AMENDED EXECUTIVE AGREEMENT
This Amendment to the Executive Agreement is made and effective this 1st
day of August, 2006 and references the amended agreement of November 5th, 2004
and the original agreement of 30th day of August, 2000 by and between Cardima,
Inc. (the "Company") and Eric K.Y. Chan ("Chan" or "the Employee").
Recitals
WHEREAS, Chan is currently employed by the Company as Vice President,
Product Development; and
WHEREAS, the Company and Chan would like to enter into an amended Executive
Agreement that sets forth the basic terms and conditions of Chan's continued
employment with the Company;
THE PARTIES AGREE AS FOLLOWS:
Compensation
1. Chan's salary shall not be less than $200,000 on an annualized basis,
which will be paid biweekly, less regular payroll deductions, and will cover all
hours worked. Chan's salary will be reviewed annually based generally on
performance and market conditions. In addition, the Board of Directors has
approved to pay a one time $50,000 bonus to Chan. Moreover, subject to approval
of the Board of Directors, Chan will be eligible for annual executive bonuses.
Stock Grants
2. Pursuant to earlier agreements with the Company, Chan has been granted
options to purchase Company Common Stock. In the event of a "Change in Control"
as defined in Appendix A, vesting of all of Chan's stock options issued prior to
the effective date of this agreement will fully and immediately vest. Stock
options granted after the effective date of this agreement shall be accelerated
by the same number of months of completed months of vesting for such options.
For example, if Chan has a stock option subject to vesting over 48 months and
has completed 23 months of service towards the vesting of the option, then, in
the event of a Change in Control, the vesting of the option shall be accelerated
by 23 additional months so that the option would become 46/48ths vested.
Termination Without Cause and/or Change of Control
3. Chan and the Company agree that if Chan is terminated without "Cause"
(as defined in Appendix A) and subject to, and upon the effective date of, the
release described in Section 9 below, Chan (i) will receive an additional 12
(twelve) months of continued base salary, (ii) will continue to receive the
Company's standard benefits package for an additional 12 (twelve) months, (iii)
will receive a bonus for the Company fiscal year coinciding with or immediately
following his termination based upon the average bonus Chan received in the
preceding two years prior to his termination at the same time that he would have
received an annual bonus from the Company had he remained in employment with the
Company, (iv) will have his stock options vest on an accelerated basis as
provided in paragraph 2 above, and (v) Chan will have ninety (90) days from the
date of termination of his employment to exercise his vested options.
Duties
4. Chan and the Company agree that Chan will continue to act as Vice
President, Product Development of the Company. Chan acknowledges that his duties
may change from time to time on reasonable notice, based on the needs of the
Company and based on his skills, both as reasonably determined by the Company.
As an exempt employee Chan agrees that he will, to the best of his ability
and experience, loyally and conscientiously perform the duties and obligations
required of him pursuant to the terms of this Agreement. Chan is required to
follow office policies and procedures adopted from time to time by the Company
and to take such general direction consistent with his positions within the
Company as he may be given from time to time by his superiors. The Company
reserves the right to change these policies and procedures at any time upon
reasonable notice. (Also see Adjustments and Changes in Employment Status). Chan
is required to devote his full business energies, efforts and abilities to his
employment, unless the Company expressly agrees in writing otherwise.
Adjustment and Changes in Employment Status
5. Chan understands that the Company reserves the right to make personnel
decisions regarding his employment, including but not limited to decisions
regarding any promotion, salary adjustment, transfer or disciplinary action, up
to and including termination, consistent with the needs of the business;
provided that any of the foregoing changes shall be subject to his rights under
this Agreement.
Proprietary Information and Inventions Agreement
6. Chan agrees that he is bound by the terms of the Company's Proprietary
Information and Inventions Agreement that he executed on June 8, 1998 (the
"Proprietary Information Agreement"), which is incorporated into this Agreement
by reference.
