Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of March 12, 2015 (the
“Effective Date”), is by and between MATINAS BIOPHARMA HOLDINGS, INC., a
Delaware corporation (the “Company”) and Douglas F. Kling (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to employ the Executive as its Senior Vice
President, Clinical Development and Project Management and the Executive desires
to accept such employment, on the terms and conditions set forth in this
Agreement; and

 

WHEREAS, the Company and the Executive have mutually agreed that, as of the
Effective Date, this Agreement shall govern the terms of employment between the
Executive and the Company.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:

 

ARTICLE 1
Employment; TERM OF AGREEMENT

 

Section 1.1.            Employment and Acceptance. During the Term (as defined
in Section 1.2), the Company shall employ the Executive, and the Executive shall
accept such employment and serve the Company, in each case, subject to the terms
and conditions of this Agreement.

 

Section 1.2.            Term. The employment relationship hereunder shall be for
the period commencing on the Effective Date and, subject to earlier termination
as provided in ARTICLE 4, ending on the third anniversary of the Effective Date
(the “Term”). In the event that the Executive’s employment with the Company
terminates, the Company’s obligation to continue to pay, after the Termination
Date (as defined in Section 4.2(b)), Base Salary (as defined in Section 3.1(a)),
Annual Bonus (as defined in Section 3.1(b)) and other unaccrued benefits shall
terminate, except as may be provided for in ARTICLE 4.

 

ARTICLE 2
TITLE; DUTIES AND OBLIGATIONS; LOCATION

 

Section 2.1.            Title. The Company shall employ the Executive to render
exclusive and full-time services to the Company. The Executive shall serve in
the capacity of Senior Vice President, Clinical Development and Project
Management.

 

 

 

 

Section 2.2.            Duties. The Executive shall report to the Company’s
Chief Executive Officer and be subject to the lawful direction of the Company’s
Board of Directors (the “Board”). The Executive agrees to perform to the best of
his ability, experience and talent those acts and duties, consistent with the
position of Senior Vice President, Clinical Development and Project Management
as the Board (and/or the Chief Executive Officer) shall from time to time
direct. During the Term, the Executive also shall serve in such other
executive-level positions or capacities as may, from time to time, be reasonably
requested by the Board and/or the CEO, including, without limitation (subject to
election, appointment, re-election or re-appointment, as applicable) as (a) a
member of the Board and/or as a member of the board of directors or similar
governing body of any of the Company’s subsidiaries or other Affiliates (as
defined below), (b) an officer of any of the Company’s subsidiaries or other
Affiliates, and/or (c) a member of any committee of the Company and/or any of
its subsidiaries or other Affiliates, in each case, for no additional
compensation. As used in this Agreement, “Affiliate” of any individual or entity
means any other individual or entity that directly or individual controls, is
controlled by, or is under common control with, the individual or entity. For
avoidance of doubt, any election of the Executive as a member of the Board is
independent from the employment of the Executive under this Agreement and
subject to normal procedures, bylaws and agreements regulating the election
and/or removal of the members of the Board; provided, however, that, as set
forth above, such service shall be for no additional compensation.

 

Section 2.3.            Compliance with Policies, etc. During the Term, the
Executive shall be bound by, and comply fully with, all of the Company’s
policies and procedures for employees and officers in place from time to time,
including, but not limited to, all terms and conditions set forth in the
Company’s employee handbook, compliance manual, codes of conduct and any other
memoranda and communications applicable to the Executive pertaining to the
policies, procedures, rules and regulations, as currently in effect and as may
be amended from time to time. These policies and procedures include, among other
things and without limitation, the Executive’s obligations to comply with the
Company’s rules regarding confidential and proprietary information and trade
secrets.

 

Section 2.4.            Time Commitment. During the Term, the Executive shall
use his best efforts to promote the interests of the Company (including its
subsidiaries and other Affiliates) and shall devote all of his business time,
ability and attention to the performance of his duties for the Company and shall
not, directly or indirectly, render any services to any other person or
organization, whether for compensation or otherwise, except with the Board’s
prior written consent or as specified on Exhibit C of the Covenants Agreement
(as defined in Section 5.1), provided that the foregoing shall not prevent the
Executive from (i) participating in charitable, civic, educational,
professional, community or industry affairs, or (ii) managing the Executive’s
passive personal investments, so long as, in each case, such activities
individually or in the aggregate do not materially interfere or conflict with
the Executive’s duties hereunder or create a potential business or fiduciary
conflict (in each case, as determined by the Board).

 

Section 2.5.            Location. The Executive’s principal place of business
for the performance of his duties under this Agreement shall be at the principal
executive office of the Company. Notwithstanding, the foregoing, the Executive
shall be required to travel as necessary to perform his duties hereunder.

