Document:

Exhibit
10.1

 

SUPERGEN,
INC.

 

EXECUTIVE
EMPLOYMENT AND CONFIDENTIAL INFORMATION

AND
INVENTION ASSIGNMENT AGREEMENT

 

This Executive Employment and Confidential Information and Invention
Assignment Agreement (the “Agreement”) is made and entered into effective as of
April 1, 2009 (the “Effective Date”) by and between SuperGen, Inc., a
Delaware corporation (the “Company”), and James S. Manuso (“Executive”).

 

1.     Term.  The Company hereby agrees to continue to employ Executive and
Executive hereby accepts continued employment, on the terms and conditions set
forth herein.  The term of this Agreement shall commence upon the
Effective Date and shall continue until and including March 31, 2012.

 

2.     Positions and Duties.  Executive agrees to continue to serve
the Company as its President and Chief Executive Officer or in such other
executive capacity as the Board may from time to time request.  During the
term of this Agreement, Executive will have all duties and responsibilities
that are reasonably consistent with these titles and positions and will devote
all of his normal business time and attention to, and use his best efforts to
advance, the business of the Company.  Executive agrees not to actively
engage in any other employment, occupation or consulting activity for any
direct or indirect remuneration without the prior approval of the Board of
Directors (the “Board”), except that without the prior approval, Executive may
serve on the board of directors of other companies if in so doing Executive
does not violate the terms of this Agreement.

 

3.     Confidential Information.

 

3.1  Company Information. 
Executive agrees at all times during the term of his employment and thereafter,
to hold in the strictest confidence, and not to use, except for the benefit of
the Company, or to disclose to any person, firm or corporation without written
authorization of the Board, any confidential Information of the Company, except
under a non-disclosure agreement duly authorized and executed by the
Company.  Executive understands that “Confidential Information” means any
non-public information that relates to the actual or anticipated business or
research and development of the Company, technical data, trade secrets or
know-how, including, but not limited to, research, product plans or other
information regarding Company’s products or services and markets therefore,
customer lists and customers (including, but not limited to, customers of the
Company on whom Executive called with whom Executive became acquainted during
the term of his employment), software developments, inventions, processes,
formulas, technology, designs, drawings, engineering, hardware configuration
information, marketing, finances or other business information.  Executive
further understands that Confidential Information does not include any of the
foregoing items that have become publicly known and made generally available
through no wrongful act of Executive’s or of others who were under
confidentiality obligations as to the item or items involved or improvements or
new versions thereof.

 

 

3.2  Former Employer Information.  Executive agrees that he will not, during his employment with
the Company, improperly use or disclose any proprietary information or trade
secrets of any former employer or other person or entity and that he will not
bring onto the premises of the Company any unpublished document or proprietary
information belonging to any such employer, person or entity unless consented
to in writing by such employer, person or entity.

 

3.3  Third Party Information.  Executive recognizes that the Company has received and in the
future will receive from third parties their confidential or proprietary
information subject to a duty on the Company’s part to maintain the
confidentiality of such information and to use it only for certain limited
purposes.  Executive agrees to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out Executive’s
work for the Company’s consistent with the Company’s agreement with such third
party.

 

4.     Inventions.

 

4.1  Inventions Retained and Licensed.  Except as listed on Exhibit A, Executive does not
have any inventions, original works of authorship, developments, improvements,
and trade secrets which were made by him prior to his employment with the
Company (collectively referred to as “Prior Inventions”), which belong to him,
which may relate to the Company’s proposed business, products or research and
development, and which were not previously assigned to the Company.  If in
the course of Executive’s employment with the Company, Executive incorporates
into a Company product, process or service a Prior Invention owned by Executive
or in which Executive has an interest, Executive hereby grants to the Company a
nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide
license to make, have made, modify, use and sell such Prior Invention as part
of or in connection with such product, process or service, and to practice any
method related thereto.

 

4.2  Assignment of Inventions.  Executive agrees that Executive will promptly make full written
disclosure to the Company, will hold in trust for the sole right and benefit of
the Company, and hereby assigns to the Company, or its designee, all Executive’s
right, title, and interest in and to any and all inventions, original works of
authorship, developments, concepts, improvements, designs, discoveries, ideas,
trademarks or trade secrets, whether or not patentable or registrable under
copyright or similar laws, which Executive may solely or jointly conceive or
develop or reduce to practice, or cause to be conceived or developed or reduced
to practice, during the period of time Executive is in the employ of the
Company (collectively referred to as “Inventions”), except as provided in Section 4.6
below.  Executive further acknowledges that all original works of
authorship which are made by him (solely or jointly with others) within the
scope of and during the period of his employment with the Company, and which
are protectable by copyright, are “works made for hire,” as that term is
defined in the United States Copyright Act.  Executive understands and
agrees that the decision 

 

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whether
or not to commercialize or market any Invention developed by Executive solely
or jointly with others is within the Company’s sole discretion and for the
Company’s sole benefit and that no royalty will be due to Executive as a result
of the Company’s efforts to commercialize or market any such Invention.

 

4.3  Inventions Assigned To The United States.  Executive agrees to assign to the
United States government all his right, title, and interest in and to any and
all Inventions whenever such full title is required to be in the United States
by a contract between the Company and the United States or any of its agencies.

