EMPLOYMENT AGREEMENT
 
This Employment Agreement dated as of June 8, 2007 (the “Effective Date”)
between Velcera, Inc., a Delaware corporation (the “Company”) with its principal
corporate offices at 201 Corporate Drive, Langhorne, Pennsylvania 19047, and
Dennis F. Steadman (“Executive”), residing at 10 Milton Drive, Yardley,
Pennsylvania 19067.
 
The Company and Executive are parties to an employment agreement dated April 20,
2004, whereby Executive served as President and Chief Executive Officer of the
Company according to the terms set forth therein. That employment agreement
expired as of May 2, 2007 and Executive and the Company desire that Executive
continue to serve the Company as President and Chief Executive Officer upon the
terms set forth herein.
 
The parties hereby agree as follows:
 
1.  Employment
 
(a)  Services. The Company hereby agrees to employ Executive as its President
and Chief Executive Officer. Executive will report to the Board of Directors of
the Company (the “Board”) and shall be responsible for directing all daily
operations of the Company, including, but not limited to, sales, marketing,
sourcing, licensing, product development and financial affairs, and such other
duties as consistent with the position as President and Chief Executive Officer
and are otherwise directed by the Board (the “Services”).
 
(b)  Acceptance. Executive hereby accepts such employment and agrees to render
the Services.
 
2.  Term.
 
Executive's employment under this Agreement shall commence as of June 8, 2007
and shall continue through December 31, 2007, subject to earlier termination or
renewal as provided herein (the “Term” or the “Expiration Date”). The Term will
automatically renew on January 1, 2008 and on each successive anniversary date
thereof for a one-year period unless written notice is given by the Company or
Executive of its or his intention not to extend the Term at least 60 days prior
to December 31, 2007 or such subsequent anniversary date, as the case may be,
subject in all cases to earlier termination as set forth herein. Notwithstanding
anything to the contrary contained herein, the provisions of this Agreement
governing protection of Confidential Information shall continue in effect as
specified in Section 6 hereof and survive the expiration or earlier termination
of the Term. The actual period during which Executive continues to be employed
by the Company is referred to herein as the “Term” and the actual date upon
which Executive’s employment with the Company is terminated or this Agreement
expires, as the case may be, is referred to herein as the “Expiration Date”.
 
3.  Best Efforts; Place of Performance.
 
(a)  Executive agrees to perform the Services faithfully and to devote
substantially all of his business time, attention and energies to the business
and affairs of the Company during the Term and shall use his commercially
reasonable best efforts to advance the interests of the Company and shall not
during the Term be actively engaged in any other business activity, whether or
not such business activity is pursued for gain, profit or other pecuniary
advantage, that will materially interfere with the performance by Executive of
his duties hereunder or Executive's availability to perform such duties or that
will adversely affect, or negatively reflect upon, the Company. Notwithstanding
the foregoing, it is understood and agreed that during the Term Executive shall
be entitled (i) to continue to participate in charitable and civic activities,
(ii) to maintain his ownership interest in Valorum Associates, Ltd., (iii) to
maintain his ownership interest in AgroSource Inc. and (iv) to purchase, hold
and sell securities of publicly-traded corporations for his own account provided
that his beneficial ownership of any one such issuer does not exceed 2%, in each
case without being deemed to violate the provisions of this Section 3(a),
provided, however, that such activities to do not occupy more than 8 business
hours per month of Executive's time.
 
 
 

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

 
(b)  The duties to be performed by Executive hereunder shall be performed
primarily at an office of the Company to be located within a thirty-minute
commuting radius of Executive's current residence in Yardley, Pennsylvania,
subject to reasonable travel requirements on behalf of the Company, or at such
other place as Executive and the Board may mutually agree.
 
4.  Directorship. The Company shall use its best efforts to cause Executive to
be nominated and elected as a member of its board of directors throughout the
Term and shall include Executive in the management slate for election as a
director at every stockholders meeting held during the Term at which his term as
a director would otherwise expire. Executive agrees to accept election, and to
serve during the Term, as director of the Company, without any compensation
other than as specified in this Agreement.
 
5.  Compensation As full compensation for the performance by Executive of his
duties under this Agreement, the Company shall pay Executive as follows:
 
(a)  Base Salary. The Company shall pay Executive a salary (the “Base Salary”)
equal to $275,000 per year, effective as of May 1, 2007. Payment will be made in
accordance with the Company's normal payroll practices. The Board will consider
increases to the Base Salary on an annual basis.
 
