Exhibit 10.2

 

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made as of the 14th day of September,
2017, between Vericel Corporation, a Michigan corporation (the “Company”), and
Daniel R. Orlando (the “Executive”).

 

WHEREAS, the Company and the Executive previously entered into that certain
employment agreement dated as of April 3, 2013 (the “Prior Agreement”), and both
parties desire to amend and restate the Prior Agreement as set forth herein; and

 

WHEREAS, the Company desires to continue to employ the Executive and the
Executive desires to be employed by the Company on the terms contained herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree that the Prior Agreement is
hereby amended and restated in its entirety as follows:

 

1.                                      Position and Duties.  The Executive
shall continue to serve as the Chief Operating Officer of the Company and shall
have such powers and duties as may from time to time be prescribed by the Chief
Executive Officer of the Company (the “CEO”) or other authorized executive.  The
Executive shall devote his full working time and efforts to the business and
affairs of the Company.  Notwithstanding the foregoing, the Executive may engage
in religious, charitable or other community activities as long as such services
and activities are disclosed to the CEO and do not materially interfere with the
Executive’s performance of his duties to the Company as provided in this
Agreement.

 

2.                                      Compensation and Related Matters.

 

(a)                                 Base Salary.  The Executive’s annual base
salary shall be $345,000.  The Executive’s base salary may be redetermined by
the Company’s Compensation Committee, after consultation with the CEO.  The base
salary in effect at any given time is referred to herein as “Base Salary.”  The
Base Salary shall be payable in a manner that is consistent with the Company’s
usual payroll practices for senior executives.

 

(b)                                 Incentive Compensation.  The Executive shall
be eligible to receive cash incentive compensation as determined by the
Company’s Compensation Committee from time to time.  The Executive’s target
annual incentive compensation shall be Forty Percent (40%) of his Base Salary,
and the actual bonus amount shall be determined by the Company’s Compensation
Committee.  The target annual incentive compensation in effect at any given time
is referred to herein as “Target Bonus.”  The Target Bonus may be redetermined
by the Company’s Compensation Committee, after consultation with the CEO.  To be
eligible for incentive compensation, the Executive must be employed by the
Company on the day such incentive compensation is paid.

 

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(c)                                  Equity Compensation.  From time to time and
at the discretion of the Company’s Compensation Committee, the Company may grant
to the Executive equity compensation, including options to purchase shares of
the Company’s common stock at an exercise price equal to the fair market value
of the Company’s common stock on the effective date of grant.

 

(d)                                 Expenses.  The Executive shall be entitled
to receive prompt reimbursement for all reasonable business expenses incurred by
him in performing services hereunder, in accordance with the policies and
procedures then in effect and established by the Company for its senior
executive officers.

 

(e)                                  Customary Fringe Benefits.  The Executive
shall be entitled to such fringe benefits as the Company customarily makes
available to the Company’s senior executives (collectively, “Fringe Benefits”).
The Fringe Benefits shall include sick leave, health insurance coverage, and
401(k) plan participation, in accordance with the terms and provisions of such
plans, policies and arrangements as adopted by the Company from time to time
during the term of this Agreement. The Company reserves the right to change the
Fringe Benefits on a prospective basis, at any time, effective upon delivery of
written notice to Executive.  Executive shall not be entitled to receive
payments in lieu of Fringe Benefits, other than for earned and accumulated but
unused vacation at the time the employment relationship terminates.

 

(f)                                   Paid Time Off. Executive is entitled to
16.67 hours per month, equaling twenty five (25) days per year, of paid time off
(including statutory sick leave), pro-rated for any partial calendar year during
the term of this Agreement, in accordance with the Company’s Paid Time Off
policy (“Paid Time Off”). Executive also shall be entitled to such paid holidays
as are established by the Company for all regular full-time employees.

 

3.                                      Termination.  The Executive’s employment
hereunder may be terminated without any breach of this Agreement under the
following circumstances:

 

(a)                                 Death.  The Executive’s employment hereunder
shall terminate upon his death.

 

(b)                                 Disability.  The Company may terminate the
Executive’s employment if he is disabled and unable to perform the essential
functions of the Executive’s then existing position or positions under this
Agreement with or without reasonable accommodation for a period of 180 days
(which need not be consecutive) in any 12-month period.  If any question shall
arise as to whether during any period the Executive is disabled so as to be
unable to perform the essential functions of the Executive’s then existing
position or positions with or without reasonable accommodation, the Executive
may, and at the request of the Company shall, submit to the Company a
certification in reasonable detail by a physician selected by the Company to
whom the Executive or the Executive’s guardian has no reasonable objection as to
whether the Executive is so disabled or how long such disability is expected to
continue, and such certification shall for the purposes of this Agreement be
conclusive of the issue.  The Executive shall cooperate with any reasonable
request of the physician in connection with such certification.  If such
question shall arise and the Executive shall fail to submit such certification,
the Company’s determination of such issue shall be binding on the Executive. 
Nothing in this

 

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Section 3(b) shall be construed to waive the Executive’s rights, if any, under
existing law including, without limitation, the Family and Medical Leave Act of
1993, 29 U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42 U.S.C.
§12101 et seq.

