EMPLOYMENT AGREEMENT
Exhibit
10.6
AGREEMENT
(the “Agreement”),
dated
as of January
8, 2008, by and between ZIOPHARM Oncology, Inc., a Delaware corporation with
principal executive offices at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000
(the “Company”),
and
XXXXXXXX X. XXXXX, M.D., Ph.D., residing at 0000 Xxxxxxxxx Xxxxx Xxxx,
Xxxxxxxxx, XX 00000 (the “Executive”).
W
I T N E S S E T H:
WHEREAS,
the Company desires to employ the Executive as Chief Executive Officer of the
Company, and the Executive desires to serve the Company in that capacity, upon
the terms and subject to the conditions contained in this
Agreement;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Employment.
(a) Services.
During the Term (as hereinafter defined), the Executive will be employed by
the
Company as its Chief Executive Officer. The Executive will report directly
to
the Board of Directors of the Company (the "Board") and shall perform such
duties assigned by the Board as are consistent with his position as Chief
Executive Officer (the “Services”). The Executive agrees to perform such duties
faithfully, to use his best efforts to advance the best interests of the
Company, to devote substantially all of his business time, attention and
energies to the business of the Company, and while he remains employed, not
to
engage in any other business activity, whether or not such business activity
is
pursued for gain, profit or other pecuniary advantage, that will interfere
with
the performance by the Executive of his duties hereunder or that will adversely
affect, or reflect negatively upon, the Company; provided, however, that the
Executive may engage in the following activities to the extent that such
activities, individually or collectively, do not interfere with the performance
of the Executive’s duties and responsibilities hereunder: (A) fulfilling civic
responsibilities, (B) attending to personal financial matters, (C) responding
to
inquiries from patients and their physicians, (D) serving as an expert witness
in cases involving Sarcoma, (E) giving and attending academic lectures in
connection with the Executive’s affiliation with the Yale Medical School, the
Yale School of Management (Yale’s business school), and the National Academy of
Sciences, (F) writing and editing medical, scientific and business textbooks,
(G) serving as a director of Delcath Systems, Inc., the Sarcoma Foundation
of
America, and the Police Organization Providing Peer Assistance (POPPA), Inc.
and
(H) engaging in such other activities as the Board may approve from time to
time.
(b) Acceptance.
Executive hereby accepts such employment and agrees to render the
Services.
2. Term.
The
Executive's employment under this Agreement (the “Term”) shall commence as of
the Effective Date (as hereinafter defined) and shall continue for a term of
three (3) years, unless sooner terminated pursuant to Section 9 of this
Agreement. Notwithstanding anything to the contrary contained herein, the
provisions of this Agreement governing protection of Confidential Information
shall continue in effect as specified in Section 6 hereof and survive the
expiration or termination hereof. The Term may be extended for additional one
(1) year periods upon mutual written consent of the Executive and the
Board.
3. Place
of
Performance.
The
duties to be performed by the Executive hereunder shall be performed primarily
at the executive offices of the Company in New York, New York, subject to
reasonable travel requirements on behalf of the Company, or such other place
as
the Board may reasonably designate, subject to the provisions of Section 9(d)
below. The Executive acknowledges that the Company’s operations are conducted
substantially at its offices in Boston, Massachusetts and that the Executive
will be required to travel frequently to Boston, Massachusetts.
4. Directorship.
The
Company shall use its best efforts to cause the Executive to be elected as
a
member of the Board throughout the Term and shall include him in the management
slate for election as a director at every stockholders meeting during the Term
at which his term as a director would otherwise expire. The Executive agrees
to
accept election, and to serve during the Term, as director of the Company,
without any compensation therefor other than as specified in this
Agreement.
5. Compensation.
As full
compensation for the performance by the Executive of his duties under this
Agreement, the Company shall pay the Executive as follows:
(a) Base
Salary. The
Company shall pay Executive a salary (the “Base Salary”) equal to Four Hundred
Twenty Thousand Dollars ($420,000) per year. Payment shall be made semi-monthly,
on the fifteenth and the last day of each calendar month. The
Board
shall annually review the Base Salary to determine whether an increase in the
amount thereof is warranted.
(b) Performance
Bonus. The Executive shall receive a targeted performance bonus (the
“Performance
Bonus”),
based
on his performance as determined by the Board for each calendar year ending
during the Term (each a “Bonus
Calculation Year”).
The
target amount of the Performance Bonus shall be $300,000, with the amount of
the
actual bonus payable each year determined in accordance with the provisions
of
Schedule
5(b)
attached
hereto. The amount so determined shall be payable within 30 days following
each
anniversary of the date of this Agreement during the Term, provided
that the
Executive remains employed by the Company on such anniversary date.
