EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT (the "AGREEMENT") made as of the 5th day of
April, 2004 by and between XXXXXX DRUG CO., INC., a New York corporation (the
"CORPORATION"), with administrative offices at 000 X. Xxxxx Xxxxx, Xxxxx 000,
Xxxxxxxx, XX 00000 and XXX X. XXXXXX, residing at 0000 Xxxxxx Xxxxxx, Xxxxxx
Xxxx, Xxxxxxx 00000 (the "EMPLOYEE").
W I T N E S S E T H
WHEREAS, the Corporation desires to employ the Employee to engage in
such activities and to render such services as are required under the terms and
conditions hereof and the Board of Directors has authorized and approved the
execution of this Agreement; and
WHEREAS, the Employee desires to be employed by the Corporation
under the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Services. The Corporation hereby employs the Employee for the
Term (as hereinafter defined in Section 2 hereof), to render exclusive and
full-time services to the business and affairs of the Corporation as the Senior
Vice President and Chief Scientific Officer of the Corporation, subject to the
direction of the Corporation's Chief Executive Officer ("CEO") and the Board of
Directors of the Corporation, and, in connection therewith, the Employee shall
have all the duties and responsibilities customarily rendered by a Senior Vice
President and Chief
Scientific Officer, including, without limitation, the leadership and
implementation of all Corporation scientific projects, with primary focus on the
Corporation's abuse deterrent formulation technology and active pharmaceutical
ingredient process technology, and such other tasks as may be further reasonably
and customarily directed or requested to be performed by the CEO, to whom the
Employee shall report, and to use his commercially reasonable best efforts,
skill and abilities to promote the interests of the Corporation and its
subsidiaries. The Employee shall perform the services as Senior Vice President
and Chief Scientific Officer at his home office as well as by travelling to the
Corporation's Xxxxxx, Indiana facility and Palatine, Illinois offices and such
other locations as shall be designated by the CEO from time to time, including,
without limitation, the locations of contract research organizations, clinical
trial sites, and such other locations as shall be required for meetings or
presentations with prospective investors, counsel, prospective partners and
other locations as the CEO shall determine to be in the best business interests
of the Corporation.
1.2 Acceptance. The Employee hereby accepts such employment and
agrees to render the services described in Section 1.1 hereof.
2. Term of Employment. The term of the Employee's employment under this
Agreement shall commence on the date of this Agreement and shall expire two (2)
years from the date hereof (the "INITIAL TERM"), unless sooner terminated
pursuant to Section 7 of this Agreement; provided, however, that the Employee's
term hereunder shall automatically be extended for successive one (1) year
periods (each, "RENEWAL PERIOD" and together with the Initial Term, the "TERM"),
unless either the Corporation or the Employee provides written notice of
non-renewal of the Employee's employment with the Corporation ninety (90) days
prior to the expiration of the Initial Term or any Renewal Period.
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3. Compensation. In consideration of the services to be rendered by the
Employee pursuant to this Agreement, the Employee shall receive from the
Corporation the following compensation:
(a) Base Salary. The Corporation shall pay the Employee an aggregate
base salary at the initial annual rate of $260,000 (the "BASE SALARY"), payable
in equal bi-weekly installments, less such deductions or amounts to be withheld
as shall be required by applicable laws and regulations. The Employee's Base
Salary shall be reviewed at least annually and be subject to increase by the
Board of Directors of the Corporation, in its sole and absolute discretion.
(b) Annual Bonus. During the Term, the Employee will be eligible to
receive from the Corporation an annual bonus (the "BONUS") in the amount of up
to thirty-five percent (35%) of the Employee's Base Salary during the fiscal
year (or portion thereof) for which the Bonus may be awarded. The Bonus will be
based upon on the achievement of such targets, conditions or parameters (the
"BONUS CRITERIA") as will be agreed upon by the Employee and the Board of
Directors or the Compensation Committee of the Board of Directors of the
Corporation (i) no later than sixty (60) days from the date of this Agreement in
the case of the Bonus Criteria for fiscal year 2004, and (ii) no later than
sixty (60) days from the beginning of each fiscal year thereafter during the
Term. The Bonus shall be paid at the same time as bonuses are paid to other
executive officers, but in any event within seventy-five (75) days following the
end of the Corporation's fiscal year.
