EMPLOYMENT AGREEMENT
EXHIBIT
10.5
EMPLOYMENT
AGREEMENT
(this
“Agreement”), dated as of March 5, 2008, by and between Par Pharmaceutical,
Inc., a Delaware corporation (“Par” or “Employer”), and Xxxx Xxxxxxxxxx
(“Executive”).
RECITALS:
A. WHEREAS,
Executive is presently employed by Employer in the capacity of President,
Generics Division.
B. WHEREAS,
Employer and Executive desire to cancel and replace Executive’s existing
Employment Agreement dated March 2007, and enter into this Agreement for
Executive to continue to perform the duties associated with his position on
the
terms and conditions set forth herein.
In
consideration of the mutual promises herein contained, the parties hereto hereby
agree as follows:
1. Employment.
1.1. General.
Employer hereby employs Executive in the capacity of President, Generics
Division at the compensation rate and benefits set forth in Section 2 hereof
for
the Employment Term (as defined in Section 3.1 hereof). Executive hereby accepts
such employment, subject to the terms and conditions herein contained. In all
such capacities, Executive shall perform and carry out such duties and
responsibilities as may be assigned to him from time to time by the Board and
by
the Chief Executive Officer of Par reasonably consistent with Executive’s
position and this Agreement, and shall report to the Board and the Chief
Executive Officer of Par.
1.2. Time
Devoted to Position.
Executive, during the Employment Term, shall devote substantially all of his
business time, attention and skills to the business and affairs of
Employer.
1.3. Certifications.
Whenever the Chief Executive Officer of Par is required by law, rule or
regulation or requested by any governmental authority or by Par’s auditors to
provide certifications with respect to Par’s financial statements or filings
with the Securities and Exchange Commission or any other governmental authority,
Executive shall sign such certifications as may be reasonably requested by
the
Chief Executive Officer of Par and/or Employer, with such exceptions as
Executive deems necessary to make such certifications accurate and not
misleading.
2. Compensation
and Benefits.
2.1. Salary.
At all
times Executive is employed hereunder, Employer shall pay to Executive, and
Executive shall accept, as full compensation for any and all services
rendered
and to be rendered by him during such period to Employer in all capacities,
including, but not limited to, all services that may be rendered by him to
any
of Employer’s subsidiaries, entities and organizations presently existing or
hereafter formed, organized or acquired by Employer, directly or indirectly
(each, a “Subsidiary” and collectively, the “Subsidiaries”), the following: (i)
a base salary at the annual rate of $350,000 (Three Hundred and Fifty Thousand
Dollars), or at such increased rate as the Board (through its Compensation
and
Equity Awards Committee), in its sole discretion, may hereafter from time to
time grant to Executive (as so adjusted, the “Base Salary”); and (ii) any
additional bonus and the benefits set forth in Sections 2.2, 2.3 and 2.4 hereof.
The Base Salary shall be payable in accordance with the regular payroll
practices of Employer applicable to senior executives, less such deductions
as
shall be required to be withheld by applicable law and regulations or
otherwise.
2.2. Bonus.
Subject
to Section 3.3 hereof, Executive shall be entitled to an annual bonus during
the
Employment Term in such amount (if any) as determined by the Board based on
such
performance criteria as it deems appropriate, including, without limitation,
Executive’s performance and Employer’s earnings, financial condition, rate of
return on equity and compliance with regulatory requirements. The target amount
of Executive’s Bonus shall be equal to fifty (50%) percent of his Base Salary.
At the time the Board determines the Executive is eligible for a bonus, the
Board shall set forth all material terms of the bonus arrangement in a written
document. The Employer shall pay the bonus by March 1 following the end of
the
calendar year in which the bonus is earned.
2.3. Equity
Awards.
Executive
shall be entitled to participate in long-term incentive plans commensurate
with
his titles and positions, including, without limitation, stock option,
restricted stock, and similar equity plans of Employer as may be offered from
time to time.
2.4. Executive
Benefits.
2.4.1. Expenses.
Employer shall promptly reimburse Executive for expenses he reasonably incurs
in
connection with the performance of his duties (including business travel and
entertainment expenses) hereunder, all in accordance with Employer’s policies
with respect thereto as in effect from time to time.
2.4.2. Employer
Plans.
Executive shall be entitled to participate in such employee benefit and welfare
plans and programs as Employer may from time to time generally offer or provide
to executive officers of Employer or its Subsidiaries, including, but not
limited to, participation in life insurance, health and accident, medical plans
and programs and profit sharing and retirement plans.
2.4.3. Vacation.
Executive shall be entitled to four (4) weeks of paid vacation per calendar
year, prorated for any partial year.
