Document:

Exhibit 10.5

 

PROMISSORY NOTE

(Exim)

 

	
  $10,000,000.00

  	
   

  	
  April 1, 2005

  

 

FOR VALUE RECEIVED, the undersigned (jointly and
severally, individually and collectively, the “Borrower”), jointly and
severally promises to pay to the order of Silicon Valley Bank (“Bank”), at such
place as the holder hereof may designate, in lawful money of the United States
of America, the aggregate unpaid principal amount of all advances (“Advances”)
made by Bank to Borrower, up to a maximum principal amount of Ten Million
Dollars ($10,000,000.00), plus interest on the aggregate unpaid principal
amount of such Advances, at the rates and in accordance with the terms of the
Export-Import Bank Loan and Security Agreement between Borrower and Bank dated
as of January 30, 2003, as amended from time to time (the “Loan Agreement”)
on the first calendar day of each month after an Advance has been made.  The entire principal amount and all accrued
interest shall be due and payable on July 15, 2006, or on such earlier
date, as provided for in the Loan Agreement.

 

Borrower irrevocably waives the right to direct the
application of any and all payments at any time hereafter received by Bank from
or on behalf of Borrower, and Borrower irrevocably agrees that Bank shall have
the continuing exclusive right to apply any and all such payments against the
then due and owing obligations of Borrower as Bank may deem advisable.  In the absence of a specific determination by
Bank with respect thereto, all payments shall be applied in the following
order: (a) then due and payable fees and expenses; (b) then due and
payable interest payments and mandatory prepayments; and (c) then due and
payable principal payments and optional prepayments.

 

Bank is hereby authorized by Borrower to endorse on
Bank’s books and records each Advance made by Bank under this Note and the
amount of each payment or prepayment of principal of each such Advance received
by Bank; it being understood, however, that failure to make any such
endorsement (or any errors in notation) shall not affect the obligations of
Borrower with respect to Advances made hereunder, and payments of principal by
Borrower shall be credited to Borrower notwithstanding the failure to make a
notation (or any errors in notation) thereof on such books and records.

 

Borrower promises to pay Bank all reasonable costs
and reasonable expenses including all reasonable attorneys’ fees, incurred in
such collection or in any suit or action to collect this Note or in any appeal
thereof, unless a final court of competent jurisdiction finds that the Bank
acted with gross negligence or willful misconduct.  Borrower waives presentment, demand, protest,
notice of protest, notice of dishonor, notice of nonpayment, and any and all
other notices and demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note, as well as any applicable
statute of limitations.  No delay by Bank
in exercising any power or right hereunder shall operate as a waiver of any
power or right.  Time is of the essence
as to all obligations hereunder.

 

This Note is issued pursuant to the Loan Agreement,
which shall govern the rights and obligations of Borrower with respect to all
obligations hereunder.

 

The law of the Commonwealth of Massachusetts shall
apply to this Agreement.  BORROWER AND
BANK EACH ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION,
SUIT, OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF
THIS NOTE OR THE LOAN AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK
CANNOT AVAIL ITSELF OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS,
BORROWER ACCEPTS JURISDICTION OF THE COURTS AND VENUE IN SANTA CLARA COUNTY,
CALIFORNIA.

 

 

BORROWER WAIVES ITS RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE EXIM LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.  BORROWER RECOGNIZES
AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT
TO ENTER INTO THIS AGREEMENT.  BORROWER
REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.

 

 

	
   

  	
  ASPEN TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leo S. Vannoni

  	
   

  
	
   

  	
  Name: Leo S. Vannoni

  
	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
  ASPENTECH, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles F. Kane

  	
   

  
	
   

  	
  Name: Charles F. Kane

  
	
   

  	
  Title: TreasurerExhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS
EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) dated as of April 26,
2005 (the “Effective Date”), is by and between Isolagen, Inc., a Delaware
corporation (together with its subsidiaries, the “Company” or “Isolagen”), and
Susan Stranahan Ciallella, an individual residing in Pennsylvania (the “Executive”).

