Exhibit 10.16
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Second Amended and Restated Employment Agreement (this "Agreement") is
made and entered into as of this 10th day of June, 2003, by and between CytRx
Corporation, a Delaware corporation ("Employer"), and Xxxxxx X. Xxxxxxxxx, an
individual and resident of the State of California ("Employee"), with reference
to the following facts:
A. Employer and Employee previously entered into an Amended and Restated
Employment Agreement, dated May ___, 2002 (the "Original Employment Agreement"),
under which Employee has served as Chief Executive Officer of Employer since
July 16, 2002 in accordance with the terms of that agreement, and Employer and
Employee have agreed that the term of the Original Employment Agreement will
expire on July 15, 2003.
B. Under the terms of the Original Employment Agreement, Employee was
permitted to serve as the President of the Xxxxxxxxx Capital Group and its
affiliates (collectively, "The Xxxxxxxxx Group") and to devote significant time
and attention to the operations of The Xxxxxxxxx Group.
C. Employer and Employee have agreed on the terms of a bonus to be paid by
Employer to Employee for his service under the Original Employment Agreement.
D. Employer believes that Employee has been and will continue to be an
integral part of its management and is and will continue to be responsible for
developing its business.
E. Employee possesses extensive knowledge regarding Employer's business,
including confidential and proprietary information concerning marketing plans
and strategy, business plans, projections, and the formulae and models
pertaining thereto, customer needs and peculiarities, finances, operations,
billing methods, customer lists and trade secrets.
F. Employer and Employee desire to enter into a new employment agreement
under which Employee shall serve on a full-time basis as Employer's Chief
Executive Officer on the terms set forth in this Agreement, with the term of
this new employment agreement to commence on July 16, 2003 (the "Effective
Date").
NOW, THEREFORE, upon the above premises, and in consideration of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows.
1. CONTINUATION AND EXPIRATION OF ORIGINAL EMPLOYMENT AGREEMENT. Employer
and Employee agree that Employee shall continue to be employed as Employer's
Chief Executive Officer under the terms of the Original
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Employment Agreement through July 15, 2003. As a bonus for his services under
the Original Employment Agreement, Employer shall pay Employee a cash bonus of
$150,000 on June 16, 2003 and on June 20, 2003 shall issue a fully vested,
nonqualified stock option to Employee to purchase 250,000 shares of the
Corporation's common stock at a price of $2.47 per share (the "Bonus Option").
The Bonus Option shall have a term of ten years, shall be issued under the
Employer's 2000 Long-Term Incentive Plan (the "Plan") and shall have such other
terms and conditions as are set forth under Employer's form of standard
nonqualified stock option agreement under the Plan (the "Nonqualified Option
Agreement"). Employer and Employee agree that with the exception of Employee's
remaining scheduled salary payments from the date hereof through July 15, 2003
and reimbursement of any outstanding expense reports or expense reports of
Employee that accrue for amounts from the date hereof through July 15, 2003 that
are permitted under Employer's expense reimbursement policy, Employer will owe
no further compensation or other amounts to Employee on July 15, 2003 under the
Original Employment Agreement, including without limitation salary, bonus or
vacation pay.
2. NEW EMPLOYMENT AGREEMENT. Effective as of the Effective Date, Employer
hereby hires Employee as Employer's Chief Executive Officer, and Employee hereby
accepts such employment and position with Employer, on the terms and conditions
set forth in Sections 2 through 22 hereof, which shall constitute Employee's new
employment agreement with Employer (the "New Employment Agreement"). Employer
understands that his duties as Chief Executive Officer may change from time to
time over the term of the New Employment Agreement in the discretion of
Employer's Board of Directors, but such duties shall in all events be consistent
with the duties customarily assigned to the Chief Executive Officer of a company
such as Employer.
3. DUTIES. Employee shall perform all duties assigned to him by the
Employer's Board of Directors faithfully, diligently and to the best of his
ability. Such duties include, without limitation, the overseeing and
implementation of the business plan adopted by the Board of Directors (as may be
revised from time to time by the Board of Directors). Employee shall perform the
services contemplated under this New Employment Agreement in accordance with the
policies established by and under the direction of the Board of Directors.
