EXHIBIT 10.9.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of February 6,
2003, by and between Pharmaceutical Resources, Inc., a New Jersey corporation
("Resources"), and Scott L. Tarriff ("Executive").
R E C I T A L S :
A. WHEREAS, Executive is presently employed by Resources in
the capacities of Executive Vice President of Resources and President and Chief
Executive Officer of Resources's wholly-owned subsidiary, Par Pharmaceutical,
Inc. ("Par" and, together with Resources, "Employer"), and currently serves as a
member of the Board of Directors of Resources (the "Board"); and
B. WHEREAS, Employer and Executive desire to cancel and
replace Executive's existing employment agreement, dated February 20, 1998, as
modified from time to time (the "Existing Employment Agreement"), and enter into
this Agreement in order for Executive to continue to perform the duties
associated with his positions with Employer on the terms and conditions set
forth herein.
In consideration of the mutual promises herein contained, the
parties hereto hereby agree as follows:
1. EMPLOYMENT.
1.1. GENERAL. Resources hereby employs Executive in
the capacities of Executive Vice President of Resources and President and Chief
Executive Officer of Par at the compensation rate and benefits set forth in
Section 2 hereof for the Employment Term (as defined in Section 3.1 hereof).
Executive hereby accepts such employment, subject to the terms and conditions
herein contained. In all such capacities, Executive shall perform and carry out
such duties and responsibilities as may be assigned to him from time to time by
the Board and by the Chief Executive Officer of Resources reasonably consistent
with Executive's positions and this Agreement, and shall report to the Board and
the Chief Executive Officer of Resources.
1.2. TIME DEVOTED TO POSITION. Executive, during the
Employment Term, shall devote substantially all of his business time, attention
and skills to the business and affairs of Employer.
1.3. CERTIFICATIONS. Whenever the Chief Executive
Officer and/or Chief Financial Officer of Resources are required by law, rule or
regulation or requested by any governmental authority or by Resources's or Par's
auditors to provide certifications with respect to Resources's or Par's
financial statements or filings with the Securities and Exchange Commission or
any other governmental authority, Executive shall sign such certifications as
may be reasonably requested by such officers, Resources and/or Par, with such
exceptions as Executive deems necessary to make such certifications accurate and
not misleading.
2. COMPENSATION AND BENEFITS.
2.1. SALARY. At all times Executive is employed
hereunder, Employer shall pay to Executive, and Executive shall accept, as full
compensation for any and all services rendered and to be rendered by him during
such period to Employer in all capacities, including, but not limited to, all
services that may be rendered by him to any of Employer's existing subsidiaries,
entities and organizations hereafter formed, organized or acquired by Employer,
directly or indirectly (each, a "Subsidiary" and collectively, the
"Subsidiaries"), the following: (i) a base salary at the annual rate of
$300,000, or at such increased rate as the Board (through its Compensation and
Exhibit 10.9.2 - Page 1
Stock Option Committee), in its sole discretion, may hereafter from time to time
grant to Executive, subject to adjustment in accordance with Section 2.2 hereof
(as so adjusted, the "Base Salary"); and (ii) any additional bonus and the
benefits set forth in Sections 2.3, 2.4 and 2.5 hereof. The Base Salary shall be
payable in accordance with the regular payroll practices of Employer applicable
to senior executives, less such deductions as shall be required to be withheld
by applicable law and regulations or otherwise.
2.2. ADJUSTMENTS IN BASE SALARY. On each October 1
during the Employment Term, the Base Salary shall be increased by that
percentage, if any, by which the Consumer Price Index, Urban Wage Earners and
Clerical Workers, for the New York City metropolitan area, published by the
United States Government as of the month of September of such year exceeds such
Index for the immediately preceding September.
2.3. BONUS. Subject to Section 3.3 hereof, Executive
shall be entitled to an annual bonus during the Employment Term in such amount
(if any) as determined by the Board based on such performance criteria as it
deems appropriate, including, without limitation, Executive's performance and
Employer's earnings, financial condition, rate of return on equity and
compliance with regulatory requirements. The target amount of Executive's annual
bonus shall be fifty (50%) percent of the Base Salary.
