Exhibit 10.1




 




 




	

  


  	

  BIO-TECHNOLOGY

  GENERAL CORP.


  





 




 




Employment Agreement


for


Dov Kanner


Senior Vice President




 





























 




Contents




 






















 




	

  Article 1. Term of

  Employment


  
	

   


  
	

  Article 2. Definitions


  
	

   


  
	

  Article 3.

  Position and Responsibilities


  
	

   


  
	

  Article 4. Standard of Care


  
	

   


  
	

  Article 5. Compensation


  
	

   


  
	

  Article 6. Expenses


  
	

   


  
	

  Article 7.

  Employment Terminations


  
	

   


  
	

  Article 8. Change in

  Control


  
	

   


  
	

  Article 9. Assignment


  
	

   


  
	

  Article 10. Legal

  Fees and Notice


  
	

   


  
	

  Article

  11. Confidentiality and Noncompetition


  
	

   


  
	

  Article 12.

  Outplacement Assistance


  
	

   


  
	

  Article 13. Miscellaneous


  
	

   


  
	

  Article 14. Governing Law


  





 





























 




Employment Agreement




 




This Agreement is made, entered into, and is effective

as of the Effective Date, by and between the Company and the Executive.




 




 




Article 1. Term of

Employment




 




1.1                                 The

Company hereby agrees to employ the Executive and the Executive hereby agrees

to serve the Company in accordance with the terms and conditions set forth

herein, for a period of three (3) years, commencing as of the Effective Date.




 




1.2                                 Commencing

on the third (3rd) anniversary of the Effective Date, and each

anniversary thereafter, the term of this Agreement shall automatically be

extended for one (1) additional year, unless at least ninety (90) days prior to

such anniversary, the Company or the Executive shall have given notice in

accordance with Section 10.2 hereof that it or he does not wish to extend the

term of the Agreement.




 




 




Article 2.

Definitions




 




2.1                                 “Agreement”

means this Employment Agreement.




 




2.2                                 “Annual

Bonus” means the annual bonus to be paid to the Executive in

accordance with the Company’s annual bonus program as described in Section 5.3

herein.




 




2.3                                 “Base

Salary” means the salary of record paid to the Executive as annual

salary, pursuant to Section 5.2, excluding amounts received under incentive or

other bonus plans, whether or not deferred.




 




2.4                                 “Beneficial

Owner” shall have the meaning ascribed to such term in Rule

13d-3 of the General Rules and Regulations under the Securities Exchange Act.




 




2.5                                 “Beneficiary”

means the persons or entities designated or deemed designated by the Executive

pursuant to Section 13.6 herein.




 




2.6                                 “Board” or

“Board of

Directors” means the Board of Directors of the Company.




 




2.7                                 “Cause” means:




 




(a)          Executive materially

breached any of the terms of this Agreement and failed to correct such breach

within fifteen (15) days after written notice thereof from the Company;




 




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(b)         Executive has been

convicted of a criminal offense involving a felony giving rise to a sentence of

imprisonment;




 




(c)          Executive has breached a

fiduciary trust for the purpose of gaining a personal profit, including,

without limitation, embezzlement; or




 




(d)         Despite adequate

warnings, Executive intentionally and willfully failed to perform reasonably

assigned duties within the normal and customary scope of the Position.




 




2.8                                 “Change in

Control” or “CIC” of the Company shall be deemed to have occurred as

of the first day that any one or more of the following conditions is satisfied:




 




(a)                                  Any

consolidation or merger in which the Company is not the continuing or surviving

entity or pursuant to which shares of the Common Stock would be converted into

cash, securities, or other property, other than (i) a merger of the Company in

which the holders of the Common Stock immediately prior to the merger have the

same proportionate ownership of common stock of the surviving corporation

immediately after the merger, or (ii) a consolidation or merger which would

result in the voting securities of the Company outstanding immediately prior

thereto continuing to represent (by being converted into voting securities of

the continuing or surviving entity) more than 50% of the combined voting power

of the voting securities of the continuing or surviving entity immediately

after such consolidation or merger and which would result in the members of the

Board immediately prior to such consolidation or merger (including for this

purpose any individuals whose election or nomination for election was approved

by a vote of at least two-thirds of such members) constituting a majority of

the Board (or equivalent governing body) of the continuing or surviving entity

immediately after such consolidation or merger;




 




(b)                                 Any

sale, lease, exchange, or other transfer (in one transaction or a series of

related transactions) of all or substantially all the Company’s assets;




 




(c)                                  The

Company’s stockholders approve any plan or proposal for the liquidation or

dissolution of the Company;




 




(d)                                 Any

Person shall become the Beneficial Owner of forty (40) percent or more of the

Common Stock other than pursuant to a plan or arrangement entered into by such

Person and the Company; or




 




(e)                                  During

any period of two consecutive years, individuals who at the beginning of such

period constitute the entire Board of Directors shall cease for any reason to

constitute a majority of the Board unless the election or nomination for

election by the Company’s stockholders of each new director was approved by a

vote of at lest two-thirds of the directors then still in office who were

directors at the beginning of the period.




 




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2.9                                 “CIC

Severance Benefits” means the payment of severance compensation

associated with a Qualifying Termination occurring subsequent to a Change in

Control, as described in Section 8.3.




 




2.10                           “Code” means

the United States Internal Revenue Code of 1986, as amended.




 




2.11                           “Common

Stock” means the common stock of the Company, $.01 par value.




 




2.12                           “Compensation

Committee” means the Compensation and Stock Option Committee of the

Board, or any other committee appointed by the Board to perform the functions

of such  committee.




