Exhibit 10.3
CONSULTING
AGREEMENT
THIS CONSULTING AGREEMENT (the
“Agreement”) is entered into as of July 6, 2008,
by and between Fresenius Kabi Pharmaceuticals Holding, LLC, a
Delaware limited liability company (the “Company”),
Dr. Patrick Soon-Shiong (“Consultant”) and
Fresenius SE, a societas europaea organized under the laws
of Germany (“Parent,” and together with the Company and
Consultant, the “Parties”), and sets forth the terms
and conditions governing the consulting relationship between the
Parties:
RECITALS
A. Consultant is a significant
shareholder, founder and former executive employee of APP
Pharmaceuticals, Inc. (“APP”);
B. Pursuant to the Agreement and
Plan of Merger dated as of July 6, 2008 (the “Merger
Agreement”), among Parent, the Company, Fresenius Kabi
Pharmaceuticals, LLC, a Delaware limited liability company and a
wholly-owned subsidiary of the Company, and APP (the transactions
contemplated by the Merger Agreement are referred to hereinafter as
the “Merger”), the Company will (i) acquire all of
the ownership interest of APP, and (ii) carry on the business
of APP following the Merger; and
C. Following the Merger, the Company
desires Consultant to provide certain services for the Company and
Consultant is willing to perform such services as an independent
contractor, subject to the terms and conditions set forth
below.
AGREEMENT
1. CONSULTING SERVICES .
During the Term (as defined below) and at the request of and
subject to the direction of the Company, Consultant shall, to the
extent reasonably requested by the Company, provide advice to the
Company regarding:
a. the expansion of the
Company’s generics business;
b. matters of research and
development in the field of generic products;
c. the analysis of the
Company’s competitors in relevant markets;
d. market developments and trends in
the U.S. generics business;
e. production processes and know-how
in the generics business;
f. maintaining and developing
relationships to group purchasing organizations (GPOs) and
distributors; and
g. any other aspect relating to the
generics business that is of interest and relevance to the
Company.
(collectively, the “
Consulting Services”).
2. TERM AND TERMINATION . The
term of Consultant’s consultancy shall commence on the
Effective Date (as defined below) and shall continue until the
first anniversary of the Effective Date, subject to extension by
agreement of the Parties unless terminated earlier by the Company
(the “Term”). In the event the Company terminates the
consultancy prior to the expiration of the Term, Consultant shall
be entitled only to a pro rata portion of the Annual Fee (as
defined below) calculated for the period from the last payment
through the date of termination.
3. CONSULTING FEES. In
exchange for the Consulting Services to be provided under this
Agreement, during the Term, the Company agrees to pay Consultant an
annual fee of $600,000, payable in arrears annually (the
“Annual Fee”). In addition, Consultant shall be
entitled to an additional incentive fee (the “Incentive
Fee”) of $600,000 for each calendar year during which the
consolidated Adjusted EBITDA of the Company and its subsidiaries
exceeds by at least 10% the Adjusted EBITDA amount for that year
set forth in the three-year business plan previously approved by
the board of directors of APP. For any partial calendar year,
Consultant shall be entitled to a pro rata portion of the Incentive
Fee based on the number of days of the Term elapsed during such
calendar year. In the event that an Incentive Fee is payable to
Consultant pursuant to this Section 3, then the Company shall
pay such amount to Consultant within 90 days of the applicable
calendar year end. As used herein, “Adjusted EBITDA”
has the meaning set forth in the CVR Indenture (as defined in the
Merger Agreement).
4. INDEPENDENT CONTRACTOR
STATUS. The Company and Consultant each acknowledge and agree
that Consultant shall serve as an independent contractor and not as
an employee of the Company. The Company and Consultant hereby
covenant with one another to treat the engagement of Consultant as
that of an independent contractor, and not an employee, for all
purposes.
a. Exercise of Independent
Judgment . Consultant is engaged by the Company to exercise his
own independent and professional judgment in performing the
Consulting Services pursuant to this Agreement. Consultant, in his
sole discretion, will determine the manner, means, details and
methods used in performing the Consulting Services.
b. No Right to Fringe
Benefits . In connection with the Consulting Services,
Consultant shall not be entitled to, and shall make no claim to,
rights or fringe benefits afforded to the Company’s
employees, including health insurance, disability or unemployment
insurance, workers’ compensation insurance, pension and
retirement, profit-sharing, or any other policy or plan applicable
to employees of the Company.
c. Responsibility for Taxes .
Consultant is responsible for paying all federal, state, and local
income or business taxes, including estimated taxes,
self-
2
employment and any other taxes, fees, additions
to tax, interest or penalties which may be assessed, imposed, or
incurred as a result of the Annual Fee or Incentive Fee paid by the
Company pursuant to this Agreement.
d. Inability to Bind the
Company . Consultant shall not have any right or authority to
assume or create any obligation or responsibility, express or
implied, on behalf of or in the name of the Company, or to bind the
Company in any manner, except as may be authorized in writing by a
duly authorized officer or manager of the Company, and shall not
make any contrary representation to any third party.
5. CONFIDENTIALITY.
Consultant covenants that he will not, at any time during the
period from the Effective Date through the end of the 12-month
period immediately following the end of the Term, directly or
indirectly, use for his own account, or disclose to any person,
firm or corporation, other than in the performance of services to
APP or the Company, any Confidential Information (as hereinafter
defined). As used herein, “Confidential Information”
means non-public information about APP and/or the Company of any
kind, nature or description, including, but not limited to, any
proprietary knowledge, trade secrets, data, formulae, employee
data, and client and customer lists and all documents, papers,
resumes and records (including computer records) which is disclosed
to or otherwise known to Consultant as a direct or indirect
consequence of his association with APP and his association with
the Company in the context of and subsequent