 

W I T N E S S E
T H:

 

WHEREAS,
the Executive desires to serve the Company as its General Counsel, Executive
Vice President and Secretary; and

 

WHEREAS,
the Company desires to employ Executive as its General Counsel,Executive Vice
President and Secretary;

 

NOW
THEREFORE in consideration of the mutual benefits to be derived from this
Agreement, the Company and the Executive hereby agree as follows:

 

1.                                       Term
of Employment; Office and Duties.

 

(a)                                  Commencing on or about April 28, 2005
(the “Employment Date”), and for an initial term ending April 28, 2008,
the Company shall employ the Executive as a senior executive of the Company
with the title of General Counsel, Executive Vice President and Secretary.  As General Counsel and Executive Vice
President, Executive shall be the Company’s chief legal officer and shall
perform all duties and responsibilities which are consistent with the positions
and such additional duties and responsibilities consistent with such positions
as may from time to time be assigned to the Executive by the Board of Directors
or the Chief Executive Officer. 
Executive shall report to the Chief Executive Officer of the Company and
to the Board of Directors.  Executive
shall also perform the duties and responsibilities of the Secretary as set
forth in the Bylaws of the Company. 
Executive agrees to perform such duties and discharge such
responsibilities in accordance with the terms of this Agreement.  This Agreement shall be automatically renewed
for an additional one (1) year term unless the Company notifies the
Executive  one year  prior to the expiration of the Agreement of
the Company’s  intention not to renew the
Agreement.

 

(b)                                 The Executive shall devote substantially all
of her working time to the business and affairs of the Company other than
during vacations of four weeks per year and periods of illness or incapacity;
provided, however, that nothing in this Agreement shall preclude the Executive
from devoting time required:  (i) for
serving as a director or officer of any organization or entity not in a
competing business with the Company, and any other businesses in which the
Company becomes involved; (ii) delivering lectures, writing articles or
books, or fulfilling speaking engagements; 
or (iii) engaging in charitable and community activities provided
that such activities do not interfere with the performance of her duties
hereunder.

 

(c)                                  The Board of Directors shall appoint
Executive to serve on the Board of directors within thirty (30) days of the
Employment Date and shall nominate Executive to serve the Board of Directors
during the Term of this Agreement.

 

2.                                       Compensation
and Benefits.

 

For
all services rendered by the Executive in any capacity during the period of
Executive’s employment by the Company, including without limitation, services
as an executive officer or member of any committee of the Board of Directors or
any subsidiary, affiliate or division thereof, from and after the Effective
Date, the Executive shall be compensated as follows:

 

(a)                                  Base Salary.  The Company shall pay the
Executive a fixed salary (“Base Salary”) at a rate of Four Hundred Thousand
Dollars ($400,000) per year.  The Board
of Directors may periodically review the Executive’s Base Salary and may
determine to increase (but not decrease) the Executive’s salary, in accordance
with

 

 

such policies as the Company may hereafter
adopt from time to time, if it deems appropriate.  Base Salary will be payable in accordance
with the customary payroll practices of the Company.

 

(b)                                 Bonus.  Executive shall be entitled to
a one-time bonus in the amount of $100,000, payable to Executive within thirty
(30) days of her commencement of service as General Counsel, Executive Vice
President and Secretary.  Beginning in
fiscal year 2005, Executive will also be entitled to receive an annual bonus
(the “Annual Bonus”) with the 2005 Annual Bonus being prorated for the period
of employment in that year, 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 Compensation Committee of the Board of
Directors, based primarily on mutually agreed upon criteria, established with
respect to the ensuing fiscal year, within thirty (30) days of the end of each
fiscal year.  Criteria for the Annual
Bonus for 2005 (prorated) and 2006 (full year) shall be agreed upon prior to or
within thirty (30) days after the execution of this Agreement.  The Compensation Committee may also consider
other more subjective factors in making its determination.  The targeted amount of the Annual Bonus shall
be 40% of the Executive’s base salary. The actual Annual Bonus for any given
period may be higher or lower than 40%. 
For any fiscal year in which Executive is employed for less than the
full year,   Executive shall receive a
bonus which is prorated based on the number of full months in the year which
are worked.

 

(c)                                  Fringe Benefits, Option Grants and
Miscellaneous Employment Matters.