 

ARTICLE 3
COMPENSATION AND BENEFITS; EXPENSES

 

Section 3.1.            Compensation and Benefits. For all services rendered by
the Executive in any capacity during the Term (including, without limitation,
serving as an officer, director or member of any committee of the Company or any
of its subsidiaries or other Affiliates), the Executive shall be compensated as
follows (subject, in each case, to the provisions of Article 4 below):

 

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(a)            Base Salary. During the Term, the Company shall pay the Executive
a base salary (the “Base Salary”) at the annualized rate of 250,000, which shall
be subject to customary withholdings and authorized deductions and be payable in
equal installments in accordance with the Company’s customary payroll practices
in place from time to time. The Executive’s Base salary shall be subject to
periodic adjustments as the Board and/or the Compensation Committee of the Board
(the “Compensation Committee”) shall in its/their discretion deem appropriate.
As used in this Agreement, the term “Base Salary” shall refer to Base Salary as
may be adjusted from time to time.

 

(b)            Annual Bonus. For each calendar year ending during the Term
(beginning with the calendar year ending December 31, 2015), the Executive shall
be eligible to receive an annual bonus (the “Annual Bonus”) with a target amount
equal to thirty percent (30%) of the Base Salary earned by the Executive for
such calendar year (the “Target Annual Bonus”). The actual amount of each Annual
Bonus will be based upon the level of achievement of the Company’s corporate
objectives and the Executive’s individual objectives, in each case, as
established by the Board or the Compensation Committee (taking into account the
input of the Chief Executive Officer with respect to the establishment of the
Executive’s individual objectives) for the calendar year with respect to which
such Annual Bonus relates. The determination of the level of achievement of the
corporate objectives and the Executive’s individual performance objectives for a
year shall be made by the Board or the Compensation Committee Committee (taking
into account the input of the Chief Executive Officer with respect to the level
of achievement of the Executive’s individual objectives), in its reasonable
discretion. Each Annual Bonus for a calendar year, to the extent earned, will be
paid in a lump sum in the following calendar year, within the first 75 days of
such following year. The Annual Bonus shall not be deemed earned until the date
that it is paid. Accordingly, in order for the Executive to receive an Annual
Bonus, the Executive must be actively employed by the Company at the time of
such payment.

 

(c)            Equity Compensation. The Compensation Committee has approved a
grant to the Executive (to be made on Executive’s first day of employment) of
options to purchase up to 350,000 shares of the Company’s common stock pursuant
to the Company’s 2013 Equity Compensation Plan (the “2013 Plan”), on the terms
and conditions determined by the Compensation Committee, with such grant subject
to stockholder approval of the Company’s 2013 Equity Compensation Plan. During
the Term, subject to the terms and conditions established within the 2013 Plan
or any successor equity compensation plan as may be in place from time to time
and separate Award Agreements (as defined in the 2013 Plan), the Executive also
shall be eligible to receive from time to time additional Stock Options, Stock
Unit Awards, Performance Shares, Performance Units, Incentive Bonus Awards,
Other Cash-Based Awards and/or Other Stock-Based Awards (as such capitalized
terms are defined in the 2013 Plan), in amounts, if any, to be approved by the
Board or the Compensation Committee in its discretion.

 

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(d)            Benefit Plans. The Executive shall be entitled to participate in
all employee benefit plans and programs (excluding severance plans, if any)
generally made available by the Company to senior executives of the Company, to
the extent permissible under the general terms and provisions of such plans or
programs and in accordance with the provisions thereof. The Company may amend,
modify or rescind any employee benefit plan or program and/or change employee
contribution amounts to benefit costs without notice in its discretion.

 

(e)            Paid Vacation. The Executive shall be entitled to paid vacation
days in accordance with the Company’s vacation policies in effect from time to
time for its executive team; provided, however, that the Executive shall be
entitled to no less than fifteen (15) paid vacation days per calendar year
during the Term.

 

Section 3.2.            Expense Reimbursement. The Company shall reimburse the
Executive during the Term, in accordance with the Company’s expense
reimbursement policies in place from time, for all reasonable out-of-pocket
business expenses incurred by the Executive in the performance of his duties
hereunder. In order to receive such reimbursement, the Executive shall furnish
to the Company documentary evidence of each such expense in the form required to
comply with the Company’s policies in place from time to time.

 

ARTICLE 4
TERMINATION OF EMPLOYMENT

 

Section 4.1.            Termination Without Cause or Resignation for Good
Reason.

 

(a)            The Company may terminate the Executive’s employment hereunder at
any time without Cause (other than by reason of death or Disability) upon sixty
(60) days prior written notice to the Executive. Executive may terminate his
employment hereunder for Good Reason upon written notice to the Company in
accordance with the provisions set forth in Section 4.1(c).

