This EMPLOYMENT AGREEMENT (the “Agreement”),
is entered into effective as of July 13, 2020 (the “Effective Date”), by and between Citius Pharmaceuticals,
Inc., a Nevada corporation with principal executive offices at 11 Commerce Drive, First Floor, Cranford, New Jersey 07016 (the
“Company”), and Myron Czuczman, M.D., residing at 26 Quail Run, Randolph, NJ 07869 (the “Employee”).
W I T N E S S E T H:
WHEREAS, the Company
desires to employ Employee as its Executive Vice President, Chief Medical Officer and Employee desires to be employed by the Company,
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration
of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:
1. Employment. The
Employee will be employed by the Company as its Executive Vice President, Chief Medical Officer and shall perform such duties as
are consistent with such position, as well as such other duties as are reasonably requested by the Company from time to time (the
“Services”). The Employee agrees to perform such duties faithfully, to devote substantially all of his working
time, attention and energies to the business of the Company, and while he remains employed and subject to the terms of this Agreement,
not to engage in any other business activity that is in conflict with his duties and obligations to the Company. Employee hereby
accepts such employment and agrees to render the Services.
2. At Will Employment.
The Employee’s employment under this Agreement shall commence on the Effective Date and shall continue thereafter until terminated
by either party. Employee’s employment with the Company is at-will, and either party can terminate the employment relationship
at any time, for any or no cause or reason, and with or without prior notice. Notwithstanding the foregoing, Employee may be entitled
to severance benefits pursuant to Section 8 of this Agreement depending on the circumstances of his termination of employment with
3. Best Efforts.
The Employee shall devote substantially all of his business time, attention and energies to the business and affairs of the Company
and shall use his best efforts to advance the best interests of the Company and shall not during his employment with the Company
be actively engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other
pecuniary advantage, that will interfere with the performance by the Employee of his duties hereunder or the Employee’s availability
to perform such duties or that will adversely affect, or negatively reflect upon, the Company.
As full compensation for the performance by the Employee of his duties under this Agreement, the Company shall pay the Employee
(a) Base Salary.
The Company shall pay Employee an annual salary (the “Base Salary”) equal to Four Hundred Thousand Dollars ($400,000)
per year. Payment shall be made in accordance with the Company’s normal payroll practices. The Base Salary will be subject
to periodic review and adjustment at the Company’s discretion.
Annual Bonus. Employee will be eligible for a discretionary bonus of up to 35% of Employee’s Base Salary (the “Annual
Bonus”) at year end. The actual amount of Employee’s Annual Bonus, if any, will be determined based on the Employee’s
and the Company’s performance and in the discretion of the Company’s Chief Executive Officer and the Company’s
Board of Directors (the “Board”) or a designated committee thereof. The Annual Bonus for any given year will
be payable no later than March 15 of the year immediately following the year in which the Annual Bonus, if any, is earned. If Employee
leaves the Company or is terminated for any reason before the final day of the bonus year, Employee will be ineligible for an Annual
Bonus for that year; provided that, Employee will be eligible to receive a prorated Annual Bonus where his employment is terminated
by the Company without Cause, or when Employee terminates his employment for Good Reason, before the final day of the bonus year,
subject to the provisions of Section 8 below.
(c) Stock Options.
The Company will grant to Employee stock options to purchase 500,000 shares of the Company’s common stock (the “Options”).
The Options will be granted pursuant to the terms of the Company’s 2020 Omnibus Stock Incentive Plan (the “Plan”)
and a related stock option grant agreement between Employee and the Company. The exercise price of the Options will be the Fair
Market Value of the Company’s common stock on the date of grant, determined in accordance with the Plan. One-third of the
total number of Options will vest on the first anniversary of the Effective Date, with the remainder vesting in 24 equal monthly
installments thereafter, in each case subject to Employee’s continued employment with the Company on the applicable vesting
The Company shall withhold all applicable federal, state and local taxes and social security and such other amounts as may be required
by law from all amounts payable to the Employee under this Agreement.
The Company shall reimburse the Employee for all normal, usual and necessary expenses incurred by the Employee in furtherance of
the business and affairs of the Company, including reasonable travel and entertainment, upon timely receipt by the Company of appropriate
vouchers or other proof of the Employee’s expenditures and otherwise in accordance with any expense reimbursement policy
as may from time to time be adopted by the Company.
(f) Other Benefits.
