EMPLOYMENT AGREEMENT
AGREEMENT made as of March 13, 1997 by and between GLOBAL
PHARMACEUTICAL CORPORATION, a Delaware corporation (hereinafter referred to as
the "Corporation") and XXXXXXXX XXXXXXXX (hereinafter referred to as
"Executive")
In consideration of the mutual promises set forth herein the parties
hereto agree as follows:
ARTICLE I.
Term of Employment
A. Upon the terms and subject to the conditions set forth herein, the
Corporation will employ Executive on the terms provided in this Agreement from
March 17, 1997 (the "Effective Date") until the date the employment of Executive
shall terminate pursuant to Article IV hereof. (The period during which
Executive is employed hereunder is referred to herein as the "term of
employment.") Executive shall work for the Corporation during the term of
employment in accordance with, and subject to the terms and conditions of, this
Agreement.
ARTICLE II.
Duties
During the term of employment Executive will:
(a) use his best efforts to promote the interests of the
Corporation, and shall devote his full time and efforts to its business and
affairs;
(b) serve as the Vice President, Sales & Marketing, reporting
solely to the Corporation's Chief Executive Officer and Board of Directors; and
(c) perform such duties consistent with, and customarily
provided in connection with, the office described in subsection (b) above as the
Corporation may from time to time assign to him, and Executive shall not engage
any duties or pursuits which may interfere with or be inimical or contrary to
the best interests of the Corporation.
ARTICLE III.
Compensation
A. The Corporation will compensate Executive for the duties
performed by him hereunder by payment of a salary (the "Salary") at the rate of
$110,000 per annum. The Salary shall be payable in equal installments, which
the Corporation shall pay at semi-month1y intervals or, at the Corporation's
election, more frequently, and shall be subject to such payroll deductions as
are required by law. The Salary paid to the Executive will be reviewed annually
by the Board of Directors in conjunction with the recommendation of the
President, and may be increased at the discretion of the Corporation's Board of
Directors or Compensation Committee, which shall take into account the
performance of the Executive, the productivity of the Corporation and other
factors which it deems relevant.
ARTICLE IV.
Term; Termination
A. Unless terminated sooner as hereinafter provided, the initial term
of employment of Executive under this Agreement shall be for a period of three
(3) years from the Effective Date hereof (the "Initial Term"). The term of
employment of Executive shall continue thereafter for an additional one (1) year
period commencing
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on the third anniversary of the Effective Date, unless either party has notified
the other no later than three (3) months prior to that third anniversary that he
or it does not wish to continue the term of employment of Executive under this
Agreement or unless Executive's employment is terminated sooner as hereinafter
provided. Thereafter, Executive's term of employment under this Agreement shall
continue for additional one (1) year periods, unless either party has notified
the other no later than three (3) months prior to the end of any of those
additional one (1) year periods that he or it does not wish to continue
Executive's term of employment under this Agreement or unless Executive's term
of employment is terminated sooner as hereinafter provided.
B. The Corporation may terminate the employment of Executive hereunder
(i) for Cause (as defined below) at any time and without prior notice or (ii)
for any other reason on two (2) weeks notice in writing to Executive.
1. If the Corporation terminates Executive's employment for
Cause or pursuant to Article IV.D. hereof, then the Corporation shall, within
fifteen (15) days after the termination date, pay Executive all accrued and
unpaid Salary and benefits (including accrued but unused vacation time) through
the termination date.
