Exhibit 10.1
ROBERT J. PALMISANO
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT
     This EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT (this “Agreement”) is made
as of April 6, 2008 (the “Effective Date”) by and among ev3 Inc., a Delaware
corporation (“ev3”), and Robert J. Palmisano, an individual (“Executive”), with
respect to the facts and circumstances set forth below. Capitalized terms used
herein without definition shall have the respective meanings assigned thereto in
Article 12 of this Agreement.
RECITALS
     WHEREAS, ev3 desires to employ Executive as its President and Chief
Executive Officer and to appoint Executive as a member of the Board, and
Executive desires to accept such employment and appointment;
     NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1
1.1 Employment. ev3 will hereby employ Executive as the President and Chief
Executive Officer of ev3 on the terms and conditions hereinafter set forth. For
purposes of payroll and related corporate record, Executive will be deemed to be
an employee of ev3 Endovascular, Inc., a wholly-owned subsidiary of ev3.
Executive will also be appointed to serve as a member of the Board.
1.2 Term of Agreement. This Agreement is effective immediately and will continue
for a period of three years until April 6, 2011 (the “Term”) and shall be
automatically extended thereafter for successive terms of one year each, unless
either party provides notice to the other at least ninety days prior to the
expiration of the original or any extension term that the Agreement is not to be
extended. The employment period may be sooner terminated by either party in
accordance with Articles 2 and 3.
1.3 Duties. Executive shall perform all the duties and obligations reasonably
associated with the position of President and Chief Executive Officer consistent
with the Bylaws of ev3 as in effect from time to time, subject solely to the
supervision of the Board, and such other executive duties consistent with the
foregoing as are mutually agreed upon from time to time by Executive and the
Board. Executive shall perform the services contemplated herein faithfully and
diligently. Executive shall devote substantially all of his business time and
efforts to the rendition of such services; provided, that Executive may
participate in social, civic, charitable, religious, business, educational or
professional associations and, with the prior approval of the Board, serve on
the boards of directors of no more than two other companies at any given time,
so long as such participation does not materially interfere with the duties and
obligations of Executive hereunder.
1.4 Primary Work Location. Executive’s primary work location for the performance
of services hereunder will be at the Company’s offices located in Plymouth,
Minnesota. Executive acknowledges and agrees that the nature of the Company’s
business will require travel from time to time. In addition, the Company will
pay or reimburse Executive for expenses incurred for weekly air travel between
his personal residences (in Massachusetts and Florida) and Plymouth, Minnesota.
To the extent that such payments are subject to income taxes payable by
Executive, the Company shall, for each tax year of Executive in which such
payments are made or deemed made, pay Executive an amount to reimburse Executive
for such income taxes for such tax year, on a gross-up basis.

 

