AMENDMENT ONE TO EMPLOYMENT AGREEMENT

AMENDMENT TWO TO EMPLOYMENT AGREEMENT

AMENDMENT THREE TO EMPLOYMENT AGREEMENT

AMENDMENT FOUR TO EMPLOYMENT AGREEMENT

Amendment Five to Employment Agreement

 

 

<DOCUMENT>

<TYPE>EX-10.2

<SEQUENCE>3

<FILENAME>y99512exv10w2.txt

<DESCRIPTION>EXECUTIVE EMPLOYMENT AGREEMENT OF ANDREW REDDICK

<TEXT>

<PAGE>

 

                                                                    EXHIBIT 10.2

 

                         EXECUTIVE EMPLOYMENT AGREEMENT

 

      EXECUTIVE EMPLOYMENT AGREEMENT (the "AGREEMENT") made as of the 26th day

of August, 2003 by and between HALSEY DRUG CO., INC., a New York corporation

(the "CORPORATION"), with principal executive offices at 695 North Perryville

Road, Rockford, IL 61107 and ANDREW D. REDDICK, residing at 297 North Cote

Circle, Exton, PA 19341 (the "EMPLOYEE").

 

                               W I T N E S S E T H

 

            WHEREAS, the Corporation desires to employ the Employee to engage in

such activities and to render such services as are required under the terms and

conditions hereof and the Board of Directors has authorized and approved the

execution of this Agreement; and

 

            WHEREAS, the Employee desires to be employed by the Corporation

under the terms and conditions hereinafter provided.

 

            NOW, THEREFORE, in consideration of the mutual covenants and

undertakings herein contained, the parties agree as follows:

 

      1. Employment, Duties and Acceptance.

 

            1.1 Services. The Corporation hereby employs the Employee for the

Term (as hereinafter defined in Section 2 hereof), to render exclusive and

full-time services to the business and affairs of the Corporation as the

President and Chief Executive Officer of the Corporation, subject to the

direction of the Board of Directors of the Corporation, and, in connection

therewith, the Employee shall have all the duties and responsibilities

customarily rendered by a President and Chief Executive Officer, and as may be

further reasonably and customarily

 

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directed or requested to be performed by the Board of Directors, to which the

Employee shall report, and to use his commercially reasonable best efforts,

skill and abilities to promote the interests of the Corporation and its

subsidiaries. The Employee's office shall be based initially and temporarily at

the Corporation's Congers, New York facility. The Corporation shall use its

commercially reasonable best efforts to transfer its administrative headquarters

to a location in eastern Pennsylvania no more than forty-five (45) driving miles

from Exton, Pennsylvania, within twelve (12) months from the date of this

Agreement. Upon the completion of such transfer, the Employee shall be based at

such headquarters. The Employee shall provide services to and shall travel to

such of the Corporation's various offices and locations as the Corporation and

the Employee mutually agree is in the best business interests of the

Corporation.

 

            1.2 Acceptance. The Employee hereby accepts such employment and

agrees to render the services described in Section 1.1 hereof.

 

      2. Term of Employment. The term of the Employee's employment under this

Agreement shall commence on the date of this Agreement and shall expire two (2)

years from the date hereof (the "INITIAL TERM"), unless sooner terminated

pursuant to Section 7 of this Agreement; provided, however, that the Employee's

term hereunder shall automatically be extended for successive one (1) year

periods (each, "RENEWAL PERIOD" and together with the Initial Term, the "TERM"),

unless either the Corporation or the Employee provides written notice of

non-renewal of the Employee's employment with the Corporation ninety (90) days

prior to the expiration of the Initial Term or any Renewal Period.

 

      3. Compensation. In consideration of the services to be rendered by the

Employee pursuant to this Agreement, the Employee shall receive from the

Corporation the following compensation:

 

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            (a) Base Salary. The Corporation shall pay the Employee an aggregate

base salary at the initial annual rate of $300,000 (the "BASE SALARY"), payable

in equal bi-weekly installments, less such deductions or amounts to be withheld

as shall be required by applicable laws and regulations. The Employee's Base

Salary shall be reviewed at least annually and be subject to increase by the

Board of Directors of the Corporation, in its sole and absolute discretion.

 

            (b) Annual Bonus. During the Term, the Employee will be eligible to

receive from the Corporation an annual bonus (the "BONUS") in the amount of up

to thirty-five percent (35%) of the Employee's Base Salary during the fiscal

year (or portion thereof) for which the Bonus may be awarded. The Bonus will be

based upon on the achievement of such targets, conditions or parameters (the

"BONUS CRITERIA") as will be agreed upon by the Employee and the Board of

Directors or the Compensation Committee of the Board of Directors of the

Corporation (i) no later than sixty (60) days from the date of this Agreement in

the case of the Bonus Criteria for fiscal year 2003, and (ii) no later than

sixty (60) days from the beginning of each fiscal year thereafter during the

Term. The Bonus shall be paid at the same time as bonuses are paid to other

executive officers, but in any event within seventy-five (75) days following the

end of the Corporation's fiscal year.

 

      4. Expenses.

 

            The Corporation shall pay or reimburse the Employee for all

reasonable expenses which are in accordance with the Corporation's expense

policy in force from time to time and which are actually incurred or paid by the

Employee during the Term in the performance of his services under this

Agreement, upon presentation of expense statements or vouchers or such other

supporting information as the Corporation may reasonably require. Such expenses

shall

 

                                       3

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include, but not be limited to, business travel, travel to corporate facilities

and related temporary living expenses, meals and lodging, business

entertainment, and travel expenses incurred by the Employee during the

recruiting and interviewing process. Such expenses shall also include fees and

expenses associated with membership in various business and civic associations,

approved by the Compensation Committee of the Board of Directors of the

Corporation, in which the Employee's participation is in the Corporation's best

interest.

 

            The Corporation shall reimburse the Employee for the legal fees and

expenses incurred by the Employee for review and negotiation of this Agreement

by the Employee's legal counsel up to Twelve Thousand Dollars ($12,000) on or

before fifteen (15) days following the execution date of this Agreement.

 

      5. Additional Benefits.

 

            (a) In General. In addition to the compensation and expenses to be

paid under Sections 3 and 4 hereof, the Employee will be entitled to such rights

and benefits for which he may be eligible under any insurance, profit-making,

incentive, bonus, stock option, stock grant or pension or retirement plan of the

Corporation as the Board of Directors shall adopt from time to time in its sole

and absolute discretion for the benefit of senior executives or employees

generally of the Corporation.

 

            (b) Stock Options. The Employee is hereby granted stock options to

purchase 5,500,000 shares of the Corporation's common stock, $.01 par value per

share (the "OPTION") at an exercise price of $.34 per share. The Option Shares

shall vest and be exercisable as follows: (i) 1,000,000 Option Shares on March

31, 2004; and (ii) the balance thereafter at the rate of 500,000 Option Shares

per calendar quarter (the first quarterly vesting period to be satisfied on June

30, 2004 and on each September 30, December 31, March 31, and June 30,

thereafter until

 

                                       4

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fully vested). The Option shall have a ten (10) year term, subject to earlier

termination as set forth in Section 7 upon the termination of the Employee's

employment with the Corporation and shall be evidenced by the Non-Qualified

Stock Option Agreement substantially in the form of Exhibit A hereto. The

Employee and the Corporation agree that the Option shall be deemed to have been

issued pursuant to the Corporation's 1998 Stock Option Plan or comparable plan

and the Option Shares shall be duly registered under a registration statement on

Form S-8 filed with the Securities and Exchange Commission. The Employee will

also be eligible in the future to receive annual option or stock grants based on

performance or on achievement of milestones as determined by the Board of

Directors or the Compensation Committee.

 

      Notwithstanding the foregoing and anything to the contrary contained in

this Agreement, the Employee hereby acknowledges and agrees that the grant of

the Option and the issuance of the Option Shares is contingent upon approval by

the shareholders of the Corporation at the next meeting of shareholders of

amendments to the Corporation's 1998 Stock Option Plan (i) to increase the

number of shares reserved for issuance under the 1998 Stock Option Plan and (ii)

to authorize issuance of stock options (including the Option) having an exercise

price less than the fair market value of the common stock of the Corporation on

the date of issuance. The Corporation agrees to recommend such matter to the

shareholders and to use its commercially reasonable best efforts to hold such

meeting as soon as reasonably practicable, but in any event, by March 31, 2004.