 

(b)            As used in this Agreement, “Cause” means: (i) a material act, or
act of fraud, committed by the Executive that is intended to result in the
Executive’s personal enrichment to the detriment or at the expense of the
Company or any of its Affiliates; (ii) the Executive is convicted of a felony;
(iii) gross negligence or willful misconduct by the Executive, or failure by the
Executive to perform the duties or obligations reasonably assigned to the
Executive by the Board or the CEO from time to time, which is not cured upon ten
(10) days prior written notice (unless such negligence, misconduct or failure is
not susceptible to cure, as determined in the reasonable discretion of the
Board); or (iv) the Executive violates the Covenants Agreement (as defined in
Section 5.1 below).

 

(c)            As used in this Agreement, “Good Reason” means the occurrence of
any of the following: (1) a material breach by the Company of the terms of this
Agreement; (2) a material reduction in the Executive’s Base Salary; (3) a
material diminution in the Executive’s authority, duties or responsibilities; or
(4) a material change in the geographic location at which the Executive performs
services for the Company; provided, however, that the Executive must notify the
Company within ninety (90) days of the occurrence of any of the foregoing
conditions that he considers it to be a “Good Reason” condition and provide the
Company with at least thirty (30) days in which to cure the condition. If the
Executive fails to provide this notice and cure period prior to his resignation,
or resigns more than six (6) months after the initial existence of the
condition, his resignation will not be deemed to be for “Good Reason.”

 

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(d)            If the Executive’s employment is terminated pursuant to Section
4.1(a) other than during the Post-Change in Control Period (as defined in
Section 4.1(e)), the Executive shall, in full discharge of all of the Company’s
obligations to the Executive, be entitled to receive, and the Company’s sole
obligation to the Executive under this Agreement or otherwise shall be to pay or
provide to the Executive, the following:

 

(i)            the Accrued Obligations (as defined in Section 4.2(b));

 

(ii)            six (6) months accelerated vesting of all of the Executive’s
outstanding stock options, restricted stock and other equity incentive awards;
and

 

(iii)             subject to Section 4.4 and Section 4.5:

 

(A)            payments equal to nine (9) months of the Executive’s Base Salary
(at the rate in effect immediately prior to the Termination Date) (less
applicable withholdings and authorized deductions), to be paid in equal
installments bimonthly in accordance with the Company’s customary payroll
practices, commencing sixty (60) days following the Termination Date (the
“Pre-CIC Severance Payments”); and

 

(B)            if the Executive then participates in the Company’s medical
and/or dental plans and the Executive timely elects to continue and maintain
group health plan coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), the Company will pay monthly,
on the Executive’s behalf, a portion of the cost of such coverage for the nine
(9) months after the Termination Date, which payments will be equal to the
amount of the monthly premium for such coverage, less the amount that the
Executive would have been required to pay if the Executive had remained an
active employee of the Company (the “Pre-CIC COBRA Assistance”); provided,
however, that if and to the extent that the Company may not provide such Pre-CIC
COBRA Assistance without incurring tax penalties or violating any requirement of
the law, the Company shall use its commercially reasonable best efforts to
provide substantially similar assistance in an alternative manner provided that
the cost of doing so does not exceed the cost that the Company would have
incurred had the Pre-CIC COBRA Assistance been provided in the manner described
above or cause a violation of Section 409A (as defined in Section 5.16).

 

(e)            If the Executive’s employment is terminated pursuant to Section
4.1(a) during the twenty-four (24) months immediately following a Change in
Control (as defined below) (the “Post-Change in Control Period”), the Executive
shall, in full discharge of all of the Company’s obligations to the Executive
(and in lieu of any payments and benefits set forth in Section 4.1(d)), be
entitled to receive, and the Company’s sole obligation to the Executive under
this Agreement or otherwise shall be to pay or provide to the Executive, the
following:

 

(i)            the Accrued Obligations;

 

(ii)            full accelerated vesting of all of the Executive’s outstanding
stock options, restricted stock and other equity incentive awards; and

 

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(iii)             subject to Section 4.4 and Section 4.5:

 

(A)            payments equal to eighteen (18) months of the Executive’s Base
Salary (at the rate in effect immediately prior to the Termination Date) (less
applicable withholdings and authorized deductions), to be paid in equal
installments bimonthly in accordance with the Company’s customary payroll
practices, commencing sixty (60) days following the Termination Date (the
“Post-CIC Severance Payments”);

 