 

4.4  Maintenance of Records. 
Executive agrees to keep and maintain adequate and current written records of
all Inventions made by Executive (solely or jointly with others) during the
period of his employment with the Company.  The records will be in the
form of notes, sketches, drawings, and any other format that may be specified
by the Company.  The records will be available to and remain the sole
property of the Company at all times.

 

4.5  Patent and Copyright Registrations.  Executive agrees to assist the Company, or its designee, at the
Company’s expense, in every proper way to secure the intellectual property
rights relating thereto in any and all countries, including the disclosure to
the Company of all pertinent information and data with respect thereto, the
execution of all applications, specifications, oaths, assignments and all other
instruments which the Company shall deem necessary in order to apply for and
obtain such rights and in order to assign and convey to the Company, its
successors, assigns, and nominees the sole and exclusive rights, title and
interest in and to such Inventions, and any copyrights, patents, mask work
rights or other intellectual property rights relating thereto.  Executive
further agrees that his obligation to execute or cause to be executed when it
is in his power to do so, any such instrument or papers shall continue after
the termination of this Agreement.  If the Company is unable because of
Executive’s mental or physical incapacity or for any other reason to secure
Executive’s signature to apply for or to pursue any application for any United
States or foreign patents or copyright registrations covering Inventions or
original works of authorship assigned to the Company as above, then Executive
hereby irrevocably designates and appoints the Company and its duly authorized
officers and agents as his agent and attorney in fact, to act for and in
Executive’s behalf and stead to execute and file any such applications and to
do all other lawfully permitted acts to further the prosecution and issuance of
letters patent or copyright registrations thereon with the same legal force and
effect as if executed by Executive.

 

4.6  Exception to Assignments.  Executive understands that the provision of this Agreement
requiring assignment of Inventions to the Company do not apply to any Invention
which qualifies fully under the provisions of California Labor Code section
2870 (attached as Exhibit B ).  Executive will advise the
Company promptly in writing of any Inventions that Executive believes meet the
criteria in California Labor Code Section 2870.

 

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5.     Office.  The Company shall provide Executive with an office at the
location of the Company’s primary business operations that is consistent with
his positions and titles.

 

6.     Compensation and Fringe Benefits.

 

6.1  Base Salary. 
For all services rendered by Executive pursuant to this Agreement, the Company
shall pay Executive a base salary (the “Base Salary”) at the annual rate of not
less than Five Hundred Seventy Four Thousand Seven Hundred Fifty Two Dollars
($574,752.00) as of the Effective Date. 
Commencing January 1, 2010, the Executive’s annual salary will be
adjusted to Six Hundred Twenty Five Thousand Dollars ($625,000.00).  The
Base Salary shall be paid in periodic installments in accordance with the
Company’s regular payroll practices.  Executive’s annual salary shall be
adjusted annually thereafter on January 1 of each year during the term of
the agreement to compensate for changes in the cost of living.  The amount
of each annual cost of living increase shall be twice the rate determined for
such annual period by the “Consumer Price Index for Urban Wage Earners and
Clerical Workers (All Items) published by the bureau of Labor Statistics, U.S.
Department of Labor (1967 equals 100).”

 

6.2  Performance Bonus.

 

(a)                                                      For the calendar year 2009, the Executive
shall be eligible to receive an annual performance-based bonus of Three Hundred
Fifty Thousand Dollars ($350,000.00) based upon achievement of certain criteria
to be specified by the compensation committee of the Board (“Compensation
Committee”), including (without limitation) revenue and profitability targets
and/or other organizational and strategic milestones (the “2009 Performance
Bonus”).  The 2009 Performance Bonus shall be based upon achieving
performance objectives during 2009 and shall be payable in accordance with the
Company’s normal payroll practices and policies no later than March 15 of
the year following the year in which Executive’s right to such bonus vests.

 

(b)                                                     For the remaining term of the Agreement, the
Executive shall be eligible to receive an annual performance-based bonus of Six
Hundred Fifty Thousand Dollars ($650,000.00) based upon achievement of certain
criteria to be specified by the Compensation Committee, including (without
limitation) revenue and profitability targets and/or other organizational and
strategic milestones (the “Performance Bonus”).  The Performance Bonus
shall be based upon achieving performance objectives during each calendar year
and shall be payable in accordance with the Company’s normal payroll practices
and policies no later than March 15 of the year following the year in
which Executive’s right to such bonus vests.

 

6.3  Stock Options.

 

(a)           Annual
Options.  Executive shall be
permitted to 

 

