Document:

Exhibit
        10.3

       

      EMPLOYMENT
        AGREEMENT

       

      AGREEMENT
        (the “Agreement”),
        dated
        as of January
        15, 2004, by and between ZIOPHARM, INC., a Delaware corporation with principal
        executive offices at 787 Seventh Avenue, 48th
        Floor,
        New York, NY 10019 (the “Company”),
        and
        ROBERT PETER GALE, M.D.,
        Ph.D.,
        residing at 11693 San Vicente Blvd., Suite 335, Los Angeles, CA 90049
(the
        “Employee”).

       

      W
        I T N E S S E T H:

       

      WHEREAS,
        the Company desires to employ the Employee as Senior Vice
        President of Research of
        the
        Company, and the Employee desires to serve the Company in that capacity,
        upon
        the terms and subject to the conditions contained in this
        Agreement;

       

      NOW,
        THEREFORE, in consideration of the mutual covenants and agreements herein
        contained, the parties hereto hereby agree as follows:

       

      1. Employment.

       

      (a) Services.
        The
        Employee will be employed by the Company as its Senior Vice President of
        Research on terms set forth herein. The Employee will report to the Chief
        Executive Officer of the Company and shall perform such duties as are consistent
        with your position with the Company (the
        “Services”).
        The
        Employee agrees to perform such duties faithfully, to devote substantially
        all
        of his working time, attention and energies to the business of the Company,
        and
        while he remains employed, not to engage in any other business activity that
        is
        in conflict with his duties and obligations to the Company. Notwithstanding
        the preceding sentence, the Company and Employee understand and agree that
        the
        Employee is not required to devote all of his working time, attention and
        energies to the business of the Company, as contemplated pursuant to Section
        3(a) herein.

       

      (b) Acceptance.
        Employee hereby accepts such employment and agrees to render the
        Services.

       

      2. Term.

       

      The
        Employee's employment under this Agreement (the "Term") shall commence as
        of the
        Effective Date (as hereinafter defined) and shall continue for a term of
        three
        (3) years,
        unless sooner terminated pursuant to Section 8 of this Agreement.
        Notwithstanding anything to the contrary contained herein, the provisions
        of
        this Agreement governing protection of Confidential Information shall continue
        in effect as specified in Section 5 hereof and survive the expiration or
        termination hereof. The Term may be extended for additional one (1) year
        periods
        upon mutual written consent of the Employee and the Board upon not less than
        30
        days prior written notice. 

       

      3. Best
        Efforts; Place of Performance.

       

      (a) The
        Employee shall devote no less than 20 full calendar days per month (minimum
        eight hours per day) to the business and affairs of the Company and
        shall
        use his best efforts to advance the best interests of the Company.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      (b) The
        duties to be performed by the Employee hereunder shall be performed at such
        place or places as may be agreed to by the Company and the Employee.

       

      4. Compensation.
        As full
        compensation for the performance by the Employee of his duties under this
        Agreement, the Company shall pay the Employee as follows:

       

      (a) Base
        Salary. The
        Company shall pay Employee a salary (the “Base Salary”) equal to Two Hundred
        Fifty Thousand Dollars ($250,000) per year. Payment shall be made semi-monthly,
        on the last day of each calendar month.

       

      (b) Guaranteed
        Bonus. The Company shall pay the Executive a bonus (the “Guaranteed
        Bonus”)
        of One
        Hundred Fifty Thousand Dollars ($150,000) within 30 days following each
        anniversary of the date of this Agreement during the Term, provided that
        the
        Executive is employed hereunder on such anniversary date. 

       

      (c) Discretionary
        Bonus. At the sole discretion of the Board of Directors of the Company, the
        Employee may receive an additional annual bonus based upon his performance
        on
        behalf of the Company during the prior year (the “Discretionary
        Bonus”)
        in an
        amount to be determined by the Board. The Discretionary Bonus shall be payable
        either as a lump-sum payment or in installments as determined by the Board
        of
        Directors of the Company in its sole discretion. In addition, the
        Board
        of Directors of the Company shall annually review the Bonus to determine
        whether
        an increase in the amount thereof is warranted.

       

      (d) Withholding.
        The Company shall withhold all applicable federal, state and local taxes
        and
        social security and such other amounts as may be required by law from all
        amounts payable to the Employee under this Section 5.

       

      (e) Stock
        Options. As additional compensation for the services to be rendered by the
        Employee pursuant to this Agreement, the Company shall grant the Employee
        stock
        options (“Stock
        Options”)
        to
        purchase a number of shares of Common Stock of the Company
        representing one percent (1%) of the outstanding common stock of the Company
        as
        of the date of this Agreement.
        The
        Stock
        Options shall be governed by the Company’s 2003 Stock Option Plan and
shall
        vest, if at all,
        in
        three equal installments on each anniversary of this Agreement,
        subject
        in each
        case
        to the
        provisions of Section 9 below. In connection with such grant, the Employee
        shall
        enter into the Company’s standard stock option agreement which will incorporate
        the foregoing vesting schedule and the Stock Option related provisions contained
        in Section 9 below. Due
        consideration will be by the Board annually to grant you additional options
        reflecting your contributions to the Company and so that you may maintain
        a
        significant ownership position in the Company.

       

      (f) Expenses.
        The Company shall reimburse the Employee for all normal, usual and necessary
        expenses incurred by the Employee in furtherance of the business and affairs
        of
        the Company, including reasonable travel and entertainment, upon timely receipt
        by the Company of appropriate vouchers or other proof of the Employee’s
        expenditures and otherwise in accordance with any expense reimbursement policy
        as may from time to time be adopted by the Company.

       

      (g) Other
        Benefits. The Employee shall be entitled to all rights and benefits for which
        he
        shall be eligible under any benefit or other plans (including, without
        limitation, dental, medical, medical reimbursement and hospital plans, pension
        plans, employee stock purchase plans, profit sharing plans, bonus plans and
        other so-called "fringe" benefits) as the Company shall make available to
        its
        senior executives from time to time. In addition, the Company shall reimburse
        the Employees for his reasonable medical licensing fees and other professional
        dues.

       

      
        
          
          

        

        
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      5. Confidential
        Information and Inventions.

       

      (a) The
        Employee recognizes and acknowledges that in the course of his duties he
        is
        likely to receive confidential or proprietary information owned by the Company,
        its affiliates or third parties with whom the Company or any such affiliates
        has
        an obligation of confidentiality. Accordingly, during and after the Term,
        the
        Employee agrees to keep confidential and not disclose or make accessible
        to any
        other person or use for any other purpose other than in connection with the
        fulfillment of his duties under this Agreement, any Confidential and Proprietary
        Information (as defined below) owned by, or received by or on behalf of,
        the
        Company or any of its affiliates. “Confidential and Proprietary Information”
        shall include, but shall not be limited to, confidential or proprietary
        scientific or technical information, data, formulas and related concepts,
        business plans (both current and under development), client lists, promotion
        and
        marketing programs, trade secrets, or any other confidential or proprietary
        business information relating to development programs, costs, revenues,
        marketing, investments, sales activities, promotions, credit and financial
        data,
        manufacturing processes, financing methods, plans or the business and affairs
        of
        the Company or of any affiliate or client of the Company. The Employee expressly
        acknowledges the trade secret status of the Confidential and Proprietary
        Information and that the Confidential and Proprietary Information constitutes
        a
        protectable business interest of the Company. The Employee agrees: (i) not
        to
        use any such Confidential and Proprietary Information for himself or others;
        and
        (ii) not to take any Company material or reproductions (including but not
        limited to writings, correspondence, notes, drafts, records, invoices, technical
        and business policies, computer programs or disks) thereof from the Company’s
        offices at any time during his employment by the Company, except as required
        in
        the execution of the Employee’s duties to the Company. The Employee agrees to
        return immediately all Company material and reproductions (including but
        not
        limited, to writings, correspondence, notes, drafts, records, invoices,
        technical and business policies, computer programs or disks) thereof in his
        possession to the Company upon request and in any event immediately upon
        termination of employment.

       

      (b) Except
        with prior written authorization by the Company, the Employee agrees not
        to
        disclose or publish any of the Confidential and Proprietary Information,
        or any
        confidential, scientific, technical or business information of any other
        party
        to whom the Company or any of its affiliates owes an obligation of confidence,
        at any time during or after his employment with the Company.

