Change in Control Employment Agreement [Amendment No. 1] - CytRx Corp. and Jack J. Luchese
AMENDMENT NO. 1 TO CHANGE IN CONTROL EMPLOYMENT AGREEMENT
with Jack J. Luchese
This AMENDMENT No. 1(the "Amendment"), effective as of January 1, 2002,
by and between CytRx Corporation, a Delaware corporation (the "Company"), and
Jack J. Luchese ("Executive"), amends that certain Amended and Restated Change
in Control Employment Agreement, dated as of September 1, 1999, by and between
the Company and Executive (the "Change in Control Agreement").
In consideration of the mutual promises and covenants herein contained, the
parties hereto agree as follows:
1. The Change in Control Agreement is hereby amended by deleting subsection
2(c) thereof and substituting the following therefor:
"(c) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 70% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 25% or more of the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination, and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or".
2. A new subsection 4(b)(vii) of the Change in Control Agreement is hereby
added, to read as follows:
"(vii) Success Bonus. If either of the following two events
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shall occur during the Employment Period: (A) the execution of a definitive
agreement for a transaction that, if consummated, would constitute a Change of
Control under Section 2(c) of this Agreement; or (B) the execution by the
Company of a FLOCOR license agreement for sickle cell disease (each
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such event being referred to as a "Milestone Event"), the Company shall pay to
the Executive a success bonus equal to $435,150 (the "Success Bonus", less the
amount, if any, of any success bonus for a Milestone Event previously paid to
the Executive under Section 3(c) of the Employment Agreement). The Success Bonus
shall be paid in a lump sum in cash as soon as practicable after the occurrence
of the applicable Milestone Event. The Success Bonus is subject to forfeiture as
provided in Section 6(a)(iv) below."
3. A new subsection 4(b)(viii) of the Change in Control Agreement is hereby
added, to read as follows:
"(viii) Change in Control Payment. If, during the Employment Period, the
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stockholders of the Company approve a transaction that, if consummated, would
constitute a Change of Control under Section 2(c) of this Agreement, or if a
Change in Control is consummated during the Employment Period regardless of
stockholder approval, the Company shall pay to the Executive, or his estate, in
a lump sum in cash as soon as practicable after the occurrence of such event the
higher of (i) $870,300, or (ii) the amount equal to two (2) times the sum of (A)
the Executive's annual salary as in effect at the Effective Date, plus (B) the
amount of the Executive's highest annual bonus for the last three full fiscal
years prior to the Effective Date (such higher amount being referred to herein
as the "Change in Control Payment"); provided, however, that the Change in
Control Payment shall be reduced by the amount, if any, of the Success Bonus
previously paid to the Executive under either Section 3(c) of the Employment
Agreement or Section 4(b)(vii) of this Agreement. The Change in Control Payment
is subject to forfeiture as provided in Section 6(a)(iv) below."
4. The Change in Control Agreement is hereby amended by deleting subsection 6(a)
(i)(B) thereof and substituting the following therefor:
"B. to the extent earned and not theretofore paid, the Success Bonus
(as defined in Section 4(b)(vii) above) and the Change in Control Payment
(as defined in Section 4(b)(viii) above); and"
5. The Change in Control Agreement is hereby amended by deleting subsection 6(a)
(iv) thereof and substituting the following therefor:
"(iv) Notwithstanding any provision of this Agreement to the contrary, the
Executive shall forfeit his right to receive, or, to the extent such amounts
have previously been paid to the Executive, shall repay in full to the Company
with interest at 8% per annum within thirty (30) days of a final determination
of the Executive's liability therefor as set forth below, the Success Bonus (as
defined in Section 4(b)(vii) above) and the Change in Control Payment (as
defined in Section 4(b)(viii) above) if at any time during the period of two
years after the Date of Termination (the "Restricted Period") he violates the
restrictions on competition set forth in Section 11 hereof. Any determination of
whether the Executive has violated such non-competition restrictions shall be
made by arbitration in Atlanta, Georgia under the Rules of Commercial
Arbitration (the "Rules") of the American Arbitration Association, which Rules
are deemed to be incorporated by reference herein."
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6. As amended hereby, the Change in Control Agreement shall be and remain in
full force and effect.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf by its
undersigned officer thereunto, duly authorized, all as of the day and year first
above written.
/s/ Jack J. Luchese
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Jack J. Luchese
Attest: CYTRX CORPORATION:
/s/ Mark W. Reynolds /s/ William B. Fleck
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Corporate Secretary By: William B. Fleck
(CORPORATE SEAL) Title: Vice President, Human Resources
/s/ Herbert H. McDade, Jr.
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By: Herbert H. McDade, Jr.
Title: Chairman, CytRx Compensation Committee
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