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 This Employment Agreement involves

CARDIOVASCULAR SYSTEMS INC | Cardiovascular Systems, Inc

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Title: EMPLOYMENT AGREEMENT
Governing Law: Minnesota     Date: 8/25/2016
Industry: Medical Equipment and Supplies     Sector: Healthcare

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Exhibit 10.50

 

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is entered into by and between Cardiovascular Systems, Inc. (the “Corporation”) and Scott R. Ward (“Executive”).

 

RECITALS

 

A.      Executive has been employed as the Corporation’s Interim Chief Executive Officer and President since November 30, 2015.

 

B.      The Corporation desires to employ Executive as its Chief Executive Officer and President.

 

C .      Executive wishes to become employed by the Corporation as its Chief Executive Officer and President on the terms and conditions set forth in this Agreement.

 

D.      The Corporation is engaged in the business of researching, designing, developing, manufacturing and marketing medical devices for the treatment of cardiovascular disease.

 

E.      The Corporation, through its research, development and expenditure of funds, has developed confidential and proprietary information, including trade secrets.     

 

F.      During his employment, Executive will have access to the Corporation’s valuable Confidential Information (as defined below), may contribute to Confidential Information and acknowledges that the Corporation will suffer irreparable harm if Executive uses Confidential Information outside his employment or makes unauthorized disclosure of Confidential Information to any third party.

    

AGREEMENT

 

In consideration of the above recitals and the promises set forth in the Agreement, and in consideration of Executive’s employment with the Corporation, the parties agree as follows:

 

1.      Nature and Capacity of Employment . Effective August 16, 2016 (the “Effective Date”), the Corporation hereby employs Executive and Executive hereby accepts employment as the full-time Chief Executive Officer and President of the Corporation. Executive will report to the Corporation’s Board of Directors.

 

2.      Term of Employment . Executive’s employment with the Corporation hereunder shall begin on the Effective Date and shall continue until terminated by either party as provided for in Paragraph 8 hereunder. In the event that Executive is terminated or he elects to resign as an employee of the Corporation, Executive agrees to submit his resignation as a director and officer of the Corporation effective concurrently with the effective date of his termination or resignation as an employee of the Corporation.

 

 


 

3.      Base Salary . Executives initial annualized base salary will be $630,000.00, payable biweekly, less required and authorized deductions and withholdings. The base salary may be subject to review and adjustment by the Board from time to time.

 

4.      Bonus . Executive will be eligible to participate in the Corporation’s bonus programs for executive officers in effective from time to time. Executive’s eligibility to earn bonuses will be subject to the terms and conditions of the then-applicable executive officer bonus programs, which may be subject to discontinuation or modification by the Board from time to time.

 

5.      Restricted Stock Grant . Executive will receive grants of restricted stock under the Corporation’s 2014 Equity Incentive Plan, as amended, in accordance with the Corporation’s 2017 annual incentive program for executive officers.  Further details of the restricted stock grants will be provided in separate Restricted Stock Agreements.  Future grants of restricted stock to Executive will be at the discretion of the Corporation’s Board of Directors or a Committee thereof and will be contingent upon Executive agreeing to a separate Restricted Stock Agreement and restrictive covenants in the Corporation’s then-current form.

 

6.      Employee Benefits; PTO.   Executive will be eligible to participate in all retirement plans and all other employee benefits and policies made available by the Corporation to its full-time employees, to the extent Executive meets applicable eligibility requirements. Executive will be eligible to accrue and use paid time off (PTO) pursuant to the Corporation’s then-current PTO policies. Executive will be eligible to participate in the Corporation’s Executive Officer Severance Plan, as in effect from time to time (the “Severance Plan”). Nothing in this Agreement is intended to or will in any way restrict the Corporation’s right to amend, modify or terminate any of its benefits or benefit plans during Executive’s employment.

