EMPLOYMENT AGREEMENT
AGREEMENT made as of March 25, 1998 by and between GLOBAL
PHARMACEUTICAL CORPORATION, a Delaware corporation (hereinafter referred to as
the "Corporation"), and Xxxxx Xxxxxxx (hereinafter referred to as "Executive").
In consideration of the mutual promises set forth herein the parties
hereto agree as follows:
ARTICLE I.
Term of Employment
A. Upon the terms and subject to the conditions set forth herein, the
Corporation will employ Executive on the terms provided in this Agreement from
April 20, 1998 (the "Effective Date") until the date the employment of the
Executive shall terminate pursuant to Article IV hereof. (The period during
which Executive is employed hereunder is referred to herein as the "term of
employment.") Executive shall work for the Corporation during the term of
employment in accordance with, and subject to the term and conditions of, this
Agreement.
ARTICLE II.
Duties
During the term of employment Executive will:
(a) use his best efforts to promote the interests of the Corporation,
and shall devote his full time and efforts to its business and affairs;
(b) serve as the Executive Vice President, reporting solely to the
Corporation's Chief Executive Officer and Board of Directors; and
(c) perform such duties consistent with, and customarily provided in
connection with, the office described in subsection (b) above which will include
but not be
limited to responsibility for preparing and implementing a Business Development
plan, launching new products, acquisition and licensing of new products and/or
technologies, and other sales, marketing and business development activities as
the Corporation may from time to time assign to him, and Executive shall not
engage in any duties or pursuits which may interfere with or be inimical or
contrary to the best interest of the Corporation.
ARTICLE III.
Compensation
A. The Corporation will compensate Executive for the duties performed
by him hereunder by payment of a salary (the "Salary") at the rate of $145,000
per annum. The Salary shall be payable in equal installments, which the
Corporation shall pay at semi-monthly intervals or, at the Corporation's
election, more frequently, and shall be subject to such payroll deductions as
are required by law. The Salary paid to the Executive will be reviewed annually
by the Board of Directors in conjunction with the recommendation of the
President, and may be increased at the discretion of the Corporation's Board of
Directors or Compensation Committee, which shall take into account the
performance of the Executive, the productivity of the Corporation and other
factors which it deems relevant.
ARTICLE IV.
Term: Termination
A. Unless terminated sooner as hereinafter provided, the initial term
of employment of Executive under this Agreement shall be for a period of three
(3) years from the Effective Date hereof (the "Initial Term"). The term of
employment of Executive shall continue thereafter for an additional one (1) year
period commencing on the third anniversary of the Effective Date, unless either
party has notified the other no later than three (3) months prior to
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that third anniversary that he or it does not wish to continue the term of
Executive under this Agreement or unless Executive's employment is terminated
sooner as hereinafter provided. Thereafter, Executive's term of employment under
this Agreement shall continue for additional one (1) year periods, unless either
party has notified the other no later than three (3) months prior to the end of
any of those additional one (1) year periods that he or it does not wish to
continue Executive's term of employment under this Agreement or unless
Executive's term of employment is terminated sooner as hereinafter provided.
B. The Corporation may terminate the employment of Executive hereunder
(i) for Cause (as defined below) at any time and without prior notice or (ii)
for any other reason on two (2) weeks notice in writing to Executive.
1. If the Corporation terminates Executive's employment for Cause or
pursuant to Article IV.D. hereof, then the Corporation shall, within fifteen
(15) days after the termination date, pay Executive all accrued and unpaid
Salary and benefits (including accrued but unused vacation time) through the
termination date.
2. If the Corporation terminates Executive's employment other than for
Cause or pursuant to Article IV.D. hereof, then in lieu of any other payments
otherwise required hereunder, the Corporation shall, subject to Executive's
compliance with Article V hereof, pay Executive, as liquidated damages and not
as a penalty, (a) within fifteen (15) days after the termination date, all
accrued and unpaid Salary and benefits (including accrued but unused vacation
time) through the termination date and (b) the lesser of (i) an amount equal to
his Salary payments at the time of the termination, in accordance with the
Corporation's then payment policy, and benefits provided for herein during the
six-month period following the termination date, and (ii) the entire amount of
the Salary remaining due and payable from the date of such termination to the
scheduled expiration of this Agreement; provided, however, that if such
termination occurs prior to the first anniversary of the Effective Date, then in
addition to the items referred to in subsections (a) and (b) above, Executive
shall be entitled to continue to receive, in accordance with the Corporation's
then payment policy, an amount equal to his Salary payments and, to the extent
Executive is not otherwise employed, health benefits, until the first
anniversary of the Effective Date.
