Exhibit 10.4
EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (“Agreement”) is entered
into as of the 15 day of May,
2004, (the “Effective Date”) by and between Osiris
Therapeutics, Inc., a Delaware corporation (the
“Company”), and Charles Randal Mills (the
“Executive”).
WHEREAS, the Company desires to
employ the Executive, and the Executive desires to be employed by
the Company, on the terms and conditions set forth herein from and after
July 5, 2004; and
WHEREAS, the board of directors of
the Company (the “Board”) has approved and authorized the entry into
this Agreement with the Executive.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements set forth herein and other good
and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto agree as follows:
1.
Employment Agreement. On the terms and conditions set forth
in this Agreement, the Company agrees to employ the Executive and
the Executive agrees to be employed by the Company for the
Employment Period set forth in Section 2 hereof and in the position
and with the duties set forth in Section 3 hereof.
2.
Term. The initial term of employment under this Agreement
shall be for a three-year period commencing on the date hereof (the
“Initial Term”). The term of employment shall be
automatically renewed for an additional consecutive 12-month period
(the “Extended Term”) as of the third and every
subsequent anniversary of the date hereof, unless and until either
party provides written notice to the other party in accordance with
Section 11 hereof not less than 90 days before such anniversary
date that such party is terminating the term of employment under
this Agreement, which termination shall be effective as of the end
of such Initial Term or Extended Term, as the case may be, or until
such term of employment is otherwise terminated as hereinafter set
forth. Such Initial Term and all such Extended Terms are
collectively referred to herein as the “Employment
Period.” The parties’ obligations under Sections 6, 8,
9, and 10 hereof shall survive the expiration or termination of the Employment
Period.
3.
Position and
Duties. The Executive shall initially serve as President, Chief
Executive Officer, and Board Member subject to shareholder election
during the Employment Period. As such, the Executive shall render
executive policy and other management services to the Company of
the type customarily performed by persons serving in a similar
officer capacity and shall perform the other duties and objectives
as the Board may determine from time to time. The Executive shall
report to the Board. Objectives of the Executive may be
amended by the Board from time to time. The Executive shall
devote the Executive’s best efforts and working time to the
performance of the Executive’s duties and the advancement of
the business and affairs of the
Company. The Executive is permitted to perform advisory work,
provided such work does not materially detract from the performance
of the Executive’s duties to the Company and does not compete
with the Business of the Company. Such advisory work is
subject to Board approval from case to case.
4.
Compensation.
(a) Base
Salary. During the Employment Period, the Company shall pay to the Executive an annual
base salary (the “Base Salary”), which initially shall
be at the rate of USD 300,000 per year. The Base Salary shall be
reviewed no less frequently than annually and may be increased at
the discretion of the Board. When the Executive’s Base Salary
is increased, the increased
amount shall be the Base Salary for the next 12-month
period. Except as otherwise agreed in writing by the Executive, the
Base Salary shall not be reduced from the amount previously in
effect during the Employment
Period. The Base Salary shall be payable semimonthly or in
such other installments as shall be consistent with the
Company’s payroll procedures.
(b) Bonus. At the discretion
of the Board, the Executive may be eligible to earn a bonus in the
amount of USD of up to 75,000 for the year 2004, which payments
shall be based on mutually agreed performance targets. The
Executive may further be eligible to a bonus in the amount of USD
100,000 for the year 2005, which payments shall be based and
dependent on mutually agreed performance targets.
(c) Benefits. During the
Employment Period, the Executive will be entitled to such other
benefits approved by the Board and made available to employees
generally. Nothing contained in this Agreement shall prevent the
Company from changing insurance carriers or from effecting
modifications in insurance coverage or other employee benefits that
impact Executive.
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(d)
Vacation: Holidays. The Executive shall be entitled to
all public holidays observed
by the Company and per Company policy as determined by the Board
and twenty vacation days in accordance with the applicable vacation
policies for senior executives of the Company, which shall be taken
at a reasonable time or times so as not to negatively impact the
operations of the Company. A maximum of 10 unused vacation days may be carried over for
twelve months after the year in which they accrue.
(e) Withholding Taxes and Other
Deductions. To the extent required by law, the Company shall withhold
from any payments due Executive under this Agreement any applicable federal,
state or local taxes and such other deductions as are prescribed by law or
Company policy.
(f) Equity. Upon the
effective date of the Agreement, the Executive shall be granted
600,000 options to purchase Company common stock at USD .10 per share,
as determined in the sole
discretion of the Board. The options shall vest ratably,
one-fourth on each anniversary of the effective date for four
consecutive years until fully vested. The Executive
shall further be granted 400,000 options to purchase Companies
common stock at USD .10, after 1 year employment with the
Company. These shares shall be granted upon meeting certain
milestones set in mutual agreement by the Company and the
Executive. These shares shall vest ratably, one-fourth on
each anniversary of the grant date for four consecutive years until
fully vested. Upon mutual agreement of the Board and the
Executive, stock grants or similar instruments may be substituted
in place of stock options. In any event, all unvested shares
will vest immediately upon a “Change of Control”, of
the Company as defined below.
