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EXHIBIT 10.3
PRIVATE AND CONFIDENTIAL
SEPARATION AND NON-DISCLOSURE AGREEMENT
THIS AGREEMENT, dated the 13th day of July 2004, by and between
King
Pharmaceuticals, Inc., a Tennessee
corporation, having its offices at 501 Fifth
Street, Bristol, Tennessee ("Company") and
Jefferson J. Gregory (hereinafter
referred to as "Mr. Gregory").
WITNESSETH:
WHEREAS, Mr. Gregory was employed by the Company as Chief
Executive
Officer and served as Chairman of and as a
director on the Company's Board of
Directors and as a director and officer of
each of the Company's subsidiaries;
and
WHEREAS, Mr. Gregory resigned from his employment with the Company
as
Chief Executive Officer effective May 14,
2004; and
WHEREAS, Mr. Gregory also resigned from his positions as Chairman
of
and as a director on the Company's Board of
Directors effective May 14, 2004,
and from his positions as a director and
officer of each of the Company's
subsidiaries effective May 14, 2004;
and
WHEREAS, the Company is willing to provide monetary remuneration to
Mr.
Gregory in return for certain covenants,
agreements, releases and waivers all as
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants
hereinafter set forth, the parties agree as
follows:
1. Effective Date of Separation. The effective date of Mr.
Gregory's
resignation from his position of Chief
Executive Officer is May 14, 2004 (the
"Effective Date"). The effective date of
Mr. Gregory's resignation from his
positions as Chairman and as a director on
the Company's Board of Directors is
May 14, 2004. Further, the effective date
of Mr. Gregory's resignation from his
positions as a director and officer of each
of the Company's subsidiaries is May
14, 2004. The Company is accepting Mr.
Gregory's resignation effective May 14,
2004 and agrees that Mr. Gregory shall
continue to be covered by the Company's
health insurance until May 14, 2005 or
until Mr. Gregory shall become eligible
for health care coverage through his
employment with another entity, whichever
first occurs. Mr. Gregory shall have such
rights as he may have under applicable
law to continue health coverage at his own
expense for such additional periods
of time as is available under applicable
law or to terminate such coverage or to
procure his own separate coverage as he may
elect after his company health
coverage expires.
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2. Consideration. Upon the full execution of this Agreement,
the
Company shall pay to Mr. Gregory a lump sum
which represents two (2) years of
his current annual salary and Target Bonus
(80% of annual salary), as defined in
the Company's 2004 Management Incentive
Plan, as adjusted pursuant to the terms
of this Paragraph 2 (the "Separation
Payment"). The total gross amount due Mr.
Gregory is Two Million Three Hundred Forty
Thousand Dollars ($2,340,000,000).
Applicable withholding taxes shall be
deducted from such gross amount. However,
the Company will indemnify and reimburse
Mr. Gregory for any additional future
excise taxes assessed by the Internal
Revenue Service on the above Separation
Payment.
3. Payment. The Separation Payment shall be fully due and payable
to
Mr. Gregory upon the expiration of the
seven (7) day revocation period set forth
in Paragraph 9 of this Agreement. Such
payment in full shall be delivered by the
Company in the form of a check made payable
to Mr. Gregory which shall be hand
delivered to Mr. Gregory, or by wire
transfer to an account designated by Mr.
Gregory, at the expiration of said
revocation period or as soon thereafter as
possible.
4. Company Property. Also, in consideration of the payment of
the
amount specified in Paragraph 2 above, Mr.
Gregory agrees that all ideas,
inventions, trade secrets, know how,
documents and data ("Creative Property")
developed either during, in connection
with, or pursuant to his employment with
the Company or in connection with or
pursuant to the terms and conditions of
this Agreement with the Company always have
been and shall remain the exclusive
property of the Company. Mr. Gregory agrees
to provide all reasonable assistance
to the Company in perfecting and
maintaining its rights to Creative Property.
Mr. Gregory further agrees that the Company
shall have the right to use the
Creative Property for any purpose without
additional compensation to Mr.
Gregory. However, the Company agrees that
if any such assistance is requested of
Mr. Gregory then the Company shall
reimburse Mr. Gregory for his reasonable time
and expenses.
Further, Mr. Gregory agrees to return and surrender possession of
all
property of the Company, of any nature
whatsoever, including but not limited to
keys, other methods of entry or access to
the Company's physical premises,
identification badges, memoranda, notes,
records, reports, computer hardware and
software, cellular phones and other
communication devices, and any other Company
information, material, or equipment (or
copies thereof) in Mr. Gregory's control
or possession as of the Effective Date of
his resignation as set forth in
Paragraph 1 above.
5. Confidential Information. Mr. Gregory agrees that he will not
use or
disclose any confidential information,
trade secret, or proprietary information,
whatever their form, obtained from or by
virtue of his association with the
Company including but not limited to
information about costs, profits, budgets,
finances, markets, sales, customers,
potential customers, products,
formulations, pricing policies, operational
methods or technical processes. Mr.
Gregory agrees not to communicate to any
other person or entity about the
nature, quality or quantity of work. Mr.
Gregory agrees not to display for any
purpose any document or portion thereof or
any copy or reproduction
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thereof, belonging to, or pertaining to the
Company without due written
authorization from the Company. To the
extent not inconsistent with this
Paragraph 5, nothing herein shall in any
way prevent Mr. Gregory from utilizing
his general business, management and
financial skills, techniques and abilities,
including any publicly available filings,
documents or information concerning
the Company.
