SEVERANCE AGREEMENT
AGREEMENT,
made and entered into as of January 22, 2008, by and between TUTOGEN MEDICAL,
INC., a Florida corporation (the “Company”), and L. Xxxxxx Xxxxxxxx, Jr. (the
“Employee”).
WHEREAS,
the Company desires to provide the Employee with severance payments in the event
there is a sale of the Company (a “Transaction”—which is defined in Section
10(c) below), and Employee is terminated without cause or resigns for Good
Reason within 24 months of such Transaction, in consideration of Employee’s
release of claims and certain agreements by Employee with respect to
non-competition, non-solicitation, and non-disparagement, among other
things.
NOW
THEREFORE, the parties agree as follows:
1. Severance Protection.
(a) If a Transaction occurs and if, before the second anniversary of the date on
which the Transaction is consummated, the Company or any successor entity (the
“Employer”) terminates Employee’s employment without “Cause” or such employment
is terminated by the Employee for “Good Reason” (as both such terms are defined
below), then, within ten days following such termination of employment (a
“Severance Termination”), the Employee will be entitled to receive from the
Employer an amount equal to the difference between: (a) 12 months (the
“Severance Period”) of the Employee’s then current salary, and (b) any severance
Employee has become entitled to receive as a result of such Transaction or the
termination of the Employee’s employment pursuant to that certain letter
agreement, dated December 28, 2005, by and between the Company and Employee (the
“Letter Agreement”), in equal biweekly installments during the 24 month period
subsequent to such termination, payable in accordance with the Employer’s normal
payroll practices. If after 24 months of such transaction the
Employee is terminated without cause or due to a change of control, the Employee
will be entitled to 6 months of salary in accordance with the Letter
Agreement.
(b) In
the event of a Severance Termination, the Company agrees to reimburse Employee
for the Consolidated Omnibus Reconciliation Act (“COBRA”) continuation premium
to continue the Employee’s current health/dental insurance coverage through the
earlier of: (i) the end of the maximum period subsequent to such termination
provided for under COBRA, (ii) the end of the Severance Period, (iii) such date
that the Employee becomes eligible for enrollment for other health/dental care
coverage, as the case may be, under another group health/dental plan prior to
the end of this period. To be eligible for such reimbursement of
COBRA continuation premium payments by the Company, the Employee must elect
COBRA continuation coverage when contacted by the Company or the Company’s
provider of COBRA services. If COBRA continuation coverage is elected
by Employee, he or she must pay the monthly premiums and provide Company with
evidence of payment for reimbursement. After the end of the Severance
Period, if the Employee is still eligible under COBRA and wishes to maintain
COBRA continuation coverage beyond such date, the Employee will be responsible
for all COBRA continuation premium payments after such date.
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(c) In
the event of a Severance Termination, the Company agrees to pay the Employee for
any accrued, unused paid time off leave time, to be paid to Employee 10 days
after termination of employment. The Employee will not accrue any
additional paid time off leave after such date.
(d) In
the event of a Severance Termination, the Employee will be allowed to continue
vesting in any unvested stock/option grants made by the Company, or any
successor, to Employee until the end of the Severance Period. Any and
all other remaining unvested stock/option grants as of the end of the Severance
Period, will be forfeited. Any vested options must be exercised
within 90 days of the end of the Severance Period.
2. Effect of Other
Agreements. If the Employee becomes entitled to receive severance
payments under this Agreement, such payments will be in lieu of and not in
addition to the benefits, severance payments or other payments to which Employee
may otherwise have been entitled under any prior change of control, severance or
other agreement between the Company and Employee, except for the Letter
Agreement dated December 28, 2005 by and between the Company and
Employee.
3. Release of
Claims. Notwithstanding anything to the contrary contained
herein, the Employer shall have the right to condition Employee’s right to
receive severance payments and benefits under Section 1 of this Agreement upon
the execution and delivery by the Employee (or Employee’s beneficiary) of a
general release in favor of Company, Employer and its successors and affiliates,
and their officers, directors and employees, in such form as the Employer may
specify. Any payment or benefit that is so conditioned may be
deferred until the expiration of the seven day revocation period prescribed by
the Age Discrimination in Employment Act of 1967, as amended (or any similar
revocation period then in effect).
