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EXHIBIT 10.3
1995 Employment Agreement between
CytRx Corporation and Xxxx X. Xxxxxxx
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1995 EMPLOYMENT AGREEMENT
BETWEEN
CYTRX CORPORATION
AND
XXXX X. XXXXXXX
This Employment Agreement ("Agreement") is made and executed this
_____ day of March, 1995 effective January 1, 1995 (the "Effective Date"), by
and between CYTRX CORPORATION ("CytRx" or the "Company"), a Delaware
Corporation having its principal place of business at 000 Xxxxxxxxxx Xxxxxxx,
Xxxxxxxxxx Xxxx/Xxxxxxx, Xxxxxxxx, Xxxxxxx 00000, and XXXX X. XXXXXXX ("Xx.
Xxxxxxx") who currently resides at 0000 Xxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxxxx
00000.
WHEREAS, CytRx employed Xx. Xxxxxxx as its President and Chief
Executive Officer pursuant to an Employment Agreement dated March 13, 1989, and
amended by Amendment Nos. 1 dated May 11, 1989, and March 14, 1991, Amendment
No. 2 dated March 24, 1993, Amendment No. 3 dated May 11, 1993, and Amendment
No. 4 dated June 20, 1994 (collectively, the "1989 Agreement").
WHEREAS, the Compensation Committee of the Board of Directors of the
Company at its meeting on December 8, 1994, approved certain changes to the
terms of the employment of Xx. Xxxxxxx with the Company.
WHEREAS, as a result of the foregoing, both the Company and Xx.
Xxxxxxx concluded that the 1989 Agreement should be amended and restated so as
to reflect the changes.
WHEREAS, the Company and Xx. Xxxxxxx executed the 1995 Employment
Agreement on February 20, 1995 (the "Original Execution Date"), and
subsequently determined to amend Paragraphs 3(b) and 7(c) of the Agreement, but
not any of the terms and conditions relating to the Executive Warrants as
defined below.
WHEREAS, this Agreement amends and restates the 1995 Employment
Agreement.
WHEREAS, the Board has authorized the execution of this Agreement.
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NOW, THEREFORE, in consideration of the mutual covenants and promises
made in this Agreement, the parties do hereby agree as follows:
1. EMPLOYMENT.
(a) The 1989 Agreement is hereby terminated as of the Effective Date,
except for the Category I Warrants, the Category II Warrants, the 1994 Warrants
and the Category IV Warrants (collectively, the "Executive Warrants"), which
were granted pursuant to the terms of such Agreement. The Executive Warrants
were amended and restated on the Original Execution Date, and as so amended and
restated are set forth in separate warrant agreements effective as of the
Original Execution Date.
(b) CytRx agrees to and does hereby engage and employ Xx. Xxxxxxx as
President and Chief Executive Officer of CytRx Corporation for the term and
upon the terms and conditions set forth herein, and Xx. Xxxxxxx accepts such
offer of employment. It is also understood and agreed that Xx. Xxxxxxx will
serve as a director of the Company, without additional compensation, for any
term he is elected to serve. During the term of this Agreement, the Board of
Directors will take such actions as may be required to nominate and recommend
Xx. Xxxxxxx for election as a director by the shareholders. Xx. Xxxxxxx agrees
to discharge his duties hereunder in accordance with the direction of the Board
of Directors of CytRx and to follow diligently and implement faithfully all
management policies and decisions communicated to him by the Board of
Directors. During the employment of Xx. Xxxxxxx by CytRx, Xx. Xxxxxxx shall
devote his full and undivided time, attention, energies and loyalty to the
Company's business but the foregoing shall not be construed to prevent Xx.
Xxxxxxx from making investments in other businesses or enterprises or engaging
in any other business activity that does not interfere with Xx. Xxxxxxx'x
duties under this Agreement, or conflict with his obligations under Paragraph
11 hereof or otherwise represent a conflict of interest with his duties to
CytRx. Notwithstanding the above, Xx. Xxxxxxx may serve on the Board of
Directors of companies not affiliated with CytRx, and receive compensation in
connection therewith, if such position is approved by the Board of Directors of
CytRx.
2. TERM AND RENEWAL. The term of Xx. Xxxxxxx'x employment hereunder will be
for a period commencing on the date hereof, and continuing until December 31,
1998 (the "Expiration Date"), unless Xx. Xxxxxxx'x employment is terminated by
either party pursuant to Paragraph 7 of this Agreement.
3. SALARY.
(a) For services provided hereunder, Xx. Xxxxxxx will be paid an
annual base salary. The initial base salary shall be Two Hundred Ninety-Five
Thousand Dollars ($295,000). The base salary shall be reviewed by the Board of
Directors of the Company no less than once each calendar year. The base salary
will be increased each year consistent with the average overall merit
increases, if any, granted to all employees as a
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whole for such year, but will not be decreased. If the base salary is
increased, then the increased amount shall be deemed the "base salary" for all
purposes under this Agreement.
