Exhibit 10.4

 

APTOSE BIOSCIENCES INC.

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (the ''Agreement'"), made between Aptose
Biosciences Inc. (the "Company") and Jotin Marango, M.D., Ph.D. ("Executive,"
and together with the Company, the "Parties"), is effective as of June 3, 2019
(the "Effective Date").

 

WHEREAS, the Company desires for Executive to commence employment with the
Company and wishes to provide Executive with certain compensation and benefits
in return for such employment; and

WHEREAS, Executive wishes to be employed by the Company and to provide personal
services to the Company in return for certain compensation and benefits;

Now, THEREFORE, in consideration of the mutual promises and covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:

1.Employment by the Company.

 

1.1               Position. Executive shall serve as the Company's Senior Vice
President, Chief Business Officer. While employed by the Company, Executive will
devote Executive's best efforts and substantially all of Executive's business
time and attention to the business of the Company, except for approved vacation
periods and reasonable periods of illness or other incapacities permitted by the
Company's general employment policies.

 

1.2               Duties and Location. Executive shall perform such duties as
are required by the Company's Chief Executive Officer, to whom Executive will
report. In the event of the Chief Executive Officer's incapacity or
unavailability, Executive will report to the Board of Directors of the Company
(the "Board"). Executive's primary office location shall be the Company's
executive office located at 12270 High Bluff Drive, Suite 120, San Diego,
California 92130, however it is agreed that Executive will be working remotely
for a period of seven (7) months after the Effective Date, after which the
Parties will define a mutually agreed upon timetable (the "Relocation Schedule")
for Executive's move to the Greater San Diego, California area (the “Relocation
Area”). The Company reserves the right to reasonably require Executive to
perform Executive's duties at places other than Executive's primary office
location from time to time, and to require reasonable business travel. The
Company may modify Executive's job title and duties as it deems necessary and
appropriate in light of the Company's needs and interests from time to time.

 

1.3               Policies and Procedures. The employment relationship between
the Parties shall be governed by the general employment policies and practices
of the Company, except that when the terms of this Agreement differ from or are
in conflict with the Company's general employment policies or practices, this
Agreement shall control.

 

2.Compensation.

 

2.1               Base Salary. For services to be rendered hereunder, Executive
shall receive a base salary at the rate of U.S. $390,000 per year (the "Base
Salary"). The Base Salary will be payable in accordance with the Company's
regular payroll schedule. Executive's Base Salary shall be subject to review
annually by and at the sole discretion of the Board or its designee.

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2.2               Bonus. Executive will be eligible for an annual discretionary
bonus of up to forty percent (40%) of Executive's then current Base Salary (the
"Annual Bonus"). Whether Executive receives an Annual Bonus for any given fiscal
year, and the amount of any such Annual Bonus, will be determined in the good
faith discretion of the Board or its designee based upon the Company's and
Executive's achievement of objectives and milestones to be determined on an
annual basis by the Board or its designee. Any such Annual Bonus will be paid
prior to the fifteenth (15th) day of the third (3rd) month following the close
of the Company's fiscal year to which such Annual Bonus relates. Except as
otherwise provided in Section 6.2 herein, the Company’s payment, and the amount,
of any such Annual Bonus shall be in the sole discretion of the Company, and any
such Annual Bonus will not be deemed earned unless Executive is an employee of
the Company in good standing on the dates the Annual Bonus is determined and
paid.

3.                   Standard Company Benefits. Executive shall, in accordance
with Company policy and the terms and conditions of the applicable Company
benefit plan documents, be eligible to participate in the benefit and fringe
benefit programs provided by the Company to its U.S. based executive officers
and other employees from time to time, including, without limitation, vacation.
Executive shall be entitled to four (4) weeks of vacation per year, which will
accrue in accordance with Company policy.

 

4.                   Expenses.

 

4.1               Business Expenses. The Company will reimburse Executive for
reasonable travel, entertainment or other expenses incurred by Executive in
furtherance or in connection with the performance of Executive's duties
hereunder, in accordance with the Company's expense reimbursement policy as in
effect from time to time.

 

4.2               Relocation Benefit. Executive acknowledges that, as an express
condition of his employment, and his continuing employment by the Company,
Executive will relocate to the Relocation Area in accordance with the Relocation
Schedule determined pursuant to Section 1.2.

 

(i)                 The Company will reimburse Executive for certain reasonable,
documented out-of-pocket expenses incurred as a result of Executive's permanent
relocation to the Relocation Area, up to a maximum total reimbursement amount of
$30,000 (the "Relocation Reimbursement"). In order to qualify for the Relocation
Reimbursement, Executive must remain an employee in good standing of the Company
as of the date that the applicable cost or expense is incurred.

 

(ii)               Executive will be reimbursed only for actual relocation
expenses incurred, up to the maximum reimbursement noted in Section 4.2(i).
Executive will be solely responsible for any relocation expenses exceeding the
Relocation Reimbursement, and the Company will not be obligated to provide any
additional or other relocation benefits or relocation assistance to Executive
except as set forth in this Section 4.2. Executive's right to this reimbursement
is subject to timely submission of appropriate documentary evidence of expenses
incurred in accordance with the Company's reimbursement policies in effect from
time to time. The Company will withhold from any such reimbursements the
applicable income and employment tax withholdings, as Executive will be
responsible for paying any taxes on these expense reimbursements to the extent
that they are taxable income under applicable tax law. Any Relocation
Reimbursements provided under this provision will be paid within thirty (30)
days after the date Executive submits receipts for the expenses, provided
Executive submits those receipts within sixty (60) days after Executive incurs
the expense.

