**Exhibit 10.4.4**

 

EMPLOYMENT AGREEMENT

 

AGREEMENT madeas of October 28, 2005 and effective as of October 31, 2005 (the “EffectiveDate”), by and between Scott Fein, having an address at 191 Bristol Drive,Woodbury, New York, 11797 (hereinafter referred to as “Employee”) andBio-Reference Laboratories, Inc., a New Jersey corporation with principaloffices located at 481 Edward H. Ross Drive, Elmwood Park, New Jersey 07407,and its successors and assigns (hereinafter referred to as the “Company” or “Employer”).

 

WITNESSETH

 

WHEREAS, theCompany is a New Jersey Corporation and is engaged in the clinical laboratorybusiness, including, among other things, the ownership, operation and marketingof licensed clinical laboratories; and

 

WHEREAS,Employee has background and experience in the marketing of clinical laboratoryservices and the servicing of customers of clinical laboratories and has beenemployed by the Company since March 1994; and

 

WHEREAS,Employee and the Company are parties to an employment agreement effective May1, 1999 (the “1999 Agreement”); and

 

WHEREAS, theCompany desires to continue the employment of Employee as a marketingrepresentative; and

 

WHEREAS, theEmployee desires to continue employment with the Company, pursuant to the termsand conditions herein set forth, superseding all prior agreements, includingbut not limited to the 1999 Agreement, between the Company, its subsidiaries,and/or predecessors and Employee;

 

NOW,THEREFORE, it is mutually agreed by and between the parties hereto as follows:

 

ARTICLE I

EMPLOYMENT

 

Subject to andupon the terms and conditions of this Agreement, the Company hereby agrees tocontinue the employment of the Employee, and the Employee hereby accepts suchcontinued employment in his capacity as Senior Vice President and SalesRepresentative of the Company.

 

Employeerepresents and warrants that there is no restriction or impediment, contractualor otherwise, to his accepting such employment as provided for herein, and thathe is not in breach or violation of any covenant or agreement with any partyrelation to his employment. Employee represents and warrants, and covenants andagrees that in continuing his employment with the Company and in theperformance of his duties that he is not utilizing any secret or confidentialinformation of any other person. The Employee also represents and warrants thathe has consulted with an attorney prior to executing this Employment Agreement.

 

Employerrepresents and warrants that the products and services to be marketed and soldby the Employee will in no way contravene any contract, nor will theanticipated services of the Employee be in contravention of any state, Federalor local statute or court ruling.

 

ARTICLE II

DUTIES/OBLIGATIONS

 

(A)          In exchange forpayment of the consideration set forth in this Agreement, the Employee shall,during his continued employment with the Company, and subject to the directionand control of the Company’s executive officers, perform such reasonableservices, duties and functions of a Senior Vice President and SalesRepresentative as he may be called upon by such executive officers during theterm of this Agreement. The Employee shall report directly to the SeniorManagement of the Company.

 

(B)           During thecontinuation of his employment, the Employee will work for the Company on afull-time basis and agrees to devote his best efforts to the performance of hisduties for the Company. The Employee has informed the Company that from time totime he may be requested to act as a consultant

 

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(“Consulting Work”) for a bio-technical like company not in theclinical laboratory testing business and not in competition with the Company (“Non-ClinicalLaboratory Companies”). The Consulting Work for Non-Clinical LaboratoryCompanies primarily involves introducing these companies and their products tothe doctors that the Employee solicits or is otherwise involved with on behalfof the Company. The Employee has also informed the Company that the Consulting Workwill not interfere with his work for the Company. The Employee agrees to notifythe Company of his acceptance of Consulting Work and the nature of the businessof the Company for which he will be consulting.

 

(C)           The services, dutiesand functions referred to in subsection (A) above that the Employee may becalled upon to perform include, but are not limited to the following:

 

(i)            Those dutiesattendant to the position with the Company in which he is employed, includingthe marketing and sale of the various health and clinical laboratory services;

 

(ii)           Assist the Companyin the planning and implementation of all sales promotion, advertising, publicrelations, personnel and product development programs;

 

(iii)          Promotion of therelationships of the Company and its subsidiary and affiliate corporations withtheir respective employees, customers, suppliers, and others in the businesscommunity;

 

(iv)          Work with theCompany’s professional staff toward the development of special programs tooffer laboratory services to different groups of physicians and specialists;

 

(v)           Assisting othersales personnel in marketing and servicing their accounts;

 

(vi)          Assisting theCompany in training and managing other sales and service personnel;

 

(D)          Work Product.      Employee grants to the Company, and theCompany accepts, Employee’s entire right, title and interest in and to the WorkProduct (as defined below) and in and to all patents, copyrights, trade secretsand other proprietary rights in or based on the Work Product. Employee grantsto the Company, and the Company accepts, an unlimited, unrestricted,royalty-free, fully paid-up, worldwide and exclusive right and license, withthe right to grant licenses and sublicenses to others without accounting toEmployee, under the Background Rights (as defined below) and all proprietaryrights therein or based thereon. Employee agrees that if the Work Product orany portion thereof is copyrightable, it shall be deemed to be a “work made forhire,” as such term is defined in the Copyright Laws of the United States. Employeeshall cooperate with the Company or its designees and execute documents ofassignment, oaths, declaration and other documents, prepared by the Company, toeffect the foregoing or to perfect or enforce any proprietary rights resultingfrom or related to this Agreement. Such cooperation and execution shall be atno additional compensation to Employee; provided, however, the Company shallreimburse Employee for reasonable out-of-pocket expenses incurred at thespecific request of the Company. For purposes of this provision, the followingdefinitions shall apply: (a) “Work Product” shall mean all data, documentation,software and information, in whatever form, first produced or created byEmployee or for Employee as a result of or related to the performance of workor the rendition of services under this Agreement or under any prior agreementwith the Company including, but not limited to, work or services performed byEmployee as an independent contractor for the Company; and (b) “BackgroundRights” shall mean all data, documentation, software and information, inwhatever form, not first produced or created by Employee or for Employee as aresult of or related to the performance of work or the rendition of servicesunder this Agreement or under any prior Agreement with the Company, butincluded in, necessary, useful or utilizable in or with the Work Product or anyportion thereof.

 

ARTICLE III

TERM AND COMPENSATION

 

(A)          The initial term ofthis Agreement shall be for a period of four (4) years commencing on November1, 2005 and ending on October 31, 2009. Each year of the Agreement (November 1 –October 31) is referred to as a “Contract Year.” The period of November 1, 2005through October 31, 2009, plus any extension years as provided in Article XIII,is referred to as the “Employment Term.”

 

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(B)           For the ContractYear commencing November 1, 2005, the Company shall pay to Employee a salary(the “Base Salary”) of $150,000. For the Contract Years beginning on November1, 2006, November 1, 2007, and November 1, 2008, the Company shall pay toEmployee a Base Salary of $350,000. The Base Salary is payable in bi-weeklyinstallments or otherwise pursuant to the Company’s then-current payrollpractices.

 

(C)           In addition to theBase Salary provided for in this Article III (B) above, the Employee shallreceive sales commissions from the Employer based upon the net cash revenuesactually received by the Company from the Employee’s accounts less refunds (“NetCash Revenues”) at the same rates, terms and conditions as established betweenthe Employee and the Company prior to the Effective Date of this Agreement,which are set forth below. (Net Cash Revenues are defined here and throughoutthis Agreement as those revenues actually received by the Company lessrefunds).

