EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this 28th day of December 1995, by and between
Elite Laboratories, Inc., a Delaware corporation (hereinafter "ELITE") and Xxxx
X. Xxxxx of Ramsey, New Jersey (hereinafter "MEHTA").
STATEMENT OF PURPOSE
MEHTA is currently employed by ELITE under a contract dated May 23, 1991
presently terminable at will at any time. ELITE desires to continue to employ
MEHTA for a period of five (5) years commencing January 1, 1996 in order to be
more certain of his continued services and in order to have access to his
research and development skills and experience relating to pharmaceutical and
similar products. MEHTA desires to accept continued employment upon the terms
herein. Therefore, the parties have agreed, and do hereby agree, that ELITE will
employ MEHTA and MEHTA will accept such continued employment, upon the terms and
conditions subsequently set out in this Agreement.
AGREEMENT OF THE PARTIES
1. Term. ELITE hereby agrees to employ MEHTA and MEHTA agrees to continue being
employed by ELITE for a period of five (5) years ending December 31, 2000,
provided that this Agreement is not sooner terminated pursuant to the provisions
contained herein. The current employment agreement shall be superseded by this
Agreement, effective January 1, 1996.
2. Duties. MEHTA agrees to devote a sufficient amount of his business time to
diligently and faithfully perform his duties and responsibilities on behalf of
ELITE. MEHTA, however, shall not be precluded from (a) delivering lectures,
fulfilling speaking engagements, and writing or publishing any material related
to his area of expertise, (b) participating in professional organizations and
program activities, (c) serving as a consultant in his area of expertise to
government, industrial, and academic entities where it does not conflict with
the interests of ELITE, (d) serving as a director or member of a committee of
any organization or corporation or engaging in any other business activities;
provided that such activities do not materially interfere with the regular
performance of his duties hereunder and except to the extent limited by
paragraphs 11 and 12 of this Agreement.
3. Responsibilities. ELITE agrees that during the term of this Agreement, MEHTA
shall serve as and retain the title of both President and Chief Executive
Officer of ELITE. His responsibilities shall include the overall management and
direction of ELITE'S affairs, the hiring, direction and dismissal of all
subordinate employees, and the development of ELITE'S products. In addition,
MEHTA shall be entitled to continue to serve as a director of ELITE for the
entire term of this Agreement.
4. Compensation. As compensation for the services rendered hereunder, including
any services provided as President, Chief Executive Officer, and Director, MEHTA
shall receive the following:
a. An annual salary in the following amounts:
(1) From January 1, 1996 until December 31, 1996, $165,000.00, payable
in installments of $6,875.00 semi monthly;
(2) From January 1, 1997 until December 31, 1997, $180,000.00, payable
in installments of $7,500.00 semi monthly;
(3) From January 1, 1998 until December 31,1998, $200,000.00, payable
in installments of $8,333.33 semi monthly;
(4) From January 1, 1999 until December 31, 2000, at a salary not less
than $200,000.00 plus an additional amount (i.e. a raise) to be determined by
the Board of Directors, in its discretion, for each of the two years.
b. Additional incentive commissions equal to five percent (5 %) of net profit of
each fiscal year as determined in accordance with generally accepted accounting
principles, payable no later than the 15th day of the fourth month following the
completion of each such fiscal year.
c. Health insurance, purchased and maintained by ELITE, which shall cover all
medical expenses incurred by MEHTA and his family.
d. Term life insurance on MEHTA'S life, for the benefit of MEHTA'S surviving
spouse or his estate, in an amount of at least $300,000 for each year the policy
is in effect.
e. Such discretionary bonus as the Board may (with MEHTA abstaining) from time
to time determine to be appropriate.
f. Options to purchase Class A Common voting stock of ELITE to be granted on
January 1, 1996 and each of the four succeeding anniversaries thereafter in
increments of 100,000 such options each year. The options shall be exercisable
from the date that they are granted until earlier of (a) one year after MEHTA
ceases to be employed by ELITE or to serve as an officer or director of ELITE;
or (b) the expiration of ten years from the date the options are granted. The
options shall provide for MEHTA to purchase shares at a price of:
$1.00 for options issued January 1, 1996; $1,50 for options issued
January 1, 1997;
$2.00 for options issued January 1, 1998; $2.50 for options issued
January 1, 1999;
$3.00 for options issued January 1, 2000;
The Options shall be issued upon such additional terms and conditions as ELITE
deems appropriate, provided that such terms and conditions are not materially
different from terms and conditions of options issued to members of the Board of
Directors of ELITE.
