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Exhibit
10.25
EMPLOYMENT
AGREEMENT
THIS AGREEMENT by and between
PharMerica Corporation, a Delaware corporation (hereinafter the
“Company”), and Thomas Caneris (the
“Executive”), is effective as of August 17, 2007
(“Start Date”);
WHEREAS, the Company is
engaged in the institutions pharmacy business;
WHEREAS, the Company desires
to employ the Executive, effective as of the Start Date, as the
Senior Vice President and General Counsel and Secretary of the
Company, and the Executive desires to serve in that capacity,
effective as of the date of this Agreement;
NOW, THEREFORE, IT IS HEREBY
AGREED AS FOLLOWS:
1. Employment Period. The
Company shall employ the Executive, either directly or through a
Subsidiary, and the Executive shall serve the Company or any such
Subsidiary, on the terms and conditions set forth in this
Agreement, beginning on the Start Date (the “Employment
Date”) and until that employment ceases as provided below in
Section 4 (the “Employment Period”).
2. Position and
Duties.
(a) During the Employment
Period, the Executive shall be employed as the Senior Vice
President and General Counsel and Secretary of the Company, subject
to such changes in title as may be proposed by the Board or the
Chief Executive Officer and consented to by the Executive. The
Executive shall report to the Chief Executive Officer of the
Company and shall perform such duties for the Company as are
related typically to the office of Senior Vice President and
General Counsel and Secretary, in the manner reasonably directed by
the Chief Executive Officer of the Company, in his
discretion.
(b) During the Employment
Period, but excluding any periods of vacation and absence due to
intermittent illness to which the Executive is entitled, and any
services on corporate, civic or charitable boards or committees,
lectures, speaking engagements or teaching engagements that are
approved by the Executive’s direct supervisor and that do not
significantly interfere with the performance of the
Executive’s responsibilities to the Company or violating the
provisions of Section 9, the Executive shall devote his full
time and attention during normal business hours to the business and
affairs of the Company and the Executive shall use reasonable
efforts to carry out all duties and responsibilities assigned to
him faithfully and efficiently.
3. Compensation.
(a) Base Salary. During the
Employment Period, the Executive shall receive an annual base
salary of $250,000.00, payable in accordance with the regular
payroll practices of the Company. The Executive’s base salary
shall be reviewed annually by the Compensation Committee and/or the
Chief Executive Officer of the Company, in accordance with the
Company’s standard practices for executives generally, and
may be increased, but not decreased, as determined by the
Committee, in its sole discretion, or by any person or persons to
whom the Committee has delegated such authority.
(b) Annual Bonus and
Incentive Plans; Other Benefits. During the Employment Period:
(i) the Executive shall be entitled to participate in any
short-term and long-term incentive programs established and/or
maintained by the Company for its senior level executives
generally; (ii) the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices,
policies
and programs of the Company to at least
the same extent as other senior executives of the Company;
(iii) the Executive and/or the Executive’s family, as
the case may be, shall be eligible for participation in, and shall
receive all benefits under, all welfare benefit plans, practices,
policies and programs provided by the Company to at least the same
extent as other senior executives of the Company; and (iv) the
Executive shall be entitled to, and the Company shall provide the
Executive with 4 weeks of paid vacation during each calendar year
pursuant to the Company’s vacation policy.
(c) Expenses. During the
Employment Period, the Executive shall be entitled to receive
advancement or prompt reimbursement for all reasonable expenses
incurred or anticipated to be incurred by the Executive in carrying
out the Executive’s duties under this Agreement, provided
that the Executive complies with the generally applicable policies,
practices and procedures of the Company for submission of expense
reports, receipts, or similar documentation of such
expenses.
4. Termination of
Employment.
(a) Death or Disability. The
Executive’s employment and the Employment Period shall
terminate automatically upon the Executive’s death or long
term Disability during the Employment Period.
“Disability” means a condition entitling the Executive
to benefits under the Company’s Long Term Disability Plan,
policy or arrangement.
(b) By the Company. The
Company may terminate the Executive’s employment under this
Agreement during the Employment Period for Cause or without Cause.