(c) Discretionary
Bonus. At the sole discretion of the Board, the Executive shall be eligible
to
receive an additional annual bonus (the “Discretionary
Bonus”)
in
such amount as may be determined by the Board based upon his performance on
behalf of the Company during each Bonus Calculation Year. The Discretionary
Bonus, if any, shall be payable at such times and in such manner as the Board
may determine in
its
sole discretion.
(d) Stock
Options and Restricted Stock Awards. As additional compensation for the services
to be rendered by the Executive pursuant to this Agreement, the Company shall
grant the Executive an
award
of restricted Common Stock of the Company (“Restricted
Stock”),
which
grant shall be effective as of the date of this Agreement. The Restricted Stock
shall be governed by the terms of the Company’s Stock Option Plan, as the same
may be amended from time to time, and shall vest, if at all, in three equal
annual installments on January 8, 2009, January 8, 2010, and January 8, 2011,
subject in each case to the provisions of Section 10 below. In connection with
such grant, the Executive shall enter into a Restricted Stock Agreement with
the
Company, which will incorporate the foregoing vesting schedule and the
Restricted Stock provisions contained in Section 10 below.
The
Board shall annually review the equity awards previously granted to the
Executive to determine whether an increase in the Executive’s long-term equity
incentive compensation is warranted, and the Executive shall be eligible to
receive additional equity awards as determined by the Board in its sole
discretion from time to time. Such additional awards may be in the form of
additional Restricted Stock or options
to purchase Common Stock of the Company (“Stock
Options”),
or
both, as the Board may determine in its sole discretion.
(e) Expenses.
The Company shall reimburse the Executive for all reasonable out of pocket
expenses incurred by the Executive in furtherance of the business and affairs
of
the Company, including reasonable travel and entertainment (which shall include
business-class travel, unless unavailable and then first-class travel, for
trips
requiring air time longer than two (2) hours and the use of car service for
business-related activities), upon timely receipt by the Company of appropriate
vouchers or other proof of the Executive’s expenditures and otherwise in
accordance with any expense reimbursement policy as may from time to time be
adopted by the Company. The Company’s expense reimbursement policy generally
requires that application for reimbursement be made as soon as practicable
after
the expense is incurred, but in no event more than one year after the date
of
the expense. Reimbursements are made by the Company no less frequently than
monthly.
(f) Life
and
Disability Insurance. The Company shall reimburse the Executive all premiums
paid by the Executive on life insurance policies covering the Executive in
amounts up to $800,000 and disability insurance policies covering the Executive
in amounts up to $20,000 per month.
(g) Vacation.
The Executive shall, during the Term, be entitled to a vacation of four (4)
weeks per annum,
in
addition to holidays observed by the Company.
The
Executive shall not be entitled to carry any vacation forward to the next year
of employment and shall not receive any compensation for unused vacation
days.
(h) Other
Benefits.
(i) The
Executive shall be entitled to all rights and benefits for which he shall be
eligible under any benefit or other plans (including, without limitation,
dental, medical, medical reimbursement and hospital plans, pension plans,
employee stock purchase plans, profit sharing plans, bonus plans and other
so-called "fringe" benefits) as the Company shall make available to any of
its
senior executives from time to time.
(ii) The
Company shall reimburse the Executives for his reasonable medical licensing
fees
and other professional dues and memberships and journal subscriptions. In
addition, the Company shall reimburse the Executive up to $10,000 per annum
for
costs associated with a consulting group retained by the Executive for the
purpose of assisting the Executive corporate decision making. These expenses
will be reimbursed in accordance with the expense reimbursement policy outlined
in Section 5(e) above.
6. Confidential
Information and Inventions.
(a) The
Executive recognizes and acknowledges that in the course of his duties he is
likely to receive confidential or proprietary information owned by the Company,
its affiliates or third parties with whom the Company or any of such affiliates
has an obligation of confidentiality. Accordingly, during and after the Term,
the Executive agrees to keep confidential and not disclose or make accessible
to
any other person or use for any other purpose other than in connection with
the
fulfillment of his duties under this Agreement, any Confidential and Proprietary
Information (as defined below) owned by, or received by or on behalf of, the
Company or any of its affiliates. “Confidential and Proprietary Information”
shall include, but shall not be limited to, confidential or proprietary
scientific or technical information, data, formulas and related concepts,
business plans (both current and under development), client lists, promotion
and
marketing programs, trade secrets, or any other confidential or proprietary
business information relating to development programs, costs, revenues,
marketing, investments, sales activities, promotions, credit and financial
data,
manufacturing processes, financing methods, plans or the business and affairs
of
the Company or of any affiliate or client of the Company. The Executive
expressly acknowledges the trade secret status of the Confidential and
Proprietary Information and that the Confidential and Proprietary Information
constitutes a protectable business interest of the Company. The Executive
agrees: (i) not to use any such Confidential and Proprietary Information for
himself or others; and (ii) not to take any Company material or reproductions
(including but not limited to writings, correspondence, notes, drafts, records,
invoices, technical and business policies, computer programs or disks) thereof
from the Company’s offices at any time during his employment by the Company,
except as required in the execution of the Executive’s duties to the Company.
