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EXHIBIT 10.43
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of the 10th day of March, 1998
between and among HALSEY DRUG CO., INC., a New York corporation (the
"Corporation"), with principal executive offices at 1827 Pacific Street,
Brooklyn, New York 11233 and MICHAEL K. REICHER residing at 2264 Churchview
Drive, Apt. 10, Rockford, Illinois 61107 (the "Employee").
W I T N E S S E T H
WHEREAS, the Corporation desires to employ the Employee to
engage in such activities and to render such services as are required under the
terms and conditions hereof and the Board of Directors has authorized and
approved the execution of this Agreement; and
WHEREAS, the Employee desires to be employed by the
Corporation under the terms and conditions hereinafter provided,
WHEREAS, the Corporation is engaged in the generic drug
business as a manufacturer, packager, distributor, and wholesaler thereof and in
the development of new generic drugs.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Services. The Corporation hereby employs Employee, for the
Term (as hereinafter defined in Section 2 hereof), to render exclusive and
full-time services to the business and affairs of the Corporation as the Chief
Executive Officer and President of the Corporation, subject to the direction and
control of the Board of Directors of the Corporation, and, in connection
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therewith, the Employee shall be responsible for the day-to-day operations of
the Corporation, for development and implementation of annual operating plans,
annual capital plans and strategic plans, and to perform such other duties
consistent with the office of the Chief Executive Officer and President as he
shall reasonably be directed or requested to perform by the Board of Directors,
to whom he shall report, and to use his best efforts, skill and abilities to
promote the interests of the Corporation and its subsidiaries. Employee shall
not be required to relocate his residence to the New York/New Jersey
metropolitan area as a condition of his employment. Employee shall, however,
spend as much time in the NY/NJ area as may be required in the exercise of his
best judgment for the successful operation of the Corporation.
1.2 Acceptance. Employee hereby accepts such employment and
agrees to render the services described in Section 1.1 hereof.
2. Term of Employment.
The term of Employee's employment under this Agreement shall
commence on the date of this Agreement and shall terminate on February 28, 2003
(the "Initial Term"), unless sooner terminated pursuant to Section 8 of this
Agreement; provided, however, that if the Corporation shall fail to give
Employee written notice of non-renewal of Employee's employment with the
Corporation not less than 180 days prior to the Initial Term or any Renewal
Period (as defined), Employee's term hereunder shall automatically be extended
for successive one (1) year periods (each a "Renewal Period" and together with
the Initial Term, the "Term").
3. Compensation. In consideration of the services to be rendered by the
Employee pursuant to this Agreement, the Employee shall receive from the
Corporation the following compensation:
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(a) Base Salary. The Corporation shall pay the Employee an
aggregate base salary at the annual rate of $175,000, payable in equal bi-weekly
installments, less such deductions or amounts to be withheld as shall be
required by applicable laws and regulations.
The Employee's Base Salary shall be subject to increase at the
discretion of the Board of Directors of the Corporation, in its sole discretion.
(b) Annual Bonus. During the Term, Employee shall be entitled
to receive from the Corporation an annual bonus in respect of each fiscal year,
or portion thereof, of the Corporation as follows:
(1) commencing with the Corporation's 1998 fiscal
year (ending December 31, 1998), in an amount of $93,750, provided that net
sales of the Corporation for the year ending December 31, 1998 are not less than
$28,000,000; and
(2) thereafter in accordance with such targets,
conditions or parameters as may be determined from time to time hereafter by the
Compensation Committee of the Board of Directors of the Corporation in its sole
and absolute discretion.
4. Expenses.
The Corporation shall pay or reimburse Employee for all
reasonable expenses which are in accordance with the Corporation's expense
policy in force from time to time and which are actually incurred or paid by him
during the Term in the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as the Corporation may require.
5. Additional Benefits.
(a) In General. In addition to the compensation and
expenses to be paid under
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Sections 3 and 4 hereof, Employee will be entitled to all rights and benefits
for which he shall be eligible under any insurance, profit-making, incentive,
bonus, stock option, pension or other extra compensation or "fringe" benefit
plan of the Corporation or any of its subsidiaries now existing or hereafter
adopted for the benefit of the executives or employees generally of the
Corporation.