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1.5 Base Pay. In consideration for Executive’s services hereunder, the Company
will pay Executive an annual base salary at the rate of not less than $600,000
per year during each year of the Term (subject to further annual increases by
the Board), payable in accordance with the Company’s regular payroll schedule
from time to time (less any deductions required for Social Security, state,
federal and local withholding taxes, and any other authorized or mandated
similar withholdings).
1.6 Bonus Plan. Executive shall be entitled to earn a bonus with respect to each
year during the Term, based upon Executive’s achievement of performance
objectives set by the Company’s compensation committee (the “Compensation
Committee”) after consultation with Executive, with a targeted bonus opportunity
of one hundred percent (100%) of Executive’s Base Pay for such year. Any such
bonus shall be paid no later than annually within 2 1/2 months following the end
of the calendar year to which the bonus relates.
1.7 Equity Compensation. As an additional element of compensation to Executive,
in consideration of services to be rendered hereunder, on the Effective Date,
the Company shall grant to Executive options to purchase an aggregate of
1,054,000 shares of ev3 common stock (the “Initial Options”). The Initial
Options shall vest 25% on the first anniversary of the grant date and the
remaining 75% shall vest at a rate of 1/36th per month over the thirty-six
months following the first anniversary of the grant date. The terms and
conditions of the Initial Options shall be governed by Stock Option Agreements,
substantially in the forms attached to this Agreement as Exhibits A-1 and A-2
reflecting such grant and, in each case, providing for, among other things, the
terms set forth in this Article 1.7. In addition to the Initial Options, the
Compensation Committee shall review Executive’s long-term compensation at least
annually and, after consultation with Executive, shall consider granting annual
additional equity awards.
1.8 Vacation. Executive shall be entitled to not less than four (4) weeks of
vacation each calendar year, without reduction in compensation, and otherwise in
accordance with the general policies of the Company applicable generally to
other senior executives of the Company.
1.9 Employee Benefits. Executive shall receive all group insurance, including
but not limited to health and dental, and any other benefits under any of the
Company’s Benefit Plans, on the same basis as are available to other senior
executives of the Company under the Company’s personnel policies in effect from
time to time. Executive shall receive all other such fringe benefits as the
Company may offer to other senior executives of the Company generally under the
Company personnel policies in effect from time to time, such as health and
disability insurance coverage and paid sick leave.
1.10 Indemnification. Concurrently with the execution and delivery of this
Agreement, the Company and Executive are entering into an indemnification
agreement in the form attached hereto as Exhibit B providing, among other
things, for indemnification of Executive to the fullest extent permitted by
applicable law.
1.11 Reimbursement for Expenses. Executive shall be reimbursed by the Company
for all documented reasonable expenses (including legal expenses incurred in
negotiating and executing this Agreement) incurred by Executive in the
performance of his duties or otherwise in furtherance of the business of the
Company in accordance with the policies of the Company in effect from time to
time. Any reimbursements to Executive shall be paid as promptly as practicable
and in any event not later than the last day of the calendar year in which the
expenses are incurred, and the amount of the expenses eligible for reimbursement
during any calendar year will not affect the amount of expenses eligible for
reimbursement in any other calendar year.

 

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1.12 Housing. During the Term, the Company shall pay Executive $5,000 per month
for rental payments and utilities for an apartment in or near Plymouth,
Minnesota plus any reasonable future rent or utility cost increases imposed by
the landlord for such apartment from time to time after the effective date
hereof. By way of clarification, Executive shall be responsible for all
arrangements related to renting an apartment in or near Plymouth, Minnesota, and
the Company’s obligations hereunder shall be limited to the payment to Executive
for rental and utility payments. To the extent that such payments are subject to
income taxes payable by Executive, the Company shall, for each tax year of
Executive in which such payments are made or deemed made, pay Executive an
amount to reimburse Executive for such income taxes for such tax year, on a
gross-up basis.
1.13 Automobile Payments. During the Term, the Company shall pay Executive
$1,500 per month, in connection with Executive’s leasing or purchase of an
automobile (including without limitation insurance and costs of maintenance). By
way of clarification, Executive shall be responsible for all arrangements
related to leasing or purchasing an automobile, and the Company’s obligations
hereunder shall be limited to the payment to Executive for such lease or
purchase payments. To the extent that such payments are subject to income taxes
payable by Executive, the Company shall, for each tax year of Executive in which
such payments are made or deemed made, pay Executive an amount to reimburse
Executive for such income taxes for such tax year, on a gross-up basis.
1.14 Stock Option Acceleration. In the event of a Change in Control, regardless
of whether the acquiring entity or Successor assumes or replaces the unvested
stock options or stock awards then granted to Executive pursuant to any of the
Stock Incentive Plans, the vesting schedules under the applicable Stock Option
Agreements will be accelerated and all such stock options will become fully
vested and immediately exercisable upon the closing of the Change in Control.
1.15 Gross-Up Payments. In the event that it is determined that any payment or
benefit provided by the Company to or for the benefit of Executive, either under
this Agreement or otherwise, will be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code or any successor provision
(“Section 4999”), the Company will, prior to the date on which any amount of the
excise tax must be paid or withheld, make an additional lump-sum payment (the
“Gross-Up Payment”) to Executive. The Gross-Up Payment will be sufficient, after
giving effect to all federal, state and other taxes and charges with respect to
the Gross-Up Payment, to make Executive whole for all taxes (including
withholding taxes) imposed under Section 4999.
     Determinations under this section 1.15 will be made by the Company’s then
current firm of independent auditors (the “Firm”). The determinations of the
Firm will be binding upon the Company and the Executive except as the
determinations are established in resolution (including by settlement) of a
controversy with the Internal Revenue Service to have been incorrect. All fees
and expenses of the Firm will be paid by the Company.
     If the Internal Revenue Service asserts a claim that, if successful, would
require the Company to make a Gross-Up Payment or additional Gross-Up Payment,
the Company and Executive will cooperate fully in resolving the controversy with
the Internal Revenue Service. The Company will make or advance such Gross-Up
Payments as are necessary to prevent Executive from having to bear the cost of
payments made to the Internal Revenue Service in the course of, or as a result
of, the controversy. The Firm will determine the amount of such Gross-Up
Payments or advances and will determine after resolution of the controversy
whether any advances must be returned by Executive to the Company. The Company
will bear all expenses of the controversy and will gross Executive up for any
additional taxes that may be imposed upon Executive as a result of payment of
such expenses.

