Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of March 22, 2018 (the
“Effective Date”), is by and between MATINAS BIOPHARMA HOLDINGS, INC., a
Delaware corporation (the “Company”) and Jerome Jabbour (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to employ the Executive as its Chief Executive
Officer and the Executive desires to accept such employment, on the terms and
conditions set forth in this Agreement; and

 

WHEREAS, the Company and the Executive have mutually agreed that, as of the
Effective Date, this Agreement shall govern the terms of employment between the
Executive and the Company and shall supersede and replace any prior employment
agreement between the parties.

 

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

 

ARTICLE 1

Employment;TERM OF AGREEMENT

 

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

 

Section 1.2. Term. The employment relationship hereunder shall be for the period
commencing on the Effective Date and continue until it is terminated by either
the Company or the Executive in accordance with ARTICLE 4 (the “Term”). In the
event that the Executive’s employment with the Company terminates, the Company’s
obligation to continue to pay, after the Termination Date (as defined in Section
4.2(b)), Base Salary (as defined in Section 3.1(a)), Annual Bonus (as defined in
Section 3.1(b)) and other unaccrued benefits shall terminate, except as may be
provided for in ARTICLE 4.

 

ARTICLE 2
TITLE; DUTIES AND OBLIGATIONS; LOCATION

 

Section 2.1. Title. The Company shall employ the Executive to render exclusive
and full-time services to the Company. The Executive shall serve in the capacity
of Chief Executive Officer (“CEO”).

 

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

 

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

 

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

 

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

 

ARTICLE 3

COMPENSATION AND BENEFITS; EXPENSES

 

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

 

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(a)       Base Salary. The Company shall pay the Executive a base salary (the
“Base Salary”) at the annualized rate of $350,000, which shall be subject to
customary withholdings and authorized deductions and be payable in equal
installments in accordance with the Company’s customary payroll practices in
place from time to time. In the event the Company issues and sells equity and/or
quasi-equity securities to investors for fundraising purposes in an amount equal
to or greater than $5,000,000 (five million dollars) within twelve months of the
Effective Date, the Company shall increase the Base Salary to an annualized rate
of $400,000. In the event the Company issues and sells equity and/or
quasi-equity securities to investors for fundraising purposes in an amount equal
to or greater than $15,000,000 (fifteen million dollars) within twelve months of
the Effective Date, the Company shall increase the Base Salary to an annualized
rate of $425,000. The Executive’s Base Salary shall be subject to periodic
adjustments as the Board and/or the Compensation Committee of the Board (the
“Compensation Committee”) shall in its/their discretion deem appropriate. As
used in this Agreement, the term “Base Salary” shall refer to Base Salary as may
be adjusted from time to time.

 

(b)       Signing Bonus. The Company agrees to pay the Executive a signing bonus
of $84,000, payable within thirty days following the Effective Date.

 

(c)       Annual Bonus. For each calendar year ending during the Term (beginning
with the calendar year ending December 31, 2018), the Executive shall be
eligible to receive an annual bonus (the “Annual Bonus”) with a target amount
equal to fifty percent (50%) of the Base Salary earned by the Executive for such
calendar year (the “Target Annual Bonus”). The actual amount of each Annual
Bonus will be based upon the level of achievement of the Company’s corporate
objectives and the Executive’s individual objectives, in each case, as
established by the Board or the Compensation Committee for the calendar year
with respect to which such Annual Bonus relates. The determination of the level
of achievement of the corporate objectives and the Executive’s individual
performance objectives for a year shall be made by the Board or the Compensation
Committee Committee, in its sole discretion. Each Annual Bonus for a calendar
year, to the extent earned, will be paid in a lump sum in the following calendar
year, within the first 75 days of such following year. The Annual Bonus shall
not be deemed earned until the date that it is paid. Accordingly, in order for
the Executive to receive an Annual Bonus, the Executive must be actively
employed by the Company at the time of such payment.

 

(d)       Equity Compensation. On March 22, 2018, the Compensation Committee
approved a grant to the Executive of options to purchase up to 1,000,000 shares
of the Company’s common stock pursuant to the Company’s 2013 Equity Compensation
Plan, as amended and restated (the “2013 Plan”), on the terms and conditions
determined by the Compensation Committee (the “Option”). The Option shall vest
over four (4) years as follows: 25% of the shares subject to the Option shall
vest on the one-year anniversary of the Effective Date, and the remaining 75% of
the shares subject to the Option will vest in equal monthly installments over
the following thirty-six (36) months. During the Term, subject to the terms and
conditions established within the 2013 Plan or any successor equity compensation
plan as may be in place from time to time and separate Award Agreements (as
defined in the 2013 Plan), the Executive also shall be eligible to receive from
time to time additional Stock Options, Stock Unit Awards, Performance Shares,
Performance Units, Incentive Bonus Awards, Other Cash-Based Awards and/or Other
Stock-Based Awards (as such capitalized terms are defined in the 2013 Plan), in
amounts, if any, to be approved by the Board or the Compensation Committee in
its discretion.

 

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

 

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

 

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

 

ARTICLE 4
TERMINATION OF EMPLOYMENT

 

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

 

(a)       The Company may terminate the Executive’s employment hereunder at any
time without Cause (other than by reason of death or Disability) upon five (5)
days prior written notice to the Executive. Executive may terminate his
employment hereunder for Good Reason upon written notice to the Company in
accordance with the provisions set forth in Section 4.1(c).

