UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
______________________
Date of
Report (Date of earliest event reported): August 19,
2009
THE
QUIGLEY CORPORATION
(Exact
name of registrant as specified in its charter)
|
Nevada
(State
or other
jurisdiction
of incorporation)
|
0-21617
(Commission
File
Number)
|
23-2577138
(I.R.S.
Employer
Identification
No.)
|
|
|
|
|
|
Kells
Building,
621
Shady Retreat Road, P.O. Box 1349
Doylestown,
PA
|
18901
|
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
|
Registrant's
telephone number, including area code:
(215) 345-0919
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (
see
General
Instruction A.2. below):
□ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
□ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
□ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
□ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry Into a Material Definitive Agreement
On August 19, 2009, The Quigley
Corporation (the “
Company
”) entered into a
standard form of indemnity agreement with each member of its Board of Directors
and Robert V. Cuddihy, the Chief Operating Officer of the
Company. These agreements provide, among other things, that the
Company will indemnify each Director and Mr. Cuddihy (each, an “
Indemnitee
”) in the event that
the Indemnitee becomes a party or otherwise a participant in any action or
proceeding on account of the Indemnitee’s service as a Director or Officer of
the Company (or service for another corporation or entity in any capacity at the
request of the Company) to the fullest extent permitted by applicable law. Under
the indemnity agreement, the Company will pay, in advance of the final
disposition of any such action or proceeding, expenses (including attorneys’
fees) incurred by the Indemnitee in defending or otherwise responding to such
action or proceeding upon receipt of a written undertaking from the Indemnitee
to repay the amount advanced consistent with applicable law in the event that a
court shall ultimately determine that he or she is not entitled to be
indemnified for such expenses. The contractual rights to indemnification
provided by the indemnity agreements are subject to the limitations and
conditions specified in the agreements, and are in addition to any other rights
each Indemnitee may have under the Company’s Articles of Incorporation and
Amended and Restated Bylaws, each as amended from time to time, and applicable
law.
A copy of the form of the indemnity
agreement with each Director and Mr. Cuddihy is annexed to this Current Report
on Form 8-K as Exhibit 10.1 hereof.
Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(e) On
August 19, 2009, the Company entered into employment agreements, effective as of
July 15, 2009, with each of (i) Ted Karkus, Chairman and Chief Executive Officer
of the Company, and (ii) Robert V. Cuddihy, Chief Operating Officer of the
Company.
Under his employment agreement with the
Company, which has a three year term, Mr. Karkus will earn a salary of $750,000
per year as Chief Executive Officer and will receive regular benefits routinely
provided to senior executives of the Company. He is eligible to
receive an annual increase in base salary and may be awarded a bonus, payable in
cash or stock, each in the sole discretion of the Board of
Directors. Mr. Karkus is also subject to non-competition restrictions
for the entire duration of the agreement and for a period of eighteen (18)
months thereafter.
In the
event of the termination by the Company of the employment of Mr. Karkus without
cause or due to a voluntary resignation by him with Good Reason (as defined in
the agreement), Mr. Karkus will be paid a lump sum severance payment in cash
equal to the greater of (A) the amount equal to eighteen (18) months base salary
or (B) the amount equal to the his base salary for the remainder of the term as
if the agreement had not been terminated. Additionally, Mr. Karkus is
entitled to receive a lump sum severance payment in cash equal to the greater of
A or B, if he, within twenty four (24) months of a Change in Control (as defined
in the agreement) of the Company, is terminated without cause or due to a
voluntary resignation by him with Good Reason (as defined in the
agreement).
Mr. Cuddihy will earn a salary of
$275,000 per year as Chief Operating Officer and will receive regular benefits
routinely provided to senior executives of the Company. The term of
his employment agreement is three years. Mr. Cuddihy will also
receive an annual grant of shares of common stock of the Company that is equal
to $50,000, payable quarterly,
promptly following the
close of each quarter. The value of the shares will be calculated
based on the average closing price of the Company’s shares for the first five
(5) trading days of the quarter in which the shares are earned. He is
eligible to receive an annual increase in base salary and may be awarded a
bonus, payable in cash or stock, each in the sole discretion of the Board of
Directors. Mr. Cuddihy is also subject to non-competition
restrictions for the entire duration of the agreement and for a period of
eighteen (18) months thereafter.
In the event of the termination by the
Company of the employment of Mr. Cuddihy without cause or due to a voluntary
resignation by him with Good Reason (as defined in the agreement), Mr. Cuddihy
will be paid a lump sum severance payment in cash equal to the greater of (Y)
the amount equal to eighteen (18) months of base salary plus $50,000, or (Z) the
amount equal to base salary, plus any amounts owed to Mr. Cuddihy under Section
4(c) of the agreement with respect to the grant of shares equal to $50,000 per
year, owed throughout the remainder of the term as if the agreement had not been
terminated. Additionally, Mr. Cuddihy is entitled to receive a lump
sum severance payment in cash equal to the greater of Y or Z, if he, within
twenty four (24) months of a Change in Control (as defined in the agreement) of
the Company, is terminated without cause or due to a voluntary resignation by
him with Good Reason (as defined in the agreement).
Copies of the forms of employment
agreements with Messrs Karkus and Cuddihy are annexed to this Current Report on
Form 8-K as Exhibits 10.2 and 10.3 hereof.
Item 9.01 Financial Statements
and Exhibits.
(d) Exhibits
|
|
|
No.
|
|
Description
|
|
|
|
10.1
|
|
Form
of Indemnity Agreement, dated as of August 19, 2009, by and between the
Company and the Company’s Directors and Robert V.
Cuddihy.
|
10.2
|
|
Employment
Agreement, dated as of August 19, 2009, by and between the Company and Ted
Karkus.
|
10.3
|
|
Employment
Agreement, dated as of August 19, 2009, by and between the Company and
Robert V. Cuddihy.
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
The
Quigley Corporation
|
|
|
|
|
|
|
By:
|
/s/
Ted
Karkus
|
|
|
|
Ted
Karkus
|
|
|
|
Chief
Executive Officer
|
|
|
|
|
|
Date: August
19, 2009
EXHIBIT INDEX
|
|
|
No.
|
|
Description
|
|
|
|
10.1
|
|
Form
of Indemnity Agreement, dated as of August 19, 2009, by and between the
Company and the Company’s Directors and Robert V.
Cuddihy.
|
10.2
|
|
Employment
Agreement, dated as of August 19, 2009, by and between the Company and Ted
Karkus.
|
10.3
|
|
Employment
Agreement, dated as of August 19, 2009, by and between the Company and
Robert V. Cuddihy.
|
INDEMNIFICATION
AGREEMENT
This
AGREEMENT is made and entered into as of August 19, 2009, between
THE
QUIGLEY CORPORATION
, a
corporation organized under the laws of the State of Nevada (the "
Corporation
"), and
_____________________
("
Indemnitee
").
