**Exhibit 10.2**

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made and entered into as of the 17th day of June,2004, by and between NEOPHARM, INC., a Delaware corporation (the “Company”) andGREGORY P. YOUNG (“Executive”).

 

WITNESSETH:

 

WHEREAS, the Company desires to employ the Executive and the Executivedesires to accept such employment, upon the terms and conditions hereinafterset forth;

 

NOW, THEREFORE, in consideration of the covenants and mutual agreementsset forth herein and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto do herebyagree as follows:

 

1.                                       Employment.  Throughout the Term (as defined inSection 2 below), the Company shall employ Executive as provided herein,and Executive hereby accepts such employment. In accepting such employment, Executive states that, to the best of hisknowledge, (i) he is not now, and by accepting such employment, will not be,under any restrictions in the performance of the duties contemplated under thisAgreement as a result of the provisions of any prior employment agreement ornon-compete or similar agreement to which Executive is or was a party; and (ii)he will not make use of or reveal to anyone employed by or affiliated with theCompany any information that is of a confidential or proprietary nature whichhe has obtained or which has been disclosed to him as a result of his positionwith any entity with which he has been previously employed or affiliated.

 

2.                                       Term ofEmployment.  The term of Executive’semployment by the Company hereunder shall commence on July 13, 2004, orsuch earlier date as Executive and the Company may mutually agree (the“Effective Date”) and shall continue thereafter unless sooner terminated as aresult of Executive’s death or in accordance with the provisions ofSection 7 below (the “Term”).

 

3.                                       Duties.  Throughout the Term, and except as otherwiseexpressly provided herein, Executive shall be employed by the Company as thePresident and Chief Executive Officer (“CEO”) of the Company.  In such capacity, Executive shall devote hisfull time to the performance of his duties as President and CEO of the Companyin accordance with the Company’s By-laws, this Agreement and the directions ofthe Company’s Board of Directors.  Inaddition, the Company shall promptly appoint Executive to the Board andthereafter nominate Executive as a nominee for election to the Board andsolicit proxies for his election for so long as this Agreement is in effect.  Without limiting the generality of theforegoing, throughout the Term, Executive shall faithfully perform his dutiesas President and CEO at all times so as to promote the best interests of theCompany.

 

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4.                                       Compensation.

 

(a)                                  Base Salary.  For any and all services performed by Executiveunder this Agreement during the Term, in whatever capacity, the Company shallpay to Executive an annual salary of Three Hundred Twenty-Five Thousand Dollars($325,000) per year (the “Base Salary”), less any and all applicable federal,state and local payroll and withholding taxes. The Base Salary shall be paid in the same increments as the Company’snormal payroll, but no less frequent than monthly and prorated, however, forany period of less than a full month. The Salary will be reviewed annually by the Compensation Committee ofthe Board of Directors and a determination shall be made at that time as to theappropriateness of an increase, if any, thereto.

 

(b)                                 Sign-On Bonus.  If the Executive commences employment withthe Company on or before July 13, 2004, the Company will pay Executive asign-on bonus of Ninety-Seven Thousand Five Hundred Dollars ($97,500) (the“Sign-on Bonus”) with such Sign-on Bonus, if earned, being paid in twoinstallments, with the first installment of Twenty-Five Thousand ($25,000)being paid upon the Effective Date, with the balance of Seventy-Two ThousandFive Hundred ($72,500) being paid in a second installment payment onFebruary 15, 2005.

 

(c)                                  Bonus.  In addition to the Base Salary, Executiveshall be eligible to receive from the Company an annual incentive compensationbonus (the “Bonus”) based on a percentage of his Base Salary.  The Bonus, if any, shall be determined basedon the achievement by the Company of certain specific strategic plans and goals(the “Performance Goals”) during the preceding calendar year (the “MeasurementPeriod”) as shall be determined by the Board in consultation with theExecutive.  The initial PerformanceGoals will be established by the Board within ninety (90) days of Executive’semployment hereunder.  Thereafter, thePerformance Goals for each Measurement Period shall be established as promptlyas possible in each such Measurement Period, with the expectation that thePerformance Goals be in place each year prior to distribution of the Company’sannual proxy materials.  Following eachMeasurement Period, the Compensation Committee of the Board shall review thePerformance Goals for the prior Measurement Period in light of the Company’sactual performance during such Measurement Period as reflected on the Company’saudited financial statements. Achievement of various levels of the Performance Goals shall result inthe following payments as a percentage of Salary:

 
| **Level of Achievement** |   | **Bonus as  Percent of Salary** |   |
|--------------------------|--------|---------------------------------|--------|
| Below Threshold          |   | 0                               | %      |
| Threshold Goal           |   | 20-50                           | %      |
| Target Goal              |   | 50                              | %      |
| Overachievement Goal     |   | 50-80                           | %      |

