TERMINATION AND CONSULTING AGREEMENT
This
Termination and Consulting Agreement (this "Agreement") is entered into on
June
5, 2008, by and between Cytomedix, Inc., a Delaware corporation (the "Company"),
and Xxxxxxx Xxxxx (the "Executive").
WHEREAS,
the
Executive currently serves as the Company’s Chairman of the Board of Directors
(the “Board”) and Chief Executive Officer pursuant to that certain Employment
Agreement, dated as of April 20, 2004, as amended, by and between the Company
and the Executive (the "Employment Agreement"); and
WHEREAS,
the
parties have agreed to terminate the Employment Agreement effective as of the
close of business on June 30, 2008 (the “Separation Date”) not for cause and by
amicable settlement; and
WHEREAS,
the
Company and the Executive desire that the Employment Agreement be terminated
and
superseded to the extent set forth herein; and
WHEREAS,
the
Company desires that, following his departure from the Company, the Executive
provide services to the Company as an independent contractor on an as needed
and
as available basis; and
WHEREAS,
the
Executive desires to provide such services as an independent
contractor.
NOW,
THEREFORE,
in
consideration of the mutual representations, promises and agreements contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive hereby agree as follows:
1. Term
of Agreement.
The
Company hereby engages the Executive as a consultant, subject to the terms
and
conditions hereof, for the period commencing as of the Separation Date and
ending on June 30, 2010 (the "Consulting Period"), except as the Consulting
Period may be extended by mutual written agreement of the parties hereto.
2. Consulting
Services.
(a) During
the Consulting Period, the Executive shall perform consulting services (the
“Consulting Services”) for the Company on an “as needed” basis, subject to
Executive’s availability to perform the Consulting Services. The Company’s
request for Executive to perform Consulting Services shall be at the sole
discretion of the Company, subject to advance notice and the Executive’s
availability. The Executive shall perform the Consulting Services at times
and
places reasonable and convenient to Executive, subject to Executive’s sole
discretion as to his availability to perform the Consulting
Services.
(b) The
Executive agrees to exercise the highest degree of professionalism and utilize
his expertise and talents in responding to the Company’s or the Board’s
requests. Such Consulting Services
are anticipated to include, without limitation, working with Company management
at a strategic level with respect to the Company's development and product
acquisition activities, capital structure, investor relations and reduction
of
production costs, and to follow up on clinical trials as well as any other
matters and activities with respect to which the Company management may require
Executive’s services. The Executive will devote such business time, subject to
Executive’s availability, as is reasonably necessary or desirable to accomplish
his duties and responsibilities under this Agreement.
(c) It
is
acknowledged and agreed by the Company that Executive carries neither
professional licenses nor memberships in any self-regulatory organizations.
It
is further acknowledged and agreed by the Company that the Executive is not
rendering expert or legal advice or performing accounting services and is not
acting and shall not act as an investment advisor or broker/dealer within the
meaning of any applicable state or federal securities laws. No portion of the
services rendered pursuant to this Agreement shall be provided in connection
with the offer or sale of securities in a capital raising transaction or for
the
purpose of directly or indirectly promoting or maintaining a market for the
Company’s securities. The Company shall not require Executive to perform any
services inconsistent with the foregoing. The Company acknowledges and agrees
that Executive is one of multiple sources of advice obtained by the Company
and
is not the sole source of advice nor the final decision maker for any aspect
of
the Company’s operations or actions. The Executive further acknowledges and
agrees that the Company may or may not follow Executive’s advice, but if the
Company does follow all or part of Executive’s advice, it shall be after
independent legal or other appropriate validation and the Company takes full
and
sole responsibility for all decisions and actions of the Company regardless
of
whether or not they were related to the services provided by Executive.
(d) The
Company also acknowledges and agrees that the Executive will be free to take
on
any consulting projects, employment or any other activities, provided that
it
does not violate the confidentiality and non-competition provisions of this
Agreement. While the Executive will attempt to make himself reasonably available
to provide Consulting Services to the Company, such availability will be subject
to the circumstances faced by the Executive at the time, including, but not
limited to, conditions of his employment or professional activities, prior
commitments or health status.
3. Independent
Contractor.
(a) The
Executive shall provide the Consulting Services described in Section 2 as an
independent contractor without the power to bind or represent the Company for
any purpose whatsoever. Nothing herein contained shall be construed to
constitute the parties hereto as partners or as joint venturers, or either
as
agent of the other, or as employer and employee. During the Consulting Period,
the Executive shall not present himself as an employee of the Company or any
of
its affiliates.
