OSIRIS THERAPEUTICS, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as June 1, 1997, is
made by and between Osiris Therapeutics, Inc., a Delaware corporation
("Osiris" or the "Company"), and Xxxxx X. Xxxx, Ph.D. (the "Employee").
RECITALS
A. The Company desires to employ Employee as its Vice President-International
Technology Development.
B. Employee is willing to become employed by the Company on the terms and
conditions set forth in this Agreement.
AGREEMENTS
NOW, THEREFORE, the Company and the Employee agree as follows:
1. Employment.
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The Company hereby employs Employee, and Employee hereby accepts employment
with the Company, for the term set forth in Section 2 below, in the position
and with the duties and responsibilities set forth in Section 3 below, and
upon the other terms and conditions hereinafter stated.
2. Term.
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The initial term of employment shall commence on June 1, 1997 (the
"Commencement Date") and shall end on the third anniversary of the
Commencement Date unless sooner terminated pursuant to the terms of this
Agreement. Commencing on the third anniversary of the Commencement Date,
unless the term of employment has otherwise been terminated pursuant to
Section 7, the term of employment shall be automatically renewed for up to
two successive one year terms unless the Company makes the election
described in Section 7(a), and each such renewal term shall be for one year
unless sooner terminated pursuant to the terms of this Agreement. The period
described above shall be the "term of employment."
3. Position, Duties, Responsibilities and Authority; Location.
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(a) During the term of employment, Employee shall serve as Vice President-
International Technology Development of the Company. Except as may otherwise
be determined by the Chief Executive Officer or Board of Directors, Employee
shall report to the President and CEO, and shall have the duties and
responsibilities set forth on Exhibit A to this
(b) Agreement and such other duties and responsibilities appropriate for
such position as the President may from time to time reasonably determine.
(b) Throughout the term of employment, Employee shall devote full time and
attention during business hours to the business of the Company and his
duties and responsibilities as an officer of the Company.
(c) During the term of employment, Employee shall provide the services and
fulfill his duties and responsibilities to the Company under this
Agreement, and shall work out of the Company offices and laboratories
located in Baltimore, Maryland.
4. Base Compensation.
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Commencing on the Commencement Date, and thereafter during the term of
employment, Employee shall receive base compensation at an annual rate of not
less than $140,000. Such base compensation shall be paid semi-monthly, but
not less frequently than monthly, less all applicable taxes and withholding
required to be deducted therefrom. On each anniversary of the Commencement
Date, Employee's base compensation may be increased by the Company consistent
with merit increase policies and Employee's performance, as determined by the
CEO and the Compensation Committee of the Board.
5. Incentive Compensation.
----------------------
Employee and the President of the Company shall agree on a merit bonus plan
for Employee (the "Plan") setting forth such goals and objectives for the
Employee as Employee and the President shall determine. The Plan shall
provide for Employee to receive a cash and/or stock option bonus, as
determined solely by the Company's Board of Directors, based on the
achievement of Plan goals and objectives, during each fiscal year of the
Company included in the term of employment. The bonus for any fiscal year, if
any, shall be paid to Employee within sixty (60) days following the end of the
first quarter after such fiscal year, less all applicable taxes and
withholding required to be deducted therefrom.
6. Benefits, Perquisites and Expenses.
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During the term of employment, Employee and his dependents, and his
beneficiaries to the extent provided in the Company's applicable benefit plan
or program, shall be entitled to the following benefits and perquisites:
(a) Participation in the employee benefit plans of the Company
available to its employees generally, as they may be modified from time to
time, including, without limitation, plans providing medical insurance, life
insurance, disability insurance, and accidental death or dismemberment
insurance. An accurate and complete listing of all such plans in effect as
of the date hereof is attached hereto as Schedule 1.
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(b) During the term of employment commencing three (3) months following the
Commencement Date, three (3) weeks of paid vacation in each calendar year
during the term of employment accrued from the commencement date, plus such
holidays, sick leave and other time off as are established by the policies
of the Company. Unused days of vacation may be carried over to March 31 of
the subsequent year and shall thereafter lapse for all time.
