EXHIBIT
10.20


 


	
  

  	
  BIO-TECHNOLOGY
  GENERAL CORP.

  



 


 


Employment
Agreement


for


Whitney
K. Stearns, Jr.


Senior
Vice President,


Chief
Financial Officer and Treasurer


 


 

















 


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 least two-thirds of the directors then still in office who were
directors at the beginning of the period.


 


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.


 


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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 December 2, 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 December 2, 2001.


 


2.19                           “Executive” means
Whitney K. Stearns, Jr. who, as of the Effective Date, resides at 5 Oak Crest,
Darien, Connecticut 06820.


 


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 employee benefit or retirement plans, policies, practices, or
arrangements in which the Executive participates as of the Effective Date of
this Agreement, including any perquisite program; provided, however, that any
such change that applies consistently to all executive officers of the Company
or 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;


 


(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;


 


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


 


2.29                           “Term” shall
mean that period of time commencing on the Effective Date and ending on the
Effective Date of Termination.


 


Article 3. Position and Responsibilities


 


3.1                                 During
the term of this Agreement, the Executive agrees to serve as Senior Vice
President, Chief Financial Officer and Treasurer of the Company 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 of the Company 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”).


 


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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 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, 


 


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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.  The Company shall provide to the Executive
participation in any Company qualified defined benefit and defined contribution
retirement plans as may be established during the term of this Agreement;
provided, however, that nothing in this Section 5.5 shall be construed as
obligating the Company to refrain from changing, and/or amending the
nonqualified retirement programs, so long as such changes are equally
applicable to all executive employees in the Company.


 


5.6                                 Employee
Benefits.  During the Term, and as otherwise provided
within the provisions of each of the respective plans, the Company shall
provide to the Executive all benefits to which other executives and employees
of the Company are entitled to receive, as commensurate with the Position,
subject to the eligibility requirements and other provisions of such
arrangements as applicable to executives of the Company generally.


 


(a)          Such benefits shall
include, but shall not be limited to, group term life insurance, comprehensive
health and major medical insurance, dental and life insurance,
and short-term and long-term disability.


 


(b)         The Executive shall
likewise participate in any additional benefit as may be established during the
term of this Agreement, by standard written policy of the Company.


 


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, 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 shall not be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing any benefit
plan, program, or perquisite, so long as such changes are equally applicable to
all executive employees in the Company.


 


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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 Company.


 


(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 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


 


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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 Company.


 


(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.


 


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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 (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 Chief Executive Officer of the Company 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.


 


(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)          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;


 


(2)          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;
provided, however, that no payment shall be made under this Section 7.4(b)(2)
if the Effective Date of Termination is less than eighteen (18) months after
the Employment Date;


 


(3)          A continuation of the
welfare benefits of health care, life and accidental death and dismemberment,
and disability insurance coverage (or if continuation under the 


 


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Company’s then current plans is not allowed, then
provision at the Company’s expense but subject to payment by Executive of those
payments which Executive would have been obligated to make under the Company’s
then current plan, of substantially similar welfare benefits from one or more
third party providers) after the Effective Date of Termination for a number of
months equal to the Service Multiple times twelve (12). 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
that 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 Company, or for management employees 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 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);


 


(4)          All outstanding
long-term incentive awards shall be subject to the treatment provided under the
applicable long-term incentive plan of the Company;


 


(5)          An amount equal to the
Executive’s unpaid Base Salary and accrued but unused vacation pay through the
Effective Date of Termination; and


 


(6)          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 of completed months that have elapsed since the Employment Date (but not
less than six (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 that 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 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.


 


(f)            Payment of all but
forty thousand dollars ($40,000) of the benefits described in
Section 7.4(b)(2) 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.  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.


 


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(g)         Except as specifically
provided in Section 7.4(e) and (f), 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.


 


(h)         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.


 


(i)             Notwithstanding
anything herein to the contrary, the Company’s payment obligations under this
Section 7.4 shall be offset by any amounts that the Company is required to pay
to the Executive under a national statutory severance program applicable to
such Executive.


 


7.5                                 Termination
for Cause. Nothing in this Agreement shall be construed to prevent
the Chief Executive Officer 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 Chief Executive Officer of the Company 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) 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 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.