2. If the Corporation terminates Executive's employment other
than for Cause or pursuant to Article IV.D. hereof, then in lieu of any other
payments otherwise recurred hereunder, the Corporation shall, subject to
Executive's compliance with Article V hereof, pay Executive, as liquidated
damages and not as a penalty, (a) within fifteen (15) days after the termination
date, all accrued and unpaid Salary and benefits (including accrued but unused
vacation time) through the termination date and (b) the lesser of (i) an amount
equal to his Salary payments at the time of the
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termination in accordance with the Corporation's then payment policy, and
benefits provided for herein during the six-month period following the
termination date, and (ii) the entire amount of the Salary remaining due and
payable from the date of such termination to the scheduled expiration of this
Agreement; provided however, that if such termination occurs prior to the first
anniversary of the Effective Date, then in addition to the items referred to in
subsections (a) and (b) above, Executive shall be entitled to continue to
receive, in accordance with the Corporation's then payment policy, an amount
equal to his Salary payments and, to the extent Executive is not otherwise
employed, health benefits, until the first anniversary of the Effective Date.
3. The phrase "Cause" means any of the following:
(a) breach by Executive of any provision of Article V
of this Agreement;
(b) breach of any other provision of this Agreement
by Executive (other than any such breach resulting from Executive's incapacity
due to physical or mental illness, which shall be governed by Article IV.D.
hereof), including without limitation the failure to satisfactorily perform his
duties as provided herein, if that breach is not remedied within thirty (30)
days after written notice to Executive describing the acts alleged to constitute
Cause;
(c) any act of fraud, misappropriation, embezzlement
or similar willful and malicious conduct by Executive against the Corporation;
or
(d) indictment of Executive for a felony or any
conviction of, or guilty plea by Executive to, a crime involving moral turpitude
if that crime of moral turpitude tends or would reasonably tend to bring the
Corporation into disrepute.
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C. Executive may terminate his employment hereunder at any time for any
reason upon two (2) weeks written notice to the Corporation.
1. If Executive terminates his employment without "Good
Reason" (as defined below), then the Corporation shall, within fifteen (15)
days after the termination date, pay Executive all accrued and unpaid Salary and
benefits (including accrued but unused vacation time) through the termination
date.
2. If Executive terminates his employment with "Good Reason",
then the Corporation shall, subject to Executive's compliance with Article V
hereof, (i) pay Executive, with fifteen (15) days after the termination date,
all accrued and unpaid Salary and benefits (including accrued but unused
vacation time) through the termination date and (ii) continue to pay Executive
an amount equal to Executive's Salary and benefits, accordance with the
Corporation's then payment policy during the six-month period following the
termination date.
3. The phrase "Good Reason" means a material breach of this
Agreement or the intentional disregard or violation of the Food, Drug and
Cosmetic Act as amended in any material respect (other than through the actions
of the Executive) by the Corporation, which has not been cured within thirty
(30) days after written notice thereof from the Executive.
D. If Executive dies or becomes incapacitated, his employment hereunder
shall terminate on the date of his death or incapacitation, as the case may be.
For purposes hereof, the term "incapacitated" shall mean such mental or physical
illness as shall render Executive incapable of substantially performing his
duties hereunder on a regular basis at the Corporation's offices for a period of
three (3)
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consecutive months or for a period of six (6) months in any twelve-month
period, all as determined by a physician or psychiatrist, as the case may be,
selected by the Corporation.
ARTICLE V.
Covenants
A. While Executive is employed hereunder by the Corporation and during
any time thereafter that the Corporation shall continue to pay to Executive his
Salary and benefits, he shall not, without the prior written consent of the
Corporation, engage, directly or indirectly, in any other trade, business or
employment, or have any interest, direct or indirect, in any other business,
firm or corporation; provided, however, that he may continue to own or may
hereafter acquire (i) any securities of any class of any publicly-owned company
or (ii) any passive investment in a privately held entity which is not engaged
in the pharmaceutical business.
B. Executive shall treat as confidential and keep secret the affairs of
the Corporation (including specifically the terms and conditions of this
Agreement) and shall not at any time during the term of employment or
thereafter, without the prior written consent of the Corporation, or unless
required by law, divulge, furnish or make known or accessible to, or use for the
benefit of, anyone other than the Corporation and its subsidiaries and
affiliates any information of a confidential or proprietary nature related in
any way to the business of the Corporation or its subsidiaries or affiliates or
their clients. Executive shall be entitled to disclose the terms of this
Agreement to potential employers of Executive and to lending institutions from
whom Executive seeks to borrow.