 

(c)                                  Termination by Company for Cause.  The
Company may terminate the Executive’s employment hereunder for Cause.  For
purposes of this Agreement, “Cause” shall mean: (i) conduct by the Executive
constituting a material act of misconduct in connection with the performance of
his duties, including, without limitation, misappropriation of funds or property
of the Company or any of its subsidiaries or affiliates other than the
occasional, customary and de minimis use of Company property for personal
purposes; (ii) the commission by the Executive of any felony or a misdemeanor
involving moral turpitude, deceit, dishonesty or fraud, or any conduct by the
Executive that would reasonably be expected to result in material injury or
reputational harm to the Company or any of its subsidiaries and affiliates if he
were retained in his position; (iii) continued non-performance by the Executive
of his duties hereunder (other than by reason of the Executive’s physical or
mental illness, incapacity or disability) which has continued for more than 15
days following written notice from the CEO (or the CEO’s designee); (iv) a
breach by the Executive of any of the provisions contained in Section 7 of this
Agreement, including without limitation the Restrictive Covenant Agreement
incorporated by reference to Section 7 of this Agreement; (v) a material
violation by the Executive of the Company’s written employment policies, or
(vi) failure to cooperate with a bona fide internal investigation or an
investigation by regulatory or law enforcement authorities, after being
instructed by the Company to cooperate, or the willful destruction or failure to
preserve documents or other materials known to be relevant to such investigation
or the inducement of others to fail to cooperate or to produce documents or
other materials in connection with such investigation.  Any determination of
Cause by the Company shall be conclusive.

 

(d)                                 Termination by the Company Without Cause. 
The Company may terminate the Executive’s employment hereunder at any time
without Cause.  Any termination by the Company of the Executive’s employment
under this Agreement which does not constitute a termination for Cause under
Section 3(c) and does not result from the death or disability of the Executive
under Section 3(a) or (b) shall be deemed a termination without Cause.

 

(e)                                  Termination by the Executive.  The
Executive may terminate his employment hereunder at any time for any reason,
including but not limited to Good Reason.  For purposes of this Agreement, “Good
Reason” shall mean that the Executive has complied with the “Good Reason
Process” (hereinafter defined) following the occurrence of any of the following
events:  (i) a material diminution in the Executive’s responsibilities,
authority or duties; (ii) a material diminution in the Executive’s Base Salary
except for across-the-board salary reductions based on the Company’s financial
performance similarly affecting all or substantially all senior management
employees of the Company; (iii) the material breach of this Agreement by the
Company; or (iv) any change in the location of Executive’s locus of employment
that is more than fifty (50) miles from the current headquarters of the
Company.  “Good Reason Process” shall mean that (i) the Executive reasonably
determines in good faith that a “Good Reason” condition has occurred; (ii) the
Executive notifies the Company in writing of the first occurrence of the Good
Reason condition within 30 days of the first occurrence of such condition;
(iii) the Executive cooperates in good faith with the Company’s efforts, for a
period not less than 30 days following such notice (the “Cure Period”), to
remedy the condition;

 

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(iv) notwithstanding such efforts, the Good Reason condition continues to exist;
and (v) the Executive terminates his employment within 30 days after the end of
the Cure Period.  If the Company cures the Good Reason condition during the Cure
Period, Good Reason shall be deemed not to have occurred.

 

(f)                                   Notice of Termination.  Except for
termination as specified in Section 3(a), any termination of the Executive’s
employment by the Company or any such termination by the Executive shall be
communicated by written Notice of Termination to the other party hereto.  For
purposes of this Agreement, a “Notice of Termination” shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon.

 

(g)                                  Date of Termination.  “Date of Termination”
shall mean:  (i) if the Executive’s employment is terminated by his death, the
date of his death; (ii) if the Executive’s employment is terminated on account
of disability under Section 3(b), by the Company for Cause under Section 3(c) or
by the Company without Cause under Section 3(d), the date on which Notice of
Termination is given unless another date is specified therein; (iii) if the
Executive’s employment is terminated by the Executive under Section 3(e) without
Good Reason, 30 days after the date on which a Notice of Termination is given,
and (iv) if the Executive’s employment is terminated by the Executive under
Section 3(e) with Good Reason, the date on which a Notice of Termination is
given after the end of the Cure Period.  Notwithstanding the foregoing, in the
event that the Executive gives a Notice of Termination to the Company, the
Company may unilaterally accelerate the Date of Termination and such
acceleration shall not result in a termination by the Company for purposes of
this Agreement.

 

4.                                      Compensation Upon Termination.

 

(a)                                 Termination Generally.  If the Executive’s
employment with the Company terminates for any reason, the Company shall pay or
provide to the Executive (or to his authorized representative or estate) any
earned but unpaid Base Salary, unpaid expense reimbursements, accrued but unused
Paid Time Off all through the Date of Termination, and any vested benefits the
Executive may have under any employee benefit plan of the Company (the “Accrued
Benefit”) on or before the time required by law but in no event more than 30
days after the Executive’s Date of Termination.

 

(b)                                 Termination by the Company Without Cause or
by the Executive with Good Reason.  If the Executive’s employment is terminated
by the Company without Cause as provided in Section 3(d), or the Executive
terminates his employment for Good Reason as provided in Section 3(e), then the
Company shall, through the Date of Termination, pay the Executive his Accrued
Benefit.  In addition, subject to the Executive signing a separation agreement
in a form and manner satisfactory to the Company which includes a general
release of claims in favor of the Company and related persons and entities (the
“Release”) and such Release becoming irrevocable within the time period set
forth in such Release, but in no event later than 60 days following the Date of
Termination:

 

(i)                                     the Company shall pay the Executive an
amount equal to twelve (12) months of the Executive’s Base Salary (the
“Severance Amount”).  Notwithstanding the foregoing, if the Executive breaches
any of the provisions contained in Section 7 of

 

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this Agreement, including without limitation the Restrictive Covenant Agreement
incorporated by reference to Section 7 of this Agreement, in addition to all
legal and equitable remedies, the Company shall have the right to cease payments
of the Severance Amount;