“Cause” means
(i) the continued failure by
the Executive to substantially perform his duties as contemplated
by this Agreement (other than any such failure resulting from his
incapacity due to physical or mental illness or injury or any such
actual or anticipated failure after the issuance by the Executive
of a Notice of Termination for Good Reason) over a period of not
less than thirty days after a demand for substantial performance is
delivered to the Executive by the Board or by the Chief Executive
Officer of the Company, which demand identifies the manner in which
it is believed that the Executive has not substantially performed
his duties;
(ii) the willful misconduct
of the Executive materially and demonstrably injurious to the
Company (including, without limitation, any breach by the Executive
of Section 9 of this Agreement); provided that no act or
failure to act on the Executive’s part will be considered
willful if done, or omitted to be done, by him in good faith and
with reasonable belief that his action or omission was in the best
interest of the Company;
(iii) the conviction of the
Executive for a misdemeanor, which, as determined in good faith by
the Board, constitutes a crime of moral turpitude and gives rise to
material harm to the Company or to any subsidiary or affiliate of
the Company;
(iv) the conviction of the
Executive for a felony (including, without limitation, any felony
constituting a crime of moral turpitude); or
(v) material breach by the
Executive of the Executive’s obligations under this
Agreement.
(c) By the Executive. The
Executive may terminate employment under this Agreement for Good
Reason or without Good Reason. “Good Reason”
means:
(i) any reduction in the
Executive’s Base Salary, incentive bonus opportunity or
long-term incentive opportunity; or
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(ii) material failure by the
Company to comply with any provision of Sections 2 and 3 of this
Agreement, other than an isolated, insubstantial or inadvertent
failure that is not taken in bad faith and is remedied by the
Company within 30 days after receipt of written notice thereof from
the Executive.
Notwithstanding the
foregoing, “Good Reason” for purposes of
Section 4(c)(i) shall not include a reduction in Base Salary,
incentive bonus or long-term incentive opportunity if such
reduction is coincident with a reduction applicable to all members
of the senior management team. A termination of employment by the
Executive for Good Reason shall be effectuated by giving the
Company written notice (“Notice of Termination for Good
Reason”) of the termination, setting forth in reasonable
detail the specific conduct that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive
relies. Such Notice of Termination for Good Reason must be received
by the Company no later than the 60 th day after the event, or last in a series of events, that gives
rise to Good Reason. The Company shall have 20 days to remedy the
conduct set forth in the Notice of Termination for Good Reason. A
termination of employment by the Executive for Good Reason shall be
effective on the 60 th business day following the date when the Notice of Termination
for Good Reason is given, unless the conduct set forth in the
notice is remedied by the Company within the 20-day period. A
termination of the Executive’s employment by the Executive
without Good Reason shall be effected by giving the Company at
least 30 days’ advance written notice of the
termination.
(d) Date of Termination. The
“Date of Termination” means the date of the
Executive’s death, the date of the Executive’s
Disability, the date the termination of the Executive’s
employment under this Agreement by the Company for Cause or without
Cause or by the Executive for Good Reason or without Good Reason,
as the case may be, is effective. The Employment Period shall end
on the Date of Termination.
5. Obligations of the Company
upon Termination.
(a) By the Company Other Than
for Cause; or By the Executive for Good Reason. If, during the
Employment Period, the Company terminates the Executive’s
employment under this Agreement (other than for Cause) or the
Executive terminates employment under this Agreement for Good
Reason:
(1) the Executive shall be
entitled to (i) continued payment for eighteen
(18) months after the Date of Termination of the
Executive’s current base salary (as in effect on the Date of
Termination), and (ii) a bonus equal to the average of the
annual bonuses earned by the Executive over the three complete
years (or if less than three years, the average bonus earned during
such shorter period) preceding the Date of Termination (that is,
not including the bonus year that includes the Date of Termination)
to be paid on the first business day at the conclusion of the
eighteen month period after the Date of Termination; and
(2) for the eighteen
(18) month period following the Date of Termination, the
Executive will receive waiver of the applicable premium otherwise
payable for COBRA continuation coverage for the Executive, his
spouse and eligible dependents (to the extent covered on the Date
of Termination) for health, prescription, dental and vision
benefits; provided, however, that to the extent COBRA continuation
coverage eligibility expires (unless such expiration is due to
eligibility for other group health insurance or Medicare) before
the end of such eighteen month period, the Executive will receive
payment, on an after-tax basis, of an amount equal to the premium
the Company would have otherwise waived for COBRA coverage. The
obligations of the
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Company to provide benefits
under this Section 5(a)(2) shall terminate on the date of
occurrence of the first to occur of any of the following, if any of
the following should occur prior to the end of the eighteen
(18) month period: (i) the date of commencement of
eligibility of the Executive under the group health plan of any
other employer or (ii) the date of commencement of eligibility
of the Executive for Medicare benefits.