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C. All records, papers and documents kept or made by Executive relating
to the business of the Corporation or its subsidiaries or affiliates or their
clients shall be and remain the property of the Corporation.
D. All articles invented by Executive, processes discovered by him,
trademarks, designs, advertising copy and art work, display and promotion
materials and, in general, everything of value conceived or created by him
pertaining to the business of the Corporation or any of its subsidiaries or
affiliates during the term of employment, and any and all rights of every nature
whatever relating thereto, shall immediately become the property of the
Corporation, and Executive shall assign, transfer and deliver all patents,
copyrights, royalties, designs and copy, and any and all interests and rights
whatever thereto and thereunder to the Corporation, without further
compensation, upon notice to him from the Corporation.
E. Following the termination of Executive's employment hereunder
(including, the expiration of this Agreement) for any reason, Executive shall
not, for a period of two (2) years from such termination solicit any employee of
the Corporation to leave such employ or to enter the employ of Executive or of
any corporation or enterprise with which Executive is then associated or
solicit any customer of the Corporation to terminate its relationship with the
Corporation.
F. During the one-year period following Executive's termination of
employment by Executive without Good Reason or by the Corporation for Cause (the
"Restricted Period"), Executive shall not render any services, directly or
indirectly, as an employee, officer, consultant or in any other capacity, to any
individual, firm, corporation or partnership engaged in any business or activity
which is competitive
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with any activity or business engaged in by the Corporation during his
employment by the Corporation (such activities being herein called the
"Corporation's Business"). During the Restricted Period, Executive shall not,
without the prior written consent of the Corporation, hold an equity interest in
any firm, partnership or corporation which competes with the Corporation's
Business, except that beneficial ownership by Executive (including ownership by
any one or more members of his immediate family and any entity under his direct
or indirect control) of less than five percent (5%) of the outstanding shares of
capital stock of any corporation which may be engaged in any of the same lines
of business as the Corporation's Business, if such stock is listed on a national
securities exchange or publicly traded in an over-the-counter market, shall not
constitute a breach of the covenants contained in this Article V.
G. The provisions contained in this Article V as to the time periods,
scope of activities, persons or entities affected, and territories restricted
shall be deemed divisible so that, if any provision contained in this Article V
is determined to be invalid or unenforceable, such provisions shall be deemed
modified so as to be valid and enforceable to the full extent lawfully
permitted.
H. During the term of this Agreement, the Corporation shall maintain a
Directors' and Officers' insurance policy providing such coverage for the
Directors and Officers of the Corporation as the Corporation's Board of
Directors shall reasonably determine.
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ARTICLE VI.
Bonuses
A. The Corporation shall pay Executive a $10,000 sign-on bonus,
one-half of which shall be paid thirty (30) days from the Effective Date and
one-half of which shall be paid sixty (60) days from the Effective Date;
provided, however, that in the event Executive's employment hereunder terminates
at any time within the first year of his term of employment (other than by the
Executive for Good Reason or by the Corporation without Cause), Executive shall
repay to the Corporation (pro rated based on a twelve month term and calculated
on a monthly basis) the dollar amount of the sign-on bonus that had been paid
that represents the amount of time during that first year that Executive will
not be employed by the Corporation.
B. During 1997, the Corporation shall pay Executive a bonus of $5,000
per quarter in any quarter in which Executive reaches the projected sales
numbers that have been established by the Corporation. In the event Executive
exceeds such projected sales numbers in any quarter by a factor of 1.25, the
bonus for such quarter shall be $6,250,
C. During 1998, the Corporation shall pay Executive a bonus of $10,000
per quarter in any quarter in which Executive reaches the projected sales and
gross margin numbers that have been established by the Corporation.
