Employment Agreement - CytRx Corp. and C. Kirk Peacock
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
as of August 1, 2003 (the "Effective Date") by and between CytRx Corporation, a
Delaware corporation ("Employer"), and C. Kirk Peacock, an individual and
resident of the State of California ("Employee").
WHEREAS, Employer desires to engage Employee, initially as a consultant
and, subsequently, as an employee, and Employee is willing to be so engaged by
Employer, on the terms set forth in this Agreement.
NOW, THEREFORE, upon the above premises, and in consideration of the
mutual covenants and agreements hereinafter contained, the parties hereto agree
as follows.
1. Engagement. Effective as of the Effective Date, Employer hereby
engages Employee as follows and Employee hereby accepts such engagement:
1.1. Consulting Services. From the Effective Date through August
15, 2003, Employer shall engage Employee as a consultant to provide financial
advisory and consulting services relating to Employer's business on the terms
set forth herein.
1.2. Employment. Commencing August 16, 2003, Employer shall employ
Employee as Employer's Chief Financial Officer on the terms set forth herein.
2. Duties; Place of Employment. Employee shall perform such duties as
are assigned to him from time to time by Employer's Chief Executive Officer or
Board of Directors in a professional business-like manner and to the best of his
ability. Such duties shall include, without limitation, the duties described on
Schedule 1 to this Agreement. Employee understands and agrees that his duties,
title and authority may be changed from time to time in the discretion of
Employer's Chief Executive Officer or Board of Directors. Employee's services
hereunder shall be rendered at Employer's principal executive offices in Los
Angeles, California, or its environs; provided, however, that Employee shall be
entitled to render such services from his home in Santa Barbara, California,
until he relocates his residence to Los Angeles County or September 1, 2003,
whichever occurs first. Except for travel when and as required in the
performance of Employee's duties hereunder, Employer shall have no right to
require Employee to serve the Company at any office or location other than as
set forth above.
3. Time and Efforts. Employee shall devote all of his business time,
efforts, attention and energies to Employer's business and the discharge his
duties hereunder.
4. Term. The term (the "Term") of Employee's employment hereunder shall
commence on the Effective Date and shall expire on the first anniversary
thereof, unless sooner terminated in accordance with Section 6. Neither Employer
nor Employee shall have any obligation to extend or renew this Agreement. In the
event that Employer elects in its discretion not to extend or renew this
Agreement, (a) Employer shall continue to pay Employee his salary as provided in
Section 5.1 during the period commencing on August 1, 2004 and ending on the
earlier of (1) January 31, 2005 or (2) the date of Employee's re-employment in a
comparable position with another company or business, and (b) Employee shall be
entitled during such period to continued participation, at Employer's cost and
expense, in any Employer-sponsored group benefit plans in which Employee is
participating immediately prior to the expiration of the Term.
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5. Compensation. As the total consideration for Employee's services
rendered hereunder, Employer shall pay or provide Employee the following
compensation and benefits:
5.1. Salary. Employer shall pay Employee an annual salary of One
Hundred Sixty-Five Thousand Dollars ($165,000), in 24 equal semi-monthly
installments on the 15th day and the last day of each calendar month during the
Term, with the first such installment due on August 15, 2003.
5.2. Bonus Compensation. Employer shall pay Employee a bonus of
$24,750 on August 1, 2004, provided that Employee remains in the continuous
employ of Employer through such date.
5.3. Stock Options. Employer shall grant Employee as of the
Effective Date a nonqualified stock option (the "Option") to purchase 210,000
shares of Employer's common stock, which, subject to Section 6.2, shall vest and
become exercisable as to 70,000 of the shares covered thereby on each of the
first, second and third annual anniversaries of the Effective Date, provided, in
each case, that Employee remains in the continuous employ of Employer through
such date. The exercise price of the Option shall be equal to the closing price
of Employer's common stock on the Effective Date as reported by Nasdaq. The
Option shall have a term of ten years and such other terms as shall be
determined by Employer's Board of Directors (or the Compensation Committee of
the Board of Directors) in its sole discretion and set forth in the stock option
agreement evidencing the Option.
5.4. Expense Reimbursement. Employer shall reimburse Employee for
reasonable and necessary business expenses incurred by Employee in connection
with the performance of Employee's duties in accordance with Employer's usual
practices and policies in effect from time to time.
5.5. Vacation. Employee shall be entitled to two (2) weeks
vacation each year during the Term, without loss of salary or bonus hereunder,
plus sick leave and personal days, all as determined in accordance with
Employer's usual practices and policies in effect from time to time.
5.6. Insurance Benefits. Employee shall be eligible to participate
in any medical insurance and other benefits made available by Employer to all of
its employees under its group plans in effect during the Term. Employee
acknowledges and agrees that, although Employer plans to obtain employee group
medical insurance and other benefits, no such plans are currently in effect, and
that any such plans put into effect may be modified or terminated by Employer at
any time in its discretion.
