AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and
Restated Employment Agreement (this “Agreement”) is
made and entered into as of November 10, 2008 (the
“Effective Date”) by and between GTx, Inc. ,
located at 3 North Dunlap, 3 rd Floor, Memphis, Tennessee 38163 (the
“Employer”), and JAMES T. DALTON (the
“Employee”), residing at 9896 Rue Bienville Place,
Lakeland, TN 38002.
WHEREAS, Employee
was previously a tenured professor of The Ohio State University
(“OSU”) and an employee of the Employer;
WHEREAS, the
Employee has been providing services to the Employer as Vice
President, Preclinical Research & Development under the terms
of an Employment Agreement effective as of April 12, 2007 (the
“Prior Employment Agreement”); and
WHEREAS, the
Employer and the Employee wish to amend and restate the Prior
Employment Agreement as set forth herein in order to comply with
the parties’ intent that the Prior Employment Agreement be
interpreted, construed and administered in a manner that satisfies
Section 409A of the Internal Revenue Code of 1986, as amended
from time to time (the “Code”);
WHEREAS, during
the course of Employee’s employment with the Employer, the
Employer will train and continue to train Employee and to impart to
Employee proprietary, confidential, and/or trade secret
information, data and/or materials of the Employer;
WHEREAS, the
Employer has a vital interest in maintaining its confidential
information and trade secrets, as well as rights to inventions,
since doing so allows the Employer to compete fairly and enhances
the value of the Employer to shareholders and job security for
employees; and
WHEREAS, the
Employer desires to procure the services of Employee, and Employee
is willing to be employed and continue to be employed with the
Employer upon the terms and subject to the conditions set forth in
this Agreement;
NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained in
this Agreement, the employment and continued employment of Employee
in accordance with the terms and conditions of this Agreement, and
other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties, intending to be
legally bound, agree and covenant as follows:
For the purposes
of this Agreement, the following terms have the meanings specified
or referred to in this Section 1.
“Agreement” has the meaning set forth in
first paragraph of this Agreement.
1.
“Basic Compensation” means Salary and
Benefits.
“Benefits” means as defined in
Section 3.1(b).
“Board of Directors” means the Board of
Directors of the Employer. “CEO” has the meaning set
forth in Section 2.2.
“Change of Control” means any of the
following events: (a) the sale or other disposition of all or
substantially all of the assets of Employer in a single transaction
or in a series of transactions (including, without limitation, any
liquidation or dissolution of Employer); (b) any Person or
group becomes the beneficial owner, directly, or indirectly, of
securities of the Employer representing more than fifty percent
(50%) of the combined voting power of the Employer’s then
outstanding securities other than by virtue of a merger,
consolidation or similar transaction (for such purposes,
“voting stock” shall mean the capital stock of Employer
of any class or classes, the holders of which are ordinarily, in
the absence of contingencies, entitled to vote for the election of
members of the Board of Directors (or Persons performing similar
functions) of Employer); or (c) a merger or consolidation of
Employer with or into any other entity, if immediately after giving
effect to such transaction more than fifty percent (50%) of the
issued and outstanding voting stock of the surviving entity of such
transaction is held by persons who were not holders (taking into
account their individual and affiliated holdings) as of the
Effective Date of at least twenty percent (20%) of the voting stock
of Employer. A Change of Control shall not include: (1) any
transfer or issuance of stock of Employer to one or more of
Employer’s lenders (or to any agents or representatives
thereof) in exchange for debt of Employer owed to any such lenders;
(2) any transfer of stock of Employer to or by any person or
entity, including but not limited to one or more of the
Employer’s lenders (or to any agents or representatives
thereof), pursuant to the terms of any pledge of said stock as
collateral for any loans or financial accommodations to Employer
and/or its subsidiaries; (3) any transfer or issuance to any
person or entity, including but not limited to one or more of
Employer’s lenders (or to any agents or representatives
thereof), in connection with the workout or restructuring of
Employer’s debts to any one of Employer’s lenders,
including but not limited to the issuance of new stock in exchange
for any equity contribution to Employer in connection with the
workout or restructuring of such debt; (4) any transfer of
stock by a stockholder of Employer which is a partnership or
corporation to the partners or stockholders in such stockholder or
any transfer of stock by a stockholder of Employer to an entity
affiliated with such stockholder or the immediate family of such
stockholder or a trust or similar entity for the benefit of such
family members; or (5) any transfer or issuance of stock in
connection with an offering of the Employer’s stock in a
registered public transaction not including a transaction described
in Rule 145, promulgated under the Securities Act of 1933, as
amended, provided that the Employer’s officers and Board of
Directors shall not materially change as a result
thereof.