The Executive agrees to return immediately all Company material and
reproductions (including but not limited, to writings, correspondence, notes,
drafts, records, invoices, technical and business policies, computer programs
or
disks) thereof in his possession to the Company upon request and in any event
immediately upon termination of employment.
(b) Except
in
furtherance of the business of the Company, or otherwise with prior written
authorization by the Company, the Executive agrees not to disclose or publish
any of the Confidential and Proprietary Information, or any confidential,
scientific, technical or business information of any other party to whom the
Company or any of its affiliates owes an obligation of confidence, at any time
during or after his employment with the Company. Nothing in the foregoing shall
be construed to prevent the Executive from disclosing or using any Confidential
or Proprietary Information that:
(i)
Executive can evidence through written documentation was in the Executive’s
possession or control prior to the date of disclosure;
(ii)
Executive can evidence through written documentation was in the public domain
or
enters into the public domain through no improper act by Executive
(iii)
is
approved for public release by written authorization of the Board;
(iv)
is
required to be disclosed by legal, administrative or judicial process;
or
(v) is
rightfully granted to Executive by sources independent of the Company, its
officers, employees, agents, affiliates and consultants.
(c) The
Executive agrees that all inventions, discoveries, improvements and patentable
or copyrightable works (“Inventions”)
initiated, conceived or made by him, either alone or in conjunction with others,
during the Term
shall be
the sole property of the Company to the maximum extent permitted by applicable
law and, to the extent permitted by law, shall be “works made for hire” as that
term is defined in the United States Copyright Act (17 U.S.C.A., Section 101).
The Company shall be the sole owner of all patents, copyrights, trade secret
rights, and other intellectual property or other rights in connection therewith.
The Executive hereby assigns to the Company all right, title and interest he
may
have or acquire in all such Inventions; provided, however, that the Board may
in
its sole discretion agree to waive the Company’s rights pursuant to this Section
6(c) with respect to any Invention that is not directly or indirectly related
to
the Company’s business. The Executive further agrees to assist the Company in
every proper way (but at the Company’s expense) to obtain and from time to time
enforce patents, copyrights or other rights on such Inventions in any and all
countries, and to that end the Executive will execute all documents
necessary:
(i) to
apply
for, obtain and vest in the name of the Company alone (unless the Company
otherwise directs) letters patent, copyrights or other analogous protection
in
any country throughout the world and when so obtained or vested to renew and
restore the same; and
(ii) to
defend
any opposition proceedings in respect of such applications and any opposition
proceedings or petitions or applications for revocation of such letters patent,
copyright or other analogous protection.
(d) The
Executive acknowledges that while performing the services under this Agreement
the Executive may locate, identify and/or evaluate patented or patentable
inventions having commercial potential in the fields of pharmacy,
pharmaceutical, biotechnology, healthcare, technology and other fields which
may
be of potential interest to the Company (the “Third
Party Inventions”).
The
Executive understands, acknowledges and agrees that all rights to, interests
in
or opportunities regarding, all Third-Party Inventions identified by the
Company, any of its officers, directors, employees (including the Executive),
agents or consultants during the Term as being of potential interest to the
Company shall be and remain the sole and exclusive property of the Company
and
the Executive shall have no rights whatsoever to such Third-Party Inventions
and
will not pursue for himself or for others any transaction relating to the
Third-Party Inventions which is not on behalf of the Company.
(e) The
provisions of this Section 6 shall survive any termination of this
Agreement.
7. Non-Competition,
Non-Solicitation and Non-Disparagement.
