Exhibit 10.4
EMPLOYMENT AGREEMENT
The Employment Agreement (the "Agreement") is made and entered into as of
the 22nd day of August, 2002 (the "Effective Date"), by and between CYTOMEDIX,
INC., a Delaware corporation (the "Company"), and XXXX X. XXXXX ("Executive").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereby agree as follows.
ARTICLE 1
EFFECTIVE DATE AND TERM OF EMPLOYMENT
1.1 Term of Employment. Subject to extension in accordance with Section
1.2, the Term, as defined below, of the Agreement shall commence on the
Effective Date and shall continue until the date one year hence (the "Initial
Term"), unless terminated earlier in accordance with Article 5 of the Agreement.
For purposes of the Agreement, the "Term" shall mean the Initial Term and any
extensions thereof made in accordance with Section 1.2 below.
1.2 Extension of Term. The Initial Term of the Agreement may be extended
upon the mutual agreement of the parties by two years on the first anniversary
of the Effective Date and in one year increments on each subsequent anniversary
of the Effective Date thereafter. Any party desiring to extend the Term of the
Agreement must notify the other party, in writing, not less than ninety (90)
days prior to the last day of the Term of the Agreement then in effect. If both
parties give such written notice not less than ninety (90) days prior to the
expiration of the Term then in effect, the Term automatically extends for an
additional year (or in the case of the first anniversary, two (2) years), as
noted above.
1.3 Expiration of Term. If the Term of the Agreement expires based on the
Company giving notice of an election not to extend the Term under Section 1.2,
the termination of Executive's employment that results shall be treated as an
Involuntary Termination for Other than Cause under Section 5.5 below for
purposes of the payments and benefits due Executive from the Company. If the
Term of the Agreement expires based on Executive giving notice of an election
not to extend the Term under Section 1.2, the termination of Executive's
employment that results shall be treated as a Voluntary Termination under
Section 5.8.2 for purposes of the payments and benefits due Executive from the
Company.
ARTICLE 2
DUTIES AND ACTIVITIES
2.1 Employment. During the Term, the Company shall employ Executive, and
Executive shall accept employment with the Company, upon the terms and subject
to the conditions set forth in the Agreement.
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2.2 Position. During the Term, Executive shall serve as President and
Chief Executive Officer of the Company, and shall hold such other position or
positions as the parties mutually agree in writing. Executive shall report
directly to the Chairman of the Board of Directors of the Company (the "Board").
As President and Chief Executive Officer, Executive shall have overall
responsibility for directing the Company toward the achievement of its business
objectives as developed by the Board. Upon the termination of Executive's
employment hereunder in accordance with Article 5, Executive shall immediately
resign as President and Chief Executive Officer and from all other positions, if
any, with the Company.
2.3 Duties. During the Term, Executive shall devote his business time,
attention, and energies to the business of the Company and use his best efforts
to promote the interest of the Company. Executive shall perform such duties,
services, and responsibilities incident to the Executive's positions that are
reasonably consistent with such positions and shall act in accordance with the
policies and directives of the Company as determined from time to time. In the
capacity, Executive shall have the full authority and be responsible to manage
the operations of the Company consistent with the Company's annual and strategic
business plans, such plans to set forth guidelines related to budgeting, capital
expenditures, hiring and other initiatives, and to be formulated by Executive
and approved by the Board. Executive shall have the authority to bind the
Company to contracts that are consistent with the Executive's duties and
responsibilities, subject only to specific limitations imposed by the Board.
2.4 Principal Location. The principal location at which Executive's
services are to be performed shall be at office space located in reasonable
proximity to Executive's home address, which is 00000 Xxxxxxxx Xxxxxx, Xxx
Xxxxx, XX 00000, subject to reasonable travel requirements during the course of
performing such services.
2.5 Other Activities. Subject to Article 7, and not withstanding Section
2.3, Executive may engage in other business activities and invest his personal
assets in other businesses or ventures to the extent that such other activities,
business, or ventures do not materially interfere with the performance of his
duties under the Agreement.
ARTICLE 3
SALARY, BONUS, AND BENEFITS
3.1 Base Salary. During the Term of this Agreement, the Company shall pay
Executive a base salary ("Base Salary"). Commencing on the Effective Date
through December 31, 2002, this Base Salary shall be not less than the annual
rate of $200,000. At the end of each calendar year, the Company's Board of
Directors shall review Executive's Base Salary and may in its discretion
increase, but may not decrease without his prior written consent, Executive's
Base Salary.
