EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this 28th day of December
1995, by and between Elite Laboratories, Inc., a Delaware
corporation (hereinafter "ELITE") and Xxxx X. Xxxxx of
Ramsey, New Jersey (hereinafter "MEHTA").
STATEMENT OF PURPOSE
MEHTA is currently employed by ELITE under a contract
dated May 23, 1991 presently terminable at will at any
time. ELITE desires to continue to employ MEHTA for a
period of five (5) years commencing January 1, 1996 in
order to be more certain of his continued services and in
order to have access to his research and development
skills and experience relating to pharmaceutical and
similar products. MEHTA desires to accept continued
employment upon the terms herein. Therefore, the parties
have agreed, and do hereby agree, that ELITE will employ
MEHTA and MEHTA will accept such continued employment,
upon the terms and conditions subsequently set out in
this Agreement.
AGREEMENT OF THE PARTIES
1. Term. ELITE hereby agrees to employ MEHTA and MEHTA
agrees to continue being employed by ELITE for a period
of five (5) years ending December 31, 2000, provided that
this Agreement is not sooner terminated pursuant to the
provisions contained herein. The current employment
agreement shall be superseded by this Agreement,
effective January 1, 1996.
2. Duties. MEHTA agrees to devote a sufficient amount of
his business time to diligently and faithfully perform
his duties and responsibilities on behalf of ELITE.
MEHTA, however, shall not be precluded from (a)
delivering lectures, fulfilling speaking engagements, and
writing or publishing any material related to his area of
expertise, (b) participating in professional
organizations and program activities, (c) serving as a
consultant in his area of expertise to government,
industrial, and academic entities where it does not
conflict with the interests of ELITE, (d) serving as a
director or member of a committee of any organization or
corporation or engaging in any other business activities;
provided that such activities do not materially interfere
with the regular performance of his duties hereunder and
except to the extent limited by paragraphs 11 and 12 of
this Agreement.
3. Responsibilities. ELITE agrees that during the term of
this Agreement, MEHTA shall serve as and retain the title
of both President and Chief Executive Officer of ELITE.
His responsibilities shall include the overall
management and direction of ELITE'S affairs, the hiring,
direction and dismissal of all subordinate employees, and
the development of ELITE'S products. In addition, MEHTA
shall be entitled to continue to serve as a director of
ELITE for the entire term of this Agreement.
4. Compensation. As compensation for the services
rendered hereunder, including any services provided as
President, Chief Executive Officer, and Director, MEHTA
shall receive the following:
a. An annual salary in the following amounts:
(1) From January 1, 1996 until December 31, 1996,
$165,000.00, payable in installments of $6,875.00 semi
monthly;
(2) From January 1, 1997 until December 31, 1997,
$180,000.00, payable in installments of $7,500.00 semi
monthly;
(3) From January 1, 1998 until December 31, 1998,
$200,000.00, payable in installments of $8,333.33 semi
monthly;
(4) From January 1, 1999 until December 31, 2000, at a
salary not less than $200,000.00 plus an additional
amount (i.e. a raise) to be determined by the Board of
Directors, in its discretion, for each of the two years.
b. Additional incentive commissions equal to five percent
(5 %) of net profit of each fiscal year as determined in
accordance with generally accepted accounting principles,
payable no later than the 15th day of the fourth month
following the completion of each such fiscal year.
c. Health insurance, purchased and maintained by ELITE,
which shall cover all medical expenses incurred by MEHTA
and his family.
d. Term life insurance on MEHTA'S life, for the benefit
of MEHTA'S surviving spouse or his estate, in an amount
of at least $300,000 for each year the policy is in
effect.
e. Such discretionary bonus as the Board may (with MEHTA
abstaining) from time to time determine to be
appropriate.
f. Options to purchase Class A Common voting stock of
ELITE to be granted on January 1, 1996 and each of the
four succeeding anniversaries thereafter in increments of
100,000 such options each year. The options shall be
exercisable from the date that they are granted until
earlier of (a) one year after MEHTA ceases to be employed
by ELITE or to serve as an officer or director of ELITE;
or (b) the expiration of ten years from the date the
options are granted. The options shall provide for MEHTA
to purchase shares at a price of:
$1.00 for options issued January 1, 1996;
$1,50 for options issued January 1, 1997;
$2.00 for options issued January 1, 1998;
$2.50 for options issued January 1, 1999;
$3.00 for options issued January 1, 2000;
The Options shall be issued upon such additional terms
and conditions as ELITE deems appropriate, provided that
such terms and conditions are not materially different
from terms and conditions of options issued to members of
the Board of Directors of ELITE.
