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Exhibit 10.2
EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated November 13,
2006, by and between Elite Pharmaceuticals, Inc., a Delaware
corporation ("COMPANY"), and Charan Behl ("EXECUTIVE").
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R E C I T A L S:
WHEREAS, Executive desires to provide employment services to
the
Company, and the Company desires to retain the employment
services of Executive.
In consideration of the mutual promises herein contained,
the
parties hereby agree as follows:
A G R E E M E N T:
1. EMPLOYMENT.
1.1. GENERAL. The Company hereby employs Executive in
the capacity of Executive Vice President and Chief Scientific
Officer at the
compensation rate and benefits set forth in Section 2 hereof for
the Term (as
defined in Section 3.1 hereof). Executive hereby accepts such
employment,
subject to the terms herein contained. In such capacity (a)
Executive shall
report to, and follow the directions of, the Board of Directors
(the "BOARD")
and the Chief Executive Officer (the "CEO"), (b) perform and
carry out such
duties and responsibilities that are reasonably consistent with
Executive's
position and responsibilities and this Agreement, and (c)
perform and discharge
such additional duties and responsibilities as may be determined
from time to
time by the CEO of the Company or the Board that are reasonably
consistent with
Executive's position.
1.2. TIME DEVOTED TO POSITION. During the Term,
Executive shall devote substantially all of his business time,
attention and
skills to the business and affairs of Company, including its
subsidiaries,
entities and organizations presently existing or hereafter
formed, organized or
acquired by Company (each, a "SUBSIDIARY" and collectively, the
"SUBSIDIARIES").
Nothing in this Agreement shall prevent Executive from devoting
reasonable time
and attention to personal, public and charitable affairs, as
long as such
activities do not interfere with the effective performance of
his duties
hereunder.
2. COMPENSATION AND BENEFITS.
2.1. SALARY. During the Term, the Company 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 Company in all
capacities the following: (i) a base salary at the annual rate
of Two Hundred
Fifty Thousand Dollars ($250,000) during the Term (the "BASE
SALARY"); and (ii)
any additional bonus and the benefits set forth in Sections 2.2,
2.3 and 2.4
hereof. The Base Salary shall be payable in accordance with the
regular payroll
practices of the Company applicable to its senior executives,
less such
deductions as shall be required to be
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withheld by applicable law and regulations or otherwise. The
Board may increase
the Base Salary in the sole discretion.
2.2. BONUS.
(a) GUARANTEED BONUS. The Executive shall be
entitled to Twenty Five Thousand Dollars ($25,000) bonus payable
in cash within
thirty (30) days of the end of each fiscal year of the Company
(the "FISCAL
YEAR") during the Term.
(b) DISCRETIONARY BONUSES. Following the end of
each Fiscal Year during the Term commencing on January 1, 2007,
wholly subject
to the discretion of the Board (or any committee of the Board
delegated
authority over employee compensation matters), the Company may
award Executive a
bonus of up to fifty percent (50%) of the Executive's then Base
Salary
(initially, One Hundred and Twenty Five Thousand Dollars
($125,000)), payable
(at the option of the Company) in cash or in shares of Common
Stock (as defined
below) valued at the closing price of the Common Stock on the
immediately
preceding trading day, for the relevant Fiscal Year (pro-rated
for periods of
less than a full Fiscal Year). For purposes of determining
whether such
discretionary bonuses shall be payable, the Board (or any
committee of the Board
delegated authority over employee compensation matters), shall
discuss with the
Executive certain annual goals to the achieved by the Company
and/or the
Executive during the applicable year. Such goals will be
established by the
Company and discussed with the Executive in good faith and
within a reasonable
time of the commencement of each Fiscal Year. If such
discretionary bonuses are
to be paid in shares of Common Stock, the number of shares
issuable shall be
determined by reference to the average of the closing price of a
share of Common
Stock during the five trading days immediately preceding the
date of issuance of
such shares.
(c) LIMITATION ON BONUSES. Notwithstanding anything
to the contrary in this Section 2.2 or Section 3, no annual
bonus shall be
deemed to have accrued or otherwise to have become payable for
the purposes of
this Agreement unless this Agreement shall not have been
terminated prior to the
end of the Fiscal Year in respect of which such bonus was to be
awarded.