 

(ii)                                  if the Executive was participating in the
Company’s group health plan immediately prior to the Date of Termination and
elects continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), then the Company shall pay to
the Executive a monthly cash payment for twelve (12) months or the Executive’s
COBRA health continuation period, whichever ends earlier, in an amount equal to
the monthly employer contribution that the Company would have made to provide
health insurance to the Executive if the Executive had remained employed by the
Company. The Executive may continue to participate in COBRA benefits following
the expiration of the twelve (12) months, at his sole cost, provided that he
remains eligible for such participation; and

 

(iii)                               the amounts payable under this
Section 4(b) shall be paid out in substantially equal installments in accordance
with the Company’s payroll practice over twelve (12) months commencing within 60
days after the Date of Termination; provided, however, that if the 60-day period
begins in one calendar year and ends in a second calendar year, the Severance
Amount shall begin to be paid in the second calendar year by the last day of
such 60-day period; provided, further, that the initial payment shall include a
catch-up payment to cover amounts retroactive to the day immediately following
the Date of Termination.  Each payment pursuant to this Agreement is intended to
constitute a separate payment for purposes of Treasury Regulation
Section 1.409A-2(b)(2).

 

5.                                      Change in Control Payment.  The
provisions of this Section 5 set forth certain terms of an agreement reached
between the Executive and the Company regarding the Executive’s rights and
obligations upon the occurrence of a Change in Control of the Company.  These
provisions are intended to assure and encourage in advance the Executive’s
continued attention and dedication to his assigned duties and his objectivity
during the pendency and after the occurrence of any such event.  These
provisions shall apply in lieu of, and expressly supersede, the provisions of
Section 4(b) regarding severance pay and benefits upon a termination of
employment, if such termination of employment occurs within eighteen (18) months
after the occurrence of the first event constituting a Change in Control (the
“Change in Control Period”).  These provisions shall terminate and be of no
further force or effect beginning eighteen (18) months after the occurrence of a
Change in Control.

 

(a)                                 Change in Control.  If the Executive’s
employment is terminated by the Company without Cause as provided in
Section 3(d) or the Executive terminates his employment for Good Reason as
provided in Section 3(e), and the Date of Termination occurs within the Change
in Control Period, then, subject to the signing of the Release by the Executive
and such Release becoming irrevocable within the period set forth in such
Release, but in no event later than 60 days following the Date of Termination:

 

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(i)                                     the Company shall pay the Executive a
lump sum in cash in an amount equal to one (1) multiplied by the sum of (A) the
Executive’s then-effective Base Salary, and (B) the Executive’s Target Bonus for
the year during which the Date of Termination occurs;

 

(ii)                                  the Company shall pay a prorated annual
performance bonus (the “Prorated Annual Bonus”) equal to (x) the Executive’s
Target Bonus for the year during which the Date of Termination occurs multiplied
by (y) a fraction, the numerator of which is the number of days in the fiscal
year in which the Executive was employed through the Date of Termination and the
denominator of which is 365, provided that the Prorated Annual Bonus shall be
less the amount of any annual performance bonus, or advance thereof, previously
paid for the period associated with the Prorated Annual Bonus.

 

(iii)                               notwithstanding anything to the contrary in
any applicable option agreement or stock-based award agreement, all time-based
stock options and other stock-based awards held by the Executive shall
immediately accelerate and become fully exercisable or nonforfeitable as of the
Date of Termination; and

 

(iv)                              if the Executive was participating in the
Company’s group health plan immediately prior to the Date of Termination and
elects COBRA health continuation, then the Company shall pay to the Executive a
monthly cash payment for twelve (12) months or the Executive’s COBRA health
continuation period, whichever ends earlier, in an amount equal to the monthly
employer contribution that the Company would have made to provide health
insurance to the Executive if the Executive had remained employed by the
Company.  The Executive may continue to participate in COBRA benefits following
the expiration of the twelve (12) months, at his sole cost, provided that he
remains eligible for such participation.

 

(v)                                 The amounts payable under this
Section 5(a) shall be paid or commence to be paid within 60 days after the Date
of Termination; provided, however, that if the 60-day period begins in one
calendar year and ends in a second calendar year, such payment shall be paid or
commence to be paid in the second calendar year by the last day of such 60-day
period.

 

(b)                                 Additional Limitation.

 

(i)                                     Anything in this Agreement to the
contrary notwithstanding, in the event that the amount of any compensation,
payment or distribution by the Company to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, calculated in a manner consistent with Section 280G
of the Code and the applicable regulations thereunder (the “Severance
Payments”), would be subject to the excise tax imposed by Section 4999 of the
Code, the following provisions shall apply:

 

(A)                               If the Severance Payments, reduced by the sum
of (1) the Excise Tax and (2) the total of the Federal, state, and local income
and

 

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employment taxes payable by the Executive on the amount of the Severance
Payments which are in excess of the Threshold Amount, are greater than or equal
to the Threshold Amount, the Executive shall be entitled to the full benefits
payable under this Agreement.

 

(B)                               If the Threshold Amount is less than (x) the
Severance Payments, but greater than (y) the Severance Payments reduced by the
sum of (1) the Excise Tax and (2) the total of the Federal, state, and local
income and employment taxes on the amount of the Severance Payments which are in
excess of the Threshold Amount, then the Severance Payments shall be reduced
(but not below zero) to the extent necessary so that the sum of all Severance
Payments shall not exceed the Threshold Amount.  In such event, the Severance
Payments shall be reduced in the following order:  (1) cash payments not subject
to Section 409A of the Code; (2) cash payments subject to Section 409A of the
Code; (3) equity-based payments and acceleration; and (4) non-cash forms of
benefits.  To the extent any payment is to be made over time (e.g., in
installments, etc.), then the payments shall be reduced in reverse chronological
order.