(b) It is understood and contemplated that, in addition to the
foregoing annual base salary, Xx. Xxxxxxx will be eligible to receive cash
bonuses in each calendar year during the term of this Agreement in such
amounts, if any, as shall be determined from time to time by the Board of
Directors of the Company in its sole discretion. The bonus for the last three
(3) calendar quarters of 1994 shall accrue, and become due and payable, on
April 1, 1995. The bonuses for each of 1995 and all future years shall accrue,
and become due and payable, on January 1 of the following year, or any later
time requested by Xx. Xxxxxxx. If this Agreement expires on the Expiration
Date, then the obligation of the Company to pay a bonus to Xx. Xxxxxxx on
January 1, 1999, shall survive such expiration, and the Company shall pay such
bonus to Xx. Xxxxxxx as if this Agreement remained in full force and effect
4. FRINGE BENEFITS. Xx. Xxxxxxx, during the period of his employment
hereunder, will receive fringe benefits such as insurance, vacation leave, sick
leave and participation in any retirement plan as may exist from time to time
for all other executive officers of the Company; provided, however, that, during
the term of this Agreement, the Company shall maintain at its expense a
long-term disability policy for the benefit of Xx. Xxxxxxx, which will provide
coverage equal to a percentage of Xx. Xxxxxxx'x base salary consistent with the
percentage coverage provided to the other executive officers of the Company.
Such insurance shall include any group long-term disability insurance on Xx.
Xxxxxxx that the Company maintains for the benefit of its senior executives.
Xx. Xxxxxxx will not receive an automobile or automobile expense allowance. Xx.
Xxxxxxx shall be entitled to six weeks of vacation leave, annually, which shall
be paid at his base salary, and shall accrue and be used in accordance with the
policies and procedures of the Company.
5. REIMBURSEMENT OF BUSINESS EXPENSES. The Company will promptly reimburse
Xx.Xxxxxxx for all business expenses incurred by him in connection with the
business of the Company in accordance with regular Company policy regarding the
nature and amount of expenses and the maintenance and submission of receipts and
records necessary for the Company to document them as proper business expenses.
6. THE EXECUTIVE WARRANTS.
(a) Category I and Category II Warrants. Under the 1989 Agreement, the
Company granted to Xx. Xxxxxxx Category I Warrants to purchase 1,550,000, and
Category II Warrants to purchase 650,000, shares of CytRx Common Stock. To
evidence an extension of the expiration date (from February 22, 1999 to
December 31, 2004) of such warrants granted prior to 1990 and the incorporation
of the terms of this Agreement, Xx. Xxxxxxx has surrendered Warrant Nos. WI-1
(150,000 shares), WI-2 (400,000 shares), WI-3 (400,000 shares), WI-4 (400,000
shares) and WII-1 (650,000 shares) to the
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Company for cancellation and, on the Original Execution Date, received Warrant
No. WI/II-1 (2,000,000 shares). To evidence the incorporation of the terms of
this Agreement in the balance of the warrants, Xx. Xxxxxxx has surrendered
Warrant Nos. WI-5 (100,000 shares) and WI-6 (100,000 shares) for cancellation
and, on the Original Execution Date, received Warrant No. I/II-2 (200,000
shares). All of such warrants have vested in full.
(b) 1994 Warrants and Category IV Warrants.
(1) Under the 1989 Agreement, the Company granted to Xx.
Xxxxxxx 1994 Warrants and Category IV Warrants to purchase 600,000 shares of
CytRx Common Stock at $4.25 and $4.00 per share during the sixteen calendar
quarters beginning with April 1, 1994, and ending on March 31, 1998. As amended
and restated on the Original Execution Date, the 1994 Warrants and the Category
IV Warrants grant Xx. Xxxxxxx the right to purchase 529,706 shares of CytRx
Common Stock at $1.75 per share during the nineteen calendar quarters beginning
with April 1, 1994, and ending on December 31, 1998. The warrants were amended
and restated to effect two changes. First, the Company repriced the warrants
that vested during 1994 using the repricing formula applied to options held by
employees of the Company generally. The formula reduced Xx. Xxxxxxx'x right to
purchase 180,000 shares of CytRx Common Stock at $4.25 per share to a right to
purchase 129,706 shares of CytRx Common Stock at $1.75 per share. Second, in
exchange for Xx. Xxxxxxx'x agreement to extend the term of his employment under
this Agreement for an additional 18 months (previously, Xx. Xxxxxxx had a
one-year renewal option to extend the term of his employment until July 1,
1998), the Company amended the warrants that vested after 1994 to reduce the
shares of CytRx Common Stock subject to the warrants from 420,000 to 400,000,
to reduce the exercise price from $4.25 and $4.00 to $1.75, and to change a
"back-end loaded" vesting schedule designed to induce Xx. Xxxxxxx to exercise
his renewal option to a schedule that vests warrants to purchase an equal
number of shares each calendar quarter.
