CRYO-CELL INTERNATIONAL, INC. FOR MARK PORTNOY
Exhibit 10.2
CRYO-CELL INTERNATIONAL, INC.
2022 EMPLOYMENT AGREEMENT
FOR
XXXX XXXXXXX
This Employment Agreement (the “Agreement”) is effective as of December 1, 2022 (the “Effective Date”) by and between Cryo-Cell International, Inc. (the “Company”) and Xxxx Xxxxxxx (the “Executive”). Executive is currently employed as the Co-Chief Executive Officer of the Company, and the Company and the Executive desire to assure the continued services of Executive pursuant to the terms of this Agreement.
Therefore, in consideration of the promises and the mutual covenants and conditions set forth below, the Company and Executive agree as follows:
During the period of his employment, Executive agrees to serve as Co-Chief Executive Officer of the Company. Executive also agrees to serve, if elected, as an officer and director of any subsidiary or affiliate of the Company. Failure to re-appoint or re-elect Executive as a senior executive officer of the Company without the consent of Executive during the term of this Agreement shall constitute a breach of this Agreement.
(a) Base Salary. The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2(a). In consideration of the services to be rendered by Executive, the Company shall pay Executive as compensation an annualized salary of not less than Five Hundred Forty Thousand Dollars ($540,000) per year (“Base Salary”) with such Base Salary to be increased on each anniversary by no less than the percentage increase in the Consumer Price Index for the preceding 12 months. Such Base Salary shall be payable bi-weekly, or in accordance with the Company’s normal payroll practices. During the period of this Agreement, Executive’s Base Salary shall be reviewed at least annually by the Compensation Committee of the Board (the “Committee”). The first such review will be made no later than
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DOCPROPERTY "CUS_DocIDChunk0" PD.31042877.5
December 1 of each year during each Term of this Agreement and shall be effective from the first day of December each calendar year. The Committee may increase, but not decrease, Executive’s Base Salary (any increase in Base Salary shall become the “Base Salary” for purposes of this Agreement). In addition to the Base Salary provided in this Section 3(a), the Company shall provide Executive with all such other benefits as are provided uniformly to permanent full-time employees of the Company.
(b) Bonus. At the end of each fiscal year, the Committee shall evaluate the Executive’s and the Company’s performance for consideration of a subjective cash and/or equity bonus. Such subjective bonus, if any, shall be determined solely in the discretion of the Committee and shall be paid as soon as practicable after the end of each fiscal year. For purposes of clarity, the Committee, in exercising its reasonable discretion, can determine not to award a bonus to Executive.
In addition, as an incentive for Executive to enter into this Employment Agreement, the Committee agrees to award the executive a signing bonus of a 5-year option to acquire 25,000 shares of the Company’s common stock, exercisable only if the Company’s stock has a closing price at least once during the life of the option above $8.00.
(c) Benefits. The Executive shall be eligible to participate in all employee benefit plans, arrangements, and perquisites provided by the Company to senior executive officers, including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident plans, medical coverage or any other employee benefit plan or arrangement made available by the Company and as amended in the normal course of business. Nothing in this Agreement prohibits the Company from amending, modifying, or terminating any plan, program, or arrangement in which Executive participates, in accordance with the terms of the underlying plan documents.
(d) Reimbursements. The Company shall pay or reimburse Executive for all reasonable business expenses incurred by Executive in performing his obligations under this Agreement (including, without limitation, for reasonable commuting expenses from the Executive’s residence in Miami to the Company’s offices in Tampa, reasonable rental car and lodging expenses while working in the Company’s offices in Tampa, reasonable business travel and reasonable entertainment expenses, and fees for memberships in such clubs and organizations that Executive and the Board mutually agree are necessary and appropriate to further the business of the Company) to the extent such expenses are substantiated and are consistent with the general policies of the Company relating to the reimbursement of expenses of senior executive officers. Any such reimbursements shall be made not later than ninety (90) days after the date on which the Executive incurs the expense. In no event will the amount of expenses so reimbursed by the Company in one year effect the amount of expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year. In accordance with the preceding, the Company specifically agrees to pay for the Executive’s membership at a fitness club in the Tampa area.
