Exhibit 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (this “ Agreement ”) dated as of the
15th day of July 2008, between Barr Pharmaceuticals, Inc. (the
“ Company ”), a Delaware corporation having its
principal executive offices at 225 Summit Avenue, Montvale, New
Jersey 07645-1523, and William T. McKee (the “
Employee ”).
WITNESSETH:
WHEREAS, the Company and the Employee
entered into an employment agreement dated as of February 7,
2001, which was amended and restated as of February 19, 2003
and August 19, 2005 (as so amended and restated, the “
Prior Agreement ”);
WHEREAS, the Company and the Employee
wish to amend and restate the Prior Agreement;
WHEREAS, the Company wishes to assure
itself of the services of the Employee and provide an inducement
for the Employee to remain in its employ; and WHEREAS, the Employee
is willing to remain in the employ of the Company on the terms and
conditions hereafter set forth;
NOW, THEREFORE, the Company and the
Employee hereby agree that, effective as of the date first stated
above, the Prior Agreement is amended and restated in its entirety
to read as follows:
1. Employment . The
Company agrees to employ the Employee, and the Employee agrees to
serve in the employ of the Company, during the term of this
Agreement on the terms and conditions hereafter set forth.
2. Term . The term of
this Agreement shall commence on July 15, 2008 (the “
Commencement Date”) and shall terminate at 5 P.M.
(E.S.T.) on December 31, 2009 unless sooner terminated in
accordance with the terms of this Agreement or extended as
hereinafter provided. The term of this Agreement shall be extended,
without further action by the Company or the Employee, on the date
(the “ Extension Effective Date ”) that is six
(6) months before December 31, 2009 and on the date (also
an “ Extension Effective Date ”) that is six (6)
months before each subsequent December 31, for successive
periods of twelve (12) months each, unless the Company shall
have given written notice to the Employee, or the Employee shall
have given written notice to the Company, in the manner set forth
in paragraph 13(e) or (f) below, prior to the Extension
Effective Date in question, that the term of this Agreement that is
in effect at the time such written notice is given is not to be
extended or further extended, as the case may be.
3. Position and
Responsibilities; Place of Performance.
(a) Throughout
the term of this Agreement, the Employee agrees to serve in the
employ of the Company, and the Company agrees to employ the
Employee, as its Executive Vice President and Chief Financial
Officer and as Executive Vice President and Chief Financial Officer
of Barr Laboratories, Inc. (“ BLI ”), reporting
to the Chairman of the Board of Directors and Chief Executive
Officer of the Company (the “ CEO ”). As the
Company’s Executive Vice
President and Chief Financial Officer and the Executive Vice
President and Chief Financial Officer of BLI, the Employee shall be
responsible for managing and supervising, and shall have
responsibility for the day-to-day operation of, the audit, finance,
treasury and accounting functions, including financial controls, of
the Company, BLI and such other Subsidiaries as the Company shall
determine from time to time, subject to the authority of the
Company’s Board of Directors (the “ Board
”) and the CEO, and shall have all of the powers, authority,
duties and responsibilities usually incident to the position and
role of Executive Vice President and Chief Financial Officer in
public companies that are comparable in size, character and
performance to the Company (including the Company’s interests
in BLI and other Affiliates) and the position and role of Executive
Vice President and Chief Financial Officer in public companies that
are comparable in size, character and performance to BLI, and shall
perform such other reasonable duties, consistent with the position
of Executive Vice President and Chief Financial Officer, as may
lawfully be assigned to the Employee by the Board or the CEO.
(b) In
connection with the Employee’s employment by the Company, the
Employee shall be based at the principal executive offices of the
Company in the greater New York City metropolitan area, including
Montvale, New Jersey, and the Employee agrees to travel, to the
extent reasonably necessary to perform the Employee’s duties
and obligations under this Agreement, to Company facilities and
other destinations elsewhere at the Company’s expense.
(c) During
the term of this Agreement, the Employee shall serve the Company on
an exclusive basis (it being understood that the Employee’s
engaging in activities on behalf of an Affiliate shall be deemed
serving the Company for this purpose) and shall devote all the
Employee’s business time, attention, skill and efforts to the
faithful performance of the Employee’s duties hereunder;
provided that the Employee may engage in community service and
charitable activities or such other activities as approved by the
CEO and the Board, that do not materially interfere with the
performance of the Employee’s duties and responsibilities
hereunder.
