Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of February 1,
2010 (the “Effective Date”), by and between Fibrocell Science, Inc., a Delaware
corporation (the “Company”) having its principal place of business at 405
Eagleview Boulevard, Exton, PA 19341, and David Pernock (“Executive”, and the
Company and the Executive collectively referred to herein as the “Parties”)
having an address at 748 Canterbury Lane, Villanova, PA 19085.
W I T N E S S E T H:
WHEREAS, the Company desires to hire Executive and to employ him as the Chief
Executive Officer (“CEO”) commencing February 1, 2010, and the Parties desire to
enter into this Agreement embodying the terms of such employment;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
promises of the Parties contained herein, the Parties, intending to be legally
bound, hereby agree as follows:
1. Title and Job Duties.
(a) Subject to the terms and conditions set forth in this Agreement, the Company
agrees to employ Executive as CEO. Executive shall report directly to the Board
of Directors of the Company (the “Board”).
(b) Executive accepts such employment and agrees, during the term of his
employment, to devote his full business and professional time and energy to the
Company, and agrees faithfully to perform his duties and responsibilities in an
efficient, trustworthy and business-like manner. Executive also agrees that the
Board shall determine from time to time such other duties as may be assigned to
him. Executive agrees to carry out and abide by such directions of the Board.
(c) Without limiting the generality of the foregoing, Executive shall not,
without the written approval of the Company, render services of a business or
commercial nature on his own behalf or on behalf of any other person, firm, or
corporation, whether for compensation or otherwise, during his employment
hereunder.
2. Salary and Additional Compensation.
(a) Base Salary. The Company shall pay to Executive an annual base salary (“Base
Salary”) of $450,000, less applicable withholdings and deductions, in accordance
with the Company’s normal payroll procedures. Commencing on the execution of
this Agreement, Executive shall no longer be entitled to any cash payments for
his services as Chairman of the Board.

 

 

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(b) Bonus. Commencing with the year ended December 31, 2010, Executive is
entitled to receive an annual bonus (the “Annual Bonus”), payable each year
subsequent to the issuance of final audited financial statements, but in no case
later than 120 days after the end of the Company’s most recently completed
fiscal year. The final determination on the amount of the Annual Bonus will be
made by the Board of Directors (or the Compensation Committee of the Board of
Directors, if such committee has been formed), based on criteria established by
the Board of Directors (or the Compensation Committee of the Board of Directors,
if such committee has been formed) within ninety (90) days of the beginning of
such fiscal year. The Board of Directors (or the Compensation Committee of the
Board of Directors, if such committee has been formed) may also consider other
more subjective factors in making its determination. The targeted amount of the
Annual Bonus shall be 60% of the Executive’s Base Salary. The actual Annual
Bonus for any given period may be higher or lower than 60%. For any fiscal year
in which Executive is employed for less than the full year, Executive may
receive a bonus which is prorated based on the number of full months in the year
which are worked.
(c) Payment for Prior Services. Executive will also receive a $100,000 payment
for payment of previously rendered services if and when the Company closes a
financing in an amount of greater than $3.0 million.
(d) Option Grant. Contemporaneous with the execution of this Agreement,
Executive will receive a grant (the “Stock Option Grant) of stock options (the
“Stock Options”) to purchase 1,650,000 shares at an exercise price per share
equal to the closing price of the Company’s common stock on the date of
execution of this Agreement. The Stock Options shall have a term of ten (10)
years and shall vest as follows:
(i) 250,000 shares upon execution of this Agreement;
(ii) 100,000 shares upon the closing of a strategic partnership or licensing
deal with a major partner that enables the Company to significantly improve
and/or accelerate its capabilities in such areas as research, production,
marketing and/or sales and enable the Company to reach or exceed its major
business milestones within the Company’s strategic and operational plans,
provided Executive is the CEO on the closing date of such partnership or
licensing deal. The determination of whether any partnership or licensing deal
meets the foregoing criteria will be made in good faith by the Board upon the
closing of such partnership or licensing deal; and
(iii) 1,300,000 shares in equal 1/36th installments (or 36,111 shares per
installment) monthly over a three-year period commencing March 1, 2010 (i.e. the
first installment shall vest on March 1, 2010), provided Executive is the CEO on
each vesting date.

