SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Genta Incorporated
(Name of Issuer)
Common Stock, par value $.001
(Title of Class of Securities)
37245M207
(CUSIP Number)
Raymond P. Warrell, Jr., M.D.
c/o Genta Incorporated
99 Hayden Avenue, Suite 200
Lexington, MA 02421
(781) 860-5150
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
with a copy to:
Monica Lord, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue, New York, NY 10022
(212) 715-9100
May 9, 2000
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) OR 13d-1(g), check the following
box: |_|
Page 1 of 13 Pages
Exhibit Index appears on page 3
<PAGE>
Schedule 13D Page 2 of 13 Pages
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Raymond P. Warrell, Jr., M.D.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF (see Item 3)
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 4,765,262 (See Item 5)
BENEFICIALLY ----------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING ----------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 4,765,262 (See Item 5)
----------------------------------------------
10 SHARED DISPOSITIVE POWER
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,765,262 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES
X
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Schedule 13D
Item 1. Security and Issuer
This Statement on Schedule 13D (the "Statement") relates to the common
stock, par value $.001 per share (the "Common Stock"), of Genta Incorporated, a
Delaware corporation (the "Company"). The principal executive office of the
Company is located at 99 Hayden Avenue, Suite 200, Lexington, MA 02421.
Item 2. Identity and Background.
(a) This Statement is being filed on behalf of:
Raymond P. Warrell, Jr., M.D. (the "Reporting Person").
(b) The business address of the Reporting Person is c/o Genta Incorporated,
99 Hayden Avenue, Suite 200, Lexington, MA 02421.
(c) The Reporting Person is the President, Chief Executive Officer and a
director of the Company. The Company is engaged in the development of
anti-cancer pharmaceutical products. The address of the Company is set
forth in the response to Item 1.
(d) The Reporting Person has not, during the five years prior to the date
hereof, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) The Reporting Person has not been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction, as a result
of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or finding any
violation with respect to such laws.
(f) The Reporting Person is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
On December 1, 1999, the Reporting Person became a Director, President
and Chief Executive Officer of the Company. Pursuant to an employment agreement
(the "Employment Agreement") and accompanying stock option agreement (the "Stock
Option Agreement" and together with the Employment Agreement, the "Agreements")
between the Company and the Reporting Person, the Reporting Person was granted
options (the "Options") to purchase 4,763,262 shares of Common Stock. The
exercisability of such options was conditioned upon the passage of an amendment
to the Company's charter increasing the Company's authorized capital stock (the
"Amendment"). On May 9, 2000, the shareholders approved the Amendment.
As a result of the passage of the Amendment, the Reporting Person has
the present right to exercise the Options. While the Options are presently
exercisable, the shares of Common Stock issuable upon exercise of the Option are
subject to certain vesting conditions, relating to length of service and
performance criteria, that limit the Reporting Persons right to dispose of the
shares of Common Stock issuable upon exercise. There are no limitations on the
Reporting Persons voting power over such shares of Common Stock.
Pursuant to the terms of the Stock Option Agreement, the Reporting
Person will provide the funds necessary to pay the purchase price of the
Options.
2
<PAGE>
Item 4. Purpose of Transaction.
(a) The Reporting Person Acquired the shares of Common Stock, reported as
beneficially owned by him, for investment purposes and as stock based
compensation for services as President and Chief Executive Officer.
Except as disclosed in this Item 4, the Reporting Person has no current
plans or proposals which relate to or would result in any event described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D, other than plans or
proposals of the Company which have been publicly disclosed by the Company.
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Person may be deemed to beneficially own an aggregate of
4,766,262 shares of Common Stock, representing 14.3% of the Common Stock
outstanding, 4,763,262 of which are issuable upon exercise of the Options, 2,000
of which are held directly by the Reporting Person, and 1,000 of which are held
by the Reporting Person's wife's individual retirement account. The filing of
this Statement shall not be construed as an admission that the Reporting Person
is, for the purposes of 13(d) or 13(g) of the Securities Act of 1934, as amended
(the "1934 Act"), or otherwise, the beneficial owner of any of the Common Stock
issuable upon exercise of the Options or held by the Reporting Person's wife's
individual retirement account.
(b) The Reporting Person has the sole power to vote, or direct the vote of, and
(subject to certain conditions, as described in Item 3 and in the Agreements
filed herewith as Exhibit A and Exhibit B) the sole power to dispose of, or
direct the disposition of, the 4,763,262 shares of Common Stock issuable upon
exercise of the Options and the 2,000 shares of Common Stock held directly by
the Reporting Person. The Reporting Person disclaims the beneficial ownership of
the 1,000 shares of Common Stock held of record by the Reporting Person's
spouse's individual retirement account. The filing of this Statement shall not
be construed as an admission that the Reporting Person is, for the purposes of
13(d) or 13(g) of the 1934 Act, or otherwise, the beneficial owner of any of the
Common Stock held in such individual retirement account.
(c) None.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to the Securities of the Issuer.
Except as set forth in the Agreements filed herewith as Exhibit A and
B, none.
Item 7. Material to be Filed as Exhibits.
Exhibit A: Employment Agreement between the Company and
the Reporting Person, dated as of October 28,
1999.
Exhibit B: Stock Option Agreement between the Reporting
Person and the Company, dated as of October 28,
1999.
3
<PAGE>
SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Dated: May 18, 2000
/s/ Raymond P. Warrell, Jr. M.D.
--------------------------------
Raymond P. Warrell, Jr., M.D.
4
<PAGE>
EXHIBIT A
Genta Incorporated
99 Hayden Avenue, Suite 200
Lexington, Massachusetts 02421
Dated as of October 28, 1999
Raymond P. Warrell, Jr., MD.
6 Kimble Circle
Westfield, NJ 07090
Dear Dr. Warrell:
We are pleased that you are interested in becoming an employee
of Genta Incorporated, a Delaware corporation (the "Company"). Accordingly, I
would like to offer you the following terms of engagement (the "Agreement"):
1. Employment; Duties.
(a) As of October 28, 1999, the Company hereby engages and employs you,
and you hereby accept engagement and employment, as an employee of the Company.
Commencing on December 1, 1999, the Company will engage and employ you, and you
hereby accept engagement and employment, as Chief Executive Officer and
President of the Company.
(b) You shall perform your duties as are customarily associated with
your title, consistent with the By-laws of the Company and as required by the
Board of Directors of the Company (the "Board of Directors"). You shall perform
your duties hereunder at such places as shall be necessary according to the
needs, business or opportunities of the Company; provided, that you acknowledge
and agree that the performance of the duties hereunder may require significant
domestic and international travel by you.
(c) Upon commencement of your employment as President and Chief
Executive Officer, you shall devote your full business time and best efforts as
shall be necessary to the proper discharge of your duties and responsibilities
under this Agreement. You shall not, directly or indirectly, on a full time,
part time, temporary, consulting, or any other basis, work for or provide your
services to any other person, firm, corporation, partnership, joint venture or
any other entity, except that you may engage in up to eight hours a week of
other activities, provided that such other activities are consistent in all
respects with your obligations under sections 5, 6, 7 and 8 of this Agreement.
However, notwithstanding anything else contained in this Agreement, you shall
not engage in any other business activities, whether or not pursued for gain or
profit, which will interfere with your ability to perform any of the functions,
powers or duties required under this Agreement.
