Exhibit 10.26
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (this “Agreement”) is made as of
December 31, 2006 by Endo Pharmaceuticals Holdings Inc., a
Delaware corporation (the “Employer”), and Charles A.
Rowland, Jr. (the “Employee”).
WHEREAS, the Employee has been
employed by the Employer pursuant to the terms of an Employment
Agreement, dated as of December 6, 2006 (the “Original
Agreement”); and
WHEREAS, the Employer and the
Employee each desire to amend and restate the Original Agreement in
its entirety;
NEW THEREFORE, intending to be
legally bound, and in consideration of the mutual agreements
contained herein, the parties agree to amend and restate the
Original Agreement in its entirety as follows:
ARTICLE 1. DEFINITIONS
.
For the purposes of this Agreement,
the following terms have the meanings specified or referred to in
this Article 1.
“Agreement” means this Employment Agreement, including the
Exhibits hereto, as amended from time to time.
“Basic
Compensation” means
Salary and Benefits.
“Benefits”
shall have the meaning set forth in
Section 3.1(b).
“Board of
Directors” means
the board of directors of the Employer.
“Confidential
Information” means
any and all:
(a) trade secrets concerning the
business and affairs of the Employer, product specifications, data,
know-how, formulae, compositions, processes, designs, sketches,
photographs, graphs, drawings, samples, inventions and ideas, past,
current, and planned research and development, current and planned
manufacturing or distribution methods and processes, customer
lists, current and anticipated customer requirements, price lists,
market studies, business plans, computer software and programs
(including object code and source code), computer software and
database technologies, systems, structures, and architectures (and
related formulae, compositions, processes, improvements, devices,
know-how, inventions, discoveries, concepts, ideas, designs,
methods and information);
(b) information concerning the
business and affairs of the Employer (which includes unpublished
financial statements, financial projections and budgets,
unpublished and
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projected sales, capital spending budgets and
plans, the names and backgrounds of key personnel, to the extent
not publicly known, personnel training and techniques and
materials) however documented; and
(c) notes, analysis, compilations,
studies, summaries, and other material prepared by or for the
Employer containing or based, in whole or in part, on any
information included in the foregoing.
“disability” shall have the meaning set forth in
Section 6.2.
“Effective
Date” means
January 1, 2007.
“Employment
Period” shall have
the meaning set forth in Section 2.2.
“Fiscal
Year” means the
Employer’s fiscal year, as it exists on the Effective Date or
as changed from time to time.
“for
cause” shall have
the meaning set forth in Section 6.3.
“for good
reason” shall have
the meaning set forth in Section 6.4.
“Incentive
Compensation” shall
have the meaning set forth in Section 3.2.
“person”
means any individual, corporation
(including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate,
trust, association, organization, or governmental body.
“Post-Employment
Period” shall have
the meaning set forth in Article 8.
“Renewal
Term” shall have
the meaning set forth in Section 2.2.
“Salary”
shall have the meaning set forth in
Section 3.1(a).
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ARTICLE 2. EMPLOYMENT TERMS AND
DUTIES.
Section 2.1
Employment . The
Employer hereby employs the Employee, and the Employee hereby
accepts employment by the Employer, upon the terms and conditions
set forth in this Agreement.
Section 2.2 Term
. Subject to the
provisions of Article 6, the term of the Employee’s
employment under this Agreement will be a rolling twenty-four month
period commencing each day after the Effective Date and ending on
the twenty-four month anniversary of such day (the
“Employment Period”). For purposes of this Agreement,
employment and compensation paid by any direct or indirect
subsidiary of the Employer will be deemed to be employment and
compensation paid by the Employer.
