Document:

BioSpecifics Technologies Corp.: Exhibit 10.1 - Filed by newsfilecorp.com

Execution Copy 

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (this “Agreement”), is made effective as of July 1, 2012 (“Effective Date”), by and between BioSpecifics Technologies Corp. (the “Company”), a Delaware
corporation, Dr. Matthew Geller, an individual (“Dr. Geller”), and Geller Biopharm Inc., a New York corporation (“Consultant”), of which Dr. Geller is President.

WHEREAS, Dr. Geller has served as a member of the Board of Directors of the Company (the “Board”) since September 23, 2008;

WHEREAS, at the request of the Board, Dr. Geller has also served as a member of the Nominating and Corporate Governance Committee, a member of the Financial Modeling Committee, and a member and the financial expert of the Audit Committee
(collectively, the “Committees”); 

WHEREAS, Dr. Geller wishes to devote his time to his ongoing business activities and, as such, will not be standing for re-election as a director of the Company at the expiration of his term on June 15, 2012; and

WHEREAS, the Company wishes to have available to it the advice and counsel of Consultant on a going forward basis and is willing to commit in advance to pay for such services to assure Dr. Geller’s availability.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree to enter into the following Agreement:

1. Consulting Arrangement. The Company hereby retains Consultant, and Consultant hereby agrees to serve as a consultant to the Company, on the terms and subject to the conditions of this Agreement. Consultant will, from time to time at the
reasonable request of the Company, provide strategic advice related to overall business strategy, including, without limitation, financial and strategic planning and market assessment (the “Services”) and shall make Dr. Geller
available for such purposes as and when reasonably requested by the Company. It is understood that such consulting services shall be incidental to, and shall not interfere with, the other business activities and commitments of Consultant and Dr.
Geller. The Company acknowledges and agrees that Consultant shall be permitted to provide any such consulting services telephonically. 

2. Term. The term of Consultant’s Services under this Agreement (the “Consulting Term”) shall commence on the Effective Date and, unless sooner terminated pursuant to Section 7 hereof, shall expire on the 1st
anniversary of the Effective Date.

3. Compensation. 

(a) During the Consulting Term, the Company shall pay Consultant a quarterly retainer (the “Quarterly Retainer”) at the rate of $120,000 per year, payable in equal quarterly installments of $30,000, in advance on a
quarterly basis on the first day of each quarter
commencing on the Effective Date (except as otherwise provided in Section 4); provided, however, that the failure of the Company to pay any Quarterly Retainer on the first day of each quarter shall not constitute a breach hereof if the
Company cures such failure as provided in Section 5. Concurrently with the execution of this Agreement, the Company shall pay Consultant the first Quarterly Retainer, such payment to be in the amount of $30,000 for the Services. Subject to
Section 7 below, Consultant shall be entitled to the full Quarterly Retainers regardless of the amount and frequency of consulting services actually requested of him or provided by him.

(b) Also in consideration of the Services to be performed under this Agreement, the Company has taken all measures necessary to allow Dr. Geller to exercise all stock options issued to Dr. Geller under the Company’s Amended and Restated 2001
Stock Option Plan, which have fully vested, until the date which is thirty (30) days following the expiration or termination of this Agreement in accordance with the terms hereof. 

(c) The Company also shall pay Dr. Geller concurrently with the execution of this Agreement, any unpaid compensation due and payable to him in connection with his service on the Board and the Committees.

(d) All amounts due and payable shall be paid to Consultant or Dr. Geller by wire transfer of immediately available funds in accordance with the wire instructions set forth on Annex A hereto.

4. Sale of the Company.

(a) In the event of (and concurrently with) a Sale of the Company which results in the Company no longer being a Reporting Company under the Securities Exchange Act of 1934, as amended, (a “Triggering Sale”) the Company agrees to
pay Consultant a lump sum amount in cash equal to the aggregate amount of the unpaid Quarterly Retainers that are payable by the Company to Consultant from the date of the Sale of the Company through the end of the Consulting Term. As used herein,
“Sale of the Company” shall mean any transaction or series of related transactions (i) the result of which is that any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), of more than 50% of the issued and outstanding common stock of the Company, (ii) that results in the sale
of all or substantially all of the Company’s assets, or (iii) that results in the consolidation or merger of the Company with or into another corporation or corporations or other entity or entities in which the Company is not the survivor
(except any such corporation or entity controlled, directly or indirectly, by the Company).