 

 

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The vesting of all Stock Options set forth above shall accelerate upon a Change
in Control, provided Executive is employed by the Company within sixty (60) days
prior to the date of such Change in Control. Notwithstanding the foregoing, the
Stock Options shall terminate one (1) year following a termination of the
Executive or upon the voluntary termination of service by the Executive. For
purposes of this Agreement, “Change In Control” means the occurrence of any of
the following events: (i) an acquisition (other than directly from the Company
or its affiliates) of any voting securities of the Company by any person or
group of affiliated or related persons (as such term is defined in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), immediately after which such person or group has beneficial
ownership (within the meaning of the Exchange Act) of more than fifty percent
(50%) of the combined voting power of the Company’s then outstanding voting
securities; provided that this subsection shall not apply to an acquisition of
voting securities by any employee benefit plan or trust maintained by or for the
benefit of the Company or its employees; (ii) a merger, consolidation or
reorganization involving the Company in which the holders of the Company’s
voting securities immediately prior to such event hold less than fifty percent
(50%) of the voting securities of the combined entity after such event; (iii) a
complete liquidation or dissolution of the Company; (iv) the sale or other
disposition of all or substantially all of the Company’s assets (it being
understood that a sale of the Company’s Fibroblast technology will constitute a
sale of substantially all assets of the Company); or (v) any exclusive license
covering at least the territory of the United States to sell and manufacture the
Company’s Fibroblast technology for all current and future indications or
applications.
3. Expenses. In accordance with Company policy, the Company shall reimburse
Executive for all reasonable business expenses properly and necessarily incurred
and paid by Executive in the performance of his duties under this Agreement upon
his presentment of detailed receipts in the form required by the Company’s
policy.
4. Benefits.
(a) Vacation. Executive shall be entitled to four (4) weeks vacation per year,
which shall accrue at a rate of 1.67 days per month. Vacation must be taken in
the year in which it accrues.
(b) Health Insurance and Other Plans. Executive shall be eligible to participate
in the Company’s medical, dental and other employee benefit programs, if any,
that are provided by the Company for its employees at Executive’s level in
accordance with the provisions of any such plans, as the same may be in effect
from time to time, provided that, should Executive elect to maintain his
GlaxoSmithKline benefits, the Company shall pay to Executive an amount equal to
his portion of the premium for such benefits.
5. Term. The term set forth in this Agreement will commence on the Effective
Date hereof and shall remain in effect for three (3) years and will
automatically renew for subsequent one (1) year periods (the “Term”) unless
Executive or the Company is notified of non-renewal upon no less than sixty
(60) days’ written notice by the other Party.
6. Termination.
(a) Termination at the Company’s Election.
(i) For Cause. At the election of the Company, Executive’s employment may be
terminated for Cause (as defined below) upon written notice to Executive
pursuant to Section 12 of this Agreement. For purposes of this Agreement,
“Cause” for termination shall mean that Executive: (A) pleads “guilty” or “no
contest” to or is convicted of an act which is defined as a felony under federal
or state law or the indictment of, or the bringing of formal charges against
Executive on charges involving criminal fraud or embezzlement; (B) in carrying
out his duties, engages in conduct that constitutes gross negligence or willful
misconduct; (C) engages in any conduct that may cause harm to the reputation of
the Company; or (D) materially breaches any term of this Agreement.

 

 