       

      (c) The
        Employee agrees that all inventions, discoveries, improvements and patentable
        or
        copyrightable works (“Inventions”)
        initiated, conceived or made by him, either alone or in conjunction with
        others,
        during the Term
        shall be
        the sole property of the Company to the maximum extent permitted by applicable
        law and, to the extent permitted by law, shall be “works made for hire” as that
        term is defined in the United States Copyright Act (17 U.S.C.A., Section
        101).
        The Company shall be the sole owner of all patents, copyrights, trade secret
        rights, and other intellectual property or other rights in connection therewith.
        The Employee hereby assigns to the Company all right, title and interest
        he may
        have or acquire in all such Inventions; provided, however, that the Board
        of
        Directors of the Company may in its sole discretion agree to waive the Company’s
        rights pursuant to this Section 6(c) with respect to any Invention that is
        not
        directly or indirectly related to the Company’s business. The Employee further
        agrees to assist the Company in every proper way (but at the Company’s expense)
        to obtain and from time to time enforce patents, copyrights or other rights
        on
        such Inventions in any and all countries, and to that end the Employee will
        execute all documents necessary:

      
        
          
          

        

        
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      (i) to
        apply
        for, obtain and vest in the name of the Company alone (unless the Company
        otherwise directs) letters patent, copyrights or other analogous protection
        in
        any country throughout the world and when so obtained or vested to renew
        and
        restore the same; and

      (ii) to
        defend
        any opposition proceedings in respect of such applications and any opposition
        proceedings or petitions or applications for revocation of such letters patent,
        copyright or other analogous protection.

       

      (d) The
        Employee acknowledges that while performing the services under this Agreement
        the Employee may locate, identify and/or evaluate patented or patentable
        inventions having commercial potential in the fields of pharmacy,
        pharmaceutical, biotechnology, healthcare, technology and other fields which
        may
        be of potential interest to the Company or one of its affiliates (the
“Third
        Party Inventions”).
        The
        Employee understands, acknowledges and agrees that all rights to, interests
        in
        or opportunities regarding, all Third-Party Inventions identified by the
        Company, any of its affiliates or either of the foregoing persons’ officers,
        directors, employees (including the Employee), agents or consultants during
        the
        Employment Term shall be and remain the sole and exclusive property of the
        Company or such affiliate and the Employee shall have no rights whatsoever
        to
        such Third-Party Inventions and will not pursue for himself or for others
        any
        transaction relating to the Third-Party Inventions which is not on behalf
        of the
        Company.

       

      (e) The
        provisions of this Section 6 shall survive any termination of this
        Agreement.

       

      6. Non-Competition,
        Non-Solicitation and Non-Disparagement.

       

      (a) The
        Employee understands and recognizes that his services to the Company are
        special
        and unique and that in the course of performing such services the Employee
        will
        have access to and knowledge of Confidential and Proprietary Information
        (as
        defined in Section 5) and the Employee agrees that, during the Term and for
        a
        period of 12 months
        thereafter, he shall not without the consent of the Company in any manner,
        directly or indirectly, on behalf of himself or any person, firm, partnership,
        joint venture, corporation or other business entity (“Person”),
        enter
        into or engage in any business which is engaged in any business directly
        or
        indirectly competitive with the Company’s Business (as defined below), either as
        an individual for his own account, or as a partner, joint venturer, owner,
        executive, employee, independent contractor, principal, agent, consultant,
        salesperson, officer, director or shareholder of a Person in a business
        competitive with the Company within the geographic area of the Company’s
        Business, which is deemed by the parties hereto to be worldwide. The Employee
        acknowledges that, due to the nature of the Company’s Business, and the
        importance to the Company’s Business of its Confidential and Proprietary
        Information, a violation of this Section 6(a) could cause substantial damage
        to
        the Company and its affiliates and, therefore, the Company has a strong
        legitimate business interest in protecting the continuity of its business
        interests and the restriction herein agreed to by the Employee narrowly and
        fairly serves such an important and critical business interest of the Company.
        For purposes of this Agreement, the “Company’s Business” shall mean the business
        or businesses set forth on the attached Schedule 6(a), which shall be amended
        from time to time upon the mutual written agreement of the parties, but which
        will automatically include the research, development and commercialization
        of
        any technologies that are licensed or otherwise acquired by the Company.
        Notwithstanding the foregoing, nothing contained in this Section 6(a) shall
        be
        deemed to prohibit the Employee from (i) acquiring or holding, solely for
        investment, publicly traded securities of any corporation, some or all of
        the
        activities of which are competitive with the business of the Company so long
        as
        such securities do not, in the aggregate, constitute more than five percent
        (5%)
        of any class or series of outstanding securities of such
        corporation.

       

      
        
          
          

        

        
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      (b) During
        the Term and for a period of 12 months thereafter, the Employee shall not,
        directly or indirectly, without the prior written consent of the
        Company:

       

      (i) solicit
        or induce any employee of the Company or any of its affiliates to leave the
        employ of the Company or any such affiliate; or hire for any purpose any
        employee of the Company or any affiliate or any employee who has left the
        employment of the Company or any affiliate within six months of the termination
        of such employee’s employment with the Company or any such affiliate or at any
        time in violation of such employee’s non-competition agreement with the Company
        or any such affiliate; or

       

      (ii) solicit
        or accept employment or be retained by any Person who, at any time during
        the
        term of this Agreement, was an agent, client or customer of the Company or
        any
        of its affiliates where his position will be related to the Company’s Business;
        or

      

      (iii) solicit
        or accept the business of any agent, client or customer of the Company or
        any of
        its affiliates with respect to products, services or investments similar
        to
        those provided or supplied by the Company or any of its affiliates.

      

      (c) The
        Company and the Employee each agree that both during the Term and at all
        times
        thereafter, neither party shall directly or indirectly disparage, whether
        or not
        true, the name or reputation of the other party or any of its affiliates,
        including but not limited to, any officer, director, employee or any stockholder
        owning greater than five percent (5%) of the Company’s outstanding Common Stock.
        This Section 6 shall not include (i) statements made by the Employee’s in
        performing his duties in the ordinary course as Senior Vice President of
        Research (e.g., employee evaluations and remarks made in private meetings
        of the
        Board) and (ii) statements made by the Employee under oath in a legal
        proceeding.

       

      (d) In
        the
        event that the Employee breaches any provisions of Section 5 or this Section
        6
        or there is a threatened breach, then, in addition to any other rights which
        the
        Company may have, the Company shall (i) be entitled, without the posting
        of a
        bond or other security, to injunctive relief to enforce the restrictions
        contained in such Sections and (ii) have the right to require the Employee
        to
        account for and pay over to the Company all compensation, profits, monies,
        accruals, increments and other benefits (collectively “Benefits”)
        derived or received by the Employee as a result of any transaction constituting
        a breach of any of the provisions of Sections 5 or 6 and the Employee hereby
        agrees to account for and pay over such Benefits to the Company.

       

      
        
          
          

        

        
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      (e) Each
        of
        the rights and remedies enumerated in Section 6(d) shall be independent of
        the
        others and shall be in addition to and not in lieu of any other rights and
        remedies available to the Company at law or in equity. If any of the covenants
        contained in this Section 6, or any part of any of them, is hereafter construed
        or adjudicated to be invalid or unenforceable, the same shall not affect
        the
        remainder of the covenant or covenants or rights or remedies which shall
        be
        given full effect without regard to the invalid portions. If any of the
        covenants contained in this Section 6 is held to be invalid or unenforceable
        because of the duration of such provision or the area covered thereby, the
        parties agree that the court making such determination shall have the power
        to
        reduce the duration and/or area of such provision and in its reduced form
        such
        provision shall then be enforceable. No such holding of invalidity or
        unenforceability in one jurisdiction shall bar or in any way affect the
        Company’s right to the relief provided in this Section 6 or otherwise in the
        courts of any other state or jurisdiction within the geographical scope of
        such
        covenants as to breaches of such covenants in such other respective states
        or
        jurisdictions, such covenants being, for this purpose, severable into diverse
        and independent covenants.