 

Payment of each year’s Bonus, if any, shallbe made within thirty (30) days after the Company’s performance for theMeasurement Period is established on the basis of the Company’s auditedfinancial statements.  In addition, andat its 

 

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sole discretion, the Board may award additional compensation toExecutive based on Executive’s contributions to the Company.  For the 2004 Measurement Period, the Bonus,if any, shall be prorated to take into account the shortened MeasurementPeriod.

 

5.                                       Benefits andOther Rights.  In consideration forExecutive’s performance under this Agreement, the Company shall provide toExecutive the following benefits:

 

(a)                                  The Company willprovide Executive with cash advances for or reimbursement of all reasonableout-of-pocket business expenses incurred by Executive in connection with hisemployment hereunder;  provided,however, Executive adheres to any and all reasonable policies established bythe Company from time to time with respect to such reimbursements or advances,including, but not limited to, a requirement that Executive submit supportingevidence of any such expenses to the Company.

 

(b)                                 The Company willprovide Executive with a monthly car allowance in the amount of Six HundredDollars ($600.00) subject to standard payroll withholding for taxes.

 

(c)                                  The Company willreimburse Executive for the cost of financial and estate planning up to amaximum of $3,000 per year.

 

(d)                                 The Company willprovide Executive and his family with the opportunity to receive group medicalcoverage under the terms of the Company’s health insurance plan, but subject tocompletion of normal waiting periods.  Duringany such waiting period, the Company will pay, or reimburse Executive for, thecost of COBRA coverage for Executive and his family under his prior healthplan.

 

(e)                                  During the Term theExecutive shall be entitled to four (4) weeks paid vacation, it beingunderstood and agreed that unused vacation shall not be carried over from oneyear to the next.

 

(f)                                    During the TermExecutive shall be eligible to participate in the Company’s 401(k) program andlife insurance programs, if any, subject to satisfying any eligibility requirementsfor said benefits.

 

6.                                       Options.

 

(a)                                  The Company shallgrant to Executive options pursuant to the Company’s 1998 Equity Incentive Plan(the “Option Plan”), as amended, to purchase 250,000 shares of the Company’scommon stock (the “Initial Options”) at an option exercise price of 85% of theFair Market Value (as determined under the Option Plan) of the Company’s commonstock as of the Effective Date, which date shall be the date of grant of theInitial Options for purposes of the Option Plan (the “Date of Grant”).  The Initial Options shall vest in equalinstallments of 62,500 Initial Options per year on each of the first fouranniversaries of the Date of Grant.  TheInitial Options shall not be exercisable subsequent to the date ten (10)

 

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years after the Date of Grant. In all other respects the InitialOptions shall be governed by the terms and conditions of the Option Plan.

 

(b)                                 Contingent Options.  As additional consideration for Executive toaccept employment, and as an incentive to enhance the performance of theCompany, the Company will reserve an additional 350,000 options under theOption Plan (the “Contingent Options”) for possible grant to Executive uponsatisfaction of the following conditions to grant:

 