(b) Stock Options. Employee is hereby granted stock options to
purchase 1,000,000 shares of the Corporation's common stock, $.01 par value per
share (the "Option") at an exercise price of $2.375 per share (representing the
closing price for the Company's common stock as reported by the American Stock
Exchange on Wednesday, February 18, 1998) (the "Option Shares"). The Option
shall vest and be exercisable in an amount equal to 62,500 Option Shares at the
end of each quarterly period during the Term (the first quarterly vesting period
to be satisfied on May 1, 1998 and on each August 1, November 1, and February 1,
thereafter until fully vested). The Option shall have a ten year term, subject
to earlier termination as set forth in paragraph 5(c) upon the termination of
Employee's employment with the Corporation and shall be evidenced by the
Corporation's standard form stock option agreement. The Employee and the
Corporation agree that the Option shall be deemed to have been issued pursuant
to one or more plans for the grant of incentive stock options, to the maximum
extent permitted by law, and non-qualified stock options. The exercise price and
terms of any non-qualified options shall be subject to such revisions as the
Employee and the Corporation may agree.
(c) Purchase of Options. In the event that Employee is
terminated for cause (as defined in paragraph 8.3) or resigns, the Corporation
shall have the right, but not the obligation, to purchase Employee's vested
Option at the Fair Market Value thereof. In the event that the Corporation does
not elect to purchase Employee's vested Option within seven days of the date of
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Employee's termination for cause or resignation, Employee shall be obligated to
exercise his Options in writing within 37 days of such termination or
resignation, failing which he shall be deemed to have forfeited his Option to
the Corporation. For purposes of this paragraph 5(c), "Fair Market Value" shall
mean the product of (i) the positive difference, if any, between the average of
the closing price of the Company's Common Stock as reported by the American
Stock Exchange, or such other exchange or over-the-counter market on which the
Company's Common Stock may then be listed or admitted for trading, for the five
(5) trading days prior to the date of termination, multiplied by (ii) the number
of Option Shares which, as of the date of termination, are vested under the
Option.
(d) Automobile. The Corporation shall provide the Employee
with a company car and shall reimburse the Employee for all gasoline, insurance
and maintenance expense associated with the Employee's automobile, to the extent
deductible by the Corporation under applicable federal laws and regulations.
6. Vacation.
Employee shall be entitled to a vacation period of not less
than four weeks during each year of the Term, to be taken at a time or times
acceptable to the Corporation.
7. Insurability; Right to Insure. Employee represents and warrants to
the Corporation that, to the best of his knowledge, on the date hereof he is,
and upon the commencement of the Term he will be, insurable at standard premium
rates. Employee agrees that the Corporation shall have the right during the Term
to insure the life of Employee by a policy or policies of insurance in such
amount or amounts as it may deem necessary or desirable, and the Corporation
shall be the beneficiary of any such policy or policies and shall pay the
premiums or other costs thereof. The
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Corporation shall have the right, from time to time, to modify any such policy
or policies of insurance or to take out new insurance on the life of Employee.
Employee agrees, upon request, at any time or times prior to the commencement of
or during the Term to sign and deliver any and all documents and to submit to
any physical or other reasonable examinations which may be required in
connection with any such policy or policies of insurance or modifications
thereof.
8. Termination.
8.1 Death. If during the Term Employee shall die, Employee's
employment under this Agreement shall terminate as of the date of Employee's
death. The base salary payable hereunder to or for the benefit of Employee
through the date of death shall be paid to such person or persons ("Employee's
Designees") as Employee may designate by notice to the Corporation from time to
time or, in the absence of such designation, to his spouse. In addition, the
Corporation shall pay the Employee's Designees an amount equal to six months'
base salary plus 1/12th of the bonus the Employee would have received had he
been alive at the end of the year in which he died, for each complete calendar
month from January 1 of the year in which the Employee died, to his date of
death.
