EMPLOYMENT AGREEMENT
EXHIBIT
10.1
This
EMPLOYMENT AGREEMENT (“Agreement”) made effective as of July 17, 2009 by and
between BioMimetic
Therapeutics, Inc., a Delaware corporation (the “Company”), and Xx. Xxxxxx X. Xxxxx (the
“Executive”).
In
consideration of the mutual covenants contained in this Agreement, the parties
hereby agree as follows:
1. Employment. The
Company agrees to employ the Executive and the Executive agrees to be employed
by the Company as President and Chief Executive Officer and to be responsible
for the typical management responsibilities expected of an officer holding such
position and such other responsibilities customarily pertaining to such office
as may be assigned to the Executive from time to time by the Board of Directors
of the Company (the “Board”), all for the Period of Employment as provided in
Section 2 below and upon the terms and conditions provided in the
Agreement. During the Period of Employment, the Executive shall
manage the Company for the improvement of shareholder value to the best of his
ability and perform faithfully the duties that may be assigned to him from time
to time in accordance herewith by the Board.
2. Term. The
period of Executive’s employment under this Agreement will commence as of July
17, 2009, and shall continue through December 31, 2012, subject to extension or
termination as provided in this Agreement (“Period of
Employment”). On January 1, 2013 and each January 1 thereafter, the
Period of Employment will be extended for an additional one-year period, unless
either party gives notice of non-extension at least 90 days prior to any such
anniversary. If such written notice of non-renewal is delivered from one party
to the other, the Executive’s employment will terminate on December 31 of the
year in which such notice is delivered.
3. Compensation. For
all services rendered by the Executive in any capacity during the Period of
Employment, the Executive shall be compensated as follows:
(a) Base
Salary. The Company shall pay the Executive an annual base
salary of $410,000 (the “Base Salary”). The Base Salary shall be
payable according to the customary payroll practices of the Company but in no
event less frequently than once every two weeks. The Base Salary
shall be reviewed each fiscal period and shall be subject to increase according
to the policies and practices adopted by the Company from time to time, and at
the discretion of the Board.
(b) Incentive Compensation
Award. The Executive shall be eligible to receive an annual
incentive cash bonus as may be granted by the Board or the Compensation
Committee of the Board under any executive bonus or incentive plan in effect
from time to time (the “Annual Incentive Award”). The amount of any
Annual Incentive Award shall be determined by the Compensation Committee based
upon the satisfactory performance of goals set mutually by the Board and the
Executive on an annual basis. In no event shall the payment of any Annual
Incentive Award to the Executive be made later than March 15 of the calendar
year next following the calendar year during which such Annual Incentive Award
is earned.
(c) Stock Options. As set
forth below, the Company will grant to the Executive options (the “Option”) to
acquire one percent (1%) of the Company’s Common Stock on a fully diluted basis
as of the fully executed date of this Agreement (which shall include all
outstanding Common Stock, warrants and options and shares reserved for issuance
pursuant to the Company’s stock option plan). The Option grant shall
vest upon the earlier of the Company’s receipt of FDA approval of an orthopedic
PDGF product or December 31, 2012.
Each such
Option grant shall be made pursuant to an Incentive Stock Option Agreement (“ISO
Agreement”) between the Company and the Executive to the extent the Executive is
eligible for incentive options under applicable tax laws and, with respect to
any excess, or in the event the Executive is not eligible for incentive stock
options, a Non-Qualified Stock Option Agreement (“NQSO Agreement”) between the
Company and the Executive. In all events each such Option
shall be subject to the terms and conditions of the respective ISO Agreement or
NQSO Agreement, as applicable, as well as the Company's 2001 Stock Option Plan,
as the same may be amended from time to time or any new long term incentive plan
adopted by the Company.