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participate
in any stock option and similar plans as adopted by the Company from time to
time for the grant of stock options and other equity incentives to the Company’s
employees.  On the first business day occurring on or after April 1,
2010 of each year during the term of this Agreement (subject to Executive’s
continuous employment with the Company through each such anniversary), the
Company shall grant Executive a stock option with a vesting commencement date
of April 1 of the year in which it is granted, which will be, to the
extent possible under the $100,000 rule of Section 422(d) of the
Internal Revenue Code of 1986, as amended (the “Code”), an “incentive stock
option” (as defined in Section 422 of the Code), under the Company’s 2003
Stock Plan (the “Plan”) to purchase 360,000 shares of the Company’s common
stock (as adjusted for stock splits and stock combinations that may occur after
the date of this Agreement), which each such option shall have a per share
exercise price equal to the fair market value of the Company’s common stock on
the applicable date of grant (each an “Annual Option” and collectively, the “Annual
Options”).  Subject to the accelerated vesting provisions set forth
herein, each Annual Option will vest as to 1/12th of the shares subject to such
option each month following its date of grant, so that each Annual Option will
be fully vested and exercisable one year from its grant date, subject to
Executive’s continuous service to the Company through each relevant vesting
date.  Notwithstanding the above, in the event of a Change in Control (as
defined in Section 7.4 below) of the Company prior to the granting of all
Annual Options, and that occurs while Executive remains employed hereunder,
then all Annual Options yet to be granted through the term of the Agreement
will immediately be granted and 100% of the then-unvested shares subject to all
such Annual Options will vest and become exercisable.

 

(b)      Performance Options.

 

(i) On the Effective Date, the Company shall grant Executive a
stock option, which is, to the extent possible under the $100,000 rule of Section 422(d) of
the Code, an “incentive stock option” (as defined in Section 422 of the
Code), under the Plan to purchase 1,200,000 shares of the Company’s common
stock, which such option shall have a per share exercise price equal to the
fair market value of the Company’s common stock on the Effective Date (the “2009
Performance Option” and together with the Annual Options, the “Options”).

 

(ii) The 2009 Performance Option shall vest upon the Company’s
achievement of the following performance milestones, subject to Executive’s
continuous employment with the Company through the date any such performance
milestone is achieved:

 

(A)                              100,000 shares will vest upon the
clearance by the U.S. Food and Drug Administration (“FDA”) of an
Investigational New Drug Application (“IND”) submitted by the Company that will
allow the Company to initiate a clinical study of the compound that is the
subject of the IND;

 

(B)                                100,000 shares will vest upon clearance
by the FDA of another IND
submitted by the Company that will allow the Company to initiate a 

 

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clinical study
of the compound that is the subject of the IND (subsequent to the IND described
in subsection (A) above);

 

(C)                                100,000 shares will vest upon clearance
by the FDA of another IND submitted
by the Company that will allow the Company to initiate a clinical study of the
compound that is the subject of the IND (subsequent to the INDs described in
subsections (A) and (B) above);

 

(D)                               100,000 shares will vest upon the
execution of a definitive agreement with a corporate partner or licensee for
one or more of the drugs in the Company’s portfolio, or for a discovery collaboration,
providing the value to the Company of any such deal is projected to exceed $10
million in combined up-front payments, R&D payments, milestones and
royalties to the Company throughout its course;

 

(E)                                 100,000 shares will vest upon the
execution of a definitive agreement with a corporate partner or licensee for
one or more of the drugs in the Company’s portfolio, or for a discovery
collaboration, providing the value to the Company of any such deal is projected
to exceed $15 million in combined up-front payments, R&D payments,
milestones and royalties to the Company throughout its course;

 

(F)                                 250,000 shares will vest upon the
securing of any one of the following:  (1) execution
of a definitive agreement with a third corporate partner or licensee for one or
more of the drugs in the Company’s portfolio, or for a discovery collaboration,
providing the value to the Company of any such deal is projected to exceed $25
million in combined up-front payments, R&D payments, milestones and
royalties to the Company throughout its course; (2) a transaction wherein
the Company acquires another company, and the combined entity is valued at a
premium of at least 10 percent above the market capitalization of the Company
immediately before the transaction is closed for a period of thirty (30)
consecutive days based on the closing price of the Company’s common stock
traded on the Nasdaq stock market; or (3) $25 million in additional
financing either through the sale of debt, equity or other securities of the
Company.  For the sake of clarity,
250,000 shares will vest upon the first of these that is secured — the securing
of more than one of these shall not result in additional vesting;

 

(G)                                100,000 shares will vest upon the Company
achieving a cash-flow positive year of operations during the term of this
Agreement;

 

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(H)                               100,000 shares will vest upon the Company
achieving the next cash-flow positive year of operations during the term of the
Agreement that follows
the cash-flow positive year of operations for which the performance milestone
is achieved pursuant to subsection (G) above);

 

(I)                                    100,000 shares will vest upon the Company’s
commencement of an FDA-cleared Phase II clinical trial; and

 

(J)                                   150,000 shares will vest upon achievement
of additional milestone(s) to be agreed upon with the Board, including,
but not limited to, acquisition of a company or drug that is assessed to be
value-enhancing by the Board.