 

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ARTICLE 2
2.1 Death or Disability. This Agreement will terminate immediately upon
Executive’s death or Disability.
2.2 Termination for Cause. This Agreement may be terminated by the Company for
Cause, by providing the Executive with a Notice of Termination that contains a
proposed Date of Termination.
2.3 Termination for Good Reason. This Agreement may be terminated by Executive
for Good Reason.
2.4 Any Other Reason. The Company shall have to right to terminate Executive’s
employment under this Agreement at any time without Cause and Executive shall
have the right to terminate employment under this Agreement at any time without
Good Reason.
ARTICLE 3
3.1 Termination without Cause or for Good Reason. In the event that this
Agreement is terminated by either (a) the Company for any reason other than for
Cause or (b) Executive for Good Reason, but excluding such a termination
following a Change in Control, Executive shall be entitled to receive a single
lump sum payment equal to the sum of the following amounts: (1) the amount of
any accrued and unpaid Base Pay then due to Executive and any accrued and unpaid
bonus, (2) the value of any accrued and unused vacation, and (3) a single lump
sum payment equal to (i) 150% of Executive’s then current Base Pay and (ii) a
pro rata portion of Executive’s bonus that would have been earned with respect
to the year in which the termination had the Executive remained employed through
the end of the performance period based upon the number of months in the year of
termination ending on the Date of Termination (assuming for this Article 3.1
that Executive has worked the full month of the month in which the Date of
Termination Control occurs) to the extent the performance goals for the
performance period have been achieved, for any performance periods beginning
after January 1, 2009; provided, that, by way of clarification, in no event
shall any such payment be made in the event this Agreement is terminated
pursuant to Section 2.1. In addition, the Executive shall be entitled to
(i) elect continuation coverage under COBRA during the Severance Period and the
Company hereby agrees to pay the premiums for such continuation coverage,
(ii) elect health care continuation coverage on substantially the same terms as
existed prior to the Date of Termination for an additional eighteen months
following the termination of the Severance Period provided that the Executive
shall pay to the Company a monthly amount equal to the COBRA premium that would
be payable had the Executive been entitled to COBRA coverage under the
applicable health care plan, and (iii) for the duration of the Severance Period,
to receive all fringe benefits and perquisites to which he is entitled under
this Agreement and which may legally be provided by the Company to non-employees
(including without limitation cellular telephone, blackberry (or other PDA) and
the car allowance provided for under Article 1.13 of this Agreement, but
excluding the housing allowance other than amounts (on a grossed-up basis)
necessary to pay lease or rental payments for Executive’s apartment described in
Section 1.12 with respect to any lease existing at the Date of Termination,
provided that lease or rental payments shall not exceed the duration of the
Severance Period regardless of the length of the lease).
3.2 Termination without Cause or for Good Reason Following a Change in Control.
Executive will become entitled to the benefits described in this Article 3.2 if
Executive’s employment is terminated by the Company for any reason other than
Cause or Executive terminates employment for Good Reason following a Change in
Control that occurs during the Term.

