Exhibit 10.66
EMPLOYMENT AGREEMENT
BETWEEN
ANDRX CORPORATION
AND
XXXXXXX X. XXXX
TABLE OF CONTENTS
Page
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1. Employment..........................................................1
2. Position and Responsibilities.......................................1
3. Term of Employment..................................................1
4. Compensation........................................................2
5. Sign-On Incentives..................................................4
6. Key-Man Insurance...................................................5
7. Termination.........................................................5
8. Severance Compensation..............................................9
9. Restrictive Covenants..............................................10
10. No Duty to Mitigate; Set-off.......................................12
11. Notices............................................................12
12. Arbitration........................................................13
13. Attorneys' Fees....................................................13
14. Governing Law......................................................14
15. Waiver.............................................................14
16. Entire Understanding...............................................14
17. Binding Effect.....................................................14
18. Assignment.........................................................14
Appendix A................................................................A-1
Appendix B................................................................B-1
Appendix C................................................................C-1
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, effective the 3rd day of June, 2002
("EFFECTIVE DATE"), by and between Andrx Corporation ("COMPANY"), a Delaware
corporation with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx,
Xxxxxxx 00000, and Xxxxxxx X. Xxxx ("EXECUTIVE"). In consideration of the mutual
covenants herein contained, Company and Executive hereby agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Executive, and Executive
agrees to enter the employ of Company, upon the terms and conditions herein
provided. Executive warrants to Company that his execution of this Agreement and
performance by him of the duties hereunder will not violate the terms of any
other agreements to which Executive is a party.
2. POSITION AND RESPONSIBILITIES.
2.1 During the Employment Term, Executive shall serve as
Company's Chief Executive Officer with overall charge and responsibility for the
business and affairs of Company. Executive shall report directly to Company's
Board of Directors (the "BOARD"). Executive also agrees to serve, if elected, as
an officer and director of any Subsidiary of Company without additional
compensation. Company shall use its best efforts to have Executive appointed as
a member of the Board as soon as practicable following the Effective Date, and
the Company shall at all times during the Employment Term (as defined in Section
3 below) nominate Executive for election to the Board, and use its best efforts
to cause Executive to be elected to the Board. For purposes of this Agreement,
the term "SUBSIDIARY" shall mean any corporation in which Company owns at least
a majority of that corporation's voting stock and at least a majority of each
class of that corporation's nonvoting stock.
2.2 During the Employment Term, and excluding any periods of
(a) vacation and sick leave to which Executive is entitled or (b) any other
leave approved in advance in writing by the Board, Executive shall devote his
full skill, best efforts and substantially all of his business time and
attention to the business and affairs of Company. It shall not be a violation of
this Agreement for Executive to: (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach occasional courses or seminars at educational institutions, (iii) manage
personal investments, (iv) serve as a member of the board of directors of the
companies listed at number 1 on Appendix A attached hereto, and (v) until
September 4, 2003, perform consulting services for the company listed at number
2 on Appendix A attached hereto, so long as (x) Executive obtains the prior
written consent of the Board to engage in such activities described in clauses
(i) and (ii) and (y) such activities under clauses (i), (ii), (iii), (iv), and
(v) do not interfere, in any substantial respect, with Executive's
responsibilities hereunder.
3. TERM OF EMPLOYMENT. Executive's employment shall commence on the
date Executive executes this Agreement; provided, however, the Employment Term
for purposes of this Agreement shall commence on the Effective Date and, unless
earlier terminated pursuant to SECTION 7, end on the third (3rd) anniversary of
the Effective Date (the "INITIAL TERM"); provided, however, that on the third
(3rd) anniversary of the Effective Date, the Employment
Term shall automatically be extended by one (1) year unless either Company or
Executive terminate such automatic extension by giving no less than six (6)
months written notice to the other of such termination; and further provided,
that on the fourth (4th) anniversary of the Effective Date and each subsequent
anniversary of the Effective Date thereafter, the Employment Term shall be
extended for one (1) year unless either Company or Executive terminate such
automatic extension by giving no less than sixty (60) days written notice to the
other of such termination prior to the applicable anniversary of the Employment
Term. The Initial Term and any extensions thereof shall be referred to herein as
the "EMPLOYMENT TERM".
4. COMPENSATION.
4.1 BASE SALARY. For all services rendered by Executive in any
capacity during the Employment Term, including, without limitation, services as
an executive, officer, director, or member of any committee, Company, commencing
with the Effective Date and for a period of twelve (12) months thereafter shall
pay an annualized salary to Executive at the rate of six hundred thousand
dollars ($600,000). For each twelve (12)-month period thereafter Executive's
base compensation shall be subject to upward adjustment by the Compensation
Committee of the Board in its sole discretion. Such annualized salary, as
adjusted from time to time, shall be referred to herein as "BASE SALARY."
4.2 ANNUAL BONUS. For each calendar year during the Employment
Term, Executive shall be eligible to receive an annual performance bonus (the
"BONUS") based upon achievement of performance criteria to be mutually agreed to
by Company and Executive, with a target bonus amount each year equal to no less
than forty percent (40%) of Executive's Base Salary (the "TARGET BONUS") and a
maximum of no less than eighty percent (80%) of Base Salary. Executive shall
receive a Bonus for calendar year 2002 equal to or greater than the product of
the Target Bonus multiplied by a fraction, with a numerator equal to the number
of days during the period beginning on the Effective Date and ending on December
31, 2002 or, if earlier, the Termination Date, and the denominator equal to
three hundred sixty-five (365).
