EMPLOYMENT AGREEMENT

 

 

Initial Term, the Initial Term shall be automatically renewed for successive one-year periods (collectively, the “ Renewal Terms ”; individually, a “ Renewal Term ”) unless, at least ninety (90) days prior to the expiration of the Initial Term or the then current Renewal Term, either party provides the other with a notice of intention not to renew, in which case Executive’s employment with the Company, and the Company’s obligations shall terminate as of the end of the Initial Term or said Renewal Term, as applicable. If the Initial Term is renewed, the terms of this Agreement during such Renewal Term shall be the same as the terms in effect immediately prior to such renewal, subject to any such changes or modifications as mutually may be agreed between the parties as evidenced in a written instrument signed by both the Company and Executive.

 

ARTICLE II

 

COMPENSATION, BENEFITS AND EXPENSE REIMBURSEMENT

 

2.1        Compensation and Benefits . For services rendered pursuant to this Agreement, Executive’s compensation and benefits will consist of the following:

 

(a)     Base Salary. The Company agrees to pay to Executive, and Executive agrees to accept, during the term of this Agreement an annual base salary of not less than Five Hundred Thousand Dollars ($500,000) per year, or such greater amount as the Board or the compensation committee thereof (the “ Compensation Committee ”) may from time-to-time determine (the “ Base Salary ”).

 

(b)     Bonus Opportunity . The Board or the Compensation Committee shall award Executive an annual target bonus (the “ Bonus ”) of one hundred percent (100%) of the Base Salary based on achievement of the benchmark as set forth on Exhibit “A” attached hereto. Executive shall receive a Minimum Bonus for 2001 equal to one hundred percent (100%) of the Base Salary received for 2001 ($166,700) and a Minimum Bonus for 2002 of fifty percent (50%) of the Base Salary received for 2002 ($250,000). The Compensation Committee may, at its discretion, award such other bonus payments as it finds appropriate.

 

(c)     Benefit Plans . Executive will be eligible to participate in the Company’s retirement plans that are qualified under Section 401 (a) of the Internal Revenue Code of 1986, as amended, and in the Company’s health, disability and other welfare benefit plans that are generally applicable to all executive employees of the Company, in accordance with the terms and conditions thereof.

 

(d)     Relocation Allowance . The Company shall reimburse Executive for his moving expenses and home closing costs up to a maximum amount of Fifty Thousand Dollars ($50,000).

 

(e)     Vacation . Executive shall be awarded four weeks of vacation for the first full year of his employment under this Agreement. For each full year of employment thereafter, Employee shall be awarded four (4) weeks of vacation reduced by the amount of vacation days that are unused and accrued from a prior year such that the maximum amount of unused vacation that may accrue for any given year is a total of four (4) weeks.

 

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2.2        Expenses . The Company shall reimburse Executive for all reasonable expenses incurred in the course of the performance of Executive’s duties and responsibilities pursuant to this Agreement and consistent with the Company’s policies with respect to travel, entertainment and miscellaneous expenses, and the reasonable and customary requirements with respect to the reporting of such expenses.

 

2.3        Withholding . The Company shall be entitled to withhold from amounts to be paid to Executive hereunder any federal, state or local withholding or other taxes or charges that it is from time-to-time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of any such withholding shall arise.

 

ARTICLE III

 

TERMINATION

 

Each of the following events shall be considered an “ Event of Termination ”:

 

3.1        Termination By the Company For Cause . The Company may terminate this Agreement and Executive’s employment hereunder at any time for Cause by giving notice to Executive stating the basis for such termination, effective immediately upon giving such notice or at such other time thereafter as the Company may designate. If the Executive’s employment is terminated for Cause pursuant to this Section 3.1 , notwithstanding the other terms of this Agreement, Executive shall have no further rights against the Company hereunder, except the right to receive (i) any unpaid Base Salary with respect to the period prior to the effective date of termination, and (ii) reimbursement of expenses to which Executive is entitled under Section 2.2 hereof. All unexercised options, vested and unvested, shall immediately terminate.