 

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(a) The Company will be responsible for paying to Executive all of the Base Pay
owed through such date, the value of any accrued and unused vacation, and a pro
rata portion of Executive’s Bonus Plan Payment based upon the number of months
in the current year which Executive has worked prior to the date of the Change
in Control, assuming for this Article 3.2(a) that Executive has worked the full
month of the month in which the Change in Control occurs.
(b) The following terms shall control notwithstanding any conflicting terms
contained in any employment agreement, or Stock Option Agreement. In addition to
the payments under Article 3.2(a), the Company will be responsible for making a
lump sum payment to Executive equal to the sum of (A) 36 months of Executive’s
then current Base Pay, and (B) an amount equal to 300% of Executive’s Bonus Plan
Payment for the current year.
(c) The Executive shall also be entitled to (i) elect continuation coverage
under COBRA during the Severance Period and the Company hereby agrees to pay the
premiums for such continuation coverage for the duration of the Severance
Period, (ii) elect health care continuation coverage on substantially the same
terms as existed prior to the Date of Termination for an additional 18 months
following the termination of the Severance Period provided that the Executive
shall pay to the Company a monthly amount equal to the COBRA premium that would
be payable had the Executive been entitled to COBRA coverage under the
applicable health care plan, and (iii) for the duration of the Severance Period,
to receive all fringe benefits and perquisites to which he is entitled under
this Agreement and which may legally be provided by the Company to non-employees
(including without limitation cellular telephone, blackberry (or other PDA) and
the car allowance provided for under Article 1.13 of this Agreement, but
excluding the housing allowance other than amounts (on a grossed-up basis)
necessary to pay lease or rental payments for Executive’s apartment described in
Section 1.12 with respect to any lease existing at the Date of Termination,
provided that lease or rental payments shall not exceed the duration of the
Severance Period regardless of the length of the lease).
Notice by the Company of its intent not to renew the Agreement shall be treated
as a termination by the Company without Cause for purposes of this Agreement.
3.3 Termination without Good Reason or for Cause or on account of Disability. In
the event that Executive’s employment terminates as a result of Disability or
otherwise (other than by the Company without Cause or by the Executive for Good
Reason), the Company will pay to the Executive (or his estate) his (1) accrued
but unpaid Base Pay and bonus payments through the Date of Termination and
(2) unused vacation pay accrued through the Date of Termination.
3.4 Mitigation. The Company expressly agrees and acknowledges that, with respect
to any payments due Executive under this Article 3, Executive shall have no duty
or obligation to seek or accept other employment, or otherwise mitigate
Executive’s damages resulting from such termination.
3.5 Waiver and Release Agreement. In consideration of the severance payments and
other benefits described in this Article 3, to which severance payments and
benefits Executive would not otherwise be entitled, and as a precondition to
Executive becoming entitled to such severance payments and other benefits under
this Agreement, Executive agrees to execute and deliver to the Company within
30 days after the applicable Date of Termination a Waiver and Release Agreement
in the form reasonably acceptable to the parties (the “Release”). If Executive
fails to execute and deliver the Release Agreement within 30 days after the
applicable Date of Termination, or if Executive revokes such Release as provided
therein, the Company shall have no obligation to provide any of the severance
payments and other benefits described in this Article 3. The timing of severance
payments upon Executive’s execution and delivery of the Release shall be further
governed by the following provisions:

 