(d) Additional
Benefits. The Executive will be entitled to participate in all
employee benefit plans or programs and receive all benefits and perquisites for
which any salaried employees are eligible under any existing or future plan or
program established by the Company or its affiliates and available to any
employees of the Company, including participation in any stock option
plan. The Executive will participate to the extent permissible under
the terms and provisions of such plans or programs in accordance with program
provisions. These shall include, but not be limited to group
hospitalization, health, dental care, participation in Company retirement and
pension plans, life or other insurance and disability
insurance. Nothing in this Agreement will preclude the Company or
Company affiliates from amending or terminating any of the plans or programs
applicable to salaried employees or senior executives as long as the total value
of all benefits is not materially decreased. The Executive will be
entitled to an annual paid vacation of four weeks per year.
4. Business Expenses and Other
Expenses. The Company will reimburse the Executive for all
reasonable travel and other business-related expenses and obligations incurred
by the Executive on behalf of the Company.
5. Disability.
(a) In
the event of the disability of the Executive during the Period of Employment,
the Company will continue to pay the Executive according to the compensation
provisions of this Agreement during the period of his disability, until such
time as any long term disability insurance benefits accruing to the Executive
are available. However, in the event the Executive is disabled for a continuous
period of six months, or for a total of 90 or more nonconsecutive days in any
270-day period, the Company may terminate the employment of the
Executive. In this case, normal compensation will cease, except for
any earned but unpaid Base Salary and, effective as of his termination date, the
Executive shall be entitled to receive salary continuation for a period of six
(6) months thereafter, to be paid in substantially equal monthly installments in
accordance with the Company’s regular payroll practices applicable to similarly
situated active employees and determined by reference to his Base Salary as in
effect on the day immediately prior to his termination date.
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(b) During
the period the Executive is receiving payments of either regular compensation or
disability insurance described in this Agreement and to the extent reasonable
considering the Executive’s disability, the Executive will furnish information
and assistance to the Company and from time to time will make himself available
to the Company to undertake assignments consistent with his prior position with
the Company. If the Company fails to make a payment or provide a
benefit required as part of the Agreement, the Executive’s obligation to furnish
information and assistance will end.
(c) For
purposes of this Agreement, the Executive will be considered to be “disabled” if
he satisfies the requirements necessary to receive benefits under the Company’s
long-term disability plan or, in the absence of any such plan, under any
insurance policy providing benefits for long-term disabilities that is procured
for the Executive pursuant to this Agreement or otherwise.
6. Death. In
the event of the death of the Executive during the Period of Employment, the
Company’s obligation to make payments under this Agreement shall cease as of the
date of death, except for earned but unpaid Base Salary. The Executive’s
designated beneficiary will be entitled to receive the proceeds of any life
insurance or other death benefit programs that may be provided by the
Company.
7. Effect of Termination of
Employment.
(a) If
the Executive’s employment terminates due to a Without Cause Termination, as
defined below, or by the Executive for Good Reason, as defined below, or if the
Company elects not to renew Executive’s employment hereunder, the Company will
provide the Executive the following severance benefits: (i) continuation of the
Executive’s Base Salary (and an amount equal to 1/12th of the most recent annual
bonus and incentive award) on the Company’s regular payroll dates for a period
equal to eighteen (18) months following the termination date; (ii) reimbursement
to the Executive for the costs of the Executive’s group medical insurance
premiums for himself and his dependents for the 18-month period immediately
following his termination (or COBRA if applicable). Earned but unpaid
Base Salary through the date of termination will be paid in a lump sum at such
time. Furthermore, all outstanding stock options, restricted stock, restricted
stock units, and any other unvested equity incentives shall become fully
exercisable and vested as of the Date of Termination (and shall remain
exercisable for their stated terms, with the exception of any incentive stock
options, which shall remain exercisable for three months following the Date of
Termination). Subject to Section 12 below, the salary continuation
payments described in this Section 7 will commence within fourteen (14) days of
the Company’s receipt of the Executive’s executed general release of claims and
resignation required under Section 7(c)(ii) of this Agreement, and to the extent
permissible under Section 12 below, such salary continuation payments shall be
made retroactive back to the date the Executive’s employment with the Company
terminates.