(c) Reimbursement for all reasonable and documented expenses incurred by
Employee in connection with the performance of his duties hereunder, in
accordance with the Company policy with respect to such reimbursement.
(d) Participation in the employee 401(k) program, incentive stock option
program and other such savings or incentive programs as may be offered to
employees of a comparable position during the term of employment.
(e) Employee will be reimbursed for expenses associated with the relocation
of household goods from Shaker Heights, Ohio to the Baltimore area and up
to $3,000 for temporary housing in the Baltimore area prior to the
permanent relocation. In the event that Employee relocates to Europe at
the request of the Company, then the Company will reimburse the cost of
such relocation.
7. Termination of Employment.
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(a) The Company may elect not to renew the term of employment for any
reason, such election to be effective as of either the third
anniversary of the Commencement Date or the end of a renewal term
(as described in Section 2 hereof), upon giving Employee written
notice at least six (6) months in advance of such third anniversary
or end of renewal term.
(b) Employee may terminate his employment at any time upon giving the
Company written notice at least six (6) weeks in advance of the proposed
date of termination.
(c) Employee's employment shall terminate automatically upon the death
of Employee.
(d) At any time after Employee suffers a "Disability" (as defined
below), the Company may terminate Employee's employment upon giving
Employee written notice from the Board of Directors of the Company,
accompanied by a certified copy of a resolution to that effect duly adopted
by the Board of Directors, at least sixty (60) days in advance of the date
on which such termination is to become effective. For the purposes of this
Agreement "Disability" shall have the same meaning as any similar term
under any long term disability insurance policy or long term disability plan
maintained by the Company from time to time. In the event the Company shall
not be maintaining any such policy or plan, Employee shall be considered to
have a Disability if he is receiving disability income payments under the
Social Security system, or if any life insurance carrier has agreed to waive
premiums due under any life insurance policy maintained by the
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Company on Employee's life under a disability waiver provision set forth in
such policy. In addition, Employee shall be considered to have a Disability
if the Company receives, from a physician reasonably acceptable to it,
written certification that (i) Employee is unable to provide services to
the Company of a quality and nature consistent with past practice because of
a mental or physical impairment, and (ii) there is no reasonable prospect
that Employee will be able to render services of such quality and nature
within the longer of (x) six months, or (y) the period of disability
required in order for Employee to be eligible to receive disability income
payments under any long term disability insurance policy or long term
disability plan maintained by the Company at such time, from the date of
such certificate.
(e) The Company may terminate Employee's employment without cause at any
time and for any reason by giving Employee written notice at least thirty
(30) days in advance of the date on which the termination is to become
effective.
(f) The Company may terminate Employee's employment at any time for
cause by delivering to Employee a certified copy of a resolution of the
Board of Directors of the Company finding that Employee committed an act
or omission constituting cause hereunder and specifying the particulars
thereof in detail, adopted at a meeting called and held for that purpose
and of which Employee was provided not less than three (3) days' advance
notice, including notice of the agenda of such meeting. As used herein,
the term "cause" shall mean:
(i) conviction of a felony involving the Company;
(ii) acting in a manner which is materially detrimental or materially
damaging to the Company's reputation or business operations other
than actions which involve Employee's bad judgment or a decision
which was taken in good faith, provided that Employee shall have
failed to remedy such action within ten (10) days after receiving
written notice of the Company's position with respect to such action;
or
(iii) committing any material breach of this Agreement, including
abuse of a controlled drug substance or alcohol or failure of a
diagnostic test for such controlled substance as required by the
Company, provided that, if such breach is capable of being remedied,
Employee shall have failed to remedy such breach within ten (10) days
after his receipt or written notice requesting that he remedy such
breach.
8. Certain Payments and Obligations.
--------------------------------
(a) Upon any termination of employment under paragraph (b) or (f) of
Section 7:
(i) The Company shall pay Employee in a lump sum within ten (10)
days following such termination an amount equal to the base
compensation and any incentive or bonus compensation Employee
was entitled to receive up to the time of termination, plus the
amount of any expenses that are reimbursable under paragraph (c)
of Section 6;
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provided, however, that Employee shall not be entitled to any
severance payment under the Company's then existing severance
pay policy or plan (if any); and
(ii) Employee shall have no further obligation to the Company
under this Agreement except that he shall continue to be bound by
the provisions of Sections 9, 10, and 11 hereof to the extent
applicable to the period following the term of employment.
