Exhibit 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (“Agreement”) is entered
into as of the 3rd day of
December, 2004, (the “Effective Date”) by and between
Osiris Therapeutics, Inc., a Delaware corporation (the
“Company”), and Cary J. Claiborne , (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
December 3, 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 Chief Financial
Officer during the Employment Period. As such, the Executive shall
render executive policy and other management services to the
Company of the
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type customarily performed by
persons serving in a similar, officer capacity, and shall perform
the other duties and objectives as the CEO may determine from time
to time. The Executive shall report to the CEO. Objectives of
the Executive may be amended by the CEO 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.
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 180,000 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 50,000 for the year 2005, which payments
shall be based 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.
(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.
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(f) Equity. Upon the
effective date of the Agreement, the Executive shall be granted
240,000 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
may further be granted 60,000 options to purchase Companies common
stock at USD .10. 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.
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
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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
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. Either party may
terminate employment within the first 90 days of the effective date
for any reason.
(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
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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 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. The Executive may be
eligible for severance payments after completion of 90 days of
employment. No severance payment will be made if Executive is
terminated within the first 90 days after the effective
date.
(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 through the Date of Termination and all other accrued and
unpaid amounts, if any, to which the Executive is entitled as of the Date of
Termination, and the Company shall have no further
obligations to the Executive under this Agreement.
(b)
Disability. If the Company terminates the
Executive’s employment during the
Employment Period because of the Executive’s
disability pursuant to Section
7(a)(ii)(A) hereof, the Company shall pay to the Executive,
the Executive’s Base Salary
prorated through the Date of Termination and all other accrued and
unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination, and the Company shall have no further
obligations to the Executive
under this Agreement; provided, that payments so made to
the Executive during any period that the Execu
