EXHIBIT 10.2
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EMPLOYMENT AGREEMENT
AGREEMENT made as of August 13, 2008 by and between ▇▇▇▇▇▇
Pharmaceuticals, Ltd. , a New Jersey corporation (hereinafter referred to as the
"Company"), having an office at ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇,
with offices at ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter
referred to as the "Executive").
W I T N E S S E T H :
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WHEREAS, the Company desires to engage the services of the Executive,
and the Executive desires to render such services;
NOW, THEREFORE, in consideration of the premises, the parties agree as
follows:
1. EMPLOYMENT. The Company hereby employs the Executive as President,
Chief Executive Officer and Chief Financial Officer and the Executive hereby
accepts such employment, subject to the terms and conditions hereinafter set
forth.
2. TERM. The term of the Executive's employment hereunder shall
commence on May 15, 2008 and shall continue five (5) years thereafter. This
Agreement shall renew automatically for additional one (1)-year terms unless
either party shall deliver written notice of termination to the other no later
than 90 days prior to the end of the then-current term.
3. DUTIES. The Executive agrees that the Executive will serve the
Company on a part-time basis faithfully and to the best of his ability as the
President, Chief Executive Officer and Chief Financial Officer subject to the
general supervision of the Board of Directors of the Company. The Executive
agrees that the Executive will not, during the term of this Agreement, engage in
any other business activity which interferes with the performance of his
obligations under this Agreement. The Executive further agrees to serve as a
member of the Board of the Company and/or of any parent, subsidiary or affiliate
of the Company if the Executive is elected to such directorship.
4. COMPENSATION.
(a) In consideration of the services to be rendered by the Executive
hereunder, including, without limitation, any services rendered by the Executive
as director of the Company or of any parent, subsidiary or affiliate of the
Company, the Company agrees to pay the Executive, and the Executive agrees to
accept, fixed compensation at the rate Eighty Thousand ($80,000) per annum,
subject to all required federal, state and local payroll deductions, that shall
increase on each annual anniversary date at the rate of ten percent (10%).
(b) The Executive hereby agrees to: (i) defer, at his option, payment
of his compensation pursuant to this Agreement and (ii) to accept compensation
pursuant to this Agreement in the form of Class B Common Stock, no par value per
share, in lieu of cash, for as long as the Board of Directors decides in its
sole discretion that the Company does not have the financial resources to pay
the Executive in cash. The number of Class B Common Stock shares to be issued to
the Executive pursuant to this Paragraph 4(b) shall be equal to one share of
Class B common stock for every dollar of compensation due and owing the
Executive.
(c) The Executive shall also be entitled to three weeks vacation,
unlimited sick leave and fringe benefits,) in accordance with Company policies
and plans in effect, from time to time, for Executive officers of the Company.
The Executive shall also be entitled to an executive check up and physical at a
facility of his choice at least once per annum.
(d) The Executive shall participate in the Company's Corporate
Compensation Program as approved and authorized by the Board of Directors of the
Company, subject to amendment by the Board of Directors or the Compensation
Committee of the Board of Directors of the Company ("Incentive Compensation").
The Executive shall not receive any Incentive Compensation should the Executive
be terminated for Termination for Cause. Such Incentive Compensation for the
particular fiscal year shall be paid to the Executive no later than upon the
filing of the Company's Form 10-KSB, or equivalent form, or if no Form 10-KSB
need be filed, then within ninety (90) days after the end of each fiscal year.
(e) Except as hereinafter provided in Section 5(a), the Company shall
pay the Executive, for any period during which the Executive is unable fully to
perform his duties because of physical or mental illness or incapacity, an
amount equal to the fixed compensation due the Executive for such period less
the aggregate amount of all income disability benefits which the Executive may
receive or to which the Executive may be entitled under or by reason of (i) any
group health and/or disability insurance plan provided by the Company; (ii) any
applicable state disability law; (iii) the Federal Social Security Act; (iv) any
applicable worker's compensation law or similar law; and (v) any plan towards
which the Company or any parent, subsidiary or affiliate of the Company has
contributed or for which it has made payroll deductions, such as group accident,
health and/or disability policies.
