EXHIBIT 10.2
EMPLOYMENT AGREEMENT
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This Employment Agreement ("Agreement"), effective as of May 1, 1995 (the
"Effective Date"), by and between PacificHealth Laboratories, Inc. (hereinafter
the "Company"), a Delaware corporation, and Xxxxxx Xxxxxxx (hereinafter
"Employee").
WHEREAS, the Company desires to retain the services of Employee and
Employee desires to be employed upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
1. EMPLOYMENT: The Company shall employ Employee as its President and
Chief Executive Officer, and Employee shall accept employment and shall
render services in such capacities, under and subject to the conditions and
terms set forth herein. During the period of his employment, Employee shall
devote his full time, attention, energy, knowledge and skill to the
business and interests of the Company, from offices of the Company to be
maintained in the Central New Jersey area, and the Company shall be
entitled to the profits and other benefits arising from or incident to the
work, services and advice of Employee.
2. TERM: The term of this Agreement, and the term of employment of
Employee hereunder, shall commence on the Effective Date, and shall end on
the day preceding the third anniversary date of the Effective Date (the
"Scheduled Termination Date"), provided:
a. Employee shall have the right to terminate his employment
hereunder for cause, upon written notice to the Company referring to
this paragraph 2(a) and describing the condition relied upon by him in
invoking the provisions hereof, if, without Employee's written
consent, (i) the Company fails to pay Employee any salary or other
compensation or benefit required to be paid hereunder when due and for
a period of sixty (60) days after demand therefor by Employee; (ii)
there occurs any substantial change in the authorities, powers,
functions or duties attached to Employee's positions; or (iii)
Employee is required by any directive from the Company to reside
outside of the Central New Jersey area; unless, in any such case, the
Company, within sixty (60) days after Employee's giving of notice
hereunder, takes full and effective action to eliminate the condition
cited by Employee in his notice of termination as the reason for his
giving of such notice.
b. Employee shall have the right to terminate his employment
hereunder without cause at any time upon not less than thirty (30)
days written notice.
3. COMPENSATION: Through April 30, 1996, the Company shall pay
Employee a base salary at the rate of Seventy- Five Thousand ($75,000.00)
Dollars per year. Effective as of May 1, 1996, Employee's base salary shall
be fixed in good faith by the Company's Board of Directors, taking into
account the progress of the Company's business, its financial resources and
prospects, and any other factors deemed relevant by the Board of Directors.
Employee's base salary shall be paid in equal, bi-weekly installments
commencing with the first pay period immediately following the Effective
Date. In addition to his base salary, Employee may participate in any bonus
or other incentive or compensation plan of the Company hereafter in effect,
to the extent determined by the Board of Directors of the Company.
4. OTHER BENEFITS:
a. The Company shall pay Employee for ordinary and reasonable
business expenses incurred by him in the performance of services
pursuant to this Agreement. In addition, the Company shall provide
Employee with a Company-owned or leased automobile for his use or
reimburse Employee for his costs in leasing such automobile. Employee
shall keep such records and shall render to the Company such accounts
covering such expenses as the Company shall reasonably require.
b. During the term of his employment and during any restricted
period during which Employee is entitled to receive payments pursuant
to subparagraph 5(c) below, Employee shall be entitled to participate
in any medical, health, disability and accident or other
hospitalization or insurance plan established by the Company for its
employees generally.
c. During each full year of the term of Employment, Employee
shall be entitled to four (4) weeks paid vacation time which shall not
be cumulative from year to year.
5. COMPENSATION UPON TERMINATION: If Employee's employment is
terminated at any time during the term hereof, the following provisions
shall apply:
a. If Employee's employment is terminated for any reason
whatsoever, except for termination by the Company with cause, as
defined in subparagraph (d) below, or by Employee without cause
pursuant to subparagraph 2(b) above, (i) the Company shall pay
Employee, within ninety (90) days following such termination, an
amount equal to the base salary which would have been paid from the
date of termination of employment to the Scheduled Termination Date,
which payment shall be in lieu of any other severance or
post-employment benefits except as otherwise expressly provided for in
this Agreement; and (ii) all options to purchase securities of the
Company then held by Employee which are not already vested shall vest
automatically, and without the necessity of any action
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by Employee or the Company, immediately prior to the effectiveness of
such termination.
