EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment
Agreement ("Agreement") is made as of the 10th day of
September, 2009, between Anika Therapeutics, Inc., a Massachusetts
corporation
(the "Company"), and Frank J. Luppino (the "Executive").
WHEREAS, the
Company desires to employ the Executive and the Executive
desires to be employed by the Company on the terms contained
herein.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the
receipt and
sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Employment.
Subject to the provisions of Section 4, the term of this
Agreement shall commence on September 8, 2009 and shall remain in
effect
indefinitely unless terminated pursuant to Section 4. The term of
this Agreement
may be referred to herein as the "Term."
2. Position and
Duties. During the Term, the Executive shall serve as
the Chief Operating Officer of the Company, and shall be
responsible for
translating global business priorities into operational tactics.
The Executive
shall be directly responsible for the following operational areas:
Regulatory
and Clinical Affairs, Operations, and Quality Systems. The
Executive shall
participate with the CEO and other top executives in formulating
current and
long-range strategies, objectives and global policies and
translating these into
tactics for the business and shall have such other powers and
duties as may from
time to time be prescribed by the Board of Directors of the Company
(the
"Board"), the Chief Executive Officer of the Company (the "CEO") or
other
authorized executive, provided that such duties are consistent with
the
Executive's position or other positions that he may hold from time
to time. The
Executive shall devote his full working time and efforts to the
business and
affairs of the Company. Notwithstanding the foregoing, the
Executive may serve
on other boards of directors, with the approval of the Board, or
engage in
religious, charitable or other community activities as long as such
services and
activities are disclosed to the Board and do not materially
interfere with the
Executive's performance of his duties to the Company as provided in
this
Agreement.
3. Compensation
and Related Matters.
(a) Base Salary. The Executive's initial annual base salary
shall be $285,000. The Executive's base salary shall be
redetermined annually by
the Board or the Compensation Committee of the Board (the
"Compensation
Committee"). The base salary in effect at any given time is
referred to herein
as "Base Salary." The Base Salary shall be payable in substantially
equal
bi-weekly installments.
(b) Incentive Compensation. The Executive shall be eligible to
receive cash incentive compensation as determined by the Board or
the
Compensation Committee from time to time in its sole discretion.
The Executive's
target annual bonus shall initially be 35% of his Base Salary,
subject to
adjustment in the sole discretion of the Compensation Committee or
the Board.
<PAGE>
(c) Expenses. The Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by him in
performing
services hereunder during the Term, in accordance with the policies
and
procedures then in effect and established by the Company for its
senior
executive officers.
(d) Other Benefits. During the Term, the Executive shall be
entitled to continue to participate in or receive benefits under
all of the
Company's Employee Benefit Plans in effect on the date hereof, or
under plans or
arrangements that provide the Executive with benefits at least
substantially
equivalent to those provided under such Employee Benefit Plans. As
used herein,
the term "Employee Benefit Plans" includes, without limitation,
each pension and
retirement plan; supplemental pension, retirement and deferred
compensation
plan; savings and profit-sharing plan; stock ownership plan; stock
purchase
plan; stock option plan; life insurance plan; medical insurance
plan; disability
plan; and health and accident plan or arrangement established and
maintained by
the Company on the date hereof for employees of the same status
within the
hierarchy of the Company. During the Term, the Executive shall be
entitled to
participate in or receive benefits under any employee benefit plan
or
arrangement which may, in the future, be made available by the
Company to its
executives and key management employees, subject to and on a basis
consistent
with the terms, conditions and overall administration of such plan
or
arrangement. Any payments or benefits payable to the Executive
under a plan or
arrangement referred to in this Section 3(d) in respect of any
calendar year
during which the Executive is employed by the Company for less than
the whole of
such year shall, unless otherwise provided in the applicable plan
or
arrangement, be prorated in accordance with the number of days in
such calendar
year during which he is so employed. Should any such payments or
benefits accrue
on a fiscal (rather than calendar) year, then the proration in the
preceding
sentence shall be on the basis of a fiscal year rather than
calendar year.
