Exhibit 10.1

 

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated
as of June 17, 2014 (the “Effective Date”), between InVivo Therapeutics Holdings
Corp. (the “Company”), and Steven F. McAllister (the “Executive”).

 

WITNESSETH THAT:

 

WHEREAS, the Company and the Executive are parties to that certain Amended and
Restated Employment Agreement, dated as of May 30, 2014 (the “Prior Agreement”);
and

 

WHEREAS, the Company and the Executive desire to enter into this Agreement to
amend, restate, and supersede the Prior Agreement;

 

WHEREAS, the Company desires to continue to employ the Executive and the
Executive desires to continue to be employed by the Company, upon the terms and
conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Executive and the Company
as follows:

 

1.                                      Employment.

 

(a)                                 Employment and Term. The Company hereby
agrees to continue to employ the Executive, and the Executive hereby agrees to
continue to serve the Company, on the terms and conditions set forth herein. 
The Executive understands and agrees that employment with the Company is
“at-will,” which means that either the Executive or the Company may terminate
the Executive’s employment at any time, for any reason, or for no reason, by
providing notice thereof to the other party, subject to the terms of this
Agreement. The Executive acknowledges that this Agreement does not constitute a
contract of employment for any particular period of time or impose on the
Company any obligation to retain the Executive as an employee.  If the
Executive’s employment with the Company terminates for any reason, the Executive
shall be deemed to have resigned, effective as of such termination, from his
position as an officer or director of any subsidiary of the Company, and the
Executive hereby agrees to promptly execute resignation letters documenting such
resignations upon request of the Company.

 

(b)                                 Position. The Executive shall serve as the
Chief Financial Officer of the Company. In addition, the Executive shall serve
as Chief Financial Officer of InVivo Therapeutics Corporation, the Company’s
wholly owned subsidiary.  The Executive shall be based at the Company’s
headquarters in Cambridge, MA.

 

(c)                                  Duties and Responsibilities. The Executive
agrees that he shall perform his duties faithfully and efficiently subject to
the directions of the Board of Directors of the Company (the “Board”) and the
Chief Executive Officer.  The Executive shall not, without his consent, be
assigned tasks that would be inconsistent with those of Chief Financial
Officer.  The Executive shall report to the Chief Executive Officer and shall
have such authority, power, responsibilities and duties as are inherent in his
position (and the undertakings applicable to his

 

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position) and necessary to carry out his responsibilities and the duties
required of him hereunder.

 

(d)                                 While the Executive is employed by the
Company, the Executive shall devote his full business time, energies and talents
to serving as its Chief Financial Officer.  The Executive may, however, serve on
outside Boards, to the extent that such activities do not materially inhibit or
prohibit the performance of the Executive’s duties under this Agreement, or
conflict in any material way with the business of the Company or any subsidiary
and the Executive has obtained written consent from the Company.

 

(e)                                  The Executive agrees to abide by the rules,
regulations, instructions, personnel practices and policies of the Company and
any changes therein which may be adopted from time to time by the Company.

 

2.                                      Compensation.  Subject to the terms of
this Agreement, while the Executive is employed by the Company, the Company
shall compensate him for his services as follows:

 

(a)                                 Salary.  Effective as of June 30, 2014 the
Company shall pay the Executive a salary at the annual rate of $265,000, paid in
accordance with the Company’s usual payroll practices.  This salary will be
reviewed annually by the Board (or a designated committee thereof) and may be
adjusted upward (but not downward without the Executive’s consent) in the sole
discretion of the Board (or a designated committee thereof).

 

(b)                                 Bonus.  The Executive shall be eligible to
receive an annual target bonus of 25% of his annual salary, subject to his
performance of specified objectives to be established by the Chief Executive
Officer each year.  Actual bonus payout may be below or above the annual target
bonus subject to performance.

 

(c)                                  Stock Option.  On the Effective Date, the
Executive shall receive a 10-year stock option under the Company’s 2010 Equity
Incentive Plan to purchase 250,000 shares of the Company’s common stock at an
exercise price equal to the closing price of a share of common stock as of the
Effective Date, and such option shall be exercisable as to 25% of the original
number of shares subject to the option on the first anniversary of the Effective
Date, with the remainder vesting monthly in equal installments until fully
vested on the fourth anniversary of the Effective Date, provided that the
Executive remains continuously employed by the Company on each such vesting
date.

