Exhibit 10.1
EMPLOYMENT AGREEMENT
The Employment Agreement (the "Agreement") is made and entered into as
of the _20th__ day of April, 2004 (the "Effective Date"), by and between
CYTOMEDIX, INC., a Delaware corporation (the "Company"), and DR. KSHITIJ MOHAN
("Executive").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereby agree as follows.
ARTICLE 1
EFFECTIVE DATE AND TERM OF EMPLOYMENT
1.1 Term of Employment. Subject to extension in accordance with Section
1.2, the Term, as defined below, of the Agreement shall commence on the
Effective Date and shall continue until the date two years hence (the "Initial
Term"), unless terminated earlier in accordance with Article 5 of the Agreement.
For purposes of the Agreement, the "Term" shall mean the period from the
Effective Date until the termination of Executive's employment under this
Agreement.
1.2 Extension of Term. The Initial Term of the Agreement will be
automatically extended by one year on the first anniversary of the Effective
Date and in one year increments on each subsequent anniversary of the Effective
Date thereafter, unless the Executive's employment is terminated under this
Agreement in accordance with Article 5.
ARTICLE 2
DUTIES AND ACTIVITIES
2.1 Employment. During the Term, the Company shall employ Executive,
and Executive shall accept employment with the Company, upon the terms and
subject to the conditions set forth in the Agreement.
2.2 Position. During the Term, Executive shall serve as Chief Executive
Officer of the Company and shall hold such other position or positions as the
parties mutually agree in writing. Executive shall report directly to the
Chairman of the Board of Directors of the Company (the "Board"). As Chief
Executive Officer, Executive shall have the powers, responsibilities and
authorities as are assigned by the Board. Upon the termination of Executive's
employment hereunder in accordance with Article 5, Executive shall immediately
resign as Chief Executive Officer and from all other positions, if any, with the
Company.
2.3 Duties. During the Term, Executive shall devote his business time,
attention, and energies to the business of the Company and use his best efforts
to promote the interest of the Company. Executive shall perform such duties,
services, and responsibilities incident to the Executive's positions that are
reasonably consistent with his position, as the Board shall from time to time
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delegate to him on such terms and conditions and subject to such restrictions as
the Board may reasonably from time to time impose.
2.4 Principal Location. The principal location at which Executive's
services are to be performed shall be at the Executive's then-current home
address, which is presently 25 Beman Woods Court, Potomac, Maryland, 20854,
subject to reasonable travel requirements during the course of performing such
services.
ARTICLE 3
SALARY, BONUS, AND BENEFITS
3.1 Base Salary. During the Term of this Agreement, the Company shall
pay Executive a base salary ("Base Salary"). Commencing on the Effective Date
through the one-year anniversary thereof, this Base Salary shall be not less
than the annual rate of $275,000. The Executive's Base Salary shall be increased
by at least ten percent (10%) for the second and each subsequent year of the
Term.
3.2 Inducement Award. To induce Executive's service as Chief Executive
Officer of the Company during the Term, upon commencement of Executive's
employment, the Company shall grant Executive the Inducement Award as outlined
in Appendix 1. The Inducement Award, and all necessary documents related
thereto, shall be completed no later than ten (10) business days following the
Effective Date.
3.3 Annual Bonus. The Executive shall be entitled to the Annual Bonus
as outlined in Appendix 2. The Executive's Annual Bonus shall be driven by and
proportionate to reasonable Performance Criteria that will be developed and
agreed upon by the Board of Directors and the Executive working in good faith
and with all deliberate speed within sixty (60) days of the commencement of the
Executive's employment under this Agreement, and within sixty (60) days of the
first anniversary of the Executive's employment under this Agreement. The Annual
Bonus for each year of the Term shall be paid within thirty (30) days after the
end of such year.
3.4 Withholding. The Company shall deduct or withhold from the
compensation and benefits payable to Executive hereunder any and all sums
required for federal and state income and employment taxes now applicable or
that may be enacted and become applicable during the Term of the Agreement.
3.5 Benefits. Executive shall be entitled to participate in all
ordinary and customary benefit plans afforded to executive employees of the
Company. Executive's participation in said benefit plans shall be at the
Company's sole expense except to the extent employee contributions may be
required under the Company's benefit plans as they may now or hereafter exist.
Such benefits shall include, at a minimum, medical and dental insurance for
Executive and his spouse, and may include any qualified or unqualified pension,
profit sharing, and savings plans, any death benefit and disability benefit
plan, life insurance coverage, any cafeteria plans, and any medical, dental,
health, vision and welfare plans or insurance coverage.
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3.6 Vacation and Sick Leave. Executive shall be entitled to four (4)
weeks of paid vacation per year during the Term. Unused vacation of up to four
(4) weeks may be carried over from year to year. Vacations shall be taken at
such times as are consistent with the needs of the Company and Executive will
notify in advance the Chairman of the Board of Executive's plans for any
vacations longer than one week. Employee shall also be entitled to two (2) weeks
sick leave per year, part or all of which may be covered by the Company's short
term disability insurance. Unused sick leave may be carried over from year to
year, but in no event shall Executive accrue more than four (4) weeks of sick
leave. Sick leave is compensable only on bona fide sickness of the Executive.
3.7 Fringe Benefits. In addition to the other benefits detailed herein,
Executive shall be entitled to the Fringe Benefits listed on Appendix 3.
