GRDN 8-K
Guardian Pharmacy Services, Inc. (GRDN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
INTRODUCTORY NOTE
On September 27, 2024, Guardian Pharmacy Services, Inc. (the “Company”) consummated its previously announced initial public offering (the “IPO”) of 8,000,000 shares of its Class A common stock, par value $0.001 per share (“Class A common stock”), described in the Company’s prospectus dated September 25, 2024 (the “Prospectus”), as filed with the Securities and Exchange Commission (“SEC”) on September 26, 2024 pursuant to Rule 424(b) under the Securities Act of 1933 (the “Securities Act”). Also on September 27, 2024, the underwriters for the IPO exercised in full their option to purchase an additional 1,200,000 shares of Class A common stock.
Immediately prior to the consummation of the IPO, the Company completed a series of internal reorganization transactions (the “Corporate Reorganization”) pursuant to which, among other things, Guardian Pharmacy, LLC became a wholly owned subsidiary of the Company and the members of Guardian Pharmacy, LLC immediately prior to the consummation of the IPO (other than Guardian Investor, Inc.) became holders of the Company’s Class B common stock, par value $0.001 per share (“Class B common stock”).
| Item 1.01 | Entry into a Material Definitive Agreement. |
Stockholders’ Agreement
In connection with the IPO, on September 25, 2024, the Company entered into a Stockholders’ Agreement (the “Stockholders’ Agreement”) with Bindley Capital Partners I, LLC (“Bindley Capital”), Pharmacy Investors, LLC (“Pharmacy Investors”), Cardinal Equity Fund LP (“Cardinal” and, together with Pharmacy Investors, the “Cardinal Stockholders”), Fred P. Burke, David K. Morris and G. Kendall Forbes (collectively, the “Guardian Founders”). The Stockholders’ Agreement provides for, among other things, certain director nomination rights with respect to the Company’s board of directors (the “Board”) and certain voting agreements among the Guardian Founders. Pursuant to the terms and conditions of the Stockholders’ Agreement, Bindley Capital has the right to designate up to two nominees for election to the Board (the “Bindley Capital Nominees”), the Cardinal Stockholders have the right to designate one nominee for election to the Board (the “Cardinal Stockholders Nominee”), and each of Mr. Burke and Mr. Morris will be nominees for election to the Board. The three remaining nominees for election to Board will be selected by our board of directors, each of whom must qualify as independent pursuant to New York Stock Exchange (“NYSE”) listing standards.
The terms of the Stockholders’ Agreement are further described in the Prospectus in the section titled “Management—Stockholders’ Agreement and Controlled Company Exemption,” which description is incorporated herein by reference. The foregoing description of the Stockholders’ Agreement does not purport to be complete and is qualified in its entirety by the full text of the Stockholders’ Agreement, a copy of which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.
Bindley Capital is an affiliate of William Bindley and Thomas Salentine, Jr., and the Cardinal Stockholders are affiliates of John Ackerman. Messrs. Bindley, Salentine, Jr., Ackerman, Burke and Morris are members of the Board, and Messrs. Burke, Morris and Forbes are executive officers of the Company.
Merger Agreement
In connection with the Corporate Reorganization, the Company entered into an Agreement and Plan of Merger dated as of September 27, 2024 (the “Merger Agreement”), by and among the Company, Guardian Merger Corp., a wholly owned subsidiary of the Company (“Merger Sub”), and Guardian Pharmacy, LLC, providing for the merger of Merger Sub with and into Guardian Pharmacy, LLC, with Guardian Pharmacy, LLC as the surviving entity (the “Merger”). As a result of the Merger, which was consummated on September 27, 2024, each issued and outstanding common unit of Guardian Pharmacy, LLC (other than common units held by Guardian Investor, Inc.) was converted into the right to receive one share of Class B common stock and the right to receive $1.02 in cash (the “Merger Consideration”). The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the full text of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
Upon consummation of the Corporate Reorganization and the Merger on September 27, 2024, the Company issued 54,094,132 shares of Class B common stock to former members of Guardian Pharmacy, LLC as part of the Merger Consideration under the Merger Agreement. The foregoing issuances were made pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act.
The rights of the holders of Class A common stock and Class B common stock are identical, except for certain transfer restrictions and conversion terms applicable to Class B common stock, which terms are described in the Prospectus in the section titled “Description of Capital Stock—Common Stock—Transfer Restrictions and Conversion of Class B Common Stock,” which description is incorporated herein by reference.
| Item 3.03 | Material Modification to Rights of Security Holders. |
The information set forth under Item 5.03 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
2024 Equity and Incentive Compensation Plan
Prior to the consummation of the IPO and the Corporate Reorganization, the Company adopted the Guardian Pharmacy Services, Inc. 2024 Equity and Incentive Compensation Plan (the “2024 Plan”). The 2024 Plan became effective on September 27, 2024 upon consummation of the IPO, in accordance with its terms. The terms of the 2024 Plan are described in the Prospectus in the section titled “Executive Compensation—2024 Equity and Incentive Compensation Plan,” which description is incorporated herein by reference. The foregoing description of the 2024 Plan does not purport to be complete and is qualified in its entirety by the full text of the 2024 Plan, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Board of Directors Changes
On September 25, 2024 and upon the effectiveness of the Restated Certificate (as defined below), the size of the Board was increased to eight members and William Bindley, John Ackerman, Steve Cosler, Randall Lewis, Mary Sue Patchett and Thomas Salentine, Jr. were elected to the Board. Mr. Bindley and Mr. Salentine were elected to the Board as the Bindley Capital Nominees, Mr. Ackerman was elected as the Cardinal Stockholders Nominee, and Mr. Burke and Mr. Morris continue to serve on the Board in furtherance of their nomination rights, in each case pursuant to the Stockholders’ Agreement. The Board affirmatively determined that each of Mr. Cosler, Mr. Lewis and Ms. Patchett are independent within the meaning of NYSE listing standards.
Mr. Cosler, Mr, Lewis and Ms. Patchett will be entitled to compensation consistent with the Company’s previously disclosed standard compensatory arrangements for non-affiliated directors, which are described in the Prospectus in the section titled “Director Compensation—Anticipated Compensation of Our Non-Affiliated Directors Following this Offering.” Such compensation for 2024 will be prorated to reflect the commencement date of such directors’ Board service.
Also upon the effectiveness of the Restated Certificate and in accordance with the terms thereof, the Board was classified into three classes, designated as follows:
| • | Messrs. Morris and Salentine and Ms. Patchett were designated as Class I directors, to serve for initial terms expiring at the Company’s annual meeting of stockholders to be held in 2025; |
| • | Messrs. Ackerman and Lewis were designated as Class II directors, to serve for initial terms expiring at the Company’s annual meeting of stockholders to be held in 2026; and |
| • | Messrs. Bindley, Burke and Cosler were designated as Class III directors, to serve for initial terms expiring at the Company’s annual meeting of stockholders to be held in 2027. |
Pursuant to the terms of the Restated Certificate, only one class of directors will be elected at each annual meeting of stockholders. At each annual meeting of stockholders, the successors to the class of directors whose term expires at that meeting will be elected to serve for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their respective successors are elected and qualified.
In addition, the Board established two standing committees of the Board, consisting of the Audit Committee and the Compensation Committee, and appointed the directors to serve on each committee as follows:
| Audit Committee |
Compensation Committee | |
| Randall Lewis (Chair) | Steve Cosler (Chair) | |
| Steve Cosler | Randall Lewis | |
| Mary Sue Patchett | Mary Sue Patchett |
Employment Agreements
Effective September 27, 2024, the Company’s wholly owned subsidiary, Guardian Pharmacy Services Management, LLC entered into employment agreements with each of (i) Mr. Burke, relating to his service as the Company’s President and Chief Executive Officer; (ii) Mr. Morris, relating to his service as the Company’s Executive Vice President and Chief Financial Officer; and (iii) Mr. Forbes, relating to his service as the Company’s Executive Vice President, Sales & Operations (collectively, the “Employment Agreements”). The terms of the Employment Agreements are described in the Prospectus in the sections titled “Executive Compensation—Employment Agreements” and “Executive Compensation—Severance and Change in Control Compensation,” which descriptions are incorporated herein by reference. The foregoing descriptions of the Employment Agreements do not purport to be complete and are qualified in their entirety by the full text of the Employment Agreements, copies of which are attached hereto as Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
On September 25, 2024, the Company filed an Amended and Restated Certificate of Incorporation (the “Restated Certificate”) with the Secretary of State of the State of Delaware. Also on September 25, 2024, the Company adopted Amended and Restated Bylaws (the “Restated Bylaws”). A description of the Restated Certificate and the Restated Bylaws is set forth in the Prospectus in the section titled “Description of Capital Stock,” which description is incorporated herein by reference. The foregoing description of the Restated Certificate and the Restated Bylaws does not purport to be complete and is qualified in its entirety by the full text of the Restated Certificate and the Restated Bylaws, copies of which are attached hereto as Exhibit 3.1 and Exhibit 3.2, respectively, and are incorporate herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| * | Management contract or compensatory plan, contract or arrangement. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GUARDIAN PHARMACY SERVICES INC. | ||||||
| Date: September 30, 2024 | ||||||
| By: | /s/ David K. Morris | |||||
| Name: | David K. Morris | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is entered into this 27th day of September, 2024 among Guardian Merger Corp., an Indiana corporation (“Merger Sub”), Guardian Pharmacy, LLC, an Indiana limited liability company (“Guardian Pharmacy”), and Guardian Pharmacy Services, Inc., a Delaware corporation (“Guardian Services”).
RECITALS
WHEREAS, Merger Sub and Guardian Pharmacy desire to merge into a single limited liability company (the “Merger”) pursuant to Chapter 2 of the Indiana Uniform Business Organization Transactions Act (the “IN Act”);
WHEREAS, the board of directors of Merger Sub and the sole stockholder of Merger Sub have duly adopted and approved the execution and performance of this Agreement in accordance with the IN Act; and
WHEREAS, the board of directors of Guardian Services and the sole stockholder of Guardian Services have duly adopted and approved the execution and performance of this Agreement in accordance with the IN Act; and
WHEREAS, the board of managers of Guardian Pharmacy and a supermajority in interest of the preferred members of Guardian Pharmacy have duly adopted and approved the execution and performance of this Agreement in accordance with the IN Act and the Amended and Restated Operating Agreement of Guardian Pharmacy, dated May 1, 2018, as amended (the “Operating Agreement”).
NOW, THEREFORE, both parties to this Agreement, in consideration of the mutual covenants, agreements and provisions hereinafter contained, do hereby prescribe the terms and conditions of the Merger and mode of carrying the same into effect as follows:
AGREEMENT
1. Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the applicable provisions of the IN Act, at the Effective Time, Merger Sub will be merged with and into Guardian Pharmacy, the separate corporate existence of Merger Sub will cease, and Guardian Pharmacy will continue as the surviving limited liability company in the Merger (the “Surviving Entity”).
2. Filings; Effective Time. As soon as practicable following the execution hereof, the parties will cause articles of merger with respect to the Merger to be executed and filed with the Secretary of State of the State of Indiana. The Merger will become effective upon the filing of such documents or at such later time as indicated therein (such time, the “Effective Time”).
3. Articles of Organization and Operating Agreement. As of the Effective Time, (a) the articles of organization of Guardian Pharmacy in effect immediately prior to the Effective Time will continue as the articles of organization of the Surviving Entity, and (b) the Operating Agreement in effect immediately prior to the Effective Time will continue as the operating agreement of the Surviving Entity, until amended or amended and restated in accordance with its terms.
4. Managers of the Surviving Entity. The managers of Guardian Pharmacy immediately prior to the Effective Time will be the managers of the Surviving Entity until the earlier of the death, resignation or removal of any such person or until their respective successors are duly elected or appointed, as applicable.
5. Effects Generally. The Merger will have the effects set forth in the IN Act.
6. Effects on Equity Interests. At the Effective Time, by virtue of the Merger and without any action on the part of the parties hereto or any other person or entity, (a) each issued and outstanding share of capital stock of Merger Sub will be converted into one thousand (1,000) Common Units of Guardian Pharmacy, (b) each issued and outstanding Common Unit of Guardian Pharmacy as of immediately prior to the Effective Time (other than Common Units held by Guardian Investor, Inc.) will be converted into the right to receive one fully paid and non-assessable share of Class B Common Stock, par value $0.001 per share, of Guardian Services, plus the right to receive $1.02 in cash, without interest, and (c) each issued and outstanding Common Unit of Guardian Pharmacy held by Guardian Investor, Inc. as of immediately prior to the Effective Time will be unaffected by the Merger and will remain outstanding immediately following the Merger as a Common Unit of the Surviving Entity.
7. Miscellaneous.
a. Amendments. This Agreement may only be amended by a written instrument executed by the parties hereto.
b. Counterparts. This Agreement may be executed in multiple original or .pdf counterparts (including by electronic signature and/or transmission), each of which will be deemed an original, and all of which taken together will be considered one and the same agreement.
c. Governing Law. This Agreement shall in all respects be construed, interpreted and enforced in accordance with and governed by the laws of the State of Indiana without regard to the conflict of laws principles thereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.
| GUARDIAN PHARMACY, LLC | ||
| By: | /s/ David K. Morris | |
| Name: David K. Morris | ||
| Title: Chief Financial Officer | ||
| GUARDIAN MERGER CORP. | ||
| By: | /s/ Fred P. Burke | |
| Name: Fred P. Burke | ||
| Title: President and Chief Executive Officer | ||
| GUARDIAN PHARMACY SERVICES, INC. | ||
| By: | /s/ Fred P. Burke | |
| Name: Fred P. Burke | ||
| Title: President and Chief Executive Officer | ||
[Signature Page to Agreement and Plan of Merger]
Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
GUARDIAN PHARMACY SERVICES, INC.
Guardian Pharmacy Services, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Company”), hereby certifies as follows:
1. The original Certificate of Incorporation of the Company was filed with the Office of the Secretary of State of the State of Delaware on November 16, 2021 (the “Original Certificate”).
2. The Company is filing this Amended and Restated Certificate of Incorporation of the Company, which amends and restates the Original Certificate, and which was duly adopted by all necessary action of the board of directors of the Company and the stockholders of the Company in accordance with the provisions of Sections 242, 245 and 228 of the General Corporation Law of the State of Delaware.
3. The text of the Original Certificate is hereby amended and restated in its entirety by this Amended and Restated Certificate of Incorporation to read as follows:
ARTICLE I
The name of the corporation is Guardian Pharmacy Services, Inc. (the “Company”).
ARTICLE II
The address of the Company’s registered office in the State of Delaware is 9 E. Loockerman Street, Suite 311, Dover, Kent County, Delaware 19901. The name of the Company’s registered agent at such address is Registered Agent Solutions, Inc.
ARTICLE III
The purpose of the Company is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as amended (the “DGCL”).
ARTICLE IV
Section 1. Authorized Capital Stock. The total number of shares of capital stock that the Company shall have authority to issue is 850,000,000, consisting of 700,000,000 shares of Class A Common Stock, par value $0.001 per share (“Class A Common Stock”), 100,000,000 shares of Class B Common Stock, par value $0.001 per share (“Class B Common Stock”), and 50,000,000 shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”).
Upon the effectiveness of the filing of this Amended and Restated Certificate of Incorporation of the Company with the Secretary of State of the State of Delaware (the “Effective Time”), each share of Common Stock (as defined in the Original Certificate) issued and outstanding immediately prior to the Effective Time shall be reclassified as and converted into one fully-paid and non-assessable share of Class B Common Stock (the “Reclassification”). The Reclassification shall occur automatically as of the Effective Time without any further action by the Company or the holders of the shares affected thereby and whether or not any certificates representing such shares are surrendered to the Company. Upon the Effective Time, each certificate that as of immediately prior to the Effective Time represented shares of Common Stock shall be deemed to represent an equivalent number of shares of Class B Common Stock. The Reclassification shall also apply to any outstanding securities or rights convertible into, or exchangeable or exercisable for, Common Stock and all references to the Common Stock in agreements, arrangements, documents and plans relating thereto or any option or right to purchase or acquire shares of Common Stock shall be deemed to be references to the Class B Common Stock or options or rights to purchase or acquire shares of Class B Common Stock, as the case may be.
Section 2. Preferred Stock. The Preferred Stock may be issued in one or more series. The Board of Directors of the Company (the “Board”) is hereby authorized to issue the shares of Preferred Stock in one or more series and to fix from time to time before issuance the number of shares to be included in any such series and the designation, powers, preferences and relative participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof. The authority of the Board with respect to each such series will include, without limiting the generality of the foregoing, the determination of any or all of the following:
(a) the number of shares of any series, which number the Board may (except where otherwise provided in the Preferred Stock Designation (as defined below)) increase or decrease, and the designation to distinguish the shares of such series from the shares of all other series, which may be by distinguishing number, letter or title;
(b) the voting powers, if any, and whether such voting powers are full or limited in such series;
(c) the redemption provisions, if any, applicable to such series, including the redemption price or prices to be paid;
(d) whether dividends, if any, will be cumulative or noncumulative, the dividend rate of such series, and the dates and preferences of dividends on such series;
(e) the rights of such series upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Company;
(f) the provisions, if any, pursuant to which the shares of such series are convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock, or any other security, of the Company or any other corporation or other entity, and the rates or other determinants of conversion or exchange applicable thereto;
(g) the right, if any, to subscribe for or to purchase any securities of the Company or any other corporation or other entity;
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(h) the provisions, if any, of a sinking fund applicable to such series; and
(i) any other relative, participating, optional, or other special powers, preferences or rights and qualifications, limitations, or restrictions thereof;
all as may be determined from time to time by the Board and stated or expressed in the resolution or resolutions providing for the issuance of such Preferred Stock (collectively, a “Preferred Stock Designation”). Subject to the rights of the holders of any series of Preferred Stock, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the approval of the Board of Directors and by the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Company entitled to vote generally in an election of directors, without the separate vote of the holders of the Preferred Stock as a class, irrespective of the provisions of Section 242(b)(2) of the DGCL.
Section 3. Rights of Class A Common Stock and Class B Common Stock. The relative powers, rights, qualifications, limitations and restrictions granted to or imposed on the shares of Class A Common Stock and Class B Common Stock are as follows:
(a) Voting Rights. Except as otherwise expressly provided herein or required by applicable law, the holders of Class A Common Stock and Class B Common Stock shall vote together as one class on all matters submitted to a vote of the stockholders, and each share of Class A Common Stock and each share of Class B Common Stock shall entitle the holder thereof to one vote per share on any matter submitted to a vote of the stockholders. The number of authorized shares of Class A Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the approval of the Board of Directors and by the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in an election of directors, without the separate vote of the holders of the Class A Common Stock as a class, irrespective of the provisions of Section 242(b)(2) of the DGCL.
(b) Identical Rights. Except as otherwise expressly provided herein or required by applicable law, shares of Class A Common Stock and Class B Common Stock shall have the same rights and privileges and rank equally, share ratably and be identical in all respects as to all matters, including, without limitation:
(1) Dividends. Subject to the terms of any series of Preferred Stock, shares of Class A Common Stock and Class B Common Stock shall be treated equally, identically and ratably, on a per share basis, with respect to any dividend paid by the Company, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock, each voting separately as a class; provided, however, that in the event a dividend is paid in the form of Class A Common Stock or Class B Common Stock (or rights to acquire such stock), then holders of Class A Common Stock shall receive Class A Common Stock (or rights to acquire such stock, as the case may be) and holders of Class B Common Stock shall receive Class B Common Stock (or rights to acquire such stock, as the case may be).