(e) Perquisites. The Company shall provide to the Executive all employee and executive perquisites which other senior executive officers of the Company are generally entitled to receive, in accordance with Company policy set by the Board from time to time including paid time off of no less than six weeks per calendar year.
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(f) Certain Fees. The Company shall pay the Executive’s reasonable legal and financial consulting fees and costs incurred by the Executive in connection with the negotiation and execution of this Agreement in an amount not to exceed the total amount of $25,000.00.
In performing his duties pursuant to this Agreement, the Executive shall devote his full business time, energy, skill and best efforts to promote the Company and its business and affairs; provided that the Executive shall have the right to manage and pursue personal and family interests, and make passive investments in securities, real estate, and other assets, and also to participate in charitable and community activities and organizations, so long as such activities do not adversely affect the performance by Executive of his duties and obligations to the Company, and so long as such activities do not adversely affect the economic interests and competitive advantage of the Company.
Executive’s principal place of employment shall be at the Company’s offices in Miami; provided that Executive shall travel to the Company’s headquarters offices as necessary to fulfill his responsibilities under this Agreement.
The Company, through its Committee, shall not impose any unreasonable prohibitions on Executive exercising any options he has been awarded under the Company’s 2006, 2012, or 2022 Equity Incentive Plans through a cashless manner. Notwithstanding any provisions of this Agreement, the 2006, 2012 and 2022 Equity Incentive Plan documents shall govern Executive’s exercise of options.
If the Executive’s employment is terminated by the Company for Cause, or if the Executive voluntarily resigns employment with the Company, the Executive shall not be entitled to receive compensation or other benefits for any period after such termination, except for any base salary earned through the date of termination. “Cause” shall exist when there has been a determination by the Board that one or more of the following events occurred with respect to the Executive:
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Notwithstanding the foregoing, Cause shall not exist unless a copy of a resolution is delivered to the Executive, duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for the purpose, finding that in the opinion of the Board, the Executive committed conduct providing Cause as described above. In such action of the Board, neither the Executive nor any relatives of the Executive shall participate, nor be considered in determining what constitutes a majority. Upon a finding of Cause, the Board shall deliver to the Executive a Notice of Termination, as more fully described in Section 11 below.
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(c) In the event of Executive’s death during the term of the Agreement, within 30 days after the date of his death, the Company shall pay his estate, legal representatives or named beneficiaries (as directed by Executive in writing) a cash lump sum equal to two years of the Executive’s Base Salary at the rate in effect at the time Executive’s death. Executive’s qualified beneficiaries will be offered continuation coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). The Company will pay the applicable COBRA premiums for medical and dental coverage for Executive’s qualified beneficiaries who timely elect COBRA coverage for a period of up to twenty-four (24) months after Executive’s death. Such payments will cease if COBRA coverage terminates early pursuant to applicable law. If the Company cannot provide such continued benefits because applicable rules and regulations (including, but not limited to the Affordable Care Act) prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Company to penalties, then the Company shall pay the Executive’s qualified beneficiaries a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. Such cash payment shall be made in a lump sum within thirty (30) days after the later of Executive’s date of death or the effective date of the rules or regulations prohibiting such benefits or subjecting the Company to penalties. All shares and restricted shares of the Company and options for the Company’s shares held by Executive which have been granted but are unvested pursuant to this Agreement shall be governed by the provisions of the governing plan documents.
(c) If the Executive’s employment is terminated pursuant to this Section 9, within 90 days of the effective date of termination, as defined in Section 11(b), the Company shall pay Executive or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to two years of the Base Salary plus, if the termination is during the first year of the Initial Term the average of the three most recent Bonuses earned by the Executive, if the termination is during the second year of the Initial Term, the average of the two most recent Bonuses earned by the Executive, and if
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after the second year of the Initial Term then the amount of the most recent Bonus earned by Executive, such that the payments are intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”) under the “short term deferral rule.” Such funds shall be paid in equal annual amounts over a period of three years. The first payment shall be made within 90 days of the effective date of termination, and the second and third payments shall be made no later than March 15th of each year subsequent to the date of termination. Also, all shares and restricted shares of the Company and options for the Company’s shares held by Executive which have been granted but are unvested pursuant to this Agreement shall be governed by the provisions of the governing plan documents.
