EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of this 11th
Day of August, 2004 ("Effective Date") between Lannett Company, Inc. ("Company")
and Xxxxx Xxxxxxxxxx (Executive).
RECITALS
Company wishes to employ Executive as its Chief Financial Officer; and
Executive wishes to accept such employment under the terms and conditions set
forth in this Agreement.
IT IS AGREED as follows:
1. EMPLOYMENT. Company hereby employs Executive as its Chief Financial
Officer; and Executive accepts such employment.
2. TERM. The term of employment under this Agreement shall commence on the
Effective Date and shall continue, unless otherwise terminated earlier under
Section 8, until the day before the third anniversary of the Effective Date,
i.e., June 17, 2007 (the "Term"), provided that on the day before the third
anniversary of the Effective Date and the day before the anniversary of any
one-year renewal of such Agreement, the Term shall be automatically extended for
successive additional one (1) year periods unless at least ninety (90) days
prior to such anniversary date, either Company or Executive furnishes the other
with written notice that the term is not to be so extended.
3. DUTIES. Executive shall devote his full-time efforts to the proper and
faithful performance of all duties customarily discharged by a Chief Financial
Officer for a company doing the type of business engaged in by Company and any
additional duties assigned to him from time to time by the President and/or the
Chief Executive Officer of Company and/or the Board of Directors of Company.
Executive shall report directly to the President of the Company. Executive
agrees to use his best efforts and comply with all fiduciary and professional
standards in the performance of his duties hereunder. Executive shall provide
services to any subsidiary or affiliate of Company without additional
compensation and benefits beyond those set forth in this Agreement, and any
compensation and benefits provided to Executive for such services shall be a
credit with regard to amounts due from Company under this Agreement. Executive
represents and warrants to Company that, at all times prior to the Effective
Date when he has served as Chief Financial Officer of the Company and at all
times during the Term, he has either fulfilled or will fulfill his duty of
loyalty to Company; and he has either acted or will act in the best interests of
the Company's shareholders.
4. BASE SALARY. Executive shall be paid a base salary of One Hundred and
Thirty Two Thousand Eight Hundred and Sixty Dollars and no cents ($132,860.00)
per annum for the Term, payable, less applicable withholdings, in proportional
monthly payments or more frequently in accordance with Company's regular
practice. Salary for a portion of any period will be prorated. The Compensation
Committee of the Board of Directors and the President will conduct an annual
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performance review of Executive and, as part of such review, will consider
adjustments to the base salary set forth herein based on the performance of both
Executive and Company.
5. ANNUAL BONUS. Executive shall be eligible to participate in the
Management Incentive Bonus Plan (the "MIB") administered by the Compensation
Committee, or any successor annual bonus plan or arrangement generally made
available to the executive officers of Company. The MIB shall provide Executive
with a target bonus opportunity for each fiscal year of Company (i.e. July 1 to
June 30), regardless of whether or not a bonus is declared for any fiscal year,
with a minimum guarantee using the same criteria.
6. BENEFITS.
During the Term, Executive shall have the following benefits:
a. Executive may participate in all Company sponsored stock option plans,
retirement plans, 401(k) plans, life insurance plans, medical insurance
plans, disability insurance plans, executive stock ownership plans and
such other benefit plans generally available from time to time to other
executive employees of Company for which he qualifies under the terms of
the plans. Executive's participation in and benefits under any benefit
plan shall be on the terms and subject to the conditions specified in such
plan.
b. Vacation days or personal time off (PTO) granted to Executive in
accordance with the Company's published vacation or PTO policy generally
afforded to salaried management employees.
c. If the Company is sold during Executive's active employment, the
majority shareholder sells his/her majority interest in the Company or a
majority of the Company's ANDAs (Abbreviated New Drug Applications) are
sold during Executive's active employment and the Organization that takes
control of the Company desires to continue the employment of Executive
with the same assignment and at the same place of business, regardless of
whether Executive remains with the buying organization or not, Executive
will be paid in a lump amount equal to six (6) months of Executive's then
current base annual salary at the time of the transaction .
