EMPLOYMENT AGREEMENT
AGREEMENT made as of February 7, 1997 by and between GLOBAL
PHARMACEUTICAL CORPORATION, a Delaware corporation (hereinafter referred to as
the "Corporation"), and XXXXXXX XXXXX (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
March 31, 1997 (the "Effective Date"), until the date the employment of
Executive shall terminate pursuant to Article IV or Article V. (The period
during which Executive is employed hereunder is referred to herein as the "term
of employment.") Executive will work for the Corporation during the term of
employment in accordance with, and subject to the terms and conditions of, this
Agreement.
ARTICLE II.
Duties
A. 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 Vice President, Scientific & Technical Affairs
reporting solely to the Corporation's Chief Executive Officer and Board of
Directors; and
(c) perform duties which will include but not be limited to
responsibility for product development including supervision of pilot plant
operations; analytical methods; managing new projects and establishing
priorities for the introduction of products; responsibility for the oversight of
all biostudies in conjunction with ANDA and NDA filings and the oversight of the
regulatory activities of the Corporation as they pertain to submissions to FDA
which would include: NDA's, ANDA's, supplements and associated labeling; and
other duties as the Corporation may from time to time assign to him.
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 $130,000
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 Company's Board of
Directors or Compensation Committee, which shall take into account the
performance of the Executive, the productivity of the Company and other factors
which it deems relevant.
ARTICLE IV.
Term: Termination
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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 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 that third
anniversary that he or it does not wish to continue the term of employment 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 Section 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, then in lieu of any other payments otherwise required hereunder, the
Corporation shall, subject to the Executive's compliance with Article V hereof,
pay Executive, as liquidated
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damages and not as a penalty, (a) within 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) an amount equal to his Salary
payments at the time of the termination, in accordance with the Corporation's
then payment policy, and benefits during the six-month period following the
termination date; 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 subsection (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.
3. The phrase "Cause" means any of the following:
(a) breach by Executive of Article V of this Agreement;
(b) material 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 IV.D. hereof), if that
breach is not remedied (or the remedy commences and is diligently continued
until actually remedied) within 30 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, it crime involving moral turpitude if that crime of
moral turpitude tends or would reasonably tend to bring the Corporation into
disrepute.
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C. Executive may terminate his employment hereunder at any time for any
reason on two (2) weeks written notice in writing to the Corporation.
1. If Executive terminates his employment without "Good Reason" (as
defined below), 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 Executive terminates his employment with "Good Reason", then
the Corporation shall, subject to Executive's compliance with Section 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) in any case 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 Company's
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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 Company.
ARTICLE V.
Covenants
A. While Executive is employed hereunder by the Corporation, he shall
not, without the 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 the 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, any one 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.
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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.
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 of 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 Reasons 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
activities which is competitive with any activities or
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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 the 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
(5%) percent 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 over-the-counter market, shall not constitute a breach of the
covenants contained in this Article V.
G. The provisions contained in this Article V as to the time periods,
scope of activities, persons of 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
D & O policy providing such coverage for the Directors and Officers of the
Corporation as the Corporation's Board of Directors shall reasonably determine.
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ARTICLE VI.
Bonuses
A. The Board of Directors of the Corporation will consider, and nothing
herein shall preclude the Corporation's Board of Directors from, awarding
Executive bonuses based on performance as they may, at any time or from time to
time, determine.
ARTICLE VII.
Stock Award
A. The Corporation will grant to Executive an option to purchase 36,000
shares of the Corporation's common stock at a price per share equal to the fair
market value of the Corporation's common stock (the "Award") on the date the
Compensation Committee of the Board of Directors grants this Award, 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-third of the Award shall vest on March 31, 1998, and (ii) the remaining
two-thirds 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
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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 having a death benefit payable to
a beneficiary selected by Executive equal to $250,000 and disability insurance
which provides salary replacement benefits, not to exceed $250,000 in the
aggregate, in the event Executive becomes incapacitated.
B. During the term of employment, Executive shall be entitled to three
weeks of 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, arrangement and perquisites.
C. The Corporation shall reimburse Executive for all reasonable
expenses incurred by 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.
D. The Corporation shall pay the reasonable lodging costs of the
Executive in the Philadelphia, PA metropolitan area for a period not to exceed
four (4) months at a mutually agreed upon location, and the reasonable
transportation costs of the Executive between Cincinnati, OH and Philadelphia,
PA as are mutually agreed to by Executive and the Corporation, until Executive
makes a permanent move to the Philadelphia, PA metropolitan area.
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Such a permanent move shall occur within a reasonable time from the date hereof,
but in no event later than one (1) year from the Effective Date.
E. The Corporation shall reimburse Executive up to $12,000 for expenses
incurred pursuant to Executive's permanent move to the Philadelphia, PA
metropolitan area. These expenses must be supported by the appropriate
documentation and may include expenses such as moving, title closing and real
property taxes due and owing upon the title closing.
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 requests
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. The Agreement shall be binding upon and shall 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
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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 supersedes 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.
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: /s/ Xxx X. Xxxxxxxxxx
--------------------------------
Xxx X. Xxxxxxxxxx, President
and CEO
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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