ARTICLE 4
BUSINESS EXPENSES
4.1 Expenses. The Company shall pay or reimburse the Executive for all
reasonable and authorized business expenses incurred by the Executive during the
Term.
4.2 Business Travel. The Company shall reimburse Executive for expenses
incurred for business-related travel in accordance with existing Company travel
policies, which may change from time to time.
4.3 Documentation. As a condition to reimbursement under Article 4 of
this Agreement, Executive shall furnish to the Company adequate records and
other documentary evidence appropriately itemized and approved consistent with
the Company's policies, which may change from time to time. Executive
acknowledges and agrees that failure to furnish the required documentation may
result in the Company denying all or part of the expense for which reimbursement
is sought.
ARTICLE 5
TERMINATION OF EMPLOYMENT
5.1 Termination of Employment. Notwithstanding the provisions of
Article 1, either the Company or Executive may terminate Executive's employment
hereunder during the Term, subject to the following terms and conditions.
5.2 Termination by the Company for Cause. As used in the Agreement,
"Cause" shall mean either:
5.2.1 Executive commits a material and willful breach of any
material term of this Agreement, as reasonably determined by a majority
of the directors of the Board, but only if such material and willful
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breach remains uncured (as reasonably determined by the Board) after
thirty (30) days have elapsed following the date that the Company gives
Executive written notice of such breach;
5.2.2 Executive engages in willful conduct that is materially
injurious to the Company or to any affiliate or successor thereto,
whether financial or otherwise, as reasonably determined by a majority
of the directors of the Board, but only if Executive has failed to
cease any such conduct within fifteen (15) days after the date the
Company gives Executive written notice of its belief that Executive is
engaging in such conduct;
5.2.3 Executive is convicted of a felony;
5.2.4 Executive is convicted of any crime involving moral
turpitude or dishonesty;
5.2.5 Executive is of any felony or misdemeanor involving the
property of the Company; is found guilty by any court of law of
violation of applicable securities laws; or is found guilty of
violation of any securities law in an administrative proceeding before
the Securities and Exchange Commission or any state securities
commission.
The Company may terminate Executive's employment hereunder for Cause by
giving Executive fifteen (15) days' written notice. Where Executive is entitled
to a cure period, the termination date under this Section shall be the day after
the cure period expires, if Executive fails to cure. In such event, the Company
shall pay to Executive his Base Salary through the date of Executive's
termination, his accrued but unused vacation, all deferred compensation owed to
Executive under any other agreements, and his reimbursable expenses pursuant to
Article 4 incurred prior to the effective date of such termination. In the event
of termination under this Section 5.2, all of Executive's stock options vested
on the date of termination shall remain exercisable until the original date of
expiration.
5.3 Termination for Disability. As used in this Agreement, Executive's
"Disability" shall the Executive's inability, as a result of a mental or
physical disease or condition expected to continue indefinitely, to perform
materially the services contemplated in the Agreement. The existence or
nonexistence of a Disability shall be determined by an independent physician
reasonably selected and agreed to by the Company and the Executive.
The Company may terminate Executive's employment hereunder in the event
of Executive's Disability by giving Executive thirty (30) days' written notice.
In such event, the Company shall pay to Executive his Base Salary through the
date of termination (which shall be thirty (30) days after written notice is
given) and, thereafter, his Base Salary for a period of eleven (11) additional
months after the date of termination, less net amounts received during that
period from any long-term disability insurance provided under Article 3. The
Base Salary shall be paid at the annual rate of Executive's Base Salary in
effect on the date of Executive's termination of employment and shall be payable
not less frequently than semi-monthly in accordance with the Company's executive
compensation practices. The Company shall also pay to Executive a prorated bonus
and incentive compensation payment based on the then applicable bonus plan/long
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term incentive compensation program in an amount equal to the bonus/incentive
payment that would otherwise be paid for the fiscal/calendar (depending on the
plan or program) year in which Executive is terminated, multiplied by a
fraction, the numerator of which is the number of days that Executive was
employed during that year, and the denominator of which is 365, payable no later
than thirty (30) days after the end of the fiscal/calendar year in which
Executive's employment is terminated. The Company shall also pay Executive's
accrued but unused vacation, all deferred compensation owed to Executive under
any other agreements, and his expenses incurred prior to such termination of
employment reimbursable under Article 4. All benefits provided under Section 3.5
shall be extended, to the extent permitted by Company's insurance policies and
benefit plans, for twelve (12) months after the date of Executive's termination,
except as required by law (e.g., COBRA health insurance continuation election).
During the period benefits are provided Executive under this Section, the
Executive and the Company shall continue to share the costs of such benefits in
the same proportions as they had at the time of the Executive's termination;
provided, however, that Company shall only be required to contribute such
amounts as were paid under the benefit plans in effect on the date of
termination. In the event of termination under this Section 5.3, all of
Executive's stock options shall continue to vest during the eleven (11) month
period Executive continues to receive his Base Salary, and all vested stock
options shall remain exercisable until the original date of expiration.
