February 27, 2007 Mr. Richard F. Pops Re: Your employment agreement with Alkermes, Inc. dated February 7, 1991 Dear Richard,
Exhibit 10.1
February 27, 2007
Xx. Xxxxxxx X. Xxxx
Re: Your employment agreement with Alkermes, Inc. dated February 7, 1991
Dear Xxxxxxx,
This letter agreement (the “Agreement”) serves as an amendment to and replacement of your
employment agreement with Alkermes, Inc. (the “Company”) dated February 7, 1991 (the “1991
Agreement”) and contains terms and conditions approved by the Compensation Committee of the
Company.
The 1991 Agreement will be modified as follows commencing April 1, 2007:
1. Position and Duties. The title of your position will be Chairman of the Board of
Directors of the Company. You will be responsible for oversight of strategic issues affecting the
Company and maintaining key relationships in the industry. In addition, during the initial year of
the term of this Agreement (as defined below), you will dedicate the time and resources necessary
to ensure a smooth transition to the individual taking on the role of CEO of the Company.
2. Compensation and Related Matters.
(a) The term of this Agreement shall extend from April 1, 2007 (the “Commencement Date”) until
the third anniversary of the Commencement Date (the “term of this Agreement”). During the term of
this Agreement, you will be compensated at your existing salary (adjusted annually to account for
inflation) and continue to be eligible for all your current employee benefits, including
participation in the Company 401K, health and dental plans and long-term disability and life
insurance.
(b) For a period of one year, you will be eligible to receive your current target bonus under
the Company named-executive bonus plan and restricted stock commensurate with recent equity awards
based on performance criteria to be determined by the Compensation Committee of the Board.
Thereafter, any bonus and/or equity award would be based on criteria established by the
Compensation Committee of the Board.
3. Termination. Your employment may be terminated without any breach of this Agreement in
the following circumstances:
(a) Death. Your employment hereunder will terminate upon your death.
(b) Disability. If you become disabled and are unable to perform the essential
functions of your position under this Agreement, the Board may remove you from your
responsibilities. Notwithstanding any such removal or reassignment, you shall continue to receive
your full base salary (less any disability pay or sick pay benefits to which you may be entitled
under the Company’s policies) and benefits (except to the extent that you may be ineligible for one
or more such benefits under the applicable plan terms) for a period of time equal to the lesser of
(i) six (6) months or (ii) the balance of the term of this Agreement, and your employment may be
terminated by the Company at any time thereafter. Nothing in this Subparagraph 4(b) shall be
construed to waive your rights, if any, under existing law including, without limitation, the
Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. and the Americans with Disabilities
Act, 42 U.S.C. §12101 et seq.
(c) Termination by Company for Cause. At any time during the term of this Agreement,
the Company may terminate your employment hereunder for Cause if such termination is approved by
not less than a majority of the Board at a meeting of the Board at which you would not participate
called and held for such purpose. For purposes of this Agreement, “Cause” shall mean: (A) conduct
constituting a material act of willful misconduct in connection with the performance of your
duties; (B) commission of a felony or any misdemeanor involving moral turpitude, deceit, dishonesty
or fraud, or conduct that would reasonably be expected to result in material injury to the
Company; (C) continued, willful and deliberate non-performance of duties hereunder (other than
by reason of your physical or mental illness, incapacity or disability) which has continued for
more than thirty (30) days following written notice of such non-performance from the Board; (D) a
violation of the Company’s employment policies which has continued following written notice of such
violation from the Board, or (E) willful failure to cooperate with a bona fide internal
investigation or an investigation by regulatory or law enforcement authorities, after being
instructed by the Company to cooperate, or the willful destruction or failure to preserve documents
or other materials known to be relevant to such investigation or the willful inducement of others
to fail to cooperate or to produce documents or other materials.
(d) Termination Without Cause. At any time during the term of the Agreement, the
Company may terminate your employment hereunder without Cause if such termination is approved by a
majority of the Board (excluding yourself) at a meeting of the Board called and held for such
purpose. Any termination by the Company of your employment under this Agreement which does not
constitute a termination for Cause under Subparagraph 3(c) or result from the death or disability
under Subparagraph 3(a) or (b) shall be deemed a termination without Cause.
(e) Termination by You. At any time during the term of this Agreement, you may
terminate your employment hereunder for any reason, including but not limited to Good Reason. For
purposes of this Agreement, “Good Reason” shall mean that you have complied with the “Good Reason
Process” following the occurrence of any of the following events: (A) a substantial diminution or
other substantive adverse change, not consented to by you, in the nature or scope of your
responsibilities, authorities, powers, functions or duties; (B) any removal, during the term of
this Agreement, of your title that you do not consent to; (C) an involuntary reduction in your base
salary except for across-the-board reductions similarly affecting all or substantially all
management employees; (D) a breach by the Company of any of its other material obligations under
this Agreement, or (E) the involuntary relocation of the Company’s offices at which you are
principally employed to a location more than thirty (30) miles from such offices, or the
requirement by the Company that you be based anywhere other than the Company’s offices on an
extended basis. “Good Reason Process” shall mean that (i) you reasonably determine in good faith
that a “Good Reason” event has occurred; (ii) you notify the Company in writing of the occurrence
of the Good Reason event; (iii) you cooperates in good faith with the Company’s efforts, for a
period not less than thirty (30) days following such notice, to modify your employment situation in
a manner acceptable to you and the Company; and (iv) notwithstanding such efforts, one or more of
the Good Reason events continues to exist and has not been modified in a manner acceptable to you.
