**EXHIBIT10.20**

 
|  | **BIO-TECHNOLOGY  GENERAL CORP.** |
|--|-----------------------------------|

 

 

**EmploymentAgreement**

**for**

**WhitneyK. Stearns, Jr.**

**SeniorVice President,**

**ChiefFinancial Officer and Treasurer**

 

 

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**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             |
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| Article 8. Change  in Control                   |
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| Article 9. Assignment                           |
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| Article 10. Legal  Fees and Notice              |
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| Article 11.  Confidentiality and Noncompetition |
|                                            |
| Article 12.  Outplacement Assistance            |
|                                            |
| Article 13. Miscellaneous                       |
|                                            |
| Article 14.  Governing Law                      |

 

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** **

**Employment Agreement**

 

This Agreement is made,entered into, and is effective as of the Effective Date, by and between theCompany and the Executive.

 

## **Article 1. Term ofEmployment**

 

1.1                                 TheCompany hereby agrees to employ the Executive and the Executive hereby agreesto serve the Company in accordance with the terms and conditions set forthherein, for a period of three (3) years, commencing as of the Effective Date.

 

1.2                                 Commencingon the third (3rd) anniversary of the Effective Date, and eachanniversary thereafter, the term of this Agreement shall automatically beextended for one (1) additional year, unless at least ninety (90) days prior tosuch anniversary, the Company or the Executive shall have given notice inaccordance with Section 10.2 hereof that it or he does not wish to extend theterm of the Agreement.

 

## **Article 2**. Definitions

 

2.1                                 **“Agreement”**means this Employment Agreement.

 

2.2                                 **“AnnualBonus”** means the annual bonus to be paid to the Executive inaccordance with the Company’s annual bonus program as described in Section 5.3herein.

 

2.3                                 **“BaseSalary”** means the salary of record paid to the Executive as annualsalary, pursuant to Section 5.2, excluding amounts received under incentive orother bonus plans, whether or not deferred.

 

2.4                                 **“BeneficialOwner”** shall have the meaning ascribed to such term in Rule13d-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 Executivepursuant to Section 13.6 herein.

 

2.6                                 **“Board”**or**“Board ofDirectors”** means the Board of Directors of the Company.

 

2.7                                 **“Cause”**means:

 

(a)          Executive materiallybreached any of the terms of this Agreement and failed to correct such breachwithin fifteen (15) days after written notice thereof from the Company;

 

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(b)         Executive has beenconvicted of a criminal offense involving a felony giving rise to a sentence ofimprisonment;

 

(c)          Executive has breached afiduciary trust for the purpose of gaining a personal profit, including,without limitation, embezzlement; or

 

(d)         Despite adequatewarnings, Executive intentionally and willfully failed to perform reasonablyassigned duties within the normal and customary scope of the Position.

 

2.8                                 **“Change inControl” or “CIC”** of the Company shall be deemed to have occurred asof the first day that any one or more of the following conditions is satisfied:

 

(a)                                  Any consolidation or merger in which the Companyis not the continuing or surviving entity or pursuant to which shares of theCommon Stock would be converted into cash, securities, or other property, otherthan (i) a merger of the Company in which the holders of the Common Stockimmediately prior to the merger have the same proportionate ownership of commonstock of the surviving corporation immediately after the merger, or (ii) aconsolidation or merger which would result in the voting securities of theCompany outstanding immediately prior thereto continuing to represent (by beingconverted into voting securities of the continuing or surviving entity) morethan 50% of the combined voting power of the voting securities of thecontinuing or surviving entity immediately after such consolidation  or merger and which would result in the membersof the Board immediately prior to such consolidation or merger (including forthis purpose any individuals whose election or nomination for election wasapproved by a vote of at least two-thirds of such members) constituting amajority of the Board (or equivalent governing body) of the continuing orsurviving entity immediately after such consolidation or merger;

 

(b)                                 Anysale, lease, exchange, or other transfer (in one transaction or a series ofrelated transactions) of all or substantially all the Company’s assets;

 

(c)                                  TheCompany’s stockholders approve any plan or proposal for the liquidation ordissolution of the Company;

 

(d)                                 AnyPerson shall become the Beneficial Owner of forty (40) percent or more of theCommon Stock other than pursuant to a plan or arrangement entered into by suchPerson and the Company; or

 

(e)                                  Duringany period of two consecutive years, individuals who at the beginning of suchperiod constitute the entire Board of Directors shall cease for any reason toconstitute a majority of the Board unless the election or nomination forelection by the Company’s stockholders of each new director was approved by avote of at least two-thirds of the directors then still in office who weredirectors at the beginning of the period.

 

2.9                                 **“CICSeverance Benefits”**means the payment of severance compensationassociated with a Qualifying Termination occurring subsequent to a Change inControl, as described in Section 8.3.

 

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2.10                           **“Code”**meansthe United States Internal Revenue Code of 1986, as amended.

 

2.11                           **“CommonStock”** means the common stock of the Company, $.01 par value.