(a) The
Executive understands and recognizes that his services to the Company are
special and unique and that in the course of performing such services the
Executive will have access to and knowledge of Confidential and Proprietary
Information (as defined in Section 6) and the Executive agrees that, during
the
Term and for a period of twelve
(12) months
thereafter (subject to the provisions of Section 10(e) hereof), he shall not
without the consent of the Company in any manner, directly or indirectly, on
behalf of himself or any person, firm, partnership, joint venture, corporation
or other business entity (“Person”),
enter
into or engage in any business which is engaged in any business directly or
indirectly competitive with the Company’s Business (as defined below), either as
an individual for his own account, or as a partner, joint venturer, owner,
executive, employee, independent contractor, principal, agent, consultant,
salesperson, officer, director or shareholder of a Person in a business
competitive with the Company within the geographic area of the Company’s
Business, which is deemed by the parties hereto to be worldwide. The Executive
acknowledges that, due to the nature of the Company’s Business, and the
importance to the Company’s Business of its Confidential and Proprietary
Information, a violation of this Section 7(a) could cause substantial damage
to
the Company and its affiliates and, therefore, the Company has a strong
legitimate business interest in protecting the continuity of its business
interests and the restriction herein agreed to by the Executive narrowly and
fairly serves such an important and critical business interest of the Company.
For purposes of this Agreement, the “Company’s Business” shall mean the business
or businesses set forth on the attached Schedule 7(a), which shall be amended
from time to time upon the mutual written agreement of the parties, but which
will automatically include the research, development and commercialization
of
any technologies that are licensed or otherwise acquired by the Company.
Notwithstanding the foregoing, nothing contained in this Section 7(a) shall
be
deemed to prohibit the Executive from (i) acquiring or holding, solely for
investment, publicly traded securities of any corporation, some or all of the
activities of which are competitive with the business of the Company so long
as
such securities do not, in the aggregate, constitute more than three percent
(3%) of any class or series of outstanding securities of such
corporation.
(b) During
the Term and for a period of twelve (12) months thereafter (subject to the
provisions of Section 10(e) hereof), the Executive shall not, directly or
indirectly, without the prior written consent of the Company:
(i) solicit
or induce any employee of the Company to leave the employ of the Company; or
hire for any purpose any employee of the Company or any employee who has left
the employment of the Company within six months of the termination of such
employee’s employment with the Company or at any time in violation of such
employee’s non-competition agreement with the Company; or
(ii) solicit
or accept employment or be retained by any Person who, at any time during the
term of this Agreement, was an agent, client or customer of the Company where
his position will be related to the Company’s Business; or
(iii) solicit
or accept the business of any agent, client or customer of the Company with
respect to products, services or investments similar to those provided or
supplied by the Company.
(c) The
Company and the Executive each agree that both during the Term and at all times
thereafter, neither party shall directly or indirectly disparage, whether or
not
true, the name or reputation of the other party or any of its affiliates,
including but not limited to, any officer, director, employee or stockholder
owning greater than five percent (5%) of the Company’s outstanding Common Stock.
This Section 7(c) shall not apply to (i) statements made by the Executive’s in
performing his duties in the ordinary course as Chief Executive Officer
(e.g.,
employee evaluations and remarks made in private meetings of the Board) and
(ii)
statements made by the Executive under oath in a legal proceeding, including
without limitation an investigation or administrative proceeding before any
governmental agency or instrumentality with regulatory authority over the
Company or its business.
(d) In
the
event that the Executive breaches any provisions of Section 6 or this Section
7
or there is a threatened breach, then, in addition to any other rights which
the
Company may have, the Company shall (i) be entitled, without the posting of
a
bond or other security, to injunctive relief to enforce the restrictions
contained in such Sections and (ii) have the right to require the Executive
to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments and other benefits (collectively “Benefits”)
derived or received by the Executive as a result of any transaction constituting
a breach of any of the provisions of Sections 6 or 7 and the Executive hereby
agrees to account for and pay over such Benefits to the Company.
(e) Each
of
the rights and remedies enumerated in Section 7(d) shall be independent of
the
others and shall be in addition to and not in lieu of any other rights and
remedies available to the Company at law or in equity. If any of the covenants
contained in this Section 7, or any part of any of them, is hereafter construed
or adjudicated to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants or rights or remedies which shall be
given full effect without regard to the invalid portions. If any of the
covenants contained in this Section 7 is held to be invalid or unenforceable
because of the duration of such provision or the area covered thereby, the
parties agree that the court making such determination shall have the power
to
reduce the duration and/or area of such provision and in its reduced form such
provision shall then be enforceable. No such holding of invalidity or
unenforceability in one jurisdiction shall bar or in any way affect the
Company’s right to the relief provided in this Section 7 or otherwise in the
courts of any other state or jurisdiction within the geographical scope of
such
covenants as to breaches of such covenants in such other respective states
or
jurisdictions, such covenants being, for this purpose, severable into diverse
and independent covenants.