    

7.      Best Efforts/Undertakings of Executive . During the term of Executive’s employment with the Corporation, Executive will serve the Corporation faithfully and to the best of his ability and will devote his full business and professional time, energy, and diligence to the performance of the duties assigned to him. Executive will perform such duties for the Corporation (i) as are customarily incident to Executive’s position and (ii) as may be assigned or delegated to Executive from time to time by the Corporation. During the term of Executive’s employment with the Corporation, Executive will not engage in any other business activity that would conflict or interfere with his ability to perform his duties under this Agreement. Notwithstanding the foregoing, the Corporation agrees that Executive may continue to have the outside affiliations approved by the Board. During the term of Executive’s employment, he will not provide any services or invest in, or offer for sale or sell any products, to any individual, company or other business entity that is a competitor, supplier or customer of the Corporation, except in connection with Executive’s employment with the Corporation. Furthermore, Executive will be subject to the Corporation’s control, rules, regulations, policies and programs, including, without limitation, with regard to conflict of interest and code of ethics. Executive will carry on all business and commercial correspondence, publicity and advertising in the Corporation’s name and he will not enter into any contract on behalf of the Corporation except as expressly authorized by the Corporation.

 

 

 

 

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8.      Termination of Employment .

 

8.1      Employment At Will . Executive is employed “at-will.” That is, either Executive or the Corporation may terminate the employment relationship under this Agreement at any time, with or without Cause or Good Reason, and with or without advance notice. In addition, the terms and conditions of Executive’s employment are subject to change by the Corporation and any such change will not be a breach of this Agreement.

 

8.2      Payment Upon Termination . Except as provided in Section 8.3 or in the Severance Plan, 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.

 

8.3      Severance . If at any time Executive is terminated by the Corporation without Cause (as defined below), or Executive terminates his employment for Good Reason (as defined below), and Executive executes, returns and does not rescind, and all rescission periods have expired, by the 60 th day after termination of Executive’s employment, a release of claims agreement in a form supplied by the Corporation, then the Corporation shall: (i) pay Executive the Severance Amount (as defined below) at the times and in the manner described below; (ii) pay Executive at the same time and in the same manner as provided under the Corporation’s cash bonus plan a pro rata portion of any performance bonus for which the performance period has not expired prior to his termination of employment, with such pro rata portion based on that portion of the performance period during which the Executive was employed; and (iii) continue to pay the Corporation’s ordinary share of premiums for twenty-four (24) calendar months for Executive’s COBRA continuation coverage in the Corporation’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. Notwithstanding the foregoing clause (iii), if the Corporation determines, in its sole discretion, that the payment of its share of the COBRA premiums would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Code or any statute or regulation of similar effect (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing its share of the COBRA premiums, the Corporation may, in its sole discretion, elect to pay Executive on a monthly basis a fully taxable cash payment equal to the Corporation’s ordinary share of the premiums for that month, subject to applicable tax withholdings (such amount, the “Special Severance Payment”), for the remainder of the twenty-four (24) month period. Executive may, but is not obligated to, use such Special Severance Payment toward the cost of COBRA premiums. Such Special Severance Payment shall be made at the time and in the manner prescribed in Section 8.3(c) and Section 8.4. Each of the payments described in clauses (i), (ii) and (iii) of the preceding sentence are subject to the application of Code Section 409A as set forth in Section 8.4 below and subject to the condition that Executive, at the time of any such payment, is in compliance with the terms of the release of claims agreement referred to in the preceding sentence and with Sections 9, 10, 11, 12 and 13 of this Agreement.

 

a.

Termination by the Corporation with Cause . For purposes of this Section 8.3,“Cause” shall be defined as:

 

 

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(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 of Executive that is injurious to the Corporation;

 

(3)

any statement, representation or warranty made to the Board or its designees by the Executive that the Executive knows is false or materially misleading; or

 

(4)

Executive’s commission of a felony, whether or not against the Corporation and whether or not committed during the Executive’s employment.

 

For the avoidance of doubt, termination of Executive’s employment due to his death or disability shall not be deemed a without Cause termination hereunder.

 

b.

Termination by Executive for Good Reason . For purposes of this Section 8.3, “Good Reason” shall be defined as the occurrence of any of the following without Executive’s written consent:

 

(1)

The assignment to Executive of employment responsibilities that are not of comparable responsibility and status to the employment responsibilities described in this Agreement;

 

(2)

The Corporation’s material reduction of Executive’s base salary, unless pursuant to a cost reduction effort approved by the Board of Directors that also results in the reduction of salaries of other executive officers; or

 

(3)

The Corporation’s failure to provide Executive those employee benefits specifically required by this Agreement.