<PAGE>
2. Term. Your employment hereunder shall be for a term of three years
commencing on October 28, 1999 (the "Effective Date") and continuing through
November 30, 2002 (the "Term"), unless sooner terminated as hereinafter
provided.
3. Compensation and Benefits.
(a) In consideration of the services you rendered as an employee of the
Company for the period beginning on the Effective Date and ending upon
commencement of your employment as Chief Executive Officer and President on
December 1 1999, you will be paid $15,000, less all applicable federal state and
local taxes, social security and worker's compensation contributions and such
other amounts as may be required by law.
(b) As compensation and benefits for the performance of your duties on
behalf of the Company as Chief Executive Officer and President, so long as your
employment has not been terminated in accordance with this Agreement, you shall
be compensated and shall receive benefits upon commencement of your employment
as President and Chief Executive Officer, as follows:
(i) a base salary of $325,000 per annum (the "Base Salary"),
payable in accordance with the Company's standard payroll
practice;
(ii) in consideration of your entry into this Agreement, you will
receive $100,000, which is payable within 30 days from the
date this Agreement is executed or later at your discretion;
(iii) a guaranteed bonus of $100,000 at the end of your first
twelve months of employment;
(iv) a provisional bonus of at least $100,000 at the end of each
subsequent twelve months of employment provided that mutually
agreed upon milestones have been met.
The Company shall withhold all applicable federal, state and
local taxes, social security and workers' compensation contributions and such
other amounts as may be required by law or agreed upon by the parties with
respect to the compensation payable to you pursuant to this Section 3(a).
(c) Subject to subsection 3(n), you shall be entitled to receive annual
stock options for the purchase of 300,000 shares of Common Stock, adjusted for
stock splits, reverse stock splits, and stock reclassifications, (at an exercise
price equal to Fair Market Value, as defined in the Genta Incorporated 1998
Stock Incentive Plan, on the date of grant, or, in the event of a Trigger Event,
calculated as provided below) provided that mutually agreed upon milestones have
been met. All stock options granted pursuant to this subsection 3(c) (the "3(c)
Options") shall be evidenced by a stock option agreement, which shall contain
customary terms and shall provide for immediate vesting upon the occurrence of
one of the events (each a "Trigger Event") described in Section 4.1 of the Stock
Option Agreement (as defined below). In addition, if a Trigger Event occurs,
whether or not your employment has been terminated pursuant to clause 4.1(ii) of
the Stock Option Agreement, you shall be entitled to receive all
2
<PAGE>
Section 3(c) Options which you would have been entitled to receive within twelve
months following such Trigger Event, provided that the relevant milestones have
been met during such twelve month period. The Company shall grant such options
to you as soon as practicable after you become entitled to receive them. Such
options shall have an exercise price equal to the average closing price of the
Company's Common Stock for the 60 consecutive calendar days prior to the
occurrence of the Trigger Event and shall vest and be fully exercisable upon
grant.
(d) In addition, from time to time, in the discretion of the Board of
Directors, you may be entitled to additional stock options pursuant to the
Company's stock option plans.
(e) The Company agrees to reimburse you for all reasonable and
necessary travel, business entertainment and other business expenses incurred by
you in connection with the performance of your duties under this Agreement. Such
reimbursements shall be made by the Company on a timely basis upon submission by
you of vouchers in accordance with the Company's standard procedures.
(f) You shall be entitled during the Term to four weeks per annum
vacation time. You may "carry over" up to four weeks of unused vacation time to
the succeeding year.
(g) The Company shall pay the premiums on an ordinary life insurance
policy on your behalf in the principal amount of not less than $3,250,000,
provided such premiums do not exceed $20,000 annually.
(h) You shall be entitled to participate in 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. The Company, in its sole discretion, may at any time amend or
terminate any such benefit plans or programs.
(i) You shall be covered by the Company's director's and officer's
insurance policy as is generally provided to the Company's directors and
officers.
(j) The Company shall provide you with a car or car allowance in an
amount not to exceed $500 per month which shall be paid in appropriate pro rata
amounts at the same time Base Salary is paid unless the Company pays all related
expenses directly.
(k) The Company shall pay all of your reasonable relocation expenses,
provided that such expenses are incurred within 18 months from the Effective
Date of this Agreement.
(l) The Company shall pay attorney's fees incurred by you in connection
with this Agreement in an amount not to exceed $10,000.
(m) Subject to subsection 10(f) and Section 11, you must be an employee
of the Company at the time that any compensation is due in order to receive such
compensation.
(n) No option provided for under this Section 3 shall be exercisable
unless the Company's Amended and Restated Certificate of Incorporation has been
amended (the "Amendment") to increase the Company's authorized capital stock by
an amount sufficient to
3
<PAGE>
permit the issuance of Common Stock issuable upon exercise or conversion of all
options, warrants, and convertible securities issued by the Company, including
the shares and warrants issuable in the Company's contemplated private placement
and the options provided for under this agreement. The Company shall use its
best efforts, subject to applicable law, to obtain shareholder approval of the
Amendment; provided, however, that nothing in this subsection 3(n) shall be
interpreted so as to require the Company pay a consent fee or hire third party
proxy solicitors.
(o) The Company shall pay the premiums on a medical malpractice
insurance policy on your behalf in the principal amount of not less than
$1,000,000, provided such premiums do not exceed $20,000 annually.
4. Representations and Warranties. You hereby represent and warrant to
the Company as follows:
(a) Neither the execution and delivery of this Agreement nor the
performance by you of your duties and other obligations hereunder violate or
will violate any statute, law, determination or award, or conflict with or
constitute a default under (whether immediately, upon the giving of notice or
lapse of time or both) any prior employment agreement, contract, or other
instrument to which you are a party or by which you are bound.
(b) You have the full right, power and legal capacity to execute and
deliver this Agreement and to perform your duties and other obligations
hereunder. This Agreement constitutes your legal, valid and binding obligation,
enforceable against you in accordance with its terms. No approvals or consents
of any persons or entities are required for you to execute and deliver this
Agreement or perform your duties and other obligations hereunder.
5. Non-competition and Non-solicitation.
(a) You understand and recognize that your services to the Company are
special and unique and agree that, upon commencement of your employment as
President and Chief Executive Officer on December 1, 1999, and, except as
provided below, for a period of two years following any termination of your
employment, you shall not in any manner directly or indirectly on behalf of
yourself or any person, firm, partnership, joint venture, corporation or other
business entity (collectively, "Person"), solicit, enter into, engage in any
business which is or proposes to be competitive with a technology or service of,
or product manufactured or distributed by, the Company or its subsidiaries or in
which the Company or any of its subsidiaries has intellectual property rights
(except as provided below, "Conflicting Field"), either as an individual for
your own account, or as a partner, joint venturer, executive, agent, consultant,
salesperson, officer, director or shareholder of such Person ("Competitor");
provided, however, that (x) following any termination of your employment,
Conflicting Field shall refer only to the field of using antisense technology as
therapy for cancer as its primary business and, subject to Section 1, nothing in
this agreement shall be interpreted so as to prevent you from accepting
employment with any Person which is or proposes to be competitive with a
Conflicting Field so long as you work solely in a division of such Person which
division carries on a bona fide business that is not or does not propose to be
competitive with a Conflicting Field ; and (y) nothing herein will preclude you
from holding five percent (5%) or less of the stock of any
4
<PAGE>
publicly traded company, calculated on a fully diluted basis.
