Employment Agreement - aaiPharma Inc. and Frederick D. Sancilio
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT BETWEEN
AAIPHARMA INC.
AND FREDERICK D. SANCILIO
THIS AGREEMENT made as of the 1st day of January, 2003 by and between
aaiPharma Inc. a Delaware corporation (hereinafter referred to at the
"Company"), and Frederick D. Sancilio, Ph.D. (hereinafter referred to as
"Employee").
WITNESSETH:
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WHEREAS:
A. Employee has faithfully rendered services to the Company under an
Employment Agreement dated November 17, 1995 (the "1995 Agreement") and
both parties intend to amend and restate the 1995 Agreement;
B. Employee is currently employed by the Company as its Executive Chairman and
Chief Science Officer; and
C. The Company wishes to assure itself that the Company will continue to have
the benefit of the Employee's extraordinary, unique and special abilities,
experience and services, and Employee is willing to enter into an agreement
to that end, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby covenant and agree as follows:
1. Employment Agreement
The Company hereby agrees to continue to employ Employee, and Employee
hereby agrees to remain in the employ of the Company, on the terms and subject
to the conditions set forth in this Agreement.
2. Term of Employment
(a) The term of Employee's employment under this Agreement (the "Term of
Employment") shall commence as of the date hereof (the "Effective Date") and
shall expire at the close of business on the second anniversary of that date
unless sooner terminated in accordance with the terms and conditions of this
Agreement or extended as hereinafter provided in this section 2.
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(b) On each anniversary of the Effective Date, the Term of Employment then
remaining shall be extended, automatically and without action by the Company or
Employee, for an additional two-year period, unless prior to the anniversary in
question either party gives the other party written notice, in the manner set
forth in section 15 below, that the party giving the notice does not wish to
extend the Term of Employment then remaining, in which case the Term of
Employment will end on the second anniversary of the termination notice. In the
event of any such extension, the "Term of Employment" shall include the period
of such extension and the period ending on the effective date of the termination
notice. It is agreed and understood that Employee will not vote in any vote of
the Board of Directors of the Company concerning this Agreement.
3. Position, Duties and Responsibilities
(a) During the Term of Employment, Employee shall serve as, and with the
titles, offices and authority of, Executive Chairman of the Board and Chief
Science Officer of the Company, shall report only to the Board of Directors of
the Company (the "Board"), shall be the Executive Chairman of the Company and,
as such, shall have effective oversight of the activities of the Company,
through the supervision and control of the President and Chief Executive Officer
of the Company and participation on boards and committees of the Company's
various investments; assist the Company in investor relation activities; and, as
Chief Scientific Officer, shall be primarily responsible for the quality and
innovativeness, but not the conduct, of the Company's research programs.
(b) During the Term of Employment, the Company shall use its best efforts
to cause Employee to be elected and re-elected (i) as a member of the Board,
(ii) as a member of the Board of Directors of any affiliate of the Company on
which Board of Directors Employee is serving on the date of this Agreement, and
(iii) as a member of the Board of Directors of any entity which becomes a
majority-owned subsidiary of the Company after the date of this Agreement on
which Board of Directors the Executive Chairman of the Board of the Company
would customarily serve. Employee agrees to serve on the foregoing Boards of
Directors during the Term of Employment, without compensation in excess of that
provided under this Agreement.
(c) During the Term of Employment, Employee agrees to devote his best
efforts and substantially all of his business time, efforts and skills to the
performance of his duties and responsibilities under this Agreement, to be loyal
to the Company and to refrain from rendering services for any enterprise other
than the Company and its affiliates.
4. Office Location
During the Term of Employment, Employee shall be based in Jupiter, Florida
or at the Company's principal executive offices, at the sole discretion of
Employee, which shall be located at their present location or within 30 miles
thereof. Employee agrees to travel on business to the extent reasonably
necessary or appropriate for the performance of his duties hereunder.
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5. Compensation and Related Matters
In consideration of all services rendered by Employee in any capacity
during the Term of Employment, the Company shall pay or provide Employee the
amounts and benefits set forth in this section 5.