2.4. STOCK OPTIONS. Executive shall be entitled to
participate in stock option and similar equity plans of Employer. In connection
herewith, Executive has been granted options to purchase 200,000 shares of
common stock of Resources on terms and conditions set forth in the 2001
Performance Equity Plan and Executive's Stock Option Agreement with Resources.
Executive shall be entitled to any additional annual stock option grants
provided at the discretion of the Board commencing in January 2004.
2.5. EXECUTIVE BENEFITS.
2.5.1. EXPENSES. Employer shall promptly
reimburse Executive for expenses he reasonably incurs in connection with the
performance of his duties (including business travel and entertainment expenses)
hereunder, all in accordance with Employer's policies with respect thereto as in
effect from time to time.
2.5.2. EMPLOYER PLANS. Executive shall be
entitled to participate in such employee benefit and welfare plans and programs
as Employer may from time to time generally offer or provide to executive
officers of Employer or its Subsidiaries, including, but not limited to,
participation in life insurance, health and accident, medical plans and programs
and profit sharing and retirement plans.
2.5.3. VACATION. Executive shall be entitled to
four (4) weeks of paid vacation per calendar year, prorated for any partial
year.
2.5.4. AUTOMOBILE. Employer shall provide
Executive with an automobile cash allowance commensurate with his titles and
positions.
2.5.5. LIFE INSURANCE. Employer shall obtain
(PROVIDED, that Executive qualifies on a non-rated basis) a term life insurance
policy, the premiums of which shall be borne by Employer and the death benefits
of which shall be payable to Executive's estate, or as otherwise directed by
Executive, in the amount of $3 million throughout the Employment Term.
3. EMPLOYMENT TERM; TERMINATION.
3.1. EMPLOYMENT TERM. Executive's employment
hereunder shall commence on the date hereof and, except as otherwise provided in
Section 3.2 hereof, shall continue until the third (3rd) anniversary of the date
of this Agreement (the "Initial Term"). Thereafter, this Agreement shall
automatically be renewed for successive one-year periods commencing on the third
(3rd) anniversary of the date of this Agreement in each subsequent year (the
Initial Term, together with any such subsequent employment period(s), being
referred to herein as the "Employment Term"), unless Executive or Employer shall
have provided a Notice of Termination (as defined in Section 3.4.2 hereof) in
respect of its or his election not to renew the Employment Term to the other
party at least 180 days prior to such termination. Upon non-renewal of the
Employment Term pursuant to this Section 3.1 or termination pursuant to Sections
Exhibit 10.9.2 - Page 2
3.2.1 through 3.2.6 hereof, inclusive, Executive shall be released from any
duties hereunder (except as set forth in Section 4 hereof) and the obligations
of Employer to Executive shall be as set forth in Section 3.3 hereof only.
3.2. EVENTS OF TERMINATION. The Employment Term shall
terminate upon the occurrence of any one or more of the following events:
3.2.1. DEATH. In the event of Executive's death,
the Employment Term shall terminate on the date of his death.
3.2.2. WITHOUT CAUSE BY EXECUTIVE. Executive may
terminate the Employment Term at any time during such Term for any reason
whatsoever by giving a Notice of Termination to Employer. The Date of
Termination pursuant to this Section 3.2.2 shall be thirty (30) days after the
Notice of Termination is given.
3.2.3. DISABILITY. In the event of Executive's
Disability (as hereinafter defined), Employer may, at its option, terminate the
Employment Term by giving a Notice of Termination to Executive. The Notice of
Termination shall specify the Date of Termination, which date shall not be
earlier than thirty (30) days after the Notice of Termination is given. For
purposes of this Agreement, "Disability" means disability as defined in any
long-term disability insurance policy provided by Employer and insuring
Executive, or, in the absence of any such policy, the inability of Executive for
180 days in any twelve (12) month period to substantially perform his duties
hereunder as a result of a physical or mental illness, all as determined in good
faith by the Board.