4. Non-Competition.
(a) The
Employee acknowledges, recognizes and understands that, in connection with the
Employee’s employment with the Employer, the Employee has and will have access
to certain proprietary, sensitive and confidential information of the Employer
including but not limited to: the identity of the Employer’s clients,
prospective clients, and other client information; the existence of negotiations
with prospective clients of the Employer; marketing data and plans; financial
information and financial data not publicly disclosed; all drawings, records,
sketches, and models; trade secrets and trade secrets relating to services of
the Employer; and, products sold or being developed by the Employer
(“Confidential Information”). Employee also acknowledges, recognizes
and understands that the Employer owns or has access to various types of
intellectual property that are protected or may be protected by copyright,
trademark, patent, trade secret, or other laws. The types of intellectual
property that are considered proprietary to the Employer and that must be
protected include but are not limited to: patent applications; trademarks;
programs; source and relocatable code for all programs; engineering, research,
and technical documents; unpublished product specifications; products sold or
under development; and, information belonging to other companies that is
provided to the Employer under confidentiality agreements (“Intellectual
Property”).
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(b) Employee
recognizes that the Employer possesses several valuable and legitimate business
interests such as Confidential Information and Intellectual Property,
substantial relationships with current or prospective customers, clients or
vendors, and customer, client or vendor goodwill associated with the Employer
business. In recognition of these interests, and the Employee’s
exposure to these interests, in the event of the termination of the Employee’s
employment with the Employer, the Employee agrees that for a period of two (2)
years following the effective date of the termination (the “Restricted Period”),
the Employee will not be employed, either as director, employee, owner, partner,
contractor or consultant, by any entity which engages in the business of
manufacturing, distributing, processing, procuring or recovering products made
from allograft or xenograft tissue in the United States (each, a “Competing
Organization”). The Competing Organizations that Employee agrees not
to become employed by during the Restricted Period include, without limitation:
Axogen, Inc., Pegasus Biologics, Inc., Osiris Therapeutics, Inc., Southeast
Tissue Alliance, Inc. (University of Florida Tissue Bank), Musculoskeletal
Transplant Foundation; CryoLife; LifeCell; Allosource; Tissue Banks
International; Osteotech, Inc.; LifeLink Tissue Bank; Life Net; Community Tissue
Services; American Red Cross; BioGenetics; and, Cryogenic. The
Employee also agrees that during the Restricted Period he will not participate
in, assist with or in any way become associated with or employed by any new
start up venture that is or will be engaged in the business of a Competing
Organization, or which the Employer reasonably designates as a Competing
Organization. Notwithstanding the foregoing, nothing herein shall
prevent Employee owning up to 1% of the capital stock of a Competing
Business.
(c) The
Employee acknowledges that this restrictive covenant is reasonably necessary to
protect the Employer’ legitimate business interests, which are represented by,
among other things, the substantial relationships between the Employer and its
licensees and tissue sources, as well as the goodwill established by the
Employer with licensees and tissue sources in the United States and other
countries where the Employer’s tissues are distributed over a protracted period,
specialized training, and other legitimate business reasons.
(d) The
Employee recognizes that the Employer would not sign this Agreement without the
inclusion of this covenant, and the Employee confirms the sufficiency of the
consideration received by the Employee, in the form of continued employment by
the Employer and the payments described in Section 1 hereof, in accepting this
covenant as a material term of this Agreement. The provisions of this
Section 5 shall survive the termination of Employee’s employment with the
Employer and the termination of this Agreement.
5. Non-Solicitation.
The Employee agrees during the
Restricted Period, not to: (a) solicit any employee of the Employer, or any
subsidiary or affiliate of the Employer, or otherwise induce or attempt to
induce any employee of the Employer to leave the employment of the Employer; or
(b) directly or indirectly attempt to solicit any client, customer or supplier
of the Employer, or any client, customer or supplier of any subsidiary or
affiliate of the Employer, or directly or indirectly interfere with the
Employer’s relationship, or any subsidiary’s or affiliate’s relationship, with
any of its clients, customers or suppliers. The provisions of this Section 6
shall survive the termination of Employee’s employment with the Employer and the
termination of this Agreement.
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6. Remedies for Breach of
Non-Competition and Non-Solicitation Provisions.
It is understood and agreed by the
Parties that the Employer shall be entitled, upon application to a court of
competent jurisdiction, to obtain injunctive relief to enforce the provisions of
Sections 5 and 6, which injunctive relief shall be in addition to any other
rights or remedies available to the Employer. If such a violation is
deemed by such court to have occurred, the Employee shall be responsible for the
payment of reasonable attorneys’ fees and other costs and expenses incurred by
the Employer in enforcing the covenants contained in Sections 5 and 6, whether
incurred at the trial level or in any appellate proceeding and conversely, if
such court determines that a violation did not occur, then the Employer shall be
responsible for the payment of reasonably attorney’s fees and other costs and
expenses incurred by Employee in defending such action, whether incurred at the
trial level or in any appellate proceeding.
