Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made and entered into as of the 25th
day of April 2005, by and between NEOPHARM, INC., a Delaware corporation (the “Company”)
and RONALD G. EIDELL (“Executive”).

 

WITNESSETH:

 

WHEREAS, the Company desires to employ the Executive,
on an interim basis, and the Executive desires to accept such employment on an
interim basis, upon the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in
consideration of the covenants and mutual agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

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

 

2.                                       Term
of Employment.  The term of Executive’s
employment by the Company hereunder shall commence on March 8, 2005 (the “Effective
Date”) and shall continue thereafter until the Company has identified a
permanent CEO and such individual has accepted such position, unless sooner
terminated as a result of Executive’s death or in accordance with the
provisions of Section 7 below (the “Term”).

 

3.                                       Duties.  Throughout the Term, and except as otherwise
expressly provided herein, Executive shall be employed by the Company to serve,
on an interim basis, as the President and Chief Executive Officer (“CEO”) of
the Company.  In such capacity, Executive
shall devote his full time to the performance of his duties as President and
CEO of the Company in accordance with the Company’s By-laws, this Agreement and
the directions of the Company’s Board of Directors.  Executive shall continue to serve as a member
of the Board of Directors.  Without
limiting the generality of the foregoing, throughout the Term, Executive shall
faithfully perform his duties as President and CEO at all times so as to
promote the best interests of the Company.

 

4.                                       Compensation.

 

(a)                                  Base
Salary.  For any and all services
performed by Executive under this Agreement during the Term, in whatever capacity,
the Company shall pay to Executive a base salary, prorated for the period in
which he serves, of Two Hundred Sixty Thousand Dollars ($260,000) per year (the
“Base Salary”), less 

 

 

any and all applicable federal, state and local
payroll and withholding taxes.  The Base
Salary shall be paid in the same increments as the Company’s normal payroll,
but no less frequent than monthly and prorated, however, for any period of less
than a full month.

 

(b)                                 Bonus.  In addition to the Base Salary, Executive shall
be eligible to receive from the Company an incentive compensation bonus (the “Bonus”)
based on a percentage of his Base Salary, and prorated for the period of his
employment.  The Bonus, if any, shall be
determined by the Compensation Committee based on the achievement by the
Company of certain specific strategic plans and goals (the “Performance Goals”)
during the Executive’s period of employment (the “Measurement Period”) as such
Performance Goals shall be determined by the Board in consultation with the
Executive.  The initial Performance Goals
will be established by the Board, in consultation with the Execution within
ninety (90) days of Executive’s employment hereunder.  Following the end of the Measurement Period,
the Compensation Committee of the Board shall review the Performance Goals for
the Measurement Period in light of the Company’s actual performance during the
Measurement Period as reflected on the Company’s financial statements.  Achievement of the Performance Goals, as
determined by the Compensation Committee, shall result in the following
payments as a percentage of Salary:

 

	
  Level
  of Achievement

  	
   

  	
  Bonus as Percent of Salary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Below
  Target

  	
   

  	
  0-35

  	
  %

  	
   

  
	
  Target
  Goal

  	
   

  	
  35

  	
  %

  	
   

  
	
  Overachievement
  Goal

  	
   

  	
  35-50

  	
  %

  	
   

  

 

Payment of the Bonus, if any, shall be made within
thirty (30) days after the Company’s performance for the Measurement Period is
established on the basis of the Company’s financial statements and payment has
been authorized by the Compensation Committee. 
In addition, and at its sole discretion, the Board may award additional
compensation to Executive based on Executive’s contributions to the Company.

 

5.                                       Benefits
and Other Rights.  In consideration
for Executive’s performance under this Agreement, the Company shall provide to
Executive the following benefits:

 

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

 

(b)                                 The
Company will provide Executive with a monthly transportation allowance in the
amount of $1,500.00, subject to standard payroll withholding for taxes, to be
used by Executive for commuting to and from the Company’s offices.

 

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(c)                                  The
Company will provide Executive and his family with the opportunity to receive
group medical coverage under the terms of the Company’s health insurance plan,
but subject to completion of normal waiting periods.  During any such waiting period, the Company
will pay, or reimburse Executive for, the cost of COBRA coverage for Executive
and his family under his prior health plan.