 

2.12                           **“CompensationCommittee”** means the Compensation and Stock Option Committee of theBoard, or any other committee appointed by the Board to perform the functionsof such committee.

 

2.13                           **“Company”**means Bio-Technology General Corp., a Delaware corporation, or any SuccessorCompany 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 inthe Company’s long-term disability plan, or in any successor to such plan.

 

2.16                           **“EffectiveDate”** means December 2, 2002.

 

2.17                           **“EffectiveDate of Termination”**means the date on which a termination of theExecutive’s employment occurs.

 

2.18                           **“EmploymentDate”**means December 2, 2001.

 

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

 

2.20                           **“GoodReason”**shall mean, without the Executive’s express written consent,the occurrence of any one or more of the following:

 

(a)          Reducing the Executive’sBase Salary;

 

(b)         Failing to maintainExecutive’s amount of benefits under or relative level of participation in theCompany’s employee benefit or retirement plans, policies, practices, orarrangements in which the Executive participates as of the Effective Date ofthis Agreement, including any perquisite program; provided, however, that anysuch change that applies consistently to all executive officers of the Companyor is required by applicable law shall not be deemed to constitute Good Reason;

 

(c)          Failing to require anySuccessor Company to assume and agree to perform the Company’s obligationshereunder;

 

(d)         The occurrence of any oneor more of the following events on or after the announcement of the transactionwhich leads to the CIC and up to twenty-four (24) calendar monthsfollowing the effective date of a CIC:

 

(1)          Requiring Executive tobe based at a location that requires the Executive to travel at least anadditional thirty-five (35) miles per day;

 

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(2)          Requiring Executive toreport to a position which is at a lower level than the highest level to whichExecutive reported within the six (6) months prior to the CIC;

 

(3)          Demoting Executive to alevel lower than Executive’s level in the Company as of the Effective Date.

 

2.21                           **“Notice ofTermination”**means a written notice****which shall indicate thespecific termination provision in this Agreement relied upon, and shall setforth in reasonable detail the facts and circumstances claimed to provide abasis for termination of the Executive’s employment under the provisions soindicated, and, where applicable, shall specifically include notice pursuant toSection 1.2 that Company has elected not to renew this Agreement.

 

2.22                           **“Person”**shallhave the meaning ascribed to such term in Section 3(a)(9) of theSecurities 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                           **“QualifyingTermination”** means any of the events described in Section 8.2herein, the occurrence of which triggers the payment of CIC Severance Benefitshereunder.

 

2.25                           **“SecuritiesExchange Act”**means the United States Securities Exchange Act of1934, as amended.

 

2.26                           **“ServiceMultiple”**shall have the meaning ascribed to it in Section 7.4(c).

 

2.27                           **“SeveranceBenefits”**means the payment of severance compensation as provided inSections 7.4 and 7.6 herein, and not payable due to a Change in Control ofthe Company.

 

2.28                           **“SuccessorCompany”**shall have the meaning ascribed to it in Section 9.1.

 

2.29                           **“Term”**shallmean that period of time commencing on the Effective Date and ending on theEffective Date of Termination.

 

## **Article 3**. Position and Responsibilities

 

3.1                                 Duringthe term of this Agreement, the Executive agrees to serve as Senior VicePresident, Chief Financial Officer and Treasurer of the Company or in suchother position which Executive shall agree to accept or to which Executiveshall be promoted during the Term and Executive shall report directly to theChief Executive Officer of the Company or such other position which is at ahigher position or level in the Company than Executive and as shall bedetermined by the Chief Executive Officer in his sole discretion, and shallmaintain the level of duties and responsibilities as in effect as of theEffective Date, or such higher level of duties and responsibilities asExecutive may be assigned during the Term (the “Position”).

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## **Article 4**. Standard of Care

 

4.1                                 Duringthe term of this Agreement, the Executive agrees to devote substantially hisfull time, attention, and energies to the Company’s business and shall not beengaged in any other business activity, whether or not such business activityis pursued for gain, profit, or other pecuniary advantage unless such businessactivity is approved by the Compensation Committee (or, in the event theCompensation Committee ceases to exist, the Board).  However, subject to Article 11 herein and approval by theCompensation Committee (or the Board, as the case may be), the Executive mayserve as a director of other companies so long as such service is not injuriousto the Company.

 

## **Article 5**. Compensation

 

5.1                                 Asremuneration for all services to be rendered by the Executive during the termof this Agreement, and as consideration for complying with the covenantsherein, the Company shall pay and provide to the Executive those items setforth in Sections 5.2 through 5.8.

 

5.2                                 **Base Salary**.****TheCompany shall pay the Executive a Base Salary in an amount which shall beestablished from time to time by the Board of Directors of the Company or theBoard’s designee; provided, however, that such Base Salary shall not be lessthan TWO-HUNDRED-FIFTY-THOUSAND DOLLARS (US$250,000) per year.

 

(a)          This Base Salary shallbe paid to the Executive in equal installments throughout the year, consistentwith the normal payroll practices of the Company.

