EXHIBIT 10.86
EXECUTIVE COMPENSATION AGREEMENT
THIS AGREEMENT is entered into as of January 1, 1996, by and between
Xxxxxx Xxxxxxx (the "Employee") and Genta Incorporated, a Delaware corporation
(the "Company"). This Agreement supersedes any prior agreements previously
entered into between Employee and Company.
1. Term of Employment.
(a) Basic Rule. The Company agrees to continue the Employee's
employment, and the Employee agrees to remain in employment with the Company,
from the date hereof until the date when the Employee's employment terminates
pursuant to Subsection (b), (c) or (d) below.
(b) Early Termination. Subject to Sections 6 and 7, the Company may
terminate the Employee's employment by giving the Employee 30 days' advance
notice in writing. The Employee may terminate his employment by giving the
Company 1 day's advance notice in writing. The Employee's employment shall
terminate automatically in the event of his death. Any waiver of notice shall be
valid only if it is made in writing and expressly refers to the applicable
notice requirement of this Section 1.
(c) Cause. The Company may at any time terminate the Employee's
employment for Cause by giving the Employee notice in writing. For all purposes
under this Agreement, "Cause" shall mean:
(i) A willful act by the Employee which constitutes gross
misconduct (as determined by an independent tribunal) or fraud and
which is injurious to the Company; or
(ii) Conviction of, or a plead of "guilty" or no contest" to, a
felony.
No act, or failure to act, by the Employee shall be considered "willful" unless
committed without good faith and without a reasonable belief that the act or
omission was in the Company's best interest.
(d) Disability. The Company may terminate the Employee's active
employment due to Disability by giving the Employee 30 days' advance notice in
writing. For all purposes under this Agreement, "Disability" shall mean that the
Employee, at the time notice is given, has become eligible to receive immediate
long-term disability benefits under the Company's long-term disability insurance
plan or, if there is no such plan, under the federal Social Security program. In
the event that the Employee resumes the performance of substantially all of his
duties hereunder before the termination of his active employment under this
Subsection (d) becomes effective, the notice of termination shall automatically
be deemed to have been revoked.
(e) Rights Upon Termination. Except as expressly provided in Sections 6
and 7, upon the termination of the Employee's employment pursuant to this
Section 1, the Employee shall only be entitled to the compensation, benefits and
reimbursements described in Sections 3, 4 and 5 for the period preceding the
effective date of the termination. The payments under this Agreement shall fully
discharge all responsibilities of the Company to the Employee upon the
termination of his employment.
(f) Termination of Agreement. This Agreement shall terminate when all
obligations of the parties hereunder have been satisfied.
2. Duties and Scope of Employment.
(a) Position. The Company agrees to employ the Employee as its Chief
Financial Officer for the term of his employment under this Agreement. The
Employee shall report to the Company's President.
(b) Obligations. During the term of his employment under this
Agreement, the Employee shall devote his full business efforts and time to the
Company and its subsidiaries. The Employee shall not render services to any
other for-profit corporation or entity without the prior written consent of the
Company's Board of Directors (the "Board"). This Subsection (b) shall not
preclude the Employee from engaging in appropriate professional, educational,
civic, charitable or religious activities or from devoting a reasonable amount
of time to private investments that do not interfere or conflict with his
responsibilities to the Company.
3. Base Compensation and Incentive Compensation.
(a) Base Compensation. During the term of his employment under this
Agreement, the Company agrees to pay the Employee as compensation for his
services a base salary at the annual rate of $175,000 or at such higher rate as
the Company may determine from time to time. Any difference between the Base
Compensation payable on a bi-monthly basis and that actually paid between
January 1, 1996, and the date this Agreement is executed shall be paid to
Employee in one lump sum upon execution of this Agreement. Such salary shall be
payable in accordance with the Company's standard payroll procedures. (The
annual compensation specified in this Section 3, together with any increases in
such compensation that the Company may grant from time to time, is referred to
in this Agreement as "Base Compensation.")
(b) Incentive Compensation. In addition, Employee shall be eligible for
participation in an annual incentive compensation
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program, if any, to be determined in the sole discretion of the Company.
(c) Stock Compensation. In addition to such options and Company stock
compensation available to Employee as of the execution of this Agreement, upon
execution of this Agreement Employee shall receive 75,000 shares of Company
stock at no cost to Participant. Such shares shall be fully vested when granted
and shall not be subject to any right of repurchase by the Company. As a
condition of this grant, Employee agrees to satisfy such requirements as Company
deems necessary to satisfy its federal and state tax withholding requirements.
4. Employee Benefits.
During the term of his employment under this Agreement, the Employee
shall be eligible for the employee benefit plans and executive compensation
programs maintained by the Company for other senior executives, subject in each
case to the generally applicable terms and conditions of the plan or program in
question and to the determinations of any person or committee administering such
plan or program.