       

      (f) In
        the
        event that an actual proceeding is brought in equity to enforce the provisions
        of Section 5 or this Section 6, the Employee shall not urge as a defense
        that
        there is an adequate remedy at law nor shall the Company be prevented from
        seeking any other remedies which may be available. 

       

      (g) The
        Company shall have the option, in its sole discretion, upon the termination
        of
        this Agreement for any reason, to retain the Employee as a consultant
        (“Consultant”) for a non-renewable period of 12 months from the date of
        separation from the Company (“Consultancy Period”). During the Consultancy
        Period, the Consultant shall have only such duties and responsibilities as
        Company and Consultant shall mutually agree. During the Consultancy Period,
        there is no minimum amount of time Consultant shall be required to devote
        to the
        business and affairs of the Company. During the Consultancy Period, Consultant
        shall have no obligation to travel for or on behalf of Company.

       

      (h) During
        the Consultancy Period, the provisions of Section 6(a) of this Agreement
        shall
        apply, but those provisions shall not apply after the termination of the
        Consultancy Period. Notwithstanding anything contained in this Agreement
        to the
        contrary, the provisions of Section 6(a) of this Agreement shall be deemed
        fully
        satisfied upon the later to occur of (i) the end of the Term of this Agreement
        and (ii) the end of the Consultancy Period if and only if the Company elects,
        in
        its sole discretion, to retain Employee as a Consultant as herein
        provided.

       

      (i) During
        the Consultancy Period, Consultant shall continue to receive each and every
        component of compensation provided for pursuant to Section 4 of this
        Agreement.

       

      7. Representations
        and Warranties.

       

      (a) The
        Employee hereby represents and warrants to the Company as follows:

       

      (i) Neither
        the execution or delivery of this Agreement nor the performance by the Employee
        of his duties and other obligations hereunder violate or will violate any
        statute, law, determination or award, or conflict with or constitute a default
        or breach of any covenant or obligation under (whether immediately, upon
        the
        giving of notice or lapse of time or both) any prior employment agreement,
        contract, or other instrument to which the Employee is a party or by which
        he is
        bound.

       

      
        
          
          

        

        
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      (ii) The
        Employee has the full right, power and legal capacity to enter and deliver
        this
        Agreement and to perform his duties and other obligations hereunder. This
        Agreement constitutes the legal, valid and binding obligation of the Employee
        enforceable against him in accordance with its terms. No approvals or consents
        of any persons or entities are required for the Employee to execute and deliver
        this Agreement or perform his duties and other obligations
        hereunder.

       

      (b) The
        Company hereby represents and warrants to the Employee as follows:

       

      (i) Neither
        the execution or delivery of this Agreement nor the performance by the Company
        of its duties and other obligations hereunder violate or will violate any
        statute, law, determination or award, or conflict with or constitute a default
        or breach of any covenant or obligation under (whether immediately, upon
        the
        giving of notice or lapse of time or both) any prior employment agreement,
        contract, or other instrument to which the Company is a party or by which
        he is
        bound.

       

      (ii) The
        Company has the full right, power and legal capacity to enter and deliver
        this
        Agreement and to perform its duties and other obligations hereunder. 
        This
        Agreement constitutes the legal, valid and binding obligation of the Company
        enforceable against it in accordance with its terms.  No approvals
        or
        consents of any persons or entities are required for the Company to execute
        and
        deliver this Agreement or perform its duties and other obligations hereunder
        and
        contemplated herein.

       

      8. Termination.
        The Employee’s employment hereunder shall be terminated upon the Employee’s
        death and may be terminated as follows:

       

      (a) The
        Employee’s employment hereunder may be terminated by the Board of Directors of
        the Company for Cause. Any of the following actions by the Employee shall
        constitute “Cause”:

       

      (i) The
        willful failure, disregard or refusal by the Employee to perform his duties
        hereunder;

      

      (ii) Any
        willful, intentional or grossly negligent act by the Employee having the
        effect
        of injuring, in a material way (whether financial or otherwise and as determined
        in good-faith by a majority of the Board of Directors of the Company), the
        business or reputation of the Company or any of its affiliates, including
        but
        not limited to, any officer, director, executive or shareholder of the Company
        or any of its affiliates; 

       

      (iii) Willful
        misconduct by the Employee
        in
        respect of the duties or obligations of the Employee under this
        Agreement,
        including, without limitation, insubordination with respect to lawful directions
        received by the Employee from the Executive or the Board of Directors of
        the
        Company
        within
        the scope of duties of the Employee;

       

      (iv) The
        Employee’s indictment of any felony or a misdemeanor involving moral turpitude
        (including entry of a nolo contendere plea);

       

      
        
          
          

        

        
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      (v) The
        determination by the Company, after a reasonable and good-faith investigation
        by
        the Company following a written allegation by another employee of the Company,
        that the Employee engaged in some form of harassment prohibited
        by law
        (including, without limitation, age, sex or race discrimination),
        unless
        the Employee’s actions were specifically directed by the Board of Directors of
        the Company;

       

      (vi) Any
        misappropriation or embezzlement of the property of the Company or its
        affiliates (whether or not a misdemeanor or felony);

       

      (vii) Breach
        by
        the Employee of any of the provisions of Sections
        5, 6
        or
7
        of this
        Agreement; and

      

      (viii) Breach
        by
        the Employee of any provision of this Agreement other than those contained
        in
Sections
        5,
        6
        or
7
        which
        is not cured by the Employee within thirty (30) days after notice thereof
        is
        given to the Employee by the Company.

       

      (b) The
        Executive’s employment hereunder may be terminated by the Board of Directors of
        the Company due to the Executive’s Disability. For purposes of this Agreement, a
        termination for “Disability”
        shall
        occur upon rendering of a written termination notice by the Board of Directors
        of the Company after the Executive has been unable to substantially perform
        his
        duties hereunder for 90 or more consecutive days, or more than 120 days in
        any
        consecutive 12 month period, by reason of any physical or mental illness
        or
        injury. For purposes of this Section 9(b), the Executive agrees to make himself
        available and to cooperate in any reasonable examination by a reputable
        independent physician retained by the Company.

       

      (c) The
        Employee’s employment hereunder may be terminated by the Board of Directors of
        the Company (or its successor) upon the occurrence of a Change of Control.
        For
        purposes of this Agreement, “Change
        of Control”
        means
        (i) the acquisition, directly or indirectly, following the date hereof by
        any
        person (as such term is defined in Section 13(d) and 14(d)(2) of the Securities
        Exchange Act of 1934, as amended), in one transaction or a series of related
        transactions, of securities of the Company representing in excess of fifty
        percent (50%) or more of the combined voting power of the Company’s then
        outstanding securities if such person or his or its affiliate(s) do not own
        in
        excess of 50% of such voting power on the date of this Agreement, or (ii)
        the
        future disposition by the Company (whether direct or indirect, by sale of
        assets
        or stock, merger, consolidation or otherwise) of all or substantially all
        of its
        business and/or assets in one transaction or series of related transactions
        (other than a merger effected exclusively for the purpose of changing the
        domicile of the Company).

       

      (d) The
        Employee’s employment hereunder may be terminated by the Employee for Good
        Reason. For purposes of this Agreement, “Good
        Reason”
        shall
        mean any of the following: (i) the assignment to the Employee of duties
        inconsistent with the Employee's position, duties, responsibilities, titles
        or
        offices as described herein; (ii) any material reduction by the Corporation
        of the Employee's duties and responsibilities; or (iii) any reduction
        by
        the Corporation of the Employee's compensation or benefits payable hereunder
        (it
        being understood that a reduction of benefits applicable to all employees
        of the
        Corporation, including the Employee, shall not be deemed a reduction of the
        Employee's compensation package for purposes of this definition, but that
        a
        reduction in the compensation described in Section 5 above will) (iv) a material
        breach by the Company of this Agreement that is not cured within 30 days
        of
        receipt by the Company of written notice of such breach; or (v) upon a Change
        of
        Control (1) that (x) results in the elimination of the Board of Directors
        or (y)
        representatives of the Board just prior to the event causing the Change of
        Control do not represent a majority of the Board immediately subsequent to
        the
        event causing the Change of Control and (2) in which the fair market value
        of
        the Company’s Common Stock, in the aggregate, as determined in good faith by the
        Board on the date of such Change of Control, is greater than
        $50,000,000.