(i)                                     If during theTerm, the closing stock price for the Company’s common stock as reported in theWall Street Journal, or if the Wall Street Journal shall not then be published,such other national business paper as shall be selected by the Company, on theNational Association of Securities Dealers Inc.’s Nasdaq National Market, or,if the Company’s common stock is not then traded on the Nasdaq National Market,such other market which the Company may hereafter designate as the principal tradingmarket for the Company’s common stock (the “Trading Market”) is: (x) in excessof $18.00 per share for ten (10) consecutive “Trading Days” (as used hereinTrading Days shall mean days when the Trading Market is open for business andthe common shares of the Company are actively traded), the Company willpromptly thereafter grant to Executive 50,000 additional options at an exerciseprice equal to the Fair Market Value of the Company’s common stock at the dateof grant of such options, with such options vesting at the rate of 12,500options per year on each of the next four anniversaries of the date of grant inaccordance with the terms of the Option Plan, (y) in excess of $25.00 per sharefor ten (10) consecutive Trading Days, the Company will promptly grant toExecutive another 50,000 options at an exercise price equal to the Fair MarketValue of the Company’s common stock at the date of grant of such options, withsuch options vesting at the rate of 12,500 options per year on each of the nextfour anniversaries of the date of grant in accordance with the terms of theOption Plan, and (z) in excess of $35.00 per share for ten (10) consecutiveTrading Days, the Company will promptly grant to Executive an additional250,000 options at an exercise price equal to the Fair Market Value of theCompany’s common stock at the date of grant of such options, with none of such250,000 options, however, vesting until the third anniversary of the date ofgrant.

 

(ii)                                  All of the ContingentOptions, and the target stock prices for the grant of such Contingent Optionsas set forth in § 6(b)(i) shall be adjusted, if necessary, to accuratelyand equitably reflect any stock dividends, stock splits or other stockadjustments that may be announced from time to time by the Company during theTerm.

 

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7.                                       Terminationof the Term.

 

(a)                                  The Company shallhave the right to terminate the Term under the following circumstances:

 

(i)                                     Executive shalldie;

 

(ii)                                  With or withoutCause, as herein defined, effective upon written notice to Executive by theCompany; or,

 

(iii)                               Upon or within one (1)year following a Change of Control, as herein defined.

 

(b)                                 Executive****shall have the right to terminate the Termunder the following circumstances:

 

(i)                                     At any time uponsixty (60) days prior written notice to the Company; or

 

(ii)                                  For Good Reason, asherein defined, upon or within one (1) year following a Change of Control.

 

(c)                                  For purposes of thisAgreement, “Cause” shall mean:

 

(i)                                     Executive shall beconvicted of the commission of a felony or a crime involving dishonesty, fraudor moral turpitude;

 

(ii)                                  Executive has engagedin acts of fraud, embezzlement, theft or other dishonest acts against theCompany;

 

(iii)                               Executive commits an actwhich negatively impacts the Company or its employees including, but notlimited to, engaging in competition with the Company, disclosing confidentialinformation or engaging in sexual harassment, discrimination or other humanrights-type violations;

 

(iv)                              Executive’s gross neglector willful misconduct in the discharge of his duties and responsibilities; or

 

(v)                                 Executive’s repeatedrefusal to follow the lawful direction of the Board of Directors or supervisingofficers.

 

(d)                                 For purposes of thisAgreement, “Change of Control” shall mean the occurrence of any of thefollowing:

 

(i)                                     The acquisition(other than by a direct purchase of shares from the Company) by any “person,”including a “syndication” or “group”, as those terms are used inSection 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, asamended (other than any such person currently owning in

 

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excess of the following amount), of securities representing 20% or moreof the combined voting power of the Company’s then outstanding votingsecurities, which is any security that ordinarily possesses the power to votein the election of the Board of Directors of a corporation without thehappening of any precondition or contingency;

 

(ii)           The Company is merged or consolidated withanother corporation and immediately after giving effect to the merger orconsolidation less than 80% of the outstanding voting securities of thesurviving or resulting entity are then beneficially owned in the aggregate by(x) the stockholders of the Company immediately prior to such merger orconsolidation, or (y) if a record date has been set to determinate thestockholders of the Company entitled to vote on such merger or consolidation,the stockholders of the Company as of such record date;

 

(iii)          If at any time during a calendar year amajority of the directors of the Company are not persons who were directors atthe beginning of the calendar year or are not persons who were nominated orapproved for election by a majority of directors who were directors at thebeginning of the year (or are deemed to have been in office as of such datethrough the prior operation of this provision); or

 

(iv)          The Company transfers substantially all ofits assets to another corporation which is a less than 80% owned subsidiary ofthe Company.

