EMPLOYMENT AGREEMENT
Exhibit 10.1
AGREEMENT dated as of the 5th day of January, 2006 between Xxxx Pharmaceuticals,
Inc. (“BPI”) , a Delaware corporation having its principal executive offices at 000 Xxxxxxxx Xxxxx
Xxxx, Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000, and Duramed Pharmaceuticals, Inc., a Delaware corporation
having its principal executive offices at 0 Xxxxxxx Xxxxxx, Xxxx Xxxxx, XX 00000 (“DPI’), parties
of the first part, and G. Xxxxxxxxx Xxxxxxxxx (the “Employee”).
BPI and DPI and the Employee hereby agree as follows:
1. Employment. The Company agrees to employ the Employee, and the Employee agrees to remain in
the employ of the Company, during the term of this Agreement and on the other terms and conditions
hereafter set forth. Subject to paragraph 13(d) below, where used in this Agreement, the “Company”
means BPI or, commencing on the effective date of any assignment of BPI’s rights or obligations in
accordance with paragraph 13(d) below, the Permitted Assignee (as such term is defined in that
paragraph) to which such rights or obligations are so assigned.
2. Term. The term of this Agreement shall commence on March 6, 2006 (the “Commencement Date”)
and shall terminate at 5 P.M. on the third anniversary of the Commencement Date unless sooner
terminated in accordance with the terms of this Agreement or extended as hereinafter provided. The
term of this Agreement shall be extended, without further action by BPI or the Employee, on the
date (the “Extension Effective Date”) which is six months before the third anniversary of the
Commencement Date and on the date (also an “Extension Effective Date”) which is six months before
each subsequent anniversary of the Commencement Date, for successive periods of twelve months each,
unless either BPI or an Affiliate (as defined in paragraph 3(a) below) shall have given written
notice to the Employee, or the Employee shall have given written notice to BPI, in the manner set
forth in paragraph 13(e) or (f) below, prior to the Extension Effective Date in question, that the
term of this Agreement that is in effect at the time such written notice is given is not to be
extended or further extended, as the case may be. Examples that illustrate the intended operation
of the preceding sentence appear in the Appendix to this Agreement.
3.
Positions and Responsibilities; Place of Performance.
(a) (i) Throughout the term of this Agreement, the Employee agrees to remain in
the employ of the Company, and the Company agrees to employ the Employee, as the President and
Chief Operating Officer of DPI, reporting to the President and Chief Operating Officer of BPI (the
“COO”). As the President and Chief Operating Officer of DPI, the Employee shall be responsible for
directing, managing and overseeing all commercial and developmental proprietary pharmaceutical
activities conducted by BPI or any Affiliate (as defined below), including sales, marketing,
managed care, clinical trials and medical affairs related to such activities, and including any
such activities conducted by DPI on behalf of BPI or any Affiliate, but excluding business
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development to the extent responsibility therefor is shared on the date of this Agreement with
other members of management and excluding shared services such as regulatory affairs, regulatory
quality control, information technology and systems, finance and human resources, subject only to
the authority of the COO, the Chairman and CEO of BPI (the “CEO”) and the Board of Directors of BPI
(the “BPI Board”), and, except for the aforementioned exclusions, shall have all of the powers,
authority, duties and responsibilities usually incident to the position and role of a President and
Chief Operating Officer of companies that are comparable in size, character and performance to DPI,
and such other reasonable duties, consistent with the position of such a President and Chief
Operating Officer, as may be lawfully assigned to him by the COO, the CEO or the BPI Board. As used
in this paragraph 3(a) and elsewhere in this Agreement, the term “Affiliate” means any “person” (as
such term is used in sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended) that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, BPI. For the purposes of the preceding sentence,
the word “control” (by itself and as used in the terms “controlling”, “controlled by” and “under
common control with”) means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a “person”, whether through the ownership of voting
securities, by contract, or otherwise.
(ii) Pursuant to the terms of the Employee’s previous
employment agreement with his former employer, the Employee’s responsibilities set forth in
subparagraph 3(a)(i) above shall expressly exclude Oral Micronized Progesterone and Progesterone
Ring, both of which are currently under development by the Company, during the first year of the
Employee’s employment. This limitation on the Employee’s responsibilities, however, shall
automatically expire after the first anniversary of the Employee’s employment. This limitation on
responsibility shall have no effect on the Employee’s compensation or benefits under this
Agreement.
(iii) The Employee agrees to serve as an officer and member of the board of directors of
BPI and any Affiliate if he is elected or appointed to serve as such during the term of this
Agreement, without additional compensation beyond that provided in this Agreement. Nothing in this
Agreement shall be interpreted or construed to constitute an agreement, representation or warranty
by BPI or DPI that the Employee will be elected or appointed to the board of directors of BPI or
any Affiliate.
(b) In connection with his employment by Company, the Employee shall be based at the principal
executive offices of BPI in the greater New York City metropolitan area but agrees to travel, to
the extent reasonably necessary to perform his duties and obligations under this Agreement, to
Company facilities and other destinations elsewhere at the Company’s expense.
(c) During the term of this Agreement, the Employee shall serve the Company on an exclusive
basis (it being understood that the Employee’s engaging in activities on behalf of BPI or an
Affiliate shall be deemed serving the Company for this purpose) and shall devote all his business
time, attention, skill and efforts to the faithful
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performance of his duties hereunder; provided that the Employee may engage in community service and
charitable activities and, with the approval of the BPI Board, may serve as a member of the board
of directors of other companies (and retain remuneration for such service) if such activities and
service do not materially interfere with the performance of his duties and responsibilities
hereunder.
