Exhibit 10.1
SAVIENT PHARMACEUTICALS, INC.
EMPLOYMENT AGREEMENT
FOR
XXXXXXXX X. XXXXXX
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER
CONTENTS
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Article 1. Term of Employment 1
Article 2. Definitions 1
Article 3. Position and Responsibilities 4
Article 4. Standard of Care 4
Article 5. Compensation 5
Article 6. Expenses 6
Article 7. Employment Terminations 6
Article 8. Change in Control 12
Article 9. Assignment 14
Article 10. Legal Fees and Notice 15
Article 11. Confidentiality and Noncompetition 15
Article 12. Outplacement Assistance 16
Article 13. Miscellaneous 16
Article 14. Governing Law 17
August, 2004
EMPLOYMENT AGREEMENT
This Agreement is made, entered into, and is effective as of the
Effective Date, by and between the Company and the Executive.
ARTICLE 1. TERM OF EMPLOYMENT
1.1 The Company hereby agrees to employ the Executive and the Executive
hereby agrees to serve the Company in accordance with the terms and
conditions set forth herein, for a period of three (3) years,
commencing as of the Effective Date.
1.2 Commencing on the third (3rd) anniversary of the Effective Date, and
each anniversary thereafter, the term of this Agreement shall
automatically be extended for one (1) additional year, unless at least
ninety (90) days prior to such anniversary, the Company or the
Executive shall have given notice in accordance with Section 10.2
hereof that it or he does not wish to extend the term of the Agreement.
ARTICLE 2. DEFINITIONS
2.1 "AGREEMENT" means this Employment Agreement.
2.2 "ANNUAL BONUS" means the annual bonus to be paid to the Executive in
accordance with the Company's annual bonus program as described in
Section 5.3 herein.
2.3 "BASE SALARY" means the salary of record paid to the Executive as
annual salary, pursuant to Section 5.2, excluding amounts received
under incentive or other bonus plans, whether or not deferred.
2.4 "BENEFICIAL OWNER" shall have the meaning ascribed to such term in Rule
13d-3 of the General Rules and Regulations under the Securities
Exchange Act.
2.5 "BENEFICIARY" means the persons or entities designated or deemed
designated by the Executive pursuant to Section 13.6 herein.
2.6 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.7 "CAUSE" means:
(a) Executive materially breached any of the terms of this Agreement
and failed to correct. such breach within fifteen (15) days after
written notice thereof from the Company;
(b) Executive has been convicted of a criminal offense involving a
felony giving rise to a sentence of imprisonment;
(c) Executive has breached a fiduciary trust for the purpose of
gaining a personal profit, including, without limitation,
embezzlement; or
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(d) Despite adequate warnings, Executive intentionally and willfully
failed to perform reasonably assigned duties within the normal and
customary scope of the Position.
2.8 "CHANGE IN CONTROL" OR "CIC" of the Company shall be deemed to have
occurred as of the first day that any one or more of the following
conditions is satisfied:
(a) Any consolidation or merger in which the Company is not the
continuing or surviving entity or pursuant to which shares of the
Common Stock would be converted into cash, securities, or other
property, other than (i) a merger of the Company in which the
holders of the Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (ii) a consolidation
or merger which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (by being converted into voting securities of the
continuing or surviving entity) more than 50% of the combined
voting power of the voting securities of the continuing or
surviving entity immediately after such consolidation or merger
and which would result in the members of the Board immediately
prior to such consolidation or merger (including for this purpose
any individuals whose election or nomination for election was
approved by a vote of at least two-thirds of such members)
constituting a majority of the Board (or equivalent governing
body) of the continuing or surviving entity immediately after
such consolidation or merger;
(b) Any sale, lease, exchange, or other transfer (in one transaction
or a series of related transactions) of all or substantially all
the Company's assets;
(c) The Company's stockholders approve any plan or proposal for the
liquidation or dissolution of the Company;
(d) Any Person shall become the Beneficial Owner of forty (40)
percent or more of the Common Stock other than pursuant to a
plan or arrangement entered into by such Person and the
Company; or
(e) During any period of two consecutive years, individuals who at
the beginning of such period constitute the entire Board of
Directors shall cease for any reason to constitute a majority of
the Board unless the election or nomination for election by the
Company's stockholders of each new director was approved by a
vote of at lest two-thirds of the directors then still in office
who were directors at the beginning of the period.
2.9 "CIC SEVERANCE BENEFITS" means the payment of severance compensation
associated with a Qualifying Termination occurring subsequent to a
Change in Control, as described in Section 8.3.
2.10 "CODE" means the United States Internal Revenue Code of 1986,
as amended.
2.11 "COMMON STOCK" means the common stock of the Company, $.01 par value.
2.12 "COMPENSATION COMMITTEE" means the Compensation and Stock Option
Committee of the Board, or any other committee appointed by the Board
to perform the functions of such committee.
2.13 "COMPANY" means Savient Pharmaceuticals, Inc., a Delaware corporation,
or any Successor Company thereto as provided in Section 9.1 herein.
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2.14 "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
2.15 "DISABILITY" or "DISABLED" means for all purposes of this Agreement,
the meaning ascribed to such term in the Company's long-term disability
plan, or in any successor to such plan.