7. Non-Disparagement.
While employed or engaged as a
consultant by the Employer or any affiliate of the Employer and, provided the
Employer has complied with its obligations hereunder, after the Employee’s
employment terminates for whatever reason the Employee agrees not to disparage,
denigrate, or comment negatively upon, either orally or in writing, the
Employer, or any of its affiliates, officers, or directors, to or in the
presence of any person or entity. After the Employee’s employment
terminates for whatever reason, the Company agrees that its officers, directors,
and key employees will not disparage, denigrate, or comment negatively upon,
either orally or in writing, the Employee.
8. Definitions. For
purpose of this Agreement, the following terms shall have the meanings set forth
below:
(a) “Cause”
means:
(i) willful
failure or refusal by the Employee to substantially perform the material duties
of his or her employment, and failure to cure such failure or refusal within 10
days of delivery to Employee of written notice thereof by the
Company;
(ii) conviction
of the Employee for commission of a felony, including without limitation, fraud,
embezzlement or theft, whether or not such felony was committed in connection
with the Employer’s business;
(iii) use
by Employee of alcohol or illegal drugs materially interfering with the
performance of Employee’s duties and obligations under this Agreement, or
Employee being under the influence of illegal drugs or repeatedly under the
influence of alcohol at a facility of Employer;
(iv)
willful or grossly negligent misconduct which results or could reasonably be
expected to result in material damage to the business or assets of the
Employer;
(v) violation
by Employee of any of the covenants in Sections 4, 5 or 7 of this Agreement; or
(vi) willful
breach of this Agreement or any material employment policy of the Employer, and
failure to cure such breach within 10 days of delivery to Employee of written
notice thereof by the Company.
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(b) “Good
Reason” means: (a) a diminution of duties, responsibilities and compensation
that are materially inconsistent with Employee’s current position as of the date
hereof; provided, however, that: (i) a
diminution in position, title or working conditions, or (ii) the Employer’s
failure to continue the Employee’s existing authority, duties, reporting
relationship and/or responsibilities resulting from the direct or indirect
control of the Employer by another company, any sale or transfer of equity,
property or other assets of the Employer or any of its Subsidiaries, and any
diminution of the business of the Employer or any of its Subsidiaries, shall not
constitute “Good Reason”, or (b) relocation by more than 50 miles of the
Employee’s principal place of employment.
(c) “Transaction”
means (1) the completion of the sale or other disposition of all or
substantially all of the assets of the Company to a party unaffiliated with the
Company, or (2) the completion of a merger or other transaction relating to the
Company if neither the Company nor its stockholders immediately prior to such
merger or other transaction hold, directly or indirectly, more than 50% of the
voting power of the surviving corporation or other entity resulting from such
merger or other transaction.
9. General
Provisions.
(a) Nothing
in this Agreement is intended to create a contract of employment between
Employee and the Company or any of its subsidiaries, or to interfere in any way
with the right of the Company or any of its subsidiaries to terminate Employee’s
employment at any time.
(b) All
payments made pursuant to this Agreement will be subject to applicable
withholding requirements.
(c) If,
at the time of the Employee’s termination of employment, the Employee is a
“specified employee” within the meaning of Treasury Regulation Section
1.409A-1(a)(i), then, notwithstanding anything to the contrary contained herein,
payments and benefits to which the Employee will be entitled by reason of such
termination of employment shall be delayed for six months following the
Employee’s termination of employment if and to the limited extent necessary in
order to satisfy the requirements of Section 409A(a)(2)(B) of the Internal
Revenue Code of 1986. For the avoidance of doubt, payments and
benefits will not be delayed if and to the extent such payments and benefits do
not constitute deferred compensation under Section 409A of the Code, including,
without limitation, by reason of the exceptions described in Section
1.409A-1(b)(9). Any payments that are delayed pursuant to this subparagraph will
be made in a single lump sum at the expiration of the required delay period (but
not later than six months after termination of employment).
(d) This
Agreement will be governed by and construed in accordance with the laws of the
State of Florida without regard to its conflict of laws provisions.
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(e) No
amendment or modification of this Agreement may be made except by a written
instrument signed by the Company and Employee.
(f) This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original, but all of which taken together will constitute one and the
same agreement.
(g) This
Agreement constitutes the entire agreement between the parties hereto relating
to the matters encompassed hereby and supersedes any prior oral or written
agreements relating thereto; provided, however, that this Agreement does not
modify or supersede any agreements between the Company and Employee regarding
confidentiality or assignment of inventions.
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
| TUTOGEN MEDICAL, INC. | ||||
| By: | /s/ Xxx Xxxxx | |||
| Name: Xxx Xxxxx | ||||
| Title: CEO | ||||
Accepted
and Agreed
on
January 22, 2008 by:
|
/s/
L. Xxxxxx Xxxxxxxx, Jr.
|
|||
|
L.
Xxxxxx Xxxxxxxx, Jr.
|
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