Document:

Exhibit 10.19

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO ACELL, INC. IF PUBLICLY DISCLOSED.

 

SECOND AMENDED SENIOR EXECUTIVE EMPLOYMENT AGREEMENT

 

This Second Amended Senior Executive Employment Agreement (the “Agreement”) is entered into effective as of January 16, 2020 (the “Effective Date”) between Patrick McBrayer (“Executive”) and ACell, Inc, a Delaware corporation (“Employer”) with principal offices at 6640 Eli Whitney Drive, Columbia, MD 21046. This Second Amended Agreement (the “Agreement”) amends and supersedes prior versions of this Agreement previously executed by the parties, primarily to clarify certain terms and provisions of Exhibit A.

 

Section 1.                                          Term. Employer shall employ Executive and Executive agrees to be employed, upon the terms and conditions herein, for a two-year term from the Effective Date through January 15, 2022 (the “Initial Term”). This Agreement may be renewed by the parties for successive one (1) year periods (each, a “Renewal Term”). If the Initial Term or any Renewal Term expires without the parties having agreed upon further renewal, this Agreement, and all obligations hereunder, shall in that instance continue in effect on a month-to-month basis until terminated by either party. The term of this Agreement, including the Initial Term, any Renewal Term, and any post-expiration month-to-month term, shall be referred to as the “Term”.

 

Section 2.                                          Executive’s Duties.

 

(a) Executive shall be President and Chief Executive Officer (collectively “CEO)”) and shall report to Employer’s Board of Directors (the “Board”). Executive shall faithfully and diligently perform his duties at the direction of the Board, to the best of Executive’s ability. Executive shall (i) devote his best efforts, skill, and ability and full business time and attention to the performance of the customary duties and responsibilities of a CEO, subject to vacations and sick leave as provided herein and in accordance with Employer policies, (ii) carry out his duties in a competent and professional manner; and (iii) generally promote the interests of Employer. Subject to applicable law, Executive shall not knowingly participate in any activity that is detrimental to the interests of Employer or any of its affiliates, including, without limitation, any public criticism or disparagement of any type by Executive, through the media or otherwise, of Employer or any of its affiliates or employees, except in connection with the exercise of Executive’s rights against Employer or any of its affiliates (such covenant not to publicly criticize or disparage, being referred to as the “Non-Disparagement Covenant”). Executive’s commitments to Employer shall not preclude Executive from serving as an outside director for no more than 2 companies, provided that any such board positions shall not interfere with Executive’s duties and responsibilities to Employer, and shall not create any conflict of interest with respect to any business of Employer.

 

(b) Executive agrees to abide by all policies applicable to senior executive officers of Employer promulgated from time to time by Employer.

 

(c) Except for such business travel as may be incident to his duties hereunder, Executive shall perform his duties at Employer’s primary offices in Columbia, MD.

 

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(d) During the Term of this Agreement, Executive shall be a member of Employer’s Board of Directors, and Employer shall take such steps as may be necessary to effectuate the appointment or election of Executive to the Board. Upon termination of this Agreement for any reason (including non-renewal), Executive shall automatically and immediately be removed as a Director, unless Employer and Executive mutually agree in writing to have Executive continue as a Director.

 

Section 3.                                          Compensation. In consideration of the duties and services to be performed by Executive pursuant to Sections 1 and 2 hereof, Executive shall receive:

 

(a) Salary. Executive shall earn salary compensation (“Salary”) at the annual rate of three hundred eighty seven thousand fly hundred twenty five and 84/100 dollars ($387,525.84) (“Minimum Salary”), less all applicable federal, state, and local tax withholdings. Such Salary shall be earned and payable in periodic installments in accordance with Employer’s payroll practices. During the Term, the Board or its Compensation Committee (the “Compensation Committee”) may review the Salary annually and may in its discretion increase the Salary, but may not reduce it unless Employer institutes salary reductions across the board for other senior executive officers; provided, however, that the Salary may not be reduced below the Minimum Salary without Executive’s written consent.

 

(b) Bonus. For each full fiscal year of Employer, Executive shall receive a cash performance bonus (“Bonus”) in an amount up to 50% of Minimum Salary, based upon the achievement of annual performance goals established by Employer and in accordance with any plan or metric established thereunder, and pursuant to such bonus plan as may be established by the Board or Compensation Committee.

 

(c) Equity Awards. In connection with Executive’s employment, Executive will be granted stock options (“Stock Awards”) to purchase equity securities of Employer pursuant to the terms of the ACell, Inc. 2011 Stock Option and Grant Plan, or any other successor equity incentive plans (collectively, and as may be amended from time to time, the “Stock Incentive Plan”). The amounts and terms of the Stock Awards are set forth in Exhibit A hereto, which is attached to and incorporated into this Agreement.

 

(d) Benefits. Executive may participate in and receive benefits from all life, accident, disability, medical and pension plans, and all similar benefits as are from time to time in effect and are generally made available to similar situated senior executive officers of Employer. The amount and extent of benefits to which Executive is entitled shall be governed by the specific benefit plan, as it may be amended from time to time.

 

(e) Expenses. Employer shall promptly reimburse Executive for reasonable expenses for cellular telephone usage, entertainment, travel, meals, lodging and similar items incurred in the conduct of Employer’s business. Such expenses shall be reimbursed in accordance with Employer’s expense reimbursement policies and guidelines.

 

(f) Vacation; Sick Leave. During the Term, Executive shall be entitled to vacation, paid holidays, sick leave, and similar benefits, to be earned and used in accordance with Employer’s policy and procedure for other similarly situated senior executive officers, in a total aggregate amount of at least 23 days annually.

 

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(g) Relocation Expenses. Employer shall reimburse Employee for (or at Employer’s option, pay directly) reasonable and customary expenses of relocation from Executive’s current home to a new home proximate to Employer’s Columbia MD offices. Employer shall provide Employee with a housing allowance of $3500 per month, effective as of December 1, 2019, and through the term of this Agreement and any Renewal Term, provided that, and for so long as, Employee maintains an apartment residence near ACell headquarters in Columbia, Maryland.

 

(h) Modification. Employer reserves the right to modify, suspend or discontinue any and all of the above plans, practices, policies and programs referenced in Sections 3(d) and (e) at any time in its discretion without recourse by Executive so long as such action is taken generally with respect to other similarly situated senior executive officers. Any such modification, suspension or discontinuance of the plans, practices and policies referenced in Section 3(e) will not apply to otherwise reimbursable expenses incurred by Executive prior to any such modification, suspension or discontinuance.

 

Section 4.                                          Termination of Employment

 

(a) Resignation. Executive may voluntarily terminate his employment with Employer, at any time, with or without Good Reason, upon thirty (30) days prior written notice to Employer, subject to Employer’s discretion to waive or reduce the duration of such notice period.

 

(b) Termination. Employer may terminate Executive’s employment at any time, with or without Cause, upon written notice to Executive.

 

(c) Death or Disability. Executive’s employment shall terminate immediately upon Executive’s death. In the event Employer, in good faith, determines that Executive is unable to satisfactorily perform the functions of his position due to a Disability (as defined below), it may notify Executive in writing of its intention to terminate Executive’s employment and Executive’s employment with Employer shall terminate effective on the thirtieth (30th) day after receipt of such notice by Executive. For the purposes of this Agreement, “Disability” shall mean a physical or mental impairment that substantially limits a major life activity of Executive and renders Executive unable to satisfactorily perform all essential functions of a CEO position even with reasonable accommodation (that does not impose an undue hardship on Employer), and which has lasted at least (i) sixty (60) consecutive days, (ii) the balance of Executive’s entitlement to leave, if any, under the Family and Medical Leave Act, or other similar statute, or (iii) the balance of any election period under the Employer’s long term disability program (without regard to whether Executive is awarded benefits under such program), whichever is longer.

