Exhibit 10.5
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of May 2, 2000 (the "AGREEMENT"), is
between Viacell, Inc. (together with its affiliates and subsidiaries, (the
"COMPANY"), a Delaware corporation, with its principal place of business at Xxx
Xxxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 and Xxxx Xxxx (the
"EXECUTIVE"), who currently resides at 00 Xxxxxx Xxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxxxx 00000.
WHEREAS, the Company desires to employ the Executive as Chairman of the
Board of Directors (the "BOARD") and Chief Executive Officer of the Company for
the period and upon the terms and conditions hereinafter set forth;
WHEREAS, the Executive desires to serve in such capacities for such
period and upon such terms.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. EMPLOYMENT OF EXECUTIVE; TITLE AND DUTIES; EXTENT OF SERVICES.
1.1. EMPLOYMENT; TITLE AND DUTIES; EXTENT OF SERVICES. Upon the
terms and subject to the conditions set forth in this Agreement, the Company
hereby employs the Executive, and the Executive hereby accepts employment with
the Company to serve as Chairman of the Board and Chief Executive Officer of the
Company. The Executive shall have such responsibilities and shall perform such
specific duties as are commensurate with such positions, and as may reasonably
be assigned to the Executive from time to time by the Board of Directors of the
Company (the "BOARD"). The Executive agrees to serve in such capacity, to devote
his best efforts and full working time, attention and energy to the performance
of such duties until termination of his employment under this Agreement.
1.2. BOARD MEMBERSHIP. The Board shall nominate the Executive as
Chairman of the Board with a term expiring at the next annual meeting of
stockholders of the Company. Subject to the Executive's continued employment
with the Company, the Board will nominate the Executive for re-election at such
annual meeting of stockholders.
2. TERM OF EMPLOYMENT. The Company agrees to employ the Executive, and
the Executive agrees to serve the Company for a period, commencing on June 1,
2000 and continuing through the period ending one (1) year from such date (the
"INITIAL EMPLOYMENT PERIOD") unless Executive's employment is earlier terminated
pursuant to the terms of Section 4. At the end of the Initial Employment Period
(and any renewal period provided for herein), this Agreement shall automatically
be extended for additional one year periods (the "RENEWAL PERIOD"), unless
either party hereto gives a written notice of non-renewal delivered not less
than three (3) months prior to the end of the Initial Employment Period or any
Renewal Period.
3. COMPENSATION AND BENEFITS.
3.1. BASE SALARY. For the period from the date hereof until
December 31, 2000, the Company shall pay to the Executive a base salary of
$250,000 per year (the "BASE SALARY"), pro rated for such portion of a year and
payable in substantially equal biweekly installments or in accordance with the
Company's payroll practice as in effect from time to time. For the 2001 fiscal
year and thereafter, the Executive's Base Salary shall be subject to adjustment,
as determined by mutual agreement between the Board and the Executive.
3.2. BONUS. In addition to the Base Salary, the Executive shall be
entitled to participate in the Company's incentive compensation programs for
senior executive officers existing from time to time, including, without
limitation, a performance bonus program pursuant to which the Executive shall be
entitled to receive an annual incentive award (the "PERFORMANCE BONUS") based on
the achievement of certain performance objectives to be mutually agreed upon by
the Board (or the Compensation Committee of the Board) and the Executive for the
relevant fiscal year. At the end of the first year of this Agreement, the
Company shall pay to the Executive a Performance Bonus of $75,000 (the "INITIAL
BONUS") if the Executive achieves the performance objectives mutually agreed
upon by the Executive and the Board for the 2000 fiscal year. Thereafter, the
Executive shall be entitled to an annual Performance Bonus and any other bonuses
as shall be determined in the sole discretion of the Board.
3.3. STOCK OPTIONS. As further compensation for his services
hereunder, the Company shall grant to the Executive on the date the Executive
commences employment with the Company, options to purchase 900,000 shares (the
"OPTIONS") of the Company's Common Stock, $.01 par value per share under the
Company's 1998 Equity Incentive Plan (the "1998 PLAN"), at an exercise price per
share equal to the fair market value of such Common Stock on the date the
Executive commences employment with the Company. The Options shall become
exercisable as to 600,000 shares in forty-eight (48) equal monthly installments
(12,500 shares per month) beginning on the date the Executive commences
employment. The remaining 300,000 shares shall become exercisable as to
one-third (1/3) of such shares at the end of each of the eighth, ninth and tenth
anniversary dates of the date the Executive commences employment; PROVIDED,
HOWEVER, that if within 24 months from the date the Executive commences
employment with the Company, either (i) the Company closes an initial public
offering of shares of its Common Stock in which gross proceeds of at least $20
million are raised and the offering price per share is at least $12.00 per
share, or (ii) there is a Change in Control of the Company in which the per
share consideration to the Company is at least $12.00 per share, then such
300,000 shares shall become fully vested and exercisable until the expiration of
such options or until they sooner terminate in accordance with their terms. The
Options shall have a term of ten years, subject to early termination in the
event of termination of Executive's employment in accordance with the Company's
1998 Plan, and shall have such other terms and conditions consistent with the
form of incentive stock option certificate most recently approved by the Board
for use under the 1998 Plan. For purposes of this Section 3.3 the term "CHANGE
IN CONTROL" shall mean:
(i) a merger, consolidation or similar combination after which
50% or more of the voting stock of the surviving corporation is held by persons
who were not stockholders of the Company immediately prior to such merger or
combination;
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(ii) the sale, transfer or other disposition of all or
substantially all of the Company's assets to one or more persons (other than any
wholly owned subsidiary of the Company) in a single transaction or series of
related transactions; or
(iii) 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) directly or indirectly acquires
beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended) of securities possessing more than
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.