 

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(iii)             If, prior to the two (2) year anniversary of the Effective
Date, Executive's employment is terminated by Executive other than for Good
Reason (as defined below), or the Company terminates Executive's employment for
Cause (as defined below), Executive must repay a portion of the amount of the
Relocation Reimbursement paid to Executive to the Company, on or within thirty
(30) days after the employment termination date, prorated based on Executive's
length of continued employment with the Company (e.g., if Executive is employed
for one year at the time of termination and the Relocation Reimbursement was
$10,000, Executive shall repay one-half of the Relocation Reimbursement to the
Company—i.e., $5,000). Executive hereby agrees that, pursuant to applicable law,
any such repayment obligation will be recovered from Executive's final paycheck
and any other amounts owed to Executive by the Company from and after
Executive's termination date.

 

4.3               Deadline for Reimbursements. Any amounts payable under this
Section 4 shall be made in accordance with Treasury Regulation Section
1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Executive's
taxable year following the taxable year in which Executive incurred the
expenses. The amounts provided under this Section 4 during any taxable year of
Executive's will not affect such amounts provided in any other taxable year of
Executive's, and Executive's right to reimbursement for such amounts shall not
be subject to liquidation or exchange for any other benefit.

 

5.                   Equity.

 

5.1               Subject to approval by the Board, and pursuant to the
Company’s equity plan (the “Plan”), the Company shall grant Executive an award
of options to purchase 320,000 shares of the Company’s common stock, at an
exercise price equal to the stock’s fair market value per share on the date of
grant (the “Option”). The Option will be subject to the terms and conditions of
the Plan, and the corresponding grant notice and stock option agreement, and
will be subject to the Company's standard four-year vesting schedule.

 

5.2               Subject to approval by the Board, and pursuant to the Plan,
the Company shall grant Executive an award of 80,000 restricted stock units
(“RSUs”). Each RSU will evidence the right to receive one common share in the
capital of the Company. The RSUs will be subject to the terms and conditions of
the Plan, and the corresponding grant notice and RSU agreement. One-half, or
40,000, of the RSUs shall be fully vested 3 months from the date of grant and
one-half, or 40,000, of the RSUs shall vest on the first anniversary of the date
of Executive's commencement of employment.

 

6.                  Termination of Employment; Severance.

 

6.1               At-Will Employment. Executive's employment relationship is
at-will. Either Executive or the Company may terminate the employment
relationship at any time, with or without Cause (as defined below) or advance
notice. If Executive's employment terminates for any reason, Executive shall not
be entitled to any payments, benefits, damages, awards or compensation other
than as provided in this Agreement. Upon any termination of Executive's
employment, in addition to any severance benefits to which Executive may be
entitled under Section 6.2 below, the Company shall pay to Executive (a) his or
her fully earned but unpaid base salary, through the date of termination at the
rate then in effect, plus (b) all accrued but unpaid vacation, plus (c) all
other amounts to which Executive is entitled under any compensation plan or
practice of the Company at the time of termination in accordance with the terms
of such plans or practices, including, without limitation, any continuation of
benefits required by COBRA or applicable law (together, the "Accrued
Obligations").

 

6.2              Termination Without Cause; Resignation for Good Reason.

 

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(i)                    The Company may terminate Executive's employment with the
Company at any time without Cause (as defined in Section 10.1 below). Further,
Executive may resign at any time for Good Reason (as defined in Section 10.2
below).

 

(ii)                 In the event Executive's employment with the Company is
terminated by the Company without Cause (and other than as a result of
Executive's death or Permanent Disability (as defined in Section 6.3(i) below)),
or Executive resigns for Good Reason, then provided that Executive satisfies the
Release Requirement in Section 7 herein, and remains in compliance with the
terms of this Agreement and the Confidentiality Agreement, the Company shall
provide Executive with the following "Severance Benefits":

 

(a)                A lump sum cash payment equal to Executive's annual Base
Salary (i.e., a full payment of one year’s salary at the Base Salary rate) at
the time of employment termination (without giving effect to any reduction in
Base Salary that would give Executive the right to resign for Good Reason) to be
paid by the Company on the first payroll date following the Effective Date of
the Release, but in no event more than seventy-five (75) days following the date
of Executive's termination of employment.

 

(b)               A lump sum cash payment in an amount equal to the average of
the Annual Bonus payments Executive received from the Company during the last
three years of employment completed prior to the year of the employment
termination (or such lesser number of years of employment completed by Executive
prior to the year of the employment termination if Executive has not yet been
employed for three full years prior to the year of the employment termination),
pro-rated based on the number of days Executive worked during the fiscal year of
the employment termination, divided by 365, to be paid by the Company on the
first payroll date following the Effective Date of the Release, but in no event
more than seventy-five (75) days following the date of Executive's termination
of employment.

