EXECUTION COPY
GENTA INCORPORATED
Xxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Dated as of December 1, 2002
Xx. Xxxxxxx X. Xxxxxxx, Xx.
Xxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Dear Xx. Xxxxxxx:
We are pleased that you are willing to continue to serve as Chief
Executive Officer, and Chairman of the Board of Directors (the "Board"), of
Genta Incorporated, a Delaware corporation (together with its successors and
assigns, the "Company"). Accordingly, we would like to offer you continued
employment on the terms set forth in this letter agreement (this "Agreement"),
which upon countersignature by you shall become a binding agreement between you
and the Company (each, a "Party").
1. Employment; Duties.
(a) As of December 1, 2002 (the "Effective Date"), the Company
hereby engages and employs you, and you hereby accept engagement and employment,
as an employee of the Company for the duration of the "Term" (as defined in
Section 2 below).
(b) During the Term, you shall serve as Chief Executive Officer of
the Company and (subject to re-election to the Board by the shareholders of the
Company) as a member of, and Chairman of, the Board; shall have all authorities,
duties and responsibilities customarily exercised by an individual serving in
those positions at an entity of the size and nature of the Company; shall be
assigned no duties or responsibilities that are materially inconsistent with, or
that materially impair your ability to discharge, the foregoing duties and
responsibilities; and shall, in your capacity as Chief Executive Officer of the
Company, report solely and directly to the Board. During the Term, your
principal office, and principal place of employment, shall be at the Company's
principal executive offices, but you shall perform your duties hereunder at such
places as shall be necessary according to the needs, business and opportunities
of the Company; provided that you acknowledge and agree that the performance of
your duties hereunder may require significant domestic and international travel
by you.
(c) During the Term, you shall devote substantially all of your
business time and efforts to the proper discharge of your duties hereunder. You
shall not, directly or indirectly, on a full-time, part-time, temporary,
consulting or any other basis, work for, or provide services to, any other
person, firm, corporation, partnership, joint venture or other business entity
that would conflict, either directly or indirectly, with your duties hereunder,
without the prior written consent of a representative of the Company
specifically authorized by the Board or by the Compensation Committee of the
Board (the "Committee") to give such consent, provided, however, that nothing
shall preclude you from (i) serving on the boards of a reasonable number of
trade associations and/or charitable organizations, on the boards of any
for-profit enterprises on which you are serving as of the Effective Date, and on
the boards of such additional for-profit enterprises as the Board may
specifically approve (which approval shall not be unreasonably withheld or
delayed), (ii) engaging in charitable activities and community affairs, and
(iii) managing your personal investments and affairs; so long as such activities
do not, either individually or in the aggregate, interfere with your ability to
perform, or otherwise conflict with, your duties hereunder.
2. Term. The Company hereby employs you under this Agreement, and you
hereby accept such employment, for the Term. The Term shall commence as of the
Effective Date and shall end on December 31, 2005; provided, however, that the
Term shall thereafter be automatically and indefinitely extended for additional
one-year periods unless, (i) at least six months prior to the then-scheduled
date of expiration of the Term (the "Scheduled Expiration Date"), the Company
gives notice to you that it is electing not to so extend the Term or you give
notice to the Company that you are electing not to so extend the Term, provided
that the Company shall be deemed to have timely given you notice of
non-extension if it gives you such notice within 45 days after receiving notice
from you that the Scheduled Expiration Date is to occur (such notice to be
provided by you no earlier than eight months prior to the Scheduled Expiration
Date), or (ii) you fail to notify the Company of the Scheduled Expiration Date
at least 90 days prior to the Scheduled Expiration Date, in which event the Term
shall end on the Scheduled Expiration Date, and shall be deemed for all purposes
to have ended pursuant to timely notice of non-extension from you to the Company
pursuant to clause (i), unless the Parties agree otherwise in writing.
Notwithstanding the foregoing, the Term may be earlier terminated in strict
accordance with the provisions of Section 9.
3. Compensation and Benefits.
(a) Base Salary. Commencing as of the Effective Date, you shall
receive a base salary ("Base Salary") of $400,000 per annum during the Term,
payable in accordance with the Company's standard payroll practices but no less
frequently than monthly. Your Base Salary shall be reviewed no less frequently
than annually during the Term (after calendar year 2003) for discretionary
increase, effective January 1 of the year of increase, and shall in any event be
increased as of January 1, 2004 and as of each subsequent January 1 during the
Term by a percentage equal to at least the percentage increase in the CPI (All
Urban Consumers) for the calendar year preceding the year of increase. Your Base
Salary shall not be decreased at any time, or for any purpose, during the Term
(including, without limitation, for the purpose of determining benefits under
Section 10) without your prior written consent.
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(b) Annual Bonus. You shall receive a cash bonus (a "Bonus") with
respect to each calendar year (after calendar year 2002) that ends during the
Term, ranging from 0% to 60% of you Base Salary, to the extent that the Company
attains goals and objectives for such year that have been mutually agreed upon
by you and the Committee, in accordance with this Section 3(b). You and the
Committee shall use your best reasonable efforts to ensure that such goals and
objectives are agreed upon prior to March 30 (June 30 for 2003) of the calendar
year to which a Bonus relates. Except to the extent otherwise agreed by you and
the Committee, your potential Bonus shall range from 0% of your annualized Base
Salary to 60% of your annualized Base Salary, with a "target" Bonus of 40% of
your annualized Base Salary if agreed-upon goals and objectives are achieved for
the calendar year. Except to the extent otherwise agreed by you and the
Committee, all goals and objectives will represent significant value creation
activities for the Company and "stretch target" goals and objectives will
represent extraordinary performance and achievement. "Stretch target"
performance against the agreed-upon goals and objectives for such year shall
entitle you to a Bonus for such year equal to at least 60% of your annualized
Base Salary for such year. Lesser amounts may be awarded for performance below
"target", and intermediate amounts may be awarded for performance between
"target" and "stretch target". The extent to which the agreed-upon goals and
objectives are attained shall be determined by the Committee reasonably and in
good faith, in consultation with you, as soon as reasonably practicable after
the end of the calendar year to which the Bonus at issue relates. The Bonus
earned by you for a calendar year shall be paid to you promptly after its amount
has been determined, and in no event later than the earlier of (x) the date that
other senior executives of the Company receive their annual bonuses for such
year and (y) March 30 of the year following such year. Your Bonus shall be no
less than $75,000 for calendar year 2003.
(c) Withholding. The Company shall withhold all applicable Federal,
state and local taxes, social security and workers' compensation contributions
and other amounts as may be required by law or agreed upon by the Parties with
respect to compensation payable to you pursuant to this Agreement.
(d) Initial Option Grant. As of the date you execute this Agreement,
the Company shall grant you an option to acquire 1,000,000 shares of its Common
Stock, at an exercise price per share equal to the Fair Market Value of a share
of such Common Stock on such date, and otherwise on the terms and conditions set
forth in the Stock Option Agreement that is attached hereto as Exhibit A, which
Stock Option Agreement shall be fully executed by the Parties promptly upon full
execution of this Agreement. For purposes of this Agreement, "Fair Market Value"
shall be determined as provided in the Company's 1998 Stock Incentive Plan, as
amended through the Effective Date (the "1998 Plan").
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(e) Annual Stock Option Awards. Each calendar year that commences
during the Term, you shall be granted, no later than the date that your Bonus
(if any) for the prior calendar year is due to be paid pursuant to Section 3(b)
and provided that you remain employed hereunder on the date of grant, a stock
option award for the purchase of a number of shares of the Company's Common
Stock (with the number and type of securities equitably adjusted for stock
splits, reverse stock splits, stock reclassifications, mergers,
recapitalizations, etc., that occur between the Effective Date and the date of
grant of the stock option) equal to at least 150,000 multiplied by a fraction,
not greater than 3/2 (one and one half), whose numerator equals the dollar
amount of your Bonus for the prior calendar year and whose denominator equals
40% of your Base Salary for the prior calendar year. For the sake of clarity,
the range of shares required to be subject to each stock option award granted
pursuant to this Section 3(e) (a "Section 3(e) Stock Option") shall be 0 to
225,000. Each Section 3(e) Stock Option shall have a ten-year term; shall have
an exercise price per share equal to Fair Market Value on the date of grant;
shall fully vest, and become fully exercisable, upon the occurrence of a
"Trigger Event" (as such term is defined in Section 2(c) of the Stock Option
Agreement that is attached hereto as Exhibit A); and shall be evidenced by a
stock option agreement that: (x) provides for treatment as an Incentive Stock
Option to the extent you so elect prior to the date of grant and to the extent
possible consistent with the terms of this Agreement and of your other
then-outstanding stock option grants, (y) otherwise contains terms and
provisions no less favorable to you in any respect than those apply to
corresponding grants to other senior executives of the Company, and (z) unless
the Committee specifically determines otherwise, the terms and provisions of
each annual grant shall be identical to those applying to corresponding grants
to other senior executives of the Company. All securities delivered on any
exercise of any stock option granted pursuant to this Section 3(e) or Section
3(f) below shall be fully registered, and publicly tradeable, to the extent that
any other securities of the same class are then fully registered and publicly
tradeable; provided, however, that in no event shall the Company be required to
prepare and file a Form S-3 reoffer prospectus with respect to any shares that
you receive in connection with your exercise of any stock option granted
pursuant to this Section 3(e) or Section 3(f).