(2) To evidence changes in the exercise price and shares
subject to the 1994 Warrants and the incorporation of the terms of this
Agreement, Xx. Xxxxxxx has surrendered Warrant No. WIII-1 (300,000 shares) for
cancellation and, on the Original Execution Date, received Warrant No. WIII-2
(129,706 shares). All of such warrants have vested in full.
(3) To evidence changes in the exercise price, vesting
schedule, expiration date and shares subject to the Category IV Warrants and
the incorporation of the terms of this Agreement, Xx. Xxxxxxx has surrendered
Warrant No. WIV-1 (300,000 shares) for cancellation and, on the Original
Execution Date, received Warrant No. WIV-2 (400,000 shares). The Category IV
Warrants shall vest and be exercisable as to 25,000 shares on the date hereof
and, thereafter, on the first day of each calendar quarter, beginning on April
1, 1995, and ending on October 1, 1998.
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(c) Other Registration, Vesting and Exercise Rights.
(1) In addition to any other registration rights Xx. Xxxxxxx
may have, as soon as reasonably practicable, but in no event later than May 1,
1995, the Company shall file with the Securities and Exchange Commission a
registration statement to register the shares of Common Stock to be acquired
under the 1994 Warrants or the Category IV Warrants under the Securities Act of
1933, and shall use its best efforts to keep such registration statement
effective and remain current for as long as Xx. Xxxxxxx has the right to
exercise the Executive Warrants and for a period of six (6) months thereafter,
if such additional period is required to allow Xx. Xxxxxxx to dispose of the
Warrant Shares in an orderly fashion.
(2) All rights to purchase CytRx stock pursuant to the
Executive Warrants that have vested prior to or upon the termination of Xx.
Xxxxxxx'x employment with the Company may be exercised by Xx. Xxxxxxx at any
time until the expiration of such rights under the applicable warrant
agreement, even after Xx. Xxxxxxx'x employment with the Company has been
terminated. All rights to purchase CytRx stock pursuant to the Executive
Warrants that by their terms vest after the termination of Xx. Xxxxxxx'x
employment with the Company shall terminate on the effective date of the
termination of Xx. Xxxxxxx'x employment.
(3) All of the Category IV Warrants shall become fully vested
in the event of the termination of Xx. Xxxxxxx'x employment in the
circumstances described in Paragraph 7(b) or 7(c) prior to the Expiration Date.
(4) All of the Category IV Warrants shall become fully vested
upon an extraordinary corporate event such as a Change of Control (as defined
in Paragraph 8 hereof).
(5) For all purposes of the Agreement and the Executive
Warrants, (A) in the event of the death of Xx. Xxxxxxx, the Executive Warrants
may be exercised by his personal representative, executor, or heirs (whether by
will or by the laws of descent and distribution), and (B) in the event of the
incapacity of Xx. Xxxxxxx, the Executive Warrants may be exercised by his duly
appointed attorney-in-fact or other authorized person, in each case, to the
same extent such warrants have vested and are exercisable by the Holder (as
defined in the Executive Warrants) in accordance with the terms thereof.
7. TERMINATION OF EMPLOYMENT AND THIS AGREEMENT.
(a) If Xx. Xxxxxxx'x employment is terminated by the Company for cause
(as hereinafter defined) or if Xx. Xxxxxxx voluntarily leaves the employment of
the Company prior to the Expiration Date, the Company will pay Xx. Xxxxxxx the
equivalent of three (3) months' salary at the base salary, and three (3) months
continuation of fringe benefits then being received by Xx. Xxxxxxx. For
purposes of this Agreement, termination "for
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cause" means termination of Xx. Xxxxxxx'x employment by action of a majority of
the members of the Board of Directors who are not employees of CytRx or any
subsidiary, because of:
(1) material breach of contract,
(2) failure or inability to carry out reasonable directives
of the Board of Directors,
(3) conviction of Xx. Xxxxxxx for a felony, even if such
conviction is subject to appeal,
(4) uncontroverted evidence of falsification of records or
statements of the Company,
(5) uncontroverted evidence of intentional misuse of Company
funds or property, or
(6) other substantial misconduct which, in the reasonable
judgment of the Board, results in material adverse effect, discredit
or disrepute to the Company.
A termination of employment for any cause listed in clauses (1), (2)
or (6) above shall be effective only if Xx. Xxxxxxx has first been given notice
by the Board of Directors of the alleged breach, failure to perform or
misconduct and such breach, failure to perform or misconduct continues for
fifteen days following the date of such notice.
