Document:

exv10w14

 

EXHIBIT 10.14

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is entered into effective as of the 19th day of
December 2006 by and between Cardiovascular Systems, Inc., a Minnesota corporation, (“CSI”), and
David L. Martin (“Executive”).

Recitals

     A. CSI desires to employ Executive as its Chief Executive Officer.

     B. Executive wishes to become employed by CSI on the terms and conditions set forth in this
Agreement.

Article 1

EMPLOYMENT AND TERMS OF AGREEMENT

     1.1 Employment. Effective February 15, 2007, CSI hereby employs Executive and Executive
hereby accepts employment as Chief Executive Officer of CSI.

     1.2 Duties. During his employment with CSI, Executive shall serve CSI faithfully and to the
best of his ability. Except as approved in writing by the Board of Directors, Executive shall
devote his full business and professional time, energy, and diligence to the performance of the
duties of such office. Executive shall perform such duties for CSI (i) as are customarily incident
to his office and (ii) as may be assigned or delegated to him from time to time by the Board of
Directors of CSI or its designees. During his employment with CSI, Executive shall not engage in
any other business activity that would conflict or interfere with his ability to perform his duties
under this Agreement. Executive agrees to be subject to CSI’s control, rules, regulations,
policies and programs.

     1.3 Term of Employment. Executive’s employment with CSI shall begin on February 15, 2007 and
shall be “at will,” meaning either Executive or CSI may terminate this Agreement and the employment
relationship at any time, for any or no reason. In the event that Executive is terminated or
elects to resign as an employee of the CSI, Executive agrees to submit his resignation as a
director of CSI effective concurrently with the effective date of his termination or resignation as
an employee of CSI.

Article 2

COMPENSATION AND BENEFITS

     2.1 Base Salary. As compensation for (a) his services to CSI and (b) the restrictions
contained and enumerated in Article 4 of this Agreement, during his employment with CSI in 2007,
CSI agrees to pay Executive an annual base salary of $370,000, less required and authorized
deductions and withholding. For 2008 and for each year thereafter, Executive’s base

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salary shall
be reviewed and increases or decreases, if any, shall be implemented by the Board of
Directors in its sole discretion. Executive’s base salary shall be payable at the same intervals
as CSI pays other senior executives.

     2.2 Bonus. Executive shall be eligible to earn annual incentive bonuses equal to 25% of his
base salary in 2007, and 50% of his base salary in 2008 and 2009, earned and payable according to
achievement of performance goals as shall be agreed between the Executive and the Board of
Directors of the Corporation. In addition to any other requirements for earning such bonus,
Executive must be employed by CSI for the entire calendar year to earn an annual incentive bonus.

     2.3 Housing Allowance. CSI shall pay Executive a housing allowance of $6,000 per calendar
month beginning on February 15, 2007 and terminating on the first to occur of (i) the first
anniversary of the date of this Agreement or (ii) the date Executive’s family begins residing in
the Minneapolis/St. Paul metropolitan area.

     2.4 Relocation Payment. CSI shall pay Executive a relocation payment of $40,000 on February
15, 2007. Executive shall use this payment to pay for relocation expenses incurred by Executive
and shall submit documentation of such expenses in accordance with CSI’s expense reimbursement
policies and practices.]

     2.5 Car Allowance. CSI shall pay to Executive a car allowance of $900 per calendar month
beginning February 15, 2007.

     2.6 Group Insurance Benefits. Executive shall be eligible to participate in such group
health, dental, and/or life insurance plans, if any, made available from time to time by CSI to its
employees, subject to the terms and conditions of such plans. To the extent CSI adopts such
plans, Executive shall be entitled to receive family medical and/or dental coverage and/or single
life insurance coverage (as applicable) with the normal Company contribution level for senior
executives. Nothing in this Agreement shall require CSI to adopt such plans or restrict CSI’s
right to amend, modify, or terminate such plans at any time, including during Executive’s
employment.

     2.7 Stock Options. As further consideration for the restrictions contained and enumerated in
Article 4, CSI shall grant to Executive an incentive stock option for 540,000 shares of CSI common
stock the terms of which shall be set forth in a separate Stock Option Agreement to be dated
February 15, 2007. Executive must be employed on the date of vesting in order for the options to
become exercisable. Once the option becomes exercisable, it shall remain exercisable until the
fifth anniversary of the date of grant of the option or the earlier termination of the option.

     2.5 Miscellaneous Benefits. CSI shall provide Executive the following additional benefits:

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	 	a.	 	Reimbursement of all ordinary and necessary expenses incurred
by Executive for CSI, in accordance with CSI’s policies and practices with
regard to documentation and payment of such expenses.
	 
	 	b.	 	Paid time off (“PTO”), in lieu of vacation, sick, or personal
time, in an amount consistent with CSI policies as determined by the Board of
Directors.

Article 3

TERMINATION OF EMPLOYMENT

     3.1 Termination. Either Executive or CSI may terminate this Agreement and the employment
relationship at any time, for any or no reason. Notwithstanding the foregoing, Executive agrees to
give CSI thirty (30) days’ written notice of termination.

