EXHIBIT 10.13
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AGREEMENT
This Agreement (the "Agreement"), dated as of November 9,
2001, between Bionx Implants, Inc., a Pennsylvania corporation (the "Company"),
with its principal executive office located at 0000 Xxxxxx Xxxxxxx West, Xxxxxxx
Xxxx, Xxxxx 000, Xxxx Xxxx, XX 000000 and Xxxxxx Xxxxxxx (the "Executive"), with
an address at Xxxxxxxxxxxxxxxx 0 xx. 0, XXX-00000, Xxxxxxx, Xxxxxxx.
NOW, THEREFORE, in consideration of the mutual covenants
herein set forth, the parties hereto agree as follows:
1. Background. The Executive has served as the Company's
Executive Vice President, Research and Development, since 1995. The Company
wishes to reward the Executive for his efforts on behalf of the Company and
induce him to continue those efforts.
2. New Stock Option Grant.
2.1 On November 9, 2001, the Compensation Committee
of the Board of Directors of the Company granted the Executive "Specially
Designated Options", as defined in the Company's 1996 Stock Option/Stock
Issuance Plan (the "November 2001 Options"), to purchase an aggregate of 100,000
shares of the Company's Common Stock at an exercise price of $2.72 per share.
The November 2001 Options were granted to the Executive pursuant to the
Company's 1996 Stock Option/Stock Issuance Plan.
2.2 All of the November 2001 Options will vest fully
upon the consummation of (i) a merger or consolidation with a party to whom the
Company has sent information in connection with a possible "Corporate
Transaction" (as defined below) during the term of the Executive's employment
with the Company in which securities possessing more than 50% of the voting
power of the Company's outstanding shares will be transferred to a person or
persons different from the persons holding those securities immediately prior to
the transaction or (ii) a sale, transfer or other disposition of all or
substantially all of the Company's assets or securities to a party to whom the
Company has sent information in connection with a possible Corporate Transaction
during the term of the Executive's employment with the Company (any such
transaction described in clause (i) or clause (ii) being referred to as a
"Corporate Transaction"), and remain exercisable until the close of business on
April 30, 2003 (the "Expiration Date"), at which time any and all November 2001
Options that remain unexercised or have not vested shall lapse immediately.
2.3 If the Executive's employment with the Company is
terminated (i) by the Company without "Cause" (as defined herein), (ii) as a
result of the Executive's death or permanent disability or (iii) by the
Executive for "Good Reason" (as defined herein), in the case of (i), (ii) or
(iii) prior to the Expiration Date and prior to the consummation of a Corporate
Transaction, the November 2001 Options shall not lapse immediately upon such
termination but shall vest in full upon the consummation of a Corporate
Transaction if such a Corporate Transaction is consummated prior to the
Expiration Date. Upon vesting, the November 2001 Options shall remain
exercisable for a period of 180 days following the latest of (a) the date of
termination of employment, (b) the date the Executive is no longer subject to
any management
lock-up that prohibits his ability to exercise options or purchase or sell the
Company's Common Stock and (c) the consummation of a Corporate Transaction;
provided that in no event shall any of the November 2001 Options be exercisable
after the Expiration Date. If the Executive's employment with the Company is
terminated by the Company for Cause or by the Executive without Good Reason, any
and all unexercised November 2001 Options and any and all unvested November 2001
Options shall lapse immediately upon such termination.
2.4 The Company has delivered to the Executive a
Notice of Grant of Stock Option Form which is consistent with these provisions.
2.5 In the event that (a) the engagement of U.S.
Bancorp Xxxxx Xxxxxxx Inc. ("Piper"), pursuant to the engagement letter, dated
October 31, 2001 (the "Engagement Letter"), between the Company and Piper,
terminates prior to April 30, 2003 and any of the November 2001 Options remain
unexercised or unvested at such termination date and the Company enters into an
arrangement with another investment banker pertaining to the same or similar
matters covered by the Engagement Letter, or (b) the Engagement Letter between
the Company and Piper extends after April 30, 2003 by agreement of the parties,
and some of the November 2001 Options remain unexercised or unvested at April
30, 2003, then, in the case of either (a) or (b), the Company will use its best
efforts to grant additional stock options to the Executive with the goal of
providing the Executive with the same benefit as was contemplated by the grant
of the November 2001 Options.
2.6 For purposes of this Agreement, the term "Cause"
shall mean (i) a significant act of dishonesty or deceit in the performance of
Executive's duties, (ii) receipt by Executive of kickbacks, bribes or other
improper payments, (iii) any willful continuation of a violation or of a breach
of any applicable law or material regulation governing the Company's activities
after the Executive is notified by the Company's Board of Directors that his
conduct constitutes such a violation or breach, or (iv) conviction of Executive
with respect to a felony involving moral turpitude.
2.7 For purposes of this Agreement, the term "Good
Reason" shall mean a resignation by the Executive within 30 days after (i) a
materially adverse change in the Executive's duties or title, (ii) a material
breach of this Agreement by the Company and the Company's failure to cure such
breach within five days after the Executive notifies the Company of such breach,
(iii) the Executive's offices are relocated to a location that is more than 20
miles from the Executive's current offices at the Company, (iv) the consummation
of a Corporate Transaction or (v) a change in the composition of the Board of
Directors of the Company such that the "Continuing Directors" (as defined
herein) no longer constitute a majority of the Board. For purposes of this
Agreement, the term "Continuing Director" shall mean (i) each current member of
the Company's Board of Directors and (ii) each person who is hereinafter first
nominated to such Board by unanimous vote of persons who then constitute
Continuing Directors.