(b)  Discretionary Bonus. At the sole discretion of the Board, Executive may
receive an annual bonus having an aggregate value of up to $300,000.00, based
upon his performance on behalf of the Company during the prior calendar year
(the “Discretionary Bonus”). Any Discretionary Bonus awarded by the Board for
the period from the Effective Date through December 31, 2007 will be prorated
from May 1, 2007 through December 31, 2007. The Board will consider increases to
the Discretionary Bonus on an annual basis. Factors to be considered by the
Board in determining if to award a Discretionary Bonus and the amount of any
Discretionary Bonus awarded include, but are not limited to, growth in the
Company's market capitalization, product development and sales growth, the
liquidity and performance of the Company's common stock, and financing received
by the Company from third parties introduced to the Company by Executive. The
Discretionary Bonus is payable 60% in cash (as a lump-sum payment on or before
March 15th of the following calendar year) and 40% in common stock of the
Company, unless the Board determines, in its sole discretion, to adjust the
above allocation to include more cash. The number of shares of common stock
issued hereunder will be determined by dividing the amount payable to Executive
in common stock by the closing price of the common stock for the trading day
immediately preceding payment of the Discretionary Bonus. If the common stock of
the Company is not then traded, the denominator for the above calculation will
be the fair market value of the common stock as determined in the sole
discretion of the Board.
 
 
 

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

 
(c)  Additional Bonus. Other than for products and technologies incorporating
PromistTM delivery technology, Executive will receive a lump-sum cash bonus of
$50,000.00 no later than 30 days following the adoption of each new product or
technology by the Company during the Term, as approved by the Board, including,
without limitation, the adoption of a new product or technology acquired through
acquisition or in-licensing.
 
(d)  Withholding. The Company shall withhold all applicable federal, state and
local taxes and social security and such other amounts as may be required by law
from all amounts payable to Executive under this Section 5.
 
(e)  Stock Option. As additional compensation for the Services, on May 25, 2007
the Company granted Executive an option to purchase 280,000 shares of common
stock of the Company pursuant to the terms set forth in the stock option
agreement between Executive and the Company on such date.
 
(f)  Other Benefits. Executive shall be entitled to all rights and benefits for
which he shall be eligible under any benefit or other plans (including, without
limitation, life insurance, dental, medical, medical reimbursement and hospital
plans, pension plans, employee stock purchase plans, profit sharing plans, bonus
plans and other so-called "fringe" benefits) as the Company shall make available
to its senior executives from time to time.
 
(g)  Vacation. Executive is entitled to 3 weeks per calendar year of vacation,
in addition to holidays observed by the Company. Executive will not be entitled
to carry any vacation forward to the next year of employment and will not
receive any compensation for unused vacation days.
 
6.  Confidential Information and Inventions.
 
(a)  Executive recognizes and acknowledges that in the course of his duties he
will receive confidential or proprietary information owned by the Company, its
affiliates or third parties with whom the Company or any such affiliates has an
obligation of confidentiality. Accordingly, during and after the Term, Executive
agrees to keep confidential and not disclose or make accessible to any other
person or use for any purpose other than in connection with the fulfillment of
Executive’s duties under this Agreement, any Confidential and Proprietary
Information (as defined below) owned by, or received by or on behalf of, the
Company or any of its affiliates. “Confidential and Proprietary Information”
means confidential or proprietary scientific or technical information, data,
formulas and related concepts, business plans (both current and under
development), client lists, promotion and marketing programs, trade secrets, or
any other confidential or proprietary business information relating to
development programs, costs, revenues, marketing, investments, sales activities,
promotions, credit and financial data, manufacturing processes, financing
methods, plans or the business and affairs of the Company or of any affiliate or
client of the Company. Notwithstanding the foregoing, Confidential and
Proprietary Information shall not include (i) any information to the extent it
becomes generally known to the public through no fault of Executive or (ii) any
information which Executive is required to disclose as a result of a subpoena or
other legal process, provided, however, Executive shall give prompt notice of
such request to the Company so that the Company may seek an appropriate
protective order. If, in the absence of a protective order, Executive is legally
compelled to disclose Confidential and Proprietary Information, such
Confidential and Proprietary Information (and only such Confidential and
Proprietary Information) may be disclosed in such proceeding without liability
hereunder; provided, however, that Executive shall give the Company written
notice of the Confidential and Proprietary Information to be disclosed as far in
advance of its disclosure as is practical and, upon the Company's request and at
the Company's expense, Executive shall use all reasonable efforts to obtain
assurances that confidential treatment will be accorded to the disclosure of
such Confidential and Proprietary Information in such proceeding. Executive
expressly acknowledges the trade secret status of the Confidential and
Proprietary Information and that the Confidential and Proprietary Information
constitutes a protectable business interest of the Company. Executive agrees:
(i) not to use any such Confidential and Proprietary Information for himself or
others; and (ii) not to take any Company material, or reproductions (including,
but not limited to writings, correspondence, notes, drafts, records, invoices,
technical and business policies, computer programs or disks) thereof from the
Company's offices at any time during his employment by the Company, except as
required in the execution of Executive's duties to the Company. Executive agrees
to return promptly all Company materials and reproductions (including, but not
limited, to writings, correspondence, notes, drafts, records, invoices,
technical and business policies, computer programs or disks) thereof in his
possession to the Company upon request and in any event upon termination of
employment.
 