Upon the written request of the Employee (and following such shareholder

approval), the Corporation shall promptly confirm to the Employee in writing

that such contingency has been eliminated, that the Option is fully effective,

and that the Option Shares have been duly registered in accordance with this

Section 5(b).

 

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      (c) Purchase of Options.

 

            In the event that the Employee is terminated for Cause (as defined

in Section 7.3) during the Term or resigns other than for Good Reason (as

defined in Section 7.5) during the Initial Term, the Corporation shall have the

right, but not the obligation, to purchase the Employee's vested Option Shares

at the Fair Market Value thereof. In the event that the Corporation does not

elect to purchase the Employee's vested Option Shares within ten (10) days of

the date of the Employee's termination for Cause during the Term or other than

with Good Reason resignation during the Initial Term, the Employee shall be

obligated to exercise his Option in writing within the later of forty (40) days

of such termination or resignation or ten (10) business days after written

notice of potential forfeiture from the Corporation to the Employee, failing

which he shall be deemed to have forfeited his Option to the Corporation. For

purposes of this Section 5(c), "FAIR MARKET VALUE" shall mean the product of (i)

the positive difference, if any, between (a) the average of the closing bid and

asked prices of the Corporation's Common Stock as reported by the OTC Bulletin

Board (or the closing price per share of the Corporation's Common Stock as

reported by such exchange or over-the-counter or other market on which the

Corporation's Common Stock may then be listed or admitted for trading) for the

five (5) trading days prior to the date of termination, and (b) the exercise

price of the Option Shares, multiplied by (ii) the number of Option Shares,

which, as of the date of termination or resignation, are vested under the

Option.

 

      6. Vacation. The Employee shall be entitled to four (4) weeks of vacation

during each year of the Term, to be taken at a time or times mutually agreed

upon by the Employee and the Corporation; provided, however, that not more than

one (1) week of such vacation period

 

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may be carried over to the year immediately following the year in which such

vacation was to be taken, unless otherwise required by applicable law.

 

      7. Termination.

 

            7.1 Death. If during the Term the Employee shall die, the Employee's

employment under this Agreement shall terminate as of the date of the Employee's

death. Upon such termination under this Section 7.1 the Corporation shall pay to

or for the benefit of the Employee to such person or persons as the Employee may

designate by notice to the Corporation from time to time or, in the absence of

such designation, the Employee's spouse (the "EMPLOYEE'S DESIGNEES") in a lump

sum in cash within thirty (30) days from the date of the Employee's death (a)

the accrued but unpaid portion of the Base Salary payable hereunder, (b) any

accrued and unpaid vacation, and (c) the accrued and unpaid Bonus for such year,

calculated by pro-rating the annual Bonus, which would have been payable to the

Employee but for his termination under this Section 7.1 and assuming full

achievement of the Bonus Criteria for such year based upon the number of days

that the Employee remained in the employ of the Corporation during the year for

which the Bonus is due. Additionally, notwithstanding any language to the

contrary contained in any option agreements with the Employee, the Employee's

Designees shall be entitled to exercise his vested option shares for twelve (12)

months following the date of termination under this Section 7.1.

 

            7.2 Disability. In the event of the Employee's "mental or physical

disability" (as defined herein) which continues for (i) a period of longer than

sixty (60) consecutive days, or (ii) such periods aggregating one hundred twenty

(120) days during any 365 consecutive days, such that the Employee is, despite

reasonable accommodation, unable to substantively perform the essential

functions of his position for said periods, the determination of which shall be

 

                                       7

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confirmed by the Board of Directors in the manner hereinafter provided, this

Agreement shall terminate upon thirty (30) days' prior written notice to the

Employee from the Corporation (the "DISABILITY TERMINATION DATE"). The

Corporation shall continue to pay to the Employee during the period of his

mental or physical disability the Base Salary provided in Section 3 of this

Agreement as well as provide the benefits described herein; provided, however,

that the Base Salary shall be reduced by any disability insurance payments paid

to the Employee. On the Disability Termination Date, (a) the Employee's Base

Salary shall cease, and (b) the Corporation shall pay to the Employee, in a lump

sum in cash, any accrued and unpaid vacation and the accrued and unpaid Bonus

for such year, calculated by pro-rating the annual Bonus, which would have been

payable to the Employee but for his termination under this Section 7.2 and

assuming full achievement of the Bonus Criteria for such year, based upon the

number of days that the Employee remained in the employ of the Corporation

during the year for which the Bonus is due. Additionally, notwithstanding any

language to the contrary contained in any option agreements with the Employee,

the Employee's Designees shall be entitled to exercise his vested option shares

for twelve (12) months following the date of termination under this Section 7.2.

 

            As used herein, the term "MENTALLY OR PHYSICALLY DISABLED" shall

have the meaning ascribed thereto in the Corporation's disability insurance

policy then in force and effect for the Employee or, if no such disability

policy then exists, it shall mean the inability of the Employee, by reason of

physical or mental injury, illness or other similar cause to perform the

essential functions of his duties and responsibilities in connection with the

conduct of the business and affairs of the Corporation as determined by a

reputable physician of the Corporation's selection. The Employee hereby consents

to, and agrees to make himself available for, such examination.

 

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<PAGE>

 

            7.3 Termination For Cause. The Corporation may at any time during

the Term, by written notice, and after affording the Employee the opportunity to

be heard in person by the Board of Directors, terminate this Agreement and

discharge the Employee for "Cause", whereupon the Corporation's obligation to

pay compensation or any other amounts payable hereunder to or for the benefit of

the Employee shall terminate on the date of such discharge except for accrued

and unpaid Base Salary and expenses to the date of discharge. For purposes of

this Agreement, the term "Cause" shall mean: (i) any act of the Employee's

constituting willful misconduct which is materially detrimental to the

Corporation's best interests, including misappropriation of, or intentional

damage to, the funds, property or business of the Corporation; (ii) conviction

of a felony or of a crime involving moral turpitude or conviction of any crime

involving dishonesty or fraud with respect to the Corporation or any of its

affiliates; (iii) material failure of the Employee to perform his duties in

accordance with this Agreement after written notice to the Employee by the Board

of Directors specifying such failure and giving the Employee fourteen (14) days

to correct the defects in performance; or (iv) breach by the Employee of any

material provision hereof which, if capable of remedy, remains unremedied for

more than fourteen (14) days after written notice.

 

            7.4 Termination Without Cause. The Corporation may terminate the

Employee's employment with the Corporation at any time "Without Cause", upon

thirty (30) days' written notice to the Employee. A termination "WITHOUT CAUSE"

shall mean a termination by the Corporation of the Employee's employment other

than due to death, disability or for Cause as provided in Sections 7.1, 7.2, and

7.3, respectively.

 

            7.5 Termination By the Employee For Good Reason. The Employee may

terminate his employment for "GOOD REASON", upon thirty (30) days' written

notice to

 

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Corporation. "GOOD REASON" shall mean a termination of employment by the

Employee following, without the Employee's express prior written consent: (i)

any material diminution in the Employee's duties, status, offices, reporting

requirements, or job title, except in connection with termination of the

Employee's employment for Cause as provided in Section 7.3 or death or

disability as provided in Sections 7.1 and 7.2; (ii) any requirement by the

Board that the Employee change the location at which the Employee performs his

principal duties for the Corporation to a new location that is more than

forty-five (45) driving miles from Exton, Pennsylvania; (iii) the failure of the

Corporation timely to pay the Employee's salary, bonus or benefits due the

Employee within seven (7) days of receipt of written notice from the Employee to

that effect, or any material breach by the Corporation of this Agreement; (iv)

any change in the Corporation's pay plan or employment agreement with the

Employee that results in a material diminution of the Employee's annual Base

Salary or eligible Bonus amounts; (v) the failure of the Corporation to obtain

an agreement, in a form reasonably satisfactory to the Employee, from any

successor to the Corporation to assume and agree to perform this Agreement; (vi)

the failure of the shareholders of the Corporation, by March 31, 2004, to

approve those amendments to the Corporation's 1998 Stock Option Plan described

in Section 5(b) above; or (vii) the failure of Employee to be duly elected to

the Board of Directors or the removal of the Employee from the Board of

Directors without cause.

