FIRST AMENDEMENT TO EMPLOYMENT AGREEMENT
FIRST
AMENDEMENT TO EMPLOYMENT AGREEMENT
THIS
FIRST AMENDEMENT OF EMPLOYMENT AGREEMENT made as of the 28th day of June, 2000
between and among XXXXXX DRUG CO., INC., a New York corporation (the
"Corporation"), with principal executive offices at 000 Xx. Xxxxxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxx 00000 and XXXXX XXXXXXX residing at 00000 Xxxxxx Xxxx,
Xxxxxx, Xxxxxxxx 00000 (the "Employee").
RECITALS
A. |
The
Corporation and the Employee executed an employment agreement on
March 10,
1998 (the "Agreement").
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B. |
The
Corporation desires to continue to employ the Employee and the Employee
desires to continue to be employed by the
Corporation.
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C. |
The
Corporation and the Employee now desire to amend the Agreement to
provide
for, inter alia,
(i) an increase in the length of the initial term of the Agreement,
(ii)
the addition of a provision whereby Employee may terminate his employment
for Good Reason, (iii) the payments of severance and benefits to
Employee
upon termination without cause or for Good Reason, (iv) restrictions
on
the ability of the Employee to sell incentive stock options; and
(v) the
ability of the Employee, upon termination, to continue to exercise
certain
stock options of the Corporation.
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NOW,
THEREFORE, in consideration of the mutual covenants and undertakings herein
contained, the parties agree as follows:
1. |
Section
2 of the Agreement "Term of Employment" is hereby deleted and the
following inserted in its place:
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"The
term
of Employee's employment under this Agreement shall commence on the date of
the
Agreement and shall terminate on April 30, 2005, (the "Initial Term"), unless
sooner terminated pursuant to Section 8 of the Agreement; provided, however,
that if the Corporation shall fail to give the Employee written notice of
non-renewal of the Employee’s employment with the Corporation not less than 180
days prior to the Initial Term or any Renewal Period (as defined), Employee’s
term hereunder shall automatically be extended for successive one (1) year
periods (each a "Renewal Period" and together with the Initial Term, the
"Term")."
2. |
Paragraph
5 (c) of the Agreement, "Purchase of Options" is hereby deleted
and the
following inserted in its place:
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"5(c)
Purchase
of Options.
(I).
In
the event that Employee is terminated for cause (as defined in Paragraph 8.3)
or
resigns other than for Good Reason (as provided in paragraph 8.5), the
Corporation shall have the right, but not the obligation, to purchase Employee's
vested Option at the Fair Market Value thereof. In the event that the
Corporation does not elect to purchase Employee's vested Option within seven
days of the date of Employee's termination for cause or resignation, Employee
shall be obligated to exercise his Options in writing within 37 days of such
termination or resignation, failing which he shall be deemed to have forfeited
his Option to the Corporation. For purposes of this paragraph 5(c), "Fair Market
Value" shall mean the product of (i) the positive difference, if any, between
the average of the closing price of the Company's Common Stock as reported
by
the American Stock Exchange, or such other exchange or over-the-counter market
on which the Company's Common Stock may then be listed or admitted for trading,
for the five (5) trading days prior to the date of termination, and the Option
exercise price, multiplied by (ii) the number of Option Shares which, as of
the
date of termination, are vested under the Option.
(II).
In
the event of a termination of Employee's employment with the Corporation by
the
Corporation without cause (as defined in paragraph 8.3) or a termination by
Employee of his employment with the Corporation for Good Reason (as provided
in
paragraph 8.5), notwithstanding any language to the contrary contained in any
Option Agreements with the Employee, any outstanding stock options of the
Corporation, held by the Employee, which are not incentive stock options
(non-qualified stock options), and only to the extent these options are vested
on the date of termination, shall continue to be exercisable by the Employee
for
two (2) years from the date of termination and shall not be subject to earlier
termination."
3.
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Paragraph
5(d) "Automobile" is hereby amended by changing this paragraph (d)
to
paragraph (f) and adding a new paragraph (d) "Restriction on Sale
by
Employee of Incentive Stock Options" which provides as
follows:
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"5(d).
Restriction on Sale by Employee of Incentive Stock Options. During the Term
of
the Agreement, Employee agrees that upon any exercise of incentive stock
options, Employee shall be restricted from selling, transferring or otherwise
disposing of these option shares received upon such exercise for a period of
two
(2) years from the date of such exercise; provided, however, that subject to
compliance with IRS Code 422, and applicable securities laws, the Employee
shall
be permitted to (i) sell, transfer or otherwise dispose of (including the pledge
of such shares) not more than 100,000 of such option shares without regard
to
the two (2) year holding period provided in this paragraph 5(d), and (ii) to
sell, transfer or otherwise dispose of (including the pledge of such shares)
the
number of option shares necessary to pay all federal, state and local income
taxes incurred by the Employee due to such exercise.
4. |
A
new Paragraph, entitled Paragraph 5 (e), "Form S-8 Registration Statement"
is hereby added as follows:
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"5
(e).
Not later than August 31, 2000, the Company shall file with the Securities
and
Exchange Commission a registration statement on Form S-8 to register the
Company's 1998 Stock Option Plan and the shares subject to issuance upon
exercise of stock options issued under such plan. The Company also covenants
to
file the reports required under the Securities Exchange Act of 1934, as amended
to update and keep effective the Form S-8 registration statement.
