Exhibit 10.1
June 15, 2001
PERSONAL & CONFIDENTIAL
Mr. J. Melville Engle
12 Deergrass Lane
Acton, MA 01720
Dear Mel:
This letter agreement (the "Agreement") confirms the agreement that we
have reached regarding your resignation from your regular, full-time employment
and all offices you hold with Anika Therapeutics, Inc. (the "Company").
The purpose of this Agreement is to establish an amicable arrangement
for ending your employment relationship with the Company, to release the Company
and related persons or entities from any claims and to permit you to receive
fair and reasonable separation pay and related benefits. Nothing in this
Agreement is intended to condition your entitlement to pay or benefits earned
based on your employment to and including the date of termination of your
employment on your agreement to this Agreement. Specifically, the Company has
provided or shall provide the pay referred to in Section 1 below and the right
to elect COBRA coverage, regardless of whether you agree to this Agreement.
If you agree to the terms of this Agreement, you acknowledge that you
are entering into this Agreement voluntarily. It is customary in employment
separation agreements that provide for severance pay for the departing employee
to release the employer from any possible claims, even if the employer believes,
as is the case here, that no such claims exist. You understand that you are
giving up your right to bring any and all possible legal claims against the
Company. Neither the Company nor you want your employment relationship to end
with a legal dispute. By entering into this Agreement, you understand that the
Company is not admitting in any way that it violated any legal obligation that
it owed to you. To the contrary, the Company's willingness to enter into this
Agreement, which provides for compensation beyond what you are contractually
entitled to, demonstrates that it is continuing to deal with you fairly and in
good faith.
Mr. J. Melville Engle
June 15, 2001
Page 2
With those understandings, you and the Company agree as follows:
1. RESIGNATION
Effective June 12, 2001 (the "Resignation Date"), you resigned from
your offices as Chairman of the Board, President and Chief Executive Officer,
and Director on the Company's Board of Directors, trustee of the Company's
Employee Savings and Retirement Plan and from any and all employment or offices
you hold with the Company, its subsidiaries and/or its affiliates. The Company
shall pay you your current base salary through June 12, 2001. In addition, the
Company will pay you for all accrued but unused vacation time through the
Resignation Date, which will be based on 173.85 hours of accrued but unused
vacation time. All payments to be made are subject to the provisions of Section
5 hereof.
2. SEVERANCE PAY
Beginning no later than the Company's second regular payroll date after
the Effective Date, as it is defined in Section 14, the Company shall provide
severance pay ("Severance Pay") to you consisting of the continuation of your
current base salary rate of $251,472.00 per year for a forty-one and one-half
(41 1/2) week period beginning June 13, 2001 (the "Salary Continuation Period")
such that you shall receive total Severance Pay of $200,736.00, payable on the
Company's regular bi-weekly payroll dates. The Company will suspend the payment
of Severance Pay until such time as the Agreement becomes effective in
accordance with Section 14. If the Agreement becomes effective, the Company will
reinstate you to the payroll and shall provide any suspended payroll payments to
you no later than the second payroll date after this Agreement becomes
effective. All payments to be made are subject to the provisions of Section 5
hereof.
3. BENEFITS
a. MEDICAL AND DENTAL BENEFITS
By agreeing to this Agreement, you elect to continue your medical and
dental insurance coverage under COBRA. Your COBRA period commenced on June 13,
2001. Provided that you remain eligible for COBRA continuation coverage, the
Company shall continue to pay the premiums for your group medical and dental
insurance coverage on the same basis as if you continued to be employed through
December 12, 2001. Thereafter, you may continue coverage at your own expense for
the remainder of the COBRA period to the extent you remain eligible.
b. SPOT/STAY BONUS
The Company also will provide you with the payment of $37,500,
constituting your 2001 "Spot/Stay Bonus" payment, which will be sent to you by
mail on the date on which the
Mr. J. Melville Engle
June 15, 2001
Page 3
Company regularly distributes the "Spot/Stay Bonus" to its eligible employees.
All payments to be made are subject to the provisions of Section 5 hereof.
c. STOCK AND STOCK OPTION PLANS
You currently hold stock options to purchase common stock under the
Company's Stock Option Plan dated March 3, 1993, as amended (the "Plan"), as set
forth below:
o 250,000 shares at $5.25 per share on October 4, 1996 (the "October
4, 1996 Stock Grant");
o 100,000 shares at $7.625 per share on October 28, 1997 (the
"October 28, 1997 Stock Grant");
o 85,000 shares at $4.75 per share on December 21, 1998 (the
"December 21, 1998 Stock Grant");
o 40,000 shares at $6.938 per share on January 11, 2000 (the
"January 11, 2000 Stock Grant") ; and
o 60,000 shares at $1.75 per share on September 11, 2000 (the
"September 11, 2000 Stock Grant").