       

      
        
          
          

        

        
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      (e) The
        Consultancy described in Section 6(g) may be terminated by the Company for
        any
        reason during the Consultancy Period, provided that following such termination,
        the Employee shall no longer be subject to the provisions of Section
        6(a).

       

      9. Compensation
        upon Termination.

       

      (a) If
        the
        Employee’s employment is terminated as a result of his death or Disability, the
        Company shall pay to the Employee or to the Employee’s estate, as applicable,
his
        Base
        Salary for a period of one year following the date of termination and any
        accrued but unpaid Bonus and expense reimbursement amounts through the date
        of
        his Death or Disability. All Stock Options that are
        scheduled to vest by the end of the calendar year in which such termination
        occurs shall be accelerated and deemed to have vested as of the termination
        date. Any Stock Options that have vested (or been deemed pursuant to the
        immediately preceding sentence to have vested) as
        of the
        date of the Employee’s
        termination shall remain exercisable for a period of 90 days.
        All
        Stock
        Options that have
        not
        vested as
        of the
        date of termination shall be deemed to have expired as of such date.

       

      (b) If
        the
        Employee’s employment is terminated by the Company for Cause, then the Company
        shall pay to the Employee his Base Salary through the date of his termination
        and any expense reimbursement amounts owed through the date of termination.
        The
        Employee shall have no further entitlement to any other compensation or benefits
        from the Company. All
        Stock
        Options that have
        not
        vested as
        of the
        date of termination shall be deemed to have expired as of such date.
        Any
        Stock Options that have vested as of the date of the Executive’s termination for
        Cause shall remain exercisable for a period of 90 days.

       

      (c) If
        the
        Employee’s employment is terminated by the Company (or its successor) upon the
        occurrence of a Change of Control and on the date of termination pursuant
        to
        this Section 9(c) the fair market value of the Company’s Common Stock, in the
        aggregate, as determined in good faith by the Board on the date of such Change
        of Control, is less than $50,000,000, then the Company (or its successor,
        as
        applicable) shall pay to the Employee his Base Salary and benefits for a
        period
        of one year or until the end of the Term, whichever is shorter, as well as
        any
        expense reimbursement amounts owed through the date of termination. All Stock
        Options that are
        scheduled to vest by the end of the calendar year in which such termination
        occurs shall be accelerated and deemed to have vested as of the termination
        date. Any Stock Options that have vested (or been deemed pursuant to the
        immediately preceding sentence to have vested) as
        of the
        date of the Employee’s
        termination shall remain exercisable for a period of 90 days.

       

      (d) If
        the
        Employee’s employment is terminated by the Company other than as a result of the
        Employee’s death or Disability and other than for reasons specified in Sections
        9(b), or if the Employee’s employment is terminated by the Employee for Good
        Reason, then the Company shall (i) continue to pay to the Employee his Base
        Salary and Guaranteed Bonus for a period of one year following such termination
        and (ii) pay the Employee any expense reimbursement amounts owed through
        the
        date of termination. All Stock Options scheduled
        to vest at the end of the calendar year in which such termination occurs
        shall
        be
        accelerated and deemed to have vested as of the termination date.
        Any
        Stock Options that have vested (or been deemed pursuant to this Section 9(d))
        as
        of the date of the Executive’s termination shall remain exercisable for a period
        of 90 days.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

       

      (e) This
        Section 9 sets forth the only obligations of the Company with respect to
        the
        termination of the Employee’s employment with the Company, and the Employee
        acknowledges that, upon the termination of his employment, he shall not be
        entitled to any payments or benefits which are not explicitly provided in
        Section 9.

       

      (f) The
        provisions of this Section 9 shall survive any termination of this
        Agreement.

       

      10. Miscellaneous.

       

      (a) This
        Agreement shall be governed by, and construed and interpreted in accordance
        with, the laws of the State of New York, without giving effect to its principles
        of conflicts of laws.

       

      (b) Any
        dispute arising out of, or relating to, this Agreement or the breach thereof
        (other than Sections 5 or 6 hereof), or regarding the interpretation thereof,
        shall be finally settled by arbitration conducted in New York City in accordance
        with the rules of the American Arbitration Association then in effect before
        a
        single arbitrator appointed in accordance with such rules. Judgment upon
        any
        award rendered therein may be entered and enforcement obtained thereon in
        any
        court having jurisdiction. The arbitrator shall have authority to grant any
        form
        of appropriate relief, whether legal or equitable in nature, including specific
        performance. For the purpose of any judicial proceeding to enforce such award
        or
        incidental to such arbitration or to compel arbitration and for purposes
        of
        Sections 5 and 6 hereof, the parties hereby submit to the non-exclusive
        jurisdiction of the Supreme Court of the State of New York, New York County,
        or
        the United States District Court for the Southern District of New York, and
        agree that service of process in such arbitration or court proceedings shall
        be
        satisfactorily made upon it if sent by registered mail addressed to it at
        the
        address referred to in paragraph (g) below. The
        costs
        of such arbitration shall be borne proportionate to the finding of fault
        as
        determined by the arbitrator. Judgment on the arbitration award may be entered
        by any court of competent jurisdiction.

       

      (c) This
        Agreement shall be binding upon and inure to the benefit of the parties hereto,
        and their respective heirs, legal representatives, successors and
        assigns.

       

      (d) This
        Agreement, and the Employee’s rights and obligations hereunder, may not be
        assigned by the Employee. The Company may assign its rights, together with
        its
        obligations, hereunder in connection with any sale, transfer or other
        disposition of all or substantially all of its business or assets.

       

      (e) This
        Agreement cannot be amended orally, or by any course of conduct or dealing,
        but
        only by a written agreement signed by the parties hereto.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

       

      (f) The
        failure of either party to insist upon the strict performance of any of the
        terms, conditions and provisions of this Agreement shall not be construed
        as a
        waiver or relinquishment of future compliance therewith, and such terms,
        conditions and provisions shall remain in full force and effect. No waiver
        of
        any term or condition of this Agreement on the part of either party shall
        be
        effective for any purpose whatsoever unless such waiver is in writing and
        signed
        by such party.

       

      (g) All
        notices, requests, consents and other communications, required or permitted
        to
        be given hereunder, shall be in writing and shall be delivered personally
        or by
        an overnight courier service or sent by registered or certified mail, postage
        prepaid, return receipt requested, to the parties at the addresses set forth
        on
        the first page of this Agreement, and shall be deemed given when so delivered
        personally or by overnight courier, or, if mailed, five days after the date
        of
        deposit in the United States mails. Either party may designate another address,
        for receipt of notices hereunder by giving notice to the other party in
        accordance with this paragraph (g).

       

      (h) This
        Agreement sets forth the entire agreement and understanding of the parties
        relating to the subject matter hereof, and supersedes all prior agreements,
        arrangements and understandings, written or oral, relating to the subject
        matter
        hereof. No representation, promise or inducement has been made by either
        party
        that is not embodied in this Agreement, and neither party shall be bound
        by or
        liable for any alleged representation, promise or inducement not so set
        forth.

       

      (i) As
        used
        in this Agreement, “affiliate” of a specified Person shall mean and include any
        Person controlling, controlled by or under common control with the specified
        Person.

       

      (j) The
        section headings contained herein are for reference purposes only and shall
        not
        in any way affect the meaning or interpretation of this Agreement.

       

      (k) This
        Agreement may be executed in any number of counterparts, each of which shall
        constitute an original, but all of which together shall constitute one and
        the
        same instrument.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

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

       

      
        	 	 	 
	 	ZIOPHARM,
                INC.
	 
 	 
 	 
 
	 	By:  	/s/ Jonathan
                Lewis
	 	
                

                Name:
                  Jonathan Lewis, M.D.

                Title:
                  Chief Executive Officer

              
	 	 

      

       

      
        	 	 	 
	 	EMPLOYEE
	 
 	 
 	 
 
	 	By:  	/s/ Robert
                Peter Gale
	 	
                
Name: Robert
                Peter Gale, M.D., Ph.D.
	 	 

