SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary proxy statement
|_| Confidential, For Use of the
Commission Only (as
permitted by Rule 14a-6(e)(2))
|x| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GENTA INCORPORATED
------------------
(Name of Registrant as Specified in Its Charter)
_______________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forward the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
Genta Incorporated
99 Hayden Avenue, Suite 200
Lexington, MA 02421
(781) 860-5150
April 17, 2000
Dear Stockholder:
You are cordially invited to attend our 2000 Annual Meeting of
Stockholders, which will be held on May 9, 2000 at 11:00 a.m., local time, at
the New York Hilton, 1335 Avenue of the Americas, New York, New York 10019.
The accompanying Notice of Annual Meeting of Stockholders enumerates
the matters to be brought before the meeting and the accompanying proxy
statement discusses these matters in detail. The notice and the proxy statement
have been made a part of this invitation.
Whether or not you intend to be present at the meeting, please mark,
date and sign the enclosed proxy and return it at your earliest convenience in
the enclosed envelope to which no postage need be affixed if mailed in the
United States. If you have any questions or need assistance in completing the
proxy, please call the Company's Chief Financial Officer, Mr. Gerald M.
Schimmoeller, at the number above.
A copy of our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, is also enclosed.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely yours,
Raymond P. Warrell, Jr., M.D.
President and Chief Executive Officer
<PAGE>
GENTA INCORPORATED
99 Hayden Avenue, Suite 200
Lexington, MA 02421
(781) 860-5150
Notice of Annual Meeting of Stockholders
to be held May 9, 2000
Notice is hereby given that the 2000 Annual Meeting of Stockholders
(the "Annual Meeting") of Genta Incorporated (the "Company") will be held on May
9, 2000 at 11:00 a.m., local time, at the New York Hilton, 1335 Avenue of the
Americas, New York, New York 10019, for the following purposes:
1. To elect the entire Board of Directors of the Company.
2. To approve an amendment to Genta Incorporated 1998 Stock
Incentive Plan to increase the number of shares authorized for
issuance thereunder.
3. To approve an amendment to Genta Incorporated Non-Employee
Directors' 1998 Stock Option Plan to increase the number of
shares authorized for issuance thereunder.
4. To approve an amendment to Genta Incorporated Non-Employee
Directors' 1998 Stock Option Plan to change the vesting rights
of the stock options granted thereunder.
5. To approve an amendment to Genta Incorporated Non-Employee
Directors' 1998 Stock Option Plan to change the amount and the
time when stock options are granted thereunder.
6. To approve an amendment to the Company's Restated Certificate
of Incorporation to increase the authorized capital stock.
7. To ratify the selection of Deloitte & Touche LLP as the
Company's independent auditors.
8. To transact such other business as may properly come before
the Annual Meeting and any adjournment of the Annual Meeting.
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, is being mailed to stockholders along with the attached proxy
statement.
The Board of Directors has fixed the close of business on March 10,
2000 as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment of the Annual Meeting. All
holders of record of shares of the Company's common stock and Series D
convertible preferred stock will be entitled to attend, and vote at, the Annual
Meeting.
<PAGE>
A complete list of stockholders entitled to vote will be available for
examination by any stockholder of the Company for any purpose germane to the
Annual Meeting during normal business hours at the offices of the Company, 99
Hayden Avenue, Suite 200, Lexington, Massachusetts, for the 10-day period prior
to the Annual Meeting.
Stockholders are cordially invited to attend the Annual Meeting in
person. Whether or not you plan to attend the Annual Meeting, please mark, date,
sign and return the enclosed proxy to ensure that your shares are represented at
the Annual Meeting. Stockholders who attend the Annual meeting may vote their
shares personally, even though they have sent in proxies.
April 17, 2000
By Order of the Board of Directors,
Raymond P. Warrell, Jr., M.D.
President and Chief Executive Officer
- --------------------------------------------------------------------------------
IMPORTANT: Please mark, date, sign and return the enclosed proxy as soon as
possible. The proxy is revocable and it will not be used if you give written
notice of revocation to the Secretary of the Company at 99 Hayden Avenue, Suite
200, Lexington, Massachusetts 02421, prior to the vote to be taken at the Annual
Meeting, if you lodge a later-dated proxy or if you attend and vote at the
Annual Meeting.
- --------------------------------------------------------------------------------
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
OF
GENTA INCORPORATED
99 Hayden Avenue, Suite 200
Lexington, MA 02421
(781) 860-5150
----------------
PROXY STATEMENT
----------------
The proxy accompanying this Proxy Statement is solicited by the Board
of Directors of Genta Incorporated, a Delaware corporation (the "Company"), for
use at the Annual Meeting of Stockholders to be held on May 9, 2000 at 11:00
a.m., local time, at the New York Hilton, 1335 Avenue of the Americas, New York,
New York 10019, and at any adjournment or adjournments thereof (the "Annual
Meeting"). All proxies in the accompanying form which are properly executed and
duly returned will be voted in accordance with the instructions specified
therein. If no instructions are given, such proxies will be voted FOR each of
the proposals described in this Proxy Statement and in the discretion of the
proxies named on the card with respect to any other matters properly brought
before the Annual Meeting. A proxy may be revoked at any time before it is
exercised by written revocation, by submission of another proxy bearing a later
date or by voting in person at the Annual Meeting.
Only holders of record of the Company's common stock, par value $.001
per share ("Common Stock"), and the Series D convertible preferred stock, par
value $.001 per share ("Series D Preferred Stock"), at the close of business on
March 10, 2000 (the "Record Date") are entitled to notice of and to vote at the
Annual Meeting. As of the close of business on the Record Date, 28,649,365
shares of Common Stock and 101,208 shares of Series D Preferred Stock were
issued and outstanding, excluding shares held by the Company in treasury. The
Series D Preferred Stock is entitled to vote together with the Common Stock on
an as-converted basis (as of the Record Date, each share of the Series D
Preferred Stock has the equivalent vote of approximately 113.02 shares of Common
Stock). In addition, as of the Record Date, the Company had 274,800 shares of
Series A convertible preferred stock, par value $.001 per share ("Series A
Preferred Stock"), outstanding and entitled to notice of the Annual Meeting.
Holders of the shares of Series A Preferred Stock, however, are not entitled to
vote at the Annual Meeting.
Abstentions and broker non-votes are treated as shares that are present
and entitled to vote for purposes of determining the presence or absence of a
quorum. However, broker non-votes will not be counted for the purposes of
determining the number of votes cast with respect to the particular proposal on
which the broker has expressly not voted. Therefore, broker non-votes will not
affect the determination as to whether the requisite number of votes cast has
been obtained with respect to a particular proposal.
<PAGE>
The entire expense of printing, preparing, assembling and mailing proxy
materials and the cost of soliciting proxies will be borne by the Company. In
addition to the solicitation of proxies by mail, solicitation may be made by
certain directors, officers and other employees of the Company by personal
interview, telephone, telegram or facsimile. No additional compensation will be
paid to such persons for such solicitation.
The Company will reimburse brokerage firms and others for their
reasonable expenses in forwarding proxy materials to the beneficial owners of
the Company's Common Stock, Series A Preferred Stock and Series D Preferred
Stock, and obtaining voting instructions from beneficial owners of the Company's
Common Stock and Series D Preferred Stock.
This Proxy Statement and the accompanying proxy, together with a copy
of the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1999, are being mailed to stockholders on or about April 17, 2000.
- --------------------------------------------------------------------------------
IMPORTANT: WHETHER OR NOT YOU INTEND TO ATTEND THE ANNUAL MEETING, PLEASE MARK,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR EARLIEST CONVENIENCE IN
THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO THAT YOUR SHARES OF COMMON STOCK
OR SERIES D PREFERRED STOCK WILL BE VOTED. THIS WILL NOT LIMIT YOUR RIGHT TO
ATTEND OR VOTE AT THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
-2-
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company currently has eight directors, each serving a term of one
year expiring at the Annual Meeting and until such director's successor shall
have been elected and qualified. Accordingly, the stockholders of the Company
will be electing the entire Board of Directors.
Unless a proxy shall specify that it is not to be voted for a director,
it is intended that the shares represented by each duly executed and returned
proxy will be voted in favor of the election as directors of Mark C. Rogers,
M.D., Raymond P. Warrell, Jr., M.D., Donald G. Drapkin, Kenneth G. Kasses,
Ph.D., Ralph Snyderman, M.D., Daniel D. Von Hoff, M.D., Harlan J. Wakoff, and
Michael S. Weiss, who are currently members of the Board of Directors of the
Company. The directors elected will hold office for one year and until their
respective successors are duly elected and qualified. In the event any of the
above nominees become unable or unwilling to accept nomination or election, an
event the Board of Directors does not anticipate, proxies will be voted for a
substitute nominee. The Board of Directors recommends a vote FOR the election of
each of the nominees for directors.
Set forth below is certain information regarding the Company's
directors and executive officers, including information furnished by them as to
their principal occupations and business experience for the past five years,
certain directorships held by each director, their respective ages as of March
28, 2000 and the year in which each became a director of the Company. Each
director has served continuously with the Company since his first election as a
director as indicated below.
DIRECTORS AND EXECUTIVE OFFICERS
Name Age Position
- ---- --- --------
Mark C. Rogers, M.D................... 57 Chairman of the Board of
Directors
Raymond P. Warrell, Jr. M.D.............. 50 President, Chief Executive
Officer and Director
Robert E. Klem, Ph.D..................... 56 Vice President of Discovery,
Chief Technical Officer
Gerald M. Schimmoeller................... 56 Vice President, Chief
Financial Officer and Secretary
Donald G. Drapkin........................ 52 Director
Kenneth G. Kasses, Ph.D.................. 55 Director
Ralph Snyderman, M.D..................... 60 Director
Daniel D. Von Hoff, M.D.................. 52 Director
Harlan J. Wakoff......................... 33 Director
Michael S. Weiss......................... 34 Director
Mark C. Rogers, M.D., M.B.A., has been a member of the Company's Board
of Directors since August 1999 and has been Chairman of the Board of Directors
since December 1, 1999. Dr. Rogers is currently the President of Paramount
Capital Asset Management, Inc. ("PCAM"), Paramount Capital Investments, LLC
("PCI") and Paramount Capital, Inc. ("Paramount"). Dr. Rogers also serves as the
Chairman of Gemini Management Partners, LLC,
-3-
<PAGE>
which is the investment manager of the Gemini Master Fund and the general
partner of each of Gemini Domestic Fund, L.P. and Gemini Domestic Fund II, L.P.
