EMPLOYMENT AGREEMENT
This
Employment Agreement (the “Agreement”),
dated as of September 2, 2009 (the “Effective
Date”), is made by and between GenSpera, Inc., a Delaware corporation
(the “Company”),
and Xxxxx Xxxxxx (“Executive”).
This Agreement is intended to confirm the understanding and set forth the
agreement between the Company and Executive with respect to Executive’s
employment by the Company. In consideration of the mutual promises and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the Company and the Executive hereby agree as
follows:
|
1.
|
Employment &
Directorship.
|
(a) Title and
Duties. Subject to the terms and conditions of this Agreement, the
Company will employ Executive, and Executive will be employed by the Company, as
Chairman and Chief Executive Officer (“CEO”),
reporting to the Board of Directors of the Company (the “Board”).
Executive will have the responsibilities, duties and authority commensurate with
said position. Executive will also perform such other services of an
executive nature for the Company as may be reasonably assigned to Executive from
time to time by the Board.
(b) Devotion to
Duties. For so long as Executive is employed hereunder, Executive
will devote substantially all of Executive’s business time and energies to the
business and affairs of the Company; provided
that nothing contained in this Section 1(b) will be deemed to prevent or limit
Executive’s right to manage Executive’s personal investments on Executive’s own
personal time, including, without limitation, the right to make passive
investments in the securities of (i) any entity which Executive does not
control, directly or indirectly, and which does not compete with the Company, or
(ii) any publicly held entity (other than the Company or its related entities)
so long as Executive’s aggregate direct and indirect interest does not exceed
four and 99/100 percent (4.99%) of the issued and outstanding securities of any
class of securities of such publicly held entity. Except as set forth
on Exhibit
A hereto, Executive represents that Executive is not currently a director
(or similar position) of any other entity and is not employed by or providing
consulting services to any other person or entity, and Executive agrees to
refrain from undertaking any such position or engagement without the prior
approval of the Board, which approval shall not be unreasonably withheld.
Executive may continue to serve as a director for the entities listed on Exhibit
A provided that such service does not create any conflicts,
ethical or otherwise, with Executive’s responsibilities to the Company and
further provided that Executive’s time commitments do not unreasonably interfere
with his fulfillment of his responsibilities hereunder, as determined by the
Board or its designated committee thereof. Executives affiliation
with the entities listed on Exhibit
A are subject to periodic review by the Board or its designated committee
for purpose of compliance with the preceding sentence.
(c) Directorship. In the
event that Executive is elected to serve on the Company’s Board, the Executive
agrees to accept election, as director of the Company, without any compensation
therefore other than as specified in this Agreement.
|
2.
|
Term of Agreement;
Termination of Employment.
|
(a)
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. Such notice or such termination of this Agreement
shall not on its own have the effect of terminating Executive’s employment, nor
shall it constitute Cause (as defined below). The duration of this
Agreement is referred to as the “Term.”
1
(b) Termination of
Employment. Subject to the provisions of Section 4, either the
Executive or the Company may terminate the employment relationship at any time
for any reason. Notwithstanding anything else contained in this Agreement,
Executive’s employment during the Term will terminate upon the earliest to occur
of the following:
(i) Death.
Immediately upon Executive’s death;
(ii)
Termination by the
Company.
(A)
If because of Disability (as defined below), then upon written notice by the
Company to Executive that Executive’s employment is being terminated as a result
of Executive’s Disability, which termination shall be effective on the date of
such notice;
(B)
If for Cause (as defined below), then upon written notice by the Company to
Executive that states that Executive’s employment is being terminated for Cause
and sets forth the specific alleged Cause for termination and the factual basis
supporting the alleged Cause, which termination shall be effective on the date
of such notice or such later date as specified in writing by the Board;
or
(C)
If without Cause (i.e., for reasons other than Sections 2(b)(ii)(A) or (B)),
then upon written notice by the Company to Executive that Executive’s employment
is being terminated without Cause, which termination shall be effective on the
date of such notice or such later date as specified in writing by the Board;
or
(iii)
Termination by
Executive.