 

(ii)                                  For the purposes of this Section 5(b),
“Threshold Amount” shall mean three times the Executive’s “base amount” within
the meaning of Section 280G(b)(3) of the Code and the regulations promulgated
thereunder less one dollar ($1.00); and “Excise Tax” shall mean the excise tax
imposed by Section 4999 of the Code, and any interest or penalties incurred by
the Executive with respect to such excise tax.

 

(iii)                               The determination as to which of the
alternative provisions of Section 5(b)(i) shall apply to the Executive shall be
made by a nationally recognized accounting firm selected by the Company (the
“Accounting Firm”), which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the Date of
Termination, if applicable, or at such earlier time as is reasonably requested
by the Company or the Executive.  For purposes of determining which of the
alternative provisions of Section 5(b)(i) shall apply, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation applicable to individuals for the calendar year in which the
determination is to be made, and state and local income taxes at the highest
marginal rates of individual taxation in the state and locality of the
Executive’s residence on the Date of Termination, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes.  Any determination by the Accounting Firm shall be binding upon the
Company and the Executive.

 

(b)                                 Definitions.  For purposes of this
Section 5, the following terms shall have the following meanings:

 

“Change in Control” shall mean any of the following:

 

(i)                                     any “person,” as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Act”) (other than the Company,

 

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any of its subsidiaries, or any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the Company or
any of its subsidiaries), together with all “affiliates” and “associates” (as
such terms are defined in Rule 12b-2 under the Act) of such person, shall become
the “beneficial owner” (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 50 percent or
more of the combined voting power of the Company’s then outstanding securities
having the right to vote in an election of the Board (“Voting Securities”) (in
such case other than as a result of an acquisition of securities directly from
the Company); or

 

(ii)                                  the date a majority of the members of the
Board is replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board before the
date of the appointment or election; or

 

(iii)                               the consummation of (A) any consolidation or
merger of the Company where the stockholders of the Company, immediately prior
to the consolidation or merger, would not, immediately after the consolidation
or merger, beneficially own (as such term is defined in Rule 13d-3 under the
Act), directly or indirectly, shares representing in the aggregate more than 50
percent of the voting shares of the Company issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any), or
(B) any sale or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or substantially
all of the assets of the Company.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of Voting
Securities beneficially owned by any person to 50 percent or more of the
combined voting power of all of the then outstanding Voting Securities;
provided, however, that if any person referred to in this sentence shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company) and immediately thereafter beneficially owns 50 percent or more of the
combined voting power of all of the then outstanding Voting Securities, then a
“Change in Control” shall be deemed to have occurred for purposes of the
foregoing clause (i).

 

6.                                      Section 409A.

 

(a)                                 Anything in this Agreement to the contrary
notwithstanding, if at the time of the Executive’s separation from service
within the meaning of Section 409A of the Code, the Company determines that the
Executive is a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit
that the Executive becomes entitled to under this Agreement on account of the
Executive’s separation from service would be considered deferred compensation
subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of
the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code,
such payment shall not be payable and such benefit shall not be provided until
the date that is the earlier of (A) six months and one day after the Executive’s

 

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separation from service, or (B) the Executive’s death.  If any such delayed cash
payment is otherwise payable on an installment basis, the first payment shall
include a catch-up payment covering amounts that would otherwise have been paid
during the six-month period but for the application of this provision, and the
balance of the installments shall be payable in accordance with their original
schedule.

 

(b)                                 All in-kind benefits provided and expenses
eligible for reimbursement under this Agreement shall be provided by the Company
or incurred by the Executive during the time periods set forth in this
Agreement.  All reimbursements shall be paid as soon as administratively
practicable, but in no event shall any reimbursement be paid after the last day
of the taxable year following the taxable year in which the expense was
incurred.  The amount of in-kind benefits provided or reimbursable expenses
incurred in one taxable year shall not affect the in-kind benefits to be
provided or the expenses eligible for reimbursement in any other taxable year. 
Such right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit.

 

(c)                                  To the extent that any payment or benefit
described in this Agreement constitutes “non-qualified deferred compensation”
under Section 409A of the Code, and to the extent that such payment or benefit
is payable upon the Executive’s termination of employment, then such payments or
benefits shall be payable only upon the Executive’s “separation from service.” 
The determination of whether and when a separation from service has occurred
shall be made in accordance with the presumptions set forth in Treasury
Regulation Section 1.409A-1(h).

 

(d)                                 The parties intend that this Agreement will
be administered in accordance with Section 409A of the Code.  To the extent that
any provision of this Agreement is ambiguous as to its compliance with
Section 409A of the Code, the provision shall be read in such a manner so that
all payments hereunder comply with Section 409A of the Code.  Each payment
pursuant to this Agreement is intended to constitute a separate payment for
purposes of Treasury Regulation Section 1.409A-2(b)(2).  The parties agree that
this Agreement may be amended, as reasonably requested by either party, and as
may be necessary to fully comply with Section 409A of the Code and all related
rules and regulations in order to preserve the payments and benefits provided
hereunder without additional cost to either party.

 

(e)                                  The Company makes no representation or
warranty and shall have no liability to the Executive or any other person if any
provisions of this Agreement are determined to constitute deferred compensation
subject to Section 409A of the Code but do not satisfy an exemption from, or the
conditions of, such Section.