      

      

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      SCHEDULE
        6(a)

      

      
        
          
          

        

        
          13Exhibit
        10.4

      EMPLOYMENT
        AGREEMENT

       

      AGREEMENT
        (the “Agreement”),
        dated
        as of July
        21,
        2004, by and between ZIOPHARM, INC., a Delaware corporation with principal
        executive offices at 787 Seventh Avenue, 48th
        Floor,
        New York, NY 10019 (the “Company”),
        and
        RICHARD BAGLEY, presently
        residing at Two Beck Street, Newburyport, MA 01950 (the
        “Employee”).

       

      W
        I T N E S S E T H:

       

      WHEREAS,
        the Company desires to employ the Employee as President of the Company, and
        the
        Employee desires to serve the Company in that capacity, upon the terms and
        subject to the conditions contained in this Agreement;

       

      NOW,
        THEREFORE, in consideration of the mutual covenants and agreements herein
        contained, the parties hereto hereby agree as follows:

       

      1. Employment.

       

      (a) Services.
        The
        Employee will be employed by the Company as its President, starting July
        1 ,
        2004 on terms set forth herein. The Employee will report to the Chief Executive
        Officer of the Company and shall perform such duties as are consistent with
        your
        position with the Company (the
        “Services”).
        The
        Employee agrees to perform such duties faithfully, to devote all of his working
        time, attention and energies to the business of the Company, and while he
        remains employed, not to engage in any other business activity that is in
        conflict with your duties and obligations to the Company. 

       

      (b) Acceptance.
        Employee hereby accepts such employment and agrees to render the
        Services.

       

      2. Term.

       

      The
        Employee's employment under this Agreement (the "Term") shall commence as
        of the
        Effective Date (as hereinafter defined) and shall continue for a term of
        three
        (3) years,
        unless sooner terminated pursuant to Section 8 of this Agreement.
        Notwithstanding anything to the contrary contained herein, the provisions
        of
        this Agreement governing protection of Confidential Information shall continue
        in effect as specified in Section 5 hereof and survive the expiration or
        termination hereof. The Term may be extended for additional one (1) year
        periods
        upon mutual written consent of the Employee and the Board. 

       

      3. Best
        Efforts; Place of Performance.

       

      (a) The
        Employee shall devote substantially all of his business time, attention and
        energies to the business and affairs of the Company and
        shall
        use his best efforts to advance the best interests of the Company and shall
        not
        during the Term be actively engaged in any other business activity, whether
        or
        not such business activity is pursued for gain, profit or other pecuniary
        advantage, that will interfere with the performance by the Employee of his
        duties hereunder or the Employee’s availability to perform such duties or that
        will adversely affect, or negatively reflect upon, the Company.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      (b) The
        duties to be performed by the Employee hereunder shall be performed primarily
        at
        the offices of the Company in Boston and New Haven and as necessary in New
        York,
        New York, all as requested by the Chief Executive Officer, subject to reasonable
        travel requirements on behalf of the Company, or
        such
        other place as the Board may reasonably designate. The Company will reimburse
        the Executive for reasonable commuting expenses. 

       

      4. Compensation.
        As full
        compensation for the performance by the Employee of his duties under this
        Agreement, the Company shall pay the Employee as follows:

       

      (a) Base
        Salary. The
        Company shall pay Employee a salary (the “Base Salary”) equal to Two Hundred
        Fifty Thousand Dollars ($250,000) per year. Payment shall be made semi-monthly,
        on the 15th
        and last
        day of each calendar month.

       

      (b) Signing
        Bonus. The Company shall pay the Executive a one time bonus equal to Fifty
        Thousand Dollars ($50,000) within ten (10) business days of the Effective
        Date
        of this Agreement. 

       

      (c) Guaranteed
        Bonus. The Company shall pay the Executive a bonus (the “Guaranteed
        Bonus”)
        of
        Fifty Thousand Dollars ($50,000) within 30 days following each anniversary
        of
        the date of this Agreement during the Term, provided that the Executive is
        employed hereunder on such anniversary date. 

       

      (d) Discretionary
        Bonus. At the sole discretion of the Board of Directors of the Company, the
        Employee may receive an additional annual bonus (the “Discretionary
        Bonus”),
        based
        upon his performance on behalf of the Company during the prior year. The
        Discretionary Bonus, if any, shall be payable either as a lump-sum payment
        or in
        installments as determined by the Board of Directors of the Company in its
        sole
        discretion. In addition, the
        Board
        of Directors of the Company shall annually review the Bonus to determine
        whether
        an increase in the amount thereof is warranted.

       

      (e) Withholding.
        The Company shall withhold all applicable federal, state and local taxes
        and
        social security and such other amounts as may be required by law from all
        amounts payable to the Employee under this Section 5.

       

      (f) Stock
        Options. As additional compensation for the services to be rendered by the
        Employee pursuant to this Agreement, the Company shall grant the Employee
        stock
        options (“Stock
        Options”)
        to
        purchase a number of shares of Common Stock of the Company representing six
        percent (6%) of the outstanding Common Stock of the Company as
        of the
        Effective Date.
        The
        Stock
        Options shall be governed by the Company’s 2003 Stock Option Plan and
shall
        vest, if at all,
        in
        three equal installments on each anniversary of the start date of employment,
        subject
        in each
        case
        to the
        provisions of Section 9 below. In connection with such grant, the Employee
        shall
        enter into the Company’s standard stock option agreement which will incorporate
        the foregoing vesting schedule and the Stock Option related provisions contained
        in Section 9 below. 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

       

      (g) Anti-dilution
        Protection. Until such time as the Company has raised gross proceeds equal
        to
        $25,000,000 from
        the
        issuance and sale of Equity Securities (as defined below),
        the
        Company shall issue to the Executive a number of additional Stock Options
        sufficient to maintain Executive’s ownership percentage at least equal to three
        percent (3%) of the outstanding Common Stock of the Company on a fully diluted
        basis. Once the Company has raised $25,000,000 through the sale of its Equity
        Securities, Executive shall be diluted pro rata along with all other holders
        of
        securities of the Company. As
        used
        herein “Equity Securities” shall mean shares of Common Stock, options, warrants
        or other rights to purchase Common Stock or securities or evidences of
        indebtedness convertible into or exchangeable for shares of Common
        Stock.

       

      (h) 
        Notwithstanding the foregoing, Section 3(g) shall not apply to, and the
        Executive shall not be entitled to anti-dilution protection with respect
        to, the
        issuance of Excluded Equity Securities and Excluded Equity Securities shall
        not
        be included in calculating the fully diluted issued and outstanding shares
        of
        Common Stock of the Company for any purpose under this Agreement. “Excluded
        Equity Securities” shall mean Equity Securities that are issued by the Company
        pursuant to any transactions approved by the Board of Directors primarily
        for
        the purpose of: (1) incentivizing employees, directors or consultants to
        the
        Company; (2) joint ventures, strategic alliances or research and development
        activities, (3) purchase or licensing of technology, or (4) any other
        transactions involving current or potential partners that are primarily for
        purposes other than raising capital. As long as the anti-dilution protection
        contained in this paragraph Section 3(g) remains in effect, the Executive
        shall
        be diluted pari passu with all other holders of Common Stock by the issuance
        by
        the Company of Excluded Equity Securities. Upon termination of such
        anti-dilution protection, the Executive shall be diluted pari passu with
        all
        other holders of Common Stock by the issuance of any Equity
        Securities.

       

      (i) Expenses.
        The Company shall reimburse the Employee for all normal, usual and necessary
        expenses incurred by the Employee in furtherance of the business and affairs
        of
        the Company, including reasonable travel and entertainment, upon timely receipt
        by the Company of appropriate vouchers or other proof of the Employee’s
        expenditures and otherwise in accordance with any expense reimbursement policy
        as may from time to time be adopted by the Company. 

       

      (j) Other
        Benefits. The Employee shall be entitled to all rights and benefits for which
        he
        shall be eligible under any benefit or other plans (including, without
        limitation, dental, medical, medical reimbursement and hospital plans, pension
        plans, employee stock purchase plans, profit sharing plans, bonus plans and
        other so-called "fringe" benefits) as the Company shall make available to
        its
        senior executives from time to time. In addition, the Company shall reimburse
        the Employees for his reasonable professional dues.