(b) If
the Executive’s employment terminates due to Termination for Cause (as defined
below), material breach of this Agreement by Executive, or expiration of the
Period of Employment as a result of the Executive giving notice of non-extension
under Section 2 above, earned but unpaid Base Salary will be paid to the
Executive on the termination date. No other payments will be made or
benefits provided by the Company.
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(c) For
this Agreement, the following terms have the following meanings:
(i) “Termination
for Cause” means termination of the Executive’s employment by the Board at any
time after the occurrence of one or more of the following events, in each case
as determined in good faith by the Board with Executive being afforded the
opportunity of presenting his case to the Board: (a) the Executive’s
(i) willful misconduct or gross negligence in performance of his duties
hereunder, or (ii) repeated refusal or failure to comply with the legal
directives of the Board so long as such directives are not inconsistent with the
Executive’s position and duties, which is not remedied (if remediable) within
twenty (20) working days after written notice from the Board, which written
notice shall state that failure to remedy such conduct may result in Termination
for Cause; or (b) the Executive’s conviction of a felony or crime involving
moral turpitude causing material harm to the standing and reputation of the
Company.
(ii) “Without
Cause Termination” means termination of the Executive’s employment (x) other
than due to death, disability, or Termination for Cause, or (y) as a
result of the resignation by Executive for “Good Reason,” as defined
below.(d)The Executive shall be entitled to receive benefits upon termination of
his employment by the Company only as set forth in this Section 7 (and to the
extent applicable, as set forth in Section 10). The Executive’s
entitlement to such termination benefits shall be conditioned upon the
Executive’s and Company’s execution and delivery of a mutual general release of
claims and the resignation of Executive from all of the Executive’s positions
with the Company and its affiliates, other than Executive’s position as a member
of the Board.
8. Other Duties of the
Executive During and After the Period of Employment.
(a) The
Executive will, with reasonable notice during or after the Period of Employment,
furnish information as may be in his possession and cooperate with the Company
as may reasonably be requested in connection with any claims or legal actions in
which the Company is or may become a party.
(b) The
Executive recognizes and acknowledges that all non-public information pertaining
to the affairs, business, clients, customers or other relationships of the
Company, as hereinafter defined, is confidential and is a unique and valuable
asset of the Company. Access to and knowledge of this information are
essential to the performance of the Executive’s duties under this
Agreement. The Executive will not during the Period of Employment and
for 12 months thereafter except to the extent reasonably necessary in
performance of the duties under this Agreement, give to any person, firm,
association, corporation or governmental agency any non-public information
concerning the affairs, business, clients, customers or other relationships of
the Company, except as required by law. The Executive will not make use of this
type of information for his own purposes or for the benefit of any person or
organization other than the Company. All records, memoranda, etc.,
relating to the business of the Company, whether made by the Executive or
otherwise coming into his possession, are confidential and will remain the
property of the Company. Confidential information shall not include
information that (i) becomes generally available to the public other than as a
result of disclosure by the Executive, (ii) was available to the Executive on a
non-confidential basis prior to disclosure to the Executive in connection with
his duties to the Company, provided that the source of such information is not
known to the Executive to be bound by a confidentiality agreement or other
contractual obligation of confidentiality to the Company or (iii) becomes
available to the Executive on a non-confidential basis from a source other than
the Company (or any agent, employee or affiliate of Company) provided such
source is not known to the Executive to be bound by a confidentiality agreement
or other contractual obligation of confidentiality to the
Company.
