Exhibit 10.1

 

February 11, 2019

 

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Joao Siffert, MD

 

 

 

Dear Joao,

 

 

I am pleased to offer you the position of Chief Executive Officer of Abeona
Therapeutics Inc. (the “Company”) effective February 11, 2019 (the "Effective
Date"). You shall report directly to me as the Executive Chairman of the Board
of Directors of the Company (“Board”).

 

1.Duties.

 

In the position as Chief Executive Officer, you shall perform such duties,
functions and responsibilities as are commensurate with such position, as
reasonably and lawfully directed by me or the Board (as applicable), and
pursuant to which all officers and other employees of the Company (other than
the Executive Chairman, if applicable) shall report directly or indirectly to
you (unless the Executive Chairman and Executive shall agree in writing
otherwise). You shall be appointed to the Board at the Company’s annual meeting
scheduled to be held in May 2019 and nominated for reelection each year
thereafter. You shall, if later requested by the Executive Chairman or the Board
(as applicable), also serve as a member of the Board of any corporation,
organization, association, partnership, sole proprietorship, or other type of
entity, directly or indirectly controlling, controlled by, or under direct or
indirect common control with the Company for no additional compensation.

 

2.Exclusivity.

 

As Chief Executive Officer you shall devote substantially all of your business
time and attention to the business and affairs of the Company, shall faithfully
serve the Company, use your best efforts to promote and serve the interests of
the Company and shall not engage in any other business activity, whether or not
such activity shall be engaged in for pecuniary profit. Nothing herein shall
preclude you from engaging in charitable or community affairs and managing your
personal, financial, and legal affairs, so long as such activities do not
materially interfere or conflict with your carrying out your duties and
responsibilities under this Agreement. Notwithstanding the foregoing, you will
be permitted to act or serve as a director or member of the boards of other
private or public companies with the express written consent of the Executive
Chairman or Board (as applicable) which consent shall not be unreasonably
withheld.

 

 

3.Compensation and Benefits.

 

You will receive a base salary of $550,000 USD, payable in accordance with the
regular payroll practices of the Company (“Base Salary”). During your
employment, you may be considered for an annual performance bonus (“Annual
Bonus”) in addition to your Base Salary with a target of 50% of your Base Salary
(“Target Annual Bonus Opportunity”). Annual Bonus compensation in any year, if
any, will be determined in the Company sole discretion and shall be based on
your performance and that of the Company, as well as market factors, in
accordance with a general bonus program established by the Compensation
Committee (the “Compensation Committee”) of the Board. Except as provided below
under Section 5 in the event of certain terminations of your employment, to be
eligible to receive an Annual Bonus for any year, if any, you must be employed
in good standing on the date that the Annual Bonus is paid.

 

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4.Sign-On Grant.

 

In addition to the stock option previously granted to you in connection with
your appointment as Executive Vice President, Head of Research and Development
in the amount of 240,000 shares, on the Effective Date, the Company shall grant
an additional stock option under the Abeona Therapeutics 2015 Equity Incentive
Plan (the “Option”) to purchase 110,000 shares of the Company’s Common Stock
(the “Option Shares”) at an exercise price per share equal to the Fair Market
Value of a share of Common Stock (each term as defined in the Equity Incentive
Plan) on the date of grant. The Option Shares will vest over a forty-eight (48)
month period, with one quarter (25%) of vesting on the one-year anniversary of
the Effective Date and the remaining seventy-five percent (75%) of the Option
Shares vesting in equal monthly installments thereafter over the remaining
thirty-six (36) months, on the same date of each month as the Effective Date
commencing with first such month following the first anniversary of the
Effective Date, subject to your continued employment with the Company and/or its
Affiliates through to the applicable vesting dates, and subject to the terms and
conditions of the Company’s Equity Incentive Plan, except as provided below. If
you remain continuously employed from the Effective Date through the date of a
Change in Control (as defined below), any unvested portion of the Initial Option
as of the date of the Change in Control shall become fully vested immediately
prior to the date of the Change in Control. Pursuant to the terms of the Plan,
the exercise price of the Initial Option will be the fair market value of the
Company’s common stock on the date of the grant.