3.4. FRINGE BENEFITS. During the term of the Executive's
employment hereunder, the Executive shall be entitled to participate in all
special benefit or perquisite programs and employee benefit plans and programs
of the Company established or made available to its senior executive officers
(including, without limitation, any health, dental, short and long term
disability, group term and supplemental life insurance, accidental death and
dismemberment, savings and retirement plans). The Executive shall be entitled to
receive benefits no less favorable than those provided to other senior
executives of the Company.
3.5. VACATION. The Executive shall be entitled to the number of
days of paid vacation per calendar year customarily provided by the Company to
its senior executive officers and consistent with the Company's vacation policy
as in effect from time to time.
3.6. REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive for reasonable expenses incurred in connection with his employment by
the Company, including, without limitation, reasonable travel, lodging and meal
expenses incurred by him in connection with his performance of services
hereunder upon submission of supporting documentation, reasonably satisfactory
to the Company.
4. TERMINATION.
4.1. The Executive's employment hereunder may be terminated by the
Company under the following circumstances.
(a) DEATH. Immediately upon the death of the Executive.
(b) DISABILITY. At any time, as a result of the Executive's
incapacity due to physical or mental illness resulting in a Disability of the
Executive. For purposes of this Agreement, "DISABILITY" shall mean the inability
of the Executive to substantially perform the services contemplated under this
Agreement for a period of 90 consecutive calendar days or more within any six
month period during the Initial Employment Term or any Renewal Period, as
determined by a physician satisfactory to both the Executive and the Company,
PROVIDED that if the Executive and the Company do not agree on a physician, the
Executive and the Company shall each select a physician, the two who together
shall select a third physician whose determination as to disability shall be
binding on both parties.
(c) FOR CAUSE. For purposes of this Agreement, the Company
shall have "CAUSE" to terminate the Executive's employment hereunder in the
event:
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(1) the Executive shall have willfully failed and
continued to fail substantially to perform the duties (other than any failure
resulting from the Executive's Disability), for thirty (30) days after a written
demand for performance is delivered to the Executive on behalf of the Company
which specifically identifies the manner in which it is alleged that the
Executive has not substantially performed his duties; or
(2) the Executive shall have engaged in (i) any material
misappropriation of funds, properties or assets of the Company, it being
understood that "MATERIAL" for these purposes shall take into account both the
amount of funds, properties or assets misappropriated and the circumstances
thereof (including the intent of the Executive in connection therewith) or (ii)
any malicious damage or destruction of any property or assets of the Company,
whether resulting from the Executive's willful actions or omissions or the
Executive's gross negligence;
(3) the Executive shall have been convicted of a crime
involving moral turpitude or constituting a felony, or
(4) the Executive shall have materially breached his
obligations under this Agreement or the Non-Competition/Assignment of Invention
Agreement between the Company and the Executive dated as of the date hereof (the
"NON-COMPETITION AGREEMENT"), and such breach shall remain uncured by the
Executive within thirty (30) days following receipt of notice from the Company
specifying such breach.
(d) WITHOUT CAUSE. The Company may terminate (by majority vote
of the Board) the Executive's employment hereunder without Cause, upon sixty
(60) days prior written notice.
4.2. The Executive may terminate his employment hereunder for
"REASON" in the event the Company breaches any material provision of this
Agreement and such breach shall remain uncured by the Company after 30 days
following receipt of notice from the Executive specifying such breach. For
purposes of this Agreement, the Company shall be in breach of a material
provision of this Agreement in the event that it without the express written
consent of the Executive: (a) fails to pay the Executive his Compensation and,
or benefits as provided in Section 3; (b) makes any material change to the 1998
Plan that would adversely affect the Options; (c) fails to take all steps
reasonably necessary and appropriate to effectuate the Executive's election to
the Board in accordance with the Amended and Restated Stockholders Agreement
dated as of April 11, 2000 between the Company and the stockholders listed on
Exhibit A thereto, (d) assigns the Executive to duties inconsistent with the
Executive's position and duties as provided in Section 1 which results in a
material diminution in such position and duties (excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith which is
remedied by the Company promptly after notice by the Executive hereof); (e)
requires the Executive to relocate a distance of more than 60 miles from
Sudbury, Massachusetts; or (f) fails to secure the assumption of this Employment
Agreement, by any acquirer or any corporation with which or into which the
Company may be merged or which may succeed to its assets or business.