Section 2.3 Duties
. The Employee will have
such duties as are described on Exhibit A attached hereto and made
a part hereof and such similar duties as are assigned or delegated
to the Employee by the Chief Executive Officer, and will serve as
Executive Vice President, Chief Financial Officer and Treasurer of
the Employer. The Employee will devote the Employee’s
business, time, attention, skill, and energy to the business of the
Employer, will promote the success of the Employer’s
business, and will cooperate with the Chief Executive Officer and
the Board of Directors in the advancement of the best interests of
the Employer. Nothing in this Section 2.3, however, will
prevent the Employee from engaging in additional activities in
connection with personal investments, corporate directorships and
community affairs that are not inconsistent with the
Employee’s duties under this Agreement. It is expressly
understood and agreed that to the extent any such activities have
been conducted by the Employee prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to be inconsistent with the
Employee’s duties under this Agreement. The Employee shall,
from time to time, inform the Chief Executive Officer of those
additional activities in which the Employee is engaged. If, at any
time, the Employee is elected as a director of the Employer or as a
director or officer of any of Employer’s subsidiaries, the
Employee will fulfill the Employee’s duties as such director
or officer without additional compensation.
Section 2.4
Director’s and Officer’s Liability Coverage
. The Employer shall
cause the Employee to be (a) indemnified as an officer and/or
director of the Employer or any of its affiliates, to the extent
applicable, to the maximum extent permitted by applicable law, and
(b) covered by director’s and officer’s liability
insurance in connection with the Employee serving as an officer
and/or director of Employer or any of its affiliates. The
provisions of this Section 2.4 shall survive termination of
this Agreement for any reason.
ARTICLE 3.
COMPENSATION.
Section 3.1 Basic
Compensation .
(a) Salary .
The Employee will be paid an annual
salary of $450,000, subject to adjustment as provided below (the
“Salary”), which will be payable in equal
periodic
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installments according to the Employer’s
customary payroll practices, but no less frequently than the
15 th and the last day of each month. The
Salary, upon a recommendation by the Chief Executive Officer, will
be reviewed by the Compensation Committee of the Board of Directors
(the “Committee”) not less frequently than annually,
and be adjusted in the sole discretion of the Committee, but in no
event will the Salary be less than $450,000 per year. In
determining the amount of any adjustment to Salary, the Committee
shall take into account inflation, merit, changes in
responsibilities and industry salary practices for executives. Any
increase in Salary shall not serve to limit or reduce any other
obligation to the Employee under this Agreement. Salary shall not
be reduced after such increase unless such reduction is part of a
reduction in salaries of specified management personnel of the
Employer undertaken in a program approved by the Employer’s
Board of Directors.
(b) Benefits .
The Employee will, during the
Employment Period, be permitted to participate in such incentive,
savings, pension, profit sharing, bonus, life insurance,
hospitalization and major medical, and other employee benefit
plans, practices, policies and programs, of the Employer that may
be in effect from time to time, to the extent the Employee is
eligible under the terms of those plans (collectively, the
“Benefits”).
(c) Stock Options/Restricted
Shares . To the
extent the Employer determines to award stock options, restricted
shares or other similar consideration to management personnel based
upon duration of employment or achieving performance targets, or
both, the Employee shall be permitted to participate in such
programs. For each Fiscal Year or part thereof during the
Employment Period the Employee shall be eligible to earn as
additional compensation for the services to be rendered by the
Employee pursuant to this Agreement, long-term equity incentives in
an amount equal up to one hundred fifty percent (150%) of the
Salary for such Fiscal Year (or such lesser (including zero) or
greater percent of the Salary for such Fiscal Year as is
recommended in good faith to the Committee by the Chief Executive
Officer of the Employer and approved by the Committee). On the
December 6, 2006 (the Employee’s first day of employment
with the Employer), the Employee was granted (i) 100,000 stock
options under the 2004 Stock Incentive Plan and (ii) in lieu
of a 2007 option grant, additional stock options under the 2004
Stock Incentive Plan valued at $250,000, with all such options
valued with reference to the closing market price on the
December 6, 2006.
