Exhibit 10.1
EXECUTION VERSION
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
THIS AMENDED
AND RESTATED EMPLOYMENT AGREEMENT (“ Agreement
”) is made and entered into as of the 14th day of July, 2009,
by and between NOVEN PHARMACEUTICALS, INC., a Delaware corporation
(the “ Company ”), and JEFFREY EISENBERG
(“ Executive ”) (collectively, the “
Parties ”).
Recitals
A. On
July 14, 2009, the Company and Hisamitsu Pharmaceutical Co., Inc.
(“ Hisamitsu ”) entered into an Agreement and
Plan of Merger (the “ Merger Agreement ”),
pursuant to which ( i ) Hisamitsu has agreed to cause a
subsidiary of Hisamitsu to commence a tender offer to acquire
shares of common stock of the Company (subject to the terms and
conditions set forth in the Merger Agreement) (the “
Tender Offer ”) and ( ii ) at the “
Effective Time ” (as defined in the Merger Agreement),
a subsidiary of Hisamitsu will merge with and into the Company,
with the Company continuing as the surviving corporation in such
merger;
B. Executive
and the Company are parties to a letter agreement, dated as of
January 2, 2008 (the “ Letter Agreement ”),
pursuant to which Executive serves as Executive Vice President of
the Company, and an Employment Agreement (Change of Control), dated
as of November 18, 2008 (the “ Change of Control
Agreement ”); and
C. The
Company desires to retain the continued services and dedication of
Executive to the business and affairs of the Company following the
Effective Date (as defined below) as its President and Chief
Executive Officer and a member of its Board of Directors (the
“ Board ”), and Executive desires to continue to
serve the Company in such capacity following the Effective Date, in
each case subject to the terms and conditions herein.
Agreement
NOW, THEREFORE,
in consideration of the premises and mutual covenants set forth in
this Agreement, the Parties agree as follows:
1.
Employment
.
1.1
Employment and Term . The Company agrees to
employ Executive and Executive agrees to serve the Company, on the
terms and conditions set forth in this Agreement, for the period
commencing on the day on which the Effective Time occurs or, if
earlier, the first business day following the date on which
representatives of Hisamitsu hold a majority of the seats on the
Board (the earlier of such dates, the “ Effective Date
”) and expiring on the second anniversary of the Effective
Date, unless sooner terminated as set forth in this Agreement (the
“ Term ”); provided , however ,
that commencing on the second anniversary of the Effective Date and
on each annual anniversary date thereafter, the Term of this
Agreement shall be automatically extended for an additional one
(1) year period unless, at least sixty (60) days prior to
such annual anniversary date, the Company shall have delivered to
Executive or Executive shall have delivered to the Company written
notice that the Term of the Executive’s employment under this
Agreement will not be extended.
1.2
Duties of Executive . Executive shall serve as
the President and Chief Executive Officer of the Company and shall
have powers and authority superior to any other officer or employee
of the Company or of any subsidiary of the
Company. Subject to the preceding sentence, during the
Term of employment, Executive shall in good faith use reasonable
business efforts to perform all services as may be commensurate
with his position and reasonably assigned to him by the Board and,
following the Effective Time, the Chief Executive Officer of
Hisamitsu and shall exercise such power and authority commensurate
with his position and such other power and authority as may from
time to time be delegated to him by the Board and, following the
Effective Time, the Chief Executive Officer of
Hisamitsu. In addition, following the Effective Time,
Executive shall regularly consult with and provide information to
the Chairman of the Board with respect to the Company’s
business and affairs. Executive shall be required to
report solely to, and shall be subject solely to the supervision
and direction of, the Board and the Chief Executive Officer of
Hisamitsu, and no other person or group shall be given authority to
supervise or direct Executive in the performance of his
duties. Executive shall devote substantially all of his
working time, efforts and attention to the business and affairs of
the Company. It shall not be a violation of this
Agreement for Executive to: ( a ) serve on corporate,
civic or charitable boards or committees (it being agreed that in
no event shall Executive serve on the board of directors of more
than two other corporations and the acceptance of any new corporate
directorship after the Effective Date of this Agreement shall be
subject to the consent of the Board, which shall not be
unreasonably withheld); ( b ) deliver lectures, fulfill
speaking engagements or teach at educational institutions; and (
c ) manage personal investments, so long as such
activities do not unreasonably interfere with the performance of
Executive’s responsibilities as an employee of the Company
(or as a director of the Company, if serving as such), in
accordance with this Agreement.