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4.3. TERMINATION BY THE EXECUTIVE WITHOUT REASON. The Executive
may terminate his employment hereunder without Reason, upon sixty (60) days
prior written notice.
4.4. NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive (other than termination pursuant
to Section 4.1) shall be communicated by Notice of Termination to the other
party hereto. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall
mean a written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstance which provide a basis for termination of the Executive's
employment under the provision so indicated.
4.5. DATE OF TERMINATION. "DATE OF TERMINATION" shall mean (i) if
the Executive's employment is terminated pursuant to Section 4.1, (a) the date
of the Executive's death, (ii) if the Executive's employment is terminated
pursuant to Section 4.1(b), 30 days after the Notice of Termination is given
(PROVIDED that the Executive shall not have returned to the performance of his
duties on a full-time basis during such 30 day period) and (iii) if the
Executive's employment is terminated pursuant to Section 4.1(c), 4.1(d), 4.2 or
4.3, the date specified in the Notice of Termination, PROVIDED that in the case
of termination under any of such provisions, the Notice of Termination and
termination are in compliance with the provisions of such Sections.
5. COMPENSATION UPON TERMINATION--SEVERANCE PAY.
5.1. If the Executive's employment is terminated under the
provisions of Sections 4.1(a), 4.1(b), 4.1(c) or 4.3, the Company shall pay to
the Executive his Salary, any earned but unpaid Performance Bonus and benefits
through the Date of Termination, including, but not limited to, accrued vacation
and he shall not be entitled to any other compensation or severance pay.
5.2. If the Company shall terminate the Executive's employment
without Cause under Section 4.1(d), or if the Executive shall terminate his
employment for Reason pursuant to Section 4.2, then the Company shall pay the
Executive following amounts and benefits:
(i) An amount equal to his Base Salary, and benefits (the
"SEVERANCE AMOUNT") for a period of the twelve (12) months following the Date of
Termination (the "SEVERANCE PERIOD"). The amount payable under this Section
5.2(i) shall be in addition to any other cash amounts due and payable,
including, but not limited to, accrued vacation. The Severance Amount shall be
payable in equal installments over such 12 month period following such
termination.
(ii) BENEFITS. Executive's coverage under the Company's life,
health and dental insurance plans will remain in effect and Executive will be
entitled to continue to participate in the Company's retirement plans at the
Company's expense (PROVIDED that the Executive pays his contributory share),
during the Severance Period, unless Executive notifies the Company in writing
that such coverage is no longer necessary. If, because of limitations required
by third parties or imposed by law, Executive cannot be provided such benefits
through
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the Company's plans, then the Company will provide Executive with substantially
equivalent benefits on an aggregate basis, at its expense.
(iii) In addition, the Options and any other options then held
by the Executive to purchase Common Stock of the Company that are vested at the
Date of Termination shall remain exercisable until the expiration of such
Options or such other options, as the case may be, or until they sooner
terminate in accordance with their terms.
6. MISCELLANEOUS.
6.1. NOTICES. All notices required or permitted under this
Agreement shall be given in writing and be deemed duly given upon personal
delivery, telecopy, nationally recognized courier or mailed, by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
other party at the address shown above, or at such other address or addresses as
either party shall designate to the other in accordance with this Section.
6.2. PRONOUNS. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
6.3. ENTIRE AGREEMENT. This Agreement and the Non-Competition
Agreement, constitute the entire agreement between the parties and supersedes
all prior agreements and understandings, whether written or oral, relating to
the subject matter of this Agreement.
6.4. AMENDMENT. This Agreement may be amended or modified only by
a written instrument executed by both the Company and the Executive.
6.5. GOVERNING LAW. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the Commonwealth of Massachusetts.
6.6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may succeed to its assets or business, PROVIDED, HOWEVER, that
the obligations of the Executive are personal and shall not be assigned by him;
and PROVIDED FURTHER, that the Company shall be and remain liable for the
payment to the Executive of all compensation payable to the Executive hereunder,
except as and to the extent otherwise agreed to by the Executive in his absolute
discretion. During the Executive's lifetime, this Agreement, and all rights of
the Executive hereunder shall be enforceable by the Executive's spouse, heirs,
distributees, or other legal representatives in the event the Executive is
unable to act on his own behalf for any reason whatsoever.
6.7. WAIVERS. No delay or omission by the Company in exercising
any right under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given by the Company on any one occasion shall be
effective only in that instance and shall not be construed as a bar or waiver of
any right on any other occasion.
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6.8. CAPTIONS. The captions of the sections of this Agreement are
for the convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
6.9. SEVERABILITY. In case any provision of this Agreement shall
be invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
6.10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
EXECUTIVE
/s/ Xxxx X. Beer
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Xxxx Xxxx
VIACELL, INC.
By: Signature on File
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Name:
Title:
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