2.3. STOCK OPTIONS.
2.3.1. INITIAL OPTIONS. Effective on the date
hereof, the Company shall grant to Executive options (the
"INITIAL OPTIONS") to
purchase two hundred fifty thousand (250,000) shares of common
stock, par value
$0.01 per share (the "COMMON STOCK") of the Company, pursuant to
the Company's
2004 Stock Option Plan, as amended (the "PLAN"). The Initial
Options:
(i) shall, to the maximum extent permitted under applicable
law, qualify as "incentive stock options" within the meaning of
Section
422 of the Internal Revenue Code;
(ii) be fully vested and immediately exercisable in full as
of the date hereof;
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(iii) have a per share exercise price equal to $2.25;
(iv) be subject to the terms and conditions set forth in the
Plan and a stock option agreement to be entered into by the
Company and
Executive, simultaneously herewith (the "OPTION AGREEMENT").
Such grant
of options pursuant to this Section 2.3.1 shall be fully vested
and
exercisable, subject to the terms of the Plan and the Option
Agreement
and acceleration pursuant to Section 3 hereof. The shares of
Common
Stock issuable upon exercise of the Initial Options are subject
to an
effective registration statement filed with the Securities and
Exchange
Commission (the "SEC").
2.3.2. OPIOID PRODUCT OPTIONS. In addition to
the other grants set forth in this Section 2.3, effective on the
date hereof,
the Company shall grant to Executive options (the "OPIOID
PRODUCT OPTIONS") to
purchase up to three hundred thousand (300,000) shares of Common
Stock, pursuant
to the Plan. The Opioid Product Options:
(i) shall, to the maximum extent permitted under applicable
law, qualify as "incentive stock options" within the meaning of
Section
422 of the Internal Revenue Code;
(ii) have a per share exercise price equal to $2.25;
(iii) have one hundred fifty thousand (150,000) options vest
and become immediately exercisable in full only upon the closing
of an
exclusive product license for the first of the United States
national
market, the entire European Union market or the Japan market or
product
sale transaction of all of the Company's ownership rights in the
United
States (only once for each individual product) for the Company's
first
Non-Generic Opioid Drug;
(iv) have one hundred fifty thousand (150,000) options vest
and become immediately exercisable in full only upon the closing
of an
exclusive product license for the United States national market,
the
entire European Union market or the Japan market or product
sale
transaction of all of the Company's ownership rights in the
United
States (only once for each individual product) for the Company's
second
Non-Generic Opioid Drug; and
(v) be subject to the terms and conditions set forth in the
Plan and Option Agreement.
All such options shall be subject to acceleration pursuant to
Section 3 hereof.
The shares of Common Stock issuable upon exercise of the Opioid
Product Options
are subject to an effective registration statement filed with
the SEC. For
purposes of this Section 2.3.2, "Non-Generic Opioid Drug" means
a drug developed
by the Company for which FDA approval will be sought
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under a NDA (including under a 505(b)(2) application) for
oxycodone,
hydrocodone, hydromorphone, oyxmorphone or morphine.
