EXHIBIT 10.9.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of May 28, 2004, by and
between Par Pharmaceutical, Inc., a Delaware corporation ("Employer"), and
Xxxxxxx Xxxxxxxxx ("Executive").
R E C I T A L S :
A. WHEREAS, Executive desires to provide services to Employer; and
B. WHEREAS, Employer and Executive desire to formalize the terms and
conditions of Executive's employment with Employer.
In consideration of the mutual promises herein contained, the parties
hereto hereby agree as follows:
1. Employment.
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1.1. GENERAL. Employer hereby employs Executive, effective as of the
Effective Date (as defined in Section 3.1 hereof), in the capacity of Executive
Vice President and Chief Scientific Officer of Employer at the compensation rate
and benefits set forth in Section 2 hereof for the Employment Term (as defined
in Section 3.1 hereof). Executive hereby accepts such employment, effective as
of the Effective Date, subject to the terms and conditions herein contained. In
such capacity, Executive shall be responsible for all aspects of the Employer's
research and development activities, regulatory affairs, compliance and quality
assurance/quality control, and shall perform and carry out such duties and
responsibilities that are reasonably consistent with Executive's positions and
responsibilities and this Agreement as may be assigned to him by the President
and the Chief Executive Officer of Employer and Pharmaceutical Resources, Inc.,
a Delaware corporation and Employer's parent ("Resources"). Executive shall
report to the President and Chief Executive Officer of Employer and Resources.
1.2. TIME DEVOTED TO POSITION. Executive, during the Employment Term,
shall devote substantially all of his business time, attention and skills to the
business and affairs of Employer.
1.3. CERTIFICATIONS. Whenever the Chief Executive Officer and/or
Chief Financial Officer of Resources or the Chief Executive Officer and/or Chief
Financial Officer of Employer is required by law, rule or regulation or
requested by any governmental authority or by Resources's or Employer's auditors
to provide certifications with respect to Resources's or Employer's financial
statements or filings with the Securities and Exchange Commission or any other
governmental authority, Executive shall sign such certifications as may be
reasonably requested by such officers, Resources and/or Employer, with such
exceptions as Executive deems necessary to make such certifications accurate and
not misleading.
2. Compensation and Benefits.
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2.1. SALARY. At all times Executive is employed hereunder, Employer
shall pay to Executive, and Executive shall accept, as full compensation for any
and all services rendered and to be rendered by him during such period to
Employer in all capacities, including, but not limited to, all services that may
be rendered by him to any of Resources's or Employer's subsidiaries, entities
and organizations presently existing or hereafter formed, organized or acquired,
directly or indirectly, by Resources or Employer (each, a "Subsidiary" and
collectively, the "Subsidiaries"), the following: (i) a base salary at the
annual rate of $405,000, or at such increased rate as the Board of Directors
(the "Board") of Resources (through its Compensation and Stock Option
Committee), in its sole discretion, may hereafter from time to time (it being
understood that Executive shall have a performance review at least once annually
at the beginning of the calendar year) grant to Executive (as so adjusted, the
"Base Salary"); and (ii) any bonus and the benefits set forth in Sections 2.2,
2.3, 2.4 and 2.5 hereof. The Base Salary shall be payable in accordance with the
regular payroll practices of Employer applicable to senior executives, less such
deductions as shall be required to be withheld by applicable law and
regulations.
2.2. BONUS. Subject to Section 3.3 hereof, Executive shall be
entitled to an annual bonus during the Employment Term in such amount (if any)
as determined by the Board, in its sole discretion, based on such performance
criteria as it deems appropriate, including, without limitation, Executive's
performance and Resources's and Employer's earnings, financial condition, rate
of return on equity, successful development of pharmaceutical products and
compliance with regulatory requirements; PROVIDED, HOWEVER, on the first
anniversary of the Effective Date, Executive shall receive a bonus in an amount
not less than $202,500, unless the Employment Term is terminated during the
first year of the Initial Term by Employer pursuant to Section 3.2.4 or by
Executive pursuant to Section 3.2.2. Subject to the preceding sentence, the
target amount of Executive's annual bonus shall be fifty (50%) percent of the
Base Salary.
2.3. EQUITY COMPENSATION. Executive shall be entitled to participate
in long-term incentive plans, including, without limitation, stock option,
restricted stock and similar equity plans of Employer as may be offered from
time to time, consistent with Executive's job grade and title. Subject to
stockholder approval of the 2004 Performance Equity Plan (the "2004 Equity
Plan"), Executive shall be granted (a) on the Effective Date, 45,000 shares of
restricted common stock of Resources and (b) on the six (6) month anniversary of
the Effective Date, 15,000 shares of restricted common stock of Resources
(together, the "Protected Restricted Stock"), each of which shall vest in equal
amounts over a four (4) year period on each anniversary of the date of such
grant and shall otherwise be subject to the terms and conditions set forth in
the 2004 Equity Plan and the award agreement relating to such shares; PROVIDED,
HOWEVER, if for any reason the Employment Term is terminated on or prior to the
six (6) month anniversary of the Effective Date, Executive shall not be granted
such 15,000 shares of restricted common stock. Subject to stockholder approval
of the 2004 Equity Plan and Executive's continued employment by Employer at such
time, Executive shall be granted on or before January 31, 2005 options to
purchase 50,000 shares of common stock of Resources subject to the terms and
conditions set forth in the 2004 Equity Plan and the award agreement relating to
such stock options (the "Protected Stock Options").
