schaberempagree.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EMPLOYMENT
AGREEMENT

    


    This
Agreement (the “Agreement”), dated as of December 27, 2007 (the
“Effective Date”) by and between DOR BioPharma, Inc., a Delaware corporation
having a place of business at 850 Bear Tavern Road, Suite 201, Ewing, NJ 08628
(the “Corporation”), and Christopher J. Schaber, PhD, an individual (the
“Employee”).

    


    W I T N E
S S E T H:

    


    WHEREAS,
the Corporation desires to employ Employee as President and Chief Executive
Officer, and the Employee desires to be employed by the Corporation as President
and Chief Executive Officer, all pursuant to the terms and conditions
hereinafter set forth;

    


    NOW,
THEREFORE, in consideration of the foregoing and the mutual promises and
covenants herein contained, it is agreed as follows:

    


    
      	
              1.

            	
              EMPLOYMENT
      DUTIES

            


    

    


    The
Corporation engages and employs Employee, and Employee hereby accepts engagement
andemployment, as President and Chief Executive Officer and a member of the
board of directors, and shallperform high quality, full-time service to the
Corporation to direct, supervise and have responsibility for the operations of
the Corporation, including, but not limited to: (i) directing and supervising
the business, clinical, and research and development efforts of the Corporation;
(ii) managing the other executives and personnel of the Corporation; and (iii)
evaluating, negotiating, structuring and implementing business transactions with
the Corporation’s customers and suppliers, and such other activities as may be
reasonably requested by the Board of Directors of the
Corporation.  While the Employee remains employed by the Corporation,
the Corporation shall use its best efforts to nominate and reelect Employee as a
member of the Board of Directors of the Corporation. Employee acknowledges and
understands that his employment may entail significant travel on behalf of the
Corporation.

    


    


    
      	
              2.

            	
              EMPLOYMENT
      TERM

            


    

    


    Employee’s
employment hereunder shall be for a period of three (3) years, unless extended
by mutual agreement of the parties (the”Term”).  The Company will have
a two-week period three months before end of contract to notify Employee that
contract will not be renewed.  If notification does not come during
this time it will be understood by all parties that contract will be
automatically renewed for another three (3) years.

    


    
      	
              3.

            	
              COMPENSATION

            


    

    


    As compensation for the performance of
Employee’s duties on behalf of the Corporation, Employee shallbe compensated as
follows:

    


    
      	
                          (a)

            	
              (i) The Corporation
      shall pay Employee an annual base salary (“Base Salary”) of three hundred
      thousand dollars ($300,000) per annum, payable in accordance with the
      usual payroll period of the Corporation.  The base salary shall
      be reviewed at the start of each calendar year for the purposes of
      determining increases, if any.

            


    

    


    (ii)        The
Corporation shall pay Employee a minimum annual bonus of one hundred thousand
dollars ($100,000), payable at the end of each calendar year in prorated amount
if necessary.

    


    (b)           All
options granted to Employee will be granted pursuant to the Corporation’s
Employee Stock Option Plan and the Corporation’s standard Stock Option
Agreement.  All vested options shall be exercisable for a period of
one year following termination of employment, subject to extension in the
discretion of the Stock Option Plan administrator.  Upon a change in
control due to merger or acquisition, all Employee options shall become fully
vested, and be exercisable for a period of 5 years after the merger or
acquisition (unless they would have expired sooner pursuant to their natural
term).  In the event of death of Employee during Term, all unvested
options shall immediately vest and remain exercisable for the rest of their
natural term and become property of Employee’s immediate family.

    


    (c)     1,000,000
shares of common stock of the Corporation will be issued to Employee immediately
prior to the completion of a transaction, or series or combination of related
transactions, negotiated by the Corporation’s Board of Directors whereby,
directly or indirectly, a majority of the Corporation’s capital stock or a
majority of its assets are transferred from the Corporation and/or our
stockholders to a third party.

