THIS AGREEMENT, made as of this 10 day of February, 2004, by and between
BEIJING MED-PHARM CORPORATION, a Delaware corporation ("BMP"), with its
principal offices located at 5906 Highland Drive, Palatine, IL 60067 and David
Gao, an individual, residing at 5906 Highland Drive, Palatine, IL 60067 (the
BACKGROUND. BMP desires the Executive to be employed by BMP, and the
Executive is desirous of such employment, upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties intending to be legally bound
hereto agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
(a) "Agreement" means this Employment Agreement, as
the same may, from time to time, be amended in accordance with the provisions
(b) "Cause" means, with respect to the Executive, any:
(i) Act of dishonesty;
(ii) Act of malfeasance;
(iii) Action taken in knowing contradiction to the
best interests of the Company;
(iv) Refusal to perform job functions reasonably
required of him under this Agreement; or
(v) Any other act which has a direct,
substantial and adverse effect on the Company's reputation or business.
(c) "Company" means BMP and its respective successors,
whether now or hereafter existing.
(d) "Competing Organization" means to the best of the
Executive's knowledge 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.
(e) "Competing Service" means any service of any
person or legal entity other than the Company, or a parent, subsidiary or
affiliate of the Company, 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
the Company, whether or not actively marketed by the Company.
(f) "Confidential Information" means all that
knowledge, data, concepts and other like information acquired by the Executive
in the course of his employment with the Company.
(g) "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 the Company or a parent, subsidiary
or affiliate of the Company for the purchase, sale or lease of the Company's or
a parent's, subsidiary's or affiliate's services or which has been solicited by
the Company or a parent, subsidiary or affiliate of the Company with respect to
such purchase or lease during the Executive's employment with the Company.
(h) "Disability" means the Executive's inability to
perform his duties under this Agreement for a period of six (6) consecutive
months, or for eighty percent (80%) or more of the normal working days during
the nine (9) consecutive months then ending, because of his physical or mental
illness or infirmity.
(i) "Future Inventions" means all inventions,
discoveries, ideas, concepts, designs and improvements of any sort, whether
patentable, copyrightable or not, relating in any way to the business of the
Company, which the Executive may, during the term of this Agreement, conceive or
invent, whether alone or jointly with others, and whether during business hours
or thereafter, and such term includes all "know-how" and Technical Data relating
to the foregoing, and all letters patent and copyrights of the United States or
any other country which may be issued in connection with the foregoing.
(j) "Secret or Confidential Information" means any
ideas or any compilations of information kept or which shall hereafter be kept
confidential by the Company in the operation of its business or the conduct of
its research and which are not in the public domain, and which give or can give
to the Company an advantage over its competitors, including, by way of
illustration but not limitation: source codes, object codes, engineering and
other sketches, drawings and tracings, specifications, engineering data,
memoranda, designs, sources of supplies and materials, cost and financial data,
processes, production machines and equipment, procedures, customer lists,
marketing plans and business forecasts, together with all
"know-how" and Technical Data relating thereto.
(k) "Technical Data" means all written, printed and
other tangible materials embodying or containing "know-how", and includes,
without limiting the generality of the foregoing, all correspondence, designs,
processes, source codes, object codes, engineering sketches, drawings and
tracings, specifications and engineering data, reporting formats, memoranda,
notebooks, and all copies thereof, together with all models and prototypes of
(l) "Term" means from February 10, 2004 to December
31, 2005; provided, however, Term shall include any continuation of this
Agreement pursuant to Section 5 hereof.
2. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts such employment, upon the terms and conditions set
forth in this Agreement.
The Executive shall be employed by the Company as its President and
Chief Executive Officer, and he shall perform such duties and render such
services consistent therewith as may from time to time be required of him by the
Board of Directors (the "Board") of the Company; provided, however, the
Executive shall not have the power to hire or fire officers of the Company
without the approval of the Board, nor shall the Executive take any of the
following actions on behalf of the Company without the approval of the Board:
(a) Borrowing or obtaining credit in any amount or
executing any guaranty;
(b) Expending funds for capital equipment in excess of
budgeted expenditures for any calendar month;
(c) Selling or transferring capital assets;
(d) Executing any lease of real property; or
(e) Exercising any discretionary authority or control
over the management of any employee welfare, pension benefit plan, or stock
option plan, or over the disposition of the assets of any such plan.
4. Extent of Service. During the Term of this Agreement,
the Executive agrees that he will:
(a) Serve the Company faithfully, diligently and to
the best of
his ability under the direction of the Board;
(b) 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 the Company; and
(c) Not, without the prior written approval of the
Board, become associated with or engaged in, any business other than that of the
Company, and he will do nothing inconsistent with his duties to the Company.