(b) Upon any termination of employment under paragraph (c) of Section 7,
the Company shall pay Employee's estate the same amounts as are
provided in clauses (i) and (ii) of paragraph (c) of this Section 8;
provided, however, that in the event that at the time of Employee's
death the Company is maintaining life insurance on Employee naming
Employee and/or his heirs as beneficiaries, the amount of the
insurance paid or payable to Employee's estate and/or heirs shall
reduce, on a dollar for dollar basis, the payment to Employee's estate
under this paragraph (b).
(c) Upon any termination of employment under paragraph (e) of Section 7
with or without the required noticed:
(i) The Company shall pay Employee in a lump sum within ten (10)
days following such termination an amount equal to the base
compensation and any incentive or bonus compensation Employee
was entitled to receive up to the time of termination, plus the
amount of any expenses that are reimbursable under paragraph (c)
of Section 6, with the amount of any incentive or bonus
compensation, if any as determined in the sole discretion of the
Company's Board of Directors, to be a pro rata portion of the
incentive or bonus compensation Employee would have received for
the year in which he was terminated based on the period of
Employee's employment during such year, and be paid pro rata over
the period during which Employee is entitled to receive payments
under clause (i) or clause (ii), as the case may be, of this
paragraph (c); provided, however, that Employee shall not be
entitled to any severance payment under the Company's then
existing severance pay policy or plan;
(ii) If Employee is terminated under paragraph (e) of Section 7 during
the term of employment, the Company shall (A) continue to pay
Employee the base compensation he would have received if the term
of employment had continued for a period of six (6) months after
the date of termination, based on the rate of Employee's total
annual base compensation for the year prior to the year in which
such termination occurs (or, if such termination occurs during
the first year of the term of employment, the rate of compensation
in effect during such year), which amount shall be paid in
accordance with the Company's normal payroll practices and
subject to withholdings, and (b) continue to provide Employee and,
if applicable, his dependents with the benefits provided under
the benefit plans (pursuant to the terms thereof) described in
Section 6(a) hereof, to the same extent that such benefits were
provided to Employee on the date of termination of his employment,
for a period of six (6) months after the date of termination; and
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(iii) Employee shall have no further obligation to the Company
under this Agreement except that he shall continue to be bound
by the provisions of Sections 9, 10, and 11 hereof to the extent
applicable to the period following the term of employment.
(d) Upon any termination of employment under paragraph (d) of Section 7:
(i) The Company shall pay Employee the same amounts, and shall
provide Employee with the same benefits, as are provided in
clauses (i) and (ii) of paragraph (c) of this Section 8; and
(ii) Employee shall have no further obligation to the Company under
this Agreement except that he shall continue to be bound by the
provisions of Section 9, 10 and 11 hereof to the extent applicable
to the period following the term of employment.
(e) Upon a change of control event in which the Company is merged into an
unrelated third party or sells all or substantially all of its assets
to an unrelated third party, the result of which is a substantial
diminution of Employee's responsibilities or Employee's position is
eliminated, then Employee shall receive the same benefits as other
Company officers of similar rank and such other provisions as
described in paragraph 8(c) above.
(f) Severance provisions described in paragraphs 8(c) and 8(e) above
shall take effect following Employee's completion of ninety (90) days
employment.