 




2.13                           “Company”

means Bio-Technology General Corp., a Delaware corporation, or any Successor

Company thereto as provided in Section 9.1 herein.




 




2.14                           “Director”

means any individual who is a member of the Board of Directors of the Company.




 




2.15                           “Disability”

or “Disabled”

means for all purposes of this Agreement, the meaning ascribed to such term in

the Company’s long-term disability plan, or in any successor to such plan.




 




2.16                           “Effective

Date” means January 1, 2002.




 




2.17                           “Effective

Date of Termination” means the date on which a termination of the Executive’s

employment occurs.




 




2.18                           “Employment

Date” means September 1, 1981.




 




2.19                           “Executive” means

Dov Kanner, Ph.D. who, as of the Effective Date, resides at 1 Rehov Skolnick,

76209 Rehovot, Israel.




 




2.20                           “Good

Reason” shall mean, without the Executive’s express written consent,

the occurrence of any one or more of the following:




 




(a)          Reducing the Executive’s

Base Salary;




 




(b)         Failing to maintain

Executive’s amount of benefits under or relative level of participation in the

Company’s perquisite program and the Subsidiary’s employee benefit or

retirement plans, policies, practices, or arrangements in which the Executive

participates as of the Effective Date of this Agreement; provided, however,

that any such change made by the Board in such plans, policies, practices or

arrangements that is not made only with respect to Executive or which is

required by applicable law shall not be deemed to constitute Good Reason;




 




(c)          Failing to require any

Successor Company to assume and agree to perform the Company’s obligations

hereunder;




 




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(d)         The occurrence of any one

or more of the following events on or after the announcement of the transaction

which leads to the CIC and up to twenty–four (24) calendar months following

the effective date of a CIC:




 




(1)          Requiring Executive to

be based at a location that requires the Executive to travel at least an

additional thirty-five (35) miles per day;




 




(2)          Requiring Executive to

report to a position which is at a lower level than the highest level to which

Executive reported within the six (6) months prior to the CIC;




 




(3)          Demoting Executive to a

level lower than Executive’s level in the Company as of the Effective Date.




 




2.21                           “Notice of

Termination” means a written notice  which shall indicate the

specific termination provision in this Agreement relied upon, and shall set

forth in reasonable detail the facts and circumstances claimed to provide a

basis for termination of the Executive’s employment under the provisions so

indicated, and, where applicable, shall specifically include notice pursuant to

Section 1.2 that Company has elected not to renew this Agreement.




 




2.22                           “Person” shall

have the meaning ascribed to such term in Section 3(a)(9) of the

Securities Exchange Act and used in Sections 13(d) and 14(d) thereof,

including a “group” as defined in Section 13(d) thereof.




 




2.23                           “Position”

shall have the meaning ascribed to it in Section 3.1.




 




2.24                           “Qualifying

Termination” means any of the events described in Section 8.2

herein, the occurrence of which triggers the payment of CIC Severance Benefits

hereunder.




 




2.25                           “Securities

Exchange Act” means the United States Securities Exchange Act of

1934, as amended.




 




2.26                           “Service

Multiple” shall have the meaning ascribed to it in Section 7.4(c).




 




2.27                           “Severance

Benefits” means the payment of severance compensation as provided in

Sections 7.4 and 7.6 herein, and not payable due to a Change in Control of

the Company.




 




2.28                           “Subsidiary”

shall mean Bio-Technology General (Israel) Ltd., a corporation

organized and existing under the laws of Israel, which is a wholly owned

subsidiary of the Company.




 




2.29                           “Successor

Company” shall have the meaning ascribed to it in Section 9.1.




 




2.30                           “Term” shall

mean that period of time commencing on the Effective Date and ending on the

Effective Date of Termination.




 




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Article 3.

Position and Responsibilities




 




3.1                                 During

the term of this Agreement, the Executive agrees to serve as Senior Vice

President of the Company and as General Manager of Subsidiary, or in such other

position which Executive shall agree to accept or to which Executive shall be

promoted during the Term and Executive shall report directly to the Chief

Executive Officer or such other position which is at a higher position or level

in the Company than Executive and as shall be determined by the Chief Executive

Officer in his sole discretion, and shall maintain the level of duties and

responsibilities as in effect as of the Effective Date, or such higher level of

duties and responsibilities as Executive may be assigned during the Term (the

“Position”).




 




Article 4.

Standard of Care




 




4.1                                 During

the term of this Agreement, the Executive agrees to devote substantially his

full time, attention, and energies to the Company’s business and shall not be

engaged in any other business activity, whether or not such business activity

is pursued for gain, profit, or other pecuniary advantage unless such business

activity is approved by the Compensation Committee (or, in the event the

Compensation Committee ceases to exist, the Board).  However, subject to Article 11 herein and approval by the

Compensation Committee (or the Board, as the case may be), the Executive may

serve as a director of other companies so long as such service is not injurious

to the Company.




 




Article 5.

Compensation




 




5.1                                 As

remuneration for all services to be rendered by the Executive during the term

of this Agreement, and as consideration for complying with the covenants

herein, the Company shall pay and provide to the Executive those items set

forth in Sections 5.2 through 5.8.




 




5.2                                 Base Salary.  The

Company shall pay the Executive a Base Salary in an amount which shall be

established from time to time by the Board of Directors of the Company or the

Board’s designee; provided, however, that such Base Salary shall not be less

than TWO-HUNDRED-FIFTY-THOUSAND DOLLARS (US$250,000) per year.




 




(a)          This Base Salary shall

be paid to the Executive in equal installments throughout the year, consistent

with the normal payroll practices of the Company.