     3.2 Return of Property. Immediately upon termination (or at such earlier time as requested by
the Board of Directors or its designees), Executive shall deliver to CSI all of its property,
including but not limited to all work in progress, research data, equipment, originals and copies
of documents and software, customer information and lists, financial information, and all other
material in his possession or control that belongs to CSI or its customers or contains Confidential
Information.

     3.3 Payment Upon Termination. Except as provided in Section 3.4, after the effective date of
termination, Executive shall not be entitled to any compensation, benefits, or payments whatsoever
except for compensation earned through his last day of employment and any accrued benefits.

     3.4 Severance. If Executive is terminated by CSI without Cause (as defined below), or
Executive terminates his employment for Good Reason (as defined below), and Executive executes,
returns and does not rescind a release of claims agreement in a form supplied by CSI, then CSI
shall: (i) pay Executive in a lump sum or at regular payroll intervals, at CSI’s option, an amount
equal to twelve (12) months of Executive’s then current base salary; and (ii) continue to pay CSI’s
ordinary share of premiums for twelve (12) calendar months for Executive’s COBRA continuation
coverage in CSI’s group medical, dental, and life insurance plans (as applicable), provided
Executive timely elects such continuation coverage and timely pays Executive’s share of such
premiums, if any.

	 	a.	 	Termination by Employer with Cause. For purposes of
this Article 3, “Cause” shall be defined as:

	 	(1)	 	Executive’s neglect of any of his material
duties or his failure to carry out reasonable directives from the Board
of Directors or its designees;
	 
	 	(2)	 	Any willful or deliberate misconduct that is
injurious to CSI;

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	 	(3)	 	Any statement, representation or warranty made
to the Board or its designees by Executive that Executive knows is
false or materially misleading; or
	 
	 	(4)	 	Executive’s commission of a felony, whether or
not against CSI and whether or not committed during Executive’s
employment.

	 	b.	 	Termination by Executive for Good Reason. For purposes
of this Article 3, “Good Reason” shall be defined as:

	 	(1)	 	The assignment to Executive, without
Executive’s written consent, of employment responsibilities that are
not of comparable responsibility and status to the employment
responsibilities described in this Agreement;
	 
	 	(2)	 	CSI’s reduction of Executive’s base salary
without Executive’s written consent; or
	 
	 	(3)	 	CSI’s failure to provide Executive, without
Executive’s written consent, those employee benefits specifically
required by this Agreement.

Article 4

CONFIDENTIALITY, NONCOMPETITION, NONSOLICITATION, PROPERTY, INVENTIONS, AND COPYRIGHTS

     4.1 Definitions. For purposes of this Article 4, the terms listed below shall have the
following meanings:

	 	a.	 	“Confidential Information” shall mean any information not
generally known or readily ascertainable by CSI’s competitors or the general
public. Confidential Information includes, but is not limited to, use of or
customization to product designs, plans, drawings or prototypes; data of any
type that is created by Executive, is provided, or to which access is provided,
in the course of Executive’s employment by CSI; data or conclusions or opinions
formed by Executive in the course of employment; manuals; trade secrets;
methods, procedures, or techniques pertaining to the business of CSI;
specifications; systems; price lists; marketing plans; sales or service
analyses; financial information; customer names or other information; supplier
names or other information; employee names or other information; research and
development data; diagrams; drawings; videotapes, audiotapes, or computerized
media used 

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	 	 	 	as training regimens; and notes, memoranda, notebooks, and records
or documents that are created, handled, seen, or used by Executive in the
course of employment. Confidential Information does not include
information that Executive can demonstrate by reliable, corroborated
documentary evidence (1) is generally available to the public or (2) became
generally available through no act or failure to act by Executive.

	 	b.	 	“Corporate Product” means any product or service, (including
any component thereof and any research to develop information useful in
connection with a product or service) that is being designed, developed,
manufactured, marketed or sold by CSI or with respect to which CSI has acquired
Confidential Information that it intends to use in, or made plans or statements
regarding its intention to undertake, the design, development, manufacture,
marketing or sale of a product or service.
	 
	 	c.	 	“Competitive Product” means any product or service, (including
any component thereof and any research to develop information useful in
connection with a product or service) that is being designed, developed,
manufactured, marketed or sold by anyone other than the Corporation, and is of
the same general type, performs similar functions, or is used for the same
purposes as a Corporate Product which Executive worked on or assisted the
Corporation in marketing or about which Executive received or had knowledge of
Confidential Information.
	 
	 	d.	 	“Render services” shall mean directly or indirectly, owning,
managing, operating, controlling, providing services to, being employed by,
consulting for, or otherwise participating in, a business.
	 
	 	e.	 	“Sell” and “sold” shall mean sell, lease, license, market, or
otherwise provide or attempt to provide for compensation or advantage.
	 
	 	f.	 	“Customer” shall mean any person or entity that (1) has a
contract or business relationship with CSI, (2) is negotiating to contract or
enter into a business relationship with CSI, or (3) has, within the last two
(2) years of Executive’s employment with CSI, purchased or leased products or
services from CSI.
	 
	 	g.	 	“Invention” shall mean any invention, discovery, design,
improvement, business method, or idea, whether patentable or copyrightable or
not, and whether or not shown or described in writing or reduced to practice.