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(ii) Upon Disability, Death or Without Cause. At the election of the Company,
Executive’s employment may be terminated without Cause: (A) should Executive
become physically or mentally unable to perform his duties for the Company
hereunder and such incapacity has continued for a total of ninety
(90) consecutive days or any one hundred eighty (180) days in a period of three
hundred sixty-five (365) consecutive days (“Disability”); (B) upon Executive’s
death; or (C) upon ninety (90) days’ written notice for any other reason.
(b) Termination at Executive’s Election; Good Reason Termination.
Notwithstanding anything contained elsewhere in this Agreement to the contrary,
Executive may terminate his employment hereunder at any time and for any reason,
upon ninety (90) days’ written notice pursuant to Section 12 of this Agreement
(“Voluntary Resignation”), provided that upon notice of resignation, the Company
may terminate Executive’s employment immediately and pay Executive ninety
(90) days’ pay in lieu of notice. Furthermore, the Executive may terminate this
Agreement for “Good Reason,” which shall be deemed to exist: (i) if the
Company’s Board of Directors or that of any successor entity of Company, fails
to appoint or reappoint the Executive or removes the Executive as the CEO of the
Company; or (ii) if Executive is assigned any duties materially inconsistent
with the duties or responsibilities of the CEO of the Company as contemplated by
this Agreement or any other action by the Company that results in a material
diminution in such position, authority, duties, or responsibilities, excluding
an isolated, insubstantial, and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by Executive; provided that Executive shall act within 30 days of any such
diminution in the scope of his duties, responsibilities, authority or position.
7. Severance.
(a) If Executive’s employment is terminated, at the Company’s election at any
time, for reasons other than death, Disability, Cause or Voluntary Resignation,
or by Executive for Good Reason, Executive shall be entitled to receive
severance payments equal to twelve (12) months of Executive’s Base Salary and of
the premiums associated with continuation of Executive’s benefits pursuant to
COBRA to the extent that he is eligible for them following the termination of
his employment; provided that if anytime within eighteen (18) months after a
Change of Control either (i) Executive is terminated, at the Company’s election
at any time, for reasons other than death, Disability, Cause or Voluntary
Resignation, or (ii) Executive terminates this Agreement for “Good Reason,”
Executive shall be entitled to receive severance payments equal to: (i) two
(2) years of Executive’s Base Salary, (ii) Executive’s most recent Annual Bonus
payment, and (iii) the premiums associated with continuation of Executive’s
benefits pursuant to COBRA to the extent that he is eligible for them following
the termination of his employment for a period of one (1) year after
termination. All severance payments shall be made in a lump sum within ten
business days of Executive’s execution and delivery of a general release of the
Company, its parents, subsidiaries and affiliates and each of its officers,
directors, employees, agents, successors and assigns in a form acceptable to the
Company.
(b) Notwithstanding the foregoing, Executive agrees that in the event that all
or a portion of any payment described in Subparagraph (b) of this Section 7
constitutes nonqualified deferred compensation within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
Executive is at such time a specified employee, such payment or payments that
constitute nonqualified deferred compensation within the meaning of the Code
shall not be made prior to the date which is six (6) months after the date
Executive separates from service (within the meaning of the Code).

 

 

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8. Confidentiality Agreement.
(a) Executive understands that during the Term he may have access to unpublished
and otherwise confidential information both of a technical and non-technical
nature, relating to the business of the Company and any of its parents,
subsidiaries, divisions, affiliates (collectively, “Affiliated Entities”), or
clients, including without limitation any of their actual or anticipated
business, research or development, any of their technology or the implementation
or exploitation thereof, including without limitation information Executive and
others have collected, obtained or created, information pertaining to clients,
accounts, vendors, prices, costs, materials, processes, codes, material results,
technology, system designs, system specifications, materials of construction,
trade secrets and equipment designs, including information disclosed to the
Company by others under agreements to hold such information confidential
(collectively, the “Confidential Information”). Executive agrees to observe all
Company policies and procedures concerning such Confidential Information.
Executive further agrees not to disclose or use, either during his employment or
at any time thereafter, any Confidential Information for any purpose, including
without limitation any competitive purpose, unless authorized to do so by the
Company in writing, except that he may disclose and use such information when
necessary in the performance of his duties for the Company. Executive’s
obligations under this Agreement will continue with respect to Confidential
Information, whether or not his employment is terminated, until such information
becomes generally available from public sources through no fault of Executive.
Notwithstanding the foregoing, however, Executive shall be permitted to disclose
Confidential Information as may be required by a subpoena or other governmental
order, provided that he first notifies the Company of such subpoena, order or
other requirement and allows the Company the opportunity to obtain a protective
order or other appropriate remedy.
(b) During Executive’s employment, upon the Company’s request, or upon the
termination of his employment for any reason, Executive will promptly deliver to
the Company all documents, records, files, notebooks, manuals, letters, notes,
reports, customer and supplier lists, cost and profit data, e-mail, apparatus,
computers, blackberries or other PDAs, hardware, software, drawings, blueprints,
and any other material of the Company or any of its Affiliated Entities or
clients, including all materials pertaining to Confidential Information
developed by Executive or others, and all copies of such materials, whether of a
technical, business or fiscal nature, whether on the hard drive of a laptop or
desktop computer, in hard copy, disk or any other format, which are in his
possession, custody or control.
(c) Executive will promptly disclose to the Company any idea, invention,
discovery or improvement, whether patentable or not (“Creations”), conceived or
made by him alone or with others at any time during his employment. Executive
agrees that the Company owns any such Creations, conceived or made by Executive
alone or with others at any time during his employment, and Executive hereby
assigns and agrees to assign to the Company all rights he has or may acquire
therein and agrees to execute any and all applications, assignments and other
instruments relating thereto which the Company deems necessary or desirable.
These obligations shall continue beyond the termination of his employment with
respect to Creations and derivatives of such Creations conceived or made during
his employment with the Company. Executive understands that the obligation to
assign Creations to the Company shall not apply to any Creation which is
developed entirely on his own time without using any of the Company’s equipment,
supplies, facilities, and/or Confidential Information unless such Creation
(a) relates in any way to the business or to the current or anticipated research
or development of the Company or any of its Affiliated Entities; or (b) results
in any way from his work at the Company.