5.4 Termination for Death. Executive's employment hereunder shall
terminate upon Executive's death. In such event, the Company shall pay to
Executive's estate his Base Salary until the end of the month in which the death
occurred, all accrued but unused vacation pay, all deferred compensation owed to
Executive under any other agreements, and all unreimbursed expenses which are
reimbursable pursuant to Article 4 incurred prior to his death. In the event of
death, all vested options will continue to stay vested and exercisable by the
Executive's estate until the original expiration date. Within fifteen (15) days
of Executive's death, the Company shall provide Executive's estate with a list
of all amounts, benefits, securities or options that are due Executive hereunder
and shall provide reasonable assistance to Executive's estate in receiving and
or/exercising the same.
5.5 Termination Due to Change of Control.
5.5.1 If Executive's employment is terminated by the Company without
Cause in connection with or in furtherance or as a result of a Change of
Control, or if, in connection with a Change of Control, Executive is not offered
post-closing employment by the Company or its successor-in-interest on
substantially the same terms as the terms of Executive's employment by the
Company immediately prior to the Change of Control (including, without
limitation, his or her compensation and the nature and scope of his authorities,
powers, functions and duties, and any remaining term of employment), the Company
shall pay to Executive severance in an amount equal to two (2) years of
Executive's Base Salary in effect on the date of termination, plus Annual Bonus
and Inducement Awards for the two years at rates established for the two years
but not less than the rates applicable for the initial two year Term of this
Agreement ("Severance Payment"). The Base Salary portion of the Severance
Payment shall be payable not less frequently than semi-monthly in accordance
with the Company's executive compensation practices in effect on the date of
termination. The Annual Bonus and Inducement Award portions of the Severance
Payment are due within thirty (30) days of termination of the Executive's
employment as a result of a Change of Control. The Company shall also provide to
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Executive all benefits under Article 3 of this Agreement that were in effect as
of the date of termination for a period extended for two (2) years from such
date of termination. During the period benefits are provided Executive under
this Section, the Executive and the Company shall continue to share the costs of
such benefits in the same proportions as they had at the time of the Executive's
termination.
5.5.2 In the event of termination under this Section, all of
Executive's issued and unvested stock options shall immediately become fully
vested and exercisable and shall remain exercisable until the original date of
expiration.
5.5.3 "Change of Control" shall mean any of the following:
a. a sale or other disposition of all or
substantially all of the assets of the Company;
b. 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;
c. 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;
d. any other capital reorganization in which more
than fifty percent (50%) of the shares of the Company entitled to vote
are sold or exchanged (whether in a single or a series of related
transactions); or
e. during any period of two consecutive years (not
including periods prior to the Effective Date), 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.
5.6 Termination Not for Cause.
5.6.1 The Company may terminate Executive's employment Not for Cause
during the Term by giving Executive thirty (30) days' written notice. For
purposes of this Section, any material reduction in the authority or changes in
the reporting status of the Executive shall be regarded as Termination Not for
Cause of the Executive. Any termination of Executive's employment by the Company
Not for Cause, that occurs in contemplation of a Change of Control or at the
request or insistence of any person (other than the Company) relating to such
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Change of Control shall be deemed to have occurred after the Change of Control
for the purposes of this Agreement. A breach by the Company of a material term
of this Agreement that remains uncured for a period of fifteen (15) days
following written notice of such breach to the Company, shall be considered a
Termination Not for Cause.
5.6.2 Should the Executive's employment be terminated Not for Cause,
the Company shall pay to Executive all Base Salary and bonuses earned up to and
including the date of termination (which shall be the date thirty (30) days
after the date of the written notice), all accrued and unused vacation, and all
unreimbursed expenses which are reimbursable pursuant to Article 4 incurred
prior to such termination plus, a severance payment in an amount equal to two
(2) years of Executive's Base Salary in effect on the date of termination. The
severance payment shall be payable not less frequently than semi-monthly in
accordance with the Company's executive compensation practices in effect on the
date of termination. Further, the Company shall pay to Executive the Annual
Bonus, Inducement Award (cash and options) that would have been due Executive
during the two (2) years had the Executive continued his employment with the
Company and fully met all Performance Criteria. Additionally, the Company shall
immediately pay to Executive all deferred compensation owed to Executive under
any other agreements.
5.6.3 Should the Executive's employment be terminated Not for Cause,
the Company shall provide to Executive all benefits under Article 3 of this
Agreement that were in effect as of the date of termination from the date of
termination until the earlier of (i) twenty four (24) months after the date of
notice of termination, (ii) the date Executive obtains new employment which
offers benefits comparable or superior to those provided Executive under Article
3 of this Agreement and Executive qualifies for participation in such benefit
plans, or (iii) Executive otherwise obtains benefits. comparable or superior to
those provided Executive under Article 3. During the period benefits are
provided Executive under this Section, the Executive and the Company shall
continue to share the costs of such benefits in the same proportions as they had
at the time of the Executive's termination. In the event of Termination Not for
Cause, all options granted to the Executive shall continue to vest during the
two years after termination and all vested options shall remain exercisable
until the original date of expiration.
5.7 Voluntary Termination By Executive.
5.7.1 This Agreement may be voluntarily terminated by Executive at any
time prior to the expiration of the Term set forth in Article 1 by giving thirty
(30) days' prior written notice of Executive's intent to terminate this
Agreement. Executive agrees to remain in the service of the Company from the
date of the notice until the date of the termination to facilitate transition,
unless the Company and the Executive agree mutually that this Agreement shall
terminate prior to the expiration of such thirty (30) day period. This Agreement
shall only terminate upon the expiration of the transition period following the
written notice, and the Executive shall be entitled to all benefits hereunder
until the agreed upon termination date. In the event of a voluntary termination
under this Section 5.7.1, all options granted to the Executive shall continue to
vest during the period following the written notice until the date of the
termination and all vested options shall remain exercisable until the original
date of expiration.