WHEREAS
, it is essential to
the Corporation to retain and attract as officers and directors of the
Corporation the most capable persons available; and
WHEREAS
, the Corporation has
requested that Indemnitee become or remain an officer and/or director of the
Corporation; and
WHEREAS
, both the Corporation
and Indemnitee recognize the increased risk of litigation and other claims being
asserted against officers and directors of companies in today's environment;
and
WHEREAS
, the Corporation's
By-Laws provide that the Corporation will indemnify its officers and directors
to the fullest extent permitted by law and will advance expenses in connection
therewith, and Indemnitee's willingness to serve as an officer and/or director
of the Corporation is based in part on Indemnitee's reliance on such provisions;
and
WHEREAS
, in recognition of
Indemnitee's need for substantial protection against personal liability in order
to enhance Indemnitee's service to the Corporation in an effective manner, and
Indemnitee's reliance on the aforesaid provisions of the By-Laws, and in part to
provide Indemnitee with specific contractual assurance that the protection
promised by such provisions will be available to Indemnitee regardless of, among
other things, any amendment to or revocation of such provisions or any change in
the composition of the Corporation's Board of Directors or any acquisition or
business combination transaction relating to the Corporation, the Corporation
wishes to provide in this Agreement for the indemnification and advancement of
expenses to Indemnitee as set forth in this Agreement.
NOW, THEREFORE
, in
consideration of the mutual agreements herein set forth, the parties hereto
hereby agree as follows:
1
.
Indemnity
.
(a) To
the fullest extent permitted by law (and regardless of any future provision of
the Articles of Incorporation (the “
Articles
”) or any
By-Law to the contrary), the Corporation shall indemnify Indemnitee in the event
Indemnitee is made, or threatened to be made, a party or a witness, or is
otherwise a participant in or to, an action, investigation or proceeding,
whether civil, administrative or criminal (including but not limited to an
action, investigation or proceeding by or in the right of the Corporation or by
or in the right of any other corporation or business entity of any type or kind,
domestic or foreign, which any officer and/or director of the Corporation served
in any capacity at the request of the Corporation), by reason of the fact that
Indemnitee is or was an officer and/or director of the Corporation (or served
any other corporation or business entity of any type or kind, domestic or
foreign, in any capacity at the request of the
Corporation). The foregoing indemnification shall be from and
against all judgments, fines, penalties, amounts paid in settlement and
reasonable expenses, including attorneys’ fees, actually and reasonably incurred
by Indemnitee or on Indemnitee’s behalf in connection with such action, suit,
investigation or proceeding, or any appeal therein. The Corporation
shall pay, in advance of final disposition of any such action, suit,
investigation or proceeding, expenses (including attorneys’ fees) incurred by
Indemnitee in defending or otherwise responding to such action or proceeding
upon receipt of (1) a written affirmation by the Indemnitee of the Indemnitee’s
good faith belief that Indemnitee has met the standard of conduct necessary for
indemnification by the Corporation,
and
(2) a
written undertaking by or on behalf of Indemnitee to repay
the amounts advanced if it is determined in a final order issued by a
court of competent jurisdiction from which no appeal may be taken that the
Indemnitee did not meet the required standard of conduct. The aforesaid written
affirmation and undertaking shall be consistent with provisions of applicable
law, including but not limited to the Nevada General Corporation
Law. For purposes of this Agreement, references to "serving at
the request of the Corporation" shall include any service as an officer and/or
director of the Corporation which imposes duties on, or involves services by,
such an officer and/or director with respect to an employee benefit plan or its
participants or beneficiaries, including but not limited to service as a trustee
or administrator of any such benefit plan.
(b)
Notwithstanding anything to the contrary in Section 1(a), the Corporation shall
indemnify Indemnitee in any action, suit or proceeding initiated by Indemnitee
only if Indemnitee acted with the authorization of the Corporation in initiating
that action, suit investigation or proceeding;
provided, however,
that any
action or proceeding brought under Section 9 shall not be subject to this
Section 1(b), and it is expressly agreed that the Corporation shall bear any and
all fees and expenses incurred by Indemnitee in seeking to enforce this
agreement.
(c)
Indemnitee shall be presumed to be entitled to indemnification for matters
covered in this Agreement. The burden of proof of establishing that Indemnitee
is not entitled to indemnification shall be on the Corporation.
(d)
Neither the Corporation nor Indemnitee shall unreasonably withhold their consent
to any proposed settlement of an indemnified claim, provided, however, that no
party shall be required to admit liability in connection with any proposed
settlement and Indemnitee shall not be required to bear any cost or expense in
connection with any proposed settlement of an indemnifiable claim.
2
.
Partial Indemnity; Successful
Defense.
(a) If
Indemnitee is entitled under any provisions of this Agreement to indemnification
by the Corporation for some or a portion of the expenses, judgments, fines,
taxes, penalties and amounts paid in settlement but not for the total amount
thereof, the Corporation shall indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled.
(b) To
the extent that Indemnitee has been successful on the merits or otherwise in
defense or settlement of any action, suit, investigation or proceeding or in
defense of any issue or matter therein, including, without limitation, dismissal
without prejudice, Indemnitee shall be indemnified against any and all expenses
(including but not limited to attorneys’ fees), judgments, fines, taxes,
penalties and amounts paid in settlement with respect to such action, suit or
proceeding. Moreover, to the extent that Indemnitee has been successful on the
merits or otherwise in defense of any or all claims relating in whole or in part
to an indemnifiable event or in defense of any issue or matter therein,
including, without limitation, dismissal without prejudice, Indemnitee shall be
indemnified against all costs, charges and expenses, including, without
limitation, attorneys' fees and other fees and expenses, incurred in connection
therewith without further action or determination.
(c) For
purposes of this Agreement, the termination of any action, suit, investigation
or proceeding, by judgment, order, settlement (whether with or without court
approval), shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law or this
Agreement.
3
.
Notice by
Indemnitee
.
Indemnitee
shall notify the Corporation in writing of any matter with respect to which
Indemnitee intends to seek indemnification hereunder as soon as reasonably
practicable following the receipt by Indemnitee of written threat thereof;
provided, however,
that
failure to so notify the Corporation shall not constitute a waiver by Indemnitee
of his rights hereunder.
4
.
Advancement of
Expenses.
In the
event of any action, suit, investigation or proceeding against Indemnitee which
may give rise to a right of indemnification from the Corporation pursuant to
this Agreement, following written request to the Corporation by Indemnitee, the
Corporation shall advance to Indemnitee (or, at the request of the Indemnitee,
to such parties as are conducting the defense of any indemnified claim) amounts
to cover expenses incurred by Indemnitee in defending or otherwise responding to
or participating in any such action, suit, investigation or proceeding in
advance of the final disposition thereof upon receipt of (a) an Undertaking by
or on behalf of Indemnitee substantially in the form annexed hereto as Exhibit A
to repay the amount advanced in the event it shall ultimately be
determined by a court of competent jurisdiction from which no appeal can be
taken that Indemnitee is not entitled to be indemnified by the Corporation (the
“
Undertaking
”),
and (b) reasonably satisfactory evidence as to the amount of such expenses.
Indemnitee's Undertaking together with a copy of an expense statement billed to
Indemnitee or paid or to be paid by Indemnitee shall constitute satisfactory
evidence as to the amount of expenses to be advanced by the
Corporation. Following receipt of an Undertaking, the Corporation
shall, within 30 calendar days after receiving expense statements, make payment
of the expenses stated therein. No security shall be required in
connection with any Undertaking and any Undertaking shall be accepted without
reference to the Indemnitee's ability to make repayment.
5
.
Non-Exclusivity
of Right of Indemnification
.
