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Exhibit 10.
6
EXECUTION
COPY
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
(this “ Agreement ”), dated as of April 29,
2003, is made between RELIANT PHARMACEUTICALS, LLC, a Delaware
limited liability company (the “ Company ”), and
ERNEST MARIO (the “ Executive ”).
WHEREAS, the Company desires
to employ the Executive, and the Executive desires to be employed
by the Company, upon the terms and conditions set forth
herein.
NOW, THEREFORE, in
consideration of the mutual premises contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1. Employment . The Company
hereby employs the Executive, and the Executive agrees to accept
such employment, upon the terms and conditions herein set
forth.
2. Employment Period . The term
of employment hereunder shall commence on the date hereof and
continue for a period ending on April 30, 2006, subject to earlier
termination as provided herein (as extended pursuant to the terms
hereof, the “ Employment Period ”). In the event
that the Executive continues to be employed by the Company
following the termination of the Agreement, such employment shall
be governed by this Agreement, except that it will be
“at-will,” without a fixed term, and may be terminated
by the Company or the Executive at any time, with or without
notice, for any reason or no reason (and no reason need be given),
and without any further obligations of the Company beyond that owed
for periods that the Executive was actually employed by the
Company.
3. Position and Duties . The
Executive hereby agrees to serve as the Chairman and Chief
Executive Officer of the Company, and shall have those duties,
responsibilities and authority customarily accorded a person
holding such a position in a company such as the Company. In such
capacity the Executive shall report to the Board of Managers of the
Company (the “ Board ”). The Executive shall
devote his best efforts and attention to the performance of
services to the Company in accordance with the terms hereof and as
may reasonably be requested by the Company. The Company
acknowledges that the Executive shall continue to pursue his
several external obligations during the term of this
Agreement.
4. Compensation and Other Terms of
Employment . In consideration of the performance of his duties
for the Company, the Executive shall be entitled to receive the
following:
(a) Base Salary .
During the Employment Period (and thereafter to the extent that the
Executive continues to be employed by the Company), the Executive
shall be entitled to receive an annual salary equal to the greater
of (i) $12,000 and (ii) an amount per annum equal to the applicable
minimum statutory wage rate in effect in New Jersey (or such other
state in which the Executive is resident for employment purposes)
(the “ Base Salary ”). The Base Salary shall be
payable in accordance with the Company’s regular payroll
practices (e.g., timing of payments and standard employee
deductions such as income and employment withholding
taxes).
(b) Restricted Units .
As soon as practicable after the execution of this Agreement,
Executive shall purchase and the Company shall issue to the
Executive under the Reliant Pharmaceuticals, LLC Equity Incentive
Plan (the “ Plan ”), 274,968 Class One Common
Units of the Company (the “ Restricted Units ”),
at a purchase price per unit established by an appraisal conducted
by Duff & Phelps (a copy of which will be provided to the
Company or the Executive, as the case may be, upon request) (the
“ Initial Restricted Unit Price ”). The Company
represents that, as of the date of this Agreement, the Restricted
Units equal 1.0% of the Fully Diluted (as defined below) membership
interests of the Company. The Restricted Units shall be issued
pursuant and subject to the terms of a restricted unit agreement
between the Company and the Executive substantially in the form of
Exhibit A attached hereto (the “ Restricted Unit
Agreement ”), which agreement shall provide, among other
things, that the Executive shall be immediately vested in one-third
of the Restricted Units and the remaining two-thirds of the
Restricted Units will be subject to vesting in two equal
installments on the first and second anniversary dates of this
Agreement.
(c) Anti-Dilution
Protection . During the Employment Period and at all times
thereafter that the Executive remains employed by the Company as
its Chairman and Chief Executive Officer, the Executive shall be
entitled to receive additional grants of equity compensation such
that the Executive and/or his permitted transferees (as provided in
Section 6(a) of the Restricted Unit Agreement) shall, at all
relevant times, hold Class One Common Units of the Company equal to
1.0% of the Fully Diluted membership interests of the Company (the
“ Additional Grants of Restricted Units ”). In
calculating such 1.0% of the Fully Diluted membership interests of
the Company, the Initial Options (as defined below), the Series C
Units (as defined below), any restricted units granted in
connection with the Consulting Agreement, dated as of March 25,
2003 between the Executive and the Company and any equity interests
granted to or acquired by the Executive following the date hereof,
other than Restricted Units acquired pursuant to Sections 4(b)
and 4(c) of this Agreement (and any securities acquired in
respect thereof), shall be ignored for the purpose of calculating
the Executive’s percentage ownership in the Company under
this Section 4(c) . All Additional Grants of Restricted
Units shall be made pursuant to the terms of the Plan and shall be
subject to the following terms:
(i) Each Additional Grant of
Restricted Units shall be subject to the vesting schedule described
in Section 4(b) such that the Executive shall be fully
vested in any and all Additional Grants of Restricted Units not
later than the second anniversary of this Agreement.
(ii) In the event of an
Additional Grant of Restricted Units, Executive shall purchase such
restricted Common Units at a purchase price equal to the Initial
Restricted Unit Price. Additional Grants of Restricted Units shall
be made as soon as practicable after the end of each fiscal year to
reflect the issuance by the Company of additional equity during
such fiscal year; provided, however, that if the Fully Diluted
membership interests of the Company is adjusted by reason of an
extraordinary transaction (such as issuance of additional
securities in
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connection with financing transactions),
the Additional Grants of Restricted Units to be made in connection
therewith will be made within thirty (30) business days of the last
day of the calendar quarter in which such extraordinary transaction
was consummated.