     4.2 Confidentiality Restrictions. Executive agrees at all times to use all reasonable means
to keep Confidential Information secret and confidential. Executive shall not at any time
(including after termination of his employment with CSI) use, disclose, duplicate, record, or in
any other manner reproduce in whole or in part any Confidential Information, except as necessary
for the performance of Executive’s duties on behalf of CSI. Executive shall not at any

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time
provide services to any person or entity if providing such services would require or likely
result in his using or disclosing Confidential Information. Upon termination of Executive’s
employment with CSI, Executive shall immediately return to CSI all originals and copies of
Confidential Information and other CSI materials and property in Executive’s possession. Executive
acknowledges that use or disclosure of any of CSI’s confidential or proprietary information in
violation of this Agreement would have a materially detrimental effect upon CSI, the monetary loss
from which would be difficult, if not impossible, to measure.

     4.3 Noncompetition. During Executive’s employment with CSI and for one (1) year following
termination of employment with CSI, Executive shall not, directly or indirectly, render services to
any person or entity, or on behalf of himself, in connection with the design, development,
manufacture, marketing or sale of a Competitive Product that is sold or intended for use or sale in
any geographic area in which the CSI actively markets a Corporate Product, or intends to actively
market a Corporate Product, of the same general type or function. Executive understands and
acknowledges that, at the present time, (i) Corporate Products include the products currently being
developed by CSI, and (ii) the geographic market in which CSI is actively marketing, or intends to
actively market, its Corporate Products is the United States of America and Europe. Executive
understands and acknowledges that the foregoing description of Corporate Products and geographic
market may change, and the provisions of this section shall apply to the Corporate Products and
geographic market of CSI in effect upon the termination of Executive’s employment with CSI.

     4.4 Nonsolicitation of Customers. During Executive’s employment with CSI and for a period of
one (1) year immediately following Executive’s termination, Executive shall not (except on CSI’s
behalf during Executive’s employment), directly or indirectly:

	 	a.	 	solicit or sell, or attempt to solicit or sell, to any CSI
customer, services or products that compete with services or products provided
by CSI, or that were in the process of being developed by CSI during
Executive’s employment; or
	 
	 	b.	 	interfere in any way with CSI’s relationships with any customer
or supplier, or induce any such person or entity to terminate or alter its
business relationship with CSI.

     4.5 Nonsolicitation of Employees or Others. During Executive’s employment with CSI and for a
period of one (1) year immediately following Executive’s termination, Executive shall not (except
on CSI’s behalf during Executive’s employment), directly or indirectly, solicit or accept, or
attempt to solicit or accept, as an individual or through any other person or entity—any
then-current employee of CSI or consultant under contract with CSI for employment or any other
arrangement for compensation to perform services, or induce such persons to terminate or alter
their relationship with CSI.

     4.6 Copyrights. Executive agrees that he is employed by CSI and that any designs, drawings,
or computer or software applications or other work of authorship (hereinafter referred to as
“Works”) prepared by Executive for the benefit of CSI or its customers or prepared at the

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request
of CSI or its customers (as well as Executive’s contributions to any other Works relating
to CSI), shall be considered “work made for hire” within the meaning of U.S. Copyright law and that
all such Works shall belong to CSI. To the extent that any such Works cannot be considered a “work
made for hire,” Executive agrees to disclose and assign, and hereby does assign, to CSI all right,
title, and interest in and to such Works, and agrees to assist CSI by executing any such documents
or applications as may be useful to evidence such ownership of such Works. To the extent such
Works are based on preexisting work in which Executive has an ownership interest, Executive grants
CSI all right, title, and interest in such Works free and clear of any claim based on the
preexisting work.

     4.7 Inventions.

	 	a.	 	Assignment. Executive shall promptly and fully
disclose in writing to CSI, and will hold in trust for CSI’s sole right and
benefit, any Invention that Executive, during the period of employment and for
one year thereafter, makes, conceives, or reduces to practice or causes to be
made, conceived, or reduced to practice, either alone or in conjunction with
others, that:

	 	(1)	 	Relates to any subject matter pertaining to Executive’s employment; or
	 
	 	(2)	 	Relates to or is directly or indirectly
connected with CSI’s business, products, processes, or Confidential
Information; or
	 
	 	(3)	 	Involves the use of any of CSI’s time, material, or facility.

	 	 	 	Executive shall keep accurate, complete, and timely records for such
Inventions, which records shall be CSI’s property. Executive hereby assigns
to CSI all of Executive’s right, title, and interest in and to all such
Inventions and, upon CSI’s request, Executive shall execute, verify, and
deliver to CSI such documents, including without limitation, assignments and
patent applications, and shall perform such other acts, including, without
limitation, appearing as a witness in any action brought in connection with
this Agreement that is necessary to enable CSI to obtain the sole right,
title, and benefit to all such Inventions.

	 	b.	 	Notice of Excluded Inventions. Executive agrees, and
is hereby notified, that the above agreement to assign Inventions to CSI does
not apply to any Invention for which no equipment, supplies, facility, or
Confidential Information of CSI’s was used, which was developed entirely on
Executive’s own time, and (a) which does not relate: (i) directly to CSI’s
business; or (ii) to CSI’s actual or demonstrably anticipated research or
development; or (b) which does not result from any work performed by Executive
for CSI.