 

(d) Cause. Employer may immediately terminate Executive’s employment for “Cause” by giving written notice to Executive. For purposes of this Agreement, “Cause” shall mean:

 

(1) Executive’s commission of an act of fraud or embezzlement, or other material dishonest act, upon Employer or any of its affiliates, or a materially false statement of a substantial nature in Executive’s employment application materials or interviews, regarding or bearing on Executive’s experience or qualifications for the CEO position;

 

(2) Executive’s commission of any act, or statement, intended to injure the reputation, business, or any business relationship of Employer or any of its affiliates;

 

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(3) Executive is found by a court of competent jurisdiction to have committed, or Executive’s plea of guilty or nolo contendere to, a felony or other crime involving dishonesty or moral turpitude; or

 

(4) the refusal or failure of Executive to perform any of the customary duties and responsibilities of a CEO in a competent and professional manner; or

 

(5) the refusal or failure of Executive to comply with any of his material obligations under this Agreement.

 

(e) Good Reason. Executive may terminate his employment for “Good Reason,” by delivering written notice (“Employer Default Notice”) to Employer within thirty (30) days of the occurrence of any of the following events, each of which shall constitute Good Reason: (i) Employer’s adverse breach of this Agreement, which has not been cured within the allotted time; (ii) a reduction of Executive’s then current title, authority, responsibility or duties; (iii) a reduction in Executive’s salary below the Minimum Salary set forth in the preceding sections of this Agreement; (iv) the failure of any successor entity to assume the terms of this Agreement upon any Change of Control; or (v) the relocation of Executive to a primary office more than forty (40) miles from Employer’s principal offices at the address set forth in the preamble to this Agreement. The Employer Default Notice shall specify the reason for Executive’s belief that Good Reason has occurred. Notwithstanding the foregoing, any material breach of this Agreement by Employer, or other event constituting Good Reason, shall not constitute Good Reason if it is cured or corrected by Employer within thirty (30) days following delivery to Employer of the Employer Default Notice. If Employer does not timely cure or correct the Good Reason event, Executive may resign for Good Reason by delivering a written notice and, pursuant to Section 4(a) above, resigning on the thirtieth (30) day following the end of Employer’s cure period.

 

(f) Continuing Obligations. Executive agrees that any termination under this Section 4 is not in-tended, and shall not be deemed or construed, to affect in any way any of Executive’s covenants and obligations contained in Sections 6, 7, and 8 hereof, which shall continue in full force and effect beyond such termination for any reason.

 

Section 5.                                          Termination Obligations

 

(a) Resignation; Death or Disability. If Executive’s employment is terminated voluntarily by Executive without Good Reason or by reason of death or Disability, Executive’s employment shall terminate without further obligations to Executive other than for payment of any unpaid Salary determined by the Board and reimbursable expenses and vacation accrued and owing to Executive prior to the termination. The sum of such amounts shall hereinafter be referred to as the “Accrued Obligations,” which shall be paid to Executive or Executive’s estate or beneficiary within thirty (30) days of the date of termination (or sooner if required by applicable law). If Executive voluntarily terminates his employment without Good Reason and within (30) days of such termination Employer determines that it would have had Cause to terminate Executive pursuant to Section 4(d), Executive shall be deemed to have been terminated for Cause and the terms of Section 5(b) shall apply.

 

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(b) Cause. If Executive’s employment is terminated by Employer for Cause, this Agreement shall terminate without further obligations to Executive other than for the timely payment of Accrued Obligations, and the issuance or vesting of any stock options, awards or other equity shall terminate immediately and without further notice. If it is subsequently determined by an arbitrator, pursuant to Section 19 hereof, that Employer did not have Cause for termination, then Employer’s decision to terminate shall be deemed to have been made without Cause and the terms of Section 5(c) shall apply.

 

(c) By Employer Other than for Cause; By Executive for Good Reason.

 

(1) If (A) Employer terminates Executive’s employment for a reason other than Cause, or (B) Executive terminates Executive’s employment for Good Reason, Employer shall have no further obligations to Executive other than for (i) the payment of Accrued Obligations, (ii) severance pay in an amount equal to one (1) month of Salary for every month worked during the Term of Executive’s employment, no less than a minimum of three (3) months, and up to a maximum total amount of twelve (12) months, of Salary, payable in regular payroll installments commencing on the sixtieth (60th) day following the Severance Commencement Date; and (iii) the reimbursement of premiums otherwise payable by Executive pursuant to COBRA for a period of up to twelve (12) months, or until Executive no longer is eligible for COBRA continuation coverage, whichever is earlier. For purposes of this Section 5, “Severance Commencement Date” shall mean if any stock of Employer or its affiliates is publicly traded on an established securities market or otherwise and the Board (or its delegate) determines that as of the date of termination of Executive’s employment that the Executive is a “key employee” (within the meaning of Section 416(i) of the Internal Revenue Code of 1986, as amended (the “Code”), as interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder) and that Section 409A of the Code applies with respect to payments to Executive pursuant to Section 5(c)(1)(ii) and (iii), the six-month anniversary of the date of the Executive’s “separation from service” (within the meaning of Section 409A of the Code); or (y) if the Board (or its delegate) determines that Executive is not such a “key employee” as of date of termination of Executive’s employment (or that Section 409A of the Internal Revenue Code does not apply with respect to payments to the Executive pursuant to Section 5(c)(1)(ii) and (iii)), the date of termination of Executive’s employment. The payments described in this Section 5(c)(1)(i) shall be made within thirty (30) days of the date of termination of Executive’s employment (or sooner if required by applicable law).

 

(2) If Executive terminates Executive’s employment for Good Reason and it is subsequently determined by an arbitrator, pursuant to Section 19 hereof, that Executive did not have Good Reason for termination, then Executive’s decision to terminate for Good Rea-son shall be deemed to have been a voluntary resignation, the terms of Section 5(a) shall apply, and all monies paid to Executive pursuant to this Section 5(c)(1), except for those monies paid pursuant to Section 5(c)(1)(i), shall be immediately returned to Employer.

 

(3) The amounts payable pursuant to Section 5(c)(1) shall be the only amounts Executive shall receive for termination of Executive’s Employment in accordance with this Section

 

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5(c); provided, however, that no amounts shall be payable pursuant to this section 5(c) on or following the date Executive breaches any of Sections 6, 7 or 8 of this Agreement.

 

(d) Release. Notwithstanding anything to the contrary contained herein, no severance payments required hereunder shall be made by Employer unless (i) Executive is in compliance with the re-strictive covenants set forth in Section 6, 7 and 8 of this Agreement and (ii) Executive executes and delivers a general release for the benefit of Employer and its affiliates in a form satisfactory to Employer, which release shall be executed and delivered (and not revoked) promptly (and in no event more than 50 days following the Executive’s termination). Such general release shall not apply to (i) Executive’s rights under any Stock Incentive Plan award agreements or (ii) Executive’s rights, as applicable, to indemnification under Employer’s charter or bylaws, any indemnification agreement or applicable law.

 

(e) Equity Compensation Awards. The terms of the Stock Incentive Plans and any related award agreements and/or notice of grant shall govern the termination, vesting, and/or exercise of Executive’s stock options or other equity awards upon the termination of Executive’s employment for any reason, except to the extent any such terms are modified or supplemented by the provisions of Sections 3(c), and 5(b) and Exhibit A of this Agreement, in which case the terms of this Agreement shall govern to the extent there is any inconsistency.