5. Default.

(a) The Company shall be deemed in default hereunder upon the occurrence of any of the following (each, a “Default”):

(i) the failure of the Company to pay, when due, any amount required to be paid to Consultant pursuant to Section 3;

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(ii) the breach by the Company of any other material provision of this Agreement;

(iii) the Company shall have entered against it by a court having jurisdiction thereof a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; or a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official shall be appointed for the Company or for any substantial part of the Company’s property; or the winding up or liquidation of the
Company’s affairs shall have been ordered;

(iv) the Company shall (A) commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; (B) consent to the entry of an order for such relief in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect; (C) consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for the Company or for any
substantial part of the Company’s property; or (D) make any general assignment for the benefit of creditors (any of the foregoing, an “Insolvency Proceeding”);

provided, however, that in the case of an alleged breach under subsection (i) or (ii) hereunder, Consultant must provide the Company with written notice describing the alleged breach and the Company shall have: (A) five (5) business
days to cure a breach under subsection (i), or (B) ten (10) business days to cure a breach under subsection (ii), if curable, following receipt of such written notice and if cured, such breach shall not constitute a Default hereunder.

(b) Upon the occurrence of a Default, all of the remaining unpaid Quarterly Retainers that are payable by the Company to Consultant through the end of the Consulting Term shall become immediately due and payable.

(c) The parties acknowledge and agree that this Agreement constitutes a personal services contract and that applicable law excuses both Dr. Geller and Consultant from accepting performance from or rendering performance to any trustee for the Company
or to an assignee by the Company of this Agreement without the consent of Dr. Geller or Consultant, as applicable. Accordingly, (i) notwithstanding Section 19 of this Agreement, this Agreement cannot be assumed or assigned following the commencement
of an insolvency proceeding by or against the Company without the consent of Dr. Geller or Consultant, as applicable, and (ii) 11 U.S.C. § 365(e)(1) shall not apply to this Agreement.

6. Status; Taxes.

(a) Status of Consultant. Neither Consultant nor Dr. Geller shall be an employee of the Company and shall not be entitled to participate in any employee benefit plans or other benefits or conditions of employment available to the employees of
the Company. Neither Consultant nor Dr. Geller shall have any authority to act as an agent of the Company, except on authority specifically so delegated, and neither shall represent to the contrary to any person. Consultant and Dr. Geller shall only
consult, render advice and perform such tasks as are
reasonably requested by the Company from time to time consistent with Section 1 and which Consultant and Dr. Geller determine are necessary to achieve the results specified by the Company. Consultant and Dr. Geller shall not direct the work of any
employee of the Company, or make any management decisions, or undertake to commit the Company to any course of action in relation to third persons. Although the Company may specify the results to be achieved by Consultant and Dr. Geller and may
control and direct it in that regard, the Company shall not control or direct Consultant or Dr. Geller as to the details or means by which such results are accomplished. 

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(b) Taxes. It is intended that the fees paid hereunder shall constitute revenues to Consultant. To the extent consistent with applicable law, the Company will not withhold any amounts therefrom as federal income tax withholding from wages or
as employee contributions under the Federal Insurance Contributions Act or any other state or federal laws. Consultant and Dr. Geller shall be solely responsible for the withholding and/or payment of any federal, state or local income or payroll
taxes and shall hold the Company, its officers, directors and employees harmless from any liability arising from the failure to withhold such amounts.

7. Termination. This Agreement and Consultant’s retention hereunder may be terminated by the Company only for “Cause” (as defined in Section 13). In the event of a termination by the Company for Cause, neither the
Company nor Consultant shall have any further obligations hereunder, except as set forth in Sections 8 and 9 hereof, and for the payment of any Quarterly Retainer that became due prior to notice of termination.

8. Nondisclosure of Confidential Information.

(a) Except as in response or pursuant to a subpoena or order by a court or tribunal or as required in connection with the performance of Consultant’s services to the Company hereunder, Consultant and Dr. Geller agree that they will not at any
time, either during or after the Consulting Term, directly or indirectly, use, publish, disseminate, distribute or otherwise disclose any “Confidential Information” (as defined in Section 13) without the prior written consent of
the President of the Company (or during any period in which there is no individual serving as President of the Company, of the majority of the members of the Audit Committee of the Company) and they shall retain all Confidential Information in trust
in a fiduciary capacity for the sole use and benefit of the Company. Consultant and Dr. Geller acknowledge that the Confidential Information of the Company is valuable, special and unique to its business and is information on which such business
depends, is proprietary to the Company, and that the Company wishes to protect such Confidential Information by keeping it secret and confidential for the sole use and benefit of the Company. Consultant and Dr. Geller will take all steps necessary
and reasonably requested by the Company, to ensure that all such Confidential Information is kept secret and confidential for the sole use and benefit of the Company; and

(b) Upon termination of Consultant’s consultancy with the Company for any reason, all documents, procedural manuals, guides, specifications, plans, drawings, designs and similar materials, diaries, records, notebooks, and similar repositories
of or containing Confidential Information, including all copies thereof, then in Consultant’s or Dr. Geller’s possession or control, that are furnished to Consultant, or Dr. Geller, or developed or prepared by
Consultant, Dr. Geller, or others in connection with Consultant’s consultancy hereunder shall be left with or forthwith returned by Consultant and Dr. Geller to the Company; and 