2.4.4. Life
Insurance.
Employer shall obtain (provided, that Executive qualifies on a non-rated basis)
a term life insurance policy, the premiums of which shall be borne by Employer
and the death benefits of which shall be payable to Executive’s estate,
or as otherwise directed by Executive, in the amount of $1 million throughout
the Employment Term.
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2.4.5. Automobile.
Employer shall provide Executive with an automobile cash allowance of One
Thousand and Fifty Dollars ($1,050) (gross) per month.
3. Employment
Term; Termination.
3.1. Employment
Term.
Executive’s employment hereunder shall commence on the date hereof and, except
as otherwise provided in Section 3.2 hereof, shall continue until December
31,
2010 (the “Initial Term”). Thereafter, this Agreement shall automatically be
renewed for successive one-year periods commencing on January 1, 2011 (the
Initial Term, together with any such subsequent employment period(s), being
referred to herein as the “Employment Term”), unless Executive or Employer shall
have provided a Notice of Termination (as defined in Section 3.4.2 hereof)
in
respect of its or his election not to renew the Employment Term to the other
party at least ninety (90) days prior to the end of the Employment Term. Upon
nonrenewal of the Employment Term pursuant to this Section 3.1 or termination
pursuant to Sections 3.2.1 through 3.2.6 hereof, inclusive, Executive shall
be
released from any duties hereunder (except as set forth in Section 4 hereof)
and
the obligations of Employer to Executive shall be as set forth in Section 3.3
hereof only.
3.2. Events
of Termination.
The
Employment Term shall terminate upon the occurrence of any one or more of the
following events:
3.2.1. Death.
In the,
event of Executive’s death, the Employment Term shall terminate on the date of
his death.
3.2.2. Without
Cause By Executive.
Executive may terminate the Employment Term at any time during such Term for
any
reason whatsoever by giving a Notice of Termination to Employer. The Date of
Termination pursuant to this Section 3.2.2 shall be thirty (30) days after
the
Notice of Termination is given.
3.2.3. Disability.
In the
event of Executive’s Disability (as hereinafter defined), Employer may, at its
option, terminate the Employment Term by giving a Notice of Termination to
Executive. The Notice of Termination shall specify the Date of Termination,
which date shall not be earlier than thirty (30) days after the Notice of
Termination is given. For purposes of this Agreement, “Disability” means
disability as defined in any long-term disability insurance policy provided
by
Employer and insuring Executive, or, in the absence of any such policy, the
inability of Executive for 180 days in any twelve (12) month period to
substantially perform his duties hereunder as a result of a physical or mental
illness, all as determined in good faith by the Board.
3.2.4. For
Cause By Employer.
Employer may terminate the Employment Term for “Cause” based on objective
factors determined in good faith by a majority of the Board as set forth in
a
Notice of Termination to Executive specifying the reasons for termination and
the failure of the Executive to cure the same within ten (10) days after
Employer shall have given the Notice of Termination; provided,
however,
that in
the event the Board in good faith determines that the underlying reasons giving
rise to such determination cannot be cured,
then the ten (10) day period shall not apply and the Employment Term shall
terminate on the date the Notice of Termination is given. For purposes of this
Agreement, “Cause” shall mean (i) Executive’s conviction of, guilty or no
contest plea to, or confession of guilt of, a felony, or other crime involving
moral turpitude; (ii) an act or omission by Executive in connection with his
employment that constitutes fraud, criminal misconduct, breach of fiduciary
duty, dishonesty, gross negligence, malfeasance, willful misconduct, or other
conduct that is materially harmful or detrimental to Employer; (iii) a material
breach by Executive of this Agreement; (iv) continuing failure to perform such
duties as are assigned to Executive by Employer in accordance with this
Agreement, other than a failure resulting from a Disability; (v) Executive’s
knowingly taking any action on behalf of Employer or any of its affiliates
without appropriate authority to take such action; (vi) Executive’s knowingly
taking any action in conflict of interest with Employer or any of its affiliates
given Executive’s position with Employer; and/or (vii) the commission of an act
of personal dishonesty by Executive that involves personal profit in connection
with Employer.
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3.2.5. Without
Cause By Employer.
Employer may terminate the Employment Term for any reason or no reason
whatsoever (other than for the reasons set forth elsewhere in this Section
3.2)
by giving a Notice of Termination to Executive. The Notice of Termination shall
specify the Date of Termination, which date shall not be earlier than thirty
(30) days after the Notice of Termination is given or such shorter period if
Employer shall pay to Executive that amount of the Base Salary amount that
would
have been earned between the thirty (30) day period and such shorter period
in
accordance with the Employer’s regular payroll practices.
