EMPLOYMENT AGREEMENT
EXHIBIT 10.9.2
EMPLOYMENT AGREEMENT (this “Agreement”), dated as of August 9, 2007, by and between Par
Pharmaceutical Companies, Inc., and Par Pharmaceutical, Inc., each a Delaware corporation
(collectively, “Par” or “Employer”), and Xxxxxxx XxXxxx (“Executive”).
RECITALS:
A. WHEREAS, Executive is presently employed in the capacity of President and Chief Executive
Office of Par Pharmaceutical Companies, Inc., and as President and Chief Executive Officer of Par
Pharmaceutical, Inc. and Executive and Employer desire that Executive continue to provide services
in these capacities; and
B. WHEREAS, by Agreement dated November 2006 Employer and Executive agreed upon terms and
conditions of Executive’s employment, which Agreement expires September 27, 2007, and, accordingly
Employer and Executive desire to enter into a new Agreement in order for Executive to continue in
the afore-mentioned positions.
C. WHEREAS, Executive and Employer agree and acknowledge that the Agreement set forth herein
supercedes any prior and contemporaneous written or oral agreement between the parties and that
upon execution the terms and conditions set forth herein govern Executive’s employment.
In consideration of the mutual promises herein contained, the parties hereto hereby agree as
follows:
1. Employment.
1.1. General. Employer hereby employs Executive effective September 26, 2007 in the
capacity of President and Chief Executive Officer of Employer at the compensation rate and
benefits set forth in Section 2 hereof for the Employment Term (as defined in Section 3.1 hereof).
Executive hereby accepts such employment, subject to the terms and conditions herein contained. In
all such capacities, Executive shall perform and carry out such duties and responsibilities as may
be assigned to him from time to time by the Board of Directors (the “Board”) reasonably consistent
with Executive’s position and this Agreement, and shall report to the Board.
1.2. Time Devoted to Position. Executive, during the Employment Term, shall devote
substantially all of his business time, attention and skills to the business and affairs of
Employer.
1.3. Certifications. Whenever the Chief Executive Officer of Par is required by law,
rule or regulation or requested by any governmental authority or by Par’s
auditors to provide certifications with respect to Par’s financial statements or filings with
the Securities and Exchange Commission or any other governmental authority, Executive shall sign
such certifications as may be reasonably requested by the Board, with such exceptions as Executive
deems necessary to make such certifications accurate and not misleading, and comply with applicable
law.
2. Compensation and Benefits.
2.1. Salary. At all times Executive is employed hereunder, and on a retroactive basis
to June 6, 2007, Employer shall pay to Executive, and Executive shall accept, as full compensation
for any and all services rendered and to be rendered by him during such period to Employer in all
capacities, including, but not limited to, all services that may be rendered by him to any of
Employer’s existing subsidiaries, entities and organizations hereafter formed, organized or
acquired by Employer, directly or indirectly (each, a “Subsidiary” and collectively, the
“Subsidiaries”), the following: (i) a base salary at the annual rate of $800,000 (Eight Hundred
Thousand Dollars), or at such increased rate as the Board (through its Compensation and Equity
Awards Committee), in its sole discretion, may hereafter from time to time grant to Executive
(initially and as so increased, the “Base Salary”); and (ii) any additional bonus and the benefits
set forth in Sections 2.2, 2.3 and 2.4 hereof. The Base Salary shall be payable in accordance with
the regular payroll practices of Employer applicable to senior executives, less such deductions as
shall be required to be withheld by applicable law and regulations or otherwise. To the extent
Executive is eligible for or awarded increased compensation pursuant to this Section, the increase
shall occur in March of each year, or at such other time as the Compensation Committee deems
appropriate.
2.2. Bonus.
2.2.1. In September, 2007, Executive shall receive a bonus in the amount of $458,500 (four
hundred fifty eight thousand five hundred dollars). For the sake of clarity, this bonus is in lieu
of and not in addition to any other bonus payment promised to Executive as part of any prior
agreement with Employer including but not limited to any bonus referenced in Section 2.2 of the
November 2006 Agreement between Employer and Executive.
