EXHIBIT 10.34
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into the 13th day of September 1999 between
OSTEOTECH, INC., a Delaware corporation (the "Corporation") and Xxxxxx X. Xxxxxx
(the "Employee").
WITNESSETH:
WHEREAS, the Corporation desires to employ the Employee as its President
and Chief Operating Officer; and
WHEREAS, the Employee desires to accept such employment upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto agree as follows:
1. Employment. The Corporation hereby employs the Employee, and the
Employee hereby accepts employment by the Corporation as President and Chief
Operating Officer of the Corporation upon the terms and conditions set forth
herein.
2. Term. Unless sooner terminated in accordance with this Agreement, the
term of this Agreement and the term of employment of the Employee shall be for
two (2) years commencing on the Effective Date hereof and shall be automatically
renewable for successive additional two (2) year terms unless at least three (3)
months prior to the expiration of the initial two-year period or any subsequent
two-year term the Corporation terminates this Agreement by written notice to the
Employee, whereupon this Agreement shall be terminated at the end of the
applicable two-year period (with such initial two year term and any two year
renewal thereof, unless sooner terminated in accordance with this Agreement
being the "Term of Employment").
E-1
3. Duties. The Employee shall perform such duties and services and shall be
allocated such resources, consistent with his position, as may be assigned to
him from time to time by the Chief Executive Officer and the Board of Directors
of the Corporation. In furtherance of the foregoing, the Employee hereby agrees
to perform well and faithfully such duties and responsibilities.
4. Time to be Devoted to Employment.
4(a). The Employee shall devote his full time and energy to the business of
the Corporation except for vacations, holidays and personal days and absences
due to temporary illness, during the Term of Employment and except as approved
by the Board of Directors.
4(b). During the Term of Employment, the Employee shall not be engaged in
any other business activity. Employee hereby represents that he is not a party
to any agreement which would be an impediment to entering into this Agreement
and that he is permitted to enter into this Agreement and perform the
obligations hereunder.
5. Compensation; Reimbursement.
5.1(a) During the Term of Employment, the Corporation (or at the
Corporation's option, any subsidiary or affiliate thereof) shall pay to the
Employee an annual base salary ("Base Salary") of Two Hundred Seventy-Five
Thousand Dollars ($275,000) payable in bi-monthly installments. The Base Salary
shall be reviewed annually and be subject to increase at the option and in the
sole discretion of the Board of Directors of the Corporation.
5.1(b) During the Term of Employment, on an annual basis, Employee may be
entitled to a bonus and stock option grants as determined by the Board of
Directors of the Corporation based on Employee's performance. In calendar year
1999, the employee shall receive a Twenty Thousand Dollar ($20,000) signing
bonus and a performance bonus of Fifty Thousand Dollars ($50,000)
E-2
100% payable in December 1999. Thereafter, there will be no further guaranteed
or minimum bonus and the award, if any, will be within the sole discretion of
the Board of Directors.
5.1(c). During the Term of Employment, the Employee shall be entitled to
family medical and dental insurance coverage, short and long term disability
coverage, eligibility for participation in the Corporation's 401K plan and to
such other fringe benefits such as life insurance as are made available from
time to time to the executives of the Corporation, including four (4) weeks
vacation per calendar year.
5.1(d). The Corporation shall reimburse Employee, in accordance with its
practice from time to time for other employees of the Corporation, for all
reasonable and necessary travel expenses, disbursements and other reasonable and
necessary incidental expenses incurred by him for or on behalf of the
Corporation in the performance of his duties hereunder upon presentation by the
Employee to the Corporation of appropriate vouchers.
5.1(e). The Corporation shall reimburse Employee for other reasonable
expenses during the Term of Employment as follows:
(i) Reasonable travel and lodging expenses to locate suitable housing
accommodations in the State of New Jersey.
(ii) Reasonable expenses for packing, shipping, storage and unpacking
of personal household goods in connection with Employee's relocation to New
Jersey.
(iii) Twice a month weekend travel for Employee between New Jersey and
Memphis during the relocation period. Normal and customary expenses for
house hunting trips for his family to find and purchase a house in New
Jersey.
(iv) Allowance for incidental moving expenses of Five Thousand
($5,000) dollars.
E-3
5.1(f). The Corporation shall provide Employee with suitable housing,
within reasonable commuting distance of the Corporation's offices, until
permanent housing accommodations are acquired and inhabited or for up to twelve
(12) months, whichever period is shorter.
5.1(g). In the event that legal action is brought against Employee for
breach of the non-compete provisions of the Employment Agreement by and between
Medtronic Sofamor Xxxxx, Inc. and Employee, the Corporation (Osteotech) agrees
to pay the reasonable legal fees and incidental expenses for defending such
legal action. In the event that any verdict or settlement is awarded against
Employee for any breach, the Corporation agrees to pay that portion for which
the Employee is liable.
