Document:

Exhibit 10.1

 

FIRST
AMENDMENT TO REVOLVING CREDIT

AND
SECURITY AGREEMENT

 

This First Amendment to Revolving Credit and
Security Agreement (the “First Amendment”),  is made this 14th day of October, 2009 among CROCS, INC., a corporation organized under the laws of the
State of Delaware (“Crocs”), CROCS RETAIL, INC.,
a corporation organized under the laws of the State of Colorado (“Retail”),
CROCS ONLINE, INC., a corporation
organized under the laws of the State of Colorado (“Online”), OCEAN MINDED, INC., a corporation organized under the laws
of the State of Colorado (“Ocean”), JIBBITZ, LLC, a
limited liability company organized under the laws of the State of Colorado (“Jibbitz”),
BITE, INC., a corporation organized
under the laws of the State of Colorado (“Bite”, together with Crocs,
Retail, Online, Ocean, Jibbitz and each other Person joined as a borrower from
time to time to the Loan Agreement (as defined below), collectively “Borrowers”
and each a “Borrower”), the financial institutions which are now or which
hereafter become a party hereto (collectively, the “Lenders” and each
individually a “Lender”) and PNC BANK, NATIONAL
ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such
capacity, the “Agent”).

 

BACKGROUND

 

A.            On September 25,
2009, Borrowers, Lenders and Agent entered into, inter  alia, that
certain Revolving Credit and Security Agreement (as same has been or may
hereafter be amended, modified, renewed, extended, restated or supplemented
from time to time, the “Loan Agreement”) to reflect certain financing
arrangements among the parties thereto. 
The Loan Agreement and all other documents executed in connection
therewith to the date hereof are collectively referred to as the “Existing
Financing Agreements”.  All
capitalized terms used and not otherwise defined herein shall have the meaning
ascribed thereto in the Loan Agreement, as amended hereby.

 

B.            Borrowers have
requested and Agent and Lenders have agreed to modify certain terms and
provisions of the Loan Agreement on the terms and subject to the conditions
contained in this First Amendment.

 

NOW, THEREFORE, in
consideration of the mutual promises contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

Section 1.              Amendment to Section 6.5(a) of
the Loan Agreement. Upon the Effective Date (as defined below), Section 6.5(a) of
the Loan Agreement shall be amended and restated in its entirety as follows:

 

(a)           Net Worth.  Maintain at all times a Tangible Net Worth in
an amount not less than $205,000,000, measured at the end of each fiscal
quarter, commencing with the fiscal quarter ending December 31, 2009.

 

Section 2.              Condition Precedent.  This First Amendment shall
be effective upon Agent’s receipt of this First Amendment fully executed by the
Borrowers (the “Effective Date”).

 

 

Section 3.              Representations and Warranties.  Each Borrower:

 

(a)           reaffirms all
representations and warranties made to Agent and Lenders under the Loan
Agreement and all of the other Existing Financing Agreements and confirms that
all are true and correct in all material respects as of the date hereof (except
to the extent any such representations and warranties specifically relate to a
specific date, in which case such representations and warranties were true and
correct in all material respects on and as of such other specific date);

 

(b)           reaffirms all
of the covenants contained in the Loan Agreement, covenants to abide thereby
until satisfaction in full of the Obligations and termination of the Loan
Agreement;

 

(c)           represents and
warrants that no Default or Event of Default has occurred and is continuing
under any of the Existing Financing Agreements;

 

(d)           represents and
warrants that it has the authority and legal right to execute, deliver and
carry out the terms of this First Amendment, that such actions were duly
authorized by all necessary limited liability company or corporate action, as
applicable, and that the officers executing this First Amendment on its behalf
were similarly authorized and empowered, and that this First Amendment does not
contravene any provisions of its certificate of incorporation or formation,
operating agreement, bylaws, or other formation documents, as applicable, or of
any contract or agreement to which it is a party or by which any of its
properties are bound; and

 

(e)           represents and
warrants that this First Amendment and all assignments, instruments, documents,
and agreements executed and delivered in connection herewith, are valid, binding
and enforceable in accordance with their respective terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors’ rights generally.