4. Compensation. For all services rendered by the Employee in any capacity during the
term of this Agreement, and for his undertakings with respect to confidential information,
non-solicitation and disparaging remarks set forth in sections 6 and 7 below, the Employee shall be
entitled to the following:
(a) a salary, payable in installments not less frequent than monthly, at the annual rate of
six hundred thousand dollars ($600,000), with such increases in such rate, if any, as the
Compensation Committee of the BPI Board may approve from time to time during the term of this
Agreement in accordance with BPI’s regular administrative practices applicable to senior officers
from time to time during the term of this Agreement (the annual salary rate as increased from time
to time during the term of this Agreement being hereafter referred to as the “Base Salary”);
(b) participation in BPI’s annual executive incentive or
bonus plan as in effect from time to time, with the opportunity to receive an award in accordance
with the terms and conditions of such plan, for each fiscal year of BPI that commences or
terminates during the term of this Agreement, of up to 50% of the Employee’s Base Salary earned
during such year (or such higher percentage as the BPI Board or a committee of the BPI Board may
allow from time to time during the term of this Agreement), it being understood that any award for
the fiscal year of BPI in which the term of this Agreement commences or terminates pursuant to the
terms hereof shall be prorated based on the portion of such fiscal year that coincides with the
term of this Agreement and shall be made at the same time as awards (if any) are made to other
participants with respect to such fiscal year. The Employee recognizes and agrees that the BPI
Board may defer the payment of any portion of his annual bonus to the extent that, and for such
period of time and on such terms and subject to such conditions as, may be reasonably necessary to
avoid a loss by BPI or an Affiliate of a tax deduction with respect to such portion of his annual
bonus under section 162(m) of the Internal Revenue Code and to avoid any inclusion of such portion
of his annual bonus or any other amount in the Employee’s gross income pursuant to section
409A(a)(l)(A) of the Internal Revenue Code. Any such deferred amount shall be non-forfeitable,
shall constitute an unfunded, unsecured obligation of the Company, and until paid shall be deemed
invested in such hypothetical investments as the Employee may select from among the hypothetical
investment options that are available from time to time during the deferral period under BPI’s
excess 401(k) plan or, if no such investment options are available at the time in question under
that plan, then from among the same hypothetical investment options that were available under BPI’s
excess 401(k) plan on the date hereof or a reasonable facsimile thereof;
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(c) participation in BPI’s stock and incentive award plan as from time to time in
effect, with an initial grant under such plan of stock appreciation rights (“SARs”) with respect to
a total of 75,000 shares of BPI common stock, subject to the terms and conditions of the plan, such
other terms and conditions consistent with the terms of such plan as the Board or a committee of
the Board granting the options (the Administrator”) may impose, and the following terms and
conditions:
(i) the exercise price at which the SARs may be exercised shall be the
fair market value of the shares on the date on which the SARs are granted (the
“Grant Date”); and
(ii) the SARs shall become exercisable in five equal annual installments
of 15,000 SARs each commencing on the first anniversary of the Grant Date and
continuing on each of the four succeeding anniversaries of the Grant Date, provided
in the case of each such installment that the Employee’s full-time employment by
the Company continues until the anniversary date in question; and
(iii) to the extent not therefore exercisable, the SARs shall become
exercisable on the date, if any, on which a Change in Control (as defined in BPI’s
Stock Incentive and Award Plan as in effect on the date of this Agreement) occurs,
if the Employee’s full-time employment by the Company continues until that date,
provided that, if such Change in Control occurs less than six months after the
Grant Date, the Employee agrees in writing (if requested to do so by the
Administrator) to remain in the employ of the Company or a subsidiary at least
through the date which is six months after the Grant Date with substantially the
same title, duties, authority, reporting relationships and compensation as on the
day immediately preceding such Change in Control; and
(iv) the SARs shall expire on the tenth anniversary of the Grant Date
unless the Employee’s employment terminates before that date, in which case the
SARs shall expire upon such termination of employment or within such period of time
thereafter as the Administrator may specify in the instrument evidencing the grant
of the SARs; and
(v) any amount payable by BPI in respect of any exercise of the SARs
shall be paid in the form of BPI common stock, and will not be paid in the form of
cash.
The Employee will be eligible to participate in annual grants under BPI’s stock and incentive award
plan commencing with the grant anticipated in July 2006. The time at which any such grants are to
be made, and the type, amount and terms and conditions of any such grants, shall be determined by
the Compensation Committee of the Board in its sole discretion;
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(d) the business and personal use of an automobile at Company expense including, without
limitation, payment or reimbursement of automobile insurance and maintenance expenses in accordance
with BPI’s automobile policy applicable to senior officers on the Commencement Date or, in lieu of
the business and personal use of an automobile at Company expense, a $1,500 monthly cash allowance;
and
(e) participation in all health, welfare, savings and other employee benefit and fringe
benefit plans (including vacation pay plans or policies and life and disability insurance plans) in
which other senior officers of BPI or DPI participate during the term of this Agreement, subject in
all events to the terms and conditions of such plans as in effect from time to time. Nothing in
this paragraph (e) shall preclude BPI or any Affiliate from amending or terminating any such plan
at any time. The plans covered by this paragraph (e) shall not include the annual incentive or
stock incentive plans, which are covered by paragraphs (b) and (c) above.
5. Termination of Employment.
(a) Termination by BPI or an Affiliate without Good Cause or by the Employee for
Good Reason.
(i) If the Employee’s employment with the Company is
terminated by BPI or an Affiliate without Good Cause (except as an incident of assigning the rights
to Employee’s services to a Permitted Assignee in accordance with paragraph 13(d) below) or is
terminated by the Employee for Good Reason, in either case during the term of this Agreement and
other than at the expiration of the term of this Agreement as the same may have been extended in
accordance with the provisions of section 2 above (any such employment termination being hereafter
referred to as a “Compensable Termination”), the Company shall pay the Employee the portion of his
Base Salary accrued through the date of the Compensable Termination and any other amounts to which
he is entitled by law or pursuant to the terms of any compensation or benefit plan or arrangement
in which he participated prior to the Compensable Termination and, in addition, subject to
compliance by the Employee with the provisions of sections 6 and 7 below, relating to confidential
information, non-solicitation and disparaging remarks, the Company shall, as liquidated damages or
severance pay or both (whichever characterization(s) will serve to validate the payments), and as
additional consideration for the Employee’s undertakings under sections 6 and 7 below, pay the
Employee the following:
(A) his annual bonus for the fiscal year of BPI
preceding the fiscal year of BPI in which the Compensable Termination occurs, if unpaid at the time
of the Compensable Termination, the amount of such bonus to be determined by the Compensation
Committee of the BPI Board on a basis consistent with the prior bonus determinations with respect
to the Employee or, in the event a Change in Control or Potential Change in Control (as defined in
section 11 below) occurred before the Compensable Termination, consistent with the bonus
determinations with respect to the
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Employee prior to the Change in Control or Potential Change in Control, unless the Board or a
committee of the Board made no bonus determinations with respect to the Employee before the
Compensable Termination or, if applicable, before the Change in Control or Potential Change in
Control, in which case consistent with the Board’s or Board committee’s bonus determinations with
respect to the President of Duramed Research Inc. before the Compensable Termination or, if
applicable, before the Change in Control or Potential Change in Control; and
(B) a prorated annual bonus for the fiscal year of BPI in which the Compensable Termination
occurs, such prorated annual bonus to be determined by multiplying
the “Applicable Average Bonus”
as defined below in this subparagraph 5(a)(i)(B) by a fraction the numerator of which shall be the
number of days elapsed in such fiscal year through (and including) the date on which the
Compensable Termination occurs and the denominator of which shall be the number 365. For purposes
of this Agreement, the “Applicable Average Bonus” means the higher of (I) the average
annual bonus (including any deferred bonus) awarded to the Employee during the three year period
immediately preceding the Compensable Termination or, if the Employee was employed by the Company
for less than three years before the Compensable Termination, during the period of his employment
by the Company prior to the Compensable Termination (annualizing any bonus awarded for less than a
full year of employment), or (II) the average annual bonus (including any deferred bonus) awarded
to the Employee during the three fiscal years of the Company that precede the fiscal year in which
the Compensable Termination occurs or during the portion of such three fiscal years in which he was
employed by the Company (annualizing any bonus awarded for less than a full year of employment);
provided that, if the Compensable Termination occurs after a Change in Control or Potential Change
in Control, the Applicable Average Bonus shall not be less than the average annual bonus (including
any deferred bonus) awarded to the Employee during the three years preceding the date on which the
Change in Control or Potential Change in Control occurred or during the portion of such three years
in which he was employed by the Company (annualizing any bonus awarded for less than a full year of
employment); and
(C) an amount of money (the “Severance Payment”)
equal to two and one-half (21/2) times the Employee’s “Annual Cash Compensation” as hereafter
defined, unless the Severance Payment is payable solely on account of the Employee’s resignation
for Good Reason pursuant to subparagraph 5(d)(v) below (relating to BPI or an Affiliate giving the
Employee notice of non-extension), in which case the Severance Payment shall be equal to one and
one-quarter
(11/4) times the Employee’s “Annual Cash Compensation” as hereafter defined. Except as
otherwise provided hereafter in this subparagraph 5(a)(i)(C), sixty percent (60%) of the Severance
Payment shall be paid in a lump sum within ten days after the date of the Compensable Termination.