 




(b)         The Base Salary shall be

reviewed at least annually following the Effective Date of this Agreement,

while this Agreement is in force, to ascertain whether, in the judgment of the

Board or the Board’s designee, such Base Salary should be increased based

primarily on the performance of the Executive during the year. If so increased,

the Base Salary as 




 




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stated above shall, likewise, be increased for all

purposes of this Agreement and shall not, in any event, be decreased in any

year.




 




5.3                                 Annual Bonus.  In

addition to his Base Salary, the Executive shall be entitled to participate in

the Company’s annual short-term incentive program, as such program may exist

from time to time, at a level commensurate with the Position.  The percentage of Base Salary targeted as

annual short-term incentive compensation shall be established for the Position

by the Company’s Compensation Committee in its sole discretion (the “targeted

Annual Bonus award”). Executive acknowledges that the amount of annual

short-term incentive, if any, to be awarded shall be at the sole discretion of

the Company’s Compensation Committee, may be less or more than the targeted

Annual bonus award, and will be based on a number of factors set in advance by

the Compensation Committee for each calendar year, including the Company’s

performance and the Executive’s individual performance. Nothing in this Section

5.3 shall be construed as obligating the Company or the Board to refrain from

changing, and/or amending the short-term incentive program, so long as such

changes are equally applicable to all executive employees in the Company.




 




5.4                                 Long-Term

Incentives.  The Executive shall be eligible to

participate in the Company’s long-term incentive plan, as such shall be amended

or superseded from time to time provided, however, that nothing in this Section

5.4 shall be construed as obligating the Company or the Board to refrain from

changing, and/or amending the long-term incentive plan, so long as such changes

are equally applicable to all executive employees in the Company.




 




5.5                                 Retirement

Benefits.  Executive shall be entitled to participate

in any retirement plans adopted by Subsidiary for its employees or which Subsidiary

is obligated to provide pursuant to Israeli law during the Term; provided,

however, that nothing in this Section 5.5 shall be construed as obligating the

Company to refrain from changing, and/or amending such retirement programs, to

the extent permitted by Israeli law, so long as such changes are  applicable to all employees in the

Subsidiary and are approved by the Board.




 




5.6                                 Employee

Benefits.  During the Term, and as otherwise provided

within the provisions of each of the respective plans, Executive shall be

entitled to all benefits to which other employees of Subsidiary are entitled to

receive, as commensurate with the Position, or as specifically provided for

under Israeli law, such as Keren Hishtalmut and Directors Insurance, subject to

the eligibility requirements and other provisions of such arrangements as

applicable to employees of Subsidiary generally; provided that any change in

the level of such benefits subsequent to the Effective Date, other than as

mandated by a change in the applicable Israeli laws, shall require the prior

approval of the Board.




 




5.7                                 Vacation.  The Executive shall be entitled to such paid

vacation as is customary for the Position in corporate institutions of similar

size and character, but in any event not less than twenty (20) paid vacation

days during each calendar year; provided, however, that without prior written

approval, Executive may carry forward into the next year no more than ten (10)

unused vacation days from the current year.




 




5.8                                 Perquisites.  The

Company shall provide to the Executive, at the Company’s expense, all perquisites which the Board may determine

from time to time to provide; provided, however, 




 




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that nothing in

this Section 5.8 shall be construed as obligating the Company or the Board to

refrain from changing, and/or amending the perquisite

program, so long as such changes are equally applicable to all executive

employees in the Company.




 




5.9                                 Right to

Change Plans. The Company and Subsidiary shall not be obligated to

institute, maintain, or refrain from changing, amending, or discontinuing any

benefit plan, program, or perquisite.




 




Article 6.

Expenses




 




6.1                                 Upon

presentation of appropriate documentation, the Company shall pay, or reimburse

the Executive for all ordinary and necessary expenses, in a reasonable amount,

which the Executive incurs in performing his duties under this Agreement

including, but not limited to, travel, entertainment, professional dues and

subscriptions, and all dues, fees, and expenses associated with membership in

various professional, business, and civic associations and societies.




 




Article 7.

Employment Terminations




 




7.1                                 Termination

Due to Death.  In the event the Executive’s employment is

terminated while this Agreement is in force by reason of death, the Company’s

obligations under this Agreement shall immediately expire. Notwithstanding the

foregoing, the Company shall be obligated to pay to the Executive the

following:




 




(a)          Base Salary through the

Effective Date of Termination;




 




(b)         An amount equal to the

Executive’s unpaid targeted Annual Bonus award, established for the fiscal

year in which such termination is effective, multiplied by a fraction, the

numerator of which is the number of completed days in the then-existing fiscal

year through the Effective Date of Termination, and the denominator of which is

three hundred sixty-five (365);




 




(c)          All outstanding

long-term incentive awards shall be subject to the treatment provided under the

applicable long-term incentive plan of the Company;




 




(d)         Accrued but unused

vacation pay through the Effective Date of Termination; and




 




(e)          All other rights and

benefits the Executive is vested in, pursuant to other plans and programs of

the Subsidiary, or as mandated by Israeli law.




 




(f)            The benefits described

in Sections 7.1(a) and (d) shall be paid in cash to the Executive in a single

lump sum as soon as practicable following the Effective Date of Termination,

but 




 




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in no event beyond

thirty (30) days from such date. All other payments due to the Executive upon

termination of employment, including those in Sections 7.1(b) and (c), shall be

paid in accordance with the terms of such applicable plans or programs.




 




(g)         With the exception of the

covenants contained in Articles 9 and 14 and Sections 7.1(f), 13.3, 13.5,

and 13.7 herein (which shall survive such termination), the Company and the

Executive thereafter shall have no further obligations under this Agreement.




