EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
This
Employment Agreement (the “Agreement”) is made and
entered into by and among GT Biopharma, Inc. (the Company) and
Xxxxx Xxxxx ("Executive") as of February 15, 2018 (the "Effective
Date").
WHEREAS, the Company desires to employ
Executive, and Executive wishes to be employed by the Company in
accordance with the terms and conditions set forth in this
Agreement.
WHEREAS, the Company desires for
Executive to serve as a member of its Board of Directors during
each Employment Term; and
NOW, THEREFORE, IN CONSIDERATION OF THE
MUTUAL COVENANTS AND PROMISES AND OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, IT IS
MUTUALLY AGREED AS FOLLOWS:
1. Duties and Scope of
Employment.
a. Position
and Duties: Starting on the Effective Date, Executive shall be employed by the Company in the
position of Chief Executive Officer reporting to the
Company’s Board of Directors. Executive shall have the duties
and responsibilities consistent with the position of Chief
Executive Officer and such other lawful duties and responsibilities
reasonably assigned by the Company’s Board of Directors.
Executive shall provide his services hereunder from his home in
Marin County, California or in an anticipated Company office in San
Francisco, California.
b. Term.
Executive’s employment hereunder
shall be for an initial period of three (3) years. Subsequently,
this Agreement will renew for one (1) year terms unless either
party notifies the other party of its intent to not renew this
Agreement no later than ninety (90) days prior to the end of the
existing term. The period of Executive’s employment under the
then-current term of this Agreement is referred to herein as the
“Employment Term.”
c. Obligations.
Executive understands and agrees that
Executive will faithfully devote Executive’s best efforts and
substantially all of his time during normal business hours to
advance the interests of the Company. Executive will abide by all
reasonable lawful written policies duly adopted by the Company, as
well as all applicable federal, state and local laws, regulations
or ordinances. Executive will act in a manner that Executive
reasonably believes to be in the best interest of the Company at
all times. Executive further understands and agrees that Executive
has a fiduciary duty of loyalty to the Company to the extent
provided by applicable law and that Executive will take no action
which materially xxxxx the business, business interests, or
reputation of the Company.
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d. Board
Membership. During each Employment Term, Executive will
serve as a member and Chairman of the Board, subject to any
required Board and/or stockholder approval.
2.
Compensation: Executive
shall be compensated by the Company for his services to the Company
as follows:
(a)
Base Salary: As President
and Chief Operating Officer, Executive shall be paid a Base Salary
of $500,000.00 per year (“Base Salary”), payable in
equal monthly installments. Executive’s Base Salary shall
increase to $600,000.00 per year upon a Qualified Financing. The
monthly cash payment will be subject to applicable withholding, in
accordance with the Company’s normal payroll procedures.
Executive’s Base Salary and other compensation shall be
reviewed on at least an annual basis and may be increased as
appropriate, but in no event shall it be reduced. In the event of
such an adjustment to the Base Salary, that amount shall thereafter
become Executive’s “Base Salary” for the purposes
of this Agreement. Furthermore, during the term of this Agreement,
in no event shall Executive’s total year-end cash
compensation (including Base Salary and bonuses) be less than any
other officer or employee of the Company or any
subsidiary.
(b)
Benefits: Executive shall
have the right, on the same basis as other senior executives of the
Company, to participate in and to receive benefits under any of
either Company's employee benefit plans, medical insurance, and
other insurance plans, as such plans may be modified from time to
time, and provided that in no event shall Executive receive less
than four (4) weeks of paid vacation per annum, six (6) additional
paid sick days per annum, and five (5) additional paid personal
days per annum.
(c)
Start Bonus: Executive shall
earn a one-time bonus of $250,000.00 (“Start Bonus”)
upon a Qualified Financing. The Company will pay the Start Bonus
within thirty (30) days after a Qualified Financing.
(d) Performance Bonus: Executive shall have
the opportunity to earn an annual performance bonus in accordance
with the Company's Performance Bonus Plan then in effect with a
target amount of 90% of his Base Salary (“Target
Bonus”); if the Company does not have a Performance Bonus
Plan in effect at any given time during the term of this Agreement,
then the Company’s Compensation Committee or Board of
Directors shall have discretion as to determining the annual bonus
compensation for Executive. Annual bonuses will be based on
calendar years.