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2.4. EXECUTIVE BENEFITS.
2.4.1. EXPENSES. Employer shall promptly reimburse Executive
for expenses he reasonably incurs in connection with the performance of his
duties (including business travel and entertainment expenses) hereunder, all in
accordance with Employer's policies with respect thereto as in effect from time
to time.
2.4.2. EMPLOYER PLANS. Executive shall be entitled to
participate in such employee benefit and welfare plans and programs as Employer
may from time to time generally offer or provide to executive officers of
Employer, including, but not limited to, participation in life insurance, health
and accident, medical plans and programs and profit sharing and retirement plans
in accordance with the terms and conditions of such plans and programs.
2.4.3. VACATION. Executive shall be entitled to four (4) weeks
of paid vacation per calendar year, prorated for any partial year.
2.4.4. AUTOMOBILE. Employer shall provide Executive with an
automobile cash allowance in the amount of $1,050 (gross) per month.
2.4.5. RELOCATION EXPENSES; CORPORATE APARTMENT. Employer shall
promptly reimburse Executive for reasonable expenses incurred in connection with
his relocation to undertake his duties hereunder up to a maximum amount of
$100,000, all in accordance with Employer's policies with respect thereto as in
effect from time to time. In connection with Executive's relocation, Employer
shall provide Executive with a corporate apartment for a period of up to 24
months; PROVIDED, HOWEVER, the aggregate amount Employer reimburses Executive
for such apartment shall not exceed $36,000 per calendar year, prorated for any
partial year. Employer may, at its option, extend the period of time for which
it provides the corporate apartment.
2.4.6. LIFE INSURANCE. Employer shall obtain (PROVIDED, that
Executives qualifies on a non-rated basis) a term life insurance policy, the
premiums of which shall be borne by Employer and the death benefits of which
shall be payable to Executive's estate, or as otherwise directed by Executive,
in the amount of $1 million throughout the Employment Term.
2.5. SIGNING BONUS. On the Effective Date, Employer shall pay to
Executive a one-time signing bonus (the "Signing Bonus") in the amount of
$150,000, less such deductions as shall be required to be withheld by applicable
law and regulations. In the event Executive's employment is terminated during
the first year of the Initial Term by Executive pursuant to Section 3.2.2 hereof
or by Employer pursuant to Section 3.2.4 hereof, Executive shall repay to
Employer the Signing Bonus, less one-twelfth (1/12) of such amount for each full
thirty (30) day period during which Executive shall have been employed
hereunder.
3. Employment Term; Termination.
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3.1. EMPLOYMENT TERM. Prior to May 28, 2004, Executive shall provide
Employer written notice of the date on which Executive's employment hereunder
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shall commence (the "Effective Date"), which shall not be later than June 28,
2004. Executive's employment shall commence on the Effective Date and, except as
otherwise provided in Section 3.2 hereof, shall continue until the third (3rd)
anniversary of the Effective Date (the "Initial Term"). Thereafter, this
Agreement shall automatically be renewed for successive one-year periods
commencing on the third (3rd) anniversary of the Effective Date (the Initial
Term, together with any such subsequent employment period(s), being referred to
herein as the "Employment Term"), unless Executive or Employer shall have
provided a Notice of Termination (as defined in Section 3.4.1 hereof) in respect
of its or his election not to renew the Employment Term to the other party at
least 45 days prior to such termination. Upon non-renewal of the Employment Term
pursuant to this Section 3.1 or termination pursuant to Sections 3.2.1 through
3.2.6 hereof, inclusive, Executive shall be released from any duties hereunder
(except as set forth in Sections 2.5 and 4 hereof) and the obligations of
Employer to Executive shall be as set forth in Section 3.3 hereof only.
3.2. EVENTS OF TERMINATION. The Employment Term shall terminate upon
the occurrence of any one or more of the following events:
3.2.1. DEATH. In the event of Executive's death, the Employment
Term shall terminate on the date of his death.
3.2.2. WITHOUT CAUSE BY EXECUTIVE. Executive may terminate the
Employment Term at any time during such Term for any reason or no reason
whatsoever by giving a Notice of Termination to Employer. The Notice of
Termination shall specify the Date of Termination (as defined in Section 3.4.2
hereof), which date shall not be earlier than thirty (30) days after the Notice
of Termination is given or such shorter period if mutually agreed upon by
Executive and Employer.
3.2.3. DISABILITY. In the event of Executive's Disability (as
hereinafter defined), Employer may terminate the Employment Term by giving a
Notice of Termination to Executive. The Notice of Termination shall specify the
Date of Termination, which date shall not be earlier than thirty (30) days after
the Notice of Termination is given. For purposes of this Agreement, "Disability"
means disability, as defined in any long-term disability insurance policy
provided by Employer and insuring Executive or, in the absence of any such
policy, the inability of Executive for 180 days in any twelve (12) month period
to substantially perform his duties hereunder as a result of a physical or
mental illness, all as determined in good faith by the Board.