2.16 "EFFECTIVE DATE" means AUGUST 23, 2004.
2.17 "EFFECTIVE DATE OF TERMINATION" means the date on which a termination
of the Executive's employment occurs.
2.18 "EMPLOYMENT DATE" means AUGUST 23, 2004.
2.19 "EXECUTIVE" means Xxxxxxxx X. Xxxxxx who, as of the Effective Date,
resides at 00 Xxxxxxxx Xxxxxxxx, Xxxxxxx Xxxxx, XX, 00000.
2.20 "GOOD REASON" shall mean, without the Executive's express written
consent, the occurrence of any one or more of the following:
(a) Reducing the Executive's Base Salary;
(b) A material diminution of the scope or authority of Executive's
position, duties or responsibilities as in effect for the
preceding six (6) months;
(c) Failing to maintain Executive's amount of benefits under or
relative level of participation in the Company's employee benefit
or retirement plans, policies, practices, or arrangements in which
the Executive participates as of the Effective Date of this
Agreement, including any perquisite program; provided, however,
that any such change that applies consistently to all executive
officers of the Company or is required by applicable law shall not
be deemed to constitute Good Reason;
(d) Failing to require any Successor Company to assume and agree to
perform the Company's obligations hereunder;
(e) The occurrence of any one or more of the following events on or
after the announcement of the transaction which leads to the CIC
and up to twenty-four (24) calendar months following the effective
date of a CIC:
(1) Requiring Executive to be based at a location that requires
the Executive to travel at least an additional thirty-five
(35) miles per day;
(2) Requiring Executive to report to a position which is at a
lower level than the highest level to which Executive
reported within the six (6) months prior to the CIC;
(3) Demoting Executive to a level lower than Executive's level
in the Company as of the Effective Date; or
(4) A material diminution of the scope or authority of
Executive's position, duties or responsibilities as in
effect immediately prior to the effective date of a CIC.
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2.21 "NOTICE OF TERMINATION" means a written notice which shall indicate the
specific termination provision in this Agreement relied upon, and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provisions so indicated, and, where applicable, shall specifically
include notice pursuant to Section 1.2 that Company has elected not to
renew this Agreement.
2.22 "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d) thereof.
2.23 "POSITION" shall have the meeting ascribed to it in Section3.1.
2.24 "QUALIFYING TERMINATION" means any of the events described in Section
8.2 herein, the occurrence of which triggers the payment of CIC
Severance Benefits hereunder.
2.25 "SECURITIES EXCHANGE ACT" means the United States Securities Exchange
Act of 1934, as amended.
2.26 "SERVICE MULTIPLE" shall have the meaning ascribed to it in Section
7.4(c).
2.27 "SEVERANCE BENEFITS" means the payment of severance compensation as
provided in Sections 7.4 and 7.6 herein, and not payable due to a
Change in Control of the Company.
2.28 "SUCCESSOR COMPANY" shall have the meaning ascribed to it in
Section 9.1.
2.29 "TERM" shall mean that period of time commencing on the Effective Date
and ending on the Effective Date of Termination.
ARTICLE 3. POSITION AND RESPONSIBILITIES
3.1 During the term of this Agreement, the Executive agrees to serve as
Senior Vice President, Chief Financial Officer and Treasurer of the
Company or in such other position which Executive shall agree to accept
or to which Executive shall be promoted during the Term and Executive
shall report directly to the Chief Executive Officer or such other
position which is at a higher position or level in the Company than
Executive and as shall be determined by the Chief Executive Officer in
his sole discretion, and shall maintain the level of duties and
responsibilities as in effect as of the Effective Date, or such higher
level of duties and responsibilities as Executive may be assigned
during the Term (the "Position").
ARTICLE 4. STANDARD OF CARE
4.1 During the term of this Agreement, the Executive agrees to devote
substantially his full time, attention, and energies to the Company's
business and shall not be engaged in any other business activity,
whether or not such business activity is pursued for gain, profit, or
other pecuniary advantage unless such business activity is approved by
the Compensation Committee (or, in the event the Compensation Committee
ceases to exist, the Board). However, subject to Article 11 herein and
approval by the Compensation Committee (or the Board, as the case may
be), the Executive may serve as a director of other companies so long
as such service is not injurious to the Company.
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ARTICLE 5. COMPENSATION
5.1 As remuneration for all services to be rendered by the Executive during
the term of this Agreement, and as consideration for complying with the
covenants herein, the Company shall pay and provide to the Executive
those items set forth in Sections 5.2 through 5.8.
5.2 BASE SALARY. The Company shall pay the Executive a Base Salary in an
amount which shall be established from time to time by the Board of
Directors of the Company or the Board's designee; provided, however,
that such Base Salary shall not be less than THREE HUNDRED TWENTY
THOUSAND (US$320,000) per year.
(a) This Base Salary shall be paid to the Executive in equal
installments throughout the year, consistent with the normal
payroll practices of the Company.
(b) The Base Salary shall be reviewed at least annually following the
Effective Date of this Agreement, while this Agreement is in
force, to ascertain whether, in the judgment of the Board or the
Board's designee, such Base Salary should be increased based
primarily on the performance of the Executive during the year. If
so increased, the Base Salary as stated above shall, likewise, be
increased for all purposes of this Agreement and shall not, in any
event, be decreased in any year.