3.2.6. Employer’s
Material Breach.
Executive may terminate the Employment Term upon Employer’s material breach of
this Agreement and the continuation of such breach for more than ten (10) days
after written demand for cure of such breach is given to Employer by Executive
(which demand shall identify the manner in which Employer has materially
breached this Agreement). Employer’s material breach of this Agreement shall
mean (i) the failure of Employer to make any payment that it is required to
make
hereunder to Executive when such payment is due or within two (2) business
days
thereafter; (ii) the assignment to Executive, without Executive’s express
written consent, of duties inconsistent with his positions, responsibilities
and
status with Employer, or a change in Executive’s reporting responsibilities,
titles or offices or any plan, act, scheme or design to constructively terminate
the Executive, or any removal of Executive from his positions with Employer,
except in connection with the termination of the Employment Term by Employer
for
Cause, without Cause or Disability or as a result of Executive’s death or
voluntary resignation or by Executive other than pursuant to this Section 3.2.6;
(iii) a reduction by Employer in Executive’s Base Salary; or (iv) a permanent
reassignment of Executive’s primary work location, without the consent of
Executive, to a location more than thirty-five (35) miles from Employer’s
executive offices in Woodcliff Lake, New Jersey.
3.3. Certain
Obligations of Employer Following Termination of the Employment
Term.
Following termination of the Employment Term under the circumstances described
below, Employer shall pay to Executive or his estate, as the case may be, the
following compensation and provide the following benefits. All lump sum amounts
shall be paid within forty-five (45) days of the Date of Termination in
accordance with Employer’s regular payroll practices. In connection with
Executive’s receipt of any or all compensation and benefits to be received
pursuant to this Section 3.3, Executive shall not have a duty to seek subsequent
employment during the period in which he is receiving severance payments and
the
Severance Amount (as defined in Section 3.3.2 hereof) shall not be reduced
solely as a result of Executive’s subsequent employment by an entity other than
Employer. The Executive must execute within thirty (30) days after the Date
of
Termination Employer’s standard form of Release Agreement attached as Exhibit A
hereto.
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3.3.1. For
Cause.
In the
event that the Employment Term is terminated by Employer for Cause, Employer
shall pay to Executive in a single lump-sum within forty-five (45) days an
amount equal to any unpaid but earned Base Salary through the Date of
Termination. The Employer shall also pay any annual bonus earned but unpaid
as
of the Date of Termination for any previously completed fiscal year in
accordance with the term of the bonus, and such employee benefits as to which
Executive may be entitled under the employee benefit plans of
Employer.
3.3.2. Without
Cause by Employer; Material Breach by Employer; Non-Renewal
by Employer.
In the
event that the Employment Term is terminated by Employer pursuant to Section
3.2.5 hereof or by Executive pursuant to Section 3.2.6 hereof, or is not renewed
by Employer pursuant to Section 3.1 hereof, Employer shall pay to Executive
severance in an amount equal to two (2) times his Base Amount (the “Severance
Amount”), and Executive shall retain all vested benefits granted pursuant to
Section 2.4 hereof. For purposes hereof, “Base Amount” shall mean the sum of
Executive’s Base Salary in effect on the Date of Termination, and if Executive’s
termination is not a result of, in whole or in part, Executive’s performance in
respect of his duties hereunder, the amount of Executive’s last annual cash
bonus pursuant to Section 2.2 hereof. The Employer shall pay the Severance
Amount in installments, and shall first determine the amount of each installment
payment if the Severance Amount were paid in equal semimonthly installments
for
two (2) years (the “Installment Payment”) commencing on the forty-fifth (45th)
day after the Date of Termination. The Employer shall then withhold and
accumulate the Installment Payments payable beginning on the forty-fifth (45th)
day after the Date of Termination through the end of the sixth (6th) month
after
the Date of Termination (the time period, the “Severance Holdback Period”) (the
withheld payments, the “Severance Holdback Amounts”). The Employer shall pay the
Severance Holdback Amounts in a single lump sum on the first (1st) day of the
seventh (7th) month after the Date of Termination (the “Severance Delayed
Payment Date”). The Severance Holdback Amounts paid to the Executive on the
Severance Delayed Payment Date are to accrue interest from the date each
Severance Holdback Amount would have been paid during the Severance Holdback
Period absent the holdback requirement until the Severance Delayed Payment
Date.