(e)
Expenses: Company shall
reimburse Executive for travel, lodging, entertainment and meal
expenses incurred in connection with the performance of services
for the Company, including, but not limited to, traveling to
Company offices outside the San Francisco Bay area. Executive shall
be entitled to fly Business Class on any flight longer than four
(4) hours and receive full reimbursement for such flight from the
Parent.
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(f)
Travel: Executive shall
travel as reasonably necessary from time to time to satisfy his
performance and responsibilities under this Agreement.
(g)
Attorneys’ Fees: The
Company will reimburse Executive for the attorneys’ fees he
incurred in preparing this Agreement and negotiations related
thereto.
(h)
Stock Option. As of the
Effective Date, it will be recommended to the Board that the
Company grants Executive an option to purchase 2,000,000 shares of
the Company’s common stock (“Common Stock”) at an
exercise price equal to the fair market value of each share as
determined by the Board as of the date of the grant (the
“Option”). It is intended that the Option shall, to the
extent it so qualifies, be an incentive stock option as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”) and any regulations promulgated thereunder.
Subject to the accelerated vesting provisions set forth herein, the
Option will vest as to 34% of the shares subject to the Option on
the Effective Date, 33% of the shares subject to the Option one
year after the Effective Date, and 33% of the shares subject to the
Option two years after the Effective Date. The Option will be
subject to the terms, definitions and provisions of the
soon-to-be-adopted Company Stock Plan (the "Option Plan") and the
stock option agreement by and between Executive and the Company
(the "Option Agreement") memorializing the grant described in this
Section 2(h), both of which documents shall be incorporated herein
by reference.
3.
Effect of Termination of
Employment:
(a)
Termination for Cause; Resignation
without Good Reason: In the event of the Company’s
termination of Executive’s employment for Cause or
Executive’s resignation without Good Reason, Executive shall
be entitled to:
(i) the
compensation or benefits from the Company earned under Section 2
through the date of his termination, paid on the next scheduled
payroll date;
(ii)
reimbursement of all business expenses for which Executive is
entitled to be reimbursed pursuant to Company policy, but for which
he has not yet been reimbursed;
(iii)
the right to continue health care benefits under COBRA, at
Executive’s cost, to the extent required and available by
law; and,
(iv) in
the case of each stock option, restricted stock award or other
Company stock-based award granted to Executive, the extent to which
such awards are vested through the date of his termination or as
otherwise agreed by the Parties.
In the
event that the Company intends to terminate Executive's employment
for Cause, the Company shall first provide written notice to
Executive of that fact with specificity no fewer than 30 days after
the conduct or circumstances giving rise to such intention to
termination his employment for Cause. Thereafter, Executive shall
have 30 days to cure any such conduct or circumstances. Failure to
timely provide written notice that the Company contends that the
termination is for Cause shall constitute a waiver of any
contention that the termination was for Cause, and the termination
shall be irrebuttably presumed to be a termination without
Cause.
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(b)
Termination Without Cause or
Resignation for Good Reason: In the event of the
Company’s termination of Executive’s employment without
Cause or Executive’s resignation with Good Reason, Executive
shall be entitled to:
(i) the
compensation or benefits from the Company earned under Section 2
through the remainder of Executive’s Employment Term or for a
period of twelve (12) months from the date of termination,
whichever is greater, commencing paid on the next scheduled payroll
date following the termination date;
(ii) a lump sum
payment equivalent to the Target Bonus payable to Executive for the
calendar year immediately prior to the year in which
Executive’s employment terminates, to the extent not already
paid;
(iii) a lump sum
payment equivalent to the Start Bonus, to the extent not already
paid;
(iv) a
lump sum payment equivalent to the Target Bonus payable to
Executive for the calendar year in which Executive’s
employment terminates; and
(v) reimbursement
for the cost of medical, life, and disability insurance coverage
for Executive and his eligible dependents at a level equivalent to
that provided by the Company for a period expiring upon the earlier
of: (a) one year from the effective date of Executive’s
employment termination date; or (b) the time Executive begins
alternative employment wherein said insurance coverage is
available, offered to Executive, and substantially similar to the
Company’s coverage levels. It shall be the obligation of
Executive to inform the Company that new employment with adequate
alternative insurance coverage has been obtained.