(A) If
for Good Reason (as defined below), then upon written notice by Executive to the
Company that states that Executive is terminating Executive’s employment for
Good Reason and sets forth the specific alleged Good Reason for termination and
the factual basis supporting the alleged Good Reason, such termination shall be
effective on the date of such notice; or
(B) If
without Good Reason, then upon written notice by Executive to the Company that
Executive is terminating Executive’s employment, which termination shall be
effective, at Executive’s election, not less than thirty (30) days and not more
than sixty (60) days after the date of such notice; provided that
the Executive may request a shorter period subject to Board approval;
and further
provided that the Board may choose to accept Executive’s
resignation effective as of an earlier date.
Notwithstanding
anything in this Section 2(b), the Company may at any point terminate
Executive’s employment for Cause prior to the effective date of any other
termination contemplated hereunder if such Cause exists.
2
(c) Definition of
“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) Definition of
“Cause”. 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 (including the Proprietary Information, Inventions, and Competition
Agreement attached here as Exhibit
B ), 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.
(e) Definition of “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 Executive’s Target Annual Bonus as compared to the
Target Annual Bonus set for the previous fiscal year.
(f) Board
Membership. Upon termination of Executive’s employment for any
reason, if so requested by a majority of the Board, Executive shall immediately
resign in writing as a director of the Company.
3
3.
Compensation.
(a) Base Salary.
While Executive is employed hereunder, the Company will pay Executive a base
salary at the gross annualized rate of $240,000.00 (the “Base
Salary”), paid in accordance with the Company’s usual payroll
practices. The Base Salary will be subject to review annually or on such
periodic basis (no less than annually) as the Company reviews the compensation
of the Company’s other senior executives and may be adjusted upwards in the sole
discretion of the Board or its designee. The Company will deduct from each
such installment any amounts required to be deducted or withheld under
applicable law or under any employee benefit plan in which Executive
participates.
(b) Annual Bonus.
Executive may be eligible to earn an Annual Bonus relating to each fiscal year,
based on the achievement of individual and Company written goals established on
an annual basis by the Board within thirty (30) days of the beginning of
the fiscal year. Such goals may include minimum working capital or
other financial requirements as a condition to receiving the Annual
Bonus. The applicable bonus amount shall be determined at such time
as the Board establishes the written goals for each applicable year (“Target
Annual Bonus”). Any awarded Annual Bonus shall be paid within
2 ½ months of the year to which it relates. Notwithstanding the
forgoing, Executive acknowledges that the bonus may be comprised of cash and
non-cash compensation as determined at the sole discretion of the Board or its
designee.
(c) Discretionary Bonus.
At the sole discretion of the Board, the Executive shall be eligible to receive
an annual discretionary bonus (the “Discretionary
Bonus”) based upon his performance during the prior year. Any
awarded Discretionary Bonus shall be paid within 2 ½ months of being
granted. Notwithstanding the forgoing, Executive acknowledges that
the bonus may be comprised of cash or non-cash compensation as determined at the
sole discretion of the Board or its designee.
(d) Stock Option
Grants.
The Company shall grant Executive the stock options as provided
for on Exhibit
C (“Options”). In connection with such
grants, the Executive shall enter into the Company’s standard stock option
agreement which will incorporate the vesting schedule and other terms described
in Exhibit
C. The Board shall review the aggregate number of stock options granted
to the Executive not less frequently than annually in order to determine whether
an increase in the number thereof is warranted.
(e) Fringe
Benefits. In addition to any benefits provided by this Agreement,
Executive shall be entitled to participate generally in all employee benefit,
welfare and other plans, practices, policies and programs (collectively “Benefit
Plans”) and fringe benefits maintained by the Company from time to time
on a basis no less favorable than those provided to other similarly-situated
executives of the Company. Executive understands that, except when
prohibited by applicable law, the Company’s Benefit Plans and fringe benefits
may be amended, enlarged, diminished or terminated prospectively by the Company
from time to time, in its sole discretion, and that such shall not be deemed to
be a breach of this Agreement. Executive acknowledges that at
present, the Company does not maintain any Benefit Plans and nothing contained
herein shall obligate the Company to establish any such plans.