5.2 Corporation agrees to grant to Employee effective October 1, 1999 a
stock option agreement to purchase two hundred thousand (200,000) shares of
common stock with the per share price based on the closing price of the stock on
October 1, 1999. One-fourth (1/4) of the option shall vest one year from the
effective date and one-fourth (1/4) shall vest thereafter on each anniversary of
the effective date of this Agreement so long as the Employee remains in the
employ of the Corporation on that date. The option shall terminate ninety (90)
days after termination of the Employee's employment with the Corporation and
shall be granted in accordance with the Corporation's Incentive Stock Option
Plan as amended from time to time.
6. Involuntary Termination. If the Employee dies during the Term of
Employment, his employment hereunder and the Term of Employment shall be deemed
to cease as of the date of his death.
7. Termination For Cause. The Corporation may terminate the employment of
the Employee hereunder and the Term of Employment at any time during the Term of
Employment for "cause" (such termination being hereinafter called a "Termination
For Cause") by giving the Employee notice
E-4
of such termination, upon the giving of which such termination shall take effect
immediately. For the purposes of this Section 7, "cause" shall mean (i) the
Employee's willful misconduct with respect to the business and affairs of the
Corporation or any subsidiary or affiliate thereof, which action materially and
adversely affects the business or affairs of the Corporation or any subsidiary
or affiliate thereof, (ii) the Employee fails in any material respect to observe
and perform his obligations and duties hereunder, (iii) the commission by the
Employee of an act involving embezzlement or fraud against the Corporation or
commission or conviction of a felony, or (iv) failure to abide in some material
respect by the Corporation's rules of conduct, terms and conditions set forth in
the Corporation's handbook, as amended from time to time.
8. Termination Without Cause. The Corporation may terminate the employment
of the Employee hereunder and the Term of Employment at any time without "cause"
upon thirty (30) days prior written notice (such termination being hereinafter
called a "Termination Without Cause"). Upon a Termination without Cause during
the Term of Employment, Employee shall be entitled to receive his Base Salary
for twelve (12) months from date of termination and his Base Salary for an
additional twelve (12) months or in the latter case until Employee obtains
comparable employment, whichever occurs sooner, plus all bonus payouts made
prior to the time of termination. In addition, upon a Termination Without Cause
at any time, the Corporation shall continue to pay the Employee's family medical
insurance premiums under the Corporation's medical insurance plan and other
benefits (including outplacement benefits as long as you are actively seeking
employment) provided in Section 5.1(c) for twenty-four (24) months following
such termination or until Employee obtains comparable employment, whichever
occurs sooner.
E-5
9. Voluntary Termination. Any termination of the employment of the Employee
hereunder otherwise then as a result of an Involuntary Termination, a
Termination For Cause or a Termination Without Cause shall be deemed to be a
"Voluntary Termination". A Voluntary Termination shall be deemed to be effective
immediately upon such termination.
10. Effect of Termination of Employment.
10(a). Upon the termination of the Employee's employment hereunder pursuant
to a Voluntary Termination, Involuntary Termination or a Termination For Cause,
neither the Employee nor his beneficiary or estate shall have any further rights
or claims against the Corporation under this Agreement except to receive:
(i) The unpaid portion of the Base Salary provided for in Section
5.1(a), computed on a pro rata basis to the date of termination;
(ii) Reimbursement for any expenses for which the Employee shall not
have theretofore been reimbursed as provided in Section 5.1(d);
(iii) Payment of all accrued and unused vacation time.
10(b). Upon the termination of the Employee's employment hereunder pursuant
to a Termination Without Cause, neither the Employee nor his beneficiary or
estate shall have any further rights or claims against the Corporation under
this Agreement except to receive a termination payment equal to that provided
for in Section 10(a) hereof, plus the amounts set forth in Section 8, if any.
11. General Provisions
11(a). This Agreement and any or all terms hereof may not be changed,
waived, discharged, or terminated orally, but only by way of an instrument in
writing signed by the parties.
E-6
11(b). This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey, without reference to the conflicts of laws
of the State of New Jersey or any other jurisdiction.
11(c). If any portion of this Agreement shall be found to be invalid or
contrary to public policy, the same may be modified or stricken by a Court of
competent jurisdiction, to the extent necessary to allow the Court to enforce
such provision in a manner which is as consistent with the original intent of
the provision as possible. The striking or modification by the Court of any
provision shall not have the effect of invalidating the Agreement as a whole.