5.3 ANNUAL BONUS. In addition to his Base Salary, the Executive shall be
entitled to participate in the Company's annual short-term incentive
program, as such program may exist from time to time, at a level
commensurate with the Position. The percentage of Base Salary targeted
as annual short-term incentive compensation shall be established for
the Position by the Company's Compensation Committee in its sole
discretion (the "targeted Annual Bonus award"). Executive acknowledges
that the amount of annual short-term incentive, if any, to be awarded
shall be at the sole discretion of the Company's Compensation
Committee, may be less or more than the targeted Annual bonus award,
and will be based on a number of factors set in advance by the
Compensation Committee for each calendar year, including the Company's
performance and the Executive's individual performance. Nothing in this
Section 5.3 shall be construed as obligating the Company or the Board
to refrain from changing, and/or amending the short-term incentive
program, so long as such changes are equally applicable to all
executive employees in the Company.
5.4 LONG-TERM INCENTIVES. The Executive shall be eligible to participate in
the Company's long-term incentive plan, as such shall be amended or
superseded from time to time provided, however, that nothing in this
Section 5.4 shall be construed as obligating the Company or the Board
to refrain from changing, and/or amending the long-term incentive plan,
so long as such changes are equally applicable to all executive
employees in the Company.
5.5 RETIREMENT BENEFITS. The Company shall provide to the Executive
participation in any Company qualified defined benefit and defined
contribution retirement plans as may be established during the term of
this Agreement; provided, however, that nothing in this Section 5.5
shall be construed as obligating the Company to refrain from changing,
and/or amending the nonqualified retirement programs, so long as such
changes are equally applicable to all executive employees in the
Company.
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5.6 EMPLOYEE BENEFITS. During the Term, and as otherwise provided within
the provisions of each of the respective plans, the Company shall
provide to the Executive all benefits to which other executives and
employees of the Company are entitled to receive, as commensurate with
the Position, subject to the eligibility requirements and other
provisions of such arrangements as applicable to executives of the
Company generally.
(a) Such benefits shall include, but shall not be limited to, group
term life insurance, health, dental and life insurance, and
short-term and long-term disability.
(b) The Executive shall likewise participate in any additional benefit
as may be established during the term of this Agreement, by
standard written policy of the Company.
5.7 VACATION. The Executive shall be entitled to such paid vacation as is
customary for the Position in corporate institutions of similar size
and character, but in any event not less than twenty (20) paid vacation
days during each calendar year; provided, however, that without prior
written approval, Executive may carry forward into the next year no
more than ten (10) unused vacation days from the current year.
5.8 RIGHT TO CHANGE PLANS. The Company shall not be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing any
benefit plan, program, or perquisite, so long as such changes are
equally applicable to all executive employees in the Company.
ARTICLE 6. EXPENSES
6.1 Upon presentation of appropriate documentation, the Company shall pay,
or reimburse the Executive for all ordinary and necessary expenses, in
a reasonable amount, which the Executive incurs in performing his
duties under this Agreement including, but not limited to, travel,
entertainment, professional licensing fees, dues and subscriptions, and
all dues, fees, and expenses associated with membership in various
professional, business, and civic associations and societies.
ARTICLE 7. EMPLOYMENT TERMINATIONS
7.1 TERMINATION DUE TO DEATH. In the event the Executive's employment is
terminated while this Agreement is in force by reason of death, the
Company's obligations under this Agreement shall immediately expire.
Notwithstanding the foregoing, the Company shall be obligated to pay to
the Executive the following:
(a) Base Salary through the Effective Date of Termination;
(b) An amount equal to the Executive's unpaid targeted Annual Bonus
award, established for the fiscal year in which such termination
is effective, multiplied by a fraction, the numerator of which is
the number of completed days in the then-existing fiscal year
through the Effective Date of Termination, and the denominator of
which is three hundred sixty-five (365);
(c) All outstanding long-term incentive awards shall be subject to the
treatment provided under the applicable long-term incentive plan
of the Company;
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(d) Accrued but unused vacation pay through the Effective Date of
Termination; and
(e) All other rights and benefits the Executive is vested in, pursuant
to other plans and programs of the Company.
(f) The benefits described in Sections 7.1(a) and (d) shall be paid in
cash to the Executive in a single lump sum as soon as practicable
following the Effective Date of Termination, but in no event
beyond thirty (30) days from such date. All other payments due to
the Executive upon termination of employment, including those in
Sections 7.1(b) and (c), shall be paid in accordance with the
terms of such applicable plans or programs.
(g) With the exception of the covenants contained in Articles 9 and 14
and Sections 7.1(f), 13.3, 13.5, and 13.7 herein (which shall
survive such termination), the Company and the Executive
thereafter shall have no further obligations under this Agreement.
7.2 TERMINATION DUE TO DISABILITY. In the event that the Executive becomes
Disabled during the term of this Agreement and is, therefore, unable
to perform his duties herein for more than one hundred eighty (180)
total calendar days during any period of twelve (12) consecutive
months, or in the event of the Board's reasonable expectation that the
Executive's Disability will exist for more than a period of one
hundred eighty (180) calendar days, the Company shall have the right
to terminate the Executive's active employment as provided in this
Agreement.