 

Section 4.              General
Provisions.

 

(a)           Payment of
Expenses.  Borrowers
shall pay or reimburse Agent and Lenders for its reasonable attorneys’ fees and
expenses in connection with the preparation, negotiation and execution of this
First Amendment and the documents provided for herein or related hereto.

 

(b)           Reaffirmation
of Loan Agreement.  Except as
modified by the terms hereof, all of the terms and conditions of the Loan
Agreement, as amended, and all of the other Existing Financing Agreements are
hereby reaffirmed and shall continue in full force and effect as therein
written.

 

(c)           Third Party
Rights.  No rights are intended to be
created hereunder for the benefit of any third party donee, creditor, or
incidental beneficiary.

 

(d)           Headings.  The headings of any paragraph of this First
Amendment are for convenience only and shall not be used to interpret any
provision hereof.

 

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(e)           Modifications.  No modification hereof or any agreement
referred to herein shall be binding or enforceable unless in writing and signed
on behalf of the party against whom enforcement is sought.

 

(f)            Governing Law.  This First Amendment shall be governed by and
construed in accordance with the laws of the State of New York applied to
contracts to be performed wholly within the State of New York.

 

(g)           Counterparts.  This First Amendment may be executed in any
number of and by different parties hereto on separate counterparts, all of
which, when so executed, shall be deemed an original, but all such counterparts
shall constitute one and the same agreement. 
Any signature delivered by a party by facsimile transmission or PDF
shall be deemed to be an original signature hereto.

 

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the parties hereto have caused
this First Amendment to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.

 

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CROCS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Russell C. Hammer

  
	
   

  	
  Name:

  	
  Russell C. Hammer

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  CROCS RETAIL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Russell C. Hammer

  
	
   

  	
  Name:

  	
  Russell C. Hammer

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  CROCS ONLINE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Russell C. Hammer

  
	
   

  	
  Name:

  	
  Russell C. Hammer

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  OCEAN MINDED, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Russell C. Hammer

  
	
   

  	
  Name:

  	
  Russell C. Hammer

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  JIBBITZ, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ken Chaplin

  
	
   

  	
  Name:

  	
  Ken Chaplin

  
	
   

  	
  Title:

  	
  Manager

  

 

 

	
   

  	
  BITE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Russell C. Hammer

  
	
   

  	
  Name:

  	
  Russell C. Hammer

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  PNC BANK, NATIONAL ASSOCIATION, As Lender
  and as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Steve C. Roberts

  
	
   

  	
  Name:

  	
  Steve C. Roberts

  
	
   

  	
  Title:

  	
  Vice PresidentEXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

 

This
Employment Agreement (“Agreement”) is entered into as of this 13th Day of October, 2009 (“Effective Date”)
between Lannett Company, Inc. (“Company”) and Keith R. Ruck (“Executive”).

 

RECITALS

 

Company
wishes to employ Executive as its Vice President of Finance and Chief Financial
Officer, and Executive wishes to accept such employment under the terms and
conditions set forth in this Agreement.

 

IT IS AGREED as follows:

 

1.                                      Employment. Company hereby employs Executive as its Vice
President of Finance and Chief Financial Officer; and Executive accepts such
employment.

 

2.                                      Term. The term of employment under this Agreement shall
commence on the Effective Date and shall continue, unless otherwise terminated
earlier under Section 8, until the day before the one-year anniversary of
the Effective Date, i.e., October 13, 2010 (the “Term”), provided that on
the day before the one-year anniversary of the Effective Date and the day
before the anniversary of any one-year renewal of such Agreement the Term shall
be automatically extended for successive additional one (1) year periods
unless at least ninety (90) days prior to such anniversary date, either Company
or Executive furnishes the other with written notice that the term is not to be
so extended.

