EMPLOYMENT AGREEMENT
This
AGREEMENT dated as of January 1, 2006 between Uluru Inc., a Delaware corporation
located at 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxx, 00000 (the “Company”), and
Xxxxx X. Xxxx, an individual residing at 0000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxx
00000 (the “Executive”).
W
I T N E
S S E T H:
WHEREAS,
the Company desires that Executive serve as the Company’s Chief Executive
Officer; and
WHEREAS,
in order to induce Executive to agree to serve in such capacity, the Company
hereby offers Executive certain compensation and benefits of employment,
as
described herein.
WHEREAS,
Executive is willing to serve in this position on the terms and conditions
hereinafter set forth;
NOW,
THEREFORE, in consideration of the promises and of the mutual covenants
contained herein, the Company and Executive hereby agree as
follows:
1. Employment
The
Company hereby agrees to employ Executive and Executive hereby agrees to
be
employed upon the terms and conditions hereinafter set forth.
| 2. |
Nature
of Employment
|
During
the term of this Agreement, Executive shall serve as President, Chief Executive
Officer, and as a member of the Company’s Board of Directors (the “Board”) and
shall have such responsibilities and authority consistent with such positions
as
may be reasonably assigned to him by the Board. Executive shall devote his
full
time and attention and best efforts to perform successfully his duties and
advance the Company’s interests. Employee shall abide by the Company’s policies,
procedures, and practices, as they may exist from time to time. Executive
shall
be responsible to the Board, rendering the services and performing the duties
prescribed by the Board
The
Executive shall be employed at the Company’s offices in Dallas, Texas, and his
principal duties shall be performed primarily in Dallas, Texas, except for
business trips reasonable in number and duration.
3. Term
The
employment of the Executive hereunder shall begin on the date hereof and
shall
continue in full force and effect for a period of three (3) years, and
thereafter shall be automatically renewed for successive one-year periods
unless
the Company gives the Executive written notice of termination within six
(6)
months prior to the end of any such period or until the occurrence of a
Termination Date, as defined in Section 6 (the "Term").
4. Compensation
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4.1
|
As
compensation for the Executive’s services during the Term, the Company
shall pay the Executive an annual base salary at the rate of
Three Hundred
Thousand Dollars ($300,000), payable in accordance with the Company’s
reasonable policies, procedures, and practices, as they may exist
from
time to time. Prior to the end of each year during the Term,
the
Compensation Committee of the Company shall undertake an evaluation
of the
services of the Executive during the year then ended in accordance
with
the Company’s compensation program at the date hereof (the “Program”). The
Company shall consider the performance of the Executive, his
contribution
to the success of the Company and entities under common control
with the
Company (collectively, “Affiliates”), and other factors and shall fix an
annual base salary to be paid to the Executive during the ensuing
year.
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4.2.
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Notwithstanding
the foregoing, the Company may change the Program from time to
time or
institute a successor to the Program, but the Executive’s annual base
salary shall in no event be less than his annual base salary in
effect on
the date of change, adjusted regularly to reflect increases in
the cost of
living and comparable compensation for like
positions.
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4.3.
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The
executive shall participate in the Company incentive compensation
programs
in accordance with the following subparagraphs (i) and
(ii):
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| (i) |
Incentive
Plan
-
The executive shall be covered by the cash bonus plan currently
maintained
by the Company and shall be afforded the opportunity thereunder
to receive
a target award of 25% of annual base salary payable in cash and
a target
award of 25% of annual base salary payable in Company Common Stock,
to be
awarded upon the achievement of reasonable performance goals; provided
that the Company may from time to time change the Program or institute
a
successor to the Program, so long as the Executive continues to
be
eligible to receive bonus awards of percentages of annual base
salary in
amounts at least equal to those specified as in effect on the date
hereof.
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| (ii) |
Stock
Option Plan
-
Executive shall be entitled to participate in the Company’s stock option
plan. In accordance with this plan the Board may from time to time,
but
without any obligation to do so, grant stock options to the Executive
upon
such terms and conditions as the Board shall determine in its sole
discretion. If the Company no longer has a class of stock publicly-traded
by reason of a Change in Control of the Company, as defined in
Section
6.3, the Company’s obligation under this Section 4.3 will be satisfied
through options granted by the issuer with public stock then in
control of
the Company.
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4.4
|
If
the Executive is prevented by disability, for a period of six consecutive
months, from continuing fully to perform his obligations hereunder,
the
Executive shall perform his obligations hereunder to the extent
he is able
and after six months the Company may reduce his annual base salary
to
reflect the extent of the disability; provided that in no event
may such
rate, when added to payments received by him under any disability
or
qualified retirement or pension plan to which the Company, Affiliate,
or
Executive contributes or has contributed, be less than $200,000.