Dr. Rogers was formerly Senior Vice President, Corporate Development and Chief
Technology Officer of the Perkin-Elmer Corporation. Prior to that, he was Vice
Chancellor for Health Affairs of Duke University Medical Center and Executive
Director and Chief Executive Officer of Duke Hospital and Health Network. Dr.
Rogers began his career at Johns Hopkins University, where he spent 16 years and
held a number of senior positions, including Distinguished Faculty Professor and
Chairman of the Department of Anesthesiology and Critical Care Medicine,
Director of the Pediatric Intensive Care Unit, and Professor of Pediatrics. In
1996, Dr. Rogers was elected to the National Institute of Medicine of the
National Academy of Sciences and was subsequently chosen to chair the Fulbright
Scholar selection committee. Dr. Rogers also serves on the board of Discovery
Laboratories, Inc., Procept, Inc., Cypress Bioscience, Inc. and a number of
privately-held companies in the field of health care, as well as being involved
in a number of charitable activities.
Raymond P. Warrell, Jr., M.D., M.B.A., has been President, Chief
Executive Officer and a member of the Board of Directors of the Company since
December 1, 1999. From 1980 to 1999, he was associated with the Memorial
Sloan-Kettering Cancer Center in New York, where he held tenured positions as
Member, Attending Physician, and Associate Physician-in-Chief, and with the Joan
and Sanford Weill Medical College of Cornell University, where he was Professor
of Medicine. Dr. Warrell also has more than 20 years of development and
consulting experience in pharmaceuticals and biotechnology products, and he was
previously a consultant to the Company. He was a co-founder and chairman of the
scientific advisory board of PolaRx Biopharmaceuticals, Inc., manufacturers of
arsenic trioxide, an investigational agent for the treatment of acute
promyelocytic leukemia. He is also founder and chairman of Relgen LLC, a
privately held pharmaceutical company. Dr. Warrell holds or has filed numerous
patents and patent applications for biomedical therapeutic or diagnostic agents.
He has published more than 100 peer-reviewed papers and more than 240 book
chapters and abstracts, most of which are focused upon drug development in
neoplastic diseases. Dr. Warrell is a member of the American Society of Clinical
Investigation, the American Society of Hematology, the American Association for
Cancer Research, and the American Society of Clinical Oncology. Among many
awards, he has received the U.S. Public Health Service Award for Exceptional
Achievement in Orphan Drug Development from the Food and Drug Administration.
Dr. Warrell has a B.S. in Chemistry from Emory University, an M.D. from the
Medical College of Georgia, and an M.B.A. from Columbia University Graduate
School of Business.
Robert E. Klem, Ph.D., has been Vice President of the Company since
October 1991 and had been a member of the Company's Board of Directors from
February 1991 through March 2000. In 1973, Dr. Klem co-founded JBL Scientific,
Inc. ("JBL"), a wholly-owned subsidiary of the Company that recently sold
substantially all of its assets, and was Chairman of the Board of JBL with
responsibility for research, development and marketing activities. Previously,
Dr. Klem was the Plant Manager for E.I. DuPont in Victoria, Texas from 1970 to
1974. Dr. Klem received his Ph.D. in Organic Chemistry from the University of
California at Riverside.
Gerald M. Schimmoeller has been Vice President and Chief Financial
Officer of the Company since February 1999 and Secretary since March 1999. From
1996 to February 1999, he was the Vice President and Chief Financial Officer for
Alphagene, Inc., a privately-held
-4-
<PAGE>
biotechnology development company focused on functional genomics technology.
From 1994 to 1996, he served as Vice President and Chief Financial Officer of
Concentra Corporation, a publicly held software development company. From 1987
to 1993, he served as Vice President and Chief Financial Officer of Artel
Communications Corporation, a publicly held data communications company. At each
of these companies he had significant experience in managing the financial,
management information systems, human resources, and investor relations
functions and was involved in managing an initial public offering and
significant private placements. From 1983 to 1987, Mr. Schimmoeller was
Controller at Telco Systems, a telecommunications company. From 1965 to 1983, he
held various senior financial positions with GTE Corporation. He received his
M.B.A. from Northeastern University's Executive M.B.A. Program and a B.S. in
Business and Economics from the State University of New York.
Donald G. Drapkin has been a member of the Company's Board of Directors
since September 1997, and was Chairman from September 1997 until October 1998.
Mr. Drapkin has been a director and Vice Chairman of MacAndrews & Forbes
Holdings, Inc. and various of its affiliates since March 1987. Prior to joining
MacAndrews & Forbes, Mr. Drapkin was a partner in the law firm of Skadden, Arps,
Meagher & Flom in New York for more than five years. Mr. Drapkin also is a
director of the following corporations which file reports pursuant to the
Securities Exchange Act of 1934: Algos Pharmaceutical Corporation, Anthracite
Capital, Inc., BlackRock Asset Investors, The Molson Companies, Playboy
Enterprises, Inc., Revlon, Inc., Revlon Consumer Products Corporation, Nexell
Therapeutics Inc., The Warnaco, Group Inc. and Weider Nutrition International,
Inc.
Kenneth G. Kasses, Ph.D., served as the Company's Chief Executive
Officer and President from October 1997 to December 1999. Dr. Kasses has been a
member of the Board of Directors since September 1997 and served as Chairman of
the Board of Directors from October 1998 to December 1999. From 1991 to 1997,
Dr. Kasses was affiliated with the Radiopharmaceutical Division of The DuPont
Merck Pharmaceutical Company, serving as Senior Vice President and General
Manager until 1994 when he was appointed President. From 1988 through 1990, he
served as Director, Business Development and Planning, for the Medical Products
Department of E.I. DuPont de Nemours & Company, Inc. In that capacity, he played
a key role in the formation of The DuPont Merck Pharmaceutical Company, a joint
venture between DuPont and Merck and Co., Inc. Prior to 1988 he served as
Director, U.S. Pharmaceuticals, for DuPont from 1987 to 1988 and as President of
DuPont Critical Care from 1986 to 1987. Prior to this, Dr. Kasses held various
executive positions from 1973 to 1986 at American Critical Care, CIBA-GEIGY
Pharmaceuticals, Ayerst Laboratories and Block Drug Company. Dr. Kasses received
a Ph.D. in pharmacology from New York Medical College in 1974 and a B.S. in
Biology from Dickinson College in 1966.
Ralph Snyderman, M.D., has been a member of the Company's Board of
Directors since March 27, 2000. Dr. Snyderman has held the following positions
at Duke University Health Systems: Chancellor for Health Affairs, Dean of the
School of Medicine, and James B. Duke Professor of Medicine since 1989, and he
has been Executive Dean since 1999. He held various other faculty positions at
Duke University form 1972 to 1987. He has previously served as senior vice
president of medical research and development at Genetech, Inc. from January
1987 to May 1989. Dr. Snyderman serves on the Board of Directors of Procter and
Gamble, Inc. and
-5-
<PAGE>
Ariad Pharmaceuticals, Inc. Dr. Snyderman received a B.S. from Washington
College and an M.D., Magna Cum Laude, from Downstate Medical Center of the State
University of New York.
Daniel D. Von Hoff, M.D., F.A.C.P., has been a member of the Company's
Board of Directors since January 2000. Since 1999, Dr. Von Hoff has been a
director of the Arizona Cancer Center and a professor at the University of
Arizona College of Medicine. Dr. Von Hoff served as the President of the
American Association for Cancer Research from 1999 through 2000. From 1985
through 1999, he was a professor at the University of Texas Health Science
Center at San Antonio. From 1994 through 1999, he was also an adjunct scientist
at the Southwest Foundation for Biomedical Research. He is a founder of the
Institute for Drug Development, and co-founder and Chief of the Board of
Scientific Advisors of Ilex Oncology, Inc. Dr. Von Hoff has served as a
consultant to a number of biopharmaceutical companies engaged in oncology drug
development. He has published more than 450 papers, 120 book chapters, and 750
abstracts. Dr. Von Hoff graduated Cum Laude from Carroll College in Wisconsin
and received an M.D. from Columbia College of Physicians and Surgeons.
Harlan J. Wakoff has been a member of the Company's Board of Directors
since September 1997. Mr. Wakoff has been a Vice President in the Mergers &
Acquisitions Group at Chase Securities, Inc. since June 1999. Previously Mr.
Wakoff was a Vice President of the Media and Entertainment Investment Banking
Group at ING Baring Furman Selz LLC from June 1996 to May 1999. He was
previously affiliated with the investment banking groups at NatWest Markets from
January 1995 to June 1996 and Kidder Peabody & Co. from August 1993 to January
1995. Mr. Wakoff received an M.B.A. from The Wharton School at the University of
Pennsylvania in May 1993 and a B.S. in Accounting, Summa Cum Laude, from the
State University of New York at Albany.
Michael S. Weiss has been Vice Chairman of the Company's Board of
Directors since May 1997. Mr. Weiss is currently the President and CEO of
Medical Education Network, Inc., an Internet-based cancer information and
education company. From 1993 until April 1999, Mr. Weiss was Senior Managing
Director of Paramount Capital, Inc. ("Paramount"), and served in a similar
capacity for certain entities affiliated with Paramount. Prior to this, Mr.
Weiss was an attorney with Cravath, Swaine & Moore. Mr. Weiss also serves on the
Board of Directors of Palatin Technologies, Inc. and AVAX Technologies, Inc., as
Secretary of Atlantic Pharmaceuticals, Inc. and as Vice-Chairman of Procept,
Inc., all publicly-traded biotechnology companies. Additionally, Mr. Weiss is a
member of the board of directors of several privately-held biopharmaceutical
companies. Mr. Weiss received his J.D. from Columbia University School of Law
and a B.S. in Finance from the State University of New York at Albany.
-6-
<PAGE>
Board Meetings and Board Committees
The Board of Directors held four meetings and acted by unanimous
written consent in lieu of a meeting six times during the year ended December
31, 1999. All incumbent directors attended at least 75% of the aggregate of (i)
the number of meetings of the Board of Directors and (ii) the number of meetings
of committees of the Board of Directors (during the periods such directors
served on such committees), with the exception of Donald G. Drapkin. Directors
receive no fees for their services, but non-employee directors are eligible for
stock options granted in consideration for their service as directors.
On January 29, 1998, the Board of Directors formed an Audit Committee.
During the year ended December 31, 1999, the Audit Committee consisted of Harlan
J. Wakoff, Dr. Bobby W. Sandage, Jr. and Dr. Lawrence J. Kessel. Dr. Bobby W.
Sandage, Jr. and Dr. Lawrence J. Kessel resigned from the Board of Directors in
March 2000 and are no longer members of the Audit Committee. The Audit Committee
currently consists of Harlan J. Wakoff, Dr. Kenneth G. Kasses and Dr. Ralph
Snyderman. The purpose of the Audit Committee is to recommend the engagement of
the Company's independent public accountants, review the scope of the audit to
be conducted by the independent public accountants, and meet with the
independent public accountants and the Chief Financial Officer of the Company to
review matters relating to the Company's financial statements, the Company's
accounting principles and its system of internal accounting controls, and
reports its recommendations as to the approval of the financial statements of
the Company to the Board of Directors. The Audit Committee met three times
during 1999.