(a) The
indemnification rights granted to Indemnitee under this Agreement shall not be
deemed exclusive of, or in limitation of, any other rights that are more
beneficial to Indemnitee to which Indemnitee may be entitled under Nevada law,
the Corporation's articles of incorporation or by-laws, any other agreement, any
vote of shareholders or directors or otherwise. To the extent any applicable
law, the Corporation's articles of incorporation or by-laws, as in effect on the
date hereof or at any time in the future, permit greater or less limited or less
conditional indemnification or advance payment of expenses than is provided
for
in this
Agreement, Indemnitee shall enjoy such greater or less limited or less
conditional benefits so afforded, and this Agreement shall be deemed amended
without any further action by the Corporation or Indemnitee to grant such
greater benefits. It is the intention of the parties that nothing in
this Agreement shall limit or abridge the indemnification rights of Indemnitee
as set forth in the Articles, in any by-laws, in any directors’ and officers’
liability insurance coverage, or otherwise. Accordingly, in the event there is a
conflict between any provision in this Agreement and any provision of the
Articles or any by-law provision now in effect or which may be in effect in the
future, the controlling provision shall be that provision which would be more
favorable to Indemnitee and would result in broader and more expansive
indemnification rights in favor of Indemnitee.
(b)
Indemnitee shall be entitled, in the sole discretion of Indemnitee, to elect to
have Indemnitee's rights hereunder interpreted on the basis of applicable law in
effect (i) at the time of execution of this Agreement, or (ii) at the time of
the occurrence of the indemnifiable event giving rise to a claim, or (iii) at
the time indemnification is sought.
6
.
Contribution
.
If the
indemnification provided for in this Agreement is unavailable to Indemnitee for
any reason whatsoever, the Corporation, in lieu of indemnifying Indemnitee,
shall contribute to the amount incurred by Indemnitee, whether for expenses,
judgments, fines, taxes, penalties and amounts paid in settlement in connection
with any action, suit, investigation or proceeding, in such proportion as is
fair and reasonable in light of all of the circumstances of such
action by board action, arbitration or by the court before which such action was
brought in order to reflect (a) the relative benefits received by the
Corporation and Indemnitee as a result of the event(s) and/or transaction(s)
giving cause to such action; and/or (b) the relative fault of the Corporation
(and its other directors, officers, employees and agents) and Indemnitee in
connection with such event(s) and/or transaction(s). Indemnitee's right to
contribution under this Section 6 shall be determined in accordance with,
pursuant to and in the same manner as, the provisions in Sections 1 and 2
relating to Indemnitee's right to indemnification under this
Agreement.
7
.
Liability
Insurance
.
(a) To
the extent the Corporation maintains at any time an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any other an officer and/or
director of the Corporation under such insurance policy.
(b) The
purchase and maintenance of such insurance shall not in any way limit or affect
the rights and obligations of the parties hereto, and the execution and delivery
of this Agreement shall not in any way be construed to limit or affect the
rights and obligations of the Corporation and/or of the other parties under any
such insurance policy.
(c) The
provisions of this Section 7 shall neither (i) restrict the Corporation’s right
to purchase any type of Officers’ and/or Directors’ liability coverage (or any
other insurance coverage that is reserved to or benefits solely or primarily
independent or non-executive directors), nor (ii) afford any officer or
non-executive director who is not insured under any such insurance policy a
claim against the Corporation, the Indemnitee, or any other entity arising from
the purchase or existence of such insurance coverage.
8.
Termination of Agreement and
Survival of Right of Indemnification
.
The
Corporation will require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially all
of the business or assets of the Corporation, by agreement in form and substance
reasonably satisfactory to the then-current Board of Directors of the
Corporation, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Corporation would be required to perform if no
such succession had taken place. This Agreement will be binding upon
and inure to the benefit of the Corporation and any successor to the
Corporation, including, without limitation, any person acquiring directly or
indirectly all or substantially all of the business or assets of the Corporation
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor will thereafter be deemed the "Corporation" for purposes of this
Agreement), but this Agreement will not otherwise be assignable, transferable or
delegable by the Corporation. The rights granted to Indemnitee
hereunder shall continue and survive any termination of this Agreement and any
termination of Indemnitee’s service as an officer and/or director of the
Corporation and shall inure to the benefit of Indemnitee, Indemnitee’s personal
representatives, heirs, executors, administrators and
beneficiaries.
9.
Resolution of All
Disputes Concerning Entitlement
.
(a) It is
intent of the Corporation that the Indemnitee not be required to incur the
expenses associated with the enforcement of Indemnitee’s rights under this
Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Corporation has failed to comply with any of its obligations
under this Agreement or in the event that the Corporation or any other person
takes any action to declare this Agreement void or unenforceable, or institutes
any action, suit, investigation or proceeding designed (or having the effect of
being designed) to deny, or to recover from, the Indemnitee the benefits
intended to be provided to the Indemnitee hereunder, the Corporation irrevocably
authorizes the Indemnitee from time to time to retain counsel of Indemnitee’s
choice, at the expense of the Corporation as hereinafter provided, to represent
the Indemnitee in connection with the initiation or defense of any litigation or
other legal action, whether by or against the Corporation or any director,
officer, stockholder or other person affiliated with the Corporation, in any
jurisdiction. Regardless of the outcome thereof, the Corporation
shall pay and be solely responsible for any and all costs, charges and expenses,
including, without limitation, attorneys' and other fees and expenses,
reasonably incurred by the Indemnitee as a result of the Corporation's failure
to perform this Agreement or any provision thereof.
(b)The
exclusive forum for resolution of any controversy or claim arising
out of or relating to this Agreement or Indemnitee's entitlement to
indemnification under this Agreement shall be the Federal and State Courts
situated in the County of New York, State of New York, and the parties hereby
consent to the exclusive jurisdiction and venue of said courts and
waive any claim that said courts do not constitute a convenient or
appropriate venue, and agrees that service of process may be effected in any
such action, suit or proceeding by notice given in accordance with Section
11.
10.
Amendments,
Etc
.
Except as
provided in Section 5, no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver. No provision of this Agreement
may be waived, modified or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Indemnitee and the
Corporation. No waiver by either party hereto at any time of any
breach by the other party hereto or compliance with any condition or provision
of this Agreement to be performed by such other party will be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
expressed or implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. This Agreement
may be executed in one or more counterparts, each of which will be deemed to be
an original but all of which together will constitute one and the same
agreement.
11
.
Notices
.
All
notices, requests, demands and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand or when mailed by certified registered mail, return receipt
requested, with postage prepaid:
(a) If to
Indemnitee, to the corporate address of the Corporation provided directly
below.
(b) If to
the Corporation, to:
The
Quigley Corporation
Kells
Building,
621 Shady
Retreat Road, P.O. Box 1349
Doylestown,
PA 18901
c/o Chief
Executive Officer
-with
copies to-
The Board
of Directors of The Quigley Corporation
-and-
Herbert
F. Kozlov, Esq.
Reed
Smith LLP
599
Lexington Avenue
NY, NY
10022
or to
such person or address as Indemnitee or the Corporation shall furnish to the
other party in writing pursuant to the above.
12.
Severability
.
If any
provision of this Agreement is determined to be invalid, illegal or
unenforceable, this invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement, and there shall be substituted for the provision at issue a valid and
enforceable provision as similar as possible to the provision at
issue.
IN WITNESS WHEREOF
, the
parties have executed this Agreement as of the day and year first above
stated.
THE
QUIGLEY CORPORATION:
By:
________________________
Name: Ted
Karkus
Title:
Chairman and Chief Executive Officer
INDEMNITEE
:
_____________________________
Name:
EXHIBIT A—GENERAL FORM OF
UNDERTAKING
1. This
Statement is submitted pursuant to the Indemnity Agreement effective
_____________________,
2009 between
THE QUIGLEY
CORPORATION
, a corporation organized and existing under the laws of the
State of Nevada, (the "
Corporation
") and the
undersigned.