2.2.2. Subject to Section 3.3 hereof, Executive shall be entitled to an annual bonus during
the Employment Term in such amount (if any) as determined by the Board based on such performance
criteria as it deems appropriate, including, without limitation, Executive’s performance and
Employer’s earnings, financial condition, rate of return on equity and compliance with regulatory
requirements. The target amount of Executive’s annual bonus shall be equal to 100% (one hundred
percent) of his Base Salary. At the time the Board determines the Executive’s eligibility for a
bonus, the Board shall set forth all material terms of the bonus arrangement in a written document,
and the terms shall satisfy the deferral election rules of Treasury Regulation §1.409A-2, and with
respect to the timing and form of payment either the short-term deferral rule of Treasury
Regulation §1.409A-1(b)(4), or the permissible payment rules of Treasury Regulation §1.409A-3.
Executive’s bonus eligibility shall be determined in March of each year, or at such time as the
Compensation Committee deems appropriate. Notwithstanding the foregoing, for the period from
September 2007 through March
2
2008, Executive’s target bonus amount shall be four hundred thousand dollars ($400,000), i.e.,
one-half of his annual target amount.
2.3. Equity Awards. Executive shall be entitled to participate in long-term incentive
plans commensurate with his titles and positions, including, without limitation, stock option,
restricted stock, and similar equity plans of Employer as may be offered from time to time. In
connection herewith, Executive has been granted eighty thousand (80,000) shares of restricted stock
of Par, and options to purchase one-hundred twenty thousand (120,000) shares of common stock of Par
on the terms and conditions set forth in the 2004 Performance Equity Plan, as amended (the “2004
Plan”) and Executive’s Stock Option Agreement and Award Agreement. Executive will also be eligible
for one-half of his discretionary equity grant in the first quarter of 2008, and shall be eligible
for equity grants in accordance with Employer’s regular practices thereafter, with all grants being
subject to the sole discretion of the Board.
2.4. Executive Benefits.
2.4.1. Expenses. Employer shall promptly reimburse Executive for expenses he
reasonably incurs in connection with the performance of his duties (including business travel and
entertainment expenses) hereunder, all in accordance with Employer’s policies with respect thereto
as in effect from time to time.
2.4.2. Employer Plans. Executive shall be entitled to participate in such employee
benefit and welfare plans and programs as Employer may from time to time generally offer or provide
to executive officers of Employer or its Subsidiaries, including, but not limited to, participation
in life insurance, health and accident, medical plans and programs and profit sharing and
retirement plans.
2.4.3. Vacation. Executive shall be entitled to four (4) weeks of paid vacation per
calendar year, prorated for any partial year.
2.4.4. Life Insurance. Employer shall obtain (provided, that Executives qualifies on a
non-rated basis) a term life insurance policy, the premiums of which shall be borne by Employer and
the death benefits of which shall be payable to Executive’s estate, or as otherwise directed by
Executive, in the amount of $3 million throughout the Employment Term.
2.4.5. Automobile. Employer shall provide Executive with an automobile cash allowance
of one thousand and fifty dollars ($1,050) (gross) per month.
3. Employment Term; Termination.
3.1. Employment Term. Executive’s employment hereunder shall commence on the date
hereof and, except as otherwise provided in Section 3.2 hereof, shall continue until the third
(3rd) anniversary of the date of this Agreement (the “Initial Term”). Thereafter, this Agreement
shall automatically be renewed for successive one-year periods commencing on the third (3rd)
anniversary of the date of this Agreement (the Initial Term, together with any such subsequent
employment period(s), being referred to herein as the
3
“Employment Term”), unless Executive or Employer shall have provided a Notice of Termination
(as defined in Section 3.4.2 hereof) in respect of its or his election not to renew the Employment
Term to the other party at least ninety (90) days prior to the end of the current Employment Term.
Upon nonrenewal of the Employment Term pursuant to this Section 3.1 or termination pursuant to
Sections 3.2.1 through 3.2.6 hereof, inclusive, Executive shall be released from any duties
hereunder (except as set forth in Section 4 hereof) and the obligations of Employer to Executive
shall be as set forth in Section 3.3 hereof only.
3.2. Events of Termination. The Employment Term shall terminate upon the occurrence of
any one or more of the following events:
3.2.1. Death. In the event of Executive’s death, the Employment Term shall terminate
on the date of his death.
3.2.2. Without Cause By Executive. Executive may terminate the Employment Term at any
time during such Term for any reason whatsoever by giving a Notice of Termination to Employer. The
Date of Termination pursuant to this Section 3.2.2 shall be thirty (30) days after the Notice of
Termination is given.