4. Expenses.
The Corporation shall pay or reimburse the Employee for all
reasonable expenses which are in accordance with the Corporation's expense
policy in force from time to time and
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which are actually incurred or paid by the Employee during the Term in the
performance of his services under this Agreement, upon presentation of expense
statements or vouchers or such other supporting information as the Corporation
may reasonably require. Such expenses shall include, but not be limited to,
business travel, travel to corporate facilities and related temporary living
expenses, meals and lodging, and business entertainment. Such expenses shall
also include fees and expenses associated with membership in various business
and civic associations, approved in advance by the Compensation Committee of the
Board of Directors of the Corporation, in which the Employee's participation is
in the Corporation's best interest.
5. Additional Benefits.
(a) In General. In addition to the compensation and expenses to be
paid under Sections 3 and 4 hereof, the Employee will be entitled to such rights
and benefits for which he may be eligible under any insurance, profit-making,
incentive, bonus, stock option, stock grant or pension or retirement plan of the
Corporation as the Board of Directors shall adopt from time to time in its sole
and absolute discretion for the benefit of senior executives or employees
generally of the Corporation.
(b) Stock Options. Upon execution of this Agreement, the Employee is
hereby granted stock options to purchase 3,000,000 shares of the Corporation's
common stock, $.01 par value per share (the "OPTION") at an exercise price of
$0.13 per share. The Option shares shall vest and be exercisable as follows: (i)
1,000,000 Option shares on October 1, 2004; and (ii) the balance at the rate of
333,333 per calendar quarter, beginning January 1, 2005 . The Option shall have
a ten (10) year term, subject to earlier termination as set forth in Section 7
upon the termination of the Employee's employment with the Corporation and shall
be evidenced by the Non-Qualified Stock Option Agreement substantially in the
form of Exhibit A
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hereto. The Employee and the Corporation agree that the Option shall be deemed
to have been issued pursuant to the Corporation's 1998 Stock Option Plan or
comparable plan and the Corporation shall use commercially reasonable best
efforts to register the Option Shares under the Securities Act of 1933, as
amended, under a registration statement on Form S-8 filed with the Securities
and Exchange Commission. The Employee will also be eligible in the future to
receive option grants based on performance or on achievement of milestones as
determined by the Board of Directors or the Compensation Committee.
Notwithstanding the foregoing and anything to the contrary contained in
this Agreement, the Employee hereby acknowledges and agrees that the grant of
the Option and the issuance of the shares underlying the Option are contingent
upon approval by the shareholders of the Corporation at the next meeting of the
Corporation's shareholders of amendments to the Corporation's 1998 Stock Option
Plan (i) to increase the number of shares reserved for issuance under the 1998
Stock Option Plan, and (ii) to authorize issuance of stock options (including
the Option) having an exercise price less than the fair market value of the
common stock of the Corporation on the date of issuance. The Corporation agrees
to recommend such matter to the shareholders and to use its commercially
reasonable best efforts to hold such meeting as soon as reasonably practicable,
but in any event, by December 31, 2004. Upon the written request of the Employee
(and following such shareholder approval), the Corporation shall promptly
confirm to the Employee in writing that such contingency has been eliminated and
that the Option is fully effective, and the date the shares underlying the
Option have been duly registered in accordance with this Section 5(b).
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(c) Purchase of Options.
In the event that during the Term the Employee is terminated for
Cause (as defined in Section 7.3) or resigns other than for Good Reason (as
defined in Section 7.5), the Corporation shall have the right, but not the
obligation, to purchase the Employee's vested shares under any outstanding stock
options issued by the Corporation to the Employee (including, without
limitation, the Option) at the Fair Market Value thereof. In the event that the
Corporation does not elect to purchase the Employee's vested option shares
within ten (10) days of the date of (i) the Employee's termination for Cause, or
(ii) Employee's resignation, other than with Good Reason, the Employee shall be
obligated to exercise his options in writing within forty (40) days of such
termination or resignation failing which he shall be deemed to have forfeited
his Option to the Corporation. For purposes of this Section 5(c), "FAIR MARKET
VALUE" shall mean the product of (i) the positive difference, if any, between
(a) the average of the closing bid and asked prices of the Corporation's Common
Stock as reported by the OTC Bulletin Board (or the closing price per share of
the Corporation's Common Stock as reported by such exchange or over-the-counter
or other market on which the Corporation's Common Stock may then be listed or
admitted for trading) for the five (5) trading days prior to the date of
termination or resignation, as applicable, and (b) the exercise price of the
option shares, multiplied by (ii) the number of option shares, which, as of the
date of termination or resignation, are vested under the options.