All of your vested and unvested stock options under each of the October
4, 1996 Stock Grant, October 28, 1997 Stock Grant, December 21, 1998 Stock Grant
and January 11, 2000 Stock Grant are hereby terminated as of the Resignation
Date. With respect to those shares subject to the terms of the September 11,
2000 Stock Grant, the terms of the September 11, 2000 Stock Grant are hereby
amended such that all 60,000 shares will vest as of the Resignation Date at the
option exercise price specified in the September 11, 2000 Stock Grant and shall
remain fully exercisable under the terms of the Plan until December 12, 2001.
Thereafter, the September 11, 2000 Stock Grant, or portion thereof that is
unexercised, shall terminate.
d. OUTPLACEMENT
The Company shall pay up to a maximum of $20,000 to a mutually
agreeable outplacement advisor to assist you in your efforts to obtain new
employment, provided that such outplacement services are provided on or prior to
June 12, 2002.
e. OTHER BENEFITS
Your eligibility to participate in any other employee benefit plans and
programs sponsored by or made available to employees of the Company or its
affiliated or related entities ceases effective on or after your Resignation
Date in accordance with applicable benefit plan terms and benefit practices.
Your rights to benefits, if any, are governed by the terms of those benefit
plans and programs.
Mr. J. Melville Engle
June 15, 2001
Page 4
4. TREATMENT OF EXISTING PROMISSORY NOTES TO THE COMPANY
a. $75, 000 PROMISSORY NOTE DATED MARCH 17, 1997
You acknowledge that on or about March 17, 1997, you entered into a
Promissory Note (the "March 17, 1997 Promissory Note") with the Company pursuant
to which you borrowed the principal sum of seventy-five thousand dollars
($75,000.00), together with interest, which is payable upon the end of the
severance continuation period which is 41 1/2 weeks after the employee's
termination date or when the primary residence is paid, whichever is sooner. The
March 17, 1997 Promissory Note is secured, in part, by a second mortgage on your
primary residence located at 12 Deergrass Lane, Acton, Massachusetts (the
"Primary Residence"). You and the Company hereby agree that the terms of the
Promissory Note are hereby amended such that the Note, together with interest,
shall be payable upon the end of the severance continuation period which is 41
1/2 weeks after the employee's termination date or when the primary residence is
paid, whichever is sooner. You further covenant to give prior notice to the
Company of any impending sale of your Primary Residence.
b. $59,000 PROMISSORY NOTE DATED JULY 10, 1998
You acknowledge that on or about July 10, 1998, you entered into a
Demand Promissory Note (the "July 10, 1998 Note") with the Company pursuant to
which you borrowed the principal sum of fifty-nine thousand dollars
($59,000.00), together with interest, which is payable upon the Resignation
Date. The Company hereby forgives any repayment obligations owed by you as of
the Resignation Date under the terms of the July 10, 1998 Note. You acknowledge
and agree that you are solely responsible for any tax consequences resulting
from the Company's forgiveness of the July 10, 1998 Note.
c. $41,000 PROMISSORY NOTE DATED DECEMBER 20, 1999
You acknowledge that on or about December 20, 1999, you entered into a
Demand Promissory Note (the "December 20, 1999 Note") with the Company pursuant
to which you borrowed the principal sum of forty-one thousand dollars
($41,000.00), together with interest, which is payable upon the Resignation
Date. The Company hereby forgives any repayment obligations owed by you as of
the Resignation Date under the terms of the December 20, 1999 Note. You
acknowledge and agree that you are solely responsible for any tax consequences
resulting from the Company's forgiveness of the December 20, 1999 Note.
d. $20,000 PROMISSORY NOTE DATED AUGUST 26, 1999
You acknowledge that on or about August 26, 1999, you entered into a
Promissory Note (the "August 26, 1999 Promissory Note") with the Anika
Therapeutics, Inc. 401(k) Profit
Mr. J. Melville Engle
June 15, 2001
Page 5
Sharing Plan (the "401(k) Plan"). The Terms of the August 26, 1999 Promissory
Note are unaffected by this Agreement and continue to be governed by the terms
of the 401(k) Plan.
e. PAYMENT TO OFFSET TAX LIABILITY
To offset tax liability you may incur as a result of the Company's
forgiveness of your payment obligations pursuant to the July 10, 1998 Note and
the December 20, 1999 Note, on or before December 31, 2001, the Company will
make a payment to you of $72,414.00. All payments to be made are subject to the
provisions of Section 5 hereof.