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5.7.2 In the event the Executive voluntarily terminates this Agreement without
complying with the notice provisions of Section 5.7.1 above, all options
previously awarded Executive shall cease to vest as of the termination date, and
all vested options shall remain exercisable only for a period of three (3)
months following such termination.
5.7.3 For purposes of Section 5.7.2, the three (3) month exercise period for
vested options shall be suspended for any periods during which Executive is
prohibited from exercising such vested options due to applicable securities laws
(which, for purposes of this Agreement includes, without limitation, periods
during which exercise or sale of shares is (i) prohibited by any Insider Trading
Policies or blackout periods imposed by policies adopted by the Company, or (ii)
limited as a result of Executive's knowledge of material non-public information
relating to the Company, or limited as a result of the requirement to delay
timing of any exercise or sale to avoid application of "short-swing" profit
rules (the "Suspended Period"). The Suspended Period shall be extended beyond an
aggregate of six (6) months only upon the written opinion of counsel clearly and
specifically identifying: (i) the applicable securities law that prohibits
Executive's exercise of vested options; (ii) the anticipated period that such
prohibition; (iii) the actions necessary or steps needed so that such
prohibition may be lifted.
ARTICLE 6
INSURANCE AND INDEMNIFICATION
6.1 The Company shall provide the Executive with directors' and officers' (D&O)
liability insurance coverage. The Company shall, at all times, carry no less
that $5 million in such D&O insurance. In the event that the Company's
directors' and officers' liability insurance coverage lapses, and if the
Executive is a party to or is threatened to be made a party to any threatened,
pending or completed claim, action, suit, or proceeding, or appeal therefrom,
whether civil, criminal administrative, investigative, or otherwise, because he
is or was an officer and/or director of the Company or at the express request of
the Company is or was serving for purposes reasonably understood by him to be
for the Company as a director, officer, partner, employee, agent, trustee, or in
any other capacity of an association, corporation, general or limited
partnership, joint venture, trust, or other entity, the Company shall indemnify
the Executive against, and shall pay and advance, all reasonable expenses,
including attorney's fees and disbursements, and any judgments, fines, and
amounts paid in settlement incurred by him in connection with such claim,
action, suit, proceeding, or appeal therefrom, to the fullest extent permitted
under the Company's Certificate of Incorporation ("Certificate"), bylaws
("Bylaws") or applicable law.
6.2 The Executive's coverage under the D&O insurance policy referenced above,
and the Company's obligation to indemnify the Executive as provided above and to
the extent permitted by the Certificate, Bylaws, and applicable law, shall
survive the expiration of this Agreement until the expiration of any statute of
limitations applicable to a claim brought against Executive because he is or was
an officer and/or director of the Company and as necessary to adequately protect
Executive in the event of the Company's insolvency.
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ARTICLE 7
RESTRICTIVE COVENANTS
7.1 Confidential Information. In the course of his employment
hereunder, Executive may have access to confidential records, data, formulae,
customer lists, trade secrets, specifications, inventions and processes owned by
the Company. During the Term and thereafter, Executive shall not, directly or
indirectly, disclose such information to any person or use any such information,
except as required in the performance of Executive's duties hereunder. All
records, files, keys, drawings, documents, models, equipment, and the like
relating to the Company's business, which Executive shall prepare, copy, or use,
or with which Executive comes into contact shall be and remain the Company's
sole property, shall not be removed from the Company's premises, except as
necessary for the performance of the Executive's duties, and shall be returned
to the Company upon the expiration or termination of the Term of Executive's
employment.
7.2 Competing Business. As used in the Agreement, a "Competing
Business" refers to any person or entity engaged in (i) the use of products or
technology similar to Autologel(TM) or the Autologel(TM) System involving the
use of releasates from platelets to treat chronic wounds or other indications
for which the Company has obtained or would be in the process of obtaining any
applicable regulatory clearance during the Term, (ii) any use of products or
technology similar to that which the Company may develop or otherwise obtain
marketable rights during the Term, or (iii) the direct competition with either
(i) or (ii) above.
7.3 Non-competition Period. The "Non-Competition Period" shall
be two years following the date of termination of Executive's employment
7.4 Geographic Restriction. The geographic restriction of the
Executive's Convenant Not to Compete shall include the cities, counties, states
of the United States, and each country outside of the United States where the
Company does business during Executive's employment.
7.5 Covenant Not to Compete. Executive shall not, at any time during
the Term and during the Non-competition Period, either directly or indirectly,
or solely or jointly with other persons or entities:
7.5.1 own, manage, operate, join, control, consult with, render
services for or participate in the ownership, management, operation or control
of, or be connected as an officer, director, employee, partner, principal,
agent, consultant or other representative with, or permit his name to be used in
connection with any profit or nonprofit business, organization or entity, other
than the Company and its affiliates, which operates or engages in a Competing
Business,
7.5.2 lend any credit or money for the purposes of establishing or
operating any Competing Business or otherwise give aid or advice to any person,
firm, association, corporation, or entity engaging in any Competing Business, or
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7.5.3 solicit, contract, divert, or take away or attempt to solicit,
divert, or take away any of the customers, potential customers, business or
patrons of the Company and its affiliates or any of their respective successors
and assigns, directly or indirectly, by or for himself or as the agent of any
other person or entity or through others as an agent or on behalf of a
competitor of the Company.
