EXHIBIT 10.1
RESTRICTED STOCK UNIT AWARD AGREEMENT
THIS AGREEMENT, dated as of December 7, 2006, is between ATS MEDICAL, INC.,
a Minnesota corporation (the "Company"), and Richard A. Curtis, an individual
resident of the State of Minnesota ("Employee").
RECITALS
A. The Company wishes to grant to Employee, effective as of the date of
this Agreement, an award of restricted stock units of the Company's common
stock, par value $.01 per share (the "Common Stock"), on the terms and subject
to the conditions set forth in this Agreement and the ATS Medical, Inc. 2000
Stock Incentive Plan.
B. Employee desires to accept such grant.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms have the
meanings set forth below:
"Award" has the meaning ascribed to such term in Section 2 hereof.
"Board" means the Board of Directors of the Company.
A "Change in Control" of the Company shall be deemed to have occurred if
(a) a change in control occurs of a nature that would be required to be reported
in response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended, whether or not the Company is then
subject to such reporting requirement; (b) more than 25 percent of the then
outstanding shares of Common Stock is acquired by any person or group; or (c)
individuals who at the date hereof constitute the Board of Directors of the
Company cease for any reason to constitute at least a majority thereof (unless
the election or the nomination for election of each new director was approved by
a vote of at least two-thirds of directors then still in office who were
directors at the beginning of the period and/or their successor directors who
were recommended or elected to succeed a beginning director by at least
two-thirds of the directors who were directors at the beginning of the period).
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning specified in Recital A hereof.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Plan" means the ATS Medical, Inc. 2000 Stock Incentive Plan, as amended
from time to time.
"Restricted Stock Units" means the right to receive Vested Shares upon
their vesting in accordance with Section 3 below.
"Shares" means, collectively, the shares of Common Stock subject to the
Award, whether or not such shares are Vested Shares.
"Vested Shares" means the Shares with respect to which the Restricted Stock
Units have vested at any particular time.
2. Award. The Company, effective as of the date of this Agreement, hereby
grants to Employee 50,000 Restricted Stock Units (the "Award") representing the
right to receive 50,000 Vested Shares, subject to the terms and conditions set
forth herein and in the Plan.
3. Vesting.
(a) Subject to the terms and conditions of this Agreement, the
Restricted Stock Units awarded hereunder to Employee shall vest and become the
right to receive Vested Shares in accordance with the following schedule:
Percentage or Number of
On Each of the Following Dates Shares that Vest
- ------------------------------ -----------------------
December 1, 2007 10,000
December 1, 2008 10,000
December 1, 2009 10,000
December 1, 2010 10,000
December 1, 2011 10,000
provided, however, that the Restricted Stock Units awarded hereunder are subject
to acceleration of vesting as follows:
(i) Each time the Board of Directors of the Company approves the term
sheet for (or, in the absence of a term sheet, the definitive agreement
for) a strategic investment developed by Employee, 12,500 of the Restricted
Stock Units will vest 120 days after the date of that approval, provided
that no more than 25,000 of the Restricted Stock Units will have their
vesting accelerated by this provision;
(ii) Each time a strategic investment developed by Employee that is
projected to contribute less than $2.0 million of annual operating income
in its first year closes, 12,500 of the Restricted Stock Units will vest
120 days after the date of that closing, provided that no more than 25,000
of the Restricted Stock Units will have their vesting accelerated by this
provision;
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(iii) If a strategic investment developed by Employee that is
projected to contribute more than $2.0 million of annual operating income
in its first year closes, 37,500 of the Restricted Stock Units will vest
120 days after the date of that closing, provided that Restricted Stock
Units will have their vesting accelerated by this provision only by the
first such closing to occur after the grant date of this award;
(iv) A single strategic investment may trigger accelerated vesting of
the Restricted Stock Units either under clauses (i) and (ii) above or under
clauses (i) and (iii) above;
(v) The Restricted Stock Units subject to accelerated vesting under
clauses (i), (ii) and (iii) above shall be the next 12,500 or 37,500
Restricted Stock Units, as the case may be, scheduled to vest under the
time-based vesting provisions shown in the table in Section 3(a) above.
(b) Notwithstanding the vesting provisions contained in Section 3(a)
above, but subject to the other terms and conditions set forth herein, if
Employee has been continuously employed by the Company until the date of a
Change In Control of the Company, all of the Restricted Stock Units shall
immediately vest on the date of such Change In Control.
(c) In the event of the disability (within the meaning of Section
22(e)(3) of the Code) or death of Employee, if Employee has been continuously
employed by the Company until the date of such disability or death, Employee or
his estate shall become immediately vested, as of the date of such disability or
death, in all of the Restricted Stock Units subject to the Award.
(d) Except as provided in Section 3(c), if Employee ceases to be an
employee for any reason prior to the vesting of the Restricted Stock Units
pursuant to Sections 3(a) or 3(b) hereof, Employee's rights to all of the
Restricted Stock Units (and the Shares subject to the Award) not vested on the
date that Employee ceases to be an employee shall be immediately and irrevocably
forfeited and the Employee will retain no rights with respect to the forfeited
units.
