EXHIBIT 10.5
FORM OF
EMPLOYMENT AGREEMENT
This AGREEMENT is made and entered into as of the 21 day of January
2002, by and between FIRST HORIZON PHARMACEUTICAL CORPORATION, a Delaware
corporation (the "Company") and ("Executive").
WITNESSETH:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. Employment. Throughout the Term (as defined in Section 2 below), the
Company shall employ Executive as provided herein, and Executive hereby
accepts such employment. In accepting such employment, Executive states
that, to the best of his knowledge, he is not now, and by accepting
such employment, will not be, under any restrictions in the performance
of the duties contemplated under this Agreement as a result of the
provisions of any prior employment agreement or non-compete or similar
agreement to which Executive is or was a party.
2. Term of Employment. Subject to approval of this Agreement by the
Company's Board of Directors, the term of Executive's employment by the
Company hereunder shall commence on January 1st, 2002 (the "Effective
Date") and shall continue thereafter unless sooner terminated as a
result of Executive's death or in accordance with the provisions of
Section 7 below (the "Term").
3. Duties. Throughout the Term, and except as otherwise expressly provided
herein, Executive shall be employed by the Company as the . In
such capacity, Executive shall be responsible for . Without
limiting the generality of the foregoing, throughout the Term Executive
shall faithfully perform his duties as at all times so as to
promote the best interests of the Company. In addition, upon approval
of this Agreement, the Board of Directors shall elect Executive as an
officer of the Company at its first board meeting after the Effective
Date.
4. Compensation.
(a) Salary. For any and all services performed by Executive under
this Agreement during the Term, in whatever capacity, the
Company shall pay to Executive an annual salary of
per year (the "Salary") less any and all
applicable federal, state and local payroll and withholding
taxes. The Salary shall be paid in the same increments as the
Company's normal payroll, but no less frequent than bi-monthly
and prorated, however, for any period of less than a full
month. The Salary will be reviewed annually by the
Compensation Committee of the Board and a determination shall
be made at that time as to the appropriateness of an increase,
if any, thereto.
(b) Bonus. In addition to the Salary, Executive shall be eligible
to receive from the Company an incentive compensation bonus
(the "Bonus") based on a percentage of his Salary, which
percentage, however, shall in no event exceed % of the
Executive's Salary. The Bonus, if any, shall be determined
based on such criteria as shall be determined from time to
time by the Compensation Committee of the Board of Directors.
The nature of the criteria and the determination as to whether
the criteria have been satisfied, shall be determined by the
Compensation Committee of the Board in its sole discretion.
Accordingly, there is no assurance that a Bonus will be paid
to Executive with respect to all or any particular year during
the Term.
5. Benefits and Other Rights. In consideration for Executive's performance
under this Agreement, the Company shall provide to Executive the
following benefits:
(a) The Company will provide Executive with cash advances for or
reimbursement of all reasonable out-of-pocket business
expenses incurred by Executive in connection with his
employment hereunder. Such reimbursement, however, is
conditioned upon Executive adhering to any and all reasonable
policies established by Company from time to time with respect
to such reimbursements or advances, including, but not limited
to, a requirement that Executive submit supporting evidence of
any such expenses to the Company.
(b) A company car, gasoline charge card and car maintenance plan
will be provided to Executive and paid for by the Company
during the term.
(c) The Company will provide Executive and his family with the
opportunity to receive group medical coverage under the terms
of the Company's health insurance plan, but subject to
completion of normal waiting periods. During any such waiting
period, the Company will pay, or reimburse Executive for, the
cost of COBRA coverage for Executive and his family under his
prior health plan.
(d) During the Term the Executive shall be entitled to days
paid vacation, it being understood and agreed that unused
vacation shall not be carried over from
one year to the next. In addition, Executive shall be
entitled to eight (8) paid holidays and four (4) paid personal
days off.
6. Options. The Company has previously granted to the Executive attached
options pursuant to the Company's Non-Qualified Stock Option Plan (the
"Option Plan"). The options vest at the rate of 25% of granted options
per year on each of the first four anniversaries of the date of grant
with an exercise price equal to the average of the high and low share
price as of the date of grant. Such options also provide that upon a
"Change of Control" (as herein defined) all such options shall become
fully vested and immediately exercisable. For purposes of this
Agreement, a Change of Control shall mean the occurrence of any of the
following events: (a) a merger, consolidation or reorganization of the
Company in which the Company does not survive as an independent entity;
(b) a sale of all or substantially all of tile assets of the Company;
(c) the first purchase of shares of common stock of the Company
pursuant to a tender or exchange offer for more than a majority of the
Company's outstanding shares of common stock by any person other than
Xxxx X. Xxxxxx or an entity affiliated with or controlled by Xxxx X.