During Employee’s employment at the Company, Employee will be eligible to participate in the Company’s then-current
employee benefits programs applicable to Employee’s position, if any, on the same basis and subject to the same qualifications
and limitations, as other similarly situated employees in the Company. All Company benefit plans will be governed by and subject
to plan documents and/or written policies. These benefits may include group medical, dental and vision, group life insurance, AD&D
insurance, STD and LTD insurance, and paid vacation and holidays. The Company reserves the right to amend, modify, and/or terminate
any of its employee benefit plans or policies at any time.
Employee shall be eligible to accrue vacation days ratably throughout each calendar year of his employment, equating to 20 vacation
days in a full calendar year, subject to the Company’s vacation plan or policy. Unless otherwise provided by the Company’s
vacation policy, Employee shall be entitled to carry up to ten (10) days of unused, accrued vacation forward from one year of employment
to the next and will be paid for unused accrued vacation time upon termination of employment.
5. Confidential Information and Inventions. As a condition
of Employee’s employment hereunder, Employee will execute a Confidentiality and Assignment of Inventions Agreement in the
form attached hereto as Exhibit A (the “Confidentiality Agreement”), which agreement is incorporated
by reference herein and made a part hereof.
and Non-Solicitation. Employee understands and recognizes that his services to the Company are special and unique and that
in the course of performing such services the Employee will have access to and knowledge of confidential and proprietary information
and will become knowledgeable of and familiar with the Company’s customers as well as the Company’s business. Employee
acknowledges that, due to the unique nature of the Company’s business, the loss of any of its clients or business flow or
the improper use of its confidential and proprietary information could create significant instability and cause substantial damage
to the Company and therefore the Company has a strong legitimate business interest in protecting the continuity of its business
interests and the restriction herein agreed to by the Employee narrowly and fairly serves such an important and critical business
interest of the Company. Therefore, Employee covenants and agrees as follow:
As used in this Agreement, the following terms have the meanings given to such terms below:
means (A) acquiring, developing and commercializing drug products focused on adjunctive cancer therapies; (B) acquiring, developing
and commercializing drug products for the treatment of hemorrhoids; (C) acquiring, developing and commercializing drug products
in areas other than those listed in clauses (A) or (B); and (D) any other business that the Company is actively engaged in at the
time of the date of termination, provided that this clause (D) shall only apply if Employee is involved with that other business.
means (A) any Person who is or was a customer of the Company at the time of, or during the six month period prior to, the date
of Employee’s termination and with whom Employee had dealings on behalf of the Company in the course of his employment with
the Company, or about whom Employee received confidential and proprietary information in the course of his employment with the
Company, and (B) any prospective customer to whom, within the six month period prior to the Employee’s date of termination,
the Company had submitted proposals to for services of which Employee has knowledge, whether or not such proposals have yet to
be executed into contracts, provided that, the Company has a legitimate expectation of doing business with such prospective customer,
and provided further that the Employee has had material business contacts with such prospective customer on behalf of the Company,
whether such contact was initiated by the prospective customer or by Employee.
Employee” means (A) any Person who is an employee of the Company at the time of the date of Employee’s termination
of employment, and (B) any Person who was an employee of the Company during the six month period prior to, the termination of Employee’s
means any individual person, firm, partnership, joint venture, corporation, limited liability company, or other business entity.
Period” means the period commencing on the date of Employee’s termination of employment and ending six months thereafter,
provided, however, that this period will be tolled and will not run during any time Employee is in violation of this Section 6,
it being the intent of the parties that the Restricted Period will be extended for any period of time in which Employee is in violation
of this Section.
Territory” means any state, province or similar geographic subdivision in which the Company does business at time of,
or in the six months immediately preceding, the Employee’s date of termination.
During his employment with the Company, Employee will not, on his own behalf or on behalf of any other Person, engage in any business
competitive with or adverse to that of the Company. In addition, during his employment with the Company and during the Restricted
Period, Employee will not (i) engage in the Business in the Restricted Territory, or (ii) hold a position based in or with responsibility
for all or part of the Restricted Territory, with any Person engaging in the Business, whether as employee, consultant, or otherwise,
in which Employee will use or disclose or be reasonably expected to use or disclose any confidential and proprietary information
of the Company for the purpose of providing, or attempting to provide, such Person with a competitive advantage with respect to
the Business. For purposes of clarification, nothing contained in this Section 6(b) shall be deemed to prohibit the Employee from
acquiring or holding, solely for investment, publicly traded securities of any corporation, some or all of the activities of which
are competitive with the business of the Company so long as such securities do not, in the aggregate, constitute more than 5% of
any class or series of outstanding securities of such corporation.
