Document:

EX-10.1

 

Exhibit 10.1

Dated 21 March 2007

PLIVA d.d.

and

Željko Čović

AGREEMENT WITH THE

PRESIDENT OF THE MANAGEMENT BOARD

AND COO

 

 

Table of Contents

	 	 	 	 	 	 	 
	Contents	 	 	 	Page	 
	1

	 	Interpretation
	 	 	2	 
	 
	 	 	 	 	 	 
	2

	 	Commencement of Agreement
	 	 	3	 
	 
	 	 	 	 	 	 
	3

	 	Appointment and Duties of the COO
	 	 	3	 
	 
	 	 	 	 	 	 
	4

	 	Hours
	 	 	4	 
	 
	 	 	 	 	 	 
	5

	 	Interests of the COO
	 	 	4	 
	 
	 	 	 	 	 	 
	6

	 	Location
	 	 	4	 
	 
	 	 	 	 	 	 
	7

	 	Salary
	 	 	4	 
	 
	 	 	 	 	 	 
	8

	 	Bonus
	 	 	5	 
	 
	 	 	 	 	 	 
	9

	 	Stock Options
	 	 	5	 
	 
	 	 	 	 	 	 
	10

	 	Company Car
	 	 	6	 
	 
	 	 	 	 	 	 
	11

	 	Pension
	 	 	6	 
	 
	 	 	 	 	 	 
	12

	 	Insurance
	 	 	6	 
	 
	 	 	 	 	 	 
	13

	 	Expenses
	 	 	7	 
	 
	 	 	 	 	 	 
	14

	 	Holidays
	 	 	7	 
	 
	 	 	 	 	 	 
	15

	 	Confidentiality
	 	 	7	 
	 
	 	 	 	 	 	 
	16

	 	Intellectual Property Rights
	 	 	7	 
	 
	 	 	 	 	 	 
	17

	 	Termination and Suspension
	 	 	8	 
	 
	 	 	 	 	 	 
	18

	 	Change of Control
	 	 	9	 
	 
	 	 	 	 	 	 
	19

	 	Full and Final Settlement
	 	 	9	 
	 
	 	 	 	 	 	 
	20

	 	Garden Leave
	 	 	10	 
	 
	 	 	 	 	 	 
	21

	 	Restrictions after Termination of Employment
	 	 	11	 
	 
	 	 	 	 	 	 
	22

	 	Contractual penalty
	 	 	12	 
	 
	 	 	 	 	 	 
	23

	 	Return of Company Property
	 	 	12	 
	 
	 	 	 	 	 	 
	24

	 	Directorships
	 	 	12	 
	 
	 	 	 	 	 	 
	25

	 	Notices
	 	 	12	 
	 
	 	 	 	 	 	 
	26

	 	Miscellaneous
	 	 	12	 

1

 

     This Agreement is made effective on 1 January 2007 between:

	(1)	 	PLIVA d.d whose registered address is Ulica grada
Vukovara 49,10000, Zagreb Croatia (“PLIVA d.d.” or the “Company”); and
	 
	(2)	 	Željko Čović, Gajeva 59, 10000 Zagreb, Croatia (the “COO”).

This agreement records the terms on which the COO will serve and be employed by the Company.

	1	 	Interpretation

In this agreement (and any schedules to it):

	1.1	 	Definitions

“Agreement” means this agreement entered into by and between COO and the Company defining
rights and obligations of the President of the Management Board and COO and the Company,
following decisions of the Supervisory Board as of a) 13 July 2005 on appointment of the
President of the Management Board for a Term; and b) 14 March 2007 on entering into this
new agreement with the COO;

“Change of Control” means

	 	(a)	 	the acquisition of control of the composition of the board of directors of
PLIVA d.d.
by a person (or group of persons acting together) not having such control as at the
date of this agreement;
	 
	 	(b)	 	the acquisition of control of the exercise of more than 50 per cent of the
voting
rights attributable to the share capital of PLIVA d.d by a person (or group of
persons acting together) not having such control as at the date of this agreement;
	 
	 	(c)	 	a merger of the Company with an entity other than a Group Company; or
	 
	 	(d)	 	the sale of the assets of PLIVA d.d. or substantially all of the assets of
PLIVA d.d. to
an entity not being a Group Company;

but the following do not constitute a Change of Control:

	 	(i)	 	any change in the shareholders in PLIVA d.d. not within (a), (b) or (c) above;

	 
	 	(ii)	 	the winding up of PLIVA d.d. for the purpose of a reconstruction; and
	 
	 	(iii)	 	the transfer of any ownership of associated company, or of any of PLIVA
d.d.’s operating assets, to another Group Company, provided that all or substantially
all of the associated company or operating assets remain within the Group Company.

“Group” means PLIVA d.d. and its affiliated companies that are either directly or
indirectly controlled by Barr Pharmaceuticals, Inc. (“BPI”).

“Group Company” means a member of the Group and “Group Companies” will be interpreted
accordingly;

“Listing Rules” means the Listing Rules made by the UK Listing Authority relevant for
listing on the London Stock Exchange and Listing Rules of the Zagreb Stock Exchange, and
any other listing rules of any other regulated market that may be
applicable to PLIVA d.d.;

“Management Board” means the Management Board of PLIVA d.d. from time to time;

2

 

“Material Change” means the assignment to, or the withdrawal from, the COO of any duties
the effect of which constitutes a material change in the COO’s job or a material reduction
in his responsibilities, status or authority which is related or follows the Change of
Control;

“Supervisory
Board” means the Supervisory Board of PLIVA d.d. from time to time;

“Term” means the period from 09 December 2005 to 30 June 2010 for which the COO is
appointed President of the Management Board of PLIVA d.d.;

“Termination Date” means the date on which this Agreement terminates; and

“ZSE” means the Zagreb Stock Exchange.

	2	 	Commencement of Agreement
	 
	2.1	 	The COO is employed by the Company as of 02 June 1980 and is employed for indefinite
period of time.
	 
	2.2	 	This Agreement will be effective from 1 January 2007 on which date the agreement dated
24 October 2005 between PLIVA d.d. and the COO (the “Superseded Agreement”) will
cease to have any further force or effect, all in accordance with the Settlement Agreement
between the Company and COO as of 21 March 2007.
	 
	2.3	 	The employment will continue under the terms of this Agreement until end of the Term, and
after the Term if so determined by this Agreement.
	 
	3	 	Appointment and Duties of the COO
	 
	3.1	 	The COO will serve as President of the Management Board and Chief Operating Officer,
with the roles and responsibilities as defined by the law, Articles of Association of the
Company, regulations pertaining to Management Board and other by-laws of PLIVA.
	 
	3.2	 	The COO may also serve in any other executive capacity in any of the Group Companies
as the COO and the Company agree from time to time.
	 
	3.3	 	The COO will:

	 	3.3.1	 	devote the whole of his working time, attention and skill to performing position of
the President of the Management Board and COO;
	 
	 	3.3.2	 	properly perform his duties and exercise his powers;
	 
	 	3.3.3	 	accept any offices or directorships as reasonably required by the Supervisory
Board;
	 
	 	3.3.4	 	comply with all rules, regulations and policies issued by PLIVA d.d. including any
handbook issued and amended by PLIVA d.d. from time to time. In the event of
any inconsistency between the rules, regulations and policies of PLIVA d.d. and
any Group Company the rules, regulations and policies of PLIVA d.d. shall prevail;
	 
	 	3.3.5	 	obey the reasonable and lawful directions of the Supervisory Board; and
	 
	 	3.3.6	 	use all reasonable endeavours to promote the interests and reputation of every
Group Company.