Unless
otherwise agreed to by Executive at the time termination, the
amount payable to Executive under subsections (i) through (iii),
above, shall be paid to Executive in a lump sum within thirty (30)
days following Executive's employment termination date. The amounts
payable under subsection (iv) shall be paid monthly during the
reimbursement period.
(g)
Termination on
Death. If Executive’s
employment terminates upon Executive’s death, the Company
shall consider Executive’s employment to be terminated
without Cause and assign the rights and entitles set forth Section
3(b) above to Executive’s estate.
(h)
Tax Reimbursement. If a
payment (including this tax reimbursement payment) by the Company
is determined to be an “excess parachute payment”
within the meaning of Internal Revenue Code (“Code”)
§280 and/or §4999, and Treasury Regs. §1.280G-1, and
an excise tax is imposed thereon under Code §4999, the Company
shall immediately reimburse Executive for the amount of such excise
tax together with any additional income tax or excise tax
attributable to the reimbursement of any excise taxes, as well as
any income taxes on the income tax on the excise tax reimbursement,
etc., so that Executive is not out of pocket any excise tax expense
nor any income tax expense on such excise tax
reimbursement.
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(i)
Resignation from Positions:
In the event that Executive's employment with the Company is
terminated or Executive resigns for any reason, on the effective
date of the termination Executive shall simultaneously resign from
each position he holds on the Board and/or the Board of Directors
of any of the Company’ affiliated entities and any position
Executive holds as an officer of the Company or any of the
Company’ affiliated entities.
4.
Change in Control
Benefits.
(a) In
the event of a Change in Control that occurs prior to Executive's
termination of employment, Executive shall be entitled to
acceleration of 100% of Executive’s then-unvested and
outstanding equity awards (including the Option).
(b) If
within six (6) months before or twelve (12) months following a
Change in Control the Company or the successor corporation
terminates Executive’s employment with the Company or
successor corporation for other than Cause, then Executive shall be
entitled to: (i) acceleration of 100% of Executive’s
then-unvested and outstanding equity awards (including the Option),
and (ii) a lump sum payment equal to twelve (12) months of
Executive’s then-current Base Salary, less applicable
withholdings, within fifteen (15) business days after the date of
such termination of employment. For avoidance of doubt, this
Section 5 does not limit or otherwise modify any other rights
Executive may have under this Agreement or any Company policy in
the event of the termination of Executive’s employment,
including, but not limited to, severance pay and benefits under
Section 3(b) of this Agreement.
5.
Certain Definitions: For the
purpose of this Agreement, the following capitalized terms shall
have the meanings set forth below:
(a)
"Cause" shall mean any of
the following occurring on or after the date of this Agreement
:
(i)
Executive's theft, dishonesty, or breach of fiduciary duty for
personal profit that directly results in a material adverse effect
on either Company's reputation or business;
(ii)
Executive's willful violation of any material law, rule, or
regulation (for avoidance of doubt, not including traffic
violations, misdemeanors or non-felonious offenses), in each case
that involves moral turpitude and directly results in a material
adverse effect on either Company's reputation or
business;
(iii) any
intentional material breach by Executive of the Company's Code of
Professional Conduct in existence as of the Effective Date and has
a material adverse effect on either Company's reputation or
business; or
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(iv) any material
breach by Executive of this Agreement, which breach, if curable, is
not cured within thirty (30) days following written notice of such
breach (stating the purported breach with specificity) from the
applicable Company.
(b)
"Change in Control" shall
mean the occurrence of any of the following events:
(i) the Company is
party to a merger or consolidation which results in the holders of
the voting securities of the Company outstanding immediately prior
thereto failing to retain immediately after such merger or
consolidation direct or indirect beneficial ownership of more than
fifty percent (50%) of the total combined voting power of the
securities entitled to vote generally in the election of directors
of the Company or the surviving entity outstanding immediately
after such merger of consolidation.
(ii) a change in
the composition of the Board of Directors of the Company occurring
within a period of twenty-four (24) consecutive months, as a result
of which fewer than a majority of the directors are Incumbent
Directors;
(iii) effectiveness
of an agreement for the sale, lease or disposition by the Company
of all or substantially all of the Company’s assets;
or
(iv) a liquidation
or dissolution of the Company.