(a) The Board shall deliver written notice to the Executive of the
Company's intent to terminate for Disability at least thirty (30)
calendar days prior to the Effective Date of Termination.
(b) Such Disability to be determined by the Board of Directors of the
Company upon receipt of and in reliance on competent medical
advice from one (1) or more individuals, selected by the Board,
who are qualified to give such professional medical advice.
(c) A termination for Disability shall become effective upon the end
of the thirty (30) day notice period unless prior to the
expiration of such thirty (30) day notice period Executive returns
to work with medical documentation of his fitness to resume his
duties determined to be acceptable by the Board of Directors in
their sole discretion. Upon the Effective Date of Termination, the
Company's obligations under this Agreement shall immediately
expire.
(d) Notwithstanding the foregoing, the Company shall be obligated to
pay to the Executive the following:
(1) Base Salary through the Effective Date of Termination;
(2) An amount equal to the Executive's unpaid targeted Annual
Bonus award, established for the fiscal year in which the
Effective Date of Termination occurs, multiplied by a
fraction, the numerator of which is the number of completed
days in the then-existing fiscal year through the Effective
Date of Termination, and the denominator of which is three
hundred sixty-five (365);
(3) All outstanding long-term incentive awards shall be subject
to the treatment provided under the applicable long-term
incentive plan of the Company;
(4) Accrued but unused vacation pay through the Effective Date of
Termination; and
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(5) All other rights and benefits the Executive is vested in,
pursuant to other plans and programs of the Company.
(e) The benefits described in Sections 7.2(d)(1) and (d)(4) shall be
paid in cash to the Executive in a single lump sum as soon as
practicable following the Effective Date of Termination, but in no
event beyond thirty (30) days from such date. All other payments
due to the Executive upon termination of employment, including
those in Sections 7.2(d)(2) and (d)(3), shall be paid in
accordance with the terms of such applicable plans or program.
(f) With the exception of the covenants contained in Articles 8, 9,
11, and 14 and Sections 7.2(e), 13.3, 13.5, and 13.7 herein (which
shall survive such termination), the Company and the Executive
thereafter shall have no further obligations under this Agreement.
7.3 VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may terminate
this Agreement at any time by giving Notice of Termination to the Board
of Directors of the Company, delivered at least fourteen (14) calendar
days prior to the Effective Date of Termination.
(a) The termination automatically shall become effective upon the
expiration of the fourteen (14) day notice period. Notwithstanding
the foregoing, the Company may waive the fourteen (14) day notice
period; however, the Executive shall be entitled to receive all
elements of compensation described in Sections 5.1 through 5.6 for
the fourteen (14) day notice period, subject to the eligibility
and participation requirements of any qualified retirement plan.
(b) Upon the Effective Date of Termination, following the expiration
of the fourteen (14) day notice period, the Company shall pay the
Executive his full Base Salary and accrued but unused vacation
pay, at the rate then in effect, through the Effective Date of
Termination, plus all other benefits to which the Executive has a
vested right at that time (for this purpose, the Executive shall
not be paid any Annual Bonus with respect to the fiscal year in
which voluntary termination under this Section occurs).
(c) With the exception of the covenants contained in Articles 8, 9,
11, and 14 and Sections 13.3, 13.5, and 13.7 herein (which shall
survive such termination), the Company and the Executive
thereafter shall have no further obligations under this Agreement.
7.4 INVOLUNTARY TERMINATION BY THE COMPANY WITHOUT CAUSE. At all times
during the Term, the Board may terminate the Executive's employment for
reasons other than death, Disability, or for Cause, by providing to the
Executive a Notice of Termination, at least sixty (60) calendar days
(ninety (90) calendar days when termination is due to non-renewal of
this Agreement by the Company pursuant to Section 1.2) prior to the
Effective Date of Termination; provided, however, that such notice
shall not preclude the Company from requiring Executive to leave the
Company immediately upon receipt of such notice.
(a) Such Notice of Termination shall be irrevocable absent express,
mutual consent of the parties.
(b) Upon the Effective Date of Termination (not a Qualifying
Termination), following the expiration of the sixty (60) day
notice period (90 days in the case of non-renewal), the Company
shall pay and provide to the Executive:
(1) An amount equal to the Service Multiple times the Executive's
annual Base Salary established for the fiscal year in which
the Effective Date of Termination occurs;
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(2) An amount equal to the Service Multiple times the Executive's
targeted Annual Bonus award established for the fiscal year
in which the Effective Date of Termination occurs; provided,
however, that no payment shall be made under this Section
7.4(b)(2) if the Effective Date of Termination is less than
twelve (12) months after the Employment Date;
(3) A continuation of the welfare benefits of medical, dental and
life insurance coverage (or if continuation under the
Company's then current plans is not allowed, then provision
at the Company's expense but subject to payment by Executive
of those payments which Executive would have been obligated
to make under the Company's then current plan, of
substantially similar welfare benefits from one or more third
party providers) after the Effective Date of Termination for
a number of months equal to the Service Multiple times twelve
(12). These benefits shall be provided to the Executive at
the same coverage level as in effect as of the Effective Date
of Termination, and at the same premium cost to the Executive
which was paid by the Executive at the time such benefits
were provided. However, in the event the premium cost and/or
level of coverage shall change for all employees of the
Company, or for management employees with respect to
supplemental benefits, the cost and/or coverage level,
likewise, shall change for the Executive in a corresponding
manner. The continuation of these welfare benefits shall be
discontinued if prior to the expiration of the period, the
Executive has available substantially similar benefits at a
comparable cost to the Executive from a subsequent employer,
as determined by the Compensation Committee (or, in the event
the Compensation Committee ceases to exist, the Board);
(4) All outstanding long-term incentive awards shall be subject
to the treatment provided under the applicable long-term
incentive plan of the Company;
(5) An amount equal to the Executive's unpaid Base Salary and
accrued but unused vacation pay through the Effective Date of
Termination; and
(6) All other benefits to which the Executive has a vested right
at the time, according to the provisions of the governing
plan or program.
