EXHIBIT 10.24
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT, made as of the 29th day
of March, 2002, by and between Duramed Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and E. Xxxxxx Xxxxxxxx (the "Employee"),
W I T N E S S E T H:
WHEREAS, an Amended and Restated Employment Agreement was
entered into between the Company and the Employee on July 18, 2000 (the
"Agreement"); and
WHEREAS, following the change in control that occurred on
October 24, 2001, pursuant to the Agreement and Plan of Merger dated June 29,
2001, by and among Xxxx Laboratories, Inc. ("Xxxx") and the Company ("Merger"),
the Company and Employee desire to further amend and restate the Agreement (the
Agreement as amended and restated herein being hereafter referred to as the
"Amended Agreement"); and
WHEREAS, the Company is prepared to pay the Employee a sum of
Five Hundred Thousand Dollars ($500,000) in order to incent him to further defer
the exercise of his right to terminate his employment pursuant to the last
sentence of Section 6(d) of the Agreement until after June 30, 2002, a sum of
Two Million Dollars ($2,000,000) for entering into this Amended Agreement and in
lieu of severance pay otherwise payable under the Agreement, and a sum of One
Million Two Hundred Thousand Dollars ($1,200,000) to agree to certain
restrictions on his activities during the Employment Period and thereafter that
are contained herein;
NOW THEREFORE, in consideration of the foregoing premises and
the mutual covenants hereinafter set forth, IT IS AGREED that the Agreement is
hereby amended and restated in its entirety to read as follows:
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(1) Continued Employment. The Company recognizes that, under
Section 6(d) of the Agreement as modified by that certain letter agreement dated
June 29, 2001 between the Employee and Xxxx, the Employee has the right to
terminate his employment for any reason during the six month period beginning on
April 1, 2002 and receive certain payments and benefits in connection with such
employment termination. The Company wishes to induce the Employee to both (a)
further defer any termination by him of his employment until after June 30, 2002
at the earliest, and (b) remain in the employ of the Company thereafter until
June 30, 2004. To those ends, (i) the Company agrees to pay the Employee
$500,000 immediately upon signing this Amended Agreement and the Employee hereby
agrees to remain an employee of the Company through June 30, 2002 on the terms
provided herein, and (ii) the Company hereby agrees to continue the employment
of Employee pursuant to the terms provided herein until June 30, 2004 (the
period of time from the date of this Amended Agreement to June 30, 2004 being
hereafter referred to as the "Employment Period", whether or not the Employee in
fact remains employed by the Company throughout that period). The Employee
recognizes and agrees that the aforementioned payment is being made in
consideration of his continued employment through June 30, 2002 and that if he
terminates his employment on or prior to that date, or if his employment shall
be terminated for Cause on or prior to that date, he will be obligated to repay
the portion of such payment that has not been earned in accordance with
paragraph 7(b) below.
(2) Duties. Under this Amended Agreement the Employee shall be
employed in the position of Special Transition Employee. In such employment, the
Employee's duties shall consist of aiding in the facilitation of the Merger,
including in particular facilitating the transition to Xxxx executives of
responsibility for, and facilitating the resolution of, matters that commenced
prior to the Merger and other matters concerning which the Employee possesses
special knowledge, assisting in litigation, and all other things reasonably
requested by the Company. However, no change in the Employee's location of
employment to outside the Cincinnati, Ohio
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area, or in the Employee's title, shall be made without the prior written
consent of the Employee. The Employee shall have the powers necessary to perform
the duties assigned and shall be provided such supporting staff, secretarial
(including the services of Xxxxx Xxxxxx until June 30, 2002) and other
assistance, office space and accouterments as shall be necessary and appropriate
in light of the duties assigned. After the Employment Period, Employee shall
make himself available to the Company as a consultant on an as needed basis for
specific projects related solely to the transition following the Merger,
provided such consulting does not interfere with his other business and
employment commitments at the time, with any compensation for such consultation
to be determined by mutual agreement of the parties. The Employee shall be
entitled to a minimum of paid vacation annually equal to that which he was
entitled immediately prior to the Change in Control, and shall take any vacation
accrued during the Employment Period prior to terminating employment. Subject to
the foregoing, the Employee shall have the sole discretion to determine the time
and intervals of such vacations.
(3) Compensation. During the Employment Period, the Employee
shall be compensated as follows:
(a) The Employee shall receive a salary at the annual
rate of Four Hundred Thousand Dollars ($400,000) ("Base Salary") payable ratably
in arrears not less often than twice per month.