During his employment with the Company and during the Restricted Period, Employee will not, directly or indirectly, on Employee’s
own behalf or on behalf of any other Person:
(i) Call upon, solicit,
divert, encourage or attempt to call upon, solicit, divert or encourage any Customer for purposes of marketing, selling or providing
products or services to such Customer that are similar to or competitive with those offered by the Company;
(ii) Induce, encourage
or attempt to induce or encourage any Customer to reduce, limit or cancel its business with the Company;
(iii) Induce, encourage
or attempt to induce or encourage any Customer to purchase or accept products or services competitive with those offered by the
Company from any Person (other than the Company) engaging in the Business;
(iv) Otherwise interfere
or engage in any conduct that would have the effect of interfering, in any manner, with the business relationship between the Company
and any of the Company’s Customers; or
(v) Solicit, induce,
or attempt to solicit or induce any Company Employee or any independent contractor (who is then engaged by the Company or was engaged
by the Company in the prior six months) to terminate his or her employment or engagement with the Company or to accept employment
or engagement with any Person engaging in the Business within the Restricted Territory.
(d) [Intentionally Omitted]
In the event that the Employee breaches or threatens to breach any provisions of Section 5 (inclusive of the Confidentiality Agreement)
or this Section 6, then the Company may suffer irreparable harm and monetary damages may be inadequate to compensate the Company.
Accordingly, in addition to any other rights which the Company may have, the Company may (i) be entitled, without the posting of
bond or other security, to seek injunctive relief to enforce the restrictions contained in such Sections and (ii) in addition to
any equitable remedies, have the right to seek money damages for said alleged breach.
and Severability. Each of the rights and remedies enumerated in Section 6(e) shall be independent of the others and shall be
in addition to and not in lieu of any other rights and remedies available to the Company at law or in equity. The Employee hereby
acknowledges and agrees that the covenants provided for pursuant to Section 6 are essential elements of Employee’s employment
by the Company and are reasonable with respect to their duration, geographic area and scope and in all other respects. If, at the
time of enforcement of this Section 6, a court holds that the restrictions stated herein are unreasonable under the circumstances
then existing, the parties hereto agree that the maximum duration, scope or geographic area legally permissible under such circumstances
will be substituted for the duration, scope or area stated herein. If any of the covenants contained in this Section 6, or any
part of any of them, is hereafter construed or adjudicated to be invalid or unenforceable, the same shall not affect the remainder
of the covenant or covenants or rights or remedies which shall be given full effect without regard to the invalid portions. No
such holding of invalidity or unenforceability in one jurisdiction shall bar or in any way affect the Company’s right to
the relief provided in this Section 6 or otherwise in the courts of any other state or jurisdiction within the geographical scope
of such covenants as to breaches of such covenants in such other respective states or jurisdictions, such covenants being, for
this purpose, severable into diverse and independent covenants.
The provisions of this Section 6 shall survive any termination of this Agreement.
(a) The Employee hereby
represents and warrants to the Company as follows:
(i) Neither the execution
or delivery of this Agreement nor the performance by the Employee of his duties and other obligations hereunder violate or will
violate any statute, law, determination or award, or conflict with or constitute a default or breach of any covenant or obligation
under (whether immediately, upon the giving of notice or lapse of time or both) any prior employment agreement, contract, or other
instrument to which the Employee is a party or by which he is bound.
(ii) The Employee has
the full right, power and legal capacity to enter and deliver this Agreement and to perform his duties and other obligations hereunder.
This Agreement constitutes the legal, valid and binding obligation of the Employee enforceable against him in accordance with its
terms. No approval or consent of any Person is required for the Employee to execute and deliver this Agreement or perform his duties
and other obligations hereunder.
(b) The Company hereby
represents and warrants to the Employee that this Agreement and the employment of the Employee hereunder have been duly authorized
by and on behalf of the Company, including, without limitation, by all required action by the Board.