The Company and Executive acknowledge and agree that the duration,
scope, and geographic area for which the covenant not to compete is to be
effective are reasonable.
7.6 Exceptions to Covenant Not to Compete. Notwithstanding the Covenant
Not to Compete provided in Section 7.5 above:
7.6.1 Executive shall not be restricted from accepting employment with
a Competing Business provided that the scope of such employment, and the duties
involved thereunder do not involve (i) the use of products or technology similar
to Autologel(TM) or the Autologel(TM) System involving the use of releasates
from platelets to treat chronic wounds or other indications for which the
Company has obtained or would be in the process of obtaining any applicable
regulatory clearance during the Term, (ii) any use of products or technology
similar to that which the Company may develop or otherwise obtain marketable
rights during the Term, or (iii) the direct competition with either (i) or (ii)
above.
7.6.2 Executive may own publicly-traded securities issued by a
Competing Business provided that Executive shall not own more than three percent
(3%) of the value of any class of such securities outstanding at such time.
7.6.3 Executive is free to license or economically exploit any patents,
inventions or ideas regarding products that he has developed prior to his
employment with the Company or that he may develop in the future through
expenditure of his personal time and resources, as long as any such future
developments shall not involve (i) the use of products or technology similar to
Autologel(TM) or the Autologel(TM) System involving the use of releasates from
platelets to treat chronic wounds or other indications for which the Company has
obtained or would be in the process of obtaining any applicable regulatory
clearance during the Term, (ii) any use of products or technology similar to
that which the Company may develop or otherwise obtain marketable rights during
the Term, or (iii) the direct competition with either (i) or (ii) above.
7.6.4 Notwithstanding the exceptions to the Covenant Not to Compete
listed above, in no event shall the Executive violate his duties regarding the
solicitation of employees or the nondisclosure of proprietary information
contained herein.
7.7 Solicitation of Employees. Executive shall not, at any time during
the Term or during the Non-competition Period, directly or indirectly, by or for
himself or as the agent of any other person or entity or through others as an
agent in any way solicit or induce or attempt to solicit or induce any employee,
officer, representative, consultant, or other agent of the Company or its
affiliates, whether such person is presently employed with the Company or an
affiliate or may hereinafter be so employed, to leave the Company's employ or
the employ of a Company affiliate.
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7.8. Disclosure of Proprietary Information. In the course of
Executive's employment with the Company, Executive may have access to
confidential records, data, formulae, customer lists, trade secrets,
specifications, inventions, and processes owned by the Company and its
affiliates. During Executive's employment with the Company and thereafter,
Executive shall maintain in strict confidence and shall not, directly or
indirectly, use, disseminate, disclose, or publish or use for his benefit or the
benefit of any person, firm, corporation, or other entity, any confidential or
proprietary information or trade secrets of or relating to the Company and its
affiliates, or which the Company and its affiliates have a right to use,
including, without limitation, information with respect to the Company's and its
affiliates' vendors, suppliers, customers, potential customers, marketing
methods, costs, prices, and terms of employment. Executive shall not deliver to
any person, firm, corporation, or other entity any document, record, notebook,
computer program or similar repository containing any such confidential or
proprietary information or trade secrets, except as required in the faithful
performance of Executive's duties during employment with the Company, provided,
however, that the foregoing restriction shall not apply to (i) disclosure or use
of Executive's general business and technical knowledge or any such information
that became generally available to the public in any manner or form through no
fault of Executive, (ii) disclosure or use of any such information with the
Company's prior written consent, or (iii) disclosure of any such information
required by a court or a governmental agency of competent jurisdiction. In the
event that Executive is so required or compelled to make such disclosure,
Executive shall cooperate with the Company to preserve in full the
confidentiality of all proprietary information whose disclosure is not required
or compelled.
7.8.1 All such information and trade secrets and all records,
files, keys, drawings, documents, models, equipment and the like
relating to the Company's and its affiliates' business with which
Executive comes into contact shall be and remain the sole property of
the Company and its affiliates, shall not be removed from the Company's
or its affiliates' premises, except as reasonably appropriate for the
performance of Executive's duties or with the Company's prior written
consent, and shall be returned to the Company and its affiliates upon
Executive's retirement or other termination of employment with the
Company.
7.8.2 The Company and Executive hereby stipulate and agree
that as between them the foregoing matters are important, material, and
confidential proprietary information and trade secrets and affect the
successful conduct of the business of the Company, its affiliates, and
any successor or assignee of the Company and its affiliates. In the
event that during Executive's employment with the Company or
thereafter, Executive becomes employed by any employer other than the
Company, Executive shall notify such employer of the terms of Article 7
of this Agreement and all sections and subsections thereunder not later
than the date on which Executive commences employment with such
employer.