(d) If the Executive’s employment is terminated pursuant to this Section 9, Executive will be offered continuation coverage in accordance with COBRA. The Company will pay the applicable COBRA premiums for medical and dental coverage for the maximum coverage period (as defined by COBRA) for Executive and his qualified beneficiaries who timely elect COBRA coverage; provided, however, such payments will cease if COBRA coverage terminates early pursuant to applicable law. If the maximum coverage period ends and Executive has not obtained alternate employment that provides medical and dental coverage for Executive and his qualified beneficiaries, the Company will pay Executive an amount equal to the COBRA premiums for Executive’s use toward the cost of alternate medical and dental coverage. Such payments shall be made to Executive no later than the fifteenth (15th) day of each month and will end on the earlier of: (a) twenty-four (24) months from Executive’s Termination Date, or (b) the date Executive becomes eligible for alternate medical and dental coverage. In addition, the Company will pay the applicable premium for Executive’s life and disability coverage for a period of up to twenty-four (24) months after his Date of Termination, provided Executive elects to port or convert such coverage. The Company’s premium payments for life and disability coverage will cease when payments for Executive’s medical and dental coverage (whether via COBRA premium payments or direct payments to Executive) end. If the Company cannot provide one or more of the benefits set forth in this paragraph because Executive is no longer an employee, applicable rules and regulations (including, but not limited to the Affordable Care Act) prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Company to penalties, then the Company shall pay Executive in installments over twenty-four (24) months a payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. The Company’s payments under this paragraph shall terminate for each type of coverage if Executive obtains other employment which offers such coverage.
Executive agrees that if any charge, lawsuit, complaint, or claim of any kind is filed against the Company based on activities or circumstances arising while the Executive was employed by the Company, or based on information of which the Executive has knowledge, the Executive shall cooperate on reasonable notice and at reasonable times in the Company's defense against any such charge, lawsuit, complaint, or claim. This obligation shall include, without limitation, providing information, producing documents, appearing for depositions, providing testimony, and other general cooperation to assist the Company in defending its position with reference to any such matter. This obligation includes scheduling reasonable time to meet with the Company's internal or outside legal counsel as required to prepare the Company's defense or response, including in
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preparation for any deposition or trial testimony. As a result of providing any such cooperation and assistance to the Company, the Executive shall be paid an hourly rate (based on his Base Salary on his Date of Termination) and reimbursed by the Company for any reasonable and documented out-of-pocket expenses, travel, meals, and lodging expenses that the Executive may incur.
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Tax Rate
GUP = ---------------
1- Tax Rate
The Tax Rate for purposes of computing the GUP shall be the highest marginal federal and state income and employment-related tax rate, including any applicable excise tax rate, applicable to Executive in the year in which the payment under paragraph (b)(c) is made.
(iii) Such Initial Excess Parachute Payment and such tax allowance shall be paid to the applicable taxing authority for the benefit of Executive when due, or if such Initial Excess Parachute Payment and/or tax allowance are paid by Executive, then to the Executive no later than the end of Executive’s taxable year next following the Executive’s taxable year in which the related taxes are remitted to the required taxing authority.
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If in the sole discretion of the Committee after consultation with the Executive that a Change of Control is imminent, but in any case, prior to a Change in Control (or immediately after a Change of Control if, notwithstanding this paragraph (e), such formation and funding has not been completed), the Company agrees to form and fund a Rabbi trust (the “Trust”) substantially similar to the trust entered into by the Company prior to the change of control in 2011 with sufficient monies to fulfill all of the severance obligations hereunder and those of all other corporate executives. Furthermore, additional funds will be deposited in the Trust to pay for legal and other expenses in an amount no less than the funding in 2011.
(g) For purpose of this Section 12, a “Change in Control” shall be deemed to occur upon (1) an event that would be required to be reported in response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, (2) Executive is not elected to serve as a director of the Company, (3) a Change in Ownership, (4) a Change in Effective Control, or (5) a Change in the Ownership of Assets. Such terms are defined as follows:
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The Board (or its designee) shall determine whether a Change in Control has occurred hereunder in a manner consistent with the provisions of Code Section 409A.