3.2.3. Disability. In the event of Executive’s Disability (as hereinafter defined),
Employer may, at its option, terminate the Employment Term by giving a Notice of Termination to
Executive. The Notice of Termination shall specify the Date of Termination, which date shall not be
earlier than thirty (30) days after the Notice of Termination is given. For purposes of this
Agreement, “Disability” means disability as defined in any long-term disability insurance policy
provided by Employer and insuring Executive, or, in the absence of any such policy, the inability
of Executive for 180 days in any consecutive twelve (12) month period to substantially perform his
duties hereunder as a result of a physical or mental illness, all as determined in good faith by
the Board.
3.2.4. For Cause By Employer. Employer may terminate the Employment Term for “Cause”
as determined in good faith by a majority of the Board as set forth in a Notice of Termination to
Executive specifying the reasons for termination and the failure of the Executive to cure the same
within ten (10) days after the Executive’s receipt of the Employer Notice of Termination;
provided, however, that in the event the Board in good faith determines that the
underlying reasons giving rise to such determination cannot be cured, then the ten (10) day period
shall not apply and the Employment Term shall terminate on the date the Notice of Termination is
given. For purposes of this Agreement, “Cause” shall mean (i) Executive’s conviction of, guilty or
no contest plea to, or confession of guilt of, a felony, or other crime involving moral turpitude;
(ii) an act or omission by Executive in connection with his employment that constitutes fraud,
criminal misconduct, breach of fiduciary duty, dishonesty, gross negligence, malfeasance, or
willful misconduct, regardless of harm to the Employer or any of its Subsidiaries or affiliates, or
other conduct that is materially harmful or detrimental to Employer or any of its Subsidiaries or
affiliates; (iii) is a material breach by Executive of this Agreement; (iv) Executive’s continuing
failure to perform such duties as are assigned to Executive by Employer in accordance with this
Agreement, other than a failure resulting from a Disability; (v) Executive’s knowingly taking any
action on behalf of Employer or any of its Subsidiaries or affiliates without appropriate authority
to take such action; (vi) Executive’s
4
knowingly taking any action in conflict of interest with Employer or any of its Subsidiaries
or affiliates given Executive’s position with Employer; and/or (vii) the commission of an act of
personal dishonesty by Executive that involves personal profit in connection with Employer or any
of its Subsidiaries or affiliates.
3.2.5. Without Cause By Employer. Employer may terminate the Employment Term for any
reason or no reason whatsoever (other than for the reasons set forth elsewhere in this Section 3.2)
by giving a Notice of Termination to Executive. The Notice of Termination shall specify the Date of
Termination, which date shall not be earlier than thirty (30) days after the Notice of Termination
is given or such shorter period if Employer shall pay to Executive that amount of the Base Salary
amount that would have been earned between the thirty (30) day period and such shorter period in
accordance with the Employer’s regular payroll practices.
3.2.6. Employer’s Material Breach. Executive may terminate the Employment Term upon
Employer’s material breach of this Agreement and the continuation of such breach so long as
Executive has provided written notice to Employer of a material breach (which notice shall identify
the manner in which Employer has materially breached this Agreement) within ninety (90) days of the
initial existence of the breach, and afforded Employer no less than thirty (30) days for cure of
such breach. Employer is not required to pay severance under Section 3.3.3 when Employer cures the
material breach identified in Executive’s notice within thirty (30) days of Employer’s receipt of
the notice. Employer’s material breach of this Agreement shall mean (i) the failure of Employer to
make any payment that it is required to make hereunder to Executive when such payment is due; (ii)
the assignment to Executive, without Executive’s express written consent, of duties inconsistent
with his positions, responsibilities and status with Employer, or a change in Executive’s reporting
responsibilities, titles or offices or any plan, act, scheme or design to constructively terminate
the Executive, or any removal of Executive from his positions with Employer, except in connection
with the termination of the Employment Term by Employer for Cause, without Cause or Disability or
as a result of Executive’s death or voluntary resignation or by Executive other than pursuant to
this Section 3.2.6; (iii) a reduction by Employer in Executive’s Base Salary; or (iv) a permanent
reassignment of Executive’s primary work location, without the consent of Executive, to a location
more than thirty-five (35) miles from Employer’s executive offices in Woodcliff Lake, New Jersey.