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(c) If Consultant or Dr. Geller is required to disclose any Confidential Information in connection with any judicial or administrative proceedings (by oral questions, interrogatories, requests for information or documents, subpoena, civil
investigation demand or similar process), Consultant and Dr. Geller, as applicable, will in advance of such disclosure, to the extent legally permissible and practicable, provide the Company, in advance of any such disclosure, with copies of any
Confidential Information it/he intends to disclose (and, if applicable, the text of the disclosure language itself) and provide reasonable cooperation to the Company, at the sole cost and expense of the Company, to the extent it may seek to limit
such disclosure. If such disclosure is not limited, Consultant and Dr. Geller, as applicable, may disclose only that portion of the Confidential Information which it/he is legally required to be disclosed, provided, however, that such disclosing
party shall take all reasonable efforts, at the sole cost and expense of the Company, to preserve the confidentiality of the Confidential Information (including by obtaining or seeking to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the Confidential Information).

9. Non-Disparagement.

(a) Consultant and Dr. Geller agree not to criticize, denigrate, or disparage the Company or any “Affiliates” (as defined in Section 13) in any manner whatsoever, whether oral or written, now or in the future. For the purpose of
this Paragraph, the term “disparage” shall include, without limitation, any statement accusing the aforesaid individuals or entities of acting in violation of any law or governmental regulation or of condoning any such action, or
otherwise acting in an unprofessional, dishonest, disreputable, improper, incompetent or negligent manner. Nothing in this Paragraph shall preclude Consultant or Dr. Geller from offering oral or written testimony in response or pursuant to subpoena
or order by a court or tribunal or governmental or law enforcement agency, complying with other legal obligations, in connection with asserting any defense against any claim of breach of this Agreement or in connection with asserting any claim of
breach of this Agreement. Furthermore, nothing in this Paragraph shall require Consultant or Dr. Geller to make false statements or disclosures. 

(b) The Company and its Affiliates agree not to disparage Consultant or Dr. Geller in any manner whatsoever, whether oral or written, now or in the future. For the purpose of this Paragraph, the term “disparage” shall include, without
limitation, any statement accusing the aforesaid individuals or entities of acting in violation of any law or governmental regulation or of condoning any such action, or otherwise acting in an unprofessional, dishonest, disreputable, improper,
incompetent or negligent manner. Nothing in this Paragraph shall preclude the Company or its Affiliates including without limitation, officers, directors or employees, from offering oral or written testimony in response or pursuant to subpoena or
order by a court or tribunal or governmental or law enforcement agency, complying with other legal obligations, in connection with asserting any defense against any claim of breach of this Agreement or in connection with asserting any claim of
breach of this Agreement. Furthermore, nothing in this Paragraph shall require the Company or its Affiliates to make false statements or disclosures.

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10. Injunctive Relief/Damages.

(a) Each party acknowledges that damages for any breach of Sections 8 and 9 of this Agreement may be difficult to determine and, therefore, consents that in the event of a breach of Sections 8 and 9 of this Agreement, the restrictions contained in
such Sections may be enforced by temporary or permanent injunction. Such injunctive relief shall be in addition to and not in place of any other remedies available at law or in equity. Furthermore, the specified duration of the restrictive covenants
in Section 9 shall be extended by and for the term of any period during which Consultant and/or Dr. Geller is in violation of any such covenant. Should any court or tribunal decline to enforce any provisions of Sections 8 or 9 on the basis that such
provisions are overly restrictive of the activities of Consultant or Dr. Geller as to time, scope or geography, such provisions shall be deemed to be modified to restrict Consultant’s and Dr. Geller’s activities to the maximum extent of
time, scope and geography which such court or tribunal shall find enforceable.

(b) In the event of any proceeding or action initiated by a party hereunder, all parties shall bear their own legal fees and expenses.

11. Indemnification. The Company shall, to the maximum extent permitted by law, indemnify and hold harmless Consultant and Dr. Geller for any loss, injury, damage, expense (including reasonable attorneys’ fees and costs)
(“collectively, “Losses”) to which Consultant or Dr. Geller may become subject as a result of any claim or demand arising out of, connected with, or in any manner related to, any act, omission, or decision made in good faith
while performing services for the Company pursuant to the specific written request of the Company. In addition, the Company shall promptly pay in advance of final disposition of any action, suit or proceeding all reasonable expenses incurred by
Consultant or Dr. Geller in connection with any matter as to which it could reasonably be expected to be entitled to indemnification hereunder. Notwithstanding anything to the contrary contained in this Section 11, the Company shall have no
obligation to indemnify Consultant and Dr. Geller for any Losses arising out of or caused by Consultant’s or Dr. Geller’s gross negligence, recklessness or willful misconduct.