 
 

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

 
(b)  Except with prior written authorization by the Company, Executive agrees
not to disclose or publish any of the Confidential and Proprietary Information,
or any confidential, scientific, technical or business information of any other
party to whom the Company or any of its affiliates owes an obligation of
confidence at any time during or after his employment with the Company.
 
(c)  Executive agrees that all inventions, discoveries, improvements and
patentable or copyrightable works (“Inventions”) initiated, conceived or made by
him, either alone or in conjunction with others, during the Term shall be the
sole property of the Company to the maximum extent permitted by applicable law
and, to the extent permitted by law, shall be "works made for hire" as that term
is defined in the United States Copyright Act (17 U.S.C.A., Section 101). The
Company shall be the sole owner of all patents, copyrights, trade secret rights,
and other intellectual property or other rights in connection therewith.
Executive hereby assigns to the Company all right, title and interest he may
have or acquire in all such Inventions; provided, however, that the Board may in
its sole discretion agree to waive the Company's rights pursuant to this Section
6(c) with respect to any Invention that is not directly or indirectly related to
the Company's business. Executive further agrees to assist the Company in every
proper way (but at the Company's expense) to obtain and from time to time
enforce patents, copyrights or other rights on such Inventions in any and all
countries, and to that end Executive will execute all documents necessary;
 
(i)  to apply for, obtain and vest in the name of the Company alone (unless the
Company otherwise directs) letters patent, copyrights or other analogous
protection in any country throughout the world and when so obtained or vested to
renew and restore the same; and
 
(ii)  to defend any opposition proceedings in respect of such applications and
any opposition proceedings or petitions or applications for revocation of such
letters patent, copyright or other analogous protection.
 
(d)  Executive acknowledges that while performing the Services under this
Agreement Executive may locate, identify and/or evaluate patented or patentable
inventions having commercial potential in the fields of pharmacy,
pharmaceutical, biotechnology, healthcare, technology and other fields which may
be of potential interest to the Company or one of its affiliates (the “Third
Party Inventions”). Executive understands, acknowledges and agrees that all
rights to, interests in or opportunities regarding, all Third-Party Inventions
identified by the Company, any of its affiliates or either of the foregoing
persons' officers, directors, employees (including Executive), agents or
consultants during the Term will remain the sole and exclusive property of the
Company or such affiliate and Executive shall have no rights whatsoever to such
Third-Party Inventions and will not pursue for himself or for others any
transaction relating to the Third-Party Inventions which is not on behalf of the
Company.
 
 
 

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

 
(e)  Executive agrees that he will promptly disclose to the Company, or any
persons designated by the Company, all improvements, Inventions made or
conceived or reduced to practice or learned by him, either alone or jointly with
others, during the Term.
 
(f)  The provisions of this Section 6 shall survive the termination of
Executive’s employment with the Company.
 