 

3.                                      Duties. Executive shall devote his full-time efforts to the
proper and faithful performance of all duties customarily discharged by a Vice
President of Finance and Chief Financial Officer for a company doing the type
of business engaged in by Company and any additional duties assigned to him
from time to time by the President and Chief Executive Officer of Company
and/or the Board of Directors of Company. Executive shall report directly to
the President and CEO of Company. Executive agrees to use his best efforts and
comply with all fiduciary and professional standards in the performance of his
duties hereunder. Executive shall provide services to any subsidiary or
affiliate of Company without additional compensation and benefits beyond those
set forth in this Agreement, and any compensation and benefits provided to
Executive for such services shall be a credit with regard to amounts due from
Company under this Agreement. Executive represents and warrants to Company
that, at all times prior to the Effective Date when he has served as its Vice
President of Finance and Chief Financial Officer of Company and at all times
during the Term, he has either fulfilled or will fulfill his duty of loyalty to
Company; and he has either acted or will act in the best interests of Company’s
shareholders.

 

 

4.                                           Base Salary. Executive shall be paid a base salary of One Hundred
Ninety Thousand Dollars and no cents ($190,000.00) per annum for the Term,
payable, less applicable withholdings, in proportional monthly payments or more
frequently in accordance with Company’s regular practice. Salary for a portion
of any period will be prorated. The Compensation Committee of the Board of
Directors and the President and CEO will conduct an annual performance review
of Executive and, as part of such review, will consider adjustments to the base
salary set forth herein based on the performance of both Executive and Company.

 

5.                                           Stock
Options. Company will grant Executive an option to purchase
up to 40,000 shares of Lannett common stock at the fair market value of such
stock as of the Effective Date. The terms of the options grant will include a
tiered vesting schedule of three (3)  years.  One third of the options will vest one year
after the Effective Date, an additional one third will vest two years after the
Effective Date, and the final one third will vest three years after the
Effective Date.

 

6.                                        Annual Bonus. Executive shall be eligible to participate in the
Management Incentive Bonus Plan (the “MIB”) administered by the Compensation
Committee, or any successor annual bonus plan or arrangement generally made
available to the executive officers of Company. The MIB shall provide Executive
with a target bonus opportunity for each fiscal year of Company (i.e. July 1
to June 30), regardless of whether or not a bonus is declared for any
fiscal year.

 

7.                                        Benefits.

 

During
the Term Executive shall have the following benefits:

 

(a)                                  Executive may
participate in all Company sponsored stock option plans, retirement plans, 401(k) plans,
life insurance plans, medical insurance plans, disability insurance plans,
executive stock ownership plans and such other benefit plans generally
available from time to time to other executive employees of Company for which
he qualifies under the terms of the plans. Executive’s participation in and
benefits under any benefit plan shall be on the terms and subject to the
conditions specified in such plan.

 

(b)                                 An annualized
automobile allowance of $10,800 will be provided and will be paid on a bi-weekly
basis as part of the regular payroll, subject to applicable tax withholdings
and other payroll deductions

 

(c)                                  Vacation days
or personal time off (PTO) granted to Executive in accordance with Company’s
published vacation or PTO policy generally afforded to salaried management
employees.

 

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8.                                      Reimbursement of Expenses. Company will reimburse
Executive for the reasonable and necessary expenses incurred by him in the
performance of his duties under this Agreement in accordance with Company’s
policies in effect from time to time.

 

9.                                        Termination of Employment.

 

(a)                                  Executive’s
employment under this Agreement may be terminated at any time by the President
and Chief Executive Officer, and/or the Board of Directors of Company, with or
without Cause (as defined below). Executive’s employment is “at-will.”

 

(b)                                 Executive’s
employment under this Agreement shall terminate upon his resignation or death.