 

Your right to retain the sign-on cash bonuses in connection with your previous
appointment as Executive Vice President, Head of Research & Development shall
not vest until you have completed one (1) year of service with the Company, on
October 24, 2019. Accordingly, this sign-on bonus is repayable immediately
should your employment terminate for any reason, including your resignation,
prior to October 24, 2019.

 

During your employment, you will be eligible to participate in such health and
other group insurance and other employee benefit plans and programs of the
Company as in effect from time to time on the same basis as other senior
executives of the Company. Your participation will be subject to the terms of
the applicable plan documents and generally applicable Company policies. The
Company reserves the right to amend or terminate any employee benefit plans,
programs and policies in its discretion after the Effective Date.

 

You will be entitled to twenty (20) days of paid time off (vacation days plus
sick time/personal time) per year accrued at a rate in accordance with the
Company’s policies from time to time in effect, in addition to holidays observed
by the Company. Paid time off may be taken at such times and intervals as you
shall determine, subject to the business needs of the Company and the
responsibilities of your position.

 

5.Employment Termination.

 

The Company may terminate your employment for any reason, and you may
voluntarily terminate your employment hereunder for any reason, in each case at
any time upon written notice to the other party (the date on which your
employment terminates for any reason is herein referred to as the “Termination
Date”). Upon your termination of employment for any reason, you (or your
beneficiary or estate, as applicable, in the event of your death) will be
entitled to (i) payment of any Base Salary earned but unpaid through the
Termination Date, (ii) any accrued unused vacation days, (iii) additional vested
benefits (if any) in accordance with the applicable terms of applicable Company
arrangements, and (iv) any unreimbursed expenses in accordance with the
Company’s business expense reimbursement policies (collectively, the “Accrued
Amounts”); provided, however, that if your employment hereunder is terminated
(a) by the Company without Cause (as defined below), (b) by you for Good Reason
(as defined below), (c) on account of your death or (d) by the Company on
account of your Disability (as defined below), then you will be eligible to
receive any Annual Bonus awarded in a prior year, but not yet paid or due to be
paid.

 

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If your employment is terminated (a) by the Company other than for Cause, death
or Disability or (b) by you for Good Reason, in addition to the Accrued Amounts,
you will be entitled to: (i) a payment equal to the sum of your Base Salary plus
your Target Annual Bonus Opportunity (such amount, the “Severance Amount”); (ii)
a payment equal to the premiums that you would pay if you elected continued
health coverage under the Company’s health plan for you and your eligible
dependents for the twelve (12) month period following the Termination Date, less
the applicable active employee rate, which premiums will be calculated based on
the rate determined under the COBRA rate in effect on the Termination Date
(“Medical Benefit Payment”); (iii) a pro-rata Annual Bonus, which pro-rated
Annual Bonus shall be determined by multiplying the full year Annual Bonus that
would otherwise have been awarded to you, based upon the achievement of the
applicable performance goals for the year in which the Termination Date occurs
(without any exercise of negative discretion disproportionate to any such
exercise respecting other executives and all subjective performance requirements
deemed fully satisfied), multiplied by a fraction, the numerator of which is the
number of days during which you were employed by the Company in the year in
which the Termination Date occurs and the denominator of which is three hundred
sixty-five (365); and (iv) accelerated vesting equivalent to twelve (12) months
of continued employment from the Termination Date (disregarding such termination
for such purpose) with respect to all unvested equity and any other long-term
incentive awards granted to you and then outstanding on the Termination Date;
provided, that, any delays in the settlement or payment of such awards that are
set forth in the applicable award agreement and that are required under Section
409A of the Internal Revenue Code, as amended (the “Code”), and the Treasury
Regulations thereunder (“Section 409A”) shall remain in effect. The Company’s
obligations to make the payments and provide the benefits set forth in (i) –
(iv) in this Paragraph shall be conditioned upon your continued compliance with
your obligations under Section 4 below and your execution and nonrevocation of a
release of claims in favor of the Company and its affiliates in a form provided
by the Company (“Release”). Notwithstanding any provision to the contrary herein
(other than the provisions of Section 7 below), and without limitation of any
remedies to which the Company may be entitled, (A) the Severance Amount shall be
paid in installments in accordance with the Company’s regular payroll practices
during a twelve (12) month period commencing within sixty (60) days following
the Termination Date (with the first such payment to include all installment
amounts from the Termination Date), (B) the Medical Benefit Payment will be made
in a lump sum within sixty (60) days following the Termination Date and (C) the
pro-rated Annual Bonus shall be paid to you in the ordinary course at the same
time annual bonuses are paid to other senior executives, but in no event later
than March 15 of the year following the year in which the Termination Date
occurs; provided, that, the Release is effective.