    


    (d)    The
Corporation shall withhold all applicable federal, state and local taxes; social
security;  workers compensation contributions; and such other amounts
as may be required by law or agreed upon by the parties with respect to the
compensation payable to the Employee pursuant to section 3(a)
hereof.

    


    (e)    The
Corporation shall reimburse Employee for all normal, usual and necessary
expenses incurred by Employee in furtherance of the business and affairs of the
Corporation, including reasonable travel and entertainment, against receipt by
the Corporation of appropriate vouchers or other proof of Employee’s
expenditures and otherwise in accordance with the policy of the
Corporation.

    


    (f)        During
the Term, Employee shall be entitled to a maximum of four (4) weeks paid
vacation per annum.  Unused vacation may be carried over to successive
years.

    


    (g)        The
Corporation shall make available to Employee and his dependents such medical,
dental, disability, life insurance and such other benefits as the Corporation
makes available to its other senior officers and directors.  Employee
may elect to have the Corporation reimburse Employee for payments made to his
own family medical and/or dental plan.  Company will maintain a
$1,000,000 term life insurance policy for Employee during term of
employment.

    


    
      	
              4.

            	
              REPRESENTATIONS AND
      WARRANTIES BY EMPLOYEE AND
CORPORATION

            


    

    


    (a)        Employee
hereby represents and warrants to the Corporation as follows:

    


    (i)      Neither
the execution and delivery of this Agreement nor the performance by Employee of
hisduties and other obligations hereunder violate or will violate any statute,
law, determination oraward, or conflict with or constitute a default under
(whether immediately, upon the giving of notice or lapse of time or both) any
prior employment agreement, contract, or other instrument to which Employee is a
party or by which he is bound.

    


    (ii)           Employee
has the full right, power and legal capacity to enter and deliver this Agreement
and toperform his duties and other obligations hereunder. This Agreement
constitutes the legal, valid andbinding obligation of Employee enforceable
against him in accordance with its terms. No approvals or consents of any
persons or entities are required for Employee to execute and deliver this
Agreement or perform his duties and other obligations hereunder.

    


    (b)      The
Corporation hereby represents and warrants to Employee as follows:

    


    (i)      The
Corporation is duly organized, validly existing and in good standing under the
laws of theState of Delaware, with all requisite corporate power and authority
to own its properties andconduct its business in the manner presently
contemplated.

    


    (ii)           The
Corporation has full power and authority to enter into this Agreement and to
incur andperform its obligations hereunder. This Agreement constitutes the
legal, valid and bindingobligation of the Corporation enforceable against it in
accordance with its terms. Except asexpressly set forth herein, no approvals or
consents of any persons or entities are required for Corporation to execute and
deliver this Agreement or perform its duties and other obligations
hereunder.

    


    (iii)   The
execution, delivery and performance by the Corporation of this Agreement does
not conflictwith or result in a breach or violation of or constitute a default
under (whether immediately, uponthe giving of notice or lapse of time or both)
the certificate of incorporation or by-laws of the Corporation, or any agreement
or instrument to which the Corporation is a party or by which the Corporation or
any of its properties may be bound or affected.

    


    
      	
              5.

            	
              NON-COMPETITION

            


    

    


    
      	
               
      

            	
              (a)

            	
              Employee
      understands and recognizes that his services to the Corporation are
      special and unique and agrees that, during the term of this Agreement and
      for a period of two (2) years following the termination of the Employee’s
      employment with the Corporation (or one (1) year in the event that the
      Employee is terminated within 1 year of the Effective Date), employee
      shall not in any manner, directly or indirectly, on behalf of himself or
      any person, firm, partnership, joint venture, corporation or other
      business entity (“Person”), enter into or engage in any business
      competitive with the Corporation’s business or research activities, either
      as an individual for his own account, or as a partner, joint venturer,
      executive, agent, consultant, salesperson, officer, director of a Person
      operating or intending to operate in the area of the use of any of the
      compounds owned or licensed by the Corporation during the time of his
      employ.