(B)            if the Executive then participates in the Company’s medical
and/or dental plans and the Executive timely elects to continue and maintain
group health plan coverage pursuant to COBRA, the Company will pay monthly, on
the Executive’s behalf, a portion of the cost of such coverage for the eighteen
(18) months after the Termination Date, which payments will be equal to the
amount of the monthly premium for such coverage, less the amount that the
Executive would have been required to pay if the Executive had remained an
active employee of the Company (the “Post-CIC COBRA Assistance”); provided,
however, that if and to the extent that the Company may not provide such
Post-CIC COBRA Assistance without incurring tax penalties or violating any
requirement of the law, the Company shall use its commercially reasonable best
efforts to provide substantially similar assistance in an alternative manner
provided that the cost of doing so does not exceed the cost that the Company
would have incurred had the Post-CIC COBRA Assistance been provided in the
manner described above or cause a violation of Section 409A; and

 

(C)            a payment equal to the Executive’s Target Annual Bonus for the
calendar year in which the Termination Date occurs, payable in a lump sum on the
60th day following the Termination Date.

 

(f)            As used in this Agreement, “Change in Control” means (x) a change
in ownership of the Company under clause (i) below or (y) a change in the
ownership of a substantial portion of the assets of the Company under clause
(ii) below:

 

(i)            Change in the Ownership of the Company. A change in the ownership
of the Company shall occur on the date that any one person, or more than one
person acting as a group (as defined in clause (iii) below), acquires ownership
of capital stock of the Company that, together with capital stock held by such
person or group, constitutes more than 50 percent of the total fair market value
or total voting power of the capital stock of the Company. However, if any one
person or more than one person acting as a group, is considered to own more than
50 percent of the total fair market value or total voting power of the capital
stock of the Company, the acquisition of additional capital stock by the same
person or persons shall not be considered to be a change in the ownership of the
Company. An increase in the percentage of capital stock owned by any one person,
or persons acting as a group, as a result of a transaction in which the Company
acquires capital stock in the Company in exchange for property will be treated
as an acquisition of stock for purposes of this paragraph.

 

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(ii)             Change in the Ownership of a Substantial Portion of the
Company’s Assets. A change in the ownership of a substantial portion of the
Company’s assets shall occur on the date that any one person, or more than one
person acting as a group (as defined in clause (iii) below), acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that have a total
gross fair market value equal to or more than 80 percent of the total gross fair
market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions. For this purpose, gross fair market value means the
value of the assets of the Company, or the value of the assets being disposed
of, determined without regard to any liabilities associated with such assets.
There is no Change in Control under this clause (ii) when there is a transfer to
an entity that is controlled by the shareholders of the Company immediately
after the transfer, as provided below in this clause (ii). A transfer of assets
by the Company is not treated as a change in the ownership of such assets if the
assets are transferred to (a) a shareholder of the Company (immediately before
the asset transfer) in exchange for or with respect to its capital stock, (b) an
entity, 50 percent or more of the total value or voting power of which is owned,
directly or indirectly, by the Company, (c) a person, or more than one person
acting as a group, that owns, directly or indirectly, 50 percent or more of the
total value or voting power of all the outstanding capital stock of the Company,
or (d) an entity, at least 50 percent of the total value or voting power of
which is owned, directly or indirectly, by a person described in clause (ii)(c)
of this paragraph. For purposes of this clause (ii), a person's status is
determined immediately after the transfer of the assets.

 

(iii)             Persons Acting as a Group. For purposes of clauses (i) and
(ii) above, persons will not be considered to be acting as a group solely
because they purchase or own capital stock or purchase assets of the Company at
the same time. However, persons will be considered to be acting as a group if
they are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of assets or capital stock, or similar business
transaction with the Company. If a person, including an entity, owns stock in
both corporations that enter into a merger, consolidation, purchase or
acquisition of assets or capital stock, or similar transaction, such shareholder
is considered to be acting as a group with other shareholders in a corporation
only with respect to the ownership in that corporation before the transaction
giving rise to the change and not with respect to the ownership interest in the
other corporation. For purposes of this paragraph, the term “corporation” shall
have the meaning assigned such term under Treasury Regulation section 1.280G-1,
Q&A-45.

 

(iv)             Each of clauses (i) through (iii) above shall be construed and
interpreted consistent with the requirements of Section 409A and any Treasury
Regulations or other guidance issued thereunder.

 

Section 4.2.            Termination for Cause; Voluntary Termination; Expiration
of Term.

 

(a)            The Company may terminate the Executive’s employment hereunder at
any time for Cause upon written notice to the Executive. The Executive may
voluntarily terminate his employment hereunder at any time without Good Reason
upon sixty (60) days prior written notice to the Company; provided, however, the
Company reserves the right, upon written notice to the Executive, to accept the
Executive’s notice of resignation and to accelerate such notice and make the
Executive’s resignation effective immediately, or on such other date prior to
Executive’s intended last day of work as the Company deems appropriate. It is
understood and agreed that the Company’s election to accelerate Executive’s
notice of resignation shall not be deemed a termination by the Company without
Cause for purposes of Section 4.1 of this Agreement or otherwise or constitute
Good Reason (as defined in Section 4.1) for purposes of Section 4.1 of this
Agreement or otherwise. The Executive’s employment shall automatically terminate
upon the expiration of the Term in accordance with Section 1.2.