Xxxxxx; or (d) any change of control of a nature that would, in the
opinion of the Board of Directors, be required to be reported under the
federal securities laws, provided that such a change of control shall
be deemed to have occurred if (i) any person, other than Xxxx X. Xxxxxx
or an entity affiliated with or controlled by Xxxx X. Xxxxxx, is or
becomes the beneficial owner, directly or indirectly, of securities of
the Company representing at least a majority of the combined voting
power of the Company's then outstanding securities; or (ii) during any
period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company cease for
any reason to constitute a majority thereof unless the election of any
director, who was not a director at the beginning of the period, was
approved by a vote of at least 80% of the directors then still in
office who were directors at the beginning of the period.
7. Termination of the Term.
(a) The Company shall have the right to terminate the Term under
the following circumstances:
(i) Executive shall die; or
(ii) With or without Cause, effective upon written notice
to Executive by the Company.
(b) This Agreement may be terminated by the Executive at any time
upon sixty (60) days prior written notice to the Company.
(c) For purposes of this Agreement, "Cause" shall mean:
(i) Executive shall be convicted of the commission of a
felony or a crime involving dishonesty, fraud or
moral turpitude;
(ii) Executive has engaged in acts of fraud, embezzlement,
theft or other dishonest acts against the Company;
(iii) Executive commits an act which negatively impacts the
Company or its employees including, but not limited
to, engaging in competition with the Company,
disclosing confidential information or engaging in
sexual harassment, discrimination or other human
rights-type violations;
(iv) Executive's gross neglect or willful misconduct in
the discharge of his duties and responsibilities; or
(v) Executive's repeated refusal to follow the lawful
direction of the Board of Directors or supervising
officers.
8. Effect of Expiration or Termination of the Term. Promptly following the
termination of the Term, and except as otherwise expressly agreed to by
the Company in writing, Executive shall
(a) Immediately resign from any and all other positions or
committees which Executive holds or is a member of with the
Company or any subsidiary of the Company including, but not
limited to, as an officer and director of the Company or any
subsidiary of the Company.
(b) provide the Company with all reasonable assistance necessary
to permit the Company to continue its business operations
without interruption and in a manner consistent with
reasonable business practices; provided, however, that such
transition period shall not exceed thirty (30) days after
termination nor require more than twenty (20) hours of
Executive's time per week and Executive shall be promptly
reimbursed for all out-of-pocket Expenses.
(c) deliver to the Company possession of any and all property
owned or leased by the Company which may then be in
Executive's possession or under his control, including,
without limitation, any and all such keys, credit cards,
automobiles, equipment, supplies, books, records, files,
computer equipment, computer software and other such tangible
and intangible property of any description whatsoever. If,
following the expiration or termination of the Term, Executive
shall receive any mail addressed to the Company, then
Executive shall immediately deliver such mail, unopened and in
its original envelope or package, to the Company; and
(d) Other than as provided in this Section 8, upon a termination
of employment all other benefits and/or entitlements to
participate in programs or benefits, if any, will cease as of
the effective date except medical insurance coverage that may
be continued at Executive's own expense as provided by
applicable law or written Company policy.
(e) Upon termination of Executive pursuant to ss. 7(a)(i)
or ss. 7(a)(ii) without Cause, the Company shall: (i) provide
Executive with Salary continuance, subject to ss. 8(g) for
months (a "Salary Continuance"), plus (ii) a lump sum
payment equal to percent of the Bonus, if any, paid to
Executive for the calendar year immediately preceding
termination, plus (iii) provide months of COBRA
coverage for Executive which shall be substantially equivalent
to that provided by the Company prior to termination, plus
(iv) provide months of car allowance at
dollars per month, subject to return of existing company
vehicle at time of termination, plus (v) all of Executive's
then unvested options previously issued pursuant to the
Company Option Plan shall immediately vest and be exercisable
as herein provided.
(f) Upon termination of Executive pursuant to ss. 7(a)(ii) with
Cause or ss. 7(b), the Company shall pay Executive or
Executive's estate all Salary accrued but unpaid as of the
date of such termination.
(g) In the event that Executive shall be entitled to receive a
Salary Continuance and COBRA benefit pursuant to ss. 8(e),
such Salary Continuance and COBRA benefit shall continue only
until such time as Executive shall have accepted another full
time position. In addition, in the event that Executive shall
perform consulting or other services for which he shall
receive compensation, all compensation shall be reported to
the Company and shall be offset against any remaining Salary
Continuance payments. Failure of Executive to promptly report
the receipt of any compensation from a third party or the
acceptance of a new position shall entitle the Company to
terminate all remaining Salary Continuance and COBRA benefits
and to seek restitution for any payments made to Executive
subsequent to such job acceptance or compensation receipt;
(h) Upon the expiration or termination of this Agreement for any
reason, Executive, or Executive's estate, will have a period
of 90 days from the date of such expiration or termination in
which to exercise any vested option.