(b) In further consideration of the payment by the Company to you of
amounts that may hereafter be paid to you pursuant to this Agreement (including,
without limitation, pursuant to Sections 3 and 11 hereof, and the Stock Option
Agreement between you and the Company dated October 28, 1999 (the "Stock Option
Agreement")), you agree that upon commencement of your employment as President
and Chief Executive Officer, and for a period of two years thereafter or a
period of two years subsequent to any termination hereunder, but subject to
section 5(f), you shall not, without the prior written consent of the Company:
(i) directly or indirectly take any action, or attempt to take any
action, which is intended to, or could reasonably be foreseen by
you to, induce a material breach of a contract or agreement known
to you between the Company and any of its licensors, licensees,
clients, customers, vendors, suppliers, agents, consultants,
employees (whether or not such employees are "at will" employees)
or other person or entity with which the Company has an agreement
(each, a "Covered Party", collectively, "Covered Parties");
provided, however, that such action or attempted action could
reasonably be expected to cause a material detriment to the
Company; or
(ii) directly or indirectly solicit or attempt to solicit any of the
Covered Parties to terminate his, her or its relationship with
the Company in material breach of a contract or agreement with
the Company known to you; provided, however, that such action or
attempted action is likely to cause a material detriment to the
Company; or
(iii) subject to subsection 5(f), directly or indirectly solicit or
attempt to solicit any of the employees or consultants of the
Company to become employees, agents, consultants, representatives
or advisors of any other Person; or
(iv) directly or indirectly persuade or seek to persuade any customer
of or supplier to the Company to cease to do business or to
reduce the amount of business which any customer or supplier has
done or contemplates doing with the Company, whether or not the
relationship between the Company and such Person was originally
established in whole or in part through your efforts, in material
breach of a contract or agreement known to you between the
Company and such customer or supplier; provided, however, that
such action or attempted action could reasonably be expected to
cause a material detriment to the Company.
(c) Upon commencement of your employment as President and Chief
Executive Officer, and for a period of two years following any termination of
your employment, you agree that upon the earlier of you (a) negotiating with any
Competitor concerning the possible employment of you by the Competitor, (b)
receiving an offer of employment from a Competitor, or (c) becoming employed by
a Competitor, you will (x) immediately provide notice to the Company of such
circumstances and (y) provide copies of Sections 5, 6, 7, 8 and 9 of this
5
<PAGE>
Agreement to the Competitor. You further agree that the Company may provide
notice to a Competitor of your obligations under this Agreement, including
without limitation your obligations pursuant to Sections 5, 6, 7 and 8 hereof.
(d) You understand that the provisions of this Section 5 may limit your
ability to earn a livelihood in a business similar to the business of the
Company but nevertheless agree and hereby acknowledge that the consideration
provided under this Agreement, including any compensation or benefits provided
under Sections 3 and 11 hereof and the Stock Option Agreement, is sufficient to
justify the restrictions contained in such provisions. In consideration thereof
and in light of your education, skills and abilities, you agree that you will
not assert in any forum that such provisions prevent you from earning a living
or otherwise are void or unenforceable or should be held void or unenforceable.
(e) Section 5(a) hereof shall not apply to any Conflicting Field that
is identified on Annex I to this Agreement. Annex I to this Agreement may
hereafter be amended through a writing signed by you and the Company and
approved by the Company's Board of Directors.
(f) Nothing in subsection 5(b)(iii) shall be interpreted so as to
prohibit you from accepting offers from persons employed by the Company to be
employed by you or an entity with which you become associated, provided that
such offers were not solicited, directly or indirectly, or otherwise encouraged
by you.
6. Ownership of Proprietary Information.
(a) You confirm and agree that all information relating to the
Company's, or an Affiliate's (as defined below) business that has been created
by, discovered by, developed by, learned by, or made known to, the Company, or
any of its subsidiaries, affiliates, licensors, licensees, successors or assigns
(each, an "Affiliate" and, collectively, the "Affiliates") from the commencement
of your employment and at all times thereafter (including, without limitation,
information relating to the Company's business created by, discovered by,
developed by, learned by, reduced to practice by or made known to the Company,
an Affiliate, or you, either alone or jointly with others, during your
employment and information relating to the Company's customers, clients,
suppliers, vendors, consultants, licensors and licensees) or assigned, licensed
or otherwise conveyed to the Company or any Affiliate, has been, is and shall be
the sole property of the Company or such Affiliate, as applicable, and the
Company or the Affiliate, as the case may be, has been, is and shall be the sole
owner of all designs, ideas, patents, patent applications, copyrights, copyright
applications and other rights in connection therewith, including but not limited
to the right to make application for statutory protection of any kind in any
country. All of the aforementioned information is hereinafter called
"Proprietary Information" (and shall be deemed Proprietary Information
regardless of whether or not the Proprietary Information is patentable or
copyrightable). By way of illustration, but not limitation, Proprietary
Information includes trade secrets, processes, discoveries, structures, works of
authorship, copyrightable works, trademarks, copyrights, formulas, data, data
structures, know-how, show-how, improvements, information relating to products
(both current and under development), services and technologies, product
concepts, specifications, techniques, information or statistics contained in, or
relating to, promotion or marketing plans and programs,
6
<PAGE>
strategies, forecasts, blueprints, sketches, records, notes, devices, drawings,
customer lists, continuation applications of any kind, trademark applications
and information about the Company's or the Affiliate's employees and/or
consultants and confidential business information of the Company or any
Affiliate or any of its or their clients, consultants, suppliers, customers,
vendors, licensors, licensees and other third parties (including, without
limitation, the compensation, job responsibility and job performance of such
employees and/or consultants).
(b) You agree that all Proprietary Information shall be, the extent
permitted by law, "works made for hire" as that term is defined in the United
States Copyright Act (17 USA, Section 101). You hereby assign to the Company all
right, title and interest you may have or acquire in all Proprietary
Information; provided, that, subject to subsection 6(d) hereof, the provisions
of this Section 6 only applies to information, and Proprietary Information shall
only include such information which:
(i) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company except when
the information more closely relates to the business, or actual
or demonstrably anticipated research or development of a person
or entity listed in Annex I hereto, as amended; or
(ii) result from any work performed by you for the Company; or
(iii) was developed on the Company's time or using the Company's
equipment, supplies, facilities, or trade secret information.
(c) Notwithstanding the foregoing, Proprietary Information shall not
include; (i) information (x) in the public domain not as a result of the breach
of this Agreement or the breach of any other duty owed to the Company or any
other person (y) information lawfully in your possession prior to the date
hereof and not disclosed to you by the Company or an Affiliate and (z)
information disclosed to you without restriction by a third party who had the
right to disclose such information to you; and (ii) information that more
closely relates to the business, or actual or demonstrably anticipated research
or development, of a person or entity set forth on Annex I.
(d) It is understood that no patent, copyright, trademark, or other
proprietary right of license is granted to you under this Agreement. Any
disclosure of Proprietary Information and any materials which may accompany any
such disclosure pursuant to your employment under this Agreement shall not
result in the grant to you of any rights, express or implied, of any kind.