2. I
am requesting indemnification against expenses (including attorneys' fees) and
judgments, fines and amounts paid in settlement, all of which have been or will
be actually and reasonably incurred by me or on my behalf in connection with a
certain action, suit, investigation or other proceeding to which I am a party or
am threatened to be made a party, or in which I am or may be participating, by
reason of the fact that I am or was an officer and/or director of the
Corporation.
3. With
respect to all matters related to any such action, suit, investigation or other
proceeding, I believe I acted in good faith and in a manner I reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, I had no reason to believe
that my conduct was unlawful.
4. I
hereby affirm that I believe in good faith belief that I have met the standard
of conduct necessary for indemnification by the Corporation. I hereby undertake
to repay this advancement of expenses if it shall ultimately be determined
pursuant to a final order from which no appeal can be taken of a court of
competent jurisdiction that I am not entitled to be indemnified by the
Corporation under the aforesaid Indemnification Agreement or
otherwise.
5. I
am requesting indemnification in connection with the following
matter: [PROVIDE DETAILS]
___________________________
Name of
Indemnitee
|
Dated:
_____________
|
EMPLOYMENT
AGREEMENT
This
Employment Agreement (the “
Agreement
”), is made
as of August 19, 2009, effective as of July 15, 2009 by and between
THE QUIGLEY CORPORATION
, a
corporation organized under the laws of the State of Delaware (the “
Company
”), and
TED KARKUS
(“
Executive
”).
W
I T N E S E T H:
WHEREAS
, the Company and
Executive desire to provide for the employment of the Executive as the Chief
Executive Officer of the Company, to engage in such activities and to render
such services under the terms and conditions hereof;
WHEREAS
, the Company appointed
the Executive as Chief Executive Officer on July 15, 2009, and has authorized
and approved the execution of this Agreement, and Executive desires to be
employed by the Company under the terms and conditions hereinafter provided;
and
WHEREAS
, this Agreement
constitutes the entire understanding and agreement between the Company and
Executive regarding its subject matter and supersedes all prior or
contemporaneous negotiations and agreements, whether oral or written, between
them with respect to such subject matter.
NOW, THEREFORE
, in
consideration of the mutual covenants and undertakings herein contained, the
parties agree as follows:
1.
Effective Date, Appointment,
Title and Duties
. The effective date of this Agreement is July
15, 2009 (“
Effective
Date
”). As of the Effective Date, the Company employs
Executive to serve as its Chief Executive Officer. In such capacity,
Executive shall report to the Board of Directors of the Company, and shall have
such duties, powers and responsibilities as are customarily assigned to a Chief
Executive Officer of a publicly held corporation, but shall also be responsible
to the Board of Directors and to any committee thereof. In addition,
Executive shall have such other duties and responsibilities as the Board of
Directors may reasonably assign him, with his consent, including serving with
the consent or at the request of the Board of Directors as an officer or on the
board of directors of affiliated corporations,
provided
that such duties are
commensurate with and customary for a senior executive officer bearing
Executive’s experience, qualifications, title and position.
2.
Term of
Agreement
. The term of the Executive’s employment under this
Agreement shall commence on the Effective Date and shall terminate on July 15,
2012.
3.
Acceptance of
Position
. Executive accepts the position of Chief Executive
Officer, and agrees that during the term of this Agreement he will faithfully
perform his duties and, except as expressly approved by the Board of Directors,
will devote substantially all of his business time to the business and affairs
of the Company, and will not engage, for his own account or for the account of
any other person or entity, in a business which directly competes with the
Company. It is acknowledged and agreed that Executive may serve as an
officer and/or director of companies in which the Company owns voting or
non-voting stock. In addition, it is acknowledged and agreed that
Executive may, from time to time, serve as a member of the board of directors of
other companies, in which event the Board of Directors of the Company must
expressly approve such service pursuant to a Board resolution maintained in the
Company’s minute books. Any compensation or remuneration which
Executive receives in consideration of his service on the board of directors of
other companies shall be the sole and exclusive property of Executive, and the
Company shall have no right or entitlement at any time to any such compensation
or remuneration.
4.
Salary and
Benefits
. During the term of this Agreement:
(a)
The
Company shall pay to Executive a base salary at an annual rate of not less than
Seven Hundred Fifty Thousand Dollars ($750,000) per annum (“
Base Salary
”), paid
in approximately equal installments at intervals based on any reasonable Company
policy. The Company agrees from time to time to consider increases in
such base salary in the discretion of the Board of Directors. Any
increase, once granted, shall automatically amend this Agreement to provide that
thereafter Executive’s base salary shall not be less than the annual amount to
which such base salary has been increased.
(b)
During
the term hereof, Executive shall be eligible to participate in all health,
retirement, Company-paid insurance, sick leave, vacation, disability, expense
reimbursement and other benefit programs which the Company or its subsidiaries
makes available to any of its senior executives.
(c)
Executive
may be awarded an annual bonus (in cash or stock of the Company) in the sole
discretion of the Board of Directors. Executive also shall be
eligible to participate in any Company incentive stock, option or bonus plan
offered by the Company to its senior executives, subject to the terms thereof
and at the sole discretion of the Board of Directors.
5.
Certain Terms
Defined
. For purposes of this Agreement:
(a)
Executive
shall be deemed to be “disabled” if a physical or mental condition shall occur
and persist which, in the written opinion of a licensed physician selected by
the Board of Directors in good faith, has rendered Executive unable to perform
the duties set forth in Section 1 hereof for a period of sixty (60) days or more
and, in the written opinion of such physician, the condition will continue for
an indefinite period of time, rendering Executive unable to return to his
duties.
(b)
A
termination of Executive’s employment by the Company shall be deemed for “Cause”
if, and only if, it is based upon (i) conviction of a felony by a federal
or state court of competent jurisdiction; (ii) material disloyalty to the
Company such as embezzlement, misappropriation of corporate assets or, except as
permitted pursuant to Section 3 of this Agreement, breach of Executive’s
agreement not to engage in business for another enterprise of the type engaged
in by the Company; or (iii) the engaging in unethical or illegal behavior
which is of a public nature, brings the Company into disrepute, and result in
material damage to the Company. The Company shall have the right to
suspend Executive with pay, for a reasonable period to investigate allegations
of conduct which, if proven, would establish a right to terminate this Agreement
for Cause, or to permit a felony charge to be tried. Immediately upon
the conclusion of such temporary period, unless Cause to terminate this
Agreement has been established, Executive shall be restored to all duties and
responsibilities as if such suspension had never occurred.
(c)
A
resignation by Executive shall not be deemed to be voluntary and shall be deemed
to be a resignation with “Good Reason” if it is based upon (i) a diminution
in Executive’s title, duties, or salary; (ii) a material reduction in
benefits; (iii) a direction by the Board of Directors that Executive report
to any person or group other than the Board of Directors, or (iv) a
geographic relocation of Executive’s place of work a distance for more than
sixty (60) miles from the Company’s offices located in Doylestown,
Pennsylvania.
(d)
“Affiliate”
means with respect to any Person, a Person who, directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control, with the Person specified.
(e)
“Base
Salary” means, as of any date of termination of employment, the highest base
salary of Executive in the then current fiscal year or in any of the last four
fiscal years immediately preceding such date of termination of
employment.