Employee shall have such corporate power and authority as shall reasonably be
required to enable him to discharge his duties under the New Employment
Agreement.
4. TIME AND EFFORTS. Subject to the exceptions set forth in this Section 4,
Employee shall devote 100% of his business time, efforts, attention, and
energies to Employer's business in order to implement Employer's business plan
and discharge his duties under the New Employment Agreement.
4.1. DIRECTORSHIP EXCEPTION. Notwithstanding any other provision of this
Section 4, while the New Employment Agreement is in effect, Employee may serve
on the board of directors of up to three companies other than Employer, but in
no event shall Employee serve on the board of directors of any company that is
directly competitive with Employer or serve as the chairman of any audit
committee or other
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committee of any other board of directors that requires substantial additional
time on the part of Employee beyond that customarily required to serve as a
member of the board of directors unless such service is approved by the Board of
Directors. Employee may make and manage personal business investments of his
choice and serve in any capacity with any civic, educational or charitable
organization, or any governmental entity or trade association, without seeking
or obtaining approval by the Board of Directors, provided such activities and
services do not materially interfere or conflict with the performance of his
duties hereunder.
4.2. THE XXXXXXXXX GROUP EXCEPTION. Notwithstanding any other provision
of this Section 4, Employee may continue to serve as the President of and to
operate The Xxxxxxxxx Group while the New Employment Agreement is in effect, so
long as his involvement with The Xxxxxxxxx Group is strictly limited to
completing that company's current assignments for SuperGen, Inc. Employee agrees
that immediately following completion of the SuperGen, Inc. assignments,
Employee will either (i) terminate the operations of The Xxxxxxxxx Group or (ii)
retain a new President for The Xxxxxxxxx Group and thereafter cease all personal
activities on behalf of The Xxxxxxxxx Group. Nothing contained in this Section 4
shall limit Employee's right to engage in activities or receive benefits from
The Xxxxxxxxx Group solely in his capacity as an equity owner of that firm.
5. TERM. Employee's employment under the New Employment Agreement shall
commence on the Effective Date and shall continue until July 15, 2006 (the
"Expiration Date"), unless sooner terminated by Employer or Employee in
accordance with Section 6 (the "Term"); provided, however, that unless Employer
or Employee gives written notice to the other party to the contrary at least 180
days prior to the Expiration Date, this Agreement shall automatically be
extended for an additional term of one (1) year following the Expiration Date;
and, provided further, that this Agreement shall continue to renew automatically
for an additional term of one (1) year on each anniversary of the Expiration
Date unless Employer or Employee gives written notice to the other party to the
contrary at least 90 days prior to such anniversary date. References herein to
the "Term" shall include any automatic extensions pursuant to the preceding
sentence. Provision of a notice that the New Employment Agreement will not be
extended shall not constitute a breach of the New Employment Agreement.
6. COMPENSATION. As the total consideration for Employee's services
rendered under the New Employment Agreement, Employer shall pay Employee the
following compensation:
6.1. SALARY. Commencing as of the Effective Date, Employer shall pay
Employee an annual salary of $360,000 per year, in 24 equal semi-monthly
installments, on the 15th and last day of each month during the Term, with the
first payment due on July 31, 2003. Employee's annual salary shall be subject to
review annually by the Board of Directors of Employer and may be increased (but
not decreased) in the sole discretion of the Board of Directors or the
Compensation Committee of the Board.
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6.2. BONUS COMPENSATION. Employee shall receive an annual cash bonus
on the business day immediately preceding each anniversary of the Effective Date
while the New Employment Agreement is in effect. The amount of each such bonus
payment shall be determined by Employer's Board of Directors or Compensation
Committee, in its sole discretion, but in no event shall any such bonus be less
than $150,000 for each year (prorated for any period of less than a full year)
during the Term.