(f) Paid Time Off.
Executive will be entitled to an initial thirty (30) days of Paid Time Off
(“PTO”) per
year, administered in accordance with and subject to the terms of the Company’s
PTO policy, as it may be amended prospectively from time to
time. Executive is entitled to accrue additional PTO days for any
days not taken in the prior year provided that in no event shall Executive be
entitled to more than forty five (45) PTO days per any calendar
year.
(g) Reimbursement of
Expenses. The Company will promptly reimburse Executive for all
ordinary and reasonable out-of-pocket business expenses that are incurred by
Executive in furtherance of the Company’s business in accordance with the
Company’s policies with respect thereto as in effect from time to
time.
4
4. Compensation Upon
Termination.
(a) Definition of Accrued
Obligations. For purposes of this Agreement, “Accrued
Obligations ” means (i) the portion of Executive’s Base Salary that has
accrued prior to any termination of Executive’s employment with the Company and
has not yet been paid; (ii) to the extent required by law and the Company’s
policy, an amount equal to the value of Executive’s accrued but unused PTO days;
(iii) the amount of any expenses properly incurred by Executive on behalf of the
Company prior to any such termination and not yet reimbursed; (iv) the Annual
Bonus related to the most recently completed fiscal year, if not already paid
and if the termination is not for Cause (the amount of which shall be determined
in accordance with Section 3(b) above); (v) any accrued but unused PTO days; and
(vi) any applicable Discretionary Bonus previously awarded, if not already
paid and if the termination is not for Cause. Executive’s entitlement
to any other compensation or benefit under any plan or policy of the Company,
including but not limited to applicable equity compensation plans, shall be
governed by and determined in accordance with the terms of such plans or
policies, except as otherwise specified in this Agreement.
(b) Termination for Cause, By
the Executive
without Good Reason, or as a Result of
Executive’s Disability or Death.
(i)
If Executive’s employment is terminated during the Term either by the Company
for Cause or by Executive without Good Reason, or if Executive’s employment
terminates as a result of the Executive’s death, the Company will pay the
Accrued Obligations to Executive, or his estate, promptly following the
effective date of such termination.
(ii)
In case of termination during the Term by the Company as a result of the
Executive’s Disability, the Company will pay Executive the Accrued Obligations
plus an amount equal to twelve (12) months of Executive’s then-current Base
Salary.
(c) Termination by the Company
without Cause
or by Executive with Good Reason. If Executive’s employment is
terminated by the Company without Cause or by Executive with Good Reason, during
the Term, then:
(i)
The Company will pay the Accrued Obligations to Executive promptly following the
effective date of such termination;
(ii)
The Company will pay Executive a total amount equal to thirty six (36) months of
Executive’s then current Base Salary, less applicable taxes and deductions; to
be made in approximately equal biweekly installments in accordance with the
Company’s usual payroll practices over a period of thirty six (36) months
beginning after the effective date of the separation agreement described in
Section 4(d);
(iii)
The Company will continue to provide medical insurance coverage for Executive
and Executive’s family, subject to the requirements of COBRA and subject to
Executive’s payment of a premium co-pay related to the coverage that is no less
favorable than the premium co-pay charged to active employees of the Company
electing the same coverage, for thirty six (36) months from the Separation
Date; provided
, that the Company shall have no obligation to provide such coverage if
Executive fails to elect COBRA benefits in a timely fashion or if Executive
becomes eligible for medical coverage with another employer. In the
event the Company does not provide medical insurance coverage to its employees
but instead provides for expense reimbursement in connection with the such
premiums, the Company will continue to reimburse Execute for such premiums for a
period of thirty six (36) months; and
5
(iv)
That portion of unvested or restricted securities then held by Executive,
whether granted herein or subsequently, if any, shall vest and be immediately
exercisable as of the date of the employment termination. All options and
shares of restricted stock shall otherwise be subject to the terms and
conditions of their respective agreements and with the applicable
plan.