 

(b)         The Base Salary shall bereviewed at least annually following the Effective Date of this Agreement,while this Agreement is in force, to ascertain whether, in the judgment of theBoard or the Board’s designee, such Base Salary should be increased basedprimarily on the performance of the Executive during the year. If so increased,the Base Salary as stated above shall, likewise, be increased for all purposesof this Agreement and shall not, in any event, be decreased in any year.

 

5.3                                 **Annual Bonus**.****Inaddition to his Base Salary, the Executive shall be entitled to participate inthe Company’s annual short-term incentive program; as such program may existfrom time to time, at a level commensurate with the Position.  The percentage of Base Salary targeted asannual short-term incentive compensation shall be established for the Positionby the Company’s Compensation Committee in its sole discretion (the “targetedAnnual Bonus award”). Executive acknowledges that the amount of annualshort-term incentive, if any, to be awarded shall be at the sole discretion ofthe Company’s Compensation Committee, may be less or more than the targetedAnnual bonus award, and will be based on a number of factors set in advance bythe Compensation Committee for each calendar year, including the Company’sperformance and the Executive’s individual performance. Nothing in this Section5.3 shall be construed as obligating the Company or the Board to refrain fromchanging, 

 

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and/or amending theshort-term incentive program, so long as such changes are equally applicable toall executive employees in the Company.

 

5.4                                 **Long-TermIncentives**.****The Executive shall be eligible toparticipate in the Company’s long-term incentive plan, as such shall be amendedor superseded from time to time provided, however, that nothing in this Section5.4 shall be construed as obligating the Company or the Board to refrain fromchanging, and/or amending the long-term incentive plan, so long as such changesare equally applicable to all executive employees in the Company.

 

5.5                                 **RetirementBenefits**.****The Company shall provide to the Executiveparticipation in any Company qualified defined benefit and defined contributionretirement plans as may be established during the term of this Agreement;provided, however, that nothing in this Section 5.5 shall be construed asobligating the Company to refrain from changing, and/or amending thenonqualified retirement programs, so long as such changes are equallyapplicable to all executive employees in the Company.

 

5.6                                 **EmployeeBenefits**.****During the Term, and as otherwise providedwithin the provisions of each of the respective plans, the Company shallprovide to the Executive all benefits to which other executives and employeesof the Company are entitled to receive, as commensurate with the Position,subject to the eligibility requirements and other provisions of sucharrangements as applicable to executives of the Company generally.

 

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

 

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

 

5.7                                 **Vacation.**  The Executive shall be entitled to such paidvacation as is customary for the Position in corporate institutions of similarsize and character, but in any event not less than twenty (20) paid vacationdays during each calendar year; provided, however, that without prior writtenapproval, Executive may carry forward into the next year no more than ten (10)unused vacation days from the current year.

 

5.8                                 **Perquisites**.****TheCompany shall provide to the Executive, at the Company’s expense, all perquisites which the Board may determinefrom time to time to provide; provided, however, that nothing in thisSection 5.8 shall be construed as obligating the Company or the Board torefrain from changing, and/or amending the perquisite program, so long as suchchanges are equally applicable to all executive employees in the Company.

 

5.9                                 **Right toChange Plans**. The Company shall not be obligated to institute,maintain, or refrain from changing, amending, or discontinuing any benefitplan, program, or perquisite, so long as such changes are equally applicable toall executive employees in the Company.

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## **Article 6**. Expenses

 

6.1                                 Uponpresentation of appropriate documentation, the Company shall pay, or reimbursethe Executive for all ordinary and necessary expenses, in a reasonable amount,which the Executive incurs in performing his duties under this Agreementincluding, but not limited to, travel, entertainment, professional dues andsubscriptions, and all dues, fees, and expenses associated with membership invarious professional, business, and civic associations and societies.

 

## **Article 7**. Employment Terminations

 

7.1                                 **TerminationDue to Death**.****In the event the Executive’s employment isterminated while this Agreement is in force by reason of death, the Company’sobligations under this Agreement shall immediately expire. Notwithstanding theforegoing, the Company shall be obligated to pay to the Executive thefollowing:

 

(a)          Base Salary through theEffective Date of Termination;

 

(b)         An amount equal to theExecutive’s unpaid targeted Annual Bonus award, established for the fiscalyear in which such termination is effective, multiplied by a fraction, thenumerator of which is the number of completed days in the then-existing fiscalyear through the Effective Date of Termination, and the denominator of which isthree hundred sixty-five (365);

 

(c)          All outstandinglong-term incentive awards shall be subject to the treatment provided under theapplicable long-term incentive plan of the Company;

 

(d)         Accrued but unusedvacation pay through the Effective Date of Termination; and

 

(e)          All other rights andbenefits the Executive is vested in, pursuant to other plans and programs ofthe Company.

 

(f)            The benefits describedin Sections 7.1(a) and (d) shall be paid in cash to the Executive in a singlelump 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 dueto the Executive upon termination of employment, including those in Sections7.1(b) and (c), shall be paid in accordance with the terms of such applicableplans or programs.