 

(d)                                 Other Benefits.  The Executive shall be
eligible for all medical, dental and other benefits and fringe benefits,
including, without limitation, vacation benefits in accordance with the
Company’s policies and practices for paid vacation to the same extent and on the
same terms as those benefits are provided by the Company from time to time to
the Company’s other senior management executives.  Accrued but unused vacation
time may not be carried over from year to year and shall not be paid in cash if
not used during the calendar year.  In addition, the Company shall pay for the
Executive’s parking at or near the Company’s headquarters at One Kendall Square,
Cambridge, MA.

 

(e)                                  Expense Reimbursement.  The Company will
reimburse the Executive for all reasonable travel, entertainment and other
expenses incurred or paid by the Executive in connection with, or related to,
the performance of his duties, responsibilities or services under

 

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this Agreement, provided that such expenses are incurred and accounted for in
accordance with the reasonable policies and procedures established by the
Company.

 

(f)                                   Withholding.  All salary, bonus and other
compensation payable to the Executive shall be subject to applicable withholding
taxes.

 

(g)                                  Indemnification and Insurance.

 

(i)                                     The Company and the Executive,
contemporaneously with the execution of the Prior Agreement, previously entered
into the Company’s standard Indemnification Agreement pursuant to which the
Company has agreed to indemnify and hold harmless the Executive to the fullest
extent permissible by law.

 

(ii)                                  The Company shall maintain directors and
officers liability insurance in commercially reasonable amounts (as reasonably
determined by the Board), and the Executive shall be covered under such
insurance to the same extent as other senior management Executives of the
Company and the Board.

 

3.                                      Termination.  The Executive’s employment
with the Company pursuant to this Agreement shall terminate upon the occurrence
of any of the following:

 

(a)                                 At the election of the Company, for Cause
(as defined below), immediately upon written notice by the Company to the
Executive, which notice shall identify the Cause upon which the termination is
based.  For the purposes of this Section 3(a), “Cause” shall mean (i) a good
faith finding by the Company that (A) the Executive has failed to perform his
reasonably assigned duties for the Company and has failed to remedy such failure
within 10 days following written notice from the Company to the Executive
notifying him of such failure, or (B) the Executive has engaged in dishonesty,
gross negligence or misconduct, or (C) the conviction of the Executive of, or
the entry of a pleading of guilty or nolo contendere by the Executive to, any
crime involving moral turpitude or any felony;

 

(b)                                 Upon the death or permanent disability of
the Executive, if such disability renders the Executive incapable of performing
his duties, as reasonably determined by the Company and if the Executive is
considered to be disabled with the meaning of the relevant Treasury Regulation
sections;

 

(c)                                  At the election of either party, upon not
less than ten (10) days’ prior written notice of termination; or

 

(d)                                 At the election of the Executive, for Good
Reason (as defined below), immediately upon written notice by the Executive to
the Company, which notice shall identify the Good Reason upon which the
termination is based.  For the purposes of this Section 3(d), “Good Reason” for
termination shall mean (i) a material adverse change in the Executive’s
authority, duties or compensation without the prior consent of the Executive, or
(ii) a material breach by the Company of the terms of this Agreement, which
breach is not remedied by the Company within 10 days following written notice
from the Executive to the Company notifying it of such breach.

 

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4.                                      Rights Upon Termination.  Upon the
Executive’s Date of Termination (as defined below), the Company shall provide to
the Executive the following:

 

(a)                                 Accrued Obligations.  The Company will pay
the Executive his Accrued Obligations (as defined below) promptly following such
termination.  For purposes of this Agreement, “Date of Termination” means the
last day the Executive is employed by the Company pursuant to this Agreement,
and “Accrued Obligations” means (i) the portion of the Executive’s salary as has
accrued prior to the Date of Termination and has not yet been paid, (ii) an
amount equal to the value of any accrued unused vacation days for the current
calendar year, (iii) the amount of any annual bonus declared but not yet paid
and (iv) the amount of any expenses properly incurred by the Executive on behalf
of the Company prior to any such termination and not yet reimbursed pursuant to
Section 2(e) hereof.

 

(b)                                 Severance.  If the Executive’s employment is
terminated (i) by the Company without Cause within six months following a Change
of Control (as defined in the Company’s 2010 Equity Incentive Plan), (ii) under
Section 3(c) (only if termination is elected by Company, not if elected by
Executive) or (iii) under Section 3(d), the Company shall continue to pay the
Executive his base salary as in effect on the Date of Termination, paid in
accordance with the Company’s usual payroll practices, for a period of six
(6) months following the Date of Termination.  The payment to the Executive of
the amounts payable under this Section 4(b) shall (1) be contingent upon the
execution by the Executive of a release in a form reasonably acceptable to the
Company and (2) constitute the sole remedy of the Executive in the event of a
termination of the Executive’s employment in the circumstances set forth in this
Section 4(b).