 

3.2        Executive Resigns or Voluntarily Terminates Employment . While Executive expects to fulfill the obligations of his employment to the satisfaction of the Board, and maintain his employment throughout the term of this Agreement, Executive may terminate his employment under this Agreement if Executive provides the Company at least sixty (60) days advance written notice. During this notice period, Executive may be relieved of any responsibilities. The Company and the Executive will meet and discuss a mutually satisfactory way to make any necessary transition. If Executive’s employment is terminated by the Executive pursuant to this Section 3.2 , notwithstanding the other terms of this Agreement, Executive shall have no further rights against the Company hereunder, except for the right to receive (i) any unpaid Base Salary with respect to the period prior to the effective date of termination, (ii) reimbursement of expenses to which Executive is entitled under Section 2.2 hereof. All unexercised and unvested options shall immediately terminate and all unexercised and vested options must be exercised by the Executive within ninety (90) days of termination of employment or they shall terminate.

 

3.3        Termination by Death or Disability . Executive’s employment and the Company’s obligations under this Agreement shall terminate as follows: (i) automatically, effective immediately and without any notice being necessary, upon Executive’s death; and (ii) in the event that Executive becomes Disabled, by the Company giving notice of termination to Executive. If Executive’s employment is terminated pursuant to this Section 3.3 because of the

 

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Executive’s death or disability, notwithstanding the other terms of this Agreement, Executive shall have no further rights against the Company hereunder, except for the right to receive (i) any unpaid Base Salary with respect to the period prior to the effective date of termination plus a continuation of the Base Salary for a period of sixty (60) days after the termination of employment and (ii) reimbursement of expenses to which Executive is entitled under Section 2.2 hereof, plus the greater of any accrued Bonus or Minimum Bonus prorated for the period through the termination, that has been earned but not yet paid with respect to the period prior to the effective date of termination. All unexercised and vested options must be exercised by the Executive, or Executive’s estate, within ninety (90) days of termination of employment or they shall terminate.

 

3.4        Termination by the Company Without Cause . While Company expects to fulfill the obligations of this Agreement to the satisfaction of Executive, and maintain a satisfactory relationship throughout the term of this Agreement, the Company may terminate Executive’s employment without Cause. If Executive’s employment is terminated by the Company without Cause pursuant to this Section 3.4 , notwithstanding the other terms of this Agreement, Executive shall have the right to receive (i) any unpaid Base Salary plus the greater of any accrued Bonus or Minimum Bonus prorated for the period through termination that has been earned but not yet paid with respect to the period prior to the effective date of termination payable on the regularly payroll dates, (ii) an amount equal to the greater of (A) twelve (12) months of Base Salary or (B) any unpaid Base Salary through the remaining term of this Agreement, and (iii) reimbursement of expenses to which Executive is entitled under Section 2.2 hereof. All unexercised and vested options must be exercised by the Executive within ninety (90) days of termination of employment or they shall terminate.

 

3.5        Executive Terminates Employment Due to a Change in Control . Executive shall be entitled to terminate his employment within one (1) year upon a Change in Control and for Good Reason. If the Company terminates Executive’s employment within one (1) year of a Change in Control other than for Cause, or if Executive terminates his employment pursuant to this Section 3.5 , notwithstanding the other terms of this Agreement, Executive shall have no further rights against the Company hereunder, except for the right to receive (i) any unpaid Base Salary plus any accrued Bonus or Minimum Bonus that has been earned but not yet paid with respect to the period prior to the effective date of termination, (ii) an amount equal to the greater of (A) twelve (12) months of Base Salary or (B) any unpaid Base Salary through the remaining term of this Agreement, (iii) (A) if the Change in Control occurs prior to January 1, 2003, a one-time bonus of $750,000 or (B) if the Change in Control occurs after January 1, 2003, the maximum Bonus that Executive was eligible for during the remaining Initial Term, (iv) reimbursement of expenses to which Executive is entitled under Section 2.2 hereof and (v) any unvested options granted to Executive to purchase the Company’s common stock which are owned by Executive will become fully vested.

 

3.6        Exclusive Remedy . Executive agrees not to assert or pursue any remedies, other than an action to enforce the payments due to Executive under this Agreement, at law or in equity, with respect to any termination of employment, and will sign a full and complete release, substantially in the form of Attachment A, at the time of termination, but prior to receipt of any compensation or benefits in excess of the compensation or benefits already earned and accrued.