 


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(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)          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;


 


(2)          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;


 


(3)          A continuation of the
welfare benefits of health care, life and accidental death and dismemberment,
and disability insurance coverage for one-and-one-half (1.5) years after the
Effective Date of Termination (or if continuation under the Company’s then
current plans is not allowed, then provision at the Company’s expense but
subject to payment by Executive of those payments which Executive would have
been obligated to make under the Company’s then current plan, of substantially
similar welfare benefits from one or more third party providers). 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 that 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 Company, or for management employees 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 prior to the end of the
one-and-one-half (1.5) year period in the event 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);


 


(4)          All outstanding
long-term incentive awards shall be subject to the treatment provided under the
applicable long-term incentive plan of the Company;


 


(5)          An amount equal to the
Executive’s unpaid Base Salary and accrued but unused vacation pay through the
Effective Date of Termination; and


 


(6)          All other benefits to
which the Executive has a vested right at the time, according to the provisions
of the governing plan or program.


 


(e)          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.


 


(f)            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.


 


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(g)         Payment of all but forty
thousand dollars ($40,000) of the benefits described in Section 7.6(d)(1)
and payment of all of the benefits described in Section 7.6(d)(2) 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. 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.


 


(h)         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.


 


(i)             Notwithstanding
anything herein to the contrary, the Company’s payment obligations under this
Section 7.6 shall be offset by any amounts that the Company is required to pay
to the Executive under a national statutory severance program applicable to
such Executive.


 


(j)             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.


 


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;


 


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(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)                                  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;


 


(b)                                 An
amount equal to two (2)  times the Executive’s targeted Annual
Bonus award established for the fiscal year in which the Executive’s Effective
Date of Termination occurs;


 


(c)                                  An
amount equal to the Executive’s unpaid Base Salary and accrued but unused
vacation pay through the Effective Date of Termination;


 


(d)                                 All
outstanding long-term incentive awards shall be subject to the treatment
provided under the applicable long-term incentive plan of the Company;


 


(e)                                  A
continuation of the welfare benefits of health care, life and accidental death
and dismemberment, and disability insurance coverage for two (2)  full
years after the Effective Date of Termination (or if continuation under the
Company’s then current plans is not allowed, then provision at the Company’s
expense but subject to payment by Executive of those payments which Executive
would have been obligated to make under the Company’s then current plan, of
substantially similar welfare benefits from one or more third party providers).


 


(1)                                  These
benefits shall be provided to the Executive at the same coverage level, as in
effect as of the Effective Date of Termination or, if greater, as in effect
sixty (60) days prior to the date of the Change in Control, and at the same
premium cost to the Executive which was paid by the Executive at the time such
benefits were provided.


 


(2)                                  In
the event the premium cost and/or level of coverage shall change for all
employees of the Company, or for management employees with respect to
supplemental benefits, the cost and/or coverage level, likewise, shall change
for the Executive in a corresponding manner.


 


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(3)                                  The
continuation of these welfare benefits shall be discontinued prior to the end
of the  two-year
period in the event 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).


 


8.4                                 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. 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.


 


8.5                                 Excise Tax.
In the event that a Change in Control occurs, and a determination is made by
the Company pursuant to Section 280G and 4999 of the Code that a golden
parachute excise tax is due, the benefits provided to the Executive under this
Agreement that are classified as “parachute payments” (as such term is defined
in Section 280G of the Code), shall be limited to the amount just necessary to
avoid the excise tax.


 


(a)          This limitation shall be
applied if, and only if, such a limitation results in a greater net (of excise
tax) cash benefit to the Executive than he would receive had the benefits not
been capped and an excise tax been levied.


 


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.


 


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).


 


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(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.


 


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 


 


16

















 


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 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 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.


 


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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.


 


(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.


 


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Article 14. Governing Law


 


14.1                           To the
extent not preempted by 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/ Whitney K. Stearns,
  Jr.

  	
   

  
	
   

  	
  Whitney K. Stearns, Jr.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Company:

  
	
   

  	
   

  
	
   

  	
  Bio-Technology General Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Shaw

  	
   

  
	
   

  	
   

  	
  Robert M. Shaw

  
	
   

  	
   

  	
  Senior Vice President,

  
	
   

  	
   

  	
  General Counsel &
  Secretary

  
					



 


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