On January 29, 1998, the Board of Directors formed a Compensation
Committee. During the year ended December 31, 1999, the Compensation Committee
consisted of Dr. Glenn L. Cooper, Michael S. Weiss and Andrew J. Stein. Andrew
J. Stein resigned from the Board of Directors on August 11, 1999 and Dr. Glenn
L. Cooper resigned from the Board of Directors in March 2000 and both are no
longer members of the Compensation Committee. The Compensation Committee
currently consists of Michael S. Weiss, Dr. Mark C. Rogers and Dr. Daniel D. Von
Hoff. The purpose of the Compensation Committee is to review, on an annual basis
or more frequently as it deems appropriate, the performance of the executive
officers of the Company, review the amount and form of compensation payable to
the executive officers of the Company and report to the Board of Directors on an
annual basis making recommendations regarding compensation of the executive
officers. The Compensation Committee did not hold a meeting during 1999 but
acted by unanimous written consent in lieu of a meeting three times.
On January 29, 1998, the Board of Directors established an Executive
Committee. During the year ended December 31, 1999, the Executive Committee
consisted of Dr. Kenneth G. Kasses, Dr. Glenn L. Cooper, Michael S. Weiss and
Harlan J. Wakoff. Dr. Glenn L. Cooper resigned from the Board of Directors in
March 2000 and is no longer a member of the Executive Committee. The Executive
Committee has been empowered to exercise all of the powers and authorities of
the Board of Directors in management of the business and affairs of the Company,
except that the Executive Committee does not have the power and authority in
reference to the following matters: (i) approving or adopting, or recommending
to the stockholders, any action or matter expressly required by the Delaware
General Corporation Law to be submitted to the stockholders for approval, or
(ii) adopting, amending or repealing any bylaw of the Company. The Executive
Committee did not hold a meeting during 1999 but acted by unanimous written
consent in lieu of a meeting two times.
-7-
<PAGE>
Executive Compensation
The following table sets forth certain information concerning the
annual and long-term compensation for services in all capacities to the Company
for the years 1999, 1998 and 1997 of those persons (collectively, the "Named
Executive Officers") who were (i) the Chief Executive Officer of the Company
during the fiscal year ended December 31, 1999 and (ii) the other executive
officers of the Company, whose total annual salary exceeded $100,000, at the
fiscal year ended December 31, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------------------------------------- ---------------------
Securities
Name and Other Annual Underlying
Principal Position Year Salary ($) Bonus ($) Compensation Options (#)
- ------------------------------- ---------- ------------------- ------------ --------------- ---------------------
<S> <C> <C> <C> <C>
Raymond P. Warrell, Jr., M.D. 1999 $42,083(1) $100,000(1) 4,763,262(2)
President and
Chief Executive Officer
Kenneth G. Kasses, Ph.D. 1999 300,000(3) (618,131)(4)
President and 1998 300,000 $100,000 2,236,263
Chief Executive Officer 1997 62,500
Robert E. Klem, Ph.D. 1999 217,400 $25,000(5) 885,000(6)
Vice President of Discovery, 1998 168,731
Chief Technical Officer 1997 170,000
Gerald M. Schimmoeller 1999 137,500 375,000
Vice President,
Chief Financial Officer and
Secretary
- ------------------------
</TABLE>
(1) Dr. Warrell became the President and Chief Executive Officer of the
Company effective on December 1, 1999. The amounts set forth for Dr.
Warrell represent compensation paid to Dr. Warrell for his services in
1999 as an employee of the Company and as the President and Chief
Executive Officer. See "Compensation of the President and Chief
Executive Officer" below.
(2) Represents options to purchase Common Stock, some of which are
contingent upon the occurrence of future events, granted to Dr. Warrell
pursuant to his current employment agreement. See "Compensation of the
President and Chief Executive Officer" below.
(3) Dr. Kasses resigned as President, Chief Executive Officer and Chairman
of the Board of Directors of the Company effective on December 1, 1999.
Includes one-twelfth of the severance amount payable to Dr. Kasses
under the Separation Letter Agreement (as defined below), which is
$300,000 to be paid over twelve months. See "Separation Letter
Agreement" below.
(4) Represents options to purchase Common Stock returned by Dr. Kasses
pursuant to the Separation Letter Agreement. See "Separation Letter
Agreement" below.
(5) Represents relocation expenses for Dr. Klem's move from California to
Massachusetts.
-8-
<PAGE>
(6) Includes 675,000 options granted on March 31, 1999 and 210,000 options
granted on May 11, 1999 for the early termination of the Sueldo lease
in connection with the sale of JBL which closed on May 10, 1999.
Compensation of Directors
Directors of the Company receive no fees for their services as
directors or committee members. Non-employee directors are reimbursed by the
Company for their out-of-pocket expenses incurred in attending meetings of the
Board of Directors and its committees and receive annual grants of stock options
under the Company's Non-Employee Directors' 1998 Stock Option Plan. Employee
directors are eligible for stock options under the Company's 1998 Stock
Incentive Plan.
Compensation of the President and Chief Executive Officer
Pursuant to an Employment Agreement, dated as of October 28, 1999,
between the Company and Dr. Warrell (the "Employment Agreement"), Dr. Warrell
was appointed the President and Chief Executive Officer of the Company,
effective on December 1, 1999. The Employment Agreement provides, among other
things, the following:
1. Dr. Warrell receives a base salary of $325,000 per annum, which was
pro rated during 1999. Dr. Warrell received compensation of $15,000 for services
he rendered to the Company from October 28, 1999 up to his effective appointment
as the President and Chief Executive Officer of the Company on December 1, 1999.
In the event the Company terminates his employment without cause (as defined in
the Employment Agreement) or Dr. Warrell terminates his employment for good
reason (as defined in the Employment Agreement), Dr. Warrell becomes entitled to
receive, as severance, the base salary he would have received during the
twelve-month period following the date of termination. Dr. Warrell received a
signing bonus of $100,000. At the end of Dr. Warrell's first year of employment,
he becomes entitled to an additional bonus of $100,000. In subsequent years, Dr.
Warrell is entitled to an additional bonus of at least $100,000, subject to the
achievement of agreed-upon milestones.
2. Dr. Warrell is entitled to receive (i) annual stock options for the
purchase of 300,000 shares of Common Stock upon the achievement of agreed-upon
milestones; (ii) stock options for the purchase of 793,877 shares of Common
Stock on the earlier of the sixth annual anniversary of his employment or the
date the market capitalization of the Company has exceeded three times the
market capitalization of the Company upon commencement of his employment (which
as of the date of the filing of this Proxy Statement, this option condition has
been satisfied); (iii) stock options for the purchase of 793,877 shares of
Common Stock on the earlier of the sixth annual anniversary of his employment or
the date the Company has received from the FDA a letter approving G3139 for any
clinical indication; and (iv) stock options for the purchase of 3,175,508 shares
of Common Stock, twenty-five percent of which vested upon commencement of his
employment, with the remaining seventy-five percent vesting on a ratable monthly
vesting schedule over the three-year term of his employment (items (i) through
(iv) hereinafter collectively referred to as the "CEO Options").
-9-
<PAGE>
3. Dr. Warrell is entitled to receive any and all medical insurance,
dental insurance, group health, disability insurance and other benefit plans
which are made generally available by the Company to its senior executives.
Separation Letter Agreement
Pursuant to a letter agreement, dated as of December 1, 1999, between
the Company and Dr. Kasses (the "Separation Letter Agreement"), Dr. Kasses
resigned as President, Chief Executive Officer and Chairman of the Board of
Directors of the Company, effective on December 1, 1999. Dr. Kasses remains on
the Board of Directors of the Company. The Separation Letter Agreement provides,
among other things, the following:
1. Dr. Kasses receives his base salary of $300,000 per annum through
November 30, 2000.
2. Dr. Kasses receives medical insurance, dental insurance, life
insurance and long-term disability insurance through December 31, 2000.
3. Dr. Kasses returned to the Company unvested options to purchase
618,131 shares of Common Stock. The unvested options to purchase 500,000 shares
of Common Stock (that were not yet vested as of December 1, 1999) will be fully
vested on November 30, 2000, regardless of whether or not Dr. Kasses continues
to serve as a member of the Board of Directors or otherwise renders any services
to the Company. If Dr. Kasses (i) remains a consultant to the Company, (ii)
remains a member of the Board of Directors of the Company or (iii) voluntarily
resigns as a Director or consultant to the Company, then Dr. Kasses shall not
sell any shares acquired upon exercise of his options until March 1, 2001.
Compensation Committee Interlocks and Insider Participation
By resolution dated January 29, 1998, the Board of Directors appointed
a Compensation Committee consisting of Dr. Glenn L. Cooper, Andrew J. Stein, and
Michael S. Weiss. Mr. Stein resigned from the Board of Directors on August 11,
1999 and Dr. Cooper resigned from the Board of Directors in March 2000, and both
are no longer members of the Compensation Committee. None of the members of the
Compensation Committee had any "interlock" relationship to report during the
Company's fiscal year ended December 31, 1999.
Pension and Long-Term Incentive Plans
The Company has no pension or long-term incentive plans.
-10-
<PAGE>
Option Grants in the Last Fiscal Year
The following table sets forth certain information concerning grants of
stock options made during the Company's fiscal year ended December 31, 1999 to
the Named Executive Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
PERCENTAGE
NUMBER OF OF TOTAL
SECURITIES OPTIONS EXERCISE POTENTIAL REALIZABLE VALUE
UNDERLYING GRANTED TO PRICE AT ASSUMED ANNUAL RATES OF
OPTIONS EMPLOYEE IN PER EXPIRATION STOCK PRICE APPRECIATION
NAME GRANTED FISCAL YEAR SHARE DATE FOR OPTION TERMS(1)
- ---- ------- ----------- ----- ---- -------------------
0% 5% 10%
-- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Raymond P. Warrell, Jr., M.D. 4,763,262 70.2% $2.6700 10/28/2009 $781,173 $22,837,449 $33,110,529
Robert E. Klem, Ph.D. 675,000 9.9% 0.9438 03/31/2009 987,019 1,037,657 1,652,295
210,000 3.1% 2.0313 03/19/2002 694,398 1,105,712
Gerald M. Schimmoeller 350,000 5.2% 2.3750 02/01/2009 1,356,869 2,160,587
25,000 0.4% 3.2500 05/11/2009 132,348 210,742
- ------------------------
</TABLE>
(1) The amounts shown on this table represent hypothetical gains that could
be achieved for the options if exercised at the end of the option term.