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5.7. Tax Withholding. Employer shall have the right to deduct from
the compensation and benefits due to Employee hereunder any and all sums
required for social security and withholding taxes and for any other federal,
state, or local tax or charge which may be in effect or hereafter enacted or
required as a charge on the compensation or benefits of Employee.
6. Expiration and Termination. This Agreement may be terminated as set
forth in this Section 6.
6.1. Termination by Employer for Cause. Employer may terminate
Employee's employment hereunder for "Cause" upon notice to Employee. "Cause" for
this purpose shall mean any of the following:
(a) Employee's breach of any material term of this Agreement;
provided that the first occasion of any particular breach shall not constitute
such Cause unless Employee shall have previously received written notice from
Employer stating the nature of such breach and affording Employee at least ten
days to correct such breach;
(b) Employee's conviction of, or plea of guilty or nolo contendere
to, any misdemeanor, felony or other crime of moral turpitude;
(c) Employee's act of fraud or dishonesty injurious to Employer or
its reputation;
(d) Employee's continual failure or refusal to perform his
material duties as required under this Agreement after written notice from
Employer stating the nature of such failure or refusal and affording Employee at
least ten days to correct the same;
(e) Employee's act or omission that, in the reasonable
determination of Employer's Board of Directors, indicates alcohol or drug abuse
by Employee; or
(f) Employee's act or personal conduct that, in the judgment of
Employer's Board of Directors, gives rise to a material risk of liability of
Employee or Employer under federal or applicable state law for discrimination,
or sexual or other forms of harassment, or other similar liabilities to
subordinate employees.
Upon termination of Employee's employment by Employer for Cause, all
compensation and benefits to Employee hereunder shall cease and Employee shall
be entitled only to payment, not later than three days after the date of
termination, of any accrued but unpaid salary and unused vacation as provided in
Sections 5.1 and 5.5 as of the date of such termination.
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6.2. Termination by Employer without Cause. Employer may also
terminate Employee's employment without Cause upon notice to Employee. Upon
termination of Employee's employment by Employer without Cause, all compensation
and benefits to Employee hereunder shall cease and Employee shall be entitled to
(a) payment of (1) any accrued but unpaid salary and unused vacation as provided
in Sections 5.1 and 5.5 as of the date of such termination, which shall be due
and payable upon the effective date of such termination, and (2) an amount,
which shall be due and payable within ten days following the effective date of
such termination, equal to the salary that would otherwise be payable as
provided in Section 5.1 for the period (the "Severance Period") commencing on
the date of termination of Employee's employment and ending on the six-month
anniversary of such date, and (b) continued participation, at Employer's cost
and expense, during the Severance Period in any Employer-sponsored group benefit
plans in which Employee was participating as of the date of termination.
Notwithstanding anything to the contrary set forth in Section 5.3, in the event
Employee's employment is terminated by Employer without Cause, the Option shall
thereupon vest and become immediately exercisable as to 35,000 shares covered
thereby in addition to such number of shares, if any, as to which the Option is
then vested in accordance with its terms.
6.3. Death or Disability. Employee's employment will terminate
automatically in the event of Employee's death or upon notice from Employer in
event of his permanent disability. Employee's "permanent disability" shall mean
his inability to fully perform his duties hereunder for any period of at least
75 consecutive days or for a total of 90 days, whether or not consecutive. Upon
termination of Employee's employment as aforesaid, all compensation and benefits
to Employee hereunder shall cease and Employer shall pay to the Employee's heirs
or personal representatives, not later than ten days after the date of
termination, any accrued but unpaid salary and unused vacation as provided in
Sections 5.1 and 5.5 as of the date of such termination.
7. Confidentiality. While this Agreement is in effect and for a period
of five years thereafter, Employee shall hold and keep secret and confidential
all "trade secrets" (within the meaning of applicable law) and other
confidential or proprietary information of Employer and shall use such
information only in the course of performing Employee's duties hereunder;
provided, however, that with respect to trade secrets, Employee shall hold and
keep secret and confidential such trade secrets for so long as they remain trade
secrets under applicable law. Employee shall maintain in trust all such trade
secret or other confidential or proprietary information, as Employer's property,
including, but not limited to, all documents concerning Employer's business,
including Employee's work papers, telephone directories, customer information
and notes, and any and all copies thereof in Employee's possession or under
Employee's control. Upon the expiration or earlier termination of Employee's
employment with Employer, or upon request by Employer, Employee shall deliver to
Employer all such documents belonging to Employer, including any and all copies
in Employee's possession or under Employee's control.
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8. Equitable Remedies; Injunctive Relief. Employee hereby acknowledges
and agrees that monetary damages are inadequate to fully compensate Employer for
the damages that would result from a breach or threatened breach of Section 7 of
this Agreement and, accordingly, that Employer shall be entitled to equitable
remedies, including, without limitation, specific performance, temporary
restraining orders, and preliminary injunctions and permanent injunctions, to
enforce such Section without the necessity of proving actual damages in
connection therewith. This provision shall not, however, diminish Employer's
right to claim and recover damages or enforce any other of its legal or
equitable rights or defenses.