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     (a) In any case in which the Release (and the expiration of any revocation
rights provided therein) could only become effective in a particular tax year of
Executive, payments conditioned on execution of the Release shall be made within
10 days after the Release becomes effective and such revocation rights have
lapsed.
     (b) In any case in which the Release (and the expiration of any revocation
rights provided therein) could become effective in one of two taxable years of
Executive depending on when Executive executes and delivers the Release,
payments conditioned on execution of the Release shall be made within 10 days
after the Release becomes effective and such revocation rights have lapsed, but
not earlier than the first business day of the later of such tax years.
3.6 Required Delay for Certain Deferred Compensation and Section 409A. In the
event that any compensation with respect to Executive’s termination is “deferred
compensation” within the meaning of Section 409A of the Code and the regulations
promulgated thereunder (“Section 409A”), the stock of the Company or any
affiliate is publicly traded on an established securities market or otherwise,
and Executive is determined to be a “specified employee,” as defined in
Section 409A(a)(2)(B)(i) of the Code, payment of such compensation shall be
delayed as required by Section 409A. Such delay shall last six (6) months from
Executive’s Date of Termination, except in the event of Executive’s death.
Within thirty (30) days following the end of such six-month period, or, if
earlier, Executive’s death, the Company will make a catch-up payment to
Executive equal to the total amount of such payments that would have been made
during the six-month period but for this Article 3.6. Such catch-up payment
shall bear simple interest at the prime rate of interest as published by the
Wall Street Journal’s bank survey as of the first day of the six month period,
which such interest shall be paid with the catch-up payment. Wherever payments
under this Agreement are to be made in installments, each such installment shall
be deemed to be a separate payment for purposes of Section 409A. In addition,
any tax gross-up payments made pursuant to this Agreement shall be made by the
Company by the end of the taxable year following the taxable year in which the
tax payment was remitted by Executive. With respect to payments under this
Agreement, for purposes of Section 409A, each severance payment will be
considered one of a series of separate payments. Amounts payable under this
Agreement following Executive’s termination of employment, other than those
expressly payable on a deferred or installment basis, will be paid as promptly
as practicable after such a termination of employment and, in any event, within
21/2 months after the end of the year in which employment terminates.
ARTICLE 4
4. Confidentiality, Non-Competition and Non-Solicitation Agreement. Concurrently
with the execution of this Agreement, Executive agrees to execute and deliver to
ev3 a Confidentiality, Non-Competition and Non-Solicitation Agreement in the
form attached hereto as Exhibit C without alteration or addition other than to
include the date.
ARTICLE 5
5. Successors. ev3 will seek to have any Successor, by agreement in form and
substance satisfactory to Executive, assume and assent to the fulfillment by
such Successor of ev3’s obligations under this Agreement. Failure of ev3 to
obtain such assent and assumption at least three (3) business days prior to the
time a Third Party becomes a Successor (or where ev3 does not have at least
three (3) business days’ advance notice that a Third Party may become a
Successor, within one (1) business day after having notice that such Third Party
may become or has become a Successor) will constitute Good Reason for
termination by Executive of Executive’s employment, provided that the notice
requirements set forth below under the definition of Good Reason are satisfied.
The date on which any such succession becomes effective will be deemed the Date
of Termination, and Notice of Termination will be deemed to

 

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have been given to Executive on that date. A Successor has no rights, authority
or power with respect to this Agreement prior to a Change in Control.
ARTICLE 6
6. Binding Agreement. This Agreement inures to the benefit of, and is
enforceable by, Executive, Executive’s personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive dies after a termination from employment while any amount
would still be payable to Executive under this Agreement, all such amounts,
unless otherwise provided in this Agreement, will be paid in accordance with the
terms of this Agreement to Executive’s devisee, legatee or other designee or, if
there be no such designee, to Executive’s estate.
ARTICLE 7
7. Notices. For the purposes of this Agreement, notices and other communications
provided for in this Agreement must be in writing and will be deemed to have
been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid and
addressed to each party’s respective address set forth on the first page of this
Agreement, or to such other address as either party may have furnished to the
other in writing in accordance with these provisions, except that notice of
change of address will be effective only upon receipt.
ARTICLE 8
8. Disputes. If Executive so elects, any dispute, controversy or claim arising
under or in connection with this Agreement will be heard and settled exclusively
by binding arbitration administered by the American Arbitration Association in
Minneapolis, Minnesota before a single arbitrator in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction; provided, that Executive may seek specific performance in a court
of competent jurisdiction of Executive’s right to receive benefits until the
Date of Termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement. If any dispute, controversy or claim
for damages arising under or in connection with this Agreement is settled by
arbitration, the Company will be responsible for paying, or if elected by
Executive, reimbursing, all fees, costs and expenses incurred by Executive
related to such arbitration. If Executive does not elect arbitration, Executive
may pursue all available legal remedies. The parties agree that any litigation
arising under or in connection with this Agreement must be brought in a court of
competent jurisdiction in the State of Minnesota, and both parties hereby
consent to the exclusive jurisdiction of said courts for this purpose and agree
not to assert that such courts are an inconvenient forum. The Company will not
assert in any dispute or controversy with Executive arising under or in
connection with this Agreement regarding Executive’s failure to exhaust
administrative remedies.
ARTICLE 9
9. Related Agreements. To the extent that any provision of any other Benefit
Plan or agreement between the Company and Executive limits, qualifies or is
inconsistent with any provision of this Agreement, the provision of this
Agreement will control. Nothing in this Agreement prevents or limits Executive’s
continuing or future participation in, and rights under, any Benefit Plan
provided by the Company for which Executive may qualify. Amounts which are
vested benefits or to which Executive is otherwise entitled under any Benefit
Plan or other agreement with the Company at or subsequent to the Date of
Termination will be payable in accordance with the terms thereof. Furthermore,
nothing in this Agreement will prevent the Company from seeking enforcement of
and damages arising under any

