THIS EMPLOYMENT AGREEMENT (this “Agreement”), is
made by and amongst Volcano Corporation (the
“Company”), having its principal offices at 2870
Kilgore Road, Rancho Cordova, CA 95670 USA, and Scott Huennekens
(the “Executive”) effective as of February l,
2006.
WHEREAS, the Company desires to continue to employ the
Executive in the position of President and Chief Executive Officer
for the Company;
WHEREAS, the Executive desires to be employed by the Company
as its President and Chief Executive Officer; and
WHEREAS, the Company and the Executive desire to enter into
an agreement describing the terms and conditions of such
employment.
NOW THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the Company and the Executive
hereby agree as follows:
1.
Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(a)
“Annual Base Salary” shall mean the
Executive’s rate of regular base annual compensation prior to
any reduction under (i) a salary reduction agreement pursuant
to Section 401(k) or Section 125 of the Code or (ii) any plan
or arrangement deferring any base salary.
(b)
“Board” shall mean the Board of Directors of the
Company. The Board may delegate its authority to a committee of the
Board (the “Committee”), including without limitation a
remuneration committee, which shall consist of outside directors as
defined under Section 162(m) the Code, and related Treasury
regulations, and “non-employee directors” as defined
under Rule l6b-3 under the Securities Exchange Act of 1934 (the
“Exchange Act”). Unless otherwise specified in the
Agreement, the term “Board” shall include any Committee
(or sub-committee) to which the Board’s authority has been
delegated to.
(c)
“Cause” any of the following (i) conviction
of the Executive by a court of competent jurisdiction of any felony
or a crime involving moral turpitude; (ii) the
Executive’s knowing failure or refusal to follow reasonable
instructions of the Board or reasonable policies, standards and
regulations of the Company or its affiliates; (iii) the
Executive’s failure or refusal to faithfully and diligently
perform the usual, customary duties of his employment with the
Company or its affiliates; (iv) unprofessional, unethical,
immoral or fraudulent conduct by the Executive; (v) conduct by the
Executive that materially discredits the Company or any affiliate
or is materially detrimental to the reputation, character and
standing of the Company or any affiliate or (vi) the
Executive’s material breach of the Patent, Copyright and
Nondisclosure Agreement. An event described in (ii) –
(vi) above shall not be treated as “Cause” until
after the Executive has been given written notice of such event,
failure or conduct and the Executive fails to cure such event,
failure, conduct or breach, if curable, within thirty
(30) days from such
written notice.
In any event, the Executive shall not be deemed to have been
terminated for Cause unless the Company shall have given a
reasonable opportunity to Executive to appear before the Board to
request reconsideration. Failure of the Company to meet financial
or performance targets or goals shall not be deemed to be a breach
pursuant to subjections (ii) or (iii) above.
(d)
“Change in Control” shall mean a determination
(which may be made effective as of a particular date specified by
the Board) by the Board, made by a majority vote that a change in
control has occurred, or is about to occur. Such a change shall not
include, however, a restructuring, reorganization, merger or other
change in capitalization in which the Persons who own an interest
in the Company on the date hereof (the “Current
Owners”) (or any individual Or entity which receives from a
Current Owner an interest in the Company through will or the laws
of descent and distribution) maintain more than a fifty percent
(50%) interest in the resultant entity. Regardless of the vote of
the Board or whether or not the Board votes, a Change in Control
will be deemed to have occurred as of the first day any one
(1) or more of the following subsections shall have been
satisfied:
(i) Any
Person (other than the Person in control of the Company as of the
date of this Agreement, or other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
or a company owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company), becomes the beneficial owner,
directly or indirectly, of securities of the Company representing
more than thirty five percent (35%) of the combined voting power of
the Company’s then outstanding securities;
(ii) The
stockholders of the Company approve:
(1) A
plan of complete liquidation of the Company;
(2) An
agreement for the sale, license or disposition of all or
substantially all of the Company’s assets; or
(3) A
merger, consolidation or reorganization of the Company with or
involving any other company, other than a merger, consolidation or
reorganization that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty
percent (50%) of the combined voting power of the voting securities
of the Company (or such surviving entity) outstanding immediately
after such merger, consolidation or reorganization.
(iii) The
majority of members of the Board are replaced during any twelve
(12)-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the
date of such appointment or election.
(iv)
Notwithstanding the foregoing, in no event shall a Change in
Control be deemed to have occurred if, (1) with respect to the
Executive, the Executive is part of a purchasing group which
consummates the Change in Control transaction or (2) solely
because of the fact that shares of the Company are required to be
registered under Section 12 of the
- 2 -
Exchange Act or
the shares become readily tradable on an established securities
market. The Executive shall be deemed “part of the purchasing
group” for purposes of the preceding sentence if the
Executive is an equity participant or has agreed to become an
equity participant in the purchasing company or group (except for
(a) passive ownership of less than five percent (5%) of the
voting securities of the purchasing company; of (b) ownership
of equity participation in the purchasing company or group which is
otherwise deemed not to be significant, as determined prior to the
Change in Control by a majority of the non-employee continuing
Directors of the Board).
