exv10w5






Exhibit 10.5




CARDIOGENESIS CORPORATION

DIRECTOR STOCK OPTION PLAN




(AS AMENDED THROUGH FEBRUARY 2009)




     1. Purpose of the Plan. The purposes of this Director Stock Option Plan are to
attract and retain the best available personnel for service as Directors (as defined herein) of the
Company, to provide additional incentive to the Directors of the Company to serve as Directors, and
to encourage their continued service on the Board.



     All options granted hereunder shall be nonstatutory stock options.



     2. Definitions. As used herein, the following definitions shall apply:



          (a) “Board” means the Board of Directors of the Company.




          (b) “Code” means the Internal Revenue Code of 1986, as amended.




          (c) “Common Stock” means the Common Stock of the Company.




          (d) “Company” means Cardiogenesis Corporation, formerly known as Eclipse Surgical
Technologies, Inc., a California corporation.




          (e) “Continuous Status as a Director” means the absence of any interruption or termination of
service as a Director.




          (f) “Director” means a member of the Board.




          (g) “Employee” means any person, including officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company. The payment of a Director’s fee by the Company shall not
be sufficient in and of itself to constitute “employment” by the Company.




          (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          (i) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:




               (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or
the closing, bid, if no sales were reported) as quoted on such exchange or system for the last
market trading day prior to the time of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;



               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock, shall be the mean
between the high bid and low asked prices for the Common Stock on the date of determination, as
reported in The Wall Street Journal or such other source as the Board deems reliable, or;



 









 





               (iii) In the absence of an established market for the Common Stock, the Fair Market Value
thereof, shall be determined in good faith by the Board.



          (j) “Option” means a stock option granted pursuant to the Plan.




          (k) “Optioned Stock” means the Common Stock subject to an Option.




          (l) “Optionee” means an Outside Director who receives an Option.




          (m) “Outside Director” means a Director who is not an Employee.




          (n) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.




          (o) “Plan” means this Director Stock Option Plan.




          (p) “Share” means a share of the Common Stock, as adjusted in accordance with Section 10 of
the Plan.




          (q) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as
defined in Section 424(f) of the Code.




     3. Stock Subject to the Plan. Subject to the provisions of Section 10 of the Plan,
the maximum aggregate number of Shares which may be optioned and sold under the Plan is 1,025,000
Shares of Common Stock (the “Pool”). The Shares may be authorized, but unissued, or
reacquired Common Stock.



     If an Option expires or becomes unexercisable without having been exercised in full, the
unpurchased Shares which were subject thereto shall become available for future grant or sale under
the Plan (unless the Plan has terminated); provided however, that Shares that have actually been
issued under the Plan shall not be returned to the Plan and shall not become available for future
distribution under the Plan.



     4. Administration and Grants of Options under the Plan.



          (a) Procedure for Grants. The provisions set forth in this Section 4(a) shall not be
amended more than once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder. All grants
of Options to Outside Directors under this Plan shall be automatic and nondiscretionary and shall
be made strictly in accordance with the following provisions:




               (i) No person shall have any discretion to select which Outside Directors shall be granted
Options or to determine the number of Shares to be, covered by Options granted to Outside
Directors.



               (ii) Each Outside Director elected to the Board after February 23, 2009, shall be
automatically granted an Option to purchase 50,000 Shares (a “First Option”).



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               (iii) Each Outside Director shall be automatically granted an Option to purchase 50,000 Shares
(a “Subsequent Option”) on the date of such Outside Director’s annual re-election to the
Board, if on such date, he or she shall have served on the Board for at least six (6) months.



               (iv) The terms of a First Option granted hereunder shall be as follows:



                    (A) the term of the First Option shall be ten (10) years;



                    (B) the exercise price per Share shall be the Fair Market Value per Share on the date of grant
of the First Option; and



                    (C) the First Option shall become exercisable as to 1/3rd of the Shares subject to the First
Option on each of the first, second and third anniversaries of the date of grant.