 

(d)                                 During
the Term Executive shall be eligible to participate in the Company’s 401(k)
program and life insurance programs, if any, subject to satisfying any
eligibility requirements for said benefits.

 

(e)                                  The
Company shall also enter into an indemnification agreement with Tatum Partners,
LLP, an entity of which Executive is a member.

 

6.                                       Options. The Company shall grant to Executive options
pursuant to the Company’s 1998 Equity Incentive Plan (the “Option Plan”), as
amended, to purchase eighty thousand (80,000) shares of the Company’s common
stock (the “Options”) at an option exercise price equal to the Fair Market
Value (as determined under the Option Plan) of the Company’s common stock as of
the date of grant of the Options as determined under the Option Plan (the “Date
of Grant”).  The Options shall vest upon
the termination of the Term as a result of Executive stepping down to allow a
new permanent CEO to take office or, if the Term has not yet ended, one year
from the Date of Grant, whichever occurs earlier.  The Options shall not be exercisable
subsequent to the date that is ten (10) years after the Date of Grant. In all
other respects the Options shall be governed by the terms and conditions of the
Option Plan.

 

7.                                       Termination
of the Term.

 

(a)                                  The
Term shall end without any further action by the Company upon the Board
electing an individual to succeed the Executive as CEO and President and, upon
such election, Executive shall be deemed to have immediately resigned all
executive and other positions with the Company and any subsidiary of the
Company.

 

(b)                                 The
Company shall have the right to terminate the Term under the following
circumstances:

 

(i)                                     Executive
shall die; or

 

(ii)                                  With
or without Cause, as herein defined, effective upon written notice to Executive
by the Company.

 

(c)                                  Executive shall have the right to terminate the Term
at any time upon sixty (60) days prior written notice to the Company.

 

(d)                                 For
purposes of this Agreement, “Cause” shall mean:

 

(i)                                     Executive
shall be convicted of the commission of a felony or a crime involving
dishonesty, fraud or moral turpitude;

 

(ii)                                  Executive
has engaged in acts of fraud, embezzlement, theft or other dishonest acts
against the Company;

 

(iii)                               Executive
commits an act which negatively impacts the Company or its employees including,
but not limited to, engaging in competition with the 

 

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Company, disclosing confidential information or
engaging in sexual harassment, discrimination or other human rights-type
violations;

 

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

 

(v)                                 Executive’s
repeated refusal to follow the lawful direction of the Board of Directors or
supervising officers.

 

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

 

(a)                                  Immediately
resign from any and all executive and other positions which Executive holds
with the Company or any subsidiary of the Company, including, but not limited
to, as CEO and President of the Company or any subsidiary of the Company;
provided, however, that except for a termination under Section 7(b)(i) or a
termination for Cause under Section 7(b)(ii), the Company shall permit
Executive to continue as a member of the Company’s board of directors on the
same terms of service, including, but not limited to, continuing eligibility
for re-nomination, at the discretion of the Corporate Governance Committee and
the Board of Directors, and with compensation and benefits at a level appropriate
for non-employee board members.

 

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

 

(c)                                  Deliver
to the Company possession of any and all property owned or leased by the
Company which may then be in Executive’s possession or under his control,
including, without limitation, any and all such keys, credit cards,
automobiles, equipment, supplies, books, records, files, computer equipment,
computer software and other such tangible and intangible property of any
description whatsoever.  If, following
the expiration or termination of the Term, Executive shall receive any mail
addressed to the Company, then Executive shall immediately deliver such mail,
unopened and in its original envelope or package, to the Company;

 

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

 

(e)                                  Upon
termination of Executive pursuant to Section 7(a) or a termination without
Cause pursuant to Section 7(b)(ii), the Company shall (i) pay Executive or
Executive’s estate all Base Salary accrued, but unpaid, as of the date of such
termination; (ii) make a Bonus payment in accordance with the provisions of
Section 4(b); and, (iii) all of Executive’s then unvested Options, if any,
previously issued pursuant to the Option Plan shall immediately vest and be
exercisable as provided in the Option Plan.