 




7.2                           Termination

Due to Disability.  In the

event that the Executive becomes Disabled during the term of this Agreement and

is, therefore, unable to perform his duties herein for more than

one hundred eighty (180) total calendar days during any period of twelve

(12) consecutive months, or in the event of the Board’s reasonable expectation

that the Executive’s Disability will exist for more than a period of one

hundred eighty (180) calendar days, the Company shall have the right to

terminate the Executive’s active employment as provided in this Agreement.




 




(a)          The Board shall deliver

written notice to the Executive of the Company’s intent to terminate for

Disability at least thirty (30) calendar days prior to the Effective Date of

Termination.




 




(b)         Such Disability to be

determined by the Board of Directors of the Company upon receipt of and in

reliance on competent medical advice from one (1) or more individuals, selected

by the Board, who are qualified to give such professional medical advice.




 




(c)          A termination for

Disability shall become effective upon the end of the thirty (30) day notice

period. Upon the Effective Date of Termination, the Company’s obligations under

this Agreement shall immediately expire.




 




(d)         Notwithstanding the

foregoing, the Company shall be obligated to pay to the Executive the

following:




 




(1)          Base Salary through the

Effective Date of Termination;




 




(2)          An amount equal to the

Executive’s unpaid targeted Annual Bonus award, established for the fiscal

year in which the Effective Date of Termination occurs, multiplied by a

fraction, the numerator of which is the number of completed days in the

then-existing fiscal year through the Effective Date of Termination, and the

denominator of which is three hundred sixty-five (365);




 




(3)          All outstanding

long-term incentive awards shall be subject to the treatment provided under the

applicable long-term incentive plan of the Company;




 




(4)          Accrued but unused

vacation pay through the Effective Date of Termination; and




 




(5)          All other rights and

benefits the Executive is vested in, pursuant to other plans and programs of

the Subsidiary, or as mandated by Israeli law.




 




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(e)          The benefits described

in Sections 7.2(d)(1) and (d)(4) shall be paid in cash to the Executive in a

single lump sum as soon as practicable following the Effective Date of

Termination, but in no event beyond thirty (30) days from such date. All other

payments due to the Executive upon termination of employment, including those

in Sections 7.2(d)(2) and (d)(3), shall be paid in accordance with the terms of

such applicable plans or program.




 




(f)            With the exception of

the covenants contained in Articles 8, 9, 11, and 14 and Sections 7.2(e), 13.3,

13.5, and 13.7 herein (which shall survive such termination), the Company and

the Executive thereafter shall have no further obligations under this

Agreement.




 




7.3                                 Voluntary

Termination by the Executive. The Executive may terminate this

Agreement at any time by giving Notice of Termination to the Board of Directors

of the Company, delivered at least fourteen (14) calendar days prior to the

Effective Date of Termination.




 




(a)          The termination

automatically shall become effective upon the expiration of the fourteen (14)

day notice period. Notwithstanding the foregoing, the Company may waive the

fourteen (14) day notice period; however, the Executive shall be entitled to

receive all elements of compensation described in Sections 5.1 through 5.6

for the fourteen (14) day notice period, subject to the eligibility and participation

requirements of any qualified retirement plan.




 




(b)         Upon the Effective Date

of Termination, following the expiration of the fourteen (14) day notice

period, the Company shall pay the Executive his full Base Salary and accrued

but unused vacation pay, at the rate then in effect, through the Effective Date

of Termination, plus all other benefits to which the Executive has a vested

right at that time, including all funds contributed by Subsidiary on his behalf

for Directors Insurance and Keren Hishtalmut (for this purpose, the Executive

shall not be paid any Annual Bonus with respect to the fiscal year in which

voluntary termination under this Section occurs).




 




(c)          With the exception of

the covenants contained in Articles 8, 9, 11, and 14 and Sections 13.3, 13.5,

and 13.7 herein (which shall survive such termination), the Company and the

Executive thereafter shall have no further obligations under this Agreement.




 




7.4                                 Involuntary

Termination by the Company without Cause. At all times during the

Term, the Board may terminate the Executive’s employment for reasons other than

death, Disability, or for Cause, by providing to the Executive a Notice of

Termination, at least sixty (60) calendar days (ninety (90) calendar days when

termination is due to non-renewal of this Agreement by the Company pursuant to

Section 1.2) prior to the Effective Date of Termination; provided, however,

that such notice shall not preclude the Company from requiring Executive to

leave the Company immediately upon receipt of such notice.




 




(a)          Such Notice of

Termination shall be irrevocable absent express, mutual consent of the parties.




 




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(b)         Upon the Effective Date

of Termination (not a Qualifying Termination), following the expiration of the

sixty (60) day notice period (90 days in the case of non-renewal), the Company

shall pay and provide to the Executive:




 




(1)                                  The

greater of the amount determined under (A) or the amount determined under (B);

it being agreed and understood that the payments received by Executive under

the programs set forth in (B) shall be deducted from the amount that Company is

obligated to pay Executive under this Section 7.4:




 




(A)         An amount equal to the

Service Multiple times the Executive’s annual Base Salary established for the

fiscal year in which the Effective Date of Termination occurs; plus  an amount equal to the Service Multiple

times the Executive’s targeted Annual Bonus award established for the fiscal

year in which the Effective Date of Termination occurs;




 




(B)           The total amount

payable to Executive pursuant to Directors Insurance, Keren Hishtalmut and

similar programs under Israeli law.




