Exhibit 10.36
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”), Peter A. Lankau
(the “Executive”).
WHEREAS, the Executive has been
employed by the Employer pursuant to the terms of an Amended and
Restated Employment Agreement, dated as of December 20, 2005
(the “Original Agreement”); and
WHEREAS, the Employer and the
Executive each desire to amend and restate the Original Agreement
in its entirety;
NOW 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);
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(b) information concerning the
business and affairs of the Employer (which includes unpublished
financial statements, financial projections and budgets,
unpublished and projected sales, capital spending budgets and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.
“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 Executive, and the Executive 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 Executive’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 Executive will have
such duties as are assigned or delegated to the Executive by the
Employer’s Board of Directors and will serve as President and
Chief Executive Officer of the Employer. The Executive will devote
the Executive’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 Board of
Directors in the advancement of the best interests of the Employer.
Nothing in this Section 2.3, however, will prevent the
Executive from engaging in additional activities in connection with
personal investments, corporate directorships and community affairs
that are not inconsistent with the Executive’s duties under
this Agreement. It is expressly understood and agreed that to the
extent any such activities have been conducted by the Executive
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 Executive’s
duties under this Agreement. The Executive shall, from time to
time, inform the Board of Directors of those additional activities
in which the Executive is engaged. If, at any time, the Executive
is elected as a director of the Employer or as a director or
officer of any of Employer’s subsidiaries, the Executive will
fulfill the Executive’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 Executive 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 Executive 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 Executive will be paid an annual
salary of $606,000, subject to adjustment as provided below (the
“Salary”), which will be payable in equal periodic
installments according to the Employer’s customary payroll
practices, but no less frequently than
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the 15 th and the last day of each month. The
Salary 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 $606,000 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 Executive under this Agreement.
(b) Benefits .
The Executive 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 Executive 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 Executive shall be permitted to participate in such
programs. For each Fiscal Year or part thereof during the
Employment Period the Executive shall be eligible to earn as
additional compensation (the “Long-Term Compensation”)
for the services to be rendered by the Executive pursuant to this
Agreement, long-term equity incentives in an amount approved by the
Committee; provided that the Executive shall be eligible to
earn Long-Term Compensation for services rendered by the Executive
equal in value to $3,150,000 (or such lesser (including zero) or
greater amount as is approved by the Committee).
Section 3.2 Incentive
Compensation . For
each Fiscal Year or part thereof during the Employment Period the
Executive shall be paid in cash as additional compensation (the
“Incentive Compensation”) for the services to be
rendered by the Executive pursuant to this Agreement, an amount
equal to sixty percent (60%) 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 and approved by the Committee) if the
Employer achieves certain performance targets set by the Committee
(the “Performance Targets”) for such Fiscal Year.
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
Executive shall elect to defer the receipt of such Incentive
Compensation. The Executive 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.
ARTICLE 4. FACILITIES AND
EXPENSES.
Section 4.1
Reimbursement .
The Employer will furnish the Executive office space, equipment,
supplies, and such other facilities and personnel as the Employer
deems necessary or appropriate for the performance of the
Executive’s duties under this Agreement.
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The Employer will pay the Executive’s dues
in such professional societies and organizations as are
appropriate, and will pay on behalf of the Executive (or reimburse
the Executive for) reasonable expenses incurred by the Executive at
the request of, or on behalf of, the Employer in the performance of
the Executive’s duties pursuant to this Agreement, and in
accordance with the Employer’s employment policies, including
reasonable expenses incurred by the Executive in attending
conventions, seminars, and other business meetings and in
appropriate business entertainment activities. The Executive 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 Executive will be entitled to use of an
automobile, and a replacement thereof, mutually acceptable to the
Executive and the Employer, at least every three (3) fiscal
years after the Effective Date during the Employment Term. The
Employer will reimburse the Executive for all operating expenses
relating thereto upon the Executive’s submission of
appropriate documentation as set forth in Section 4.1. The
Employer will determine the actual value, if any, of the
Executive’s non-business use of such automobile and will
furnish the Executive with a W-2 Wage and Tax Statement, grossed up
for taxes, to be included in the Executive’s income tax
returns, in accordance with prevailing Internal Revenue Service
regulations.
ARTICLE 5. VACATIONS AND
HOLIDAYS .
The Executive 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. The Executive 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 Executive 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 Executive’s Basic Compensation and
Incentive Compensation, and any and all other rights of the
Executive 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 Executive;
(b) upon the disability of the Executive (as defined
in Section 6.2);
(c) for cause (as defined in Section 6.3),
immediately upon notice from the Employer to the Executive, 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 the Employer to the
Executive;
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(e) for good reason (as defined in Section 6.4)
upon not less than thirty days’ prior notice from the
Executive to the Employer; or
(f) by the Company other than