 

(i)                                     The Executive shall be entitled to
participate in such disability, health and life insurance and other fringe
benefit plans or programs offered to all employees of the Company, as well as
to the key executive employees of Company, including a Section 401(k) and
retirement plan of the Company as may be established from time to time by the
Board of Directors, subject to the rules and regulations applicable
thereto.  At the Executive’s option, in
lieu of providing group medical benefits, the Company will reimburse the
Executive for health insurance premium payments made pursuant to COBRA by the
Executive under her existing group medical coverage (currently $970 per
month).    Upon termination of Executive’s
group coverage under COBRA, she shall have the option of enrolling in the
Company’s group plan or converting her prior coverage to an individual policy,
at which time the Company would reimburse her for an amount equal to its
monthly cost of covering Executive under its plan, and Executive would pay any
additional amounts necessary to provide individual coverage.    In addition, the Executive shall be
entitled to the following benefits:

 

(ii)                                  Contemporaneous with the execution of this
Agreement, the Executive will be granted 
a non-qualified stock option  (the
“Employment Option”) to purchase 300,000 shares of the Company’s Common Stock,
par value $.001 per share (the “Common Stock”) with an exercise price per share
equal to the average closing transaction price on the Effective Date, which is
the date of the grant.  In the Company’s
discretion, the Employment Option may be issued pursuant to the Company’s
existing stock option plans or apart from those plans.  The term of the Employment Option will be for
a period of ten (10) years from the date of grant.  One third of the shares eligible for purchase
under the Employment Option shall vest on each of the first, second and third
anniversaries of the Employment Date provided that Executive continues to be
employed by the Company; provided further, however, that if Executive’s
employment with the Company is terminated (i) without “Cause” or (ii) ”For
Good Reason,” all unvested portions of the Employment Option shall vest
immediately upon such termination.

 

(iii)                               The vesting of the Employment Option and the
Additional Employment Option shall accelerate and vest immediately upon a
change in control of the Company as defined in Rule 405 of the Securities
Act of 1933 or upon sale of substantially all of the assets of the Company or
the merger out of existence of the Company.

 

(d)                                 Withholding and Employment Tax. 
Payment of all compensation hereunder shall be subject to customary
withholding tax and other employment taxes as may be required with respect to
compensation paid by an employer/corporation to an employee.

 

(e)                                  Disability.  The Company shall provide the
Executive with a policy of disability insurance benefits of at least sixty
percent (60%) of her gross Base Salary per month.   To the extent permitted by the Company’s
existing disability policy, the Executive’s disability policy will be a
portable policy.  The Executive

 

2

 

agrees to pay for any additional premium
payments resulting from providing a portable policy (in comparison to a group
policy) and further agrees to have the additional premium payments deducted
from her pay.   In the event of the
Executive’s Disability (as hereinafter defined), the Executive and her family
shall continue to be covered by all of the Company’s life, medical, health and
dental plans, at the Company’s expense, to the extent such benefits can be
obtained at a reasonable cost, for the lesser of the term of such Disability
(as hereinafter defined) or eighteen (18) months, in accordance with the terms
of such plans.

 

(f)                                    Death.  The Company shall provide the
Executive with a policy of term life insurance benefits in the amount of at
least One Million Dollars ($1,000,000). To the extent permitted by the Company’s
existing life insurance policy, the Executive’s life insurance policy will be a
portable policy.  The Executive agrees to
pay for any additional premium payments resulting from providing a portable policy
(in comparison to a group policy) and further agrees to have the additional
premium payments deducted from her pay.   
In the event of the Executive’s death, the Executive’s family shall
continue to be covered by all of the Company’s medical, health and dental
plans, at the Company’s expense, to the extent such benefits can be obtained at
a reasonable cost, for eighteen (18) months following the Executive’s death in
accordance with the terms of such plans.

 

(g)                                 Vacation.  Executive shall receive four (4) weeks
of vacation annually, administered in accordance with the Company’s existing
vacation policy.

 

(h)                                 Malpractice Insurance.  The
Company shall provide malpractice insurance in an amount to be agreed upon by
the parties, but in any event a commercially reasonable amount consistent with
the Company’s insurance practices generally.

