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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 14th day of
October 2005, effective as of
January 18, 2005, by and between BEIJING
MED-PHARM CORPORATION, a Delaware
corporation ("BMP"), and David Gao (the
"Executive").
WHEREAS, BMP desires to continue the
Executive's employment as President and
Chief Executive Officer, and the Executive
desires to continue such employment
with BMP, upon the terms and conditions set
forth in this Agreement.
WHEREAS, this Agreement will formalize the
terms and conditions governing the
Executive's employment with BMP and the
termination of that employment.
NOW, THEREFORE, the parties hereto agree as
follows:
PART ONE - DEFINITIONS
For purposes of this Agreement, the
following definitions shall be in effect:
1. "Agreement" means this Employment
Agreement, as the same may, from time to
time, be amended in accordance with the
provisions hereof.
2. "Board" means BMP's Board of
Directors.
3. "Change in Control" means a change in
the ownership or control of BMP
effected through any of the following
transactions:
(i) a merger, consolidation or other
reorganization approved by BMP's
stockholders, unless securities
representing more than fifty percent (50%) of
the total combined voting power of the
voting securities of the successor
corporation are immediately thereafter
beneficially owned, directly or
indirectly and in substantially the same
proportion, by the persons who
beneficially owned BMP's outstanding voting
securities immediately prior to such
transaction,
(ii) a stockholder-approved sale, transfer
or other disposition of all or
substantially all of BMP's assets,
(iii) the closing of any transaction or
series of related transactions pursuant
to which any person or any group of persons
comprising a "group" within the
meaning of Rule 13d-5(b)(1) of the 1934 Act
(other than BMP or a person that,
prior to such transaction or series of
related transactions, directly or
indirectly controls, is controlled by or is
under common control with, BMP)
becomes directly or indirectly the
beneficial owner (within the meaning of Rule
13d-3 of the 1934 Act) of securities
possessing (or convertible into or
exercisable for securities possessing) more
than fifty percent (50%) of the
total combined voting power of BMP's
securities (as measured in terms of the
power to vote with respect to the election
of Board members) outstanding
immediately after the consummation of such
transaction or series of related
transactions, whether such
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EXHIBIT 10.1
transaction involves a direct issuance from
BMP or the acquisition of
outstanding securities held by one or more
of BMP's existing stockholders, or
(iv) a change in the composition of the
Board over a period of thirty-six (36)
consecutive months or less such that a
majority of the Board members ceases, by
reason of one or more contested elections
for Board membership, to be comprised
of individuals who either (A) have been
Board members continuously since the
beginning of such period or (B) have been
elected or nominated for election as
Board members during such period by at
least a majority of the Board members
described in clause (A) who were still in
office at the time the Board approved
such election or nomination.
However, the term Change of Control shall
NOT include either of the following
events undertaken at the election of
BMP:
a. any transaction, the sole purpose of
which is to change the state in which
BMP is incorporated; or
b. a transaction, the result of which is to
sell all or substantially all of the
assets of BMP to another corporation (the
"surviving corporation") provided that
the surviving corporation is owned directly
or indirectly by the shareholders of
BMP immediately following such transaction
in substantially the same proportions
as their ownership of BMP's common stock
immediately preceding such transaction.
4. "Change in Control Severance Benefits"
means the various payments and
benefits to which the Executive may become
entitled to under Paragraph 14 of
Part Four of this Agreement upon his
Involuntary Termination in connection with
a Change in Control.
5. "Code" means the Internal Revenue Code
of 1986, as amended.
6. "Competing Organization" means any
person or legal entity engaged in, about
to engage in, or intending to engage in,
the business of providing services to
foreign and/or domestic pharmaceutical
companies, specifically: drug
distribution; physician-oriented drug
promotion; product registration; clinical
trial management; and pre-market entry
analyses.
7. "Competing Service" means any service of
any person or legal entity other
than BMP, or a parent, subsidiary or
affiliate of BMP, in existence or under
development, which during the term of this
Agreement, competes with or is an
alternative to any present or planned
future service of BMP, whether or not
actively marketed by BMP.
8. "Customer" means any individual, firm,
partnership, corporation, company,
joint venture or governmental or military
unit or any other entity or any
parent, subsidiary or affiliate of any of
them which is negotiating or has a
contract with BMP or a parent, subsidiary
or affiliate of BMP for the purchase,
sale or lease of BMP's or a parent's,
subsidiary's or affiliate's services or
which has been solicited by BMP or a
parent, subsidiary or affiliate of BMP with
respect to such purchase or lease during
the Executive's employment with BMP.