 

(c )                           Executive’s employment under
this Agreement shall terminate upon thirty (30) days written notice by Company
to Executive of a termination due to Disability, provided such notice is
delivered during the period of Disability. The term “Disability” shall mean,
for purposes of this Agreement, the inability of Executive, due to injury,
illness, disease or bodily or mental infirmity to engage in the performance of
his material duties of employment with Company as contemplated by Section 3
herein for (i) any period of ninety (90) consecutive days or (ii) a
period of one hundred fifty days (150) in any consecutive twelve (12) months,
provided that if the Executive returns to work in the consecutive 12 month
period for a period of less than ten (10) consecutive business days in
duration, such return to work shall not be deemed to interfere with a
determination of consecutive absent days if the reason for absence before and
after the interim return are the same. Benefits to which Executive is entitled
under any disability policy or plan provided by Company shall reduce the base
salary paid to Executive during any period of Disability on a dollar-for-dollar
basis.

 

(d)                               Company shall
have the right to terminate Executive’s employment for Cause. For purposes of
this Agreement, “Cause” shall consist of any of the following:

 

(i)                                     Executive’s willful
commission of an act constituting fraud, embezzlement, breach of any fiduciary
duty owed to Company or its stockholders or other material dishonesty with
respect to Company;

 

(ii)                                  Gross
negligence or willful misconduct in the performance of Executive’s duties;

 

(iii)                               Willful or
reckless conduct of Executive which has an adverse impact (economic or
otherwise) on Company;

 

(iv)                                   Executive’s
willful violation of any law, rule or regulation relating to the operation
of Company or any of its subsidiaries or affiliates;

 

(v)                                 The order of
any court or supervising governmental agency with 

 

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jurisdiction over the
affairs of Company or any subsidiary or affiliate;

 

(vi)                                 Executive’s
willful violation of any provision of this Agreement, including without
limitation violation of Sections 10, 11,12 or 13;

 

(vii)                              Executive’s
conviction or plea of nolo contendere (or its equivalent) with respect to a
felony or any other crime involving dishonesty or moral turpitude;

 

(viii)                           Abuse of
illegal drugs or other controlled substances or habitual intoxication;

 

(ix)                                   Willful
violation by Executive of Company’s published business conduct guidelines, code
of ethics, conflict of interest or other similar policies;

 

(x)                                      Executive
communicating with outside professionals, including but not limited to
accounting and law firms, not retained by Company concerning the business of
Company and/or Confidential Information, as defined below, without the prior
approval of Company’s Chief Executive Officer.

 

(xi)                                  Executive  becoming under investigation by or subject to
any disciplinary charges by any regulatory agency having jurisdiction over
Company (including but not limited to the Drug Enforcement Administration
(DEA), Food and Drug Administration (FDA) or the Securities and Exchange
Commission (SEC)) or if any complaint is filed against Executive by any such
regulatory agency; or

 

(e)                             If Executive’s
employment terminates for Cause or for any reason other than as set forth in Section 9(f),
Company shall be obligated only to continue to pay Executive’s salary and, to
the extent earned, accrued and unpaid, annual cash bonus and long term
incentive compensation and furnish the then existing benefits under Section 7
up to the date of termination (except as otherwise set forth in this
Agreement).

 

(f)                               If Executive’s
employment is terminated by Company without Cause following the completion of
two (2) full years of continuous service from the Executive’s original
date of employment with Company, in addition to the amounts payable under Section 9(e),
Executive shall be entitled to receive the following: (i) base salary for
a period of eighteen (18) months after the termination date, (ii) insurance
coverage provided to him equal to such coverage provided to him on the date of
termination at no cost or, if ineligible for continued coverage under Company
policies, reimbursement of the cost of comparable coverage for a period of
eighteen (18) months, (iii) a pro rated annual cash bonus for the then
current fiscal year calculated as if all base targets and base goals are
achieved subject to any applicable cap on cash payments (but no other incentive
compensation beyond the date of termination), if it is more likely than not,
within  Company’s discretion, that the
bonus will be earned by Executive, to be paid at the times and frequency
regularly paid, and (iv) Company shall cause all outstanding Company stock
options awarded Executive prior to termination of his employment to be one
hundred percent (100%) vested at termination. If Executive’s employment is
terminated by Company without Cause prior to the completion of two (2) full
years of continuous service from Executive’s original date of employment with
Company, in addition to the amounts payable under 

