March 25, 2004
Xx. Xxxxxxx X. Xxxxxxxx
Dear Xxxx:
On behalf of the Board of Directors of Cytomedix, Inc. (the "Company"), I
am pleased to offer you the following compensation and other benefits on the
terms and conditions set forth in this letter agreement with attached exhibits
(the "Agreement").
Subject to the terms and conditions herein, the Company agrees to employ
you as Chief Financial Officer. In such capacity, you shall report to the
Company's Board of Directors and shall have the powers, responsibilities, and
authorities as are assigned by the Company's Board of Directors. By your
acceptance of this Agreement, you accept employment as the Chief Financial
Officer of the Company as of November 15, 2003 (the "Effective Date") and agree
to devote your full working time and efforts to the best of your ability,
experience, and talent, to the performance of services, duties and
responsibilities as the Company's Chief Financial Officer. You shall perform
such duties and exercise such powers, commensurate with your position, as the
Company's Board of Directors shall from time to time delegate to you on such
terms and conditions and subject to such restrictions as the Company's Board of
Directors reasonably from time to time may impose.
Your term of employment shall commence as of the Effective Date and
continue until the date of termination (the "Termination Date") (the period from
the Effective Date until the Termination Date shall be the "Term"). Your
employment with the Company shall not be for any specific term and may be
terminated by you or the Company at any time with or without cause. In the case
of termination by you or by the Company, and if so requested by the Company, you
agree to remain the Company's Chief Financial Officer for a period of thirty
(30) days from the date of notice of termination. In such case, the Termination
Date shall be the thirtieth day following notice of termination. You shall
receive a base salary ("Base Salary") at the rate of $95,000 per annum during
the Term; provided, however, the Compensation Committee of the Company's Board
of Directors, or if no such Compensation Committee is in place, the Company's
Board of Directors, shall review your annual Base Salary for potential increase
each year. Any increase in Base Salary shall constitute "Base Salary" hereunder.
The Base Salary shall not be decreased at any time during the Term. Upon
termination of your employment by either you or the Company, you shall not be
entitled to any payments of your Base Salary for periods after the Termination
Date. Base Salary shall be payable in accordance with the ordinary payroll
practices of the Company. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
Upon approval by the Compensation Committee of the Company's Board of
Directors, or if no such committee is in place, the entire Board of Directors,
you shall receive options to purchase 175,000 shares of Company's common stock
at an exercise price of $1.50 per share. The other terms and conditions of such
award shall be governed by the terms of a stock option award agreement in a form
substantially similar to that presently used by the Company. The options awarded
shall be for a term of ten (10) years, and the options representing the 175,000
shares shall vest one year from the date of grant, unless otherwise provided in
the grant notice or stock option award agreement.
It is expressly understood and contemplated that a bonus plan will be
mutually agreed upon by the parties hereto for the Company's fiscal year
beginning January 1 2004, and for each fiscal year thereafter during the Term.
It is anticipated that pursuant to this bonus plan you will be eligible for an
annual bonus of options representing 75,000 shares of common stock exercisable
at $1.50 per share. The annual bonus plan and the grant of options thereunder
shall be based upon mutually agreed upon performance objectives. These
performance objectives may include, be driven by, and/or be proportionate to
balance sheet ratios, GAAP determined EBIT, or any other measure of performance
commonly utilized in connection with annual bonus plans. Any awards pursuant to
an annual bonus plan shall be governed by the terms and conditions contained in
the grant notice and stock option agreement issued to you by the Company.
You shall be eligible to participate in any compensation plan or program
maintained by the Company. The Company shall provide you during the Term with
coverage under all employee pension and welfare benefit programs, plans and
practices (commensurate with your position in the Company and to the extent
permitted under any employee benefit plan) in accordance with the terms thereof,
which the Company generally makes available to its senior executives.
You shall be entitled to no less than ten business days of paid vacation
in each calendar year (or such greater time as Company policy permits a person
of your employment seniority), which shall be taken at such times as are
consistent with your responsibilities hereunder. In addition, you shall be
entitled to the perquisites and other fringe benefits generally made available
to senior executives of the Company, commensurate with your position with the
Company.
You will be authorized to incur reasonable expenses in carrying out your
duties and responsibilities under this Agreement, including, without limitation,
expenses for travel and similar items related to such duties and
responsibilities. The Company will reimburse you for all such expenses upon
presentation, from time to time, of accounts of such expenditures (appropriately
itemized and approved consistent with the Company's policy).
This Agreement, including the attached Exhibits A and B, contains the
entire understanding among the parties hereto and supersedes in all respects any
prior or other agreement or understanding among the parties with respect to your
employment, including but not limited to any severance arrangements.
If any provision of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions hereof which shall remain in full force and
effect. Each party hereto shall be solely responsible for any and all legal fees
incurred by him or it in connection with this Agreement, including the
enforcement of this Agreement. This Agreement may only be amended by written
agreement of the parties hereto, and shall be construed, interpreted and
governed in accordance with the laws of Arkansas, without reference to rules
relating to conflicts of law.