(f) Trigger Event Stock Option Award. In addition, if a Trigger
Event occurs during the Term or within 12 months thereafter, you shall be
entitled to receive, as promptly as reasonably practicable following the
occurrence of such Trigger Event, any Section 3(e) Stock Option that you would
have been entitled to receive in respect of the calendar year in which such
Trigger Event occurs (assuming continued employment hereunder through the end of
such calendar year and attainment of "target" levels of performance on all
annual Bonus goals and objectives for such year). Any such stock option shall:
(i) have an exercise price equal to the average closing price of the Company's
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Common Stock for the sixty-day period ending immediately prior to the day that
such Trigger Event occurs; (ii) be fully vested, and fully exercisable, upon
grant; (iii) otherwise be on terms and conditions no less favorable to you than
the terms and conditions that would have applied if the grant had been made
under Section 3(e) above; and (iv) be granted in lieu of the Section 3(e) Stock
Option that you would otherwise have been entitled to receive in respect of the
calendar year in question.
(g) Restrictions on Sale of Option Stock.
(i) Unless otherwise agreed to in writing by a representative
of the Company expressly authorized to act by the Board or the Committee, you
agree not to sell on any single day, after the Term, a number of Covered Option
Shares that exceeds 3% of the trading volume of the Common Stock of the Company
on the immediately preceding trading day as reported by the Nasdaq National
Market or on such other exchange or market system which provides the primary
trading market for the Common Stock of the Company at the applicable time (a
"Public Market"). For purposes of this Agreement, the term "Covered Option
Share" shall mean any share of Common Stock of the Company acquired on any
exercise of the stock option granted pursuant to Section 3(d) above.
(ii) Except as provided in Section 3(g)(i) above or as
otherwise agreed to in writing by a representative of the Company expressly
authorized to act by the Board or the Committee, you agree that you will not,
either during or after the Term: (x) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any Covered Option Share or any securities
convertible into or exercisable or exchangeable for any Covered Option Share or
(y) enter into any swap or other arrangement that transfers to another Person
(as defined in Section 3(q) below), in whole or in part, any of the economic
consequences of ownership of any Covered Option Share, whether any such
transaction described in clause (x) or (y) above is to be settled by delivery of
Covered Option Shares or such other securities, in cash or otherwise; provided
that this Section 3(g)(i) shall not apply to any pledge of Covered Option Shares
in connection with payment of the purchase price of Covered Option Shares
pursuant to any exercise of the stock option granted pursuant to Sections 3(d)
above, so long as the pledgee agrees that no sale of Covered Option Shares by
such pledgee on any day, when added to sales of Covered Option Shares by you on
such day, may exceed the aggregate numerical limit imposed by Section 3(g)(i)
above.
(iii) All sales of Covered Option Shares by you, and by any
pledgee referred to in the proviso to Section 3(g)(ii), shall be executed
through Xxxxxxx Xxxxx or such other broker as the Company may from time to time
reasonably designate on written notice to you.
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(iv) The restrictions contained in Sections 3(g)(i), 3(g)(ii)
and 3(g)(iii) shall expire on the earlier of the second anniversary of the
"Termination Date" (as defined in Section 10(a)(i) below) and ten trading days
prior to the date that Common Stock of the Company ceases to be traded on any
Public Market.
(h) Additional Awards. In addition to the minimum cash and equity
awards required under Sections 3(b) through 3(f) above, the Company may from
time to time grant you additional cash, stock option, equity and/or other
long-term incentive awards, in the sole discretion of the Board or the
Committee.
(i) Business Expenses. The Company shall reimburse you for all
travel, business entertainment and other business expenses reasonably incurred
by you in connection with the performance of your duties under this Agreement.
Such reimbursement shall be made by the Company promptly upon submission by you
of appropriate documentation in accordance with the Company's standard
procedures.
(j) Vacation. You shall be entitled during the Term to four weeks'
vacation per calendar year. You may "carry over" up to four weeks of accrued but
unused vacation from year-to-year.
(k) Supplemental Life Insurance. During the Term and in addition to
any life insurance coverage provided under Section 3(m) below, the Company shall
pay the premiums on a term life insurance policy in your name and on your behalf
in a principal amount of not less than $3,250,000 and with the proceeds payable
as you direct; provided that such premiums do not exceed $20,000 annually, in
which event the Company shall purchase as much coverage for you as it can
acquire for $20,000 annually.
(l) Supplemental Disability Insurance. During the Term and in
addition to any disability insurance coverage provided under Section 3(m) below,
the Company shall provide you with as much disability insurance coverage,
acceptable to you, as it can obtain at a cost to the Company (beyond costs
incurred by the Company under Section 3(m) below) of $10,000 annually.
(m) Employee Benefits. During the Term, you shall be entitled to
participate in any and all medical insurance, dental insurance, group health,
disability insurance, life insurance, retirement, pension, savings, income
deferral, fringe benefit, and other benefit and perquisite plans, programs and
arrangements that are made generally available to senior executives of the
Company, in each case on terms and conditions no less favorable to you than
those applying to other senior executives of the Company generally. For
avoidance of doubt, the Company, in its sole discretion, may at any time amend
or terminate any such plan, program or arrangement.
(n) D&O Insurance. A directors' and officers' liability insurance
policy (or policies) shall be kept in place, during the Term and for six years
thereafter, providing coverage that is no less favorable to you in any respect
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(including, without limitation, with respect to scope, exclusions, amounts and
deductibles) than the coverage then being provided to any other present or
former officer or director of the Company.
(o) Automobile. During the Term, the Company shall provide you with
a car or car allowance in an amount not to exceed $500 per month, which
allowance shall be paid in appropriate pro rata amounts at the same time Base
Salary is paid unless the Company pays all related expenses directly.
(p) Medical Malpractice Insurance. During the Term, the Company
shall pay the premiums on a medical malpractice insurance policy in your name
and on your behalf in the principal amount of not less than $1,000,000; provided
that such premiums do not exceed $20,000 annually, in which event the Company
shall provide you with as much medical malpractice insurance coverage,
acceptable to you, as it can obtain at a cost to the Company of $20,000
annually.
(q) Indemnification. If you are made a party, are threatened to be
made a party, or reasonably anticipate being made a party, to any Proceeding by
reason of the fact that you are or were a director, officer, member, employee,
agent, manager, trustee, consultant or representative of the Company or any of
its Affiliates or are or were serving at the request of the Company or any of
its Affiliates, or in connection with your service hereunder, as a director,
officer, member, employee, agent, manager, trustee, consultant or representative
of another Person, or if any Claim is made, is threatened to be made, or is
reasonably anticipated to be made, that arises out of or relates to your service
in any of the foregoing capacities, then you shall promptly be indemnified and
held harmless to the fullest extent permitted or authorized by the Certificate
of Incorporation or Bylaws of the Company, or if greater, by applicable law,
against any and all costs, expenses, liabilities and losses (including, without
limitation, attorneys' and other professional fees and charges, judgments,
interest, expenses of investigation, penalties, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) incurred or suffered by
you in connection therewith or in connection with seeking to enforce your rights
under this Section 3(q), and such indemnification shall continue even if you
have ceased to be a director, officer, member, employee, agent, manager,
trustee, consultant or representative of the Company or other Person and shall
inure to the benefit of your heirs, executors and administrators. You shall be
entitled to prompt advancement of any and all costs and expenses (including,
without limitation, attorneys' and other professional fees and charges) incurred
by you in connection with any such Proceeding or Claim, or in connection with
seeking to enforce your rights under this Section 3(q), any such advancement to
be made within 15 days after you give written notice, supported by reasonable
documentation, requesting such advancement. Such notice shall include, to the
extent required by applicable law, an undertaking by you to repay the amount
advanced if you are ultimately determined not to be entitled to indemnification
against such costs and expenses. Nothing in this Agreement shall operate to
limit or extinguish any right to indemnification, advancement of expenses, or
contribution that you would otherwise have (including, without limitation, by
agreement or under applicable law or under the Company's Certificate of
Incorporation). For purposes of this Agreement, the following terms shall have
the following meanings: "Affiliate" of a Person shall mean any Person that
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directly or indirectly controls, is controlled by, or is under common control
with, such Person; "Claim" shall mean any claim, demand, request, investigation,
dispute, controversy, threat, discovery request, or request for testimony or
information; "Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, estate, board, committee,
agency, body, employee benefit plan, or other person or entity; and "Proceeding"
shall mean any threatened or actual action, suit or proceeding, whether civil,
criminal, administrative, investigative, appellate, formal, informal or other.