(g) Relocation. The
Company will reimburse or advance all reasonable and necessary
costs and expenses associated with the relocation of Executive and
his family from Florida to the Baltimore, Maryland area to include:
incurred closing costs, real estate commissions, and packaging,
moving, and temporary storage services. Such reimbursements
will take into account the tax consequences of any non-deductible
monies, such that all reimbursements or items of imputed income
will also include monies sufficient to cover the state and federal
tax liabilities associated with such payments (i.e., these payments
will be “grossed-up”), and such reimbursements shall be
made within thirty (30) days of the presentment of invoices for
same or advanced where appropriate, not more than
75,000.
During the transition period of
Executive’s move from Florida to Maryland, the Company shall
also provide, for a period of up to six (6) months the following
temporary housing and travel reimbursements and advances: (i)
temporary executive housing in the Baltimore area; (ii) round-trip
airfare for either Executive or Executive’s wife, between
Gainesville and
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Baltimore, on weekends during the
period.
5.
Expenses . The Executive’s expenses incurred in
the performance of his duties hereunder, including the costs of
travel, and similar business expenses incurred shall be reimbursed
by the Company promptly in accordance with Company expense policies
upon periodic presentation by the Executive of an itemized account
of such expenses, with appropriate documentation, which shall be
reviewed by the audit committee from time to time at its
discretion.
6.
Confidentiality: Work
Product.
(a)
Information. The Executive acknowledges that
the information, observations
and data obtained by the Executive concerning the business and
affairs of the Company and its Subsidiaries during the course of
the Executive’s performance of services for, or employment
with, any of the foregoing Persons (whether or not compensated for
such services) are the property
of the Company and its Subsidiaries, including information
concerning acquisition opportunities in or reasonably
related to the business or industry of the Company or its Subsidiaries of which
the Executive becomes aware during such period. Therefore,
the Executive agrees that he will not at any time (whether during
or after the Employment Period) disclose to any unauthorized person
or, directly or indirectly, use for the Executive’s own
account or the account of any other Person, any of such
information, observations or data without the Board’s
consent, unless and to the extent that the aforementioned matters
become generally known to and available for use by the public other
than as a direct or indirect result of the Executive’s acts
or omissions to act or the acts or omissions to act of other senior
or junior management employees of the Company and its Subsidiaries.
The Executive agrees to deliver to the Company at the termination of the
Executive’s employment, or at any other time the
Company may request in writing (whether during or after the
Employment Period), all memoranda, notes, plans, records, reports
and other documents, regardless of the format or media (and copies
thereof), relating to the business of the Company and its Subsidiaries and
their predecessors (including, without limitation, all
acquisition prospects, lists, customer and contact information)
which the Executive may then
possess or have under the Executive’s
control.
(b) Inventions and Patents.
The Executive acknowledges that all inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports and all similar
or related information (whether or not patentable) that
relate to the actual or anticipated business, research
and
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development or existing or future
products or services of the Company or its Subsidiaries that are
conceived, developed, made or reduced to practice by the Executive
while employed by the Company or any of its predecessors
(“Work Product”)
belong to the Company and the Executive hereby assigns, and
agrees to assign, all of
the above to the Company. Any copyrightable work prepared in
whole or in part by the
Executive in the course of the Executive’s work for any
of the foregoing
entities shall be deemed a “work made for hire” under
the copyright laws, and
the Company shall own all rights therein. To the extent that any
such copyrightable work is not a “work made for hire,”
the Executive hereby assigns and agrees to assign to the
Company all right, title and interest, including without limitation, copyright in and to
such copyrightable work. The Executive shall promptly disclose such Work Product
and copyrightable work to the Board and perform all actions
reasonably requested by the Board (whether during or after the Employment Period) to establish
and confirm the Company’s ownership (including,
without limitation, assignments, consents, powers of attorney and
other
instruments).
7.
Termination
of Employment.
(a)
Permitted Terminations. The Executive’s
employment hereunder may be
terminated during the Employment Period without any breach
of this
Agreement only under the following circumstances:
(i)
Death. The Executive’s employment hereunder
shall
terminate upon the executive’s death;
(ii)
By the
Company. The Company
may terminate the Executive’s
employment:
(A) If
the Executive shall have
been unable to perform all of
the Executive’s duties hereunder by reason of illness,
physical or mental disability or other similar incapacity, which
inability shall continue for
three or more consecutive months or four or more non-consecutive months;
or
(B)
for the failure of Executive to satisfactorily perform the duties
and the tasks of the office held by the Executive as reasonably
determined by the Board, and such failure is not cured within 30
days after the Executive receives specific written notice thereof
from the Board; or
(C) for Cause;
or
(iii)
By the Executive.
The Executive may
terminate
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employment for Good
Reason.
(b) Termination. Any termination of the Executive’s
employment by the Company or the Executive (other than because of
the Executive’s death) shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 11 hereof. Termination of the Executive’s
employment shall take effect on the Date of Termination.
8.
Compensation Upon Termination.
(a) Death. If the Executive’s employment is terminated
during the Employment Period as a result of the Executive’s
death, the Company shall pay to the Executive’s estate, or as
may be directed by the legal representatives of such estate, the
Executive’s Base Salary prorated throug
