Exhibit 10.4

 

EXECUTIVE RETENTION AGREEMENT

 

This Executive Retention Agreement (the “Agreement”) is made and entered into as of October 25, 2017 by and between GENEXOSOME TECHNOLOGIES INC., a Delaware corporation (the “Company”), and YU ZHOU (the “Executive”).

 

Recitals:

 

WHEREAS, the Executive is a key employee of the Company who possesses valuable proprietary knowledge of the Company, its business and operations and the markets in which the Company competes; and

 

WHEREAS, the Company and the Executive desire to enter into this Agreement to encourage the Executive to continue to devote the Executive’s full attention and dedication to the success of the Company, and to provide specified compensation and benefits to the Executive in the event of certain terminations pursuant to the terms of this Agreement.

 

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1.            PURPOSE AND TERM; DUTIES

 

1.1          The purpose of this Agreement is to provide specified compensation and benefits to the Executive in the event of an Involuntary Termination. Subject to the terms of any applicable written employment agreement between Company and the Executive (as to which Executive acknowledges no other such agreement exists as of the date hereof), either the Executive or Company may terminate the Executive’s employment at any time for any reason, with or without notice. The term of this Agreement shall be the period from the date set forth above until Executive’s employment is terminated for any reason or this Agreement is terminated by mutual agreement of the parties.

 

1.2          The Executive’s job responsibilities as Co-Chief Executive Officer will comprise of:

 

(a)          developing high quality business strategies and plans ensuring their alignment with short-term and long-term objectives,

 

(b)          managing, leading and motivating subordinates to advance employee engagement

 

(c)          developing a high performing managerial team and overseeing all operations and business activities to ensure they produce the desired results and are consistent with the overall strategy and mission of the Company as established by the Board of Directors.

 

1.3          The Executive will from the Company’s corporate offices but agrees that significant travel will be required including international travel. The Executive is entitled to four (4) weeks of vacation which will accrue on a pro-rata basis during the year, in addition to all public holidays when the office is closed.   Executive will be eligible to participate in all employee benefit plans established by the Company for its employees from time to time. In accordance with Company policies from time to time, Executive will reimburse you for all reasonable and proper travel and business expenses incurred by you in the performance of your duties that are approved in writing by the Chief Financial Officer.

 

 

2.            COMPENSATION AND TERMINATION GENERALLY

 

2.1          Compensation.

 

2.1.1          Annual Salary. The Executive’s base salary shall be $160,000 per annum and shall be subject to periodic review and modification by the Company’s Board of Directors (the “Board”) as may be delegated to the Compensation Committee of the Board (references herein to the Compensation Committee shall include reference to the Board if no such Committee exists at any time) at such time or times as it shall determine. The Company’s Compensation Committee shall also from time to time, in its discretion, determine the type and amount of other forms of compensation for Executive’s service with the Company (including, without limitation, stock options or other forms of equity awards).

 

2.1.2          Bonuses. Executive shall be entitled to bonuses as determined by the Board of Directors.

 

2.2          Termination of Employment Generally. In the event the Executive’s employment with the Company terminates, for any reason whatsoever including death or disability the Executive shall be entitled to the benefits described in this Section 2.2.

 

2.2.1          Accrued Salary and Vacation. All salary and accrued vacation earned through the Termination Date shall be paid to Executive on such date.

 

2.2.2          Accrued Bonus Payment. The Executive shall receive a lump sum payment of any actual bonus amount to the extent that all the conditions for payment of such bonus have been satisfied and any such bonus was earned and is unpaid on the Termination Date.

 

2.2.3          Expense Reimbursement. Within ten (10) days following submission to the Company of proper expense reports by the Executive, the Company shall reimburse the Executive for all expenses incurred by the Executive, consistent with the Company’s expense reimbursement policy in effect prior to the incurring of each such expense, in connection with the business of the Company prior to the Termination Date.

 

3.            INVOLUNTARY TERMINATION

 

3.1          Salary Payment. In the event of the Executive’s Involuntary Termination, during the period commencing on the date hereof and continuing for a period of two years, the Executive shall continue to receive Executive’s base salary at normal pay intervals through October 20, 2019.

 

4.            DEFINITIONS

 

4.1          Capitalized Terms Defined. Capitalized terms used in this Agreement shall have the meanings set forth in this Section 4, unless the context clearly requires a different meaning.

 

4.2          “Base Salary” means the monthly salary of the Executive in effect immediately prior to the Termination Date.