4. Compensation . For
all services rendered by the Employee in any capacity during the
term of this Agreement, and for the Employee’s undertakings
with respect to confidential information, non-solicitation and
disparaging remarks set forth in Sections 6 and 7 below, the
Employee shall be entitled to the following:
(a) a
salary, payable in installments not less frequent than monthly, at
the annual rate of six hundred thousand dollars ($600,000), with
such increases in such rate, if any, as the Board or a committee of
the Board may approve from time to time during the term of this
Agreement in accordance with the Company’s regular
administrative practices applicable to senior officers from time to
time during the term of this Agreement (the Employee’s annual
salary rate as increased from time to time during the term of this
Agreement being hereafter referred to as the “ Base
Salary ”);
(b) participation
in the Company’s annual executive incentive or bonus plan as
in effect from time to time, with the opportunity to receive, for
each fiscal year of the Company that begins or ends during the term
of this Agreement, a target award of fifty percent (50%) of the
Base Salary earned during such year (or such higher amount as the
Board or a committee of the Board may determine, in its discretion,
up to a maximum of the lesser of (i) one hundred
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percent
(100%) of Base Salary earned during such year or (ii) three
percent (3%) of the Company’s pre-tax and pre-bonus net
operating income for such year), in accordance with the terms and
conditions of such incentive or bonus plan, it being understood
that any award for the fiscal year of the Company in which the term
of this Agreement terminates pursuant to the terms hereof shall be
prorated based on the portion of such fiscal year that coincides
with the term of this Agreement and shall be made at the same time
as awards (if any) are made to other participants with respect to
such fiscal year. The Company will pay the Employee’s annual
incentive bonus for each year at the same time as annual incentive
bonus payments for such year (if any) are made to other
participants with respect to such fiscal year, and in all events
within the two and one half (2 1 / 2 ) months following the end of the
calendar year in which the bonus is earned. Annual incentive
bonuses are intended to qualify for the short-term deferral
exception to Section 409A of the Internal Revenue Code of
1986, as amended (the “ Code ”);
(c) participation
in the stock incentive plan applicable to Company officers as from
time to time in effect, subject to the terms and conditions of such
plan;
(d) the
business and personal use of an automobile at Company expense
including, without limitation, payment or reimbursement of
automobile insurance and maintenance expenses, or a cash allowance
in lieu thereof, in accordance with the Company’s automobile
policy applicable to similarly situated officers; and
(e) participation
in all health, welfare, savings and other employee benefit and
fringe benefit plans (including vacation pay plans or policies and
life and disability insurance plans) in which other senior officers
of the Company participate during the term of this Agreement,
subject in all events to the terms and conditions of such plans as
in effect from time to time. Nothing in this paragraph
(e) shall preclude the Company or an Affiliate from amending
or terminating any such plan at any time prior to a Change in
Control or Potential Change in Control. The plans covered by this
paragraph (e) shall not include the annual incentive or stock
incentive plans, which are covered by paragraphs (b) and
(c) above.
5. Termination of
Employment.
(a)
Termination by the Company or an Affiliate without Good Cause or
by the Employee for Good Reason; Non-Renewal Termination
.