 

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confidentiality, invention assignment or non-competition provision or breach
thereof contained in any other agreement with the Company.
ARTICLE 10
10. Survival. The respective obligations of, and benefits afforded to, the
Company and Executive which by their express terms or clear intent survive
termination of Executive’s employment with the Company or termination of this
Agreement, as the case may be, will survive termination of Executive’s
employment with the Company or termination of this Agreement, as the case may
be, and will remain in full force and effect according to their terms.
ARTICLE 11
11. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged other than in a writing signed by Executive and the Company. No
waiver by any party to this Agreement at any time of any breach by another party
of any provision of this Agreement will be deemed a waiver of any other
provisions at the same or at any other time. This Agreement reflects the final
and complete agreement of the parties and supersedes all prior and simultaneous
agreements with respect to the subject matter hereof, including without
limitation any change in control or similar agreement between any past, current
or future Affiliate of the Company and Executive. This Agreement will be
governed by and construed in accordance with the laws of the State of Delaware
(without regard to the conflict of laws principles of any jurisdiction). The
invalidity or unenforceability of all or any part of any provision of this
Agreement will not affect the validity or enforceability of the remainder of
such provision or of any other provision of this Agreement. This Agreement may
be executed in several counterparts, each of which will be deemed an original,
but all of which together will constitute one and the same instrument.
ARTICLE 12
12. Definitions. The following terms will have the meaning set forth below
unless the context clearly requires otherwise. Terms defined elsewhere in this
Agreement will have the same meaning throughout this Agreement.
(a) “Affiliate” means, with respect to any Person (within the meaning of
Sections 13(d) and 14(d) of the Exchange Act), any other Person that, directly
or indirectly through one or more intermediaries, controls, is controlled by or
is under common control with such Person.
(b) “Base Pay” means Executive’s annual base salary from the Company at the rate
in effect at the time Notice of Termination is given. Base Pay includes only
regular cash salary and is determined before any reduction for deferrals
pursuant to any nonqualified deferred compensation plan or arrangement,
qualified cash or deferred arrangement or cafeteria plan.
(c) “Benefit Plan” means any
(i) employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended;
(ii) cafeteria plan described in Code Section 125; or
(iii) plan, policy or practice providing for paid vacation, other paid time off
or short-or long-term profit sharing, fringe benefits, bonus or incentive
payments.