(a) Salary. The Company shall pay Employee a salary at an annual rate which
shall be established from time to time by the Board, but which shall not be less
than $422,000. Employee's salary shall be paid in substantially equal
installments at monthly or more frequent intervals, in accordance with the
normal payroll practices of the Company. Employee's salary rate shall be
reviewed by the Board at least annually following the date of this Agreement to
be increased in light of Employee's performance competitive pay levels or such
other factors (if any) as the Board may deem relevant. Any increase in salary
shall not limit or reduce any other obligation of the Company under this
Agreement and, once established at an increased specified rate, Employee's
salary shall not thereafter be reduced. Employee's annual salary under this
Agreement, at the rate specified above and including any increases, is hereafter
referred to as his "Salary."
(b) Bonus. In addition to the 2002 Executive Bonus Award due Employee in
January 2003 and January 2004, the Company shall provide Employee a bonus for
each regulatory filing approval as set forth in Exhibit A attached hereto. It is
agreed and understood that Employee will not vote in any Board vote concerning
his own bonus.
(c) Other Incentive Plans. During the Term of Employment, Employee shall be
eligible to participate in any other compensation or incentive plans of a long
or short term nature in which other senior executives of the Company are then
eligible to participate, subject to the terms and conditions of such plans. It
is agreed and understood that eligibility to participate is not synonymous with
participation. Employee shall participate in any such plan only if the Board, in
its sole discretion, selects Employee for such participation. It is agreed and
understood that Employee will not vote in any Board vote concerning his
participation in any such plan.
(d) Perquisites. During the Term of Employment, Employee shall be entitled
to perquisites of office, including without limitation air travel privileges,
office facilities and secretarial staff for Company and other personal business,
payment or reimbursement of membership dues in one country club and one luncheon
club, tax return preparation and advisory fees (including, but not limited to,
legal and other advisory fees related to Company and personal matters), and to
fringe benefits, including, without limitation, personal use of company
aircraft, at least equal to and on the same terms and conditions as those
provided to Employee on the date of this Agreement (all such fringe benefits,
however, not in the aggregate to exceed $35,000 per year in "gross-up" payments
to cover the taxes on such fringe benefits), as well as to reimbursement, upon
proper accounting of all reasonable expenses and disbursements incurred by him
in the course of his duties, including, without limitation, membership dues in
various professional, trade and civic organizations, societies and associations
which the Company has heretofore paid or reimbursed. Employee agrees to furnish
an appropriate model automobile for
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his use for business purposes, for which the Company shall pay Employee a
monthly automobile allowance of $750. The Company shall also pay or reimburse
the airfare of Employee's spouse if she accompanies him on any business trip
that exceeds two weeks' duration, and shall indemnify and hold Employee harmless
against any income tax liability he incurs as a result of such payment or
reimbursement or this indemnity.
(e) Employee Benefits. Employee, his dependents and beneficiaries,
including without limitation any beneficiary of a joint and survivor or other
optional method of payment applicable to the payment of benefits under the
Company's tax-qualified retirement plan(s), if any, shall be entitled to all
payments, benefits and age, pay and service credit for benefits as a result of
employment during the Term of Employment to which other senior officers of the
Company, their dependents and beneficiaries are then entitled under the employee
benefit plans and practices of the Company, including without limitation any
qualified or non-qualified pension, profit sharing and savings plans, death
benefit plans (including split dollar life insurance plans and group life
insurance plans providing group term life insurance, accidental death and
dismemberment insurance, and travel accident insurance), sickness and disability
benefit plans, vacation pay plans, and medical, dental, health and welfare
plans. Nothing in this Agreement shall preclude the Company from amending or
terminating any employee benefit plan or practice. In any event, however,
Employee shall be entitled to five weeks of vacation with pay each year. Any
provision of this paragraph to the contrary notwithstanding, Employee shall
participate in any employee benefit plan that is established after the date of
this Agreement only if the Board of Directors, in its sole discretion, permits
him to participate.
