AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is entered into this
31st day of March, 2000, by and between Elite Pharmaceuticals, Inc., a Delaware
corporation (hereinafter "ELITE") and Atul M. Mehta of Mahwah, New Jersey
(hereinafter "MEHTA").
STATEMENT OF PURPOSE
MEHTA is currently employed by ELITE under a contract dated May 23,
1991, as amended December 1995, December 1996, and February 1998. ELITE desires
to continue to employ MEHTA for a period of five (5) years commencing January 1,
2000 in order to be more certain of his continued services and in order to have
access to his research and development skills and experience relating to
pharmaceutical and similar products. MEHTA desires to accept continued
employment upon the terms herein. Therefore, the parties have agreed, and do
hereby agree, that ELITE will employ MEHTA and MEHTA will accept such continued
employment, upon the terms and conditions subsequently set out in this
Agreement.
AGREEMENT OF THE PARTIES
1. Term. ELITE hereby agrees to employ MEHTA and MEHTA agrees to
continue being employed by ELITE for a period of five (5) years ending December
31, 2005, provided that this Agreement is not sooner terminated pursuant to the
provisions contained herein. The current employment agreement shall be
superseded by this Agreement, effective March 31, 2000. On December 31, 2005,
this Agreement shall be automatically renewed for an additional five year term
("Initial Additional Term"), unless either party shall provide the other party
written notice of its desire not to so renew the agreement by December 31, 2004.
Subsequently, the Agreement shall be automatically extended for periods of one
(1) year unless a party gives notice of non-renewal at least one (1) year prior
to the date of expiration. (Any and all such renewals and/or extensions are
referred to herein as the "Additional Term".)
2. Duties. MEHTA agrees to devote a sufficient amount of his business
time to diligently and faithfully perform his duties and responsibilities on
behalf of ELITE. MEHTA, however, shall not be precluded from (a) delivering
lectures, fulfilling speaking engagements, and writing or publishing any
material related to his area of expertise, (b) participating in professional
organizations and program activities, (c) serving as a consultant in his area of
expertise to government, industrial, and academic entities where it does not
conflict with the interests of ELITE, (d) serving as a director or member of a
committee of any organization or corporation or engaging in any other business
activities; provided that such activities do not materially interfere with the
regular performance of his
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duties hereunder and except to the extent limited by paragraphs 11 and 12 of
this Agreement.
3. Responsibilities. ELITE agrees that during the term of this
Agreement, MEHTA shall serve as and retain the titles of President, Chairman and
Chief Executive Officer of ELITE and Elite Laboratories, Inc. His
responsibilities shall include the overall management and direction of ELITE'S
affairs, the hiring, direction and dismissal of all subordinate employees, and
the development of ELITE'S products. In addition, MEHTA shall be entitled to
continue to serve as a director of ELITE for the entire term of this Agreement.
4. Compensation. As compensation for the services rendered hereunder,
including any services provided as President, Chief Executive Officer, and
Director, MEHTA shall receive the following:
a. An annual salary in the following amounts:
(1) From January 1, 2000 until December 31,
2000, $242,000 payable in semi-monthly installments;
(2) From January 1, 2001 until December 31, 2005, at
a salary not less than $242,000 plus an additional amount
(i.e., a raise) to be determined by the Board of Directors, in
its discretion, for each of the four years; provided, however,
that such raise shall be equal to no less than ten percent
(10%) of the previous year's base salary.
b. Additional incentive commissions equal to five percent (5%)
of net profit of each fiscal year as determined in accordance with
generally accepted accounting principles, payable no later than the
15th day of the fourth month following the completion of each such
fiscal year.
c. Health insurance, purchased and maintained by ELITE, which
shall cover all medical expenses incurred by MEHTA and his family.
d. Term life insurance on MEHTA's life, for the benefit of
MEHTA's surviving spouse or his estate, in an amount of at least
$300,000 for each year the policy is in effect.
e. Such discretionary bonus as the Board may (with MEHTA
abstaining) from time to time determine to be appropriate.
f. Options to Purchase Class A Common voting stock of
ELITE at a price of ten dollars ($10.00) per share,
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i) The option to purchase 100,000 shares shall
vest on December 31, 2000 and the remainder
of the option will vest in 100,000 share
increments on December 31 of each of the
next four succeeding years;
ii) The options shall be exercisable from the
date that they vest until earlier of (a) one
year after MEHTA ceases to be employed by
ELITE or to serve as an officer or director
of ELITE; or (b) the expiration of ten years
from the date the options are granted.