 

(f) Exclusive Remedy. Executive agrees that the payments set forth in this Agreement shall constitute the exclusive and sole remedy for any termination of Executive’s employment and Executive covenants not to assert or pursue any other remedies, at law or in equity, with respect to this Agreement or with respect to any termination of Executive’s employment for any reason.

 

(g) Termination of Executive’s Office. Following the termination of Executive’s employment for any reason, Executive shall hold no further office or position with Employer or any of its affiliates.

 

(h) Treatment of Parachute Payments under Section 280G. In the event that (i) any payment or benefit received or to be received by Executive hereunder or otherwise payable to the Executive (collectively, the “Payments”) would subject Executive to any excise tax pursuant to Section 4999 of the Internal Revenue Code, or any similar or successor provision (the “Excise Tax”), due to the characterization of the Payments as “excess parachute payments” under Section 280G of the Internal Revenue Code or any similar or successor provision (“Section 280G”), and (ii) the reduction of the amounts payable to Executive under this Agreement to the maximum amount that could be paid without giving rise to the Excise Tax (the “Safe Harbor Cap”) would provide Executive with a greater after-tax amount than if such amounts were not reduced, then the amounts payable to Executive hereunder shall be reduced (but not below zero) to the Safe Harbor Cap. The determination of amounts and order of reduction shall be on the same basis as set forth in Section 6.1(b) of the Key Employee Retention and Severance Plan (as amended from time to time), and solely for this purpose Section 6.1(b) is incorporated herein by reference.

 

Section 6.                                          Restrictions Respecting Confidential Information. Executive hereby covenants and agrees that, during his employment and thereafter, Executive will not, under any circumstance, disclose in any way any Confidential Information (as defined below) to any other person other than (i) at the direction of and for the benefit of Employer, (ii) to his attorney or other advisers in connection with Executive’s enforcement of his rights hereunder, provided such individuals or

 

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entities agree to be bound by the confidentiality restrictions herein contained, and if such Confidential Information is relevant to such enforcement action, to the court or arbitrator, as applicable, and (iii) as required by law, subpoena or other legal process. For the purposes of the foregoing, “Confidential Information” means any information pertaining to the assets, business, creditors, vendors, manufacturers, customers, data, employees, financial condition or affairs, formulae, li-censes, methods, operations, procedures, reports, suppliers, systems and technologies of Employer and its affiliates, including (without limitation) the contracts, patents, trade secrets and customer lists developed or otherwise acquired by Employer and its affiliates; provided, however, that Confidential Information shall exclude any information that was, is, or becomes publicly available other than through disclosure by Executive or any other person known to Executive to be subject to confidentiality obligations to Employer. All Confidential Information is and will remain the sole and exclusive property of Employer and its affiliates. Following the termination of his employment, Executive shall return all documents and other tangible items containing Confidential Information to Employer, without retaining any copies, notes or excerpts thereof.

 

Section 7.                                          Proprietary Matters. Executive expressly understands and agrees that any and all improvements, inventions, discoveries, processes, or know-how that are generated or conceived by Executive during the Term (collectively, the “Inventions”) will be the sole and exclusive property of Employer, and Executive will, whenever requested to do so by Employer (either during the Term or thereafter), execute and assign any and all applications, assignments and/or other instruments and do all things which Employer may deem necessary or appropriate in order to apply for, obtain, maintain, enforce and defend patents, copyrights, trade names or trademarks of the United States or of foreign countries for said Inventions, or in order to assign and convey or otherwise, make available to Employer any and all of Executive’s rights, title, and interest in and to said Inventions, applications, patents, copyrights, trade names or trademarks; provided, however, that the provisions of this Section 7 shall not apply to an Invention that Executive developed entirely on his own time without using Employer’s Confidential Information except for those Inventions that either (i) directly and materially relate, at the time of conception or reduction to practice of the invention, to Employer’s business, or actual or demonstrably anticipated research or development of Employer, or (ii) directly and materially result from any work performed by Executive for Employer. Executive shall promptly communicate and disclose to Employer all inventions conceived, developed or made by him during his employment by Employer, whether solely or jointly with others, and whether or not patentable or copyrightable, (a) which relate to any matters or business of the type carried on or being developed by Employer, or (b) which result from or are suggested by any work done by him in the course of his employment by Employer. Executive shall also promptly communicate and disclose to Employer all material other data obtained by him concerning the business or affairs of Employer in the course of his employment by Employer.

 

Section 8.                                          Nonsolicitation/Non-Compete

 

(a) Executive agrees that throughout his employment and for a period of two (2) years following the termination of his employment with Employer for any reason, he will not directly or indirectly, own, manage, operate, control, or participate in the ownership (including warrants and/or vested or unvested stock options), management, operation, or control of, or be connected with, or have any financial interest in, any Competitor. Ownership, for personal investment purposes only, of

 

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not to exceed (i) individually, two (2%) percent of the outstanding capital stock of any privately held entity, or (ii) voting stock of any publicly held corporation shall not constitute a violation hereof. For purposes of this Agreement, the term “Competitor” shall mean any individual or entity, present or future, then providing any of the following products or services: extracellular matrix technology or any comparable bioscaffold or biomaterial.

 

(b) Executive agrees that during his employment with Employer and for a period of two (2) years following the termination of his employment for any reason, he will not actively solicit for employment, consulting or any other arrangement any employee of Employer or any of its present or future affiliates (while an affiliate).

 

(c) Executive agrees that during his employment with Employer and for a period of two (2) years following the termination of his employment for any reason, he will not influence or attempt to influence customers of Employer or any of its present or future affiliates, either directly or indirectly, to divert their business to any Competitor.

 

(d) The restrictions contained in this Section 8 are necessary for the protection of the business and goodwill of Employer and are considered by Executive to be reasonable for such purpose. Further, Executive represents that these restrictions will not prevent him from earning a livelihood during the restricted period.

 

(e) Sections 6, 7, 8 and the Non-Disparagement Covenant in Section 2(a) shall survive the termination or expiration of this Agreement.

 

Section 9.                                          Equitable Relief. Executive acknowledges and agrees that Employer will suffer irreparable damage which cannot be adequately compensated by money damages in the event of a breach, or threatened breach, of any of the terms and provisions of Sections 6, 7 and 8 of this Agreement, and that, in the event of any such breach, or threatened breach, Employer will not have an adequate remedy at law. It is therefore agreed that Employer, in addition to all other such rights, powers, privileges and remedies that it may have, shall be entitled to injunctive relief, specific performance or such other equitable relief as Employer may request to enforce any of those terms and provisions and to enjoin or otherwise restrain any act prohibited thereby, and Executive will not raise and hereby waives any objection or defense that there is an adequate remedy available at law. Notwithstanding the provisions of Section 19 of this Agreement, Executive agrees that Employer shall be entitled to seek such injunctive relief, without bond, in a court of competent jurisdiction and Executive hereby consents to the jurisdiction of the state and federal courts of Maryland for purposes of such an action. Executive agrees that any claim he may have against Employer or any of its affiliates shall not constitute a defense against the issuance of any such equitable relief. The foregoing shall not constitute a waiver of any of Employer’s rights, powers, privileges and remedies against or in respect of a breaching party or any other person or thing under this Agreement, or applicable law.

 

Section 10.                                   Notice. Any notice, request, demand or other communication hereunder shall be in writing, shall be delivered by hand or sent by registered or certified mail or by reputable overnight delivery service, postage prepaid, to the addressee at the address set forth below (or at such other address as shall be designated hereunder by written notice to the other party hereto) and shall be

 

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deemed conclusively to have been given when actually received by the addressee. All notices and other communications hereunder shall be addressed as follows:

 

If to Executive at the address set forth in the Employer’s payroll records.