 

4

 

Section 9(e), Executive
shall be entitled to receive the following: (v) base salary for a period
of twelve months after the termination date. 
As a condition to the applicable salary and/or insurance continuation
under this Section 9(f), Executive must first execute and deliver to
Company, in a form prepared by Company, a release of all claims against Company
and other appropriate parties, excluding Company’s performance under this Section 9(f) and
Executive’s vested rights under Company sponsored retirement plans, 401(k) plans
and stock ownership plans. The obligation of Company to pay Executive’s salary
as required by Subsections (i) and (v) of this Section 9(f) shall
not be subject to offset for earnings from Executive’s subsequent employment,
provided however, that, if and to the extent required under Section 409A
of the Internal Revenue Code (“Section 409A”), payments required under Section 9(f)(i) shall
be made in twenty-six (26) equal biweekly installments commencing as of
the first biweekly pay period immediately following the end of the six-month
period commencing on the Termination Date. Neither Company nor Executive shall
have the right hereunder to alter the payment schedule applicable to the
Severance Package.

 

(g)                            Executive shall
be deemed to have been terminated by Company without Cause, for purposes of Section 9(f) of
this Agreement, if he is terminated by Company within 36 months of a Change in
Control of Company, and such termination is not pursuant to Sections 9(b), 9(c) or
9(d) of this Agreement.  For
purposes of this Section 9(g), a non-renewal of this Agreement by Company
pursuant to Section 2 within the 36-month period after a Change in Control
shall be deemed to be a termination by Company without Cause, unless Executive
and Company execute a new employment agreement effective as of the date on
which the Agreement would otherwise have renewed.  As used in this Agreement, a “Change in Control”
of Company shall be deemed to have occurred if:

 

(i)                                any person (a
“Person”), as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), (other than (1) Company;
(2) any ESOP or other employee benefit plan of Company and any trustee or
other fiduciary in such capacity holding securities under such plan; or (3) any
corporation owned, directly or indirectly, by the stockholders of Company in
substantially the same proportions as their ownership of stock in Company); is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Company representing
40% or more of the combined voting power of Company’s then outstanding
securities or such lesser percentage of voting power, but not less than 20%, as
the Board of Directors of Company shall determine; provided, however, that a
Change in Control shall not be deemed to have occurred under the provisions of
this subsection (i) by reason of the beneficial ownership of voting securities
by or among members of the Farber family. As used in this Agreement, “members
of the Farber Family” shall mean William Farber, his spouse and children and
their respective spouses and children, all entities controlled by any of them
and all trusts created by or for the benefit of any of them.

 

(ii)                             Company’s
stockholders or Company’s Board of Directors shall approve (a) any
consolidation or merger of Company in which Company is not the continuing or
surviving corporation or pursuant to which Company’s voting common stock (the 

 

5

 

“Common Stock”) would be
converted into cash, securities, and/or other property, other than a merger of
Company in which holders of Common Stock immediately prior to the merger have
the same proportionate ownership of Common Stock of the surviving corporation
immediately after the merger as they had in the Common Stock immediately
before; (b) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or substantially all
the assets or earning power of Company; or (c) the liquidation or
dissolution of Company.

 

(h)                            The termination
of Executive’s employment with Company, for any reason and irrespective as to
whether initiated by Executive or Company, shall be considered a
contemporaneous resignation by Executive from the position of Company’s Vice
President of Finance and Chief Financial Officer, and shall be deemed a
termination from employment with all entities related to Company.