 

(c)                If the Company has previously established a group health plan
in which Executive participates prior to Executive's termination and Executive
timely elects COBRA coverage following any such termination, the Company will
pay Executive for the full amount of such COBRA premiums for himself or herself
and his or her covered dependents (on a monthly basis) for a period of up to
twelve (12) months following the date of termination; provided, that, if and to
the extent that any benefit described in this Section 6.2(ii)(c) is not or
cannot be paid or provided under any Company plan or program without penalties
or adverse tax consequences to the Company or for any other reason, as
determined by the Company in its sole discretion, then the Company shall pay
Executive a fully taxable cash payment equal to the COBRA premium for each month
that such benefits cannot be so paid or provided by the Company for a period of
up to twelve (12) months following the date of termination; provided, further,
that the COBRA payments or, if applicable, the taxable monthly payment discussed
above, shall terminate on the earliest to occur of (A) the close of the 12-month
period following the termination of Executive's employment; (B) the expiration
of Executive's (or Executive's dependents') eligibility for coverage under
COBRA; and (C) the date when Executive becomes eligible for group health
insurance coverage in connection with new employment or self-employment. If
Executive becomes eligible for coverage under another employer's group health
plan or otherwise ceases to be eligible for COBRA coverage during the period
provided in this Section 6.2(ii)(c), Executive must immediately provide written
notice to the Company of such event, and the Company-provided COBRA payments, or
if applicable, the monthly payments under this Section 6.2(ii)(c) shall
immediately cease.

 

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(iii)             Furthermore, in the event Executive's employment with the
Company is terminated by the Company pursuant to Section 6.2(ii), in either
case, within sixty (60) days immediately preceding or twelve (12) months
immediately following the consummation of a Change in Control (as defined
below), then, in lieu of (and not additional to) the severance benefits
described in Section 6.2(ii), and provided that Executive satisfies the Release
Requirement in Section 7 herein and remains in compliance with the terms of this
Agreement and the Confidentiality Agreement, the Company shall instead provide
Executive with the following benefits (the "Change in Control Severance
Benefits"). For the avoidance of doubt: (A) in no event will Executive be
entitled to severance benefits under Section 6.2(ii) and this Section 6.2(iii),
and (B) if the Company has commenced providing severance benefits to Executive
under Section 6.2(ii) prior to the date that Executive becomes eligible to
receive Change in Control Severance Benefits under this Section 6.2(iii), the
benefits previously provided to Executive under Section 6.2(ii) of this
Agreement shall reduce the severance benefits provided under this Section
6.2(iii):

 

(a)                A lump sum cash payment in an amount equal to eighteen (18)
months of Executive's annual Base Salary (without giving effect to any reduction
in Base Salary that would give Executive the right to resign for Good Reason),
to be paid in a single lump sum during the first payroll date following the
later of (i) the Effective Date of the Release or (ii) if Executive's
termination of employment occurs prior to a Change in Control, the date of such
Change in Control, but in no event more than seventy-five (75) days following
the date of Executive's termination of employment.

 

(b)               A lump sum cash payment in an amount equal to 150% of the
average of the Annual Bonus payments Executive received from the Company during
the last three years of employment completed prior to the year of the employment
termination (or such lesser number of years of employment completed by Executive
prior to the year of the employment termination if Executive has not yet been
employed for three full years prior to the year of the employment termination),
pro-rated based on the number of days Executive worked during the fiscal year of
the employment termination, divided by three hundred sixty-five (365), to be
paid by the Company on the first payroll date following the later of (i) the
Effective Date of the Release or (ii) if Executive's termination of employment
occurs prior to a Change in Control, the date of such Change in Control, but in
no event more than seventy-five (75) days following the date of Executive's
termination of employment.

 

(c)                If the Company has previously established a group health plan
in which Executive participates prior to Executive's termination and Executive
timely elects COBRA coverage following any such termination, the Company will
pay Executive for the full amount of such COBRA premiums for himself or herself
and his or her covered dependents (on a monthly basis) for a period of up to
twelve (12) months following the date of termination; provided, that, if and to
the extent that any benefit described in this Section 6.2(iii)(c) is not or
cannot be paid or provided under any Company plan or program without penalties
or adverse tax consequences to the Company or for any other reason, as
determined by the Company in its sole discretion, then the Company shall pay
Executive a fully taxable cash payment equal to the COBRA premium for each month
that such benefits cannot be so paid or provided by the Company for a period of
up to twelve (12) months following the date of termination; provided, further,
that the COBRA payments or, if applicable, the monthly payment discussed above,
shall terminate on the earliest to occur of (A) the close of the 12-month period
following the termination of Executive's employment; (B) the expiration of
Executive's (or Executive's covered dependents) eligibility for coverage under
COBRA; and (C) the date when Executive becomes eligible for group health
insurance coverage in connection with new employment or self-employment. If
Executive becomes eligible for coverage under another employer's group health
plan or otherwise ceases to be eligible for COBRA coverage during the period
provided in this Section 6.2(iii)(c), Executive must immediately provide written
notice to the Company of such event, and the Company-provided COBRA payments, or
if applicable, the monthly payments under this Section 6.2(iii)(c) shall
immediately cease.

 

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(d)               Notwithstanding anything to the contrary set forth in the
Company's equity plan or form of award agreement, effective as of Executive's
employment termination date, the vesting and exercisability of all then
outstanding unvested Stock Awards then held by Executive shall accelerate such
that all shares become immediately vested and exercisable, if applicable, by
Executive upon such termination and shall remain exercisable, if applicable,
following Executive's termination as set forth in the applicable equity award
documents.

