Exhibit 10.3
SETTLEMENT AGREEMENT
     THIS SETTLEMENT AGREEMENT (“Agreement”) is made and entered into among ev3
Inc., ev3 Endovascular, Inc., (collectively, “ev3”), FoxHollow Technologies,
Inc., (“FoxHollow”), Tyco Healthcare Group LP d/b/a Covidien (“Covidien”),
Cardiovascular Systems, Inc. (“CSI”), Aaron Lew (“Lew”), Paul Tyska (“Tyska”),
Sean Collins (“Collins”), David Gardner (“Gardner”), Michael Micheli
(“Micheli”), Kevin Moore (“Moore”), Steve Pringle (“Pringle”), Jason Proffitt
(“Proffitt”), Thadd Taylor (“Taylor”), and Rene Treanor-Sarria
(“Treanor-Sarria”). The above identified persons are referred to collectively as
“Parties” and individually as “Party.”
     RECITALS:
     1. ev3 and FoxHollow commenced a lawsuit in Ramsey County District Court,
State of Minnesota entitled ev3 Inc., et al. v. Cardiovascular Systems, Inc., et
al., Court File No. 62 CV-07-5977 (“Lawsuit”). CSI asserted counterclaims in the
Lawsuit. Collins, Gardner, Micheli, Moore, Pringle, Proffitt, Taylor and
Treanor-Sarria were subsequently dismissed from the Lawsuit in their capacity as
individual defendants.
     2. The Parties wish to settle and fully and finally resolve and terminate
all disputes and claims between them under the terms set forth in this
Agreement.
     AGREEMENT:
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby universally acknowledged, the Parties agree as
follows:
     1. Payment. CSI shall deliver the sum of One Million and No/100 Dollars
($1,000,000.00) to ev3 as follows:
     (a) Seven Hundred Fifty Thousand and No/100 Dollars ($750,000.00) shall be
delivered to ev3 by certified funds or wire transfer on or before October 29,
2010; and
     (b) Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) shall be
delivered by CSI as a Promissory Note in the form of the document attached
hereto as Exhibit A (“Promissory Note”), which shall be executed and delivered
to ev3 on or before October 29, 2010.
     2. Mutual Releases. The Parties agree to a full, final and mutual release
of all claims and disputes as provided below; however, the releases shall not
extend to: i) obligations created by this Agreement; ii) the Promissory Note; or
iii) any contractual obligation of a person formerly employed by ev3 or
FoxHollow (who subsequently became employed by CSI) relating to ev3 or
FoxHollow’s proprietary, confidential or trade secret information, except as to
actions, inactions or matters that have occurred or arisen as of October 29,
2010, all of such rights and obligations are specifically reserved.

1

--------------------------------------------------------------------------------

 

With these exceptions, the Parties agree to the following releases:
     (a) ev3, FoxHollow, and Covidien’s Release of CSI. ev3, FoxHollow, and
Covidien, on behalf of themselves and their predecessors, successors, parent
entities, subsidiaries, affiliates, officers, directors, employees, agents,
attorneys, shareholders, insurers and assigns (collectively, “ev3 Releasing
Parties”), hereby forever, fully and unconditionally release and discharge CSI
and its predecessors, successors, parent entities, subsidiaries, affiliates, and
all of their present and former officers, directors, employees, agents,
attorneys, shareholders, insurers and assigns (collectively, “CSI Released
Parties”), from all obligations, offsets, actions, suits, debts, sums of money,
contracts, covenants, agreements, promises, legal rights, claims, counterclaims,
causes of action, demands, damages, costs, compensation, liabilities, losses and
expenses of any nature or of any kind, whether known or unknown, asserted or
unasserted, liquidated or unliquidated, absolute or contingent, accrued or
nonaccrued, which any of the ev3 Releasing Parties ever had, now have, or claim
to have, whether grounded in law or equity, in contract or in tort, by statute
or otherwise against any or all of the CSI Released Parties by reason of any
action, inaction or matter whatsoever occurring or arising on or prior to
October 29, 2010.
     It is the intention of the Parties that this release shall operate as a
full and final settlement of any of the CSI Released Parties’ past, present,
direct, indirect, and derivative liabilities to any and all of the ev3 Releasing
Parties relating to or arising out of events and occurrences taking place on or
prior to October 29, 2010.
     (b) ev3, FoxHollow, and Covidien’s Release of Lew, Tyska, Collins, Gardner,
Micheli, Moore, Pringle, Proffitt, Taylor, and Treanor-Sarria. ev3 Releasing
Parties hereby forever, fully and unconditionally release and discharge Lew,
Tyska, Collins, Gardner, Micheli, Moore, Pringle, Proffitt, Taylor, and
Treanor-Sarria and their respective representatives, heirs, agents, assigns,
attorneys, and spouses, if any, (collectively, “Released individuals”), from all
obligations, offsets, actions, suits, debts, sums of money, contracts,
covenants, agreements, promises, legal rights, claims, counterclaims, causes of
action, demands, damages, costs, compensation, liabilities, losses and expenses
of any nature or of any kind, whether known or unknown, asserted or unasserted,
liquidated or unliquidated, absolute or contingent, accrued or nonaccrued, which
any of the ev3 Releasing Parties ever had, now have, or claim to have, whether
grounded in law or equity, in contract or in tort, by statute or otherwise
against any or all of the Released Individuals by reason of any action, inaction
or matter whatsoever occurring or arising on or prior to October 29, 2010.
     It is the intention of the Parties that this release shall operate as a
full and final settlement of any of the Released Individuals’ past, present,
direct, indirect, and derivative liabilities to any and all of the ev3 Releasing
Parties relating to or arising out of events and occurrences taking place on or
prior to October 29, 2010.
     The Parties understand that ev3 Releasing Parties are not releasing the
Released Individuals from any future obligations to maintain the confidentiality
of ev3 or

