AGREEMENT
THIS AGREEMENT ("Agreement") is effective as of the 16Th day of
December, 1996 (the "Effective Date"), by and between K-V PHARMACEUTICAL
COMPANY, 0000 Xxxxx Xxxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx 00000, a Delaware
corporation ("Employer"), and XXXX X. XXXXXXXX ("Employee").
WHEREAS, Employee has been employed by Employer for twenty-three (23)
years and continues to serve as the Vice Chairman and Chief Executive Officer of
Employer and has made significant contributions to Employer during the term of
his employment;
WHEREAS, Employer desires to assure itself of the continued
availability of the services of Employee and Employee desires to be employed by
Employer;
WHEREAS, Employer and Employee executed an agreement of employment
dated November 15, 1991, which agreement amended and restated certain prior
agreements (collectively, the "Employment Agreement");
WHEREAS, Employer and Employee desire to amend and restate the terms of
the Employment Agreement and believe that it is to their mutual benefit to enter
into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Employer and Employee agree as follows:
1. Affiliates. Employer has or may in the future have one or more
subsidiaries and/or affiliated companies (hereafter collectively referred to as
the "Companies"). From time to time, Employer and the Companies may exchange or
use facilities, technology and/or Confidential Information (as that term is
defined below) of the other.
2. Services. Employer hereby agrees to employ Employee and Employee
agrees to be employed by Employer for the term of this Agreement in the capacity
of Vice Chairman and Chief Executive Officer or in such other capacity as
Employer and Employee shall mutually agree. Employee shall be employed at
Employer's offices in St. Louis, Missouri, or such other location as shall be
mutually agreeable to Employee and Employer. During the term of this Agreement,
Employee agrees to devote his best efforts to the performance of such reasonable
duties, commensurate with his position(s), as shall be mutually agreed to by
Employer and Employee.
3. Term. The initial term of the Agreement shall begin on the Effective
Date, and shall extend through March 31, 2002, and shall thereafter be
automatically renewed for successive twelve (12) month periods, unless and until
terminated by either Employee or Employer upon written notice to the other given
not less than ninety (90) calendar days prior to the expiration of the initial
term of this Agreement or any such renewal term. Notwithstanding the foregoing,
Employee may terminate this Agreement at any time and for any reason, and
Employer may terminate this Agreement at any time for Cause. For purposes of
this Agreement, "Cause" shall mean that (i) Employee has committed a breach of a
fiduciary duty, embezzlement, larceny, or has willfully failed to perform his
duties to Employer, and in so doing has acted with full knowledge of all
pertinent facts; and (ii) such act has had a material and demonstrable adverse
effect on Employer. For purposes of this Agreement, the phrase "term of this
Agreement" shall include the initial term and any and all renewal terms.
4. Compensation.
(a) Base Salary. For the fiscal year ending March 31, 1997, (the "Base
Year") Employee is being paid a base salary (the "Base Salary") at the annual
rate of Five Hundred Ninety Three Thousand Sixty-Eight Dollars ($593,068). As
compensation for his services under Paragraph 2, and in consideration of the
obligations undertaken by Employee, Employee shall receive annual compensation
in an amount equal to the Base Salary, increased, cumulatively, as of April 1 of
each year during the term of this Agreement subsequent to the Base Year by the
greater of eight percent (8%) or the percentage increase in the cost of living
for the preceding calendar year, as measured by the U.S. Department of Labor
Consumer Price Index for All Urban Consumers, U.S. City Average, All Items, or
comparable index then in use (the "C.P.I."), or at such other rate as shall be
mutually agreed to by Employer and Employee. For purposes of this Agreement,
Base Salary at any time shall mean Base Salary as adjusted annually in
accordance with the preceding sentence. All salary payments (whether under this
Paragraph or another Paragraph of this Agreement) shall be paid at such
intervals as Employer pays its other executive employees, unless otherwise
specifically agreed to by Employer and Employee.
(b) Annual Bonus. Employee shall receive an annual bonus equal to the
following percentage of the Employer's net income, calculated on and payable
with respect to each incremental level of net income:
Employer's Net Income Employee's Bonus Percentage
Below $200,000 0%
$200,000 - $600,000 5%
$600,000 - $3,000,000 7%
$3,000,000 -$5,000,000 6%
$5,000,000 - $10,000,000 5%
Over $10,000,000 4%
Employer and Employee agree to negotiate in advance of the final
determination of the bonus, mutually acceptable terms and conditions under which
Employer pays Employee the bonus, in one or more of the following forms:
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(i) Incentive Stock Options granted under Employer's existing
option plan or a similar plan applying the Black-Scholes option pricing
model to determine the number of options equivalent in value to the
Bonus to be paid by the delivery of Incentive Stock Options;
(ii) Shares of Restricted Stock equal in number to the portion
of the Bonus to be paid by the delivery of Restricted Stock, divided by
the fair market value of the same class of unrestricted shares of
Employer's common stock to be so delivered;
(iii) Discounted Stock Options applying a discount negotiated
by Employer and Employee and using the Black-Scholes option pricing
model to determine the number of discounted options equivalent in value
to the portion of the Bonus to be paid by the delivery of Discounted
Stock Options; and/or
(iv) Cash
For purposes of this Agreement, calculations based on the Black-Scholes
option pricing model shall be made in the same manner, applying the same
assumptions used in Employer's most recent annual proxy statement. Should
Employer and Employee fail to reach an agreement regarding the form of the Bonus
after negotiating in good faith, the Bonus as finally determined by the formula
provided in this Paragraph shall be paid in cash.
For purposes of calculating Employer's net income to determine the
amount of the annual bonus, the consolidated net income after taxes of Employer
and the Companies shall be calculated by the Independent Certified Public
Accountants regularly in the employ of Employer, based on generally accepted
accounting principles consistently applied, without regard to the payment of
such bonus. Employer shall promptly provide Employee with a written copy of all
calculations hereunder. Employee's bonus, if any, shall be payable within ninety
(90) calendar days following the end of each fiscal year of Employer during the
term of this Agreement.
Funds for the exercise of stock options under Paragraphs 4(b)(i) and
(iii) may be loaned by the Employer to Employee, at the agreement of Employer.
Such loans shall bear interest at the long-term federal rate published by the
Internal Revenue Service ("AFR") as of the date of the loan.