 

(iii)  Executive is still eligible to achieve the outstanding
performance milestones described in Section 6.3(b) of that certain
Amended and Restated Executive Employment and Confidential Information and
Invention Assignment Agreement by and between the Company and Executive, dated
as of October 28, 2008 (the “2008 Agreement”) with respect to the
performance option granted to Executive in connection with the 2008 Agreement
(the “2008 Performance Option”), and subject to Executive’s continuous
employment with the Company through the date any such performance milestone is
achieved.  For purposes of clarity, under
no circumstances shall Executive vest in both the 2009 Performance Option and
the 2008 Performance Option simultaneously, to the extent the performance
milestones for each are duplicative.  Accordingly, the remaining unachieved
performance milestones for the 2008 Performance Option are reproduced below,
with certain modifications, for the purpose of avoiding duplication with the
performance milestones for the 2009 Performance Option:

 

(A)                              100,000 shares subject to the 2008
Performance Option will vest upon the filing of an IND for a drug acquired as a
result of the Company’s acquisition of Montigen; provided, however, that this
performance milestone can only be achieved if the performance milestones set
forth in subsections (ii)(A), (B) and (C) above are already achieved;

 

(B)                                100,000 shares subject to the 2008
Performance Option will vest upon the acquisition of a corporate partner or
licensee for one or more of the drugs in the Company’s portfolio, providing the
value of such deal is projected to exceed $10MM in combined up-fronts, R&D
payments, milestones and royalties to the Company throughout its course;
provided, however, that this performance milestone can only be achieved if the
performance milestone set forth in subsection (ii)(D) above is already
achieved;

 

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(C)                                250,000 shares subject to the 2008
Performance Option will vest upon the securing of (1) a significant
corporate partner for one or more of the Company’s drugs or (2) $25,000,000
in additional financing; provided, however, that the performance milestone
described in the preceding clauses can only be achieved if the performance
milestone set forth in subsection (ii)(F)(1) and (3) above are
already achieved;

 

(D)                               100,000 shares subject to the 2008
Performance Option will vest upon the Company achieving a cash-flow positive
year of operations; provided, however, that this performance milestone can only
be achieved for a cash-flow positive year of operations that follows both
cash-flow positive years described in subsections (ii)(G) and (H) above;
and

 

(E)                                 50,000 shares subject to the 2008
Performance Option will vest upon achievement of additional milestone(s) to
be agreed upon with the Board, including, but not limited to, acquisition of a
company or drug that is assessed to be value-enhancing by the Board.

 

(iv)  In
addition, Executive is still eligible to achieve the outstanding performance
milestones described in Section 6.3(b) of that certain Executive
Employment and Confidential Information and Invention Assignment Agreement by
and between the Company and Executive, dated as of January 1, 2004 (the “2004
Agreement”), as set forth below.  The
performance option granted pursuant to the 2004 Agreement shall vest upon the
Company’s achievement of the following performance milestones, subject to
Executive’s continuous employment with the Company through the date any such
performance milestone is achieved:

 

(A)                              50,000 shares shall vest upon European
approval of Decitabine;

 

(B)                                50,000 shares shall vest upon the
acquisition from a third party of at least one Phase II or more advanced
compound;

 

(C)                                100,000 shares shall vest upon completion
of Phase III of a compound acquired during Executive’s tenure as the Company’s
Chief Executive Officer during the term of the 2004 Agreement; and

 

(D)                               100,000 shares shall vest upon FDA
approval of a compound acquired by the Company during the term of the 2004
Agreement;

 

(E)                                 50,000 shares shall vest upon European
approval of Orathecin; and

 

(F)                                 200,000 shares shall vest upon the
Company achieving annual gross sales of $30,000,000 or more.

 

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(c)      Each
Option shall have a term of ten (10) years from its date of grant, subject
to earlier termination in connection with Executive’s termination of service to
the Company as provided in the Option Agreements.  The Options will be
subject to the terms, definitions and provisions of the Plan and the stock
option agreements to be executed by and between Executive and the Company (the “Option
Agreements”), all of which documents are incorporated herein by reference.
Notwithstanding the above, in the event of a Change in Control (as defined in Section 7.4 below) of the Company prior to the vesting of
the 2009 Performance Option and the 2008 Performance Option (if
outstanding)
and that occurs while Executive remains employed hereunder, 100% of the then unvested
shares subject to the 2009
Performance Option and the 2008 Performance Option (if
outstanding)
shall immediately vest and become exercisable.

 

6.4  Life Insurance. 
During the term of the Agreement, the Company will pay the full premium on a $4
million key person life insurance policy covering Executive.  Executive
will be entitled to select personal beneficiaries for 50% of the proceeds of
the insurance policy.  The Company will provide Executive with additional
cash compensation at the end of each calendar year to fully offset taxes
attributable to Executive as a result of payment of the life insurance premiums
by the Company.

 

6.5  Other Benefits. 
Executive shall be entitled to participate in such group life, pension,
disability, accident, hospital and medical insurance plans, and such other plan
or plans which may be instituted by the Company for the benefit of its
executive employees generally, upon such terms as may be therein provided of
general application to all executive employees of the Company and such other
benefits as are mutually deemed appropriate by the Compensation Committee and
Executive to the position held by Executive and to the discharge of Executive’s
duties.  Executive shall be entitled to not less than twenty (20) business
days’ vacation per year, with remuneration, which shall be coordinated with the
vacation periods of other officers of the Company in a manner that will
minimize disruption of the Company’s management efforts.

 

6.6   Additional
Compensation.  Executive shall also be eligible to receive
such additional salary or other incentive compensations as the Compensation
Committee may, in its sole discretion, determine from time to time.

 

7.     Expenses.

 

7.1  Automobile Expense.  
For the calendar year 2009, up to a maximum of Twenty-Five Thousand Dollars
($25,000.00) annually, the Company will lease and pay for the maintenance of an
automobile selected by Executive for his exclusive use.  The Company will
also pay for automobile insurance for the Executive, up to a maximum of Four
Thousand Dollars ($4,000.00) annually.