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3. The phrase "Cause" means any of the following:
(a) breach by Executive of any provision of Article V of this
Agreement;
(b) breach of any other provision of this Agreement by
Executive (other than any such breach resulting from Executive's incapacity due
to physical or mental illness, which shall be governed by Article IV.D. hereof),
including without limitation the failure to satisfactorily perform his duties as
provided herein, if that breach is not remedied within thirty (3) days after
written notice to Executive describing the acts alleged to constitute Cause;
(c) any act of fraud, misappropriation, embezzlement or
similar willful and malicious conduct by Executive against the Corporation; or
(d) indictment of Executive for a felony or any conviction of,
or guilty plea by Executive to, a crime involving moral turpitude if that crime
of moral turpitude tends or would reasonably tend to bring the Corporation into
disrepute.
C. Executive may terminate his employment hereunder at any time for any
reason upon two (2) weeks notice to the Corporation.
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1. If Executive terminates his employment without "Good
Reason" (as defined below), then the Corporation shall, within fifteen (15) says
after the termination date, pay Executive all accrued and unpaid Salary and
benefits (including accrued but unused vacation time) through the termination
date.
2. If Executive terminates his employment with "Good Reason",
then the Corporation shall, subject to Executive's compliance with Article V
hereof, (i) pay Executive, within fifteen (15) days after the termination date,
all accrued and unpaid Salary and benefits (including accrued but unused
vacation time) through the termination date and (ii) continue to pay Executive
an amount equal to Executive's Salary and benefits, in accordance with the
Corporation's then payment policy, during the six-month period following the
termination date.
3. The phrase "Good Reason" means a material breach of this
Agreement or the intentional disregard or violation of the Food, Drug and
Cosmetic Act as amended in any material respect (other than through the actions
of the Executive) by the Corporation, which has not been cured within thirty
(30) days after written notice thereof from the Executive.
D. If Executive dies or becomes incapacitated, his employment hereunder
shall terminate on the date of his death or incapacitation, as the case may be.
For purposes hereof, the term "incapacitated" shall mean such mental or physical
illness as shall render Executive incapable of substantially performing his
duties hereunder on a regular basis at the Corporation's offices for a period of
three (3) consecutive months or for a period of six (6) months in any
twelve-month period, all as determined by a physician or psychiatrist, as the
case may be, selected by the Corporation.
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ARTICLE V.
Covenants
A. While Executive is employed hereunder by the Corporation and during
any time thereafter that the Corporation shall continue to pay to Executive his
Salary and benefits, he shall not, without prior written consent of the
Corporation, engage, directly or indirectly, in any other trade, business or
employment, or have any interest, direct or indirect, in any other business,
firm or corporation; provided, however, that he may continue to own or may
hereafter acquire (i) any securities of any class of any publicly-owned company
or (ii) any passive investment in a privately held entity which is not engaged
in the pharmaceutical business.
B. Executive shall treat as confidential and keep secret the affairs of
the Corporation (including specifically the terms and conditions of this
Agreement) and shall not at any time during the term of employment or
thereafter, without prior written consent of the Corporation, or unless required
by law, divulge, furnish, or make known or accessible to, or use for the benefit
of, anyone other than the Corporation and its subsidiaries and affiliates any
information of a confidential or proprietary nature related in any way to the
business of the Corporation or its subsidiaries or affiliates or their clients.
Executive shall be entitled to disclose the terms of this Agreement to potential
employers of Executive and to lending institutions from whom Executive seeks to
borrow.
C. All records, papers and documents kept or made by Executive relating
to the business of the Corporation or its subsidiaries or affiliates or their
clients shall be and remain the property of the Corporation.
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D. All articles invented by Executive, processes discovered by him,
trademarks, designs, advertising copy and art work, display and promotion
materials and, in general, everything of value conceived or created by him
pertaining to the business of the Corporation or any of its subsidiaries or
affiliates during the term of employment, and any and all rights of every nature
whatever relating thereto, shall immediately become the property of the
Corporation, and Executive shall assign, transfer and deliver all patents,
copyrights, royalties, designs and copy, and any and all interests and rights
whatever thereto and thereunder to the Corporation, without further
compensation, upon notice to him from the Corporation.
E. Following the termination of Executive's employment hereunder
(including the expiration of this Agreement) for any reason, Executive shall
not, for a period of two (2) years from such termination solicit any employee of
the Corporation to leave such employ or to enter the employ of Executive or of
any corporation or enterprise with which Executive is then associated or solicit
any customer of the Corporation to terminate its relationship with the
Corporation.
F. During the one-year period following Executive's termination of
employment by Executive without Good Reason or by the Corporation for Cause (the
"Restricted Period"), Executive shall not render any services, directly or
indirectly, as an employee, officer, consultant or in any other capacity, to any
individual, firm, corporation or partnership engaged in any business or activity
which is competitive with any activity or business engaged in by the Corporation
during his employment by the Corporation (such activities being herein called
the "Corporation's Business"). During the Restricted Period, Executive shall
not, without prior written consent of the Corporation, hold an equity interest
in any firm, partnership or corporation which competes with the Corporation's
Business, except that beneficial ownership by Executive (including ownership by
any one or more members of his immediate family and any entity under his direct
or indirect control) of less than five percent (5%) of the outstanding shares of
capital stock of any corporation which may be engaged in any of the same lines
of business as the Corporation's Business, if such stock is listed on a national
securities exchange or publicly traded in an over-the-counter market, shall not
constitute a breach of the covenants contained in this Article V.