            


    

    


    
      	
               
      

            	
              (b)

            	
              During the Term and for two
      (2) years (or one (1) year in the event that the Employee is terminated
      within 1 year of the Effective Date) following the termination of the
      Employee’s employment with the Corporation, Employee shall not, directly
      or indirectly, without the prior written consent of the
      Corporation:

            


    

    


    (i)      interfere
with, disrupt or attempt to disrupt any past, present or prospective
relationship,contractual or otherwise ,
between the Corporation and any of its licensors, licensees,
clients,customers, suppliers, employees, consultants or other related parties,
or solicit or induce for hire any of the employees or agents of the Corporation,
or any such individual who in the past was employed or retained by the
Corporation within six (6) months of the termination of said individual’s
employment or retention by the Corporation; or

    


    (ii)            solicit
or accept employment or be retained by any party who, at any time during the
term ofthis Agreement, was a customer or supplier of the Corporation or any of
its affiliates or anylicensor or licensee thereof where his position will be
related to the business of the Corporation; or

    


               (c)                  In
the event that Employee breaches any provisions of this Section 5 or
there is a threatened breach,then, in addition to any other rights which the
Corporation may have, the Corporation shall beentitled without the posting of a
bond or other security to injunctive relief to enforce the restrictions
contained herein.

    


    
      	
              6.

            	
              CONFIDENTIAL
      INFORMATION

            


    

    


    
      	
               
      

            	
              (a)

            	
              Employee
      agrees that during the course of his employment or at any time after
      termination, he will

            	
              not
      disclose or make accessible to any other person, the Corporation’s or any
      of its subsidiaries’ or

            	
              affiliates’,
      (collectively the “Affiliates”) products, services and technology, both
      current and under development, promotion and marketing programs, business
      plans, lists, customer lists, product or licensing opportunities, investor
      lists, trade secrets and other confidential and proprietary business
      information of the Corporation or the Affiliates. Employee agrees: (i) not
      to use any such information for himself or others; and (ii) not to take
      any such material or reproductions thereof in any form or media from the
      Corporation’s facilities at any time during his employment by the
      Corporation, except as required in Employee’s duties to the Corporation.
      Employee agrees immediately to return all such material and reproductions
      thereof in his possession to the Corporation upon request and in any event
      upon termination of employment.

            


    

    


    (b)         Except
with prior written authorization by the Corporation, Employee agrees not to
disclose orpublish any of the confidential, technical or business information or
material of the Corporation, toany suppliers, licensors, licensees, customers,
partners or other third parties to whom the Corporation owes an obligation of
confidence, at any time during or after his employment with the
Corporation.

    


    
      	
               
      

            	
              (c)

            	
              Employee
      hereby assigns to the Corporation all right, title and interest he may
      have or acquire in all inventions (including patent rights) developed by
      Employee during the term of this Agreement (hereinafter the “Inventions”)
      and agrees that all Inventions shall be the sole property of the
      Corporation and its assigns, and the Corporation and its assigns shall be
      the sole owner of all patents, copyrights and other rights in connection
      therewith. Employee further agrees to assist the Corporation in every
      proper way (but at the Corporation’s expense) to obtain and from time to
      time enforce patents, copyrights or other rights on said Inventions in any
      and all countries. Employee hereby irrevocably designates counsel to the
      Corporation as Employee’s agent and attorney-in-fact to do all lawful acts
      necessary to apply for and obtain patents and copyrights and to enforce
      the Corporation’s rights under this Section. This Section shall survive
      the termination of this Agreement for any
  reason.