2

--------------------------------------------------------------------------------

 

FoxHollow’s confidential, proprietary or trade secret information as may be set
forth in an agreement with ev3 and/or FoxHollow.
     (c) CST’s Release of ev3, FoxHollow and Covidien. CST, on behalf of itself
and its predecessors, successors, parent entities, subsidiaries, affiliates,
officers, directors, employees, agents, attorneys, shareholders, insurers and
assigns (collectively, “CSI Releasing Parties”), hereby forever, fully and
unconditionally release and discharge ev3, FoxHollow and Covidien and their
predecessors, successors, parent entities, subsidiaries, affiliates, and all of
their present and former officers, directors, employees, agents, attorneys,
shareholders, insurers and assigns (collectively, “ev3 Released Parties”), from
all obligations, offsets, actions, suits, debts, sums of money, contracts,
covenants, agreements, promises, legal rights, claims, counterclaims, causes of
action, demands, damages, costs, compensation, liabilities, losses and expenses
of any nature or of any kind, whether known or unknown, asserted or unasserted,
liquidated or unliquidated, absolute or contingent, accrued or nonaccrued, which
any of the CSI Releasing Parties ever had, now have, or claim to have, whether
grounded in law or equity, in contract or in tort, by statute or otherwise
against any or all of the ev3 Released Parties by reason of any action, inaction
or matter whatsoever occurring or arising on or prior to October 29, 2010.
     It is the intention of the Parties that this release shall operate as a
full and final settlement of any of the ev3 Released Parties’ past, present,
direct, indirect, and derivative liabilities to any and all of the CSI Releasing
Parties relating to or arising out of events and occurrences taking place on or
prior to October 29, 2010.
     (d) Lew, Tyska, Collins, Gardner, Micheli, Moore, Pringle, Proffitt,
Taylor, and Treanor-Sarria’s Release of ev3, FoxHollow and Covidien. Lew, Tyska,
Collins, Gardner, Micheli, Moore, Pringle, Proffitt, Taylor, and Treanor-Sarria
and their respective representatives, heirs, agents, assigns, attorneys, and
spouses, if any, (collectively, “Individual Releasing Parties”), hereby forever,
fully and unconditionally release and discharge ev3 Released Parties, from all
obligations, offsets, actions, suits, debts, sums of money, contracts,
covenants, agreements, promises, legal rights, claims, counterclaims, causes of
action, demands, damages, costs, compensation, liabilities, losses and expenses
of any nature or of any kind, whether known or unknown, asserted or unasserted,
liquidated or unliquidated, absolute or contingent, accrued or nonaccrued, which
any of the Individual Releasing Parties ever had, now have, or claim to have,
whether grounded in law or equity, in contract or in tort, by statute or
otherwise against any or all of the ev3 Released Parties by reason of any
action, inaction or matter whatsoever occurring or arising on or prior to
October 29, 2010.
     It is the intention of the Parties that this release shall operate as a
full and final settlement of any of the ev3 Released Parties’ past, present,
direct, indirect, and derivative liabilities to any and all of the Individual
Releasing Parties relating to or arising out of events and occurrences taking
place on or prior to October 29, 2010.