 

For the remaining term of the Agreement, up to a maximum of Thirty 

 

9

 

Thousand
Dollars ($30,000.00) annually, the Company will lease and pay for the maintenance
of an automobile selected by Executive for his exclusive use.  The Company
will also pay for automobile insurance for the Executive, up to a maximum of
Five Thousand Dollars ($5,000.00) annually.

 

7.2  Business Expenses. 
The Company will pay or reimburse Executive for reasonable travel,
entertainment or other expenses incurred by Executive in the furtherance of or
in connection with the performance of Executive’s duties hereunder in
accordance with the Company’s established policies.  Executive shall
furnish the Company with evidence of the incurrence of such expenses within a
reasonable period of time from the date that they were incurred.

 

7.3 Relocation Expenses.  In the event Executive undergoes an “Involuntary
Termination” (as defined below and to include the result of a merger or acquisition in which
Executive is not offered full-time employment as Chairman, President and/or CEO
of the surviving entity), the Company will pay or reimburse Executive for all
reasonable relocation expenses incurred by Executive in connection with his and
his family’s relocation from California to New York, including, but not limited
to short-term hotel costs or apartment rental for Executive for a period not to
exceed six (6) months, house-hunting travel by Executive’s spouse and all
household goods moving costs.  The total of all such amounts will not
exceed $100,000.  Executive must submit a request for reimbursement of
relocation expenses no later than the December 31 of the second calendar
year following the calendar year in which Executive undergoes an Involuntary
Termination and the Company will not reimburse Executive for any expenses
incurred after such date.  The Company will reimburse Executive within
ninety (90) days after receipt of Executive’s request for reimbursement. 
The Company will provide Executive with additional cash compensation at the end
of the calendar year to fully offset taxes attributable to Executive as a
result of payment of such reasonable relocation expenses by the Company, which
such amount will be paid to Executive no later than the December 31 of the
calendar year following the calendar year in which Executive pays the tax on
the relocation expenses.

 

7.4  Termination Benefits. 
If Executive’s employment with the Company is terminated by the Company as a
result of an “Involuntary Termination” (as defined below) within one (1) year
following a “Change in Control” (as defined below), Executive shall be entitled
to receive the following severance benefits:  (1) a lump sum payment
equivalent to eighteen (18) months of Executive’s then current Base
Salary, which shall be paid no later no later than seventy (70) days following
the date of Executive’s termination of employment; and (2) a lump sum
payment equivalent to any unpaid amount of the Bonuses referenced in Section 6.2,
up to a maximum of One Million Dollars ($1,000,000.00), which shall be paid no
later no later than seventy (70) days following the date of Executive’s
termination of employment; and (3) full acceleration of the vesting of any
then unvested stock options held by Executive.

 

If Executive’s employment with the Company is terminated by the Company
as a 

 

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result
of an Involuntary Termination prior to the occurrence of a Change in Control,
Executive may be eligible for severance benefits under the Company’s Severance
Benefit Plan for Officers, to the extent determined by the Board.

 

For
the purposes of this Agreement, “Involuntary Termination” means (i) without
Executive’s express written consent, a material diminution of Executive’s
duties, position or responsibilities relative to Executive’s duties, position
or responsibilities in effect immediately prior to such reduction; (ii) without
Executive’s express written consent, a material diminution by the Company of
Executive’s base salary as in effect immediately prior to such reduction; (iii) any
material breach by the Company of any of the terms of this Agreement; (iv) without
Executive’s express written consent, the relocation of Executive to a facility
or a location more than fifty (50) miles from the current location of the
Company, which the Company and Executive agree would constitute a material
change in the geographic location at which Executive must perform services to the
Company, or (v) any purported termination of Executive other than for “Cause”
(as defined below).  Executive will not resign for an Involuntary
Termination without first providing the Company (x) with written notice
within ninety (90) days of the event that Executive believes constitutes an
Involuntary Termination specifically identifying the acts or omissions
constituting the grounds for an Involuntary Termination and (y) a
reasonable cure period of not less than thirty (30) days following the date of such
notice.

 

For the purposes of this Agreement, “Change in Control” means the
occurrence of any of the following events: (i) any “person” (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding
voting securities; (ii) the consummation of the sale or disposition by the
Company of all or substantially all of the Company’s assets; or (iii) the
consummation of a merger or consolidation of the Company with any other
corporation, other than a merger consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or its parent) at least outstanding or by
being converted into voting securities of the surviving entity or its parent)
at least fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity or its parent
outstanding immediately after such merger or consolidation.

 

For the purposes of this Agreement, “Cause” means (i) any act of
personal dishonesty taken by the Executive in connection with his employment
hereunder, which is intended to result in personal enrichment of the Executive,
(ii) the Executive’s conviction of a felony, (iii) any act by the
Executive that constitutes material misconduct and is injurious to the Company,
or (iv) continued violations by the Executive of the Executive’s
obligations to the Company.