The interest rate is the prime rate as published in The Wall Street Journal
seven (7) days prior to the Severance Delayed Payment Date. The Employer shall
pay the accrued interest on the Severance Delayed Payment Date. From the
Severance Delayed Payment Date through the end of two (2) years after the
forty-fifth (45th) day after the Date of Termination, the Employer shall pay
the
Installment Payments semimonthly. Payment of the Severance Amount is subject
to
Executive’s continued compliance with the terms of Section 4. The Employer shall
also pay any annual bonus earned but unpaid as of the Date of Termination for
any previously completed fiscal year in accordance with the terms of the bonus,
and such employee benefits as to which Executive may be entitled under the
employee benefit plans of the Employer.
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3.3.3. Without
Cause By Executive; Election Not to Renew by Executive.
In the
event that the Employment Term is terminated by Executive pursuant to Section
3.2.2 hereof or Executive elects not to renew this Agreement pursuant to Section
3.1 hereof, Employer shall pay to Executive in a single lump-sum within
forty-five (45) days of the Date of Termination an amount equal to any unpaid
but earned Base Salary through the Date of Termination, in accordance with
the
Employer’s regular payroll practices. The Employer shall also pay any annual
bonus earned but unpaid as of the Date of Termination for any previously
completed fiscal year in accordance with the terms of the bonus, and such
employee benefits as to which Executive may be entitled under the employee
benefit plans of the Employer.
3.3.4. Without
Cause by Executive During Window Period.
If a
Change of Control (as defined in Section 3.4.1 hereof) occurs, and the Executive
continues employment of six (6) months after the date of the Change of Control
(as defined in Section 3.4.1 hereof) (the “Stay Period”), the Executive may
terminate the Employment Term (the “Resignation”) during the ninety (90) days
following the Stay Period (the “Window Period”). The Executive must provide the
Resignation in a Notice of Termination to the Employer during the Window Period.
Upon the Resignation, the provisions of Sections 3.3.2 and 3.3.6 shall apply
as
if the Resignation were a termination of the Employment Term without Cause
by
the Employer under Section 3.2.5.
3.3.5. Death,
Disability.
In the
event that the Employment Term is terminated by reason of Executive’s death
pursuant to Section 3.2.1 hereof or by Employer by reason of Executive’s
Disability pursuant to Section 3.2.3 hereof, Employer shall pay to Executive,
subject to, in the case of Disability, Executive’s continued compliance with
Section 4 hereof, the Severance Amount, less any life insurance and/or
disability insurance received by Executive or his estate pursuant to insurance
policies provided by Employer (including pursuant to Section 2.4.4 hereof),
and
Executive shall retain all vested benefits granted pursuant to Section 2.3
hereof. In the case of death, the Employer shall pay the Severance Amount
commencing on the thirtieth (30th) day after the Executive’s date of death, and
otherwise in accordance with the payment provisions of Section 3.3.2 hereof
without the holdback requirement. In the case of Disability, the Employer shall
pay the Severance Amount in accordance with the payment provisions of Section
3.3.2 hereof. The Employer shall also pay any annual bonus earned but unpaid
as
of the Date of Termination for any previously completed fiscal year in
accordance with the terms of the bonus, and such employee benefits as to which
Executive may be entitled under the employer benefit plans of the
Employer.
3.3.6. Post-Employment
Term Benefits.
In the
event Executive is terminated pursuant to Sections 3.2.1 through 3.2.6 hereof,
inclusive, or either Employer or Executive elects not to renew this Agreement
pursuant to Section 3.1 hereof, Employer shall reimburse Executive for any
unpaid expenses pursuant to Section 2.4.1 hereof, and Executive will have the
opportunity and responsibility to elect COBRA continuation coverage pursuant
to
the terms of that law and will thus be responsible for the execution of the
continuation of coverage forms upon termination of his insurance coverage.
Except as provided immediately below, Executive will be responsible for all
COBRA premiums. Specifically, if Executive is terminated pursuant to Sections
3.2.3, 3.2.5 or 3.2.6 hereof, or Employer elects not to renew this Agreement
pursuant to Section 3.1 hereof, Executive shall be entitled to participate,
at
Employer’s expense, in all medical and health plans and programs of Employer in
accordance with
COBRA for a period of up to eighteen (18) months (the “Benefits Period”),
subject Executive’s continued compliance with the terms of Section 4 hereof;
provided,
that
Executive’s continued participation is permissible under the general terms and
provisions of such plans and programs; and provided,
further,
that in
the event Executive becomes entitled to equal or comparable benefits from a
subsequent employer during the Benefits Period, Employer’s obligation with
respect thereto pursuant to this Section 3.3.6 shall end as of such date. The
Employer shall commence payment of COBRA premiums on the forty-fifth (45th)
day
after the Date of Termination.
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3.3.7. Equity
Awards.