3.2 Incentive Stock Options. The Company shall grant Executive Incentive
Stock Options as outlined in Part A of Appendix 1.
3.3 Annual Bonus and Long-Term Incentive Program. The Company shall
establish, and Executive shall be entitled to participate in the Company's Bonus
Compensation Program, beginning
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in the year 2003, which shall be substantially in accordance with the summary
points contained in Part A of Appendix I, attached hereto and made part hereof.
To the extent that Executive is entitled to receive each Bonus, such payment
shall be made not later than sixty (60) days following the end of the Company's
fiscal year. The Company shall establish, and Executive shall also be entitled
to participate in, the Company's Executive Long Term Incentive Program as
described in Part A of Appendix I.
3.4 Withholding. The Company shall deduct or withhold from the
compensation and benefits payable to Executive hereunder any and all sums
required for federal and state income and employment taxes now applicable or
that may be enacted and become applicable during the Term of the Agreement.
3.5 Benefits. During the Term, the Company shall provide Executive with
benefits as described in Part B of Appendix I, and Executive agrees to submit to
any medical or other examination and to execute and deliver any application or
other instrument in writing reasonably necessary to effectuate such benefit plan
or insurance coverage. Executive shall be entitled to participate in all
ordinary and customary benefit plans afforded to executive employees of the
Company. Executive's participation in said benefit plans shall be at the
Company's sole expense except to the extent employee contributions may be
required under the Company's benefit plans as they may now or hereafter exist.
Such benefits may include any qualified or unqualified pension, profit sharing,
and savings plans, any death benefit and disability benefit plan, life insurance
coverage, any cafeteria plans, and any medical, dental, health, vision and
welfare plans or insurance coverage.
3.6 Vacation. During the Term, Executive shall be entitled to three (3)
weeks of paid vacation for each year of his employment hereunder. Unused
vacation may be carried over from year to year, subject to a cap equal to
Executive's annual vacation entitlement. Once that cap is reached, Executive
will not accrue any additional vacation until his accrued vacation time falls
below the cap. Vacations shall be taken at such times as are approved by the
Chairman of the Board or in accordance with the policies of the Company then in
effect.
ARTICLE 4
BUSINESS EXPENSES
4.1 Expenses. The Company shall pay or reimburse the Executive for all
reasonable and authorized business expenses incurred by the Executive during the
Term.
4.2 Business Travel. The Company shall reimburse Executive for expenses
incurred for business-related travel in accordance with existing Company travel
policies, which may change from time to time.
4.3 Documentation. As a condition to reimbursement under the Article 4,
Executive shall furnish to the Company adequate records and other documentary
evidence required by federal and state statutes and regulations for the
substantiation of each expenditure. Executive
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acknowledges and agrees that failure to furnish the required documentation may
result in the Company denying all or part of the expense for which reimbursement
is sought.
ARTICLE 5
TERMINATION OF EMPLOYMENT
5.1 Termination of Employment. Notwithstanding the provisions of Article
1, either the Company or Executive may terminate Executive's employment
hereunder during the Term, subject to the following terms and conditions.
5.2 Involuntary Termination by the Company for Cause. As used in the
Agreement, "Cause" shall mean either:
5.2.1 a material and willful breach of any material term of the Agreement
by Executive, as determined by a majority of the disinterested directors of the
Board, but only if such material and willful breach remains uncured (as
reasonably determined by the Board) after thirty (30) days have elapsed
following the date that the Company gives Executive written notice of such
breach;
5.2.2 willful conduct by Executive that is materially injurious to the
Company or to any affiliate or successor thereto, whether financial or
otherwise, as determined by a majority of the disinterested directors of the
Board, but only if Executive has failed to cease any such conduct within fifteen
(15) days after the date the Company gives Executive written notice of its
belief that Executive is engaging in such conduct;
5.2.3 Executive's conviction of a felony,
5.2.4 Executive's conviction of any crime involving moral turpitude or
dishonesty.
The Company may terminate Executive's employment hereunder for Cause by giving
Executive thirty (30) days' written notice. Where Executive is entitled to a
cure period, the termination date under this Section shall be the day after the
cure period expires, if Executive fails to cure. In such event, the Company
shall pay to Executive his Base Salary through the date of Executive's
termination, his accrued but unused vacation, all deferred compensation owed to
Executive under any other agreements, and his reimbursable expenses pursuant to
Article 4 incurred prior to such termination.
