EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into the 4th day of December, 1998 between
OSTEOTECH, INC., a Delaware corporation (the "Corporation") and Xxxxxxx X. Xxxxx
(the "Employee").
WITNESSETH:
WHEREAS, the Corporation desires to continue to employ the Employee as its
President and Chief Executive officer; and
WHEREAS, the Employee desires to accept such employment upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto agree as follows:
1. Employment. The Corporation hereby employs the Employee, and the
Employee hereby accepts employment by the Corporation as President and Chief
Executive Officer of the Corporation upon the terms and conditions set forth
herein.
2. Term. Unless sooner terminated in accordance with this Agreement, the
term of this Agreement and the term of employment of the Employee shall be for
two (2) years commencing on the Effective Date hereof and shall be automatically
renewable for successive additional two (2) year terms unless at least three (3)
months prior to the initial two-year period or any subsequent two-year term the
Corporation terminates this Agreement by written notice to the Employee,
whereupon this Agreement shall be terminated at the end of the applicable two
year period (with such initial two year term and any two year renewal thereof,
unless sooner terminated in accordance with this Agreement being the "Term of
Employment").
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3. Duties. The Employee shall perform such duties and services and shall be
allocated such resources, consistent with his position, as may be assigned to
him from time to time by the Board of Directors of the Corporation. In
furtherance of the foregoing, the Employee hereby agrees to perform well and
faithfully such duties and responsibilities.
4. Time to be Devoted to Employment.
(a) The Employee shall devote his full time and energy to the business of
the Corporation except for vacations, holidays and personal days and absences
due to temporary illness, during the Term of Employment and except as approved
by the Board of Directors.
(b) During the Term of Employment, the Employee shall not be engaged in any
other business activity. Employee hereby represents that he is not a party to
any agreement which would be an impediment to entering into this Agreement and
that he is permitted to enter into this Agreement and perform the obligations
hereunder.
5. Compensation; Reimbursement.
5.1 (a) During the Term of Employment, the Corporation (or at the
Corporation's option, any subsidiary or affiliate thereof) shall pay to the
Employee an annual base salary ("Base Salary") of Three Hundred Thousand Dollars
($300,000) payable in bi-monthly installments. The Base Salary shall be reviewed
annually and be subject to increase at the option and in the sole discretion of
the Board of Directors of the Corporation.
(b) During the Term of Employment, on an annual basis, Employee may be
entitled to a bonus and stock option grants as determined by the Board of
Directors of the Corporation based on Employee's performance. There will be no
guaranteed or minimum bonus or a stock option grant and the bonus and stock
option grant, if any, will be within the sole discretion of the Board of
Directors.
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(c) During the Term of Employment, the Employee shall be entitled to family
medical and dental insurance coverage (the cost of which shall be paid by the
Corporation) short and long term disability coverage, eligibility for
participation in the Corporation's 401K plan and to such other fringe benefits
as are made available from time to time to the executives of the Corporation,
including four (4) weeks vacation.
(d) The Corporation shall reimburse Employee, in accordance with its
practice from time to time for other employees of the Corporation, for all
reasonable and necessary travel expenses, disbursements and other reasonable and
necessary incidental expenses incurred by him for or on behalf of the
Corporation in the performance of his duties hereunder upon presentation by the
Employee to the Corporation of appropriate vouchers.
6. Involuntary Termination. If the Employee dies during the Term of
Employment, his employment hereunder and the Term of Employment shall be deemed
to cease as of the date of his death.
7. Termination For Cause. The Corporation may terminate the employment of
the Employee hereunder and the Term of Employment at any time during the Term of
Employment for "cause" (such termination being hereinafter called a "Termination
For Cause") by giving the Employee notice of such termination, upon the giving
of which such termination shall take effect immediately. For the purposes of
this Section 7, "cause" shall mean (i) the Employee's willful misconduct with
respect to the business and affairs of the Corporation or any subsidiary or
affiliate thereof, which action materially and adversely affects the business or
affairs of the Corporation or any subsidiary or affiliate thereof, (ii) the
Employee fails in any material respect to observe and perform his obligations
and duties hereunder, (iii) the commission by the Employee of an act involving
embezzlement or fraud against the Corporation
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or commission or conviction of a felony, or (iv) failure to abide in some
material respect by the Corporation's rules of conduct, terms and conditions set
forth in the Corporation's handbook, as amended from time to time.
