Exhibit 10.1
CEPHALON,
INC.
ADVISORY SERVICES
AGREEMENT AND RELEASE
THIS ADVISORY
SERVICES AGREEMENT (the “ Agreement ”), is entered into as
of February 8, 2008, by and between Cephalon, Inc., a
Delaware corporation (the “ Company ”), and John E. Osborn
(“ Advisor
”).
WHEREAS, Advisor
has been a good and valuable employee of the Company since
March 17, 1997;
WHEREAS, Advisor
has served as chief legal officer of the Company since 1998, and in
that capacity has been responsible for managing all legal matters
and strategies, including matters related to intellectual property
and litigation;
WHEREAS, Advisor
is currently Executive Vice President, General Counsel and
Secretary of the Company, and in that capacity is a party to an
Executive Severance Agreement, dated July 25, 2002, by and
between Advisor and the Company (the “ Severance Agreement
”);
WHEREAS, Advisor
intends to resign his position as Executive Vice President, General
Counsel and Secretary of the Company, effective March 31,
2008.
WHEREAS, the
Company recognizes that Advisor’s unique knowledge and
insight concerning the Company’s legal and policy matters is
valuable to the Company and the Company wishes to obtain the
continued services of Advisor in connection with such legal and
policy matters, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in
consideration of the mutual promises hereinafter set forth, and
intending to be legally bound hereby, the Company and Advisor
hereby agree as follows:
1. Term .
The term of this Agreement shall begin on April 1, 2008 (the
“ Effective Date
”) and shall continue until March 31, 2011, unless
terminated prior thereto pursuant to Paragraph 7 below (the “
Term ”).
2. Conditions
. Advisor understands and agrees that this Agreement will not
become effective unless Advisor resigns his position as Executive
Vice President, General Counsel and Secretary of the Company, and
thereby terminates his employment with the Company, on
March 31, 2008. Advisor also agrees that at such time he
will also resign as an officer and/or director of any subsidiary of
the Company. Advisor further understands and agrees that this
Agreement will not become effective unless and until Advisor
executes, and does not revoke, the Company’s standard written
release, a copy of which is attached hereto as Schedule 1
(the “ Release
”), of any and all claims against the Company and all related
parties with respect to all matters arising out of Advisor’s
employment by the Company (other than any entitlements under the
terms of this Agreement or under any other plans or programs of the
Company in which Advisor participated and under which Advisor has
accrued or become entitled to a benefit) or the termination
thereof. Advisor further understands and agrees that as a
condition to the effectiveness of this Agreement, Advisor hereby
waives all of his rights and privileges under the Severance
Agreement and both the Company and Advisor hereby agree that the
Severance Agreement shall terminate and be of no further force and
effect as of March 31, 2008.
3. Services to be
Provided . During the Term of this Agreement, Advisor
shall work with and provide such advice, including legal advice,
and support to the Company’s outside counsel, in-house
counsel and Company executives as the Company may reasonably
request in connection with legal and policy matters, including
litigation, intellectual property and regulatory matters, as well
as assistance in the transition to Advisor’s replacement as
General Counsel (the “ Services ”). Advisor
shall be subject to the direction of the Chairman and Chief
Executive Officer (“ CEO ”) of the Company or such
person as the CEO may reasonably designate, including the new
General Counsel once hired. Advisor shall perform such other
reasonable advisory services as shall be mutually agreed upon by
Advisor and the CEO, or the CEO’s delegate, from time to
time. The Company contemplates, and Advisor acknowledges,
that the Services to be rendered by Advisor during the first twelve
months of the Term may be substantial. Advisor shall perform
the Services at any one of the Company’s locations or at
other places as may be mutually convenient and agreed upon by
Advisor and the Company.
4. Compensation; No
Benefits .
(a)
Compensation.
The
Company shall pay Advisor one million nine hundred thousand dollars
(US $1,900,000) on October 1, 2008 and one hundred thousand
dollars (US $100,000) on each of April 1, 2009 and
April 1, 2010. The payment of nine hundred fifty
thousand dollars (US $950,000) of the October 1, 2008 payment
(the “Waiver Compensation”) is expressly conditioned on
Advisor’s executing this Agreement, thereby waiving his
rights under the Severance Agreement pursuant to Paragraph 2
above.
(b)
Equity
Awards. Notwithstanding anything in
any agreement to the contrary and as a condition for the Company to
enter into this Agreement, Advisor hereby agrees that all of
Advisor’s outstanding equity awards that are not vested as of
March 31, 2008 shall terminate and Advisor shall have no
further rights with respect to such nonvested awards.
(c)
Expenses.
The
Company shall reimburse Advisor for all reasonable business and
pre-approved traveling expenses incurred by Advisor in connection
with the performance of the Services in accordance with the
Company’s expense reimbursement policies in effect from time
to time.
(d)
No Benefits.
Advisor
acknowledges that for purposes of this Agreement and any and all
Services to be provided hereunder, he shall not be an employee of
Company and will not be entitled to participate in or receive any
benefit or right as a Company employee under any Company employee
benefit or executive compensation plan, including, without
limitation by way of specification, employee insurance, pension,
savings, medical, healthcare, fringe benefit, stock option, equity
compensation, deferred compensation and bonus plans (collectively,
the “ Company Plans
”). If
Advisor’s status is ultimately re-characterized by a third
party to constitute employee status, Advisor shall not be eligible
to participate in or receive any benefit or right as a Company
employee under any Company Plan unless and until the Company
consents to such eligibility.
5. Independent
Contractor; Performance . For purposes of this Agreement
and all Services to be provided hereunder, Advisor shall not be
considered a partner, co-venturer, agent, employee, or
representative of the Company, but shall remain in all respects an
independent
contractor, and neither
party shall have any right or authority to make or undertake any
promise, warranty or representation, to execute any contract, or
otherwise to assume any obligation or responsibility in the name of
or on behalf of the other party. Advisor shall perform all
Services in a professional manner, consistent with industry
standards and the Company’s goals and ethical
standards. Notwithstanding anything in this Paragraph 5, the
Company’s board of directors (the “ Board ”) or a committee thereof
shall designate Advisor an “authorized representative”
of the Company under Section VII of the Company’s
bylaws, effective on the Effective Date, for purposes of
Advisor’s eligibility to obtain reimbursement of legal fees
and indemnification by the Company, such reimbursement and
indemnification shall be subject to the terms and conditions of the
Company’s relevant policies.
6. Tax
Obligations . The Company will report the Waiver
Compensation paid on October 1, 2008 on Form W-2 and
shall effect the applicable withholding on such compensation.
Except as otherwise provided in this Paragraph 6, Advisor shall be
responsible for all income taxes, employment taxes and
workers’ compensation insurance associated with the
compensation received under this Agreement and agrees that the
Company will not withhold or pay any of the foregoing in connection
with Advisor’s Services to the Company hereunder.
7. Termination
. Notwithstanding the provisions of Paragraph 1, the Company
may terminate this Agreement at any time during the Term upon
written notice to Advisor (“ Early Termination ”), if the
Services are not being performed. In the event of an Early
Termination by the Company, the Company shall not be responsible
for any portion of any compensation payments due to be paid to
Advisor under Paragraph 4 after the date of notice of such Early
Termination, except the Waiver Compensation, which shall
nevertheless be paid as scheduled under Paragraph 4. Within
five days after an Early Termination by the Company, Advisor shall
deliver to the Company all work product resulting from the
performance of the Services.
8. Restrictive
Covenants .
(a)
Confidentiality. Advi
|
