EMPLOYMENT AGREEMENT
THIS
AGREEMENT is dated January 21, 2008 (the “Effective
Date”)
by and
between FineTech, Inc, a wholly owned subsidiary of RxElite, Inc. (the
“Company”)
and
Xxxx Xxxxxxxxxxx (“Executive”).
In
consideration of the mutual covenants contained herein, and for such other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Employment
and Duties.
The
Company hereby agrees to employ Executive as its Senior Vice President of New
Business Development hereby accepts such employment, on the terms and conditions
hereinafter set forth. During the Employment Period (as defined below),
Executive shall serve in the foregoing capacities and shall report to the Chief
Operating Officer of the Company. Executive shall have those powers and duties
customarily associated with the foregoing positions of entities comparable
to
the Company and such other powers and duties as may be prescribed by the
Board.
2. Term.
The
term of this Agreement (the “Term”)
shall
commence on the Effective Date and run for a term of five (5) years. This Term
may be extended by the mutual agreement of both parties unless Executive’s
employment is terminated as provided in Section 6 (the “Employment
Period”).
3. Extent
of Services.
During
the Term and any extension thereof, Executive shall devote his full time and
efforts to the performance, to the best of his abilities, of such duties and
responsibilities, as described in Section 1 above, and as the Board shall
determine, consistent therewith.
4. Compensation.
(a) Salary.
Executive shall be paid One Hundred Eighty Five Thousand Dollars (185,000)
on an
annualized basis (the “Base
Salary”)
in
accordance with the Company’s normal payroll practices, and subject to all
lawfully required withholding. The base salary may be increased annually as
determined by the Board in its sole discretion.
(b) Bonus.
Executive will be paid during 2008 5% for each $1 in EBITDA created in division
above the current FineTech baseline EBITDA This will include all EBITDA created
on existing contracts for products or services above the current contract and
any new business. Executive is eligible for additional bonuses to include 3%
on
any EBITDA created on new product deals or other transactions brought before
the
company by the Executive. Deals under discussion prior to the effective date
of
the Executive’s contract that were being negotiated with the Executive’s prior
employer will be eligible for 1.5% on EBITDA and any deals in negotiation that
were not related to the Executive will be exempt from bonus.
(i) Bonus
Carve-out A: DuoNeb and / Or Levalbuterol cooperation agreement with Cobalt
or
other related entity will provide 5% of EBITDA if the LOI is signed in Q1,
2008
and the final agreement is signed by Q2, 2008. If these conditions do not exist
then the EBITDA target will be 3%.
(c) Stock
Options.
Executive shall be granted 250,000 common stock options with a strike price
of
the 30 day prevailing price on a trailing average at the time of execution
of
this agreement, vesting 25% per year over 4 years.
(d) Relocation
Costs: Executive will be compensated for documented relocation costs under
the
following schedule:
| (1) |
Up
to Fifteen Thousand Dollars ($15,000) in documented moving
expenses
|
| (2) |
Up
to Twenty Three Thousand Dollars ($23,000) in documented closing
costs
|
| (3) |
Up
to Three Thousand Five Hundred Dollars ($3,500) in temporary housing
costs
|
| (4) |
Up
to Four Thousand Dollars ($4,000) in flights and transportation
costs
|
| (5) |
Expenses
over the above limits will require pre-approval by
RxElite.
|
(e) Executive
Participation in the Company’s Staff Benefits Plans.
(i) The
Company shall pay for Executive’s and his family’s medical insurance, as may be
established from time to time by the Company with such carriers and such
coverage and such terms and conditions as the Company may select. On or after
the date hereof, the Company shall be entitled to cause Executive to participate
in the cost of the foregoing medical insurance in such pro-rations as the
Company may decide in its sole and absolute discretion.
(f) Expenses.
Executive shall be reimbursed by the Company for all ordinary, reasonable,
customary and necessary expenses incurred by him in the performance of his
duties and responsibilities. Executive agrees to prepare documentation for
such
expenses as may be necessary for the Company to comply with the applicable
rules
and regulations of the Internal Revenue Service.
(g) Equity
Awards.
Executive shall be eligible for grants of stock options, restricted stock and
other permissible awards under the RxElite Holdings Inc. 2008 Incentive Stock
Plan, as the Board or Compensation Committee of the Company shall, in its
absolute and sole discretion, determine.
5. Vacation.
Executive shall be entitled to 15 business days paid vacation and 5 paid sick
days (which may be taken as personal days if Executive has not previously taken
said days as sick days), per annum during Executive’s employment under this
Agreement consistent with the Company’s vacation policy for employees generally,
provided,
however,
that
Executive shall not be permitted to take more than ten consecutive business
days
of vacation at any particular time without the prior approval of the Company’s
Compensation Committee. The Company’s Compensation Committee may (but shall not
be obligated to) grant Executive such additional paid sick days, as the
Compensation Committee may decide on a case by case basis.