8. Termination Without Cause. The Corporation may terminate the employment
of the Employee hereunder and the Term of Employment at any time without Acause"
upon thirty (30) days prior written notice (such termination being hereinafter
called a "Termination Without Cause"). Upon a Termination without Cause during
the Term of Employment, Employee shall be entitled to receive his Base Salary
for twelve (12) months and his Base Salary for an additional twelve (12) months
or in the latter case until Employee obtains comparable employment, whichever
occurs sooner, plus all earned but unpaid bonus at the time of termination. In
addition, upon a Termination Without Cause at any time, the Corporation shall
continue to pay the Employee's family medical insurance premiums under the
Corporation's medical insurance plan and other benefits (including outplacement
benefits) provided in Section 5.1(c) for twenty-four (24) months following such
termination or until Employee obtains comparable employment, whichever occurs
sooner.
9. Voluntary Termination. Any termination of the employment of the Employee
hereunder otherwise then as a result of an Involuntary Termination, a
Termination For Cause or a Termination Without Cause shall be deemed to be a
"Voluntary Termination". A Voluntary Termination shall be deemed to be effective
immediately upon such termination.
10. Effect of Termination of Employment.
(a) Upon the termination of the Employee's employment hereunder pursuant to
a Voluntary Termination, Involuntary Termination or a Termination For Cause,
neither the
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Employee nor his beneficiary or estate shall have any further rights or claims
against the Corporation under this Agreement except to receive:
(i) the unpaid portion of the Base Salary provided for in Section
5.1(a), computed on a pro rata basis to the date of termination, plus any
earned but unpaid bonus with respect to the prior year;
(ii) reimbursement for any expenses for which the Employee shall not
have theretofore been reimbursed as provided in Section 5.1(d);
(iii) payment of all accrued and unused vacation time.
(b) Upon the termination of the Employee's employment hereunder pursuant to
a Termination Without Cause, neither the Employee nor his beneficiary or estate
shall have any further rights or claims against the Corporation under this
Agreement except to receive a termination payment equal to that provided for in
Section 10(a) hereof, plus the amounts set forth in Section 8, if any.
11. General Provisions.
(a) This Agreement and any or all terms hereof may not be changed, waived,
discharged, or terminated orally, but only by way of an instrument in writing
signed by the parties.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey, without reference to the conflicts of laws
of the State of New Jersey or any other jurisdiction.
(c) If any portion of this Agreement shall be found to be invalid or
contrary to public policy, the same may be modified or stricken by a Court of
competent jurisdiction, to the extent necessary to allow the Court to enforce
such provision in a manner which is as consistent
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with the original intent of the provision as possible. The striking or
modification by the Court of any provision shall not have the effect of
invalidating the Agreement as a whole.
(d) The obligations of Sections 8, 10, 11, 12, 13 and 14 shall survive
termination of this Agreement.
12. Corporation Rights to Intellectual Property. The Employee shall
promptly disclose, grant and assign ownership to the Corporation for its sole
use and benefit any and all inventions, improvements, information, copyrights
and suggestions (whether patentable or not), which he may develop, acquire,
conceive or reduce to practice while employed by the Corporation (whether or not
during usual working hours), together with all patent applications, letters
patent, copyrights and reissues thereof that may at any time be granted for or
upon any such invention, improvement or information. In connection therewith:
(i) The Employee shall without charge, but at the expense of the
Corporation, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as may be
reasonably necessary or proper in the opinion of the Corporation to vest
title to any such inventions, improvements, technical information, patent
applications, patents, copyrights or reissues thereof in the Corporation
and to enable it to obtain and maintain the entire right and title thereto
throughout the world; and
(ii) The Employee shall render to the Corporation at its expense
(including reimbursement to the Employee of reasonable out-of-pocket
expenses incurred by the Employee and a reasonable payment for the
Employee's time involved in case he is not then in its employ) all such
assistance as it may reasonably require in the prosecution of applications
for said patents, copyrights or reissues thereof, in the
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prosecution or defense of interferences which may be declared involving any
said applications, patents or copyrights and in any litigation in which the
Corporation may be involved relating to any such patents, inventions,
improvements or technical information.