Section 3.2 Incentive
Compensation . For
each Fiscal Year or part thereof during the Employment Period the
Employee shall be eligible to be paid in cash additional
compensation (the “Incentive Compensation”) for the
services to be rendered by the Employee pursuant to this Agreement,
an amount equal to fifty percent (50%) of the Salary for such
Fiscal Year (or such lesser (including zero) or greater (not to
exceed two hundred) percent of the Salary for such Fiscal Year as
is recommended in good faith to the Committee by the Chief
Executive Officer of the Employer and approved by the Committee) if
the Employer achieves certain performance targets set by the
Committee (the “Performance Targets”) for such Fiscal
Year; it being understood that the Employee shall receive
full year 2006 Incentive Compensation in an amount equal to 50% of
the Salary. Incentive Compensation for each Fiscal Year or part
thereof shall be paid as soon as practicable following the receipt
by the Employer of its audited financial statements for the Fiscal
Year for which the Incentive Compensation is being paid, unless
the
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Employee shall elect to defer the receipt of
such Incentive Compensation. The Employee shall be permitted to
submit a proposal for additional incentive compensation with
respect to the period commencing on the date hereof and ending at
the end of the Employers’ current Fiscal Year, and the
Employer shall consider such proposal in good faith.
Section 3.3
Relocation . The
Employer will provide the Employee with a relocation allowance of
up to $75,000 to cover documented and reasonable moving expenses
that are incurred within twelve (12) months of the Effective
Date, and an additional sum of $75,000 to cover any realtor’s
fees incurred by the Employee in connection with his relocation to
the Chadds Ford, PA area shall be paid by the Employer. The
Employee shall also be eligible for temporary living expense
reimbursement, to be pre-approved by Employer, for up to twelve
(12) months after the Effective Date. All such sums must be
repaid to the Employer in the event the Employee voluntarily
terminates his employment within eighteen (18) months of the
Effective Date.
ARTICLE 4. FACILITIES AND
EXPENSES.
Section 4.1
Reimbursement .
The Employer will furnish the Employee office space, equipment,
supplies, and such other facilities and personnel as the Employer
deems necessary or appropriate for the performance of the
Employee’s duties under this Agreement. The Employer will pay
the Employee’s dues in such professional societies and
organizations as are appropriate, and will pay on behalf of the
Employee (or reimburse the Employee for) reasonable expenses
incurred by the Employee at the request of, or on behalf of, the
Employer in the performance of the Employee’s duties pursuant
to this Agreement, and in accordance with the Employer’s
employment policies, including reasonable expenses incurred by the
Employee in attending conventions, seminars, and other business
meetings and in appropriate business entertainment activities. The
Employee must file expense reports with respect to such expenses in
accordance with the Employer’s policies.
Section 4.2 Motor Vehicle
Allowance . As of the
Effective Date, the Employee will be entitled to use of an
automobile, and a replacement thereof, mutually acceptable to the
Employee and the Employer, at least every three (3) fiscal
years after the Effective Date during the Employment Term. The
Employer will reimburse the Employee for all operating expenses
relating thereto upon the Employee’s submission of
appropriate documentation as set forth in Section 4.1. The
Employer will determine the actual value, if any, of the
Employee’s non-business use of such automobile and will
furnish the Employee with a W-2 Wage and Tax Statement, grossed up
for taxes, to be included in the Employee’s income tax
returns, in accordance with prevailing Internal Revenue Service
regulations.
ARTICLE 5. VACATIONS AND
HOLIDAYS .
The Employee will be entitled to
paid vacation each Fiscal Year in accordance with the vacation
policies of the Employer in effect for its executive officers from
time to time, provided that in no event shall such number of paid
vacation days be fewer than twenty. Vacation must be taken by the
Employee at such time or times as approved by the Chief
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Executive Officer. The Employee will also be
entitled to the paid holidays and other paid leave set forth in the
Employer’s policies. Vacation days and holidays during any
Fiscal Year that are not used by the Employee during such Fiscal
Year may be used in any subsequent Fiscal Year.
ARTICLE 6. TERMINATION AND
ELECTION NOT TO RENEW .
Section 6.1 Events of
Termination . The
Employment Period, the Employee’s Basic Compensation and
Incentive Compensation, and any and all other rights of the
Employee under this Agreement or otherwise as an employee of the
Employer will terminate (except as otherwise provided in this
Article 6):
(a) upon the death of the Employee;
(b) upon the disability of the Employee (as defined
in Section 6.2);
(c) for cause (as defined in Section 6.3),
immediately upon notice from the Employer to the Employee, or at
such later time as such notice may specify, unless otherwise
provided in Section 6.3;
(d) without cause upon not less than thirty
days’ prior notice from t