3

--------------------------------------------------------------------------------

 

     The Parties understand that the Individual Releasing Parties are not
releasing the ev3 Released Parties from any future obligation to arbitrate
claims with them as may be set forth in an agreement with ev3 and/or FoxHollow.
     3. No Admission of Liability. It is expressly understood and agreed that
this Agreement constitutes a compromise and settlement of disputed claims and
that this Agreement is not intended, nor shall it be construed by anyone, to be
an admission of liability by or on behalf of any Party hereto, by whom all such
liability is expressly denied, the Parties intending merely to avoid the cost
and inconvenience of continuing with the Lawsuit.
     4. Attorneys’ Fees And Costs. It is agreed that each Party will bear its,
his or her own costs and expenses, including but not limited to attorneys’ fees,
incurred with respect to the Lawsuit, the drafting of this Agreement and the
Promissory Note, and all other matters addressed in or related to this
Agreement, except that CSI shall be obligated to pay the holder of the
Promissory Note all reasonable costs and fees (including but not limited to
reasonable attorneys’ fees), the holder incurs if the holder prevails in any
proceeding to enforce or exercise its rights to payment under the Promissory
Note as set forth in the Promissory Note.
     5. Stipulation of Dismissal. Two (2) business days after the latter of the
execution of this Agreement and CSI’s satisfaction of its obligations under
Paragraph 1 of this Agreement, counsel for the Parties shall execute and file
with the Ramsey County District Court a stipulation of dismissal of the Lawsuit
with prejudice and on the merits, and without an award of attorneys’ fees, costs
or disbursements to any party, which shall include a stipulation to the
dismissal and vacation of the Court’s Order, dated January 10, 2008, in the form
attached hereto as Exhibit B.
     6. Stipulated Protective Order. The Stipulated Protective Order, dated
February 25, 2008, remains in full force and effect. The Parties agree that any
subsequent dispute concerning the Protective Order shall be decided by Rick
Solum as a binding arbitrator.
     7. Governing Law; Venue. This Agreement shall be construed and interpreted
under the laws of the State of Minnesota without regard to its conflict-of-law
principles.
     8. Severability. If any provision of this Agreement is held to be unlawful
or unenforceable in any respect by a court of competent jurisdiction, such
provision shall be severed and shall not affect the validity or enforceability
of the remaining provisions. Further, if any provision of this Agreement is held
to be overbroad, such provision shall be deemed amended to narrow the
application to the extent necessary to render the provision enforceable
according to applicable law.
     9. Execution and Delivery. This Agreement may be executed in counterparts,
which taken together shall constitute one agreement binding on all parties.
Facsimile and electronically transmitted signatures shall be valid and binding
to the same extent as signatures delivered in original. In making proof of this
Agreement, it will be necessary to produce only one copy signed (or reproduced
from an electronically delivered signature) by the Party to be charged.
     10. Benefit and Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties and their successors and permitted assigns.

4

--------------------------------------------------------------------------------

 

     11. Consultation with Advisors; Knowing Agreement. Each Party represents
that he, she, or it has had the opportunity to consult with legal, financial,
and other professional advisors as he, she, or it deems appropriate in
connection with his, her, or its consideration, execution and delivery of this
Agreement. Each Party represents that he, she, or it has read this Agreement
carefully and understands all of its terms.
     12. Entire Agreement. This Agreement and the documents attached hereto set
forth the entire agreement and understanding of the Parties regarding the
ettlement of the claims described in this Agreement, and this Agreement
supersedes all prior representations, statements, proposals, negotiations,
discussions, understandings and agreements regarding such settlement, including
but not limited to the Binding Mediated Settlement Agreement entered into on
October 4, 2010. This Agreement may not be modified or amended except in a
writing signed by all of the Parties hereto that expressly references this
Agreement.
     13. Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The Parties agree that each of them and their
respective legal counsel has reviewed and had an opportunity to revise this
Agreement and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement. Instead, the language used in this
Agreement will be deemed to be the language chosen by the Parties to express
their mutual intent.
     IN WITNESS WHEREOF, the undersigned have executed this Agreement.