 

4

 

(f)                                    Upon
termination of Executive pursuant to Section 7(b)(i), a termination for Cause
pursuant to Section 7(b)(ii) or a termination pursuant to Section 7(c), the
Company shall pay Executive or Executive’s estate all Base Salary accrued, but
unpaid, as of the date of termination.

 

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

 

(a)                                  Solicit
any current supplier, customer, employee, or client of the Company with whom
Executive dealt, or with whom anyone in Executive’s direct chain of command
dealt, on behalf of the Company within the year preceding Executive’s
termination of employment, for the purpose of researching, developing or
purchasing, selling or marketing drug or non-drug products, which are
competitive with:  (1) those products
being marketed by the Company at the time of Executive’s termination; or (2)
those products that Executive was aware were under development by the Company
and expected to be marketed within four years of Executive’s termination;

 

(b)                                 All
ideas, inventions, trademarks, and other developments or improvements conceived
or developed by the Executive, alone or with others, during the term of this
Agreement, whether or not during working hours that are within the scope of the
Company’s business operations, or that relate to any Company work or projects,
shall be conclusively presumed to have been created for or on behalf of the
Company as part of the Executive’s services to the Company (“Development”).  Executive shall disclose promptly to Company
any and all such Developments.  Such
Developments are the exclusive property of the Company without the payment of
consideration therefore, and the Executive hereby transfers, assigns and
conveys all of the Executive’s right, title and interest in any such
Developments to the Company and agrees to execute and deliver any documents
that the Company deems necessary to effect such transfer on the demand of the
Company.  The Executive agrees to assist
the Company, at its expense, to obtain patents on any such patentable Developments,
and agrees to execute all documents necessary to obtain such patents in the
name of the Company.  This Agreement does
not apply to any invention for which no equipment, supplies, facility or trade
secret information of the Company was used and which was developed entirely on
the Executive’s own time unless:  (1) the
invention relates (a) to the business of the Company or (b) to the Company’s
actual demonstratively anticipated research and development, or (2) the
invention results from any work performed by the Executive for the Company.

 

(c)                                  Executive
recognizes and understands that Executive’s duties at the Company may include
the preparation of materials, including written or graphic materials and other
Developments, and that any such materials conceived or written by 

 

5

 

Executive shall be deemed a “work made for hire” as
defined and used in the Federal Copyright Act, 17 U.S.C.

§ 101.  In the event of publication of
such materials, Executive understands that since such work is “work made for
hire,” the Company shall solely retain and own all rights in such materials,
including any right of copyright.

 

10.                                 Confidentiality.  The Executive acknowledges that during the
period of his employment by the Company, and in his performance of services
hereunder, he will be placed in a relationship of trust and confidence
regarding the Company and its affairs. 
In the course of and due to that relationship he will have contact with
the Company’s customers, suppliers, affiliates, and distributors and their
personnel.  In the course of the
aforesaid relationship, he will have access to and will acquire confidential
information relating to the business and operations of the Company, including,
without limitation, information relating to processes, plans and methods of
operation of the Company.  The Executive
acknowledges that any such information that is not a trade secret, nonetheless
constitutes confidential information as between himself and the Company, that the
disclosure thereof (or of any information which he knows relates to
confidential, trade, or other secret aspects of the Company’s business) would
cause substantial loss to the goodwill of the Company, and will continue to be
made known to Executive only because of the position of trust and confidence
which he will continue to occupy hereunder. 
In view of the foregoing, and in consideration of the covenants and
premises of this Agreement, the Executive agrees that he will not, at any time
during the term of his employment, and for a period of twelve months
thereafter, disclose to any person, firm or company any trade secrets or
confidential information or such ideas which he may have acquired or developed
or may acquire or develop relating to the business of the Company while serving
the Company as an executive.