4.3 ANNUAL STOCK OPTION AWARDS. In each of 2003, 2004 and
2005, Executive shall be granted an award of non-qualified stock options
pursuant to Company's 2000 Stock Option Plan on not less than forty thousand
(40,000) shares of Company's common stock. Each such stock option award shall be
granted as soon as practicable after Company's receipt of final audited
financials for the immediately prior calendar year. Such options shall be
granted with an exercise price equal to the fair market value of Company's
common stock on the date of grant. In addition, such options shall vest in such
manner as the Compensation Committee of the Board determines, however, such
manner will be consistent with the vesting methodology of the Performance-Vest
Options described in SUBSECTION 5.1(B) below.
4.4 FRINGE BENEFITS. During the Employment Term, Company shall
provide Executive with the following:
(a) AUTOMOBILE. An automobile allowance of at least
$1,000.00 per month.
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(b) MEDICAL INSURANCE AND PREMIUM REIMBURSEMENT.
Medical and dental insurance coverage and medical and dental insurance
premium reimbursement for Executive and Executive's spouse and eligible
dependent children.
(c) EXPENSE REIMBURSEMENT. Payment or reimbursement
of reasonable travel and other expenses (including without limitation
entertainment expenses incurred primarily for the benefit of Company)
reasonably incurred by Executive in performing his duties under this
Agreement and in carrying out and promoting the business of Company,
upon presentation by Executive, from time to time, of an itemized
account and receipts ("VOUCHERS") of such expenditures in such detail
as may reasonably be required by Company.
(d) VACATION. Four (4) weeks of vacation with full
pay each twelve (12)-month period during the Employment Term, at such
times as shall be mutually agreed upon by Executive and the Board. No
portion of any unused vacation time shall be carried over to a
subsequent period, nor shall Executive receive any compensation in
addition to that provided herein for any unused vacation time.
(e) PROFESSIONAL DEVELOPMENT. Subject to review by
the Board, during the Employment Term, Executive may attend seminars
and conferences relating to the business of Company (with full pay).
Company shall pay or reimburse Executive for all fees, reasonable
travel and other expenses reasonably incurred in connection with
attendance at such seminars and conferences. Reimbursements shall be
made upon presentation of Vouchers by Executive.
(f) RELOCATION. Company shall pay all reasonable
costs of relocation of Executive and Executive's dependents to the Ft.
Lauderdale, Florida metropolitan area in accordance with Company's
relocation policy for senior executives, consistent with past practices
and as supplemented as follows:
(i) Company shall reimburse Executive for
reasonable temporary living expenses for Executive and
Executive's dependents in the Ft. Lauderdale, Florida
metropolitan area for a period not to exceed six (6) months
from the Effective Date;
(ii) Company shall reimburse Executive for
reasonable travel and accommodation expenses for Executive and
Executive's dependents for up to three (3) house selection
trips;
(iii) Company will make available to
Executive the opportunity to sell Executive's present primary
residence at appraised value either to a relocation firm
mutually acceptable to Executive and Company or directly to
Company; provided, however, that prior to such sale
Executive's primary residence must be listed at appraised
value for no less than four (4) months and Executive must
notify Company of Executive's election of such sale within
nine (9) months of the Effective Date and such sale shall be
completed on or about the first anniversary of the Effective
Date, as mutually agreed to by the parties; and
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(iv) All relocation payments and benefits
described in this Section 4.4(f) will be fully
grossed-up for any applicable taxes.
(g) OTHER BENEFITS. Executive shall also be entitled
to participate in any written country-club program, pension or profit
sharing plan, stock purchase plan, stock option plan, group life
insurance plan, hospitalization insurance plan, medical services plan,
or any other written plan of Company now or hereafter existing for the
benefit of Executive and other senior executives or officers generally.
Company shall provide Executive with life insurance coverage (under
Company's group life insurance plan or otherwise) with a death benefit
of not less than one million dollars ($1,000,000), payable to a
beneficiary or beneficiaries as may be designated by Executive.
5. SIGN-ON INCENTIVES.
5.1 SIGN-ON STOCK OPTION GRANTS. On the date Executive
executes this Agreement, Executive shall be granted two (2)
non-qualified stock option awards pursuant to Company's 2000 Stock
Option Plan, as follows:
(a) An award of ten-(10) year options with respect to
two hundred fifty thousand (250,000) shares of Company's
common stock (the "TIME-VEST OPTION GRANT"). The Time-Vest
Option Grant shall vest as follows:
(i) eighty-three thousand (83,000) options
shall vest on each of the one-(1) year and two-(2)
year anniversaries of the Effective Date, and
(ii) eighty-four thousand (84,000) options
shall vest on the three-(3) year anniversary of the
Effective Date.
(b) A grant of ten-(10) year options with respect to
two hundred fifty thousand (250,000) shares of Company's
common stock (the "PERFORMANCE-VEST OPTIONS"). The
Performance-Vest Options shall fully vest on the seven-(7)
year anniversary of the Effective Date, subject to accelerated
vesting of all or portions of the award upon the achievement
of certain performance criteria as described in Appendix B
hereto.
(c) The exercise price for both the Time-Vest Options
and the Performance-Vest Options shall be the last closing
price for Company's common stock on the date Executive
executes this Agreement.
(d) Company agrees that it shall not make any public
announcement concerning Executive's employment by Company
until the day following the day on which the stock options
awards pursuant to this SECTION 5.1 have been granted.
