Document:

Exhibit
10.1

 

TERMS OF
EMPLOYMENT

FOR RONALD
G. EIDELL

AS INTERIM
CEO AND PRESIDENT

 

1.             Term. 
Mr. Eidell shall serve as the CEO and President of NeoPharm, Inc. on an
interim basis until his successor shall be duly elected and qualified by the
Board of Directors or until his employment shall be otherwise terminated,
whichever is earlier, as provided in the definitive employment agreement to be
entered into by the Company and Mr. Eidell.

 

2.             Base Salary.  Mr. Eidell shall receive a base salary of
$325,000 per year, prorated for the period during which he serves.

 

3.             Bonus. 
Mr. Eidell shall be eligible to receive a 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 with such Performance Goals to be
determined by the Board, in consultation with the Executive, within 90 days of
Executive’s employment.  Achievement of
the Performance Goals, as determined by the Compensation Committee, shall
result in the following payments to Mr. Eidell as a percentage of base salary:

 

	
  Level of Achievement

  	
   

  	
  Bonus as
  Percent of Base Salary

  
	
   

  	
   

  	
   

  
	
  Below Target

  	
   

  	
       0 - 35%

  
	
  Target Goal

  	
   

  	
  35%

  
	
  Overachievement Goal

  	
   

  	
  35%
  - 50%

  

 

4.             Options. 
The Company shall grant to Executive options pursuant to the Company’s
1998 Equity Incentive Plan (the “Option Plan”), as amended, to purchase 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 as of
the Date of Grant, as determined under the Option Plan.  The Options shall vest upon the termination
of the Term as a result of the Executive’s stepping down to allow a new
permanent CEO to take office or, if the term has not previously ended, one year
from the Date of Grant, whichever occurs earlier.

 

5.             Additional Benefits.

 

•                                          The Company
will provide Executive with a monthly transportation allowance in the amount of
$1,500.00 per month to be used by Executive for commuting to and from the
Company’s offices;

 

•                                          The Company
will provide Executive and his family with the opportunity to receive group
medical coverage under the terms under the Company’s health insurance plan, but
subject to completion of normal waiting periods during which time the Company
will pay or reimburse the Executive for the costs of COBRA coverage for the
Executive and his family;

 

•                                          Executive shall
be eligible to participate in the Company’s 401(k) program and life insurance
programs.

 

6.             Agreement with Tatum Partners, LLC.  As Mr. Eidell is a partner in Tatum Partners,
LLC, (“Tatum Partners”) the Company will enter into an agreement with Tatum
Partners providing for up to 20% of Mr. Eidell’s Base Salary and Bonus, if any,
to be remitted to Tatum Partners in consideration for Mr. Eidell’s serving as
President and CEO of the Company, which agreement may also include, but not be
limited to, provisions obligating the Company to indemnify and hold harmless
Tatum Partners.

 

7.             Other Standard Terms and Conditions.  The Employment Agreement to be entered into
by the Company with Mr. Eidell shall also include such additional terms
conditions and consents, including restrictive covenants, as the officer of the
Company negotiating such agreement shall determine to be advisable.

 

 

	
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  Approved and adopted by the Board of Directors of NeoPharm, Inc. on
  March 10, 2005.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accepted this 10th day of 

  March, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Ronald G. Eidell

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ronald G. EidellExhibit 10.2

 

SEPARATION AGREEMENT AND FULL RELEASE OF ALL CLAIMS

 

THIS SEPARATION AGREEMENT AND FULL RELEASE OF ALL CLAIMS (hereinafter
the “Agreement”) is entered into as of this 11th day of March 2005 by
and between NEOPHARM, INC. (the “Company”) and GREGORY P. YOUNG (“Executive”)
and shall be effective as of the 8th day of March 2005 (the “Effective
Date”).

 

WITNESSETH

 

A.                                   The Company and
Executive are parties to that certain Employment Agreement (the “Employment
Agreement”) dated as of June 17, 2004.

 

B.                                     Executive has
resigned as an officer and director of the Company and from all related offices
and positions with affiliates of the Company, as set forth in the letter of
resignation attached hereto as Exhibit A for reference.

 

C.                                     Executive and
the Company are terminating their employment relationship effective on the
Effective Date and desire to settle fully and finally all issues between them
that may arise out of or relate to Executive’s employment with the Company and
all other claims the Company or Executive have or may have against each other
through the date of this Agreement.