12. Entire Agreement. The provisions contained herein constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersede any and all prior agreements, understandings and communications
between the parties, oral or written, with respect to such subject matter.

13. Definitions. For purposes of this Agreement, the following terms have the respective meanings set forth below:

“Affiliates” shall mean the Company’s subsidiaries, shareholders, clients, successors and assigns, the past and present officers, directors, members, employees and agents of any of the foregoing, and any fiduciaries
of any employee benefit plan or policy of the Company or any affiliate.

“Cause” shall mean Consultant’s or Dr. Geller’s breach of the covenants set forth in Sections 8 or 9.

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“Confidential Information” shall mean that proprietary information of the Company, of whatever kind or nature, disclosed to Consultant or Dr. Geller or known by Consultant or Dr. Geller (whether or not discovered or
developed by Consultant or Dr. Geller) as a consequence of or through Consultant’s or Dr. Geller’s past, present or future employment or relationship with the Company, including Board and Committee service; provided,
however, that Confidential Information shall not include any information that is or was publicly known or publicly available, other than as a result of Consultant’s or Dr. Geller’s breach of this restrictive covenant, and shall
not include any information that has been acquired by Consultant or Dr. Geller independent of their past, present or future relationship or position with the Company. Such proprietary information shall include, without limitation, trade secrets,
processes, techniques, algorithms, programs, designs, drawings, formulae, models, inventions, discoveries or developments, information or data relating to the Company’s research projects, work in process, future development efforts,
manufacturing, marketing, servicing, financing, present or future products or services, sales, suppliers, customers, operating and other costs data, inventory control and practices, terms and conditions of agreements to which the Company is a party,
and any of which information is not generally known in the industry, and shall specifically include all such proprietary information contained in manuals, memoranda, plans, drawings, and designs, specifications, programs and records of the Company,
including records of any Board or Committee meetings. 

14. Mutual Release.

(a) Each of Consultant and Dr. Geller, on behalf of himself and his agents, representatives, administrators, receivers, trustees, estates, heirs, devisees, assignees, legal representatives, attorneys, and employees, past or present (as the case may
be), hereby irrevocably and unconditionally releases, discharges, and acquits the Company and its Affiliates from liability for any and all claims, promises, demands, liabilities, contracts, debts, losses, damages, attorneys’ fees and causes
of action of every kind and nature, known or unknown, whether asserted or unasserted, direct or indirect, liquidated or contingent, from the beginning of the world up to and through the execution of this Agreement. Notwithstanding the foregoing,
this Section 14(a) does not alter or apply to any claim or cause of action arising out of an alleged breach or other violation of any obligation under this Agreement, Dr. Geller’s right to coverage under the Company’s directors’
and officers’ insurance policies, or Dr. Geller’s right to indemnification by the Company in connection with his services as a member of the Board, whether pursuant to an agreement or under the Company’s charter and bylaws. 

(b) The Company and its Affiliates, agents, representatives, administrators, receivers, trustees, estates, heirs, devisees, assignees, legal representatives, attorneys, and employees, past or present (as the case may be), hereby irrevocably and
unconditionally releases, discharges, and acquits Consultant and Dr. Geller and their Affiliates from liability for any and all claims, promises, demands, liabilities, contracts, debts, losses, damages, attorneys’ fees and causes of action of
every kind and nature, known or unknown, whether asserted or unasserted, direct or indirect, liquidated or contingent, from the beginning of the world prior to the execution of this Agreement. Except as provided herein, this release shall include,
but not be limited to: (i) any and all claims or rights arising out of, or which might be considered to arise out of or to be connected in any way to, Dr. Geller’s service as a member of the Board or the termination thereof; (ii) any claim or
cause of action arising under any federal state or local statute or
regulation; (iii) any claim or cause of action arising under any foreign law, rule or regulation; and (iv) any claim of tort, contract, negligence, defamation, negligent or intentional infliction of emotional distress, assault, battery, duress,
invasion of privacy, bad faith, conspiracy, vicarious liability, nonphysical injury, personal injury or sickness, or other harm. Notwithstanding the foregoing, this Section 14(b) does not alter or apply to any claim or cause of action arising out of
an alleged breach or other violation of any obligation under this Agreement, or any derivative action or claim brought on behalf of the Company by its shareholders, provided that such shareholder suit was not initiated directly or indirectly at the
behest of the officers or directors (or any of their affiliates) of the Company or its Affiliates. 

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15. Covenant not to Sue. Each of the Company and its Affiliates and Consultant, Dr. Geller, and their Affiliates hereby agree, promise, and covenant not to sue or assert claims as part of any lawsuit, arbitration, or other legal proceeding
that are based in any way on or arise out of the claims or potential claims released in Section (14)(a) or 15(b).

