EXHIBIT 10.9.4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of December 18,
2002, by and between Pharmaceutical Resources, Inc., a New Jersey corporation
("Resources"), and Dr. Arie Gutman ("Executive").
R E C I T A L S :
A. WHEREAS, Executive is presently employed by Resources in the
capacities of President and Chief Executive Officer of FineTech Laboratories,
Ltd., a company organized under the laws of the State of Israel ("FineTech" and,
together with Resources, "Employer"), and currently serves as a member of the
Board of Directors of Resources (the "Board"); and
B. WHEREAS, Employer and Executive desire to enter into this
Agreement in order for Executive to continue to perform the duties associated
with his positions with Employer on the terms and conditions set forth herein.
In consideration of the mutual promises herein contained, the
parties hereto hereby agree as follows:
1. EMPLOYMENT.
1.1. GENERAL. Resources hereby employs Executive in the
capacities of President and Chief Executive Officer of FineTech at the
compensation rate and benefits set forth in Section 2 hereof for the Employment
Term (as defined in Section 3.1 hereof). Executive hereby accepts such
employment, subject to the terms and conditions herein contained. In all such
capacities, Executive shall perform and carry out such duties and
responsibilities as may be assigned to him from time to time by the Board and by
the Chief Executive Officer of Resources reasonably consistent with Executive's
positions and this Agreement, and shall report to the Board and the Chief
Executive Officer of Resources. Executive shall be headquartered in the
Company's New York office and FineTech's Haifa, Israel office and make himself
available to the Company at such times and places as the Company shall
reasonably request during the Employment Term.
1.2. TIME DEVOTED TO POSITION. Executive, during the
Employment Term, shall devote substantially all of his business time, attention
and skills to the business and affairs of Employer.
1.3. CERTIFICATIONS. Whenever the Chief Executive Officer
and/or Chief Financial Officer of Resources are required by law, rule or
regulation or requested by any governmental authority or by auditors of
Resources, its wholly-owned subsidiary, Par Pharmaceutical, Inc. ("Par"), or
FineTech to provide certifications with respect to Resources's, Par's or
FineTech's financial statements or filings with the Securities and Exchange
Commission or any other governmental authority, Executive shall sign such
certifications as may be reasonably requested by the such officers, Resources,
Par and/or FineTech, with such exceptions as Executive deems necessary to make
such certifications accurate and not misleading.
2. COMPENSATION AND BENEFITS.
2.1. SALARY. At all times Executive is employed hereunder,
Employer shall pay to Executive, and Executive shall accept, as full
compensation for any and all services rendered and to be rendered by him during
such period to Employer in all capacities, including, but not limited to, all
services that may be rendered by him to any of Employer's existing subsidiaries,
entities and organizations hereafter formed, organized or acquired by Employer,
directly or indirectly (each, a "Subsidiary" and collectively, the
"Subsidiaries"), the following: (i) a base salary at the annual rate of
$300,000, or at such increased rate as the Board (through its Compensation and
Stock Option Committee), in its sole discretion, may hereafter from time to time
grant to Executive, subject to adjustment in accordance with Section 2.2 hereof
(as so adjusted, the "Base Salary"); and (ii) any additional bonus and the
benefits set forth in Sections 2.3, 2.4 and 2.5 hereof. The Base Salary shall be
payable in accordance with the regular payroll practices of Employer applicable
EXHIBIT 10.9.4 - Page 1
to senior executives, less such deductions as shall be required to be withheld
by applicable law and regulations or otherwise.
2.2. ADJUSTMENTS IN BASE SALARY. On each October 1 during the
Employment Term, the Base Salary shall be increased by that percentage, if any,
by which the Consumer Price Index, Urban Wage Earners and Clerical Workers, for
the New York City metropolitan area, published by the United States Government
as of the month of September of such year exceeds such Index for the immediately
preceding September.