                ev3 Inc.:   Cardiovascular Systems, Inc.:   By:  /s/ Michael
Cowhig   By:  /s/ James E. Flaherty   Its: Vice President     Its: Chief
Administrative Officer   ev3 Endovascular, Inc.:           By:  /s/ Michael
Cowhig     /s/ Aaron Lew   Its: Vice President     Aaron Lew (individually)  
FoxHollow Technologies, Inc.:           By:  /s/ Michael Cowhig     /s/ Paul
Tyska   Its: Vice President     Paul Tyska (individually)

5

--------------------------------------------------------------------------------

 

                Tyco Healthcare Group LP d/b/a Covidien:           By:  /s/
Michael Cowhig     /s/ Sean Collins   Its: Vice President     Sean Collins
(individually)             /s/ David Gardner           David Gardner
(individually)             /s/ Michael Micheli           Michael Micheli
(individually)             /s/ Kevin Moore           Kevin Moore (individually)
            /s/ Jason Proffitt           Jason Profitt (individually)          
  /s/ Steve Pringle           Steve Pringle (individually)             /s/ Thadd
Taylor           Thadd Taylor (individually)             /s/ Renee
Treanor-Sarria           Renee Treanor-Sarria (individually)

6

--------------------------------------------------------------------------------

 

PROMISSORY NOTE

    October 29, 2010 $250,000.00   St. Paul, Minnesota

     FOR VALUE RECEIVED, Cardiovascular Systems, Inc. (“Debtor”) hereby promises
to pay to the order of ev3 Inc. or its endorsees, successors and assigns
(“Holder”), the principal sum of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) in the manner provided in this Promissory Note (“Note”). The
unpaid principal amount of this Note shall bear simple interest from the date
first above written at the rate of three and one-half percent (3.5%) per annum,
which principal and interest is due and payable on or before January 1, 2014.
     This Note is not secured and shall only be subordinate to any other debt of
the Debtor existing as of the date first above written.
     All payments of principal and interest shall be paid by Debtor to Holder at
3033 Campus Drive, Plymouth, MN 55441, or at such other address as Holder may
designate in writing to Debtor from time to time by certified or registered
mail. Debtor may prepay, with no penalty or premium, the principal and interest
of this Note, in whole or in part and from time to time. All payments shall
first be applied to interest on the unpaid principal amount and the remainder to
principal.
     Upon the occurrence of any of the following events of default (each, an
“Event of Default”), and the passage of 10 business days following written
notice of default without cure, all of the then outstanding principal balance
plus accrued interest of this Note shall automatically become immediately due
and payable:

  (a)   Debtor enters into a written agreement for the sale of all or
substantially all of its assets;     (b)   Debtor fails to satisfy a judgment in
an amount exceeding $250,000 entered by a court of law within sixty (60) days
after entry of the judgment except as such judgment is being appealed with a
stay of any ability of the judgment creditor to execute on the judgment; or    
(c)   Debtor applies for, consents to, or acquiesces in the appointment of a
trustee, receiver or other custodian for itself or any of its property, or makes
a general assignment composition, or similar device for the benefit of its
creditors; or a trustee, receiver or other custodian is otherwise appointed for
Debtor or any of its assets; or an attachment or receivership of assets or any
bankruptcy, reorganization, debt arrangement, or other case or proceeding under
any bankruptcy or insolvency law, or any dissolution or liquidation proceeding
is commenced by or against Debtor; or Debtor takes any corporate action to
authorize any of the foregoing.

EXHIBIT A

 

--------------------------------------------------------------------------------

 