(f) In
the
event that an actual proceeding is brought in equity to enforce the provisions
of Section 6 or this Section 7, the Executive shall not urge as a defense that
there is an adequate remedy at law nor shall the Company be prevented from
seeking any other remedies which may be available.
(g) The
provisions of this Section 7 shall survive any termination of this
Agreement.
8. Representations
and Warranties by the Executive.
The
Executive hereby represents and warrants to the Company that
(a)
the Executive has the full right, power and legal capacity to enter and deliver
this Agreement and to perform his duties and other obligations hereunder; (b)
this Agreement constitutes the legal, valid and binding obligation of the
Executive enforceable against him in accordance with its terms; and (c) no
approvals or consents of any persons or entities are required for the Executive
to execute and deliver this Agreement or perform his duties and other
obligations hereunder.
9. Termination.
The Executive’s employment hereunder shall be terminated upon the Executive’s
death and may be terminated as follows:
(a) The
Executive’s employment hereunder may be terminated by the Board for Cause. Any
of the following actions by the Executive shall constitute “Cause”:
(i) The
willful misconduct, failure, disregard or refusal by the Executive to perform
any of the material duties of his employment hereunder including, without
limitation, insubordination with respect to written directions received by
the
Executive from the Board, provided, however, that the Executive shall have
one
(1) opportunity to cure any breach of this section 9(a)(i) within five (5)
business days (‘Cure Period”) of written notice to the Executive;
(ii) Any
willful, intentional or grossly negligent act by the Executive having the effect
of injuring, in a material way (whether financial or otherwise and as determined
in good faith by a majority of the Board), the business or reputation of the
Company or any of its affiliates, including but not limited to, any officer,
director, executive of the Company or any stockholder owning greater than five
percent (5%) of the Company’s outstanding Common Stock; provided, however, that
the Executive shall be granted an opportunity to appear personally before the
Board during its deliberations to explain the reasons for such conduct;
(iii) The
Executive’s conviction of any felony or a misdemeanor involving moral turpitude
(including entry of a nolo contendere
plea);
(iv) The
determination by the Company, after a reasonable and good-faith investigation
by
the Company following a written allegation by another employee of the Company,
that the Executive engaged in some form of harassment prohibited
by law
(including, without limitation, harassment that constitutes age, sex or race
discrimination),
unless
the Executive’s actions were specifically directed by the Board;
(v) Any
misappropriation or embezzlement of the property of the Company or its
affiliates;
(vi) Breach
by
the Executive of any of the provisions of Sections
6, 7
or
8
of this
Agreement; and
(vii) Breach
by
the Executive of any provision of this Agreement other than those contained
in
Sections
6, 7
or
8
which is
not cured by the Executive within thirty (30) days after notice thereof is
given
to the Executive by the Company.
(b) The
Executive’s employment hereunder may be terminated by the Board due to the
Executive’s Disability. For purposes of this Agreement, a termination for
“Disability”
shall
occur upon rendering of a written termination notice by the Board after the
Executive has been unable to substantially perform his duties hereunder for
90
or more consecutive days, or more than 120 days in any consecutive 12 month
period, by reason of any physical or mental illness or injury. For purposes
of
this Section 9(b), the Executive agrees to make himself available and to
cooperate in any reasonable examination by a reputable independent physician
retained by the Company.
(c) The
Executive’s employment hereunder may be terminated by the Board (or its
successor) upon the occurrence of a Change of Control. For purposes of this
Agreement, “Change
of Control”
means
(i) the acquisition, directly or indirectly, following the date hereof by any
person (as such term is defined in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), in one transaction or a series of related
transactions, of securities of the Company representing in excess of fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding securities if such person (or his or its affiliate(s)) does not
own
in excess of 50% of such voting power on the date of this Agreement, or (ii)
the
future disposition by the Company (whether direct or indirect, by sale of assets
or stock, merger, consolidation or otherwise) of all or substantially all of
its
assets in one transaction or series of related transactions (other than (i)
a
merger effected exclusively for the purpose of changing the domicile of the
Company, (ii) financing activities in the ordinary course in which the Company
sells its equity securities, or (iii) a transfer to a person or entity that,
immediately after the transfer, is or is controlled by a person or entity that
controlled the Company before the transfer, within the meaning of Section
1.409A-3(i)(5)(vii)(B) of the Treasury Regulations).