6. Agreement Not to Compete. Mr. Gregory agrees that for a period
of
twelve (12) months after the Effective Date
of this Agreement he will not accept
any employment, whether as an owner,
partner, director, officer, employee,
agent, independent contractor, consultant,
or in any other capacity
(collectively referred to as "Employment"
for purposes of this paragraph) with
any entity the business of which directly
competes with the Company's business
in any geographical area in which the
Company markets its products. Mr. Gregory
agrees and acknowledges that this provision
will preclude him from accepting
Employment with any entity the business of
which competes with any of the
products or business lines of the Company
as they exist immediately prior to Mr.
Gregory's acceptance of such Employment.
However, this provision will not
preclude Mr. Gregory from remaining
employed by an entity that, subsequent to
the beginning of Mr. Gregory's Employment
with such entity, becomes in
competition with the Company's business as
the result of an expansion of the
scope of the Company's business. Should Mr.
Gregory wish to accept Employment
with an entity whose business is not
clearly outside the scope of the
restrictions provided for in this
paragraph, Mr. Gregory must seek a
determination from the Chief Executive
Officer of the Company and the
Compensation and Human Resources Committee
of its Board of Directors and obtain
permission from the same to accept such
Employment. The decision of the Chief
Executive Officer of the Company and the
Compensation and Human Resources
Committee of its Board of Directors shall
be delivered in writing to Mr. Gregory
within fourteen (14) business days. The
Chief Executive Officer of the Company
and the Compensation and Human Resources
Committee of its Board of Directors may
not unreasonably withhold such permission
if said entity's business does not
directly compete with the Company's
business as it exists at that time.
7. Solicitation of the Company's Employees. Mr. Gregory agrees that
for
a period of twenty-four (24) months from
the Effective Date of this Agreement,
he will not participate in recruiting or
soliciting any Company employee. Should
Mr. Gregory wish to discuss possible
employment with any then-current Company
employee during the twenty-four (24) month
period set forth above, he may
request permission to do so by seeking and
obtaining a written exception to this
provision from the Chief Executive Officer
of the Company and the Compensation
and Human Resources Committee of its Board
of Directors; provided, however, Mr.
Gregory agrees that he will not discuss any
employment possibility with such
employees prior to securing the Company's
permission. Should the Company decline
to grant such permission, Mr. Gregory
agrees that he will not at any time,
either during or after the non-solicitation
period set forth above, advise the
employee concerned that he/she was the
subject of a request under this paragraph
or that the Company refused to grant Mr.
Gregory the right to discuss an
employment possibility with him/her.
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8. Covenant to Protect the Company. Mr. Gregory agrees: (i) not to
make
any public statement or statements to the
press concerning Company business
objectives, status of its securities, its
management practices, or other
sensitive information without first
receiving the Company's written approval;
(ii) that he will not divulge or disclose
any proprietary or confidential
information to any third party, except his
personal legal advisor, without the
prior written consent of the Company (any
disclosure of such information by any
of Mr. Gregory's advisors shall be
considered a disclosure by Mr. Gregory) (iii)
that he shall not make or publish any
statement either orally or in writing
which he knows or reasonably should know
may cause harm to the Company, its
Board of Directors, officers or its
employees or agents.
The Company agrees that the Company's directors and officers who
are
subject to the reporting requirements of
Section 16 of the Securities Exchange
Act of 1934 ("Section 16 Officers") will
not make to any third party or any
employee of the Company, including without
limitation the news media, any
written or oral statements critical of Mr.
Gregory's character, integrity, or
job performance, or request any other
person to do so.
9. Release. Except for obligations of the Company arising under
or
continuing pursuant to this Agreement,
including specifically but not limited to
the provisions of Paragraph 10,
Indemnification, Mr. Gregory hereby forever
waives for himself, his attorneys, heirs,
executors, administrators, successors
and assigns fully and forever any claims
against the Company, its partners, any
related or affiliated company (including,
without limitation King
Pharmaceuticals, Inc., Monarch
Pharmaceuticals, Inc., Jones Pharma Incorporated,
Parkedale Pharmaceuticals, Inc., King
Pharmaceuticals Research and Development,
Inc., Meridian Medical Technologies, Inc.,
their predecessors, successors,
assigns, partners, officers, directors,
agents, representatives, attorneys or
employees), for any action or inaction,
loss, expense or any damages of whatever
nature arising from any occurrence or
occurrences, known or unknown, from the
beginning of time until the Effective Date
of this Agreement. Without
limitation, Mr. Gregory specifically waives
any claim arising under the FAIR
LABOR STANDARDS ACT ("FLSA"), the AMERICANS
WITH DISABILITIES ACT ("ADA"), the
AGE DISCRIMINATION IN EMPLOYMENT ACT
("ADEA"), and the REHABILITATION ACT (as
codified in 29 U.S.C. Sections 701 et
seq.), or their state counterparts; claims
under TITLE VII OF THE CIVIL RIGHTS ACT OF
1964, as amended, TITLE VII OF THE
CIVIL RIGHTS ACT OF 1991, as amended, the
FAMILY MEDICAL LEAVE ACT ("FMLA"), the
NATIONAL LABOR RELATIONS ACT ("NLRA"), or
any state co