3.2.4. CAUSE. Employer may terminate the Employment Term for
"Cause," based on objective factors determined in good faith by a majority of
the Board as set forth in a Notice of Termination to Executive specifying the
reasons for termination and the failure of the Executive to cure the same within
ten (10) days after Employer shall have given the Notice of Termination;
PROVIDED, HOWEVER, that in the event the Board in good faith determines that the
underlying reasons giving rise to such determination cannot be cured, then the
ten (10) day period shall not apply and the Employment Term shall terminate on
the date that the Notice of Termination is given. For purposes of this
Agreement, "Cause" shall mean (i) Executive's conviction of, guilty or no
contest plea to, or confession of guilt of, a felony or other crime involving
moral turpitude; (ii) an act or omission by Executive in connection with his
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employment that constitutes fraud, criminal misconduct, breach of fiduciary
duty, dishonesty, gross negligence, malfeasance, willful misconduct or other
conduct that is materially harmful or detrimental to Employer; (iii) a material
breach by Executive of this Agreement; (iv) a continuing or other material
failure by Executive to perform such duties as are assigned to Executive by
Employer in accordance with this Agreement, other than a failure resulting from
a Disability; (v) Executive's knowingly taking any action on behalf of Employer
or any of its affiliates without appropriate authority to take such action; (vi)
Executive's knowingly taking any action in conflict of interest with Employer or
any of its affiliates given Executive's position with Employer; and/or (vii) the
commission of an act of personal dishonesty by Executive in connection with
Employer that involves personal profit.
3.2.5. WITHOUT CAUSE BY EMPLOYER. Employer may terminate the
Employment Term for any reason or no reason whatsoever (other than for the
reasons set forth elsewhere in this Section 3.2) by giving a Notice of
Termination to Executive. The Notice of Termination shall specify the Date of
Termination, which date shall not be earlier than thirty (30) days after the
Notice of Termination is given or such shorter period if Employer shall pay to
Executive that amount of the full annual Base Salary amount that would have been
earned between the 30-day period and such shorter period.
3.2.6. Employer's Material Breach. Executive may terminate the
Employment Term upon Employer's material breach of this Agreement and the
continuation of such breach for more than ten (10) days after written demand for
cure of such breach is given to Employer by Executive (which demand shall
identify the manner in which Employer has materially breached this Agreement).
Employer's material breach of this Agreement shall mean (i) the failure of
Employer to make any payment that it is required to make hereunder to Executive
when such payment is due; (ii) the assignment to Executive, without Executive's
express written consent, of duties materially inconsistent with his positions,
responsibilities and status with Employer, or a significant change in
Executive's reporting responsibilities, titles or offices, except in connection
with the termination of the Employment Term by Employer for Cause, without Cause
or Disability or as a result of Executive's death or voluntary resignation;
(iii) a reduction by Employer in Executive's Base Salary; or (iv) a permanent
reassignment of Executive's primary work location, without the consent of
Executive, to a location more than 35 miles from Employer's executive offices in
Woodcliff Lake, New Jersey.
3.3. CERTAIN OBLIGATIONS OF EMPLOYER FOLLOWING TERMINATION OF THE
EMPLOYMENT TERM. Following termination of the Employment Term under the
circumstances described below, Employer shall pay to Executive or his estate, as
the case may be, the following compensation and provide the following benefits
in full satisfaction and final settlement of any and all claims and demands that
Executive now has or hereafter may have hereunder against Employer. Any lump-sum
payments owed by Employer shall be made to Executive within ten (10) business
days of the Date of Termination. In connection with Executive's receipt of any
or all monies and benefits to be received pursuant to this Section 3.3,
Executive shall not have a duty to seek subsequent employment during the period
in which he is receiving severance payments and any Severance Amount (as defined
in Section 3.3.2 hereof) shall not be reduced solely as a result of Executive's
subsequent employment by an entity other than Employer.
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3.3.1. FOR CAUSE. In the event that the Employment Term is
terminated by Employer for Cause, Employer shall pay to Executive, in a single
lump-sum, an amount equal to any unpaid but earned Base Salary through the Date
of Termination.
3.3.2. WITHOUT CAUSE BY EMPLOYER; MATERIAL BREACH BY EMPLOYER;
ELECTION NOT TO RENEW BY EMPLOYER. In the event that the Employment Term is
terminated by Employer pursuant to Section 3.2.5 hereof or by Executive pursuant
to Section 3.2.6 hereof or Employer elects not to renew this Agreement pursuant
to Section 3.1 hereof, Employer shall pay to Executive, subject to Executive's
continued compliance with the terms of Section 4 hereof, an amount equal to the
Severance Amount. For purposes hereof, "Severance Amount" shall mean two (2)
times the full annual Base Salary amount in effect at such applicable time. Any
payments made in accordance with this Section 3.3.2 shall be made in twelve (12)
equal monthly installments from the Date of Termination in accordance with
Employer's regular payroll practices.
3.3.3 WITHOUT CAUSE BY EXECUTIVE; ELECTION NOT TO RENEW BY
EXECUTIVE. In the event that the Employment Term is terminated by Executive
pursuant to Section 3.2.2 hereof or Executive elects not to renew this Agreement
pursuant to Section 3.1 hereof, Employer shall pay to Executive, in a single
lump-sum, an amount equal to any unpaid but earned Base Salary through the Date
of Termination.