 

(i)            For new accountsobtained solely by the Employee’s efforts (including new accounts obtainedprior to the Effective Date), a sales commission of 9% of the Net Cash Revenuesactually received by the Company from such accounts, which rate of commissionshall continue so long as the Company keeps such account and so long as theEmployee services the account. For the purpose of this provision, a new accountshall mean: (x) an account not previously serviced by the Company andintroduced to the Company by the Employee, or (y) an account previouslyserviced by the Company which has not ordered for a period of 180 days andwhich has become an active account as a result of the Employee’s efforts. Anaccount having been serviced within 180 days by the Company, from which anorder has been received within 180 days and/or referred to the Employee by theCompany shall be denominated a house account. The foregoing commission rate of9% shall not apply to accounts serviced by the Employee prior to the EffectiveDate where the Employee and the Company have agreed to a lower rate. For thoseaccounts, the lower rate shall continue to apply during the term of thisAgreement. Additionally, the 9% commission on new accounts shall not apply toany new accounts where: (x) 50% or more of the patient mix is Medicaid and orMedicaid/HMO, or; (y) the professional billing rate is set at the Medicaid rateor below. For such accounts, the commission rate shall be 4.5%.

 

(ii)           For all thoseaccounts brought to the Company by the Employee in conjunction with anothermarketing representative, the Employee will receive sales commission asdetermined by mutual agreement of the Company and the Employee, based upon theNet Cash Revenues. Those accounts considered to have been in conjunction withanother marketing representative include those accounts not serviced by theCompany within the previous 180 days, and/or those accounts not referred by theCompany. Such commission shall continue unabated so long as the Company keepssuch account and so long as the Employee and/or other marketing representativeservices such account.

 

(iii)          On sales made bythe Employee to the Company’s house accounts or to accounts developed as aresult of Company referrals or leads, the Employee shall receive a salescommission of 4.5% of the Net Cash Revenues. Such commission shall continueunabated so long as the Employee services said account. Accounts considered bythe Company to be house accounts for the purposes of (C)(ii) above shall bethose accounts submitted to the Employee by the Company and agreed upon by theCompany representative and the Employee.

 

(iv)          The Employee willreceive commissions on the business generated from drawing stations he assistedin establishing in accordance with sections (C)(i) and (C)(ii) above. Thecommission will be mutually agreed upon by the Company and the Employee uponestablishment of each new drawing station.

 

(v)           The standarddeduction applicable to all commissions arising from reference work that was ineffect as of the Effective Date will remain in effect for the Employment Term.

 

(vi)          The sales commissionprovided for herein shall be paid pursuant to the terms of the Company’sthen-current policy on the payment of commissions. The Company shall, ifrequired, deduct and withhold all applicable federal, state, and local employeetaxes from such payment.

 

(vii)         The Company shallprovide Employee with a report so that the Employee may determine

 

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his commission on a monthly basis.

 

(vii)         The Company reservesthe right to reasonably reject any new account sold by the Employee, solely orjointly, that is deemed insufficiently profitable by the Company.

 

(viii)        The Employeereserves the right to refuse to service any account, house or otherwise, which(1) will not generate more than $500 per month in commission; (2) or theservicing of which would substantially impair the Employee’s ability to serviceother accounts necessary for him to maximize his profits under the Contract.

 

(D)          If (i) the Employeeis absent from work for more than 130 business days in any twelve-month periodby reason of illness or incapacity (whether physical or otherwise) or (ii) theCompany reasonably determines that the Employee is unable to perform hisduties, services and responsibilities hereunder by reason of illness orincapacity (whether physical or otherwise) for more than 130 business days inany twelve-month period during the Employment Term (“Disability” or “Disabled”),the Company shall not be obligated to pay the Employee any compensation(Salary, bonus or commissions) for any period in excess of such 130 business;furthermore, any such payments during such 130 business day period shall bereduced by any amount the Employee is entitled to receive as a result of suchdisability under any plan provided through the Company or under state orfederal law. See, however, Article X hereof pursuant to which Employee’sspouse, Debbie Fein, may assume Employee’s obligations under this Agreement.

 

(E)           Any and all taxableincome relating to the compensation and benefits to be received by Employeehereunder shall be reported pursuant to applicable federal, state and local taxlaws, and Employee shall bear the financial responsibility for all such taxobligations applicable to him (as distinct from those tax obligations that arethe Employer’s responsibility).

 

ARTICLE IV

SIGNING BONUS

 

The Employeewill receive a signing bonus payment as follows:

 

(A)          After the Effective Date but no laterthan December 31, 2005, the Employee will receive a signing bonus of $200,000,less all required deductions and withholdings.

 

ARTICLE V

STOCK OPTIONS

 

The Board ofDirectors has authorized the Company to grant Employee non-transferableincentive stock options (the “Options”) exercisable to purchase shares ofBio-Reference Common Stock (the “Stock”) as set forth below. The number ofOptions to be issued to Employee shall be determined by dividing $100,000 bythe closing stock price on the Date of Grant, as defined below (for example ifthe closing Stock price on the Date of Grant is equal to $20, employee will beissued 5,000 Options). The Date of Grant of the Options (“Date of Grant”) shallbe the date determined by the Board of Directors to be the Date of Grant, butin no event shall the Date of Grant occur later than October 31, 2005. It isthe intent of the parties that the Date of Grant will occur on or prior to theEffective Date. The Option exercise price per share shall be equal to the lastsale price on the NASDAQ Stock Market for the Stock on the Date of Grant. Inthe event of and upon grant, the Company and Employee shall execute and deliverto each other, an Incentive Stock Option Agreement (the “Stock Option Agreement”)containing such terms and vesting provisions as shall be determined by theBoard of Directors consistent with the provisions of the Company’s EmployeeIncentive Stock Option Plan (the “Plan”) pursuant to which the Options aregranted. The Stock Option Agreement will set forth, among other items, the termof the Option, provisions as to termination in the event of cessation ofemployment, death or permanent disability, method of exercise and restrictionsaffecting transfer or sale of the underlying Common Stock. Consistent with theprovisions of the Plan, the aggregate fair market value of Bio-Reference CommonStock with respect to which Options are exercisable by Employee for the firsttime during any calendar year shall not exceed $100,000. Subject to thelimitations of the preceding sentence, the Options shall vest immediately uponthe Date of Grant.

 

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ARTICLE VI

BENEFITS

 

(A)          During the EmploymentTerm, (i) the Company shall make available to the Employee, his wife and theirdependent children eligible for coverage, the same hospital and major medicalinsurance benefits coverage provided by the Company to its Senior Management;(ii) Employee shall be reimbursed by the Company upon presentation ofappropriate vouchers for all reasonable business and entertainment expensesincurred by the Employee on behalf of the Company; and (iii) Employee shallreceive a car allowance of $1,600 per month. In addition, the Company will payfor gasoline, maintenance, excess annual mileage over 15,000 miles per year,and the amount of insurance coverage necessary to maintain compliance with theleasing company. If the Employee desires insurance coverage above the coverageprovided by the Company, the Employee may obtain coverage at his own cost.