 

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ARTICLE IV

 

CONFIDENTIALITY

 

4.1        Confidential Information . Executive acknowledges that he has been required to use his personal intellectual skills on behalf of the Company, its subsidiaries and affiliates (the term “ Company ” as used in this Article IV shall include such subsidiaries and affiliates) and that it is reasonable and fair that the fruits of such skills should inure to the sole benefit of the Company. Executive further acknowledges that he has acquired information of a confidential nature relating to the operation, finances, business relationships and trade secrets of the Company (“Confidential Information”). During the Initial Term and the Renewal Term, and for a period of five (5) years following termination of employment, Executive will not, except in the course of Executive’s regular authorized duties on behalf of the Company, or with the prior written consent of the Company, use, publish, disclose or authorize anyone else to use, publish or disclose, any Confidential Information of the Company. Executive shall not remove or retain any Confidential Information of the Company, except for use in the course of Executive’s regular authorized duties on behalf of the Company. The foregoing notwithstanding, Executive has no obligation to refrain from using, publishing or disclosing any such Confidential Information that is or hereafter shall become available to the public, other than by use, publication or disclosure by Executive. This prohibition also does not prohibit Executive’s use of general skills and know-how acquired during and prior to employment with the Company, as long as such use does not involve the use, publication or disclosure of the Company’s Confidential Information or trade secrets.

 

(b)        Agreement to Transfer . Executive shall without further payment, assign, transfer and set over, and does hereby assign, transfer and set over, to the Company, its successors and assigns, all Executive’s right, title and interest in and to all trade secrets, secret processes, inventions, improvements, patents, patent applications, trademarks, trademark applications, copyrights and any and all intellectual property rights which Executive solely or jointly with others has conceived, made, acquired or suggested at any time during employment or within a one-year period after termination of employment and which relate to the existing or potential products, processes, work, research or other activities of the Company.

 

4.2        Prohibited Activity . Executive agrees that during the Initial Term, any Renewal Term and for a period of one (1) year after termination of employment, without the Company’s express written consent, Executive shall not, directly or indirectly, (i) employ, solicit for employment, or recommend for employment any person employed by the Company (or any Affiliate of the Company) or (ii) engage in any activity that is or may be competitive with the Company in any state or other jurisdiction where the Company conducts its business.

 

4.3        Return of Documents . Immediately upon termination of employment, Executive will return to the Company, and so certify in writing to the Company, that the Executive has returned to the Company all the Company’s papers, documents and things, including information stored for use in or with computers and software applicable to the Company’s business (and all copies thereof), which are in Executive’s possession or under Executive’s control.

 

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4.4        No Conflicts . Executive Represents and warrants that Executive has not previously assumed any obligations inconsistent with those of this Agreement and that employment by the Company does not conflict with any prior obligations to third parties.

 

4.5        Equitable Relief . Executive agrees that any breach of Article IV of this Agreement could cause substantial and irreparable harm to the Company for which money damages would be an inadequate remedy. Accordingly, the Company shall in any such event be entitled to obtain injunctive and other forms of equitable relief to prevent such breach and to recover from Executive the Company’s costs (including without limitation reasonable attorneys’ fees) incurred in connection with enforcing Article IV this Agreement, in addition to any other rights or remedies available at law, in equity or by statute.

 

ARTICLE V

 

GENERAL PROVISIONS

 

5.1        Notices . While the parties enter this Agreement anticipating the communication among them will be open and take place without resorting to unnecessary formalities, in the event that a formal Notice under this Agreement is necessary, such Notice provided for in this Agreement shall be given in writing and shall be deemed given to a party at the earlier of (i) when actually delivered to such party, or (ii) when received by such party after sending by registered or certified mail (return receipt requested) or sent to such party by courier, confirmed by receipt, and addressed to such party at the address designated below for such party as follows (or to such other address for such party as such party may have substituted by notice pursuant to this Section 5.1) . However, if the party to receive notice is unavailable or unwilling to make himself available for receipt of such Notice, then Notice will be complete after reasonable efforts to provide Notice have been made under this Section 5.1 , and more than five (5) days have passed since attempting to provide Notice.

 

(a)         If to the Company:

 

OMP, Inc.
310 Golden Shore
Long Beach, CA 90802
Attn:  Chairman of the Compensation Committee

 

with a copy to:

 

Michael Best & Friedrich LLP
One South Pinckney St., #700
Madison, WI 53703
Attn:  Tod B. Linstroth, Esq.