 

(e)                                  For purposes of thisAgreement, “Good Reason” shall mean the occurrence of any one or more of thefollowing events which continues uncured for a period of not less than thirty(30) days following written notice given by the Executive to the Company withinfifteen (15) days following the occurrence of such event, unless the Executivespecifically agrees in writing that such event shall not be Good Reason:

 

(i)                                     Any materialbreach of this Agreement by the Company;

 

(ii)                                  Any failure tocontinue the Executive as an executive officer of the Company;

 

(iii)                               The requirement by theCompany that Executive perform his services hereunder primarily at a locationoutside of the metropolitan Chicago, Illinois area; or

 

(iv)                              The reduction of theEmployee’s Base Salary below the amount set forth in Section 4(a) abovewithout the written consent of Executive.

 

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8.                                       Effect ofExpiration or Termination of the Term. Promptly following the termination of the Term, and except otherwiseexpressly agreed to by the Company, Executive shall:

 

(a)                                  Immediately resignfrom any and all other positions or committees which Executive holds or is amember of with the Company or any subsidiary of the Company, including, but notlimited to, as an officer and director of the Company or any subsidiary of theCompany.

 

(b)                                 Provide the Companywith all reasonable assistance necessary to permit the Company to continue itsbusiness operations without interruption and in a manner consistent withreasonable business practices; provided, however, that such transition periodshall not exceed thirty (30) days after termination nor require more thantwenty (20) hours of Executive’s time per week and Executive shall be promptlyreimbursed for all out-of-pocket expenses.

 

(c)                                  Deliver to theCompany possession of any and all property owned or leased by the Company whichmay then be in Executive’s possession or under his control, including, withoutlimitation, any and all such keys, credit cards, automobiles, equipment,supplies, books, records, files, computer equipment, computer software andother such tangible and intangible property of any description whatsoever.  If, following the expiration or terminationof the Term, Executive shall receive any mail addressed to the Company, thenExecutive shall immediately deliver such mail, unopened and in its originalenvelope or package, to the Company;

 

(d)                                 Other than asspecifically provided in this Section 8, upon a termination of employmentall other benefits and/or entitlements to participate in programs or benefits,if any, will cease as of the effective date of such termination

 

(e)                                  Upon termination ofthe Executive pursuant to § 7(a)(ii), without Cause, following the six (6)month anniversary of the Effective Date, the Company shall provide Executivewith Base Salary continuance, subject to § 8(h), for twelve (12) months (a“Salary Continuance”) at the rate in effect immediately prior to termination.

 

(f)                                    Upon termination ofExecutive pursuant to § 7(a)(i) and § 7(a)(ii) with Cause or§ 7(b)(i), the Company shall pay Executive or Executive’s estate all BaseSalary accrued, but unpaid, as of the date of such termination.

 

(g)                                 Upon termination ofExecutive pursuant to §7(a)(iii) or § 7(b)(ii), the Company shall:  (i) provide Executive with SalaryContinuance for twelve (12) months at the rate in effect immediately prior totermination, plus (ii) a lump sum payment equal to one hundred percent (100%)of the Bonus, if any, paid to Executive for the calendar year immediatelypreceding such termination, plus (iii) all of Executive’s then unvestedoptions, if any, previously issued pursuant to the Option Plan shallimmediately vest and be exercisable as provided in the Option Plan.

 

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(h)                                 In the event thatExecutive shall be entitled to receive a Salary Continuance pursuant to§ 8(e), such Salary Continuance shall continue only until such time asExecutive shall have accepted another full-time position.  In addition, in the event that Executiveshall perform consulting or other services during the period he is receivingany Salary Continuance for which he shall receive compensation, allcompensation shall be reported to the Company and shall be offset against anyremaining Salary Continuance payments. Failure of Executive to promptly report the receipt of any compensationfrom a third party or the acceptance of a new position shall entitle theCompany to terminate all remaining Salary Continuance and to seek restitutionfor any payments made to Executive subsequent to such job acceptance orcompensation receipt.

 

(i)                                     Any SalaryContinuance payments shall be made in accordance with the usual payrollpractices which were applicable prior to termination. Except as otherwisespecifically set forth herein, any and all payments made pursuant to thisAgreement shall be net of any and all applicable federal, state and localpayroll and withholding taxes.