     Debtor shall be obligated to pay Holder all reasonable costs and fees
(including but not limited to reasonable attorneys’ fees) Holder incurs if
Holder prevails in any proceeding to enforce or exercise its rights to payment
under this Note.
     Debtor hereby waives presentment for payment, protest and notice of
non-payment. Debtor hereby waives any right to set off and/or recoupment against
Holder in connection with any claim it now or hereafter may have against Holder,
and agrees it will not urge or assert any claim including but not limited to a
set-off and/or recoupment, it may have now or hereafter against Holder as a
defense against payment of this Note.
     Holder shall not be deemed to have waived any of its rights or remedies
under this Note unless such waiver is expressed in a writing signed by Holder.
No delay or omission by Holder in exercising, or failure by Holder on any one or
more occasions to exercise, any of Holder’s rights hereunder, at law or in
equity, including without limitation, Holder’s right after the occurrence of any
Event of Default to declare the entire indebtedness evidenced hereby immediately
due and payable, shall be construed as a novation of this Note or shall operate
as a waiver or prevent the subsequent exercise of any or all such rights.
     Acceptance by Holder of any portion or all of any sum payable hereunder,
whether before, on or after the due date of such payment shall not be a waiver
of Holder’s right either to require prompt payment when due of all other sums
payable hereunder or to exercise any of Holder’s rights, powers and remedies
hereunder. Debtor expressly waives the benefit of any statute or rule of law or
of equity now provided, or which may hereafter be provided, which would produce
a result contrary to, or in conflict with, the foregoing.
     The provisions of this Note can not be changed, amended, or discharged
orally, and any oral change, amendment or discharge of any term or provision of
this Note shall be without authority and of no force or effect. The provisions
of this Note can be changed, amended, or discharged only by an instrument in
writing signed by Debtor and Holder.
     All of the provisions of this Note are binding on Debtor’s successors and
assigns and shall inure to the benefit of Holder and its successors, assigns and
endorsees, with Holder having the unfettered right to assigns its rights under
this Note.
     THE UNDERSIGNED WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH
ANY PARTIES TO THIS INSTRUMENT ARE INVOLVED, ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS INSTRUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
     This Note is governed in all respects by the internal laws of the State of
Minnesota without regard to the conflicts-of-law rules of any jurisdiction.
[The remainder of this page is intentionally left blank.]

2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Debtor has caused this Promissory Note to be signed by
its duly authorized officer as of the date first above written.

         
CARDIOVASCULAR SYSTEMS, INC.
   
 
       
By:
       
 
 
 
   

  Its:     
 
 
 
   

3

--------------------------------------------------------------------------------

 

         
STATE OF MINNESOTA
      DISTRICT COURT
 
       
COUNTY OF RAMSEY
      SECOND JUDICIAL DISTRICT
 
      CASE TYPE: OTHER CIVIL
ev3 Inc., a Delaware corporation, ev3
  )    
Endovascular, Inc., a Delaware
  )   Court File No. 62-CV-07-5977
corporation, and FoxHollow Technologies,
  )   Honorable Robert A. Awsumb
Inc., a Delaware corporation,
  )    
 
  )    
Plaintiffs,
  )    
 
  )    
vs.
  )  
STIPULATION AND ORDER OF
 
  )  
DISMISSAL WITH PREJUDICE
Cardiovascular Systems, Inc., a Minnesota
  )    
corporation, Aaron Lew, an individual, and
  )    
Paul Tyska, an individual,
  )    
 
  )    
Defendants.
  )    

     IT IS HEREBY STIPULATED AND AGREED, by and between the parties to the
above-captioned action, through their undersigned counsel, that the Court may
enter an Order as follows:
     1. The above-entitled action is dismissed with prejudice, on the merits and
in its entirety, with each party bearing its own costs, disbursements and
attorneys’ fees; and
     2. The Court’s January 10, 2008, Order is dismissed and vacated, and the
January 10, 2008, Order shall have no further force or effect.

            OPPENHEIMER WOLFF & DONNELLY LLP
    Dated:                     , 2010  By:           Jeffrey J. Bouslog
(#174671)        Kathy S. Kimmel (#268823)
Dennis E. Hansen (#386734)
45 South Seventh Street
Plaza VII Building, Suite 3300
Minneapolis, MN 55402-1609
(612) 607-7000

ATTORNEYS FOR PLAINTIFFS   

EXHIBIT B 

--------------------------------------------------------------------------------

 

         

            ANTHONY OSTLUND BAER & LOUWAGIE PA.
    Dated:                     , 2010  By:           Joseph W. Anthony (2872)   
    Mary L. Knoblauch (159645)
Courtland C. Merrill (311984)
3600 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
(612) 349-6969

ATTORNEYS FOR DEFENDANTS     

ORDER
     Pursuant to the foregoing stipulation, IT IS HEREBY ORDERED THAT:
     1. The stipulation of the parties is hereby adopted by the Court and
incorporated by reference.
     2. The above-entitled action is dismissed with prejudice, on the merits and
in its entirety, with each party bearing its own costs, disbursements and
attorneys’ fees.
     3. The Court’s Order entered in this action on January 10, 2008, is
dismissed and vacated, and the January 10, 2008, Order shall have no further
force or effect.

            BY THE COURT:

    Dated:                     , 2010   Robert A. Awsumb
Judge of District Court
   

2