Employment Agreement - Bio-Reference Laboratories Inc. and Rebecca Klafter
EMPLOYMENT AGREEMENT
AGREEMENT made this 14th day of December 1999, by and between Rebecca
Klafter having an address at 102 Bristol Drive, Woodbury, New York 11797
(hereinafter referred to as the "Employee") and Bio-Reference Laboratories,
Inc., a New Jersey corporation with principal offices located at 481 Edward H.
Ross Drive, Elmwood Park, New Jersey 07407 (hereinafter referred to as the
"Company").
WITNESSETH:
WHEREAS, the Company is a New Jersey Corporation engaged in the clinical
laboratory business; and
WHEREAS, the Employee is the chief executive officer and sole stockholder
of Right Body Foods Inc., a New York corporation engaged in the manufacture of
certain health food products at its facility at 118 Jackson Avenue, Syosset,
Long Island, New York 11791 ("RBF") and the distribution of such products in the
greater New York metropolitan area (the "Health Food Business"); and
WHEREAS, the Company has agreed through its wholly-owned subsidiary, BRLI
No. 1 Acquisition Corp. ("BRLI Acq. Corp.") to purchase certain assets used by
RBF in its operation of the Health Food Business so as to enable BRLI Acq. Corp.
to operate the Health Food Business; and
<PAGE>
WHEREAS, the Company is unwilling to effect such purchase unless it is
able to employ the Employee to serve as Director of the Health Food Business
operations of BRLI Acq. Corp. and to obtain the Employee's agreement not to
compete with the Company and/or BRLI Acq. Corp. in the operation of the Health
Food Business; and
WHEREAS, the Employee desires to commence employment with the Company,
pursuant to the terms and conditions herein set forth, superseding any and all
prior agreements, express or implied, between the Company, its subsidiaries
and/or predecessors and the Employee;
NOW THEREFORE, it is mutually agreed by and between the parties hereto as
follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this Agreement, the
Company hereby employs the Employee, and the Employee hereby accepts such
employment in her capacity as Director of the Health Food Business operations of
BRLI Acq. Corp. The Company agrees that during the term of her employment
hereunder, the Employee will be consulted with by the president and/or the
2
<PAGE>
executive vice president of the Company with regard to and will be provided with
the opportunity to review each recipe as well as each proposed change in recipe
with respect to each food product manufactured and distributed by the Health
Food Business.
Employee represents and warrants that there is no restriction or
impediment, contractual or otherwise to her accepting such employment as
provided for herein, and that she is not in breach or violation of any covenant
or agreement with any party relating to her employment. Employee represents and
warrants, and covenants and agrees that in entering into employment with the
Company and in the performance of her duties that she is not utilizing any
secret or confidential information of any other person.
ARTICLE II
DUTIES
(A) The Employee shall, during the continuation of her employment with the
Company, and subject to the direction and control of the Company's Chief
Executive Officer and Chief Operating Officer, perform such executive and
marketing duties and functions as she may be called upon to perform by such
executive officers during the terms of this Agreement principally on Long Island
in the State of New York but also in the State of New Jersey.
(B) During the continuation of her employment, the Employee agrees to
devote her full time to the performance of her duties for the Company and to
render such services for any subsidiary or
3
<PAGE>
affiliate corporation of the Company including BRLI Acq. Corp. provided that
from the date hereof through December 31, 1999, the Employee shall be permitted
to render her services hereunder on a part-time basis provided that she devotes
a minimum of 25 hours per five-day week (pro-rated for partial weeks) to the
performance of her duties hereunder.
(C) The Employee shall perform to the best of her ability the following
services and duties for the Company and its subsidiary and affiliate
corporations (by way of example, and not by way of limitation):
(i) Those duties attendant to the position with the Company and BRLI Acq.