These gains are based on assumed rates of stock appreciation (based on
a market value on the date of the grant of $2.67 per share for Dr.
Warrell's grant and $.94 per share for Dr. Klem's options to purchase
675,000 shares of Common Stock; the other grants were at market value
on the date of the grant) of 0%, 5% and 10%, compounded annually from
the date the options were granted to their expiration date. The gains
shown are net of the option exercise price, but do not include
deductions for taxes or other expenses associated with the exercise.
Actual gains, if any, on stock option exercises will depend on the
future performance of the Common Stock, the optionholder's continued
employment through the option period, and the date on which the options
are exercised.
Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
The following table sets forth certain information with respect to
aggregate option exercises by the Named Executive Officers in the fiscal year
ended December 31, 1999 and with respect to the unexercised options held by the
Named Executive Officers as of December 31, 1999:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at Fiscal Year at Fiscal Year End ($)
End (#) (1)
Value ----------------------- --------------------------
Shares Acquired Realized
Name On Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Raymond P. Warrell, Jr., 793,877 3,969,385 $2,991,329 $14,956,642
M.D.
Kenneth G. Kasses, Ph.D. 1,118,132 500,000 6,143,297 2,747,125
Robert E. Klem, Ph.D. 24,000 39,385 355,688 505,312 1,954,239 2,776,310
Gerald M. Schimmoeller 375,000 1,501,750
- ------------------------
</TABLE>
(1) Calculated on the basis of the market value of the underlying
securities as of December 31, 1999 ($6.438 per share), minus the
exercise price.
-11-
<PAGE>
Stock Ownership of Management and Certain Beneficial Owners
The following table sets forth information as of March 10, 2000 as to
shares of Common Stock and Series D Preferred Stock beneficially owned by (i)
the Company's directors, (ii) the Named Executive Officers, (iii) the directors
and executive officers of the Company as a group and (iv) each person known by
the Company to be the beneficial owner of more than five percent (5%) of the
outstanding shares of the Common Stock of the Company. As of March 10, 2000,
each share of Series A Preferred Stock was convertible at the option of the
holder into approximately 7.3825 shares of Common Stock and each share of Series
D Preferred Stock is convertible at the option of the holder into approximately
113.02 shares of Common Stock. Except as required by law or with respect to the
creation or amendment of senior classes of preferred stock or creation of
different series or classes of Common Stock, and in certain other instances, the
holders of Series A Preferred Stock do not have voting rights until conversion
into Common Stock. The holders of Series D Preferred Stock are entitled to vote
together with the holders of Common Stock on an as-converted basis. The
conversion price and the numbers of shares of Common Stock issuable upon
conversion of the Series A and the Series D Preferred Stock may be adjusted in
the future, based on the provisions in the Company's Certificate of
Incorporation, as amended.
<TABLE>
<CAPTION>
Common Stock Series D Preferred Stock
------------ ------------------------
Name and Address of Number of Shares Percent of Number of Shares Percent of
Beneficial Owner Beneficially Owned(1) Class (2) Beneficially Owned Class (2)
---------------------- --------------------- --------- ------------------ ---------
<S> <C> <C> <C> <C>
MANAGEMENT
Mark C. Rogers, M.D. 0(3) *
Raymond P. Warrell, Jr., M.D. 3,000(4) *
Donald G. Drapkin 357,875(5) 1.2%
Kenneth G. Kasses, Ph.D. 1,118,131(5) 3.8%
Ralph Snyderman, M.D. 0 *
Daniel D. Von Hoff, M.D. 0
Harlan J. Wakoff 96,875(5) *
Michael S. Weiss 698,313(6) 2.4% 5,104(6) 5.0%
Robert E. Klem, Ph.D. 587,128(7) 2.0%
Gerald M. Schimmoeller 63,000(8) *
All directors and executive officers
as a group (10 persons) 2,924,322(9) 9.9% 5,104(6) 5.0%
5% BENEFICIAL HOLDERS
Lindsay A. Rosenwald, M.D. 29,838,596(10) 59.4% 103,133(10) 80.0%
787 Seventh Avenue
New York, NY 10019
Paramount Capital Asset 26,576,700(11) 56.6% 75,415(11) 74.5%
Management, Inc.
787 Seventh Avenue
New York, NY 10019
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
United Congregations Mesora 332,550 (12) 1.1% 2,500(12) 2.5%
c/o Aetna Realty
1 State Street Plaza
New York, NY 10004
</TABLE>
- ------------------------
* Less than 1%.
(1) Includes shares of Common Stock deemed to be beneficially owned by
reason of the right to acquire such shares within 60 days of the Record
Date.
(2) As of March 10, 2000, 28,649,365 shares of Common Stock were issued and
outstanding and 101,208 shares of Series D Preferred Stock were issued
and outstanding.
(3) Dr. Rogers is party to an option agreement with the Company whereby he
has been granted options to purchase 750,000 shares of the Company's
Common Stock. The exercisability of these 750,000 options is
conditioned upon the approval by the stockholders of Proposal Six
relating to the increase in authorized capital stock of the Company.
(4) Includes 1,000 shares of Common Stock held by Dr. Warrell's wife's
pension fund. Dr. Warrell disclaims beneficial ownership of such
shares. In addition, Dr. Warrell is party to an option agreement
whereby he has been granted options to purchase 4,763,262 shares of the
Company's Common Stock. The exercisability of these 4,763,262 options
is conditioned upon the approval by the stockholders of Proposal Six
relating to the increase in authorized capital stock of the Company.
(5) Shares issuable upon exercise of options.
(6) Includes 576,854 shares of Common Stock issuable upon conversion of
5,104 shares of Series D Preferred Stock; 24,584 shares of Common Stock
issuable upon exercise of warrants; and 96,875 shares of Common Stock
issuable upon exercise of options.
(7) Includes 586,978 shares of Common Stock issuable upon exercise of
options and includes 150 shares of Common Stock held by Dr. Klem's
wife.
(8) Includes 62,500 shares of Common Stock issuable upon exercise of
options.
(9) Includes 2,313,881 shares issuable upon exercise of options; 576,854
shares of Common Stock issuable upon conversion of 5,104 shares of
Series D Preferred Stock; 24,584 shares of Common Stock issuable upon
exercise of warrants.
(10) Dr. Rosenwald may be deemed to have shared voting and investment power
over the 26,576,700 shares of Common Stock, which includes 250,800
shares of Series A Preferred Stock (which are convertible into
1,851,531 shares of Common Stock) and 75,415 shares of Series D
Preferred Stock (which are convertible into 8,523,403 shares of Common
Stock) that may be deemed to be beneficially owned by Paramount Capital
Asset Management, Inc. ("Paramount"), of which Dr. Rosenwald is the
sole stockholder. See Footnote 11 below. In addition, Dr. Rosenwald may
be deemed to have sole voting and investment power over approximately
3,261,896 shares of Common Stock, consisting of approximately 3,132,733
shares of Common Stock issuable upon conversion of 27,718 shares of
Series D Preferred Stock, which are themselves issuable upon exercise
of warrants, and 129,163 shares of Common Stock issuable upon exercise
of warrants, which are themselves issuable upon exercise of warrants.
(11) Paramount may be deemed to have shared voting and investment power
over: (i) 2,415,707 shares Common Stock held by the Aries Domestic
Fund, L.P. (the "Aries Domestic Fund"), (ii) 5,306,437 shares of Common
Stock held by The Aries Trust, a Cayman Islands trust (the "Aries
Trust"), (iii) 507,631 shares of Common Stock held by the Aries
Domestic Fund II, L.P. (the "Aries Domestic Fund II"), (iv) 70,100
shares of Series A Preferred Stock (convertible into 517,513 shares of
Common Stock) held by the Aries Domestic Fund, (v) 180,700 shares of
Series A Preferred Stock (convertible
-13-
<PAGE>
into 1,334,018 shares of Common Stock) held by the Aries Trust, (vi)
26,395 shares of Series D Preferred Stock (convertible into 2,983,163
shares of Common Stock) held by the Aries Domestic Fund, (vii) 49,020
shares of Series D Preferred Stock (convertible into 5,540,240 shares
of Common Stock) held by the Aries Trust, (viii) 2,790,197 shares of
Common Stock issuable upon exercise of warrants held by the Aries
Domestic Fund, and (ix) 5,181,794 shares of Common Stock issuable upon
exercise of warrants held by the Aries Trust. Paramount is the General
Partner and Investment Advisor of the Aries Domestic Fund and the Aries
Domestic Fund II and the Investment Advisor of the Aries Trust.
(12) United Congregations Mesora owns beneficially 2,500 shares of Series D
Preferred Stock (which are convertible into approximately 282,550
shares of Common Stock) and Class D Warrants to purchase up to 50,000
shares of Common Stock.
Report of the Compensation Committee on Executive Compensation
Overview
The Company seeks to achieve three objectives which serve as guidelines
in making compensation decisions:
o Providing a total compensation package which is competitive and,
therefore, enables the Company to attract and retain, on a long-term
basis, high-caliber executive personnel;
o Integrating compensation programs with the Company's short-term and
long-term strategic plan and business objectives; and
o Encouraging achievement of business objectives and enhancement of
stockholder value by providing executive management long-term incentive
through equity ownership.
In making its compensation determinations, the Compensation Committee
of the Board of Directors has relied, in part, on independent surveys and
analyses of management compensation of executives of companies in the
biotechnology and pharmaceutical industries (including companies in the Nasdaq
Pharmaceutical Stock Index used in the Company's Stock Price Performance Graph
set forth in this Proxy Statement) and recommendations of management. The
Compensation Committee believes it has established executive compensation levels
that are competitive with companies in the biotechnology and pharmaceutical
industries when taking into account relative company size, stage of development,
individual responsibilities and experience, individual and overall corporate
performance and geographic location.
Components of Executive Compensation
The Company's potential therapeutic products are in various stages of
research and development and no revenues have as yet been generated from
therapeutic product sales. As a result, the use of traditional performance
standards, such as corporate profitability, are not believed to be appropriate
in the evaluation of the performance of the Company or its individual
-14-
<PAGE>
executives. The compensation of the Company's executive officers is based, in
substantial part, on the achievement of individual and overall corporate
objectives. Such objectives are established and modified as necessary to reflect
changes in market conditions and other factors. Individual and overall corporate
performance are measured by reviewing whether these corporate objectives have
been achieved.