 

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(b)        If to Executive:

 

Austin McNamara
10202 Sycamore Circle
Villa Park, CA 92861

 

5.2        Entire Agreement . This Agreement contains the entire understanding and the full and complete agreement of the parties and supersedes and replaces any prior understandings and agreements among the parties, with respect to the subject matter hereof.

 

5.3        Amendment: Headings . This Agreement may be altered, amended or modified only in a writing, signed by both of the parties hereto. Headings included in this Agreement are for convenience only and are not intended to limit or expand the rights of the parties hereto. References to Sections herein shall mean sections of the text of this Agreement, unless otherwise indicated.

 

5.4        Assignability . This Agreement and the rights and duties set forth herein may not be assigned by Executive, or by the Company, in whole or in part, except that the Company may assign its rights and obligations to a successor of the Company’s business which expressly assumes the Company’s obligations hereunder in writing. This Agreement shall be binding on and inure to the benefit of each party and such party’s respective heirs, legal representatives, successors and permitted assigns.

 

5.5        Arbitration . Any controversy, dispute or claim arising out of or relating to this Agreement, or the breach hereof, shall be settled by a single arbitrator in binding arbitration conducted in Los Angeles, California, in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator’s decision shall be in writing. In addition to the Commercial Arbitration Rules of the AAA and unless otherwise agreed to by the parties, the following rules shall apply:

 

(a)     Each party shall be entitled to discovery exclusively by the following means: (i) requests for admission, (ii) requests for production of documents, (iii) up to 15 written interrogatories (with any subpart to be counted as a separate interrogatory), and (iv) depositions of no more than six individuals.

 

(b)     Unless the arbitrator finds that delay is reasonably justified or as otherwise agreed to by the parties, all discovery shall be completed, and the arbitration hearing shall commence within five months after the appointment of the arbitrator.

 

(c)     Unless the arbitrator finds that delay is reasonably justified, the hearing will be completed, and an award rendered within 30 days of commencement of the hearing. The arbitrator’s authority shall include the ability to render equitable types of relief and, in such event, any aforesaid court may enter an order enjoining and/or compelling such actions or relief ordered or as found by the arbitrator. The arbitrator also shall make a determination regarding which party’s legal position in any such controversy or claim is the more substantially correct (the “Prevailing Party”) and the arbitrator shall require the other party to pay the legal and other professional fees

 

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and costs incurred by the Prevailing Party in connection with such arbitration proceeding and any necessary court action. However, notwithstanding the foregoing, the parties expressly agree that a court of competent jurisdiction may enter a temporary restraining order or an order enjoining a breach of Article IV of this Agreement pending a final award or further order by the arbitrator. Such remedy, however, shall be cumulative and nonexclusive, and shall be in addition to any other remedy to which the parties may be entitled.

 

5.6        Severability . If any court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then such invalidity or unenforceability shall have no effect on the other provisions hereof, which shall remain valid, binding and enforceable and in full force and effect, and such invalid or unenforceable provision shall be rewritten or construed in a manner so as to give the maximum valid and enforceable effect to the intent of the parties expressed herein.

 

5.7        Waiver of Breach . The waiver by either party of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party.

 

5.8        Governing Law; Construction . This Agreement and the obligations hereunder shall be interpreted, construed and enforced in accordance with the laws of the State of Delaware (without regard to its conflict of laws principles). Any ambiguities in this Agreement shall not be strictly construed against the drafter of the language, but rather shall be resolved by applying the most reasonable interpretation under the circumstances, giving full consideration to the intentions of the parties.

 

5.9        Counterparts . This Agreement may be executed in two or more counterparts each of which shall be deemed an original but all of which together shall constitute one and the same instrument, and all signatures need not appear on any one counterpart.

 

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above.

 

 

		/s/ Austin McNamara
	Austin McNamara
	OMP, INC.
	By:	/s/ Robert F. End
		Robert F. End
		Director and Chairman of the Compensation
		Committee

 

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APPENDIX A

 

DEFINITIONS

 

Affiliate shall mean a person, corporation, partnership, limited liability company or other entity which, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, OMP, Inc. and shall include Stonington Capital 1994 Fund, L.P.

