Document:

Exhibit 10.15

 

EMPLOYMENT
AGREEMENT

 

AGREEMENT
made and entered into by and between AGA Medical Corporation, a Minnesota
corporation (the “Company”), and Brigid A. Makes of 46 Williams Lane,
Foster City, California 94404 (the “Executive”), effective as of the 2nd
day of October, 2006 (the “Effective Date”).

 

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

 

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

 

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

 

2.             Term.  The
Company hereby agrees to employ Executive as Chief Financial Officer and Senior
Vice President, and Executive hereby agrees to accept such employment, on the
terms and conditions set forth herein, for the period commencing on Effective
Date and terminating on the third (3rd) anniversary of the Effective
Date (unless sooner terminated as hereinafter set forth) (the “Term”); provided,
however, that commencing on such third (3rd) anniversary
date, and each anniversary of the date hereof thereafter, the Term of this
Agreement shall automatically be extended for one additional year unless at
least thirty (30) calendar days prior to each such anniversary date, the
Company or Executive shall have given notice that it or he, as applicable, does
not wish to extend this Agreement; provided, further, that the
Company may terminate this Agreement in its sole discretion in the event
Executive fails to relocate Executive’s primary residence within twenty-five
(25) miles of the Minneapolis-St. Paul Metropolitan Statistical Area within six
(6) months of the Effective Date. 
Following the date on which the Executive’s employment so terminates,
unless specifically otherwise agreed between Executive and the Company, the
Executive shall cease to hold any position (whether as an officer, director,
manager, Executive, trustee, fiduciary or otherwise) with the Company, its
parent, AGA Holdings, Inc. (“Holdings”), or any of its Subsidiaries
or Affiliates.

 

3.             Capacity and
Performance.

 

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

 

(b)           During the term of
Executive’s employment hereunder, the Executive shall be employed by the
Company on a full-time basis and shall perform such duties and responsibilities
on behalf of the Company, Holdings and the Company’s Subsidiaries as may be
designated from time to time by the Chief Executive Officer of Holdings.

 

 

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

 

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

 

(a)           Base Salary.  The Company shall pay the Executive a base
salary at the rate of Two Hundred Sixty Thousand dollars ($260,000) per year,
payable in accordance with the payroll practices of the Company for its
executives and subject to increase (but not subject to decrease without the
consent of Executive) from time to time by the Board, in its sole discretion
(such base salary, including any increase from time to time, is hereafter
referred to as the “Base Salary”).

 

(b)           Stock Options.  On the Effective Date or the date Executive
commences employment with the Company, whichever is later, the Company shall
grant Executive stock options to purchase 2,200,000 shares of Class B
common stock of the Company (“Options”). 
The Options shall consist of 200,000 shares of incentive stock options
and 2,000,000 shares of non-statutory stock options.  The Options will have a ten-year term and an
exercise price equal to $1.00 per share. 
Options will vest in five (5) years upon a vesting schedule equal
to twenty (20) percent of the total Option shares per year.  The Options will be subject to the terms and
conditions of the 2006 Equity Investment Plan and applicable Form of Stock
Option Agreement, as they may be amended from time to time by the Compensation
Committee of the Board in its sole discretion. 
Upon a Change of Control, the Options will automatically vest provided
Executive is employed at the time of the Change of Control.  Options and option shares shall be nonvoting
ownership and shall have only those rights as determined by the Compensation
Committee of the Board in its sole discretion. 
If Executive’s employment is terminated for Cause, all vested and
unvested Options and option shares will be forfeited without further
action.  If Executive’s employment is
terminated for any other reason other than for Cause, Executive shall retain
vested Options and option shares, and only unvested Options and option shares
will be forfeited.  Options not exercised
by Executive within ninety (90) days after the Termination Date will be
forfeited.

 

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(c)           Bonuses.  So long as Executive is still employed by
Company on March 15, 2007, the Company shall pay Executive a bonus in an
amount equal to fifty percent (50%) of Executive’s 2006 Base Salary.  Thereafter, so long as Executive is employed
by Company, the Company shall pay Executive a cash bonus for each calendar year
ending during the Term no later than the March 15th following the close of
each such calendar year, in an amount determined by the Compensation Committee
of the Board in its sole discretion; provided, however, that the cash bonus
shall not exceed 50% of the Base Salary of Executive at the close of such
preceding calendar year.