3.3. Certain Obligations of Employer Following Termination of the Employment Term.
Following termination of the Employment Term under the circumstances described below, Employer
shall pay to Executive or his estate, as the case may be, the following compensation and provide
the following benefits in full satisfaction and final settlement of any and all claims and demands
that Executive now has and hereafter may have hereunder against Employer. Any and all payments
referenced in Section 3.3 are contingent upon Executive’s execution within thirty (30) days after
the Date of Termination of Employer’s standard form Release Agreement in effect at the Date of
Termination. In connection with Executive’s receipt of any or all monies and benefits to be
received pursuant to this Section 3.3, Executive shall not have a duty to seek subsequent
employment during the period in which he is receiving such monies and benefits payments and the
Severance Amount (as defined in Section 3.3.2 hereof)
5
shall not be reduced solely as a result of Executive’s subsequent employment by an entity
other than Employer. Any and all payments referenced in Section 3.3 are contingent upon
Executive’s execution within thirty (30) days after the Date of Termination of Employer’s standard
form of Release Agreement on the Date of Termination. No payments shall be made prior to execution
of the release agreement.
3.3.1. For Cause. In the event that the Employment Term is terminated by Employer for
Cause, Employer shall pay to Executive, in a single lump-sum within thirty (30) days of the Date of
Termination, and in accordance with Employer’s regular payroll practices, an amount equal to any
unpaid but earned Base Salary through the Date of Termination.
3.3.2. Without Cause by Employer; Material Breach by Employer; Non-Renewal by
Employer. In the event that the Employment Term is terminated by Employer pursuant to Section
3.2.5 hereof or by Executive pursuant to Section 3.2.6 hereof, or is not renewed by Employer
pursuant to Section 3.1 hereof, Employer shall pay to Executive severance, subject to Executive’s
continued compliance with the terms of Section 4, in an amount equal to two (2) times his Base
Salary as in effect on the Date of Termination, and Executive shall retain all vested benefits
granted pursuant to Section 2.3 hereof, plus, if Executive’s termination is not, as set forth in
the Notice of Termination, a result of, in whole or in part, Executive’s performance in respect of
his duties hereunder, the amount of Executive’s last annual cash bonus pursuant to Section 2.2
hereof (the “Severance Amount”) Any payments made in accordance with this Section 3.3.2 shall be
made in equal semimonthly installments in accordance with Employer’s regular payroll practices, for
a term ending on the earlier of the end of the current Employment Term, and two and one-half months
after the end of the Executive’s taxable year in which the Employment Term is terminated, or, if
upon agreement of Executive and Employer, in a lump sum within thirty (30) days of the Date of
Termination. In addition, no payment may be made under this Section 3.3.2 on Executive’s
Termination under Section 3.2.6 unless Executive terminated the Employment Term during the six (6)
months immediately following his initial identification of a material breach, as required under
Section 3.2.6. Payment of the Severance Amount is subject to Executive’s continued compliance with
the terms of Section 4 hereof and the execution by Executive within thirty (30) days after the Date
of Termination of Employer’s standard form Release Agreement in effect at the Date of Termination.
No payments shall be made prior to execution of the Release Agreement.
3.3.3. Without Cause By Executive; Non- Renewal by Executive. In the event that the
Employment Term is terminated by Executive pursuant to Section 3.2.2 hereof or Executive elects not
to renew this Agreement pursuant to Section 3.1 hereof, Employer shall pay to Executive, in a
single lump-sum within thirty (30) days of the Date of Termination, and in accordance with
Employer’s regular payroll practices, an amount equal to any unpaid but earned Base Salary through
the Date of Termination. In the event Executive has elected non-renewal or has elected to separate
from Employer after a Change in Control, the Compensation and Equity Awards Committee may choose
also to consider Executive’s performance and accomplishments to the Date of Termination, as well as
the Employer’s earnings, financial condition, rate of return on equity and compliance with
regulatory requirements, as well as the existence of an approved successor plan, in considering
whether to award Executive additional compensation upon his separation. The Executive does not
have a legal right to and is not vested
6
in this additional compensation at any time prior to the Date of Termination under Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”).
3.3.4. Death, Disability. In the event that the Employment Term is terminated by
reason of Executive’s death pursuant to Section 3.2.1 hereof or by Employer by reason of
Executive’s Disability pursuant to Section 3.2.3 hereof, Employer shall pay to Executive, subject
to, in the case of Disability, Executive’s continued compliance with Section 4 hereof, the
Severance Amount, less any life insurance and/or disability insurance received by Executive or his
estate pursuant to insurance policies provided by Employer (including without limitation pursuant
to Section 2.4.4 hereof), payable in accordance with Section 3.3.2 hereof, and Executive shall
retain all vested benefits granted pursuant to Section 2.3 hereof.