7.8.3 The Company and the Executive agree that the
restrictions related to disclosure of proprietary information shall not
be applicable if the Executive is directed to disclose proprietary
information pursuant to an order of a court or regulatory agency with
applicable jurisdiction, or if the Executive's failure to disclose
proprietary information would result in a violation of any applicable
laws or regulations. Executive agrees that upon the receipt of a
subpoena or other legal request for information that may include
proprietary information, the Executive will promptly notify the Company
of such subpoena or legal request and shall give the Company
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opportunity to object to the disclosure of such proprietary information
prior to Executive's response.
7.9 Normal Business Communications. Notwithstanding the foregoing
Section 7.8, Executive may engage in discussion and meetings with
representatives of a Competing Business in the normal course of the business of
the Company during Executive's employment with the Company.
7.10 Enforcement of Covenants Not to Compete, Solicit or Disclose.
7.10.1 The Company and Executive intend that the provisions of
Article 7 of this Agreement shall be fully enforceable as set forth
herein. To the extent that any court of competent jurisdiction finds
that any such provision is unenforceable by reason of its duration or
scope, the Company and Executive agree that it shall be enforced
insofar as it may be enforced within the limits of the law of that
jurisdiction but that the Agreement as a whole shall be unaffected
elsewhere.
7.10.2 The Company and Executive recognize and acknowledge
that the Company, by the Agreement, has sought to prohibit competition
and disclosure of confidential information by Executive during
Executive's employment with the Company and thereafter and that
Executive's performance of services or disclosure of confidential
information in contravention of the Agreement or other breach of the
provisions of Article 7 of this Agreement would consequently cause
immediate and irreparable harm to the business and goodwill of the
Company and its affiliates, the exact amount of which will be difficult
or impossible to ascertain, and that damages, if any, and other
remedies at law would be inadequate. Accordingly, should Executive
perform or attempt or threaten to perform services or disclose
confidential information in contravention of the Agreement or otherwise
breach the provisions of Article 7 of this Agreement, the Company
shall, in addition to any and all other remedies available to it under
the Agreement, have the right to seek and obtain an injunction or other
equitable relief, restraining and preventing Executive from performing
such services, disclosing such information, or breaching the provisions
of Article 7 of this Agreement.
ARTICLE 8
GENERAL PROVISIONS
8.1 Entire Agreement. The Agreement is intended to be the final,
complete, and conclusive agreement between the parties relating to the
employment of the Executive by the Company with respect to the Term, and all
prior or contemporaneous understandings, representations, and statements, oral
or written, are merged herein. No modification, waiver, amendment, discharge, or
change of the Agreement shall be valid unless the same is in writing and signed
by the party against which the enforcement thereof is or may be sought.
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8.2 No Waiver. No waiver by conduct or otherwise by any party of any
term, provision, or condition of the Agreement shall be deemed or construed as a
further or continuing waiver of any such term, provision, or condition or as a
waiver of a similar or dissimilar condition or provision at the same time or at
any prior or subsequent time.
8.3 Remedies Not Exclusive. No remedy conferred by any of the specific
provisions of the Agreement is intended to be exclusive of any other remedy,
except as expressly provided in the Agreement, and each and every remedy shall
be cumulative and in addition to every other remedy given hereunder or now or
hereafter existing in law, in equity, by statute, or otherwise. No failure by
any party to exercise and no delay in exercising any rights shall be construed
or deemed to be a waiver thereof, and no single or partial exercise by any party
shall preclude any other or future exercise thereof or the exercise of any other
right.
8.4 Notices. Except as otherwise provided in the Agreement, any notice,
approval, consent, waiver, or other communication required or permitted to be
given or to be served upon any person or entity in connection with the Agreement
shall be in writing. Such notice shall be either personally served, sent by
telegram, tested telex, fax, cable, prepaid registered or certified mail with
return receipt requested, or by other express mail service and shall be deemed
given at the time such notice was actually given if personally served or by
express mail service, or two business days following delivery by telegram,
telex, fax, cable, or mail. Any notice given by telegram, telex, fax, or cable
shall be confirmed in writing by the carrier making the service within
forty-eight hours after being sent. Such notices shall be addressed to the party
to whom such notice is to be given at the party's address set forth below or as
such party shall otherwise direct.
If to the Company: Cytomedix, Inc.
1523 South Bowman Road, Suite A
Little Rock, Arkansas 72211
If to Executive: Dr. Kshitij Mohan
25 Beman Woods Court
Potomac, Maryland 20854
8.5 Assignment. This Agreement is intended to bind and inure to the
benefit of and be enforceable by the Executive and the Company, and their
respective successors, heirs (in the case of Executive) and assigns, except
that: (1) the Agreement and the Executive's rights and obligations hereunder may
not be assigned by the Executive, and any purported assignment by the Executive
in violation hereof shall be null and void; and (2) in the event of any sale,
transfer, or other disposition of all or substantially all of the Company's
assets or business, whether by merger, consolidation or otherwise, the Company
may assign the Agreement and its rights hereunder, only with the Executive's
consent and only provided that such assignment shall not limit the Company's
liability under the Agreement to the Executive. Notwithstanding any of the
foregoing, all of Executive's rights and interest hereunder shall be assignable
to Executive's legal representatives, executors or conservators in the event of
Executive's Death or Disability.
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8.6 Governing Law. The Agreement shall be construed and enforced in
accordance with the laws of Arkansas without giving effect to the principles of
conflict of laws thereof. Venue for any dispute resolution shall be in the
Commonwealth of Virginia or the State of Maryland, at the sole choice of the
Executive.