6. Termination.
Executive’s employment by the Company shall terminate under the following
circumstances:
(a) Death.
If
Executive dies, Executive’s employment shall be terminated effective as of the
end of the calendar month during which Executive died.
2
(b) Disability.
In the
event Executive, by reason of physical or mental incapacity, shall be
substantially unable to perform his duties hereunder for a period of three
(3)
consecutive months, or for a cumulative period of six (6) months within any
twelve (12) month period (such incapacity deemed to be “Disability”),
the
Company shall have an option, at any time thereafter, to terminate Executive’s
employment hereunder as a result of such Disability. Such termination will
be
effective ten (10) days after the Board gives written notice of such termination
to Executive, unless Executive shall have returned to the full performance
of
his duties prior to the effective date of the notice. Upon such termination,
Executive shall be entitled to any benefits as to which he and his dependents
are entitled by law, and except as otherwise expressly provided herein, all
obligations of the Company hereunder shall cease upon the effectiveness of
such
termination other than payment of salary earned through the date of Disability,
provided that such termination shall not affect or impair any rights Executive
may have under any policy of long term disability insurance or benefits then
maintained on his behalf by the Company. Executive’s Base Salary shall continue
to be paid during any period of incapacity prior to and including the date
on
which Executive’s employment is terminated for Disability.
(c) Cause.
The
Company shall have the right to terminate Executive's employment for “Cause.”
For purposes of this Agreement, “Cause”
shall
mean:
(i) the
willful or continued failure by Executive to substantially perform his duties,
including, but not limited to, acts of fraud, willful misconduct, gross
negligence or other act of dishonesty;
(ii) a
material violation or material breach of this Agreement which is not cured
within 30 days written notice to Executive;
(iii) misappropriation
of funds, properties or assets of the Company by Executive or any action which
has a materially adverse effect on the Company or its business;
(iv) the
conviction of, or plea of guilty or no contest to, a felony or any other crime
involving moral turpitude, fraud, theft, embezzlement or dishonesty; or
(v) abuse
of
drugs or alcohol that impairs Executive’s ability to perform his duties as
described in Section 1 above.
(d) Without
Cause.
The
Company shall have the right to terminate Executive’s employment hereunder
without cause at any time by providing Executive with written notice of such
termination, which termination shall take effect 10 days after the date such
notice is provided.
(e) Voluntary
Resignation.
Executive shall have the right to terminate his employment hereunder by
providing the Company with a written notice of resignation. Such notice must
be
provided 60 days prior to the date upon which Executive wishes such resignation
to be effective. Upon receipt of such resignation, the Company shall have the
option to accelerate the resignation to a date prior to the expiration of the
60
day period.
3
7. Payments
Due Upon Termination.
In the
event Executive’s employment is terminated pursuant to Section 6(d) above, in
years one through three of the agreement, then (i) any unvested stock options
held by Executive shall immediately vest, (ii) the Company shall continue pay
to
Executive his base salary as in effect on the date of termination for a period
of twelve (12) months and (iii) the Company shall reimburse Executive for
the costs of obtaining comparable medical benefits for twelve (12) months,
unless Executive obtains other employment that provides for comparable medical
benefits as Executive received while employed by the Company. In the event
Executive’s employment is terminated pursuant to Section 6(d) above, in years
four and subsequent years of the agreement, then (i) any unvested stock options
held by Executive shall immediately vest, (ii) the Company shall continue pay
to
Executive his base salary as in effect on the date of termination for a period
of six (6) months and (iii) the Company shall reimburse Executive for the
costs of obtaining comparable medical benefits for six (6) months, unless
Executive obtains other employment that provides for comparable medical benefits
as Executive received while employed by the Company. In the event Executive’s
employment is terminated for any other reason, then Executive shall be entitled
to receive his Base Salary through the effective date of termination and the
Company shall reimburse Executive for any reasonable expenses previously
incurred for which Executive had not been reimbursed prior to the termination
of
employment. Executive acknowledges and agrees that prior to receiving any
payments under this Section, and as a material condition thereof, Executive
shall, if requested by the Company, sign and agree to be bound by a general
release of claims against the Company related to Executive’s employment (and
termination of employment) with the Company in such form as the Company may
deem
appropriate. Upon Executive’s termination of employment for any reason, upon the
request of the Board, he shall resign any memberships or positions that he
then
holds with the Company.
8. Vesting
of Options upon Change of Control.
Upon
the occurrence of a Change of Control, unless otherwise specifically prohibited
under the applicable laws, or the rules and regulations of any governing
governmental agency or national securities exchange, any and all stock options
granted by the Company to Executive shall become immediately exercisable, and
shall remain exercisable throughout their entire term. “Change of Control” of
the Company shall mean:
(a) Acquisition
of Shares.