(b) The Employee shall be reimbursed for any and all
monies advanced in connection with his employment for reasonable and necessary
expenses incurred on behalf of the Company, in accordance with and subject to
the substantiation and other terms and conditions of the Company's business
expense reimbursement policy applicable to other employees of comparable rank.
(c) The Company is party to a Split Dollar Insurance
Agreement dated December 8, 1999 pertaining to a $1,275,000 life insurance
policy on the life of Employee (Phoenix 2657322) and in connection with which
the cash value and death benefit of such
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policy was collaterally assigned back to the Company to the extent of $192,894.
The Company agrees to refrain from exercising its right to terminate said Split
Dollar Insurance Agreement pursuant to paragraph 7 thereof until September 5,
2016, provided that the foregoing shall not prevent the Company from enforcing
its rights under such collateral assignment before that date if any
circumstances described in Section 2 of said collateral assignment (other than
termination of said Split Dollar Insurance Agreement by the Company) occur
before that date. The Company is also party to a Split Dollar Insurance
Agreement dated December 8, 1999 pertaining to a $3,000,000 second-to-die policy
on the lives of Employee and his wife (Phoenix 2764238) and in connection with
which the cash value and death benefit of such policy was collaterally assigned
back to the Company to the extent of its cumulative premiums paid on such
policy. Prior to the date of this Amended Agreement, the Company has funded such
policy, on a split dollar basis, to the extent of $51,000 per year. The Company
agrees to continue to fund such policy on a split dollar basis to the extent of
$51,000 per year for the duration of the Employment Period but not beyond the
date, if any, on which the Employee's employment by the Company is voluntarily
terminated by the Employee, other than for Good Reason, or is terminated by the
Company for Cause, and agrees to refrain from exercising its right to terminate
said Split Dollar Insurance Agreement pursuant to paragraph 7 thereof until
September 5, 2008, provided that the foregoing shall not prevent the Company
from enforcing its rights under such collateral assignment before September 5,
2008 if any circumstances described in Section 2 of such collateral assignment
(other than termination of said Split Dollar Insurance Agreement by the Company)
occur before that date. In addition, the Employee shall be included to the
extent eligible thereunder in the Company's life insurance and supplemental life
insurance plans, business travel accident plan, short term and long term
disability plan, Humana medical plan, Delta dental plan, flexible spending
account/cafeteria plan, long term care insurance plan and employee assistance
program, at the expense of the Company on a comparable basis as other employees
of comparable rank, it being understood that (i) the
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Company will not pay employee contributions for the Employee under any such plan
unless it pays such employee contributions for other employees of comparable
rank under such plan, (ii) the Employee may be ineligible to participate in such
plans during part of the Employment Period if he did not elect to participate in
such plans during the applicable enrollment periods that closed prior to the
Employee's signing this Amended Agreement, and (iii) nothing herein shall
prevent the Company or Xxxx from amending, modifying, terminating or replacing
any of such plans during the Employment Period, provided that the Employee is
included in any such replacement plan to the extent eligible thereunder and on
the other terms and conditions of this paragraph (c).
(d) The Employee shall be eligible to participate in
the Company's 401(k) and excess 401(k) plans and shall be fully vested under
each of those plans. In addition, the Employee shall be eligible to participate
in the Employee Stock Purchase Plan, on the same terms and conditions applicable
to other employees of comparable rank, provided that the Employee will be
eligible to participate in the cycle that is in progress under such Plan on the
date of this Amended Agreement only if he elected to participate in such Plan
during the applicable enrollment period that closed prior to the Employee's
signing this Amended Agreement.