9. Confidentiality.
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Employee acknowledges that by reason of his duties as an employee of the
Company he has or will have access to and become informed of confidential and
secret information which is a competitive asset of the Company (collectively
"Confidential Information") including, without limitation, (a) information
concerning concepts for products and services and products and services data,
(b) corporate planning data, (c) the Company's financial results and business
condition, and (d) any other information which constitutes a "trade secret"
under the Uniform Trade Secrets Act. Employee agrees to keep in strict
confidence and not, either directly or indirectly, to make known, divulge,
reveal, furnish, make available or use any Confidential information, except
for use in the Employee's regular authorized duties on behalf of the
Company. Employee acknowledges that all documents and other property
including or reflecting Confidential Information furnished to Employee by the
Company or otherwise acquired or developed by the Company shall at all times
be the property of the Company. Employee agrees that upon termination of
Employee's employment with the Company, for any reason, Employee shall
return to the Company any such documents or other property (including copies,
summaries or analyses of the foregoing) containing Confidential information
which are in his possession, custody or control. Employee further agrees that
Employee's obligations of confidentiality hereunder shall survive any
termination of Employee's employment by the Company. For the purposes of
this Section 9, Confidential Information shall not include information which
has become, through no fault of Employee, generally known to the public,
and Employee, if required
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by law to make disclosure of Confidential Information to a court of
competent jurisdiction, may make such disclosure after providing the Company
with reasonable notice and an opportunity to contest such requirement. The
obligations of Employee under this Section 9 are in addition to, and not in
limitation of or pre-emption of, all other obligations of confidentiality
which he may have to the Company under general legal and equitable principles.
10. Noncompetition.
--------------
Employee acknowledges that his access to and knowledge of the
Confidential Information would be valuable to a competitor of the Company.
Employee further acknowledges that it would be inherent in the performance of
his duties as a director, officer, employee, agent, consultant, shareholder or
partner of any corporation, partnership or other entity which competes with
the Company, or which intends to or may compete with the Company, to
disclose or use such knowledge to or for the benefit of such corporation,
partnership or other entity. To protect these vital interests of the Company,
Employee agrees that from the date of this Agreement through the second
anniversary of the date on which his employment with the Company terminates
for any reason (the "Noncompetition Period"), he shall not, directly or
indirectly, whether as a director, officer, employee, agent or consultant or
otherwise; (a) invest in or become employed by or affiliated with, in any
capacity, any corporation, partnership or other entity which is engaged in a
business which is competitive with the business of the Company on the date of
such termination (except that Employee may purchase up to two percent of the
outstanding capital stock of a company that has common stock quoted on a
national stock exchange or the over-the-counter market); (b) solicit sales
of, or sell or deliver, any product or service of the kind and character sold
or distributed by Company; (c) solicit, attempt to solicit or work to divert
from the Company the business or patronage of any person, corporation,
partnership or other entity with whom the Company has had business relations;
or (d) engage, suggest or assist in or influence the engagement of hiring by
any competitor of the Company of any employee of the Company, or otherwise
cause or encourage any person, corporation, partnership or other entity having
a business or employment relationship with the Company to sever such
relationship with or commit any act harmful to the Company. Employee's
obligations and covenants under this Section 10 shall be limited to North
America, Europe, Japan, China, Taiwan, Singapore and Australia. For the
purposes of this Section 10, the business of the Company shall mean the
research, development and commercializtion of products based on human or
animal mesenchymal stem cells (MSCs) and other lineage cells, including
without limitation any research, development and commercialization of
cellular transplants and cell-matrix products or other products utilizing
mesenchymal stem cells, their lineage cells, or other products resulting from
MSCs.
11. Inventions.
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Employee hereby assigns and agrees to assign to the Company, its
successors, assigns or nominees, all of his rights to any discoveries,
inventions and improvements, whether patentable or not, made, conceived or
suggested, either solely or jointly with others, by Employee while in the
Company's employ, whether in the course of his employment with the use of the
Company's time, material or facilities or that is in any way within or related
to the existing or contemplated
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scope of the Company's business. Any discovery, invention or improvement
relating to any subject matter with which the Company was concerned during
Employee's employment and made, conceived or suggested by Employee, either
solely or jointly with others, within one year following termination of
Employee's employment under this Agreement shall be irrebuttably presumed to
have been so made, conceived or suggested in the course of such employment
with the use of the Company's time, materials or facilities. Upon request by
the Company with respect to any such discoveries, inventions or improvements,
Employee will execute and deliver to the Company, at any time during or after
his employment, all appropriate documents for use in applying for, obtaining
and maintaining such domestic and foreign patents as the Company may desire,
and all proper assignments therefore, when so requested by and at the expense
of the Company, but without further or additional consideration.