 

7.                                      Confidential Information, Noncompetition
and Cooperation.

 

(a)                                 Restrictive Covenant Agreement.  The terms
of the Restrictive Covenant Agreement, by and between the Company and the
Executive and attached hereto as Exhibit A (the “Restrictive Covenant
Agreement”), shall be in full force and effect and are incorporated by reference
as material terms of this Agreement.

 

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(b)                                 Third-Party Agreements and Rights.  The
Executive hereby confirms that the Executive is not bound by the terms of any
agreement with any previous employer or other party which restricts in any way
the Executive’s use or disclosure of information or the Executive’s engagement
in any business.  The Executive represents to the Company that the Executive’s
execution of this Agreement, the Executive’s employment with the Company and the
performance of the Executive’s proposed duties for the Company will not violate
any obligations the Executive may have to any such previous employer or other
party.  In the Executive’s work for the Company, the Executive will not disclose
or make use of any information in violation of any agreements with or rights of
any such previous employer or other party, and the Executive will not bring to
the premises of the Company any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.

 

(c)                                  Litigation and Regulatory Cooperation. 
During and after the Executive’s employment, the Executive shall cooperate fully
with the Company in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of the
Company which relate to events or occurrences that transpired while the
Executive was employed by the Company.  The Executive’s full cooperation in
connection with such claims or actions shall include, but not be limited to,
being available to meet with counsel to prepare for discovery or trial and to
act as a witness on behalf of the Company at mutually convenient times.  During
and after the Executive’s employment, the Executive also shall cooperate fully
with the Company in connection with any investigation or review of any federal,
state or local regulatory authority as any such investigation or review relates
to events or occurrences that transpired while the Executive was employed by the
Company.  The Company shall reimburse the Executive for any reasonable
out-of-pocket expenses incurred in connection with the Executive’s performance
of obligations pursuant to this Section 7(c).

 

(d)                                 Injunction.  The Executive agrees that it
would be difficult to measure any damages caused to the Company which might
result from any breach by the Executive of the promises set forth in this
Section 7, and that in any event money damages would be an inadequate remedy for
any such breach.  Accordingly, subject to Section 8 of this Agreement, the
Executive agrees that if the Executive breaches, or proposes to breach, any
portion of this Agreement, the Company shall be entitled, in addition to all
other remedies that it may have, to an injunction or other appropriate equitable
relief to restrain any such breach without showing or proving any actual damage
to the Company.

 

(e)                                  Protected Disclosure.  The Executive
understands that nothing contained in this Agreement limits the Executive’s
ability to communicate with any federal, state or local governmental agency or
commission, including to provide documents or other information, without notice
to the Company.

 

8.                                      Consent to Jurisdiction.  The parties
hereby consent to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.  Accordingly, with respect to any such court action, the
Executive (a) submits to the personal jurisdiction of such courts; (b) consents
to service of process; and (c) waives any other requirement (whether imposed by
statute, rule of court, or otherwise) with respect to personal jurisdiction or
service of process.

 

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9.                                      Integration.  This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements between the parties concerning such
subject matter, including without limitation, the Prior Agreement; provided that
the Restrictive Covenant Agreement, the Acknowledgment regarding the Statement
of Company Policy on Insider Trading and Disclosure, the Acknowledgment of the
Statement of Company Policy on the Code of Business Conduct and Ethics and the
Acknowledgement regarding the Company’s Colleague Handbook shall remain in full
force and effect.

 

10.                               Withholding.  All payments made by the Company
to the Executive under this Agreement shall be net of any tax or other amounts
required to be withheld by the Company under applicable law.

 

11.                               Successor to the Executive.  This Agreement
shall inure to the benefit of and be enforceable by the Executive’s personal
representatives, executors, administrators, heirs, distributees, devisees and
legatees.  In the event of the Executive’s death after his termination of
employment but prior to the completion by the Company of all payments due him
under this Agreement, the Company shall continue such payments to the
Executive’s beneficiary designated in writing to the Company prior to his death
(or to his estate, if the Executive fails to make such designation).

 

12.                               Enforceability.  If any portion or provision
of this Agreement (including, without limitation, any portion or provision of
any section of this Agreement) shall to any extent be declared illegal or
unenforceable by a court of competent jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.

 

13.                               Survival.  The provisions of this Agreement
shall survive the termination of this Agreement and/or the termination of the
Executive’s employment to the extent necessary to effectuate the terms contained
herein.

 

14.                               Waiver.  No waiver of any provision hereof
shall be effective unless made in writing and signed by the waiving party.  The
failure of any party to require the performance of any term or obligation of
this Agreement, or the waiver by any party of any breach of this Agreement,
shall not prevent any subsequent enforcement of such term or obligation or be
deemed a waiver of any subsequent breach.

 

15.                               Notices.  Any notices, requests, demands and
other communications provided for by this Agreement shall be sufficient if in
writing and delivered in person or sent by a nationally recognized overnight
courier service or by registered or certified mail, postage prepaid, return
receipt requested, to the Executive at the last address the Executive has filed
in writing with the Company or, in the case of the Company, at its main offices,
attention of the Board.

 

16.                               Amendment.  This Agreement may be amended or
modified only by a written instrument signed by the Executive and by a duly
authorized representative of the Company.

 

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17.                               Governing Law.  This is a Massachusetts
contract and shall be construed under and be governed in all respects by the
laws of the Commonwealth of Massachusetts, without giving effect to the conflict
of laws principles of such State.  With respect to any disputes concerning
federal law, such disputes shall be determined in accordance with the law as it
would be interpreted and applied by the United States Court of Appeals for the
First Circuit.

 

18.                               Counterparts.  This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be taken to be an original; but such counterparts shall together
constitute one and the same document.