 

6.3               Termination for Cause; Resignation Without Good Reason; Death
or Permanent Disability.

 

(i)                 The Company may terminate Executive's employment with the
Company for Cause. Further, Executive may resign at any time without Good
Reason. Executive's employment with the Company will also terminate
automatically upon Executive's death. Executive's employment may also be
terminated following Executive's "Permanent Disability." For purposes of this
Agreement, “Permanent Disability” shall be deemed to have occurred if Executive
shall become physically or mentally incapacitated or disabled or otherwise
unable fully to discharge his duties hereunder for a period of ninety (90)
consecutive calendar days or for one hundred twenty (120) calendar days in any
one hundred eighty (180) calendar-day period. The existence of Executive's
Permanent Disability shall be determined by the Company on the advice of a duly
licensed physician reasonably acceptable to the Company and Executive.

 

(ii)               If Executive resigns without Good Reason, or the Company
terminates Executive's employment for Cause, or upon Executive's death or
following Executive's Permanent Disability, then (a) Executive will no longer
vest in his or her Stock Awards, (b) all payments of compensation by the Company
to Executive hereunder will terminate immediately (except as to amounts already
earned and the Accrued Obligations), and (c) Executive will not be entitled to
any severance benefits, including (without limitation) the Severance Benefits
and Change in Control Benefits listed in Sections 6.2(ii) and 6.2(iii). In
addition, Executive shall resign from all positions and terminate any
relationships as an employee, advisor, officer or director with the Company and
any of its affiliates, each effective on the date of termination. In the event
of Executive's death or Permanent Disability, Executive, or his estate or heirs,
as the case may be, shall also be entitled to any life insurance or disability
benefits provided under the Company's benefit plans in which Executive
participates, subject to the terms and conditions of such plans.

 

7.                   Conditions to Receipt of Severance Benefits and Change in
Control Severance Benefits. Notwithstanding the foregoing, to be eligible for
any of the Severance Benefits or Change in Control Severance Benefits, on or
within sixty (60) days following the termination of employment, Executive must
satisfy the requirement (the "Release Requirement") to return to the Company a
signed and dated general release of all known and unknown claims in a form
acceptable to the Company (the "Release and Waiver") and allow that Release and
Waiver to become effective in accordance with its terms (such date, the
"Effective Date of the Release"). No Severance Benefits or Change in Control
Severance Benefits will be paid hereunder prior to the Effective Date of the
Release. Accordingly, if Executive breaches the preceding sentence and/or
refuses to sign and deliver to the Company an executed Release and Waiver within
the foregoing time period or signs and delivers to the Company the Release and
Waiver but exercises his or her right, if any, under applicable law to revoke
the Release and Waiver (or any portion thereof), then Executive will not be
entitled to any severance, payment or benefit under this Agreement.

 

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8.                   Section 409A. It is intended that all of the severance
benefits and other payments payable under this Agreement satisfy, to the
greatest extent possible, the exemptions from the application of Section 409A of
the Internal Revenue Code of 1986, as amended (the "Code") and the regulations
and other guidance thereunder and any state law of similar effect (collectively
"Section 409A"), provided under Treasury Regulations l.409A-1(b)(4), 1.409A- l
(b)(5) and 1.409A-l (b)(9), and this Agreement will be construed to the greatest
extent possible as consistent with those provisions, and to the extent not so
exempt, this Agreement (and any definitions hereunder) will be construed in a
manner that complies with Section 409A. For purposes of Code Section 409A
(including, without limitation, for purposes of Treasury Regulation Section
1.409A-2(b)(2)(iii)), Executive's right to receive any installment payments
under this Agreement (whether severance payments, reimbursements or otherwise)
shall be treated as a right to receive a series of separate payments and,
accordingly, each installment payment hereunder shall at all times be considered
a separate and distinct payment. Notwithstanding anything herein to the
contrary, to the extent any payments to Executive pursuant to this Agreement
(including the Severance Benefits or Change in Control Severance Benefits)
constitute “non-qualified deferred compensation” subject to Section 409A of the
Code, then, to the extent required by Section 409A of the Code (including,
without limitation, to secure an exemption from or to comply with Section 409A),
no amount shall be payable pursuant to such sections unless Executive's
termination of employment constitutes a “separation from service” with the
Company (as defined under Treasury Regulation Section 1.409A-1(h), without
regard to any alternative definition thereunder, a "Separation from Service").
Notwithstanding any provision to the contrary in this Agreement, if Executive is
deemed by the Company at the time of Executive's Separation from Service to be a
"specified employee" for purposes of Code Section 409A(a)(2)(B)(i), and if any
of the payments upon Separation from Service set forth herein and/or under any
other agreement with the Company are deemed to be "deferred compensation", then
to the extent delayed commencement of any portion of such payments is required
in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i)
and the related adverse taxation under Section 409A, such payments shall not be
provided to Executive prior to the earliest of (a) the expiration of the
six-month and one day period measured from the date of Executive's Separation
from Service with the Company, (b) the date of Executive's death or (c) such
earlier date as permitted under Section 409A without the imposition of adverse
taxation. Upon the first business day following the expiration of such
applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant
to this Paragraph shall be paid in a lump sum to Executive, and any remaining
payments due shall be paid as otherwise provided herein or in the applicable
agreement. No interest shall be due on any amounts so deferred. If any severance
benefits provided under this Agreement constitute "non-qualified deferred
compensation" under Section 409A, any such severance benefits shall not be paid,
or in the case of installments shall not commence payment, until the sixtieth
(60th) day following the Executive's Separation from Service (the "Initial
Payment Date"), regardless of when the Release actually becomes effective (and
any payments scheduled to be made prior to such Initial Payment Date shall
instead accrue and be paid in a single lump sum on such Initial Payment Date)
and the remaining payments shall be made as provided in this Agreement.

