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Exhibit 10.1
SEVERANCE AGREEMENT
AND MUTUAL RELEASE OF CLAIMS
1. Parties . This Severance
Agreement and Mutual Release of Claims ("Agreement") is made by and
between James D. Durham ("Durham") and Crdentia Corp., Delaware
corporation, ("Crdentia") (individually a "Party" or collectively
"the Parties").
2. Purpose of Agreement .
The purpose of this Agreement is to settle completely and cause the
release of any and all known and unknown claims by and between
Durham and Crdentia, including but not limited to any and all
claims relating to Durham’s employment with Crdentia and the
severance of Durham’s employment with Crdentia (other than
those expressly excluded herein).
3. Resignation . Effective
March 1, 2007, Durham retired and resigned from Durham’s
position as Crdentia’s Chief Executive Officer, as Chairman
of the Board and as a member of Crdentia’s Board of
Directors, and in all other capacities in which he currently serves
with respect to Crdentia.
4. Wages and Expenses .
Within three business days of the Effective Date, Crdentia will
mail Durham checks in the gross sum of: (a) $11,067.92, less
payroll withholdings, as payment of wages through March 1, 2007;
and (b) an additional bonus payment of $60,161.00, less payroll
withholdings. Crdentia will also reimburse Durham for
reasonable business expenses incurred by Durham relating to
Durham’s employment with Crdentia according to
Crdentia’s policy and practice with fifteen days of
submission of appropriate documentation to Crdentia.
5. Return of Crdentia Property and
Documents . In consideration of this Agreement, and the
covenants and releases given herein, Durham agrees to return all
property and documents belonging to Crdentia with three business
days of the Effective Date. Durham, however, will be
permitted to retain the laptop and Blackberry provided to Durham by
Crdentia; provided Durham submits those items within three business
days of the Effective Date to Crdentia’s Chief Financial
Officer and IT Consultant for joint review, inspection, and removal
of all Crdentia related information. Crdentia will provide,
and Durham will be permitted to retain, a copy of Durham’s
contact list. Crdentia’s IT Consultant will assist
Durham in transferring his contact list to the laptop.
6. Durham’s Continuing
Obligations Under Employment Agreement . Durham’s
employment with Crdentia was governed by the Durham Employment
Agreement between Lifen, Inc. and Durham, effective August 1, 2002
("Original Employment Agreement"), the Amendment to Employment
Agreement, effective January 1, 2004, between Crdentia and Durham
("First Amendment"), and Second Amendment to Employment Agreement,
effective November 8, 2005, between Crdentia and Durham ("Second
Amendment"). The Original Employment Agreement, First
Amendment, and Second Amendment are collectively referred to
herein as the "Employment Agreement." In
consideration of this Agreement, and the covenants and releases
given herein, Durham hereby agrees to comply with Durham’s
continuing obligations under the following Sections of Part Two of
the Employment Agreement: Section 11(A) (Non-Competition);
Section 12 (Non-Solicitation and Non-Disparagement); Section 13
(Confidentiality); Section 14 (Ownership Rights); Section 18
(Injunctive Relief and Termination); and Section 19 (Reasonableness
of Restrictions).
7. Consulting Period . In
consideration of this Agreement, and the covenants and releases
given herein, from March 1, 2007 through October 31, 2007, Durham
will provide consulting services to Crdentia as an independent
contractor ("Consulting Period"). During the Consulting
Period, Durham shall, with respect to any reasonable request upon
reasonable notice, (i) cooperate with Crdentia in the orderly
transfer of work to other employees, in the transistion process to
a new Chief Executive Officer, and will cooperate with
Crdentia’s reasonable requests for assistance, information,
and/or advice, (ii) cooperate fully with Crdentia in its
investigation or defense of any administrative proceeding,
investigation or litigation without requiring a subpoena, be
available to provide information and answer questions from Crdentia
or its counsel, and appear as a witness, all without compensation
(except as provided in the last sentence of this Section 7 and for
reimbursement for travel or other reasonable expenses incurred in
doing so), and (iii) cooperate fully with Crdentia in all
reasonable respects in the potential settlement of any claims by
iVOW, Inc., or any of its shareholders or creditors, against
Crdentia (except that nothing herein shall require Durham to pay
any money or other consideration as part of any such settlement,
other than a mutual release and the release of the Security
Interest as defined and contemplated in Section 13 below).
Durham shall have no authority to represent or act on behalf of
Crdentia during or after the Consulting Period. Within five (5)
business days of March 30, 2007 and within five (5) business days
of the last day of each month thereafter during the Consulting
Period, Crdentia will wire Durham the gross sum of $31,666.66 or
shall make direct deposit of such amount to any account designated
by Durham. In the event that Crdentia believes that Durham is
in breach of any obligation to provide services under this Section
7, Crdenita will provide written notice and opportunity for Durham
to cure such breach within seven (7) business days. The
parties agree that Durham is not expected to provide services
during the Consulting Period to Crdentia at an annual rate that is
fifty percent or more of the services rendered on average
during the immediately preceding three full calendar
years.
8. Severance . In further
consideration of Durham signing this Agreement, and the covenants
and releases given herein, within seven business days of November
1, 2007, Crdentia will mail Durham a check for the gross sum of
$250,000.04, less payroll withholdings. Such payment will be
made regardless of whether Durham dies or becomes disabled during
the Consulting Period.
9. Acknowledgement of Full
Payment . Durham acknowledges and agrees that the payment
of the amounts described in Sections 4, 7 and 8 shall constitute
full and complete satisfaction of any and all amounts properly due
and owing to Durham as a result of his employment with Crdentia or
the termination of his employment.
