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AFH Acquisition IV, Inc. 8-K [afhacq4-8k_0429.htm]
 
 
Exhibit 10.14
 
 
EXECUTIVE EMPLOYMENT AGREEMENT
 
This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of
this 5th day of April 2011 (the “Effective Date”), by and between Emmaus
Medical, Inc., a California corporation (the “Company”), and, Lan T. Tran, MPH,
an individual (the “Executive”).  Company or Executive are sometimes referred to
herein as “party” or collectively “parties”.
 
RECITALS
 
WHEREAS, Company and Executive entered into an employment relationship
historically for Executive to serve as Chief Compliance Officer of the Company;
 
WHEREAS, by unanimous consent of its Board of Directors, Company named Executive
to serve as Executive Vice President, Chief Administrative Officer, and Chief
Compliance and Regulatory Officer (referred to collectively for this Agreement
as “CAO”) to manage the Company’s administrative duties and regulatory
requirements;
 
WHEREAS, Executive is willing to continue to be employed by the Company and
provide services to the Company under the terms and conditions stated herein, as
of the Effective Date;
 
WHEREAS, Company and Executive now mutually desire to enter into this Agreement
as approved by the Board of Directors;
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, and for other good and valuable consideration, it is
hereby agreed by and between the parties hereto as follows:
 
1.           Employment and Duties
 
1.1           Employment.  The Company hereby employs Executive as the CAO of
the Company and Executive hereby accepts such employment as of the Effective
Date pursuant to the terms, covenants and conditions set forth
herein.  Executive shall report directly to the CEO and as approved by the Board
of Directors of the Company (the “Board”).  This Agreement shall supersede and
replace any prior agreements or Letters of Agreement.
 
1.2           Duties.  Executive shall have the overall responsibility as CAO
for the administrative, regulatory and compliance requirements of the Company,
and shall perform all duties and responsibilities and have such powers which are
commonly incident to the position of CAO, as well as any additional
responsibilities and authority as may be from time to time assigned or delegated
to her by the CEO and the Board of Directors.  Executive shall perform the
duties assigned to her to the best of her ability and in a manner satisfactory
to the Company.
 
 
 

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1.3           Time and Efforts.  Executive shall devote her full business time,
efforts, attention, and energies to the business of the Company and to the
performance of Executive's duties hereunder during the Term, and shall not
engage in any other business, profession or occupation for compensation or
otherwise which would conflict or interfere with the rendition of such services,
either directly or indirectly, without the prior written consent of the Company;
provided that, nothing herein shall preclude Executive from (i) continuing to
serve on any board of directors or trustees of any "not for profit"
organization, (ii) being involved in charitable activities, or (iii) managing
her personal and family passive investments; provided, further that, in each
case, and in the aggregate, such activities shall not materially conflict or
interfere with the performance of Executive's duties hereunder or conflict with
her duty of loyalty and/or fiduciary duties owed to the Company.
 
2.           Term
 
The term of employment under this Agreement shall be for a period of two (2)
years commencing on the Effective Date (the “Initial Term”), and this Agreement
will then be renewed automatically for additional one (1) year periods
commencing on the last date of the Initial Term, and on each one (1) year
anniversary date thereafter (each subsequent one year period together with the
Initial Term, hereinafter collectively the “Term”), unless either the Company or
Executive provides the other party with written notice at least sixty (60) days
prior to the last date of the Initial Term or any subsequent Term stating that
the Agreement will not be renewed.  In connection with any notice of non-renewal
pursuant to this Section 2, the Executive’s termination date of employment will
be the last date of the applicable Term and Executive will not be eligible or
entitled to receive any severance pay or post-termination benefits that may
otherwise be provided under this Agreement; provided, however, that if a notice
of non-renewal is provided by the Company to Executive within two (2) years
after the date of a Change of Control as defined in Section 5.2(b) below, then
the notice of non-renewal shall be deemed to be and shall be treated as a
Termination Without Cause After a Change of Control and Executive shall be
entitled to the pay and benefits as set forth in Section 6.4 below.  The Company
reserves the right to relieve Executive from all duties during all or any
portion of the 60-day notice period.  Notwithstanding the above, either party
may terminate this Agreement at any time during the Term pursuant to the
applicable provisions of Section 5 of this Agreement.

