EXHIBIT 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement
(“Agreement”) is entered into as of this 13
th Day of October, 2009 (“Effective
Date”) between Lannett Company, Inc.
(“Company”) and Keith R. Ruck
(“Executive”).
RECITALS
Company wishes to employ Executive
as its Vice President of Finance and Chief Financial Officer, and
Executive wishes to accept such employment under the terms and
conditions set forth in this Agreement.
IT IS AGREED
as follows:
1.
Employment.
Company hereby employs Executive as
its Vice President of Finance and Chief Financial Officer; and
Executive accepts such employment.
2.
Term. The term of employment under this Agreement
shall commence on the Effective Date and shall continue, unless
otherwise terminated earlier under Section 8, until the day
before the one-year anniversary of the Effective Date, i.e.,
October 13, 2010 (the “Term”), provided that on
the day before the one-year anniversary of the Effective Date and
the day before the anniversary of any one-year renewal of such
Agreement the Term shall be automatically extended for successive
additional one (1) year periods unless at least ninety (90)
days prior to such anniversary date, either Company or Executive
furnishes the other with written notice that the term is not to be
so extended.
3.
Duties. Executive shall devote his full-time efforts to
the proper and faithful performance of all duties customarily
discharged by a Vice President of Finance and Chief Financial
Officer for a company doing the type of business engaged in by
Company and any additional duties assigned to him from time to time
by the President and Chief Executive Officer of Company and/or the
Board of Directors of Company. Executive shall report directly to
the President and CEO of Company. Executive agrees to use his best
efforts and comply with all fiduciary and professional standards in
the performance of his duties hereunder. Executive shall provide
services to any subsidiary or affiliate of Company without
additional compensation and benefits beyond those set forth in this
Agreement, and any compensation and benefits provided to Executive
for such services shall be a credit with regard to amounts due from
Company under this Agreement. Executive represents and warrants to
Company that, at all times prior to the Effective Date when he has
served as its Vice President of Finance and Chief Financial Officer
of Company and at all times during the Term, he has either
fulfilled or will fulfill his duty of loyalty to Company; and he
has either acted or will act in the best interests of
Company’s shareholders.
4.
Base Salary.
Executive shall be paid a base
salary of One Hundred Ninety Thousand Dollars and no cents
($190,000.00) per annum for the Term, payable, less applicable
withholdings, in proportional monthly payments or more frequently
in accordance with Company’s regular practice. Salary for a
portion of any period will be prorated. The Compensation Committee
of the Board of Directors and the President and CEO will conduct an
annual performance review of Executive and, as part of such review,
will consider adjustments to the base salary set forth herein based
on the performance of both Executive and Company.
5.
Stock Options.
Company will grant Executive an
option to purchase up to 40,000 shares of Lannett common stock at
the fair market value of such stock as of the Effective Date. The
terms of the options grant will include a tiered vesting schedule
of three (3) years. One third of the options will vest
one year after the Effective Date, an additional one third will
vest two years after the Effective Date, and the final one third
will vest three years after the Effective Date.
6.
Annual Bonus.
Executive shall be eligible to
participate in the Management Incentive Bonus Plan (the
“MIB”) administered by the Compensation Committee, or
any successor annual bonus plan or arrangement generally made
available to the executive officers of Company. The MIB shall
provide Executive with a target bonus opportunity for each fiscal
year of Company (i.e. July 1 to June 30), regardless of
whether or not a bonus is declared for any fiscal year.
7.
Benefits.
During the Term Executive shall have
the following benefits:
(a)
Executive may participate in all
Company sponsored stock option plans, retirement plans,
401(k) plans, life insurance plans, medical insurance plans,
disability insurance plans, executive stock ownership plans and
such other benefit plans generally available from time to time to
other executive employees of Company for which he qualifies under
the terms of the plans. Executive’s participation in and
benefits under any benefit plan shall be on the terms and subject
to the conditions specified in such plan.
(b)
An annualized automobile allowance
of $10,800 will be provided and will be paid on a bi-weekly basis
as part of the regular payroll, subject to applicable tax
withholdings and other payroll deductions
(c)
Vacation days or personal time off
(PTO) granted to Executive in accordance with Company’s
published vacation or PTO policy generally afforded to salaried
management employees.
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8.
Reimbursement of
Expenses. Company will
reimburse Executive for the reasonable and necessary expenses
incurred by him in the performance of his duties under this
Agreement in accordance with Company’s policies in effect
from time to time.
9.
Termination of
Employment.
(a)
Executive’s employment under
this Agreement may be terminated at any time by the President and
Chief Executive Officer, and/or the Board of Directors of Company,
with or without Cause (as defined below). Executive’s
employment is “at-will.”
(b)
Executive’s employment under
this Agreement shall terminate upon his resignation or
death.
(c )
Executive’s employment under
this Agreement shall terminate upon thirty (30) days written notice
by Company to Executive of a termination due to Disability,
provided such notice is delivered during the period of Disability.