2.3. BONUS. Subject to Section 3.3 hereof, Executive shall be
entitled to an annual bonus during the Employment Term in such amount (if any)
as determined by the Board based on such performance criteria as it deems
appropriate, including, without limitation, Executive's performance and
Employer's earnings, financial condition, rate of return on equity and
compliance with regulatory requirements.
2.4. STOCK OPTIONS. Executive shall be entitled to
participate in stock option and similar equity plans of Employer. In connection
herewith, Executive has been granted options to purchase 300,000 shares of
common stock of Resources on terms and conditions set forth in the 2001
Performance Equity Plan and Executive's Stock Option Agreement with Resources.
2.5. EXECUTIVE BENEFITS.
2.5.1. EXPENSES. Employer shall promptly reimburse
Executive for expenses he reasonably incurs in connection with the performance
of his duties (including business travel and entertainment expenses) hereunder,
all in accordance with Employer's policies with respect thereto as in effect
from time to time.
2.5.2. EMPLOYER PLANS. Executive shall be entitled
to participate in such employee benefit and welfare plans and programs as
Employer may from time to time generally offer or provide to executive officers
of Employer or its Subsidiaries, including, but not limited to, participation in
life insurance, health and accident, medical plans and programs and profit
sharing and retirement plans.
2.5.3. VACATION. Executive shall be entitled to
four (4) weeks of paid vacation per calendar year, prorated for any partial
year.
2.5.4. AUTOMOBILE. Employer shall provide Executive
with an automobile cash allowance commensurate with his titles and positions.
2.5.5. LIFE INSURANCE. Employer shall obtain
(PROVIDED, that Executives qualifies on a non-rated basis) a term life insurance
policy, the premiums of which shall be borne by Employer and the death benefits
of which shall be payable to Executive's estate, or as otherwise directed by
Executive, in the amount of $1 million throughout the Employment Term.
3. EMPLOYMENT TERM; TERMINATION.
3.1. EMPLOYMENT TERM. Executive's employment hereunder shall
commence on the date hereof and, except as otherwise provided in Section 3.2
hereof, shall continue for such term (the "Initial Term") commencing on April
12, 2002 (the "Start Date") and terminating on the fifth (5th) anniversary
thereof. Thereafter, this Agreement shall automatically be renewed for
successive one-year periods commencing on the fifth (5th) anniversary of the
Start Date (the Initial Term, together with any such subsequent employment
period(s), being referred to herein as the "Employment Term"), unless Executive
or Employer shall have provided a Notice of Termination (as defined in Section
3.4.1 hereof) in respect of its or his election not to renew the Employment Term
to the other party at least ninety (90) days prior to such termination. Upon
non-renewal of the Employment Term pursuant to this Section 3.1 or termination
pursuant to Sections 3.2.1 through 3.2.6 hereof, inclusive, Executive shall be
released from any duties hereunder (except as set forth in Section 4 hereof) and
the obligations of Employer to Executive shall be as set forth in Section 3.3
hereof only.
3.2. EVENTS OF TERMINATION. The Employment Term shall
terminate upon the occurrence of any one or more of the following events:
EXHIBIT 10.9.4 - Page 2
3.2.1. DEATH. In the event of Executive's death,
the Employment Term shall terminate on the date of his death.
3.2.2. WITHOUT CAUSE BY EXECUTIVE. Executive may
terminate the Employment Term at any time during such Term for any reason
whatsoever by giving a Notice of Termination to Employer. The Date of
Termination pursuant to this Section 3.2.2 shall be thirty (30) days after the
Notice of Termination is given.
3.2.3. DISABILITY. In the event of Executive's
Disability (as hereinafter defined), Employer may, at its option, terminate the
Employment Term by giving a Notice of Termination to Executive. The Notice of
Termination shall specify the Date of Termination, which date shall not be
earlier than thirty (30) days after the Notice of Termination is given. For
purposes of this Agreement, "Disability" means disability as defined in any
long- term disability insurance policy provided by Employer and insuring
Executive, or, in the absence of any such policy, the inability of Executive for
180 days in any twelve (12) month period to substantially perform his duties
hereunder as a result of a physical or mental illness, all as determined in good
faith by the Board.