(c) For purposes of this Section 7.4, the term "Service Multiple"
shall be equal to the quotient resulting from a formula the
numerator of which is the lesser of (a) full number of completed
months that have elapsed since the Employment Date (but not less
than 6 months) and (b) eighteen (18) and the denominator of which
is twelve (12);
(d) In the event that the Board terminates the Executive's employment
without Cause on or after the date of the announcement of the
transaction which leads to a CIC, the Executive shall be entitled
to the CIC Severance Benefits as provided in Section 8.3 in lieu
of the Severance Benefits outlined in this Section 7.4.
(e) Payment of all of the benefits described in Section 7.4(b)(1)
shall be paid in cash to the Executive in equal bi-weekly
installments over a period of consecutive months equal to the
Service Multiple times twelve (12) and beginning on the fifteenth
day of the month following the month in which the Effective Date
of Termination occurs.
(f) Payment of all but forty thousand dollars ($40,000) of the
benefits described in Section 7.4(b)(2) shall be paid in cash to
the Executive in a single lump sum as soon as practicable
following the Effective Date of Termination, but in no event
beyond thirty (30) days from such date. The forty thousand dollars
($40,000) which was withheld shall be paid in cash to the
Executive in a single lump sum at the end of the twelve (12) month
restrictive period set forth in Sections 11.2 and 11.3 of this
Agreement.
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(g) Except as specifically provided in Section 7.4(e) and (f), all
other payments due to the Executive upon termination of employment
shall be paid in accordance with the terms of such applicable
plans or programs.
(h) With the exception of the covenants contained in Articles 8, 9,
10, 11, 12 and 14 and Sections 7.4, 13.3, 13.5, and 13.7 (which
shall survive such termination), the Company and the Executive
thereafter shall have no further obligations under this Agreement.
(i) Notwithstanding anything herein to the contrary, the Company's
payment obligations under this Section 7.4 shall be offset by any
amounts that the Company is required to pay to the Executive under
a national statutory severance program applicable to such
Executive.
7.5 TERMINATION FOR CAUSE. Nothing in this Agreement shall be construed to
prevent the Board from terminating the Executive's employment under
this Agreement for Cause.
(a) To be effective, the Notice of Termination must set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for such termination for Cause.
(b) In the event this Agreement is terminated by the Board for Cause,
the Company shall pay the Executive his Base Salary and accrued
vacation pay through the Effective Date of Termination, and the
Executive shall immediately thereafter forfeit all rights and
benefits (other than vested benefits) he would otherwise have been
entitled to receive under this Agreement. The Company and the
Executive thereafter shall have no further obligations under this
Agreement with the exception of the covenants contained in
Articles 9, 10, 11, and 14 and Sections 13.3, 13.5, and 13.9
herein (which shall survive such termination).
7.6 TERMINATION FOR GOOD REASON. Except where Section 2.20(e) is
applicable, this Section 7.6 shall only become effective when at least
twelve (12) months have elapsed since the Employment Date. Prior to
this Section 7.6 becoming effective, any notice of termination by
Executive may only be given pursuant to Section 7.3. The Executive
shall have sixty (60) days from the date he learns of action taken by
the Company that allows the Executive to terminate his employment for
Good Reason to provide the Board with a Notice of Termination.
(a) The Notice of Termination must set forth in reasonable detail the
facts and circumstances claimed to provide a basis for such Good
Reason termination.
(b) The Company shall have thirty (30) days to cure such Company
action following receipt of the Notice of Termination.
(c) The Executive is required to continue his employment for the sixty
(60) day period following the date in which he provided the Notice
of Termination to the Board. The Company may waive the sixty (60)
day notice period; however, the Executive shall be entitled to
receive all elements of compensation described in Sections 5.1
through 5.6 for the sixty (60) day notice period, subject to the
eligibility and participation requirements of any qualified
retirement plan.