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(2) Subdivision, Combination or Reclassification. If the Company in any manner subdivides, combines or reclassified the outstanding shares of Class A Common Stock or Class B Common Stock, the outstanding shares of the other such class will be subdivided, combined or reclassified in the same proportion and manner, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock, each voting separately as a class.
(3) Liquidation, Dissolution or Winding Up. Subject to the terms of any series of Preferred Stock, upon the dissolution, distribution of assets, liquidation or winding up of the Corporation, whether voluntary or involuntary, holders of Class A Common Stock and Class B Common Stock will be entitled to receive ratably all assets of the Company available for distribution to its stockholders unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and Class B Common Stock, each voting separately as a class.
(4) Merger or Consolidation. In the case of any distribution or payment in respect of the shares of Class A Common Stock or Class B Common Stock, or any consideration into which such shares are converted, upon the consolidation or merger of the Company with or into any other entity, such distribution, payment or consideration that the holders of shares of Class A Common Stock or Class B Common Stock have the right to receive, or the right to elect to receive, shall be made ratably on a per share basis among the holders of the Class A Common Stock and Class B Common Stock as a single class; provided, however, that shares of such classes may receive, or have the right to elect to receive, different or disproportionate consideration in connection with such consolidation, merger or other transaction if such different treatment is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock and Class B Common Stock, each voting separately as a class.
(c) Transfer Restriction. Shares of Class B Common Stock may not be Transferred by the holder thereof, unless such Transfer is a Permitted Transfer.
(d) Automatic Conversion of Class B Common Stock.
(i) On the 182nd day following any Class B Issuance Date (“First Conversion Date”), one-fourth (1/4) of each Qualified Stockholder’s then outstanding shares of Class B Common Stock issued on such Class B Issuance Date shall automatically convert into an equal number of shares of Class A Common Stock, without any further action by the holder thereof.
(ii) On the one-year anniversary of any Class B Issuance Date (“Second Conversion Date”), one-third (1/3) of each Qualified Stockholder’s then outstanding shares of Class B Common Stock relating to such First Conversion Date shall automatically convert into an equal number of shares of Class A Common Stock, without any further action by the holder thereof.
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(iii) On the one-year anniversary of the First Conversion Date, one-half (1/2) of each Qualified Stockholder’s then outstanding shares of Class B Common Stock issued on such Class B Issuance Date shall automatically convert into an equal number of shares of Class A Common Stock, without any further action by the holder thereof.
(iv) On the two-year anniversary of any Class B Issuance Date, all of each Qualified Stockholder’s then outstanding shares of Class B Common Stock issued on such Class B Issuance Date shall automatically convert into an equal number of shares of Class A Common Stock, without any further action by the holder thereof.
(v) If the conversion of any shares of Class B Common Stock pursuant to the foregoing provisions of this Article IV, Section 4(d)(1) would result in the conversion of any fractional share of Class B Common Stock, the number of shares so converted shall be rounded down to the nearest whole number.
(e) Conversion by Action of the Board. All or any portion of the issued and outstanding shares of Class B Common Stock shall be converted into an equal number of shares of Class A Common Stock pursuant to an action of the Board.
(f) Procedures. The Company may, from time to time, establish such policies and procedures relating to the conversion of Class B Common Stock to Class A Common Stock and the general administration of this dual class stock structure, including the issuance of stock certificates (or the establishment of book-entry positions) with respect thereto, as it may deem reasonably necessary or advisable, and may from time to time request that holders of shares of Class B Common Stock furnish to the Company such certifications, affidavits or other evidence as the Company deems necessary to verify the ownership of Class B Common Stock or to assess other related administrative matters.
(g) Effects of Conversion. Upon the effectiveness of any conversion of Class B Common Stock to Class A Common Stock, all rights of any holder of shares of Class B Common Stock so converted shall cease and such holder shall be treated for all purposes as having become the record holder or holders of such shares of Class A Common Stock into which such shares of Class B Common Stock were converted.
(h) Reservation of Stock. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class B Common Stock, such number of its shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock into shares of Class A Common Stock.
(i) Treatment of Class B Stock Upon Conversion. Each share of Class B Common Stock that is converted pursuant to this Article IV shall be retired by the Company and returned to the authorized but unissued shares of Class B Common Stock.
(j) Defined Terms: For purposes of this Article IV, the following terms have the meanings set forth below:
(1) “Class B Issuance Date” means the date of initial issuance of such share of Class B Common Stock, as recorded in the stock records of the Company.
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(2) “Distribution” means (i) any dividend of cash, property or shares of the Company’s capital stock, and (ii) any distribution following or in connection with any liquidation, dissolution or winding up of the Company, either voluntary or involuntary.
(3) “Family Member” means with respect to any natural person who is a Qualified Stockholder, the spouse, domestic partner, parents, grandparents, lineal descendants, siblings and lineal descendants of siblings of such Qualified Stockholder. Lineal descendants shall include adopted persons, but only so long as they are adopted while a minor.
(4) “Permitted Entity” means with respect to a Qualified Stockholder: (i) a Permitted Trust solely for the benefit of (A) such Qualified Stockholder, (B) one or more Family Members of such Qualified Stockholder, or (C) any other Permitted Entity of such Qualified Stockholder; or (ii) any general partnership, limited partnership, limited liability company, corporation or other entity exclusively owned by (A) such Qualified Stockholder, (B) one or more Family Members of such Qualified Stockholder, or (C) any other Permitted Entity of such Qualified Stockholder.
(5) “Permitted Transfer” means, and be restricted to, any Transfer of a share of Class B Common Stock:
(i) approved in advance by the Board, in its discretion;
(ii) by a Qualified Stockholder (A) to one or more Family Members of such Qualified Stockholder, (B) to any Permitted Entity of such Qualified Stockholder, (C) to such Qualified Stockholder’s revocable living trust, which revocable living trust is a Permitted Trust, or (D) upon such Qualified Stockholder’s death by will, intestate succession or operation of law; or
(iii) by a Permitted Entity of a Qualified Stockholder to (A) such Qualified Stockholder or one or more Family Members of such Qualified Stockholder, or (B) any other Permitted Entity of such Qualified Stockholder.
(6) “Permitted Transferee” means a transferee of shares of Class B Common Stock received in a Permitted Transfer.
(7) “Permitted Trust” means a bona fide trust where each trustee is (i) a Qualified Stockholder, (ii) a Family Member, or (iii) a professional in the business of providing trustee services, including private professional fiduciaries, trust companies and bank trust departments.
(8) “Qualified Stockholder” means (i) the record holder of a share of Class B Common Stock upon the initial issuance thereof, and (ii) a Permitted Transferee.
(9) “Transfer” of a share of Class B Common Stock means any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of such share or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law. The term “Transferred” shall have a correlative meaning.
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ARTICLE V
The Board may make, amend, and repeal the Bylaws of the Company.
ARTICLE VI
Section 1. Action by Written Consent of Stockholders. Subject to the rights of the holders of any series of Preferred Stock, from and after the time the Company ceases to be a “controlled company” (within the meaning of Nasdaq rules), any action required or permitted to be taken by the stockholders of the Company may only be taken at a duly called annual or special meeting of stockholders of the Company and may not be taken without a meeting by means of any consent in writing of such stockholders.
Section 2. Special Meetings of Stockholders. Subject to the rights of the holders of any series of Preferred Stock, special meetings of stockholders of the Company may be called only (i) by the Chairman of the Board (the “Chairman”) or (ii) by the Secretary of the Company (the “Secretary”) acting at the request of the Chairman or a majority of the total number of directors of the Company (the “Directors”).
Section 3. Business Conducted at Meetings of Stockholders. At any annual meeting or special meeting of stockholders of the Company, only such business will be conducted or considered as has been brought before such meeting in the manner provided in the Bylaws of the Company.
ARTICLE VII
Section 1. Number, Election and Terms of Directors. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional Directors under circumstances specified in any Preferred Stock Designation, the number of Directors of the Company will not be less than 5 nor more than 9 and will be fixed from time to time in the manner provided in the Bylaws of the Company. The Directors, other than those who may be elected by the holders of any series of Preferred Stock, will be classified with respect to the time for which they severally hold office into three classes, as nearly equal in number as possible, designated Class I, Class II, and Class III. At any meeting of stockholders at which Directors are to be elected, the number of Directors elected may not exceed the greatest number of Directors then in office in any class of Directors. The Board shall assign members of the Board already in office to Class I, Class II or Class III. The Directors first appointed to Class I will hold office for a term expiring at the annual meeting of stockholders to be held in 2025; the Directors first appointed to Class II will hold office for a term expiring at the annual meeting of stockholders to be held in 2026; and the Directors first appointed to Class III will hold office for a term expiring at the annual meeting of stockholders to be held in 2027, with the members of each class to hold office until their successors are elected and qualified. At each succeeding annual meeting of the stockholders of the Company, the successors to the class of Directors whose term expires at that meeting will be elected by plurality vote of all votes cast at such meeting to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors are elected and qualified. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional Directors under circumstances specified in a Preferred Stock Designation. Election of Directors need not be by written ballot.
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Section 2. Nomination of Director Candidates. Advance notice of stockholder nominations for the election of Directors must be given in the manner provided in the Bylaws of the Company.
Section 3. Newly Created Directorships and Vacancies. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional Directors under circumstances specified in a Preferred Stock Designation, newly created directorships resulting from any increase in the number of Directors and any vacancies on the Board resulting from death, resignation, disqualification, removal, or other cause will be filled solely by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director. Any Director elected in accordance with the preceding sentence will hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such Director’s successor has been elected and qualified. No decrease in the authorized number of Directors constituting the Board may shorten the term of any incumbent Director.
Section 4. Removal. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional Directors under circumstances specified in a Preferred Stock Designation, so long as the Board is divided into classes, any Director may be removed from office by the stockholders only for cause.
ARTICLE VIII
To the fullest extent permitted by the DGCL and any other applicable law currently or hereafter in effect, no Director or officer of the Company will be personally liable to the Company or its stockholders for monetary damages for or with respect to any breach of fiduciary duty or other act or omission as a Director or officer of the Company. No repeal or modification of this Article VIII will adversely affect the protection of any Director or officer of the Company provided hereby in relation to any breach of fiduciary duty or other act or omission as a Director or officer of the Company occurring prior to the effectiveness of such repeal or modification.
ARTICLE IX
Section 1. Forum Generally. Unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, this Certificate of Incorporation or the Bylaws of the Company (as either may be amended from time to time), or (iv) any action asserting a claim governed by the internal affairs doctrine, shall be the Court of Chancery in the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware).
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Section 2. Securities Act Matters. Notwithstanding Section 1 of this Article IX, unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
Section 3. Deemed Notice. Any person or entity purchasing or otherwise acquiring any interest in any security of the Company shall be deemed to have notice of and consented to the provisions of this Article IX.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Amended and Restated Certificate of Incorporation to be signed on this 25th day of September, 2024.
| GUARDIAN PHARMACY SERVICES, INC. | ||
| By: | /s/ Fred P. Burke | |
| Name: | Fred P. Burke | |
| Title: | President and Chief Executive Officer | |
[Signature Page to Amended and Restated Certificate of Incorporation]
Exhibit 3.2
GUARDIAN PHARMACY SERVICES, INC.
AMENDED AND RESTATED BYLAWS
As Adopted and Effective
on September 25, 2024
TABLE OF CONTENTS
| Page | ||||||||
| STOCKHOLDERS MEETINGS | 1 | |||||||
| 1. | Time and Place of Meetings |
1 | ||||||
| 2. | Annual Meetings |
1 | ||||||
| 3. | Special Meetings |
1 | ||||||
| 4. | Notice of Meetings; Adjournment |
1 | ||||||
| 5. | Inspectors |
2 | ||||||
| 6. | Quorum |
2 | ||||||
| 7. | Voting; Proxies |
2 | ||||||
| 8. | Organization; Conduct of Meetings |
2 | ||||||
| 9. | Notice of Stockholder Proposals |
3 | ||||||
| 10. | Notice of Director Nominations |
5 | ||||||
| 11. | Additional Provisions Relating to the Notice of Stockholder Business and Director Nominations |
8 | ||||||
| 12. | Record Dates |
10 | ||||||
| 13. | List of Stockholders Entitled to Vote |
11 | ||||||
| DIRECTORS | 11 | |||||||
| 14. | Authority |
11 | ||||||
| 15. | Number, Election and Terms |
11 | ||||||
| 16. | Newly Created Directorships and Vacancies |
11 | ||||||
| 17. | Removal |
12 | ||||||
| 18. | Resignation |
12 | ||||||
| 19. | Regular Meetings |
12 | ||||||
| 20. | Special Meetings |
12 | ||||||
| 21. | Quorum |
12 | ||||||
| 22. | Participation in Meetings by Remote Communications |
12 | ||||||
| 23. | Committees |
12 | ||||||
| 24. | Compensation |
13 | ||||||
| 25. | Rules |
13 | ||||||
| 26. | Chairman of the Board |
13 | ||||||
| 27. | Action by Unanimous Consent of Directors |
13 | ||||||
(i)
TABLE OF CONTENTS
(continued)
| Page | ||||||||
| NOTICES | 13 | |||||||
| 28. | Generally |
13 | ||||||
| 29. | Waivers |
14 | ||||||
| OFFICERS | 14 | |||||||
| 30. | Generally |
14 | ||||||
| 31. | Compensation |
14 | ||||||
| 32. | Succession |
14 | ||||||
| 33. | Authority and Duties |
15 | ||||||
| STOCK | 15 | |||||||
| 34. | Certificates |
15 | ||||||
| 35. | Transfer |
15 | ||||||
| 36. | Lost, Stolen or Destroyed Certificates |
15 | ||||||
| INDEMNIFICATION | 15 | |||||||
| 37. | Right to Indemnification |
15 | ||||||
| 38. | Right to Advancement of Expenses |
16 | ||||||
| 39. | Contract Rights |
16 | ||||||
| 40. | Right of Indemnitee to Bring Suit |
16 | ||||||
| 41. | Non-Exclusivity of Rights |
17 | ||||||
| 42. | Insurance |
17 | ||||||
| 43. | No Duplication of Payments |
17 | ||||||
| GENERAL | 17 | |||||||
| 44. | Fiscal Year |
17 | ||||||
| 45. | Reliance Upon Books, Reports and Records |
17 | ||||||
| 46. | Amendments |
17 | ||||||
(ii)
STOCKHOLDERS MEETINGS
1. Time and Place of Meetings. All meetings of stockholders will be held at such time and place, within or without the State of Delaware, as may be designated by resolution of the Board of Directors (the “Board”) of Guardian Pharmacy Services, Inc., a Delaware corporation (the “Company”), from time to time or, in the absence of a designation by the Board, by the Chairman of the Board (the “Chairman”) or Secretary of the Company (the “Secretary”), and stated in the notice of the meeting. Notwithstanding the foregoing, the Board may, in its sole discretion, determine that a meeting of stockholders will not be held at any place, but may instead be held by means of remote communications in accordance with Section 211(a) of the General Corporation Law of the State of Delaware (the “DGCL”), subject to such guidelines and procedures as the Board may adopt from time to time. The Board may cancel, postpone or reschedule to an earlier or later date any previously scheduled annual or special meeting of stockholders.
2. Annual Meetings. An annual meeting of stockholders shall be held at such date and time as may be designated by resolution of the Board from time to time. At each annual meeting of stockholders, the stockholders will elect the directors and transact such other business as may properly be brought before the meeting.
3. Special Meetings. A special meeting of stockholders for any purpose or purposes may be called only (i) by the Chairman or (ii) by the Secretary acting at the request of the Chairman or a majority of the Board, and may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
4. Notice of Meetings; Adjournment. Notice of every meeting of stockholders, stating the place, if any, date and time thereof, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, will be given, not less than ten nor more than 60 calendar days before the date of the meeting to each stockholder of record entitled to vote at such meeting as of the record date for determining stockholders entitled to notice of the meeting, except as otherwise provided by law, the certificate of incorporation (as may amended and/or restated from time to time, the “Certificate of Incorporation”) or these Bylaws. When a meeting is adjourned to another place, if any, date, or time, notice need not be given of the adjourned meeting if the place, if any, date and time thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such recessed or adjourned meeting, are announced at the meeting at which the recess or adjournment is taken or are provided in any other matter permitted by the DGCL; provided, however, that if the adjournment is for more than 30 calendar days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the place, if any, date and time thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting, must be given in conformity herewith.
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5. Inspectors. The Board may, and shall if required by law, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Board may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the presiding officer of the meeting will appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have such duties as provided by law.
6. Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the holders of a majority in voting power of the shares of stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, will constitute a quorum at a meeting of stockholders for the transaction of business thereat. A quorum, once established, will not be broken by the subsequent withdrawal of enough votes to leave less than a quorum. If, however, such a quorum shall not be present or represented at any meeting of the stockholders, the presiding officer of the meeting or the stockholders so present, by the affirmative vote of the holders of a majority in voting power of the shares of the corporation which are present in person or by proxy and entitled to vote thereon, may adjourn the meeting from time to time, in the manner provided in Bylaw 4, until a quorum is present or represented.
| 7. | Voting; Proxies. |
(a) General. Except as otherwise provided by law or the Certificate of Incorporation, each stockholder will be entitled at every meeting of the stockholders to one vote for each share of stock having voting power standing in the name of such stockholder on the books of the Company on the record date for the meeting. Such votes may be cast either in person or by another person or persons who have been authorized by the stockholder to act for such stockholder by proxy. No proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Every proxy must be authorized in a manner permitted by Section 212 of the DGCL (or any successor provision).
(b) Vote Required for Stockholder Action. At all meetings of stockholders for the election of directors at which a quorum is present a plurality of the votes cast shall be sufficient to elect. All other matters presented to the stockholders at a meeting at which a quorum is present, shall, unless a different or minimum vote is required by the Certificate of Incorporation, these Bylaws, the rules or regulations of any stock exchange applicable to the Company, or any law or regulation applicable to the Company or its securities, in which case such different or minimum vote shall be the applicable vote on the matter, be decided by the affirmative vote of a majority of the votes properly cast on the matter (excluding any abstentions or broker non-votes).
8. Organization; Conduct of Meetings. The Chairman, or an officer of the Company designated from time to time by the Board, will call meetings of stockholders to order and will act as presiding officer thereof. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person officer of the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations adopted by the Board, the presiding officer of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding officer, are appropriate for the proper conduct
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of the meeting. Such rules and regulations or procedures, whether adopted by the Board or prescribed by the presiding officer of the meeting, may include without limitation: (a) the establishment of an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting and the safety of those present; (c) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the presiding officer of the meeting shall determine; (d) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (e) limitations on the time allotted to questions or comments by participants. The presiding officer at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding officer should so determine, such presiding officer shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered.
