Exhibit 10.26
EMPLOYMENT
AGREEMENT
THIS AGREEMENT by and among APP
Pharmaceuticals, Inc., a Delaware corporation (the “
Company ”), Thomas Silberg (the “
Executive ”) and, solely for the purposes of
guaranteeing the Company’s obligations under Section 5
of this Agreement, Fresenius Kabi AG, a stock corporation
organized under the laws of Germany, (the “ Parent
”) for purposes of Section 5, is dated as of
September 30, 2008.
WHEREAS, on September 10, 2008,
the Company became an indirect subsidiary of the Parent;
WHEREAS, the Company desires to have
the Executive continue to serve as the Company’s President
and Chief Executive Officer, on the terms and conditions set forth
in this Agreement, and to serve on the Fresenius Kabi AG Board of
Management (the “ Board ”);
WHEREAS, the Executive desires to
accept such service, subject to the terms and conditions of this
Agreement;
WHEREAS, the Executive and the
Company are parties to a retention agreement dated as of
May 23, 2008 (the “ Retention Agreement ”);
and
WHEREAS, this Agreement shall
wholly-replace and supersede the Retention Agreement in its
entirety.
NOW, THEREFORE, in consideration of
the premises and mutual covenants contained herein and for other
good and valuable consideration, the receipt and sufficiency of
which is mutually acknowledged, the Company and the Executive
(individually, a “ Party ” and together, the
“ Parties ”) agree as follows:
1. Effective Date . The
“ Effective Date ” shall mean September 10,
2008.
2. Employment Period . The
Company hereby agrees to continue to employ the Executive, and the
Executive hereby agrees to continue to be employed by the Company,
subject to the terms and conditions of this Agreement, for a period
commencing on the Effective Date and ending on December 31,
2011, unless earlier terminated as provided herein. Notwithstanding
the foregoing, commencing on January 1, 2012, and each January
1 thereafter (each, an “Extension Effective Date”), the
term of this Agreement shall be extended, without further action by
the Company or the Executive, for successive periods of twelve
months each, unless either Party shall have given nine
(9) months’ advance notice to the other Party, in the
manner set forth in Section 8(b) below, prior to the
Extension Effective Date in question, that the term of this
Agreement that is in effect at the time such notice is given is not
to be extended or further extended, as the case may be (the period
of such employment to be called the “ Employment
Period ”).
3. Terms of Employment . (a)
Position and Duties . (i) During the Employment
Period, the Executive shall serve as the President and Chief
Executive Officer of the Company,
with such duties and responsibilities as are
commensurate with such position, and shall report directly to the
Board. The Executive’s principal location of employment shall
be at the principal headquarters of the Company in Schaumburg,
Illinois; provided , however , that the Executive may
be required under reasonable business circumstances to travel
outside of the principal location of employment in connection with
performing his duties under this Agreement.
(ii) The Executive agrees that
during the Employment Period, he shall devote all of his business
time, energies and talents to serving as the Company’s
President and Chief Executive Officer, and shall perform his duties
conscientiously and faithfully subject to the lawful directions of
the Board, and in accordance with each of the corporate governance
and ethics guidelines, conflict of interests policies, and codes of
conduct of the Company.
(iii) During the Employment Period,
the Executive shall not, without the prior written consent of the
Board: (A) render or perform services of a business,
professional or commercial nature other than to or for the Company
or any of its affiliates or subsidiaries, either alone or as an
employee, consultant, director, officer or partner of another
business entity (including serving on boards of directors), whether
or not for compensation or (B) plan or otherwise take any
preliminary steps, either alone or in concert with others, to
establish or engage in any business activity that would compete
with the current or proposed businesses of the Company or any of
its affiliates or subsidiaries.
(b) Compensation .
(i) Base Salary . As
compensation for the performance by the Executive of his
obligations hereunder, during the Employment Period, the Company
shall pay the Executive a base salary at an annual rate of $600,000
(the “ Base Salary ”). The Base Salary shall be
payable in accordance with the Company’s regularly
established payroll practice. The Board shall conduct an annual
review of the Base Salary and may increase (but not decrease) such
Base Salary in its sole discretion.