2.
Compensation
.
2.1
Base Salary . Executive shall receive a base
salary at the annual rate of $475,000 (as increased from time to
time, the “ Base Salary ”) during the Term of
this Agreement, with such Base Salary payable in installments
consistent with the Company’s normal payroll schedule. The
Base Salary shall also be reviewed, at least annually, for merit
increases (if any) and may, by action and in the discretion of the
Board, be increased. Once increased, the Base Salary may
not be decreased.
2.2
Annual Incentive Compensation . Executive shall
participate in the Company’s annual incentive bonus plan (the
“ Annual Incentive Bonus Plan ”). The Annual
Incentive Bonus Plan will be based on the achievement of Company
and individual performance goals to be established by the Board in
consultation with Executive, with annual target incentive bonuses
of at least seventy-five percent (75%) of the Base Salary, which
percentage will not be subject to reduction notwithstanding any
provisions to the contrary contained in any applicable Annual
Incentive Bonus Plan; provided , that, with respect to the
fiscal year 2009, any bonus awarded to Executive will be determined
by determining ( i ) the bonus to which Executive would have
been entitled if he had served as Executive Vice President for the
entire fiscal year (at Executive’s prior base salary and
prior target percentage), ( ii ) the bonus to which
Executive would have been entitled if he had served as Chief
Executive Officer for the entire fiscal year (as provided in this
Section 2.2) and ( iii ) the pro rata portion of each of (i)
and (ii) by reference to the date of this Agreement. It
is intended that performance measures selected shall be reasonably
attainable at target. It is agreed that such Annual
Incentive Bonus Plan shall not create any implication that the
Board shall award any such bonus or incentive compensation unless
targets are met; provided , that in the event that the
Company agrees, in connection with the transactions contemplated by
the Merger Agreement, to provide guaranteed bonuses to one or more
other executives of the Company who are parties to change of
control agreements and who enter into new compensation arrangements
with the Company, then Executive shall be provided with a
guaranteed bonus on the most favorable terms as set forth in any of
those compensation arrangements.
2.3
Long-Term Incentive Compensation . Within sixty
(60) days following the Effective Time, the Company shall establish
a Management Incentive Plan (the “ LTI Plan ”)
consistent with the terms and conditions currently agreed to by the
Company and Hisamitsu and shall designate Executive as a
participant in the LTI Plan. Executive shall have a
target award of $1,687,500, and a maximum award of $3,375,000,
under the LTI Plan with respect to the performance cycle ending
December 31, 2013 (or a lower adjusted amount if Executive and the
Company mutually agree in writing on a performance period of less
than four years applicable to Executive).
2.4
Withholding . All payments under this Agreement
or otherwise pursuant to Executive’s employment relationship
shall be made net of any applicable withholding taxes or other
amounts required to be withheld by law.
3.
Expense Reimbursement and Other Benefits .