8. Separation Payments.
(a) If Employee’s
employment is terminated by the Company without Cause (as defined below) or by Employee for Good Reason (as defined below), provided
that Employee signs and does not revoke a general release of claims against the Company within the time period specified therein,
but in no event later than 60 days after the termination date, in form and substance satisfactory to the Company and Employee (the
“Release”), then the Company will provide Employee with the following benefits, referred to herein as the “Separation
(i) an amount of severance
pay equal to Employee’s then-current Base Salary, paid less applicable taxes and withholdings over a period of 12 months
following the date of termination (the “Separation Pay”);
(ii) a pro-rated portion
of the Annual Bonus for which Employee is eligible for the year of termination, based on actual performance for the year as determined
by the Board based on the period between the first day of the fiscal year in which the Annual Bonus is in force and the actual
day of termination, and payable when the Company would otherwise have paid the Annual Bonus; and
(iii) provided that
Employee properly and timely elects to continue his health insurance benefits under COBRA or applicable state continuation coverage
law after the date of termination, reimbursement for Employee’s applicable health continuation coverage premiums actually
paid, less the amount of any premium amount that would have been payable by Employee for such coverage, if any, if Employee had
been actively employed by the Company, for a period of 12 months or until Employee becomes eligible for insurance benefits from
another employer, whichever is earlier (the “COBRA Reimbursement”).
The Separation Pay
described in clause (i) above will be payable to Executive over time in accordance with the Company’s payroll practices and
procedures beginning on the 60th day following the termination of Executive’s employment with the Company, provided that
the first installment will include all amounts that would have been paid if such payments had commenced effective on the date of
termination. The COBRA Reimbursement shall continue for the specified period provided that (A) the Company may terminate the COBRA
Reimbursement if Employee becomes eligible to receive health benefits pursuant to a plan maintained by a subsequent employer during
such period, and Employee will promptly notify the Company of his becoming eligible for such coverage, and (B) the Company has
the right to discontinue the reimbursement payment and pay to the Employee a lump sum amount equal to the current COBRA premium
times the number of months remaining in the specified period if the Company determines that continued payment of the COBRA reimbursement
is discriminatory under Section 105(h) of the Internal Revenue Code of 1986, as amended. If Employee is entitled to receive the
Separation Benefits but materially breaches his obligations under this Agreement or any other agreement entered into by Employee
and the Company (including but not limited to the Confidentiality Agreement) after termination of employment, the Company will
be entitled to immediately stop paying any further installments of the Separation Benefits.
(b) For purposes of
this Agreement, “Cause” shall mean Employee’s: (i) willful or repeated failure, disregard or refusal to
perform his duties as an employee of the Company; (ii) willful misconduct with respect to Employee’s duties as an employee
of the Company; (iii) material breach of any agreement between Employee and the Company (including but not limited to this Agreement
or the Confidentiality Agreement); (iv) conviction on charges of, or plea of guilt or no contest to any felony or a misdemeanor
involving illegal drugs or substances or moral turpitude (including entry of a nolo contendere plea); (v) engagement in a form
of discrimination or harassment prohibited by law (including, without limitation, discrimination or harassment based on race, color,
religion, sex, national origin, age or disability); and/or (vi) intentional or negligent act that injures or, in the reasonable
opinion of the Company, has the capacity to injure, the operations or reputation of the Company. “Good Reason”
shall mean any of the following occurring at the time of, or within 12 months immediately following, a Change in Control: (i) a
material reduction in Employee’s Base Salary without his consent; (ii) any reduction or material change in his duties as
Employee; (iii) a material breach by the Company (or by any successor) of the terms and conditions of any agreement between Employee
and the Company; or (iv) any directive of the Company that would require Employee to commit any act or omission involving fraud,
embezzlement, or unethical behavior or would bring Employee into substantial public or professional disgrace or disrepute. To effectuate
a termination of employment for Good Reason, Employee must give the Company written notice of the termination within 30 days of
the initial existence of the circumstances alleged to be the grounds for Good Reason, setting forth such circumstances in reasonable
detail. The Company shall have 30 days following the receipt of such notification to cure the specific circumstances that constitute
Good Reason. In the event the Company takes effective action to cure, Good Reason for termination shall not be deemed to exist
with respect to the specific circumstances set forth in the written notice. “Change in Control” means the sale
of substantially all the assets of the Company, any merger, consolidation or acquisition of the Company by or into another party,
entity or person, and or any change in the ownership of more than 50% of the voting capital stock of the Company in one or more
(c) This Section 8
sets forth the only obligations of the Company with respect to the termination of the Employee’s employment with the Company,
except as otherwise required by law, and the Employee acknowledges that, upon the termination of his employment, he shall not be
entitled to any payments or benefits which are not explicitly provided in Section 8 (other than payment of any accrued, unpaid
Base Salary and accrued but unused vacation pay through the date of termination).