 
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3.           Compensation
 
As the total consideration for Executive’s services rendered hereunder,
Executive shall be entitled to the following:
 
3.1           Base Salary.  Executive shall be paid an initial annual base
salary of One Hundred Eighty Thousand Dollars ($180,000.00) per year (“Base
Salary”) beginning on the Effective Date of the Agreement and payable in regular
installments in accordance with the customary payroll practices of the
Company.  Executive’s Base Salary will be reviewed at least annually by the
Company and may be increased at the discretion of the Company.  The Base Salary
may not be decreased, except upon a mutual written agreement between the
parties.
 
3.2           Annual Performance Bonus.  In addition to Base Salary, Executive
shall be eligible to receive an annual bonus based upon Executive’s performance
for the preceding year as measured against certain targets and goals as mutually
established by the parties.  The bonus shall be paid within thirty (30) days of
the conclusion of the bonus period.  Executive must be employed on the Bonus
payment date in order to be eligible to receive the Bonus, except as otherwise
expressly provided for in this Agreement.  The target Bonus amount for 2011
shall be Twenty Thousand Dollars ($20,000.00).
 
3.3           Equity Consideration. Effective on December 31, 2011, and at the
end of each successive calendar year on December 31 thereafter , or as soon as
reasonably practicable after such December 31 (each a “Grant Date”) during the
Term of this Agreement, and as part of the consideration for this Agreement and
based on the achievement of the specific execution of responsibilities and
performance of duties from the immediate prior year as may be determined by the
Board, the Compensation Committee of the Board shall grant annually to
Executive, non-qualified stock options with a Black Scholes value of Forty
Thousand Dollars ($40,000), with three year vesting, exercisable into shares of
common stock of the Company, with an exercise price per share to equal to the
“Fair Market Value” (as defined in the Company’s stock incentive plan) on the
applicable Grant Date, which shares shall have a ten year expiration date from
the Grant Date and a cashless exercise feature.   One-third (1/3) of the options
granted shall vest on the first anniversary of the applicable Grant Date,
one-third (1/3) shall vest on the second anniversary of the applicable Grant
Date, and the final one-third (1/3) shall vest on the third anniversary of the
applicable Grant Date.  Any unvested options will vest upon (i) a Change of
Control as defined in and pursuant to Section 5.2(b) below, or (ii) any
termination of Executive’s employment other than (a) termination by Executive,
or (b) termination for Cause as defined in Section 5.1 below.  In the event that
the Executive is terminated for any reason other than (i) Cause, (ii) death or
(iii) disability or retirement, each Option granted to such Participant, to the
extent that it is exercisable at the time of such termination, shall remain
exercisable for the 90 day period following such termination, but in no event
following the expiration of its term.  In the event of the termination of
Executive’s employment for Cause, each outstanding option granted to Executive
shall terminate at the commencement of business on the date of such
termination.  In the event that the Executive’s employment with the Company
terminates on account of death, disability or, with respect to any non-qualified
stock option, retirement of Executive, each option granted that is outstanding
and vested as of the date of such termination shall remain exercisable by
Executive (or Executive’s legal representatives, heirs or legatees) for the one
year period following such termination, but in no event following the expiration
of its term.
 
 
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3.4           Compensation Committee. The Annual Performance Bonus and the
Equity Consideration shall be reviewed by the Compensation Committee of the
Company’s Board on an annual basis and may be revised upon mutual agreement
between Company and Executive to set performance criteria for purposes of
compliance with the exemption requirements of Section 162(m) of the Internal
Revenue Code of 1986, as amended (“Code”).
 
3.5           Expenses.  During employment, Executive is entitled to
reimbursement for reasonable and necessary business expenses incurred by
Executive in connection with the performance of Executive’s duties and pursuant
to applicable Company policy.  The Company shall also provide Executive with a
laptop computer for use during Executive’s employment.
 
3.6           Vacation.  Executive shall be entitled to accrue paid vacation
each year pursuant to the terms and provisions of the Company’s vacation leave
policies as in effect from time to time.  Although unused vacation may be
carried over from year to year, the maximum cap on accrual shall be equal to 1.5
times the annual accrual.
 