2
(b) Except
as
specified in this Agreement, the Executive shall not be entitled to participate
in any employee benefit plans maintained on behalf of the Company or any of
its
affiliates during the Consulting Period. The Executive hereby acknowledges
that
if the Company compensates Executive for the Consulting Services, the Company
shall not withhold income taxes or withhold or make payments for social
security, make unemployment insurance or disability insurance contributions,
or
obtain worker’s compensation insurance on Executive’s (or his employees’ or
agents’) behalf. The Executive hereby acknowledges his separate responsibility
for all federal, state and local income taxes, Federal Insurance Contribution
Act taxes, payroll, workers' compensation and unemployment compensation taxes
and business license fees, if applicable, for all compensation and benefits
under this Agreement.
(c) Subject
only to such specific limitations as are contained in this Agreement, the
manner, means, details or methods by which the Executive performs the Consulting
Services shall be solely within the discretion of the Executive. The Company
shall not have the authority to, nor shall it, supervise, direct or control
the
manner, means, details or methods utilized by the Executive to perform the
Consulting Services and nothing in this Agreement shall be construed to grant
the Company any such authority.
4. Severance
Pay and Compensation.
(a) Severance
Pay.
In
settlement of the severance pay requirements in the Employment Agreement related
to termination “Not For Cause”, the Executive shall receive payments (each a
“Severance Payment”, collectively “Severance Payments”) in the amount equal to
five hundred thousand dollars ($500,000) payable in twenty four (24) equal
monthly installments in arrears at the end of each month. The Company shall
make
the first Severance Payment to Executive at the end of the first month after
the
Effective Date (as defined in Section 7 of this Agreement).
(b) Outstanding
Equity Awards.
The
Company and the Executive acknowledge and agree that all of the stock options
previously awarded by the Company to the Executive and vested as of the date
hereof as set forth in Exhibit
A
hereto
(each an “Option”, and collectively referred to the “Options”),
shall:
|
(i)
|
remain
in full force and effect, and
|
|
(ii)
|
continue
to be governed by the terms of the applicable stock option grant
notices
and agreements between the Company and the Executive regarding the
Options.
|
Notwithstanding
the foregoing, Company represents, warrants and agrees that the Options are
fully vested as set forth in Exhibit
A
and will
not terminate (and Executive’s ability to exercise each Option will not expire)
until the close of business on the expiration dates set forth in each respective
option grant notice and agreement (such expiration dates are also set forth
in
Exhibit A), which is the last day of the tenth (10th)
year
following the date of grant of each Option. The Company further represents,
warrants and agrees that, consistent with the terms and provisions of the
Executive’s Employment Agreement, in the event of Executive’s death or
disability, the Options will remain vested and exercisable by the Executive’s
estate or the Executive (in case of his disability) until the close of business
on the expiration dates set forth in each respective option grant notice and
agreement (such expiration dates are also set forth in Exhibit A), which is
the
last day of the tenth (10th)
year
following the date of grant of each Option. Under no circumstances will the
termination of Executive’s consulting with the Company affect the foregoing
provisions. The Company hereby agrees to effect such changes and amendments
to
its agreements, plans and other written instruments setting forth the terms
and
provisions of the Options as it may deem necessary or appropriate to carry
out
the purposes of this Section 4(b).
3
(c) Additional
Payment for Counsel Fees and Costs.
Within
ten (10) days after the Separation Date, the Company shall make an additional
payment to Executive to reimburse Executive for the fees and costs incurred
by
Executive’s counsel’s review of this Agreement; provided, however, that such
reimbursement shall not exceed the sum of $5,000.
(d) No
Other Severance Pay.
Except
as set forth in this Agreement, the Executive acknowledges and agrees that
he
will not enforce the Company’s obligations to pay the other severance or
termination pay or benefits under Section 5 of the Employment
Agreement.
(e) Vacation
Pay.
The
Executive shall be reimbursed for all accrued but unused vacation time as of
the
Separation Date, which vacation time is not to exceed two hundred (200) hours
on
or before June 30, 2008.
(f) Health
Benefits.