5.3 Termination for Disability. As used in the Agreement, Executive's
"Disability" shall mean a good faith determination by the Board, acting without
participation by Executive, based on competent and independent medical evidence,
that Executive, as a result of a mental or physical disease or condition
expected to continue indefinitely, is incapable of performing a substantial
portion of the services contemplated in the Agreement. The Company may terminate
Executive's employment hereunder in the event of Executive's Disability by
giving Executive thirty (30) days' written notice. In such event, the Company
shall pay to Executive his Base Salary through the date of termination (which
shall be thirty (30) days after written notice is given) and, thereafter, his
Base Salary for a period of eleven (11) additional months after the date of
termination, less net amounts
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received during that period from any long-term disability insurance provided
under Article 3. The Base Salary shall be paid at the annual rate of Executive's
Base Salary in effect on the date of Executive's termination of employment and
shall be payable not less frequently than semi-monthly in accordance with the
Company's executive compensation practices. The Company shall also pay to
Executive a prorated bonus and incentive compensation payment based on the then
applicable bonus plan/long term incentive compensation program in an amount
equal to the bonus/incentive payment that would otherwise be paid for the
fiscal/calendar (depending on the plan or program) year in which Executive is
terminated, multiplied by a fraction, the numerator of which is the number of
days that Executive was employed during that year, and the denominator of which
is 365, payable no later than sixty (60) days after the end of the
fiscal/calendar year in which Executive's employment is terminated. The Company
shall also pay Executive's accrued but unused vacation, all deferred
compensation owed to Executive under any other agreements, and his expenses
incurred prior to such termination of employment reimbursable under Article 4.
All benefits provided under Section 3.5 shall be extended, at Executive's
election and cost, to the extent permitted by Company's insurance policies and
benefit plans, for twelve (12) months after the date of Executive's termination,
except as required by law (e.g., COBRA health insurance continuation election).
Within sixty (60) days of the Effective Date hereof, the Executive shall
provide to the Board written documentation from a licensed physician evidencing
the Executive's fitness for duty as such duties are described herein.
5.4 Termination for Death. Executive's employment hereunder shall
terminate upon Executive's death. In such event, the Company shall pay to
Executive's estate his Base Salary until the end of the month in which the death
occurred, all accrued but unused vacation pay, all deferred compensation owed to
Executive under any other agreements, and all unreimbursed expenses which are
reimbursable pursuant to Article 4 incurred prior to his death.
5.5 Involuntary Termination for Other than Cause. The Company may
terminate Executive's employment hereunder during a Term of employment other
than for Cause by giving Executive ninety (90) days' written notice. Any
termination of Executive's employment by the Company without Cause, prior to a
Change of Control, that occurs at the request or insistence of any person (other
than the Company) relating to such Change of Control shall be deemed to have
occurred after the Change of Control for the purposes of the Agreement.
Should the Executive's employment be terminated hereunder during a Term of
employment other than for Cause, prior to a Change of Control, the Company shall
pay to Executive all Base Salary and bonuses earned up to and including the date
of termination (which shall be the date ninety (90) days after the date of the
written notice), all accrued and unused vacation, and all unreimbursed expenses
which are reimbursable pursuant to Article 4 incurred prior to such termination.
In addition, the Company shall:
5.5.1 pay to Executive a severance payment in an amount equal to six (6)
months of Executive's Base Salary in effect on the date of termination (the
"Severance Payment"). The Severance Payment shall be paid in a lump sum within
thirty (30) days of the date of termination, at the annual rate of Executive's
Base Salary on the date of termination.
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5.5.2 pay to Executive a prorated bonus and a prorated long term incentive
program payment, based on the then applicable bonus plan/long term incentive
program, in an amount equal to the bonus/incentive payment that would otherwise
be paid for the fiscal/calendar (depending on the plan or program) year in which
Executive is terminated, multiplied by a fraction, the numerator of which is the
number of days that Executive was employed during that year, and the denominator
of which is 365, payable no later than sixty (60) days after the end of the
fiscal/calendar year in which Executive's employment is terminated.
5.5.3 keep all medical, disability, life and dental benefits that are in
effect as of the date of termination in force, at the sole cost to the Company,
for twelve (12) after the date of notice of termination;
5.5.4 extend the exercise date of any stock options that the Executive has
to purchase shares in the Company for a term of twelve (12) months from the date
of termination; and
5.5.5 immediately pay to Executive all deferred compensation owed to
Executive under any other agreements.