 

(c)                                  COBRA.  The Executive and any of his
dependents shall be eligible for COBRA continuation coverage (as described in
section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”)) at
the Executive’s own cost to the extent permitted by applicable law.

 

(d)                                 Other Benefits.  The Company shall provide
any other payments or benefits to be provided to the Executive by the Company or
a subsidiary pursuant to any employee benefit plans or arrangements established
or adopted by the Company or a subsidiary (including, without limitation, any
rights to indemnification from the Company (or from a third-party insurer for
directors and officers liability coverage) under Section 2(g) or otherwise with
respect to any costs, losses, claims, suits, proceedings, damages or liabilities
to which the Executive may become subject which arise out of, are based upon or
relate to the Executive’s employment by the Company or the Executive’s service
as an officer), to the extent such amounts are due from the Company in
accordance with the terms of this Agreement or such plans or arrangements.

 

5.                                      Proprietary Information.

 

(a)                                 The Executive agrees that all information,
whether or not in writing, of a private, secret or confidential nature
concerning the Company’s business, business relationships or financial affairs
(collectively, “Proprietary Information”) is and shall be the exclusive property
of the Company.  Without limitation, Proprietary Information shall include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects,

 

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development plans, research data, clinical data, confidential communications
with regulatory bodies and other third parties, financial data, personnel data,
computer programs, customer and supplier lists, and contacts with or knowledge
of customers or prospective customers of the Company.  The Executive will not
disclose any Proprietary Information to any person or entity other than
employees of the Company with authorization to access the information or use the
same for any purposes (other than in the performance of his duties as an
Executive of the Company) without approval by an officer of the Company, during
or after his employment with the Company, unless and until such Proprietary
Information has become public knowledge without fault of the Executive or such
disclosure is required by law.

 

(b)                                 The Executive agrees that all files,
letters, memoranda, reports, records, data, sketches, drawings, laboratory
notebooks, program listings, or other written, photographic, electronic, or
other tangible material containing Proprietary Information, in any form, whether
created by the Executive or others, which shall come into his custody or
possession, shall be the exclusive property of the Company and will be used by
the Executive only in the performance of his duties for the Company.  All such
materials or copies thereof and all tangible property of the Company in the
custody or possession of the Executive shall be delivered to the Company, upon
the earlier of (i) a request by the Company or (ii) the Date of Termination. 
After such delivery, the Executive shall not retain any such materials or copies
thereof or any such tangible property.

 

(c)                                  The Executive agrees that his obligation
not to disclose or to use information and materials of the types set forth in
Sections 5(a) and 5(b), and his obligation to return materials and tangible
property, set forth in Section 5(b), also extends to such types of information,
materials and tangible property of customers of the Company or suppliers to the
Company or other third parties, including licensors and licensees, who may have
disclosed or entrusted the same to the Company or to the Executive.

 

6.                                      Inventions.

 

(a)                                 The Executive will make full and prompt
disclosure to the Company of all inventions, improvements, discoveries, methods,
developments, software, and works of authorship, whether patentable or not,
which are created, made, conceived or reduced to practice by him, or under his
direction, or jointly with others, during his employment by the Company, whether
or not during normal working hours or on the premises of the Company (all of
which are collectively referred to in this Agreement as “Inventions”).

 

(b)                                 The Executive agrees to assign and does
hereby assign to the Company (or any person or entity designated by the Company)
all of his right, title and interest in and to all Inventions and related
patents, patent applications, trade secrets, copyrights and copyright
applications.  However, this Section 6(b) shall not apply to Inventions which
are unrelated to the present or planned business or research and development of
the Company and which are made and conceived by the Executive outside of normal
working hours, outside the Company’s premises and do not involve use of the
Company’s tools, devices, equipment or Proprietary Information.  The Executive
understands that, to the extent this Agreement is to be construed in accordance
with the laws of any state which precludes a requirement in an employment
agreement to assign certain classes of inventions made by an employee, this
Section 6(b) shall be interpreted to not apply to any invention which a court
rules and/or the Company agrees to fall

 

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within such classes.