3.3.4. DEATH, DISABILITY. In the event that the Employment Term
is terminated by reason of Executive's death pursuant to Section 3.2.1 hereof or
by Employer by reason of Executive's Disability pursuant to Section 3.2.3
hereof, Employer shall pay to Executive, subject to, in the case of Disability,
Executive's continued compliance with Section 4 hereof, the Severance Amount,
less any life and/or disability insurance proceeds received by Executive or his
estate pursuant to insurance policies provided by Employer, payable in
accordance with Section 3.3.2 hereof.
3.3.5. POST-EMPLOYMENT TERM BENEFITS. In the event Executive is
terminated pursuant to Sections 3.2.1 through 3.2.6 hereof, inclusive, or either
Employer or Executive elects not to renew this Agreement pursuant to Section 3.1
hereof, Employer shall reimburse Executive for any unpaid expenses pursuant to
Section 2.4.1 hereof and if Executive is terminated pursuant to Sections 3.2.3,
3.2.5 or 3.2.6 hereof or Employer elects not to renew this Agreement pursuant to
Section 3.1 hereof, Executive shall be entitled to participate, at Employer's
expense, for a period equal to twenty-four (24) months from the Date of
Termination (the "Benefits Period"), subject to Executive's continued compliance
with the terms of Section 4 hereof, all life insurance, medical, health and
accident, and disability plans and programs in which Executive was entitled to
participate immediately prior to the Date of Termination; PROVIDED, that
Executive's continued participation is legally possible under the general terms
and provisions of such plans and programs; and PROVIDED, FURTHER, that in the
event Executive is entitled to equal or comparable benefits from a subsequent
employer during the Benefits Period, Employer's obligation with respect thereto
pursuant to this Section 3.3.5 shall end as of such date. In the event that
Executive's participation in any such plan or program is barred, Employer, at
its cost and expense, shall use its commercially reasonable efforts to provide
Executive with benefits substantially similar to those that Executive was
entitled to receive under such plans and programs for the remainder of the
Benefits Period.
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3.3.6. EQUITY COMPENSATION.
(a) Subject to Section 3.3.6(b) hereof, notwithstanding
anything to the contrary contained in the applicable award agreements relating
to the Protected Restricted Stock and the Protected Stock Options, if Employer
elects not to renew the Employment Term pursuant to Section 3.1 or terminates
the Employment Term without cause pursuant to Section 3.2.5 hereof, all of the
(i) Protected Restricted Stock and (ii) Protected Stock Options (clauses (i) and
(ii) above collectively, the "Protected Awards"), whether vested or unvested,
shall not be terminated solely as a result of such termination or election not
to renew and shall continue to vest otherwise in accordance with the terms of
the 2004 Equity Plan and the applicable award agreements; PROVIDED, HOWEVER,
each stock option that is a Protected Stock Option shall only be exercisable on
or before the second (2nd) anniversary of the date such Protected Stock Option
shall vest (an "Option Termination Date"), and each vested and unexercised
Protected Stock Option shall terminate and be of no further force and effect as
of its Option Termination Date.
(b) If the Board determines, in good faith, that Executive
breached his obligations under Section 4 hereof, all restricted stock and
unexercised stock options (including, without limitation, all Protected Awards)
granted to Executive, whether vested or unvested, shall terminate or be
cancelled (as applicable) immediately and be of no further force or effect.
3.4. DEFINITIONS.
3.4.1. "NOTICE OF TERMINATION" DEFINED. "Notice of Termination"
means a written notice that indicates the specific termination provision relied
upon by Employer or Executive and, except in the case of termination pursuant to
Sections 3.2.1, 3.2.2 or 3.2.5 hereof, that sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Employment Term under the termination provision so indicated.
3.4.2. "DATE OF TERMINATION" DEFINED. "Date of Termination"
means such date as the Employment Term expires (if not renewed) or is terminated
in accordance with Sections 3.1 or 3.2 hereof.
4. Certain Covenants.
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4.1. "CONFIDENTIAL INFORMATION" DEFINED. "Confidential Information"
means any and all information (oral or written) relating to Employer or any
Subsidiary or any person controlling, controlled by, or under common control
with Employer or any Subsidiary or any of their respective activities,
including, but not limited to, information relating to: technology; research,
test procedures and results; business strategies and plans; machinery and
equipment; manufacturing processes; financial information; products; identity
and description of materials and services used; purchasing; costs; pricing;
customers and prospects; advertising, promotion and marketing; and selling,
servicing and information pertaining to any governmental investigation, except
such information which becomes public, other than as a result of a breach of the
provisions of Section 4.2 hereof. Without limiting the foregoing, Confidential
Information shall also include all information related to products targeted for
development by Employer, subjects of research and development, projected launch
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dates, the United States Food and Drug Administration ("FDA") protocols,
projected dates for regulatory filings, consumer studies, market research,
clinical research, business plans, content of the New Product Planning Committee
meetings, planned expenditures, profit margins, strategic evaluation plans and
initiatives, and those commissioned by Employer through outside vendors or
consultants, such as IBM, Cap Gemini and LEK, and the content of all business
and strategic planning conducted with or through Third Party Relationships (as
defined in Section 4.4 hereof). Executive's obligation not to disclose
Confidential Information shall be as set forth in Section 4.2 of this Agreement,
and shall include but not be limited to his obligation not to place himself in
any business position in which use or disclosure of Employer's confidences would
be likely, expected or inevitable, for his own benefit or the benefit of any
other person or entity.