 

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(b)            If the Executive’s employment is terminated pursuant to Section
4.2(a), the Executive shall, in full discharge of all of the Company’s
obligations to the Executive, be entitled to receive, and the Company’s sole
obligation under this Agreement or otherwise shall be to pay or provide to the
Executive, the following (collectively, the “Accrued Obligations”):

 

(i)            the Executive’s earned, but unpaid, Base Salary through the final
date of the Executive’s employment by the Company (the “Termination Date”),
payable in accordance with the Company’s standard payroll practices;

 

(ii)            the Executive’s accrued, but unused, vacation (in accordance
with the Company’s policies);

 

(iii)             expenses reimbursable under Section 3.2 above incurred on or
prior to the Termination Date but not yet reimbursed; and

 

(iv)             any amounts or benefits that are vested amounts or vested
benefits or that the Executive is otherwise entitled to receive under any plan,
program, policy or practice (with the exception of those, if any, relating to
severance) on the Termination Date, in accordance with such plan, program,
policy, or practice.

 

Section 4.3.            Termination Resulting from Death or Disability.

 

(c)            As the result of any Disability suffered by the Executive, the
Company may, upon five (5) days prior notice to the Executive, terminate the
Executive’s employment under this Agreement. The Executive’s employment shall
automatically terminate upon his death.

 

(d)            “Disability” means a determination by the Company in accordance
with applicable law that as a result of a physical or mental injury or illness,
the Executive is unable to perform the essential functions of his job with or
without reasonable accommodation for a period of (i) ninety (90) consecutive
days; or (ii) one hundred twenty (120) days during any twelve (12) month period.

 

(e)            If the Executive’s employment is terminated pursuant to Section
4.3(a), the Executive or the Executive’s estate, as the case may be, shall be
entitled to receive, and the Company’s sole obligation under this Agreement or
otherwise shall be to pay or provide to the Executive or the Executive’s estate,
as the case may be, the Accrued Obligations.

 

Section 4.4.            Release Agreement. In order to receive the Pre-CIC
Severance Payments or the Post-CIC Severance Payments (collectively referred to
herein as the “Severance Payments”) or the Pre-CIC COBRA Assistance or the
Post-CIC COBRA Assistance (collectively referred to herein as the “COBRA
Assistance”) set forth in Section 4.1 (if eligible), the Executive must timely
execute (and not revoke) a separation agreement and general release (the
“Release Agreement”) in a customary form as is determined to be reasonably
necessary by the Company in its good faith and reasonable discretion. If the
Executive is eligible for Severance Payments and COBRA Assistance pursuant to
Section 4.1, the Company will deliver the Release Agreement to the Executive
within seven (7) calendar days following the Termination Date. The Severance
Payments and COBRA Assistance are subject to the Executive’s execution of such
Release Agreement within 45 days of the Executive’s receipt of the Release
Agreement and the Executive’s non-revocation of such Release Agreement.

 

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Section 4.5.            Post-Termination Breach. Notwithstanding anything to the
contrary contained in this Agreement, the Company’s obligations to provide the
Severance Payments and the COBRA Assistance will immediately cease if the
Executive breaches any of the provisions of the Covenants Agreement, the Release
Agreement or any other agreement the Executive has with the Company.

 

Section 4.6.            Removal from any Boards and Position. If the Executive’s
employment is terminated for any reason under this Agreement, he shall be deemed
(without further action, deed or notice) to resign (i) if a member, from the
Board or board of directors (or similar governing body) of any Affiliate of the
Company or any other board to which he has been appointed or nominated by or on
behalf of the Company and (ii) from all other positions with the Company or any
subsidiary or other Affiliate of the Company, including, but not limited to, as
an officer of the Company and any of its subsidiaries or other Affiliates.

 

ARTICLE 5
GENERAL PROVISIONS

 

Section 5.1.             Company Non-Disclosure and Invention Assignment
Agreement. The Executive acknowledges and confirms that the Non-Disclosure and
Invention Assignment Agreement executed by the Executive in favor of the Company
as of the Effective Date (“Covenants Agreement”), the terms of which are
incorporated herein by reference, remains in full force and effect and binding
upon the Executive. The Covenants Agreement shall survive the termination of
this Agreement and the Executive’s employment by the Company for the applicable
period(s) set forth therein.