3.2.4. CAUSE. Employer may, at its option,
terminate the Employment Term for "Cause" based on objective factors determined
in good faith by a majority of the Board as set forth in a Notice of Termination
to Executive specifying the reasons for termination and the failure of the
Executive to cure the same within ten (10) days after Employer shall have given
the Notice of Termination; PROVIDED, HOWEVER, that in the event the Board in
good faith determines that the underlying reasons giving rise to such
determination cannot be cured, then the ten- (10) day period shall not apply and
the Employment Term shall terminate on the date the Notice of Termination is
given. For purposes of this Agreement, "Cause" shall mean (i) Executive's
conviction of, guilty or no contest plea to, or confession of guilt of, a felony
or other crime involving moral turpitude; (ii) an act or omission by Executive
in connection with his employment that constitutes fraud, criminal misconduct,
breach of fiduciary duty, dishonesty, gross negligence, malfeasance, willful
misconduct or other conduct that is materially harmful or detrimental to
Employer; (iii) a material breach by Executive of this Agreement; (iv)
continuing failure to perform such duties as are assigned to Executive by
Employer in accordance with this Agreement, other than a failure resulting from
a Disability; (v) Executive's knowingly taking any action on behalf of Employer
or any of its affiliates without appropriate authority to take such action; (vi)
Executive's knowingly taking any action in conflict of interest with Employer or
any of its affiliates given Executive's position with Employer; and/or (vii) the
commission of an act of personal dishonesty by Executive that involves personal
profit in connection with Employer.
3.2.5. WITHOUT CAUSE BY EMPLOYER. Employer may,
at its option, terminate the Employment Term for any reason or no reason
whatsoever (other than for the reasons set forth elsewhere in this Section 3.2)
by giving a Notice of Termination to Executive. The Notice of Termination shall
specify the Date of Termination, which date shall not be earlier than thirty
(30) days after the Notice of Termination is given.
3.2.6. EMPLOYER'S MATERIAL BREACH. Executive
may, at his option, terminate the Employment Term upon Employer's material
breach of this Agreement and the continuation of such breach for more than ten
(10) days after written demand for cure of such breach is given to Employer by
Executive (which demand shall identify the manner in which Employer has
materially breached this Agreement). Employer's material breach of this
Agreement shall mean (i) the failure of Employer to make any payment that it is
required to make hereunder to Executive when such payment is due or within two
(2) business days thereafter; (ii) the assignment to Executive, without
Executive's express written consent, of duties inconsistent with his positions,
responsibilities and status with Employer, or a change in Executive's reporting
responsibilities, titles or offices or any plan, act, scheme or design to
constructively terminate the Executive, or any removal of Executive from his
positions with Employer, except in connection with the termination of the
Exhibit 10.9.2 - Page 3
Employment Term by Employer for Cause, without Cause or Disability or as a
result of Executive's death or voluntary resignation or by Executive other than
pursuant to this Section 3.2.6; (iii) a reduction by Employer in Executive's
Base Salary; or (iv) a permanent reassignment of Executive's primary work
location, without the consent of Executive, to a location more than 35 miles
from Employer's executive offices in Woodcliff Lake, New Jersey.
3.3. CERTAIN OBLIGATIONS OF EMPLOYER FOLLOWING
TERMINATION OF THE EMPLOYMENT TERM. Following termination of the Employment Term
under the circumstances described below, Employer shall pay to Executive or his
estate, as the case may be, the following compensation and provide the following
benefits in full satisfaction and final settlement of any and all claims and
demands that Executive now has or hereafter may have hereunder against Employer.
In connection with Executive's receipt of any or all monies and benefits to be
received pursuant to this Section 3.3, Executive shall not have a duty to seek
subsequent employment during the period in which he is receiving severance
payments and the Severance Amount (as defined in Section 3.3.2 hereof) shall not
be reduced solely as a result of Executive's subsequent employment by an entity
other than Employer.
3.3.1. FOR CAUSE. In the event that the
Employment Term is terminated by Employer for Cause, Employer shall pay to
Executive, in a single lump-sum, an amount equal to any unpaid but earned Base
Salary through the Date of Termination.