6. Vacation. The Employee shall be entitled to four (4) weeks of vacation
during each year of the Term, to be taken at a time or times mutually agreed
upon by the Employee and the Corporation; provided, however, that not more than
one (1) week of such vacation period
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may be carried over to the year immediately following the year in which such
vacation was to be taken, unless otherwise required by applicable law.
7. Termination.
7.1 Death. If during the Term the Employee shall die, the Employee's
employment under this Agreement shall terminate as of the date of the Employee's
death. Upon such termination under this Section 7.1 the Corporation shall pay in
equal portions to Xxxx Xxxxxx and Xxxxx Xxxxxx (the "Employee's Designees"), in
a lump sum in cash within thirty (30) days from the date of the Employee's death
(a) the accrued but unpaid portion of the Base Salary payable hereunder, and (b)
any accrued and unpaid vacation. Additionally, notwithstanding any language to
the contrary contained in any option agreements with the Employee, the
Employee's Designees shall be entitled to exercise the Employee's vested option
shares during the twelve (12) months following the date of termination under
this Section 7.1. At the expiration of such twelve (12) month period, the
options shall terminate.
7.2 Disability. In the event of the Employee's "mental or physical
disability" (as defined herein) which continues for (i) a period of longer than
sixty (60) consecutive days, or (ii) such periods aggregating one hundred twenty
(120) days during any 365 consecutive days, such that the Employee is, despite
reasonable accommodation, unable to substantively perform the essential
functions of his position for said periods, the determination of which shall be
confirmed by the Board of Directors in the manner hereinafter provided, this
Agreement shall terminate upon thirty (30) days' prior written notice to the
Employee from the Corporation (the "DISABILITY TERMINATION DATE"). The
Corporation shall continue to pay to the Employee during the period of his
mental or physical disability the Base Salary provided in Section 3 of this
Agreement as well as provide the benefits described herein; provided, however,
that the Base
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Salary shall be reduced by any disability insurance payments paid to the
Employee. On the Disability Termination Date, (a) the Employee's Base Salary
shall cease, and (b) the Corporation shall pay to the Employee, in a lump sum in
cash, any accrued and unpaid vacation. Additionally, notwithstanding any
language to the contrary contained in any option agreements with the Employee,
the Employee's Designees shall be entitled to exercise his vested option shares
for twelve (12) months following the date of termination under this Section 7.2.
At the expiration of such twelve (12) month period, the options shall terminate.
As used herein, the term "MENTALLY OR PHYSICALLY DISABLED" shall
have the meaning ascribed thereto in the Corporation's disability insurance
policy then in force and effect for the Employee or, if no such disability
policy then exists, it shall mean the inability of the Employee, by reason of
physical or mental injury, illness or other similar cause to perform the
essential functions of his duties and responsibilities in connection with the
conduct of the business and affairs of the Corporation as determined by a
reputable physician of the Corporation's selection. The Employee hereby consents
to, and agrees to make himself available for, such examination.
7.3 Termination For Cause. The Corporation may at any time during
the Term, by written notice, and after affording the Employee the opportunity to
be heard in person by the Board of Directors, terminate this Agreement and
discharge the Employee for "Cause", whereupon the Corporation's obligation to
pay compensation or any other amounts payable hereunder to or for the benefit of
the Employee shall terminate on the date of such discharge except for accrued
and unpaid Base Salary and expenses to the date of discharge. For purposes of
this Agreement, the term "Cause" shall mean: (i) any act of the Employee's
constituting willful misconduct which is materially detrimental to the
Corporation's best interests, including
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misappropriation of, or intentional damage to, the funds, property or business
of the Corporation; (ii) conviction of a felony or of a crime involving moral
turpitude or conviction of any crime involving dishonesty or fraud with respect
to the Corporation or any of its affiliates; (iii) material failure of the
Employee to perform his duties in accordance with this Agreement after written
notice to the Employee by the Board of Directors specifying such failure and
giving the Employee fourteen (14) days to correct the defects in performance; or
(iv) breach by the Employee of any material provision hereof which, if capable
of remedy, remains unremedied for more than fourteen (14) days after written
notice.