(i) If the Employee’s
employment with the Company is terminated by the Company or an
Affiliate without Good Cause (except as an incident of assigning
the rights to Employee’s services to a Permitted Assignee in
accordance with paragraph 13(d) below) when the Employee is willing
and able to continue performing service, or is terminated by the
Employee for Good Reason, in either case during the term of this
Agreement and other than at the expiration of the term of this
Agreement as the same may have been extended in accordance with the
provisions of Section 2 above (any such employment termination
being hereafter referred to as a “ Compensable
Termination ”), the Company shall pay the Employee, in
accordance with normal payroll practices, the portion of the
Employee’s Base Salary accrued through the date of the
Compensable Termination and any other amounts to which the Employee
is entitled by law or pursuant to the terms of any compensation or
benefit plan or arrangement in which the Employee participated
prior to the Compensable Termination and, in addition, subject to
all of the
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provisions of
this Section 5, Section 14 below, and further subject to
compliance by the Employee with the provisions of Sections 6
and 7 below, relating to confidential information, non-solicitation
and disparaging remarks, the Company shall, as liquidated damages
or severance pay or both (whichever characterization(s) will serve
to validate the payments), and as additional consideration for the
Employee’s undertakings under Sections 6 and 7 below,
pay the Employee the following:
(A) the Employee’s annual bonus
for the fiscal year of the Company preceding the fiscal year of the
Company in which the Compensable Termination occurs, if unpaid at
the time of the Compensable Termination. Such annual bonus shall be
paid at the same time as bonuses (if any) for such preceding fiscal
year are paid to other officers, and in all events within the first
two and one half (2 1 / 2 ) months of the fiscal year in which the
Compensable Termination occurs. The amount of such bonus shall be
determined by the Board or a committee of the Board on a basis
consistent with the prior bonus determinations with respect to the
Employee or, in the event a Change in Control or Potential Change
in Control (as defined in Section 11 below) occurred before
the Compensable Termination, consistent with the bonus
determinations with respect to the Employee prior to the Change in
Control or Potential Change in Control. If the Board or a committee
of the Board made no bonus determinations with respect to the
Employee before the Compensable Termination or, if applicable,
before the Change in Control or Potential Change in Control, the
amount of such bonus shall be determined on a basis consistent with
the Board’s or Board committee’s bonus determinations
with respect to other Executive Vice Presidents before the
Compensable Termination or, if applicable, before the Change in
Control or Potential Change in Control; and
(B) a prorated annual bonus for the
fiscal year of the Company in which the Compensable Termination
occurs, payable at the same time as bonuses (if any) for such
fiscal year are paid to other officers, and in all events within
the first two and one half (2 1 / 2 ) months of the fiscal year following the
fiscal year in which the Compensable Termination occurs. Such
prorated annual bonus shall be determined by multiplying the
“ Applicable Average Bonus ” as defined below in
this subparagraph 5(a)(i)(B) by a fraction, the numerator of which
shall be the number of days elapsed in such fiscal year through
(and including) the date on which the Compensable Termination
occurs and the denominator of which shall be the number three
hundred sixty-five (365). For purposes of this Agreement, the
“Applicable Average Bonus” means the highest of
(I) the average annual bonus (including any portion of the
bonus that is deferred) awarded to the Employee during the three
(3)-year period immediately preceding the Compensable Termination
or, if the Employee was employed by the Company for less than three
(3) years before the Compensable Termination, during the
period of the Employee’s employment by the Company prior to
the Compensable Termination (annualizing any bonus awarded for less
than a full year of employment), (II) the average annual bonus
(including any portion of the bonus that is deferred) awarded to
the Employee during the three (3) fiscal years of the Company
that precede the fiscal year in which the Compensable Termination
occurs or during the portion of such three (3) fiscal years in
which the Employee
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was employed by
the Company (annualizing any bonus awarded for less than a full
year of employment); provided that, if the Compensable Termination
occurs after a Change in Control or Potential Change in Control,
the Applicable Average Bonus shall not be less than the average
annual bonus (including any portion of the bonus that is deferred)
awarded to the Employee during the three (3) years preceding
the date on which the Change in Control or Potential Change in
Control occurred or during the portion of such three (3) years
in which the Employee was employed by the Company (annualizing any