(e) The Employee and Company acknowledge and agree
that his options to purchase shares of Common Stock of the Company ("Duramed
Options") did not vest at the Merger; that since the Merger his duties and
responsibilities have consisted of those described in Section 2 above; that such
duties and responsibilities represent a diminution in the Employee's position,
authority, duties and responsibilities within the meaning of Section 6(d)(i) of
the Agreement that entitled the Employee, under the Agreement as in effect prior
to its being superseded by this Amended Agreement, to receive the benefits
stated in Section 7(a) of such Agreement, including the immediate vesting of all
unvested options to purchase shares of Common Stock of the Company then held by
the Employee, upon any termination of
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employment by the Employee until December 31, 2005; and that, until the Employee
terminated employment under the Agreement, such options would have continued to
vest pursuant to the terms of the original grant. The parties do not intend to
alter the vesting of such options. Accordingly, the parties acknowledge and
agree that, any provision of this Amended Agreement to the contrary
notwithstanding, the options will continue to vest pursuant to the terms of the
original grant or will immediately vest in their entirety upon any termination
of employment by the Employee until December 31, 2005, it being understood and
acknowledged by the Company that a termination of employment at the expiration
of the Employment Period as defined in Section 1 above shall be deemed to be a
termination of employment by the Employee for this purpose. No provision of this
Section (3)(e) is intended to extend the expiration date of any Duramed Option
or alter the terms on which any Duramed Option will continue to vest pursuant to
the original grant.
(f) The Employee shall be entitled to an additional
sum of Two Million Dollars ($2,000,000), payable upon signing this Amended
Agreement, in consideration of his signing this Amended Agreement and in lieu of
his participating in any compensation, employee benefit or fringe benefit plans
(including but not limited to any stock incentive plan) during the Employment
Period other than those specifically provided for in paragraphs 3(c) and 3(d)
above and in full satisfaction of any accrued vacation pay and in lieu of any
amounts which would have been paid under the Agreement or under any other plan
or arrangement in the event of termination of the Employee's employment for Good
Reason as defined in the Agreement but which are not payable under any other
provision of this Amended Agreement.
(g) The Employee shall be entitled to an additional
sum of One Million Two Hundred Thousand Dollars ($1,200,000), payable upon
signing this Amended Agreement, in consideration of his special undertakings
under Section 10 of this Amended Agreement. The Employee recognizes and agrees
that the aforementioned payment is being made in consideration of his special
undertakings under Section 10 and, especially, paragraph 10(f)
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below, and that if he fails to comply with his obligations thereunder, he will
be obligated to repay the portion of such payment that has not been earned in
accordance with paragraph 10(f) below.
(4) Intentionally left blank.
(5) Indemnification. To the extent permitted by law, the
Company shall pay, indemnify and hold the Employee harmless from any liability,
cost or expense (including, without limitation, reasonable attorney's fees)
incurred by the Employee in the defense of any claim, proceeding or action
arising out of his performance of services for the Company or out of his status
as an officer or director of the Company or while serving at the request of the
Company as an officer, director, partner or employee of any other entity.
Notwithstanding the foregoing, the Company shall not indemnify the Employee
against any act or omission by the Employee constituting fraud, willful
misconduct or gross negligence. In addition, if the Company terminates the
Employee for Cause and it is subsequently determined in a non-appealable
judicial decision that the Company did not have Cause for terminating the
Employee, the Company will reimburse the Employee for reasonable attorney's fees
and expenses he incurs as a result of such termination.
(6) Termination. The following provisions of this Section 6
shall apply only during the Employment Period:
(a) Disability. For purposes of this Amended
Agreement, the term "permanent disability" shall be defined as a physical or
mental disability or disease which, in the opinion of an independent qualified
physician appointed by the Company, prevents the Employee from discharging the
customary normal duties of his employment with the Company.
(b) Cause. The Company may terminate the Employee's
employment for Cause. For purposes of this Amended Agreement, "Cause" shall mean
the willful engaging by the Employee in illegal conduct which is materially and
demonstrably injurious to the Company.
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For purposes of this provision, no act or failure to act, on the part of the
Employee, shall be considered "willful" unless it is done, or omitted to be
done, by the Employee in bad faith or without reasonable belief that his action
or omission was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Employee in good faith and in
the best interests of the Company.
(c) Good Reason. The Employee's employment may be
terminated by the Employee for Good Reason at any time after the effective date
of this Amended Agreement. For purposes of this Amended Agreement, "Good Reason"
shall mean:
(i) the assignment to the Employee of any
duties inconsistent with the Employee's position, duties or responsibilities as
contemplated by Section 2 of this Amended Agreement, or any other action by the
Company which results in a change in such position, duties or responsibilities;
(ii) any failure by the Company to comply
with any of the provisions of Section 3 of this Amended Agreement;
(iii) the Company's requiring the Employee
to be based at any office or location other than within twenty-five miles of
Cincinnati, Ohio or the Company's requiring the Employee to travel on Company
business to a substantially greater extent than required immediately prior to
the date of this Amended Agreement; or
(iv) any purported termination by the
Company of the Employee's employment otherwise than as expressly permitted by
this Amended Agreement; or
(v) the continued failure of the Company to
perform substantially its obligations under this Amended Agreement after a
written demand for substantial performance is delivered by the Employee to
Xxxx'x Chief Executive Officer which
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specifically identifies the manner in which the Employee believes the Company
has not substantially carried out its obligations.