 

(c)                                  The Executive agrees to cooperate fully
with the Company, both during and after his employment with the Company, with
respect to the procurement, maintenance and enforcement of patents, trademarks,
copyrights and other intellectual property rights (both in the United States and
foreign countries) relating to Inventions.  The Executive shall sign all papers,
including, without limitation, copyright applications, patent applications,
declarations, oaths, formal assignments, assignments of priority rights, and
powers of attorney, which the Company may deem necessary or desirable in order
to protect its rights and interests in any Invention.  The Executive further
agrees that if the Company is unable to secure the signature of the Executive on
any such papers with reasonable effort, an executive officer of the Company
shall be entitled to execute any such papers as the agent and the
attorney-in-fact of the Executive, and the Executive hereby irrevocably
designates and appoints each executive officer of the Company as his agent and
attorney-in-fact to execute any such papers on his behalf, and to take any and
all actions as the Company may deem necessary or desirable in order to protect
its rights and interests in any Invention, under the conditions described
herein.

 

7.                                      Remedies.  The Executive agrees and
acknowledges that his breach of Sections 5 or 6 cannot be reasonably or
adequately compensated for in money damages alone and would cause irreparable
injury to the Company.  Accordingly, the Executive agrees that, with respect to
a breach of such Sections, the Company is entitled to, in addition to all other
rights and remedies available to the Company at law or in equity, specific
performance and immediate injunctive relief, without posting a bond.

 

8.                                      Non-Compete and Non-Solicitation.

 

(a)                                 Restricted Activities.  While the Executive
is employed by the Company and for a period of one (1) year after the Date of
Termination for any reason, the Executive will not directly or indirectly:

 

(i)                         Engage in any business or enterprise (whether as
owner, partner, officer, director, employee, consultant, investor, lender or
otherwise, except as the holder of not more than 1% of the outstanding stock of
a publicly-held company) that develops, manufactures, markets, licenses, sells
or provides any product or service that competes with any product or service
developed, manufactured, marketed, licensed, sold or provided, or planned to be
developed, manufactured, marketed, licensed, sold or provided, by the Company
while the Executive was employed by the Company; or

 

(ii)                      Either alone or in association with others
(i) solicit, or permit any organization directly or indirectly controlled by the
Executive to solicit, any Executive of the Company to leave the employ of the
Company, or (ii) solicit for employment, hire or engage as an independent
contractor, or permit any organization directly or indirectly controlled by the
Executive to solicit for employment, hire or engage as an independent
contractor, any person who was employed by the Company at any time during the
term of the Executive’s employment with the Company.

 

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(b)                                 Extension.  If the Executive violates the
provisions of Section 8(a), the Executive shall continue to be bound by the
restrictions set forth in Section 8(a) until a period of one year has expired
without any violation of such provisions.

 

(c)                                  Interpretation.  If any restriction set
forth in Section 8(a) is found by any court of competent jurisdiction to be
unenforceable because it extends for too long a period of time or over too great
a range of activities or in too broad a geographic area, it shall be interpreted
to extend only over the maximum period of time, range of activities or
geographic area as to which it may be enforceable.

 

(d)                                 Equitable Remedies.  The restrictions
contained in this Section 8 are necessary for the protection of the business and
goodwill of the Company and are considered by the Executive to be reasonable for
such purpose.  The Executive agrees that any breach of this Section 8 is likely
to cause the Company substantial and irrevocable damage which is difficult to
measure.  Therefore, in the event of any such breach or threatened breach, the
Executive agrees that the Company, in addition to such other remedies which may
be available, shall have the right to obtain an injunction from a court
restraining such a breach or threatened breach and the right to specific
performance of the provisions of this Section 8 and the Executive hereby waives
the adequacy of a remedy at law as a defense to such relief.

 

9.                                      Compliance with Section 409A

 

(a)                                 General.  It is the intention of both the
Company and the Executive that the benefits and rights to which the Executive
could be entitled pursuant to this Agreement comply with Section 409A of the
Code and the related Treasury Regulations and other guidance promulgated or
issued thereunder (“Section 409A”), to the extent that the requirements of
Section 409A are applicable thereto, and the provisions of this Agreement shall
be construed in a manner consistent with that intention.  If the Executive or
the Company believes, at any time, that any such benefit or right that is
subject to Section 409A does not so comply, it shall promptly advise the other
and shall negotiate reasonably and in good faith to amend the timing of such
benefits and rights such that they comply with Section 409A (with the most
limited possible economic effect on the Executive).

 

(b)                                 Distributions on Account of Separation from
Service.  If and to the extent required to comply with Section 409A, no payment
or benefit required to be paid under this Agreement on account of termination of
the Executive’s employment shall be made unless and until the Executive incurs a
“separation from service” within the meaning of Section 409A.

 

(c)                                  6 Month Delay for “Specified Employees”.