4. Additional Restriction on Transfer of Restricted Stock Units.
The Restricted Stock Units cannot be sold, assigned, transferred, gifted,
pledged, hypothecated, or in any manner encumbered or disposed of at any time
prior to delivery of the Shares underlying the Restricted Stock Units after the
Restricted Stock Units have vested pursuant to Section 3 above.
5. Issuance and Custody of Certificate; Representations of Employee.
(a) Subject to the restrictions in this Section 5, upon vesting of the
Restricted Stock Units and following payment of any applicable withholding taxes
pursuant to section 8 of this Agreement, the Company shall promptly cause to be
issued and delivered to Employee a certificate or certificates evidencing such
Vested Shares, free of any restrictive legends and registered in the name of
Employee or in the name of Employee's legal representatives, beneficiaries or
heirs, as the case may be, and shall cause such certificate or certificates to
be delivered to Employee or Employee's legal representatives, beneficiaries or
heirs.
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(b) The issuance of any Common Stock in accordance with this Award
shall only be effective at such time that the sale or issuance of Common Stock
pursuant to this Agreement will not violate any state or federal securities or
other laws.
(c) At any time after the vesting of the Restricted Stock Units and
prior to the issuance of the Vested Shares, if the issuance of the Vested Shares
to the Employee is prohibited due to limitations under this Section 5, the
Company shall use its reasonable best efforts to remove such limitations, unless
such limitations relate solely to Employee's personal situation. If such
limitations relate solely to Employee's personal situation, the Company will use
its reasonable best efforts to cooperate with the Employee in resolving such
limitation.
6. Rights as Shareholder. Prior to the Restricted Stock Units vesting and
Employee receiving his shares of Common Stock underlying the Restricted Stock
Units pursuant to Section 5 above, Employee shall not have ownership or rights
of ownership of any Common Stock underlying the Restricted Stock Units awarded
hereunder. However, Employee shall be entitled to receive dividend equivalents
on the Restricted Stock Units awarded, whether vested or unvested, when and if
dividends are declared by the Board on the Common Stock, in an amount of cash
per share equal to and on the same payment dates as dividends paid to other
common stockholders of the Company. Dividend equivalents paid before delivery of
the Vested Shares will be treated as compensation income for tax purposes and
will be subject to income and payroll tax withholding by the Company.
7. Distributions and Adjustments. In accordance with Section 4(c) of the
Plan, the Award shall be subject to adjustment in the event that any
distribution, recapitalization, reorganization, merger or other event covered by
Section 4(c) of the Plan shall occur.
8. Taxes. In order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it in connection
with this restricted stock unit award, and in order to comply with all
applicable federal or state tax laws or regulations, the Company may take such
action as it deems appropriate to insure that, if necessary, all applicable
federal or state income and social security taxes are withheld or collected from
Employee.
9. Employee's Employment. Nothing in this Agreement shall confer upon
Employee any right to continue in the employ of the Company or any of its
subsidiaries or interfere with the right of the Company or its subsidiaries, as
the case may be, to terminate Employee's employment or to increase or decrease
Employee's compensation at any time.
10. Notices. All notices, claims, certificates, requests, demands, and
other communications hereunder shall be in writing and shall be deemed to have
been duly given and delivered if personally delivered or if sent by nationally
recognized overnight courier, by facsimile or by registered or certified mail,
return receipt requested and postage prepaid, addressed as follows:
(a) If to the Company, to it at:
ATS Medical, Inc.
3905 Annapolis Lane, Suite 105
Minneapolis, MN 55447
Attention: Corporate Secretary
Facsimile: (763) 553-0052
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(b) If to Employee, to him at such Employee's address as most recently
supplied to the Company and set forth in the Company's records; or
(c) to such other address as the party to whom notice is to be given
may have furnished to the other party in writing in accordance herewith.
Any such notice or communication shall be deemed to have been received (i)
in the case of personal delivery, on the date of such delivery (or if such date
is not a business day, on the next business day), (ii) in the case of
nationally-recognized overnight courier, on the next business day after the date
sent, (iii) in the case of facsimile transmission, when received (or if not sent
on a business day, on the next business day after the date sent), and (iv) in
the case of mailing, on the third business day following the date on which the
piece of mail containing such communication is posted.
11. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any other or subsequent breach.
12. Undertaking. Both parties hereby agree to take whatever additional
actions and execute whatever additional documents either party may in their
reasonable judgment deem necessary or advisable in order to carry out or effect
one or more of the obligations or restrictions imposed on the other party under
the provisions of this Agreement.
13. Plan Provisions Control. The Award is made subject to the terms and
provisions of the Plan. In the event that any provision of the Agreement
conflicts with or is inconsistent in any respect with the terms of the Plan, the
terms of the Plan shall control.
14. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Minnesota (without giving effect to
principles of conflicts of laws).
15. Counterparts. This Agreement may be executed in one or more
counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts together shall constitute but one agreement.
16. Entire Agreement. This Agreement (and the other writings incorporated
by reference herein, including the Plan) constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior or contemporaneous written or oral negotiations, commitments,
representations, and agreements with respect thereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
ATS MEDICAL, INC,
By: /s/ Michael D. Dale
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Name: Michael D. Dale
Title: Chief Executive Officer
EMPLOYEE
/s/ Richard A. Curtis
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Name: Richard A. Curtis
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