 

Notwithstanding any other provision contained herein, if your employment
hereunder is terminated by you for Good Reason or by the Company without Cause
(other than on account of your death or Disability), in each case within twelve
(12) months following a Change in Control, you will be entitled to receive the
Severance Amount, the Medical Benefit Payment, and the pro-rata Annual Bonus, as
provided above, except that (i) if the Change in Control is a “change in control
event” as defined under Section 409A, the Severance Amount shall be payable in a
lump sum within sixty (60) days following the Termination Date; and
(ii) notwithstanding the terms of any equity incentive plan or award agreements,
as applicable, all outstanding unvested stock options/stock appreciation rights
granted to your during your employment with the Company shall become fully
vested and exercisable and will remain exercisable for six (6) months following
the Termination Date and all outstanding equity-based and other long-term
compensation awards, other than stock options/stock appreciation rights, shall
become fully vested and the restrictions thereon shall lapse; provided, that,
any delays in the settlement or payment of such awards that are set forth in the
applicable award agreement and that are required under Section 409A shall remain
in effect. The Company’s obligations to provide the payments and benefits
described in this Paragraph shall be conditioned upon your continued compliance
with your obligations under Section 4 below and your execution and delivery to
the Company of an effective Release.

 

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The foregoing payments and benefits upon termination of your employment shall
constitute the exclusive severance payments and benefits due to you upon a
termination of your employment.

 

Upon your termination of employment with the Company for any reason, you will be
deemed to have resigned, as of the Termination Date, from all positions you then
hold with the Company and its affiliates.

 

Following the termination of your employment with the Company for any reason,
you will reasonably cooperate with the Company upon reasonable request of the
CEO or the Board or and be reasonably available to the Company (taking into
account your other business endeavors) with respect to matters arising out of
your services to the Company and its subsidiaries, including, in connection with
any legal proceeding, providing testimony and affidavits; provided, that, the
Company shall make reasonable efforts to minimize disruption of your other
activities. The Company shall reimburse you for reasonable expenses incurred in
connection with such cooperation.

 

For purposes of this offer letter, the following terms have the following
meanings:

 

(i)       “Cause” shall mean: (a) your substantial failure to perform your
duties (other than any such failure resulting from incapacity due to physical or
mental disability) that continues for fifteen (15) calendar days after written
notice from the Company; (b) your failure to comply with any valid and legal
directive of the CEO or the Board (as applicable) that continues for fifteen
(15) calendar days after written notice from the Company; (c) your engagement in
dishonesty, illegal conduct, or misconduct (or the discovery of your having
engaged in such conduct), which, in each case, materially harms or is reasonably
likely to materially harm the Company or its subsidiaries; (d) your
embezzlement, misappropriation, or fraud, whether or not related to your
employment with the Company; (e) your conviction of or plea of guilty or nolo
contendere to a crime that constitutes a felony; (f) your willful violation of a
material policy of the Company; (g) your willful or grossly negligent
unauthorized disclosure of Confidential Information (as defined below); or (h)
your material breach of any material obligation under this offer letter or any
other written agreement between you and the Company that continues for fifteen
(15) calendar days after written notice from the Company (if such breach is
reasonably curable); or (i) any willful material failure by you to comply with
the Company’s written policies or written rules, as they may be in effect from
time to time.