3

 

	3.4	 	The COO accepts that with his consent (which he will not unreasonably withhold or delay)
the Company may require him to perform COO or other executive duties of equivalent
status to those referred to at clause 3.1 for any other Group Company.
	 
	3.5	 	The COO will keep the Supervisory Board fully informed of his conduct of the business,
finances or affairs of the Company or any other Group Company in a prompt and timely
manner. He will provide information to the Supervisory Board in writing if requested.
	 
	4	 	Hours
	 
	 	 	The COO and the Company agree that the COO’s working time shall be regular working
time in the Company, provided however that the COO will not be entitled to additional
remuneration for hours worked in excess of usual business hours.
	 
	5	 	Interests of the COO
	 
	5.1	 	Subject to clause 5.2, while this Agreement is in force, the COO will not be directly or
indirectly engaged or concerned in the conduct of any activity nor he will accept any
directorship in any company not being a Group Company, (except as a representative of
the Company or Group Companies) without first obtaining the written consent of the
Supervisory Board, such consent not to be unreasonably withheld or delayed.
	 
	5.2	 	The COO may not hold or be interested in investments which amount to more than one per
cent of the issued investments of any class of any one company whether or not those
investments are listed or quoted on any recognised Stock Exchange or dealt in on the
Alternative Investments Market, without first obtaining the written consent of the
Supervisory Board, such consent not to be unreasonably withheld or delayed.
	 
	5.3	 	The COO will (and will procure that his spouse and dependent children) comply with all
rules of law, including Croatian Securities Act, Criminal Law and Listing rules and any other
rules or policies applicable to PLIVA d.d. or BPI from time to time in relation to the holding
or trading of securities.
	 
	6	 	Location
	 
	 	 	The COO’s place of work will be in the seat of the Company. The COO will be required
to travel abroad when necessary and to the extent the reasonable business needs require so,
the COO shall also work in other PLIVA’s locations or places where PLIVA operates.
	 
	7	 	Salary
	 
	7.1	 	The Company will pay the COO a gross base salary of EUR 450,000 per annum (“Base
Salary”). Salary will be paid monthly in 12 equal instalments, when all PLIVA d.d.
employees’ salaries are paid, for the previous month, and the equivalent will be payable in
HRK according to the average exchange rate of Croatian National Bank on the date of
calculation of the salary for each particular month.
	 
	7.2	 	The salary referred to in clause 7.1 includes director’s fees from PLIVA d.d. and any other
Group company in which the COO is required to accept a directorship from time to time.

4

 

	8	 	Bonus
	 
	8.1	 	The COO shall be eligible to receive a discretionary bonus (in accordance with the
decision of the Supervisory Board) for each fiscal year of the Company that commences or
terminates during the term of this Agreement, of up to 50% of the Base Salary earned
during such year (or such higher or lower percentage as the Supervisory Board may allow
from time to time during the term of this Agreement).
	 
	8.2	 	In the event that the Agreement is terminated, the following provisions will apply:

	 	8.2.1	 	if the Agreement is terminated by the Company (other than by reason of the COO’s
misconduct or in accordance with clause 17.7) the COO shall be entitled to unpaid
bonus for the year in which the COO received the notice on termination, calculated
at 50% of his Base Salary then in effect and pro-rated to reflect the number of days
worked in the respective year, and shall be paid in full for any accrued but unpaid
bonus, and payment of any such bonus shall be made within 2 weeks after the
termination date, however not before the deadline set out in 8.5. For the avoidance
of doubt, COO shall not be entitled to any bonus during any notice period after
receipt of the notice on termination;
	 
	 	8.2.2	 	in the event that the COO resigns, the COO will have no entitlement to any bonus
which hasn’t already been granted to him;
	 
	 	8.2.3	 	in the case of termination of the Agreement by the Company under the clause 17.7
no bonus shall be payable whether for the Bonus Year in which notice was given or
in respect of any previous Bonus Year where such year’s bonus had not been paid;

	8.3	 	In the event of termination of the Agreement by the Company pursuant to clause 17.2 or 18
or the COO pursuant to clause 18, the COO’s entitlement to bonus, if any, will be
calculated at 50% of his Base Salary then in effect pro-rata to the date the Company gives
notice in accordance with clause 17.2 or 18 or the date on which the COO serves a
Material Change notice on the Company in accordance with clause 18.
	 
	8.4	 	The “Bonus Year” means the financial year from 01 January to 31 December in respect of
which the annual bonus is being paid. The amount of bonus calculated in accordance with
the above provisions represents the gross amount.
	 
	8.5	 	The annual bonus shall in any case be paid within 15 days from the day of approval of
annual financial reports for the previous business year by the Supervisory Board.
	 
	9	 	Stock Options
	 
	9.1	 	Grant of Stock Options
	 
	 	 	The COO shall be eligible to participate in the BPI stock incentive plan as from time to
time in effect, subject to the terms and conditions of such plan; including an initial
grant of 30,000 stock appreciation rights having an exercise price equal to the mean of
the high and low price for BPI stock on the date of approval of this grant by the Board of
Directors of BPI or a committee of the Board of Directors of BPI and for the purposes of
this Agreement accepted and confirmed by the Supervisory Board, with one-third of the
stock appreciation rights becoming exercisable (“vesting”) in 12 months from the date
thereof (as of the date of approval of the Board of Directors of BPI), one-third of the
stock appreciation rights vesting 24 months from the date thereof, and the remaining
one-third of the stock appreciation rights vesting 36 months from the date thereof,
provided in each

5

 

	 	 	case that the COO is employed by the Company on the vesting date in question, and
otherwise having the same terms and conditions as set forth in the forms of tandem stock
appreciation rights agreement and standalone stock appreciation rights agreement approved
by the Board of Directors of BPI or a committee of the Board of Directors of BPI under the
current stock incentive plan. (The stock appreciation rights will be granted with tandem
(i.e., alternative) incentive stock options to the extent permitted by applicable law and
any remaining stock appreciation rights will be granted as free-standing (i.e.,
standalone) stock appreciation rights.);
	 
	9.2	 	Tax
	 
	 	 	The COO will promptly pay all taxes, eventual social security contributions, duties or
other levies which arise or may arise in connection with the grant, vesting or exercise of
the stock options or stock appreciation rights or any cash payment made under this clause 9
or will, on demand, repay any such amounts paid by the Company or any of its affiliated
entities. The COO consents to the deduction of any such amounts and authorises the Company
to sell, on his behalf, sufficient shares or other securities to meet any such liability.
	 
	10	 	Company Car
	 
	 	 	The COO is entitled to use the Company car of AUDI A8 or similar class.
	 
	11	 	Pension
	 
	11.1	 	The Company shall pay to the COO annually gross amount equal to 15% of the Base
salary to voluntarily pension fund as elected and notified to the Company by the COO, and
which shall be paid in 12 equal monthly installments as long as this Agreement is in force.
	 
	11.2	 	The COO undertakes that, except to the extent determined by this Agreement, he will not
be entitled to any other benefits related to the contribution to the pension scheme.
	 
	12	 	Insurance
	 
	12.1	 	The Company shall arrange and pay the cost for the COO insurance policy, including but
not limited to life insurance, insurance for long term disease or disability, according to the
Company policy in effect.
	 