 

            7.6 Payment, Benefits and Stock Options Upon Termination Without

                Cause Or For Good Reason.

 

                  (a) Cash Payments and Severance. In the event of a termination

of the Employee's employment with the Corporation without Cause or a termination

by the Employee

 

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<PAGE>

 

of his employment with the Corporation for Good Reason, during the Term, the

Corporation shall pay to the Employee,

 

                  (i)   in a single lump sum in cash within thirty (30) days

                        after the date of termination:

 

                        (x)   the Employee's then accrued and unpaid Base Salary

                              through and including the date of termination;

 

                        (y)   the Employee's then accrued and unpaid unused

                              vacation through and including the date of

                              termination, and

 

                        (z)   the Employee's then accrued and unpaid Bonus for

                              such year, calculated by pro-rating the annual

                              Bonus, which would have been payable to the

                              Employee but for his termination and assuming full

                              achievement of the Bonus Criteria for such year,

                              based upon the number of days that the Employee

                              remained in the employ of the Corporation during

                              the year for which the Bonus is due; and

 

                  (ii)  the greater of (x) the Employee's Base Salary for the

                        remainder of the Initial Term and (y) one (1) year of

                        the Employee's Base Salary in effect immediately prior

                        to the date of termination ("SEVERANCE PAY"). The

                        Severance Pay shall be paid in equal monthly

                        installments over a twelve (12) month period commencing

                        on the date of termination.

 

            (b) Benefits. In addition, the Employee shall be entitled to any

benefits under any employee benefit plans, and for a period of time equal to the

greater of the remainder of the Initial Term or twelve (12) months from the date

of termination ("SEVERANCE PERIOD"), the Employee will, at the Employee's

option, (i) continue to receive all benefits to which he was entitled pursuant

to Section 5(a) of this Agreement as of the date of termination including

continued medical, dental, disability, and life insurance coverage for the

Employee and the Employee's family, on terms substantially as in effect on the

date of termination, subject to

 

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<PAGE>

 

the payment by the Employee of all applicable employee contributions, or (ii)

receive a lump sum payment in cash within thirty (30) days of his termination

without Cause or for Good Reason representing the value of such continued

benefits, plus any income tax payable by the Employee on such value. If the

Employee elects option (i) above and for any reason at any time the Corporation

is unable to treat the Employee as being or having been an employee of the

Corporation under any benefits plan in which he is entitled to participate and

as a result thereof the Employee receives reduced benefits under such plan

during the period that the Employee is continuing to receive payments pursuant

to this Section 7.6(b), then the Corporation shall provide the Employee with

such benefits by direct payment or, at the Corporation's option, by making

available equivalent benefits from other sources. During the Severance Period,

the Employee shall not be entitled to receive salary and/or benefits except as

provided herein and shall not be entitled to participate in any employee benefit

plan of, or receive any other benefit from, the Corporation that is introduced

after the date of termination, except that an appropriate adjustment shall be

made if such new employee benefit or employee benefit plan is a replacement for

or amendment to an employee benefit or employee benefit plan in effect as of the

date of termination.

 

            (c) Stock Options. In the event of a termination of the Employee's

employment with the Corporation without Cause or a termination by the Employee

of his employment with the Corporation for Good Reason, during the Term, the

Corporation shall accelerate the vesting of any outstanding option to purchase

shares of stock of the Corporation granted to the Employee by one (1) year, and

accelerate the lapse of all repurchase rights or forfeiture restrictions

applicable to any restricted stock granted to the Employee by one (1) year, such

that all unvested option share or restricted shares which would have continued

vesting in

 

                                       12

<PAGE>

 

accordance with their vesting schedule for a period of one (1) year following

the date of such termination, but for such termination, will be deemed

immediately vested and exercisable. In connection therewith, the Corporation

shall cause all restrictive legends, stop transfer orders or similar

restrictions to be removed from such shares, except as required by applicable

law. Additionally, notwithstanding any language to the contrary contained in any

option agreements with the Employee, the Employee shall be entitled to exercise

his vested option shares for twelve (12) months following the date of

termination without Cause or for Good Reason.

 

            7.7 Change of Control. In the event that (i) a Change of Control (as

hereinafter defined) occurs during the Term and (ii) the Employee's employment

with the Corporation is terminated by the Corporation other than for Cause or

the Employee resigns or terminates his employment hereunder for any reason by

giving sixty (60) days prior written notice to the Corporation subsequent to the

date of closing of the Change of Control transaction, the Employee shall be

entitled to the accrued salary, unused vacation, bonus, Severance Pay, benefits,

and stock option treatment as are provided in Sections 7.6(a), (b), and (c)

above, except, that (i) the Severance Pay shall be payable in a lump sum in cash

within thirty (30) of the date of such termination and (ii) upon termination or

resignation under this Section 7.7, the Corporation shall accelerate fully the

vesting of any outstanding option to purchase shares of stock of the Corporation

granted to the Employee and accelerate fully the lapse of all repurchase rights

or forfeiture restrictions applicable to restricted stock granted to the

Employee, such that all options shall vest in their entirety and be immediately

exercisable.

 

      For purposes of this Section 7.7, the term "CHANGE OF CONTROL" means the

occurrence of any of the following, in one or a series of related transactions:

(v) the sale or transfer of fifty percent (50)% or more of the Outstanding

Shares of the Corporation to any person or entity other

 

                                       13

<PAGE>

 

than (i) a transfer to a wholly-owned subsidiary of the Corporation or (ii) a

transfer by a holder or holders of the Corporation's common stock or convertible

securities as of the date hereof to Affiliates (as defined below), or (w) the

sale, lease, license or other transfer of all or substantially all of the assets

or earning power of the Corporation to any person or entity other than (i) a

wholly-owned subsidiary of the Corporation or (ii) an Affiliate whereby the

purpose or effect of such transfer is to provide for the transfer by a holder or

holders of the Corporation's common stock or convertible securities as of the

date hereof of such holders' direct or indirect interests in the assets of the

Corporation to Affiliates and so long as such transfer does not result in a

transaction described by one of the other clauses of this paragraph of Section

7.7; or (x) merger, consolidation, reorganization, recapitalization, share

exchange, business combination or a similar transaction which results in any

person or entity (other than the persons who are shareholders or security

holders of the Corporation immediately prior to such transaction (or their

Affiliates as of the date of such transaction)) owning fifty percent (50%) or

more of the Outstanding Shares or combined voting power of the Corporation, (y)

merger, consolidation, reorganization, business combination or a similar

transaction in which the Corporation is not the surviving entity; or (z) a

transaction commonly known as "going private" whereby the Corporation engages

one or a series of transactions which results in the Corporation not being

required to file periodic reports with the Securities and Exchange Commission,

unless the Employee is a participant in such transaction. "OUTSTANDING SHARES"

shall mean the total number of common shares and common share equivalents of the

Corporation outstanding at the time the Change of Control. "AFFILIATE" shall

mean (i) any person or entity controlling, controlled by or under the common

control of the existing holders of common stock or convertible securities of the

Corporation and (ii) any partner, shareholder or member of the existing holders

of common stock or convertible securities

 

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<PAGE>

 

of the Corporation. For the purposes hereof, "CONTROL" shall mean the direct or

indirect ownership of at least fifty (50%) percent of the outstanding shares or

other voting rights of the subject entity or if it possesses, directly or

indirectly, the power to direct or cause the direction of management and

policies of such other entity.

 

      In the event that the Employee resigns or terminates his employment

following a Change of Control as described above, the Employee acknowledges and

agrees that upon the request of the Corporation, he will execute and deliver a

release in customary form releasing all claims of the Employee arising out of

his employment with the Corporation except for the obligations of the

Corporation under this Agreement.