Notwithstanding the above, this Section 3(q) shall not be effective unless and
until approved by the Board, which approval the Committee has agreed to promptly
seek.
(r) Golden Parachute Tax.
(i) If the aggregate of all amounts and benefits due to you,
under this Agreement or any other plan, program, agreement or arrangement of the
Company or any of its Affiliates, which, if received by you in full, would
constitute "parachute payments" as such term is defined in and under Section
280G of the Code (collectively, "Change in Control Benefits"), reduced by all
Federal, state and local taxes applicable thereto, including the excise tax
imposed pursuant to Section 4999 of the Code, is less than the amount you would
receive, after taxes, if you received aggregate Change in Control Benefits equal
to only three times your "base amount", as defined in and determined under
Section 280G of the Code, less $1.00, then such cash Change in Control Benefits
as you shall select shall be reduced or eliminated to the extent necessary so
that the Change in Control Benefits received by you will not constitute
parachute payments (provided that reduction in such cash Change in Control
Benefits can achieve this objective). The determinations with respect to this
Section 3(r)(i) shall be made by an independent auditor (the "Auditor") paid by
the Company. The Auditor shall be the Company's regular independent auditor
unless you reasonably object to the use of that firm, in which event the Auditor
shall be a nationally-recognized United States public accounting firm chosen by
the Company and approved by you (which approval shall not be unreasonably
withheld or delayed). For purposes of this Agreement, the term "Code" shall mean
the Internal Revenue Code of 1986, as amended, and any reference to a particular
section of the Code shall include any provision that modifies, replaces or
supersedes such section.
(ii) It is possible that after the determinations and
selections made pursuant to Section 3(r)(i) you will receive Change in Control
Benefits that are, in the aggregate, either more or less than the limitations
provided in Section 3(r)(i) above (hereafter referred to as an "Excess Payment"
or "Underpayment", respectively). If it is established, pursuant to a final
determination of a court or an Internal Revenue Service proceeding that has been
finally and conclusively resolved, that an Excess Payment has been made, then
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you shall refund the Excess Payment to the Company promptly on demand, together
with an additional payment in an amount equal to the product obtained by
multiplying the Excess Payment times the applicable annual federal rate (as
determined in and under Section 1274(d) of the Code) times a fraction whose
numerator is the number of days elapsed from the date of your receipt of such
Excess Payment through the date of such refund and whose denominator is 365. In
the event that it is determined (x) by arbitration under Section 12 below, (y)
by a court of competent jurisdiction, or (z) by the Auditor upon request by you
or the Company, that an Underpayment has occurred, the Company shall pay an
amount equal to the Underpayment to you within 10 days of such determination
together with an additional payment in an amount equal to the product obtained
by multiplying the Underpayment times the applicable annual federal rate (as
determined in and under Section 1274(d) of the Code) times a fraction whose
numerator is the number of days elapsed from the date of the Underpayment
through the date of such payment and whose denominator is 365.
4. Representations.
(a) The Company's Representations. The Company represents and
warrants that: (i) it is fully authorized by action of the Board and the
Committee (and of any other Person whose action is required) to enter into this
Agreement and to perform its obligations under it; (ii) the execution, delivery
and performance of this Agreement by it does not violate any applicable law,
regulation, order, judgment or decree or any agreement, arrangement, plan or
corporate governance document to which it is a party or by which it is bound;
and (iii) upon the execution and delivery of this Agreement by the Parties, this
Agreement shall be a valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
(b) Your Representations. You represent and warrant that: (i)
delivery and performance of this Agreement by you does not violate any
applicable law, regulation, order, judgment or decree or any agreement to which
you are a party or by which you are bound; and (ii) upon the execution and
delivery of this Agreement by the Parties, this Agreement shall be a valid and
binding obligation of you, enforceable against you in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
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5. Non-competition and Non-solicitation.
(a) You understand and recognize that your services to the Company
are special and unique and you agree that, during the Term, and, except as
provided below, for two years thereafter, you shall not, other than in
connection with performing services for the Company (or any of its Affiliates)
or with the prior written consent of a representative of the Company
specifically authorized by the Board or the Committee to give such consent,
directly or indirectly on behalf of yourself or any Person, enter into, or
engage in, any business that competes, or is actively planning to compete,
directly and materially with the Company with respect to any technology or
service of, or any product manufactured or distributed by, the Company or in
which the Company has intellectual property rights (except as provided below, a
"Conflicting Field"), either as an individual for your own account, or as a
partner, joint venturer, executive, agent, consultant, salesperson, officer,
director or shareholder of such a Person (a "Competitor"); provided, however,
that: (i) following any termination of your employment hereunder, "Conflicting
Field" shall refer only to the field of using antisense technology as therapy
for cancer as its primary business; (ii) subject to the provisions of Section
1(c) above, nothing in this Agreement shall preclude you from accepting
employment with, or providing services for, any Person that competes, or is
actively planning to compete, with the Company in a Conflicting Field so long as
(x) you work solely in a subsidiary, division, or other distinct unit of such
Person that carries on a bona fide business that does not compete, and is not
actively planning to compete, with the Company in a Conflicting Field or (y) you
serve as a member of a board of directors (and not as an employee) and your
activities otherwise do not involve competition with the Company in a
Conflicting Field, either directly or indirectly; and (iii) nothing in this
Agreement shall preclude you from holding five percent (5%) or less of the
equity interests of any publicly-traded entity, calculated on a fully diluted
basis. For purposes of this Section 5 (other than Section 5(c)), the term
"Company" shall be deemed to include, where appropriate, all direct and indirect
subsidiaries of the Company.
(b) In further consideration of the payments and benefits to be
provided to you pursuant to this Agreement (including, without limitation,
pursuant to Sections 3 and 10 hereof), you agree that, during the Term and for
two years thereafter, but subject to Sections 5(e) and 5(f) below, you shall
not, other than in connection with performing services for the Company or any of
its Affiliates or with the prior written consent of a representative of the
Company specifically authorized by the Board or the Committee to give such
consent:
(i) directly or indirectly take any action, or attempt to take
any action, which is intended to, or should reasonably be foreseen by you to,
induce a material breach of any material contract or agreement known to you
between the Company and any of its licensors, licensees, clients, customers,
vendors, suppliers, agents, consultants, employees (whether or not such
employees are "at will" employees) or any other Person with whom the Company has
an agreement (each, a "Covered Party");
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(ii) directly or indirectly solicit or attempt to solicit any
Covered Party to terminate his, her or its relationship with the Company in
breach of any material contract or agreement with the Company known to you;
(iii) directly or indirectly solicit or attempt to solicit any
individual known by you to be an employee or consultant of the Company to
instead become an employee, agent, consultant, representative or advisor of any
other Person; or
(iv) directly or indirectly persuade, or seek to persuade, any
customer of or supplier to the Company to cease to do business with the Company
or to reduce the amount of business which such customer or supplier has done or
contemplates doing with the Company, whether or not the relationship between the
Company and such customer or supplier was originally established in whole or in
part through your efforts.