9. Notice of Stockholder Proposals.
(a) Business to Be Conducted at Annual Meeting. At an annual meeting of stockholders, only such business may be conducted as has been properly brought before the meeting. To be properly brought before an annual meeting, business (other than the nomination of a person for election as a director, which is governed by Bylaw 10, and, to the extent applicable, Bylaw 11), must be brought before the meeting only (i) pursuant to the Company’s notice of meeting, (ii) by or at the direction of the Board or (iii) by a stockholder who (A) has complied with all applicable requirements of this Bylaw 9 and Bylaw 11 in relation to such business, (B) was a stockholder of record of the Company at the time of giving the notice required by this Bylaw 9 and is a stockholder of record of the Company at the time of the annual meeting, and (C) is entitled to vote at the annual meeting. For the avoidance of doubt, the foregoing clause (iii) will be the exclusive means for a stockholder to submit business before an annual meeting of stockholders (other than proposals properly made in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder, the “Exchange Act”) and included in the notice of meeting given by or at the direction of the Board). For business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Bylaw 9(a), the stockholder must have given timely notice thereof in writing to the Secretary of the Company in accordance with this Bylaw 9 and Bylaw 11 and any such proposed business must constitute a proper matter for stockholder action.
(b) Required Form for Stockholder Proposals. To be in proper form, a stockholder’s notice to the Secretary must set forth in writing:
(i) Information Regarding the Proposing Person. As to each Proposing Person (as such term is defined in Bylaw 11(e)(ii)):
(A) the name and address of such stockholder, as they appear on the Company’s books and the name and address of any other Proposing Person;
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(B) the class, series and number of shares of the Company’s stock directly or indirectly beneficially owned or held of record by such Proposing Person (including any shares of any class or series of the Company as to which such Proposing Person has a right to acquire beneficial ownership, whether such right is exercisable immediately or only after the passage of time);
(C) a representation (1) that the stockholder giving the notice is a holder of record of stock of the Company entitled to vote at the annual meeting and intends to appear in person or by proxy at the annual meeting to bring such business before the annual meeting and (2) as to whether any Proposing Person intends or is part of a group which intends to (x) deliver a proxy statement and form of proxy to holders of at least the percentage of shares of the Company entitled to vote and required to approve the proposal, (y) otherwise to solicit proxies or votes from stockholders in support of such proposal and (z) solely with respect to nominations pursuant to Bylaw 10, to solicit proxies in support of any proposed nominee in accordance with Rule 14a-19 promulgated under the Exchange Act;
(D) a description of any (1) option, warrant, convertible security, stock appreciation right or similar right or interest (including any derivative securities, as defined under Rule 16a-1 under the Exchange Act), whether or not presently exercisable, with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of securities of the Company or with a value derived in whole or in part from the value of any class or series of securities of the Company, whether or not such instrument or right is subject to settlement in whole or in part in the underlying class or series of securities of the Company or otherwise, directly or indirectly held of record or owned beneficially by such Proposing Person and (2) each other direct or indirect right or interest that may enable such Proposing Person to profit or share in any profit derived from, or to manage the risk or benefit from, any increase or decrease in the value of the Company’s securities, in each case regardless of whether (x) such right or interest conveys any voting rights in such security to such Proposing Person, (y) such right or interest is required to be, or is capable of being, settled through delivery of such security, or (z) such Proposing Person may have entered into other transactions that hedge the economic effect of any such right or interest (any such right or interest referred to in this clause (D) being a “Derivative Interest”);
(E) any proxy, contract, arrangement, understanding or relationship pursuant to which the Proposing Person has a right to vote any shares of the Company or which has the effect of increasing or decreasing the voting power of such Proposing Person;
(F) any rights directly or indirectly held of record or beneficially by the Proposing Person to dividends on the shares of the Company that are separated or separable from the underlying shares of the Company;
(G) any performance-related fees (other than an asset-based fee) to which the Proposing Person may be entitled as a result of any increase or decrease in the value of shares of the Company or Derivative Interests; and
(H) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required pursuant to Section 14(a) of the Exchange Act to be made in connection with a general solicitation of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting.
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(ii) Information Regarding the Proposal: As to each item of business that the stockholder giving the notice proposes to bring before the annual meeting:
(A) a description in reasonable detail of the business desired to be brought before the annual meeting and the reasons why such stockholder or any other Proposing Person believes that the taking of the action or actions proposed to be taken would be in the best interests of the Company and its stockholders;
(B) a description in reasonable detail of any material interest of any Proposing Person in such business and a description in reasonable detail of all agreements, arrangements and understandings among the Proposing Persons or between any Proposing Person and any other person or entity in connection with the proposal; and
(C) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws, the language of the proposed amendment).
(c) No Right to Have Proposal Included. A stockholder is not entitled to have its proposal included in the Company’s proxy statement and form of proxy solely as a result of such stockholder’s compliance with the foregoing provisions of this Bylaw 9.
(d) Requirement to Attend Annual Meeting. Notwithstanding the foregoing provisions of this Bylaw 9, if a stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting to present its proposal, such proposal will be disregarded and not transacted (notwithstanding that such proposal is set forth in the notice of meeting and notwithstanding that proxies in respect of such proposal may have been solicited, obtained or delivered). For purposes of this Bylaw 9 and Bylaw 10, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
10. Notice of Director Nominations.
(a) Nomination of Directors. Subject to the rights, if any, of any series of Preferred Stock to nominate or elect directors under circumstances specified in a Preferred Stock Designation, only persons who are nominated in accordance with the procedures set forth in this Bylaw 10 will be eligible to elected or serve as directors. Nominations of persons for election as directors of the Company may be made at an annual meeting of stockholders only (i) by or at the direction of the Board or (ii) by a stockholder who (A) has complied with all applicable requirements of this Bylaw 10 and Bylaw 11 in relation to such nomination, (B) was a stockholder of record of the Company at the time of giving the notice required by this Bylaw 10 and is a stockholder of record of the Company at the time of the annual meeting, and (C) is entitled to vote at the annual meeting. For a nomination to be properly made at an annual meeting by a stockholder pursuant to clause (ii) of this Bylaw 10(a), the stockholder must have given timely notice thereof in writing to the Secretary of the Company in accordance with this Bylaw 10 and Bylaw 11. The
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number of nominees a stockholder may nominate for election at the annual meeting (or in the case of one or more stockholders giving the notice on behalf of a beneficial owner, the number of nominees such stockholders may collectively nominate for election at the annual meeting on behalf of such beneficial owner) shall not exceed the number of directors to be elected at such annual meeting.
(b) Required Form for Director Nominations. To be in proper form, a stockholder’s notice to the Secretary must set forth in writing:
(i) Information Regarding the Proposing Person. As to each Nominating Person (as such term is defined in Bylaw 11(d)(iii)), the information set forth in Bylaw 9(b)(i) (except that for purposes of this Bylaw 10, the term “Nominating Person” will be substituted for the term “Proposing Person” in all places where it appears in Bylaw 9(b)(i) and any reference to “business” or “proposal” therein will be deemed to be a reference to the “nomination” contemplated by this Bylaw 10).
(ii) Information Regarding the Nominee: As to each person whom the stockholder giving notice proposes to nominate for election as a director:
(A) all information with respect to such proposed nominee that would be required to be set forth in a stockholder’s notice pursuant to Bylaw 9(b)(i) if such proposed nominee were a Proposing Person;
(B) all information relating to such proposed nominee that would be required to be disclosed in a proxy statement or other filing required pursuant to Section 14(a) under the Exchange Act to be made in connection with a general solicitation of proxies for an election of directors in a contested election (including such proposed nominee’s written consent to be named in the proxy statement as a nominee and to serve as a director if elected);
(C) all information that would be required to be disclosed pursuant to Items 403 and 404 under Regulation S-K if the stockholder giving the notice or any other Nominating Person were the “registrant” for purposes of such rule and the proposed nominee were a director or executive officer of such registrant;
(D) a completed questionnaire (in the form provided by the Secretary upon written request) with respect to the identity, background and qualification of the proposed nominee and the background of any other person or entity on whose behalf the nomination is being made; and
(E) a written representation and agreement (in the form provided by the Secretary upon written request) that the proposed nominee (1) is not and will not become a party to (x) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how the proposed nominee, if elected as a director of the Company, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Company or (y) any Voting Commitment that could limit or interfere with the proposed nominee’s ability to comply, if elected as a director of the Company, with the proposed nominee’s fiduciary duties under applicable law, (2) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Company with
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respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (3) if elected as a director of the Company, the proposed nominee would be in compliance and will comply, with all applicable publicly disclosed corporate governance, ethics, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Company.
The Company may require any proposed nominee to furnish such other information as may be reasonably required by the Company to determine the qualifications and eligibility of such proposed nominee to serve as a director.
(c) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Company’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Company’s notice of meeting (i) by or at the direction of the Board (ii) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder who (A) has complied with all applicable requirements of this Bylaw 10 and Bylaw 11 in relation to such nomination, (B) was a stockholder of record of the Company at the time of giving the notice required by this Bylaw 10 and is a stockholder of record of the Company at the time of the special meeting, and (C) is entitled to vote at the special meeting. The number of nominees a stockholder may nominate for election at the special meeting at which directors are to be elected (or in the case of one or more stockholders giving the notice on behalf of a beneficial owner, the number of nominees such stockholders may collectively nominate for election at the special meeting on behalf of such beneficial owner) shall not exceed the number of directors to be elected at such special meeting. In the event a special meeting of stockholders is duly called for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by this Bylaw 10 shall be delivered to the Secretary in accordance with Bylaw 11.
(d) No Right to Have Nominees Included. A stockholder is not entitled to have its nominees included in the Company’s proxy statement solely as a result of such stockholder’s compliance with the foregoing provisions of this Bylaw 10.
(e) Requirement to Attend Annual Meeting; Compliance with Rule 14a-19. If a stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting to present its nomination, such nomination will be disregarded (notwithstanding that such nomination is set forth in the notice of meeting and notwithstanding that that proxies in respect of such nomination may have been solicited, obtained or delivered). Notwithstanding anything to the contrary in these Bylaws, unless otherwise required by law, if any stockholder or Nominating Person (i) provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act with respect to any proposed nominee and (ii) subsequently fails to comply with the requirements of Rule 14a-19(a)(2) or Rule 14a-19(a)(3) promulgated under the Exchange Act (or fails to timely provide reasonable evidence sufficient to satisfy the Corporation that such stockholder has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act in accordance with the following sentence), then the nomination of each such proposed nominee shall be disregarded, notwithstanding that the nominee is included as a nominee in the Company’s proxy statement,
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notice of meeting or other proxy materials for any annual meeting (or any supplement thereto) and notwithstanding that proxies or votes in respect of the election of such proposed nominees may have been received by the Company (which proxies and votes shall be disregarded). Upon request by the Corporation, if any stockholder or Nominating Person provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act, such stockholder shall deliver to the Corporation, no later than five (5) business days prior to the applicable meeting, reasonable evidence that it or such Nominating Person has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act.
11. Additional Provisions Relating to the Notice of Stockholder Business and Director Nominations.
(a) Timely Notice.
(i) To be timely, a stockholder’s notice required by Bylaw 9(a)(iii) or Bylaw 10(a)(ii) must be delivered to or mailed and received by the Secretary at the principal executive offices of the Company not less than 90 nor more than 120 calendar days prior to the first anniversary of the date on which the Company held the preceding year’s annual meeting of stockholders (which preceding year’s annual meeting shall, for purposes of the Company’s first annual meeting after the Company’s shares are first publicly traded, be deemed to have occurred on [ ]); provided, however, that if the date of the annual meeting is scheduled for a date more than 30 calendar days prior to or more than 30 calendar days after the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than 120 calendar days prior to such annual meeting and not later than the close of business on the later of the 90th calendar day prior to such annual meeting and the 10th calendar day following the day on which public disclosure of the date of such meeting is first made. In no event will a recess or adjournment of an annual meeting (or any announcement of any such recess or adjournment) commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(ii) Notwithstanding anything in this Bylaw 11(a) to the contrary, in the event that the number of directors to be elected to the Board at the annual meeting is increased effective after the time period for which nominations would otherwise be due under this Bylaw 11(a) and there is no public announcement by the Company naming the nominees for the additional directorships at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this this Bylaw 11(a) shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Company not later than the close of business on the 10th day following the day on which such public announcement is first made by the Company.
(iii) In the event a special meeting of stockholders is duly called for the purpose of electing one or more directors to the Board, stockholder’s notice required by Bylaw 10(c) must be delivered to or mailed and received by Secretary at the principal executive offices of the Company not earlier than 120 calendar day prior to such special meeting and not less than the later of 90 calendar days prior to such special meeting or the 10th day following the day on which the Company first makes a public announcement of the date of the special meeting at which directors are to be elected. In no event will a recess or adjournment of an annual meeting (or any announcement of any such recess or adjournment) commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
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(b) Updating Information in Notice. A stockholder providing notice of business proposed to be brought before an annual meeting pursuant to Bylaw 9 or notice of any nomination to be made at an annual meeting pursuant to Bylaw 10 must further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to Bylaw 9 or Bylaw 10, as applicable, is true and correct (x) as of the record date for notice and voting at the meeting and (y) as of the date that is fifteen (15) days prior to the meeting or any adjournment or postponement thereof. Any such update and supplement must be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Company (i) in the case of any update and supplement required to be made as of any record date for the meeting that is at least ten (10) days prior to the meeting, not later than five (5) days after such record date for the meeting and (ii) in the case of any update or supplement required to be made as of fifteen (15) days prior to the meeting or adjournment or postponement thereof, not later than ten (10) days prior to the date for the meeting or any adjournment or postponement thereof. For the avoidance of doubt, the obligation to update and supplement as set forth in this Bylaw 11(b) or any other section of these Bylaws shall not limit the Company’s rights with respect to any deficiencies in any stockholder’s notice, including, without limitation, any representation required herein, extend any applicable deadlines under these Bylaws or enable or be deemed to permit a stockholder who has previously submitted a stockholder’s notice under these Bylaws to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business and/or resolutions proposed to be brought before a meeting of stockholders.
(c) Determinations Regarding Compliance. The presiding officer of any annual meeting will, if the facts warrant, determine that a proposal was not made in accordance with the procedures prescribed by Bylaw 9 and this Bylaw 11 or that a nomination was not made in accordance with the procedures prescribed by Bylaw 10 and this Bylaw 11, and if he or she should so determine, he or she will so declare to the meeting and the defective proposal or nomination, as applicable, will be disregarded.
(d) Compliance with the Exchange Act. Notwithstanding the foregoing provisions of Bylaws 9, 10, and 11, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in Bylaws 9, 10, and 11; provided however, that any references in these Bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to Bylaws 9, 10, and 11, and compliance with Bylaws 9, 10, and 11 shall be the exclusive means for a stockholder to make nominations or submit other business (other than, as provided in the penultimate sentence of Bylaw 9(a), business other than nominations brought properly under and in compliance with Rule 14a-8 of the Exchange Act, as may be amended from time to time). Nothing in Bylaws 9, 10, and 11 shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals other than nominations in the Company’s proxy statement pursuant to applicable rules and regulations promulgated under the Exchange Act or (ii) of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of a Preferred Stock Designation.
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(e) Certain Definitions.
(i) For purposes of Bylaw 9 and Bylaw 10 and this Bylaw 11, “public disclosure” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document filed by the Company with the Securities and Exchange Commission pursuant to Exchange Act or furnished by the Company to stockholders.
(ii) For purposes of Bylaw 9 and this Bylaw 11, “Proposing Person” means (A) the stockholder providing the notice of business proposed to be brought before an annual meeting, (B) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is given, and (C) any Affiliate or Associate (each within the meaning of Rule 12b-2 under the Exchange Act) of such stockholder or beneficial owner.
(iii) For purposes of Bylaw 10 and this Bylaw 11, “Nominating Person” means (A) the stockholder providing the notice of the nomination proposed made to be at an annual meeting, (B) the beneficial owner or beneficial owners, if different, on whose behalf the notice of nomination proposed to be made at the annual meeting is given, and (C) any Affiliate or Associate (each within the meaning of Rule 12b-2 under the Exchange Act) of such stockholder or beneficial owner.
12. Record Dates.
(a) Voting Record Dates. In order that the Company may determine the stockholders entitled to notice of any meeting of stockholders, the Board may fix a record date, which will not precede the date upon which the Board resolution fixing the same is adopted and will not be more than 60 nor less than 10 calendar days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders will be at the close of business on the calendar day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the calendar day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders will apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to such notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this Bylaw 12(a) at the adjourned meeting.
(b) Payment Record Dates. In order that the Company may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date will not be more than 60 calendar days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose will be at the close of business on the calendar day on which the Board adopts the resolution relating thereto.
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(c) Identity of Registered Holder. The Company will be entitled to treat the person in whose name any share of its stock is registered as the owner thereof for all purposes, and will not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Company has notice thereof, except as expressly provided by applicable law.
13. List of Stockholders Entitled to Vote. The corporation shall prepare, no later than the tenth day before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of 10 days ending on the day before the meeting date (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting or (ii) during ordinary business hours at the principal place of business of the corporation. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Bylaw 13 or to vote in person or by proxy at any meeting of stockholders.
DIRECTORS
14. Authority. The business and affairs of the Company will be managed by and under the direction of the Board.
15. Number, Election and Terms. Subject to the rights, if any, of any series of Preferred Stock to elect additional directors under circumstances specified in the Certificate of Incorporation including any Preferred Stock Designation, and to the minimum and maximum number of authorized directors provided in the Certificate of Incorporation, the authorized number of directors may be fixed from time to time only by a resolution adopted by a majority of the Board. The terms of directors shall be as set forth in the Certificate of Incorporation.
16. Newly Created Directorships and Vacancies. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional directors under circumstances specified in the Certificate of Incorporation including any Preferred Stock Designation, newly created directorships resulting from any increase in the authorized number of directors and any vacancies on the Board resulting from death, resignation, disqualification, removal or other cause may be filled solely by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board, or by a sole remaining director. Any director elected in accordance with the preceding sentence will hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director’s successor is elected and qualified. No decrease in the authorized number of directors will shorten the term of any incumbent director.
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17. Removal. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional directors under circumstances specified in the Certificate of Incorporation including any Preferred Stock Designation, any director may be removed from office by the stockholders only in the manner provided in the Certificate of Incorporation.
18. Resignation. Any director may resign at any time upon notice given in writing or by electronic transmission to the Chairman or the Secretary. Any resignation is effective when the resignation is delivered to the Company unless the resignation specifies a later effective date or an effective date that is contingent upon the occurrence or non-occurrence of one or more specified events.
19. Regular Meetings. Regular meetings of the Board may be held at such places either within or without the State of Delaware and at such times as may from time to time be determined by the Board. Notice of regular meetings of the Board need not be given.
20. Special Meetings. Special meetings of the Board may be called by the Chairman on at least 24 hours’ notice to each director and will be called by the Chairman, in like manner and on like notice, upon the request of a majority of the Board. The time and place, if any, of any such special meeting shall be as specified in the notice of such meeting.
21. Quorum. At all meetings of the Board, a majority of the Board will constitute a quorum for the transaction of business. Except for actions required by these Bylaws or the Certificate of Incorporation to be taken by a majority of the Board, the act of a majority of the directors present at any meeting at which there is a quorum will be the act of the Board. If a quorum is not present at any meeting of the Board, the directors present thereat may adjourn the meeting from time to time to another place, if any, time, or date, without notice other than announcement at the meeting, until a quorum is present.
22. Participation in Meetings by Remote Communications. Members of the Board or any committee designated by the Board may participate in a meeting of the Board or any such committee, as the case may be, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting will constitute presence in person at the meeting.