2.3.3 INTENTIONALLY OMITTED
2.3.4. MILESTONE OPTIONS. Subject to Section
2.3.7. hereof, in addition to the other grants set forth in this
Section 2.3,
effective on the date hereof, the Company shall grant to
Executive options (the
"MILESTONE OPTIONS") to purchase up to two hundred thousand
(200,000) shares of
Common Stock, pursuant to the Plan. The Milestone Options:
(i) shall, to the maximum extent permitted under applicable
law, qualify as "incentive stock options" within the meaning of
Section
422 of the Internal Revenue Code;
(ii) have a per share exercise price equal to $2.25;
(iii) shall vest and become exercisable only upon the
occurrence of the following events which occur during the
Initial Term
(up to a maximum of 200,000 shares of Common Stock in the
aggregate):
(a) Milestone Options exercisable for one hundred
twenty-five thousand (125,000) shares of Common Stock shall vest
and
become immediately exercisable in full upon the commencement of
the
first Phase III clinical trial relating to the first Non-Generic
Opioid
Drug developed by the Company;
(b) Milestone Options exercisable for seventy-five
thousand (75,000) shares of Common Stock shall vest and
become
immediately exercisable in full upon the commencement of the
first Phase
III clinical trial relating to the second Non-Generic Opioid
Drug
developed by the Company;
(c) Milestone Options exercisable for fifty thousand
(50,000) shares of Common Stock shall vest and become
immediately
exercisable in full only upon the closing of an exclusive
product
license for the United States national market or product
sale
transaction of all of the Company's ownership rights (on a
product by
product basis and only once for each individual product) for
each
Company drug product, other than the Non-Generic Opioid Drugs
for which
Opioid Product Options were granted under Section 2.3.2
above;
(d) Milestone Options exercisable for ten thousand
(10,000) shares of Common Stock shall vest and become
immediately
exercisable in full upon the filing by the Company (in the
Company's
name) with the United States Food and Drug Administration (the
"FDA") of
either an abbreviated new drug application (an "ANDA") or a new
drug
application (including a NDA filed with the FDA under Section
505(b)(2)
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of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Section
301 et
seq.) (a "NDA"), for a product not covered by a previous FDA
application;
(e) Milestone Options exercisable for forty thousand
(40,000) shares of Common Stock shall vest and become
immediately
exercisable in full upon the approval by the FDA of any ANDA or
NDA
(filed in the Company's name) for a product not previously
approved by
the FDA;
(f) Milestone Options exercisable for twenty-five
(25,000) shares of Common Stock shall vest and become
immediately
exercisable in full upon filing of an application for U.S.
patent by the
Company (filed in the Company's name); and
(g) Milestone Options exercisable for twenty-five
(25,000) shares of Common stock shall vest and become
immediately
exercisable in full upon the granting by U.S. Patent and
Trademark
Office ("PTO") of a patent to the Company (filed in the
Company's name);
and
(iv) be subject to the terms and conditions set forth in the
Plan and Option Agreement. All such options shall be subject
to
acceleration pursuant to Section 3 hereof.
Upon the earlier to occur of the expiration of the Initial Term
of this
Agreement or the termination of Executive's employment
hereunder, all unvested
Milestone Options granted shall automatically terminate and all
vested but
unexercised Milestone Options shall terminate in accordance with
the terms of
the stock option agreement by and between the Executive and the
Company with
respect to the Milestone Options and the Plan; provided that, in
the case of any
Milestone Options that may be vested pursuant to clause (e) or
clause (g) of
Section 2.3.4(iii) above, if (x) the applicable filing with the
FDA or PTO, as
the case may be, was made by the Company during the Initial Term
but prior to
the termination of the Executive by the Company without Cause,
(y) the approval
relating to such filing (either from the FDA or the PTO) occurs
within five
hundred forty (540) days of such filing and (x) such approval
occurring within
the three year Initial Term, the Milestone Options relating to
such filing shall
vest in accordance with clause (e) or clause (g), as the case
may be. The shares
of Common Stock issuable upon exercise of the Milestone Options
are subject to
an effective registration statement filed with the SEC.