Notwithstanding the foregoing, consistent with his historical practice,
Employee may in his sole discretion elect to receive a lesser bonus based on
consideration for Employer.
(c) Expenses. Employer agrees to reimburse Employee for all reasonable
business expenses incurred by Employee in the performance of his services
hereunder, including, but not be limited to, business travel, association
membership dues and fees, subscriptions, and the maintenance of an office in his
home(s) for business use which expenses shall be substantiated to the reasonable
satisfaction of Employer.
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(d) Vacation. Employee shall be entitled to not less than eight (8)
weeks vacation during each fiscal year of Employer, during which time Employee's
compensation shall be paid in full. Vacations need not be taken over a
consecutive eight (8) week period or at any specific time or times during the
course of any fiscal year. If Employee takes less than eight (8) weeks vacation
during any fiscal year, he shall be entitled to carry over such days or to
receive a cash payment at such time as he elects equal to the pro rata amount of
his Base Salary for the portion of his vacation period not taken.
(e) Automobile. So long as Employee continues to fulfill the position
as Vice Chairman of the Board, Employer agrees to provide Employee with an
automobile (or comparable allowance) similar to the automobile presently
provided for Employee's use plus a reasonable estimate of the average expenses
of its operation, insurance, maintenance and repair.
(f) Financial Services. During the term of Employee's employment by
Employer under this Agreement, Employer agrees to provide Employee with an
annual allowance of up to Ten Thousand Dollars ($10,000) to be used for tax
preparation, estate planning and other similar financial services provided to
Employee by qualified consultants chosen by and in the sole discretion of
Employee.
(g) Deferred Compensation. During the term of Employee's employment by
Employer under this Agreement, Employee shall be entitled to participate in the
same qualified or nonqualified deferred compensation plans made available
generally to other executive employees of Employer. In addition, Employer agrees
to implement concurrent with this Agreement the Deferred Compensation Plan
effective January 1, 1997, providing Employee with the opportunity to defer up
to fifty percent (50%) of Base Salary and up to one hundred percent (100%) of
Employee's bonus during the term of Employee's employment by Employer.
(h) Charitable Contribution. In addition to any benefits that may be
payable to Employee on death pursuant to this Agreement, Employer shall make a
charitable gift at the time of Employee's death to the charity elected by
Employee in the amount of Five Hundred Thousand Dollars ($500,000). However,
such amount shall be reduced if Employee terminates employment under the terms
of Paragraph 2 prior to attaining age sixty (60) by twenty percent (20%) for
each complete twelve (12) month period between the retirement date and the date
that Employee attains age sixty (60). The charity selected by Employee shall be
a registered public charity, university or other organization approved by
Employer (which approval shall not be unreasonably withheld) and to which
contributions are tax deductible to Employer for federal income tax purposes.
(i) Miscellaneous. During the term of Employee's employment by Employer
under this Agreement, Employer agrees to provide Employee with all other fringe
benefits as are from time to time available generally to other executive
employees of Employer.
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5. Insurance Benefits.
(a) Life Insurance. Employee shall be entitled to the same group term
life insurance coverage provided by Employer to other executive employees of
Employer.
In addition, Employer shall continue and maintain two (2) life
insurance policies on Employee's life (the "Policies") subject to that certain
split dollar agreement dated July 1, 1990 and that certain split dollar
agreement dated November 8, 1991 as each agreement may be amended from time to
time by the mutual consent of the parties (the "Split Dollar Agreements").
In this connection, Employer agrees to continue to make the premium
payments contemplated by the Split Dollar Agreements except that such agreements
shall be amended to provide that Employee shall pay that portion of the annual
premiums due on the Policies equal to the economic benefit that would otherwise
be attributable to Employee by reason of the death benefits payable to Employee
under the Split Dollar Agreements (the "Economic Benefit"). The balance of the
annual premiums contemplated by the Split Dollar Agreements shall be paid by
Employer. Employer further agrees to pay Employee an additional amount equal to
the Economic Benefit to Employee grossed up to offset the federal and state
marginal income tax to Employee generated by this additional payment. Such
additional amount shall be paid to Employee in each year and at the same time
Employee is required to make an annual premium payment under the revised Split
Dollar Agreements.
Upon the death of Employee or upon cancellation of the Policies with
the mutual consent of Employee and Employer, Employer shall be entitled to
recover the greater of all premiums paid by Employer, net of reimbursements, or
the cash surrender value of the Policies as of the date of Employee's
retirement, net of any Employer loans or withdrawals. To assure the repayment of
such amounts, the owner(s) of the Policies shall collaterally assign the
Policies to Employer as security for Employer's interest in the Policies. In the
event Employer fails to make the premium payments required by the revised Split
Dollar Agreements or the additional bonus described in this paragraph, within
sixty (60) days of the date the premium is due, Employee shall be entitled to
submit a thirty (30) day demand letter to Employer requesting payment of such
amounts. If Employer fails to make such payments within the thirty (30) day
notice period, the Split Dollar Agreements shall terminate and the Policies
shall be distributed to Employee as provided in the Split Dollar Agreements.
However, Employer shall continue to be obligated to pay to Employee the amount
of the premium payments and additional bonus which would otherwise be required
by this Agreement and the Split Dollar Agreements for the period contemplated by
the Split Dollar Agreements.
(b) Disability. If and to the extent obtainable by Employer, Employer
shall provide Employee with one or more noncancellable policies of disability
insurance or a mutually acceptable equivalent thereof which provides for the
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payment, in the event of the disability of Employee in accordance with the terms
of such policies, of monthly installments equal to sixty percent (60%) of the
Base Salary of Employee, as in effect under Paragraph 4, for the longer of: (A)
the benefit period provided under the insurance contracts, or (B) until Employee
reaches (or would have reached) sixty-five (65) years of age, which amounts
shall continue to be payable to such beneficiary or beneficiaries as are
designated by Employee in the event of Employee's death during the period
provided for the payment thereof. The value of the disability protection
provided to Employee shall be imputed to Employee currently in order that the
ultimate disability benefits shall be income tax free.
(c) Medical. Employer shall provide Employee, at Employer's expense,
with health, accident, major medical and such other insurance coverage of a kind
and in amounts not less than those presently being provided Employee and no less
than those provided by Employer to other executive employees during the term of
this Agreement.