12. Grant of Options
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(a) In order to provide Employee with additional incentive to further
the interests of the Company, the Company shall grant to Employee,
simultaneously with the execution of this Agreement and pursuant to
the terms of the Company's 1994 Stock Option Plan (the "1994 Plan"),
an option (the "Option") to purchase from the Company 25,000 shares
of the Company's Common Stock, par value $.001 per share (the
"Common Stock"), for an exercise price of $4.00 per share. The Option
for 25,000 shares of such Common Stock shall vest based on the
achievement of certain performance milestones ("Equity Performance
Options"). Such Option shall be evidenced by a Nonqualified Stock
Option Agreement substantially in the form of Exhibit B hereto.
(b) Restrictions on Transfer of Shares. The shares of Common Stock
----------------------------------
issuable upon exercise of the Option (the "Shares") may not be
transferred, sold, pledged, exchanged, assigned or otherwise
encumbered or disposed of by Employee, except Company, unless and
until such transfer or other disposition is registered under the
Securities Act of 1993 and any applicable state securities laws or
the Company receives evidence satisfactory to it, in its sole
discretion, that such transfer or other disposition is not required
to be registered under the Securities Act of 1933 and such state
securities law. Any purported transfer, encumbrance or other
disposition of the Shares that is in violation of this Section 12
shall be null and void, and the other party to any such purported
transfer, encumbrance or other disposition shall not obtain any
rights to or interest in such Shares. The certificate(s) evidencing
the Shares shall hear a legend in a form satisfactory to the Company
reflecting the restrictions described below.
(c) Vesting of Option Shares. The Equity Performance Option Shares
------------------------
shall vest upon meeting certain collaboration, international
development, intellectual property and new technology milestones,
such milestones to be determined by the President, in consultation
if required with the Executive Committee or Compensation Committee
of the Board, within ninety (90) days following the Commencement
Date. Notwithstanding the foregoing:
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(i) in the event of a termination of Employee's employment with the Company
pursuant to Section 7(e) of this Agreement, all of the Shares that
would have been vested had Employee's employment continued through the
period with respect to which he receives payments under Section 8(c),
as the case may be, shall become forfeited as of the date of
termination; and
(ii) in the event the Company elects not to renew the term of employment at
the end of the initial three (3) year term, the final unvested Shares
subject to performance vesting shall be forfeited as of the date of
such election.
(d) Other. No provision of this Section 12 shall limit in any way
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whatsoever any right that the Company may otherwise have to terminate
the employment of Employee at any time. Any economic or other
benefit to Employee under this Section 12 shall not be taken into
account in determining any benefits to which Employee may be entitled
under any profit-sharing, retirement or other benefit or compensation
plan maintained by the Company and shall not affect the amount of any
life insurance coverage available to any beneficiary under any life
insurance plan covering employees and consultants of the Company.
13. Miscellaneous.
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(a) All notices required to be given under this Agreement shall be in
writing and delivered personally or sent by registered mail or
certified mail, postage prepaid, return receipt requested, addressed
as follows:
If to the Company:
------------------
Osiris Therapeutics, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: President
(000) 000-0000
with a copy to:
---------------
Xxxxx & Xxxxxxx
Columbia Center
Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: Xxxx X. Xxx, Esquire
(000) 000-0000
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If to Employee:
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Xxxxx X. Xxxx, Ph.D.
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Notice shall be deemed delivered at the time received in the case of personal
delivery, facsimile or electronic transmission to the address indicated, or
five (5) business days after it is mailed in the case of mailing.
(b) This Agreement shall be subject to and governed by the internal
law of the State of Maryland (without regard to conflicts of
law principles).
(c) The headings or titles to sections in this Agreement are intended
solely for convenience and no provision of this Agreement is to be
construed by reference to the heading or title of any section.
(d) No provision of this Agreement may be amended, modified or waived
unless such amendment, modification or waiver is agreed to in a
writing signed by Employee and by a duly authorized officer of the
Company (other than Employee). Except as otherwise specifically
provided in this Agreement, no waiver by any party hereto of any
breach by any other party hereto of any condition or provision of
this Agreement to be performed by such other party shall be deemed
a waiver of a subsequent breath of such condition or provision or a
waiver of a similar or dissimilar provision or condition at the same
or at any prior to subsequent time; nor shall the receipt or
acceptance of compensation or other benefits following any termination
of Employee's employment be deemed a waiver of any condition or
provision hereof.