6.3. STOCK OPTIONS. Employer shall grant to Employee as of June 20,
2003 a nonqualified stock option under the Plan to purchase 750,000 shares of
Employer's common stock at a price of $2.47 per share (the "New Option"), which
shall have a term of ten years, shall vest as to 1/3rd of the shares covered
thereby on June 20, 2004 and shall vest as to the remaining 2/3rds of such
shares in monthly installments of 1/24th each on the 20th day of each month
thereafter, commencing on July 20, 2004, so that the New Option shall be fully
vested as to all of the shares covered thereby on June 20, 2006, provided that
Employee shall remain in the continuous employ of Employer through each such
vesting date, and shall have such other terms and conditions as are set forth in
Employer's Nonqualified Option Agreement evidencing the New Option. Employee
recognizes that the Plan currently limits to 500,000 the aggregate number of
shares covered by options that may be granted to Employee in any calendar year
and that the New Option, when aggregated with the stock option granted to
Employee as referred to in Section 1 of this Agreement, exceed this Plan
limitation. In this respect, Employer shall amend the Plan, and hereby
undertakes at the 2003 annual meeting of its shareholders to seek approval of
its shareholder of such amendment to the Plan, to increase to at least 1,000,000
the number of shares of Employer's common stock covered by options that may be
granted to any optionee in any calendar year. In the event, however, that
Employer's shareholders fail to approve such amendment to the Plan at the 2003
annual meeting of shareholders, or such amendment is not otherwise approved by
no later than December 31, 2003, (i) by its terms the New Option shall thereupon
be modified (the "Modified New Option") to reduce the number of shares covered
thereby from 750,000 to 250,000 and (ii) Employer shall grant to Employee on
January 2, 2004, a new nonqualified option under the Plan to purchase 500,000
shares of Employer's common stock at an exercise price equal to the "Fair Market
Value" (as defined in the Plan) on January 2, 2004 (the "2004 Option"), which
shall vest in accordance with the vesting provisions and otherwise shall have
the same terms and conditions as the Modified New Option. (The exercise price of
the Modified New Option will remain unchanged at $2.47 per share.) In addition,
to the extent the exercise price of the 2004 Option exceeds $2.47 per share,
Employer also shall, to the extent permissible under the Plan and applicable
Nasdaq governance standards, grant to Employee as of December 31, 2003 and/or
January 2, 2004 performance units or other awards under the Plan which, in
combination with the Modified Option and the 2004 Option, afford Employee
aggregate economic benefits equivalent to those that would have been afforded
Employee under the New Option had it not been modified as aforesaid. If
necessary because of applicable Plan or Nasdaq governance standards limitations,
Employer shall make a further grant or award to Employee on January 2, 2004 of a
promissory note or other instrument of Employer payable in cash only so as to
accomplish this objective. Employer and Employee understand and agree that such
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performance units and awards shall be payable solely in shares of Employer
common stock. Employer and Employee further understand and agree that such
performance units and awards, and any such promissory note or other instrument,
shall vest and become exercisable and/or payable ratably only in conjunction
with the future exercise by Employee of the Modified New Option. Employee also
shall be eligible for future grants of stock options and other equity awards
based on Employer stock in accordance with Employer's practices and policies
with respect to its senior executives.
6.4. EXPENSE REIMBURSEMENT. Employer shall promptly reimburse Employee
for reasonable and necessary business and entertainment expenses incurred by
Employee in connection with the performance of Employee's duties in accordance
with Employer's usual reimbursement policies and procedures in effect from time
to time.
6.5. VACATION. Employee shall be entitled to four weeks vacation time
for each 12-month period during the Term without loss of compensation.
Employee's vacation shall be governed by Employer's usual policies applicable to
all employees.
6.6. EMPLOYEE BENEFIT PLANS AND FRINGE BENEFITS. Employee shall be
eligible to participate in all employee benefit plans and programs, fringe
benefits and perquisites as in effect generally with respect to other senior
officers of Employer; provided, however, that unless and until Employer shall
adopt a group medical benefit plan providing health care coverage for its
employees, including Employee, Employer shall continue during the Term to pay on
Employee's behalf the annual premiums for the medical insurance coverage
currently maintained by Employee for himself and his family. During the Term,
Employer shall also continue to make fixed annual premium payments of $5,000 on
the Transamerica Occidental Life Insurance Company policy insuring Employee
under which Employee or his designee is the beneficiary.
