Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”), dated September 13, 2018 and effective
as of the Commencement Date (as defined below), is entered into between Motus GI
Holdings, Inc., a Delaware corporation, having its corporate headquarters at
1301 East Broward Blvd, Fort Lauderdale, Florida (“Company”), and Timothy P.
Moran, an individual residing at 145 Morgans Way, Holliston, MA 01746
(“Executive”) (Company and Executive, each a “Party” and together, the
“Parties”).

 

WHEREAS, Company desires to employ Executive as its Chief Executive Officer; and

 

WHEREAS, Executive is willing to accept such employment on the terms and
conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements set forth herein,
Company and Executive hereby agree as follows:

 

ARTICLE I

EMPLOYMENT; POSITION, DUTIES AND RESPONSIBILITIES

 

1.01       Employment and Acceptance. Company agrees to, and does hereby, employ
Executive, and Executive agrees to, and does hereby accept, such employment,
upon the terms and subject to the conditions set forth in this Agreement.

 

1.02       Position, Duties and Responsibilities. During the Term (as defined in
Section 2.01 below), Executive shall serve as Chief Executive Officer (the
“CEO”) of the Company as well as in such other positions or capacities as may be
reasonably requested by the Board of Directors of Company (the “Board”) and
shall have such duties and responsibilities as are customary for, and are
consistent with, such position(s) as may, from time to time, be assigned by the
Board. Executive’s employment by Company shall be full-time and exclusive to
Company and Executive shall (a) report to the Board, (b) comply with Company’s
policies and procedures in place from time to time, and (c) serve Company
faithfully and to the best of Executive’s ability. During the Term, the
Executive shall also serve without further compensation as a member of the
Board. The Executive also agrees to promptly execute such documents as may be
reasonably requested by the Company to evidence his cessation of service on the
Board pursuant to Section 4.02(E). During the Term, and except for paid time off
in accordance with the terms of Section 3.01(F) below or absences due to illness
or incapacity, Executive shall devote all of Executive’s business time,
attention, skill and efforts exclusively to the business and affairs of Company
(including its affiliates) and the promotion of its interests. Notwithstanding
anything contained herein to the contrary, Executive may do the following,
provided that such activities do not inhibit or prohibit the performance of
Executive’s duties hereunder or inhibit or conflict with the business of Company
and/or its affiliates: (i) engage in charitable, educational, religious, civic
and similar types of activities and manage Executive’s personal investments, and
(ii) with the prior written consent of the Board which shall not be unreasonably
withheld, serve on the board of directors, managers, advisors (or their
equivalent) of outside business enterprises. The Parties acknowledge that the
Executive currently resides in the Boston metropolitan area; while the Executive
will not be required to relocate his home residence, Executive acknowledges that
he shall be required to travel as reasonably necessary to perform Executive’s
duties hereunder, including international travel.

 

  

 

 

ARTICLE II

 TERM

 

2.01       Term of Employment. Executive’s employment under this Agreement shall
commence no later than 21 days from the date first written above (the
“Commencement Date”) and shall continue on an at-will basis. The period during
which Executive is employed pursuant to this Agreement shall be referred to as
the “Term.”

 

ARTICLE III

COMPENSATION AND BENEFITS; EXPENSES

 

3.01       Compensation and Benefits. For all services rendered by Executive in
any capacity during the Term (including, without limitation, serving as an
officer, director or member of any committee of Company or any affiliate or
division thereof), Executive shall be compensated as follows (subject, in each
case, to the provisions of Article IV below):

 

(A)       Base Salary. During the Term, Company shall pay to Executive a base
salary at the initial rate of $475,000 (less applicable withholdings and
deductions) on an annualized basis (the “Base Salary”). As used in this
Agreement, the term “Base Salary” shall refer to Base Salary as may be adjusted
upward from time to time by the Board. Base Salary shall be payable in
accordance with the customary payroll practices of Company.

 

(B)       Employment Buy-Out Payments. During the Term, Executive shall receive
Employment Buy-Out Payments in the amounts set forth below, and on the dates
listed below, each subject to applicable withholdings and deductions, if the
Executive is actively employed by the Company on such date (the “Employment
Buy-Out Payments”):

 

Amount Date $400,000 March 1, 2019 $400,000 November 1, 2019 $400,000 March 1,
2020 $400,000 November 1, 2020

 

(C)       Performance Bonus. During the Term, the Executive shall be eligible to
receive a bonus payment in an amount equal to up to sixty percent (60%) of the
Executive’s then-Base Salary (“Bonus Target”) if the Board determines that the
Executive has met the target objectives communicated to him. For the first
twelve months of the Executive’s employment, the payout range for the
Performance Bonus shall be between fifty percent (50%) and two hundred percent
(200%) of the Bonus Target based on the Board’s assessment of the achievement of
performance objectives. Thereafter, subsequent payout parameters will be
determined by the Board based upon parameters set by the Board and the Executive
for an overall Company executive bonus program using market data and analysis
input from a third-party expert compensation firm. Any bonus earned by the
Executive shall be paid to Executive no later than March 15th of the calendar
year following the calendar year to which the bonus relates.

 

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(D)         Equity Compensation. Within thirty (30) days after the Commencement
Date, Executive will be granted:

 

a.          an option to purchase 495,000 shares (the “Initial Option Grant”) of
the Company’s common stock (the “Common Stock”) pursuant to the Company’s 2016
Equity Incentive Plan (the “Plan”). The Initial Option Grant will be at an
exercise price equal to the “Fair Market Value” of a share of Common Stock on
the “Date Of Grant” (as such terms are defined by the Plan), as determined by
the Board or the Compensation Committee and subject to the terms and conditions
established within the Plan and a separate stock option grant agreement between
Executive and Employer that sets forth the terms of the Initial Option Grant.