23. Committees. The Board may designate one or more committees, each committee to consist of one or more of the directors. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, or in these Bylaws, will have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, and may authorize the seal of the Company to be affixed to all papers which may require it; but no such committee will have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to
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stockholders for approval or (b) making, adopting, amending or repealing any provision of these Bylaws. Unless the Board provides otherwise, each committee designated by the Board may make, alter and repeal rules and procedures for the conduct of its business. In the absence of such rules and procedures, each committee shall conduct its business in the same manner as the Board conducts its business. Any resolution of the Board establishing or directing any committee of the Board or establishing or amending the charter of any such committee may establish requirements or procedures relating to the governance and/or operation of such committee that are different from, or in addition to, those set forth in these Bylaws and, to the extent that there is any inconsistency between these Bylaws and any such resolution or charter, the terms of such resolution or charter shall be controlling.
24. Compensation. The Board may establish the compensation of directors, including without limitation compensation for membership on the Board and on committees of the Board, attendance at meetings of the Board or committees of the Board, and for other services provided to the Company or at the request of the Board.
25. Rules. The Board may adopt rules and regulations for the conduct of meetings and the oversight of the management of the affairs of the Company.
26. Chairman of the Board. The Board, by a majority vote of the Board, shall elect a Chairman from among the members of the Board. The Chairman shall not be considered an officer of the Company in his or her capacity as such. The Chairman may be removed from that capacity by a majority vote of the Board. The Chairman shall preside at meetings of the Board and of the stockholders of the Company and exercise and perform such other powers and duties as may from time to time be assigned to him or her by the Board or as may be prescribed by these Bylaws. In the absence of the Chairman, such other director of the Company designated by the Chairman or by the Board shall act as chairman of any meeting of the Board. The Chairman or the Board may appoint a Vice Chairman of the Board to exercise and perform such other powers and duties as may from time to time be assigned to him or her by the Chairman or by the Board.
27. Action by Unanimous Consent of Directors. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of proceedings of the board or committee in the same paper or electronic form as the minutes are maintained.
NOTICES
28. Generally.
(a) Form of Notices. Except as otherwise provided by law, these Bylaws, or the Certificate of Incorporation, whenever by law or under the provisions of the Certificate of Incorporation or these Bylaws notice is required to be given to any director or stockholder, it will not be construed to require personal notice, but such notice may be given in writing, by mail or courier service or, to the extent permitted by the DGCL, by electronic transmission, addressed to
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such director or stockholder. Any notice sent to stockholders by mail or courier service shall be sent to the address of such stockholder as it appears on the records of the Company, with postage thereon prepaid, and such notice will be deemed to be given, if mailed, at the time when the same is deposited in the United States mail, postage prepaid, or, if delivered by courier service, at the earlier of when the notice is received or left at such stockholders’ address. Notices sent by electronic transmission shall be deemed given as set forth in Section 232 of the DGCL. For purposes of this Bylaw 28, “electronic transmission” shall be defined as set forth in Section 232 of the DGCL.
(b) Notices to Directors. Notices to directors may be given by mail or courier service, telephone, electronic transmission or as otherwise may be permitted by these Bylaws.
29. Waivers. Whenever any notice is required to be given by law or under the provisions of the Certificate of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person entitled to such notice, or a waiver by electronic transmission by the person entitled to such notice, whether before or after the time of the event for which notice is to be given, will be deemed equivalent to such notice. Attendance of a person at a meeting will constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
OFFICERS
30. Generally. The officers of the Company will be elected annually by the Board and will consist of a Chief Executive Officer, a Secretary and a Treasurer. The Board may also choose any or all of the following: a President, one or more Vice Presidents (who may be given particular designations with respect to authority, function, or seniority), one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as the Board may from time to time determine. Notwithstanding the foregoing, the Board may authorize the Chief Executive Officer to appoint any person to any office other than the Secretary or Treasurer. Any number of offices may be held by the same person. Any of the offices may be left vacant from time to time as the Board may determine. In the case of the absence or disability of any officer of the Company or for any other reason deemed sufficient by the Board, the Board may delegate the absent or disabled officer’s powers or duties to any other officer or to any director.
31. Compensation. The compensation of all directors who are also officers and agents of the Company and the executive officers of the Company will be fixed by the Board or by a committee of the Board. The Board may fix or delegate the power to fix, the compensation of other officers and agents of the Company to an officer of the Company.
32. Succession. The officers of the Company will hold office until their successors are elected and qualified or until such officer’s earlier death, resignation or removal. Any officer may be removed at any time by the affirmative vote of a majority of the Board. Any vacancy occurring in any office of the Company may be filled by the Board or by the Chief Executive Officer as provided in Bylaw 30.
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33. Authority and Duties. Each of the officers of the Company will have such authority and will perform such duties as are customarily incidental to their respective offices or as may be specified from time to time by the Board.
STOCK
34. Certificates. The shares of the Company shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Company shall be uncertificated shares. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Company by, any two authorized officers of the Company (it being understood that each of the Chairman, Chief Executive Officer, Chief Financial Officer, Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary shall be an authorized officer for such purpose). Any or all of the signatures on a certificate may be a facsimile signature. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
35. Transfer. Transfers of shares shall be made upon the books of the Company (a) only by the holder of record thereof, or by a duly authorized agent, transferee or legal representative and (b) in the case of certificated shares, upon the surrender to the Company of the certificate or certificates for such shares. No transfer shall be made that is inconsistent with the provisions of applicable law.
36. Lost, Stolen or Destroyed Certificates. The Secretary may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the Company alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact, satisfactory to the Secretary, by the person claiming the certificate of stock to be lost, stolen or destroyed. As a condition precedent to the issuance of a new certificate or certificates, the Company may require the owners of such lost, stolen or destroyed certificate or certificates to give the Company a bond in such sum and with such surety or sureties as the Secretary may direct as indemnity against any claims that may be made against the Company with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of the new certificate or uncertificated shares.
INDEMNIFICATION
37. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise subject to or involved in any claim, demand, action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she is or was a director or an officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another company or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an “Indemnitee”), whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified by the Company to the fullest extent
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permitted or required by the DGCL and any other applicable law, as the same exists or may hereafter be amended against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith (“Indemnifiable Losses”); provided, however, that, except as provided in Bylaw 40 with respect to Proceedings to enforce rights to indemnification, the Company shall indemnify any such Indemnitee pursuant to this Bylaw 37 in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board.
38. Right to Advancement of Expenses. The right to indemnification conferred in Bylaw 37 shall include the right to advancement by the Company of any and all expenses (including, without limitation, attorneys’ fees and expenses) incurred in defending any such Proceeding in advance of its final disposition (an “Advancement of Expenses”); provided, however, that, if the DGCL so requires, an Advancement of Expenses incurred by an Indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such Indemnitee, including without limitation service to an employee benefit plan) shall be made pursuant to this Section 2 only upon delivery to the Company of an undertaking (an “Undertaking”), by or on behalf of such Indemnitee, to repay, without interest, all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “Final Adjudication”) that such Indemnitee is not entitled to be indemnified for such expenses under this Bylaw 38. An Indemnitee’s right to an Advancement of Expenses pursuant to this Bylaw 38 is not subject to the satisfaction of any standard of conduct and is not conditioned upon any prior determination that Indemnitee is entitled to indemnification under Bylaw 37 with respect to the related Proceeding or the absence of any prior determination to the contrary.
39. Contract Rights. The rights to indemnification and to the Advancement of Expenses conferred in Bylaws 37 and 38 shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators.
40. Right of Indemnitee to Bring Suit. If a claim under Bylaw 37 or 38 is not paid in full by the Company within 60 calendar days after a written claim has been received by the Company, except in the case of a claim for an Advancement of Expenses, in which case the applicable period shall be 30 calendar days, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Company to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the Indemnitee shall be entitled to the fullest extent permitted or required by the DGCL, as the same exists or may hereafter be amended, to be paid also the expense of prosecuting or defending such suit. In any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an Advancement of Expenses), the Company may raise as a defense that the Indemnitee has not met any applicable standard for indemnification set forth in the DGCL. In any suit brought by the Company to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the Company shall be entitled to recover such expenses, without interest, upon a Final Adjudication that the Indemnitee has not met any applicable standard for indemnification set forth in the DGCL. Neither the failure of the Company (including its Board or a committee thereof, its
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stockholders or independent legal counsel) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Company (including its Board or a committee thereof, its stockholders or independent legal counsel) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by an Indemnitee to enforce a right to indemnification or to an Advancement of Expenses hereunder, or brought by the Company to recover an Advancement of Expenses hereunder pursuant to the terms of an Undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such Advancement of Expenses, shall be on the Company.
41. Non-Exclusivity of Rights. The rights to indemnification and to the Advancement of Expenses conferred these Bylaws shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Company’s Certificate of Incorporation, these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise. Nothing contained in these Bylaws shall limit or otherwise affect any such other right or the Company’s power to confer any such other right.
42. Insurance. The Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the DGCL.
43. No Duplication of Payments. The Company’s obligation under these Bylaws to make any payment to an Indemnitee in respect of any Indemnifiable Losses shall be reduced by any amount that the Indemnitee has otherwise actually received payment (net of any expenses incurred in connection therewith and any repayment by the Indemnitee made with respect thereto) under any insurance policy or from any other source in respect of such Indemnifiable Losses.
GENERAL
44. Fiscal Year. The fiscal year of the Company will end on December 31 of each calendar year or such other date as may be fixed from time to time by the Board.
45. Reliance Upon Books, Reports and Records. Each director, each member of a committee designated by the Board, and each officer of the Company will, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports, or statements presented to the Company by any of the Company’s officers or employees, or committees of the Board, or by any other person or entity as to matters the director, committee member, or officer believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company.
46. Amendments. These Bylaws or any of them may be amended in any respect or repealed at any time, either by the Board or the stockholders.
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Exhibit 4.1
STOCKHOLDERS’ AGREEMENT
This STOCKHOLDERS’ AGREEMENT (this “Agreement”) is entered into as of September 25, 2024 among Guardian Pharmacy Services, Inc., a Delaware corporation (the “Company”), Bindley Capital Partners I, LLC, an Indiana limited liability company (“Bindley Capital”), Pharmacy Investors, LLC, an Indiana limited liability company (“Pharmacy Investors”), Cardinal Equity Fund LP, a Delaware limited partnership (“Cardinal” and, collectively with Pharmacy Investors, the “Cardinal Stockholders”), Fred P. Burke, an individual (“Burke”), David K. Morris, an individual (“Morris”), and G. Kendall Forbes, an individual, and any Person who becomes a party hereto pursuant to Section 3.1 (collectively, the “Stockholders”, and each individually, a “Stockholder”).
RECITALS
A. The Stockholders and the Company are entering into this Agreement in connection with the underwritten initial public offering (the “IPO”) of shares of Class A Common Stock, par value $0.001 per share of the Company (“Class A Shares”) in order to govern certain of their rights and obligations with respect to the Stockholders’ ownership of Shares and the governance of the Company following consummation of the IPO.
B. After giving effect to the IPO, the Stockholders own the equity securities of the Company in the respective amounts indicated on Schedule I hereto.
Accordingly, the Company and the Stockholders agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Defined Terms. As used herein, the following terms will have the following meanings:
“Affiliate” means (a) with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person, and (b) with respect to any natural person, any spouse or lineal descendant of such person, and in each case, any trust therefor.
“beneficial owner” or “beneficially own” has the meaning given such term in Rule 13d-3 under the Exchange Act, and a Person’s beneficial ownership of Shares or other Equity Securities of the Company will be calculated in accordance with the provisions of such rule. For the avoidance of doubt, no Person will be deemed to beneficially own any security solely as a result of such Person’s execution of this Agreement.
“Board” means the Board of Directors of the Company.
“Business Day” means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in New York City.
“Bylaws” means the Bylaws of the Company, as in effect on the date hereof and as may be amended from time to time in accordance with the terms thereof.
“Charter” means the Certificate of Incorporation of the Company, as in effect on the date hereof and as may be amended from time to time in accordance with the terms thereof.
“Class B Shares” means shares of Class B Common Stock, par value $0.001 per share, of the Company.
“Competing Entity” means any Person that competes, directly or indirectly, with the Company or any of its Subsidiaries.
“control” (including the terms “controlling”, “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.
“Director” means any member of the Board.
“Equity Securities” means any and all Shares or other equity securities of the Company, securities of the Company convertible into, or exchangeable or exercisable for (whether presently convertible, exchangeable or exercisable or not) Shares or other equity securities, and options, warrants or other rights (whether presently convertible, exchangeable or exercisable or not) to Shares or other equity securities of the Company.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Group” has the meaning set forth in Section 13(d)(3) of the Exchange Act.
“Independent Director” means a Director who would qualify as an “Independent Director” pursuant to the listing standards of the corporate governance rules for The NASDAQ Stock Market.
“Information” means all confidential information about the Company or any of its Subsidiaries that is or has been furnished to any Stockholder or any of its Representatives by or on behalf of the Company or any of its Subsidiaries, or any of their respective Representatives (whether written or oral or in electronic or other form and whether prepared by the Company or any of its Subsidiaries or their respective Representatives), together with that portion of all written or electronically stored documentation prepared by such Stockholder or its Representatives based on or reflecting, in whole or in part, such information; provided, however, that the term “Information” will not include any information that (a) is or becomes generally available to the public through no action or omission by such Stockholder or its Representatives in violation of this Agreement, (b) is or becomes available to such Stockholder on a non-confidential basis from a source, other than the Company or any of its Subsidiaries, or any of their respective Representatives, that, to such Stockholder’s knowledge, after reasonable inquiry, is not prohibited from disclosing to such Stockholder by a contractual, legal or fiduciary obligation or (c) is independently developed by a Stockholder or its Representatives or Affiliates without use of any Information.
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“Law” means the law of any jurisdiction, whether international, multilateral, multinational, national, federal, state, provincial, local or common law, or an order, act, statute, ordinance, regulation, rule, extension order or code promulgated by a governmental authority (including any department, court, agency or official, or non-governmental self-regulatory organization, agency or authority and any political subdivision or instrumentality thereof).
“Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivisions thereof or any Group comprised of two or more of the foregoing.
“Representatives” means with respect to any Person, any of such Person’s, or its Affiliates’, directors, officers, employees, general partners, Affiliates, direct or indirect shareholders, members or limited partners, attorneys, accountants, financial and other advisers, and other agents and representatives, including, in the case of any Stockholder, any designee nominated for election to the Board or a committee thereof by such Stockholder.
“Restricted Group” means, with respect to any Stockholder, (a) such Stockholder, (b) any Affiliate of such Stockholder (other than any portfolio company), and (c) any Group (that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act with respect to securities of the Company) of which such Stockholder or its Affiliate (other than any portfolio company) is a member, other than the Group formed by virtue of the existence of this Agreement.
“Sale of the Company” means, in any one or more related transactions, a merger (other than a merger solely for the purpose of forming a holding company with no change in indirect ownership or to effect a change in the Company’s state of incorporation), business combination or sale of all or substantially all of the Company’s assets, in each case, as a result of which the Directors immediately prior to such transaction do not represent a majority of the Board immediately following the consummation of such transaction (or series of transactions), or the stockholders of the Company immediately prior to such transaction do not, immediately following the consummation of such transaction (or series of transactions), continue to own equity securities representing more than 50% of the vote and of the equity of the Company, of the ultimate controlling Person (in the case of a merger or business combination) or Person succeeding to ownership of all or substantially all of the Company’s assets (in the case of a sale of assets).
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares” means Class A Shares and Class B Shares.
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“Significant Stockholder” means each Stockholder who, together with its Affiliates, beneficially owns 10% or more of the Company’s outstanding Shares.
“Subsidiary” means, with respect to any Person, (a) any corporation of which a majority of the securities entitled to vote generally in the election of directors thereof, at the time as of which any determination is being made, or a majority of the economic interests in such Person’s equity, are owned by such Person, either directly or indirectly, and (b) any joint venture, general or limited partnership, limited liability company or other legal entity in which such Person is the record or beneficial owner, directly or indirectly, of a majority of the voting or equity interests or of which such Person is the general partner or managing member.
“Transfer” means mean any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition, whether or not for value and whether voluntary or involuntary or by operation of law. The term “Transferred” has a correlative meaning.
“Transferee” means any Person to whom any Stockholder or any transferee thereof Transfers Equity Securities.
“Voting Securities” means at any time the then-issued and outstanding Shares and any other Equity Securities having power generally to vote for the election of Directors.
Section 1.2. As used herein, each capitalized term set forth below has the meaning set forth in the corresponding Section of this Agreement set forth below.
| Agreement | Preamble | |
| Bindley Capital | Preamble | |
| Burke | Preamble | |
| Cardinal | Preamble | |
| Cardinal Stockholders | Preamble | |
| Class A Shares | Recitals | |
| Company | Preamble | |
| Covered Claims | 5.15(a) | |
| Designating Stockholder | 2.1(d)(ii) | |
| IPO | Recitals | |
| Morris | Preamble | |
| Pharmacy Investors | Preamble | |
| Secondary Indemnitors | 5.15 | |
| Specified Indemnitee | 5.15 | |
| Stockholders | Preamble |
Section 1.3. Other Definitional Provisions. Unless otherwise expressly provided, for the purposes of this Agreement, the following rules of interpretation will apply:
(a) When a reference is made in this Agreement to an article or a section, paragraph, exhibit or schedule, such reference will be to an article or a section, paragraph, exhibit or schedule hereof unless otherwise clearly indicated to the contrary.
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(b) Whenever the words “include,” “includes” or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.”
(c) The words “hereof,” “herein” and “herewith” and words of similar import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.
(d) The meaning assigned to each term defined herein will be equally applicable to both the singular and the plural forms of such term, and words denoting any gender will include all genders. Where a word or phrase is defined herein, each of its other grammatical forms will have a corresponding meaning.
| (e) | A reference to any period of days will be deemed to be to the relevant number of calendar days, unless otherwise specified. |
| (f) | The word “dollars” and symbol “$” mean U.S. dollars. |
(g) References herein to any Person will include such Person’s heirs, executors, personal representatives, administrators, successors and assigns.
| (h) | The word “or” will be disjunctive but not exclusive. |
(i) The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any provisions hereof.
(j) Any statute or rule defined or referred to herein or in any agreement or instrument that is referred to herein means such statute or rule as from time to time amended, modified or supplemented, including by succession of comparable successor statutes or rules and references to all attachments thereto and instruments incorporated therein.
ARTICLE II
CORPORATE GOVERNANCE; VOTING
Section 2.1. Board of Directors Matters.
(a) Board Size and Composition. Effective as of the consummation of the IPO, in accordance with Section 15 of the Bylaws, the size of the Board has been fixed at eight Directors.
(b) Nomination of Directors. Subject to Section 2.1(e), each Stockholder agrees with the Company that it will: (i) appear in person or by proxy at each annual meeting or special meeting of the stockholders of the Company at which Directors are to be elected for the purposes of obtaining a quorum; (ii) at each such stockholders’ meeting, vote, in person or by proxy, all of the Voting Securities owned by it on the date of such meeting in favor of election of the following designees nominated for election to the Board pursuant to this Section 2.1(b) and in accordance with the Bylaws and the nomination procedures of the Company; and (iii) in any action by written consent of the holders of Voting Securities for the purpose of electing Directors, consent to election of the following designees nominated for election to the Board pursuant to this Section 2.1(b) and in accordance with the Bylaws and the nomination procedures of the Company:
(i) one individual designated as nominee for election to the Board by the Cardinal Stockholders;
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(ii) two individuals designated as nominees for election to the Board by Bindley Capital;
(iii) Burke, whom the Stockholders agree to nominate, or cause to be nominated, for election to the Board;
(iv) Morris, whom the Stockholders agree to nominate, or cause to be nominated, for election to the Board; and
(v) three other Persons nominated for election to the Board by the Board, each of whom must quality as an Independent Director (with respect to both the Company and each Stockholder).