(d) Continuation of Coverage. After Employee is no longer in the active
employ of Employer, to the extent permitted by Employer's insurer, Employee
shall continue to participate in Employer's regular life and health insurance
programs at Employer's expense. Such continued insurance shall continue for so
long as permitted by Employer's insurer but in no event for longer than Employee
is receiving payments under this Agreement or under any other employment of
consulting agreement between Employer and Employee, or, if earlier, in the event
of Employee's voluntary retirement or permanent disability, until Employee
reaches age seventy (70).
6. Pre-retirement Voluntary Termination. If Employee voluntarily
terminates his employment prior to attaining age sixty-five (65), Employee may
elect to provide consulting services in the areas described in Paragraph 7(a)
between the date of such voluntary termination and thereafter until not later
than the age of sixty-five (65), provided that such services may be terminated
by Employer upon not less than ninety (90) days' notice at any time: (i) after
such services have been provided by Employee for five (5) years, or (ii) if
Employee is terminated under Paragraph 3 during the initial five (5) years, or
(iii) if Employee is unwilling to devote the minimum hours under Paragraph 6(a),
when and if needed, at mutually agreed upon times, and Employee has not elected
to retire and receive payments under Paragraph 7 (such period is hereinafter
referred to as the "Pre-retirement Period"), then during such Pre-retirement
Period, Employee's employment shall be subject to the following terms and
conditions:
(a) Employee shall devote a minimum of three hundred (300) hours
annually, on an as-needed basis as Employer and Employee shall agree, for the
benefit of Employer. Additional hours worked over three hundred (300) shall be
compensated on a pro-rata basis. Employee shall be compensated in an amount
equal to fifty percent (50%) of the Base Salary being paid to Employee at the
time of his voluntary termination, adjusted annually, as of April 1 of each year
during the Pre-retirement Period, by the greater of eight percent (8%) or the
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C.P.I. Employee shall also be compensated in an amount equal to fifty percent
(50%) of the annual bonus under Paragraph 4(b) or on a pro-rata basis for hours
worked in excess of three hundred (300).
(b) Additionally, during the Pre-retirement Period, Employee shall be
entitled to participate in and continue to vest in all benefits he was entitled
to and was receiving during his employment period.
(c) Employee's termination under this Paragraph shall be considered
voluntary only if such termination is by Employee without duress from Employer,
its directors, officers, or shareholders, or any federal or state agency, its
officers, agents, employees or directors.
7. Retirement Benefits and Continued Services. Any time after reaching
age fifty-five (55), Employee may, as this sole option, retire from performing
services under the terms of Paragraph 2 or 6, and shall (except in the case of
complete disability discussed in Paragraph 7(c)) perform services as provided
under this Paragraph 7.
(a) Consulting Services. After retirement, Employee agrees to perform
consulting services at the request of Employer for a ten (10) year period in the
following areas:
(i) Industry and customer relations;
(ii) Strategic and financial planning and commercial business
development;
(iii)Mergers, Acquisitions and Divestitures;
(iv) Application of Employer and Industry knowledge;
(v) Assistance in respect of the continuity of Employer's
operations;
(vi) Investment community relations.
Employee agrees to devote up to three hundred (300) hours annually for the
benefit of Employer and to serve on the Board of Directors, at the request of
Employer. Additional hours worked over three hundred (300) shall be compensated
on a pro-rata basis. To assist Employee in the performance of his duties,
Employer shall provide Employee with internal support services consisting of one
(1) full-time employee as Project Coordinator, and administrative and
secretarial services as needed. Employee shall have final approval with respect
to the selection of the Project Coordinator.
(b) Consulting Compensation. Employee shall be entitled to compensation
for his consulting services to be paid in the form of a single life annuity
equal to fifteen percent (15%) of Employee's Base Salary for the year in which
retirement occurs ("Final Base Salary") payable each year beginning at age
sixty-five (65) and continuing for the longer of ten (10) years or the life of
Employee. Such payments shall continue to be payable to such beneficiary or
beneficiaries as are designated by Employee in the event of Employee's death
during the period provided for the payment thereof. In addition, for each
additional complete year of employment under the terms of Paragraph 2 or 6 after
attaining age fifty- five (55), Employee shall be entitled to an increased
annual benefit based on the following percentage (the "Vested Percentage") of
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the difference between (i) fifteen percent (15%) of Employee's Final Average
Compensation, and (ii) fifteen percent (15%) of Employee's Base Salary.
Post 55 years
of Employment Vested %
--------------------------------------------
1 40%
2 60%
3 80%
4 90%
5 or More 100%
In addition, each annual benefit shall be increased by the C.P.I. as defined in
Paragraph 4(a).
For purposes of this Agreement, "Final Average Compensation" shall mean
Employee's average annual compensation (including bonuses and other non-regular
forms of compensation and adding back voluntary deferrals under any Employer
benefit plans) earned from Employer during the highest three (3) consecutive
years of the five (5) year period ending coincident with or immediately prior to
the retirement date. If, prior to retirement under this Paragraph 7, Employee
was performing services under Paragraph 6, "Final Average Compensation" shall be
calculated using one hundred percent (100%) of the Employee's Base Salary plus
bonuses as if Employee was performing services on a full-time basis during such
years.
(c) Disability. In the event of Employee's retirement from performing
services under Paragraph 2 or 6 as a result of disability, Employee shall
continue to perform the consulting services specified in Paragraph 7(a) to the
extent Employee is able to do so. In the event of Employee's complete disability
on or after retirement, Employee shall nevertheless be entitled to the
consulting compensation provided in Paragraph 7(b). In the event of Employee's
disability on or after retirement, Employee shall continue to be entitled to the
benefits provided under Paragraphs 7(d) and (e) below. Notwithstanding the
foregoing, the total annual benefits for any year payable under Paragraphs 7(c),
(d) and (e) shall be offset by the amount of any disability benefits payable for
such year under Paragraph 5(b).
(d) Restrictive Covenants. After retirement, in consideration for
complying with the restrictive covenants described in Paragraph 12, Employee
shall receive additional compensation in the form of a single life annuity equal
to fifteen percent (15%) of Employee's Final Base Salary payable each year
beginning at age sixty-five (65) and continuing for the longer of ten (10) years
or the life of Employee. Such payments shall continue to be payable to such
beneficiary or beneficiaries as are designated by Employee in the event of
Employee's death during the period provided for the payment thereof. In
addition, for each additional complete year of employment under the terms of
Paragraph 2 or 6 after attaining age fifty-five (55), Employee shall be entitled
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to an increased annual benefit based on the Vested Percentage of the difference
between (i) fifteen percent (15%) of Employee's Final Average Compensation, and
(ii) fifteen percent (15%) of Employee's Final Base Salary. In addition, each
annual benefit shall be increased cumulatively by the C.P.I.