5.2 Sign-On Restricted Stock Unit Grant.
(a) On the Effective Date, Executive shall be granted
an award of one hundred thousand (100,000) restricted stock
units (the "RSU GRANT") with each unit representing the right
to acquire one (1) share of common stock of Company. Except as
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otherwise provided in Section 5.2(c) and Section 8 herein, the RSU
Grant shall vest as follows: twenty five thousand (25,000) units shall
vest on each of the seventh (7th), eighth (8th), ninth (9th) and tenth
(10th) anniversaries of the Effective Date. For purposes of tax
withholding, Company shall withhold shares of common stock of Company
at the time Company common stock underlying the RSU Grant are
distributed (or otherwise become taxable) to Executive, and shall pay
only the statutory minimum withholding amounts to the applicable tax
authorities in accordance therewith.
(b) Subject to the approval by the Compensation Committee,
Executive may defer receipt of the common stock to be received upon the
vesting of the RSU Grant by electing to defer such receipt by no later
than the earlier of (i) the date six (6) months prior to the applicable
vesting date or (ii) the December 31 immediately prior to the
applicable vesting date; provided, however, that in the sole discretion
of the Compensation Committee and based on the opinion of tax counsel,
the election to defer may be required to be made at a different time or
may be disallowed in its entirety. In addition, the parties hereto will
attempt in good faith to mitigate any loss of deduction under Section
162(m) of the Internal Revenue Code (the "CODE"); provided that
Executive shall not be under any obligation to incur any economic loss
to effect such mitigation.
(c) Upon termination of Executive's employment (i) by Company
without Cause, (ii) by Executive for Good Reason, (iii) due to
Disability or death, or (iv) upon the failure of Company to continue
Executive's employment under this Agreement so that severance
compensation would be paid under SECTION 8 hereto, then the vesting of
the RSU Grant shall accelerate so that Executive shall be vested in a
number of restricted stock units equal to the product of one hundred
thousand (100,000) multiplied by a fraction with a numerator equal to
the number of complete months from the Effective Date to the date of
termination of Executive's employment and a denominator equal to one
hundred twenty (120).
6. KEY-MAN INSURANCE. At any time during the Employment Term, Company
shall have the right to insure the life of Executive for the sole benefit of
Company, in such amounts, and with such terms, as it may determine. All premiums
payable thereon shall be the obligation of Company. Executive shall have no
interest in any such policy, but shall cooperate with Company in taking out such
insurance by submitting to physical examinations, by supplying all information
required by the insurance company, and by executing all necessary documents,
provided that no financial obligation is imposed upon Executive by any such
documents.
7. TERMINATION. This Agreement shall terminate upon the occurrence of
any one of the events set forth below:
7.1 CAUSE. Company may, at any time and in its sole
discretion, terminate the employment of Executive hereunder for Cause, effective
as of the date of written notice (a "TERMINATION NOTICE") to Executive
specifying the nature of such Cause (the "TERMINATION DATE"). "CAUSE" shall
mean:
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(a) The conviction of Executive, or a plea of guilty
or NOLO CONTENDERE, to a felony;
(b) Executive's willful misconduct, gross negligence,
fraud, embezzlement, or theft, resulting in demonstrable harm to
Company; or
(c) Executive's willful failure to carry out the
legal directions of the Board;
provided, however, that for the purposes of
determining whether conduct constitutes willful misconduct or willful
failure, conduct on Executive's part shall be considered "willful"
unless such conduct is done by Executive in good faith and with a
reasonable belief that Executive's conduct was in the best interests of
Company. Notwithstanding the foregoing, Company may not terminate
Executive's employment for Cause unless (i) a determination that Cause
exists is made and approved by a majority of Company's Board of
Directors, (ii) Executive is given at least fifteen (15) days written
notice of the Board meeting called to make such determination, (iii)
Executive and Executive's legal counsel are given the opportunity to
address such meeting, and (iv) if the conduct constituting Cause is
capable of cure, such conduct is not cured to the Board's complete
satisfaction in its sole discretion within fourteen (14) days following
Executive's receipt of written notice of his termination for Cause. If
the employment of Executive is terminated pursuant to this SECTION 7.1,
Company shall have no further obligations to Executive after the
Termination Date other than the payment of (i) accrued but unpaid Base
Salary, (ii) unpaid or unreimbursed benefits and expenses (including
relocation payments and any gross-up) through the Termination Date, and
(iii) earned but unpaid Bonus (the "ACCRUED OBLIGATIONS"), or as
otherwise required by law.
7.2 TERMINATION BY COMPANY FOR NO REASON. Company may, at any time, and
in its sole discretion, terminate the employment of Executive hereunder for any
or no reason by delivery to him of a Termination Notice. Such termination shall
be effective on the date of the Termination Notice; provided, however, that
Company shall be obligated to pay Executive severance compensation following the
Termination Date as set forth in SECTION 8 hereof so long as Executive executes,
and does not revoke within the seven (7) days following such execution, a
general waiver and release in substantially the form of Appendix C attached
hereto in favor of Company prior to the payment of any such severance
compensation.