 

(i)                         If the Executive is a “specified employee”, then no
payment or benefit that is payable on account of the Executive’s “separation
from service”, as that term is defined for purposes of Section 409A, shall be
made before the date that is six months after the Executive’s “separation from
service” (or, if earlier, the date of the Executive’s death) if and to the
extent that such payment or benefit constitutes deferred compensation (or may be
nonqualified deferred compensation) under Section 409A and such deferral is
required to comply with the requirements of Section 409A.  Any payment or
benefit

 

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delayed by reason of the prior sentence shall be paid out or provided in a
single lump sum at the end of such required delay period in order to catch up to
the original payment schedule, and there shall be added additional amounts to
any payments that are delayed pursuant to this provision to reflect interest at
the prime rate as reported in the Wall Street Journal for the date of the
Executive’s separation from service.  Such interest shall be calculated from the
date on which the payment otherwise would have been made until the date on which
the payment is made.

 

(ii)                      For purposes of this provision, the Executive shall be
considered to be a “specified employee” if, at the time of his or her separation
from service, the Executive is a “key employee”, within the meaning of
Section 416(i) of the Code, of the Company (or any person or entity with whom
the Company would be considered a single employer under Section 414(b) or
Section 414(c) of the Code) any stock in which is publicly traded on an
established securities market or otherwise.

 

(d)                                 No Acceleration of Payments.  Neither the
Company nor the Executive, individually or in combination, may accelerate any
payment or benefit that is subject to Section 409A, except in compliance with
Section 409A and the provisions of this Agreement, and no amount that is subject
to Section 409A shall be paid prior to the earliest date on which it may be paid
without violating Section 409A.

 

(e)                                  Treatment of Each Installment as a Separate
Payment. For purposes of applying the provisions of Section 409A to this
Agreement, each separately identified amount to which the Executive is entitled
under this Agreement shall be treated as a separate payment.  In addition, to
the extent permissible under Section 409A, any series of installment payments
under this Agreement shall be treated as a right to a series of separate
payments.

 

(f)                                   Taxable Reimbursements.

 

(i)                         Any reimbursements by the Company to the Executive
of any eligible expenses under this Agreement that are not excludable from the
Executive’s income for Federal income tax purposes (the “Taxable
Reimbursements”) shall be made by no later than the earlier of the date on which
they would be paid under the Company’s normal policies and the last day of the
taxable year of the Executive following the year in which the expense was
incurred.

 

(ii)                      The amount of any Taxable Reimbursements to be
provided to the Executive during any taxable year of the Executive shall not
affect the expenses eligible for reimbursement to be provided in any other
taxable year of the Executive.

 

(iii)                   The right to Taxable Reimbursements shall not be subject
to liquidation or exchange for another benefit.

 

10.                               Survival.  The Executive agrees that his
obligations under Sections 5, 6, 8 and 9 of this Agreement shall survive the
termination of his employment or the Agreement, regardless of the reason for
such termination.

 

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11.                               Acknowledgement.  The Executive acknowledges
and agrees that the Company does not desire him to use any confidential
information of any prior employer during his employment hereunder and that the
Company will not ask for nor accept any such confidential information.  This
acknowledgement shall not reduce or otherwise affect the Executive’s rights to
indemnification from the Company.

 

12.                               Severability.  The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

 

13.                               Governing Law.  This Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the Commonwealth of Massachusetts.  Both parties agree to exclusive venue in the
state (Middlesex County) or federal courts located in the Commonwealth of
Massachusetts.

 

14.                               Paragraph Headings. The paragraph headings in
this Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.

 

15.                               Successors and Assigns.

 

(a)                                 This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives.

 

(b)                                 This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.

 

16.                               Executive’s Beneficiaries. In the event the
Executive dies during the term of this Agreement, any amounts remaining to be
paid to the Executive shall be paid to the beneficiary designated by the
Executive or, if none, to the Executive’s estate at the same time that they
would have been paid to the Executive.

 

17.                               Entire Agreement.  This Agreement amends,
restates, and supersedes in its entirety the provisions of the Prior Agreement.
This Agreement contains the entire understanding between the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements, and conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may be modified
or amended only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.

 

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IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated
Employment Agreement as of the Effective Date.

 

 

Company

 

 

 

InVivo Therapeutics Holdings Corp.

 

 

 

 

 

By:

/s/ Mark Perrin

 

Name:

Mark Perrin

 

Title:

CEO

 

 

 

 

 

Executive

 

 

 

Steven F. McAllister

 

 

 

 

 

/s/ Steven F. McAllister

 

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