 

(B)           In the event theCompany wishes to obtain and/or maintain Key Man Life Insurance on the life ofthe Employee, the Employee agrees to cooperate with the Company in completingany applications necessary to obtain such insurance and promptly submit to suchphysical examinations and furnish such information as any proposed insurancecarrier may request, providing Employee is insurable.

 

(C)           The Company shallprovide Employee, so long as Employee continues to be employed by the Company,a term life insurance policy in an amount equal to the lesser of one andone-half (11⁄2) times Employee’s salary or $50,000.

 

(D)          The Company shallindemnify and hold harmless the Employee against all claims, liability, losses,damages and expenses, including reasonable legal fees (“Claims”) arisingdirectly or indirectly from acts of the Company and/or its employees, includingbut not limited to all tests and other laboratory services. The indemnitycontained in the paragraph does not apply to Claims arising from the acts oromissions of Employee or his spouse, where such acts or omissions are or were:(i) outside the scope of their employment; (ii) the result of gross negligence,or; (iii) the result of intentional wrongdoing.

 

ARTICLE VII

CLIENT ENTERTAINMENT

 

The Companywill provide Employee access to a country club of his choosing for the purposeof entertaining clients. Employee will be one of the named country club membersand yearly membership fees paid by the Company will not exceed $30,000.

 

ARTICLE VIII

TERMINATION

 

(A)                 Exceptas otherwise provided in this Agreement, the employment of Employee hereunderand the Employment Term shall terminate (“Date of Termination”) upon theearliest to occur of the dates specified below:

 

(i)            the close ofbusiness on the date of expiration of the Employment Term;

 

(ii)           the close ofbusiness on the date of the Employee’s death, unless, following the delivery ofnotice from the Company, the obligations of this Agreement are assumed byDebbie Fein as provided in Article X, in which case the Employment Term shallcontinue for Debbie Fein;

 

(iii)          the close ofbusiness on an early termination date mutually agreed to in writing by theCompany and the Employee;

 

(iv)          the close ofbusiness on the day on which the Company shall have delivered to the Employee awritten notice of the Company’s election to terminate his employment for “Cause”(as defined in Article VIII(C) hereof);

 

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(v)           the close ofbusiness on the day on which the Company shall have delivered to the Employee awritten notice of the Company’s election to terminate his employment because ofDisability, unless, following the delivery of such notice, the obligations ofthis Agreement are assumed by Debbie Fein (either permanently or temporarily)as provided in Article X, in which case the Employment Term shall continue forDebbie Fein and may be later assumed by Scott Fein at the conclusion of hisDisability;

 

(vi)          the close ofbusiness on the day on which the Company shall have terminated the employmentof the Employee hereunder and such termination is not for death, Cause orDisability; or

 

(vii)         the close ofbusiness on the date which is five business days after the date on which theEmployee delivers to the Company a written notice of the Employee’s election toterminate his employment hereunder (x) for “Good Reason” (as defined in ArticleVIII(D) hereof) or (y) for any other reason.

 

(B)           Any purportedtermination by the Company or by the Employee pursuant to Article VIII(A) (iv)(vii) hereof shall be communicated by written “Notice of Termination” to theother party. For purposes of this Agreement, a “Notice of Termination” shallmean a written notice which indicates the specific termination provision inthis Agreement relied upon and which sets forth in reasonable detail the factsand circumstances claimed to provide a basis for termination of the Employee’semployment under the provision so indicated. For purposes of this Agreement, nosuch purported termination shall be effective without delivery of such Noticeof Termination.

 

(C)           For purposes of thisAgreement, termination of Employee for “Cause” shall mean termination based on(i) the Employee’s material breach of this Agreement; (ii) willful misconductor gross negligence by Employee with regard to the Company or its business,assets or employees; (iii) the refusal of Employee to follow the proper andreasonable direction of the Chief Executive Officer or his designee relating tothe normal, customary and reasonably related duties and responsibilities ofEmployee as set forth in Article II(C) and provided that Employee is warned inwriting at least three (3) days prior to the Company terminating his employmentfor Cause as defined under this paragraph (C)(iii); (iv) substantial andcontinuing refusal by the Employee to attempt to perform the normal, customary,and reasonably related duties and responsibilities of Employee as set forth inArticle II(C) (other than any such failure resulting from incapacity due tophysical or mental illness) and provided that Employee’s breach of thisparagraph (C)(iv) is not cured by Employee within 15 days following writtennotice from the Company; (v) the Employee being convicted of a felony orpleading nolo contendere to a felony (other than a felony involving a motorvehicle); (vi) the breach by Employee of any fiduciary duty owed by Employee tothe Company; or (vii) Employee’s misappropriation or fraud with regard to theCompany (other than good faith expense account disputes).

 

(D)          For purposes of thisAgreement, the term “Good Reason” shall mean (i) in the event of a Change inControl (as defined below), or (ii) any material breach by the Company of thisAgreement, provided, however, that Employee first delivers written noticethereof to the Chief Executive Officer of the Company and the Company shallhave failed to cure such breach within thirty (30) days after receipt of suchwritten notice.

 

(E)           In the event oftermination of this Agreement, for whatever reason, the Employee agrees tocooperate with the Company and to be reasonably available to the Company withrespect to continuing and/or future matters arising out of the Employee’semployment or any other relationship with the Company, whether such matters arebusiness related, legal or otherwise. The Company agrees to reimburse theEmployee for the Employee’s reasonable expenses incurred in complying with theterms of this paragraph upon delivery by the Employee to the Company of validreceipts for such expenses. The provisions of this paragraph shall survivetermination of this Agreement.

 

ARTICLE IX

TERMINATION PAYMENTS

 

(A)          In the event thatEmployee’s employment is terminated for any reason whatsoever, Employee shallreceive his earned but unpaid wages and commission earned through the date ofEmployee’s termination and shall be notified of his rights, if any, tocontinued benefits coverage under any of the

 

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Company’s benefit plans.

 

(B)           **TerminationPayments in the Event of Termination By the Company Without Cause or ByEmployee With Good Reason.**

 

(i) If the Employee’s employment with the Company terminates pursuantto Article VIII (A)(vi) or Article VIII (A)(vii)(x) hereof, but not withintwelve months following a Change in Control, the Company will pay toEmployee the following:

 

salary, bonus, commissions, and other benefits provided for herein forthe remainder of the Employment Term. Salary and Bonus will be paid outpursuant to the terms of this Agreement and over the Employment Term at thesame rate and amount as Employee would have received had Employee remainedemployed for the duration of the Employment Term. Commissions will becalculated by taking the average of the commissions earned during the last sixmonths of Employee’s employment (“Average Commissions”). Employee will receivethe Average Commissions on a monthly basis for the remainder of the EmploymentTerm. To continue receiving the compensation set for in this Article IX(B)(i),the Employee must engage in mitigation of damages by actively seeking newemployment with similar duties and obligations as set forth in Article II(C)herein. Good faith mitigation of damages requires the Employee to acceptsubstantially similar employment, if offered, regularly contact prospective newemployers, investigate new markets, utilize the services of employment searchfirms, and employ other avenues which will assist him in finding suitableemployment. Employee will not be obligated to accept employment as being “substantiallysimilar employment” unless such employment opportunity provides him with thereasonable opportunity to earn a total financial package of at least $1,200,000per year. Upon accepting substantially similar employment, payments under this provisionwill cease.