Corp. for which she is being hired, including the establishment, supervision of
manufacturing and marketing of products for the Health Food Business;
(ii) Assisting the Company and BRLI Acq. Corp. in the planning and
implementation of all sales promotion, advertising, public relations, personnel
and product development programs for the Health Food Business;
(iii) Promotion of the relationships of the Company and its subsidiary and
affiliate corporations including BRLI Acq. Corp. with their respective
employees, customers, suppliers and others in the business community.
(iv) Working with the Company's and BRLI Acq. Corp.'s professional staff
toward the development of special programs to offer Health Food Business
products and services to physicians and healthcare facilities.
4
<PAGE>
ARTICLE III
COMPENSATION
Solely during the time that this Employment Agreement is in full force and
effect, the Company shall make the following payments to the Employee and shall
provide her with the following benefits as compensation for all of her services
rendered hereunder.
(A) Salary - initially at the rate of $150,000 per annum (the "Annual Base
Salary"), payable in weekly installments or pursuant to the Company's regular
pay periods. For each successive twelve- month period that this Agreement is in
effect beginning with the twelve-month period commencing November 1, 2000, the
Annual Base Salary in effect immediately prior to such November 1 date shall be
increased (but never decreased) by the same percentage increase as that of the
percentage increase in the Consumer Price Index -- All Items for the New York
metropolitan area for the month of November in the successive period over the
first month of the twelve-month or shorter fiscal period then ended.
(B) Signing Bonus - in the aggregate amount of $100,000 paid in 24
consecutive equal monthly installments of $4,166.67, without interest,
commencing February 1, 2000.
(C) Commission Bonus and Bonus Guarantee - The Employee will be paid a
"Commission Bonus" in an amount equal to the following percentages of the net
cash receipts (net of required credits and refunds) during the period commencing
on the date hereof and ending
5
<PAGE>
on October 31, 2000 and during each successive twelve-month period, actually
collected by the division or subsidiary of the Company organized to operate the
Health Food Business, which receipts are attributable to such business:
Collected Cash Receipts Bonus-Percentage of the
In excess of Not more than Collected Net Cash Receipts
------------ ------------- -------------------------
-- $ 1,000,000 None
$ 1,000,000 $ 5,000,000 5%
$ 5,000,000 $10,000,000 2%
$10,000,000 $20,000,000 1%
By way of example, if the net cash receipts (net of required credits and
refunds) of the Health Food Business actually collected during an applicable
period totalled $7,500,000, the Commission Bonus with respect to such period
would be $250,000 ($0 + $200,000 + $50,000) subject to offset by the Bonus
Guarantee hereinafter described. No net cash receipts collected during one
period shall be carried back or forward to a prior or subsequent period for
purposes of computing the Commission Bonus with respect to such prior or
subsequent period. Each Commission Bonus shall be paid within 60 days after the
close of each such period. The Company agrees that the Health Food Business will
be operated through BRLI Acq. Corp. The Company agrees to provide the Employee
and her agents with access to the books and records of the Health Food Business
on a quarterly basis during normal business hours in order to verify the
"Collected Cash Receipts" of the Health Food Business.
6
<PAGE>
With respect to the initial period only commencing on the date hereof and
ending on October 31, 2000 (the "First Bonus Period"), the Employee shall also
be paid a $50,000 non-refundable "Bonus Guarantee" against her Commission Bonus.
Such Bonus Guarantee shall be paid in twelve consecutive equal monthly
installments of $4,166.66, without interest, commencing February 1, 2000 but
shall be credited solely against the Employee's Commission Bonus earned with
respect to the First Bonus Period. By way of example, if the net cash receipts
of the Health Food Business actually collected during the First Bonus Period
totalled $1,800,000, the Employee will be entitled to retain her entire Bonus
Guarantee of $50,000 as it is non-refundable but would not be paid any
Commission Bonus with respect to such period as the $50,000 Bonus Guarantee
exceeds the $40,000 Commission Bonus to which she would otherwise be entitled.
If such net cash receipts during the First Bonus Period totalled $5,500,000, the
Employee would be paid a $160,000 Commission Bonus ($210,000 Commission Bonus
less $50,000 Bonus Guarantee) but would also be entitled to retain her entire
Bonus Guarantee of $50,000 as it is non-refundable.