3.1
Expense Reimbursement . During the Term of
Executive’s employment under this Agreement, the Company,
upon the submission of reasonable supporting documentation by
Executive, shall reimburse Executive for all reasonable expenses
actually paid or incurred by Executive in the course of and
pursuant to the business of the Company, including expenses for
travel and entertainment. Notwithstanding anything
herein to the contrary or otherwise, except to the extent any
expense reimbursement provided pursuant to this Agreement or
otherwise is not taxable income to Executive within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended from
time to time (the “ Code ”, and Section 409A
thereof and its implementing regulations and guidance, “
Section 409A ”), ( a ) the amount of
expenses eligible for reimbursement provided to Executive during
any calendar year will not affect the amount of expenses eligible
for reimbursement or in-kind benefits provided to Executive in any
other calendar year, ( b ) the reimbursements for
expenses for which Executive is entitled to be reimbursed shall be
made on or before the last day of the calendar year following the
calendar year in which the applicable expense is incurred, (
c ) the right to payment or reimbursement or in-kind
benefits hereunder may not be liquidated or exchanged for any other
benefit and ( d ) the reimbursements shall be made pursuant
to objectively determinable and nondiscretionary Company policies
and procedures regarding such reimbursement of expenses.
3.2
Employee Benefit Plans . During the Term of
Executive’s employment under this Agreement, Executive shall
be entitled to participate in all incentive, savings, and
retirement plans, practices, policies and programs provided by the
Company to other officer-level executives of the Company, in each
case, in accordance with their respective terms in effect from time
to time. Nothing in this Agreement shall preclude the
Company from amending or terminating any such plan at any
time.
3.3
Health and Welfare Benefit Plans . During the
Term of Executive’s employment under this Agreement,
Executive and/or Executive’s family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under health and welfare benefit plans, practices,
policies and programs provided by the Company to other
officer-level executives of the Company, in each case, in
accordance with their respective terms in effect from time to time
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs). Nothing in this Agreement shall preclude the
Company from amending or terminating any such plan at any
time.
3.4
Working Facilities . In connection with his
employment by the Company, Executive shall be based at the
Company’s offices in the New York or Miami areas, as elected
by the Executive, unless otherwise agreed to in writing by the
Board, subject to reasonable business travel on behalf of the
Company, which will include, without limitation, quarterly travel
to Tokyo, Japan, and regular travel to the Company’s offices
in New York to attend Board meetings. During the Term of
Executive’s employment under this Agreement, the Company
shall furnish Executive with an office, a secretary and such other
facilities and services suitable to his position and adequate for
the performance of his duties under this Agreement.
3.5
Vacation . During the Term of Executive’s
employment under this Agreement, Executive shall be entitled to
paid annual vacation according to the Company’s policy
applicable to other officer-level executives of the Company, which
in no event shall be less than seven (7) weeks per calendar
year.
3.6
Fringe Benefits . During the Term of
Executive’s employment under this Agreement, Executive shall
be entitled to fringe benefits according to the Company’s
regular plans, practices, policies and programs applicable to other
officer-level executives of the Company.
4.
Termination .
4.1
Termination by Either Party .
(a) The
Company or Executive may terminate Executive’s employment for
any reason or no reason at any time.
(b) If
the Company terminates Executive’s employment without Cause
(as defined in this Section 4) or Executive terminates
Executive’s employment with Good Reason (as defined in this
Section 4), subject to Executive’s execution (and
non-revocation, if applicable) of the waiver and release in the
form attached hereto as Exhibit A within thirty (30) days following
the Date of Termination (as defined in this Section 4), the
Company shall pay Executive severance pay in an amount equal to the
following:
(i) If
such termination occurs during the period of the Term commencing on
the Effective Date and ending on the day prior to the second
anniversary of the Effective Date, Executive shall be paid, in a
lump sum within thirty (30) days following the Date of Termination,
( A ) an amount equal to two times the sum of: (
x ) Executive’s annual Base Salary in effect on
the Date of Termination; plus ( y ) the Highest Annual
Bonus (as defined in this Agreement); and ( B ) the Highest
Annual Bonus prorated for the number of days during the current
fiscal year that Executive has worked up through the date of
termination. For this purpose, the “ Highest
Annual Bonus ” is the greater of: ( x ) the
annual incentive compensation bonus paid or payable by the Company
to Executive pursuant to Section 2.2 of this Agreement (or prior
annual incentive plan of the Company) in respect of the
Company’s most recent completed fiscal year; and ( y
) the average of the annual incentive compensation bonuses
paid or payable by the Company to Executive pursuant to Section 2.2
of this Agreement (or prior annual incentive plan of the Company)
in respect of the three completed fiscal years immediately
preceding the fiscal year in which the termination
occurs. In addition, in the event of such a termination
within such period, Executive shall be entitled to the additional
benefits set forth on Exhibit B hereto.
