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Exhibit 10.26
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of
December 6, 2006 by Endo Pharmaceuticals Inc., a Delaware
corporation (the "Employer"), and Charles A. Rowland, Jr. (the
"Employee").
Intending to be legally bound, and in consideration of the
mutual agreements contained herein, the parties agree 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Employer (which includes unpublished financial statements,
financial projections and budgets, unpublished and projected sales,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 December 6, 2006.
"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).
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 initial term of the Employee’s employment
under this Agreement will be one (1) year, beginning on the
Effective Date and ending on December 31, 2007 (the "Initial
Term"). The term of this Agreement shall be renewed by the Employee
and the Employer for additional periods of one year (each, a
"Renewal Term";) unless either party gives the other party written
notice prior to the end of the Initial Term or any Renewal Term (in
which event this Agreement will continue for a period of thirty
(30) days from such notice) or unless sooner terminated in
accordance with the provisions of Section 6. The Initial Term
together with all Renewal Terms, if any, are hereinafter referred
to as the "Employment Period".
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 and community affairs that are
not inconsistent with the Employee’s duties under this
Agreement. 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 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 . To the extent the Employer
determines to award stock options 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 (the "Long-Term 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) 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 Effective Date, the Employee shall be 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 Effective Date.
Section 3.2 Incentive Compensation . For each
Fiscal Year or part thereof during the Employment Period the
Employee shall be eligible to earn as 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.
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, 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, 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 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) for good reason (as defined in Section 6.4) upon
not less than thirty days’ prior notice from the Employee to
the Employer; or
(e) by the Company other than for cause upon not less
than thirty days’ prior notice from the Employer to the
Employee or by the Employee for good reason, in each case within 12
months following the occurrence of a Change of Control (as defined
in Section 6.5(e)).
Section 6.2 Definition of Disability . For
purposes of Sections 6.1 and 6.3, the Employee will be deemed
to have a "disability" if, as a result of the Employee’s
incapacity due to reasonably documented physical illness or injury
or mental illness, the Employee shall have been unable for more
than six months in any twelve month period to perform
Employee’s duties hereunder on a full time basis and within
30 days after written notice of termination has been give to the
Employee, the Employee
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