SEVERANCE AGREEMENT
This
Agreement is entered into as of September 2, 2009 (the “Effective
Date”) by and between GenSpera, Inc., a Delaware corporation (the “Company”)
and Xxxxx Xxxxxx (the “Executive”).
WHEREAS,
the Executive is Chairman and Chief Executive Officer (“CEO”) of the
Company;
WHEREAS,
the Company recognizes that the Executive’s service to the Company is very
important to the future success of the Company;
WHEREAS,
the Executive desires to enter into this Agreement to provide the Executive with
certain financial protection in the event that his employment terminates under
certain conditions following a change in control of the Company;
and
WHEREAS
the Board of Directors of the Company (the “Board”)
has determined that it is in the best interests of the Company to enter into
this Agreement.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Executive hereby agree as
follows:
1.
Definitions. Any terms not specifically defined herein shall have the
meaning ascribed to it in Executive’s employment agreement.
(a) Cause. For
purposes of this Agreement, “Cause”
shall mean that Executive has For purposes of this Agreement, “Cause”
shall mean that Executive has:
(i) intentionally
committed an unlawful act or omission in the performance of Executives duties
that materially xxxxx the Company;
(ii) been
grossly negligent in the performance of Executive’s duties to the
Company;
(iii) willfully
failed or refused to follow the lawful and proper directives of the
Board;
(iv) been
convicted of, or pleaded guilty or nolo contendre, to a
felony;
(v) committed
an act involving moral turpitude;
(vi) committed
an act relating to the Company involving, in the good faith judgment of the
Board, material fraud or theft resulting in material harm to the
Company;
(vii) breached
any material provision of this Agreement or any nondisclosure or non-competition
agreement, between Executive and the Company, as all of the foregoing may be
amended prospectively from time to time; or
(viii) breached
a material provision of any code of conduct or ethics policy in effect at the
Company, as all of the foregoing may be amended prospectively from time to
time.
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(b) Change in
Control. For purposes of this Agreement, a “Change in
Control” shall have the meaning ascribed to such term pursuant to the
Company’s 2007 Equity Compensation Plan, as amended; provided that “Change in
Control” shall be interpreted in a manner, and limited to the extent necessary,
so that it will not cause adverse tax consequences for either party with respect
to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code ”),
and the provisions of Treasury Notice 2005-1, and any successor statute,
regulation and guidance thereto.
(c) Disability.
For purposes of this Agreement, “Disability”
shall mean that Executive is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than six (6) months. Whether the Executive
has a Disability will be determined by a majority of the Board based on evidence
provided by one or more physicians selected by the Board and approved by
Executive, which approval shall not be unreasonably withheld.
(d) Good Reason.
For purposes of this Agreement, “Good Reason” shall mean the occurrence of
one or more of the following without the Executive’s consent: (i) a change
in the principal location at which the Executive performs his duties for the
Company to a new location that is at least forty (40) miles from the prior
location without Executives consent; (ii) a material change in the Executive’s
authority, functions, duties or responsibilities as Chief Executive Officer of
the Company, which would cause his position with the Company to become of less
responsibility, importance or scope than his position on the date of this
Agreement, provided, however, that such material change is not in connection
with the termination of the Executive’s employment by the Company for Cause or
death or Disability and further provided that it shall not be considered a
material change if the Company becomes a subsidiary of another entity and
Executive continues to hold the position of Chief Executive Officer in the
subsidiary; (iii) a reduction in the Executives annual base salary or (iv)
a reduction in Executives Target Annual Bonus as compared to the Target
Annual Bonus set for the previous fiscal year.
2. Term of
Agreement. The term of this Agreement shall commence on the
Effective Date and shall continue in effect for five (5) years; provided however,
that commencing on the fifth anniversary of the Effective Date and continuing
each anniversary thereafter, the Term shall automatically be extended for one
(1) additional year unless, not later than three (3) months before the
conclusion of the Term, the Company or the Executive shall have given notice not
to extend the Term; and further
provided , however ,
that if a Change in Control shall have occurred during the Term, the Term shall
expire on the last day of the twenty-fourth (24th )
month following the month in which such Change in Control occurred. Notice
of termination or termination of this Agreement shall not constitute Cause or
Good Reason (both terms as defined above).
3. Termination; Notice;
Severance Compensation.