“Change of Control Termination” means
(i) a Termination Without Cause of the Employee’s
employment by the Employer (other than for death or disability)
within six (6) months after a Change of Control or
(ii) the Employee’s resignation for Good Reason within
six (6) months after a Change of Control.
“Competing Business” means any individual
or entity, other than the Employer, that is engaging in, or
proposes to engage in, the development, manufacture, distribution
or sale of a
2.
Competing
Product in any country in North America, South America, Europe and
Eastern Europe, and in the countries of Russia, Australia, Japan,
China, Taiwan, South Korea and India (the “Territory”);
provided; however that (i) an entity that develops,
manufactures, distributes or sells a Competing Product in a
separate business unit than the business unit in which Employee is
then employed shall not be deemed a Competing Business unless
Employee provides Confidential Information and/or Proprietary
Information to the business unit that is engaging in or proposes to
engage in the development, manufacture, distribution or sale of a
Competing Product; and (ii) nothing in this Agreement shall prevent
Employee from conducting research at OSU for non-commercial
purposes utilizing institutional or governmental grant funds in
areas relating to any Competing Product as long as such
non-commercial research is conducted in accordance with those
certain Inter-Institutional Agreements executed between OSU and the
University of Tennessee Research Foundation (“UTRF”) as
of December 22, 2004 (the “IIAs”).
“Competing Product” means any
pharmaceutical or other compound, composition, formulation, method,
process, product or material that is competitive with any product
of Employer under development, manufacture, distribution or
commercialization at any time from and after January 1, 2005
(the date of Employee’s initial employment agreement with
Employer) through the date of termination of Employee’s
employment, including, without limitation, small molecules that
target androgen, estrogen, glucocorticoid, and/or other hormone
receptors for purposes of treating, diagnosing, or imaging humans
in health and disease, including treating cancer, osteoporosis and
bone loss and muscle loss. The parties agree that the four areas of
research that are described in Section 2.3 hereof as areas
where Employee shall be overseeing the ongoing work by graduate
students at OSU during the term of this Agreement shall not be
deemed to be Competing Product.
“Confidential Information and/or Proprietary
Information” means any and all:
(a) information
disclosed to Employee or known by Employee as a consequence of, or
through, Employee’s employment with the Employer or pursuant
to the Employee’s prior relationship with Employer either
through his employment with OSU or under the Consulting Agreement
(including information conceived, originated, discovered, or
developed in whole or in part by Employee), not generally known in
the relevant trade or industry, about the Employer’s
business, products, processes, and services; and trade secrets
concerning the business and affairs of the Employer, product
specifications, data, know-how, formulae, compositions, research,
processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current, and planned research
and development, current and planned manufacturing or distribution
methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans,
computer software and programs (including object code and source
code), computer software and database technologies, systems,
structures, and architectures (and related formulae, compositions,
processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information);
and any other information, however documented, that is a trade
secret within the meaning of Tenn. Code §39-14-138;
and
(b) information
concerning the business and affairs of the Employer (which includes
historical financial statements, financial projections and budgets,
historical and
3.
projected
sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and
materials), however documented; and
(c) intellectual
property, inventions, methods, processes, techniques, computer
programs, devices, products, services, compounds, gene therapy
products, pharmaceuticals, substances, vectors, enzymes, genes,
concepts, discoveries, improvements, and designs, whether or not
patentable in the United States or foreign countries, any trade
secrets, information, procedures, technologies, data, results,
conclusions, know-how or show-how and business information;
and
(d) notes,
analysis, compilations, studies, summaries, and other material
prepared by or for the Employer containing or based, in whole or in
part, on any information included in the foregoing.
“Delayed Initial Payment Date” has the
meaning stated in Section 9.2 of this Agreement.
“Effective Date” means the date stated in
the first paragraph of the Agreement. “Employee” has
the meaning stated in the first paragraph of this
Agreement.