16. Expenses. The Company shall reimburse Consultant for any reasonable expenses incurred by him in connection with the performance of his services hereunder; provided that such expenses were incurred in accordance with Company policies and
were authorized in writing in advance by the Company.

17. Cooperation. Dr. Geller and Consultant, to the extent applicable, agree that they will cooperate with the Company (and its subsidiaries, affiliates or related entities) and its legal counsel in connection with any current or future
questions, investigation, or litigation relating to any matter with which they were involved or have knowledge or which occurred while they were providing services to the Company, and the Company shall reimburse them for all reasonable expenses
incurred in providing such cooperation.

18. Modifications. Any waiver, alteration, amendment or modification of any provisions of this Agreement shall not be valid unless in writing and signed by the Company and Consultant. 

19. Assignment. This Agreement is intended to bind and inure to the benefit of and be enforceable by Consultant, Dr. Geller and the Company and their respective heirs, successors and assigns, except that the Company shall not have any right
to assign or otherwise transfer this Agreement or any of its rights, duties or any other interest herein to any party without the prior written consent of Consultant, and any such purported assignment shall be null and void.

20. Notice. All notices and other communications required or permitted under this Agreement shall be made in writing and shall be deemed given if delivered personally, sent by registered or certified mail, return receipt requested, postage
prepaid, or sent by nationally recognized overnight courier service, addressed as follows:

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if to the Company:

BioSpecifics Technologies Corp. 

35 Wilbur Street 

Lynbrook, New York 11563 

Attn: Thomas L. Wegman

with a copy to:

Carl A. Valenstein, Esq.

Bingham McCutchen LLP

2020 K Street, NW 

Washington, DC 20006 

If to Consultant or Dr. Geller:

Dr. Matthew Geller 

Geller Biopharm Inc. 

140 West 57th Street

New York, NY 10019 

or to such other addresses as a party shall designate in the manner provided in this Section 20. Any notice or other communication shall be deemed given (a) on the date three (3) business days after it shall have been mailed, if sent by certified
mail or (b) on the date one (1) business day after it shall have been given to a nationally-recognized overnight courier service.

21. Choice of Law. This Agreement shall be governed by and construed in accordance with the law of the State of New York applicable to contracts made and to be performed entirely within such jurisdiction.

22. Section Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

23. Counterparts. This Agreement may be executed in one or more counterparts, which shall, collectively and separately, constitute one agreement. 

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24. Section 409A. All payments under this Agreement are intended to be exempt from, or in the alternative to comply with, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the interpretive guidance issued
thereunder (“Section 409A”), including the exceptions for short-term deferrals, and the Agreement will be constructed and interpreted in accordance with such intent. The parties hereby agree to negotiate in good faith to amend
this Agreement as and when necessary or desirable to conform to or otherwise properly reflect any guidance issued under Section 409A after the date hereof without violating Section 409A. In case any one or more provisions of this Agreement fails to
comply with the provisions of Section 409A, the remaining provisions of this Agreement shall remain in effect, and this Agreement shall be administered and applied as if the non-complying provisions were not part of this Agreement. The parties in
that event shall endeavor to agree upon a reasonable
substitute for the non-complying provisions, to the extent that a substituted provision would not cause this agreement to fail to comply with Section 409A, and, upon so agreeing, shall incorporate such substituted provisions into this Agreement.
Each payment, including, for the avoidance of doubt, each Quarterly Retainer, made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A. All reimbursements and in-kind benefits provided
under this Agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A. All reimbursements for expenses paid pursuant hereto that
constitute taxable income to Consultant shall in no event be paid later than the end of the calendar year next following the calendar year in which Consultant incurs such expense or pays such related tax. Unless otherwise permitted by Section 409A,
the right to reimbursement or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit and the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year
shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, respectively, in any other taxable year. 

25. Indemnification and Insurance.  This Agreement shall not affect any indemnification or other rights and benefits afforded to Consultant or Dr. Geller by the Company’s article of incorporation or by law or under any agreement
regarding indemnification between Dr. Geller and the Company. The Company shall use commercially reasonable efforts to continue Dr. Geller’s coverage under the directors’ and officers’ liability coverage maintained by the Company,
as in effect from time to time, to the same extent as other current or former directors of the Company. 

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IN WITNESS WHEREOF, the Company, Dr. Geller and
Consultant have executed this Agreement as of the date first above written. 

BIOSPECIFICS TECHNOLOGIES CORP. 

______________________________________
By: Thomas L.
Wegman
Title: President

______________________________________ 

DR. MATTHEW GELLER

 

GELLER BIOPHARM INC. 