 

“ Cause ” shall mean any of the following: (i) Executive has committed gross negligence, willful misconduct or any violation of law in the performance of Executive’s duties to the Company; (ii) Executive has taken action likely to result in material discredit to or material loss of business, reputation or goodwill of the Company; (iii) Executive has willfully failed to follow reasonable instructions from the Board of Directors of the Company and has failed to cure that conduct after receiving notice from the Board of Directors; (iv) Executive has committed a felony deemed by the Company to be adverse to its best interests or reputation; (v) Executive has misappropriated funds or property of the Company; (vi) Executive has attempted to obtain a personal profit from any transaction in which the Company has an interest, and which represents the corporate opportunity of the Company or is adverse to the interests of the Company, unless the transaction was approved in writing by the Company after full disclosure relating to the transaction; or (vii) Executive has breached a material provision of this Agreement or any other Agreement to which Executive and Company are parties or has breached any obligation or duty owed to the Company; however, for claimed violations under (i), (iii) and (vii) above, the Executive shall have a period of thirty (30) days in which to present exculpatory information concerning a claimed violation to the Board, or to cure said violation, provided that Executive shall have only one such right to cure for each of (i), (iii) and (vii) during the term of this Agreement.

 

“ Change in Control ” shall mean the occurrence any of the following:

 

(a)            Any institution, other than Stonington Capital Appreciation 1994 Fund, L.P. or its Affiliates (collectively, “ Stonington ”), acquires greater than fifty percent (50%) of the Company’s outstanding voting stock; or

 

(b)            Any institution, other than Stonington, acquires greater than thirty percent (30%) of the Company’s outstanding voting stock and Stonington does not own at least thirty percent (30%) of the Company’s outstanding voting stock.

 

“ Confidential Information ” shall mean information that is possessed by or developed for the Company and that relates to the Company’s existing or potential business or technology, which information is generally not known to the public and which information the Company seeks to protect from disclosure to its existing or potential competitors or others, including, without limitation, the following: business plans, strategies, existing or proposed bids, costs, technical developments, existing or proposed research projects, financial or business projections, investments, marketing plans, negotiation strategies, training information and materials, information generated for client engagements and information stored or developed for use in or with computers. Confidential Information also includes information received by the

 

 

Company from others for which the Company has an obligation to treat as confidential, including all information obtained in connection with client engagements.

 

“ Disabled ” shall mean that Executive is unable to perform his services under this Agreement for a continuous period of six months by reason of his physical or mental illness or incapacity. If there is any dispute as to whether Executive is or was physically or mentally unable to perform his duties under this Agreement, such question shall be submitted to a licensed physician agreed to by Executive (or any legal guardian lawfully appointed) and the Company, or, if they are unable to so agree, appointed by the senior judge of the Orange County Circuit Court at the request of either Executive (or such legal guardian) or the Company. Executive shall submit to such examinations and provide such information as such physician may reasonably request and the determination of such physician as to Executive’s physical or mental condition shall be binding and conclusive upon Executive and the Company.

 

“Good Reason ” shall mean the termination by Executive of this Agreement as a result of: (i) without Executive’s written consent, the assignment to Executive of duties which are substantially inconsistent with Executive’s position, duties, responsibilities, and status hereunder, a change in Executive’s reporting responsibilities, titles, or office as an employee, or a reduction in Executive’s title, duties, responsibilities; or (ii) any breach of this Agreement by the Company as a result of the material reduction in the rate of Executive’s Base Salary, Bonus, or any material aggregate benefits provided to executives of the Company from time to time; provided , however, that for claimed violations under (i) and (ii) above, the Company shall have a period of thirty (30) days in which to cure said violation.

 

 

EXHIBIT A – BONUS OPPORTUNITY

 

Annual bonus equal to 100% of salary based on a number of criteria, including but not limited to, the achievement of the Company’s forecasted EBITDA in the financial plan approved by the Board.

 

Notwithstanding the above, in 2001, the Minimum Bonus shall be $166,700 and in 2002, the Minimum Bonus shall be $250,000.

 

 

EXHIBIT B

 

GENERAL RELEASE

 

I, Austin McNamara, in consideration of and subject to the performance by OMP, Inc., a Delaware company (together with its affiliates, the “ Company ”), of its material obligations under the Employment Agreement, dated September 1, 2001 (the “ Agreement ”), do hereby release and forever discharge as of the date hereof the Company and all present and former directors, officers, agents, representatives, employees, successors and assigns of the Company and its direct or indirect owners (collectively, the “ Released Parties ”) to the extent provided below.

 

1.              I understand that any payments or benefits paid or granted to me under Sections 3.4 and 3.5 of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled. I underst