 

Section 5.2.            Expenses. Each of the Company and the Executive shall
bear its/his own costs, fees and expenses in connection with the negotiation,
preparation and execution of this Agreement.

 

Section 5.3.            Entire Agreement. This Agreement and the Covenants
Agreement contain the entire agreement of the parties hereto with respect to the
terms and conditions of the Executive’s employment during the Term and
activities following termination of this Agreement and the Executive’s
employment with the Company and supersede any and all prior agreements and
understandings, whether written or oral, between the parties hereto with respect
to the subject matter of this Agreement or the Covenants Agreement. Each party
hereto acknowledges that no representations, inducements, promises or
agreements, whether oral or in writing, have been made by any party, or on
behalf of any party, which are not embodied herein or in the Covenants
Agreement. The Executive acknowledges and agrees that the Company has fully
satisfied, and has no further, obligations to the Executive arising under, or
relating to, any other employment or consulting arrangement or understanding
(including, without limitation, any claims for compensation or benefits of any
kind) or otherwise. No agreement, promise or statement not contained in this
Agreement or the Covenants Agreement shall be valid and binding, unless agreed
to in writing and signed by the parties sought to be bound thereby.

 

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Section 5.4.            No Other Contracts. The Executive represents and
warrants to the Company that neither the execution and delivery of this
Agreement by the Executive nor the performance by the Executive of the
Executive’s obligations hereunder, shall constitute a default under or a breach
of the terms of any other agreement, contract or other arrangement, whether
written or oral, to which the Executive is a party or by which the Executive is
bound, nor shall the execution and delivery of this Agreement by the Executive
nor the performance by the Executive of his duties and obligations hereunder
give rise to any claim or charge against either the Executive, the Company or
any Affiliate, based upon any other contract or other arrangement, whether
written or oral, to which the Executive is a party or by which the Executive is
bound. The Executive further represents and warrants to the Company that he is
not a party to or subject to any restrictive covenants, legal restrictions or
other agreement, contract or arrangement, whether written or oral, in favor of
any entity or person which would in any way preclude, inhibit, impair or limit
the Executive’s ability to perform his obligations under this Agreement,
including, but not limited to, non-competition agreements, non-solicitation
agreements or confidentiality agreements. The Executive shall defend, indemnify
and hold the Company harmless from and against all claims, actions, losses,
liabilities, damages, costs and expenses (including reasonable attorney’s fees
and amounts paid in settlement in good faith) arising from or relating to any
breach of the representations and warranties made by the Executive in this
Section 5.4.

 

Section 5.5.            Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally or
sent by nationally recognized overnight courier service (with next business day
delivery requested). Any such notice or communication shall be deemed given and
effective, in the case of personal delivery, upon receipt by the other party,
and in the case of a courier service, upon the next business day, after dispatch
of the notice or communication. Any such notice or communication shall be
addressed as follows:

 

If to the Company, to:

 

Matinas BioPharma Holdings, Inc.

1545 Route 206 South, Suite 302

Bedminster, NJ 07921

Attn: Chief Executive Officer

 

With a copy to:

 

Lowenstein Sandler PC

1251 Avenue of the Americas

New York, New York 10020

Attn: Michael J. Lerner, Esq.

 

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If to the Executive, to:

 

Douglas F. Kling

45 Philhower Road

Lebanon, NJ 08833

 

With a copy to:

 

___________________

____________________

 

 

Any person named above may designate another address or fax number by giving
notice in accordance with this Section to the other persons named above.

 

Section 5.6.            Governing Law; Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
Jersey, without regard to principles of conflicts of law. Any and all actions
arising out of this Agreement or Employee’s employment by Company or termination
therefrom shall be brought and heard in the state and federal courts of the
State of New Jersey and the parties hereto hereby irrevocably submit to the
exclusive jurisdiction of any such courts. The Company and the Executive HEREBY
WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS
AGREEMENT OR ANY AND ALL MATTERS ARISING DIRECTLY OR INDIRECTLY HEREFROM AND
REPRESENT THAT THEY HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE OR HAVE CHOSEN
VOLUNTARILY NOT TO DO SO SPECIFICALLY WITH RESEPCT TO THIS WAIVER.

 

Section 5.7.            Waiver. Either party hereto may waive compliance by the
other party with any provision of this Agreement. The failure of a party to
insist on strict adherence to any term of this Agreement on any occasion shall
not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
No waiver of any provision shall be construed as a waiver of any other
provision. Any waiver must be in writing.

 

Section 5.8.            Severability. If any one or more of the terms,
provisions, covenants and restrictions of this Agreement shall be determined by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable substitute for such invalid
and unenforceable provision in light of the tenor of this Agreement, and, upon
so agreeing, shall incorporate such substitute provision in this Agreement. In
addition, if any one or more of the provisions contained in this Agreement shall
for any reason be determined by a court of competent jurisdiction to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed, by limiting or reducing it, so as to be enforceable to the
extent compatible with then applicable law.