(b) If this Agreement expires on the Expiration Date, or if the sooner
termination of Xx. Xxxxxxx'x employment and this Agreement is not for cause,
not because of Xx. Xxxxxxx'x death or disability and not because of his
voluntary termination of employment, then the Company will continue to make
semi-monthly base salary payments for a period of one year after the Expiration
Date or the earlier effective date of termination; provided, however, that (1)
in the case of the expiration of this Agreement on the Expiration Date, the
one-year salary continuation period shall be reduced by the period of time
before the Expiration Date that the Board of Directors gives Xx. Xxxxxxx
written notice that it intends to allow the Agreement to expire, or not to pay
the full salary continuation obligation if negotiations to renew the Agreement
are unsuccessful, and (2) in all cases, Xx. Xxxxxxx'x rights to receive salary
continuation payments are contingent upon his using his best efforts to find a
new job commensurate with his position as the chief executive officer and
member of the Board of directors of the Company. If Xx. Xxxxxxx obtains a
position during the one-year salary continuation period (whether commensurate
with his position with the Company or not) the obligation for salary
continuation hereunder shall be limited to an amount equivalent to the
difference, if any, between the base salary under this Agreement and the base
salary paid to him by his new
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employer. Fringe benefits provided during employment shall be continued until
Xx. Xxxxxxx finds another job as provided for under this Subparagraph or until
the end of the one-year salary continuation period, whichever first occurs.
(c) If Xx. Xxxxxxx'x employment and thereby this Agreement is
terminated because of Xx. Xxxxxxx'x death, CytRx shall pay any compensation
then due him under this Agreement as of the date of his death to his surviving
spouse, or if there is no surviving spouse, to his estate, and shall make to
such spouse or his estate, as above, semi-monthly payments of salary based on
the annual rate which then would have been applicable to Xx. Xxxxxxx'x
employment for six (6) months after his death, and provide six (6) months'
continuation of fringe benefits available to his dependents covered for such
benefits at the time of Xx. Xxxxxxx'x death. If Xx. Xxxxxxx becomes permanently
disabled or subject to long term disability during the period of his employment
hereunder, and CytRx terminates this Agreement other than pursuant to Paragraph
7(a), Xx. Xxxxxxx'x employment shall be deemed to have been terminated without
cause pursuant to Paragraph 7(b); provided, however, that (1) Xx. Xxxxxxx shall
not be required to find a new job, and (2) instead of the one-year salary
continuation, an amount equal to his base salary for one year shall be paid to
Xx. Xxxxxxx in variable monthly installments until such amount is exhausted,
with each installment being equal to the amount that when combined with
payments received during such month by Xx. Xxxxxxx from the Company under its
short-term disability policy, or from one or more insurance companies under
long term disability insurance policies maintained by the Company pursuant to
Paragraph 4, equals the amount of base salary (calculated on a pre-tax basis)
that Xx. Xxxxxxx would have received during such month if this Agreement had
not been terminated. For example, if (1) CytRx terminates this Agreement
because Xx. Xxxxxxx becomes permanently disabled at a time when his annual base
salary is $300,000, (2) Xx. Xxxxxxx is eligible immediately to receive monthly
short term disability payments from the Company equal to $25,000 (100% of his
base salary) and (3) Xx. Xxxxxxx will be eligible after one month to receive
long term disability payments from the insurance carrier equal to $15,000 (60%
of his base salary), then CytRx will not be obligated to make any payment to
Xx. Xxxxxxx for the first month and will be obligated to pay Xx. Xxxxxxx
$10,000 per month (40% of his base salary) for the next 2.5 years (30 months).
If, in the above example, Xx. Xxxxxxx ceased for any reason to qualify for the
insurance company payments after the first 11 months, then the Company shall be
obligated to make monthly payments of $25,000 (100% of his base salary) for the
following 8 months ($300,000 less the $100,000 already paid divided by
$25,000), subject to the salary adjustment described in Paragraph 7(b) if Xx.
Xxxxxxx obtains a position during the 8 month period.
It is understood that permanently disabled and subject to long term
disability shall mean such sickness, as well as physical or mental disability,
that qualifies or, with the passage of time (not to exceed 90 calendar days),
will quality Xx. Xxxxxxx to receive benefit payments under at least one of the
long-term disability policies maintained by the Company for Xx. Xxxxxxx in
accordance with Paragraph 4. In the event of a dispute as to Xx. Xxxxxxx'x
ability to perform his duties, the Company may refer Xx. Xxxxxxx to a
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licensed practicing physician of CytRx's choice and reasonably satisfactory to
Xx. Xxxxxxx, and Xx. Xxxxxxx agrees to submit to such tests and examinations as
such physician shall deem appropriate. The determination by the physician as to
whether or not Xx. Xxxxxxx is unable to perform substantially his normal duties
shall conclusively determine such facts for the purposes of this Paragraph
7(c). Short term illness or injury not amounting to long term disability shall
be treated in accordance with any benefit provided under Paragraph 4 of this
Agreement.