The rights of the Stockholders to designate nominees for election to the Board as set forth in Section 2.1(b)(i) and (ii) are personal to such Stockholders and may not be exercised by any Transferee, except that in the event a Stockholder no longer holds any Shares but its Affiliates continue to hold Shares transferred by such Stockholder to such Affiliates (whether directly or by Transfers through other Affiliates of such Stockholder), and such rights have not been terminated pursuant to Section 2.1(e), the rights of such Stockholder may be exercised by the Affiliates of such Stockholder to which such Shares were Transferred.
| (c) | Chairman of the Board. William Bindley will be the initial Chairman of the Board. |
| (d) | Removal and Replacement; Vacancies. |
(i) If a vacancy on the Board is created at any time by the death, disability, retirement, resignation or removal of any Director nominated for election to the Board pursuant to Section 2.1(b), the Company, by action of the remaining Directors, will, and the Stockholders will use their reasonable best efforts to cause the remaining Directors to, fill the vacancy created thereby with a replacement nominee designated by the Person or Persons that had designated such Director for nomination pursuant to Section 2.1(b) as promptly as practicable. Notwithstanding the foregoing, if such vacant position had been held by a Person nominated under Section 2.1(b)(iii), (iv) or (v), then the vacancy will be filled by action of the majority of the Board.
(ii) If a vacancy on the Board is created at any time by the death, disability, retirement, resignation or removal of any Director nominated for election to the Board pursuant to Section 2.1(b) and the remaining Directors have not caused the vacancy created thereby to be filled pursuant to Section 2.1(d)(i) by a new designee of the appropriate Person promptly after the Stockholders have been notified of such vacancy, then in such case the Company will take all such actions as and when requested by the Stockholder entitled, pursuant to Section 2.1(b) to designate a Person to fill such vacancy (the “Designating Stockholder”), and each other Stockholder will vote, or act by written consent with respect to, all Voting Securities beneficially owned by it on the date of the relevant vote or action to fill the vacancy with a Person designated as a replacement by the Designating Stockholder in accordance with Section 2.1(b). Upon the written request of any Person having rights under Section 2.1(b), each other Stockholder will vote, or act by written consent with respect to, all Voting Securities beneficially owned by it on the date of the relevant action to, remove any Director nominated by such Person for election to the Board pursuant to Section 2.1(b) and to elect any replacement Director designated for nomination by such Person pursuant to this Section 2.1(d).
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(iii) Subject to Section 2.1(e), unless otherwise requested in writing by the Person entitled to nominate such Person for election to the Board under Section 2.1(b), no other Stockholder will take any action to cause the removal of any Directors nominated by such Person for election to the Board pursuant to Section 2.1(b).
(iv) Any vacancy on the Board that results from the termination of rights of nomination pursuant to Section 2.1(e) may be filled by action of a majority of the Board, in accordance with the Bylaws and applicable nomination procedures of the Company.
(e) Termination of Rights of Nomination. Notwithstanding anything in Section 2.1(b) to the contrary:
(i) In the case of the Cardinal Stockholders, upon the earlier of (A) such time as the Cardinal Stockholders and their Affiliates, collectively, cease to beneficially own at least 6,084,400 Shares, as such number may be proportionately adjusted for stock splits, reverse stock splits and the like after the date hereof, and (B) the date, if any, on which the Cardinal Stockholders or their Affiliates acquire beneficial ownership of, collectively, more than 10% of the outstanding equity of any Competing Entity, the Cardinal Stockholders will cease to have the right to designate any nominee for election to the Board pursuant to Section 2.1(b)(i).
(ii) In the case of Bindley Capital:
(A) upon the earlier of (A) such time as Bindley Capital and its Affiliates cease to beneficially own, collectively, at least 15,211,000 Shares, as such number may be proportionately adjusted for stock splits, reverse stock splits and the like after the date hereof, and (B) the date, if any, on which Bindley Capital or its Affiliates acquire beneficial ownership of, collectively, more than 10% of the outstanding equity of any Competing Entity, Bindley Capital will cease to have the right to designate two nominees for election to the Board pursuant to Section 2.1(b)(ii), and will thereafter only have the right to designate on such nominee pursuant to Section 2.1(b)(ii), subject to Section 2.1(e)(ii)(B) below; and
(B) upon the earlier of (A) such time as Bindley Capital and its Affiliates cease to beneficially own, collectively, at least 6,084,400 Shares, as such number may be proportionately adjusted for stock splits, reverse stock splits and the like after the date hereof, and (B) the date, if any, on which Bindley Capital or its Affiliates acquire beneficial ownership of, collectively, more than 10% of the outstanding equity of any Competing Entity, Bindley Capital will cease to have the right to designate any nominee for election to the Board pursuant to Section 2.1(b)(ii).
(iii) If at any time Burke or Morris ceases to be an executive officer of the Company, the obligation of the Stockholders to nominate such Person for election to the Board pursuant to Section 2.1(b)(iii) or (iv), as applicable, will terminate.
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Section 2.2. Company Cooperation. The Company will take such action as may be required under applicable Law, the Charter and the Bylaws (subject to such vote of the Board as may be required) (a) to cause the Board to consist of the number of Directors specified in Section 2.1(a), (b) to cause one of the Directors to be appointed and serve as the Chairman of the Board in accordance with Section 2.1(c), and (c) to include in the slate of nominees to be voted upon by stockholders of the Company the Persons designated for nomination to the Board in accordance with Section 2.1(b).
Section 2.3. Affiliate Transactions. Except for such transactions as are contemplated by agreements to which the Company is a party on the date hereof or to be entered into on the date hereof, any transaction between the Company or any Subsidiary of the Company, on the one hand, and a Stockholder or any Affiliate of such Stockholder, on the other, will require the approval of a majority of the disinterested members of the Board.
Section 2.4. Stockholder Votes. In connection with any vote taken at any meeting of the stockholders of the Company or any action by written consent of the stockholders of the Company in lieu thereof (other than with respect to the election of Directors, which is governed by Section 2.1), each Stockholder will vote, or act by written consent with respect to, all of its Voting Securities in the manner determined by the Stockholders holding a majority of the Voting Securities held by all Stockholders at the time of such vote or action.
ARTICLE III
TRANSFERS
Section 3.1. Rights and Obligations of Transferees. No Stockholder will Transfer any Equity Securities, except in compliance with the Securities Act, the Charter, any applicable state or foreign securities Laws, and this Agreement. Any Transfers in violation of this Agreement will be null and void, and the Company will not in any way give effect to any such impermissible Transfer. Prior to the consummation of a Transfer by any Stockholder to an Affiliate, and as a condition thereto, the applicable Transferee will agree in writing to be bound by the terms of this Agreement (if not already bound hereby) to the same extent as the Transferring Stockholder is bound hereunder prior to giving effect to such Transfer.
Section 3.2. Standstill Agreement.
(a) Prior to the seventh anniversary of the date hereof, without the prior written consent of the Board, except (i) by way of stock dividend, stock split, reorganization, recapitalization, merger, consolidation or other like distributions made to holders of Equity Securities generally or (ii) pursuant to the terms of any stock option, stock purchase or other similar plans for Directors or officers of the Company, if any, each Significant Stockholder (so long as it is a Significant Stockholder) will not, and will not permit any other member of its Restricted Group to, directly or indirectly, acquire, agree to acquire or make a proposal to acquire (or publicly announce or otherwise disclose an intention to propose to acquire) or offer to acquire, by purchase or otherwise, beneficial ownership of any Equity Securities not beneficially owned by them as of the date hereof.
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(b) Notwithstanding anything in this Section 3.2 to the contrary, a Significant Stockholder or any member of its Restricted Group will not be prohibited from making a confidential proposal to the Board to acquire additional Equity Securities if the Board (i) determines to effect, or to solicit proposals to effect, a Sale of the Company, or (ii) causes the Company to enter into a definitive agreement providing for the Sale of the Company.
Section 3.3. Going Private Transactions. Prior to the seventh anniversary of the date hereof, without the prior written consent of the Board, no Significant Stockholder (so long as it is a Significant Stockholder) will, or will permit any other member of its Restricted Group to, make any public announcement with respect to, or submit a proposal for, or offer in respect of (with or without conditions) any transaction or series of transactions that would constitute or result in a Going-Private Transaction, unless such Going-Private Transaction: (a) which is not a tender or exchange offer made by any member of such Significant Stockholder’s Restricted Group, is (i) approved by the Board and determined by the Board to be fair to the stockholders of the Company who are not members of such Significant Stockholder’s Restricted Group, in each case with the approval of a majority of the disinterested members of the Board, and (ii) approved by a majority of the outstanding Voting Securities not beneficially owned by members of such Significant Stockholder’s Restricted Group; or (b) which is a tender or exchange offer made by a member of such Significant Stockholder’s Restricted Group and is contingent upon (i) the acquisition of a majority of the outstanding Shares not beneficially owned by members of such Significant Stockholder’s Restricted Group, and accompanied by an undertaking that such member of such Significant Stockholder’s Restricted Group shall acquire all of the Shares, if any, that remain outstanding after the completion of such tender or exchange offer in a merger at the same price per share paid in such tender or exchange offer and (ii) the disinterested members of the Board, being authorized on behalf of the full Board to take and disclose a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act with respect to such tender or exchange offer, not recommending that holders of Shares refrain from tendering their Shares in such tender or exchange offer.
Section 3.4. Additional Stock Transfer Limitations. Without the prior written consent of the Board, no Significant Stockholder will, and each Significant Stockholder will use commercially reasonable efforts to cause members of its Restricted Group not to, directly or indirectly, Transfer Equity Securities to (a) any Person who is a Competing Entity or (b) any Person who, together with its Affiliates, would beneficially own 10% or more of the Company’s outstanding Shares following such Transfer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Company. The Company represents and warrants to each Stockholder as follows:
(a) the Company has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder, and to consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the enforcement of creditors’ rights generally and general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity; and
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(b) the execution and delivery of this Agreement by the Company, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby will not violate, conflict with or result in a breach, or constitute a default (with or without notice or lapse of time or both) under any provision of the Charter or Bylaws.
Section 4.2. Representations and Warranties of the Stockholders. Each Stockholder, severally and not jointly, represents and warrants, solely with respect to itself, to each other Stockholder and to the Company as follows:
(a) such Stockholder has all requisite power and authority to enter into this Agreement and to perform its obligations hereunder, and to consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by such Stockholder and constitutes a valid and binding obligation of such Stockholder enforceable against such Stockholder in accordance with its terms, except to the extent that the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the enforcement of creditors’ rights generally and general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity; and
(b) the execution and delivery of this Agreement by such Stockholder, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby will not violate, conflict with or result in a breach, or constitute a default (with or without notice or lapse of time or both) under any provision of its charter, bylaws or other similar organizational documents.
ARTICLE V
MISCELLANEOUS
Section 5.1. Termination. This Agreement will terminate upon the earlier of (a) the 15th anniversary of the date of this Agreement, (b) a Sale of the Company, and (c) the date on which both (i) the rights of each Stockholder pursuant to Section 2.1(b) to nominate individuals for election to the Board (or to be nominated for election to the Board), have terminated in accordance with the terms of Section 2.1(e), and (ii) no Stockholder continues to be a Significant Stockholder; provided, however, that, notwithstanding anything in this Section 5.1 to the contrary, the rights and obligations of each Stockholder under this Agreement will terminate on the date on which such Stockholder no longer beneficially owns any Equity Securities.
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Section 5.2. Confidentiality. Each Stockholder agrees with the Company to, and agrees with the Company to use commercially reasonable efforts to cause its Representatives to, keep confidential and not divulge any Information; provided, however, that nothing herein will prevent any Stockholder from disclosing such Information (a) upon the order of any court or administrative agency, (b) upon the request or demand of any regulatory agency or authority having jurisdiction over such Stockholder or Representative, (c) to the extent required by Law or legal process or required or requested pursuant to subpoena, interrogatories or other discovery requests, (d) to the extent necessary in connection with the exercise of any remedy hereunder, (e) to other Stockholders, or (f) to such Stockholder’s Representatives that in the reasonable judgment of such Stockholder need to know such Information; provided, further, that, in the case of clause (a), (b) or (c), such Stockholder will notify the Company of the proposed disclosure as far in advance of such disclosure as reasonably practicable and, if requested by the Company, use commercially reasonable efforts (but at the sole expense of the Company) to ensure that any Information so disclosed is accorded confidential treatment, when and to the extent available.
Section 5.3. Amendments and Waivers. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement will be effective without the approval of the Company and the Stockholders holding a majority of the outstanding Shares held by all Stockholders; provided, however, that (a) this Agreement may not be amended, modified or waived in any manner adversely affecting the rights or obligations of any Stockholder without the prior written consent of such Stockholder, (b) no amendment, modification or waiver to Section 2.1 (directly or by amendment of the definitions used therein) will adversely affect the rights of a Stockholder to designate nominee(s) for election to the Board in accordance with this Agreement without the consent of such Stockholder, as the case may be, (c) amendment, modification or waiver of this Section 5.3 will require the prior written consent of each Stockholder, and (d) any Stockholder may terminate or waive (in writing) the benefit of any provision of this Agreement with respect to itself for any purpose.
Section 5.4. Successors, Assigns and Transferees. Except as expressly set forth herein, this Agreement will bind and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns.
Section 5.5. Notices. All notices and other communications to be given to any party hereunder will be sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service, or when received in the form of an email or other electronic transmission (receipt confirmation requested), and will be directed to the address set forth below (or at such other address or email address as such party will designate by like notice):
if to the Company, to:
Guardian Pharmacy Services, Inc.
300 Galleria Parkway SE, Suite 800
Atlanta, Georgia 30339
Attention: Fred P. Burke
Email: [***]
if to any Stockholder, to the address of such Stockholder as shown in Schedule I hereto.
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Section 5.6. Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.
Section 5.7. Entire Agreement; Third Party Beneficiaries. Except as otherwise expressly set forth herein, this Agreement embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, that they may have related to the subject matter hereof in any way. This Agreement is not intended to confer in or on behalf of any Person not a party to this Agreement any rights, benefits, causes of action or remedies with respect to the subject matter or any provision thereof.
Section 5.8. Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, will impair any such right, power or remedy, nor will it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on the part of any party hereto of any breach, default or noncompliance under this Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement, must be in writing and will be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by Law, or otherwise afforded to any party, will be cumulative and not alternative.
Section 5.9. Governing Law. This Agreement will be governed by and construed in accordance with the Laws of the State of Delaware applicable to contracts made and to be performed within the State of Delaware, without giving effect to conflicts of law rules that would require or permit the application of the Laws of another jurisdiction.
Section 5.10. Specific Performance; Jurisdiction.
(a) The parties agree that irreparable damage would occur for which money damages would not suffice in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that the parties would not have any adequate remedy at law. It is accordingly agreed that any non-breaching party will be entitled to seek an injunction, temporary restraining order or other equitable relief exclusively in the Delaware Court of Chancery enjoining any such breach and enforcing specifically the terms and provisions hereof, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in the United States District Court for the District of Delaware or another court sitting in the state of Delaware. Each party agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of such party under this Agreement. The provisions of this Section 5.10(a) are in addition to any other remedy to which any party is entitled at law, in equity or otherwise.
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(b) Each of the parties hereto irrevocably agrees that any legal action or proceeding in connection with or with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns will be brought and determined exclusively in the Delaware Court of Chancery, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in the United States District Court for the District of Delaware or another court sitting in the state of Delaware. Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action in connection with or relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding in connection with or with respect to this Agreement, (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve in accordance with this Section 5.10, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by the applicable Law, any claim that (A) the suit, action or proceeding in such court is brought in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
(c) Each of the parties hereto irrevocably consents to the service of any summons and complaint and any other process in any other action in connection with or relating to this Agreement, on behalf of itself or its property, by the personal delivery of copies of such process to such party or by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 4.5. Nothing in this Section 5.10 will affect the right of any party hereto to serve legal process in any other manner permitted by Law.
Section 5.11. Waiver of Jury Trial. Each party hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each party (a) certifies and acknowledges that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver, and (b) acknowledges that it understands and has considered the implications of this waiver and makes this waiver voluntarily, and that it and the other parties have been induced to enter into the Agreement by, among other things, the mutual waivers and certifications in this Section 5.11.
Section 5.12. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement will remain in full force and effect and will in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such a determination, the parties will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
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Section 5.13. Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and will not affect the meaning or interpretation of this Agreement.
Section 5.14. Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which will constitute one and the same instrument. Signatures provided by electronic transmission in “pdf” or equivalent format will be deemed to be original signatures.
Section 5.15. Certain Indemnification Matters. The Company hereby acknowledges that an Indemnitee (as defined in the Charter) who is an officer, director, partner, member, manager, employee, managing director or Affiliate of, or a Director nominee pursuant to Section 2.1 of, a Stockholder (each such Indemnitee, a “Specified Indemnitee”) may have certain rights to indemnification, advancement of expenses and/or insurance pursuant to charter documents, constitutive agreements or other agreements with such Stockholder or Affiliates of such Stockholder or other Person (other than the Company and its Affiliates) of which such Specified Indemnitee is an officer, director, partner, member, manager, employee, managing director or Affiliate (collectively, the “Secondary Indemnitors”). In furtherance of the foregoing, the Company hereby covenants and agrees as follows:
(a) The Company will be the indemnitor of first resort for any claims or proceedings (collectively, “Covered Claims”) for which any Specified Indemnitee is entitled, under the Charter or otherwise, to indemnification by the Company (i.e., the Company’s obligations to each such Specified Indemnitee with respect to any Covered Claim are primary and any obligations of any Secondary Indemnitor to advance expenses or to provide indemnification for the same expenses or liabilities incurred by any such Specified Indemnitee with respect Covered Claims are secondary).
(b) Subject to Sections 1 and 2 of Article IX of the Charter, the Company will pay the expenses (including attorneys’ fees and expenses) incurred by any Specified Indemnitee in defending any Covered Claim in advance of such Covered Claim’s final disposition, without regard to any rights any such Specified Indemnitee may have against any Secondary Indemnitor.
(c) The Company hereby irrevocably waives, relinquishes and releases each Secondary Indemnitor from any and all claims against such Secondary Indemnitor for contribution, subrogation or any other recovery of any kind in respect of any Covered Claim.
The Company further agrees that no advancement or payment by any Secondary Indemnitor on behalf of any such Specified Indemnitee with respect to any Covered Claim for which any such Specified Indemnitee has sought indemnification from the Company will affect the foregoing and any such Secondary Indemnitor will have a right of contribution and/or subrogation to the extent of such advancement or payment to all of the rights of recovery of such Specified Indemnitee against the Company. Any amendment, repeal or modification of this Section 5.15 will not adversely affect any right or protection of a Specified Indemnitee or Secondary Indemnitor existing prior to such repeal or modification.