5.6 Involuntary Termination by Executive For "Good Reason" As used in the
Agreement, "Good Reason" shall mean any of the following:
5.6.1 a material and willful breach of any material term of the Agreement
by the Company, including but not limited to the assignment to Executive of any
duties inconsistent in any material respect with Executive's position (including
status, offices, title, and reporting requirements), authority, duties or other
responsibilities or any other action of the Company that results in a material
diminishment in such position, authority, duties, or responsibilities, or a
reduction by the Company in Executive's Base Salary, Bonus and Incentive
Compensation programs as in effect on the Effective Date and as the same shall
be increased from time to time hereafter; unless remedied (as reasonably
determined by Executive) within thirty (30) days after receipt of written notice
thereof given by Executive;
5.6.2 the Company's requiring Executive to be based at a location in
excess of thirty (30) miles from the location of Executive's principal residence
without the prior written consent of Executive;
5.6.3 the failure by the Company to: (a) continue in effect any material
compensation or benefit plan, program, policy or practice in which Executive was
participating during the Term of his employment or at the time of a Change of
Control; or (b) provide Executive with compensation and benefits at least equal
(in terms of benefit levels and/or reward opportunities) to those provided for
under each employee benefit plan, program, policy and practice as in effect
immediately prior to a Change of Control (or as in effect following the Change
of Control, if greater); or
5.6.4 the failure by the Company to obtain a satisfactory agreement from
any successor to the Company to assume and agree to perform the Agreement, or an
election by Executive not to give
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consent to an assignment under Section 8.5, or an election by Executive to
terminate his employment at the same time as or within six (6) months after a
Change in Control.
Executive may terminate his employment hereunder for Good Reason by giving the
Company thirty (30) days' written notice. Where the Company is entitled to a
cure period, the termination date under this Section shall be the day after the
cure period expires, if the Company fails to cure. Such a termination shall be
treated as an Involuntary Termination for Other than Cause, and Executive shall
be entitled to the payments and benefits as set forth in Section 5.5 above,
except that the Severance Payment referenced in Section 5.5.1 shall be in an
amount equal to eleven (11) months of Executive's Base Salary.
5.7 Change of Control.
5.7.1 Following or at the same time as a Change of Control (as defined
below), if the Agreement is terminated (or not renewed) by the Company in
accordance with Section 5.5 or 1.2, or by the Executive in accordance with
Section 5.6, then, in addition to the benefits described in Section 5.5, all of
Executive's issued and unvested stock options shall immediately become fully
vested and exercisable.
5.7.2 "Change of Control" shall mean any of the following:
a. a sale of all or substantially all of the assets of the Company;
b. the acquisition of more than thirty percent (30%) of the common
stock of the Company (with all classes or series thereof treated as
a single class) by any person or group of persons, except a
Permitted Shareholder (as hereinafter defined), acting in concert. A
"Permitted Shareholder" means a holder, as of the date the 2002
Stock Option Plan was adopted by the Company, of common stock;
c. a reorganization of the Company wherein the holders of common
stock of the Company receive stock in another company, a merger of
the Company with another company wherein there is a fifty percent
(50%) or greater change in the ownership of the common stock of the
Company as a result of such merger, or any other transaction in
which the Company (other than as the parent corporation) is
consolidated for federal income tax purposes or is eligible to be
consolidated for federal income tax purposes with another
corporation;
d. in the event that the common stock is traded on an established
securities market, a public announcement that any person has
acquired or has the right to acquire beneficial ownership of
fifty-one percent (51%) or more of the then-outstanding common stock
and, for this purpose, the terms "person" and "beneficial ownership"
shall have the meanings provided in Section 13(d) of the Securities
and Exchange Act of 1934 or related rules promulgated by the
Securities and Exchange Commission, or the commencement of or public
announcement of an intention to
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make a tender offer or exchange offer for fifty-one percent (51%) or
more of the then outstanding common stock;
e. a majority of the Board of Directors is not comprised of
Continuing Directors. A "Continuing Director" means a director
recommended by the Board for election as a director of the Company
by the stockholders; or
f. a sufficient change in the share ownership of the Company to
constitute a change of effective ownership or control of the
Company.
5.8 Voluntary Termination. The Agreement may be voluntarily terminated
under either of the following conditions:
5.8.1 At any time, upon the mutual written consent of the parties prior to
the expiration of the Term set forth in Article 1. In the event of such
voluntary termination, Executive agrees to remain in the service of the Company
for an agreed upon period of time not to exceed three (3) months to facilitate
transition. Executive's compensation during said transition shall be determined
and paid as follows. During said transition, Executive shall continue receive
compensation equal to 110 percent of his Base Salary at the time of the
termination. Said payment shall be made at least monthly. The Company
understands that Executive, during the transition period, will be seeking other
opportunities and will not be devoting his full time and attention to the
affairs of the Company. The parties shall be free to agree upon any different or
additional terms in writing at the time of the termination.