It is also understood that, if CytRx becomes obligated to make
payments to Xx. Xxxxxxx pursuant to this Paragraph 7(c) because of Xx.
Xxxxxxx'x disability and, within a reasonable period of time after Xx.
Xxxxxxx'x termination, a majority of the members of the Board of Directors of
the Company who are not employees of CytRx or any subsidiary determine in good
faith that Xx. Xxxxxxx should have been terminated for cause in accordance with
Paragraph 7(a), then the obligations of the Company under this Paragraph 7(c)
shall cease after the Company has paid to Xx. Xxxxxxx an amount equal to the
amount due him pursuant to Paragraph 7(a) and continued Xx. Xxxxxxx'x fringe
benefits for the period of time required by Paragraph 7(a); provided, however,
that in no event shall Xx. Xxxxxxx be required to repay the Company any amounts
paid to him under this Paragraph 7(c).
8. CHANGE IN CONTROL.
(a) Applicability. The provisions of this Paragraph 8 shall be
effective immediately upon execution of this Agreement, but anything in this
Agreement to the contrary notwithstanding, the provisions of this Paragraph 8
shall not be operative unless, during the term of this Agreement, there has
been a Change in Control of the Company, as defined in Subparagraph 8(b) below.
Upon such a Change in Control of the Company during the term of this Agreement,
all of the provisions of this Paragraph 8 shall become operative immediately.
(b) Definitions.
"Board" or "Board of Directors" means the Board of Directors of the
Company.
"Cause" means, for purposes of this Paragraph 8 only, any act that
constitutes, on the part of Xx. Xxxxxxx, (1) fraud, dishonesty, a felony or
gross malfeasance of duty, and (2) that directly results in a demonstrable,
material injury to the Company.
"Change in Control" means either
(1) the acquisition, directly or indirectly, by any "person"
(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) within any twelve (12) month period of securities of
the Company representing an aggregate of twenty-five percent (25%) or more of
the combined voting power of the Company's then outstanding securities; or
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(2) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board, cease for any reason
to constitute at least a majority thereof, unless the election of each new
director was approved in advance by a vote of at least a majority of the
directors then still in office who were directors at the beginning of the
period; or
(3) consummation of (A) a merger, consolidation or other
business combination of the Company with any other "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) or affiliate thereof, other than a merger, consolidation or business
combination which would result in the outstanding common stock of the Company
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into common stock of the surviving entity or
a parent or affiliate thereof) at least sixty percent (60%) of the outstanding
common stock of the Company or such surviving entity or parent or affiliate
thereof outstanding immediately after such merger, consolidation or business
combination, or (B) a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially
all of the Company's assets; or
(4) the occurrence of any other event or circumstance which
is not covered by (1) through (3) above which the Board determines affects
control of the Company and, in order to implement the purposes of this
Agreement as set forth above, adopts a resolution that such event or
circumstance constitutes a Change in Control for the purposes of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation Committee" means the Compensation Committee of the Board
of Directors, or any successor committee.
"Disability" means Xx. Xxxxxxx'x probable and expected inability as a
result of physical or mental incapacity to substantially perform his duties for
the Company on a full-time basis for a period of six months. The determination
of whether Xx. Xxxxxxx suffers a Disability shall be made by a physician
acceptable to both Xx. Xxxxxxx (or his personal representative) and the
Company.
"Involuntary Termination" means termination of Xx. Xxxxxxx'x
employment by Xx. Xxxxxxx following a Change in Control which, in the
reasonable judgment of Xx. Xxxxxxx, is due to (1) a change of Xx. Xxxxxxx'x
responsibilities, position (including title, reporting relationships, working
conditions or Xx. Xxxxxxx ceasing for any reason to be a member of the Board of
Directors of the Company), authority or duties (including changes resulting
from the assignment to Xx. Xxxxxxx of any duties inconsistent with his
positions, duties or responsibilities as in effect immediately prior to the
Change in Control); or (2) a reduction in Xx. Xxxxxxx'x compensation or
benefits as in effect immediately prior to the Change in Control, or (3) a
forced relocation of Xx. Xxxxxxx outside the Atlanta, Georgia metropolitan area
or significant increase in Xx. Xxxxxxx'x travel requirements. Involuntary
Termination does not include the death or Disability of Xx. Xxxxxxx.
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"Payment Period" means the period that begins on the effective date of
the termination of Xx. Xxxxxxx'x employment hereunder and ends on the
Expiration Date; provided, however, that the Payment Period shall be at least
one (1) year and not longer than two (2) years.
(c) Benefits upon Termination of Employment Following a Change in
Control.