5. Expenses. ELITE shall reimburse MEHTA for all
reasonable expenses incurred by him in connection with
his employment pursuant to this Agreement. ELITE will
reimburse MEHTA for such expenses upon the presentation
of an itemized account together with such receipts,
invoices, or other evidence of the expenditure that would
constitute satisfactory documentation for tax purposes.
Additionally, during the term of this Agreement, ELITE
shall provide MEHTA with the use of an automobile to be
selected by MEHTA, provided that the automobile selected
has a fair market value at the time of acquisition not
exceeding $50,000. MEHTA shall be responsible for
accounting for the use of the automobile in compliance
with all applicable regulations imposed by federal and
state taxing authorities.
6. Incentive and Benefit Plans. MEHTA shall be entitled
to (a) participate in any Management Incentive
Compensation Plans adopted by ELITE'S Board of Directors
(provided any such plan is adopted upon a vote in which
MEHTA abstains or does not cast a deciding vote) on a
basis to be determined by the Board of Directors at such
time; (b) participate in any stock option plan
established by the Board of Directors; and (c)
participate in, and benefit from, any and all pension,
profit-sharing, life, dental, medical, and other group
benefit plans provided to management and/or other
employees of ELITE.
7. Key Man Life Insurance. MEHTA shall do anything that
is reasonably necessary to enable ELITE to maintain key
man insurance upon his life should the Board of Directors
so determine, with all benefits payable to ELITE. Upon
termination of employment for reasons other than MEHTA's
death, MEHTA shall have the right to (a) cancel such
insurance policy or (b) rename the beneficiary provided
he assumes all subsequent payment of premiums.
8. Termination. MEHTA'S employment hereunder shall terminate
upon the occurrence of any of the following:
a. the death of MEHTA;
b. by election of either party upon the inability of
MEHTA to perform his duties on account of disability for
a total of one hundred twenty (120) days or more during
any consecutive twelve (12) month period;
c. by election of ELITE upon "Severe cause", defined as
(i) MEHTA'S commission of an act involving dishonesty,
embezzlement or fraud causing material damage to ELITE,
(ii) MEHTA'S conviction for the commission of a felony
involving an act of dishonesty or (iii) willful
misconduct by MEHTA which is materially and demonstrably
injurious to ELITE (and which MEHTA cannot or does not
cease or correct upon request). For purposes of this
provision, no act or failure to act by MEHTA shall be
considered "willful", unless done, or omitted to be done,
by him in bad faith and with knowledge that it was
contrary to the interests of ELITE;
d. by election of MEHTA upon (i) failure of ELITE to meet
its obligations under paragraph 4, (ii) substantial
interference with the discharge of his responsibilities
under paragraph 3, (iii) purported change by ELITE
without MEHTA's consent, of the duties and
responsibilities of MEHTA from those duties and
responsibilities described in this Agreement, (iv) a
change in ownership of more than fifty percent (50%) of
ELITE's shares in any one twelve (12) month period, or if
any person or entity (or commonly owned or controlled
group of entities) acquires shares which cause such
person or entity's shares to total more than fifty
percent (50 %) of the shares of ELITE; provided that
shares acquired from MEHTA shall not be counted in
calculating the fifty percent (50%) of shares, and
provided that "ownership" shall mean ownership or de
facto control, (v) requirement by ELITE that MEHTA be
based anywhere more than 40 miles from Ramsey, New Jersey
unless mutually agreed, (vi) any purported termination of
MEHTA'S employment which is not effected pursuant to the
terms of this Agreement or which does not constitute
grounds for termination under this Agreement, or (vii)
the occurrence of a vote by a majority of shares voting
upon an issue contrary to the vote of MEHTA, if MEHTA in
his sole discretion deems the vote "likely to result in
an interference in management" and requests at the
meeting that the shareholders reconsider and the
shareholders fail to reverse the vote.
The parties recognize that there may arise disputes and
controversies over alleged conditions or conduct that is
wrongful or that constitutes a breach of this Agreement.
However, the parties agree that such conditions or
conduct (which may give rise to a claim for damages)
shall not constitute grounds for termination of
employment or excuse performance under this Agreement
unless, and to the extent, provided above.
9. Payments upon Termination.
a. In the event of termination due to MEHTA's death, his
surviving spouse (or if she predeceases MEHTA, his
estate), shall be entitled to receive MEHTA's salary,
incentive commissions, benefits and any deferred
compensation accrued through the last day of the third
calendar month following the month in which the
termination of employment occurs and additional salary
payable monthly for the following three years at the rate
of one-half the aggregate annual amounts shown in
paragraph 4a above; provided that ELITE may purchase life
insurance (other than the life insurance provided under
paragraph 4d) payable to a designated beneficiary of
MEHTA to cover all or a portion of the obligation under
this paragraph 9a.