 

b.          a restricted stock unit award for 165,000 shares of Common Stock
pursuant to the Plan (the “Initial Restricted Stock Unit Award”),subject to the
terms and conditions of the Plan and a separate restricted stock unit award
agreement between Executive and Employer that sets forth the terms of the
Initial Restricted Stock Unit Award.

 

The Initial Option Grant and Initial Restricted Stock Unit Award will, subject
to Executives continued employment by the Company, vest in substantially equal
quarterly installments over four years commencing from the Commencement Date.
The stock option grant agreement and restricted stock unit award agreement will
include terms and conditions set forth in the Company’s standard forms of such
agreements under the Plan.

 

During the Term, Executive shall be eligible to receive from time to time such
additional equity grants or awards, if any, pursuant to the terms of the Plan
(or any successor plan as may be in place from time to time) as maybe approved
by the Board or the Compensation Committee in its discretion. Such grants or
awards will be subject to the terms and conditions of the Plan (or any successor
plan) and such other terms and conditions as the Board or the Compensation
Committee in its discretion may establish.

 

(E)         Benefits. During the Term, Executive shall be entitled to
participate in all Executive benefit plans and programs (excluding severance
plans, if any) generally made available by Company to Executives of Company, to
the extent permissible under the general terms and provisions of such plans or
programs and in accordance with the provisions thereof. Company may amend,
modify or rescind any employee benefit plan or program and/or change employee
contribution amounts to benefit costs without notice in its discretion.
Executive’s eligibility for severance shall be governed by the terms of this
Agreement

 

(F)         Paid Time Off (PTO). During the Term, Executive shall be entitled to
paid time off in accordance with Company’s policy in place from time to
time; provided, however, that Executive shall be eligible to accrue no less than
twenty (20) days per calendar year (with such amount prorated for the balance of
2018). The Executive shall be required to obtain the Board’s approval if he
wishes to take more than two weeks of PTO consecutively.

 

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3.02       Expenses. Executive shall be entitled to receive reimbursement from
Company for reasonable out-of-pocket expenses incurred by Executive during the
Term in connection with the performance of Executive’s duties and obligations
under this Agreement, according to Company’s expense account and reimbursement
policies in place from time to time and provided that Executive shall submit
reasonable documentation with respect to such expenses; provided, however, in no
event shall a reimbursement be made later than December 31 of the year following
the year in which the expense was incurred.

 

ARTICLE IV

 TERMINATION

 

4.01       Events of Termination. This Agreement and Executive’s employment
hereunder shall terminate upon the occurrence of any one or more of the
following events:

 

(A)        Death. In the event of Executive’s death, this Agreement and
Executive’s employment hereunder shall automatically terminate on the date of
death.

 

(B)         Disability. To the extent permitted by law, in the event of
Executive’s physical or mental disability that prevents Executive from
performing the essential functions of Executive’s duties under this Agreement
(with or without reasonable accommodation) for a period of at least ninety (90)
consecutive days in any twelve (12)-month period or one hundred twenty (120)
non-consecutive days in any twelve (12)-month period, Company may terminate this
Agreement and Executive’s employment hereunder upon giving written notice of
termination to Executive.

 

(C)        Termination by Company for Cause. Company may, at its option,
terminate this Agreement and Executive’s employment hereunder for Cause (as
defined below) upon giving notice of termination to Executive. As used in this
Agreement, “Cause” shall mean the termination of the Executive’s employment
because of:

 

(1)       gross negligence or willful misconduct in the performance of the
Executive’s duties hereunder, or if the Executive otherwise materially breaches
this Agreement;

 

(2)       the Executive’s failure to obey a lawful and appropriate directive
that is from the Board, which failure is not cured within 15 days written notice
of the alleged failure to perform; provided, that the Executive’s failure to
achieve performance goals shall not constitute such a failure;

 

(3)       a material violation of the restrictive covenants described in Article
V below or of any written employee conduct policy of the Company against
workplace harassment or discrimination); or

 

(4)       conviction of a felony or other serious crime; or

 

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(5)       any other act or omission that results in material harm to the
business, reputation of the Company.

 

(D)         Without Cause by Company. Company may, at its option, at any time
terminate this Agreement and Executive’s employment hereunder for no reason or
for any reason whatsoever (other than for Cause or as a result of Executive’s
death or Disability) by giving written notice of termination to Executive.

 

(E)         Termination by Executive. Executive may terminate this Agreement and
Executive’s employment hereunder with or without Good Reason (as defined below)
by: (i) in the case of a resignation without Good Reason, giving thirty (30)
days prior written notice of termination to Company; or (ii) in the case of a
resignation for Good Reason, giving written notice of resignation within thirty
(30) days after the expiration of the Good Reason Cure Period; provided,
however, in each case, Company reserves the right, upon written notice to
Executive, to accept Executive’s notice of resignation and to accelerate such
notice and make Executive’s resignation effective immediately, or on such other
date prior to Executive’s intended last day of work as Executive deems
appropriate. The Company’s election to accelerate Executive’s notice of
resignation shall not be deemed a termination by Company. For purposes of this
Agreement, “Good Reason” means the occurrence of any of the following
circumstances without Executive’s prior express written consent: (i) a material
adverse change in the nature of Executive’s title, duties or responsibilities
with the Company that represents a material demotion from his title, duties or
responsibilities as in effect immediately prior to such change; (ii) a material
breach of this Agreement by the Company; (iii) a failure by the Company to make
any payments to Executive when due, unless the payment is not material and is
being contested by the Company, in good faith; (iv) the Company’s performance of
any illegal or civilly actionable act that materially damages Executive’s
reputation or is considered harassment under applicable law; (v) any material
reduction of the Executive’s then current annual Base Salary except to the
extent that the annual Base Salary of all other similarly situated employees of
the Company or its successor is similarly reduced; (vi) any requirement that the
Executive relocate to a work site that is more than fifty miles from his home;
or (vii) a liquidation, bankruptcy or receivership of the Company.
Notwithstanding the foregoing, no Good Reason shall be deemed to exist with
respect to the Company’s acts described in clause (i) above, unless Executive
shall have given written notice to the company specifying the Good Reason with
reasonable particularity within (ninety) 90 days after the date Executive first
knew or should reasonably have known of the occurrence of any such event and,
within fifteen (15) days after such notice, the Company shall not have cured or
eliminated the problem or thing giving rise to such Good Reason; provided,
however, that a repeated breach after notice and cure of any provision of clause
(i) above involving the same or substantially similar actions or conduct, shall
be grounds for termination for Good Reason without any additional notice from
Executive. If Executive fails to provide the notice and Good Reason Cure Period
prior to Executive’s resignation, or resigns more than ninety (90) days after
the initial existence of the condition, Executive’s resignation will not be
deemed to be for “Good Reason” and any claim of such circumstances as “Good
Reason” shall be deemed irrevocably waived by Executive.