(a) If,
within twelve (12) months following a Change of Control (as defined in Section
3.4.1 hereof) of Employer, the Employment Term is terminated other than for
Cause, then Executive (or his estate) shall have twenty-four (24) months from
the date of termination to exercise any vested equity awards; provided,
that
the relevant equity award plan remains in effect and such equity awards shall
not have otherwise expired in accordance with the terms thereof. In connection
therewith, Employer agrees to use commercially reasonable efforts to amend
Executive’s Equity Award Agreements if necessary to effectuate the provisions of
this Section 3.3.7(a).
(b) In
the
event the Employment Term is terminated (i) by Employer pursuant to Section
3.2.5 hereof and the reason for such termination is not related to the
performance of Executive in his duties with respect to Employer, or (ii) by
Executive pursuant to Section 3.2.6 hereof, then all equity awards theretofore
granted to Executive shall thereupon vest and Executive shall have twenty-four
(24) months from such date to exercise such options; provided,
that
the relevant equity award plan remains in effect and such equity awards shall
not have otherwise expired in accordance with the terms thereof. In connection
therewith, Employer agrees to use commercially reasonable efforts to amend
Executive’s Equity Award Agreements if necessary to effectuate the provisions of
this Section 3.3.7(b).
(c) For
grants of time-based restricted stock made during calendar year 2008 (the “2008
Grants”) under the 2008 Long Term Incentive Program (the “2008 Program”), (i)(A)
if after a Change of Control (as defined in Section 3.4.1 hereof) the Employer
or its successor requires the Executive to remain employed for the Stay Period,
(B) the Executive continues employment for the Stay Period, and (C) the Change
of Control (as defined in Section 3.4.1 hereof) occurs within two (2) years
after the date of grant of the 2008 Grants, all 2008 Grants shall vest on the
last day of the Stay Period; or (ii) if there is a termination of the Employment
Term under Section 3.2.5 or 3.2.6 after the date of a Change of Control (as
defined in Section 3.4.1 hereof), all 2008 Grants shall vest on the Date of
Termination; or (iii) if a Change of Control (as defined in Section 3.4.1
hereof) occurs two (2) or more years after the date of grant of the 2008 Grants,
all 2008 Grants shall vest on the date of the Change of Control (as defined
in
Section 3.4.1 hereof); provided, however, that the 2008 Program remains in
effect and the 2008 Grants shall not have otherwise expired in accordance with
the terms thereof. In connection therewith, Employer agrees to use commercially
reasonable efforts to amend Executive’s 2008 Grant Agreements if necessary to
effectuate the provisions of this Section 3.3.7(c).
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(d) To
the
extent not determined by this Agreement, the terms and conditions of all equity
awards, including without limitation awards of performance contingent restricted
stock under the 2008 Program, shall be determined by the Executive’s Equity
Award Agreements, Grant Agreements, Certificates of Performance Shares, and
the
terms of the plans and award documents pursuant to which the equity awards
were
made.
3.4. Definitions.
3.4.1. “Change
of Control” Defined.
A
“Change
of Control” of the Employer means any of the following events, unless otherwise
defined in an Award Agreement or Grant Agreement:
(a) Any
individual, firm, corporation or other entity, or any group (as defined in
Section 13(d)(3) of Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) becomes, directly or indirectly, the beneficial owner (as defined in the
General Rules and Regulations of the Securities and Exchange Commission with
respect to Sections 13(d) and 13(g) of the Exchange Act) of more than twenty
(20%) percent of the then outstanding shares entitled to vote generally in
the
election of directors of the Employer;
(b) The
commencement of, or the first public announcement of the intention of any
individual, firm, corporation or other entity or of any group (as defined in
Section 13(d)(3) of the Exchange Act) to commence, a tender or exchange offer
subject to Section 14(d)(1) of the Exchange Act for any class of the Employer’s
capital stock; or
(c) The
stockholders of the Employer approve (i) a definitive agreement for the merger
or other business combination of the Employer with or into another corporation
pursuant to which the stockholders of the Employer do not own, immediately
after
the transaction, more than fifty (50%) percent of the voting power of the
corporation that survives and is a publicly owned corporation and not a
subsidiary of another corporation, (ii) a definitive agreement for the sale,
exchange or other disposition of all or substantially all of the assets of
the
Employer, or (iii) any plan or proposal for the liquidation or dissolution
of
the Employer.
Provided,
however, that a Change of Control shall not be deemed to have taken place if
beneficial ownership is acquired by, or a tender or exchange offer is commenced
or announced by, the Employer, any profit-sharing, employee ownership or other
employee benefit plan of the Employer, any trustee of or fiduciary with respect
to any such plan when acting in such capacity, or any group comprised solely
of
such capacity, or any group comprised solely of such entities.