3.7           Benefits.  Executive shall be entitled to participate in and
receive all benefits made available by the Company to its Executives, subject to
and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements, including without limitation, medical, dental,
vision, life and disability insurance plans and coverage, and defined benefit,
defined contribution or other 401K program, including all company matching
provisions.
 
4.           Proprietary Information
 
As a condition of this Agreement, Executive shall sign the Employee
Confidentiality and Invention Assignment Agreement as presented by the Company,
and such agreement shall remain in full force and effect as provided therein
even after the termination of this Agreement and the employment relationship.
 
5.           Termination
 
Executive’s employment shall terminate upon the happening of the following:
 
5.1           Termination For Cause.  The Company may terminate this Agreement
for Cause if the Board of Directors determines that Cause exists.  For purposes
of this Agreement, “Cause” shall mean:
 
(a)           A proven act of dishonesty, fraud, embezzlement, or
misappropriation of proprietary information in connection with the Executive’s
responsibilities as an Executive;
 
(b)           Executive’s conviction of, or plea of nolo contendere to, a felony
or a crime involving moral turpitude;

 
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(c)           Executive’s willful misconduct in connection with her employment
duties that is detrimental to the Company and which cannot be cured on
reasonable notice to Executive; or
 
(d)           Executive’s habitual failure or refusal to perform her employment
duties under this Agreement if such failure or refusal is not cured by Executive
within twenty (20) days after receiving written notice thereof from the Board of
Directors.
 
For purposes hereof, no act or failure to act by the Executive shall be
considered ‘willful’ unless done or omitted to be done by her not in good faith
or without reasonable belief that her action or omission was in the best
interest of the Employer or contrary to a formal resolution of the Board.  

5.2           Termination Without Cause.
 
(a)           The Company may terminate this Agreement Without Cause.  For
purposes of this Agreement, “Without Cause” shall mean termination by the
Company of Executive’s employment for any reason, other than as specified in
Sections 5.1 or 5.3 hereof, including any termination Without Cause that occurs
within a two (2) year period after a Change of Control (as defined below).
 
(b)           Change of Control shall mean the occurrence of any one of the
following:  (i) any “person,” as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other
than the Company, a subsidiary, an affiliate, or a Company employee benefit
plan, including any trustee of such plan acting as trustee) becoming the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of Company’s then outstanding securities; (ii) a sale of
assets involving 50% or more of the fair market value of the assets of Company
as determined in good faith by the Board of Directors of the Company; or (iii)
any merger or reorganization of the Company whether or not another entity is the
survivor, pursuant to which the holders of all the shares of capital stock of
the Company outstanding prior to the transaction hold, as a group, fewer than
50% of the shares of capital stock of the Company outstanding after the
transaction.
 
 
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(c)           The Company may terminate the employment of Executive and all of
the Company’s obligations hereunder at any time during the Term of Employment
“Without Cause” by giving Executive written notice of such termination, to be
effective thirty (30) days following the giving of such written notice, in which
case Executive shall receive the compensation, severance and benefit
continuation required by Section 6.3 below; provided, however, that if Company
terminates Executive’s employment Without Cause at any time within a two (2)
year period after the date of a Change of Control as defined in Section 5.2(b)
above, then Executive shall receive the compensation, severance and benefit
continuation required by Section 6.4 below.
 

5.3           Termination Due to Disability or Death.  Executive’s employment
hereunder may be terminated by the Company as follows:
 
(a)           To the extent permitted by law, upon thirty (30) days’ notice to
Executive in the event that Executive has been unable to perform substantially
all of her duties under this Agreement for an aggregate of 120 days (inclusive
of weekends and holidays) within any 12-month period, as the result of
Executive’s incapacity to perform the essential functions of her job due to a
physical or mental disability and after reasonable accommodation made by the
Company, and within thirty (30) days of receipt of such notice, Executive shall
not have returned to the full-time, continuing performance of her duties
hereunder, or
 
(b)           Immediately upon the death of Executive.
 
