EMPLOYMENT
AGREEMENT

     

     

    This
Employment Agreement (the “Agreement”), is made
as of August 19, 2009, effective as of July 15, 2009 by and between THE QUIGLEY CORPORATION, a
corporation organized under the laws of the State of Delaware (the “Company”), and TED KARKUS (“Executive”).

     

     

    W
I T N E S E T H:

     

     

    WHEREAS, the Company and
Executive desire to provide for the employment of the Executive as the Chief
Executive Officer of the Company, to engage in such activities and to render
such services under the terms and conditions hereof;

     

     

    WHEREAS, the Company appointed
the Executive as Chief Executive Officer on July 15, 2009, and has authorized
and approved the execution of this Agreement, and Executive desires to be
employed by the Company under the terms and conditions hereinafter provided;
and

     

     

    WHEREAS, this Agreement
constitutes the entire understanding and agreement between the Company and
Executive regarding its subject matter and supersedes all prior or
contemporaneous negotiations and agreements, whether oral or written, between
them with respect to such subject matter.

     

     

    NOW, THEREFORE, in
consideration of the mutual covenants and undertakings herein contained, the
parties agree as follows:

     

     

    1. Effective Date, Appointment,
Title and Duties.  The effective date of this Agreement is July
15, 2009 (“Effective
Date”).  As of the Effective Date, the Company employs
Executive to serve as its Chief Executive Officer.  In such capacity,
Executive shall report to the Board of Directors of the Company, and shall have
such duties, powers and responsibilities as are customarily assigned to a Chief
Executive Officer of a publicly held corporation, but shall also be responsible
to the Board of Directors and to any committee thereof.  In addition,
Executive shall have such other duties and responsibilities as the Board of
Directors may reasonably assign him, with his consent, including serving with
the consent or at the request of the Board of Directors as an officer or on the
board of directors of affiliated corporations, provided that such duties are
commensurate with and customary for a senior executive officer bearing
Executive’s experience, qualifications, title and position.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    2. Term of
Agreement.  The term of the Executive’s employment under this
Agreement shall commence on the Effective Date and shall terminate on July 15,
2012.

     

     

    3. Acceptance of
Position.  Executive accepts the position of Chief Executive
Officer, and agrees that during the term of this Agreement he will faithfully
perform his duties and, except as expressly approved by the Board of Directors,
will devote substantially all of his business time to the business and affairs
of the Company, and will not engage, for his own account or for the account of
any other person or entity, in a business which directly competes with the
Company.  It is acknowledged and agreed that Executive may serve as an
officer and/or director of companies in which the Company owns voting or
non-voting stock.  In addition, it is acknowledged and agreed that
Executive may, from time to time, serve as a member of the board of directors of
other companies, in which event the Board of Directors of the Company must
expressly approve such service pursuant to a Board resolution maintained in the
Company’s minute books.  Any compensation or remuneration which
Executive receives in consideration of his service on the board of directors of
other companies shall be the sole and exclusive property of Executive, and the
Company shall have no right or entitlement at any time to any such compensation
or remuneration.

     

     

    4. Salary and
Benefits.  During the term of this Agreement:

     

     

    (a) The
Company shall pay to Executive a base salary at an annual rate of not less than
Seven Hundred Fifty Thousand Dollars ($750,000) per annum (“Base Salary”), paid
in approximately equal installments at intervals based on any reasonable Company
policy.  The Company agrees from time to time to consider increases in
such base salary in the discretion of the Board of Directors.  Any
increase, once granted, shall automatically amend this Agreement to provide that
thereafter Executive’s base salary shall not be less than the annual amount to
which such base salary has been increased.

     

    
      
        
        

      

      
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    (b) During
the term hereof, Executive shall be eligible to participate in all health,
retirement, Company-paid insurance, sick leave, vacation, disability, expense
reimbursement and other benefit programs which the Company or its subsidiaries
makes available to any of its senior executives.

     

     

    (c) Executive
may be awarded an annual bonus (in cash or stock of the Company) in the sole
discretion of the Board of Directors.  Executive also shall be
eligible to participate in any Company incentive stock, option or bonus plan
offered by the Company to its senior executives, subject to the terms thereof
and at the sole discretion of the Board of Directors.

     

     

    5. Certain Terms
Defined.  For purposes of this Agreement:

     

     

    (a) Executive
shall be deemed to be “disabled” if a physical or mental condition shall occur
and persist which, in the written opinion of a licensed physician selected by
the Board of Directors in good faith, has rendered Executive unable to perform
the duties set forth in Section 1 hereof for a period of sixty (60) days or more
and, in the written opinion of such physician, the condition will continue for
an indefinite period of time, rendering Executive unable to return to his
duties.

