EXECUTION COPY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "AGREEMENT"),
dated as of September 2, 2005, by and between Elite Pharmaceuticals, Inc., a
Delaware corporation (the "COMPANY"), and Xxxxxxx Xxxx (the "EXECUTIVE").
W I T N E S S E T H:
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WHEREAS, on June 23, 2003 the Company and the Executive entered into an
employment agreement (the "ORIGINAL EMPLOYMENT AGREEMENT") which memorialized
the terms and conditions under which the Executive would serve as the Company's
Chief Executive Officer;
WHEREAS, the Company and the Executive wish to amend and restate the
terms and conditions under which the Executive will continue to serve as the
Company's Chief Executive Officer and Chairman of the Board of Directors of the
Company;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
Section 1. TERM OF EMPLOYMENT; REPRESENTATIONS AND WARRANTIES OF THE
EXECUTIVE. This Agreement shall be effective as September 2, 2005 (the
"EFFECTIVE DATE") and, subject to earlier termination as specified herein, shall
continue until the fourth anniversary of the Effective Date (the "INITIAL TERM",
and together with any extensions, the "TERM"), provided, however, that unless
the Company or the Executive gives written notice to the other party at least
sixty (60) days prior to the expiration of the then-current Term that the
Company or the Executive, as the case may be, elects not to renew this
Agreement, the then-current Term shall be automatically extended for additional
one-year periods. The Executive hereby represents and warrants that (i) he has
the legal capacity to execute and perform this Agreement, (ii) this Agreement is
a valid and binding obligation of the Executive enforceable against him in
accordance with its terms, (iii) the Executive's service hereunder will not
conflict with, or result in a breach of, any agreement, understanding, order,
judgment or other obligation to which the Executive is presently a party or by
which he may be bound, and (iv) the Executive is not subject to, or bound by,
any covenant against competition, confidentiality obligation or any other
agreement, order, or judgment which would conflict with, restrict or limit the
performance of the services to be provided by him hereunder.
Section 2. POSITION AND DUTIES. During the Term, the Executive shall
serve as the Chief Executive Officer of the Company and the Chairman of the
Board of Directors of the Company (the "BOARD OF DIRECTORS"). The Executive
shall have such powers and duties as are commensurate with such position and as
may be conferred upon him by the Board of Directors. During the Term, the
Executive shall devote all of his business time, attention, skill and efforts
exclusively to the business and affairs of the Company.
Section 3. COMPENSATION. For all services rendered by the Executive in
any capacity during the Term, including, without limitation, services as an
executive officer, director, or member of any committee of the Company or any of
its subsidiaries, affiliates or divisions thereof, the Executive shall be
compensated as follows:
(a) Effective as of May 1, 2005, the Company shall be obligated to pay
the Executive a fixed salary at a rate per annum equal to Three Hundred Thirty
Thousand One Hundred Forty Dollars ($330,140) (the "BASE Salary"); provided,
however that from the Effective Date until November 1, 2005, the Company shall
actually pay the Executive at a rate per annum equal to Two Hundred Thousand
($200,000) and all additional amounts of the Base Salary payable but not paid to
the Executive for the period beginning May 1, 2005 and ending on November 1,
2005 pursuant to the immediately-preceding sentence shall accrue and become
payable on November 1, 2005. The Base Salary shall be subject to such periodic
increases as the Board of Directors shall deem appropriate in light of, among
other factors, the then-existing financial condition of the Company and the
Executive's success in implementing the Company's business plan and achieving
its strategic objectives. Except as otherwise provided in this Section 3(a), the
Base Salary shall be payable in accordance with the customary payroll practices
of the Company.
(b) The Executive shall be eligible to receive an annual bonus in an
amount to be determined by the Compensation Committee of the Board of Directors
in its sole and absolute discretion. The Compensation Committee of the Board of
Directors will give good faith consideration, in exercising its discretion to
determine the annual bonus of the Executive, to any commercialization of
products, merger or acquisition, business combination or collaboration, growth
in revenue and earnings, additional financings or other strategic or business
transaction or combination that inures to the benefit of the stockholders of the
Company. Any such bonus may be paid in the form of cash, capital stock of the
Company, options or warrants exercisable for capital stock of the Company or in
such other form as the Compensation Committee of the Board of Directors shall
determine.
(c) The Executive shall be entitled to four (4) weeks of vacation in
each calendar year during the Term; provided, however, that the Executive shall
not be entitled to carryover vacation from one year to any other year or to any
payment in respect of any unused or accrued vacation.