5.4           Termination by Executive for Good Reason.  Executive may terminate
the Agreement for “Good Reason”. Executive’s termination shall be for “Good
Reason” if Executive provides written notice to the Company of the Good Reason
within ninety (90) days of the event constituting Good Reason, and provides the
Company with a period of thirty (30) days to cure the Good Reason and the
Company fails to cure the Good Reason within that period.  For purposes of this
Agreement, “Good Reason” shall mean any of the following events if the event is
effected by the Company or third-parties without Executive’s consent:  (i) a
reduction of more than 10% in Executive’s Base Salary or other component of
compensation and benefits, except for changes to the Company’s generally
applicable benefit plans and policies; unless the salary or compensation
reduction is part of a general reduction for all executive employees; (ii) a
change in the location of the business requiring Executive to move or drive to
work more than 40 miles from the current location; (iii) any material diminution
of Executive’s authority, responsibilities, reporting or job duties (except for
any reduction for Cause as defined above); or (iv) any other material breach by
the Company of this Agreement.  Executive may terminate his/her employment at
any time for Good Reason as provided in this Section 5.4, in which case
Executive shall receive the compensation, severance and benefit continuation
required by Section 6.3 below; provided, however, that if Executive terminates
his/her employment at any time for Good Reason within a two (2) year period
after the date of a Change of Control as defined in Section 5.2(b) above, then
Executive shall receive the compensation, severance and benefit continuation
required by Section 6.4 below.

5.5           Voluntary Termination.  Executive’s employment hereunder may be
terminated by Executive for any reason (other than by Termination Due to
Disability or Death or for Good Reason) upon Executive providing Company with
thirty (30) days’ notice of Executive’s voluntary termination.

 
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6.           Effect of Termination

6.1           Termination For Cause or Voluntary Termination.  In the event that
Executive’s employment is terminated pursuant to Sections 5.1 or 5.5 above:

(a)           The Company shall pay to Executive, or her representatives, on the
date of termination of employment (the “Termination Date”) only that portion of
the Base Salary provided in Section 3.1 that has been earned to the Termination
Date, and any accrued but unpaid Vacation pay provided in Section 3.5, and any
expense reimbursements due and owing to Executive as of the Termination Date;
and
 
 (b)           Executive shall not be entitled to (i) any other salary or
compensation, (ii) the Annual Performance Bonus pursuant to Section 3.2, (iii)
any Equity Consideration pursuant to Section 3.3, nor (iv) any Benefits pursuant
to Section 3.6, except for benefit continuation under COBRA or similar state or
federal legislation.
 
6.2           Termination Due to Disability or Death.  In the event Executive’s
employment is terminated pursuant to Section 5.3 above, the Company shall pay to
Executive, or her representatives, all of the following:
 
(a)           The payments, if any, referred to in Section 6.1(a) above as of
the Termination Date; and
 
(b)           An amount equal to the full year targeted Annual Performance Bonus
referenced in Section 3.2 above for the calendar year in which the Termination
Date occurs, less applicable statutory deductions and tax withholdings, to be
paid within thirty (30) days of the Termination Date; and
 
(c)           For a Termination Due to Disability only, and provided that
Executive signs a binding release of all claims relating to her employment in
the standard form then being used by the Company at the time, then Company shall
continue to pay Executive a severance package equal to six (6) months of
Executive’s Base Salary at the time of termination.  This severance amount shall
be paid to Executive in equal regular installments over the six (6) month period
pursuant to the Company’s regular payroll periods, less applicable statutory
deductions and tax withholdings.  The first installment shall be paid to
Executive on the first payroll period after the Termination Date once the
release becomes effective; and
 
(d)           If Executive elects benefit continuation under COBRA or similar
state or federal legislation for the available Benefits provided in Section 3.6,
Company shall pay or reimburse the COBRA premiums for a period of up to six (6)
months commencing on the Termination Date, provided that Executive remains
eligible for COBRA continuation coverage.

6.3           Termination Without Cause or for Good Reason.  In the event
Executive’s employment is terminated pursuant to Sections 5.2 or 5.4 above at
anytime in which there has not been a qualifying Change of Control termination,
the Company shall pay Executive on the date of Termination the payments referred
to in Section 6.1(a) above, and provided that, within sixty (60) days of the
Termination Date, Executive signs a binding release of all claims relating to
her employment in the standard form then being used by the Company at the time,
Executive shall also receive all of the following:
 
 
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(a)           A severance package equal to six (6) months of Executive’s Base
Salary at the time of termination.  This severance amount shall be paid to
Executive in equal regular installments over the six (6) month period pursuant
to the Company’s regular payroll periods, less applicable statutory deductions
and tax withholdings.  The first installment shall be paid to Executive on the
first payroll period after the Termination Date once the release becomes
effective; and
 