(e) Retirement Compensation. In addition to the compensation provided
for in (b) and (c) above, Employee shall be entitled to receive retirement
compensation paid in the form of a single life annuity equal to thirty percent
(30%) of Employee's Final Base Salary payable each year beginning at retirement
and continuing for the longer of ten (10) years or the life of Employee. Such
payments shall continue to be payable to such beneficiary or beneficiaries as
are designated by Employee in the event of Employee's death during the period
provided for the payment thereof. In addition, for each additional complete year
of employment under the terms of Paragraph 2 or 6 after attaining age fifty-
five (55), Employee shall be entitled to an increased annual benefit based on
the Vested Percentage of the difference between (i) thirty percent (30%) of
Employee's Final Average Compensation, and (ii) thirty percent (30%) of
Employee's Final Base Salary. In addition, each annual benefit shall be
increased cumulatively by the C.P.I.
(f) Election of Alternative Form of Payment. Notwithstanding the
foregoing, for each of the above pieces of compensation payable over the life of
Employee, Employee shall be entitled to elect an earlier start date after
retirement or an alternative form (such as joint and survivor) of annuity which
shall be actuarially adjusted to equate to the original benefit provided for in
this Paragraph 7. Such actuarial calculations shall be performed by a qualified
actuary based on generally accepted actuarial principles.
8. Termination Benefits.
(a) Triggering Event. A "Triggering Event" shall mean (i) termination
of this Agreement by its terms and with no renewal, or (ii) termination of
Employee's employment with Employer in the capacity described in Paragraph 2
during the term of this Agreement for any reason whatsoever other than
Employee's voluntary termination of employment or retirement, as contemplated
under Paragraph 6 or 7, respectively, or Employee's death or disability, or
(iii) even if this Agreement is still in force and Employee has not been
terminated, failure of Employer to maintain the Letter of Credit required by
Paragraph 9.
(b) Termination Payments. Employer shall pay Employee, on the date of
the Triggering Event, a lump sum cash payment (the "Lump Sum Payment") equal to
one (1) times Employee's Base Salary as in effect on the date of the Triggering
Event; and Employer shall make monthly cash payments to Employee or his assigns,
on the first day of each of the thirty-six (36) calendar months following the
date of the Triggering Event, equal to seventy-five percent (75%) of the Lump
Sum Payment divided by twelve (12). If Employee shall die during the thirty-six
(36) month period, any payments remaining due hereunder shall be accelerated and
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shall become immediately due and payable to Employee's beneficiaries, or if none
have been designated by Employee, to the estate of Employee.
(c) Adjustment of Stock Options and Restricted Stock. With respect to
any stock options or restricted stock held by Employee at the occurrence of the
Triggering Event, such options or restricted stock agreements shall be amended
by Employer, as of such time, provided that the provisions of the applicable
stock optionor restricted stock plans or agreements provide for such amendment
and the employment record of Employee over the full tenure of such Employee's
employment so justifies (the determination of which shall be made by the Board
of Directors of Employer, but shall not be unreasonably withheld) and provided
Employee has not been terminated for Cause, to provide that upon the occurrence
of the Triggering Event: (i) Employee shall have the right to exercise such
options for up to a two (2) year period following the Triggering Event, (ii) all
such stock options and restricted stock shall become immediately fully vested,
and (iii) any Holding Period requirement with regard to any restricted stock or
shares purchased pursuant to the exercise of a stock option shall be waived and
shall be inapplicable to such shares.
(d) Payments Not Conditioned on Services. Employer's obligations under
his Paragraph 8, including the making of any monetary payments, shall be
independent of, and not conditioned upon, Employee's rendering services under
Paragraph 6 or 7.
9. Letter of Credit.
(a) Terms. Employer has delivered to Employee and will continue to
maintain in effect during the term of Employee's employment under Paragraph 2
and for the period of any unfilled obligation of Employer to make payments to
Employee under Paragraph 8 an irrevocable letter of credit (the "Letter of
Credit"), form a bank mutually acceptable to Employer and Employee (the "Bank")
for an amount which at all times during the term thereof shall be equal to the
lesser of: (A) three (3) times Employee's Base Salary, or (B) the amount payable
by Employer under Paragraph 8 after deducting any amounts actually paid to
Employee thereunder. Employer shall provide Employee with a copy of any amended,
extended or replacement Letter of Credit not later than ten (10) business days
prior to the effective date thereof and shall notify Employee in writing of any
impending expiration of the Letter of Credit, as in effect at any time, no later
than forty-five (45) days prior to the expiration date of the Letter of Credit.
The Letter of Credit shall provide that Employee may draw upon the
Letter of credit the aggregate amount of all payments to be made by Employer to
Employee under Paragraph 8 and not previously paid, in lieu of such payments, if
the following conditions exist:
(A) (I) Employee's employment with Employer has been
terminated during the term of this agreement for any reason whatsoever
(other than voluntary retirement, death, or permanent disability); or
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(II) This Agreement has not been renewed upon the
expiration of the initial term or any renewal term; or
(III) Employer has ceased operations; and
(B) Employer shall have failed, refused, or been unable to
make the Lump Sum Payment or any monthly payment to Employee required
by Paragraph 8, for any reason whatsoever.
Notwithstanding the foregoing, whether or not a condition described in
subparagraph (A) or (B) exists, and whether or not Employee's employment has
been terminated, if the Letter of Credit is not renewed by the Bank or replaced
by Employer within twenty (20) days prior to the expiration of the Letter of
Credit at any time during the term of Employee's employment under Paragraph 2,
Employee shall be entitled to draw upon the Letter of Credit the aggregate
amount of all payments to be made by Employer to Employee under Paragraph 8.
The Letter of Credit shall further provide that funds represented by
the Letter of Credit shall be available to Employee thereunder against:
(A) Employee's sight draft drawn on the bank, bearing the
number of the Letter of Credit; and
(B) Employee's signed certificate, in one of the forms
attached to the Letter of Credit, stating that one or more of the
event(s) specified in Paragraph 9(a) has occurred and the date of such
occurrence.
