Document:

EX-10.5

 

Exhibit 10.5

CONSULTING AGREEMENT

     This Consulting Agreement (hereinafter “Agreement”) made and entered into this 10th
day of May, 2004 (the “Effective Date”) by and between aaiPharma Inc., a Delaware corporation,
having its principal place of business at 2320 Scientific Park Drive, Wilmington, North Carolina
28405, including its subsidiaries, (hereinafter “aaiPharma”) and William L. Ginna, Jr., with an
address of 1200 Clipper Lane, Wilmington, NC 28405 (hereinafter “Consultant”).

W I T N E S S E T H

     WHEREAS, aaiPharma desires to have Consultant perform certain consulting services for and on
behalf of aaiPharma;

     NOW THEREFORE, in consideration of the mutual covenants and agreements set forth hereinafter
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:

ARTICLE I

SERVICES

     Consultant shall render consulting services as reasonably requested by the Chief Executive
Officer involving activities that Consultant was engaged in on behalf of aaiPharma prior to the
Effective Date or as otherwise agreed to by Consultant and aaiPharma’s Chief Executive Officer.
Consultant agrees that he shall be available during aaiPharma’s normal business hours May 11, 2004
through May 10, 2005.

ARTICLE II

COMPENSATION

     aaiPharma Inc. shall pay Consultant the Consulting Payment as that term is defined in the
letter dated May 10, 2004 from aaiPharma to Consultant (the “Letter Agreement”).

ARTICLE III

TERM AND TERMINATION

     This Agreement shall commence on May 11, 2004 and terminate on May 10, 2005 unless terminated
earlier as set forth in the Letter Agreement.

ARTICLE IV

CONFIDENTIALITY

     The terms of the Confidentiality Agreement dated February 1, 2000 between Consultant and
aaiPharma Inc. are incorporated herein by reference.

 

 

CONSULTING AGREEMENT

Page 2 of 2

ARTICLE V

RELATIONSHIP BETWEEN THE PARTIES

     Consultant is retained only for the purposes and to the extent set forth in the Purpose of
this Agreement, and his relationship to aaiPharma shall be that of an independent contractor. As
such Consultant shall not be entitled to any pension, stock, bonus, profit-sharing, health, or
similar benefits which are available to aaiPharma employees.

ARTICLE VI

MISCELLANEOUS

     This Agreement may be amended only by written instrument executed by both parties. This
Agreement shall be interpreted in accordance with the laws of the State of North Carolina. Neither
party shall be liable for consequential, punitive or exemplary damages with respect to this
Agreement.

     IN WITNESS WHEREOF, aaiPharma has caused this Agreement to be executed in its corporate name
by a duly authorized officer, and Consultant has set his hand and seal, as of the day and year
first above written.

	 	 	 	 	 
	CONSULTANT	 	 
	 
	 	 	 	 
	By:

	 	/s/ William L. Ginna, Jr.
	 	 
	

	 	 	 	 
	

	 	William L. Ginna, Jr.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	aaiPHARMA INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Greg Rayburn	 	 
	

	 	 	 	 
	

	 	Name: Greg Rayburn

Title: COOEX-10.6

 

Exhibit 10.6

Director and Named Executive Officer Compensation Arrangements

Compensation Arrangements for Directors

     The company has an oral arrangement to pay non-employee members of the Company’s Board of
Directors compensation for their service on the board. All non-employee directors receive $3,000
per meeting for attending in-person meetings of the Board of Directors and meetings of Board
committees not held in connection with a regular Board meeting. Non-employee directors also
receive $1,000 per meeting lasting longer than one hour for participating in telephonic meetings of
the Board of Directors and $500 for Board committee telephonic meetings. In addition, non-employee
directors who serve on the Audit Committee receive an annual retainer of $15,000 and those who
serve on the Executive and Corporate Governance Committees receive an annual retainer of $10,000.
The non-employee chair of the Audit, the Executive and Corporate Governance, and the Compensation
Committees receives an annual retainer of $30,000, $15,000 and $10,000, respectively. The
non-employee chair of the Board of Directors receives an annual retainer of $100,000, which is paid
in quarterly installments. Directors are also reimbursed for expenses incurred in connection with
attending meetings.

     One director, Dr. Sancilio, uses office space in Jupiter, Florida that the Company has leased
from a third party. The Company paid $92,000 per year for this office space, but ceased paying
rent in April 2005.

Compensation Arrangements for Named Executive Officers

     The Company has certain oral compensation arrangements, as described below, with its Named
Executive Officers. The Company also has written compensation arrangements with certain of the
Named Executive Officers, as described elsewhere in and filed as separate exhibits to this Annual
Report on Form 10-K.