     4.8 Understandings. Executive agrees and acknowledges that CSI informed him, prior to
entering into this Agreement, that the restriction provisions contained in Article 4 would

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be required as part of the terms and conditions of employment. Executive agrees and
acknowledges that he signed this Agreement prior to commencing employment with CSI. Executive
understands that the foregoing restrictions may limit his ability to earn a livelihood in a
business similar to CSI’s business, but he nevertheless believes that he has received and will
receive sufficient consideration and other benefits as an executive of CSI and as otherwise
provided hereunder to justify clearly such restrictions which, in any event (given his education,
skills and ability), Executive does not believe would prevent him from earning a living. Executive
agrees that the restrictions and obligations in this Agreement are reasonable. Executive and CSI
agree that the restrictions and obligations in Article 4 of this Agreement shall survive
Executive’s termination of employment with CSI and the termination of this Agreement, and shall
apply regardless of whether Executive’s termination is voluntary or involuntary.

     4.9 Remedies. The parties acknowledge and agree that, if Executive breaches or threatens to
breach the terms of this Article 4, CSI shall be entitled as a matter of right to injunctive relief
and reasonable attorneys’ fees, costs, and expenses, in addition to any other remedies available at
law or equity. The parties further agree that, if Executive breaches any noncompetition and/or
nonsolicitation restriction contained in this Article 4, then the time period for such restriction
shall be extended by the length of time that Executive was in breach.

     4.10 Notification. Executive authorizes CSI to notify third parties (including, but not
limited to, Executive’s actual or potential future employers or business partners, CSI’s
competitors and CSI’s customers) of this Article 4, and those provisions necessary for the
enforcement of Article 4 of this Agreement, and Executive’s obligations hereunder.

Article 5

MISCELLANEOUS PROVISIONS

     5.1 Other Benefits. This Agreement shall not be construed to be in lieu or to the exclusion
of any other rights, benefits, and privileges to which Executive may be entitled as an employee of
CSI under any retirement, pension, or profit-sharing plans that may now be in effect or that may
hereafter be adopted.

     5.2 Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the state of Minnesota.

     5.3 Entire Agreement. This Agreement constitutes the entire understanding of CSI and
Executive and supersedes all prior agreements, understandings, and negotiations between the
parties, whether oral or written. No modification, supplement, or amendment of any provision
hereof shall be valid unless made in writing and signed by the parties.

     5.4 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon
CSI and Executive and their respective successors, executors, and administrators, except that the
services to be performed by Executive are personal and are not assignable.

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     5.5 Captions. The captions set forth in this Agreement are for the convenience only and shall
not be considered as part of this Agreement or as in any way limiting or amplifying the terms and
conditions hereof.

     5.6 No Conflicting Obligations. Executive represents and warrants to CSI that he is not
under, or bound to be under in the future, any obligation to any person or entity that is or would
be inconsistent or in conflict with this Agreement or would prevent, limit, or impair in any way
the performance by Executive of his obligations hereunder, including but not limited to any duties
owed to any former employers not to compete or use or disclose confidential information. Executive
represents and agrees that he will not disclose to CSI or use on behalf of CSI any trade secret or
confidential information belonging to a third party.

     5.7 Waiver. The failure of a party to require compliance with any term or obligation of this
Agreement shall not constitute a waiver or prevent enforcement of such term or obligation. A term
or obligation of this Agreement may be waived only by a written instrument signed by the party
waiving compliance.

     5.8 Severability. In the event that any provision hereof is held invalid or unenforceable by
a court of competent jurisdiction, CSI and Executive agree that that part should be modified by the
court to make it enforceable to the maximum extent possible. If the part cannot be modified, then
that part may be severed and the other parts of this Agreement shall remain enforceable.

     5.9 Notices. Any notices given hereunder shall be in writing and delivered or mailed by
registered or certified mail, return receipt requested:

	 	 	 	 	 
	(a)

	 	If to CSI:
	 	Cardiovascular Systems, Inc.
	 

	 	 	 	651 Campus Drive
	 

	 	 	 	St. Paul, MN 55112
	 
	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	Fredrikson & Byron, P.A.
	 

	 	 	 	200 South Sixth Street, Suite 4000
	 

	 	 	 	Minneapolis, MN 55402
	 
	 	 	 	 
	(b)

	 	If to Executive:
	 	David L. Martin
	 

	 	 	 	2016 Stockbridge Avenue
	 

	 	 	 	Redwood City, CA 94061

     5.10 Counterparts. More than one counterpart of this Agreement may be executed by the parties
hereto, and each fully executed counterpart shall be deemed an original.

     5.11 Legal Fees. In any action to enforce this Agreement or determine the parties’ rights and
obligations under this Agreement, the court or arbitrator may award to the prevailing party, if
any, as determined by the court or arbitrator, all of its costs and fees, including any

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arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses and reasonable
attorneys’ fees.

     With the intention of being bound hereby, the parties have executed this Agreement as of the
date set forth above.

	 	 	 	 	 	 	 
	 	 	/s/ David L. Martin	 	 
	 	 	 	 	 
	 	 	David L. Martin	 	 
	 
	 	 	 	 	 	 
	 	 	Cardiovascular Systems, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gary Petrucci	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:
	 	Chairman	 	 

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EXHIBIT 10.15

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (“Agreement”) is entered into effective as of
the 31 day of May 2003 by and between Cardiovascular Systems, Inc., a Minnesota corporation,
(“CSI”), and Michael J. Kallok, Ph.D. (“Kallok”).