 

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Section 5.9.            Counterparts. This Agreement may be executed in any
number of counterparts and each such duplicate counterpart shall constitute an
original, any one of which may be introduced in evidence or used for any other
purpose without the production of its duplicate counterpart. Moreover,
notwithstanding that any of the parties did not execute the same counterpart,
each counterpart shall be deemed for all purposes to be an original, and all
such counterparts shall constitute one and the same instrument, binding on all
of the parties hereto.

 

Section 5.10.            Advice of Counsel. This Agreement was prepared by
Lowenstein Sandler LLP in its capacity as legal counsel to the Company. Both
parties hereto acknowledge that they have had the opportunity to seek and obtain
the advice of counsel before entering into this Agreement and have done so to
the extent desired, and have fully read the Agreement and understand the meaning
and import of all the terms hereof.

 

Section 5.11.            Assignment. This Agreement shall inure to the benefit
of the Company and its successors and assigns (including, without limitation,
the purchaser of all or substantially all of its assets) and shall be binding
upon the Company and its successors and assigns. This Agreement is personal to
the Executive, and the Executive shall not assign or delegate his rights or
duties under this Agreement, and any such assignment or delegation shall be null
and void.

 

Section 5.12.            Agreement to Take Actions. Each party to this Agreement
shall execute and deliver such documents, certificates, agreements and other
instruments, and shall take all other actions, as may be reasonably necessary or
desirable in order to perform his or its obligations under this Agreement.

 

Section 5.13.            No Attachment. Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy or similar process or assignment
by operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect; provided, however, that
nothing in this Section 5.13 shall preclude the assumption of such rights by
executors, administrators or other legal representatives of the Executive or the
Executive’s estate and their assigning any rights hereunder to the person or
persons entitled thereto.

 

Section 5.14.            Source of Payment. Except as otherwise provided under
the terms of any applicable employee benefit plan, all payments provided for
under this Agreement shall be paid in cash from the general funds of Company.
The Company shall not be required to establish a special or separate fund or
other segregation of assets to assure such payments, and, if the Company shall
make any investments to aid it in meeting its obligations hereunder, the
Executive shall have no right, title or interest whatever in or to any such
investments except as may otherwise be expressly provided in a separate written
instrument relating to such investments. Nothing contained in this Agreement,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between Company and the
Executive or any other person. To the extent that any person acquires a right to
receive payments from Company hereunder, such right, without prejudice to rights
which employees may have, shall be no greater than the right of an unsecured
creditor of Company. The Executive shall not look to the owners of the Company
for the satisfaction of any obligations of the Company under this Agreement.

 

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Section 5.15.            Tax Withholding. The Company or other payor is
authorized to withhold from any benefit provided or payment due hereunder, the
amount of withholding taxes due any federal, state or local authority in respect
of such benefit or payment and to take such other action as may be necessary in
the opinion of the Board to satisfy all obligations for the payment of such
withholding taxes. The Executive will be solely responsible for all taxes
assessed against him with respect to the compensation and benefits described in
this Agreement, other than typical employer-paid taxes such as FICA, and the
Company makes no representations as to the tax treatment of such compensation
and benefits.

 

Section 5.16.            409A Compliance. All payments under this Agreement are
intended to comply with or be exempt from the requirements of Section 409A of
the Code and regulations promulgated thereunder (“Section 409A”). As used in
this Agreement, the “Code” means the Internal Revenue Code of 1986, as amended.
To the extent permitted under applicable regulations and/or other guidance of
general applicability issued pursuant to Section 409A, the Company reserves the
right to modify this Agreement to conform with any or all relevant provisions
regarding compensation and/or benefits so that such compensation and benefits
are exempt from the provisions of 409A and/or otherwise comply with such
provisions so as to avoid the tax consequences set forth in Section 409A and to
assure that no payment or benefit shall be subject to an “additional tax” under
Section 409A. To the extent that any provision in this Agreement is ambiguous as
to its compliance with Section 409A, or to the extent any provision in this
Agreement must be modified to comply with Section 409A, such provision shall be
read in such a manner so that no payment due to the Executive shall be subject
to an “additional tax” within the meaning of Section 409A(a)(1)(B) of the Code.
If necessary to comply with the restriction in Section 409A(a)(2)(B) of the Code
concerning payments to “specified employees,” any payment on account of the
Executive’s separation from service that would otherwise be due hereunder within
six (6) months after such separation shall be delayed until the first business
day of the seventh month following the Termination Date and the first such
payment shall include the cumulative amount of any payments (without interest)
that would have been paid prior to such date if not for such restriction. Each
payment in a series of payments hereunder shall be deemed to be a separate
payment for purposes of Section 409A. In no event may the Executive, directly or
indirectly, designate the calendar year of payment. All reimbursements provided
under this Agreement shall be made or provided in accordance with the
requirements of Section 409A, including, where applicable, the requirement that
(i) any reimbursement is for expenses incurred during the Executive’s lifetime
(or during a shorter period of time specified in this Agreement), (ii) the
amount of expenses eligible for reimbursement during a calendar year may not
affect the expenses eligible for reimbursement in any other calendar year, (iii)
the reimbursement of an eligible expense will be made on or before the last day
of the calendar year following the year in which the expense is incurred, and
(iv) the right to reimbursement is not subject to liquidation or exchange for
another benefit. Notwithstanding anything contained herein to the contrary, the
Executive shall not be considered to have terminated employment with the Company
for purposes of Section 4.1 unless the Executive would be considered to have
incurred a “termination of employment” from the Company within the meaning of
Treasury Regulation §1.409A-1(h)(1)(ii). In no event whatsoever shall the
Company be liable for any additional tax, interest or penalty that may be
imposed on the Executive by Section 409A or damages for failing to comply with
Section 409A.