If there
should be a dispute about the Executive’s disability, disability shall be
determined by the Board of Directors of the Company based upon
a report
from a physician, reasonably acceptable to the Executive, who shall
have
examined the Executive. If the Executive claims disability, the
Executive
agrees to submit to a physical examination at any reasonable time
or times
by a qualified physician designated by the Chairman of Board of
the
Company and reasonably acceptable to the Executive. Notwithstanding
any
provision in this Section, the Company shall not be obligated to
make any
payments to Executive on account of disability after the expiration
of
this Agreement.
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| 5. |
Executive
Benefits
|
The
Executive shall be entitled to participate in all “employee pension benefit
plans,” all “employee welfare benefit plans” (each as defined in the Employee
Retirement Income Security Act of 1974) and all pay practices and other
compensation arrangements maintained by the Company, on a basis at least
as
advantageous to the Executive as the basis on which other executive employees
of
the Company are eligible to participate and on a basis at least as advantageous
to the Executive as the basis on which he participates therein on the date
hereof. Executive shall, during the term of his employment hereunder, continue
to be provided with such benefits at a level at least equivalent to the initial
benefits provided or to be provided hereunder. Without limiting the generality
of the foregoing, the Executive shall be entitled to the following employee
benefits (collectively, with the benefits contemplated by this Section 5,
the
“Benefits”):
| 5.1 |
The
Executive and Executive’s dependents shall participate, at their option in
any medical insurance plans and programs comparable in scope to
the
coverage afforded on the date hereof, with only such contribution
by the
Executive toward the cost of such insurance as may be required
from time
to time from other executive officers of the Company. If a Change
in
Control of the Company, as defined in Section 6.3, shall have occurred,
the Company may not change the carriers providing medical insurance
immediately before the change without the consent of the Executive,
which
consent will not be unreasonably withheld.
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| 5.2 |
Life
Insurance. Executive shall be entitled to group term life insurance
coverage of an amount equal to no less than $500,000, all premiums
being
paid by the Company.
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| 5.3 |
Long-Term
Disability Insurance. The Company shall maintain in effect long
term
disability insurance providing Executive in the event of his disability
(as defined in Section 4.4 hereof) with compensation annually equal
to at
least $200,000.
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| 5.4 |
The
Executive shall be entitled to paid time off (“PTO”) of no less than
thirty nine (39) days each year. Such PTO shall be accrued and
taken in
accordance with the Company’s policies and practices, as they may exist
from time to time.
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| 5.5 |
The
Company shall reimburse the Executive from time to time for the
reasonable
expenses incurred by the Executive in connection with the performance
of
his obligations hereunder.
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| 5.6 |
During
such times as the Company is eligible and financially qualified
to obtain
the same, the Company shall maintain directors and officers’ liability
insurance applicable to the Executive in amounts established by
the Board
of Directors.
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Notwithstanding
the foregoing, the Company may from time to time change or substitute a plan
or
program under which one or more of the Benefits are provided to the Executive,
provided that the Company first obtains the written consent of the Executive,
which the Executive agrees not unreasonably to withhold, taking into account
his
personal situation.
6. Termination
Date; Consequences for Compensation and Benefits
| 6.1 |
Definition
of Termination Date. The first to occur of the following events shall
be
the Termination Date:
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|
6.1.1
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The
date on which the Executive becomes entitled to receive long-term
disability payments by reason of total and permanent
disability;
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6.1.2
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The
Executive’s death;
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6.1.3.
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Voluntary
resignation after one of the following events shall have occurred,
which
event shall be specified to the Company by the Executive at the
time of
resignation: material reduction in the responsibility, authority,
power or
duty of the Executive or a material breach by the Company of
any provision
of this Agreement, which breach continues for 30 days following
notice by
the Executive to the Company setting forth the nature of the
breach
(“Resignation with Reason”);
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6.1.4.