 

If to Employer:
 Chairman of the Board of Directors
 ACell, Inc.
 6640 Eli Whitney Drive
 Columbia, MD 21046

 

With a copy to:
 General Counsel (same address as above)

 

or to such other address as either party provides by written notice.

 

Section 11.                                   Legal Counsel. In entering into this Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them.

 

Section 12.                                   Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

Section 13.                                   Governing Law. This Agreement shall be governed by Maryland law, except to the extent Delaware law governs corporate issues relating to Employer (including without limitation any stock options, awards or equity).

 

Section 14.                                   Severability. In the event that any term or provision of this Agreement shall be finally determined to be superseded, invalid, illegal or otherwise unenforceable pursuant to applicable law by a governmental authority having jurisdiction and venue, that determination shall not impair or otherwise affect the validity, legality or enforceability, to the maximum extent permissible by law, (a) by or before that authority of the remaining terms and provisions of this Agreement, which shall be enforced as if the unenforceable term or provision were deleted, or (b) by or before any other authority of any of the terms and provisions of this Agreement.

 

Section 15.                                   Counterparts. This Agreement may be executed in two counterpart copies of the entire document or of signature pages to the document, each of which may be executed by one of the parties hereto, but all of which, when taken together, shall constitute a single agreement binding upon both of the parties hereto.

 

Section 16.                                   Benefit. This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their legal representatives, successors and assigns. Insofar as Executive is concerned, this Agreement, being personal, cannot be assigned; provided, however, that should Executive become entitled to payment pursuant to Section 5 hereof, he may assign his rights to such payment to his legal representatives, successors, and assigns. Without limiting the generality of the foregoing, all representations, warranties, covenants and other agreements made

 

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by or on behalf of Executive in this Agreement shall inure to the benefit of the successors and assigns of Employer.

 

Section 17.                                   Modification. This Agreement may not be amended or modified other than by a written agreement executed by all parties hereto.

 

Section 18.                                   Entire Agreement. Except as provided in Section 5(e) hereof, this Agreement contains the entire agreement of the parties and supersedes all other representations, warranties, agreements and understandings, oral or otherwise, among the parties with respect to the matters contained herein, including any prior employment agreements between Executive and Employer or any affiliate of Employer.

 

Section 19.                                   Arbitration.

 

(a) Executive agrees that any dispute or controversy arising out of, relating to, or in connection with this Agreement or the termination thereof, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by expedited, binding arbitration to be held in Baltimore, Maryland under the administration of and in accordance with the rules of JAMS (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The arbitrator may, but is not required to, award to a substantially prevailing party its reasonable attorney’s fees.

 

(b) The arbitrator shall apply Maryland law to the merits of any dispute or claim, without reference to rules of conflicts of law, except to the extent Delaware law governs as to corporate issues relating to Employer (including without limitation any stock options, awards or equity). The arbitration proceedings shall be governed by the Federal Arbitration Act and law thereunder, and by the Rules, without reference to state arbitration law.

 

(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE IS AGREEING TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF, TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP INCLUDING, BUT NOT LIMITED TO, STATUTORY OR OTHER DISCRIMINATION CLAIMS.

 

Section 20.                                   Representations and Warranties of Executive. In order to induce Employer to enter into this Agreement, Executive represents and warrants to Employer (1) that all material oral or written statements made by Executive in connection with his hiring or in the interview and selection process, including in his resume or CV, application, or interviews, are true, complete and accurate, and that Executive made no material omissions of facts or information that would have been material for Employer to know and consider in the selection process; and (2) to the best of

 

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his knowledge after the review of his personnel files, that: (a) the execution and delivery of this Agreement by Executive and the performance of his obligations hereunder will not violate or be in conflict with any fiduciary or other duty, instrument, agreement, document, arrangement or other understanding to which Executive is a party or by which he is or may be bound or subject; and (b) Executive is not a party to any instrument, agreement, document, arrangement or other understanding with any person (other than Employer) requiring or restricting the use or disclosure of any confidential information or the provision of any employment, consulting or other services.

 

Section 21.                                   Waiver of Breach. Except as may specifically provided herein, the failure of a party to insist on strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement. Any waiver hereto must be in writing.

 

Section 22.                                   Section 409A

 

(a) For purposes of Section 5(c)(1) of this Agreement, a “termination of employment” shall only occur if there has been a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.

 

(b) If Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i), payments and benefits constituting Section 409A “deferred compensation” which are to be paid or provided upon Executive’s separation from service shall be paid or provided commencing on the date that is six (6) months after the date of such separation from service or, if earlier, the date of death (in either case, the “Delayed Payment Date”). All such amounts that would, but for this Section 22(b), become payable prior to the Delayed Payment Date shall be accumulated and paid on the Delayed Payment Date.

 

(c) It is intended that any amounts payable under this Agreement and the Employer’s and Executive’s exercise of authority or discretion hereunder shall comply with and avoid the imputation of any tax, penalty or interest under Section 409A. This Agreement shall be construed and interpreted consistent with that intent.

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the date first written above.

 

 

	
ACELL, INC.
    	
 
    	
PATRICK McBRAYER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/Kyle C. Kerbawy
    	
 
    	
Signed:
    	
/s/ Patrick McBrayer
    
	
 
    	
 
    	
 
    
	
Name: Kyle C. Kerbawy
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title: Chairman of the Board of Directors
    	
 
    	
 
    
					

 

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AMENDED EXHIBIT A to Second Amended Senior Executive Employment
 Agreement (Patrick McBrayer)

 

Equity Awards. This Second Amended Exhibit A (“Exhibit A”) is attached to and incorporated by reference into the Second Amended Senior Executive Employment Agreement between ACell, Inc., and Patrick McBrayer (the “Agreement”), in order to provide the details of the equity awards from Employer to Executive pursuant to Section 3(c) of that Agreement. The provisions of this Exhibit take priority over the Stock Incentive Plan and any related stock plans, grants, subscription agreements and the like, and to the extent of any inconsistencies are between this Exhibit and the Stock Incentive Plan or other stock related documents, the provisions of this Exhibit, take precedence.

 

1)                                     The equity awards shall be pursuant to Employer’s 2011 Stock Option and Grant Plan, or such other stock option plan as may be created subsequently, and the standard form stock option agreements pursuant thereto, which govern the terms and conditions of all options, except to the extent modified by the Agreement and this Exhibit A.

 

2)                                     The exercise price for all equity award options shall be $1.17, which is the Section 409(A) valuation as of the Effective Date of the Agreement.

 

3)                                     The percentages awarded to Executive shall be based upon the total amount of fully diluted, outstanding shares (55,022,116) as of the effective date of the Agreement.

 

4)                                     All equity awards have been or will be made within a reasonable time from the commencement of Executive’s employment but, as set forth below, vesting will occur based upon the specific terms of each award.

 

5)                                     References to a “Transaction” herein, for purposes of option vesting and related valuation of ACell, shall mean [*]. The Board shall have the sole discretion to make such determinations.

 

6)                                     Equity Award “A” is in the amount of 825,332 options, equal to 1.5%. In accordance with the terms of the original Senior Executive Employment Agreement effective January 16, 2016, all options in Equity Award “A” are vested as of the effective date of this Second Amendment.

 

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7)                                     Equity Award “B” is in the amount of 275,110 options, equal to 0.5%. None of the options in this Award B shall vest unless and until a Transaction is closed in which ACell’s valuation is at least [*]. In the event of a Transaction that closes with a valuation of at least [*], the number of options in Equity Award “B” that vest will be determined by the following calculations: ((ACell Valuation – [*]) / [*]). The result, which shall not be greater than one (1) is then multiplied by 275,110 to determine the options to be vested, and that number of options will vest immediately upon the closing of the eligible Transaction. Once the vested options are determined, any unvested options are automatically cancelled.