By your signature below, you agree that this Agreement, including
Exhibits A and B, shall be binding upon and inure to the benefit of your heirs
and representatives and the assigns and successors of the Company, but neither
this Agreement nor any rights or obligations hereunder shall be assignable or
otherwise subject to hypothecation by you or by the Company, except that the
Company may assign this Agreement to any successor (whether by merger, purchase
or otherwise) to the stock, assets or business(es) of the Company.
Very truly yours,
CYTOMEDIX, INC.
___________________________________
By: Xxxxxx Xxxxxxx
Chairman of the Board of Directors
I have read and hereby accept the terms of this Agreement
_____________________________________
Xx. Xxxxxxx X. Xxxxxxxx
Date: _______________________________
Exhibit A
Confidentiality Provisions
In connection with the Agreement, Xx. Xxxxxxx X. Xxxxxxxx ("Executive"),
hereby agrees as follows:
(a) Executive shall not, without the prior written consent of the Company,
use, divulge, disclose or make accessible to any other person, firm,
partnership, corporation or other entity any Confidential Information (as
defined below) pertaining to the business of the Company or any of its
affiliates, except (i) while employed by the Company, in the business of and for
the benefit of the Company, or (ii) when required to do so by a court of
competent jurisdiction, by any governmental agency having supervisory authority
over the business of the Company, or by any administrative body or legislative
body (including a committee thereof) with jurisdiction to order Executive to
divulge, disclose or make accessible such information.
For purposes of this Exhibit A, "Confidential Information" shall mean
non-public information concerning the financial data, strategic business plans,
product development (or other proprietary product data), customer lists,
marketing plans and other non-public, proprietary and confidential information
of the Company or its affiliates (hereinafter referred to as the "Protected
Group") or the Company's existing or potential customers, that is not otherwise
available to the public (other than by Executive's breach of the terms hereof).
(b) During the Term and for one (1) year thereafter, Executive agrees
that, without the prior written consent of the Company, (A) he will not,
directly or indirectly, in the United States, participate in any Position (as
defined below) in any business which is in competition with any business of the
Protected Group and (B) he shall not, on his own behalf or on behalf of any
person, firm or company, directly or indirectly, solicit or offer employment to
any person who has been employed by the Protected Group at any time during the
12 months immediately preceding such solicitation, and (C) he shall not, on his
own behalf or on behalf of any person, firm or company, solicit, call upon, or
otherwise communicate in any way with any client, customer, prospective client
or prospective customer of the Company or of any member of the Protected Group
for the purposes of causing or of attempting to cause any such person to
purchase products sold or services rendered by the Company or by any member of
the Protected Group from any person other than the Company or any member of the
Protected Group. The term "Position" shall include, without limitation, a
partner, director, holder of more than 5% of the outstanding voting shares,
principal, executive, officer, manager or any employment or consulting position.
It is acknowledged and agreed that the scope of the clause as set forth above is
essential, because (i) a more restrictive definition of "Position" (e.g.
limiting it to the "same" position with a competitor) will subject the Company
to serious, irreparable harm by allowing competitors to describe positions in
ways to evade the operation of this clause, and substantially restrict the
protection sought by the Company, and (ii) by allowing Executive to escape the
application of this clause by accepting a position designated as a "lesser" or
"different" position with a competitor, the Company is unable to restrict the
Executive from providing valuable information to such competing company to the
harm of the Company.
(c) Executive agrees that he will not, directly or indirectly,
individually or in concert with others, engage in any conduct or make any
statement that is likely to have the effect of undermining or disparaging the
reputation of the Company or any member of the Protected Group, or their good
will, products, or business opportunities, or that is likely to have the effect
of undermining or disparaging the reputation of any officer, director, agent,
representative or employee, past or present, of the Company or any member of the
Protected Group. Company agrees that it shall not, directly or indirectly,
engage in any conduct or make any statement that is likely to have the effect of
undermining or disparaging the reputation of Executive.
(d) For purposes of this Exhibit A, a business shall be deemed to be in
competition with the Protected Group if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Protected Group as a material part
of the business of the Protected Group within the same geographic area in which
the Protected Group effects such purchases, sales or dealings or renders such
services.
(e) Executive and the Company agree that this covenant not to compete is a
reasonable covenant under the circumstances, and further agree that if in the
opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
modified. Executive agrees that any breach of the covenants contained in this
Exhibit A would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in addition to pursuing any other remedies it or they may
have in law or in equity, cease making any payments otherwise required by this
Agreement and obtain an injunction against Executive from any court having
jurisdiction over the matter restraining any further violation of this Agreement
by Executive.
Exhibit B
Change Of Control
In connection with the Agreement, Xx. Xxxxxxx X. Xxxxxxxx ("Executive")
and Cytomedix, Inc. ("Company") hereby agree as follows:
(a) In the event a Change of Control occurs, and (i) the Company
terminates Executive's employment without Cause, or (ii) the Executive
terminates his employment for Good Cause within three (3) months prior to or
within three (3) months following the effective date of a Change of Control of
the Company, then Executive will be entitled to a lump sum payment equivalent to
fifty percent (50%) of the Executive's Base Salary in effect at the time of the
Change of control, less standard deductions and withholdings (the "Change of
Control Benefits"). No payment under (ii) above shall be made until the
transaction causing a Change of Control has occurred.