	12.2	 	The Company shall arrange and pay the cost for the COO a private health insurance
policy, in accordance with the Company’s policies.
	 
	12.3	 	The COO understands and agrees that if the Company provides long term illness/disability
insurance and the Insurer appointed by the Company from time to time fails or refuses to
provide the COO with any benefit under the insurance arrangement, the COO will have no
right of action against the Company in respect of such failure or refusal.
	 
	12.4	 	The Company shall arrange and meet the cost of business travel insurance in respect of
the COO’s performance of his duties under this Agreement. The COO’s rights and
entitlements under such travel insurance will be subject to the terms of Company’s
insurance cover from time to time.

6

 

	13	 	Expenses
	 
	13.1	 	The Company will reimburse the COO for all reasonable expenses properly incurred by
him in performing his duties under this Agreement, provided that these are incurred in
accordance with Company policy from time to time.
	 
	13.2	 	If the COO is provided with a credit or charge card by the Company this must only be used
for expenses which he incurs in performing the duties of this Agreement.
	 
	14	 	Holidays
	 
	 	 	The COO is entitled to 30 days’ paid holiday each year (in addition to other public
holidays in Croatia) which shall be used at the latest by 30 June of the following year,
after which date all unused holiday days shall lapse. The COO will pay due consideration to
the operational requirements of the Company when arranging any holidays. For part years,
the COO’s holiday entitlement for the year will be pro-rated to the length of his service
in that year. Only 5 working days shall be calculated for the purpose of determination of
duration of holiday.
	 
	15	 	Confidentiality
	 
	15.1	 	Without prejudice to the legal duties which he owes to the Company the COO agrees that
he will not, except in the proper performance of his duties, copy, use or disclose to any
person any of the Company’s trade secrets or confidential information. This restriction will
continue to apply after the termination of the Agreement without limit in time but will not
apply to trade secrets or confidential information which become public other than through
unauthorised disclosure by the COO. The COO will use all reasonable endeavours to
prevent the unauthorised copying use or disclosure of such information.
	 
	15.2	 	In the course of the Agreement the COO is likely to obtain trade secrets and confidential
information belonging or relating to other Group Companies and other persons. He will
treat such information as if it falls within the terms of clause 15.1 and clause 15.1 will apply
with any necessary amendments to such information. If requested to do so by the
Company the COO will enter into an agreement with other Group Companies and any
other persons in the same terms as clause 15.1 with any amendments necessary to give
effect to this provision.
	 
	15.3	 	Without prejudice to this clause, details of what the Company and the Group Companies
regard as confidential information are set out in relevant policies of the Company and/or
the Group Companies from time to time.
	 
	16	 	Intellectual Property Rights
	 
	16.1	 	In relation to each and every invention, improvement or discover (together called “the
Group Company Invention”) which relates either directly or indirectly to the business of the
Company or Group Company which the COO (jointly or alone) makes at any time during his
employment, the COO will, subject to the Company or Group Companies complying with all
statutory obligations, promptly disclose to the Company full details of all Group Company
Inventions and then, as requested by the Company or Group Company and at its expense, do all
things necessary or desirable to enable the Group Company (or its nominee) to exploit such
Group Company Inventions for commercial purposes and to secure patent or other appropriate
forms of protection for the same anywhere in the world.

7

 

	 	 	Decisions as to the patenting and exploitation of any such Group Company Inventions are at
the sole discretion of the Group Company.
	 
	16.2	 	In relation to each and every copyright work, database or design which relates either
directly or indirectly to the business of the Group Company (a “Company Work”) which the
COO (jointly or alone) originates, conceives, writes or makes at any time during the period
of this employment, the COO acknowledges that all intellectual property rights in and to
such Company Work are the property of the Group Company. At the Company’s request
the COO will assign to the Company all copyright (and all and any other proprietary or
similar rights) throughout the world in Company Works.
	 
	16.3	 	The COO agrees that (at the request and expense of the Company) he will do all things
necessary or desirable to substantiate the rights of the Group Company to each and every
Group Company Invention or Company Work and that he will permit he Group Company
(whom he irrevocably appoints as the Company’s attorney for this purpose) to execute
documents, to use the COO’s name and to do all things which may be necessary or
desirable for the Company to obtain for itself or its nominee the full benefit of each and
every Group Company Invention or Company Work.
	 
	17	 	Termination and Suspension
	 
	17.1	 	The Agreement will be in force until the end of the Term unless terminated earlier by either
party giving written notice in accordance with clauses 17.2, 17.5 or 18.
	 
	17.2	 	Either party may terminate the Employment by giving not less than 6 months’ written notice
to the other.
	 
	17.3	 	In case the Company terminates this Agreement, in addition to the COO’s right to receive
notice in accordance with clause 17.2, the COO shall be entitled to a severance payment
equal to 18 months’ Base Salary (“18-months’ severance payment”) which will be paid to
the COO within 4 weeks of the date of termination of the employment. This 18 months’
severance payment will only be payable if the Agreement is terminated by the Company on
6 months’ notice and will not be payable where such termination is by reason of the COO’s
misconduct or in accordance with clause 17.7.
	 
	17.4	 	However, the Supervisory Board may accept shorter notice period in case the COO resign
according to clause 17.2.
	 
	17.5	 	In case the COO becomes disabled from performing the duties from this Agreement (i) for
a period of 60 consecutive days or 90 non-consecutive days in any period of 365 days and
is likely that such disability will continue, or (ii) immediately upon occurrence of such
disability becomes likely that the COO will not be able to perform his duties even after
expiration of the 60 or 90 days, the Company may terminate this Agreement with the 6-
months notice. In addition, the Company will pay the COO 18 months’ severance payment
within 30 days after termination of the employment.
	 
	17.6	 	The COO’s entitlement to bonus, if any, on termination, is set out in clause 8.
	 
	17.7	 	The Company may terminate the Agreement with immediate effect by giving written notice
if the COO:

	 	17.7.1	 	commits any serious or persistent breach of his material obligations under this
Agreement; or

8

 

	 	17.7.2	 	is guilty of any gross misconduct or conducts himself (whether in connection
with
the Agreement or not) in a way which in the reasonable opinion of the Supervisory
Board is harmful to PLIVA d.d. or any Group Company; or
	 
	 	17.7.3	 	is guilty of dishonesty or is convicted of an offence (other than an offence under
the road traffic legislation) whether in connection with the Agreement or not, in a way
which in the reasonable opinion of the Supervisory Board is harmful to PLIVA d.d.
or any Group Company; or
	 
	 	17.7.4	 	commits (or is reasonably believed by the Supervisory Board to have committed) a
breach of any legislation in force or Group policies which may affect or relate to the
business or reputation of any Group Company; or
	 
	 	17.7.5	 	becomes of unsound mind, is bankrupted or has a receiving order made against
him; or
	 
	 	17.7.6	 	becomes disqualified from being a director of a company by decision of relevant
authority; or
	 
	 	17.7.7	 	fails to follow lawful direction by Supervisory Board and the Management Board;

	17.8	 	The COO will have no claim for damages or any other remedy against the Company and
Group Companies if the Agreement is terminated for any of the reasons set out in clause
17.5 or 17.7.
	 