 




(2)                                  A

continuation of the welfare benefits of health care, life and accidental death

and dismemberment, and disability insurance coverage after the Effective Date

of Termination for a number of months equal to the Service Multiple times

twelve (12) or the maximum number of months mandated under Israeli law,

whichever is greater. These benefits shall be provided to the Executive at the

same coverage level as in effect as of the Effective Date of Termination, and

at the same premium cost to the Executive which was paid by the Executive at

the time such benefits were provided. However, in the event the premium cost

and/or level of coverage shall change for all employees of the Subsidiary, or

for management employees of the Subsidiary with respect to supplemental

benefits, the cost and/or coverage level, likewise, shall change for the

Executive in a corresponding manner. The continuation of these welfare benefits

shall be discontinued if prior to the expiration of the period, the Executive

has available substantially similar benefits at a comparable cost to the

Executive from a subsequent employer, as determined by the Compensation Committee

(or, in the event the Compensation Committee ceases to exist, the Board);




 




(3)                                  All

outstanding long-term incentive awards shall be subject to the treatment

provided under the applicable long-term incentive plan of the Company;




 




(4)                                  An

amount equal to the Executive’s unpaid Base Salary and accrued but unused

vacation pay through the Effective Date of Termination; and




 




(5)                                  All

other benefits to which the Executive has a vested right at the time, according

to the provisions of the governing plan or program.




 




(c)          For purposes of this

Section 7.4, the term “Service Multiple” shall be equal to the quotient

resulting from a formula the numerator of which is the lesser of (a) full

number 




 




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of completed

months that have elapsed since the Employment Date (but not less than 6 months)

and (b) eighteen (18) and the denominator of which is twelve (12);




 




(d)         In the event that the

Board terminates the Executive’s employment without Cause on or after the date

of the announcement of the transaction which leads to a CIC, the Executive

shall be entitled to the CIC Severance Benefits as provided in Section 8.3

in lieu of the Severance Benefits outlined in this Section 7.4.




 




(e)          Payment of all but forty

thousand dollars ($40,000) of the benefits described in Section 7.4(b)(1) shall

be paid in cash to the Executive in equal bi-weekly installments over a period

of consecutive months equal to the Service Multiple times twelve (12) and

beginning on the fifteenth day of the month following the month in which the

Effective Date of Termination occurs, unless mandated to be paid differently

under Israeli law.  The forty thousand

dollars ($40,000) which was withheld shall be paid in cash to the Executive in

a single lump sum at the end of the twelve (12) month restrictive period set

forth in Sections 11.2 and 11.3 of this Agreement.




 




(e)          Except as specifically

provided in Section 7.4(e), all other payments due to the Executive upon

termination of employment shall be paid in accordance with the terms of such

applicable plans or programs.




 




(f)            Notwithstanding

anything herein to the contrary, it is agreed and understood that the Company’s

payment obligations under this Section 7.4 shall be reduced by the amount of

the payments Executive is entitled to receive under the programs set forth in

Section 7.4(b)(1)(B).




 




(f)            With the exception of

the covenants contained in Articles 8, 9, 10, 11, 12 and 14 and Sections 7.4,

13.3, 13.5, and 13.7 (which shall survive such termination), the Company and the

Executive thereafter shall have no further obligations under this Agreement.




 




7.5                                 Termination

for Cause. Nothing in this Agreement shall be construed to prevent

the Board from terminating the Executive’s employment under this Agreement for

Cause.




 




(a)          To be effective, the

Notice of Termination must set forth in reasonable detail the facts and

circumstances claimed to provide a basis for such termination for Cause.




 




(b)         In the event this

Agreement is terminated by the Board for Cause, the Company shall pay the

Executive his Base Salary and accrued vacation pay through the Effective Date

of Termination, and the Executive shall immediately thereafter forfeit all

rights and benefits (other than vested benefits or any amount required to be

paid under Israeli law in the even of termination for cause) he would otherwise

have been entitled to receive under this Agreement. The Company and the

Executive thereafter shall have no further obligations under this Agreement

with the exception of the covenants contained in Articles 9, 10, 11, and 14 and

Sections 13.3, 13.5, and 13.9 herein (which shall survive such termination).




 




7.6                           Termination

for Good Reason.  Except where Section 2.20(d) is

applicable, this Section 7.6 shall only become effective when at least twelve

(12) months have elapsed since the 




 




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Employment

Date.  Prior to this Section 7.6

becoming effective, any notice of termination by Executive may only be given

pursuant to Section 7.3.  The Executive

shall have sixty (60) days from the date he learns of action taken by the

Company that allows the Executive to terminate his employment for Good Reason

to provide the Board with a Notice of Termination.




 




(a)          The Notice of

Termination must set forth in reasonable detail the facts and circumstances

claimed to provide a basis for such Good Reason termination.




 




(b)         The Company shall have

thirty (30) days to cure such Company action following receipt of the Notice of

Termination.




 




(c)          The Executive is

required to continue his employment for the sixty (60) day period following the

date in which he provided the Notice of Termination to the Board. The Company

may waive the sixty (60) day notice period; however, the Executive shall be

entitled to receive all elements of compensation described in Sections 5.1

through 5.6 for the sixty (60) day notice period, subject to the eligibility

and participation requirements of any qualified retirement plan.