Payment of the Letter of Credit shall not require any other
documentation or the fulfillment of any other conditions of any kind.
(b) Limitation on Use. Notwithstanding anything to the contrary
contained in this Paragraph 9, Employee agrees that if a Triggering Event, as
defined in Paragraph 8, has occurred and Employer has not employed a replacement
chief executive officer, Employee will not exercise his rights to draw against
the Letter of Credit for a period not to exceed four (4) months from the date of
such Triggering Event. Provided, however, that Employee shall not be prohibited
from exercising his right to draw against the Letter of Credit during the four
(4) month period if:
(i) the Letter of credit will expire in less than twenty (20)
days or is in jeopardy of not being maintained for any reason, and is not
scheduled to be renewed or replaced by Employer;
(ii) Employer is adjudicated a bankrupt or makes an assignment
for the benefit of creditors;
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(iii) Bankruptcy, insolvency, reorganization, arrangement,
debt adjustment, liquidation or receivership proceedings, in which Employer is
alleged to be insolvent or unable to pay its debts as they mature, are
instituted by or against Employer, and Employer consents thereto or admits in
writing the material allegations of the petitions filed in said proceedings or
said proceedings remain undismissed for sixty (60) days;
(iv) There is an entry of a decree or order for relieve by a
court having jurisdiction with respect to Employer in an involuntary case under
the federal bankruptcy laws against Employer, or Employer commences voluntary
proceedings under federal bankruptcy laws;
(v) A significant portion of the assets of Employer is
attached;
(vi) A judgment is obtained in a legal or equitable proceeding
against Employer and the sale of a significant portion of Employer's assets is
contemplated or threatened under legal process as a result of such judgment; or
(vii) an execution process is issued against Employer which
affects a significant portion of Employer's assets or the existence or operation
of the Letter of Credit, which is not removed or satisfied within twenty (20)
days.
(c) Employee's Election. If at any time Employee: (i) has exercised his
right to draw against the Letter of Credit provided for under this Paragraph 9,
and (ii) there is a Change of Control and Employee becomes eligible for benefits
under Paragraph 10 of this Agreement, then the benefits which Employee would be
entitled to receive under Paragraph 10 shall be reduced by the proceeds Employee
received when Employee exercised his rights to draw against the Letter of
Credit; provided, however, that if the proceeds received from the Letter of
Credit exceed the benefits to be received under Paragraph 10, this Paragraph
shall not be construed to require Employee to repay any amounts to Employer.
10. Change of Control.
(a) Definition. For purposes of this Agreement, a "Change of Control"
of Employer shall mean the occurrence of any one of the following events:
(i) any "person," as such term is used in Sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934, becomes a "beneficial owner," as
such term is used in Rule 13d-3 promulgated under that Act, of twenty percent
(20%) or more of the voting stock of Employer.
(ii) the majority of the Board consists of individuals other
than Incumbent Directors, which term means the members of the Board on the date
of this Agreement; provided that any person becoming a director subsequent to
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such date whose election or nomination for election was supported by two-thirds
(2/3) of the directors who then comprised the Incumbent Directors shall be
considered to be an Incumbent Director;
(iii) Employer adopts any plan of liquidation providing for
the distribution of all or substantially all of its assets;
(iv) all or substantially all of the assets or business of
Employer is disposed of pursuant to a merger, consolidation or other transaction
(unless the shareholders of Employer immediately prior to such merger,
consolidation or other transaction beneficially own, directly or indirectly, in
substantially the same proportion as they owned the voting stock of the company,
all of the voting stock or other ownership interests of the entity or entities,
if any; that succeed to the business of Employer); or
(v) Employer combines with another company and is the
surviving corporation but, immediately after the combination, the shareholders
of Employer, immediately prior to the combination hold, direct or indirectly,
fifty percent (50%) or less of the voting stock of the combined company (there
being excluded from the number of shares held by such shareholders, but not from
the voting stock of the combined company, any shares received by affiliates of
such other company in exchange for stock of such other company).
(b) Termination After Change in Control. In the event of a Change of
Control of Employer, if (i) immediately preceding such Change of Control,
Employee was providing services under Xxxxxxxxx 0, 0, xx 00, xxx (xx) Employee's
employment in such capacity terminates within three (3) years after such Change
of Control ("Termination"), voluntarily or involuntarily, with or without cause,
for any reason whatsoever, except for the death or disability of Employee,
Employee shall be entitled to the benefits provided in Paragraph 10(c). For
purposes of this Agreement, "Date of Termination" shall mean the date on which a
Notice of Termination is given, unless the parties agree to another date, and
"Notice of Termination" shall mean a written notice communicated by either party
to the other party which indicates that Employee's employment with Employer is
being terminated.
(c) Payments on Termination After Change in Control.
(i) Employee's Base Salary through the Date of Termination at
the rate in effect on the date Notice of Termination is given, including
expenses, vacation pay, allowances and other compensation and benefits under
Paragraphs 4 and 5, and (ii) the amount, if any, of any bonus for a past fiscal
year (and pro rata for any portion of the then current fiscal year through the
Date of Termination) which has not been awarded or paid under any bonus plans in
which Employee is entitled to participate at the time of the Change of Control
or under other bonus plans at least as beneficial to Employee. In addition,
Employer shall continue in full force and effect for the benefit of Employee
through the Date of Termination all stock ownership, purchase or option plans,
13
employee benefit or compensation plans, and insurance or disability plans in
effect immediately preceding the Change of Control or plans substantially
similar thereto.
(ii) In lieu of any further payments or benefits to be paid or
otherwise provided under Paragraph 4 (excluding any stock option or restricted
stock grants and any deferred compensation benefits payable under Paragraphs
4(b) and (g)) for any period subsequent to the Date of Termination, Employer
shall pay as severance pay ("Severance Pay") to Employee a lump sum payment
equal to the sum of: (A) two and one-half (2-1/2) times the greater of: (x)
Employee's Base Salary immediately prior to the Date of Termination, or (y)
Employee's Base Salary in effect immediately prior to the date on which the
Change of Control occurred, and (B) Employee's bonus, if any, which would be
payable in respect of the thirty (30) month period beginning on the Date of
Termination as if Employee had continued his position, computed based upon the
formula in Paragraph 4(b). Such Severance Pay shall be subject to all applicable
federal and state income taxes. The portion of the Severance Pay based upon
Employee's Base Salary shall be paid on or before the fifth (5th) day following
the Date of Termination, and the portion of the Severance Pay based upon any
bonus plan shall be paid to Employee as and when payable under the terms of the
applicable plan had Employee's employment continued. Employee, by written notice
to Employer at any time prior to a Change of Control of Employer or the Date of
Termination, may elect, in his sole discretion, to receive said Severance Pay
interest-free at a future time, but in no event any later than twenty-four (24)
months after the Date of Termination.