Notwithstanding the above, "Good Reason" shall
exclude an isolated, insubstantial and inadvertent action or failure to act not
taken or occurring in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Employee.
For purposes of this Section 6(c), any good faith
determination of "Good Reason" by the Employee shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Employee, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 15 of
this Amended Agreement. For purposes of this Amended Agreement, a Notice of
Termination means a written notice which (i) indicates the specific termination
provision in this Amended Agreement relied upon, (ii) to the extent applicable,
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the termination date (which date
shall be not more than thirty days after the giving of such notice). The failure
by the Employee or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause,
respectively, shall not preclude the Employee or the Company, respectively, from
asserting such fact or circumstance in enforcing the Employee's or the Company's
rights hereunder.
(e) Date of Termination. "Date of Termination" means
the earlier of (i) if the Employee's employment is terminated by the Company for
Cause, or by the Employee, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be; (ii) if the Employee's
employment is terminated by the Company other than for Cause, the Date of
Termination shall be the date on which the Company notifies him of such
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termination; (iii) if the Employee's employment is terminated by reason of death
or disability, the Date of Termination shall be the date of death of the
Employee or the disability, as the case may be; and (iv) termination of the
Employment Period.
(7) Obligations of the Company upon Termination. The following
provisions of this Section 7 shall apply only in the event of termination during
the Employment Period:
(a) Death; Disability; Good Reason; Other Than for
Cause/ Employment Period Expiration. If the Employee dies, suffers a permanent
disability or if the Company terminates the Employee's employment during the
Employment Period other than for Cause or death or disability or the Employee
terminates employment for Good Reason or the Employment Period expires, then in
full discharge and settlement of any and all obligations of the Company and/or
its affiliates, including Xxxx, to the Employee for compensation, benefits or
emoluments of any kind (including but not limited to accrued vacation pay but
excluding amounts payable pursuant to Section 8 hereof):
(i) the Company shall pay to the Employee in
a lump sum in cash within 30 days after the Date of Termination the sum of (1)
the Employee's Base Salary through the end of the Employment Period, to the
extent not theretofore paid, and (2) any unpaid compensation previously deferred
by the Employee (together with any vested accrued interest or earnings net of
losses thereon) under any plan other than the 401(k) plan, any other
tax-qualified plan or the excess 401(k) plan (with respect to which plans
payments if any shall be made at the time or times and on the terms and subject
to the conditions set forth in the applicable plan documents)(the sum of the
amounts described in clause (2) shall be hereinafter referred to as the "Accrued
Obligations"); and
(ii) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Employee when due any
other amounts or benefits required to be paid or provided or which the Employee
is entitled to receive under any plan, program, policy or practice or contract
or agreement of the Company and its affiliated
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companies as a result of his participation therein prior to the Employment
Period (all such other amounts and benefits being itemized on Schedule A hereto)
or, in the case of the plans specifically provided for in paragraphs 3(c) and
3(d) above, as a result of his participation therein during the Employment
Period (such other amounts and benefits shall be hereinafter referred to as the
"Other Benefits"), it being understood and agreed, however, that, any provision
of this Agreement or of any plan, program, policy or practice or contract or
agreement of the Company and/or its affiliated companies to the contrary
notwithstanding:
A. the $500,000 amount payable
pursuant to Section 1 above, the $2,000,000 amount payable pursuant to Section
3(f) above and the $1,200,000 amount payable pursuant to Section 3(g) above
shall not be treated as cognizable compensation under any such plan, program,
policy or practice or contract or agreement of the Company and/or its affiliated
companies (each a "Plan" and, collectively, "Plans"), including without
limitation any 401(k) plan and any excess or non-qualified 401(k) plan, and thus
shall not give rise to any benefit obligation under any such Plan on the part of
the Company or any affiliated company, including without limitation Xxxx, or any
other person or entity, nor to any benefit entitlement under any such Plan or
otherwise on the part of the Employee, and if, notwithstanding the foregoing
provisions of this Section 7(a)(ii)(A), any Plan shall treat any of such amounts
as cognizable compensation under any such Plan, the Employee hereby irrevocably
waives and foregoes any benefit or increase in benefits resulting therefrom; and
B. the $2,000,000 amount payable
pursuant to Section 3(f) above shall be in lieu of and in full discharge of any
severance pay obligation under any and all of the Plans (other than amounts
payable pursuant to Section 8 hereof).