 




(d)         Upon a termination of the

Executive’s employment for Good Reason during the Term, and following the

expiration of the sixty (60) day notice period, the Company shall pay and

provide to the Executive the following:




 




(1)                                  The

greater of the amount determined under (A) or the amount determined under (B):




 




(A)         An amount equal to one-and-one-half

(1.5) times the Executive’s annual Base Salary established for the fiscal year

in which the Effective Date of Termination occurs; plus  an amount equal to one-and-one-half (1.5)

times the Executive’s targeted Annual Bonus award established for the fiscal

year in which the Effective Date of Termination occurs;




 




(B)           The total amount

payable to Executive pursuant to Directors Insurance, Keren Hishtalmut and

similar programs under Israeli law.




 




(2)                                  A

continuation of the welfare benefits of health care, life and accidental death

and dismemberment, and disability insurance coverage after the Effective Date

of Termination for eighteen months or the maximum number of months mandated

under Israeli law, whichever is greater. These benefits shall be provided to

the Executive at the same coverage level as in effect as of the Effective Date

of Termination, and at the same premium cost to the Executive which was paid by

the Executive at the time such benefits were provided. However, in the event

the premium cost and/or level of coverage shall change for all employees of the

Subsidiary, or for management employees of the Subsidiary with respect to

supplemental benefits, the cost and/or coverage level, likewise, shall change

for the Executive in a corresponding manner. The continuation of these welfare

benefits shall be discontinued if prior to the expiration of the period, the 




 




12





























 




Executive has

available substantially similar benefits at a comparable cost to the Executive

from a subsequent employer, as determined by the Compensation Committee (or, in

the event the Compensation Committee ceases to exist, the Board);




 




(3)                                  All

outstanding long-term incentive awards shall be subject to the treatment

provided under the applicable long-term incentive plan of the Company;




 




(4)                                  An

amount equal to the Executive’s unpaid Base Salary and accrued but unused

vacation pay through the Effective Date of Termination; and




 




(5)                                  All

other benefits to which the Executive has a vested right at the time, according

to the provisions of the governing plan or program.




 




(g)         In the event of

termination of Executive’s employment for Good Reason on or after the date of

the announcement of the transaction which leads to the CIC and up to twenty-four

(24) months following the date of the CIC, the Executive shall be entitled to

the CIC Severance Benefits as provided in Section 8.3 in lieu of the

Severance Benefits outlined in this Section 7.6.




 




(h)         The Executive’s right to

terminate employment for Good Reason shall not be affected by the Executive’s

incapacity due to physical or mental illness unless such incapacity is

determined to constitute a Disability as provided herein.




 




(g)         Payment of all but forty

thousand dollars ($40,000) of the benefits described in Section 7.6(d)(1) shall

be paid in cash to the Executive in equal bi-weekly installments over a period

of consecutive months equal to the Service Multiple times twelve (12) and

beginning on the fifteenth day of the month following the month in which the

Effective Date of Termination occurs, unless mandated to be paid differently

under Israeli law.  The forty thousand

dollars ($40,000) which was withheld shall be paid in cash to the Executive in

a single lump sum at the end of the twelve (12) month restrictive period set

forth in Sections 11.2 and 11.3 of this Agreement.




 




(i)             Except as

specifically provided in Section 7.6(g), all other payments due to the

Executive upon termination of employment shall be paid in accordance with the

terms of such applicable plans or programs.




 




(j)             Notwithstanding

anything herein to the contrary, it is agreed and understood that the Company’s

payment obligations under this Section 7.6 shall be reduced by the amount of

the payments Executive is entitled to receive under the programs set forth in

Section 7.6(d)(1)(B).




 




(k)          With the exceptions of

the covenants contained in Articles 8, 9, 10, 11, 12 and 14 and Sections 7.6,

13.3, 13.5, and 13.7 (which shall survive such termination) herein, the Company

and the Executive thereafter shall have no further obligations under this

Agreement.




 




13





























 




Article 8. Change

in Control




 




8.1                                 Employment

Termination Following a Change in Control.  The Executive shall be

entitled to receive from the Company CIC Severance Benefits if a Notice of

Termination for a Qualifying Termination of the Executive has been delivered;

provided, that:




 




(a)          The Executive shall not

be entitled to receive CIC Severance Benefits if he is terminated for Cause (as

provided in Section 7.5 herein), or if his employment with the Company ends due

to death, or Disability, or due to voluntary termination of employment by the

Executive without Good Reason.




 




(b)         CIC Severance Benefits

shall be paid in lieu of all other benefits provided to the Executive under the

terms of this Agreement.




 




8.2                           Qualifying

Termination.  The occurrence of any one or more of the

following events on or after the date of the announcement of the transaction

which leads to the CIC and up to twenty-four (24) months following the date of

the CIC shall trigger the payment of CIC Severance Benefits to the Executive

under this Agreement:




 




(a)          An involuntary

termination of the Executive’s employment by the Company for reasons other than

Cause, death, or Disability, as evidenced by a Notice of Termination delivered

by the Company to the Executive;




 




(b)         A voluntary termination

by the Executive for Good Reason as evidenced by a Notice of Termination

delivered to the Company by the Executive;




 




(c)          Failure to renew this

Agreement (if the Agreement would expire unless renewed within such period), as

evidenced by a Notice of Termination delivered by the Company to

the Executive; or




 




(d)         The Company or any

Successor Company materially breaches any material provision of this Agreement

and does not cure such breach within thirty (30) days of receiving a written

notice from the Executive with such notice explaining in reasonable detail the

facts and circumstances claimed to provide a basis for the Executive’s claim.