4.2. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Executive shall not
at any time (other than as may be required or appropriate in connection with the
performance by him of his duties hereunder), directly or indirectly, use,
exploit, communicate, disclose or disseminate any Confidential Information in
any manner whatsoever (except as may be required under legal process by subpoena
or other court order). Executive acknowledges that the Confidential Information
is a protectible interest of Employer under applicable law.
4.3. Intellectual Property. Executive acknowledges that, as part of
Employer's confidences and trust reposed in him, he will be afforded unimpeded
access to Employer's Intellectual Property. As used herein, "Intellectual
Property" shall mean and include all research and development, patent
applications, patent research and development strategies and planning, protocols
for design and approval of products, development plans for manufacturing, sites
and raw materials, and all other or related intellectual property of Employer or
generated on Employer's behalf or for its benefit with or through others.
Executive further acknowledges that all such Intellectual Property is valuable
property of Employer, not of Executive, and constitutes Confidential Information
and trade secrets in which Employer has a protectible interest under applicable
law.
4.4. BUSINESS RELATIONSHIPS WITH THIRD PARTIES. Executive
acknowledges that, in significant part, Employer conducts its business and
intends to conduct future business through business relationships with third
parties such as agents, contractors, vendors, business partners or affiliates,
or joint-venturers ("Third Parties") who, with Employer or on its behalf or for
its benefit, engage, inter alia, in research and development, patent strategy or
applications, manufacturing, distribution, or similar business enterprises
significant to Employer's business ("Third Party Relationships"). Executive
agrees that the work product and content of Employer's business plans,
relationships, financial arrangements, product development and business
confidences involved in the Third Party Relationships, and those planned for or
engaged in the future, are Confidential Information in which Employer has a
protectible interest under applicable law.
4.5. UNIQUE CHARACTER OF EXECUTIVE'S POSITION. Executive further
acknowledges that his duties for Employer in his executive capacities are of a
special, unique, extraordinary and intellectual character which place him in a
position of trust and responsibility with Employer in relation to its
specialized business, including, without limitation, trust and responsibility
relating to conceptualization and/or implementation of Employer's marketing and
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sales strategies, business relationships developed by Executive with the clients
and potential clients of Employer, public and investor communications, strategic
plans, business targets, projects, partners, and product developments in the
unique aspects of the pharmaceutical and generic pharmaceutical business
conducted by Employer. Therefore, Executive acknowledges that each of the
restrictions set forth in Section 4.7 below are reasonable and necessary to
protect Employer from unfair competition by any party using or seeking to use
the Employer's Confidential Information and trade secrets, or using or seeking
to use Executive's unique skills and knowledge acquired with and for Employer,
or his position of trust with Employer, to Employer's disadvantage.
4.6. NATIONAL AND INTERNATIONAL SCOPE OF BUSINESS. Executive
acknowledges that Employer's business includes the manufacture, distribution
and/or sale of its products on its own behalf and through Third Party
Relationships, is nationwide in scope among the fifty United States, and also
includes Israel and other locations or markets in which Employer has or is
developing a Market Presence (as defined in Section 4.7.1 hereof). Accordingly,
Executive acknowledges that the restrictions set forth in Sections 4.7 and 4.7.1
below are reasonable in their national and international scope and geographic
territory.
4.7. COVENANT NOT TO COMPETE. Executive agrees that, at all times
during his employment by Employer, and for a period of not less than one (1)
year following the Date of Termination, if the Employment Term is terminated for
any reason, including expiration of the Employment Term, Executive shall not,
directly or indirectly, on his own behalf or for his own benefit, or on behalf
of or for the benefit of another (other than the Employer), own, operate,
manage, engage in, participate in, be employed by, affiliate with, or provide
material assistance to, contract for services for or with, render advice or
services to or otherwise assist in any capacity, directly or indirectly (whether
as an officer, director, partner, agent, investor, consultant, contractor,
employee, equityholder, lender, counselor, or otherwise) any Competitive
Enterprise, as defined in Section 4.7.1 below. Notwithstanding the foregoing,
nothing herein shall prevent Executive from owning up to 2% of publicly traded
securities in a Competitive Enterprise.