(d) Upon a termination of the Executive's employment for Good Reason
during the Term, and following the expiration of the sixty (60)
day notice period, the Company shall pay and provide to the
Executive the following:
(1) An amount equal to one-and-one-half (1.5) times the
Executive's annual Base Salary established for the fiscal
year in which the Effective Date of Termination occurs;
(2) An amount equal to one-and-one-half (1.5) times the
Executive's targeted Annual Bonus award established for the
fiscal year in which the Effective Date of Termination
occurs;
(3) A continuation of the welfare benefits of medical, dental and
life insurance coverage for one-and-one-half (1.5) years
after the Effective Date of Termination (or if continuation
under the Company's then current plans is not allowed, then
provision at the Company's expense but subject to payment by
Executive of those payments which Executive would have been
obligated to make under the Company's then current plan, of
substantially similar welfare benefits from one or more third
party providers). These benefits shall be provided to the
Executive at the same coverage level, as in effect as of the
Effective Date of Termination and at the same premium cost to
the Executive which was paid by the Executive at the time
such benefits were provided. However, in the event the
premium cost and/or level of coverage shall change for all
employees of the Company, or for management employees with
respect to supplemental benefits, the cost and/or coverage
level, likewise, shall change for the Executive in a
corresponding manner. The continuation of these welfare
benefits shall be discontinued prior to the end of the
one-and-one-half (1.5) year period in the event the Executive
has available substantially similar benefits at a comparable
cost to the Executive from a subsequent employer, as
determined by the Compensation Committee (or, in the event
the Compensation Committee ceases to exist, the Board);
(4) All outstanding long-term incentive awards shall be subject
to the treatment provided under the applicable long-term
incentive plan of the Company;
(5) An amount equal to the Executive's unpaid Base Salary and
accrued but unused vacation pay through the Effective Date of
Termination; and
(6) All other benefits to which the Executive has a vested right
at the time, according to the provisions of the governing
plan or program.
(e) In the event of termination of Executive's employment for Good
Reason on or after the date of the announcement of the transaction
which leads to the CIC and up to twenty-four (24) months following
the date of the CIC, the Executive shall be entitled to the CIC
Severance Benefits as provided in Section 8.3 in lieu of the
Severance Benefits outlined in this Section 7.6.
(f) The Executive's right to terminate employment for Good Reason
shall not be affected by the Executive's incapacity due to
physical or mental illness unless such incapacity is determined to
constitute a Disability as provided herein.
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(g) Payment of all but forty thousand dollars ($40,000) of the
benefits described in Section 7.6(d)(1) and payment of all of the
benefits described in Section 7.6(d)(2) shall be paid in cash to
the Executive in a single lump sum as soon as practicable
following the Effective Date of Termination, but in no event
beyond thirty (30) days from such date. The forty thousand dollars
($40,000) which was withheld shall be paid in cash to the
Executive in a single lump sum at the end of the twelve (12) month
restrictive period set forth in Sections 11.2 and 11.3 of this
Agreement.
(h) Except as specifically provided in Section 7.6(g), all other
payments due to the Executive upon termination of employment shall
be paid in accordance with the terms of such applicable plans or
programs.
(i) Notwithstanding anything herein to the contrary, the Company's
payment obligations under this Section 7.6 shall be offset by any
amounts that the Company is required to pay to the Executive under
a national statutory severance program applicable to such
Executive.
(j) With the exceptions of the covenants contained in Articles 8, 9,
10, 11, 12 and 14 and Sections 7.6, 13.3, 13.5, and 13.7 (which
shall survive such termination) herein, the Company and the
Executive thereafter shall have no further obligations under this
Agreement.
ARTICLE 8. CHANGE IN CONTROL
8.1 EMPLOYMENT TERMINATION FOLLOWING A CHANGE IN CONTROL. The Executive
shall be entitled to receive from the Company CIC Severance Benefits if
a Notice of Termination for a Qualifying Termination of the Executive
has been delivered; provided, that:
(a) The Executive shall not be entitled to receive CIC Severance
Benefits if he is terminated for Cause (as provided in Section 7.5
herein), or if his employment with the Company ends due to death,
or Disability, or due to voluntary termination of employment by
the Executive without Good Reason.
(b) CIC Severance Benefits shall be paid in lieu of all other benefits
provided to the Executive under the terms of this Agreement.
8.2 QUALIFYING TERMINATION. The occurrence of any one or more of the
following events on or after the date of the announcement of the
transaction which leads to the CIC and up to twenty-four (24) months
following the date of the CIC shall trigger the payment of CIC
Severance Benefits to the Executive under this Agreement:
(a) An involuntary termination of the Executive's employment by the
Company for reasons other than Cause, death, or Disability, as
evidenced by a Notice of Termination delivered by the Company to
the Executive;
(b) A voluntary termination by the Executive for Good Reason as
evidenced by a Notice of Termination delivered to the Company by
the Executive;
(c) Failure to renew this Agreement (if the Agreement would expire
unless renewed within such period), as evidenced by a Notice of
Termination delivered by the Company to the Executive; or
(d) The Company or any Successor Company materially breaches any
material provision of this Agreement and does not cure such breach
within thirty (30) days of receiving a written notice from the
Executive with such notice explaining in reasonable detail the
facts and circumstances claimed to provide a basis for the
Executive's claim.