 

7.5  Limitation on Payments. 
In the event that the severance and other 

 

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benefits
provided for in this Agreement or otherwise payable to Executive, including but
not limited to, the accelerated vesting of any stock options previously or
hereafter granted to Executive, (i) constitute “parachute payments” within
the meaning of Section 280G of the Code, and (ii) would be subject to
the excise tax imposed by Section 4999 of the Code (the “Excise Tax”),
then Executive’s benefits under this Agreement shall be reduced to the extent
necessary in order to avoid such benefits being subject to the Excise Tax.  In the event of any such reduction, such
benefits shall be reduced in the following order: (i) cash, (ii) equity
award acceleration, (iii) option grants, and (iv) employee benefits.

 

Unless the Company and Executive otherwise agree in writing, any
determination required under this Section shall be made in writing by the
Company’s independent public accountants (the “Accountants”), whose
determination shall be conclusive and binding upon Executive and the Company
for all purposes.  For purposes of making the calculations required by
this Section, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Section 280G and 4999
of the Code.  The Company and Executive shall furnish to the Accountants
such information and documents as the Accountants may reasonably request in
order to make a determination under this Section.  The Company shall bear
all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section.

 

7.6  Section 409A

 

(a)          
Notwithstanding anything to the contrary in the Agreement, if Executive is a “specified
employee” within the meaning of Section 409A at the time of Executive’s
termination of employment (other than due to death), and the severance payable
to Executive, if any, pursuant to the Agreement, when considered together with
any other severance payments or separation benefits that are considered
deferred compensation under Section 409A (together, the “Deferred
Compensation Separation Benefits”) that are payable within the first six (6) months
following Executive’s termination of employment, then such severance will
become payable on the first payroll date that occurs on or after the date six (6) months
and one (1) day following the date of Executive’s termination of
employment.  All subsequent Deferred Compensation Separation Benefits, if
any, will be payable in accordance with the payment schedule applicable to each
payment or benefit.  Notwithstanding anything herein to the contrary, if
Executive dies following Executive’s termination of employment but prior to the
six (6) month anniversary of Executive’s termination of employment, then
any payments delayed in accordance with this paragraph will be payable in a
lump sum as soon as administratively practicable after the date of Executive’s
death and all other Deferred Compensation Separation Benefits will be payable
in accordance with the payment schedule applicable to each payment or
benefit.  Each payment and benefit payable under this Agreement is
intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of
the Treasury Regulations.

 

12

 

(b)           Any
amount paid under the Agreement that satisfies the requirements of the “short-term
deferral” rule set forth in Section 1.409A-1(b)(4) of the
Treasury Regulations will not constitute Deferred Compensation Separation
Benefits for purposes of this Agreement.  Any amount paid under the
Agreement that qualifies as a payment made as a result of an involuntary
separation from service pursuant to Section 1.409A-1(b)(9)(iii) of
the Treasury Regulations that does not exceed the Section 409A Limit will
not constitute Deferred Compensation Separation Benefits for purposes of this
Agreement.  For this purpose, “Section 409A Limit” means the lesser
of two (2) times: (A) Executive’s annualized compensation based upon
the annual rate of pay paid to Executive during the Company’s taxable year
preceding the Company’s taxable year of Executive’s termination of employment
as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any
Internal Revenue Service guidance issued with respect thereto; or (B) the
maximum amount that may be taken into account under a qualified plan pursuant
to Section 401(a)(17) of the Code for the year in which Executive’s
employment is terminated.

 

(c)           The
foregoing provisions are intended to comply with the requirements of Section 409A
so that none of the severance payments and benefits to be provided hereunder
will be subject to the additional tax imposed under Section 409A, and any
ambiguities herein will be interpreted to so comply.  Executive and the
Company agree to work together in good faith to consider amendments to the
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Executive under Section 409A.

 

8.     Arbitration And
Equitable Relief.

 

8.1  Arbitration.  In consideration of Executive’s
employment with the Company, the Company’s promise to arbitrate all
employment-related disputes and Executive’s employment with the Company, the
Company’s promise to arbitrate all employment-related disputes and Executive’s
receipt of the compensation and other benefits paid to Executive by the
Company, at present and in the future, Executive agrees that any and all
controversies claims or disputes with anyone (including the Company and any
employee, officer, director, shareholder or benefit pan of the Company in their
capacity as such or otherwise) arising out of, relating to, or resulting from
Executive’s employment with the Company, or the termination of Executive’s
employment with the Company, including any breach of this Agreement, shall be
subject to binding arbitration rules set forth in California Code of Civil
Procedure Section 1280 through 1294.2, including Section 1283.05 (the
“Rules”) and pursuant to California law.  Disputes which Executive agrees
to arbitrate, and thereby agrees to waive any right to a trial by jury, include
any statutory claims under the state or federal law, including, but not limited
to, claims under title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the
Older Workers Benefit Protection Act, the California Fair Employment and
Housing Act, the California Labor Code, claims of harassment, discrimination or
wrongful termination and any statutory claims.  Executive further
understands that this 

 

13

 

Agreement
to arbitrate also applies to any disputes that the Company may have with
Executive.

