in each case rounded up to the next higher
full cent.

                                   ARTICLE V.

                               EXERCISE OF RIGHT

     SECTION 5.01  Purchase of Stock.  On the last business day of a Purchase
Period, the entire credit balance in each Participant's Stock Purchase Account
will be used to purchase the largest number of whole shares of Common Stock
purchasable with such amount (subject to the limitations of Section 4.01),
unless the Participant has filed with the Company, in advance of that date and
subject to such terms and conditions as the Committee in its sole discretion may
impose, a form provided by the Company which requests the distribution of part
or all of the credit balance in cash.

<PAGE>

     SECTION 5.02  Cash Distributions.  Any amount remaining in a Participant's
Stock Purchase Account after the last business day of a Purchase Period will be
paid to the Participant in cash within thirty (30) days after the end of that
Purchase Period.

     SECTION 5.03  Notice of Acceleration Date.  The Company shall use its best
efforts to notify each Participant in writing at least ten days prior to any
Acceleration Date that the then current Purchase Period will end on such
Acceleration Date.

                                  ARTICLE VI.

                      WITHDRAWAL FROM PLAN; SALE OF STOCK

     SECTION 6.01  Voluntary Withdrawal.  A Participant may, in accordance with
such terms and conditions as the Committee in its sole discretion may impose,
withdraw from the Plan and cease making payroll deductions by filing with the
Company a form provided for this purpose. In such event, the entire credit
balance in the Participant's Stock Purchase Account will be paid to the
Participant in cash within thirty (30) days. A Participant who withdraws from
the Plan will not be eligible to reenter the Plan until the beginning of the
next Purchase Period following the date of such withdrawal.

     SECTION 6.02  Death.  Subject to such terms and conditions as the Committee
in its sole discretion may impose, upon the death of a Participant, no further
amounts shall be credited to the Participant's Stock Purchase Account.
Thereafter, on the last business day of the Purchase Period during which such
Participant's death occurred and in accordance with Section 5.01, the entire
credit balance in such Participant's Stock Purchase Account will be used to
purchase Common Stock, unless such Participant's estate has filed with the
Company, in advance of that day and subject to such terms and conditions as the
Committee in its sole discretion may impose, a form provided by the Company
which elects to have the entire credit balance in such Participant's Stock
Account distributed in cash within thirty (30) days after the end of that
Purchase Period or at such earlier time as the Committee in its sole discretion
may decide. Each Participant, however, may designate one or more beneficiaries
who, upon death, are to receive the Common Stock or the amount that otherwise
would have been distributed or paid to the Participant's estate and may change
or revoke any such designation from time to time. No such designation, change or
revocation will be effective unless made by the Participant in writing and filed
with the Company during the Participant's lifetime. Unless the Participant has
otherwise specified the beneficiary designation, the beneficiary or
beneficiaries so designated will become fixed as of the date of the death of the
Participant so that, if a beneficiary survives the Participant but dies before
the receipt of the payment due such beneficiary, the payment will be made to
such beneficiary's estate.

     SECTION 6.03  Termination of Employment.  Subject to such terms and
conditions as the Committee in its sole discretion may impose, upon a
Participant's normal or early retirement with the consent of the Company under
any pension or retirement plan of the Company or Participating Affiliate, no
further amounts shall be credited to the Participant's Stock Purchase Account.
Thereafter, on the last business day of the Purchase Period during which such
Participant's approved retirement occurred and in accordance with Section 5.01,
the entire credit balance in such Participant's Stock Purchase Account will be
used to purchase Common Stock at the Fair Market Value of the Common Stock on
such date, unless such Participant has filed with the Company, in advance of
that day and subject to such terms and conditions as the Committee in its sole
discretion may impose, a form provided by the Company which elects to receive
the entire credit balance in such Participant's Stock Purchase Account in cash
within thirty (30) days after the end of that Purchase Period, provided that
such Participant shall have no right to purchase Common Stock in the event that
the last day of such a Purchase Period occurs more than three months following
the termination of such Participant's employment with the Company by reason of
such an approved retirement. In the event of any other termination of employment
(other than death) with the Company or a Participating Affiliate, participation
in the Plan will cease on the date the Participant ceases to be a Permanent
Full-Time Employee for any reason. In such event, the entire credit balance in
such Participant's Stock Purchase Account will be paid to the Participant in
cash within thirty (30) days. For purposes of this Section 6.03, a transfer of
employment to any Affiliate, or a leave of absence which has been approved by
the Committee, will not be deemed a termination of employment as a Permanent
Full-Time Employee.

<PAGE>

                                  ARTICLE VII.

                               NONTRANSFERABILITY

     SECTION 7.01  Nontransferable Right to Purchase.  The right to purchase
Common Stock hereunder may not be assigned, transferred, pledged or hypothecated
(whether by operation of law or otherwise), except as provided in Section 6.02,
and will not be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other disposition or
levy of attachment or similar process upon the right to purchase will be null
and void and without effect.

     SECTION 7.02  Nontransferable Account.  Except as provided in Section 6.02,
the amounts credited to a Stock Purchase Account may not be assigned,
transferred, pledged or hypothecated in any way, and any attempted assignment,
transfer, pledge, hypothecation or other disposition of such amounts will be
null and void and without effect.