 

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9.Section 280G; Limitations on Payment.

 

9.1               If any payment or benefit Executive will or may receive from
the Company or otherwise (a "280G Payment") would (a) constitute a "parachute
payment" within the meaning of Section 280G of the Code, and (b) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the
"Excise Tax"), then any such 280G Payment provided pursuant to this Agreement (a
"Payment") shall be equal to the Reduced Amount. The "Reduced Amount" shall be
either (x) the largest portion of the Payment that would result in no portion of
the Payment (after reduction) being subject to the Excise Tax or (y) the largest
portion, up to and including the total, of the Payment, whichever amount (i.e.,
the amount determined by clause (x) or by clause (y)), after taking into account
all applicable federal, state and local employment taxes, income taxes, and the
Excise Tax (all computed at the highest applicable marginal rate), results in
Executive's receipt, on an after-tax basis, of the greater economic benefit
notwithstanding that all or some portion of the Payment may be subject to the
Excise Tax. If a reduction in a Payment is required pursuant to the preceding
sentence and the Reduced Amount is determined pursuant to clause (x) of the
preceding sentence, the reduction shall occur in the manner (the "Reduction
Method") that results in the greatest economic benefit for Executive. If more
than one method of reduction will result in the same economic benefit, the items
so reduced will be reduced pro rata (the "Pro Rata Reduction Method").

 

9.2               Notwithstanding any provision of Section 9.1 to the contrary,
if the Reduction Method or the Pro Rata Reduction Method would result in any
portion of the Payment being subject to taxes pursuant to Section 409A that
would not otherwise be subject to taxes pursuant to Section 409A, then the
Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall
be modified so as to avoid the imposition of taxes pursuant to Section 409A as
follows: (A) as a first priority, the modification shall preserve to the
greatest extent possible, the greatest economic benefit for Executive as
determined on an after-tax basis; (B) as a second priority, Payments that are
contingent on future events (e.g., being terminated without Cause), shall be
reduced (or eliminated) before Payments that are not contingent on future
events; and (C) as a third priority, Payments that are "deferred compensation"
within the meaning of Section 409A shall be reduced (or eliminated) before
Payments that are not deferred compensation within the meaning of Section 409A.

 

9.3                   Unless Executive and the Company agree on an alternative
accounting firm or law firm, the accounting firm engaged by the Company for
general tax compliance purposes as of the day prior to the effective date of the
Change in Control transaction shall perform the foregoing calculations. If the
accounting firm so engaged by the Company is serving as accountant or auditor
for the individual, entity or group effecting the Change in Control transaction,
the Company shall appoint a nationally recognized accounting or law firm to make
the determinations required by this Section 9. The Company shall bear all
expenses with respect to the determinations by such accounting or law firm
required to be made hereunder. The Company shall use commercially reasonable
efforts to cause the accounting or law firm engaged to make the determinations
hereunder to provide its calculations, together with detailed supporting
documentation, to Executive and the Company within fifteen (15) calendar days
after the date on which Executive's right to a 280G Payment becomes reasonably
likely to occur (if requested at that time by Executive or the Company) or such
other time as requested by Executive or the Company.

 

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9.4               If Executive receives a Payment for which the Reduced Amount
was determined pursuant to clause (x) of Section 9.1 and the Internal Revenue
Service determines thereafter that some portion of the Payment is subject to the
Excise Tax, Executive agrees to promptly return to the Company a sufficient
amount of the Payment (after reduction pursuant to clause (x) of Section 9.1) so
that no portion of the remaining Payment is subject to the Excise Tax. For the
avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y)
of Section 9.1, Executive shall have no obligation to return any portion of the
Payment pursuant to the preceding sentence.

 

10.Definitions.

 

10.1            Cause. For purposes of this Agreement, "Cause" for termination
will mean: (a) Executive's commission of any felony or commission of a crime
involving dishonesty; (b) Executive's participation in any fraud against the
Company; (c) a material breach of Executive's duties to the Company; (d)
Executive's persistent unsatisfactory performance of his job duties; (e)
Executive's intentional damage to any property of the Company; (f) Executive's
misconduct, or other violation of Company policy that causes harm to the
Company; and (g) Executive's breach of any material provision of this Agreement
or any other written agreement between Executive and the Company; provided,
however, that prior to the determination that “Cause” under this Section 10.1
has occurred, the Company shall (i) provide to Executive a written notice
providing, in reasonable detail, the reasons for the determination that such
“Cause” exists, (ii) other than with respect to clause (a) above, afford
Executive a reasonable opportunity to remedy any such event or breach (if deemed
curable), (iii) provide Executive an opportunity to be heard prior to the final
decision to terminate Executive's employment hereunder for such “Cause” and (iv)
make any decision that such “Cause” exists in good faith.