5. Business Expenses.
During the term of his employment under this Agreement, the Employee
shall be authorized to incur necessary and reasonable travel, entertainment and
other business expenses in connection with his duties hereunder. The Company
shall reimburse the Employee for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance with the
Company's generally applicable policies.
6. SkyePharma Transaction.
(a) General. As of September 25, 1996, the Company is contemplating a
transaction with SkyePharma. If the transaction is contemplated by June 30,
1997, Employee shall be paid a lump sum cash bonus of $50,000 upon closing of
the transaction. Closing means execution of a definitive agreement with
shareholder approval, if necessary. Such bonus shall not be paid to Employee if
he is not employed by the Company on the date of closing unless Employee is
either involuntarily terminated without cause or terminates with Good Reason.
(b) Good Reason. For all purposes under this Agreement, "Good Reason"
shall mean that the Employee:
(i) Has incurred a material reduction in his authority or
responsibility except for reason of demonstrated lack of performance;
(ii) Has incurred one or more reductions in his Base
Compensation; or
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(iii) Has been notified that the Company's headquarters will be
relocated by a distance of 50 miles or more.
7. Termination for Any Reason Without Cause.
(a) Continuation Period. Except as otherwise specifically provided for
this Agreement, in the event that during the term of this Agreement, the Company
terminates the Employee's employment for any reason other than Cause or Employee
voluntarily terminates under circumstances where an involuntary termination for
Cause is not otherwise warranted, then the Employee shall be entitled to receive
all of the payments and benefit coverage described in this Section 7. Such
payments and benefit coverage shall continue for the period (the "Continuation
Period") commencing on the date when the employment termination is effective and
ending on the date twelve months after such date.
(b) Compensation. During the Continuation Period, the Company shall pay
the Employee compensation at an annual rate equal to his Base Compensation at
the rate in effect on the date of the employment termination. Such amount shall
be paid at periodic intervals in accordance with the Company's standard payroll
procedures.
(c) Insurance Coverage. During the Continuation Period, the Employee
(and, where applicable, his dependents) shall be entitled to continue
participation in the group insurance plans maintained by the Company, including
life, disability and health insurance programs, as if he were still an employee
of the Company. Where applicable, the Employee's salary for purposes of such
plans shall be deemed to be equal to his Base Compensation. To the extent that
the Company finds it impossible to cover the Employee under its group insurance
policies during the Continuation Period, the Company shall provide the Employee
with individual policies which offer at least the same level of coverage and
which impose not more than the same costs on him. The foregoing notwithstanding,
in the event that the Employee becomes eligible for comparable group insurance
coverage in connection with new employment, the coverage provided by the Company
under this Subsection (c) shall terminate immediately. Any group health
continuation coverage that the Company is required to offer under COBRA shall
commence when coverage under this Subsection (c) terminates.
(d) Incentive Programs. The Continuation Period shall be counted as
employment with the Company for purposes of vesting under all stock option,
stock appreciation rights, restricted stock, phantom stock or similar plans
maintained by the Company (any contrary provisions of such plans
notwithstanding). The preceding sentence shall not be construed to require the
Company to grant any new awards to the Employee during the Continuation Period.
The Continuation Period shall also be counted as employment with the Company for
purposes of determining the
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expiration date of any stock option granted by the Company and held by the
Employee when his employment terminates. Any other provision of this Agreement
notwithstanding, the Continuation Period for purposes of this Subsection (d)
shall not exceed three months in the event that the Company terminates the
Employee's employment for performance-related reasons (considering only
performance after the date this Agreement is executed), as determined by the
Board. (There is no Continuation Period for any purpose in the event that the
termination is for Cause.)
(e) No Mitigation. The Employee shall not be required to mitigate the
amount of any payment contemplated by this Section 7 (whether by seeking new
employment or in any other manner). Except as expressly provided in Subsection
(c) above, no such payment shall be reduced by earnings that the Employee may
receive from any other source.
8. Covenant Not to Compete. As a condition to Employee's rights to
receive payments under Section 6 or 7 of this Agreement, the parties agree to
the following:
(a) Competition. Employee hereby agrees, so long as Company is not in
material default (subject to notice and a 30- day cure period) of any of its
material obligations under this Agreement, that Employee will not, except as
specifically provided for in this Covenant, at any time during the Covenant Term
(as defined in Section 8(b) below), directly or indirectly, whether or not for
compensation, engage in any business activity, or have any interest in or
relationship with any person, firm, corporation or business (whether as an
employee, shareholder, proprietor, officer, director, agent, security holder,
trustee, partner, consultant or otherwise), which is competitive with, the
antisense and geomatrix drug delivery business of Company or its subsidiaries
now being conducted in the Covered Area; provided, however, that Employee may
own shares of companies whose securities do not constitute more than five
percent (5%) of the outstanding securities of any such company. Employee further
agrees that as long as the Covenant remains in effect, Employee will not, in any
way which materially adversely affects the Company's business or financial
position divert or attempt to divert, directly or indirectly, any business of
Company or any of its subsidiaries, or any customers of their business, to any
competitor in the Covered Area or induce or attempt to induce, directly or
indirectly, any person to leave his or her employment with Company or any of its
subsidiaries.