“Employee Invention” means any idea,
invention, technique, modification, process, improvement (whether
patentable or not), industrial design (whether registerable or
not), work of authorship (whether or not copyright protection may
be obtained for it), design, copyrightable work, discovery,
trademark, copyright, trade secret, formula, device, method,
compound, gene, prodrug, pharmaceutical, structure, product
concept, marketing plan, strategy, customer list, technique,
blueprint, sketch, record, note, drawing, know-how, data, patent
application, continuation application, continuation-in-part
application, file wrapper continuation application or divisional
application, created, conceived, or developed by the Employee,
either solely or in conjunction with others, during the
Employee’s employment, or a period that includes a portion of
the Employee’s employment, that relates in any way to, or is
useful in any manner in, the business then being conducted or
proposed to be conducted by the Employer, and any such item created
by the Employee, either solely or in conjunction with others,
following termination of the Employee’s employment with the
Employer, that is based upon or uses Confidential Information
and/or Proprietary Information.
“Employer” means GTx, Inc., its
successors and assigns, and any of its current or future
subsidiaries, or organizations controlled by, controlling, or under
common control with it.
“Expenses” has the meaning stated in
Section 4.1 of this Agreement.
“Good
Reason” for termination means that Employee
voluntarily resigns from all positions he then holds with Employer
if and only if:
(a) one
of the following actions have been taken without Employee’s
express written consent:
(i) following
a Change of Control, an adverse change in the Employee’s
authority, duties or responsibilities (including reporting
responsibilities) which,
4.
without
Employee’s consent, represents a material reduction in or a
material demotion of the Employee’s authority, duties or
responsibilities as in effect immediately prior to a Change of
Control or the assignment to the Employee of any duties or
responsibilities which are materially inconsistent with and
materially adverse to such authority, duties or
responsibilities;
(ii) following
a Change of Control, a material reduction in the then current
Salary of Employee;
(iii) following
a Change of Control, the relocation of the Employer’s
principal Employee offices to a location that increases
Employee’s one-way commute by more than twenty
(20) miles;
(iv) following
a Change of Control, the failure of the Employer to obtain an
agreement reasonably satisfactory to Employee from any successor or
assign of the Employer to assume and agree to perform this
Agreement in all material respects; or
(v) Employer
materially breaches its obligations under this Agreement or any
other then-effective agreement with Employee (including any
agreement or arrangement providing for incentive compensation or
employee benefits, including the Benefits provided in this
Agreement).
(b) Employee
provides written notice to the Employer’s Board within the
thirty (30) day period immediately following such action;
and
(c) Such
action is not remedied by the Employer within thirty (30) days
following the Employer’s receipt of such written notice;
and
(d) Employee’s
resignation is effective not later than sixty (60) days after
the expiration of such thirty (30)-day cure period.
“Person” means any individual,
corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture,
estate, trust, association, organization, or governmental
body.
“Proprietary Items” means any Proprietary
and/or Confidential Information embodied in any document, record,
recording, electronic media, formulae, notebook, plan, model,
component, device, or computer software or code, whether embodied
in a disk or in any other form.
“Release” means a general release of
claims, which shall specifically relate to all of Employee’s
rights and claims in existence at the time of such execution and
shall confirm Employee’s continuing obligations to the
Employer (including but not limited to obligations under
Section 7 and Section 8 of this Agreement and any other
confidentiality and/or non-competition agreement with the
Employer).
“Salary” has the meaning stated in
Section 3.1(a) of this Agreement.
“Section 409A” has the meaning
stated in Section 9.2 of this Agreement.
5.
“Termination Date” has the meaning stated
in Section 6.3 of this Agreement.
“Termination With Cause” means the
termination of the Employee’s employment by act of the Board
for any of the following reasons:
(a) the
Employee’s conviction for a felony;
(b) the
Employee’s theft, embezzlement, misappropriation of or
intentional infliction of material damage to the Employer’s
property or business opportunities;
(c) the
Employee’s breach of the provisions contained in
Section 7 or Section 8 of this Agreement; or
(d) the
Employee’s ongoing willful neglect of or failure to perform
his duties hereunder or his ongoing willful failure or refusal to
follow any reasonable, unambiguous duly adopted written direction
of the CEO that is not inconsistent with the description of the
Employee’s duties set forth in Section 2.3, if such
willful neglect or failure is materially damaging or materially
detrimental to the business and operations of the Employer;
provided that Employee shall have received written notice of such
failure and shall have continued to engage in such failure after 30
days following receipt of such notice from the CEO, which notice
specifically identifies the manner in which the CEO believes that
Employee has engaged in such failure. For purposes of this
subsection, no act, or failure to act, shall be deemed
“willful” unless done, or omitted to be done, by
Employee not in good faith, and without reasonable belief that such
action or omission was in the best interest of the
Employer.