(iii) To the extent not otherwise provided for under the terms
of any of Employer's stock option agreements, all stock options and restricted
stock granted by Employer or any predecessor of Employer to Employee shall vest
and be exercisable or transferable as of the Date of Termination and, except for
"incentive stock options" within the meaning of 26 U.S.C. ss.422, all options
shall remain fully exercisable for six (6) months following the Date of
Termination. In addition, any holding period for the underlying shares specified
under any of Employer's stock option agreements or restricted stock agreements
with Employee shall automatically be amended and deemed to be the earlier of:
(i) two (2) years from the date of exercise of the stock option, or (ii) the
Date of Termination.
(iv) Employer shall maintain in full force and effect, for the
continued benefit of Employee and members of Employee's family, for a period of
thirty (30) months after the Date of Termination, all employee benefit plans and
programs, including, but not limited to plans and programs provided under
Paragraphs 4, 5, 6, and 7 concerning profit-sharing, retirement, life insurance,
medical, health and accident, automobile and disability plans or programs in
which he or such family members were entitled to participate immediately prior
to: (i) the Date of Termination, or (ii) the date of Change of Control,
whichever plans provide greater benefits, provided that continued participation
is possible under the general terms and provisions of such plans and programs.
To the extent the terms of the individual agreements or policies contemplated by
Paragraph 5 require benefits to be provided for a period which would be less
14
than thirty (30) months after the Date of Termination, then notwithstanding the
terms of Paragraph 5 to the contrary, Employer shall provide benefits for a
period of time no less than thirty (30) months from and after the date of
Termination. If Employee's participation in any such plan or program is barred,
Employer shall arrange to provide Employee with benefits substantially similar
to those which Employee would be entitled to receive under such plans and
programs as if Employee's participation was not barred.
(v) In lieu of the compensation and retirement benefits
provided under Paragraph 7, Employee shall be entitled to receive an annual
retirement benefit equal to sixty percent (60%) of Employee's Final Average
Compensation (as defined in Paragraph 7) payable in the form of a single life
annuity over the life of Employee beginning at age sixty-five (65). Such benefit
shall not be conditioned on the covenants described in Paragraph 7. If Employee
has elected an actuarially reduced alternative form of benefit as provided in
Paragraph 7(e), the retirement benefit shall be paid in such alternative form.
(d) Coordination with Paragraph 8. The benefits provided under this
Paragraph 10 shall be in lieu of the benefits provided under Paragraph 8.
Notwithstanding the foregoing, the Employee may elect, by written notice to
Employer given within thirty (30) days after the date of the Notice of
Termination to receive the benefits provided under Paragraph 8 in lieu of the
benefits provided under this Paragraph 10.
(e) Mitigation. Employee shall not be required to mitigate the amount
of any payment provided for in this Paragraph 10 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Paragraph 10
be reduced by any compensation earned by Employee as a result of employment by
another employer after the Date of Termination, or otherwise.
(f) Application of Section 280G.
(i) If it shall be determined that any payment or distribution
by Employer to or for the benefit of Employee (whether paid or payable or
distributable pursuant to the terms of this Paragraph 10, but determined without
regard to any additional payments required under subparagraph (c) above) (a
"Payment"), would be subject to the payment by Employee of the excise tax
imposed by Section 280G(b)(2) of the Internal Revenue Code of 1987, as amended
(the "Code"), or any interest or penalties is alleged to be due from Employee
with respect to such excise tax (such excise tax, together with any interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes and excise tax imposed upon the
Gross-Up Payment, Employee retains an amount of the Gross-Up Payment equal to
the Excise Tax payable by Employee upon the Payment.
15
(ii) Subject to the provisions of subparagraph (c)(1) above,
all determinations required to be made under subparagraph (c), including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by a nationally recognized accounting firm mutually acceptable to Employee
and Employer (the "Accounting Firm"), which shall provide detailed supporting
calculations both to Employer and Employee within fifteen (15) business days of
the receipt of notice from Employee that there has been a Payment, or such
earlier time as is requested by Employer. All fees and expenses of the
Accounting Firm shall be borne solely by Employer. Any Gross-Up Payment, as
determined pursuant to subparagraph (c), shall be paid by Employer to Employee
within five (5) days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by Employee, it
shall furnish Employee with a written opinion that failure to report the Excise
Tax on Employee's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon Employer and Employee. As a result of the
uncertainty in the application of Code Section 280G at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by Employee should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. If Employer exhausts its remedies pursuant to subparagraph (c)(3) and
Employee thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by Employer to or for the
benefit of Employee.
(iii) Employee shall notify Employer in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
Employer of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Employee is informed
in writing of such claim, and shall apprise Employer of the nature of such claim
and the date on which such claim is requested to be paid. Employee shall not pay
such claim prior to the expiration of the thirty (30) day period following the
date on which Employee gives such notice to Employer (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If Employer notifies Employee in writing prior to the expiration of such period
that it desires to contest such claim, Employee shall:
(A) give Employer any information reasonably requested by
Employer relating to such claim;
(B) take such action in connection with contesting such claim
as Employer shall reasonably request in writing from time to time,
including without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by Employer;
(C) cooperate with Employer to contest such claim; and
16
(D) permit Employer to participate in any proceedings relating
to such claim;
provided, however, that Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this subparagraph (c)(3), Employer shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings or conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Employee to pay the tax claimed and xxx for a refund, or contest the
claim in any permissible manner. Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as Employer shall determine;
provided, however, that if Employer directs Employee to pay such claim and xxx
for a refund, Employer shall advance the amount of such payment to Employee,
interest-free, and shall indemnify and hold Employee harmless on an after-tax
basis) from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of Employee with respect to which such contested amount is claimed
to be due is limited solely to such contested amount. Furthermore, Employer's
control of a contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder, and Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(iv) If, after the receipt by Employee of an amount advanced
by Employer pursuant to subparagraph (c)(3). Employee becomes entitled to
receive any refund with respect to such claim, Employee shall (subject to
Employer's complying with the requirements of subparagraph (c)(3) promptly pay
to Employer the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Employee of an amount advanced by Employer pursuant to subparagraph (c)(3), a
determination is made that Employee shall not be entitled to any refund with
respect to such claim and Employer does not notify Employee in writing of its
intent to contest such denial or refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
(g) Adjustment of Index. In the event of a Change of Control of
Employer has occurred and Employee is providing services under Paragraph 2 or 6,
then notwithstanding anything herein to the contrary, annual adjustments to
continuing payments due under Paragraph 4, shall thereafter be the greater of
17
ten percent (10%) or the percentage increase in the costs of living based on the
U.S. Department of Labor Consumer Price Index for All Urban Consumers, U.S. City
Average, All Items, or comparable successor index.