The forty percent (40%) balance of the Severance Payment shall be paid in twelve (12) equal monthly
installments one of which shall be paid at the end of each of the first twelve (12) months after
the date of the Compensable Termination, provided, in the case of each of such 12 installments,
that the Employee has not accepted full-time or regular part-time employment with or regularly
served as a consultant to a for-profit
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pharmaceutical company prior to the date for payment of such installment, it being understood and
agreed that the foregoing condition shall not be violated by the Employee’s serving as a member of
a board of directors of a for-profit pharmaceutical company or by his performing consulting
services on an ad hoc basis for such a company. If a Change in Control or Potential Change
in Control as defined in section 11 below occurs (either before or after the Compensable
Termination), the Severance Payment (or, in the case of a Change in Control or Potential Change in
Control that occurs after the Compensable Termination, any portion thereof that remains unpaid at
the time such Change in Control or Potential Change in Control occurs) shall be paid in a lump sum
within ten days after the Compensable Termination (or, in the case of a Change in Control or
Potential Change in Control that occurs after the Compensable Termination, within ten days after
the Change in Control or Potential Change in Control occurs), and the two preceding sentences of
this subparagraph shall not apply. In addition, if the Severance Payment is payable solely on
account of the Employee’s resignation for Good Reason pursuant to subparagraph 5(d)(v) below
(relating to BPI or an Affiliate giving the Employee notice of non-extension), the Severance
Payment shall be paid in a lump sum within ten days after the Employee resigns for such Good
Reason, and the second and third preceding sentences of this subparagraph shall not apply. During
the 18 month period following a Compensable Termination, the Company shall also provide the
Employee with COBRA coverage at its expense. For purposes of this section 5, the Employee’s “Annual
Cash Compensation” shall mean the sum of (I) the Employee’s highest Base Salary (i.e., one year’s
salary at its highest rate), plus (II) the “Applicable Average Bonus” as defined in subparagraph
5(a)(i)(B) above.
(ii) If the term of this Agreement as the same may have been extended in accordance with
the provisions of section 2 above is not extended or further extended because BPI or an Affiliate
gives written notice of non-extension to the Employee as provided in section 2 above, and there is
not Good Cause for termination of the Employee’s employment at the time of giving such notice, and
the Employee does not thereafter resign for Good Reason during the term of this Agreement as
permitted by paragraph 5(d)(v) below, then the Company, subject to fulfillment by the Employee of
his obligations under this Agreement during the balance of the term and his compliance with the
provisions of sections 6 and 7 below, relating to confidential information, non-solicitation and
disparaging remarks, shall, as non-renewal compensation, and as additional consideration for the
Employee’s undertakings under this Agreement including sections 6 and 7 below, pay the Employee an
amount of money (the “Non-Renewal Payment”) equal to the Employee’s Annual Cash Compensation as
defined in subparagraph 5(a)(i)(C) above, in addition to any other amounts to which the Employee
may be entitled hereunder (including without limitation his annual bonus pursuant to paragraph 4(b)
above for the fiscal year of BPI in which his employment terminates and any amounts to which he may
be entitled under section 8, 9 or 10 below) or by law or pursuant to the terms of any compensation
or benefit plan or arrangement in which he participated before his employment terminated. The
Non-Renewal Payment shall be paid in a lump sum within ten days after the date on which the
Employee’s employment terminates. During the 18 month period following the termination of his
employment, the Company shall also provide the Employee with COBRA coverage at its expense.
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(iii) The foregoing provisions of (including any payments
under) this paragraph 5(a) shall be in lieu of any severance pay that may be payable under any plan
or practice of BPI or any Affiliate, but shall be in addition to (and not in lieu of) any payments
to which the Employee may be entitled under sections 8, 9 and 10 below. Subparagraphs 5(a)(i)(C)
and 5(a)(ii) above are intended to be mutually exclusive, and in no event shall such subparagraphs,
either individually or collectively, be construed to require the Company to pay an amount of money
in excess of two and one-half (21/2) times the Employee’s Annual Cash Compensation under such
subparagraphs, either individually or collectively, in addition to the 18 months of COBRA coverage
provided for therein. The Employee shall not be required to mitigate the amount of any payment or
benefit provided for in this Agreement (including but not limited to any payment provided for above
in this paragraph 5(a)) by seeking other employment or otherwise, nor shall any compensation earned
by the Employee in other employment or otherwise reduce the amount of any payment or benefit
provided for in this Agreement.
(b) Termination by BPI or an Affiliate for Good Cause or by the Employee without Good
Reason. If, during the term of this Agreement, the Employee’s employment by the Company and its
subsidiaries is terminated by BPI or an Affiliate for Good Cause or by the Employee without Good
Reason, the Employee shall not be entitled to receive any compensation under section 4 above
accruing after the date of such termination or any payment under paragraph 5(a) above. However, any
obligations of BPI or the Company under sections 8, 9 and 10 shall not be affected by such
termination of employment. The provisions of this paragraph 5(b) shall be in addition to, and not
in lieu of, any other rights and remedies the Company may have at law or in equity or under any
other provision of this Agreement in respect of such termination of employment. However, if during
the term of this Agreement the Employee’s employment is terminated by the Employee without Good
Reason and the Employee gives BPI at least 120 days’ advance notice of such termination, then the
Employee shall not have any obligation or liability to BPI or any Affiliate under this Agreement on
account of such termination of employment, but his obligations under Section 6 and 7 hereof shall
not be affected by such termination of employment.
(c) Good Cause Defined. For purposes of this Agreement,
BPI and its Affiliates shall have “Good Cause” to terminate the Employee’s employment by the
Company during the term of this Agreement only if:
(i) (A) the Employee fails to substantially perform his duties
hereunder for any reason or to devote substantially all his business time exclusively to the
affairs of the Company (including Company activities on behalf of BPI or an Affiliate), other than
by reason of a medical condition that prevents the Employee from substantially performing his
duties hereunder even with a reasonable accommodation by the Company, or fails to obtain the
consent of the BPI Board to his service on the board of directors of another company, and (B) such
failure is not discontinued within a reasonable period of time, in no event to exceed 30 days,
after the Employee receives written notice from BPI or an Affiliate of such failure; or
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(ii) the
Employee commits an act of dishonesty resulting or intended to result directly or indirectly in gain or personal enrichment at the expense of BPI
or an Affiliate, or engages in conduct that constitutes a felony in the jurisdiction in which
the Employee engages in such conduct; or
(iii) the Employee is grossly negligent or engages in willful misconduct or
insubordination in the performance of his duties hereunder; or
(iv) the Employee materially breaches his obligations under section 6 or paragraph 7(a)
below, relating to confidential information and non-solicitation.