 

(g)         With the exception of thecovenants 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 theExecutive thereafter shall have no further obligations under this Agreement.

 

7.2                                 **TerminationDue to Disability.**  In theevent that the Executive becomes Disabled during the term of this Agreement andis, therefore, unable to perform his duties herein for more

 

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than one hundred eighty (180) total calendar daysduring any period of twelve (12) consecutive months, or in the event of theBoard’s reasonable expectation that the Executive’s Disability will exist formore than a period of one hundred eighty (180) calendar days, the Company shallhave the right to terminate the Executive’s active employment as provided inthis Agreement.

 

(a)          The Board shall deliverwritten notice to the Executive of the Company’s intent to terminate forDisability at least thirty (30) calendar days prior to the Effective Date ofTermination.

 

(b)         Such Disability to bedetermined by the Board of Directors of the Company upon receipt of and inreliance on competent medical advice from one (1) or more individuals, selectedby the Board, who are qualified to give such professional medical advice.

 

(c)          A termination forDisability shall become effective upon the end of the thirty (30) day noticeperiod. Upon the Effective Date of Termination, the Company’s obligations underthis Agreement shall immediately expire.

 

(d)         Notwithstanding theforegoing, the Company shall be obligated to pay to the Executive thefollowing:

 

(1)          Base Salary through theEffective Date of Termination;

 

(2)          An amount equal to theExecutive’s unpaid targeted Annual Bonus award, established for the fiscalyear in which the Effective Date of Termination occurs, multiplied by afraction, the numerator of which is the number of completed days in thethen-existing fiscal year through the Effective Date of Termination, and thedenominator of which is three hundred sixty-five (365);

 

(3)          All outstandinglong-term incentive awards shall be subject to the treatment provided under theapplicable long-term incentive plan of the Company;

 

(4)          Accrued but unusedvacation pay through the Effective Date of Termination; and

 

(5)          All other rights andbenefits the Executive is vested in, pursuant to other plans and programs ofthe Company.

 

(e)          The benefits describedin Sections 7.2(d)(1) and (d)(4) shall be paid in cash to the Executive in asingle lump sum as soon as practicable following the Effective Date ofTermination, but in no event beyond thirty (30) days from such date. All otherpayments due to the Executive upon termination of employment, including thosein Sections 7.2(d)(2) and (d)(3), shall be paid in accordance with the terms ofsuch applicable plans or program.

 

(f)            With the exception ofthe 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 andthe Executive thereafter shall have no further obligations under thisAgreement.

 

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7.3                                 **VoluntaryTermination by the Executive**. The Executive may terminate thisAgreement at any time by giving Notice of Termination to the Board of Directorsof the Company, delivered at least fourteen (14) calendar days prior to the EffectiveDate of Termination.

 

(a)          The terminationautomatically shall become effective upon the expiration of the fourteen (14)day notice period. Notwithstanding the foregoing, the Company may waive thefourteen (14) day notice period; however, the Executive shall be entitled toreceive all elements of compensation described in Sections 5.1 through 5.6for the fourteen (14) day notice period, subject to the eligibility andparticipation requirements of any qualified retirement plan.

 

(b)         Upon the Effective Dateof Termination, following the expiration of the fourteen (14) day noticeperiod, the Company shall pay the Executive his full Base Salary and accruedbut unused vacation pay, at the rate then in effect, through the Effective Dateof Termination, plus all other benefits to which the Executive has a vestedright at that time (for this purpose, the Executive shall not be paid anyAnnual Bonus with respect to the fiscal year in which voluntary terminationunder this Section occurs).

 

(c)          With the exception ofthe 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 theExecutive thereafter shall have no further obligations under this Agreement.

 

7.4                                 **InvoluntaryTermination by the Company without Cause**. At all times during theTerm, the Chief Executive Officer of the Company may terminate the Executive’semployment for reasons other than death, Disability, or for Cause, by providingto the Executive a Notice of Termination, at least sixty (60) calendar days(ninety (90) calendar days when termination is due to non-renewal of thisAgreement by the Company pursuant to Section 1.2) prior to the Effective Dateof Termination; provided, however, that such notice shall not preclude theCompany from requiring Executive to leave the Company immediately upon receiptof such notice.

 

(a)          Such Notice ofTermination shall be irrevocable absent express, mutual consent of the parties.