3.3.2. WITHOUT CAUSE BY EMPLOYER; MATERIAL
BREACH BY EMPLOYER; ELECTION NOT TO RENEW BY EMPLOYER. In the event that the
Employment Term is terminated by Employer pursuant to Section 3.2.5 hereof or by
Executive pursuant to Section 3.2.6 hereof or Employer elects not to renew this
Agreement at any time pursuant to Section 3.1 hereof, Employer shall pay to
Executive, subject to Executive's continued compliance with the terms of Section
4 hereof, an amount equal to (i) if such termination is effective (subject to
clause (ii) of this Section 3.3.2) before July 15, 2003, two times the Base
Salary in effect at such applicable time, or (ii) if such termination is
effective after July 15, 2003 or at any time after a Change of Control (as
defined in Section 3.4.1 hereof) of Employer, $1 million ((i) or (ii), as
applicable, the "Severance Amount"). Any payments made in accordance with this
Section 3.3.2 shall be made in twelve (12) equal installments over the course of
one (1) year from the Date of Termination in accordance with Employer's regular
payroll practices.
3.3.3 WITHOUT CAUSE BY EXECUTIVE; ELECTION NOT
TO RENEW BY EXECUTIVE. In the event that the Employment Term is terminated by
Executive pursuant to Section 3.2.2 hereof or Executive elects not to renew this
Agreement at any time pursuant to Section 3.1 hereof, Employer shall pay to
Executive, in a single lump-sum, an amount equal to any unpaid but earned Base
Salary through the Date of Termination.
3.3.4. DEATH, DISABILITY. In the event that the
Employment Term is terminated by reason of Executive's death pursuant to Section
3.2.1 hereof or by Employer by reason of Executive's Disability pursuant to
Section 3.2.3 hereof, Employer shall pay to Executive, subject to, in the case
of Disability, Executive's continued compliance with the terms of Section 4
hereof, the Severance Amount, less any life insurance and/or disability
insurance benefits received by Executive or his estate pursuant to insurance
policies provided by Employer (including pursuant to Section 2.5.5 hereof),
payable in accordance with Section 3.3.2 hereof.
3.3.5. POST-EMPLOYMENT TERM BENEFITS. In the
event Executive is terminated pursuant to Sections 3.2.1 through 3.2.6 hereof,
inclusive, or either Employer or Executive elects not to renew this Agreement
pursuant to Section 3.1 hereof, Employer shall reimburse Executive for any
unpaid expenses pursuant to Section 2.5.1 hereof and if Executive is terminated
pursuant to Sections 3.2.3, 3.2.5 or 3.2.6 hereof or Employer elects not to
renew this Agreement pursuant to Section 3.1 hereof, Employer shall pay, on
behalf of Executive, for a period equal to twenty-four (24) months from the Date
of Termination (the "Benefits Period"), subject to Executive's continued
compliance with the terms of Section 4 hereof, all life insurance, medical,
health and accident, and disability plans and programs in which Executive was
entitled to participate immediately prior to the Date of Termination; PROVIDED,
that Executive's continued participation is legally possible under the general
terms and provisions of such plans and programs; and PROVIDED, FURTHER, that in
the event Executive is entitled to equal or comparable benefits from a
subsequent employer during the Benefits Period, Employer's obligation with
respect thereto pursuant to this Section 3.3.5 shall end as of such date. In the
event that Executive's participation in any such plan or program is barred,
Employer, at its sole cost and expense, shall use its commercially reasonable
efforts to provide Executive with benefits substantially similar to those that
Exhibit 10.9.2 - Page 4
Executive was entitled to receive under such plans and programs for the
remainder of the Benefits Period.
3.3.6. STOCK OPTIONS.
(a) If, within twelve (12) months following a
Change of Control (as defined in Section 3.4.1 hereof) of Employer, the
Employment Term is terminated other than for Cause, then Executive (or his
estate) shall have twenty-four (24) months from the date of such event to
exercise such stock options; PROVIDED, that the relevant stock option plan
remains in effect and such stock options shall not have otherwise expired in
accordance with the terms thereof. In connection therewith, Employer agrees to
use commercially reasonable efforts to amend Executive's Stock Option Agreements
if necessary to effectuate the provisions of this Section 3.3.6(a).