 

3.                                       Business
Expenses.

 

The
Company shall pay or reimburse all reasonable travel and entertainment expenses
incurred by the Executive in connection with the performance of her duties
under this Agreement travel to the Company’s various offices and facilities in
the United States and abroad, reimbursement for attending out-of-town meetings
of the Board of Directors, and such other travel as may be required or
appropriate in Executive’s discretion, consistent with duly approved Company
budgets, to fulfill the responsibilities of her office, all in accordance with
such policies and procedures as the Company may from time to time establish for
senior officers and as required to preserve any deductions for federal income
taxation purposes to which the Company may be entitled and subject to the
Company’s normal requirements with respect to reporting and documentation of
such expenses.  The Company shall pay to
Executive a non-accountable automobile allowance of seven hundred ($700)
dollars per month for all expenses incurred by the Executive for Executive’s
automobile (including lease payments, insurance, maintenance, and
gasoline).  The Company shall also pay or
reimburse Executive for all membership fees and dues in appropriate
professional associations and organizations utilized by Executive in the course
of her service for the Company including expenses of bar membership and
Continuing Legal Education, as well as all expenses incurred by the Executive
for Executive’s cellular telephone and portable text messaging including
monthly service charges, equipment maintenance and all other ancillary charges
including, but not limited to, text messaging, paging, and wireless
communications.

 

4.                                       Termination
of Employment.

 

Notwithstanding
any other provision of this Agreement, Executive’s employment with the Company
may be terminated upon written notice to the other party as follows:

 

(a)                                  By the Company, in the event of the Executive’s
death or Disability (as hereinafter defined) or for Cause (as hereinafter
defined).  For purposes of this
Agreement, “Cause” shall mean either: (i) the indictment of, or the
bringing of formal charges against 
Executive on charges involving criminal fraud or embezzlement; (ii) the
conviction of Executive of a crime involving an act or acts of dishonesty,
fraud or moral turpitude by the Executive, which act or acts constitute a
felony; (iii) Executive negligently or knowingly having  caused the Company  to violate the Company’s Bylaws; (iv) Executive
having committed acts or omissions constituting gross negligence or willful
misconduct with respect to the Company including with respect to any valid
contract to which the Company is a party; (v) Executive having committed
acts or omissions constituting a breach of

 

3

 

Executive’s duty of loyalty or fiduciary duty
to the Company or any material act of dishonesty or fraud with respect to the
Company which are not cured or substantially cured to the satisfaction of the
Board of Directors of the Company in a reasonable time, which time shall be at
least 30 days from receipt of written notice from the Company of such material
breach; or (vi) Executive having committed acts or omissions constituting
a material breach of this Agreement which are not cured or substantially cured
to the satisfaction of the Board of Directors of the Company in a reasonable
time, which time shall be at least 30 days from receipt of written notice from
the Company setting forth with specificity the particulars of any such material
breach as well as the corrective actions required; (vii) Executive’s
suspension, disbarment or loss of her license to practice law  provided that the same is not cured or substantially
cured to the satisfaction of the Board of Directors of the Company in a
reasonable time, which time shall be at least 30 days from receipt of
notification of the suspension, disbarment or loss of license to practice law
(except in the case of a suspension for administrative reasons, in which case
Executive shall have a reasonable time to cure the suspension).  A determination that Cause exists as defined
in clauses (iv), (v), or (vi) (as to this Agreement) of the preceding
sentence shall be made by at least a majority of the members of the Board of
Directors.  For purposes of this
Agreement, “Disability” shall mean the inability of Executive, in the
reasonable judgment of a physician jointly appointed by the Executive and Board
of Directors, to perform, even with 
reasonable accommodation, her duties of employment for the Company or
any of its subsidiaries because of any physical or mental disability or
incapacity, where such disability shall exist for an aggregate period of more
than 120 days in any 365-day period or for any period of 90 consecutive
days.  The Company shall by written
notice to the Executive specify the event relied upon for termination pursuant
to this Section 4(a), and Executive’s employment hereunder shall be deemed
terminated as of the date of such notice. 
In the event of any termination under this Subsection 4(a), the
Company shall pay all amounts then due to the Executive under Section 2(a) of
this Agreement for any portion of the payroll period worked but for which
payment had not yet been made up to the date of termination, and, if such
termination was for Cause, the Company shall have no further obligations to
Executive under this Agreement, and any and all options granted hereunder shall
terminate according to their terms.  In
the event of a termination due to Executive’s Disability or death, the Company
shall comply with its obligations under Sections 2(e) and 2(f).