(f) The Executive shall be granted a stock option under the Company's
stock option plan as adopted by the Board of Directors and the shareholders of
the Company(the "Plan"). The Company will provide the Executive a Stock Option
Contract for his signature which will set out the terms of the option. This
Stock Option shall be subject to the terms of the Plan.
(g) At such time that the Company completes an acquisition, merger,
reverse merger, or spin-off transaction (a "Transaction"), the Company shall
pay, and Executive agrees to accept, cash compensation in the amount of two
hundred fifty thousand dollars ($250,000.00). Such amount shall be paid in a
lump sum on the date of closing of a Transaction or alternatively, at the
discretion of the Company and with the agreement of the Executive, in shares of
the Company's Class B Common Stock.
(h) The Company shall reimburse the Executive for the cost of leasing,
insuring and maintaining (including the cost of fuel) a luxury automobile of the
Executive's choice not to exceed $1200 per month.
(i) Upon execution of this Agreement, the Company will pay, and the
Executive agrees to accept, a signing bonus equal to thirty five thousand
dollars ($35,000). Since the Company is presently unable to make such payment in
cash, the Company agrees to issue a five (5) year promissory note to Executive
in such amount, such note carrying an interest charge of three percent (3%) per
annum. Such note shall be convertible, at the will of the Executive, into thirty
five thousand (35,000) shares of Class B Common Stock, plus shares which may be
issued on a dollar for dollar basis in an amount equal to any interest due and
owing.. Executive may choose, at his discretion, to partially convert this
obligation into shares of Class B Common Stock at any time.
5. COMPENSATION UPON TERMINATION.
Upon termination of the Executive's employment or during a period of
Disability the Executive shall be entitled to the following benefits:
(a) Termination for Cause, Disability, Death or Retirement etc.
(i)If the Executive's employment shall be terminated by the
Company for Termination for Cause, or by the Company or the Executive for
Disability, or by either the Company or the Executive for Retirement, the
Company shall pay to the Executive the Executive's full base salary for five
years from date of termintion at the highest salary under the agreement, plus
all other amounts to which the Executive is entitled under any compensation plan
of the Company in effect on the date the payments are due, in addition to any
other benefits set forth in this Agreement. If the Executive's employment shall
be terminated by the Company for Death, the Company shall pay to the estate of
the Executive the Executive's full base salary through the period of eight (8)
years following the Date of Termination at the highest rate in effect at the
date that Notice of Termination is given, plus all other amounts to which the
Executive is entitled under any compensation plan of the Company in effect on
the date the payments are due, in addition to any other benefits set forth in
this Agreement, and the Company shall have no further obligations to the
Executive under this Agreement.
(ii) If the Executive's employment shall be terminated by the
Executive for any reason other than for Termination for Cause, Death,
Disability, Retirement or Good Reason after a Change in Control, the Company
shall pay to the Executive the Executive's full base salary through the Term of
this Agreement, plus an additional five (5) years following the Date of
Termination, at
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the highest rate in effect at the date that Notice of Termination is given, plus
all other amounts to which the Executive is entitled under any compensation plan
of the Company in effect on the date the payments are due , in addition to any
other benefits set forth in this Agreement, and the Company shall have no
further obligations to the Executive under this Agreement.