(i) Any dollar amounts which are to be paid at the time of
termination under this Section 8, other than Salary
Continuance, the car allowance and COBRA payments, shall be
paid within thirty (30) days after the date of termination.
Any Salary Continuance or COBRA payments shall be made in
accordance with the usual payroll practices which were
applicable prior to termination. Any and all payments made
pursuant to this Agreement shall be net of any and all
applicable federal, state and local payroll and withholding
taxes.
9. Restrictive Covenants for Executive. Executive hereby covenants and
agrees with the Company that for so long as Executive is employed by
the Company and for a period (the "Restricted Period") of thirty six
(36) months thereafter, Executive shall not, without the prior written
consent of the Company, which consent shall be within the sole and
exclusive discretion of the Company either directly or indirectly on
his own account or as an executive, consultant, agent, partner, joint
venturer, owner, officer, director or
shareholder of any other person, firm, corporation, partnership,
limited liability company or other entity, or in any other capacity, in
any way:
(a) Carry on, be engaged in or have any financial interest in any
business which is in competition with the business of the
Company. For purposes of this Section 9, a business shall be
deemed to be in competition with the Company if it involves
research and development work involving products, including,
but not limited to, generic drug products, which were, at the
time of termination, being marketed by the Company or which at
such time were under study by the Company and expected to be
marketed within six (6) months of the date of termination.
Nothing in this Section 9(a) shall be construed so as to
preclude Executive from investing in any publicly held
company, provided Executive's beneficial ownership of any
class of such company's securities does not exceed 5% of the
outstanding securities of such class.
(b) solicit any current supplier, customer or client of the
Company or any affiliate of the Company or anyone who was a
supplier, customer or client at any time during the twelve
(12) month period immediately preceding termination, excluding
customers such as wholesalers, managed care agencies,
shippers, commercial and investment banks, IR/PR agencies,
scientific and computer consultants, lawyers and
manufacturers, as long as manufacturers have extra capacity,
provided, however, that where minimum alternative allocation
sources would not b available, requests for exceptions to this
restriction will be determined by the Company on a case by
case basis; or
(c) solicit, employ, or engage any person who was an employee of
the Company or any affiliate of the Company at any time during
the twelve (12) month period immediately preceding
termination.
10. Confidentiality. The Executive acknowledges that during the period of
his employment by the Company, and in his performance of services
hereunder, he will be placed in a relationship of trust and confidence
regarding the Company and its affairs. In the course of the aforesaid
relationship, he will have access to and will acquire confidential
information relating to the business and operations of the Company,
including, without limitation, information which constitutes "trade
secrets", as that term is defined in the Georgia Trade Secrets Act of
1990 as amended. The Executive acknowledges that any such information,
including information that may not constitute a trade secret,
nonetheless constitutes confidential information as between himself and
the Company, that the disclosure thereof (or of any information which
he knows relates to confidential, trade, or other secret aspects of the
Company's business) would cause substantial loss to the goodwill of the
Company, and will continue to be made known to Executive only because
of the position of trust and confidence which he will continue to
occupy hereunder. In view of the foregoing, and in consideration of the
covenants and premises of this Agreement, the Executive agrees that he
will not, at any time during the term of his employment, and for a
period of sixty (60) months thereafter, disclose to any person, firm or
company any trade secrets or confidential information or such ideas
which he
may have acquired or developed or may acquire or develop relating to
the business of the Company while serving the Company.
11. Remedies.
(a) The covenants of Executive set forth in Section 9 and Section
10 are separate and independent covenants for which valuable
consideration has been paid, the receipt, adequacy and
sufficiency of which are acknowledged by Executive, and have
also been made by Executive to induce the Company to enter
into this Agreement and continue Executive's employment with
the Company. Each of the aforesaid covenants may be availed
of, or relied upon, by the Company in any court of competent
jurisdiction, and shall form the basis of injunctive relief
and damages including expenses of litigation (including, but
not limited to, reasonable attorney's fees upon trial and
appeal) suffered by the Company arising out of any breach of
the aforesaid covenants by Executive. The covenants of
Executive set forth in this Section 11 are cumulative to each
other and to all other covenants of Executive in favor of the
Company contained in this Agreement and shall survive the
termination of this Agreement for the purposes intended.
(b) Each of the covenants contained in Section 9 and Section 10
above shall be construed as agreements which are independent
of any other provision of this Agreement, and the existence of
any claim or cause of action by any party hereto against any
other party hereto, of whatever nature, shall not constitute a
defense to the enforcement of such covenants. If any of such
covenants shall be deemed unenforceable by virtue of its scope
in terms of geographical area, length of time or otherwise,
but may be made enforceable by the imposition of limitations
thereon, Executive agrees that the same shall be enforceable
to the fullest extent permissible under the laws and public
policies of the jurisdiction in which enforcement is sought.