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EXHIBIT 10.1
9. "Disability" means a physical or mental
disability which renders it
impracticable for the Executive to continue
to perform his duties under this
Agreement, whether with or without
reasonable accommodation. The Executive shall
be deemed to have incurred such disability
if (i) a physician selected by BMP
and reasonably satisfactory to the
Executive advises BMP that the Executive's
physical or mental condition will render
him unable to perform his duties under
this Agreement for a period of six (6)
consecutive months, or (ii) due to a
physical or mental condition the Executive
has not substantially performed the
material duties required of him hereunder
for eighty percent (80%) or more of
the normal working days during a period of
six (6) consecutive months.
10. "Employment Period" means the duration
of the Executive's employment with
BMP pursuant to the terms of this
Agreement.
11. "Involuntary Termination" means (i)
BMP's termination of the Executive's
employment for any reason other than a
Termination for Cause, (ii) the
termination of the Executive's employment
by reason of his death or Disability,
or (iii) the Executive's voluntary
resignation within thirty (30) days following
(A) a material reduction in the scope of
his duties and responsibilities, (B) a
change in his level of reporting so that he
no longer directly reports to the
Board, (C) a reduction in the annual rate
of his base salary by more than
fifteen percent (15%), (D) a relocation of
his principal place of employment by
more than fifty (50) miles, or (E) a
material breach by BMP of any of its
obligations under this Agreement and the
failure of BMP to cure such breach
within thirty (30) days after receipt of
written notice from the Executive in
which the actions or omissions constituting
such material breach are specified.
A greater than fifteen percent (15%)
aggregate reduction in the Executive's base
salary shall NOT constitute grounds for an
Involuntary Termination under clause
(C) above if substantially all of the other
executive officers of BMP are
subject to the same aggregate reduction to
their base salary.
12. "1934 Act" means the Securities
Exchange Act of 1934, as amended.
13. "Option" means any option granted to
the Executive under the Plan or
otherwise to purchase shares of common
stock which is outstanding at the time of
(i) a Change in Control or (ii) his
Involuntary Termination, whether or not in
connection with a Change in Control.
14. "Plan" means (i) BMP's 2004 Stock
Incentive Plan, as subsequently amended or
restated from time to time, and (ii) any
other stock incentive plan established
or implemented by BMP.
15. "Termination for Cause" means the
termination of the Executive's employment
for any of the following reasons: (i) the
Executive's conviction of a felony or
his commission of any act of personal
dishonesty involving the property or
assets of BMP, (ii) a material breach by
the Executive of one or more of his
obligations under this Agreement or his
Proprietary Information and Inventions
Agreement with BMP, (iii) any intentional
misconduct by the Executive which has
a material adverse effect upon BMP's
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EXHIBIT 10.1
business or reputation, (iv) the
Executive's material dereliction of the major
duties, functions and responsibilities of
his executive position, (v) a material
breach by the Executive of any of his
fiduciary obligations as an officer of
BMP, or (vi) the Executive's willful and
knowing participation in the
preparation or release of false or
materially misleading financial statements
relating to the false or erroneous
certification required of him under the
Sarbanes-Oxley Act of 2002 or any
securities exchange on which shares of BMP's
common stock are at the time listed for
trading.
PART TWO - TERMS AND CONDITIONS OF EMPLOYMENT
1. Duties and Responsibilities.
A. The Executive shall continue to serve as
the President and Chief Executive
Officer of BMP and shall in such capacity
report to the Board. As the President
and Chief Executive Officer, the Executive
shall have primary responsibility for
the formulation, implementation and
execution of strategic policies relating to
BMP's business operations, financial
objectives and market growth and shall
accordingly have overall responsibility for
the formulation of the business plan
for each fiscal year to be submitted for
Board approval.
B. In addition to the duties and
responsibilities specified in Paragraph 1.A.,
the Executive shall continue to make
business trips to the People's Republic of
China as required by the Board to assist
Beijing Med-Pharm Marketing Calculating
Co. Ltd. ("BMP China") with various
activities including, but not limited to,
directing marketing operations and meeting
with distributors.
C. During the employment period specified
in Paragraph 2, the Executive agrees
that he will: (i) serve BMP faithfully,
diligently and to the best of his
ability under the direction of the Board,
(ii) devote his best efforts and his
entire working time, attention and energy
to the performance of his duties
hereunder and to promoting and furthering
the interests of BMP, and (iii) not,
without the prior written approval of the
Board, become associated with or
engaged in, any business other than that of
BMP, and he will do nothing
inconsistent with his duties to BMP.
2. Employment Period. The Executive's
employment with BMP shall be governed by
the provisions of this Agreement for the
period commencing January 18, 2005, and
continuing through January 17, 2006.