5. Term of Employment. The term of employment of the
Executive under this Agreement shall be for the Term, unless terminated pursuant
to Section 9 of this Agreement. Notwithstanding the foregoing, the term of the
Executive's employment hereunder shall continue beyond the Term on a year-to-
year basis, subject to Section 9 hereof, unless either party gives notice of
termination to the other in accordance with the terms of this Agreement.
6. Base Salary Compensation; Annual Bonus. (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 Board may assign to him in accordance with Section 3 hereof, the Company
agrees to pay the Executive a base salary of $200,000 per annum, payable at such
times as is customary for employees of the Company and in accordance with the
normal payroll practices of the Company.
(b) Effective January 1,2005 and on each subsequent January
1 during the Term, the Executive shall be entitled to receive an annual cash
bonus in an amount determined by the Board.
7. Other Compensation. The Executive will participate in a
Company Stock Incentive Plan pursuant to which the Executive will have the
option to purchase shares of the voting common stock of the Company for a period
of years and at an option price determined by the Board.
8. OTHER BENEFITS.
A. The Executive shall be entitled to participate in any
disability, medical or life insurance or other similar plan or arrangement, any
stock bonus, purchase or option plan and any bonus or profit sharing plan or
retirement plan or other fringe benefit provided by the Company to its
executives generally. The Company shall reimburse the Executive for reasonable
out-of-pocket expenses incurred in connection with the Company's business,
including travel expenses, food, and lodging while away from home, subject to
such policies as Company 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. The Company shall cause its wholly-owned subsidiary,
Beijing Med-Pharm Marketing Calculating Co. Ltd. ("BMP China"), to arrange for
the Executive's use of an automobile while the Executive is working on Company
and/or BMP China business in The People's Republic of China.
B. The Executive shall be entitled to receive four weeks of
paid vacation during each year of this Agreement, which shall be taken at such
time or times as will not unreasonably hinder or interfere with the Executive's
business or operations. Vacation time may be accrued from year to year in
accordance with the Company's general vacation policy.
C. Death Benefit and Life Insurance.
I. The Executive is entitled to participate in any life
insurance, accidental death and dismemberment and travel accident plans
maintained by the Company for its employees, on terms no less favorable than
those extended to any other senior executive of the Company.
II. The Company may, if it so chooses, apply for and procure
in its own name, and for its own benefit, additional life insurance and
disability insurance on the Executive, and the Executive shall have no right,
title or interest therein.
III. The Executive agrees to submit to any medical or other
examination, and to execute any application or other instrument, reasonably
necessary to obtain any policy of insurance under this Section.
D. Liability Insurance. The Company will obtain and
maintain at all times directors' and officers' liability insurance for the
Executive, so long as such insurance can be obtained on terms acceptable to the
E. Indemnification. The Company 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
(a) The Term of this Agreement and the employment of
the Executive hereunder shall terminate in the event of the death of the
Executive and, at the option of the Company, upon written notice to the
Executive, upon the Disability of the Executive. During the period of any
Disability, until the Company shall have elected to terminate the Term of this
Agreement, as aforesaid, the Executive shall continue to receive his base salary
and all other benefits provided for in Sections 7 and 8 hereof.
(b) In addition to the provisions of Section 9(a)
above, the Company may also, for Cause, elect to terminate the Term of this
Agreement and the employment of the Executive hereunder by written notice to the
Executive. Upon any such termination for Cause, the Executive shall no longer be
entitled to receive his base salary or any other benefits under this Agreement.
(c) In addition to the provisions of Section 9(a) and
(b) above, the Company may also terminate the employment of the Executive
hereunder, at the end of the Term, by notice given to the Executive at least
ninety (90) days before the end of such Term.
(d) The Executive shall have the right to terminate
this Agreement (i) upon written notice given to the Company at least ninety (90)
days prior to his intended date of resignation, or (ii) upon his Disability.
(e) In the event of a merger or combination in which
the Company is not the surviving entity, or of a sale of all or substantially
all of the Company's assets, the Company shall (1) assign this Agreement and all
rights and obligations under it to any business entity that succeeds to all or
substantially all of the Company's business through that merger or combination
or sale of assets, or (2) on at least thirty (30) days' prior written notice to
Executive, terminate this Agreement effective on the date of the merger or
combination or sale of assets. Such termination shall constitute a "termination
without cause" under Section 9(f) hereof.