Recitals

     A. CSI and Kallok are parties to an Employment Agreement dated December 2, 2002 (the “2002
Agreement”).

     B. CSI and Kallok wish to amend and restate the 2002 Agreement upon the terms and conditions
set forth in this Agreement, primarily for the purpose of providing severance benefits to Kallok.

Article 1

AMENDMENT AND RESTATEMENT OF 2002 AGREEMENT

     1.1 Amendment and Restatement. The 2002 Agreement is hereby amended and restated in its
entirety to read as set forth in this Agreement.

Article 2

EMPLOYMENT AND TERMS OF AGREEMENT

     2.1 Employment. CSI hereby employs Kallok and Kallok hereby accepts employment as Chief
Executive Officer of CSI.

     2.2 Duties.

	 	a.	 	During his employment with CSI, Kallok shall serve CSI
faithfully and to the best of his ability. Except as approved in writing by
the Board of Directors, which approval shall not be unreasonably withheld,
Kallok shall devote his full business and professional time, energy, and
diligence to the performance of the duties of such office. Kallok shall
perform such duties for CSI (i) as are customarily incident to his office and
(ii) as may be assigned or delegated to him from time to time by the Board of
Directors of CSI or its designees. During his employment with CSI, Kallok
shall not engage in any other business activity that would conflict or
interfere with his ability to perform his duties under this Agreement.

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	 	b.	 	Kallok agrees to be subject to CSI’s control, rules,
regulations, policies and programs. Kallok further agrees that he shall not
enter into any contract on behalf of CSI except as expressly authorized by CSI.

     2.3 Term of Employment. Kallok’s employment with CSI shall be “at will,” meaning either
Kallok or CSI may terminate the employment relationship at any time, for any or no reason.

Article 3

COMPENSATION AND BENEFITS

     3.1 Base Salary. As compensation for (a) his services to CSI and (b) his confidentiality,
noncompetition, and nonsolicitation agreement provided in Article 4 of this Agreement, during his
employment with CSI Kallok shall be paid a base salary as follows: (i) beginning with the Effective
Date of this Agreement and continuing through and ending December 31, 2003, Kallok shall be paid a
monthly base rate of $12,500; (ii) beginning January 1, 2004, Kallok shall be paid a monthly base
rate as determined by the Board of Directors or its designees from time to time but no less than
annually. The base salary shall be payable at such periodic intervals, not less than monthly, as
from time to time are applicable with respect to senior executives of CSI. Kallok’s base salary,
and all other compensation and benefits provided by CSI, shall be subject to required and
authorized deductions and withholdings.

     3.2 Bonus. Kallok shall be given the opportunity to earn a cash bonus of $60,000 in the first
year of the Agreement payable according to achievement of performance goals as is agreed between
the Kallok and the Board of Directors of the Corporation.

     First half of Bonus to be paid on achievement of

	 	1)	 	Design Freeze
	 
	 	2)	 	Raising $5 million.

     Second half of Bonus based on

	 	1)	 	CE Mark
	 
	 	2)	 	Start of Human Trials

     This Agreement shall be amended from time to time by an agreement or agreements in writing to set
forth and reflect the then current annual base salary and bonus payable by the Corporation to
Employee.

     3.3 Group Insurance Benefits. Kallok shall be eligible to participate in such group health,
dental, and/or life insurance plans, if any, made available from time to time by CSI to its
employees, subject to the terms and conditions of such plans. To the extent CSI adopts such
plans, Kallok shall be entitled to receive family medical and/or dental coverage and/or single life
insurance coverage (as applicable) with the normal Company contribution level for senior

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executives. Nothing in this Agreement shall require CSI to adopt such plans or restrict CSI’s
right to amend, modify, or terminate such plans at any time, including during Kallok’s employment.

     3.4 Stock Options. As further consideration for the restrictions contained and enumerated in
Article 5, CSI has granted Kallok stock options for 260,000 shares of CSI common stock the terms of
which are set forth in a separate Stock Option Agreement dated December 18, 2002. Kallok shall
also be entitled to receive additional options for his service on the CSI’s Board of Directors, as
determined by the Board. Kallok must be employed on the date of vesting in order for the options
to become exercisable. Once the options become exercisable, they shall remain exercisable until
the fifth anniversary of the date they become exercisable or the earlier termination of the
options.

     3.5 Miscellaneous Benefits. CSI shall provide Kallok the following additional benefits:

	 	a.	 	Reimbursement of all ordinary and necessary expenses incurred
by Kallok for CSI, in accordance with CSI’s policies and practices with regard
to documentation and payment of such expenses.
	 
	 	b.	 	Paid time off (“PTO”), in lieu of vacation, sick, or personal
time, in an amount consistent with CSI policies as determined by the Board of
Directors.

Article 4

TERMINATION OF EMPLOYMENT

     4.1 Termination. Either Kallok or CSI may terminate the employment relationship at any time,
for any or no reason. Notwithstanding the foregoing, Kallok agrees to give CSI thirty (30) days’
written notice of termination.

