EXHIBIT 10.20.2
EMPLOYMENT AGREEMENT
This Employment Agreement made as of the 24th day of August 1998
BY AND BETWEEN:
XXXXXXX PHARMACEUTICAL CORPORATION, a New Jersey Corporation with offices
located at Meridian Center II, 4 Industrial Way West, Eatontown, New Jersey
(hereinafter referred to as "Employer")
AND
XXXXX X. XXXXXXX, residing at 00 Xxxxxxx Xxxx, Xxxx Xxxx, Xxx Xxxxxx 00000
(hereinafter referred to as "Employee"):
W I T N E S S E T H:
WHEREAS, Employee has been employed as Vice President and Treasurer, by
Employer and has made and is expected to continue to make material contributions
to the growth and development of Employer; and
WHEREAS, Employer deems it to be in Employer's best interest to assure
Employee continuous employment by Employer; and
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WHEREAS, it is in the best interest of the Employer that Employee remain
focused on the business of the Company in the event of a change of control of
Employer; and
WHEREAS, Employer deems it to be in Employer's best interests to encourage
Employee to remain employed by Employer during a period of uncertainty
concerning ownership of Employer; and
WHEREAS, Employee is willing to continue, and is desirous of continuing, in
the employment of Employer;
NOW THEREFORE, in consideration of the mutual agreements contained herein and
intending to be legally bound, the parties hereto hereby agree as follows:
ARTICLE 1. CAPACITY AND DUTIES
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1.01 Employment, Acceptance of Employment.
-------------------------------------
Employer hereby employs Employee and Employee hereby accepts employment by
Employer subject to all the terms and conditions hereafter set forth.
1.02 Capacity.
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Employee shall serve as Vice President and Treasurer.
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1.03 Duties.
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During the term of this Agreement, Employee shall devote his full attention
and his best efforts to the performance of the customary duties of Vice
President and Treasurer.
ARTICLE 2. TERM OF EMPLOYMENT; TERMINATION
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2.01 Term.
-----
Unless earlier terminated as hereafter provided, the term of this Agreement
shall commence on the date first above written (the "Effective Date") and shall
continue through August 31, 2001, and thereafter may be automatically renewed
for successive one (1) year periods on each anniversary of the Effective Date
only upon the mutual Agreement of Employer and Employee.
2.02 Termination After Change of Control.
------------------------------------
In the event of a Change in Control (as hereinafter defined) of Employer,
Employer shall have the right to terminate this Agreement by giving written
notice to Employee specifying the intention to terminate this Agreement and the
effective date for such termination. For purposes of this Article 2, "Change of
Control" shall mean either (i) a merger or consolidation of Employer into
another corporation or a merger of another corporation with or into the
Employer; or (ii) a sale by Employer of substantially all of its assets, which,
in the case of either (i) or (ii) above, results in the shareholders of Employer
(as they existed immediately prior to the effectiveness of the merger,
consolidation or sale) owning less than seventy percent (70%) of the surviving
entity or
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new corporation or entity that has acquired substantially all of the Employer's
assets after the effectiveness thereof; or (iii) a reorganization of Employer
which results in either Employer becoming a subsidiary of another corporation or
Employer not being the surviving entity (other than a merger or consolidation
(a) with a wholly-owned subsidiary of the Employer; (b) to effect a change in
domicile; or (c) of the Employer into another corporation that does not result
in the shareholders of Employer, as they existed immediately prior to the
effectiveness of such merger or consolidation, owning less than seventy percent
(70%) of the surviving corporation); or (iv) the acquisition by any person,
entity or group of persons or entities acting in concert, of thirty percent
(30%) or more of Employer's then issued and outstanding voting securities,
whether acquired in one transaction or a series of transactions; or (v) the
individuals who (x) as of the effective date of this Agreement constitute the
Board of Directors (the "Original Directors"), (y) thereafter are elected to the
Board of Directors and whose election or nomination for election to the Board of
Directors was approved by a vote of at least 2/3 of the Original Directors then
still in office (such Directors being called "Additional Original Directors"),
or (z) are elected to the Board of Directors and whose election or nomination
for election to the Board of Directors was approved by a vote of at least 2/3 of
the Original Directors and Additional Original Directors then still in office,
cease for any reason to constitute a majority of the members of the Board of
Directors.