If the Company cures the Good Reason event in a manner acceptable to you during the thirty (30) day
period, Good Reason shall be deemed not to have occurred.
(f) Notice of Termination. Except for termination as specified in Subparagraph 3(a),
any termination of your employment by the Company or any such termination by you shall be
communicated by written Notice of Termination to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.
(g) Date of Termination. “Date of Termination” shall mean: (A) if your employment is
terminated by your death, the date of your death; (B) if your employment is terminated on account
of disability or by the Company for Cause, the date on which Notice of Termination is given; (C) if
your employment is terminated by the Company under Subparagraph 3(d), thirty (30) days after the
date on which a Notice of Termination is given; and (D) if your employment is terminated by you
under Subparagraph 3(e), thirty (30) days after the date on which a Notice of Termination is given.
4. Compensation Upon Termination.
(a) Termination Generally. If your employment with the Company is terminated for any
reason during the term of this Agreement, the Company shall pay or provide to you any earned but
unpaid base salary, incentive compensation earned but not yet paid, unpaid expense reimbursements,
accrued but unused vacation and any vested benefits you may have under any employee benefit plan of
the Company (the “Accrued Benefit”)
(b) Termination by the Company Without Cause or by You with Good Reason. If your
employment is terminated by the Company without Cause, or you terminate your employment for Good
Reason,
during the term of this Agreement, then the Company shall pay you your Accrued Benefit. In
addition, subject to your signing a general release of claims in a form and manner satisfactory to
the Company,
(i) the Company shall pay you an amount equal to two times your Average Compensation (the
“Severance Amount”). The Severance Amount shall be paid out in substantially equal bi-weekly
installments over twenty-four months, in arrears. For purposes of this Agreement, “Average
Compensation” shall mean (i) the average of your base salary in effect as of the date of the
Notice of Termination and your prior year’s base salary plus (ii) the average of your bonus under
the Company named-executive bonus plan for the prior two fiscal years; and
(ii) subject to your co-payment of premium amounts at the active employees’ rate, you shall be
entitled to continued participation in the Company’s group health, dental and vision program for
eighteen (18) months (continuation of health benefits under this Subparagraph shall reduce and
count against your rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”)), and continued life and long term disability insurance for twenty-four months;
and
(iii) anything in this Agreement to the contrary notwithstanding, if at the time of your
termination of employment you are considered a “specified employee” within the meaning of Section
409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the “Code”), and if any payment
that you become entitled to under this Agreement is considered deferred compensation subject to
interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the
application of Section 409A(a)(2)(B)(i) of the Code, then no such payment shall be payable prior to
the date that is the earliest of (i) six months after your Date of Termination, (ii) your death, or
(iii) such other date as will cause such payment not to be subject to such interest and additional
tax, and the initial payment shall include a catch-up amount covering amounts that would otherwise
have been paid during the first six-month period but for the application of this Subparagraph
4(b)(iii).
5. Litigation and Regulatory Cooperation. During and after your employment, you will
cooperate fully with the Company in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of the Company which relate to
events or occurrences that transpired while you were employed by the Company. Your full
cooperation in connection with such claims or actions shall include, but not be limited to, being
available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf
of the Company at mutually convenient times. During and after your employment, you also shall
cooperate fully with the Company in connection with any investigation or review of any federal,
state or local regulatory authority as any such investigation or review relates to events or
occurrences that transpired while you were employed by the Company. The Company shall reimburse
you for any reasonable out-of-pocket expenses incurred in connection with your performance of such
obligations.
6. Integration. This Agreement constitutes the entire agreement between you and the
Company with respect to the subject matter hereof and supersedes all prior agreements between us,
including the 1991 Agreement, with respect to any related subject matter, other than the Change in
Control Employment Agreement dated December 19, 2000.
7. Enforceability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
8. Waiver. No waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving party. The failure of any party to require the performance of any term or
obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not
prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
9. Notices. Any notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent by overnight courier or
by registered or certified mail, postage prepaid, return receipt requested, to you at the address
you have on file with the Company or, in the case of
the Company, at its main offices, attention of the Chief Executive Officer, and shall be effective
on the date of delivery in person or by courier or three (3) days after the date mailed.
10. Amendment. This Agreement may be amended or modified only by a written instrument
signed by you and by a duly authorized representative of the Company.
11. Governing Law. This is a Massachusetts contract and shall be construed under and be
governed in all respects by the laws of the Commonwealth of Massachusetts, without giving effect to
the conflict of laws principles of such Commonwealth. With respect to any disputes concerning
federal law, such disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First Circuit.
12. Change in Control Payments. Notwithstanding anything in this letter to the contrary,
in the event that your employment terminates under circumstances that would entitle you to
severance payments under the Change in Control Employment Agreement dated December 19, 2000 entered
into between the Company and you, you may elect to collect severance under either this Agreement or
the Change in Control Employment Agreement, but not both. Nothing herein shall be interpreted to
affect your rights to receive gross-up payment pursuant to Section 10 of the Change in Control
Employment Agreement.
| Sincerely, ALKERMES, INC. |
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| /s/ Xxxxxxx X. Xxxxxxx | ||||
| By: Xxxxxxx X. Xxxxxxx Vice President, Corporate Development |
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Agreed and Accepted this 27th day of February, 2007:
| /s/ Xxxxxxx X. Xxxx | ||||
| Xxxxxxx X. Xxxx | ||||