 

(b)                                 By the Company, in the absence of Cause, for
any reason and in its sole and absolute discretion, provided that in such event
the Company shall, as liquidated damages or severance pay, or both, continue to
pay to Executive the Base Salary (at a monthly rate equal to the rate in effect
immediately prior to such termination) for the longer of the remaining term
through April 28, 2008 if this Agreement has not been automatically
renewed or April 28, 2009 if this Agreement has been automatically renewed
or twelve months from the date of termination (the “Termination Payments”),
when, as and if such payments would have been made in the absence of Executive’s
termination.  The Termination Payments
shall be made regardless of Executive’s subsequent re-employment as long as any
new employment is not in violation of Sections 5 or 6 of this Agreement.

 

(c)                                  By the Executive for “Good Reason,” (as the
Executive shall reasonably determine in good faith) which shall be deemed to
exist: (i) if the Company’s Board of Directors or that of any successor
entity of the Company fails to appoint or reappoint the Executive  or removes the Executive from the title
and/or office of Executive Vice President and General Counsel of the Company or
from any successor entity operating the Company; (ii) if the Company’s
Board of Directors or that of any successor entity of the Company fails to appoint
the Executive to serve on the Board of Directors within thirty (30) days of the
Employment Date or fails to renominate the Executive to serve on the Board of
Directors; (iii) if Executive is assigned any duties materially
inconsistent with the duties or responsibilities of the General Counsel and
Executive Vice President 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 (but not excluding changes resulting from a sale of the Company,
whether by merger, tender offer or otherwise) provided that Executive shall act
within 30 days of becoming aware of any such diminution in the scope of her
duties, responsibilities, authority or position;  (iv) if the Company shall breach or
shall have continued to fail to comply with any material provision of this
Agreement after a 30-day period to cure (if such failure is curable)
following written notice to the Company of such non-compliance; (v) if the
Board of Directors requires Executive without her express written consent to
relocate to any area outside a thirty-five (35) mile radius of Kennett Square,
Pennsylvania, (vi) upon a change in control of the Company or within
twelve (12) months of any such change in control (for these purposes the term “change
in control” shall have the meaning set forth in Rule 405 of the Securities
Act of 1933), or within twelve (12) months of a sale of substantially all of
the assets of the Company or the merger out of existence of the Company.   In the event of any termination for “Good
Reason” under this Section 4(c),

 

4

 

the Company shall, as liquidated damages or
severance pay, or both, pay the Termination Payments, as defined in (b) of
this Section 4, to Executive, when, as and if such payments would have
been made in the absence of Executive’s termination.

 

(d)                                 During any period in which Executive is
obligated not to compete with the Company pursuant to Section 5 hereof
(unless Executive was terminated for Cause as defined herein), Executive and
her family shall continue to be covered by the Company’s life, medical, health
and death plans.  Such coverage shall be
at the Company’s expense to the same extent as if Executive were still employed
by the Company.  In the event of a termination
pursuant to Sections 4(b) or 4(c), the Company shall provide to Executive
the pro-rata share of her annual bonus, to the extent one is awarded by the
Compensation Committee the consideration of which shall be taken in good faith,
giving a full month’s credit for any partial month worked in that bonus
year.   Additionally, in the event of a
termination pursuant to Sections 4(b) or 4(c), the Company shall provide
to Executive, at the Company’s expense, outplacement services of a nature
customarily provided to a senior executive. 
Notwithstanding the foregoing, the obligations of the Company pursuant
to this Section 4(d) shall remain in effect no longer than the term
of the Termination Payments.

 

(e)                                  In the event that any amounts payable and/or
any benefits provided to the Executive under the terms of this Agreement and/or
under any other plan, agreement or arrangement by which she is to receive
payments or benefits in the nature of compensation would constitute “excess
parachute payments” as that term is defined for purposes of Section 280G
of the Internal Revenue Code of 1986, as amended (“Code”) and Treasury
Regulations promulgated pursuant thereto, then the amounts payable under the
terms of this Agreement and/or under any other plan, agreement or arrangement
shall be reduced so that no payments are deemed “excess parachute payments.”  Any decisions regarding this requirement or
implementation of reductions shall be made by tax counsel selected by the
Company.