The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, amended (the “Exchange Act”))
(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (a) the outstanding
shares of common stock of the Company (the “Outstanding Company Common Stock”)
or (b) the combined voting power of the then outstanding voting securities
of
the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes
of this subsection (a), the following acquisitions shall not constitute a Change
of Control: (i) any acquisition by the Company, (ii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iii) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii)
and
(iii) of subsection (c) below; or
(b) Change
in Board.
Individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individuals were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or
consents by or on behalf of a Person other than the Board; or
4
(c) Business
Combination.
Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50%
of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of the Company
or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then Outstanding
Company Common Stock or the combined voting power of the then Outstanding Voting
Securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution
of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval
by the shareholders of the Company of a complete liquidation or dissolution
of
the Company.
9. Surrender
of Books and Papers.
Upon
termination of this Agreement (irrespective of the time, manner, or cause of
termination, be it for cause or otherwise), Executive shall immediately
surrender to the Company all books, records, or other written papers or
documents entrusted to him or which he has otherwise acquired pertaining to
the
Company and all other Company property in Executive’s possession, custody or
control.
10. Inventions
and Patents.
Executive agrees that Executive will promptly from time-to-time fully inform
and
disclose to the Company any and all ideas, concepts, copyrights, copyrightable
material, developments, inventions, designs, improvements and discoveries of
whatever nature that Executive may have or produce during the term of
Executive’s employment under this Agreement that pertain or relate to the then
current business of the Company (the “Creations”),
whether conceived by Executive alone or with others and whether or not conceived
during regular working hours. All Creations shall be the exclusive property
of
the Company and shall be “works made for hire” as defined in 17 U.S.C. §101, and
the Company shall own all rights in and to the Creations throughout the world,
without payment of royalty or other consideration to Executive or anyone
claiming through Executive. Executive hereby transfers and assigns to the
Company (or its designee) all right, title and interest in and to every
Creation. Executive shall assist the Company in obtaining patents or copyrights
on all such inventions, designs, improvements and discoveries being patentable
or copyrightable by Executive or the Company and shall execute all documents
and
do all things necessary to obtain letters of patent or copyright, vest the
Company with full and exclusive title thereto, and protect the same against
infringement by others, and such assistance shall be given by Executive, if
needed, after termination of this Agreement for whatever cause or reason.
Executive hereby represents and warrants that Executive has no current or future
obligation with respect to the assignment or disclosure of any or all
developments, inventions, designs, improvements and discoveries of whatever
nature to any previous employer, entity or other person and that Executive
does
not claim any rights or interest in or to any previous unpatented or
uncopyrighted developments, inventions, designs, improvements or
discoveries.
5
11. Trade
Secrets, Non-Competition and Non-Solicitation.
(a) Trade
Secrets.
Contemporaneous with the execution of this Agreement and during the term of
employment under this Agreement, the Company shall deliver to Executive or
permit Executive to have access to and become familiar with various confidential
information and trade secrets of the Company, including, without limitation,
data, production methods, customer lists, product format or developments, other
information concerning the business of the Company and other unique processes,
procedures, services and products of the Company, which are regularly used
in
the operation of the business of the Company (the “Confidential
Information”).
Executive shall not disclose any of the Confidential Information that he
receives from the Company, or its clients and customers in the course of his
employment with the Company, directly or indirectly, nor use it in any way,
either during the term of this Agreement or at any time thereafter, except
as
required in the course of employment with the Company. Executive further
acknowledges and agrees that Executive owes the Company a fiduciary duty to
preserve and protect all Confidential Information from unauthorized disclosure
or unauthorized use. All files, records, documents, drawings, graphics,
processes, specifications, equipment and similar items relating to the business
of the Company, whether prepared by Executive or otherwise coming into
Executive’s possession in the course of his employment with the Company, shall
remain the exclusive property of the Company and shall not be removed from
the
premises of the Company without the prior written consent of the Company unless
removed in relation to the performance of Executive’s duties under this
Agreement. Any such files, records, documents, drawings, graphics,
specifications, equipment and similar items, and any and all copies of such
materials that have been removed from the premises of the Company, shall be
returned by Executive to the Company. Executive further acknowledges that the
covenants of Executive herein are intended to include the protection of the
confidential information of each of the Company’s customers and clients, that
come into the possession of Executive as a result of his employment with the
Company, and that such customers and clients of the Company shall be entitled
to
rely on and enforce these covenants against Executive for their own
benefit.
(b) Non-Competition.