(b) Severance Benefits. If the Executive's employment shall be
terminated by the Company within three (3) years after a Change in Control of
the Company, for reasons other than for Termination for Cause, Retirement, Death
or Disability, or terminated by the Executive for Good Reason within three (3)
years after a Change in Control of the Company, then, subject to the limitations
set forth in Subparagraph 5(d) below, the Executive shall be entitled to the
benefits provided below:
(i) the Company shall pay the Executive the Executive's full
base salary through the Date of Termination, plus (3), three years, less $100,
at the rate equal to the greater of the rate in effect on the date prior to the
Change in Control and the rate in effect at the time Notice of Termination is
given, plus all other amounts to which the Executive is entitled under any
compensation plan of the Company in effect on the date, the payments are due,
except as otherwise provided below;
(ii) [Intentionally omitted]
(iii) in consideration of the surrender on the Date of
Termination of the then outstanding options ("Options") granted to the
Executive, if any, under the stock option plans of the Company, or otherwise,
for shares of common stock of the Company ("Company Shares"), except as provided
in Paragraph 5(d) below, the Executive shall receive an amount in cash equal to
the product of (A) the excess of, (x) in the case of options granted after the
date of this Agreement that qualify as incentive stock options ("ISOs") under
Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"), the
closing price on or nearest the Date of Termination of Company Shares as
reported in the principal national securities exchange on which the Company's
Shares are listed or admitted to trading or, if the Company Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or, if on any such date the Company Shares are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Company Shares
selected by the Board of Directors of the Company, and (y) in the case of all
other Options, the higher of such closing price or the highest per share price
for any Company Shares actually paid in connection with any Change in Control of
the Company, over the per share exercise price of each Option held by the
Executive (irrespective of whether or not such Option is then fully
exercisable), times (B) the number of Company Shares covered by each such Option
(irrespective of whether or not such Option is then fully exercisable). The
parties hereto acknowledge and agree that the benefits afforded to the Executive
under this Subparagraph (iii) do not, and shall not be deemed to, materially
increase the benefits accruing to the Executive under any stock option plan
under which any such Options are granted. Insofar as the Executive receives full
payment under this Subparagraph (iii) with respect to the surrender of all such
Options, such Options so surrendered shall be canceled upon the Executive's
receipt of such payment. However, if pursuant to the limitations set forth under
Paragraph 5(d) below, the full amount described under this Subparagraph
5(b)(iii) cannot be paid, the number of Options which are canceled shall be
reduced so that the ratio of the value of the canceled Options to the value of
all such Options equals the ratio of the amount payable under this Subparagraph
5(b)(iii) after the application of the limitation described under Paragraph
5(d), to the amount that otherwise would have been paid under this Subparagraph
5(b)(iii) in the absence of such limitations. The Options canceled pursuant to
the immediately preceding sentence shall be those Options providing the smallest
"excess amounts" as determined under Subparagraph 5(b)(iii)(A). For those
Options not surrendered and canceled pursuant to this subparagraph, the Company
shall guaranty the Executive's loan for such amount as needed by the Executive
to exercise those outstanding Options that may be exercised as they become
exercisable by the Executive. Additionally, those stock options not surrendered
and canceled as determined in this Subparagraph 5(b)(iii) shall
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hereinafter become fully exercisable for the remaining term of such stock option
grant, regardless whether the Executive continues as an employee of the Company;
and
(iv) The Company shall also pay to the Executive all legal
fees and expenses incurred by the Executive as a result of such termination
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section 499 of the
Code to any payment or benefit provided hereunder).
(c) Date Benefits Due. The payments provided for in Paragraph 5(b)
above shall be made not later than the fifth day following the Date of
Termination, provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section 7872(f)(2) of the Code)
as soon as the amount thereof can be determined but in no event later than the
thirtieth day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive repayable on
the fifth day after demand by the Company (together with interest at the rate
provided in Section 7872(f)(2) of the Code).
(d) Reduction to Avoid Non-Deductibility. Any of the other provisions
of this Agreement notwithstanding, if any payment to be made by the Company
pursuant to this Agreement to the Executive or for the Executive's benefit (the
"Payments") otherwise would not be deductible by the Company for Federal income
tax purposes due to the provisions of the Code Section 280G, the aggregate
present value (determined as of the date of the Change in Control) of the
Payments shall be reduced (but not to a negative amount) to an amount expressed
in the present value as of such date (the "Reduced Amount") that maximizes the
present value of the Payments without causing any payment to be nondeductible by
the Company due to the Code Section 280G. The determination of the Reduced
Amount and the accompanying reduction in Payments shall be made by the
independent certified public accountants for the Company. Any such decrease in
Payments shall be applied to the amounts to be paid to the Executive or for the
Executive's benefit hereunder in the following order but only to the extent such
amounts would be taken into account in determining whether the Payments
constitute "parachute payments" within the meaning of the Code Section
280G(b)(2)(A): (i) to decrease the amounts payable to the Executive pursuant to
Subparagraph 5(b)(iii); (ii) to decrease the amounts payable to the Executive
pursuant to Subparagraph 5(b)(ii); (iii) to decrease the amounts payable to the
Executive pursuant to Section 5(j); (iv) to decrease the amounts payable to the
Executive pursuant Subparagraph 5(b)(iv); and (v).to decrease the amounts
payable to the Executive pursuant to Section 5(a)
(e) Determination of Reduced Amount. The determination of the Reduced
Amount and of the reduction in the Payments shall be communicated to the
Executive in writing by the Company. If the Executive does not agree with such
determinations, the Executive may give written notice of such disagreement to
the Board within five (5) days of the Executive's receipt of the determination,
and within fifteen (15) days after the Executive's notice of disagreement, the
Executive shall deliver to the Board the Executive's calculation of the
reduction in Payments. If the Executive fails to give notice of disagreement or
to furnish the Executive's calculation in accordance with the provisions of the
immediately preceding sentence, the Executive shall be conclusively deemed to
have accepted the determinations made by the independent public accountants for
the Company. If the accountants for the Company and the Executive's accountants
are unable to agree upon the reduction of Payments within ten (10) days of the
receipt of the Board of the Executive's calculation, the determination of the
reduction in Payments shall be made by a third accounting firm picked by the
Company's accountants and the Executive's accountants (the "Arbiter") whose
determination shall be final and binding upon the Executive and the Company,
except to the extent provided below. The Company shall withhold for income tax
purposes all amounts that the Company's independent certified public accountants
believe that the Company is required to withhold.
