Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into
as of November 1, 2005 between Bactolac Pharmaceutical, Inc.
Inc., a Delaware corporation (the “Company”) and Pailla
Reddy (the “Executive”).
RECITALS
A.
This Agreement is entered into following a previous employment
agreement dated as of November 17, 1999 and subsequent extensions
of that employment agreement. The Company is a wholly owned
subsidiary of Advanced Nutraceuticals, Inc.,
(“ANI”).
B.
The Company desires to continue to employ the Executive, and the
Executive desires to continue to be so employed by the Company, on
the terms and subject to the conditions set forth in this
Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual promises
set forth in this Agreement, the Company and the Executive hereby
agree as follows:
1.
Employment .
(a)
Subject to the terms and conditions contained herein, the Company
employs the Executive, and the Executive accepts such employment,
from the date hereof until the earlier of (i) November 1, 2007
or (ii) the date such employment is terminated pursuant to Section
4 of this Agreement. During the Executive’s employment under
this Agreement, the Executive shall perform such duties for the
Company as may from time to time be assigned to the Executive by
the Board of Directors of the Company (the “Board”).
The Executive shall have the title of President and such additional
titles as from time to time may be assigned to the Executive by the
Board.
(b)
The Executive will devote substantial business time, energy,
attention and skill to the services of the Company and its
affiliates and to the promotion of their interests; provided,
however, the Executive may render services to Invagen
Pharmaceuticals, Inc., Shilpa-Saketh Realty, (or other part-time
real estate ventures), or any business that does not compete with
the Company in the vitamin and nutraceutical industry, none which
will interfere in any material respect with his duties to the
Company. So long as the Executive is employed by the Company, the
Executive shall not, without the written consent of the
Company:
(i)
engage in any other significant activity for compensation, profit
or other pecuniary advantage, whether received during or after the
term of this Agreement;
(ii)
render or perform other significant services of a business,
professional, or commercial nature other than to or for the
Company, either alone or as an employee, consultant, director,
officer, or partner of another business entity, whether or not for
compensation, and whether or not such activity, occupation or
endeavor is similar to, competitive with, or adverse to the
business or welfare of the Company, (the Executive may from time to
time consult with Atlantic Essentials (“AE”) regarding
certain of AE’s business operations); or
(iii)
invest in or become a shareholder of another corporation or other
entity; provided, that the Executive’s investment solely as a
shareholder in another corporation shall not be prohibited hereby
so long as such investment is not in excess of four point nine
percent (4.9%) of any class of shares that are traded on a national
securities exchange or quoted on the NASDAQ National Market; and,
provided further, Executive may maintain his ownership interest in
Invagen Pharmaceuticals, Inc, a company in the business of
pharmaceuticals which Executive represents is not in, nor will it
enter, the business of manufacturing nutritional supplements, and
any other ownership holdings of Executive as of the date of this
Agreement.
2.
Location of Employment . The Executive’s principal
place of employment shall be at the executive offices of the
Company located in Hauppauge, New York or in the same general area;
provided, that at the direction of the Board, the Executive may
from time to time be required to travel to various domestic and
foreign locations.
3.
Compensation .
(a)
In exchange for full performance of the Executive’s
obligations and duties under this Agreement, the Company shall pay
the Executive a base salary at a monthly rate of $29,666.67,
payable in accordance with the Company’s standard payroll
practices. The base salary described in subsection (a) hereof is a
gross amount, and the Company shall be required to withhold from
such amount deductions with respect to Federal, state and local
taxes, FICA, unemployment compensation taxes and similar taxes,
assessments or withholding requirements.
(b)
In addition to the base salary, Executive shall be entitled to a
performance bonus (the “Bonus”) at the discretion of
the Board.
(c)
During the Executive’s employment under this Agreement, the
Executive shall also be reimbursed by the Company for reasonable
business expenses actually incurred or paid by the Executive,
consistent with the policies established by the Board, in rendering
to the Company the services provided for in this Agreement, upon
presentation of expense statements or such other supporting
information as is consistent with the policies of the
Company.
(d)
The Executive shall be entitled to 15 business days vacation for
each full year of employment under this Agreement, which vacation
time will accrue in accordance with the vacation policy of the
Company.
(e)
The Executive shall be entitled to participate in all benefit plans
(including deferred compensation plans and any medical, dental or
life insurance plans) which shall be available from time to time to
the domestic management employees of the Company generally, except
to the extent such participation in any plan would alter the
intended tax treatment of such plan; provided, however, that the
Executive shall have no right under this Agreement to participate
in any additional stock option, stock purchase or other plan
relating to shares of capital stock of the Company or its
affiliates. The Executive acknowledges and agrees that the Board
may in its discretion terminate at any time or modify from time to
time any such benefit plans.
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(f)
The Executive shall be provided the use of a Company paid
automobile of a similar model to those previously provided to
Executive by the Company.
4.
Termination .
(a)
The employment of the Executive under this Agreement may be
terminated by the Company immediately upon giving the Executive
notice if the Executive has been unable to discharge his essential
job duties by reason of illness or injury for either (A) a period
of one hundred twenty (120) consecutive days or (B) one hundred
eighty (180) days in any twelve month period. In the event of any
dispute regarding the existence of Executive’s Disability
hereunder, the matter will be resolved by the determination of a
majority of three physicians qualified to practice medicine in New
York, one to be selected by each of Executive and the Board and the
third to be selected by the two designated physicians. For this
purpose, Executive will submit to appropriate medical
examinations.
(b)
The employment of the Executive under this Agreement shall
terminate on the date of the Executive’s death.
(c)
The employment of the Executive under this Agreement may be
terminated by the Company for Cause. For purposes of this
Agreement, “Cause” shall mean (i) the willful failure
or refusal by the Executive to perform his duties hereunder which
has not ceased within ten (10) business days after written demand
for substantial performance is delivered to the Executive by the
Company, which demand identifies the manner in which the Company
believes that the Executive has not performed such duties; (ii) the
Executive shall intentionally engage in misconduct toward the
Company which is materially injurious to the Company, ANI, or its
Subsidiaries, monetarily or otherwise or (iii) the conviction of
the Executive of or the entering of a plea of nolo contendre
by the Executive with respect to, a felony or a crime involving
moral turpitude.
(d)
The employment of the Executive under this Agreement shall
terminate upon receipt by the Board of a written notice of
resignation signed by the Executive. Such notice shall provide a
minimum of four months notice prior to the date of termination by
Executive.
(e)
In addition to the circumstances described in subsections (a), (b),
(c) and (d) above, the Company may terminate the Executive’s
employment for any reason or no reason and with or without cause or
prior notice.
(f)
If the Executive’s employment is terminated pursuant to this
Section 4 or for any other reason, the Executive shall not be
entitled to any compensation or benefits from the Company, under
Section 3 of this Agreement or otherwise, except for the
following:
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(i)
base salary and vacation pay accrued, and reasonable business
expenses incurred, under Section 3 of this Agreement through the
date of such termination;
(ii)
such benefits, if any, as may be required to be provided by the
Company under the Comprehensive Omnibus Budget Reconciliation Act
(COBRA); and
(iii)
if the Executive’s employment is terminated pursuant to
subsection (e) above, the Company shall continue to pay to the
Executive the base salary described in Section 3(a) above until the
earlier of (A) twelve (12) months following such termination or (B)
the termination date set forth in Section 1(a)(i) of this
Agreement.
(g)
Executive may terminate his employment hereunder for “Good
Reason” (as hereinafter defined).
(i)
For purpose