6. Termination of Employment
(a) Death. The Term of Employment shall terminate upon the death of
Employee.
(b) Disability. The Term of Employment shall terminate in the event of
Disability of Employee. As used in this Agreement, the term "Disability" means
an accident or physical or mental illness which prevents Employee from
substantially performing his duties and responsibilities hereunder for six
months (consecutive or otherwise) within any twelve consecutive month period.
The Term of Employment shall terminate at the close of business on the last day
of such six month period, but without prejudice to any payments due Employee in
respect of disability under any pension or welfare plan. The amount of any
Salary or other compensation payable to Employee during such six month period as
a result of this paragraph may be reduced by any payments which Employee
receives for the same period because of disability under any disability or
pension plan of the Company or any affiliate of the Company.
(c) Cause. The Company may terminate the Term of Employment for Cause. For
purposes of this Agreement, Employee shall be considered to be terminated for
"Cause" only if (i) Employee has -
(A) willfully failed to comply with any of the material terms of this
Agreement;
(B) willfully and continually failed to perform his duties hereunder;
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(C) willfully engaged in misconduct materially injurious to the
Company; or
(D) been convicted of a felony or crime of moral turpitude;
and (ii) a resolution is adopted by a vote of the majority of the members of the
Board (excluding Employee) finding that Employee has engaged in conduct referred
to in (A), (B), (C) or (D) above, specifying the particulars in reasonable
detail, and (iii) Employee received thirty (30) days' advance written notice
that the Board intended to meet to consider Employee's termination for Cause and
Employee was given a reasonable opportunity to be heard by the Board on the
issue prior to the Board's vote on the matter.
(d) Constructive Discharge. Employee may terminate his employment under
this Agreement on 10 days' advance written notice to the Company given within 90
days after the occurrence of a Constructive Discharge Event. For purposes of
this Agreement, "Constructive Discharge Event" means any act or omission
identified below in this paragraph 6(d) to which Employee does not consent in
writing and which does not occur in connection with termination of Employee's
employment for Cause or Disability as defined in this Agreement; provided that
no such act or omission shall constitute a Constructive Discharge Event unless
and until Employee gives the Board written notice describing the act or omission
in reasonable detail within 60 days after the Employee first knows (or should
have known) of the act or omission and the act or omission is not cured within
30 days after the Board receives such written notice:
i. Any (A) failure to re-designate Employee as, or (B) removal of
Employee from, or failure to re-elect Employee to, any of the following
positions:
(I) Executive Chairman of the Board and Chief Science Officer of
the Company, or
(II) a member of the Board of Directors of (aa) the Company, (bb)
any affiliate of the Company on whose Board of Directors Employee now
serves, and (cc) any future majority-owned subsidiary of the Company
on whose Board of Directors the Executive Chairman of the Board of the
Company would customarily serve;
ii. (A) any conduct by the Board, or
(B) any assignment to Employee of any duties, functions, authority or
responsibilities by the Board,
that in either case (A) or (B) -
(I) calls for Employee to report to anyone other than the Board,
or
(II) deprives Employee of effective supervision and control over,
and responsibility for, the duties set forth in Paragraph 3(a),
subject to the authority of the Board, or
(III) is substantially inconsistent with or deprives Employee of
any of the material duties, functions, authority or responsibilities
incident to his positions described above,
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including the authority to hire and discharge all employees of the
Company subject to approval of the Board in the case of elected
officers, or
(IV) substantially interferes with Employee's ability to
substantially perform the duties, functions or responsibilities, or
exercise the authority, of his positions described in section 3 above;
iii. any material failure by the Company to comply with the provisions of
section 4 above (relating to office location) or section 5 above (relating to
compensation and related matters).
A termination by Employee in accordance with the provisions of this paragraph
6(d) shall not be deemed a voluntary termination of employment by Employee for
the purpose of this Agreement or any plan or practice of the Company or its
affiliates.