7.  Non-Competition; Non-Solicitation; Non-Disparagement.
 
(a)  Executive understands and recognizes that his services to the Company are
special and unique and that in the course of performing such services Executive
will have access to and knowledge of Confidential and Proprietary Information
(as defined in Section 6) and Executive agrees that, during the Term and for an
additional period of 12 months thereafter (such period, the “Restricted
Period”), he shall not in any manner, directly of indirectly, on behalf of
himself or any person, firm, partnership, joint venture, corporation or other
business entity (“Person”), engage in any business which is directly or
indirectly competitive with the business of the Company within the geographic
area of the Company's business, which is worldwide. Executive acknowledges that,
due to the unique nature of the Company's business, the loss of any of its
clients or business flow or the improper use of its Confidential and Proprietary
Information could create significant instability and cause substantial damage to
the Company and its affiliates and therefore the Company has a strong legitimate
business interest in protecting the continuity of its business interests and the
restriction herein agreed to by Executive narrowly and fairly serves such an
important and critical business interest of the Company. For purposes of this
Agreement, the Company will be deemed to be actively engaged on the date hereof
in the development and commercialization of (i) drug delivery systems for
animals, and (ii) in the future of any other business in which it actually
devotes substantive resources to study, develop or pursue. Notwithstanding the
foregoing, nothing contained herein shall be deemed to prohibit Executive from
(i) acquiring, or holding, solely for investment, publicly traded securities of
any corporation, some or all of the activities of which are competitive with the
business of the Company so long as such securities do not, in the aggregate,
constitute more than 4% of any class or series of outstanding securities of such
corporation,
 
(b)  During the Term and thereafter during the Restricted Period, if any,
Executive shall not, directly or indirectly, without the prior written consent
of the Company;
 
(i)  solicit or induce any employee of the Company or any of its affiliates to
leave the employ of the Company or any such affiliate; or hire for any purpose
any employee of the Company or any affiliate or any employee who has left the
employment of the Company or any affiliate within one year of the termination of
such employee's employment with the Company or any such affiliate or at any time
in violation of such employee's non-competition agreement with the Company or
any such affiliate; or
 
 
 

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

 
(ii)  solicit or accept employment or be retained by any Person who, at any time
during the Term, was an agent, client or customer of the Company or any of its
affiliates where his position will be related to the business of the Company or
any such affiliate; or
 
(iii)  solicit or accept the business of any agent, client or customer of the
Company or any of its affiliates with respect to products, services or
investments similar to those provided or supplied by the Company or any of its
affiliates.
 
(c)  The Company and Executive each agree that both during the Term and at all
times thereafter, neither party shall directly or indirectly disparage, whether
or not true, the name or reputation of the other party or any of its affiliates,
including but not limited to, any officer, director, employee or shareholder of
the Company or any of its affiliates.
 
(d)  In the event that Executive breaches any provision of Section 6 or this
Section 7 or there is a threatened breach, then, in addition to any other rights
which the Company may have, the Company will (i) be entitled, without the
posting of a bond or other security, to injunctive relief to enforce the
restrictions contained in such Sections and (ii) have the right to require
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments and other benefits (collectively “Benefits”)
derived or received by Executive as a result of any transaction constituting a
breach of any of the provisions of Sections 6 or 7 and Executive hereby agrees
to account for and pay over such Benefits to the Company.
 
(e)  Each of the rights and remedies enumerated in Section 7(d) shall be
independent of the others and shall be in addition to and not in lieu of any
other rights and remedies available to the Company at law or in equity. If any
covenant contained in this Section 7 is hereafter construed or adjudicated to be
invalid or unenforceable, the same shall not affect the remainder of the
covenants or rights or remedies, which will be given full effect without regard
to the invalid portions. If any covenant contained in this Section 7 is held to
be invalid or unenforceable because of the duration of such provision or the
area covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and in
its reduced form such provision shall then be enforceable. No such holding of
invalidity or unenforceability in one jurisdiction shall bar or in any way
affect the Company's right to the relief provided in this Section 7 or otherwise
in the courts of any other state or jurisdiction within the geographical scope
of such covenants as to breaches of such covenants in such other respective
states or jurisdictions, such covenants being, for this propose, severable into
diverse and independent covenants.
 
(f)  In the event that an actual proceeding is brought in equity to enforce the
provisions of Section 6 or this Section 7, Executive shall not urge as a defense
that there is an adequate remedy of law nor shall the Company be prevented from
seeking any other remedies which may be available. Executive agrees that he
shall not raise in any proceeding brought to enforce the provisions of Section 6
or this Section 7 that the covenants contained in such Sections limit his
ability to earn a living.
 