(d) On June 3, 2003, the Company granted the Executive options
("INITIAL OPTIONS") to purchase up to three hundred thousand (300,000) shares of
the Company's Common Stock, par value $.01 per share (the "COMMON STOCK"),
pursuant to the Company's 1997 Employee Stock Option Plan (the "1997 PLAN"). The
Initial Options (i) are, to the maximum extent permitted under applicable law,
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code, (ii) are fully vested as of June 3, 2003,
(iii) have a per share exercise price equal to $2.01, the closing price of a
share of Common Stock, as listed on the American Stock Exchange, on the June 3,
2003, and (iv) are subject to the terms and conditions set forth in the 1997
Plan and the stock option agreement previously entered into by the Company and
the Executive.
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(e) On June 23, 2003, the Company granted to the Executive options to
purchase up to three hundred thousand (300,000) shares of Common Stock (the
"ADDITIONAL OPTIONS"). For good and valuable consideration received including
the Company's execution and delivery of this Agreement, the Executive hereby
waives and releases any and all rights and claims to receive or exercise 75,000
of the Additional Options. The remaining 225,000 of the Additional Options (i)
shall, to the maximum extent permitted under applicable law, qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code, (ii) shall vest in full on the Effective Date, as a result of the
occurrence of a Strategic Transaction (as defined in the Original Employment
Agreement), pursuant to the terms of the Original Employment Agreement, (iii)
shall have a per share exercise price equal to $2.15, the closing price of a
share of Common Stock, as listed on the American Stock Exchange, on the June 23,
2003, (iv) shall be evidenced by the stock option agreement previously entered
into by the Company and the Executive, as amended simultaneously herewith, and
(v) shall be subject to the terms and conditions set forth in the Stock Option
Agreement, dated as of June 23, 2003, by and between the Company and the
Executive, as amended simultaneously herewith.
(f) On the Effective Date, the Company shall grant to the Executive
options to purchase up to two hundred thousand (200,000) shares of Common Stock
(the "SUBSEQUENT OPTIONS"), pursuant to the Company's 2004 Employee Stock Option
Plan, as amended (the "PLAN"). The Subsequent Options (i) shall, to the maximum
extent permitted under applicable law, qualify as "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code, (ii) shall vest
50% on September 2 2006 and 50% on September 2, 2007 (iii) shall have a per
share exercise price equal to $2.69, the closing price of a share of Common
Stock, as listed on the American Stock Exchange, on September 1, 2005, and (iv)
are subject to the terms and conditions set forth in the Plan and the stock
option agreement to be entered into by the Company and the Executive,
simultaneously herewith.
(g) On the Effective Date, the Company shall grant to the Executive
options to purchase up to four hundred thousand (400,000) shares of Common Stock
(the "MILESTONE OPTIONS"), pursuant to the Plan. The Milestone Options (ii)
shall, to the maximum extent permitted under applicable law, qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code, (ii) shall have a per share exercise price equal to $2.69, the
closing price of a share of Common Stock, as listed on the American Stock
Exchange, on September 1, 2005, (iii) are subject to the terms and conditions
set forth in the Plan and the stock option agreement to be entered into by the
Company and the Executive, simultaneously herewith, and (iv) shall vest as
follows (up to a maximum of 400,000 shares of Common Stock in the aggregate):
(x) Milestone Options exercisable for up to fifty thousand
(50,000) shares of Common Stock shall vest upon the closing of each
product license or product sale transaction (on a product by product
basis and only once for each product) in which the Company receives an
aggregate of at least $5,000,000 in net cash proceeds (including
royalties and signing, license and milestone payments) in connection
with such product transaction;
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(y) Milestone Options exercisable for up to ten thousand
(10,000) shares of Common Stock shall vest upon the filing by the
Company (in the Company's name) with the United States Food and Drug
Administration (the "FDA") of either an abbreviated new drug
application (an "ANDA") or a new drug application (including a NDA
filed with the FDA under Section 505(b)(2) of the Federal Food, Drug,
and Cosmetic Act, 21 U.S.C. Section 301 ET SEQ.) (a "NDA"), for a
product not covered by a previous FDA application; and
(z) Milestone Options exercisable for up to forty thousand
(40,000) shares of Common Stock shall vest upon the approval by the FDA
of any ANDA or NDA (filed in the Company's name) for a product not
previously approved by the FDA.
Upon the earlier to occur of the expiration of the Initial Term of this
Agreement or the termination of Executive's employment hereunder, all unvested
Milestone Options granted shall automatically terminate and all vested but
unexercised Milestone Options shall automatically terminate in accordance with
the terms of the stock option agreement by and between the Executive and the
Company with respect to the Milestone Options and the Plan.
