SEPARATION AGREEMENT AND RELEASE
Exhibit
10.1
SEPARATION
AGREEMENT AND RELEASE
This
Separation Agreement and Release ("Separation Agreement") is entered into by
and
between Xxxxx X. Xxxxxx ("Executive" or "you") and Endo Pharmaceuticals Holdings
Inc. (the "Company"), and confirms the agreement that has been reached with
you
in connection with your resignation from the Company.
1. Termination
of Employment. You agree that your resignation shall be effective
as of March 1, 2008 (the "Separation Date") and as of such date you shall cease
to be employed by the Company in any capacity and you shall resign from all
executive positions you then hold with the Company and its
subsidiaries. Your resignation as a member of the Board of Directors
of the Company (as well as of the Board of Directors of any of the Company's
subsidiaries) shall be effective immediately. The Company hereby
waives the 30 days’ prior notice requirement in accordance with Section 6.1 of
your Amended and Restated Employment Agreement dated as of December 19, 2007
(the "Employment Agreement"). You further agree to execute any
additional documents necessary to effectuate the foregoing.
2. Separation
Pay and Benefits. In consideration of your execution of this
Separation Agreement and your compliance with its terms and conditions, the
Company agrees to pay or provide you (subject to the terms and conditions set
forth in this Separation Agreement) with the benefits described in this
paragraph 2 and to adhere to the nondisparagement restrictions set forth in
paragraph 4b below, which exceed any payment and benefits to which you are
otherwise entitled. The benefits below shall be in full satisfaction
of its obligations under the terms of the Employment Agreement and all
applicable cash or equity incentive compensation plans and
agreements.
a. The
Company shall continue to pay you at your current rate of base salary and
benefits through March 1, 2008, in accordance with the Company's payroll
practices.
b. The
Company shall pay you an aggregate of $1,939,200 (the "Separation Amount"),
which represents two times the sum of (i) your current annual base salary
($606,000) and (ii) your target incentive compensation for the fiscal year
in
which the Separation Date occurs (60% of salary). The Separation
Amount shall be paid within 30 days following the Effective Date (as
defined below). There shall be deducted from the payment of the
Separation Amount all applicable federal, state and local withholding taxes
and
other appropriate deductions. Notwithstanding the foregoing, in the
event that the Effective Date does not occur by March 1, 2008, the Separation
Amount shall not be paid pursuant to the Separation Agreement.
c. The
Company shall provide you with continued coverage under the Company's group
medical insurance at the cost in effect at the Separation Date for a period
of
twenty-four (24) months following the Separation Date; provided that, to the
extent you become eligible for medical insurance from a subsequent employer,
the
Company’s medical insurance shall become secondary to such subsequent employer’s
medical insurance. The health plan continuation coverage period
provided for under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”)
shall commence at the end of such 24 month period. In addition, the Company
shall provide you with continued life insurance benefits for a period of
twenty-four (24) months following the Separation Date.
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d. The
parties acknowledge and agree that you are party to Stock Option Agreements
(the
"Option Agreements") under which you have been granted stock options to purchase
shares of common stock of the Company (the "Options") pursuant to the terms
of
the Endo Pharmaceuticals Holdings Inc. 2000 Stock Incentive Plan or the Endo
Pharmaceuticals Holdings Inc. 2004 Stock Incentive Plan, as applicable (the
"Stock Incentive Plans"), as follows:
|
Grant
Date
|
Vested
Options
as
of 2/25/08
|
Unvested
Options
|
Exercise
Price
|
Remaining
vesting dates (out of 4)
|
|
2/21/07
|
43,750
|
131,250
|
$30.55
|
2/22/09,
2/21/10 & 2/24/11
|
|
2/14/06
|
125,000
|
125,000
|
$28.61
|
2/14/09
& 2/14/10
|
|
4/27/05
|
125,000
|
125,000
|
$20.22
|
4/27/08
& 4/27/09
|
|
8/11/04
|
19,138
|
6,379
|
$16.47
|
8/11/08
|
(i) The
Company also agrees that the 6,379 unvested Options originally granted to you
on
August 11, 2004 and the 125,000 unvested Options originally granted to you
on
April 27, 2005 shall become fully vested and exercisable as of the Separation
Date.