The Company's compensation package for executive officers generally
consists of annual cash compensation and long-term compensation in the form of
stock options. In light of the Company's stage of development, considerable
emphasis is placed on equity-based compensation in an effort to preserve cash to
finance the Company's research and development efforts.
Annual Cash Compensation
Compensation levels for the Company's executive officers are determined
in part through comparisons with companies of a similar size, stage of
development and level of complexity in the biotechnology and pharmaceutical
industries and other companies with which the Company competes for personnel. In
addition, the compensation level for each executive officer reflects an
evaluation of the responsibilities required for each respective position,
individual experience levels and individual performance and contributions toward
achievement of the Company's business objectives. The compensation levels for
the Company's executive officers are designed to be competitive within a range
that the Compensation Committee determines to be reasonable in light of the
aforementioned factors. The salary level of each executive officer is reviewed
on an annual basis and adjustments are made as deemed necessary.
Stock Options
The Compensation Committee believes that by providing all full-time
employees, including executive officers who have responsibility for the
management and growth of the Company, with an opportunity to obtain an equity
interest in the Company, the best interests of stockholders and the Company's
employees will be closely aligned. Accordingly, all full-time employees,
including executive officers, are eligible to receive stock option grants from
time to time, giving them the right to purchase shares of the Company's Common
Stock at a specified price.
Compensation of Executive Officers
In making compensation decisions for the Company's fiscal year ended
December 31, 1999, the Compensation Committee took into account the Company's
limited cash resources, the general financial performance of the Company during
1998 and 1999 and the importance of retaining the Company's cash to finance its
development programs. The Compensation Committee also considered the importance
to the Company of retaining highly qualified key personnel due to the complex
and technologically sophisticated nature of the Company's business. In light of
these factors, the only bonus compensation awarded to any executive officer was
to Dr. Warrell, in accordance with his employment agreement when he was hired as
the Company's President and Chief Executive Officer, effective on December 1,
1999. In addition, Dr. Warrell receives an annual salary of $325,000 pursuant to
the terms of his employment
-15-
<PAGE>
agreement. See "Compensation of the President and Chief Executive Officer"
above. Dr. Kasses served as the Company's President and Chief Executive Officer
until December 1, 1999. During the fiscal year ended December 31, 1999, Dr.
Kasses received $300,000, including one-twelfth of the severance amount payable
to Dr. Kasses under his separation agreement, which is $300,000 to be paid over
twelve months. See "Separation Letter Agreement" above.
This Report of the Compensation Committee on Executive Compensation
shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, except to the extent the Company specifically incorporates
this report by reference, and shall not otherwise be deemed filed under such
Acts.
Michael S. Weiss(1)
- --------
1 During the fiscal year ended December 31, 1999, the Compensation
Committee was composed of Dr. Glenn L. Cooper, Michael S. Weiss and
Andrew J. Stein. Mr. Stein resigned from the Board of Directors on
August 11, 1999 and Dr. Cooper resigned from the Board of Directors in
March 2000, and both are no longer members of the Compensation
Committee.
-16-
<PAGE>
Stock Price Performance Graph
The following graph illustrates a comparison of the five-year
cumulative total stockholder return (change in stock price plus reinvested
dividends) of the Company's Common Stock with the CRSP Total Return Index for
the Nasdaq National Market (U.S. and foreign) (the "Nasdaq Composite Index") and
the CRSP Total Return Index for Nasdaq Pharmaceutical Stocks (the "Nasdaq
Pharmaceutical Index"). The comparisons in the graph are required by the
Securities and Exchange Commission ("SEC") and are not intended to forecast or
be indicative of possible future performance of the Company's Common Stock.
The Performance Graph is being filed in tabular form pursuant to Item
304(d) of Regulation S-T.
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, December 31, December 31,
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Genta
Incorporated $100.00 $43.90 $8.54 $1.52 $2.50 $12.56
Nasdaq
Composite 100.00 183.41 183.98 189.98 241.68 451.62
NASDAQ
Pharmaceutical1 100.00 140.36 171.84 209.85 290.17 531.74
</TABLE>
Assumes a $100 investment on December 31, 1994 in each of the Company's
Common Stock, the securities comprising the Nasdaq Composite Index, and the
securities comprising the Nasdaq Pharmaceutical Index.
- ------------------------
(1) The Nasdaq Pharmaceutical Index includes companies on Nasdaq whose
business activities fall within the same standard industrial classification code
as the Company (SIC code 283). A copy of the list of companies that comprise the
Nasdaq Pharmaceutical Index may be obtained upon request by contacting Genta
Incorporated, 99 Hayden Avenue, Suite 200, Lexington, Massachusetts 02421, Tel.
(781) 860-5150.
-17-
<PAGE>
Certain Relationships and Related Transactions
Michael S. Weiss is a managing director of Genta Jago Technologies
B.V., a joint venture that is 50% owned by Genta.
During 1998 and through March 1999, the Company rented office space
from Interneuron Pharmaceuticals, Inc. on a month-to-month basis at $600 a
month. The Company and Interneuron Pharmaceuticals, Inc. entered into a two-year
sub-lease effective April 1, 1999, pursuant to which the Company rents
approximately 2,300 square feet of office space for $3,621 per month, subject to
a standard escalation clause. In February 2000, the Company received notice from
Interneuron Pharmaceuticals, Inc. of its intention to terminate the sub-lease,
effective August 31, 2000. Dr. Glenn L. Cooper is a director and President and
Chief Executive Officer of Interneuron Pharmaceuticals, Inc., and Dr. Bobby W.
Sandage, Jr., is a Director and Executive Vice President, Research and
Development, and Chief Scientific Officer of Interneuron Pharmaceuticals, Inc.
Drs. Cooper and Sandage resigned from the Board of Directors of the Company in
March 2000.
Nominees for the Board of Directors
The nominees to serve as members on the Board of Directors of the
Company are Mark C. Rogers, M.D., Raymond P. Warrell, Jr., M.D., Donald G.
Drapkin, Kenneth G. Kasses, Ph.D., Ralph Snyderman, M.D., Daniel D. Von Hoff,
M.D., Harlan J. Wakoff, and Michael S. Weiss, all of whom are currently members
of the Board of Directors of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE
NOMINEES FOR DIRECTOR LISTED ABOVE.
Directors are elected by a plurality vote of the aggregate voting power
of the shares of outstanding Common Stock and Series D Preferred Stock, present
in person or represented by proxy, voting together as a single class.
-18-
<PAGE>
PROPOSAL TWO
AMENDMENT TO GENTA INCORPORATED 1998 STOCK
INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE THEREUNDER
On January 12, 2000 and February 22, 2000, the Board of Directors
approved amendments to the Company's 1998 Stock Incentive Plan (the "1998 Plan")
which, if adopted, would increase the number of shares authorized for issuance
thereunder from six million seven hundred fifty thousand (6,750,000) shares to
eleven million (11,000,000) shares and on March 27, 2000, the Board of Directors
approved an amendment to the 1998 Plan that would increase the maximum number of
incentive stock options which may be granted thereunder from five million
(5,000,000) shares to nine million (9,000,000) shares (collectively, the "1998
Plan Amendment"). The Board of Directors believes that the 1998 Plan Amendment
is in the best interests of the Company and its stockholders because the
availability of an adequate stock option program is an important factor in
attracting and retaining qualified directors, officers and employees (whether
through acquisitions or otherwise) essential to the success of the Company and
in aligning their long term interests with those of the stockholders. The
increase in the number of shares of Common Stock reserved for issuance under the
1998 Plan will permit the Company to continue the operation of the 1998 Plan for
the benefit of new participants, as well as to allow additional awards to
current participants. Stockholder approval of the 1998 Plan Amendment is
necessary, inter alia, to comply with the listing maintenance standards of
Nasdaq, to comply with the provisions of the performance-based compensation
exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), as well as to ensure that incentive stock options are available
for issuance.
The major features of the 1998 Plan are summarized below, which summary
is qualified in its entirety by the actual text of the 1998 Plan. The Company
will furnish without charge a copy of the 1998 Plan to any stockholder of the
Company upon receipt from any such person of an oral or written request for the
1998 Plan. Such request should be sent to the Company at Genta Incorporated, 99
Hayden Avenue, Suite 200, Lexington, Massachusetts 02421, or made by telephone
at (781) 860-5150.
General
The 1998 Plan was approved by the Board of Directors as of May 28, 1998
and adopted by the Company's stockholders on July 14, 1998.
Awards under the 1998 Plan may be made in the form of (i) incentive
stock options, (ii) non-qualified stock options (incentive and non-qualified
stock options are collectively referred to as "options"), (iii) stock
appreciation rights, (iv) restricted stock, (v) restricted stock units, (vi)
dividend equivalent rights and (vii) other stock-based awards. Awards may be
made to such directors, officers and other employees of the Company and its
subsidiaries (including prospective employees who become employees), and to such
consultants, advisors and other independent contractors of the Company and its
subsidiaries, as the Committee shall in its discretion select (collectively,
"key persons").
-19-
<PAGE>
Administration
The 1998 Plan may be administered by the Board of Directors of the
Company or the Compensation Committee, composed of not fewer than two outside
directors. To the extent required for transactions under the 1998 Plan to
qualify for the exemptions available under Rule 16b-3 ("Rule 16b-3") promulgated
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), all
actions relating to awards to persons subject to Section 16 of the 1934 Act
shall be taken by the Board unless each person who serves on the Compensation
Committee is a "non-employee director" within the meaning of Rule 16b-3 or such
actions are taken by a sub-committee of the Compensation Committee (or the
Board) comprised solely of "non-employee directors". To the extent required for
compensation realized from awards under the 1998 Plan to be deductible by the
Company pursuant to Section 162(m) of the Code, the members of the Compensation
Committee shall be "outside directors" within the meaning of Section 162(m). The
Board and Compensation Committee are authorized to construe, interpret and
implement the provisions of the 1998 Plan, to select the key persons to whom
awards will be granted, to determine the terms and provisions of such awards,
and to amend outstanding awards. The determinations of the Board and
Compensation Committee are made in their sole discretion and are conclusive. The
Compensation Committee presently consists of Michael S. Weiss. (As used herein,
"Committee" refers to the Compensation Committee and/or the Board of Directors,
as appropriate).
Grants Under the 1998 Plan
Currently, the 1998 Plan provides for the issuance of authorized and
unissued shares of Common Stock, treasury shares and/or shares acquired by the
Company for purposes of the 1998 Plan up to a maximum of 6,750,000 shares. In
addition, the 1998 Plan currently provides that the total number of incentive
stock options, which may be granted under the 1998 Plan may not exceed 5,000,000
shares. Generally, shares subject to an award that remain unissued upon
expiration or cancellation of the award are available for other awards under the
1998 Plan. In the event of a stock dividend, stock split, reverse stock split,
combination or reclassification of the Common Stock or the like, the Board of
Directors or the Compensation Committee of the Board of Directors will equitably
adjust the aggregate number of shares subject to the 1998 Plan, the number of
shares subject to each outstanding award, and the exercise price of each
outstanding option.