(h) If the maximum number of Milestone Options shall have vested during
the Initial Term of this Agreement, the Company shall grant to the Executive
additional options to purchase shares of Common Stock (the "ADDITIONAL MILESTONE
OPTIONS"), pursuant to the Plan. The Additional Milestone Options (ii) shall, to
the maximum extent permitted under applicable law, qualify as "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code, (ii)
shall have a per share exercise price equal to the closing price of a share of
Common Stock, as listed on the American Stock Exchange, on the date of grant,
(iii) shall be subject to the terms and conditions set forth in the Plan and the
stock option agreement to be entered into by the Company and the Executive on
the date of grant, (iv) shall be fully vested upon grant, and (v) shall be
granted as follows:
(x) Additional Milestone Options exercisable for up to fifty
thousand (50,000) shares of Common Stock shall be granted upon the
closing of each product license or product sale transaction (on a
product by product basis and only once for each product) in which the
Company receives an aggregate of at least $5,000,000 in net cash
proceeds (including royalties and signing, license and milestone
payments) in connection with such product transaction;
(y) Additional Milestone Options exercisable for up to ten
thousand (10,000) shares of Common Stock shall be granted upon the
filing by the Company (in the Company's name) with the FDA of either an
ANDA or NDA for a product not covered by a previous FDA application;
and
(z) Additional Milestone Options exercisable for up to forty
thousand (40,000) shares of Common Stock shall be granted upon the
approval by the FDA of any ANDA, NDA or 505(b)(2) application of the
Company (filed in the Company's name) for a product not previously
approved by the FDA.
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Upon the earlier to occur of the expiration of the Initial Term of this
Agreement or the termination of Executive's employment hereunder, all Additional
Milestone Options shall automatically terminate in accordance the applicable
stock option agreement to be entered into by and between the Executive and the
Company with respect to such Additional Milestone Options (which agreement shall
be substantially similar to the other stock option agreements by and between the
Executive and the Company) and the Plan.
(i) During the Term, the Company shall pay the Executive a monthly
automobile allowance in the amount of Eight Hundred Dollars ($800).
(j) The Executive shall be entitled to participate in all compensation
and employee benefit plans or programs, and to receive all benefits, perquisites
and emoluments, for which any salaried employees of the Company are eligible
under any plan or program now or hereafter established and maintained for the
employees of the Company, to the fullest extent permissible under the general
terms and provisions of such plans or programs and in accordance with the
provisions thereof. The Executive will be entitled to participate in the
Company's qualified 401(k) plan and the Company will make the maximum annual
matching contributions to the Executive's account thereunder as shall be
permitted by law for an employee, of the Executive's position and salary.
Notwithstanding the foregoing, nothing in this Agreement shall preclude the
amendment or termination of any such plan or program; provided, that, such
amendment or termination is applicable generally to the senior officers of the
Company or any subsidiary or affiliate.
(k) During the Term, the Executive shall be covered under the
directors' and officers' insurance policy maintained by the Company.
Section 4. BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable travel or other expenses incurred by the Executive
in connection with the performance of his duties and obligations under this
Agreement, subject to the Executive's presentation of appropriate vouchers in
accordance with such procedures as are applicable to senior officers of the
Company and to preserve any deductions for Federal income taxation purposes to
which the Company may be entitled.
Section 5. TERMINATION OF EMPLOYMENT; EFFECTS THEREOF. (a) The Company
shall have the right, upon delivery of written notice to the Executive, to
terminate the Executive's employment hereunder prior to the expiration of the
Term (i) pursuant to a Termination for Cause (as defined in Section 5(h)), (ii)
upon the Executive's Permanent Disability (as defined in Section 5(h)), or (iii)
pursuant to a Without Cause Termination (as defined in Section 5(h)). The
Executive shall have the right, upon delivery of written notice to the Company,
to terminate the Executive's employment hereunder prior to the expiration of the
Term in the Executive's sole discretion; provided, however, that, without the
Company's written consent, no termination of the Executive's employment pursuant
to this sentence shall be effective until thirty (30) days after receipt by the
Company of written notice of termination from the Executive. Notwithstanding the
foregoing, the Executive shall have the right, upon delivery of written notice
to the Company, to immediately terminate the Executive's employment hereunder in
the event that the Company (w) breaches this Agreement by materially reducing
the nature or scope of the authorities, powers, functions, duties or
responsibilities of the Executive set forth in Section 2 of this Agreement or
fails to pay the Executive's Base Salary when due and such
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failure is not remedied within five (5) days of receipt of written notice of
such failure from the Executive, (x) otherwise materially breaches its
obligations pursuant to this Agreement and the Company fails to remedy such
other breach within thirty (30) days of receipt of written notice of such breach
from the Executive, (y) relocates its principal executive offices outside of New
Jersey or New York or (z) consummates a Change of Control Event (as defined in
Section 5(h)) with an entity and the Executive elects to terminate his
employment for any reason within ninety (90) days following the consummation of
such Change of Control Event (a "TERMINATION FOR GOOD REASON"). The Executive's
employment hereunder shall terminate automatically without action by any party
hereto upon the Executive's death.