 

(b)         Upon the Effective Dateof Termination (not a Qualifying Termination), following the expiration of thesixty (60) day notice period (90 days in the case of non-renewal), the Companyshall pay and provide to the Executive:

 

(1)          An amount equal to theService Multiple times the Executive’s annual Base Salary established for thefiscal year in which the Effective Date of Termination occurs;

 

(2)          An amount equal to theService Multiple times the Executive’s targeted Annual Bonus award establishedfor 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 afterthe Employment Date;

 

(3)          A continuation of thewelfare 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, thenprovision at the Company’s expense but subject to payment by Executive of thosepayments which Executive would have been obligated to make under the Company’sthen current plan, of substantially similar welfare benefits from one or morethird party providers) after the Effective Date of Termination for a number ofmonths equal to the Service Multiple times twelve (12). These benefits shall beprovided to the Executive at the same coverage level as in effect as of theEffective Date of Termination, and at the same premium cost to the Executivethat 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 changefor all employees of the Company, or for management employees with respect tosupplemental benefits, the cost and/or coverage level, likewise, shall changefor the Executive in a corresponding manner. The continuation of these welfarebenefits shall be discontinued if prior to the expiration of the period, theExecutive has available similar benefits at a comparable cost to the Executivefrom a subsequent employer, as determined by the Compensation Committee (or, inthe event the Compensation Committee ceases to exist, the Board);

 

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

 

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

 

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

 

(c)          For purposes of thisSection 7.4, the term “Service Multiple” shall be equal to the quotientresulting from a formula the numerator of which is the lesser of (a) fullnumber of completed months that have elapsed since the Employment Date (but notless than six (6) months) and (b) eighteen (18) and the denominator of which istwelve (12);

 

(d)         In the event that theBoard terminates the Executive’s employment without Cause on or after the dateof the announcement of the transaction that leads to a CIC, the Executive shallbe entitled to the CIC Severance Benefits as provided in Section 8.3 inlieu of the Severance Benefits outlined in this Section 7.4.

 

(e)          Payment of all of thebenefits described in Section 7.4(b)(1) shall be paid in cash to the Executivein equal bi-weekly installments over a period of consecutive months equal tothe Service Multiple times twelve (12) and beginning on the fifteenth day ofthe month following the month in which the Effective Date of Terminationoccurs.

 

(f)            Payment of all butforty thousand dollars ($40,000) of the benefits described inSection 7.4(b)(2) shall be paid in cash to the Executive in a single lumpsum as soon as practicable following the Effective Date of Termination, but inno event beyond thirty (30) days from such date.  The forty thousand dollars ($40,000) which was withheld shall bepaid 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 thisAgreement.

 

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(g)         Except as specificallyprovided in Section 7.4(e) and (f), all other payments due to the Executiveupon termination of employment shall be paid in accordance with the terms ofsuch applicable plans or programs.

 

(h)         With the exception of thecovenants 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 theExecutive thereafter shall have no further obligations under this Agreement.

 

(i)             Notwithstandinganything herein to the contrary, the Company’s payment obligations under thisSection 7.4 shall be offset by any amounts that the Company is required to payto the Executive under a national statutory severance program applicable tosuch Executive.

 

7.5                                 **Terminationfor Cause**. Nothing in this Agreement shall be construed to preventthe Chief Executive Officer from terminating the Executive’s employment underthis Agreement for Cause.

 

(a)          To be effective, theNotice of Termination must set forth in reasonable detail the facts andcircumstances claimed to provide a basis for such termination for Cause.

 

(b)         In the event thisAgreement is terminated by the Chief Executive Officer of the Company forCause, the Company shall pay the Executive his Base Salary and accrued vacationpay through the Effective Date of Termination, and the Executive shallimmediately thereafter forfeit all rights and benefits (other than vestedbenefits) he would otherwise have been entitled to receive under thisAgreement. The Company and the Executive thereafter shall have no furtherobligations under this Agreement with the exception of the covenants containedin Articles 9, 10, 11, and 14 and Sections 13.3, 13.5, and 13.9 herein (whichshall survive such termination).

 

7.6                                 **Terminationfor Good Reason**.****Except where Section 2.20(d) isapplicable, 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 oftermination by Executive may only be given pursuant to Section 7.3.  The Executive shall have sixty (60) daysfrom the date he learns of action taken by the Company that allows theExecutive to terminate his employment for Good Reason to provide the Board witha Notice of Termination.

 

(a)          The Notice ofTermination must set forth in reasonable detail the facts and circumstancesclaimed to provide a basis for such Good Reason termination.

 

(b)         The Company shall havethirty (30) days to cure such Company action following receipt of the Notice ofTermination.

 

(c)          The Executive isrequired to continue his employment for the sixty (60) day period following thedate in which he provided the Notice of Termination to the Board. The Companymay waive the sixty (60) day notice period; however, the Executive shall beentitled to receive all elements of compensation described in Sections 5.1through 5.6 for the sixty (60) day notice period, subject to the eligibilityand participation requirements of any qualified retirement plan.