3.2.4. CAUSE. Employer may, at its option,
terminate the Employment Term for "Cause" based on objective factors determined
in good faith by a majority of the Board as set forth in a Notice of Termination
to Executive specifying the reasons for termination and the failure of the
Executive to cure the same within ten (10) days after Employer shall have given
the Notice of Termination; PROVIDED, HOWEVER, that in the event the Board in
good faith determines that the underlying reasons giving rise to such
determination cannot be cured, then the ten- (10) day period shall not apply and
the Employment Term shall terminate on the date the Notice of Termination is
given. For purposes of this Agreement, "Cause" shall mean (i) Executive's
conviction of, guilty or no contest plea to, or confession of guilt of, a felony
or other crime involving moral turpitude; (ii) an act or omission by Executive
in connection with his employment that constitutes fraud, criminal misconduct,
breach of fiduciary duty, dishonesty, gross negligence, malfeasance, willful
misconduct or other conduct that is materially harmful or detrimental to
Employer; (iii) a material breach by Executive of this Agreement; (iv)
continuing failure to perform such duties as are assigned to Executive by
Employer in accordance with this Agreement, other than a failure resulting from
a Disability; (v) Executive's knowingly taking any action on behalf of Employer
or any of its affiliates without appropriate authority to take such action; (vi)
Executive's knowingly taking any action in conflict of interest with Employer or
any of its affiliates given Executive's position with Employer; and/or (vii) the
commission of an act of personal dishonesty by Executive that involves personal
profit in connection with Employer.
3.2.5. WITHOUT CAUSE BY EMPLOYER. Employer may, at
its option, terminate the Employment Term for any reason or no reason whatsoever
(other than for the reasons set forth elsewhere in this Section 3.2) by giving a
Notice of Termination to Executive. The Notice of Termination shall specify the
Date of Termination, which date shall not be earlier than thirty (30) days after
the Notice of Termination is given.
3.2.6. EMPLOYER'S MATERIAL BREACH. Executive may,
at his option, terminate the Employment Term upon Employer's material breach of
this Agreement and the continuation of such breach for more than ten (10) days
after written demand for cure of such breach is given to Employer by Executive
(which demand shall identify the manner in which Employer has materially
breached this Agreement). Employer's material breach of this Agreement shall
mean (i) the failure of Employer to make any payment that it is required to make
hereunder to Executive when such payment is due or within two (2) business days
thereafter; (ii) the assignment to Executive, without Executive's express
written consent, of duties inconsistent with his positions, responsibilities and
status with Employer, or a change in Executive's reporting responsibilities,
titles or offices or any plan, act, scheme or design to constructively terminate
the Executive, or any removal of Executive from his positions with Employer,
except in connection with the termination of the Employment Term by Employer for
Cause, without Cause or Disability or as a result of Executive's death or
voluntary resignation or by Executive other than pursuant to this Section 3.2.6;
or (iii) a reduction by Employer in Executive's Base Salary.
3.3. CERTAIN OBLIGATIONS OF EMPLOYER FOLLOWING TERMINATION OF
THE EMPLOYMENT TERM. Following termination of the Employment Term under the
circumstances described below, Employer shall pay to Executive or his estate, as
the case may be, the following compensation and provide the following benefits
in full satisfaction and final settlement of any and all claims and demands that
Executive now has or hereafter may have hereunder against Employer. In
connection with Executive's receipt of any or all monies and benefits to be
received pursuant to this Section 3.3, Executive shall not have a duty to seek
subsequent employment during the period in which he is receiving severance
EXHIBIT 10.9.4 - Page 3
payments and the Severance Amount (as defined in Section 3.3.2 hereof) shall not
be reduced solely as a result of Executive's subsequent employment by an entity
other than Employer.