7.3 RESIGNATION BY EXECUTIVE.
(a) RESIGNATION FOR GOOD REASON. If at any time during the
Employment Term Executive resigns from the employ of Company for Good
Reason (as defined in the next sentence), Company shall be obligated to
pay Executive severance compensation following the Termination Date as
set forth in SECTION 8 hereof; provided, however, that Executive
executes, and does not revoke within the seven (7) days following such
execution, a general waiver and release in substantially the form of
Appendix C attached hereto in favor of Company prior to the payment of
any such severance compensation. "GOOD REASON" shall mean the
occurrence of any of the
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following, without Executive's prior written consent, during
the thirty (30)-day period immediately preceding the date
Executive terminates employment with Company:
(i) A material adverse change in Executive's
position, duties, authority or responsibilities with respect
to Executive's employment by Company as contemplated by this
Agreement, excluding any isolated and inadvertent change not
taken in bad faith and which is remedied by Company within ten
(10) days after receipt of written notice thereof given by
Executive;
(ii) A reduction in, or failure to provide,
Executive's compensation, benefits and perquisites described
in this Agreement (other than any reduction applicable to
substantially all members of senior management), other than an
isolated and inadvertent reduction not committed in bad faith
and which is remedied by Company within ten (10) days after
receipt of written notice thereof given by Executive;
(iii) A change in Executive's principal work location
if such new principal work location is (x) more than fifty
(50) miles from Executive's principal work location on the
Effective Date and (y) more than fifty (50) miles from
Executive's principal residence as of the date of such change
in Executive's principal work location; or
(iv) The failure of any successor of Company to
assume in writing all obligations imposed on the applicable
assignor hereunder by the sixtieth (60th) day following such
succession, unless such assumption occurs by operation of law.
(b) RESIGNATION WITHOUT GOOD REASON. Executive shall provide
Company with sixty (60) days written notice of Executive's resignation
without Good Reason. If Executive resigns without Good Reason, Company
shall have no further obligations to Executive after the Termination
Date other than payment of the Accrued Obligations, or as otherwise
required by law.
7.4 TERMINATION IN CASE OF DISABILITY OR DEATH.
(a) If Executive, due to physical or mental injury, illness,
disability or incapacity, shall fail to render the services provided
for in this Agreement for a consecutive period of six (6) months or for
an aggregate one hundred eighty (180) days in any three hundred and
sixty five (365) day period, Company may, at its option, terminate
Executive's employment hereunder upon thirty (30) days' written notice
to Executive. Disability shall mean, for purposes of this Agreement,
physical or mental disability preventing Executive from performing
Executive's duties hereunder for the period above specified as
determined by the written opinion of a physician selected in good faith
by Company and agreed to by Executive, with such agreement not to be
unreasonably withheld. If the employment of Executive is terminated
pursuant to this SECTION 7.4(A), Company shall have no further
obligations to Executive hereunder after the Termination Date other
than (i) paying the Accrued Obligations, (ii) providing medical, dental
and life
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insurance for the one (1)-year period following the Termination Date
and (iii) vesting and payment of the RSU Grant as described in SECTION
5.2(C), or as otherwise required by law.
(b) If Executive shall die during the Employment Term, this
Agreement and Executive's employment hereunder shall terminate
immediately upon Executive's death. If the employment of Executive is
terminated pursuant to this SECTION 7.4(B), Company shall have no
further obligations to Executive hereunder after the Termination Date
other than (i) paying the Accrued Obligations, (ii) providing medical
and dental insurance to Executive's eligible dependents for the one
(1)-year period following the Termination Date and (iii) vesting and
payment of the RSU Grant as described in SECTION 5.2(C).
7.5 EXECUTIVE'S RIGHT TO TERMINATE UPON CHANGE IN CONTROL.
(a) In the event that at any time during the Employment Term
there is a Change in Control of Company (as hereinafter defined),
Executive shall, in the exercise of Executive's sole discretion and
upon the provision of thirty (30) days written notice to Company, be
entitled to terminate his employment hereunder during the eighteen
(18)-month period beginning on the date on which the Change in Control
of Company occurs and Company shall in such event pay (i) the Accrued
Obligations and (ii) the severance compensation provided in SECTION 8.
herein following the Termination Date, provided that "three hundred
percent (300%)" shall be inserted in place of "one hundred fifty
percent (150%)" where it appears in SECTION 8.1(B) herein, and
"thirty-six (36) month" shall be inserted in place of "eighteen (18)
month" where it appears in SECTION 8.1(C) herein.
(b) As used herein, a "CHANGE IN CONTROL OF COMPANY" shall be
deemed to have occurred if (i) any person (including any individual,
firm, partnership or other entity) together with all Affiliates and
Associates (as defined under Rule 12b-2 of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") of such person, but excluding (A) a
trustee or other fiduciary holding securities under an executive
benefit plan of Company or any subsidiary of Company, (B) a corporation
owned, directly or indirectly, by the stockholders of Company in
substantially the proportions as their ownership of Company, (C)
Company or any subsidiary of Company, or (D) Executive, together with
all Affiliates and Associates of Executive, is or becomes the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of Company
representing 40% or more of the combined voting power of Company's then
outstanding securities, such person being hereinafter referred to as an
Acquiring Person; (ii) individuals who, on the date hereof, are
Continuing Directors shall cease for any reason to constitute a
majority of Company's Board; (iii) the stockholders of Company approve
a merger or consolidation of Company with any other entity, other than
a merger or consolidation that would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the combined voting
power of the voting securities of Company or such surviving entity
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outstanding immediately after such merger or consolidation, or (iv) the
stockholders or Company approve a plan of complete liquidation of
Company or an agreement for the sale or disposition by Company of all
or substantially all of Company's assets. For purposes of this Section,
the term "CONTINUING DIRECTOR" shall mean (1) any member of the Board,
while such person is a member of the Board, who was a member of the
Board prior to the date of this Agreement, or (2) any person who
subsequently becomes a member of the Board, while such person is a
member of the Board (excluding an Acquiring Person or a representative
of any Acquiring Person), if such person's nomination for election or
election to the Board is recommended or approved by a majority of the
Continuing Directors.