11. Indemnity. Upon the termination of Employee's employment hereunder
by any party and for any reason, Employer shall immediately, to the fullest
extent permitted by applicable law, indemnify and hold Employee and Employee's
estate, heirs, personal representatives, successor and assigns, harmless from
and against any and all losses, costs, expenses, claims, damages, demands,
liabilities, derivative and other suits, actions and/or judgments of any nature
and description (including, without limitation, attorneys' fees) arising in
connection with any of Employee's past or present services as a director,
officer and/or employee of Employer or the Companies. Immediately upon such
termination, Employer shall obtain a rider to its errors and omissions insurance
policy covering Employer's obligations pursuant to the Paragraph 11.
12. Restrictive Covenants. During the term of Employee's employment
under this Agreement (including, for the purposes of this Paragraph 12, any
period during which Employee is providing services to Employer under Paragraph
7, and for a period of three (3) years after the termination of such employment,
unless Employer experiences a Change of Control or fails to make the payments
required to be made to Employee by Employer under Paragraph 8 for reasons other
than the breach of the Agreement by Employee, Employee covenants and agrees that
Employee will not, in any manner directly or indirectly:
(a) Except as required in his duties to Employer or as required by law
(in which case Employee shall give Employer notice in advance of such disclosure
in sufficient time to permit Employer to take such legal action as may be
necessary to prevent such disclosure, unless the circumstances under which such
disclosure is required make it impracticable for Employee to give such notice to
Employer ), disclose or divulge to any person, entity, firm or company, directly
or indirectly, any privileged knowledge, formulae, devices, confidential
information, proprietary business methods, unique techniques, customer lists,
supplier lists or other data of Employer ("Confidential Information").
(b) Solicit, divert, take away or interfere with: (i) any of the
employees or agents of Employer, or (ii) any customer of or supplier to Employer
with respect to any area of business which is competitive with the business of
Employer at the date of such termination of employment.
(c) Engage, directly or indirectly, either personally or as an
employee, partner, associate partner, manager, agent, advisor, consultant or
otherwise, or by means of any corporate or other device, in any business which
is competitive with the business of Employer at the date of such termination of
employment; provided nothing contained herein shall restrict Employee from
owning securities of a competitor of Employer which are listed on any National
Securities Exchange or actively traded over the counter, if Employee has no
other connection or relationship, direct or indirect, with the issuer o such
securities.
18
(d) It is the intention of the parties to restrict the activities of
Employee under Paragraphs 11(a), (b) and (c) only to the extent necessary, after
a review of all facts and circumstances, for the protection of legitimate
business interests of Employer, and the parties specifically covenant and agree
that should any of the provisions set forth herein, under any set of
circumstances not now foreseen by the parties, be deemed too board for that
purpose, said provisions will nevertheless be valid and enforceable to the
extent necessary for such protection. It is also agreed that Employee may engage
in activities which would be covered by Paragraph 12(c), with the written
consent of Employer.
(e) To the extent that Employer Patent and Confidential Information
Agreement and Agreement to assign Inventions with Employer, entered into between
Employer and Employee, which shall remain in full force and effect, shall impose
any other or greater obligations on Employee (and/or any obligations of greater
duration) than those set forth in this Paragraph 12, then such greater (and/or
longer) obligations: (i) shall prevail (in addition to those set forth in this
Paragraph 12); and (ii) shall survive any expiration or termination of this
Agreement for any reason whatsoever.
(f) If Employee breaches any of the terms of this Paragraph 12, in
addition to any other rights which Employer may have against Employee, any
amounts due Employee under Paragraph 6 or 7 shall be suspended for so long as
such violation continues and are forfeited if the violation is not cured within
six (6) months, or waived, at Employer's option, based on a review of the facts
and circumstances.
13. Succession. If Employee shall voluntarily terminate his employment
under Paragraph 2, as provided in Paragraph 6 and 7, and a period of transition
is needed for a successor chief executive officer, Employee may, at his
election, provide services, in his position as Vice Chairman of the Board to
assist the successor chief executive officer in the transition, for a period of
one (1) year or such lesser period as Employee shall agree. If Employee provides
such services, then he shall receive compensation for such period, in accordance
with Paragraph 4, instead of Paragraph 6 or 7, as the case may be, and only
thereafter the provisions of Paragraphs 6 and 7 shall apply.
14. Miscellaneous.
(a) Remedies. Employee acknowledges and agrees that any breach or
evasion of any of the terms of Paragraph 12 of this Agreement by Employee will
result in immediate and irreparable injury to Employer for which Employer cannot
be adequately protected or compensated by the payment of damages and therefore
shall authorize recourse by Employer to injunction and/or specific performance
as well as to all other legal or equitable remedies to which Employer may be
entitled. No remedy conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity, by statute or
19
otherwise. The election of any one or more remedies by either party shall not
constitute a waiver of the right to pursue other available remedies.
(b) Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof. Any
provision which is invalid or unenforceable (whether generally or limited to one
or more individual jurisdictions) shall be modified in its scope and/or
application in such a manner and to such an extent (either generally or in such
individual jurisdictions as is necessary) as to be valid and enforceable as
nearly as possible consistent with its stated purpose and intent or, if such
modification is not possible, shall be construed (generally or in such
jurisdiction(s)) as if such invalid or unenforceable provisions were omitted.