 

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Section 5.17.            280G Modified Cutback.

 

(a)            If any payment, benefit or distribution of any type to or for the
benefit of the Executive, whether paid or payable, provided or to be provided,
or distributed or distributable pursuant to the terms of this Agreement or
otherwise (collectively, the “Parachute Payments”) would subject the Executive
to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the
Parachute Payments shall be reduced so that the maximum amount of the Parachute
Payments (after reduction) shall be one dollar ($1.00) less than the amount
which would cause the Parachute Payments to be subject to the Excise Tax;
provided that the Parachute Payments shall only be reduced to the extent the
after-tax value of amounts received by the Executive after application of the
above reduction would exceed the after-tax value of the amounts received without
application of such reduction. For this purpose, the after-tax value of an
amount shall be determined taking into account all federal, state, and local
income, employment and excise taxes applicable to such amount. Unless the
Executive shall have given prior written notice to the Company to effectuate a
reduction in the Parachute Payments if such a reduction is required, which
notice shall be consistent with the requirements of Section 409A to avoid the
imputation of any tax, penalty or interest thereunder, then the Company shall
reduce or eliminate the Parachute Payments by first reducing or eliminating
accelerated vesting of stock options or similar awards, then reducing or
eliminating any cash payments (with the payments to be made furthest in the
future being reduced first), then by reducing or eliminating any other remaining
Parachute Payments; provided, that no such reduction or elimination shall apply
to any non-qualified deferred compensation amounts (within the meaning of
Section 409A) to the extent such reduction or elimination would accelerate or
defer the timing of such payment in manner that does not comply with Section
409A.

 

(b)            An initial determination as to whether (x) any of the Parachute
Payments received by the Executive in connection with the occurrence of a change
in the ownership or control of the Company or in the ownership of a substantial
portion of the assets of the Company shall be subject to the Excise Tax, and (y)
the amount of any reduction, if any, that may be required pursuant to the
previous paragraph, shall be made by an independent accounting firm selected by
the Company (the “Accounting Firm”) prior to the consummation of such change in
the ownership or effective control of the Company or in the ownership of a
substantial portion of the assets of the Company. The Executive shall be
furnished with notice of all determinations made as to the Excise Tax payable
with respect to the Executive’s Parachute Payments, together with the related
calculations of the Accounting Firm, promptly after such determinations and
calculations have been received by the Company.

 

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(c)            For purposes of this Section 5.17, (i) no portion of the
Parachute Payments the receipt or enjoyment of which the Executive shall have
effectively waived in writing prior to the date of payment of the Parachute
Payments shall be taken into account; (ii) no portion of the Parachute Payments
shall be taken into account which in the opinion of the Accounting Firm does not
constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the
Code; (iii) the Parachute Payments shall be reduced only to the extent necessary
so that the Parachute Payments (other than those referred to in the immediately
preceding clause (i) or (ii)) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the auditor or tax counsel referred to in such
clause (ii); and (iv) the value of any non-cash benefit or any deferred payment
or benefit included in the Parachute Payments shall be determined by the
Company’s independent auditors based on Sections 280G and 4999 of the Code and
the regulations for applying those sections of the Code, or on substantial
authority within the meaning of Section 6662 of the Code.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

  COMPANY       MATINAS BIOPHARMA HOLDINGS, INC.           By:  /s/ Roelof
Rongen   Name:
Title: Roelof Rongen
Chief Executive Officer               EXECUTIVE               /s/ Douglas F.
Kling   Douglas F. Kling      

 

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]