However, the term of the Executive's
employment pursuant to the terms of this
Agreement shall automatically be
extended for successive one-year periods
thereafter, unless either BMP or the
Executive elects, by written notice
delivered to the other not later than sixty
(60) days prior to the start of any such
one-year period, not to renew the term
of this Agreement. This Agreement may also
be terminated at any time in
accordance with the termination of
employment provisions set forth in Paragraph
10.
3. Cash Compensation.
A. For all services to be rendered by the
Executive under this Agreement
(excluding services as an officer, director
and member of any committee) and
such duties as the
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EXHIBIT 10.1
Board may assign him in accordance with
Paragraph 1.A. and Paragraph 1.B., BMP
agrees to pay the Executive a base salary
of $250,000 per annum, payable at such
times as is customary for salaried
employees of BMP and in accordance with the
normal payroll practices of BMP.
B. For each fiscal year of BMP during the
Employment Period, beginning with the
fiscal year commencing January 1, 2005, the
Executive shall be entitled to
receive a cash bonus in an amount
determined by the Board.
C. BMP shall deduct and withhold from the
compensation payable to the Executive
hereunder any and all applicable federal,
state and local income and employment
withholding taxes and any other amounts
required to be deducted or withheld by
BMP under applicable statutes, regulations,
ordinances or orders governing or
requiring the withholding or deduction of
amounts otherwise payable as
compensation or wages to employees.
4. Equity Compensation.
A. The Executive has received a series of
Options over his period of employment
to date with BMP. Each of those Options
shall vest and become exercisable for
the shares of common stock subject to that
Option in accordance with the
applicable vesting schedule currently in
effect for each such Option.
B. The Executive shall be eligible to
receive one or more additional Option
grants during the Employment Period, as the
Board may deem appropriate in order
to provide him with sufficient equity
incentive for his position.
C. The shares of common stock subject to
the Options summarized in Paragraph
4.A., together with each additional Option
which the Executive may subsequently
receive over the remainder of the
Employment Period, shall be subject to the
applicable vesting acceleration provisions
of either Paragraph 12 or Paragraph
14 should an Involuntary Termination of his
employment occur during the
Employment Period.
5. Expense Reimbursement. BMP shall
reimburse the Executive for reasonable
out-of-pocket expenses incurred in
connection with BMP's and/or BMP China's
business, including travel expenses, food
and lodging while away from home,
subject to such polices as BMP may from
time to time reasonably establish for
its employees and subject to substantiation
of expenses as required under
applicable federal and state tax laws and
regulations.
6. Fringe Benefits.
A. The Executive shall, throughout the
Employment Period, be eligible to
participate in all pension, profit-sharing
and fringe benefit plans, such as
group term life insurance plans, group
health plans, accidental death and
dismemberment plans, short-term and
long-term disability programs, and any other
benefit programs which are made available
to BMP's executives and for which the
Executive qualifies.
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EXHIBIT 10.1
B. BMP shall cause BMP China to arrange for
the Executive's use of an automobile
while the Executive is working on BMP
and/or BMP China business in the People's
Republic of China.
C. The Executive shall be entitled to
receive four (4) weeks of paid vacation
each year, which shall be taken at such
time or times as will not unreasonably
hinder or interfere with BMP business or
operations. Vacation time may be
accrued from year to year in accordance
with BMP's general vacation policy.
D. BMP will obtain and maintain at all
times directors' and officers' liability
insurance for Executive, so long as such
insurance can be obtained on terms
acceptable to the Board.
7. Indemnification. BMP agrees to defend
the Executive and shall indemnify and
hold harmless the Executive to the fullest
extent permitted by law from any and
all liability, costs and expenses which may
be assessed against the Executive by
reason of the performance of his
responsibilities and duties under the terms of
this Agreement, provided such liability
does not result from the willful
misconduct or gross negligence of the
Executive.
8. Proprietary Information.
A. The Executive hereby acknowledges that
BMP and/or BMP China may, from time to
time during the Employment Period, disclose
to the Executive confidential
information pertaining to BMP's and/or BMP
China's business, strategic plans,
technology or financial affairs. All
information, data and know-how, whether or
not in writing, of a private or
confidential nature concerning BMP's and/or BMP
China's trade secrets, inventions,
processes, systems, designs, drawings,
product innovations and developments,
engineering, marketing strategies and
future marketing plans, customer lists,
prospective customers, finances and
financial reports, employee information and
other organizational information
(collectively, "Proprietary Information")
is and shall remain the sole and
exclusive property of BMP and/or BMP China
and shall not be used or disclosed by
the Executive except to the extent
necessary to perform his d