(1) Termination. Executive shall be entitled to, and the
Company shall pay or provide to Executive, the benefits described in Paragraph
8(c)(2) below if a Change in Control occurs during the term of this Agreement
and Executive's employment is terminated within two (2) years following the
Change in Control, either (A) by the Company (other than for Cause or by reason
of Executive's death or Disability) or (B) by Executive pursuant to Involuntary
Termination; provided, however, that if:
(x) during the term of this Agreement there is a public
announcement of a proposal for a transaction that, if consummated,
would constitute a Change in Control or the Board receives and decides
to explore an expression of interest with respect to a transaction
which, if consummated, would lead to a Change in Control (either
transaction being referred to herein as the "Proposed Transaction");
and
(y) Executive's employment is thereafter terminated by the
Company other than for Cause or by reason of Executive's death or
Disability; and
(z) the Proposed Transaction is consummated within one year
after the date of termination of Executive's employment,
then, for the purposes of this Agreement, a Change in Control shall be deemed
to have occurred during the term of this Agreement and the termination of
Executive's employment shall be deemed to have occurred within two (2) years
following a Change in Control.
(2) Benefits to be Provided. If Executive becomes eligible for
benefits under Paragraph 8(c)(1) above, the Company shall pay or provide to
Executive the benefits set forth in this Paragraph 8(c)(2).
(A) Salary. Executive will continue to receive his current base salary
(subject to withholding of all applicable taxes and any amounts referred to in
(C) below) for the Payment Period in the same manner as it was being paid as of
the date of termination; provided, however, that the salary payments provided
for hereunder shall be paid in a single lump sum payment, to be paid not later
than thirty (30) days after his termination of employment; provided further,
that the amount of such lump sum payment shall be determined by taking the
salary payments to be made.
(B) Bonuses. Executive shall receive bonus payments from the Company
for the Payment Period in an amount for each such month equal to one-twelfth of
the average of the bonuses paid to him for the two calendar years immediately
preceding the year in which such
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termination occurs. Any bonus amounts that Executive had previously earned from
the Company but which may not yet have been paid as of the date of termination
shall not be affected by this provision. The bonus amounts determined herein
shall be paid in a single lump sum payment, to be paid not later than thirty
(30) days after termination of employment; provided, that the amount of such
lump sum payment shall be determined by taking the bonus payments (as of the
payment date) to be made.
(C) Health and Life Insurance Coverage. The health and life insurance
benefits coverage provided to Executive at his date of termination shall be
continued at the same level and in the same manner as if his employment had not
terminated, beginning on the date of such termination and ending on the last
day of the Payment Period. Any additional coverages Executive had at
termination, including dependent coverage, will also be continued for such
period at the same level and on the same terms as provided to Executive
immediately prior to his termination, to the extent permitted by the applicable
policies or contracts and with such reasonable increases as applicable to other
participants for the same or similar coverage. Any costs Executive was paying
for such coverages at the time of termination (plus reasonable increases as
applicable to other participants for the same or similar coverage) shall be
paid by Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Subparagraph do
not permit continued participation by Executive, then the Company will use its
best efforts to arrange for other coverage, at its expense, providing
substantially similar benefits as it can find for other officers in similar
positions.
(D) Executive Retirement Plans. To the extent permitted by the
applicable plan, Executive will be fully vested in and will be entitled to
continue to participate, consistent with past practices, in all Executive
retirement plans maintained by the Company in effect as of his date of
termination. Executive's participation in such retirement plans shall continue
for the Payment Period (at which point he will be considered to have terminated
employment within the meaning of the plans) and the compensation payable to
Executive under (A) and (B) above shall be treated (unless otherwise excluded)
as compensation under the plan. If full vesting and continued participation in
any plan is not permitted, the Company shall pay to Executive and, if
applicable, his beneficiary, a supplemental benefit equal to the excess of (1)
the benefit Executive would have been paid under such plan if he had been fully
vested and had continued to be covered for the Payment Period as if Executive
had earned compensation described under (A) and (B) above and had made
contributions sufficient to earn the maximum matching contribution, if any,
under such plan (less any amounts he would have been required to contribute),
over (2) the benefit actually payable to or on behalf of Executive under such
plan. For purposes of determining the benefit under (1) in the preceding
sentence, contributions deemed to be made under a defined contribution plan
will be deemed to be invested in the same manner as Executive's account under
such plan at the time of termination of employment. The Company shall pay such
supplemental benefits (if any) in a lump sum.
(E) Effect of Lump Sum Payment. The lump sum payment under (A) or (B)
above shall not alter the amounts Executive is entitled to receive under the
benefit plans described in
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(C) and (D) above. Benefits under such plans shall be determined as if
Executive had remained employed and received such payments over a period equal
to the Payment Period.
(F) Effect of Death or Retirement. The benefits payable or to be
provided under this Agreement shall cease in the event of Executive's death or
election to commence retirement benefits under the Company's retirement plan.
(G) Limitation on Amount. To the extent permitted by law, Executive
may in his sole discretion elect to reduce any payments he may be eligible to
receive under this Agreement to prevent the imposition of excise taxes on
Executive under Section 4999 of the Code.