8.7 Counterparts. The Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
8.8 Severability. The provisions of the agreement are severable, and if
any provision or application thereof is held invalid or unenforceable, then such
holding shall not affect any other provision or application.
8.9 Arbitration. Any controversy or claim arising out of or related to
the Agreement or the breach thereof shall be settled by binding arbitration in
accordance with the rules then in effect of the American Arbitration
Association, which arbitration shall be held in the Commonwealth of Virginia or
the State of Maryland, at the sole choice of the Executive. The arbitrator's
decision shall be binding and final, and judgment upon the award rendered may be
entered in any court having jurisdiction thereof.
8.10 Injunctive Relief. The Executive agrees that it would be difficult
to compensate Company fully for damages for any violation of the provisions of
the Agreement, including without limitation the provisions of Article 7.
Accordingly, the Executive specifically agrees that the Company and its
successors and assigns shall be entitled to temporary and permanent injunctive
relief to enforce the provisions of the Agreement. The provision with respect to
injunctive relief shall not, however, diminish the right of the Company to claim
and recover damages in addition to injunctive relief.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties execute the Agreement effective the
date first above written.
COMPANY:
CYTOMEDIX, INC., a Delaware corporation
By:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
EXECUTIVE:
----------------------------------------
Dr. Kshitij Mohan
Date:
---------------------------------
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APPENDIX 1
INDUCEMENT AWARD
A. Option Grant
In consideration of Executive's execution of this Agreement, Company
agrees to immediately grant Executive stock options for 1,000,000 shares of
Company's common stock at an exercise price of $1.50 per share (the "Inducement
Award"). Options for 500,000 shares will be fully vested and immediately
exercisable upon commencement of Executive's employment. Options for 250,000
shares shall vest and be exercisable upon the first anniversary of the date of
employment provided Executive remains employed by the Company upon such date or
is otherwise entitled to immediate or continued vesting as a result of
termination as specified under Article 5 of this Agreement. Options for 250,000
shares shall vest and be exercisable upon the second anniversary of the date of
employment provided Executive remains employed by the Company upon such date or
is otherwise entitled to immediate or continued vesting as a result of
termination as specified under Article 5 of this Agreement. All vested options
comprising the Inducement Award (and all rights with respect thereto, including,
without limitation, the rights provided in Sections B and D of this Appendix 1)
shall continue to be exercisable until the original date of expiration
notwithstanding the Company's termination of Executive's employment under the
Agreement.
B. Anti-Dilution Provisions
The Inducement Award shall be subject to the following anti-dilution
provisions:
The Company represents that as if the Effective Date, the outstanding
common stock of the Company on a fully diluted basis (which reflects, without
limitation, full exercise of all outstanding but unexercised options and
warrants, full conversion of all convertible stock and securities, and full
issuance of dividends accrued and payable in stock) is 36,167,304 shares. Thus,
the Inducement Award provided in Section A of this Appendix 1 constitutes 2.76
percent (2.76%) (the "Target Percentage") of the outstanding common stock on a
fully diluted basis as of the Effective Date (not including any security issued
to or controlled by the Executive). Upon commencement of Executive's employment
and the award of the Inducement Grant, the Company shall prepare and the Company
and Executive shall execute mutually a schedule setting forth the Target
Percentage and the method of calculating the same.
In the event the Company issues additional shares of common stock or
other security convertible into or exercisable for common stock (including,
without limitation, other options, warrants or debt securities, but not
including any security issued to the Executive), the Company shall issue
Executive additional options to purchase common stock at an exercise price of
$1.50 so that, assuming the exercise of all options previously issued and to be
issued as part of the Inducement Award, the Executive would be the beneficial
owner of the Target Percentage of the outstanding common stock of the Company on
a fully diluted basis (not including any securities owned or controlled by the
Executive).
However, in no event shall this Section B of Appendix 1 entitle the
Executive to receive options to purchase more than 1,000,000 additional shares
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of common stock, so that the total number of shares of common stock issuable
upon the exercise of Inducement Award options shall never exceed 2,000,000
shares (the foregoing 1,000,000 and 2,000,000 values being subject to adjustment
for stock splits or stock dividends as provided in Section C of this Appendix
1). Any additional options issued under this Section B of Appendix 1 shall vest
as if such options had been issued as part of the original Inducement Award
(i.e., one-half of the additional options will be immediately vested and
exercisable, one-quarter shall vest and become exercisable upon the first
anniversary of the Executive's employment provided Executive remains employed by
the Company upon such date or is otherwise entitled to immediate of continued
vesting as a result of a termination as specified under Article 5 of this
Agreement, and one quarter shall vest and become exercisable upon the second
anniversary of the Executive's employment provided Executive remains employed by
the Company upon such date or is otherwise entitled to immediate or continued
vesting as a result of a termination as specified in Article 5 of this
Agreement. If, for example, the issuance of additional options pursuant to this
Section B of Appendix 1 occurred after the first anniversary of Executive's
employment, three quarters of the additional options would be immediately vested
and exercisable and one quarter would vest and be exercisable upon the second
anniversary of Executive's employment, assuming Executive remains employed by
the Company upon such date or is otherwise entitled to immediate or continued
vesting as a result of termination as specified under Article 5 of this
Agreement). Any additional options issued under this Section B of Appendix 1
shall also be considered a part of the Inducement Award for all other rights and
purposes under this Appendix B.