 

 

4.3          “Cause” means:

 

(a)

the Executive willfully failed to follow the lawful written directions of the Board of Directors of the Company or Executive’s immediate superior; provided that no termination for such Cause shall occur unless the Executive: (i) has been provided with notice, specifying such willful failure in reasonable detail, of the Company’s intention to terminate the Executive for Cause; and (ii) has failed to cure or correct such willful failure within ten (10) days of receiving such notice;

 

(b)

the Executive engaged in gross misconduct, or gross incompetence which is materially detrimental to the Company; provided that no termination for such Cause shall occur unless the Executive: (i) has been provided with notice, specifying such gross misconduct or gross incompetence in reasonable detail, of the Company’s intention to terminate the Executive for Cause; and (ii) has failed to cure or correct such gross misconduct within ten (10) days of receiving such notice;

 

(c)

the Executive willfully failed to comply in any material respect with the Employee Invention Assignment, Confidentiality, Non-Compete and Non-Solicit Agreement (the “Invention Agreement”) or any other reasonable policies of the Company where non-compliance would be materially detrimental to the Company; provided that no termination for such Cause shall occur unless the Executive: (i) has been provided with notice of the Company’s intention to terminate the Executive for such Cause, and (ii) has failed to cure or correct such willful failure within ten (10) days of receiving such notice, provided that such notice and cure period requirements shall not apply in the event that such non-compliance is of a nature that it is unable to be remedied; or

 

(d)

is indicted, charged or convicted of a felony or crime involving moral turpitude (excluding drunk driving unless combined with other aggravating circumstances or offenses) or commission of a fraud which the Company reasonably believes would reflect adversely on the Company.

 

4.4           “Company” shall mean Genexosome Technologies Inc..

 

4.5          “Involuntary Termination” means:

 

(a)

any termination without Cause of the employment of the Executive by the Company; or

 

(b)

any resignation by Executive for Good Reason where such resignation occurs within ten (10) days following the occurrence of such Good Reason.

 

Notwithstanding the foregoing, the term “Involuntary Termination” shall not include any termination of the employment of the Executive: (1) by the Company for Cause; (2) by the Company as a result of the Permanent Disability of the Executive; (3) as a result of the death of the Executive; or (5) as a result of the voluntary termination of employment by the Executive for any reason other than Good Reason.

 

 

4.6           “Good Reason” means the occurrence of any of the following conditions, without the Executive’s written consent:

 

(a)

A reduction in the Executive’s Base Salary.

 

(b)

The failure of the Company (i) to continue to provide the Executive an opportunity to participate in any benefit or compensation plans provided to employees who hold positions with the Company comparable to the Executive’s position, or (ii) to provide the Executive all other fringe benefits (or the equivalent) in effect for the benefit of any employee group which includes any employee who hold a position with the Company comparable to the Executive’s position.

 

(c)

A material breach of this Agreement by the Company.

 

The Executive must first give the Company an opportunity to cure any of the foregoing within thirty (30) days following delivery to the Company of a written explanation specifying the specific basis for Executive’s belief that Executive is entitled to terminate employment for Good Reason, and Executive terminates employment with the Company not later than (30) days following the Company’s failure to cure.

 

4.7           “Permanent Disability” means that:

 

(a)

the Executive has been incapacitated by bodily injury, illness or disease so as to be prevented thereby from engaging in the performance of the Executive’s duties;

 

(b)

such total incapacity shall have continued for a period of six consecutive months; and

 

(c)

such incapacity will, in the opinion of a qualified physician, be permanent and continuous during the remainder of the Executive’s life.

 

4.8           “Termination Date” means the date of the termination of the Executive’s employment with the Company.

 

5.            EXCLUSIVE REMEDY

 

5.1          No Other Benefits Payable. The Executive shall be entitled to no other termination, severance or compensation, benefits, or other payments from the Company as a result of any termination with respect to which the payments and benefits described in Section 2 have been provided to the Executive, except as expressly set forth in this Agreement.

 

5.2          No Limitation of Regular Benefit Plans. Except as may be provided elsewhere in this Agreement, this Agreement is not intended to and shall not affect, limit or terminate any plans, programs or arrangements of the Company that are regularly made available to a significant number of employees or officers of the Company, including, without limitation, the Company’s stock option plans.

 

 

5.3          Release of Claims. The payment of the benefits described in Sections 3 and 4 of this Agreement is conditioned upon the delivery by the Executive to the Company of a signed and effective general release of claims as provided by the Company; provided, however, that the Executive shall not be required to release any rights the Executive may have to be indemnified by the Company or as otherwise provided under this Agreement.