 

(j)                                     If the Company orthe Company’s accountants determine that the payments called for underSection 8(g) of this Agreement either alone or in conjunction with anyother payments or benefits made available to the Executive by the Company willresult in the Executive being subject to an excise tax (“Excise Tax”) underSection 4999 of the Internal Revenue Code of 1986, as amended (the“Code”), or if an Excise Tax is assessed against Executive as a result of suchpayments or other benefits, the Company shall make a Gross-Up Payment (as definedbelow) to or on behalf of Executive as and when such determination(s) andassessments(s), as appropriate, are made, subject to the conditions of thissubsection (j).  A “Gross-UpPayment” shall mean a payment to or on behalf of Executive that shall besufficient to pay (i) any Excise Tax in full, (ii) any federal, state and localincome tax and Social Security or other employment tax on the payment made topay such Excise Tax as well as any additional Excise Tax on the Gross-UpPayment, and (iii) any interest or penalties assessed by the Internal RevenueService on Executive if such interest or penalties are attributable to theCompany’s failure to comply with its obligations under this subsection (j)or applicable law.  Any determinationunder this subsection (j) by the Company or the Company’s accountantsshall be made in accordance with Section 280G of the Code, any applicablerelated regulations (whether proposed, temporary or final), any relatedInternal Revenue Service rulings and any related case law, and shall assumethat Executive shall pay Federal income taxes at the highest marginal rate ineffect for the year in which the Gross-Up Payment is made and state and localincome taxes at the highest marginal rate in effect in the state of Executive’sresidence for such year.  Executiveshall take such action (other than waiving Executive’s right to any payments orbenefits) as the Company reasonably requests under the circumstances tomitigate or challenge such tax.  If theCompany reasonably requests that Executive take action to mitigate orchallenge, or to mitigate and challenge, any such tax or assessment andExecutive complies with such request, the Company shall provide Executive withsuch information and such expert advice and assistance from the Company’saccountants, lawyers and other advisors as Executive may reasonably request andshall pay for all expenses

 

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incurred in effecting such compliance and any related fines, penalties,interest and other assessments.  Subjectto the provisions of this subsection (j), all determinations required tobe made under this subsection (j), including whether and when a Gross-UpPayment is required and the amount of such Gross-Up Payment and the assumptionsto be utilized in arriving at such determination, shall be made, afterreceiving the prior approval of the Audit Committee of the Board of Directors,by the public accounting firm that is retained by the Company as of the dateimmediately prior to the Change of Control (the “Accounting Firm”) which shallprovide detailed supporting calculations both to the Company and Executivewithin thirty (30) business days of receipt of notice from the Company orExecutive that there has been a payment that could trigger a Gross-Up Payment,or such earlier time as is requested by the Company (collectively the“Determination”).  In the event that theAccounting Firm is serving as accountant or auditor for the individual, entityor group effecting the Change of Control, or in the event that the AuditCommittee of the Board of Directors shall not approve of the accountants’performing such services, Executive may appoint another nationally recognizedpublic accounting firm to make the determinations required hereunder (whichaccounting firm shall then be referred to as the Accounting Firmhereunder).  All fees and expenses ofthe Accounting Firm shall be borne solely by the Company and the Company shallenter into any agreement requested by the Accounting Firm in connection withthe performance of the services hereunder. The Gross-Up Payment under this subsection (j) with respect to anypayments shall be made no later than sixty (60) days following such payments.  If the Accounting Firm determines that noExcise Tax is payable by Executive, it shall furnish Executive with a writtenopinion to such effect, and to the effect that failure to report the ExciseTax, if any, on Executive’s applicable federal income tax return will notresult in the imposition of a negligence or similar penalty.  The Determination by the Accounting Firmshall be binding upon the Company and Executive.  As a result of the uncertainty in the application ofSection 4999 of the Code at the time of the Determination, it is possiblethat the Gross-Up Payments which will not have been made by the Company shouldhave been made (“Underpayment”) or Gross-Up Payments are made by the Companywhich should not have been made (“Overpayment”), consistent with thecalculations required to be made hereunder. In the event that Executive thereafter is required to make payment ofany additional Excise Tax, the Accounting Firm shall determine the amount ofthe Underpayment that has occurred and any such Underpayment (together withinterest at the rate provided in Section 1274(b)(2)(B) of the Code) shallbe promptly paid by the Company to or for the benefit of Executive.  In the event the amount of the Gross-UpPayment exceeds the amount necessary to reimburse Executive for his Excise Taxas herein set forth, the Accounting Firm shall determine the amount of theOverpayment that has been made and any such Overpayment (together with interestat the rate provided in Section 1274(b)(2) of the Code) shall be promptlypaid by Executive to or for the benefit of the Company.  Executive shall cooperate, to the extentExecutive’s expenses are reimbursed by the Company, with any reasonablerequests by the Company in connection with any contests or disputes with theInternal Revenue Service in connection with the Excise Tax.