(c)
"Good Reason" shall mean
Executive's resignation for any of the following conditions without
Executive's written consent:
(i) a
decrease in Executive's Base Salary, a decrease in Executive's
Target Bonus (as a multiple of Executive's Base Salary) under the
Performance Bonus Plan, or a decrease in employee
benefits;
(ii) a change in
Executive's title, authority, or responsibilities, including that
Executive would no longer report to the Board of
Directors;
(iii) any
requirement that Executive change his primary work location from
his home in California or the Company’s anticipated office in
San Francisco, California;
(iv) any material
breach by the Company of any provision of this Agreement, which
breach is not cured within thirty (30) days following written
notice of such breach from Executive;
(v) a
material diminution in the budget or other resources over which
Executive retains authority; or
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(vi)
any failure of the Company to obtain the assumption of this
Agreement by any of the Company’s successors or assigns by
purchase, merger, consolidation, sale of assets or
otherwise.
The effective date
of any resignation from employment by the Executive for Good Reason
shall be the date of notification to the Company of such
resignation from employment by the Executive.
The effective date
of any resignation from employment by the Executive Good Reason
shall be the effective date stipulated in such notice by the
Executive.
(f)
"Incumbent Directors" shall
mean members of the Board who either (a) are members of the Board
as of the date hereof, or (b) are elected, or nominated for
election, to the Board with the affirmative vote of at least a
majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy
contest relating to the election of members of the Board). Any
members of the Board newly elected prior to the one-year
anniversary of the Effective Date shall be considered Incumbent
Directors for the purposes of this Agreement.
(g)
“Qualified
Financing” shall mean the sale and issuance of equity
securities of the Company (or any successor entity) in one or more
transactions and/or rounds primarily for capital raising purposes
resulting in gross, aggregate proceeds to the Company of at least
$70,000,000.
6.
Dispute Resolution:
Executive and the Company agree that any and all disputes, claims,
or causes of action arising from or relating to the enforcement,
breach, performance, negotiation, execution, or interpretation of
this Agreement, or Executive’s employment, or the termination
of such employment, including but not limited to all statutory
claims, will be resolved pursuant to the Federal Arbitration Act, 9
U.S.C. §1-16, and to the fullest extent permitted by law, by
final, binding and confidential arbitration by a single arbitrator
conducted in San Francisco, California, by Judicial Arbitration and
Mediation Services Inc. (“JAMS”) under the then
applicable JAMS rules. By agreeing to this arbitration procedure,
both Executive and the Company waive the right to resolve any such
dispute through a trial by jury or judge or administrative
proceeding. This paragraph shall not apply to an action or claim
brought in court pursuant to the California Private Attorneys
General Act of 2004, as amended. The Company acknowledges that
Executive will have the right to be represented by legal counsel at
any arbitration proceeding. Questions of whether a claim is subject
to arbitration under this Agreement) shall be decided by the
arbitrator. Likewise, procedural questions which grow out of the
dispute and bear on the final disposition are also matters for the
arbitrator. The arbitrator shall: (a) have the authority to compel
adequate discovery for the resolution of the dispute and to award
such relief as would otherwise be permitted by law; (b) issue a
written arbitration decision, to include the arbitrator’s
essential findings and conclusions and a statement of the award;
and (c) be authorized to award any or all remedies that Executive
or the Company would be entitled to seek in a court of law. The
Company shall pay all JAMS’ arbitration fees. Any awards or
orders in such arbitrations may be entered and enforced as
judgments in the federal and state courts of any competent
jurisdiction.
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7.