(e) Vacations. The Executive shall be entitled to 20 paid
vacation days in each calendar year, which shall be accrued ratably
during the
calendar year. The Executive shall also be entitled to all paid
holidays given
by the Company to its executives.
4. Termination.
The Executive's employment hereunder may be terminated
without any breach of this Agreement under the following
circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. The Company may terminate the Executive's
employment if he is disabled and unable to perform the essential
functions of
the Executive's then existing position or positions under this
Agreement with or
without reasonable accommodation for a period of 180 days (which
need not be
consecutive) in any 12-month period. If any question shall arise as
to whether
during any period the Executive is disabled so as to be unable to
perform the
essential functions of the Executive's then existing position or
positions with
or without reasonable accommodation, the Executive may, and at the
request of
the Company shall, submit to the Company a certification in
reasonable detail by
a physician selected by the Company to whom the Executive or the
Executive's
guardian has no reasonable objection as to whether the Executive is
so disabled
or how long such disability is expected to continue, and such
certification
shall for the purposes of this Agreement be conclusive of the
issue. The
Executive shall cooperate with any reasonable request of the
physician in
connection with such certification. If such question shall arise
and the
Executive shall fail to submit such certification, the Company's
determination
of such issue shall be binding on the Executive. Nothing in this
Section 4(b)
shall be construed to waive the Executive's rights, if any, under
existing law
including, without limitation, the Family and Medical Leave Act of
1993, 29
U.S.C. ss.2601 et seq. and the Americans with Disabilities Act, 42
U.S.C.
ss.12101 et seq.
2
<PAGE>
(c) Termination by Company for Cause. At any time during the
Term, the Company may terminate the Executive's employment
hereunder for Cause
if at a meeting of the Board called and held for such purpose, a
majority of the
Board, exclusive of the Executive, determines in good faith that
the Executive
is guilty of conduct that constitutes "Cause" as defined herein.
For purposes of
this Agreement, "Cause" shall mean: (i) conduct by the Executive
constituting a
material act of willful misconduct in connection with the
performance of his
duties, including, without limitation, misappropriation of funds or
property of
the Company or any of its subsidiaries or affiliates other than the
occasional,
customary and de minimis use of Company property for personal
purposes; (ii) the
commission by the Executive of any felony or a misdemeanor
involving moral
turpitude, deceit, dishonesty or fraud, or any conduct by the
Executive that
would reasonably be expected to result in material injury to the
Company or any
of its subsidiaries and affiliates if he were retained in his
position; (iii)
continued, willful and deliberate non-performance by the Executive
of his duties
hereunder (other than by reason of the Executive's physical or
mental illness,
incapacity or disability) which has continued for more than 30 days
following
written notice of such non-performance from the CEO or the Board;
(iv) a breach
by the Executive of any of the provisions contained in Section 8 of
this
Agreement; (v) a violation by the Executive of the Company's
employment policies
which has continued following written notice of such violation from
the CEO or
the Board, or (vi) willful failure to cooperate with a bona fide
internal
investigation or an investigation by regulatory or law enforcement
authorities,
after being instructed by the Company to cooperate, or the willful
destruction
or failure to preserve documents or other materials known to be
relevant to such
investigation or the willful inducement of others to fail to
cooperate or to
produce documents or other materials in connection with such
investigation. For
purposes of clauses (i), (iii) or (vi) hereof, no act, or failure
to act, on the
Executive's part shall be deemed "willful" unless done, or omitted
to be done,
by the Executive without reasonable belief that the Executive's act
or failure
to act, was in the best interest of the Company and its
subsidiaries and
affiliates.
(d) Termination Without Cause. At any time during the Term,
the Company may terminate the Executive's employment hereunder
without Cause.
Any termination by the Company of the Executive's employment under
this
Agreement which does not constitute a termination for Cause under
Section 4(c)
and does not result from the death or disability of the Executive
under Section
4(a) or (b) shall be deemed a termination without Cause.