3.3.1. FOR CAUSE. In the event that the Employment
Term is terminated by Employer for Cause, Employer shall pay to Executive, in a
single lump-sum, an amount equal to any unpaid but earned Base Salary through
the Date of Termination (as defined in Section 3.4.3 hereof).
3.3.2. WITHOUT CAUSE BY EMPLOYER; MATERIAL BREACH
BY EMPLOYER; ELECTION NOT TO RENEW BY EMPLOYER OR EXECUTIVE; WITHOUT CAUSE BY
EXECUTIVE AFTER INITIAL TERM. In the event that, (i) during the Initial Term,
Executive's employment is terminated by Employer pursuant to Section 3.2.5
hereof or by Executive pursuant to Section 3.2.6 hereof, (ii) after the Initial
Term, Executive's employment is terminated by Employer pursuant to Section 3.2.5
hereof or by Executive pursuant to Sections 3.2.2 or 3.2.6 hereof or (iii) the
Employment Term is not renewed pursuant to Section 3.1 hereof, Employer shall
pay to Executive, subject to Executive's continued compliance with the terms of
Section 4 hereof, an amount equal to one-and-a-half (1.5) times the Base Salary
in effect at such applicable time (the "Severance Amount"); PROVIDED, HOWEVER,
that in the event Executive shall have received any royalties during the
Employment Term pursuant to that certain letter agreement (the "Royalty
Agreement"), dated August 23, 2002, between Resources and FineTech Ltd., with
respect to royalty payments relating to Latanoprost, the Severance Amount shall
be equal to one (1) times such Base Salary. Any payments made in accordance with
this Section 3.3.2 shall be made in twelve (12) equal installments over the
course of one (1) year from the Date of Termination in accordance with
Employer's regular payroll practices.
3.3.3 WITHOUT CAUSE BY EXECUTIVE DURING INITIAL
TERM. In the event that the Employment Term is terminated during the Initial
Term by Executive during the Initial Term pursuant to Section 3.2.2 hereof,
Employer shall pay to Executive, in a single lump-sum, an amount equal to any
unpaid but earned Base Salary through the Date of Termination.
3.3.4. DEATH, DISABILITY. In the event that the
Employment Term is terminated by reason of Executive's death pursuant to Section
3.2.1 hereof or by reason of Executive's Disability pursuant to Section 3.2.3
hereof, Employer shall pay to Executive, subject to, in the case of Disability,
Executive's continued compliance with Section 4 hereof, the Severance Amount,
less any life insurance and/or disability insurance received by Executive or his
estate pursuant to insurance policies provided by Employer (including pursuant
to Section 2.5.5 hereof), payable in accordance with Section 3.3.2 hereof.
3.3.5. POST-EMPLOYMENT TERM BENEFITS. In the event
Executive is terminated pursuant to Sections 3.2.1 through 3.2.6 hereof,
inclusive, or either Employer or Executive elects not to renew this Agreement
pursuant to Section 3.1 hereof, Employer shall reimburse Executive for any
unpaid expenses pursuant to Section 2.5.1 hereof and if Executive is terminated
pursuant to Sections 3.2.3, 3.2.5 or 3.2.6 hereof or Employer elects not to
renew this Agreement pursuant to Section 3.1 hereof, Employer shall pay, on
behalf of Executive, for a period equal to twenty-four (24) months from the Date
of Termination (the "Benefits Period"), subject to Executive's continued
compliance with the terms of Section 4 hereof, all life insurance, medical,
health and accident, and disability plans and programs in which Executive was
entitled to participate immediately prior to the Date of Termination; PROVIDED,
that Executive's continued participation is legally possible under the general
terms and provisions of such plans and programs; and PROVIDED, further, that in
the event Executive is entitled to equal or comparable benefits from a
subsequent employer during the Benefits Period, Employer's obligation with
respect thereto pursuant to this Section 3.3.5 shall end as of such date. In the
event that Executive's participation in any such plan or program is barred,
Employer, at its sole cost and expense, shall use its commercially reasonable
efforts to provide Executive with benefits substantially similar to those that
Executive was entitled to receive under such plans and programs for the
remainder of the Benefits Period.