(c) During the Term and for two years thereafter, you agree that (i)
upon becoming employed by a Competitor, or by a subsidiary, division or other
business unit of a Competitor, you will promptly provide notice to the Company
of such employment; and (ii) upon the earlier of your (x) negotiating with any
Competitor concerning the possible employment of you by such Competitor, (y)
receiving an offer of employment from any Competitor, and (z) becoming employed
by any Competitor, you will promptly provide copies of Sections 5, 6, 7 and 8 of
this Agreement to such Competitor. You further agree that the Company may,
during such period, provide notice to any Competitor by which you have become
employed, or with which you are negotiating to become employed, of your
obligations under this Agreement, including (without limitation) your
obligations under Sections 5, 6 and 7 hereof.
(d) You understand that the provisions of this Section 5 may limit
your ability to earn a livelihood in a business similar to the business of the
Company but nevertheless agree and hereby acknowledge that the consideration
provided under this Agreement, including any compensation or benefits provided
under Sections 3 and 10 hereof, is sufficient to justify the restrictions
contained in the provisions of this Section 5. In consideration thereof and in
light of your education, skills and abilities, you agree that you will not
assert in any forum that such provisions prevent you from earning a living or
otherwise are void or unenforceable or should be held void or unenforceable.
(e) Nothing in Section 5(b) above shall preclude any Person with
whom you become associated from accepting offers from individuals employed by
the Company to be employed by such Person; provided that such offers were not
solicited, or otherwise encouraged, by you, either directly or indirectly.
(f) The provisions of this Section 5 shall be null and void in the
event that, after the Term, the Company or any of its Affiliates materially
breaches any of their material obligations to you, under Section 10 or
otherwise, which breach is not fully cured on fifteen days' notice from you to
the Company requesting cure.
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6. Ownership of Proprietary Information.
(a) You confirm and agree that all proprietary information relating
to the Company's business that has been created by, discovered by, developed by,
learned by, or made known to, the Company, or assigned, licensed or otherwise
conveyed to the Company, from the beginning of time through the end of the Term
(including, without limitation, proprietary information relating to the
Company's business created by, discovered by, developed by, learned by, reduced
to practice by or made known to the Company, or to you, either alone or jointly
with others, during your employment with the Company, and proprietary
information relating to the Company's customers, clients, suppliers, vendors,
consultants, licensors and licensees) has been, is and shall be the sole
property of the Company, and the Company has been, is and shall be the sole
owner of all proprietary designs, ideas, patents, patent applications,
copyrights, copyright applications and other rights in connection with such
proprietary information, including but not limited to the right to make
application for statutory protection of any kind with respect to such
proprietary information in any country. All of the aforementioned information is
hereinafter called "Proprietary Information" (and shall be deemed Proprietary
Information regardless of whether or not the Proprietary Information is
patentable or copyrightable) except to the extent otherwise provided in Section
6(c) below. By way of illustration, but not limitation, Proprietary Information
includes, to the extent proprietary to the Company and except to the extent
otherwise provided in Section 6(c) below, trade secrets, processes, discoveries,
structures, works of authorship, copyrightable works, trademarks, copyrights,
formulas, data, data structures, know-how, show-how, improvements, information
relating to products (both current and under development), services and
technologies, product concepts, specifications, techniques, information or
statistics contained in, or relating to, promotion or marketing plans and
programs, strategies, forecasts, blueprints, sketches, records, notes, devices,
drawings, customer lists, continuation applications of any kind, trademark
applications and information about the Company's employees and/or consultants
(including, without limitation, the compensation, job responsibilities and job
performance of such employees and/or consultants) and confidential business
information of the Company or any of its clients, consultants, suppliers,
customers, vendors, licensors, licensees and other third parties. For purposes
of this Section 6(a), and of Section 6(b) and 6(c) below, the term "Company"
shall be deemed to include, as appropriate, all of the Company's Affiliates.
(b) You agree that the results of all work and tasks performed by
you for or on behalf of the Company ("Works") are owned by the Company and, to
the extent permitted by law, shall be "works made for hire" as that term is
defined in the United States Copyright Act (17 U.S.C. Section 101). The Company
shall therefore be deemed to be the sole owner author and owner of any and all
right, title and interest in any Works, including, without limitation, all
intellectual property rights therein. You hereby assign to the Company all
right, title and interest you may have or acquire in any Works.
12
(c) Notwithstanding the foregoing, Proprietary Information shall not
include: (i) information in the public domain not as a result of any breach of
this Agreement or of any duty owed by you to the Company or any other Person;
(ii) information lawfully in your possession prior to the commencement of your
employment with the Company and not disclosed to you by the Company; or (iii)
information disclosed to you without restriction by a third party who had the
right to disclose such information to you.
(d) It is understood that no patent, copyright, trademark, or other
proprietary right or license is granted to you under this Agreement. Any
disclosure of Proprietary Information, and any materials which may accompany any
such disclosure, in the course of your employment under this Agreement shall not
result in the grant to you of any proprietary rights, express or implied, of any
kind as against the Company.
(e) During the Term and thereafter, you agree that you will, upon
reasonable request by the Company, promptly disclose to the Company, or any
Person reasonably designated by the Company, all Proprietary Information that
you know or possess and that has been developed, created, made, conceived,
reduced to practice or learned by the Company, any Affiliate of the Company, or
you, either alone or jointly with others, during the Term and is not otherwise
known to the Company's officers and directors.
(f) Any assignment of copyright under this Agreement includes all
rights of paternity, integrity, disclosure and withdrawal and other rights
relating thereto that may be known as or referred to as "moral rights"
(collectively, "Moral Rights"). To the extent such Moral Rights cannot be
assigned under applicable law and to the extent the following is allowed by the
laws in the various countries where such Moral Rights exist, you hereby waive
such Moral Rights and consent to any action of the Company that would violate
such Moral Rights in the absence of such consent. You agree to confirm any such
waivers and consents from time to time as requested by the Company.
(g) You further agree to assist the Company, upon reasonable request
by the Company and both during and after the Term (but at the Company's sole
expense), to obtain, confirm and from time to time enforce patents, copyrights
or other rights relating thereto on Works in any and all countries, and to that
end you will, upon reasonable request by the Company, execute any documents
reasonably necessary: (i) to apply for, obtain and vest in the name of the
Company alone (unless the Company otherwise directs) letters patent, copyrights
or other analogous protection with respect to Works in any country throughout
the world and when so obtained or vested to renew and restore the same on behalf
of the Company; and (ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters patent, copyright or other analogous protection.
13
(h) Your obligation to assist the Company, upon reasonable request
by the Company, in obtaining and enforcing patents and copyrights for Works in
any and all countries, and in resisting disclosure of Proprietary Information as
provided in Section 7(d) below, and in otherwise carrying out your obligations
under Sections 6 and 7, shall continue beyond the Term to the extent provided
herein, but the Company agrees to compensate you, on an hourly basis based on an
eight hour day at a daily rate $1,500, for time actually spent by you after the
Term at the Company's request on such matters.
7. Use and Disclosure of Proprietary Information.
(a) You agree at all times, including after the Term, (x) to keep in
strict trust and confidence, and not to disclose or make accessible to any other
Person other than with the prior written consent of a representative of the
Company specifically authorized by the Board or the Committee to give such
consent, Proprietary Information of the Company and its Affiliates, and (y) not
to use any such Proprietary Information for yourself or others; provided that
the provisions of this Section 7(a) shall not prohibit or restrict use or
disclosure in connection with the proper discharge of your services for the
Company or any of its Affiliates or as otherwise provided in this Agreement.
(b) You further agree not to disclose or publish at any time, during
or after the Term, and in violation of any obligation of confidence owed by you,
information relating to any of your former employers.
(c) Upon lawful written notice by the Company to you either during
or after the Term, you shall promptly deliver to the Company, or, if requested
by the Company, promptly destroy, all written Proprietary Information and any
other material containing any Proprietary Information (whether prepared by the
Company, you or a third party) that is in physical (including, without
limitation, electronic) form and that is in your possession, and will not retain
any copies, extracts, summaries or other reproductions in whole or in part of
such written Proprietary Information or other material; provided that you shall
in all instances be permitted to retain, and use appropriately: (x) your
personal correspondence files, rolodex, and the like and (y) documents relating
to your benefits, entitlements, compensation, tax obligations, and the like.