 

(ii)           If the Employee’semployment with the Company terminates pursuant to Article VIII (A)(vi) orArticle VIII (A)(vii)(x) hereof within twelve months following a Change inControl, the Company will pay to Employee the following:

 

a.               Inlieu of any further compensation payments for periods subsequent to the Date ofTermination, the Company shall pay to the Employee as severance pay not laterthan the tenth business day following the Date of Termination, a lump sumpayment (the “Severance Payment) equal to 2.99 times the average of the annualCompensation which was payable by the Company and includible in the Employee’sgross income for federal income tax purposes for the five (5) calendar years,preceding the earlier of (x) the calendar year in which a Change in Controloccurred or (y) the calendar year of the Date of Termination (the “Base Period”).Such average shall be determined in accordance with the provisions of Section280G(d) of the Internal Revenue Code of 1986 as amended (the “Code”). As usedin this Agreement, the term “Compensation” shall mean and include every typeand form of compensation includible in the Employee’s gross income in respectof his employment by the Company (but, excluding compensation or incomerecognized as a result of the exercise of stock options or sale ofBio-Reference stock), except to the extent otherwise provided in Congressionalor Joint Committee Reports or temporary or final regulations interpretingSection 280G(d) of the Code.

 

b.              TheSeverance Payment shall be reduced by the amount of any other payment or thevalue of any benefit received or to be received by the Employee in connectionwith the termination of his employment or contingent upon a Change in Control(whether payable pursuant to the terms of this Agreement, any other plan,agreement or arrangement with the Company) unless (i) the Employee shall haveeffectively waived his receipt or enjoyment of such payment or benefit prior tothe date of payment of the Severance Payment, (ii) in the opinion of taxcounsel selected by the Company such other payment or benefit does notconstitute a “parachute payment” within the meaning of Section 280(G)(b)(2) ofthe Code, or (iii) in the opinion of such tax counsel, the Severance Payment(in its full amount or as partially reduced, as the case may be) plus all otherpayments or benefits which constitute “parachute payments” within the meaningof

 

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Section280(G)(b)(2) of the Code are reasonable compensation for services actuallyrendered, within the meaning of Section 280(G)(b)(4) of the Code, and suchpayments are deductible by the Company. The value of any non-cash benefit orany deferred cash payment shall be determined by the Company in accordance withthe principles of Section 280(G)(d)(3) and (4) of the Code.

 

c.               Exceptto the extent that Congressional or Joint Committee Reports or temporary orfinal regulations interpreting Section 280G of the Code specify that suchpayments would result, under subsection (b) above, in a reduction in theSeverance Payment:

 

1.               TheCompany shall pay to the Employee, no later than the tenth business dayfollowing the Date of Termination, a lump sum amount equal to the sum of (x)any bonus compensation which has been allocated or awarded for a fiscal yearpreceding the Date of Termination but has not yet been paid, and (y) a pro rataportion of any bonus compensation which the Employee has earned for the fiscalyear in which the Date of Termination occurs determined by multiplying theEmployee’s prior years’ bonus compensation by a fraction equal to the number offull calendar months in the fiscal year prior to the Date of Termination overtwelve.

 

2.               TheCompany shall also pay all legal fees and expenses incurred by the Employee asa result of such termination (including all such fees and expenses, if any, incontesting or disputing any such termination or seeking to obtain or enforceany right or benefit provided by this Agreement).

 

d.              Ifit is established pursuant to a final determination of a court or an InternalRevenue proceeding that, notwithstanding the good faith of the Employee and theCompany in applying the terms of this Section 8, the aggregate “parachutepayments” paid are in an amount that would result in any portion of such “parachutepayments” not being deductible by the Company by reason of Section 280G of theCode, then the Employee shall have an obligation to pay the Company upon demandan amount equal to the sum of (i) the portion of the aggregate “parachutepayments” paid that would not be deductible by reason of Section 280G of theCode and (ii) interest on the amount set forth in clause (i) of this sentenceat the applicable Federal rate (as defined in Section 1274(d) of the Code) fromthe date of receipt of such excess until date of such payment.

 

e.               Asused in the Agreement, the term “Change in Control” shall mean a change incontrol of a nature that would be required to be reported in response to Item6(e) of Schedule 14A issued under the Securities Exchange Act of 1934, asamended (the “Exchange Act”) as in effect as of the date hereof (regardless ofwhether or not a Proxy Statement is being filed pursuant to such Regulation atsuch time), or if Item 6(e) is no longer in effect, any subsequent regulationissued under the Exchange Act for a similar purpose, whether or not the Companyis subject to such reporting requirements; provided, that without limitation,such a change in control shall be deemed to have occurred if:

 

1.               any“Person” other than the Employee is or becomes the “beneficial owner” (asdefined in Rule 13d-3 under the Exchange Act), directly or indirectly ofsecurities of the Company representing 25% or more of the combined voting powerof the Company’s then outstanding securities;

 

2.               duringany period of two consecutive fiscal years (not including any period prior tothe date of the Agreement), individuals who at the beginning of such periodconstitute the Board of Directors, and any new director, whose election by theBoard or nomination for election by the Company’s stockholders was approved bya vote of at least two-thirds of the directors then still in their office whoeither were directors at the

 

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beginning of the period or whose election or nomination for electionswas previously approved, cease for any reason to constitute a majority of theBoard; or

 

3.               thebusiness of the Company is disposed of by the Company pursuant to aliquidation, sale of assets of the Company, or otherwise.

 

f.                 Theparties reserve the right to mutually amend the provisions of Article IX(B)(ii)to provide the most favorable tax treatment to Employee and the company.

 

 

(C)           **TerminationPayments in the Event of Termination For all Reasons Other than Those Coveredby Article IX (B).** In the event Employee’s employment with theCompany is terminated pursuant to Article VIII (i), (ii), (iii), (iv), (v), or(vii)(y) , the Company shall have no further obligations than those that areset forth in Article IX(A)

 

(D)          Employee shall onlybe eligible to receive the payments set forth in Article IX (B) on thecondition that he executes a separation agreement and release in a formreasonably acceptable to the Company. Moreover, the payments set forth inArticle IX (B) upon termination shall constitute the exclusive payments due theEmployee upon termination under this Agreement, but shall have no effect on anybenefits which may be due the Employee under any plan of the Company whichprovides benefits after termination of employment, except that the Employeeshall not be eligible for benefits under any Company severance plan. Nothingherein shall affect any of the post-Employment restrictions contained in theKey Employee Agreement attached as Exhibit A and Employee’s violation of anyprovisions of such Key Employee Agreement shall result in the immediate andpermanent cessation of any and all post-employment payments under this ArticleIX.

 

ARTICLE X

SURVIVAL BENEFITS

 

This Agreementmay not be assigned to any successors and assigns of the Employee. Therestriction shall not apply to any monetary benefit which the Employee may beentitled to, which shall in that event inure to the benefit of the Employee’sheirs, personal representatives, successors and assigns.