3.3.6. STOCK OPTIONS.
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(a) If, within twelve (12) months following a
Change of Control (as defined in Executive's Stock Option Agreements) of
Employer, the Employment Term is terminated other than for Cause, then Executive
(or his estate) shall have twenty-four (24) months from the date of such event
to exercise such stock options; PROVIDED, that the relevant stock option plan
remains in effect and such stock options shall not have otherwise expired in
accordance with the terms thereof. In connection therewith, Employer agrees to
use commercially reasonable efforts to amend Executive's Stock Option Agreements
if necessary to effectuate the provisions of this Section 3.3.6(a).
EXHIBIT 10.9.4 - Page 4
(b) In the event the Employment Term is
terminated by Employer pursuant to Section 3.2.5 hereof and the reason for such
termination is not related to the performance of Employer (financially,
operationally or otherwise) or of Executive in his duties with respect to
Employer, the Board shall cause the Compensation and Stock Option Committee to
consider in good faith, but in the Committee's sole discretion, whether to
accelerate the vesting of all or a portion of Executive's then unvested stock
options and whether to extend the period of time within which Executive may
exercise his vested stock options.
(c) In the event the Employment Term is
terminated by Executive pursuant to Section 3.2.6 hereof, then all stock options
theretofore granted to Executive shall thereupon vest and Executive shall have
twenty-four (24) months from such date to exercise such options; PROVIDED, that
the relevant stock option plan remains in effect and such stock options shall
not have otherwise expired in accordance with the terms thereof. In connection
therewith, Employer agrees to use commercially reasonable efforts to amend
Executive's Stock Option Agreements if necessary to effectuate the provisions of
this Section 3.3.6(c).
3.4. DEFINITIONS.
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3.4.1. "NOTICE OF TERMINATION" DEFINED. "Notice of
Termination" means a written notice that indicates the specific termination
provision relied upon by Employer or Executive and, except in the case of
termination pursuant to Sections 3.2.1, 3.2.2 or 3.2.5 hereof, which sets forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employment Term under the termination provision so indicated.
3.4.2. "DATE OF TERMINATION" DEFINED. "Date of
Termination" means such date as the Employment Term is expired if not renewed or
terminated in accordance with Sections 3.1 or 3.2 hereof.
4. CONFIDENTIALITY AND NONSOLICITATION; PROPERTY RIGHTS.
4.1. "CONFIDENTIAL INFORMATION" DEFINED. "Confidential
Information" means any and all information (oral or written) relating to
Employer or any Subsidiary or any person controlling, controlled by, or under
common control with Employer or any Subsidiary or any of their respective
activities, including, but not limited to, information relating to: technology,
research, test procedures and results, machinery and equipment; manufacturing
processes; financial information; products; identity and description of
materials and services used; purchasing; costs; pricing; customers and
prospects; advertising, promotion and marketing; and selling, servicing and
information pertaining to any governmental investigation, except such
information which becomes public, other than as a result of a breach of the
provisions of Section 4.2 hereof.
4.2. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Executive
shall not at any time (other than as may be required or appropriate in
connection with the performance by him of his duties hereunder), directly or
indirectly, use, communicate, disclose or disseminate any Confidential
Information in any manner whatsoever (except as may be required under legal
process by subpoena or other court order).
4.3. CERTAIN ACTIVITIES. Executive shall not, while employed
by Resources and for a period of three (3) years following the Date of
Termination, directly or indirectly, hire, offer to hire, entice away or in any
other manner persuade or attempt to persuade any officer, employee, agent,
lessor, lessee, licensor, licensee, customer, prospective customer or supplier
of Employer or any of its Subsidiaries to discontinue or alter his or its
relationship with Employer or any of its Subsidiaries.