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3. Acceleration of Existing Options.
3.1 The Company hereby designates all stock options
previously granted to the Executive prior to the date hereof (the "Prior
Options") under the Company's 1996 Stock Option/Stock Issuance Plan and the
Company's Investment Plan (such Plans collectively referred to hereinafter as
the "Plans") as Specially Designated Options as described in the Company's 1996
Stock Option/Stock Issuance Plan. The Company agrees that all Prior Options
granted to the Executive that are not then fully vested will vest in full upon
the consummation of a Corporate Transaction. Any Prior Options that remain
unexercised or unvested on the Expiration Date will immediately revert to their
original vesting schedules on the Expiration Date, provided that the original
term of such Prior Options extended beyond the Expiration Date. This provision
shall not be deemed to extend the term of any Prior Options.
3.2 If the Executive's employment with the Company is
terminated (i) by the Company without Cause, (ii) as a result of the Executive's
death or permanent disability or (iii) by the Executive for Good Reason, in the
case of (i), (ii) or (iii) prior to the Expiration Date and prior to the
consummation of a Corporate Transaction, any Prior Options that have not vested
shall not lapse immediately upon such termination but shall vest in full upon
the consummation of a Corporate Transaction if such a Corporate Transaction is
consummated prior to the Expiration Date. Upon vesting, such Prior Options shall
remain exercisable for a period of 180 days following the latest of (a) the date
of termination of employment, (b) the date the Executive is no longer subject to
any management lock-up that prohibits his ability to exercise options or
purchase or sell the Company's Common Stock and (c) the consummation of a
Corporate Transaction; provided that in no event shall any of the Prior Options
be exercisable after the expiration of their original terms. If the Executive's
employment with the Company is terminated by the Company for Cause, any and all
unexercised Prior Options and any and all unvested Prior Options shall lapse
immediately upon such termination. If the Executive's employment with the
Company is terminated by the Executive without Good Reason, the Executive shall
have 90 days from such termination in which to exercise those Prior Options
which were vested on the date of such termination, and all Prior Options which
had not vested prior to the date of termination shall lapse immediately.
3.3 The Notice of Grant of Stock Option Form
pertaining to any Prior Option shall be revised to conform to the provisions
contained in Sections 3.1 and 3.2 hereof. The Company's obligations under
Sections 3.1 and 3.2 hereof with respect to Prior Options shall terminate on the
Expiration Date.
4. Future Options.
4.1 The Company agrees that in the event any
additional stock options are granted to the Executive pursuant to the Plans
after the date hereof (the "Future Options"), any and all such Future Options
shall vest in full upon the consummation of a Corporate Transaction. Any Future
Options that remain unexercised or unvested on the Expiration Date will
immediately revert to the typical vesting schedules under the Plans on the
Expiration Date, provided that the original term of such Future Options extended
beyond the Expiration Date. This provision shall not be deemed to extend the
term of any Future Options.
-3-
4.2 If the Executive's employment with the Company is
terminated (i) by the Company without Cause, (ii) as a result of the Executive's
death or permanent disability or (iii) by the Executive for Good Reason, in the
case of (i), (ii) or (iii) prior to the Expiration Date and prior to the
consummation of a Corporate Transaction, any Future Options that have not vested
shall not lapse immediately upon such termination but shall vest in full upon
the consummation of a Corporate Transaction if such a Corporate Transaction is
consummated prior to the Expiration Date. Upon vesting, such Future Options
shall remain exercisable for a period of 180 days following the latest of (a)
the date of termination of employment, (b) the date the Executive is no longer
subject to any management lock-up that prohibits his ability to exercise options
or purchase or sell the Company's Common Stock and (c) the consummation of a
Corporate Transaction; provided that in no event shall any of the Future Options
be exercisable after the expiration of their original terms. If the Executive's
employment with the Company is terminated by the Company for Cause, any and all
unexercised Future Options and any and all unvested Future Options shall lapse
immediately upon such termination. If the Executive's employment with the
Company is terminated by the Executive without Good Reason, the Executive shall
have 90 days from such termination in which to exercise those Future Options
which were vested on the date of such termination, and all Future Options which
had not vested prior to the date of termination shall lapse immediately.
4.3 The Notice of Grant of Stock Option Form
pertaining to any Future Option shall contain provisions consistent with those
in Sections 4.1 and 4.2 hereof. The Company's obligations under Sections 4.1 and
4.2 hereof with respect to Future Options shall terminate on the Expiration
Date.