 

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(F)         Mutual Agreement. This Agreement and Executive’s employment
hereunder may be terminated at any time by the mutual agreement of Company and
Executive.

 

4.02       Company’s Obligations upon Termination.

 

(A) Termination by Company for Cause; Termination by Executive without Good
Reason; Mutual Agreement; Death; Disability. In the event of a termination of
this Agreement and Executive’s employment hereunder pursuant to Sections
4.01(A), 4.01(B), 4.01(C), 4.01(E) (other than a termination for Good Reason),
or 4.01(F) above, then this Agreement and Executive’s employment with Company
shall terminate and Company’s sole obligation to Executive (or Executive’s
estate, heirs, executors, administrators, representatives and assigns) under
this Agreement or otherwise shall be to: (i) pay to Executive (or, if
applicable, Executive’s estate) any Base Salary earned, but not yet paid, prior
to the effective date of such termination, payable in accordance with Company’s
standard payroll practices; (ii) reimburse Executive (or, if applicable,
Executive’s estate) for any expenses incurred by Executive through the effective
date of such termination in accordance with Section 3.02 above; and (iii) pay
and/or provide any amounts or benefits that are vested amounts or vested
benefits or that Executive is otherwise entitled to receive under any plan,
program, policy or practice (with the exception of those, if any, relating to
severance) on the date of termination, in accordance with such plan, program,
policy, or practice (including payment for unused, accrued vacation) (clauses
(i), (ii) and (iii) of this sentence are collectively referred to herein as the
“Accrued Obligations”). In addition, and subject to the timely execution,
delivery and non-revocation of a Release by the Executive (or his estate, as
applicable), in the event of death or termination due to Disability, the Company
shall pay Executive (or his estate as applicable) any unpaid Employment Buy-Out
Payments in accordance with the schedule set forth in Section 3.01(B).

 

(B)          Termination by Company without Cause; Termination by Executive for
Good Reason.

 

(1) In the event of a termination of this Agreement and Executive’s employment
hereunder by Company pursuant to Section 4.01(D) or a termination of this
Agreement and Executive’s employment hereunder by Executive for Good Reason (as
defined in Section 4.01(E) above) pursuant to Section 4.01(E), other than during
the Post-Change in Control Period (as defined in Section 4.02(B)(2)) then this
Agreement and Executive’s employment with Company shall terminate and Company’s
sole obligation to Executive under this Agreement or otherwise shall be to: (i)
pay and/or provide, as applicable, the Accrued Obligations in accordance with
the terms set forth in Section 4.02(A) above; and (ii) subject to Section
4.02(C) below, (a) pay to Executive an aggregate amount equal to the Pre-CIC
Severance Payment (as defined below), (b) if Executive timely elects COBRA
coverage, Company shall pay the Company portion of Executive’s healthcare
continuation payments under COBRA for a twelve (12)-month period following the
date of Executive’s termination of employment with Company (the “Pre-CIC COBRA
Assistance”) during which time Executive shall be responsible for the Executive
portion (unless Executive becomes eligible to obtain healthcare coverage from a
new Company before the twelve (12)-month anniversary of the termination of
Executive’s employment, in which case Company’s obligation to contribute to
Executive’s health care continuation payments under COBRA shall cease), (c) pay
to Executive any unpaid portion of the Employment Buy-Out Payments in accordance
with the schedule set forth in Section 3.01(B), (d) pay to Executive any earned
but unpaid Annual Bonus that relates to the calendar year prior to the calendar
year in which the termination of Executive’s employment from the Company occurs,
which shall be paid in lump sum on the date when bonuses otherwise would be
paid, and (e) the Company agrees to accelerate the vesting of any unvested
equity awards (including the unvested portion of the Initial Option Grant and
Initial Restricted Stock Unit Award) that would have vested within twelve
(12)-months of the termination date if Executive had remained employed by the
Company through such date. Executive acknowledges that he is obligated to inform
Company if Executive obtains new employment or becomes eligible to obtain
healthcare coverage from an alternate source before the twelve (12)-month
anniversary of Executive’s termination of employment.