6.7. TAX WITHHOLDING. Employer shall have the right to deduct from the
compensation due to Employee hereunder any and all sums required for social
security and withholding taxes and for any other federal, state, or local tax or
charge which may be in effect or hereafter enacted or required as a charge on
the compensation of Employee.
7. TERMINATION.
7.1. TERMINATION BY EMPLOYER FOR CAUSE. Employer may terminate
Employee's employment hereunder for "Cause" (as defined below), provided that
Employer has complied with the provisions of this Section 7.1. Employee shall be
given written notice by Employer's Board of Directors of the intention to
terminate him for Cause. Such notice shall state in reasonable detail the
particular circumstances that constitute Cause for termination. Employee shall
have 15 days after receiving such notice in which to cure such circumstances, to
the extent such cure is possible. If cure is not possible, or if he fails to
cure such circumstances, Employee shall then be entitled to a hearing before the
Board. Such hearing shall be held within 20 days of his receiving such notice,
provided that he requests such hearing within 15 days of receiving such notice.
If, within five days following such hearing, the Board gives written notice to
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Employee confirming that, in the judgment a majority of the members of the Board
(excluding Employee), Cause for terminating his employment on the basis set
forth in the original notice exists, the Term and Employee's employment
hereunder shall be terminated for Cause. The term "Cause" for purposes of this
New Employment Agreement shall mean any of the following:
(a) Employee has materially breached any material term of
the New Employment Agreement;
(b) Employee is (i) convicted of, or has entered a plea of
guilty or nolo contendere to, any felony that in the reasonable judgment of
Employer's Board of Directors is materially injurious to Employer or its
reputation or (ii) is convicted of, or has entered a plea of guilty or nolo
contendere to, any misdemeanor, felony or other crime of moral turpitude that in
the reasonable judgment of the Board of Directors of Employer is materially
injurious to Employer or its reputation; provided, however, that in the event
Employee is indicted for, or charged with, the commission of any felony that in
the judgment of the Board of Directors could reasonably be expected to result in
substantial lasting harm to Employer or its reputation, Employer shall be
entitled summarily to suspend Employee's services to Employer hereunder, without
a loss to Employee of his compensation and other benefits hereunder, during the
pendency of such indictment or charge;
(c) Employee has willfully committed (i) any act of fraud or
gross misconduct against Employer or (ii) any act of fraud or gross misconduct
not directly involving Employer that in the reasonable judgment of the Board of
Directors of Employer is materially injurious to Employer or its reputation; or
(d) Employee has willfully failed or refused or is legally
unable (other than due to his death or total disability as defined in Section
19), to perform his duties as required under the New Employment Agreement.
If Employer terminates Employee's employment for Cause, the termination
shall take effect on the effective date (determined under Section 16) of the
final written notice to Employee pursuant to this Section 7.1, and Employee
shall be entitled to (i) a lump sum cash payment, payable within ten (10)
business days after the date of termination of Employee's employment, equal to
the sum of (A) any accrued but unpaid salary as of the date of such termination,
(B) any accrued but unpaid bonus due under Section 6.2 for any annual period
ended prior to the date of such termination and (C) the minimum bonus under
Section 6.2 for the annual period in which such termination occurs, prorated
through the date of such termination, and (ii) such benefits, if any, to which
Employee or his dependents or beneficiaries may then be entitled as a
participant under the employee benefit plans referred to in Section 6.6. In the
event of the termination of Employee's employment for Cause, Employee's stock
options and any other equity awards based on Employer's securities, such as
restricted stock, restricted stock units, stock appreciation rights, performance
units, etc. shall, to the extent then vested and exercisable, remain vested and
exercisable in accordance with their terms.