 

      8. Protection of Confidential Information. In view of the fact that the

Employee's work for the Corporation will bring him into close contact with all

the confidential affairs thereof, and plans for future developments, the

Employee agrees to the following:

 

            8.1 Secrecy. During the Term and for five (5) years after the date

of termination of the Employee's employment, to preserve the confidential nature

of, and not disclose, reveal, or make accessible to anyone other than the

Corporation's officers, directors, employees, consultants or agents, otherwise

than within the scope of his employment duties and responsibilities hereunder,

any and all documents, information, knowledge or data of or pertaining to the

Corporation, its subsidiaries or affiliates or pertaining to any other

individual, firm, corporation, partnership, joint venture, business,

organization, entity or other person with which the Corporation or any of its

subsidiaries or affiliates may do business during the Term (including licensees,

licensors, manufacturers, suppliers and customers of the Corporation or any of

its subsidiaries or affiliates) and which is not in the public domain, including

trade secrets, "know how", names and lists of licensees, licensors,

manufacturers, suppliers and customers,

 

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<PAGE>

 

development plans or programs, statistics, manufacturing and production methods,

processes, techniques, pricing, marketing methods and plans, specifications,

advertising plans and campaigns or any other matters, and all other confidential

information of the Corporation, its subsidiaries and affiliates (hereinafter

referred to as "CONFIDENTIAL INFORMATION"). The restrictions on the disclosure

of Confidential Information imposed by this Section 8.1 shall not apply to any

Confidential Information that was part of the public domain at the time of its

receipt by the Employee or becomes part of the public domain in any manner and

for any reason other than an act by the Employee, unless the Employee is legally

compelled (by applicable law, deposition, interrogatory, request for documents,

subpoena, civil investigative demand or similar process) to disclose such

Confidential Information, in which event the Employee shall provide the

Corporation with prompt notice of such requirement so that the Corporation may

seek a protective order or other appropriate remedy, and if such protective

order or other remedy is not obtained, the Employee shall exercise reasonable

efforts in good faith to obtain assurance that confidential treatment will be

accorded such Confidential Information.

 

            8.2 Return Memoranda, etc. To deliver promptly to the Corporation on

termination of his employment, or at any other time the Corporation may so

request, all memoranda, notes, records, reports, manuals, drawings, blueprints

and other documents (and all copies thereof) relating to the Corporation's

business and all property associated therewith, which the Employee may then

possess or have under his control.

 

            8.3 Non-competition. Provided that this Agreement has not been

breached by the Corporation, the Employee agrees that he shall not at any time

prior to one (1) year after the expiration or termination of his employment with

the Corporation, own, manage, operate, be a director or an employee of, or a

consultant to any person, business, corporation, partnership,

 

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<PAGE>

 

trust, limited liability company or other firm or enterprise ("PERSON") which is

engaged in marketing, selling or distributing products or in developing product

candidates in the United States which are directly competitive with products or

product candidates in development as evidenced by the current written product

development plan and/or business plan of the Corporation at the time of

termination of the Employee's employment and/or described in the Corporation's

most recent filing on Form 10-K with the Securities and Exchange Commission as

of the date of the termination of the Employee's employment.

 

            If any of the provisions of this section, or any part thereof, is

hereinafter construed to be invalid or unenforceable, the same shall not affect

the remainder of such provision or provisions, which shall be given full effect,

without regard to the invalid portions. If any of the provisions of this

section, or any part thereof, is held to be unenforceable because of the

duration of such provision, the area covered thereby or the type of conduct

restricted therein, the parties agree that the court making such determination

shall have the power to modify the duration, geographic area and/or other terms

of such provision and, as so modified, said provision shall then be enforceable.

In the event that the courts of any one or more jurisdictions shall hold such

provisions wholly or partially unenforceable by reason of the scope thereof or

otherwise, it is the intention of the parties hereto that such determination not

bar or in any way affect the Corporation's right to the relief provided for

herein in the courts of any other jurisdictions as to breaches or threatened

breaches of such provisions in such other jurisdictions, the above provisions as

they relate to each jurisdiction being, for this purpose, severable into diverse

and independent covenants.

 

            8.4 Injunctive Relief. The Employee acknowledges and agrees that,

because of the unique and extraordinary nature of his services, any breach or

threatened breach of the

 

                                       17

<PAGE>

 

provisions of Sections 8.1, 8.2, or 8.3 hereof will cause irreparable injury and

incalculable harm to the Corporation, and the Corporation shall, accordingly, be

entitled to injunctive and other equitable relief for such breach or threatened

breach and that resort by the Corporation to such injunctive or other equitable

relief shall not be deemed to waive or to limit in any respect any right or

remedy which the Corporation may have with respect to such breach or threatened

breach.

 

            8.5 Expenses of Enforcement of Covenants. In the event that any

action, suit or proceeding at law or in equity is brought to enforce the

covenants contained in Section 8.1, 8.2, or 8.3 hereof or to obtain money

damages for the breach thereof, the party prevailing in any such action, suit or

other proceeding shall be entitled upon demand to reimbursement from the other

party for all expenses (including, without limitation, reasonable attorneys'

fees and disbursements) incurred in connection therewith.

 

            8.6 Non-Solicitation. The Employee covenants and agrees not to (and

not to cause or direct any Person to) hire or solicit for employment any

employee of the Corporation or any of its subsidiaries or affiliates. The

prohibitions of this Section 8.6 shall apply (i) for six (6) months following

the termination of the Employee's employment by the Corporation without Cause or

by the Employee for Good Reason, prior to a Change of Control, (ii) for twelve

(12) months following the termination of the Employee's employment for Cause,

prior to a Change of Control, or (iii) twenty-four (24) months following a

Change of Control.

 

      9. Indemnification. The Corporation will defend, indemnify and hold

harmless the Employee, to the maximum extent permitted by applicable law and the

by-laws of the Corporation, against all claims, costs, charges and expenses

incurred or sustained by him in connection with any action, suit or other

proceeding to which he may be made a party by reason

 

                                       18

<PAGE>

 

of his being an officer, director or employee of the Corporation or of any

subsidiary or affiliate thereof. Furthermore, the Corporation hereby represents

that it will maintain during the Term, Directors and Officers insurance coverage

in the amount of at least Five Million Dollars ($5,000,000).

 

      10. Warranties.

 

            The Employee hereby warrants that as of the date hereof the Employee

is not employed (other than by the Corporation) and is not a party to any other

employment contract, express or implied. The Employee warrants that he has no

other obligation, contractual or otherwise, which would prevent him from

accepting the Corporation's offer of employment under the terms of this

Agreement and from complying with its provisions. The Employee warrants that he

will not utilize during his employment hereunder any confidential information

obtained through or in connection with his prior employment. The Employee

warrants that he knows of no reason why he would not be able to perform his

obligations under this Agreement. The Employee warrants that he has duly

executed and delivered this Agreement and it is valid, binding and enforceable

against the Employee in accordance with its terms. The Corporation warrants to

the Employee that this Agreement has been duly approved and authorized by its

Board of Directors, that this Agreement has been duly executed and delivered on

behalf of the Corporation and that this Agreement is valid, binding and

enforceable against the Corporation in accordance with its terms.

 

      11. Notices.

 

            All notices, requests, consents and other communications required or

permitted to be given hereunder, shall be in writing and shall be deemed to have

been duly given if delivered personally or sent by facsimile, with confirmation

of receipt, or mailed first-class, postage

 

                                       19

<PAGE>

 

prepaid, by registered or certified mail (notices sent by mail shall be deemed

to have been given three (3) business days after the date sent), to the parties

at their respective addresses hereinabove set forth or to such other address as

either party shall designate by notice in writing to the other in accordance

herewith.

 

      12. General.

 

            12.1 Governing Law. This Agreement shall be governed by and

construed and enforced in accordance with the local laws of the Commonwealth of

New York applicable to agreements made and to be performed entirely in New York.

 

            12.2 Captions. The section headings contained herein are for

reference purposes only and shall not in any way affect the meaning or

interpretation of this Agreement.