Notwithstanding any provision to the
contrary, the options granted to Mehta
pursuant to this Agreement shall be fully
vested and exercisable if this Employment
Agreement (or Dr. Mehta's position as an
officer and director) is terminated by the
Corporation for any reason or if it expires
as a result of the Corporation giving notice
of non-renewal.
iii) If the Board of Directors of Elite votes to
approve the acquisition of more than 50% of
the stock of Elite (i.e. "control") by any
person or entity, Elite may, at its
discretion require Optionee to elect one of
the following (whichever is preferred by the
Optionee):
a. exercise the Options within thirty (30)
days of Optionee's receipt of notice from
Elite. In such event, all Options (vested
and unvested) shall be exercisable; or
b. sell the Options (vested and unvested) to
Elite at a price determined by subtracting
the exercise price from an amount equal to
110% of the fair market value of the stock.
For purposes of this provision "fair market
value" shall be determined by a Certified
Public Accountant regularly engaged by
Elite, taking into account the then-most
recent price at which the shares of Elite
have been issued and the price at which
shares are, or are expected to be, offered
to the public, or the price at which a
person has acquired shares to gain control
(to the extent known by Elite).
If a circumstance described above
occurs and Elite does not require Optionee
to elect to exercise or sell the options in
accordance with clauses (a) or (b) above,
the Options shall be vested as of the date
that the Directors vote as described above.
iv) Neither the options nor the shares
underlying the options are presently
registered and there are no present plans to
register the options or the underlying
shares.
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v) The options granted pursuant to this
resolution are not intended to constitute
"qualified employee incentive stock
options." It is intended that other options
held by Dr. Mehta are not affected by this
action.
g. If this Employment Agreement continues into the Additional
Term, the parties shall determine, prior to the beginning of the
Additional Term, compensation to be paid to Mehta during the Additional
Term, provided that such compensation shall be on terms no less
favorable to Mehta than those contained herein; and specifically
provided, that the base salary for each year shall be no less than one
hundred ten percent (110%) of his base salary for the year ended
December 31, 2005.
5. Expenses. ELITE shall reimburse MEHTA for all reasonable expenses
incurred by him in connection with his employment pursuant to this Agreement.
ELITE will reimburse MEHTA for such expenses upon the presentation of an
itemized account together with such receipts, invoices, or other evidence of the
expenditure that would constitute satisfactory documentation for tax purposes.
Additionally, during the term of this Agreement, ELITE shall provide MEHTA with
the use of an automobile to be selected by MEHTA. MEHTA shall be responsible for
accounting for the use of the automobile in compliance with all applicable
regulations imposed by federal and state taxing authorities.
6. Incentive and Benefit Plans. MEHTA shall be entitled to (a)
participate in any Management Incentive Compensation Plans adopted by ELITE'S
Board of Directors (provided any such plan is adopted upon a vote in which MEHTA
abstains or does not cast a deciding vote) on a basis to be determined by the
Board of Directors at such time; (b) participate in any stock option plan
established by the Board of Directors; and (c) participate in, and benefit from,
any and all pension, profit-sharing, life, dental, medical, and other group
benefit plans provided to management and/or other employees of ELITE.
7. Key Man Life Insurance. MEHTA shall do anything that is reasonably
necessary to enable ELITE to maintain key man insurance upon his life should the
Board of Directors so determine, with all benefits payable to ELITE. Upon
termination of employment for reasons other than MEHTA's death, MEHTA shall have
the right to (a) cancel such insurance policy or (b) rename the beneficiary
provided he assumes all subsequent payment of premiums.