5.8.2 At any time, upon sixty (60) days' prior written notice by
Executive. In such event, the Company shall pay to Executive his Base Salary
through the Executive's date of termination (which shall be sixty (60) days
after the date of his written notice), his accrued but unused vacation, all
deferred compensation owed to Executive under any other agreements, and his
reimbursable expenses pursuant to Article 4 incurred prior to such termination.
The Company may accelerate the termination date by giving a lump-sum payment in
lieu of notice.
ARTICLE 6
INSURANCE
6.1 The Company shall provide the Executive with directors' and officers'
liability insurance coverage. In the event that the Company's directors' and
officers' liability insurance coverage lapses, and if the Executive is a party
to or is threatened to be made a party to any threatened, pending or completed
claim, action, suit, or proceeding, or appeal therefrom, whether civil, criminal
administrative, investigative, or otherwise, because he is or was an officer
and/or director of the Company or at the express request of the Company is or
was serving for purposes reasonably understood by him to be for the Company as a
director, officer, partner, employee, agent, trustee, or in any other capacity
of an association, corporation, general or limited partnership, joint venture,
trust, or other entity, the Company shall indemnify the Executive against, and
shall pay and advance, all reasonable expenses, including attorney's fees and
disbursements, and any judgments,
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fines, and amounts paid in settlement incurred by him in connection with such
claim, action, suit, proceeding, or appeal therefrom, to the fullest extent
permitted under applicable law.
ARTICLE 7
RESTRICTIVE COVENANTS
7.1 Confidential Information. In the course of his employment hereunder,
Executive may have access to confidential records, data, formulae, customer
lists, trade secrets, specifications, inventions and processes owned by the
Company. During the Term and thereafter, Executive shall not, directly or
indirectly, disclose such information to any person or use any such information,
except as required in the performance of Executive's duties hereunder. All
records, files, keys, drawings, documents, models, equipment, and the like
relating to the Company's business, which Executive shall prepare, copy, or use,
or with which Executive comes into contact shall be and remain the Company's
sole property, shall not be removed from the Company's premises, except as
necessary for the performance of the Executive's duties, and shall be returned
to the Company upon the expiration or termination of the Term of Executive's
employment.
7.2 Competing Business. As used in the Agreement, a "Competing Business"
refers to any person or entity engaged in any of the businesses in which the
Company or any of its affiliates, or any of their respective successors and
assigns, are engaged. The restrictions contained in the paragraphs of the
Article 7 shall apply only to Executive's actions within the cities, counties,
states of the United States, and other countries where the Company and its
affiliates do business during the Non-competition Period. The Company and
Executive acknowledge and agree that the duration, scope, and geographic area
for which the covenant is to be effective are reasonable.
7.3 Non-competition Period. The "Non-Competition Period" shall be one year
following the date of termination of Executive's employment
7.4 Covenant Not to Compete. Executive shall not, at any time during the
Term and during the Non-competition Period,
7.4.1 either directly or indirectly, or solely or jointly with other
persons or entities, own, manage, operate, join, control, consult with, render
services for or participate in the ownership, management, operation or control
of, or be connected as an officer, director, employee, partner, principal,
agent, consultant or other representative with, or permit his name to be used in
connection with any profit or nonprofit business, organization or entity, other
than the Company and its affiliates, which operates or engages in or owns an
interest in a Competing Business.
7.4.2 lend any credit or money for the purposes of establishing or
operating any Competing Business or otherwise give aid or advice to any person,
firm, association, corporation, or entity engaging in any Competing Business, or
7.4.3 solicit, contract, divert, or take away or attempt to solicit,
divert, or take away any of the customers, potential customers, business or
patrons of the Company and its affiliates or any of
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their respective successors and assigns, directly or indirectly, by or for
himself or as the agent of any other person or entity or through others as an
agent or on behalf of a competitor of the Company.
Notwithstanding the foregoing, Executive may own publicly traded securities
issued by a Competing Business, provided that Executive shall not own more than
1 percent of the value of any class of such securities outstanding at such time.
7.5 Solicitation of Employees. Executive shall not, at any time during the
Term or during the Non-competition Period, defined as the term of the
employment, directly or indirectly, by or for himself or as the agent of any
other person or entity or through others as an agent in any way solicit or
induce or attempt to solicit or induce any employee, officer, representative,
consultant, or other agent of the Company or its affiliates, whether such person
is presently employed with the Company or an affiliate or may hereinafter be so
employed, to leave the Company's employ or the employ of a Company affiliate.