7. Confidential Information.
(a) You agree at all times, including after the Term, to keep in
strictest trust and confidence and will not disclose or make accessible to any
other person without the prior written consent of the Company, the Company's or
any Affiliate's Proprietary Information. You further agree that upon
commencement of your employment and at all times thereafter (i) not to use any
such Proprietary Information for yourself or others; and (ii) not to take any
such material or reproductions embodying Proprietary Information from the
Company's facilities (or any of the
7
<PAGE>
Affiliates' facilities) at any time, except as required during the Term in
connection with your duties to the Company.
(b) Except with prior written authorization of the Board of Directors,
you agree not to disclose or publish any of the Proprietary Information, except
as required in the performance of your obligations under this Agreement. You
further agree not to disclose or publish information relating to your former
employers, to whom you, the Company or any of its Affiliates owes an obligation
of confidence, at the time of disclosure to you, at any time during or after
your employment with the Company.
(c) Upon written notice by the Company, you shall promptly deliver to
the Company, or, if requested by the Company, promptly destroy all written
Proprietary Information and any other written material containing any
Proprietary Information (whether prepared by the Company, you or a third party),
and will not retain any copies, extracts, summaries or other reproductions in
whole or in part of such written Proprietary Information or other material.
(d) You recognize that the Company has received and in the future will
receive confidential or proprietary information from third parties subject to a
duty on the Company's part to maintain the confidentiality of such information
and, in some cases, to use it only for certain limited purposes. You agree that
you owe the Company and such third parties, both during your employment and
thereafter, a duty to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any Person (except in a
manner that is consistent with the Company's agreement with the third party) or
use it for the benefit of anyone other than the Company or such third party
(consistent with the Company's agreement with the third party), unless expressly
authorized to act otherwise by the Board of Directors.
(e) If during the term and thereafter you are requested or required (by
oral questions, deposition, interrogatories, requests for information or
documents, subpoena, civil investigative demand or any other process) to
disclose all or any part of any Confidential Information, you will provide the
Company with prompt notice of such request or requirement, as well as notice of
the terms and circumstances surrounding such request or requirement, so that the
Company, or, as applicable, one or more of its Affiliates, may seek an
appropriate protective order or waive compliance with the provisions of this
Agreement. In such case, the parties will consult with each other on the
advisability of pursuing any such order or other legal action or available steps
to resist or narrow such request or requirement. If, failing the entry of a
protective order or the receipt of a waiver hereunder, you are, in the opinion
of your counsel, legally compelled to disclose Proprietary Information, you may
disclose that portion of such information which counsel advises you that you are
legally compelled to disclose. In any event, you will use reasonable efforts to
cooperate with the Company in obtaining and will not oppose action by the
Company (or, as applicable, one or more of its Affiliates) to obtain, an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the disclosure of any Proprietary Information. All
reasonable expenses incurred by you in compliance with this subsection 7(e) will
be reimbursed by the Company.
8. Disclosure of Proprietary Information.
(a) During the Term, and thereafter, you agree that you will promptly
8
<PAGE>
disclose to the Company, or any persons designated by the Company, all
Proprietary Information developed, created, made, conceived, reduced to practice
or learned by the Company, any Affiliate or you, either alone or jointly with
others, during the Term and not otherwise known to the Company's officers and
directors.
(b) You further agree to assist the Company in every proper way (but at
the Company's expense) to obtain and confirm and from time to time enforce
patents, copyrights or other rights on said Proprietary Information in any and
all countries, and to that end you will execute all documents necessary:
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters patent, copyrights
or other analogous protection in any country throughout the world
and when so obtained or vested to renew and restore the same on
behalf of the Company; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or
applications for revocation of such letters patent, copyright or
other analogous protection.
(c) Your obligation to assist the Company in obtaining and enforcing
patents and copyrights for the Proprietary Information in any and all countries
shall continue beyond the Term, but the Company agrees to compensate you at a
reasonable rate after the expiration of the Term for time actually spent by you
at the Company's request on such assistance.
9. Enforcement. You agree that the remedy at law for any breach or
threatened breach of any covenant contained in Sections 5, 6, 7 or 8 of this
Agreement would be inadequate and cause irreparable damage to the Company. In
the event that you breach or threaten to breach any provisions of Sections 5, 6,
7 or 8, in addition to any other rights which the Company may have at law or in
equity, the Company shall be entitled, without the posting of a bond or other
security, to injunctive relief to enforce the restrictions contained in this
Agreement. In the event that an actual proceeding is brought in equity to
enforce any of the provisions of Sections 5, 6, 7 or 8, you shall not assert as
a defense that there is an adequate remedy at law nor shall the Company be
prevented from seeking any other remedies, including without limitation monetary
damages, which may be available to it.
10. Termination. Your employment hereunder as President and Chief
Executive Officer shall commence as provided for under subsection 1(a) and shall
continue for the period set forth in Section 2 hereof unless sooner terminated
upon the first to occur of the following events:
(a) Death. Your death;
(b) Disability. You have been unable, for a period of one hundred
eighty (180) consecutive business days, to perform your duties under this
Agreement, as a result of physical or mental illness or injury ("Becoming
Totally Disabled") and the Company shall have communicated to you the fact of
your termination by written notice, which termination shall be effective on the
30th day after receipt of such notice by you (the "Total Disability Effective
Date"), unless you return to full-time performance of your duties before the
Total Disability
9
<PAGE>
Effective Date;
(c) Termination by the Company for Cause. For purposes of this
Agreement, the term "Cause" shall mean any of the following; provided, however,
that the Company has terminated you pursuant to this subsection 10(c) within 60
days of the Board of Directors having first obtained knowledge of a basis for
termination under this subsection 10(c):
(i) A breach by you of any of the provisions of Sections 4, 5, 6, 7
or 8 of this Agreement which results in a material detriment to
the Company or any Affiliate thereof;
(ii) Any breach by you of subsection 1(b) or (c) which is not cured by
you within 30 days of written notice thereof from the Company;
provided, however, your right to such 30 day cure period shall be
conditioned upon your good faith attempt to cure such breach;
(iii) Any action or omission by you to intentionally harm the Company
which is in bad faith and likely to cause a material harm to the
Company or any other act or bad faith omission having the effect
of materially harming the Company, its business or reputation;
(iv) The perpetration of an intentional and knowing fraud against or
adversely affecting the Company or any Covered Party which causes
or is likely to cause a material detriment to the Company; or
(v) The conviction of you of any crime classified as a felony.
(d) Termination by the Company Without Cause. The Company may terminate
your employment hereunder at any time for any reason or no reason by giving you
thirty (30) days prior written notice of the termination.
(e) Termination By You For Good Reason. You may terminate your
employment hereunder for "Good Reason" for (i) having been assigned duties by
the Board of Directors which are inconsistent in any material respect with
Section 1 of this Agreement or any other action by the Company that results in a
material diminution in your title, position, authority, duties or
responsibilities, either of which is not cured by the Company within 30 days of
written notice thereof from you; or (ii) any failure by the Company to comply
with Section 3 other than an isolated, insubstantial and inadvertent failure
that is not taken in bad faith and is remedied by the Company promptly after
receipt of notice thereof from you; (iii) your failure to be re-elected to the
Company's Board of Directors, unless , at the time you are not re-elected, the
Company has the right to terminate you for Cause under subsection 10(c) of this
Agreement and does so within 45 days of your failure to be re-elected; or (iv)
relocation of the Company's principal place of operations, provided that such
relocation results in a principal place of operations more than 75 miles from
New York, New York.