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G. The provisions contained in this Article V as to the time periods,
scope of activities, persons or entities affected, and territories restricted
shall be deemed divisible so that, if any provision contained in this Article V
is determined to be invalid or unenforceable, such provisions shall be deemed
modified so as to be valid and enforceable to the full extent lawfully
permitted.
H. During the term of this Agreement, the Corporation shall maintain a
Directors' and Officers' insurance policy providing such coverage for the
Directors and Officers of the Corporation as the Corporation's Board of
Directors shall reasonably determine,
ARTICLE VI.
Bonuses
A. The Corporation shall pay Executive a $10,000 sign-on bonus, which
shall be paid thirty (30) days from the Effective Date.
B. The Executive is eligible to participate in an Incentive Bonus
Program of up to 24% of the Executive's base salary in accordance with
pre-established individual, corporate and business goals. Fifty percent (50%) of
the Incentive Bonus will be paid for the Executive achieving Net Profit Before
Taxes objectives and fifty percent (50%) of the Incentive Bonus will be paid for
the Executive achieving Net Sales and Gross Margin goals established by the
Corporation.
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C. The Board of Directors of the Corporation may consider, and nothing
herein shall preclude the Corporation's Board of Directors from, awarding
Executive any other bonuses based on performance as they may, at any time or
from time to time, determine.
ARTICLE VII.
Stock Option Award
A. The Corporation will grant to Executive an option to purchase 50,000
shares of the Corporation's common stock (the "Award") at a price per share
equal to the fair market value of the Corporation's common stock on the date of
acceptance of the employment offer by Executive, which so long as Executive
remains in the continuous employ of the Corporation on a given vesting date,
shall vest in Executive in accordance with the following schedule: (i)
one-fourth of the Award shall vest on the Effective date, and (ii) one-fourth of
the Award shall vest on the date one (1) year from the Effective Date, and (iii)
the remaining one-half of the Award shall vest in increments of one-twenty
fourth per month for the twenty-four (24) months then following.
B. The option shall be granted pursuant to, and shall be subject to the
terms of, the stock option plan adopted by the Corporation.
ARTICLE VIII.
Other Employment Benefits
A. The Corporation shall provide Executive with medical and
hospitalization insurance coverage and retirement plans which in each case are
no less favorable to Executive than those plans provided to the Corporation's
senior executive officers generally (it being understood that to the extent the
plans provide coverage for dependents of employees, Executive shall be entitled
to such coverage for his dependents under the same terms as senior executives
generally). The Corporation shall also provide Executive with life insurance
coverage at standard premium rates having a death benefit payable to a
beneficiary selected by the Executive equal to $250,000 and disability insurance
at standard premium rates which provides salary replacement benefits, not to
exceed $250,000 in the aggregate, in the event Executive becomes incapacitated.
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B. During the term of employment, Executive shall be entitled to three
weeks paid vacation each year and to participate in or receive benefits under
any other employee benefit plan, arrangement or perquisite made available by the
Corporation now or in the future to its senior executive officers generally,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans, arrangements and perquisites; provided, however,
that Executive shall not be entitled to carry over unused vacation time in any
given year to subsequent years.
C. The Corporation shall reimburse Executive for all reasonable
expenses incurred by the Executive for promoting the business of the
Corporation, including expenses for travel and similar items from time to time
upon presentation by Executive of an itemized account of such expenditures, all
in accordance with the Corporation's policies for incurrence and reimbursement.
To the extent permitted by law, the Corporation will not withhold Philadelphia
city wage taxes for the days the Executive travels out of town on business.
D. The Corporation will provide Executive with a car allowance of
$5,000.00 per annum, payable monthly.
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ARTICLE IX.
Key Man Insurance
A. The Corporation may, in its sole and absolute discretion, at any
time after the date hereof, apply for and procure as owner for its own benefit
life insurance on Executive, in such amount and in such form or forms as the
Corporation may determine. Executive shall, at the Corporation's request,
subject to such medical examinations, supply such information and execute such
documents as may be required by the insurance company or companies to whom the
Corporation has applied for such insurance.
ARTICLE X.
Assignment
A. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Corporation. Neither this Agreement nor any rights
hereunder shall be assignable by Executive and any such purported assignment by
him shall be void.
ARTICLE XI.
Entire Agreement
A. This Agreement constitutes the entire understanding between the
Corporation and Executive concerning his employment by the Corporation or any of
its subsidiaries and supercedes any and all previous agreements between
Executive and the Corporation or any of its subsidiaries concerning such
employment. This Agreement may not be changed orally.
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ARTICLE XII.
Applicable Law
A. The Agreement shall be governed by and construed in accordance with
the laws of the State of Pennsylvania.
GLOBAL PHARMACEUTICAL CORPORATION
By:
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Xxx X. Xxxxxxxxxx, President & CEO
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Xxxxx Xxxxxxx
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