bonus awarded for less than a full year of employment); or
(III) the Employee’s target bonus (based on the greatest
of (i) the Employee’s target bonus percentage and Base
Salary rate as specified in Section 4 above, (ii) the
Employee’s approved target bonus percentage and Base Salary
rate in effect on the date of the Compensable Termination, or
(iii) the Employee’s approved target bonus percentage
and Base Salary rate in effect on the date of notice of such
Compensable Termination); and
(C) an amount of money (the “
Severance Payment ”) equal to two (2) times the
Employee’s “Annual Cash Compensation” as
hereafter defined, unless the Severance Payment is payable solely
on account of the Employee’s resignation for Good Reason
pursuant to subparagraph 5(d)(v) below (relating to the Company or
an Affiliate giving the Employee notice of non-extension), in which
case the Severance Payment shall be equal to one and one-quarter (1
1 / 4 ) times the Employee’s
“Annual Cash Compensation” as hereafter defined. Except
as otherwise provided hereafter in this subparagraph 5(a)(i)(C) and
Section 14, seventy-five percent (75%) of the Severance
Payment shall be paid in a lump sum within ten (10) days after
the date of the Compensable Termination. The twenty-five percent
(25%) balance of the Severance Payment shall be paid in six
(6) equal monthly installments, one (1) of which shall be
paid at the end of each of the first six (6) months after the
date of the Compensable Termination, provided, in the case of each
of such six (6) installments, that the Employee has not accepted
full-time or regular part-time employment with or regularly served
as a consultant to a for-profit pharmaceutical company prior to the
date for payment of such installment, it being understood and
agreed that the foregoing condition shall not be violated by the
Employee’s serving as a member of a board of directors of a
for-profit pharmaceutical company or by his performing consulting
services on an ad hoc basis for such a company. If a
Change in Control occurs that is a “change in control
event” within the meaning of Code Section 409A and
Treasury Regulation §1.409A-3(i)(5)(i) (or any similar or
successor provisions) (either before or after the Compensable
Termination and in accordance with Treasury Regulation
§1.409A-3(c)), the Severance Payment (or, in the case of such
a “change in control event” that occurs after the
Compensable Termination, any portion thereof that remains unpaid at
the time such “change in control event” occurs) shall
be paid in a lump sum within ten (10) days after the
Compensable Termination (or, in the case of such a “change in
control event” that occurs after the Compensable Termination,
within ten (10) days after the “change in control
event” occurs), and the two (2) preceding sentences of
this subparagraph shall not apply. For twenty-four (24) months
following a Compensable Termination, the Company shall also provide
the Employee (and, as applicable, the Employee’s
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covered
dependents), at Company expense, with continuation coverage under
the Company’s group health plan(s) covering similarly
situated executives. For purposes of this Section 5, the
Employee’s “ Annual Cash Compensation ”
shall mean the sum of (I) the Employee’s highest Base
Salary ( i.e., one (1) year’s salary at its
highest rate), plus (II) the “Applicable Average Bonus”
as defined in subparagraph 5(a)(i)(B) above.
(ii) If the term of this Agreement as
the same may have been extended in accordance with the provisions
of Section 2 above is not extended or further extended because
the Company or an Affiliate gives written notice of non-extension
to the Employee as provided in Section 2 above, and there is
not Good Cause for termination of the Employee’s employment
at the time of giving such notice, and the Employee does not
thereafter resign for Good Reason during the term of this Agreement
as permitted by paragraph 5(d)(v) below, and the Employee is
willing and able to renew or execute a new agreement providing
terms and conditions substantially similar to those in this
Agreement and to continue providing such services, then the Company
shall pay the Employee, subject to fulfillment by the Employee of
the Employee’s obligations under this Agreement during the
balance of the term and the Employee’s compliance with the
provisions of Sections 6 and 7 below, relating to confidential
information, non-solicitation and disparaging remarks, as
non-renewal compensation, and as additional consideration for the
Employee’s undertakings under this Agreement, including
Sections 6 and 7 below, an amount of money (the “
Non-Renewal Payment ”) equal to one and one-quarter (1
1 / 4 ) times the Employee’s Annual Cash
Compensation as defined in subparagraph 5(a)(i)(C) above, in
addition to any other amounts to which the Employee may be entitled
hereunder (including without limitation the Employee’s annual
bonus pursuant to paragraph 4(b) above for the fiscal year of the
Company in which the Employee’s employment terminates and any
amounts to which the Employee may be entitled under Section 8,
9 or 10 below) or by law or pursuant to the terms of any
compensation or benefit plan or arrangement in which the Employee
participated before the Employee’s employment terminated.