(f) Termination by You Without Good Reason. You may terminate your
employment hereunder at any time for any reason or no reason by giving thirty
(30) days prior written notice of termination. If you do, you shall be entitled
only to the following
10
<PAGE>
compensation:
(i) Any accrued but unpaid Base Salary as of the date of termination
for services rendered to the date of termination;
(ii) Any accrued but unpaid expenses required to be reimbursed
pursuant to Section 3;
(iii) Any vacation accrued to the date of termination.
(iv) Any accrued but unpaid bonus payments; and
(v) The amounts set forth in subsection 3(b)(ii), if not already
paid.
11. Compensation Following Termination Prior to the End of the Term.
In the event that your employment hereunder is terminated prior to the
end of the Term, you shall be entitled only to the following compensation and
benefits upon such termination:
(a) Termination by Reason of Death or Becoming Totally Disabled;
Termination by the Company for Cause.
In the event that your employment is terminated by reason of your death
or your becoming Totally Disabled, or by the Company for Cause, pursuant to
Sections 10(a), 10(b) or 10(c), the Company shall pay the following amounts to
you (or your estate, as the case may be):
(i) Any accrued but unpaid Base Salary as of the date of termination
for services rendered to the date of termination;
(ii) Any accrued but unpaid expenses required to be reimbursed
pursuant to Section 3;
(iii) Any vacation accrued to the date of termination;
(iv) Any accrued but unpaid bonus payments; and
(v) The amounts set forth in subsection 3(b)(ii), if not already
paid.
The benefits to which you may be entitled upon termination pursuant to
the plans, programs and arrangements referred to in Section 3 hereof shall be
determined and paid in accordance with the terms of such plans, policies and
arrangements.
(b) Termination by the Company Without Cause; Termination by You for
Good Reason. In the event that your employment is terminated by the Company
without Cause pursuant to Section 10(d) or by you for Good Reason pursuant to
Section 10(e), the Company shall pay the following amounts to you:
11
<PAGE>
(i) Any accrued but unpaid Base Salary as of the date of termination
for services rendered to the date of termination, payable within
30 days;
(ii) Any accrued but unpaid expenses required to be reimbursed
pursuant to Section 3, payable within 30 days;
(iii) Any vacation accrued to the date of termination, payable within
30 days; and
(iv) As your sole damages; (i) the Base Salary which you would have
received during the twelve month period following the date on
which your employment is terminated and any bonus which would
have been payable to you within 12 months of the date of
termination pursuant to section 3(iii) or 3(iv) had you still
been employed by the Company; provided that, in the event that
you have terminated your employment pursuant to subsection 10(e),
and the Company has provided you notice of a basis of a breach,
within 45 days of the Board of Director's of the Company having
obtained first knowledge of such basis, of any covenant contained
in Sections 5, 6, 7 or 8 hereof, you shall not be entitled to any
payment under this clause (iv) of this Section 11(b); and (ii)
all stock options received pursuant to subsection 3(c) hereof
shall become fully vested. Any payments to be made pursuant to
this subsection 11(b) shall be made in accordance with the
Company's standard payroll practices then in effect; and
(v) The amounts set forth in subsection 3(b)(ii), if not already
paid.
The benefits to which you may be entitled upon termination pursuant to
the plans, policies and arrangements referred to in Section 3 hereof shall be
determined and paid in accordance with the terms of such plans, policies and
arrangements.
(c) It is the intention of the parties that all cash payouts that may
be due subject to this Section 11 shall be guaranteed by either Paramount
Capital, the Aries Funds, or some other party that the Company and you mutually
agree upon.
(d) No Other Benefits or Compensation. Except as may be provided under
this Agreement, under the terms of any incentive compensation, employee benefit
or fringe benefit plan applicable to you at the time of the termination of your
employment prior to the end of the Term, you shall have no right to receive any
other compensation, or to participate in any other plan, arrangement or benefit,
with respect to any future period after such termination.
12. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be deemed to have been given: when delivered
personally after receipt therefor; one (1) day after being sent by Federal
Express or similar overnight delivery; or three (3) days after being mailed
registered or certified mail, postage prepaid, return receipt requested, to
either party at the address set forth below, or to such other address as such
party shall give by notice hereunder to the other party.
12
<PAGE>
If to the Company:
Genta Incorporated
c/o Paramount Capital, Inc.
787 Seventh Avenue
New York, NY 10019
(212) 554-4514
Attention: Mark C. Rogers, M.D.
With a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
(212) 715-9100
Attention: Monica C. Lord, Esq.
If to you:
Raymond Warrell, Jr., M.D.
6 Kimball Circle
Westfield, NJ 07090
(908) 301-1022
With a copy to:
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304
(650) 813-5746
Attention: Joseph Lin, Esq.
13. Severability of Provisions. If any provision of this Agreement
shall be declared by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced in whole or in part, the remaining conditions and
provisions or portions thereof shall nevertheless remain in full force and
effect and enforceable to the extent they are valid, legal and enforceable, and
no provision shall be deemed dependent upon any other covenant or provision
unless so expressed herein. If any provision of this Agreement, or any part
thereof, is held to be invalid or unenforceable because of the scope or duration
of or the area covered by such provision, the parties hereto agree that the
court making such determination shall reduce the scope, duration and/or area of
such provision (and shall substitute appropriate provisions for any such invalid
or unenforceable provisions) in order to make such provision enforceable to the
fullest extent permitted by law and/or shall delete specific words and phrases,
and such modified provision shall then be enforceable and shall be enforced. The
parties hereto recognize that if, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants contained in this Agreement,
then that invalid or unenforceable covenant contained in this Agreement shall be
12
<PAGE>
deemed eliminated from these provisions to the extent necessary to permit the
remaining separate covenants to be enforced. In the event that any court
determines that the time period or the area, or both, are unreasonable and that
any of the covenants is to that extent invalid or unenforceable, the parties
hereto agree that such covenants will remain in full force and effect, first,
for the greatest time period, and second, in the greatest geographical area that
would not render them unenforceable.
14. Entire Agreement; Modification. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof, and the parties
hereto have made no agreements, representations or warranties relating to the
subject matter of this Agreement which are not set forth herein. No modification
of this Agreement shall be valid unless made in writing and signed by the
parties hereto.
15. Binding Effect. The rights, benefits, duties and obligations under
this Agreement shall inure to, and be binding upon, the Company, its successors
and assigns, and upon you and your legal representatives. This Agreement
constitutes a personal service agreement, and the performance of your
obligations hereunder may not be transferred or assigned by you.
16. Non-waiver. The failure of either party to insist upon the strict
performance of any of the terms, conditions and provisions of this Agreement
shall not be construed as a waiver or relinquishment of future compliance
therewith, and said terms, conditions and provisions shall remain in full force
and effect. No waiver of any term or condition of this Agreement on the part of
either party shall be effective for any purpose whatsoever unless such waiver is
in writing and signed by such party.
17. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York without
regard to principles of conflict of laws.
18. Survivability . The provisions of this Agreement which by their
terms call for performance subsequent to termination of your employment
hereunder, or of this Agreement, shall so survive such termination.
19. Headings. The headings of paragraphs are inserted for convenience
and shall not affect any interpretation of this Agreement.
If this letter agreement meets with your approval and you desire to
accept this offer of employment on the terms and conditions set forth herein,
please execute the enclosed copy of this letter and return it to me as soon as
possible.
18
<PAGE>
Sincerely,
GENTA INCORPORATED
By:
Mark C. Rogers, M.D.
AGREED AND ACCEPTED
AS OF THE DATE FIRST SET FORTH ABOVE:
Dr. Raymond P. Warrell, Jr.
15
<PAGE>
EXHIBIT B
GENTA INCORPORATED
1998 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated as of October
28, 1999, between GENTA INCORPORATED, a Delaware corporation (the "Company"),
and the other party signatory hereto (the "Optionee"). Capitalized terms used
here without definition shall have the meanings ascribed thereto in the
Company's 1998 Stock Incentive Plan (the "Plan").
All options granted herein (the "Options") shall be
appropriately adjusted pursuant to Section 1.5.3 of the Plan.
The Company hereby represents and warrants to Optionee that,
as of the date of this Agreement, the sum of the number of outstanding shares of
Common Stock and the number of shares of Common Stock underlying all outstanding
convertible or exercisable derivative securities is 63,510,163 shares. In the
event that the foregoing representation is inaccurate, the number of shares
underlying the Options granted under Section 1 of this Agreement shall be
proportionately adjusted.
The Optionee hereby represents and warrants to the Company
that, upon commencing his employment with the Company on October 28, 1999, the
Optionee was not violating the terms of his employment with any third person,
nor did the commencement of his employment with the Company on October 28, 1999
provide the basis for a claim of such a violation.
In consideration of the foregoing and of the mutual
undertakings set forth in this Agreement, the Company and the Optionee agree as
follows:
SECTION 1. Grant of Options.
(a) In consideration of the commencement of his employment by
the Company on October 28, 1999, the Company hereby grants to the Optionee
Options (the "Initial Options") to purchase 3,175,508 shares of the Company
common stock, par value $.001 (the "Common Stock"), at an initial exercise price
per share of $2.67 (the "Exercise Price"). These Initial Options are exercisable
immediately subject to the
<PAGE>
satisfaction of the Option Conditions (defined below); provided, however, the
unvested portion of the Common Stock issuable upon exercise of the Initial
Option shall be subject to the nontransferability, forfeiture and repayment
provisions of Section 2, 5 and 7 hereof, respectively, until such shares vest in
accordance with the following vesting schedule: 25% of the Initial Options shall
vest immediately: the remaining 75% of the Initial Options and Common Stock
issuable upon exercise thereof shall vest in 36 substantially equal installments
on the last day of each month commencing November 30, 1999; and provided,
further, that the Initial Options granted hereunder shall not be exercisable
until all of the following conditions (the "Option Conditions") have been
satisfied: (x) the Company's Amended and Restated Certificate of Incorporation
has been amended to increase the Company's authorized capital stock by an amount
sufficient to permit the issuance of Common Stock upon the exercise or
conversion of all options, warrants and convertible securities issued by the
Company, including all of the Options granted pursuant to this Agreement (the
"Reservation Requirements"); and (y) the Company's shareholders shall have
approved an amendment to the Plan authorizing an increase in the shares of
Common Stock available under the Plan sufficient to satisfy the Options referred
to herein. The Company shall use its best efforts, subject to applicable law, to
obtain shareholder approval of such amendments; provided, however, that nothing
in this Section 1(a) shall be interpreted so as to require the Company pay a
consent fee or hire third party proxy solicitors.
(b) The Company hereby grants to the Optionee Options (the
"FDA Option") to purchase 793,877 shares of Common Stock at the Exercise Price;
provided, however, that this FDA Option and the Common Stock issuable upon
exercise thereof shall only vest when the Optionee has been employed by the
Company for six years (the "Term Condition") and provided, further, that in no
event shall this FDA Option be exercisable unless all Option Conditions have
been satisfied. The FDA Option is immediately exercisable; provided, however,
that the Common Stock issuable upon exercise of the FDA Option shall be subject
to the nontransferability, forfeiture and repayment provisions of Section 2, 5
and 7 hereof, respectively. Notwithstanding the foregoing, the Term Condition
shall be waived in respect of this FDA Option and the FDA Option and Common
Stock issuable upon exercise thereof shall vest in their entirety when the
Company has received from the Food and Drug Administration a letter providing
that Company's product G3139, or its substantial equivalent, is approved for
marketing in any indication.
2
<PAGE>
(c) The Company hereby grants to the Optionee Options (the
"Market Capitalization Option") (and, together with the FDA Option, the
"Performance Options") to purchase 793,877 shares of Common Stock at the
Exercise Price; provided, however, that this Market Capitalization Option and
the Common Stock issuable upon exercise thereof shall only vest upon the
satisfaction of the Term Condition; and provided, further, that in no event
shall this Market Capitalization Option be exercisable unless all Option
Conditions have been satisfied. The Market Capitalization Option is immediately
exercisable; provided, however, the unvested portion of the Common Stock
issuable upon exercise of the Market Capitalization Option shall be subject to
the nontransferability, forfeiture and repayment provisions of Section 2, 5 and
7 hereof, respectively. Notwithstanding the foregoing, the Term Condition shall
be waived in respect of this Market Capitalization Option and the Market
Capitalization Option and Common Stock issuable upon exercise thereof shall vest
in its entirety when the average of the product of the Fair Market Value of the
Company Common Stock (or any successor security issued as a replacement for
Company Common Stock) multiplied by the number of shares of Company Common Stock
outstanding and issuable upon exercise of all warrants, options and convertible
securities, during any 60 consecutive calendar day period, exceeds $
541,106,489. (d) All the options described above may from time to time
hereinafter be referred to singularly as an "Option" and collectively as the
"Options."
SECTION 2. Nontransferability.
(a) No Option shall be assignable or transferable, voluntarily
or involuntarily, by operation of law, or otherwise, and any such assignment or
transfer which may be attempted shall be null and void and of no effect;
provided, however, that this Section 2 shall not prevent transfers by will or by
the laws of descent and distribution. During the lifetime of the Optionee, the
Options shall be exercisable only by the Optionee.
(b) Until a share of Common Stock vests in accordance with the
provisions of Section 1(a), (b) or (c), as the case may be, the Optionee
acknowledges that the Optionee may not, and the Optionee agrees that the
Optionee shall not, transfer or assign the Optionee's rights to such share of
Common Stock or to any cash payment related thereto. Until a share of Common
Stock so vests, no attempt to transfer or assign such shares or the right to any
cash payment related thereto, whether by transfer, pledge, hypothecation or
otherwise
3
<PAGE>
and whether voluntary or involuntary, by operation of law or otherwise, shall
vest the transferee or assignee with any interest or right in or with respect to
such share of Common Stock or such cash payment, and the attempted transfer or
assignment shall be of no force and effect.
SECTION 3. Certificates; Custodianship.
