Exhibit 10.4
EMPLOYMENT AGREEMENT, dated as of October__ , 1998, by and between
HI-TECH PHARMACAL CO., INC., a Delaware corporation with offices at 000 Xxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 (the "Corporation"), and XXXXXX XXXXX, an
individual residing at 0 Xxxxxxxxxxx Xxxxx, Xxxxx Xxxx, XX 00000 (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Corporation desires to secure the services of the
Executive upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive desires to render services to the Corporation
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties mutually agree as follows:
Section 1. Employment. The Corporation hereby employs the
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Executive and the Executive hereby accepts such employment, as an executive of
the Corporation, subject to the terms and conditions set forth in this
Agreement.
Section 2. Duties. Executive shall serve as the Chief Opearating
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Officer of the Corporation and shall properly perform such duties as may be
assigned to him from time to time by the President, Chief Executive Officer and
Board of Directors of the Corporation. If requested by the Corporation, the
Executive shall serve on any committee of the Board of Directors without
additional compensation. Commencing on May 1, 1999, the Executive may serve as
the President of the Corporation, subject to the approval of the Corporation's
Board of Directors. During the term of this Agreement, the Executive shall
devote all of his business time to the
performance of his duties hereunder unless otherwise authorized by the Board of
Directors.
Section 3. Term of Employment. The term of the Executive's employment
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shall commence on October 21, 1998 and shall continue for a period of thirty
(30) months until April 30, 2000, or until earlier terminated pursuant to
Section 5 hereof (the "Term").
Section 4. Compensation of Executive.
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4.1 Compensation. The Corporation shall pay to the Executive as
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annual compensation for his services hereunder a base salary ("Base Salary") in
the amount equal to Two Hundred Thousand ($200,000) dollars per annum. The Base
Salary shall be payable bi-weekly less such deductions as shall be required to
be withheld by applicable law and regulations.
4.2 Bonus. (a) In addition to his annual Base Salary, the
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Executive shall receive a bonus ("Bonus") with respect to each year of his
employment hereunder equal to (i) one (1%) percent of the amount by which the
Corporation's Net Sales for a fiscal year during the term of this Agreement
exceeds the Corporation's Net Sales for its preceding fiscal year; and (ii)
three (3%) percent of the amount by which the Corporation's Net After Tax
Profits for a fiscal year during the term of this Agreement exceeds the
Corporation's Net After Tax Profits for its preceding fiscal year. During the
fiscal year of the Corporation ending April 30, 1999, Net Sales and Net After
Tax Profits for such period shall be pro-rated based on the Net Sales and Net
After Tax Profits for the period of Executive's employment during such fiscal
year as compared to the respective period for the preceding fiscal year. For
example, if Executive is employed for six (6) months during the fiscal year
ending April 30, 1999,
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for purposes of determining the Bonus the Net Sales and Net After Tax Profit for
such fiscal year and for the preceding fiscal year shall be multiplied by 50%
(12 divided by 6).
(b) For purposes of this Agreement, the calculation of Net Sales and
Net After Tax Profits shall be determined by the Chief Financial Officer of the
Corporation. In the event of any dispute Executive shall give written notice to
the Corporation within twenty (20) days after Executive's receipt of the
Corporation's calculation of Net Sales and Net After Tax Profits. The
Corporation's independent certified public accountants ("Accountants") shall
then be required to make a determination of such Net Sales and Net After Tax
Profits, and such determination shall be final, conclusive and binding upon the
parties to this Agreement.
(c) The Bonus shall be payable to the Executive within thirty (30)
days after delivery to the Corporation of its certified financial statements by
its Accountants.
4.3 Expenses. The Corporation shall pay or reimburse the Executive
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for all reasonable and necessary out-of-pocket business, travel or other upon
proper documentation thereof, actually incurred or paid by the Executive during
the term of this Agreement in connection with the rendition of Executive's
services contemplated hereunder. In addition, the Corporation shall pay the
Executive an amount of up to Five Thousand ($5,000) Dollars for the actual
expenses incurred by him in relocating his residence in close proximity to the
Xxxxxx Xxxxxxxxxx Bridge, including real estate brokerage fees.
4.4 Benefits. During the term shall be entitled to participate in such
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pension, profit sharing, group insurance, of this Agreement, the
hospitalization, and group health benefit plans and all other benefits and plans
as the
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Corporation provides to its senior executives. During the term of his
employment hereunder, the Executive shall be entitled to receive the amount of
$600 per month for automobile payments and associated maintenance and insurance
payments.
