EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of the 18th day of November, 2002
between and among XXXXXX DRUG CO., INC., a New York corporation (the
"Corporation"), with principal executive offices at 000 X. Xxxxxxxxxx Xxxx,
Xxxxxxxx, XX 00000 and XXXXX XXXXX residing at 00 Xxxxxxxxx Xxxxx, Xxxxxx
Xxxxxx, XX 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 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 Chief Operations
Officer of the Corporation, subject to the direction of the Board of Directors
of the Corporation, and, in connection therewith, the Employee shall have all
the duties and responsibilities customarily rendered by a Chief Operations
Officer, and as may be further reasonably directed or requested to be performed
by the Chairman and Chief Executive Officer, to whom the Employee shall report,
and to use his
best efforts, skill and abilities to promote the interests of the Corporation
and its subsidiaries. Employee shall be located at, and operate out of, the
Corporation's Congers, New York facility.
1.2 Acceptance. Employee hereby accepts such employment and agrees
to render the services described in Section 1.1 hereof.
2. Term of Employment. The term of 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 ("Renewal Period"), unless either the Corporation or the Employee
provides written notice of non-renewal of Employee's employment with the
Corporation ninety (90) days prior to the end of the Initial Term or any Renewal
Period (each a "Renewal Period" and together with the Initial Term, the "Term").
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 annual rate of $180,000, 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
subject to increase at the discretion of the Board of Directors of the
Corporation, in its sole discretion.
(b) Annual Bonus. During the Term, Employee may be eligible to
receive from the Corporation an annual bonus, as may be determined by the Board
of Directors in its sole discretion, in respect of each fiscal year, or portion
thereof, of the Corporation, based on the
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achievement of such targets, conditions or parameters as may be determined from
time to time hereafter by the Compensation Committee of the Board of Directors
of the Corporation in its sole and absolute discretion.
4. Expenses. The Corporation shall pay or reimburse Employee for all
reasonable expenses which are in accordance with the Corporation's expense
policy in force from time to time and which are actually incurred or paid by him
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 require.
5. Additional Benefits.
(a) In General. In addition to the compensation and expenses to be
paid under Sections 3 and 4 hereof, Employee will be entitled to such rights and
benefits for which he may be eligible under any insurance, 401K, bonus, or stock
option plan of the Corporation, as the Board of Directors shall determine from
time to time in its sole and absolute discretion, adopted for the benefit of
executives or employees generally of the Corporation.
(b) Stock Options. Employee is hereby granted stock options to
purchase 400,000 shares of the Corporation's common stock, $.01 par value per
share (the "Option") at an exercise price representing the closing price for the
Company's common stock as reported by the OTC Bulletin Board on the date of
hire. The Option shall vest and be exercisable in quarterly amounts upon
anniversary date of hire beginning November 18, 2003 and thereafter until fully
vested. The Option shall have a ten year term, subject to earlier termination as
set forth in paragraph 5(c) upon the termination of Employee's employment with
the Corporation and shall be evidenced by the Corporation's standard form stock
option agreement. The Employee and the Corporation agree that the Option shall
be deemed to have been issued pursuant to one or more
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plans for the grant of incentive stock options, to the maximum extent permitted
by law, and non-qualified stock options for any excess.
(c) Purchase of Options. In the event that Employee is terminated
for cause (as defined in paragraph 7.3) or resigns, 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 (7)] days of the date of
Employee's termination for cause or resignation, Employee shall be obligated to
exercise his Options in writing within thirty (30) 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 bid and asked prices of the Company's Common Stock as reported by
the OTC Bulletin Board, 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, multiplied by (ii)
the number of Option Shares which, as of the date of termination, are vested
under the Option.
6. Vacation. Employee shall be entitled to a vacation period of not less
than [four] weeks during each year of the Term, to be taken at a time or times
acceptable to the Corporation.
7. Termination.
7.1 Death. If during the Term Employee shall die, Employee's
employment under this Agreement shall terminate as of the date of Employee's
death. The base salary payable hereunder to or for the benefit of Employee
through the date of death shall be paid to such person or persons ("Employee's
Designees") as Employee may designate by notice to the Corporation from time to
time or, in the absence of such designation, to his spouse.
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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
45 consecutive days, or (ii) such periods aggregating 90 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
period, 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 salary shall be reduced by
any disability insurance payments paid to the Employee. On the Disability
Termination Date, Employee's base salary shall cease.
As used herein, the term "mentally or physically disabled" shall
have the meaning ascribed thereto in the disability insurance policy then in
force and effect with respect to 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 a material part 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. 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 Employee for "cause", whereupon the Corporation's obligation to pay
compensation or any other amounts payable
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hereunder to or for the benefit of Employee shall terminate on the date of such
discharge except for accrued and unpaid salary and expenses to the date of
discharge. For purposes of this Agreement, the term "cause" shall mean (i)
excessive absenteeism, alcoholism or drug abuse, (ii) misappropriation of, or
intentional damage to, the funds, property or business of the Corporation; (iii)
commission of a felony or a crime involving moral turpitude or the commission of
any other act or omission involving dishonesty or fraud with respect to the
Corporation or any of its affiliates; (iv) 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 seven (7) days to correct the defects in performance; (v) engaging in
any conduct tending to bring the Corporation or any of its affiliates into
public disgrace or disrepute; or (vi) breach by the Employee of any material
provision hereof which, if capable of remedy, remains unremedied for more than
ten (10) days after written notice.