b. In the event of MEHTA's termination in accordance with
paragraphs 8b or c, MEHTA's salary, incentive
commissions, benefits and any deferred compensation
accrued through the last day of the calendar month in
which the termination of employment occurs shall be paid
promptly. No other unaccrued salary or benefits shall be
paid.
c. In the event of termination pursuant to paragraph 8d,
MEHTA shall receive all accrued salary, incentive
commissions, benefits, and any deferred compensation and
all salary and commissions payable under paragraph 4b
through a period ending upon the later of (i) May 22,
2001 or (ii) the third anniversary of such termination,
provided that the salary portion of such amounts shall be
aggregated and discounted to Present Value, using as the
discount factor the prime Rate published on the date of
termination (or nearest date thereafter) in the Wall
Street Journal; and provided that salary for the period
after May 22, 2001 shall be imputed at the same rate as
provided for under paragraph da(4).
10. Procedure for Termination. Termination of employment
by ELITE or MEHTA shall not be effective until notice is
received by the other party. The notice shall not be
effective unless it indicates the specific termination
provision(s) in paragraph 8 of this Agreement relied upon
and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination
of employment under the provisions indicated.
Additionally, no purported termination by ELITE shall be
effective unless and until there has been delivered to
MEHTA a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the
entire membership of the Board of Directors at a meeting
of the Board held for the purpose (after opportunity for
MEHTA, together with his counsel, to be heard before said
Board), finding that in the good faith opinion of the
Board, the facts and circumstances claimed to provide a
basis for termination under paragraph 8b or c of this
Agreement exist and specifying the particulars thereof.
11. Covenant Not To Compete. MEHTA covenants and agrees
that during the term of this Agreement, he will not
directly or indirectly engage in, conduct, solicit, be
involved in, aid or assist, either personally or as an
employee, partner, director or consultant any business
which is competitive with the business of ELITE. MEHTA,
however, shall be free to conduct any business he desires
outside of the United States, so long as such business
does not sell any product sold or licensed by ELITE in
any market in which ELITE competes, and provided that
MEHTA does not use confidential information that he could
not disclose under paragraph 12.
12. Confidentiality. MEHTA acknowledges and recognizes
that the disclosure of confidential information to
ELITE'S competitors will be highly detrimental to ELITE'S
business. Therefore, MEHTA agrees that he will not
disclose, reveal, or disseminate to any person, firm, or
organization, any information concerning ELITE'S business
which is of a confidential nature. This shall not
preclude MEHTA from disclosing confidential information
(i) to the extent that such information is generally
available and known in the industry or is available from
a source other than ELITE, through no action of MEHTA, or
(ii) as required by law, or (iii) information respecting
the business of ELITE after the Expiration Date of this
Agreement; or (iv) if such disclosure is in the Company's
best interest or is made in order to promote and enhance
the Company's business. This provision shall also not
preclude MEHTA from using or disclosing any information
and experience he possesses in his memory and knowledge.
13. Entire Agreement. Each party acknowledges that he has
read this Agreement, understands it, and agrees to be
bound by its terms, and further agrees that this
Agreement supersedes and merges all prior proposals,
understandings and all other agreements, oral or written,
between the parties relating to its subject matter. The
parties further agree that this Agreement may not be
modified or altered except by a written instrument duly
executed by both parties.
14. Nonwaiver. No failure of a party to exercise any
right or waiver of any remedy shall operate or be
construed to constitute a waiver or bar affecting such
party's assertion of the right or obtaining the remedy at
any future time. No failure of a party to insist upon
compliance with any provision of this Agreement at any
time or for any period of time shall impair the party's
right to insist upon compliance with such provision at
any future time.
15. Legality. In the event any provision of this
Agreement shall be held to be invalid, illegal, or
unenforceable, the validity, legality and enforceability
of the remaining provisions shall in no way be affected
or impaired thereby and said Agreement shall remain in
full force and effect as if such cause or provision had
not been inserted therein.
16. Binding Effect. This Agreement shall be binding upon
the parties, their respective successors and permitted
assigns. Neither party may assign this Agreement or any
of its rights or obligations hereunder without the prior
written consent of the other party, and any such attempt
at assignment shall be void.
17. Notices. Any notice to be given under this Agreement
shall be sufficient if it is in writing and is sent by
Certified or Registered Mail, or hand-delivered by a
person who is not affiliated with the sender. Notices to
MEHTA shall be sent to 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxx,
Xxx Xxxxxx 00000 or such other address as he designates
in writing. Notice to ELITE shall be sent to its
Secretary or to any member of its Board of Directors
(other than MEHTA).
IN WITNESS WHEREOF, the parties have here unto executed
this document the day and year first above written.
ELITE LABORATORIES, INC.
[Corporate Seal] by: /s/
Director, acting with authority of the Board of Directors
/s/
Assistant Secretary
/s/ Xxxx X. Xxxxx