Restrictive
Covenants:
(a)
Nondisclosure. Except as
provided in Section 8(m) below, during the term of this Agreement
and following termination of the Executive's employment with the
Company, except within the scope of Executive’s job,
Executive shall not divulge, communicate, use to the detriment of
the Company or for the benefit of any other person or persons, or
misuse in any way, any Confidential Information (as hereinafter
defined) pertaining to the business of the Company. Any
Confidential Information or data now or hereafter acquired by the
Executive with respect to the business of the Company (which shall
include, but not be limited to, confidential information concerning
each Company's financial condition, prospects, technology,
customers, suppliers, methods of doing business and promotion of
each Company's products and services) shall be deemed a valuable,
special and unique asset of each Company that is received by the
Executive in confidence and as a fiduciary. For purposes of this
Agreement "Confidential Information" means information disclosed to
the Executive or known by the Executive as a consequence of or
through his employment by each Company (including information
conceived, originated, discovered or developed by the Executive)
after the date hereof and not generally known or in the public
domain, about the Company or its business. Notwithstanding the
foregoing, none of the
following information shall be treated as Confidential Information:
(i) information which is known to the public at the time of
disclosure to Executive, (ii) information which becomes known to
the public by publication or otherwise after disclosure to
Executive, (iii) information which Executive can show by written
records was in his possession at the time of disclosure to
Executive, (iv) information about which Executive was aware prior
to the date of this Agreement, (v) information which was rightfully
received by Executive from a third party without violating any
non-disclosure obligation owed to or in favor of the Company, or
(vi) information which was developed by or on behalf of Executive
independently of any disclosure hereunder as shown by written
records. Nothing herein
shall be deemed to restrict the Executive from disclosing
Confidential Information to the extent required by law or by any
court.
(b)
Property Rights; Assignment of
Inventions. Subject to the provisions of Schedule A, with
respect to information, inventions and discoveries or any interest
in any copyright and/or other property right developed, made or
conceived of by Executive (collectively, “Inventions”),
either alone or with others, during his employment by each Company
arising out of such employment and pertinent to any field of
business or research in which, during such employment, each Company
is engaged or (if such is known to or ascertainable by Executive)
is considering engaging, Executive hereby agrees:
(i) that all
such information, inventions and discoveries or any interest in any
copyright and/or other property right, whether or not patented or
patentable, shall be and remain the exclusive property of the
Company;
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(ii) to
disclose promptly to an authorized representative of the Company
all such information, inventions and discoveries or any copyright
and/or other property right and all information in Executive's
possession as to possible applications and uses
thereof;
(iii)
not to file any patent application relating to any such invention
or discovery except with the prior written consent of an authorized
officer of the Company (other than Executive);
(iv)
that Executive hereby waives and releases any and all rights
Executive may have in and to such information, inventions and
discoveries, and hereby assigns to Executive and/or its nominees
all of Executive's right, title and interest in them, and all
Executive's right, title and interest in any patent, patent
application, copyright or other property right based thereon.
Executive hereby irrevocably designates and appoints the Company
and each of its duly authorized officers and agents as his agent
and attorney-in-fact to act for his and on his behalf and in his
stead to execute and file any document and to do all other lawfully
permitted acts to further the prosecution, issuance and enforcement
of any such patent, patent application, copyright or other property
right with the same force and effect as if executed and delivered
by Executive; and
(v) at
the request of the Company, and without expense to Executive, to
execute such documents and perform such other acts as the Company
deems necessary or appropriate, for the Company to obtain patents
on such inventions in a jurisdiction or jurisdictions designated by
the Company, and to assign to the Company or their respective
designees such inventions and any and all patent applications and
patents relating thereto.
Notwithstanding
anything to the contrary above, the Parties agree that this
Agreement will not be deemed to require assignment of any Invention
that is covered under California Labor Code section 2870(a)
provided that that nothing herein shall forbid or restrict the
right of the Company to provide for full title to certain patents
and Inventions to be in the United States, as required by contracts
between the Company and the United States or any of its
agencies.
8.
General:
(a)
Successors and Assigns: The
provisions of this Agreement shall inure to the benefit of and be
binding upon the Company, Executive and each and all of their
respective heirs, legal representatives, successors and assigns.
The duties, responsibilities and obligations of Executive under
this Agreement shall be personal and not assignable or delegable by
Executive in any manner whatsoever to any person, corporation,
partnership, firm, company, joint venture or other entity.
Executive may not assign, transfer, convey, mortgage, pledge or in
any other manner encumber the compensation or other benefits to be
received by his or any rights which he may have pursuant to the
terms and provisions of this Agreement.
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(b)
Amendments; Waivers: No
provision of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in
writing and signed by Executive and by an authorized officer of the
Company (other than Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of
this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or
provision at another time.