4.4. NON-COMPETITION. Executive shall not, while employed by
Resources and for a period of one (1) year following the Date of Termination,
engage or participate in, directly or indirectly (whether as an officer,
director, employee, partner, consultant, equityholder, lender or otherwise), any
business that manufactures, markets or sells products that compete with any
product of Employer that is significant to Employer's business based on sales
and/or profitability of any such product as of the Date of Termination, unless
the Employment Term is terminated by Employer pursuant to Section 3.2.5 hereof
or by Executive properly pursuant to Section 3.2.6 hereof. Nothing herein shall
prohibit Executive from being a passive owner of not more than one (1%) percent
of any publicly-traded class of capital stock of any entity engaged in a
competing business.
EXHIBIT 10.9.4 - Page 5
4.5. PROPERTY RIGHTS; ASSIGNMENT OF INVENTIONS. With respect
to information, inventions and discoveries or any interest in any copyright
and/or other property right developed, made or conceived of by Executive, either
alone or with others, at any time during his employment by Employer and whether
or not within working hours, arising out of such employment or pertinent to any
field of business or research in which, during such employment, Employer is
engaged or (if such is known to or ascertainable by Executive) is considering
engaging, Executive hereby agrees:
(a) that all such information, inventions and discoveries or
any interest in any copyright and/or other property right, whether or not
patented or patentable, shall be and remain the exclusive property of Employer;
(b) to disclose promptly to an authorized representative of
Employer all such information, inventions and discoveries or any copyright
and/or other property right and all information in Executive's possession as to
possible applications and uses thereof;
(c) not to file any patent application relating to any such
invention or discovery except with the prior written consent of an authorized
officer of Employer (other than Executive);
(d) that Executive hereby waives and releases any and all
rights Executive may have in and to such information, inventions and
discoveries, and hereby assigns to Executive and/or its nominees all of
Executive's right, title and interest in them, and all Executive's right, title
and interest in any patent, patent application, copyright or other property
right based thereon. Executive hereby irrevocably designates and appoints
Employer and each of its duly authorized officers and agents as his agent and
attorney-in-fact to act for him and on his behalf and in his stead to execute
and file any document and to do all other lawfully permitted acts to further the
prosecution, issuance and enforcement of any such patent, patent application,
copyright or other property right with the same force and effect as if executed
and delivered by Executive; and
(e) at the request of Employer, and without expense to
Executive, to execute such documents and perform such other acts as Employer
deems necessary or appropriate, for Employer to obtain patents on such
inventions in a jurisdiction or jurisdictions designated by Employer, and to
assign to Employer or its designee such inventions and any and all patent
applications and patents relating thereto.
4.6. INJUNCTIVE RELIEF. The parties hereby acknowledge and
agree that (a) Employer will be irreparably injured in the event of a breach by
Executive of any of his obligations under this Section 4; (b) monetary damages
will not be an adequate remedy for any such breach; (c) Employer will be
entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach; and (d) the existence of any claims that
Executive may have against Employer, whether under this Agreement or otherwise,
will not be a defense to the enforcement by Employer of any of its rights under
this Section 4.
4.7. NON-EXCLUSIVITY AND SURVIVAL. The covenants of Executive
contained in this Section 4 are in addition to, and not in lieu of, any
obligations that Executive may have with respect to the subject matter hereof,
whether by contract, as a matter of law or otherwise, and such covenants and
their enforceability shall survive any termination of the Employment Term by
either party and any investigation made with respect to the breach thereof by
Employer at any time. 5. MISCELLANEOUS PROVISIONS.
5.1. SEVERABILITY. If, in any jurisdiction, any term or
provision hereof is determined to be invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired; (b) any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction; and (c) the invalid or
unenforceable term or provision shall, for purposes of such jurisdiction, be
deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
5.2. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement (and all
signatures need not appear on any one counterpart), and this Agreement shall
become effective when one or more counterparts has been signed by each of the
parties hereto and delivered to each of the other parties hereto.
