EXHIBIT 10.02
SEPARATION AGREEMENT
SEPARATION AGREEMENT (the "Agreement"), made and entered into as of
November 11, 2004, by and between NeoPharm, Inc., a Delaware corporation (the
"Company"), and Sander A. Flaum (together with his marital community, heirs,
executors, administrators and assigns, the "Director").
W I T N E S S E T H:
WHEREAS, the Director has served as a member of the Board of
Directors (the "Board") of the Company;
WHEREAS, in connection with such service, pursuant to the Company's
1998 Equity Incentive Plan (the "Plan"), the Director has received Awards of
Restricted Stock and Options (each such terms as is defined in the Plan);
WHEREAS, John N. Kapoor, Ph.D. has initiated a consent solicitation
seeking, among other things, the removal of the Director from the Board;
WHEREAS, the Company and Mr. Kapoor have mutually agreed to terms on
which Mr. Kapoor will withdraw his consent solicitation, pursuant to a
Settlement Agreement by and among the Company, Mr. Kapoor, Erick E. Hanson,
Gregory P. Young and Dr. Kaveh T. Safavi (the "Settlement Agreement");
WHEREAS, in connection with the actions contemplated by the
Settlement Agreement, the parties hereto desire to enter into this Agreement
in order to settle fully and finally all matters between them, including but
not limited to any matters arising out of Director's service on the Board and
his separation therefrom.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Director agree as follows:
1. Resignation.
By his execution hereof, effective as of immediately prior to the
execution of the Settlement Agreement on the Effective Date (as such term is
defined in the Settlement Agreement), the Director hereby resigns his position
as a member of the Board. Except as provided herein, the Director shall no
longer be entitled to any compensation or benefits in respect of his service
as a member of the Board.
2. Agreements and Payments in Connection with Resignation.
In connection with the Director's resignation, the Company hereby
agrees and acknowledges that the Director shall be entitled to receive from
the Company, effective immediately upon the Effective Date, the following
payments and benefits:
(a) an honorarium payment in the amount of Fifty Thousand
Dollars ($50,000.00), payable in cash in immediately
available funds;
(b) reimbursement of expenses incurred in connection with the
Director's position as a member of the Board, in accordance
with Company policy;
(c) immediate vesting of all shares under the Award of
Restricted Stock granted under the Plan to the Director on
March 10, 2004;
(d) extension of the exercisability of each Award of Options
granted under the Plan to the Director until the earlier of
(i) June 30, 2008 or (ii) the date that is ten (10) years
from the date of the original grant of any such Award; and
(e) payment in advance, on a yearly basis, upon notice from the
Director, of all dues and fees necessary to continue the
Director's membership in the National Association of
Corporate Directors through 2008; and
(f) reimbursement of reasonable attorney's fees in connection
with the negotiation hereof.
3. Confidentiality.
The Director acknowledges that his service as a member of the Board
brought him into close contact with many confidential financial and
proprietary matters concerning the Company, including, without limitation,
information about costs, profits, assets, liabilities, patents, licenses,
trade secrets, management bonuses, business plans, customer lists, other
proprietary matters and other information not available to the public, and
plans for future development. In recognition of the foregoing, the Director
agrees that he will keep secret any and all confidential financial and
proprietary matters of the Company, which are not otherwise in the public
domain, and will not disclose them to anyone outside of the Company without
the Company's written consent, except as may be required by a lawful order of
a court or agency of competent jurisdiction.
4. Non-Disparagement.
The Director agrees that he shall not in any way disparage the
Company or its current and former officers, directors and employees, verbally
or in writing, or make any statements to the press or to third parties that
may reasonably be derogatory or detrimental to the Company's or any such
person's good name or business reputation. Likewise, the Company, and each of
its directors, officers and employees, shall not in any way disparage the
Director, verbally or in writing, or make any statements to the press or to
third parties that may reasonably be derogatory or detrimental to the
Director's good name or business reputation. Nothing in this section shall
preclude any party from responding truthfully to inquiries made in connection
with any legal or governmental proceeding or from making such other statements
as may be required by applicable law.