 

(i)                                Executive may
terminate his employment hereunder at any time for any reason by giving Company
prior written notice not less than thirty (30) days prior to such termination.
Termination by Executive pursuant to this Clause shall be deemed a termination
entitling Executive to compensation Pursuant to Section 9(e) above.

 

10.                                    Confidential Information. During Executive’s
employment with Company and at all times after the termination of such
employment, regardless of the reason for such termination, Executive shall hold
all Confidential Information relating to Company in strict confidence and in
trust for Company and shall not disclose or otherwise communicate, provide or
reveal in any manner whatsoever any of the Confidential Information to anyone
other than Company without the prior written consent of Company. “Confidential
Information” includes, without limitation, financial information, related trade
secrets (including, without limitation, Company’s business plan, methods and/or
practices) and other proprietary business information of Company which may
include, without limitation, market studies, customer and client lists,
referral lists and other items relative to the business of Company.
“Confidential Information” shall not include information which is or becomes in
the public domain through no action by Executive or information which is
generally disclosed by Company to third parties without restrictions on such
third parties.

 

11.                                    Solicitation of Customers. During his employment with
Company and for a period of eighteen (18) months after the termination of
Executive’s employment, regardless of the reason for the termination (the
“Non-Competition Period”), Executive shall not, whether directly or indirectly,
for his own benefit or for the benefit of any other person or entity, or as a
partner, stockholder, member, manager, officer, director, proprietor, employee,
consultant, representative, agent of any entity other than Company, solicit,
directly or indirectly, any customer of Company, or induce any customer of
Company to terminate any association with Company, in connection with those
certain products being offered for sale by Company or in its research and
development pipeline on the date of termination of Executive’s employment (the
“Restricted Products”) or otherwise attempt to provide services to any customer
of Company in connection with the Restricted Products. Executive shall prevent
such solicitation to the extent he has authority to prevent same and otherwise
shall not interfere with the relationship between Company and its customers.
This provision shall not be interpreted to prohibit, prevent or otherwise
impair the Executive’s ability and right to seek and obtain employment from a
competitor of Company, even if said competitor is currently selling products to
Company’s customers that are the same as Company products. While the Executive 

 

6

 

shall be unrestricted in seeking to sell products to Company’s
customers that are different than Company’s products, it is the intent of this
paragraph to preclude the Executive from having said competitor replace Company
as a supplier of a product or otherwise take existing sales from Company for
the period in question.

 

12.                               Solicitation of Executives and Others. During his employment with
Company and during the Non-Competition Period, Executive shall not, whether
directly or indirectly, for his own benefit or for the benefit of any other
person or entity, or as a partner, stockholder, member, manager, officer,
director, proprietor, employee, consultant, representative, agent of any entity
other than Company, solicit, for purposes of employment or association, any
Executive or agent of Company (“Solicited Person”), or induce any Solicited
Person to terminate such employment or association for purposes of becoming
employed or associated elsewhere, or hire or otherwise engage any Solicited
Person as an Executive or agent of an entity with whom Executive may be
affiliated or permit such, or otherwise interfere with the relationship between
Company and its employees and agents. For purposes of this Agreement, an
employee or agent of Company shall mean an individual employed or retained by
Company during the Term and/or who terminates such association with Company within
a period of six (6) months after the termination of Executive’s employment
with Company.

 

13.                                    Non-Competition.
Without the written consent of the President and Chief Executive
Officer, during his employment with Company and during the Non-Competition Period,
Executive shall not directly or indirectly, as an officer, director,
shareholder, member, partner, joint venturer, Executive, independent
contractor, consultant, or in any other capacity:

 

(a)                                       Engage, own or
have any interest in;

(b)                                      Manage, operate,
join, participate in, accept employment with, render advice to, or become
interested in or be connected with;

(c)                                       Furnish
consultation or advice to; or

(d)                                      Permit his name
to be used in connection with;

 

Any
person or entity engaged in a business in the United States or Canada which is
engaged in the manufacture, distribution or sale of the Restricted Products or
which otherwise competes with the business of Company as it exists from time to
time and, in the case of termination of this Agreement, as it exists on the
termination date. Notwithstanding the foregoing, holding one percent (1%) or
less of an interest in the equity, stock options or debt of any publicly traded
company shall not be considered a violation of this Section 13.

