EMPLOYMENT AGREEMENT
AGREEMENT made as of September 30, 1996 by and between GLOBAL
PHARMACEUTICAL CORPORATION, a Delaware corporation (hereinafter referred to as
the "Corporation"), and XXXX X. 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
October 14, 1996 (the 'Effective Date"), until the date the employment of
Executive shall terminate pursuant to Article IV or Article V. (The period
during which Executive is employed hereunder is referred to herein as the "term
of employment.") Executive will 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
A. During the term of employment Executive will:
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(a) use his best efforts to promote the interests of the
Corporation and devote his full time and efforts to its business and affairs;
(b) serve as the Vice President-Quality and Regulatory Affairs
reporting solely to the Corporation's Chief Executive Officer and Board of
Directors, and
(c) perform such duties consistent with the office of Vice
President-Quality and Regulatory Affairs as the Corporation may from time to
time assign to him.
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 $130,000
per annum. The salary shall be payable in equal installments, which the
Corporation shall pay at semi-monthly 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 Company's Board of
Directors or Compensation Committee, which shall take into account the
performance of the Executive, the productivity of the Company and other factors
which it deems relevant.
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ARTICLE IV.
Term; Termination
A. Unless terminated sooner as hereinafter provided, the
initial term of employment at 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 year period commencing 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 period, 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 at any time and without prior
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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 (as defined below) or pursuant to Section 4I.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, then in lieu of any other payments otherwise required hereunder,
the Corporation shall, subject to the Executive's compliance with Article V
hereof, pay Executive, as liquidated damages and not as a penalty, (a) within 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) continued Salary and benefits during the six-month period following the
termination date.
3. The phrase "Cause" means any of the following:
(a) breach by Executive of Article V of this Agreement;
(b) material breach of any other provision of this Agreement by
Executive (other than any such breach resulting
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from Executive's incapacity due to physical or mental illness), if that breach
is not remedied or the remedy commences and is diligently continued until
actually remedied within 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.
C. Executive may terminate his employment hereunder at any time for any
reason on two (2) weeks written notice in writing 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 Section V
hereof, pay Executive (i) within fifteen (15) days after the termination date,
all accrued
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and unpaid Salary and benefits (including accrued but unused vacation time)
through the termination date and (ii) continued Salary and benefits 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 thru 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 Company's offices for a period of
three (3) 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 Company.
ARTICLE V.
Covenants
A. While Executive is employed hereunder by the Corporation, he shall
not, without the prior written consent of
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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 any securities of any class of any publicly-owned company as
well as passive investments in privately held entities which are 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 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.
C. All records, papers and documents kept or made by Executive relating
to the business of the Corporation or its
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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
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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 the generic pharmaceutical business, or any other
activities competitive with any activities actively engaged in by the Executive
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 (5%) percent 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
over-the-counter market, shall not constitute a breach of the covenants
contained in this Article V. The provisions contained in this Article V as to
the time periods, scope of activities, persons or entities affected, and
territories 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
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lawfully permitted.
G. During the term of this agreement, the Corporation shall
maintain a D & O policy providing such coverage for the Directors and Officers
of the Corporation as the Corporation's Board of Directors shall reasonably
determine.
ARTICLE VI.
Bonuses
A. The Board of Directors of the Corporation will consider, and nothing
herein shall preclude the Corporation's Board of Directors from, awarding
Executive bonuses based on performance as they may, at any time or from time to
time determine.
ARTICLE VII.
Stock Award
A. The Corporation will grant to Executive an option to purchase 36,000
shares of the Corporation's common stock at a price per share equal to the fair
market value of the Corporation's common stock (the "Award") 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 October 14, 1997, and (ii) the
remaining two-thirds of the Award shall vest in increments of
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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 officers 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 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
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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, arrangement and perquisites.
C. The Corporation shall reimburse Executive for all reasonable
expenses for promoting the business of the Corporation, including expenses for
travel and similar items, from time to time upon presentation by Executive of
any itemized account of such expenditures in accordance with the Corporation's
policies.
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
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inure to the benefit of the successors 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.
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: /s/ Xxx X. Xxxxxxxxxx
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Xxx X. Xxxxxxxxxx, President & CEO
/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
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