The parties hereto hereby authorize any court of competent
jurisdiction to modify or reduce the scope of such covenants
to the extent necessary to make such covenants enforceable.
(c) In the event that Executive believes that the Company is in
violation of a material obligation owed to Executive under
this Agreement, and the Executive has given notice of such
violation to the Company requesting that the Company cure such
violation, and within twenty (20) business days the Company
has not undertaken steps to cure such violation or to provide
information to Executive demonstrating that the Company is not
in violation of the Agreement, and as a result of such failure
to cure or dispute such violation, the Executive terminates
the Agreement in accordance with Section 7(b), Executive shall
not be barred from seeking employment with a competitor
notwithstanding the restriction of Section 8(a); provided,
however, that all other restrictions contained in this
Agreement, including, but not limited to, the covenants in
Section 8(b) and in Section 9, shall remain in full force and
effect.
12. Enforcement Costs. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any
provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorney's fees, court
costs and all expenses even if not taxable as court costs (including,
without limitation, all such fees, costs and expenses incident to
appeal and other post judgment proceedings), incurred in that action or
proceeding, in addition to any other relief to which such party or
parties may be entitled. Attorneys fees shall include, without
limitation, paralegal fees, investigative fees, administrative costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party.
13. Notices. Any and all notices necessary or desirable to be served
hereunder shall be in writing and shall be
(a) personally delivered, or
(b) sent by certified mail, postage prepaid, return receipt
requested, or guaranteed overnight delivery by a nationally
recognized express delivery company, in each case addressed to
the intended recipient at the address set forth below.
(c) For notices sent to the Company:
First Horizon Pharmaceuticals, Inc.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(d) For notices sent to Executive:
Either party hereto may amend the addresses for notices to such party
hereunder by delivery of a written notice thereof served upon the other party
hereto as provided herein. Any notice sent by certified mail as provided above
shall be deemed delivered on the third (3rd) business day next following the
postmark date which it bears.
14. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto with respect to the subject matter hereof, and all prior
negotiations, agreements and understandings are merged herein. This
Agreement may not be modified or revised except pursuant to a written
instrument signed by the party against whom enforcement is sought.
15. Severability. The invalidity or unenforceability of any provision
hereof shall not affect the enforceability of any other provision
hereof, and except as otherwise provided in Section 11 above, any such
invalid or unenforceable provision shall be severed from this
Agreement.
16. Waiver. Failure to insist upon strict compliance with any of the terms
or conditions hereof shall not be deemed a waiver of such term or
condition, and the waiver or relinquishment of any right or remedy
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or remedy at any other time or times.
17. Arbitration. Any claims, disputes or controversies arising out of or
relating to this Agreement between the parties (other than those
arising under Section 11) shall be submitted to arbitration by the
parties. The arbitration shall be conducted in Atlanta, Georgia in
accordance with the rules of the American Arbitration Association then
in existence and the following provisions: Either party may serve upon
the other party by guaranteed overnight delivery by a nationally
recognized express delivery service, written demand that the dispute,
specifying in detail its nature, be submitted to arbitration. Within
seven business days after the service of such demand, each of the
parties shall appoint an arbitrator and serve written notice by
guaranteed overnight delivery by a nationally recognized express
delivery service, of such appointment upon the other party. The two
arbitrators appointed shall appoint a third arbitrator. The decision of
two arbitrators in writing under oath shall be final and binding upon
the parties. The arbitrators shall decide who is to pay the expenses of
the arbitration. If the two arbitrators appointed fail to agree upon a
third arbitrator within ten days after their appointment, then an
application may be made by either party, upon notice to the other
party, to any court of competent jurisdiction for the appointment of a
third arbitrator, and any such appointment shall be binding upon both
parties.
18. Governing Law. This Agreement and the rights and obligations of the
parties hereto shall be governed by and construed in accordance with
the law of the State of Georgia, without regard to its conflicts of
laws provisions. Each party hereto hereby (a) agrees that any
litigation which may be initiated with respect to this Agreement or to
enforce rights granted hereunder shall be initiated in a court located
in Xxxxxx County, Georgia and (b) consents to personal jurisdiction of
such courts for such purpose.
19. Benefit and Assignability. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The
rights and obligations of Executive hereunder are personal to him, and
are not subject to voluntary or involuntary alienation, transfer,
delegation or assignment.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
EXECUTIVE:
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and
FIRST HORIZON PHARMACEUTICAL CORPORATION
Accepted By
By:
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Its:
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