(d) Release of Claims/Board
Resignation. The Company shall not be obligated to pay Executive
any of the compensation or provide Executive any of the benefits set forth in
Section 4(b)(i) or 4(c) (other than the Accrued Obligations) unless and until
Executive has (i) executed a timely separation agreement in a form acceptable to
the Company, which shall include a release of claims between the Company and the
Executive and may include provisions regarding mutual non-disparagement and
confidentiality; and (ii) resigned from the Board, if so requested pursuant to
Section 2(e).
(e) Other Payments or Benefits
Owing. The payments and benefits set forth in this Section 4 shall
be in addition to any payments or benefits owing to Executive pursuant to a
severance agreement. Executive shall not be eligible for any other
payments, including but not limited to additional Base Salary payments,
bonuses, commissions, or other forms of compensation or benefits, except as
may otherwise be set forth in this Agreement, other agreements between the
Company and Executive, including severance agreements, or in Company plan
documents with respect to plans in which Executive is a
participant.
(f)
Notwithstanding any other provision with respect to the timing of payments under
Section 4, 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 Section 4 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 Section 4.
5. Competition. Executive agrees to
sign and return to the Company the Proprietary Information, Inventions, and
Competition Agreement (the “Proprietary Information Agreement”) attached hereto
as Exhibit B
concurrently with the execution of this 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.
6. Property and
Records. Upon termination of Executive’s employment hereunder for
any reason or for no reason, Executive will deliver to the Company any property
of the Company which may be in Executive’s possession, including blackberry-type
devices, laptops, cell phones, products, materials, memoranda, notes, records,
reports or other documents or photocopies of the same.
7.
General.
(a) 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.
6
(b) Entire
Agreement/Modification. This Agreement, together with the
Proprietary Information Agreement attached hereto, and the other agreements
specifically referred to herein, embodies the entire agreement and understanding
between the parties hereto and supersedes all prior oral or written agreements
and understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Agreement (or in a subsequent written modification or amendment
executed by the parties hereto) will affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
(c) Waivers and
Consents. The terms and provisions of this Agreement may be waived,
or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions. No
such waiver or consent will be deemed to be or will 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 will be effective only in the
specific instance and for the purpose for which it was given, and will not
constitute a continuing waiver or consent.
(d) Assignment and Binding
Effect. The Company may assign its rights and obligations hereunder
to any person or entity that succeeds to all or substantially all of the
Company’s business or that aspect of the Company’s business in which Executive
is principally involved. Executive may not assign Executive’s rights and
obligations under this Agreement without the prior written consent of the
Company. This Agreement shall be binding upon Executive, Executive’s
heirs, executors and administrators and the Company, and its successors and
assigns, and shall inure to the benefit of Executive, Executive’s heirs,
executors and administrators and the Company, and its successors and
assigns.
(e)
Indemnification. Executive shall be entitled to the same rights, if
any, to indemnification and coverage under the Company’s Directors and Officers
Liability Insurance policies as they may exist from time to time to the same
extent as other officers and directors of the Company.
(f) Governing Law.
This Agreement and the rights and obligations of the parties hereunder will be
construed in accordance with and governed by the law of Texas, without giving
effect to conflict of law principles.
(g) Severability.
The parties intend this Agreement to be enforced as written. However, should any
provisions of this Agreement be held by a court of law to be illegal, invalid or
unenforceable, the legality, validity and enforceability of the remaining
provisions of this Agreement shall not be affected or impaired
thereby.
(h) Headings and
Captions. The headings and captions of the various subdivisions of
this Agreement are for convenience of reference only and will in no way modify
or affect the meaning or construction of any of the terms or provisions
hereof.
8.
Counterparts.
This Agreement may be executed in two or more counterparts, and by different
parties hereto on separate counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument. For all purposes a signature by fax shall be treated as an
original.