 

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(2) In the event of a termination of this Agreement and Executive’s employment
hereunder by Company pursuant to Section 4.01(D) or a termination of this
Agreement and Executive’s employment hereunder by Executive for Good Reason (as
defined in Section 4.01(E) above) pursuant to Section 4.01(E) during the twelve
(12)-months immediately following a Change in Control (as defined below) (the
“Post-Change in Control Period”) then this Agreement and Executive’s employment
with Company shall terminate and Company’s sole obligation to Executive under
this Agreement or otherwise shall be to: (i) pay and/or provide, as applicable,
the Accrued Obligations in accordance with the terms set forth in Section
4.02(A) above; and (ii) subject to Section 4.02(C) below, (a) pay to Executive
an aggregate amount equal to the Post-CIC Severance Payment (as defined below),
(b) if Executive timely elects COBRA coverage, Company shall pay the Company
portion of Executive’s healthcare continuation payments under COBRA for an
eighteen (18)-month period following the date of Executive’s termination of
employment with Company (the “Post-CIC COBRA Assistance”) during which time
Executive shall be responsible for the Executive portion (unless Executive
becomes eligible to obtain healthcare coverage from a new Company before the
eighteen (18)-month anniversary of the termination of Executive’s employment, in
which case Company’s obligation to contribute to Executive’s health care
continuation payments under COBRA shall cease), (c) pay to Executive any unpaid
portion of the Employment Buy-Out Payments in accordance with the schedule set
forth in Section 3.01(B), (d) pay to Executive any earned but unpaid Annual
Bonus that relates to the calendar year prior to the calendar year in which the
termination of Executive’s employment from the Company occurs, which shall be
paid in lump sum on the date when bonuses otherwise would be paid, and (e) the
Company agrees to accelerate the vesting of all unvested equity awards
(including the unvested portion of the Initial Option Grant and Initial
Restricted Stock Unit Award). Executive acknowledges that he is obligated to
inform Company if Executive obtains new employment or becomes eligible to obtain
healthcare coverage from an alternate source before the eighteen (18)-month
anniversary of Executive’s termination of employment. As used in this Agreement,
a “Change in Control” shall have the meaning of Change in Control set forth in
the Company’s 2016 Equity Incentive Plan, as in effect on the date of this
Agreement. In the event the unvested portion of Executive’s equity awards
(including the Initial Option Grant and Initial Restricted Stock Unit Award) are
not assumed or substituted with substantially equivalent awards with the
successor corporation in connection with a Change in Control, such unvested
equity awards shall become immediately vested immediately prior to such Change
in Control.

 

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As used in this Section 4.02(B), the term “Pre-CIC Severance Payment” shall mean
the following: continuation of Executive’s regular Base Salary for twelve
(12)-months, with all amounts offset by any subsequent salary or consulting fees
that the Executive receives from any alternate source during the applicable
severance period. As used in this Section 4.02(B), the term “Post-CIC Severance
Payment” shall mean the following: continuation of Executive’s regular Base
Salary for eighteen (18)-months. Subject to Section 4.02(E) below, the Pre-CIC
Severance Payment or Post-CIC Severance Payment, as applicable, (less applicable
withholdings and customary payroll deductions, excluding 401(k) contributions)
shall be paid in equal installments in accordance with Company’s customary
payroll practices, commencing on the next regular pay date following the date
that the Release (as defined in Section 4.02(D) below) becomes effective and is
no longer subject to revocation; provided, however, the first payment shall
include the cumulative amount of payments that would have been paid to Executive
during the period of time between the effective date of termination and the
actual commencement date of such payments had such payments commenced
immediately following the effective date of Executive’s termination.

 

Notwithstanding anything set forth in this Section 4.02(B) to the contrary, in
the event of a material breach by Executive under Article V of this Agreement or
the Release and in addition to any other remedies hereunder, the Release or at
law or in equity, Company’s obligation to make (i) any remaining installments of
the Pre-CIC Severance Payment or the Pre-CIC COBRA Assistance through the twelve
(12)-month anniversary of the date of termination or (ii) any remaining
installments of the Post-CIC Severance Payment or the Post-CIC COBRA Assistance
through the eighteen (18)-month anniversary of the date of termination shall
terminate as of the date of such breach and Company shall have no further
obligations under this Section 4.02(B) other than to pay/provide the Accrued
Obligations (to the extent not previously paid/provided) and Executive shall be
required, upon demand, to return to Company fifty percent (50%) of the Pre-CIC
Severance Payment or Post-CIC Severance Payment, as applicable, (or installments
thereof) paid by the Company pursuant to this Section 4.02(B).

 

(C)       Release. With the exception of Accrued Obligations, all payments and
benefits to Executive pursuant to this Section 4.02 (including the Pre-CIC
Severance Payment or the Post-CIC Severance Payment, as applicable, and the
Pre-CIC COBRA Assistance or the Post-CIC COBRA Assistance, as applicable) shall
be contingent upon Executive’s execution, delivery within 21 days (or 45 days in
the case of a group termination) following receipt by Executive, and
non-revocation of a general release in a form satisfactory to the Company (the
“Release”). The Release will be delivered to Executive within five (5) business
days following the effective date of Executive’s termination and will include,
without limitation, a general release from all liability of Company, its
affiliates and each of their respective officers, directors, shareholders,
partners, managers, agents, employees and other related parties. Notwithstanding
anything to the contrary contained herein, in the event that any payment
hereunder is contingent upon Executive’s execution and delivery of the Release
and the 21 (or 45 day) period covers more than one calendar year, the payment
shall be paid in the second calendar year (on the first regular pay date of such
calendar year following the date that the Release becomes effective and is no
longer subject to revocation, all subject to Section 4.02(D) below), regardless
of whether the Executive executes and delivers the Release in the first or the
second calendar year encompassed in such 21 (or 45) day period.

 

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(D)       Specified Employee. If the Executive is a “specified employee” within
the meaning of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) at the time of the Executive’s termination of employment, amounts
or benefits (including the Severance Payments) that are deferred compensation
subject to Section 409A of the Code, as determined in the reasonable discretion
of the Company, that would otherwise be payable or provided during the six
(6)-month period immediately following the termination of employment will
instead be paid or provided, with interest on any delayed payment at the
short-term applicable federal rate under Section 1274(d) of the Code (with
monthly compounding and at the rate published for the month prior to the month
in which the Executive’s termination of employment occurs), on the first
business day after the date that is six months following the Executive’s
termination of employment.