 

(d)           Vacations.  Executive shall be entitled to no less than
twenty (20) paid vacation days per calendar year during the Term subject to the
reasonable business needs of the Company. 
Executive shall also be entitled to no less than nine (9) sick/personal
days per calendar year during the Term. 
Vacation and sick/personal time shall otherwise be governed by the
policies of the Company, as in effect from time to time.

 

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

 

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

 

(g)           Automobile Allowance.  The Company shall pay Executive an automobile
allowance at the rate of Seven Hundred Fifty dollars ($750) per month, payable
as additional ordinary income.  In
addition, the Company shall pay or reimburse Executive automobile insurance
premiums incurred by Executive on Executive’s primary automobile used for
business purposes, including any applicable taxes incurred by Executive as a
result of such payments.

 

(h)           Relocation Expenses.  The Company shall pay or reimburse Executive
for reasonable relocation expenses and temporary living costs incurred by
Executive in transferring Executive’s residence to the State of Minnesota as
set forth in Attachment B hereto (“Relocation Expenses”) up to a maximum of One
Hundred Thousand dollars ($100,000).  Any
exceptions to the eligible Relocation Expenses must be agreed upon in advance
between Executive and the Company; provided, however, that the final determination
of reasonableness of Executive’s Relocation Expenses shall be in the sole
discretion of the Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.             Compensation
Upon Termination.

 

(a)           Expiration.  In the event of Executive’s
termination hereunder upon the expiration of any Term as contemplated by Section 2,
the Company shall pay Executive any amounts due and payable in accordance with Section 4(c),
plus one lump cash payment equal to six (6) months of the Base Salary at
the rate that was in effect during the Term prior to his Termination Date, plus
a bonus for the calendar year in which the Termination Date occurs on a
pro-rata basis through the Termination Date to be determined in the sole
discretion of the Compensation Committee; provided, however, that such bonus
shall not be less than 37.5% nor more than 50% of the Base Salary of Executive
through the Termination Date.  The sums
due under this Section 6(a) shall be paid  within the 30 day period following his
Termination Date.

 

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

 

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

 

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Executive the additional dollar amount that the
Company would have contributed if the Executive were to have remained a
participant through the end of such 18-month period.

 

(d)           By the
Company for Cause, or By Executive. 
In the event of a termination of Executive’s employment hereunder by the
Company for Cause as contemplated by Section 5(d), or by Executive as
contemplated by Section 5(f), or by the Company as contemplated in the
third proviso of Section 2, the Company shall pay in a lump sum within 30
days of the Termination Date, to the Executive the sum of the Base Salary
earned but not paid through the Termination Date plus the balance of
Executive’s earned but unused vacation days as of the Termination Date for the
calendar year in which the Termination Date occurs.

 

(e)           By the
Company Other than for Cause.  In the
event of any termination of Executive’s employment hereunder by the Company
other than for Cause as contemplated by Section 5(e), the Company shall
pay Executive (i) the Base Salary at the rate in effect on the Termination
Date for another twelve (12)  months, and (ii) a
one-time lump sum payment equal to the balance of Executive’s earned but unused
vacation days as of the Termination Date, and (iii) a bonus for the calendar year in which the
Termination Date occurs on a pro-rata basis through the Termination Date to be
determined in the sole discretion of the Compensation Committee; provided,
however, that such bonus shall not be less than 37.5% nor more than 50% of the
Base Salary of Executive through the Termination Date.  Any
obligation of the Company to the Executive pursuant to this Section 6(e) is
conditioned upon (i) the Executive signing a release of claims in the form
appended hereto as Attachment A (the “Executive Release”) within
twenty-one (21) days (or such greater period as the Company may specify)
following the date notice of termination of employment is given under either Section 5(e) or
Section 5(f) and upon the Executive’s not revoking the Executive
Release in a timely manner thereafter and (ii) the Executive’s
continued full performance of his continuing obligations under Sections 7, 8
and/or 9  hereof.  Base Salary to which the
Executive is entitled under this Section 6(e) shall be payable in
accordance with the normal payroll practices of the Company and will begin at
the Company’s next regular payroll period which is at least five business days
following the effective date of the Executive Release, but shall be retroactive
to the next business day following the Termination Date. The lump-sum payment
in respect of accrued vacation required by this Section 6(e) shall be
due and payable five business days following the effective date of the
Executive Release.