4.7.1. DEFINITION OF COMPETITIVE ENTERPRISE AND GEOGRAPHIC
TERRITORY COVERED. As used herein, the term "Competitive Enterprise" means and
includes any person, association, business, or entity: (a) that manufactures,
markets, licenses, distributes, contracts for the sale of, or sells (or causes
to be manufactured, marketed, licensed, distributed, contracted for or sold
through others) any product that competes with, or is developing any product
that is intended to compete with (i) any product manufactured, marketed,
distributed, licensed, contracted for sale or sold by Employer or through its
Third Party Relationships, or (ii) any product which the Employer has developed,
targeted for development, or is developing for manufacture, marketing, license,
distribution, contract, or sale and which is projected to reach the wholesale or
retail market within the later of five (5) years of the date of this Agreement
or one (1) year following the date of termination (each, a "Competitive
Product"); or (b) that obtains finished goods, source materials, or research and
development (i) from any source or supplier with whom Employer regularly does
business ("Employer Source"), or (ii) to formulate any Competitive Product. The
geographic territory covered by the term "Competitive Enterprises" includes any
such person, association, business or entity (a) doing business in the United
States or in Israel or any other location or market in which Employer has a
Market Presence (defined as more than DE MINIMUS gross revenue as to any product
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line or business of Employer as of the Date of Termination), whether or not
through a Third Party Relationship, or (b) obtaining finished goods, source
materials, or resources and development for a Competitive Product in any
location or market in which Employer does so, or from any Employer Source,
wherever located; and includes any person, association, business or entity, (c)
outside the United States or Israel which manufactures, markets, licenses,
contracts for, distributes or sells (or causes to be manufactured, marketed,
licensed, contracted for, distributed or sold through others) any Competitive
Product, or engages in the development of any Competitive Product intended to be
manufactured, distributed, licensed, contracted for or sold in the United
States, Israel or any other location or market in which Employer has a Market
Presence.
4.8. COVENANT NOT TO SOLICIT SUPPLIERS AND OTHERS. Executive shall
not, while employed by Employer and for a period of one (1) year following the
Date of Termination, directly or indirectly solicit or divert (or seek to
divert) or entice away, for the benefit of Executive or any other person or
entity, or cause (or attempt to cause) or persuade in any manner to cease doing
business with Employer or reduce its level of business with Employer, any Third
Party Relationship, client, supplier, vendor, contractor, business partner,
licensee, licensor, agent or investor, or supplier of source materials or
finished goods, product lines or research, who was doing business with Employer
at any time within twelve (12) months prior to the Date of Termination, or who
was actively engaged in discussions in contemplation of any such business
relationship during such period. During the above-referenced one- (1) year
period, Executive may not accept business from any of the above-referenced
entities where doing so would have the effect of diverting Employer's existing
business, or would have the effect of reducing its existing level of business
with such entities.
4.9. COVENANT NOT TO HIRE OR SOLICIT EMPLOYEES. Except with the
express written permission of Employer, Executive shall not, while employed by
Employer and for a period of two (2) years following the Date of Termination,
directly or indirectly hire, retain or engage, or offer to hire, retain or
engage, or solicit for employment or other retention or engagement of services,
or otherwise induce to leave Employer, for the benefit of Executive or any other
person or entity, any employee, consultant or contractor who is then employed by
or engaged by Employer or was so employed or engaged as of the Date of
Termination.
4.10. TOLLING DURING PERIODS OF VIOLATION. The parties agree that, in
the event Executive violates any of the provisions of Sections 4.7, 4.8 or 4.9
hereof during the time periods of restriction set forth respectively therein,
any such period of restriction shall be tolled for the duration of such
violation, and the applicable period of restriction shall not expire, and shall
be extended for a period of time commensurate with the duration of the
violation.
4.11. GOODWILL. Executive acknowledges that, through and solely as a
result of his employment by Employer, he shall acquire an equity stake in the
Employer's business. Accordingly, solely for purposes of enforcement of the
covenants contained in this Section 4, Executive agrees to be deemed and
regarded under applicable legal precedent as if he were in the same position as
a seller of a business interest and goodwill appurtenant thereto.
4.12. APPLICATION IRRESPECTIVE OF REASON FOR TERMINATION OF
EMPLOYMENT. In light of the acknowledgements set forth in this Section 4, the
parties agree that the provisions of this Section 4 shall apply in the event of
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Executive's termination from employment, whether by Employer or Executive,
whether for Cause or without Cause, or for any other reason or asserted reasons.
4.13. EMPLOYER DEFINED. For purposes of Section 4 hereof, "Employer"
shall mean and include Resources, Employer, FineTech Laboratories Ltd., and any
parent corporations, affiliates, subsidiaries and joint ventures.
4.14. PROPERTY RIGHTS; ASSIGNMENT OF INVENTIONS. With respect to
information, inventions and discoveries or any interest in any copyright and/or
other property right developed, made or conceived of by Executive, either alone
or with others, at any time during his employment by Employer and whether or not
within working hours, arising out of such employment or pertinent to any field
of business or research in which, during such employment, Employer is engaged or
(if such is known to or ascertainable by Executive) is considering engaging,
Executive hereby agrees:
(a) that all such information, inventions and discoveries or any
interest in any copyright and/or other property right, whether or not patented
or patentable, shall be and remain the exclusive property of Employer;
(b) to disclose promptly to an authorized representative of Employer
all such information, inventions and discoveries or any copyright and/or other
property right and all information in Executive's possession as to possible
applications and uses thereof;
(c) not to file any patent application relating to any such
invention or discovery except with the prior written consent of an authorized
officer of Employer (other than Executive);
(d) that Executive hereby waives and releases any and all rights
Executive may have in and to such information, inventions and discoveries, and
hereby assigns to Employer and/or its nominees all of Executive's right, title
and interest in them, and all Executive's right, title and interest in any
patent, patent application, copyright or other property right based thereon.
