Exhibit 10.39

 

September 27, 2005

 

VIA HAND DELIVERY

 

Frank Litvack, M.D.

Conor Medsystems, Inc.

 

Re:   New Employment Terms

 

Dear Frank:

 

As we discussed, this letter (the “Agreement”) sets forth the new terms and
conditions of your employment relationship with Conor Medsystems, Inc. (the
“Company”). On September 27, 2005, these terms and conditions were approved by
the Company’s Compensation Committee (“Committee”) of the Board of Directors
(“Board”). Except as expressly stated herein, this Agreement supersedes and
replaces all previous agreements between you and the Company, including but not
limited to the Engagement Letter dated January 1, 2002, your Contract Extension
dated August 7, 2003 and your letter agreement dated March 4, 2005. As noted
below, your current stock option grants are not affected by this Agreement. The
terms contained in this Agreement will become effective as of the date that both
you and the Company sign this Agreement (the “Effective Date”).

 

1. Position and Reporting Relationship

 

You will continue to be employed in the full-time employment position of Chief
Executive Officer (“CEO”) reporting to the Company’s Board.

 

2. Base Salary

 

Effective September 27, 2005, you will have a base salary at an annualized rate
of $350,000, less standard payroll deductions and withholdings, and paid in
accordance with the Company’s normal payroll schedule. You will be considered
for annual increases in base salary in accordance with Company policy and
subject to review and approval by the Committee.

 

3. Annual Target Bonus

 

For calendar year 2005, you shall also be eligible to earn an annual target
bonus pursuant to the Company’s 2005 Bonus Plan. The bonus, if awarded, shall be
subject to applicable payroll withholdings and employment taxes. The Committee
will determine, in its sole discretion, whether and to what extent the bonus has
been earned. You will be considered for annual target bonuses in accordance with
Company policy and subject to review and approval by the Committee.

 

4. Option Grants

 

Your current stock options are not affected by this Agreement, and your current
stock option agreements will remain in full force and effect in accordance with
their terms. As approved by the Committee on September 27, 2005, the Company
granted you an option under the Company’s 2004 Equity Incentive Plan (the
“Plan”) to purchase two hundred and seventy-five thousand (275,000) shares of
the Company’s Common Stock (the “New Option”) at the fair market value on the
date of grant. The New Option shall contain a vesting schedule, contingent upon
your continued service to the Company as an employee, pursuant to which the
shares shall vest in equal monthly installments over four (4) years. The New
Option

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will be governed in full by the terms and conditions of the Plan, a stock option
grant notice, stock option agreement and the Chief Executive Officer Change of
Control Severance Agreement (the “CEO Agreement”).

 

5. Employee Benefits; Business Expenses

 

You will continue to be eligible to participate in the Company’s standard
employee benefit plans, pursuant to the terms, conditions and limitations of the
benefit plans. In addition, you will continue to be eligible for reimbursement
of your reasonable business expenses incurred in connection with your
employment, including but not limited to reasonable lodging and travel expenses,
in accordance with the Company’s business expense reimbursement policies and
practices.

 

6. Confidentiality Agreement; Compliance With Company Policies

 

The Confidentiality, Invention Assignment and Nonsolicitation Agreement that you
signed on May 15, 2002 (the “Confidentiality Agreement”) is not affected by this
Agreement and will remain in full force and effect in accordance with its terms.
You will continue to be required to abide by the Confidentiality Agreement as a
condition of your employment. In addition, you will continue to be required to
abide by the Company’s policies and procedures, as may be in effect from time to
time.

 

7. Outside Activities

 

You will continue to be prohibited from engaging in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during the
term of your employment, nor will you engage in any other activities that
conflict with your obligations to the Company. Similarly, you agree to continue
to not bring any third-party confidential information to the Company, including
but not limited to that of your former employer or other current employers, and
that in performing your duties for the Company you will not in any way utilize
or disclose any such information. The Company acknowledges that you are a
practicing interventional cardiologist on a part-time basis at Cedars Sinai
Medical Center and that you may continue to perform services in that capacity.
The Company further acknowledges that you are rendering services and may
continue to render services to other entities engaged in the medical device
business in connection with interventional cardiology, including, without
limitation, Savacor, Inc., Immusol, Inc., and Corset, Inc. and that you may have
an equity position in such entities. The Company consents to you continuing to
render such services and holding any equity position that you may have, or that
may result from the exercise of stock options, in such entities; provided,
however, that your confidentiality and other obligations to the Company will
apply to the providing of such services.

 

8. At-Will Employment Relationship

 

Your employment relationship is terminable at-will, and either you or the
Company may terminate your employment relationship at any time.

 

9. Severance and Change of Control Arrangements

 

Severance and change of control arrangements will be governed by the CEO
Agreement in the form approved by the Board. Pursuant to its terms and
conditions, the CEO Agreement provides for accelerated vesting of option shares
in the event you are either terminated without Cause or Constructively
Terminated.

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10. Miscellaneous

 

This Agreement, together with your Confidentiality Agreement, CEO Agreement and
stock option agreements, sets forth and forms the complete and exclusive
statement of your agreement with the Company concerning the terms and conditions
of your employment as of the Effective Date. This Agreement supersedes any other
agreements or promises made to you by anyone, whether oral or written,
concerning the subject matters set forth herein including, but not limited to,
your Engagement Letter dated January 1, 2002, your Contract Extension dated
August 7, 2003 and your letter agreement dated March 4, 2004. Changes in your
employment terms, other than those changes expressly reserved to the Company’s,
Committee’s or Board’s discretion in this Agreement, require a written
modification signed by a duly authorized officer of the Company which must be
approved by the Committee. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together shall constitute one and the same
Agreement, and signatures transmitted via facsimile shall be deemed the
equivalent of originals.

 

We look forward to continuing your employment relationship under the terms and
conditions contained herein. To accept this Agreement, please sign and return
this letter to the Company.

 

Sincerely,     CONOR MEDSYSTEMS, INC.    

/s/ George M. Milne

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/s/ Michael Boennighausen

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George M. Milne, Jr., Ph.D.   Michael Boennighausen Compensation Committee  
Chief Financial Officer Board of Directors    

 

Accepted:

/s/ Frank Litvack

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Frank Litvack, M.D.