(ii) Annual Bonus . With
respect to each calendar year during the Employment Period, the
Executive shall be eligible to receive a cash bonus of up to
$1,000,000, based on the achievement of the Company Adjusted EBITDA
targets set forth on Exhibit A to this Agreement (the “
Annual Bonus ”) and payable in a single lump sum cash
payment not later than March 15 following the conclusion of
the calendar year in which the Annual Bonus is earned.
(iii) Vacation . During the
Employment Period, the Executive shall be entitled to four
(4) weeks of paid vacation for each calendar year or ratable
part thereof. In addition, the Executive shall be entitled to all
paid holidays typically granted to executive officers of the
Company generally.
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(iv) Benefits and Perquisites
. The Executive shall be entitled to participate in all employee
benefit plans and to all perquisites which shall be made available
from time to time to executive officers of the Company generally
(including, but not limited to executive short-term disability
insurance, executive long-term disability insurance and
supplemental income protection, health club reimbursement, estate
and financial planning services and supplemental life insurance).
The Executive acknowledges and agrees that the Company may, in its
discretion, terminate at any time or modify from time to time any
such employee benefit plans or perquisites.
(v) Company Automobile Lease
. The Executive shall be entitled to an automobile lease allowance
during the Employment Period at the Company’s expense in an
amount not to exceed $1,500 per month.
(vi) Company Apartment Rental
. The Executive shall be entitled to the rental of a furnished
apartment in the Schaumburg, Illinois area during the Employment
Period at the Company’s expense in an amount not to exceed
$3,000 per month.
(vii) Initial Equity Grant .
As soon as practicable following December 1, 2008, the
Executive shall be granted, pursuant to the Fresenius SE Stock
Option Plan (the “Plan”), options to acquire 6,900
shares of common stock and 6,900 shares of preference stock
(collectively, the “Stock Options”). The grant of Stock
Options shall be governed by the Plan and an award letter, which
award letter shall set forth the terms and conditions of the Stock
Options.
(viii) Expenses . During the
Employment Period, the Executive shall be eligible for prompt
reimbursement for business expenses reasonably incurred by the
Executive in accordance with the policies of the Company as may be
in effect from time to time for executive officers of the Company
generally.
4. Termination of Employment
. (a) Death . The Executive’s employment shall
terminate automatically upon the Executive’s death during the
Employment Period.
(b) Disability . If the
Executive experiences a Disability (within the meaning of the
applicable disability plan, program or arrangement of the Company,
as in effect from time to time) during the Employment Period, the
Company may provide the Executive with a Notice of Termination in
accordance with Section 4(f) below of its intention to
terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate
immediately upon the receipt of such Notice of Termination by the
Executive.
(c) Cause . The
Executive’s employment may be terminated by the Company
during the Employment Period other than for Cause upon the Company
providing a Notice of Termination to the Executive of its intention
to so terminate the Executive’s employment in accordance with
Section 4(f) below. The Executive’s employment may be
terminated by the Company for Cause if (A) the Company
provides the Executive with a Notice of Termination in
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accordance with Section 4(f) of this
Agreement within 30 days after the initial occurrence or existence
of an event or circumstance set forth in this Section 4(c),
which notice shall specifically identify the event or circumstance
that the Company believes constitutes Cause and (B) the
Executive fails to correct the circumstance or event so identified
within 60 days after the receipt of such notice. For purposes of
this Agreement, “ Cause ” shall mean:
(i) the Executive’s
dishonesty, willful misconduct or gross negligence in the
performance of his duties to the Company or any of its affiliates
or subsidiaries;
(ii) the Executive’s willful
material misrepresentation at any time to the Company or any of its
affiliates or subsidiaries;
(iii) the Executive’s
intentional failure or refusal to perform his reasonably assigned
duties;
(iv) the Executive’s
commission of any felony, or any other crime (whether or not a
felony) involving dishonesty, fraud or breach of trust;
(v) the Executive’s willful or
grossly negligent failure to comply with any written rules,
regulations, policies or procedures of the Company or any of its
affiliates or subsidiaries; or
(vi) the Executive’s material
breach of the provisions of Section 6 of this
Agreement.