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8.3 SEVERANCE BENEFITS PAID UPON A QUALIFYING TERMINATION. In the event the
Executive becomes entitled to receive CIC Severance Benefits, the
Company shall pay to the Executive and provide him the following:
(a) An amount equal to two (2) times the Executive's annual Base
Salary established for the fiscal year in which the Effective Date
of Termination occurs;
(b) An amount equal to two (2) times the Executive's targeted Annual
Bonus award established for the fiscal year in which the
Executive's Effective Date of Termination occurs;
(c) An amount equal to the Executive's unpaid Base Salary and accrued
but unused vacation pay through the Effective Date of Termination;
(d) All outstanding long-term incentive awards shall be subject to the
treatment provided under the applicable long-term incentive plan
of the Company;
(e) A continuation of the welfare benefits of medical, dental and life
insurance coverage for two (2) full years after the Effective Date
of Termination (or if continuation under the Company's then
current plans is not allowed, then provision at the Company's
expense but subject to payment by Executive of those payments
which Executive would have been obligated to make under the
Company's then current plan, of substantially similar welfare
benefits from one or more third party providers).
(1) These benefits shall be provided to the Executive at the same
coverage level, as in effect as of the Effective Date of
Termination or, if greater, as in effect sixty (60) days
prior to the date of the Change in Control, and at the same
premium cost to the Executive which was paid by the Executive
at the time such benefits were provided.
(2) In the event the premium cost and/or level of coverage shall
change for all employees of the Company, or for management
employees with respect to supplemental benefits, the cost
and/or coverage level, likewise, shall change for the
Executive in a corresponding manner.
(3) The continuation of these welfare benefits shall be
discontinued prior to the end of the two year period in the
event the Executive has available substantially similar
benefits at a comparable cost to the Executive from a
subsequent employer, as determined by the Compensation
Committee (or, in the event the Compensation Committee ceases
to exist, the Board).
8.4 FORM AND TIMING OF SEVERANCE BENEFIT. Payment of all of the benefits
described in Sections 8.3(a) through (c) shall be paid in cash to the
Executive in a single lump sum as soon as practicable following the
Effective Date of Termination, but in no event beyond thirty (30) days
from such date. All other payments due to the Executive upon
termination of employment shall be paid in accordance with the terms of
such applicable plans or programs.
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8.5 EXCISE TAX. In the event that a Change in Control occurs, and a
determination is made by the Company pursuant to Section 280G and 4999
of the Code that a golden parachute excise tax is due, the benefits
provided to the Executive under this Agreement that are classified as
"parachute payments" (as such term is defined in Section 280G of the
Code), shall be limited to the amount just necessary to avoid the
excise tax.
(a) This limitation shall be applied if, and only if, such a
limitation results in a greater net (of excise tax) cash benefit
to the Executive than he would receive had the benefits not been
capped and an excise tax been levied.
8.6 With the exceptions of the covenants contained in Articles 8, 9, 10,
11, 12 and 14 and Sections 13.3, 13.5, and 13.7 (which shall survive
such termination) herein, the Company and the Executive thereafter
shall have no further obligations under this Agreement.
ARTICLE 9. ASSIGNMENT
9.1 ASSIGNMENT BY COMPANY. This Agreement may and shall be assigned or
transferred to, and shall be binding upon and shall inure to the
benefit of any Successor Company, with Successor Company for purposes
of this Agreement being defined as a company that (i) acquires greater
than fifty percent (50%) of the assets of the Company or (ii) acquires
greater than fifty percent (50%) of the outstanding stock of the
Company, or (iii) is the surviving entity in the event of a CIC.
(a) Any such Successor Company shall be deemed substituted for all
purposes of the "Company" under the terms of this Agreement.
(b) Failure of the Company to obtain the agreement of any Successor
Company to be bound by the terms of this Agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement, and shall immediately entitle the Executive to benefits
from the Company in the same amount and on the same terms as the
Executive would be entitled to receive in the event of a
termination of employment for Good Reason as provided in Section
7.7 (failure not related to a Change in Control) or Section 8.3
(if the failure of assignment follows or is in connection with a
Change in Control).
(c) Except as herein provided, this Agreement may not otherwise be
assigned by the Company.
9.2 ASSIGNMENT BY EXECUTIVE. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees.
(a) If the Executive dies while any amount would still be payable to
him pursuant to this Agreement had he continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement, to the Executive's
Beneficiary.
(b) If the Executive has not named a Beneficiary, then such amounts
shall be paid to the Executive's devisee, legatee, or other
designee, or if there is no such designee, to the Executive's
estate.
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ARTICLE 10. LEGAL FEES AND NOTICE
10.1 PAYMENT OF LEGAL FEES. To the extent permitted by law, the Company
shall pay all legal fees, costs of litigation, prejudgment interest,
and other expenses incurred by Executive in contesting a termination,
if Executive prevails.
10.2 NOTICE. Any notices, requests, demands, or other communications
provided by this Agreement shall be sufficient if in writing and if
sent by registered or certified mail to the Executive at the last
address he has filed in writing with the Company or, in the case of the
Company, at its principal offices to the attention of the Chief
Executive Officer.
ARTICLE 11. CONFIDENTIALITY AND NONCOMPETITION
11.1 DISCLOSURE OF INFORMATION. The Executive recognizes that he has access
to and knowledge of confidential and proprietary information of the
Company that is essential to the performance of his duties under this
Agreement.