	17.9	 	The Company may suspend the COO for a reasonable period from the employment on full
salary and contractual benefits at any time to investigate any matter in which the COO is
implicated or involved (whether directly or indirectly) and to conduct any related disciplinary
proceedings. During suspension, the COO shall not work, but is obliged to comply with the
clause 15, 16 and 21 of the Agreement, and shall not undertake any action which may
cause the damage to the Company or any Group Company.
	 
	18	 	Change of Control
	 
	 	 	In the event of a termination of the Agreement either by the Company following Change
of Control (unless the Company terminates pursuant to clause 17.7) or by the COO when there
is a Material Change before the end of the Term the period of notice will be 6 months. In
addition, the Company shall pay the COO severance payment of the amount that is equal to 18
months Base Salary. Severance will be paid to the COO within 4 weeks of the date on which
the Agreement terminates.
	 
	19	 	Full and Final Settlement
	 
	 	 	In the event that the COO becomes entitled to a severance payment under clauses 17.3,
17.5 or 18 of this Agreement, such payment is subject to and conditional upon the COO
entering into a Settlement and Compromise Agreement with the Company and Pliva d.d. (of
terms which are satisfactory to Pliva d.d.) the terms of that agreement will provide that
the severance payments are made in full and final settlement of all and any claims the COO
has or may have against the Company in respect of his employment by it or the termination
of that employment (in addition to what he is entitled to according to this Agreement).

9

 

	20	 	Garden Leave
	 
	20.1	 	The COO agrees that:

	 	20.1.1	 	at any time after notice to terminate the Agreement is given by either party; or
	 
	 	20.1.2	 	if the COO purports to terminate the Agreement by resigning without giving due
notice and the Company does not accept his resignation; or
	 
	 	20.1.3	 	during the last six months of the Term;
	 
	 	the Company may require the COO to comply with any or all of the provisions in clauses 20.2
and 20.3 below for a maximum period of six months (the “Garden Leave Period”).

	20.2	 	The COO will not, without prior written consent of the Supervisory Board as long as he
assumes position of President of the Management Board and COO, be employed or
otherwise engaged in the conduct of any activity, whether or not of a business nature
during the Garden Leave Period. Further, the COO will not, unless requested by the
Company:

	 	20.2.1	 	enter or attend the premises of the Company or any other Group Company; or
	 
	 	20.2.2	 	contact or have any communication with any customer or client of the Company or
any other Group Company in relation to the business of the Company or any other
Group Company; or
	 
	 	20.2.3	 	contact or have any communication with any COO, officer, director, agent or
consultant of the Company or any other Group Company in relation to the business
of the Company or any other Group Company; or
	 
	 	20.2.4	 	remain or become involved in any aspect of the business of the Company or any
other Group Company except as required by such companies.

	20.3	 	The Company may require the COO:

	 	20.3.1	 	to comply with the provisions of clause 21; and
	 
	 	20.3.2	 	to immediately resign from any directorship which he holds in the Company, any
other Group Company or any other company where such directorship is held as a
consequence or requirement of the Agreement, unless he is required to perform
duties to which any such directorship relates, in which case he may retain such
directorships while those duties are ongoing.

	20.4	 	During the Garden Leave Period, the COO will be entitled to receive his salary and all
contractual benefits except bonus and stock options, in accordance with the terms of this
Agreement. Any unused holiday accrued at the commencement of the Garden Leave
Period and any holiday accrued during any such period will be deemed to be taken by the
COO during the Garden Leave Period.
	 
	20.5	 	All duties of the Agreement (whether express or implied), shall continue throughout the
Garden Leave Period save as expressly varied by this clause.

10

 

	21	 	Restrictions after Termination of Employment
	 
	21.1	 	In this clause:
	 
	 	 	“Relevant Date” means the Termination Date or, if earlier, the date on which the COO
commences any Garden Leave Period; and
	 
	 	 	“Restricted Period” means the period of 9 months (less any period of Garden Leave)
commencing on the Termination Date;
	 
	21.2	 	The COO is likely to obtain trade secrets and confidential information and personal
knowledge of and influence over customers and clients of the Group during the course of
the Employment. To protect these interests of the Company, the COO agrees with the
Company that he will be bound by the following covenants:

	 	21.2.1	 	during the Restricted Period he will not be employed in, or carry on for his own
account or for any other person, whether directly or indirectly, (or be a director of
any company engaged in) any business which, by virtue of its location or
otherwise, is or is about to be in competition with any business of the Company or
any other Group Company being carried on by such company at the Relevant Date
provided he was concerned or involved with that business at any time during his
service with the Company;
	 
	 	21.2.2	 	during the Restricted Period he will not (either on his own behalf or for or with any
other person), whether directly or indirectly, canvass or solicit in competition with
the Company or any other Group Company the custom of any person who at any
time during the 12 months prior to the Relevant Date was a customer or client of,
or in the habit of dealing with, the Company or (as the case may be) any other
Group Company and in respect of whom the COO had access to confidential
information or with whose custom or business the COO was personally concerned;
	 
	 	21.2.3	 	during the Restricted Period he will not (either on his own behalf or for or with any
other person, whether directly or indirectly) deal with or otherwise accept in
competition with the Company or any Group Company the custom of any person
who was at any time during the 12 months prior to the Relevant Date a customer or
client of, or in the habit of dealing with, the Company or (as the case may be) any
Group Company and in respect of whom the COO had access to confidential
information or with whose custom or business the COO was personally concerned;

	21.3	 	Each of the paragraphs contained in clause 21.2 constitutes an entirely separate and
independent covenant. If any covenant is found to be invalid this will not affect the validity
or enforceability of any of the other covenants.
	 
	21.4	 	Following the Termination Date, the COO will not represent himself as being in any way
connected with the businesses of the Company or of any other Group Company (except to
the extent agreed with the Company).
	 
	21.5	 	Any benefit given or deemed to be given by the COO to any Group Company is received
and held on trust by the Company for the relevant Group Company. The COO will enter
into appropriate restrictive covenants directly with other Group Companies if asked to do
so by the Company.

11

 

	22	 	Contractual Penalty
	 
	 	 	In case of the breach of any provision from the clause 20 or 21 of this Agreement,
the COO shall be liable to pay the Company contractual penalty equal to 24 months of the
average monthly gross salary paid to him in the last three months before termination of the
Agreement within 30 days from the notice of the Company that breach is made. If the COO was
compensated with anything in addition to base salary after the termination date and commits
breach of the clause 20 or 21 of this Agreement, he shall be liable to pay back the Company
any such payment.
	 
	23	 	Return of Company Property
	 
	23.1	 	At any time during the Agreement (at the request of the Company) and in any event when
the Agreement terminates, the COO will immediately return to the Company:

	 	23.1.1	 	all documents and other materials (whether originals or copies) made or compiled
by or delivered to the COO during the Employment and concerning all the Group
Companies. The COO will not retain any copies of any materials or other
information; and
	 
	 	23.1.2	 	all other property belonging or relating to any of the Group Companies.

	23.2	 	When the Agreement terminates, the COO will upon expiration of the notice period or
Garden leave, whichever is longer, return to the Company any car provided to the COO
which is in the possession or under the control of the COO.
	 
	24	 	Directorships
	 
	24.1	 	The COO’s office as a director of the Company or any other Group Company is subject to
the Articles of Association of the relevant company (as amended from time to time) or any
other document which governs appointment of Directors to any Group Company. If the
provisions of this agreement conflict with the provisions of the Articles of Association or any
other governing document, the Articles of Association and the governing document will
prevail.
	 