(d) If during the Term or thereafter you are required by law, or by
order, subpoena or comparable process from an arbitrator, court, agency or other
Person, to disclose all or any part of any Proprietary Information, other than
as contemplated elsewhere in Sections 6 and 7, you will provide the Company with
prompt written notice of such requirement, and of the terms and circumstances
surrounding such requirement, so that the Company, or, as applicable, one or
more of its Affiliates, may seek an appropriate protective order or waive
compliance with the provisions of this Agreement. In such case, the Parties will
consult with each other on the advisability of pursuing any such order or other
legal action or available steps to resist or narrow such requirement. If,
14
failing the entry of a protective order or the receipt of a waiver hereunder,
you are, in the opinion of your counsel, legally compelled to disclose
Proprietary Information, you may disclose only that portion of such information
which counsel advises you that you are legally compelled to disclose. In any
event, you will cooperate reasonably with the Company in obtaining, and will not
oppose action by the Company (or, as applicable, one or more of its Affiliates)
to obtain, an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the disclosure of any Proprietary
Information. All expenses reasonably incurred by you in complying with Sections
6 and 7 (including, without limitation, fees and other charges of counsel) will
be promptly reimbursed by the Company.
8. Enforcement. You agree that the remedy at law for any breach or
threatened breach by you of any covenant contained in Sections 5, 6 or 7 of this
Agreement would be inadequate and cause irreparable damage to the Company. In
the event that you breach or threaten to breach any provisions of Sections 5, 6
or 7, in addition to any other rights which the Company may have at law or in
equity, the Company shall be entitled, without the posting of a bond or other
security, to seek injunctive relief from any court of competent jurisdiction to
enforce the restrictions contained in such Sections. In the event that an actual
proceeding is brought in equity to enforce any of the provisions of Sections 5,
6 or 7, you shall not assert as a defense that there is an adequate remedy at
law, nor shall the Company be prevented from seeking any other remedies that may
be available to it (including, without limitation, monetary damages) through
arbitration in accordance with Section 12 below. The prevailing party in any
contested request for injunctive relief under this Section 8 shall be entitled
to prompt reimbursement for such party's reasonable attorneys' fees, and for
other costs and expenses reasonably incurred by such party, in connection with
such request.
9. Termination. Your employment hereunder, and the Term, shall terminate
upon the first to occur of the following events:
(a) Death. You die.
(b) Disability. You have been unable, for 120 or more days out of
180 consecutive days, to perform your duties under this Agreement, as a result
of physical or mental illness, injury or incapacity, and the Company shall have
communicated to you, by written notice, the fact of your termination, which
termination shall be effective on the 30th day after receipt of such notice by
you, unless you return to full-time performance of your duties hereunder prior
to such 30th day.
(c) For Cause. Your employment hereunder may be terminated by the
Company for Cause in accordance with this Section 9(c).
15
(i) No termination of your employment hereunder for Cause
shall be effective as a termination for Cause unless the provisions of this
Section 9(c)(i) shall first have been complied with. You shall be given written
notice by the Board of its intention to terminate you for Cause, such notice (x)
to state in detail the particular circumstances that constitute the grounds on
which the proposed termination for Cause is based and (y) to be given no later
than 90 days after the Board, as a whole, is first made aware of such
circumstances. You shall have five business days after receiving such notice in
which to request a hearing before the Board, which hearing (if timely requested)
shall be held within ten business days of your receiving such notice. If, within
20 business days following such hearing (if timely requested), or within ten
business days following your receipt of the original notice (if no hearing is
timely requested), the Board gives written notice to you confirming that, in the
judgment of at least two thirds of the members of the Board (not including you,
if you are then a member of the Board), Cause for terminating your employment on
the basis set forth in the original notice exists, your employment hereunder
shall thereupon be terminated for Cause, subject to de novo review, at your
election, of the question whether Cause existed through arbitration in
accordance with Section 12 below. Notwithstanding anything herein to the
contrary, the Board may cause you to be on administrative leave (with full pay
and benefits) during a period, not longer than 20 business days, that begins on
the date that the Company gives the original notice provided for in this Section
9(c)(i) and ends on the earlier of (x) the date that your employment hereunder
is terminated for Cause and (y) the date that the Board determines that your
employment hereunder will not be terminated for Cause.
(ii) For purposes of this Agreement, the term "Cause" shall
mean the occurrence of any of the following: (A) any willful and material breach
by you of any of the provisions of Sections 5, 6, or 7 above, which breach
causes or is likely to cause material harm to the Company; (B) any willful and
material breach by you of Section 1(b) or 1(c) above, which breach is not cured
by you on 30 days' written notice thereof from the Company requesting cure;
provided, however, that your right to such 30-day cure period shall be
conditioned upon your good-faith attempt to cure such breach; (C) any act or
omission by you that constitutes misconduct, is intended to harm the Company,
and causes or is likely to cause material harm to the Company; (D) any conduct
by you that constitutes willful gross misconduct, or willful gross neglect, and
that causes or is likely to cause material harm to the Company; (E) the
perpetration by you of an intentional and knowing fraud against, or adversely
affecting, the Company or any of its Affiliates, which fraud causes or is likely
to cause material harm to the Company; or (F) you are convicted of, or plead
guilty or nolo contendere to, any felony.
(d) Without Cause. The Company may terminate your employment
hereunder at any time, for any reason or no reason, by giving you ten days'
prior written notice of the termination. No such termination of your employment
hereunder shall be deemed a breach of this Agreement.
16
(e) For Good Reason. You may terminate your employment hereunder for
"Good Reason" on ten days' written notice to the Company following the
occurrence of any of the following without your prior written consent: (i) you
are assigned duties that are inconsistent in any material respect with Section
1(b) above, or your titles, positions, authorities, duties or responsibilities
are materially diminished, in each case without full cure on 30 days' written
notice from you to the Company requesting cure; provided that the Company
becoming a subsidiary of another entity, or otherwise ceasing to be a
publicly-traded company, shall not in and of itself constitute circumstances
described in this clause (i) unless an assignment or diminishment described in
this clause (i) occurs in connection therewith; (ii) any failure by the Company
to timely comply with its obligations to you under Section 3 above, or with any
other material obligation to you, that is not fully cured on 30 days' written
notice from you to the Company requesting cure; (iii) your failure to be
re-elected to the Board or as Chairman of the Board, unless, at the time you are
not re-elected, the Company has the right to terminate your employment hereunder
for Cause under Section 9(c) above and does so within 45 days of your failure to
be re-elected; (iv) any change in your reporting structure so that you are
required to report, in your capacity as Chief Executive Officer of the Company,
to any Person other than the Board that is not fully cured on ten days' written
notice from you to the Company requesting cure; (v) any relocation of the
Company's headquarters, or of your principal place of employment, to a location
that is more than 75 miles from Berkeley Heights, New Jersey; or (vi) any
failure by the Company to obtain the assumption in writing of its obligations
under this Agreement by any successor to all or substantially all of its
business or assets within 15 days after any reconstruction, amalgamation,
combination, merger, consolidation, sale, liquidation, dissolution or similar
transaction; provided, however, that if your failure to be elected as Chairman
of the Board is solely on account of the Board determining in good faith,
pursuant to written advice from nationally-recognized outside counsel, that the
same person should not serve as both Chairman of the Board and Chief Executive
Officer of the Company, then such failure shall not constitute Good Reason. In
addition, any termination by you, on 30 days' written notice from you to the
Company, of your employment hereunder during any 30-day period that commences
365 days after the occurrence of any Change in Control shall be treated as a
termination by you for "Good Reason". For purposes of this Agreement, "Change in
Control" shall mean "Change in Control" as defined in the 1998 Plan.
(f) Without Good Reason. You may terminate your employment hereunder
at any time, for any reason or no reason, by giving 30 days' prior written
notice of termination to the Company. No such termination of your employment
hereunder shall be deemed a breach of this Agreement.
(g) Expiration of Term. Your employment hereunder shall terminate
upon expiration of the Term pursuant to notice of non-extension given by either
Party in accordance with Section 2.