5. Excise Tax. In the event that either the independent public
accountants of the Executive or the Internal Revenue Service determines that any
payment, coverage or benefit provided to the Executive is subject to the excise
tax imposed by Section 4999 (or any successor provisions) of the Internal
Revenue Code of 1986, as amended (the "Code"), the Company, within 30 days
thereafter, shall pay to the Executive, in addition to any other payment,
coverage or benefit due and owing hereunder, an amount determined by multiplying
the rate of excise tax then imposed by such Section 4999 by the amount of the
"excess parachute payment" received by the Executive (determined without regard
to any payments made to the Executive pursuant to this Section 6) and dividing
the product so obtained by the amount obtained by subtracting the aggregate
local, state and Federal income tax rate applicable to the receipt by the
Executive of such "excess parachute payment" (taking into account the
deductibility for Federal income tax purposes of the payment of state and local
income taxes thereon) from the amount obtained by subtracting from 1.00 the rate
of excise tax then imposed by Section 4999 of the Code, it being the intention
of the parties hereto that the Executive's net after tax position shall be
identical to that which would have obtained had Sections 280G and 4999 of the
Code not been part of the Code.
6. Fees and Expenses. In the event that, prior to, on or after
the effective date of termination of this Agreement, the Company fails to make
payments or provide coverage to or sustain benefits for the Executive in
accordance with the terms of this Agreement, then the Company shall pay to the
Executive and reimburse the Executive for his full costs (including,
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without limitation, the reasonable fees and expenses of the Executive's
attorneys and court and related costs) of enforcing this Agreement and obtaining
the payments and coverage described herein, unless it is ultimately determined
that no such failure to make payment or provide coverage occurred.
7. Existing Employment Agreement. The parties
acknowledge and agree that nothing contained in this Agreement shall be deemed
to affect any of the terms and provisions of the Executive's existing employment
agreement (the "Employment Agreement") with the Company.
8. Notices. Any notice to be given by either party hereunder
shall be in writing, mailed by certified or registered mail with return receipt
requested, shall be addressed to the other party at the addresses set forth at
the beginning of this Agreement, or to such other address as may have been
furnished by such other party in writing as herein provided, and shall be deemed
to have been given on the date of mailing.
9. Entire Agreement; Amendment. This instrument and the
Employment Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. No modification, amendment or waiver of
any of the provisions of this Agreement shall be effective unless in writing and
signed by both parties.
10. Waiver of Breach. The failure at any time to enforce or
exercise any right under any of the provisions of this Agreement or to require
at any time performance by the other party of any of the provisions hereof shall
in no way be construed to be a waiver of such provisions or to affect either the
validity of this Agreement or any part hereof, or the right of either party
hereafter to enforce or exercise its rights under each and every provision in
accordance with the terms of this Agreement.
11. Severability. If any provision of this Agreement shall be
held to be invalid or unenforceable, in whole or in part, this Agreement shall
remain valid and enforceable and be reformed and construed as if such invalid or
unenforceable provision, or part thereof, had never been contained herein and
such provision reformed so that it would be valid and enforceable to the maximum
extent permitted.
12. Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the Company and any successor of the Company and any
such successor shall be deemed substituted for the Company under the provisions
of this Agreement. This Agreement shall be binding upon and shall inure to the
benefit of the Executive, his legal representatives and assigns.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Pennsylvania.
14. Successor Liability. The Company will require any
subsequent successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to
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perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the day and year first above written.
BIONX IMPLANTS, INC.
By:
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Xxxxx X. Xxxx, Chairman
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Xxxxxx Xxxxxxx
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AGREEMENT
This Agreement (the "Agreement"), dated as of November 9,
2001, between Bionx Implants, Inc., a Pennsylvania corporation (the "Company"),
with its principal executive office located at 0000 Xxxxxx Xxxxxxx West, Xxxxxxx
Xxxx, Xxxxx 000, Xxxx Xxxx, XX 000000 and Xxxx Xxxxxxx (the "Executive"), with
an address at 000 Xxxxxxxxx Xxxx, Xxxxx, XX 00000.
NOW, THEREFORE, in consideration of the mutual covenants
herein set forth, the parties hereto agree as follows:
1. Background. The Executive has served as the Company's Vice
President and Chief Financial Officer since December 1999. The Company wishes to
reward the Executive for his efforts on behalf of the Company and induce him to
continue those efforts.
2. New Stock Option Grant.
2.1 On November 9, 2001, the Compensation Committee
of the Board of Directors of the Company granted the Executive "Specially
Designated Options", as defined in the Company's 1996 Stock Option/Stock
Issuance Plan (the "November 2001 Options"), to purchase an aggregate of 10,000
shares of the Company's Common Stock at an exercise price of $2.72 per share.
The November 2001 Options were granted to the Executive pursuant to the
Company's 1996 Stock Option/Stock Issuance Plan.
2.2 All of the November 2001 Options will vest fully
upon the consummation of (i) a merger or consolidation with a party to whom the
Company has sent information in connection with a possible "Corporate
Transaction" (as defined below) during the term of the Executive's employment
with the Company in which securities possessing more than 50% of the voting
power of the Company's outstanding shares will be transferred to a person or
persons different from the persons holding those securities immediately prior to
the transaction or (ii) a sale, transfer or other disposition of all or
substantially all of the Company's assets or securities to a party to whom the
Company has sent information in connection with a possible Corporate Transaction
during the term of the Executive's employment with the Company (any such
transaction described in clause (i) or clause (ii) being referred to as a
"Corporate Transaction"), and remain exercisable until the close of business on
April 30, 2003 (the "Expiration Date"), at which time any and all November 2001
Options that remain unexercised or have not vested shall lapse immediately.