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10. Vested Stock Options and
Restricted Stock . (a) Nothing in this Agreement,
including the Mutual Release set forth in Section 18 below, shall
affect any rights or obligations of the Parties under the
Restricted Stock Bonus Award and Restricted Stock Bonus Award
Agreements relating to the restricted stock awards granted to
Durham on March 24, 2006 (the "2006 Restricted Stock Grant") and
May 31, 2005 (the "2005 Restricted Stock Grant") (collectively, the
"Restricted Stock Grants"). In accordance with the terms of
the Restricted Stock Grants, vesting in the restricted stock
granted thereunder will continue during the period Durham continues
to provide consulting services pursuant to Section 7 and shall
cease in any event as of October 31, 2007. [Crdentia confirms
that as of the date of this Agreement, 105,000 shares of restricted
stock have vested pursuant to the 2005 Restricted Stock Grant and
no shares of restricted stock have vested under the 2006 Restricted
Stock Grant.]
(b) Nothing in this Agreement, including the Mutual
Release set forth in Section 18 below shall affect any rights or
obligations of the parties with respect to the stock option grants
and common stock purchase rights listed on Exhibit A to this
Agreement (the "Options"). Crdentia confirms that Exhibit
A lists (i) all Options currently held by Durham, including the
number of shares of Crdentia common stock for which each such
Option is exercisable, (ii) the option exercise price with respect
to each such Option, (iii) that all such Options are fully vested
and (iv) the period through which each such Option may be exercised
by Durham. In accordance with the terms of the Options, such
Options will remain exercisable until they expire pursuant to their
terms (including early termination due to the termination of
Durham’s employment or service to Crdentia, but the period
for exercise of any Options shall not expire earlier than ninety
days after the termination of the Consulting Period).
(c) Durham agrees to take all actions and execute all
documents (including without limitation the endorsement and
delivery of share certificates) required to effectuate the
agreements set forth in this Section 10.
11. Additional Stock Option Grant . In
further consideration of Durham signing this Agreement, and the
covenants and releases given herein, on the Effective Date (the
"Grant Date"), Crdentia shall grant Durham an option to purchase
1,000,000 shares of Crdentia’s common stock in the form
attached hereto as Exhibit B ("Stock Option"), at an
exercise price of $0.60 per share or the closing price of
Crdentia’s common stock on the Over-the-Counter Bulletin on
the Effective Date, whichever is greater. The Stock Option
shall be fully vested as of the Grant Date, Durham shall have up to
and including the tenth anniversary of the Grant Date to exercise
the Stock Option, and the Stock Option will contain a cashless
exercise provision. Crdentia will cause the Stock Option and
the shares of common stock underlying the Stock Option to be
covered by a Registration Statement on Form S-8, to the extent
permissible by law and the rules and regulations promulgated by the
U.S. Securities and Exchange Commission.
12. Continuation of Health Insurance Coverage
. In further consideration of Durham signing this Agreement,
and the covenants and releases given herein, Crdentia will continue
to provide Durham with family health insurance coverage during the
Consulting Period, consistent
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with the coverage received by him immediately
prior to the date of this Agreement. In addition, beginning
immediately following the Consulting Period, Crdentia will pay for
an additional sixteen (16) months of family health insurance
coverage pursuant to COBRA for Durham and Durham’s family,
provided Durham timely completes all necessary documentation prior
to the end of the Consulting Period and Durham and Durham’s
family qualify for such coverage ("Health Insurance Pay").
The premium amounts for such coverage will be includable in
Durham’s taxable income at the applicable COBRA rates
(without regard to the 2% administrative surcharge). Crdentia
shall have no further or additional obligation or liability for
continuation of any benefits, including but not limited to medical,
dental, disability, death, travel/accident, and/or life insurance
(except that Durham may exercise any portability rights provided by
the plan documents for such benefits). Nothing in this
Section 12 will limit any right that Durham or his beneficiaries
have under COBRA.
13. Collateral .
(a) In further consideration of Durham signing this
Agreement, and the covenants and releases given herein, Crdentia
will return to Durham a sum equal to the certificate of deposit in
the principal amount of $500,000 (the "Collateral") pledged as
collateral by Durham pursuant to that certain Security Agreement
— Pledge, dated as of January 19, 2007, by and between Durham
and Comerica Bank, within fifteen days of Crdentia’s receipt
of additional equity investments (following the Effective Date) in
the aggregate amount of $5,000,000 ("Aggregate Investment").
(As used herein, "Aggregate Investment" excludes all equity
investments made pursuant to the Securities Purchase Agreement
dated January 25, 2007, as amended, and all subsequent closings
under such Securities Purchase Agreement, as amended, including but
not limited to such subsequent closings on February 7, 2007 and
March 5, 2007, and any additional closings made pursuant to such
Securities Purchase Agreement, as amended, after the date hereof
(as amended the "Securities Purchase Agreement")) If Crdentia
does not receive the Aggregate Investment on or before September 1,
2007 (the "Collateral Payment Date") or has not otherwise returned
the Collateral, Crdentia shall immediately return the Collateral
and Durham may institute any and all proceedings, including those
seeking immediate equitable relief, to collect the Collateral;
provided , however , that Crdentia has the right to
extend the Collateral Payment Date to March 1, 2008 (the "Extended
Collateral Payment Date") upon payment to Durham of an additional
$100,000.00 on or before the Collateral Payment
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