7
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Employment
Agreement as of the date first written above.
|
EXECUTIVE
|
GENSPERA,
INC.
|
||
|
|
By:
|
||
|
(Signature)
|
Xxxx
Xxxxx, Director
|
||
|
Print
Name: Xxxxx Xxxxxx
|
|||
8
Exhibit
A
Exhibit B
Exhibit C
Prior Performance
Grant
As
partial compensation for services rendered by Executive during 2007 and 2008,
the Company shall grant Executive a stock option to purchase 300,000 shares of
the Company’s common stock, par value $0.01 per share (the “Common
Stock”) at an exercise price of $1.65 per share (the “Option”).
The Option shall be governed by the Company’s 2009 Executive Compensation Plan
(the “Plan”). The
Option shall be 100% vested on the Effective Date of this
Agreement. The Option shall have a term of 7 years from date of
grant. The vested Performance Options shall remain exercisable for: (i) the
remaining term of the option if Executive is no longer employed by the Company
as a result of terminated without Cause or with Good Reason. In the
event Executive is no longer employed for any other reason such as death or
disability, the terms of the Plan shall govern. In connection with
such grant, the Executive shall enter into the Company’s standard stock option
agreement which will incorporate the terms described in this
paragraph.
Inducement
Grant
As an
inducement for entering into the Agreement, Executive shall be granted a stock
option to purchase 200,000 shares of Common Stock at an exercise price of $1.65
per share (the “Inducement Option”).
The Inducement Option shall be governed by the Plan. . The Inducement
Option shall be 100% vested on the grant date and have a term of 7
years. The vested Performance Options shall remain exercisable for:
(i) the remaining term of the option if Executive is no longer employed by the
Company as a result of terminated without Cause or with Good
Reason. In the event Executive is no longer employed for any other
reason such as death or disability, the terms of the Plan shall
govern. In connection with such grant, the Executive shall
enter into the Company’s standard stock option agreement which will incorporate
the terms described in this paragraph.
Performance
Grant
The
Company shall grant Executive a stock option to purchase 500,000 shares of
Common Stock at an exercise price of $1.65 per share (the “Performance
Option”).
The Performance Option shall be governed by the Plan. For so long as the
Executive is an employee of the Company, the Performance Option shall vest, if
at all, upon the following milestones being achieved:
|
|
·
|
150,000
upon: (i) the Company’s Common Stock becoming listed on a national
exchange or on the Over-the-Counter Bulletin Board; and (ii) the
enrollment of the first patient in a Phase 1 clinical trial for
G-202.
|
|
|
·
|
200,000
upon: (i) enrollment of first patient in a second Phase 1 clinical trial;
(ii) enrollment of first patient in a Phase II clinical trial or an
expanded cohort in a Phase 1B clinical trial; or (iii)
enrollment of tenth patient in a Phase II clinical trial or in an expanded
cohort in a phase 1B clinical
trial.
|
|
|
·
|
150,000
upon an additional: (i) enrollment of first patient in a second Phase 1
clinical trial; (ii) enrollment of first patient in a Phase II clinical
trial or an expanded cohort in a Phase 1B clinical trial; or
(iii) enrollment of tenth patient in a Phase II clinical trial or in an
expanded cohort in a phase 1B clinical trial. (for purposes of
clarity, these milestones are in additional to those required for the
vesting of options to purchase 200,000 shares of Common Stock as contained
in the paragraph immediately
above)
|
Subject
to any applicable acceleration provisions contained in this Agreement or the
Severance Agreement, upon termination of Executive’s employment with the
Company, Executive’s rights to any portion of the Performance Option that has
not yet vested as of the date of such termination shall not vest and all of
Executive’s rights to such unvested portion of the Option shall terminate.
In the event of a Change of Control (as such term is defined in the Plan),
the entire Option shall vest and become immediately exercisable. The Option
shall have a term of 7 years from date of grant. The vested
Performance Options shall remain exercisable for: (i) the remaining term of the
option if Executive is no longer employed by the Company as a result of
terminated without Cause or with Good Reason. In the event Executive
is no longer employed for any other reason such as death or disability, the
terms of the Plan shall govern. In connection with such grant, the
Executive shall enter into the Company’s standard stock option agreement which
will incorporate the foregoing vesting schedule and other terms described in
this section.