2.3 If the Executive's employment with the Company is
terminated (i) by the Company without "Cause" (as defined herein), (ii) as a
result of the Executive's death or permanent disability or (iii) by the
Executive for "Good Reason" (as defined herein), in the case of (i), (ii) or
(iii) prior to the Expiration Date and prior to the consummation of a Corporate
Transaction, the November 2001 Options shall not lapse immediately upon such
termination but shall vest in full upon the consummation of a Corporate
Transaction if such a Corporate Transaction is consummated prior to the
Expiration Date. Upon vesting, the November 2001 Options shall remain
exercisable for a period of 180 days following the latest of (a) the date of
termination of employment, (b) the date the Executive is no longer subject to
any management
lock-up that prohibits his ability to exercise options or
purchase or sell the Company's Common Stock and (c) the consummation of a
Corporate Transaction; provided that in no event shall any of the November 2001
Options be exercisable after the Expiration Date. If the Executive's employment
with the Company is terminated by the Company for Cause or by the Executive
without Good Reason, any and all unexercised November 2001 Options and any and
all unvested November 2001 Options shall lapse immediately upon such
termination.
2.4 The Company has delivered to the Executive a
Notice of Grant of Stock Option Form which is consistent with these provisions.
2.5 In the event that (a) the engagement of U.S.
Bancorp Xxxxx Xxxxxxx Inc. ("Piper"), pursuant to the engagement letter, dated
October 31, 2001 (the "Engagement Letter"), between the Company and Piper,
terminates prior to April 30, 2003 and any of the November 2001 Options remain
unexercised or unvested at such termination date and the Company enters into an
arrangement with another investment banker pertaining to the same or similar
matters covered by the Engagement Letter, or (b) the Engagement Letter between
the Company and Piper extends after April 30, 2003 by agreement of the parties,
and some of the November 2001 Options remain unexercised or unvested at April
30, 2003, then, in the case of either (a) or (b), the Company will use its best
efforts to grant additional stock options to the Executive with the goal of
providing the Executive with the same benefit as was contemplated by the grant
of the November 2001 Options.
2.6 For purposes of this Agreement, the term "Cause"
shall mean (i) a significant act of dishonesty or deceit in the performance of
Executive's duties, (ii) receipt by Executive of kickbacks, bribes or other
improper payments, (iii) any willful continuation of a violation or of a breach
of any applicable law or material regulation governing the Company's activities
after the Executive is notified by the Company's Board of Directors that his
conduct constitutes such a violation or breach, or (iv) conviction of Executive
with respect to a felony involving moral turpitude.
2.7 For purposes of this Agreement, the term "Good
Reason" shall mean a resignation by the Executive within 30 days after (i) a
materially adverse change in the Executive's duties or title, (ii) a material
breach of this Agreement by the Company and the Company's failure to cure such
breach within five days after the Executive notifies the Company of such breach,
(iii) the Executive's offices are relocated to a location that is more than 20
miles from the Executive's current offices at the Company, (iv) the consummation
of a Corporate Transaction or (v) a change in the composition of the Board of
Directors of the Company such that the "Continuing Directors" (as defined
herein) no longer constitute a majority of the Board. For purposes of this
Agreement, the term "Continuing Director" shall mean (i) each current member of
the Company's Board of Directors and (ii) each person who is hereinafter first
nominated to such Board by unanimous vote of persons who then constitute
Continuing Directors.
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3. Acceleration of Existing Options.
3.1 The Company hereby designates all stock options
previously granted to the Executive prior to the date hereof (the "Prior
Options") under the Company's 1996 Stock Option/Stock Issuance Plan and the
Company's Investment Plan (such Plans collectively referred to hereinafter as
the "Plans") as Specially Designated Options as described in the Company's 1996
Stock Option/Stock Issuance Plan. The Company agrees that all Prior Options
granted to the Executive that are not then fully vested will vest in full upon
the consummation of a Corporate Transaction. Any Prior Options that remain
unexercised or unvested on the Expiration Date will immediately revert to their
original vesting schedules on the Expiration Date, provided that the original
term of such Prior Options extended beyond the Expiration Date. This provision
shall not be deemed to extend the term of any Prior Options.
3.2 If the Executive's employment with the Company is
terminated (i) by the Company without Cause, (ii) as a result of the Executive's
death or permanent disability or (iii) by the Executive for Good Reason, in the
case of (i), (ii) or (iii) prior to the Expiration Date and prior to the
consummation of a Corporate Transaction, any Prior Options that have not vested
shall not lapse immediately upon such termination but shall vest in full upon
the consummation of a Corporate Transaction if such a Corporate Transaction is
consummated prior to the Expiration Date. Upon vesting, such Prior Options shall
remain exercisable for a period of 180 days following the latest of (a) the date
of termination of employment, (b) the date the Executive is no longer subject to
any management lock-up that prohibits his ability to exercise options or
purchase or sell the Company's Common Stock and (c) the consummation of a
Corporate Transaction; provided that in no event shall any of the Prior Options
be exercisable after the expiration of their original terms. If the Executive's
employment with the Company is terminated by the Company for Cause, any and all
unexercised Prior Options and any and all unvested Prior Options shall lapse
immediately upon such termination. If the Executive's employment with the
Company is terminated by the Executive without Good Reason, the Executive shall
have 90 days from such termination in which to exercise those Prior Options
which were vested on the date of such termination, and all Prior Options which
had not vested prior to the date of termination shall lapse immediately.