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(f) Arbiter to Resolve Disputes. If the Arbiter's and the Company's
accountant's fees shall be borne solely by the Company. The Executive's
accountant's fees shall be borne by the Executive.
(g) Final Payment. As promptly as practicable after the final
determination of the reduction in Payments, the Company shall pay to the
Executive or for the Executive's benefit the amounts determined to be payable.
(h) IRS Ruling. In the event there is a final determination by the
Internal Revenue Service or by a court of competent jurisdiction that any
portion of the Payments are not deductible by the Company by reason of Section
280G, then the amount of the Payments that exceeds the amount deductible by the
Company shall be deemed to be a loan by the Company to the Executive, which
shall be repaid by the Executive five (5) days after delivery of a demand by the
Company therefor together with interest from the date paid by the Company to the
date repaid by the Executive at the rate provided for a demand loan in Section
7872(f)(2) of the Code.
(i) Interpretation. The provisions of this Section 4 shall be
interpreted in a manner that will avoid the disallowance of a deduction to the
Company pursuant to Section 280G and the imposition of excise taxes on the
Executive under Section 4899 of the Code.
(j) Additional Fringe Benefits. If the Executive's employment shall be
terminated by the Company other than for Termination for Cause, Retirement,
Death or Disability or by the Executive within three years after a Change in
Control of the Company for Good Reason, then for an (8) year period after such
termination, the Company shall arrange to provide the Executive with life,
disability, Health and accident insurance benefits substantially similar to
those that the Executive was receiving immediately prior to the Notice of
Termination. In addition to the benefits set forth above, the Company shall
reimburse the Executive for the cost of leasing, insuring and maintaining
(including the cost of fuel) a luxury automobile of the Executive's choice not
to exceed $800 per month during the eight (8) yearperiod following the
Executive's termination.
Benefits otherwise receivable by the Executive pursuant to this
Paragraph 5(j) shall be reduced to the extent comparable benefits are otherwise
received by the Executive during the three (3) year period following the
Executive's termination and any such benefits otherwise received by the
Executive shall be reported to the Company.
(k) No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Paragraph 5 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this Paragraph 5 be reduced by any compensation earned by the Executive
as the result of the Executive's employment by another employer, by any
retirement benefits, by offset against any amount claimed to be owing by the
Executive to the Company, or otherwise, except as specifically provided in this
Paragraph 5.
(l) The benefits provided in this Paragraph 5 shall replace benefits
provided to the Executive other than in this Agreement only in the circumstances
set forth herein, and under all other circumstances, the Executive's benefits
will be determined in accordance with other agreements between the Company and
the Executive and other plans, arrangements and programs of the Company in which
the Executive participates.
(m) Notwithstanding anything in this Agreement, the Company shall
arrange to provide the Executive and his immediate family with health insurance
benefits substantially similar to those that the Executive was receiving,
immediately prior to the Notice of Termination, for the remainder of his and his
spouse's life.