(a)
In the event that within a period of two (2) months before or two (2) years
following the consummation of a Change in Control the Company elects to
terminate the Executive’s employment other than for Cause (but not including
termination due to the Executive’s Disability), then the Company shall give the
Executive no less than sixty (60) days advance notice of such termination (the
“Company’s Notice Period”); provided
that the Company may elect to require the Executive to cease
performing work for the Company so long as the Company continues the Executive’s
full salary and benefits during the Company’s Notice Period.
(b)
In the event that within a period of two (2) months before or two (2) years
following the consummation of a Change in Control the Executive elects to
terminate his employment for Good Reason, then the Executive shall give the
Company no less than thirty (30) days and no more than sixty (60) days advance
notice of such termination (the “Executive’s Notice Period”); provided
that the Company may elect to require the Executive to cease
performing work for the Company so long as the Company continues the Executive’s
full salary and benefits during the Executive’s Notice Period. In order to
effect a termination for Good Reason pursuant to this Agreement, the Executive
must notice his intent to terminate for Good Reason not later than ninety (90)
days following the occurrence of the Good Reason.
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(c)
In the event that within a period of two (2) months before or two (2) years
following the consummation of a Change in Control the Executive’s employment
with the Company is terminated by the Company other than for Cause (but not
including termination due to the Executive’s death or Disability), or by the
Executive for Good Reason, then, contingent upon the Executive’s execution of a
release of claims against the Company in a form reasonably acceptable to the
Company (the “ Release
”) the Executive shall be entitled to, in addition to any amounts due to the
Executive for services rendered prior to the termination date:
(i) the
Executive’s Target Annual Bonus for the fiscal year in which such termination
occurs at 100% of such Target Annual Bonus, pro-rated by the number of calendar
days in which the Executive is employed by the Company during the applicable
year, including any applicable Notice Period, which shall be paid no later than
the tenth business day following the effective date of the Release;
and
(ii) a
lump sum payment from the Company in an amount equal to three (3) times the
Executive’s Annual Salary, which shall be paid no later than the tenth business
day following the effective date of the Release.
For
purposes of this Agreement, “Annual
Salary” shall mean the Executive’s annual Base Salary then in effect or,
if higher, in effect at the time of the Change in Control, excluding
reimbursements and amounts attributable to stock options and other non-cash
compensation; and the “ Severance
Compensation ” shall mean the compensation set forth in (ii)
above.
(d)
Notwithstanding any other provision with respect to the timing of payments, if,
at the time of Executive’s termination, Executive is deemed to be a “specified
employee” (within the meaning of Code Section 409A, and any successor statute,
regulation and guidance thereto) of the Company, then limited only to the extent
necessary to comply with the requirements of Code Section 409A, any payments to
which Executive may become entitled under this Agreement which are subject to
Code Section 409A (and not otherwise exempt from its application) will be
withheld until the first (1st )
business day of the seventh (7th) month
following the termination of Executive’s employment, at which time Executive
shall be paid an aggregate amount equal to the accumulated, but unpaid, payments
otherwise due to Executive under the terms of this Agreement.
(e)
If any payment or benefit Executive would receive under this Agreement, when
combined with any other payment or benefit Executive receives pursuant to a
Change in Control (“Payment”) would (i) constitute a “parachute payment” within
the meaning of Code Section 280G, and (ii) but for this sentence, be subject to
the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such
Payment shall be either (x) the full amount of such Payment or (y) such less
amount as would result in no portion of the Payment being subject to the Excise
Tax, whichever of the foregoing amounts, taking into account the applicable
federal, state, and local employments taxes, income taxes, and the Excise Tax
results in Executive’s receipt, on an after-tax basis, of the greater amount of
the Payment, notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. The Executive shall be allowed to specify which
payment(s) or benefit(s) shall be reduced if necessary to implement this section
and avoid the excise tax application. The Company shall provide the
Executive with sufficient information to make such determination and to file and
pay any required taxes.