            


    

    


    
      	
               
      

            	
              (d)

            	
              The
      Employee recognizes that in the course of his duties hereunder, he may
      receive from Affiliates or others information which may be considered
      ‘material, nonpublic information” concerning a public company that is
      subject to the reporting requirements of the Securities and Exchange Act
      of 1934, as amended. The Employee agrees not
to:

            


    

    


    (i)         Buy
or sell any security, option, bond or warrant while in possession of
relevantmaterial, nonpublic information received from Affiliates or others in
connectionherewith;

    


    (ii) Provide
Affiliates with information with respect to any public company that may
beconsidered material, nonpublic information; or

    


    (iii)     Provide
any person with material, nonpublic information, received from
Affiliates,including any relative, associate, or other individual who intends
to, or may otherwisedirectly or indirectly benefit from, such
information.

    


    
      	
              7.

            	
              TERMINATION

            


    

    


    (a)         The
Employee’s employment hereunder shall begin on the Effective Date and shall
continue for theperiod set forth in Section 2 hereof unless renewed by mutual
agreement or sooner terminated uponthe first to occur of the following
events:

    


    (i)         The
death of the Employee;

    


    (ii)         One
year following the merger or consolidation in which either more than fifty
percent of thevoting power of the Corporation is transferred or the Corporation
is not the surviving entity,or sale or other disposition of all or substantially
all the assets of the Corporation;

    


    (iii)      Termination
by the Board of Directors of the Corporation for Just Cause. Any of thefollowing
actions by the Employee shall constitute “Just Cause”:

    


    (A)          Material
breach by the Employee of Section 1, Section 5 or Section 6 of
thisAgreement;

    


    (B)          Material
breach by the Employee of any provision of this Agreement other thanSection 5 or
Section 6 which is not cured by the Employee within thirty (30) days ofnotice
thereof from the Corporation;

    


    (C)          Any
action by the Employee to intentionally harm the Corporation or any action
ofgross negligence by the Employee; or

    


    (D)          The
conviction of the Employee of a felony.

    


    (iv)    Termination
by the Employee for Just Cause. Any of the following actions or omissions by the
Corporation shall constitute just cause, subject to the notice and cure
requirements below, provided that the Employee terminates employment with the
Corporation within one year following the initial existence of one or more of
the following conditions, without the consent of the Executive:

    


    
      	
              (A)  

            	
              Material
      diminution of base salary;

            


    

    


    
      	
              (B)  

            	
              Material
      diminution of the Employee’s authority, duties or
      responsibilities;

            


    

    


    
      	
              (C)  

            	
              Material
      change in the geographic location in which the Employee provides services
      to the Corporation; or

            


    

    


    
      	
              (D)  

            	
              Material
      breach by the Corporation of any provision of this Agreement which is not
      cured by the Corporation within thirty (30) days of notice thereof from
      the Employee.

            


    

    


    The
Employee must provide notice to the Corporation of the existence of the “just
cause” condition not later than 90 days of its initial existence and the
Corporation shall have 30 days from the date of the Employee notice to cure the
condition giving rise to such notice.

    


    (b)        Upon
termination by the Corporation pursuant to either subparagraph (i) or (iii) of
paragraph (a) above or by Employee other than pursuant to subparagraph (iv) of
paragraph (a) above, the Employee (or his estate in the event of termination
pursuant to subparagraph (i)) shall be entitled to receive the Base Salary plus
Bonus accrued but unpaid as of the date of termination including any vacation
time accrued but not taken.

    


    (c)      Upon
termination by the Corporation without Just Cause or pursuant to subparagraphs
(i), (ii) or (iv) of paragraph (a) above, then the term of the Agreement as set
forth in Section 2 hereof shall be deemed to have been terminated as of such
date and (i) the Corporation shall pay to the Employee (or his estate in the
event of termination pursuant to subparagraph (i)), nine months salary and any
accrued Bonuses and any vacation accrued but not  taken, payable upon
the normal payroll periods of the Corporation with such payments to begin on the
first payroll period following the Employee’s termination of employment
(“Severance Period”).  Notwithstanding anything herein to the
contrary, each payment made during the Severance Period shall be deemed to be a
separate payment within the meaning of Section 409A of the Code and the
regulations thereunder.  Health benefits and life insurance will also
be maintained for Employee (or his dependents in the event of termination
pursuant to subparagraph (i)) by Company during severance period.  No
unvested options shall vest beyond the termination date, except where previously
noted in Section 3 (b) or at the discretion of the Stock Option Plan
Administrator.  