6. TERMINATION FOR CAUSE. Termination by the Company of the Executive's
employment for cause (hereinafter referred to as "Termination for Cause), shall
mean termination
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upon (i) the willful and continued failure by the Executive to substantially
perform, on an "as-needed" basis, the Executive's material duties with the
Company (other than any such failure resulting from the Executive's incapacity
due to physical or mental illness or any such failure after the issuance by the
Executive for Good Reason of a Notice of Termination (as the terms "Good Reason"
and "Notice of Termination" are defined in this Agreement) after a written
demand for substantial performance is delivered to the Executive by the Board,
which demand specifically identifies the material duties that the Board believes
that the Executive has not substantially performed, or (ii) the willful engaging
by the Executive in conduct that is demonstrably and materially injurious to the
Company, monetarily or otherwise, except that such conduct shall specifically
exclude Executive's acting as a Executive to or executive of any company not
directly competitive with the business of the Company. For purposes of this
Paragraph 6, no act, or failure to act, on the Executive's part, shall be deemed
"willful" unless done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that the Executive's action or omission was in the
best interest of the Company, or (iii) the conviction of the Executive of a
felony, limited solely for a crime related to the business operations of the
Company, or that results in the Executive being unable to substantially carry
out his duties as set forth in this Agreement, or (iv) the commission of any act
by the Executive against the Company that may be construed as the crime of
embezzlement, larceny, and/or grand larceny. Any other provision in this
paragraph to the contrary notwithstanding, the Executive shall not be deemed to
have been terminated for Termination for Cause unless and until the Board duly
adopts a resolution by the affirmative vote of no less than three-quarters (3/4)
of the entire membership of the Board, at a meeting of the Board called and held
for such purpose (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive's counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the Executive was
guilty of conduct described in Subparagraphs (i), (ii) or (iv) of this paragraph
and specifying the particulars thereof in detail and a certified copy of such
resolution is delivered to the Executive.
7. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND NON- COMPETITION
(a) The Executive acknowledges that the Executive has been informed
that it is the policy of the Company to maintain as secret and confidential all
information (i) relating to the products, processes, designs and/or systems used
by the Company and (ii) relating to the customers and employees of the Company
(all such information hereafter referred to as "confidential information"), and
the Executive further acknowledges that such confidential information is of
great value to the Company. The parties recognize that the services to be
performed by the Executive are special and unique, and that by reason of his
employment by the Company, the Executive has and will acquire confidential
information as aforesaid. The parties confirm that it is reasonably necessary to
protect the Company's goodwill, and accordingly the Executive does agree that
the Executive will not directly or indirectly (except where authorized by the
Board of Directors of the Company for the benefit of the Company):
A At any time during his employment by the Company or after
the Executive ceases to be employed by the Company, divulge to any persons,
firms or corporations, other than the Company (hereinafter referred to
collectively as "third parties"), or use or allow or cause or authorize any
third parties to use, any such confidential information; and
B. At any time during his employment by the Company and for a
period of one (1) year after the Executive ceases to be employed by the Company,
solicit or cause or authorize directly or indirectly to be solicited, for or on
behalf of the Executive or third parties, any business from persons, firms,
corporations or other entities who were at any time within one (1) year prior to
the cessation of his employment hereunder, customers of the Company; and
C. At any time during his employment by the Company and for a
period of one (1) year after the Executive ceases to be employed by the Company,
accept or cause or authorize directly or indirectly to be accepted, for or on
behalf of the Executive or third parties, any business from any such customers
of this Company; and
D. At any time during his employment by the Company and for a
period of one (1) year after the Executive ceases to be employed by the Company,
solicit or cause or authorize directly or indirectly to be solicited for
employment, for or on behalf of the Executive or third parties, any persons
(excluding any individuals residing in the same immediate primary
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residence as the Executive, and/or the Executive's immediate family) who were at
any time within one year prior to the cessation of his employment hereunder,
employees of the Company; and
E. At any time during his employment by the Company and for a
period of one year after the Executive ceases to be employed by the Company,
employ or cause or authorize directly or indirectly to be employed, for or on
behalf of the Executive or third parties, any such employees of the Company; and
F. At any time during his employment by the Company and for a
period of one (1) year after the Executive ceases to be employed by the Company,
compete with the Company in any fashion or work for, advise, be a Executive to
or an officer, director, agent or employee of or otherwise associate with any
person, firm, corporation or other entity which is engaged in or plans to engage
in a business or activity which competes with any business or activity engaged
in by the Company, or which is under development or in a planning stage by the
Company.
