(b) Definitions.
(i)
For
purposes of this Agreement, "Disability" shall mean a physical or mental
sickness or any injury which renders Dr. Leeper incapable of performing the
services required of her as an employee of the Company and which does or
may be
expected to continue for more than six months during any twelve-month period.
In
the event Dr. Leeper shall be able to perform her usual and customary
duties on behalf of the Company following a period of Disability, and does
so
perform such duties or such other duties as are prescribed by the Board of
Directors for a period of three continuous months, any subsequent period
of
Disability shall be regarded as a new period of Disability for purposes of
this
Agreement. The Company and Dr. Leeper shall determine the existence of a
Disability and the date upon which it occurred. In the event of a dispute
regarding whether or when a Disability occurred, the matter shall be referred
to
a medical doctor selected by the Company and Dr. Leeper. In the event of
their failure to agree upon such a medical doctor, the Company and
Dr. Leeper shall each select a medical doctor who together shall select a
third medical doctor who shall make the determination. Such determination
shall
be conclusive and binding upon the parties hereto.
(ii)
For
purposes of this Agreement, "Cause" shall be deemed to exist if Dr. Leeper
shall have (1) engaged in a material breach of the terms of section 7 or
section
8 of this Agreement; (2) refused to perform a lawful written directive of
the Board of Directors of the Company or of the Company's Chairman and Chief
Executive Officer that is consistent with Dr. Leeper's duties and
responsibilities; (3) been convicted of, or plead guilty to, or plead nolo
contendere to a felony or a crime involving moral turpitude; (4) committed
an act of fraud, embezzlement or material misappropriation against the Company,
including, but not limited to, the offer, payment, solicitation or acceptance
of
any unlawful bribe or kickback with respect to the Company's business;
(5) habitually neglected her duties (other than resulting from
Dr. Leeper's incapacity due to physical or mental illness); (6) failed
to perform the duties incident to her employment with the Company on a regular
basis, including, but not limited to by reason of chronic absence from work
(excluding a failure resulting from Dr. Leeper's Disability, vacations,
illnesses or leaves of absence approved by the Board); (7) made a knowing
material misrepresentation to the shareholders or directors of the Company;
or
(8) engaged in willful and intentional material misconduct in the
performance of her duties or gross negligence of her duties under this Agreement
or a material violation of her fiduciary obligations to the Company; provided,
that for purposes of clause (2) and only the first act or omission with respect
to section 8 of this Agreement for clause (1), any act or omission that is
curable shall not constitute Cause unless the Company gives Dr. Leeper
written notice of such act or omission, that specifies the act or omission
in
reasonable detail, and that specifically refers to this section and, within
15 days after such notice is received by Dr. Leeper, Dr. Leeper
fails to cure such act or omission (except that the Company shall not be
required to provide such notice more than once in cases of repeated acts
or
omissions).
(iii) For
purposes of this Agreement, "Good Reason" shall mean (1) the material
diminution of Dr. Leeper's duties set forth in section 3 above or any
material adverse change in title, status, responsibilities, authorities or
material perquisites of Dr. Leeper; (2) the relocation of the offices
at which Dr. Leeper is principally employed to a location which is more
than 50 miles from the offices at which Dr. Leeper is principally
employed as of the date hereof; provided, that travel necessary for the
performance of Dr. Leeper's duties set forth in section 3 above shall
not determine the location where Dr. Leeper is "principally employed;"
(3) assignment to Dr. Leeper of duties materially inconsistent with
her position and duties described in this Agreement; or (4) any material
reduction in or failure to pay Dr. Leeper's Base Salary as provided
herein.
(c) Termination
for Disability or Death.
In the
event of termination for Disability or death, payments of the greater of
(i)
Dr. Leeper's Base Salary or (ii) remaining portion of the agreement shall
be made to Dr. Leeper, her designated beneficiary or her estate for a
period of six months after the Termination Date in accordance with the normal
payroll practices of the Company. During this period, the Company shall also
reimburse Dr. Leeper for amounts paid, if any, to continue medical, dental
and health coverage pursuant to the provisions of the Consolidated Omnibus
Budget Reconciliation Act. During this period, the Company will also continue
Dr. Leeper's life insurance and disability coverage, to the extent
permitted under applicable policies, and will pay to Dr. Leeper the fringe
benefits pursuant to section 5 which have accrued prior to the Termination
Date.
