exv10w1



 





Exhibit 10.1




Replidyne, Inc.




Variable Incentive Bonus Plan

Effective Calendar Year 2007



1. Purpose of the Plan. The purpose of the Replidyne, Inc. Variable Incentive Bonus Plan (the
“Plan”) is to promote the interests of the Company and its stockholders by rewarding Company
executives based upon the level of achievement of financial, business and other performance
objectives established in accordance with this Plan.



2. Administration. The Plan will be administered by the Compensation Committee of the Company’s
Board of Directors (the “Compensation Committee”) and the Chief Executive Officer; provided that
any action permitted to be taken by the Committee may be taken by the Board, in its discretion.
The Compensation Committee may correct any defect or omission or reconcile any inconsistency in the
Plan in the manner and to the extent the Compensation Committee deems necessary or desirable. Any
decision of the Compensation Committee in the interpretation and administration of the Plan, as
described herein, shall lie within its sole and absolute discretion and shall be final, conclusive
and binding on all parties concerned. The Compensation Committee generally sets a one-year
performance period under the Plan to run from January 1 through December 31 (the “Plan Year”). The
Compensation Committee is responsible for approving any incentive compensation for executive
officers, as that term is defined in Section 16 of the Securities Exchange Act of 1934, as amended
(the “Executive Officers”), and for recommending to the Company’s Board of Directors (the “Board”)
the incentive compensation for the President and Chief Executive Officer. The President and Chief
Executive Officer is responsible for any incentive compensation for employees who are not Executive
Officers (the “Non-Executive Officer Employees”) within annual budgets approved by the Compensation
Committee.



3. Eligibility. Replidyne executives serving on the Executive Committee and reporting to the
President and Chief Executive Officer are eligible to participate in the Plan (“Participant”). In
order to receive an award, a Participant must (i) be of regular status and scheduled to work a
minimum of 32 hours per week; (ii) have entered into Plan eligibility prior to October
1st of the applicable Plan Year; (iii) be on the Company’s payroll on the last day of
the applicable Plan Year; (iv) must receive at least a “Meets Expectations” rating on the
employee’s performance review for the Plan Year and; (v) not be subject to a formal performance
improvement plan at the time bonus determinations are made.



Participants with at least three (3), but less than twelve (12), months of active service during a
Plan Year may be eligible for a prorated bonus for such Plan Year, depending on their length of
service for that period.



3. Determination and Weighting of Objectives. Bonus awards for each Plan Year shall be determined
based on the level of achievement of corporate and individual objectives.




     (a) Corporate Objectives. On or about the beginning of each Plan Year, the President and CEO
will develop a list of corporate objectives for the Plan Year, which shall be subject to the
approval of the Compensation Committee. The corporate objectives shall include such financial,
business and other performance objectives as the Compensation Committee may, in its sole
discretion, approve.



     (b) Individual Objectives. After approval of the corporate objectives, the Company, in
consultation with the Participants, will develop individual objectives for the Plan Year that are
consistent with and support the corporate objectives or are otherwise intended to contribute to the
success of the Company. Individual objectives for each Participant will vary. Participants should
expect that the Company will request the Participant to develop specific written objectives for the
Plan Year, which will be subject to the approval of the President and CEO and the Compensation
Committee.



 









 





     (c) Weighting of Objectives. Bonus awards for each Participant shall be weighted between
corporate objectives and individual objectives based on the Participant’s position within the
organization. The weighting will be reviewed annually and may be adjusted by the Compensation
Committee, as necessary or appropriate. The weighting will be as follows:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Position	 	Corporate	 	Individual
	President and CEO