     

     

    (b) A
termination of Executive’s employment by the Company shall be deemed for “Cause”
if, and only if, it is based upon (i) conviction of a felony by a federal
or state court of competent jurisdiction; (ii) material disloyalty to the
Company such as embezzlement, misappropriation of corporate assets or, except as
permitted pursuant to Section 3 of this Agreement, breach of Executive’s
agreement not to engage in business for another enterprise of the type engaged
in by the Company; or (iii) the engaging in unethical or illegal behavior
which is of a public nature, brings the Company into disrepute, and result in
material damage to the Company.  The Company shall have the right to
suspend Executive with pay, for a reasonable period to investigate allegations
of conduct which, if proven, would establish a right to terminate this Agreement
for Cause, or to permit a felony charge to be tried.  Immediately upon
the conclusion of such temporary period, unless Cause to terminate this
Agreement has been established, Executive shall be restored to all duties and
responsibilities as if such suspension had never occurred.

     

    
      
        
        

      

      
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    (c) A
resignation by Executive shall not be deemed to be voluntary and shall be deemed
to be a resignation with “Good Reason” if it is based upon (i) a diminution
in Executive’s title, duties, or salary; (ii) a material reduction in
benefits; (iii) a direction by the Board of Directors that Executive report
to any person or group other than the Board of Directors, or (iv) a
geographic relocation of Executive’s place of work a distance for more than
sixty (60) miles from the Company’s offices located in Doylestown,
Pennsylvania.

     

     

    (d) “Affiliate”
means with respect to any Person, a Person who, directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control, with the Person specified.

     

     

    (e) “Base
Salary” means, as of any date of termination of employment, the highest base
salary of Executive in the then current fiscal year or in any of the last four
fiscal years immediately preceding such date of termination of
employment.

     

     

    (f) “Beneficial
Owner” shall have the meaning given to such term in Rule 13d-3 under the
Exchange Act.

     

     

    (g) A “Change
in Control” occurs if:

     

     

    (i) Any
Person or related group of Persons (other than Executive and his Related
Persons, the Company or a Person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding securities;

     

    
      
        
        

      

      
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    (ii) The
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 66-2/3% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires 30% or more of the combined
voting power of the Company’s then outstanding securities shall not constitute a
Change in Control;

     

     

    (iii) The
Stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets; or

     

     

    (iv) A
majority of the members of the Board of Directors of the Company cease to be
Continuing Directors;

     

     

    (h) “Code”
means the Internal Revenue Code of 1986, as amended.

     

     

    (i) “Continuing
Directors” means, as of any date of determination, any member of the Board of
Directors who (i) was a member of such Board of Directors on the date of
the Agreement or (ii) was nominated for election or elected to such Board
of Directors with the approval of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election.

     

    
      
        
        

      

      
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    (j) “Exchange
Act” means the Exchange Act of 1934, as amended.

     

     

    (k) “Person”
means any individual, control group as defined in the Exchange Act, corporation,
partnership, limited liability company, trust, association or other
entity.

     

     

    (l) “Related
Person” means any immediate family member (spouse, partner, parent, sibling or
child whether by birth or adoption) of the Executive and any trust, estate or
foundation, the beneficiary of which is the Executive and/or an immediate family
member of the Executive.

     

     

    6. Certain Benefits Upon
Termination.  Executive’s employment shall be terminated upon
the earlier of (i) the voluntary resignation of Executive with or without
Good Reason; (ii) Executive’s death or permanent disability; or
(iii) upon the termination of Executive’s employment by the Company for any
reason at any time.  In the event of such termination, the provisions
of Section 6(a) shall apply, and in the event of a Change of Control, the
provisions of Section 6(b) shall apply.

     

     

    (a) If
Executive’s employment by the Company terminates for any reason other than as a
result of (i) a termination for Cause, or (ii) a voluntary resignation by
Executive without a Good Reason, then the Company shall pay Executive a lump sum
severance payment in cash equal to the greater of (y) the amount equal to
eighteen (18) months Base Salary or (z) the amount equal to the Executive’s Base
Salary for the remainder of the term as if this Agreement had not been
terminated; provided
that if employment terminates by reason of Executive’s death or disability, then Executive (or
Executive’s estate, if applicable) shall receive a one time payment equal to the
amount of Base Salary owed for the remainder of the term as if this Agreement
had not been terminated.

     

     

    (b)  If
the Executive’s employment is terminated by the Company for any reason other
than as a result of (i) a termination for Cause, or (ii) a voluntary resignation
by Executive without a Good Reason, within twenty four (24) months of a Change
in Control of the Company, the Company shall pay Executive a one time severance
payment in cash equal to the greater of (y) the amount equal to eighteen (18)
months Base Salary, or (z) the amount equal to the Executive’s Base Salary for
the remainder of the term as if this Agreement had not been terminated; provided that if employment
terminates by reason of Executive’s death or disability, then Executive (or
Executive’s estate, if applicable) shall receive a one time payment equal to the
amount of Base Salary owed for the remainder of the term as if this Agreement
had not been terminated.