(d) The
Executive’s employment hereunder may be terminated by the Executive for Good
Reason, provided
that
such termination occurs within two (2) years following the occurrence of an
event of Good Reason (as defined below) and provided,
further,
that
the Executive has provided the Board with written notice of an event of Good
Reason within ninety (90) days following the date of its occurrence and the
Company shall have failed to cure the event of Good Reason within thirty (30)
days following the Board’s receipt of such notice from the Executive. For
purposes of this Agreement, “Good
Reason”
shall
mean any of the following: (i) the assignment to the Executive of duties
that constitute a material diminution in the Executive's position,
responsibilities, titles or offices as described herein; (ii) any material
reduction by the Company of the Executive's duties and responsibilities;
(iii) any reduction by the Company of the Executive's compensation or
benefits payable hereunder (it being understood that a reduction of benefits
applicable to all employees of the Company, including the Executive, shall
not
be deemed a reduction of the Executive's compensation package for purposes
of
this definition); (iv) a material breach by the Company of this Agreement;
(v)
moving the primary place of business of the Executive to a location that is
more
than 60 miles from Fairfield, Connecticut; or (vi) upon a Change of Control
(x)
that results in the elimination of the Board or
(y) in
which representatives of the Board just prior to the event causing the Change
of
Control do not represent a majority of the Board immediately subsequent to
the
event causing the Change of Control.
10. Compensation
Following Termination.
(a) If
the
Executive’s employment is terminated as a result of his death or Disability, the
Company shall pay to the Executive or to the Executive’s estate, as applicable,
his
Base
Salary for a period of one year following the date of termination and any
accrued but unpaid Performance Bonus, Discretionary Bonus and expense
reimbursement amounts for expense incurred through the date of his Death or
Disability. All Stock Options and Restricted Stock that are
scheduled to vest by the end of the calendar year in which such termination
occurs shall be accelerated and deemed to have vested as of the termination
date. Any Stock Options that have vested (or been deemed pursuant to the
immediately preceding sentence to have vested) as
of the
date of the Executive’s termination shall remain exercisable for a period of 90
days.
All
Stock
Options and Restricted Stock that have
not
vested as
of the
date of termination shall be deemed to have expired as of such
date.
(b) If
the
Executive’s employment is terminated by the Board for Cause, then the Company
shall pay to the Executive his Base Salary through the date of his termination
and any expense reimbursement amounts for expense incurred through the date
of
termination. The Executive shall have no further entitlement to any other
compensation or benefits from the Company. All
Stock
Options and Restricted Stock that have
not
vested as
of the
date of termination shall be deemed to have expired as of such date.
Any
Stock Options that have vested as of the date of the Executive’s termination for
Cause shall remain exercisable for a period of 90 days.
(c) If
the
Executive’s employment is terminated by the Company (or its successor) without
Cause and either (i) within eighteen (18) months following the occurrence of
a
Change of Control or (ii) prior to and in connection with the occurrence of
a
Change in Control, then the Company (or its successor, as applicable) shall
continue to pay to the Executive his Base Salary and Benefits for a period
of
two years following such termination of employment, as well as any expense
reimbursement amounts for expenses incurred through the date of termination.
In
addition, the Company shall pay to the Executive the Performance Bonus that
would have been payable for the Bonus Calculation Year in which termination
of
his employment occurs. For this purpose, the amount of Performance Bonus shall
be the greater of
(x) the
amount determined pursuant to Schedule
5(b)
or (y)
the average of the amounts payable to the Executive as Performance Bonus or
Guaranteed Bonus (as determined under the Employment Agreement dated as of
January 8, 2004 by and between the Executive and the Company’s predecessor) for
the two years immediately preceding the year of termination of the Executive’s
employment. All Stock Options and Restricted Stock that are scheduled to vest
by
the end of the calendar year in which such termination occurs shall be
accelerated and deemed to have vested as of the termination date. Any Stock
Options that have vested (or been deemed pursuant to the immediately preceding
sentence to have vested) as
of the
date of the Executive’s termination shall remain exercisable for a period of 90
days.
(d) If
the
Executive’s employment is terminated by the Company without Cause other than as
a result of the Executive’s death or Disability and other than for reasons
specified in Section 10(c), or if the Executive’s employment is terminated by
the Executive for Good Reason, then the Company shall continue to pay to the
Executive his Base Salary and Benefits for a period of one year following such
termination, as well as any expense reimbursement amounts for expenses incurred
through the date of termination. In addition, the Company shall pay to the
Executive a portion of the Performance Bonus that would have been payable for
the Bonus Calculation Year in which termination of his employment occurs, which
portion shall be determined pro rata
based on
the number of days in such Bonus Calculation Year on which the Executive was
employed by the Company. For this purpose, the amount of Performance Bonus
shall
be determined pursuant to Schedule
5(b),
provided
that all
performance targets shall be deemed to have been met for the bonus calculation
year. All Stock Options and Restricted Stock scheduled
to vest by the end of the calendar year in which such termination occurs
shall
be
accelerated and deemed to have vested as of the termination date. Any
Stock
Options that have vested (or been deemed pursuant to this Section 10(d)) as
of
the date of the Executive’s termination shall remain exercisable for a period of
90 days.