Notwithstanding the above, should the Executive not be
receiving compensation from the Company either in a lump sum, or on a regular
basis for a period at least equal to one (8) years, or life, as set forth in
this Agreement following his Date of Termination, then Subparagraphs 7(C), 7(E)
and 7(F) shall be ineffective. Additionally, Subparagraphs 7(C), 7(D), and 7(E)
shall be ineffective as it relates to the spouse of the Executive.
(b) The Executive agrees that, upon the expiration of his employment by
the Company for any reason, the Executive shall forthwith deliver up to the
Company any and all records, drawings, notebooks, keys and other documents and
material, and copies thereof in his possession or under his control which is the
property of the Company or which relate to any confidential information or any
discoveries of the Company.
(c) The Executive agrees that any breach or threatened breach by the
Executive of any provision of this Section 7 shall entitle the Company, in
addition to any other legal remedies available to it, to enjoin such breach or
threatened breach through any court of competent jurisdiction. The parties
understand and intend that each restriction agreed to by the Executive herein
above shall be construed as separable and divisible from every other
restriction, and that the unenforceability, in whole or in part, of any
restriction will not affect the enforceability of the remaining restrictions,
and that one or more or all of such restrictions may be enforced in whole or in
part as the circumstances warrant.
(d) For the purposes of this Section, the term "Company" shall mean and
include any and all subsidiaries, parents and affiliated corporations of the
Company in existence from time to time.
8. CHANGE IN CONTROL.
(a). Effectiveness of Change in Control Provisions. The terms set forth
in this Paragraph 8, shall be effective should a Change in Control of the
Company, as defined below, have occurred during the term of this Agreement, or
during any extensions thereof, and shall continue in effect for a period of
thirty-six (36) months beyond the month in which such Change in Control
occurred. However, the definitions set forth in Subparagraph 8(c) shall apply
throughout this Agreement.
(b) Change in Control. No benefits shall be payable hereunder unless an
event as set forth below, shall have occurred (hereinafter called a "Change in
Control"):
(i) Any person including any individual, firm, partnership or
other entity, together with all Affiliates and Associates (as defined by
ss.240.12b-2 of the regulations promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") of such person, directly or indirectly
acquires securities of the Company's then outstanding securities representing
twenty percent (20%) or more of the voting securities of the Company, such
person being hereinafter referred to as an Acquiring Person; or, but excluding:
(A) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any Subsidiary of the Company, or
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(B) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of the Company, or
(c) the Company or any Subsidiary of the Company, is or
becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange
Act),or
(D)a person who acquires securities of the Company
directly from the Company pursuant to a transaction that has been approved by a
vote of at least a majority of the Incumbent Board, or
(ii) Individuals who, on the date hereof, constitute the
Incumbent Board shall cease for any reason to constitute a majority of the
Board; or
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such other surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
(c) Definitions. For the purposes of this Agreement, the following
terms shall mean:
(i) "Incumbent Board" shall mean the members of the Board, who
were members of the Board prior to the date of this Agreement.
(ii) "Subsidiary" shall mean any corporation of which an
amount of voting securities sufficient to elect at least a majority of the
directors of such corporation is beneficially owned, directly or indirectly, by
the Company, or is otherwise controlled by the Company.