 




8.3                                 Severance

Benefits Paid upon a Qualifying Termination.  In the event the Executive

becomes entitled to receive CIC Severance Benefits, the Company shall pay to

the Executive and provide him the following:




 




(a)           The greater of the

amount determined under (1) or the amount determined under (2):




 




(1)                                  An

amount equal to two (2) times the Executive’s annual Base Salary established

for the fiscal year in which the Effective Date of Termination occurs; plus an 




 




14





























 




amount equal to

two (2) times the Executive’s targeted Annual Bonus award established for the

fiscal year in which the Effective Date of Termination occurs;




 




(2)                                  the

total amount payable to Executive pursuant to Directors Insurance, Keren

Hishtalmut and similar programs under Israeli law.




 




(b)                           An

amount equal to the Executive’s unpaid Base Salary and accrued but unused

vacation pay through the Effective Date of Termination;




 




(c)                            All

outstanding long-term incentive awards shall be subject to the treatment provided

under the applicable long-term incentive plan of the Company;




 




(d)                           A

continuation of the welfare benefits of health care, life and accidental death

and dismemberment, and disability insurance coverage after the Effective Date

of Termination for twenty-four (24) months or the maximum number of months

mandated under Israeli law, whichever is greater. These benefits shall be

provided to the Executive at the same coverage level as in effect as of the

Effective Date of Termination, and at the same premium cost to the Executive

which was paid by the Executive at the time such benefits were provided.

However, in the event the premium cost and/or level of coverage shall change

for all employees of the Subsidiary, or for management employees of the

Subsidiary with respect to supplemental benefits, the cost and/or coverage

level, likewise, shall change for the Executive in a corresponding manner. The

continuation of these welfare benefits shall be discontinued if prior to the

expiration of the period, the Executive has available substantially similar

benefits at a comparable cost to the Executive from a subsequent employer, as

determined by the Compensation Committee (or, in the event the Compensation

Committee ceases to exist, the Board);




 




(e)                            Notwithstanding

anything herein to the contrary, it is agreed and understood that the Company’s

payment obligations under this Section 8.3 shall be reduced by the amount of

the payments Executive is entitled to receive under the programs set forth in

Section 8.3(a)(2).




 




8.3                                 Form and

Timing of Severance Benefit. Payment of all of the benefits

described in Sections 8.3(a) through (c) shall be paid in cash to the Executive

in a single lump sum as soon as practicable following the Effective Date of

Termination, but in no event beyond thirty (30) days from such date unless

mandated to be paid differently under Israeli law. All other payments due to

the Executive upon termination of employment shall be paid in accordance with

the terms of such applicable plans or programs.




 




8.6                                 With

the exceptions of the covenants contained in Articles 8, 9, 10, 11, 12 and 14

and Sections 13.3, 13.5, and 13.7 (which shall survive such termination)

herein, the Company and the Executive thereafter shall have no further

obligations under this Agreement.




 




15





























 




Article 9.

Assignment




 




9.1                                 Assignment

by Company.  This Agreement may and shall be assigned

or transferred to, and shall be binding upon and shall inure to the benefit of

any Successor Company, with Successor Company for purposes of this Agreement

being defined as a company that (i) acquires greater than fifty percent (50%)

of the assets of the Company or (ii) acquires greater than fifty percent (50%)

of the outstanding stock of the Company, or (iii) is the surviving entity in

the event of a CIC.




 




(a)          Any such Successor

Company shall be deemed substituted for all purposes of the “Company” under the

terms of this Agreement.




 




(b)         Failure of the Company to

obtain the agreement of any Successor Company to be bound by the terms of this

Agreement prior to the effectiveness of any such succession shall be a breach

of this Agreement, and shall immediately entitle the Executive to benefits from

the Company in the same amount and on the same terms as the Executive would be

entitled to receive in the event of a termination of employment for Good Reason

as provided in Section 7.7 (failure not related to a Change in Control) or

Section 8.3 (if the failure of assignment follows or is in connection with a

Change in Control).




 




(c)          Except as herein

provided, this Agreement may not otherwise be assigned by the Company.




 




9.2                                 Assignment

by Executive.  This Agreement shall inure to the benefit

of and be enforceable by the Executive’s personal or legal representatives,

executors, administrators, successors, heirs, distributees, devisees, and

legatees.




 




(a)          If the Executive dies

while any amount would still be payable to him pursuant to this Agreement had

he continued to live, all such amounts, unless otherwise provided herein, shall

be paid in accordance with the terms of this Agreement, to the Executive’s

Beneficiary.




 




(b)         If the Executive has not

named a Beneficiary, then such amounts shall be paid to the Executive’s

devisee, legatee, or other designee, or if there is no such designee, to the

Executive’s estate.




 




Article 10. Legal

Fees and Notice




 




10.1                           Payment of

Legal Fees.  To the

extent permitted by law, the Company shall pay all legal fees, costs of

litigation, prejudgment interest, and other expenses incurred by Executive in

contesting a termination, if Executive prevails.




 




16





























 




10.2                           Notice.  Any

notices, requests, demands, or other communications provided by this Agreement

shall be sufficient if in writing and if sent by registered or certified

mail to the Executive at the last address he has filed in writing with the

Company or, in the case of the Company, at its principal offices to the

attention of the General Counsel.




 




Article 11.

Confidentiality and Noncompetition




 




11.1                           Disclosure

of Information.  The Executive recognizes that he has

access to and knowledge of confidential and proprietary information of the

Company that is essential to the performance of his duties under this

Agreement.




 




(a)          The Executive will not,

during and for five (5) years after the term of his employment by the Company,

in whole or in part, disclose such information to any person, firm,

corporation, association, or other entity for any reason or purpose whatsoever,

nor shall he make use of any such information for his own purposes, so long as

such information has not otherwise been disclosed to the public or is not

otherwise in the public domain except as required by law or pursuant to

administrative or legal process.