 

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9.                                       RestrictiveCovenants for Executive.  Executivehereby covenants and agrees with the Company that for so long as Executive isemployed by the Company and for a period (the “Restricted Period”) of twelve(12) months after the termination of such employment for any reason, Executiveshall not, without the prior written consent of the Company, which consentshall be within the sole and exclusive discretion of the Company, eitherdirectly or indirectly, on his own account or as an executive, consultant,agent, partner, joint venturer, owner, officer, director or shareholder of anyother person, firm, corporation, partnership, limited liability company orother entity:

 

(a)                                  Perform services forthe Competing Business, as hereinafter defined, that are substantially similarin whole or in part to those that he performed for the Company in his role asPresident and CEO, including specifically, but not limited to, the research,development, sale or marketing of drug or non-drug products or the managementof individuals involved in the research, development, sale or marketing of drugor non-drug products.  For purposes ofthis covenant, the term “Competing Business” shall mean any entity engaged inthe research, development, marketing or sale of drug and nondrug products whichare competitive with:  (1) thoseproducts being marketed by the Company at the time of Executive’s termination;or (2) those products that Executive was aware were under research anddevelopment by the Company and expected to be marketed within four years ofExecutive’s termination.  This covenantshall apply only within the “Territory” which is defined as the fifty states ofthe United States.  Executive recognizesand agrees that in capacity of President and CEO, his duties extend throughoutthe entire service area of the Company which includes, at a minimum, the fiftystates of the United States and that, because of the executive nature ofExecutive’s position with the Company, in order to afford the Companyprotection from unfair competition by the Executive following his terminationof employment, this covenant must extend throughout the stated Territory.  Executive further acknowledges that thiscovenant does not prohibit him from engaging in his entire trade or businessbut only a very limited segment of the pharmaceuticals industry;

 

(b)                                 Solicit any currentsupplier, customer, employee, or client of the Company with whom Executivedealt, or with whom anyone in Executive’s direct chain of command dealt, onbehalf of the Company within the year preceding Executive’s termination ofemployment, for the purpose of researching, developing or purchasing, sellingor marketing drug or non-drug products, which are competitive with:  (1) those products being marketed by theCompany at the time of Executive’s termination; or (2) those products thatExecutive was aware were under development by the Company and expected to bemarketed within four years of Executive’s termination;

 

(c)                                  All ideas,inventions, trademarks, and other developments or improvements conceived ordeveloped by the Executive, alone or with others, during the term of thisAgreement, whether or not during working hours that are within the scope of theCompany’s business operations, or that relate to any Company work or projects,shall be conclusively presumed to have been created for or on behalf of

 

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the Company as part of the Executive’s services to the Company(“Development”).  Executive shall disclosepromptly to Company any and all such Developments.  Such Developments are the exclusive property of the Companywithout the payment of consideration therefore, and the Executive herebytransfers, assigns and conveys all of the Executive’s right, title and interestin any such Developments to the Company and agrees to execute and deliver anydocuments that the Company deems necessary to effect such transfer on thedemand of the Company.  The Executiveagrees to assist the Company, at its expense, to obtain patents on any suchpatentable Developments, and agrees to execute all documents necessary toobtain such patents in the name of the Company.  This Agreement does not apply to any invention for which no equipment,supplies, facility or trade secret information of the Company was used andwhich was developed entirely on the Executive’s own time unless:  (1) the invention relates (a) to thebusiness of the Company or (b) to the Company’s actual demonstratively anticipatedresearch and development, or (2) the invention results from any work performedby the Executive for the Company.