 

(ii)       “Change in Control” shall have the meaning defined in subparagraph
(ii) of the definition of such term under the Appendix in the Plan as in effect
on the date hereof.

 

(iii)       “Disability” shall occur, subject to applicable law, when you are
entitled to receive long-term disability benefits under the Company’s long-term
disability plan, or if there is no such plan, your inability, due to physical or
mental incapacity, to perform the essential functions of your job for one
hundred eighty (180) calendar days out of any three hundred sixty-five (365) day
period or one hundred twenty (120) consecutive calendar days. Any question as to
the existence of your Disability as to which you and the Company cannot agree
shall be determined in writing by a qualified independent physician mutually
acceptable to you and the Company. If you and the Company cannot agree as to a
qualified independent physician, each shall appoint such a physician and those
two physicians shall select a third who shall make such determination in
writing. The determination of Disability made in writing to the Company and you
shall be final and conclusive for all purposes of this offer letter.

 

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(iv)       “Good Reason” shall mean the occurrence of any of the following, in
each case without your written consent: (a) a material reduction of at least ten
percent (10%) of your Base Salary other than a general reduction in Base Salary
that affects all similarly situated executives in substantially the same
position; (b) a material reduction of at least thirty percent (30%) of the
Target Annual Bonus Opportunity other than a general reduction in the Target
Annual Bonus Opportunity that affects all similarly situated executives in
substantially the same position; (c) a permanent relocation of your principal
place of employment by more than thirty-five (35) miles; (d) any material breach
by the Company of any material provision of this offer letter; or (e) a material
adverse change in your title, authority, duties, or responsibilities (including
the reporting structure applicable to you, other than temporarily while you are
physically or mentally incapacitated); provided, however, that you cannot
terminate your employment for Good Reason unless you have provided written
notice to the Company of the existence of the circumstances providing grounds
for termination for Good Reason within sixty (60) calendar days following the
initial existence of such grounds and the Company has had thirty (30) calendar
days from the date on which such notice is provided to cure such circumstances.
If you do not terminate your employment for Good Reason within sixty (60)
calendar days after expiration of the cure period (in which the Company shall
not have so cured such grounds), then you will be deemed to have waived your
right to terminate for Good Reason with respect to such grounds.

 

6.Restrictive Covenants.

 

This offer of employment is subject to the Company’s policies contained in the
Employee Handbook, the Policy on Insider Trading, Whistle Blower Policy, Code of
Ethics, and the terms of any Employee Confidentiality Non-competition and
Proprietary Information Agreement between you and the Company, the terms of
which are incorporated by reference.

 

7.Conditions of Employment.

 

This offer of employment is contingent on you continued employment eligibility
in accordance with the US Immigration and Naturalization requirements, if
appropriate. The offer of employment contained in this offer letter, and your
continued employment, is contingent upon and subject to a satisfactory
background and reference check (which you hereby authorize), including but not
limited to a confirmation of your stated credentials. It will be in the
Company’s sole discretion at any time to determine the scope of the background
and reference check, whether and when to conduct or update such background check
and reference check and whether such check is satisfactory.

 

8.At-Will Employment.

 

Your employment with the Company is at-will. This means that you will have the
right to terminate your employment relationship with the Company at any time for
any reason. Similarly, the Company will have the right to terminate its
employment relationship with you at any time for any reason.

 

9.Section 409A.