2.3.5 ADDITIONAL MILESTONE OPTIONS. Subject to
Section 2.3.7. hereof, if the maximum number of Milestone
Options shall have
vested during the Initial Term of this Agreement, the Company
shall grant to the
Executive additional options to purchase shares of Common Stock
(the "ADDITIONAL
MILESTONE OPTIONS"), pursuant to the Plan. The Additional
Milestone Options (i)
shall, to the maximum extent permitted under applicable law,
qualify as
"incentive stock options" within the meaning of Section 422 of
the Internal
Revenue Code, (ii) shall have a per share exercise price equal
to the closing
price of a share of Common Stock, as listed on the American
Stock Exchange, on
the date of grant, (iii) shall be subject to the terms and
conditions set forth
in the Plan and the stock option agreement to be entered into by
the Company and
the Executive on the date of grant which shall be substantially
the same as the
Option Agreement, (iv) shall be fully vested and exercisable in
full upon grant,
and (v) shall be granted at the end of the then current Fiscal
Year in which any
of the following triggering events
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shall occur (and, in the case of grants related to events
occurring after the
end of the last fiscal year during the Initial Term, such grants
shall be made
at the end of the first Fiscal Year after the Initial Term):
(a) Additional Milestone Options for one hundred
twenty-five thousand (125,000) shares of Common Stock shall be
granted
at the end of the then current Fiscal Year (and immediately
vested
exercisable in full) upon the commencement of first Phase III
clinical
trial relating to the first Non-Generic Opioid Drug developed by
the
Company only to the extent that such Milestone Options did
not
previously vest under clause (iii)(a) of Section 2.3.4, it
being
understood that in no event shall the total of Milestone Options
vesting
under 2.3.4(iii)(a) and Additional Milestone Options granted
under this
Section 2.3.5(iii)(a) exceed options for 125,000 shares of
Common Stock
in the aggregate;
(b) Additional Milestone Options for one hundred and
twenty five thousand (125,000) shares of Common Stock shall be
granted
at the end of the then current Fiscal Year upon the commencement
of the
first Phase III clinical trial relating to the second
Non-Generic Opioid
Drug developed by the Company only to the extent Milestone
Options did
not previously vest under clause (clause (iii)(b) of Section
2.3.4, it
being understood that (i) in no event shall the total of
Milestone
Options vesting under 2.3.4(iii)(b) and the Additional Milestone
Options
granted under this Section 2.3.5(iii)(b) exceed 125,000 shares
of Common
Stock in the aggregate, and (ii) in no event shall the options
vested
and/or granted under Sections 2.3.4(a), 2.3.4(b), 2.3.5(a) and
2.3.5(b)
exceed options for 250,000 shares of Common Stock in the
aggregate.
(c) Additional Milestone Options for fifty thousand
(50,000) shares of Common Stock shall be granted at the end of
the then
current Fiscal Year upon the closing of an exclusive product
license for
the United States national market or product sale transaction of
all
ownership rights (on a product by product basis and only once
for each
individual product) for each Company drug product, other than
the
Non-Generic Opioid Drugs for which any Opioid Product Options
were
granted under Section 2.3.2 above;
(d) Additional Milestone Options for ten thousand
(10,000) shares of Common Stock shall be granted at the end of
the then
current Fiscal Year (and immediately vested exercisable in full)
upon
the filing by the Company (in the Company's name) with the FDA
of either
an ANDA or NDA for a product not covered by a previous FDA
application;
(e) Additional Milestone Options for forty thousand
(40,000) shares of Common Stock shall be granted at the end of
the then
current Fiscal Year (and immediately vested exercisable in full)
upon
the approval by the FDA of any ANDA, NDA or 505(b)(2)
application of the
Company (filed in the Company's name) for a product not
previously
approved by the FDA;
(f) Additional Milestone Options for twenty-five
(25,000) shares of Common Stock shall be granted at the end of
the then
current Fiscal Year (and
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immediately vested exercisable in full) upon filing of an
application
for an additional U.S. patent by the Company (filed in the
Company's
name); and
(g) Additional Milestone Options for twenty-five
(25,000) shares of Common Stock shall be granted as of the end
of the
then current Fiscal Year (and immediately vested exercisable in
full)
upon the granting by U.S. Patent and Trademark Office of such
additional
patent to the Company (filed in the Company's name).
Upon the earlier to occur of the expiration of the Initial Term
of this
Agreement or the termination of Executive's employment
hereunder, all Additional
Milestone Options shall automatically terminate in accordance
the applicable
stock option agreement to be entered into by and between the
Executive and the
Company with respect to such Additional Milestone Options (which
agreement shall
be substantially similar to the other stock option agreements by
and between the
Executive and the Company) and the Plan. For the avoidance of
doubt, (i) under
no circumstances shall Additional Milestone Options be granted
as a result of
the occurrence of an event which had previously triggered, or
simultaneously
therewith will trigger, the vesting of any Milestone Options
granted under
Section 2.3.4 above and (ii) no Opioid Product Options,
Milestone Options or
Additional Milestone Options shall be granted or vest under this
Agreement as a
result of any transaction entered into, or any FDA or PTO
application or filing
made, by, or in the name of, any Person in which the Company has
an equity
interest but which is not a wholly-owned subsidiary of the
Company.