    


    (d)   Upon the
cessation of service to the Company by Employee for any reason, Employee will
immediately resign from the Board of Directors of the Company.

    


    (e)        Not
withstanding any of the foregoing, Sections 5 and 6 shall survive the
termination or expiration of this Agreement.

    


    (f)       Notwithstanding
anything to the contrary in this Agreement, if the Employee is determined by the
Corporation to be a “specified employee” within the meaning of Code Section
409A(a)(2)(B)(i) at the time of the Employee’s separation from service with the
Corporation and if any payment or benefit to which the Employee become entitled
to under this Agreement would be considered deferred compensation subject to
interest and additional tax imposed pursuant to Section 409A(a) of the Code
as a result of the application of Section 409A(a)(2)(B)(i) of the Code, no
such payment or benefit payable or provided to the Employee prior to the earlier
of (i) the expiration of the six (6) month period following the date of the
Employee’s “separation from service” (as such term is defined by Code Section
409A and the regulations promulgated thereunder), or (ii) the date of the
Employee’s death, but only to the extent such delayed commencement is otherwise
required in order to avoid a prohibited distribution under Code
Section 409A(a)(2).   The payments and benefits to which the
Employee would otherwise be entitled during the first six (6) months following
separation from service shall be accumulated and paid or provided, as
applicable, in a lump sum, on the date that is six (6) months and one day
following the Employee’s separation from service (or if such date does not fall
on a business day of the Corporation, the next following business day) and any
remaining payments or benefits will be paid in accordance with the normal
payment dates specified for them herein.

     

    


    


    8.          NOTICES

    


    Any
notice or other communication under this Agreement shall be in writing and shall
be deemed to havebeen given: when delivered personally against receipt therefor;
one (1) day after being sent by FederalExpress or similar overnight delivery; or
three (3) days after being mailed registered or certified mail, postage prepaid,
return receipt requested, to either party at the address set forth above, or to
such other address as such party shall give by notice hereunder to the other
party.

    


    9.          SEVERABILITY OF
PROVISIONS

    


    If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegalor incapable of being enforced in whole or in
part, such provision shall be interpreted so as to remainenforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provision shall be deemed dependent upon any other covenant
or provision unless so expressed herein.

    


    10.           ENTIRE AGREEMENT
MODIFICATION

    


    This
Agreement contains the entire agreement of the parties relating to the subject
matter hereof, and theparties hereto have made no agreements, representations or
warranties relating to the subject matter of thisAgreement which are not set
forth herein. No modification of this Agreement shall be valid unless made in
writing and signed by the parties hereto.

    


    11.          BINDING
EFFECT

    


    The
rights, benefits, duties and obligations under this Agreement shall inure to,
and be binding upon, theCorporation, its successors and assigns, and upon
Employee and his legal representatives. This Agreementconstitutes a personal
service agreement, and the performance of Employee’s obligations hereunder may
not be transferred or assigned by Employee.

    


    12.          NON-WAIVER

    


    The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisionsof this Agreement shall not be construed as a
waiver or relinquishment of future compliance therewith, andsaid terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.

    


    13.          GOVERNING
LAW

    


    This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of theState of New Jersey without regard to principles of
conflict of laws.

    


    14.          HEADINGS

    


    The
headings of paragraphs are inserted for convenience and shall not affect any
interpretation of thisAgreement.

    


    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year firstabove written.

    


    


    DOR
BIOPHARMA, INC.

    


    


    By:/s/ James S. Kuo

    James S.
Kuo, M.D

    Chairman
of the Board

    


    EMPLOYEE:

    


    


    By: /s/Christopher J.
Schaber

    Christopher
J.  Schaber, PhD