3.3 The Notice of Grant of Stock Option Form
pertaining to any Prior Option shall be revised to conform to the provisions
contained in Sections 3.1 and 3.2 hereof. The Company's obligations under
Sections 3.1 and 3.2 hereof with respect to Prior Options shall terminate on the
Expiration Date.
4. Future Options.
4.1 The Company agrees that in the event any
additional stock options are granted to the Executive pursuant to the Plans
after the date hereof (the "Future Options"), any and all such Future Options
shall vest in full upon the consummation of a Corporate Transaction. Any Future
Options that remain unexercised or unvested on the Expiration Date will
immediately revert to the typical vesting schedules under the Plans on the
Expiration Date, provided that the original term of such Future Options extended
beyond the Expiration Date. This provision shall not be deemed to extend the
term of any Future Options.
-3-
4.2 If the Executive's employment with the Company is
terminated (i) by the Company without Cause, (ii) as a result of the Executive's
death or permanent disability or (iii) by the Executive for Good Reason, in the
case of (i), (ii) or (iii) prior to the Expiration Date and prior to the
consummation of a Corporate Transaction, any Future Options that have not vested
shall not lapse immediately upon such termination but shall vest in full upon
the consummation of a Corporate Transaction if such a Corporate Transaction is
consummated prior to the Expiration Date. Upon vesting, such Future Options
shall remain exercisable for a period of 180 days following the latest of (a)
the date of termination of employment, (b) the date the Executive is no longer
subject to any management lock-up that prohibits his ability to exercise options
or purchase or sell the Company's Common Stock and (c) the consummation of a
Corporate Transaction; provided that in no event shall any of the Future Options
be exercisable after the expiration of their original terms. If the Executive's
employment with the Company is terminated by the Company for Cause, any and all
unexercised Future Options and any and all unvested Future Options shall lapse
immediately upon such termination. If the Executive's employment with the
Company is terminated by the Executive without Good Reason, the Executive shall
have 90 days from such termination in which to exercise those Future Options
which were vested on the date of such termination, and all Future Options which
had not vested prior to the date of termination shall lapse immediately.
4.3 The Notice of Grant of Stock Option Form
pertaining to any Future Option shall contain provisions consistent with those
in Sections 4.1 and 4.2 hereof. The Company's obligations under Sections 4.1 and
4.2 hereof with respect to Future Options shall terminate on the Expiration
Date.
5. Other Obligations Upon Termination of Employment. In the
event the Executive's employment with the Company is terminated (i) by the
Company without Cause, (ii) as a result of the Executive's death or permanent
disability or (iii) by the Executive for Good Reason, the Company agrees to (a)
pay the Executive within five business days of termination a lump sum cash
payment equal to six months of compensation, at the rate in effect for the
Executive at the time of termination, (b) provide the Executive with the same
health and insurance benefits enjoyed at the time of termination for six months
following the date of termination of employment, at the Company's expense and
(c) promptly reimburse the Executive for all automobile lease termination fees.
The preceding sentence shall not reduce any benefits the Executive would be
entitled to receive upon termination of employment pursuant to any employee
benefit plans or policies of the Company. The Company's obligations pursuant to
the first sentence of this Section 5 shall terminate on the Expiration Date.
6. Excise Tax. In the event that either the independent public
accountants of the Executive or the Internal Revenue Service determines that any
payment, coverage or benefit provided to the Executive is subject to the excise
tax imposed by Section 4999 (or any successor provisions) of the Internal
Revenue Code of 1986, as amended (the "Code"), the Company, within 30 days
thereafter, shall pay to the Executive, in addition to any other payment,
coverage or benefit due and owing hereunder, an amount determined by multiplying
the rate of excise tax then imposed by such Section 4999 by the amount of the
"excess parachute payment" received by the Executive (determined without regard
to any payments made to the Executive pursuant to
-4-
this Section 6) and dividing the product so obtained by the amount obtained by
subtracting the aggregate local, state and Federal income tax rate applicable to
the receipt by the Executive of such "excess parachute payment" (taking into
account the deductibility for Federal income tax purposes of the payment of
state and local income taxes thereon) from the amount obtained by subtracting
from 1.00 the rate of excise tax then imposed by Section 4999 of the Code, it
being the intention of the parties hereto that the Executive's net after tax
position shall be identical to that which would have obtained had Sections 280G
and 4999 of the Code not been part of the Code.
7. Fees and Expenses. In the event that, prior to, on or after
the effective date of termination of this Agreement, the Company fails to make
payments or provide coverage to or sustain benefits for the Executive in
accordance with the terms of this Agreement, then the Company shall pay to the
Executive and reimburse the Executive for his full costs (including, without
limitation, the reasonable fees and expenses of the Executive's attorneys and
court and related costs) of enforcing this Agreement and obtaining the payments
and coverage described herein, unless it is ultimately determined that no such
failure to make payment or provide coverage occurred.
8. Notices. Any notice to be given by either party hereunder
shall be in writing, mailed by certified or registered mail with return receipt
requested, shall be addressed to the other party at the addresses set forth at
the beginning of this Agreement, or to such other address as may have been
furnished by such other party in writing as herein provided, and shall be deemed
to have been given on the date of mailing.