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7.2. TERMINATION BY EMPLOYER WITHOUT CAUSE. Employer may terminate
Employee's employment without Cause, which termination shall take effect on the
effective date (determined under Section 16 of this Agreement) of written notice
of such termination to Employee. A termination by Employer in accordance with
this Section 7.2 shall not be deemed a breach of this Agreement. Upon any
termination of Employee's employment by Employer without Cause pursuant to this
Section 7.2, Employee shall be entitled to (i) a lump sum cash payment, payable
within ten (10) business days after the date of termination of Employee's
employment, equal to the sum of (A) any accrued but unpaid salary as of the date
of such termination, (B) any accrued but unpaid bonus due under Section 6.2 for
any annual period ended prior to the date of such termination and (C) the
minimum bonus under Section 6.2 for the annual period in which such termination
occurs, prorated through the date of such termination; (ii) such benefits, if
any, to which Employee and his dependents or beneficiaries may then be entitled
as a participant under the employee benefit plans referred to in Section 6.6;
(iii) immediate vesting of all of Employee's stock options and any other equity
awards based on Employer securities, such as restricted stock, restricted stock
units, stock appreciation rights, performance units, etc, all of which shall
remain exercisable for their full term; (iv) continuation of the life insurance
premium payments and medical insurance premium payments described in Section 6.6
(unless such medical insurance premium payments have been replaced by
participation in an Employer-sponsored medical benefit plan as provided herein)
through the expiration of the then current Term, but in no event for a period of
less than 24 months; (vi) continued participation, through the expiration of the
then current Term, but in no event for a period of less than 24 months, of
Employee and each of his dependents in any Employer-sponsored health plan at the
benefit level in effect from time to time and with COBRA benefits commencing
thereafter. In addition to the foregoing payments and continuation of benefits,
Employer shall pay Employee in a lump-sum within 10 days following the date of
termination of Employee's employment an amount equal to the sum of (x)
Employee's salary as provided in Section 6.1 and (y) the minimum bonus under
Section 6.2 that would otherwise be payable for the period (the "Severance
Period") commencing on the date of termination of Employee's employment and
ending on the later of (1) the expiration of the Term and (2) the second
anniversary of such termination date.
7.3. TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may terminate his
employment hereunder for "Good Reason," which shall mean any material breach by
Employer of the terms hereof that is not corrected by Employer within five days
after written notice by Employee to Employer, including, without limitation, (i)
the assignment to Employee of any duties inconsistent in any respect with his
position as Chief Executive Officer (including status, offices, titles,
reporting requirements, authority, duties or responsibilities); (ii) any failure
by Employer to comply with its compensation obligations under the New Employment
Agreement; or (iii) Employer's requiring Employee to be based at any office or
location other than in Los Angeles, California or within ten miles of the
current location of the Company's headquarters. If Employee terminates his
employment for Good Reason, subject to Employer's right to cure as set forth
above, the termination shall take effect on the effective date (determined
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under Section 16) of the written notice to Employer, and Employee shall be
entitled to the same payments and benefits, at the same times, described in
Section 7.2 for a termination by Employer without Cause.
7.4. TERMINATION BY EMPLOYEE WITHOUT GOOD REASON. Employee shall have
the right to voluntarily terminate his employment hereunder at any time without
Good Reason upon 30 days' written notice to Employer. A voluntary termination by
Employee in accordance with this Section 7.4 shall not be deemed a breach of
this Agreement. Upon any voluntary termination of employment by Employee without
Good Reason pursuant to this Section 7.4, Employee shall be entitled only to
such payments and benefits as those described in Section 7.1 for a termination
by Employer for Cause.