(d) In
determining whether a Change of Control of the Employer has occurred, “Employer”
means Par Pharmaceutical, Inc. or Par Pharmaceutical Companies,
Inc.
3.4.2. “Notice
of Termination” Defined.
“Notice
of Termination” means a written notice that indicates the specific termination
provision relied upon by Employer or Executive and, except in the case of
termination pursuant to Sections 3.2.1, 3.2.2 or 3.2.5 hereof, that sets forth
in reasonable detail the facts and circumstances claimed to provide a basis
for
termination of the Employment Term under the termination provision so
indicated.
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3.4.3. “Date
of Termination” Defined.
“Date
of Termination” means such date as the Employment Term is expired if not renewed
or terminated in accordance with Sections 3.1 or 3.2 hereof.
4. Confidentiality/
Non-Solicitation/Non-Compete.
4.1. “Confidential
Information” Defined.
“Confidential Information” means any and all information (oral or written)
relating to Employer or any Subsidiary or any person or entity controlling,
controlled by, or under common control with Employer or any Subsidiary or any
of
their respective activities, including, but not limited to, information relating
to: technology, research, test procedures and results, machinery and equipment;
manufacturing processes; financial information; products; identity and
description of materials and services used; purchasing; costs; pricing;
customers and prospects; advertising, promotion and marketing; and selling,
servicing and information pertaining to any governmental investigation, except
such information which becomes public, other than as a result of a breach of
the
provisions of Section 4.2 hereof.
4.2. Non-disclosure
of Confidential Information.
Executive shall not at any time (other than as may be required or appropriate
in
connection with the performance by him of his duties hereunder), directly or
indirectly, use, communicate, disclose or disseminate any Confidential
Information in any manner whatsoever for the benefit of any person or entity
other than Employer (except as may be required under legal process by subpoena
or other court order).
4.3. Non-Solicitation.
Executive shall not, while employed by Employer and for a period of one (1)
year
following the Date of Termination, directly or indirectly, hire, offer to hire,
entice away or in any other manner persuade or attempt to persuade any officer,
employee, agent, lessor, lessee, licensor, licensee, customer, prospective
customer, or supplier of Employer or any of its Subsidiaries to discontinue
or
alter his or its relationship with Employer or any of its
Subsidiaries.
4.4. Non-Competition.
Executive shall not, while employed by Employer and for a period of one (1)
year
following the Date of Termination, directly or indirectly provide any services
(whether in the management, sales, marketing, public relations, finance,
research, development, general office, administrative, or other areas) as an
employee, agent, stockholder, officer, director, consultant, advisor, investor,
or other representative of Employer's competitors in the branded or generic
pharmaceutical industry in any state or country in which Employer does or seeks
to do business. Employer's competitors include any entity, individual, or
affiliate of such company or individual that develops, sells, markets, or
distributes any products that compete with or are the same or similar to those
of Employer. However, the restrictions of this Section 4.4 shall not apply
if
the Employment Term is terminated by Employer pursuant to Section 3.2.5 hereof
or by Executive properly pursuant to Section 3.2.6 hereof; nor shall this
Section 4.4 prohibit Executive from being a passive owner of not more than
one
(1%) percent of any publicly-traded class of capital stock of any entity engaged
in a competing business.
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4.5. Injunctive
Relief.
The
parties hereby acknowledge and agree that (a) the type, scope and periods of
restrictions imposed in Section 4 are necessary, fair and reasonable to protect
Employer’s legitimate business interests and to prevent the inevitable
disclosure of Employer’s Confidential Information; (b) Employer will be
irreparably injured in the event of a breach by Executive of any of his
obligations under this Section 4; (c) monetary damages will not be an adequate
remedy for any such breach; (d) Employer will be entitled to injunctive relief,
in addition to any other remedy which it may have, in the event of any such
breach; and (e) the existence of any claims that Executive may have against
Employer, whether under this Agreement or otherwise, will not be a defense
to
the enforcement by Employer of any of its rights under this Section
4.
4.6. Non-exclusivity
and Survival.
The
covenants of Executive contained in this Section 4 are in addition to, and
not
in lieu of, any obligations that Executive may have with respect to the subject
matter hereof, whether by contract, as a matter of law or otherwise, and such
covenants and their enforceability shall survive any termination of the
Employment Term by either party and any investigation made with respect to
the
breach thereof by Employer at any time.
5. Miscellaneous
Provisions.
5.1. Severability.
If, in
any jurisdiction, any term or provision hereof is determined to be invalid
or
unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired; (b) any such invalidity or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction; and (c) the invalid or unenforceable term or provision shall,
for
purposes of such jurisdiction, be deemed replaced by 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.