 

10.2            Good Reason. For purposes of this Agreement, Executive shall
have "Good Reason" for resignation from employment with the Company if any of
the following actions are taken by the Company without Executive's prior written
consent: (a) a material reduction in Executive's Base Salary, other than in
connection with an across-the-board decrease of base salaries applicable to all
senior executives of the Company; (b) a material reduction in Executive's duties
(including responsibilities and/or authorities), provided, however, that a
change in job position (including a change in title) shall not be deemed a
"material reduction" in and of itself unless Executive's new duties are
materially reduced from the prior duties; or (c) relocation of Executive's
principal place of employment to a place that increases Executive's one-way
commute from the Executive’s residence (after the relocation agreed by Executive
and the Company in Section 1.2) by more than fifty (50) miles as compared to
Executive's then-current principal place of employment immediately prior to such
relocation. In order for Executive to resign for Good Reason, each of the
following requirements must be met: (i) Executive must provide written notice to
the Company's Chief Executive Officer within 60 days after the first occurrence
of the event giving rise to Good Reason setting forth the basis for Executive's
resignation, (ii) the Executive must allow the Company at least 30 days from
receipt of such written notice to cure such event (the "Cure Period"), (iii)
such event is not reasonably cured by the Company within the Cure Period, and
(iv) Executive must resign from all positions Executive then holds with the
Company not later than 30 days after the expiration of the Cure Period.

 

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10.3                Change in Control. For purposes of this Agreement, "Change
in Control" shall mean the consummation of any of the following: (a) the
acquisition of the Company by another entity by means of any transaction or
series of related transactions to which the Company is party (including, without
limitation, any stock acquisition, reorganization, merger or consolidation but
excluding any sale of stock for capital raising purposes) other than a
transaction or series of transactions in which the holders of the voting
securities of the Company outstanding immediately prior to such transaction
continue to retain (either by such voting securities remaining outstanding or by
such voting securities being converted into voting securities of the surviving
entity), following such transaction, at least fifty percent (50%) of the total
voting power represented by the voting securities of the surviving entity
outstanding immediately after such transaction or series of transactions; (b) a
sale, lease or other conveyance of all or substantially all of the assets of the
Company; or (c) any liquidation, dissolution or winding up of the Company,
whether voluntarily or involuntarily. Notwithstanding the foregoing, the Company
and Executive agree that Change in Control does not include any reorganization,
sale or plan of arrangement undertaken to move the domicile of the Company to
the U.S., pursuant to which the Company will become a wholly-owned subsidiary of
a Delaware corporation. Notwithstanding the foregoing, if a Change in Control
constitutes a payment event with respect to any payment hereunder that provides
for the deferral of compensation that is subject to Section 409A, to the extent
required to avoid the imposition of additional taxes under Section 409A, the
transaction or event with respect to such payment shall only constitute a Change
in Control for purposes of the payment timing of such payment if such
transaction also constitutes a “change in control event,” as defined in Treasury
Regulation Section 1.409A-3(i)(5).

 

10.4                "Stock Awards" means all stock options, restricted stock and
such other awards granted pursuant to the Company’s stock option and equity
incentive award plans or agreements and any shares of stock issued upon exercise
thereof.

 

11.Confidential Information Obligations.

 

11.1            Confidential Information Agreement. As a condition of
employment, Executive shall execute and abide by the Company's standard form of
Employee Proprietary Information and Inventions Assignment Agreement (the
"Confidentiality Agreement").

 

11.2            Third-Party Agreements and Information. Executive represents and
wan-ants that Executive's employment by the Company does not conflict with any
prior employment or consulting agreement or other agreement with any third
party, and that Executive will perform Executive's duties to the Company without
violating any such agreement. Executive represents and warrants that Executive
does not possess confidential information arising out of prior employment,
consulting, or other third party relationships, that would be used in connection
with Executive's employment by the Company, except as expressly authorized by
that third party. During Executive's employment by the Company, Executive will
use in the performance of Executive's duties only information which is generally
known and used by persons with training and experience comparable to Executive's
own, common knowledge in the industry, otherwise legally in the public domain,
or obtained or developed by the Company or by Executive in the course of
Executive's work for the Company.

 

11.3            Return of Company Property. If Executive's employment is
terminated for any reason, the Company shall have the right, at its option, to
require Executive to vacate his or her offices prior to or on the effective date
of termination and to cease all activities on the Company’s behalf. Upon the
termination of his or her employment in any manner, as a condition to the
Executive's receipt of any post-termination benefits described in this
Agreement, Executive shall immediately surrender to the Company all lists,
books, records and documents of, or in connection with, the Company’s business,
and all other property belonging to the Company, it being distinctly understood
that all such lists, books and records, and other documents and property, are
the property of the Company. Executive shall deliver to the Company a signed
statement certifying compliance with this Section 11.3 prior to the receipt of
any post-termination benefits described in this Agreement.

 

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11.4            Rights and Remedies Upon Breach. If Executive breaches or
threatens to commit a breach of any of the provisions of this Section 11 or
Section 12 below, the Company shall have all of the rights and remedies
available to the Company under law or in equity.