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IN WITNESS WHEREOF, the parties hereto have caused this Stockholders’ Agreement to be executed effective as of the date set forth in the first paragraph hereof.
| GUARDIAN PHARMACY SERVICES, INC. | ||
| By: | /s/ Fred P. Burke | |
| Name | Fred P. Burke | |
| Title: | President and Chief Executive Officer | |
[Signature Page to Stockholders’ Agreement]
| BINDLEY CAPITAL PARTNERS I, LLC | ||
| By: | /s/ Thomas J. Salentine, Jr. | |
| Name: | Thomas J. Salentine, Jr. | |
| Title: | President | |
| PHARMACY INVESTORS, LLC | ||
| By: | /s/ James L. Smeltzer | |
| Name: | James L. Smeltzer | |
| Title: | Managing Member | |
| CARDINAL EQUITY FUND LP | ||
| By: Cardinal Equity Partners, LLC, its General Partner | ||
| By: | /s/ James L. Smeltzer | |
| Name: | James L. Smeltzer | |
| Title: | Managing Member | |
| /s/ Fred P. Burke | ||
| FRED P. BURKE | ||
| /s/ David K. Morris | ||
| DAVID K. MORRIS | ||
| /s/ G. Kendall Forbes | ||
| G. KENDALL FORBES | ||
[Signature Page to Stockholders’ Agreement]
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT by and between Guardian Pharmacy Services Management, LLC, a Georgia limited liability company with its principal place of business located at 300 Galleria Parkway SE, Suite 800, Atlanta, GA 30339 (the “Company”) and a wholly owned subsidiary of Guardian Pharmacy Services, Inc. (“Parent”), and Fred P. Burke (“Executive”), is dated as of the 26th day of September, 2024 (the “Agreement”).
The Company wishes to employ Executive on the terms and conditions, and for the consideration, hereinafter set forth, and Executive desires to be employed by the Company on such terms and conditions and for such consideration.
In consideration of the promises provided for in this Agreement, the Company and Executive agree as follows:
1. Employment Period. This Agreement shall become effective as of September 27, 2024 (the “Effective Date”). The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, on an at-will basis on the terms and conditions set-forth herein for the period commencing on the Effective Date and ending as provided in Section 3 hereof (the “Employment Period”).
2. Terms of Employment.
(a) Position and Duties. (i) During the Employment Period, Executive shall (A) serve as President and Chief Executive Officer of the Parent with such duties and responsibilities as are customarily commensurate with or incident to such position for an entity similar in size to, and in a business similar to that of, Parent, (B) report to the Board of Directors of Parent, and (C) perform Executive’s services at 300 Galleria Parkway SE, Suite 800, Atlanta, GA 30339 (subject to reasonable travel requirements commensurate with Executive’s position).
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive agrees to devote Executive’s full business time and attention to the business and affairs of the Company, Parent and their affiliates. During the Employment Period, it will not be a violation of this Agreement for Executive to (A) serve on civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities described in clauses (A), (B) and (C) do not significantly interfere with the performance of Executive’s responsibilities as an employee of the Company in accordance with this Agreement.
(b) Compensation. (i) Base Salary. During the Employment Period, Executive shall receive an annual base salary (“Annual Base Salary”) of $450,000 paid in accordance with the normal payroll practices of the Company as may be in effect from time to time, which Annual Base Salary shall be reviewed for increase at least annually.
(ii) Annual Cash Bonus. Executive shall be eligible, for each fiscal year of Parent (beginning with fiscal year 2025) ending during the Employment Period, for an annual incentive bonus in cash (the “Annual Bonus”), with a target Annual Bonus opportunity equal to no less than 60% of Annual Base Salary (“Target Bonus”) and a maximum Annual Bonus opportunity of no less than 150% of the Target Bonus. For each such fiscal year, Parent’s Board of Directors (the “Board”) (or an applicable committee of the Board) will establish the performance metrics and their relative weighting to be used in, and any specific performance goals applicable to, the determination of the Annual Bonus for Executive for such period. There is no guaranteed Annual Bonus under this Agreement, and for each applicable fiscal year, Executive’s Annual Bonus could be as low as zero or as high as the maximum percentage set forth in this paragraph. Notwithstanding anything in this Agreement to the contrary, each Annual Bonus shall be on the terms and subject to such conditions as are specified for the particular Company or Parent plans or programs pursuant to which the Annual Bonus is granted. Any Annual Bonus earned with respect to a particular fiscal year will be paid no later than March 15 following the end of the fiscal year to which the Annual Bonus relates.
(iii) Equity Compensation Program. During the Employment Period, subject to approval by the Board (or an applicable committee of the Board), Executive shall be eligible to participate in Parent’s long-term incentive compensation program as may be in effect from time to time for senior executives of Parent and the Company generally, with such participation occurring in accordance with the approval of the Board (or an applicable committee of the Board), Parent and the Company’s policies, and the applicable award agreement and incentive compensation plan under which such awards will be granted, as in effect from time to time.
(iv) Employee Benefits. During the Employment Period, Executive shall be eligible to participate in the employee benefit plans, programs, and policies, as may be in effect from time to time, for senior executives of Parent and the Company generally.
(v) Vacation. During the Employment Period, Executive shall be entitled to paid vacation during each calendar year, consistent with the Company’s policies then applicable to executive officers.
(vi) Expenses. During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the performance of Executive’s duties under this Agreement and in accordance with the Company’s business expense reimbursement policy.
3. Termination of Employment.
(a) Generally. Except as hereinafter provided, the Employment Period shall continue until, and shall end upon, the second anniversary of the Effective Date (the “Initial Employment Period”). At the end of the Initial Employment Period and on each anniversary thereafter, unless the Company shall have given Executive sixty (60) days written notice that the Employment Period will not be extended, the Employment Period shall be extended for an additional year. The term “Employment Period” as used in this Agreement shall refer to the Initial Employment Period or the Employment Period as so extended. If the Company gives Executive sixty (60) days written notice that the Employment Period will not be extended, then, unless otherwise agreed by the Company and Executive, Executive’s employment with the Company shall terminate immediately following the last day of the Employment Period. Notwithstanding the foregoing, the Employment Period (to the extent then in effect) will cease on the Date of Termination (as defined in Section 3(g)).
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(b) Death or Disability. Executive’s employment shall terminate automatically if Executive dies during the Employment Period. If the Company determines in good faith that the Disability (as defined herein) of Executive has occurred during the Employment Period (pursuant to the definition of “Disability” set forth below), it may give to Executive written notice in accordance with Section 14(b) of its intention to terminate Executive’s employment. In such event, Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, Executive shall not have returned to full-time performance of Executive’s duties. “Disability” means the absence of Executive from Executive’s duties with the Company on a full-time basis for 90 consecutive business days, or 90 business days during any period of 120 consecutive business days, as a result of incapacity due to mental or physical illness that is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to Executive or Executive’s legal representative (such agreement as to acceptability not to be unreasonably withheld).
(c) By the Company. The Company may terminate Executive’s employment during the Employment Period for any, or no reason, with or without Cause. For purposes of this Agreement, “Cause” will be deemed to exist upon:
(i) any use or misappropriation by Executive of the funds, assets or property of Parent, the Company, or their subsidiaries or affiliates for any personal or other improper purpose;
(ii) any act of moral turpitude, dishonesty, fraud by or felony conviction of Executive whether or not such acts were committed in connection with the business of the Company, an affiliate or a subsidiary, if such act or conviction, in the reasonable good faith judgment of the Board, could reasonably be expected to be materially injurious to the financial condition or business reputation of Parent, the Company, or their subsidiaries or affiliates;
(iii) any failure by Executive substantially to perform the lawful instructions of the person(s) to whom Executive reports (other than as a result of total or partial incapacity due to physical or mental illness) following written notice by the Company to Executive of such failure and 15 days within which to cure such failure;
(iv) any willful or gross misconduct by Executive in connection with Executive’s duties to the Company which, in the reasonable good faith judgment of the Board, could reasonably be expected to be materially injurious to the financial condition or business reputation of Parent, the Company or their subsidiaries or affiliates;
(v) any failure by Executive to follow a material Company or Parent policy; or
(vi) any material breach by Executive of this Agreement.
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The cessation of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding Executive, if Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel for Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, Executive has engaged in the conduct described in Section 3(c), and specifying the particulars thereof in detail.
(d) By Executive. Executive’s employment may be terminated during the Employment Period by Executive for Good Reason or by Executive without Good Reason. For purposes of this Agreement, “Good Reason” shall mean, in the absence of the prior written consent of Executive:
(i) a material diminution in Executive’s duties, authorities or responsibilities;
(ii) a material reduction of Executive’s Annual Base Salary or Target Bonus;
(iii) relocation of Executive’s primary workplace, as assigned to Executive by the Company in accordance with Section 2(a)(i), beyond a 50 mile radius from such workplace; or
(iv) any other material breach by the Company of this Agreement;
provided, however, that Executive’s termination of employment shall not be deemed to be for Good Reason unless (A) Executive has notified the Company in writing describing the occurrence of one or more Good Reason events within 90 days of such occurrence, (B) the Company fails to cure such Good Reason event within 30 days after its receipt of such written notice and (C) the termination of employment occurs within 180 days after the occurrence of the applicable Good Reason event.
(e) Notice of Termination; Expiration of Employment Period. Any termination of employment by the Company for Cause, or by Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 14(b) of this Agreement. “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company, respectively, hereunder or preclude Executive or the Company, respectively, from asserting such fact or circumstance in enforcing Executive’s or the Company’s respective rights hereunder.
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(f) Resignation. Upon any termination of Executive’s employment with the Company, Executive shall be deemed to resign from any position as an officer, director, or fiduciary of the Company, Parent and any related entity.
(g) Date of Termination. “Date of Termination” means (i) if Executive’s employment is terminated by the Company for Cause, or by Executive for Good Reason, the date of receipt of the Notice of Termination or such later date specified in the Notice of Termination, as the case may be, (ii) if Executive’s employment is terminated by the Company other than for Cause or Disability, the date on which the Company notifies Executive of such termination, (iii) if Executive resigns without Good Reason, the date on which Executive notifies the Company of such termination, and (iv) if Executive’s employment is terminated by reason of death or Disability, the date of Executive’s death or the Disability Effective Date, as the case may be. Notwithstanding the foregoing, in no event shall the Date of Termination occur until Executive experiences a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the date on which such separation from service takes place shall be the “Date of Termination.” Upon the expiration of the Employment Period and in the event Executive continues employment with the Company, Executive’s employment will be at-will and the terms of this Agreement (other than Section 8) will have no further effect.
4. Obligations of the Company upon Termination.
(a) By Executive for Good Reason or by the Company other than for Cause, Death or Disability Not During the Change in Control Period. If, during the Employment Period, the Company terminates Executive’s employment other than for Cause, death or Disability, including by providing notice to Executive pursuant to Section 3(a) that the Employment Period will not be extended and Executive’s employment is terminated, or Executive terminates employment for Good Reason, and, in each case, Executive is not entitled to any amounts or benefits pursuant to Section 4(b):
(i) The Company shall pay to Executive, in a lump sum in cash within 30 days after the Date of Termination (or earlier, if required by applicable law), the aggregate of the following amounts: the sum of (A) Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) Executive’s business expenses that are reimbursable pursuant to Section 2(b)(vi) of this Agreement but have not been reimbursed by the Company as of the Date of Termination; (C) Executive’s Annual Bonus for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs, if such Annual Bonus has been earned but not paid as of the Date of Termination; and (D) any accrued vacation pay to the extent not theretofore paid (the sum of the amounts described in subclauses (A), (B), (C) and (D), the “Accrued Obligations”);
(ii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) two by (B) the sum of (1) Executive’s Annual Base Salary (without regard to any reduction thereto) and (2) Executive’s Target Bonus (without regard to any reduction thereto);
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(iii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) Executive’s Target Bonus for the fiscal year in which the Date of Termination occurs, by (B) a fraction, the numerator of which is the total number of days that have elapsed during such fiscal year through the Date of Termination and the denominator of which is the total number of days in the applicable fiscal year;
(iv) If Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall reimburse Executive for the difference between the monthly COBRA premium paid by Executive for Executive and Executive’s dependents and the monthly premium amount paid by Executive for such coverage immediately prior to the Date of Termination. Such reimbursement shall be paid to Executive on the first of the month immediately following the month in which Executive timely remits the premium payment. Executive shall be eligible to receive such reimbursement until the earliest of (A) 24 months following the Date of Termination, (B) the time Executive is no longer eligible for such COBRA coverage, or (C) the date Executive becomes eligible for group health care insurance coverage from another employer; provided, that Executive shall promptly notify the Company of any such circumstances. For the avoidance of doubt, nothing in this Agreement (including Section 4(b)) shall prohibit the Company or any of its affiliates from amending or terminating any group health plan. Notwithstanding anything in this Agreement (including Section 4(b)) to the contrary, in the event that the payment of amounts payable under this clause (iv) or in Section 4(b)(iv), as applicable, shall result in adverse tax consequences under Chapter 100 of the Code, Code Section 4980D or otherwise to the Company or its affiliates, the parties shall undertake commercially reasonable efforts to restructure such benefit in an economically equivalent manner to avoid the imposition of such taxes on the Company or the affiliate, provided, however, that should the Company’s auditors determine in good faith that no such alternative arrangement is achievable, Executive shall not be entitled to his or her rights to payment under this clause (iv) or Section 4(b)(iv), as applicable. Further, neither the Company nor any of its employees, directors, managers, board members, affiliates, parents, stakeholders, equityholders, agents, successors, predecessors or related parties guarantees the tax treatment of any benefit under this clause (iv) or Section 4(b)(iv), as applicable, and no such party shall have liability to Executive or his or her beneficiaries with respect to the taxation of such benefits or amounts payable in respect thereof; and
(v) To the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any Other Benefits (as defined in Section 5) in accordance with the terms of the underlying plans or agreements.
Other than as set forth in this Section 4(a), in the event of a termination of Executive’s employment by the Company without Cause (other than due to death or Disability) or by Executive for Good Reason, the Company shall have no further obligation to Executive under this Agreement.
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(b) By Executive for Good Reason or By the Company Other than for Cause, Death, or Disability During the Change in Control Period. If, during the Employment Period, the Company terminates Executive’s employment other than for Cause, death or disability, including by providing notice to Executive pursuant to Section 3(a) that the Employment Period will not be extended and Executive’s employment is terminated, or Executive terminates employment for Good Reason, in each case, within a period of two years after a Change in Control (the “Change in Control Period”), the Company will pay and provide to Executive the amounts and benefits specified in Section 4(b)(i)-(vi) herein in lieu of the amounts and benefits provided in Section 4(a).
(i) The Company shall pay to Executive, in a lump sum in cash within 30 days after the Date of Termination (or earlier, if required by applicable law), the aggregate of the Accrued Obligations (as defined in Section 4(a)(i)).
(ii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) three by (B) the sum of (1) Executive’s Annual Base Salary (without regard to any reduction thereto) and (2) Executive’s Target Bonus (without regard to any reduction thereto);
(iii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) Executive’s Target Bonus for the fiscal year in which the Date of Termination occurs, by (B) a fraction, the numerator of which is the total number of days that have elapsed during such fiscal year through the Date of Termination and the denominator of which is the total number of days in the applicable fiscal year;
(iv) If Executive timely and properly elects health continuation coverage under COBRA, the Company shall reimburse Executive for the difference between the monthly COBRA premium paid by Executive for Executive and Executive’s dependents and the monthly premium amount paid by Executive for such coverage immediately prior to the Date of Termination. Such reimbursement shall be paid to Executive on the first of the month immediately following the month in which Executive timely remits the premium payment. Executive shall be eligible to receive such reimbursement until the earliest of (A) 36 months following the Date of Termination, (B) the time Executive is no longer eligible for such COBRA coverage, or (C) the date Executive becomes eligible for group health care insurance coverage from another employer; provided, that Executive shall promptly notify the Company of any such circumstances; and
(v) Any outstanding equity-based awards granted to Executive under Parent’s 2024 Equity and Incentive Compensation Plan (or any successor plan) (the “Equity Plan”) shall vest in full (with performance-based awards vesting at the greater of target performance and actual performance measured as of the Date of Termination) and shall be paid in accordance with the terms of the Equity Plan and the applicable equity award agreements; and
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(vi) To the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any Other Benefits (as defined in Section 5) in accordance with the terms of the underlying plans or agreements.
(c) Death or Disability. If Executive’s employment is terminated by reason of Executive’s death or Disability during the Employment Period, the Company shall provide Executive or, in the event of death, Executive’s estate or beneficiaries, with the Accrued Obligations and the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no further obligations under this Agreement. The Accrued Obligations shall be paid to Executive or, in the event of death, Executive’s estate or beneficiaries, in a lump sum in cash within 30 days of the applicable Date of Termination.
(d) Cause; Other than for Good Reason. If Executive’s employment is terminated for Cause during the Employment Period, the Company shall provide Executive with Executive’s Annual Base Salary through the Date of Termination, and the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no further obligations under this Agreement. If Executive voluntarily terminates employment other than for Good Reason during the Employment Period, the Company shall provide to Executive the Accrued Obligations and the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no further obligations under this Agreement. In such case, all the Accrued Obligations shall be paid to Executive in a lump sum in cash within 30 days of the Date of Termination.
(e) Release. Notwithstanding anything herein to the contrary, the Company shall not be obligated to make any payment under Sections 4(a) (ii)-(iv) or Sections 4(b)(ii)-(v) of this Agreement, as applicable, unless (i) prior to the 60th day following the Date of Termination, Executive executes a release of claims against the Company and its affiliates in a form provided by the Company (the “Release”), and (ii) any applicable revocation period has expired during such 60-day period without Executive revoking such Release.
(f) Change in Control. For purposes of this Agreement, “Change in Control” means the occurrence (after the date of the consummation of the initial public offering Parent’s common stock (the “IPO Date”)) of any of the following events; provided, that, for the avoidance of doubt, the initial public offering of Parent’s common stock shall not constitute a Change in Control for purposes of this Agreement:
(i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time (the “Exchange Act”), and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities of Parent where such acquisition causes such Person to own 50% or more of the combined voting power of the then outstanding voting securities of Parent entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not be deemed to result in a Change in Control: (A) any acquisition
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directly from Parent that is approved by the Incumbent Board (as defined in subsection (ii) below), (B) any acquisition by Parent, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Parent or any corporation controlled by Parent or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B) and (C) of subsection (iii) below; provided, further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds 50% as a result of a transaction described in clause (A) or (B) above, and such Person subsequently acquires beneficial ownership of additional voting securities of Parent, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 50% or more of the Outstanding Company Voting Securities; and provided, further, that if at least a majority of the members of the Incumbent Board determines in good faith that a Person has acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding Company Voting Securities inadvertently, and such Person divests as promptly as practicable a sufficient number of shares so that such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) less than 50% of the Outstanding Company Voting Securities, then no Change in Control shall have occurred as a result of such Person’s acquisition;
(ii) individuals who, as of the IPO Date, constitute the Board (the “Incumbent Board” as modified by this subsection (ii)) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the IPO Date whose election, or nomination for election by Parent’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by specific vote or by approval of the proxy statement of Parent in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(iii) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Parent or the acquisition of assets of another corporation or other transaction (“Business Combination”) excluding, however, such a Business Combination pursuant to which (A) the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction owns Parent or all or substantially all of Parent’s assets either directly or through one or more subsidiaries), (B) no Person (excluding any employee benefit plan (or related trust) of Parent, Parent or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 50% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
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(iv) approval by Parent’s stockholders of a complete liquidation or dissolution of Parent except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of subsection (iii) above.
5. Non-Exclusivity of Rights. Amounts that Executive is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company or its affiliates at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, Executive shall not be eligible to participate in any other severance plan, program or policy of the Company or its affiliates.
6. Set-off; No Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall be subject to set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company or its affiliates may have against Executive to the extent such set-off or other action does not violate Section 409A of the Code. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement.