     

    
      
        
        

      

      
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    (c) If
Executive’s employment by the Company terminates for any reason, except for the
Company’s termination of Executive’s employment for Cause or a voluntary
resignation by Executive without a Good Reason, the Company shall offer to
Executive the opportunity to participate at Company expense in all medical and
dental plans provided by the Company to its executive officers to the extent
Executive elects for the remainder of the term of this Agreement.  To
the extent that the Company cannot provide, for a legal reason or any other
matter, Executive with the opportunity to participate in such medical and dental
plans (at Company expense), the Company shall pay to Executive in cash an amount
equal to the fair market value of the benefits to be provided pursuant to this
Section 6(c).

     

     

    (d) The
Company shall make all payments pursuant to the foregoing subsections (a)
through (b) concurrently with the date of termination of Executive’s employment
or consummation of a Change in Control of the Company, as
applicable.  Any such termination payments payable hereunder shall be
considered as part-consideration for the non-compete covenant provided by
Executive in Section 7 below.

     

     

    (e) The
Company shall have no liability under this Section 6 if Executive’s employment
pursuant to this Agreement is terminated by the Company for Cause or by
Executive without a Good Reason.

     

     

    (f) Gross-Up.

     

     

    (i) If it
shall be determined that any payment, distribution or benefit received or to be
received by Executive from the Company (whether payable pursuant to the terms of
this Agreement or any other plan, arrangements or agreement with the Company or
a Affiliate (as defined above) (“Payments”)) would be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
Executive shall be entitled to receive an additional payment (the “Excise Tax Gross-Up
Payment”) in an amount such that the net amount retained by Executive,
after the calculation and deduction of any Excise Tax on the Payments and any
federal, state and local income taxes and excise tax on the Excise Tax Gross-Up
Payment provided for in this Section 6(g), shall be equal to the
Payments.  In determining this amount, the amount of the Excise Tax
Gross-Up Payment attributable to federal income taxes shall be reduced by the
maximum reduction in federal income taxes that could be obtained by the
deduction of the portion of the Excise Tax Gross-Up Payment attributable to
state and local income taxes.  Finally, the Excise Tax Gross-Up
Payment shall be reduced by income or excise tax withholding payment made by the
Company or any affiliate of either to any federal, state or local taxing
authority with respect to the Excise Tax Gross-Up Payment that was not deducted
from compensation payable to Executive.

     

    
      
        
        

      

      
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    (ii) All
determinations required to be made under this Section 6(g), including whether
and when an Excise Tax Gross-Up Payment is required and the amount of such
Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, except as specified in Section 6(g)(i) above, shall be made
by the Company’s independent auditors (the “Accounting Firm”),
which shall provide detailed supporting calculations both to the Company and
Executive.  Such determination of tax liability made by the Accounting
Firm shall be subject to review by Executive’s tax advisor and, if Executive’s
tax advisor does not agree with such determination reached by the Accounting
Firm, then the Accounting Firm and Executive’s tax advisor shall jointly
designate a nationally recognized public accounting firm, which shall make such
determination.  All reasonable fees and expenses of the accountants
and tax advisors retained by either Executive or the Company shall be borne by
the Company.  Any Excise Tax Gross-Up Payment, as determined pursuant
to this Section 6(g), shall be paid by the Company to Executive within five days
after the receipt of such determination.  Any determination by a
jointly designated public accounting firm shall be binding upon the Company and
Executive.

     

     

    (iii) As a
result of the uncertainty in the application of Subsection 4999 of the Code at
the time of the initial determination thereunder, it is possible that Excise Tax
Gross-Up Payments will not have been made by the Company that should have been
made consistent with the calculations required to be made hereunder (“Underpayment”).  In
the event that Executive thereafter is required to make a payment of any Excise
Tax, any such Underpayment calculated in accordance with and in the same manner
as the Excise Tax Gross-Up Payment in Section 6(g)(i) above shall be promptly
paid by the Company to or for the benefit of Executive.  In the event
that the Excise Tax Gross-Up Payment exceeds the amount subsequently determined
to be due, such excess shall constitute a loan from the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the
Code).

