EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into the 5th day of December, 1996
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. The term of this Agreement shall commence on
December 5, 1996 (the "Effective Date") and end on the day prior to
the second anniversary of the Effective Date of this Agreement (the
"Term of Employment").
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
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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.
5.1a. 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 Two
Hundred Sixty-Five Thousand Dollars ($265,000), 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
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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.
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.
5.2 Corporation agrees to grant to Employee on December 5,
1996 an option to purchase one hundred thousand (100,000) shares of common stock
at ten dollars ($10.00) per share. The option shall be exercisable over a four
(4) year period. One fourth (1/4) of the option shall vest on the day prior to
the anniversary of the Effective Date ("Vesting Date") and one-fourth (1/4)
shall vest
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thereafter on each anniversary of the Vesting Date, so long as the Employee
remains in the employ of the Corporation on that date. The option shall
terminate ninety (90) days after termination of the Employee's employment with
the Corporation and shall be granted in accordance with the Corporation's
Incentive Stock Option Plan as amended from time to time.
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
call 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 or
commission or conviction of a felony, or (iv) failure to abide in some material
respect by the Corporation's
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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 "cause" 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 twenty-four (24) months or 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.
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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 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.
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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 an consistent 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
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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 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.
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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 Term 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
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prior to the effective date of his employment by the Corporation;
(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 two years after termination or expiration of his Term of
Employment 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
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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
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
Title:Chairman of the Board of Directors
Employee: /S/ Xxxxxxx X. Xxxxx 12/17/96
Xxxxxxx X. Xxxxx
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