Any foregoing provision of this paragraph 5(c) to the contrary notwithstanding, BPI and its
Affiliates shall not have “Good Cause” to terminate the Employee’s employment within three years
after a Change in Control or Potential Change in Control (as such terms are defined in section 11
below) unless (A) the Employee’s act or omission is willful and has a material adverse effect upon
BPI, (B) the BPI Board gives the Employee (I) written notice warning of its intention to terminate
the Employee for Good Cause if the specified act or omission alleged to constitute Good Cause is
not discontinued and, if curable, cured, and (II) a reasonable opportunity after receipt of such
written notice, but in no event less than two weeks, to discontinue and, if curable, cure the
conduct alleged to constitute Good Cause, and (C) the Employee fails to discontinue and, if
curable, cure the act or omission in question; provided that clauses (B) and (C) of this sentence
shall not apply with respect to conduct on the part of the Employee that constitutes a felony in
the jurisdiction in which the Employee engages in such conduct, and, provided further, that this
sentence shall not apply to conduct involving moral turpitude. For all purposes of this Agreement,
no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted
to be done, by him intentionally and in bad faith (i.e., without reasonable belief that his action
or omission was in furtherance of the interests of BPI or an Affiliate).
(d) Good Reason Defined. For purposes of this Agreement, the Employee shall have “Good
Reason” to terminate his employment during the term of this Agreement only if:
(i) the Company fails to pay or provide any amount or benefit that the Company is
obligated to pay or provide under section 4 above or section 8, 9 or 10 below and the failure is
not remedied within 30 days after BPI receives written notice from the Employee of such failure; or
(ii) the Employee is assigned duties, responsibilities or
reporting relationships not contemplated by section 3 above without his consent, or his duties or
responsibilities or power or authority contemplated by section 3 above are limited in any respect
materially detrimental to him, and in either case the situation is not
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remedied within 30 days after BPI receives written notice from the Employee of the situation;
or
(iii) he
is removed from, or not elected or reelected to, the office, title or position of President and Chief Operating Officer of DPI, and BPI and the
Affiliates do not have Good Cause for doing so; or
(iv) BPI or an Affiliate relocates his office outside of either the Company’s principal
executive offices or the greater New York City metropolitan area without his written consent (given
in a personal rather than representative capacity), and the situation is not remedied within 30
days after BPI receives written notice from the Employee of the situation; or
(v) BPI or an Affiliate gives the Employee written notice, in the manner set forth in
paragraph 13(e) or (f) below, prior to any Extension Effective Date, that the term of this
Agreement that is in effect at the time such written notice is given is not to be extended or
further extended, as the case may be; provided that the giving of such written notice to the
Employee shall constitute Good Reason only if and when the Employee shall have performed such of
his duties and responsibilities for such period of time, in no event to exceed ninety (90) days
after the giving of such notice, as the COO, the CEO or the BPI Board may reasonably request in
writing to transition his duties and responsibilities; or
(vi) a Change in Control occurs and as a result thereof either
(A) equity securities of BPI cease to be publicly-traded, or (B) the Employee is not elected or
designated to serve as the sole President and Chief Operating Officer of DPI or its survivor in the
Change in Control; or
(vii) a Change in Control or Potential Change in Control occurs and (A) the dollar value
of the stock optioned to the Employee annually thereafter is less than the average annual dollar
value of the stock that was optioned to the Employee during the four years prior to the Change in
Control or Potential Change in Control, or
(B) the material terms of such options (including without limitation vesting schedules) are less
favorable to the Employee than the material terms of the options that were granted to the Employee
during the four years prior to the Change in Control or Potential Change in Control, and in either
case (A) or (B) the situation is not remedied within 30 days after BPI receives written notice from
the Employee of the situation. For purposes of (A) and (B) of this subparagraph 5(d)(vii), if
free-standing stock appreciation rights are granted to the Employee (such as those described in
paragraph 4(c) above), the stock subject to such rights shall be considered stock that is optioned
to the Employee, and if alternative stock appreciation rights (aka tandem stock appreciation
rights) are granted to the Employee, the stock appreciation rights shall be considered terms of the
options to which they are alternative/tandem; or
(viii) BPI or a Permitted Assignee attempts to assign any of its rights or obligations
under this Agreement other than in accordance with paragraph 13(d)
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below and does not remedy the situation within 30 days after BPI receives written notice from the
Employee of the situation.
In no event shall the Employee’s continued employment after any of the foregoing constitute
his consent to the act or omission in question, or a waiver of his right to terminate his
employment for Good Reason hereunder on account of such act or omission.
(e) Disability
(i) Notwithstanding any provision of this Agreement to the contrary, (A) if during the
term of this Agreement as the same may be extended from time to time pursuant to section 2 above, a
medical condition prevents the Employee, even with a reasonable accommodation by the Company, from
substantially performing his duties hereunder (it being understood that a transitory illness, such
as a cold or flu, that prevents the Employee from substantially performing his duties hereunder
during a brief period is not such a medical condition), then until the date, if any, on which the
Employee recovers from such medical condition (the “Evaluation Period”), BPI or an Affiliate may
terminate the Employee’s employment only pursuant to subparagraph 5(e)(ii) below (a “Disability
Termination”) or for willful misconduct constituting Good Cause under paragraph 5(c) above, and (B)
if any notice of non-extension of the term of this Agreement was given before the Evaluation
Period, or is given during the Evaluation Period, whether by BPI, an Affiliate or the Employee,
pursuant to section 2 above, and, but for this clause (B), the term of this Agreement would expire
during the Evaluation Period as a result of such notice of non-extension having been given, then
the term of this Agreement will automatically be extended without action by any party until the
Employee recovers from such medical condition. For purposes of this paragraph 5(e), the Employee
will be deemed to recover from a medical condition only if and when he both (I) has been able to
substantially perform his duties hereunder (either with or without a reasonable accommodation by
the Company) for more than six months, consecutive or non-consecutive, within any period of 12 or
fewer consecutive months commencing on or after the commencement of the Evaluation Period, and (II)
is not entitled to receive long-term disability (“LTD”) benefits under a LTD plan of BPI or a
Subsidiary.
(ii) Except as otherwise provided in subparagraph 5(e)(i)
above, during the Evaluation Period, BPI or an Affiliate may terminate the Employee’s employment
only in the event of a “Disability”, which for this purpose means that a medical condition either
(A) has prevented the Employee, even with a reasonable accommodation by the Company, from
substantially performing his duties hereunder for six months, consecutive or non-consecutive, in
any period of 12 or fewer consecutive months, or (B) entitles the Employee to receive LTD benefits
under a LTD plan of BPI or any Subsidiary. The Company will give the Employee at least ten (10)
days advance written notice of a Disability Termination. Notwithstanding any provision of this
Agreement to the contrary, a Disability Termination will not be treated as a termination to which
the provisions of paragraph 5(a) or 5(b) apply.
