EX-10.13 Employment Agreement



 




EXHIBIT 10.13









January 16, 2008




Mr. Leo Pavliv

707 Walcott Way

Cary, NC 27519




Re: Employment of Leo Pavliv as Vice President, Operations by Cumberland Pharmaceuticals Inc.



Dear Leo:



Effective January 1st, 2008, this letter agreement (the “Agreement”) will evidence the
terms and conditions under which you will be employed by Cumberland Pharmaceuticals Inc. (the
“Company”). In consideration of your appointment as Vice President, Operations of the Company, and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:



1. Compensation. The Company agrees to compensate you as follows:



(a) The Company agrees to pay you on a salary basis for services performed, based on an annual rate
of two hundred thirty thousand dollars ($230,000.00), payable in arrears in equal monthly
installments on the last day of each calendar month during the term of this Agreement.



(b) You will be eligible to participate in any Company-wide employee benefits as approved by the
Board of Directors.



(c) You may be eligible for any Company bonus program, based upon performance in meeting your
individual objectives and the Company’s overall performance, both as determined and approved by the
Board of Directors of the Company. Any such bonus will be discretionary and will be subject to the
terms of the applicable bonus program, the terms of which program may be modified from year to
year in the sole discretion of the Company’s Board of Directors.



(d) You will receive a grant of options, as set forth in Exhibit A, to purchase Cumberland
common shares pursuant to an option agreement. Such options will be subject to the option
agreement and the terms set forth in the option plan under which they are awarded.



(e) Except as set forth in Section 2, the Company shall not be liable to you for any expense
incurred by you unless you receive the Company’s prior written consent to reimburse you for such
expense.




CUMBERLAND PHARMACEUTICALS INC.

2525 West End Avenue, Suite 950 • Nashville, Tennessee 37203 • Telephone: (615) 255-0068 • Facsimile: (615) 255-0094




www.cumberlandpharma.com




 









 





2. Additional Payments. During the term hereof, you shall be entitled to receive prompt
reimbursement for all reasonable and documented expenses incurred in the performance of services in
accordance with the expense reimbursement policy of the Company.



3. Employment at Will. This Agreement is not intended to and shall not be understood in
any manner as affecting or modifying the at-will status of your employment with the Company. As an
at-will employee either you or the Company may terminated the employment relationship at any time
with or without cause or notice. The obligations of Sections 4, 5, 6, 7, 8, 10, 11 and 12 herein
shall survive the termination of the employment relationship or of this Agreement.



4. Confidentiality. All knowledge and information, not already available to the
public, which you acquire, have acquired, or will acquire in the course of your employment with the
Company with respect to the Company’s business, work methods, or pending regulatory matters, or
other Company matters that are treated by the Company as confidential, shall be regarded by you as
trade secrets, whether or not they are classifiable legally as trade secrets, and shall be treated
by you as strictly confidential. Such knowledge and information shall not either directly or
indirectly be used, disclosed, or made accessible to anyone by you for any purpose, except in the
ordinary course of the Company’s business under circumstances in which you are authorized to use or
disclose such information. No disclosures of such confidential information shall be made outside
of those you are authorized to make in the regular and ordinary course of your duties unless and
until you receive prior written permission of the Board of Directors of the Company to make such
disclosure.



5. Discoveries and Improvements. During the time that you are employed by the
Company, all confidential information, trade secrets, or proprietary information and all other
discoveries, inventions, software programs, processes, methods and improvements that are conceived,
developed, or otherwise made by you , alone or with others, that relate in any way to the Company’s
present or planned business or products (collectively the “Developments”), whether or not
patentable or subject to copyright protection and whether or not reduced to tangible form or
reduced to practice, shall be the sole property of the Company. You agree to disclose all
Developments promptly, fully and in writing to the Company. You agree to keep and maintain
adequate and current dated and witnessed written records of all such Developments, in the form of
notes, sketches, drawings, or reports, which records shall be promptly submitted to the Company
and shall be and remain the property of the Company at all times. You agree to assign, and hereby
do assign, to, the Company all your right, title and interest throughout the world in and to all
Developments. You agree that all Developments shall constitute “Works for Hire” (as such are
defined under the U.S. Copyright Laws) and hereby assign to the Company all copyrights, patents and
other proprietary rights you may have in any Developments without any obligation on the part of the
Company to pay royalties or any other consideration to you for such Developments.



