Exhibit 10.22
(KOS Logo) [g00234g0023401.gif]
October 14, 2005
- Revised -
CONFIDENTIAL
Mr. Kevin Clarke
130 Fairway Avenue
Verona, NJ 07044
Dear Kevin:
     I am delighted to confirm to you this offer of employment, which you have
accepted, as Executive Vice President and Chief Financial Officer at Kos
Pharmaceuticals. In this capacity you will report to me.
     Your date of hire will be November 1, 2005 and your salary, which will be
paid bi-weekly, will be at an annual rate of $370,000. On January 1, 2006 your
salary will be increased to an annual rate of $400,000 and your next salary
review will be in March 2007, consistent with Kos’ Performance Management
Program. You will also be paid a signing bonus of $300,000- $100,000 will be
paid upon your start date (payment will occur on the first pay-period after your
start date) and $200,000 will be paid on March 1, 2006, provided you are still
employed with the Company on that date. Your target performance bonus will be
around 50% of your current base compensation but not less than $250,000 for the
calendar year 2006, and not less than $300,000 for the calendar year 2007, based
on your continued employment and satisfactory performance. After 2007, you will,
of course, continue to be eligible for annual performance bonuses based on your
contributions and the results of the Company. Although it is impossible to
commit to what these bonus amounts might be, I would expect them to be at least
in line with the bonus awards paid to other executives at a similar level and
with comparable performance, generally around 50% of base compensation. These
bonus payments are usually made in the first quarter of the following calendar
year after review by the Compensation Committee of the Board of Directors.
     Subject to the approval of the Board of Directors, you will be granted an
option to purchase 100,000 shares of Kos common stock, consistent with the
Company’s 1996 Stock Option Plan (the “Stock Option Plan’’) that provides for
vesting of 25% of the option shares on each anniversary of your employment. The
exercise price of these options shall be the price of the stock on the day the
Board approves the award. You will receive detailed information about the Stock
Option Plan and specific exercise price under separate cover. Additionally,
subject to Board approval, you will receive 8,000 shares of fully paid and
non-assessable common stock of the Company, (the “Restricted Stock Shares”),
that will vest over a three-year period. In addition, consistent with Kos
Pharmaceuticals’ normal and customary incentive compensation awards, you will be
eligible for additional annual stock option grants and/or Restricted Stock
Shares. Such awards have traditionally been granted on an annual basis and it is
anticipated will continue to be an important element of our compensation plan.
However, such awards are granted at the sole discretion of the Compensation
Committee of the Board of Directors and based on individual and company
performance.

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Kevin Clarke-Revised
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     You will be eligible for all Company benefit plans, consistent with the
enclosed information regarding our benefits programs, plus an added health
insurance benefit for Corporate officers (which is not included in the
accompanying information), subject to the terms of such plans. Eligibility for
medical insurance will begin on December 1, 2005, and for the 401(k) plan, on
March 1, 2006. You will be eligible for four weeks of paid vacation in addition
to the Kos standard fifteen paid holidays and an automobile allowance or a
leased car with a retail value of up to $70,000. You have the option of either
leasing the chosen car through the Company’s fleet vendor, or receiving the
equivalent cash value of the lease option as a cash payment paid each pay
period. Both of these options include allowances for insurance and maintenance.
     In the event of a “Change in Control’’, you may elect, at any time during
the 90-day period immediately following such change in control, to deliver
written notice to the Company of your termination of employment. For purposes of
this agreement, a Change on Control shall be deemed to have occurred when:
     (i) any person, including a “group’’ as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, other than Michael Jabaris or any
of his family members or affiliates, becomes the beneficial owner of fifty
percent or more of the capital stock of the Company;
     (ii) the Company is merged with or into any other company where members of
the Board of Directors of the Company immediately prior to such transaction do
not constitute a majority of the Board of Directors of the Company or the
surviving entity immediately following such transaction; or
     (iii) substantially all of the Company’s assets are acquired by any third
party not an affiliate of the Company or of Michael Jaharis, or any of his
family members or affiliates.
     In the event of the termination of your employment with the Company, for
any reason other than death or disability, the Company shall provide the
payments and benefits to you as listed below:

  (a)   Following a Change in Control: All unvested stock options and Restricted
Stock Shares previously awarded shall be 100% vested effective as of the date of
such Change in Control or upon termination following such Change in Control plus
one years’ compensation to include both your current base compensation and
either (a) the agreed guaranteed bonus (if such termination occurs in the
calendar years 2006 or 2007) or (b) a target bonus of no less than 50% of the
current base compensation.     (b)   Termination for cause as defined in section
6(f)(3) of the Stock Option Plan, any unvested part of the options shall lapse
immediately upon the earlier of the occurrence of such event or the last day
that you are employed by or affiliated with the Company.     (c)   Termination
voluntarily without cause: In the event your employment or affiliation with the
Company ceases for any reason other than (a) (b) or (d) or death or retirement,
all unvested stock options shall expire thirty days following the last day of
employment. However, should you be terminated prior to the first anniversary of
your initial employment date, you will immediately vest in 25% of you initial
stock option grant (25,000 stock options shares) and these shares will be
exercisable consistent with the terms provided in the Company’s 1996 Stock
Option Plan. all Restricted Stock Shares previously awarded shall be 100% vested
immediately upon termination.

 

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Kevin Clarke-Revised
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  (d)   In the event that you are terminated involuntarily without cause: Stock
options previously awarded to you shall continue to vest for two years from the
date of termination (as though you were still employed by the Company)
consistent with the Company’s 1996 Stock Option Plan. All Restricted Stock
Shares previously awarded shall be 100% vested immediately upon termination. In
addition, you will receive one years’ compensation to include both your current
base compensation and either (a) the agreed guaranteed bonus (if such
termination occurs in the calendar years 2006 or 2007) or (b) a target bonus of
no less than 50% of the current base compensation.     (e)   In either the event
of a Change in Control or termination for cause, voluntarily or involuntarily,
you will also be paid any unused vacation entitlement.

     As a condition of your employment, you will be required to sign (i) the
Procedures and Guidelines Governing Insider Trading and Disclosure, (ii) a
Confidentiality and Intellectual Property Agreement, and (iii) an Electronic and
Telephonic Communications Policy. Two copies of each document are enclosed;
please sign one copy and return it in the enclosed envelope (the other copy is
for you to retain). This offer is also contingent upon successful completion of
the Kos background check and drug screen. Information regarding our drug
screening process is enclosed in your offer package. Please contact Jessica
Zenkert in the Human Resources Department at (609) 495-0512 should you need
assistance in scheduling you drug screen.
     As an employee of Kos Pharmaceuticals, Inc., you will be an at-will
employee, and your employment is for an indefinite period to time and may be
terminated by you, or the Company, at any time, for any reason.
     On behalf of both Mike Jaharis, Dan Bell and the Kos Leadership Team, we
are genuinely pleased about your becoming a key member of senior management at
Kos. We have much to do and our future is very bright, as we continue
“Pioneering Medicines for a Better Life”. I look forward to forming a strong
working relationship with you and to all of the contributions that I know you
will bring to Kos — a Company that is the sixth fastest growing Company in the
USA.
Cordinally,
/s/ Adrian Adams

Adrian Adams
President and CEO
AA/ova
cc: Susan E. Taylor