Page 11 of 26
(iii) In the event of a Disability Termination, the Company will pay or provide the
Employee with the following:
(A) With respect to the period ending on the date of the
Disability Termination, the Employee will receive all of the compensation and benefits provided by
Section 4 above. The amount of any compensation payable to the Employee with respect to the period
ending on the date of the Disability Termination may be reduced by (I) any payments which the
Employee receives with respect to the same period because of short- or long-term disability under
any disability plan of BPI or any Subsidiary, and (II) any income (whether from Social Security,
workers compensation or any other source) that is deducted in computing the amount of such payments
under any disability plan of BPI or any Subsidiary;
(B) During the period from the date of the Disability
Termination until the first to occur of (I) the date, if any, on which the Employee recovers from
the disabling medical condition, (II) the Employee’s attainment of age 65, and (III) the death of
the Employee (such period being referred to in subparagraph 5(e)(iii)(C) below as the “LTD
Period”), the Company will pay the Employee a monthly amount of money equal to the excess, if any,
of (aa) over (bb) where (aa) is 60% of one-twelfth (l/12th) of the Employee’s Base
Salary (as defined in subparagraph 4(a) above) immediately before the Disability Termination (i.e.,
60% of the Employee’s monthly salary at its highest rate), and (bb) is the sum of (1) the monthly
LTD benefit (if any) which the Employee receives with respect to the same month under a LTD plan of
BPI or any Subsidiary, plus (2) any income (whether from Social Security, workers compensation or
any other source) that is deducted in computing the amount of such monthly LTD benefit; and
(C) Promptly following the LTD Period as defined in
subparagraph 5(e)(iii)(B) above (and whether or not the Employee received payments pursuant to that
subparagraph during the LTD Period), the Company will pay the Employee or his estate or designated
beneficiary a lump sum amount of money equal to the excess, if any, of (I) over (II) where (I) is
the Severance Payment as defined in subparagraph 5(a)(i)(C) above, and (II) is the cumulative
monthly payments made by the Company to the Employee pursuant to subparagraph 5(e)(iii)(B) above
(if any). In calculating the amount payable pursuant to this subparagraph 5(e)(iii)(C) (including
the payments made pursuant to subparagraph 5(e)(iii)(B) above), no adjustments will be made for
interest or otherwise for the time value of money.
The payments and benefits provided by the foregoing provisions of this subparagraph 5(e)(iii) are
in addition to and not in lieu of any other amounts to which the Employee is entitled by law or
pursuant to the terms of any compensation or benefit plan or arrangement in which he participated
prior to the Disability Termination, and any amounts payable pursuant to section 8, 9 or 10 below.
6. Confidential
Information. The Employee agrees not to disclose, either while
in the Company’s employ or at any time thereafter, to any person not employed by BPI or an
Affiliate, or not engaged to render services to BPI or an Affiliate, except with
Page 12 of 26
the prior written consent of an authorized officer of BPI or an Affiliate or as necessary or
appropriate for the performance of his duties hereunder, any confidential information obtained by
him while in the employ of the Company, including, without limitation, information relating to any
of the inventions, processes, formulae, plans, devices, compilations of information, research,
methods of distribution, suppliers, customers, client relationships, marketing strategies or trade
secrets of BPI or any Affiliate; provided, however, that this provision shall not preclude the
Employee from use or disclosure of information known generally to the public or of information not
considered confidential by persons engaged in the businesses conducted by BPI or any Affiliate, or
from disclosure required by law or court order. The Employee also agrees that upon leaving the
Company’s employ he will not take with him, without the prior written consent of an authorized
officer of the Company, and she will surrender to the Company, any record, list, drawing,
blueprint, specification or other document or property of BPI or an Affiliate, together with any
copy or reproduction thereof, mechanical or otherwise, which is of a confidential nature relating
to BPI or an Affiliate, or without limitation, relating to its or their methods of distribution,
suppliers, customers, client relationships, marketing strategies or any description of any formulae
or secret processes, or which was obtained by him or entrusted to him during the course of his
employment with the Company.
7. Restrictive Covenants
(a)
Non-Solicitation. Employee covenants and agrees that, during his employment by the
Company and during the one year period immediately following the termination of his employment with
the Company for any reason (including, without limitation, a termination of employment by BPI or an
Affiliate without cause and a voluntary termination of employment by the Employee, in either case
whether during the term of this Agreement, at the expiration of the term of this Agreement or at
any time thereafter), he will not solicit or attempt to persuade any employee of BPI or any
Affiliate (except the Employee’s personal secretary or administrative assistant), or any other
person who performs services for BPI or an Affiliate at the time the Employee’s employment
terminates or at any time within one year thereafter, to terminate or reduce or refrain from
engaging in his or her employment or other service relationship with BPI or an Affiliate; provided,
however, that responding to inquiries from any such employees or other persons that are not
initiated by the Employee, and subsequently hiring such employees or other persons following the
termination of their employment with BPI and any Affiliates shall be permitted.
(b)
Specific Enforcement. Employee recognizes and agrees that, by reason of his
knowledge, experience, skill and abilities, his services are extraordinary and unique, that the
breach or attempted breach of any of the restrictions set forth above in this section 7 will result
in immediate and irreparable injury for which the Company will not have an adequate remedy at law,
and that the Company shall be entitled to a decree of specific performance of those restrictions
and to a temporary and permanent injunction enjoining the breach thereof, and to seek any and all
other remedies to which the
Page 13 of 26
Company may be entitled, including, without limitation, monetary damages, without
posting bond or furnishing security of any kind.
(c) Restrictions
Reasonable. Employee specifically and expressly represents and
warrants that (i) he has reviewed and agreed to the restrictive covenants contained in this section
7 and their contemplated operation after receiving the advice of counsel of his choosing; (ii) he
believes, after receiving such advice, that the restrictive covenants and their contemplated
operation are fair and reasonable; (iii) he will not seek or attempt to seek to have the
restrictive covenants declared invalid, and, after receiving the advice of counsel, expressly
waives any right to do so; and (iv) if the full breadth of any restrictive covenant and/or its
contemplated operation shall be held in any fashion to be too broad, such covenant or its
contemplated operation, as the case may be, shall be interpreted in a manner as broadly in favor of
the beneficiary of such covenant as is legally permissible. Employee recognizes and agrees that the
restrictions on his activities contained in this section 7 are required for the reasonable
protection of BPI and its investments; and that the restriction on his activities set forth in
paragraph 7(a) will not deprive the Employee of the ability to earn a livelihood.
(d) Non-Disparagement. Employee covenants and agrees that, during the one year period
immediately following the termination of his employment with the Company for any reason (including,
without limitation, a termination of employment by BPI or an Affiliate without cause and a
voluntary termination of employment by the Employee, in either case whether during the term of this
Agreement, at the expiration of the term of this Agreement or at any time thereafter), he will not
make disparaging remarks about BPI or any Affiliate or any of their officers, directors or
employees, unless required by law or reasonably necessary to assert or defend his position in a
bona fide dispute arising out of or relating to this Agreement or the breach thereof.
(e) Effect
on Termination Payments. The Employee recognizes and agrees that the
Company shall not be obligated to make any payments provided for in paragraph 5 (a) or 5(e) above
if the Employee violates the provisions of section 6 or paragraph 7(a) or 7(d) above during the one
year period immediately following the termination for any reason of his employment with the
Company. In addition, the Employee recognizes and agrees that, if the Employee violates such
provisions, the Company may recoup any payments the Company may have theretofore made pursuant to
paragraph 5(a) or 5(e) above and any payments it may thereafter make under paragraph 5(a) or 5(e).
The foregoing provisions of this paragraph 7(e) shall be in addition to and not by way of
limitation of any other rights and remedies the Company may have in respect of the violation in
question.