8. Termination. MEHTA's employment hereunder shall terminate upon the
occurrence of any of the following:
a. the death of MEHTA;
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b. by election of either party upon the inability of MEHTA to
perform his duties on account of disability for a total of one hundred
twenty (120) days or more during any consecutive twelve (12) month
period;
c. by election of ELITE upon "Severe cause", defined as (i)
MEHTA's commission of an act involving dishonesty, embezzlement or
fraud causing material damage to ELITE, (ii) MEHTA's conviction for the
commission of a felony involving an act of dishonesty or (iii) willful
misconduct by MEHTA which is materially and demonstrably injurious to
ELITE (and which MEHTA cannot or does not cease or correct upon
request). For purposes of this provision, no act or failure to act by
MEHTA shall be considered "willful", unless done, or omitted to be
done, by him in bad faith and with knowledge that it was contrary to
the interests of ELITE;
d. by election of MEHTA upon (i) failure of ELITE to meet its
obligations under paragraph 4, (ii) substantial interference with the
discharge of his responsibilities under paragraph 3, (iii) purported
change by ELITE without MEHTA's consent, of the duties and
responsibilities of MEHTA from those duties and responsibilities
described in this Agreement, (iv) a change of ownership of more than
fifty percent (50%) of ELITE's shares in any one twelve (12) month
period, or if any person or entity (or commonly owned or controlled
group of entities) acquires shares which cause such person or entity's
shares to total more than fifty percent (50%) of the shares of ELITE;
provided that shares acquired from MEHTA shall not be counted in
calculating the fifty percent (50%) of shares, and provided that
"ownership" shall mean ownership or de facto control; (v) requirement
by ELITE that MEHTA be based anywhere more than 40 miles from Mahwah,
New Jersey unless mutually agreed, (vi) any purported termination of
MEHTA's employment which is not effected pursuant to the terms of this
Agreement or which does not constitute grounds for termination under
this Agreement, or (vii) the occurrence of a vote by a majority of
shares voting upon an issue contrary to the vote of MEHTA, if MEHTA in
his sole discretion deems the vote "likely to result in an interference
in management" and requests at the meeting that the shareholders
reconsider and the shareholders fail to reverse the vote.
The parties recognize that there may arise disputes and controversies over
alleged conditions or conduct that is wrongful or that constitutes a breach of
this Agreement. However, the parties agree that such conditions or conduct
(which may give rise to a claim for damages) shall not constitute grounds for
termination of employment or excuse performance under this Agreement unless, and
to the extent, provided above.
9. Payments upon Termination.
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a. In the event of termination due to MEHTA's death, his
surviving spouse (or if she predeceases MEHTA, his estate), shall be
entitled to receive MEHTA's salary, incentive commissions, benefits and
any deferred compensation accrued through the last day of the third
calendar month following the month in which the termination of
employment occurs and additional salary payable monthly for the
following three years at the rate of one-half the aggregate annual
amounts shown in paragraph 4a above; provided that ELITE may purchase
life insurance (other than the life insurance provided under paragraph
4d) payable to a designated beneficiary of MEHTA to cover all or a
portion of the obligation under this paragraph 9a.
b. In the event of MEHTA's termination in accordance with
paragraphs 8b or c, MEHTA's salary, incentive commissions, benefits and
any deferred compensation accrued through the last day of the calendar
month in which the termination of employment occurs shall be paid
promptly. No other unaccrued salary or benefits shall be paid.
c. In the event of termination pursuant to paragraph 8d, MEHTA
shall receive all accrued salary, incentive commissions, benefits, and
any deferred compensation and all salary and commissions payable under
paragraph 4b through a period ending upon the later of (i) May 22, 2006
or (ii) the third anniversary of such termination, provided that the
salary portion of such amounts shall be aggregated and discounted to
Present Value, using as the discount factor the prime rate published on
the date of termination (or nearest date thereafter) in the Wall Street
Journal; and provided that salary for the period after May 22, 2006
shall be imputed at the same rate as provided for under paragraph 4g.