 

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(d) “Board” means the board of directors of ev3.
(e) “Bonus Plan Payment” means the amount of the annual target bonus that is
payable by the Company to Executive pursuant to ev3’s company-wide bonus plan or
equivalent plan of the Successor, based on the assumption that all of the annual
performance milestones will have been satisfied for such year at the target
performance level.
(f) “Cause” means: (i) Executive’s gross misconduct; (ii) Executive’s willful
and continued failure to perform substantially Executive’s duties with the
Company (other than a failure resulting from Executive’s incapacity due to
bodily injury or physical or mental illness) after a demand for substantial
performance is delivered to Executive by the chair of the Board or the Lead
Independent Director of the Board if the Board does not have a chair (or any
other director designated by the Board if the Board does not have a chair or a
Lead Independent Director) which specifically identifies the manner in which
Executive have not substantially performed Executive’s duties and provides for a
reasonable period of time within which Executive may take corrective measures;
or (iii) Executive’s conviction (including a plea of nolo contendere) of
willfully engaging in illegal conduct constituting a felony or gross misdemeanor
under federal or state law which is materially and demonstrably injurious to the
Company or which impairs Executive’s ability to perform substantially
Executive’s duties for the Company. An act or failure to act will be considered
“gross” or “willful” for this purpose only if done, or omitted to be done, by
Executive in bad faith and without reasonable belief that it was in, or not
opposed to, the best interests of the Company. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the Board (or a
committee thereof) or based upon the advice of counsel for the Company will be
conclusively presumed to be done, or omitted to be done, by Executive in good
faith and in the best interests of the Company. Notwithstanding the foregoing,
Executive may not be terminated for Cause unless and until there has been
delivered to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the Board at a
meeting of the Board called and held for the purpose, finding that in the good
faith opinion of the Board Executive was guilty of the conduct set forth above
in clauses (i), (ii) or (iii) of this definition and specifying the particulars
thereof in detail.
(g) “Change in Control” means a change in control of ev3 occurring after the
Effective Date of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item
on any similar schedule or form) promulgated under the Exchange Act, whether or
not ev3 is then subject to such reporting requirement; provided, however, that,
without limitation, a Change in Control shall include: (i) the acquisition
(other than from ev3) after the date hereof by any person, entity or “group”
within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act
(excluding, for this purpose, ev3 or its subsidiaries, any employee benefits
plan of ev3 or its subsidiaries which acquires beneficial ownership of voting
securities of ev3, any qualified institutional investor who meets the
requirements of Rule 13d-1(b)(1) promulgated under the Exchange Act, Warburg
Pincus LLC and its affiliates, and The Vertical Group, L.P. and its affiliates)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either the then-outstanding shares of common
stock or the combined voting power of ev3’s then-outstanding capital stock
entitled to vote generally in the election of directors; (ii) individuals who,
as of the date hereof, constitute the Board (the “Incumbent Board”) ceasing for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by ev3’s stockholders was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors

 

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of ev3) shall be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board; or (iii) approval by the
stockholders of ev3 of (A) reorganization, merger, or consolidation, in each
case, with respect to which persons who were the stockholders of ev3 immediately
prior to such reorganization, merger, or consolidation do not, immediately
thereafter, own more than 50% of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged, consolidated
or other surviving corporation’s then-outstanding voting securities, (B) a
liquidation or dissolution of ev3, or (C) the sale of all or substantially all
of the assets of ev3.
(h) “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
(i) “Company” means ev3, any Successor and any Affiliate.
(j) “Date of Termination” means: (i) if Executive’s employment is to be
terminated by Executive for Good Reason, the date specified in the Notice of
Termination which in no event may be a date more than 15 days after the date on
which Notice of Termination is given unless the Company agrees in writing to a
later date; (ii) if Executive’s employment is to be terminated by the Company
for Cause, the date specified in the Notice of Termination; (iii) if Executive’s
employment is terminated by reason of Executive’s death, the date of Executive’s
death; or (iv) if Executive’s employment is to be terminated by the Company for
any reason other than Cause or Executive’s death, the date specified in the
Notice of Termination, which in no event may be a date earlier than 15 days
after the date on which a Notice of Termination is given, unless Executive
expressly agrees in writing to an earlier date. In the case of termination by
the Company of Executive’s employment for Cause, then within the 30 days after
Executive’s receipt of the Notice of Termination, Executive may notify the
Company that a dispute exists concerning the termination, in which event the
Date of Termination will be the date set either by mutual written agreement of
the parties or by the judge or arbitrator in a proceeding as provided in
Article 8 of this Agreement. In all cases, Executive’s termination of employment
must constitute a “separation from service” within the meaning of Section 409A
of the Code.
(k) “Disability” means Executive is unable to engage in any substantial gainful
business activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or that has rendered
Executive unable to effectively carry out his duties and obligations under this
Agreement or unable to effectively and actively participate in the management of
the Company for a period of 180 days within a 365 day period;
(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time.
(m) “Good Reason” means:
(i) a substantial change in Executive’s status, position(s), duties or
responsibilities as an executive of the Company which, in Executive’s reasonable
judgment, is adverse with respect to any of the foregoing;
(ii) a material reduction by the Company in Executive’s Base Pay or a material
reduction by the Company in the annual Bonus Plan Payment that Executive may
earn in a given year, provided, however, that Executive’s inability to satisfy
the existing performance objectives under any bonus plan shall not constitute
Good Reason;
(iii) any other material breach by the Company of its obligations hereunder; or