 

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

 

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

 

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

 

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

 

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

 

8.             Confidential
Information.

 

(a)           Executive acknowledges
that the Company, Holdings or any of the Company’s Subsidiaries continually
develop Confidential Information, that Executive has in the past and may in the
future develop Confidential Information for the Company, Holdings or any of the
Company’s Subsidiaries and that Executive has in the past and may in the future
learn of Confidential Information during the course of employment.   Executive will comply with the policies and
procedures of the Company and its Subsidiaries for protecting Confidential
Information and shall never use or disclose to any Person (except as required
by applicable law or for the proper performance of his duties and
responsibilities to the Company and its Subsidiaries), any Confidential
Information obtained by Executive incident to his employment or other
association with 

 

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the Company, Holdings or any of the Company’s
Subsidiaries.  Executive understands that
this restriction shall continue to apply after his employment terminates,
regardless of the reason for such termination.

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           “Change of Control” means (i) a consolidation or
merger of the Company with or into any other corporation (other than a merger
in which the Company is the surviving corporation and which will not result in
more than 50% of the capital stock of the Company being owned of record or
beneficially by persons other than the holders of such capital stock
immediately prior to such merger), (ii) a sale or disposition of all or
substantially all of the properties and assets of the Company as an entirety to
any other person or persons in a single transaction or series of related
transactions, (iii) an acquisition of beneficial ownership by any person
or group of voting stock of the Company representing more than 50% of the
voting power of all outstanding shares of such voting stock, whether by way of
merger or consolidation or otherwise, or (iv) any other transaction which
results in the disposition of 50% or more of the voting power of all classes of
capital stock of the Company on a combined basis.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16.           Severability.  If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the remainder of this 

 

10

 

Agreement, or the
application of such portion or provision in circumstances other than those as
to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.

 

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

 

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

 

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

 

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

 

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

 

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

 

23.           Compliance with Laws.  If the Company and Executive reasonably determine
that the terms of this Agreement are not in compliance with applicable laws or
regulations, including without limitation as would result in the imposition of
extraordinary current taxation, the Company and Executive agree to undertake
commercially reasonable efforts to amend this Agreement to cure such
noncompliance.  In furtherance of the
foregoing, it is the intent of the Company and Executive that this Agreement
comply with the provisions and principles established by the Internal Revenue
Service pursuant to Section 409A of the Internal Revenue Code of 1986, as
amended.

 

11

 

24.           Governing Law.  This contract and shall be construed and
enforced under and be governed in all respects by the laws of Minnesota,
without regard to the conflict of laws principles thereof.

 

[The balance of this page is
intentionally left blank.]

 

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

 

 

	
  THE EXECUTIVE:

  	
   

  	
  AGA MEDICAL
  CORPORATION:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Brigid A. Makes

  	
   

  	
  By:

  	
  /s/ Franck Gougeon

  
	
  Brigid A. Makes

  	
   

  	
   

  	
  Franck Gougeon

  
	
   

  	
   

  	
  Its: President and CEO

  

 

12

 

Attachment A

RELEASE OF CLAIMS

 

FOR
AND IN CONSIDERATION OF the special payments and benefits to be provided in
connection with the termination of my employment in accordance with the terms
of the Employment Agreement between me and AGA Medical Corporation, a Minnesota
corporation (the “Company”) dated as of
[                ],
2006 (the “Employment Agreement”), I, on my own behalf and on behalf of
my personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees and all others connected with me,
hereby release and forever discharge, the Company, AGA Medical Holdings, Inc.,
the Company’s Subsidiaries and Affiliates and all of their respective past and
present officers, directors, stockholders, members, partners, managers,
controlling persons, Executives, agents, representatives, successors and
assigns and all others connected with any of 
them (all collectively, the “Released”), both individually and in
their official capacities, as to acts in their official capacity or within the
scope of their employment or agency, from any and all rights, liabilities,
claims, demands and causes of action of any type (all collectively “Claims”)
which I have had in the past, now have, or might now have, through the date of
my signing of this Release of Claims, in any way resulting from, arising out of
or connected with my employment or its termination or pursuant to any federal,
state, foreign or local employment law, regulation or other requirement
(including without limitation Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, and
the fair employment practices laws of the state or states in which I have been
employed pursuant to the Employment Agreement, each as amended from time to
time); provided, however, that the foregoing release shall not apply to any
right or benefit that Section 6 of the Employment Agreement explicitly
provides shall survive the termination of my employment.  Capitalized terms used in this Release of
Claims which are defined in the Employment Agreement are used herein with the
meanings so defined.