(iii) as provided in Section 3(e) above, all
unvested options to purchase shares of Common Stock of the Company then held by
the Employee shall vest immediately.
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(b) Cause; other than for Good Reason. If the
Employee's employment shall be terminated during the Employment Period for
Cause, this Amended Agreement shall terminate without further obligations to the
Employee other than the obligation to pay to the Employee (x) his Base Salary
through the Date of Termination and (y) the amount of any compensation
previously deferred by the Employee and referred to in Section 7(a)(i)(2) above
in each case to the extent theretofore unpaid. If the Employee voluntarily
terminates employment during the Employment Period, excluding a termination for
Good Reason, this Amended Agreement shall terminate without further obligations
to the Employee, other than for his Base Salary through the Date of Termination,
the Accrued Obligations, and the timely payment or provision of Other Benefits,
the immediate vesting of any options to purchase Common Stock of the Company
then held by him, and the payment of any benefits payable pursuant to Section 8
hereof. In such case, all Accrued Obligations shall be paid to the Employee in a
lump sum in cash within 30 days of the Date of Termination. If the Employee's
employment shall be terminated on or before June 30, 2002 for Cause, or if the
Employee terminates employment on or before that date, the Employee shall
immediately repay to the Company the unearned portion of the $500,000 payment
made pursuant to Section 1 above. The unearned portion of such payment shall be
deemed to be equal to a fraction of such payment, the numerator of which shall
be the number of full or partial calendar days in the period from the date of
the employment termination through (and including) June 30, 2002 and the
denominator of which shall be the number ninety-one (91).
(8) Certain Additional Payments by the Company.
(a) Anything in this Amended Agreement to the
contrary notwithstanding, in the event it shall be determined at any time after
the execution of this Amended Agreement that any payment or distribution by the
Company to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Amended Agreement or
otherwise, but determined without regard to any additional
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payments required under this Section 8) (a "Payment") would be subject to the
excise tax imposed by Section 4999 or its equivalent or any successor provision
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.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, 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, shall be made
by the Company's certified public accounting firm (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company 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 the Company;
provided however that the Accounting Firm must determine that a Gross-Up Payment
is immediately required following a final determination by a court of competent
jurisdiction that a Payment to or for the benefit of the Employee is subject to
the Excise Tax. 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 8, shall be paid by the Company to the Employee within five days of the
receipt of the Accounting Firm's determination. 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
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Company should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(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 shall be
promptly paid by the Company to or for the benefit of the Employee.
(c) The Employee shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. 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 apprize the Company 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 it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Employee in writing
prior to the expiration of such period that it desires to contest such claim,
the Employee shall:
(i) give the Company any information
reasonably requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company 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 the Company,
(iii) cooperate with the Company in good
faith in order effectively to contest such claim, and
(iv) permit the Company to participate in
any proceedings relating to such claim; provided, however, that the Company
shall bear and pay directly all
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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 Section 8(c), the Company 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 courts, as the Company
shall determine; provided, however, that if the Company directs the Employee to
pay such claim and xxx for a refund, the Company shall advance the amount of
such payment to the Employee, on an interest-free basis 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; 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, the Company'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 by the Company pursuant to Section 8(a) or 8(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 Section 8(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
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receipt by the Employee of an amount advanced by the Company pursuant to Section
8(c), a determination is made that the Employee shall not be entitled to any
refund with respect to such claim and the Company 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.
(e) The Company's obligations provided in this
Section 8 shall survive until all applicable statutes of limitation with respect
to the subject matter have terminated.
(9) Confidentiality. The Employee will not at any time during
the term of this Amended Agreement or thereafter, except as authorized by the
Company, divulge, furnish or make accessible to any person, firm, corporation or
other entity, any confidential information or any other information that is
otherwise not publicly available which he presently possesses or which he may
obtain during the course of his employment with respect to the business,
customers or affairs of the Company or any subsidiary or affiliate of the
Company or trade secrets, developments, know-how, methods or other information
or data pertaining to practices, equipment, developments or any confidential or
secret aspect of the business of the Company or any subsidiary or affiliate of
the Company, and agrees that all such matters and information shall be kept
strictly and absolutely confidential. The Employee, upon termination of his
employment, irrespective of the time, manner or cause of termination, will
surrender and deliver to the Company all lists, books, records and data of every
kind relating to or in connection with the business of the Company or any
subsidiary or affiliate of the Company, and all property belonging to the
Company and any subsidiary or affiliate of the Company.