 

(E)       Removal from any Positions and Boards. If the Executive’s employment
is terminated for any reason under this Agreement, he shall be deemed (without
further action, deed or notice) to resign (i) if a member, from the Board or
board of directors (or similar governing body) of any Affiliate of the Company
or any other board to which he has been appointed or nominated by or on behalf
of the Company and (ii) from all other positions with the Company or any
subsidiary or other Affiliate of the Company, including, but not limited to, as
an officer of the Company and any of its subsidiaries or other Affiliates.

 

ARTICLE V

 CONFIDENTIALITY, NONCOMPETITION, NONSOLICITATION AND OTHER COVENANTS

 

5.01       Confidentiality. Executive shall be provided with access to
Confidential Information relating to the Company, its business, potential
business or that of its clients and customers. “Confidential Information”
includes all trade secrets, know-how, show-how, theories, technical, operating,
financial, and other business information, whether or not reduced to writing or
other medium and whether or not marked or labeled confidential, proprietary or
the like, specifically including, but not limited to, information regarding
source codes, software programs, computer systems, concepts, creations, costs,
plans, materials, enhancements, research, specifications, works of authorship,
techniques, documentation, models and systems, sales and pricing techniques,
designs, inventions, discoveries, products, improvements, modifications,
methodology, processes, concepts, records, files, memoranda, reports, plans,
proposals, price lists, product development and project procedures. Confidential
Information does not include general skills, experience or information that is
generally available to the public, other than information which has become
generally available as a result of Executive’s direct or indirect act or
omission. With respect to Confidential Information of the Company and its
clients and customers:

 

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(A)       Executive will use Confidential Information only in the performance of
Executive’s duties for Company. Executive will not use Confidential Information
at any time (during or after Executive’s employment with Company) for
Executive’s personal benefit, for the benefit of any other individual or entity,
or in any manner adverse to the interests of Company and its clients and
customers except to the extent permitted by applicable law, including to enable
Executive to exercise any protected legal right he may have;

 

(B)       Executive will not disclose Confidential Information at any time
(during or after Executive’s employment with Company) except to authorized
Company personnel, unless Company consents in advance in writing or unless the
Confidential Information indisputably becomes of public knowledge or enters the
public domain (other than through Executive’s direct or indirect act or
omission) or as authorized by a court or regulatory agency.

 

(C)       Executive will safeguard the Confidential Information by all
reasonable steps and abide by all policies and procedures of Company in effect
from time to time regarding storage, copying, destroying, and handling of
documents; and

 

(D)       Executive will return or destroy all materials, models, software,
prototypes and the like containing and/or relating to Confidential Information,
together with all other property of Company and its clients and customers, to
Company when Executive’s employment relationship with Company terminates or
otherwise on demand and, at that time Executive will certify to Company, in
writing and under oath, that Executive has complied with this Agreement.
Executive shall not retain any copies or reproductions of correspondence,
memoranda, reports, notebooks, drawings, photographs, databases, diskettes, or
other documents or electronically stored information of any kind relating in any
way to the business, potential business or affairs of Company and its clients
and customers.

 

(E)       Executive acknowledges receipt of the following notice under the
Defend Trade Secrets Act: An individual will not be held criminally or civilly
liable under any federal or state trade secret law for the disclosure of a trade
secret if he/she (i) makes such disclosure in confidence to a Federal, State, or
local government official, either directly or indirectly, or to an attorney and
such disclosure is made solely for the purpose of reporting or investigating a
suspected violation of law; or (ii) such disclosure was made in a complaint or
other document filed in a lawsuit or other proceeding if such filing is made
under seal.

 

(F)       Notwithstanding the foregoing or anything else contained herein to the
contrary, this Agreement shall not preclude the Executive from disclosing
Confidential Information to a governmental body or agency or to a court if and
to the extent that a restriction on such disclosure would limit the Executive
from exercising any protected right afforded the Executive under applicable law,
including the ability to receive an award for information provided to a
governmental body.

 

5.02       Obligations to Other Persons. Executive does not have any
non-disclosure or other obligations to any other individual or entity (including
without limitation, any previous company) concerning proprietary or confidential
information that Executive learned of during any previous employment or
associations that would conflict with the Executive’s obligations to Company
under this Agreement. Executive shall not disclose to Company or induce Company
to use any secret or confidential information or material belonging to others,
including, without limitation, Executive’s former employers, if any. Executive
does not have any non-competition agreements, non-solicitation agreements or
other restrictive covenants with any previous company or other individual or
entity that would conflict with the Executive’s obligations to Company under
this Agreement.

 

-10-  

 

 

5.03       Covenants Against Competition and Solicitation.

 

Executive acknowledges and understands that, Executive’s position with Company
affords Executive extensive access to Confidential Information of the Company.
Executive therefore agrees that during the course of Executive’s employment with
Company and for twelve (12) months after termination of Executive’s employment
with Company (for any reason or no reason) (collectively, “Restricted Period”),
Executive shall not: (i) anywhere within the United States of America or any
other country in which the Company then conducts or proposes to conduct
business, either directly or indirectly, as an owner, stockholder, member,
partner, joint venturer, officer, director, consultant, independent contractor,
agent or executive, engage in any business or other commercial activity which is
engaged in or is seeking to engage in a “Competitive Business.” As used in this
Agreement, “Competitive Business” shall mean any individual or enterprise
engaged in (x) cleansing of body cavities, tubular structures or other orafices
or devices added on or attached to endoscopes or (y) any other business directly
competitive with the business of the Company on the date of termination.