 

19.                               Successor to Company.  The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company expressly to assume and agree to perform this Agreement to
the same extent that the Company would be required to perform it if no
succession had taken place.  Failure of the Company to obtain an assumption of
this Agreement at or prior to the effectiveness of any succession shall be a
material breach of this Agreement.

 

20.                               Gender Neutral.  Wherever used herein, a
pronoun in the masculine gender shall be considered as including the feminine
gender unless the context clearly indicates otherwise.

 

IN WITNESS WHEREOF, the parties have executed this Agreement effective on the
date and year first above written.

 

 

VERICEL CORPORATION

 

 

 

 

 

/s/ Dominick C. Colangelo

 

By:

Dominick C. Colangelo

 

Its:

President and Chief Executive Officer

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Daniel R. Orlando

 

Daniel R. Orlando

 

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Exhibit A

 

Restrictive Covenant Agreement

 

In consideration and as a condition of my employment as well benefits set forth
in my Employment Agreement with Vericel Corporation (including its subsidiaries
and/or affiliates and its and their successors and assigns, the “Company”), I
agree as follows:

 

1.                                      Proprietary Information.  I agree that
all information, whether or not in writing, concerning the Company’s business,
technology, business relationships or financial affairs which the Company has
not released to the general public (collectively, “Proprietary Information”) is
and will be the exclusive property of the Company.  By way of illustration,
Proprietary Information may include information or material which has not been
made generally available to the public, such as:  (a) corporate information,
including plans, strategies, methods, policies, resolutions, negotiations or
litigation; (b) marketing information, including strategies, methods, customer
identities or other information about customers, prospect identities or other
information about prospects, or market analyses or projections; (c) financial
information, including cost and performance data, debt arrangements, equity
structure, investors and holdings, purchasing and sales data and price lists; 
(d) operational and technological information, including plans, specifications,
manuals, forms, templates, software, designs, methods, procedures, formulas,
discoveries, inventions, improvements, concepts and ideas; and (e) personnel
information, including personnel lists, reporting or organizational structure,
resumes, personnel data, performance evaluations and termination arrangements or
documents.  Proprietary Information also includes information received in
confidence by the Company from its customers or suppliers or other third
parties.

 

2.                                      Recognition of Company’s Rights.  I will
not, at any time, without the Company’s prior written permission, either during
or after my employment, disclose any Proprietary Information to anyone outside
of the Company, or use or permit to be used any Proprietary Information for any
purpose other than the performance of my duties as an employee of the Company. 
I will cooperate with the Company and use my best efforts to prevent the
unauthorized disclosure of all Proprietary Information.  I will deliver to the
Company all copies of Proprietary Information in my possession or control upon
the earlier of a request by the Company or termination of my employment.

 

3.                                      Rights of Others.  I understand that the
Company is now and may hereafter be subject to non-disclosure or confidentiality
agreements with third persons which require the Company to protect or refrain
from use of proprietary information.  I agree to be bound by the terms of such
agreements in the event I have access to such proprietary information.

 

4.                                      Commitment to Company; Avoidance of
Conflict of Interest.  While an employee of the Company, I will devote my
full-time efforts to the Company’s business and I will not engage in any other
business activity without prior written permission of an authorized
representative of the Company.   I will advise the General Counsel of the
Company or his or her nominee at such time as any activity of either the Company
or another business presents me with a conflict of interest or the appearance of
a conflict of interest as an employee of the Company.  I will take whatever
action is requested of me by the Company to resolve any conflict or appearance
of conflict which it finds to exist.

 

5.                                      Developments.  I will make full and
prompt disclosure to the Company of all inventions, discoveries, designs,
developments, methods, modifications, improvements, processes, algorithms,
databases, computer programs, formulae, techniques, trade secrets, graphics or
images, and audio or visual works and other works of authorship (collectively
“Developments”), whether or not patentable or copyrightable, that are created,
made, conceived or reduced to practice by me (alone or jointly with others) or
under my direction during the period of my employment.  I acknowledge that all
work performed by me is on a “work for hire” basis, and I hereby do assign and
transfer and, to the extent any such assignment cannot be made at present, will
assign and transfer, to the Company and its successors and assigns all my right,
title and interest in all Developments that (a) relate to the business of the
Company or any of the products or services being researched, developed,
manufactured or sold by the Company or which may be used with such products or
services; or (b) result from tasks assigned to me by the Company; or (c) result
from the use of premises or personal property (whether tangible or intangible)
owned, leased or contracted for by the Company (“Company-Related Developments”),
and all related patents, patent applications, trademarks and trademark
applications, copyrights and copyright applications, and other intellectual
property rights in all countries and territories worldwide and under any
international conventions (“Intellectual Property Rights”).

 

To preclude any possible uncertainty, I have set forth on Schedule A attached
hereto a complete list of Developments that I have, alone or jointly with
others, conceived, developed or reduced to practice prior to the commencement of
my employment with the Company that I consider to be my property or the property
of third parties and that I wish to have excluded from the scope of this
Agreement (“Prior Inventions”).  If disclosure of any such Prior Invention would
cause me to violate any prior confidentiality agreement, I understand that I am
not to list such Prior Inventions in Schedule A but am only to disclose a
cursory name for each such invention, a listing of the party(ies) to whom it
belongs and the fact that full disclosure as to such inventions has not been
made for that reason.  I have also listed on Schedule A all patents and patent
applications in which I am named as an inventor, other than those which have
been assigned to the Company (“Other Patent Rights”).  If no such disclosure is
attached, I represent that there are no Prior Inventions or Other Patent
Rights.  If, in the course of my employment with the Company, I incorporate a
Prior Invention into a Company

 

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product, process or machine or other work done for the Company, I hereby grant
to the Company a nonexclusive, royalty-free, paid-up, irrevocable, worldwide
license (with the full right to sublicense) to make, have made, modify, use,
sell, offer for sale and import such Prior Invention.  Notwithstanding the
foregoing, I will not incorporate, or permit to be incorporated, Prior
Inventions in any Company-Related Development without the Company’s prior
written consent.