(b) In lieu of any severance that may otherwise be payable to the
Executive pursuant to this Section 5 or any other provision of this Agreement or
any policies of the Company, whether existing on the date hereof or in effect
from time to time hereafter, in the event that the Company terminates the
Executive's employment pursuant to a Without Cause Termination or the Executive
terminates the Executive's employment pursuant to a Termination for Good Reason
(other than in connection with a Change of Control Event specified in clause (z)
of the definition of Termination for Good Reason, which shall be governed by
Sections 5(c) and 5(d)), the Company shall (i) pay the Executive any earned but
unpaid Base Salary plus any unpaid reimbursable expenses as of the effective
date of termination of his employment, (ii) continue to pay the Executive's
then-current Base Salary (in accordance with the Company's standard payroll
practices) and reimburse the Executive for the cost to replace the life and
disability insurance coverages afforded to the Executive under the Company's
benefit plans with substantially similar coverages, following the effective date
of termination of his employment, for a period equal to the greater of (x) the
remainder of the then-current Term, or (y) two years following the effective
date of termination and (iii) pay the premiums for the Executive's Company
provided health insurance for the period during which the Executive is entitled
to continued health insurance coverage as specified in the Comprehensive Omnibus
Budget Reconciliation Act. Other than as required by law, no other payments
shall be made, or benefits provided, by the Company under this Agreement.
(c) In lieu of any severance that may otherwise be payable to the
Executive pursuant to this Section 5 or any other provision of this Agreement or
any policies of the Company, whether existing on the date hereof or in effect
from time to time hereafter, in the event that the Company consummates a Change
of Control Event (as defined in Section 5(h)) with an entity and the Executive
elects to terminate his employment for any reason within ninety (90) days
following the consummation of such Change of Control Event, the Company shall
(i) pay the Executive any earned but unpaid Base Salary plus any unpaid
reimbursable expenses as of the effective date of termination of his employment,
(ii) pay the Executive, in twenty-four (24) equal monthly installments
commencing on the first day of the month following the effective date of
termination of his employment, the sum of One Million Dollars ($1,000,000),
(iii) pay the Executive's then-current Base Salary (in accordance with the
Company's standard payroll practices) for a period of twelve (12) months
following the effective date of termination, (iv) following the effective date
of termination of his employment, reimburse the Executive for the cost, for a
period equal to the twelve (12) months following the effective date of
termination, of replacing the life and disability insurance coverages afforded
to the Executive under the Company's benefit plans with substantially similar
coverages and (v) pay the premiums for the
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Executive's Company provided health insurance for the period during which the
Executive is entitled to continued health insurance coverage as specified in the
Comprehensive Omnibus Budget Reconciliation Act. Other than as required by law,
no other payments shall be made, or benefits provided, by the Company under this
Agreement.
(d) In lieu of any severance that may otherwise be payable to the
Executive pursuant to this Section 5 or any other provision of this Agreement or
any policies of the Company, whether existing on the date hereof or in effect
from time to time hereafter, in the event that the Company consummates a Change
of Control Event (as defined in Section 5(h)) and the Company terminates the
Executive's employment as Chief Executive Officer of the Company in connection
with, or within one hundred eighty (180) days following, the consummation of
such Change of Control Event and other than a Termination for Cause, the Company
shall (i) pay the Executive any earned but unpaid Base Salary plus any unpaid
reimbursable expenses as of the effective date of termination of his employment,
(ii) pay the Executive, in twenty-four (24) equal monthly installments
commencing on the first day of the month following the effective date of
termination of his employment, the sum of One Million Dollars ($1,000,000),
(iii) pay the Executive's then-current Base Salary (in accordance with the
Company's standard payroll practices) for a period of twelve (12) months
following the effective date of termination, (iv) following the effective date
of termination of his employment, reimburse the Executive for the cost, for a
period equal to the twelve (12) months following the effective date of
termination, of replacing the life and disability insurance coverages afforded
to the Executive under the Company's benefit plans with substantially similar
coverages and (v) pay the premiums for the Executive's Company provided health
insurance for the period during which the Executive is entitled to continued
health insurance coverage as specified in the Comprehensive Omnibus Budget
Reconciliation Act. Other than as required by law, no other payments shall be
made, or benefits provided, by the Company under this Agreement.
(e) In the event that the Company terminates the Executive's employment
pursuant to a Permanent Disability, the Company shall pay the Executive the same
amounts that would be payable to the Executive in the case of a termination
under Section 5(b) less any amounts actually received by the Executive under any
Company provided and paid for disability insurance coverage. Other than pursuant
to the terms of any benefit plan then-maintained by the Company, no other
payments shall be made, or benefits provided, by the Company under this
Agreement except as otherwise required by law.