 

11.5            Whistleblower Provision. Nothing herein shall be construed to
prohibit Executive from communicating directly with, cooperating with, or
providing information to, any government regulator, including, but not limited
to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures
Trading Commission, or the U.S. Department of Justice. Executive acknowledges
that the Company has provided Executive with the following notice of immunity
rights in compliance with the requirements of the Defend Trade Secrets Act: (a)
Executive shall not be held criminally or civilly liable under any Federal or
State trade secret law for the disclosure of proprietary information of the
Company that is made in confidence to a Federal, State, or local government
official or to an attorney solely for the purpose of reporting or investigating
a suspected violation of law, (b) Executive shall not be held criminally or
civilly liable under any Federal or State trade secret law for the disclosure of
proprietary information of the Company that is made in a complaint or other
document filed in a lawsuit or other proceeding, if such filing is made under
seal and (c) if Executive files a lawsuit for retaliation by the Company for
reporting a suspected violation of law, Executive may disclose the proprietary
information to my attorney and use the proprietary information in the court
proceeding, if Executive files any document containing the proprietary
information under seal, and does not disclose the proprietary information,
except pursuant to court order.

 

12.Outside Activities During Employment; Non-Solicitation.

 

12.1            Non-Company Business. Except with the prior written consent of
the Board or the Chief Executive Officer of the Company, Executive will not
during the term of Executive's employment with the Company undertake or engage
in any other employment, occupation or business enterprise, other than ones in
which Executive is a passive investor. Subject to the terms of the
Confidentiality Agreement and Section 12.2 below, Executive may engage in civic
and not-for-profit activities so long as such activities do not materially
interfere with the performance of Executive's duties hereunder. Executive agrees
that he or she will not join any boards, other than civic and not-for-profit
boards (which do not materially interfere with Executive's duties to the
Company), without the prior written approval of the Board, which approval shall
not be unreasonably withheld.

 

12.2            No Adverse Interests. During the term of Executive's employment,
Executive agrees not to acquire, assume or participate in, directly or
indirectly, any position, investment or interest known to be adverse or
antagonistic to the Company, its business or prospects, financial or otherwise.
In addition, and in furtherance of the provisions of this Section 12, except as
may otherwise be approved in writing by the Board or the Chief Executive Officer
of the Company, during the period of Executive's employment, Executive shall not
have any ownership interest (of record or beneficial) in, or perform services as
an employee, salesman, consultant, independent contractor, officer or director
of, or otherwise aid or assist in any manner, any firm, corporation,
partnership, proprietorship or other business that engages in any county, city
or part thereof in the United States and/or any foreign country in a business
which competes directly or indirectly (as determined by the Board) with the
Company’s business in such county, city or part thereof, so long as the Company,
or any successor in interest of the Company to the business and goodwill of the
Company, remains engaged in such business in such county, city or part thereof
or continues to solicit customers or potential customers therein; provided,
however, that Executive may own, directly or indirectly, solely as an
investment, securities of any entity which are traded on any national securities
exchange if Executive (a) is not a controlling person of, or a member of a group
which controls, such entity; or (b) does not, directly or indirectly, own one
percent (1%) or more of any class of securities of any such entity.

 

 11 

 

12.3            Solicitation of Employees. Executive shall not during the term
of Executive’s employment and for a period of twelve (12) months following
Executive’s termination of employment, directly or indirectly, solicit or
encourage to leave the employment of the Company or any of its subsidiaries, any
employee of the Company or any of its subsidiaries.

 

13.               Insurance; Indemnification. The Company shall have the right
to take out life, health, accident, “key-man” or other insurance covering
Executive, in the name of the Company and at the Company’s expense in any amount
deemed appropriate by the Company. Executive shall assist the Company in
obtaining such insurance, including, without limitation, submitting to any
required examinations and providing information and data required by insurance
companies. Executive will be provided with indemnification against third party
claims related to his or her work for the Company as required by applicable law,
including advancement of attorneys’ fees and costs related to any such
indemnification as provided by applicable law. The Company shall provide
Executive with directors and officers liability insurance coverage at least as
favorable as that which the Company may maintain from time to time for the
directors of the Company or the other executive officers.

 

14.               Dispute Resolution.

 

14.1            In the event of any dispute, claim, cause of action or
disagreement (a “Dispute”) arising out of or in connection to this Agreement,
including, without limitation, the negotiation, execution, interpretation,
performance or non-performance of this Agreement, as well as Executive's
employment with the Company or the termination thereof, the Parties shall
attempt to resolve the Dispute in non-binding mediation administered by JAMS,
Inc. ("JAMS") or its successors. The parties shall agree on a mediator or if
they cannot agree, the dispute shall be submitted to the mediation process of
JAMS. The place of mediation shall be San Diego, California. If the Dispute is
not resolved pursuant to the foregoing procedure within thirty (30) days after
the initial mediation meeting among the parties and the mediator, or if the
mediation is otherwise terminated, then either Party may submit the Dispute to
arbitration pursuant to Section 14.2 below. Each Party shall pay the fees of its
own attorneys and all other expenses connected with presenting its case. Other
costs of the mediation, including JAMS' administrative fees, the fee of the
mediator, and all other fees and costs, shall be borne by the Company.