5. Expenses. ELITE shall reimburse MEHTA for all reasonable expenses incurred by
him in connection with his employment pursuant to this Agreement. ELITE will
reimburse MEHTA for such expenses upon the presentation of an itemized account
together with such receipts, invoices, or other evidence of the expenditure that
would constitute satisfactory documentation for tax purposes. Additionally,
during the term of this Agreement, ELITE shall provide MEHTA with the use of an
automobile to be selected by MEHTA, provided that the automobile selected has a
fair market value at the time of acquisition not exceeding $50,000. MEHTA shall
be responsible for accounting for the use of the automobile in compliance with
all applicable regulations imposed by federal and state taxing authorities.
6. Incentive and Benefit Plans. MEHTA shall be entitled to (a) participate in
any Management Incentive Compensation Plans adopted by ELITE'S Board of
Directors (provided any such plan is adopted upon a vote in which MEHTA abstains
or does not cast a deciding vote) on a basis to be determined by the Board of
Directors at such time; (b) participate in any stock option plan established by
the Board of Directors; and (c) participate in, and benefit from, any and all
pension, profit-sharing, life, dental, medical, and other group benefit plans
provided to management and/or other employees of ELITE.
7. Key Man Life Insurance. MEHTA shall do anything that is reasonably necessary
to enable ELITE to maintain key man insurance upon his life should the Board of
Directors so determine, with all benefits payable to ELITE. Upon termination of
employment for reasons other than MEHTA's death, MEHTA shall have the right to
(a) cancel such insurance policy or (b) rename the beneficiary provided he
assumes all subsequent payment of premiums.
8. Termination. MEHTA'S employment hereunder shall terminate upon the
occurrence of any of the following:
a. the death of MEHTA;
b. by election of either party upon the inability of MEHTA to perform his duties
on account of disability for a total of one hundred twenty (120) days or more
during any consecutive twelve (12) month period;
c. by election of ELITE upon "Severe cause", defined as (i) MEHTA'S commission
of an act involving dishonesty, embezzlement or fraud causing material damage to
ELITE, (ii) MEHTA'S conviction for the commission of a felony involving an act
of dishonesty or (iii) willful misconduct by MEHTA which is materially and
demonstrably injurious to ELITE (and which MEHTA cannot or does not cease or
correct upon request). For purposes of this provision, no act or failure to act
by MEHTA shall be considered "willful", unless done, or omitted to be done, by
him in bad faith and with knowledge that it was contrary to the interests of
ELITE;
d. by election of MEHTA upon (i) failure of ELITE to meet its obligations under
paragraph 4, (ii) substantial interference with the discharge of his
responsibilities under paragraph 3, (iii) purported change by ELITE without
MEHTA's consent, of the duties and responsibilities of MEHTA from those duties
and responsibilities described in this Agreement, (iv) a change in ownership of
more than fifty percent (50%) of ELITE's shares in any one twelve (12) month
period, or if any person or entity (or commonly owned or controlled group of
entities) acquires shares which cause such person or entity's shares to total
more than fifty percent (50 %) of the shares of ELITE; provided that shares
acquired from MEHTA shall not be counted in calculating the fifty percent (50%)
of shares, and provided that "ownership" shall mean ownership or de facto
control, (v) requirement by ELITE that MEHTA be based anywhere more than 40
miles from Ramsey, New Jersey unless mutually agreed, (vi) any purported
termination of MEHTA'S employment which is not effected pursuant to the terms of
this Agreement or which does not constitute grounds for termination under this
Agreement, or (vii) the occurrence of a vote by a majority of shares voting upon
an issue contrary to the vote of MEHTA, if MEHTA in his sole discretion deems
the vote "likely to result in an interference in management" and requests at the
meeting that the shareholders reconsider and the shareholders fail to reverse
the vote.
The parties recognize that there may arise disputes and controversies over
alleged conditions or conduct that is wrongful or that constitutes a breach of
this Agreement. However, the parties agree that such conditions or conduct
(which may give rise to a claim for damages) shall not constitute grounds for
termination of employment or excuse performance under this Agreement unless, and
to the extent, provided above.