 

6.            NON-COMPETE; PROPRIETARY AND CONFIDENTIAL INFORMATION

 

During the term of this Agreement and following any termination of employment, Executive agrees to continue to abide by the terms and conditions of the Invention Agreement.

 

7.            ARBITRATION

 

7.1          Disputes Subject to Arbitration. Any claim, dispute or controversy arising out of this Agreement (other than claims relating to misuse or misappropriation of the intellectual property of the Company), the interpretation, validity or enforceability of this Agreement or the alleged breach thereof shall be submitted by the parties to binding arbitration by a sole arbitrator under the rules of the American Arbitration Association; provided, however, that (a) the arbitrator shall have no authority to make any ruling or judgment that would confer any rights with respect to the trade secrets, confidential and proprietary information or other intellectual property of the Company upon the Executive or any third party; and (b) this arbitration provision shall not preclude the Company from seeking legal and equitable relief from any court having jurisdiction with respect to any disputes or claims relating to or arising out of the misuse or misappropriation of the Company’s intellectual property. Judgment may be entered on the award of the arbitrator in any court having jurisdiction.

 

7.2          Costs of Arbitration. All costs of arbitration, including reasonable attorney’s fees of the Executive, will be borne by the Company, except that if the Executive initiates arbitration and the arbitrator finds the Executive’s claims to be frivolous the Executive shall be responsible for his own costs and attorneys fees.

 

7.3          Site of Arbitration. The site of the arbitration proceeding shall be in Monmouth County, New Jersey.

 

8.            NOTICES

 

For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or five (5) business days after being mailed, return receipt requested, as follows: (a) if to the Company, attention: Chief Executive Officer, at the Company’s offices at 83 South Street, Suite 101, Freehold, New Jersey 07728 and, (b) if to the Executive, at the address indicated below or such other address specified by the Executive in writing to the Company. Either party may provide the other with notices of change of address, which shall be effective upon receipt.

 

9.            MISCELLANEOUS PROVISIONS

 

9.1          Heirs and Representatives of the Executive; Successors and Assigns of the Company. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devises and legatees. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of the Company.

 

 

9.2          Amendment and Waiver. No provision of this Agreement shall be modified, amended, waived or discharged unless the modification, amendment, waiver or discharge is agreed to in writing, specifying such modification, amendment, waiver or discharge, and signed by the Executive and by an authorized officer of the Company (other than the Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

9.3          Withholding Taxes. All payments made under this Agreement shall be subject to deduction of all federal, state, local and other taxes required to be withheld by applicable law.

 

9.4          Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

 

9.5          Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New Jersey, without regard to where the Executive has his residence or principal office or where he performs his duties hereunder.

 

9.6          No Duty to Mitigate. The Executive is not required to seek alternative employment following termination, and payments called for under this Agreement will not be reduced by earnings from any other source.

 

9.7.          Section 409A of the Code. To the extent (a) any payments or benefits to which Employee becomes entitled under this Agreement, or under any agreement or plan referenced herein, in connection with Employee’s termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code and (b) Employee is deemed at the time of such termination of employment to be a “specified employee” under Section 409A of the Code, then such payments shall not be made or commence until the earliest of (i) the expiration of the six (6)-month period measured from the date of Employee’s “separation from service” (as such term is at the time defined in Treasury Regulations under Section 409A of the Code) from the Company; or (ii) the date of Employee’s death following such separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Employee, including (without limitation) the additional twenty percent (20%) tax for which Employee would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to Employee or Employee’s beneficiary in one lump sum (without interest). Any termination of Employee’s employment is intended to constitute a “separation from service” as such term is defined in Treasury Regulation Section 1.409A-1. It is intended that each installment of the payments provided hereunder constitute separate “payments” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). It is further intended that payments hereunder satisfy, to the greatest extent possible, the exemption from the application of Code Section 409A (and any state law of similar effect) provided under Treasury Regulation Section 1.409A-1(b)(4) (as a “short-term deferral”).

 

9.8          Entire Agreement. This Agreement represents the entire agreement and understanding between the parties as to the subject matter herein (whether oral or written and whether express or implied).

 

[SIGNATURE PAGE TO EXECUTIVE RETENTION AGREEMENT FOLLOWS]

 

 

In Witness Whereof, each of the parties has executed this Agreement, in the case of the Company, by its duly authorized officer, as of the day and year first above written.

 

	Executive
	/s/ Yu Zhou
	Yu Zhou
	GenExosome Technologies Inc.
	By:	/s/ David Jin
		David Jin, Co-CEO