(ii) If
such termination occurs during the period of the Term commencing on
the second anniversary of the Effective Date, Executive shall be
paid eighteen (18) months of Executive’s Base Salary in
effect at the date of such termination within thirty (30) days
following the Date of Termination, as well as a prorated bonus,
such prorated bonus being in an amount equal to the payment that
would have been paid to Executive pursuant to the applicable Annual
Incentive Bonus Plan had Executive continued to the end of the
applicable performance period, multiplied by a fraction, the
numerator of which is the number of completed days of employment
during such performance period and the denominator of which is the
total number of days in the performance period (“
Termination Prorated Bonus ”) and which shall be paid
when it would otherwise have been paid if Executive’s
employment had continued. For purposes of determining
the amount of the Termination Prorated Bonus, subjective
performance criteria shall be disregarded, and Board discretion to
adjust the resulting figure downward shall be applied only if and
to the same extent applied to the Company’s other executive
officers.
(iii) On
any such termination of employment, Executive shall be paid, within
thirty (30) days following the Date of Termination, an amount equal
to the Base Salary (and benefits) and annual incentive compensation
(for the prior calendar year) earned by Executive (to the extent
such payments have not been made) on or prior to the Date of
Termination but unpaid as of the Date of Termination (but subject
to the terms of the applicable incentive compensation plans), as
well as any accrued but unused vacation in accordance with Company
policies. In addition, Executive shall be entitled to
any amounts due under any Company benefit, fringe, equity or
payroll practices plans or policies in accordance with their
respective terms and any amounts earned on or prior to the Date of
Termination but unpaid as of the Date of Termination under the
Company’s long-term incentive compensation plan (but subject
to the terms thereof). The amounts and benefits under
this Section (iii) shall be referred to as “ Accrued
Amounts .”
(c) If
the Company terminates Executive’s employment with Cause (as
defined in this Section 4) or Executive terminates
Executive’s employment without Good Reason (as defined in
this Section 4), the Company shall pay to Executive his
Accrued Amounts.
(d) If
Executive’s employment terminates due to Executive’s
death or Disability (as defined in this Section 4), the
Company shall pay to Executive (or his estate, beneficiary or legal
representative), his Accrued Amounts, as well as a Termination
Prorated Bonus. For the purposes of this Agreement,
“ Disability ” shall mean the absence of the
Executive from the Executive’s duties with the Company on a
full time basis for one hundred and eighty (180) days in any
period of three hundred sixty-five (365) consecutive days as a
result of incapacity due to mental or physical illness (“
Disability ”). Upon the end of the
aforesaid period and while the Disability continues, the Company
may terminate the Executive for Disability on written notice (the
date specified in such notice, the “Disability Effective
Date”).
(e) If
the Company gives notice of non extension of the Term of employment
under this Agreement, then, upon the end of the then-current Term,
Executive’s employment hereunder shall end and (so long as no
intervening termination of employment has occurred, in which case
Section 4.1(b), (c) or (d) shall apply, as applicable) such
termination shall be treated as a termination ( x ) to
which Section 4.1(b)(i) of this Agreement applies if such
notice is given prior to the second anniversary of the Effective
Date and ( y ) to which Section 4.1(b)(ii) applies
if given thereafter.
(f) Any
Termination Prorated Bonus, if any, shall be paid at the time it
would be paid if the Executive continued employment.
Notwithstanding anything contained in any Annual Incentive Bonus
Plan, payment of any Termination Prorated Bonus pursuant to this
Section 4.1 shall be in complete and total satisfaction of any
obligation of the Company to Executive under such Annual Incentive
Bonus Plan with respect to the performance period to which the
Termination Prorated Bonus relates.