(iii) "Good Reason" shall mean, without the Executive's
express written consent, the occurrence of any of the following circumstances
unless, such circumstances are fully corrected prior to the Date of Termination
specified in the Notice of Termination, as defined in Paragraphs 8(c)(iv) and
(v), respectively, given in respect thereof:
(A) the assignment to the Executive of any duties
inconsistent with the Executive's status as President and/or Chief Financial
Officer of the Company, or a substantial adverse alteration in the nature or
status of the Executive's responsibilities from those in effect immediately
prior to a Change in Control of the Company;
(B) a reduction by the Company in the Executive's annual
base salary as in effect on the date hereof or as the same may be increased from
time to time, except for across-the-board salary reductions similarly affecting
all senior executives of the Company and all senior executives of any person in
control of the Company;
(c) the relocation of the Company's principal executive
offices to a location which is not within the boundaries of New Jersey, Essex,
Morris, Union, and Middlesex counties within the state of New Jersey or the
Company requiring the Executive to be based anywhere other than the Company's
principal executive offices, except for required travel on the Company's
business to an extent substantially consistent with the Executive's present
business travel obligations, or the adverse and substantial alteration of the
office space or secretarial or support services provided to the Executive for
the performance of the Executive's duties;
(D) the failure by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's current
compensation, except pursuant to an across-the-board compensation deferral
similarly affecting all senior executives of the Company and all senior
executives of any person in control of the Company, or the failure by the
Company to pay to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;
(E) the failure by the Company to continue in effect any
compensation plan in which the Executive participates that is material to the
Executive's total compensation, including but not limited to the Company's
Incentive Stock Option Plan, 401(k) plan, cafeteria or salary reduction plan, or
any other or substitute plans adopted prior to a Change in Control of the
Company, unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the failure by the
Company to
8
continue the Executive's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of the
amount of benefits provided and the level of the Executive's participation
relative to other participants, than the Executive's participation as it existed
at the time of a Change in Control of the Company;
(F) unless such action is pursuant to an across-the-board
reduction in benefits similarly affecting all senior executives of the Company
and all senior executives of any person in control of the Company, the failure
by the Company to continue to provide the Executive with benefits substantially
similar to those enjoyed by the Executive under any of the Company's pension,
life insurance, automobile reimbursement, Company credit card, medical, health
and accident, or disability plans, if any, in which the Executive was
participating at the time of a Change in Control of the Company, or the taking
of any action by the Company that would directly or indirectly materially reduce
any of such benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of a Change in Control of the Company, or
the failure by the Company to provide the Executive with the number of paid
vacation or sick days to which the Executive is entitled under this Agreement at
the time of a Change in Control of the Company;
(G) the failure of the Company to obtain a satisfaction
agreement from any successor to assume and agree to perform this Agreement, as
contemplated in Paragraph 5 hereof; or
(H) any purported termination of the Executive's
employment that is not affected pursuant to a Notice of Termination satisfying
the requirements of Subparagraph 8(c)(iv) below (and, if applicable, the
requirement of Paragraph 6 above); for purposes of this Agreement, no such
purported termination shall be effective.
The Executive's right to terminate the Executive's employment
pursuant to this paragraph shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of right with respect to, any
circumstances constituting Good Reason hereunder.
(iv) "Notice of Termination" shall mean a notice that shall
indicate the specific termination provision of this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(v) "Date of Termination" shall mean (A) if employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided, that the Executive shall not return to the full-time performance of
the Executive's duties during such thirty (30) day period), or (B) if employment
is terminated due to Death of the Executive, upon receipt of Notice of
Termination or (c) if employment is terminated pursuant to any other provision
in this Agreement, the date specified in Notice of Termination (which, in the
case of a termination pursuant to any provision of this Agreement other than for
Disability and Death shall not be less than fifteen (15) nor more than sixty
(60) days, respectively, from the date such Notice of Termination is given).
Notwithstanding the above, provided, that if within fifteen
(15) days after any Notice of Termination is given to the Executive or prior to
the Date of Termination (as determined without regard to this provision) the
Executive receiving such Notice of Termination notifies the Company that a
dispute exists concerning such termination, that during the pendency of any such
dispute, the Company will continue to pay the Executive his full compensation in
effect when the notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue the Executive as a participant in all
compensation, benefit, and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved. However, should final resolution of the dispute
result in the Notice of Termination being affirmed in the forum, as set forth in
Paragraph 16, utilized for resolving said dispute, then the Executive shall be
liable to the Company for all compensation, benefit, and insurance plans paid
and/or provided to the Executive during the period that the Notice of
Termination was in dispute.
Amounts paid under this subparagraph are prior to all other
amounts due under this Agreement and shall not reduce any other amounts due
under this Agreement, which other amounts shall be in addition to, and shall not
be offset by, amounts due under this subparagraph.