       

      (k) Vacation.
        The Employee shall, during the Term, be entitled to a vacation of four (4)
        weeks
        per annum,
        in
        addition to holidays observed by the Company.
        The
        Employee shall not be entitled to carry any vacation forward to the next
        year of
        employment and shall not receive any compensation for unused vacation
        days.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      5. Confidential
        Information and Inventions.

       

      (a) The
        Employee recognizes and acknowledges that in the course of his duties he
        is
        likely to receive confidential or proprietary information owned by the Company,
        its affiliates or third parties with whom the Company or any such affiliates
        has
        an obligation of confidentiality. Accordingly, during and after the Term,
        the
        Employee agrees to keep confidential and not disclose or make accessible
        to any
        other person or use for any other purpose other than in connection with the
        fulfillment of his duties under this Agreement, any Confidential and Proprietary
        Information (as defined below) owned by, or received by or on behalf of,
        the
        Company or any of its affiliates. “Confidential and Proprietary Information”
        shall include, but shall not be limited to, confidential or proprietary
        scientific or technical information, data, formulas and related concepts,
        business plans (both current and under development), client lists, promotion
        and
        marketing programs, trade secrets, or any other confidential or proprietary
        business information relating to development programs, costs, revenues,
        marketing, investments, sales activities, promotions, credit and financial
        data,
        manufacturing processes, financing methods, plans or the business and affairs
        of
        the Company or of any affiliate or client of the Company. The Employee expressly
        acknowledges the trade secret status of the Confidential and Proprietary
        Information and that the Confidential and Proprietary Information constitutes
        a
        protectable business interest of the Company. The Employee agrees: (i) not
        to
        use any such Confidential and Proprietary Information for himself or others;
        and
        (ii) not to take any Company material or reproductions (including but not
        limited to writings, correspondence, notes, drafts, records, invoices, technical
        and business policies, computer programs or disks) thereof from the Company’s
        offices at any time during his employment by the Company, except as required
        in
        the execution of the Employee’s duties to the Company. The Employee agrees to
        return immediately all Company material and reproductions (including but
        not
        limited, to writings, correspondence, notes, drafts, records, invoices,
        technical and business policies, computer programs or disks) thereof in his
        possession to the Company upon request and in any event immediately upon
        termination of employment.

       

      (b) Except
        with prior written authorization by the Company, the Employee agrees not
        to
        disclose or publish any of the Confidential and Proprietary Information,
        or any
        confidential, scientific, technical or business information of any other
        party
        to whom the Company or any of its affiliates owes an obligation of confidence,
        at any time during or after his employment with the Company.

       

      (c) The
        Employee agrees that all inventions, discoveries, improvements and patentable
        or
        copyrightable works (“Inventions”)
        initiated, conceived or made by him, either alone or in conjunction with
        others,
        during the Term
        shall be
        the sole property of the Company to the maximum extent permitted by applicable
        law and, to the extent permitted by law, shall be “works made for hire” as that
        term is defined in the United States Copyright Act (17 U.S.C.A., Section
        101).
        The Company shall be the sole owner of all patents, copyrights, trade secret
        rights, and other intellectual property or other rights in connection therewith.
        The Employee hereby assigns to the Company all right, title and interest
        he may
        have or acquire in all such Inventions; provided, however, that the Board
        of
        Directors of the Company may in its sole discretion agree to waive the Company’s
        rights pursuant to this Section 6(c) with respect to any Invention that is
        not
        directly or indirectly related to the Company’s business. The Employee further
        agrees to assist the Company in every proper way (but at the Company’s expense)
        to obtain and from time to time enforce patents, copyrights or other rights
        on
        such Inventions in any and all countries, and to that end the Employee will
        execute all documents necessary:

      

      (i) to
        apply
        for, obtain and vest in the name of the Company alone (unless the Company
        otherwise directs) letters patent, copyrights or other analogous protection
        in
        any country throughout the world and when so obtained or vested to renew
        and
        restore the same; and

      (ii) to
        defend
        any opposition proceedings in respect of such applications and any opposition
        proceedings or petitions or applications for revocation of such letters patent,
        copyright or other analogous protection.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

       

      (d) The
        Employee acknowledges that while performing the services under this Agreement
        the Employee may locate, identify and/or evaluate patented or patentable
        inventions having commercial potential in the fields of pharmacy,
        pharmaceutical, biotechnology, healthcare, technology and other fields which
        may
        be of potential interest to the Company or one of its affiliates (the
“Third
        Party Inventions”).
        The
        Employee understands, acknowledges and agrees that all rights to, interests
        in
        or opportunities regarding, all Third-Party Inventions identified by the
        Company, any of its affiliates or either of the foregoing persons’ officers,
        directors, employees (including the Employee), agents or consultants during
        the
        Employment Term shall be and remain the sole and exclusive property of the
        Company or such affiliate and the Employee shall have no rights whatsoever
        to
        such Third-Party Inventions and will not pursue for himself or for others
        any
        transaction relating to the Third-Party Inventions which is not on behalf
        of the
        Company.

       

      (e) The
        provisions of this Section 6 shall survive any termination of this
        Agreement.

       

      6. Non-Competition,
        Non-Solicitation and Non-Disparagement.

       

      (a) The
        Employee understands and recognizes that his services to the Company are
        special
        and unique and that in the course of performing such services the Employee
        will
        have access to and knowledge of Confidential and Proprietary Information
        (as
        defined in Section 5) and the Employee agrees that, during the Term and for
        a
        period of 12 months
        thereafter, he shall not without the consent of the Company in any manner,
        directly or indirectly, on behalf of himself or any person, firm, partnership,
        joint venture, corporation or other business entity (“Person”),
        enter
        into or engage in any business which is engaged in any business directly
        or
        indirectly competitive with the Company’s Business (as defined below), either as
        an individual for his own account, or as a partner, joint venturer, owner,
        executive, employee, independent contractor, principal, agent, consultant,
        salesperson, officer, director or shareholder of a Person in a business
        competitive with the Company within the geographic area of the Company’s
        Business, which is deemed by the parties hereto to be worldwide. The Employee
        acknowledges that, due to the nature of the Company’s Business, and the
        importance to the Company’s Business of its Confidential and Proprietary
        Information, a violation of this Section 6(a) could cause substantial damage
        to
        the Company and its affiliates and, therefore, the Company has a strong
        legitimate business interest in protecting the continuity of its business
        interests and the restriction herein agreed to by the Employee narrowly and
        fairly serves such an important and critical business interest of the Company.
        For purposes of this Agreement, the “Company’s Business” shall mean the business
        or businesses set forth on the attached Schedule 6(a), which shall be amended
        from time to time upon the mutual written agreement of the parties, but which
        will automatically include the research, development and commercialization
        of
        any technologies that are licensed or otherwise acquired by the Company.
        Notwithstanding the foregoing, nothing contained in this Section 6(a) shall
        be
        deemed to prohibit the Employee from (i) acquiring or holding, solely for
        investment, publicly traded securities of any corporation, some or all of
        the
        activities of which are competitive with the business of the Company so long
        as
        such securities do not, in the aggregate, constitute more than three percent
        (3%) of any class or series of outstanding securities of such
        corporation.

       

      (b) During
        the Term and for a period of 12 months thereafter, the Employee shall not,
        directly or indirectly, without the prior written consent of the
        Company:

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      

       

      (i) solicit
        or induce any employee of the Company or any of its affiliates to leave the
        employ of the Company or any such affiliate; or hire for any purpose any
        employee of the Company or any affiliate or any employee who has left the
        employment of the Company or any affiliate within six months of the termination
        of such employee’s employment with the Company or any such affiliate or at any
        time in violation of such employee’s non-competition agreement with the Company
        or any such affiliate; or

       

      (ii) solicit
        or accept employment or be retained by any Person who, at any time during
        the
        term of this Agreement, was an agent, client or customer of the Company or
        any
        of its affiliates where his position will be related to the Company’s Business;
        or

      

      (iii) solicit
        or accept the business of any agent, client or customer of the Company or
        any of
        its affiliates with respect to products, services or investments similar
        to
        those provided or supplied by the Company or any of its affiliates.