	 	 	100	%	 	—

	CCO — Chief Commercial Officer

	 	 	80	%	 	 	20	%
	CSO — Chief Scientific Officer

	 	 	80	%	 	 	20	%
	CMO — Chief Medical Officer

	 	 	80	%	 	 	20	%
	CFO — Chief Financial Officer

	 	 	80	%	 	 	20	%
	Senior Vice President

	 	 	75	%	 	 	25	%
	Vice President

	 	 	75	%	 	 	25	%
	Executive Director

	 	 	60	%	 	 	40	%





3. Target Award Multipliers. Target Bonus awards for each Participant will be determined by
applying a “target award multiplier” to the Participant’s Base Salary. The target award
multipliers will be reviewed annually and may be adjusted by the Compensation Committee, as
necessary or appropriate. The target award multipliers will be as follows:




	 	 	 	 	 
	 	 	Target Award
	Position	 	Multiplier
	President and CEO

	 	 	50	%
	Chief Functional Officer

	 	 	40	%
	Senior Vice President

	 	 	35	%
	Vice President

	 	 	30	%
	Executive Director

	 	 	30	%





4. Determination of Bonus Amounts.




     (a) Executive Officers. As soon as practicable after the end of each Plan Year, the
Compensation Committee shall determine the Bonus amount for each Executive Officer by determining
(i) the performance multiplier for the corporate component of the Executive Officers’ Bonus awards
based on the Committee’s assessment of the Company’s performance against corporate objectives for
the Plan Year (the “Corporate Performance Multiplier”), and (ii) the performance multiplier for the
individual component of each Executive Officer’s Bonus award based on the Compensation Committee’s
assessment (which may be based on the recommendation of the President and CEO) of the Executive
Officer’s performance against his or her individual objectives for the Plan Year (the “Individual
Performance Multiplier”). The same Corporate Performance Multiplier shall be used for all
Executive Officers and all other Participants under the Plan for any particular Plan Year. If the
Committee determines that corporate or individual performance for the Plan Year exceeded objectives
or was excellent in view of prevailing conditions, the Committee may approve Corporate or
Individual Performance Multipliers, as the case may be, up to 150%.



     (b) Non-Executive Officer Participants. As soon as practicable after the end of each Plan
Year, the President and CEO shall determine the Bonus amount for each Non-Executive Officer
Participant by (i) applying the Corporate Performance Multiplier, and (ii) determining the
performance multiplier for the individual component of each Participant’s Bonus award based the
President and CEO’s assessment of the Participant’s performance against his or her individual
objectives for the Plan Year (the “Individual Performance Multiplier”). If the President and CEO
determines that a Participant’s individual performance



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for the Plan Year exceeded objectives or was excellent in view of prevailing conditions, the
President and CEO may approve an Individual Performance Multiplier up to 150%.



     (c) Calculation of Bonus Amount. The example below illustrates a sample Bonus calculation
under the Plan. First, a total target award is calculated by multiplying a Participant’s Base
Salary by the target award multiplier for the Participant’s position. This total target award
amount is then divided between corporate and individual components based on the relative weighting
of performance factors for the Participant’s position. This calculation establishes specific
target awards for both the individual and corporate components of the Participant’s bonus award.


At the end of the Plan Year, the actual Corporate Performance Multiplier and Individual Performance
Multiplier will be established for each Participant using the process described above. The
Corporate Performance Multiplier, which is based on overall corporate performance, will be used to
calculate the corporate component of all Participants’ Bonus awards. This is accomplished by
multiplying each Participant’s target award based on corporate performance by the actual Corporate
Performance Multiplier approved by the Compensation Committee. The Individual Performance
Multiplier, which is based on a Participant’s performance against his or her individual objectives,
is used in the same way to calculate the individual component of the Participant’s Bonus award.