	24.2	 	The COO must promptly resign from any office held in any Group Company if he is asked
to do so by the Company.
	 
	24.3	 	The termination of any directorship or other office held by the COO will not terminate the
COO’s employment or amount to a breach of terms of this Agreement by the Company.
	 
	24.4	 	During the Employment the COO will not do anything which could cause him to be
disqualified from continuing to act as a director of any Group Company.
	 
	25	 	Notices
	 
	 	 	Any notices given under this Agreement must be given in writing. Notice to the
Company must be addressed to its registered office at the time the notice is given. Notice
to the COO must be given to him personally or sent to his last known address.
	 
	26	 	Miscellaneous
	 
	26.1	 	This Agreement may only be modified by the written agreement of the parties.
	 
	26.2	 	The COO cannot assign this Agreement to anyone else.

12

 

	26.3	 	This Agreement supersedes any previous written or oral agreement between the
parties in
relation to the matters dealt with in it.
	 
	26.4	 	Reference to any provision of the law shall include any of its later amendments.
	 
	26.5	 	Headings will be ignored in construing this agreement.
	 
	26.6	 	If either party agrees to waives his rights under a provision of this Agreement, that
waiver
will only be effective if it is in writing and it is signed by him. A party’s agreement to waive
any breach of any term or condition of this Agreement will not be regarded as a waiver of
any subsequent breach of the same term or condition or a different term or condition.
	 
	26.7	 	This Agreement is governed by and will be interpreted in accordance with the laws of
Croatia. Each of the parties submits to the exclusive jurisdiction of the relevant Court in
Zagreb as regards any claim or matter arising under this Agreement.
	 
	26.8	 	The Agreement is signed in four original copies in Croatian and two original copies in
English, whereby the COO keep one copy of the each, and the Company keeps three
copies in Croatian and one copy on English. The English version shall be prevailing for
the
interpretation purpose.

For and on behalf of

PLIVA d.d.

	 	 	 	 	 	 	 	 	 	 	 
	Signed

	 	/s/ Frederick J. Killion	 	Signed
	 	/s/ Željko Čović	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Frederick J. Killion	 	Željko Čović
	President of the Supervisory Board of PLIVA d.d.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date

	 	 	 	Date	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

13EX-10.2

 

 Exhibit 10.2

PLIVA d.d., Ulica
grada Vukovara 49, Zagreb (dalje: “PLIVA”), koju sukladno
čl. 268 Zakona o
trgovačkim društvima (NN br. 111/93, 34/99, 52/00 i 118/03; dalje: “ZTD”) zastupa predsjednik
nadzornog odbora, g. Frederick Jay Killion

i

Željko Čović, 
Predsjednik uprave PLIVE d.d., s prebivalištem u Gajeva 59, 10 000 Zagreb (dalje:
“Predsjednik uprave”)

zaključili su dana
21. ožujka 2007.g. sljedeći

UGOVOR O NAGODBI

Članak 1.

Stranke
potvrđuju da je dana 24. listopada 2006.g. došlo do “Promjene kontrole” nad PLIVOM na
način kako je isti pojam definiran sukladno odredbama ugovora
sklopljenog između PLIVE i
Predsjednika uprave dana 24. listopada 2005.g, a koji je stupio na snagu dana 09. prosinca 2005
..g. (dalje:
“Važeći ugovor”).

Članak 2.

Stranke
su suglasne da bi Predsjednik uprave u slučaju otkaza Važećeg ugovora kao posljedice
“Bitne promjene”, kako je ista definirana Važećim
ugovorom, a do kojeg bi došlo uslijed Promjene
kontrole, stekao određena prava sukladno čl. 8.4, 9.4.1,
9.6, 18 i 19 Važećeg ugovora.

Predsjednik
uprave bi u slučaju otkaza uslijed “Bitne promjene”
ostvario određena prava i sukladno
odredbama ugovora sklopljenog 07. rujna 2000.g. te njegovih naknadnih izmjena od 13. studenog
200l.g. i 13. studenog 2002.g. i odluke nadzornog odbora PLIVE od 26. rujna 2006.g. (dalje zajedno:
“Stari ugovor”).

 

PLIVA d.d., Ulica grada Vukovara 49, Zagreb (hereinafter: “PLIVA”), pursuant to Art. 268 of the
Companies Act (Official Gazette No. 111/93, 34/99, 52/00 and 118/03; hereinafter: “ZTD”)
represented by the President of the Supervisory Board, Mr. Frederick Jay Killion

and

Željko Čović, President of the Management Board of PLIVA d.d., wit residence in Gajeva 59, 10 000
Zagreb (hereinafter: “President of the Board”)

concluded on this day of 21 March 2007 the following

SETTLEMENT AGREEMENT

Article 1

The parties hereby confirm that on 24 October 2006 “Change of control” occurred over PLIVA, as
that term is defined by the provisions of the agreement concluded between PLIVA and President of
the Board on 24 October 2005, in effect as of 09 December 2005 (hereinafter: the “Effective
Agreement”).

Article 2

The parties hereto agree that in case of termination of the Effective Agreement as a result of a
“Material Change”, as that term is defined by the Effective Agreement, which would result from the
Change of Control, the President of the Board would be entitled to certain rights arising from
Art. 8.4, 9.4.1, 9.6, 18 and 19 of the Effective Agreement.

The President of the Board would in case of termination as a result of a “Material Change” also be
entitled to certain rights arising from provisions of the agreement dated 07 September 2001 and
its subsequent amendments dated 13 November 2001 and 13 November 2002 and the resolution of PLIVA
Supervisory Board as of 26 September 2006 (hereinafter together: the “Old Agreement”).

 

 

Članak 3.

Ugovorne
strane ovom nagodbom ustvrđuju da je došlo do Bitne promjene.

Članak 4.

Imajući
na umu najbolji interes PLIVE, njezinih dioničara i povezanih
društava, a vodeći pritom
računa o pravima Predsjednika uprave koja proizlaze iz Važećeg ugovora, ugovorne strane sklapaju
ovu nagodbu (dalje: “Nagodba”) kako bi osigurale pomirenje interesa obiju ugovornih strana.

Stranke
stoga sklapaju ovu Nagodbu imajući na umu prava koja bi Predsjednik uprave ostvario
temeljem Starog i Važećeg ugovora u slučaju da je
otkazao Važeći ugovor dana 31. prosinca 2006.g.
pozivajući se pritom na čl. 18 istoga ugovora.

Sukladno
navedenome, stranke su suglasne da PLIVA temeljem ove Nagodbe isplati Predsjedniku
uprave, u roku od 15 (riječima: petnaest) dana od potpisa Nagodbe po obje strane, sljedeće
bruto iznose:

	 	a)	 	21.607.755,00 kn s osnove čl. 4 Starog
ugovora, na ime neiskorištenih opcijskih
prava za razdoblje od 09. prosinca 2002.g.
do 09. prosinca 2005.g.;
	 
	 	b)	 	19.371.451,00 kn s osnove čl. 9.6
Važećeg ugovora, na ime opcijskih prava
za 2006.g. uvećano za dodatnih 15.000
dionica sukladno istom članku;
	 
	 	c)	 	1.548.000,00 EUR s osnove otpremnine
(čl. 18 Važećeg ugovora) i bonusa (čl. 8.4.
Važećeg ugovora), protuvrijednost u
kunama prema srednjem tečaju Hrvatske
Narodne banke na dan plaćanja.