3.3.5. Post-Employment Term Benefits. In the event Executive is terminated pursuant to
Sections 3.2.1 through 3.2.6 hereof, inclusive, or either Employer or Executive elects not to renew
this Agreement pursuant to Section 3.1 hereof, Employer shall reimburse Executive for any unpaid
expenses pursuant to Section 2.4.1 hereof, and Executive will have the opportunity and
responsibility to elect COBRA continuation coverage pursuant to the terms of that law and will thus
be responsible for the execution of the continuation of coverage forms upon termination of his
insurance coverage. Except as provided immediately below, Executive will be responsible for all
COBRA premiums. If Executive is terminated pursuant to Sections 3.2.3, 3.2.5, 3.2.6, or Employer
elects not to renew this Agreement pursuant to Section 3.1 hereof, Executive shall be entitled to
participate, at Employer’s expense, in all medical and health plans and programs of Employer in
accordance with COBRA for a period of eighteen (18) months (the “Benefits Period”), subject to the
execution by Executive within thirty (30) days after the Date of Termination of Employer’s standard
form Release Agreement in effect on the Date of Termination, and to Executive’s continued
compliance with Section 4; provided, however, that Executive’s continued participation is
permissible under the terms and provisions of such plans and programs; and provided,
further, that if Executive becomes entitled to equal or comparable benefits from a
subsequent employer during the Benefits Period, Employer’s obligations under this Section 3.3.5
shall end as of such date.
3.3.6. Equity Awards.
(a) If, within twelve (12) months following a Change of Control (as defined in Section 3.4.1
hereof) of Employer, the Employment Term is terminated other than for Cause, then Executive (or his
estate) shall have twenty-four (24) months from the date of termination to exercise any vested
equity awards; provided, however, that the relevant equity award plan remains in effect and
such equity awards have not have otherwise expired in accordance with the terms thereof. In
connection therewith, Employer agrees to use commercially reasonable efforts to amend Executive’s
Equity Award Agreements if necessary to effectuate the provisions of this Section 3.3.6(a).
(b) In the event the Employment Term is terminated (i) by Employer pursuant to Section 3.2.5
hereof and the reason for such termination, as set forth in the Notice of Termination, is not
related to the Executive’s performance of Executive in his duties with respect to Employer, or (ii)
by Executive pursuant to Section 3.2.6 hereof, then all equity awards theretofore granted to
Executive on or after the execution of this Agreement shall
7
thereupon vest and Executive shall have twenty-four (24) months from such date to exercise
such options; provided, however, that the relevant equity award plan remains in effect and
such equity awards shall not have otherwise expired in accordance with the terms thereof. In
connection therewith, Employer agrees to use commercially reasonable efforts to amend Executive’s
Equity Award Agreements if necessary to effectuate the provisions of this Section 3.3.6(b). All
equity awards granted to Executive prior to the execution of this Agreement shall continue to vest
according to the schedule set forth at the time the awards were granted to Executive and shall
remain subject to those terms and conditions set forth in Executive’s Equity Award Agreements
related to such awards.
3.4. Definitions.
3.4.1. “Change of Control” Defined. A “Change of Control” of Employer means (i) the
approval by the stockholders of Par of the sale, lease, exchange or other transfer (other than
pursuant to internal reorganization) by Par of all or substantially all of its respective assets to
a single purchaser or to a group of associated purchasers; (ii) the first purchase of shares of
equity securities of Par pursuant to a tender offer or exchange offer (other than an offer by Par)
for at least fifteen (15%) percent of the equity securities of Par; (iii) the approval by the
stockholders of Par of an agreement for a merger or consolidation in which Par shall not survive as
an independent, publicly-owned corporation; (iv) the acquisition (including without limitation by
means of a merger) by a single purchaser or a group of associated purchasers of securities of Par
from either Par or any third party representing thirty-five (35%) percent or more of the combined
voting power of Par’s then outstanding equity securities in one or a related series of transactions
(other than pursuant to an internal reorganization) or (v) the change of the membership of a
majority of the Board during any period of two (2) consecutive years, unless the election, or the
nomination for election by Par’s stockholders, of each new director was approved by a vote of at
least two-thirds of the directors of the Board still in office who were directors of Par at the
beginning of the period.