7. REIMBURSEMENT OF EXPENSES. Company will reimburse Executive for the
reasonable and necessary expenses incurred by him in the performance of
his duties under this Agreement in accordance with Company's policies in
effect from time to time.
8. TERMINATION OF EMPLOYMENT.
a. Executive's employment under this Agreement may be terminated at any
time by the President, Chief Executive Officer and/or the Board of
Directors of Company, with or without Cause (as defined below).
Executive's employment is "at-will."
b. Executive's employment under this Agreement shall terminate upon his
resignation or death.
c. Executive's employment under this Agreement shall terminate upon thirty
(30) days written notice by Company to Executive of a termination due to
Disability, provided such
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notice is delivered during the period of Disability. The term "Disability"
shall mean, for purposes of this Agreement, the inability of Executive,
due to injury, illness, disease or bodily or mental infirmity to engage in
the performance of his material duties of employment with Company as
contemplated by Section 3 herein for (i) any period of ninety (90)
consecutive days or (ii) a period of one hundred fifty days (150) in any
consecutive twelve (12) months, provided that if the Executive returns to
work in the consecutive 12 month period for a period of less than ten (10)
consecutive business days in duration, such return to work shall not be
deemed to interfere with a determination of consecutive absent days if the
reason for absence before and after the interim return are the same.
Benefits to which Executive is entitled under any disability policy or
plan provided by Company shall reduce the base salary paid to Executive
during any period of Disability on a dollar-for-dollar basis.
d. Company shall have the right to terminate Executive's employment for
Cause. For purposes of this Agreement, "Cause" shall consist of any of the
following:
1. Executive's willful misrepresentation in this Agreement or otherwise or
fraud, willful dishonesty or willful breach of a fiduciary duty or duty of
loyalty to Company which directly or indirectly results in his or any
person's or entity's enrichment, economic or otherwise, at the expense of
Company;
2. Willful misconduct; provided, however, that conduct by Executive in
good faith and/or ordinary negligence shall not be considered "Cause";
3. Willful or reckless conduct of Executive which has an adverse impact
(economic or otherwise) on Company;
4. Willful violation of any law, rule or regulation relating to the
operation of Company or any of its subsidiaries or affiliates;
5. The order of any court or supervising governmental agency with
jurisdiction over the affairs of Company or any subsidiary or affiliate;
6. Executive's willful violation of any provision of this Agreement,
including without limitation violation of Sections 9, 10, 11 or 12;
7. Executive's conviction or no contest plea to a felony involving moral
turpitude;
8. Abuse of illegal drugs or other controlled substances or habitual
intoxication; or
9. Willful violation by Executive of Company's published business conduct
guidelines, code of ethics, conflict of interest or other similar
policies.
e. If Executive's employment terminates for Cause or for any reason other
than as set forth in Section 8(f), Company shall be obligated only to
continue to pay Executive's salary and, to the extent earned, accrued and
unpaid, annual cash bonus and long term incentive compensation and furnish
the then existing benefits under Section 6 up to the date of termination
(except as otherwise set forth in this Agreement).
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f. If Executive's employment is terminated by Company without Cause, in
addition to the amounts payable under Section 8(e), Executive shall be
entitled to receive his (i) base salary for a period of eighteen (18)
months after the termination date, (ii) insurance coverage provided to him
equal to such coverage provided to him on the date of termination at no
cost or, if ineligible for continued coverage under Company policies,
reimbursement of the cost of comparable coverage for a period of eighteen
(18) months (iii) a pro rated annual cash bonus for the then current
fiscal year calculated as if all base targets and base goals are achieved
(but no other incentive compensation beyond the date of termination) at
the times and frequency regularly paid, and (iv) the Company shall cause
all outstanding Company stock options awarded Executive prior to
termination of his employment to be one hundred percent (100%) vested at
termination. As a condition to the salary, insurance continuation, under
this Section 8(f), Executive must first execute and deliver to Company, in
a form prepared by Company, a release of all claims against Company and
other appropriate parties, excluding Company's performance under this
Section 8(f) and Executive's vested rights under Company sponsored
retirement plans, 401(k) plans and stock ownership plans. The obligation
of Company to pay Executive's salary as required by Subsection (i) of this
Section 8(f) shall not be subject to offset for earnings from Executive's
subsequent employment.