b. If Employee's employment is terminated by his death, the
payments to Employee provided for in subparagraph (a) above shall be
made to his estate or to a beneficiary designated by him by notice to
the Company, and shall be reduced by an amount equal to life insurance
proceeds, if any, paid to beneficiaries designated by Employee under
any life insurance policy owned by the Company. The Company shall use
its best efforts to obtain and maintain in force key man insurance on
Employee's life in the amount of $1,000,000.00 for its benefit, which
insurance proceeds may be used, in part, to fund the aforementioned
termination payment.
c. If Employee's employment is terminated for any reason other
than Employee's death, the Company, at its election, by notice to
Employee given not later than ten (10) days after such termination and
referring specifically to this subparagraph, shall have the right to
require for one (1) year from the date of termination (the "restricted
period") that Employee not directly or indirectly solicit the business
of any customer of the Company or the employment of any employee of
the Company, and, if the Company so elects, Employee agrees not to
solicit such business or employment, provided that (i) the Company
continues to pay to Employee during the restricted period, when
payment of Employee's base salary would otherwise be due and without
interruption, an amount equal to one hundred (100%) percent of
Employee's base salary in effect immediately prior to termination
unless such termination is for "cause", as defined below, in which
case no payment shall be required, and (ii) the Company honors and
timely performs its obligations to Employee under subparagraph (a)
above. Any failure by the Company to make the payments required
hereunder as and when due, or to honor and timely perform its
obligations to Employee under subparagraph (a) above, shall constitute
a full and irrevocable waiver of the Company's rights under this
subparagraph (c). Payments, if any, to Employee hereunder shall be in
addition to any payments required under subparagraphs (a) and (b)
above.
d. For the purposes of subparagraph (a) of this Agreement,
"cause" for termination of Employee's employment shall exist only in
the event of Employee's gross negligence or intentional malfeasance in
the performance of his duties as an officer of the Company which
results in or creates a substantial risk of serious financial injury
to the Company.
6. ASSIGNMENT: This Agreement is personal in its nature and neither of
the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder, except
that: (i) the Company may assign or transfer this Agreement to a successor
organization in the event of merger, consolidation, or transfer of sale of
all or substantially
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all of the assets of the Company, in which case the term Company shall mean
such successor, provided that in the case of any such assignment or
transfer, the obligations of this Agreement are assumed by such successor
or are binding upon and inure to the benefit of such successor as a matter
of law; and (ii) in the event of Employee's death, the term "Employee"
shall include his heirs, executors and administrators.
7. NOTICES: All notices hereunder shall be in writing and shall be
deemed to have been given at the time when mailed in any general or branch
United States Post Office enclosed in a certified post-paid envelope,
addressed to the respective parties stated below, or to such changed
address as such party may fix by notice as aforesaid:
To the Company: Attn: Board of Directors
0000 Xxxxx 0 Xxxxx
Xxxxxxxxxx, XX 00000
with a copy to: Xxxxxxxx Xxxxxxx Chicco
Foxman Engelmyer & Xxxxx
Attention: Xxxxxx Chicco
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
To Employee: Xxxxxx Xxxxxxx
000 Xxxx Xxxx
Xxxxxxxxxxx, XX 00000
in each case with copies of such notice to each director of the Company
then in office.
8. GOVERNING LAW: This Agreement and all performance under this
Agreement shall be governed by the laws of the State of New Jersey.
9. WAIVER, MODIFICATION: No waiver or modification of this Agreement
or of any covenant, condition or limitation contained herein shall be valid
or effective unless it is in writing and duly executed by Employee and the
Company.
10. RESOLUTION OF DISPUTES:
a. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof, including without limitation a claim
for declaratory relief or relief which is equitable in nature, shall
be settled by arbitration in either Philadelphia, Pennsylvania or
Newark, New Jersey, by an arbitrator selected by Employee and the
Company. If the Company and Employee cannot agree on the appointment
of an arbitrator within ten (10)
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days after a request for arbitration, then such arbitrator shall be an
attorney-at-law with no prior professional association with any of the
parties or their affiliates who is selected in accordance with
procedures established and implemented by the American Arbitration
Association. The arbitration shall be conducted in accordance with the
rules of the American Arbitration Association, except as otherwise
provided in this paragraph 10. Except as otherwise provided herein,
all costs of the arbitration shall be borne by the Company. Judgment
upon any award rendered by the arbitrator may be entered in any court
having jurisdiction over the parties. Any award of the arbitrator
shall include interest at a rate or rates considered just under the
circumstances by the arbitrator.