3.4.2. “Notice of Termination” Defined. “Notice of Termination” means a written
notice that indicates the specific termination provision relied upon by Employer or Executive and,
except in the case of termination pursuant to Sections 3.2.1, 3.2.2 or 3.2.5 (other than as
required under Section 3.3.2 or 3.3.6), that sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employment Term under the
termination provision so indicated.
3.4.3. “Date of Termination” Defined. “Date of Termination” means such date as the
Employment Term is expired if not renewed or terminated in accordance with Sections 3.1 or 3.2
hereof.
4. Confidentiality/Non-Solicitation/Non-Compete.
4.1. “Confidential Information” Defined. “Confidential Information” means any and all
information (oral or written) relating to Employer or any Subsidiary or any person or entity
controlling, controlled by, or under common control with Employer or any Subsidiary or any of their
respective activities, including, but not limited to, information relating to: technology,
research, test procedures and results, machinery and equipment; manufacturing
8
processes; financial information; products; identity and description of materials and services
used; purchasing; costs; pricing; customers and prospects; advertising, promotion and marketing;
and selling, servicing and information pertaining to any governmental investigation, except such
information which becomes public, other than as a result of a breach of the provisions of Section
4.2 hereof.
4.2. Non-disclosure of Confidential Information. Executive shall not at any time
(other than as may be required or appropriate in connection with the performance by him of his
duties hereunder), directly or indirectly, use, communicate, disclose or disseminate any
Confidential Information in any manner whatsoever for the benefit of any person or entity other
than Employer (except as may be required under legal process by subpoena or other court order).
4.3. Non-Solicitation. Executive shall not, while employed by Employer and for a
period of one (1) year following the Date of Termination, directly or indirectly, hire, offer to
hire, entice away or in any other manner persuade or attempt to persuade any officer, employee,
agent, lessor, lessee, licensor, licensee, customer, prospective customer, or supplier of Employer
or any of its Subsidiaries to discontinue or alter his or its relationship with Employer or any of
its Subsidiaries.
4.4. Non-Competition. Executive shall not, while employed by Employer and for a period
of one (1) year following the Date of Termination, directly or indirectly provide any services
(whether in the management, sales, marketing, public relations, finance, research, development,
general office, administrative, or other areas) as an employee, agent, stockholder, officer,
director, consultant, advisor, investor, or other representative of Employer’s competitors in the
branded or generic pharmaceutical industry in any state or country in which Employer does or seeks
to do business. Employer’s competitors include any entity, individual, or affiliate of such company
or individual that develops, sells, markets, or distributes any products that compete with or are
the same or similar to those of Employer. However, the restrictions of this Section 4.4 shall not
apply if the Employment Term is terminated by Employer pursuant to Section 3.2.5 hereof or by
Executive properly pursuant to Section 3.2.6 hereof; nor shall this Section 4.4 prohibit Executive
from being a passive owner of not more than one (1%) percent of any publicly-traded class of
capital stock of any entity engaged in a competing business.
4.5. Injunctive Relief. The parties hereby acknowledge and agree that (a) the type,
scope and periods of restrictions imposed in Section 4 are necessary, fair and reasonable to
protect Employer’s legitimate business interests and to prevent the inevitable disclosure of
Employer’s Confidential Information; (b) Employer will be irreparably injured in the event of a
breach by Executive of any of his obligations under this Section 4; (c) monetary damages will not
be an adequate remedy for any such breach; (d) Employer will be entitled to injunctive relief, in
addition to any other remedy which it may have, in the event of any such breach; and (e) the
existence of any claims that Executive may have against Employer, whether under this Agreement or
otherwise, will not be a defense to the enforcement by Employer of any of its rights under this
Section 4.
9
4.6. Non-exclusivity and Survival. The covenants of Executive contained in this
Section 4 are in addition to, and not in lieu of, any obligations that Executive may have with
respect to the subject matter hereof, whether by contract, as a matter of law or otherwise, and
such covenants and their enforceability shall survive any termination of the Employment Term by
either party and any investigation made with respect to the breach thereof by Employer at any time.
5. Miscellaneous Provisions.
5.1. Severability. If, in any jurisdiction, any term or provision hereof is determined
to be invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired;
(b) any such invalidity or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction; and (c) the invalid or unenforceable term
or provision shall, for purposes of such jurisdiction, be deemed replaced by a term or provision
that is valid and enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision.
5.2. Execution in Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each of which shall be
deemed to be an original but all of which taken together shall constitute one and the same
agreement (and all signatures need not appear on any one counterpart), and this Agreement shall
become effective when one or more counterparts has been signed by each of the parties hereto and
delivered to each of the other parties hereto.