(f)
“Beneficial
Owner” shall have the meaning given to such term in Rule 13d-3 under the
Exchange Act.
(g)
A “Change
in Control” occurs if:
(i)
Any
Person or related group of Persons (other than Executive and his Related
Persons, the Company or a Person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding securities;
(ii)
The
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 66-2/3% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation;
provided, however
, that a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires 30% or more of the combined
voting power of the Company’s then outstanding securities shall not constitute a
Change in Control;
(iii)
The
Stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets; or
(iv)
A
majority of the members of the Board of Directors of the Company cease to be
Continuing Directors;
(h)
“Code”
means the Internal Revenue Code of 1986, as amended.
(i)
“Continuing
Directors” means, as of any date of determination, any member of the Board of
Directors who (i) was a member of such Board of Directors on the date of
the Agreement or (ii) was nominated for election or elected to such Board
of Directors with the approval of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election.
(j)
“Exchange
Act” means the Exchange Act of 1934, as amended.
(k)
“Person”
means any individual, control group as defined in the Exchange Act, corporation,
partnership, limited liability company, trust, association or other
entity.
(l)
“Related
Person” means any immediate family member (spouse, partner, parent, sibling or
child whether by birth or adoption) of the Executive and any trust, estate or
foundation, the beneficiary of which is the Executive and/or an immediate family
member of the Executive.
6.
Certain Benefits Upon
Termination
. Executive’s employment shall be terminated upon
the earlier of (i) the voluntary resignation of Executive with or without
Good Reason; (ii) Executive’s death or permanent disability; or
(iii) upon the termination of Executive’s employment by the Company for any
reason at any time. In the event of such termination, the provisions
of Section 6(a) shall apply, and in the event of a Change of Control, the
provisions of Section 6(b) shall apply.
(a)
If
Executive’s employment by the Company terminates for any reason other than as a
result of (i) a termination for Cause, or (ii) a voluntary resignation by
Executive without a Good Reason, then the Company shall pay Executive a lump sum
severance payment in cash equal to the greater of (y) the amount equal to
eighteen (18) months Base Salary or (z) the amount equal to the Executive’s Base
Salary for the remainder of the term as if this Agreement had not been
terminated;
provided
that if employment terminates by reason of Executive’s death or disability,
then Executive (or
Executive’s estate, if applicable) shall receive a one time payment equal to the
amount of Base Salary owed for the remainder of the term as if this Agreement
had not been terminated.
(b)
If
the Executive’s employment is terminated by the Company for any reason other
than as a result of (i) a termination for Cause, or (ii) a voluntary resignation
by Executive without a Good Reason, within twenty four (24) months of a Change
in Control of the Company, the Company shall pay Executive a one time severance
payment in cash equal to the greater of (y) the amount equal to eighteen (18)
months Base Salary, or (z) the amount equal to the Executive’s Base Salary for
the remainder of the term as if this Agreement had not been terminated;
provided
that if employment
terminates by reason of Executive’s death or disability,
then Executive (or
Executive’s estate, if applicable) shall receive a one time payment equal to the
amount of Base Salary owed for the remainder of the term as if this Agreement
had not been terminated.
(c)
If
Executive’s employment by the Company terminates for any reason, except for the
Company’s termination of Executive’s employment for Cause or a voluntary
resignation by Executive without a Good Reason, the Company shall offer to
Executive the opportunity to participate at Company expense in all medical and
dental plans provided by the Company to its executive officers to the extent
Executive elects for the remainder of the term of this Agreement. To
the extent that the Company cannot provide, for a legal reason or any other
matter, Executive with the opportunity to participate in such medical and dental
plans (at Company expense), the Company shall pay to Executive in cash an amount
equal to the fair market value of the benefits to be provided pursuant to this
Section 6(c).
(d)
The
Company shall make all payments pursuant to the foregoing subsections (a)
through (b) concurrently with the date of termination of Executive’s employment
or consummation of a Change in Control of the Company, as
applicable. Any such termination payments payable hereunder shall be
considered as part-consideration for the non-compete covenant provided by
Executive in Section 7 below.
(e)
The
Company shall have no liability under this Section 6 if Executive’s employment
pursuant to this Agreement is terminated by the Company for Cause or by
Executive without a Good Reason.
(f)
Gross-Up
.
(i)
If it
shall be determined that any payment, distribution or benefit received or to be
received by Executive from the Company (whether payable pursuant to the terms of
this Agreement or any other plan, arrangements or agreement with the Company or
a Affiliate (as defined above) (“
Payments
”)) would be
subject to the excise tax imposed by Section 4999 of the Code (the “
Excise Tax
”), then
Executive shall be entitled to receive an additional payment (the “
Excise Tax Gross-Up
Payment
”) in an amount such that the net amount retained by Executive,
after the calculation and deduction of any Excise Tax on the Payments and any
federal, state and local income taxes and excise tax on the Excise Tax Gross-Up
Payment provided for in this Section 6(g), shall be equal to the
Payments. In determining this amount, the amount of the Excise Tax
Gross-Up Payment attributable to federal income taxes shall be reduced by the
maximum reduction in federal income taxes that could be obtained by the
deduction of the portion of the Excise Tax Gross-Up Payment attributable to
state and local income taxes. Finally, the Excise Tax Gross-Up
Payment shall be reduced by income or excise tax withholding payment made by the
Company or any affiliate of either to any federal, state or local taxing
authority with respect to the Excise Tax Gross-Up Payment that was not deducted
from compensation payable to Executive.
(ii)
All
determinations required to be made under this Section 6(g), including whether
and when an Excise Tax Gross-Up Payment is required and the amount of such
Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, except as specified in Section 6(g)(i) above, shall be made
by the Company’s independent auditors (the “
Accounting Firm
”),
which shall provide detailed supporting calculations both to the Company and
Executive. Such determination of tax liability made by the Accounting
Firm shall be subject to review by Executive’s tax advisor and, if Executive’s
tax advisor does not agree with such determination reached by the Accounting
Firm, then the Accounting Firm and Executive’s tax advisor shall jointly
designate a nationally recognized public accounting firm, which shall make such
determination. All reasonable fees and expenses of the accountants
and tax advisors retained by either Executive or the Company shall be borne by
the Company. Any Excise Tax Gross-Up Payment, as determined pursuant
to this Section 6(g), shall be paid by the Company to Executive within five days
after the receipt of such determination. Any determination by a
jointly designated public accounting firm shall be binding upon the Company and
Executive.
(iii)
As a
result of the uncertainty in the application of Subsection 4999 of the Code at
the time of the initial determination thereunder, it is possible that Excise Tax
Gross-Up Payments will not have been made by the Company that should have been
made consistent with the calculations required to be made hereunder (“
Underpayment
”). In
the event that Executive thereafter is required to make a payment of any Excise
Tax, any such Underpayment calculated in accordance with and in the same manner
as the Excise Tax Gross-Up Payment in Section 6(g)(i) above shall be promptly
paid by the Company to or for the benefit of Executive. In the event
that the Excise Tax Gross-Up Payment exceeds the amount subsequently determined
to be due, such excess shall constitute a loan from the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
7.