7.4 Termination Without Cause. The Corporation may terminate the
Employee's employment with the Corporation at any time "without Cause", upon
thirty (30) days' written notice to the Employee. A termination "WITHOUT CAUSE"
shall mean a termination of the Employee's employment other than due to death,
disability or for Cause as provided in Sections 7.1, 7.2, and 7.3, respectively.
7.5 Termination By the 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
the Employee following, without the Employee's express prior written consent:
(i) any material diminution in the Employee's duties, status, offices, reporting
requirements, or job title, except in connection with termination of the
Employee's employment for Cause as provided in Section 7.3 or death or
disability as provided in Sections 7.1 and 7.2; (ii) the failure of the
Corporation timely to pay the Employee's salary, bonus or benefits due the
Employee or any material breach by the Corporation of this Agreement, in each
case within ten (10) days of the Corporation's receipt of written notice from
the Employee to that effect, which remains uncured at the end of such ten
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(10) day period; (iii) any change in the Corporation's pay plan or employment
agreement with the Employee that results in a material diminution of the
Employee's annual Base Salary or eligible Bonus amounts; (iv) the failure of the
Corporation to obtain an agreement from any successor to the Corporation to
assume and agree to perform this Agreement; or (v) a Change of Control of the
Corporation, as defined in Section 7.7.
7.6 Payment, Benefits and Stock Options Upon Termination Without
Cause Or For Good Reason.
(a) Cash Payments and Severance. In the event of a termination
by the Corporation of the Employee's employment with the Corporation without
Cause or a termination by the Employee of his employment with the Corporation
for Good Reason, during the Term, the Corporation shall pay to the Employee,
(i) in a single lump sum in cash within thirty (30) days
after the date of termination:
(x) the Employee's then accrued and unpaid Base Salary
through and including the date of termination;
(y) the Employee's then accrued and unpaid unused
vacation through and including the date of
termination, and
(z) the Employee's then accrued and unpaid Bonus for
such year, calculated by pro-rating the annual
Bonus, which would have been payable to the
Employee but for his termination and assuming full
achievement of the Bonus Criteria for such year,
based upon the number of days that the Employee
remained in the employ of the Corporation during
the year for which the Bonus is due; and
(ii) one (1) year of the Employee's Base Salary in effect
immediately prior to the date of termination ("SEVERANCE
PAY"). The Severance Pay shall be paid in equal monthly
installments over the Severance Period (as defined in
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Section 7.6(b) below) commencing on the date of
termination.
(b) Benefits. In addition, the Employee shall be entitled to
any benefits under any employee benefit plans, and for twelve (12) months from
the date of termination ("SEVERANCE PERIOD"), the Employee will, at the
Employee's option, (i) continue to receive all benefits to which he was entitled
pursuant to Section 5(a) of this Agreement as of the date of termination
including continued medical, dental, disability, and life insurance coverage for
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, or (ii) receive a lump sum payment in cash
within thirty (30) days of his termination without Cause or for Good Reason
representing the value of such continued benefits, plus any income tax payable
by the Employee on such value. If the Employee elects option (i) above and for
any reason at any time the Corporation is unable to treat the 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 the Employee receives
reduced benefits under such plan during the period that the Employee is
continuing to receive payments pursuant to this Section 7.6(b), then the
Corporation shall provide the Employee with such benefits by direct payment or,
at the Corporation's option, by making available equivalent benefits from other
sources. During the Severance Period, the Employee shall not be entitled to
receive salary and/or benefits except as provided herein 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.
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(c) Stock Options. In the event of a termination of the
Employee's employment with the Corporation without Cause or a termination by the
Employee of his employment with the Corporation for Good Reason, during the
Term, the Corporation shall accelerate the vesting of any outstanding option to
purchase shares of stock of the Corporation granted to the Employee by one (1)
year, and accelerate the lapse of all repurchase rights or forfeiture
restrictions applicable to any restricted stock granted to the Employee by one
(1) year, such that all unvested option shares or restricted shares which would
have continued vesting in accordance with their vesting schedule for a period of
one (1) year following the date of such termination, but for such termination,
will be deemed immediately vested and exercisable. In connection therewith, the
Corporation shall cause all restrictive legends, stop transfer orders or similar
restrictions to be removed from such shares, except as required by applicable
law. Additionally, notwithstanding any language to the contrary contained in any
option agreements with the Employee, the Employee shall be entitled to exercise
his vested option shares for twelve (12) months following the date of
termination without Cause or resignation for Good Reason. At the expiration of
such twelve (12) month period, all options shall terminate.