 

11.                                 Remedies.

 

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

 

(b)                                 Each
of the covenants contained in Sections 9 and 10 above shall be construed as
agreements which are independent of any other provision of this Agreement, and
the existence of any claim or cause of action by any party hereto against any
other party hereto, of whatever nature, shall not constitute a defense to the
enforcement of such covenants.  If any of
such covenants shall be deemed unenforceable by virtue of its scope in terms of
geographical area, length of time or otherwise, but 

 

6

 

may be made enforceable by the imposition of
limitations thereon, Executive agrees that the same shall be enforceable to the
fullest extent permissible under the laws and public policies of the
jurisdiction in which enforcement is sought. 
The parties hereto hereby authorize any court of competent jurisdiction
to modify or reduce the scope of such covenants to the extent necessary to make
such covenants enforceable.

 

(c)                                  In
the event that Executive believes that the Company is in violation of a material
obligation owed to Executive under this Agreement, and the Executive has given
notice of such violation to the Company requesting that the Company cure such
violation, and within twenty (20) business days the Company has not undertaken
steps to cure such violation or to provide information to Executive
demonstrating that the Company is not in violation of the Agreement, and as a
result of such failure to cure or dispute such violation, the Executive
terminates the Agreement in accordance with Section 7(b), Executive shall be
entitled to receive from the Company the payments and benefits set forth in
Section 8(e) of this Agreement provided, however, that the restrictions
contained in this Agreement, including, but not limited to, the covenants in
Section 9(b) and in Section 10, shall remain in full force and effect.

 

12.                                 Enforcement
Costs.  If any legal action or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorney’s fees, court costs and all
expenses even if not taxable as court costs (including, without limitation, all
such fees, costs and expenses incident to appeal and other post-judgment
proceedings), incurred in that action or proceeding, in addition to any other
relief to which such party or parties may be entitled.  Attorney’s fees shall include, without
limitation, paralegal fees, investigative fees, administrative costs, sales and
use taxes and all other charges billed by the attorney to the prevailing party.

 

The Company shall maintain directors’ and officers’
insurance to cover the Executive in an amount reasonably agreeable to the
Executive at no additional cost to the Executive, and the Company will maintain
such insurance at all times while this Agreement remains in effect.  Furthermore, the Company will maintain such
insurance coverage with respect to occurrences arising during the term of this
Agreement for at least three years following the termination of this Agreement
or will purchase a directors’ and officers’ extended reporting period, or “tail,”
policy to cover the Executive.  The
Company agrees to provide documentary evidence of such insurance coverage to
Executive.

 

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

 

7

 

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

 

(a)                                  personally
delivered, or

 

(b)                                 sent
by certified mail, postage prepaid, return receipt requested, or guaranteed
overnight delivery by a nationally recognized express delivery company, in each
case addressed to the intended recipient at the address set forth below.

 

(c)                                  For
notices sent to the Company:

 

NeoPharm, Inc.

150 Field Drive, Suite 195

Lake Forest, Illinois 60045

 

Telephone No.: (847) 295-8678

Facsimile No.: (847) 295-8654

 

(d)                                 For
notices sent to Executive:

 

Mr. Ronald G. Eidell

1110 N. Lake Shore Drive

Chicago, IL 60611

Telephone No.: (312) 642-0570

Fax No.: (312) 649-9196

 

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

 

15.                                 Tatum
Resources.  The Company acknowledges
and agrees that Executive is and will remain a partner of, and has and will
retain an interest in, Tatum CFO Partners, LLP (“Tatum”), which will benefit
the Company in that Executive will have access to certain Tatum resources.  The Company and Executive acknowledge and
agree that a Resource Fee, and other compensation, will be paid by the Company
to Tatum in consideration for Tatum’s provision of resources to Executive as
provided in the Interim Engagement Resources Agreement between the Company and
Tatum, dated on or about the date of this Agreement (the “Resources Agreement”).  The Company and Executive agree that any
payments made by the Company to Tatum pursuant to the terms of the Resources
Agreement will not be treated as income to Executive from services performed by
Executive to the Company and will not be reflected as compensation in the
Executive’s W-2 report.

 

16.                                 Entire
Agreement.  Except for the Resources
Agreement, this Agreement sets forth the entire agreement of the parties hereto
with respect to the subject matter hereof, and all prior negotiations,
agreements and understandings are merged herein.  This Agreement may not be modified or revised
except pursuant to a written instrument signed by the party against whom enforcement
is sought.