Non-competition
. Executive
agrees that at all times while he is employed by the Company and, regardless of
the reason for termination of his employment or this Agreement, for a period of
eighteen (18) months thereafter, he will not, as a principal, agent, employee,
employer, consultant, stockholder, investor, director or co-partner of any
person, firm, corporation or business entity other than the Company, or in any
individual or representative capacity whatsoever, directly or indirectly,
without the express prior written consent of the Company:
(i) engage
or participate in any business whose products or services are directly
competitive with that of the Company and which conducts or solicits business, or
transacts with supplier or customers located within the United States or Puerto
Rico;
(ii) aid
or counsel any other person, firm, corporation or business entity to do any of
the above;
(iii) become
employed by a firm, corporation, partnership or joint venture which competes
with the business of the Company within the United States or Puerto Rico;
or
(iv) approach,
solicit business from, or otherwise do business or deal with any customer of the
Company in connection with any product or service competitive to any provided by
the Company.
For
purposes of the definition of
stockholder
or
investor
used in this Section
7, the Executive may hold a non-control position as stockholder or investor in
the securities of publicly traded companies without the prior written consent of
the Company.
8.
Indemnification
. The
Company shall indemnify Executive and hold him harmless from and against all
claims, losses, damages, expense or liabilities (including expenses of defense
and settlement) based upon or in any way arising from or connected with his
employment by the Company, to the maximum extent permitted by law. To
the fullest extent permitted by law, the Company shall advance to Executive all
expenses necessary in connection with the defense of any action or claim which
is brought if indemnification cannot be determined to be available prior to the
conclusion of such action or the investigation of such claim. The
Company shall investigate in good faith the availability and cost of directors’
and officers’ insurance and shall include Executive as an insured in any
directors’ and officers’ insurance policy it maintains. The
provisions of this Section 8 shall survive any termination or expiration of this
Agreement.
9.
Attorney
Fees
. In the event that any action or proceeding is brought to
enforce the terms and provisions of this Agreement, the prevailing party shall
be entitled to recover reasonable attorney fees.
10.
Notices
. All
notices and other communications provided to either party hereto under this
Agreement shall be in writing and delivered by certified or registered mail to
such party at its/her address set forth below its/her signature hereto, or at
such other address as may be designated with postage prepaid, shall be deemed
given when received.
11.
Construction
. In
constructing this Agreement, if any portion of this Agreement shall be found to
be invalid or unenforceable, the remaining terms and provisions of this
Agreement shall be given effect to the maximum extent permitted without
considering the void, invalid or unenforceable provisions. In
construing this Agreement, the singular shall include the plural, the masculine
shall include the feminine and neuter genders as appropriate, and no meaning in
effect shall be given to the captions of the sections in this Agreement, which
is inserted for convenience of reference only. Without limitation to
the foregoing, nothing in this Agreement is intended to violate the
Sarbanes-Oxley Act of 2002, and to the extent that any provision of this
Agreement would constitute such a violation, such provision shall be modified to
the extent required by such Act, or, to the extent that such provision cannot be
so modified and is found to be invalid or unenforceable, the remaining terms and
provisions shall be given effect to the maximum extent permitted without
considering the void, invalid or unenforceable provision.
12.
Headings
. The
section headings hereof have been inserted for convenience of reference only and
shall not be construed to affect the meaning, construction or effect of this
Agreement.
13.
Governing
Law
. This Agreement, and any statements, conduct, claims,
causes of action, liabilities or other matters relating to or arising out of or
in connection with this Agreement, shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to choice of
law or conflict of law principles. The federal and state courts sitting in the
State of New York, County of New York, shall have exclusive jurisdiction to
adjudicate any disputes arising out of or in connection with this Agreement and
the parties hereby waive any objection based with respect
thereto.
Any rights to trial by jury
with respect to any claim, action or proceeding, directly or indirectly, arising
out of, or relating to, this Agreement are waived by the
parties.
14.
Entire
Agreement
. This Agreement constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among Executive and the Company, with respect to the subject matter
hereof.
IN WITNESS WHEREOF
, this
Agreement shall be effective as of the date specified in the first paragraph of
this Agreement.
|
|
|
|
|
THE
QUIGLEY CORPORATION:
|
|
|
|
|
|
|
|
|
|
|
|
Name:
Robert V. Cuddihy,
|
|
|
|
Title: Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This
Employment Agreement (the “
Agreement
”), is made
as of August 19, 2009, effective as of July 15, 2009 by and between
THE QUIGLEY CORPORATION
, a
corporation organized under the laws of the State of Delaware (the “
Company
”), and
ROBERT
V. CUDDIHY
(“
Executive
”).
W
I T N E S E T H:
WHEREAS
, the Company and
Executive desire to provide for the employment of the Executive as the Chief
Operating Officer of the Company, to engage in such activities and to render
such services under the terms and conditions hereof;
WHEREAS
, the Company appointed
the Executive as Chief Operating Officer on July 15, 2009, and has authorized
and approved the execution of this Agreement, and Executive desires to be
employed by the Company under the terms and conditions hereinafter provided;
and
WHEREAS
, this Agreement
constitutes the entire understanding and agreement between the Company and
Executive regarding its subject matter and supersedes all prior or
contemporaneous negotiations and agreements, whether oral or written, between
them with respect to such subject matter.
NOW, THEREFORE
, in
consideration of the mutual covenants and undertakings herein contained, the
parties agree as follows:
1.
Effective Date, Appointment,
Title and Duties
. The effective date of this Agreement is July
15, 2009 (“
Effective
Date
”). As of the Effective Date, the Company employs
Executive to serve as its Chief Operating Officer. In such capacity,
Executive shall report to the Chief Executive Officer, and shall have such
duties, powers and responsibilities as are customarily assigned to a Chief
Operating Officer of a publicly held corporation, but shall also be responsible
to the Board of Directors and to any committee thereof. In addition,
Executive shall have such other duties and responsibilities as the Chief
Executive Officer and/or the Board of Directors may reasonably assign him, with
his consent, including serving with the consent or at the request of the Board
of Directors as an officer or on the board of directors of affiliated
corporations,
provided
that such duties are commensurate with and customary for a senior executive
officer bearing Executive’s experience, qualifications, title and
position.
2.
Term of
Agreement
. The term of the Executive’s employment under this
Agreement shall commence on the Effective Date and shall terminate on July 15,
2012.
3.
Acceptance of
Position
. Executive accepts the position of Chief Operating
Officer, and agrees that during the term of this Agreement he will faithfully
perform his duties and, except as expressly approved by the Board of Directors,
will devote substantially all of his business time to the business and affairs
of the Company, and will not engage, for his own account or for the account of
any other person or entity, in a business which directly competes with the
Company. It is acknowledged and agreed that Executive may serve as an
officer and/or director of companies in which the Company owns voting or
non-voting stock. In addition, it is acknowledged and agreed that
Executive may, from time to time, serve as a member of the board of directors of
other companies, in which event the Board of Directors of the Company must
expressly approve such service pursuant to a Board resolution maintained in the
Company’s minute books. Any compensation or remuneration which
Executive receives in consideration of his service on the board of directors of
other companies shall be the sole and exclusive property of Executive, and the
Company shall have no right or entitlement at any time to any such compensation
or remuneration.
4.
Salary and
Benefits
. During the term of this Agreement:
(a)
The
Company shall pay to Executive a base salary at an annual rate of not less than
Two Hundred Seven Five Thousand Dollars ($275,000) per annum (“
Base Salary
”), paid
in approximately equal installments at intervals based on any reasonable Company
policy. The Company agrees from time to time to consider increases in
such base salary in the discretion of the Board of Directors. Any
increase, once granted, shall automatically amend this Agreement to provide that
thereafter Executive’s base salary shall not be less than the annual amount to
which such base salary has been increased.