 

However, in theevent the Employee dies during the term of this Agreement or shall becomeDisabled, the Employee, upon prior written instructions or upon becomingDisabled, may temporarily or permanently assign this Agreement, and allobligations, compensation and benefits hereunder to his wife, Debbie Fein, solong as the Employee’s responsibilities are performed and his accounts aremaintained (except those lost to legitimate and normal industry accountturnover) during the term of this Agreement by his wife, Debbie Fein, andfurther provided that Debbie Fein, within thirty (30) days following the eventleading to the triggering of this paragraph, agrees in writing to be bound inthe same manner as Employee pursuant to all of the provision of this Agreement.Unless Employee is incapacitated or deceased, such an assignment must be madein writing by the Employee. No other assignment of this Agreement may be madenor can the Employee’s duties be fulfilled by any one other than Scott Fein orhis wife, Debbie Fein, in order for such the benefits of this Agreement toaccrue. Simultaneously herewith, Debbie Fein shall enter into the Agreementattached hereto as Exhibit B (“DF Agreement”).

 

ARTICLE XI

POST –EMPLOYMENT RESTRICTIONS

 

As an inducement for theCompany to enter into this Agreement, Employee agrees to execute and adhere tothe obligations set forth in the Key Employee Agreement attached hereto asExhibit A.

 

ARTICLE XII

THE COMPANY’S REPRESENTATIONS

 

The Companywarrants and represents the following:

 

(i)            It is presentlylicensed to perform clinical laboratory services and tests in New York, NewJersey, and Connecticut and will maintain said licenses throughout the term ofthis Agreement; and

 

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(ii)           It has the abilityand capacity to service the Employee’s accounts in a timely and professionalmanner in accordance with all applicable governmental regulations and thatduring the term of this Agreement shall maintain said ability and capacity andwill service the Employee’s accounts in a timely and professional manner inaccordance with all applicable governmental regulations.

 

(iii)          The execution anddelivery of this Agreement and the consummation of the transaction hereincontemplated and the performance, observation and fulfillment by the Company ofall the terms and conditions hereof on its part to be performed, observed andfulfilled have been approved by resolution of the Board of Directors of theCompany.

 

(iv)          The Company hassufficient shares to issue pursuant to Article V.

 

ARTICLE XIII

CONTRACTUAL RENEWAL

 

Notwithstandinganything to the contrary, this Agreement shall automatically renew for anadditional Contract Year (an “Additional Contract Year”), unless either partyshall notify the other party during the month of August in any Contract Year ofthe Employment Term. Thus, for example, unless either party notifies the otherbetween August 1, 2006 and August 31, 2006, that it desires not to renew theAgreement, the Employment Term shall then be extended automatically to concludeon October 31, 2010. The same cancellation option exists every year. Ifcancelled, the Agreement will continue only until the end of the Contract Yearsremaining in the Employment Term, unless earlier terminated by the partiespursuant to the Agreement.   Thus, for example, if either party notifiesthe other between August 1, 2006 and August 31, 2006, that it desires not torenew the Agreement, the Employment Term would terminate as of October 31,2009. Any Additional Contract Years added to this Agreement as a result of theoperation of this Article XIII shall be under the same terms and conditions asare applicable to the Contract Year preceding such Additional Contract Year. Thus,if the Agreement is automatically extended to conclude on October 31, 2010, theterms and conditions applicable to the Additional Contract Year commencingNovember 1, 2009 and concluding October 31, 2010 shall be the same as those forthe Contract Year commencing November 1, 2008 and ending October 31, 2009.

 

ARTICLE XIV

SEVERABILITY

 

If anyprovision of the Agreement shall be held invalid and unenforceable, theremainder of this Agreement shall remain in full force and effect. If anyprovision is held invalid or unenforceable with respect to particularcircumstances, it shall remain in full force and effect in all othercircumstances.

 

ARTICLE XV

NOTICES

 

All noticesrequired to be given under the terms of this Agreement shall be in writing andshall be deemed to have been duly given only if delivered to the addressee inperson or mailed by certified mail, return receipt requested, as follows:

 
| IF TO  COMPANY:  |   | Marc  Grodman, M.D.               |
|------------------|--------|-----------------------------------|
|             |   | Bio-Reference  Laboratories, Inc. |
|             |   | 481 Edward  H. Ross Drive         |
|             |   | Elmwood  Park, New Jersey 07407   |
|             |   |                              |
| WITH COPY  TO:   |   | Glenn J.  Smith, Esq.             |
|             |   | Grotta  Glassman & Hoffman    |
|             |   | 75  Livingston Avenue             |
|             |   | Roseland, NJ  07068               |
|             |   |                              |
| IF TO  EMPLOYEE: |   | Scott Fein                        |
|             |   | 191 Bristol  Drive                |
|             |   | Woodbury,  New York 11797         |

 

or such other additionaladdress as the party to receive the notice shall advise by due notice inaccordance with this paragraph.

 

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ARTICLE XVI

BENEFIT

 

This Agreementshall inure to and be binding upon the parties hereto, the successors andassigns of the Company and the estate, heirs and successors of the Employee.

 

ARTICLE XVII

WAIVER

 

The waiver byeither party of any breach or violation of any provision of this Agreementshall not operate or be construed as a waiver of any subsequent breach orconstruction and validity.

 

ARTICLE XVIII

GOVERNING LAW & ARBITRATION

 

The partieshereto agree that it is their intention and covenant that this Agreement andperformance hereunder and all suits and special proceedings hereunder beconstrued in accordance with and pursuant to the laws of the State of New Jersey.

 

Any dispute,claim or controversy (whether statutory, contractual, or arising under commonlaw) that relates to this Agreement, Employee’s employment with the Company, orthe termination of Employee’s employment from the Company (but not relating to theKey Employee Agreement attached hereto as Exhibit A), shall be submitted toJAMS/Endispute (“JAMS”) for binding arbitration by the complaining partyproviding written notice to JAMS and the other party. The arbitration shalltake place in a location mutually agreed upon by Employee and the Company or,if the parties cannot agree upon a location, in a location in Bergen or UnionCounty, New Jersey selected by the arbitrator. The parties will try to agree ona retired judge from the JAMS panel for the binding arbitration. If the partiesare unable to agree, JAMS will provide a list of three available judges and theCompany and the Employee can each strike one. The remaining judge will serve asthe arbitrator. Judgment on the decision of the arbitrator may be entered inthe highest court of any forum, federal or state, having jurisdiction. Thearbitrator shall set the guidelines for discovery. Nothing contained hereinshall prevent either Employee or the Company from applying to a court havingjurisdiction for emergent equitable relief. The cost for JAMS shall initiallybe shared equally between Employee and the Company, with the prevailing partybeing entitled to recover its share of said cost and reasonable attorneys’ feesand expenses from the other party. **BY EXECUTING THISEMPLOYMENT AGREEMENT, EMPLOYEE AGREES TO WAIVE HIS RIGHT TO A JURY TRIAL IN ANYACTION OR PROCEEDING. EMPLOYEE UNDERSTANDS THAT HE IS WAIVING HIS RIGHT TO AJURY TRIAL VOLUNTARILY AND KNOWINGLY AND FREE FROM DURESS OR COERCION. EMPLOYEEUNDERSTANDS THAT HE HAS A RIGHT TO CONSULT WITH A PERSON OF HIS CHOOSING,INCLUDING AN ATTORNEY, BEFORE SIGNING THIS EMPLOYMENT AGREEMENT.**

 

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IN WITNESS WHEREOF, the partieshave hereto set their hands and seals the day and year written below theirnames.