Except as otherwise provided hereafter in this subparagraph
5(a)(ii), seventy-five percent (75%) of the Non-Renewal Payment
shall be paid in a lump sum within ten (10) days after the
date on which the Employee’s employment terminates, subject
to paragraph 5(f) and Section 14. The twenty-five percent
(25%) balance of the Non-Renewal Payment shall be paid in six
(6) equal monthly installments one (1) of which shall be
paid at the end of each of the first six (6) months after the
date on which the Employee’s employment terminates. If a
Change in Control occurs that is a “change in control
event” within the meaning of Code Section 409A and
Treasury Regulation §1.409A-3(i)(5)(i) (or any similar or
successor provisions) (either before or after the Employee’s
termination and in accordance with Treasury Regulation
§1.409A-3(c)), the Non-Renewal Payment (or, in the case of
such a “change in control event” that occurs after the
Employee’s termination, any portion thereof that remains
unpaid at the time such “change in control event”
occurs) shall be paid in a lump sum within ten (10) days after
the date on which the Employee’s employment terminates (or,
in the case of such a “change in control event” that
occurs after the Employee’s termination, within ten
(10) days after the “change in control event”
occurs), and the two (2) preceding sentences of this
subparagraph shall not apply. For twenty-four (24) months
following the Employee’s termination, the Company shall
also
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provide the
Employee (and, as applicable, the Employee’s covered
dependents), at Company expense, with continuation coverage under
the Company’s group health plan(s) covering similarly
situated executives.
(iii) The foregoing provisions of
(including any payments under) this paragraph 5(a) shall be in lieu
of any severance pay that may be payable under any plan or practice
of the Company, any other Subsidiary or Affiliate (as such terms
are defined in Section 11 below), or by law (including the
WARN Act or any similar state or foreign law), but shall be in
addition to (and not in lieu of) any payments to which the Employee
may be entitled under Sections 8, 9 and 10 below.
Subparagraphs 5(a)(i)(C) and 5(a)(ii) above are intended to be
mutually exclusive, and in no event shall such subparagraphs,
either individually or collectively, be construed to require the
Company to pay an amount of money in excess of two (2) times
the Employee’s Annual Cash Compensation under such
subparagraphs, either individually or collectively, in addition to
continuation coverage under the Company’s group health
plan(s) covering similarly situated executives provided by the
Company to the Employee (and, as applicable, the Employee’s
covered dependents), at Company expense, for twenty-four
(24) months.
(iv) The Employee shall not be
required to mitigate the amount of any payment or benefit provided
for in this Agreement (including but not limited to any payment
provided for above in this paragraph 5(a)) by seeking other
employment or otherwise, nor shall any compensation earned by the
Employee in other employment or otherwise reduce the amount of any
payment or benefit provided for in this Agreement, except as
provided in subparagraphs 5(a)(i)(C) and 5(a)(ii) above.
(v) A Compensable Termination shall
not include a termination of employment by reason of the
Employee’s death.
(b)
Termination by the Company or an Affiliate for Good Cause or by
the Employee without Good Reason . If, during the term of this
Agreement, the Employee’s employment by the Company is
terminated by the Company or an Affiliate for Good Cause or by the
Employee without Good Reason, the Employee shall not be entitled to
receive any compensation under Section 4 above accruing after
the date of such termination or any payment under paragraph 5(a)
above. However, any obligations of the Company under
Sections 8, 9 and 10 shall not be affected by such termination
of employment. The provisions of this paragraph 5(b) shall be in
addition to, and not in lieu of, any other rights and remedies the
Company may have at law or in equity or under any other provision
of this Agreement in respect of such termination of employment.
However, if during the term of this Agreement the Employee’s
employment is terminated by the Employee without Good Reason and
the Employee gives the Company at least one hundred twenty
(120) days’ advance notice of such termination, then the
Employee shall not have any obligation or liability under this
Agreement on account of such termination of employment, but the
Employee’s obligations under Section 6 and 7 hereof
shall not be affected by such termination of employment.