 

 

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(d) Executive will not assert any rights to any invention, discovery, idea or
improvement relating to the business of the Company or any of its Affiliated
Entities or to his duties hereunder as having been made or acquired by Executive
prior to his work for the Company, except for the matters, if any, described in
Appendix A to this Agreement.
(e) During the Term, if Executive incorporates into a product or process of the
Company or any of its Affiliated Entities anything listed or described in
Appendix A, the Company is hereby granted and shall have a non-exclusive,
royalty-free, irrevocable, perpetual, worldwide license (with the right to grant
and authorize sublicenses) to make, have made, modify, use, sell, offer to sell,
import, reproduce, distribute, publish, prepare derivative works of, display,
perform publicly and by means of digital audio transmission and otherwise
exploit as part of or in connection with any product, process or machine.
(f) 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 copyrights, patents, trademarks and other intellectual
property rights (both in the United States and foreign countries) relating to
such Creations. 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 Creations. Executive further agrees that if the Company is
unable, after reasonable effort, to secure Executive’s signature on any such
papers, any officer of the Company shall be entitled to execute such papers as
his agent and attorney-in-fact and Executive hereby irrevocably designates and
appoints each 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 Creations, under the conditions described in this paragraph.
9. Non-solicitation; non-competition. (a) Executive agrees that, during the Term
and, if Executive is receiving severance payments pursuant to Section 7(a),
until twelve (12) months after the termination of his employment, Executive will
not, directly or indirectly, including on behalf of any person, firm or other
entity, employ or solicit for employment any employee of the Company or any of
its Affiliated Entities, or anyone who was an employee of the Company or any of
its Affiliated Entities within the twelve (12) months prior to the termination
of Executive’s employment, or induce any such employee to terminate his or her
employment with the Company or any of its Affiliated Entities.

 

 

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(b) Executive further agrees that, during the Term and, if Executive is
receiving severance payments pursuant to Section 7(a), until twelve (12) months
after the termination of his employment, Executive will not, directly or
indirectly, including on behalf of any person, firm or other entity, without the
express written consent of an authorized representative of the Company,
(i) perform services within the Territory (as defined below) for any Competing
Business (as defined below), whether as an employee, consultant, agent,
contractor or in any other capacity, (ii) hold office as an officer or director
or like position in any Competing Business, (iii) request any present or future
customers or suppliers of the Company or any of its Affiliated Entities to
curtail or cancel their business with the Company or any of its Affiliated
Entities, and (iv) accept business from such customers or suppliers of the
Company or any of its Affiliated Entities. These obligations will continue for
the specified period regardless of whether the termination of Executive’s
employment was voluntary or involuntary or with or without Cause.
(c) “Competing Business” means any corporation, partnership or other entity or
person (other than the Company) which is engaged in the development,
manufacture, marketing, distribution or sale of, or research directed to the
development, manufacture, marketing, distribution or sale of cellular biologic
products or any other business carried on or planned to be carried on by the
Company.
(d) “Territory” shall mean within any state or foreign jurisdiction in which the
Company or any subsidiary of the Company is then providing services or products
or marketing its services or products (or engaged in active discussions to
provide such services).
(e) Executive agrees that in the event a court determines the length of time or
the geographic area or activities prohibited under this Section 9 are too
restrictive to be enforceable, the court may reduce the scope of the restriction
to the extent necessary to make the restriction enforceable. In furtherance and
not in limitation of the foregoing, the Company and the Executive each intend
that the covenants contained in Section 9 shall be deemed to be a series of
separate covenants, one for each and every other state, territory or
jurisdiction of the United States and any foreign country set forth therein. If,
in any judicial proceeding, a court shall refuse to enforce any of such separate
covenants, then such unenforceable covenants shall be deemed eliminated from the
provisions hereof for the purpose of such proceedings to the extent necessary to
permit the remaining separate covenants to be enforced in such proceedings.
10. Representation and Warranty. Executive represents and warrants to the
Company that he is not subject to any employment agreement, non-competition
provision, confidentiality agreement or any other agreement restricting his
ability fully to act hereunder, and, that upon the execution and delivery of
this Agreement by the Company, this Agreement shall be the valid and binding
obligation of the Executive, enforceable in accordance with its terms. The
Executive hereby acknowledges and represents that he has consulted with legal
counsel regarding his rights and obligations under this Agreement and that he
fully understands the terms and conditions contained herein Executive hereby
indemnifies and holds the Company harmless against any losses, claims, expenses
(including attorneys’ fees), damages or liabilities incurred by the Company as a
result of a breach of the foregoing representation and warranty. The Company
hereby represents and warrants to the Executive that upon the execution and
delivery of this Agreement by the Executive, this Agreement shall be the valid
and binding obligation of the Company, enforceable in accordance with its terms.