5. TAX TREATMENT
The Company shall undertake to make deductions, withholdings and tax
reports with respect to payments and benefits under this Agreement to the extent
that it reasonably and in good faith believes that it is required to make such
deductions, withholdings and tax reports. Payments under this Agreement shall be
in amounts net of any such deductions or withholdings. Except as expressly
provided in Section 4, nothing in this Agreement shall be construed to require
the Company to make any payments to compensate you for any adverse tax effect
associated with any payments or benefits or for any deduction or withholding
from any payment or benefit.
6. RELEASE OF CLAIMS
In consideration for, among other terms, the payments and benefits
described in Sections 2, 3 and 4, to which you otherwise would not be entitled,
you voluntarily release and forever discharge the Company, its affiliated and
related entities, its and their respective predecessors, successors and assigns,
and each of their current and former officers, directors, shareholders,
employees, attorneys, accountants and agents in their official and personal
capacities (collectively referred to as the "Releasees") generally from all
claims, demands, debts, damages and liabilities of every name and nature, known
or unknown, that, as of the date that you sign this Agreement, you now have,
ever had, now claim to have or ever claimed to have had against any or all of
the Releasees ("Claims"). This release includes, without limitation, all Claims
relating to your employment by and termination of employment with the Company;
all Claims of wrongful discharge; all Claims of breach of contract; all Claims
of retaliation or discrimination under federal, state or local law (including,
without limitation, Claims of age discrimination under the Age Discrimination in
Employment Act); all Claims of defamation or other torts; all Claims of
violation of public policy; all Claims for wages, bonuses, incentive
compensation, vacation pay or any other compensation or benefits; and all Claims
for damages of any sort, including, without limitation, compensatory damages,
punitive damages and attorneys fees; provided, however, that this release shall
not affect your right to enforce this Agreement.
Mr. J. Melville Engle
June 15, 2001
Page 6
You agree that you shall not seek or accept reinstatement with any
Releasees. You also agree that you shall not seek damages of any nature,
equitable or legal remedies, attorney's fees, or costs from any of the Releasees
with respect to any Claim. As a material inducement to the Company to enter into
this Agreement, you hereby represent that you have not heretofore assigned to
any third party and you have not heretofore filed with any agency or court any
Claim released by this Agreement.
7. RETURN OF PROPERTY
You will return all Company property that is in your possession,
custody or control, including, without limitation, computer equipment, software,
cellular telephones, keys and access cards, credit cards, files and any other
documents (including computerized data and any copies made of any computerized
data or software) containing information concerning the Company, its business or
customer relationships (in the latter two cases, actual or prospective), no
later than the date when this Agreement becomes effective.
8. COOPERATION
You agree that, at any time in the future, you shall cooperate fully
with the Company as reasonably requested in all regulatory matters and in the
defense or prosecution of any legal claims or actions that already have been
brought or that may be brought in the future against or on behalf of the Company
that relate to events or occurrences that transpired during your employment with
the Company. Your full cooperation in connection with such regulatory matters,
claims, actions or disputes shall include, without limitation, being available
to meet with representatives of the Company to prepare for regulatory processes
and counsel to prepare for discovery or trial and to testify truthfully as a
witness when reasonably requested by the Company. The Company will reimburse you
for any reasonable out-of-pocket expenses [(which shall not be construed to
include your personal attorney's fees)] that you incur in connection with such
cooperation, provided that you provide the Company reasonable documentation of
such out-of-pocket expenses, and receive advanced written approval of any such
expenditure or group of related expenditures in excess of $250.