 

            12.3 Entire Agreement. This Agreement sets forth the entire

agreement and understanding of the parties relating to the subject matter

hereof, and supersedes all prior agreements, arrangements and understandings,

written or oral, relating to the subject matter hereof. No representation,

promise or inducement has been made by either party that is not embodied in this

Agreement, and neither party shall be bound by or liable for any alleged

representation, promise or inducement not so set forth.

 

            12.4 Nomination to the Board of Directors. During the Term, the

Corporation shall cause the Employee to be nominated for election to the Board

of Directors of the Corporation at each Annual Meeting of shareholders of the

Corporation, and at each special meeting of the shareholders of the Corporation

called for the purpose of electing directors of the Corporation and at any time

at which the shareholders of the Corporation have the right to elect directors

of the Corporation, and shall recommend that the Corporation's shareholders vote

in favor of the election of the Employee to the Board of Directors.

 

                                       20

<PAGE>

 

            12.5 Assignability. This Agreement, and the Employee's rights and

obligations hereunder, may not be assigned by the Employee. The Corporation may

assign its rights, together with its obligations, hereunder in connection with

any sale, transfer or other disposition of all or substantially all of its

business or assets; in any event the rights and obligations of the Corporation

hereunder shall be binding on its successors or assigns, whether by merger,

consolidation or acquisition of all or substantially all of its business or

assets.

 

            12.6 Amendment. This Agreement may be amended, modified, superseded,

canceled, renewed or extended and the terms or covenants hereof may be waived,

only by a written instrument executed by both of the parties hereto, or in the

case of a waiver, by the party waiving compliance. No superseding instrument,

amendment, modification, cancellation, renewal or extension hereof shall require

the consent or approval of any person other than the parties hereto. The failure

of either party at any time or times to require performance of any provision

hereof shall in no manner affect the right at a later time to enforce the same.

No waiver by either party of the breach of any term or covenant contained in

this Agreement, whether by conduct or otherwise, in any one or more instances,

shall be deemed to be, or construed as, a further or continuing waiver of any

such breach, or a waiver of the breach of any other term or covenant contained

in this Agreement.

 

            12.7 Counterparts. This Agreement may be executed in one or more

counterparts, each of which shall be deemed an original, but all of which taken

together will constitute one and the same instrument.

 

            12.8 Severability. The provisions of this Agreement shall be deemed

severable, and if any part of any provision is held illegal, void or invalid

under applicable law, such provision may be changed to the extent reasonably

necessary to make the provision, as so

 

                                       21

<PAGE>

 

changed, legal, valid and binding. If any provision of this Agreement is held

illegal, void or invalid in its entirety, the remaining provisions of this

Agreement shall not in any way be affected or impaired but shall remain binding

in accordance with their terms.

 

                           [SIGNATURE PAGE TO FOLLOW]

 

                                       22

<PAGE>

 

            IN WITNESS WHEREOF, the parties have executed this Agreement as of

the date first above written.

 

ATTEST:                                     HALSEY DRUG CO., INC.

 

_________________________                   By: /s/ Jerry Karabelas

                                                --------------------------------

                                                Name:  Jerry Karabelas,

                                                Title: Chairman of the Board

 

WITNESS:                                    EMPLOYEE

 

___________________________                 By: /s/ Andrew D. Reddick

                                                --------------------------------

                                                ANDREW D.  REDDICK

 

                                       23

 

</TEXT>

</DOCUMENT>

TOP OF DOCUMENT

 
                                                                    EXHIBIT 10.4
 
                   AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
 
THIS AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this "AMENDMENT") made this
27th day of May, 2004 by and between HALSEY DRUG CO., INC., a New York
corporation (the "CORPORATION"), with offices at 616 N. North Court, Suite 120,
Palatine, Illinois 60067 and ANDREW D. REDDICK, residing at 297 North Cote
Circle, Exton, Pennsylvania 19341 (the "EMPLOYEE").
 
                                 R E C I T A L S
 
      A.    The Corporation and the Employee executed an employment agreement
            dated as of August 26, 2003 (the " EMPLOYMENT AGREEMENT").
 
      B.    Pursuant to Section 5(b) of the Employment Agreement, the
            Corporation committed to issue to the Employee a stock option
            exercisable for up to 5,500,000 shares of the Corporation's common
            stock, $.01 par value per share (the "ORIGINAL OPTION COMMITMENT").
 
      C.    The Corporation and the Employee now desire to amend the Employment
            Agreement as provided herein.
 
      NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, the parties agree as follows:
 
      1. Section 5(b) of the Employment Agreement is hereby deleted in its
entirety and the following is inserted in its place:
 
            "(b) Stock Options. The Company hereby agrees to issue and deliver a
            stock option grant to the Employee to purchase 8,750,000 shares of
            the Corporation's common stock, $.01 par value per share (the
            "OPTION") at an exercise price of $0.13 per share. The shares
            subject to the Option shall vest and be exercisable as follows: (i)
            2,750,000 Option shares on June 30, 2004; and (ii) the balance at
            the rate of 250,000 Option shares on the last day of each calendar
            month (the first monthly vesting period to be satisfied on July 31,
            2004) until fully vested. The Option shall have a ten (10) year
            term, subject to earlier termination as set forth in Section 7, upon
            the termination of the Employee's employment with the Corporation
            and shall be evidenced by the Non-Qualified Stock Option Agreement
            in the form of Exhibit A hereto. The Employee and the Corporation
            agree that the Option will be issued pursuant to the Corporation's
            1998 Stock Option Plan, as amended as described below, and the
            Option shares shall be promptly and duly registered under a
 
<PAGE>
 
            registration statement on Form S-8 filed with the Securities and
            Exchange Commission. The Employee will also be eligible in the
            future to receive annual option or stock grants based on performance
            or on achievement of milestones as determined by the Board of
            Directors or the Compensation Committee.
 
                  Notwithstanding the foregoing and anything to the contrary
            contained in this Amendment, the Employee hereby agrees that the
            grant of the Option and the issuance of the Option shares are
            contingent upon approval by the shareholders of the Corporation at
            the next meeting of shareholders of amendments to the Corporation's
            1998 Stock Option Plan (i) to increase the number of shares
            available for grants of options and stock under the 1998 Stock
            Option Plan, (ii) to permit the grant of non-qualified stock options
            (including the Option) having an exercise price per share less than
            the fair market value of the common stock of the Corporation on the
            date of issuance, and (iii) to provide for a limit of 8,750,000
            option awards that may be granted to one individual in any calendar
            year. The Corporation hereby agrees to recommend such matter to the
            shareholders and to use its commercially reasonable best efforts to
            hold such meeting as soon as reasonably practicable, but in any
            event by October 31, 2004. Following receipt of such shareholder
            approval, the Corporation shall promptly (i) confirm in writing that
            the contingency described in this paragraph has been satisfied and
            the Option is effective, (ii) issue a replacement Option Agreement,
            omitting Section 6 thereof relating to such contingency, and (iii)
            confirm in writing that the Option shares have been duly registered
            in accordance with this Section 5(b)."
 
      2. The Corporation and the Employee agree that effective as of the date of
this Amendment, the Original Option Commitment shall terminate and be of no
further legal force or effect.
 
      3. Section 6 of the Employment Agreement is hereby deleted in its entirety
and the following is inserted in its place:
 
            "6. Vacation. The Employee shall be entitled to four (4) weeks of
            vacation during each year of the Term, to be taken at a time or
            times mutually agreed upon by the Employee and the Corporation. The
            Employee may carry over to the following year any unused vacation
            from the immediately preceding year; provided, however, that not
            more than four (4) weeks of such vacation time may be carried over
            to the year immediately following the year in which such vacation
            was to be taken, unless otherwise required by applicable law.
            Without limiting the foregoing, the Corporation agrees that Employee
            may carry over all of his unused 2003 vacation time into 2004."
 