7.7 Change of Control. In the event that (i) a Change of Control (as
hereinafter defined) occurs during the Term and (ii) the Employee's employment
with the Corporation is terminated by the Corporation without Cause or the
Employee resigns or terminates his employment hereunder for Good Reason, the
Employee shall be entitled to the accrued salary, unused vacation, bonus,
Severance Pay, benefits, and stock option treatment as are provided in Sections
7.6(a), (b), and (c) above, except, that (i) the Severance Pay shall be payable
in a lump sum in cash within thirty (30) of the date of such termination, and
(ii) upon termination or resignation under this Section 7.7, the Corporation
shall accelerate fully the
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vesting of any outstanding option to purchase shares of stock of the Corporation
granted to the Employee and accelerate fully the lapse of all repurchase rights
or forfeiture restrictions applicable to restricted stock granted to the
Employee, such that all options shall vest in their entirety and be immediately
exercisable. The Employee shall give the Corporation not less than sixty (60)
days' prior written notice of a termination of employment with the Corporation
following a Change of Control transaction.
For purposes of this Section 7.7, the term "CHANGE OF CONTROL" means the
occurrence of any of the following, in one or a series of related transactions:
(v) the sale or transfer of fifty percent (50)% or more of the Outstanding
Shares of the Corporation to any person or entity other than (i) a transfer to a
wholly-owned subsidiary of the Corporation, (ii) a transfer by a holder or
holders of the Corporation's common stock or convertible securities as of the
date hereof to Affiliates (as defined below), or (iii) the conversion of the
Corporation's debentures outstanding as of the date hereof into preferred stock
or the conversion of such preferred stock into common stock, or (w) the sale,
lease or other transfer of all or substantially all of the assets or earning
power of the Corporation to any person or entity other than (i) a wholly-owned
subsidiary of the Corporation, (ii) an Affiliate whereby the purpose or effect
of such transfer is to provide for the transfer by a holder or holders of the
Corporation's common stock or convertible securities as of the date hereof of
such holders' direct or indirect interests in the assets of the Corporation to
Affiliates and so long as such transfer does not result in a transaction
described by one of the other clauses of this paragraph of Section 7.7, or (iii)
the sale, lease, license or transfer of the Corporation's assets located in
Congers, New York, including without limitation, intellectual property,
inventory, equipment, regulatory approvals and related assets, to a third-party
purchaser; or (x) merger, consolidation, reorganization, recapitalization, share
exchange,
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business combination or a similar transaction which results in any person or
entity (other than the persons who are shareholders or security holders of the
Corporation immediately prior to such transaction (or their Affiliates as of the
date of such transaction)) owning fifty percent (50%) or more of the Outstanding
Shares or combined voting power of the Corporation, (y) merger, consolidation,
reorganization, business combination or a similar transaction in which the
Corporation is not the surviving entity; or (z) a transaction commonly known as
"going private" whereby the Corporation engages one or a series of transactions
which results in the Corporation not being required to file periodic reports
with the Securities and Exchange Commission, unless the Employee is a
participant in such transaction. "OUTSTANDING SHARES" shall mean the total
number of common shares and common share equivalents of the Corporation
outstanding at the time the Change of Control, including, without limitation,
shares of common stock underlying debentures, preferred stock, options, warrants
and other convertible securities. "AFFILIATE" shall mean (i) any person or
entity controlling, controlled by or under the common control of the existing
holders of common stock or convertible securities of the Corporation and (ii)
any partner, shareholder or member of the existing holders of common stock or
convertible securities of the Corporation. For the purposes hereof, "CONTROL"
shall mean the direct or indirect ownership of at least fifty (50%) percent of
the outstanding shares or other voting rights of the subject entity or if it
possesses, directly or indirectly, the power to direct or cause the direction of
management and policies of such other entity.
In the event that the Employee resigns or terminates his employment
following a Change of Control as described above, the Employee acknowledges and
agrees that upon the request of the Corporation, he will execute and deliver a
release in customary form releasing all claims of
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the Employee arising out of his employment with the Corporation except for the
obligations of the Corporation under this Agreement.