7.5. TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL. For purposes
of this Section 7.5, a "Change in Control" shall have the meaning described to
such term in Employer's 2000 Long-Term Incentive Plan. If a Change in Control
occurs during the Term, and if, during the Term and within two years after the
date on which the Change in Control occurs, Employee's employment is terminated
by Employer without Cause or by Employee for Good Reason, then Employee will be
entitled to the payments and benefits, at the same times, described in Section
7.2 for a termination by Employer without Cause. In addition, to the extent that
any payment or distribution of any type to or for Employee by Employer (which
for purposes of this Section 7.5 includes any parent, subsidiary or affiliate of
Employer), whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (including, without limitation, any
accelerated vesting of stock options or other equity awards based on Employer
stock granted pursuant to this Agreement or otherwise) (collectively, the "Total
Payments") is or will be subject to the excise tax ("Excise Tax") imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or
any successor to such Section), Employer shall pay to Employee, prior to the
time any Excise Tax is payable with respect to any of such Total Payments
(through withholding or otherwise), an additional amount (a "Gross-Up Payment")
that, after the imposition of all income, employment, excise and other taxes,
penalties and interest thereon, is equal to the sum of (i) the Excise Tax on
such Total Payments plus (ii) any penalty and interest assessments associated
with such Excise Tax. The determination of whether any portion of the Total
Payments is subject to an Excise Tax and, if so, the amount and time of any
Gross-Up Payment pursuant to this Section 7.5, shall be made by an independent
auditor (the "Auditor") jointly selected by Employee and Employer and paid by
Employer. If Employee and Employer cannot agree on the firm to serve as the
Auditor, then they shall each select an accounting firm and those two firms
shall jointly select the accounting firm to serve as the Auditor. Unless
Employee agrees otherwise in writing, the Auditor shall be a nationally
recognized United States public accounting firm that has not during the two
years preceding the date of its selection, acted in any way on behalf of
Employer. Employee and Employer shall cooperate with each other in connection
with any proceeding or claim relating to the existence or amount of any
liability for Excise Tax. All expenses relating to any such proceeding or claim
(including attorneys' fees and other expenses incurred by Employee in connection
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therewith) shall be paid by Employer promptly upon demand by Employee, and any
such payment shall be subject to a Gross-Up Payment under this Section 7.5 in
the event that Employee is subject to Excise Tax on it.
8. NO MITIGATION; NO OFFSET. Employee shall have no obligation to seek
other employment or to otherwise mitigate Employer's obligations to him arising
from the termination of his employment, and no amounts paid or payable to
Employee by Employer under this Agreement shall be subject to offset for any
remuneration to which Employee may become entitled from any other source after
his employment with Employer terminates, whether attributable to subsequent
employment, self-employment or otherwise.
9. FIRST OFFER. Employee acknowledges and agrees that a material inducement
to Employer to enter into the New Employment Agreement is the Employee's
expertise in, knowledge of and ability to identify acquisition candidates
within, the biotech, pharmaceutical and health care industries. Accordingly,
Employee agrees that Employee will provide, and will cause The Xxxxxxxxx Group
for so long as Employee is the principal owner of The Xxxxxxxxx Group to
provide, Employer's Board of Directors with the first opportunity to conduct or
take action with respect to any acquisition opportunity or any other potential
transaction identified by Employee or The Xxxxxxxxx Group within the biotech,
pharmaceutical or health care industries and that is within the scope of the
business plan adopted by the Employer's Board of Directors. Employee's
obligations under this Section 9 shall commence on the Effective Date and shall
continue while the New Employment Agreement is in effect.
10. CONFIDENTIALITY. While the New Employment Agreement is in effect and
for a period of five years thereafter, and except as otherwise required by law
or legal process and after reasonable notice to Employer and opportunity for
Employer to intervene, Employee shall hold and keep secret and confidential all
Trade Secrets and other confidential or proprietary information of Employer and
shall use such information only in the course of performing Employee's duties
hereunder; provided, however, that with respect to "trade secrets" (as defined
under applicable law), Employee's confidentiality obligations shall continue for
so long as they remain "trade secrets" under applicable law. Employee shall
maintain in trust all such "trade secret" or other confidential or proprietary
information, as Employer's property, including, but not limited to, all
documents concerning Employer's business, including Employee's work papers,
telephone directories, customer information and notes, and any and all copies
thereof in Employee's possession or under Employee's control. Upon expiration or
earlier termination of Employee's employment with Employer, for any reason, or
upon request by Employer, Employee shall deliver to Employer all such documents
belonging to Employer, including any and all copies in Employee's possession or
under Employee's control.
11. EQUITABLE REMEDIES; INJUNCTIVE RELIEF. Employee hereby acknowledges and
agrees that monetary damages are inadequate to fully compensate Employer for the
damages that would result from a breach or threatened breach of Sections 8 or 9
hereof
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and, accordingly, that Employer shall be entitled to equitable remedies,
including, without limitation, specific performance, temporary restraining
orders, and preliminary injunctions and permanent injunctions, to enforce such
Sections without the necessity of proving actual damages in connection
therewith. This provision shall not, however, diminish Employer's right to claim
and recover damages or enforce any other of its legal or equitable rights or
defenses.