D. The Board of Directors of the Corporation may consider, and nothing
herein shall preclude the Corporation's Board of Directors from, awarding
Executive any other bonuses based on performance as they may, at any time or
from time to time, determine.
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ARTICLE VII
Stock Option Award
A. The Corporation will grant to Executive an option to purchase 36,000
shares of the Corporation's common stock (the "Award") at a price per share
equal to the fair marker value of the Corporation's common stock on the date the
Compensation Committee of the Board of Directors grants this Award, which so
long as Executive remains in the continuous employ of the Corporation on a
given vesting date, shall vest in Executive in accordance with the following
schedule: (i) one-third of the Award shall vest on the date one (1) year from
the Effective Date, and (ii) the remaining two-thirds of the Award shall vest in
increments of one-twenty fourth per month for the twenty four (24) months then
following.
B. The option shall be granted pursuant to, and shall be subject to the
terms of, the stock option plan adopted by the Corporation.
ARTICLE VIII.
Other Employment Benefits
A. The Corporation shall provide Executive with medical and
hospitalization insurance coverage and retirement plans which in each case are
no less favorable to Executive than those plans provided to the Corporation's
senior executive offices generally (it being understood that to the extent the
plans provide coverage for dependents of employees, Executive shall be entitled
to such coverage for his dependents under the same terms as senior executives
generally). The Corporation shall also provide Executive with life insurance
coverage having a death benefit payable to a beneficiary selected by Executive
equal to $250,000 and disability insurance which
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provides salary replacement benefits, not to exceed $250,000 in the aggregate,
in the event Executive becomes incapacitated.
B. During the term of employment, Executive shall be entitled to three
weeks of paid vacation each year and to participate in or receive benefits under
any other employee benefit plan, arrangement or perquisite made available by the
Corporation now or in the future to its senior executive officers generally,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans, arrangements and perquisites; provided, however,
that Executive shall not be entitled to carry over unused vacation time in any
given year to subsequent years.
C. The Corporation shall reimburse Executive for all reasonable
expenses incurred by Executive for promoting the business of the Corporation,
including expenses for travel and similar items (such as automobile mileage at
the Corporation's standard rates), from time to time upon presentation by
Executive of an itemized account of such expenditures, all in accordance with
the Corporation's policies for incurrence and reimbursement. To the extent
permitted by law, the Corporation will not withhold Philadelphia city wage taxes
for the days Executive travels out of town on business.
D. The Corporation will provide Executive with a cellular telephone and
a lap-top computer for use in performing his duties hereunder during the term of
employment.
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ARTICLE IX.
Key Man Insurance
A. The Corporation may, in its sole and absolute discretion, at any
time after the date hereof, apply for and procure as owner for its own benefit
life insurance on Executive, in such amount and in such form or forms as the
Corporation may determine. Executive shall, at the Corporation's request,
subject to such medical examinations, supply such information and execute such
documents as may be required by the insurance company or companies to whom the
Corporation has applied for such insurance.
ARTICLE X.
Assignment
A. This Agreement shall be binding upon and shall inure to the benefit
of the successor and assigns of the Corporation. Neither this Agreement nor any
rights hereunder shall be assignable by Executive and any such purported
assignment by him shall be void.
ARTICLE XI.
Entire Agreement
A. This Agreement constitutes the entire understanding between the
Corporation and Executive concerning his employment by the Corporation or any
of its subsidiaries and supersedes any and all previous agreements between
Executive and the Corporation or any of its subsidiaries concerning such
employment. This Agreement may not be changed orally.
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ARTICLE XII.
Applicable Law
A. The Agreement shall be governed by and construed in accordance with
the laws of the State of Pennsylvania.
GLOBAL PHARMACEUTICAL CORPORATION
By Xxx X. Xxxxxxxxxx
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Xxx X. Xxxxxxxxxx, President,
and CEO
/s/ Xxxxxxxx Xxxxxxxx
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Xxxxxxxx Xxxxxxxx
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