(f) Termination without Cause. Should the Executive be
terminated for any reason other than for Cause or the expiration of this
Agreement, the Executive shall be entitled to receive, payments as follows:
(i) Upon termination during the first 2 years of
this Agreement, an amount equal to twelve (12) months of the Executive's then
current base salary paid in twelve (12) equal monthly installments beginning 7
days after the date of such termination;
(ii) Upon termination following the second year
of this Agreement, an amount equal to twelve (12) months of the Executive's then
current base salary payable in a lump sum within 7 days of the date of
(iii) The immediate vesting of all options,
pension plans and other benefit packages in which the Executive was a
participant at the time of his termination; and
(iv) Such additional payments and other
compensation as may be reasonable under the circumstances and approved by the
Board in the event that the termination is due to a merger of the Company into
another company, or, the Company is sold to third parties.
(v) In addition to termination by the Executive
provided in Section 9(d) hereof, the Executive may terminate this Agreement upon
30 days written notice to the Company setting forth specifically the grounds for
termination upon the occurrence of any of the following: (i) the failure of the
Company to observe or comply with any material provision of this Agreement if
such failure has not been cured within 30 days after written notice thereof has
been given by the Executive to the Company, or (ii) the dissolution of the
Company. Upon termination by the Executive in accordance with this Section
9(f)(v), the Company shall pay the Executive his base salary through the date of
termination plus any incentive compensation accrued by the Executive under any
Company Incentive Compensation Plan but not yet paid, and shall continue to pay
to the Executive his base salary for a period (the "Severance Period") equal to
the lesser of:
(a) two years from the date of such termination, and
(b) the sum of (i) the period from the date of such
termination through the date when the Term would have expired but for
termination hereunder and (ii) one year. Following termination of this Agreement
pursuant to Section 9(f), the Executive shall have no obligation to mitigate his
damages by finding alternative employment or otherwise. Upon termination of this
Agreement as provided in Section 9(f), the Term shall terminate and all further
rights and obligations of the parties under this Agreement (except those set
forth in Section 9(f) for the periods set forth herein) shall be of no further
force or effect.
10. Representations and Warranties of the Executive as to
Conflicts. The Executive hereby represents and warrants to the Company that his
employment by the Company does not and will not violate any agreement or
instrument to which he is a party or by
which he is bound, and the Executive agrees that he will indemnify and hold
harmless the Company, its directors, officers and employees against any claims,
damages, liabilities and expenses (including reasonable attorneys' fees) which
may be incurred, including amounts paid in settlement, by any of them in
connection with any claim based upon or related to a breach of the Executive's
representations and warranties set forth in this Section 10. In the event of any
claim based upon or related to a breach of the Executive's representations and
warranties set forth in this Section 10, the Company will give prompt notice
thereof, in writing, to the Executive and the Executive shall have the right to
defend such claim with counsel reasonably satisfactory to the Company.
11. Future Inventions. The Executive shall assign and convey
to the Company, and hereby does assign and convey to the Company, and the
Company hereby accepts, all of the Executive's right, title and interest in and
to all Future Inventions made or conceived during the Term of this Agreement,
and the Executive hereby agrees that he shall, without the payment of royalty or
any other consideration to him therefor:
(a) Inform the Company promptly and fully of each such
Future Invention by a written report satisfactory to the Company;
(b) Apply, at the Company's request and expense, for
United States and foreign letters patent, copyright, trademark or service mark,
as the case may be, either in the Executive's name or otherwise as the Company
(c) Assign and convey to the Company, and he hereby
does assign and convey to the Company, all of his right, title and interest in
and to applications for United States and foreign letters patent, copyrights,
trademarks and service marks and to any letters patent, copyrights, trademarks
and service marks which may be issued upon any such Future Invention;
(d) Deliver promptly to the Company, without charge to
the Company but at its expense, such written instruments, and do such other
acts, as may be reasonably necessary, in the opinion of the Company, to obtain
and maintain United States and foreign letters patent, copyrights, trademarks or
service marks on each such Future Invention and to vest the Executive's entire
right, title and interest thereto in the Company; and
(e) Grant to the Company, and he hereby does grant to
the Company, prior to any further assignment of the Executive's right, title and
interest to the Company in any Future Invention as required above, the
royalty-free right to use in its business,
and to make, have made, use and sell products, processes, services, writings and
marks based upon or related to such Future Invention made or conceived by the
(a) During the Term of this Agreement and at all times
thereafter, the Executive will not use Secret or Confidential Information for
his own benefit or for the benefit of any person or legal entity other than the
Company, nor will he disclose the same to any other person or legal entity,
except as required to conduct the business of the Company in the ordinary
(b) Except with the prior written approval of the
Company, or except as required to conduct the business of the Company in the
ordinary course, the Executive will not, at any time, directly or indirectly,
use, disseminate, disclose, lecture upon, or publish articles concerning, any
Secret or Confidential Information.