C. Adjustment Upon Change in Stock Split or Stock Dividend
In the event that the Company issues any stock dividend upon its shares
of common stock or undergoes a stock split with respect to its common stock, the
Inducement Award options shall provide for a corresponding and proportionate
adjustment to the number of shares subject to the Inducement Award options and
to the exercise price thereof (for example, in the event of a 5:1 stock split,
the number of options would be increased to 5,000,000 and the exercise price per
share would be reduced to $0.30 per share). The limitation on the number shares
of common stock which may be subject to options issued pursuant to the
Anti-Dilution Provisions of Section B of this Appendix 1 (1,000,000 shares of
common stock) shall also be similarly adjusted in such event.
D. Registration Rights
In the event the Executive exercises any of the options constituting
the Inducement Award, the Company shall use its best efforts to issue
unrestricted common stock to the Executive upon such exercise. To the extent the
Company issues restricted common stock to the Executive upon his exercise of
options constituting the Inducement Award, the Company shall use its reasonable
best efforts to register the Executive's resale of such common stock as soon as
practicable, but in no event the next subsequent registration statement filed by
Company with the SEC, and in any event no later than the end of Executive's
second year of employment. Company shall indemnify and hold Executive harmless
from and against all losses or expenses arising from such registration other
than liability arising from fraud or criminal acts of Executive. In the event
that the Company proposes to effect a sale or offering of shares of common stock
through any underwriter on a firm commitment or best efforts basis, Company
agrees to notify Executive, and if so elected by Executive, to include all
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shares desired by Executive within the shares to be sold pursuant to such
offering. In the event that other shareholders hold similar registration rights
and the underwriter is not willing or able to sell all such shares in such
offering, then Executive shall have the right to participate on a pari passu
"most favored nation" basis with all other common shareholders holding similar
such registration rights. The option agreement will include a registration
rights provision which incorporates all of the foregoing.
Notwithstanding the above, the Executive understands and acknowledges
that certain provisions of federal and/or state securities law may limit his
ability to sell the common stock issued to him upon exercise of the Inducement
Award options and Executive agrees to comply with any federal or state
securities law applicable to such sale.
E. Continuation of Rights.
The Executive's rights to additional options pursuant to Section B of
this Appendix 1 (Anti-Dilution Provisions) shall continue until the earlier of:
(i) the date upon which Executive has received the maximum possible total number
of additional options permissible under the anti-dilution provisions of section
B of this Appendix 1 (1,000,000, subject to adjustment under Section C of this
Appendix B), or (ii) the date Executive is no longer employed by the Company,
whether under this Agreement or otherwise. All other rights contained in this
Appendix 1 and applicable to the Inducement Award or the common stock to be
issued upon exercise of options comprising the Inducement Award shall survive
the expiration or termination of this Agreement and continue with respect to
vested Inducement Award options and Inducement Award options which may continue
to vest after termination as a result of the specific provisions contained in
Article 5 of this Agreement through the full term of such options (and, with
respect to shares of common stock acquired through exercise of Inducement Award
options shall continue through Executive's full period of ownership of such
shares unless sooner fulfilled).
F. Other Provisions
The Company and the Executive agree that this Inducement Award is
subject to modification or amendment by mutual agreement of the Company and
Executive if the Company and the Executive determine in good faith that an
amendment or modification would maintain the economic benefit of the Inducement
Award to the Executive, but would mitigate any adverse economic impact upon the
Company or the Executive. In such event, the Company and the Executive agree to
negotiate such amendment or modification in good faith and use their best
efforts to amend or modify the Inducement Award as will maintain the economic
benefit to Executive reflected in the Inducement Award structure reflected
above. The obligation under Section 3.2 of the Agreement to complete all
necessary documents related to the Inducement Award within ten (10) days of the
Effective Date shall be suspended if the Executive and the Company elect to
discuss or otherwise consider an amendment or modification to the Inducement
Award. Such documents shall be completed within ten (10) business days following
the mutual agreement between the Company and the Executive as to the final form
and structure of the Inducement Award.
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APPENDIX 2
ANNUAL BONUS
A. Bonus
Executive's Bonus for the first year of the Initial Term shall be
$100,000, notwithstanding the achievement of any Performance Criteria.
If Executive meets the Performance Criteria that have been agreed upon
by the Company and the Executive, per Section 3.3 of this Agreement, the bonus
for the first and second year of the Initial Term shall be $150,000 each year.
The Executive may elect to receive all or part of his bonus in the first or
second year of the Term in the form of stock at $1.50 per shares. In each of the
first and second years of the Term, the Executive shall also receive options to
purchase 100,000 shares of common stock at an exercise price of $1.50, vested
immediately upon grant and with a 10-year exercise term. All vested options
comprising an Annual Bonus award shall continue to be exercisable until the
original date of expiration notwithstanding the Company's termination of
Executive's employment under the Agreement.
B. Performance Criteria
The Performance Criteria for the first year will be agreed upon by the
Company and the Executive, as outlined in Section 3.3.
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APPENDIX 3
FRINGE BENEFITS
The Company and the Executive have agreed to a $25,000 per year "perk
package." This amount will be paid at the beginning of each year of the Term in
cash or through a combination of cash and other benefits in kind, at the sole
choice of Executive.
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