The 1998 Plan Amendment would increase the maximum number of shares of
Common Stock authorized for issuance under the 1998 Plan to 11,000,000 (subject
to any increase pursuant to Section 1.5 of the 1998 Plan), and would increase
the maximum number of incentive stock options which may be granted under the
1998 Plan to 9,000,000 shares.
As of December 31, 1999, the Company had granted options to purchase
9,602,882 shares of Common Stock under the 1998 Plan. The exercisability of (i)
the CEO Options granted to Dr. Warrell, and (ii) options granted to Dr. Rogers
to purchase of approximately 750,000 shares of Common Stock for his services as
Chairman of the Board of Directors, however, is contingent upon stockholder
approval of Proposal Six.
-20-
<PAGE>
Stock Options
Unless the Committee expressly provides otherwise, an option will
become exercisable as to 25% of the shares subject thereto on each of the first
through fourth anniversaries of the grant. The purchase price per share payable
upon the exercise of an option (the "option exercise price") will be established
by the Committee, provided that the option exercise price shall be no less than
100% of the fair market value of a share of the Common Stock on the date of
grant in the case of an incentive stock option. However, to the extent required
under Section 422 of the Code, an incentive option granted to an individual who,
at the time the option is granted, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of his employer corporation
or of its parent or subsidiary must satisfy the following conditions: (a) at the
time such option is granted, the option exercise price shall be no less than
110% of the fair market value of a share of the Common Stock on the date of
grant and (b) the option by its terms is not exercisable after the expiration of
five years from the date it is granted. The option exercise price is payable in
cash, or, with the consent of the Committee, by surrender of shares of Common
Stock having a fair market value on the date of the exercise equal to part or
all of the option exercise price, or by such other payment method as the
Committee may prescribe.
Stock Appreciation Rights
Stock appreciation rights may be granted in connection with all or any
part of, or independently of, any option granted under the 1998 Plan. Generally,
no stock appreciation right will be exercisable at a time when any option to
which it relates is not exercisable. The grantee of a stock appreciation right
has the right to surrender the stock appreciation right and to receive from the
Company an amount equal to the aggregate appreciation (since the date of the
grant, or over the option exercise price if the stock appreciation right is
granted in connection with an option) in the shares of Common Stock in respect
of which such stock appreciation right is being exercised. Payment due upon
exercise of a stock appreciation right may be in cash, in Common Stock, or
partly in each, as determined by the Committee in its discretion.
Individual Limitation on Stock Options and Stock Appreciation Rights
The total number of shares of Common Stock with respect to which
options and stock appreciation rights may be granted to any one employee during
any two-year period may not exceed 8,000,000.
Restricted Stock
The Committee may grant or sell restricted shares of Common Stock to
such key persons, in such amounts, and subject to such terms and conditions
(which may depend upon or be related to performance goals and other conditions)
as the Committee shall determine in its discretion. Certificates for the shares
of Common Stock covered by a restricted stock award will remain in the
possession of the Company until such shares are free of restrictions. Subject to
the applicable restrictions, the grantee has the rights of a stockholder with
respect to the restricted stock.
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Restricted Stock Units
The Committee may grant restricted stock units to such key persons, in
such amounts, and subject to such terms and conditions as the Committee shall
determine in its discretion. Restricted stock units are intended to give the
recipient the economic equivalent of actual restricted shares of stock, while
postponing the tax consequences. A restricted stock unit is an unsecured promise
to transfer an unrestricted share of stock at a specified future maturity date
(which can be later than the vesting date at which the right to receive the
shares becomes nonforfeitable) selected by the recipient of the unit at the time
of grant or subsequent thereto.
Dividend Equivalent Rights
The Committee may include in any award a dividend equivalent right
entitling the recipient to receive amounts equal to the ordinary dividends that
would have been paid, during the time such award is outstanding, unexercised or
not vested, on the shares of Common Stock covered by such award if such shares
were then outstanding.
Other Stock Based-Awards
The 1998 Plan permits the Committee to grant other stock based awards,
such as performance shares or unrestricted stock, subject to such terms and
conditions as the Committee deems appropriate.
Termination of Employment or Service
Options and Stock Appreciation Rights
Unless the Committee otherwise specifies: (i) all options and stock
appreciation rights not yet exercised shall terminate upon termination of the
grantee's employment or service by reason of discharge for cause; (ii) if a
grantee's employment or service terminates for reasons other than cause or
death, the grantee's options and/or stock appreciation rights generally will be
exercisable for 90 days (or one year if the termination is by reason of
disability) after termination to the extent that they were exercisable at
termination, but not after the expiration date of the award; and (iii) if a
grantee dies while in the Company's employ or service or during the
aforementioned post-employment exercise period, the grantee's options and/or
stock appreciation rights will, to the extent exercisable immediately prior to
death, generally remain exercisable for one year after the date of death, but
not after the expiration date of the award.
Restricted Stock
If a grantee's employment or service terminates for any reason during
the 120 days following the employee's termination date, the Company will have
the right to require forfeiture of restricted shares then subject to
restrictions on transfer in exchange for any amount paid by the grantee for such
shares.
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Right of Recapture
If at any time within one year after the date of a "realization event"
(as defined in Section 2.10 of the 1998 Plan), the grantee is terminated for
cause or engages in any activity determined in the discretion of the Committee
to be in competition with any activity of the Company, or otherwise inimical,
contrary or harmful to the interests of the Company (including, but not limited
to, accepting employment with or serving as a consultant, adviser or in any
other capacity to an entity that is in competition with or acting against the
interests of the Company), then any gain realized by the grantee from the
realization event shall be paid by the grantee to the Company. Such gain shall
be determined as of the date of the realization event, regardless of any
subsequent change in the fair market value of a share of Common Stock. The
Company shall have the right to offset such gain against any amounts otherwise
owed to the grantee by the Company (whether as wages, vacation pay, or pursuant
to any benefit plan or other compensatory arrangement).
Other Features of the 1998 Plan
The Committee may amend any outstanding award, including, without
limitation, by amendment which would accelerate the time or times at which the
award becomes unrestricted or may be exercised, or waive or amend any goals,
restrictions or conditions on the award. The Board of Directors may, without
stockholder approval, suspend, discontinue, revise or amend the 1998 Plan at any
time or from time to time; provided, however, that stockholder approval shall be
obtained to the extent necessary to comply with Section 422 of the Code
(relating to the grant of incentive stock options) and other applicable law.
Unless sooner terminated by the Board of Directors, the provisions of the 1998
Plan respecting the grant of incentive stock options shall terminate on the
tenth anniversary of the adoption of the 1998 Plan by the Board of Directors.
All awards made under the 1998 Plan prior to its termination shall remain in
effect until they are satisfied or terminated. In the event of a change in
control of the Company (as defined in Section 3.7 of the 1998 Plan), (i) any
then outstanding stock option or stock appreciation right will become fully
vested and immediately exercisable upon the subsequent termination of employment
of the grantee by the Company or its successors without cause within one year of
the change in control, unless the applicable plan agreement otherwise provides,
and (ii) the Committee in its discretion may amend any outstanding award,
including by amendments which advance the dates upon which any or all
outstanding awards of any type terminate. In the event of a proposed liquidation
or dissolution of the Company, outstanding awards will terminate immediately
prior to the consummation of the action, unless otherwise provided by the
Committee, which in its discretion may accelerate the date on which any award
becomes fully vested and/or declare that any award will terminate as of a
specified date. In the event of a merger or consolidation of the Company with or
into any other corporation or entity, outstanding awards shall be assumed or an
equivalent option or right shall be substituted by such successor corporation or
a parent or subsidiary of such successor corporation, unless the Committee
determines, in the exercise of its sole discretion, to accelerate the date on
which an award becomes exercisable or fully vested. In the absence of an
assumption or substitution of awards, awards shall, to the extent not exercised,
terminate as of the date of the closing of the merger.
Unless sooner terminated by the Board, the provisions of the 1998 Plan
respecting the grant of incentive stock options shall terminate on July 13,
2008, and no incentive stock option
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awards shall thereafter be made under the Plan. All awards made under the Plan
prior to its termination shall remain in effect until such awards have been
satisfied or terminated in accordance with the terms and provisions of the Plan
and the applicable plan agreements.
Tax Consequences
The following description of the tax consequences of awards under the
1998 Plan is based on present federal tax laws, and does not purport to be a
complete description of the tax consequences of the 1998 Plan.
There are generally no federal tax consequences either to the optionee
or to the Company upon the grant of a stock option. On exercise of an incentive
stock option, the optionee will not realize any income, and the Company will not
be entitled to a deduction for tax purposes, although such exercise may give
rise to liability for the optionee under the alternative minimum tax provisions
of the Code. However, if the optionee disposes of shares acquired upon exercise
of an incentive stock option within two years of the date of grant or one year
of the date of exercise, the optionee will recognize compensation income, and
the Company will be entitled to a deduction in the amount of the excess of the
fair market value of the shares of Common Stock on the date of exercise over the
option exercise price (or the gain on sale, if less); the remainder of any gain
to the optionee will be treated as capital gain. On exercise of a non-qualified
stock option, the amount by which the fair market value of the Common Stock on
the date of exercise exceeds the option exercise price will generally be taxable
to the optionee as compensation income and will generally be deductible for tax
purposes by the Company.
The grant of a stock appreciation right or restricted stock unit award
will not result in income for the grantee or in a tax deduction for the Company.
Upon the settlement of such a right or award, the grantee will include in gross
income an amount equal to the fair market value of any shares of Common Stock
and/or any cash received, and the Company will be entitled to a tax deduction in
the same amount. An award of restricted shares of Common Stock will not result
in income for the grantee or in a tax deduction for the Company until such time
as the shares are no longer subject to forfeiture unless the grantee elects
otherwise. At that time, the grantee generally will include in gross income an
amount equal to the fair market value of the shares less any amount paid for
them, and the Company will be entitled to a tax deduction in the same amount.
Limitations on the Company's Compensation Deduction
Section 162(m) of the Code limits the deduction which the Company may
take for otherwise deductible compensation payable to certain executive officers
to the extent that the yearly compensation paid to such officers exceeds $1.0
million, unless such compensation meets certain criteria. The Company believes
that compensation realized from stock options and stock appreciation rights
granted under the 1998 Plan generally will satisfy the requirements of Section
162(m) of the Code if the options or stock appreciation rights are granted by a
committee of "outside directors" (as defined under Section 162(m)) and are
granted at fair market value; however, there is no assurance that such awards
will satisfy such requirements. In addition, because other awards under the 1998
Plan will generally not meet the requirements of Section
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162(m) of the Code, the deduction attributable to any compensation realized
under any such awards to the affected executive officers may be limited.