12. SEVERABLE PROVISIONS. The provisions of the New Employment Agreement
are severable and if any one or more provisions is determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions, and any
partially unenforceable provisions to the extent enforceable, shall nevertheless
be binding and enforceable.
13. BINDING AGREEMENT. The New Employment Agreement shall inure to the
benefit of and shall be binding upon Employer, its successors and assigns and
Employee and his heirs and representatives. Neither party may assign the New
Employment Agreement without the prior written consent of the other party.
14. ENTIRE AGREEMENT. The New Employment Agreement, together with the
Original Employment Agreement, contains the entire agreement of the parties
relating to the subject matter hereof, and the parties hereto have made no
agreements, representations or warranties relating to the subject matter of the
New Employment Agreement or the Original Employment Agreement that are not set
forth otherwise in the Original Employment Agreement or herein. The New
Employment Agreement supersedes any and all prior agreements, written or oral,
between Employee and Employer relating to the subject matter hereof. Any such
prior agreements are hereby terminated and of no further effect and Employee, by
the execution hereof, agrees that any compensation provided for under any such
prior agreements is specifically superseded and replaced by the provisions of
this Agreement. No modification of this Agreement shall be valid unless made in
writing and signed by the parties hereto and unless such writing is made by an
executive officer of Employer (other than Employee) after approval by Employer's
Board of Directors. The parties hereto agree that in no event shall an oral
modification of this Agreement be enforceable or valid.
15. GOVERNING LAW. This Agreement is and shall be governed and construed in
accordance with the laws of the State of California without giving effect to
California's choice of law rules.
16. NOTICE. All notices and other communications under this Agreement shall
be in writing and mailed, telecopied or delivered by hand or by a nationally
recognized courier service guaranteeing overnight delivery to a party at the
following address (or to such other address as such party may have specified by
notice given to the other party pursuant to this provision and shall be
effective when personally delivered or two (2) business days after being mailed:
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If to Employer:
CytRx Corporation
00000 Xxx Xxxxxxx Xxxxxxxxx,
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Corporate Secretary
With a copy to:
Xxxxxxx X. Xxxxxxxxx
Xxxx & Xxxxx Professional Corporation
0000 Xxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
If to Employee:
Xxxxxx X. Xxxxxxxxx
The Xxxxxxxxx Group
00000 Xxx Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxx Xxxxxxx
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
17. ATTORNEYS' FEES. Employee acknowledges that he has been represented in
connection with this Agreement by O'Melveny & Xxxxx LLP. Employer shall
reimburse Employee for up to $6,000 of Employee's legal fees incurred in
connection with the preparation of this Agreement.
18. ARBITRATION. The parties agree if any controversy or claim shall arise
out of this Agreement or the breach hereof (other than claims (a) for equitable
relief, including specific performance, injunctive relief or temporary
restraining orders or (b) enforcing this Section 16 or an arbitration award
granted in accordance herewith), and either party shall request that the matter
be settled by arbitration the matter shall be settled exclusively by final and
binding arbitration before JAMS (or its successor pursuant to the United States
Arbitration Act, 9 U.S.C. Section 1 et seq.) in accordance
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with the provisions of JAMS' Streamlined Arbitration Rules and Procedures in
effect at such time, by a single arbitrator, if the parties shall agree upon
one, or by one arbitrator appointee by each party and a third arbitrator
appointed by the other arbitrators. In case of any failure of a party to make an
appointment referred to above within two (2) weeks after written notice of
controversy, such appointment shall be made by JAMS. All arbitration proceedings
shall be held in the City of Los Angeles, and each party agrees to comply in all
respects with any award made in such proceeding and to the entry of a judgment
in any jurisdiction upon any award rendered in such proceeding. All costs and
expenses of arbitration (including costs of preparation therefore and reasonable
attorneys' fees and disbursements of counsel incurred in connection therewith)
shall be borne by the respective party incurring such costs and expenses.