     4.2 Return of Property. Immediately upon termination (or at such earlier time as requested by
the Board of Directors or its designees), Kallok shall deliver to CSI all of its property,
including but not limited to all work in progress, research data, equipment, originals and copies
of documents and software, customer information and lists, financial information, and all other
material in his possession or control that belongs to CSI or its customers or contains Confidential
Information.

     4.3 Payment Upon Termination. Except as provided in Section 4.4, after the effective date of
termination, Kallok shall not be entitled to any compensation, benefits, or payments whatsoever
except for compensation earned through his last day of employment and any accrued benefits.

     4.4 Severance. If (1) Kallok is terminated by CSI without Cause, or Kallok terminates his
employment for Good Reason, and (2) Kallok executes a release of claims in a

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form supplied by CSI,
then CSI shall provide Kallok with the severance benefits described in this Section 4.4.

	 	a.	 	Termination by Employer with Cause. For purposes of
this Article 4, “Cause” shall be defined as:

	 	(1)	 	Kallok’s neglect of any of his material duties
or his failure to carry out reasonable directives from the Board of
Directors or its designees;
	 
	 	(2)	 	Any willful or deliberate misconduct that is
injurious to CSI;
	 
	 	(3)	 	Any statement, representation or warranty made
to the Board or its designees by Kallok that Kallok knows is false or
materially misleading; or
	 
	 	(4)	 	Kallok’s commission of a felony, whether or not
against CSI and whether or not committed during Kallok’s employment.

	 	b.	 	Termination by Kallok for Good Reason. For purposes of
this Article 4, “Good Reason” shall be defined as:

	 	(1)	 	The assignment to Kallok, without Kallok’s
consent, of employment responsibilities that are not of comparable
responsibility and status to the employment responsibilities described
in this Agreement;
	 
	 	(2)	 	CSI’s reduction of Kallok’s base salary without
Kallok’s consent; or
	 
	 	(3)	 	CSI’s failure to provide Kallok, without
Kallok’s consent, those employee benefits specifically required by this
Agreement.

	 	c.	 	Severance Benefits Upon Termination by CSI Without Cause or
Termination by Kallok for Good Reason. In the event that (A) Kallok’s
employment is terminated by CSI without Cause or terminated by Kallok for Good
Reason, and (B) Kallok executes a release of claims in a form supplied by CSI,
then CSI shall: (i) pay Kallok in a lump sum or at regular payroll intervals,
at CSI’s option, an amount equal to twelve (12) months’ of Kallok’s then
current base salary plus the greater of (x) the annual bonus received by Kallok
in the previous fiscal year or (y) the annual bonus which would be paid to
Kallok for the fiscal year in which termination occurs assuming CSI’s financial
results for each month subsequent to termination are the same as the average
monthly financial results for months prior to termination, which salary and
bonus amounts shall be subject to required and authorized deductions and
withholdings; 

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	 	 	 	and (ii) continue to pay CSI’s ordinary share of premiums for
twelve (12) calendar months for Kallok’s COBRA continuation coverage in CSI’s
group medical, dental, and life insurance plans (as applicable), provided
Kallok elects such continuation coverage and timely pays Kallok’s share of
such premiums, if any.

Article 5

CONFIDENTIALITY, NONCOMPETITION, NONSOLICITATION, PROPERTY, INVENTIONS, AND COPYRIGHTS

     5.1 Definitions. For purposes of this Article 5, the terms listed below shall have the
following meanings:

	 	a.	 	“Confidential Information” shall mean any information not
generally known or readily ascertainable by CSI’s competitors or the general
public. Confidential Information includes, but is not limited to, use of or
customization to product designs, plans, drawings or prototypes; data of any
type that is created by Kallok, is provided, or to which access is provided, in
the course of Kallok’s employment by CSI; data or conclusions or opinions
formed by Kallok in the course of employment; manuals; trade secrets; methods,
procedures, or techniques pertaining to the business of CSI; specifications;
systems; price lists; marketing plans; sales or service analyses; financial
information; customer names or other information; supplier names or other
information; employee names or other information; research and development
data; diagrams; drawings; videotapes, audiotapes, or computerized media used as
training regimens; and notes, memoranda, notebooks, and records or documents
that are created, handled, seen, or used by Kallok in the course of employment.
Confidential Information does not include information that Kallok can
demonstrate by reliable, corroborated documentary evidence (1) is generally
available to the public or (2) became generally available through no act or
failure to act by Kallok.
	 
	 	b.	 	“Corporate Product” means any product or service, (including
any component thereof and any research to develop information useful in
connection with a product or service) that is being designed, developed,
manufactured, marketed or sold by CSI or with respect to which CSI has acquired
Confidential Information which it intends to use in the design, development,
manufacture, marketing or sale of a product or service.
	 
	 	c.	 	“Competitive Product” means any product or service, (including
any component thereof and any research to develop information useful in
connection with a product or service) that is being designed, developed,
manufactured, marketed or sold by anyone other than the Corporation, and is of
the same general type, performs similar functions, or is used for the 

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	 	 	 	same purposes as a Corporate Product which Employee worked on or assisted the
Corporation in marketing or about which Employee received or had knowledge of
Confidential Information.

	 	d.	 	“Render services” shall mean directly or indirectly, owning,
managing, operating, controlling, providing services to, being employed by,
consulting for, or otherwise participating in, a business.
	 
	 	e.	 	“Sell” and “sold” shall mean sell, lease, license, market, or
otherwise provide or attempt to provide for compensation or advantage.
	 
	 	f.	 	“Customer” shall mean any person or entity that (1) has a
contract or business relationship with CSI, (2) is negotiating to contract or
enter into a business relationship with CSI, or (3) has, within the last two
(2) years of Kallok’s employment with CSI, purchased or leased products or
services from CSI.
	 
	 	g.	 	“Invention” shall mean any invention, discovery, design,
improvement, business method, or idea, whether patentable or copyrightable or
not, and whether or not shown or described in writing or reduced to practice.