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Voluntary
resignation not accompanied by a notice of reason described in
Section
6.1.3 (“General Resignation”);
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6.1.5
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Discharge
of the Executive by the Company after one of the following events
shall
have occurred, which event shall be specified in writing to the
Executive
by the Company at the time of
discharge:
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| (i) |
a
felonious act committed by Executive during his employment hereunder,
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| (ii) |
any
act or omission on the part of Executive not requested or approved
by the
Company constituting willful malfeasance or gross negligence in the
performance of his duties hereunder,
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| (iii) |
any
material breach of any term of this Agreement by the Executive which
is
not cured within 30 days after written notice from the Board to the
Employee setting forth the nature of the breach (“Discharge for Cause”);
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For
purposes of this subparagraph (6.1.5), no act or failure to act on the
Executive’s part shall be considered “willful” unless done or omitted to be done
by Executive not in good faith and without reasonable belief that Executive’s
action or omission was in the best interest of the Company. Notwithstanding
the
foregoing, Executive shall not be deemed to have been discharged for Cause
unless and until there shall have been delivered to Executive a copy of a
Notice
of Termination (as defined below) from the Chairman of the Board of the Company
stating that in his good faith opinion Executive was guilty of conduct set
forth
in clauses (i), (ii), or (iii) above of this subparagraph (6.1.5) and specifying
the particulars thereof in detail.
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6.1.6
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Discharge
of the Executive by the Company not accompanied by a notice of
cause
described in Section 6.1.5 (“General
Discharge”).
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For
purposes of this Agreement “Notice of Termination” shall mean a notice which
indicates the specific termination provision in this Agreement relied upon
and
sets forth in reasonable detail the facts and circumstances claimed to provide
a
basis for termination of Executive’s employment under the provision so
indicated. Each Notice of Termination shall be delivered at least sixty (60)
days prior to the effective date of termination.
| 6.1 |
Consequences
for Compensation and Benefits
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(a) If the Termination Date occurs by reason of disability, death, General Resignation or Discharge for Cause, the Company shall pay compensation to the Executive through the Termination Date and shall pay to the Executive all Benefits accrued through the Termination Date, payable in accordance with the respective terms of the plans, practices and arrangements under which the Benefits were accrued.
(b) If
the
Termination Date occurs by reason of General Discharge or Resignation with
Reason, (i) all stock options held by the Executive shall become immediately
exercisable and shall remain exercisable for three (3) years after the
Termination Date, (ii) the Company shall continue the health coverage
contemplated by Section 5.1 for a period of two (2) years thereafter, (iii)
the
Company shall engage for the Executive, at the Company’s expense, outplacement
services appropriate to the Executive’s position, for up to twelve months after
the Termination Date, and (iv) the Executive shall be entitled to receive,
within 60 days after the Termination Date, the amount set forth in Section
6.2.1.
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6.2.1
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The
Executive’s annual base salary at the Termination Date plus the target
bonus for the year in which the Termination Date occurs, multiplied
by two
(2) (i.e., 2 times base salary plus target
bonus).
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6.3
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Change
in Control.
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In
the event of the occurrence of a Change in Control (as defined
below),
this Agreement may be terminated by Executive upon the occurrence
thereafter of one or more of the following
events:
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1)
Termination by Executive of his employment with the Company may be made within
two (2) years after a Change in Control and upon the occurrence of any of
the
following events:
(a.)
A
significant adverse change in the nature or scope of the Executive’s
authorities, powers, functions, responsibilities or duties as a result of
the
Change in Control, a reduction in the aggregate of Executive’s existing base
salary and existing Incentive Plan received from the Company, or termination
of
Executive’s rights to any existing Executive Benefit to which he was entitled
immediately prior to the Change in Control or a reduction in scope or value
thereof without the prior written consent of Executive;
(b.)
The
liquidation, dissolution, merger, consolidation or reorganization of the
Company
or transfer of all or a significant portion of its business and/or assets
(by
liquidation, merger, consolidation, reorganization or otherwise) unless the
successor or successors to which all or a significant portion of its business
and/or assets have been transferred (directly or by operation of law) shall
have
assumed all duties and obligations of the Company under this Agreement pursuant
to Section 12.5 hereof; or
(c.)
The
Company shall relocate its principal executive offices or require Executive
to
have as his principal location of work any location which is in excess of
50
miles from the location thereof immediately prior to the relocation date
or to
travel from his office in the course of discharging his responsibilities
or
duties hereunder more than thirty (30) consecutive calendar days or an aggregate
of more than ninety (90) calendar days in any consecutive 365-calendar day
period without in either case his prior consent.
(d.)
Failure to elect or re-elect Executive, or removal of Executive, as a director
of the Company (or any successor thereto), if Executive shall have been a
director of the Company immediately prior to the Change in Control, or the
office of the Company which Executive held immediately prior to a Change
in
Control; however, in a Change in Control as a result of merger or acquisition,
it is understood by the parties that the entire Board of Directors of the
Company may be dissolved and this Paragraph 6.3(1)(d) will not apply in such
case.