In addition, the Executive shall be
entitled to receive executive level outplacement assistance under
any outplacement assistance program then being maintained by the
Company in accordance with the terms of any such program. The
Executive shall also become vested in any outstanding options,
restricted stock or other equity incentive awards only to the
extent provided for under the terms governing such equity incentive
award. The Company shall also pay, or cause to be paid, to the
Executive, in a lump sum in cash within 30 days after the Date of
Termination (or, in the case of the pro-rated Annual Bonus Amount,
at the time such bonus would otherwise be paid), the
Executive’s accrued but unpaid cash compensation (the
“Accrued Obligations”), which shall include but not be
limited to, (W) the Executive’s base salary through the
Date of Termination that has not yet been paid (X) an amount
representing a 100% target bonus for the Executive’s salary
grade for the year of termination, multiplied by a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is
365 (the “Annual Bonus Amount”), (Y) any accrued
but unpaid vacation pay, and (Z) similar unpaid items that
have accrued and as to which the Executive has become entitled as
of the Date of Termination, including declared but unpaid bonuses
and unreimbursed employee business expenses; provided, however,
that the Company’s obligation to make any payments, or cause
any payments to be made, under this paragraph (a) to the
extent any such payment shall not have accrued as of the day before
the Date of Termination shall also be conditioned upon the
Executive’s execution, and non-revocation, of a written
release, substantially in the form attached hereto as Exhibit 1, of
any and all claims against the Company and all related parties with
respect to all matters arising out of the Executive’s
employment under this Agreement or the termination thereof (other
than any entitlements under the terms of this Agreement to
indemnification or under any other plans or programs of the Company
in which the Executive participated and under which the Executive
has accrued and is due a benefit).
If any payment, compensation or other
benefit provided to the Executive in connection with his employment
termination is determined, in whole or in part, to constitute
“nonqualified deferred compensation” within the meaning
of Section 409A of the Code and the Executive is a specified
employee as defined in Section 409A(a)(2)(B)(i) and Income Tax
Regulations under Section 409A, no part of such payments shall
be paid before the day that is six (6) months plus one
(1) day after the Date of Termination (the “New Payment
Date”). The aggregate of any payments that otherwise would
have been paid to the Executive during the period between the
termination date and the New Payment Date shall be paid to the
Executive, without interest, in a lump sum on such New Payment
Date. Thereafter, any payments that remain outstanding as of the
day immediately following the New Payment Date shall be paid
without delay over the time period originally scheduled, in
accordance with the terms of this Agreement.
(b) Death or Disability. If
the Executive’s employment is terminated by reason of the
Executive’s death or Disability during the Employment Period,
the Company shall pay the Accrued Obligations to the Executive or
the Executive’s estate or legal representative, as
applicable, in a lump sum in cash within 30 days after the Date of
Termination. If the Executive’s employment is terminated by
reason of the Executive’s death, the Executive shall also
become vested in any outstanding options, restricted stock or other
equity incentive awards. If the Executive’s employment is
terminated by reason of the Executive’s death or Disability,
the Company shall have no further obligations under this Agreement
or otherwise to or with respect to the Executive other than for any
entitlements under the terms of any other plans or programs of the
Company in which the Executive participated and under which the
Executive has become entitled to a benefit.
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(c) By the Company for Cause;
By the Executive Other than for Good Reason. If the
Executive’s employment is terminated by the Company for Cause
during the Employment Period, or the Executive voluntarily
terminates employment during the Employment Period, other than for
Good Reason, the Company shall pay the Executive, or shall cause
the Executive to be paid, the Executive’s base salary through
the Date of Termination that has not been paid and the amount of
any declared but unpaid bonuses, accrued but unpaid vacation pay,
and unreimbursed employee business expenses, and the Company shall
have no further obligations under this Agreement or otherwise to or
with respect to the Executive other than for any entitlements under
the terms of any other plans or programs of the Company in which
the Executive participated and under which the Executive has become
entitled to a benefit.