7. Limitations on Payments Under Certain Circumstances. Notwithstanding any provision of any other plan, program, arrangement or agreement to the contrary, in the event that it shall be determined that any payment or benefit to be provided by the Company to Executive pursuant to the terms of this Agreement or any other payments or benefits received or to be received by Executive (a “Payment”) in connection with or as a result of any event which is deemed by the U.S. Internal Revenue Service or any other taxing authority to constitute a change in the ownership or effective control of Parent or the Company, or in the ownership of a substantial portion of the assets of Parent or the Company and subject to the tax (the “Excise Tax”) imposed by Section 4999 (or any successor section) of the Code, the Payments, whether under this Agreement or otherwise, shall be reduced so that the Payment, in the aggregate, is reduced to the greatest amount that could be paid to Executive without giving rise to any Excise Tax; provided that in the event that Executive would be placed in a better after-tax position after receiving all Payments and not having any reduction of Payments as provided hereunder, Executive shall, notwithstanding the provisions of any other plan, program, arrangement or agreement to the contrary, receive all Payments and pay any applicable Excise Tax. All determinations under this Section 7 shall be made by a nationally recognized accounting firm selected by Parent or the Company (the “Accounting Firm”). Without limiting the generality of the foregoing, any determination by the Accounting Firm under this Section 7 shall take into account the value of any reasonable compensation for services to be rendered by Executive (or for holding oneself out as available to perform services and refraining from performing services (such as under a covenant not to compete)). If the Payments are to be reduced pursuant to this Section 7, the Payments shall be reduced in the following order: (a) Payments which do not constitute “nonqualified deferred compensation” subject to Section 409A of the Code shall be reduced first; and (b) all other Payments shall then be reduced, in each case as follows: (i) cash payments shall be reduced before non-cash payments and (ii) payments to be made on a later payment date shall be reduced before payments to be made on an earlier payment date.
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8. Restrictive Covenants.
(a) Acknowledgements and Agreements. Executive hereby acknowledges and agrees that in the performance of Executive’s duties to the Company during Executive’s employment, Executive shall be brought into frequent contact with existing and potential customers of the Company throughout the continental Unites States. Executive also agrees that Executive will obtain knowledge and skill relevant to the Company’s industry, methods of doing business, and marketing strategies by virtue of Executive’s employment. Executive further agrees that trade secrets and confidential information of the Company, more fully described in Section 8(i), have been developed by the Company through substantial expenditures of time, effort and money and constitute valuable and unique property of the Company with great competitive importance and commercial value to the Company. Executive further understands and agrees that the foregoing makes it necessary for the protection of the Company’s legitimate business interests that Executive comply with the restrictive covenants, as further provided in the following sections. Executive acknowledges and agrees that the terms and conditions of this Section 8 are fair, reasonable, and not unduly restrictive on Executive and are reasonably necessary to protect the legitimate business interests of the Company and to prevent irreparable harm to the Company.
(b) Competitive Activity During Employment. Executive will not compete with the Company anywhere within the United States during Executive’s employment with the Company, including, without limitation:
(i) entering into or engaging in any business which competes with the Company’s Business;
(ii) soliciting customers, business, patronage or orders for, or selling, any products or services in competition with, or for any business that competes with, the Company’s Business;
(iii) diverting, enticing or otherwise taking away any customers, business, patronage, or orders of the Company or attempting to do so;
(iv) soliciting any employee, sales representative, agent or consultant of the Company to terminate their employment, relationship or other association with the Company or attempting to do so; or
(v) promoting or assisting, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the Company’s Business.
(c) Following Termination. For a period of two years following Executive’s termination of employment with the Company, for any reason, Executive shall not, on Executive’s own account or as a partner, joint venturer, employee, agent, contractor, salesperson, consultant, officer and/or director of any firm, association, partnership, corporation or other entity:
(i) Provide services the same or substantially similar to those duties performed by Executive as President and Chief Executive Officer for the Company for any person or entity that competes with the Company’s Business (as hereinafter defined) within the Restricted Territory (as hereinafter defined);
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(ii) Directly or indirectly, solicit or attempt to solicit business, patronage or orders for products or services in competition with those provided by the Company, on Executive’s own behalf or for any person or entity, wherever located, from any Company customers or actively sought prospective customers with whom Executive had Material Contact (as hereinafter defined). This Section 8(c)(ii) does not prohibit Executive from accepting as a customer any Company customer or actively sought prospective customer who: (A) responds to a general advertisement or solicitation, including but not limited to advertisements or solicitations through newspapers, trade publications, periodicals or internet databases, not specifically directed at customers or prospective customers of the Company; or (B) unilaterally contacts Executive in the absence of any violation of this Section 8(c)(ii) by Executive;
(iii) Directly or indirectly, within the Restricted Territory, solicit or recruit, or attempt to solicit or recruit, for purposes of terminating employment, relationship or other association with the Company, any employee, sales representative, agent or consultant of the Company with whom Executive worked or about whom Executive came to know confidential information as a result of Executive’s employment with the Company, and who has not prior thereto ceased to be employed or retained by the Company, to terminate their employment, relationship or other association with the Company. This Section 8(c)(iii) shall not prohibit Executive from soliciting or hiring any person who: (A) responds to a general advertisement or solicitation, including but not limited to advertisements or solicitations through newspapers, trade publications, periodicals, internet databases or recruiting or employment agencies, not specifically directed at employees, sales representatives, agents or consultants of the Company; or (B) unilaterally contacts Executive in the absence of any violation of this Section 8(c)(iii) by Executive.
(d) The “Company.” For the purposes of this Section 8, the “Company” shall include any and all direct and indirect subsidiaries, parents, and affiliated or related companies thereof or the Company for which Executive worked or had responsibility at the time of termination of Executive’s employment and at any time during the two year period prior to such termination.
(e) The Company’s “Business.” For the purposes of this Section 8, the Company’s Business is defined to mean owning, operating or providing business consulting services to pharmacies that offer pharmaceutical products and services to long-term care facilities, including skilled nursing facilities, assisted living facilities and behavioral health facilities, as such activities are conducted by the Company, or the provision of any other products or services conducted, authorized, offered or provided by the Company within the two year period prior to Executive’s termination.
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(f) “Material Contact.” For purposes of this Section 8, Material Contact is defined to be contact between Executive and each customer and prospective customer: (i) with whom or which the Executive dealt on behalf of the Company; (ii) whose dealings with the Company were coordinated or supervised by Executive; (iii) about whom Executive obtained Confidential Information in the ordinary course of business as a result of Executive’s association with the Company; or (iv) who received products or services authorized by the Company, the sale or provision of which results or resulted in compensation, commissions, or earnings for Executive within the two years prior to the Executive’s termination from the Company.
(g) “Restricted Territory.” For the purposes of Section 8, the Restricted Territory shall be defined as and limited to:
(i) (A) the geographic area(s) within a 100 mile radius of any and all of the Company’s location(s) in, to, or for which Executive worked, to which Executive was assigned or had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination; or (B) in the event that the foregoing definition of Restricted Territory in this Section 8(g)(i)(A) is deemed to be overbroad or otherwise enforceable even after judicial modification, then this Section 8(g)(i)(A) shall mean the geographic area(s) within a 50 mile radius of any and all of the Company’s location(s) in, to, or for which Executive worked, to which Executive was assigned or had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination; and
(ii) (A) the geographic areas(a) within a 100 mile radius of any and all of the specific customer accounts, whether within or outside of the geographic area described in (i) above, with which Executive had any contact or for which Executive had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination; (B) in the event that the foregoing definition of Restricted Territory in this Section 8(g)(ii)(B) is deemed to be overbroad or otherwise enforceable even after judicial modification, then this Section 8(g)(i) shall mean the geographic area(s) within a 50 mile radius of any and all of the Company’s location(s) in, to, or for which Executive worked, to which Executive was assigned or had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination.
(h) Non-Disclosure/Return of Company Property and Information.
(i) Confidential Information Defined. Executive acknowledges that, in the course of Executive’s employment with the Company, Executive has had and will have access to, and will be making use of, acquiring, and adding to the Company’s confidential and proprietary information, including, without limitation, any of the following: trade secrets; patent applications and invention disclosures; confidential business records;
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computer software programs or any portions or logic comprising said programs; technical or non-technical data, formulae or compilations; vendor and product information; customer and prospective customer lists; information about customers, prospective customers and consultants requirements; terms of contracts with customers and consultants; research, production, programming, development, engineering, and distribution processes or techniques; the Company’s unique selling, manufacturing and servicing methods and business techniques; training, service and business manuals; promotional materials; training courses and other training and instructional materials; methods of doing business; costs and pricing information; advertising, promotions, marketing information, or sales techniques; planning and financial information of the Company; business opportunities; business plans; target markets; pricing formulas; financial models; working methods; profit formulas; studies; servicing plans; portfolio management strategies; and any other proprietary and/or confidential business information of the Company (hereinafter referred to as the “Confidential Information”). Executive further understands that the term Confidential Information does not include any information that is in the public domain or becomes generally known or available from a source other than the Company without a breach of any agreement with the Company and without any restriction on disclosure.
(ii) Duty of Non-Disclosure and Non-Use. In consideration of employment by the Company, Executive agrees that Executive shall not, for any purpose whatsoever other than to the extent necessary to render services to the Company, directly or indirectly, divulge or disclose to any individual or entity, or use in any manner or allow others to use in any manner through Executive, any of the Confidential Information, but shall hold all of the same confidential for so long as such Confidential Information: (A) constitutes trade secrets; and/or (B) is not publicly and widely known or made generally available through no wrongful act of Executive in violation of this Agreement or others who were under confidentiality obligations as to the relevant Confidential Information.
(iii) Return of Information. Any Confidential Information furnished to Executive by the Company, used by Executive on the Company’s behalf, or generated or obtained by Executive during the course of Executive’s employment with the Company, is and shall at all times remain the property of the Company. Executive acknowledges that this property is confidential and is not readily accessible to the Company’s competitors. Upon termination of the employment relationship between Executive and the Company, or prior thereto at the Company’s request, Executive shall immediately deliver to the Company all such property, including all copies, remaining in Executive’s possession or control.
(iv) Notwithstanding the foregoing, nothing in this Agreement prohibits Executive from reporting possible violations of law or regulation to any governmental agency or entity, or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation. Likewise, nothing in this Agreement is intended to or shall prevent, impede or interfere with Executive from providing truthful testimony and information in the course of, or otherwise participating in, an investigation or proceeding conducted by a governmental agency or entity in connection with the lawful exercise of such agency’s or entity’s functions.
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(v) The U.S. Defend Trade Secrets Act of 2016 (“DTSA”) provides that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, the DTSA provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
(i) Discoveries and Inventions. Executive agrees that any discoveries, inventions, know-how, and improvements (collectively “Inventions”), whether patentable or not, made, conceived or suggested, either solely or jointly with others, by Executive while in the Company’s employ, whether in the course of Executive’s employment with the use of the Company’s time, material or facilities or that is in any way within or related to the existing or contemplated scope of the Company’s business, shall be solely the property of the Company. Any Inventions relating to any subject matter with which the Company was concerned during Executive’s employment and made, conceived or suggested by Executive, either solely or jointly with others, within one year following termination of Executive’s employment under this Agreement or any successor agreements shall be irrebuttably presumed to have been so made, conceived or suggested in the course of such employment with the use of the Company’s time, materials or facilities, and to be solely the property of the Company. Executive agrees, both during and after employment with the Company, to disclose promptly and in writing to the Company all Inventions that Executive, whether solely or jointly with others, makes, discovers, develops, conceives, and/or reduces to practice. Executive hereby assigns and agrees to assign to the Company or its designee, without further consideration, Executive’s entire right and interest in and to all such Inventions. Upon request by the Company with respect to any such Inventions, Executive will execute and deliver to the Company, at any time during or after Executive’s employment, all appropriate documents for use in applying for, obtaining and maintaining such domestic and foreign patents as the Company may desire, and all proper assignments therefor, when so requested, at the expense of the Company, but without further or additional consideration.
(j) Work Made For Hire. Executive acknowledges that, to the extent permitted by law, all work papers, reports, documentation, drawings, specifications, photographs, negatives, tapes and masters therefore, prototypes and other materials (hereinafter, “items”), including without limitation, any and all such items generated and maintained on any form of electronic media, authored or generated by Executive during Executive’s employment with the Company shall be considered a “work made for hire” and that ownership of any and all copyrights in any and all such items shall belong solely to the Company.
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(k) Remedies. The parties acknowledge and agree that any breach by Executive of the terms of this Agreement may cause the Company irreparable harm and injury for which money damages would be inadequate. Accordingly, the Company, in addition to any other remedies available at law or equity, shall be entitled, as a matter of right, to injunctive relief in any court of competent jurisdiction. The parties agree that such injunctive relief may be granted without the necessity of proving actual damages. Nothing in this Agreement shall limit the Company’s remedies under state for federal law or elsewhere.
(l) Reasonableness. Executive acknowledges and agrees that Executive’s obligations under this Section 8 are reasonable in the context of the nature of the Company’s Business and the competitive injuries likely to be sustained by the Company if Executive were to violate such obligations. Executive further acknowledges and agrees that this Agreement is made in consideration of, and is adequately supported by, the agreement of the Company to perform its obligations under this Agreement and by other consideration, which Executive acknowledges constitutes good, valuable and sufficient consideration. Executive further acknowledges and agrees that Executive’s obligations under this Section 8 will not prohibit Executive from engaging in other businesses or employment for the purpose of earning a livelihood following the termination of his employment with the Company.
(m) Modification/Reformation. If any restriction set forth in this Section 8 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time, or over too great a range of activities, or in too broad a geographic territory, it shall be interpreted to extend only over the maximum period of time, range of activities, or geographic territory as to which it would otherwise be enforceable. If any provision or covenant, or any part thereof, of this Section 8 should be held by any court to be invalid, illegal or unenforceable, either in whole or in part, such invalidity, illegality or unenforceability will not affect the validity, legality or enforceability of the remaining provisions or covenants, or any part thereof, of this Section 8 or this Agreement, all of which will remain in full force and effect.
(n) Additional Acknowledgements. Executive acknowledges and agrees that, in the event that Executive becomes subject to any other contractual arrangements with the Company regarding competition with the Company, the restrictive covenants set forth in this Agreement were executed first and shall be deemed supplemented, and in no event diminished or replaced, by such other contractual arrangements.
9. Successors.
(a) This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of, and be enforceable by, Executive’s legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
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10. Indemnification. The Company or an affiliate thereof shall indemnify Executive to the maximum extent permitted under applicable law for acts taken within the scope of Executive’s employment and Executive’s service as an officer or director of the Company or any of its subsidiaries or affiliates. To the extent that the Company or an affiliate thereof obtains coverage under a director and officer indemnification policy, Executive will be entitled to such coverage on a basis that is no less favorable than the coverage provided to any other officer or director of the Company or Parent.
11. Section 409A of the Code.
(a) The intent of the parties is that payments and benefits under this Agreement comply with, or be exempt from, Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.
(b) Notwithstanding any provision of this Agreement to the contrary, in the event that Executive is a “specified employee” within the meaning of Section 409A (as determined in accordance with the methodology established by the Company as in effect on the Date of Termination) (a “Specified Employee”), any payments or benefits that are considered non-qualified deferred compensation under Section 409A payable under this Agreement on account of a “separation from service” during the six-month period immediately following the Date of Termination shall, to the extent necessary to comply with Section 409A, instead be paid, or provided, as the case may be, on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A. For purposes of Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement that is considered nonqualified deferred compensation, subject to Section 409A.
(c) With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits that are deferred compensation subject to Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.
12. Compensation Recoupment Policy. Notwithstanding anything in this Agreement to the contrary, Executive acknowledges and agrees that the terms and conditions set forth in Parent’s compensation recoupment policy as in effect from time to time, including specifically to implement Section 10D of the Exchange Act, and any applicable rules or regulations promulgated thereunder (including applicable rules and regulations of any national securities exchange on which the shares of Parent’s common stock may be traded) (the “Compensation Recovery Policy”) are incorporated into this Agreement by reference. To the extent the Compensation Recovery Policy is applicable to Executive, it creates additional rights
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for the Company and Parent with respect to certain compensation, including, without limitation, incentive-based compensation. Notwithstanding any provisions to the contrary, certain compensation will be subject to potential mandatory cancellation, forfeiture and/or repayment by Executive to the Company or Parent to the extent Executive is, or in the future becomes, subject to (a) any Parent clawback or recoupment policy, including the Compensation Recovery Policy, and any other policies that are adopted to comply with the requirements of any applicable laws, rules, regulations, stock exchange listing standards or otherwise, or (b) any applicable laws that impose mandatory clawback or recoupment requirements under the circumstances set forth in such laws, including as required by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or other applicable laws, rules, regulations or stock exchange listing standards, as may be in effect from time to time, and which may operate to create additional rights for the Company or Parent with respect to awards and the recovery of amounts relating thereto. Executive consents to be bound by the terms of the Compensation Recovery Policy, if applicable, and agrees and acknowledges that Executive is obligated to cooperate with, and provide any and all assistance necessary to, the Company and Parent in their efforts to recover or recoup an award, any gains or earnings related to an award, or any other applicable compensation or amounts, including, without limitation, annual cash incentive compensation, that is subject to clawback or recoupment pursuant to such laws, rules, regulations, stock exchange listing standards or Company or Parent policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the recovery or recoupment by the Company or Parent from Executive of any such amounts, including from Executive’s accounts or from any other compensation, to the extent permissible under Section 409A.
13. Complete Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein, and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of the subject matter contained herein, including any previous Employment Agreement between Guardian Pharmacy, LLC and Executive. Notwithstanding the foregoing, Executive acknowledges and agrees that he remains bound by the terms of that certain Restrictive Covenant Agreement entered into between Guardian Pharmacy, LLC and Executive (the “RCA”), and that the terms of the RCA are not superseded by this Agreement but are in addition to the terms of this Agreement.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia, without reference to principles of conflict of laws. Executive agrees that the state and federal courts located in the State of Georgia shall have jurisdiction in any action, suit or proceeding against Executive based on or arising out of this Agreement and Executive hereby: (a) submits to the personal jurisdiction of such courts; (b) consents to service of process in connection with any action, suit or proceeding against Executive; and (c) waives any other requirement (whether imposed by statute, rule of court or otherwise) with respect to personal jurisdiction, venue or service of process. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
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(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, or nationally-recognized overnight courier service, postage prepaid, addressed as follows:
| If to Executive: | At the most recent address on file at the Company. | |
| If to the Company: | 300 Galleria Parkway SE | |
| Suite 800 | ||
| Atlanta, GA 30339 | ||
or to such other address as either party shall have furnished to the other in writing in accordance herewith (including via electronic mail). Notice and communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d) The Company, its subsidiaries and affiliates may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes or social security charges as shall be required to be withheld pursuant to any applicable law or regulation. None of the Company, its subsidiaries or affiliates guarantees any tax result with respect to payments or benefits provided hereunder. Executive is responsible for all taxes owed with respect to all such payments and benefits.
(e) Subject to any limits on applicability contained therein, Section 8 of this Agreement shall survive and continue in full force in accordance with its terms notwithstanding any termination or expiration of the Employment Period.
(f) This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(g) Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(h) With respect to any controversy or claim arising out of or relating to or concerning injunctive relief for Executive’s breach or purported breach of Section 8 of this Agreement, the Company shall have the right, in addition to any other remedies it may have, to seek specific performance and injunctive relief with a court of competent jurisdiction, without the need to post a bond or other security.