2)
Subsequent to a change in control of the Company, the failure by the Company
to
obtain the assumption of the obligation to perform this Agreement by any
successor as contemplated in Section 12.5 hereof or otherwise; or
3)
Subsequent to a Change in Control of the Company, any purported termination
of
Executive’s employment that is not effected pursuant to a Notice of Termination
satisfying the requirement of Section 6.1.5 hereof.
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6.3.1
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A
Change in Control of the Company shall occur upon the first to
occur of
the date when (a) a person or group “beneficially owns” (as defined in
Rule 13d-3 promulgated under the Securities Exchange Act of 1934)
in the
aggregate 50% or more of the outstanding shares of capital stock
entitled
to vote generally in the election of the Directors of the Company
(b)
there occurs a sale of all or substantially all of the business
and/or
assets of the Company or (c) persons who were Directors of the
Company on
January 2, 2006 no longer constitute a majority of the Board of
Directors
of the Company.
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6.3.2
|
If
a Change in Control of the Company shall have occurred within six
(6)
months prior to the Termination Date or the Executive terminates
this
Agreement under Section 6.3 the Executive will be entitled to receive,
within 60 days after the Termination Date, the Executive’s annual base
salary at the Termination Date plus the target bonus for the year
in which
the Termination Date occurs multiplied by two (2) (i.e., 2 times
base
salary plus target bonus), all stock options held by the Executive
shall
become immediately exercisable and shall remain exercisable for
three (3)
years after the Termination Date. The Company shall continue the
health
coverage contemplated by Section 5.1 for a period of two (2) years
thereafter.
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6.4
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Liquidated
Damages: No Duty to Mitigate Damages. The amounts payable pursuant
to
Sections 6.2 and 6.3 shall be deemed liquidated damages for the
early
termination of this Agreement and shall be paid to the Executive
regardless of any income the Executive may receive from any other
employer, and the Executive shall have no duty of any kind to seek
employment from any other employer during the balance of the
Term.
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7. Indemnification
To
the
fullest extent permitted by law, the Company shall indemnify the Executive
and
hold him harmless from and against all loss, cost, liability and expense
(including reasonable attorney’s fees) arising from the Executive’s service to
the Company or any Affiliate, whether as officer, director, employee, fiduciary
of any employee benefit plan or otherwise.
8. Agreement
Not to Compete
The
Executive agrees that, while serving as an Executive of the Company, he will
not, without the written consent of the Chairman of the Board of the Company,
serve as an employee or director of any business entity other than the Company
and its Affiliates, but may serve as a director of a reasonable number of
not-for-profit corporations and may devote a reasonable amount of time to
charitable and community service. For the period beginning on the Termination
Date and continuing for the number of year specified below, the Executive
shall
not engage, directly or indirectly in any business competitive with that
of the
Company:
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Termination
Benefit
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Period
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|||
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Amount
set forth in Section 6.2.1
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1.0
|
Year
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||
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Amount
set forth in Section 6.3.2
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1.5
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Years
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||
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Neither
the amount set forth in Section 6.2.1 nor the amount set forth
in Section
6.3.2
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1.0
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Year
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||
The
Executive may hold stock or a limited partnership interest of 5% or less
in any
publicly traded entity engage in such business without violating this
Agreement.
9. Agreement
Not to Solicit
For
one
year following any Termination Date, regardless of the reason, the Executive
shall not solicit any employee of the Company or an Affiliate to leave such
employment and to provide services to the Executive or any business entity
by
which the Executive is employed or in which the Executive has a material
financial interest. Soliciting a former employee of the Company and its
Affiliates to provide such services shall not be a violation of this
Agreement.
10. Confidential
Information
Unless
the Executive shall first secure consent of the Company, the Executive shall
not
disclose or use, either during or after the Term for a period of five (5)
years,
any secret or confidential information of the Company or any Affiliate, whether
or not developed by the Executive, except as required by his duties to the
Company or the Affiliate.
Executive
will sign a Employee Confidentiality, Inventions, and Non-Competition Agreement,
which shall control over this Agreement (except for Section 8 of this Agreement)
if any conflict exists between it and this Agreement .