 

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(d)         Upon a termination of theExecutive’s employment for Good Reason during the Term, and following theexpiration of the sixty (60) day notice period, the Company shall pay andprovide to the Executive the following:

 

(1)          An amount equal toone-and-one-half (1.5) times the Executive’s annual Base Salary established forthe fiscal year in which the Effective Date of Termination occurs;

 

(2)          An amount equal toone-and-one-half (1.5) times the Executive’s targeted Annual Bonus awardestablished for the fiscal year in which the Effective Date of Terminationoccurs;

 

(3)          A continuation of thewelfare benefits of health care, life and accidental death and dismemberment,and disability insurance coverage for one-and-one-half (1.5) years after theEffective Date of Termination (or if continuation under the Company’s thencurrent plans is not allowed, then provision at the Company’s expense butsubject to payment by Executive of those payments which Executive would havebeen obligated to make under the Company’s then current plan, of substantiallysimilar welfare benefits from one or more third party providers). Thesebenefits shall be provided to the Executive at the same coverage level, as ineffect as of the Effective Date of Termination and at the same premium cost tothe Executive that was paid by the Executive at the time such benefits wereprovided. However, in the event the premium cost and/or level of coverage shallchange for all employees of the Company, or for management employees withrespect to supplemental benefits, the cost and/or coverage level, likewise,shall change for the Executive in a corresponding manner. The continuation ofthese welfare benefits shall be discontinued prior to the end of theone-and-one-half (1.5) year period in the event the Executive has availablesubstantially similar benefits at a comparable cost to the Executive from asubsequent employer, as determined by the Compensation Committee (or, in theevent the Compensation Committee ceases to exist, the Board);

 

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

 

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

 

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

 

(e)          In the event oftermination of Executive’s employment for Good Reason on or after the date ofthe announcement of the transaction which leads to the CIC and up totwenty-four (24) months following the date of the CIC, the Executive shall beentitled to the CIC Severance Benefits as provided in Section 8.3 in lieuof the Severance Benefits outlined in this Section 7.6.

 

(f)            The Executive’s rightto terminate employment for Good Reason shall not be affected by theExecutive’s incapacity due to physical or mental illness unless such incapacityis determined to constitute a Disability as provided herein.

 

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(g)         Payment of all but fortythousand 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 paidin cash to the Executive in a single lump sum as soon as practicable followingthe Effective Date of Termination, but in no event beyond thirty (30) days fromsuch date. The forty thousand dollars ($40,000) which was withheld shall bepaid in cash to the Executive in a single lump sum at the end of thetwelve (12) month restrictive period set forth in Sections 11.2 and 11.3of this Agreement.

 

(h)         Except as specificallyprovided in Section 7.6(g), all other payments due to the Executive upontermination of employment shall be paid in accordance with the terms of suchapplicable plans or programs.

 

(i)             Notwithstandinganything herein to the contrary, the Company’s payment obligations under thisSection 7.6 shall be offset by any amounts that the Company is required to payto the Executive under a national statutory severance program applicable tosuch Executive.

 

(j)             With the exceptionsof the covenants contained in Articles 8, 9, 10, 11, 12 and 14 and Sections7.6, 13.3, 13.5, and 13.7 (which shall survive such termination) herein, theCompany and the Executive thereafter shall have no further obligations under thisAgreement.

 

## **Article 8**. Change in Control

 

8.1                                 **EmploymentTermination Following a Change in Control**.****The Executive shall beentitled to receive from the Company CIC Severance Benefits if a Notice ofTermination for a Qualifying Termination of the Executive has been delivered;provided, that:

 

(a)          The Executive shall notbe entitled to receive CIC Severance Benefits if he is terminated for Cause (asprovided in Section 7.5 herein), or if his employment with the Company ends dueto death, or Disability, or due to voluntary termination of employment by theExecutive without Good Reason.

 

(b)         CIC Severance Benefitsshall be paid in lieu of all other benefits provided to the Executive under theterms of this Agreement.

 

8.2                          **QualifyingTermination**.****The occurrence of any one or more of thefollowing events on or after the date of the announcement of the transactionwhich leads to the CIC and up to twenty-four (24) months following the date ofthe CIC shall trigger the payment of CIC Severance Benefits to the Executiveunder this Agreement:

 

(a)          An involuntarytermination of the Executive’s employment by the Company for reasons other thanCause, death, or Disability, as evidenced by a Notice of Termination deliveredby the Company to the Executive;

 

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(b)         A voluntary terminationby the Executive for Good Reason as evidenced by a Notice of Terminationdelivered to the Company by the Executive;

 

(c)          Failure to renew thisAgreement (if the Agreement would expire unless renewed within such period), asevidenced by a Notice of Termination delivered by the Company tothe Executive; or

 

(d)         The Company or anySuccessor Company materially breaches any material provision of this Agreementand does not cure such breach within thirty (30) days of receiving a writtennotice from the Executive with such notice explaining in reasonable detail thefacts and circumstances claimed to provide a basis for the Executive’s claim.

 

8.3                                 **SeveranceBenefits Paid upon a Qualifying Termination**.****In the event the Executivebecomes entitled to receive CIC Severance Benefits, the Company shall pay tothe Executive and provide him the following:

 

(a)                                  Anamount equal to two (2)****times the Executive’s annual Base Salaryestablished for the fiscal year in which the Effective Date of Terminationoccurs;

 

(b)                                 Anamount equal to two (2)****times the Executive’s targeted AnnualBonus award established for the fiscal year in which the Executive’s EffectiveDate of Termination occurs;

 

(c)                                  Anamount equal to the Executive’s unpaid Base Salary and accrued but unusedvacation pay through the Effective Date of Termination;

 

(d)                                 Alloutstanding long-term incentive awards shall be subject to the treatmentprovided under the applicable long-term incentive plan of the Company;

 

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

 

(1)                                  Thesebenefits shall be provided to the Executive at the same coverage level, as ineffect as of the Effective Date of Termination or, if greater, as in effectsixty (60) days prior to the date of the Change in Control, and at the samepremium cost to the Executive which was paid by the Executive at the time suchbenefits were provided.