 

(f)                                    If any payment to Executive under the terms
of this Agreement is determined to constitute a payment of nonqualified
deferred compensation for purposes of Section 409A of the Code, such
payment shall be delayed until the date that is six months after the date of
Executive’s separation from service with the Company, so as to comply with the
special rule for certain “specified employees” set forth in Code Section 409A(a)(2)(B)(i) unless
it is determined that immediate distribution is permissible (and does not
trigger any additional tax liability pursuant to Code Section 409A(a)(l))
pursuant to Code Section 409A(a)(2)(A)(v) by reason of being payable
in connection with a change in the ownership or effective control of the
Company or in the ownership of a substantial position of the assets of the Company.

 

5.                                       Non-Competition.

 

During
the period of Executive’s employment hereunder and during the period, if any,
during which payments are required to be made to the Executive by the Company
pursuant to Sections 4(b) or 4(c), the Executive shall not, 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), or within
a fifty (50) mile radius of any such state, directly or indirectly own any
interest in, manage, control, participate in, consult with, render services
for, or in any manner engage in any business engaged in by the Company (unless
the Board of Directors shall have authorized such activity and the Company
shall have consented thereto in writing). 
The foregoing sentence shall not prevent Executive from practicing in a
law firm which represents a client which performs business engaged in by the
Company as long as Executive herself provides no legal services, directly or
indirectly to the client which performs business engaged in by the
Company.  The term “business engaged in
by the Company” shall mean the development and commercialization of autologous
fibroblast system technology for application in, among other therapies,
dermatology, surgical and post-traumatic scarring, skin ulcers, cosmetic
surgery, periodontal disease, 
reconstructive dentistry, vocal chord injuries, urinary incontinence,
and digestive and gastroenterological disorders and other applications relating
to the market for autologous fibroblast or UMC cells and the five derivative
cell lines: osteoblast, chondroblast, fibroblast, adipocyte, and
neuroectoderm.  Investments in less than
five percent of the outstanding securities of any class of a corporation
subject to the reporting requirements of Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended, shall not be prohibited by
this Section 5.  At the option of
Executive, Executive’s obligations under this Section 5 arising after the
termination of Executive shall be suspended during any period in which the
Company

 

5

 

fails to pay to her
Termination Payments required to be paid to her pursuant to this
Agreement.  The provisions of this Section 5
are subject to the provisions of Section 14 of this Agreement.

 

6.                                       Inventions
and Confidential Information.

 

The
parties hereto recognize that a major need of the Company is to preserve its
specialized knowledge, trade secrets, and confidential information.  The strength and good will of the Company is
derived from the specialized knowledge, trade secrets, and confidential
information generated from experience with the activities undertaken by the
Company and its subsidiaries.  The
disclosure of this information and knowledge to competitors would be beneficial
to them and detrimental to the Company, as would the disclosure of information
about the marketing practices, pricing practices, costs, profit margins, design
specifications, analytical techniques, and similar items of the Company and its
subsidiaries.  The Executive acknowledges
that the proprietary information, observations and data obtained by her while
employed by the Company concerning the business or affairs of the Company are
the property of the Company.  By reason
of her being a senior executive of the Company, the Executive has or will have
access to, and has obtained or will obtain, specialized knowledge, trade
secrets and confidential information about the Company’s operations and the
operations of its subsidiaries, which operations extend throughout the United
States.  For purposes of this Section 6,
“Company” shall mean the Company and each of its controlled subsidiaries.  Therefore, subject to the provisions of Section 14
hereof, the Executive hereby agrees as follows, recognizing that the Company is
relying on these agreements in entering into this Agreement:

 

(i)                                     During the period of Executive’s employment
with the Company and thereafter, the Executive will not use, disclose to
others, or publish or otherwise make available to any other party any
inventions or any confidential business information about the affairs of the
Company, including but not limited to confidential information concerning the
Company’s products. “Confidential Information” shall include commercial or
trade secrets about Company’s products, methods, engineering designs and
standards, analytical techniques, technical information, customer information,
employee information, or financial and business records, any of which contains
proprietary information created or acquired by the Company and which
information is held in confidence by Company. Confidential Information does not
include information which: (i) becomes generally available to the public,
unless said Confidential Information was disclosed in violation of a
confidentiality agreement; or (ii) becomes available to Executive on a
non-confidential basis from a source other than the Company or its agents,
provided that such source is not bound by a confidentiality agreement with the
Company.