(g)  Notwithstanding anything to the contrary in this Section 7, (i) it is
understood and agreed that Executive's performance of his obligations pursuant
to this Section 7 during the Restricted Period, if any, are subject to the
Company's performance of its obligations to Executive in connection with the
termination of his employment pursuant to Section 10 below and (ii) it is
understood and agreed that the Company's performance of its obligations pursuant
to Section 10 during the Restricted Period, if any, are subject to Executive’s
performance of his obligations to the Company in connection this Section 7.
 
 
 

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

 
(h)  The provisions of this Section 7 shall survive the termination of
Executive’s employment with the Company.
 
8.  Representations and Warranties by Executive.
 
Executive hereby represents and warrants to the Company as follows:
 
(a) Neither the execution or delivery of this Agreement nor the performance by
Executive of his duties and other obligations hereunder violate or will violate
any statute, law, determination or award, or conflict with or constitute a
default or breach of any covenant or obligation under (whether immediately, upon
the giving of notice or lapse of time or both) any prior employment agreement,
contract, or other instrument to which Executive is a party or by which he is
bound.
 
(b) Executive has the full right, power and legal capacity to enter and deliver
this Agreement and to perform his duties and other obligations hereunder. This
Agreement constitutes the legal, valid and binding obligation of Executive
enforceable against him in accordance with its terms. No approvals or consents
of any persons or entities are required for Executive to execute and deliver
this Agreement or perform his duties and other obligations hereunder.
 
9.  Termination. Executive's employment hereunder will be terminated upon
Executive's death and may be terminated as follows:
 
(a)  Executive's employment hereunder may be terminated by the Board for Cause
(as defined below). Any of the following actions by Executive shall constitute
“Cause”;
 
(i)  Executive's commission of embezzlement, theft or other dishonest or
fraudulent acts of a material nature, provided that the Company gives notice
thereof identifying the conduct alleged and allows Executive and his
representatives to present his position to the Board prior to such termination;
 
(ii)  Executive's conviction of a felony, whether or not committed in the course
of his employment by the Company;
 
(iii)  Executive's willful malfeasance or gross negligence which has a material
adverse effect on the Company or its business, provided that the Company gives
notice thereof identifying the conduct alleged and, if such action is capable of
cure, gives Executive 10 business days to cure;
 
(iv)  persistent inattention or failure by Executive to discharge his duties and
responsibilities due to alcohol or drug abuse, provided that the Company gives
notice thereof identifying the conduct alleged and, if such action is capable of
cure, give Executive 10 business days to cure;
 
(v)  a violation of the Company's policy regarding discrimination or harassment
in the workplace which is deemed by a majority of the disinterested members of
the Board acting in good faith to warrant the termination of Executive's
employment hereunder provided that, if such action is capable of cure, the Board
gives Executive 10 business days to cure unless there is a serious claim filed
by a Company employee which is sustainable in the judgment of the Company's
outside counsel and, in any event after Executive and his representative have
been given a reasonable opportunity to present his position; and
 
 
 

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

 
(vi)  a willful disregard or failure to perform a written lawful directive of
the Board consistent with Executive's duties as President and Chief Executive
Officer;
 
(vii)  the material breach by Executive of this Agreement, which breach remains
uncured for 10 business days after written notice of such breach.
 
(b)  In the event Executive, by reason of physical or mental disability
(excluding infrequent and temporary absences due to ordinary transitory
illnesses), is unable for more than 2 months in the consecutive 12 month period
to perform the Services, or in the event Executive is permanently disabled, a
termination of this Agreement for “Disability” will occur at the end of the
month following the month in which the Company gives notice to Executive of its
intention to terminate the Agreement because of such Disability.
 
(c)  Executive's employment hereunder may be terminated by the Board (or its
successor) upon the occurrence of a Change of Control. For purposes of this
Agreement, “Change of Control” means (i) the acquisition, directly or indirectly
by any person (as such term is defined in Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended), in one transaction or a series of
related transactions, of securities of the Company representing in excess of
fifty percent (50%) or more of the combined voting power of the Company's then
outstanding securities or (ii) the disposition by the Company (whether direct or
indirect, by sale of assets or stock, merger, consolidation or otherwise) of all
or substantially all of its business and/or assets in one transaction or series
of related transactions (other than a merger effected exclusively for the
purpose of changing the domicile of the Company).
 