(d) Termination
by the Company without Cause or by Dr. Leeper for Good
Reason.
If
(i) the Employment Period is terminated by the Company for any reason other
than for Cause, Disability or death, (ii) the Employment Period is
terminated by the Company for what the Company believes is Cause or Disability,
and it is ultimately determined that the Employment Period was terminated
without Cause or Disability or (iii) Dr. Leeper resigns for Good
Reason, Dr. Leeper shall be entitled to receive, as damages for such a
termination, a severance amount of $125,000 to be paid on the Termination
Date, and Dr. Leeper shall receive $50,000 in consideration for her
covenants and agreements provided in sections 7 and 8, with such amount to
be paid in a lump sum on the first anniversary of the Termination Date. During
the applicable Noncompete Period, the Company shall also reimburse
Dr. Leeper for amounts paid, if any, to continue medical, dental and health
coverage pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act. During the applicable Noncompete Period, the Company
will
also continue Dr. Leeper's disability coverage. If a termination or
resignation of Dr. Leeper's employment occurs in accordance with subsections
6(d)(i), (ii) or (iii) at any time after the occurrence of or in contemplation
of a Change of Control, then Dr. Leeper shall not be entitled to receive
any amounts or benefits as provided in this Agreement, but instead shall
be
entitled to receive as damages for such termination or resignation, the payments
and other benefits as are set forth in the Amended and Restated Change of
Control Agreement dated as of October 1, 2005 by and between the Company
and Dr.
Leeper. Moreover, if such a termination or resignation occurs after the
occurrence of or in contemplation of a Change of Control, the Noncompete
Period
provided in section 7(a) shall be reduced to six months. In addition, the
Company will pay to Dr. Leeper the fringe benefits pursuant to section 5
which have accrued prior to the Termination Date.
(e) Termination
by the Company for Cause or by Dr. Leeper Without Good
Reason.
If the
Employment Period is terminated by the Company with Cause or as a result
of
Dr. Leeper's resignation without Good Reason, Dr. Leeper shall not be
entitled to receive her Base Salary or any fringe benefits or bonuses for
periods after the Termination Date.
(f) Effect
of Termination.
Except
as provided in section 6(d), the termination of the Employment Period pursuant
to section 6(a) shall not affect Dr. Leeper's obligations as described
in sections 7 and 8.
7.
Noncompetition
and Nonsolicitation.
Dr. Leeper acknowledges and agrees that the contacts and relationships of
the Company and its Subsidiaries with its customers, suppliers, licensors
and
other business relations are, and have been, established and maintained at
great
expense and provide the Company and its Subsidiaries with a substantial
competitive advantage in conducting their business. Dr. Leeper acknowledges
and agrees that by virtue of Dr. Leeper's employment with the Company,
Dr. Leeper will have unique and extensive exposure to and personal contact
with the Company's customers and licensors, and that she will be able to
establish a unique relationship with those Persons that will enable her,
both
during and after employment, to unfairly compete with the Company and its
Subsidiaries. Furthermore, the parties agree that the terms and conditions
of
the following restrictive covenants are reasonable and necessary for the
protection of the business, trade secrets and Confidential Information (as
defined in section 8 below) of the Company and its Subsidiaries and to
prevent great damage or loss to the Company and its Subsidiaries as a result
of
action taken by Dr. Leeper. Dr. Leeper acknowledges and agrees that
the noncompete restrictions and nondisclosure of Confidential Information
restrictions contained in this Agreement are reasonable and the consideration
provided for herein is sufficient to fully and adequately compensate
Dr. Leeper for agreeing to such restrictions. Dr. Leeper acknowledges
that she could continue to actively pursue her career and earn sufficient
compensation in the same or similar business without breaching any of the
restrictions contained in this Agreement.