7.6 Disclosure of Proprietary Information. In the course of Executive's
employment with the Company, Executive may have access to confidential records,
data, formulae, customer lists, trade secrets, specifications, inventions, and
processes owned by the Company and its affiliates. During Executive's employment
with the Company and thereafter, Executive shall maintain in strict confidence
and shall not, directly or indirectly, use, disseminate, disclose, or publish or
use for his benefit or the benefit of any person, firm, corporation, or other
entity, any confidential or proprietary information or trade secrets of or
relating to the Company and its affiliates, or which the Company and its
affiliates have a right to use, including, without limitation, information with
respect to the Company's and its affiliates' vendors, suppliers, customers,
potential customers, marketing methods, costs, prices, and terms of employment.
Executive shall not deliver to any person, firm, corporation, or other entity
any document, record, notebook, computer program or similar repository
containing any such confidential or proprietary information or trade secrets,
except as required in the faithful performance of Executive's duties during
employment with the Company, provided, however, that the foregoing restriction
shall not apply to (i) disclosure or use of Executive's general business
knowledge or any such information that became generally available to the public
in any manner or form through no fault of Executive, (ii) disclosure or use of
any such information with the Company's prior written consent, or (iii)
disclosure of any such information required by a court or a governmental agency
of competent jurisdiction. In the event that Executive is so required or
compelled to make such disclosure, Executive shall cooperate with the Company to
preserve in full the confidentiality of all proprietary information whose
disclosure is not required or compelled.
7.6.1 All such information and trade secrets and all records, files, keys,
drawings, documents, models, equipment and the like relating to the Company's
and its affiliates' business with which Executive comes into contact shall be
and remain the sole property of the Company and its affiliates, shall not be
removed from the Company's or its affiliates' premises, except as reasonably
appropriate for the performance of Executive's duties or with the Company's
prior written consent, and shall be returned to the Company and its affiliates
upon Executive's retirement or other termination of employment with the Company.
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7.6.2 The Company and Executive hereby stipulate and agree that as between
them the foregoing matters are important, material, and confidential proprietary
information and trade secrets and affect the successful conduct of the business
of the Company, its affiliates, and any successor or assignee of the Company and
its affiliates. In the event that during Executive's employment with the Company
or thereafter, Executive becomes employed by any employer other than the
Company, Executive shall notify such employer of the terms of the Article 7 and
all sections and subsections thereunder not later than the date on which
Executive commences employment with such employer.
7.7 Normal Business Communications. Notwithstanding the foregoing,
Executive may engage in discussion and meetings with representatives of a
Competing Business in the normal course of the business of the Company during
Executive's employment with the Company.
7.8 Enforcement of Covenants Not to Compete or Disclose.
7.8.1 The Company and Executive intend that the provisions of the Article
7 shall be fully enforceable as set forth herein. To the extent that any court
of competent jurisdiction finds that any such provision is unenforceable by
reason of its duration or scope, the Company and Executive agree that it shall
be enforced insofar as it may be enforced within the limits of the law of that
jurisdiction but that the Agreement as a whole shall be unaffected elsewhere.
7.8.2 The Company and Executive recognize and acknowledge that the
Company, by the Agreement, has sought to prohibit competition and disclosure of
confidential information by Executive during Executive's employment with the
Company and thereafter and that Executive's performance of services or
disclosure of confidential information in contravention of the Agreement or
other breach of the provisions of the Article 7 would consequently cause
immediate and irreparable harm to the business and goodwill of the Company and
its affiliates, the exact amount of which will be difficult or impossible to
ascertain, and that damages, if any, and other remedies at law would be
inadequate. Accordingly, should Executive perform or attempt or threaten to
perform services or disclose confidential information in contravention of the
Agreement or otherwise breach the provisions of the Article 7, the Company
shall, in addition to any and all other remedies available to it under the
Agreement, have the right to seek and obtain an injunction or other equitable
relief, restraining and preventing Executive from performing such services,
disclosing such information, or breaching the provisions of this Article 7.
7.8.3 The Company shall not decrease or discontinue any payments to or for
the benefit of Executive or deny him any other benefit under this Agreement
based upon a claim that Executive has breached this Article 7. The Company shall
instead continue such payments and benefits pending legal resolution of any
issues between the parties and entry of a final court judgment resolving those
issues.