4.5 Performance Shares. During the term of this Agreement, the
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Executive shall be eligible to receive a maximum aggregate amount of twenty-five
(25,000) thousand shares of the Corporation's common stock ("Performance
Shares"). Executive shall receive five thousand (5,000) Performance Shares on
the first occasion that the Corporation's common stock has an average closing
price during any thirty (30) day trading period as follows:
Number of
30 Day Average Performance
Closing Price Shares Granted
$ 7.00 5,000
8.00 5,000
9.00 5,000
10.00 5,000
11.00 5,000
4.6 Discretionary Payments. Nothing herein shall preclude the
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Corporation from paying the Executive such bonus or bonuses or other
compensation, as the Board of Directors, in its discretion, may authorize from
time to time.
Section 5. Termination.
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5.1 Base Salary and Bonus Payments. This Agreement shall
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terminate upon the death, Total Disability, as hereinafter defined, or
termination of employment of the Executive. The Corporation shall pay to the
Executive, any person designated in writing or if no such person is designated,
to his estate, as the case may be,
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the aggregate amount of the Base Salary up to the end of the month in which
death, Total Disability, or termination of employment occurs. In addition to
Base Salary, and in the event Executive is not terminated For Cause, as
hereinafter defined, in the event the Executive shall be entitled to a Bonus,
then the Executive, his designee or his estate shall be paid within thirty (30)
days after the Corporation's accountants have determined the Net Sales and Net
After Tax Profits of the Corporation, an amount equal to the product of (i) the
Bonus, for such fiscal year in which death, Total Disability or termination of
employment occurred and (ii) a fraction, the numerator of which is the number of
months during the year of such death, Total Disability or termination of
employment during which the Executive was employed by the Corporation through
and including the month of his death, Total Disability or termination of
employment, and the denominator of which is twelve (12).
5.2 Termination For Cause. In terminated For Cause, as
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hereinafter defined, Total Disability or because Executive the event Executive
is wrongfully leaves his employment hereunder, then, upon such occurrence, this
Agreement shall be deemed terminated and the Corporation shall be released from
all obligations to Executive with respect to this Agreement, except as provided
in Section 5.1 hereof.
5.3 Termination Without Cause. In the event of a termination
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without Cause, the Executive shall be entitled to continue to participate in the
hospitalization, group health benefit and disability plans of the Corporation on
the same terms and conditions as immediately prior to his termination for a
period equal to the earlier of (i) the date the Executive commences employment
elsewhere or (ii) the date the Term would have expired pursuant to Section 3 of
this Agreement had
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the Executive not been terminated. Executive shall receive, at the Corporation's
option, his Base Salary for the balance of the Term either in a lump sum payment
discounted to present value, the percentage of discount to be determined by the
Accountants, or his Base Salary pursuant to Section 4.1 of this Agreement.
5.4 Voluntary Termination. In the event that the Executive
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voluntarily terminates his employment hereunder, upon the giving of thirty (30)
days prior written notice thereof to the Corporation, then, the Executive's
right to all compensation hereunder shall terminate as of the date of such
termination, except that the Executive shall be entitled to receive any Base
Salary and Bonus earned and accrued.
5.5 Definitions. As used herein, the term "For Cause" shall
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mean (i) the Executive's conviction in a court of law of any crime or offense
which constitutes a felony in the jurisdiction involved, or (ii) willful
misconduct, or (iii) material breach of his responsibilities under this
Agreement.
Section 6. Disability.
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6.1 Total Disability. In the event the Executive is mentally or
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physically incapable or unable to perform his regular and customary duties of
employment with the Corporation for a period of ninety (90) days the Executive
shall be deemed to be suffering from a "Total Disability".
6.2 Payment During Disability. In the event the Executive is
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unable to perform his duties hereunder by reason of a disability, which
disability does not constitute Total Disability, the Corporation shall continue
to pay the Executive his Base Salary during the continuance of such disability.
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Section 7. Vacations. The Executive shall be entitled to a
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vacation of three (3) weeks per year, during which period his Base Salary shall
be paid in full. The Executive shall take his vacation at such time or times as
the Executive and the Corporation shall determine is mutually convenient.
Section 8. Disclosure of Confidential Information.