5.3. Notices. All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed duly given upon receipt when delivered by hand, overnight
delivery or telecopy (with confirmed delivery), or three (3) business days after posting, when
delivered by registered or certified mail or private courier service, postage prepaid, return
receipt requested, as follows:
If to Employer, to:
Par Pharmaceutical, Inc.
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Chairman
Telecopy No. 000-000-0000
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Chairman
Telecopy No. 000-000-0000
Copy to:
Xxxxxxxxx X. Xxxxxx, Esq.
Xxxxxxx, P.C.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Telecopy No.: (000) 000-0000
Xxxxxxx, P.C.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Telecopy No.: (000) 000-0000
If to Executive, to:
10
Xxxxxxx XxXxxx
c/o Par Pharmaceutical, Inc.
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
c/o Par Pharmaceutical, Inc.
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
or to such other address(es) as a party hereto shall have designated by like notice to the other
parties hereto.
5.4. Amendment. No provision of this Agreement may be modified, amended, waived or
discharged in any manner except by a written instrument executed by both Par and Executive.
5.5. Entire Agreement. This Agreement and, with respect to Sections 2.3 and 3.3.6,
Executive’s Equity Award Agreements and governing equity award plans constitute the entire
agreement of the parties hereto with respect to the subject matter hereof, and supersede all prior
agreements and understandings of the parties hereto, oral or written, including, but not limited
to, the parties’ Employment Agreement dated March 16, 2006. Executive and Employer hereby agree
that the Employment Agreement dated March 16, 2006, is hereby superseded and of no further force
and effect, and that this Agreement shall be effective as of the date hereof. In the event of any
conflict between Sections 2.3 and 3.3.6 hereof and Executive’s Equity Award Agreements and the
governing equity award plans, Sections 2.3 and 3.3.6 shall control.
5.6. Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey applicable to contracts made and to be wholly performed
therein.
5.7. Headings. The headings contained herein are for the sole purpose of convenience
of reference, and shall not in any way limit or affect the meaning or interpretation of any of the
terms or provisions of this Agreement.
5.8. Binding Effect; Successors and Assigns. Executive may not delegate any of his
duties or assign his rights hereunder. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective heirs, legal representatives, successors and
permitted assigns. Employer shall require any successor (whether direct or indirect and whether by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of Employer, by an agreement in form and substance reasonably satisfactory to Executive, to
expressly assume and agree to perform this Agreement in the same manner and to the same extent that
Employer would be required to perform if no such transaction had taken place.
5.9. Waiver, etc. The failure of either of the parties hereto to at any time enforce
any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such
provision, nor to in any way affect the validity of this Agreement or any provision hereof or the
right of either of the parties hereto thereafter to enforce each and every provision of this
Agreement. No waiver of any breach of any of the provisions of this Agreement shall be effective
unless set forth in a written instrument executed by the party against whom or
11
which enforcement of such waiver is sought, and no waiver of any such breach shall be
construed or deemed to be a waiver of any other or subsequent breach.
5.10. Capacity, etc. Executive and Employer hereby represent and warrant to the other
that, as the case may be: (a) he or it has full power, authority and capacity to execute and
deliver this Agreement, and to perform his or its obligations hereunder; (b) such execution,
delivery and performance shall not (and with the giving of notice or lapse of time or both would
not) result in the breach of any agreements or other obligations to which he or it is a party or he
or it is otherwise bound; and (c) this Agreement is his or its valid and binding obligation in
accordance with its terms.
5.11. Enforcement; Jurisdiction. If any party institutes legal action to enforce or
interpret the terms and conditions of this Agreement, the applicable court shall award the
prevailing party reasonable attorneys’ fees at all trial and appellate levels, and the expenses and
costs incurred by such prevailing party in connection therewith. Subject to Section 5.12, any
legal action, suit or proceeding, in equity or at law, arising out of or relating to this Agreement
shall be instituted exclusively in the State or Federal courts located in the State of New Jersey,
and each party agrees not to assert, by way of motion, as a defense or otherwise, in any such
action, suit or proceeding, any claim that such party is not subject personally to the jurisdiction
of any such court, that the action, suit or proceeding is brought in an inconvenient forum, that
the venue of the action, suit or proceeding is improper or should be transferred, or that this
Agreement or the subject matter hereof may not be enforced in or by any such court. Each party
further irrevocably submits to the jurisdiction of any such court in any such action, suit or
proceeding. Any and all service of process and any other notice in any such action, suit or
proceeding shall be effective against any party if given personally or by registered or certified
mail, return receipt requested or by any other means of mail that requires a signed receipt,
postage prepaid, mailed to such party as herein provided. Nothing herein contained shall be deemed
to affect or limit the right of any party to serve process in any other manner permitted by
applicable law.