 

Notwithstanding the foregoing, Executive’s resignation shall not constitute resignation for Good Reason unless (i) Executive notifies the Corporation in writing within ninety (90) days after the initial existence of any condition that constitutes Good Reason, (ii) the Corporation fails to cure the condition within thirty (30) days after receiving such notice, and (iii) Executive resigns within ninety (90) days after the end of such thirty-day cure period.

 

c.

Severance Amount . Except as set forth in the following sentence with respect to a Change of Control, the Severance Amount will be the product of (i) 2, multiplied by (ii) Executive’s annual base salary at the time of termination of Executive’s employment. If Executive is terminated without Cause or terminates his employment for Good Reason in accordance with terms hereof following a Change of Control (as that phrase is defined in the Severance Plan) and before the second anniversary of the Change of Control, then the Severance Amount will be the product of (i) 2,

 

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multiplied by (ii) the sum of Executive’s annual base salary at the time of termination of Executive’s employment and the target bonus amount that Executive was eligible to earn for the fiscal year in which termination occurred under the Corporation’s cash bonus plan then in effect, assuming 100% achievement against Corporation’s budgets. In either case, the Severance Amount shall be paid in approximately equal installments, as determined by the Corporation in its sole and absolute discretion, at regular payroll intervals over a period of twenty-four (24) months, beginning on the next regularly scheduled payday coinciding with or immediately following the 60 th day after the termination of the Executive’s employment and continuing until the end of such twenty-four (24) month period.

 

8.4      IRC Section 409A .  This Agreement is intended to comply with Internal Revenue Code Section 409A (“Code Section 409A”) or an exemption thereunder and shall be construed and administered in accordance with Code Section 409A.  Any payments to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a ”separation from service’ under Code Section 409A.  Notwithstanding any other provision of this Agreement to the contrary, if any of the payments described in this Agreement are subject to the requirements of Code Section 409A and the Corporation determines that Executive is a “specified employee” as defined in Code Section 409A as of the date of Executive’s termination of employment, all or a portion of such payments will not be paid or commence until the first payroll date that occurs after the six-month anniversary of the date of Executive’s termination of employment, or, if earlier, the date of Executive’s death, but only to the extent such delay is required for compliance with Code Section 409A.  Further, notwithstanding anything in this Agreement to the contrary, the Corporation expressly reserves the right to amend this Agreement without Executive’s consent to the extent necessary to comply with Code Section 409A, as it may be amended from time to time, and the regulations, notices and other guidance of general applicability issued thereunder.

 

9.      Return of Property/Termination of Loan.  

 

a.      Immediately upon termination of employment for any reason (or at such earlier time as requested by the Corporation), Executive will deliver to the Corporation all Confidential Information and all physical property of the Corporation or any of its prospective or current customers in the possession or control of Executive, including all products, equipment, product specifications, drawings, work in progress, research data, models, prototypes, notes, software programs, project plans, sales and marketing materials, business and product development materials, advertising materials, media materials, customer and client lists, customer account records, training and operations material and memoranda, personnel records, code books, pricing information, business practices, business policies, methods of operation, advertising strategies, business plans and strategy, financial information, information submitted to the Corporation by its customers, clients, suppliers, employees, consultants or co-ventures, prospective or existing customers of the Corporation, and other information concerning or relating to the business, accounts, customers, suppliers, employees and affairs of the Corporation, together with any similar materials, whether or not of a secret or confidential nature, and all copies of any of the foregoing that are in any way related to the Corporation’s business and that Executive has in its possession or that are subject to

 

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Executive’s control. Neither the execution of this Agreement nor the furnishing of any Confidential Information hereunder will be construed as the Corporation granting to Executive, either expressly, by implication, estoppel or otherwise, any license under any invention, patent, copyright or trade secret, now or hereafter owned or controlled by the Corporation.

 

b.      If Executive fails to return the Corporation’s property, products and/or equipment to the Corporation within 24 hours of demand by the Corporation, by signing below, Executive voluntarily authorizes the Corporation to deduct the monetary value of such property, products and/or equipment, as determined in the Corporation’s sole discretion, from any money that the Corporation may owe Executive for wages, commissions, bonuses, paid time off, or any other advances or reimbursements due to Executive. If the amount the Corporation owes Executive is insufficient to cover the amount Executive owes under this Agreemen


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