6. Publication. All documents and other writings produced by you during the period of
your employment, which relate to work you are doing or have done for the Company or to the business
of the Company or its affiliates, shall belong to the Company. You will not publish outside of the
Company any such writing without the prior written consent of the Board of Directors of the
Company. You will, without further compensation, execute at any time



 









 





(whether or not you are still employed by the Company) all documents requested of you relating to
the protection of such rights, including the assignment of such rights to the Company.



7. Litigation. You shall notify the Company within three business days if no longer
employed and immediately if still employed by the Company if you are contacted by any person
relating to any claim or litigation against the Company. You shall not communicate in any manner
with any person related to any claim or litigation against the Company without the prior consent of
the Board of Directors of the Company unless compelled to do so by law.



8. Competition. For so long as you are employed by the Company or any Affiliate (as
defined below) and for a period of one year after you cease to be employed by the Company or any
Affiliate, you shall not, directly or indirectly, engage in any work or other activity—whether as
owner, stockholder, partner, officer, consultant, or otherwise—involving a trademark, product, or
process that, in the opinion of the Company’s President, is similar to a trademark, product or
process on which you worked for the Company (or any Affiliate) or obtained knowledge about while
working for the Company at any time during the period of employment, if such work or other activity
is then, or reasonably expected to become, competitive with that of the Company (or any Affiliate).
The restriction in the preceding sentence shall not apply if you have disclosed to the Company in
writing all the known facts relating to such work or activity and have received a release in
writing from the Board of Directors of the Company allowing you to engage in such work or activity.
The Company’s President shall have sole discretion to determine whether your work or activity for
another employer involves trademarks, products, or processes that are similar to trademarks,
products, or processes that you worked on for the Company. Ownership by you of five percent (5%) or
less of the outstanding shares of stock of any company either (i) listed on a national securities
exchange, or (ii) having at least one hundred (100) stockholders shall not make you a “stockholder”
within the meaning of that term as used in this paragraph. For one year after you cease to work
for the Company, you will not engage in any work or activity that will cause you to inevitably
disclose to anyone not employed by the Company (or an Affiliate) any trade secret or confidential
information that belongs to the Company or one of its Affiliates. Nothing in this paragraph shall
limit the rights or remedies of the Company arising, directly or indirectly, from such competitive
employment, including, without limitation, claims based upon breach of fiduciary duty,
misappropriation, or theft of confidential information. The term “Affiliate” shall mean the
Company and any entity controlling, controlled by, or under common control with the Company.



9. Conflicting Contracts. You represent and warrant that you are not now under any
obligation resulting from any contract or arrangement, to any person, firm, or corporation, which
is inconsistent or in conflict with this Agreement. Likewise you represent and warrant that you
are not now under any obligation resulting from any contract or arrangement to any person, firm, or
corporation which would prevent, limit, or impair in any way the performance by you of your
obligations to the Company.



10. Solicitation. For a period of one year after you cease to be employed by the Company
(or a Company affiliate):



(a) You agree not to solicit, directly or indirectly, business related to the development or sales
of pharmaceutical products from any entity, organization, or person which is contracted



 









 




with the Company, which has been doing business with the Company or from which the Company was
soliciting at the time of your termination, or a firm which you knew or had reason to know that the
Company was going to solicit business at the time you ceased to be employed by the Company. The
restriction set forth in the preceding sentence shall not apply if you have disclosed to the
Company in writing all the known facts relating to such solicitation and have received a release in
writing from the Board of Directors of the Company to engage in such solicitation.