 

NOW, THEREFORE, in consideration of the recitals, the mutual agreements
contained herein and other good and valuable consideration, the receipt,
adequacy and sufficiency of which is hereby acknowledged, the parties to this
Agreement hereby agree, promise and covenant as to each of the following:

 

1.                                       Capacity to Execute.

 

Each of the parties represents and warrants that he or it is legally
viable and competent to enter into this Agreement, is relying on independent
judgment and has not been influenced, pressured or coerced to any extent
whatsoever in making this Agreement by any representations or statements made
by the Company and/or any person or persons representing the Company, and that
the individuals executing this Agreement on his or its behalf are authorized to
do so. Each of the parties further represents and warrants that he or it has
not sold, assigned, transferred, conveyed or otherwise disposed of all or any
part of the claims released hereunder, whether known or unknown.

 

2.                                       Specific
Consideration Provided to Executive.

 

In exchange for the covenants of Executive hereunder, the future
services to be provided by Executive, and other good and valuable consideration
the receipt of which is hereby acknowledged, and notwithstanding any provisions
to the contrary contained in the Employment Agreement, which provisions, except
as otherwise provided herein, shall be considered to be null and void,
Executive shall receive the following consideration from the Company:

 

(a)                                  The Company shall: (i) provide Executive with salary
continuance, subject to Sections 2(c) and 4 below, for twelve (12) months
based upon his current base salary (the “Salary Continuance”), plus (ii) subject
to Sections 2(b), 2(c) and 4 below, for twelve (12) months from the date
of this Agreement, either continue to provide Executive with coverage under the
Company’s medical insurance plan (“Medical Insurance”) or, in the event
Executive shall not be eligible for such coverage, pay the cost of COBRA
coverage for Executive which shall be substantially equivalent to the Medical
Insurance, plus (iii) in accordance with Section 3(b), Executive’s
previously issued, but currently unvested options granted pursuant to the
Company’s stock option plans shall continue to vest in accordance with the
vesting schedule set forth in the Employment Agreement during the period
set forth in Section 3(b), plus (iv) reimbursement for up to $5,000 of
career counseling.

 

(b)                                 The benefits set forth in Section 2(a)(ii) above,
which provide for twelve (12) months of Medical Insurance or, alternatively,
COBRA coverage for Executive shall, in addition, include such benefits for
those of Executive’s dependents who are currently included in Executive’s
Medical Insurance coverage and which would be subject to COBRA to the extent
such benefits otherwise are in effect for Executive under the Employment
Agreement, understanding, however, that Executive is responsible for complying
with all terms and conditions of any such insurance plan.

 

 

(c)                                  The Salary Continuance provided in Section 2(a)(i) and
Medical Insurance or COBRA payments provided in Section 2(a)(ii) shall
continue only until such time as Executive shall have accepted another
full-time position or until Executive shall perform any services for a "Competing
Business" as hereinafter defined in Section 4(a)(i). For purposes of
this Agreement, "full-time position" shall mean employment that
requires Executive to provide forty hours or more of services per week;
provided, however, that work for a charitable entity organized under Section
501(c)(3) of the Internal Revenue Code shall be excepted from full time
employment. In addition, in the event that Executive shall perform consulting
or other services for any third party, (including, but not limited to, a
charitable organization) other than for a Competing Business and other than on
a full-time basis, for which he shall receive compensation during the period he
is receiving the Salary Continuance, all such compensation shall be reported to
the Company and shall be offset against any remaining Salary Continuance
payments.  Failure of Executive to
promptly report the receipt of any compensation from a third party or the
acceptance of a new position, or the rendering of consulting or other services
to any Competing Business, shall entitle the Company to terminate all remaining
Salary Continuance, Medical Insurance or COBRA benefit payments and to seek
restitution for any such payments made to Executive subsequent to such job
acceptance or performance of services for a Competing Business, or other
compensation receipt. In the event of Executive's death, any remaining Salary
Continuance payments shall be made to his estate and the Medical Insurance or
COBRA payments provided in Section 2(a)(ii) shall continue for his dependents.

 

(d)                                 Any Salary Continuance payments shall be made in accordance
with the usual payroll practices which were applicable prior to
termination.  Except as otherwise
specifically set forth herein, any and all payments made pursuant to this
Agreement shall be net of any and all applicable federal, state and local
payroll and withholding taxes.