2.3.6. ADDITIONAL OPTIONS. In addition to the
other grants set forth in this Section 2.3, the Company, in its
sole discretion,
may grant to Executive additional options (the "ADDITIONAL
OPTIONS") to purchase
shares of Common Stock, pursuant to the Plan. The Additional
Options shall (i)
to the maximum extent permitted under applicable law, qualify as
"incentive
stock options" within the meaning of Section 422 of the Internal
Revenue Code,
(ii) have a per share exercise price equal the then fair market
value of a share
of Common Stock, (iii) vest, as determined by the Board, in its
sole discretion
and (iv) be subject to the terms and conditions set forth in the
Plan and Option
Agreement. All such options shall vest and be exercisable, as
determined by the
Board, in its sole discretion and shall be subject to
acceleration pursuant to
Section 3 hereof.
2.3.7. LIMITATION UPON DUPLICATIVE GRANTING/
VESTING OF OPTIONS. Notwithstanding anything set forth in this
Section 2.3 of
this Agreement, in the event that Opioid Product Options are
vested under
Section 2.3.2 as result of the sale transaction involving
Non-Generic Opioid
Drug, (x) no Milestone Options shall vest under clauses (iii)(a)
or (iii)(b) of
Section 2.3.4 and (y) no Additional Milestone Options shall be
granted and/or
vest under clauses (v)(a) or (v)(b) of Section 2.3.5, in each
case, as a result
of any Phase III clinical trials relating to the same drug
product. The
limitations set forth in this Section 2.3.7 shall not affect the
granting and/or
vesting of Milestone Options or Additional Milestone Options as
a result of any
Phase III clinical trials relating to a Non-Generic Opioid Drug
which is the
subject of an exclusive license.
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2.3.8. PLEDGE OF COMMON STOCK UNDERLYING THE
OPTIONS. Executive may not, directly or indirectly, sell,
assign, transfer,
offer, grant a participation in, mortgage, pledge, hypothecate,
create a
security interest in or lien upon, encumber, donate, contribute,
place in trust,
enter into any voting agreement with respect to, the shares of
Common Stock
underlying the Initial Options, Opioid Product Options,
Milestone Options,
Additional Milestone Options or Additional Options without the
prior written
consent of the Company. During the Term, Executive shall not,
directly or
indirectly, enter into any short sales or "derivative" or
"hedging" transactions
or strategies, nor maintain any "short" positions, with respect
to the Common
Stock.
2.3.9. CONFLICT. In the event of any conflict
between the terms of the Plan or this Agreement, the terms of
this Agreement
shall govern.
2.3.10 PIGGY-BACK REGISTRATION RIGHTS.
(a) If at any time after the Initial Term, (x) the Company
shall propose to register shares of Common Stock under the
Securities
Act of 1933 (other than in a registration statement on Form S-3
relating
to sales of securities to participants in a Company dividend
reinvestment plan, or Form S-4 or S-8 or any successor form or
in
connection with an acquisition or exchange offer or an offering
of
securities solely to the existing shareholders or employees of
the
Company), and (y) any Additional Milestone Options that may be
granted
under Section 2.3.5 hereof shall have been granted to, and
are
exercisable by, the Executive, the Company (i) will give prompt
written
notice to the Executive of its intention to effect such a
registration
and (ii) subject to Section 2.3.10(b) below, will include in
such
registration all shares of Common Stock issued or issuable upon
exercise
of such granted and vested Additional Milestone Options (the
"Registrable Securities") which are permitted under
applicable
securities laws to be included in the form of registration
statement
selected by the Company and with respect to which the Company
has
received written requests for inclusion therein within 30 days
after the
receipt of the Company's notice (each, a "PIGGYBACK
REGISTRATION"). The
Executive will be permitted to withdraw all or any part of
the
Registrable Securities from a Piggyback Registration at any time
prior
to the effective date of such Piggyback Registration.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. If a Piggyback
Registration is to be an underwritten offering, and the
managing
underwriters advise the Company in writing that in their opinion
the
number of securities requested to be included in such
registration
exceeds the number which can be sold in such offering without
adversely
affecting the marketability of the offering, the Company will
include in
such registration:
(i) first, the securities the Company proposes to
sell;
(ii) second, securities held by holders other than
Executive, directors, officers or employees of the Company;
(iii) third, the Registrable Securities requested to
be included in such registration by the Executive and any
securities requested to be included in such
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registration by any other Person other than Persons having a
lower priority of registration than the Executive, PRO RATA
among Executive and such other Persons, on the basis of the
number of securities requested to be included in such
registration by each of such Holders and such other Persons;
and
(iv) thereafter, other securities requested to be
included in such registration, as determined by the Company.