(d)  Executive's employment hereunder may be terminated by Executive for Good
Reason. For purposes of this Agreement, “Good Reason” means (i) failure by the
Company to continue Executive in his executive position as President and Chief
Executive Officer of the Company; (ii) material reduction in the nature or scope
of Executive's responsibilities, duties, power or authority, in each case as set
forth in Section 1 above; (iii) material reduction by the Company of Executive's
benefits (unless such benefits are similarly reduced for all employees); (iv)
failure of Executive to be nominated to serve as a member of the Board at each
stockholders meeting of the Company held during the Term (and such current Board
members will be obligated to vote shares in favor of Executive), or (v) a
material breach by the Company of any provision of this Agreement that is not
cured within 10 business days following delivery of written notice of such
material breach by Executive to the Board.
 
(e)  Executive’s employment may be terminated by the Board without Cause, and
for any reason, upon 30 days advance written notice to Executive. Executive may
terminate his employment with the Company for any reason upon 30 days advance
written notice to the Company.
 
 
 

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

 
 
10.  Compensation upon Termination.
 
(a)  If Executive’s employment is terminated as a result of Executive’s death or
Disability, the Company shall pay to Executive or to Executive's estate, as
applicable, (i) his accrued but unpaid Base Salary, (ii) any Discretionary
Bonus, if any, which has been earned but is unpaid, and (iii) expense
reimbursement amounts, in each case through the date of Executive’s death or
Disability.
 
(b)  If Executive’s employment is terminated by the Company for Cause, then the
Company shall pay to Executive (i) accrued but unpaid Base Salary in accordance
with normal payroll practices and (ii) expense reimbursement amounts, in each
case through the date of termination. In the event of a termination for Cause,
Executive will have no further entitlement hereunder to any other compensation
or benefits from the Company except to the extent otherwise provided by law.
 
(c)  Termination upon Change of Control.
 
(i) In the event Executive’s employment is terminated by the Company prior to
and as a result of, or within one year following, a Change of Control resulting
in the Company or its stockholders receiving at least $50,000,000 in value, then
the Company shall pay to Executive on the effective date of such termination (i)
one year's Base Salary in a lump sum, (ii) his expense reimbursement amounts, in
each case through the date of the Change of Control, (iii) $300,000 in cash, and
(iv) an additional amount in cash equal to $822.00 multiplied by the number of
days the Company employed Executive under this Agreement during the then current
calendar year. In addition, at the request of Executive, the Board of Directors
will reasonably consider releasing Executive from the Non-Competition
obligations described in section 7.
 
(ii) In the event Executive’s employment is terminated by the Company prior to
and as a result of, or within one year following, a Change of Control resulting
in the Company or its stockholders receiving less than $50,000,000 in value,
then the Company shall pay to Executive on the effective date of such
termination (i) 6 months Base Salary in a lump sum, (ii) his expense
reimbursement amounts, in each case through the date of the Change of Control,
and (iii) an additional amount in cash equal to $822.00 multiplied by the number
of days the Company employed Executive under this Agreement during the then
current calendar year. In addition, at the request of Executive, the Board will
reasonably consider releasing Executive from the covenants set forth in Section
7.
 
(d)  If Executive terminates his employment with the Company for Good Reason or
is terminated by the Company other than as a result of Executive's death or
Disability and other than for reasons specified in Sections 10(b) or 10(c), then
the Company shall (i) continue to pay to Executive his Base Salary for a period
of 12 months following such termination in accordance with normal payroll
practices; provided that, if on March 15th of the calendar year following the
date of termination, the required amount has not been paid in full, the Company
shall pay the remainder on such date, (ii) pay Executive in a lump sum on the
date of termination any expense reimbursement amounts owed through the date of
termination, and (iii) pay Executive an additional amount in cash equal to
$822.00 multiplied by the number of days the Company employed Executive under
this Agreement during the then current calendar year.
 
(e)  This Section 10 sets forth all of the obligations of the Company with
respect to the termination of Executive’s employment. Executive acknowledges
that, upon the termination of his employment, he will not be entitled to any
payments or benefits which are not explicitly provided for in this Section 10
except as otherwise provided by law.
 
 
 

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

 
(f)  Upon termination of Executive’s employment for any reason by either party,
Executive shall be deemed to have resigned as director of the Company, effective
as of the date of such termination.
 