11(d). The obligations of Sections 8, 10, 11, 12, 13 and 14 shall survive
termination of this Agreement.
12. Corporation Rights to Intellectual Property. The Employee shall
promptly disclose, grant and assign ownership to the Corporation for its sole
use and benefit any and all inventions, improvements, information, copyrights
and suggestions (whether patentable or not), which he may develop, acquire,
conceive or reduce to practice while employed by the Corporation (whether or not
during usual working hours), together with all patent applications, letters
patent, copyrights and reissues thereof that may at any time be granted for or
upon any such invention, improvement or information. In connection therewith:
(i) The Employee shall without charge, but at the expense of the
Corporation, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as may be
reasonably necessary or proper in the opinion of the Corporation to vest
title to any such inventions, improvements, technical information, patent
applications, patents, copyrights or reissues thereof in the Corporation
and
E-7
to enable it to obtain and maintain the entire right and title thereto
throughout the world; and
(ii) The Employee shall render to the Corporation at its expense
(including reimbursement to the Employee of reasonable out-of-pocket
expenses incurred by the Employee and a reasonable payment for the
Employee's time involved in case he is not then in its employ) all such
assistance as it may reasonably require in the prosecution of applications
for said patents, copyrights or reissues thereof, in the prosecution or
defense of interferences which may be declared involving any said
applications, patents or copyrights and in any litigation in which the
Corporation may be involved relating to any such patents, inventions,
improvements or technical information.
13. Protection of Information.
13(a). Employee hereby covenants with Corporation that, throughout the term
of his employment by Corporation, Employee will serve Corporation's best
interests loyally and diligently. Throughout the course of employment by
Corporation and thereafter, Employee will not disclose or provide to any person,
firm, corporation or entity (except when authorized by Corporation) any
information, materials, biologics or animals which are owned by the Corporation
or which come into the possession of the Corporation from a third party under an
obligation of confidentiality, including without limitation, information
relating to trade secrets, business methods, products, processes, procedures,
development or experimental projects, suppliers, customer lists or the needs of
customers or prospective customers, clients, etc. (collectively "Confidential
Information"), which Confidential Information, comes into his possession or
knowledge during the Term of Employment, and he will not use such Confidential
Information for his own purpose or for the
E-8
purpose of any person, firm, corporation or entity, other than the Corporation.
13(b). The provisions of Section 13(a) shall not apply to the following
Confidential Information:
(i) Confidential Information which at the time of disclosure is
already in the public domain;
(ii) Confidential Information which the Employee can demonstrate was
in his possession or known to him prior to the effective date of his
employment by the Corporation;
(iii) Confidential Information which subsequently becomes part of the
public domain through no fault of the Employee;
(iv) Confidential Information which becomes known to the Employee
through a third party who is under no obligation of confidentiality to the
Corporation; and
(v) Confidential Information which is required to be disclosed by law
or by judicial or administrative proceedings.
14. Non-Compete. Employee agrees that during the Term of Employment and for
the period of time Employee is paid salary and benefits as outlined in Section
8, he shall not directly or indirectly be engaged in or assist others in
engaging in any business or activity which is involved in selling products,
processes or services which compete with any significant product, process or
service which Corporation is developing, marketing or selling at the time of
such termination whether his involvement shall be as an owner (except for
passive ownership of up to five percent (5%) of the securities of a company),
officer, director, employee, consultant, partner or agent. For purposes of this
provision, products, processes or services which Corporation is marketing or
selling shall be deemed "significant" if sales
E-9
of such products, processes or services exceed ten percent (10%) of the
Corporation's total sales.
15. Notices. Notices and other communications hereunder shall be in writing
and shall be delivered personally or sent by air courier or first class
certified or registered mail, return receipt requested and postage prepaid,
addressed as follows unless the party specifies a new address in writing:
If to the Employee: Xxxxxx X. Xxxxxx
00000 Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxxxxx, XX 00000
If to the Corporation: Osteotech, Inc.
00 Xxxxx Xxx
Xxxxxxxxx, XX 00000
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given to the
date of delivery if personally delivered; on the business day after the date
when sent if sent by air courier; and on the third business day after the date
when sent if sent by mail, in each case addressed to such party as provided in
this Section or in accordance with the latest unrevoked direction from such
party.
16. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Assignment. This Agreement is personal in its nature and the parties
hereto shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that the
provisions hereof shall inure to the benefit of, and be binding upon each
successor of the Corporation, whether by merger, consolidation, transfer of all
or substantially all assets, or otherwise and the heirs and legal
representatives of the employee.
E-10
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
Corporation: OSTEOTECH, INC.
/s/ Xxxxxxx X. Xxxxx
-------------------------------
By: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
Employee: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
E-11