      4. Section 7.5(vi) of the Employment Agreement is hereby deleted in its
entirety and the following is inserted in its place:
 
<PAGE>
 
            "(vi) the failure of the shareholders of the Corporation, by
            October 31, 2004, to approve those amendments to the Corporation's
            1998 Stock Option Plan described in Section 5(b) above or, after
            such approval, the failure by the Corporation to comply with the
            other provisions of Section 5(b);"
 
      5. Notwithstanding anything to the contrary contained in the Employment
Agreement or the Option, the Employee agrees that the Corporation's sale of
substantially all of its assets used in the operation of its former Congers, New
York facilities does not constitute a "Change of Control" as such term is
defined in the Employment Agreement.
 
      6. The Corporation shall reimburse the Employee for the reasonable legal
fees and expenses incurred by the Employee for review and negotiation of this
Amendment on or before thirty (30) days following the date of execution of this
Amendment.
 
      7. Except as expressly amended by this Amendment, the Employment Agreement
remains in full force and effect. Capitalized terms used herein shall have the
same meaning as in the Employment Agreement unless otherwise defined herein.
This Amendment shall be governed and construed and enforced in accordance with
the local laws of the State of New York applicable to agreements made and to be
performed entirely in New York.
 
      8. This Amendment may be executed in one or more facsimile or original
counterparts, each of which shall be deemed an original, but all of which taken
together will constitute one and the same instrument.
 
      IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
 
ATTEST:                                        HALSEY DRUG CO., INC.
 
___________________                            By: /s/ Peter A. Clemens
                                                   -----------------------------
                                                   Peter A. Clemens,
                                                   Senior Vice President and
                                                   Chief Financial Officer
 
WITNESS:                                       EMPLOYEE
 
                                               By: /s/ Andrew D. Reddick
__________________                                 -----------------------------
                                                   Andrew D. Reddick
 
 
</TEXT>
</DOCUMENT>

TOP OF DOCUMENT

 

 

SECOND AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS SECOND AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Second Amendment) made this 24th day of May, 2005 by and between ACURA PHARMACEUTICALS, INC., a New York corporation, formerly known as Halsey Drug Co., Inc. (the “Corporation), with offices at 616 N. North Court, Suite 120, Palatine, Illinois 60067 and ANDREW D. REDDICK, residing at 297 North Cote Circle, Exton, Pennsylvania 19341 (the “Employee).

 

RECITALS

 

A.          

The Corporation and the Employee executed an employment agreement dated as of August 26, 2003, which agreement was amended by an Amendment to Executive Employment Agreement between the Employee and the Corporation, dated May 27, 2004 (as so amended, the “Employment Agreement).

 

B.      

Pursuant to Section 2 of the Employment Agreement, the term of Employee’s employment under the Agreement is automatically extended for successive one (1) year periods, unless notice of non-renewal from either the Employee or the Corporation is received no later than (90) days prior to the expiration of the Initial Term and each Renewal Period (as defined in the Employment Agreement”).

 

C.      

The Corporation and the Employee now desire to further amend the Employment Agreement as provided herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained, the parties agree as follows:

 

1.  Section 2 of the Employment Agreement is hereby deleted in its entirety and the following is inserted in its place:

 

   “2. Term of Employment. The term of the Employee's employment under this Agreement shall commence on the date of this Agreement and shall expire two (2) years from the date hereof (the "Initial Term"), unless sooner terminated pursuant to Section 7 of this Agreement; provided, however, that the Employee’s term of employment hereunder shall automatically be extended for successive one (1) year periods (each, a "Renewal Period" and together with the Initial Term, the "Term"), unless either the Corporation or the Employee provides written notice of non-renewal of the Employee's employment with the Corporation (i) thirty (30) days prior to the expiration of the Initial Term or (ii) ninety (90) days prior to the expiration of any Renewal Period.”

 


2.  The Corporation shall reimburse the Employee, on or before thirty (30) days following the date of execution of this Second Amendment, for the reasonable legal fees and expenses incurred by the Employee for review and negotiation of this Second Amendment and for review and analysis of the Employee’s stock option arrangements and certain related matters.

 

3.  Except as expressly amended by this Second Amendment, the Employment Agreement remains unmodified and in full force and effect. Capitalized terms used herein shall have the same meaning as in the Employment Agreement unless otherwise defined herein. This Second Amendment shall be governed and construed and enforced in accordance with the local laws of the State of New York applicable to agreements made and to be performed entirely in New York.

 

4.  This Second Amendment may be executed in one or more facsimile or original counterparts, each of which shall be deemed an original, but all of which taken together will constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first above written.

 

 

ATTEST:

 

 

ACURA PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Peter A. Clemens


 

 


Peter A. Clemens,

 

 

 

Senior Vice President and
Chief Financial Officer

 

 

 

 

 

 

 

 

WITNESS:

 

 

EMPLOYEE

 

 

 

 

 

 

 

 

 

 

By:

/s/ Andrew D. Reddick


 

 


Andrew D. Reddick

TOP OF DOCUMENT 

EX-10.1 2 v031958_ex99-1.htm

 

 

 

EXECUTION COPY

 

 

THIRD AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS THIRD AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Amendment) made this 22nd day of December, 2005 by and between ACURA PHARMACEUTICALS, INC., (formerly Halsey Drug Co., Inc.), a New York corporation (the “Corporation), with offices at 616 N. North Court, Suite 120, Palatine, Illinois 60067 and ANDREW D. REDDICK, residing at 297 North Cote Circle, Exton, Pennsylvania 19341 (the “Employee).

 

R E C I T 60;A L S

 

A.  

The Corporation and the Employee executed an employment agreement dated as of August 26, 2003, which agreement was amended in writing on each of May 27, 2004 and May 24, 2005 (as so amended, the “Employment Agreement).

 

B.  

The Corporation and the Employee now desire to further amend the Employment Agreement as provided herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained, the parties agree as follows:

 

1.    Section 2 of the Employment Agreement is hereby deleted in its entirety and the following is inserted in its place:

 

The term of the Employee’s employment under this Agreement shall commence on the date of this Agreement and shall expire on December 31, 2006 (the “Initial Term), unless sooner terminated pursuant to Section 7 of this Agreement; provided, however, that the term of the Employee’s employment hereunder shall automatically be extended for successive one (1) year periods (each, a “Renewal Periodand together with the Initial Term, the “Term) unless either the Corporation or the Employee provides written notice of non-renewal of the Employee’s employment with the Corporation ninety (90) days prior to the expiration of the Initial Term or any Renewal Period.”

 

2.    Section 3(b) of the Employment Agreement is hereby deleted in its entirety and the following is inserted in its place:

 

(b) Annual Bonus. During the Term, the Employee will be eligible to receive from the Corporation an annual bonus (the “Bonus) in the amount of up to one hundred percent (100%) of the Employee’s then current annual Base Salary during the fiscal year (or portion thereof) for which the Bonus may be awarded. The Bonus will be based upon the achievement of such targets, conditions or parameters (the “Bonus Criteria) as will be agreed upon by the Employee and the Board of Directors or the Compensation Committee of the Board of Directors of the Corporation within sixty (60) days of (before or after) the beginning of each fiscal year during the Term. The Bonus shall be paid at the same time as the bonuses are paid to other executive officers, but in any event within seventy five (75) days following the end of the Corporation’s fiscal year.

 


 

Notwithstanding the foregoing, with respect to the Corporation’s fiscal year ending December 31, 2006 (“Fiscal 2006), in the event the Corporation completes one or more Funding Transactions during Fiscal 2006 which results in the Corporation’s receipt of aggregate gross Funding Proceeds of at least Fifteen Million Dollars ($15,000,000)(the “Minimum Funding Threshold), the Corporation shall pay the Employee a bonus in an amount equal to one hundred percent (100%) of the Employee’s then current annual Base Salary not later than thirty (30) calendar days following the Corporation’s receipt of Funding Proceeds satisfying the Minimum Funding Threshold. For purposes of this Section 3(b) “Funding Transactionshall mean (a) any equity financing, and/or (b) any licensing or similar arrangement (including, by means of a joint venture, option or similar arrangement) whereby the Corporation licenses or otherwise grants any interest in or to any of the Corporation’s intellectual property rights, technology, know-how or similar property rights (whether existing now or hereafter) to a non-affiliated third party, or any similar transaction. “Funding Proceedsshall mean and include (a) in the case of a Funding Transaction comprising an equity financing, the gross proceeds received by the Corporation from the issuance or sale of its equity securities, and (b) in the case of a Funding Transaction comprising a licensing or similar arrangement, the gross proceeds (consisting of signing fees, upfront fees, license fees, sublicense fees, milestone payments or any similar fees or payments, but expressly excluding any royalty payments, profit sharing payments or similar payments calculated based on the sale of products incorporating the Company’s technology) received by the Corporation with respect to such arrangement, and (c) in each case, the gross proceeds are received by the Corporation on or before March 31, 2007 with respect to a Funding Transaction pursuant to a definitive agreement executed on or before December 31, 2006 by the Corporation and the other party to such transaction.