 

(e)                                  The severance obligations of the Company set forth in
paragraphs 2(a), 2(b) and 2(c) herein shall constitute the total
payment and severance obligations under this Agreement, which represent
payments and obligations that Executive would not otherwise be entitled to
receive from the Company. Accordingly, Executive understands and warrants that
no amount other than as set forth in this Section 2 (which supercedes and
goes beyond post-termination benefits otherwise available under the Employment
Agreement) is or shall be due or claimed to be due from the Company and/or from
any other person or entity released in paragraph 5 below with respect to any
claim or claims released in Section 5 below, including, but not limited
to, any and all claims for attorneys’ fees and the costs of litigation that he
may have under any federal, state or local law, common law or in equity.

 

3.                                       Advisory Services

 

(a)                                  Effective with Executive’s termination of employment, and
continuing until the earlier of termination of this Agreement or twelve (12)
months from the date hereof (the “Consulting Term”), Executive’s status shall
change to that of a consultant to, and not an employee of, the Company.  During the Consulting Term, Executive will be
reasonably available to NeoPharm personnel during normal business hours for
advice on matters relating to the Company’s business operations and strategies,
including, but not limited to, the Company’s development of drugs and nondrugs
which are currently being researched and developed by the company; provided,
however, that such consultation shall not exceed twenty (20) hours per week.

 

(b)                                 During the Consulting Term, Executive’s previously granted
options will continue to vest in accordance with the current vesting schedule applicable
to such options and shall remain exercisable until the date that is ninety (90)
days after the termination of the Consulting Term.

 

4.                                       Restrictive
Covenants for Executive.

 

(a)                                  Executive hereby covenants and agrees with the Company that,
in consideration for the payments and other valuable consideration to be
provided to Executive under this Agreement, for a period (the “Restricted
Period”) of twelve (12) months from the date of this Agreement, 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:

 

(i)                                     Perform services for any
Competing Business, as hereinafter defined, that are substantially similar in
whole or in part to those that he performed for the Company in his role as
President and CEO, including specifically, but not limited to, participating in
the research, development, sale or marketing of drug or non-drug products or
the management of individuals

 

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involved in the research, development, sale or marketing of drug or
non-drug products.  For purposes of this
Agreement, the term “Competing Business” shall mean any entity engaged in the
research, development, marketing or sale of drug and nondrug products which are
or would be 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 research and
development by the Company and expected to be marketed within four years of
Executive’s termination.  This covenant
shall apply only within the “Territory” which is defined as the fifty states of
the United States.  Executive recognizes
and agrees that in his capacity as President and CEO of the Company, his duties
extended throughout the entire service area of the Company which includes, at a
minimum, the fifty states of the United States and that, because of the
executive nature of Executive’s position with the Company, in order to afford
the Company protection from unfair competition by the Executive following his
termination of employment, this covenant must extend throughout the stated
Territory.  Executive further
acknowledges that this covenant does not prohibit him from engaging in his
entire trade or business but only a very limited segment of the pharmaceuticals
industry; or

 

(ii)                                  Solicit any current employee,
supplier, customer, 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 or would be 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;

 

Executive acknowledges and
agrees that breach by Executive of the provisions of this Section 4(a) shall
entitle the Company, at its option, to terminate this Agreement, including, but
not limited to, termination of the remaining payments and benefits, if any, to
be made to Executive under Section 2 hereof.

 

(b)                                 Executive acknowledges that all ideas, inventions,
trademarks, and other developments or improvements conceived or developed by
the Executive, alone or with others, during the term of his employment with the
Company or during the Restricted Period, 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, are conclusively presumed to have been created
for or on behalf of the Company as part of the Executive’s services to the
Company (“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 while in its employ or during the Restricted Period, may have
included, or may include, the preparation of materials, including written or
graphic materials and other Developments, and that any such materials conceived
or written by Executive are deemed to be “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.

 

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5.                                       Mutual Release of
Claims.