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(c) During
the period of his employment and for a period of 12 months thereafter, the
Executive will not engage, directly or indirectly, in any business activity or
enterprise which is a “Competitive Activity.” For purposes hereof,
“Competitive Activity” means any business or endeavor in which the Company is
engaged at the Date of Termination (or, if the Date of Termination occurs after
a Change in Control, immediately prior to the Change in Control, including if he
becomes involved as an owner, employee, employer, consultant, principal,
officer, director, independent contractor, agent, partner, advisor or in any
other capacity, with or without compensation, calling for the rendition of
personal services with any individual, partnership, corporation or other
organization that is engaged in any part of the Competitive Activity; provided,
however, that the Executive will not be prohibited from owning less than one
percent (1%) of any publicly traded corporation that is in competition with the
Company. The Executive acknowledges that the covenants contained herein are
reasonable as to geographic and temporal scope.
(d) The
Executive acknowledges that his breach or threatened or attempted breach of any
provision of this Section 8 would cause irreparable harm to the Company not
compensable in monetary damages and that the Company shall be entitled, in
addition to all other applicable remedies, to a temporary and permanent
injunction and a decree for specific performance of the terms of this Section 8
without being required to prove damages or furnish any bond or other
security.
(e) The
Executive shall not be bound by the provisions of this Section 8 in the event of
the default by the Company in its obligations under this Agreement that are to
be performed upon or after termination of this Agreement.
(f) For
purposes of this Section 8, the “Company” shall include any person or entity
that, directly or indirectly, controls or is controlled by the Company or is
under common control with the Company.
9. Indemnification;
Litigation. The Company will indemnify the Executive to the
fullest extent permitted by the laws of the state of incorporation in effect at
that time, or certificate of incorporation and by-laws of the Company whichever
affords the greater protection to the Executive. The Executive will be entitled
to reimbursement of any reasonable fees or expenses incurred in connection with
any action, suit or proceeding to which he may be made a party by reason of
being a director or executive officer of the Company. The foregoing
shall survive termination of the Executive’s employment or any future amendment
or modification of the Company’s articles of incorporation or
bylaws.
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10. Effect of Change in
Control.
(a) In
the event there is a Change in Control (as defined below) and within the twelve
(12) month period following such event Executive is terminated in a Without
Cause Termination, the Company elects not to renew this Employment Agreement, or
Executive elects to resign upon written notice to the Company following an event
that constitutes Good Reason (as defined below), the Company shall pay to the
Executive in a lump sum 150% of Executive’s Annual Base Salary and most recent
Annual Incentive Award. Without limiting the foregoing, any Without
Cause Termination or resignation for Good Reason that occurs within three (3)
months prior to a Change in Control shall be deemed to be made in contemplation
of such Change in Control. In addition, the Company shall pay
Executive upon such termination or resignation, in exchange for Executive
agreeing to not solicit any of the then current customers or employees of the
Company for a period of twelve (12) months following his termination of
employment, a lump sum payment of twelve (12) months of his Base Salary plus an
amount equal to 100% of the most recent annual bonus and incentive
award.
(b) In
addition, all unvested stock options and restricted stock held by Executive
shall be deemed fully vested and immediately exercisable on the date of such
Change in Control.
(c) A
“Change in Control” shall be deemed to have occurred if (i) a tender offer shall
be made and consummated for the ownership of more than fifty percent (50%) of
the outstanding voting securities of the Company, (ii) the Company shall be
merged or consolidated with another corporation or entity and as a result of
such merger or consolidation less than fifty percent (50%) of the outstanding
voting securities of the surviving or resulting corporation or entity shall be
owned in the aggregate by the former shareholders of the Company, as the same
shall have existed immediately prior to such merger or consolidation, (iii) the
Company shall sell all or substantially all of its assets to another corporation
or entity which is not a wholly- owned subsidiary, or (iv) a person, within the
meaning of Section 3(a)(9) or of Section 13 (d)(3) (as in effect on the date
hereof) of the Securities and Exchange Act of 1934 (“Exchange Act”), shall
acquire more than fifty percent (50%) of the outstanding voting securities of
the Company (whether directly, indirectly, beneficially, or of
record).