______________________________________ 
By: Dr. Matthew
Geller
Title: Presidentf8k042412ex10i_ifs.htm

Exhibit 10.1

 

 

April 24, 2012

Mr. Henry Brown

6225 leGorce Drive

Miami beach, Fl 33141

Dear henry:

I am pleased to provide you with the following offer of employment:

Position: Chief Financial Officer

Compensation: $125,000 per year plus $650 per month car allowance (Until cash flow will support, 1⁄2 salary in cash and 1⁄2 in stock valued at $0.50 per share.

Benefits: Health Insurance and other benefits as they become available

Vacation: 4 weeks per year

Stock options: 100,000 options at strike price of $1/share (see attached option agreement)

Start Date: April 24, 2012

Sincerely,

 

Stephen J. Dresnick, MD

President and CEO

Accepted:

 

___________________________

Henry Brown

 

5901 SW 74th Street, Suite 408 ♦ South Miami, FL  33143 ♦ 786-268-0995

www.ifsusa.net

 

  

  

  

 

STOCK OPTION AGREEMENT

	  	
Name of Optionee:

	  	  	  
	  	  	  	  
	  	
Date of Grant:

	  	
April 24, 2012

	  
	  	  	  	  
	  	
Expiration Date:

	  	
April 23, 2015

	  
	  	  	  	  
	  	
Number of Option Shares:

	  	
100,000,000

	  
	  	  	  	  
	  	
Option Price:

	  	
$1.00

	  
	  	  	  	  
	
Right to Exercise: The Option shall not be exercisable as of the Date of Grant. The Option shall become exercisable in respect of the Option Shares as follows:

 

April 23, 2013    33,333 shares  Expiring April 23, 2016

 

April23, 2014     33,333 shares  Expiring April 23, 2017

 

April 23, 2015    33,334 shares  Expiring April 23, 2018

 

In all cases if the Optionee remains as a continuing employee of the Company.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer, and Optionee has also executed this Agreement in duplicate, as of the day and year first above written.

 

 

	 	 	 	INTERNAL FIXATION SYSTEMS INC.	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	By:	 	 
	 	 	 	 	 	 
	 	
/s/ Henry Brown

	 	 	
/s/ Stephen Dresnick, MD

	 
	 	
Henry Brown

	 	 	
Stephen Dresnick, MD

	 
	 	 	 	 	
Chief Executive Officer

	 

 

 

  

  

  

Page 2

STOCK OPTION AGREEMENT

 

 

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS OPTION AGREEMENT AND THE SECURITIES UNDERLYING THIS OPTION AGREEMENT MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS SUCH SALE, PLEDGE, HYPOTHECATION, TRANSFER, OR OTHER DISPOSITION SHALL HAVE BEEN REGISTERED UNDER SAID ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR UNTIL THE COMPANY SHALL HAVE RECEIVED A LEGAL OPINION SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY, THAT SUCH SECURITIES MAY BE LEGALLY SOLD OR OTHERWISE TRANSFERRED WITHOUT SUCH REGISTRATION AND COMPLIANCE.

 

OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE COMPANY AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THIS STOCK OPTION AGREEMENT.

 

INTERNAL FIXATION SYSTEMS, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

 

This AGREEMENT (the "Agreement") is made as of the date of grant on the cover page hereof (the "Date of Grant") by and between Internal Fixation Systems Inc., a Florida corporation (the "Company"), and the individual named on the cover page hereto (the "Optionee").

 

1. Grant of Stock Option. Subject to and upon the terms, conditions, and restrictions set forth in this Agreement, the Company hereby grants to the Optionee as of the Date of Grant a stock option (the "Option") to purchase the number of shares of the Company's Common Stock, $.05 par value per share, shown on the cover page hereof (the "Option Shares"). The Option may be exercised from time to time in accordance with the terms of this Agreement. The price at which the Option Shares may be purchased pursuant to this Option shall be as set forth on the cover page hereof subject to adjustment as provided on the cover page hereof and as hereinafter provided (the "Option Price"). The Option is intended to be a non-qualified stock option and shall not be treated as an "incentive stock option" within the meaning of that term under Section 422 of the Code, or any successor provision thereto; this Agreement shall be construed in a manner that will effectuate such intent.

 

2. Term of Option. The term of the Option shall commence on the Date of Grant and, unless earlier terminated in accordance with Section 6 hereof, shall expire as listed previously.

 

3. Right to Exercise. Subject to the expiration or earlier termination of this Option in accordance with its terms, the Option shall become exercisable as set forth on the cover page hereof. To the extent the Option is exercisable, it may be exercised in whole or in part. In no event shall the

Optionee be entitled to acquire a fraction of one Option Share pursuant to the Option. After the Optionee has exercised all or part of the Option in accordance with its terms  and conditions, the Optionee shall be entitled to the privileges of ownership with respect to Option Shares purchased and delivered to the Optionee upon such exercise.