(a) The Executive will not, during and for five (5) years after the
term of his employment by the Company, in whole or in part,
disclose such information to any person, firm, corporation,
association, or other entity for any reason or purpose whatsoever,
nor shall he make use of any such information for his own
purposes, so long as such information has not otherwise been
disclosed to the public or is not otherwise in the public domain
except as required by law or pursuant to administrative or legal
process.
11.2 COVENANTS REGARDING OTHER EMPLOYEES. During the term of this Agreement,
and for a period of twelve (12) months following the Executive's
termination of employment for any reason, the Executive agrees not to
actively solicit any employee of the Company to terminate his or her
employment with the Company or to interfere in a similar manner with
the business of the Company.
11.3 NONCOMPETE FOLLOWING A TERMINATION OF EMPLOYMENT. From the Effective
Date of this Agreement until six (6) months following the Executive's
Effective Date of Termination for any reason, the Executive will not:
(a) directly or indirectly own any equity or proprietary interest in
(except for ownership of shares in a publicly traded company not
exceeding three percent (3%) of any class of outstanding securities),
or be an employee, agent, director, advisor, or consultant to or for
any competitor of the Company, whether on his own behalf or on behalf
of any person; or (b) undertake any action to induce or cause any
customer or client to discontinue any part of its business with the
Company.
11.4 WAIVER OF COVENANTS UPON A CHANGE IN CONTROL. Upon the occurrence of a
Change in Control, the Executive shall be released from each of the
covenants set forth in Section 11.2 and 11.3, if such Executive is
terminated by the Company without Cause or if the Executive terminates
his employment with the Company for Good Reason.
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ARTICLE 12. OUTPLACEMENT ASSISTANCE
12.1 Following a termination of employment, other than for Cause, the
Executive shall be reimbursed by the Company for the costs of all
outplacement services obtained by the Executive within the one (1) year
period after the Effective Date of Termination; provided, however, that
the total reimbursement shall be limited to an amount equal to twenty
percent (10%) of the Executive's Base Salary as of the effective date
of termination.
ARTICLE 13. MISCELLANEOUS
13.1 ENTIRE AGREEMENT. With the exception of the Company's Proprietary
Information and Inventions Agreement previously executed by Executive
and the Offer Letter, dated May 10, 2004, executed by the company and
executive (the terms of which are incorporated herein by this
reference), this Agreement supersedes any prior agreements, or
understandings, oral or written, between the parties hereto or between
the Executive and the Company, with respect to the subject matter
hereof, and constitutes the entire agreement of the parties with
respect thereto.
13.2 MODIFICATION. This Agreement shall not be varied, altered, modified,
canceled, changed, or in any way amended except by mutual agreement of
the parties in a written instrument executed by the parties hereto or
their legal representatives.
13.3 SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.
13.4 COUNTERPARTS. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original, but all
of which together will constitute one and the same Agreement.
13.5 TAX WITHHOLDING. The Company may withhold from any benefits payable
under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
13.6 BENEFICIARIES. To the extend allowed by law, any payments or benefits
hereunder due to the Executive at the time of his death shall
nonetheless be paid or provided and the Executive may designate one or
more persons or entities as the primary and/or contingent beneficiaries
of any amounts to be received under this Agreement. Such designation
must be in the form of a signed writing acceptable to the Board or the
Board's designee. The Executive may make or change such designation at
any time.
13.7 PAYMENT OBLIGATION ABSOLUTE. Absent actions deliberately or willfully
taken by the Executive to materially injure the Company, the Company's
obligation to make the payments and the arrangement provided for herein
shall be absolute and unconditional, and shall not be affected by any
circumstances, including, without limitation, any offset, counterclaim,
recoupment, defense, or other right which the Company may have against
the Executive or anyone else.
(a) All amounts payable by the Company hereunder shall be paid without
notice or demand. Subject to the provisions set forth in Sections
7.4 and 7.6, and Article 11, each and every payment made hereunder
by the Company shall be final, and the Company shall not seek to
recover all or any part of such payment from the Executive or from
whomsoever may be entitled thereto, for any reasons whatsoever.
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(b) With the exception of the Company's willful material breach of its
payment obligations under Articles 7 and 8 of this Agreement
(provided, however, that no such breach shall be deemed to have
occurred until the Executive has provided the Board with written
notice of such breach and a reasonable opportunity for cure), the
restrictive covenants contained in Article 11 are independent of
any other contractual obligations in this Agreement or otherwise
owed by the Company to the Executive. Except as provided in this
paragraph, the existence of any claim or cause of action by
Executive against the Company, whether based on this Agreement or
otherwise, shall not create a defense to the enforcement by the
Company of any restrictive covenant contained herein.
(c) The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and the obtaining of any such other
employment shall in no event effect any reduction of the Company's
obligations to make the payments and arrangements required to be
made under this Agreement.
ARTICLE 14. GOVERNING LAW
14.1 To the extent not preempted by federal law, the provisions of this
Agreement shall be construed and enforced in accordance with the laws
of the state of New Jersey.
IN WITNESS WHEREOF, the Company, through its duly authorized
representative, and the Executive have executed this Agreement as of
the Effective Date.
Executive:
/s/ Xxxxxxxx X. Xxxxxx
----------------------
Xxxxxxxx X. Xxxxxx
Company:
SAVIENT PHARMACEUTICALS, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------------
Xxxxx Xxxxxxx
President & CEO
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