9. Payments upon Termination.
a. In the event of termination due to MEHTA's death, his surviving spouse (or if
she predeceases MEHTA, his estate), shall be entitled to receive MEHTA's salary,
incentive commissions, benefits and any deferred compensation accrued through
the last day of the third calendar month following the month in which the
termination of employment occurs and additional salary payable monthly for the
following three years at the rate of one-half the aggregate annual amounts shown
in paragraph 4a above; provided that ELITE may purchase life insurance (other
than the life insurance provided under paragraph 4d) payable to a designated
beneficiary of MEHTA to cover all or a portion of the obligation under this
paragraph 9a.
b. In the event of MEHTA's termination in accordance with paragraphs 8b or c,
MEHTA's salary, incentive commissions, benefits and any deferred compensation
accrued through the last day of the calendar month in which the termination of
employment occurs shall be paid promptly. No other unaccrued salary or benefits
shall be paid.
c. In the event of termination pursuant to paragraph 8d, MEHTA shall receive
all accrued salary, incentive commissions, benefits, and any deferred
compensation and all salary and commissions payable under paragraph 4b through a
period ending upon the later of (i) May 22, 2001 or (ii) the third anniversary
of such termination, provided that the salary portion of such amounts shall be
aggregated and discounted to Present Value, using as the discount factor the
prime Rate published on the date of termination (or nearest date thereafter) in
the Wall Street Journal; and provided that salary for the period after May 22,
2001 shall be imputed at the same rate as provided for under paragraph da(4).
10. Procedure for Termination. Termination of employment by ELITE or MEHTA shall
not be effective until notice is received by the other party. The notice shall
not be effective unless it indicates the specific termination provision(s) in
paragraph 8 of this Agreement relied upon and sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
employment under the provisions indicated. Additionally, no purported
termination by ELITE shall be effective unless and until there has been
delivered to MEHTA a copy of a resolution duly adopted by the affirmative vote
of not less than a majority of the entire membership of the Board of Directors
at a meeting of the Board held for the purpose (after opportunity for MEHTA,
together with his counsel, to be heard before said Board), finding that in the
good faith opinion of the Board, the facts and circumstances claimed to provide
a basis for termination under paragraph 8b or c of this Agreement exist and
specifying the particulars thereof.
11. Covenant Not To Compete. MEHTA covenants and agrees that during the term of
this Agreement, he will not directly or indirectly engage in, conduct, solicit,
be involved in, aid or assist, either personally or as an employee, partner,
director or consultant any business which is competitive with the business of
ELITE. MEHTA, however, shall be free to conduct any business he desires outside
of the United States, so long as such business does not sell any product sold or
licensed by ELITE in any market in which ELITE competes, and provided that MEHTA
does not use confidential information that he could not disclose under paragraph
12.
12. Confidentiality. MEHTA acknowledges and recognizes that the disclosure of
confidential information to ELITE'S competitors will be highly detrimental to
ELITE'S business. Therefore, MEHTA agrees that he will not disclose, reveal, or
disseminate to any person, firm, or organization, any information concerning
ELITE'S business which is of a confidential nature. This shall not preclude
MEHTA from disclosing confidential information (i) to the extent that such
information is generally available and known in the industry or is available
from a source other than ELITE, through no action of MEHTA, or (ii) as required
by law, or (iii) information respecting the business of ELITE after the
Expiration Date of this Agreement; or (iv) if such disclosure is in the
Company's best interest or is made in order to promote and enhance the Company's
business. This provision shall also not preclude MEHTA from using or disclosing
any information and experience he possesses in his memory and knowledge.
13. Entire Agreement. Each party acknowledges that he has read this Agreement,
understands it, and agrees to be bound by its terms, and further agrees that
this Agreement supersedes and merges all prior proposals, understandings and all
other agreements, oral or written, between the parties relating to its subject
matter. The parties further agree that this Agreement may not be modified or
altered except by a written instrument duly executed by both parties.
14. Nonwaiver. No failure of a party to exercise any right or waiver of any
remedy shall operate or be construed to constitute a waiver or bar affecting
such party's assertion of the right or obtaining the remedy at any future time.
No failure of a party to insist upon compliance with any provision of this
Agreement at any time or for any period of time shall impair the party's right
to insist upon compliance with such provision at any future time.
15. Legality. In the event any provision of this Agreement shall be held to be
invalid, illegal, or unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby and
said Agreement shall remain in full force and effect as if such cause or
provision had not been inserted therein.
16. Binding Effect. This Agreement shall be binding upon the parties, their
respective successors and permitted assigns. Neither party may assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party, and any such attempt at assignment shall be
void.
17. Notices. Any notice to be given under this Agreement shall be sufficient if
it is in writing and is sent by Certified or Registered Mail, or hand-delivered
by a person who is not affiliated with the sender. Notices to MEHTA shall be
sent to 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000 or such other address
as he designates in writing. Notice to ELITE shall be sent to its Secretary or
to any member of its Board of Directors (other than MEHTA).
IN WITNESS WHEREOF, the parties have here unto executed this document the day
and year first above written.
ELITE LABORATORIES, INC.
[Corporate Seal] by: _____________________________
Director, acting with authority of the
______________________ Board of Directors Assistant Secretary
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Xxxx X. Xxxxx