 

Executive further agrees that, during the Restricted Period, Executive shall
not, directly or indirectly, either on Executive’s own behalf or on behalf of
any other individual or commercial enterprise: (i) contact, communicate, solicit
or transact any business with or assist any third party in contacting,
communicating, soliciting or transacting any business with (A) any of the
customers or clients of the Company, (B) any prospective customers or clients of
the Company, or (C) any individual or entity who or which was within the most
recent twelve (12) month period a customer or client of Company, for the purpose
of inducing such customer or client or potential customer or client to be
connected to or benefit from any competitive business or to terminate its or
their business relationship with the Company; (ii) solicit, induce or assist any
third party in soliciting or inducing any individual or entity who is then (or
was at any time within the preceding twelve (12) an employee or full-time
consultant, independent contractor or agent of Company) to leave the employment
of the Company or cease performing services for the Company; (iii) hire or
engage or assist any third party in hiring or engaging, any individual or entity
that is or was (at any time within the preceding twelve (12) months) an employee
or full-time consultant, independent contractor or agent of the Company, or (iv)
solicit, induce or assist any third party in soliciting or inducing any other
person or entity (including, without limitation, any third-party service
provider or distributor) to terminate its relationship with the Company or
otherwise interfere with such relationship. A “prospective customer or client”
is any individual or entity with respect to whom or which Company was engaged in
a solicitation at any time during the twelve (12) months preceding termination
of Executive’s employment with Company and in which solicitation Executive was
in any way involved, or about whom or which Executive had access to Confidential
Information.

 

-11-  

 

 

5.04       Cooperation With Investigations/Litigation. Executive agrees, upon
Company’s request, to reasonably cooperate both during and after Executive’s
employment with Company in any Company investigation, litigation, arbitration,
or regulatory proceeding regarding events that occurred during Executive’s
tenure with Company. Executive will make himself reasonably available to consult
with Company’s counsel, to provide information, and to appear to give testimony.
Company will reimburse Executive for reasonable out-of-pocket expenses Executive
incurs in extending such cooperation, so long as Executive provides advance
written notice of Executive’s request for reimbursement and provides
satisfactory documentation of the expenses.

 

5.05       Reasonable Restrictions/Damages Inadequate Remedy. The Parties to
this agreement acknowledge that the restrictions contained in this Article are
reasonable and necessary to protect the legitimate business interests of Company
and that any breach by Executive of any provision contained in this Article may
result in immediate irreparable injury to Company for which a remedy at law
would be inadequate. Accordingly, the Parties shall be entitled to temporary or
permanent injunctive or other equitable relief (without being obligated to post
a bond or other collateral) in the event of any breach or threatened breach of
the provisions of this Article, in addition to any other remedy that may be
available whether at law or in equity.

 

5.06       Separate Covenants. In the event that an arbitrator or any court of
competent jurisdiction shall determine that any one or more of the provisions
contained in this Article shall be unenforceable in any respect, then such
provision shall be deemed limited and restricted to the extent that the
adjudicator shall deem the provision to be enforceable. It is the intention of
the Parties to this Agreement that the covenants and restrictions in this
Article be given the broadest interpretation permitted by law. The invalidity or
unenforceability of any provision of this Article shall not affect the validity
or enforceability of any other provision hereof. If, in any judicial or
arbitration proceedings, a court of competent jurisdiction or arbitration panel
should refuse to enforce all of the separate covenants and restrictions in this
Article, then such unenforceable covenants and restrictions shall be eliminated
from the provisions of this Agreement for the purpose of such proceeding to the
extent necessary to permit the remaining separate covenants and restrictions to
be enforced in such proceeding.

 

5.07       Ownership of Proprietary Rights

 

(A)       Proprietary Rights. “Proprietary Rights” means all right, title and
interest (including any copyrights, patent rights, trademarks, servicemarks and
trade names) in and to, or associated with, or arising from, any and all notes,
data, reference materials, sketches, drawings, memoranda, documentation, and any
and all work product conceived, created, reduced to any medium of expression
and/or produced as part of the activities of Executive for the Company,
including all written, graphical, pictorial, visual, audio, and audiovisual
elements relating thereto, software code or records in any way incorporating or
reflecting any Confidential Information and any original works of authorship,
derivative works, inventions, developments, concepts, know-how, improvements,
trade secrets or ideas, whether or not fixed in a tangible medium of expression,
that are conceived or developed in whole or in part by the Executive alone or in
conjunction with others, whether or not conceived or developed during regular
working hours by, or in association with, the Company that are made through the
use of any Confidential Information or any of the Company’s equipment,
facilities, supplies, or trade secrets, or that relate to the Company’s business
or the Company’s actual or demonstrably anticipated research and development, or
that result from any work performed by the Executive for the Company.

 

-12-  

 

 

(B)       Ownership of Proprietary Rights. All Proprietary Rights shall belong
exclusively to the Company, and the Executive agrees to assign and hereby
assigns to the Company, all rights, title and interest throughout the world in
and to all Proprietary Rights. The Executive agrees to promptly make full
written disclosure to the Company, and will hold in trust for the sole right and
benefit of the Company, all Proprietary Rights. Upon request of the Company and
without any separate compensation, the Executive shall take such action and
execute and deliver such documents and instruments as may be necessary or proper
to vest in the Company all right, title and interest in and to all such
Proprietary Rights. Without limiting the foregoing, the Executive further agrees
that for any original works of authorship created by the Executive, the Company
shall be deemed the author thereof under the United States Copyright
Act; provided, however, that in the event and to the extent such works do not to
constitute “works made for hire” as a matter of law, the Executive agrees to
irrevocably assign and transfer, and hereby irrevocably assigns and transfers to
the Company, all right, title and interest in and to such works, including but
not limited to copyrights.