8. Indemnification
To the fullest extent permitted by applicable law, the Company shall indemnify, defend and
hold harmless the Employee from and against any and all claims, demands, actions, causes of action,
liabilities, losses, judgments, fines, costs and expenses (including reasonable attorneys’ fees and
settlement expenses) arising from or relating to his service or status as an officer, director,
employee, agent or representative
Page 14 of 26
of BPI or any Affiliate, or in any other capacity in which the Employee serves or has served
at the request of, or for the benefit of, BPI or an Affiliate. The Company’s obligations under this
section 8 shall be in addition to, and not in derogation of, any other rights the Employee may have
against BPI or any Affiliate to indemnification or advancement of expenses, whether by statute,
contract or otherwise.
9. Certain Additional Payments by the Company
(a) Anything in this Agreement (other than the second sentence of this paragraph 9(a)) to the
contrary notwithstanding, in the event it shall be determined that any payment or distribution by
BPI or an Affiliate to or for the benefit of the Employee (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this section 9) (a “Payment”), would be subject to
the excise tax imposed by Section 4999 of the United States Internal Revenue Code (the “Code”) or
any interest or penalties are incurred by the Employee with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Employee shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Employee of all taxes and any benefits that
result from the deductibility by the Employee of such taxes (including, in each case, any interest
or penalties imposed with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. However, if it shall be determined that none of the Payments would be
subject to the Excise Tax if the total Payments were reduced in the aggregate by $25,000 or less,
then in that event the total Payments shall be reduced by the smallest amount (in no event to
exceed $25,000 in the aggregate) necessary to ensure that none of the Payments will be subject to
the Excise Tax. The decision as to which Payments shall be so reduced shall be made by the
Employee, unless allowing the decision to be made by the Employee will result in any income
inclusion pursuant to Code section 409A(a)(l)(A), in which case the Payments shall be reduced in
the chronological order in which they are payable to or on behalf of the Employee.
(b) Subject to the provisions of paragraph 9(a) above and 9(c) below, all determinations
required to be made under this section 9, including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, and whether Payments are to be reduced pursuant to the second sentence of paragraph
9(a) above, shall be made by Deloitte & Touche or such other certified public accounting firm as
may be designated by the Employee (the “Accounting Firm”) which shall provide detailed supporting
calculations both to BPI and the Employee within 15 business days of the receipt of notice from the
Employee that there has been a Payment, or such earlier time as is requested by BPI. In the event
that the Accounting Firm is serving as accountant or auditor for the individual, entity or group
effecting the “change in ownership or effective control” or “change in the ownership of a
substantial portion of assets” (within the
Page 15 of 26
meaning of Code section 280G(b)(2)(A)) that gives rise to the Excise Tax, or in the
event that the Accounting Firm for any reason is unable or unwilling to make the determinations
required hereunder, the Employee shall appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this section 9, shall be paid by the
Company to the Employee within five days of the receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm shall be binding upon the Company and the Employee. As a
result of the uncertainty in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made (an “Underpayment”), consistent with the
calculations required to be made hereunder. In the event that BPI exhausts its remedies pursuant to
paragraph 9(c) and the Employee thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred and any such
Underpayment, along with any penalty and interest imposed with respect to such Underpayment, shall
be promptly paid by the Company to or for the benefit of the Employee.
(c) The Employee shall notify BPI in writing of any claim by the Internal Revenue
Service that, if successful, would require either the payment by the Company of the Gross-Up
Payment or the reduction of Payments pursuant to the second sentence of paragraph 9(a) above. Such
notification shall be given as soon as practicable but no later than ten business days after the
Employee is informed in writing of such claim and shall apprise BPI of the nature of such claim and
the date on which such claim is requested to be paid. The Employee shall not pay such claim prior
to the expiration of the 30-day period following the date on which she gives such notice to BPI (or
such shorter period ending on the date that any payment of taxes with respect to such claim is
due). If BPI notifies the Employee in writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give BPI any information reasonably requested by BPI relating to such claim,
(ii) take such action in connection with contesting such claim as BPI shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by BPI,
(iii) cooperate with BPI in good faith in order effectively to contest such claim,
and
(iv) permit BPI to participate in any proceedings relating to such claim;
Page 16 of 26
provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this paragraph
9(c), BPI shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Employee to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
BPI shall determine, provided, however, that if BPI directs the Employee to pay such claim and xxx
for a refund, the Company shall, if permissible under Section 402 of the Xxxxxxxx-Xxxxx Act of
2002, advance the amount of such payment to the Employee, on an interest-free basis or, if such an
advance is not permissible thereunder, pay the amount of such payment to the Employee as additional
compensation, and shall indemnify and hold the Employee harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or additional compensation; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the Employee with
respect to which such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, BPI’s control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Employee of an amount advanced or paid by the Company
pursuant to paragraph 9(a) or 9(c), the Employee becomes entitled to receive any refund with
respect to such claim, the Employee shall (subject to the Company’s complying with the requirements
of paragraph 9(c)) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to paragraph 9(c), a determination is made
that the Employee shall not be entitled to any refund with respect to such claim and BPI does not
notify the Employee in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
10. Certain Enforcement Matters
(a) If, after a Change in Control or Potential Change in Control, a dispute arises (i)
with respect to this Agreement or the breach thereof, or (ii) with respect to the Employee’s or the
Company’s or BPI’s rights or obligations under this Agreement, including but not limited to any
such dispute between the Employee and BPI, the
Page 17 of 26
Company shall pay or reimburse the Employee for all reasonable costs and expenses (including
court costs, arbitrators’ fees and reasonable attorneys’ fees and disbursements) the Employee
incurs in connection with such dispute, including without limitation costs and expenses he incurs
to obtain payment or otherwise enforce his rights under this Agreement, or to obtain payment of
costs and expenses due under this paragraph 10(a). In addition, the Company shall pay the Employee
such additional amount (a “Gross Up”) as will be sufficient, after the Employee pays his tax
liability with respect to the Gross Up from the Gross Up, to pay all of his federal, state and
local tax liability with respect to any costs and expenses that are paid by the Company pursuant to
this paragraph 10(a). The Company shall promptly pay or reimburse the Employee for all such costs
and expenses as he incurs them, upon presentation of reasonable documentation of such costs and
expenses, and shall promptly pay the related Gross Up as and when it pays or reimburses costs and
expenses. The Employee shall not be obligated to repay any such costs, expenses or Gross Up unless
it is finally determined by the trier of fact in a non-appealable judicial or arbitral decision or
ruling (as applicable) that the Employee’s principal positions with respect to the principal
matter(s) in dispute were unreasonable and pursued in bad faith.
(b) Any payments to which the Employee may be entitled under this Agreement, including,
without limitation, under section 5, 8, 9 or 10 hereof, shall be made forthwith on the applicable
date(s) for payment specified in this Agreement. If for any reason the amount of any payment due to
the Employee cannot be finally determined on that date, such amount shall be estimated on a good
faith basis by the Company and the estimated amount shall be paid no later than within 10 days
after such date. As soon as practicable thereafter, the final determination of the amount due shall
be made and any adjustment requiring a payment to or from the Employee shall be made as promptly as
practicable.