(e) Termination by the Executive. At any time during the Term,
the Executive may terminate his employment hereunder for any
reason, including
but not limited to Good Reason. For purposes of this Agreement,
"Good Reason"
shall mean that the Executive has complied with the "Good Reason
Process"
(hereinafter defined) following the occurrence of any of the
following events:
(i) a material diminution in the Executive's responsibilities,
authority or
duties; (ii) a material diminution in the Executive's Base Salary
except for
across-the-board salary reductions based on the Company's financial
performance
similarly affecting all or substantially all senior management
employees of the
Company; (iii) a material change in the geographic location at
which the
Executive provides services to the Company; or (iv) the material
breach of this
Agreement by the Company. "Good Reason Process" shall mean that (i)
the
Executive reasonably determines in good faith that a "Good Reason"
condition has
occurred; (ii) the Executive notifies the Company in writing of the
occurrence
of the Good Reason condition within 60 days of the occurrence of
such condition;
(iii) the Executive cooperates in good faith with the Company's
efforts, for a
period not less than 30 days following such notice (the "Cure
Period"), to
remedy the condition; (iv) notwithstanding such efforts, the Good
Reason
condition continues to exist; and (v) the Executive terminates his
employment
within 60 days after the end of the Cure Period. If the Company
cures the Good
Reason condition during the Cure Period, Good Reason shall be
deemed not to have
occurred.
3
<PAGE>
(f) Notice of Termination. Except for termination as specified
in Section 4(a), any termination of the Executive's employment by
the Company or
any such termination by the Executive shall be communicated by
written Notice of
Termination to the other party hereto. For purposes of this
Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the
specific
termination provision in this Agreement relied upon.
(g) Date of Termination. "Date of Termination" shall mean: (i)
if the Executive's employment is terminated by his death, the date
of his death;
(ii) if the Executive's employment is terminated on account of
disability under
Section 4(b) or by the Company for Cause under Section 4(c), the
date on which
Notice of Termination is given; (iii) if the Executive's employment
is
terminated by the Company under Section 4(d), 30 days after the
date on which a
Notice of Termination is given; (iv) if the Executive's employment
is terminated
by the Executive under Section 4(e) without Good Reason, 30 days
after the date
on which a Notice of Termination is given, and (v) if the
Executive's employment
is terminated by the Executive under Section 4(e) with Good Reason,
the date on
which a Notice of Termination is given after the end of the Cure
Period.
Notwithstanding the foregoing, in the event that the Executive
gives a Notice of
Termination to the Company, the Company may unilaterally accelerate
the Date of
Termination and such acceleration shall not result in a termination
by the
Company for purposes of this Agreement.
5. Compensation
Upon Termination.
(a) Termination Generally. If the Executive's employment with
the Company is terminated for any reason during the Term, the
Company shall pay
or provide to the Executive (or to his authorized representative or
estate) any
earned but unpaid base salary, incentive compensation earned but
not yet paid,
unpaid expense reimbursements, accrued but unused vacation and any
vested
benefits the Executive may have under any employee benefit plan of
the Company
(the "Accrued Benefit") within 30 days of the Executive's Date of
Termination.
(b) Termination by the Company Without Cause or by
the
Executive with Good Reason. If the Executive's employment is
terminated by the
Company without Cause as provided in Section 4(d), or the Executive
terminates
his employment for Good Reason as provided in Section 4(e), then
the Company
shall, through the Date of Termination, pay the Executive his
Accrued Benefit.
If the Executive signs a general release of claims in a form and
manner
satisfactory to the Company (the "Release") within 45 days of the
Date of
Termination and does not revoke such Release during the seven day
revocation
period,
4
<PAGE>
(i) the Company shall pay the Executive an amount
equal to the
Executive's Base Salary for the current fiscal year (the
"Severance
Amount"). The Severance Amount shall be paid out in
substantially
equal installments in accordance with the Company's
payroll practice
over 12 months, beginning on the first payroll date
that occurs 52
days after the Date of Termination. Solely for purposes
of Section 409A of
the Internal Revenue Code of 1986, as amended (the
"Code"), each
installment payment is considered a separate payment.