 

17.                                 Severability.  The invalidity or unenforceability of any
provision hereof shall not  affect  the 
enforceability of any other provision hereof, and except as otherwise
provided in  

 

8

 

Section 11 above, any such invalid or unenforceable
provision shall be severed from this Agreement.

 

18.                                 Waiver.
Failure to insist upon strict compliance with any of the terms or conditions
hereof shall not be deemed a waiver or such term or condition, and the waiver
or relinquishment of any right or remedy hereunder at any one or more times
shall not be deemed a waiver or relinquishment of such right or remedy at any
other time or times.

 

19.                                 Governing
Law.  This Agreement and the rights
and obligations of the parties hereto shall be governed by and construed in
accordance with the laws of the State of Illinois, without regard to its
conflicts of laws provisions.  Each party
hereto hereby (a) agrees that any litigation which may be initiated with respect
to this Agreement or to enforce rights granted hereunder shall be initiated in
a court located in Cook County, Illinois and (b) consents to personal
jurisdiction of such courts for such purpose.

 

20.                                 Benefit
and Assignability. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.  The rights and obligations of Executive
hereunder are personal to him, and are not subject to voluntary or involuntary
alienation, transfer, delegation or assignment.

 

[SIGNATURE PAGE FOLLOWS]

 

9

 

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

 

 

	
   

  	
  NEOPHARM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Erick E. Hanson

  	
   

  
	
   

  	
  Its: Chairman of the Board

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Ronald G. Eidell

  	
   

  
	
   

  	
  RONALD G. EIDELL

  

 

10Exhibit 10.2

 

Tatum CFO Partners, LLP

 

Interim Engagement Resources Agreement

 

	
   

  	
  April 25, 2005

  

 

NeoPharm, Inc.

150 Field Drive

Suite 195

Lake Forest,
Illinois   60045

 

Gentlemen:

 

Tatum CFO Partners, LLP (“Tatum”)
understands that NeoPharm, Inc. (the “Company”)
desires to hire Ronald G. Eidell, one of our
partners, as an employee of the Company (the “Tatum Partner”).  Although the Tatum Partner will dedicate
substantially all of his business time and attention to the Company, the
Company acknowledges that the Tatum Partner is and will remain a partner in our
firm so that he or she will have access to our firm’s resources for use in his
or her employment with the Company.  This
Interim Engagement Resources Agreement sets forth the rights of the Company,
through the Tatum Partner, to use such resources for the benefit of the Company
and for the payment for such services.

 

Since the Tatum Partner
will be under the control and direct management of the Company, and not Tatum,
Tatum’s obligations to the Company are exclusively those set forth in this
agreement.  This document will serve as
the entire agreement between the Company and Tatum.

 

Compensation

 

The Company will pay
directly to Tatum an annual fee of Sixty-Five Thousand Dollars ($65,000),
prorated for the period of Tatum Partner’s employment with the Company, and
paid in the same increments as the Company’s normal payroll (“Resource Fee”),
as partial compensation for resources provided. 
The Company shall pay directly to Tatum annually an additional sum equal
to the product of (i) the percentage of the Tatum Partner’s annual Bonus
in relation to his annual base salary, multiplied by (ii) the Resource Fee
( i.e., $65,000).  Upon the termination of Tatum Partner’s
employment with the Company, the Company shall pay directly to Tatum any
accrued and unpaid amounts of the Resource Fee. 
Further, in the event the Tatum Partner is terminated without Cause
pursuant to Section 7(a) or 7(b) of the Employment Agreement,
the Company shall also pay directly to Tatum an amount equal to the product of (i) the
percentage of any final bonus or other cash amount paid in the nature of
severance paid to the Tatum Partner in relation to his base salary, multiplied
by (ii) the Resource Fee.

 

Converting Interim
to Permanent

 

The Company will have the
opportunity to make the Tatum Partner a full-time permanent member of Company
management at any time during the term of this agreement by entering into
another form of Tatum agreement, the term so which will be negotiated at such
time.

 

 

Termination

 

This agreement will
terminate immediately upon the earlier of the effective date of termination or
expiration of the Tatum Partner’s employment with the Company or upon the Tatum
Partner ceasing to be a partner of Tatum.