(d) Termination Pursuant to a
Change of Control. If there is a Change of Control, as defined in
Section 5(d)(i) below, during the Employment Period, the
provisions of this Section 5(d) shall apply and shall continue
to apply throughout the remainder of Employment Period. If, within
one (1) year following a Change of Control, the
Executive’s employment is terminated by the Company or the
Executive following the occurrence of any of the events listed in
Section 5(d)(ii) below or if the Executive’s employment
is terminated without cause (in accordance with Section 5(a)
above), the Company shall pay to the Executive (or the
Executive’s estate, if applicable) the payments described
under Section 5(a) and the Executive shall become vested in
any outstanding options, restricted stock, or other equity
incentive award; provided that the Company’s obligation to
make any payment, or to permit any vesting of outstanding options,
restricted stock, or other equity incentive award as described
above, shall be conditioned upon the Executive’s execution,
and non-revocation, of a written release, substantially in the form
attached hereto as Exhibit 1.
(i) Change of Control shall
mean the occurrence of one or more of the following
events:
(A) any “person”
(as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) becomes a “beneficial owner” (as such term
is defined in Rule 13d-3 promulgated under the Exchange Act) (other
than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any corporation
owned, directly or indirectly, by the stockholders of the Company,
in substantially the same proportions as their ownership of stock
of the Company), directly or indirectly, of securities of the
Company, representing forty percent (40%) or more of the
combined voting power of the Company’s then outstanding
securities; or
(B) persons who, as of the
Effective Date, constituted the Company’s Board of Directors
(the “Incumbent Board”) cease for any reason including,
without limitation, as a result of a tender offer, proxy contest,
merger or similar transaction, to constitute at least a majority of
the Board of Directors, provided that any person becoming a
director of the Company subsequent to the Effective Date whose
election was approved by at least a majority of the directors then
comprising the Incumbent Board shall, for purposes of this
Section 5(d), be considered a member of the Incumbent Board;
or
(C) the stockholders of the
Company approve a merger or consolidation of the Company with any
other corporation or other entity, other than (1) a merger or
consolidation which would result in the voting securities of
the
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Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) more than forty percent (40%) of the
combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no “person” (as hereinabove
defined) acquires more than forty percent (40%) of the
combined voting power of the Company’s then outstanding
securities; or
(D) the stockholders of the
Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.
(ii) The events referred to
in Section 5(d) above shall be as follows:
(A) a reduction of the
Executive’s salary other than a reduction that is (1) is
based on the Company’s financial performance or (2) is
similar to the reduction made to the salaries provided to all or
most other senior executives of the Company; or
(B) a significant change in
the Executive’s responsibilities and/or duties which
constitutes, when compared to the Executive’s
responsibilities and/or duties before the Change of Control, a
demotion; or
(C) a material loss of title
or office; or
(D) the relocation of the
offices at which the Executive is principally employed as of the
Change of Control to a location more than fifty (50) miles
from such offices, which relocation is not approved by the
Executive.
The Executive shall provide
the Company with reasonable notice and an opportunity to cure any
of the events listed in Section 5(d)(ii) and shall not be
entitled to compensation pursuant to this Section 5(d) unless
the Company fails to cure within a reasonable period.
(e) Treatment of Payments
Subject to Section 280G. It is the understanding of the
Executive and of the Company that certain payments by the Company
to or for the benefit of the Executive under this Agreement or any
other agreement or plan, if any, pursuant to which the Executive is
entitled to receive payments or benefits may be subject to the
provisions of Section 280G of the Code or any like statutory
or regulatory provision relating to parachute payments as such term
is defined in section 280G(b)(2) of the Code (a “Parachute
Payment”). In general, under Section 280G, a Parachute
Payment is a compensatory payment (including the accelerated
vesting of compensatory stock options made upon the occurrence of a
change in control of the Company) to the extent that the payment
exceeds three times the Executive’s annual
compensation.
(i) Reduction of Minimal
Parachute Payment. Notwithstanding any other provision of this
Agreement or any such agreement or plan, the amount of the payment
pursuant to Section 5(d) hereof or any other payments (a
“Change
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in Control Payment”)
made to the Executive pursuant to a change in control as defined in
Section 280G that is treated as a Parachute Payment is less
than 10% of the Change in Control Payment, such Change in Control
Payment shall be reduced to an amount such that the Executive will
not receive any Parachute Payment. To the extent that such
Parachute Payments have been made to or for the benefit of the
Executive, the Executive shall refund such Parachute Payment to the
Company with interest thereon at the applicable Federal rate
determined under Section 1274(d) of the Code, compounded
annually, or at such other rate as may be required in order that no
such
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