The
Company agrees to continue to make available and pay the same proportion of
the
deductible and portion of the premium as it currently does for participation
for
the Executive and his spouse, Xxx. Xxxxxxxxx Xxxxx, to the extent each is
eligible under Maryland continuation of benefits laws, in the Company’s health
benefit plans (including medical and dental plans) or programs equivalent to
those that are offered to the key executive employees of Company as may be
established from time to time by the Company management or its Board of
Directors (the “Health Plans”) on substantially the same basis as is in effect
for the Company’s active employees for a period of eighteen (18) months
commencing on the first day of the month next-following the Separation Date
(the
“Continuation Period”). If and to the extent Executive and his spouse cease to
be eligible for coverage under the Health Plans, respectively, at any point
after the commencement of the Continuation Period but prior to the end of the
Continuation Period, continuation coverage under the Health Plans or any
available alternate coverage shall be provided to the Executive and his spouse
in accordance with the applicable requirements of Maryland law for up to
eighteen (18) months (the “Continuation Coverage”); provided, that any such
Continuation Coverage shall be provided at the same proportion of the deductible
and portion of the premium, if available, as may then be in effect for the
Company’s active employees generally. In the event the Executive’s or his
spouse’s eligibility for Continuation Coverage ends prior to the expiration of
the Continuation Period, the Company shall, upon the presentation of receipts
or
invoices, promptly reimburse the Executive and/or his spouse for the costs
of
any replacement coverage they may thereafter secure until the end of the
Continuation Period; provided, that the amount of the Company’s reimbursement
for such alternative coverage shall be no greater than hundred and fifty percent
(150%) of the cost of coverage it otherwise would have provided to the Executive
in connection with the Continuation Coverage (the “Coverage Maximum”). The
Executive acknowledges and agrees that the Company’s obligations to pay or
reimburse the costs of such Continuation Coverage or alternative coverage shall
terminate at the end of the Continuation Period. The Executive acknowledges
and
agrees that the Company’s reimbursement for the alternative coverage
contemplated hereunder shall be limited to the Coverage Maximum. The Executive
further acknowledges and agrees to pay all federal, state and any other taxes
in
connection with or caused by the Company’s providing the Continuation Coverage
(or alternative coverage) contemplated hereunder; provided, however, in the
event that the Company reports any such Continuation Coverage as a taxable
benefit to the Executive, the Company hereby agrees to provide the Executive
written notice of any such report.
4
(g) Additional
Benefits.
In the
event of the Executive’s death, benefits due to the Executive shall be paid in
full to the Executive’s spouse, Xxx. Xxxxxxxxx Xxxxx, or if she predeceases him,
to his son, Xxxxx Xxxxx, and daughter, Xxxxxx Xxxxx, in equal
shares.
5. Reference
Inquiries.
In the
event that any person or entity requests information regarding Executive’s
employment with the Company, the Company will inform the inquiring party that
Executive’s employment with the Company ended by mutual agreement and that
Executive has transitioned from being an employee of the Company to an
independent consultant to the Company. Notwithstanding the foregoing, the
Company acknowledges that it terminated the Employment Agreement Not for Cause
pursuant to Section 5.6 of the Employment Agreement. In addition, Executive
may
refer potential employers or clients to Xxxxxx Xxxxxx, Chief Financial Officer
of the Company.
6. Intentionally
deleted.
7. Termination
of the Employment Agreement; Mutual Release and Covenant Not To
Xxx.
(a) Except
as
otherwise provided in this Agreement, the Company and the Executive hereby
represent, warrant and agree that, except as expressly set forth in this
Agreement, the Employment Agreement executed by such parties is hereby
terminated and canceled, and is of no further force and effect, effective
immediately upon the execution of this Agreement by each party thereto. Except
for any agreements between the Company and the Executive regarding the Options,
directors’ and officers’ (D&O) liability insurance coverage of Executive
provided by the Company, or the indemnification
rights to which Executive may be entitled from the Company, this Agreement
supersedes and extinguishes any agreements or understandings, whether oral
or
written, made between the Company and the Executive at any time prior to the
date of this Agreement, including, but not limited to, the Employment Agreement.
The Executive hereby appoints the Chief Financial Officer of the Company as
its
agent and attorney-in-fact for the limited purpose of taking any and all action
necessary or deemed advisable by such attorney and agent-in-fact to cause the
Employment Agreement to be terminated and canceled, such appointment to be
effective once this Agreement has been executed by the Company and delivered
to
the Executive.