 

8.2  Procedure.  Executive agrees that any arbitration
will be administered by the American Arbitration Association (“AAA”) and that
the neutral arbitrator will be selected in a manner consistent with its
National rules for the Resolution of Employment Disputes.  Executive
agrees that the arbitrator shall have the power to decide any motions brought
to any party to the arbitration, including motions for summary judgment and/or
adjudication and motions to dismiss and demurrers, prior to any arbitration
hearing.  Executive also agrees that the arbitrator shall have the power
to award any remedies, including attorneys’ fees and costs, available under
applicable law.  Executive understands the Company will pay for any
administrative or hearing fees charged by the arbitrator or AAA, except that
Executive shall pay the first $125.00 of any filing fees associated with any
arbitration he initiates.  Executive agrees that the arbitrator shall
administer and conduct any arbitration in a manner consistent with the rules and
that to the extent that the AAA’s National Rules for the Resolution of
Employment Disputes conflict with the Rules, the Rules shall take
precedence.  Executive agrees that the decision of the arbitrator shall be
in writing.

 

8.3  Remedy.  Except as provided by the Rules and
this Agreement, arbitration shall be the sole, exclusive and final remedy for
any dispute between Executive and the Company.  Accordingly, except as
provided for and by the Rules and this Agreement, neither Executive nor
the Company will be permitted to pursue court action regarding claims that are
subject to arbitration.  Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator shall not order or require the Company to adopt a policy not
otherwise required by law which the Company has not adopted.

 

8.4  Availability Of Injunctive Relief.  In addition to the right under the Rules to
petition to the court for provisional relief, Executive agrees that any party
may also petition the court for injunctive relief whether either party alleges
or claims a violation of this Agreement or any other agreement regarding trade
secrets, confidential information, and nonsolicitation of Labor Code
2870.  Executive understands that any breach or threatened breach of such
an agreement will cause irreparable injury and that money damages will not
provide an adequate remedy therefor and both parties hereby consent to the
issuance of an injunction.  In the event either party seeks injunctive
relief, the prevailing party shall be entitled to recover reasonable costs and
attorney fees.

 

8.5  Administrative Relief.  Executive understands that this
Agreement does not prohibit Executive from pursuing an administrative claim
with a local, state or federal administrative body such as the Department of
Fair Employment and Housing, the Equal Employment Opportunity Commission, or
the Workers’ Compensation Board.  This Agreement, however, does preclude
Executive from pursing court action regarding any such claim.

 

8.6  Voluntary Nature Of This Agreement.  Executive acknowledges 

 

14

 

and
agrees that Executive is executing this Agreement voluntarily and without any
duress or undue influence by the Company or anyone else.  Executive
further acknowledges and agrees that Executive has carefully read this
Agreement and has asked any questions needed for Executive to understand the
terms, consequences and binding effect of this Agreement and fully understand
it, including that
Executive is waiving his right to a jury trial.  Finally, Executive agrees that he has been
provided an opportunity to seek the advice of an attorney of his choice before
signing this Agreement.

 

9.     Contract Renewal.  This Agreement is automatically
renewed for a successive three (3) year term from the Effective Date
unless either party gives the other party three (3) months notice prior to
expiration of the Agreement of their intent not to renew the Agreement.

 

10.  Assignment.  This Agreement shall be binding upon
and inure to the benefit of (a) the heirs, executors and legal
representatives of Executive upon Executive’s death and (b) any successor
of the Company.  Any such successor of the Company shall be deemed
substituted for the Company under the terms of this Agreement for all
purposes.  As used herein, “successor” shall include any person, firm,
corporation or other business entity which at any time, whether by purchase,
merger or otherwise, directly or indirectly acquires all or substantially all
of the assets or business of the Company.  None of the rights of executive
to receive any form of compensation payable pursuant to this Agreement shall be
assignable or transferable except through a testamentary disposition or by the
laws of descent and distribution upon the death of Executive.  Any
attempted assignment, transfer, conveyance or other disposition (other than as
aforesaid) of any interest in the rights of Executive to receive any form of
compensation hereunder shall be null and void.

 

11.  Notices.  All notices, requests, demands and
other communications called for hereunder shall be in writing and shall be
deemed given if delivered personally or three (3) days after being mailed
by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors in interest at the following
addresses, or at such other addresses as the parties may designate by written
notice in the manner aforesaid:

 

	
  If
  to the Company:

  	
  SuperGen, Inc.

  
	
   

  	
  4140
  Dublin Blvd., Suite 200

  
	
   

  	
  Dublin,
  CA 94568

  
	
   

  	
  Attn:

  	
  Chief
  Financial Officer and

  
	
   

  	
   

  	
  Chairman
  of the Governance

  
	
   

  	
   

  	
  and
  Nominating Committee of

  
	
   

  	
   

  	
  the
  SuperGen Board of Directors

  
	
   

  	
   

  
	
  If
  to the Executive:

  	
  James
  S.J. Manuso

  
	
   

  	
  8
  Glen Alpine Drive

  
	
   

  	
  Piedmont,
  CA 94611

  

 

12.  Severability.  In the event that any provision
hereof becomes or is declared 

 

15

 

by
a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision.

 

13.  Entire Agreement.  This Agreement, together with the
Plan and the Option Agreements, represents the entire agreement and
understanding between the Company and Executive concerning Executive’s
employment relationship with the Company, and supersedes and replaces any and
all prior agreements and understandings, including, without limitation, the
2004 Agreement, and the 2008 Agreement, whether oral or written, concerning
Executive’s employment relationship with the Company.