                                 ARTICLE VIII.

                               STOCK CERTIFICATES

     SECTION 8.01  Delivery.  Promptly after the last day of each Purchase
Period and subject to such terms and conditions as the Committee in its sole
discretion may impose, the Company will cause to be delivered to or for the
benefit of the Participant a certificate representing the Common Stock purchased
on the last business day of such Purchase Period.

     SECTION 8.02  Securities Laws.  The Company shall not be required to issue
or deliver any certificate representing Common Stock prior to registration under
the Securities Act of 1933, as amended, or registration or qualification under
any state law if such registration is required. The Company shall use its best
efforts to accomplish such registration (if and to the extent required) not
later than a reasonable time following the Purchase Period, and delivery of
certificates may be deferred until such registration is accomplished.

     SECTION 8.03  Completion of Purchase.  A Participant shall have no interest
in the Common Stock purchased until a certificate representing the same is
issued to or for the benefit of the Participant.

     SECTION 8.04  Form of Ownership.  The certificates representing Common
Stock issued under the Plan will be registered in the name of the Participant or
jointly in the name of the Participant and another person, as the Participant
may direct on a form provided by the Company.

                                  ARTICLE IX.

               EFFECTIVE DATE, AMENDMENT AND TERMINATION OF PLAN

     SECTION 9.01  Effective Date.  The Plan was approved by the Board of
Directors on January 28, 1998 and shall be approved by the shareholders of the
Company within twelve (12) months thereof.

     SECTION 9.02  Plan Commencement.  The initial Purchase Period under the
Plan will commence on May 3, 1998. Thereafter, each succeeding Purchase Period
will commence and terminate in accordance with Section 1.03(k).

     SECTION 9.03  Powers of Board.  The Board of Directors may amend or
discontinue the Plan at any time. No amendment or discontinuation of the Plan,
however, shall without shareholder approval be made that: (i) absent such
shareholder approval, would cause Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the "Act") to become unavailable with respect to the Plan,
(ii) requires shareholder approval under any rules or regulations of the
National Association of Securities Dealers, Inc. or any securities exchange that
are applicable to the Company, (iii) permit the issuance of Common Stock before
payment therefor in full or, (iv) other than as provided in Article XI,
increases the number of shares of Common Stock available for issuance under the
Plan.

     SECTION 9.04  Automatic Termination.  The Plan shall automatically
terminate when all of the shares of Common Stock provided for in Section 10.03
have been sold.

<PAGE>

                                   ARTICLE X.

                                 ADMINISTRATION

     SECTION 10.01  The Committee.  The Plan shall be administered by a
committee (the "Committee") of two or more directors of the Company, each of
whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 under
the Act. The members of the Committee shall be appointed by and serve at the
pleasure of the Board of Directors.

     SECTION 10.02  Powers of Committee.  Subject to the provisions of the Plan,
the Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan, to establish
deadlines by which the various administrative forms must be received in order to
be effective, and to adopt such other rules and regulations for administering
the Plan as it may deem appropriate. The Committee shall have full and complete
authority to determine whether all or any part of the Common Stock acquired
pursuant to the Plan shall be subject to restrictions on the transferability
thereof or any other restrictions affecting in any manner a Participant's rights
with respect thereto but any such restrictions shall be contained in the form by
which a Participant elects to participate in the Plan pursuant to Section 2.02.
Decisions of the Committee will be final and binding on all parties who have an
interest in the Plan.

     SECTION 10.03  Stock to be Sold.  The Common Stock to be issued and sold
under the Plan may be treasury shares or authorized but unissued shares, or the
Company may purchase Common Stock in the market for sale under the Plan. Except
as provided in Section 11.01, the aggregate number of shares of Common Stock to
be sold under the Plan will not exceed 1,000,000 shares.

     SECTION 10.04  Notices.  Notices to the Committee should be addressed as
follows:

     ATS Medical Inc.
     Attn: John H. Jungbauer
     Chief Financial Officer
     3905 Annapolis Lane
     Minneapolis, Minnesota, 55447

                                  ARTICLE XI.

                   ADJUSTMENT FOR CHANGES IN STOCK OR COMPANY

     SECTION 11.01  Stock Dividend or Reclassification.  If the outstanding
shares of Common Stock are increased, decreased, changed into or exchanged for a
different number or kind of securities of the Company, or shares of a different
par value or without par value, through reorganization, recapitalization,
reclassification, stock dividend, stock split, amendment to the Company's
Articles of Incorporation, reverse stock split or otherwise, an appropriate
adjustment shall be made in the maximum numbers and kind of securities to be
purchased under the Plan with a corresponding adjustment in the purchase price
to be paid therefor.

     SECTION 11.02  Merger or Consolidation.  If the Company is merged into or
consolidated with one or more corporations during the term of the Plan,
appropriate adjustments will be made to give effect thereto on an equitable
basis in terms of issuance of shares of the corporation surviving the merger or
of the consolidated corporation, as the case may be.

                                  ARTICLE XII.

                                 APPLICABLE LAW

     Rights to purchase Common Stock granted under the Plan shall be construed
and shall take effect in accordance with the laws of the State of Minnesota.

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