“Termination Without Cause” means the
termination of the Employee’s employment by the Employer for
any reason other than (i) Termination With Cause, or
(ii) termination by the Employer due to Employee’s death
or disability.
2.
EMPLOYMENT TERMS AND
DUTIES
The
Employer hereby continues the employment of the Employee, and the
Employee hereby accepts continued employment by the Employer, upon
the terms and conditions set forth in this Agreement.
Either
the Employee or the Employer may terminate this Agreement at any
time and the Employee’s employment and compensation with or
without Cause or notice, at any time, at either the
Employer’s or the Employee’s option. No company officer
or manager has the authority to enter into any other agreement for
employment for a specified period of time, or to modify or to make
any agreement contrary to the foregoing, except by written
amendment to this Agreement, dated and signed by the Chief
Executive Officer (“CEO”) or the President of the
Employer.
6.
The
Employee will continue to have such duties as are assigned or
delegated to the Employee by the Board of Directors, CEO or the
President, and will initially serve as Vice President, Preclinical
Research & Development for the Employer. During the term of
this Agreement, the Employee will devote 100% of his full time,
attention, skill and energy to the business of the Employer.
Additionally, Employee agrees that he will use his best efforts to
promote the success of the Employer’s business, and will
cooperate fully with the Board of Directors, CEO and the President
in the advancement of the best interest of the Employer. Employee
commits that, without first obtaining the prior written approval of
Employer, he will refrain from publishing, and he will not allow
those working for him to publish, any abstracts, articles or other
publications arising from research conducted for or on behalf of
Employer that pertain to Employer’s products or business,
including specifically compounds that are being tested from time to
time by Employer and any developmental work or other services that
are being undertaken by Employee for Employer, except as may be
approved in accordance with the policies of Employer. If Employee
or any OSU employee under his direction continues to work on
compounds, products or other inventions that are included within
the scope of the IIAs or covered under a separate license agreement
between OSU and Employer, Employee agrees to make available to GTx
all notebooks and other evidences of research and inventions
pertaining to such compounds, products and inventions, which are
maintained at OSU, any time upon request by Employer, subject to
rule, regulations and procedures of OSU. Additionally, Employee
agrees to provide Employer regular verbal (and at such other times
as Employer may reasonably request, written) reports containing the
data and results of his efforts and the efforts of all others
working under Employee’s supervisions or control in
Preclinical Research and Development.
Employee
agrees that his only other non-Employer duties will be limited to
his overseeing up to 3 graduate students who were enrolled at OSU
in April 2007 and who are working in the following areas of
research and development:
1.
Cytotoxic phospholipids, bis-indoles, thiazolidines, and calpain
inhibitors for cancer;
2.
Imidazoline and amidine-based peptidomimetics for
leukemia;
3.
Selective androgen receptor modulators; and
4.
Flavopiridol for cancer;
and will not be
expanded to include any compounds, molecular targets, or other
intellectual property developed within GTx for the period of time
set forth in Section 8.1 hereof, without first obtaining the
prior written approval of Employer. As an employee of the Employer,
the responsibilities and duties of the Employee shall include
managing and overseeing and being personally responsible for all
preclinical research and development projects, including
specifically those for selective androgen receptor modulator
compounds, selective estrogen receptor modulator compounds, nuclear
hormone receptor ligands, anti-cancer drugs and other
7.
similar
compounds of the Employer. Employee agrees to abide by all bylaws,
policies, practices, procedures or rules of Employer.
(a)
Salary . As of the Effective Date, the Employee will be paid
for each of the twenty-six pay periods during the calendar year
approximately $11,995, which is the equivalent of $311,875 per
calendar year (the “Salary”). Additionally,
Employee’s Salary may be adjusted from time to time by
agreement of the Employee and the CEO.
(b)
Benefits . The Employee will, during his employment with the
Employer, be permitted to participate in such life insurance,
hospitalization, major medical, short term disability, long term
disability, 401K plan and other employee benefit plans of the
Employer that may be in effect from time to time (collectively, the
“Benefits”). The Employer may withhold from any Salary
or Benefits payable to Employee all federal, state, local, and
other taxes and other amounts as permitted or required pursuant to
law, rules or regulations. Additionally, Employer will pay for the
reasonable moving costs associated with
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