 

 

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11. Injunctive Relief. Without limiting the remedies available to the Company,
Executive acknowledges that a breach of any of the covenants contained in
Sections 8 and 9 above may result in material irreparable injury to the Company
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of such a
breach or threat thereof, the Company shall be entitled, without the requirement
to post bond or other security, to obtain a temporary restraining order and/or
injunction restraining Executive from engaging in activities prohibited by this
Agreement or such other relief as may be required to specifically enforce any of
the covenants in Sections 8 and 9 of this Agreement.
12. Notice. Any notice or other communication required or permitted to be given
to the Parties shall be deemed to have been given if personally delivered, if
sent by nationally recognized overnight courier or if mailed by certified or
registered mail, return receipt requested, first class postage prepaid, and
addressed as follows:

  (a)  
If to Executive, to:
David Pernock
748 Canterbury Lane
Villanova, PA 19085

  (b)  
If to the Company, to:
Fibrocell Science, Inc.
405 Eagleview Boulevard
Exton, PA 19341
Attention: Declan Daly

with a copy to (which shall not constitute notice hereunder):
Cavas Pavri
Cozen O’Connor
1900 Market Street
Philadelphia, Pennsylvania 19103

13. Severability. If any provision of this Agreement is declared void or
unenforceable by a court of competent jurisdiction, all other provisions shall
nonetheless remain in full force and effect.
14. Indemnification. The Company will indemnify Executive and hold Executive
harmless to the fullest extent permitted by law with respect to Executive’s acts
of service as an officer and director of the Company. The Company further agrees
that Executive will be covered by “directors and officers” insurance policies
with respect to Executive’s acts as an officer and director.

 

 

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15. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the Commonwealth of Pennsylvania,
without regard to the conflict of laws provisions thereof. This Agreement is
intended to comply with the Internal Revenue Code, and shall be construed in a
manner consistent with that intent. Any action, suit or other legal proceeding
that is commenced to resolve any matter arising under or relating to any
provision of this Agreement shall be submitted to the exclusive jurisdiction of
any state or federal court in Chester County, Pennsylvania.
16. Waiver. The waiver by either Party of a breach of any provision of this
Agreement shall not be or be construed as a waiver of any subsequent breach. The
failure of a Party to insist upon strict adherence to any provision of this
Agreement on one or more occasions shall not be considered a waiver or deprive
that Party of the right thereafter to insist upon strict adherence to that
provision or any other provision of this Agreement. Any waiver must be in
writing.
17. Assignment. This Agreement is a personal contract and Executive may not
sell, transfer, assign, pledge or hypothecate his rights, interests and
obligations hereunder. Except as otherwise herein expressly provided, this
Agreement shall be binding upon and shall inure to the benefit of Executive and
his personal representatives and shall inure to the benefit of and be binding
upon the Company and its successors and assigns, including without limitation,
any corporation or other entity into which the Company is merged or which
acquires all or substantially all of the assets of the Company.
18. Entire Agreement. This Agreement (together with Appendix A hereto) embodies
all of the representations, warranties, and agreements between the Parties
relating to Executive’s employment with the Company. No other representations,
warranties, covenants, understandings, or agreements exist between the Parties
relating to Executive’s employment. This Agreement shall supersede all prior
agreements, written or oral, relating to Executive’s employment. This Agreement
may not be amended or modified except by a writing signed by the Parties.
[Signature page follows]

 

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
and delivered on the date above.

            FIBROCELL SCIENCE, INC.
      By:           Name:   Declan Daly        Title:   Chief Financial Officer 
   

Agreed to and Accepted:

     
 
David Pernock
   

 

 

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Appendix A
NONE.