Exhibit 10.5
SEVERANCE PAY AGREEMENT
(TERMINATION WITHOUT CAUSE)
THIS AGREEMENT is made as of the 31st day of July 1998,
between Diametrics Medical, Inc., a Minnesota corporation (the "Company") and
___________________ ("Employee").
WITNESSETH THAT:
WHEREAS, it is the purpose of this Agreement to specify the
financial arrangements that the Company will provide to Employee upon Employee's
separation from employment with the Company or one of its subsidiaries under the
circumstances described herein; and
WHEREAS, this Agreement is adopted in the belief that it is in
the best interests of the Company and its shareholders to provide stable
conditions of employment for Employee, thereby minimizing personnel turnover and
enhancing the Company's and its subsidiaries' ability to recruit highly
qualified people.
NOW, THEREFORE, to assure the Company that it will have the
continued dedication of Employee notwithstanding the possibility, threat or
occurrence of a bid to take over control of the Company, and to induce Employee
to remain in the employ of the Company or the subsidiary of the Company with
which Employee is employed (the "Subsidiary"), and for other good and valuable
consideration, the Company and Employee agree as follows:
1. Term of Agreement.
This Agreement shall be for a three-year term commencing on
the date hereof and shall be automatically renewed for an additional three-year
term thereafter unless canceled in writing by either party hereto at least 60
days prior to expiration of the initial or any renewal term.
2. Termination of Employment.
(i) The Company or the Subsidiary, as the case may be, shall
at all times have the right to terminate Employee from employment at any time
during the term of this Agreement with or without Cause by written notice to
Employee. If the termination is for Cause, the notice shall specify the
particulars of the conduct of Employee forming the basis for such termination,
and Employee shall not be entitled to any payment pursuant to Section 4 for
termination for Cause.
(ii) Employee's rights upon termination of employment after
the expiration of the term of this Agreement shall be governed by the standard
-1-
employment termination policy applicable to Employee in effect at the time of
termination.
3. Definitions
"Cause" shall mean termination by the Company or the
Subsidiary, as the case may be, of Employee's employment based upon (a) the
willful and continued failure by Employee substantially to perform Employee's
duties and obligations (other than any such failure resulting from Employee's
incapacity due to physical or mental illness) or (b) the willful engaging by
Employee in misconduct which is materially injurious to the Company or any of
its subsidiaries, monetarily or otherwise. For purposes of this paragraph, no
act, or failure to act, on Employee's part shall be considered "willful" unless
done, or omitted to be done, by Employee in bad faith and without reasonable
belief that his action or omission was in the best interests of the Company and
its subsidiaries.
4. Benefits Upon Termination Under Section 2(i)
Upon the termination of the employment of Employee pursuant to
Section 2(i) hereof without Cause, Employee shall be entitled to receive the
benefits specified in this Section 4.
(a) The Company shall pay to Employee not later than one
business day prior to the date that the termination of Employee's employment
becomes effective.(i) the full base salary earned and other compensation (other
than any bonus referred to in clause (ii) below) by Employee and unpaid through
the date that such termination becomes effective, at the rate in effect at the
time written notice of termination was given, (ii) any amount earned by Employee
as a bonus with respect to the fiscal year of the Company preceding the
termination of Employee's employment if such bonus has not theretofore been paid
to Employee, (iii) an amount equal to a pro rata portion, based on number of
days elapsed, of the bonus Employee would have earned for the year in which
termination is effective, assuming for such purposes that the Company achieves
targeted performance, and (iii) an amount representing vacation pay earned or
accrued by Employee but not taken.
(b) The Company shall pay as severance pay to Employee, (i)
for a period of twelve (12) months following the effective date of such
termination, on the same terms in effect on such date and in accordance with the
Company's then applicable payroll policies, Employee's full base salary then in
effect plus a pro rata portion of the targeted bonus Employee would have earned
for the year in which termination is effective, assuming for such purposes that
the company and employee achieve targeted performance, or, at the option of the
Employee, (ii) a lump-sum payment, paid no later than one business day prior to
the date that the termination of Employee's employment becomes effective, of all
amounts payable under 4b(i) above.
-2-
Employee shall not be required to mitigate the amount of any payment provided
for in this Section 4 by seeking other employment or otherwise. The amount of
any payment or benefit provided in this Section 4 shall not be reduced by any
compensation earned by Employee as a result of any employment by another
employer.
5. Successors; Binding Agreement; Assignment.
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise), to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Employee to compensation from the Company in the same amount and on the same
terms as Employee would be entitled hereunder if Employee's employment were
terminated without Cause. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 5(i) or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(ii) This Agreement is personal to Employee and Employee may
not assign or transfer any part of Employee's rights or duties hereunder, or any
compensation due to Employee hereunder, to any other person. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.
6. Modification; Waiver. No provisions of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in a writing signed by Employee and such officer as may be
specifically designated by the Board of Directors of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time.
8. Notice. All notices, requests, demands and all other
communications required or permitted by either party to the other party by this
Agreement (including, without limitation, any notice of termination of
employment) shall be in writing and shall be deemed to have been duly given when
delivered personally or mailed by regular, certified or registered mail, return
receipt requested, at the address of the other party, as follows:
-3-
If to the Company, to:
Diametrics Medical, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
If to Employee, to:
Either party hereto may change its address for purposes of this Section 8 by
giving fifteen (15) days' prior notice to the other party hereto.
9. Severability. If any term or provision of this Agreement or
the application hereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
10. Headings. The headings in this Agreement are inserted for
convenience or reference only and shall not be a part of or control or affect
the meaning of this Agreement.
11. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12. Governing Law/Arbitration. This Agreement has been
executed and delivered in the State of Minnesota and shall in all respects be
governed by, and construed and enforced in accordance with, the laws of the
State of Minnesota, including all matters of construction, validity and
performance. Notwithstanding the foregoing, any dispute as to "Cause" shall be
settled by final and binding arbitration by a sole arbitrator in accordance with
rules of the Center for Public Resources Rules for Non-Administered Arbitration
of Business Disputes in effect as of the date of this Agreement. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. ss. 1-16, and
judgment upon the award rendered by the arbitrator may be entered by any court
having jurisdiction thereof. The place of arbitration shall be Minneapolis,
Minnesota.
13. Entire Agreement. This Agreement supersedes any and all
other oral or written agreements or policies made relating to the subject matter
hereof; provided that, this Agreement shall not supersede or limit in any way
Employee's rights under any benefit plan, program or arrangements in accordance
with their terms.
-4-
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed in its name by a duly authorized officer, and Employee has hereunto
set his hand, all as of the date first written above.
Diametrics Medical, Inc.
By
---------------------------------
Its
------------------------------
Employee
-5-