(D) Other Benefits - The Company will provide the Employee with three
weeks of paid vacation for each approximately 12 month period ending October 31
commencing with the period ending October 31, 2000, on such dates as she may
elect, as well as participation on an equitable basis in any medical, health
benefit or other employee benefit plan established for senior management of the
Company. The Company will provide the Employee with a $500 per
7
<PAGE>
month automobile allowance towards lease or purchase and insurance coverage
costs and will reimburse the Employee upon presentation of the appropriate
vouchers for business and travel expenses incurred by the Employee on behalf of
the Company as well as for reasonable maintenance and repairs of the automobile
used by the Employee in connection with the Health Food Business.
(E) Key-Man Life Insurance - In the event the Company wishes to obtain
"Key-Man" Life Insurance on the life of the Employee, Employee agrees to
cooperate with the Company in completing any applications necessary to obtain
such insurance and to promptly submit to such physical examinations and furnish
such information as any proposed insurance carrier may request, providing
Employee is insurable.
ARTICLE IV
TERM AND TERMINATION
The term of this Agreement shall be for a period of approximately five (5)
years commencing on the date hereof and terminating on October 31, 2004.
The Company, at its option, exercised in writing not less than 30 days
prior to the end of such term (the "Initial Term"), may elect to extend the term
of this Agreement for an additional twelve-month period terminating on October
31, 2005 (the "First Extension Year"). In the event of such election, all of the
terms and conditions of this Agreement shall remain in full force and effect
except that (a) the Employee's Annual Salary in effect at
8
<PAGE>
the end of the Initial Term shall be increased by 10% but shall not be modified
by changes in the Consumer Price Index; (b) the Employee shall not be entitled
to an additional Signing Bonus or a Bonus Guarantee; but (c) the terms of the
Commission Bonus shall remain in full force and effect.
If the Company so extends the Initial Term for a First Extension Year, it
may at its option, exercised not less than 30 days prior to the end of the First
Extension Year, extend the term of this Agreement for a second additional
twelve-month period terminating on October 31, 2006 (the "Second Extension
Year"). In the event of such election, all of the terms and conditions of this
Agreement shall remain in full force and effect except that (a) the Employee's
Annual Salary during the Second Extension Year shall remain the same as her
Annual Salary in effect during the First Extension Year and shall not be
modified by changes in the Consumer Price Index; (b) the Employee shall not be
entitled to an additional Signing Bonus or a Bonus Guarantee; but (c) the terms
of the Commission Bonus shall remain in full force and effect.
The Company shall have the right to terminate this Agreement upon twenty
(20) days prior written notice to the Employee for "cause," defined as gross
dereliction of duty, gross negligence affecting Employee's performance,
conviction of a "crime," or substantial violation of the terms of this Agreement
provided that prior to the expiration of such twenty (20) day period, if the
Employee is able to and cures such "cause," such termination will not be
effective. For purposes of this Agreement, "crime" is
9
<PAGE>
defined as a felony or a crime of high moral turpitude, but in no event shall a
traffic offense or an offense which is considered to be a disorderly person
offense or a misdemeanor be deemed a "crime" permitting termination. In the
event of termination of this Agreement "for cause," no unpaid or future payments
required hereunder including payments of Annual Salary, the Signing Bonus, the
Commission Bonus and/or the Bonus Guarantee shall be required to be paid to the
Employee after such termination date.