(c)
Good Cause Defined . For purposes of this Agreement, the
Company and the Affiliates shall have “ Good Cause
” to terminate the Employee’s employment by the Company
during the term of this Agreement only if:
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(i) (A) the Employee fails to
substantially perform the Employee’s duties hereunder for any
reason or to devote substantially all the Employee’s business
time exclusively to the affairs of the Company (including Company
activities on behalf of the other Affiliates), other than by reason
of a medical condition that prevents the Employee from
substantially performing the Employee’s duties hereunder even
with a reasonable accommodation by the Company, and (B) such
failure is not discontinued within a reasonable period of time, in
no event to exceed thirty (30) days, after the Employee
receives written notice from the Company or an Affiliate of such
failure; or
(ii) the Employee commits an act of
dishonesty resulting or intended to result directly or indirectly
in gain or personal enrichment at the expense of the Company, or an
Affiliate, or engages in conduct that constitutes a felony in the
jurisdiction in which the Employee engages in such conduct;
or
(iii) the Employee is grossly
negligent or engages in willful misconduct or insubordination in
the performance of the Employee’s duties hereunder; or
(iv) the Employee materially breaches
the Employee’s obligations under Section 6 or paragraph
7(a) below, relating to confidential information and
non-solicitation.
In addition, the Employee’s
employment shall be deemed to have terminated for Good Cause if,
after the Employee’s employment has terminated, facts and
circumstances arising during the course of the Employee’s
employment are discovered that would have justified a termination
for Good Cause under subparagraphs 5(c)(ii) or
(iv) above.
Any foregoing provision of this
paragraph 5(c) to the contrary notwithstanding, the Company and the
Affiliates shall not have “Good Cause” to terminate the
Employee’s employment within three (3) years after a
Change in Control or Potential Change in Control (as such terms are
defined in Section 11 below) unless (A) the
Employee’s act or omission is willful and has a material
adverse effect upon the Company, (B) the Board gives the
Employee (I) written notice warning of its intention to
terminate the Employee for Good Cause if the specified act or
omission alleged to constitute Good Cause is not discontinued and,
if curable, cured, and (II) a reasonable opportunity after
receipt of such written notice, but in no event less than two
(2) weeks, to discontinue and, if curable, cure the conduct
alleged to constitute Good Cause, and (C) the Employee fails
to discontinue and, if curable, cure the act or omission in
question; provided that clauses (B) and (C) of this
sentence shall not apply with respect to conduct on the part of the
Employee that constitutes a felony in the jurisdiction in which the
Employee engages in such conduct, and, provided further, that this
sentence shall not apply to conduct involving moral turpitude. For
all purposes of this Agreement, no act, or failure to act, on the
Employee’s part shall be deemed “willful” unless
done, or omitted to be done, by the Employee intentionally and in
bad faith ( i.e. , without reasonable belief that the
Employee’s action or omission was in furtherance of the
interests of the Company, another Subsidiary or Affiliate).
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(d)
Good Reason Defined . For purposes of this Agreement, the
Employee shall have “ Good Reason ” to terminate
employment during the term of this Agreement only if:
(i) the Company fails to pay or
provide any amount or benefit that the Company is obligated to pay
or provide under Section 4 above or Section 8, 9, or 10
below and the failure is not remedied within thirty (30) days
after the Company receives written notice from the Employee of such
failure; or
(ii) the Employee is assigned duties,
responsibilities, or reporting relationships not contemplated by
Section 3 above without the Employee’s consent, or the
Employee’s duties or responsibilities or power or authority
contemplated by Section 3 above are limited in any respect
materially detrimental to the Employee, and in either case the
situation is not remedied within thirty (30) days after the
Company receives written notice from the Employee of the situation;
or
(iii) the Employee is removed from,
or not elected or reelected to, the office, title or position of
Executive Vice President and Chief Financial Officer of the Company
or Executive Vice President and Chief Financial Officer of BLI, and
the Company and the Affiliates do not have Good Cause for doing so;
or
(iv) the Company relocates the
Employee’s office outside of either the Company’s
principal executive offices or the greater New York City
metropolitan area without the Employee’s written consent
(given in a personal rather than representative capacity) and the
situation is not remedied within thirty (30) days after the
Company receives written notice from the Employee of the situation;
or
(v) the Company gives the Employee
written notice, in the manner set forth in paragraph 13(f) below,