5.2. Execution
in Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be
an
original but all of which taken together shall constitute one and the same
agreement (and all signatures need not appear on any one counterpart), and
this
Agreement shall become effective when one or more counterparts has been signed
by each of the parties hereto and delivered to each of the other parties
hereto.
5.3. Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed duly given upon receipt when delivered by hand,
overnight delivery or telecopy (with confirmed delivery), or three (3) business
days after posting, when delivered by registered or certified mail or private
courier service, postage prepaid, return receipt requested, as
follows:
If
to
Employer, to:
Par
Pharmaceutical, Inc.
000
Xxxx
Xxxxxxxxx
Xxxxxxxxx
Xxxx, Xxx Xxxxxx 00000
Attention: Chairman
Telecopy
No.: (000) 000-0000
10
Copy
to:
Xxxxxxxxx
X. Xxxxxx, Esq.
Xxxxxxx
P.C.
Xxx
Xxxxxxx Xxxxxx
Xxxxxx,
Xxx Xxxxxx 00000-0000
Telecopy
No.: (000) 000-0000
If
to
Executive, to:
Xxxx
Xxxxxxxxxx
c/o
Par
Pharmaceutical, Inc.
000
Xxxx
Xxxxxxxxx
Xxxxxxxxx
Xxxx, Xxx Xxxxxx 00000
or
to
such other address(es) as a party hereto shall have designated by like notice
to
the other parties hereto.
5.4. Amendment.
No
provision of this Agreement may be modified, amended, waived or discharged
in
any manner except by a written instrument executed by both Par and
Executive.
5.5. Entire
Agreement.
This
Agreement and, with respect to Section 3.3.7 hereof, Executive’s Equity Award
Agreements and governing equity award plans constitute the entire agreement
of
the parties hereto with respect to the subject matter hereof, and supersede
all
prior agreements and understandings of the parties hereto, oral or written,
including, but not limited to, the parties’ Employment
Agreement dated March 2007.
Executive and Employer hereby agree that the Employment Agreement dated March
2007 is hereby superseded and of no further force and effect, and that this
Agreement shall be effective as of the date hereof. In the event of any conflict
between Section 3.3.7 hereof and Executive’s Equity Award Agreements and the
governing equity award plans, Section 3.3.7 shall govern.
5.6. Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New Jersey applicable to contracts made and to be wholly performed
therein.
5.7. Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Agreement.
5.8. Binding
Effect; Successors and Assigns.
Executive may not delegate any of his duties or assign his rights hereunder.
This Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and their respective heirs, legal representatives, successors and
permitted assigns. Employer shall require any successor (whether direct or
indirect and whether by purchase, merger, consolidation or otherwise) to all
or
substantially all of the business and/or assets of Employer, by an agreement
in
form and substance reasonably satisfactory to Executive, to expressly assume
and
agree to perform this Agreement
in the same manner and to the same extent that Employer would be required to
perform if no such succession had taken place.
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5.9. Waiver.
The
failure of either of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way affect the validity of this Agreement
or
any provision hereof or the right of either of the parties hereto thereafter
to
enforce each and every provision of this Agreement. No waiver of any breach
of
any of the provisions of this Agreement shall be effective unless set forth
in a
written instrument executed by the party against whom or which enforcement
of
such waiver is sought, and no waiver of any such breach shall be construed
or
deemed to be a waiver of any other or subsequent breach.
5.10. Capacity.
Executive and Employer hereby represent and warrant to the other that, as the
case may be: (a) he or it has full power, authority and capacity to execute
and
deliver this Agreement, and to perform his or its obligations hereunder; (b)
such execution, delivery and performance shall not (and with the giving of
notice or lapse of time or both would not) result in the breach of any
agreements or other obligations to which he or it is a party or he or it is
otherwise bound; and (c) this Agreement is his or its valid and binding
obligation in accordance with its terms.
5.11. Enforcement;
Jurisdiction.
If any
party institutes legal action to enforce or interpret the terms and conditions
of this Agreement, the applicable court shall award the prevailing party
reasonable attorneys’ fees at all trial and appellate levels, and the expenses
and costs incurred by such prevailing party in connection therewith, subject
to
the requirements of Treas. Reg. §1.409A-3(i)(1)(iv). Any legal action, suit or
proceeding, in equity or at law, arising out of or relating to this Agreement
shall be instituted exclusively in the State or Federal courts located in the
State of New Jersey, and each party agrees not to assert, by way of motion,
as a
defense or otherwise, in any such action, suit or proceeding, any claim that
such party is not subject personally to the jurisdiction of any such court,
that
the action, suit or proceeding is brought in an inconvenient forum, that the
venue of the action, suit or proceeding is improper or should be transferred,
or
that this Agreement or the subject matter hereof may not be enforced in or
by
any such court. Each party further irrevocably submits to the jurisdiction
of
any such court in any such action, suit or proceeding. Any and all service
of
process and any other notice in any such action, suit or proceeding shall be
effective against any party if given personally or by registered or certified
mail, return receipt requested or by any other means of mail that requires
a
signed receipt, postage prepaid, mailed to such party as herein provided.