(f) In the event that the Company terminates the Executive's employment
hereunder due to a Termination for Cause or, except as provided in Section 5(b)
or Section 5(c) above, the Executive terminates his employment with the Company
(including, without limitation, pursuant to any retirement plan or policy then
maintained by the Company), the Company shall pay the Executive any earned but
unpaid Base Salary plus any unpaid reimbursable expenses as of the effective
date of termination of his employment. Other than as required by law, no other
payments shall be made, or benefits provided, by the Company under this
Agreement.
(g) The Company will obtain and maintain a life insurance policy in the
amount of $1,000,000 on the life of the Executive payable to the estate of the
Executive in the event of the Executive's death.
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(h) For purposes of this Agreement, the following terms have the
following meanings:
(i) "CHANGE OF CONTROL EVENT" means, in any one or series of
related transactions, (i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction; (ii) the sale, transfer or other disposition of all or
substantially all of the Company's assets; (iii) the sale of securities by the
Company to a third party which securities constitute more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
immediately following such transaction or (iv) the consummation of a strategic
combination as a result of which new directors to the Board of Directors are
appointed by stockholders who are not stockholders of the Company prior to the
consummation of such Change of Control Event, such that the directors
immediately prior to the consummation of such transaction and the directors
appointed by them constitute less than 50% of the members of the Board of
Directors immediately following such transaction.
(ii) "PERMANENT DISABILITY" means permanently disabled so as
to qualify for full benefits under the Company's then-existing disability
insurance policy; provided, however, that if the Company does not maintain any
such policy on the date of determination, "Permanent Disability" shall mean the
inability of the Executive to work for a period of six (6) full calendar months
during any eight (8) consecutive calendar months due to illness or injury of a
physical or mental nature, supported by the completion by the Executive's
attending physician of a medical certification form outlining the disability and
treatment.
(iii) "TERMINATION FOR CAUSE" means, to the maximum extent
permitted by applicable law, a termination of the Executive's employment by the
Company because the Executive has (a) breached or failed to perform his duties
under applicable law and such breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness, (b) committed an act of
dishonesty in the performance of his duties hereunder, (c) willfully engaged in
conduct that is detrimental to the business of the Company, (d) been convicted
of a felony or a misdemeanor involving moral turpitude, (e) excessively used
alcohol or illegal drugs so as to interfere with the performance of the
Executive's obligations under this Agreement, (f) breached or failed to perform
his obligations and duties hereunder, which breach or failure the Executive
shall fail to remedy within thirty (30) days after written demand from the
Company specifying in reasonable detail such breach or failure, (g) failed to
follow lawful, written directives of the Board of Directors that are consistent
with the duties and obligations of the Executive under this Agreement, and the
Executive shall fail to remedy such failure within thirty (30) days after
written demand from the Board of Directors, or (h) violated in any material
respect the representations made in Section 1 of this Agreement or the
provisions of Section 6 of this Agreement.
(iv) "WITHOUT CAUSE TERMINATION" means a termination of the
Executive's employment by the Company other than due to Permanent Disability,
death, retirement or expiration (or non-renewal) of the Term and other than a
Termination for Cause.
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(e) Any payments to be made or benefits to be provided by the Company
pursuant to this Section 5 (other than in the event of the Executive's death or
Permanent Disability) are subject to the receipt by the Company of an effective
general release and agreement not to xxx, in a form reasonably satisfactory to
the Company (the "RELEASE"), pursuant to which the Executive agrees (i) to
release all claims against the Company and certain related parties (excluding
claims for (x) indemnification under the Company's Certificate of Incorporation,
by-laws or any Company provided insurance policy or (y) any severance benefits
payable hereunder), (ii) not to maintain any action, suit, claim or proceeding
against the Company, its subsidiaries and affiliates and certain related parties
relating to this Agreement, and (iii) to be bound by certain confidentiality and
non-disparagement covenants specified therein. The Company shall deliver a
general release and agreement not to xxx to the Executive, in a form
substantially similar to the Release, upon the Executive's delivery of the
Release to the Company; provided, that, the general release and agreement not to
xxx the Executive shall not be effective until following the expiration of any
revocation period applicable to the Release. Notwithstanding the due date of any
post-employment payment, the Company shall not be obligated to make any payments
under this Section 5 until after the expiration of any revocation period
applicable to the Release under applicable law, as may be amended from time to
time (which revocation period is presently seven (7) days under the Age
Discrimination Act).