9. 409A Restrictions.
The intent of the parties to the Agreement is that the payments, compensation and benefits under this Agreement be exempt from
or comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder
(collectively, “Section 409A”) and, in this connection, the following shall be applicable:
(a) To the greatest extent
possible, this Agreement shall be interpreted to be exempt or in compliance with Section 409A.
(b) If any severance,
compensation, or benefit required by the Agreement is to be paid in a series of installment payments, each individual payment in
the series shall be considered a separate payment for purposes of Section 409A.
(c) If any severance,
compensation, or benefit required by the Agreement that constitutes “nonqualified deferred compensation” within the
meaning of Section 409A is considered to be paid on account of “separation from service” within the meaning of Section
409A, and Employee is a “specified employee” within the meaning of Section 409A, no payments of any of such severance,
compensation, or benefit shall made for six months plus one day after such separation from service (the “New Payment Date”).
The aggregate of any such payments that would have otherwise been paid during the period between the date of separation from service
and the New Payment Date shall be paid to the Employee in a lump sum on the New Payment Date. Thereafter, any severance, compensation,
or benefit required by the Agreement that remains outstanding as of the day immediately following the New Payment Date shall be
paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement.
(d) The provisions of
this Section 9 shall survive any termination of this Agreement.
The Company will indemnify Employee with respect to matters relating to his services as an officer and/or director of the Company,
if applicable, to the extent set forth in the Company’s bylaws and in accordance with the terms of any other indemnification
which is generally applicable to executive officers of the Company that may be provided by the Company from time to time. The Company
will also cover Employee under a policy of officers’ and directors’ liability insurance that provides coverage that
is comparable to that provided to any other executive officer or director of the Company, if applicable; provided the Company is
not required to obtain or maintain such insurance if in the reasonable judgment of the Company’s Board such insurance cannot
be obtained or maintained on reasonable terms.
(a) This Agreement shall
be governed by, and construed and interpreted in accordance with, the laws of the State of New Jersey, without giving effect to
its principles of conflicts of laws.
(b) The parties agree
that any litigation arising out of or related to this Agreement or Employee’s employment by the Company will be brought exclusively
in any state or federal court in Union County, New Jersey. Each party (i) consents to the personal jurisdiction of said courts,
(ii) waives any venue or inconvenient forum defense to any proceeding maintained in such courts, and (iii) agrees not
to bring any proceeding arising out of or relating to this Agreement or Employee’s employment by Company in any other court.
(c) This Agreement shall
be binding upon and inure to the benefit of the parties hereto, and their respective heirs, legal representatives, successors and
(d) This Agreement, and
the Employee’s rights and obligations hereunder, may not be assigned by the Employee. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company, including
any successors or assigns in connection with any sale, transfer or other disposition of all or substantially all of its business
(e) This Agreement cannot
be amended orally, or by any course of conduct or dealing, but only by a written agreement signed by the parties hereto.
(f) The failure of either
party to insist upon the strict performance of any of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and such terms, conditions and provisions shall remain in full force
and effect. No waiver of any term or condition of this Agreement on the part of either party shall be effective for any purpose
whatsoever unless such waiver is in writing and signed by such party.
(g) All notices, requests,
consents and other communications, required or permitted to be given hereunder, shall be in writing and shall be delivered personally
or by an overnight courier service or sent by registered or certified mail, postage prepaid, return receipt requested, to the parties
at the addresses set forth on the first page of this Agreement, and shall be deemed given when so delivered personally or by overnight
courier, or, if mailed, five days after the date of deposit in the United States mails. Either party may designate another address,
for receipt of notices hereunder by giving notice to the other party in accordance with this Section 11(g).
(h) This Agreement sets
forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
(i) The section headings
contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(j) This Agreement may
be executed in any number of counterparts, each of which shall constitute an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement and intend it to be effective as of the Effective Date by proper person thereunto duly authorized.
||Citius Pharmaceuticals, Inc.|
||/s/ Myron Holubiak|
||Myron Holubiak |
||/s/ Myron Czuczman|
||Myron Czuczman, M.D.|
Confidentiality and Assignment
of Inventions Agreement