Interest of Certain Persons in the 1998 Plan Amendment
Pursuant to his employment agreement and accompanying stock option
agreement, Dr. Warrell is entitled to receive (i) annual stock options for the
purchase of 300,000 shares of Common Stock upon the achievement of agreed-upon
milestones; (ii) stock options for the purchase of 793,877 shares of Common
Stock on the earlier of the sixth annual anniversary of his employment or the
date the market capitalization of the Company has exceeded three times the
market capitalization of the Company upon commencement of his employment; (iii)
stock options for the purchase of 793,877 shares of Common Stock on the earlier
of the sixth annual anniversary of his employment or the date the Company has
received from the FDA a letter approving G3139 for any clinical indication; and
(iv) stock options for the purchase of 3,175,508 shares of Common Stock,
twenty-five percent of which vested upon commencement of his employment, with
the remaining seventy-five percent vesting on a ratable monthly vesting schedule
over the three-year term of his employment. Dr. Rogers has been granted options
to purchase approximately 750,000 shares of Common Stock for his services as
Chairman of the Board of Directors. The increase in the number of shares
authorized for issuance under the 1998 Plan is intended, in part, to provide a
sufficient number of shares for the exercise of options granted to Dr. Warrell
and Dr. Rogers.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL TWO.
Approval of Proposal Two will require the affirmative vote of a
majority of the aggregate voting power of the shares of Common Stock and Series
D Preferred Stock present in person or represented by proxy, voting together as
a single class.
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PROPOSAL THREE
AMENDMENT TO GENTA INCORPORATED NON-EMPLOYEE
DIRECTORS' 1998 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER
On January 12, 2000, the Board of Directors of the Company approved an
amendment (the "Directors' Plan Amendment No. 1") to the Company's Non-Employee
Directors' 1998 Stock Option Plan (the "Directors' Plan") which, if adopted,
would increase the number of shares authorized for issuance thereunder from
three million (3,000,000) to four million (4,000,000). The Board of Directors
believes that the Directors' Plan Amendment No. 1 is in the best interests of
the Company and its stockholders because the availability of an adequate stock
option program is an important factor in attracting and retaining qualified
non-employee directors to serve on the Board of Directors and helps to maintain
and enhance long-term performance. The increase in the number of shares of
Common Stock reserved for issuance under the Directors' Plan will permit the
Company to continue the operation of the Directors' Plan for the benefit of new
participants, as well as to allow additional awards to current participants.
Stockholders approval of the Directors' Plan Amendment No. 1 is necessary, inter
alia, to comply with the listing maintenance standards of Nasdaq and to comply
with the provisions of the performance-based compensation exemption under
Section 162(m) of the Code.
The major features of the Directors' Plan are summarized below, which
summary is qualified in its entirety by the actual text of the Directors' Plan.
The Company will furnish without charge a copy of the Directors' Plan to any
stockholder of the Company upon receipt from any such person of an oral or
written request for the Directors' Plan. Such request should be sent to the
Company at Genta Incorporated, 99 Hayden Avenue, Suite 200, Lexington,
Massachusetts 02421, or made by telephone at (781) 860-5150.
General
The Directors' Plan was approved by the Board of Directors as of May
28, 1998 and adopted by the Company's stockholders as of July 14, 1998.
Currently, the Directors' Plan provides for the issuance of authorized and
unissued shares of Common Stock, treasury shares and/or shares acquired by the
Company for purposes of the Directors' Plan up to a maximum of 3,000,000 shares.
Generally, shares subject to an option that remain unissued upon expiration or
cancellation of the option are available for other options under the Directors'
Plan. In the event of any change in the Common Stock by reason of a stock
dividend, recapitalization, merger, consolidation or the like, the Board of
Directors will adjust the number and kind of shares issuable, the number of
shares subject to options then outstanding or subsequently granted under the
Directors' Plan and the exercise price of such options.
The Directors' Plan Amendment No. 1 would increase the maximum number
of shares of Common Stock authorized for issuance under the Directors' Plan to
4,000,000 plus the number of shares underlying the options referred to in
Section 5(c) of the Directors' Plan. As of December 31, 1999, the Company had
granted options to purchase 2,075,000 shares of Common Stock under the
Directors' Plan.
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Annual Option Grants
Currently, the Directors' Plan provides for grants, at each annual
meeting of stockholders of the Company commencing with the 1999 annual meeting
of stockholders, of non-qualified stock options to purchase 50,000 shares of
Common Stock to each non-employee director, excluding any director who is then
receiving a grant under any other equity-based plan or arrangement of the
Company in connection with his or her initial election or appointment to the
Board of Directors, provided that the director has served on the Board of
Directors for at least six months prior to the date of the annual meeting (such
annual options, the "Annual Options"). The requirement that each director serves
on the Board of Directors for at least six months prior to the annual meeting to
receive the Annual Options will be eliminated if Proposal Five is approved by
the stockholders. Each Annual Option granted under the Directors' Plan will have
a term of ten years and will become exercisable in full on the date of the
annual meeting of stockholders next following the date of grant. The exercise
price of each Annual Option granted under the Directors' Plan will equal the
fair market value of a share of Common Stock on the date of the relevant annual
meeting.
Termination of Service
If a non-employee director's service on the Board terminates for any
reason other than death or disability, options granted under the Directors' Plan
will be exercisable for six months after termination to the extent they were
exercisable at the time of termination, but not after the expiration date of the
option. If a director dies or becomes disabled while serving on the Board or
during the aforementioned post-service exercise period, the options granted
under the Directors' Plan will, to the extent exercisable immediately prior to
death or disability, remain exercisable for one year after the date of death or
disability, but not after the expiration date of the option.
Other Features of the Directors' Plan
In the event of a merger or consolidation of the Company with or into
any other corporation or entity, outstanding awards shall be assumed or an
equivalent option or right shall be substituted by such successor corporation or
a parent or subsidiary of such successor corporation.
The Board may amend the Directors' Plan at any time or from time to
time; provided, that no amendment may impair any material rights or increase any
material obligations under any outstanding option without the optionee's
consent. Stockholder approval of any amendment shall be obtained to the extent
necessary to comply with any applicable law, rule or regulation.
Unless sooner terminated by the Board, the Directors' Plan will
terminate on the date when no more shares are available for issuance thereunder.
All options granted under the Directors' Plan prior to its termination will
continue in effect until exercised or terminated.
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Federal Income Tax Consequences
The following description of the tax consequences of awards of options
under the Directors' Plan is based on present federal tax laws, and does not
purport to be a complete description of the tax consequences of the Directors'
Plan.
There are generally no federal tax consequences either to the optionee
or to the Company upon the grant of a stock option. On exercise of a
non-qualified stock option, the amount by which the fair market value of the
Common Stock on the date of exercise exceeds the option exercise price will
generally be taxable to the optionee as compensation income and will generally
be deductible for tax purposes by the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL
THREE.
Approval of Proposal Three will require the affirmative vote of a
majority of the aggregate voting power of the shares of Common Stock and Series
D Preferred Stock present in person or represented by proxy, voting together as
a single class.
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PROPOSAL FOUR
AMENDMENT TO GENTA INCORPORATED NON-EMPLOYEE
DIRECTORS' 1998 STOCK OPTION PLAN TO CHANGE
THE VESTING RIGHTS OF THE OPTIONS GRANTED THEREUNDER
On February 22, 2000, the Board of Directors approved an amendment to
the Directors' Plan (the "Directors' Plan Amendment No. 2") which, if adopted,
would replace the first sentence of Section 8(d) of the Directors' Plan in its
entirety with the following:
"Upon the happening of a change in control (as hereinafter
defined) notwithstanding any other provision of this Plan, any
option granted under this Plan then outstanding shall become
fully vested and immediately exercisable (i) upon the
termination of the Eligible Director's status as an Eligible
Director as a result of the removal of such person from the
Board (other than for cause) by shareholder action within one
year of such change in control or (ii) in the case of any
liquidation, sale, disposition or other transaction described
in clause (D) of the next sentence, immediately upon the
consummation of such liquidation, sale, disposition or other
transaction."
The Directors' Plan Amendment No. 2 would make Section 8(d) applicable
to any option granted under the Director's Plan and not just options granted
under Section 5(c) as was formerly the case. The Board of Directors believes
that the Directors' Plan Amendment No. 2 is in the best interests of the Company
and its stockholders because it provides improved incentives to attract and
retain qualified non-employee directors to serve on the Board of Directors and
helps to maintain and enhance long-term performance.
The major features of the Directors' Plan are summarized above, which
summary is qualified in its entirety by the actual text of the Directors' Plan.
The Company will furnish without charge a copy of the Directors' Plan to any
stockholder of the Company upon receipt from any such person of an oral or
written request for the Directors' Plan. Such request should be sent to the
Company at Genta Incorporated, 99 Hayden Avenue, Suite 200, Lexington,
Massachusetts 02421, or made by telephone at (781) 860-5150.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL FOUR.
Approval of Proposal Four will require the affirmative vote of a
majority of the aggregate voting power of the shares of Common Stock and Series
D Preferred Stock present in person or represented by proxy, voting together as
a single class.
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PROPOSAL FIVE
AMENDMENT TO GENTA INCORPORATED
NON-EMPLOYEE DIRECTORS' 1998 STOCK OPTION PLAN
TO CHANGE THE AMOUNT AND THE TIME WHEN STOCK OPTIONS ARE GRANTED THEREUNDER
On February 22, 2000 and March 27, 2000, the Board of Directors of the
Company approved an amendment to the Directors' Plan (the "Directors' Plan
Amendment No. 3") which, if adopted, would add a Section 5(d) to the Directors'
Plan, which states the following:
"(d) Each person elected to the Board after January
1, 2000, and who upon such election qualifies as an Eligible
Director, shall, upon such person's election shall be granted
options to purchase 75,000 shares of Common Stock and upon
each one year anniversary of such person's election (provided
such person remains an Eligible Director on such date), be
granted options to purchase 50,000 shares of Common Stock;
provided, however, that if the Chairman of the Board of
Directors is not an employee of the Company, he will be
granted options to purchase 100,000 shares of Common Stock.