(b) In the event the Employment Term is
terminated (i) by Employer pursuant to Section 3.2.5
hereof and the reason for such termination is not related to the performance of
Executive in his duties with respect to Employer, or (ii) by Executive pursuant
to Section 3.2.6 hereof, then all stock options theretofore granted to Executive
shall thereupon vest and Executive shall have twenty-four (24) months from such
date to exercise such options; PROVIDED, that the relevant stock option plan
remains in effect and such stock options shall not have otherwise expired in
accordance with the terms thereof. In connection therewith, Employer agrees to
use commercially reasonable efforts to amend Executive's Stock Option Agreements
if necessary to effectuate the provisions of this Section 3.3.6(b).
3.4. DEFINITIONS.
3.4.1. "CHANGE OF CONTROL" DEFINED. A "Change of
Control" of Employer means (i) the approval by the stockholders of Resources of
the sale, lease, exchange or other transfer (other than pursuant to internal
reorganization) by Resources or Par of all or substantially all of its
respective assets to a single purchaser or to a group of associated purchasers;
(ii) the first purchase of shares of equity securities of Par or Resources
pursuant to a tender offer or exchange offer (other than an offer by Par or
Resources) for at least fifteen (15%) percent of the equity securities of Par or
Resources; (iii) the approval by the stockholders of Resources of an agreement
for a merger or consolidation in which neither Par nor Resources shall survive
as an independent, publicly-owned corporation; (iv) the acquisition (including
by means of a merger) by a single purchaser or a group of associated purchasers
of securities of Par or Resources from either Par or Resources or any third
party representing thirty-five (35%) percent or more of the combined voting
power of Par's or Resources's then outstanding equity securities in one or a
related series of transactions (other than pursuant to an internal
reorganization) or (v) the change of the membership of a majority of the Board
during any period of two (2) consecutive years, unless the election, or the
nomination for election by Resources's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors of the Board still in
office who were directors of Resources at the beginning of the period.
3.4.2. "NOTICE OF TERMINATION" DEFINED. "Notice
of Termination" means a written notice that indicates the specific termination
provision relied upon by Employer or Executive and, except in the case of
termination pursuant to Sections 3.2.1, 3.2.2 or 3.2.5 hereof, that sets forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employment Term under the termination provision so indicated.
3.4.3. "DATE OF TERMINATION" DEFINED. "Date of
Termination" means such date as the Employment Term is expired if not renewed or
terminated in accordance with Sections 3.1 or 3.2 hereof.
4. CONFIDENTIALITY AND NONSOLICITATION; PROPERTY RIGHTS.
4.1. "CONFIDENTIAL INFORMATION" DEFINED.
"Confidential Information" means any and all information (oral or written)
relating to Employer or any Subsidiary or any entity controlling, controlled by,
or under common control with Employer or any Subsidiary or any of their
respective activities, including, but not limited to, information relating to:
technology, research, test procedures and results, machinery and equipment;
Exhibit 10.9.2 - Page 5
manufacturing processes; financial information; products; identity and
description of materials and services used; purchasing; costs; pricing;
customers and prospects; advertising, promotion and marketing; and selling,
servicing and information pertaining to any governmental investigation, except
such information which becomes public, other than as a result of a breach of the
provisions of Section 4.2 hereof.
4.2. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
Executive shall not at any time (other than as may be required or appropriate in
connection with the performance by him of his duties hereunder), directly or
indirectly, use, communicate, disclose or disseminate any Confidential
Information in any manner whatsoever (except as may be required under legal
process by subpoena or other court order).
4.3. CERTAIN ACTIVITIES. Executive shall not, while
employed by Resources and for a period of two (2) years following the Date of
Termination, directly or indirectly, hire, offer to hire, entice away or in any
other manner persuade or attempt to persuade any officer, employee, agent,
lessor, lessee, licensor, licensee or supplier of Employer or any of its
Subsidiaries to discontinue or alter his or its relationship with Employer or
any of its Subsidiaries.