 

In the event the Corporation does not satisfy the Minimum Funding Threshold, but receives Funding Proceeds of at least Eleven Million Dollars ($11,000,000) on or before March 31, 2007, the Corporation shall pay the Employee a Bonus in an amount equal to a percentage of the Employee’s then current annual Base Salary in an amount equal to the product of (x) 100%, multiplied by (y) the quotient of (A) the Funding Proceeds received by the Corporation on or before March 31, 2007, divided by (B) Fifteen Million Dollars ($15,000,000).”

 

2


 

3.    Section 5(b) of the Employment Agreement is hereby amended to add the following at the end of such Section:

 

Reference is made to Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (“Section 409A). For purposes of this Agreement, the portion of the Option which vests prior to January 1, 2005 shall be referred to as the “Pre-409A Option Portionand the portion of the Option which vests on or after January 1, 2005 shall be referred to as the “Post-409A Option Portion.” The Corporation will promptly amend the Corporation’s 1998 Stock Option Plan to comply with Section 409A and prepare and issue to the Employee an amended and restated non-qualified stock option agreement conforming to the requirements of Section 409A with respect to the Post-409A Option Portion, in form and substance satisfactory to the parties, in replacement of the Non-Qualified Stock Option Agreement dated May 26, 2004 (the “Existing Option). The Corporation acknowledges and agrees that shareholder approval of the Existing Option has been obtained and that the shares underlying the Existing Option have been duly registered.”

 

4.    Section 5(c) of the Employment Agreement is hereby deleted in its entirety and the following is inserted in its place:

 

(c) Restricted Stock Units. Simultaneously with the execution of the Third Amendment to Executive Employment Agreement dated December 22, 2005, the Corporation granted to the Employee a Restricted Stock Units Award Agreement which, subject to its terms and the terms of the Corporation’s 2005 Restricted Stock Unit Award Plan, provides for the Corporation’s issuance of up to Eight Million, Two Hundred Fifty Thousand (8,250,000) shares of the Corporation’s common stock, $.01 par value per share (the “Restricted Stock Units”). Notwithstanding anything to the contrary contained in this Employment Agreement, the grant, vesting and distribution relating to the Restricted Stock Units will be governed solely by Corporation’s Restricted Stock Units Award Plan dated December 22, 2005 and the Restricted Stock Unit Award Agreement dated December 22, 2005 between the Corporation and the Employee. The shares underlying the Restricted Stock Units shall be duly registered under a registration statement on Form S-8 filed by the Corporation with the Securities and Exchange Commission promptly following the grant of such Restricted Stock Units.”

 

5.    Section 6 of the Employment Agreement (regarding vacation) is hereby amended by deleting “four weeks” each time it appears in such section, and inserting in lieu thereof “five weeks.”

 

6.    The last sentence of Section 7.1 of the Employment Agreement is hereby deleted in its entirety and the following is inserted in its place:

 

3


 

Additionally, notwithstanding any language to the contrary contained in any option agreements with the Employee (or any other applicable agreement or plan), the Employee’s Designees shall be entitled to exercise (i) the Pre-409A Option Portion during the twelve (12) month period following the date of termination under this Section 7.1, and (ii) the vested portion of the Post-409A Option Portion during the lesser of (A) the twelve (12) month period following the date of termination under this Section 7.1, or (B) the maximum exercise period permitted under Section 409A. At the expiration of the applicable exercise period, the unexercised stock options shall terminate.”

 

7.    The last sentence of the first paragraph of Section 7.2 of the Employment Agreement is hereby deleted in its entirety and the following is inserted in its place:

 

Additionally, notwithstanding any language to the contrary contained in any option agreements with the Employee (or any other applicable agreement or plan), the Employee’s Designees shall be entitled to exercise (i) the Pre-409A Option Portion during the twelve (12) month period following the date of termination under this Section 7.2, and (ii) the vested portion of the Post-409A Option Portion during the lesser of (A) the twelve (12) month period following the date of termination under this Section 7.2, or (B) the maximum exercise period permitted under Section 409A. At the expiration of the applicable exercise period, the unexercised stock options shall terminate.”

 

8.    Section 7.3 of the Employment agreement is hereby amended to add the following at the end of such Section:

 

 

In the event the Employee is terminated for Cause, the Employee shall be entitled to exercise (i) the Pre-409A Option Portion within forty (40) days of such termination, and (ii) the vested portion of the Post-409A Option Portion within the forty (40) day period commencing upon the end of any applicable holding period under Section 409A following such termination.

 

In the event the Employee resigns other than for Good Reason (as defined in Section 7.5), the Employee shall be entitled to exercise (i) the Pre-409A Option Portion during the twelve (12) months following the date of resignation, and (ii) the vested portion of the Post-409A Option Portion during the lesser of (A) the twelve (12) month period following the date of resignation, or (B) the maximum exercise period permitted under Section 409A.

 

At the expiration of the applicable exercise period, the unexercised stock options shall terminate.”

 

4


 

 

9.    Section 7.6(c) of the Employment Agreement is hereby deleted in its entirety and the following is inserted in its place:

 

(c) Stock Options.” In the event of a termination of the Employee’s employment by the Corporation without Cause or if the Employee resigns for Good Reason, the Corporation shall accelerate fully the vesting of any outstanding stock options to purchase shares of stock of the Corporation granted to the Employee. In connection therewith, the Corporation shall cause all restrictive legends, stop transfer orders or similar restrictions to be removed from such stock options and the underlying shares, except as required by applicable law. Additionally, notwithstanding any language to the contrary contained in any stock option agreements with the Employee (or any other applicable agreement or plan), the Employee shall be entitled to exercise (i) the Pre-409A Option Portion during the twelve (12) month period following the date of termination or resignation, and (ii) the vested portion of the Post-409A Option Portion during an exercise period commencing upon the end of any applicable holding period under Section 409A following the date of termination or resignation, such exercise period being the lesser of (A) the twelve (12) month period following the date of termination or resignation, or (B) the maximum exercise period permitted under Section 409A. At the expiration of the applicable exercise period, the unexercised stock options shall terminate.”

 

10.    The Employment Agreement is hereby amended to add a new Section 8.7 as follows:

 

8.7 Assignment of Invention. All discoveries, inventions, improvements and innovations, whether patentable or not (including all data and records pertaining thereto), which Employee may have invented, discovered, originated or conceived of during the Term of his employment with the Corporation prior to the date of the Third Amendment to Executive Employment Agreement dated December 22, 2005, or may invent, discover, originate or conceive during the Term of this Agreement and which directly relate to the business of the Corporation or any of its subsidiaries as described in the Corporation’s filings with the Securities and Exchange Commission, shall be the sole and exclusive property of the Corporation. Employee shall promptly and fully disclose each and all such discoveries, inventions, improvements or innovations to the Corporation. Employee shall assign to the Corporation his entire right, title and interest in and to all of his discoveries, inventions, improvements and innovation described in this Section 8.7 and any related U.S. or foreign patent and patent applications, shall execute any instruments reasonably necessary to convey or perfect the Corporation’s ownership thereof, and shall assist the Corporation in obtaining, defending and enforcing its rights therein. The Corporation shall bear all expenses it authorizes to be incurred in connection with such activity and shall pay the Employee reasonable compensation for time spent by the Employee in performing such duties at the request of the Corporation after the termination of his employment, for a period not to exceed three (3) years.”