5
(b) Except
for claims arising under any agreement between the Company and the Executive
regarding the Options, the Company’s directors’ and officers’ (D&O)
liability insurance coverage of Executive, and the indemnification rights to
which Executive may be entitled from the Company, the Executive, for himself
and
his respective heirs, executors, representatives, beneficiaries and assigns,
irrevocably and unconditionally releases and discharges the Company, together
with its officers, directors, shareholders, partners, employees, administrators,
representatives, beneficiaries, attorneys and assigns (the "Released Persons"),
from any and all claims, demands, causes of action, actions, judgments, liens,
indebtedness, costs, damages, obligations, attorneys’ fees, losses and liability
of whatever kind and character, that are known to the Executive as of the
Effective Date, in law or equity, liquidated or unliquidated, whether asserted
personally, derivatively or in any other capacity, arising from, referring
to,
relating to or in connection with events, acts or conduct at any time prior
to
and including the execution date of this Agreement, including, without limiting
the foregoing, (i) any claims relating to or arising out of the Employment
Agreement including, but not limited to breach of contract, breach of covenant
of good faith and fair dealing, fraud, promissory or equitable estoppel,
misrepresentation, violation of public policy, wrongful discharge, unfair
dismissal, or any other common law claim now or hereafter recognized; (ii)
any
claims for unpaid or withheld wages, vacation, paid time off, sick and/or
personal time pay, severance pay, notice, bonuses, and/or other compensation
or
benefits of any kind; (iii) any and all claims of discrimination in employment
arising before the execution of this Agreement, including, but not limited
to
claims for discrimination or harassment on the basis of age, sex, race,
religion, color, creed, handicap, disability, citizenship, national origin,
sexual orientation or any other factor protected by Title VII of the Civil
Rights Act of 1964, The Americans with Disabilities Act, The Age Discrimination
in Employment Act (29 U.S.C.A.§621, et seq.) (“ADEA”), and/or any other similar
employment-related federal, state and local laws, and any claims for retaliation
thereunder; (iv) any claims under the Xxxxxxxx-Xxxxx Act; (v) any claims arising
under the Executive Retirement Income Security Act; (vi) any claims under the
Federal Family and Medical Leave Act of 1993 or similar state law; (vii) all
claims for attorneys’ fees, costs and expenses except as otherwise provided in
this Agreement (all of the foregoing being collectively referred to herein
as
the "Claims"). The Executive hereby declares that he voluntarily accepts the
above-mentioned consideration for the purpose of making a full and final
compromise, adjustment, release and settlement of the Claims.
(c) The
Executive acknowledges that he is knowingly and voluntarily waiving and
releasing any rights he may have under the ADEA, as amended. Executive
acknowledges that he has been advised by this writing, as required by the ADEA,
that: (a) his waiver and release does not apply to any rights or claims that
may
arise after the execution date of this Agreement; (b) he has been advised hereby
to consult with an attorney prior to executing this release; (c) he has
twenty-one (21) days to consider this Agreement (although he may choose to
voluntarily execute this Agreement earlier); (d) he has seven (7) days following
the execution of this Agreement by the parties to revoke the Agreement, which
can be done by sending a certified letter to that effect to Xxxxxx Xxxxxx,
Chief
Financial Officer, 000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000; and
(e)
this Agreement shall not be effective until the date upon which the revocation
period has expired, which shall be the eighth (8th) day after this Agreement
is
executed by Executive (“Effective Date”).
6
(d) The
Executive covenants and agrees not to xxx or bring any action in law, or in
equity, including, but not limited to, an action in any court, forum, or
arbitration proceeding whether by original process or demand, counterclaim,
cross-claim, third-party process, impleader, claim for indemnity or contribution
or otherwise against the Company and its successors and assigns, arising from,
referring to, relating to, or in connection with in any way the Claims, except
as otherwise provided for in this Agreement.
(e) The
Company and its officers and directors, and the Released Persons, irrevocably,
unconditionally, fully, and forever releases and discharges the Executive,
together with his heirs, executors, administrators, attorneys, agents, personal
representatives, family members, successors, and assigns, from any and all
claims, demands, causes of action, actions, judgments, liens, indebtedness,
costs, damages, obligations, attorneys’ fees, losses and liability, contingent
or accrued, that are known to the Company and its directors, officers, agents,
subsidiaries and affiliates as of the Effective Date. This release does not
include any claims that arise after the execution date of this
Agreement.
8. Resignation.
The
Executive will resign, effective on the Separation Date, as Chief Executive
Officer and as a member of the Board as well as from his memberships, if any,
on
the Board’s standing committees.
9. Return
of Property.