      

      (c) The
        Company and the Employee each agree that both during the Term and at all
        times
        thereafter, neither party shall directly or indirectly disparage, whether
        or not
        true, the name or reputation of the other party or any of its affiliates,
        including but not limited to, any officer, director, employee or any stockholder
        owning greater than five percent (5%) of the Company’s outstanding Common Stock.
        This Section 6 shall not include (i) statements made by the Employee’s in
        performing his duties in the ordinary course as President (e.g., employee
        evaluations and remarks made in private meetings of the Board) and (ii)
        statements made by the Employee under oath in a legal proceeding.

       

      (d) In
        the
        event that the Employee breaches any provisions of Section 5 or this Section
        6
        or there is a threatened breach, then, in addition to any other rights which
        the
        Company may have, the Company shall (i) be entitled, without the posting
        of a
        bond or other security, to injunctive relief to enforce the restrictions
        contained in such Sections and (ii) have the right to require the Employee
        to
        account for and pay over to the Company all compensation, profits, monies,
        accruals, increments and other benefits (collectively “Benefits”)
        derived or received by the Employee as a result of any transaction constituting
        a breach of any of the provisions of Sections 5 or 6 and the Employee hereby
        agrees to account for and pay over such Benefits to the Company.

       

      (e) Each
        of
        the rights and remedies enumerated in Section 6(d) shall be independent of
        the
        others and shall be in addition to and not in lieu of any other rights and
        remedies available to the Company at law or in equity. If any of the covenants
        contained in this Section 6, or any part of any of them, is hereafter construed
        or adjudicated to be invalid or unenforceable, the same shall not affect
        the
        remainder of the covenant or covenants or rights or remedies which shall
        be
        given full effect without regard to the invalid portions. If any of the
        covenants contained in this Section 6 is held to be invalid or unenforceable
        because of the duration of such provision or the area covered thereby, the
        parties agree that the court making such determination shall have the power
        to
        reduce the duration and/or area of such provision and in its reduced form
        such
        provision shall then be enforceable. No such holding of invalidity or
        unenforceability in one jurisdiction shall bar or in any way affect the
        Company’s right to the relief provided in this Section 6 or otherwise in the
        courts of any other state or jurisdiction within the geographical scope of
        such
        covenants as to breaches of such covenants in such other respective states
        or
        jurisdictions, such covenants being, for this purpose, severable into diverse
        and independent covenants.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

       

      (f) In
        the
        event that an actual proceeding is brought in equity to enforce the provisions
        of Section 5 or this Section 6, the Employee shall not urge as a defense
        that
        there is an adequate remedy at law nor shall the Company be prevented from
        seeking any other remedies which may be available. 

       

      (g) The
        provisions of this Section 6 shall survive any termination of this
        Agreement.

       

      7. Representations
        and Warranties by the Employee.

       

      The
        Employee hereby represents and warrants to the Company as follows:

       

      (a) Neither
        the execution or delivery of this Agreement nor the performance by the Employee
        of his duties and other obligations hereunder violate or will violate any
        statute, law, determination or award, or conflict with or constitute a default
        or breach of any covenant or obligation under (whether immediately, upon
        the
        giving of notice or lapse of time or both) any prior employment agreement,
        contract, or other instrument to which the Employee is a party or by which
        he is
        bound.

       

      (b) The
        Employee has the full right, power and legal capacity to enter and deliver
        this
        Agreement and to perform his duties and other obligations hereunder. This
        Agreement constitutes the legal, valid and binding obligation of the Employee
        enforceable against him in accordance with its terms. No approvals or consents
        of any persons or entities are required for the Employee to execute and deliver
        this Agreement or perform his duties and other obligations
        hereunder.

       

      8. Termination.
        The Employee’s employment hereunder shall be terminated upon the Employee’s
        death and may be terminated as follows:

       

      (a) The
        Employee’s employment hereunder may be terminated by the Board of Directors of
        the Company for Cause. Any of the following actions by the Employee shall
        constitute “Cause”:

       

      (i) The
        willful failure, disregard or refusal by the Employee to perform his duties
        hereunder;

      

      (ii) Any
        willful, intentional or grossly negligent act by the Employee having the
        effect
        of injuring, in a material way (whether financial or otherwise and as determined
        in good-faith by a majority of the Board of Directors of the Company), the
        business or reputation of the Company or any of its affiliates, including
        but
        not limited to, any officer, director, executive or shareholder of the Company
        or any of its affiliates; 

       

      (iii) Willful
        misconduct by the Employee
        in
        respect of the duties or obligations of the Employee under this
        Agreement,
        including, without limitation, insubordination with respect to lawful directions
        received by the Employee from the Executive or the Board of Directors of
        the
        Company;

       

      (iv) The
        Employee’s indictment of any felony or a misdemeanor involving moral turpitude
        (including entry of a nolo contendere plea);

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

       

      (v) The
        determination by the Company, after a reasonable and good-faith investigation
        by
        the Company following a written allegation by another employee of the Company,
        that the Employee engaged in some form of harassment prohibited
        by law
        (including, without limitation, age, sex or race discrimination),
        unless
        the Employee’s actions were specifically directed by the Board of Directors of
        the Company;

       

      (vi) Any
        misappropriation or embezzlement of the property of the Company or its
        affiliates (whether or not a misdemeanor or felony);

       

      (vii) Breach
        by
        the Employee of any of the provisions of Sections
        5, 6
        or
7
        of this
        Agreement; and

      

      (viii) Breach
        by
        the Employee of any provision of this Agreement other than those contained
        in
Sections
        5,
        6
        or
7
        which
        is not cured by the Employee within thirty (30) days after notice thereof
        is
        given to the Employee by the Company.

       

      (b) The
        Executive’s employment hereunder may be terminated by the Board of Directors of
        the Company due to the Executive’s Disability. For purposes of this Agreement, a
        termination for “Disability”
        shall
        occur upon rendering of a written termination notice by the Board of Directors
        of the Company after the Executive has been unable to substantially perform
        his
        duties hereunder for 90 or more consecutive days, or more than 120 days in
        any
        consecutive 12 month period, by reason of any physical or mental illness
        or
        injury. For purposes of this Section 9(b), the Executive agrees to make himself
        available and to cooperate in any reasonable examination by a reputable
        independent physician retained by the Company.

       

      (c) The
        Employee’s employment hereunder may be terminated by the Board of Directors of
        the Company (or its successor) upon the occurrence of a Change of Control.
        For
        purposes of this Agreement, “Change
        of Control”
        means
        (i) the acquisition, directly or indirectly, following the date hereof by
        any
        person (as such term is defined in Section 13(d) and 14(d)(2) of the Securities
        Exchange Act of 1934, as amended), in one transaction or a series of related
        transactions, of securities of the Company representing in excess of fifty
        percent (50%) or more of the combined voting power of the Company’s then
        outstanding securities if such person or his or its affiliate(s) do not own
        in
        excess of 50% of such voting power on the date of this Agreement, or (ii)
        the
        future disposition by the Company (whether direct or indirect, by sale of
        assets
        or stock, merger, consolidation or otherwise) of all or substantially all
        of its
        business and/or assets in one transaction or series of related transactions
        (other than a merger effected exclusively for the purpose of changing the
        domicile of the Company).

       

      (d) The
        Employee’s employment hereunder may be terminated by the Employee for Good
        Reason. For purposes of this Agreement, “Good
        Reason”
        shall
        mean any of the following: (i) the assignment to the Employee of duties
        inconsistent with the Employee's position, duties, responsibilities, titles
        or
        offices as described herein; (ii) any material reduction by the Corporation
        of the Employee's duties and responsibilities; or (iii) any reduction
        by
        the Corporation of the Employee's compensation or benefits payable hereunder
        (it
        being understood that a reduction of benefits applicable to all employees
        of the
        Corporation, including the Employee, shall not be deemed a reduction of the
        Employee's compensation package for purposes of this definition) (iv) a material
        breach by the Company of this Agreement that is not cured within 30 days
        of
        receipt by the Company of written notice of such breach; or (v) upon a Change
        of
        Control (1) that (x) results in the elimination of the Board of Directors
        or (y)
        representatives of the Board just prior to the event causing the Change of
        Control do not represent a majority of the Board immediately subsequent to
        the
        event causing the Change of Control and (2) in which the fair market value
        of
        the Company’s Common Stock, in the aggregate, as determined in good faith by the
        Board on the date of such Change of Control, is greater than
        $50,000,000.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      

       

      9. Compensation
        upon Termination.

       

      (a) If
        the
        Employee’s employment is terminated as a result of his death or Disability, the
        Company shall pay to the Employee or to the Employee’s estate, as applicable,
his
        Base
        Salary for a period of one year following the date of termination and any
        accrued but unpaid Bonus and expense reimbursement amounts through the date
        of
        his Death or Disability. All Stock Options that are
        scheduled to vest by the end of the calendar year in which such termination
        occurs shall be accelerated and deemed to have vested as of the termination
        date. Any Stock Options that have vested (or been deemed pursuant to the
        immediately preceding sentence to have vested) as
        of the
        date of the Employee’s
        termination shall remain exercisable for a period of 90 days.
        All
        Stock
        Options that have
        not
        vested as
        of the
        date of termination shall be deemed to have expired as of such date.