     Base Salary

     The annual base salaries for the Named Executive Officers who are still employed by the
Company, other than those set forth in written compensation arrangements, are as follows:

	 	 	 	 	 
	Named Executive Officer	 	2005 Base Salary	 
	 
	 	 	 	 
	Timothy R. Wright
	 	$	456,000	 
	William H. Underwood
	 	$	230,000	 
	Gregory S. Bentley
	 	$	255,000	 
	Michael W. George
	 	$	250,000	 
	Matthew E.
Czajkowski
	 	$	325,000	 

     Perquisites

     The only perquisite available to the Named Executive Officers is enrollment in an executive
health program. The Named Executive Officers otherwise are eligible for the same benefits accorded
all full-time employees.EX-10.7

 

Exhibit 10.7

	 	 	 
	November 30, 2004
	 	Revised

Matthew E. Czajkowski

1083 Burning Tree Drive

Chapel Hill, NC 27517

Dear Mr. Czajkowski:

On behalf of aaiPharma, Inc., I am pleased to offer you the position as Executive Vice President,
Chief Financial Officer. We look forward to your contribution to aaiPharma. This letter will
serve to confirm the terms and conditions of our offer of employment.

Compensation –

Your annual salary will be TWO HUNDRED AND FIFTY-FIVE THOUSAND DOLLARS ($255,000), with gross
amounts equal to 1/26 of the total annual salary paid every other week. Compensation is based upon
work actually performed. It is, therefore, terminable upon the severance of the employment
relationship by either you or aaiPharma at any time for any reason.

Stock Options –

Effective as of your date of hire, you will be granted options to purchase 145,000 shares of
aaiPharma common stock pursuant to the terms and conditions set forth in aaiPharma’s 1997 Stock
Option Plan, a copy of which is attached.

Bonus and Restricted Stock Grant –

You will be entitled to receive a Bonus and a Restricted Stock Grant of 50,000 shares of restricted
stock upon commencement of your employment. Fifty percent (50%) of the grant will vest after six
months of employment; the remaining shares will vest on your one-year employment anniversary date.
This Restricted Stock will contain a customary legend and the Restricted Stock will be forfeited if
you leave the Company’s employment prior to the applicable vesting period.

After the one-year anniversary of employment, you will be eligible to participate in the annual
performance bonus program consistent with the program provided other executives at this level.

 

 

Matthew E. Czajkowski

Page 2

November 30, 2004

Starting Date of Employment –

We would like to target your start date on December 1, 2004. If this is not suitable, please
contact the Human Resources Department as soon as possible. We will work with you to establish a
mutually agreed upon start date. Upon reporting to work, you must provide proof of your identity
for Employment Eligibility Verification in compliance with the Immigration Reform and Control Act
of 1986. Prior to commencing work, the aaiPharma Human Resources Department should have received a
fully completed and signed Employment Application and a copy of your transcript for the highest
degree you have obtained.

Benefits –

Enclosed for your review is a Benefit Summary along with handbooks, which will give you detailed
information on the coverage and benefits offered. Vacation will be credited to you at the rate
applicable to employees who have 9.5 years of service. Please refer to the Employee Benefit
Summary for applicable credit hours.

Relocation –

aaiPharma is willing to assist you in relocating, subject to the terms and conditions of the
attached Relocation Addendum.

Employee Physical –

After reporting to work, a post-offer physical examination will be scheduled for you by the Human
Resources Department. This examination will include a drug and alcohol screening. aaiPharma
reserves the right to conduct random and periodic drug and alcohol testing during the term of your
employment.

Other Contingencies to Offer –

This offer is contingent upon the results of appropriate background inquiries as to matters that
may compromise your position with aaiPharma. As you may be aware, the pharmaceutical industry is a
highly regulated industry with the FDA and the DEA having significant oversight responsibilities.
Therefore, please complete the attached background investigation form and return it with your
signed copy of this offer. Please recognize that these inquiries are based upon business
necessity, however, they may not be completed prior to your starting date. In addition, this offer
is contingent upon you fully and accurately completing the Employment Application prior to
commencing employment.

 

 

Matthew E. Czajkowski

Page 3

November 30, 2004

The enclosed Confidentiality and Non-Compete Agreement must be executed and returned to us along
with this offer letter. Please note carefully the provisions contained therein and execute the
agreement in the space indicated. Please note also paragraph 7, which requires you to list any
other obligations or understandings that may affect your ability to provide service to aaiPharma in
the job described.

As stated under compensation, this offer of employment is for an indefinite term. Therefore,
either party may sever the employment relationship by notice to the other party at any time for any
reason.

If the above terms and conditions are acceptable, please sign and date the two (2) originals
and return one original to Human Resources, marked “confidential,” at the address above within the
next week if possible. Please be aware that this letter and the enclosures identified in the
letter represent all of the terms of employment.

We look forward to having you as a member of our team.

Sincerely,

/s/ John W. Harrington

John W. Harrington

Executive Vice President, Human Resources

aaiPharma

 

	 	 	 	 	 
	ACCEPTED:

	 	/s/ Matthew E. Czajkowski	 	 
	

	 	 
	 	 
	

	 	Matthew E. Czajkowski
	 	Starting Date

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