Svi
iznosi navedeni u ovom članku specificirani su u Prilogu 1 ove
Nagodbe i čine njezin sastavni
dio.

 

Article 3

The parties hereto hereby determine that there has been a Material Change.

Article 4

Having in mind the best interest of PLIVA, its shareholders and affiliated entities, and also
taking into consideration the rights of the President of the Board arising from the Effective
Agreement, the parties hereto enter into this settlement (hereinafter: the “Settlement”) in order
to reconcile the interests of both contracting parties.

The contracting parties therefore enter into this Settlement proceeding from the rights the
President of the Board would acquire pursuant to the Old Agreement and to the Effective Agreement
in case he terminated the Effective Agreement on 31 December 2006 pursuant to its Art. 18.

In accordance with the aforesaid, PLIVA undertakes to pay to the President of the Board pursuant
to this Settlement the following gross amounts within 15 (in words: fifteen) days as of
the execution of this Settlement by both contracting parties:

	 	a)	 	HRK 21,607,755.00 based on Art. 4 of
the Old Agreement, related to
unexercised option rights for the period
from 09 December 2002 until 09
December 2005;
	 
	 	b)	 	HRK 19,371,451.00 based on Art 9.6 of
the Effective Agreement, related to
option rights for the year 2006.g.,
increased by additional 15.000 shares
pursuant to the same Article;
	 
	 	c)	 	EUR 1,548,000.00 in relation to
severance (Art. 18 of the Effective
Agreement) and bonus (Art. 8.4. of the
Effective Agreement), all in HRK counter
value according to mid exchange rate of
the Croatian National Bank in effect on
the date of payment.

All the amounts stated in this Article are specified in Exhibit 1 to this Settlement which forms
an integral part hereof.

 

 

Sve poreze i doprinose iz navedenih
iznosa snosit će Predsjednik uprave, pa će PLIVA stoga
po odbitku doprinosa iz gore navedenih iznosa bruto plade te poreza i prireza na porez, tako
dobiveni neto iznos isplatiti Predsjedniku uprave na njegov
tekući račun.

Članak 5.

Ugovorne strane ovime utvrduju
da se iznosi navedeni u ovoj Nagodbi isplaćuju kao potpuna i
konačna naknada za svč potraživanja koja Predsjednik uprave ima ili bi mogao imati
prema PLIVI
temeljem ili u svezi s radnim odnosom, Starim i/ili Važećim ugovorom, ili bilo kojim drugim
ugovorom s PLIVOM odnosno temeljem ili u svezi s članstvom u upravi kao i po bilo kojoj drugoj
osnovi. Predsjednik uprave se ovime odriče bilo koje drugog
potraživanja koje bi mogao imati
prema PLIVI ili bilo kojem njenom povezanom društvu po bilo
kojoj osnovi, izuzev potraživanja koja
proizlaze iz ove Nagodbe.

Članak 6.

Ova Nagodba predstavlja punu volju
stranaka, te se njome isključuju i zamjenjuju svi raniji usmeni
ili pismeni uglavci, dogovori i sporazumi stranaka glede njenog predmeta.

Ova
Nagodba se može naknadno
izmijeniti samo pisanim putem, uz potpis ovlaštenih osoba obaju
ugovornih strana.

Članak 7.

Ova
Nagodba se ne može prenijeti na
treću osobu, bilo u cijelosti ili djelomično, bez izričite,
prethodne pisane suglasnosti PLIVE. PLIVA zadržava pravo prenijeti ovu Nagodbu, u cijelosti ili
djelomično, na bilo koje povezano dručtvo u kojem slučaju će o istom promptno izvijestiti drugu
ugovornu stranu.

Članak 8.

Za ovaj ugovor i njegovu interpretaciju
mjerodavno je hrvatsko pravo.

Svi sporovi koji proizlaze iz ili
su u svezi s ovom Nagodbom,, uključujući i one koji se odnose na
pitanje njenog valjanog nastanka, povrede, ili

 

All taxes and contributions arising from the above mentioned amounts shall be borne by the
President of the Board. Therefore, after deducting contributions from the above mentioned gross
salary amounts as well as taxes and surtaxes, PLIVA shall pay such net amounts to the
account of the President of the Board.

Article 5

The contracting parties hereby agree that the amounts mentioned in this Settlement are being paid
as a full and final settlement of all and any claims the President of the Board has or might have
against PLIVA arising from or in relation to his employment with PLIVA, to the Old and/or the
Effective Agreement, or any other agreement concluded with PLIVA, as well as arising from or in
relation to membership in the Management Board or on any other grounds. The President of the Board
hereby waives any other claim he might have against PLIVA or any of its affiliated entities,
excluding the claims arising from this Settlement.

Article 6

This Settlement represents the final agreement of the parties and supersedes any prior oral or
written agreement or arrangement.

This Settlement may be changed only in writing, signed by the authorized representatives of both
contracting parties.

Article 7

This Settlement shall not be assigned or otherwise transferred in whole or in part without the
prior written consent of PLIVA. PLIVA however has the right to such transfer to any of its
affiliated entities in which case it undertakes to promptly inform the other contracting party
thereon.

Article 8

This Settlement shall be exclusively governed by and interpreted in accordance with the Croatian
law.

All disputes arising out of or relating to this Settlement, including such relating to its
validity, breach or termination, and any legal consequence

 

 

prestanka,
te na sve pravne učinke
koje iz toga proizlaze, bit će podvrgnuti arbitraži u skladu s
važećim Pravilnikom o arbitraži pri Stalnom izbranom sudištu Hrvatske gospodarske komore
(Zagrebačka pravila). Broj arbitara bit će jedan. Mjerodavno pravo bit će hrvatsko pravo. Jezik
arbitraže bit će engleski, a mjesto arbitraže Zagreb. Ovlaštenik za imenovanje
bit će predsjednik
Stalnog izbranog sudišta.

Članak 9.

U slučaju da bilo koja odredba ove
Nagodbe je ili postane nevaljana, nezakonita ili neizvršiva, to
neće imati utjecaja na njene preostale odredbe i takva će odredba biti zamijenjena odredbom koja
najbolje odgovara svrsi zamijenjen odredbe.

Članak 10.

Ova
Nagodba sastavljena je u četiri istovjetna primjerka, tri za PLIVU i jedan za Predsjednika
uprave. U slučaju bilo kakvih odstupanja u odnosu na hrvatski i engleski tekst ove Nagodbe,
mjerodavan je hrvatski tekst.

 

thereof shall be finally settled by the arbitration in accordance with the Rules of Arbitration of
the Permanent Arbitration Court at the Croatian Chamber of Economy as in force (the Zagreb Rules).
The number of arbitrators shall be one. The substantive law of Croatia shall be applicable. The
language of the arbitration shall be English and the place of arbitration shall be Zagreb. The
appointing authority shall be the President of the Permanent Arbitration Court.

Article 9

If any provision of this Settlement is or becomes invalid, illegal or unenforceable, then such
provision shall not affect any other provision of this Settlement and such provision will be
replaced by a provision which best meets the purpose of the replaced provision.

Article 10

This Settlement has been executed in four copies,
three to be kept by PLIVA and one by the
President of the Board. In case of any
discrepancies between the Croatian and English
version of the text, the Croatian version shall
prevail

	 	 	 	 	 
	 

	 	PLIVA d.d.	 	 
	 