7.6 NONRENEWAL OF EMPLOYMENT TERM BY COMPANY. If (i) Company does not
renew the Employment Term in accordance with SECTION 3 above and (ii) Executive
remains employed by Company on a continuous basis until the end of the
Employment Term, Executive shall be entitled to the same severance payments and
benefits as provided in connection with a termination pursuant to SECTION 7.2
above as if Company had terminated Executive's employment without Cause as of
the last day of the Employment Term.
7.7 NONRENEWAL OF EMPLOYMENT TERM BY EXECUTIVE. If Executive does not
renew the Employment Term in accordance with SECTION 3 above, Executive shall be
entitled to the same payments and benefits as provided in SECTION 7.3(B) above,
as if Executive had terminated his employment without Good Reason as of the last
day of the Employment Term.
8. SEVERANCE COMPENSATION.
8.1 In the event Executive's employment hereunder is
terminated by Company pursuant to SECTION 7.2 or SECTION 7.6 hereof, or by
Executive pursuant to SECTION 7.3(A) or SECTION 7.5 hereof, Company shall:
(a) within thirty (30) days of such termination of employment,
pay Executive the Accrued Obligations;
(b) within thirty (30) days of such termination of employment,
pay Executive a lump-sum payment (the "SEVERANCE PAYMENT") equal to one
hundred fifty percent (150%) of the sum of (i) the Base Salary plus
(ii) the most recent Target Bonus, or, if greater, the most recent
Bonus received by Executive;
(c) during the eighteen (18)-month period beginning on the
date of termination of employment, continue to provide Executive with
(i) the benefits described in SUBSECTIONS 4.4(A), (B) and (G) for which
being an active employee is not a legal requirement; provided, however,
that medical and dental insurance shall, to the extent applicable, be
provided to Executive through Company providing the full premium for
such insurance through COBRA continuation coverage;
(d) pay Executive a lump-sum payment equal to the actual Bonus
Executive would have received (if such Bonus would have in fact been
paid based on Company performance) if Executive's employment had not
terminated multiplied by a fraction, with a numerator equal to the
number of days Executive is employed by
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Company in the year in which the termination of Executive's employment
occurs and the denominator equal to three hundred sixty-five (365),
payable when such Bonus is paid to other senior executives of Company;
(e) accelerate the vesting of any outstanding Time-Vest
Options, any outstanding options granted pursuant to SECTION 4.3 above
and any other option awards granted to Executive during the Employment
Term that would have vested as of the later of (i) the date twelve (12)
months following the Termination Date, or (ii) the end of the Initial
Term (with option exercisability continuing until the earlier of the
end of the option term or five years); and
(f) accelerate vesting of Executive's RSU Grant pursuant to
SUBSECTION 5.2(C) above.
8.2 If any payment to Executive would trigger "golden parachute" excise
taxes pursuant to Section 4999 of the Code (or any successor provision), a
gross-up payment will be provided in an amount sufficient to make Executive
whole for applicable excise taxes and all income, employment, additional excise
taxes or any interest or penalties with respect to such gross-up payment (the
"GROSS-UP PAYMENT"). All determinations concerning whether a Gross-Up Payment is
due to Executive and the amount of such Gross-Up Payment will be made by a
nationally recognized firm of certified public accounts (the "ACCOUNTING FIRM")
selected by Company and subject to the approval of Executive, such approval not
to be unreasonably withheld. If the Accounting Firm determines that any Gross-Up
Payment is due Executive, Company will pay the required Gross-Up Payment to
Executive or on Executive's behalf within ten (10) business days after receipt
of such determination and calculations. If the Accounting Firm determines that
no "golden parachute" excise taxes would be triggered, it will, at the same time
as it makes such determination, furnish Executive with an opinion that Executive
has substantial authority not to report any excise tax on Executive's federal,
state, local income or other tax return. Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment will be binding upon Company and
Executive.
9. RESTRICTIVE COVENANTS.
9.1 CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges
that the list of Company's customers, as it may exist from time to time, its
financial data, and its future plans and its trade secrets are valuable, special
and unique assets of Company. Except in connection with Executive's duties
hereunder, at no time will Executive disclose any such list or information, or
any part thereof to any person, firm, corporation, association or other entity
for any unauthorized reason or purpose whatsoever. In the event of a breach or
threatened breach by Executive of the provisions of this SECTION 9.1, Company
shall notify Executive, in writing, of the nature of Executive's breach of the
provisions hereof, and if such breach is repeated and continuing, shall be
entitled to an injunction restraining Executive from disclosing, in whole or in
part, such list or information, or from rendering any services to any person,
firm, corporation, association or other entity to whom such list or information,
in whole or in part, has been disclosed or is threatened to be disclosed.
Nothing herein shall be construed as prohibiting Company from pursuing any other
remedies available to it for such breach or threatened breach, including
recovery of damages from Executive.
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9.2 NON-COMPETE AND NON-SOLICITATION. During the Employment Term and
for a period of one (1) year immediately thereafter, Executive covenants and
agrees as follows:
(a) Executive shall not, without the prior written consent of
Company, Participate in the management of any Competing Business. For
purposes of this SUBSECTION 9.2(A) "PARTICIPATE" shall mean: (A)
holding a position (including, but not limited to, employee,
consultant, principal, member, agent, officer, director, partner or
shareholder) in which Executive directly manages such Competing
Business; (B) holding a position (including, but not limited to,
employee, consultant, principal, member, agent, officer, director,
partner or shareholder) in which anyone else who directly manages such
Competing Business is in Executive's reporting chain or
chain-of-command, regardless of the number of reporting levels between
them; or (C) providing input, advice, guidance, or suggestions
regarding the management of such Competing Business to anyone
responsible therefore. For purposes of the immediately prior sentence,
shareholder shall not mean a less than one percent (1%) shareholder of
a publicly traded company or a less than five percent (5%) shareholder
of a privately held company. "COMPETING BUSINESS" shall mean any
business entity or group of business entities, regardless of whether
organized as a corporation, partnership (general or limited), joint
venture, association or other organization or entity that designs,
develops, produces, offers for sale or sells a product or service that
can be used as a substitute for, or is generally intended to satisfy
the same customer needs for, any one or more products or services (i)
in a substantial stage of design or development, (ii) designed or
developed, (iii) manufactured, (iv) produced or (v) offered for sale or
sold by a Company business as of the Termination Date.