 

Signed, sealedand delivered in the presence of:

 
| WITNESS              | BIO-REFERENCE LABORATORIES, INC.                            |
|----------------------|-------------------------------------------------------------|
|                 |                                                        |
|                 |                                                        |
| /S/ Sam  Singer      |                                                        | By: |   /S/ Charles T. Todd. Jr. |   |
| Sam Singer           | Charles T. Todd, Jr. as approved by the  Board of Directors |
|                 |                                                        |
| WITNESS:             |                                                        |
|                 |                                                        |
| /S/ Linda  Niedweske |                                                        | By: |   /S/ Scott Fein |   |
| Linda  Niedweske     | Scott Fein                                                  |
|                 |                                                        |
| STATE OF NEW  JERSEY | :                                                           |
|                 | : ss.                                                       |
| COUNTY OF            | :                                                           |
|                      |                                                             |  |  |  |  |

 

On the 28thday of October, 2005, before me personally came Scott Fein known to me to bethe individual described herein and who executed the foregoing instrument andacknowledged that he executed same.

 

 
|   |           |
|--------|----------------|
|   | Notary Public. |

 

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EXHIBIT A

 

**KEY EMPLOYEE AGREEMENT**

 

This Key Employee Agreement isentered into between BioReference Laboratories, Inc. (“Company”), a New JerseyCorporation having its principal place of business in the State of New Jerseywith testing facilities in other states, and Scott Fein (“Employee”), anindividual residing at 191 Bristol Drive, Woodbury, NY 11797 on this 28th dayof October, 2005.

 

1.     Employee agrees to theterms and conditions set forth below in exchange for: (1) Employee’s employmentwith Company as set forth in the Employment Agreement (“Employment Agreement”)to which this is attached, and; (2) Employee’s participation in Company’semployee benefits or other programs pursuant to the terms thereof.

 

2.     Company agrees to employEmployee and Employee agrees to work for the Company in the capacity of SeniorVice President and Sales Representative.  Employee shall, as an employee of the Company,devote full time best efforts and attention to the performance of Employee’sduties, except as delineated in Article II(B) of the Employment Agreement.. ShouldEmployee’s position and/or compensation change, the parties agree that this KeyEmployee Agreement will nevertheless remain in effect.

 

3.     This Key Employee Agreementsupplements the Employment Agreement.

 

4.     As used in this KeyEmployee Agreement, “Confidential Information” is defined as information notgenerally or publicly known or readily available to the public, and proprietaryto the Company, including, without limitation, information relating to past,present or prospective customers, vendors, suppliers and distributors; marketing,merchandising or servicing techniques, methodologies and procedures; manuals;Agreements; reports; notes; price schedules; memoranda and correspondence;product lists; financial records; computer programs, systems or modes;contracts and the content of negotiations culminating in such contracts,including any records thereof.  Thisparagraph shall not apply to any Confidential Information that is or becomesgenerally available to the public for reasons other than as a result ofdisclosure which is prohibited under this Key Employee Agreement or anyagreement.

 

**5.     Asused in this Key Employee Agreement, the term “Customer” shall include anyentity to whom the Company has sold, provided or been obligated to provide, anyservice or product or who has otherwise received any benefit from the Companywithin the 180-day period preceding the date of Employee’s termination ofemployment.**

 

**6.     Employeerecognizes and acknowledges that Confidential Information, and relationshipswith Employee’s actual customers and prospective customers, which Employee willbecome knowledgeable of as an employee of Company are valuable, special, andunique aspects of Company’s business, which have been created and developed atgreat time, effort and expense to the Company. Employee acknowledges that this “ConfidentialInformation”, and these existing and prospective customer relationships are nottransitory and will not soon be obsolete.**

 

A. Accordingly,during Employee’s employment and for a period of one (1) year following thetermination of Employee’s employment with the Company (such one year periodreferred to as the “Restricted Period”) for any reason set forth in ArticleVIII(A) of the Employment Agreement (except as modified by Section 6(B)(1) and6(B)(2) of this Key Employee Agreement, and regardless of the reason therefore,Employee shall not, without the express written consent of Company, directly orindirectly, by Employee or through any other person, firm, partnership,corporation, entity or enterprise:

 

(1)           directly or indirectly solicit anysales (or make or derive any sales from such

 

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direct or indirectsolicitation) from any customer or prospective customer of the Company thatEmployee (or such other employees of the Company that directly report toEmployee) solicited, serviced, was responsible for or interacted with (in theperformance of Employee’s duties for the Company) while employed by theCompany; or

 

(2)           induce, approach or attempt to induceany employee of the Company to leave the Company and become professionallyaffiliated with and/or work for or with Employee or at Employee’s new employer.

 

B. TheRestricted Period may be modified as follows:

 

(1) In theevent Employee receives the severance payments set forth in Article IX(B)(ii)of the Employment Agreement which are triggered in the event of certainterminations following a Change in Control (as such term is defined in theScott Fein Employment Agreement), the Restricted Period shall be for the periodof Employee’s employment with the Company and for a period of three (3) yearsfollowing the termination of Employee’s employment with the Company.

 

(2) In theevent Employee’s employment with the Company terminates pursuant to ArticleVIII (A)(iv) or Article VIII (A)(vi)of the Employment Agreement, but notwithin twelve months following a Change in Control, the Restricted Periodshall be for the period of Employee’s employment with the Company and for aperiod of six (6) months following the termination of Employee’s employmentwith the Company.

 

C. Further,during Employee’s employment and for an unlimited period following thetermination of Employee’s employment with the Company, whether termination isvoluntary or involuntary, and regardless of the reason therefore, Employeeshall not, without the express written consent of Company, directly orindirectly, by Employee or through any other person, firm, partnership,corporation, entity or enterprise:

 

(1)           disclose or use, in any manner, orallow to be disclosed or used in any manner, “Confidential Information”.

 

D. The timerestrictions set forth herein shall run from the date of Employee’s terminationof employment for any reason, except that if Employee violates this KeyEmployee Agreement, such time restrictions shall commence on the date ofcompliance with the restrictions contained herein, whether such compliance isvoluntary or compelled.

 

7.             Employee acknowledges that: (1)compliance with the restrictive covenants contained in Section 5 of this KeyEmployee Agreement is necessary to protect the business and goodwill ofCompany; and (2) a breach of Section 5 will result in irreparable andcontinuing damage to Company for which money damages may not provide adequaterelief. Consequently, Employee agrees that, in the event Employee breaches orthreatens or attempts to breach the restrictive covenants contained in Section5, Company shall be entitled to both: (1) a temporary restraining order,preliminary injunction and permanent injunction in order to prevent such harm;and (2) money damages as may be determined. Nothing in this Key EmployeeAgreement shall be construed to prohibit Company from also pursuing any otherremedy, the parties agreeing that all remedies are cumulative.

 

8.             All originals and photocopies or anyother form of reports, memoranda, manuals, Agreements, books, computer recordsand printouts, customer lists, sales records, and any other material and/orequipment furnished to and/or maintained by Employee in connection withEmployee’s employment by Company shall remain the property of the Company andshall be returned to the Company: (1) upon demand; or (2) immediately upontermination of employment.