8.2 Disability. In the event of the Employee's "mental or
physical disability" (as defined herein) which continues for (i) a period of
longer than 90 consecutive days, or (ii) such periods aggregating 120 days
during any 365 consecutive days, such that the Employee is, despite reasonable
accommodation, unable to substantively perform the essential functions of his
position for said period, the determination of which shall be confirmed by the
Board of Directors in the manner hereinafter provided, this Agreement shall
terminate upon thirty (30) days' prior written notice to the Employee from the
Corporation (the "Disability Termination Date"). The Corporation
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shall continue to pay to the Employee during the period of his mental or
physical disability the base salary and annual bonus provided in Section 3 of
this Agreement as well as provide the benefits described herein; provided,
however, that the base salary shall be reduced by any disability insurance
payments paid to the Employee. On the Disability Termination Date, Employee's
base salary shall cease but the Employee shall be entitled to the annual bonus
computed in accordance with Section 3(b) hereof for the period ending on the
Disability Termination Date. Except for the bonus payment required in the
preceding sentence, no annual bonus will accrue or be payable by the Corporation
following the Disability Termination Date.
As used herein, the term "mentally or physically disabled"
shall have the meaning ascribed thereto in the disability insurance policy then
in force and effect with respect to the Employee or, if no such disability
policy then exists, it shall mean the inability of the Employee, by reason of
injury, illness or other similar cause to perform a material part of his duties
and responsibilities in connection with the conduct of the business and affairs
of the Corporation as determined by a reputable physician of the Corporation's
selection, who has examined the Employee with his consent.
8.3 Termination For Cause. The Corporation may at any time
during the Term, by written notice, and after affording the Employee the
opportunity to be heard in person by the Board of Directors, terminate this
Agreement and discharge Employee for "cause", whereupon the Corporation's
obligation to pay compensation or any other amounts payable hereunder to or for
the benefit of Employee shall terminate on the date of such discharge except for
accrued and unpaid salary and expenses to the date of discharge. For purposes of
this Agreement, the term "cause" shall mean (i) excessive absenteeism,
alcoholism or drug abuse, (ii) fraud, misappropriation or intentional
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material damage to the property or business of the Corporation; (iii) conviction
of a felony; (iv) failure of the Employee to perform his duties in accordance
with this Agreement after written notice to the Employee by the Board of
Directors specifying such failure and giving the Employee eight (8) days to
correct the defects in performance; or (v) breach by the Employee of any
material provision hereof which, if capable of remedy, remains unremedied for
more than 10 days after written notice.
8.4 Termination without Cause. The Corporation shall have the
option to terminate this Agreement without cause upon thirty (30) days' written
notice to the Employee. In the event the Corporation terminates this Agreement
pursuant to this Section 8.4, the Corporation shall pay the Employee an amount
equal to (a) his then accrued and unpaid base salary and bonuses through and
including the date of termination, and (b) $350,000 or twice his then Base
Salary, whichever is greater payable in 24 equal monthly installments. Upon
termination of Employee's employment with the Corporation pursuant to this
Section 8.4, (i) Employee's outstanding Options shall vest in full,
notwithstanding any contrary vesting schedule contained herein or in any option
agreement between the Corporation and the Employee and shall be exercised within
90 days of the date of vesting, and (ii) the provisions of paragraph 9.3 shall
be deemed of no force or effect.
Subject to paragraph 8.4(ii), the obligations of the Employee
under Section 9 shall continue notwithstanding the termination of Employee's
employment pursuant to this Section 8.4 provided the Corporation complies with
its obligations specified in this paragraph.
8.5 Change of Control. Upon the sale or transfer of more than
50% of the outstanding shares of the Corporation (other than to Galen Associates
or any of its affiliates) or upon the sale of the whole or a major part of the
business of the Corporation, Employee shall be entitled
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to terminate this Agreement on the same terms and conditions as set forth in
Section 8.4.