	 	Predsjednik Nadzornog odbora/	 	 
	 

	 	President of the Supervisory Board
	 	 
	 
	 	 	 	 
	 

	 	/s/
Frederick Jay Killion
	 	 
	 

	 	Frederick Jay Killion	 	 
	 
	 	 	 	 
	 

	 	/s/ Željko Čović
	 	 
	 

	 	Željko Čović	 	 

 

 

     

EXHIBIT 1

- Overview of Current Number of Option Rights

Date: 23th January 2007

1. OLD CONTRACT

Stock Option Plan from 9.12.2002. to 8.12.2005.

In HRK

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Stock Option Estimated as Salary
	Stock Option Estimated as Capital Income	 	cost
	 	 	 	 	 	 	 	 	 	 	 	 	Tax for	 	Tax for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Net
	 	 	 	 	 	 	 	 	 	 	 	 	capital income	 	capital income	 	Net	 	Net salary	 	Gross*	 	Contribution	 	Total	 	Total salary cost +	 	Total	 	 	 	 	 	salary
	 	 	Number of	 	Exercise	 	Market	 	CAPITAL	 	(PLIVA’s	 	(Emloyee’s	 	capital	 	for tax	 	salary 	 	on salary 	 	salary	 	capital income	 	salary	 	Gross	 	(44,56% of
	Over period	 	Options	 	price	 	price	 	INCOME	 	obligation)	 	obligation)	 	income	 	PLIVA’s obligation	 	for
tax obl.	 	of
17,2%	 	cost	 	cost	 	cost	 	salary	 	gross salary)
	9.12.2002-8.12.2003
	 	11.200	 	380,64	 	820	 	 	4.920.832	 	 	 	870.987	 	 	 	 	 	 	 	4.920.832	 	 	 	870.987	 	 	 	1.954.859	 	 	 	336.236	 	 	 	2.291.094	 	 	 	7.211.926	 	 	 	7.211.926	 	 	 	6.153.521	 	 	 	2.742.009	 
	9.12.2003-8.12.2004
	 	12.200	 	371,02	 	820	 	 	5.477.507	 	 	 	969.519	 	 	 	 	 	 	 	5.477.507	 	 	 	969.519	 	 	 	2.176.004	 	 	 	374.273	 	 	 	2.550.277	 	 	 	8.027.784	 	 	 	8.027.784	 	 	 	6.849.645	 	 	 	3.052.202	 
	9.12.2004-8.12.2005
	 	13.200	 	298,72	 	820	 	 	6.880.896	 	 	 	1.217.919	 	 	 	 	 	 	 	6.880.896	 	 	 	1.217.919	 	 	 	2.733.517	 	 	 	470.165	 	 	 	3.203.682	 	 	 	10.084.578	 	 	 	10.084.578	 	 	 	8.604.589	 	 	 	3.834.205	 
	 
	TOTAL:
	 	36.600	 	 	 	 	 	 	17.279.235	 	 	 	3.058.425	 	 	 	0	 	 	 	17.279.235	 	 	 	3.058.425	 	 	 	6.864.380	 	 	 	1.180.673	 	 	 	8.045.054	 	 	 	25.324.289	 	 	 	25.324.289	 	 	 	21.607.755	 	 	 	9.628.416	 

In USD

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Stock Option Estimated as Salary
	Stock Option Estimated as Capital Income	 	cost
	 	 	 	 	 	 	 	 	 	 	 	 	Tax for	 	Tax for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Net
	 	 	 	 	 	 	 	 	 	 	 	 	capital income	 	capital income	 	Net	 	Net salary	 	Gross*	 	Contribution	 	Total	 	Total salary cost +	 	Total	 	 	 	 	 	salary
	 	 	Number of	 	Exercise	 	Market	 	CAPITAL	 	(PLIVA’s	 	(Emloyee’s	 	capital	 	for tax	 	salary	 	on salary	 	salary	 	capital income	 	salary	 	Gross	 	(44,56% of
	Over period	 	Options	 	price	 	price	 	INCOME	 	obligation)	 	obligation)	 	income	 	PLIVA’s obligation	 	tor tax obl.	 	of 17,2%	 	cost	 	cost	 	cost	 	salary	 	gross salary)
	9.12.2002-8.12.2003
	 	11.200	 	67,13	 	144,61	 	 	867.776	 	 	 	153.596	 	 	 	 	 	 	 	867.776	 	 	 	153.596	 	 	 	344.734	 	 	 	59.294	 	 	 	404.029	 	 	 	1.271.805	 	 	 	1 .271.805	 	 	 	1.085.157	 	 	 	483.546	 
	9.12.2003-8.12.2004
	 	12.200	 	65,43	 	144,61	 	 	965.996	 	 	 	170.981	 	 	 	 	 	 	 	965.996	 	 	 	170.981	 	 	 	383.753	 	 	 	66.006	 	 	 	449.759	 	 	 	1.415.755	 	 	 	1.415.755	 	 	 	1.207.982	 	 	 	538.277	 
	9.12.2004-8.12.2005
	 	13.200	 	52,68	 	144,61	 	 	1.213.476	 	 	 	214.785	 	 	 	 	 	 	 	1.213.476	 	 	 	214.785	 	 	 	482.068	 	 	 	82.916	 	 	 	564.983	 	 	 	1.778.459	 	 	 	1.778.459	 	 	 	1.517.457	 	 	 	676.179	 
	 
	TOTAL:
	 	36.600	 	 	 	 	 	 	3.047.248	 	 	 	539.363	 	 	 	0	 	 	 	3.047.248	 	 	 	539.363	 	 	 	1.210.555	 	 	 	208.216	 	 	 	1.418.771	 	 	 	4.466.019	 	 	 	4.466.019	 	 	 	3.810.596	 	 	 	1.698.002	 

1/3

 

     

EXHIBIT 1

- Overview of Current Number of Option Rights

Date: 23th January 2007

*Gross up factor for net: 2,244417013

2. EXISTING CONTRACT

			
	Stock Option Plan for 2006 and in case of change of control
	 	In HRK

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Stock Option Estimated as Salary
	Stock Option Estimated as Capital Income	 	cost
	 	 	 	 	 	 	 	 	 	 	 	 	Tax for	 	Tax for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Net
	 	 	 	 	 	 	 	 	 	 	 	 	capital income	 	capital income	 	Net	 	Net salary	 	Gross	 	Contribution	 	Total	 	 	 	 	 	Total	 	 	 	 	 	salary
	 	 	Number of	 	Exercise	 	Market	 	CAPITAL	 	(PLIVA’s	 	(Employee’s	 	capital	 	for tax	 	salary	 	on salary	 	salary	 	Total capital income	 	salary	 	Gross	 	(44,56% of
	Over period	 	Options	 	price	 	price	 	INCOME	 	obligation)	 	obligation)	 	income	 	PLIVA’s obligation	 	for tax obl.	 	of 17,2%	 	cost	 	cost	 	cost	 	salary	 	gross salary)
	1.1.2006-31.12.2006 **
	 	12.687	 	0,00	 	820	 	 	10.403.340	 	 	 	 	 	 	 	1.841.391	 	 	 	8.561.949	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10.403.340	 	 	 	10.403.340	 	 	 	8.876.570	 	 	 	3.955.400	 
	In case of change of
control
	 	15.000	 	0,00	 	820	 	 	12.300.000	 	 	 	 	 	 	 	2.177.100	 	 	 	10.122.900	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	12.300.000	 	 	 	12.300.000	 	 	 	10.494.881	 	 	 	4.676.519	 
	 