(e)
“Code’’ shall mean the Internal Revenue
Code of 1986, as amended, and, as applicable, Treasury Regulations
promulgated thereunder.
(f)
“Company” shall mean Volcano Corporation and any
successor to its business and/or assets which assumes (either
expressly, by operation of law or otherwise) and/or agrees to
perform this Agreement by operation of law or otherwise (except in
determining, under subsection (d) hereof, whether or not any Change
in Control of the Company has occurred in connection with such
succession).
(g)
“Date of Termination” shall mean with respect to
any purported termination of the Executive’s employment,
(i) if the Executive’s employment is terminated by his
death, the date of his death, (ii) if the Executive’s
employment is terminated for Cause or without Cause by the Company,
the date specified in the Company’s notice of termination,
(iii) if the Executive’s employment is terminated as a
result of a Disability, the date on which it is finally determined
that the Executive is Disabled, and (iv) if the Executive
terminates his employment for Good Reason or otherwise voluntarily
terminates his employment, the date specified in the
Executive’s notice of termination.
(h)
“Disability” shall mean the Executive’s
inability for medical reasons to perform the essential duties of
the Executive’s position for either ninety
(90) consecutive calendar days or one hundred twenty
(120) business days in a twelve month period by reason of any
medically determined physical or mental impairment as determined by
a medical doctor selected by written agreement of the Company and
the Executive upon the request of either party by notice to the
other.
(i)
“Good Reason” shall mean (i) a material
change In the character or scope of the Executive’s position,
duties, Annual Base Salary, responsibilities, reporting or
authority; (ii) a material change initiated by the Company in
the living or commuting relationship currently utilized by
Executive and/or his family or the Company’s relocation of
its principal place of business to a location that is greater than
fifty (50) miles from the Company’s principal business
location as of the effective date of the Agreement and the Company
requiring the Executive to perform a substantial performance of his
services at such location; (iii) failure of the Company to
renew the Agreement; (iv) the Company’s material breach
of the Agreement; or (v) written notice of resignation from
the Executive during the sixty (60) day period following the
date which is six months after a Change in Control.
- 3 -
(j) “Patent, copyright and Nondisclosure
Agreement” shall mean the Patent, Copyright and
Nondisclosure Agreement between the Executive and the Company dated
March 15, 2002.
(k)
“Person” shall have the meaning ascribed thereto
in Section 3(a)(9) of the Exchange Act, as modified, applied
arid used in Sections 13(d) and 14(d) thereof; provided ,
however , a Person shall not include (i) the Company or
any of its respective subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any of its respective subsidiaries (in its capacity as
such), (iii) an underwriter temporarily holding securities
pursuant an offering such securities.
(l)
“Release” shall mean a general mutual release of
the Company and the Executive containing a mutual non-disparagement
clause and mutually agreed to by the parties hereto.
2. Term
of this Agreement. The term of this Agreement shall commence
upon the date of this Agreement set forth above and shall continue
until the second anniversary of the date of this Agreement;
provided however , that the term of this Agreement
shall automatically be extended for an additional term of one year
on each anniversary (the “Term”) unless either party to
this Agreement delivers a written notice of non-extension to the
other party by at least ninety (90) days prior to the
expiration of the Term.
3.
Duties; Scope of Employment; Compensation and
Benefits.
(a)
Position and Duties. The Company shall employ the Executive
to the position of Chief Executive Officer of the Company. During
the Term, the Executive will devote substantially all of the
Executive’s business efforts and time to the Company. The
Executive agrees not to actively engage in any other employment,
occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board, provided,
however, that the Executive may engage in the following as long as
such activities do not materially interfere with the
Executive’s duties and responsibilities with the Company:
(i) serve on the board of one (1) unaffiliated corporation or
the boards of trade associations or charitable organizations; (ii)
engage in charitable activities and community affairs; or
(iii) manage the Executive’s personal investments and
affairs; provided, however, that service on the Board on an
unaffiliated corporation shall be subject to the reasonable prior
approval of the Board, which shall not be unreasonably withheld or
delayed.
(b)
Annual Base Salary. The Executive’s Annual Base Salary
shall equal Three Hundred Fifty Thousand Dollars ($350,000.00).
This amount shall be reviewed annually in January of each year by
the Board and, in the sole discretion of the Board, may be adjusted
upward with such adjustments effective January 1 of the respective
year. Notwithstanding the preceding sentence, the Executive’s
annual salary may be reduced if such reduction is pro rata among
substantially all of the Company’s senior level executives as
a group.
(c)
Bonus. The Executive’s maximum target bonus
opportunity shall not exceed fifty (50%) of the Executive’s
Annual Base Salary. The Executive’s actual target bonus
opportunity shall be based up on the Executive’s performance
and achievement of target
- 4 -
objectives and
such other terms agreed to in good faith by the Company and the
Executive. The Executive shall also be eligible to receive an
additiona
|