 

  

  

  

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STOCK OPTION AGREEMENT

 

 

4. Transferability of Option. The Shares underlying this Option may be assignable by the Optionee upon written notice which shall be attached to the Notice of Exercise. This Option  may be exercised, during the lifetime of the Optionee, only by the Optionee, or in the event of his or her legal incapacity, by his or her guardian or legal representative acting on behalf of the Optionee in a fiduciary capacity under state law and court supervision.

 

5. Notice of Exercise; Payment. To the extent then exercisable, the Option may be exercised by written notice to the Company stating the number of Option Shares for which the Option is being exercised and the intended manner of payment. The date of such notice shall be the exercise date. Payment equal to the aggregate Option Price of the Option Shares for which the Option is being exercised shall be tendered in full with the notice of exercise to the Company in cash in the form of currency or check or other cash equivalent acceptable to the Company. The Optionee may also tender the Option Price by (a) the actual or constructive transfer to the Company of nonforfeitable, nonrestricted Common Shares that have been owned by the Optionee for more than six months prior to the date of exercise, or (b) by any combination of the foregoing methods of payment, including a partial tender in cash and a partial tender in nonforfeitable, nonrestricted Common Shares. Nonforfeitable, nonrestricted Common Shares that are transferred by the Optionee in payment of all or any part of the Option Price shall be valued on the basis of their fair market value per Common Share as determined by the Board. As a further condition precedent to the exercise of the Option, the Optionee shall comply with all regulations and requirements of any regulatory authority having control of, or supervision over, the issuance of Common Shares and in connection therewith shall execute any documents which the Board or a Committee thereof shall in its sole discretion deem necessary or advisable. The requirement of payment in cash shall be deemed satisfied if the Optionee makes arrangements that are satisfactory to the Company with a bank or broker that is a member of the National Association of Securities Dealers, Inc. to sell on the exercise date a sufficient number of Option Shares that are being purchased pursuant to the exercise, so that the net proceeds of the sale transaction will at least equal the amount of the aggregate Option Price plus payment of any applicable withholding taxes, to the extent permitted by law.

 

6. Termination of Agreement. This Agreement and the Option granted hereby shall terminate automatically and without further notice on the earliest of the following dates:

 

 (a) 120 days after the Optionee's death or permanent and total disability, if the Optionee dies or becomes permanently and totally disabled while being affiliated with IFS as a consultant, employee, member of an Advisory Board, or member of the IFS Board of Directors through such date.

(b) 90 days after the Optionee's retirement under a retirement plan of the Company or one of its Subsidiaries at or after the earliest voluntary retirement age provided for in such retirement plan or retirement at any earlier age with the consent of the Board;

 

(c) After 90 days of Optionee no longer being an employee of the Company

 

  

  

  

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STOCK OPTION AGREEMENT

 

 

7. Effect of Certain Transactions. In the event of a Change in Control (as defined in the Employment Agreement), the Option (or portion thereof that has not become exercisable as provided above before such Change in Control) will become immediately exercisable as of the date of such Change in Control. Notwithstanding the foregoing, the initial public offering of the Company's capital stock under the Securities Act of 1933, as amended, will not constitute a Change in Control.

 

8. Company's Right of Repurchase.

 

(a) Exercise of Right. The Company shall have the right (the "Repurchase Right") to repurchase some or all of the Option Shares which the Optionee has elected to exercise from the Optionee, upon the occurrence of any of the events specified in Section 8(b) below (each, a "Repurchase Event"). The Repurchase Right may be exercised by the Company within 180 days following the date of such Repurchase Event (the "Repurchase Period"). The Repurchase Right shall be exercised by the Company by giving the holder written notice on or before the last day of the Repurchase Period of its intention to exercise the Repurchase Right, and, together with such notice, tendering to the holder an amount equal to the Fair Market Value of the shares, determined as provided in Section 8(c). The Company may assign the Repurchase Right to one or more persons or legal entities. Upon exercise of the Repurchase Right in the manner provided in this Section 8(a), the Optionee shall deliver to the Company the stock certificate or certificates representing the Option Shares being repurchased, duly endorsed and free and clear of any and all liens, charges, and encumbrances.

 

If Option Shares are not purchased under the Repurchase Right, the Optionee and his or her successor in interest, if any, will hold any such shares in his or her possession subject to all of the provisions of this Section 8 and Section 9 hereof.