4.2
Termination for Cause by Company . In the case of
the Company terminating this Agreement, “ Cause
” means any one or more of the following:
(a) a
material act or acts of personal dishonesty taken by Executive
which is either (x) at the expense of the Company, or (y)
reasonably likely to bring significant disrepute to the
Company;
(b) any
violation by Executive of his material obligations under this
Agreement (other than as a result of incapacity due to physical or
mental illness) which is demonstrably willful and deliberate on his
part and which is not remedied within ten business days after
receipt of written notice from the Company;
(c) the
conviction (or plea of no contest) of Executive for any criminal
act which is a felony or a misdemeanor in each case involving moral
turpitude; or
(d) a
material breach by Executive of his Confidentiality and Invention
Agreement with the Company;
Termination of
this Agreement for Cause by the Company shall be effective only
upon a majority vote of the Board; provided however ,
that Executive shall first be given an opportunity to make a
presentation to the Board in Executive’s defense.
4.3
Termination for Good Reason by Executive . In the
case of Executive terminating his employment under this Agreement,
“ Good Reason ” means, without Executive’s
prior written consent, the occurrence of any of the following
events following the Effective Date: ( A ) ( i )
any diminution in Executive’s title or material diminution in
Executive’s authority, duties, responsibilities or reporting
lines as President and Chief Executive Officer of the Company
(other than temporarily as a result of Executive’s physical
or mental incapacity), excluding any such diminution arising by
reason of the Company no longer being a public company, or (
ii ) the assignment to Executive of duties inconsistent with
such positions; and provided , that the foregoing shall not
be violated by the Board’s good faith actions with regard to
acquisitions, dispositions or realignment of the Company’s
lines of business; or ( B ) a material breach by
Company of this Agreement including, without limitation, as to
location of office, travel or compensation. In order for
a termination by Executive to constitute a termination for Good
Reason, Executive must notify the Company of the circumstances
claimed to constitute Good Reason in writing not later than the
sixtieth (60th) day after it has arisen or occurred and must
provide the Company with at least thirty (30) days within which to
cure such circumstances before terminating employment, and, failing
a cure, Executive must terminate his employment within thirty (30)
days following the expiration of such cure period.
4.4
Notice of Termination . Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other Party given in
accordance with Section 8. For purposes of this
Agreement, a “ Notice of Termination ” means a
written notice which: ( a ) indicates the specific
termination provision in this Agreement relied upon; ( b
) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision
so indicated; and ( c ) if the Date of Termination is
other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than fifteen (15)
days after the giving of such notice, but subject to compliance
with and further notice and cure provisions contained herein). The
failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Company under this Agreement or preclude the
Executive or the Company from asserting such fact or circumstance
in enforcing the Executive’s or the Company’s rights
under this Agreement.
4.5
Date of Termination . “ Date of
Termination ” means: ( a ) if the
Executive’s employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as
the case may be; ( b ) if the Executive’s
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination; and ( c
) if the Executive’s employment is terminated by reason
of death or Disability, the Date of Termination shall be the date
of death of the Executive or the Disability Effective Date, as the
case may be.
4.6
Resolution of Disputes . If, during the period
commencing on the Effective Date and ending on the day prior to the
second anniversary of the Effective Date, there shall be any
dispute between the Company and the Executive (but excluding any
dispute by Executive not in good faith) ( a ) as to
whether Cause existed or ( b ) as to whether Good
Reason existed, then, unless and until there is a final arbitration
award pursuant to Section 16 or final non-appealable judgment by a
court of competent jurisdiction declaring that such termination was
for Cause or was not with Good Reason, the Company shall pay all
amounts, and provide all benefits, to the Executive and/or the
Executive’s family or other beneficiaries, as the case may
be, that the Company would be required to pay pursuant to this
Section 4 as though such termination were by the Company without
Cause or by the Executive with Good Reason; provided ,
however , that the Company shall not be required to pay any
disputed amounts pursuant to this paragraph except upon receipt of
a written promise by or on behalf of the Executive to repay all
such amounts to which the Executive is ultimately adjudged by such
court not to be entitled.