(b)           A pro rata amount of the Annual Performance Bonus referenced in
Section 3.2 above for the calendar year in which the Termination Date occurs,
less applicable statutory deductions and tax withholdings, based on the
achievement of any applicable performance terms or goals for the year and to be
paid at the same time such Annual Bonus would have been payable under Section
3.2 if Executive had remained employed with the Company; and
 
(c)           If Executive elects benefit continuation under COBRA or similar
state or federal legislation for the available Benefits provided in Section 3.6,
Company shall pay or reimburse the COBRA premiums for a  period of up to six (6)
months commencing on the Termination Date, provided that Executive remains
eligible for COBRA continuation.
 
6.4           Termination Without Cause or for Good Reason After a Change of
Control.  In the event Executive’s employment is terminated pursuant to Sections
5.2 or 5.4 above within the qualifying two (2) year period after a Change of
Control, the Company shall pay Executive on the date of Termination the payments
referred to in Section 6.1(a) above, and provided that, within sixty (60) days
of the Termination Date,  Executive signs a binding release of all claims
relating to her employment in the standard form then being used by the Company
at the time, Executive shall also receive all of the following:
 
(a)           A severance package equal to twelve (12) months of Executive’s
Base Salary at the time of termination.  This severance amount shall be paid to
Executive in equal regular installments over the twelve (12) month period
pursuant to the Company’s regular payroll periods, less applicable statutory
deductions and tax withholdings.  The first installment shall be paid to
Executive on the first payroll period after the Termination Date once the
release becomes effective; and
 
(b)           An amount equal to the full year targeted Annual Performance Bonus
referenced in Section 3.2 above for the calendar year in which the Termination
Date occurs, less applicable statutory deductions and tax withholdings, to be
paid within thirty (30) days of the Termination Date; and
 
(c)           A one-time cash payment of Two Hundred Thousand Dollars
($200,000.00), less applicable statutory deductions and tax withholdings, to be
paid within thirty (30) days of the Termination Date; and
 
 
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(d)           If Executive elects benefit continuation under COBRA or similar
state or federal legislation for the available Benefits provided in Section 3.6,
Company shall pay or reimburse the COBRA premiums for a  period of up to twelve
(12) months commencing on the Termination Date, provided that Executive remains
eligible for COBRA continuation; and
 
(e)           Executive shall also be entitled to full vesting of all stock,
options, incentive or performance share awards, and shall be free from all
lock-ups or contractual restrictions on the free sale of shares, and shall have
twenty-four  months (24) within which to sell or exercise awards, shares or
options (subject to expiration of the applicable term for any options), but
Executive shall not be released from the black-out periods for the next
financial reporting quarter following the Termination Date or Securities and
Exchange Act of 1934 trading obligations typically required for an executive in
this position.
 
NOTWITHSTANDING THE PROVISIONS SET FORTH ABOVE, IF EXECUTIVE’S EMPLOYMENT,
TITLE, RESPONSIBILITY OR ROLE IS CHANGED AS A RESULT OF A CHANGE OF CONTROL
(INCLUDING ANY MERGER, ACQUISITION, BUSINESS COMBINATION OR JOINT OPERATING
AGREEMENT) WITH ANY THIRD PARTY COMPANY THAT OCCURS WITHIN 180 DAYS OF SIGNING
OF THIS AGREEMENT, AND EXECUTIVE ASSUMES A NEW ROLE SIMILAR TO HER CURRENT
POSITION OF CAO, THEN THE PROVISIONS OF SECTION 5.4(iii) AND 5.4(iv) ABOVE SHALL
NOT APPLY AS A BASIS FOR EXECUTIVE TO ASSERT A TERMINATION FOR GOOD REASON, AND
EXECUTIVE SHALL NOT BE ENTITLED TO THE BENEFITS OF THIS SECTION 6.4.
 
7.           Assignment
 
This Agreement is personal in nature, and neither this Agreement nor any part of
any obligation herein shall be assignable by Executive.  The Company shall be
entitled to assign this Agreement to any affiliate of the Company or any person
or entity that assumes the ownership and control of the business of the
Company.  This Agreement shall inure to the benefit of and shall be binding upon
the Company, its successors and assigns.
 