b. Employee shall be entitled to recover from the Company
reasonable attorney's fees and costs and other expenses incurred by
him in connection with any arbitration hereunder. Subject to the
limitations of subparagraph (c) below, payment of such fees and
expenses shall be made by the Company as they are incurred by
Employee. If, however, the arbitrator should later determine that,
under the circumstances, it was unjust for the Company to have made
any of these payment of attorney's fees and costs and expenses to
Employee, the arbitrator may require Employee to repay any such
payments in accordance with such terms and conditions as the
arbitrator shall direct.
c. Notwithstanding anything to the contrary in subparagraph (b)
above: (i) the amount which the Company shall be required to advance
to Employee or which Employee shall be entitled to recover from the
Company on account of attorney's fees, costs and expenses incurred by
him in any arbitration hereunder shall be limited to the amount
incurred by the Company on account of its own attorney's fees, costs
and expenses, as and when such fees, costs and expenses are incurred
by the Company, unless the arbitrator shall determine that, under the
circumstances, it is unjust to so limit the Company's advances and
reimbursements to Employee; and (ii) the Company shall not be required
to advance such fees, costs and expenses to Employee in any
arbitration in which the Company is seeking to enforce the restrictive
covenants set forth in subparagraph 5(c) hereof if the Company has
previously paid to Employee as and when due all payments required to
be made by the Company under subparagraphs 5(a) and 5(c) hereof.
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IN WITNESS WHEREOF, Employee has signed his name and the Company, by the
signatures of its duly authorized officers, has executed this Agreement, as of
the date and year mentioned at the top of page one.
PACIFICHEALTH LABORATORIES, INC.
By: /s/
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/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
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Bonus Stock Option Award Program
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In addition to any other compensation paid to him for services, the
Corporation shall award options to purchase common stock to Xxxxxx Xxxxxxx, as
follows:
1. Terms and Conditions.
a. Dates of Grant: January 1, 1997, January 1, 1998, and January 1, 1999.
b. Number of Options: Options to purchase 25,000 shares of common stock
per each $1,000,000 increase in Company Valuation between the last two
preceding Valuation Dates.
c. Exercise Price: Fair Market Value of Common Stock at the Date of
Grant.
d. Terms of Options: Five years from Date of Grant.
e. Vesting of Options: 100% vested upon grant.
f. Other terms and conditions: Identical to options previously granted to
Xxxxxx Xxxxxxx under the Corporation's 1995 Incentive Stock Option
Program.
2. Definitions.
a. "Company Valuation" shall have the following meanings:
(i) As of June 30, 1996 - $15,000,000.
(ii) As of any subsequent Valuation Date, (x) if the Corporation's
Common Stock is not publicly traded (i.e., is not traded on The
NASDAQ Stock Market or a national stock exchange, or quoted on
the NASDAQ/ OTC Electronic Bulletin Board), fifteen (15) times
the Corporation's net income for the fiscal year immediately
preceding the Valuation Date, determined in accordance with
generally accepted accounting purposes and reported to
shareholders, or, (y) if the Common Stock is publicly traded, the
Market Price of Common Stock multiplied by the number of shares
outstanding on the Valuation Date, on a "fully diluted" basis.
b. "Valuation Date" means June 30, 1996, December 31, 1996, December 31,
1997 and December 31, 1998.
c. "Fair Market Value of Common Stock" as of a Date of Grant means (x) if
the Corporation's Common Stock is publicly traded, the Market Price of
Common Stock, and (y) if the Common Stock is not publicly traded, the
price per share obtained by dividing the Company Valuation as of the
preceding Valuation Date by the number of shares (on a "fully diluted"
basis) outstanding on that Date.
d. "Market Price for Common Stock" means (x) the average closing sale
price of the Common Stock reported for the Common Stock on The NASDAQ
Stock Market, or any national securities exchange on which the Common
Stock is listed, on the five trading days ending on the Valuation
Date, or (y) if the Common Stock is publicly traded solely by reason
of its being quoted on the NASDAQ/OTC Electronic Bulletin Board, the
average of the medians between the closing high "bid" and low "asked"
prices quoted on the Bulletin Board on the five trading days ending on
the Valuation Date.