(b) Executive shall not directly or indirectly solicit or
encourage any employee of Company who was an employee of Company as of
the Termination Date, to leave Company or accept any position with any
other entity.
(c) Executive shall not directly or indirectly contact any
then-existing customers or vendors of Company for the purpose of
soliciting or encouraging such customers or vendors to alter their
relationship with Company in any way that would be adverse to Company.
(d) In the event any of the foregoing covenants shall be
determined by any court or arbitrator of competent jurisdiction to be
unenforceable by reason of extending for too great a period of time,
over too great a geographical area or by reason of its being too
extensive in any other respect, it shall be interpreted to extend only
over the maximum period of time for which it may be enforceable, over
the maximum geographical area as to which it may be enforceable, and/or
to the maximum extent in all other respects as to which it may be
enforceable, all as determined by such court or arbitrator. The
invalidity or unenforceability of any particular provision of this
SECTION 9 shall not affect the other provisions hereof, which shall
continue in full force and effect.
9.3 REMEDY. Executive acknowledges that Company has no adequate remedy
at law and will be irreparably harmed if Executive breaches or threatens to
breach the provisions of SECTIONS 9.2(A), 9.2(B) OR 9.2(C) of this Agreement,
and, therefore, agrees that Company shall
11
be entitled to injunctive relief to prevent any breach or threatened breach of
such Sections and that Company shall be entitled to specific performance of the
terms of such Sections in addition to any other legal or equitable remedy it may
have. Nothing in this Agreement shall be construed as prohibiting Company from
pursuing any other remedies at law or in equity that it may have or any other
rights that it may have under any other agreement.
10. NO DUTY TO MITIGATE; SET-OFF. Company agrees that if Executive's
employment is terminated during the Employment Term, Executive shall not be
required to seek other employment or to attempt in any way to reduce any amounts
payable to Executive by Company pursuant to this Agreement. Further, the amount
of the Severance Payment provided for in this Agreement shall not be reduced by
any compensation earned by Executive or benefit provided to Executive as the
result of employment by another employer or otherwise. Except as otherwise
provided herein, Company's obligations to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including without limitation, any set-off,
counterclaim, recoupment, defense or other right which Company may have against
Executive. Executive shall retain any and all rights under all pension plans,
welfare plans, equity plans and other plans, including other severance plans,
under which Executive would otherwise be entitled to benefits.
11. NOTICES. All notices required to be given under this Agreement
shall be in writing, sent certified mail, return receipt requested, postage
prepaid, to the following addresses or to such other addresses as either may
designate in writing to the other party:
If to Company, then:
Andrx Corporation
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: General Counsel
with a copy to:
Vedder, Price, Xxxxxxx & Kammholz
000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to Executive, then:
Xxxxxxx X. Xxxx
0000 Xxxxx Xxxxxxxx Xxxx
Xxx Xxxx, XX 00000
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with a copy to:
Willkie, Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
12. ARBITRATION. Any dispute or controversy between Company and
Executive, whether arising out of or relating to this Agreement, the breach of
this Agreement, or otherwise, shall be settled by arbitration administered by
the American Arbitration Association ("AAA") in accordance with its Commercial
Arbitration Rules then in effect, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any
arbitration shall be held before a single arbitrator who shall be selected by
the mutual agreement of Company and Executive, unless the parties are unable to
agree to an arbitrator, in which case, the arbitrator will be selected under the
procedures of the AAA. The arbitrator shall have the authority to award any
remedy or relief that a court of competent jurisdiction could order or grant,
including, without limitation, the issuance of an injunction. However, either
party may, without inconsistency with this arbitration provision, apply to any
court having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award is
rendered or the controversy is otherwise resolved. Except as necessary in court
proceedings to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of Company and Executive. Notwithstanding any choice
of law provision included in this Agreement, the United States Federal
Arbitration Act shall govern the interpretation and enforcement of this
arbitration provision. The arbitration proceeding shall be conducted in Dade or
Broward County. Florida or such other location to which the parties may agree.
Company shall pay the costs of any arbitrator appointed hereunder and the costs
of such arbitration. This Agreement shall constitute a written agreement to
submit any such dispute or controversy to arbitration within the meaning of the
Florida Arbitration Code and shall confer jurisdiction on the Courts of the
State of Florida to enforce such agreement to arbitrate and to enter judgment on
an award in accordance with said Florida Arbitration Code.
13. ATTORNEYS' FEES.
13.1 If Executive is the successful party to any arbitration or
litigation between or among any of the parties to this Agreement, then he shall
be entitled to recovery a reasonable attorney's fees, arbitration fees and court
costs from the Company; if he is not the successful party to any arbitration or
litigation between or among any of the parties to this Agreement, then costs of
the arbitrators and other similar costs in connection with an arbitration shall
be shared equally by the parties and all other costs, such as attorneys' fees
incurred by each party, shall be borne by the party incurring such costs.