5.12. Arbitration.
(a) Any dispute under Section 3 hereof, including, but not limited to, the determination by
the Board of a termination for Cause pursuant to Section 3.2.4 hereof, or in respect of the breach
thereof (other than a claim for equitable relief) shall be settled by arbitration in New Jersey.
The arbitration shall be accomplished in the following manner. Either party may serve upon the
other party written demand that the dispute, specifying the nature thereof, shall be submitted to
arbitration. Within ten (10) days after such demand is given in accordance with Section 5.3 hereof,
each of the parties shall designate an arbitrator and provide written notice of such appointment
upon the other party. If either party fails within the specified time to appoint such arbitrator,
the other party shall be entitled to appoint both arbitrators. The two (2) arbitrators so appointed
shall appoint a third arbitrator. If the two arbitrators appointed fail to agree upon a third
arbitrator within ten (10) days after their appointment, then an application may be made by either
party hereto, upon written notice to the other party, to the American Arbitration Association (the
“AAA”), or any successor thereto, or if the AAA or its successor fails to appoint a third
arbitrator within ten (10) days after such request, then either party may apply, with written
notice to the other, to the Superior Court of New Jersey, Bergen
12
County, for the appointment of a third arbitrator, and any such appointment so made shall be
binding upon both parties hereto.
(b) The decision of the arbitrators shall be final and binding upon the parties. The party
against whom the award is rendered (the “non-prevailing party”) shall pay all fees and expenses
incurred by the prevailing party in connection with the arbitration (including fees and
disbursements of the prevailing party’s counsel), as well as the expenses of the arbitration
proceeding. The arbitrators shall determine in their decision and award which of the parties is the
prevailing party, which is the non-prevailing party, the amount of the fees and expenses of the
prevailing party and the amount of the arbitration expenses. The arbitration shall be conducted, to
the extent consistent with this Section 5.12, in accordance with the then prevailing rules of
commercial arbitration of the AAA or its successor. The arbitrators shall have the right to retain
and consult experts and competent authorities skilled in the matters under arbitration, but all
consultations shall be made in the presence of both parties, who shall have the full right to
cross-examine the experts and authorities. The arbitrators shall render their award, upon the
concurrence of at least two of their number, not later than thirty (30) days after the appointment
of the third arbitrator. The decision and award shall be in writing, and counterpart copies shall
be delivered to each of the parties. In rendering an award, the arbitrators shall have no power to
modify any of the provisions of this Agreement, and the jurisdiction of the arbitrators is
expressly limited accordingly. Judgment may be entered on the award of the arbitrators and may be
enforced in any court having jurisdiction.
5.13. Specified Employee. Notwithstanding any other provision of this Agreement, if
Executive is a specified employee under Treas. Reg. §1.409A-1 as of the Date of Termination, all
payments to which Executive would otherwise be entitled during the first six months following the
date of separation from service shall be accumulated and paid on the first day of the seventh month
following the date of separation from service, or if earlier within thirty (30) days of the
Executive’s date of death following the date of separation from service. This provision shall not
apply to all payments on separation from service that satisfy the short-term deferral rule of
Treas. Reg. §1.409A-1(b)(4), or to the portion of the payments on separation from service that
satisfy the requirements for separation pay due to an involuntary separation from service under
Treas. Reg. §1.409A-1(b)(9)(iii), or to any payments that are otherwise exempt from the six month
delay requirement of the Treasury Regulations under Code Section 409A.
[SIGNATURE PAGE FOLLOWS]
13
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of
the date first above written.
| PAR PHARMACEUTICAL COMPANIES, INC. | ||||||
| By: | /s/ Xxxxx X. Xxxxxx | |||||
| Name: Xxxxx X. Xxxxxx | ||||||
| Title: Chair, Compensation Committee | ||||||
| PAR PHARMACEUTICAL, INC. | ||||||
| By: | /s/ Xxxxxxx XxXxxx | |||||
| Name: Xxxxxxx XxXxxx | ||||||
| Title: President and Chief Executive Officer |
14