(a) Reasonably promptly after Optionee has exercised his right
to acquire any such shares of Common Stock already vested pursuant to the
provisions of Section 1 or Section 6 of this Agreement, but in no event more
than ten (10) business days after such date, the Company (i) shall cause to be
issued certificates evidencing such shares of Common Stock, including such
legends as the Company deems necessary or appropriate to comply with federal and
applicable state securities laws, and (ii) shall cause such certificates to be
delivered to the Optionee (or such Optionee's legal representative, beneficiary
or heir), together with any other property directly related to such vested
shares of Common Stock of the Optionee.
(b) Reasonably promptly after the date that the Optionee
exercises his right to purchase any shares of Common Stock that have not
theretofore vested or been forfeited, but in no event more than ten (10)
business days after such date, provided that the Company has first received a
stock power endorsed by the Optionee in blank with respect to such shares of
Common Stock, the Company shall issue stock certificates, registered in the name
of the Optionee, evidencing such shares of Common Stock. Each such certificate
shall bear the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and conditions
(including forfeiture and restrictions against transfer) contained in
the Genta Incorporated 1998 Stock Incentive Plan and an Agreement
entered into between the registered owner of such shares and Genta
Incorporated. A copy of the Plan and Agreement is on file in the office
of the Secretary of Genta Incorporated."
Such legend shall not be removed from the certificates
evidencing such exercised shares of Common Stock until such shares vest pursuant
to the provisions of Section 1 and Section 6 of this Agreement.
(c) Each certificate issued pursuant to Section 3(b) hereof,
together with the stock powers relating to such shares of Common Stock, shall be
deposited by the Company with a custodian designated by the Company (the
"Certificate Custodian"). The Company may designate itself as Certificate
Custodian
4
<PAGE>
hereunder. The Company shall cause such Certificate Custodian to issue to the
Optionee a receipt evidencing the certificates held by it which are registered
in the name of the Optionee.
(d) Reasonably promptly after any previously unvested shares
of Common Stock vest pursuant to the provisions of Section 1 or Section 6 of
this Agreement, but in no event more than ten (10) business days after such
date, the Company (i) shall cause to be issued certificates evidencing such
shares of Common Stock, free of the legend provided in Section 3(b) hereof, but
including such legends as the Company deems necessary or appropriate to comply
with federal and applicable state securities laws, and (ii) shall cause such
certificates to be delivered to the Optionee (or such Optionee's legal
representative, beneficiary or heir), together with any other property directly
related to such vested shares of Common Stock of the Optionee held by the
Certificate Custodian pursuant to Section 3(e) hereof.
(e) Any securities or other property (excluding cash
dividends) received by the Optionee with respect to a share of Common Stock as a
result of any stock dividend, stock split, recapitalization, merger,
consolidation, combination or exchange of shares and for which the issue date of
such Common Stock occurs prior to such event but which has not vested as of the
date of such event will not vest until such share of Common Stock vests and
shall be promptly deposited with the Certificate Custodian as though such
securities and other property were part of such share.
SECTION 4. Method of Exercise.
(a) The Options or any part thereof may be exercised only by
the giving of written notice to the Company on such form and in such manner as
the Committee shall prescribe. Such written notice must be accompanied by
payment of the full purchase price for the number of shares being purchased.
Such payment may be made by one or a combination of the following methods:
(i) by a certified or official bank check (or the
equivalent thereof acceptable to the Company);
(ii) by delivery of shares of Common Stock having a
Fair Market Value on such date of exercise equal to part or all of the purchase
price, provided such shares of Common Stock would not upon
5
<PAGE>
delivery of such shares for such purpose result in an accounting compensation
charge with respect to the shares of Common Stock used to pay the Exercise
Price;
(iii) by delivery of a promissory note issued by
Optionee for up to the full amount of the purchase price of the optioned shares
(except that an amount equal to the par value of Common Stock shall be paid in
cash), on terms acceptable to the Company, which promissory note shall be full
recourse to the Optionee personally for all amounts due thereunder and shall be
fully secured by the Common Stock purchased pursuant to the exercise of the
Option;
(iv) by payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (i) shall provide written
instructions to a Company designated brokerage firm to effect the immediate sale
of some or all of the purchased Common Stock and remit to the Company, out of
the sale proceeds available on the settlement date, sufficient funds to cover
the aggregate exercise price payable for the purchased shares of Common Stock
and (ii) shall provide written directives to the Company to deliver the
certificates for the purchased shares of Common Stock directly to such brokerage
firm in order to complete the sale transactions; or
(v) at the discretion of the Committee and to the
extent permitted by law, by such other method as the Committee may authorize,
including, without limitation, at the discretion of the Committee, by the
withholding of shares (valued at their Fair Market Value on the exercise date of
the Common Stock) underlying the Options.
Pursuant to Section 3.2 of the Plan, it shall be a condition
precedent to the issuance of shares upon exercise of the Options that the
Optionee shall remit to the Company any amount sufficient to satisfy all
applicable withholding tax requirements, which may be satisfied through the
withholding of Common Stock as provided in Section 3.2.2 of the Plan. The date
of the exercise of the Options shall be the date on which written notice of
exercise is delivered to the Company, during normal business hours, at its
address as provided in Section 10 of this Agreement, or if mailed, the date on
which it is postmarked, provided such notice is actually received.
6
<PAGE>
(b) The Optionee agrees not to exercise any Options granted
hereunder until the later of (i) the day the Option Conditions are satisfied or
(ii) one day after the Optionee has been employed by the Company for six (6)
months. Furthermore, the Optionee agrees that any disposition of any Options
(and any shares of Common Stock issuable upon exercise of any options) will be
carried out in a manner consistent with Section 16(b) of the Securities and
Exchange Act of 1934, as amended, and any and all other applicable requirements
of law.
SECTION 5. Termination of Option.
(a) Except as otherwise provided for under this Section 5, the
unexercised portion of the Initial Option shall expire and cease to be
exercisable at 12:01 a.m. on October 27, 2009; the unexercised portion of the
Market Capitalization Option shall expire and cease to be exercisable on the
tenth anniversary of the date such option vests in accordance with the
provisions of Section 1(b) hereof; and the unexercised portion of the FDA Option
shall expire and cease to be exercisable on the tenth anniversary of the date
such option vests in accordance with the provisions of Section 1(c) hereof.
(b) Except as provided in Section 6 of this Agreement, upon
termination of the Optionee's employment with the Company or any of its
subsidiaries for any reason (including death), all unvested Options immediately
shall terminate and expire and all unvested shares of Common Stock exercised
pursuant to any Option hereunder shall be immediately and irrevocably forfeited
except as provided in Section 5(c) and (d) hereof.
(c) Except as provided in Section 6 of this Agreement, if the
Optionee's employment with the Company or any of its subsidiaries terminates for
any reason other than death, the Options shall be exercisable but only to the
extent they were exercisable and vested at the time of such termination and only
until the earlier of the expiration date of such Options, or the expiration of
one year following the date of termination.
(d) If the Optionee dies while still an employee of the
Company or any of its subsidiaries or following the termination of Optionee's
employment with the Company and its subsidiaries, but during the period in which
any Option is exercisable pursuant to Section 5(c) of this Agreement, such
vested Option shall
7
<PAGE>
be exercisable but only to the extent they were exercisable at the time of death
and only until the earlier of the expiration date of such Option or the first
anniversary of the date of the Optionee's death.