 

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14.2            To ensure the rapid and economical resolution of Disputes,
including any and all Disputes, in law or equity, including but not limited to
statutory claims, arising from or relating to the enforcement, breach,
performance, or interpretation of this Agreement, Executive's employment with
the Company, or the termination of Executive's employment from the Company,
shall 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 conducted in San Diego, California by JAMS or its successors before
a single arbitrator, under the JAMS Employment Arbitration Rules & Procedures
(which can be found at https://www.jamsadr.com/rules-employment-arbitration/,
and which will be provided to Executive on request); provided that the
arbitrator shall issue a written arbitration decision including the arbitrator’s
essential findings and conclusions and a statement of the award. The judgment
and award rendered by the arbitrator may be entered in any court or tribunal of
competent jurisdiction. This Section 14 is intended to be the exclusive method
for resolving any and all claims by the parties against each other for payment
of damages under this Agreement or relating to Executive’s employment; provided,
however, that Executive shall retain the right to file administrative charges
with or seek relief through any government agency of competent jurisdiction, and
to participate in any government investigation, including but not limited to (i)
claims for workers’ compensation, state disability insurance or unemployment
insurance; (ii) claims for unpaid wages or waiting time penalties brought before
the California Division of Labor Standards Enforcement (or any similar agency in
any applicable jurisdiction other than California); provided, however, that any
appeal from an award or from denial of an award of wages and/or waiting time
penalties shall be arbitrated pursuant to the terms of this Agreement; and (iii)
claims for administrative relief from the United States Equal Employment
Opportunity Commission and/or the California Department of Fair Employment and
Housing (or any similar agency in any applicable jurisdiction other than
California); provided, further, that Executive shall not be entitled to obtain
any monetary relief through such agencies other than workers’ compensation
benefits or unemployment insurance benefits. Executive and the Company shall be
entitled to all rights and remedies that either would be entitled to pursue in a
court of law; provided, however, that in no event shall the arbitrator be
empowered to hear or determine any class or collective claim of any type.
Nothing in this Agreement is intended to prevent either Executive or the Company
from obtaining injunctive relief (or any other provisional remedy) in any court
of competent jurisdiction pursuant to California Code of Civil Procedure Section
1281.8 (or similar statute of an applicable jurisdiction) to prevent irreparable
harm (including, without limitation, pending the conclusion of any arbitration),
which, to the extent applicable, shall be brought in the state or federal courts
of California, as applicable. The Company shall pay all fees relating to the
administration of the arbitration, including the arbitrator’s fees, arbitration
expenses and any other costs unique to the arbitration proceeding (recognizing
that each side shall bear its own deposition, witness, expert and attorney’s
fees and other expenses to the same extent as if the matter were being heard in
court). In the event that a Party refuses to acknowledge his or its obligation
to arbitrate a Dispute or files an action in court that is subject to
arbitration pursuant to this Section 14.2, and the Executive or the Company
seeks to compel arbitration pursuant to this Section 14.2, or if either Party
brings an action to enforce an arbitration award hereunder, the prevailing party
shall be entitled to attorneys' fees and costs pursuant to applicable law. In
addition, if a Party to this Agreement hereafter pursues any dispute by any
method other than as set forth herein, the responding Party shall be entitled to
recover from the initiating Party all damages, costs, expenses and attorneys'
fees incurred as a result of defending such action. Both Executive and the
Company acknowledge that by agreeing to this arbitration procedure, each waiveS
the right to resolve any such dispute through a trial by jury or judge or
administrative proceeding.

 

15.General Provisions.

 

15.1            Notices. Any notices provided must be in writing and will be
deemed effective upon the earlier of personal delivery (including delivery by
email or facsimile transmission upon acknowledgment of receipt of electronic
transmission) or the next day after sending by overnight carrier, to the Company
at its primary office location (with any email notice to the Chief Executive
Officer of the Company at his primary Company email address) and to Executive at
the address (or email address) as listed on the Company payroll.

 

15.2            Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction to the extent possible in
keeping with the intent of the Parties.

 

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15.3            Waiver. Any waiver of any breach of any provisions of this
Agreement must be in writing to be effective, and it shall not thereby be deemed
to have waived any preceding or succeeding breach of the same or any other
provision of this Agreement.

 

15.4               Complete Agreement. This Agreement, together with the
Confidentiality Agreement, constitutes the entire agreement between Executive
and the Company with regard to the subject matter hereof and is the complete,
final, and exclusive embodiment of the Company's and Executive's agreement with
regard to this subject matter. This Agreement is entered into without reliance
on any promise or representation, written or oral, other than those expressly
contained herein, and it supersedes any other such promises, warranties or
representations. It cannot be modified or amended except in a writing signed by
Executive and a duly authorized officer of the Company.

 

15.5              Counterparts. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
Party, but both of which taken together will constitute one and the same
Agreement.

 

15.6              Headings. The headings of the paragraphs hereof are inserted
for convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.

 

15.7              Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors, assigns, heirs, executors and administrators,
except that Executive may not assign any of his or her duties hereunder and he
or she may not assign any of his or her rights hereunder without the written
consent of the Company, which shall not be withheld unreasonably.

 

15.8            Tax Withholding. All amounts payable to Executive will be
subject to appropriate payroll deductions and withholdings.

 

15.9            Governing Law; Consent to Personal Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
California without regard to the conflict of laws provisions thereof.

 

15.10        Survival. The covenants, agreements, representations and warranties
contained in or made in Sections 6 through 15 of this Agreement shall survive
any termination of this Agreement.

 

15.11        Third-Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
Party to this Agreement.

 

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first written above.

 

 

APTOSE BIOSCIENCES INC.

 

 

 

By:                                              

Name: William G. Rice, Ph.D.

Title: Chairman, President & CEO

 

Date: __________________________________

 

EXECUTIVE

 

 

______________________________________

Print Name: Jotin Marango, M.D., Ph.D.

 

 

Date: __________________________________

 

 

 

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