(e) Termination by Company Not for Cause. Notwithstanding any provision of
this Agreement to the contrary, the Board shall have the right to terminate
Employee's employment for any reason other than Cause at any time, subject to
the consequences of such termination as set forth in this Agreement.
(f) Notice of Termination. Any termination by the Company for Disability or
Cause as defined in paragraph 6(b) and (c) or by Employee pursuant to paragraph
6(d) hereof (relating to Constructive Discharge Events) shall be communicated by
written Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision so indicated.
If any dispute concerning termination of Employee's employment under paragraphs
6(b), (c), or (d) above results in a final determination that a proper basis for
such termination did not exist, Employee's employment hereunder shall be treated
as having been terminated other than pursuant to paragraph 6(b), (c), or (d), as
the case may be, by the party who gave Notice of Termination.
7. Compensation for Termination and Related Matters
The parties recognize and agree that, if the Company terminates Employee's
employment under this Agreement other than for Disability pursuant to paragraph
6(b) above or Cause pursuant to paragraph 6(c), or if employee terminates his
employment in accordance with paragraph 6(d) above following a Constructive
Discharge Event, the actual damages to Employee would be difficult, if not
impossible, to ascertain. Accordingly, the parties agree that, if the Company
terminates Employee's employment under this Agreement other than for Disability
pursuant to paragraph 6(b) above or Cause pursuant to paragraph 6(c), or if
Employee terminates his employment in accordance with paragraph 6(d) above
following a Constructive Discharge Event, (any such termination by the Company
or Employee being hereafter referred to as a "Compensable Termination"), then
Employee shall thereupon be relieved of any further obligation under this
Agreement other than sections 9 and 10 hereof (relating to restrictive covenants
and intellectual property, and his sole remedy shall be a right to receive from
the
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Company, as liquidated damages, severance pay or both, the payments and benefits
provided in paragraphs 7(a) through (and including) 7(e) below; provided that no
provision of this section 7 is intended to curtail, reduce or otherwise affect
adversely any rights Employee may have in respect of termination of employment
under any compensation, incentive or employee benefit plan or any rights
Employee may have under section 8 hereof to put shares to the Company. Employee
shall not be required to mitigate the amount of any payment or benefit provided
for in this section 7 by seeking other employment or otherwise, nor shall any
compensation earned by Employee in other employment or otherwise reduce the
amount of any payment or benefit provided for in this section.
(a) The Company shall pay Employee his Salary (as defined in paragraph 5(a)
above) prorated through the date of termination;
(b) The Company shall pay Employee any accrued but unpaid bonus award for
Employee's services in the fiscal year preceding the date of termination, and a
prorated bonus award for the fiscal year in which the date of termination
occurs, such prorated bonus award to be determined by multiplying the "Target
Bonus" as defined in paragraph 7(d) below by a fraction the numerator of which
is the number of days in the calendar year of termination that preceded the date
of termination and the denominator of which is the number 365;
(c) The Company shall pay Employee an amount equal to three times his
Salary (as defined in paragraph 5(a) above, in one lump sum payment on or before
the tenth day after the date of termination;
(d) The Company shall pay Employee an amount equal to two times the "Target
Bonus" as hereafter defined, in 24 substantially equal monthly installments
commencing on or before the tenth day after the date of termination and
continuing at monthly intervals thereafter. For purposes of this section 7, the
"Target Bonus" shall mean fifty percent (50%) of Employee's Salary (as defined
in paragraph 5(a) above);
(e) The Company shall provide Employee, his dependents and beneficiaries
with the medical insurance benefits and life insurance benefits which they would
receive under paragraph 5(e) of this Agreement if the Term of Employment were to
continue for two years after the date of termination and the compensation
described in paragraphs 7(c) and (d) above were paid to him in the capacity of
any employee (rather than a former employee); provided, however, that if and to
the extent the Company determines that such benefits cannot be provided under
the plans in question due to Internal Revenue Code or other restrictions, the
Company shall provide tax-equivalent benefits through other means reasonably
satisfactory to Employee, and, provided further, that if Employee obtains full
time employment within two years after his date of termination, any benefits to
be provided under this paragraph shall be reduced to the extent Employee
receives benefits under comparable plans of the successor employer; and
(f) All unvested options previously granted to Employee will become fully
vested and exercisable on the date of termination and will be exercisable as set
forth in the applicable stock option plan.