(d) For
purposes hereof, ownership of voting securities shall take into account and
shall include ownership as determined by applying the provisions of Rule
13d-3(d)(1)(i) (as in effect on the date hereof) pursuant to the Exchange
Act.
(e) A
resignation for “Good Reason” shall be deemed to have occurred if the Executive
resigns his employment with the Company after the occurrence of any of the
following events, to which the Executive has not expressly consented in writing:
(i) a material reduction in the Executive’s Base Salary (other than one
applicable to all executive officers); (ii) a material reduction in job duties,
authority, responsibilities and requirements inconsistent with the Executive’s
position with the Company and the Executive’s prior duties, authority,
responsibilities, and requirements or a change in the Executive’s reporting
relationship such that Executive is no longer reporting to the Board; (iii) a
relocation of the Executive to a facility or location more than fifty (50) miles
from the address of the Company’s headquarters office as of the effective date
of this Agreement, or (iv) material breach by the Company of any of the material
covenants herein. Any of the foregoing conditions described in this
Section 10(e) will constitute “Good Reason” only if the Executive delivers a
Notice of Termination identifying such condition within ninety (90) days after
the initial existence of such condition and such condition must continue for a
period of thirty (30) days after the delivery of such Notice of
Termination. Notwithstanding the foregoing, the Executive’s
termination of employment will not be considered to be for Good Reason unless
such termination of employment occurs within sixty (60) days after Company’s
failure to cure such condition or conditions during the foregoing thirty (30)
day period.
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11. Withholding
Taxes. The Company shall directly or indirectly withhold from any
payments under this Agreement all federal, state, city or other taxes as
required pursuant to any law or governmental regulation.
12. Tax
Provisions.
(a) Notwithstanding
any other provision of this Agreement whatsoever, the Company shall have the
right, after consulting with and securing the approval of the Executive (which
approval shall not unreasonably be withheld), to provide for the application and
effects of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) (relating to deferred compensation arrangements) and any related
regulatory or administrative guidance issued by the Internal Revenue Service
such that the severance and other benefits provided under this Agreement shall
not trigger the additional tax, interest, and any related penalties imposed by
Code Section 409A(l)(B). Although the Company intends to administer
the Agreement so that it will comply with the requirements of Code Section 409A,
the Company does not represent or warrant that the Agreement will comply with
Code Section 409A or any other provision of federal, state, local or non-United
States law. Neither the Company, its subsidiaries, nor their
respective directors, officers, employees or advisers will be liable to the
Executive (or any other individual claiming a benefit through the Executive) for
any tax, interest, or penalties the Executive may owe as a result of
compensation paid under the Agreement, and the Company and its subsidiaries will
have no obligation to indemnify or otherwise protect the Executive from the
obligation to pay any taxes pursuant to Code Section 409A.
(b) The
Company shall delay the payment of any portion of severance benefits payable
under this Agreement as required to comply with Code
Section 409A(a)(2)(B)(i) (relating to payments made to certain “specified
employees” of certain publicly-traded companies) and in such event, any such
amount to which the Executive would otherwise be entitled during the six (6)
month period immediately following his termination of employment shall instead
be accumulated through and paid or provided on the first business day following
the expiration of such six (6) month period, or if earlier, the date of his
death. Only that portion of the severance benefits shall delayed that
is necessary to reduce payments to an amount that complies with Section
409(a)(2)(B)(i) during such six (6) month period. For the avoidance
of doubt, no portion of any such severance benefits shall be subject to the
foregoing delay if and to the extent that such benefits (i) constitute a
“short term deferral” within the meaning of Section 1.409A-1(a)(4) of the
Treasury Regulations, or (ii) (A) are being paid due to the
Executive’s “involuntary separation from service” (within the meaning of Section
1.409A-1(n) of the Treasury Regulations); (B) do not exceed two times the lesser
of (1) the Executive’s annualized compensation from the Company for the
calendar year prior to the calendar year in which the termination occurs, or (2)
the maximum amount that may be taken into account under a qualified plan
pursuant to Code Section 401(a)(17) for the year in which the Executive’s
employment terminates; and (C) the payment is required under this Agreement to
be paid no later than the last day of the second (2nd) calendar year following
the calendar year during which the Executive’s “separation from service” (within
the meaning of Code Section 409A) occurs. For purposes of Code
Section 409A, the Executive’s right to receive installment payments pursuant to
Section 7 above shall be treated as a right to receive a series of separate and
distinct payments. The determination of whether the Executive is a
“specified employee” for purposes of Code Section 409A(a)(2)(B)(i) as of the
time of his termination of employment shall made by the Company in accordance
with the terms of Code Section 409A and the applicable guidance thereunder
(including without limitation Treasury Regulation Section 1.409A-1(i) and any
successor provision thereto).