(c)
Notices: Any notices to be
given pursuant to this Agreement by either party may be effected by
personal delivery or by overnight delivery with receipt requested.
Mailed notices shall be addressed to the parties at the addresses
stated below, but each party may change its or his/her address by
written notice to the other in accordance with this subsection (c).
Mailed notices to Executive shall be addressed as
follows:
Xxxxx
Xxxxx
E-mail:
xxxxx.xxxxx@xxx.xxx
Mailed
notices to the Company shall be addressed as follows:
Georgetown
Translational Pharmaceuticals, Inc.
Attention: Xxxxxxx
X. Xxxxxxx, Executive Chairman
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 000
Xxxxx,
XX 00000
(d)
Entire Agreement: This
Agreement constitutes the entire employment agreement among
Executive and the Company regarding the terms and conditions of his
employment, with the exception of (a) any agreements referenced or
described in this Agreement and (b) any stock option, stock grant,
restricted stock, or other Company equity-related agreements among
Executive and the Company (including, but not limited, to Section
2(d) of the Executive Employment Agreement between Executive and
the Company dated November 16, 2017. This Agreement (including the
other documents referenced in the previous sentence) supersedes all
prior negotiations, representations or agreements among Executive
and the Company, whether written or oral, concerning Executive's
employment by the Company.
(e)
Withholding Taxes: All
payments made under this Agreement shall be subject to reduction to
reflect taxes required to be withheld by law.
(f)
Counterparts: This Agreement
may be executed by the Company and Executive in counterparts, each
of which shall be deemed an original and which together shall
constitute one instrument.
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(g)
Headings: Each and all of
the headings contained in this Agreement are for reference purposes
only and shall not in any manner whatsoever affect the construction
or interpretation of this Agreement or be deemed a part of this
Agreement for any purpose whatsoever.
(h)
Savings Provision: To the
extent that any provision of this Agreement or any paragraph, term,
provision, sentence, phrase, clause or word of this Agreement shall
be found to be illegal or unenforceable for any reason, such
paragraph, term, provision, sentence, phrase, clause or word shall
be modified or deleted in such a manner as to make this Agreement,
as so modified, legal and enforceable under applicable laws. The
remainder of this Agreement shall continue in full force and
effect.
(i)
Construction: The language
of this Agreement and of each and every paragraph, term and
provision of this Agreement shall, in all cases, for any and all
purposes, and in any and all circumstances whatsoever be construed
as a whole, according to its fair meaning, not strictly for or
against Executive or the Company, and with no regard whatsoever to
the identity or status of any person or persons who drafted all or
any portion of this Agreement.
(j)
Further Assurances: From
time to time, at the Company's request and without further
consideration, Executive shall execute and deliver such additional
documents and take all such further action as reasonably requested
by the Company to be necessary or desirable to make effective, in
the most expeditious manner possible, the terms of this Agreement
and to provide adequate assurance of Executive's due performance
hereunder.
(k)
Governing Law: Executive and
the Company agree that this Agreement shall be interpreted in
accordance with and governed by the laws of the State of
California.
(l)
Board Approval: The Company
warrants to Executive that the Board of Directors of the Company
has ratified and approved this Agreement, and that the Company will
cause the appropriate disclosure filing to be made with the
Securities and Exchange Commission in a timely manner.
(m) Protected
Activity Not Prohibited. Executive understands that nothing
in this Agreement limits or prohibits him from filing a charge or
complaint with, or otherwise communicating or cooperating with or
participating in any investigation or proceeding that may be
conducted by, any federal, state or local government agency or
commission, including the Securities and Exchange Commission, the
Equal Employment Opportunity Commission, the Occupational Safety
and Health Administration, and the National Labor Relations Board
(“Government Agencies”), including disclosing documents
or other information as permitted by law, without giving notice to,
or receiving authorization from, the Company, discussing the terms
and conditions of his employment with others to the extent
expressly permitted by Section 7 of the National Labor Relations
Act. Notwithstanding, in making any such disclosures or
communications, Executive agrees to take all reasonable precautions
to prevent any unauthorized use or disclosure of any information
that may constitute Company Confidential Information to any parties
other than the Government Agencies.
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9.