The
Executive agrees that he will return prior to the Effective Date any and all
documents (including all copies) and other property he may have which belongs
to
the Company, except for documents which the Company agrees are requested for
him
to perform his consulting duties or are related to his fiduciary
responsibilities as an officer and director of the Company that may be necessary
for him to protect himself against any legal or regulatory liability in the
future. The Executive further agrees to return to the Company any of its
documents and property that is permitted during the Term upon request by the
Company. The Executive may retain the computer and cellular telephone currently
in his possession. The Executive shall also be entitled to retain his personal
documents produced by the Executive prior to or outside of his work for the
Company.
10. Expenses.
The
Company shall pay or reimburse the Executive for all reasonable expenses
incurred by the Executive in connection with the performance of his services
under this Agreement including, without limitation, travel and lodging expenses,
consistent with the Company’s expense policies following
receipt of appropriate documentation.
7
11. Work
Product.
It is
agreed that all information and materials produced specifically for the Company
and in connection with the services rendered by Executive under this Agreement
shall be the property of the Company, free and clear of all claims thereto
by
Executive, and Executive has no claim of ownership rights thereto; provided,
however, that Executive may retain one copy of the work product for personal
use.
12. Non-competition.
(a) The
term
“Competing Business” shall refer to any person or entity engaged in (i) the use
of products or technology similar to Autologel(TM) or the Autologel(TM) System
involving the use of releasates from platelets to treat chronic wounds or other
indications for which the Company has obtained or would be in the process of
obtaining any applicable regulatory clearance during the Consulting Period,
(ii)
any use of products or technology similar to that which the Company may develop
or otherwise obtain marketable rights during the Consulting Period, or (iii)
the
direct competition with either (i) or (ii) above. The term “Non-Competition
Period” shall be the duration of the Consulting Period. The geographic
restriction of this covenant not to compete shall include the cities, counties,
states of the United States, and each country outside of the United States
where
the Company does business during the Consulting Period.
(b) The
Executive shall not, at any time during the Non-Competition Period, either
directly or indirectly, or solely or jointly with other persons or
entities:
(i)
own,
manage, operate, join, control, consult with, render services for or participate
in the ownership, management, operation or control of, or be connected as an
officer, director, employee, partner, principal, agent, consultant or other
representative with, or permit his name to be used in connection with any profit
or nonprofit business, organization or entity, other than the Company and its
affiliates, which operates or engages in a Competing Business,
(ii) lend
any
credit or money for the purposes of establishing or operating any Competing
Business or otherwise give aid or advice to any person, firm, association,
corporation, or entity engaging in any Competing Business, or
(iii) solicit,
contract, divert, or take away or attempt to solicit, divert, or take away
any
of the customers, potential customers, business or patrons of the Company and
its affiliates or any of their respective successors and assigns, directly
or
indirectly, by or for himself or as the agent of any other person or entity
or
through others as an agent or on behalf of a competitor of the
Company.
The
Company and Executive acknowledge and agree that the duration, scope, and
geographic area for which the covenant not to compete is to be effective are
reasonable.
(c) Notwithstanding
the foregoing covenant not to compete, the Executive shall not be restricted
from accepting employment with a Competing Business provided that the scope
of
such employment, and the duties involved thereunder do not involve (i) the
use
of products or technology similar to Autologel(TM) or the Autologel(TM) System
involving the use of releasates from platelets to treat chronic wounds or other
indications for which the Company has obtained or would be in the process of
obtaining any applicable regulatory clearance during the Consulting Period,
(ii)
any use of products or technology similar to that which the Company may develop
or otherwise obtain marketable rights during the Consulting Period, or (iii)
the
direct competition with either (i) or (ii) above. Further, the Executive may
own
publicly-traded securities issued by a Competing Business provided that
Executive shall not own more than three percent (3%) of the value of any class
of such securities outstanding at such time.
8
(d) The
Executive is free to license or economically exploit any patents, inventions
or
ideas regarding products that he has developed prior to his employment with
the
Company or that he may develop in the future through expenditure of his personal
time and resources, as long as any such future developments shall not involve
(i) the use of products or technology similar to Autologel(TM) or the
Autologel(TM) System involving the use of releasates from platelets to treat
chronic wounds or other indications for which the Company has obtained or would
be in the process of obtaining any applicable regulatory clearance during the
Consulting Period, (ii) any use of products or technology similar to that which
the Company may develop or otherwise obtain marketable rights during the
Consulting Period, or (iii) the direct competition with either (i) or (ii)
above.
13. Confidential
Information; Non-Solicitation; Non-Disparagement.