13.2 Upon Executive providing Company with copies of detailed
statements for legal services, Company shall reimburse Executive for the
reasonable fees and expenses of legal counsel retained by Executive in
negotiating this Agreement.
13
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida. Any arbitration,
lawsuits or other proceedings related to this Agreement or the transactions
herein described shall be commenced and held in Dade or Broward County, Florida
or such other location as the parties mutually agree.
15. WAIVER. The waiver by either party hereto of any breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party hereto.
16. ENTIRE UNDERSTANDING. This Agreement contains the entire
understanding of the parties relating to the employment of Executive by Company.
It may not be changed orally but only by an agreement in writing signed by the
party or parties against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
17. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of Company, its successors and assigns and Executive and his heirs
and legal representatives.
18. ASSIGNMENT. Executive acknowledges that the services to be rendered
by Executive are unique and personal. Accordingly, Executive may not assign any
of Executive's rights (except as specifically permitted herein) or delegate any
of Executive's duties or obligations under this Agreement, except with the
written permission of Company.
IN WITNESS WHEREOF, each of the parties have executed this Agreement as
of the dates written below.
ANDRX CORPORATION
By: /s/ Xxxxxx X. Xxxx, Ph.D.
-------------------------------------
Its: President
--------------------------------
Date: May 18, 2002
EXECUTIVE
/s/ Xxxxxxx X. Xxxx
-----------------------------------------
Xxxxxxx X. Xxxx
Date: May 18, 2002
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APPENDIX A
COMPANIES FOR PURPOSES OF SECTION 2.2
1. Companies for board memberships: Millipore Corporation and OraSure
Technologies, Inc.
2. Company for consulting: Xxxxxxx-Xxxxx Squibb Company.
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XXXXXXXX X
OPTION ACCELERATORS
1. For 50,000 option shares each, with no more than two accelerations -
1.1 Following a Victory (as defined below) in the Prilosec
litigation, by maintaining an Average Stock Price (as defined below) of at least
$125 per share for a three-month period of time during which there is not more
than one additional generic competitor
1.2 Following a Victory in the Prilosec litigation, by
maintaining an Average Stock Price of at least $80 per share for a three-month
period of time during which there is not more than two (2) additional generic
competitors
1.3 Following a Victory in the Prilosec litigation, by
maintaining an Average Stock Price of at least $60 per share for a three-month
period of time during which there are three or more additional generic
competitors
1.4 Following a Loss in the Prilosec litigation, by
maintaining an Average Stock Price of at least $45 per share for a three-month
period of time
1.5 Following a settlement with Astra of the patent issues
relating to the Prilosec litigation, by maintaining an Average Stock Price of at
least $80 per share for a three-month period of time.
1.6 For purposes of this Section 1 of Appendix B, a "VICTORY"
shall mean a either (i) a judicial determination of non-infringement or
invalidity with respect to each of the patents at issue in Company's Prilosec
litigation pending in the United States District Court for the Southern District
of New York ("COURT DECISION") or (ii) a Board approved launch of one or more
strengths of the Company's generic version of Prilosec followed by a Court
Decision.
1.7 For purposes of this Section 1 of Appendix B, "AVERAGE
STOCK PRICE" shall equal the sum of the closing price of Company's common stock
reported on the National Association of Securities Dealers Automated Quotation
Market System ("NASDAQ"), or on the principal securities exchange on which
Company's common stock is then traded, for each trading day during the
applicable three-month period, divided by the number of trading days during such
three-month period.
1.8 For purposes of this Section 1 of Appendix B, a "LOSS"
shall mean a judicial determination that Company's ANDA product infringes any
valid and enforceable patents at issue in Company's Prilosec litigation pending
in the United States District Court for the Southern District of New York.
2. For 40,000 option shares -
Maintaining audited total net sales for the Company's controlled
release generic products (as a whole) at a level that is at least 20% of the
brand opportunity on the date of launch, for at
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least a two year period of time; either including or excluding Prilosec, in both
the numerator and denominator. For this purpose, the "brand opportunity" shall
be determined by referring to IMS or other widely recognized databases which
estimate the amount of revenues that the brand product derived during the 12
month period preceding the date on which the Company launched its controlled
release generic product. This accelerator shall only apply once.
3. For 50,000 option shares each -
By maintaining the following audited average earnings per share levels,
with either R&D spending of at least 20% of Company product sales or an increase
of at least 25% in R&D spending from the prior year: $4.00 for the year ended
December 31, 2003; $5.00 for the year ended December 31, 2004; and $6.25 for the
year ended December 31, 2005, in each case excluding earnings derived during the
180-day period of marketing exclusivity for generic Prilosec.
4. For 30,000 option shares -
By generating audited brand-product net sales in excess of $225,000,000
during either of the calendar years 2004 or 2005, but in each case excluding
sales derived from products hereafter acquired by Company and such sales shall
be included only to the extent that the profits from such sales are earned by
Company. Thus, for example, if Company were to co-market Altocor with another
company, and each company earns a share of the profits of the other, for this
purpose Company brand sales revenues would include only its profit percentage of
the revenues derived from its and the other company's respective sales forces.
5. For 25,000 option shares -
Maintaining an average growth rate of at least 30% in audited net sales
of distributed products for two full calendar years, beginning January 1, 2003.
All amounts reflected herein shall be determined in accordance with
generally accepted accounting principles of the United States, consistently
applied, using audited financials and adjusting for any stock dividend or split,
recapitalization, merger, consolidation or other similar corporate change or
distribution of stock or property by the Company.