(ii) The
Company agrees that, in accordance with, and subject to, the terms and
conditions of the Option Agreements, you shall be entitled to exercise all
vested Options held by you as of the Separation Date (including those that
become vested in accordance with paragraph 2d.(i) above) until the earlier
to
occur of the first anniversary of the Separation Date or the original expiration
date of the Options as set forth in the Stock Incentive Plans or applicable
Option agreements.
e. The
Company shall pay you incentive compensation for 2007 equal to $300,000
when in 2008 bonuses for such year are paid to other executives of the
Company.
f. The
Company shall pay you, within 30 days following the Effective Date, an
additional $60,000 for office transition services. The Company shall
promptly pay in 2008, upon presentation of invoices, your legal counsel’s
reasonable fees in connection with this Agreement, provided that the cost of
such legal fees shall not exceed $30,000.
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g. The
Company's obligation to make the payments and to provide the benefits set forth
in paragraphs 2d.(i), 2e. and 2f above shall cease as of the date of any
material breach of your obligations under the covenants set forth in paragraphs
4, 5, and 6 hereof, provided such breach is not cured within 30 days of the
date
the Company delivers you written notice notifying of such breach.
3. Accrued
Benefits. Whether or not you execute this Separation Agreement,
you will be paid for any accrued but unused vacation days, and for unreimbursed
business expenses (in accordance with usual Company policies and practices,
and
in no event later than the calendar year following the year in which the
expenses are incurred), to the extent not theretofore paid. In
addition, following the Separation Date, you will be entitled to receive vested
amounts payable to you under the Company's 401(k) plan and other retirement
and
deferred compensation plans in accordance with the terms of such plans and
applicable law. Except as specifically set forth herein, your
participation in all Company plans shall remain subject to the terms and
conditions of such plans as in effect from time to time and you agree that
such
terms and conditions are binding on you and the Company.
4. Nondisparagement.
a. You
agree that you will not, with intent to damage, disparage or encourage or induce
others to disparage any of the Company, its subsidiaries and affiliates,
together with all of their respective past and present directors and officers,
as well as their respective past and present managers, officers, shareholders,
partners, employees, agents, attorneys, servants and customers and each of
their
predecessors, successors and assigns (collectively, the "Company Entities and
Persons"); provided that such limitation shall extend to past and present
managers, officers, shareholders, partners, employees, agents, attorneys,
servants and customers only in their capacities as such or in respect of their
relationship with the Company and its affiliates.
b. The
Company agrees that neither the Company formally nor any director or officer,
with intent to damage you, will disparage you or encourage or induce others
to
disparage you.
c. For
the purposes of this Separation Agreement, the term "disparage" includes,
without limitation, comments or statements adversely affecting in any manner
(i)
the conduct of the business of the Company Entities and Persons or yours or
(ii)
the business reputation of the Company Entities and Persons or
yours. Nothing in this Separation Agreement is intended to or shall
prevent either party from providing, or limiting testimony in response to a
valid subpoena, court order, regulatory request or other judicial,
administrative or legal process or otherwise as required by law.
5. Cooperation
in Any Investigations and Litigation.
a. The
parties agree that they will reasonably cooperate with each other, and their
respective counsel, in connection with any investigation, inquiry,
administrative proceeding or litigation relating to any matter in which you
were
involved or of which you have knowledge as a result of your service with the
3
Company
by providing truthful information, provided that in your case, such cooperation
does not unreasonably interfere with your then current professional and personal
commitments. The Company agrees to promptly reimburse you for
reasonable expenses reasonably incurred by you, in connection with your
cooperation pursuant to this paragraph. Such expenses shall include
reasonable legal fees of separate counsel in the event of an actual or
potential conflict of interest, provided that (i) such selection of counsel
shall be subject to the prior approval of the Company, which approval shall
not
be unreasonably withheld, (ii) the scope of such representation shall be subject
to the prior approval of the Company which approval shall not be unreasonably
withheld, and (iii) such reimbursement of legal fees shall not exceed $100,000
in any one year (which limitation shall not, however, apply to limit any of
your
existing rights you may have to indemnification or under the applicable
directors and officers liability insurance).
b. You
agree that, in the event you are subpoenaed or otherwise required by any person
or entity (including, but not limited to, any government agency) to give
testimony or produce documents (in a deposition, court proceeding or otherwise)
which in any way relates to your employment by the Company, you will, to the
extent not legally prohibited from doing so, give prompt notice of such request
to the General Counsel of the Company so that the Company may contest the right
of the requesting person or entity to such disclosure before making such
disclosure. Nothing in this provision shall require you violate your
obligation to comply with valid legal process.