5. General.
(a) Cooperation. Following the Effective Date, upon request of the
Chief Executive Officer of the Company, the Director shall make himself
available to the Company at mutually convenient times and places to assist the
Company with respect to Company-related matters, including but not limited to
pending and future litigations, arbitrations, governmental investigations or
other disputes relating to matters that arose during the Director's service as
a member of the Board. The Company shall reimburse the Director for all
reasonable expenses and costs he may incur as a result of providing assistance
under this Section 5(a), upon receipt of proper documentation. In connection
with any such cooperation provided hereunder, the Director will be reimbursed
based upon a daily $4,000 per diem for any assistance provided, including any
travel time related to providing such assistance, provided that on June 1,
2005, and each subsequent anniversary thereof, the foregoing reimbursement
rate will increase by 10%. In the event the Director provides assistance to
the Company for less than half of a day, the Director will be paid half of the
per diem, or $2,000; provided that the Director will be paid the full per
diem, or $4,000, for providing service for more than half of a day.
(b) Remedies. The Director recognizes that irreparable injury will
result to the Company and its business in the event of any breach by the
Director of any of the provisions of this Agreement as determined by a court
of competent jurisdiction. In the event of any breach of any of the
commitments of the Director pursuant hereto, the Company shall be entitled, in
addition to any other remedies and damages available, to injunctive relief to
restrain the violation of such commitments by the Director or by any person or
persons acting for or with the Director in any capacity whatsoever.
(c) Amendments. This Agreement may not be modified, amended, or
waived in any manner except by an instrument in writing signed by both parties
to this Agreement.
(d) Waiver. The waiver by either party of compliance by the other
party with any provision of this Agreement shall not operate or be construed
as a waiver of any other provision of this Agreement (whether or not similar),
or a continuing waiver, or a waiver of any subsequent breach by a party of any
provision of this Agreement.
(e) Governing Law; Jurisdiction. The laws of the State of Delaware
shall govern the validity, performance, enforcement, interpretation, and other
aspects of this Agreement, notwithstanding any state's choice of law
provisions to the contrary. Any proceeding to enforce, interpret, challenge
the validity of', or recover for the breach of any provision of, this
Agreement may be filed in the courts of the State of Delaware or the United
States District Court sitting in the State of Delaware, and the parties hereto
expressly waive any and all objections to personal jurisdiction, service of
process or venue in connection therewith.
(f) Complete Agreement. This Agreement constitutes a complete and
total integration of the understanding of the parties with respect to the
subject matter hereof and supersedes all prior or contemporaneous
negotiations, commitments, agreements, writings, and discussions with respect
to the subject matter of this Agreement; provided, however, that the Director
and Executive Officer Indemnification Agreement, dated as of September 24,
2004, between the Director and the Company, shall remain in full force and
effect pursuant to the terms thereof.
(g) Severability. If a court having proper jurisdiction holds a
particular provision of this Agreement unenforceable or invalid for any
reason, that provision shall be modified only to the extent necessary in the
opinion of such court to make it enforceable and valid and the remainder of
this Agreement shall be deemed valid and enforceable and shall be enforced to
the greatest extent possible under the then existing law. In the event the
court determines such modification is not possible, the provision shall be
deemed severable and deleted, and all other provisions of this Agreement shall
remain unchanged and in full force and effect.
(h) Counterparts. This Agreement may be executed in two (2)
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same Agreement. Facsimile transmission
of the executed version of this Agreement or any counterpart hereof shall have
the same force and effect as the original.
(i) Headings. The headings of the Sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction of this Agreement.
(j) Notices. Any notice required or permitted hereunder shall be
personally delivered or mailed by certified mail, return receipt requested, to
the addresses of the parties set out on the signature pages hereto, or as
changed from time to time by notice as provided herein.
(k) Successors and Assigns. All provisions of this Agreement are
binding upon, shall inure to the benefit of, and are enforceable by or
against, the parties and their respective heirs, executors, administrators or
other legal representatives and permitted successors and assigns.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have made this Agreement effective as
of the Effective Date.
"COMPANY"
NEOPHARM, INC.
By: /s/ Gregory P. Young
--------------------------------
Printed: Gregory P. Young
Title: President and CEO
NeoPharm, Inc.
150 Field Drive, Suite 195
Lake Forest, Illinois 60045
"DIRECTOR"
/s/ Sander A. Flaum
-----------------------------------
Sander A. Flaum
630 Park Avenue
Apt. 9B
New York, New York 10021