 

8)                                     Equity Award “C” is in the amount of 550,221 options or 1%. This Award C shall not vest unless and until a Transaction is closed in which ACell is valued at [*] or more. If such a Transaction with a valuation of at least [*] is closed, Equity Award C shall immediately vest upon closing. Award C is additive or cumulative with Award B, so that if the target for Award C is achieved, Executive would receive both Awards B and C.

 

9)                                     (Intentionally deleted in this Second Amended Agreement.)

 

 

	
ACELL, INC.
    	
 
    	
PATRICK McBRAYER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/Kyle C. Kerbawy
    	
 
    	
Signed:
    	
/s/ Patrick McBrayer
    
	
 
    	
 
    	
 
    
	
Name: Kyle C. Kerbawy
    	
 
    	
Name:   Patrick McBrayer
    
	
 
    	
 
    	
 
    
	
Title: Chairman of the Board of Directors
    	
 
    	
Title: President and Chief   Executive Officer
    
					

 

14EXHIBIT 10.20

 

ACELL, INC.

 

SEPARATION PLAN

 

Effective:  November 7, 2016

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
Introduction
    	
1
    
	
 
    	
 
    
	
Who is Eligible to   Participate in this Plan?
    	
1
    
	
 
    	
 
    
	
Who is Not Eligible to   Participate in this Plan?
    	
1
    
	
 
    	
 
    
	
When Will an Eligible   Employee be Entitled to Receive Benefits under this Plan?
    	
2
    
	
 
    	
 
    
	
What is a Qualifying   Termination of Employment?
    	
2
    
	
 
    	
 
    
	
What is Not a   Qualifying Termination of Employment?
    	
2
    
	
 
    	
 
    
	
What Other Conditions   Must be Satisfied to Receive Benefits?
    	
3
    
	
 
    	
 
    
	
What if I am on an   Approved Leave of Absence When My Job is Eliminated?
    	
3
    
	
 
    	
 
    
	
How Much Separation Pay   Does the Plan Provide?
    	
4
    
	
 
    	
 
    
	
How are Weeks of Base   Pay Determined under the Plan?
    	
4
    
	
 
    	
 
    
	
How are Years of   Service Determined under the Plan?
    	
4
    
	
 
    	
 
    
	
How and When Will   Separation Pay be Paid?
    	
5
    
	
 
    	
 
    
	
What Happens if a   Participant Returns to Work with the Company while Receiving Separation Pay?
    	
5
    
	
 
    	
 
    
	
What Other Benefits   May Be Provided To Plan Participants?
    	
5
    
	
 
    	
 
    
	
What General   Rules Apply to this Plan?
    	
6
    
	
 
    	
 
    
	
What Else Does a   Participant Need to Know about the Plan?
    	
9
    
	
 
    	
 
    
	
Definitions   and Interpretations
    	
13
    
	
 
    	
 
    
	
Your   Rights Under Erisa
    	
15
    

 

i

 

Introduction

 

ACell, Inc. (the “Company”) hereby establishes the ACell, Inc. Separation Plan (the “Plan”), effective as of November 7, 2016, to provide separation benefits to eligible employees who experience a loss of employment under the terms and conditions of the Plan. The Plan replaces and supersedes any prior severance or retention plans, separation or severance benefits, or any related plans, policies and/or practices of the Company.

 

The Plan is intended to fall within the definition of an “employee welfare benefit plan” under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Benefits under this Plan are not provided as consideration for the rendering of any past or future services to the Company. An employee has no right under or interest in the Plan until the employee is eligible to receive benefits.

 

Capitalized terms that are not defined in the body of this document shall have the meanings set forth in Appendix A. A reference to all other capitalized terms is also included in Appendix A.

 

Who is Eligible to Participate in this Plan?

 

Non-temporary, full-time employees of the Company employed in the United States and on the United States payroll are eligible to participate in the Plan provided they are:

 

(1)           actively at work,

 

(2)           eligible to participate in Employer-sponsored employee benefit plans,

 

(3)           regularly scheduled to work at least 35 hours per week, and

 

(4)           not excluded under the next section.

 

Such employees will be referred to as Eligible Employees.

 

For employees who are on an approved leave of absence, please see “What if I am on an Approved Leave of Absence When My Job is Eliminated?”.

 

Who is Not Eligible to Participate in this Plan?

 

An individual is not eligible to participate in this Plan if he or she is:

 

(1)                                 designated by the Company as an independent contractor or consultant and not as an employee at the time of any determination for benefits;

 

(2)                                 being paid by or through an employee leasing company or other third party agency;

 

(3)                                 covered by an individual employment, separation or other written agreement or contract that has any provision for any type of separation benefits, including without limitation a Key Employee Retention and Severance Plan (“KERSA”) Participation Agreement. However, upon termination of KERSA, provided that a covered employee who has signed a KERSA Participation Agreement timely

 

1

 

executes a termination of that Participation Agreement, waives the one-year notice required under KERSA, and relinquishes any and all rights under KERSA effective immediately, such employee will then become an Eligible Employee hereunder if he or she otherwise satisfies the requirements for Plan participation.

 

When Will an Eligible Employee be Entitled to Receive Benefits under this Plan?

 

An Eligible Employee becomes eligible to receive Separation Pay under the Plan when such individual has experienced a Qualifying Termination of Employment, has satisfied the conditions for receipt of Separation Pay as set forth herein, and has met all of the requirements under this Plan. An Eligible Employee who experiences a Qualifying Termination of Employment and meets the conditions set forth herein shall be referred to as a “Participant.”

 

What is a Qualifying Termination of Employment?

 

A Qualifying Termination of Employment is generally the termination by the Company of an Eligible Employee’s employment relationship with the Company as the result of a job elimination, job discontinuation, office closing, office relocation which would require the Eligible Employee to commute 50 miles or more from such individual’s then current workplace, reduction in force, business restructuring, or such other circumstances as the Company deems appropriate for the payment of separation benefits under this Plan. The date of an Eligible Employee’s Qualifying Termination of Employment is the last day of the Eligible Employee’s employment with the Company. In no event shall a Qualifying Termination of Employment include a voluntary termination or voluntary resignation by the Eligible Employee.

 

What is Not a Qualifying Termination of Employment?

 

An Eligible Employee’s termination of employment shall not be considered a Qualifying Termination of Employment in the following circumstances, all as determined in the Company’s sole discretion:

 

(1)                                 the Eligible Employee’s unsatisfactory job performance, which shall include, by way of example and not limitation, the Eligible Employee’s poor or unacceptable performance, attendance, and/or punctuality; inappropriate or unacceptable conduct; unsatisfactory or unacceptable attitude; violation of or disregard for the rules and procedures of the Company (including, but not limited to, any code of conduct or policies of the Company from time to time); the improper disclosure of confidential information or trade secrets; insubordination or other failure or refusal to carry out an assigned task; or fraud, misrepresentation or any other act of dishonesty. Any such determination, made in the Company’s sole discretion, does not require the Company to provide advance notice or warning or any type of progressive discipline;

 

(2)                                 the Eligible Employee’s voluntary resignation, retirement, job abandonment, disability or death;

 

(3)                                 the Eligible Employee is offered, but refuses, employment with the Company or any subsidiary or related entity of the Company including a joint venture owned by

 

2

 

any such entity, in a position that provides the Eligible Employee with substantially equivalent base pay and incentive compensation opportunity and requires substantially similar skills and abilities, and does not require the Eligible Employee to commute more than 50 miles from the Eligible Employee’s then current workplace;

 

(4)                                 the Eligible Employee works in a business (or the portion of such business) of the Company which is (i) sold in whole or in part to another entity, whether by sale of stock or assets, (ii) merged or consolidated with another entity or is part of a similar corporate transaction in which the Company is not the surviving entity, or (iii) outsourced to another entity, and in each situation the Eligible Employee is offered employment with the purchaser or surviving business or the entity to which the business is outsourced (whether or not he or she accepts any such offer) in a position that provides the Eligible Employee with substantially equivalent base pay and incentive compensation opportunity and requires substantially similar skills and abilities, and does not require the Eligible Employee to commute more than 50 miles from his or her then current workplace;

 

(5)                                 the Eligible Employee is demoted, incurs a salary or pay reduction, or other reduction in compensation, or any other change of position.