 

(C)       Maintenance of Records. The Executive covenants and agrees to take
commercially reasonable measures to keep and maintain adequate and current
written records of all inventions and works of authorship made by the Executive
(solely or jointly with others) during the term of the Executive’s relationship
with the Company. The records may be in the form of notes, sketches, drawings,
flow charts, electronic data or recordings, laboratory notebooks, and any other
format. The records will be available to and remain the sole property of the
Company at all times. The Executive agrees not to remove such records from the
Company’s place of business except as expressly permitted by the Company policy,
which may, from time to time, be revised at the sole election of the Company.
The Executive agrees to return all such records (including any copies thereof)
to the Company at the time of termination of services with the Company.

 

(D)       Recordation of Rights. The Executive covenants and agrees to assist
the Company, or its designee, at the Company’s expense, in every proper way to
secure the Company’s, or its designee’s, rights in the inventions and any
copyrights, patents, trademarks, servicemarks, moral rights, or other
intellectual property rights relating thereto in any and all countries,
including the disclosure to the Company or its designee of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments, recordations, and all other instruments that
the Company or its designee shall deem necessary in order to apply for, obtain,
maintain and transfer such rights, or if not transferable, waive such rights,
and in order to assign and convey to the Company or its designee and any
successors, assigns and nominees the sole and exclusive rights, title and
interest in and to such inventions, and any copyrights, patents or other
intellectual property rights relating thereto. The Executive further agrees that
the obligation to execute or cause to be executed, when it is in the Executive’s
power to do so, any such instrument or papers shall continue after the
termination of this Agreement until the expiration of the last such intellectual
property right to expire in any country of the world. If the Company or its
designee is unable because of the Executive’s mental or physical incapacity or
unavailability or for any other reason to secure the Executive’s signature to
apply for or to pursue any application for any United States or foreign patents,
copyrights, or other registrations covering inventions or works of authorship
assigned or to be assigned to the Company or its designee as above, then the
Executive hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as the Executive’s agent and attorney-in-fact, to
act for and on the Executive’s behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
application for, prosecution, issuance, maintenance or transfer of letters
patent, copyright or other registrations thereon with the same legal force and
effect as if originally executed by the Executive. The Executive hereby waives
and irrevocably quitclaims to the Company or its designee any and all claims, of
any nature whatsoever, that the Executive now or hereafter has for infringement
of any and all proprietary rights assigned to the Company or such designee.

 

-13-  

 

 

ARTICLE VI

 MISCELLANEOUS

 

6.01       Benefit of Agreement and Assignment. This Agreement shall inure to
the benefit of Company, its affiliates and their respective successors and
assigns (including, without limitation, the purchaser of all or substantially
all of the assets of Company and/or any of its affiliates) and shall be binding
upon Company and its successors and assigns. This Agreement also shall inure to
the benefit of and be binding upon Executive and Executive’s heirs,
administrators, executors and assigns. Executive may not assign or delegate
Executive’s duties under this Agreement, without the prior written consent of
Company.

 

6.02       Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be given in writing and shall be deemed to
have been duly given (i) on the date delivered if personally delivered, (ii)
upon receipt by the receiving party of any notice sent by registered or
certified mail (first-class mail, postage pre-paid, return receipt requested),
(iii) by email, or (iv) on the date targeted for delivery if delivered by
nationally recognized overnight courier or similar courier service, addressed in
the case of Company to:

 

Motus GI Holdings, Inc.,  

With a copy which, itself, shall not 

constitute notice, to:

1301 East Broward Blvd   Lowenstein Sandler LLP Fort Lauderdale, Florida 33301  
One Lowenstein Drive     Roseland, NJ 07068 Attn: Chief Executive Officer  
Attn: Steven M. Skolnick, Esq.

 

and in the case of Executive to:

 

Timothy P. Moran

145 Morgans Way

Holliston, MA 01746

 

 

-14-  

 

 

Any Party may notify the other Party in writing of the change in address by
giving notice in the manner provided in this Section 6.02. Service of process in
connection with any suit, action or proceeding (whether arbitration or
otherwise) may be served on each Party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this Agreement.

 

6.03       Non-Disparagement. During the Term and at all times thereafter,
Executive agrees that Executive shall not knowingly disparage, criticize or
otherwise make any derogatory statements regarding Company or its past, present
and future directors, officers, shareholders, employees, or agents. Upon
conclusion of the Term, the Company agrees to instruct the Board and its senior
officers not to knowingly disparage, criticize or otherwise make any derogatory
statements concerning the Executive. Nothing herein shall preclude either Party
from making truthful statements that are reasonably necessary to comply with
applicable law, regulation or legal process or to defend or enforce a Party’s
rights under this Agreement.

 

6.04       Indemnification. The Company shall indemnify Executive to the maximum
extent provided in the Company’s Bylaws and organizational documents, as
currently in effect. Executive and the Company shall enter into the
Indemnification Agreement attached hereto as Exhibit A at the time the Parties
enter into this Agreement. Executive shall be entitled to coverage under the
directors and officers liability insurance on terms no less favorable to him in
any respect than the coverage then being provided to any other current or former
director or officer of the Company and which the Company shall maintain with
minimum coverage of $1 million.

 

6.05        Arbitration. With the exception of the Company’s right to seek
injunctive relief in a court of competent jurisdiction to enforce Article V, any
dispute or controversy arising out of or relating to this Agreement or
Executive’s performance thereunder shall be exclusively settled by arbitration
before a single arbitrator to be held in Florida in accordance with the rules
then in effect of the American Arbitration Association. The decision of the
arbitrator shall be final, conclusive and binding on the Parties to the
arbitration. Judgment may be entered on the arbitrator’s decision in any court
having jurisdiction. The Company and the Executive shall separately pay their
own counsel fees and expenses. The arbitrator shall apply the laws of the State
of Florida with respect to interpretation, construction or enforcement of this
Agreement without giving effect to the principles of conflicts of law.