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The Executive acknowledges that irreparable injury will result to the Company, its business and property in the event of Executive’s breach of this Section and agrees that in the event of any such breach by Executive, the Company will be entitled, in addition to any other remedies and damages available, to an injunction without the need to post a bond, to restrain the violation hereof by Executive, Executive’s partners, agents, servants, employers, employees and all persons acting for or with Executive. Executive represents and admits that Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Company, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Company from pursuing any other remedies available to the Company for such breach or threatened breach, including the recovery of damages from Executive.
14. CONFIDENTIAL INFORMATION
(a) Executive recognizes and acknowledges that the knowledge of the business activities and plans for business activities of the Company and its affiliates, as it may exist from time to time, is a valuable, confidential, proprietary, and unique asset of the business of the Company. Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities of the Company or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever. Notwithstanding the foregoing, Executive may disclose any knowledge of principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Company, and
(b) Executive may disclose any information regarding the Company which is otherwise publicly available (and for the avoidance of doubt, Company publicly available information shall not include information Executive discloses after his employment terminates). In the event of a breach or threatened breach by Executive of the provisions of this Section, the Company will be entitled to an injunction, without the need to post a bond, restraining Executive from disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of the Company or affiliates thereof, or from rendering any services to any person, firm, corporation, other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Company from pursuing any other remedies available to the Company for such breach or threatened breach, including the recovery of damages from Executive.
(c) Executive shall execute any future policy or agreement concerning the protection of the Company’s confidential and proprietary information required of all senior executives.
The termination of Executive’s employment during the term of this Agreement or thereafter, whether by the Company or by Executive, shall have no effect on the vested rights of
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Executive under the Company’s qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or stock bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans, or other employee benefit plans or programs, or compensation plans or programs in which Executive was a participant.
If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.
The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.
This Agreement shall be governed by the laws of the State of Florida but only to the extent not superseded by federal law.
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Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators, one of whom shall be selected by the Company, one of whom shall be selected by Executive and the third of whom shall be selected by the other two arbitrators. The panel shall sit in a location within fifty (50) miles from the location of the Company, in accordance with the rules of the Judicial Mediation and Arbitration Systems (JAMS) then in effect. Judgment may be entered on the arbitrators award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. Similarly, the Company shall not be required to arbitrate any claim to which it is entitled to an injunctive or similar relief. In any arbitration brought pursuant to this agreement, the parties shall be entitled to take the same amount of discovery and depositions as they would be entitled to in litigation in state or federal courts in Florida.
Reasonable legal fees and expenses paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Company, provided that such payment or reimbursement is made by the Company not later than thirty (30) days after the date on which Executive submits to the Company a request for repayment. INDEMNIFICATION
During the term of this Agreement, the Company shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense, and shall indemnify Executive (and his heirs, executors and administrators) to the fullest extent permitted under Delaware law, under the Company’s charter, and under any such agreements then in affect between the company and its officers and/or directors against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Company since August 30, 2011 (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorney’s fees and the cost of reasonable settlements (such settlements must be approved by the Board of Directors of the Company). If such action, suit or proceeding is brought against Executive in his capacity as an officer or director of the Company, however, such indemnification shall not extend to matters as to which Executive is finally adjudged to be liable for willful misconduct in the performance of his duties.
Notwithstanding any provision of this Agreement to the contrary, the Company shall advance, to the extent not prohibited by law, the expenses incurred by Executive in connection with any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Company since August 30, 2011 (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), and such advancement shall be made within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any
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Proceeding. Advances shall be unsecured and on such terms as allowed by Delaware law, the company’s charter, or such terms as are provided to other officers and directors of the Company. Advances shall include any and all reasonable Expenses incurred successfully pursuing an action to enforce this right of advancement. For the avoidance of doubt, the right to advances shall apply to such indemnification as provided in paragraph 23 of this agreement, and not to any claims by Executive for any other rights under this agreement.
The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company’s obligations under this Agreement, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Executive has signed this Agreement, on the day and date first above written.
CRYO-CELL INTERNATIONAL, INC.
Date: December 22, 2022
By: /s/ Xxxxxx Xxxxxxx
Compensation Committee Chairman
EXECUTIVE:
Date: December 23, 2022 By: /s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx
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