5.
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Paragraph
8.3 of the Agreement, "Termination for Cause" is hereby amended to
include
the following additional language:
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"Any
termination of Employee by Corporation for cause shall be communicated in
writing thirty (30) days prior to date of termination. The notice shall state
that the Employee's employment hereunder has been or shall be terminated,
indicating the specific termination provisions in this Agreement relied upon
and
setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for such termination of employment."
6.
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Paragraph
8.4 of the Agreement, "Termination Without Cause" is hereby deleted
and
the following inserted in its
place:
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"8.4.
The
Corporation may terminate Employee's employment with the Corporation at any
time
"Without Cause", upon thirty (30) days' written notice to Employee. A
termination "Without Cause" shall mean a termination by the Corporation of
Employee's employment other than due to death or disability as defined in
Paragraphs 8.1 and 8.2 or Cause as defined in Paragraph 8.3."
7.
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Paragraph
8.5 of the Agreement "Change of Control" is hereby amended by moving
such
Paragraph to a newly created Paragraph 8.7, and to be put in its
place, a
new Paragraph 8.5 "Termination by Employee" which provides as
follows:
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"8.5.
Termination
By Employee For Good Reason.
The
Employee may terminate his employment for "Good Reason", upon thirty (30) days'
written notice to Corporation. "Good
Reason"
shall
mean a termination of employment by Employee following, without Employee's
express prior written consent, (i) any material diminution by the Board or
an
Executive Officer, in Employee's duties, status, offices, reporting
requirements, or job title, except in connection with termination of Employee's
employment for Cause as provided in Paragraph 8.3 or death or disability as
provide in Paragraphs 8.1 and 8.2, (ii) any requirement by the Board that
Employee change the location at which the Employee performs his principal duties
for the Corporation to a new location that is more than 35 miles from the
location at which the Employee performed his principal duties for the
Corporation immediately prior to date of termination, (iii) the failure of
the
Corporation timely to pay Employee's salary, bonus or benefits due Employee
within seven days of the date such compensation or benefits are due, or any
material breach by the Corporation of this Agreement, (iv) any change in the
Corporation's pay plan or employment agreement with Employee that results in
a
material diminution of Employee's annual base salary or eligible bonus amounts,
or (v) the failure of the Corporation to obtain the agreement, in a form
reasonably satisfactory to Employee, from any successor to the Corporation
to
assume and agree to perform this Agreement."
8.
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A
new Paragraph, entitled Paragraph 8.6, of the Agreement "Payment
upon
Termination Without Cause or for Good Reason" is hereby added as
follows:
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"8.6.
Payment
Upon Termination Without Cause Or For Good Reason.
(A)
In
the event of a termination of Employee's employment with the Corporation without
Cause or a termination by Employee of his employment with the Corporation for
Good Reason, prior to the last day of the Initial Term or any Renewal Term,
the
Corporation shall pay to Employee, in a single lump sum in cash within thirty
(30) days after the date of termination an amount equal to (a) his then accrued
and unpaid base salary plus
bonuses
through and including the date of termination, plus
(b) the
greater of (i) $280,000, or (ii) twice the Employee's Annual Base Salary in
effect immediately prior to the date of termination.
(B)
In
addition, during the twenty four (24) full months following the date of
termination (the "Coverage Period"), Employee will continue to receive all
benefits to which he was entitled pursuant to Paragraph 5 of the Agreement
as of
the date of termination, and Employee shall be entitled to any vested benefits
under any employee benefit plans. This is to include continued medical, dental
and life insurance coverage to the Employee and the Employee's family, on terms
substantially as in effect on the date of termination, subject to the payment
by
the Employee of all applicable employee contributions health and welfare
benefits. If for any reason at any time the Corporation is unable to treat
Employee as being or having been an employee of the Corporation under any
benefits plan in which he is entitled to participate and as a result thereof
Employee receives reduced benefits under such plan during the period that
Employee is continuing to receive payments pursuant to this Paragraph 8.5 (B),
the Corporation shall provide Employee with such benefits by direct payment
or
at the Corporation's option by making available equivalent benefits from other
sources. During the Coverage Period, Employee shall not be entitled to receive
compensation and shall not be entitled to participate in any employee benefit
plan of, or receive any other benefit from, the Corporation that is introduced
after the date of termination, except that an appropriate adjustment shall
be
made if such new employee benefit or employee benefit plan is a replacement
for
or amendment to an employee benefit or employee benefit plan in effect as of
the
date of termination."
9.
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Except
as amended herein the Agreement remains in full force and effect.
Defined
terms herein shall have the same meaning as in the Agreement unless
otherwise defined herein. This Amendment shall be governed and construed
and enforced in accordance with the local laws of the State of New
York
applicable to agreements made and to be performed entirely in New
York.
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10. |
This
Amendment may be executed in one or more counterparts, each of which
shall
be deemed an original, but all of which taken together will constitute
one
and the same instrument.
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IN
WITNESS WHEREOF, the parties have executed this Amendment as of the date first
above written.
ATTEST: | XXXXXX DRUG CO., INC. | ||
By:
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/s/ Xxxxxxx Xxxxxx | ||
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Xxxxxxx Xxxxxx, Chairman |
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WITNESS: | EMPLOYEE | ||
By:
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/s/ Xxxxx Xxxxxxx | ||
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