 

To the extent applicable, it is intended that this offer letter (including all
amendments hereto, if any) either meets the requirements for exclusion from
coverage under Section 409A, or alternatively complies with the requirements of
Section 409A, so that the income inclusion provisions of Section 409A(a)(1) of
the Code do not apply to you. This offer letter shall be interpreted and
administered in a manner consistent with this intent.

 

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To the extent that payment of amounts under this offer letter that are subject
to Section 409A are payable upon your termination of employment, such amounts
shall only be payable if such termination also constitutes a "separation from
service," within the meaning of Section 409A, from the Company and its
affiliates. If you are deemed on the date of your separation from service to be
a "specified employee" (within the meaning of Section 409A(a)(2)(B) of the Code)
of the Company, then, notwithstanding any other provision herein, with regard to
any payment that is "nonqualified deferred compensation" subject to Section 409A
and that is payable on account of your "separation from service," such payment
shall not be made prior to the earlier of (i) the expiration of six (6) months
following the date of your separation from service, and (ii) the date of your
death, following which all payments so delayed shall be paid to you in a lump
sum without interest.

 

Any taxable reimbursement of business or other expenses provided for under this
offer letter that is subject to Section 409A shall be subject to the following
conditions: (i) the expenses eligible for reimbursement in one taxable year
shall not affect the expenses eligible for reimbursement in any other taxable
year; (ii) the reimbursement of an eligible expense shall be made no later than
the end of the year after the year in which such expense was incurred; and (iii)
the right to reimbursement shall not be subject to liquidation or exchange for
another benefit.

 

In applying Section 409A to amounts paid pursuant to this offer letter, each
payment shall be treated as a separate payment and any right to a series of
installment payments under this offer letter shall be treated as a right to a
series of separate payments. Whenever a payment under this offer letter
specifies a payment period within a specified number of days, the actual date of
payment within the specified period shall be within the sole discretion of the
Company. If the consideration and revocation period for the Release spans two
taxable years and any amount hereunder is “nonqualified deferred compensation"
subject to Section 409A and payable on account of your separation from service,
such payment shall not be made or commence until the second taxable year.

 

10.Section 280G.

 

In the event of a change in ownership or control under Section 280G of the Code,
if it shall be determined that any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
your benefit, whether paid or payable or distributed or distributable pursuant
to the terms of this offer letter or otherwise (a “Payment”), would constitute
an “excess parachute payment” within the meaning of Section 280G of the Code,
the aggregate present value of the Payments under this offer letter shall be
reduced (but not below zero) to the Reduced Amount (defined below) if and only
if the Accounting Firm (described below) determines that the reduction will
provide you with a greater net after-tax benefit than would no reduction. No
reduction shall be made unless the reduction would provide you with a greater
net after-tax benefit. The determinations under this Section 8 shall be made as
follows:

 

(i)       The “Reduced Amount” shall be an amount expressed in present value
which maximizes the aggregate present value of Payments under this offer letter
without causing any Payment under this offer letter to be subject to the Excise
Tax (defined below), determined in accordance with Section 280G(d)(4) of the
Code. The term “Excise Tax” means the excise tax imposed under Section 4999 of
the Code, together with any interest or penalties imposed with respect to such
excise tax.

 

(ii)       Payments under this offer letter shall be reduced on a
nondiscretionary basis in such a way as to minimize the reduction in the
economic value deliverable to you. Where more than one payment has the same
value for this purpose and they are payable at different times, they will be
reduced on a pro-rata basis. Only amounts payable under the offer letter shall
be reduced pursuant to this Section.

 

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(iii)       All determinations to be made under this Section shall be made by an
independent certified public accounting firm selected by the Company and agreed
to by you immediately prior to the change in ownership or control transaction
(the “Accounting Firm”). The Accounting Firm shall provide its determinations
and any supporting calculations both to the Company and you within ten (10) days
of the transaction. Any such determination by the Accounting Firm shall be
binding upon the Company and you. All of the fees and expenses of the Accounting
Firm in performing the determinations referred to in this Section shall be borne
solely by the Company.