     

    
      
        
        

      

      
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    7. Non-competition.  Executive
agrees that at all times while he is employed by the Company and, regardless of
the reason for termination of his employment or this Agreement, for a period of
eighteen (18) months thereafter, he will not, as a principal, agent, employee,
employer, consultant, stockholder, investor, director or co-partner of any
person, firm, corporation or business entity other than the Company, or in any
individual or representative capacity whatsoever, directly or indirectly,
without the express prior written consent of the Company:

     

    (i)           engage
or participate in any business whose products or services are directly
competitive with that of the Company and which conducts or solicits business, or
transacts with supplier or customers located within the United States or Puerto
Rico;

     

    (ii)           aid
or counsel any other person, firm, corporation or business entity to do any of
the above;

     

    (iii)           become
employed by a firm, corporation, partnership or joint venture which competes
with the business of the Company within the United States or Puerto Rico;
or

     

    (iv)           approach,
solicit business from, or otherwise do business or deal with any customer of the
Company in connection with any product or service competitive to any provided by
the Company.

     

    
      
        
        

      

      
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    For
purposes of the definition of stockholder or investor used in this Section
7, the Executive may hold a non-control position as stockholder or investor in
the securities of publicly traded companies without the prior written consent of
the Company.

     

     

    8. Indemnification.  The
Company shall indemnify Executive and hold him harmless from and against all
claims, losses, damages, expense or liabilities (including expenses of defense
and settlement) based upon or in any way arising from or connected with his
employment by the Company, to the maximum extent permitted by law.  To
the fullest extent permitted by law, the Company shall advance to Executive all
expenses necessary in connection with the defense of any action or claim which
is brought if indemnification cannot be determined to be available prior to the
conclusion of such action or the investigation of such claim.  The
Company shall investigate in good faith the availability and cost of directors’
and officers’ insurance and shall include Executive as an insured in any
directors’ and officers’ insurance policy it maintains.  The
provisions of this Section 8 shall survive any termination or expiration of this
Agreement.

     

     

    9. Attorney
Fees.  In the event that any action or proceeding is brought to
enforce the terms and provisions of this Agreement, the prevailing party shall
be entitled to recover reasonable attorney fees.

     

     

    10. Notices.  All
notices and other communications provided to either party hereto under this
Agreement shall be in writing and delivered by certified or registered mail to
such party at its/her address set forth below its/her signature hereto, or at
such other address as may be designated with postage prepaid, shall be deemed
given when received.

     

     

    11. Construction.  In
constructing this Agreement, if any portion of this Agreement shall be found to
be invalid or unenforceable, the remaining terms and provisions of this
Agreement shall be given effect to the maximum extent permitted without
considering the void, invalid or unenforceable provisions.  In
construing this Agreement, the singular shall include the plural, the masculine
shall include the feminine and neuter genders as appropriate, and no meaning in
effect shall be given to the captions of the sections in this Agreement, which
is inserted for convenience of reference only.  Without limitation to
the foregoing, nothing in this Agreement is intended to violate the
Sarbanes-Oxley Act of 2002, and to the extent that any provision of this
Agreement would constitute such a violation, such provision shall be modified to
the extent required by such Act, or, to the extent that such provision cannot be
so modified and is found to be invalid or unenforceable, the remaining terms and
provisions shall be given effect to the maximum extent permitted without
considering the void, invalid or unenforceable provision.

     

    
      
        
        

      

      
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    12. Headings.  The
section headings hereof have been inserted for convenience of reference only and
shall not be construed to affect the meaning, construction or effect of this
Agreement.

     

     

    13. Governing
Law.  This Agreement, and any statements, conduct, claims,
causes of action, liabilities or other matters relating to or arising out of or
in connection with this Agreement, shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to choice of
law or conflict of law principles. The federal and state courts sitting in the
State of New York, County of New York, shall have exclusive jurisdiction to
adjudicate any disputes arising out of or in connection with this Agreement and
the parties hereby waive any objection based with respect
thereto.  Any rights to trial by jury
with respect to any claim, action or proceeding, directly or indirectly, arising
out of, or relating to, this Agreement are waived by the
parties.

     

     

    14. Entire
Agreement.  This Agreement constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among Executive and the Company, with respect to the subject matter
hereof.

     

     

     

     

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, this
Agreement shall be effective as of the date specified in the first paragraph of
this Agreement.

     

    
      
        	 	
              	 
	 	 	      
                THE
      QUIGLEY CORPORATION:

              	 
	 	 	 	 
	
                
                  Signed
      August 19, 2009

                

              	
              	 	 
	 	 	Name:
      Robert V. Cuddihy,	 
	 	 	
                Title:  Chief
      Operating Officer

              	 
	 	 	 	 
	 	 	 	 
	 	 	 	 


      

    

    
      
        	 	
              	 
	 	 	EXECUTIVE:	 
	 	 	 	 
	
                
                  Signed
      August 19, 2009

                

              	
              	 	 
	 	 	
                Ted
      Karkus

              	 
	 	 	
              	 
	 	 	 	 


      

    

     

     

     

     

     

     

    
 

    
      
        
        

      

      
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