The term “Disability” shall mean, for purposes of this
Agreement, the inability of Executive, due to injury, illness,
disease or bodily or mental infirmity to engage in the performance
of his material duties of employment with Company as contemplated
by Section 3 herein for (i) any period of ninety (90)
consecutive days or (ii) a period of one hundred fifty days
(150) in any consecutive twelve (12) months, provided that if the
Executive returns to work in the consecutive 12 month period for a
period of less than ten (10) consecutive business days in
duration, such return to work shall not be deemed to interfere with
a determination of consecutive absent days if the reason for
absence before and after the interim return are the same. Benefits
to which Executive is entitled under any disability policy or plan
provided by Company shall reduce the base salary paid to Executive
during any period of Disability on a dollar-for-dollar
basis.
(d)
Company shall have the right to
terminate Executive’s employment for Cause. For purposes of
this Agreement, “Cause” shall consist of any of the
following:
(i)
Executive’s willful commission
of an act constituting fraud, embezzlement, breach of any fiduciary
duty owed to Company or its stockholders or other material
dishonesty with respect to Company;
(ii)
Gross negligence or willful
misconduct in the performance of Executive’s
duties;
(iii)
Willful or reckless conduct of
Executive which has an adverse impact (economic or otherwise) on
Company;
(iv)
Executive’s willful violation
of any law, rule or regulation relating to the operation of
Company or any of its subsidiaries or affiliates;
(v)
The order of any court or
supervising governmental agency with
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jurisdiction over the affairs of
Company or any subsidiary or affiliate;
(vi)
Executive’s willful violation
of any provision of this Agreement, including without limitation
violation of Sections 10, 11,12 or 13;
(vii)
Executive’s conviction or plea
of nolo contendere (or its equivalent) with respect to a felony or
any other crime involving dishonesty or moral turpitude;
(viii)
Abuse of illegal drugs or other
controlled substances or habitual intoxication;
(ix)
Willful violation by Executive of
Company’s published business conduct guidelines, code of
ethics, conflict of interest or other similar policies;
(x)
Executive communicating with outside
professionals, including but not limited to accounting and law
firms, not retained by Company concerning the business of Company
and/or Confidential Information, as defined below, without the
prior approval of Company’s Chief Executive
Officer.
(xi)
Executive becoming under
investigation by or subject to any disciplinary charges by any
regulatory agency having jurisdiction over Company (including but
not limited to the Drug Enforcement Administration (DEA), Food and
Drug Administration (FDA) or the Securities and Exchange Commission
(SEC)) or if any complaint is filed against Executive by any such
regulatory agency; or
(e)
If Executive’s employment
terminates for Cause or for any reason other than as set forth in
Section 9(f), Company shall be obligated only to continue to
pay Executive’s salary and, to the extent earned, accrued and
unpaid, annual cash bonus and long term incentive compensation and
furnish the then existing benefits under Section 7 up to the
date of termination (except as otherwise set forth in this
Agreement).
(f)
If Executive’s employment is
terminated by Company without Cause following the completion of two
(2) full years of continuous service from the
Executive’s original date of employment with Company, in
addition to the amounts payable under Section 9(e), Executive
shall be entitled to receive the following: (i) base salary
for a period of eighteen (18) months after the termination date,
(ii) insurance coverage provided to him equal to such coverage
provided to him on the date of termination at no cost or, if
ineligible for continued coverage under Company policies,
reimbursement of the cost of comparable coverage for a period of
eighteen (18) months, (iii) a pro rated annual cash bonus for
the then current fiscal year calculated as if all base targets and
base goals are achieved subject to any applicable cap on cash
payments (but no other incentive compensation beyond the date of
termination), if it is more likely than not, within
Company’s discretion, that the bonus will be earned by
Executive, to be paid at the times and frequency regularly paid,
and (iv) Company shall cause all outstanding Company stock
options awarded Executive prior to termination of his employment to
be one hundred percent (100%) vested at termination. If
Executive’s employment is terminated by Company without Cause
prior to the completion of two (2) full years of continuous
service from Executive’s original date of employment with
Company, in addition to the amounts payable under
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Section 9(e), Executive shall
be entitled to receive the following: (v) base salary for a
period of twelve months after the termination date. As a
condition to the applicable salary and/or insurance continuation
under this Section 9(f), Executive must first execute and
deliver to Company, in a form prepared by Company, a release of all
claims against Company and other appropriate parties, excluding
Company’s performance under this Section 9(f) and
Executive’s vested rights under Company sponsored retirement
plans, 401(k) plans and stock ownership plans. The obligation
of Company to pay Executive’s salary as required by
Subsections (i) and (v) of this
Section 9(f) shall not be subject to offset for earnings
from Executive’s subsequent employment, provided however,
that, if and to the extent required under Section 409A of
the Internal Revenue C