(c) Waiver. No waiver, modification or amendment of this Agreement or
of any covenant, condition or limitation herein contained shall be effective
unless in writing specifically referring thereto, and duly executed by the
parties hereto. The failure of either party to exercise or otherwise act with
respect to any of its rights hereunder in the event of a breach of any of the
terms or conditions hereof by the other party shall not be construed as a waiver
of such breach, nor prevent the nonbreaching party from thereafter enforcing
strict compliance with any and all of the terms and conditions hereof.
(d) Complete Agreement. Except for the agreements specifically referred
to in this Agreement, and the provisions contained in Employer's profit sharing,
stock option and other employee benefit plans, this Agreement contains the
complete agreement concerning the employment arrangement between the parties and
shall, as of the effective date hereof, supersede all other agreements, oral or
written, between the parties. The parties stipulate that neither of them has
made any representations or warranties with respect to the subject matter of
this Agreement, including the execution and delivery hereof, except as are
specifically set forth herein.
(e) Controlling Law. This Agreement shall be governed by, construed and
interpreted according to the laws of the State of Missouri, notwithstanding the
place of execution hereof, nor the performance of any acts in connection
herewith or hereunder in any other jurisdiction.
(f) Successors; Binding Agreement.
(i) Employer shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of Employer, by agreement in form
and substance satisfactory to Employee, 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 succession had taken place. As used in this
Agreement, "Employer" shall mean Employer, as hereinbefore defined, and any
successor to its business or assets as aforesaid which executes and delivers the
20
agreement provided for in this Paragraph 14 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
(ii) This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die while any amount would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there be no such designee, to his estate.
(g) Notice. Any notice given by either party hereunder shall be in
writing and shall be personally delivered or shall be mailed, Express, certified
or registered mail, or sent by a generally recognized next business day courier,
postage or other charges prepaid, as follows:
To Employer:
K-V Pharmaceutical Company
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Director, Human Resources
To Employee:
At his address as set forth on the payroll records
of Employer,
or to such other address as may have been furnished to the other party by
written notice. Notice shall be deemed given on the date personally delivered,
or if sent by Express Mail or next business day courier on the business day
following the date sent, or if otherwise mailed, two calendar days after the
date postmarked.
(h) Accounting. If Employee does not agree with any calculation by
Employer hereunder, within thirty (30) calendar days after Employee has received
written notice of the calculation, Employee may notify Employer's Board of
Directors of his disagreement and thereby cause an independent review to be made
by an accountant selected by Employee. If such accountant determines that the
calculation is in error and Employee is entitled to additional compensation and
Employee's accountant cannot agree as to the amount, the two accountants shall
select an independent third accountant to review the calculation and any payment
made, whose decision shall be binding on both parties. If as a result of such
review employee's payment is increased, Employer shall bear the expense of the
review, including the cost of Employee's accountant and the third account.
21
(i) Headings. The headings herein are for convenience only and shall
not affect the interpretation of this Agreement.
(j) Stock Options. Except for "incentive stock options" within the
meaning of 26 U.S.C. ss. 422, Employer agrees to continue in effect in
accordance with the terms and conditions thereof (other than the requirement of
Employee's continuing employment with Employer) during the term of this
Agreement and subsequent to Employee's retirement and so long as Employee
remains a director or a consultant to Employer, all stock options for the
purchase of Employer's shares held by Employee at the date of his Agreement. In
addition, upon Employee's retirement, any period provided for Employer to
continue to hold shares subsequent to the prior exercise of any stock option
shall terminate and be of no further force or effect, and any such shares then
held by Employer shall be delivered to Employee, subject to Employee's agreement
to comply with applicable securities laws and the provisions of any restrictive
legend required to be included on any certificate(s) issued therefor under such
securities laws.
(k) Attorney's Fees. If Employee retains legal counsel as a result of
the termination of his employment by Employer, or to enforce any term of this
Agreement, by reason of Employer's alleged failure to perform or alleged breach
of this Agreement, Employer shall pay to Employee all such attorneys' fees and
costs associated with such legal counsel, whether or not litigation shall be
commenced.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
"EMPLOYEE"
/s/ Xxxx X. Xxxxxxxx
XXXX X. XXXXXXXX
"EMPLOYER"
K-V PHARMACEUTICAL COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
(Name)
Vice-President, Finance
(Title)
22
STATE OF MISSOURI )
) ss.
COUNTY OF ST. LOUIS )
I, Xxxxx Xxxxx, do hereby certify that on this 16th day of December,
1996, before me personally appeared Xxxx X. Xxxxxxxx, to me known to be the
person described in and who executed the foregoing instrument and who
acknowledged that he executed the same as his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed by official
seal in said County and State on the day and year above written.
/s/ Xxxxx Xxxxx
My Commission Expires:
STATE OF MISSOURI )
) ss.
COUNTY OF ST. LOUIS )
I, Xxxxx Xxxxx, do hereby certify that on this 16th day of December,
1996, before me personally appeared Xxxxxx X. Xxxxxxxx, to me known to be the
VP, Finance of KV Pharmaceutical Company, a Delaware corporation, and known to
me to be the same person whose name is subscribed to the foregoing instrument,
who acknowledged that he signed and delivered said instrument pursuant to
authority given by the Board of Directors of said corporation, as his free act
and deed, as the free act and deed of said corporation for the uses and purposes
therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed by official
seal in said County and State on the day and year above written.
/s/ Xxxxx Xxxxx
My Commission Expires:
23
KV PHARMACEUTICAL COMPANY
December 16, 1996
Xx. Xxxx X. Xxxxxxxx
0000 X. Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
RE: Agreement between KV Pharmaceutical Company
and Xxxx X. Xxxxxxxx, dated December 16, 1996
Dear Xx. Xxxxxxxx:
This letter will confirm our understanding that your Annual Bonus for Fiscal
Year 1997 will be calculated and paid to you under your old Agreement, dated
November 15, 1993 and the Amendments attached thereto.
Except as specifically modified by this letter, it is agreed that the Agreement
will remain in full force and effect as originally written.
If this accurately reflects our understanding, please sign one copy of this
letter and return it to me for our files.
Sincerely,
KV PHARMACEUTICAL COMPANY
/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Vice-President, Finance
AGREED: /s/ Xxxx X. Xxxxxxxx DATE: 12/16/96
Xxxx X. Xxxxxxxx
24