(b)
During
the term hereof, Executive shall be eligible to participate in all health,
retirement, Company-paid insurance, sick leave, vacation, disability, expense
reimbursement and other benefit programs which the Company or its subsidiaries
makes available to any of its senior executives.
(c)
In
addition to the Base Salary, Executive shall be granted an amount of shares of
common stock of the Company that is equal to $50,000 per year. The
shares to be granted under this Section 4(c) shall be granted quarterly during
the term of this Agreement (on the basis of a value of $12,500 of shares per
quarter) in arrears, promptly following the close of each
quarter. The value of the shares shall be calculated based on the
average closing price of the Company’s shares for the first five (5) trading
days of the quarter in which the shares are earned.
(d)
Executive
may be awarded an annual bonus (in cash or stock of the Company) in the sole
discretion of the Board of Directors. Executive also shall be
eligible to participate in any Company incentive stock, option or bonus plan
offered by the Company to its senior executives, subject to the terms thereof
and at the sole discretion of the Board of Directors.
5.
Certain Terms
Defined
. For purposes of this Agreement:
(a)
Executive
shall be deemed to be “disabled” if a physical or mental condition shall occur
and persist which, in the written opinion of a licensed physician selected by
the Board of Directors in good faith, has rendered Executive unable to perform
the duties set forth in Section 1 hereof for a period of sixty (60) days or more
and, in the written opinion of such physician, the condition will continue for
an indefinite period of time, rendering Executive unable to return to his
duties.
(b)
A
termination of Executive’s employment by the Company shall be deemed for “Cause”
if, and only if, it is based upon (i) conviction of a felony by a federal
or state court of competent jurisdiction; (ii) material disloyalty to the
Company such as embezzlement, misappropriation of corporate assets or, except as
permitted pursuant to Section 3 of this Agreement, breach of Executive’s
agreement not to engage in business for another enterprise of the type engaged
in by the Company; or (iii) the engaging in unethical or illegal behavior
which is of a public nature, brings the Company into disrepute, and result in
material damage to the Company. The Company shall have the right to
suspend Executive with pay, for a reasonable period to investigate allegations
of conduct which, if proven, would establish a right to terminate this Agreement
for Cause, or to permit a felony charge to be tried. Immediately upon
the conclusion of such temporary period, unless Cause to terminate this
Agreement has been established, Executive shall be restored to all duties and
responsibilities as if such suspension had never occurred.
(c)
A
resignation by Executive shall not be deemed to be voluntary and shall be deemed
to be a resignation with “Good Reason” if it is based upon (i) a diminution
in Executive’s title, duties, or salary; (ii) a material reduction in
benefits; (iii) a direction by the Board of Directors that Executive report
to any person or group other than the Board of Directors, or (iv) a
geographic relocation of Executive’s place of work a distance for more than
sixty (60) miles from the Company’s offices located in Doylestown,
Pennsylvania.
(d)
“Affiliate”
means with respect to any Person, a Person who, directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control, with the Person specified.
(e)
“Base
Salary” means, as of any date of termination of employment, the highest base
salary of Executive in the then current fiscal year or in any of the last four
fiscal years immediately preceding such date of termination of
employment.
(f)
“Beneficial
Owner” shall have the meaning given to such term in Rule 13d-3 under the
Exchange Act.
(g)
A “Change
in Control” occurs if:
(i)
Any
Person or related group of Persons (other than Executive and his Related
Persons, the Company or a Person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding securities;
(ii)
The
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 66-2/3% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation;
provided, however
, that a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires 30% or more of the combined
voting power of the Company’s then outstanding securities shall not constitute a
Change in Control;
(iii)
The
Stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets; or
(iv)
A
majority of the members of the Board of Directors of the Company cease to be
Continuing Directors;
(h)
“Code”
means the Internal Revenue Code of 1986, as amended.
(i)
“Continuing
Directors” means, as of any date of determination, any member of the Board of
Directors who (i) was a member of such Board of Directors on the date of
the Agreement or (ii) was nominated for election or elected to such Board
of Directors with the approval of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election.
(j)
“Exchange
Act” means the Exchange Act of 1934, as amended.
(k)
“Person”
means any individual, control group as defined in the Exchange Act, corporation,
partnership, limited liability company, trust, association or other
entity.
(l)
“Related
Person” means any immediate family member (spouse, partner, parent, sibling or
child whether by birth or adoption) of the Executive and any trust, estate or
foundation, the beneficiary of which is the Executive and/or an immediate family
member of the Executive.
6.
Certain Benefits Upon
Termination
. Executive’s employment shall be terminated upon
the earlier of (i) the voluntary resignation of Executive with or without
Good Reason; (ii) Executive’s death or permanent disability; or
(iii) upon the termination of Executive’s employment by the Company for any
reason at any time. In the event of such termination, the provisions
of Section 6(a) shall apply, and in the event of a Change of Control, the
provisions of Section 6(b) shall apply.
(a)
If
Executive’s employment by the Company terminates for any reason other than as a
result of (i) a termination for Cause, or (ii) a voluntary resignation by
Executive without a Good Reason, then the Company shall pay Executive a lump sum
severance payment in cash equal to the greater of (y) the amount equal to
eighteen (18) months of Base Salary plus $50,000, or (z) the amount equal to the
Executive’s Base Salary, plus any amounts owed to Executive under
Section 4(c) above, for the remainder of the term as if this Agreement had not
been terminated;
provided
that if employment
terminates by reason of Executive’s death or disability,
then Executive (or
Executive’s estate, if applicable) shall receive a one time payment equal to the
amount of Base Salary owed for the remainder of the term as if this Agreement
had not been terminated.
(b)
If the
Executive’s employment is terminated by the Company for any reason other than as
a result of (i) a termination for Cause, or (ii) a voluntary resignation by
Executive without a Good Reason, within twenty four (24) months of a Change in
Control of the Company, the Company shall pay Executive a one time severance
payment in cash equal to the greater of (y) the amount equal to eighteen (18)
months of Base Salary plus $50,000, or (z) the amount equal to the Executive’s
Base Salary, plus any amounts owed to Executive under Section 4(c)
above, for the remainder of the term as if this Agreement had not been
terminated;
provided
that if employment terminates by reason of Executive’s death or disability,
then Executive (or
Executive’s estate, if applicable) shall receive a one time payment equal to the
amount of Base Salary owed for the remainder of the term as if this Agreement
had not been terminated.
(c)
If
Executive’s employment by the Company terminates for any reason, except for the
Company’s termination of Executive’s employment for Cause or a voluntary
resignation by Executive without a Good Reason, the Company shall offer to
Executive the opportunity to participate at Company expense in all medical and
dental plans provided by the Company to its executive officers to the extent
Executive elects for the remainder of the term of this Agreement. To
the extent that the Company cannot provide, for a legal reason or any other
matter, Executive with the opportunity to participate in such medical and dental
plans (at Company expense), the Company shall pay to Executive in cash an amount
equal to the fair market value of the benefits to be provided pursuant to this
Section 6(c).
(d)
The
Company shall make all payments pursuant to the foregoing subsections (a)
through (b) concurrently with the date of termination of Executive’s employment
or consummation of a Change in Control of the Company, as
applicable. Any such termination payments payable hereunder shall be
considered as part-consideration for the non-compete covenant provided by
Executive in Section 7 below.