 

In
signing this Release of Claims, I acknowledge that I have had at least
twenty-one (21) days from the date of notice of termination of my employment to
consider the terms of this Release of Claims and that such time has been
sufficient; that I am encouraged by the Company to seek the advice of an
attorney prior to signing this Release of Claims; and that I am signing this
Release of Claims voluntarily and with a full understanding of its terms.

 

I
understand that I may revoke this Release of Claims at any time within seven (7) days
of the date of my signing by written notice to the Company and that this
Release of Claims will take effect only upon the expiration of such seven-day
revocation period and only if I have not timely revoked it.

 

Intending
to be legally bound, I have signed this Release of Claims under seal as of the
date written below.

 

 

	
  Signature:

  	
   

  	
   

  
	
   

  	
  Brigid A. Makes

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
				

 

13Exhibit 10.16

 

INDEPENDENT
CONTRACTOR AGREEMENT

 

THIS
INDEPENDENT CONTRACTOR AGREEMENT (“Agreement”) is entered into by and among AGA
Medical Corporation, a Minnesota corporation, with its principal office located
at 5050 Nathan Lane North, Plymouth, MN 55442 (the “Company”), and
Ronald Lund, residing at 9002 Riley Lake Rd., Eden Prairie, MN 55347, and
Ronald E. Lund, LLC, a Minnesota limited liability of which Ronald Lund is the
sole owner (individually and collectively, the “Contractor”), effective
as of the 1st day of June, 2007 (the “Effective Date”).

 

WHEREAS,
the Company desires to retain Contractor to provide certain services for the
Company, and Contractor desires to perform such services pursuant to the terms
and conditions set for the herein.

 

NOW,
THEREFORE, in consideration of their respective promises and covenants, the
parties hereby agree as follows:

 

1.             Services.  Subject to the terms and conditions set forth
in this Agreement, the Company agrees to engage Contractor as Chief Legal
Officer to provide services advising and directing the Company in all aspects
of its legal affairs along with such other services as the Company may, from
time to time, reasonably request (the “Services”).  In addition, and without further
compensation, Contractor shall provide Services as requested for the Company’s
parent, AGA Medical Holdings, Inc. (“Holdings”) and/or one or more
of the Company’s Subsidiaries.

 

2.             Status as an
Independent Contractor.  Contractor
is and shall remain an independent contractor of the Company and is not and
shall not be deemed to be an employee, partner or joint venturer with the
Company. Contractor shall be entirely and solely responsible for his acts and
the acts of his agents, employees and subcontractors, if any, while engaged in the
performance of the Services. Contractor acknowledges that the Company shall not
be responsible for deducting withholding taxes, payroll taxes, social security
taxes or other similar items from compensation paid to Contractor. Contractor
shall be solely responsible for any and all such taxes, payments, deductions,
or contributions.  As an independent
contractor, Contractor shall not be entitled to participate in or receive
benefits under any insurance, benefit or bonus plans offered by the Company to
its employees. Contractor agrees to indemnify the Company and hold the Company
harmless from any and all claims or penalties asserted against the Company for
any failure by Contractor to pay taxes due on any form of compensation provided
by the Company pursuant to this Agreement.

 

3.             Term.      The term of this Agreement
shall be three (3) years from the Effective Date (“Term”) unless
otherwise terminated according to the provisions set forth in Section 5
hereof.

 

 

4.             Performance and
Compensation.

 

(a)           Hours.  Contractor shall perform Services to the
extent reasonably necessary to fulfill the responsibilities outlined in Section 2
hereof and which shall not be less than three (3) days per week.

 

(b)           Compensation and
Billing.  The Company shall pay
Contractor at the rate of $400 per hour worked up to a maximum of $3,200 per
day and a maximum of $16,000 per week. 
Contractor shall record time spent performing Services and shall provide
documentation to the Company in such form and time intervals as may be
requested by the Company to evidence hours worked.