8. Protection of Confidential Information. In view of the fact that the
Employee's work for the Corporation will bring him into close contact with all
the confidential affairs thereof, and plans for future developments, the
Employee agrees to the following:
8.1 Secrecy. During the Term and for five (5) years after the date
of termination of the Employee's employment, to preserve the confidential nature
of, and not disclose, reveal, or make accessible to anyone other than the
Corporation's officers, directors, employees, consultants or agents, otherwise
than within the scope of his employment duties and responsibilities hereunder,
any and all documents, information, knowledge or data of or pertaining to the
Corporation, its subsidiaries or affiliates or pertaining to any other
individual, firm, corporation, partnership, joint venture, business,
organization, entity or other person with which the Corporation or any of its
subsidiaries or affiliates may do business during the Term (including licensees,
licensors, manufacturers, suppliers and customers of the Corporation or any of
its subsidiaries or affiliates) and which is not in the public domain, including
trade secrets, "know how", names and lists of licensees, licensors,
manufacturers, suppliers and customers, development plans or programs,
statistics, manufacturing and production methods, processes, techniques,
pricing, marketing methods and plans, specifications, advertising plans and
campaigns or any other matters, and all other confidential information of the
Corporation, its subsidiaries and affiliates (hereinafter referred to as
"CONFIDENTIAL INFORMATION"). The restrictions on the disclosure of Confidential
Information imposed by this Section 8.1 shall not apply to any Confidential
Information that was part of the public domain at the time of its receipt by the
Employee or becomes part of the public domain in any manner and for any reason
other
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than an act by the Employee, unless the Employee is legally compelled (by
applicable law, deposition, interrogatory, request for documents, subpoena,
civil investigative demand or similar process) to disclose such Confidential
Information, in which event the Employee shall provide the Corporation with
prompt notice of such requirement so that the Corporation may seek a protective
order or other appropriate remedy, and if such protective order or other remedy
is not obtained, the Employee shall exercise reasonable efforts in good faith to
obtain assurance that confidential treatment will be accorded such Confidential
Information.
8.2 Return Memoranda, etc. To deliver promptly to the Corporation on
termination of his employment, or at any other time the Corporation may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Corporation's
business and all property associated therewith, which the Employee may then
possess or have under his control.
8.3 Non-competition. Provided that this Agreement has not been
breached by the Corporation, the Employee agrees that he shall not at any time
prior to one (1) year after the expiration or termination of his employment with
the Corporation, own, manage, operate, be a director or an employee of, or a
consultant to any person, business, corporation, partnership, trust, limited
liability company or other firm or enterprise ("PERSON") which is engaged in
marketing, selling or distributing products or in developing product candidates
in the United States which are directly competitive with products or product
candidates in development as evidenced by the current written product
development plan and/or business plan of the Corporation at the time of
termination of the Employee's employment and/or described in the Corporation's
most recent filing on Form 10-K with the Securities and Exchange Commission as
of the date of the termination of the Employee's employment.
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If any of the provisions of this section, or any part thereof, is
hereinafter construed to be invalid or unenforceable, the same shall not affect
the remainder of such provision or provisions, which shall be given full effect,
without regard to the invalid portions. If any of the provisions of this
section, or any part thereof, is held to be unenforceable because of the
duration of such provision, the area covered thereby or the type of conduct
restricted therein, the parties agree that the court making such determination
shall have the power to modify the duration, geographic area and/or other terms
of such provision and, as so modified, said provision shall then be enforceable.
In the event that the courts of any one or more jurisdictions shall hold such
provisions wholly or partially unenforceable by reason of the scope thereof or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Corporation's right to the relief provided for
herein in the courts of any other jurisdictions as to breaches or threatened
breaches of such provisions in such other jurisdictions, the above provisions as
they relate to each jurisdiction being, for this purpose, severable into diverse
and independent covenants.
8.4 Injunctive Relief. The Employee acknowledges and agrees that,
because of the unique and extraordinary nature of his services, any breach or
threatened breach of the provisions of Sections 8.1, 8.2, or 8.3 hereof will
cause irreparable injury and incalculable harm to the Corporation, and the
Corporation shall, accordingly, be entitled to injunctive and other equitable
relief for such breach or threatened breach and that resort by the Corporation
to such injunctive or other equitable relief shall not be deemed to waive or to
limit in any respect any right or remedy which the Corporation may have with
respect to such breach or threatened breach.