EXHIBIT 10.9.4 - Page 6
5.3. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly given upon
receipt when delivered by hand, overnight delivery or telecopy (with confirmed
delivery), or three (3) business days after posting, when delivered by
registered or certified mail or private courier service, postage prepaid, return
receipt requested, as follows:
If to Employer, to:
Pharmaceutical Resources, Inc.
One Ram Ridge Road
Spring Valley, New York 10977
Attention: Chairman
Telecopy No.: (845) 425-7922
Copy to:
Stephen A. Ollendorff, Esq.
Whitney John Smith, Esq.
Kirkpatrick & Lockhart LLP
599 Lexington Avenue
New York, New York 10022
Telecopy No.: (212) 536-3901
If to Executive, to:
Dr. Arie Gutman
c/o Pharmaceutical Resources, Inc.
One Ram Ridge Road
Spring Valley, New York 10977
or to such other address(es) as a party hereto shall have designated by like
notice to the other parties hereto.
5.4. AMENDMENT. No provision of this Agreement may be
modified, amended, waived or discharged in any manner except by a written
instrument executed by both Resources and Executive.
5.5. ENTIRE AGREEMENT. This Agreement and Executive's Stock
Option Agreement constitute the entire agreement of the parties hereto with
respect to the subject matter hereof, and supersede all prior agreements and
understandings of the parties hereto, oral or written, including, but not
limited to, any agreement between Executive and International Specialty Products
Inc. or ISP FineTech Ltd. or any of their respective affiliates (the "Previous
Employers"); PROVIDED, HOWEVER, that if there shall be a conflict between this
Agreement and Executive's Stock Option Agreement, the terms of this Agreement
shall govern; and PROVIDED, FURTHER, that Executive hereby agrees and
acknowledges that under no circumstances whatsoever shall Employer assume any
liabilities, or be responsible for any obligations, monetary or otherwise, owed
by any of the Previous Employers to Executive. Executive and Employer hereby
agree that each of such agreements and understandings is hereby superseded and
of no further force and effect, and that this Agreement shall be effective as of
the date hereof. Notwithstanding anything to the contrary contained herein,
nothing in this Section 5.5 shall impair Executive's rights in respect of the
Royalty Agreement.
5.6. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be wholly performed therein.
5.7. HEADINGS. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
5.8. BINDING EFFECT; SUCCESSORS AND ASSIGNS. Executive may
not delegate any of his duties or assign his rights hereunder. This Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Employer shall require any successor (whether direct or indirect and whether by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Employer, by an agreement in form and substance
reasonably satisfactory to Executive, to expressly assume and agree to perform
EXHIBIT 10.9.4 - Page 7
this Agreement in the same manner and to the same extent that Employer would be
required to perform if no such succession had taken place.
5.9. WAIVER, ETC. The failure of either of the parties hereto
to at any time enforce any of the provisions of this Agreement shall not be
deemed or construed to be a waiver of any such provision, nor to in any way
affect the validity of this Agreement or any provision hereof or the right of
either of the parties hereto thereafter to enforce each and every provision of
this Agreement. No waiver of any breach of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party against whom or which enforcement of such waiver is sought, and no
waiver of any such breach shall be construed or deemed to be a waiver of any
other or subsequent breach.
5.10. CAPACITY, ETC. Executive and Employer hereby represent
and warrant to the other that, as the case may be: (a) he or it has full power,
authority and capacity to execute and deliver this Agreement, and to perform his
or its obligations hereunder; (b) such execution, delivery and performance shall
not (and with the giving of notice or lapse of time or both would not) result in
the breach of any agreements or other obligations to which he or it is a party
or he or it is otherwise bound; and (c) this Agreement is his or its valid and
binding obligation in accordance with its terms.