 

(2)                                  Inthe event the premium cost and/or level of coverage shall change for allemployees of the Company, or for management employees with respect tosupplemental benefits, the cost and/or coverage level, likewise, shall changefor the Executive in a corresponding manner.

 

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(3)                                  Thecontinuation of these welfare benefits shall be discontinued prior to the endof the****two-yearperiod in the event the Executive has available substantially similar benefitsat a comparable cost to the Executive from a subsequent employer, as determinedby the Compensation Committee (or, in the event the Compensation Committeeceases to exist, the Board).

 

8.4                                 **Form andTiming of Severance Benefit**. Payment of all of the benefitsdescribed in Sections 8.3(a) through (c) shall be paid in cash to the Executivein a single lump sum as soon as practicable following the Effective Date ofTermination, but in no event beyond thirty (30) days from such date. All otherpayments due to the Executive upon termination of employment shall be paid inaccordance 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 bythe Company pursuant to Section 280G and 4999 of the Code that a goldenparachute excise tax is due, the benefits provided to the Executive under thisAgreement that are classified as “parachute payments” (as such term is definedin Section 280G of the Code), shall be limited to the amount just necessary toavoid the excise tax.

 

(a)          This limitation shall beapplied if, and only if, such a limitation results in a greater net (of excisetax) cash benefit to the Executive than he would receive had the benefits notbeen capped and an excise tax been levied.

 

8.6                                 Withthe exceptions of the covenants contained in Articles 8, 9, 10, 11, 12 and 14and Sections 13.3, 13.5, and 13.7 (which shall survive such termination)herein, the Company and the Executive thereafter shall have no furtherobligations under this Agreement.

 

## **Article 9**. Assignment

 

9.1                                 **Assignmentby Company**.****This Agreement may and shall be assignedor transferred to, and shall be binding upon and shall inure to the benefit of any SuccessorCompany, with Successor Company for purposes of this Agreement being defined asa company that (i) acquires greater than fifty percent (50%) of the assets ofthe Company or (ii) acquires greater than fifty percent (50%) of theoutstanding stock of the Company, or (iii) is the surviving entity in the eventof a CIC.

 

(a)          Any such SuccessorCompany shall be deemed substituted for all purposes of the “Company” under theterms of this Agreement.

 

(b)         Failure of the Company toobtain the agreement of any Successor Company to be bound by the terms of thisAgreement prior to the effectiveness of any such succession shall be a breachof this Agreement, and shall immediately entitle the Executive to benefits fromthe Company in the same amount and on the same terms as the Executive would beentitled to receive in the event of a termination of employment for Good Reasonas provided in Section 7.7 (failure not related to a Change in Control) or Section8.3 (if the failure of assignment follows or is in connection with a Change inControl).

 

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(c)          Except as hereinprovided, this Agreement may not otherwise be assigned by the Company.

 

9.2                                 **Assignmentby Executive**.****This Agreement shall inure to the benefitof and be enforceable by the Executive’s personal or legal representatives,executors, administrators, successors, heirs, distributees, devisees, andlegatees.

 

(a)          If the Executive dieswhile any amount would still be payable to him pursuant to this Agreement hadhe continued to live, all such amounts, unless otherwise provided herein, shallbe paid in accordance with the terms of this Agreement, to the Executive’sBeneficiary.

 

(b)         If the Executive has notnamed a Beneficiary, then such amounts shall be paid to the Executive’sdevisee, legatee, or other designee, or if there is no such designee, to theExecutive’s estate.

 

## **Article 10**. Legal Fees and Notice

 

10.1                           **Payment ofLegal Fees**.****To theextent permitted by law, the Company shall pay all legal fees, costs oflitigation, prejudgment interest, and other expenses incurred by Executive incontesting a termination, if Executive prevails.

 

10.2                           **Notice**.****Anynotices, requests, demands, or other communications provided by this Agreementshall be sufficient if in writing and if sent by registered or certifiedmail to the Executive at the last address he has filed in writing with theCompany or, in the case of the Company, at its principal offices to the attentionof the General Counsel.

 

## **Article 11**. Confidentiality and Noncompetition

 

11.1                           **Disclosureof Information**.****The Executive recognizes that he hasaccess to and knowledge of confidential and proprietary information of theCompany that is essential to the performance of his duties under thisAgreement.

 

(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 assuch information has not otherwise been disclosed to the public or is nototherwise in the public domain except as required by law or pursuant toadministrative or legal process.