(e) Following
expiration and non-renewal of the Term, should the Company in its sole
discretion require that the Executive continue to comply with the terms of
Section 7(a) or Section 7(b) hereof, or both, the Company shall pay the
Executive his Base Salary and Performance Bonus for a period of one year
following expiration of the Term. For this purpose, the amount of Performance
Bonus shall be the average of the amounts payable to the Executive as
Performance Bonus for the two Bonus Calculation Years immediately preceding
the
expiration of the Term.
(f) This
Section 10 sets forth the only obligations of the Company with respect to the
termination of the Executive’s employment with the Company, and the Executive
acknowledges that, upon the termination of his employment, he shall not be
entitled to any payments or benefits which are not explicitly provided in
Section 10.
(g) Upon
termination of the Executive’s employment hereunder for any reason, the
Executive shall be deemed to have resigned as director of the Company, effective
as of the date of such termination.
(h) Amounts
payable to the Executive pursuant to Sections 10(a), 10(c) 10(d), or 10(e)
hereof shall only be paid following the Executive’s separation from service with
the Company. The time for payment of amounts due following the Executive’s
separation from service pursuant to this Section 10 shall be determined in
accordance with the Company’s regular payroll and bonus payment practices,
subject to the provisions of Section 409A of the Internal Revenue Code of 1986,
as amended, and the Treasury Regulations promulgated therender. Payments of
Base
Salary following separation from service shall be made semi-monthly at the
same
times as, and in accordance with, the Company’s regular payroll payments.
Payments for Performance Bonus, Discretionary Bonus or expense reimbursements
accrued with respect to periods of service completed prior to the Executive’s
separation from service, but unpaid at the time of termination of employment,
shall be due and payable at the same times as they otherwise would be due in
accordance with the Company’s regular bonus payment practices (i.e.,
Performance Bonus within 30 days following the end of the Bonus Calculation
Year; Discretionary Bonus within 2 months following the end of a calendar year
for which bonus is granted), and payments in lieu of Performance Bonus for
the
Bonus Calculation Year in which termination of employment occurs or for any
Bonus Calculation Year following termination of employment, payable pursuant
to
Section 10(c), 10(d), or 10(e) above, shall be payable either (i) at the same
time as they otherwise would be due in accordance with this Agreement if the
Executive’s employment had not terminated, or (ii) on the day following the date
that is six (6) months after the date of the Executive’s separation from
service, whichever is later. Notwithstanding any other provision of this
Agreement, no amount of Base Salary, Performance Bonus, and Discretionary Bonus
payable to the Executive by reason of the Executive’s termination of his
employment pursuant to Section 9(d) above, other than a termination by reason
of
Section 9(d)(vi), and no amount in excess of $420,000 payable following the
Executive’s separation from service for any reason shall be paid earlier than
the day following the date that is six (6) months after the date of the
Executive’s separation from service with the Company. For purposes of this
section 10(h), the term “separation from service” shall have the meaning set
forth in Section 1.409A-1(h)(1) of the Treasury Regulations, and the Executive
shall be deemed to be a “key employee” for purposes of such Treasury
Regulations.
(i) The
provisions of this Section 10 shall survive any termination of this
Agreement.
11. Miscellaneous.
(a) Withholding.
The Company shall withhold from all amounts payable to the Executive under
this
Agreement all applicable federal, state and local income taxes, Social Security
contributions and such other payroll taxes and deductions as may be required
by
law.
(b) This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York, without giving effect to its principles
of conflicts of laws.
(c) Any
dispute arising out of, or relating to, this Agreement or the breach thereof
(other than Sections 6 or 7 hereof), or regarding the interpretation thereof,
shall be finally settled by arbitration conducted in New York City in accordance
with the Employment Dispute Rules of the American Arbitration Association then
in effect before a single arbitrator appointed in accordance with such rules.