9. Indemnification; Insurance. Employer and Employee acknowledge that,
as the Chief Financial Officer of the Employer, Employee shall be a corporate
officer of Employer and, as such, Employee shall be entitled to indemnification
to the full extent provided by Employer to its officers, directors and agents
under the Employer's Certificate or Articles of Incorporation and Bylaws as in
effect as of the date of this Agreement. Subject to his insurability thereunder,
effective the Effective Date, Employer shall add Employee as an additional
insured under its current policy of directors and officers liability insurance
and shall continue to insure Employee thereunder, or under any replacement
policies in effect from time to time, during the Term.
10. Severable Provisions. The provisions of this Agreement are
severable and if any one or more provisions is determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions, and any
partially unenforceable provisions to the extent enforceable, shall nevertheless
be binding and enforceable.
11. Successors and Assigns. This Agreement shall inure to the benefit
of and shall be binding upon Employer, its successors and assigns and Employee
and his heirs and representatives; provided, however, that neither party may
assign this Agreement without the prior written consent of the other party.
12. Entire Agreement. 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 that are not set forth otherwise herein. This Agreement
supersedes any and all prior or contemporaneous agreements, written or oral,
between Employee and Employer relating to the subject matter hereof. Any such
prior or contemporaneous agreements are hereby terminated and of no further
effect, and Employee, by the execution hereof, agrees that any compensation
provided for under any such agreements is specifically superseded and replaced
by the provisions of this Agreement.
13. Amendment. No modification of this Agreement shall be valid unless
made in writing and signed by the parties hereto and unless such writing is made
by an executive officer of Employer (other than Employee). The parties hereto
agree that in no event shall an oral modification of this Agreement be
enforceable or valid.
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14. Governing Law. This Agreement is and shall be governed and
construed in accordance with the laws of the State of California without giving
effect to California's choice-of-law rules.
15. Notice. All notices and other communications under this Agreement
shall be in writing and mailed, telecopied or delivered by hand or by a
nationally recognized courier service guaranteeing overnight delivery to a party
at the following address (or to such other address as such party may have
specified by notice given to the other party pursuant to this provision):
If to Employer:
CytRx Corporation
11726 San Vicente Boulevard, Suite 650
Los Angeles, California 90049
Facsimile: (310) 826-5529
Attention: Chief Executive Officer
If to Employee:
C. Kirk Peacock
2027 State Street
Santa Barbara, California 93105
Facsimile: (805) ___-____
16. Arbitration. The parties agree if any controversy or claim shall
arise out of this Agreement or the breach hereof (other than claims (a) for
equitable relief, including specific performance, injunctive relief or temporary
restraining orders or (b) enforcing this Section 15 or an arbitration award
granted in accordance herewith), and either party shall request that the matter
be settled by arbitration the matter shall be settled exclusively by final and
binding arbitration before JAMS (or its successor pursuant to the United States
Arbitration Act, 9 U.S.C. Section 1 et seq.) in accordance with the provisions
of JAMS' Streamlined Arbitration Rules and Procedures in effect at such time, by
a single arbitrator, if the parties shall agree upon one, or by one
arbitrator-appointee by each party and a third arbitrator appointed by the other
arbitrators. In case of any failure of a party to make an appointment referred
to above within two weeks after written notice of controversy, such appointment
shall be made by JAMS. All arbitration proceedings shall be held in the City of
Los Angeles, and each party agrees to comply in all respects with any award made
in such proceeding and to the entry of a judgment in any jurisdiction upon any
award rendered in such proceeding. All costs and expenses of arbitration
(including costs of preparation therefore and reasonable attorneys' fees
incurred in connection therewith) of the party prevailing in such arbitration
shall be borne by the losing party to such arbitration or otherwise as directed
by the arbitrator or arbitrators.
17. Survival. Sections 7 through 16 shall survive the expiration or
termination of this Agreement.
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18. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the day and year
first above written.
"EMPLOYER"
CytRx Corporation,
a Delaware corporation
By: /s/ Steven A. Kriegsman
---------------------------------
Name: Steven A. Kriegsman
Title: Chief Executive Officer
"EMPLOYEE"
/s/ C. Kirk Peacock
-------------------------------------
C. Kirk Peacock
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Schedule 1
Description of Duties
Responsibility for
o Accounting and finance departments
o Budgeting
o Cash management
o Accounts payable and aging
o Accounts receivable and aging
o Posting of recurring accounting entries
o Bank reconciliations
o Vendor reconciliations
o Monthly closings of company books of account
o Monthly, quarterly and annual comparisons of actual vs. targeted
results of operations
o Assisting in preparation of press releases regarding financial matters
o Assisting in capital-raising and other financing transactions
o Assisting in in-licensing, business acquisitions and other corporate
transactions
o Coding of income and expenditures
o Payroll
o Assisting in establishing and maintaining SEC internal controls and
procedures, including financial controls
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