The Compensation Committee of the Board may, in its sole discretion, at
any time and from time to time, modify the foregoing accelerators and the
amounts thereof, but such modifications (if made) shall be only to benefit
Executive.
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APPENDIX C
GENERAL RELEASE OF ALL CLAIMS
1. For valuable consideration, the adequacy of which is hereby
acknowledged, the undersigned ("EXECUTIVE"), for himself, his spouse, heirs,
administrators, children, representatives, executors, successors, assigns, and
all other persons claiming through Executive, if any (collectively,
"RELEASERS"), does hereby release, waive, and forever discharge Andrx
Corporation (the "COMPANY"), Anda Generics, Inc., Andrx, Andrx Pharmaceuticals,
Inc., Andrx Laboratories, Inc., Cybear, Inc., and all their subsidiaries,
affiliates, related organizations, and all present, past and future employees,
officers, agents, directors, attorneys, successors, and assigns (collectively,
the "RELEASEES") from, and does fully waive any obligations of Releasees to
Releasers for, any and all liability, actions, charges, causes of action,
demands, damages, or claims for relief, remuneration, sums of money, accounts or
expenses (including attorneys' fees and costs) of any kind whatsoever, whether
known or unknown or contingent or absolute, which heretofore has been or which
hereafter may be suffered or sustained, directly or indirectly, by Releasers in
consequence of, arising out of, or in any way relating to Executive's employment
with the Company or any of its affiliates and the termination of Executive's
employment. The foregoing release and discharge, waiver and covenant not to xxx
includes, but is not limited to, all claims and any obligations or causes of
action arising from such claims, under common law including wrongful or
retaliatory discharge, breach of contract or public policy and any action
arising in tort including libel, slander, defamation or intentional infliction
of emotional distress, and claims under any federal, state or local statute
including Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1866 and 1871 (42 U.S.C. ss. 1981), the National Labor Relations Act, the Age
Discrimination in Employment Act (ADEA), the Fair Labor Standards Act, the
Employee Retirement Income Security Act, the Americans with Disabilities Act of
1990, the Rehabilitation Act of 1973, or the discrimination or employment laws
of any state or municipality, and/or any claims under any express or implied
contract which Releasers may claim existed with Releasees. This also includes a
release by Executive of any claims for breach of contract, wrongful discharge
and all claims for alleged physical or personal injury, emotional distress
relating to or arising out of Executive's employment with the Company or the
termination of that employment; and any claims under the WARN Act or any similar
law, which requires, among other things, that advance notice be given of certain
work force reductions. This release and waiver does not apply to any claims or
rights that may arise after the date Executive signs this General Release. The
foregoing release does not cover: (1) any right to indemnification now existing
pursuant to applicable insurance or under the Articles of Incorporation or
By-laws of the Company regardless of when any claim is filed, (2) any right to
xxx or take other action to enforce the Employment Agreement between Company and
Executive, effective ______________ (the "EMPLOYMENT AGREEMENT") or (3) to
assert defenses in the event that a claim is asserted against Executive by the
Releasees (the "Non-Released Claims").
2. Executive and Company shall publicly tell persons that Executive's
employment was amicably terminated as a result of conflicting management styles.
Executive agrees that Executive shall not at any time engage in any form of
conduct or make any statements or representations that disparage or otherwise
impair the reputation, goodwill or commercial interests of any of the Releasees.
Company agrees that it shall not at any time engage in any
C-1
form of conduct or make any statements or representations that disparage or
otherwise impair the reputation of Executive.
3. Excluded from this release and waiver are any claims which cannot be
waived by law, including but not limited to the right to participate in an
investigation conducted by certain government agencies. Executive does, however,
waive Executive's right to any monetary recovery should any agency (such as the
Equal Employment Opportunity Commission) pursue any claims on Executive's
behalf. Executive represents and warrants that Executive has not filed any
complaint, charge, or lawsuit against the Releasees with any government agency
or any court.
4. Executive agrees never to xxx Releasees in any forum for any claim
covered by the above waiver and release language, except that Executive may
bring a claim under ADEA to challenge this General Release and to bring a claim
with respect to the Non-Released Claims. If Executive violates this General
Release by suing Releasees, other than under ADEA or as otherwise set forth in
Section 1 hereof, Executive shall be liable to the Company for its reasonable
attorneys' fees and other litigation costs incurred in defending against such a
suit. Nothing in this General Release is intended to reflect any party's belief
that Executive's waiver of claims under ADEA is invalid or unenforceable, it
being the interest of the parties that such claims are waived.
5. Executive acknowledges and recites that:
(a) Executive has executed this General Release knowingly and
voluntarily;
(b) Executive has read and understands this General Release in
its entirety;
(c) Executive has been advised and directed orally and in
writing (and this subparagraph (c) constitutes such written direction)
to seek legal counsel and any other advice he wishes with respect to
the terms of this General Release before executing it;
(d) Executive's execution of this General Release has not been
forced by any employee or agent of the Company, and Executive has had
an opportunity to negotiate about the terms of this General Release;
and
(e) Executive has been offered 21 calendar days after receipt
of this General Release to consider its terms before executing it.
6. This General Release shall be governed by the internal laws (and not
the choice of laws) of the State of Florida, except for the application of
pre-emptive federal law.
7. Executive shall have 7 days from the date hereof to revoke this
General Release by providing written notice of the revocation to the Company's
General Counsel, as provided in Section 11 of the Employment Agreement, in which
event this General Release shall be unenforceable and null and void.
C-2
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.
[INSERT NAME OF EXECUTIVE]
Date: May 18, 2002 /s/ Xxxxxxx X. Xxxx
-----------------------------------------
Executive
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