 

11.2                           **CovenantsRegarding Other Employees**. During the term of this Agreement, andfor a period of twelve (12) months following the Executive’s termination ofemployment for any 

 

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reason, the Executive agrees not to actively solicitany employee of the Company to terminate his or her employment with the Companyor to interfere in a similar manner with the business of the Company.

 

11.3                           **NoncompeteFollowing a Termination of Employment**.****From the Effective Date ofthis Agreement until six (6) months following the Executive’s Effective Date ofTermination for any reason, the Executive will not: (a) directly or indirectlyown any equity or proprietary interest in (except for ownership of shares in apublicly traded company not exceeding three percent (3%) of any class ofoutstanding securities), or be an employee, agent, director, advisor, orconsultant to or for any competitor of the Company, whether on his own behalfor on behalf of any person; or (b) undertake any action to induce or causeany customer or client to discontinue any part of its business with theCompany.

 

11.4                           **Waiver ofCovenants Upon a Change in Control.**Upon the occurrence of a Changein Control, the Executive shall be released from each of the covenants setforth in Section 11.2 and 11.3, if such Executive is terminated by the Companywithout Cause or if the Executive terminates his employment with the Companyfor Good Reason.

## ** **

## **Article 12**. Outplacement Assistance

 

12.1                           Following a termination of employment, other than for Cause, theExecutive shall be reimbursed by the Company for the costs of all outplacementservices obtained by the Executive within the two (2) year period after theEffective Date of Termination; provided, however, that the total reimbursementshall be limited to an amount equal to twenty percent (20%) of the Executive’sBase Salary as of the effective date of termination.

 

## **Article 13**. Miscellaneous

 

13.1                           **EntireAgreement**.****With the exception of the Company’sProprietary Information and Inventions Agreement previously executed byExecutive, 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 agreementof the parties with respect thereto.

 

13.2                           **Modification**.****ThisAgreement shall not be varied, altered, modified, canceled, changed, or in anyway amended except by mutual agreement of the parties in a written instrumentexecuted by the parties hereto or their legal representatives.

 

13.3                           **Severability**.****Inthe event that any provision or portion of this Agreement shall be determinedto be invalid or unenforceable for any reason, the remaining provisions of thisAgreement shall be unaffected thereby and shall remain in full force andeffect.

 

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13.4                           **Counterparts**.****ThisAgreement may be executed in one (1) or more counterparts, each of which shallbe deemed to be an original, but all of which together will constitute one andthe same Agreement.

 

13.5                           **TaxWithholding**.****The Company may withhold from any benefitspayable under this Agreement all federal, state, city, or other taxes as may berequired pursuant to any law or governmental regulation or ruling.

 

13.6                           **Beneficiaries**.****Tothe extend allowed by law, any payments or benefits hereunder due to theExecutive at the time of his death shall nonetheless be paid or provided andthe Executive may designate one or more persons or entities as the primaryand/or contingent beneficiaries of any amounts to be received under thisAgreement. Such designation must be in the form of a signed writing acceptableto the Board or the Board’s designee. The Executive may make or change suchdesignation at any time.

 

13.7                           **PaymentObligation Absolute**. Absent actions deliberately or willfully takenby the Executive to materially injure the Company, the Company’s obligation tomake the payments and the arrangement provided for herein shall be absolute andunconditional, and shall not be affected by any circumstances, including,without limitation, any offset, counterclaim, recoupment, defense, or otherright which the Company may have against the Executive or anyone else.

 

(a)          All amounts payable bythe Company hereunder shall be paid without notice or demand. Subject to theprovisions set forth in Sections 7.4 and 7.6, and Article 11, each andevery payment made hereunder by the Company shall be final, and the Companyshall not seek to recover all or any part of such payment from the Executive orfrom whomsoever may be entitled thereto, for any reasons whatsoever.

 

(b)         With the exception of theCompany’s willful material breach of its payment obligations under Articles 7and 8 of this Agreement (provided, however, that no such breach shall be deemedto have occurred until the Executive has provided the Board with written noticeof such breach and a reasonable opportunity for cure), the restrictivecovenants contained in Article 11 are independent of any other contractualobligations in this Agreement or otherwise owed by the Company to theExecutive. Except as provided in this paragraph, the existence of any claim orcause of action by Executive against the Company, whether based on thisAgreement or otherwise, shall not create a defense to the enforcement by theCompany of any restrictive covenant contained herein.

 

(c)          The Executive shall notbe obligated to seek other employment in mitigation of the amounts payable orarrangements made under any provision of this Agreement, and the obtaining ofany such other employment shall in no event effect any reduction of theCompany’s obligations to make the payments and arrangements required to be madeunder this Agreement.

 

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## **Article 14**. Governing Law

 

14.1                           To theextent not preempted by federal law, the provisions of this Agreement shall beconstrued and enforced in accordance with the laws of the state of New Jersey.

** **

**IN WITNESS WHEREOF**, the Company, throughits duly authorized representative, and the Executive have executed thisAgreement 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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