(b) In the event that the Change of Control Benefits or any part thereof
provided for in this Exhibit B, or any amount otherwise payable to the Executive
under the Agreement, this Exhibit B, or otherwise, constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and will be subject to the excise tax imposed by
Section 4999 of the Code, then Executive shall receive (i) a payment from the
Company sufficient to pay such excise tax, and (ii) an additional payment from
the Company sufficient to pay the income, employment, excise and any other taxes
arising from the payments made by the Company to or for the benefit of Executive
pursuant to paragraph (a) above and this paragraph (b) so that Executive shall
be fully reimbursed for any excise tax and any taxes associated with the
payments to reimburse Executive for such excise tax. Unless the Company and
Executive otherwise agree in writing, the determination of Executive's excise
tax liability and the amount required to be paid under this paragraph (b) shall
be made in writing by a nationally recognized accounting firm satisfactory to
both parties (the "Accountants"). In the event that the excise tax incurred by
Executive is determined by the Internal Revenue Service to be greater or lesser
than the amount so determined by the Accountants, the Company and Executive
agree to promptly make such additional payment, including interest and any tax
penalties, to the other party as the Accountants reasonably determine is
appropriate to ensure that the net economic effect to Executive under this
paragraph (b), on an after-tax basis, is as if the Code Section 4999 excise tax
did not apply to Executive. For purposes of making the calculations required by
this paragraph (b), the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on interpretations of
the Code for which there is a "substantial authority" tax reporting position.
The Company and Executive shall furnish to the Accountants such information and
documents the Accountants may reasonably request in order to make a
determination under this paragraph (b). The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this paragraph (b).
(c) Upon the occurrence of a Change of Control, all unvested options or
other stock based incentives that have been awarded to the Executive prior to
the transaction causing a Change of Control shall become immediately vested so
that all such options and incentives shall become fully vested under the terms
of the plans under with they were issued.
(d) The following definitions shall be applicable to the identified terms
used in this Exhibit B:
(i) "Change of Control" shall mean (1) a sale or other disposition of all
or substantially all of the assets of the Company; (2) a merger or consolidation
in which the Company is not the surviving entity and in which the shareholders
of the Company immediately prior to such consolidation or merger own less than
fifty percent (50%) of the surviving entity's voting power immediately after the
transaction; (3) a reverse merger in which the Company is the surviving entity
but the shares of the Company's common stock outstanding immediately preceding
the merger are converted by virtue of the merger into other property, whether in
form of securities, cash or otherwise, and in which the shareholders of the
Company immediately prior to such merger own less than fifty percent (50%) of
the Company's voting power immediately after the transaction; (4) any other
capital reorganization in which more than fifty percent (50%) of the shares of
the Company entitled to vote are exchanged; or (5) during any period of two
consecutive years (not including periods prior to the effective date of this
Agreement), individuals who at the beginning of such period constitute the board
and any new directors whose election by the board or nomination for election by
the stockholders was approved by at least 2/3rds of the members of the board,
cease for any reason to constitute a majority thereof.
(ii) "For Cause" shall mean: (1) the willful and continued failure by
Executive to substantially perform his duties with the Company in good faith
(other than any such failure resulting from his incapacity due to physical or
mental illness, injury or disability), after a demand for substantial
performance is delivered to him by the Board of Directors of the Company which
identified, in reasonable detail, the manner in which the Board of Directors
believes that Executive has not substantially performed his duties in good
faith; (2) the willful engaging by Executive in conduct which causes material
harm to the Company, monetarily or otherwise; or (3) Executive's conviction of a
felony arising from conduct during the term of this Agreement. For purposes of
this definition, no act or failure to act on Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interest of the Company or its shareholders. Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to him a copy of a resolution duly adopted by
the affirmative vote of two-thirds (2/3rds) of the directors then occupying a
seat on the Board of Directors at a meeting of the Board of Directors called and
held for such purpose (after ten (10) days notice to him and an opportunity for
him, together with his counsel, to appear before the Board of Directors),
finding that Executive was guilty of conduct described in clauses (1), (2), or
(3) of this definition.
(iii) "Good Cause" shall mean any of the following actions taken by the
Company or any subsidiary that employs the Executive: (1) a breach of the
Agreement, (2) an assignment of the Executive to duties that are inconsistent
with his status as a senior executive or which represent a diminution of his
status in the Company, (3) a reduction in Executive's Base Salary, (4) a failure
by the Company to pay any of Executive's compensation in accordance with Company
policy, (5) a reduction in or elimination of any of the benefits described in
the Agreement or otherwise granted to Executive, (6) change of Executive's
title, or (7) the failure of a successor to the Company to confirm in writing
within five (5) days of its succession its obligation to assume and perform all
obligations of the Agreement.