 

(c)           Stock Options.  On the Effective Date or the date Contractor
commences Services for the Company, whichever is later, the Company shall grant
Contractor non-statutory stock options to purchase 600,000 shares of Class B
common stock of the Company (“Options”). 
The Options will have a ten-year term and an exercise price equal to
$2.00 per share.  One-third (1/3) of the
total Option shares will vest on each anniversary of the Effective Date subject
also to the pro rata vesting set forth in this Section 3(c).  The Options will be subject to the terms and
conditions of the 2006 Equity Investment Plan and applicable Form of Stock
Option Agreement, as they may be amended from time to time by the Compensation
Committee of the Board in its sole discretion. 
Upon a Change of Control, the Options will automatically vest provided
Contractor is performing Services at the time of the Change of Control.  Options and option shares shall be nonvoting
ownership and shall have only those rights as determined by the Compensation
Committee of the Board in its sole discretion. 
If Contractor’s Services are terminated for Cause, all vested and
unvested Options and option shares will be forfeited without further action.

 

If Contractor’s Services
are terminated for any other reason other than for Cause then (i) Contractor
shall retain Options and option shares that were vested as of the date
immediately preceding the Termination Date; and (ii) Contractor shall
become vested in additional Options automatically on the Termination Date which
shall be calculated by the following formula (which shall be rounded to the
nearest whole number of Options): (F/365) X 200,000, where F is the number of
calendar days between the immediately preceding anniversary of the Effective
Date (or the Effective Date if no such anniversary thereof shall have occurred)
and the Termination Date; and (iii) remaining unvested Options and option
shares will be forfeited.  Options not
exercised by Contractor within ninety (90) days after the Termination Date will
be forfeited.

 

(d)           Business Expenses.  The Company shall pay or reimburse Contractor
for all reasonable and necessary business expenses incurred or paid by
Contractor in the performance of the Services, subject to any maximum annual
limit or other restrictions on such expenses set by the Company and to such
reasonable substantiation and documentation as may be specified by the Company
from time to time; provided, however, that notwithstanding the
policies of the Company regarding travel expenses, Contractor shall be
permitted reasonable reimbursement for fuel consumed in the use of Contractor’s
private airplane when used for travel in connection with the Services, subject
to a maximum reimbursement of $3,500 per trip.

 

2

 

5.             Termination.  Subject to survival of obligations set forth
herein, this Agreement shall terminate under the following circumstances (the
date of each event of termination set forth below, by whatever cause, is
referred to as the “Termination Date”):

 

(a)           Expiration.  This Agreement shall terminate upon the
expiration of the Term pursuant to Section 3 hereof.

 

(b)           Death.  This Agreement shall immediately and
automatically terminate upon the death of Contractor during the Term.

 

(c)           Failure to Perform.  The Company may terminate this Agreement,
upon five (5) business days’ notice to Contractor, in the event that
Contractor fails to perform the Services requested by the Company for a period
of fifteen (15) consecutive business days or fails to perform Services totaling
at least 900 hours during any consecutive 365 calendar day period of the Term
for any reason other than expiration, death, or by the Company for Cause as
contemplated in Sections 5(a), 5(b) or 5(d) herein.

 

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

 

(e)           By the Company Other
than for Cause.  This Agreement may
be terminated by the Company at any time without Cause.

 

(f)            By the Contractor.  The Contractor may terminate this Agreement
at any time upon the provision of sixty (60) days prior written notice to the
Company.

 

6.             Compensation
Upon Termination.

 

(a)                                  By
the Company Other than for Cause.  In
the event of any termination of this Agreement by the Company other than for
Cause as contemplated by Section 5(e), the Company shall pay Contractor a
total sum equal to the number of complete calendar weeks remaining in the Term
times $3,200. Any obligation of the Company
to the Contractor pursuant to this Section 6(a) is conditioned upon (i) the
Contractor signing a release of claims in the form appended hereto as Attachment
A (the “Contractor Release”) within twenty-one (21) days (or such
greater period as the Company may 

 

3

 

specify) following the date
notice of termination of this Agreement is given under Section 5(e) and
upon the Contractor’s not revoking the Contractor Release in a timely manner
thereafter and (ii) the Contractor’s continued full performance of
Contractor’s continuing obligations under Sections 7, 8 and/or 9  hereof.  The sum paid under this Section 6(a) shall
be paid to Contractor in accordance with the normal billing periods and maximum
amount set forth in Section 4(b) and will begin at the next regular
billing period which is at least five business days following the effective
date of the Contractor Release, but shall be retroactive to the next business
day following the Termination Date.

 

(b)           Other Causes.  In
the event this Agreement is terminated upon expiration, death, failure to
perform, by the Company for Cause, or by Contractor as contemplated by Sections
5(a), 5(b), 5(c), 5(d) or 5(f) hereunder, the Company shall pay
Contractor (or Contractor’s estate in the case of death) any outstanding sums
due and owing for Services performed and expenses incurred through the
Termination Date, within the 30 day period following his Termination Date.