 




11.2                           Covenants

Regarding Other Employees. During the term of this Agreement, and

for a period of twelve (12) months following the Executive’s termination of

employment for any reason, the Executive agrees not to actively solicit any

employee of the Company to terminate his or her employment with the Company or

to interfere in a similar manner with the business of the Company.




 




11.3                           Noncompete Following a Termination of Employment.

From the Effective Date of this Agreement until six (6) months following the

Executive’s Effective Date of Termination for any reason, the Executive will

not: (a) directly or indirectly own any equity or proprietary interest in

(except for ownership of shares in a publicly traded company not exceeding

three percent (3%) of any class of outstanding securities), or be an employee,

agent, director, advisor, or consultant to or for any competitor of the

Company, whether on his own behalf or on behalf of any person; or (b) undertake

any action to induce or cause any customer or client to discontinue any part of

its business with the Company.




 




11.4                           Waiver of Covenants Upon a Change in Control.

Upon the occurrence of a Change in Control, the Executive shall be released

from each of the covenants set forth in Section 11.2 and 11.3, if such

Executive is terminated by the Company without Cause or if the Executive

terminates his employment with the Company for Good Reason.




 




Article

12. Outplacement Assistance




 




12.1                           Following

a termination of employment, other than for Cause, the Executive shall be

reimbursed by the Company for the costs of all outplacement services obtained

by the Executive within the 




 




17





























 




two (2) year period after the Effective Date of Termination; provided,

however, that the total reimbursement shall be limited to an amount equal to

twenty percent (20%) of the Executive’s Base Salary as of the effective date of

termination.




 




Article 13.

Miscellaneous




 




13.1                           Entire

Agreement.  With the exception of the Company’s

Proprietary Information and Inventions Agreement previously executed by

Executive, this Agreement supersedes any prior agreements (specifically, the

prior employment agreement executed by the Executive as of January 23, 2000,

and any and all amendments thereto), or understandings, oral or written,

between the parties hereto or between the Executive and the Company, with

respect to the subject matter hereof, and constitutes the entire agreement of

the parties with respect thereto.




 




13.2                           Modification.  This

Agreement shall not be varied, altered, modified, canceled, changed, or in any

way amended except by mutual agreement of the parties in a written instrument

executed by the parties hereto or their legal representatives.




 




13.3                           Severability.  In

the event that any provision or portion of this Agreement shall be determined to

be invalid or unenforceable for any reason, the remaining provisions of this

Agreement shall be unaffected thereby and shall remain in full force and

effect.




 




13.4                           Counterparts.  This

Agreement may be executed in one (1) or more counterparts, each of which shall

be deemed to be an original, but all of which together will constitute one and

the same Agreement.




 




13.5                           Tax

Withholding.  The Company may withhold from any benefits

payable under this Agreement all federal, state, city, or other taxes as may be

required pursuant to any law or governmental regulation or ruling.




 




13.6                           Beneficiaries.  To

the extend allowed by law, any payments or benefits hereunder due to the

Executive at the time of his death shall nonetheless be paid or provided and

the Executive may designate one or more persons or entities as the primary

and/or contingent beneficiaries of any amounts to be received under this

Agreement. Such designation must be in the form of a signed writing acceptable

to the Board or the Board’s designee. The Executive may make or change such

designation at any time.




 




13.7                           Payment

Obligation Absolute. Absent actions deliberately or willfully taken

by the Executive to materially injure the Company, the Company’s obligation to

make the payments and the arrangement provided for herein shall be absolute and

unconditional, and shall not be affected by any circumstances, including,

without limitation, any offset, counterclaim, recoupment, defense, or other

right which the Company may have against the Executive or anyone else.




 




18





























 




(a)          All amounts payable by

the Company hereunder shall be paid without notice or demand. Subject to the

provisions set forth in Sections 7.4 and 7.6, and Article 11, each and

every payment made hereunder by the Company shall be final, and the Company

shall not seek to recover all or any part of such payment from the Executive or

from whomsoever may be entitled thereto, for any reasons whatsoever.




 




(b)         With the exception of the

Company’s willful material breach of its payment obligations under Articles 7

and 8 of this Agreement (provided, however, that no such breach shall be deemed

to have occurred until the Executive has provided the Board with written notice

of such breach and a reasonable opportunity for cure), the restrictive

covenants contained in Article 11 are independent of any other contractual

obligations in this Agreement or otherwise owed by the Company to the

Executive. Except as provided in this paragraph, the existence of any claim or

cause of action by Executive against the Company, whether based on this

Agreement or otherwise, shall not create a defense to the enforcement by the

Company of any restrictive covenant contained herein.




 




(c)          The Executive shall not

be obligated to seek other employment in mitigation of the amounts payable or

arrangements made under any provision of this Agreement, and the obtaining of

any such other employment shall in no event effect any reduction of the

Company’s obligations to make the payments and arrangements required to be made

under this Agreement.




 




Article 14. Governing Law




 




14.1                           To the

extent not preempted by United States federal law, the provisions of this

Agreement shall be construed and enforced in accordance with the laws of the

state of New Jersey.




 




IN

WITNESS WHEREOF, the Company, through its duly authorized

representative, and the Executive have executed this Agreement as of the

Effective Date.




 




	

   


  	

  Executive:


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  /s/ Dov Kanner


  	

   


  
	

   


  	

  Dov Kanner,

  Ph.D.


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  Company:


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  Bio-Technology

  General Corp.


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  By:


  	

   /s/ Sim Fass


  	

   


  
	

   


  	

  Sim Fass


  	

   


  
	

   


  	

  Chairman

  & CEO


  	

   


  
				





 




19