 

(ii)                                  During the period of Executive’s employment
with the Company and for twelve (12) months thereafter, (a) the Executive
will not directly or indirectly through another entity induce  any employee of the Company to leave the
Company’s employ (unless the Board of Directors shall have authorized such
employment and the Company shall have consented thereto in writing) or in any
way interfere with the relationship between the Company and any employee
thereof or (b) tortiously interfere with the Company’s business
relationship with  any customer,
supplier, licensee, licensor or other business relation of the Company.

 

7.                                       Indemnification.

 

The
Company will indemnify (and advance the costs of defense of) and hold harmless
the Executive (and her legal representatives) to the fullest extent permitted
by the laws of the state in which the Company is incorporated, as in effect at
the time of the subject act or omission, or by the Certificate of Incorporation
and Bylaws of the Company, as in effect at such time or on the date of this
Agreement, whichever affords greater protection to the Executive, and the
Executive shall be entitled to the protection of any insurance policies the
Company may elect to maintain generally for the benefit of its executive
officers, against all judgments, damages, liabilities, costs, charges and
expenses whatsoever incurred or sustained by her or her legal representative in
connection with any action, suit or proceeding to which she (or her legal
representatives or other successors) may be made a party by reason of her being
or having been an officer of the Company or any of its subsidiaries except that
the Company shall have no obligation to indemnify Executive for liabilities
resulting from conduct of the Executive with respect to which a court of
competent jurisdiction has made a final determination that Executive committed
gross negligence or willful misconduct.

 

6

 

8.                                       Litigation
Expenses.

 

In the
event of any litigation or other proceeding between the Company and the
Executive with respect to the subject matter of this Agreement and the
enforcement of the rights hereunder, the losing party shall reimburse the
prevailing party for all of her/its reasonable costs and expenses relating to
such litigation or other proceeding, including, without limitation, her/its
reasonable attorneys’ fees and expenses.

 

9.                                       Consolidation;
Merger; Sale of Assets; Change of Control.

 

Nothing
in this Agreement shall preclude the Company from combining, consolidating or
merging with or into, transferring all or substantially all of its assets to,
or entering into a partnership or joint venture with, another corporation or
other entity, or effecting any other kind of corporate combination provided
that the corporation resulting from or surviving such combination,
consolidation or merger, or to which such assets are transferred, or such
partnership or joint venture assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a consolidation, merger,
transfer of assets or formation of such partnership or joint venture, this
Agreement shall inure to the benefit of, be assumed by, and be binding upon
such resulting or surviving transferee corporation or such partnership or joint
venture, and the term “Company,” as used in this Agreement, shall mean such
corporation, partnership or joint venture or other entity, and this Agreement
shall continue in full force and effect and shall entitle the Executive and her
heirs, beneficiaries and representatives to exactly the same compensation,
benefits, perquisites, payments and other rights as would have been their
entitlement had such combination, consolidation, merger, transfer of assets or
formation of such partnership or joint venture not occurred.

 

10.                                 Survival
of Obligations.

 

Sections
4, 5, 6, 7, 8, 9, 11, 12 and 14 shall survive the termination for any reason of
this Agreement (whether such termination is by the Company, by the Executive,
upon the expiration of this Agreement or otherwise).

 

11.                                 Executive’s
Representations.

 

The
Executive hereby represents and warrants to the Company that to the best of her
knowledge: (i) the execution, delivery and performance of this Agreement
by the Executive do not and shall not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which the Executive is a party or by which she is bound, (ii) the
Executive is not a party to or bound by any employment agreement, non-compete
agreement or confidentiality agreement with any other person or entity and (iii) 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 she has consulted with legal counsel
regarding her rights and obligations under this Agreement and that she fully
understands the terms and conditions contained herein.