9. Protection of Confidential Information. In view of the fact that
Employee's work for the Corporation will bring him into close contact with all
the confidential affairs thereof, and plans for future developments, Employee
agrees to the following:
9.1 Secrecy. During the term of Employment and for two (2)
years thereafter, to preserve the confidential nature of, and not disclose,
reveal, or make accessible to anyone other than the Corporation's officers,
directors, employees, consultants or agents, otherwise than within the scope of
his employment duties and responsibilities hereunder, any and all documents,
information, knowledge or data of or pertaining to the Corporation, its
subsidiaries or affiliates or pertaining to any other individual, firm,
corporation, partnership, joint venture, business, organization, entity or other
person with which the Corporation or any of its subsidiaries or affiliates may
do business during the Term of Employment (including licensees, licensors,
manufacturers, suppliers and customers of the Corporation or any of its
subsidiaries or affiliates) and which is not in the public domain, including
trade secrets, "know how", names and lists of licensees, licensors,
manufacturers, suppliers and customers, programs, statistics, manufacturing and
production methods, processes, techniques, pricing, marketing methods and plans,
specifications, advertising plans and campaigns or any other matters, and all
other confidential information of the Corporation, its subsidiaries and
affiliates acquired in connection with Employee's employment (hereinafter
referred to as "Confidential Information"). The restrictions on the disclosure
of Confidential Information imposed by this Subparagraph 9.1 shall not apply to
any Confidential Information that was part of the public domain at the time of
its receipt by the Employee or becomes part of the public domain in any manner
and for any reason other than an act by the Employee, unless the Employee is
legally
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compelled (by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to disclose such Confidential
Information, in which event Employee shall provide the Corporation with prompt
notice of such requirement so that the Corporation may seek a protective order
or other appropriate remedy, and if such protective order or other remedy is not
obtained, Employee shall exercise reasonable efforts in good faith to obtain
assurance that confidential treatment will be accorded such Confidential
Information.
9.2 Return Memoranda, etc. To deliver promptly to the
Corporation on termination of his employment, or at any other time the
Corporation may so request, all memoranda, notes, records, reports, manuals,
drawings, blueprints and other documents (and all copies thereof) relating to
the Corporation's business and all property associated therewith, which he may
then possess or have under his control.
9.3 Non-competition. Provided that this Agreement has not been
breached by the Corporation, the Employee agrees that he shall not at any time
prior to two years after the earlier to occur of (i) the expiration of the Term
hereunder and (ii) the termination of his employment with the Corporation, own,
manage, operate, be a director or an employee of, or a consultant to any
business or corporation which is conducting any business within the generic drug
industry or which competes with or conducts the same business as or similar to
that conducted by the Corporation in the United States. The Employee further
agrees that, provided this Agreement has not been breached by the Corporation,
he shall not, at any time prior to two years after the earlier to occur of (i)
the expiration of the Term hereunder and (ii) the termination of his employment
with the Corporation, assist or allow any such business or corporation to hire
anyone who was employed by the Corporation at such time or at any time during
the preceding twelve months. If any of the provisions of this section, or
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any part thereof, is hereinafter construed to be invalid or unenforceable, the
same shall not affect the remainder of such provision or provisions, which shall
be given full effect, without regard to the invalid portions. If any of the
provisions of this section, or any part thereof, is held to be unenforceable
because of the duration of such provision, the area covered thereby or the type
of conduct restricted therein, the parties agree that the court making such
determination shall have the power to modify the duration, geographic area
and/or other terms of such provision and, as so modified, said provision shall
then be enforceable. In the event that the courts of any one or more
jurisdictions shall hold such provisions wholly or partially unenforceable by
reason of the scope thereof or otherwise, it is the intention of the parties
hereto that such determination not bar or in any way affect the Corporation's
right to the relief provided for herein in the courts of any other jurisdictions
as to breaches or threatened breaches of such provisions in such other
jurisdictions, the above provisions as they relate to each jurisdiction being,
for this purpose, severable into diverse and independent covenants.
9.4 Injunctive Relief. The Employee acknowledges and agrees
that, because of the unique and extraordinary nature of his services, any breach
or threatened breach of the provisions of Sections 9.1, 9.2, or 9.3 hereof will
cause irreparable injury and incalculable harm to the Corporation, and the
Corporation shall, accordingly, be entitled to injunctive and other equitable
relief for such breach or threatened breach and that resort by the Corporation
to such injunctive or other equitable relief shall not be deemed to waive or to
limit in any respect any right or remedy which the Corporation may have with
respect to such breach or threatened breach.
9.5 Expenses of Enforcement of Covenants. In the event that
any action, suit or proceeding at law or in equity is brought to enforce the
covenants contained in Section 9.1, 9.2, or
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9.3 hereof or to obtain money damages for the breach thereof, the party
prevailing in any such action, suit or other proceeding shall be entitled upon
demand to reimbursement from the other party for all expenses (including,
without limitation, reasonable attorneys' fees and disbursements) incurred in
connection therewith.