 

14.                                    Disclosure and Ownership of Work product and Information.

 

(a)                                       Executive
agrees to disclose promptly to Company all ideas, inventions (whether
patentable or not), improvements, copyrightable works of original authorship
(including but not limited to computer programs, compilations of information,
generation of data, graphic works, audio-visual materials, technical reports
and the like), trademarks, know-how, trade secrets, processes and other
intellectual property, developed or discovered by Executive in the course of
his employment relating to the business of Company, or to the prospective
business of Company, or which utilizes Company’s information or staff services
(collectively, “Work 

 

7

 

product”).

 

(b)                                      Work product
created by Executive within the scope of Executive’s employment, on Company
time, or using Company resources (including but not limited to facilities,
staff, information, time and funding), belongs to Company and is not owned by
Executive individually. Executive agrees that all works of original authorship
created during his employment are “works made for hire” as that term is used in
connection with the U.S. Copyright Act. To the extent that, by operation of
law, you retain any intellectual property rights in any Work product, Executive
hereby assigns to Company all right, title and interest in all such Work
product, including copyrights, patents, trade secrets, trademarks and know-how.

 

(c)                                       Executive
agrees to cooperate with Company, at Company’s expense, in the protection of
Company’s information and the securing of Company’s proprietary rights,
including signing any documents necessary to secure such rights, whether during
or after your employment with Company, and regardless of the fact of any
employment with a new company.

 

15.                                    Enforcement of Agreement; Injunctive Relief; Attorneys’ Fees and
Expenses. Executive acknowledges that violation of this
Agreement will cause immediate and irreparable damage to Company, entitling it
to injunctive relief. Executive specifically consents to the issuance of
temporary, preliminary, and permanent injunctive relief to enforce the terms of
this Agreement. In addition to injunctive relief, Company is entitled to all
money damages available under the law. If Executive violates this Agreement, in
addition to all other remedies available to Company at law, in equity, and
under contract, Executive agrees that Executive is obligated to pay all
Company’s costs of enforcement of this Agreement, including attorneys’ fees and
expenses.

 

16.                               Severability and Savings. Each provision in this
Agreement is separate. If necessary to effectuate the purpose of a particular
provision, the Agreement shall survive the termination of Executive’s
employment with Company. If any provision of this Agreement, in whole or in
part, is held to be invalid or unenforceable, the parties agree that any such
provision shall be deemed modified to make such provision enforceable to the
maximum extent permitted by applicable law. As to any provision held to be invalid
or unenforceable, the remaining provisions of this Agreement shall remain in
effect.

 

17.                          Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of Company and its successors and assigns. This
Agreement shall be binding upon and inure to the benefit of Executive, his
heirs and personal representatives. This Agreement is not assignable by
Executive.

 

18.                                    Statute of Limitations. Executive agrees not to
initiate any action or suit relating directly or indirectly to employment with
Company or the termination of such employment more than one (1) year after
the effective date of termination of employment. Executive expressly waives any
other longer statute of limitations. However, Executive agrees that any shorter
statute(s) of limitations remain in effect.

 

19.                                    Indemnification. To the fullest extent permitted by
applicable law, Company shall indemnify, defend, and hold harmless the
Executive from and against any and all claims, demands, 

 

8

 

actions, causes of action, liabilities, losses judgments, fines, costs
and expenses (including reasonable attorneys’ fees and settlement expenses)
arising from or relating to his service or status as an officer, director,
employee, agent or representative of Company or any affiliate of Company or in
any other capacity in which the Executive serves or has served at the request
of, or for the benefit of, Company or its affiliates. Company’s obligations
under this section shall be in addition to, and not in derogation of, any
rights the Executive may have against Company to indemnification or advancement
of expenses, whether by statute, contract or otherwise, and Company’s
obligation pursuant to this Section 19 shall survive termination of the
Executive’s employment.