Executive acknowledges that (i) he will be provided with and have access to
the
Confidential Information, the unauthorized use or disclosure of which would
cause irreparable injury to the Company, (ii) the Company’s willingness to enter
into this Agreement is based in material part on Executive’s agreement to the
provisions of this Section 10(b)
and
(iii) Executive’s breach of the provisions of this Section would materially and
irreparably damage the Company. In consideration for the Company’s disclosure of
Confidential Information to Executive, Executive’s access to the Confidential
Information, and the salary paid to Executive by the Company hereunder,
Executive agrees that during the Term and for one (1) year thereafter,
regardless of whether such termination is with or without Cause, Executive
shall
not, directly or indirectly, either as an executive, employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director,
advisor or in any other individual or representative capacity, engage or
participate in any business that is in competition in any manner whatsoever
with
any business conducted by the Company at any time prior to, or during,
Executive’s employment hereunder.
6
(c) Reasonableness
of Restrictions.
Executive acknowledges that the restrictions set forth in Section
10(b)
of this
Agreement are reasonable in scope and necessary for the protection of the
business and goodwill of the Company. Executive agrees that should any portion
of the covenants in Section
10
be
unenforceable because of the scope thereof or the period covered thereby or
otherwise, the covenant shall be deemed to be reduced and limited to enable
it
to be enforced to the maximum extent permissible under the laws and public
policies applied in the jurisdiction in which enforcement is
sought.
(d) Soliciting
Employees.
Executive shall not during the Term or for a period of one (1) year thereafter
for any reason, whether by resignation, discharge or otherwise, either directly
or indirectly, employ, enter into agreement with, or solicit the employment
of,
any employee of the Company for the purpose of causing them to leave the
employment of the Company or take employment with any business that is in
competition in any manner whatsoever with the business of the
Company.
(e) Injunctive
Relief; Extension of Restrictive Period.
In the
event of a breach of any of the covenants by Executive or the Company contained
in this Agreement, it is understood that damages will be difficult to ascertain,
and either party may petition a court of law or equity for injunctive relief
in
addition to any other relief which Executive or the Company may have under
the
law, including, but not limited to, reasonable attorneys’ fees.
12. Miscellaneous.
(a) Assignment.
This
Agreement shall be binding upon the parties and their respective heirs,
executors, administrators, successors and assigns. Executive shall not assign
any part of his rights under this Agreement without the prior written consent
of
the Company.
(b) Entire
Agreement.
This
Agreement contains the entire agreement and understanding between the parties
and supersedes any and all prior understandings and agreements between the
parties regarding Executive’s employment.
(c) Modification;
Waiver.
No
modification hereof shall be binding unless made in writing and signed by the
party against whom enforcement is sought. No waiver of any provisions of this
Agreement shall be valid unless the same is in writing and signed by the party
against whom it is sought to be enforced, unless it can be shown through custom,
usage or course of action.
(d) Governing
Law.
This
Agreement is executed in, and it is the intention of the parties hereto that
it
shall be governed by, the laws of the State of Delaware without giving effect
to
applicable conflict of laws provisions.
(e) Severability.
The
provisions of this Agreement shall be deemed to be severable, and the invalidity
or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
7
(f) Notices.
Any
notice or communication permitted or required by this Agreement shall be in
writing and shall become effective upon personal service, or service by wire
transmission, which has been acknowledged by the other party as being received,
or two (2) days after its mailing by certified mail, return receipt requested,
postage prepaid addressed as follows:
| (i) |
If
to the Company:
|
|
RxElite
Holdings Inc.
|
|
0000
X. Xxxx Xxxxxx,
|
|
Xxxxx
000
|
|
Xxxxxxxx,
XX 00000
|
|
Attn:
Chief Operating Officer
|
| (ii) |
If
to Executive, to:
|
|
Xxxx
Xxxxxxxxxxx
|
|
0000
Xxxxxxx Xxxx Xxxxxx
|
|
XxXxxxx,
XX 00000
|
(g) Non-Disparagement.
Both
parties acknowledge and agree not to defame or publicly criticize the services,
business, integrity, veracity or personal or professional reputation of the
other, in either a professional or personal manner, at any time during or
following the employment period. With respect to the Company, this shall include
any officers, directors, partners, executives, employees, representatives or
agents of the Company.
(h) Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed as original but all of which together shall constitute one and the same
instrument.
IN
WITNESS WHEREOF,
the
Company and Executive have executed this Agreement as of the Effective
Date.
|
RXELITE
HOLDINGS INC.
|
EXECUTIVE
|
|
|
By:
/s/ Xxxx X. Xxxxxxxx
|
/s/ Xxxx
Xxxxxxxxxxx
|
|
|
Name:
Xxxx
X. Xxxxxxxx
|
Xxxx
Xxxxxxxxxxx
|
|
|
Title:
Chief
Operating Officer
|
8