(b) You agree not to solicit, recruit, hire, or assist in the hiring of any employee of the Company
to work for you or another person, firm, corporation, or business in competition with, or
reasonably likely to become in competition with, the Company.



11. Return of Documents. Upon termination of your employment for any reason, you shall
immediately return to the Company all documents and things belonging to the Company. This
includes, but is not limited to, trade secrets, confidential information, knowledge, data or
know-how, and software containing such information, whether or not the documents are marked
“Confidential.”



12. Remedies. You acknowledge that in the event of breach of this Agreement by you, actual
damages to the Company will be impossible to calculate, the Company’s remedies at law will be
inadequate, and the Company will suffer irreparable harm. Therefore, you agree that any of the
covenants contained in this Agreement may be specifically enforced through injunctive relief, but
such right to injunctive relief shall not preclude the Company from other remedies which may be
available to it. You further agree that should you fail to keep any of the promises made by you in
this Agreement, or any way violate this Agreement, the Company shall be entitled to recover all
monies the Company is required to spend, including attorneys’ fees, to enforce the provisions of
this Agreement.



13. Debarment. You represent and warrant that you have not been debarred and will
notify the Company immediately if you are debarred, pursuant to subsection 306(a) or 306(b) of the
Federal Food, Drug, and Cosmetic Act.



14. Notice. Any notice required or permitted to be given under this Agreement shall
be sufficient if in writing and if sent by registered or certified mail to your residence or to the
Company’s principal office in the case of the Company.



15. Waiver. The waiver by either party of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.



16. Entire Agreement. This Agreement contains the entire agreement of the parties and
may not be changed orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is sought.



17. Governance. This Agreement shall be governed by the laws of the State of
Tennessee. Any dispute arising out of this Agreement shall be resolved, at the Company’s sole
option, by courts sitting in Nashville, Tennessee, and you waive any objection to such venue.



 









 





18. Enforceability. In the event that any provision of this Agreement shall be held
by a court to be unenforceable, such provision will be enforced to the maximum extent permissible,
and the remaining portions of this Agreement shall remain in full force and effect.



19. Survival. Notwithstanding any termination of your employment, this Agreement
shall survive and remain in effect in accordance with its terms.



This letter agreement may be signed in one or more counterparts, each of which shall be an
original and all of which will constitute one and the same instrument.







	 	 	 	 	 	 	 
	 	 	Sincerely yours,	 	 
	 
	 	 	 	 	 	 
	 	 	CUMBERLAND PHARMACEUTICALS INC.	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ A.J. Kazimi	 	 
	 	 	 	 	 
	 

	 	By:
	 	A.J. Kazimi	 	 
	 

	 	 	 	Chief Executive Officer
	 	 
	 
	 	 	 	 	 	 
	Accepted as to all terms and conditions
	 	 	 	 	 	 
	as of
the 17th of January, 2008:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Leo Pavliv
	 	 	 	 	 	 
	 

Leo Pavliv

	 	 	 	 	 	 







 









 





Exhibit A




Option Agreement




The Company’s standard option agreement shall be forthcoming at the appropriate time and shall
incorporate the following several terms:




	1.	 	Subject to the terms therein, the Company will provide a grant of options under its 2007
Long-Term Incentive Compensation Plan to purchase up to nine thousand (9,000) of its shares of
common stock.






	2.	 	As determined and approved by the Board of Directors, up to 2,250 options will vest on each
31st of December over the four-year period from 2008-2011.






	3.	 	The options awarded will have an Exercise Price of Fair Market Value on Date of Grant.






	4.	 	The options awarded will have a term of ten years from Date of Grant.





It is important that, after you receive your option agreement and other related documents, you read
and understand the terms and conditions of the option agreement. The Company recommends that you
always seek guidance from your personal accountant or tax advisor prior to initiating any exercise
or action involving your option agreement.