ARTICLE 8
GENERAL PROVISIONS
8.1 Entire Agreement. The Agreement is intended to be the final, complete,
and conclusive agreement between the parties relating to the employment of the
Executive by the
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Company with respect to the Term, and all prior or contemporaneous
understandings, representations, and statements, oral or written, are merged
herein. No modification, waiver, amendment, discharge, or change of the
Agreement shall be valid unless the same is in writing and signed by the party
against which the enforcement thereof is or may be sought.
8.2 No Waiver. No waiver by conduct or otherwise by any party of any term,
provision, or condition of the Agreement shall be deemed or construed as a
further or continuing waiver of any such term, provision, or condition or as a
waiver of a similar or dissimilar condition or provision at the same time or at
any prior or subsequent time.
8.3 Remedies Not Exclusive. No remedy conferred by any of the specific
provisions of the Agreement is intended to be exclusive of any other remedy,
except as expressly provided in the Agreement, and each and every remedy shall
be cumulative and in addition to every other remedy given hereunder or now or
hereafter existing in law, in equity, by statute, or otherwise. No failure by
any party to exercise and no delay in exercising any rights shall be construed
or deemed to be a waiver thereof, and no single or partial exercise by any party
shall preclude any other or future exercise thereof or the exercise of any other
right.
8.4 Notices. Except as otherwise provided in the Agreement, any notice,
approval, consent, waiver, or other communication required or permitted to be
given or to be served upon any person or entity in connection with the Agreement
shall be in writing. Such notice shall be either personally served, sent by
telegram, tested telex, fax, cable, prepaid registered or certified mail with
return receipt requested, or by other express mail service and shall be deemed
given at the time such notice was actually given if personally served or by
express mail service, or two business days following delivery by telegram,
telex, fax, cable, or mail. Any notice given by telegram, telex, fax, or cable
shall be confirmed in writing by the carrier making the service within
forty-eight hours after being sent. Such notices shall be addressed to the party
to whom such notice is to be given at the party's address set forth below or as
such party shall otherwise direct.
If to the Company: Cytomedix, Inc.
Eden Tower Plaza
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the Executive: Xxxx X. Xxxxx
00000 Xxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
8.5 Assignment. This Agreement is intended to bind and inure to the
benefit of and be enforceable by the Executive and the Company, and their
respective successors, heirs (in the case of Executive) and assigns, except that
(1) the Agreement and the Executive's rights and obligations hereunder may not
be assigned by the Executive, and any purported assignment by the Executive in
violation hereof shall be null and void; and (2) in the event of any sale,
transfer, or other disposition of all or substantially all of the Company's
assets or business, whether by merger, consolidation or otherwise, the Company
may assign the Agreement and its rights hereunder, only with the
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Executive's consent and only provided that such assignment shall not limit the
Company's liability under the Agreement to the Executive. Notwithstanding any of
the foregoing, all of Executive's rights and interest hereunder shall be
assignable to Executive's legal representatives, executors or conservators in
the event of Executive's Death or Disability.
8.6 Governing Law. The Agreement shall be construed and enforced in
accordance with the laws of California without giving effect to the principles
of conflict of laws thereof. Venue for any dispute resolution shall be in San
Diego, California.
8.7 Counterparts. The Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
8.8 Severability. The provisions of the agreement are severable, and if
any provision or application thereof is held invalid or unenforceable, then such
holding shall not affect any other provision or application.
8.9 Arbitration. Any controversy or claim arising out of or related to the
Agreement or the breach thereof shall be settled by binding arbitration in
accordance with the rules then in effect of the American Arbitration
Association, which arbitration shall be held in San Diego, California. The
arbitrator's decision shall be binding and final, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof.
8.10 Injunctive Relief. The Executive agrees that it would be difficult to
compensate Company fully for damages for any violation of the provisions of the
Agreement, including without limitation the provisions of Article 7.
Accordingly, the Executive specifically agrees that the Company and its
successors and assigns shall be entitled to temporary and permanent injunctive
relief to enforce the provisions of the Agreement. The provision with respect to
injunctive relief shall not, however, diminish the right of the Company to claim
and recover damages in addition to injunctive relief.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties execute the Agreement effective the date
first above written.
COMPANY:
CYTOMEDIX, INC., a Delaware corporation
By: /s/Xxxxx Xxxxx
Title: Director
Date: August 22, 2002
EXECUTIVE:
/s/Xxxx X. Xxxxx
Xxxx X. Xxxxx
Date: August 13, 2002
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APPENDIX I
Part A - Bonus and Incentive Plans
1. Annual Bonus. In addition to Executive's Base Salary, each year Executive
shall be eligible to participate in the Company's "Annual Bonus Program."
The amount of the Annual Bonus (as defined below) as well as the nature of
such Annual Bonus (i.e., mandatory or discretionary) shall be determined
as set forth below.