9. NO RESTRICTIONS ON XX. XXXXXXX'X EMPLOYMENT BY CYTRX. Xx. Xxxxxxx
represents as a condition of this Agreement that he is not under any existing
employment agreement, noncompetition agreement or other legally binding
agreement which would prohibit or in any manner restrict his employment
hereunder with CytRx.
10. EMPLOYEE CONFIDENTIALITY AND INVENTION ASSIGNMENT AGREEMENT. Xx.
Xxxxxxx and the Company are parties to a confidentiality and invention
assignment letter agreement dated November 3, 1994, which shall be deemed to be
incorporated into this Agreement as if fully set forth in this Paragraph 10.
11. RESTRICTIONS ON COMPETITION.
(a) During Employment. In order to protect CytRx's investment, which
includes but is not limited to, time, money and proprietary information, and in
recognition of the unique character of the Trade Secrets and other Confidential
Information which are the basis of CytRx's business and future business
opportunities, in recognition of the worldwide geographic scope of CytRx's
business and/or potential business opportunities and Xx. Xxxxxxx'x contemplated
role, responsibilities and knowledge therefor, for the entire period of Xx.
Xxxxxxx'x employment by CytRx, Xx. Xxxxxxx agrees that he will not work as a
consultant for or directly or indirectly perform services anywhere in the world
for himself or any other person, firm or corporation in competition with CytRx.
A business in competition with CytRx includes any business activity being
actively investigated or contemplated by CytRx during the period of Xx.
Xxxxxxx'x employment by CytRx. Without limitation on the foregoing, but by way
of example, businesses currently contemplated by CytRx as being in competition
with it include pharmaceutical businesses engaged in or considering engaging in
manufacture, marketing or development of commercial products in any and all of
the following areas:
(1) Immune system stimulating compounds and methods;
(2) Growth stimulation of animals;
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(3) all formulations and methods using the
surface-active copolymers described in U.S. Patent
No. 4,801,452, U.S. Patent Application Serial No.
291,925, U.S. Patent Application Serial No. 107,358,
U.S. Patent Application Serial No. 208,335, and U.S.
Patent Application Serial No. 150,731.
(4) Mycobacterial and antiviral chemotherapy; and
(5) Vaccine adjuvants.
(b) For two (2) years after termination of employment. In order to
protect CytRx's investment, which includes but is not limited to, time, money
and proprietary information and in recognition of the unique character of the
Trade Secrets and other Confidential Information which are the basis of CytRx's
business and future business opportunities, in recognition of the worldwide
geographic scope of CytRx's business and/or potential business opportunities
and Xx. Xxxxxxx'x contemplated role, responsibilities and knowledge therefor,
for a period of two (2) years following the termination of Xx. Xxxxxxx'x
employment with CytRx, regardless of the reason therefor, Xx. Xxxxxxx agrees
that he will not work as a consultant for or directly or indirectly perform
services anywhere in the world for himself or any other person, firm or
corporation in any capacity involving the study, development, use, manufacture
or marketing of all formulations and methods using the surface-active
copolymers described in U.S. Patent No. 4,801,452, U.S. Patent Application
Serial No. 291,925, U.S. Patent Application Serial No. 107,358, U.S. Patent
Application Serial No. 208,335, and U.S. Patent Application Serial No. 150,731.
The foregoing shall not preclude (1) the employment of Xx. Xxxxxxx,
whether as a director, officer, employee, consultant or otherwise, by a
research partner, joint venture partner, licensee or other person, or
corporation or entity that at such time is authorized by CytRx to have rights
in or to restricted products, or (2) the ownership by Xx. Xxxxxxx of investment
securities representing not more than three (3) per cent of the outstanding
voting securities of company engaged in a pharmaceutical business, whose stock
and/or securities are traded on a national stock exchange or national
quotations system, provided that such investment is passive and not with the
intention of controlling such business.
(c) Xx. Xxxxxxx will notify the Company at least three (3) weeks
before he is to begin any employment or activity which is described in
Subparagraph (b) of this Paragraph if such employment or activity would
commence within two (2) years after the termination of his employment with
CytRx. Such notice shall be in writing and shall contain a complete description
of such offer, including the position and the responsibilities involved.
(d) Xx. Xxxxxxx agrees and acknowledges that the restrictions on
competition contained herein including their geographic and product scope are
necessary and
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reasonable to protect the interests of CytRx and that the Company's Trade
Secrets and other Confidential Information of which he will become acquainted,
if used anywhere in the world during the period in which he has agreed not to
use them or to disclose them would cause CytRx serious and irreparable damage
and harm. Xx. Xxxxxxx represents and admits that upon the termination of his
employment with CytRx, his experience and capabilities are such that he can
obtain employment engaged in other lines of endeavor and that the enforcement of
this Agreement would not prevent him from earning a livelihood.