9. Entire Agreement; Amendment. This instrument constitutes
the entire agreement between the parties with respect to the subject matter
hereof. No modification, amendment or waiver of any of the provisions of this
Agreement shall be effective unless in writing and signed by both parties.
10. Waiver of Breach. The failure at any time to enforce or
exercise any right under any of the provisions of this Agreement or to require
at any time performance by the other party of any of the provisions hereof shall
in no way be construed to be a waiver of such provisions or to affect either the
validity of this Agreement or any part hereof, or the right of either party
hereafter to enforce or exercise its rights under each and every provision in
accordance with the terms of this Agreement.
11. Severability. If any provision of this Agreement shall be
held to be invalid or unenforceable, in whole or in part, this Agreement shall
remain valid and enforceable and be reformed and construed as if such invalid or
unenforceable provision, or part thereof, had never been contained herein and
such provision reformed so that it would be valid and enforceable to the maximum
extent permitted.
12. Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the Company and any successor of the Company and any
such successor shall be deemed substituted for the Company under the provisions
of this Agreement. This Agreement
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shall be binding upon and shall inure to the benefit of the Executive, his legal
representatives and assigns.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Pennsylvania.
14. Successor Liability. The Company will require any
subsequent successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the day and year first above written.
BIONX IMPLANTS, INC.
By:
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Xxxxx X. Xxxx, Chairman
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Xxxx Xxxxxxx
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AGREEMENT
This Agreement (the "Agreement"), dated as of November 9,
2001, between Bionx Implants, Inc., a Pennsylvania corporation (the "Company"),
with its principal executive office located at 0000 Xxxxxx Xxxxxxx West, Gwynedd
Hall, Suite 400, Blue Xxxx, PA 129422 and Xxxxxx X. Xxxxxxxx (the "Executive"),
with an address at 0000 Xxxx Xxxxxxxx Xxx, Xxxx Xxxxxxx, XX 00000.
NOW, THEREFORE, in consideration of the mutual covenants
herein set forth, the parties hereto agree as follows:
1. Background. The Executive has served as the Company's
President and Chief Executive Officer since September 1999. The Company wishes
to reward the Executive for his efforts on behalf of the Company and induce him
to continue those efforts.
2. New Stock Option Grant.
2.1 On November 9, 2001, the Compensation Committee
of the Board of Directors of the Company granted the Executive "Specially
Designated Options", as defined in the Company's 1996 Stock Option/Stock
Issuance Plan (the "November 2001 Options"), to purchase an aggregate of 200,000
shares of the Company's Common Stock at an exercise price of $2.72 per share.
The November 2001 Options were granted to the Executive pursuant to the
Company's 1996 Stock Option/Stock Issuance Plan.
2.2 All of the November 2001 Options will vest fully
upon the consummation of (i) a merger or consolidation with a party to whom the
Company has sent information in connection with a possible "Corporate
Transaction" (as defined below) during the term of the Executive's employment
with the Company in which securities possessing more than 50% of the voting
power of the Company's outstanding shares will be transferred to a person or
persons different from the persons holding those securities immediately prior to
the transaction or (ii) a sale, transfer or other disposition of all or
substantially all of the Company's assets or securities to a party to whom the
Company has sent information in connection with a possible Corporate Transaction
during the term of the Executive's employment with the Company (any such
transaction described in clause (i) or clause (ii) being referred to as a
"Corporate Transaction"), and remain exercisable until the close of business on
April 30, 2003 (the "Expiration Date"), at which time any and all November 2001
Options that remain unexercised or have not vested shall lapse immediately.
2.3 If the Executive's employment with the Company is
terminated (i) by the Company without "Cause" (as defined herein), (ii) as a
result of the Executive's death or permanent disability or (iii) by the
Executive for "Good Reason" (as defined herein), in the case of (i), (ii) or
(iii) prior to the Expiration Date and prior to the consummation of a Corporate
Transaction, the November 2001 Options shall not lapse immediately upon such
termination but shall vest in full upon the consummation of a Corporate
Transaction if such a Corporate Transaction is consummated prior to the
Expiration Date. Upon vesting, the November 2001 Options shall remain
exercisable for a period of 180 days following the latest of (a) the date of
termination of employment, (b) the date the Executive is no longer subject to
any management lock-up that prohibits his ability to exercise options or
purchase or sell the Company's Common Stock and (c) the consummation of a
Corporate Transaction; provided that in no event shall any of the November 2001
Options be exercisable after the Expiration Date. If the Executive's employment
with the Company is terminated by the Company for Cause or by the Executive
without Good Reason, any and all unexercised November 2001 Options and any and
all unvested November 2001 Options shall lapse immediately upon such
termination.
2.4 The Company has delivered to the Executive a
Notice of Grant of Stock Option Form which is consistent with these provisions.