Notwithstanding the foregoing, following a Change in Control, all reasonable
costs and expenses (including costs of preparation therefore and attorneys' fees
and disbursements of counsel) incurred by Employee pursuant to this section
shall be paid on behalf of or reimbursed to Employee promptly by Employer;
provided, however, that Employee shall repay such amounts to Employer in any
contest brought by Employee if the arbitrator determines that Employer did not
breach this Agreement and Employee's claim was not made in good faith.
19. DEATH OR DISABILITY. In the event of Employee's death or "Disability"
(as defined below) during the Term, the Employee's employment shall
automatically cease and terminate as of the date of Employee's death or the
effective date of Employer's written notice to Employee of its decision to
terminate his employment by reason of his Disability, as the case may be, and
Employee shall be entitled to the same payments and benefits, at the same times,
as described in Section 7.2 for a termination of employment by Employer without
Cause. Likewise, any stock options and other equity awards held by Employee at
the time of his death or Disability shall immediately vest in full upon such
termination and shall remain exercisable thereafter for the full term of such
options and equity rights. Notwithstanding the foregoing or any provision of
Section 7.2, Employer's obligation to pay Employee the salary and bonus called
for in Section 7.2 during the Severance Period following termination of his
employment by reason of his Disability shall be subject to offset and shall be
reduced by any and all amounts paid to Employee under any disability insurance
policy paid or provided for by Employer as provided in Section 6.6 or otherwise.
For purposes of this Agreement, the term "Disability" means the inability of
Employee to perform substantially all of his duties hereunder for any period of
at least 120 consecutive days by reason of any physical or mental incapacity.
20. SURVIVAL. In the event the New Employment Agreement expires after its
Term or is terminated, the provisions of Sections 7, 10, 11, 12, 15, 16, 18, 19
and 22 shall survive.
21. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same agreement.
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22. INDEMNIFICATION.
22.1. EMPLOYER INDEMNITY. If Employee is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of Employer or any
affiliate of Employer or was serving at the request of Employer or any affiliate
of Employer as a director, officer, member, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether or not the basis of such
Proceeding is Employee's alleged action in an official capacity while serving as
a director, officer, member, employee or agent, then Employer will indemnify
Employee and hold him harmless to the fullest extent legally permitted or
authorized by Employer's certificate of incorporation or bylaws or resolution of
the Board of Directors to the extent not inconsistent with the laws of the State
of Delaware, against all cost, expense, liability and loss (including, without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
Employee in connection therewith, except to the extent attributable to
Employee's gross negligence or fraud), and such indemnification shall continue
as to Employee even if he has ceased to be a director, member, officer, employee
or agent of Employer or affiliate and shall inure to the benefit of Employee's
heirs, executors and administrators. Employer will advance to Employee all
reasonable costs and expenses to be incurred by him in connection with a
Proceeding within 20 days after receipt by Employer of a written request for
such advance. Such request shall include an undertaking by Employee to repay the
amount of such advance if it shall ultimately be determined that he is not
entitled to be indemnified against such costs and expenses. The provisions of
this subsection 22.1 shall not be deemed exclusive of any other rights of
indemnification to which Employee may be entitled or which may be granted to him
and shall be in addition to any rights of indemnification to which he may be
entitled under any policy of insurance.
22.2. NO PRESUMPTION REGARDING STANDARD OF CONDUCT. Neither the failure
of Employer (including its Board of Directors, independent legal counsel or
stockholders) to have made a determination prior to the commencement of any
proceeding concerning payment of amounts claimed by Employee under the preceding
subsection 22.1 of this Section 22 that indemnification of Employee is proper
because he has met the applicable standard of conduct, nor a determination by
Employer (including its Board of Directors, independent legal counsel or
stockholders) that Employee has not met such applicable standers of conduct,
shall create a presumption the Employer has not met the applicable standard of
conduct.
22.3. LIABILITY INSURANCE. Employer will continue and maintain a
directors and officers liability insurance policy covering Employee to the
extent Employer provides such coverage for its other senior executive officers.
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IN WITNESS WHEREOF, this Agreement is executed as of the day and year first
above written.
"EMPLOYER"
CytRx Corporation,
a Delaware corporation
By: /s/ Xxx Xxxx
-------------------------------
Name: Xxx Xxxx, Ph.D.
Title: Chairman of the Board
"EMPLOYEE"
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxxx
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