12. ACKNOWLEDGMENTS.
(a) It is understood and contemplated by the parties that if the
obligations undertaken herein in Paragraphs 10 and 11 were breached in any way,
irreparable harm to the Company should be presumed. Damages might be difficult
if not impossible to ascertain, and the faithful observance of the terms of
this Agreement during and after termination of Xx. Xxxxxxx'x employment is an
essential condition to his employment with the Company. In light of these
considerations, Xx. Xxxxxxx agrees that a court of competent jurisdiction may
immediately enjoin any breach or threatened breach of Paragraphs 10 and 11 to
this Agreement, without waiver of any other rights and remedies which the
Company may have at law.
(b) The obligations undertaken in Paragraphs 10 and 11 of this
Agreement survive the termination of Xx. Xxxxxxx'x employment hereunder for the
period specified in each such Paragraph and the termination of this Agreement,
regardless of the reason therefor.
The obligations of CytRx to Xx. Xxxxxxx following his termination of
employment as set forth in Paragraphs 3(b), 6, 7 and 8 shall survive the
termination of this Agreement until satisfied in accordance with the terms
thereof.
(c) The rights of Xx. Xxxxxxx under this Agreement are in addition to
any other rights or remedies he may have in law or in equity in the event CytRx
breaches this Agreement, all of which rights and remedies are preserved in
full. Without limiting the foregoing, the rights of Xx. Xxxxxxx under Paragraph
7 herein do not limit any right he would have upon termination of employment
caused by a breach of CytRx. However, any damages he may sustain shall be
reduced by the payments required to be made under this Agreement.
13. CONSTRUCTION OF AGREEMENT.
(a) It is the intention of the parties to this Agreement that any
construction of this Agreement or Paragraph thereof shall be in favor of its
legality and enforceability and that any construction causing illegality or
unenforceability should yield to a construction favoring legality and
enforceability. Further, the parties agree that should any portion of
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this Agreement be judicially held invalid, unenforceable or void, such holding
shall not have the effect of invalidating or voiding any remaining portion of
this Agreement not so declared and that any portion held to be invalid,
unenforceable or void shall, if possible, be deemed amended or reduced in scope,
otherwise to be stricken from this Agreement, but only to the extent required
for purposes of maintaining the legality, validity and enforceability of this
Agreement and all portions thereof in the jurisdiction so holding.
(b) It is understood that use of the word "and" herein included the
disjunctive as well as its injunctive meaning whenever such meaning would
broaden the protection to the Company in the context in which it is used.
14. NO WAIVER. No waiver of any breach of this Agreement may be
construed or deemed as a waiver of any succeeding breach of this Agreement.
15. PERSONAL SERVICES. It is understood and contemplated that this
Agreement provides for personal services of Xx. Xxxxxxx to the Company.
16. NO INTERFERENCE. For two (2) years following the termination of
Xx. Xxxxxxx'x employment hereunder, regardless of the reason therefor, Xx.
Xxxxxxx will not intentionally disrupt or attempt to disrupt the Company's
business relationship with its customers or suppliers, nor solicit any of the
Company's employees to terminate their employment with CytRx.
17. CERTIFICATION BY EMPLOYEE. Xx. Xxxxxxx certifies that he has
received a copy of this Agreement for review and study before being asked to
execute it, that he has read this Agreement carefully, that he has had a
sufficient opportunity before executing this Agreement to ask questions about
it and to receive answers to any such questions and that he understands the
obligations and rights provided hereunder.
18. ENTIRE AGREEMENT. This Agreement hereto supersedes any and all
other agreements, both oral and in writing, between the parties hereto with
respect to the employment and terms and conditions thereof of Xx. Xxxxxxx by
CytRx, and it contains all of the parties' representations, covenants and
agreements with respect to such matters. The terms of this Agreement may not be
changed orally but only by a subsequent writing signed by the party against
whom enforcement of such modification is sought.
19. CAPTIONS. Paragraph captions used herein are for convenience of
reference only and shall not change the meaning of the terms of this Agreement.
20. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall inure to
the benefit of any successors and assigns of the Company.
21. GOVERNING LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of Georgia.
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22. CORPORATE AUTHORITY. The Company represents and warrants that this
Agreement including the issuance of the warrants (1) has been duly authorized,
executed and delivered by the Company, (2) constitutes a legal, valid and
binding obligation of the Company enforceable in accordance with its terms, and
(3) does not conflict with or result in a violation of the Company's
Certificate of Incorporation, By-laws, or any contract, agreement or instrument
to which the Company is a party or is otherwise bound.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal on the date hereof, to be effective as of the Effective Date.
XXXX X. XXXXXXX:
----------------------------------------
Attest: CYTRX CORPORATION:
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Corporate Secretary By: Xxxxxxx X. Xxxxx
(CORPORATE SEAL) Title: Vice President, Human Resources
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