2.5 In the event that (a) the engagement of U.S.
Bancorp Xxxxx Xxxxxxx Inc. ("Piper"), pursuant to the engagement letter, dated
October 31, 2001 (the "Engagement Letter"), between the Company and Piper,
terminates prior to April 30, 2003 and any of the November 2001 Options remain
unexercised or unvested at such termination date and the Company enters into an
arrangement with another investment banker pertaining to the same or similar
matters covered by the Engagement Letter, or (b) the Engagement Letter between
the Company and Piper extends after April 30, 2003 by agreement of the parties,
and any of the November 2001 Options remain unexercised or unvested at April 30,
2003, then, in the case of either (a) or (b), the Company will use its best
efforts to grant additional stock options to the Executive with the goal of
providing the Executive with the same benefit as was contemplated by the grant
of the November 2001 Options.
2.6 For purposes of this Agreement, the term "Cause"
shall mean (i) a significant act of dishonesty or deceit in the performance of
Executive's duties, (ii) receipt by Executive of kickbacks, bribes or other
improper payments, (iii) any willful continuation of a violation or of a breach
of any applicable law or material regulation governing the Company's activities
after the Executive is notified by the Company's Board of Directors that his
conduct constitutes such a violation or breach, or (iv) conviction of Executive
with respect to a felony involving moral turpitude.
2.7 For purposes of this Agreement, the term "Good
Reason" shall mean a resignation by the Executive within 30 days after (i) a
materially adverse change in the Executive's duties or title, (ii) a material
breach of this Agreement by the Company and the Company's failure to cure such
breach within five days after the Executive notifies the Company of such breach,
(iii) the Executive's offices are relocated to a location that is more than 20
miles from the Executive's current offices at the Company, (iv) the consummation
of a Corporate Transaction or (v) a change in the composition of the Board of
Directors of the Company such that the "Continuing Directors" (as defined
herein) no longer constitute a majority of the Board. For purposes of this
Agreement, the term "Continuing Director" shall mean (i) each current member of
the Company's Board of Directors and (ii) each person who is hereinafter first
nominated to such Board by unanimous vote of persons who then constitute
Continuing Directors.
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3. Acceleration of Existing Options.
3.1 The Company hereby designates all stock options
previously granted to the Executive prior to the date hereof (the "Prior
Options") under the Company's 1996 Stock Option/Stock Issuance Plan and the
Company's Investment Plan (such Plans collectively referred to hereinafter as
the "Plans") as Specially Designated Options as described in the Company's 1996
Stock Option/Stock Issuance Plan. The Company agrees that all Prior Options
granted to the Executive that are not then fully vested will vest in full upon
the consummation of a Corporate Transaction. Any Prior Options that remain
unexercised or unvested on the Expiration Date will immediately revert to their
original vesting schedules on the Expiration Date, provided that the original
term of such Prior Options extended beyond the Expiration Date. This provision
shall not be deemed to extend the term of any Prior Options.
3.2 If the Executive's employment with the Company is
terminated (i) by the Company without Cause, (ii) as a result of the Executive's
death or permanent disability or (iii) by the Executive for Good Reason, in the
case of (i), (ii) or (iii) prior to the Expiration Date and prior to the
consummation of a Corporate Transaction, any Prior Options that have not vested
shall not lapse immediately upon such termination but shall vest in full upon
the consummation of a Corporate Transaction if such a Corporate Transaction is
consummated prior to the Expiration Date. Upon vesting, such Prior Options shall
remain exercisable for a period of 180 days following the latest of (a) the date
of termination of employment, (b) the date the Executive is no longer subject to
any management lock-up that prohibits his ability to exercise options or
purchase or sell the Company's Common Stock and (c) the consummation of a
Corporate Transaction; provided that in no event shall any of the Prior Options
be exercisable after the expiration of their original terms. If the Executive's
employment with the Company is terminated by the Company for Cause, any and all
unexercised Prior Options and any and all unvested Prior Options shall lapse
immediately upon such termination. If the Executive's employment with the
Company is terminated by the Executive without Good Reason, the Executive shall
have 90 days from such termination in which to exercise those Prior Options
which were vested on the date of such termination, and all Prior Options which
had not vested prior to the date of termination shall lapse immediately.
3.3 The Notice of Grant of Stock Option Form
pertaining to any Prior Option shall be revised to conform to the provisions
contained in Sections 3.1 and 3.2 hereof. The Company's obligations under
Sections 3.1 and 3.2 hereof with respect to Prior Options shall terminate on the
Expiration Date.
4. Future Options.
4.1 The Company agrees that in the event any
additional stock options are granted to the Executive pursuant to the Plans
after the date hereof (the "Future Options"), any and all such Future Options
shall vest in full upon the consummation of a Corporate Transaction. Any Future
Options that remain unexercised or unvested on the Expiration Date will
immediately revert to the typical vesting schedules under the Plans on the
Expiration Date, provided that the original term of such Future Options extended
beyond the Expiration Date. This provision shall not be deemed to extend the
term of any Future Options.