     5.2 Confidentiality Restrictions. Kallok agrees at all times to use all reasonable means to
keep Confidential Information secret and confidential. Kallok shall not at any time (including
after termination of his employment with CSI) use, disclose, duplicate, record, or in any other
manner reproduce in whole or in part any Confidential Information, except as necessary for the
performance of Kallok’s duties on behalf of CSI. Kallok shall not at any time provide services to
any person or entity if providing such services would require or likely result in his using or
disclosing Confidential Information. Upon termination of Kallok’s employment with CSI, Kallok
shall immediately return to CSI all originals and copies of Confidential Information and other CSI
materials and property in Kallok’s possession. Kallok acknowledges that use or disclosure of any
of CSI’s confidential or proprietary information in violation of this Agreement would have a
materially detrimental effect upon CSI, the monetary loss from which would be difficult, if not
impossible, to measure.

     5.3 Noncompetition. During employment and for one (1) year following termination of
employment with CSI, Kallok will not, directly or indirectly, render services to any person or
entity in connection with the design, development, manufacture, marketing or sale of a Competitive
Product that is sold or intended for use or sale in any geographic area in which the CSI actively
markets a Corporate Product, or intends to actively market a Corporate Product of the same general
type or function. Kallok understands and acknowledges that, at the present time, (i) Corporate
Products include the products currently being developed by CSI, and (ii) the geographic market in
which CSI is actively marketing its Corporate Products is the United States of America. Employee
understands and acknowledges that the foregoing description of Corporate Products and geographic
market may change, and the provisions of this section shall apply to the Corporate Products and
geographic market of CSI in effect upon the termination of Kallok’s employment with CSI.

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     5.4 Nonsolicitation of Customers. During Kallok’s employment with CSI and for a period of one
(1) year immediately following Kallok’s termination, Kallok shall not (except on CSI’s behalf
during Kallok’s employment):

	 	a.	 	solicit or sell, or attempt to solicit or sell, to any CSI
customer, services or products that compete with services or products provided
by CSI, or that were in the process of being developed by CSI during Kallok’s
employment; or
	 
	 	b.	 	interfere in any way with CSI’s relationships with any customer
or supplier, or induce any such person or entity to terminate or alter its
business relationship with CSI.

     5.5 Nonsolicitation of Employees or Others. During Kallok’s employment with CSI and for a
period of one (1) year immediately following Kallok’s termination, Kallok shall not (except on
CSI’s behalf during Kallok’s employment) solicit or accept—directly or indirectly, as an individual
or through any other person or entity—any employee of CSI or consultant under contract with CSI for
employment or any other arrangement for compensation to perform services, or induce such persons to
terminate or alter their relationship with CSI.

     5.6 Copyrights. Kallok agrees that he is employed by CSI and that any designs, drawings, or
computer or software applications or other work of authorship (hereinafter referred to as “Works”)
prepared by Kallok for the benefit of CSI or its customers or prepared at the request of CSI or its
customers (as well as Kallok’s contributions to any other Works relating to CSI), shall be
considered “work made for hire” within the meaning of U.S. Copyright law and that all such Works
shall belong to CSI. To the extent that any such Works cannot be considered a “work made for
hire,” Kallok agrees to disclose and assign, and hereby does assign, to CSI all right, title, and
interest in and to such Works, and agrees to assist CSI by executing any such documents or
applications as may be useful to evidence such ownership of such Works. To the extent such Works
are based on preexisting work in which Kallok has an ownership interest, Kallok grants CSI all
right, title, and interest in such Works free and clear of any claim based on the preexisting work.

     5.7 Inventions.

	 	a.	 	Assignment. Kallok shall promptly and fully disclose
in writing to CSI, and will hold in trust for CSI’s sole right and benefit, any
Invention that Kallok, during the period of employment and for one year
thereafter, makes, conceives, or reduces to practice or causes to be made,
conceived, or reduced to practice, either alone or in conjunction with others,
that:

	 	(1)	 	Relates to any subject matter pertaining to Kallok’s employment; or

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	 	(2)	 	Relates to or is directly or indirectly
connected with CSI’s business, products, processes, or Confidential
Information; or
	 
	 	(3)	 	Involves the use of any of CSI’s time, material, or facility.