9.6 Non-Solicitation. Employee covenants and agrees not to,
directly or indirectly, during the Term of Employment and for a period of two
(2) years from and after the effective date of the termination of his employment
with the Corporation (for any reason whatsoever), (i) induce or attempt to
influence any employee of the Corporation or any of its subsidiaries or
affiliates to leave its employ, or (ii) aid any person, business, or firm,
including a supplier, a competitor, licensor or customer of or a manufacturer
for the Corporation, in any attempt to hire any person who shall have been
employed by the Corporation or any of its subsidiaries or affiliates within the
period of one (1) year of the date of any such requested aid.
10. Indemnification.
(a) The Corporation will defend and indemnify Employee, to the
maximum extent permitted by applicable law and the by-laws of the Corporation,
against all claims, costs, charges and expenses incurred or sustained by him in
connection with any action, suit or other proceeding to which he may be made a
party by reason of (i) his being an officer, director or employee of the
Corporation or of any subsidiary or affiliate thereof, or (ii) the Employee's
alleged employment of Employee by Ranbaxy Pharmaceuticals, Inc. or his alleged
termination thereafter.
(b) The Corporation will defend and indemnify Employee against
all costs, charges and expenses incurred or sustained by him in connection with
any action, suit or other proceeding to which he may be made a party by reason
of the Employee's prior employment by
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Mylan Pharmaceuticals Inc. or any agreement executed in connection with such
employment; provided, however, that in no event shall such defense and indemnity
obligation exceed $25,000 in the aggregate.
11. Employee Warranties.
Employee hereby warrants that, except as may be alleged by
Ranbaxy Pharmaceuticals, Inc., as of the date hereof Employee is not employed
(other than by the Corporation) and is not a party to any other employment
contract, express or implied. Employee warrants that he has no other obligation,
contractual or otherwise, which would prevent him from accepting the
Corporation's offer of employment under the terms of this Agreement and from
complying with its provisions. Employee warrants that he will not utilize during
his employment hereunder any confidential information obtained through or in
connection with his prior employment. Employee warrants that he knows of no
reason why he would not be able to perform his obligations under this Agreement.
12. Notices.
All notices, requests, consents and other communications
required or permitted to be given hereunder, shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by facsimile,
with confirmation of receipt, or mailed first-class, postage prepaid, by
registered or certified mail (notices sent by mail shall be deemed to have been
given on the date sent), to the parties at their respective addresses
hereinabove set forth or to such other address as either party shall designate
by notice in writing to the other in accordance herewith.
13. General.
13.1 Governing Law. This Agreement shall be governed by and
construed and
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enforced in accordance with the local laws of the State of New York applicable
to agreements made and to be performed entirely in New York.
13.2 Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
13.3 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof. No representation,
promise or inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
13.4 Assignability. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. The Corporation may
assign its rights, together with its obligations, hereunder in connection with
any sale, transfer or other disposition of all or substantially all of its
business or assets; in any event the rights and obligations of the Corporation
hereunder shall be binding on its successors or assigns, whether by merger,
consolidation or acquisition of all or substantially all of its business or
assets.
13.5 Amendment. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. No superseding
instrument, amendment, modification, cancellation, renewal or extension hereof
shall require the consent or approval of any person other than the parties
hereto. The failure of either party at any time or times to require performance
of any provision hereof shall
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in no matter affect the right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
13.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together will constitute one and the same instrument.
13.7 Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators, in New York, New York, in
accordance with the commercial arbitration rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. The expense of such arbitration shall be borne as
directed by the arbitrator.
13.8 Severability. The provisions of this Agreement shall be
deemed severable, and if any part of any provision is held illegal, void or
invalid under applicable law, such provision may be changed to the extent
reasonably necessary to make the provision, as so changed, legal, valid and
binding. If any provision of this Agreement is held illegal, void or invalid in
its entirety, the remaining provisions of this Agreement shall not in any way be
affected or impaired but shall remain binding in accordance with their terms.
13.9 Fees and Costs. The Corporation will contribute not more
than $10,000 towards the fees and costs of Employee's counsel in connection with
the review of this Agreement and Peter Clemens' Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ATTEST: HALSEY DRUG CO., INC.
By: /s/ William Skelly
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William Skelly, Chairman
WITNESS: EMPLOYEE
By: /s/ Michael K. Reicher
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Michael K. Reicher
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