 

This Agreement does not obligate me to assign to the Company any Development
which, in the sole judgment of the Company, reasonably exercised, is developed
entirely on my own time and does not relate to the business efforts or research
and development efforts in which, during the period of my employment, the
Company actually is engaged or reasonably would be engaged, and does not result
from the use of premises or equipment owned or leased by the Company. 
However, I will also promptly disclose to the Company any such Developments for
the purpose of determining whether they qualify for such exclusion.  I
understand that to the extent this Agreement is required to be construed in
accordance with the laws of any state which precludes a requirement in an
employee agreement to assign certain classes of inventions made by an employee,
this paragraph 5 will be interpreted not to apply to any invention which a court
rules and/or the Company agrees falls within such classes.  I also hereby waive
all claims to any moral rights or other special rights which I may have or
accrue in any Company-Related  Developments.

 

6.                                      Documents and Other Materials.  I will
keep and maintain adequate and current records of all Proprietary Information
and Company-Related Developments developed by me during my employment, which
records will be available to and remain the sole property of the Company at all
times.

 

All files, letters, notes, memoranda, reports, records, data, sketches,
drawings, notebooks, layouts, charts, quotations and proposals, specification
sheets, program listings, blueprints, models, prototypes, or other written,
photographic or other tangible material containing Proprietary Information,
whether created by me or others, which come into my custody or possession, are
the exclusive property of the Company to be used by me only in the performance
of my duties for the Company.  Any property situated on the Company’s premises
and owned by the Company, including without limitation computers, disks and
other storage media, filing cabinets or other work areas, is subject to
inspection by the Company at any time with or without notice.  In the event of
the termination of my employment for any reason, I will deliver to the Company
all Company property and equipment in my possession, custody or control,
including all files, letters, notes, memoranda, reports, records, data,
sketches, drawings, notebooks, layouts, charts, quotations and proposals,
specification sheets, program listings, blueprints, models, prototypes, or other
written, photographic or other tangible material containing Proprietary
Information, and other materials of any nature pertaining to the Proprietary
Information of the Company and to my work, and will not take or keep in my
possession any of the foregoing or any copies.

 

7.                                      Enforcement of Intellectual Property
Rights.  I will cooperate fully with the Company, both during and after my
employment with the Company, with respect to the procurement, maintenance and
enforcement of Intellectual Property Rights in Company-Related Developments.  I
will sign, both during and after the term of this Agreement,  all papers,
including without limitation copyright applications, patent applications,
declarations, oaths, 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 Company-Related Development.  If the Company is unable,
after reasonable effort, to secure my signature on any such papers, I hereby
irrevocably designate and appoint each officer of the Company as my agent and
attorney-in-fact to execute any such papers on my 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 Company-Related Development.

 

8.                                      Non-Competition and Non-Solicitation. 
In order to protect the Company’s Proprietary Information and good will, during
my employment and (i) with respect to clause (a) below, for a period of twelve
(12) months following the termination of my employment or other service
relationship with the Company for any reason and (ii) with respect to clauses
(b) and (c) below, for a period of twelve (12)  months following the termination
of my employment or other service relationship with the Company for any reason
(the “Restricted Period”):

 

(a)                                 I will not directly or indirectly, whether
as owner, partner, shareholder, director, manager, consultant, agent, employee,
co-venturer or otherwise, engage, participate or invest in any business activity
anywhere in the United States that is competitive with the Company’s development
programs, including product candidates developed thereunder, or technologies or
commercial products, at such time of my termination of employment; provided that
this shall not prohibit any possible investment in publicly traded stock of a
company representing less than one percent of the stock of such company.

 

(b)                                 I will not, directly or indirectly, in any
manner, other than for the benefit of the Company or for solely non-competitive
purposes, call upon, solicit, divert, take away, accept or conduct any business
from or with any of the customers or prospective customers of the Company.

 

(c)                                  I will not, directly or indirectly, in any
manner, solicit, entice, attempt to persuade any other employee or consultant of
the Company to leave the Company for any reason or otherwise participate in or
facilitate the hire, directly or through another entity, of any person who is
employed or engaged by the Company or who was employed or engaged by the Company
within six months of any attempt to hire such person.

 

I acknowledge and agree that if I violate any of the provisions of this
paragraph 8 after my employment ends, the running of the Restricted Period will
be extended until there is a period of in which there is no violation of this
paragraph 8.

 

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9.                                      Government Contracts.  I acknowledge
that the Company may have from time to time agreements with other persons or
with the United States Government or its agencies which impose obligations or
restrictions on the Company regarding inventions made during the course of work
under such agreements or regarding the confidential nature of such work.  I
agree to comply with any such obligations or restrictions upon the direction of
the Company. In addition to the rights assigned under paragraph 5, I also assign
to the Company (or any of its nominees) all rights which I have or acquired in
any Developments, full title to which is required to be in the United States
under any contract between the Company and the United States or any of its
agencies.

 

10.                               Prior Agreements.  I hereby represent that,
except as I have fully disclosed previously in writing to the Company, I am not
bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential or proprietary
information in the course of my employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party.  I further represent that my performance of all the terms of
this Agreement as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data
acquired by me in confidence or in trust prior to my employment with the
Company. I will not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any previous
employer or others.