(10) Special Undertakings.
(a) The Employee agrees that any and all notes and
records kept or made in connection with his employment shall be and are the sole
and exclusive property of the Company; and the Employee further agrees that upon
leaving the employment of the
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Company, he will place all such notes and records in the Company's possession,
and will not take with him, without the consent of the Company's Board of
Directors, any notes and records relating to or connected with the business,
work or investigations of the Company, its affiliates and subsidiaries, or any
of them, including drawings, blueprints or other reproduction.
(b) The Employee further agrees that any secret
apparatus, secret equipment, secret formula, secret method or process of the
Company, that the Employee is aware of because of his employment with the
Company, whether or not developed by the Employee, will not be disclosed to any
third party or used by the Employee except in connection with his duties to the
Company or unless the Employee shall first secure the consent of the Company's
Board of Directors, either during his employment or after his employment by the
Company shall have terminated.
(c) Employee agrees that, during the Employment
Period as defined in Section 1 above and during the one year period immediately
following the Employment Period, he will not solicit or attempt to persuade any
employee of the Company, its subsidiaries or affiliates, or any other person who
performs services for the Company, its subsidiaries or affiliates at any time
during the Employment Period 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 the Company, its subsidiaries or affiliates. Provided,
however, that responding to inquiries and subsequently hiring such employees
following their termination of employment with the Company shall be permitted.
(d) Employee agrees that, during the Employment
Period and the one year period immediately following the Employment Period, he
will not make disparaging remarks about the Company, its subsidiaries or
affiliates or any of their officers, directors or employees.
(e) The Employee also agrees to cooperate with the
Company and Xxxx in any legal action for which his participation is needed
during the Employment Period or the one year period thereafter. The Company
agrees to try to schedule all such participation so
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that it does not unduly interfere with the Employee's pursuits after he is no
longer in the Company's employ. The Employee also hereby agrees not to
communicate with anyone (other than the Employee's own attorneys) with respect
to the facts or subject matter of any pending or potential litigation, or
regulatory or administrative proceeding involving the Company, its subsidiaries
or affiliates known or which becomes known to the Employee, other than any
litigation or proceeding in which the Employee is a party-in-opposition, without
giving prior notice to the Company and its legal counsel, and in the event that
any other party attempts to obtain information or documents from the Employee
with respect to matters possibly related to such litigation or proceeding, the
Employee shall promptly notify the Company and its legal counsel. However, the
Employee shall not be required to comply with the preceding sentence if and to
the extent that doing so would violate the law.
(f) The Employee agrees that, during the Employment
Period as defined in Section 1 above and the one year period following the
Employment Period (collectively, the "Restricted Period"), including but not
limited to any portion of the Restricted Period that follows the termination of
his employment with the Company for any reason (whether by the Company or the
Employee and whether or not for Cause or Good Reason), he will not engage in
competition with the Company as defined in the next sentence. For this purpose,
"engage in competition with the Company" means manufacturing of any product, or
causing a manufacturer to develop any product, being sold or to be sold in the
United States (i) that on June 27, 2001 was being manufactured by the Company or
Xxxx or any subsidiary of the Company or Xxxx ("Group"), or (ii) for which the
Group had filed a NDA or an ANDA on or before June 27, 2001 seeking FDA approval
to manufacture such product; provided that in no event shall passive ownership
of less than 5% of any class of securities which are registered under section 12
of the Securities Exchange Act of 1934, as amended, by itself be deemed to
constitute competition within the meaning of this sentence. If the Employee
fails to comply with his obligations under this paragraph 10(f), the Employee
shall immediately repay to the
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Company the unearned portion of the $1,200,000 payment made pursuant to
paragraph 3(g) above. For this purpose, the unearned portion of such payment
shall be deemed to be equal to a fraction of such payment, the numerator of
which shall be the number of calendar days remaining in the Restricted Period
after the first date of noncompliance and the denominator of which shall be the
total number of calendar days in the Restricted Period. The parties recognize
and agree that the foregoing permits the Employee during the Restricted Period
to, among other matters, (A) engage in a business that manufactures any product
that is not manufactured by any member of the Group on June 27, 2001 and for
which no member of the Group had filed a NDA or an ANDA seeking FDA approval to
manufacture such product, and (B) engage in the business of selling and
distributing all multisource products that are normally available for sale in a
broad based generic distributorship.