6. Confidentiality;
Non-Competition and Non-Interference. You acknowledge and agree
that you continue to be bound by the confidentiality, non-competition and
non-interference covenants set forth in Articles VII and VIII of the Employment
Agreement as modified below, and the Company shall continue to be entitled
to
the benefits of Section 9.1 of the Employment Agreement, and such provisions
shall survive the termination of the Employment Agreement. The
parties agree that the provisions of Article VIII shall not be violated unless
you are providing services to the portion of a business whose
prescription pharmaceutical products compete in whole or in part with the
Company’s currently marketed products and/or the following products that are
currently in development, for those indications currently being pursued:
fentanyl, ketoprofen, sufentanil, N-acetyl cysteine, doxepine, and any marketed
or development products that the Company acquires or licenses as a result of
any
discussions that are ongoing as of the date of this Agreement which discussions
conclude in a definitive agreement executed within one year of the Separation
Date; and that there shall be no limitation on you providing services to other
portions of such entities.
7. Indemnification. You
shall be indemnified to the extent permitted by applicable laws, if
you are made a party, or are threatened to be made a party, to any action,
suit
or proceeding, whether civil, criminal, administrative or investigative, in
connection with acts or omissions occurring during your tenure with the Company,
as provided under Section 2.4 of the Employment Agreement, and such provision
shall survive the termination of the Employment Agreement and your employment,
such indemnification shall include the advancement of legal fees in accordance
with the terms
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and
conditions set forth in the Charter and the By-Laws of the
Company. The level of directors and officers insurance coverage shall
not be less than that maintained time to time for active directors and
officers.
8. Waiver.
a. You
agree that, in consideration of the benefits to be provided to you under this
Separation Agreement, you hereby waive, release and forever discharge any and
all claims and rights which you ever had, now have or may have against the
Company and any of its subsidiaries or affiliated companies, and their
respective successors and assigns, current and former officers, agents, board
of
directors members, representatives and employees, various benefits committees,
and their respective successors and assigns, heirs, executors and personal
and
legal representatives, based on any act, event or omission occurring before
you
execute this Separation Agreement arising out of, during or relating to your
employment or services with the Company or the termination of such employment
or
services, except as provided below. This waiver and release includes,
but is not limited to, any claims which could be asserted now or in the future,
under: common law, including, but not limited to, breach of express or implied
duties, wrongful termination, defamation, or violation of public policy; any
policies, practices, or procedures of the Company; any federal or state statutes
or regulations including, but not limited to, Title VII of the Civil Rights
Act
of 1964, as amended, 42 U.S.C. §2000e et seq., the Civil Rights Act of
1866 and 1871, the Americans With Xxxxxxxxxxxx Xxx, 00 X.X.X. §00000 et
seq., the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C.
§1001 et seq. (excluding those rights relating exclusively to employee
pension benefits as governed by ERISA), the Family and Medical Xxxxx Xxx, §0000
et. seq., any comparable state laws, any contract of employment,
express or implied; any provision of the United States or of a state; any
provision of any other law, common or statutory, of the United States, or any
applicable state. Notwithstanding the foregoing, nothing contained in this
paragraph 8a shall (i) impair any rights or potential claims that you may have
under the federal Age Discrimination in Employment Act of 1967 (the "ADEA")
subject to paragraph 8c; (ii) be construed to prohibit Executive from bringing
appropriate proceedings to enforce this Separation Agreement; (iii) effect
any
rights of indemnification, or to be held harmless, or any coverage under
directors and officers liability insurance or rights or claims of contribution
that you have or (iv) any rights as a shareholder of the Company.
b. By
signing this Separation Agreement, you represent that you have not and will
not
in the future commence any action or proceeding arising out of the matters
released hereby, and that you will not seek or be entitled to any award of
legal
or equitable relief in any such action or proceeding that may be commenced
on
your behalf. The Company has advised you to consult with an attorney of
your choosing prior to signing this Separation Agreement. You
represent that you understand and agree that you have the right and have been
given the opportunity to review this Separation Agreement and the ADEA Release,
with an attorney. You further represent that you understand and agree
that the Company is under no obligation to offer this Separation Agreement,
and
that you are under no obligation to consent to the waiver.