9
Anything to the contrary herein notwithstanding, twenty-four
hours after written notice to the Executive, the Company may relieve the
Executive of authority to act on behalf of, or legally bind, the Company,
provided, that any such action by the Company shall be without prejudice to the
Executive's right to the compensation and benefits provided under this Agreement
and the Executive's right to termination hereunder under such circumstances and
with the compensation and benefits following such termination as provided in
this Agreement.
(vi) "Disability"- If the Executive, due to physical or mental
illness or incapacity, is unable fully to perform his duties herein for twelve
(12) consecutive months.
(vii) "Death"- If the Executive shall die during the term of
this Agreement.
(viii) ""Retirement"- Shall mean termination in accordance
with the Company's retirement policy, if any, including early retirement,
generally applicable to its salaried employees or in accordance with any
retirement arrangement established with the Executive's consent with respect to
the Executive.
(d) Termination Following Change in Control. If any of the events
described in Paragraph 8(b) hereof constituting a Change in Control of the
Company shall have occurred, the Executive shall be entitled to the benefits
provided in Paragraph 5 hereof upon the subsequent termination of the
Executive's employment during the term of this Agreement unless such termination
is (i) because of the Executive's Death, Disability or Retirement, (ii) by the
Company for Termination for Cause, or (iii) by the Executive for Good Reason
within three years after a Change in Control shall have occurred.
(e) Notice of Termination. Any purported termination of the Executive's
employment by the Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with Paragraph 15
hereof.
9. SUCCESSORS; BINDING AGREEMENT.
(a) Assumption by Successor. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from the Company
in the same amount and on the same terms as the Executive would be entitled
hereunder if the Executive terminates the Executive's employment for Good Reason
following a Change in Control of the Company, except that for purposes of
implementing this paragraph, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid that assumes and agrees to perform this
Agreement by operation of law, or otherwise.
(b) Successors. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Executive (except by will or intestate
succession) or any successor to the Executive's interest, nor shall it be
subject to attachment, execution, pledge or hypothecation, but this Agreement
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representative, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amount would still be payable to the Executive hereunder if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee or other designee or, if there is no such designee, to the Executive's
estate.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
10
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party that is not set forth in
this Agreement. All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The obligations of the Company under
Paragraph 5 shall survive the expiration of the term of this Agreement.
11. SEVERANCE AND VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof, supersedes any prior
agreement between the parties, and may not be changed or terminated orally. No
change, termination or attempted waiver of any of the provisions hereof shall be
binding unless in writing and signed by the party to be bound; provided,
however, that the Executive's compensation and benefits may be increased at any
time by the Company without in any way affecting any of the other terms and
conditions of this Agreement, which in all other respects shall remain in full
force and effect.
14. NEGOTIATED AGREEMENT. This Agreement has been negotiated and shall
not be construed against the party responsible for drafting all or parts of this
Agreement.
15. NOTICES. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or received by United
States registered or certified mail, return receipt requested, postage prepaid,
or by nationally recognized overnight delivery service providing for a signed
return receipt, addressed to the Executive at the Executive's home address set
forth in the Company's records and to the Company at the address set forth on
the first page of this Agreement, provided that all notices to the Company shall
be directed to the attention of the Board with a copy to counsel to the Company,
at Meritz & ▇▇▇▇▇, LLP, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
16. GOVERNING LAW AND RESOLUTION OF DISPUTES. All matters concerning
the validity and interpretation of and performance under this Agreement shall be
governed by the laws of the State of New York. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration in Garden City, New York, in accordance with the rules of the
American Arbitration Association ("AAA") then in effect. Any judgment rendered
by the arbitrator as above provided shall be final and binding on the parties
hereto for all purposes and may be entered in any court having jurisdiction;
provided, however, that the Executive shall be entitled to seek specific
performance of the Executive's right to be paid following termination for any
reason during the pendency of any dispute or controversy arising under or in
connection with this Agreement. The Company share bear the total cost of filing
fees for the initial Demand of Arbitration, as well as all charges billed by the
AAA, regardless of which party shall commence the action. The Company shall bear
the cost of the Executive's legal fees regarding any dispute or controversy
arising under or in connection with this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
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▇▇▇▇▇▇ PHARMACEUTICALS, LTD. ▇▇▇▇ ▇▇▇▇▇▇
By:___________________________ ___________________________
▇▇▇▇▇ ▇▇▇▇▇
Date:_________________________ Date:______________________
12