(a) Noncompetition.
Dr. Leeper hereby covenants and agrees that during the Employment Period
and for two years thereafter (the "Noncompete Period") (except that the
Noncompete Period may be shortened as provided in section 6(d)), she shall
not,
directly or indirectly, either individually or as an employee, principal,
agent,
partner, shareholder, owner, trustee, beneficiary, co-venturer, distributor,
consultant, representative or in any other capacity, participate in, become
associated with, provide assistance to, engage in or have a financial or
other
interest in any business, activity or enterprise which is competitive with
the
business of the Company or any of the Company's Subsidiaries. The ownership
of
less than a 3% interest in a corporation whose shares are traded in a recognized
stock exchange or traded in the over-the-counter market, even though that
corporation may be a competitor of the Company, shall not be deemed financial
participation in a competitor. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this section is invalid
or
unenforceable, the parties agree that the court making the determination
of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term
or
provision that is valid and enforceable and that comes closest to expressing
the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified. The term "indirectly" as used in this
section and section 8 below is intended to include any acts authorized or
directed by or on behalf of Dr. Leeper or any Affiliate of
Dr. Leeper.
(b) Nonsolicitation.
Dr. Leeper hereby covenants and agrees that during the Noncompete Period,
she shall not, directly or indirectly, either individually or as an employee,
agent, partner, shareholder, owner, trustee, beneficiary, co-venturer,
distributor, consultant or in any other capacity:
(i)
canvass,
solicit or accept from any Person who is a customer, distributor or licensor
of
the Company or any of its Subsidiaries (any such Person is hereinafter referred
to individually as a "Customer," and collectively as the "Customers") any
business which is in competition with the business of the Company or any
of its
Subsidiaries (as the Company's or its Subsidiaries' business existed during
the
Employment Period) including, without limitation, the canvassing, soliciting
or
accepting of business competitive with the Company's or its Subsidiaries'
business (as the Company's or its Subsidiaries' business existed during the
Employment Period) from any Person which is or was a Customer of the Company
or
any of its Subsidiaries within two years preceding the date of this
Agreement, or during the Employment Period;
(ii)
advise,
request, induce or attempt to induce any of the Customers, suppliers, or
other
business contacts of the Company or any of its Subsidiaries who currently
have
or have had business relationships with the Company or any of its Subsidiaries
within two years preceding the date of this Agreement, to withdraw, curtail
or
cancel any of its business or relations with the Company or any of its
Subsidiaries; or
(iii)
induce
or
attempt to induce any employee, sales representative, consultant or other
agent
of the Company or any of its Subsidiaries to terminate his or her relationship
or breach any agreement with the Company or any of its
Subsidiaries.
(c) Limitation.
For
purposes of this section, the term "business of the Company or any of the
Company's Subsidiaries" shall be limited to the business actually carried
on by
the Company or its Subsidiaries during the term of this Agreement. Further,
these provisions shall not prohibit Dr. Leeper from consulting with governmental
or non-commercial organizations or NGOs on matters relating to HIV/AIDS,
including the use of the female condom, provided that Dr. Leeper shall not
accept assignments resulting in a conflict of interest with her obligations
under this Agreement.
8.
Confidential
Information.
Dr. Leeper acknowledges and agrees that the customers, business
connections, customer lists, procedures, operations, techniques, and other
aspects of and information about the business of the Company and its
Subsidiaries (the "Confidential Information") are established at great expense
and protected as confidential information and provides the Company and its
Subsidiaries with a substantial competitive advantage in conducting their
business. Dr. Leeper further acknowledges and agrees that by virtue of her
past employment with the Company, and by virtue of her employment with the
Company, she has had access to and will have access to, and has been entrusted
with and will be entrusted with, Confidential Information, and that the Company
would suffer great loss and injury if Dr. Leeper would disclose this
information or use it in a manner not specifically authorized by the Company.