17
10. Benefits Upon Termination of Your Employment Hereunder. In the event
that your employment hereunder is terminated, you shall be entitled to the
following compensation and benefits:
(a) Any Termination. On any termination of your employment
hereunder, you shall be entitled to the following benefits:
(i) prompt payment of any accrued but unpaid Base Salary
through the date that your employment hereunder terminates (the "Termination
Date");
(ii) prompt payment of any accrued but unpaid expenses
required to be reimbursed pursuant to Section 3 above;
(iii) unless the termination is (x) by the Company for Cause
in accordance with Section 9(c) above or (y) by you voluntarily without Good
Reason and not pursuant to notice of non-extension in accordance with Section 2
above, a prompt lump-sum payment in respect of accrued but unused vacation days
at your per-business-day Base Salary rate in effect as of the Termination Date;
(iv) prompt payment of any accrued but unpaid Bonus amount;
(v) unless the termination is (x) by the Company for Cause in
accordance with Section 9(c) above or (y) by you voluntarily without Good Reason
and not pursuant to notice of non-extension in accordance with Section 2 above,
a lump-sum payment equal to the product obtained by multiplying (A) the Bonus to
which you would have been entitled for the calendar year of termination if you
had remained employed hereunder throughout such calendar year times (B) a
fraction whose numerator equals the number of days you were employed hereunder
during such calendar year and whose denominator is 365, such payment to be due
to you at the time your Bonus for such calendar year would have been due if you
had remained employed hereunder;
(vi) other or additional benefits in accordance with
applicable plans, programs, agreements and arrangements of the Company and its
Affiliates (including, without limitation, Sections 3, 6(h) and 7(d) above and
Section 12 below, and applicable stock option agreements, retirement plans,
disability/life insurance programs, etc.); and
(vii) payment, promptly when due, of all amounts referred to
above, such payments to be made by wire transfer of same-day funds to the extent
reasonably requested by you.
(b) Termination without Cause or for Good Reason. In the event that
your employment hereunder is terminated (x) by the Company (other than for
death, for disability in accordance with Section 9(b), for Cause in accordance
with Section 9(c), or pursuant to a notice of non-extension in accordance with
Section 2), or (y) by you for Good Reason in accordance with Section 9(e), you
shall receive the following benefits:
18
(i) the benefits described in Section 10(a);
(ii) subject to your not having materially breached the
provisions of Section 5, which breach has not been fully cured (if capable of
cure) on fifteen days' notice to you from the Company requesting cure, continued
payment of your Base Salary through the first anniversary of the Termination
Date; provided that, in the event that such termination of your employment is
either (x) by the Company in anticipation of a Change in Control or (y) by
either Party upon the occurrence of, or within 13 months following, a Change in
Control, then you shall instead receive a prompt lump-sum payment equal to two
times your annualized Base Salary;
(iii) subject to your not having materially breached the
provisions of Section 5, which breach has not been fully cured (if capable of
cure) on fifteen days' notice to you from the Company requesting cure, in the
event that such termination of your employment is either (x) by the Company in
anticipation of a Change in Control or (y) by either Party upon the occurrence
of, or within 13 months following, a Change in Control, then you shall receive a
prompt lump-sum payment equal to two times your target Bonus for the calendar
year of termination (i.e., forty percent of your annualized Base Salary);
(iv) each of your outstanding stock options shall, to the
extent vesting or exercisability depends solely on your continued employment,
become fully vested, and fully exercisable, as of the Termination Date (provided
that, for avoidance of doubt, the stock option granted pursuant to Section 3(d)
above shall, for purposes of this Section 10, be deemed not to vest or become
exercisable based solely on your continued employment); and
(v) each of your outstanding stock options shall, to the
extent that it is or becomes exercisable as of the Termination Date, remain
exercisable in accordance with its terms.
(c) Expiration of the Term. In the event that your employment
hereunder terminates by expiration of the Term pursuant to notice of
non-extension in accordance with Section 2, you shall be entitled to the
following benefits:
(i) the benefits described in Section 10(a);
(ii) if the Term expires pursuant to notice of non-extension
from you, each of your outstanding stock options whose vesting or exercisability
depends solely on your continued employment shall vest, and become fully
exercisable, as of the Termination Date to the extent that such stock option was
then scheduled to become vested or exercisable within 90 days following the
Termination Date had your employment hereunder continued;
19
(iii) if the Term expires pursuant to notice of non-extension
from the Company, each of your outstanding stock options whose vesting or
exercisability depends solely on your continued employment shall become fully
vested, and fully exercisable, as of the Termination Date; and
(iv) each of your outstanding stock options shall, to the
extent that it is or becomes exercisable as of the Termination Date, remain
exercisable in accordance with its terms.
(d) No Mitigation; No Offset. In the event of any termination of
your employment hereunder, you shall have no obligation to seek other employment
or otherwise mitigate the obligations of the Company under this Agreement, and
there shall be no offset against amounts or benefits due to you under this
Agreement or otherwise on account of (x) any Claim that the Company or any of
its Affiliates may have against you or (y) any remuneration or other benefit
earned or received by you after such termination. Any amounts due under this
Section 10 are considered to be reasonable by the Company and are not in the
nature of a penalty.
(e) No Other Benefits or Compensation. Except as may be provided
under this Agreement or under the terms of any incentive compensation, employee
benefit or fringe benefit plan applicable to you as of the Termination Date, you
shall have no right to receive any other compensation, or to participate in any
other plan, arrangement or benefit, with respect to any future period after such
date.
11. Notices. Any notice, consent, demand, request, or other communication
given to a Person in connection with this Agreement shall be in writing and
shall be deemed to have been given to such Person (x) when delivered personally
to such Person or (y) provided that a written acknowledgment of receipt is
obtained, five days after being sent by prepaid certified or registered mail, or
two days after being sent by a nationally recognized overnight courier, to the
address (if any) specified below for such Person (or to such other address as
such Person shall have specified by ten days' advance notice given in accordance
with this Section 11) or (z), in the case of the Company only, on the first
business day after it is sent by facsimile to the facsimile number set forth
below (or to such other facsimile number as shall have specified by ten days'
advance notice given in accordance with this Section 11), with a confirmatory
copy sent by certified or registered mail or by overnight courier in accordance
with this Section 11.
If to the Company: Genta Incorporated
Xxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: General Counsel and Board of Directors
Fax #: 000-000-0000
20
With a copy to: Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax #: 000-000-0000
If to you: The address of your principal residence as it
appears in the Company's records, with a copy to
you (during the Term) at your office in Berkeley
Heights, New Jersey
With a copy to: Law Offices of Xxxxxx X. Xxxxxxxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Fax #: 000-000-0000
If to any of your
beneficiaries: The address most recently specified by you or by
such beneficiary.
12. Resolution of Disputes. Any Claim arising out of or relating to this
Agreement, any other agreement between you and the Company or any of its
Affiliates, your employment with the Company, or any termination thereof (a
"Covered Claim") shall (except to the extent otherwise provided in Section 8
with respect to certain requests for injunctive relief) be resolved by binding
confidential arbitration, to be held in the Borough of Manhattan in New York
City, in accordance with the Commercial Arbitration Rules (and not the National
Rules for Resolution of Employment Disputes) of the American Arbitration
Association and this Section 12. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. To the
extent that it is determined through arbitration that you substantially
prevailed in respect of a Covered Claim (and the Parties agree to request the
arbitrator(s) appointed pursuant to this Section 12 to determine whether or not
you did so), the Company shall reimburse all reasonable costs and expenses
(including, without limitation, attorneys' fees and other charges of counsel)
incurred by you or your beneficiaries in resolving such Covered Claim. Pending
the resolution of any Covered Claim, you (and your beneficiaries) shall continue
to receive all payments and benefits that are then due (under this Agreement or
otherwise) and that are not the subject of reasonable, good-faith dispute,
unless the arbitrator(s) appointed pursuant to this Section 12 determines
otherwise.
21
13. Severability of Provisions. If any provision of this Agreement shall
be declared by any court or arbitrator of competent jurisdiction to be invalid,
illegal or incapable of being enforced in whole or in part, the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable. If any provision of this Agreement, or any part thereof, is held to
be invalid or unenforceable because of the scope or duration of or the area
covered by such provision, the Parties agree that the court or arbitrator making
such determination shall reduce the scope, duration and/or area of such
provision (and shall substitute appropriate provisions for any such invalid or
unenforceable provisions) in order to make such provision enforceable to the
fullest extent permitted by law and/or shall delete specific words and phrases,
and such modified provision shall then be enforceable and shall be enforced. The
Parties recognize that if, in any Proceeding, a court or arbitrator shall refuse
to enforce any of the separate covenants contained in this Agreement, then that
invalid or unenforceable covenant contained in this Agreement shall be deemed
eliminated from these provisions to the extent necessary to permit the remaining
separate covenants to be enforced. In the event that any court or arbitrator
determines that the time period or the area, or both, are unreasonable and that
any of the covenants is to that extent invalid or unenforceable, the Parties
agree that such covenants shall remain in full force and effect, first, for the
greatest time period, and second, in the greatest geographical area that would
not render them unenforceable.