2.03 Compensation on Termination After Change of Control.
----------------------------------------------------
In the event of any termination of this Agreement by Employer pursuant to
Section 2.02 hereof, Employee shall be entitled to receive, and Employer shall
be
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obligated to pay, the compensation set forth in Section 3.01 (a) at the annual
rate which Employee is receiving on the date of termination of this Agreement
for a period of three (3) years following the termination date (the Severance
Compensation).
ARTICLE 3. COMPENSATION
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3.01(a) Compensation.
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During the term of this Agreement or any extension thereof, and after
termination of this Agreement as provided in Section 2.02, as compensation for
services to the Employer pursuant to this Agreement, the Employer shall pay to
Employee a minimum base salary of One Hundred Ninety Three Thousand Dollars
($193,000) per year and the Board of Directors of Employer may, in its sole
discretion from time to time, increase said base salary to be paid to Employee
as provided in this Article 3 or provide additional compensation to Employee,
including but not limited to incentive compensation based upon the earnings or
performance of Employer or otherwise, in order to recognize and fairly
compensate Employee for the value of his services to Employer.
In addition, Employee shall be entitled to receive all vacation and other
fringe benefits provided by Employer to its employees and officers, including
insurance benefits, which may be established by the Board of Directors of
Employer from time to time. In addition, Employer may provide such other
additional or incentive compensation, benefits or perquisites as its Board of
Directors may from time to time authorize.
3.01(b) Incentive Compensation.
-----------------------
Employer may adopt and maintain a "Management Incentive Compensation
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Plan." Should such a plan be adopted by Employer, at all times during the term
of this Agreement, Employee shall be designated by Employer as a participant in
such plan. In the event that, at any time during the term of this Agreement,
Employer shall rescind, discontinue, amend or revise such plan, then Employer
shall include Employee in any revised or amended Incentive Plan or substituted
plan and Employee shall be entitled to receive incentive compensation comparable
to that offered to other members of Employer's senior level management
thereunder.
3.02 Stock Option Plans.
-------------------
If during the term of this Agreement, Employee's employment is terminated and
such election by Employee is permitted under any stock option plan or pursuant
to any determination made prior to subsequent to the execution of this Agreement
by the Employer's Board of Directors or the committee thereof administering any
such plan applicable to Employee, Employee, or his personal representatives or
heirs, shall have the right during a period of one (1) year following the
Termination Date to exercise all options previously granted to Employee under
all Stock Option Plans adopted and maintained by Employer as to all or any part
of the shares covered thereby, including shares as to which such options would
not otherwise then be exercisable.
ARTICLE 4 CERTAIN COVENANTS
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4.01 Non-Competition.
----------------
During the term of employment hereunder and, in the event of termination of
this Agreement, for two (2) years thereafter, Employee shall not accept
employment with any
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employer in direct competition with, nor engage in any activities in direct
competition with, the business of Employer. This Section 4.01 shall not be
applicable to any period after a termination of employment if such termination
was effected by Employer. In addition, this Section 4.01 shall not prevent
Employee from acquiring, as a passive investor, up to 5% of the equity of a
competing enterprise.
ARTICLE 5. MISCELLANEOUS
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5.01 Assignment.
-----------
This Agreement shall not be assignable by Employee and shall be assignable and
required to be assigned, by Employer, only to a person, firm or corporation
which may become a successor in interest (by purchase of all or substantially
all of the assets of Employer, merger or otherwise) to Employer ("Successor")
and this Agreement shall be fully binding upon, and the assumed obligation of,
such Successor.