 

(a)                                  In consideration of the payments provided for in paragraph 2
above, and other good and valuable consideration, the receipt, adequacy, and
sufficiency of which is hereby acknowledged, Executive and his heirs,
executors, administrators, agents, assigns, receivers, attorneys, servants,
legal representatives, predecessors and successors in interest, regardless of
form, trustees in bankruptcy or otherwise, wards, and any other representative
or entity acting on his or their behalf, pursuant to, or by virtue of the
rights of any of them, do hereby now and forever unconditionally release,
discharge, acquit and hold harmless the Company and any parent, subsidiary or
related companies, and any and all of their officers, directors, employees,
agents, administrators, assigns, receivers, attorneys, servants, legal representatives,
affiliates, insurers, predecessors and successors in interest, regardless of
form, trustees in bankruptcy or otherwise, insurance benefit plans, and any
other representative or entity acting on its or their behalf (collectively, the
“Released Parties”), from any and all claims, rights, demands, actions, suits,
damages, losses, expenses, liabilities, indebtedness, and causes of action, of
whatever kind or nature related to the Company that existed from the beginning
of time through the date of execution of this Agreement, regardless of whether
known or unknown, and regardless of whether asserted by Executive to date,
including, but not limited to, all claims for or relating to any vesting of
options under the Company’s 1998 Equity Incentive Plan or for or relating to
assault, battery, negligence, negligent hiring, negligent retention, negligent
supervision, negligent training, negligent or intentional infliction of
emotional distress, false imprisonment, defamation (whether libel or slander),
personal injury, bodily injury, bad faith, pain and suffering, medical
expenses, wage and hour, lost income and earnings (including, but not limited
to, back pay, front pay and any other form of present or future income,
benefits and/or earnings), equitable reinstatement, breach of any express or
implied contract, breach of the covenant of good faith and fair dealing,
workers’ compensation, wrongful termination, wrongful demotion, wrongful
failure to promote, wrongful deprivation of a career opportunity, discrimination
(including disparate treatment and disparate impact), hostile work environment,
quid pro quo sexual harassment, retaliation, any request to submit to a drug or
polygraph test, and/or whistleblowing, whether said claim(s) are brought
pursuant to Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991,42 U.S.C. § 1981, the Executive Retirement Income Security Act, the
Equal Pay Act, the Pregnancy Discrimination Act, the Fair Labor Standards Act,
the Age Discrimination in Employment Act, the Americans with Disabilities Act,
the Family and Medical Leave Act or any other constitutional, federal,
regulatory, state or local law, or under the common law or in equity, except
for any criminal acts or fraudulent acts or omissions of the Company.

 

Executive further
understands and warrants that this Agreement shall operate as a fully binding
and complete resolution of all claims as to the parties to this Agreement and
all parties represented by or claiming through such parties, and that he shall
not be able to seek any monies for any claim related to the Company, whether
known or unknown, against any of the persons or entities released hereunder
other than as provided in paragraphs 2 and 8 of this Agreement.

 

(b)                                 The Company does hereby now and forever unconditionally
release, discharge, acquit and hold harmless Executive from any and all claims,
rights, demands, actions, suits, damages, losses, expenses, liabilities,
indebtedness, and causes of actions, of whatever kind or nature that existed
from the beginning of time through the date of execution of this Agreement,
regardless of whether known or unknown, and regardless of whether asserted by
the Company to date, except for any criminal acts or fraudulent acts or
omissions of Executive.

 

6.                                       Mutual Covenant
Not-to-Sue.

 

(a)                                  Executive covenants and agrees not to file or initiate a
lawsuit against any of the Released Parties in regard to any claims, demands,
causes of action, suits, damages, losses and expenses, arising from acts or
omissions (except for any criminal act or fraudulent acts or omissions) of the
Company occurring on or before the date of execution of this Agreement,
including, but not limited to, those set forth in Section 5(a), and
Executive will ask no other person or entity to initiate such a lawsuit on his
behalf. If Executive breaches this covenant and agreement, Executive must
immediately repay and refund to the Company all payments he received pursuant
to paragraph 2 above, and Executive shall also indemnify and hold harmless the Company,
any of the Released Parties, and any of their officers, owners,

 

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directors,
executives and agents from any and all costs incurred by any and all of them,
including their reasonable attorneys’ fees, in defending against any such
lawsuit.

 

(b)                                 The Company covenants and agrees not to file or initiate a
lawsuit against Executive in regard to any claims, demands, causes of action,
suits, damages, losses and expenses, arising from acts or omissions (except for
any criminal act or fraudulent acts or omissions) of Executive occurring on or
before the date of execution of this Agreement, including, but not limited to,
those set forth in Section 5(b), and the Company will ask no other person
or entity to initiate such a lawsuit on its behalf.