13. Protection of Information.
(a) Employee hereby covenants with Corporation that, throughout the term of
his employment by Corporation, Employee will serve Corporation's best interests
loyally and diligently. Throughout the course of employment by Corporation and
thereafter, Employee will not disclose or provide to any person, firm,
corporation or entity (except when authorized by Corporation) any information,
materials, biologics or animals which are owned by the Corporation or which come
into the possession of the Corporation from a third party under an obligation of
confidentiality, including without limitation, information relating to trade
secrets, business methods, products, processes, procedures, development or
experimental projects, suppliers, customer lists or the needs of customers or
prospective customers, clients, etc. (collectively "Confidential Information"),
which Confidential Information, comes into his possession or knowledge during
the Tenn of Employment, and he will not use such Confidential Information for
his own purpose or for the purpose of any person, firm, corporation or entity,
other than the Corporation.
(b) The provisions of Section 13(a) shall not apply to the following
Confidential Information:
(i) Confidential Information which at the time of disclosure is
already in the public domain;
(ii) Confidential Information which the Employee can demonstrate was
in his possession or known to him prior to the effective date of his
employment by the Corporation;
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(iii) Confidential Information which subsequently becomes part of the
public domain through no fault of the Employee;
(iv) Confidential Information which becomes known to the Employee
through a third party who is under no obligation of confidentiality to the
Corporation; and
(v) Confidential Information which is required to be disclosed by law
or by judicial or administrative proceedings.
14. Non-Compete. Employee agrees that during the Term of Employment and for
the period of time Employee is paid salary and benefits as outlined in Section
8, he shall not directly or indirectly be engaged in or assist others in
engaging in any business or activity which is involved in selling products,
processes or services which compete with any significant product, process or
service which Corporation is developing, marketing or selling at the time of
such termination whether his involvement shall be as an owner (except for
passive ownership of up to five percent (5%) of the securities of a company),
officer, director, employee, consultant, partner or agent. For purposes of this
provision, products, processes or services which Corporation is marketing or
selling shall be deemed "significant" if sales of such products, processes or
services exceed ten percent (10%) of the Corporation's total sales.
15. Notices. Notices and other communications hereunder shall be in writing
and shall be delivered personally or sent by air courier or first class
certified or registered mail, return receipt requested and postage prepaid,
addressed as follows unless the party specifies a new address in writing:
If to the Employee: Xxxxxxx X. Xxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
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If to the Corporation: Osteotech, Inc.
00 Xxxxx Xxx
Xxxxxxxxx, XX 00000
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given to the
date of delivery if personally delivered; on the business day after the date
when sent if sent by air courier; and on the third business day after the date
when sent if sent by mail, in each case addressed to such party as provided in
this Section or in accordance with the latest unrevoked direction from such
party.
16. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Assignment. This Agreement is personal in its nature and the parties
hereto shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that the
provisions hereof shall inure to the benefit of, and be binding upon each
successor of the Corporation, whether by merger, consolidation, transfer of all
or substantially all assets, or otherwise and the heirs and legal
representatives of the employee.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
Corporation: OSTEOTECH, INC.
By: /s/ XXXXXX X. XXXXXXXX
-------------------------
Xxxxxx X. Xxxxxxxx
Title: Chairman of the Board
Employee: /s/ XXXXXXX X. XXXXX
------------------------------
Xxxxxxx X. Xxxxx
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