Executive hereby irrevocably designates and appoints Employer and each of its
duly authorized officers and agents as his agent and attorney-in-fact to act for
him and on his behalf and in his stead to execute and file any document and to
do all other lawfully permitted acts to further the prosecution, issuance and
enforcement of any such patent, patent application, copyright or other property
right with the same force and effect as if executed and delivered by Executive;
and
(e) at the request of Employer, and without expense to Executive, to
execute such documents and perform such other acts as Employer deems necessary
or appropriate, for Employer to obtain patents on such inventions in a
jurisdiction or jurisdictions designated by Employer, and to assign to Employer
or its designee such inventions and any and all patent applications and patents
relating thereto.
4.15. CONFIDENTIAL OR PROPRIETARY INFORMATION OF THIRD PARTIES.
Executive shall promptly inform Employer if he is in possession of any
confidential or proprietary information of a third party relating to any
projects and/or products on which Employer is currently working, or plans to be
11
in the near future, and Executive and Employer shall cooperate in taking such
reasonable precautionary measures as may be appropriate to avoid any potential
violation of such third party's rights.
4.16. CONTINUED COOPERATION. Executive shall, during and after the
conclusion of his employment relationship for any reason, cooperate fully with
Employer with respect to any internal or external agency or legal investigation
(whether conducted by the FDA, the Securities and Exchange Commission, or
otherwise), lawsuits, financial reports, or with respect to other matters within
his knowledge, responsibilities or purview. Employer will pay a reasonable per
diem for post-termination services rendered by Executive in compliance herewith,
based on Executive's Base Salary (in effect at such applicable time) and time
reasonably expended by him. Executive shall execute all lawful documents
reasonably necessary for Employer to secure or maintain its Intellectual
Property, Confidential Information, or other business requirements.
4.17. RETURN OF DOCUMENTS AND PROPERTY. Executive shall, upon the
conclusion of the employment relationship for any reason, participate in an exit
interview, and shall deliver promptly to Employer all documents, records, files,
customer or client materials, computer files or discs, and Confidential
Information fixed in any tangible medium of expression, together with all
computers and hard drives, employee identification cards, Employer credit cards,
keys, and any other physical property of Employer.
4.18. INJUNCTIVE RELIEF. The parties hereby acknowledge and agree that
(a) Employer will be irreparably injured in the event of a breach by Executive
of any of his obligations under Section 4 hereof; (b) monetary damages will not
be an adequate remedy for any such breach; (c) Employer will be entitled to
injunctive relief, in addition to any other remedy which it may have, in the
event of any such breach; and (d) the existence of any claims that Executive may
have against Employer, whether under this Agreement or otherwise, will not be a
defense to the enforcement by Employer of any of its rights under Section 4
hereof. All of the parties' covenants and Employer's rights to specific
enforcement, injunctive relief, and other remedies as set forth herein shall
apply in the event of any breach or threatened breach by Executive of any of the
provisions of Section 4 hereof, without the requirement of posting a bond or
other security in connection with any such application for specific performance
or injunctive relief, which is hereby waived. The parties further agree that any
action concerning alleged breach of Section 4 hereof shall not be brought or
addressed in arbitration, and the existence of any demand for arbitration or
pendency of any dispute in arbitration under this Agreement shall not be a basis
to delay or defer adjudication by a court of any demand for specific
performance, injunctive relief, or other remedies in relation to any alleged
breach of Section 4 hereof.
4.19. NON-EXCLUSIVITY AND SURVIVAL. The covenants of Executive
contained in Section 4 hereof are in addition to, and not in lieu of, any
obligations that Executive may have with respect to the subject matter hereof,
whether by contract, as a matter of law or otherwise, and such covenants and
their enforceability shall survive any termination of the Employment Term by
either party and any investigation made with respect to the breach thereof by
Employer at any time.
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5. Miscellaneous Provisions.
------------------------
5.1. SEVERABILITY. If, in any jurisdiction, any term or provision
hereof is determined to be invalid or unenforceable, (a) the remaining terms and
provisions hereof shall be unimpaired; (b) any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction; and (c) the invalid or
unenforceable term or provision shall, for purposes of such jurisdiction, be
deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
5.2. EXECUTION IN COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the two parties hereto in separate counterparts,
each of which shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement (and all signatures need not appear
on any one counterpart), and this Agreement shall become effective when one or
more counterparts has been signed by each of the parties hereto and delivered to
each of the other parties hereto.
5.3. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given upon receipt when
delivered by hand, overnight delivery or telecopy (with confirmed delivery), or
three (3) business days after posting, when delivered by registered or certified
mail or private courier service, postage prepaid, return receipt requested, as
follows:
If to Employer, to:
Pharmaceutical Resources, Inc.
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Chairman
Telecopy No.: (000) 000-0000
Copy to (which shall not constitute notice):
Xxxxxxx X. Xxxxxxxxxx, Esq.
Whitney Xxxx Xxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
If to Executive, to:
Xxxxxxx Xxxxxxxxx
c/o Pharmaceutical Resources, Inc.
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
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or to such other address(es) as a party hereto shall have designated by like
notice to the other parties hereto.
5.4. AMENDMENT. No provision of this Agreement may be modified,
amended, waived or discharged in any manner except by a written instrument
executed by both Employer and Executive.
5.5. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersede all prior agreements and understandings of the parties hereto, oral or
written, with respect to the subject matter hereof.
5.6. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be wholly performed therein.