8.           Severability
 
Should any term, provision, covenant or condition of this Agreement be held to
be void or invalid, the same shall not affect any other term, provision,
covenant or condition of this Agreement, but such remainder shall continue in
full force and effect as though each such voided term, provision, covenant or
condition is not contained herein.
 
9.           Governing Law and Submission to Jurisdiction
 
This Agreement shall be governed by and construed in accordance with the laws of
the State of California applicable to contracts made and to be carried out in
California.  Subject to the Binding Arbitration provision of this Agreement as
set forth below, and without in any way limiting the applicability of binding
arbitration, each of the parties submits to the exclusive jurisdiction of any
state or federal court sitting in Los Angeles County, California in any action
or proceeding arising out of or relating to this Agreement and further agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court  to the extent that any court proceeding is
necessary in connection with the Binding Arbitration provision below, and
further agrees not to bring any action or proceeding arising out of or relating
to this Agreement in any other court. Each of the parties agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner so provided by law.
 
 
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10.           Binding Arbitration
 
Any and all disputes which involve or relate in any way to this Agreement and/or
to Executive’s employment or termination of employment with the Company, whether
initiated by Executive or by the Company and whether based on contract, tort,
statute, or common law, shall be submitted to and resolved by final and binding
arbitration as the exclusive method for resolving all such disputes.  The
arbitration shall be private and confidential and conducted in Los Angeles,
California pursuant to the Federal Arbitration Act and applicable California
law, and pursuant to the applicable rules of the American Arbitration
Association (“AAA”) relating to employment disputes, unless the parties
otherwise mutually agree to modify the AAA Rules.  A copy of the AAA Employment
Rules are available for review at www.adr.org/employment and are incorporated
herein by reference.
 
The party demanding arbitration shall submit a written claim to the other party,
setting out the basis of the claim or claims, within the time period of any
applicable statute of limitations relating to such claim(s).  If the parties
cannot mutually agree upon an Arbitrator, then the parties shall select a
neutral Arbitrator through the procedures established by the AAA.  The
Arbitrator shall have the powers provided under the California Code of Civil
Procedure relating to the arbitration of disputes, except as expressly limited
or otherwise provided in this Agreement.  The parties shall have the right to
reasonable discovery as mutually agreed or as determined by the Arbitrator,
including at least one deposition each, it being the goal of the parties to
resolve any disputes as expeditiously and economically as reasonably
practicable.  The parties agree to equally share in the payment of the
administration costs of the AAA arbitration, including payment of the fees for
the Arbitrator, and any other costs directly related to the administration of
the arbitration.  The parties shall otherwise be responsible for their own
respective costs and attorneys fees relating to the dispute, such as deposition
costs, expert witnesses and similar expenses, except as otherwise provided in
this Agreement to the prevailing party.
 
The Arbitrator may award, if properly proven, any damages or remedy that a party
could recover in a civil litigation, and shall award costs and reasonable
attorneys' fees to the prevailing party as provided by law.  The award of the
Arbitrator shall be issued in writing, setting forth the basis for the decision,
and shall be binding on the parties to the fullest extent permitted by law,
subject to any limited statutory right to appeal as provided by law.  Judgment
upon the award of the Arbitrator may be entered in any court having proper
jurisdiction and enforced as provided by law.
 
This agreement to arbitrate is freely negotiated between Executive and the
Company and is mutually entered into between the parties.  Each party
understands and agrees that they are giving up certain rights otherwise afforded
to them by civil court actions, including but not limited to the right to a jury
trial; provided, however, that either party may seek provisional remedies in a
court of competent jurisdiction as provided pursuant to applicable law.
 

 
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11.           Captions
 
The Section captions herein are inserted only as a matter of convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provisions hereof.
 