 

(6)                                 the Eligible Employee experiences a layoff or reduction in force which is temporary.

 

What Other Conditions Must be Satisfied to Receive Benefits?

 

An Eligible Employee who experiences a Qualifying Termination of Employment must satisfy the following requirements to receive Separation Pay:

 

(1)                                 be in good standing on the date of the Qualifying Termination of Employment;

 

(2)                                 sign and not revoke an agreement and general release in a form acceptable to the Company (a “Release”) under which, among other things, the Eligible Employee releases and discharges the Company from all legally waivable claims and liabilities relating to the Eligible Employee’s employment or termination of employment with the Company. If applicable, the employee must also agree, for a specified period of time, not to work for a competitor of the Company, solicit Company customers or hire any employees of the Company, including, without limitation, honoring post-termination obligations under an Eligible Employee’s ACell, Inc. Employee Proprietary Information, Inventions, and Non-Competition Agreement.

 

What if I am on an Approved Leave of Absence When My Job is Eliminated?

 

Employees who are on: (i) a military leave covered by the Uniformed Services Employment and Reemployment Rights Act (“USERRA”), or (ii) any other approved leave of absence, shall have their eligibility for Plan benefits determined by the Company in accordance with any applicable

 

3

 

law which applies to such leave of absence or based on other facts and circumstances in the Company’s discretion.

 

How Much Separation Pay Does the Plan Provide?

 

Except as provided in the Minimum Separation Pay Schedule, the Company shall provide a Participant with Separation Pay as follows:

 

(1)                                 For Participants who have been employed by the Company for three (3) Years of Service or less, one Week of Base Pay for each Year of Service (as such terms are defined below); or

 

(2)                                 For Participants who have been employed by the Company for more than three (3) Years of Service, two Weeks of Base Pay for each Year of Service, subject to a maximum of fifty-two (52) Weeks of Base Pay.

 

Employees holding positions listed in the Minimum Separation Pay Schedule will receive the greater of the amount determined under (1) or (2) above or the amount listed in the Minimum Separation Pay Schedule.

 

Minimum Separation Pay Schedule

 

	
Title
    	
 
    	
Minimum Weeks of Pay
    	
 
    
	
Director,   Medical Director
    	
 
    	
16 weeks
    	
 
    
	
Vice   President, Chief Science Officer
    	
 
    	
26 weeks
    	
 
    
	
Senior   Vice President
    	
 
    	
52 weeks
    	
 
    

 

How are Weeks of Base Pay Determined under the Plan?

 

A Week of Base Pay is a participant’s weekly base salary at the time of the participant’s Qualifying Termination of Employment. A Week of Base Pay shall not include bonuses, overtime pay, shift differential, commissions, equity, incentive or deferred compensation or other additional compensation such as stipends or other allowances. Base Pay shall include any pre-tax or after­tax salary deductions (e.g., Roth) such as, but not limited to, 401(k) plan, welfare or fringe benefits program deductions.

 

How are Years of Service Determined under the Plan?

 

Years of Service mean a Participant’s continuous and uninterrupted years of employment with the Employer between a Participant’s date of hire and date of Qualifying Termination of Employment, rounded to the next full year in those situations where the Participant has worked seven (7) or more

 

4

 

full months in a service year. A service year is the 12-month period starting on the anniversary date of the Eligible Employee’s date of hire. The Plan Administrator will determine the calculation of Years of Service and make any adjustments, if necessary, for breaks in service of six (6) months or less, service with any entity acquired by the Company, or reemployment scenarios.

 

How and When Will Separation Pay be Paid?

 

Separation Pay shall generally be paid to a Participant as soon as practical following a Qualifying Termination of Employment and Participant’s execution of a Release, in periodic installments in accordance with the Company’s normal payroll practices. Such payments shall continue for the number of weeks for which the Participant is entitled to Separation Pay. If a Participant dies while receiving Separation Pay, the Company shall pay the unpaid balance of such Separation Pay, if any, in a single lump sum to the Participant’s estate.

 

What Happens if a Participant Returns to Work with the Company while Receiving Separation Pay?

 

Separation Pay shall cease upon the Participant’s rehire date. The Plan Administrator will determine whether any unpaid balance will resume following a subsequent employment termination and how Years of Service will be calculated for entitlement to Plan benefits upon a subsequent termination of employment.

 

What Other Benefits May Be Provided To Plan Participants?

 

In addition to Separation Pay, Participants may be eligible for the following benefits.

 

Incentive Compensation

 

The Company has the discretion to accelerate or to pro-rate the payment of certain discretionary bonus awards other than Stock Options upon a Participant’s Qualifying Termination of Employment. In making such determination, the Company may, without limiting its discretion, consider factors including, but not limited to, the terms of the specific award plan or program, the time of year in which the Qualifying Termination of Employment occurs, and individual or corporate performance. The Company may also determine, in its discretion and pursuant to award terms and Company practice, whether a Participant is eligible to receive any award payments for the year immediately prior to the year in which a Qualifying Termination of Employment has occurred if such payment has not yet been made for such year. Notwithstanding the foregoing, no acceleration or pro-ration shall be permitted if it would cause an impermissible acceleration under Code Section 409A.

 

Previously Granted Stock Options

 

Unvested stock options that were previously granted (“Unvested Options”) shall be governed by the terms and conditions of the applicable option grant or award and the 2011 Stock Option and Grant Plan, or such other plan under which the particular options may have been issued unless the terms of this paragraph would provide more favorable treatment for a Participant.

 

5

 

In the event of a Company Sale (as defined below) any Unvested Options which are not expressly assumed, substituted on an equivalent basis or otherwise continued following a Company Sale, shall become 100% vested on the date of the Company Sale. For the avoidance of doubt, Unvested Options described in the preceding sentence become 100% vested upon the date of a Company Sale even if the Eligible Employee has not incurred a Qualifying Termination of Employment as long as the Eligible Employee is not terminated for cause.

 

In the event of a Company Sale where Unvested Options are assumed, substituted on an equivalent basis or otherwise continued following a Company Sale, Unvested Options shall only become 100% vested and exercisable if an Eligible Employee incurs a Qualifying Termination of Employment within 12 months of the date of the Company Sale. Options will remain exercisable for a period of 12 months from the Participant’s Qualifying Termination of Employment.

 

For purposes of the Plan, a Company Sale shall mean a sale or merger under which more than 50% of the Company’s stock or assets or a combination thereof (both stock and assets to be measured by value) are acquired by or transferred to, or merged into, a different unrelated entity. A Company Sale may occur in either one transaction or a series of related transactions between the same or related parties that are closed in less than 12 months, and in the case of a series of transactions, the operative date shall be the closing of the last transaction which achieves the 50% threshold required hereunder.

 

Unused Vacation Benefits

 

Employees will receive vacation pay consistent with the Company’s vacation policy then in effect.