 

11.                               Remedies Upon Breach.   I understand that the
restrictions contained in this Agreement are necessary for the protection of the
business and goodwill of the Company and I consider them to be reasonable for
such purpose.  Any breach of this Agreement is likely to cause the Company
substantial and irrevocable damage and therefore, in the event of such breach,
the Company, in addition to such other remedies which may be available, will be
entitled to specific performance and other injunctive relief, without the
posting of a bond.  If I violate this Agreement, in addition to all other
remedies available to the Company at law, in equity, and under contract, I agree
that I am obligated to pay all the Company’s costs of enforcement of this
Agreement, including attorneys’ fees and expenses.

 

12.                               Use of Voice, Image and Likeness.   I give the
Company permission to use any and all of my voice, image and likeness, with or
without using my name, in connection with the products and/or services of the
Company, for the purposes of advertising and promoting such products and/or
services and/or the Company, and/or for other purposes deemed appropriate by the
Company in its reasonable discretion, except to the extent expressly prohibited
by law.

 

13.                               No Employment Obligation.  I understand that
this Agreement does not create an obligation on the Company or any other person
to continue my employment.  I acknowledge that, unless otherwise agreed in a
formal written employment agreement signed on behalf of the Company by an
authorized officer, my employment with the Company is at will and therefore may
be terminated by the Company or me at any time and for any reason, with or
without cause.

 

14.                               Survival and Assignment by the Company.  I
understand that my obligations under this Agreement will continue in accordance
with its express terms regardless of any changes in my title, position, duties,
salary, compensation or benefits or other terms and conditions of employment. I
further understand that my obligations under this Agreement will continue
following the termination of my employment regardless of the manner of such
termination and will be binding upon my heirs, executors and administrators. 
The Company will have the right to assign this Agreement to its affiliates,
successors and assigns.  I expressly consent to be bound by the provisions of
this Agreement for the benefit of the Company or any parent, subsidiary or
affiliate to whose employ I may be transferred without the necessity that this
Agreement be resigned at the time of such transfer.

 

15.                               Post-Employment Notifications.  For twelve
(12) months following termination of my employment, I will notify the Company of
any change in my address and of each subsequent employment or business activity,
including the name and address of my employer or other post-Company employment
plans and the nature of my activities.

 

16.                               Disclosure to Future Employers. I will provide
a copy of this Agreement to any prospective employer, partner or coventurer
prior to entering into an employment, partnership or other business relationship
with such person or entity.

 

17.                               Severability.  In case any provisions (or
portions thereof) contained in this Agreement shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.  If, moreover, any one or more of the
provisions contained in this Agreement shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.

 

18.                               Interpretation; Consent to Jurisdiction.  This
Agreement will be deemed to be made and entered into in the Commonwealth of
Massachusetts, and will in all respects be interpreted, enforced and governed
under the laws of the Commonwealth of Massachusetts.  I hereby consent to
personal jurisdiction of the state and federal courts situated within
Massachusetts for purposes of enforcing this Agreement, and waive any objection
that I might have to personal jurisdiction or venue in those courts.

 

19.                               Protected Disclosures.  I understand that
nothing contained in this Agreement limits my ability to communicate with any
federal, state or local governmental agency or commission, including to provide
documents or other information, without notice to the Company.

 

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20.                               Defend Trade Secrets Act of 2016.  I
understand that pursuant to the federal Defend Trade Secrets Act of 2016, I
shall not be held criminally or civilly liable under any federal or state trade
secret law for the disclosure of a trade secret that (a) is made (i) in
confidence to a federal, state, or local government official, either directly or
indirectly, or to an attorney; and (ii) solely for the purpose of reporting or
investigating a suspected violation of law; or (b) is made in a complaint or
other document filed in a lawsuit or other proceeding, if such filing is made
under seal.

 

21.                               Other Agreements and Obligations. This
Agreement constitutes the entire agreement between me and the Company regarding
the subject matter hereof, and  supersedes any previous agreements or
understandings that I had or may have had  between  me and the Company regarding
the subject matter, except any confidentiality and/or assignment of inventions
agreement (including the Employee Proprietary Information and Non-Disclosure and
Assignment of  Intellectual Property Rights Agreement) that I entered into  with
the Company shall continue to be in full force and effect  and shall be
supplemental to this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

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I UNDERSTAND THAT THIS AGREEMENT AFFECTS IMPORTANT RIGHTS.  BY SIGNING BELOW, I
CERTIFY THAT I HAVE READ IT CAREFULLY AND AM SATISFIED THAT I UNDERSTAND IT
COMPLETELY.

 

IN WITNESS WHEREOF, the undersigned has executed this agreement as a sealed
instrument as of the date set forth below.

 

Signed:

/s/ Daniel R. Orlando

 

(Employee’s full name)

 

 

 

Type or print name: Daniel R. Orlando

 

 

 

Date:

September 14, 2017

 

 

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SCHEDULE A

 

To:                             Vericel Corporation

 

From:               Daniel R. Orlando

 

 

 

Date:

September 14, 2017

 

 

 

SUBJECT:

Prior Inventions

 

 

The following is a complete list of all inventions or improvements relevant to
the subject matter of my employment by the Company that have been made or
conceived or first reduced to practice by me alone or jointly with others prior
to my engagement by the Company:

 

x                                  No inventions or improvements

 

o                                    See below:

 

 

 

o                                    Additional sheets attached

 

The following is a list of all patents and patent applications in which I have
been named as an inventor:

 

x                                  None

 

o                                    See below:

 

 

 

 

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