Example: Cash Award Calculation




	 	 	 
	Position:	 	Vice President
	Base salary:

	 	$200,000
	Target award multiplier:

	 	30%
	Total target award:

	 	$60,000
	 
	 	 
	Target award components (based on performance factor mix):
	 	 
	Target award based on corporate performance (75%):

	 	$45,000
	Target award based on individual performance (25%):

	 	$15,000
	 
	 	 
	Actual cash award calculation:
	 	 
	Assumed payment multipliers based on performance assessment:
	 	 
	Corporate Performance Multiplier:

	 	75%
	Individual Performance Multiplier:

	 	125%
	Cash award:
	 	 
	Corporate component:

	 	$33,750
	Individual component:

	 	$18,750
	Total cash award earned:

	 	$52,500






     (d) Adjustments to Bonuses. Notwithstanding any other provision of this Plan, the
Compensation Committee (with respect to any Officer’s Bonus) or the President and CEO (with respect
to a Non-Officer Participant’s Bonus) shall have the authority, in their sole discretion and in
such circumstances as they may deem appropriate, to approve any adjustments to a Participant’s
Bonus with respect to any particular Plan Year.


5. Payment of Bonuses. Payment of a Bonus to a Participant shall be made as soon as practicable
after determination of the amount of the Bonus, and will occur within 75 days after the end of the
Plan Year. Any such payment shall be in cash or cash equivalent, subject to any applicable
withholding requirements. Awards under the Plan are subject to applicable withholdings.
Participants who have elected to participate in the Company’s 401(k) Plan will have the applicable
funds withheld from their bonus payment unless appropriate authorization is received to opt out of
the deferral. Notwithstanding the foregoing, if the payment of any award at the time specified
herein would be result in the adverse tax consequences described in Section 409A(a)(1) of the
Internal Revenue Code (the “Code”) as a result of the recipient’s status as a “specified employee”
(within the


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meaning of Section 409A of the Code), the time of such payment shall be automatically delayed to
the minimum extent necessary so that Section 409A(a)(1) of the Code will not apply.



6. Termination of Employment; Changes in Status.




     (a) Unless the terms of an applicable severance plan or employment agreement provide
otherwise, the payment of a Bonus with respect to a specific Plan Year requires that the employee
be on the Company’s payroll as of the last day of such Plan Year. An employee whose employment
with the Company is terminated, either voluntarily or involuntarily, prior to the last day of the
Plan Year will not be eligible to receive a Bonus with respect to such Plan Year. An employee who
terminates after the last day of the Plan Year but prior to the normal delivery of Bonuses for such
Plan Year shall be eligible to receive his or her Bonus at the same time Bonuses are paid to all
other Participants generally.



     (b) If a Participant transfers from one eligible position to another prior to the end of a
Plan Year, the Participant’s Bonus will be based on (i) the target award multipliers prorated for
the length of time spent in each position, and (ii) the weighting of goals effective on the last
day of the Plan Year, and (iii) the Participant’s performance results as determined to reflect the
entire performance period.


7. Other Provisions 



The Company reserves the right to interpret, modify, suspend or terminate this Plan at any time.



No Participant will have the right to alienate, assign, encumber, hypothecate or pledge his or her
interest in any award under the Plan, voluntarily or involuntarily, and any attempt to so dispose
of any such interest will be void.



Participants who engage in an activity that violates applicable local, state or federal laws, or
who violate Company policies, may be subject to having their awards reduced or eliminated in the
sole discretion of the Compensation Committee, except in the case of the Chief Executive Officer
where the Board shall make the final determination after considering the Compensation Committee’s
recommendation.



Neither this Plan nor any action taken hereunder shall be construed as giving any employee or
Participant the right to be retained in the employ of the Company. Employees of the Company are
employed “at will” unless they have an agreement signed by the Chief Executive Officer or a member
of the Board providing for other than at-will employment.



The Company shall not be required to fund or otherwise segregate any cash or any other assets which
may at any time be paid to Participants under the Plan. The Plan shall constitute an “unfunded”
plan of the Company.



In the event of any conflict between a Participant’s employment agreement with the Company and this
Plan, the terms of the Participant’s employment agreement will control.



The provisions contained in this Plan set forth the entire understanding of the Company with
respect to the Plan and supersede any and all prior communications between the Company and any
employee with respect to the Plan. This Plan supersedes and replaces the Company’s previous Annual
Incentive Plan.





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