 

14.  Waiver of Breach.  The waiver of a breach of any term or
provision of this Agreement, which must be in writing, will not operate as or
be construed to be a waiver of any other previous or subsequent breach of this
Agreement.

 

15.  Headings.  All captions and section headings
used in this Agreement are for convenient reference only and do not form a part
of this Agreement.

 

16.  No Oral Modification, Cancellation Or
Discharge. 
This Agreement may only be amended, canceled or discharged in writing signed by
Executive and the Company.

 

17.  Tax Withholding.  All payments made pursuant to this
Agreement will be subject to withholding of applicable taxes.

 

18.  Governing Law.  This Agreement shall be governed by
the internal substantive laws, but not the choice of law rules, of the State of
California.

 

19.  Acknowledgement.  Executive acknowledges that he has
had the opportunity to discuss this matter with and obtain advice from his
private attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

 

20.  Counterparts.  This Agreement may be executed in
counterparts, and each counterpart will have the same force and effect as an
original and will constitute an effective, binding agreement on the part of
each of the undersigned.

 

16

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates set forth below.

 

	
  SUPERGEN, INC.

  	
   

  	
  JAMES S.J. MANUSO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ WALTER J. LACK

  	
   

  	
  /s/
  JAMES S.J. MANUSO

  
	
  Date:

  	
  04/01/09

  	
  Date:

  	
    04/01/09

  
	
   

  	
  Chairman,
  Governance &

  	
   

  	
   

  
	
   

  	
  Nominating
  Committee of the

  	
   

  	
   

  
	
   

  	
  SuperGen
  Board of Directors

  	
   

  	
   

  

 

17

 

EXHIBIT A

 

INVENTIONS RETAINED AND LICENSED

 

 

EXHIBIT B

 

CALIFORNIA LABOR CODE SECTION 2870

INVENTION ON OWN TIME — EXEMPTION FROM AGREEMENT

 

(a)             
Any provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either:

 

(1)   Relate at the time of conception or reduction to
practice of the invention to the employer’s business, or actual or demonstrably
anticipate research or development of the employer; or

 

(2)   Result from any work performed by the employee for the
employer.

 

(b)             
To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.

 

19Exhibit 10.1

 

Bank of
America, N.A.

WA1-501-32-37

800 Fifth
Avenue, Floor 32

Seattle,
WA  98104

 

Prospect Medical Group, Inc.

400 Corporate Pointe, Suite 525

Culver City, CA 90230

 

Re:  Letter agreement regarding certain further
conditions to Forbearance Agreement.

 

Ladies and gentlemen:

 

This letter is the side letter
referenced in Section 1.4(vi) of the Amended and Restated Forbearance
Agreement (the “Forbearance Agreement”) dated April 10, 2008,
entered into by and among Prospect Medical Holdings, Inc. (“Holdings”),
Prospect Medical Group, Inc. (“Prospect” and, collectively with
Holdings, the “Borrowers” and each, individually, a “Borrower”),
Bank of America, N.A., as Administrative Agent (in such capacity, the “First
Lien Administrative Agent”), and the lenders party hereto (collectively,
the “First Lien Lenders”).  Terms
not otherwise defined herein shall have the meaning assigned thereto in the
Forbearance Agreement.

 

In connection with the
execution of the Forbearance Agreement, the First Lien Administrative Agent and
the First Lien Lenders require, and the Borrowers hereby agree to provide no
later than April 17, 2008, each of (a) a comprehensive business plan
regarding the Borrowers’ plan for divesting certain assets, which plan shall
include, among other things, projected milestones, timing for planned sales,
and identification of the assets targeted for sale (the “Divestiture Plan”);
and (b) projections, consistent with the projections required pursuant to Section 1.4(a)(ix) of
the Forbearance Agreement, incorporating such Divestiture Plan on a pro forma
basis.  Each of the foregoing documents
shall be in form and substance satisfactory to the First Lien Administrative
Agent and the First Lien Lenders.

 

The Borrowers, by their
execution hereof, hereby acknowledge and agree that the foregoing requirements
set forth above constitute further, supplemental conditions to the Forbearance
Period under Section 1.4 of the Forbearance Agreement, and that failure to
so provide such items within the time period specified shall result in an
immediate Event of Default and termination of the Forbearance Period in
accordance with Section 1.4(b) of the Forbearance Agreement.

 

This side letter shall
become effective concurrently with the effectiveness of the Forbearance Agreement
and shall constitute a Loan Document. 
Each provision set forth in Article IV of the Forbearance Agreement
shall be applicable hereto and incorporated by reference, mutatis
mutandis, as if set forth verbatim herein.

 

[Signature Page Follows]

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,
  as First Lien Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tiffany Shin

  
	
   

  	
  Name:

  	
  Tiffany Shin

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  

 

[Prospect – First Lien
Side Letter]

 

 

	
  Accepted and Agreed:

  	
   

  
	
   

  	
   

  
	
  PROSPECT MEDICAL
  HOLDINGS, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Samuel S. Lee

  	
   

  
	
  Name:

  	
  Samuel S. Lee

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  PROSPECT MEDICAL GROUP,
  INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jacob Y. Terner

  	
   

  
	
  Name:

  	
  Jacob Y. Terner, M.D.

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  

 

[Prospect – First Lien
Side Letter]

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