 

7.                                       No Proceedings
Initiated.

 

Executive represents and warrants that neither he nor anyone acting on
his behalf has filed or initiated any charge or claim against the Company in
any administrative or judicial proceeding.

 

8.                                       Covenants of the
Parties.

 

(a)                                  Executive ratifies and confirms the confidentiality
provisions of Section 10 of the Employment Agreement and acknowledges that
such covenants and agreements survive the termination of employment of
Executive with the Company and remain in full force and effect in accordance
with their terms.

 

(b)                                 Executive agrees that he shall not disparage the Company or
its officers, directors, employees, agents, representatives or its products or
products in development, or otherwise seek to reduce the goodwill of the
Company or the reputation of the Company or its officers, directors, employees,
agents, or representatives. The Company, on behalf of its directors and
executive officers, agrees not to disparage Executive or to act in any way to
diminish Executive’s reputation. In this regard, the parties will cooperate in
good faith to prepare a mutually acceptable letter of reference and will also
agree on the general content of the Company's response to telephone inquiries
regarding Mr. Young.

 

(c)                                  Upon execution of this Agreement, Executive shall 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 date of
this Agreement, Executive shall receive any mail, including, but not limited
to, electronic mail, addressed to the Company or to the Executive as an officer
of the Company, Executive shall immediately deliver, or forward, such mail,
unopened, and in its original envelope or package, to the Company;

 

(d)           The Company hereby agrees to
indemnify and hold harmless, in accordance with Delaware law and the Articles
of Incorporation and By-Laws of the Company, the Executive from and against any
and all actions, suits, proceedings, claims, demands, judgments, expenses
(including reasonable attorney fees) losses and damages arising or resulting
from Executive's good faith performance of his duties as President and CEO of
the Company.

 

9.                                       No Voluntary
Assistance.

 

Executive hereby covenants and agrees that, except under compulsion of
law, he will not voluntarily assist, support, or cooperate with, directly or
indirectly, any entity or person alleging or pursuing any claim, administrative
charge, or cause of action against the Company, including without limitation,
by providing testimony or other information, audio or video recordings, or
documents.  If compelled to testify,
nothing contained herein shall in any way inhibit or interfere with Executive
providing completely truthful testimony or producing documents.  In addition, and notwithstanding anything
elsewhere appearing in this Agreement, nothing herein shall prevent or hinder
Executive’s full cooperation with any investigation or other proceeding by any
federal, state or local governmental agency, including, but not limited to, the
ongoing investigation by the U.S. Securities and Exchange Commission.

 

10.                                 No Admission of
Liability.

 

The parties agree and acknowledge that this Agreement is a full and
complete compromise of the matters released herein between the parties hereto;
that neither the releases nor the negotiations for this Agreement and the
settlement embodied herein, including all statements or communications made to
date, shall be considered admissions by them.

 

11.                                 Confidentiality.

 

(a)                                  Executive acknowledges that the information, observations
and data that has been obtained by him during his involvement with the Company
as an employee concerning the business or affairs of the Company which has not
been released publicly by authorized representatives of the Company (“Confidential
Information”) is the property of the Company. 
Accordingly, Executive agrees, on behalf of himself and any

 

5

 

affiliate,
that he will not disclose to any person not authorized by the Company to
receive such Confidential Information, or use for his own account, any of the
Confidential Information previously obtained during his employment or which is
hereafter obtained during the Consulting Term without the prior written consent
of the Company, unless, and to the extent that, the aforementioned matters (i) are
or become generally known to and available for use by the public otherwise than
as a direct or indirect result of Executive’s acts or omissions to act in the
protection of such Confidential Information or (ii) are disclosed to
Executive by a third party who, to the best knowledge of Executive, is not
thereby in breach of any duty to the Company or any of its affiliates.  For purposes of this Agreement, the term “affiliate”
means any person, partnership, corporation or business entity controlling,
controlled by or under common control with the Company or Executive, as the
case may be.

 

(b)                                 Executive acknowledges that the Confidential Information is
proprietary and of value to the Company and, accordingly, Executive will follow
reasonable security practices with regard to the protection and non-disclosure
of the Confidential Information.  If
Executive is required to disclose any Confidential Information in accordance
with applicable law, Executive will, whenever possible, first provide to the
Company a copy of the proposed disclosure so that the Company may have a
sufficient opportunity to review and comment thereon and Executive agrees to
seek such maximum confidential treatment of such disclosure as NeoPharm
requests or as may be permitted by applicable law.  Executive’s obligations under this Article will
survive any termination of this Agreement.