 

11.Miscellaneous.

 

All amounts paid to you under this offer letter during or following your
employment shall be subject to withholding and other employment taxes imposed by
applicable law, and the Company shall withhold from any payments under this
offer letter all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. You shall be
solely responsible for the payment of all taxes imposed on you relating to the
payment or provision of any amounts or benefits hereunder.

 

This offer letter may be executed by .pdf or facsimile signatures in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

 

From and after the Effective Date, this offer letter (including any exhibits
hereto) constitutes the entire agreement between you and the Company, and
supersedes all prior representations, agreements and understandings (including
any prior course of dealings), both written and oral, between you and the
Company with respect to the subject matter hereof unless otherwise provided in
this Agreement. In the event of any inconsistency between this offer letter and
any other plan, program, practice or agreement in which you are a participant or
a party, this offer letter shall control unless such other plan, program,
practice or agreement is more favorable to you (term by term) or specifically
refers to this offer letter as not controlling.

 

This offer letter and any of the provisions hereof may be amended, waived
(either generally or in a particular instance and either retroactively or
prospectively), modified or supplemented, in whole or in part, only by written
agreement signed by you and the Company. This offer letter and your rights and
obligations hereunder, may not be assigned by you, and any purported assignment
by you in violation hereof shall be null and void. The Company is authorized to
assign this offer letter to a successor to substantially all of its assets or
business. Nothing in this offer letter shall confer upon any person not a party
hereof, or the legal representatives of such person, any rights or remedies of
any nature or kind whatsoever under or by reason of this offer letter, except
the personal representative of the deceased. This offer letter shall inure to
the benefit of, and be binding on, the successors and assigns of each of the
parties, including, without limitation, your heirs and the personal
representatives of your estate and any successor to all or substantially all of
the business and/or assets of the Company.

 

No remedy conferred upon a party by this offer letter is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given under this offer
letter or now or hereafter existing at law or in equity. Except as explicitly
provided herein, no delay or omission by a party in exercising any right, remedy
or power under this offer letter or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or power may be
exercised by such party from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.

 

This offer letter shall be construed and enforced in accordance with, and the
laws of the State of New York, without giving effect to the conflicts of law
principles thereof.

 

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Any reference to a Section of the Code shall be deemed to include any successor
to such Section.

 

This offer letter and the compensation payable hereunder shall be subject to any
applicable clawback or recoupment policies, share trading policies, and other
policies that may be implemented by the Board from time to time with respect to
officers of the Company.

 

Any notices required or permitted hereunder or necessary or convenient in
connection herewith shall be in writing and shall be deemed to have been given
when hand delivered or mailed by registered or certified mail, if to the
Company, to the Executive Chairman at the address above, and if to you at the
most recent address in the Company’s records.

 

Please acknowledge your acceptance of this offer by returning a signed copy of
this offer letter. If there are any other agreements of any type that you are
aware of that may impact or limit your ability to perform your job at the
Company, please let us know as soon as possible. In accepting this offer, you
represent and warrant to the Company that you are not subject to any legal or
contractual restrictions that would in any way impair your ability to perform
your duties and responsibilities to the Company, and that all information you
provided to the Company is accurate and complete in all respects.

 

Formalities aside, we are very excited about having you join our team. Your
skills and experiences are a great match with our goals, and I anticipate you
being a critical part of the Company’s success.

 

Very truly yours,

 

/s/ Steven H. Rouhandeh

 

Steven H. Rouhandeh

Executive Chairman

Abeona Therapeutics Inc.

 

I accept this offer of employment with Abeona Therapeutics and will begin
employment on February 11, 2019.

 

Signature:   Date:      

/s/ João Siffert, M.D.

  February 11, 2019

João Siffert, M.D.

   

 

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