(g)  The provisions of this Section 10 shall survive the termination of
Executive’s employment with the Company.
 
11.  Indemnification. The Company agrees to indemnify, defend and hold Executive
harmless from and against all loss, liability and expense (including, but not
limited to, reasonable attorneys' fees) arising out of, relating to or incurred
by Executive in connection with the performance of the Services or his duties as
a director of the Company to the maximum extent permitted by the laws of the
State of Delaware as in effect from time to time, except to the extent such
loss, liability and expense arises out of the fraud or willful misconduct of
Executive. In addition, the Company agrees to advance expenses to Executive in
connection with the defense of any claim brought against Executive for which
Executive is entitled to be indemnified by the Company in advance of a final
decision on the merits, subject to Executive's undertaking to reimburse the
Company in the event that Executive is finally judicially determined to have
failed to meet the applicable standard of conduct, to the maximum extent
permitted by the laws of the State of Delaware as in effect from time to time.
The provisions of this Section 11 shall survive the termination of Executive’s
employment with the Company.
 
12.  Miscellaneous.
 
(a)  This Agreement is governed by, and construed and interpreted in accordance
with, the laws of the Commonwealth of Pennsylvania, without giving effect to its
principles of conflicts of laws.
 
(b)  Any dispute arising out of, or relating to, this Agreement or the breach
thereof (other than Sections 6 or 7 hereof), or regarding the interpretation
hereof, will be finally settled by arbitration conducted in Philadelphia,
Pennsylvania in accordance with the rules of the American Arbitration
Association then in effect before a single arbitrator appointed in accordance
with such rules. Judgment upon any award rendered therein may be entered and
enforcement obtained thereon in any court having jurisdiction. The arbitrator
shall have authority to grant any form of appropriate relief, whether legal or
equitable in nature, including specific performance. For the purpose of any
judicial proceeding to enforce such award or incidental to such arbitration or
to compel arbitration and for purposes of Sections 6 and 7 hereof, the parties
hereby submit to the non-exclusive jurisdiction of the state and federal courts
having jurisdiction over Philadelphia, Pennsylvania, and agree that service of
process in such arbitration or court proceedings shall be satisfactorily made
upon it if sent by registered mail addressed to it at the address referred to in
paragraph (g) below. The costs of such arbitration shall be borne proportionate
to the finding of fault as determined by the arbitrator. Judgment on the
arbitration award may be entered by any court of competent jurisdiction.
 
(c)  This Agreement shall be binding upon and inure to this benefit of the
parties hereto, and their respective heirs, legal representatives, successors
and assigns.
 
(d)  This Agreement, and Executive's rights and obligations hereunder, may not
be assigned by Executive. The Company 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.
 
 
 

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

 
(e)  This Agreement cannot be amended orally, or by any course of conduct or
dealing, but only by a written agreement signed by the parties hereto.
 
(f)  The failure of either party to insist upon the strict performance of any of
the teams, conditions and provisions of this Agreement shall not be construed as
a waiver or relinquishment of future compliance, and such terms, conditions and
provisions shall remain in full force and effect. No waiver of any term of this
Agreement on the part of either party will be effective for any purpose
whatsoever unless such waiver is in writing and signed by such party,
 
(g)  All notices, requests, consents and other communications, required or
permitted to be given hereunder, will be in writing and will be delivered
personally or by an overnight courier service or sent by registered or certified
mail, postage prepaid, return receipt requested, to the parties at the addresses
set forth on the first page of this Agreement, and will be deemed given when so
delivered personally or by overnight courier, or, if mailed, five days after the
date of deposit in the United States mails. Either party may designate another
address, for receipt of notices hereunder by giving notice to the other party in
accordance with this paragraph (g).
 
(h)  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.
 
(i)  As used in this Agreement, "affiliate" of a specified Person shall mean and
include any Person controlling, controlled by or under common control with the
specified Person.
 
(j)  The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
 
(k)  This Agreement may be executed in any number of counterparts. each of which
shall constitute an original, but all of which together shall constitute one and
the same instrument.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
 
 
Velcera, Inc.
 
By:  /s/ Matthew C. Hill
Name: Matthew C. Hill
Title: CFO
/s/ Dennis F. Steadman
Dennis F. Steadman

      

 
 

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