 

(c)                                  Upon completion or earlier termination of this Agreement,
Executive will promptly return to NeoPharm all written or electronic
Confidential Information, as well as all written or electronic material which
incorporates any Confidential Information.

 

12.                                 OWBPA Rights.

 

(a)                                  Executive is advised to seek legal counsel regarding the
terms of this Agreement. Executive acknowledges that he has either sought legal
counsel or has, notwithstanding the foregoing, consciously decided not to seek
legal counsel regarding the terms and effect of this Agreement.

 

(b)                                 Executive acknowledges that this Agreement releases only
those claims which exist as of the date of Executive’s execution of this
Agreement.

 

(c)                                  Executive acknowledges that he may take a period of
twenty-one (21) days from the date of receipt of this Agreement (March 9, 2005)
within which to consider and sign this Agreement.

 

(d)                                 Executive acknowledges that he will have seven (7) days
from the date of signing this Agreement to revoke the Agreement in writing in
its entirety (“Revocation Period”). Executive acknowledges that the Agreement
will not become effective or enforceable until the Revocation Period has
expired and that pending acceptance of this Agreement by Executive, the Company
shall not be obligated to make any of the payments or to provide any of the
benefits to be provided to Executive under this Agreement.  In the event the Executive chooses to revoke
this Agreement, within the Revocation Period, he will:

 

(i)                                     Revoke the entire Agreement in a
signed writing, delivered to the following person on or before the seventh
(7th) day after he executed the Agreement:

 

NeoPharm, Inc.

c/o Mr. Rick Hanson,
Chairman of the Board

14404 Champion Woods Place

Louisville, KY 40245

 

(ii)                                  Forfeit all severance and other
consideration from the Company that is contemplated by this Agreement; and

 

(iii)                               Return the full amount of any
consideration received under this Agreement, if any, to the Company along with
the signed writing.

 

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(e)                                  The Effective Date of this Agreement shall be the eighth
(8th) day after the date Executive signs this Agreement, assuming the Executive
has not revoked the Agreement in writing within the Revocation Period.

 

(f)                                    Executive expressly acknowledges that the payments and the
other consideration that he is receiving under this Agreement constitute
material consideration for his execution of this Agreement, and represent
valuable consideration to which he would not otherwise be entitled.

 

13.                                 Jurisdiction/Choice of Forum.

 

The laws of the State of Illinois shall govern this Agreement, unless
pre-empted by any applicable federal law controlling the review of this
Agreement. The parties further stipulate and agree that any litigation
regarding this Agreement shall be brought in the state or federal courts for
the Northern District of Illinois and neither party will object to personal
jurisdiction or venue in any of these courts.

 

14.                                 Advice of Attorneys.

 

The parties acknowledge that they have fully read, understood and
unconditionally accepted this Agreement after consulting with their attorneys
or having the opportunity to consult with an attorney, and acknowledge that
this Agreement is mutual and binding upon all parties hereto regardless of the
extent of damages allegedly suffered by any of the parties hereto.

 

15.                                 Counterparts.

 

This Agreement may be signed in counterpart originals with the same
force and effect as if signed in a single original document.

 

16.                                 Cooperation of the Parties.

 

The parties to this Agreement agree to cooperate fully and to execute
any and all supplementary documents and to take all additional actions that may
be necessary or appropriate to give full force and effect to the basic terms
and intent of this Agreement and the settlement embodied herein. Executive
further agrees to fully cooperate with the Company in any and all
investigations, inquiries or litigation whether in any judicial,
administrative, or public, quasi-public or private forum, in which the Company
is involved, including, but not limited to, the current investigation of the
Company by the U.S. Securities and Exchange Commission and the class action
litigation involving the Company which is currently pending in the federal
court for the Northern District of Illinois, whether or not Executive is a
defendant in such investigations, inquiries, proceedings or litigation.
Executive shall provide truthful and accurate testimony, background
information, and other support and cooperation as the Company may reasonably
request. The Company will compensate Executive for all travel expenses,
attorney’s fees, and preparation expenses and lost wages associated with
pursuit of actions necessary to comply with this Section 16.