9. CONFIDENTIALITY OF AGREEMENT
You agree to keep the existence and terms of this Agreement and all
matters leading up to your resignation, including the rationale or reasons
therefor, in the strictest confidence and to not reveal, unless legally
compelled to do so, the existence or terms of this Agreement to any persons
except your attorney and your financial advisors, provided that they also agree
to keep such information confidential. You shall be considered to have breached
this Agreement if any of those individuals fails to keep such information
completely confidential. Nothing in this Section 9 shall be construed to prevent
you from disclosing such matters to the extent required by a lawfully issued
subpoena or duly issued court order; PROVIDED that you provide the Company
Mr. J. Melville Engle
June 15, 2001
Page 7
with advance written notice as soon as is practicable and a reasonable
opportunity to contest such subpoena or court order. Nothing contained herein
shall be deemed to limit your rights under applicable law, including 29 U.S.C.
ss. 626(f)(4).
10. VALIDITY OF NON-DISCLOSURE AND NON-COMPETITION AGREEMENT
You acknowledge and agree that you remain bound by the terms of the
Company's Non-Disclosure and Non-Competition Agreement that was executed by you
on or about August 20, 1998, in accordance with its terms after the date hereof.
11. NON-DISPARAGEMENT
You will refrain from making any disparaging statements, taking any
actions, or conducting yourself in any way that adversely affects the reputation
or goodwill of the Company and/or its affiliated entities and the current and
former officers, directors, shareholders, employees and agents of any of them.
These non-disparagement obligations shall not in any way affect your obligation
to testify truthfully in any legal proceeding. You further agree to refrain from
communicating with any third parties, including, without limitation,
shareholders of the Company, regarding the Company, its business, prospects or
strategies.
12. CONSIDERATION OF THE AGREEMENT
This Agreement is a legally binding document. Provided that you do not
revoke this Agreement in accordance with Section 14 below, your signature will
commit you to the terms of this Agreement. You acknowledge that you have been
advised to discuss all aspects of this Agreement with your attorney, that you
have carefully read and fully understand all of the provisions of this Agreement
and that you are voluntarily entering into this Agreement.
13. CONSENT TO JURISDICTION
You and the Company hereby consent to the jurisdiction of the Superior
Court of the Commonwealth of Massachusetts and the United States District Court
for the District of Massachusetts with respect to any claim of violation of this
Agreement. With respect to any such court action you (a) submit to the
jurisdiction of such courts, (b) consent to service of process, and (c) waive
any other requirement (whether imposed by statute, rule of court or otherwise)
with respect to personal jurisdiction or venue.
14. OTHER PROVISIONS
You acknowledge that you have been given the opportunity to consider
this Agreement for twenty-one (21) days before signing it. If you sign this
Agreement within less than twenty-
Mr. J. Melville Engle
June 15, 2001
Page 8
one (21) days of the date of its delivery to you, you acknowledge that such
decision was entirely voluntary and that you had the opportunity to consider
this Agreement for the entire twenty-one (21) day period. To accept this
Agreement, you must provide the fully signed Agreement to the undersigned by the
end of the twenty-one (21) day period. For a period of seven (7) days from the
date you sign this Agreement, you have the right to revoke this Agreement by
written notice to the undersigned. If you do not revoke this Agreement, it shall
become effective on the eighth (8th) day after you sign it. This Agreement shall
not become effective or enforceable until the expiration of the seven (7) day
revocation period (the "Effective Date").
You acknowledge that you are aware that under Federal and state
securities laws, certain restrictions may apply to actions and communications by
you, as well as to trading in the Company's securities.
This Agreement constitutes the entire agreement regarding the
termination of your employment with the Company. This Agreement supersedes any
previous agreements or understandings between us (including, without limitation,
that certain letter dated September 24, 1996), except as described in Sections
3, 4 and 10. In signing this Agreement, you are not relying upon any oral
promises or representations made by anyone at or on behalf of the Company.
This Agreement will be interpreted and enforced under the laws of the
Commonwealth of Massachusetts, without regard to conflict of law principles. In
the event of any dispute, this Agreement will be construed as a whole, will be
interpreted in accordance with its fair meaning, and will not be construed
strictly for or against either you or the Company. This Agreement is executed
under seal.
Mr. J. Melville Engle
June 15, 2001
Page 9
Please indicate your agreement to the terms of this Agreement by
signing and returning to me a copy of this letter. You are advised to consult
with an attorney before signing this Agreement.
Sincerely,
ANIKA THERAPEUTICS, INC.
By: /s/ DOUGLAS R. POTTER
----------------------------
Accepted and agreed to: Douglas R. Potter
Chief Executive Officer and
Chief Financial Officer
/s/ J. MELVILLE ENGLE
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J. Melville Engle
Date: June 15, 2001