prior to any Extension Effective Date, that the term of this
Agreement that is in effect at the time such written notice is
given is not to be extended or further extended, as the case may
be; provided that the giving of such written notice to the Employee
shall constitute Good Reason only if and when the Employee shall
have performed such of the Employee’s duties and
responsibilities for such period of time, in no event to exceed
ninety (90) days after the giving of such notice, as the CEO
or the Board, may reasonably request in writing to transition the
Employee’s duties and responsibilities; or
(vi) a Change in Control occurs and
as a result thereof either (A) equity securities of the
Company cease to be publicly-traded, or (B) the Employee is
not elected or designated to serve as the sole Executive Vice
President and Chief Financial Officer of the Company or its
survivor in the Change in Control and sole Executive Vice President
and Chief Financial Officer of BLI or its survivor in the Change in
Control; or
(vii) a Change in Control or
Potential Change in Control occurs and (A) the dollar value of the
stock optioned to the Employee annually thereafter is less than the
average annual dollar value of the stock that was optioned to the
Employee during the four (4) years prior to the Change in
Control or Potential Change in Control, or (B) the material
terms of such options (including without limitation vesting
schedules) are less favorable to the Employee than the material
terms of the options that were granted to the Employee during the
four (4) years prior to the Change in Control or Potential
Change in Control, and in either case (A) or (B) the
situation is not remedied within thirty (30) days after the
Company receives written notice from the Employee of the situation.
For
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purposes of
(A) and (B) of this subparagraph 5(d)(vii), if
free-standing stock appreciation rights are granted to the
Employee, the stock subject to such rights shall be considered
stock that is optioned to the Employee, and if alternative stock
appreciation rights (a/k/a tandem stock appreciation rights) are
granted to the Employee, the stock appreciation rights shall be
considered terms of the options to which they are
alternative/tandem; or
(viii) the Company or a Permitted
Assignee attempts to assign any of its rights or obligations under
this Agreement other than in accordance with paragraph 13(d) below
and does not remedy the situation within thirty (30) days
after the Company receives written notice from the Employee of the
situation; or
(ix) the Company or any Subsidiary or
Affiliate materially breaches the terms of this Agreement.
In no event shall the
Employee’s continued employment after any of the foregoing
constitute the Employee’s consent to the act or omission in
question, or a waiver of the Employee’s right to terminate
employment for Good Reason hereunder on account of such act or
omission, except as provided in the following sentence. With
respect to any act, omission, or occurrence that is alleged to
occur after the Commencement Date and prior to a Change in Control
or Potential Change in Control, the Employee must provide the
Company with written notice of any one (1) or more of the
conditions set forth in this definition of Good Reason within six
(6) months of the initial existence of the condition for such
condition to constitute Good Reason. Such notice shall not excuse
the Employee from continuing to perform the duties and
responsibilities assigned to the Employee until such time as the
Employee terminates employment. Notwithstanding the foregoing, this
notice requirement shall not apply to acts or omissions alleged to
constitute Good Reason that arise after a Change in Control or
Potential Change in Control.
(e) Disability
(i) Notwithstanding any provision of
this Agreement to the contrary, (A) if during the term of this
Agreement as the same may be extended from time to time pursuant to
Section 2 above, a medical condition prevents the Employee,
even with a reasonable accommodation by the Company, from
substantially performing the Employee’s duties hereunder (it
being understood that a transitory illness, such as a cold or flu,
that prevents the Employee from substantially performing the
Employee’s duties hereunder during a brief period is not such
a medical condition), then until the date, if any, on which the
Employee recovers from such medical condition (the “
Evaluation Period ”), the Company may terminate the
Employee’s employment only pursuant to subparagraph 5(e)(ii)
below (a “ Disability Termination ”) or for
willful misconduct constituting Good Cause under paragraph 5(c)
above, and (B) if any notice of non-extension of the term of
this Agreement was given before the Evaluation Period, or is given
during the Evaluation Period, whether by the Company or the
Employee, pursuant to Section 2 above, and, but for this
clause (B), the term of this Agreement would expire during the
Evaluation Period as a result of such notice of non-extension
having been given, then the term of this Agreement will
automatically be extended without action by any party until the
Employee recovers fr
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