 

17.                                 Modification in Writing Only.

 

Neither this Agreement nor any provision of this Agreement may be
modified or waived in any way except by an agreement in writing signed by each
of the parties hereto consenting to such modification or waiver.

 

18.                                 Construction of this Agreement.

 

The parties agree that they each have participated in the drafting of
this Agreement, and that, as a result, this Agreement shall not be construed in
favor of or against any party hereto.

 

19.                                 No False Statements or Misrepresentation.

 

The Company and Executive each hereby warrants and represents that they
have not made any false statements or misrepresentations in connection with
this Agreement.

 

20.                                 Headings and Captions.

 

The headings and captions used in the Agreement are for convenience of
reference only, and shall in no way define, limit, expand, or otherwise affect
the meaning or construction of any provision of this Agreement.

 

7

 

21.                                 Remedies.

 

Executive agrees that money damages cannot adequately compensate the
Company in case of a breach or threatened breach of the covenants contained in
Sections 4(a) or 11 and that, accordingly, the Company would be entitled
to injunctive relief upon such breach. 
Executive understands that it is the Company’s intent to have the
covenants contained in Section 4(a) and 11 enforced to their fullest
extent.  Accordingly, Executive and the
Company agree that, if any portion of the restrictions contained in Section 4(a) or
11 are deemed unenforceable, the court shall construe and enforce these
covenants to the fullest extent permitted by law.

 

22.                                 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.

 

23.                                 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, IL 60045

 

Telephone No.:  (847)
295-8678

Facsimile
No.:   (847) 295-8854

 

(d)                                 For notices sent to Executive:

 

Mr. Gregory P. Young

227 South Kennicott

Arlington Heights, IL 60005

 

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.

 

24.                                 Binding Agreement.

 

This Agreement shall be binding upon and inure to the benefit of the
parties hereto, jointly and severally, and the past, present and future heirs,
executors, administrators, agents, executors, servants, attorneys, affiliated
persons and entities, predecessors and successors in interest and assigns,
regardless of form, trustees in bankruptcy or otherwise, and any other
representative or entity acting on behalf of, pursuant to, or by virtue of the
rights of each.

 

25.                                 Non-Assignability:  Assignment in the Event of Acquisition or
Merger

 

This Agreement, and the benefits hereunder are not assignable or
transferable by Executive, other than transfer of any options as permitted by
Section 8 of the 1998 Equity Incentive Plan, for which permission is hereby
granted, and the rights and obligations of the Company under this Agreement
will automatically be deemed to be assigned by the Company to any

 

8

 

corporation
or entity acquiring all or substantially all of the assets or stock of the
Company or of any corporation or entity with or into which the Company may be
merged or consolidated; provided, however, that in the event of Executive’s
death, the Company shall make such payments as may then be due and owing to the
Executive, if any, to the Executive’s estate.

 

26.                                 Entire Agreement.

 

This Agreement contains the entire agreement of the parties concerning
the subject matter hereof, and is intended and shall be construed as an
integrated agreement. Each party understands, acknowledges and hereby
represents and warrants that this Agreement supersedes any and all prior or
contemporaneous understandings, agreements, representations and/or promises,
whether oral or written, which are not expressly set forth herein or expressly
referred to in this Agreement, and no understanding, agreement, representation,
warranty, promise or inducement has been made concerning the subject matter of
this Agreement other than as set forth in this Agreement, and that each party
enters into this Agreement without any reliance whatsoever upon any
understanding, agreement, representation, warranty or promise not set forth
herein.

 

[SIGNATURE PAGE TO FOLLOW]

 

9

 

IN WITNESS WHEREOF, the undersigned have executed this Separation
Agreement and Full Release of All Claims.

 

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/ Gregory P. Young

  
	
   

  	
  Gregory
  P. Young

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  3/11/05

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NEOPHARM, INC:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Erick Hanson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chairman
  of the Board of Directors

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  3/11/05

  
					

 

10

 

Exhibit A

 

March 8,
2005

 

To
the Board

 

It is with regret that I, Gregory P. Young, do hereby resign my
position as a Director, President and CEO of NeoPharm, Inc. and any
subsidiaries effective March 8, 2005.

 

 

	
   

  	
  Regards,

  
	
   

  	
   

  
	
   

  	
  /s/
  Gregory P. Young

  	
   

  
	
   

  	
  Gregory
  P. Young

  

 

 

11

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