(c) Upon the termination of his employment with the
Company, all documents, records, notebooks and similar repositories of, or
containing, Secret or Confidential Information, including any copies thereof,
then in the Executive's possession, or under his control, whether prepared by
him or others, will be left with or immediately returned to the Company by the
13. Non-Compete. The Executive agrees that, during the Term
of this Agreement and during the period of two (2) years following the
termination of his employment with the Company pursuant to Section 9,
subsections (a), (b), (c) or (d) of this Agreement, he will not, without the
written approval of the Company, directly or indirectly, under any circumstances
whatsoever, own, manage, operate, engage in, control or participate in the
ownership, management, operation or control of, or be connected in any manner,
whether as an individual, partner, stockholder, director, officer, principal,
agent, employee or consultant, or in any other relation or capacity whatsoever,
with any Competing Organization, and will not in any such manner, compete with
or solicit or call on any Customer, wherever located, who was a Customer at any
time during the period one year prior to the termination of the Executive's
employment with the Company, for the purpose of inducing such Customer to
purchase or lease a Competing Service. Notwithstanding the foregoing, nothing
contained in this Section 13 shall restrict the Executive from making any
investment in any company, so long as such investment consists of no more than
five percent (5%) of any class of equity securities of a company whose
securities are traded on a national securities exchange or in the
14. Non-Interference. The Executive will not, for a period
of two (2) years following the termination of the Executive's employment
pursuant to Section 9, subsections (a), (b), (c) or (d) of this Agreement,
directly or indirectly, employ, hire, solicit or, in any manner, encourage any
employee of the Company to leave the employ of the Company.
15. Injunctive Relief. In addition to any other rights or
remedies available to the Company as a result of any breach by the Executive of
his obligations under this Agreement, the Company shall be entitled to
enforcement of such obligations by an injunction or a decree of specific
performance from a court with appropriate jurisdiction, and in the event that
the Company is successful in any suit or proceeding brought or instituted by the
Company to enforce any of the provisions of this Agreement, or on account of any
damages sustained by the Company by reason of the violation by the Executive of
any of the terms of this Agreement to be performed by the Executive, the
Executive agrees to pay to the Company all attorneys' fees reasonably incurred
by the Company.
16. Withholding. The Executive hereby agrees that he will
make such arrangements as the Company may deem necessary to discharge any
obligations of the Company to withhold Federal, state or local taxes imposed
upon the Company in respect of this Agreement.
17. Severability. The provisions of this Agreement shall be
severable and if any part of any provision shall be held invalid or
unenforceable, or any separate covenant contained in any provision is held to be
unduly restrictive and void by a final decision of any court or other tribunal
of competent jurisdiction, such part, covenant or provision shall be construed
or limited in scope to give it maximum lawful validity, and the remaining
provisions of this Agreement shall nonetheless remain in full force and effect.
18. Entire Agreement. This Agreement contains the entire
agreement of the parties relative to the subject matter hereof, superseding and
terminating all prior agreements or understandings, whether oral or written,
between the parties hereto relative to the subject matter hereof, and this
Agreement may not be extended, amended, modified or supplemented without the
prior written consent of the parties hereto.
19. Waivers. Any waiver of the performance of the terms or
provisions of this Agreement shall be effective only if in writing and signed by
the party against whom such waiver is to be enforced. The failure of either
party to exercise any of his or its rights under this Agreement or to require
the performance of any term or provision of this Agreement, or the waiver by
either party of any breach of this Agreement, shall not prevent a subsequent
exercise or enforcement of such rights or be deemed a waiver of any subsequent
breach of the same or any other term or provision of this Agreement.
20. Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be deemed given when
personally delivered or sent by overnight courier or certified mail, postage
prepaid, return receipt requested, to their respective addresses of the parties
hereto as set forth above or to such other address as either party may designate
by notice to the other party given as herein provided.
21. Assignment. Except as provided in Section 9(e), this
Agreement shall not be assignable by either party without the prior written
consent of the other party.
22. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without giving effect to the conflict of laws rules of such state.
23. Survival of Terms. The terms of this Agreement and the
respective obligations of the parties hereto shall survive the termination of
the Executive's employment with the Company for as long as any obligation or
duty remains outstanding.
24. Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the Company, its successors and assigns,
including, without limitation, any person, firm, corporation or other entity
which may acquire all or substantially all of the Company's assets and business,
or with or into which the Company may be consolidated or merged, and this
provision shall apply in the event of any subsequent merger, consolidation or
transfer. In every respect, this Agreement shall inure to the benefit of and be
binding upon the Executive, his heirs, executors and personal representatives
and, being personal in nature, shall not be assignable by the Executive.
25. Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
BEIJING MED-PHARM CORPORATION