(11) Enforceability. The parties agrees that nothing in this
Amended Agreement shall in any way abrogate the right of the Company and the
Employee to enforce by injunction or otherwise the due and proper performance
and observance of the several covenants herein contained to be performed by the
Employee or the Company or to recover damages for breach thereof.
(12) Successors and Assigns. If the Company sells, assigns or
transfers all or substantially all of its business and assets to any person,
excluding affiliates of the Company, or if the Company merges into or
consolidates or otherwise combines with any person which is a continuing or
successor entity, then the Company shall assign all of its right, title and
interest in this Amended Agreement as of the date of such event to the person
which is either the acquiring or successor corporation, and such person(s) shall
assume and perform from and after the date of such assignment all of the terms,
conditions and provisions imposed by this Amended Agreement upon the Company. In
case of such assignment by the Company and of assumption and agreement by such
person(s), all further rights as well as all other obligations of
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the Company under this Agreement thenceforth shall cease and terminate and
thereafter the expression "the Company" wherever used herein shall be deemed to
mean such person(s).
(13) Supplemental Compensation. This Amended Agreement
supersedes and replaces the Agreement and any other employment agreement or
Change in Control Contingent Employment Agreement between the Employee and the
Company. By executing this Amended Agreement, each party irrevocably waives and
releases the other party hereto from any claims and liabilities arising under
the Agreement prior to the effective date of this Amended Agreement. No person,
other than such person as may be designated by the Board of Directors of the
Company, shall have any authority on behalf of the Company to agree to modify or
change this Amended Agreement. This Amended Agreement sets forth all of the
agreements and understandings of the parties and Xxxx relating to the subject
matter of this Amended Agreement, and there are no agreements or understandings
relating to such subject matter that are not set forth herein. No provision of
this Amended 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 a representative of the Company duly authorized to do so.
(14) Severability. This Amended Agreement is to be governed by
and construed under the laws of the State of Ohio. If any provision of this
Amended Agreement shall be held invalid and unenforceable for any reason, such
provision shall be interpreted in such a manner that will make it valid and
enforceable and if such provision cannot be so interpreted then in that event
such provision shall be deemed deleted and the remainder of the Amended
Agreement shall be valid and enforceable without such provision.
(15) Notice. Any notice required or permitted hereunder shall
be given in writing and delivered to the other party either in person or by U.S.
registered or certified mail; if to the Company, at 0000 Xxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxx 00000, with a copy to Xxxx Laboratories, Inc., 000 Xxxxxxxxx
Xxxxx, Xxxxxxxx #00, Xxxxxxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000,
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Attention: General Counsel; and if to the Employee, at his address as it appears
on the books and records of the Company, or in each case at such other address
provided in writing to the other party.
(16) Headings. The Section headings used in this Amended
Agreement are for convenience only and shall not affect the construction or
interpretation of this Amended Agreement.
(17) Withholding. Any provision of this Amended Agreement to
the contrary notwithstanding, (i) all amounts payable or credited to the
Employee under this Amended Agreement 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, and (ii) the Company shall
have the right to deduct and offset from any amounts payable by the Company to
the Employee hereunder any such withholding amounts and any amounts that are due
to the Company from the Employee hereunder, including any amounts that may be
repayable to the Company pursuant to paragraph 7(b) or 10(f) above.
IN WITNESS WHEREOF, the Company has caused this Amended and
Restated Employment Agreement to be executed and attested by its duly authorized
officers, and the Employee has hereunto set his hand as of the first date
written above.
DURAMED PHARMACEUTICALS, INC.
Employer
By_________________________________
___________________________________
___________________________________
E. Xxxxxx Xxxxxxxx, Employee
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GUARANTY
Xxxx Laboratories, Inc. hereby guarantees the punctual payment
of all obligations of Duramed Pharmaceuticals, Inc. under the foregoing Amended
and Restated Employment Agreement dated ________, 2002.
XXXX LABORATORIES, INC.
By _________________________________
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Attachment A
Amounts and Benefits to be Itemized under Section 7(a)(ii)
Page 23 of 23