Section 6. OTHER DUTIES OF EXECUTIVE DURING AND AFTER TERM. (a) The
Executive recognizes and acknowledges that all information pertaining to the
affairs, business, clients, or customers of the Company or any of its
subsidiaries or affiliates (any or all of such entities being hereinafter
referred to as the "Business"), as such information may exist from time to time,
other than information that the Company has previously made publicly available,
is confidential information and is a unique and valuable asset of the Business,
access to and knowledge of which are essential to the performance of the
Executive's duties under this Agreement. In consideration of the payments made
to him hereunder, the Executive shall not, except to the extent reasonably
necessary in the performance of his duties under this Agreement, divulge to any
person, firm, association, corporation, or governmental agency, any information
concerning the affairs, businesses, clients, or customers of the Business
(except such information as is required by law to be divulged to a government
agency or pursuant to lawful process), or make use of any such information for
his own purposes or for the benefit of any person, firm, association or
corporation (except the Business) and shall use his reasonable best efforts to
prevent the disclosure of any such information by others. All records,
memoranda, letters, books, papers, reports, accountings, experience or other
data, and other records and documents relating to the Business, whether made by
the Executive or otherwise coming into his possession, are confidential
information and are, shall be, and shall remain the property of the Business. No
copies thereof shall be made which are not retained by the Business, and the
Executive agrees, on termination of his employment or on demand of the Company,
to deliver the same to the Company.
(b) The Executive recognizes and acknowledges that the Company shall
own all Work Product created or contributed to by the Executive during the Term
and all Work Product created or contributed to by the Executive as an employee
or consultant of the Company (or its subsidiaries or affiliates) prior to the
Effective Date (including, without limitation, during the
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term of the Original Employment Agreement). As used herein, "Work Product"
includes, but is not limited to, all intellectual property rights, US and
international copyrights, patentable inventions, creations, discoveries and
improvements, works of authorship and ideas, whether or not patentable or
copyrightable and regardless of their form or state of development. All Work
Product or contributed to by the Executive as an employee or consultant of the
Company (or its subsidiaries or affiliates) shall be considered work made for
hire by the Executive and shall be owned by the Company.
(i) If any of the Work Product created or contributed to by
the Executive as an employee or consultant of the Company (or its subsidiaries
or affiliates) may not, by operation of law, be considered a work made for hire
by the Executive for the Company, or if ownership of all right, title and
interest of the intellectual property rights therein shall not otherwise vest
exclusively in the Company, the Executive shall assign, and upon creation
thereof or contribution thereto shall be deemed to have automatically assigned,
without further consideration, the ownership of all such Work Product to the
Company and its successors and assigns. The Company, its successors and assigns
shall have the right to obtain and hold in its or their own name copyrights,
patents, registrations and other protections available to the Work Product. The
Executive shall assist the Company, during and after the Term, in obtaining and
maintaining patent, copyright, trademark and other appropriate protection for
all Work Product in all countries and jurisdictions, at the Company's expense.
The Executive hereby irrevocably relinquishes for the benefit of the Company,
its successors and assigns any moral rights in the Work Product recognized under
applicable law.
(ii) The Executive shall disclose all Work Product created or
contributed to by the Executive as an employee or consultant of the Company or
its subsidiaries or affiliates (before, during and after the Term) promptly to
the Company and shall not disclose the Work Product to anyone other than
authorized Company personnel without the Company's prior written consent. The
Executive shall not disclose to the Company or induce the Company to use any
secret or confidential information or material belonging to others.
(iii) The provisions of this Section 6(b) cover Work Product
of any kind that is conceived, created, contributed to or made by the Executive
during the term of this Agreement (and during the period prior to the Effective
Date that the Executive provided employment or consulting services to the
Company or its subsidiaries or affiliates) that (i) relates specifically to the
business of the Company or its subsidiaries and affiliates, (ii) results from
tasks assigned to the Executive by the Company or its subsidiaries and
affiliates, or (iii) are conceived or made with the use of facilities or
materials, or confidential or proprietary information or trade secrets, provided
by the Company or its subsidiaries and affiliates.
(c) In consideration of the payments to be made to him hereunder,
during the period (the "RESTRICTIVE PERIOD") commencing on the effective date of
the termination of his employment for any reason and ending one (1) year
thereafter, the Executive shall not, without express prior written approval of
the Company, directly or indirectly, (i) solicit or assist any third party in
soliciting for employment any person then currently employed by the Company or
any of its subsidiaries and affiliates or who was employed by the Company or any
of its subsidiaries and affiliates during the three-month period immediately
preceding the termination of the
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Executive's employment (collectively, "EMPLOYEES"), (ii) employ, attempt to
employ or materially assist any third party in employing or attempting to employ
any Employee, or (iii) otherwise act on behalf of any Competitor to interfere
with the relationship between the Company or any of its subsidiaries and
affiliates and their respective Employees.