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8.1 Disclosure. The Executive recognizes that he will have
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access to secret and confidential information regarding the Corporation, its
products, know-how, customers and plans. The Executive acknowledges that such
information is of great value to the Corporation, is the sole property of the
Corporation and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Corporation herein, the
Executive will not, at any time, during or after his employment hereunder,
reveal, divulge or make known to any person, any information acquired by the
Executive during the course of his employment, which is treated as confidential
by the Corporation and not otherwise in the public domain except for information
which was known to Executive on a non-confidential basis prior to its disclosure
by the Corporation as shown by documentary evidence prior to the date of this
Agreement.
8.2 Non-Competition. The Executive covenants and agrees that
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for a period commencing on the date hereof and expiring eighteen (18) months
from and after the date of termination of this Agreement (the "Restricted
Period"), the Executive will not, directly or indirectly, in the Territory (as
hereinafter defined), own, manage, operate, control or engage or participate in
the ownership, management, operation or control of, or be connected as a
stockholder, agent, partner, joint venturer, employee, officer, director,
consultant
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or otherwise with, any business or organization any part of which engages in the
manufacture, marketing or sale of products competitive with the products of the
Corporation existing or in the development or production stage during the term
of this Agreement. During the Restricted Period, the Executive will not directly
solicit, or in any manner attempt to induce, any employee of the Corporation to
leave the employ of the Corporation or to work for the Executive. During the
Restricted Period, the Executive, directly or indirectly, will not solicit,
raid, entice, induce or contact, or attempt to solicit, raid, entice, induce or
contact, any person that is a customer, supplier or distributor of the
Corporation to terminate such person's contractual or business relationship with
the Corporation or directly or indirectly solicit or attempt to solicit the
business of, enter into any written or oral agreement with, or otherwise deal
with any customers of the Corporation, except in regard to businesses outside
the scope of the business of the Corporation. The parties hereto agree that if a
court of competent jurisdiction determines that this covenant is unenforceable
in any respect, the remainder of this covenant shall not thereby be affected and
shall be given full effect, without regard to any invalid portions, and this
covenant may be modified by such court in any necessary respect in order to
render it enforceable in its least reduced form. As used herein, the term
"Territory" shall mean North America.
8.3 Survival. The provisions of this Section 8 shall survive
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the Executive's employment hereunder.
Section 9. Miscellaneous.
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9.1 Injunctive Relief. The Executive agrees that any
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breach or threatened breach by him of Section 8 of this Agreement shall entitle
the Corporation, in addition to all other legal remedies available to it, to
apply to any court of competent
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jurisdiction to enjoin such breach or threatened breach. The parties understand
and intend that each restriction agreed to by the Executive hereinabove shall be
construed as separable and divisible from every other restriction, that the
unenforceability of any restriction shall not limit the enforceability, in whole
or in part, of any other restriction, and that one or more or all of such
restrictions may be enforced in whole or in part as the circumstances warrant.
In the event that any restriction in this Agreement is more restrictive than
permitted by law in the jurisdiction in which the Corporation seeks enforcement
thereof, such restriction shall be limited to the extent permitted by law.
9.2 Assignment. Neither the Executive nor the Corporation may
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assign or delegate any of his or their rights or duties under this Agreement.
9.3 Entire Agreement. This Agreement constitutes and embodies
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the full and complete understanding and agreement of the parties with respect to
the Executive's employment by the Corporation, supersedes all prior
understandings and agreements, if any, whether oral or written, between the
Executive and the Corporation and shall not be amended, modified or changed
except by an instrument in writing executed by the party to be charged. The
invalidity or partial invalidity of one or more provisions of this Agreement
shall not invalidate any other provision of this Agreement. No waiver by either
party of any provision or condition to be performed shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or any prior or
subsequent time.
9.4 Binding Effect. This Agreement shall inure to the benefit
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of, be binding upon and enforceable against, the parties hereto and their
respective successors and permitted assigns.
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9.5 Captions. The captions contained in this Agreement are for
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convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.6 Notices. All notices, requests, demands and other
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communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when personally delivered or sent by
certified mail, postage prepaid, or overnight delivery to the party at the
address set forth above or to such other address as either party may hereafter
give notice of in accordance with the provisions hereof.
9.7 Counterparts. This Agreement may be executed in
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counterparts, all of which shall together constitute one and the same
instrument. All documents and signatures required hereunder may be delivered or
exchanged by telecopy and telecopied signatures shall be effective as originals
thereof.
9.8 Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
HI-TECH PHARMACAL CO., INC.
By: /s/Xxxxxxx Xxxxxxx
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Title: Chairman of the Board
/s/ Xxxxxx Xxxxx
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XXXXXX XXXXX
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