4.4. NON-COMPETITION. Executive shall not, while
employed by Resources and for a period of one (1) year following the Date of
Termination, engage or participate in, directly or indirectly (whether as an
officer, director, employee, partner, consultant, equityholder, lender or
otherwise), any business that manufactures, markets or sells products that
compete with any product of Employer that is significant to Employer's business
based on sales and/or profitability of any such product as of the Date of
Termination, unless the Employment Term is terminated by Employer pursuant to
Section 3.2.5 hereof or by Executive properly pursuant to Section 3.2.6 hereof.
Nothing herein shall prohibit Executive from being a passive owner of not more
than one (1%) percent of any publicly-traded class of capital stock of any
entity engaged in a competing business.
4.5. PROPERTY RIGHTS; ASSIGNMENT OF INVENTIONS. With
respect to information, inventions and discoveries or any interest in any
copyright and/or other property right developed, made or conceived of by
Executive, either alone or with others, at any time during his employment by
Employer and whether or not within working hours, arising out of such employment
or pertinent to any field of business or research in which, during such
employment, Employer is engaged or (if such is known to or ascertainable by
Executive) is considering engaging, Executive hereby agrees:
(a) that all such information, inventions and
discoveries or any interest in any copyright and/or other property right,
whether or not patented or patentable, shall be and remain the exclusive
property of Employer;
(b) to disclose promptly to an authorized
representative of Employer all such information, inventions and discoveries or
any copyright and/or other property right and all information in Executive's
possession as to possible applications and uses thereof;
(c) not to file any patent application relating to
any such invention or discovery except with the prior written consent of an
authorized officer of Employer (other than Executive);
(d) that Executive hereby waives and releases any and
all rights Executive may have in and to such information, inventions and
discoveries, and hereby assigns to Executive and/or its nominees all of
Executive's right, title and interest in them, and all Executive's right, title
and interest in any patent, patent application, copyright or other property
right based thereon. Executive hereby irrevocably designates and appoints
Employer and each of its duly authorized officers and agents as his agent and
attorney-in-fact to act for him and on his behalf and in his stead to execute
and file any document and to do all other lawfully permitted acts to further the
prosecution, issuance and enforcement of any such patent, patent application,
copyright or other property right with the same force and effect as if executed
and delivered by Executive; and
(e) at the request of Employer, and without expense
to Executive, to execute such documents and perform such other acts as Employer
deems necessary or appropriate, for Employer to obtain patents on such
Exhibit 10.9.2 - Page 6
inventions in a jurisdiction or jurisdictions designated by Employer, and to
assign to Employer or its designee such inventions and any and all patent
applications and patents relating thereto.
4.6. INJUNCTIVE RELIEF. The parties hereby
acknowledge and agree that (a) Employer will be irreparably injured in the event
of a breach by Executive of any of his obligations under this Section 4; (b)
monetary damages will not be an adequate remedy for any such breach; (c)
Employer will be entitled to injunctive relief, in addition to any other remedy
which it may have, in the event of any such breach; and (d) the existence of any
claims that Executive may have against Employer, whether under this Agreement or
otherwise, will not be a defense to the enforcement by Employer of any of its
rights under this Section 4.
4.7. NON-EXCLUSIVITY AND SURVIVAL. The covenants of
Executive contained in this Section 4 are in addition to, and not in lieu of,
any obligations that Executive may have with respect to the subject matter
hereof, whether by contract, as a matter of law or otherwise, and such covenants
and their enforceability shall survive any termination of the Employment Term by
either party and any investigation made with respect to the breach thereof by
Employer at any time.
5. MISCELLANEOUS PROVISIONS.
5.1. SEVERABILITY. If, in any jurisdiction, any term
or provision hereof is determined to be invalid or unenforceable, (a) the
remaining terms and provisions hereof shall be unimpaired; (b) any such
invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction; and (c) the
invalid or unenforceable term or provision shall, for purposes of such
jurisdiction, be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision.
5.2. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement (and all
signatures need not appear on any one counterpart), and this Agreement shall
become effective when one or more counterparts has been signed by each of the
parties hereto and delivered to each of the other parties hereto.