The exercise price per share of Common Stock under each option
granted under this Section 5(d) shall be equal to Fair Market
Value (as defined in Section 6(a) of this Plan). Such options
shall be exercisable on the one year anniversary of the date
of the grant, provided that the optionee continues to be an
Eligible Director at that time; provided further that no
Eligible Director who is eligible to receive a grant under
this Section 5(d) shall be eligible to receive a grant under
Section 5(b) of this Plan.
The Board of Directors believes that the Directors' Plan Amendment No.
3 is in the best interests of the Company and its stockholders because it
provides improved incentives to attract and retain qualified non-employee
directors to serve on the Board of Directors and helps to maintain and enhance
long-term performance. Stockholders approval of the Directors' Plan Amendment
No. 3 is necessary, inter alia, to comply with the listing maintenance standards
of Nasdaq.
The major features of the Directors' Plan are summarized above, which
summary is qualified in its entirety by the actual text of the Directors' Plan.
The Company will furnish without charge a copy of the Directors' Plan to any
stockholder of the Company upon receipt from any such person of an oral or
written request for the Directors' Plan. Such request should be sent to the
Company at Genta Incorporated, 99 Hayden Avenue, Suite 200, Lexington,
Massachusetts 02421, or made by telephone at (781) 860-5150.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL FIVE.
Approval of Proposal Five will require the affirmative vote of a
majority of the aggregate voting power of the shares of Common Stock and Series
D Preferred Stock present in person or represented by proxy, voting together as
a single class.
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PROPOSAL SIX
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED CAPITAL STOCK
On January 12, 2000, the Board of Directors of the Company approved an
amendment (the "Charter Amendment") to the Company's Restated Certificate of
Incorporation which, if adopted, would increase the total authorized capital
stock from seventy million (70,000,000) shares to one hundred million
(100,000,000) shares.
The Charter Amendment will increase the authorized capital stock of the
Company by amending and restating the first sentence of Article IV(A) of the
Company's Restated Certificate of Incorporation so that, as amended and
restated, it will read as follows:
"ARTICLE IV
(A) Classes of Capital Stock. The total number of shares of
capital stock which the corporation shall have authority to
issue is one hundred million (100,000,000), of which
ninety-five million (95,000,000) shares shall be common stock,
par value $.001 per share (the "Common Stock"), and five
million (5,000,000) shares shall be Preferred Stock, par value
$.001 per share (the "Preferred Stock")."
The Board of Directors believes that the Charter Amendment is in the
best interests of the Company and its stockholders.
Reasons for Charter Amendment and Interests of Certain Persons in the Charter
Amendment
In the past, the Company has issued Common Stock to raise funds for its
operations, as consideration in asset acquisitions, to compensate research
institutions and corporate partners in connection with collaborative and other
arrangements and as incentive compensation to employees and directors. The
Charter Amendment needs to be approved in order for the Company to enter into
such transactions in the future, inasmuch as the Restated Certificate of
Incorporation does not provide for sufficient additional stock issuances.
The Company has granted the following options, the exercisability of
which is contingent upon stockholder approval of the Charter Amendment: (i) the
CEO Options granted to Dr. Warrell, and (ii) options granted to Dr. Rogers to
purchase of approximately 750,000 shares of Common Stock for his services as
Chairman of the Board of Directors.
Paramount Capital Asset Management, Inc., through its affiliates and on
behalf of itself, in connection with its service as placement agent in the
Company's private placement of equity securities, which closed on December 23,
1999, agreed to suspend its right to exercise warrants for the purchase of an
aggregate of approximately 1,450,000 shares of Common Stock contingent upon the
Company using its best efforts to have the Charter Amendment approved.
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The increase in the authorized number of shares of Common Stock could
have certain beneficial effects on the Company's principal stockholders
depending upon the exact nature and circumstances of any actual issuances of
authorized but unissued shares. The increase could deter takeovers, in that
additional shares could be issued (within the limits imposed by applicable law)
in one or more transactions that could make a change in control or takeover of
the Company more difficult. For example, additional shares could be issued by
the Company so as to dilute the stock ownership or voting rights of persons
seeking to obtain control of the Company. Similarly, the issuance of additional
shares to certain persons allied with the Company's management could have the
effect of making it more difficult to remove the Company's current management by
diluting the stock ownership or voting rights of persons seeking to cause such
removal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL SIX.
Approval of Proposal Six will require the affirmative vote of a
majority of the aggregate voting power of the shares of Common Stock and Series
D Preferred Stock present in person or represented by proxy, voting together as
a single class.
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PROPOSAL SEVEN
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP
as the Company's independent auditors for the fiscal year ending December 31,
2000, subject to ratification by the stockholders at the Annual Meeting.
The Company's financial statements have been audited by Ernst & Young
LLP since the Company's inception in February 1988 until Ernst & Young's
resignation in October 1998. Deloitte & Touche LLP was hired by the Company on
February 10, 1999. For more information concerning the resignation of Ernst &
Young LLP and the hiring of Deloitte & Touche LLP, please see the Company's
Current Reports on Form 8-K dated November 3, 1998 and February 12, 1999,
respectively.
Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting. They will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL
SEVEN.
Approval of Proposal Seven will require the affirmative vote of a
majority of the aggregate voting power of the shares of Common Stock and Series
D Preferred Stock present in person or represented by proxy, voting together as
a single class.
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STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be included in the proxy
statement for the Company's 2001 Annual Meeting of Stockholders must be received
by the Company at the offices of the Company, 99 Hayden Avenue, Suite 200,
Lexington, Massachusetts 02421, no later than December 18, 2000 in order to be
included in the proxy statement and form of proxy relating to such annual
meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the directors and executive officers of the Company and persons who
beneficially own more than ten percent of the Company's Common Stock
(collectively, the "Reporting Persons") to report their ownership of and
transactions in the Company's Common Stock to the SEC. Copies of these reports
are also required to be supplied to the Company. The Company believes, upon a
review of the copies of such reports received by the Company, written
representations furnished by the Reporting Persons to the Company and SEC
filings, that during the year ended December 31, 1999 the Reporting Persons
complied with all applicable Section 16(a) reporting requirements, except for
(i) Gerald M. Schimmoeller, who filed two late reports and one transaction was
not reported on a timely basis; (ii) Michael S. Weiss, who filed one late report
and three transactions were not reported on a timely basis; and (iii) Robert E.
Klem who filed two late reports and two transactions were not reported on a
timely basis.
OTHER MATTERS
The Board of Directors knows of no other business that will be
presented at the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form will
be voted in accordance with the judgment of the persons voting the proxies.
Whether you intend to be present at the Annual Meeting or not, we urge
you to return your signed proxy promptly.
By order of the Board of Directors,
Raymond P. Warrell, Jr., M.D.
President and Chief Executive Officer
Dated: April ___, 2000
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GENTA INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 9, 2000
The undersigned stockholder of Genta Incorporated (the "Company")
acknowledges receipt of the Notice of Annual Meeting of Stockholders and the
Proxy Statement, each dated April 17, 2000, and the undersigned revokes all
prior proxies and appoints Raymond P. Warrell, Jr., M.D. and Gerald M.
Schimmoeller, or either of them, as proxies for the undersigned, with full power
of substitution to each, to vote all shares of Common Stock and/or Series D
Preferred Stock of the Company which the undersigned is entitled to vote at the
Company's Annual Meeting of Stockholders to be held at the New York Hilton, 1335
Avenue of the Americas, New York, New York 10019, at 11:00 a.m., local time, on
May 9, 2000 and at any postponement or adjournment thereof, and the undersigned
authorizes and instructs said proxies or their substitutes to vote as follows:
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1. ELECTION OF DIRECTORS: To elect the nominees listed below to the Board
of Directors for a term of one year:
NOMINEES:
MARK C. ROGERS, M.D. RAYMOND P. WARRELL, JR., M.D.
DONALD G. DRAPKIN KENNETH G. KASSES, PH.D.
RALPH SNYDERMAN, M.D. DANIEL D. VON HOFF, M.D.
HARLAN J. WAKOFF MICHAEL S. WEISS
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary above) |_| listed above |_|
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list above.
2. To approve an amendment to Genta Incorporated 1998 Stock Incentive Plan
to increase the number of shares authorized for issuance thereunder.
FOR |_| AGAINST |_| ABSTAIN |_|
3. To approve an amendment to Genta Incorporated Non-Employee Directors'
1998 Stock Option Plan to increase the number of shares authorized for
issuance thereunder.
FOR |_| AGAINST |_| ABSTAIN |_|
4. To approve an amendment to Genta Incorporated Non-Employee Directors'
1998 Stock Option Plan to change the vesting rights of the stock
options granted thereunder.
FOR |_| AGAINST |_| ABSTAIN |_|
5. To approve an amendment to Genta Incorporated Non-Employee Directors'
1998 Stock Option Plan to change the amount and the time when stock
options are granted thereunder.
FOR |_| AGAINST |_| ABSTAIN |_|
6. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the authorized capital stock.
FOR |_| AGAINST |_| ABSTAIN |_|
7. To ratify the selection of Deloitte & Touche LLP as Company's
independent auditors.
FOR |_| AGAINST |_| ABSTAIN |_|
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IN THE ABSENCE OF DIRECTION, THIS PROXY
WILL BE VOTED (i) FOR THE ELECTION OF THE DIRECTORS, (ii) FOR AMENDMENT TO GENTA
INCORPORATED 1998 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE THEREUNDER, (iii) FOR AMENDMENT TO GENTA INCORPORATED
NON-EMPLOYEE DIRECTORS' 1998 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE THEREUNDER, (iv) FOR AMENDMENT TO GENTA INCORPORATED
NON-EMPLOYEE DIRECTORS' 1998 STOCK OPTION PLAN TO CHANGE THE VESTING RIGHTS OF
THE STOCK OPTIONS GRANTED THEREUNDER, (v) FOR AMENDMENT TO GENTA INCORPORATED
NON-EMPLOYEE DIRECTORS' 1998 STOCK OPTION TO CHANGE THE AMOUNT AND THE TIME WHEN
STOCK OPTIONS ARE GRANTED THEREUNDER, (vi) FOR AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED CAPITAL STOCK,
(vii) FOR RATIFICATION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS AND (viii) IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES, FOR OR
AGAINST ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND
ANY ADJOURNMENT THEREOF.
Receipt of the Notice of Annual Meeting, the Proxy Statement and the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
accompanying the same is hereby acknowledged.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: _____________________________, 2000
__________________________________________
(Signature of Stockholder)
__________________________________________
(Signature of Stockholder)
Please sign exactly as your name(s) appears
on your stock certificate. If signing as
attorney, executor, administrator, trustee
or guardian, please indicate the capacity in
which signing. When signing as joint
tenants, all parties to the joint tenancy
must sign. When the proxy is given by a
corporation, it should be signed by an
authorized officer.
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