 

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11.    The Corporation shall reimburse the Employee (or pay directly) for the reasonable out-of-pocket fees and expenses incurred by the Employee (including, without limitation, legal and tax consulting fees and expert opinion fees) for review, analysis, advice and negotiation relating to this Amendment, and the matters referred to herein, not to exceed $15,000, on or before thirty (30) days following the date of execution of this Amendment. The Employee shall provide the Corporation with reasonable documentation evidencing such expenses.

 

12.    Except as expressly amended by this Amendment, the Employment Agreement remains in full force and effect. Capitalized terms used herein shall have the same meaning as in the Employment Agreement unless otherwise defined herein. This Amendment shall be governed and construed and enforced in accordance with the local laws of the State of New York applicable to agreements made and to be performed entirely in New York.

 

13.    This Amendment may be executed in one or more facsimile or original counterparts, each of which shall be deemed an original, but all of which taken together will constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

 

ATTEST:

 

ACURA PHARMACEUTICALS, INC.

 

 

 

___________________

 

By: /s/ Peter A. Clemens

 

 

   Peter A. Clemens,

 

 

   Senior Vice President and

 

 

   Chief Financial Officer

 

 

 

WITNESS:

 

EMPLOYEE

 

 

 

___________________ 

 

By: /s/ Andrew D. Reddick

 

 

   Andrew D. Reddick

 

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TOP OF DOCUMENT

FOURTH AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS FOURTH AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Amendment”) made this 16th day of December, 2007 by and between ACURA PHARMACEUTICALS, INC. (formerly Halsey Drug Co., Inc.), a New York corporation (the “Corporation”) and ANDREW D. REDDICK(the “Employee”).

 

RECITALS

 

A.  

The Corporation and the Employee executed an employment agreement dated as of August 26, 2003, which was amended three times (as amended, the “Employment Agreement”).

 

B.  

The Corporation and the Employee now desire to further amend the Employment Agreement as provided herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained, the parties agree as follows:

 

1. Section 7.6(a)(i) is hereby deleted and replaced with the following:

 

(i) each of the following amounts:

 

 

(x)

the Employee’s accrued and unpaid Base Salary through and including the date of terminations;

 

 

(y)

the Employee’s then accrued and unused vacation through and including the date of termination; and

 

 

(z)

the Employee’s then accrued and unpaid Bonus for such year, calculated by pro-rating the annual Bonus, which would have been payable to the Employee but for his termination and assuming full achievement of the Bonus Criteria for such year, based on the number of days that the Employee remained in the employ of the Corporation during the year for which the Bonus is due;

 

The payments provided in subsections (x), (y) and (z) above, shall be paid in a single lump sum in cash within thirty (30) days after the date of termination; provided, however, that if such termination is by the Employee for Good Reason, the payment provided in subsection (z) shall be paid in a single lump sum in cash six (6) months and one (1) day following such termination; and”

 

2. Section 7.6(a)(ii) is hereby deleted and replaced with the following:

 




 

(ii) the greater of (x) the Employee's Base Salary for the remainder of the Initial Term and (y) one (1) year of the Employee's Base Salary in effect immediately prior to the date of termination (”Severance Pay”). In the case of termination by the Employee for Good Reason, one-half of such Severance Pay shall be paid six months and one day following termination; and the remainder of such Severance Pay shall be paid in six equal monthly installments commencing with the seventh month following termination. In the case of termination of the Employee’s employment by the Corporation without Cause, the amount of such Severance Pay that does not exceed the Applicable Limit, shall be paid in equal monthly installments over the Severance Period (as defined in Section 7.6(b)). To the extent the Severance Pay exceeds the Applicable Limit, (A) one-half of the amount exceeding the Applicable Limit shall be paid six months and one-day after the date of termination, and (B) one-half of the amount exceeding the Applicable Limit shall be paid in six equal monthly installments commencing with the seventh month after the date of termination. The Applicable Limit is the amount which may not be exceeded as specified in Treas. Reg. 1-.409A-1(b)(iii)(A) (generally the lesser of $450,000 (for 2007) and two times Employee’s compensation).”

 

3. Subsection (ii) of Section 7.6(b) is hereby deleted and replaced with the following:

 

(ii) receive a payment in cash following his termination without Cause or for Good Reason representing the value of such continued benefits, plus any income tax payable by the Employee on such value. The amount provided in subsection (ii) shall be paid (A) in a single lump sum payment within thirty (30) days of the date of termination if such termination is by the Corporation without Cause, and (B) in a single lump sum payment six months and one day following the date of termination if such termination is by the Employee for Good Reason.”

 

4. Section 7.7 is amended by deleting the phrase “the Severance Pay shall be payable in a lump sum in cash within thirty (30) days after the of the date of such termination,” and replacing it with “the Severance Pay shall be payable in a lump sum in cash six months and one day after the date of such termination.”

 

5. Section 12.9 is added to the agreement as follows:

 

12.9 Section 409A Option Agreement. Notwithstanding anything contained herein to the contrary, in the event of a conflict between this Agreement and the Section 409A Non-Qualified Stock Option Agreement dated February 8, 2006, as amended (the “409A Agreement”), with respect to the exercise of options covered thereunder (including the period during which they may be exercised), the provisions of the 409A Agreement shall control.

 

6. Except as expressly amended by this Amendment, the Employment Agreement remains in full force and effect. Capitalized terms used herein shall have the same meaning as in the Employment Agreement unless otherwise defined herein. This Amendment shall be governed and construed and enforced in accordance with the local laws of the State of New York applicable to agreements made and to be performed entirely in New York.

 



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7. This Amendment may be executed in one or more facsimile or original counterparts, each of which shall be deemed an original, but all of which taken together will constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

 

 

ACURA PHARMACEUTICALS, INC.

 

 

 

 

 

 

By: 

/s/ Peter A. Clemens

 

 

 

Name: Peter A. Clemens

 

 

 

Title: Senior Vice President and

 

 

 

          Chief Financial Officer

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

 

By: 

/s/ Andrew D. Reddick

 

 

 

Andrew D. Reddick

 

 



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EX-10.1 2 v119471_ex10-1.htm

 

Exhibit 10.1


FIFTH AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT


THIS FIFTH AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Amendment) made this 9th day of July, 2008 by and between ACURA PHARMACEUTICALS, INC., a New York corporation (the “Corporation”) and ANDREW D. REDDICK (the “Employee).


RECITALS


A.  

The Corporation and the Employee executed an Executive Employment Agreement dated as of August 26, 2003, as amended (as amended, the “Employment Agreement).

 

 

B.  

The Corporation and the Employee now desire to further amend the Employment Agreement as provided herein.


NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained, the parties agree as follows:


1.  Section 7.4 of the Employment Agreement is hereby amended to add the following two sentences at the end of such Section to read as follows:


With respect to other Sections of this Agreement, termination “Without Cause” shall also mean a termination of the Employee’s employment with the Corporation following notice by the Corporation to the Employee to not renew this Agreement pursuant to Section 2. In such case, in the absence of the Employee’s prior termination of this Agreement for Good Reason pursuant to Section 7.5, the effective date of such termination shall be the expiration of the Term.”


2.  Section 7.5 of the Employment Agreement is hereby amended by adding a new Section (viii) at the end of such Section to read as follows:


; or (viii) notice by the Corporation to the Employee to not renew this Agreement pursuant to Section 2.”


3.  Except as expressly amended by this Amendment, the Employment Agreement remains in full force and effect. Capitalized terms used herein shall have the same meaning as in the Employment Agreement unless otherwise defined herein. This Amendment shall be governed and construed and enforced in accordance with the local laws of the State of New York applicable to agreements made and to be performed entirely in New York.


4.  This Amendment may be executed in one or more facsimile or original counterparts, each of which shall be deemed an original, but all of which taken together will constitute one and the same instrument.

 








IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

 

 

 

ACURA PHARMACEUTICALS, INC.

 

 

 

 

 

By: /s/ Peter A. Clemens            

 

 

Name: Peter A. Clemens

 

 

Title: Senior Vice President and

 

 

          Chief Financial Officer

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

By: /s/ Andrew D. Reddick          

 

 

Andrew D. Reddick





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