5.
Restrictive Covenants .
5.1
Confidentiality and Intellectual Property
. Executive has previously executed the Company’s
Confidentiality and Invention Agreement and, from and after the
Effective Date, shall materially comply therewith; provided
, that any express provision therein that is substantially similar
in intent to an express provision of this Section 5 shall be
superseded.
5.2
Non-Competition and Non-Solicitation. Executive
agrees that, both during employment and for a period of eighteen
(18) months following the termination of this Agreement or his
employment for any reason, Executive will not, directly or
indirectly (in any capacity, on Executive’s own behalf or on
behalf of any other person or entity):
(a) Anywhere
in the World, own an interest in any business, including but not
limited to, an individual proprietorship, partnership, corporation,
joint stock company, joint venture, limited liability company,
trust or other form of business entity, or unincorporated
organization (except for ( i ) an ownership interest not
exceeding five percent (5%) of a publicly-traded entity and (
ii ) equity compensation, as provided in Section 5.2(b)),
that is a Company Competitive Business or a Hisamitsu Competitive
Business (in each case as defined by this
Agreement). For purposes of this Agreement, (i) “
Company Competitive Business ” shall mean any business
that is engaged in the acquisition, manufacture, development or
sale of any product which materially competes in the same markets
as any material product of Noven Pharmaceuticals, Inc. or any of
its subsidiaries (the “ Company Group ”) or
which is under active development by the Company Group and is
reasonably expected to be a material product of the Company Group;
provided , however , that Company Competitive
Business shall not include any business having $5 billion or
greater in annual revenues (in the fiscal year preceding
Executive’s termination from employment with the Company)
which business does not acquire, manufacture, develop, or sell any
non-hormonal treatment for menopause (the “ Special
Exception ”); and (ii) “ Hisamitsu Competitive
Business ” shall mean any business that is engaged in the
acquisition, manufacture, development or sale of any material
product which materially competes in the same markets as any
product of Hisamitsu or any of its subsidiaries (excluding the
Company Group) (the “ Hisamitsu Group ”) or
which is under active development by the Hisamitsu Group and is
reasonably expected to be a material product of the Hisamitsu
Group, but only if Executive had substantial exposure to research,
development, sales, marketing or other material non-public
strategic information with respect to such product as part of
Executive’s responsibilities to the Company, and subject to
the Special Exception;
(b) Anywhere
in the World, as an individual proprietor, principal, partner,
shareholder, joint venturer, member, trustee, officer, director,
consultant, broker, employee, agent, trustee, independent
contractor, or in any manner whatsoever, perform any work for or
provide any services to or receive any remuneration from any person
or entity that is a Company Competitive Business or a Hisamitsu
Competitive Business; provided , that being employed by (and
receiving compensation (including equity compensation) from) an
employer with a Company Competitive Business or a Hisamitsu
Competitive Business, standing alone, shall not be considered a
violation of this Agreement so long as ( A ) the employer
has more than one discrete and readily distinguishable part of its
business, ( B ) Executive’s duties are not at or
involving the part of the business of the employer that constitutes
a Company Competitive Business or a Hisamitsu Competitive Business,
including, without limitation, serving in a capacity where any
person involved in the Company Competitive Business or Hisamitsu
Competitive Business reports to Executive (excluding, however,
reporting arrangements of two or more levels so long as the revenue
of the Company Competitive Business or the Hisamitsu Competitive
Business is not material to the employer and is (or is projected to
be) two-thirds or less of the revenue of the corresponding
Hisamitsu or Company business during the applicable period) and (
C ) Executive notifies the Company of such employment prior
to commencement of his employment with such new
employer. For this purpose, “employment” and
corollary terms shall mean the provision of services to any such
person