5.7. HEADINGS. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
5.8. BINDING EFFECT; SUCCESSORS AND ASSIGNS. Executive may not
delegate any of his duties or assign any of his rights hereunder. This Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, legal representatives and beneficiaries, successors and
permitted assigns. Employer shall require any successor (whether direct or
indirect and whether by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer, by an agreement in
form and substance reasonably satisfactory to Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Employer would be required to perform if no such succession had taken place.
5.9. WAIVER, ETC. The failure of either of the parties hereto to at
any time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Agreement or any provision hereof or the right of either of the
parties hereto thereafter to enforce each and every provision of this Agreement.
No waiver of any such breach shall be construed or deemed to be a waiver of any
other or subsequent breach.
5.10. CAPACITY, ETC. Each of Executive and Employer hereby represents
and warrants to the other that, as the case may be: (a) he or it has full power,
authority and capacity to execute and deliver this Agreement, and to perform his
or its obligations hereunder; (b) such execution, delivery and performance shall
not (and with the giving of notice or lapse of time or both would not) result in
the breach of any agreements or other obligations to which he or it is a party
or he or it is otherwise bound (including any covenants not to compete or
similar covenants) or violate the law; and (c) this Agreement is his or its
valid and binding obligation enforceable in accordance with its terms.
5.11. ENFORCEMENT; JURISDICTION. If any party institutes legal action
to enforce or interpret the terms and conditions of this Agreement, the
prevailing party shall be awarded reasonable attorneys' fees at all trial and
14
appellate levels, and the expenses and costs incurred by such prevailing party
in connection therewith. Subject to Section 5.12 hereof, any legal action, suit
or proceeding, in equity or at law, arising out of or relating to this Agreement
shall be instituted exclusively in the State or Federal courts located in the
Borough of Manhattan, City of New York and each party agrees not to assert, by
way of motion, as a defense or otherwise, in any such action, suit or
proceeding, any claim that such party is not subject personally to the
jurisdiction of any such court, that the action, suit or proceeding is brought
in an inconvenient forum, that the venue of the action, suit or proceeding is
improper or should be transferred, or that this Agreement or the subject matter
hereof may not be enforced in or by any such court. Each party further
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding. Any and all service of process and any other notice in any
such action, suit or proceeding shall be effective against any party if given
personally or by registered or certified mail, return receipt requested or by
any other means of mail that requires a signed receipt, postage prepaid, mailed
to such party as herein provided. Nothing herein contained shall be deemed to
affect or limit the right of any party to serve process in any other manner
permitted by applicable law.
5.12. ARBITRATION.
(a) Any dispute under Section 3 hereof, including, but not
limited to, the determination by the Board of a termination for Cause pursuant
to Section 3.2.4 hereof, or in respect of the breach thereof shall be settled by
arbitration in the Borough of Manhattan, City of New York. The arbitration shall
be accomplished in the following manner. Either party may serve upon the other
party written demand that the dispute, specifying the nature thereof, shall be
submitted to arbitration. Within ten (10) days after such demand is given in
accordance with Section 5.3 hereof, each of the parties shall designate an
arbitrator and provide written notice of such appointment upon the other party.
If either party fails within the specified time to appoint such arbitrator, the
other party shall be entitled to appoint both arbitrators. The two (2)
arbitrators so appointed shall appoint a third arbitrator. If the two
arbitrators appointed fail to agree upon a third arbitrator within ten (10) days
after their appointment, then an application may be made by either party hereto,
upon written notice to the other party, to the American Arbitration Association
(the "AAA"), or any successor thereto, or if the AAA or its successor fails to
appoint a third arbitrator within ten (10) days after such request, then either
party may apply, with written notice to the other, to the Supreme Court of the
State of New York, New York County, for the appointment of a third arbitrator,
and any such appointment so made shall be binding upon both parties hereto.
(b) The decision of the arbitrators shall be final and
binding upon the parties. The party against whom the award is rendered (the
"non-prevailing party") shall pay all fees and expenses incurred by the
prevailing party in connection with the arbitration (including fees and
disbursements of the prevailing party's counsel), as well as the expenses of the
arbitration proceeding. The arbitrators shall determine in their decision and
award which of the parties is the prevailing party, which is the non-prevailing
party, the amount of the fees and expenses of the prevailing party and the
amount of the arbitration expenses. The arbitration shall be conducted, to the
extent consistent with this Section 5.12, in accordance with the then prevailing
rules of commercial arbitration of the AAA or its successor. The arbitrators
shall have the right to retain and consult experts and competent authorities
skilled in the matters under arbitration, but all consultations shall be made in
15
the presence of both parties, who shall have the full right to cross-examine the
experts and authorities. The arbitrators shall render their award, upon the
concurrence of at least two of their number, not later than thirty (30) days
after the appointment of the third arbitrator. The decision and award shall be
in writing, and counterpart copies shall be delivered to each of the parties. In
rendering an award, the arbitrators shall have no power to modify any of the
provisions of this Agreement, and the jurisdiction of the arbitrators is
expressly limited accordingly. Judgment may be entered on the award of the
arbitrators and may be enforced in any court of competent jurisdiction.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
PAR PHARMACEUTICAL, INC.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President Human Resources
/s/ Xxxxxxx Xxxxxxxxx
--------------------------------------------------
Xxxxxxx Xxxxxxxxx
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