Therefore, Dr. Leeper agrees that during the Employment Period and for
three years thereafter, she will not, directly or indirectly, either
individually or as an employee, agent, partner, shareholder, owner trustee,
beneficiary, co-venturer distributor, consultant or in any other capacity,
use
or disclose or cause to be used or disclosed any Confidential Information,
unless and to the extent that any such information (a) becomes generally
known to and available for use by the public other than as a result of
Dr. Leeper's acts or omissions or (b) is legally required to be
disclosed (by oral questions, deposition, interrogatory, request for information
or documents, subpoena, civil investigative demand or similar process);
provided, that to the extent practicable Dr. Leeper shall provide the
Company with prompt written notice of such legal requirement so that the
Company
may seek a protective order or other appropriate remedy and, in the event
that
such protective order or other remedy is not obtained, Dr. Leeper shall
furnish only that portion of the Confidential Information which is legally
required to be disclosed and will cooperate with the Company to obtain
assurances that confidential treatment will be accorded such Confidential
Information. At
the
Company's request, Dr. Leeper shall deliver to the Company at the
termination of the Employment Period, or at any other time the Company may
reasonably request, all memoranda, notes, plans, records, reports, computer
tapes, printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below)
or the
business of the Company or any of its Subsidiaries which she may then possess
or
have under her control. Dr. Leeper acknowledges and agrees that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) which relate to the Company's or any of its Affiliates' actual
or
anticipated business research and development or existing or future products
or
services and which are conceived, developed or made by Dr. Leeper while
employed by the Company and its Subsidiaries belong to the Company or such
Affiliate, as the case may be. The Company will provide Dr. Leeper with
reasonable access from time to time to all of the memoranda, notes and other
material delivered by her for any and all reasonable purposes not in violation
of the terms of this Agreement.
9.
Common
Law of Torts and Trade Secrets.
The
parties agree that nothing in this Agreement shall be construed to limit
or
negate the common law of torts or trade secrets where it provides the Company
and its Affiliates with broader protection than that provided
herein.
10.
Definitions.
"Affiliate"
means,
with respect to any Person, any other Person controlling, controlled by or
under
common control with such Person and any partner of a Person which is a
partnership.
"Change
of Control"
means:
(a)
The
acquisition by any individual, entity or group (within the meaning of
section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or
more
of either (i) the then outstanding shares of common stock of the Company
(the "Outstanding Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally
in
the election of directors (the "Outstanding Voting Securities"); provided,
however, that the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii)
and
(iii) of subsection (c)
of this definition; or
(b)
Individuals
who, as of the date hereof, constitute the Board of Directors of the Company
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board of Directors of the Company; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at
least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but
excluding, for this purpose, any such individual whose initial assumption
of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the
Board of Directors of the Company; or
(c)
Approval
by the shareholders of the Company of a reorganization, merger or consolidation
(a "Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Common Stock
and Outstanding Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively,
the
then outstanding shares of common stock and the combined voting power of
the
then outstanding voting securities entitled to vote generally in the election
of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result
of
such transaction owns the Company through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such
Business Combination of the Outstanding Common Stock and Outstanding Voting
Securities, as the case may be, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation resulting
from such Business Combination) beneficially owns, directly or indirectly,
20%
or more of, respectively, the then outstanding shares of common stock of
the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to
the extent that such ownership existed prior to the Business Combination
and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the approval of the initial agreement, or
of the
action of the Board of Directors of the Company, providing for such Business
Combination; or
(d)
Approval
by the shareholders of the Company of (i) a complete liquidation or
dissolution of the Company or (ii) the sale or other disposition of all or
substantially all of the assets of the Company, other than to a corporation,
with respect to which following such sale or other disposition, [a] more
than 60% of, respectively, the then outstanding shares of common stock of
such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Common Stock and Outstanding Voting
Securities immediately prior to such sale or other disposition in substantially
the same proportion as their ownership, immediately prior to such sale or
other
disposition, of the Outstanding Common Stock and Outstanding Voting Securities,
as the case may be, [b] less than 20% of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled
to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by any Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation), except to the extent that such
Person owned 20% or more of the Outstanding Common Stock or Outstanding Voting
Securities prior to the sale or disposition, and [c] at least a majority of
the members of the board of directors of such corporation were members of
the
Incumbent Board at the time of the approval of the initial agreement, or
of the
action of the Board of Directors of the Company, providing for such sale
or
other disposition of assets of the Company or were elected, appointed or
nominated by the Board of Directors of the Company.