For purposes of this
Agreement, “ Fully Diluted ” means the total
number of Common Units assuming full conversion or exercise of all
securities (or equity interests) convertible into Common Units and
utilizing the treasury method to determine the number of Common
Units able to be repurchased with the proceeds of option exercise.
An example of the calculation of the Fully Diluted membership
interests of the Company is attached hereto as Exhibit B
.
(d) Options . As of
the date of this Agreement, the Company shall grant to the
Executive options to purchase 549,936 Common Units, at an exercise
price of $20.00 per unit (the “ Initial Options
”). The Initial Options shall be evidence by and subject to
the terms of an option agreement between the Company and the
Executive substantially in the form of Exhibit C attached
hereto (the “ Option Agreement ”).
(e) Liquidity Event
Bonus . In the event of a transaction during the Employment
Period resulting in a Change of Control (as defined below) of the
Company (a “ Liquidity Event ”), the Executive
shall be entitled to a bonus equal to 1.0% of the Net Proceeds (as
defined below) actually received by the members of the Company in
connection with such Liquidity Event with respect to their
membership interests in the Company (the “ Liquidity Event
Bonus ”). The Liquidity Event Bonus will be paid in the
same consideration as, and to the extent (if the transaction is a
mix of cash and other consideration) received by the holders of
Common Units. The Liquidity Event Bonus shall be in addition to any
rights that Employee shall have by reason of the Liquidity Event
with respect to any equity ownership or other rights to equity
ownership he may hold in the Company. For the purposes of this
Agreement, “ Net Proceeds ” means the total
value of all consideration actually received by the members of the
Company with respect to a Liquidity Event, less investment banking
fees and other transaction costs incurred by the Company in
connection with the Liquidity Event. In the event that any of the
consideration received by the members of Reliant is paid into
escrow or is a contingent payment, the Executive shall be paid his
Liquidity Event Bonus in respect of such escrowed or contingent
payments at the time that such payments are received by the other
members (or former members) of the Company.
(f) For the purposes of
Section 4(e), “ Change of Control ” means (i)
the sale, lease exchange license or other disposition of all or
substantially all of the Company’s assets in one transaction
or a series of related transactions, (ii) a merger or consolidation
as a result of which the holders of Company’s issued and
outstanding voting securities immediately before such transaction
own or control less than a majority of the voting securities of the
continuing or surviving entity immediately after such transaction
and/or (iii) the acquisition (in one or more transactions) by any
person or persons acting together or constituting a
“group” under Section 13(d) of the Securities Exchange
Act of 1934, as amended (the “ Exchange Act ”),
together with any affiliates thereof (other than members of the
Company as of the date hereof and their
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respective affiliates) of beneficial
ownership (as defined in Rule 13d-3 under such Exchange Act) or
control, directly or indirectly, of at least eighty percent (80%)
of the total voting power of all classes of securities entitled to
vote generally in the election of the Company’s board of
managers or similar governing body; provided that for the purposes
of the immediately preceding clause (iii) neither a public offering
of Company’s securities nor any financing transaction or
series of financing transactions shall constitute a Change of
Control.
(g) Aircraft . As soon
as practicable following the date hereof, the Company will purchase
from Middlemarch, LLC (an entity controlled by the Executive,
“ Middlemarch ”) Middlemarch’s 3/16ths
NetJets fractional ownership interest in a Citation Excel aircraft,
tail number N668QS (such interest, the “
Aircraft” ) for a purchase price equal to One Million
Eight Hundred Sixty Thousand Dollars ($1,860,000). Upon
consummation of the purchase of the Aircraft, the Company shall
assume responsibility for all payments and obligations with respect
to the Aircraft from and after the date that title to the Aircraft
passes to the Company. The Executive shall retain responsibility
for all scheduling and similar issues related to the use of the
Aircraft. The Aircraft shall be available to the Executive for
business and personal use; provided, however, that the Executive
shall reimburse the Company for any personal usage of the Aircraft
pursuant to applicable IRS table.
(h) Subscription .
Concurrently with the closing of the purchase of the Aircraft
pursuant to Section 4(g) above, the Executive (or the
Executive’s designee, but only as approved by the Company)
shall subscribe for and purchase 93,000 of the Company’s
Series C Preferred Units (the “ Series C Units
”) pursuant to the terms of a subscription agreement between
the Executive and the Company substantially in the form attached
hereto as Exhibit D .
(i) Housing . The
Company will provide, at the Company’s cost, an apartment for
the Executive’s use reasonably close to the Company’s
corporate headquarters in Liberty Corner, New Jersey. All taxes,
utilities and maintenance/repair obligations related to the
apartment shall be borne by the Company.
(j)
Transportation/Automobile . The Company shall provide the
Executive, at the Company’s expense, with the use of a car
service for business-related transportation. A vehicle from the
Company’s fleet of PSR vehicles will be available for
Executive’s use.
(k) Business Expenses
. The Executive shall be entitled to receive reimbursement in
accordance with the policies and procedures of the Company
maintained from time to time for all reasonable documented business
expenses incurred in the performance of his duties for the Company.
In addition, the Executive shall be entitled to a one time
reimbursement of reasonable fees and expenses of legal counsel
incurred by the Executive in connection with the negotiation of
this Agreement.
(l) Vacation . The
Executive shall be entitled to vacation during each year of the
Employment Period in accordance with the Company’s policies
in effect from time to time applicable to other members of the
Company’ senior management.
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(m) Benefits . Except
as specifically provided herein, the Executive shall not
participate in the Company’s employment benefit plans,
including but not limited to the Section 401(k) retirement plan,
health, dental, life insurance, and long term disability plans or
any bonus or other incentive plans.
(n) No Additional
Compensation . Except as otherwise specifically provided in
this Section 4 or
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