 

In the event that either
party commits a breach of this agreement and fails to cure the same within
seven (7) days following delivery by the non-breaching party of written
notice specifying the nature of the breach, the non-breaching party will have
the right to terminate this agreement immediately effective upon written notice
of such termination.

 

Hiring Tatum Partner Outside of Agreement

 

During the twelve
(12)-month period following termination or expiration of this agreement, other
than in connection with another Tatum agreement, the Company will not employ the Tatum Partner, or engage the Tatum Partner as an
independent contractor, to render services of substantially the same nature as
those for which Tatum is making the Tatum Partner available pursuant to this
agreement.  The parties recognize and agree that a breach by the Company
of this provision would result in the loss to Tatum of the Tatum Partner’s
valuable expertise and revenue potential and that such injury will be
impossible or very difficult to ascertain.  Therefore, in the event this
provision is breached, Tatum will be entitled to receive as liquidated damages
an amount equal to twenty-five percent (25%) of the Tatum Partner’s Annualized
Compensation (as defined below), which amount the parties agree is reasonably
proportionate to the probable loss to Tatum and is not intended as a penalty.
 If, however, a court or arbitrator, as applicable, determines that
liquidated damages are not appropriate for such breach, Tatum will have the
right to seek actual damages.  The amount will be due and payable to Tatum
upon written demand to the Company.  For this purpose, ‘‘Annualized
Compensation’’ will mean the Tatum Partner’s most recent annual Salary and the
maximum amount of any bonus for which the Tatum Partner was eligible with
respect to the then current bonus year.

 

Insurance

 

The Company will provide
Tatum or the Tatum Partner with written evidence that the Company maintains
directors’ and officers’ insurance in an amount reasonably acceptable to the
Tatum Partner at no additional cost to the Tatum Partner, and the Company will
maintain such insurance at all times while this agreement remains in effect.

 

 Furthermore, the Company
will maintain such insurance coverage with respect to occurrences arising
during the term of this agreement for at least three years following the
termination or expiration of this agreement or will purchase a directors’ and
officers’ extended reporting period, or “tail,” policy to cover the Tatum
Partner.

 

Disclaimers,
Limitations of Liability & Indemnity

 

It is understood that
Tatum does not have a contractual obligation to the Company other than to make
its resources available to the Tatum Partner (by virtue of the Tatum Partner
being a partner in Tatum) for the benefit of the Company under the terms and
conditions of this agreement.  The
Resource Fee will be for the resources provided.  Tatum
assumes no responsibility or liability under this agreement other than to
render the services called for hereunder and will not be responsible for any
action taken by the Company in following or declining to follow any of Tatum’s
advice or recommendations.

 

2

 

Tatum represents to the
Company that Tatum has conducted its standard screening and investigation
procedures with respect to the Tatum Partner becoming a partner in Tatum, and
the results of the same were satisfactory to Tatum.  Tatum disclaims all other warranties, either
express or implied.  Without limiting the
foregoing, Tatum makes no representation or warranty as to the accuracy or
reliability of reports, projections, forecasts, or any other information
derived from use of Tatum’s resources, and Tatum will not be liable for any
claims of reliance on such reports, projections, forecasts, or information.  Tatum will not be liable for any
non-compliance of reports, projections, forecasts, or information or services
with federal, state, or local laws or regulations.  Such reports, projections, forecasts, or
information or services are for the sole benefit of the Company and not any
unnamed third parties.

 

In the event that any
partner of Tatum (including without limitation the Tatum Partner to the extent
not otherwise entitled in his or her capacity as an officer of the Company) is
subpoenaed or otherwise required to appear as a witness or Tatum or such
partner is required to provide evidence, in either case in connection with any
action, suit, or other proceeding initiated by a third party or by the Company
against a third party, then the Company shall reimburse Tatum for the costs and
expenses (including reasonable attorneys’ fees) actually incurred by Tatum or
such partner and provide Tatum with compensation at Tatum’s customary rate for
the time incurred.

 

The Company agrees that,
with respect to any claims the Company may assert against Tatum in connection
with this agreement or the relationship arising hereunder, Tatum’s total
liability will not exceed two (2) months
of the then current monthly Resource Fee.