409A:
Notwithstanding
anything to the contrary set forth herein, any payments and
benefits provided under this Agreement that constitute
“deferred compensation” within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended
(“Code”) and the regulations and other guidance
thereunder and any state law of similar effect (collectively,
“Section 409A”) shall not commence in connection with
your termination of employment unless and until you have also
incurred a “separation from service” (as such term is
defined in Treasury Regulation Section 1.409A-1(h)
(“Separation From Service”), unless the Company
reasonably determines that such amounts may be provided to you
without causing you to incur the additional 20% tax under Section
409A. It is intended that each installment of severance pay
provided for in this Agreement is a separate “payment”
for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). For
the avoidance of doubt, it is intended that severance payments set
forth in this Agreement satisfy, to the greatest extent possible,
the exceptions from the application of Section 409A provided under
Treasury Regulation Sections 1.409A-1(b)(4) and 1.409A-1(b)(9). If
the Company (or, if applicable, the successor entity thereto)
determines that any payments or benefits constitute “deferred
compensation” under Section 409A and you are, on the
termination of service, a “specified employee” of the
Company or any successor entity thereto, as such term is defined in
Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent
necessary to avoid the incurrence of the adverse personal tax
consequences under Section 409A, the timing of the payments and
benefits shall be delayed until the earlier to occur of: (a) the
date that is six months and one day after your Separation From
Service, or (b) the date of your death (such applicable date, the
“Specified Employee Initial Payment Date”). On the
Specified Employee Initial Payment Date, the Company (or the
successor entity thereto, as applicable) shall (i) pay to you a
lump sum amount equal to the sum of the payments and benefits that
you would otherwise have received through the Specified Employee
Initial Payment Date if the commencement of the payment of such
amounts had not been so delayed pursuant to this Section and (ii)
commence paying the balance of the payments and benefits in
accordance with the applicable payment schedules set forth in this
Agreement. All reimbursements provided under this Agreement shall
be subject to the following requirements: (i) the amount of in-kind
benefits provided or reimbursable expenses incurred in one taxable
year shall not affect the in-kind benefits to be provided or the
expenses eligible for reimbursement in any other taxable year, (ii)
all reimbursements shall be paid as soon as administratively
practicable, but in no event shall any reimbursement be paid after
the last day of the taxable year following the taxable year in
which the expense was incurred, and (iii) the right to
reimbursement or in-kind benefits is not subject to liquidation or
exchange for any other benefit. It is intended that all payments
and benefits under this Agreement shall either comply with or be
exempt from the requirements of Section 409A, and any ambiguity
contained herein shall be interpreted in such manner so as to avoid
adverse personal tax consequences under Section 409A.
12
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year written below.
EXECUTIVE:
Date:
February 15, 2018
/s/
Xxxxx Xxxxx
Xxxxx Xxxxx
Date:
February 15, 2018
/s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
CFO
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Attachment 1
California Labor Code Provisions
2870.
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights
in an invention to his or her employer shall not apply to an
invention that the employee developed entirely on his or her own
time without using the employer's equipment, supplies, facilities,
or trade secret information except for those inventions that
either:
(1)
Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer;
or
(2)
Result from any work performed by the employee for the
employer.
(b) To
the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from
being required to be assigned under subdivision (a), the provision
is against the public policy of this state and is
unenforceable.
2871.
No employer shall require a provision made void and unenforceable
by Section 2870 as a condition of employment or continued
employment. Nothing in this article shall be construed to forbid or
restrict the right of an employer to provide in contracts of
employment for disclosure, provided that any such disclosures be
received in confidence, of all of the employee's inventions made
solely or jointly with others during the term of his or her
employment, a review process by the employer to determine such
issues as may arise, and for full title to certain patents and
inventions to be in the United States, as required by contracts
between the employer and the United States or any of its
agencies.
2872.
If an employment agreement entered into after January 1, 1980,
contains a provision requiring the employee to assign or offer to
assign any of his or her rights in any invention to his or her
employer, the employer must also, at the time the agreement is
made, provide a written notification to the employee that the
agreement does not apply to an invention which qualifies fully
under the provisions of Section 2870. In any suit or action arising
thereunder, the burden of proof shall be on the employee claiming
the benefits of its provisions.
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