Notwithstanding
the foregoing, if the Executive breaches any of the
provisions
contained in Section 8 of this Agreement, all payments of
the Severance
Amount shall immediately cease; and
(ii) subject to the Executive's copayment of premium
amounts at the
active employees' rate, the Executive may continue to
participate in the
Company's group health, dental and vision program
for 12 months;
provided, however, that the continuation of health
benefits under
this Section shall reduce and count against the
Executive's rights
under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as
amended ("COBRA").
6. Change in
Control Payment. The provisions of this Section 6 set
forth certain terms of an agreement reached between the Executive
and the
Company regarding the Executive's rights and obligations upon the
occurrence of
a Change in Control of the Company, as defined herein. These
provisions are
intended to assure and encourage in advance the Executive's
continued attention
and dedication to his assigned duties and his objectivity during
the pendency
and after the occurrence of any such event. These provisions shall
apply in lieu
of, and expressly supersede, the provisions of Section 5(b)
regarding severance
pay and benefits upon a termination of employment, if such
termination of
employment occurs within 3 months prior to or 12 months after the
occurrence of
the first event constituting a Change in Control, provided that
such first event
occurs during the Term. The provisions in this Section 6 shall
terminate and be
of no further force or effect beginning 12 months after the
occurrence of a
Change in Control, in which case the provisions of Section 5(b)
shall once again
become applicable.
(a) Change in Control. (i) If within 3 months prior to or 12
months after a Change in Control, the Executive's employment is
terminated by
the Company without Cause as provided in Section 4(d) or the
Executive
terminates his employment for Good Reason as provided in Section
4(e), then
(A) Subject to the signing of the Release by
the Executive within 45 days of the Date of Termination and
not revoking
the Release during the seven day revocation
period, the Company shall pay the Executive a lump sum in cash
in an amount equal to 1 1/2 times the sum of (A) the
Executive's current Base Salary (or the Executive's Base
Salary in effect immediately prior to the Change in Control,
if higher) plus (B) the Executive's target annual bonus for
the current fiscal year (or if higher, the target annual bonus
for the fiscal year immediately prior to the Change in
Control) on the first payroll date that occurs 52 days after
the Date of Termination; and
5
<PAGE>
(B) Subject to the Executive's copayment of
premium amounts at the active employees' rate, the Executive
may continue to participate in the Company's group health,
dental
and vision program for 18 months; provided, however,
that the continuation of health benefits under this Section
shall reduce and count against the Executive's rights under
COBRA.
(ii)
Notwithstanding anything to the contrary in this Agreement, it
is
expressly
understood by the parties hereto that the event described in
Section 4(e)(i)
will not be deemed to have occurred so long as the
Executive retains
primary responsibility for the Chief Operating
Officer function
as it relates to the business conducted by the Company
immediately prior
to a Change in Control.
(b) Certain Matters Related to 280G of the Code.
(i)
Anything in this Agreement to the contrary
notwithstanding,
in the event that the amount of any compensation,
payment or
distribution by the Company to or for the benefit of the
Executive, whether
paid or payable or distributed or distributable
pursuant to the
terms of this Agreement or otherwise calculated in a
manner consistent
with Section 280G of the Code and the applicable
regulations
thereunder (the "Severance Payments"), would be subject to
the excise tax
imposed by Section 4999 of the Code, the following
provisions shall
apply:
(A) If the Severance Payments, reduced by
the sum of (1) the Excise Tax and (2) the total of the
Federal, state, and local income and employment taxes payable
by the Executive on the amount of the Severance Payments which
are in excess of the Threshold Amount, are greater than or
equal to the Threshold Amount, the Executive shall be entitled
to the full benefits payable under this Agreement.
(B) If the Threshold Amount is less than (x)
the Severance Payments, but greater than (y) the
Severance
Payments reduced by the sum of (1) the Excise Tax (as defined
below) and (2) the total of the Federal, state, and local
income and employment taxes on the amount of the Severance
Payments which are in excess of the Threshold Amount (as
defined below), then the benefits payable under this Agreement
shall be reduced (but not below zero) to the extent necessary
so that the sum of all Severance Payments shall not exceed the
Threshold Amount. In such event, the Severance Payments shall
be reduced in the following order: (1) cash payments subject
&