 

Unused Paid Time Off

 

Employees will receive paid time off (“PTO”) consistent with the Company’s PTO policy then in effect.

 

No Other Benefits

 

If a Participant receives Separation Pay, such Participant shall not be entitled to receive any other separation, notice or termination payments on account of the Participant’s employment or termination of employment with the Company under any other plan, policy, program or agreement.

 

What General Rules Apply to this Plan?

 

Amendment and Termination and Continuation of Plan Upon Company Sale

 

The Company reserves the right, in its sole and absolute discretion, to unilaterally terminate, amend or modify the Plan, in whole or in part, at any time and for any reason, either retrospectively or prospectively, generally or in individual circumstances, and with or without prior notice. If the Plan is terminated, amended or modified, individuals’ rights to participate in, or to receive benefits under, the Plan may be changed, eliminated altogether, reduced, or otherwise adversely affected; provided, however, that Separation Pay payable (or which becomes payable) to a Participant who has already incurred a Qualifying Termination of Employment prior to such termination, amendment or modification of the Plan, shall not be reduced by the termination, amendment or

 

6

 

modification. Also, in the event of a Company Sale, as defined above, this Plan may not be terminated or modified until more than one (1) year after the date of the closing of the Company Sale (or last transaction in the event the Company Sale is consummated by a series of transactions), it being the intent of this Plan that Eligible Employees and/or Participants shall have the benefits of this Plan in the event of and for a specified period following a Company Sale.

 

Correction of Errors

 

The Plan Administrator expressly reserves the right to correct any and all errors in the administration of the Plan, including errors in determining initial eligibility and/or calculation of Separation Pay under the Plan. Any past failure to correct any error in the operation of the Plan shall not prevent or otherwise restrict the Plan Administrator from correcting any future error.

 

No Additional Rights Created

 

Neither the establishment of this Plan, nor any modification thereof, nor the payment of any benefits hereunder, shall be construed as giving to any Participant, Eligible Employee (or any beneficiary of either), or other person, any legal or equitable right against the Company or any officer, director or employee or agent of the Company; and in no event shall the terms and conditions of employment by the Company of any Eligible Employee be modified or in any way affected by this Plan.

 

Binding Decisions

 

The determinations of the Company with respect to Years of Service, employment history, employee performance or conduct, reasons for termination, base pay, absences, and all other relevant matters shall be final, binding and conclusive for all purposes of this Plan and for all legal purposes.

 

Clawback Provisions

 

If the Company’s financial results are materially restated, the Company may review the circumstances surrounding the restatement and determine whether and which Eligible Employees or Participants of the Plan will be required to forfeit the right to receive any future payments of Separation Pay and/or repay any prior payments determined by the Company to have been inappropriately received. If the Company’s financial results are restated due to fraud, any Eligible Employee or Participant who the Company determines participated in or is responsible for the fraud causing the need for the restatement forfeits the right to receive any future payments of Separation Pay and will be required to repay any amounts paid under the Plan. Any repayments required under this Section must be made within ten (10) days following written demand from the Company.

 

Unfunded Plan

 

The Plan shall not be funded. Any amounts payable under the Plan shall be paid out of the general assets of the Company and each Participant and his or her beneficiaries shall be deemed to be a general unsecured creditor of the Company. No Participant shall have any right to, or interest in, any assets of any Company which may be applied by the Company to the payment of benefits or

 

7

 

other rights under the Plan. In all events, it is the intent of the Company that the Plan be treated as unfunded for tax purposes and for purposes of Title I of ERISA.

 

Construction and Choice of Law and Forum

 

The terms and provisions of the Plan shall be construed, whenever possible, to be in conformity with the requirements of ERISA, or any subsequent laws or amendments thereto. To the extent not governed by ERISA, or not in conflict with the preceding sentence or another provision in the Plan, the construction and administration of the Plan shall be governed by Delaware law (without reference to its conflicts of law provisions). All actions and proceedings arising out of, in connection with or in direct or indirect relation to this Plan shall be litigated exclusively in the courts of Baltimore, Maryland and in no other jurisdiction or venue. All Participants or other affected persons consent to both personal and subject matter jurisdiction in the courts of Baltimore, Maryland. All Participants or affected persons further waive trial by jury in any judicial proceeding involving any matter arising out of, related to, or connected with, this Plan or any claims or alleged rights hereunder.

 

Severability

 

Should any provisions of the Plan be deemed or held unlawful or invalid for any reason, such fact shall not adversely affect other provisions of the Plan unless such determination shall render impossible or impracticable the functioning of the Plan, and in such case, an appropriate provision or provisions shall be adopted so that the Plan may continue to function properly.

 

Incompetency

 

In the event that the Plan Administrator finds that a Participant (or designated beneficiary) is unable to care for his or her own affairs because of illness or accident, then benefits payable hereunder, unless claim has been made therefor by a duly appointed guardian, committee, or other legal representative, may be paid in such manner as the Plan Administrator shall determine, and the application thereof shall be a complete discharge of all liability for any payments or benefits to which such Participant (or designated beneficiary) was or would have been otherwise entitled under this Plan.

 

Payments to a Minor

 

Any payments to a minor from this Plan may be paid by the Plan Administrator in its sole and absolute discretion (a) directly to such minor; (b) to the legal or natural guardian of such minor; or (c) to any other person, whether or not appointed guardian of the minor, who shall have the care and custody of such minor. The receipt of payment by such individual shall be a complete discharge of all liability under the Plan therefor.

 

Plan Not a Contract of Employment

 

Nothing contained in this Plan shall be held or construed to create any liability upon the Employer to retain any Eligible Employee in its service. All Eligible Employees shall remain subject to termination or corrective action to the same extent as if the Plan had not been put into effect.

 

8

 

Non transferability

 

In no event shall the Company make any payment under this Plan to any assignee or creditor of a Participant, except as otherwise required by law. Prior to the time of a payment hereunder, a Participant shall have no rights by way of anticipation or otherwise to assign or otherwise dispose of any interest under this Plan, nor shall rights be assigned or transferred by operation of law.

 

Company’s Successors

 

Any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company shall assume both the Company’s obligations and its rights under this Plan in the same manner and to the same extent as the Company if no such succession had taken place, including the requirement that this Plan be kept in effect, without modification, for at least one (1) year following any Company Sale.

 

Code Section 409A Compliance

 

It is intended that the Plan comply in all respects with the applicable requirements of Code Section 409A or any applicable exceptions to Section 409A. Accordingly, all provisions of the Plan shall be interpreted so as to comply with such applicable requirements and, to the extent necessary, shall be deemed amended so as to comply until a formal amendment can be adopted. Further, all rights and benefits created under the Plan are subject to such interpretation and modification so as to not be subject to the adverse tax consequences and penalties of Code Section 409A.

 

State Unemployment Benefits

 

Participants’ eligibility for state unemployment benefits may or may not be affected by receipt of benefits under the Plan. Each state has different rules regarding the impact of separation benefits on its residents’ eligibility for state unemployment benefits. Participants should contact their local unemployment office regarding eligibility for state unemployment benefits. The Company will not contest unemployment compensation benefits following the period that Separation Pay is paid to Participant. Should a Participant file for and receive unemployment compensation for any period of time which is covered by Separation Pay under the Plan, the amount of unemployment compensation shall be deducted from the amount of Separation Pay to the Participant. Notwithstanding the foregoing, the Company may contest unemployment compensation benefits for any individual who was terminated for cause.

 

Tax Withholding

 

All Separation Pay under the Plan shall be subject to applicable withholding taxes.

 

What Else Does a Participant Need to Know about the Plan?