 

6.06       Entire Agreement. This Agreement, including the exhibits, contains
the entire agreement of the Parties with respect to the terms and conditions of
Executive’s employment during the Term and activities following termination of
this Agreement and Executive’s employment with Company and supersedes any and
all prior agreements and understandings, whether written or oral, between the
Parties with respect to the subject matter of this Agreement. This Agreement may
not be changed or modified except by an instrument in writing, signed by both
the Company and the Executive.

 

6.07       Representation and Warranties. Executive and Company each
respectively represent and warrant to the other that (a) he/it has the legal
capacity to execute and perform this Agreement, (b) this Agreement is a valid
and binding agreement enforceable against the Parties according to its terms,
and (c) the execution and performance of this Agreement by him/it does not
violate or conflict with the terms of any existing agreement or understanding to
which Executive or Company is a party or by which Executive or Company may be
bound.

 

-15-  

 

 

6.08       No Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect; provided, however, that nothing in this Section
6.08 shall preclude the assumption of such rights by executors, administrators
or other legal representatives of Company or Executive’s estate and their
assigning any rights hereunder to the person or persons entitled thereto.

 

6.09       Source of Payment. All payments provided for under this Agreement
shall be paid in cash from the general funds of Company. The Company shall not
be required to establish a special or separate fund or other segregation of
assets to assure such payments, and, if Company shall make any investments to
aid it in meeting its obligations hereunder, Executive shall have no right,
title or interest whatever in or to any such investments except as may otherwise
be expressly provided in a separate written instrument relating to such
investments. Nothing contained in this Agreement, and no action taken pursuant
to its provisions, shall create or be construed to create a trust of any kind,
or a fiduciary relationship, between Company and Executive or any other person.
To the extent that any person acquires a right to receive payments from Company
hereunder, such right, without prejudice to rights which Executives may have,
shall be no greater than the right of an unsecured creditor of Company.

 

6.10       No Waiver. The waiver by any Party of a breach of any provision of
this Agreement shall not operate or be construed as a continuing waiver or as a
consent to or waiver of any subsequent breach hereof.

 

6.11       Headings. The Article and Section headings in this Agreement are for
the convenience of reference only and do not constitute a part of this Agreement
and shall not be deemed to limit or affect any of the provisions hereof.

 

6.12       Validity. The invalidity or enforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision or provisions of this Agreement, which shall remain in full
force and effect.

 

6.13       Executive Withholdings and Deductions. All payments to Executive
hereunder shall be subject to such withholding and other Executive deductions as
may be required by law.

 

6.14       Counterparts. This Agreement may be executed in one more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

 

-16-  

 

 

6.15       Agreement to Take Actions. Each Party shall execute and deliver such
documents, certificates, agreements and other instruments, and shall take all
other actions, as may be reasonably necessary or desirable in order to perform
his or its obligations under this Agreement.

 

6.16       Survival. The terms of Section 4.02 and Articles V and VI of this
Agreement shall survive the termination of this Agreement and Executive’s
employment hereunder.

 

6.17       Section 409A Compliance.

 

(A)       This Agreement is intended to comply with the requirements of Section
409A of the Code (“Section 409A”) and regulations promulgated thereunder. To the
extent that any provision in this Agreement is ambiguous as to its compliance
with Section 409A, the provision shall be read in such a manner so that all
payments due under this Agreement shall comply with Section 409A. For purposes
of section 409A, each payment made under this Agreement shall be treated as a
separate payment. In no event may Executive, directly or indirectly, designate
the calendar year of payment. Notwithstanding anything contained herein to the
contrary, Executive shall not be considered to have terminated employment with
Company for purposes of Section 4.02 of this Agreement unless Executive would be
considered to have incurred a “termination of employment” from Company within
the meaning of Treasury Regulation §1.409A-1(h)(1)(ii).

 

(B)       All reimbursements provided under this Agreement shall be made or
provided in accordance with the requirements of Section 409A, including, where
applicable, the requirement that (i) any reimbursement is for expenses incurred
during Executive’s lifetime (or during a shorter period of time specified in
this Agreement), (ii) the amount of expenses eligible for reimbursement during a
calendar year may not affect the expenses eligible for reimbursement in any
other calendar year, (iii) the reimbursement of an eligible expense will be made
on or before the last day of the calendar year following the year in which the
expense is incurred, and (iv) the right to reimbursement is not subject to
liquidation or exchange for another benefit.

 

(C)       Executive acknowledges that, while the Parties endeavor to have this
Agreement comply with the requirements of Section 409A, any tax liability
incurred by Executive under Section 409A is solely the responsibility of
Executive.

 

6.18       Legal Counsel. Executive represents that Company has previously
recommended that Executive engage counsel to assist Executive in reviewing this
Agreement. Executive acknowledges that, prior to executing this Agreement,
Executive has been given a reasonable opportunity to review the Agreement and to
consult with counsel as to its content and is entering into this Agreement
freely and voluntarily.

 

[Signatures appear on the following page]

 

-17-  

 

IN WITNESS WHEREOF, Company and Executive have duly executed this Agreement as
of the date first written above.

 

  COMPANY:         Motus GI Holdings, Inc.         BY:     Name:     Title:    
      EXECUTIVE:       Timothy P. Moran

 

[Signature Page to Tim Moran Employment Agreement] 

 

 

 

EXHIBIT A

 

INDEMNIFICATION AGREEMENT