7.4 Termination without Cause. The Corporation shall have the option
to terminate this Agreement without cause upon thirty (30) days' written notice
to the Employee. In the event the Corporation terminates this Agreement pursuant
to this Section 7.4, the Corporation shall pay the Employee an amount equal to
(a) his then accrued and unpaid base salary through and including the date of
termination, and (b) the lesser of (i) the Employee's base salary for the
remainder of the Term, and (ii) one (1) year of Employee's base salary. The
amount payable under Subsection (b) hereof shall be paid in equal monthly
installments. Upon termination of Employee's employment with the Corporation
pursuant to this Section 7.4, (i) such portion of Employee's outstanding Options
which have vested as of the date of termination must be exercised within 90 days
of the date of termination, failing which such Options shall terminate, and (ii)
the provisions of paragraph 8.3 shall be deemed of no force or effect.
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7.5 Change of Control. (i) In the event of the sale or transfer of
more than 50% of the outstanding shares of the Corporation, or the sale of all
or substantially all of the assets of the Corporation (a "Change of Control")
during the Initial Term, and (ii) the Employee's employment with the Corporation
is terminated by the Corporation without cause pursuant to Section 7.4 hereof
subsequent to the date of closing of the Change of Control transaction, then
Employee shall be entitled to the same benefits provided in Section 7.4 above.
The Employee acknowledges and agrees to execute any release or instruments
required to be obtained to effectuate the closing of such Change of Control
transaction.
8. Protection of Confidential Information. In view of the fact that
Employee's work for the Corporation will bring him into close contact with all
the confidential affairs thereof, and plans for future developments, Employee
agrees to the following:
8.1 Secrecy. During the term of Employment and for two (2) years
thereafter, 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 of employment (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, programs, statistics, manufacturing and
production methods, processes, techniques, pricing, marketing methods and plans,
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specifications, advertising plans and campaigns or any other matters, and all
other confidential information of the Corporation, its subsidiaries and
affiliates acquired in connection with Employee's employment (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 than an act by the Employee, unless the Employee is legally
compelled (by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to disclose such Confidential
Information, in which event 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, 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 he 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 earlier to occur of (i) the expiration of the
Term hereunder and (ii) the termination of his employment with the Corporation,
own, manage, operate, be a director or an employee of, or a consultant to any
business or corporation which is conducting any business within the generic
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drug industry or which competes with or conducts the same business as or similar
to that conducted by the Corporation in the United States. The Employee further
agrees that, provided this Agreement has not been breached by the Corporation,
he shall not, at any time prior to one (1) year after the earlier to occur of
(i) the expiration of the Term hereunder and (ii) the termination of his
employment with the Corporation, assist or allow any such business or
corporation to hire anyone who was employed by the Corporation at such time or
at any time during the preceding twelve months. 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
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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.
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. Employee covenants and agrees not to, directly
or indirectly, during the Term of employment and for a period of two (2) years
from and after the effective date of the termination of his employment with the
Corporation (for any reason whatsoever), (i) induce or attempt to influence any
employee of the Corporation or any of its subsidiaries or affiliates to leave
its employ, or (ii) aid any person, business, or firm, including a supplier, a
competitor, licensor or customer of or a manufacturer for the Corporation, in
any attempt to hire any person who shall have been employed by the Corporation
or any of its subsidiaries or affiliates within the period of one (1) year of
the date of any such requested aid.
9. Indemnification. The Corporation will defend and indemnify 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,
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director or employee of the Corporation or of any subsidiary or affiliate
thereof.
10. Employee Warranties.
Employee hereby warrants that as of the date hereof Employee is not
employed (other than by the Corporation) and is not a party to any other
employment contract, express or implied. 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. Employee warrants that he will not utilize during
his employment hereunder any confidential information obtained through or in
connection with his prior employment. Employee warrants that he knows of no
reason why he would not be able to perform his obligations under this Agreement.
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 on the date sent),
to the parties at their respective addresses hereinabove set forth or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith.
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.
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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 Employee's rights and
obligations hereunder, may not be assigned by 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 parties hereto. The failure
of either party at any time or times to require performance of any provision
hereof shall in no matter 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.
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12.6 Counterparts. This Agreement 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.
12.7 Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators, in New York, New York, in
accordance with the commercial arbitration rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. The expense of such arbitration shall be borne as
directed by the arbitrator.
12.8 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ATTEST: XXXXXX DRUG CO., INC.
By: /s/ Xxxxxxx X. Xxxxxxx
_________________________ --------------------------------
Xxxxxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
WITNESS: EMPLOYEE
By: /s/ Xxxxx Xxxxx
___________________________ --------------------------------
Xxxxx Xxxxx
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