 

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(iv) the failure by the Company to obtain the assent to this Agreement from any
Successor as soon as reasonably practicable in the circumstances and in any
event within the times required by Article 5 hereof.
Executive’s continued employment does not constitute consent to, or waiver of
any rights arising in connection with, any circumstances constituting Good
Reason. Executive’s termination of employment for Good Reason as defined in this
Article 12(m) will constitute Good Reason for all purposes of this Agreement
notwithstanding that Executive may also thereby be deemed to have retired under
any applicable retirement programs of the Company. To constitute Good Reason,
Executive must provide notice to the Company of the initial occurrence of one of
the foregoing events within 90 days of such occurrence and the Company shall
have 30 days after the receipt of such notice to remedy the occurrence. In
addition, to constitute Good Reason, Executive must terminate employment within
2 years following the initial occurrence of such an event.
(n) “Notice of Termination” means a written notice (except in the case of a
deemed Notice of Termination pursuant to Article 5 hereof) which indicates the
specific termination provision in this Agreement pursuant to which the notice is
given. Any purported termination by the Company or by Executive must be
communicated by written Notice of Termination to be effective.
(o) “Severance Period” means
(i) in the event that this Agreement is terminated by either (a) the Company for
any reason other than for Cause or (b) Executive for Good Reason, but excluding
such a termination following a Change in Control, the 18 month period commencing
on the Date of Termination; or
(ii) in the event that Executive’s employment is terminated by the Company for
any reason other than Cause or Executive terminates employment for Good Reason
following a Change in Control, the 36 month period commencing on the Date of
Termination.
(p) “Stock Incentive Plan” means (i) the ev3 LLC 2003 Incentive Plan, as
amended, (ii) the ev3 Inc. Amended and Restated 2005 Incentive Stock Plan,
(iii) the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan or
(iv) any successor or additional stock option, stock award, or other incentive
plans of ev3.
(q) “Stock Option Agreements” means in any of the non-statutory stock option
agreements, incentive stock options agreements, restricted stock awards or other
similar agreements Executive may have entered into with the Company pursuant to
the Stock Incentive Plans.
(r) “Successor” means any Third Party that succeeds to, or has the ability to
control (either immediately or with the passage of time), ev3’s business
directly, by merger, consolidation or other form of business combination, or
indirectly, by purchase of ev3’s outstanding securities entitling the holder
thereof to be allocated a portion of ev3’s net income, net loss or distributions
or all or substantially all of its assets or otherwise.
(s) “Third Party” means any Person, other than ev3, any Affiliate of ev3 as of
the date of this Agreement, or any Benefit Plan(s) sponsored by ev3 or an
Affiliate.

 

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.

     
 
  ev3 Inc.
 
   
 
  /s/ Kevin Klemz
 
   
 
  Name: Kevin Klemz
 
  Title: Senior Vice President and Chief Legal Officer
 
   
 
  Robert J. Palmisano
 
   
 
  /s/ Robert J. Palmisano