               (v) The terms of a Subsequent Option granted hereunder shall be as follows:



                    (A) the term of the Subsequent Option shall be ten (10) years;



                    (B) the exercise price per Share shall be the Fair Market Value per Share on the date of grant
of the Subsequent Option; and



                    (C) the Subsequent Option shall become exercisable as to all of the Shares subject to the
Subsequent Option on the first anniversary of its date of grant.



               (vi) In the event that any Option granted under the Plan would cause the number of Shares
subject to outstanding Options plus the number of Shares previously purchased under Options to
exceed the Pool, then the remaining Shares available for Option grant shall be granted under
Options to the Outside Directors on a pro rata basis. No further grants shall be made until such
time, if any, as additional Shares, become available for grant under the Plan through action of the
shareholders to increase the number of Shares which may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.



     5. Eligibility. Options may be granted only to Outside Directors. All Options shall
be automatically granted in accordance with the terms of Section 4 hereof. An Outside Director who
has been granted an Option may, if he or she is otherwise eligible, be granted an additional Option
or Options in accordance with such term.



     Neither the Plan nor any Option shall confer upon an Optionee any right to be nominated or
continue to serve as a Director, nor shall they interfere in any way with any right that the
Director or the Company may have to terminate the Directors directorship at any time.



     6. Term of Plan. The Plan shall become effective upon the earlier to occur of the
Plan’s adoption by the Board or it’s approval by the shareholders of the Company as described in
Section 16 of the Plan; provided, however, that the Plan shall be null and void if an underwritten,
initial public offering of the Company’s Common Stock does not occur before April 1, 1997. This
Plan shall continue in effect until March 31, 2015 unless sooner terminated under Section 11 of the
Plan.



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Termination of this Plan shall not affect rights and obligations heretofore granted under this
Plan and then in effect.




     7. Form of Consideration. The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall consist of (i) cash, (ii) check,
(iii) promissory note, (iv) other shares which (x) in the case of Shares acquired upon exercise of
an Option, have been owned by the Optionee for more than six (6) months on the date of surrender,
and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised, (v) delivery of a properly executed exercise
notice together with such other documentation as the Company and the broker, if applicable, shall
require to affect an exercise of the Option and delivery to the Company of the sale or loan
proceeds required to pay the exercise price, or (vi) any combination of the foregoing methods of
payment.



     8. Exercise of Option.



          (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder
shall be exercisable at such times as are set forth in Section 4 hereof; provided, however, that no
Options shall be exercisable until shareholder approval of the Plan in accordance with Section 16
hereof has been obtained.




          An Option may not be exercised for a fraction of a Share.




          An Option shall be deemed to be exercised when written notice of such exercise has been given
to the Company in accordance with the terms of the Option by the person entitled to exercise the
Option and fall payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate, entry
on the books of the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued to the Optionee
as soon as practicable after exercise of the Option. No adjustment shall be made for a dividend or
other right for which the record date is prior to the date the stock certificate is issued, except
as provided in Section 10 of the Plan.




          Exercise of an Option in any manner shall result in a decrease in the number of Shares which
thereafter may be available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.




          (b) Rule 16b-3. Options granted to Outside Directors must comply with the applicable
provisions of Rule 16b-3 promulgated under the Exchange Act or any successor thereto and shall
contain such additional conditions or restrictions as may be required thereunder to qualify Plan
transactions, and other transactions by Outside Directors that otherwise could be matched with Plan
transactions, for the maximum exemption from Section 16 of the Exchange Act.




          (c) Disability of Optionee. In the event Optionee’s Continuous Status as a Director
terminates as a result of total and permanent disability (as defined in Section 22(e)(3) of the
Code) or such disability occurs within sixty (60) days following the termination of Optionee’s
Continuous Status as a Director, the Optionee may exercise his or her Option, but only within
twelve




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(12) months from the date of such termination, and only to the extent that the Optionee was
entitled to exercise it on the date of such termination (but in no event later than the expiration
of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option
on the date of termination, or if he or she does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option shall terminate.