(e) Employee shall not assign, pledge or encumber any interest in this
Agreement or any part thereof without the express written consent of
the Company, this Agreement being personal to Employee. This
Agreement shall, however, inure to the benefit of Employee's estate,
dependents, beneficiaries and legal representatives. This Agreement
shall not be assignable by the Company without the written consent of
Employee, but if the Company shall merge or consolidate with or into,
or sell or otherwise transfer all or substantially all of its assets
to, another corporation or other form of business organization, then
this Agreement shall inure to the benefit of and be binding upon the
successor of the Company resulting from such merger, consolidation,
sale or transfer.
(f) Each provision of this Agreement constitutes a separate and distinct
undertaking, covenant and/or provision hereof. In the event that any
provision of this Agreement shall finally be determined to be
unlawful, such provision of this Agreement shall remain in full force
and effect, and in substitution a provision of similar import
reflecting the original intent of the parties hereto to the extent
permissible under law.
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(g) This Agreement and the agreements referred to herein comprise the
entire understanding between the Company and Employee as to the
subject matter hereof and supersedes all prior agreements relating
thereto, except as to continuing obligations relating to
confidentiality and inventions from the 1993 Employment Agreement
between the Company and Employee.
(h) In the event of a breach by Employee of any of the provisions of
Sections 9, 10 or 11 of this Agreement, the Company shall have the
right to institute and prosecute proceedings, in equity, in any court
or competent jurisdiction, to obtain an injunction during or after
the term of this Agreement to enforce the provisions of such Sections
and to pursue any other remedy to which the Company may be entitled.
Employee acknowledges that the Company's remedy at law for any of
Employee's obligations under such Sections will be inadequate, and
Employee agrees and consents that temporary and permanent injunctive
relief may be granted in any proceeding which may be brought to
enforce any provision thereof, without the necessity of proof of
actual damage.
(i) Any controversy or claim arising under this Agreement, except for
any controversy or claim which involves a claim by the Company for
equitable or injunctive relief with respect to Section 9, 10 and/or
11 of this Agreement, shall be settled by arbitration in Baltimore,
Maryland in accordance with the Rules of the American Arbitration
Association then in effect. The controversy or claim shall be
submitted to three arbitrators, one of whom shall be chosen by the
Company, one of whom shall be chosen by Employee, and the third of
whom shall be chosen by the two arbitrators so selected. The party
desiring arbitration shall given written notice to the other party of
its desire to arbitrate the particular matter in question naming the
arbitrator selected by it. If the other party shall fail, within
a period of fifteen (15) days after such notice shall have been given,
to reply in writing naming the arbitrator selected by it, then the
other party may apply to the American Arbitration Association for the
appointment of an arbitrator to serve as the arbitrator chosen by the
other party. The decision of any two of the arbitrators shall be in
final and binding upon the parties hereto and shall be delivered in
writing, signed in triplicate, by the concurring arbitrators to each
of the parties hereto. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
In addition, the prevailing party in such an arbitration proceeding
shall be entitled to recover his or its reasonable attorney's fees
and all reasonable out-of-pocket costs and disbursements, as well as
any and all charges which may be made for the cost of the arbitration
and the fees of the arbitrators. In the event a claim or controversy
arising under this Agreement involves a claim by the Company for
equitable or injunctive relief with respect to Section 9, 10 and/or 11
of this Agreement, the parties may, but shall not be obligated to,
submit all or a portion of such controversy or claim to the foregoing
arbitration proceedings.
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IN WITNESS WHEREOF, Employee and the Company, by a duly authorized
officer of the Company pursuant to the authority of its Board of Directors,
have executed this Employment Agreement at Baltimore, Maryland, as of the day
and year first written above.
OSIRIS THERAPEUTICS, INC.
By:
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Xxxxx X. Xxxxx, President
----------------------
Xxxxx X. Xxxx, Ph.D.
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