(a) The
parties hereto recognize that a major need of the Company is to preserve its
specialized knowledge, trade secrets, and confidential information. The strength
and good will of the Company is derived from the specialized knowledge, trade
secrets, and confidential information generated from experience with the
activities undertaken by the Company and its subsidiaries. The disclosure of
this information and knowledge to competitors would be beneficial to them and
detrimental to the Company, as would the disclosure of information about the
marketing practices, pricing practices, costs, profit margins, design
specifications, analytical techniques, and similar items of the Company and
its
subsidiaries. The Executive acknowledges that the proprietary information,
observations and data obtained by him while employed by the Company and during
the Consulting Period concerning the business or affairs of the Company are
the
property of the Company. By reason of his having been a senior executive of
the
Company and through his providing services under this Agreement, the Executive
has or will have access to, and has obtained or will obtain, specialized
knowledge, trade secrets and confidential information about the Company's
operations and the operations of its subsidiaries, which operations extend
worldwide, including the United States. For purposes of this Section 11, “the
Company” shall mean the Company and each of its subsidiaries, if any. Therefore,
the Executive hereby agrees as follows, recognizing that the Company is relying
on these agreements in entering into this Agreement:
9
|
(i)
|
The
Executive will not use, disclose to others, or publish or otherwise
make
available to any other party any inventions or any confidential business
information about the affairs of the Company, including but not limited
to
confidential information concerning the Company's products. "Confidential
Information" shall include commercial or trade secrets about Company’s
products, methods, engineering designs and standards, analytical
techniques, technical information, customer information, employee
information, or financial and business records, any of which contains
proprietary information created or acquired by the Company and which
information is held in confidence by Company. Confidential Information
does not include information which: (x) becomes generally available
to the
public, unless said Confidential Information was disclosed in violation
of
a confidentiality agreement; or (y) becomes available to the Executive
on
a non-confidential basis from a source other than the Company or
its
agents, provided that such source is not bound by a confidentiality
agreement with the Company.
|
|
(ii)
|
During
the Consulting Period and for 12 months thereafter, the Executive
will not
directly or indirectly through another entity (x) induce any employee
of
the Company to leave the Company's employ (unless the Board of Directors
shall have authorized such employment and the Company shall have
consented
thereto in writing) or in any way interfere with the relationship
between
the Company and any employee thereof or (y) tortiously interfere
with the
Company’s business relationship with any customer, supplier, licensee,
licensor or other business relation of the Company with whom Executive
had
contact or whose identity Executive learned as a result of his employment
by the Company.
|
(b) The
Executive will not disparage, portray in a negative light, or take any action
that is intended to disparage or portray in a negative light the Company, its
executive officers, directors, employees, shareholders, agents, successors
or
assigns, subsidiaries or counsel (collectively the “Company Parties”), whether
such disparagement, portrayal, communication or action is made publicly or
privately, including without limitation, in any and all interviews, oral
statements, written materials, electronically-displayed materials, and materials
or information displayed on Internet-related sites. Similarly, the Company
Parties will not disparage, portray in a negative light, or take any action
that
is intended to disparage or portray in a negative light the Executive together
with his heirs, executors, administrators, attorneys, personal representatives,
family members, successors, and assigns (collectively, the “Executive Parties”),
whether such disparagement, portrayal, communication or action is made publicly
or privately, including without limitation, in any and all interviews, oral
statements including any statements made to Company employees, written
materials, electronically-displayed materials, and materials or information
displayed on Internet-related sites. Notwithstanding anything in this Section
13(b) to the contrary, neither Executive Parties nor the Company Parties will
be
prevented from making statements required by law, or that are otherwise
appropriate to make in any governmental investigation or a legal proceeding
or
to which such person is a party and which such person believes are truthful
and
are supportable by evidence, including complying with any court order, subpoena,
or government investigation, or from complying with the requirements of any
applicable law or common law duty.
10
14. Representations.
(a) The
Executive hereby represents and warrants to the Company that as of the Effective
Date: (x) the execution, delivery and performance of this Agreement by the
Executive do not and shall not conflict with, breach, violate or cause a default
under any contract, agreement, instrument, order, judgment or decree to which
the Executive is a party or by which he is bound, and (y) upon the execution
and
delivery of this Agreement by the Company, this Agreement shall be the valid
and
binding obligation of the Executive enforceable in accordance with its terms.
The Executive hereby acknowledges and represents that he has consulted with
legal counsel regarding his rights and obligations under this Agreement and
that
he fully understands the terms and conditions contained herein.
(b) The
Company hereby represents and warrants to the Executive that (x) the execution,
delivery and performance of this Agreement by the Company do not and shall
not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Company is a party or by
which it is bound; and (y) upon the execution and delivery of this Agreement
by
the Executive , this Agreement shall be the valid and binding obligation of
the
Company, enforceable in accordance with its terms.