          (d) Death of Optionee. In the event of an Optionee’s death during or within sixty
(60) days of the termination of Optionee’s Continuous Status as a Director, the Optionee’s estate
or a person who acquired the right to exercise the Option by bequest or inheritance may exercise
the Option, but only within twelve (12) months following the date of death, and only to the extent
that the Optionee was entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of death, and to the extent that the Optionee’s estate or a person
who acquired the right to exercise such Option does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall terminate.




     9. Non-Transferability of Options. The Option may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the Optionee, only by the
Optionee.



     10. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset Sale or Change
of Control.



          (a) Changes in Capitalization. Subject to any required action by the shareholders of
the Company, the number of Shares covered by each outstanding Option, the number of Shares which
have been authorized for issuance under the Plan but as to which no Options have yet been granted
or which have been returned to the Plan upon cancellation or expiration of an Option, the price per
Share covered by each such outstanding Option, and the number of Shares issuable pursuant to the
automatic grant provisions of Section 4 hereof shall be proportionately adjusted for any increase
or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other increase or decrease in
the number of issued Shares effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not be deemed to have
been “effected without receipt of consideration.” Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares subject to an Option.



          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been previously exercised, it
shall terminate immediately prior to the consummation of such proposed action.



          (c) Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the Company, each
outstanding option may be assumed or an equivalent option may be substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event that the
successor corporation does not agree to assume the Option or to substitute an equivalent option,
each outstanding Option shall become fully vested and exercisable, including as to Shares as to
which it would not otherwise be exercisable. If an Option becomes fully vested and exercisable
upon a merger or sale of assets, the



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Board shall notify the Optionee that the Option shall be fully exercisable for a period of
thirty (30) days from the date of such notice, and the Option shall terminate upon the expiration
of such period. For the purpose of this paragraph, an Option shall be considered assumed if,
following, the merger or sale of assets, the Option confers the right to purchase or receive, for
each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property) received in the
merger or sale of assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares).



     11. Amendment and Termination of the Plan.



          (a) Amendment and Termination of the Plan. Except as set forth in Section 4, the
Board may at any time amend, alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of any Optionee under
any grant theretofore made, without his or her consent. In addition, to the extent necessary and
desirable to comply with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.



          (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan
shall not affect Options already granted, and such Options shall remain in full force and effect as
if this Plan had not been amended or terminated.



          (c) Shareholder Approval Required. Unless approved by the holders of a majority of
the shares present and entitled to vote at a duly convened meeting of shareholders, the Company
shall not: (i) grant any stock option, including a stock appreciation right, with an exercise
price that is less than 100% of the fair market value of the underlying stock on the date of grant;
or (ii) reduce the exercise price of any stock option, including a stock appreciation right,
outstanding or to be granted in the future; cancel and re-grant options at a lower exercise price
(including entering into any “6 month and 1 day” cancellation and re-grant scheme), whether or not
the cancelled options are put back into the available pool for grant; replace underwater options
with restricted stock in an exchange, buy-back or other scheme; or replace any options with new
options having a lower exercise price or accelerated vesting schedule in an exchange, buy-back or
other scheme. This Section 11(c) may not be further amended or repealed without the affirmative
vote of the holders of a majority of the shares present and entitled to vote at a duly convened
meeting of shareholders.



     12. Time of Granting Options. The date of grant of an Option shall, for all purposes,
be the date determined in accordance with Section 4 hereof.



     13. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, state securities laws, and the requirements of any stock exchange upon
which the Shares may then be listed, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.



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          As a condition to the exercise of an Option, the Company may require the person exercising
such Option to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares,
if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.



          The inability of the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to
issue or sell such Shares as to which such requisite authority shall not have been obtained.



     14. Reservation of Shares. The Company, during the term of this Plan, shall at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.



     15. Option Agreement. Options shall be evidenced by written option agreements in such
form as the Board shall approve.



     16. Shareholder Approval. Continuance of the Plan shall be subject to approval by the
shareholders of the Company at or prior to the first annual meeting of shareholders held subsequent
to the granting, of an Option hereunder. Such shareholder approval shall be obtained in the degree
and manner required under applicable state and federal law.




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