As a condition to the inclusion of his Registrable Securities in
such
registration, the Executive will execute an underwriting
agreement in customary
form and in form and substance satisfactory to the managing
underwriters.
(c) RIGHT TO TERMINATE REGISTRATION. If at any time after
giving written notice of its intention to register any of its
securities
as set forth in Section 2.3.10(a) and prior to the effective
date of the
registration statement filed in connection with such
registration, the
Company shall determine for any reason not to register such
securities,
the Company may, at its election, give written notice of
such
determination to the Executive and thereupon be relieved of
its
obligation to register any Registrable Securities in connection
with
such registration.
2.4. EXECUTIVE BENEFITS.
2.4.1. EXPENSES. Company shall promptly
reimburse Executive for expenses he reasonably incurs in
connection with the
performance of his duties (including business travel and
entertainment expenses)
hereunder, against receipts or other appropriate written
evidence of such
expenditures as required by the appropriate Internal Revenue
Service regulations
or by the Company; PROVIDED, that, all expenses in excess of
US$2,000 per month,
individually or in the aggregate, shall be approved by the Chief
Executive
Officer as a condition to reimbursement thereof.
2.4.2. COMPANY PLANS. Executive shall be
entitled to participate in such employee benefit and welfare
plans and programs
as Company may from time to time generally offer or provide to
senior executive
officers of Company or the Subsidiaries, including participation
in life
insurance, health and accident, medical plans and programs, and
profit sharing
and retirement plans. Nothing in the foregoing shall limit or
restrict the
Company's discretion to amend, revise or terminate any benefit
or plan without
notice to or consent of the Executive.
2.4.3. VACATION. Executive shall be entitled to
five (5) weeks of paid vacation per Fiscal Year, pro rated for
periods of less
than a full Fiscal Year; PROVIDED, that the timing and duration
of any
particular vacation shall not interfere with the business of the
Company or the
effective performance of Executive's duties hereunder, as
reasonably determined
in good faith by the Chief Executive Officer.
2.4.4. AUTOMOBILE ALLOWANCE. During the Term,
the Company shall pay the Executive a monthly automobile
allowance in the amount
of Seven Hundred Dollars ($700).
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2.4.5. LIFE INSURANCE. The Company will obtain
and maintain during the Term a term life insurance policy in the
amount of Five
Hundred Thousand Dollars ($500,000) on the life of the Executive
payable to the
estate of the Executive in the event of the Executive's death
during the Term.
3. EMPLOYMENT TERM; TERMINATION.
3.1. EMPLOYMENT TERM. Executive's employment
hereunder shall commence as of the date hereof (the
"COMMENCEMENT DATE") and,
subject to Section 1.2 hereof and except as otherwise provided
in Section 3.2
hereof, shall continue for three (3) years following the date
hereof (the
"INITIAL TERM"). Thereafter, this Agreement shall automatically
be renewed (upon
the compensation terms provided herein other than option grants
which shall be
negotiated with the Executive at such time) for successive one
(1) year terms
commencing at the end of the Initial Term (the Initial Term,
together with any
prior or subsequent employment or consulting term(s), being also
referred to
herein as the "TERM"), unless Executive or Company shall have
provided a Notice
of Termination (as defined in Section 3.4.2 hereof) electing not
to renew the
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