	TOTAL:
	 	27.687	 	 	 	 	 	 	22.703.340	 	 	 	0	 	 	 	4.018.491	 	 	 	18.684.849	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	22.703.340	 	 	 	22.703.340	 	 	 	19.371.451	 	 	 	8.631.918	 

In USD

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Stock Option Estimated as Salary
	Stock Option Estimated as Capital Income	 	cost
	 	 	 	 	 	 	 	 	 	 	 	 	Tax for	 	Tax for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Net
	 	 	 	 	 	 	 	 	 	 	 	 	capital income	 	capital income	 	Net	 	Net salary	 	Gross	 	Contribution	 	Total	 	 	 	 	 	Total	 	 	 	 	 	salary
	 	 	Number of	 	Exercise	 	Market	 	CAPITAL	 	(PLIVA’s	 	(Employee’s	 	capital	 	for tax	 	Salary	 	on salary	 	salary	 	Total capital income	 	salary	 	Gross	 	(44,56% of
	Over period	 	Options	 	price	 	price	 	INCOME	 	obligation)	 	obligation)	 	income	 	PLIVA’s obligation	 	for tax obl.	 	of 17,2%	 	cost	 	cost	 	cost	 	salary	 	gross salary)
	1.1.2006-31.12.2006 **
	 	12.687	 	0,00	 	144,61	 	 	1.834.667	 	 	 	 	 	 	 	324.736	 	 	 	1.509.931	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1.834.667	 	 	 	1.834.667	 	 	 	1.565.416	 	 	 	697.549	 
	In case of change of
control
	 	15.000	 	0,00	 	144,61	 	 	2.169.150	 	 	 	 	 	 	 	383.940	 	 	 	1.785.210	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2.169.150	 	 	 	2.169.150	 	 	 	1.850.811	 	 	 	824.721	 
	 
	TOTAL:
	 	27.687	 	 	 	 	 	 	4.003.817	 	 	 	0	 	 	 	708.676	 	 	 	3.295.141	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	4.003.817	 	 	 	4.003.817	 	 	 	3.416.226	 	 	 	1.522.270	 

 

			
	**	 	For 2006 number of granted shares of 12.687 is calculated for target options of
23.500 shares by average closing price of HRK 377,32 on ZSE in period from 01.01.2005. to
31.12.2005 and by market price of HRK 820,00. The middle foreign exchange rate of National
Bank of Croatia used at 11 January 2007 USD 1 = HRK 5,670255

2/3

 

     

EXHIBIT 1

- Overview of Current Number of Option Rights

Date: 23th January 2007

			
	3. SUMMARY OF OLD AND EXISTING CONTRACTS
	 	CONFIDETIAL
	 	 	 
	Stock Option Plan from 9.12.2002 to
31.12.2006 and in case of change of control
	 	In HRK

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Summary of Stock Option Estimated
	Summary of Stock Option Estimated as Capital Income	 	as Salary cost
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Tax for	 	Tax for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Net
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	capital income	 	capital income	 	Net	 	Net salary	 	Gross	 	Contribution	 	Total	 	Total salary cost +	 	Total	 	 	 	 	 	salary
	 	 	Number of	 	Exercise	 	Market	 	CAPITAL	 	(PLIVA’s	 	(Emloyee’s	 	capital	 	for tax	 	salary	 	on salary	 	salary	 	capital income	 	salary	 	Gross	 	(44,56% of
	Over period	 	Options	 	price	 	price	 	INCOME	 	obligation)	 	obligation)	 	income	 	PLIVA’s obligation	 	for tax obl.	 	of 17,2%	 	cost	 	cost	 	cost	 	salary	 	gross salary)
	ALLTOTAL:
	 	 	64.287	 	 	 	 	 	 	 	 	 	 	 	39.982.575	 	 	 	3.058.425	 	 	 	4.018.491	 	 	 	35.964.084	 	 	 	3.058.425	 	 	 	6.864.380	 	 	 	1.180.673	 	 	 	8.045.054	 	 	 	48.027.629	 	 	 	48.027.629	 	 	 	40.979.206	 	 	 	18.260.334	 

In USD

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Summary of Stock Option Estimated
	Summary of Stock Option Estimated as Capital Income 	 	as Salary cost
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Tax for	 	Tax for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Net
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	capital income	 	capital income	 	Net	 	Net salary	 	Gross	 	Contribution	 	Total	 	Total salary cost +	 	Total	 	 	 	 	 	salary
	 	 	Number of	 	Exercise	 	Market	 	CAPITAL	 	(PLIVA’s	 	(Emloyee’s	 	capital	 	for tax	 	salary	 	on salary	 	salary	 	capital income	 	salary	 	Gross	 	(44,56% of
	Over period	 	Options	 	price	 	price	 	INCOME	 	obligation)	 	obligation)	 	income	 	PLIVA’s obligation	 	for tax obl.	 	of 17,2%	 	cost	 	cost	 	cost	 	salary	 	gross salary)
	ALLTOTAL:
	 	 	64.287	 	 	 	 	 	 	 	 	 	 	 	7.051.065	 	 	 	539.363	 	 	 	708.676	 	 	 	6.342.389	 	 	 	539.363	 	 	 	1.210.555	 	 	 	208.216	 	 	 	1.418.771	 	 	 	8.469.836	 	 	 	8.469.836	 	 	 	7.226.822	 	 	 	3.220.272	 

Zagreb, 23 January 2007

3/3

 

EXHIBIT 1

REVIEW
OF SALARY FROM 01.01.2007 — 30.06.2010.AND OF TARGET BONUS FOR 2006.

In EUR

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL salary cost	 	ESTIMATION TOTAL
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(with contribution	 	NET SALARY
	 	 	Annual gross	 	Target gross bonus (60% of	 	 	 	 	 	on gross salary of	 	(44,56% of gross
	For year	 	salary	 	annual gross salary)	 	TOTAL gross salary	 	17,2%)	 	salary)
	TOTAL
	 	 	1.505.000,00	 	 	 	258.000,00	 	 	 	1.763.000,00	 	 	 	2.066.236,00	 	 	 	785.592,80	 
	TOTAL EXLUDED NOTICE
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PERIOD OF 6 MONTHS 
	 	 	1.290.000,00	 	 	 	258.000,00	 	 	 	1.548.000,00	 	 	 	1.814.256,00	 	 	 	689.788,80	 

In USD

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL salary cost	 	ESTIMATION TOTAL
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(with contribution	 	NET SALARY
	 	 	Annual gross	 	Target gross bonus (60% of	 	 	 	 	 	on gross salary of	 	(44,6% of gross
	For year	 	salary	 	annual gross salary)	 	TOTAL gross salary	 	17,2%)	 	salary)
	TOTAL
	 	 	1.955.446,41	 	 	 	335.219,39	 	 	 	2.290.665,80	 	 	 	2.684.660,32	 	 	 	1.020.720,68	 
	TOTAL EXLUDED NOTICE
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PERIOD OF 6 MONTHS
	 	 	1.676.096,93	 	 	 	335.219,39	 	 	 	2.011.316,31	 	 	 	2.357.262,72	 	 	 	896.242,55	 

	 	 	 
	The middle foreign exchange rate of National Bank of Croatia used at

EUR 1 = USD      

	 	11 January 2007

1,299299943

Zagreb, 29 January 2007

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]