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8. (Intentionally Omitted)
9. Restrictive Covenants
(a) Employee covenants and agrees that during the 24 months following the
termination of his employment with the Company for any reason (including,
without limitation, a Compensable Termination, a termination that is not a
Compensable Termination and a termination of employment following the expiration
of the Term of this Agreement), he will not engage in "Competition" with the
Company. For this purpose, "Competition" means -
i. directly or indirectly, taking or contracting to take a management,
advisory, operational, sales, employment or ownership position with, or control
of, a business engaged in the development, formulation, testing, manufacturing,
marketing, distribution or sale of pharmaceutical products (including, without
limitation, generic drug products, whether prescription or otherwise) or
services to the pharmaceutical industry; provided that in no event shall
ownership of less than 1% of the outstanding equity securities of any issuer
whose securities are registered under the Securities Exchange Act of 1934,
standing alone, be deemed Competition for this purpose and, provided further,
that this provision shall not restrict Employee from employment or other
association with the ethical portion of a pharmaceutical company or a
not-for-profit institution that is not developing generic pharmaceutical
products;
ii. soliciting any person or business who or which is a supplier,
customer or client of the Company or any of its subsidiaries or affiliates, on
behalf of a competitive business described in clause (i) above of this
subparagraph 9(a), or inducing any such person or business to terminate, reduce
or otherwise alter to the detriment of the Company, its subsidiaries or
affiliates their business with the Company, its subsidiaries or affiliates; or
iii. inducing or attempting to persuade any employee of the Company,
its subsidiaries or affiliates to terminate his or her employment relationship,
or offering employment to any employee of the Company, its subsidiaries or
affiliates on behalf of any person or entity other than the Company, its
subsidiaries or affiliates.
Employee further covenants and agrees that during such 24 months' period he will
not otherwise act or conduct himself to the detriment of the Company, its
subsidiaries or affiliates.
(b) Employee agrees not to disclose, either while in the Company's employ
or at any time thereafter, to any person not employed by the Company, or not
engaged to render services to the Company, except with the prior written consent
of an authorized officer of the Company or as necessary or appropriate for the
performance of his duties hereunder, any confidential information obtained by
him while in the employ of the Company, including, without limitation,
information relating to any of the inventions processes, formulae, plans,
devices, compilations of information, research, methods of distribution,
suppliers, customers, client relationships, marketing strategies, trade secrets
or other proprietary information of the Company, its subsidiaries or affiliates;
provided, however, that this provision shall not preclude Employee from use or
disclosure of information known generally to the public or from disclosure
required by law or court order. Employee agrees that, in the event his
employment with the Company
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terminates for any reason, he shall promptly return to the Company all property
of the Company, its subsidiaries and affiliates in his possession or under his
direct or indirect control, including without limitation any record, list,
drawing, blueprint, specification, material, document, diary or compilation of
data, whether printed, typed, handwritten, on diskette or on any other computer
media, relating to its or their methods of distribution, testing, suppliers,
customers, client relationships, marketing strategies, business plans or any
description of any formulae or secret processes, or which was obtained by him or
entrusted to him during the course of his employment with the Company.
(c) Employee recognizes and agrees that, by reason of his knowledge,
experience, skill and abilities, his services are extraordinary and unique, that
the breach or attempted breach of the restrictions set forth above in this
section will result in immediate and irreparable injury for which the Company
will not have an adequate remedy at law, and that the Company shall be entitled
to a decree of specific performance of those restrictions and to a temporary and
permanent injunction enjoining the breach thereof, and to seek any and all other
remedies to which the Company may be entitled, including, without limitation,
monetary damages, without posting bond or furnishing security of any kind.