12.           Compliance with IRC Section 409A
 
Notwithstanding anything herein to the contrary, (i) if at the time of
Executive's termination of employment with the Company Executive is a "specified
employee" as defined in Section 409A of the Code, and the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a result
of such termination of employment is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code, then the Company
will defer the commencement of the payment of any such payments or benefits
hereunder (without any reduction in such payments or benefits ultimately paid or
provided to Executive) until the date that is six (6) months following
Executive's termination of employment with the Company (or the earliest date as
is permitted under Section 409A of the Code) and (ii) if any other payments of
money or other benefits due to Executive hereunder could cause the application
of an accelerated or additional tax under Section 409A of the Code, such
payments or other benefits shall be deferred if deferral will make such payment
or other benefits compliant under Section 409A of the Code, or otherwise such
payment or other benefits shall be restructured, to the extent possible, in a
manner, determined by the Board, that does not cause such an accelerated or
additional tax.  In the event that payments under this Agreement are deferred
pursuant to this Section 12 in order to prevent any accelerated tax or
additional tax under Section 409A of the Code, then such payments shall be paid
at the time specified under this Section 12 without any interest thereon. The
Company shall consult with Executive in good faith regarding the implementation
of this Section 12; provided that neither the Company nor any of its employees
or representatives shall have any liability to Executive with respect thereto.
Notwithstanding anything to the contrary herein, a termination of employment
shall not be deemed to have occurred for purposes of any provision of this
Agreement providing for the payment of amounts or benefits upon or following a
termination of employment unless such termination is also a "Separation from
Service" within the meaning of Section 409A of the Code and, for purposes of any
such provision of this Agreement, references to a "resignation," "termination,"
"termination of employment" or like terms shall mean Separation from Service.
For purposes of Section 409A of the Code, each payment made under this Agreement
shall be designated as a "separate payment" within the meaning of the Section
409A of the Code. Notwithstanding anything to the contrary herein, except to the
extent any expense, reimbursement or in-kind benefit provided pursuant to this
Agreement does not constitute a "deferral of compensation" within the meaning of
Section 409A of the Code: (x) the amount of expenses eligible for reimbursement
or in-kind benefits provided to Executive during any calendar year will not
affect the amount of expenses eligible for reimbursement or in-kind benefits
provided to Executive in any other calendar year, (y) the reimbursements for
expenses for which Executive is entitled to be reimbursed shall be made on or
before the last day of the calendar year following the calendar year in which
the applicable expense is incurred, and (z) the right to payment or
reimbursement or in-kind benefits hereunder may not be liquidated or exchanged
for any other benefit

 
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13.           Entire Agreement
 
This Agreement contains the entire agreement of the parties relating to the
subject matter hereof, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
that are not set forth otherwise herein.  In this regard, each of the parties
represents and warrants to the other party that such party is not relying on any
promises or representations that do not appear in writing herein.  This
Agreement supersedes and replaces any prior agreements that Executive had with
the Company.  Each of the parties further agrees and understands that this
Agreement can be amended or modified only by a written agreement signed by all
parties.
 
14.           Notice
 
All notices and other communications under this Agreement shall be in writing
and mailed, telegraphed, telecopied, or delivered by hand (by a party or a
recognized courier service) to the other party at the following address (or to
such other address as such party may have specified by notice given to the other
party pursuant to this provision):
 
If to the Company:
Emmaus Medical, Inc.
207255 Western Ave., Suite 136
Torrance, CA 90501

If to Executive:
Lan T. Tran, MPH
At current home address on file with the Company
 
15.           Attorney’s Fees
 
In the event that any party shall bring an action or proceeding in connection
with the performance, breach or interpretation of this Agreement, then the
prevailing party in any such action or proceeding, as determined by the
arbitrator, court or other body having jurisdiction, shall be entitled to
recover from the losing party all reasonable costs and expenses of such action
or proceeding, including reasonable attorneys’ fees, court costs, costs of
investigation, expert witness fees and other costs reasonably related to such
action or proceeding.
 
EXECUTIVE HAS BEEN ADVISED THAT SHE SHOULD SEEK INDEPENDENT REVIEW AND ADVICE
FROM COUNSEL AND TAX ADVISORS AS TO THE SCOPE AND AFFECT OF THIS AGREEMENT.

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

     
“COMPANY”
     
 
EMMAUS MEDICAL, INC., a California corporation
         
By:
 
/s/ Yutaka Niihara
     
Yutaka Niihara, MD
     
Chief Executive Officer
         
and
                 
“EXECUTIVE”
         
By:
 
/s/ Lan T. Tran
     
Lan T. Tran, MPH

 
 
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