 

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

 

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

 

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

 

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

 

(ii)       accelerated vesting of fifty percent (50%) of all of the Executive’s
outstanding stock options, restricted stock and other equity incentive awards;

 

(iii)       an extension of the period of time that Employee may exercise stock
options granted to the Employee that have vested as of the Termination Date (the
“Vested Options”) from 90 days to two years after the Termination Date; and

 

(iv)       subject to Section 4.4 and Section 4.5:

 

(A)       payments equal to twelve (12) months of the Executive’s Base Salary
(at the rate in effect immediately prior to the Termination Date) (less
applicable withholdings and authorized deductions), to be paid in equal
installments bimonthly in accordance with the Company’s customary payroll
practices, commencing sixty (60) days following the Termination Date (the
“Pre-CIC Severance Payments”); and

 

(B)       if the Executive then participates in the Company’s medical and/or
dental plans and the Executive timely elects to continue and maintain group
health plan coverage pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), the Company will pay monthly, on the
Executive’s behalf, a portion of the cost of such coverage for the twelve (12)
months after the Termination Date, which payments will be equal to the amount of
the monthly premium for such coverage, less the amount that the Executive would
have been required to pay if the Executive had remained an active employee of
the Company (the “Pre-CIC COBRA Assistance”); provided, however, that if and to
the extent that the Company may not provide such Pre-CIC COBRA Assistance
without incurring tax penalties or violating any requirement of the law, the
Company shall use its commercially reasonable best efforts to provide
substantially similar assistance in an alternative manner provided that the cost
of doing so does not exceed the cost that the Company would have incurred had
the Pre-CIC COBRA Assistance been provided in the manner described above or
cause a violation of Section 409A (as defined in Section 5.16).

 

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

 

(i)       the Accrued Obligations;

 

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

 

(iii)       an extension of the period of time that Employee may exercise his
Vested Options from 90 days to two years after the Termination Date; and

 

(iv)       subject to Section 4.4 and Section 4.5:

 

(A)       payments equal to twenty-four (24) months of the Executive’s Base
Salary (at the rate in effect immediately prior to the Termination Date) (less
applicable withholdings and authorized deductions), to be paid in equal
installments bimonthly in accordance with the Company’s customary payroll
practices, commencing sixty (60) days following the Termination Date (the
“Post-CIC Severance Payments”);

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.2. Termination for Cause; Voluntary Termination.

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.3. Termination Resulting from Death or Disability.

 

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

 

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

 

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

 

Section 4.4. Release Agreement. In order to receive the Pre-CIC Severance
Payments or the Post-CIC Severance Payments (collectively referred to herein as
the “Severance Payments”) or the Pre-CIC COBRA Assistance or the Post-CIC COBRA
Assistance (collectively referred to herein as the “COBRA Assistance”) set forth
in Section 4.1 (if eligible), the Executive must timely execute (and not revoke)
a separation agreement and general release (the “Release Agreement”) in a form
as is determined to be necessary by the Company in its discretion. If the
Executive is eligible for Severance Payments and COBRA Assistance pursuant to
Section 4.1, the Company will deliver the Release Agreement to the Executive
within seven (7) calendar days following the Termination Date. The Severance
Payments and COBRA Assistance are subject to the Executive’s execution of such
Release Agreement within 21 days of the Executive’s receipt of the Release
Agreement and the Executive’s non-revocation of such Release Agreement.

 

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

 

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

 

ARTICLE 5

GENERAL PROVISIONS

 

Section 5.1. Company Non-Disclosure and Invention Assignment Agreement. The
Executive acknowledges and confirms that the Non-Disclosure and Invention
Assignment Agreement executed by the Executive in favor of the Company as of
October 22, 2012 (“Covenants Agreement”), the terms of which are incorporated
herein by reference, remains in full force and effect and binding upon the
Executive. The Covenants Agreement shall survive the termination of this
Agreement and the Executive’s employment by the Company for the applicable
period(s) set forth therein.

 

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

 

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

 

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

 

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

 

If to the Company, to:

 

Matinas BioPharma Holdings, Inc.

1545 Route 206 South, Suite 302

Bedminster NJ 07921

Attn: Board of Directors

 

With a copy to:

 

Lowenstein Sandler LLP

1251 Avenue of the Americas

New York, New York 10020

Attn: Michael J. Lerner, Esq.

 

If to the Executive, to:

 

Jerome D. Jabbour

9 Valley View Drive

Mendham, NJ 07945

 

With a copy to:

___________________

___________________

 

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

 

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

 

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

 -10- 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 -11- 

 

 

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

 

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

 

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

 

 -12- 

 

 

Section 5.17. 280G Modified Cutback.

 

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

 

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

 

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

 

[Signature Page Follows]

 

 -13- 

 

 

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

 

  COMPANY         Matinas BioPharma Holdings, Inc.       By: /s/ Herbert J.
Conrad   Name: Herbert J. Conrad   Title: Chairman       EXECUTIVE         /s/
Jerome D. Jabbour   Jerome D. Jabbour

 

 -14-