Employee Benefits
7. Chan will continue to be eligible for the Company's standard benefits
package which includes, but is not limited to, health insurance benefits during
the course of this agreement. Chan acknowledges that these benefits may change
from time to time. Chan will be covered by workers' compensation insurance and
State Disability Insurance, as required by California state law.
Term of Employment
8. Chan acknowledges that his employment with the Company is "at-will." In
other words, either he or the Company can terminate Chan's employment at any
time for any reason, with or without cause and with or without notice. Chan and
the Company acknowledge that any such termination will be subject to this
Agreement.
Release of All Claims
9. As a condition for the rights, payments and benefits provided for in
Section 3 above, Chan must execute a general waiver and release of all claims
that Chan may have against the Company and its employees (including its
officers), agents, advisors, and members of its board of directors, in a general
waiver and release form that the Company may require, and such waiver and
release must become effective in accordance with its terms (including after any
applicable rescission period imposed by law). The Company, in its sole
discretion, shall determine the form of the required release and may draft and
modify the format of the required release to comply with applicable state and
federal laws.
Integrated Agreement
10. This Agreement supersedes any prior agreements, representations or
promises of any kind, whether written, oral, express or implied between the
parties hereto with respect to the subject matters herein. It constitutes the
full, complete and exclusive agreement between Chan and the Company with respect
to the subject matters herein. This Agreement cannot be changed unless in
writing, signed by Chan and the Compensation Committee of the Board of Directors
of the Company.
Severability
11. If any term of this Agreement is held to be invalid, void or
unenforceable, the remainder of this Agreement shall remain in full force and
effect and shall in no way be affected, and the parties shall use their best
efforts to find an alternative way to achieve the same result. This Agreement
shall be governed by California law.
Chan and the Company agree to and accept the terms expressed in this Agreement.
Chan acknowledges that this is not an employment contract for any fixed period,
and that either party may end the employment relationship at any time for any
reason subject to the terms set forth above.
/s/ Eric K.Y. Chan
- ------------------
Eric K.Y. Chan Date: August 9, 2006
Cardima, Inc.
/s/ Gabriel B. Vegh
- -------------------
By: Gabriel B. Vegh Date: August 9, 2006
Title: Chief Executive Officer
APPENDIX A
DEFINITIONS
"Change in Control" shall mean the consummation of one of the following:
(a) the acquisition of 50.1% or more of the outstanding stock of the
Company pursuant to a tender offer validly made under any federal or state law
(other than a tender offer by the Company);
(b) a merger, consolidation or other reorganization of the Company (other
than a reincorporation of the Company), if after giving effect to such merger,
consolidation or other reorganization of the Company, the stockholders of the
Company immediately prior to such merger, consolidation or other reorganization
do not represent a majority in interest of the holders of voting securities (on
a fully diluted basis) with the ordinary voting power to elect directors of the
surviving or resulting entity after such merger, consolidation or other
reorganization;
(c) the sale of all or substantially all of the assets of the Company to a
third party who is not an affiliate of the Company; or
(d) the dissolution of the Company pursuant to action validly taken by the
stockholder of the Company in accordance with applicable state law.
"Cause" shall mean (a) Employee's willful misconduct or gross negligence in
performance of his duties hereunder or material breach of this Agreement,
including Employee's refusal to comply in any material respect with the legal
directives of the Company's Chief Executive Officer or Board of Directors so
long as such directives are not inconsistent with the Employee's position and
duties, and such refusal to comply is not remedied within 20 working days after
written notice from the Chief Executive Officer or Board of Directors, which
written notice shall state that failure to remedy such conduct may result in
Termination for Cause; (b) dishonest or fraudulent conduct, a deliberate attempt
to do an injury to the Company, or conduct that materially discredits the
Company or is materially detrimental to the reputation of the Company, including
conviction of a felony related to or adversely reflecting on the Company; or (c)
Employee's incurable material breach of any element of the Company's Proprietary
Information Agreement, including without limitation, Employee's theft or other
misappropriation of the Company's proprietary information.