14. Entire Agreement; Modification; Inconsistencies.
(a) This Agreement contains the entire understanding and agreement
between the Parties concerning the specific subject matter hereof and supersedes
in its entirety, as of the Effective Date, any prior employment agreement
between the Parties; provided, however, that nothing herein shall limit or
reduce any right or benefit that shall have accrued to you as of the Effective
Date, under any prior employment agreement or otherwise, on account of events
occurring prior to the Effective Date, or any right under the second sentence of
Section 3(c) of the October 28, 1999 employment agreement between the Parties in
respect of stock options granted prior to the Effective Date pursuant to such
Section 3(c).
(b) No provision in this Agreement may be amended unless such
amendment is set forth in a writing that expressly refers to the provision of
this Agreement that is being amended and that is signed by you and by an
authorized representative of the Company. No waiver by any Person of any breach
of any condition or provision contained in this Agreement shall be deemed a
waiver of any similar or dissimilar condition or provision at the same or any
prior or subsequent time. To be effective, any waiver must be set forth in a
writing signed by the waiving Person and must specifically refer to the
condition(s) or provision(s) of this Agreement being waived.
22
(c) In the event of any inconsistency between any provision of this
Agreement and any provision of any employee handbook, personnel manual, program,
policy, arrangement, agreement, plan, or corporate governance document of the
Company or any of its Affiliates, the provisions of this Agreement shall control
unless you otherwise agree in a writing that expressly refers to the provision
of this Agreement whose control you are waiving.
15. Assignability; Binding Nature.
(a) This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs (in your case) and assigns.
(b) No rights or obligations of the Company under this Agreement may
be assigned or transferred by the Company except that such rights and
obligations may be assigned or transferred pursuant to a merger, consolidation
or other combination in which the Company is not the continuing entity, or a
sale or liquidation of all or substantially all of the business and assets of
the Company; provided that the assignee or transferee is the successor to all or
substantially all of the business and assets of the Company and such assignee or
transferee expressly assumes the liabilities, obligations and duties of the
Company as set forth in this Agreement. In the event of any merger,
consolidation, other combination, sale of business and assets, or liquidation as
described in the preceding sentence, the Company shall use its best reasonable
efforts to cause such assignee or transferee to promptly and expressly assume
the liabilities, obligations and duties of the Company hereunder.
(c) None of your rights or obligations under this Agreement may be
assigned or transferred by you other than your rights to compensation and
benefits, which may be transferred only by will or by operation of law, except
that you shall be entitled, to the extent permitted under applicable law, to
select and change a beneficiary or beneficiaries to receive any compensation or
benefit hereunder following your death by giving written notice thereof to the
Company.
16. Miscellaneous.
(a) In the event of your death or a judicial determination of your
incompetence, references in this Agreement to you shall be deemed, where
appropriate, to refer to your beneficiary, estate or other legal representative.
(b) This Agreement shall be governed, construed and enforced in
accordance with its express terms, and otherwise in accordance with the laws of
the State of New York without regard to principles of conflict of laws.
23
(c) Except as otherwise set forth in this Agreement, the respective
rights and obligations of the Parties hereunder shall survive any termination of
your employment hereunder.
(d) The headings of Sections and subsections of this Agreement are
inserted for convenience only and shall not affect any interpretation of this
Agreement.
[Remainder of page intentionally left blank; signature page to follow]
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If this letter agreement meets with your approval and you desire to
accept this offer of employment on the terms and conditions set forth herein,
please execute the enclosed copy of this letter and return it to me as soon as
possible. Signatures delivered by facsimile shall be effective for all purposes.
Sincerely,
GENTA INCORPORATED
By: /s/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Chairman of the Compensation
Committee of the Board
Date: May 16, 2003
AGREED AND ACCEPTED:
/s/ XXXXXXX X. XXXXXXX, XX., M.D.
---------------------------------
Xx. Xxxxxxx X. Xxxxxxx, Xx.
Date: May 16, 2003
25
EXHIBIT A
FORM OF
STOCK OPTION AGREEMENT
1. Grant of Option. Genta Incorporated, a Delaware corporation (together
with its successors and assigns, the "Company"), hereby grants to Xx. Xxxxxxx X.
Xxxxxxx, Xx. (the "Optionee"), effective as of May __, 2003 (the "Grant Date"),
an option under the Company's 1998 Stock Incentive Plan, as amended through the
Grant Date (the "Plan"), to purchase an aggregate of 1,000,000 shares of the
Company's Common Stock (each such share, a "Share") at a price of $_____ per
Share, exercisable as set forth in, and subject to the terms and conditions of,
the Plan, this Stock Option Agreement and the letter agreement dated as of
December 1, 2002, between the Company and the Optionee relating to the
Optionee's employment with the Company (the "Employment Agreement"). All
capitalized terms not defined in this Stock Option Agreement shall have the
meanings set forth in the Employment Agreement. "Term of Employment" shall mean
"Term" as defined in the Employment Agreement, and the terms "Fair Market Value"
and "Change in Control" shall mean "Fair Market Value" and "Change in Control"
as defined in the Plan.
2. Exercisability of Option.
(a) In the event that the average Fair Market Value of a Share over
any seven consecutive trading days (or, in the event that the Shares are not
then publicly traded, over seven consecutive business days) equals or exceeds
$20.00 on or before December 31, 2005 and during the Term of Employment, then
this option shall immediately become fully vested, and fully exercisable, with
respect to half of the 1,000,000 Shares that are subject to it.
(b) In the event that the average Fair Market Value of a Share over
any seven consecutive trading days (or, in the event that the Shares are not
then publicly traded, over seven consecutive business days) equals or exceeds
$30.00 on or before December 31, 2005 and during the Term of Employment, then
this option shall immediately become fully vested, and fully exercisable, with
respect to all of the Shares that are then subject to it.
(c) If any of the following events (each, a "Trigger Event") occurs
(x) on or before December 31, 2005 and (y) either during the Term of Employment
or, in the event that the Optionee's employment is terminated by the Company
without Cause in anticipation of the occurrence of a Trigger Event, within three
months after such termination, then this option shall become fully vested, and
fully exercisable, upon the occurrence of a Trigger Event, provided that the
Fair Market Value of a Share as of the date of the occurrence of such Trigger
Event equals or exceeds $10.00:
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(i) a sale or other disposition of the product G3139 or its
substantial equivalent; or
(ii) a Change in Control.
(d) In the event that the Optionee remains employed with the Company
on the seventh anniversary of the Grant Date, then this option shall, to the
extent that it has not yet then expired or been exercised, become fully vested,
and fully exercisable, as of such anniversary.
(e) In the event that the Optionee's employment with the Company is
terminated other than in a termination (x) by the Company for Cause in
accordance with Section 9(c) of the Employment Agreement or (y) by the Optionee
voluntarily, other than for Good Reason, then this option shall remain
exercisable, to the extent that it either is exercisable as of the date that the
Optionee's employment terminates or becomes exercisable within three months
thereafter pursuant to Section 2(c) above, through the second anniversary of the
date that the Optionee's employment terminates, at which time it shall expire to
the extent that it has not yet been exercised.
(f) In the event that the Optionee's employment with the Company is
terminated by the Optionee voluntarily, other than for Good Reason, then this
option shall remain exercisable, to the extent that it is exercisable as of the
date that the Optionee's employment terminates, through the first anniversary of
the date that the Optionee's employment terminates, at which time it shall
expire to the extent that it has not yet been exercised.
(g) In the event that the Optionee dies on or before the date that
this option expires, then this option shall remain exercisable, to the extent
that it is exercisable as of the date of the Optionee's death through the later
of the first anniversary of the date of the Optionee's death and, in the event
that the Optionee's employment with the Company previously terminated in a
termination governed by Section 2(e) above, the expiration date that applies
under Section 2(e) above, at which time it shall expire to the extent that it
has not yet been exercised.
(h) In the event that the Optionee's employment with the Company is
terminated for Cause in accordance with Section 9(c) of the Employment
Agreement, then this Option shall expire as of the Termination Date.
(i) Anything elsewhere to the contrary notwithstanding, this option
shall, to the extent that it has not yet then expired or been exercised, expire
at 11:59 p.m. on the tenth anniversary of the Grant Date.
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3. Exercise of Option.