15. Insurance
Coverage and Indemnification.
(a) The
Company shall continue to provide Executive with directors’ and officers’
(D&O) liability insurance coverage (through tail coverage or otherwise) as
required by the Employment Agreement and the Company shall, at all times, carry
no less than $5 million in such D&O insurance. The Company’s obligation to
provide Executive coverage under the D&O policy referred to in the
Employment Agreement and this Section 15 (through tail coverage or otherwise)
and the Company’s obligation to indemnify the Executive as provided in this
Agreement and the Employment Agreement shall survive expiration of this
Agreement until both: (a) the expiration of any statute of limitations
applicable to a claim brought against Executive because he is or was an officer
and/or director of the Company; and (b) if applicable, the Company’s insolvency
as necessary to adequately protect Executive.
(b) The
Company will indemnify (and advance the reasonable costs of defense of) and
hold
harmless the Executive (and his legal representatives) to the fullest extent
permitted by the laws of the state in which the Company is incorporated, as
in
effect at the time of the subject act or omission, or by the Certificate of
Incorporation and Bylaws of the Company, as in effect at such time or on the
date of this Agreement, whichever affords greater protection to the Executive,
and the Executive shall be entitled to the protection of any insurance policies
the Company may elect to maintain generally for the benefit of its executive
officers and directors, against all judgments, damages, liabilities, costs,
charges and expenses whatsoever incurred or sustained by him or his legal
representative in connection with any action, suit or proceeding to which he
(or
his legal representatives or other successors) may be made a party by reason
of
his performing services under this Agreement or having been an officer or
director of the Company or any of its subsidiaries.
11
16. Agreement.
This
Agreement has been negotiated at arms-length and in good faith, is entered
into
by the parties’ free acts and deeds and shall not be construed against any party
as its draftsman.
17. Remedies.
In the
event of the Executive’s noncompliance or violation, as the case may be, of
Sections 12 and 13, the Company may alternatively apply to a court of competent
jurisdiction for a temporary restraining order, injunctive relief, and/or such
other legal and equitable remedies as may be appropriate because the Company
would have no adequate remedy at law for such violation or noncompliance. Should
such court hold any provisions thereof to be invalid, Executive agrees that
it
shall be construed and/or reformed by such court as to be judged reasonable
and
enforceable.
18. Successors;
Binding Agreement.
This
Agreement shall inure to the benefit of and be enforceable by the Executive
and
by his personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees and by the Company and its respective
successors and assigns.
19. Notices.
All
notices and other communications required or permitted under this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered, when delivered by courier or overnight express service or five days
after having been sent by certified or registered mail, postage prepaid,
addressed (x) if to the Executive, to the Executive's address set forth in
the
records of the Company, or if to the Company, then to Xx. Xxxxxx Xxxxxx, Chief
Financial Officer, 000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000 or
(y)
to such other address as any party may have furnished to the other parties
in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt thereof.
20. Governing
Law.
The
interpretation, construction and performance of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State
of Delaware without regard to any conflict of laws principles. The parties
consent to the jurisdiction of the state courts of Delaware for the resolution
of any dispute, claim, or controversy arising or relating to this
Agreement.
21. Waiver.
Executive hereby acknowledges and agrees that, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
Executive hereby expressly and irrevocably waives and relinquishes the right
to
the thirty (30) days’ written notice contemplated under Section 5.6 of the
Employment Agreement.
12
22. Severability.
In case
any one or more of the provisions or part of a provision contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect in any jurisdiction, such invalidity, illegality or
unenforceability shall be deemed not to affect any other jurisdiction or any
other provision or part of a provision of this Agreement, nor shall such
invalidity, illegality or unenforceability affect the validity, legality or
enforceability of this Agreement or any provision or provisions hereof in any
other jurisdiction; and this Agreement shall be reformed and construed in such
jurisdiction as if such provision or part of a provision held to be invalid
or
illegal or unenforceable had never been contained herein and such provision
or
part reformed so that it would be valid, legal and enforceable in such
jurisdiction to the maximum extent possible. In furtherance and not in
limitation of the foregoing, the Company and the Executive each intend that
the
covenants contained in Sections 12 and 13 shall be deemed to be a series of
separate covenants, one for each and every state of the United States and any
foreign country set forth therein. If, in any judicial proceeding, a court
shall
refuse to enforce any of such separate covenants, then such unenforceable
covenants shall be deemed eliminated from the provisions hereof for the purpose
of such proceedings to the extent necessary to permit the remaining separate
covenants to be enforced in such proceedings. If, in any judicial proceeding,
a
court shall refuse to enforce any one or more of such separate covenants because
the total time, scope or area thereof is deemed to be excessive or unreasonable,
then it is the intent of the parties hereto that such covenants, which would
otherwise be unenforceable due to such excessive or unreasonable period of
time,
scope or area, be enforced for such lesser period of time, scope or area as
shall be deemed reasonable and not excessive by such court.