(b) Covenant Term. The Term of this Covenant ("Covenant Term") is
defined to be the period commencing on the effective date of this Agreement, and
ending upon the last payment made to Employee pursuant of Section 6 or 7.
(c) Covered Area. The Covered Area shall be the area in which the
Company or any of its wholly-owned subsidiaries is
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operating at the time of the alleged violation of the covenants of this
paragraph.
9. Limitation on Payments.
(a) Basic Rule. Any other provision of this Agreement notwithstanding,
the Company shall not be required to make any payment or property transfer to,
or for the benefit of, the Employee (under this Agreement or otherwise) that
would be non-deductible by the Company by reason of section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), or that would subject the
Employee to the excise tax described in section 49999 of the Code. All
calculations required by this Section 9 shall be performed by the independent
auditors retained by the Company most recently prior to the Change in Control
(the "Auditors"), based on information supplied by the Company and the Employee,
and shall be binding on the Company and the Employee. All fees and expenses of
the Auditors shall be paid by the Company.
(b) Reductions. If the amount of the aggregate payments or property
transfers to the Employee must be reduced under this Section 9, then the
Employee shall direct in which order the payments or transfers are to be
reduced, but no change in the timing of any payment or transfer shall be made
without the Company's consent. As a result of uncertainty in the application of
sections 280G and 4999 of the Code at the time of an initial determination by
the Auditors hereunder, it is possible that a payment will have been made by the
Company that should not have been made (an "Overpayment") or that an additional
payment that will not have been made by the Company could have been made (an
"Underpayment"). In the event that the Auditors, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or the Employee
that the Auditors believe has a high probability of success, determine that an
Overpayment has been made, such Overpayment shall be treated for all purposes as
a loan to the Employee that he shall repay to the Company, together with
interest at the applicable federal rate specified in section 7872(f)(2) of the
Code; provided, however, that no amount shall be payable by the Employee to the
Company if and to the extent that such payment would not reduce the amount that
is nondeductible under section 280G of the Code or is subject to the excise tax
under section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to, or for the benefit of, the Employee, together
with interest at the applicable federal rate specified in section 7872(f)(2) of
the Code.
10. Successors.
(a) Company's Successors. The Company shall require any successor
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or
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substantially all of the Company's business and/or assets, by an agreement in
substance and form satisfactory to the Employee, to assume this Agreement and to
agree expressly to perform this Agreement in the same manner and to the same
extent as the Company would be required to perform it in the absence of a
succession. The Company's failure to obtain such agreement prior to the
effectiveness of a succession shall be a breach of this Agreement and shall
entitle the Employee to all of the compensation and benefits to which he would
have been entitled hereunder if the Company had involuntarily terminated his
employment, without Cause immediately after such succession becomes effective.
For all purposes under this Agreement, the term "Company" shall include any
successor to the Company's business and/or assets which executes and delivers
the assumption agreement described in this Subsection (a) or which becomes bound
by this Agreement by operation of law.
(b) Employee's Successors. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
11. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
(b) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and an authorized officer of the Company (other than
the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(c) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(d) No Setoff; Withholding Taxes. There shall be no right of setoff or
counterclaim, with respect to any claim, debt or obligation, against payments to
the Employee under this
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Agreement. All payments made under this Agreement shall be subject to reduction
to reflect taxes required to be withheld by law.
(e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(f) Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(g) Arbitration. Except as otherwise provided in Section 9, any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration in San Diego in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Discovery
shall be permitted to the same extent as in a proceeding under the Federal Rules
of Civil Procedure, including (without limitation) such discovery as is
specifically authorized by section 1283.05 of the California Code of Civil
Procedure, without need of prior leave of the arbitrator under section
1283.05(e) of such Code. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. All fees and expenses of the
arbitrator and such Association shall be paid as determined by the arbitrator.
Any attorney fees paid to enforce this Agreement shall be paid by the
non-prevailing party.
(h) No Assignment. The rights of any person to payments or benefits
under this Agreement shall not be made subject to option or assignment, either
by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this Subsection (h) shall be void.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
GENTA INCORPORATED
By /s/ Xxxxxx X. Xxxxx
Title __________________________
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