5.02 Employee's Attorney Fees.
-------------------------
In the event that Employee is required to institute legal proceedings against
Employer to enforce this Agreement or any term or provision thereof ("Employee's
Suit") and the Employee's suit results in a judgment in whole or in part in
favor of Employee against Employer, then Employer hereby agrees that Employer
shall pay, either directly or by reimbursement to Employee, all legal fees and
costs incurred by Employee in the prosecution of Employee's suit.
5.03 Entire Agreement.
-----------------
This writing represents the entire understanding of the parties and supersedes
any
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and all other understandings between the parties regarding the subject matter
hereof whether oral or written. This Agreement may not be altered nor amended in
any way except by an agreement in writing signed by both Employer and Employee.
5.04 Binding Effect.
---------------
Subject to Section 5.01, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs,
executors and administrators. Any paragraph, sentence, phrase or other
provision of this Agreement which is or becomes in conflict with any applicable
statute, rule or other law shall be deemed, if possible, to be modified or
altered to conform thereto or, if not possible, to be omitted herefrom. If any
provision of this Agreement shall be or become illegal or unenforceable in whole
or in part for any reason whatsoever, the remaining provisions shall
nevertheless be deemed valid, binding and subsisting.
5.05 Governing Law.
--------------
This Agreement has been negotiated and executed within the State of New
Jersey, and the validity, interpretation and enforcement of this Agreement shall
be governed by the laws of the State of New Jersey.
5.06 Headings.
---------
The headings of Sections in this Agreement are for convenience only and form
no part of this Agreement and shall not affect its interpretation.
5.07 Notice.
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Notices authorized or required to be sent pursuant to this Agreement shall be
in writing and sent postage prepaid, by United States Certified or Registered
Mail, return
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receipt requested, directed to the other party at its address as may be
designated by notice from time to time. Notice shall be deemed given on the date
the envelope in which such notice is enclosed, as provided above, is deposited
for mailing in a United Sates mailbox or post office.
5.08 Payment of Taxes.
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(a) Special Reimbursement. In the event that Employee becomes entitled to
the Severance Compensation, if any payment or benefit paid or payable, or
received or to be received, by or on behalf of the Employee in connection with a
Change in Control whether any such payments or benefits are pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any of its subsidiaries, any Person, or otherwise (the "Total
Payments"), will or would be subject to the excise tax imposed under section
4999 of the Code (the "Excise Tax"), the Company shall pay to the Employee an
additional amount (the "Gross-Up Payment") which amount shall be equal to the
sum of (a) the amount of such Excise Tax imposed (determined without regard to
the Gross-Up Payment), and (b) the product of (i) such Excise Tax (determined
without regard to the Gross-Up Payment), and (ii) the rate of Excise Tax imposed
on "golden parachute" payments under Section 4999 of the code.
(b) For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) the Total
Payments shall be treated as "parachute payments" within the meaning of section
280G(b) (2) of the Code, and all "excess parachute payments" within the meaning
of section 280(b) (1) of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel
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(delivered to Employee) selected by the Company and reasonably acceptable to
Employee, such Total Payments (in whole or in part) (a) do not constitute
parachute payments, including (without limitation) by reason of section 280G (b)
(4) (A) of the Code, (b) such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered, within the
meaning of section 280G (b) (4) (B) of the Code, or (c) are otherwise not
subject to the Excise Tax, and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G (d) (3) and (4) of
the Code.
(c) In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of
Employee's employment, Employee shall repay to the Company, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction plus interest on the amount of
such repayment at the rate provided in section 1274(b) (2) (B) of the Code. In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of the Employee's employment
(including by reason of any payment, the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus any interest,
penalties or additions payable by Employee with respect to such excess) at the
time that the amount of such excess is finally determined. The Employee and the
Company shall each reasonably cooperate with the other in connection with any
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administrative or judicial proceedings concerning the existence or amount of any
such subsequent liability for Excise Tax with respect to the Severance
Compensation.
5.09 Waiver of Breach.
-----------------
The waiver of either party of a breach of any provision of this Agreement
shall not operate nor be construed as a waiver of any subsequent breach thereof
or of any other provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
XXXXXXX PHARMACEUTICAL CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxxxxxxx
President and CEO
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Employee