(d) The Executive acknowledges that the restrictions contained in this
Section 6 are reasonable and necessary to protect the legitimate interests of
the Company and that any breach by the Executive of any provision contained in
this Section 6 will result in irreparable injury to the Company for which a
remedy at law would be inadequate. Accordingly, the Executive acknowledges that
the Company shall be entitled to temporary, preliminary and permanent injunctive
relief against the Executive in the event of any breach or threatened breach by
the Executive of the provisions of this Section 6, in addition to any other
remedy that may be available to the Company whether at law or in equity. With
respect to any provision of this Section 6 finally determined by a court of
competent jurisdiction to be unenforceable, such court shall be authorized to
reform this Agreement or any provision hereof so that it is enforceable to the
maximum extent permitted by law. The parties hereto shall abide by such court's
determination. If the covenants of Section 6(c) are determined to be wholly or
partially unenforceable in any jurisdiction, such determination shall not be a
bar to or in any way diminish the Company's right to enforce such covenants in
any other jurisdiction.
(e) The Company's obligation to make payments, or provide for any
benefits under this Agreement (except to the extent vested or exercisable),
shall cease upon a violation by the Executive of the provisions of this Section
6. The provisions of this Section 6 shall survive any termination of the
Executive's employment with the Company. The Company shall not be required to
post any bond or other security in connection with any proceeding to enforce the
provisions of this Section 6.
Section 7. INDEMNIFICATION. Prior to the Effective Date, the Executive
rendered consulting services to the Company pursuant to the terms of a certain
Consulting Agreement, dated as of April 15, 2003 (the "CONSULTING AGREEMENT"),
by and between the Company and Xxxxxxx Xxxxxxx Corporation (the "CONSULTANT").
For purposes of the Delaware General Corporation Law (the "DGCL") and the
provisions of the Company's Certificate of Incorporation and By-laws, the
Executive, the Consultant and the Consultant's shareholders, employees,
permitted agents and representatives shall each have the status of an "agent" of
the Company and, accordingly, (i) the Executive shall be entitled to
indemnification and advancement of expenses from the Company in connection with
the performance of the Executive's duties hereunder and (ii) the Consultant and
its shareholders, employees, permitted agents and representatives shall be
entitled to indemnification and advancement of expenses from the Company in
connection with the performance of the Consulting Services (as defined in the
Consulting Agreement) previously rendered to the Company pursuant to the
Consulting Agreement, in the case of clause (i) or (ii), to the fullest extent
permitted by the DGCL and the provisions of the Company's Certificate of
Incorporation and By-laws. In addition, to the maximum extent permitted by
applicable law (including the DGCL), the Company shall indemnify and hold
harmless (i) the Executive against and in respect of any and all claims, costs,
expenses, damages, liabilities, losses or deficiencies (including, without
limitation, counsel's fees and other costs and expenses incident to any suit,
action or proceeding) (collectively,
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"DAMAGES") arising out of, resulting from or incurred in connection with the
Executive's performance of his duties hereunder, except to the extent that any
such Damages result from a breach of this Agreement by the Executive and (ii)
the Consultant and its shareholders, employees, agents or representatives
against and in respect of any and all Damages arising out of, resulting from or
incurred in connection with the provision of the Consulting Services by the
Consultant, except to the extent that any such Damages result from (A) the gross
negligence or willful misconduct of the Consultant and/or its shareholders,
employees agents or representatives; provided, however, any such gross
negligence or willful misconduct shall not limit the Consultant and/or its
shareholders, employees, agents or representatives right to indemnification
arising out of any claims by Xx. Xxxx X. Xxxxx, the former chief executive
officer of the Company, surrounding his resignation as the chief executive
officer of the Company or (B) a breach of the Consulting Agreement by the
Consultant.
Section 8. WITHHOLDINGS. The Company may directly or indirectly
withhold from any payments made under this Agreement all Federal, state, city or
other taxes and all other deductions as shall be required pursuant to any law or
governmental regulation or ruling or pursuant to any contributory benefit plan
maintained by or on behalf of the Company.
Section 9. CONSOLIDATION, MERGER, OR SALE OF ASSETS. Nothing in this
Agreement shall preclude the Company from consolidating or merging into or with,
or transferring all or substantially all of its assets to, or engaging in any
other business combination with, any other person or entity which assumes this
Agreement and all obligations and undertakings of the Company hereunder. Upon
such a consolidation, merger, transfer of assets or other business combination
and assumption, the term "Company" as used herein shall mean such other person
or entity and this Agreement shall continue in full force and effect.
Section 10. NOTICES. All notices and other communications under this
Agreement shall be in writing and, unless otherwise provided herein, shall be
deemed duly given if delivered personally, by facsimile transmission (receipt of
which is confirmed) or upon receipt by the receiving party of any notice sent by
registered or certified mail (first-class mail, postage pre-paid, return receipt
requested) or by overnight courier or similar courier service, addressed, in the
case of the Executive, at the address for the Executive first set forth above,
or, in the case of the Company, at the address set forth below:
Elite Pharmaceuticals, Inc.