       

      (b) If
        the
        Employee’s employment is terminated by the Company for Cause, then the Company
        shall pay to the Employee his Base Salary through the date of his termination
        and any expense reimbursement amounts owed through the date of termination.
        The
        Employee shall have no further entitlement to any other compensation or benefits
        from the Company. All
        Stock
        Options that have
        not
        vested as
        of the
        date of termination shall be deemed to have expired as of such date.
        Any
        Stock Options that have vested as of the date of the Executive’s termination for
        Cause shall remain exercisable for a period of 90 days.

       

      (c) If
        the
        Employee’s employment is terminated by the Company (or its successor) upon the
        occurrence of a Change of Control and on the date of termination pursuant
        to
        this Section 9(c) the fair market value of the Company’s Common Stock, in the
        aggregate, as determined in good faith by the Board on the date of such Change
        of Control, is less than $50,000,000, then the Company (or its successor,
        as
        applicable) shall pay to the Employee his Base Salary and benefits for a
        period
        of one year or until the end of the Term, whichever is shorter, as well as
        any
        expense reimbursement amounts owed through the date of termination. All Stock
        Options that are
        scheduled to vest by the end of the calendar year in which such termination
        occurs shall be accelerated and deemed to have vested as of the termination
        date. Any Stock Options that have vested (or been deemed pursuant to the
        immediately preceding sentence to have vested) as
        of the
        date of the Employee’s
        termination shall remain exercisable for a period of 90 days.

       

      (d) If
        the
        Employee’s employment is terminated by the Company other than as a result of the
        Employee’s death or Disability and other than for reasons specified in Sections
        9(b), or if the Employee’s employment is terminated by the Employee for Good
        Reason, then the Company shall (i) continue to pay to the Employee his Base
        Salary and Guaranteed Bonus for a period of one year following such termination
        and (ii) pay the Employee any expense reimbursement amounts owed through
        the
        date of termination. All Stock Options scheduled
        to vest at the end of the calendar year in which such termination occurs
        shall
        be
        accelerated and deemed to have vested as of the termination date.
        Any
        Stock Options that have vested (or been deemed pursuant to this Section 9(d))
        as
        of the date of the Executive’s termination shall remain exercisable for a period
        of 90 days.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

       

      (e) Following
        expiration and non-renewal of the Term, should the Company, in its sole
        discretion require that the Employee continue to comply with the terms of
        Section 6 hereof, the Company shall pay the Employee his Base Salary for
        a
        period of one year following expiration of the Term.

       

      (f) This
        Section 9 sets forth the only obligations of the Company with respect to
        the
        termination of the Employee’s employment with the Company, and the Employee
        acknowledges that, upon the termination of his employment, he shall not be
        entitled to any payments or benefits which are not explicitly provided in
        Section 9.

       

      (g) The
        provisions of this Section 9 shall survive any termination of this
        Agreement.

       

      10. Miscellaneous.

       

      (a) This
        Agreement shall be governed by, and construed and interpreted in accordance
        with, the laws of the State of New York, without giving effect to its principles
        of conflicts of laws.

       

      (b) Any
        dispute arising out of, or relating to, this Agreement or the breach thereof
        (other than Sections 5 or 6 hereof), or regarding the interpretation thereof,
        shall be finally settled by arbitration conducted in New York City in accordance
        with the rules of the American Arbitration Association then in effect before
        a
        single arbitrator appointed in accordance with such rules. Judgment upon
        any
        award rendered therein may be entered and enforcement obtained thereon in
        any
        court having jurisdiction. The arbitrator shall have authority to grant any
        form
        of appropriate relief, whether legal or equitable in nature, including specific
        performance. For the purpose of any judicial proceeding to enforce such award
        or
        incidental to such arbitration or to compel arbitration and for purposes
        of
        Sections 5 and 6 hereof, the parties hereby submit to the non-exclusive
        jurisdiction of the Supreme Court of the State of New York, New York County,
        or
        the United States District Court for the Southern District of New York, and
        agree that service of process in such arbitration or court proceedings shall
        be
        satisfactorily made upon it if sent by registered mail addressed to it at
        the
        address referred to in paragraph (g) below. The
        costs
        of such arbitration shall be borne proportionate to the finding of fault
        as
        determined by the arbitrator. Judgment on the arbitration award may be entered
        by any court of competent jurisdiction.

       

      (c) This
        Agreement shall be binding upon and inure to the benefit of the parties hereto,
        and their respective heirs, legal representatives, successors and
        assigns.

       

      (d) This
        Agreement, and the Employee’s rights and obligations hereunder, may not be
        assigned by the Employee. The Company may assign its rights, together with
        its
        obligations, hereunder in connection with any sale, transfer or other
        disposition of all or substantially all of its business or assets.

       

      (e) This
        Agreement cannot be amended orally, or by any course of conduct or dealing,
        but
        only by a written agreement signed by the parties hereto.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

       

      (f) The
        failure of either party to insist upon the strict performance of any of the
        terms, conditions and provisions of this Agreement shall not be construed
        as a
        waiver or relinquishment of future compliance therewith, and such terms,
        conditions and provisions shall remain in full force and effect. No waiver
        of
        any term or condition of this Agreement on the part of either party shall
        be
        effective for any purpose whatsoever unless such waiver is in writing and
        signed
        by such party.

       

      (g) All
        notices, requests, consents and other communications, required or permitted
        to
        be given hereunder, shall be in writing and shall be delivered personally
        or by
        an overnight courier service or sent by registered or certified mail, postage
        prepaid, return receipt requested, to the parties at the addresses set forth
        on
        the first page of this Agreement, and shall be deemed given when so delivered
        personally or by overnight courier, or, if mailed, five days after the date
        of
        deposit in the United States mails. Either party may designate another address,
        for receipt of notices hereunder by giving notice to the other party in
        accordance with this paragraph (g).

       

      (h) This
        Agreement sets forth the entire agreement and understanding of the parties
        relating to the subject matter hereof, and supersedes all prior agreements,
        arrangements and understandings, written or oral, relating to the subject
        matter
        hereof. No representation, promise or inducement has been made by either
        party
        that is not embodied in this Agreement, and neither party shall be bound
        by or
        liable for any alleged representation, promise or inducement not so set
        forth.

       

      (i) As
        used
        in this Agreement, “affiliate” of a specified Person shall mean and include any
        Person controlling, controlled by or under common control with the specified
        Person.

       

      (j) The
        section headings contained herein are for reference purposes only and shall
        not
        in any way affect the meaning or interpretation of this Agreement.

       

      (k) This
        Agreement may be executed in any number of counterparts, each of which shall
        constitute an original, but all of which together shall constitute one and
        the
        same instrument.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

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

       

      
        	 	 	 
	 	ZIOPHARM,
                INC.
	 
 	 
 	 
 
	 	By:  	/s/ Jonathan
                Lewis
	 	
                

                Name:
                  Jonathan Lewis, M.D.

                Title:
                  Chief Executive Officer

              
	 	 

      

       

      
        	 	 	 
	 	EMPLOYEE
	 
 	 
 	 
 
	  	By:  	/s/ Richard
                Bagley
	 	
                
Name: Richard
                Bagley
	 	 

      

       

        

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      SCHEDULE
        6(a)

      

      1. The
        research, development, manufacture, commercialization and sale of organic
        arsenicals for the treatment of cancer and human disease.

       

       

      
        
          
          

        

        
          13

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