10. Procedure for Termination. Termination of employment by ELITE or
MEHTA shall not be effective until notice is received by the other party. The
notice shall not be effective unless it indicates the specific termination
provision(s) in paragraph 8 of this Agreement relied upon and sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provisions indicated. Additionally, no
purported termination by ELITE shall be effective unless and until there has
been delivered to MEHTA a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the Board of
Directors at a meeting of the Board held for the purpose (after opportunity for
MEHTA, together with his counsel, to be heard before said Board), finding that
in the good faith opinion of the Board, the facts and circumstances claimed to
provide a basis for termination under paragraph 8b or c of this Agreement exist
and specifying the particulars thereof.
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11. Covenant Not To Compete. MEHTA covenants and agrees that during the
term of this Agreement, he will not directly or indirectly engage in, conduct,
solicit, be involved in, aid or assist, either personally or as an employee,
partner, director or consultant any business which is competitive with the
business of ELITE. MEHTA, however, shall be free to conduct any business he
desires outside of the United States, so long as such business does not sell any
product sold or licensed by ELITE in any market in which ELITE competes, and
provided that MEHTA does not use confidential information that he could not
disclose under paragraph 12.
12. Confidentiality. MEHTA acknowledges and recognizes that the
disclosure of confidential information to ELITE'S competitors will be highly
detrimental to ELITE'S business. Therefore, MEHTA agrees that he will not
disclose, reveal, or disseminate to any person, firm, or organization, any
information concerning ELITE'S business which is
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of a confidential nature. This shall not preclude MEHTA from disclosing
confidential information (i) to the extent that such information is generally
available and known in the industry or is available from a source other than
ELITE, through no action of MEHTA, or (ii) as required by law, or (iii)
information respecting the business of ELITE after the Expiration Date of this
Agreement; or (iv) if such disclosure is in the Company's best interest or is
made in order to promote and enhance the Company's business. This provision
shall also not preclude MEHTA from using or disclosing any information and
experience he possesses in his memory and knowledge.
13. Entire Agreement. Each party acknowledges that he has read this
Agreement, understands it, and agrees to be bound by its terms, and further
agrees that this Agreement supersedes and merges all prior proposals,
understandings and all other agreements, oral or written, between the parties
relating to its subject matter. The parties further agree that this Agreement
may not be modified or altered except by a written instrument duly executed by
both parties.
14. Nonwaiver. No failure of a party to exercise any right or waiver of
any remedy shall operate or be construed to constitute a waiver or bar affecting
such party's assertion of the right or obtaining the remedy at any future time.
No failure of a party to insist upon compliance with any provision of this
Agreement at any time or for any period of time shall impair the party's right
to insist upon compliance with such provision at any future time.
15. Legality. In the event any provision of this Agreement shall be
held to be invalid, illegal, or unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby and said Agreement shall remain in full force and effect as if
such cause or provision had not been inserted therein.
16. Binding Effect. This Agreement shall be binding upon the parties,
their respective successors and permitted assigns. Neither party may assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party, and any such attempt at assignment shall be
void.
17. Notices. Any notice to be given under this Agreement shall be
sufficient if it is in writing and is sent by Certified or Registered Mail, or
hand-delivered by a person who is not affiliated with the sender. Notices to
MEHTA shall be sent to 76 Walsh Drive, Mahwah, New Jersey 07430 or such other
address as he designates in writing. Notice to ELITE shall be sent to its
Secretary or to any member of its Board of Directors (other than MEHTA).
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IN WITNESS WHEREOF, the parties have here unto executed this document
the day and year first above written.
ELITE PHARMACEUTICALS, INC.
[Corporate Seal] by: ___________________________
Director, acting with authority of the
______________________ Board of Directors
Assistant Secretary
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Atul M. Mehta
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