 

9.             If any clause or provision hereinshall be adjudged invalid or unenforceable by a court of competent jurisdictionor by operation of any applicable law, it shall not affect the validity of anyother clause or provision, which shall remain in full force and effect. ThisKey Employee Agreement shall be governed by the internal laws of the State ofNew Jersey, without giving effect to its conflict of law principles. The courtsof the State of New Jersey shall have jurisdiction over any disputes arisingunder this Key Employee Agreement, and each of the parties hereby consents tosuch exercise of jurisdiction. If either party to this Key Employee Agreementbreaches any of the terms of this Key Employee Agreement, that party shall payto the non-defaulting party all of the non-defaulting party’s costs andexpenses incurred in enforcing the terms of this Key Employee Agreement,including its attorneys’ fees.

 

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10.           The parties have attempted to limitEmployee’s activities only to the extent necessary to protect the Company fromunfair competition. The parties recognize, however, that reasonable people maydiffer in making such a determination. Consequently, the parties hereby agreethat, if the scope and/or enforceability of the restrictive covenants containedherein are in any way disputed at any time, a court or other trier of fact maymodify and enforce such covenants to the extent that it believes to bereasonable under the circumstances existing at that time.

 

11.           The waiver by the Company of a breachof any of the provisions of this Key Employee Agreement by Employee shall notoperate or be construed as a waiver of any subsequent breach by Employee.

 

12.           The Company shall have the right toassign any rights or obligations under this Key Employee Agreement without theprior written approval of Employee. The Employee shall not have the right toassign rights or obligations under this Key Employee Agreement.

 

13.           This Key Employee Agreement containsthe entire agreement of the parties as to the subject matter hereof andsupersedes all prior written and oral agreements and understandings between theparties as to such subject matter. This Key Employee Agreement may not bemodified, changed or altered by any oral promise or statement by whoever made,nor shall any written modifications of this Key Employee Agreement be bindingon the Company unless such modification shall have been approved in writing byan officer of the Company.

 

EMPLOYEEACKNOWLEDGES THAT EMPLOYEE HAS READ THIS KEY EMPLOYEE AGREEMENT, UNDERSTANDS ITAND IS BOUND BY ITS TERMS AND CONDITIONS AND THAT EMPLOYEE HAS VOLUNTARILYEXECUTED THIS KEY EMPLOYEE AGREEMENT IN ORDER TO BECOME EMPLOYED IN ACCORDANCEWITH THE TERMS AND CONDITIONS SET FORTH HEREIN.

 
|  /S/ Linda Niedweske |           | By:        | Scott Fein            |   |
|---------------------------|----------------|------------|-----------------------|--------|
| Witness                   | Date  10/28/05 | (Employee) | Date 10/28/05         |
|                      |           |
|  /S/ Sam Singer      |           | By:        | Charles T.  Todd, Jr. |   |
| Witness                   | Date  10/28/05 | (Company)  | Date  10/28/05        |
|                           |                |            |                       |        |  |  |  |

 

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EXHIBIT B

 

**AGREEMENT BETWEEN DEBBIE FEIN AND BIO-REFERENCE**

 

This agreement(“DF Agreement”) is entered into between BioReference Laboratories, Inc. (“Company”),a New Jersey Corporation having its principal place of business in the State ofNew Jersey with testing facilities in other states, and Debbie Fein (“DebbieFein”), an individual residing at 191 Bristol Drive, Woodbury, NY 11797 on this28th day of October, 2005.

 

1.             Debbie Fein agrees to the terms andconditions set forth below in exchange for: (1) Scott Fein’s employment withthe Company as set forth in the Employment Agreement (“Scott Fein EmploymentAgreement” ) of Scott Fein to which this is attached; (2) Debbie Fein’semployment with the Company as set forth herein; and (3) Debbie Fein’sparticipation in Company’s employee benefits or other programs pursuant to theterms hereof.

 

2.             Company agrees to employ Debbie Feinand Debbie Fein agrees to work for the Company in the capacity of SalesRepresentative. Debbie Fein shall be paid an annual salary of $35,000, pursuantto the regular payroll practices of the Company for the performance of herduties.  The Board of Directors hasauthorized the Company to grant Debbie Fein non-transferable incentive stockoptions (the “Options”) exercisable to purchase shares of Bio-Reference CommonStock (the “Stock”) as set forth below. The number of Options to be issued toDebbie Fein shall be determined by dividing $100,000 by the closing stock priceon the Date of Grant, as defined below (for example if the closing Stock priceon the Date of Grant is equal to $20, Debbie Fein will be issued 5,000Options). The Date of Grant of the Options (“Date of Grant”) shall be the datedetermined by the Board of Directors to be the Date of Grant, but in no eventshall the Date of Grant occur later than October 31, 2005. It is the intent ofthe parties that the Date of Grant will occur on or prior to the EffectiveDate. The Option exercise price per share shall be equal to the last sale priceon the NASDAQ Stock Market for the Stock on the Date of Grant. In the event ofand upon grant, the Company and Debbie Fein shall execute and deliver to each other,an Incentive Stock Option Agreement (the “Stock Option Agreement”) containingsuch terms and vesting provisions as shall be determined by the Board ofDirectors consistent with the provisions of the Company’s Employee IncentiveStock Option Plan (the “Plan”) pursuant to which the Options are granted. TheStock Option Agreement will set forth, among other items, the term of theOption, provisions as to termination in the event of cessation of employment,death or permanent disability, method of exercise and restrictions affectingtransfer or sale of the underlying Common Stock. Consistent with the provisionsof the Plan, the aggregate fair market value of Bio-Reference Common Stock withrespect to which Options are exercisable by Debbie Fein for the first timeduring any calendar year shall not exceed $100,000. Subject to the limitationsof the preceding sentence, the Options shall vest immediately upon the Date ofGrant. Debbie Fein shall, as an employee of the Company, devote reasonableeffort and attention to the performance of her duties. Should Debbie Fein’sposition and/or compensation change, the parties agree that this Agreement willnevertheless remain in effect.

 

3.             This Agreement between Debbie Feinand the Company shall remain in effect for the duration of the term of theAgreement between the Company and Scott Fein, which includes any assumption byDebbie Fein of Scott Fein’s responsibilities pursuant to Article X of theAgreement between the Company and Scott Fein.

 

4.             As used in this DF Agreement, “ConfidentialInformation” is defined as information not generally or publicly known orreadily available to the public, and proprietary to the Company, including,without limitation, information relating to past, present or prospectivecustomers, vendors, suppliers and distributors; marketing, merchandising orservicing techniques, methodologies and procedures; manuals; Agreements;reports; notes; price schedules; memoranda and correspondence; product lists;financial records; computer programs, systems or modes; contracts and thecontent of negotiations culminating in such contracts, including any recordsthereof.  This paragraph shall not applyto any Confidential Information that is or becomes generally available to thepublic for reasons other than as a result of disclosure which is prohibitedunder this DF Agreement or any agreement.