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4.2 If the Executive's employment with the Company is
terminated (i) by the Company without Cause, (ii) as a result of the Executive's
death or permanent disability or (iii) by the Executive for Good Reason, in the
case of (i), (ii) or (iii) prior to the Expiration Date and prior to the
consummation of a Corporate Transaction, any Future Options that have not vested
shall not lapse immediately upon such termination but shall vest in full upon
the consummation of a Corporate Transaction if such a Corporate Transaction is
consummated prior to the Expiration Date. Upon vesting, such Future Options
shall remain exercisable for a period of 180 days following the latest of (a)
the date of termination of employment, (b) the date the Executive is no longer
subject to any management lock-up that prohibits his ability to exercise options
or purchase or sell the Company's Common Stock and (c) the consummation of a
Corporate Transaction; provided that in no event shall any of the Future Options
be exercisable after the expiration of their original terms. If the Executive's
employment with the Company is terminated by the Company for Cause, any and all
unexercised Future Options and any and all unvested Future Options shall lapse
immediately upon such termination. If the Executive's employment with the
Company is terminated by the Executive without Good Reason, the Executive shall
have 90 days from such termination in which to exercise those Future Options
which were vested on the date of such termination, and all Future Options which
had not vested prior to the date of termination shall lapse immediately.
4.3 The Notice of Grant of Stock Option Form
pertaining to any Future Option shall contain provisions consistent with those
in Sections 4.1 and 4.2 hereof. The Company's obligations under Sections 4.1 and
4.2 hereof with respect to Future Options shall terminate on the Expiration
Date.
5. Other Obligations Upon Termination of Employment. In the
event the Executive's employment with the Company is terminated (i) by the
Company without Cause, (ii) as a result of the Executive's death or permanent
disability or (iii) by the Executive for Good Reason, the Company agrees to (a)
pay the Executive within five business days of termination a lump sum cash
payment equal to six months of compensation, at the rate in effect for the
Executive at the time of termination, (b) provide the Executive with the same
health and insurance benefits enjoyed at the time of termination for six months
following the date of termination of employment, at the Company's expense and
(c) promptly reimburse the Executive for all automobile lease termination fees.
The preceding sentence shall not reduce any benefits the Executive would be
entitled to receive upon termination of employment pursuant to any employee
benefit plans or policies of the Company. The Company's obligations pursuant to
the first sentence of this Section 5 shall terminate on the Expiration Date.
6. Excise Tax. In the event that either the independent public
accountants of the Executive or the Internal Revenue Service determines that any
payment, coverage or benefit provided to the Executive is subject to the excise
tax imposed by Section 4999 (or any successor provisions) of the Internal
Revenue Code of 1986, as amended (the "Code"), the Company, within 30 days
thereafter, shall pay to the Executive, in addition to any other payment,
coverage or benefit due and owing hereunder, an amount determined by multiplying
the rate of excise tax then imposed by such Section 4999 by the amount of the
"excess parachute payment" received by the Executive (determined without regard
to any payments made to the Executive pursuant to
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this Section 6) and dividing the product so obtained by the amount obtained by
subtracting the aggregate local, state and Federal income tax rate applicable to
the receipt by the Executive of such "excess parachute payment" (taking into
account the deductibility for Federal income tax purposes of the payment of
state and local income taxes thereon) from the amount obtained by subtracting
from 1.00 the rate of excise tax then imposed by Section 4999 of the Code, it
being the intention of the parties hereto that the Executive's net after tax
position shall be identical to that which would have obtained had Sections 280G
and 4999 of the Code not been part of the Code.
7. Fees and Expenses. In the event that, prior to, on or after
the effective date of termination of this Agreement, the Company fails to make
payments or provide coverage to or sustain benefits for the Executive in
accordance with the terms of this Agreement, then the Company shall pay to the
Executive and reimburse the Executive for his full costs (including, without
limitation, the reasonable fees and expenses of the Executive's attorneys and
court and related costs) of enforcing this Agreement and obtaining the payments
and coverage described herein, unless it is ultimately determined that no such
failure to make payment or provide coverage occurred.
8. Notices. Any notice to be given by either party hereunder
shall be in writing, mailed by certified or registered mail with return receipt
requested, shall be addressed to the other party at the addresses set forth at
the beginning of this Agreement, or to such other address as may have been
furnished by such other party in writing as herein provided, and shall be deemed
to have been given on the date of mailing.
9. Entire Agreement; Amendment. This instrument constitutes
the entire agreement between the parties with respect to the subject matter
hereof. No modification, amendment or waiver of any of the provisions of this
Agreement shall be effective unless in writing and signed by both parties.
10. Waiver of Breach. The failure at any time to enforce or
exercise any right under any of the provisions of this Agreement or to require
at any time performance by the other party of any of the provisions hereof shall
in no way be construed to be a waiver of such provisions or to affect either the
validity of this Agreement or any part hereof, or the right of either party
hereafter to enforce or exercise its rights under each and every provision in
accordance with the terms of this Agreement.
11. Severability. If any provision of this Agreement shall be
held to be invalid or unenforceable, in whole or in part, this Agreement shall
remain valid and enforceable and be reformed and construed as if such invalid or
unenforceable provision, or part thereof, had never been contained herein and
such provision reformed so that it would be valid and enforceable to the maximum
extent permitted.
12. Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the Company and any successor of the Company and any
such successor shall be deemed substituted for the Company under the provisions
of this Agreement. This Agreement
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shall be binding upon and shall inure to the benefit of the Executive, his legal
representatives and assigns.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Pennsylvania.
14. Successor Liability. The Company will require any
subsequent successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the day and year first above written.
BIONX IMPLANTS, INC.
By:_________________________________
Xxxxx X. Xxxx, Chairman
____________________________________
Xxxxxx X. Xxxxxxxx
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