g. The termination of Executive's employment with Company, for any reason
and irrespective as to whether initiated by Executive or Company, shall be
considered a contemporaneous resignation by Executive from the position of
Company's Chief Financial Officer and shall be deemed a termination from
employment with all entities related to Company.
h. The Executive may terminate his employment hereunder at any time for
any Reason by giving the Company prior written notice not less than thirty
(30) days prior to such termination. Termination by the Executive pursuant
to this Clause shall be deemed a termination entitling the Executive to
compensation pursuant to Section 8(e) above.
9. CONFIDENTIAL INFORMATION. During Executive's employment with Company
and at all times after the termination of such employment, regardless of the
reason for such termination, Executive shall hold all Confidential Information
relating to Company in strict confidence and in trust for Company and shall not
disclose or otherwise communicate, provide or reveal in any manner whatsoever
any of the Confidential Information to anyone other than Company without the
prior written consent of Company. "Confidential Information" includes, without
limitation, financial information, related trade secrets (including, without
limitation, Company's business plan, methods and/or practices) and other
proprietary business information of Company which may include, without
limitation, market studies, customer and client lists, referral lists and other
items relative to the business of Company. "Confidential Information" shall not
include information which is or becomes in the public domain through no action
by Executive or information which is generally disclosed by Company to third
parties without restrictions on such third parties.
10. SOLICITATION OF CUSTOMERS. During his employment with Company and for
a period of eighteen (18) months after the termination of Executive's
employment, regardless of the reason for the termination (the "Non-Competition
Period"), Executive shall not, whether directly or indirectly, for his own
benefit or for the benefit of any other person or entity, or as a partner,
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stockholder, member, manager, officer, director, proprietor, employee,
consultant, representative, agent of any entity other than Company, solicit,
directly or indirectly, any customer of Company, or induce any customer of
Company to terminate any association with Company, in connection with those
certain products being offered for sale by Company or in its research and
development pipeline on the date of termination of Executive's employment (The
"Restricted Products") or otherwise attempt to provide services to any customer
of Company in connection with the Restricted Products. Executive shall prevent
such solicitation to the extent he has authority to prevent same and otherwise
shall not interfere with the relationship between Company and its customers.
This provision shall not be interpreted to prohibit, prevent or otherwise impair
the Executive's ability and right to seek and obtain employment from a
competitor of the Company, even if said competitor is currently selling products
to the Company's customers that are the same as Company's products. While the
Executive shall be unrestricted in seeking to sell products to the Company's
customers that are different than the Company's products, it is the intent of
this paragraph to preclude the Executive from having said competitor replace the
Company as a supplier of a product or otherwise take existing sales from the
Company for the period in question.
11. SOLICITATION OF EXECUTIVES AND OTHERS. During his employment with
Company and during the Non-Competition Period, Executive shall not, whether
directly or indirectly, for his own benefit or for the benefit of any other
person or entity, or as a partner, stockholder, member, manager, officer,
director, proprietor, employee, consultant, representative, agent of any entity
other than Company, solicit, for purposes of employment or association, any
Executive or agent of Company ("Solicited Person"), or induce any Solicited
Person to terminate such employment or association for purposes of becoming
employed or associated elsewhere, or hire or otherwise engage any Solicited
Person as an Executive or agent of an entity with whom Executive may be
affiliated or permit such, or otherwise interfere with the relationship between
Company and its employees and agents. For purposes of this Agreement, an
employee or agent of Company shall mean an individual employed or retained by
Company during the Term and/or who terminates such association with Company
within a period of six (6) months after the termination of Executive's
employment with Company.