ARTICLE V
NON-DISCLOSURE OF INFORMATION AND TRADE SECRETS
Employee acknowledges that BRLI Acq. Corp. has purchased certain secret
information relating to the Health Food Business including business plans and
programs, marketing plans, contractual arrangements with others, formulations,
recipes and customer lists and that in the course of her duties hereunder, the
Company and/or BRLI Acq. Corp. will make available to her and she may also
develop additional secret information of like nature relating to the Health Food
Business. All of such secret information whether purchased by BRLI Acq. Corp. or
developed during the course of her employment is hereinafter collectively
referred to as the "Proprietary Information." Employee waives any and all rights
to the Proprietary Information and agrees that all such rights shall be vested
solely in the Company and BRLI Acq. Corp. even after termination of her
employment. Upon the termination of employment, Employee shall promptly deliver
all correspondence, notes, reports, programs,
10
<PAGE>
proposals, formulations, recipes, customer lists and books and records, or any
other documents, and all copies thereof, relating to the Health Food Business,
to BRLI Acq. Corp. (The Company and BRLI Acq. Corp. have entered into a separate
Non-Competition Agreement with the Employee as of the date hereof.)
ARTICLE VI
SEVERABILITY
If any provision of the Agreement shall be held invalid and unenforceable,
the remainder of this Agreement shall remain in full force and effect. If any
provision is held invalid or unenforceable with respect to particular
circumstances, it shall remain in full force and effect in all other
circumstances.
ARTICLE VII
NOTICES
All notices required to be given under the terms of this Agreement shall
be in writing and shall be deemed to have been duly given only if delivered to
the addressee in person or mailed by certified mail, return receipt requested,
as follows:
IF TO COMPANY: Bio-Reference Laboratories, Inc. (or BRLI Acq.
Corp.)
AND/OR TO 481 Edward H. Ross Drive
BRLI ACQ. CORP. Elmwood Park, New Jersey 07407
Attn: Howard Dubinett, Executive Vice President
WITH COPY TO: Roger Tolins, Esq.
Tolins and Lowenfels
12 East 49th St - 21st Floor
New York, New York 10017
11
<PAGE>
IF TO EMPLOYEE: Rebecca Klafter
102 Bristol Drive
Woodbury, New York 11797
WITH COPY TO: Paul Levitt, Esq.
Vitale & Levitt
445 Broadhollow Road, Suite 124
Melville, New York 11747
or such other additional address as the party to receive the notice shall advise
by due notice in accordance with this paragraph.
ARTICLE VIII
BENEFIT
This agreement shall inure to, and be binding upon, the parties hereto,
the successors and assigns of the Company, and the heirs and personal
representatives of the Employee.
ARTICLE IX
WAIVER
The waiver by either party of any breach or violation of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of construction and validity.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the laws
of the State of New Jersey without regard to the principle of the conflict of
laws. The parties hereto consent to the in personam jurisdiction of the courts
of the State of New
12
<PAGE>
Jersey and further agree that any action with respect to this Agreement shall be
commenced and prosecuted only in such courts. The parties hereby waive trial by
jury in any action or proceeding arising under this Agreement.
ARTICLE XI
JURISDICTION
In case any provision of this Agreement shall be invalid under the laws of
any county, state or jurisdiction, such invalidity shall not affect any other
provisions of this Agreement.
ARTICLE XII
REMEDIES
No remedy herein conferred upon or reserved to a party is intended to be
exclusive of any other available remedy, but each and every such remedy shall be
cumulative and in addition to every other remedy given under this Agreement or
in connection with this Agreement and now or hereafter existing at law or in
equity.
ARTICLE XIII
ENTIRE AGREEMENT
This Agreement, the Non-Competition Agreement and the Asset/Sale Purchase
Agreement constitute the entire agreement among the parties with respect to the
subject matter contained herein and therein and supersedes all prior agreements
and understandings, oral or written. This Agreement and such other Agreements
may not
13
<PAGE>
be amended or modified except in writing executed by each of the parties hereto
and thereto.
IN WITNESS WHEREOF, the parties have hereto set their hands and seals the
day and year written below their names.
Signed, sealed and delivered in the presence of:
WITNESS: Bio-Reference Laboratories, Inc.
/s/Roger Tolins By /s/Howard Dubinett
-------------------------- -------------------
Howard Dubinett, Executive
Vice President
Date: December 14, 1999
WITNESS:
/s/Paul Levitt /s/Rebecca Klafter
-------------- ------------------
Rebecca Klafter
Date: December 14, 1999
14