 

As a condition for
recovery of any liability, the Company must assert any claim against Tatum
within three (3) months after discovery or sixty (60) days after the
termination or expiration of this agreement, whichever is earlier.

 

Tatum will not be liable
in any event for incidental, consequential, punitive, or special damages,
including without limitation, any interruption of business or loss of business,
profit, or goodwill.

 

Arbitration

 

If the parties are unable
to resolve any dispute arising out of or in connection with this agreement,
either party may refer the dispute to arbitration by a single arbitrator
selected by the parties according to the rules of the American Arbitration
Association (“AAA”), and the decision of the arbitrator will be final and
binding on both parties.  Such arbitration
will be conducted by the Atlanta, Georgia office of the AAA in the event that
the Company initiates the arbitration or in the Chicago, Illinois office of the
AAA, in the event that Tatum initiates the arbitration.  In the event that the parties fail to agree
on the selection of the arbitrator within thirty (30) days after either party’s
request for arbitration under this paragraph, the arbitrator will be chosen by
AAA.  The arbitrator may in his
discretion order documentary discovery but shall not allow depositions without
a showing of compelling need.  The
arbitrator will render his decision within ninety (90) days after the call for
arbitration.  The arbitrator will have no
authority to award punitive damages. 
Judgment on the award of the arbitrator may be entered in and enforced
by any court of competent jurisdiction. 
The arbitrator will have no authority to award damages in excess or in
contravention of this agreement and may not amend or disregard any provision
herein.  Notwithstanding the foregoing,
no issue related to the ownership of intellectual property will be subject to
arbitration but will instead be subject to determination by a court of
competent jurisdiction, and either party may seek injunctive relief in any
court of competent jurisdiction.

 

3

 

Miscellaneous

 

Tatum will be entitled to
receive all reasonable costs and expenses incidental to the collection of
overdue amounts under this agreement, including but not limited to attorneys’ fees
actually incurred.

 

Neither the Company nor
Tatum will be deemed to have waived any rights or remedies accruing under this
agreement unless such waiver is in writing and signed by the party electing to
waive the right or remedy.  This agreement
binds and benefits the successors of Tatum and the Company.

 

Neither party will be
liable for any delay or failure to perform under this agreement (other than
with respect to payment obligations) to the extent such delay or failure is a
result of an act of God, war, earthquake, civil disobedience, court order,
labor dispute, or other cause beyond such party’s reasonable control.

 

The terms of this
agreement are severable and may not be amended except in a writing signed by
Tatum and the Company.  If any portion of
this agreement is found to be unenforceable, the rest of the agreement will be
enforceable except to the extent that the severed provision deprives either
party of a substantial portion of its bargain.

 

The provisions in this
agreement concerning payment of compensation and reimbursement of costs and
expenses, limitation of liability, directors’ and officers’ insurance, and
arbitration will survive any termination or expiration of this agreement.

 

This agreement will be
governed by and construed in all respects in accordance with the laws of the
State of Georgia, without giving effect to conflicts-of-laws principles.

 

Nothing in this agreement
shall confer any rights upon any person or entity other than the parties hereto
and their respective successors and permitted assigns and the Tatum Partner.

 

Each person signing below
is authorized to sign on behalf of the party indicated, and in each case such
signature is the only one necessary.

 

Electronic Payment
Instructions for Deposit and Resource Fee: Previously provided.

 

[SIGNATURE PAGE FOLLOWS]

 

4

 

Please sign below and
return a signed copy of this letter to indicate the Company’s agreement with
its terms and conditions.

 

We look forward to
serving you.

 

Sincerely yours,

 

	
  TATUM CFO PARTNERS, LLP

  	
   

  
	
   

  	
   

  
	
  /s/ Dirk B. Landis

  	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
  Dirk B. Landis

  	
   

  	
   

  
	
  (Print name)

  	
   

  
	
  Area Managing Partner for TATUM CFO
PARTNERS, LLP

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   Acknowledged
  and agreed by:

  	
   

  
	
   

  	
   

  
	
   

  	
  NeoPharm, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Erick E. Hanson

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  4/25/05

  	
   

  
								

 

5

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