(d) Employee agrees that the Company shall not be obligated to make any
payments or provide any benefits pursuant to this Agreement if Employee shall,
during the period in which such payments are being made or benefits provided,
engage in competition as defined above or otherwise act or conduct himself to
the detriment of the Company, its subsidiaries or affiliates. The foregoing
provisions of this subparagraph are in addition to and not by way of limitation
of any other rights and remedies available to the Company.
(e) Employee specifically and expressly represents and warrants that (i) he
has reviewed and agreed to the restrictive covenants contained in this Agreement
and their contemplated operation after receiving the advice of counsel of his
choosing; (ii) he believes, after receiving such advice, that the restrictive
covenants and their contemplated operation are fair and reasonable; (iii) he
will not seek or attempt to seek to have the restrictive covenants declared
invalid, and, after receiving the advice of counsel, expressly waives any right
to do so; and (iv) if the full breath of any restrictive covenant and/or its
contemplated operation shall be held in any fashion to be too broad, such
covenant or its contemplated operation, as the case may be, shall be interpreted
in a manner as broadly in favor of the beneficiary of such covenant as is
legally permissible. Employee recognizes and agrees that the restriction on his
activities contained in this section are required for the reasonable protection
of the Company and its investments.
10. Intellectual Property
Employee agrees that all "Intellectual Property" which is or was at any
time made or conceived by Employee, acting alone or in conjunction with others,
during Employee's employment with the Company, is or shall be the property of
the Company, free of any reserved or other rights of any kind on Employee's
part. During the Term of Employment and thereafter Employee shall promptly make
full disclosure of any such Intellectual Property to the Company and, at its
cost and expense, do all acts and things (including, among others, the exclusion
and delivery under oath of patent and copyright applications and instruments of
assignment) deemed
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by the Company to be necessary or desirable at any time in order to effect the
full assignment to the Company of Employee's right and title, if any, to such
Intellectual Property. For purposes of this Agreement, "Intellectual Property"
means any discovery, development, program, concept, idea, process or
improvement, whether or not patentable, relating to the present or planned
future activities, business, products or services of the Company, its
subsidiaries or affiliates.
11. Successors; Binding Agreement
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall entitle Employee to compensation under section 7 above and to
put shares to the Company pursuant to section 8 above, in the same amount and on
the same terms as he would be entitled to hereunder if his employment were
terminated by the Company other than for Disability or Cause, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the date of termination.
(b) As used in this Agreement, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers an agreement provided for in this section
11 or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(c) This Agreement and all rights of Employee hereunder shall inure to the
benefit of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributes, devisees and
legatees. If Employee should die while any amounts are due and payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid to
Employee's designated beneficiary or, if there be no such designated
beneficiary, whether because none was designated or because none is alive or in
existence at the time any amount becomes payable hereunder, to the legal
representatives of Employee's estate.
(d) Except as to withholding of any tax under the laws of the United States
or any other country, state or locality, neither this Agreement nor any right or
interest hereunder nor any amount payable at any time hereunder shall be subject
in any manner to alienation, sale, transfer, assignment, pledge, attachment, or
other legal process, or encumbrance of any kind by Employee or the beneficiaries
of Employee or by his legal representatives without the Company's prior written
consent, nor shall there be any right of set-off or counterclaim in respect of
any debts or liabilities of Employee, his beneficiaries or legal
representatives; provided, however, that nothing in this paragraph shall
preclude Employee from designating a beneficiary to receive any benefit payable
on his death, or the legal representatives of Employee from assigning any right
hereunder to the person or persons entitled thereto under his will, or in case
of intestacy, to the person or persons entitled thereto under the laws of
intestacy applicable to his estate.
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12. Agreement Binding
This Agreement shall be binding upon and shall inure to the benefit of
Employee, his heirs and legal representative(s), and the Company, its successors
and assigns and any person, firm, corporation or other entity which succeeds to
all or substantially all of the business, assets or property of the Company, as
provided in section 11 hereof.