	 	 	 	Kallok shall keep accurate, complete, and timely records for such
Inventions, which records shall be CSI’s property. Kallok hereby assigns to
CSI all of Kallok’s right, title, and interest in and to all such Inventions
and, upon CSI’s request, Kallok shall execute, verify, and deliver to CSI
such documents, including without limitation, assignments and patent
applications, and shall perform such other acts, including, without
limitation, appearing as a witness in any action brought in connection with
this Agreement that is necessary to enable CSI to obtain the sole right,
title, and benefit to all such Inventions.

	 	b.	 	Notice of Excluded Inventions. Kallok agrees, and is
hereby notified, that the above agreement to assign Inventions to CSI does not
apply to any Invention for which no equipment, supplies, facility, or
Confidential Information of CSI’s was used, which was developed entirely on
Kallok’s own time, and (a) which does not relate: (i) directly to CSI’s
business; or (ii) to CSI’s actual or demonstrably anticipated research or
development; or (b) which does not result from any work performed by Kallok for
CSI.

     5.8 Understandings. Kallok agrees and acknowledges that CSI informed him, prior to entering
into this Agreement, that the restriction provisions contained in Article 5 would be required as
part of the terms and conditions of employment. Kallok understands that the foregoing
restrictions may limit his ability to earn a livelihood in a business similar to CSI’s business,
but he nevertheless believes that he has received and will receive sufficient consideration and
other benefits as an executive of CSI and as otherwise provided hereunder to justify clearly such
restrictions which, in any event (given his education, skills and ability), Kallok does not believe
would prevent him from earning a living. Kallok agrees that the restrictions and obligations in
this Agreement are reasonable. Kallok and CSI agree that the restrictions and obligations in
Article 5 of this Agreement shall survive the later of Kallok’s termination of employment with CSI
or the termination of this Agreement, and shall apply regardless of whether Kallok’s termination is
voluntary or involuntary.

     5.9 Remedies. The parties acknowledge and agree that, if Kallok breaches or threatens to
breach the terms of this Article 5, CSI shall be entitled as a matter of right to injunctive relief
and reasonable attorneys’ fees, costs, and expenses, in addition to any other remedies available at
law or equity. The parties further agree that, if Kallok breaches any noncompetition and/or
nonsolicitation restriction contained in this Article 5, then the time period for such restriction
shall be extended by the length of time that Kallok was in breach.

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Article 6

MISCELLANEOUS PROVISIONS

     6.1 Other Benefits. This Agreement shall not be construed to be in lieu or to the exclusion
of any other rights, benefits, and privileges to which Kallok may be entitled as an employee of CSI
under any retirement, pension, or profit-sharing plans that may now be in effect or that may
hereafter be adopted.

     6.2 Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the state of Minnesota.

     6.3 Entire Agreement. This Agreement constitutes the entire understanding of CSI and Kallok
and supersedes all prior agreements, understandings, and negotiations between the parties, whether
oral or written. No modification, supplement, or amendment of any provision hereof shall be valid
unless made in writing and signed by the parties.

     6.4 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon
CSI and Kallok and their respective successors, executors, and administrators, except that the
services to be performed by Kallok are personal and are not assignable.

     6.5 Captions. The captions set forth in this Agreement are for the convenience only and shall
not be considered as part of this Agreement or as in any way limiting or amplifying the terms and
conditions hereof.

     6.6 No Conflicting Obligations. Kallok represents and warrants to CSI that he is not under,
or bound to be under in the future, any obligation to any person or entity that is or would be
inconsistent or in conflict with this Agreement or would prevent, limit, or impair in any way the
performance by Kallok of his obligations hereunder, including but not limited to any duties owed to
any former employers not to compete or use or disclose confidential information.

     6.7 Waiver. The failure of a party to require compliance with any term or obligation of this
Agreement shall not constitute a waiver or prevent enforcement of such term or obligation. A term
or obligation of this Agreement may be waived only by a written instrument signed by the party
waiving compliance.

     6.8 Severability. In the event that any provision hereof is held invalid or unenforceable by
a court of competent jurisdiction, CSI and Kallok agree that that part should be modified by the
court to make it enforceable to the maximum extent possible. If the part cannot be modified, then
that part may be severed and the other parts of this Agreement shall remain enforceable.

     6.9 Notices. Any notices given hereunder shall be in writing and delivered or mailed by
registered or certified mail, return receipt requested:

	 	 	 	 	 
	(a)

	 	If to CSI:
	 	Cardiovascular Systems, Inc.

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	 	 	 	2715 Nevada Avenue North
	 

	 	 	 	New Hope, MN 55427
	 
	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	Fredrikson & Byron, P.A.
	 

	 	 	 	4000 Pillsbury Center
	 

	 	 	 	200 South Sixth Street
	 

	 	 	 	Minneapolis, MN 55402
	 
	 	 	 	 
	(b)

	 	If to Kallok:
	 	Michael J. Kallok, Ph.D.
	 

	 	 	 	2715 Nevada Avenue North
	 

	 	 	 	New Hope, MN 55427

     6.10 Counterparts. More than one counterpart of this Agreement may be executed by the parties
hereto, and each fully executed counterpart shall be deemed an original.

     With the intention of being bound hereby, the parties have executed this Agreement as of the
date set forth above.

	 	 	 	 	 	 	 
	 	 	/s/ Michael J. Kallok	 	 
	 	 	 	 	 
	 	 	Michael J. Kallok	 	 
	 
	 	 	 	 	 	 
	 	 	Cardiovascular Systems, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gary Petrucci	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:
	 	Director	 	 

- 10 -

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