 

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

 

(a)           During the Term of this
Agreement and for eighteen (18) months after the Termination Date (in the
aggregate, the “Non-Competition Period”), Contractor shall not, directly or
indirectly, whether as owner, partner, investor, consultant, agent, employee,
independent contractor, co-venturer or otherwise (other than through ownership
of  publicly-traded capital stock of a
corporation which represents less than one percent (1%) of the outstanding
capital stock of such corporation), (i) compete with the Company, Holdings
or any of the Company’s Subsidiaries in any business related to developing,
selling, licensing or otherwise providing Products and related services to
physicians, hospitals or other medical establishments in the United States or
such other business activities which the Company, Holdings or any of the
Company’s Subsidiaries shall conduct or intend to conduct as of the Termination
Date, or (ii) undertake any planning for any business competitive with the
Company, Holdings or any of the Company’s Subsidiaries.  Specifically, but without limiting the
foregoing, Contractor agrees not to engage in any manner in any activity that
is directly or indirectly competitive or potentially competitive with the
business of the Company, Holdings or any of the Company’s Subsidiaries as
conducted or under consideration at any time during the Term of this Agreement
or performance of the Services for the Company or any of its Subsidiaries
(including prior to the date hereof).

 

(b)           Contractor agrees that,
during the Term of this Agreement, Contractor will not undertake any outside
activity, whether or not competitive with the business of the Company, Holdings
or the Company’s Subsidiaries, that could reasonably give rise to a conflict of
interest or otherwise interfere with the performance of the Services for the
Company, Holdings or any of the Company’s Subsidiaries; provided, however,
that Contractor may continue to perform as counsel in the case entitled Innovair
Aviation, 

 

4

 

Ltd. v. United States, so long as
such representation does not violate conflict of interest rules.

 

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

 

8.             Confidential
Information.

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

6

 

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

 

(b)           “Change of Control” means (i) a consolidation or
merger of the Company with or into any other corporation (other than a merger in
which the Company is the surviving corporation and which will not result in
more than 50% of the capital stock of the Company being owned of record or
beneficially by persons other than the holders of such capital stock
immediately prior to such merger), (ii) a sale or disposition of all or
substantially all of the properties and assets of the Company as an entirety to
any other person or persons in a single transaction or series of related
transactions, (iii) an acquisition of beneficial ownership by any person
or group of voting stock of the Company representing more than 50% of the
voting power of all outstanding shares of such voting stock, whether by way of
merger or consolidation or otherwise, or (iv) any other transaction which
results in the disposition of 50% or more of the voting power of all classes of
capital stock of the Company on a combined basis.

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17.           Notices.  Any and all notices, requests, demands and
other communications provided for by this Agreement shall be in writing and
shall be effective when delivered in person, when delivered by courier at
Contractor’s last known address on the books of the 

 

8

 

Company, or five (5) business
days following deposit in the United States mail, postage prepaid, registered
or certified, and addressed to Contractor at his last known address on the
books of the Company or, in the case of the Company, at its principal place of
business, attention of the Chairman of the Board, or to such other address as
either party may specify by notice to the other actually received.

 

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

 

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

 

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

 

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

 

22.           Compliance with Laws.  If the Company and Contractor reasonably
determine that the terms of this Agreement are not in compliance with applicable
laws or regulations, including without limitation as would result in the
imposition of extraordinary current taxation, the Company and Contractor agree
to undertake commercially reasonable efforts to amend this Agreement to cure
such noncompliance.  In furtherance of
the foregoing, it is the intent of the Company and Contractor that this
Agreement comply with the provisions and principles established by the Internal
Revenue Service pursuant to Section 409A of the Internal Revenue Code of
1986, as amended.

 

23.           Governing Law.  This contract and shall be construed and
enforced under and be governed in all respects by the laws of Minnesota,
without regard to the conflict of laws principles thereof.

 

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

 

 

	
  THE CONTRACTOR:

  	
   

  	
  AGA MEDICAL
  CORPORATION:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Ronald Lund

  	
   

  	
  By:

  	
  /s/ Franck Gougeon

  
	
  Ronald Lund and

  	
   

  	
  Franck Gougeon

  
	
  Ronald E. Lund, LLC

  	
   

  	
  Its: President and CEO

  

 

9

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