12. NON-COMPETITION. Without the written consent of the President or the
Chief Executive Officer, during his employment with Company and during the
Non-Competition Period, Executive shall not directly or indirectly, as an
officer, director, shareholder, member, partner, joint venturer, Executive,
independent contractor, consultant, or in any other capacity:
a. Engage, own or have any interest in;
b. Manage, operate, join, participate in, accept employment with, render
advice to, or become interested in or be connected with;
c. Furnish consultation or advice to; or
d. Permit his name to be used in connection with;
Any person or entity engaged in a business in the United States or Canada which
is engaged in the manufacture, distribution or sale of the Restricted Products
or which otherwise competes with the business of Company as it exists from time
to time and, in the case of termination of this Agreement, as it exists on the
termination date. Notwithstanding the foregoing, holding one
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percent (1%) or less of an interest in the equity, stock options or debt of any
publicly traded company shall not be considered a violation of this Section 12.
13. DISCLOSURE AND OWNERSHIP OF WORK PRODUCT AND INFORMATION.
(a) Executive agrees to disclose promptly to Company all ideas,
inventions (whether patentable or not), improvements, copyrightable works
of original authorship (including but not limited to computer programs,
compilations of information, generation of data, graphic works,
audio-visual materials, technical reports and the like), trademarks,
know-how, trade secrets, processes and other intellectual property,
developed or discovered by Executive in the course of his employment
relating to the business of Company, or to the prospective business of
Company, or which utilizes Company's information or staff services
(collectively, "Work product").
(b) Work product created by Executive within the scope of Executive's
employment, on Company time, or using Company resources (including but not
limited to facilities, staff, Information, time and funding), belongs to
Company and is not owned by Executive individually. Executive agrees that
all works of original authorship created during his employment are "works
made for hire" as that term is used in connection with the U.S. Copyright
Act. To the extent that, by operation of law, you retain any intellectual
property rights in any Work product, Executive hereby assigns to Company
all right, title and interest in all such Work product, including
copyrights, patents, trade secrets, trademarks and know-how.
(c) Executive agrees to cooperate with Company, at Company's expense, in
the protection of Company's information and the securing of Company's
proprietary rights, including signing any documents necessary to secure
such rights, whether during or after your employment with Company, and
regardless of the fact of any employment with a new company.
14. ENFORCEMENT OF AGREEMENT; INJUNCTIVE RELIEF; ATTORNEYS' FEES AND
EXPENSES. Executive acknowledges that violation of this Agreement will cause
immediate and irreparable damage to Company, entitling it to injunctive relief.
Executive specifically consents to the issuance of temporary, preliminary, and
permanent injunctive relief to enforce the terms of this Agreement. In addition
to injunctive relief, Company is entitled to all money damages available under
the law. If Executive violates this Agreement, in addition to all other remedies
available to Company at law, in equity, and under contract, Executive agrees
that Executive is obligated to pay all Company's costs of enforcement of this
Agreement, including attorneys' fees and expenses. Company acknowledges that
violation of this Agreement will cause immediate and irreparable damage to
Executive, entitling him to injunctive relief. Company specifically consents to
the issuance of temporary, preliminary, and permanent injunctive relief to
enforce the terms of this Agreement. In addition to injunctive relief, Executive
is entitled to all money damages available under the law. If Company violates
this Agreement, in addition to all other remedies available to Executive at law,
in equity, and under contract, Company agrees that Company is obligated to pay
all Executive's costs of enforcement of this Agreement, including attorneys'
fees and expenses.
15. SEVERABILITY AND SAVINGS. Each provision in this Agreement is
separate. If necessary to effectuate the purpose of a particular provision, the
Agreement shall survive the termination of
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Executive's employment with Company. If any provision of this Agreement, in
whole or in part, is held to be invalid or unenforceable, the parties agree that
any such provision shall be deemed modified to make such provision enforceable
to the maximum extent permitted by applicable law. As to any provision held to
be invalid or unenforceable, the remaining provisions of this Agreement shall
remain in effect.
16. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of Company and its successors and assigns. This Agreement shall
be binding upon and inure to the benefit of Executive, his heirs and personal
representatives. This Agreement is not assignable by Executive.
17. STATUTE OF LIMITATIONS. Executive agrees not to initiate any action or
suit relating directly or indirectly to employment with Company or the
termination of such employment more than one (1) year after the effective date
of termination of employment. Executive expressly waives any other longer
statute of limitations. However, Executive agrees that any shorter statute(s) of
limitations remain in effect.
18. INDEMNIFICATION. To the fullest extent permitted by applicable law,
the Company shall indemnify, defend and hold harmless the Executive from and
against any and all claims, demands, actions, causes of action, liabilities,
losses, judgments, fines, costs and expenses (including reasonable attorneys'
fees and settlement expenses) arising from or relating to his service or status
as an officer, director, employee, agent or representative of the Company or any
affiliate of the Company or in any other capacity in which the Executive serves
or has served at the request of, or for the benefit of, the Company or its
affiliates. The Company's obligations under this section shall be in addition
to, and not in derogation of, any other rights the Executive may have against
the Company to indemnification or advancement of expenses, whether by statute,
contract or otherwise, and the Company's obligations pursuant to tins Section 18
shall survive termination of the Executive's employment.
19. MISCELLANEOUS.
a. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by Company and Executive. The waiver or nonenforcement by Company
of a breach by Executive of any provision of this Agreement shall not be
construed as a waiver of any subsequent breach by Executive. This
Agreement is the parties' entire agreement relating to the subject matter
hereof and any and all prior agreements, representations or promises, oral
or otherwise, express or implied, are superseded by and/or merged into
this Agreement.
b. Notices and all other communications provided for in this Agreement
shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid,
or sent by facsimile or prepaid overnight courier to the parties at the
addresses set forth below (or such other addresses as shall be specified
by the parties by like notice): To Company, Lannett Company, Inc., 0000
Xxxxx Xxxx, Xxxxxxxxxxxx, XX 00000 Attn.: President; To the Executive:
Xxxxx Xxxxxxxxxx, 0000 Xxxxxxx Xxxxx, Xxxxxxxxxxxx, XX 00000. All notices
shall be deemed effective upon receipt. The failure to accept mail
forwarded through the U.S. Postal Service, certified,
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return receipt requested, shall be deemed received as of the earlier of
the first date such delivery is refused or, alternatively, if notices are
provided of attempts to deliver, the date on which said first notice was
provided to the Company.
c. This Agreement shall be governed by the laws of the State of
Pennsylvania.
d. Although this Agreement was drafted by Company, the parties agree that
it accurately reflects the intent and understanding of each party and
should not be construed against Company for the sole reason that it was
the drafter if there is any dispute over the meaning or intent of any
provisions.
e. Executive agrees that this Agreement is confidential and Executive will
not disclose the terms and conditions of this Agreement to any Company
employee or other third party, other than Executive's attorney,
accountant, professional advisors and members of his immediate family,
except as may be permitted by applicable law.
f. This Agreement may be executed in counterparts, which together shall
constitute one Agreement.
g. Executive agrees that this Agreement is the sole Employment Agreement
between Company and Executive and supersedes any and all prior Employment
Agreements, Letters of Understandings, Verbal understandings or
commitments.
h. By their signatures below, the parties acknowledge that they have had
sufficient opportunity to read and consider, and that they have carefully
read and considered, each provision of this Agreement and that they are
voluntarily signing this Agreement.
The parties have executed this Agreement as of the Effective Date.
WITNESS:
/s/ Xxxxx Xxxx /s/ Xxxxx Xxxxxxxxxx
---------------------------- ----------------------------
Xxxxx Xxxx Xxxxx Xxxxxxxxxx
LANNETT COMPANY, INC.
By /s/ Xxxxxx Xxxxxxxxx
------------------------
Xxxxxx Xxxxxxxxx
Its: President
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