 

5.             As used in this DF Agreement, theterm “Customer” shall include any entity to whom the Company has sold, providedor been obligated to provide, any service or product or who has otherwisereceived any benefit from the Company within the 180-day period preceding thedate of Debbie Fein’s termination of employment.

 

6.             Debbie Fein recognizes andacknowledges that Confidential Information, and relationships with

 

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her or Scott Fein’s actualcustomers and prospective customers, which she will become knowledgeable of asan employee of Company are valuable, special, and unique aspects of Company’sbusiness, which have been created and developed at great time, effort andexpense to the Company. Debbie Fein acknowledges that this “ConfidentialInformation”, and these existing and prospective customer relationships are nottransitory and will not soon be obsolete.

 

A. Accordingly,during Debbie Fein’s employment and for a period of one (1) year following thetermination of Debbie Fein’s employment with the Company (such one year periodreferred to as the “Restricted Period”) for any reason set forth in ArticleVIII(A) of the Employment Agreement (except as modified by Section 6(B)(1) and6(B)(2) of this Key Employee Agreement and regardless of the reason therefore,Debbie Fein shall not, without the express written consent of Company, directlyor indirectly, by Debbie Fein or through any other person, firm, partnership,corporation, entity or enterprise:

 

(1) directlyor indirectly solicit any sales (or make or derive any sales from such director indirect solicitation) from any customer or prospective customer of theCompany that Debbie Fein or Scott Fein solicited, serviced, was responsible foror interacted with while employed by the Company; or

 

(2) induce,approach or attempt to induce any employee of the Company to leave the Companyand become professionally affiliated with and/or work for or with Debbie Feinor Scott Fein or at Debbie Fein’s or Scott Fein’s new employer.

 

B.TheRestricted Period may be modified as follows:

 

(1) In theevent either Scot Fein or Debbie Fein receives the severance payments set forthin Article IX(B)(ii) of the Scott Fein Employment Agreement which are triggeredin the event of certain terminations following a Change in Control (as suchterm is defined in the Employment Agreement), the Restricted Period shall befor the period of Debbie Fein’s employment with the Company and for a period ofthree (3) years following the termination of Debbie Fein’s or Scott Fein’semployment with the Company.

 

(2) In theevent the employment of either Scott Fein or Debbie Fein with the Companyterminates pursuant to Article VIII (A)(iv) or Article VIII (A)(vi) of theEmployment Agreement, but not within twelve months following a Change inControl, the Restricted Period shall be for the period of Employee’semployment with the Company and for a period of six (6) months following thetermination of Employee’s employment with the Company.

 

C. Further,during Debbie Fein’s employment and for an unlimited period following thetermination of Debbie Fein’s employment with the Company, whether terminationis voluntary or involuntary, and regardless of the reason therefore, DebbieFein shall not, without the express written consent of Company, directly orindirectly, by Debbie Fein or through any other person, firm, partnership,corporation, entity or enterprise:

 

(1) discloseor use, in any manner, or allow to be disclosed or used in any manner, “ConfidentialInformation”.

 

D. The timerestrictions set forth herein shall run from the later of the date of DebbieFein’s termination of employment for any reason or Scott Fein’s termination ofemployment for any reason, except that if Debbie Fein violates this DFAgreement, such time restrictions shall commence on the date of compliance withthe restrictions contained herein, whether such compliance is voluntary orcompelled.

 

7.             Debbie Fein acknowledges that: (1)compliance with the restrictive covenants contained in Section 5 of this DFAgreement is necessary to protect the business and goodwill of Company; and (2)a breach of Section 5 will result in irreparable and continuing damage toCompany for which money damages may not provide adequate relief. Consequently,Debbie Fein agrees that, in the event Debbie Fein breaches or threatens orattempts to breach the restrictive covenants contained in Section 5, Companyshall be entitled to both: (1) a temporary restraining order, preliminaryinjunction and permanent injunction in order to prevent such harm; and (2)money damages as may be determined. Nothing in this DF Agreement shall beconstrued to prohibit Company from also pursuing any other remedy, the partiesagreeing that all remedies are cumulative.

 

8.             All originals and photocopies orany other form of reports, memoranda, manuals, Agreements, books, computerrecords and printouts, customer lists, sales records, and any other materialand/or equipment furnished to and/or maintained by Debbie Fein in connectionwith Debbie Fein’s employment by Company shall

 

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remain the property of theCompany and shall be returned to the Company: (1) upon demand; or (2)immediately upon termination of employment.

 

9.             If any clause or provision hereinshall be adjudged invalid or unenforceable by a court of competent jurisdictionor by operation of any applicable law, it shall not affect the validity of anyother clause or provision, which shall remain in full force and effect. This DFAgreement shall be governed by the internal laws of the State of New Jersey,without giving effect to its conflict of law principles. The courts of theState of New Jersey shall have jurisdiction over any disputes arising underthis DF Agreement, and each of the parties hereby consents to such exercise ofjurisdiction. If either party to this DF Agreement breaches any of the terms ofthis DF Agreement, that party shall pay to the non-defaulting party all of thenon-defaulting party’s costs and expenses incurred in enforcing the terms ofthis DF Agreement, including its attorneys’ fees.

 

10.           The parties have attempted to limitDebbie Fein’s activities only to the extent necessary to protect the Companyfrom unfair competition. The parties recognize, however, that reasonable peoplemay differ in making such a determination. Consequently, the parties herebyagree that, if the scope and/or enforceability of the restrictive covenantscontained herein are in any way disputed at any time, a court or other trier offact may modify and enforce such covenants to the extent that it believes to bereasonable under the circumstances existing at that time.

 

11.           The waiver by the Company of a breachof any of the provisions of this DF Agreement by Debbie Fein shall not operateor be construed as a waiver of any subsequent breach by Debbie Fein.

 

12.           The Company shall have the right toassign any rights or obligations under this DF Agreement without the priorwritten approval of Debbie Fein. Debbie Fein shall not have the right to assignrights or obligations under this DF Agreement.

 

13.           This DF Agreement contains the entireagreement of the parties as to the subject matter hereof and supersedes allprior written and oral agreements and understandings between the parties as tosuch subject matter. This DF Agreement may not be modified, changed or alteredby any oral promise or statement by whoever made, nor shall any writtenmodifications of this DF Agreement be binding on the Company unless suchmodification shall have been approved in writing by an officer of the Company.

 

DEBBIE FEINACKNOWLEDGES THAT SHE HAS READ THIS DF AGREEMENT, UNDERSTANDS IT AND IS BOUNDBY ITS TERMS AND CONDITIONS AND THAT SHE HAS VOLUNTARILY EXECUTED THIS DFAGREEMENT IN ORDER TO BECOME EMPLOYED IN ACCORDANCE WITH THE TERMS ANDCONDITIONS SET FORTH HEREIN.

 
|  /S/ Linda Niedweske |                                                | By:        | /S/ Scott  Fein           |   |
|---------------------------|-----------------------------------------------------|------------|---------------------------|--------|
| Witness                   | Date         10/28/05 | (Employee) | Date 10/28/05             |
|                      |                                                |
|  /S/ Sam Singer      |                                                | By:        | /S/ Charles  T. Todd, Jr. |   |
| Witness                   | Date         10/28/05 | (Company)  | Date  10/28/05            |
|                           |                                                     |            |                           |        |  |  |  |  |

 

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