(e)
The
Company shall have no liability under this Section 6 if Executive’s employment
pursuant to this Agreement is terminated by the Company for Cause or by
Executive without a Good Reason.
(f)
Gross-Up
.
(i)
If it
shall be determined that any payment, distribution or benefit received or to be
received by Executive from the Company (whether payable pursuant to the terms of
this Agreement or any other plan, arrangements or agreement with the Company or
a Affiliate (as defined above) (“
Payments
”)) would be
subject to the excise tax imposed by Section 4999 of the Code (the “
Excise Tax
”), then
Executive shall be entitled to receive an additional payment (the “
Excise Tax Gross-Up
Payment
”) in an amount such that the net amount retained by Executive,
after the calculation and deduction of any Excise Tax on the Payments and any
federal, state and local income taxes and excise tax on the Excise Tax Gross-Up
Payment provided for in this Section 6(g), shall be equal to the
Payments. In determining this amount, the amount of the Excise Tax
Gross-Up Payment attributable to federal income taxes shall be reduced by the
maximum reduction in federal income taxes that could be obtained by the
deduction of the portion of the Excise Tax Gross-Up Payment attributable to
state and local income taxes. Finally, the Excise Tax Gross-Up
Payment shall be reduced by income or excise tax withholding payment made by the
Company or any affiliate of either to any federal, state or local taxing
authority with respect to the Excise Tax Gross-Up Payment that was not deducted
from compensation payable to Executive.
(ii)
All
determinations required to be made under this Section 6(g), including whether
and when an Excise Tax Gross-Up Payment is required and the amount of such
Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, except as specified in Section 6(g)(i) above, shall be made
by the Company’s independent auditors (the “
Accounting Firm
”),
which shall provide detailed supporting calculations both to the Company and
Executive. Such determination of tax liability made by the Accounting
Firm shall be subject to review by Executive’s tax advisor and, if Executive’s
tax advisor does not agree with such determination reached by the Accounting
Firm, then the Accounting Firm and Executive’s tax advisor shall jointly
designate a nationally recognized public accounting firm, which shall make such
determination. All reasonable fees and expenses of the accountants
and tax advisors retained by either Executive or the Company shall be borne by
the Company. Any Excise Tax Gross-Up Payment, as determined pursuant
to this Section 6(g), shall be paid by the Company to Executive within five days
after the receipt of such determination. Any determination by a
jointly designated public accounting firm shall be binding upon the Company and
Executive.
(iii)
As a
result of the uncertainty in the application of Subsection 4999 of the Code at
the time of the initial determination thereunder, it is possible that Excise Tax
Gross-Up Payments will not have been made by the Company that should have been
made consistent with the calculations required to be made hereunder (“
Underpayment
”). In
the event that Executive thereafter is required to make a payment of any Excise
Tax, any such Underpayment calculated in accordance with and in the same manner
as the Excise Tax Gross-Up Payment in Section 6(g)(i) above shall be promptly
paid by the Company to or for the benefit of Executive. In the event
that the Excise Tax Gross-Up Payment exceeds the amount subsequently determined
to be due, such excess shall constitute a loan from the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
7.
Non-competition
. Executive
agrees that at all times while he is employed by the Company and, regardless of
the reason for termination of his employment or this Agreement, for a period of
eighteen (18) months thereafter, he will not, as a principal, agent, employee,
employer, consultant, stockholder, investor, director or co-partner of any
person, firm, corporation or business entity other than the Company, or in any
individual or representative capacity whatsoever, directly or indirectly,
without the express prior written consent of the Company:
(i) engage
or participate in any business whose products or services are directly
competitive with that of the Company and which conducts or solicits business, or
transacts with supplier or customers located within the United States or Puerto
Rico;
(ii) aid
or counsel any other person, firm, corporation or business entity to do any of
the above;
(iii) become
employed by a firm, corporation, partnership or joint venture which competes
with the business of the Company within the United States or Puerto Rico;
or
(iv) approach,
solicit business from, or otherwise do business or deal with any customer of the
Company in connection with any product or service competitive to any provided by
the Company.
For
purposes of the definition of
stockholder
or
investor
used in this Section
7, the Executive may hold a non-control position as stockholder or investor of
the securities of publicly traded companies without the prior written consent of
the Company.
8.
Indemnification
. The
Company shall indemnify Executive and hold him harmless from and against all
claims, losses, damages, expense or liabilities (including expenses of defense
and settlement) based upon or in any way arising from or connected with his
employment by the Company, to the maximum extent permitted by law. To
the fullest extent permitted by law, the Company shall advance to Executive all
expenses necessary in connection with the defense of any action or claim which
is brought if indemnification cannot be determined to be available prior to the
conclusion of such action or the investigation of such claim. The
Company shall investigate in good faith the availability and cost of directors’
and officers’ insurance and shall include Executive as an insured in any
directors’ and officers’ insurance policy it maintains. The
provisions of this Section 8 shall survive any termination or expiration of this
Agreement.
9.
Attorney
Fees
. In the event that any action or proceeding is brought to
enforce the terms and provisions of this Agreement, the prevailing party shall
be entitled to recover reasonable attorney fees.
10.
Notices
. All
notices and other communications provided to either party hereto under this
Agreement shall be in writing and delivered by certified or registered mail to
such party at its/her address set forth below its/her signature hereto, or at
such other address as may be designated with postage prepaid, shall be deemed
given when received.
11.
Construction
. In
constructing this Agreement, if any portion of this Agreement shall be found to
be invalid or unenforceable, the remaining terms and provisions of this
Agreement shall be given effect to the maximum extent permitted without
considering the void, invalid or unenforceable provisions. In
construing this Agreement, the singular shall include the plural, the masculine
shall include the feminine and neuter genders as appropriate, and no meaning in
effect shall be given to the captions of the sections in this Agreement, which
is inserted for convenience of reference only. Without limitation to
the foregoing, nothing in this Agreement is intended to violate the
Sarbanes-Oxley Act of 2002, and to the extent that any provision of this
Agreement would constitute such a violation, such provision shall be modified to
the extent required by such Act, or, to the extent that such provision cannot be
so modified and is found to be invalid or unenforceable, the remaining terms and
provisions shall be given effect to the maximum extent permitted without
considering the void, invalid or unenforceable provision.
12.
Headings
. The
section headings hereof have been inserted for convenience of reference only and
shall not be construed to affect the meaning, construction or effect of this
Agreement.
13.
Governing
Law
. This Agreement, and any statements, conduct, claims,
causes of action, liabilities or other matters relating to or arising out of or
in connection with this Agreement, shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to choice of
law or conflict of law principles. The federal and state courts sitting in the
State of New York, County of New York, shall have exclusive jurisdiction to
adjudicate any disputes arising out of or in connection with this Agreement and
the parties hereby waive any objection based with respect
thereto.
Any rights to trial by jury
with respect to any claim, action or proceeding, directly or indirectly, arising
out of, or relating to, this Agreement are waived by the
parties.
14.
Entire
Agreement
. This Agreement constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among Executive and the Company, with respect to the subject matter
hereof.
IN WITNESS WHEREOF
, this
Agreement shall be effective as of the date specified in the first paragraph of
this Agreement.
|
|
|
|
|
THE
QUIGLEY CORPORATION:
|
|
|
|
|
|
|
|
|
|
|
|
Name:
Ted Karkus
|
|
|
|
|
|
|
|
Title: Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|