 

(d)                                 Executive recognizesand understands that Executive’s duties at the Company may include thepreparation of materials, including written or graphic materials and other Developments,and that any such materials conceived or written by Executive shall be deemed a“work made for hire” as defined and used in the Federal Copyright Act, 17U.S.C. § 101.  In the event ofpublication of such materials, Executive understands that since such work is“work made for hire,” the Company shall solely retain and own all rights insuch materials, including any right of copyright.

 

10.                                 Confidentiality.  The Executive acknowledges that during theperiod of his employment by the Company, and in his performance of serviceshereunder, he will be placed in a relationship of trust and confidenceregarding the Company and its affairs. In the course of and due to that relationship he will have contact withthe Company’s customers, suppliers, affiliates, and distributors and theirpersonnel.  In the course of theaforesaid relationship, he will have access to and will acquire confidentialinformation relating to the business and operations of the Company, including,without limitation, information relating to processes, plans and methods ofoperation of the Company.  The Executiveacknowledges that any such information that is not a trade secret, nonethelessconstitutes confidential information as between himself and the Company, thatthe disclosure thereof (or of any information which he knows relates toconfidential, trade, or other secret aspects of the Company’s business) wouldcause substantial loss to the goodwill of the Company, and will continue to bemade known to Executive only because of the position of trust and confidencewhich he will continue to occupy hereunder. In view of the foregoing, and in consideration of the covenants andpremises of this Agreement, the Executive agrees that he will not, at any timeduring the term of his employment, and for a period of twelve monthsthereafter, disclose to any person, firm or company any trade secrets orconfidential information or such ideas which he may have acquired or developedor may acquire or develop relating to the business of the Company while servingthe Company as an executive.

 

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11.                                 Remedies.

 

(a)                                  The covenants ofExecutive set forth in Sections 9 and 10 are separate and independent covenantsfor which valuable consideration has been paid, the receipt, adequacy andsufficiency of which are acknowledged by Executive, and have also been made byExecutive to induce the Company to enter into this Agreement.  Each of the aforesaid covenants may be availedof, or relied upon, by the Company in any court of competent jurisdiction, andshall form the basis of injunctive relief and damages including expenses oflitigation (including, but not limited to, reasonable attorney’s fees upontrial and appeal) suffered by the Company arising out of any breach of theaforesaid covenants by Executive.  Thecovenants of Executive set forth in this Agreement are cumulative to each otherand to all other covenants of Executive in favor of the Company contained inthis Agreement and shall survive the termination of this Agreement for thepurposes intended.

 

(b)                                 Each of the covenantscontained in Sections 9 and 10 above shall be construed as agreements which areindependent of any other provision of this Agreement, and the existence of anyclaim or cause of action by any party hereto against any other party hereto, ofwhatever nature, shall not constitute a defense to the enforcement of suchcovenants.  If any of such covenantsshall be deemed unenforceable by virtue of its scope in terms of geographicalarea, length of time or otherwise, but may be made enforceable by theimposition of limitations thereon, Executive agrees that the same shall beenforceable to the fullest extent permissible under the laws and publicpolicies of the jurisdiction in which enforcement is sought.  The parties hereto hereby authorize anycourt of competent jurisdiction to modify or reduce the scope of such covenantsto the extent necessary to make such covenants enforceable.

 

(c)                                  In the event thatExecutive believes that the Company is in violation of a material obligationowed to Executive under this Agreement, and the Executive has given notice ofsuch violation to the Company requesting that the Company cure such violation,and within twenty (20) business days the Company has not undertaken steps tocure such violation or to provide information to Executive demonstrating thatthe Company is not in violation of the Agreement, and as a result of suchfailure to cure or dispute such violation, the Executive terminates theAgreement in accordance with Section 7(b), Executive shall not be barredfrom seeking employment with a competitor notwithstanding the restriction ofSection 9(a); provided, however, that all other restrictions contained inthis Agreement, including, but not limited to, the covenants inSection 9(a) and in Section 10, shall remain in full force andeffect.