(c) Any controversy or claim arising, after a Change in Control or Potential Change in
Control, out of or related to this Agreement or the breach thereof, shall be settled by binding
arbitration in the City of New York, in accordance with the employment dispute arbitration rules of
the American Arbitration Association then in effect, and the arbitrator’s decision shall be binding
and final and judgment upon the award rendered may be entered in any court having jurisdiction
thereof, except that the Employee may elect to have any such controversy or claim settled by
judicial determination in lieu of arbitration by bringing a court action, if he is the plaintiff
or, if he is not the plaintiff, demanding such judicial determination within the time to answer any
complaint in any arbitration action that may be commenced.
11. Change in Control
(a) The term “Change in Control” as used in this Agreement means a change of control of
BPI of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), whether or not BPI is then subject to such reporting requirement; provided that, whether or
not any of the following
Page 18 of 26
events would constitute a change of control of such a nature, a Change in Control shall be
deemed to occur for purposes of this Agreement if and when any of the following events occur:
(i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) (a “Person”), other than—
(A) BPI,
(B) a Subsidiary,
(C) a trustee or other fiduciary holding securities under an employee
benefit plan of BPI or a Subsidiary, or
(D) an underwriter engaged in a distribution of BPI stock to
the public with BPI’s written consent,
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of Voting Securities that represent more than thirty percent (30%) of the combined
voting power of the then outstanding Voting Securities. However, if the Person in question is an
institutional investor whose investment in Voting Securities is purely passive when such Person
becomes such a more than thirty percent beneficial owner of Voting Securities, then such event
(i.e., such Person’s becoming a more than thirty percent beneficial owner of Voting Securities)
shall not be deemed to constitute a Change in Control under this
subparagraph 11(a)(i) for so long
as (and only for so long as) such Person’s investment in Voting Securities remains purely passive;
or
(ii) the stockholders of BPI approve a merger, consolidation, recapitalization or
reorganization of BPI or a Subsidiary, reverse split of any class of Voting Securities, or an
acquisition of securities or assets by the Company or a Subsidiary, or consummation of any such
transaction if stockholder approval is not obtained, other than (A) any such transaction in which
the holders of outstanding Voting Securities immediately prior to the transaction receive, with
respect to such Voting Securities (or, in the case of a transaction in which BPI is the surviving
corporation or a transaction involving a Subsidiary, retain), voting securities of the surviving or
transferee entity representing more than fifty percent (50%) of the total voting power outstanding
immediately after such transaction, with the voting power of each such continuing holder relative
to other such continuing holders not substantially altered in the transaction, or (B) any such
transaction which would result in BPI or a Related Party beneficially owning more than 50 percent
of the voting securities of the surviving entity outstanding immediately after such transaction; or
(iii) the stockholders of BPI approve a plan of complete liquidation of BPI or an
agreement for the sale or disposition by BPI of all or substantially
all of BPP’s assets other than
any such transaction which would result in a
Page 19 of 26
Related Party owning or acquiring more than 50 percent of the assets owned by BPI
immediately prior to the transaction; or
(iv) the persons who were members of the BPI Board
immediately before a tender or exchange offer for shares of Common Stock of BPI by any person other
than BPI or a Related Party, or before a merger or consolidation of BPI or a Subsidiary, or
contested election of the BPI Board, or before any combination of such transactions, cease to
constitute a majority of the BPI Board as a result of such transaction or transactions.
(b) For purposes of this Agreement, including paragraph 11(a) above:
(i) the term “Related Party” shall mean (A) a Subsidiary, (B) an employee or group of
employees of BPI or any Subsidiary, (C) a trustee or other fiduciary holding securities under an
employee benefit plan of BPI or any Subsidiary, or (D) a corporation or other form of business
entity owned directly or indirectly by the stockholders of BPI in substantially the same proportion
as their ownership of Voting Securities;
(ii) the term “Subsidiary” means a corporation or other form of
business association of which shares (or other ownership interests) having more than 50% of the
voting power are, or in the future become, owned or controlled, directly or indirectly, by BPI; and
(iii) the term “Voting Securities” shall mean any securities of BPI which carry the right
to vote generally in the election of directors.
(c) For purposes of this Agreement, a “Potential Change in Control” means that (i) BPI or a
Subsidiary enters into an agreement, the consummation of which would result in the occurrence of a
Change of Control; or (ii) the BPI Board adopts a resolution to the effect that, for purposes of
this Agreement, a potential change in control has occurred.
(d) A “Change in Control” as such term is used in this Agreement shall also be deemed to occur
if either Xxxx Laboratories. Inc. (a Delaware corporation), or a Permitted Assignee to which BPI
assigns any of its rights or obligations under this Agreement in accordance with paragraph 13(d)
below, ceases to be an Affiliate.
12. Severability; Survival
(a) In the event that any provision of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining provisions of this
Agreement not so invalid or unenforceable shall be unaffected thereby and shall remain in full
force and effect to the fullest extent permitted by law; and
Page 20 of 26
(b) Any provision of this Agreement which may for any reason be invalid or
unenforceable in any jurisdiction shall remain in effect and be enforceable in any jurisdiction in
which such provision shall be valid and enforceable.
(c) The provisions of sections 6, 7, 8, 9 and 10 and paragraph 5(e) of this Agreement, and any
other provision of this Agreement which is intended to apply, operate or have effect after the
expiration or termination of the term of this Agreement, or at a time when the term of this
Agreement may have expired or terminated, shall survive the expiration or termination of the term
of this Agreement for any reason.
13. General
Provisions
(a) No right or interest to or in any payments to be made under this Agreement shall be
subject to anticipation, alienation, sale, assignment, encumbrance, pledge, charge or hypothecation
or to execution, attachment, levy or similar process, or assignment by operation of law. All
payments to be made by the Company hereunder shall be subject to the withholding of such amounts as
the Company may determine it is required to withhold under the laws or regulations of any
governmental authority, whether foreign, federal, state or local.
(b) To the extent that the Employee acquires a right to receive payments from the Company
under this Agreement, such right shall be no greater than the right of an unsecured general
creditor of the Company. All payments to be made hereunder shall be paid from the general funds of
the Company and no special or separate fund shall be established and no segregation of assets shall
be made to assure payment of any amount hereunder.
(c) This Agreement shall be governed by and construed and enforced in accordance with the laws
of the State of New York, without giving effect to the principles of conflicts of laws of that
State.
(d) This Agreement shall be binding upon and inure to the benefit of BPI, its successors and
permitted assigns, and the Employee, his heirs, devisees, distributees and legal representatives.
BPI may assign any or all of its rights and obligations under this Agreement to any Subsidiary or
Affiliate (collectively, “Permitted Assignees”), and, if any rights or obligations are assigned
pursuant to this sentence, the assignee may thereafter assign any or all of such rights and
obligations to any other Permitted Assignee; provided that (i) the Employee’s title, authority,
duties and responsibilities, reporting relationships and office location immediately before any
such assignment are not changed in any respect materially detrimental to the Employee in connection
with such assignment without the written consent of the Employee (given in a personal capacity
rather than a representative capacity), (ii) no such assignment shall relieve BPI of any past,
present or future payment or benefit obligation hereunder without the express written consent of
the Employee (also given in a personal capacity), and (iii) no assignment may be made after a
Change in Control or Potential Change in Control without the express written consent of the
Employee (also given in a personal capacity).