5.3. NOTICES. All notices, requests, demands and
other communications hereunder shall be in writing and shall be deemed duly
given upon receipt when delivered by hand, overnight delivery or telecopy (with
confirmed delivery), or three (3) business days after posting, when delivered by
registered or certified mail or private courier service, postage prepaid, return
receipt requested, as follows:
If to Employer, to:
Pharmaceutical Resources, Inc.
One Ram Ridge Road
Spring Valley, New York 10977
Attention: Vice President - Finance and
Administration
Telecopy No.: (845) 425-7922
Copy to:
Stephen A. Ollendorff, Esq.
Whitney John Smith, Esq.
Kirkpatrick & Lockhart LLP
599 Lexington Avenue
New York, New York 10022
Telecopy No.: (212) 536-3901
Exhibit 10.9.2 - Page 7
If to Executive, to:
Scott L. Tarriff
c/o Pharmaceutical Resources, Inc.
One Ram Ridge Road
Spring Valley, New York 10977
or to such other address(es) as a party hereto shall have designated by like
notice to the other parties hereto.
5.4. AMENDMENT. No provision of this Agreement may be
modified, amended, waived or discharged in any manner except by a written
instrument executed by both Resources and Executive.
5.5. ENTIRE AGREEMENT. This Agreement and, with
respect to Section 3.3.6 hereof, Executive's Stock Option Agreements and the
governing stock option plans constitute the entire agreement of the parties
hereto with respect to the subject matter hereof, and supersede all prior
agreements and understandings of the parties hereto, oral or written, including,
but not limited to, the Existing Employment Agreement and that certain Trade
Secret, Non-Disclosure and Restrictive Covenant Agreement, dated as of October
19, 1999 (the "Restrictive Covenant Agreement"), with respect to the subject
matter hereof. Executive and Employer hereby agree that each of the Existing
Employment Agreement and the Restrictive Covenant Agreement is hereby superseded
and of no further force and effect, and that this Agreement shall be effective
as of the date hereof. In the event of any conflict between Section 3.3.6 hereof
and Executive's Stock Option Agreements and the governing stock option plans,
Section 3.3.6 shall govern.
5.6. APPLICABLE LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be wholly performed therein.
5.7. HEADINGS. The headings contained herein are for
the sole purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Agreement.
5.8. BINDING EFFECT; SUCCESSORS AND ASSIGNS.
Executive may not delegate any of his duties or assign his rights hereunder.
This Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and their respective heirs, legal representatives, successors and
permitted assigns. Employer shall require any successor (whether direct or
indirect and whether by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer, by an agreement in
form and substance reasonably satisfactory to Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Employer would be required to perform if no such succession had taken place.
5.9. WAIVER, ETC. The failure of either of the
parties hereto to at any time enforce any of the provisions of this Agreement
shall not be deemed or construed to be a waiver of any such provision, nor to in
any way affect the validity of this Agreement or any provision hereof or the
right of either of the parties hereto thereafter to enforce each and every
provision of this Agreement. No waiver of any breach of any of the provisions of
this Agreement shall be effective unless set forth in a written instrument
executed by the party against whom or which enforcement of such waiver is
sought, and no waiver of any such breach shall be construed or deemed to be a
waiver of any other or subsequent breach.
5.10. CAPACITY, ETC. Executive and Employer hereby
represent and warrant to the other that, as the case may be: (a) he or it has
full power, authority and capacity to execute and deliver this Agreement, and to
perform his or its obligations hereunder; (b) such execution, delivery and
performance shall not (and with the giving of notice or lapse of time or both
would not) result in the breach of any agreements or other obligations to which
he or it is a party or he or it is otherwise bound; and (c) this Agreement is
his or its valid and binding obligation in accordance with its terms.