(d) Good Reason . The
Executive’s employment may be voluntarily terminated by the
Executive with Good Reason if (A) an event or circumstance set
forth in the clauses of this Section 4(d) below shall have
occurred and the Executive provides the Company with a Notice of
Termination in accordance with Section 4(f) below within 30
days after the Executive has knowledge of the initial occurrence or
existence of such event or circumstance, which notice shall
specifically identify the event or circumstance that the Executive
believes constitutes Good Reason and (B) the Company fails to
correct the circumstance or event so identified within 90 days
after the receipt of such notice. For purposes of this Agreement,
“ Good Reason ” shall mean, without the
Executive’s express written consent, the occurrence of any of
the following:
(i) a change in the
Executive’s status or responsibilities that represents a
material and adverse change or reduction from his overall status or
responsibilities, taken as a whole;
(ii) the Executive is required to be
based at any location outside of a 50 mile radius of Schaumburg,
Illinois (but excluding any travel that is reasonably required in
connection with the Company’s business); provided ,
that such relocation is materially adverse to the
Executive;
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(iii) a material reduction in the
Executive’s Base Salary or employee benefits (unless such
reduction applies similarly to all executive officers of the
Company generally); or
(iv) failure by a successor to
assume and agree to perform the obligations under the Agreement,
which failure constitutes a material breach of Section 8(j) of this
Agreement.
(e) Voluntary Termination .
The Executive may voluntarily terminate his employment under this
Agreement without Good Reason upon the Executive providing a Notice
of Termination to the Company of his intention to so terminate his
employment in accordance with Section 4(f) below and such
termination shall not be deemed to be a breach of this
Agreement.
(f) Notice of Termination .
Any termination of the Executive’s employment by the Company
or by the Executive (other than death) shall be communicated by a
written notice (“ Notice of Termination ”) to
the other Party hereto in accordance with Section 8(b) below.
The “ Date of Termination ” shall mean
(i) if the Executive’s employment is terminated by the
Executive’s death, the date of his death, (ii) if the
Executive’s employment is terminated by the Company for Cause
or Disability, the date specified in the Notice of Termination and
(iii) if the Executive’s employment is terminated under
any circumstances other than those described in clause (i) or
(ii) immediately preceding, the date specified in the Notice
of Termination which shall not be less than 90 days from the date
such Notice of Termination is given.
(g) Resignation from All
Positions . Notwithstanding any other provision of this
Agreement, upon the termination of the Executive’s employment
for any reason, unless otherwise requested by the Board, the
Executive shall immediately resign from all positions that he holds
or has ever held with the Company or any of its affiliates or
subsidiaries (and with any other entities with respect to which the
Company has requested the Executive to perform services). The
Executive hereby agrees to execute any and all documentation to
effectuate such resignations upon request by the Company, but he
shall be treated for all purposes as having so resigned upon the
Date of Termination, regardless of when or whether he executes any
such documentation.
5. Obligations of the Company
upon Termination . (a) Good Reason: Other Than for
Cause . If during the Employment Period, (A) the Company
shall terminate the Executive’s employment other than for
Cause, death or Disability or (B) the Executive shall
terminate employment with Good Reason:
(i) the Company shall pay to the
Executive within 30 days after the Date of Termination the sum of
(1) the Executive’s accrued but unpaid Base Salary
through the Date of Termination and (2) the Executive’s
business expenses that are reimbursable pursuant to
Section 3(b)(viii) but have not yet been reimbursed by the
Company as of the Date of Termination (collectively, the “
Obligations ”).
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(ii) the Company shall pay to the
Executive an amount equal to two (2) times the sum of
(A) the Executive’s then-current Base Salary and (B) an
Annual Bonus of $200,000, payable in substantially equal
installments in accordance with the Company’s regularly
established payroll practice during the twelve month period
following the Date of Termination;
(iii) the Company shall continue to
provide the benefits to the Executive set forth in Sections
3(b)(iv) and 3(b)(v) above for the remainder of the then-current
Employment Period; and
(iv) to the extent not theretofore
paid or provided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any
plan, program, policy or practice, contract or agreement (other
than any severance plan, program, policy or practice, contract or
agreement) of the Company and its affiliates and subsidiaries (such
amounts and benefits, the “ Other Benefits ”) in
accordance with the terms and normal procedures of each such plan,
program, policy or practice, contract or agreement, based on
accrued benefits through the Date of Termination.
Except with respect to payments and
benefits under Sections 5(a)(i)