 

12.                                 Company’s
Representations.

 

The
Company hereby represents and warrants to the Executive that (i) the
execution, delivery and performance of this Agreement by the Company do not and
shall not conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which the Company is a
party or by which it is bound; (ii) 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; and (iii) the
Company’s representations made by the Board of Directors and members of senior
management prior to the execution of this Agreement regarding the science,
business or fiscal propriety of the Company are accurate in all material
respects

 

13.                                 Enforcement.

 

Because
the Executive’s services are unique and because the Executive has access to
confidential information concerning the Company, the parties hereto agree that
money damages would not be an adequate remedy for any breach of this
Agreement.  Therefore, in the event of a
breach of this Agreement, the Company may,

 

7

 

in addition to other
rights and remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security).

 

14.                                 Severability.

 

In case
any one or more of the provisions or part of a provision contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect in any jurisdiction, such invalidity, illegality or
unenforceability shall be deemed not to affect any other jurisdiction or any
other provision or part of a provision of this Agreement, nor shall such
invalidity, illegality or unenforceability affect the validity, legality or
enforceability of this Agreement or any provision or provisions hereof in any
other jurisdiction; and this Agreement shall be reformed and construed in such
jurisdiction as if such provision or part of a provision held to be invalid or
illegal or unenforceable had never been contained herein and such provision or
part reformed so that it would be valid, legal and enforceable in such
jurisdiction to the maximum extent possible. 
In furtherance and not in limitation of the foregoing, the Company and
the Executive each intend that the covenants contained in Sections 5 and 6
shall be deemed to be a series of separate covenants, one for each and every
state 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. 
If, in any judicial proceeding, a court shall refuse to enforce any one
or more of such separate covenants because the total time, scope or area
thereof is deemed to be excessive or unreasonable, then it is the intent of the
parties hereto that such covenants, which would otherwise be unenforceable due
to such excessive or unreasonable period of time, scope or area, be enforced
for such lesser period of time, scope or area as shall be deemed reasonable and
not excessive by such court.

 

15.                                 Entire
Agreement; Amendment.

 

Except
as otherwise set forth in this Agreement, this Agreement contains the entire
agreement between the Company and the Executive with respect to the subject
matter hereof and thereof.  This
Agreement may not be amended, waived, changed, modified or discharged except by
an instrument in writing executed by or on behalf of the party against whom
enforcement of any amendment, waiver, change, modification or discharge is
sought.  No course of conduct or dealing
shall be construed to modify, amend or otherwise affect any of the provisions
hereof.

 

16.                                 Notices.

 

All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if physically delivered,
delivered by express mail or other expedited service or upon receipt if mailed,
postage prepaid, via registered mail, return receipt requested, addressed as
follows:

 

	
  (a)

  	
   

  	
  To the Company:

  	
   

  	
  (b)

  	
  To the Executive:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Isolagen

  	
   

  	
   

  	
  Susan Stranahan Ciallella

  	
   

  	
   

  
	
   

  	
   

  	
  102 Pickering Way

  	
   

  	
   

  	
  107 Stonepine
  Drive

  	
   

  	
   

  
	
   

  	
   

  	
  Suite 200

  	
   

  	
   

  	
  Kennett Square,
  PA 19348

  	
   

  	
   

  
	
   

  	
   

  	
  Exton, PA 19341

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

and/or to such other persons and addresses as any party shall have
specified in writing to the other.

 

17.                                 Assignability.

 

This
Agreement shall not be assignable by either party and shall be binding upon, and
shall inure to the benefit of, the heirs, executors, administrators, legal
representatives, successors and assigns of the parties.  In the

 

8

 

event that all or
substantially all of the business of the Company is sold or transferred, then
this Agreement shall be binding on the transferee of the business of the
Company whether or not this Agreement is expressly assigned to the transferee.

 

18.                                 Governing
Law.

 

This
Agreement shall be governed by and construed under the laws of the Commonwealth
of Pennsylvania.

 

19.                                 Waiver
and Further Agreement.

 

Any
waiver of any breach of any terms or conditions of this Agreement shall not
operate as a waiver of any other breach of such terms or conditions or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof.  Each of the parties hereto agrees to execute
all such further instruments and documents and to take all such further action
as the other party may reasonably require in order to effectuate the terms and
purposes of this Agreement.

 

20.                                 Headings
of No Effect.

 

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

 

9

 

IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as
of the date first above written.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  ISOLAGEN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Susan Stranahan Ciallella

  

 

10

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