 

Claims and Appeal Procedures

 

An Eligible Employee or the Eligible Employee’s beneficiary (if applicable) may file a written claim with the Plan Administrator with respect to the Eligible Employee’s rights to receive Separation Pay under the Plan. The Eligible Employee will be informed of the decision of the Plan

 

9

 

Administrator with respect to the claim within 60 days after it is filed. Under special circumstances, the Plan Administrator may require an additional period of not more than 45 days to review a claim. If this occurs, the Eligible Employee will be notified in writing as to the length of the extension, the reason for the extension, and any other information needed in order to process the claim. If an Eligible Employee is not notified within the 60-day (or 120-day, if so extended) period, he or she may consider the claim to be denied.

 

If a claim is denied, in whole or in part, the Eligible Employee will be notified in writing of the specific reason(s) for the denial, the plan provision(s) on which the decision was based, what, if any, additional material or information is relevant to the Eligible Employee’s case, and what procedure the Eligible Employee should follow to get the claim reviewed again. The Eligible Employee then has sixty (60) days to appeal the decision to the Plan Administrator.

 

The appeal must be submitted in writing to the Plan Administrator. An Eligible Employee may request to review pertinent documents, and may submit a written statement of issues and comments.

 

A decision as to an Eligible Employee’s appeal will be made within sixty (60) days after the appeal is received. Under special circumstances, the Plan Administrator may require an additional period of not more than 60 days to review an appeal. If this occurs, the Eligible Employee will be notified in writing as to the length of the extension, not to exceed 120 days from the day on which the appeal was received.

 

If an Eligible Employee’s appeal is denied, in whole or in part, he or she will be notified in writing of the specific reason(s) for the denial and the plan provision(s) on which the decision was based. The decision on an appeal of the Plan Administrator will be final and binding on all parties and persons affected thereby. If an Eligible Employee is not notified within the 60-day (or 120-day, if so extended) period, he or she may consider the appeal as denied. Notwithstanding anything herein to the contrary, no individual may file a lawsuit until these procedures have been exhausted.

 

Plan Administration and Benefit Determination

 

In carrying out the fiduciary responsibilities established under this Plan, the Plan Administrator shall have full discretionary authority to interpret the Plan, the right to remedy possible ambiguities, inequities, inconsistencies or omissions and to apply its provisions to individual situations. This discretionary authority may only be challenged by either the Company or an employee if the discretionary authority is exercised in an arbitrary and capricious manner. The Plan Administrator shall also have authority to:

 

(1)                                 Designate such other persons as necessary to carry out the fiduciary responsibilities under this Plan;

 

(2)                                 Any designation as set forth above shall be put in writing;

 

(3)                                 Any person or group of persons may be designated to carry out one or more of the Plan Administrator’s responsibilities under this Plan, including the establishment of a review committee to determine eligibility for benefits; and

 

10

 

(4)                                 The Plan Administrator or any person or group of persons designated by the Plan Administrator, as set forth above, may employ one or more persons to render advice with regard to any responsibility that such named Plan Administrator or designated individual has under the Plan

 

Your Rights under ERISA

 

Appendix B sets forth “Your Rights under ERISA.”

 

Plan Document

 

This document shall constitute both the plan document and summary plan description and shall be distributed to all employees in this form.

 

Other Important Facts

 

	
OFFICIAL NAME OF THE PLAN:
    	
The ACell, Inc. Separation Plan
    
	
SPONSOR:
    	
ACell, Inc.
   6640 Eli Whitney 
   Drive Columbia, MD 21046 
   800-826-2926
    
	
EMPLOYER IDENTIFICATION 
   NUMBER (EIN)
    	
04-3496380
    
	
PLAN NUMBER:
    	
501
    
	
TYPE OF PLAN:
    	
Employee Welfare Benefit Plan
    
	
END OF PLAN YEAR
    	
December 31st
    
	
TYPE OF ADMINISTRATION:
    	
Employer Administered or Third 
   Party Administrator
    
	
PLAN ADMINISTRATOR:
    	
As defined in Appendix A 
   6640 Eli Whitney Drive 
   Columbia, MD 21046 
   800-826-2926
    
	
AGENT FOR SERVICE OF LEGAL PROCESS:
    	
Legal Department 
   6640 Eli Whitney Drive 
   Columbia, MD 21046 
   800-826-2926 
    

 

11

 

	
 
    	
Service of legal process may also 
   be made upon the Plan 
   Administrator.
    
	
EFFECTIVE DATE:
    	
November 7, 2016
    

 

The Plan Administrator or its delegate keeps records of the Plan and is responsible for the administration of the Plan. The Plan Administrator will also answer any questions the Eligible Employee may have about the Plan. Service of legal process may be made upon the Plan Administrator.

 

No individual may, in any case, become entitled to additional benefits or other rights under this Plan after the Plan is terminated. Under no circumstances, will any benefit under this Plan ever vest or become nonforfeitable, except as provided in the “Amendment and Termination” section.

 

12

 

APPENDIX A

 

DEFINITIONS AND INTERPRETATIONS

 

The following definitions and interpretations of important terms apply to the Plan.

 

1.                                      Company (or Employer). The Company means ACell, Inc. and each United States subsidiary of the Company that participates in the Plan with the approval of the Board of Directors of the Company.

 

2.                                      Plan Administrator. The Company shall serve as the Plan Administrator within the meaning of all pertinent sections of ERISA with responsibility for the day to day administration of the Plan. The Company may delegate any administrative or operational functions as provided under “Plan Administration and Benefit Determination.”

 

Additionally, the following terms shall have the meanings given to them in the sections of the Plan referenced below. The page numbers for these sections can be found in the table of contents.

 

	
Code
    	
How and When will Separation Pay be Paid?
    
	
Company
    	
Introduction
    
	
Eligible Employee
    	
Who is Eligible to Participate in this   Plan?
    
	
ERISA
    	
Introduction
    
	
Participant
    	
When Will an Eligible Employee be Entitled   to Receive Benefits Under this Plan?
    
	
Plan
    	
Introduction
    
	
Qualifying Termination of Employment
    	
What is a Qualifying Termination of   Employment?
    
	
Separation Pay
    	
How Much Separation Pay Does the Plan   Provide?
    
	
Temporary Employee
    	
Who is Not Eligible to Participate in this   Plan?
    
	
USERRA
    	
What if I am on an Approved Leave of   Absence When My Job is Eliminated?
    
	
Weeks of Base Pay
    	
How are Weeks of Base Pay Determined under   the Plan?
    

 

13

 

	
Years of Service
    	
How are Years of Service Determined under   the Plan?
    

 

14

 

APPENDIX B

 

YOUR RIGHTS UNDER ERISA

 

As a participant in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all plan Participants shall be entitled to:

 

Receive Information About Your Plan and Benefits

 

Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as worksites and union halls, all documents governing the plan, including insurance contracts, and a copy of the latest annual report (Form 5500 Series) filed by the plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

 

Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the plan and summary plan description. The Plan Administrator may make a reasonable charge for the copies.

 

Prudent Actions by Plan Fiduciaries

 

In addition to creating rights for plan Participants ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called “fiduciaries’ of the plan, have a duty to do so prudently and in the interest of you and other plan Participants and beneficiaries. No one, including the Company or any other person may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit or exercising your rights under ERISA.

 

Enforcing Your Rights

 

If your claim for a welfare benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

 

Under ERISA there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents or the latest annual report from the plan and do not receive them within 30 days, you may file suit in a Federal Court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Administrator. If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a State or Federal Court. If it should happen that plan fiduciaries misuse the plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal Court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the persons you have sued to pay these cost and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

 

15

 

Assistance With Your Questions

 

If you have any questions about your plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in you telephone directory or the Division of Technical Assistance and Inquiries. Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

 

16

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