Nothing herein contained shall be deemed to affect or limit the right of any
party to serve process in any other manner permitted by applicable
law.
5.12. Arbitration.
(a) Any
dispute under Section 3 hereof, including, but not limited to, the determination
by the Board of a termination for Cause pursuant to Section 3.2.4 hereof, or
in
respect of the breach thereof shall be settled by arbitration in New Jersey.
The
arbitration shall be accomplished in the following manner. Either party may
serve upon the other party written demand that the dispute, specifying the
nature thereof, shall be submitted to arbitration. Within ten (10) days after
such demand is given in accordance with Section 5.3 hereof,
each of the parties shall designate an arbitrator and provide written notice
of
such appointment upon the other party. If either party fails within the
specified time to appoint such arbitrator, the other party shall be entitled
to
appoint both arbitrators. The two (2) arbitrators so appointed shall appoint
a
third arbitrator. If the two arbitrators appointed fail to agree upon a third
arbitrator within ten (10) days after their appointment, then an application
may
be made by either party hereto, upon written notice to the other party, to
the
American Arbitration Association (the “AAA”), or any successor thereto, or if
the AAA or its successor fails to appoint a third arbitrator within ten (10)
days after such request, then either party may apply, with written notice to
the
other, to the Superior Court of New Jersey, Bergen County, for the appointment
of a third arbitrator, and any such appointment so made shall be binding upon
both parties hereto.
12
(b) The
decision of the arbitrators shall be final and binding upon the parties. The
party against whom the award is rendered (the “non-prevailing party”) shall pay
all fees and expenses incurred by the prevailing party in connection with the
arbitration (including fees and disbursements of the prevailing party’s
counsel), as well as the expenses of the arbitration proceeding. The arbitrators
shall determine in their decision and award which of the parties is the
prevailing party, which is the non-prevailing party, the amount of the fees
and
expenses of the prevailing party and the amount of the arbitration expenses.
The
arbitration shall be conducted, to the extent consistent with this Section
5.12,
in accordance with the then prevailing rules of commercial arbitration of the
AAA or its successor. The arbitrators shall have the right to retain and consult
experts and competent authorities skilled in the matters under arbitration,
but
all consultations shall be made in the presence of both parties, who shall
have
the full right to cross-examine the experts and authorities. The arbitrators
shall render their award, upon the concurrence of at least two of their number,
not later than thirty (30) days after the appointment of the third arbitrator.
The decision and award shall be in writing, and counterpart copies shall be
delivered to each of the parties. In rendering an award, the arbitrators shall
have no power to modify any of the provisions of this Agreement, and the
jurisdiction of the arbitrators is expressly limited accordingly. Judgment
may
be entered on the award of the arbitrators and may be enforced in any court
having jurisdiction.
5.13. Specified
Employee.
Notwithstanding any other provision of this Agreement, if the Executive is
a
specified employee under Treas. Reg. §1.409A-1
as of the Date of Termination, all payments to which the Executive would
otherwise be entitled during the first six months following the Date of
Termination shall be accumulated and paid on the first day of the seventh month
following the Date of Termination, or if earlier on Executive’s death in
accordance with Section 3.3.4. This provision shall not apply to all payments
on
separation from service that satisfy the short-term deferral rule of Treas.
Reg.
§1.409A-1(b)(4),
or to the portion of the payments on separation from service that satisfy the
requirements for separation pay due to an involuntary separation from service
under Treas. Reg. §1.409A-1(b)(9)(iii),
or to any payments that are otherwise exempt from the six month delay
requirement of the Treasury Regulations under Section 409A of the Internal
Revenue Code.
[SIGNATURE
PAGE FOLLOWS]
13
IN
WITNESS WHEREOF,
this
Agreement has been executed and delivered by the parties hereto as of the date
first above written.
|
PAR
PHARMACEUTICAL, INC.
|
|
By:
/s/ Xxxxxxx
Xxxxxxxx
|
|
Name:
Xxxxxxx Xxxxxxxx
|
|
Title:
Senior Vice President,
|
|
Human
Resources
|
|
/s/
Xxxx
Xxxxxxxxxx
|
|
Xxxx
Xxxxxxxxxx
|
14