5. No Mitigation.
If the Executive’s employment with the Company terminates following a Change in
Control, the Executive is not required to seek other employment or to attempt in
any way to reduce any amounts payable to the Executive by the Company pursuant
to Section 3 or Section 14. Except as set forth in Section 4, the amount
of any payment or benefit provided for in this Agreement shall not be reduced by
any compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
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6. Confidentiality,
Non-Competition, and Assignment of Inventions. The Company’s
obligations under this Agreement are contingent on the Executive’s execution of
the Company’s Proprietary Information, Inventions, and Competition Agreement
(the “Proprietary Information Agreement”). The parties agree that the
obligations set forth in the Proprietary Information Agreement shall survive
termination of this Agreement and termination of the Executive’s employment,
regardless of the reason for such termination.
7.
Enforceability. If any provision of this Agreement shall be deemed
invalid or unenforceable as written, this Agreement shall be construed, to the
greatest extent possible, or modified, to the extent allowable by law, in a
manner which shall render it valid and enforceable. No invalidity or
unenforceability of any provision contained herein shall affect any other
portion of this Agreement .
8. Notices.
Except as otherwise specifically provided herein, any notice required or
permitted by this Agreement shall be in writing and shall be delivered as
follows with notice deemed given as indicated: (i) by personal delivery when
delivered personally; (ii) by overnight courier upon written verification of
receipt; (iii) by facsimile transmission upon acknowledgment of receipt of
electronic transmission; (iv) by certified or registered mail, return receipt
requested, upon verification of receipt, or (v) via facsimile with confirmation
of receipt at the Company’s primary facsimile number. Notices to Executive
shall be: (x) sent to the last known address in the Company’s records or such
other address as Executive may specify in writing; or (y) via facsimile with
confirmation of receipt at the facsimile number provided to the Company by
Executive. Notices to the Company shall be sent to the Company’s Board, or
to such other Company representative as the Company may specify in
writing.
9. Claims for
Benefits. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set forth the
specific reasons for the denial and the specific provisions of this Agreement
relied upon. The Board shall afford a reasonable opportunity to the
Executive for a review of the decision denying a claim and shall further allow
the Executive to appeal to the Board a decision of the Board within sixty (60)
days after notification by the Board that the Executive’s claim has been
denied.
10. Modifications and
Amendments. The terms and provisions of this Agreement may be
modified or amended only by written agreement executed by the Company and the
Executive. The Company and the Executive agree that they will jointly
execute an amendment to modify this Agreement to the extent necessary to comply
with the requirements of Code Section 409A, or any successor statute, regulation
and guidance thereto; provided that
no such amendment shall increase the total financial obligation of the Company
under this Agreement.
11. Waivers and
Consents. The terms and provisions of this Agreement may be waived,
or consent for the departure therefrom granted, only by a written document
executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall
constitute a waiver or consent with respect to any other terms or provisions of
this Agreement, whether or not similar. Each such waiver or consent shall
be effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
12. Binding Effect;
Assignment. The Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of the
Executive upon the Executive’s death and (b) any successor of the
Company. Any such successor of the Company will be deemed substituted for
the Company under the terms of the Agreement for all purposes. For this
purpose, “successor” means any person, firm, corporation or other business
entity which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires all or substantially all of the assets or business of the
Company. None of the rights of the Executive to receive any form of
compensation payable pursuant to the Agreement may be assigned or transferred
except by will or the laws of descent and distribution. Any other
attempted assignment, transfer, conveyance or other disposition of the
Executive’s right to compensation or other benefits will be null and
void.
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13. Governing Law.
This Agreement and the rights and obligations of the parties hereunder shall be
construed in accordance with and governed by the law of Delaware, without giving
effect to the conflict of law principles thereof.
14. Attorneys’
Fees. The Company shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive’s employment, in seeking
in good faith to obtain or enforce any benefit or right provided by this
Agreement. Such payments shall be made within five (5) business days after
delivery of the Executive’s written requests for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may
require.
15. Withholding.
The Company is authorized to withhold, or to cause to be withheld, from any
payment or benefit under the Agreement the full amount of any applicable
withholding taxes.
16. Tax
Consequences. The Company does not guarantee the tax treatment or
tax consequences associated with any payment or benefit arising under this
Agreement.
17.
Acknowledgment. The Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of the Agreement, and is knowingly and
voluntarily entering into the Agreement.
18. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
IN
WITNESS WHEREOF, the parties have executed and delivered this Severance
Agreement as of the day and year first above written.
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COMPANY:
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GENSPERA,
INC.
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Xxxx
Xxxxx, Director
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EXECUTIVE:
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Xxxxx
Xxxxxx
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