5.11. ENFORCEMENT; JURISDICTION. If any party
institutes legal action to enforce or interpret the terms and conditions of this
Agreement, the prevailing party shall be awarded reasonable attorneys' fees at
all trial and appellate levels, and the expenses and costs incurred by such
prevailing party in connection therewith. Any legal action, suit or proceeding,
in equity or at law, arising out of or relating to this Agreement shall be
instituted exclusively in the State or Federal courts located in the State and
County of New York and each party agrees not to assert, by way of motion, as a
Exhibit 10.9.2 - Page 8
defense or otherwise, in any such action, suit or proceeding, any claim that
such party is not subject personally to the jurisdiction of any such court, that
the action, suit or proceeding is brought in an inconvenient forum, that the
venue of the action, suit or proceeding is improper or should be transferred, or
that this Agreement or the subject matter hereof may not be enforced in or by
any such court. Each party further irrevocably submits to the jurisdiction of
any such court in any such action, suit or proceeding. Any and all service of
process and any other notice in any such action, suit or proceeding shall be
effective against any party if given personally or by registered or certified
mail, return receipt requested or by any other means of mail that requires a
signed receipt, postage prepaid, mailed to such party as herein provided.
Nothing herein contained shall be deemed to affect or limit the right of any
party to serve process in any other manner permitted by applicable law.
5.12. ARBITRATION.
(a) Any dispute under Section 3 hereof,
including, but not limited to, the determination by the Board of a termination
for Cause pursuant to Section 3.2.4 hereof, or in respect of the breach thereof
shall be settled by arbitration in the Borough of Manhattan, City of New York.
The arbitration shall be accomplished in the following manner. Either party may
serve upon the other party written demand that the dispute, specifying the
nature thereof, shall be submitted to arbitration. Within ten (10) days after
such demand is given in accordance with Section 5.3 hereof, each of the parties
shall designate an arbitrator and provide written notice of such appointment
upon the other party. If either party fails within the specified time to appoint
such arbitrator, the other party shall be entitled to appoint both arbitrators.
The two (2) arbitrators so appointed shall appoint a third arbitrator. If the
two arbitrators appointed fail to agree upon a third arbitrator within ten (10)
days after their appointment, then an application may be made by either party
hereto, upon written notice to the other party, to the American Arbitration
Association (the "AAA"), or any successor thereto, or if the AAA or its
successor fails to appoint a third arbitrator within ten (10) days after such
request, then either party may apply, with written notice to the other, to the
Supreme Court of the State of New York, New York County, for the appointment of
a third arbitrator, and any such appointment so made shall be binding upon both
parties hereto.
(b) The decision of the arbitrators shall be
final and binding upon the parties. The party against whom the award is rendered
(the "non-prevailing party") shall pay all fees and expenses incurred by the
prevailing party in connection with the arbitration (including fees and
disbursements of the prevailing party's counsel), as well as the expenses of the
arbitration proceeding. The arbitrators shall determine in their decision and
award which of the parties is the prevailing party, which is the non-prevailing
party, the amount of the fees and expenses of the prevailing party and the
amount of the arbitration expenses. The arbitration shall be conducted, to the
extent consistent with this Section 5.12, in accordance with the then prevailing
rules of commercial arbitration of the AAA or its successor. The arbitrators
shall have the right to retain and consult experts and competent authorities
skilled in the matters under arbitration, but all consultations shall be made in
the presence of both parties, who shall have the full right to cross-examine the
experts and authorities. The arbitrators shall render their award, upon the
concurrence of at least two of their number, not later than thirty (30) days
after the appointment of the third arbitrator. The decision and award shall be
in writing, and counterpart copies shall be delivered to each of the parties. In
rendering an award, the arbitrators shall have no power to modify any of the
provisions of this Agreement, and the jurisdiction of the arbitrators is
expressly limited accordingly. Judgment may be entered on the award of the
arbitrators and may be enforced in any court having jurisdiction.
[SIGNATURE PAGE FOLLOWS]
Exhibit 10.9.2 - Page 9
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.
PHARMACEUTICAL RESOURCES, INC.
By: /s/ Kenneth I. Sawyer
-----------------------------
Name: Kenneth I. Sawyer
Title: Chief Executive Officer
/s/ Scott L. Tarriff
--------------------
Scott L. Tarriff
Exhibit 10.9.2 - Page 10