11. Arbitration
Any
dispute or differences concerning any provision of this Agreement which cannot
be settled by mutual accord between the parties shall be settled by arbitration
in Dallas, Texas in accordance with the rules then in effect of the American
Arbitration Association, except as otherwise provided herein. The dispute
or
differences shall be referred to a single arbitrator, if the parties agree
upon
one, or otherwise to three arbitrators, one to be appointed by each party
and a
third arbitrator to be appointed by the first named arbitrators; and if either
party shall refuse or neglect to appoint an arbitrator within 30 days after
the
other party shall have appointed an arbitrator and shall have served a written
notice upon the first mentioned party requiring such party to make such
appointment, then the arbitrator first appointed shall, at the request of
the
party appointing him, proceed to hear and determine the matters in difference
as
if he were a single arbitrator appointed by both parties for the purpose,
and
the award or determination which shall be made by the arbitrator shall be
final
and binding upon the parties hereto. The arbitrator or arbitrators shall
each
have not less than five (5) years experience in dealing with the subject
matter
of the dispute or differences to be arbitrated. Any award maybe enforced
in any
court of competent jurisdiction. The expenses of any such arbitration shall
be
paid by the non-prevailing party, as determined by the final order of the
arbitrators.
12. Miscellaneous
12.1 Notices
All
notices in connection with this Agreement shall be in writing and sent by
postage prepaid first class mail, courier, or telefax, and if relating to
default or termination, by certified mail, return receipt requested, addressed
to each party at the address indicated below:
If
to the
Company:
Uluru
Inc.
0000
Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attn:
Chief Financial Officer
Copy
To:
Xxxx
X.
Xxxxxxxxx III, Esq.,
Xxxxxxx
Xxxx LLP
000
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000
If
to the
Executive:
Xxxxx
X.
Xxxx
0000
Xxxxxxxxx Xxxxx
Xxxxxx,
XX 00000
Or
to
such other address as the addressee shall last have designated by notice
to the
communicating party. The date of giving of any notice shall be the date of
actual receipt.
12.2 Governing
Law
This
Agreement shall be deemed a contract made and performed in the State of Texas,
and shall be governed by the internal and substantive laws of the State of
Texas.
12.3 Severability
Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of
this
Agreement is held to be invalid, illegal or unenforceable in any respect
under
any applicable law or rule in any jurisdiction, such invalidity, illegality
or
unenforceability shall not affect any other provision or in the interpretation
in any other jurisdiction; however, such provision shall be deemed amended
to
conform to applicable laws and to accomplish the intentions of the
parties.
12.4 Entire
Agreement; Amendment
This
Agreement constitutes the entire agreement of the parties and may be altered
or
amended or any provision hereof waived only by an agreement in writing signed
by
the party against whom enforcement of any alteration, amendment, or waiver
is
sought. No waiver by a party of any breach of this Agreement shall be considered
as a waiver of any subsequent breach.
12.5 Successors
and Assigns
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12.5.1
|
The
Company will require any successor (whether direct or indirect,
by
purchase, merger, consolidation or otherwise) to expressly assume
and
agree to perform this Agreement in the same manner and to the
same extent
that the Company would be required to perform it if no such succession
had
taken place. Failure of the Company to obtain such agreement
prior to the
effectiveness of any such succession shall be a breach of this
Agreement
and shall entitle Executive to compensation from the Company
in the same
amount and on the same terms as Executive would be entitled hereunder
if
Executive terminated his employment for Change of Control. As
used in this
Section 12.5.1, “Company” shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid
which
executes and delivers the Agreement provided for in this Section
12.5.1 or
which otherwise becomes bound by all the terms and provisions
of this
Agreement by operation of law.
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12.5.2
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This
Agreement is intended to bind and inure to the benefit of and
be
enforceable by Executive and the Company, and their respective
successors
and assigns, except that Executive may not assign any of his
rights or
delegate any of his duties without the prior written consent
of the
Company.
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12.6 Assignability
Neither
this Agreement nor any benefits payable to the Executive hereunder shall
be
assigned, pledged, anticipated, or otherwise alienated by the Executive,
or
subject to attachment or other legal process by any creditor of the Executive,
and notwithstanding any attempted assignment, pledge, anticipation, alienation,
attachment, or other legal process, any benefit payable to the Executive
hereunder shall be paid only to the Executive or his estate.
IN
WITNESSES WHEREOF, the Company and its officers hereunto duly authorized,
and
the Employee have signed and sealed this Agreement as of the date first written
above.
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ULURU
Inc.
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Executive
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|||
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By:
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/s/
Xxxxxxxx X. Xxxxxxxx
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By:
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/s/
Xxxxx X. Xxxx
|
|
|
Name:
|
Xxxxxxxx
X. Xxxxxxxx
|
Name:
|
Xxxxx
X. Xxxx
|
|
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Title:
|
Vice
President and CFO
|
Title:
|
President
and CEO
|
|
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Date:
|
January,
1, 2006
|
Date:
|
January,
1, 2006
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