 

20.                                    Section 409A
Compliance. No payment shall be made under this Agreement in a
form or at a time that would subject the recipient to interest or penalties
under Section 409A. It is the intention of the Parties to make all
payments hereunder in compliance with Section 409A and the provisions of
this Agreement should be interpreted and applied to give effect to this
intention. Neither Executive nor Company, nor any provision of this Agreement,
shall be permitted to cause the acceleration of payments hereunder, except as
permitted under Section 409A, nor shall either of the Parties be permitted
to defer the payment of any payments hereunder.

 

21.                                    Miscellaneous.

 

(a)                             No provision of
this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Company and
Executive. The waiver or nonenforcement by Company of a breach by Executive of
any provision of this Agreement shall not be construed as a waiver of any
subsequent breach by Executive. This Agreement is the parties’ entire agreement
relating to the subject matter hereof and any and all prior agreements,
representations or promises, oral or otherwise, express or implied, are
superseded by and/or merged into this Agreement.

 

(b)                            Notices and all
other communications provided for in this Agreement shall be in writing and
shall be delivered personally or sent by registered or certified mail, return
receipt requested, postage prepaid, or sent by facsimile or prepaid overnight
courier to the parties at the addresses set forth below (or such other
addresses as shall be specified by the parties by like notice): To Company:
Lannett Company, Inc., 9000 State Road, Philadelphia, PA 19136 Attn.:
President/Chief Executive Officer; To Executive: Keith R. Ruck, 113 Erlington
Drive Cinnaminson, New Jersey 08077. All notices shall be deemed effective upon
receipt. The failure to accept mail forwarded through the U.S. Postal Service,
certified, return receipt requested, shall be deemed received as of the earlier
of the first date such delivery is refused or, alternatively, if notices are
provided of attempts to deliver, the date on which said first notice was
provided to Company.

 

(c)                            This Agreement
shall be governed by the laws of the Commonwealth of Pennsylvania without
regard to choice of law rules.  Any
action to enforce this Agreement shall be filed in the state or federal courts
located in Pennsylvania.

 

(d)                           Although this
Agreement was drafted by Company, the parties agree that it accurately reflects
the intent and understanding of each party and should not be construed against 

 

9

 

Company for the sole reason
that it was the drafter if there is any dispute over the meaning or intent of
any provisions.

 

(e)                            Executive
agrees that this Agreement is confidential and Executive will not disclose the
terms and conditions of this Agreement to any Company employee or other third
party, other than Executive’s attorney, accountant, professional advisors and
members of his immediate family, except as may be permitted by applicable law.

 

(f)                              This Agreement
may be executed in counterparts, which together shall constitute one Agreement.

 

(g)                           Executive
agrees that this Agreement is the sole Employment Agreement between Company and
Executive and supersedes any and all prior Employment Agreements, Letters of
Understandings, Verbal understandings or commitments.

 

(h)                           By their
signatures below, the parties acknowledge that they have had sufficient
opportunity to read and consider, and that they have carefully read and
considered, each provision of this Agreement and that they are voluntarily
signing this Agreement intending to be legally bound hereby. The parties have
executed this Agreement as of the Effective Date.

 

 

	
  WITNESS

  	
   

  	
   

  
	
  /s/
  Daniel Sell

  	
   

  	
  /s/
  Keith R. Ruck

  
	
  Daniel
  Sell

  	
   

  	
  Keith
  R. Ruck

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lannett
  Company, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Arthur P. Bedrosian

  
	
   

  	
   

  	
  Arthur
  P. Bedrosian

  
	
   

  	
   

  	
  Its
  President and CEO

  

 

10

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