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8.5 Expenses of Enforcement of Covenants. In the event that any
action, suit or proceeding at law or in equity is brought to enforce the
covenants contained in Section 8.1, 8.2, or 8.3 hereof or to obtain money
damages for the breach thereof, the party prevailing in any such action, suit or
other proceeding shall be entitled upon demand to reimbursement from the other
party for all expenses (including, without limitation, reasonable attorneys'
fees and disbursements) incurred in connection therewith.
8.6 Non-Solicitation. The Employee covenants and agrees not to (and
not to cause or direct any Person to) hire or solicit for employment any
employee of the Corporation or any of its subsidiaries or affiliates. The
prohibitions of this Section 8.6 shall apply (i) for six (6) months following
the termination of the Employee's employment by the Corporation without Cause or
by the Employee for Good Reason, prior to a Change of Control, (ii) for twelve
(12) months following the termination of the Employee's employment for Cause,
prior to a Change of Control, or (iii) for twenty-four (24) months following a
Change of Control.
9. Indemnification. The Corporation will defend, indemnify and hold
harmless the Employee, to the maximum extent permitted by applicable law and the
by-laws of the Corporation, against all claims, costs, charges and expenses
incurred or sustained by him in connection with any action, suit or other
proceeding to which he may be made a party by reason of his being an officer,
director or employee of the Corporation or of any subsidiary or affiliate
thereof. Furthermore, the Corporation hereby represents that it will maintain
during the Term, Directors and Officers insurance coverage in the amount of at
least Five Million Dollars ($5,000,000).
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10. Warranties.
The Employee hereby warrants that as of the date hereof the Employee
is not employed (other than by the Corporation) and is not a party to any other
employment contract, express or implied. The Employee warrants that he has no
other obligation, contractual or otherwise, which would prevent him from
accepting the Corporation's offer of employment under the terms of this
Agreement and from complying with its provisions. The Employee warrants that he
will not utilize during his employment hereunder any confidential information
obtained through or in connection with his prior employment. The Employee
warrants that he knows of no reason why he would not be able to perform his
obligations under this Agreement. The Employee warrants that he has duly
executed and delivered this Agreement and it is valid, binding and enforceable
against the Employee in accordance with its terms.
The Corporation warrants to the Employee that this Agreement has
been duly approved and authorized by its Board of Directors, that this Agreement
has been duly executed and delivered on behalf of the Corporation and that this
Agreement is valid, binding and enforceable against the Corporation in
accordance with its terms.
11. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder, shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by facsimile, with confirmation
of receipt, or mailed first-class, postage prepaid, by registered or certified
mail (notices sent by mail shall be deemed to have been given three (3) business
days after the date sent), to the parties at their respective addresses herein
above set forth or to such other address as either party shall designate by
notice in writing to the other in accordance herewith.
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12. General.
12.1 Governing Law. This Agreement shall be governed by 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.
12.2 Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
12.3 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof. No representation,
promise or inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
12.4 Assignability. This Agreement, and the Employee's rights and
obligations hereunder, may not be assigned by the Employee. The Corporation may
assign its rights, together with its obligations, hereunder in connection with
any sale, transfer or other disposition of all or substantially all of its
business or assets; in any event the rights and obligations of the Corporation
hereunder shall be binding on its successors or assigns, whether by merger,
consolidation or acquisition of all or substantially all of its business or
assets.
12.5 Amendment. This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be waived,
only by a written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. No superseding instrument,
amendment, modification, cancellation, renewal or extension hereof shall require
the consent or approval of any person other than the
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parties hereto. The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by either party of the breach of any
term or covenant contained in this Agreement, whether by conduct or otherwise,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
12.6 Counterparts. This Agreement may be executed in one or more
facsimile or original counterparts, each of which shall be deemed an original,
but all of which taken together will constitute one and the same instrument.
12.7 Severability. The provisions of this Agreement shall be deemed
severable, and if any part of any provision is held illegal, void or invalid
under applicable law, such provision may be changed to the extent reasonably
necessary to make the provision, as so changed, legal, valid and binding. If any
provision of this Agreement is held illegal, void or invalid in its entirety,
the remaining provisions of this Agreement shall not in any way be affected or
impaired but shall remain binding in accordance with their terms.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ATTEST: XXXXXX DRUG CO., INC.
_________________________ By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
WITNESS: EMPLOYEE
___________________________ By: /s/ Xxx X. Xxxxxx
---------------------------------------
Xxx X. Xxxxxx
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