(a) Method of Exercise. Subject to the conditions set forth in this
Stock Option Agreement, this option may be exercised from time to time by
delivery of written notice of exercise to the Company from the Optionee. Such
notice shall specify the total number of Shares to be purchased and shall be
accompanied by payment in full (or an arrangement for payment in full) in
accordance with Section 3(b) below. Such exercise shall be effective upon
delivery to the Company of such written notice together with the required
payment (or arrangement for payment). This option may be exercised for less than
the full number of Shares for which it is then exercisable, provided that no
such exercise may be for any fractional Share.
(b) Method of Payment. Payment of the purchase price for Shares
purchased upon an exercise of this option may be made: (i) by delivery to the
Company of cash, a wire transfer of available funds, or a check payable to the
order of the Company and backed by sufficient funds, in each case in an amount
equal to the purchase price of such Shares; (ii) by delivery to the Company of
Shares then owned by the Optionee having an aggregate Fair Market Value as of
the date of delivery equal to the purchase price of such Shares, provided that
payment in this fashion does not result in an accounting charge to the Company's
earnings that is greater than the accounting charge (if any) that would have
applied if the payment had been made in cash; (iii) subject to the restrictions
contained in Section 3(g) of the Employment Agreement and to the extent then
allowed by applicable law, through reasonable cashless exercise procedures that
are from time to time established or approved by the Company and that afford the
Optionee the opportunity to sell immediately some or all of the Shares
underlying the exercised portion of this option in order to generate sufficient
cash to pay the option purchase price, provided that the Company shall not
unreasonably delay establishing, or approving, such procedures upon reasonable
request by the Optionee; (iv) by authorizing the Company to withhold Shares that
would otherwise be delivered on such exercise having a Fair Market Value on the
date of exercise equal to the amount of the purchase price, provided that
payment in this fashion is allowable only if the Company applies FAS 123, or a
successor thereto, to this option and, as a result, the accounting consequences
of exercising this option in this manner are no different than if the exercise
price was payable solely in cash; (v) to the extent then allowed by applicable
law, by delivering to the Company a full recourse three-year promissory note
which shall (A) bear interest, payable at maturity, at the applicable federal
rate (as defined in and under Section 1274(d) of the Code), and (B) be secured
by a pledge of the Shares delivered on such exercise, subject to your right to
sell such Shares within the limitations described in Section 3(g) of the
Employment Agreement and remit the after-tax proceeds of such sale to the
Company in repayment of such note; or (vi) by any combination of (i), (ii),
(iii), (iv) or (v).
(c) Delivery of Shares Tendered in Payment of Purchase Price.
Payment by delivery of Shares may be effected by delivering one or more stock
certificates or by otherwise delivering Shares to the Company's reasonable
satisfaction (including, without limitation, through an "attestation" procedure
28
that is reasonably acceptable to the Company), in each case accompanied by such
endorsements, stock powers, signature guarantees or other documents or
assurances as may reasonably be required by the Company. If a certificate or
certificates or other documentation representing Shares in excess of the amount
required are delivered, a certificate (or other satisfactory evidence of
ownership) representing the excess number of Shares shall promptly be returned
by the Company.
(d) Delivery of Option Shares. The Company shall, upon payment in
accordance with Section 3(b) above of the aggregate purchase price for the
number of Shares purchased, make prompt delivery of such Shares to the Optionee
and pay all original issue and transfer taxes and all other fees and expenses
incident to such delivery. All Shares delivered upon any exercise of this option
shall, when delivered: (i) be duly authorized, validly issued, fully paid and
nonassessable; (ii) be registered, or otherwise qualified, for sale, and for
resale, under state and Federal securities laws to the extent that other Shares
of the same class are then so registered or qualified; provided, however, that
in no event shall the Company be required to prepare and file a Form S-3 reoffer
prospectus; and (iii) be listed, or otherwise qualified, for trading on any
securities exchange or securities market on which Shares of the same class are
then listed or qualified. To the extent that Shares are not promptly delivered
to the Optionee when due, the Company shall promptly make the Optionee whole for
any resulting expense or loss of benefit. The Company shall deliver cash in lieu
of any fractional Share. Section 2.10 of the Plan shall not apply to this
option.
(e) Tax Withholding. The Company's obligation to deliver Shares upon
an exercise of this option shall be subject to the Optionee's satisfaction of
all applicable Federal, state and local income, excise, employment and other tax
withholding requirements ("tax obligations"). The Optionee may satisfy any such
tax obligations in any of the manners provided in Section 3(b)(i), (ii) or (iv)
above for payment of the purchase price, or any combination thereof.
4. Restrictions on Disposition of Option Shares. The provisions of Section
3(g) of the Employment Agreement shall apply to this option.
5. Nontransferability of Option. This option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process, except that this option may
be transferred in whole or in part (x) by will or the laws of descent and
distribution or (y) gratuitously to any Family Member who agrees to be bound by
the provisions of this Stock Option Agreement. For purposes of clause (y) of the
preceding sentence, "Family Member" shall mean "family member" as such term is
used as of the Grant Date in Section A1(a)(5) of the General Instructions to XXX
00
Xxxx X-0, together with any entity described in clause (ii) of such Section
A1(a)(5). Any Person to whom this option has been transferred in whole or in
part in accordance with the first sentence of this Section 5 shall, to the
extent of the transfer, succeed to the rights, and assume the obligations, of
the Optionee under Sections 2, 3, 5 and 6 of this Stock Option Agreement, except
that such Person may not transfer this option (in whole or in part) pursuant to
clause (y) of such sentence to any Person to whom the original Optionee would
not have been permitted to transfer this option (in whole or in part). The
Optionee shall give notice to the Company of any transfer of this option, in
whole or in part, pursuant to clause (y) of the first sentence of this Section
5.
6. Adjustments. In the event that, at any time after the Grant Date, any
merger, consolidation, reorganization, recapitalization, spin-off, split-up,
combination, modification of securities, exchange of securities, liquidation,
dissolution, share split, share dividend, other distribution of securities or
other property in respect of Shares or other securities (other than
ordinary-course cash dividends), or other change in corporate structure or
capitalization affecting the rights or value of securities of any class then
subject to this option occurs, appropriate adjustment(s) shall promptly be made
in the number and/or kind of securities subject to this option and/or in the
exercise price and/or in the dollar amounts referred to in Sections 2(a), 2(b)
and 2(c) above and/or in other terms and conditions of this option, and/or
appropriate provision(s) shall promptly be made for supplemental distributions
of cash, securities and/or other property, so as to avoid dilution or
enlargement of the rights of the Optionee and the value represented by this
option. If an event occurs that may require an adjustment (or other action)
pursuant to this Section 6, the Company shall promptly deliver to the Optionee a
certificate, signed by an officer of the Company, setting forth in reasonable
detail (x) the event in question and (y) either the adjustment (or other action)
being implemented and the method by which such adjustment (or other action) was
calculated or determined or the reasons why the Company believes no adjustment
(or other action) is needed.
7. Miscellaneous.
(a) This Stock Option Agreement, together with the Plan, contains
the entire understanding and agreement between the Parties concerning the
specific subject matter hereof. It shall be governed, construed and enforced in
accordance with its express terms, and otherwise in accordance with the laws of
the State of Delaware without regard to principles of conflict of laws.
(b) Sections 4(a), 11, 12, 13 (first sentence only), 14(b), 14(c),
16(a) and 16(d) of the Employment Agreement (relating, respectively, to
representations, notices, dispute resolution, severability, amendment and
waiver, inconsistencies, references and headings) shall be deemed incorporated
herein in full, with the references to the "Agreement" in such Sections being
treated as references to this Stock Option Agreement and the references to "you"
in such Sections being treated as references to the original Optionee.
30
(c) Nothing contained in this Stock Option Agreement shall be
construed or deemed by any Person under any circumstances to bind the Company to
continue the employment of the Optionee for any particular period of time.
(d) This Stock Option Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be
deemed to be one and the same instrument. Signatures delivered by facsimile
shall be effective for all purposes.
Grant Date: May 16, 2003
GENTA, INCORPORATED
By: /s/ XXXXXXX XXXXX
---------------------------------
Name: Xxxxxxx Xxxxx
Title: Chairman of the Compensation
Committee of the Board
Date: May 16, 2003
ACCEPTED
OPTIONEE
/s/ XXXXXXX X. XXXXXXX, XX., M.D.
---------------------------------
Xx. Xxxxxxx X. Xxxxxxx, Xx.
Date: May 16, 2003
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