SECTION 6. Acceleration of Vesting.
If:
(i) prior to the termination of Optionee's
employment with the Company, there is (A) a sale or other disposition of all or
substantially all of the assets of the Company or the product G3139 or its
substantial equivalent, (B) an acquisition of the Company by another entity by
means of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation but, excluding any
merger effected exclusively for the purpose of changing the domicile of the
Company) unless the Company's stockholders as constituted immediately prior to
such acquisition will, immediately after such acquisition (by virtue of
securities issued as consideration for the Company's acquisition or otherwise)
hold at least fifty percent (50%) of the voting power of the surviving or
acquiring entity and unless the Company's directors as constituted immediately
prior to such acquisition, constitute a majority of directors of the surviving
or acquiring entity, or (C) an acquisition by any person or related group of
persons (other than the Company, a Company-sponsored employee benefit plan or
such person or entity who as of September 14, 1999, beneficially owned (within
the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
more than fifty percent (50%) of the Company's Common Stock) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities; or
(ii) Optionee's employment is terminated by the
Company pursuant to Section 10(d) of the employment agreement between you and
the Company dated as of October 28, 1999 (the "Employment Agreement")) or the
Optionee terminates his employment for Good Reason under subsection 10(e) of the
Employment Agreement; or
(iii) prior to the termination of Optionee's
employment with the Company, at any time Lindsay Rosenwald, or after his death
or incapacity, his successor or legal representative (collectively "LR")
directly or indirectly (through Paramount Capital Management Inc., Paramount
Capital Inc., or any fund, trust or other entity for whom any of them, or any
entity controlled by LR or any of them, serves as investment advisor
8
<PAGE>
and/or general partner or otherwise acts as an advisor or manager) ceases to
control and direct at least 35% (thirty five percent) of the total combined
voting power of the Company's outstanding securities; or
(iv) prior to termination of Optionee's employment
with the Company the Company, within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for
relief against it in an involuntary case,
(C) consents to the appointment of a Custodian
of it or for all or substantially all of
its property, and such Custodian is not
discharged within 60 days; or
(v) prior to termination of Optionee's employment
with the Company, a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief in any involuntary case
against the Company,
(B) appoints a Custodian of the Company or for
all or substantially all of the property
of the Company, or
(C) orders the liquidation of the Company,
and, in each case, the order or decree
remains unstayed and in effect for 60
consecutive days;
then any Initial Options previously granted and the Common Stock issuable
thereof under this Agreement but not yet vested shall immediately vest. In
addition, all Performance Options that would have vested during the 12-month
period following the events set forth in this Section 6 (the "Section 6 Events")
shall vest, if a Section 6 Event occurs within such 12-month period, immediately
upon the occurrence of such Section 6 Events; provided, however, that no Options
granted hereunder shall be exercisable unless the Option Conditions have been
met. At the time the Section 6 Event occurs, the Options referred to in this
Section 6 shall be fully exercisable.
The term "Bankruptcy Law" means Title 11 of the U.S. Code or
any similar federal, foreign or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, examiner or
similar official under any Bankruptcy Law.
9
<PAGE>
SECTION 7. Right to Repayment.
If in accordance with the terms of Section 5 of this
Agreement, Optionee forfeits any unvested shares of Common Stock received upon
exercise of an Option, Optionee acknowledges and agrees that the Certificate
Custodian shall surrender to the Company as soon as practicable after the
effective date of such forfeiture all certificates for such shares issued to
Optionee by the Company pursuant to Section 3(b) of this Agreement. As soon as
practicable after such surrender, but in no event later than 30 days after such
surrender, Optionee shall be entitled to a payment by the Company in an amount,
in cash equal to the aggregate of the Exercise Prices paid for each exercised
but unvested share of Common Stock so forfeited.
SECTION 8. Plan Provisions to Prevail.
This Agreement is subject to all of the terms and provisions
of the Plan. Without limiting the generality of the foregoing, by entering into
this Agreement the Optionee agrees that no member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any award thereunder or this Agreement. In the event
that there is any inconsistency between the provisions of this Agreement and of
the Plan, the provisions of the Plan shall govern. Notwithstanding the
foregoing, Section 2.10 of the Plan shall not apply to this Agreement.
SECTION 9. Right of Discharge Preserved.
Nothing in this Agreement shall confer upon the Optionee the
right to continue in the employ of the Company and its subsidiaries, or to
continue in the service of the Company and its subsidiaries as a consultant or
director, or affect any right which the Company and its subsidiaries may have to
terminate such employment or service.
SECTION 10. Notices.
All notices required or permitted hereunder shall be given in
writing by personal delivery; by confirmed facsimile transmission (with a copy
dispatched by express delivery or registered or certified mail); or by express
delivery via express mail or any reputable express courier service. Notice shall
be addressed (a) to Genta Incorporated, c/o Dr. Mark C. Rogers, Paramount
Capital Inc., 787 Seventh Avenue, 48th Floor, New
10
<PAGE>
York, New York 10019; and (b) to the Optionee at the address set forth on the
signature page hereto; or (c) as to either party, at such other address as may
be designated by notice in the manner set forth herein. Notices which are
delivered personally, by confirmed facsimile transmission, or by courier as
aforesaid, shall be effective on the date of delivery.
SECTION 11. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and the successors and assigns of the Company and, to the
extent consistent with Section 5 of this Agreement and with the Plan, the heirs
and personal representatives of the Optionee.
SECTION 12. Entire Contract; Waiver; Amendment.
This Agreement constitutes the entire contract between the
parties hereto and supersedes all prior oral and written agreements between the
parties with regard to the subject matter hereof. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition, whether of like or different nature. This
Agreement may be amended as provided in Section 3.1.3 of the Plan. Headings are
for convenience only, and are not themselves part of the Agreement.
SECTION 14. Severability.
If any provision of this Agreement (including any provision of
the Plan that is incorporated herein by reference) shall hereafter be held to be
invalid, unenforceable or illegal in whole or in part, in any jurisdiction under
any circumstances for any reason, (a) such provision shall be reformed to the
minimum extent necessary to cause such provision to be valid, enforceable and
legal while preserving the intent of the parties as expressed in, and the
benefits to the parties provided by, this Agreement and the Plan or (b) if such
provision cannot be so reformed, such provision shall be severed from this
Agreement and an equitable adjustment shall be made to this Agreement
(including, without limitation, addition of necessary further provisions to this
Agreement) so as to give effect to the intent as so expressed and the benefits
so provided. Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other
11
<PAGE>
jurisdiction or under any other circumstances. Neither such holding nor such
reformation or severance shall affect or impair the legality, validity or
enforceability of any other provision of this Agreement or the Plan.
SECTION 15. Governing Law.
This Agreement shall be interpreted, construed and
administered in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws, as they apply to contracts
made, delivered and performed in the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement as of the date and year first written above.
GENTA INCORPORATED
By: _______________________________
Name: Mark C. Rogers
Title: Chairman of the Board of
Directors
OPTIONEE
Dr. Raymond P. Warrell, Jr.
____________________________________
Address:
____________________________________
Social Security Number:
____________________________________
12