13. General
(a) This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof and cancels and supersedes any and all
other agreements between the parties with respect to the subject matter hereof,
including the Employment Agreement between Employee and the Company dated
November 17, 1995.
(b) (Intentionally Omitted)
(c) Any modification of this Agreement shall not be binding unless in
writing and signed by the Company and Employee.
(d) Notwithstanding anything contained in this Agreement to the contrary,
to the extent that the payments and benefits provided under this Agreement (such
payments and benefits are collectively referred to as the "Payments"), when
added to the benefits provided to, or for the benefit of, Employee under any
other Company plan or agreement, would be subject to the excise tax (the "Excise
Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), the Payments shall be reduced (but not below zero) if and
to the extent necessary so that no Payment to made or provided to Employee shall
be subject to the Excise Tax (such reduced amount is hereinafter referred to as
the "Limited Payment Amount"). Unless Employee shall have given prior written
notice specifying a different order to the Company to effectuate the Limited
Payment Amount, the Company shall reduce or eliminate the Payments, by first
reducing or eliminating those payments or benefits which are not payable in cash
and then by reducing or eliminating cash payments, in each case in reverse order
beginning with payments or benefits which are to be paid the farthest in time
from the determination (as hereinafter defined). Any notice given by Employee
pursuant to the preceding sentence shall take precedence over the provisions of
any other plan, arrangement or agreement governing Employee's rights and
entitlements to any benefits or compensation.
14. Enforceability
In the event that any provision of this Agreement is determined to be
invalid or unenforceable, the remaining terms and conditions of this Agreement
shall be unaffected and shall remain in full force and effect, and any such
determination of invalidity or unenforceability shall not affect the validity or
enforceability of any other provision of this Agreement.
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15. Notices
All notices which may be necessary or proper for either the Company or
Employee to give to the other shall be in writing and shall be delivered by hand
or sent by registered or certified mail, return receipt requested, or by air
courier, to Employee at:
Frederick D. Sancilio, Ph.D.
5395 Pennock Point Road
Jupiter, FL 33458
, with a copy to:
Frederick D. Sancilio, Ph.D.
aaiPharma Inc.
1900 Eastwood Road, Suite 5
Wilmington, NC 28403
, and shall be sent in the manner described above to the Company at aaiPharma
Inc., 2320 Scientific Park Drive, Wilmington, NC 28405 Attn: Office of General
Counsel, or delivered by hand to its Secretary, and shall be deemed given when
sent, provided that any Notice of Termination or notice given pursuant to
section 2 hereof shall be deemed given only when received. Any party may by like
notice to the other party change the address at which he or it is to receive
notices hereunder.
16. Arbitration
Any controversy or claim arising out of, or relating to, this Agreement, or
the breach thereof, shall be settled by binding arbitration in the County of New
Hanover, State of North Carolina, in accordance with the rules then obtaining of
the American Arbitration Association, and the arbitrator's decision shall be
binding and final, and judgment upon the award rendered may be entered in any
court having jurisdiction thereof.
17. Governing Law
This Agreement shall be governed by and enforceable in accordance with the
laws of the State of North Carolina without giving effect to principles of
conflicts of laws thereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its proper representative and Employee has hereunto set his hand as of the date
first above written.
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AAIPHARMA INC.
/S/ Philip S. Tabbiner
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By: Philip S. Tabbiner, D.B.A.
[Seal] Title: President and Chief Executive Officer
Attest:
/S/ Albert N. Cavagnaro
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Secretary
EMPLOYEE
/s/ Frederick D. Sancilio
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Frederick D. Sancilio, Ph.D.
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EXHIBIT A
REGULATORY APPROVAL BONUS PROGRAM
Employee shall receive a bonus, as set forth below, for each regulatory approval
received by the Company for a regulatory filing submitted by the Company on or
after July 1, 2002 during the Term of employment. The bonus shall be payable
within forty-five (45) days of the first commercial sale of a product pursuant
to the approval:
Regulatory Filing Bonus Amount
New Drug Application $250,000
Supplemental New Drug Application or $ 50,000
Abbreviated New Drug Application
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