 

 (b) Company's Right to Exercise Repurchase Right. The Company shall have the Repurchase Right in the event that any of the following events shall occur:

 

(i) (x) The filing of a voluntary petition under any bankruptcy or insolvency law, or a petition for the appointment of a receiver or the making of an assignment for the benefit of creditors, with respect to the Optionee, or (y) the Optionee being subjected involuntarily to a petition or assignment or to an attachment or other legal or equitable interest with respect to his or her assets, which involuntary petition or assignment or attachment is not discharged within 60 days after its date, or (z) the Optionee being subject to a transfer of Option Shares by operation of law, except by reason of death.

 

(c) Determination of Fair Market Value. For purposes of this Section 8, the Fair Market Value of the Option Shares shall be determined as of the date of the Repurchase Event by the Board in good faith and using reasonable assumptions.

 

  

  

  

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STOCK OPTION AGREEMENT

 

 

(d) Failure to Deliver Option Shares. If the Optionee fails or refuses to deliver on a timely basis duly endorsed certificates representing Company Option Shares to be sold to the Company or its assignee pursuant to this Section 9, the Company shall have the right to deposit the purchase price for such Company Option Shares in a special account with any bank or trust company, giving notice of such deposit to the Optionee, whereupon such Company Option Shares shall be deemed to have been purchased by the Company. All such monies shall be held by the bank or trust company for the benefit of the Optionee. All monies deposited with the bank or trust company but remaining unclaimed for two years after the date of deposit shall be repaid by the bank or trust company to the Company on demand, and the Optionee shall thereafter look only to the Company for payment. The Company may place a legend on any certificate for Option Shares delivered to the Optionee reflecting the restrictions on transfer provided in this Section 9.

 

(e) Expiration of Company's Right of First Refusal. The first refusal rights of the Company set forth above shall remain in effect until the closing of an Initial Public Offering.

 

9. No Employment Contract. Nothing contained in this Agreement shall confer upon the Optionee any right with respect to continuance of employment by the Company,  nor limit or affect in any manner the right of the Company to terminate the employment or adjust the compensation of the Optionee.

 

10. Taxes and Withholding. To the extent that the Company shall be required to withhold any federal, state, local, or foreign taxes in connection with the exercise of the Option,  and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the exercise of the Option that the Optionee shall pay such taxes or make provisions that are satisfactory to the Company for the payment thereof. The Company will pay any and all issue and other taxes in the nature thereof which may be payable by the Company in respect of any issue or delivery upon a purchase pursuant to this Option.

11. Compliance with Law. Notwithstanding any other provision of this Agreement, the Option shall not be exercisable if the exercise thereof would result in a violation of any applicable federal or state securities law.

 

12. Adjustments. The Board may make or provide for such adjustments in the Option Price and in the number or kind of shares or other securities covered by outstanding Options as the Board in its sole discretion may in good faith determine to be equitably required in order to prevent dilution or enlargement of the rights of Optionees that would otherwise result from any (a) stock dividend, stock split, combination of shares, recapitalization, or other change in the capital structure of the Company or (b) merger, consolidation, separation, reorganization, partial or complete liquidation, issuance of rights or warrants to purchase stock. Moreover, in the event of any such transaction or event, the Board, in its discretion, may provide in substitution for any or all outstanding Options under this

Plan such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all Options so replaced.

 

14. Availability of Common Shares. The Company shall at all times until the expiration of the Option reserve and keep available, either in its treasury or out of its authorized but unissued Common Shares, the full number of Option Shares deliverable upon the exercise of this Option.

 

  

  

  

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STOCK OPTION AGREEMENT

 

 

15. Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall materially adversely affect the rights of the Optionee under this Agreement without the Optionee's consent.

 

16. Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

 

19. Successors and Assigns. Without limiting Section 4 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives, and assigns of the Optionee, and the successors and assigns of the Company.

 

20. Governing Law. The interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Delaware.

 

21. Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: President, and any notice to the Optionee shall be addressed to the Optionee at his or her address on file with the Company. Any written notice required to be given to the Company shall be deemed to be duly given only when actually received by the Company.

 

22. Securities Laws Compliance. The Optionee acknowledges that the Option will be held by the Optionee for investment for the Optionee's own account and not with a view to, or for, resale, transfer, or distribution. The Optionee acknowledges that the Optionee has no intention of participating directly or indirectly in a distribution of the Option. The Optionee understands that prior to exercising the Option, the Optionee shall be required to reaffirm these representations and warranties as to the Option Shares that shall be issued upon exercise.

 

23. Compliance with Section 409A of the Code. The Plan and this Agreement are intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. This Agreement shall be treated in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of Treasury and the Internal Revenue Service with respect thereto (the "Guidance"). Any provision of this Agreement that would cause a grant or any other payment under the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Code

Section 409A (which amendment may be retroactive to the extent permitted by the Guidance). Notwithstanding the foregoing, nothing herein shall create any obligation by the Company to the Optionee should any grant or other payment fail to satisfy Section 409A of the Code.

 

END OF AGREEMENT

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