23. IRC
Section 409A Compliance.
The
parties hereto agree and acknowledge that they have and will endeavor to
implement the terms and conditions of this Agreement in reasonable, good faith
compliance with the provisions of Section 409A of the Internal Revenue Code
of
1986, as amended (the “Code”) and provisions of any applicable guidance
published thereunder, including Notice 2005-1, the proposed regulations and
the
final regulations issued under Section 409A of the Code. All payments and
benefits provided for under this Agreement shall be made and provided in a
manner that is intended to comply with Section 409A of the Code, to the extent
applicable. The Executive understands and expressly agrees that he has relied
on
his own counsel, and has not relied on any tax or legal advice provided by
the
Company in entering into this Agreement.
24. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original and all of which together shall constitute one and
the
same instrument.
25. Miscellaneous.
No
provision of this Agreement may be modified or waived unless such modification
or waiver is agreed to in writing and executed by the Executive and by a duly
authorized officer of the Company. No waiver by any party hereto at any time
of
any breach by another party hereto of, or failure to comply with, any condition
or provision of this Agreement to be performed or complied with by such other
party shall be deemed a waiver of any similar or dissimilar conditions or
provisions at the same or at any prior or subsequent time. Failure by the
Executive or the Company to insist upon strict compliance with any provision
of
this Agreement or to assert any right which the Executive or the Company may
have hereunder shall not be deemed to be a waiver of such provision or right
or
any other provision of or right under this Agreement.
[remainder
of the page intentionally left blank]
13
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the day and year first above
written.
| EXECUTIVE | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxx | |
| Name: | Xxxxxxx Xxxxx | |
| APPROVED ON BEHALF OF COMPANY | ||
| By: | /s/ Xxxxx Xxxxxx | |
| Name: | Xxxxx Xxxxxx | |
| Title: | Chair of Compensation Committee
of
the Board of Directors
|
|
| CORPORATE OFFICER | ||
| By: | /s/ Xxxxxx Xxxxxx | |
| Name: | Xxxxxx Xxxxxx | |
| Title: | Chief Financial Officer | |
14
Exhibit
A
Executive’s
Stock Options as of June 5, 2008
|
ISSUANCE
DATE
|
GRANT
TYPE
|
AMOUNT OF
SHARES OF COMMON STOCK OF COMPANY
|
EXERCISE
PRICE
|
VESTING
|
EXPIRATION
DATE
|
|
04/20/04
|
NQO
|
990,000
|
$1.50
($2.24
as amended on 07/11/07 for the option to purchase 250,000 shares
which
vested on 4/20/05 and the option to purchase 250,000 shares which
vested
on 4/20/06)
|
990,000
fully vested
(500,000
vested immediately upon grant; 250,000 - on 04/20/05 and 250,000
- on
04/20/06; does not include 10,000 options which have been exercised
by the
Executive as of the date hereof)
|
04/20/2014
|
|
06/06/05
|
NQO
|
100,000
|
$1.50
($2.24
as amended on 07/10/07)
|
100,000
fully vested
(immediately
upon grant )
|
06/06/2015
|
|
08/17/06
|
NQO
|
100,000
|
$1.50
($2.24
as amended on 07/10/07)
|
100,000
fully vested
(immediately
upon grant)
|
08/17/2016
|
|
01/25/08
|
NQO
|
555
|
$1.50
|
555
fully vested
(immediately
upon grant)
|
01/25/2018
|
|
NQO
|
13,095
|
$1.50
|
13,095
fully vested
(immediately
upon grant)
|
01/25/2018
|
|
|
NQO
|
10,735
|
$1.50
|
10,735
fully vested
(immediately
upon grant)
|
01/25/2018
|
|
|
NQO
|
34,925
|
$1.50
|
34,925
fully vested
(immediately
upon grant)
|
01/25/2018
|
|
|
ISO
|
30,000
|
$1.50
|
30,000
fully vested
(immediately
upon grant)
|
01/25/2018
|
15