(a) Mandatory Annual Bonus. On an annual basis, and in each instance
prior to the beginning of the next fiscal year, the Board, in
consultation with the Company's management, will determine a revenue
target (the "Revenue Target") for the coming fiscal year. In the
event that, at the end of the applicable fiscal year, the Company
actual revenues are less than eighty percent (80%) of the applicable
Revenue Target, then payment of the Annual Bonus shall not be
mandatory and shall be determined as set forth in Section 1(b) of
Part A of this Appendix I. In the event that, at the end of the
applicable fiscal year, the Company actual revenues are equal to or
exceed eighty percent (80%) of the Applicable Target, then the
Annual Bonus shall be payable as follows:
-----------------------------------------------
Actual Revenue (as Percentage of
% of Target Revenue) Annual Bonus
-----------------------------------------------
80% 40%
-----------------------------------------------
85% 55%
-----------------------------------------------
90% 70%
-----------------------------------------------
95% 85%
-----------------------------------------------
100% or more 100%
-----------------------------------------------
(b) Discretionary Annual Bonus. In the event that Company actual
revenues are less than eighty percent (80%) of the applicable
Revenue Target, then payment of the Annual Bonus shall be determined
by the Board in its sole discretion.
(c) Annual Bonus. Executive's Annual Bonus shall equal fifty percent
(50%) of Base Salary and shall be payable in accordance with
Sections 1(a) and (b) of Part A of this Appendix I.
(d) Revenue Targets. No mandatory Annual Bonus shall be payable for the
fiscal year ending December 31, 2002, irrespective of actual Company
revenues. For the fiscal year ending December 31, 2003, the Revenue
Target shall equal Fourteen Million Dollars ($14,000,000).
2. Long Term Incentive Program. During the Term of Executive's employment by
the Company, Executive shall be entitled to participate in the Company's
Executive Long Term
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Incentive Program which will be established by the Board in accordance
with a strategic plan developed for the Company and on appropriate terms
and conditions.
3. Incentive Stock Options.
(a) General. As of the Effective Date of the Agreement and in accordance
with the Company's 2002 Stock Option Plan, the Company shall award
Executive common stock stock options (the "Options") in the
aggregate amount of Five Hundred Twenty-One Thousand Nine Hundred
Twenty-Eight (521,928). Seventy Thousand (70,000) Options, which
shall be awarded to the Executive under the 2002 Stock Option Plan
in connection with Executive's success bonus relating to the
emergence of the Company from bankruptcy, shall be fully vested as
of the date of such award; the remainder of the Options shall vest
on a monthly schedule over a twenty-four (24) month period
commencing on the Effective Date. The exercise price of the Options
shall be the fair market value of the Company's common stock on the
date of award of such Options, which will be determined by the Board
of Directors. The Options shall expire ten (10) years from the date
each Option becomes exercisable. Immediately preceding a Change of
Control, all issued and unvested Options shall immediately become
fully vested and exercisable by Executive.
(b) Limited Anti-Dilution Protection. The parties understand and agree
that the Company is contemplating an additional round of equity
financing, not to exceed $2,000,000, which is intended to fund
certain clinical trials that are desirable for product development.
In the event that the Company consummates such an additional round
of equity financing prior to the second anniversary of the Effective
Date, Executive shall receive additional Options in an amount
equivalent to 5% of the amount of additional financing committed.
These additional Options shall vest as if they had been awarded on
the award date described above and had been subject to the same
twenty-four (24) month vesting period applicable to the Options
issued pursuant to Appendix I, Part A, Paragraph (3)(a) above. The
exercise price of such Options shall be the fair market value of the
Company's common stock on the date of award of such Options, which
will be determined by the Board of Directors. Financings shall
include, but not be limited to, secondary public offerings, private
placements and other vehicles used to provide funds to the Company.
In the event that the proceeds from any additional round of equity
financing are intended to be applied to any purpose other than to
fund clinical trials as described above, then no additional Options
shall be granted to Executive.
Part B - Employee Benefit Plans and Programs
1. Insurance Program. The Company shall establish for the benefit of
Executive an insurance program, which shall include, among other things,
life, health, dental, vision, flexible spending program, and long-term
disability coverage. Such insurance program shall be no less competitive
than similar benefit programs that are established for other health care
companies or comparable industries.
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2. Pension or Profit-Sharing Programs. In addition to the insurance program,
the Company shall establish a 410(k) plan and may, at the Company's
discretion, also establish a pension or other profit sharing program.
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