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(c) The
continued employee benefits available under Sections 7 and 10 above that are
taxable benefits (and that are not disability pay or death benefit plans within
the meaning of Code Section 409A) are intended to comply, to the maximum extent
possible, with the exception to Code Section 409A set forth in Section
1.409A-1(b)(9)(v) of the Treasury Regulations (and any successor
thereto). To the extent that any of those benefits either do not
qualify for that exception, or are provided beyond the applicable time periods
set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations, then such
amounts will be reimbursed or provided no later than December 31 of the
year following the year in which the expense was incurred and will be subject to
the following additional rules: (i) the amount of in-kind
benefits provided, during any calendar year shall not affect the amount of
in-kind benefits to be provided, during any other calendar year; and (ii) the
right to in-kind benefits shall not be subject to liquidation or exchange for
another benefit.
(d) For
the avoidance of doubt, no amount subject to the requirements of Code Section
409A shall become payable to the Executive as a result of a termination of
employment that does not constitute a “separation from service” within the
meaning of Code Section 409A(a)(2)(A)(i) and Section 1.409A-1(h) of the Treasury
Regulations.
13. Consolidation; Merger or
Sale of Assets. Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation that assumes this
Agreement and all obligations and undertakings of the Company
hereunder. Upon such a consolidation, merger or sale of assets, the
term “the Company” as used will mean the other corporation and this Agreement
shall continue in full force and effect.
14. Modification. This
Agreement may not be modified or amended except in writing signed by the
parties. No term or condition of this Agreement will be deemed to
have been waived, except in writing by the party charged with
waiver. A waiver shall operate only as to the specific term or
condition waived and will not constitute a waiver for the future or act on
anything other than that which is specifically waived.
15. Effective Prior
Agreements. This Agreement contains the entire understanding
between the Company and the Executive with respect to the subject matter and
supersedes any prior employment or severance agreements between the Company and
its affiliates, and the Executive.
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16. Governing
Law. This Agreement has been executed and delivered in the
State of Tennessee and its validity, interpretation, performance and enforcement
shall be governed by the laws of that state.
17. Notices. All
notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed to have been made when delivered or mailed
first-class postage prepaid by registered mail, return receipt requested, or
when delivered if by hand, overnight delivery service or confirmed facsimile
transmission, to the following:
(a) If
to the Company, at BioMimetic Therapeutics, Inc.,
000 Xxxxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxx 00000, Attention: General
Counsel with a copy to Xxxx Manner, Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner,
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000, or at such other
address as may have been furnished to the Executive by the Company in writing;
or
(b) If
to the Executive, at 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxx 00000, or such
other address as may have been furnished to the Company by the Executive in
writing.
18. Binding
Agreement. This Agreement shall be binding on the parties’
successors, heirs and assigns.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
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EXECUTIVE
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Xx.
Xxxxxx X. Xxxxx
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Date
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Xxxxxxx
Xxxxxxxx, Chair of Compensation
Committee
of Board of Directors
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Date
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