THIS EMPLOYMENT
AGREEMENT (the “ Agreement ”) is made and
entered into as of July 1, 2009, by and between CARDIOGENESIS
CORPORATION, a California corporation (the “ Company
”), and Paul McCormick, an individual (the “
Executive ”).
The Company
desires to employ Executive in the capacity hereinafter stated, and
the Executive desires to enter into the employ of the Company in
that capacity pursuant to the terms and conditions set forth
herein.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants and
agreements set forth herein, the Company and the Executive,
intending to be legally bound, hereby agree as follows:
1.
EMPLOYMENT AND COMPENSATION .
1.1
EMPLOYMENT . The Company hereby agrees to employ the
Executive as the Executive Chairman of the Board of Directors of
the Company, and the Executive accepts such employment and agrees
to devote approximately seventy-five percent (75%) of all his
business time, efforts and skills on such reasonable duties
commensurate with such position. The term of this Agreement shall
commence on July 1, 2009 and expire on July 1, 2010
unless sooner terminated pursuant to the terms and provisions
herein stated. This Agreement shall automatically be extended for
additional one (1) year renewal terms (unless sooner
terminated pursuant to the terms and provisions herein) unless
either party gives written notice to the other to terminate this
Agreement at least thirty (30) days prior to the end of the
preceding term.
(a)
Base Salary . For all of the services rendered by Executive
hereunder, Executive’s annual base salary shall be $250,000
(as may be increased by the Board of Directors from time to time,
the “ Base Salary ”), payable in accordance with
the Company’s ordinary payroll practices (but in any event no
less often than monthly). Such Base Salary shall not be reduced
during the term of this Agreement without the express written
consent of Executive. The Company agrees that Executive’s
Base Salary and performance will thereafter be reviewed at least
annually by the Company to determine if an increase in compensation
is appropriate, which increase shall be in the sole discretion of
the Board of Directors of the Company.
(b)
Benefits . During the term of employment Executive shall be
provided such benefits and be permitted to participate in all
equity compensation and fringe benefit plans made available to
employees of the Company generally and to management level
employees of the Company which, from time to time at the
Company’s discretion may be provided. Such benefits shall
include, at a minimum, medical insurance (including prescription
drug) for Executive and his spouse. Executive shall be entitled to
no less than three (3) weeks paid vacation per
year.
(c)
Expenses . The Company shall reimburse Executive on a timely
basis for all ordinary and necessary business expenses incurred in
the discharge of his duties and
responsibilities under this Agreement, in line
with Company policy and in accordance with the Company’s
expense approval procedures then in effect upon presentation to the
Company of an itemized account and appropriate written proof of
such expenses.
2. EQUITY
AWARDS . Notwithstanding any provisions of the Company’s
option or stock incentive plan, or of the Executive’s stock
option or restricted stock agreements, in the event of a
“Corporate Transaction” or “Change in
Control,” as defined below, during the period of the
Executive’s employment with the Company, all of the
Executive’s stock options shall vest in full and all rights
of the Company to repurchase restricted stock of the Executive
shall terminate in full.
For purposes
hereof, “Change in Control” shall mean a change in
ownership or control of the Company effected through the
acquisition, directly or indirectly, by any person or related group
of persons (other than the Company or a person that directly or
indirectly controls, is controlled by, or is under common control
with, the Company), of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934) of securities
possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities pursuant
to a tender or exchange offer made directly to the Company’s
stockholders which the Board does not recommend such stockholders
to accept.
For purposes
hereof, “Corporate Transaction” shall mean either of
the following stockholder-approved transactions to which the
Company is a party:
(a) a
merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the
Company’s outstanding securities are transferred to a person
or persons different from the persons holding those securities
immediately prior to such transaction; or
(b) the
sale, transfer or other disposition of all or substantially all of
the Company’s assets in complete liquidation or dissolution
of the Company.
3.1
TERMINATION BY THE COMPANY FOR CAUSE . Any of the following
acts or omissions shall constitute grounds for the Company to
terminate the Executive’s employment pursuant to this
Agreement for “cause”:
(a) willful
misconduct by Executive causing material harm to the Company or
repeated failure by the Executive to follow the reasonable
directives of the Board of Directors (or a designated committee
thereof), but only if, in either case, Executive shall not have
discontinued such misconduct or failure within thirty
(30) days after receiving written notice from the Company
describing the misconduct or failure and stating that the Company
will consider the continuation of such misconduct or failure as
cause for termination of this Agreement,
(b) any
material act or omission by the Executive involving gross
negligence in the performance of the Executive’s duties to,
or material deviation from any of the policies or directives of,
the Company, other than a deviation taken in good faith by the
Executive for the benefit of the Company,
(c) any
illegal act by the Executive which materially and adversely affects
the business of the Company, provided that the Company may suspend
the Executive with pay while any allegation of such illegal act is
investigated, or
(d) any
felony committed by Executive, as evidenced by conviction thereof,
provided that the Company may suspend the Executive with pay while
any allegation of such felonious act is investigated.
Termination by the
Company for cause shall be accomplished by written notice to the
Executive and, in the event of a termination pursuant to
Sections 3.1(a), 3.1(b), and/or 3.1(c) above, shall be
preceded by a written notice providing a reasonable opportunity for
the Executive to correct his conduct.
3.2
TERMINATION FOR DEATH OR DISABILITY . In addition to
termination for cause pursuant to Section 3.1 hereof, the
Executive’s employment pursuant to this Agreement shall be
immediately terminated without notice by the Company (i) upon
the death of the Executive or (ii) upon the Executive becoming
totally disabled. For purposes of this Agreement, the term
“totally disabled” means an inability of Executive, due
to a physical or mental illness, injury or impairment, to perform a
substantial portion of his duties for a period of one hundred
eighty (180) or more consecutive days, as determined by a competent
physician selected by the Company’s Board of Directors and
reasonably agreed to by the Executive, following such one hundred
eighty (180) day period.
3.3
TERMINATION FOR GOOD REASON . Executive’s employment
pursuant to this Agreement may be terminated by the Executive for
“good reason” if the Executive voluntarily terminates
his employment as a result of any of the following; provided,
however, that Executive shall be required to give written notice to
the Company of any condit
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