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c. In
accordance with the ADEA release contained in Exhibit A hereto (the "ADEA
Release"), you shall have twenty-one (21) days from the date of this Agreement
to consider the ADEA Release and once you have signed the ADEA Release, you
shall have seven (7) additional days from the date of execution to revoke
your consent to the ADEA Release. Any such revocation shall be made
in writing so as to be received by the Company prior to the eighth (8th) day following
your
execution of the ADEA Release. If no such revocation occurs, the ADEA
Release shall become effective on the eighth (8th) day following
your
execution of the ADEA Release (the "Effective Date"). In the event
that you fail to sign the ADEA Release within 21 days or revokes your ADEA
Release thereafter as provided above, this Separation Agreement shall remain
in
full force and effect but the Company shall have no obligation to provide the
benefits in paragraph 2(b), d(i) and 2e above.
9. Enforcement. If
any provision of this Separation Agreement is held by a court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall have
no
effect; however, the remaining provisions shall be enforced to the maximum
extent possible. Further, if a court should determine that any
portion of this Separation Agreement is overbroad or unreasonable, such
provision shall be given effect to the maximum extent possible by narrowing
or
enforcing in part that aspect of the provision found overbroad or
unreasonable. Additionally, the parties agree that in the event of
any breach of the terms of paragraphs 4, 5 and 6 the other party may seek
injunctive and other equitable relief. In addition, you agree that
your willful and knowing failure to return Company Property that relates to
the
maintenance of security of the Company Entities and Persons or the maintenance
of Proprietary Information shall entitle the Company to such injunctive and
other equitable relief.
10. No
Admission. This Separation Agreement is not intended, and shall
not be construed, as an admission that either you or the Company Entities and
Persons have violated any federal, state or local law (statutory or decisional),
ordinance or regulation, breached any contract or committed any wrong
whatsoever.
11. Successor. This
Separation Agreement is binding upon, and shall inure to the benefit of, the
parties and their respective heirs, executors, administrators, successors and
assigns.
12. Choice
of Law. This Separation Agreement shall be construed and enforced
in accordance with the laws of the State of Delaware without regard to the
principles of conflicts of law.
13. Entire
Agreement. You acknowledge that this Separation Agreement
constitutes the complete understanding between the Company and you, and,
supersedes any and all agreements, understandings, and discussions, whether
written or oral, between you and any of the Company Entities and Persons,
including your Employment Agreement, which shall terminate on the Separation
Date, except for the provisions of Section 2.4, Section 6.5(h), Articles VII
and
VIII (as amended herein) and Section 9.1 of the Employment Agreement which
shall
survive such termination. No other promises or agreements shall be
binding on the Company unless in writing and signed by both the Company and
you
after the date of this Separation Agreement.
6
14. Effective
Date. You may accept this Separation Agreement by signing it and
returning it to Xxxxxxxx X. Xxxxxxx, General Counsel, Endo Pharmaceuticals
Holdings Inc., 000 Xxxx Xxxxxxxxx, Xxxxxx Xxxx, XX 00000. The
effective date of this Separation Agreement shall be the date it is signed
by
both parties, provided that the provisions of paragraph 2b, d(i) and 2e shall
not become effective until the Effective Date, as defined in paragraph
8c. In the event you do not accept this Separation Agreement as set
forth above, this Separation Agreement, including but not limited to the
obligation of the Company to provide the payments and other benefits described
herein, shall be deemed automatically null and void.
|
Signature:
|
/s/
Xxxxx X. Xxxxxx
|
Date:
|
January
28, 2008
|
||
|
Xxxxx
X. Xxxxxx
|
|||||
|
By:
|
/s/
Xxxxx Xxxxxx
|
Date:
|
January
28, 2008
|
||
|
Title:
|
Xxxxx
Xxxxxx, Chairman
|
||||
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