"Person"
means
any individual, partnership, corporation, limited liability company,
association, joint stock company, trust, joint venture, unincorporated
organization and any governmental entity or any department, agency or political
subdivision thereof.
"Subsidiary"
means,
with respect to any Person, any corporation, partnership, association or
other
business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence
of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is
at
the time owned or controlled, directly or indirectly, by any Person or one
or
more Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest
in a
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of partnership, association or other business
entity gains or losses or shall be or control any managing director or general
partner of such partnership, association or other business entity.
11.
Specific
Performance.
Dr. Leeper acknowledges and agrees that irreparable injury to the Company
may result in the event Dr. Leeper breaches any covenant or agreement
contained in sections 7 or 8 and that the remedy at law for the breach of
any such covenant will be inadequate. Therefore, if Dr. Leeper engages in
any act in violation of the provisions of sections 7 or 8, Dr. Leeper
agrees that the Company shall be entitled, in addition to such other remedies
and damages as may be available to it by law or under this Agreement, to
injunctive relief to enforce the provisions of sections 7 and
8.
12.
Waiver.
The
failure of either party to insist in any one or more instances, upon performance
of the terms or conditions of this Agreement shall not be construed as a
waiver
or a relinquishment of any right granted hereunder or of the future performance
of any such term, covenant or condition.
13.
Notices.
Any
notice to be given hereunder shall be deemed sufficient if addressed in writing
and delivered by registered or certified mail or delivered personally, in
the
case of the Company, to its principal business office, and in the case of
Dr. Leeper, to her address appearing on the records of the Company, or to
such other address as she may designate in writing to the Company.
14.
Severability.
In the
event that any provision shall be held to be invalid or unenforceable for
any
reason whatsoever, it is agreed such invalidity or unenforceability shall
not
affect any other provision of this Agreement and the remaining covenants,
restrictions and provisions hereof shall remain in full force and effect
and any
court of competent jurisdiction may so modify the objectionable provision
as to
make it valid, reasonable and enforceable. Furthermore, the parties specifically
acknowledge the above covenant not to compete and covenant not to disclose
confidential information are separate and independent agreements.
15.
Complete
Agreement.
Except
as otherwise expressly set forth herein, this document embodies the complete
agreement and understanding among the parties hereto with respect to the
subject
matter hereof and supersedes and preempts any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way. Without limiting the generality
of the foregoing, this Agreement supersedes the Employment Agreement, entered
into effective May 1, 1994, between the Company and Dr. Leeper
(together with all amendments thereto, the "Prior Agreement"). The Prior
Agreement is hereby terminated and shall cease to be of any further force
or
effect except as insofar as it is referred to in Section 5 of this Agreement.
Notwithstanding the foregoing, the Amended and Restated Change of Control
Agreement dated as of October 1, 2005 between the parties hereto shall remain
in
full force and effect.
16.
Amendment.
This
Agreement may only be amended by an agreement in writing signed by each of
the
parties hereto.
17.
Governing
Law.
This
Agreement shall be governed by and construed exclusively in accordance with
the
laws of the State of Illinois, regardless of choice of law
requirements.
18.
Benefit.
This
Agreement shall be binding upon and inure to the benefit of and shall be
enforceable by and against the Company, its successors and assigns and
Dr. Leeper, her heirs, beneficiaries and legal representatives. It is
agreed that the rights and obligations of Dr. Leeper and the Company may
not be delegated or assigned.
IN
WITNESS WHEREOF, the parties have executed or caused this Employment
Agreement
to be executed as of the date first above written.
| |
THE
FEMALE HEALTH COMPANY
BY
/s/ O.B.
Parrish
O.B. Parrish, Chairman and
Chief Executive Officer
|
| |
/s/
Mary Ann
Leeper
Mary
Ann Leeper
|