Judgment upon any award rendered therein may be entered and enforcement obtained
thereon in any court having jurisdiction. The arbitrator shall have authority
to
grant any form of appropriate relief, whether legal or equitable in nature,
including specific performance. For the purpose of any judicial proceeding
to
enforce such award or incidental to such arbitration or to compel arbitration
and for purposes of Sections 6 and 7 hereof, the parties hereby submit to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, or the United States District Court for the Southern District
of
New York, and agree that service of process in such arbitration or court
proceedings shall be satisfactorily made upon it if sent by registered mail
addressed to it at the address referred to in paragraph (g) below. The costs
of
such arbitration shall be borne proportionate to the finding of fault as
determined by the arbitrator. Judgment on the arbitration award may be entered
by any court of competent jurisdiction.
(d) This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective heirs, legal representatives, successors and permitted
assigns.
(e) This
Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive. The Company may assign its rights, together with
its
obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets and shall
cause the acquirer to assume all of its obligations under this
Agreement.
(f) This
Agreement cannot be amended orally, or by any course of conduct or dealing,
but
only by a written agreement signed by the parties hereto.
(g) The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not be construed as
a
waiver or relinquishment of future compliance therewith, and such terms,
conditions and provisions shall remain in full force and effect. No waiver
of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
(h) All
notices, requests, consents and other communications, required or permitted
to
be given hereunder, shall be in writing and shall be delivered personally or
by
an overnight courier service or sent by registered or certified mail, postage
prepaid, return receipt requested, to the parties at the addresses set forth
on
the first page of this Agreement, and shall be deemed given when so delivered
personally or by overnight courier, or, if mailed, five days after the date
of
deposit in the United States mails. Either party may designate another address,
for receipt of notices hereunder by giving notice to the other party in
accordance with this Section 11(g).
(i) This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof. No representation, promise or inducement has been made by either party
that is not embodied in this Agreement, and neither party shall be bound by
or
liable for any alleged representation, promise or inducement not so set
forth.
(j) As
used
in this Agreement, “affiliate” of a specified Person shall mean and include any
Person controlling, controlled by or under common control with the specified
Person.
(k) The
section headings contained herein are for reference purposes only and shall
not
in any way affect the meaning or interpretation of this Agreement.
(l) This
Agreement may be executed in any number of counterparts, each of which shall
constitute an original, but all of which together shall constitute one and
the
same instrument.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
|
ZIOPHARM
Oncology, Inc.
|
|
|
By:
|
/s/
Xxxxxxx X. Xxxxxx
|
|
Name:
Xxxxxxx X. Xxxxxx
|
|
|
Title:
President, Chief Operating Officer and Chief Financial
Officer
|
|
|
EXECUTIVE
|
|
|
By:
|
/s/
Xxxxxxxx X. Xxxxx
|
|
Name:
Xxxxxxxx X. Xxxxx, M.D., Ph.D.
|
|
SCHEDULE
5(b)
Calculation
of Performance Bonus
Prior
to
the beginning of each Bonus Calculation Year during the Term, the Executive
and
the Compensation Committee of the Board shall agree upon five (5) performance
goals (“Targets”) for the Bonus Calculation Year. The amount of Performance
Bonus payable to the Executive pursuant to Section 5(b) of this Agreement for
any Bonus Calculation Year shall be determined based on the Executive’s
achievement of the Targets as follows:
With
respect to each of the Targets, the Executive will receive $60,000 in
Performance Bonus if the Target is met on or before the end of the Bonus
Calculation Year (e.g.,
Performance Bonus of $300,000 if all Targets are met).
The
Executive will receive $50,000 in Performance Bonus with respect to any Target
that has not been met on or before the end of the Bonus Calculation Year,
provided
that
either
of the
following has occurred: (1) (a) the Executive has devoted his reasonable best
business efforts toward achievement the Target during the Bonus Calculation
Year, and (b) substantial progress toward accomplishment of the Target has
occurred during the Bonus Calculation Year; or
(2)
during the Bonus Calculation Year, the Company abandoned the business goal
that
the Target was intended to address (e.g.,
Performance Bonus of $250,000 if no Target is met, but the Executive has devoted
his reasonable best business efforts to achievement of all of the
Targets).
The
Executive will receive $72,000 in Performance Bonus with respect to any Target
if the Target is exceeded during the Bonus Calculation Year and the Board
determines that the Executive’s performance with respect to the Target exceeded
expectations (e.g.,
Performance Bonus of $360,000 if the Executive’s performance with respect to all
Targets exceeded expectations).
SCHEDULE
7(a)
1. Developing,
designing, producing, marketing, selling or rendering oncology products in
the
class of arsenicals, products in the phosphoramidic nitrogen mustard family
and
“mustard gas family,” and anti-mitotics with the same mechanism as that in
indibulin or products that are in the same chemical family as those that have
been or are being developed, designed, produced, marketed, sold or rendered
by
the Corporation during the period of the Executive’s employment with the
Company.