Page 21 of 26
In the
event of an assignment in accordance with this paragraph, (A) the term “Company”
as used in this Agreement shall be deemed to refer, with respect to the period commencing on the
effective date of such assignment, to the Permitted Assignee to which such rights or obligations
are assigned and, with respect to any obligations that are assigned hereunder, to BPI and such
Permitted Assignee jointly and severally, and (B) the term
“BPI” as used in this Agreement shall
continue to refer exclusively to BPI as defined on page 1 of this Agreement and its successors. The
foregoing provisions of this paragraph are intended to enable BPI to assign its right to employ the
Employee under this Agreement to an Affiliate but only if (I) such assignment does not change to
the material detriment of the Employee his title, authority, duties, responsibilities, reporting
relationships, office location or compensation, (II) such assignment does not result in any
Affiliate replacing BPI as an obligor under this Agreement, and (III) the Employee expressly
consents in writing to any assignment that is to occur after a Change in Control or Potential
Change in Control. For the avoidance of doubt, as an example, the Employee would not have Good
Reason under subparagraph 5(d)(ii), (iii) or (iv) above if as a result of an assignment in
accordance with this paragraph the Employee were to cease to be employed by BPI as President and
Chief Operating Officer of DPI, he were employed by the Permitted Assignee as President and Chief
Operating Officer of DPI, and his authority, duties, responsibilities, reporting relationships and
office location were to continue to be those described in subparagraphs 3(a) and 3(b) above as in
effect immediately before the assignment. The term “BPI” as used in this Agreement shall include
any successor to BPI by merger or operation of law, and the term
“Company” shall include any
successor to the relevant Permitted Assignee. The rights and obligations of the Employee hereunder
are personal to the Employee and may not be assigned by the Employee; provided that nothing herein
shall prevent the Employee from assigning the right to any amount that may be payable under this
Agreement after the death of the Employee by will or the laws of descent and distribution or to a
beneficiary designated by the Employee with the written consent of BPI.
(e) Any notice or other communication to BPI pursuant to any provision of this Agreement shall
be given in writing and will be deemed to have been delivered:
(i) when delivered in person to the General Counsel of BPI; or
(ii) one week after it is deposited in the United States certified or registered mail,
postage prepaid, addressed to the General Counsel of BPI at 000 Xxxxxxxx Xxxxx Xxxx, Xxxxxxxxx
Xxxx, Xxx Xxxxxx 00000 or at such other address of which BPI may from time to time give the
Employee written notice in accordance with paragraph 13(f) below.
(f) Any notice or other communication to the Employee pursuant to any provision of the
Agreement shall be given in writing and will be deemed to have been delivered:
(i) when delivered to the Employee in person, or
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(ii) one week after it is deposited in the United States certified or registered
mail, postage prepaid, addressed to the Employee at his address as it appears on the records of the
Company or at such other address of which the Employee may from time to time give BPI written
notice in accordance with paragraph 13(e) above.
(g) No provision of this Agreement may be amended, modified or waived unless such
amendment, modification or waiver shall be agreed to in a writing signed by the Employee and an
authorized officer of BPI.
(h) This instrument contains the entire agreement of the parties relating to the subject
matter of this Agreement and supersedes and replaces all prior agreements and understandings with
respect to such subject matter, and the parties have made no agreements, representations or
warranties relating to the subject matter of this Agreement which are not set forth herein.
(i) BPI and DPI agree to amend this Agreement on or before December 31, 2005 (or such
later date, if any, to which the December 31, 2005 date referred to in Q&A-19 of IRS Notice 2005-1
is extended) in the respects that BPI reasonably determines to be necessary or advisable to enable
the Employee to receive all amounts and benefits payable under this Agreement at the times herein
provided (or as close thereto as is practicable and permissible) without inclusion of any amounts
or benefits in the Employee’s income pursuant to Section 409A(a)(l)(A) of the Code. BPI and DPI
also agree to use commercially reasonable efforts to administer this Agreement, and operate any
deferred compensation plans in which the Employee participates from time to time that are
aggregated with this Agreement for purposes of Section 409A of the Code (e.g., account balance
plans, nonaccount balance plans, and plans that are neither account balance nor nonaccount balance
plans), in good faith compliance with Section 409 A of the Code to the extent necessary to avoid
inclusion of any amounts or benefits payable hereunder in the Employee’s income pursuant to Section
409A(a)(l)(A) of the Code.
14. Representations
and Warranties of the Employee. The Employee represents and
warrants that:
(a) his negotiation, execution and performance of this Agreement, and his compliance with the
terms and conditions of this Agreement, does not and will not conflict with or result in the breach
by him of any agreement to which he is a party or by which he may be bound,
(b) in connection with the negotiation of this Agreement he has not violated, and in
connection with his employment with the Company he will not violate, any non-solicitation covenant,
non-competition covenant or other similar covenant or agreement by which he is or may be bound, and
Page 23 of 26
(c) in connection with the negotiation of this Agreement or his
employment with the Company he has not used or disclosed, and will not use or disclose, any
confidential or proprietary information he may have obtained in connection with employment with any
prior employer.
[This space left blank intentionally]
Page 24 of 26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
| XXXX PHARMACEUTICALS, INC. | ||
| By: /s/ [ILLEGIBLE]
|
||
[SEAL] |
||
Attest: |
||
/s/ [ILLEGIBLE]
|
||
Secretary |
||
| DURAMED PHARMACEUTICALS, INC. | ||
| By: /s/ [ILLEGIBLE]
|
||
[SEAL] |
||
Attest: |
||
/s/ [ILLEGIBLE]
|
||
Secretary |
||
| /s/ [ILLEGIBLE]
|
||
| Employee |
Page 25 of 26
Appendix
Examples Illustrating Intended Operation of Extension Provisions of Paragraph 2
Example
1:
Facts: BPI and its Affiliates do not give the Employee, and the Employee does not
give BPI, written notice of non-extension before the date that is six months before
the third anniversary of the Commencement Date.
Result: Effective as of the date that is six months before the third anniversary of
the Commencement Date, the term of the Agreement is extended 12 months, so that it
will expire on the fourth anniversary of the Commencement Date unless further
extended in accordance with the provisions of Paragraph 2 of the Agreement.
Example
2:
Facts: BPI or an Affiliate gives the Employee, or the Employee gives BPI,
written notice of non-extension before the date that is six months before the
third anniversary of the Commencement Date.
Result: The term of the Agreement is not extended, and expires on the third
anniversary of the Commencement Date.
Example
3:
Facts: BPI and its Affiliates do not give the Employee, and the Employee does not
give BPI, written notice of non-extension before the date that is six months before
the fourth anniversary of the Commencement Date.
Result: Effective as of the date that is six months before the fourth anniversary
of the Commencement Date, the term of the Agreement as extended in accordance with
Example 1 above is further extended 12 months, so that it will expire on the fifth
anniversary of the Commencement Date unless further extended in accordance with the
provisions of Paragraph 2 of the Agreement.
Example
4:
Facts: BPI or an Affiliate gives the Employee, or the Employee gives BPI, written
notice of non-extension on or after the date that is six months before the fourth
anniversary of the Commencement Date and before the date that is six months before
the fifth anniversary of the Commencement Date.
Result: The term of the Agreement as extended is not further extended, and expires
on the fifth anniversary of the Commencement Date.
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