5.11. ENFORCEMENT; JURISDICTION. If any party institutes legal
action to enforce or interpret the terms and conditions of this Agreement, the
prevailing party shall be awarded reasonable attorneys' fees at all trial and
appellate levels, and the expenses and costs incurred by such prevailing party
in connection therewith. Any legal action, suit or proceeding, in equity or at
law, arising out of or relating to this Agreement shall be instituted
exclusively in the State or Federal courts located in the State and County of
New York and each party agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that such party is
not subject personally to the jurisdiction of any such court, that the action,
suit or proceeding is brought in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or should be transferred, or that this
Agreement or the subject matter hereof may not be enforced in or by any such
court. Each party further irrevocably submits to the jurisdiction of any such
court in any such action, suit or proceeding. Any and all service of process and
any other notice in any such action, suit or proceeding shall be effective
against any party if given personally or by registered or certified mail, return
receipt requested or by any other means of mail that requires a signed receipt,
postage prepaid, mailed to such party as herein provided. Nothing herein
contained shall be deemed to affect or limit the right of any party to serve
process in any other manner permitted by applicable law.
5.12. ARBITRATION.
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(a) Any dispute under Section 3 hereof,
including, but not limited to, the determination by the Board of a termination
for Cause pursuant to Section 3.2.4 hereof, or in respect of the breach thereof
shall be settled by arbitration in the Borough of Manhattan, City of New York.
The arbitration shall be accomplished in the following manner. Either party may
serve upon the other party written demand that the dispute, specifying the
nature thereof, shall be submitted to arbitration. Within ten (10) days after
such demand is given in accordance with Section 5.3 hereof, each of the parties
shall designate an arbitrator and provide written notice of such appointment
upon the other party. If either party fails within the specified time to appoint
such arbitrator, the other party shall be entitled to appoint both arbitrators.
The two (2) arbitrators so appointed shall appoint a third arbitrator. If the
two arbitrators appointed fail to agree upon a third arbitrator within ten (10)
days after their appointment, then an application may be made by either party
hereto, upon written notice to the other party, to the American Arbitration
Association (the "AAA"), or any successor thereto, or if the AAA or its
successor fails to appoint a third arbitrator within ten (10) days after such
request, then either party may apply, with written notice to the other, to the
Supreme Court of the State of New York, New York County, for the appointment of
a third arbitrator, and any such appointment so made shall be binding upon both
parties hereto.
(b) The decision of the arbitrators shall be
final and binding upon the parties. The party against whom the award is rendered
(the "non-prevailing party") shall pay all fees and expenses incurred by the
prevailing party in connection with the arbitration (including fees and
disbursements of the prevailing party's counsel), as well as the expenses of the
arbitration proceeding. The arbitrators shall determine in their decision and
award which of the parties is the prevailing party, which is the non-prevailing
party, the amount of the fees and expenses of the prevailing party and the
amount of the arbitration expenses. The arbitration shall be conducted, to the
extent consistent with this Section 5.12, in accordance with the then prevailing
rules of commercial arbitration of the AAA or its successor. The arbitrators
shall have the right to retain and consult experts and competent authorities
skilled in the matters under arbitration, but all consultations shall be made in
EXHIBIT 10.9.4 - Page 8
the presence of both parties, who shall have the full right to cross-examine the
experts and authorities. The arbitrators shall render their award, upon the
concurrence of at least two of their number, not later than thirty (30) days
after the appointment of the third arbitrator. The decision and award shall be
in writing, and counterpart copies shall be delivered to each of the parties. In
rendering an award, the arbitrators shall have no power to modify any of the
provisions of this Agreement, and the jurisdiction of the arbitrators is
expressly limited accordingly. Judgment may be entered on the award of the
arbitrators and may be enforced in any court having jurisdiction.
[SIGNATURE PAGE FOLLOWS]
EXHIBIT 10.9.4 - Page 9
IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto as of the date first above written.
PHARMACEUTICAL RESOURCES, INC.
By: /s/ KENNETH I. SAWYER
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Name:Kenneth I. Sawyer
Title:Chief Executive Officer
/s/ DR. ARIE GUTMAN
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DR. ARIE GUTMAN
EXHIBIT 10.9.4 - Page 10