000 Xxxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Board of Directors
Facsimile No.: (000) 000-0000
or to such other address as either party shall have previously specified in
writing to the other.
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Section 11. NO ATTACHMENT. Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect; provided, however,
that nothing in this Section 11 shall preclude the assumption of such rights by
executors, administrators or other legal representatives of the Executive or his
estate and their assigning any rights hereunder to the person or persons
entitled thereto.
Section 12. SOURCE OF PAYMENT. All payments provided for under this
Agreement shall be paid in cash from the general funds of the Company. The
Company shall not be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the Company shall make
any investments to aid it in meeting its obligations hereunder, the Executive
shall have no right, title or interest whatever in or to any such investments
except as may otherwise be expressly provided in a separate written instrument
relating to such investments. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to create a trust
of any kind, or a fiduciary relationship, between the Company and the Executive
or any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right, without prejudice to rights
which employees may have, shall be no greater than the right of an unsecured
creditor of the Company.
Section 13. BINDING AGREEMENT; NO ASSIGNMENT. This Agreement shall be
binding upon, and shall inure to the benefit of, the Executive and the Company
and their respective permitted successors, assigns, heirs, beneficiaries and
representatives. This Agreement is personal to the Executive and may not be
assigned by him without the prior written consent of the Company. Any attempted
assignment in violation of this Section 13 shall be null and void.
Section 14. EXPENSES. Except as set forth herein, each party hereto
shall pay its own expenses incident to the preparation, negotiation,
administration and enforcement of this Agreement and the transactions
contemplated herein.
Section 15. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.
Section 16. DISPUTE RESOLUTION. At the option of either the Company or
the Executive, any dispute, controversy or question arising under, out of or
relating to this Agreement or the breach thereof, other than pursuant to Section
6 hereof, shall be referred for decision by arbitration in the State of New
Jersey by a neutral arbitrator mutually selected by the parties hereto. Any
arbitration proceeding shall be governed by the Rules of the American
Arbitration Association then in effect or such rules last in effect (in the
event such Association is no longer in existence). If the parties are unable to
agree upon such a neutral arbitrator within twenty one (21) days after either
party has given the other written notice of the desire to submit the dispute,
controversy or question for decision as aforesaid, then either party may apply
to the American Arbitration Association for a final and binding appointment of a
neutral arbitrator, however, if such Association is not then in existence or
does not act in the matter within forty five (45) days
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of any such application, either party may apply to the presiding judge of the
Superior Court of any county in New Jersey for the appointment of a neutral
arbitrator to hear the parties and such judge is hereby authorized to make such
appointment. In the event that either party exercises the right to submit a
dispute, controversy or question arising hereunder to arbitration, the decision
of the neutral arbitrator shall be final, conclusive and binding on all
interested persons and no action at law or in equity shall be instituted or, if
instituted, further prosecuted by either party other than to enforce the award
of the neutral arbitrator. The award of the neutral arbitrator may be entered in
any court that has jurisdiction. The Executive and the Company shall each bear
all their own costs (including the fees and disbursements of counsel) incurred
in connection with any such arbitration and shall each pay one-half of the costs
of any arbitrator appointed hereunder.
Section 17. ENTIRE AGREEMENT. This Agreement shall constitute the
entire agreement among the parties with respect to the matters covered hereby
and shall supersede all previous written, oral or implied understandings among
them (including the Consulting Agreement and the Original Agreement) with
respect to such matters.
Section 18. SEVERABILITY. The invalidity of any provision hereof shall
not affect the validity, force or effect of the remaining provisions hereof. In
the event that an arbitrator designated pursuant to the provisions of Section 16
or a court of competent jurisdiction determines that any provision contained
herein is not enforceable as written because of the breadth or duration of such
provision, such arbitrator or court shall have the authority to modify the terms
of such provision so that, as so modified, such provision shall be enforceable
to the maximum extent permitted by applicable law.
Section 19. AMENDMENTS. This Agreement may only be amended or otherwise
modified, and compliance with any provision hereof may only be waived, by a
writing executed by all of the parties hereto. The provisions of this Section 19
may only be amended or otherwise modified by such a writing.
Section 20. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which shall together be deemed to constitute one and the same instrument.
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Amended and Restated
Employment Agreement to be duly executed by the undersigned, thereunto duly
authorized, and the Executive has signed this Amended and Restated Employment
Agreement, all as of the date first written above.
ELITE PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Director
/s/ Xxxxxxx Xxxx
---------------------------
Xxxxxxx Xxxx
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