 

12.                                 Enforcement Costs.  If any legal action or other proceeding isbrought for the enforcement of this Agreement, or because of an allegeddispute, breach, default or misrepresentation in connection with any provisionsof this Agreement, the successful or prevailing party or parties shall beentitled to recover reasonable attorney’s fees, court costs and all expenseseven if not taxable as court costs (including, without limitation, all suchfees, costs and expenses incident to appeal and other post-judgmentproceedings),

 

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incurred in that action or proceeding, in addition to any other reliefto which such party or parties may be entitled.  Attorney’s fees shall include, without limitation, paralegalfees, investigative fees, administrative costs, sales and use taxes and allother charges billed by the attorney to the prevailing party.

 

13.                                 Indemnification.  The Company covenants and agrees that, tothe extent permitted by applicable law, it will indemnify and hold Executiveharmless from any and all liability, loss, damage, cost and expense (includingreasonable attorneys’ fees) which Executive may incur, suffer or be required topay and which result from or arise in connection with any act by the Company,or on the Company’s behalf by any of the Company’s officers, directors,employees, consultants, representatives or agents, which act occurred prior tothe Effective Date and in which Executive did not, directly or indirectly,participate.

 

14.                                 Notices.  Any and all notices necessary or desirableto be served hereunder shall be in writing and shall be

 

(a)                                  personally delivered,or

 

(b)                                 sent by certifiedmail, postage prepaid, return receipt requested, or guaranteed overnightdelivery by a nationally recognized express delivery company, in each caseaddressed to the intended recipient at the address set forth below.

 

(c)                                  For notices sent tothe Company:

 

NeoPharm, Inc.

150 Field Drive, Suite 195

Lake Forest, Illinois 60045

 

Telephone No.: (847) 295-8678

Facsimile No.: (847) 295-8654

 

(d)                                 Fornotices sent to Executive:

 

Mr. Gregory P. Young

 

 

 

Either party hereto may amend the addresses for notices to such partyhereunder by delivery of a written notice thereof served upon the other partyhereto as provided herein.  Any noticesent by certified mail as provided above shall be deemed delivered on the third(3rd) business day next following the postmark date which it bears.

 

15.                                 Entire Agreement.  This Agreement sets forth the entireagreement of the parties hereto with respect to the subject matter hereof, andall prior negotiations, agreements and understandings are merged herein.  This Agreement may not be modified orrevised except pursuant to a written instrument signed by the party againstwhom enforcement is sought.

 

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16.                                 Severability.  The invalidity or unenforceability of anyprovision hereof shall not affect the enforceability of any other provisionhereof, and except as otherwise provided in Section 11 above, any suchinvalid or unenforceable provision shall be severed from this Agreement.

 

17.                                 Waiver. Failureto insist upon strict compliance with any of the terms or conditions hereofshall not be deemed a waiver or such term or condition, and the waiver orrelinquishment of any right or remedy hereunder at any one or more times shallnot be deemed a waiver or relinquishment of such right or remedy at any othertime or times.

 

18.                                 Governing Law.  This Agreement and the rights andobligations of the parties hereto shall be governed by and construed inaccordance with the laws of the State of Illinois, without regard to itsconflicts of laws provisions.  Eachparty hereto hereby (a) agrees that any litigation which may be initiated withrespect to this Agreement or to enforce rights granted hereunder shall beinitiated in a court located in Cook County, Illinois and (b) consents topersonal jurisdiction of such courts for such purpose.

 

19.                                 Benefit andAssignability. This Agreement shall inure to the benefit of and be bindingupon the Company and its successors and assigns.  The rights and obligations of Executive hereunder are personal tohim, and are not subject to voluntary or involuntary alienation, transfer,delegation or assignment.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed this EmploymentAgreement as of the day and year first above written.

 
|   | NEOPHARM, INC.      |
|--------|---------------------|
|   |                |
|   |                |
|   | By:                 | s/ Erick E. Hanson |   |
|   | Its:                | Chairman of the Corp. Gov. Committe |
|   |                |
|   |                |
|   | EXECUTIVE:          |
|   |                |
|   |                |
|   | s/ Gregory P. Young |   |
|   | GREGORY P. YOUNG    |
|        |                     |  |  |  |

 

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