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15. Other Acknowledgements. Nothing in this Agreement prevents Executive from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Executive and the Company have executed this Agreement on the date first above written.
| EXECUTIVE | ||
| /s/ Fred P. Burke | ||
| FRED P. BURKE | ||
| GUARDIAN PHARMACY SERVICES MANAGEMENT, LLC | ||
| By | /s/ David K. Morris | |
| Name: | David K. Morris | |
| Title: | Executive Vice President and Chief Executive Officer | |
Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT by and between Guardian Pharmacy Services Management, LLC, a Georgia limited liability company with its principal place of business located at 300 Galleria Parkway SE, Suite 800, Atlanta, GA 30339 (the “Company”) and a wholly owned subsidiary of Guardian Pharmacy Services, Inc. (“Parent”), and David K. Morris (“Executive”), is dated as of the 26th day of September, 2024 (the “Agreement”).
The Company wishes to employ Executive on the terms and conditions, and for the consideration, hereinafter set forth, and Executive desires to be employed by the Company on such terms and conditions and for such consideration.
In consideration of the promises provided for in this Agreement, the Company and Executive agree as follows:
1. Employment Period. This Agreement shall become effective as of September 27, 2024 (the “Effective Date”). The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, on an at-will basis on the terms and conditions set-forth herein for the period commencing on the Effective Date and ending as provided in Section 3 hereof (the “Employment Period”).
2. Terms of Employment.
(a) Position and Duties. (i) During the Employment Period, Executive shall (A) serve as Executive Vice President and Chief Financial Officer of the Parent with such duties and responsibilities as are customarily commensurate with or incident to such position for an entity similar in size to, and in a business similar to that of, Parent, (B) report to the Chief Executive Officer of Parent, and (C) perform Executive’s services at 300 Galleria Parkway SE, Suite 800, Atlanta, GA 30339 (subject to reasonable travel requirements commensurate with Executive’s position).
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive agrees to devote Executive’s full business time and attention to the business and affairs of the Company, Parent and their affiliates. During the Employment Period, it will not be a violation of this Agreement for Executive to (A) serve on civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities described in clauses (A), (B) and (C) do not significantly interfere with the performance of Executive’s responsibilities as an employee of the Company in accordance with this Agreement.
(b) Compensation. (i) Base Salary. During the Employment Period, Executive shall receive an annual base salary (“Annual Base Salary”) of $400,000 paid in accordance with the normal payroll practices of the Company as may be in effect from time to time, which Annual Base Salary shall be reviewed for increase at least annually.
(ii) Annual Cash Bonus. Executive shall be eligible, for each fiscal year of Parent (beginning with fiscal year 2025) ending during the Employment Period, for an annual incentive bonus in cash (the “Annual Bonus”), with a target Annual Bonus opportunity equal to no less than 60% of Annual Base Salary (“Target Bonus”) and a maximum Annual Bonus opportunity of no less than 150% of the Target Bonus. For each such fiscal year, Parent’s Board of Directors (the “Board”) (or an applicable committee of the Board) will establish the performance metrics and their relative weighting to be used in, and any specific performance goals applicable to, the determination of the Annual Bonus for Executive for such period. There is no guaranteed Annual Bonus under this Agreement, and for each applicable fiscal year, Executive’s Annual Bonus could be as low as zero or as high as the maximum percentage set forth in this paragraph. Notwithstanding anything in this Agreement to the contrary, each Annual Bonus shall be on the terms and subject to such conditions as are specified for the particular Company or Parent plans or programs pursuant to which the Annual Bonus is granted. Any Annual Bonus earned with respect to a particular fiscal year will be paid no later than March 15 following the end of the fiscal year to which the Annual Bonus relates.
(iii) Equity Compensation Program. During the Employment Period, subject to approval by the Board (or an applicable committee of the Board), Executive shall be eligible to participate in Parent’s long-term incentive compensation program as may be in effect from time to time for senior executives of Parent and the Company generally, with such participation occurring in accordance with the approval of the Board (or an applicable committee of the Board), Parent and the Company’s policies, and the applicable award agreement and incentive compensation plan under which such awards will be granted, as in effect from time to time.
(iv) Employee Benefits. During the Employment Period, Executive shall be eligible to participate in the employee benefit plans, programs, and policies, as may be in effect from time to time, for senior executives of Parent and the Company generally.
(v) Vacation. During the Employment Period, Executive shall be entitled to paid vacation during each calendar year, consistent with the Company’s policies then applicable to executive officers.
(vi) Expenses. During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the performance of Executive’s duties under this Agreement and in accordance with the Company’s business expense reimbursement policy.
3. Termination of Employment.
(a) Generally. Except as hereinafter provided, the Employment Period shall continue until, and shall end upon, the second anniversary of the Effective Date (the “Initial Employment Period”). At the end of the Initial Employment Period and on each anniversary thereafter, unless the Company shall have given Executive sixty (60) days written notice that the Employment Period will not be extended, the Employment Period shall be extended for an additional year. The term “Employment Period” as used in this Agreement shall refer to the Initial Employment Period or the Employment Period as so extended. If the Company gives Executive sixty (60) days written notice that the Employment Period will not be extended, then, unless otherwise agreed by the Company and Executive, Executive’s employment with the Company shall terminate immediately following the last day of the Employment Period. Notwithstanding the foregoing, the Employment Period (to the extent then in effect) will cease on the Date of Termination (as defined in Section 3(g)).
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(b) Death or Disability. Executive’s employment shall terminate automatically if Executive dies during the Employment Period. If the Company determines in good faith that the Disability (as defined herein) of Executive has occurred during the Employment Period (pursuant to the definition of “Disability” set forth below), it may give to Executive written notice in accordance with Section 14(b) of its intention to terminate Executive’s employment. In such event, Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, Executive shall not have returned to full-time performance of Executive’s duties. “Disability” means the absence of Executive from Executive’s duties with the Company on a full-time basis for 90 consecutive business days, or 90 business days during any period of 120 consecutive business days, as a result of incapacity due to mental or physical illness that is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to Executive or Executive’s legal representative (such agreement as to acceptability not to be unreasonably withheld).
(c) By the Company. The Company may terminate Executive’s employment during the Employment Period for any, or no reason, with or without Cause. For purposes of this Agreement, “Cause” will be deemed to exist upon:
(i) any use or misappropriation by Executive of the funds, assets or property of Parent, the Company, or their subsidiaries or affiliates for any personal or other improper purpose;
(ii) any act of moral turpitude, dishonesty, fraud by or felony conviction of Executive whether or not such acts were committed in connection with the business of the Company, an affiliate or a subsidiary, if such act or conviction, in the reasonable good faith judgment of the Board, could reasonably be expected to be materially injurious to the financial condition or business reputation of Parent, the Company, or their subsidiaries or affiliates;
(iii) any failure by Executive substantially to perform the lawful instructions of the person(s) to whom Executive reports (other than as a result of total or partial incapacity due to physical or mental illness) following written notice by the Company to Executive of such failure and 15 days within which to cure such failure;
(iv) any willful or gross misconduct by Executive in connection with Executive’s duties to the Company which, in the reasonable good faith judgment of the Board, could reasonably be expected to be materially injurious to the financial condition or business reputation of Parent, the Company or their subsidiaries or affiliates;
(v) any failure by Executive to follow a material Company or Parent policy; or
(vi) any material breach by Executive of this Agreement.
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The cessation of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding Executive, if Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel for Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, Executive has engaged in the conduct described in Section 3(c), and specifying the particulars thereof in detail.
(d) By Executive. Executive’s employment may be terminated during the Employment Period by Executive for Good Reason or by Executive without Good Reason. For purposes of this Agreement, “Good Reason” shall mean, in the absence of the prior written consent of Executive:
(i) a material diminution in Executive’s duties, authorities or responsibilities;
(ii) a material reduction of Executive’s Annual Base Salary or Target Bonus;
(iii) relocation of Executive’s primary workplace, as assigned to Executive by the Company in accordance with Section 2(a)(i), beyond a 50 mile radius from such workplace; or
(iv) any other material breach by the Company of this Agreement;
provided, however, that Executive’s termination of employment shall not be deemed to be for Good Reason unless (A) Executive has notified the Company in writing describing the occurrence of one or more Good Reason events within 90 days of such occurrence, (B) the Company fails to cure such Good Reason event within 30 days after its receipt of such written notice and (C) the termination of employment occurs within 180 days after the occurrence of the applicable Good Reason event.
(e) Notice of Termination; Expiration of Employment Period. Any termination of employment by the Company for Cause, or by Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 14(b) of this Agreement. “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company, respectively, hereunder or preclude Executive or the Company, respectively, from asserting such fact or circumstance in enforcing Executive’s or the Company’s respective rights hereunder.
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(f) Resignation. Upon any termination of Executive’s employment with the Company, Executive shall be deemed to resign from any position as an officer, director, or fiduciary of the Company, Parent and any related entity.
(g) Date of Termination. “Date of Termination” means (i) if Executive’s employment is terminated by the Company for Cause, or by Executive for Good Reason, the date of receipt of the Notice of Termination or such later date specified in the Notice of Termination, as the case may be, (ii) if Executive’s employment is terminated by the Company other than for Cause or Disability, the date on which the Company notifies Executive of such termination, (iii) if Executive resigns without Good Reason, the date on which Executive notifies the Company of such termination, and (iv) if Executive’s employment is terminated by reason of death or Disability, the date of Executive’s death or the Disability Effective Date, as the case may be. Notwithstanding the foregoing, in no event shall the Date of Termination occur until Executive experiences a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the date on which such separation from service takes place shall be the “Date of Termination.” Upon the expiration of the Employment Period and in the event Executive continues employment with the Company, Executive’s employment will be at-will and the terms of this Agreement (other than Section 8) will have no further effect.
4. Obligations of the Company upon Termination.
(a) By Executive for Good Reason or by the Company other than for Cause, Death or Disability Not During the Change in Control Period. If, during the Employment Period, the Company terminates Executive’s employment other than for Cause, death or Disability, including by providing notice to Executive pursuant to Section 3(a) that the Employment Period will not be extended and Executive’s employment is terminated, or Executive terminates employment for Good Reason, and, in each case, Executive is not entitled to any amounts or benefits pursuant to Section 4(b):
(i) The Company shall pay to Executive, in a lump sum in cash within 30 days after the Date of Termination (or earlier, if required by applicable law), the aggregate of the following amounts: the sum of (A) Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) Executive’s business expenses that are reimbursable pursuant to Section 2(b)(vi) of this Agreement but have not been reimbursed by the Company as of the Date of Termination; (C) Executive’s Annual Bonus for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs, if such Annual Bonus has been earned but not paid as of the Date of Termination; and (D) any accrued vacation pay to the extent not theretofore paid (the sum of the amounts described in subclauses (A), (B), (C) and (D), the “Accrued Obligations”);
(ii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) two by (B) the sum of (1) Executive’s Annual Base Salary (without regard to any reduction thereto) and (2) Executive’s Target Bonus (without regard to any reduction thereto);
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(iii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) Executive’s Target Bonus for the fiscal year in which the Date of Termination occurs, by (B) a fraction, the numerator of which is the total number of days that have elapsed during such fiscal year through the Date of Termination and the denominator of which is the total number of days in the applicable fiscal year;
(iv) If Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall reimburse Executive for the difference between the monthly COBRA premium paid by Executive for Executive and Executive’s dependents and the monthly premium amount paid by Executive for such coverage immediately prior to the Date of Termination. Such reimbursement shall be paid to Executive on the first of the month immediately following the month in which Executive timely remits the premium payment. Executive shall be eligible to receive such reimbursement until the earliest of (A) 24 months following the Date of Termination, (B) the time Executive is no longer eligible for such COBRA coverage, or (C) the date Executive becomes eligible for group health care insurance coverage from another employer; provided, that Executive shall promptly notify the Company of any such circumstances. For the avoidance of doubt, nothing in this Agreement (including Section 4(b)) shall prohibit the Company or any of its affiliates from amending or terminating any group health plan. Notwithstanding anything in this Agreement (including Section 4(b)) to the contrary, in the event that the payment of amounts payable under this clause (iv) or in Section 4(b)(iv), as applicable, shall result in adverse tax consequences under Chapter 100 of the Code, Code Section 4980D or otherwise to the Company or its affiliates, the parties shall undertake commercially reasonable efforts to restructure such benefit in an economically equivalent manner to avoid the imposition of such taxes on the Company or the affiliate, provided, however, that should the Company’s auditors determine in good faith that no such alternative arrangement is achievable, Executive shall not be entitled to his or her rights to payment under this clause (iv) or Section 4(b)(iv), as applicable. Further, neither the Company nor any of its employees, directors, managers, board members, affiliates, parents, stakeholders, equityholders, agents, successors, predecessors or related parties guarantees the tax treatment of any benefit under this clause (iv) or Section 4(b)(iv), as applicable, and no such party shall have liability to Executive or his or her beneficiaries with respect to the taxation of such benefits or amounts payable in respect thereof; and
(v) To the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any Other Benefits (as defined in Section 5) in accordance with the terms of the underlying plans or agreements.
Other than as set forth in this Section 4(a), in the event of a termination of Executive’s employment by the Company without Cause (other than due to death or Disability) or by Executive for Good Reason, the Company shall have no further obligation to Executive under this Agreement.
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(b) By Executive for Good Reason or By the Company Other than for Cause, Death, or Disability During the Change in Control Period. If, during the Employment Period, the Company terminates Executive’s employment other than for Cause, death or disability, including by providing notice to Executive pursuant to Section 3(a) that the Employment Period will not be extended and Executive’s employment is terminated, or Executive terminates employment for Good Reason, in each case, within a period of two years after a Change in Control (the “Change in Control Period”), the Company will pay and provide to Executive the amounts and benefits specified in Section 4(b)(i)-(vi) herein in lieu of the amounts and benefits provided in Section 4(a).
(i) The Company shall pay to Executive, in a lump sum in cash within 30 days after the Date of Termination (or earlier, if required by applicable law), the aggregate of the Accrued Obligations (as defined in Section 4(a)(i)).
(ii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) three by (B) the sum of (1) Executive’s Annual Base Salary (without regard to any reduction thereto) and (2) Executive’s Target Bonus (without regard to any reduction thereto);
(iii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) Executive’s Target Bonus for the fiscal year in which the Date of Termination occurs, by (B) a fraction, the numerator of which is the total number of days that have elapsed during such fiscal year through the Date of Termination and the denominator of which is the total number of days in the applicable fiscal year;
(iv) If Executive timely and properly elects health continuation coverage under COBRA, the Company shall reimburse Executive for the difference between the monthly COBRA premium paid by Executive for Executive and Executive’s dependents and the monthly premium amount paid by Executive for such coverage immediately prior to the Date of Termination. Such reimbursement shall be paid to Executive on the first of the month immediately following the month in which Executive timely remits the premium payment. Executive shall be eligible to receive such reimbursement until the earliest of (A) 36 months following the Date of Termination, (B) the time Executive is no longer eligible for such COBRA coverage, or (C) the date Executive becomes eligible for group health care insurance coverage from another employer; provided, that Executive shall promptly notify the Company of any such circumstances; and
(v) Any outstanding equity-based awards granted to Executive under Parent’s 2024 Equity and Incentive Compensation Plan (or any successor plan) (the “Equity Plan”) shall vest in full (with performance-based awards vesting at the greater of target performance and actual performance measured as of the Date of Termination) and shall be paid in accordance with the terms of the Equity Plan and the applicable equity award agreements; and
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(vi) To the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any Other Benefits (as defined in Section 5) in accordance with the terms of the underlying plans or agreements.
(c) Death or Disability. If Executive’s employment is terminated by reason of Executive’s death or Disability during the Employment Period, the Company shall provide Executive or, in the event of death, Executive’s estate or beneficiaries, with the Accrued Obligations and the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no further obligations under this Agreement. The Accrued Obligations shall be paid to Executive or, in the event of death, Executive’s estate or beneficiaries, in a lump sum in cash within 30 days of the applicable Date of Termination.
(d) Cause; Other than for Good Reason. If Executive’s employment is terminated for Cause during the Employment Period, the Company shall provide Executive with Executive’s Annual Base Salary through the Date of Termination, and the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no further obligations under this Agreement. If Executive voluntarily terminates employment other than for Good Reason during the Employment Period, the Company shall provide to Executive the Accrued Obligations and the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no further obligations under this Agreement. In such case, all the Accrued Obligations shall be paid to Executive in a lump sum in cash within 30 days of the Date of Termination.
(e) Release. Notwithstanding anything herein to the contrary, the Company shall not be obligated to make any payment under Sections 4(a) (ii)-(iv) or Sections 4(b)(ii)-(v) of this Agreement, as applicable, unless (i) prior to the 60th day following the Date of Termination, Executive executes a release of claims against the Company and its affiliates in a form provided by the Company (the “Release”), and (ii) any applicable revocation period has expired during such 60-day period without Executive revoking such Release.
(f) Change in Control. For purposes of this Agreement, “Change in Control” means the occurrence (after the date of the consummation of the initial public offering Parent’s common stock (the “IPO Date”)) of any of the following events; provided, that, for the avoidance of doubt, the initial public offering of Parent’s common stock shall not constitute a Change in Control for purposes of this Agreement:
(i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time (the “Exchange Act”), and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities of Parent where such acquisition causes such Person to own 50% or more of the combined voting power of the then outstanding voting securities of Parent entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not be deemed to result in a Change in Control: (A) any acquisition
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directly from Parent that is approved by the Incumbent Board (as defined in subsection (ii) below), (B) any acquisition by Parent, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Parent or any corporation controlled by Parent or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B) and (C) of subsection (iii) below; provided, further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds 50% as a result of a transaction described in clause (A) or (B) above, and such Person subsequently acquires beneficial ownership of additional voting securities of Parent, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 50% or more of the Outstanding Company Voting Securities; and provided, further, that if at least a majority of the members of the Incumbent Board determines in good faith that a Person has acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding Company Voting Securities inadvertently, and such Person divests as promptly as practicable a sufficient number of shares so that such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) less than 50% of the Outstanding Company Voting Securities, then no Change in Control shall have occurred as a result of such Person’s acquisition;
(ii) individuals who, as of the IPO Date, constitute the Board (the “Incumbent Board” as modified by this subsection (ii)) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the IPO Date whose election, or nomination for election by Parent’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by specific vote or by approval of the proxy statement of Parent in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(iii) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Parent or the acquisition of assets of another corporation or other transaction (“Business Combination”) excluding, however, such a Business Combination pursuant to which (A) the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction owns Parent or all or substantially all of Parent’s assets either directly or through one or more subsidiaries), (B) no Person (excluding any employee benefit plan (or related trust) of Parent, Parent or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 50% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the entity
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resulting from such Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(iv) approval by Parent’s stockholders of a complete liquidation or dissolution of Parent except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of subsection (iii) above.
5. Non-Exclusivity of Rights. Amounts that Executive is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company or its affiliates at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, Executive shall not be eligible to participate in any other severance plan, program or policy of the Company or its affiliates.
6. Set-off; No Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall be subject to set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company or its affiliates may have against Executive to the extent such set-off or other action does not violate Section 409A of the Code. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement.
7. Limitations on Payments Under Certain Circumstances. Notwithstanding any provision of any other plan, program, arrangement or agreement to the contrary, in the event that it shall be determined that any payment or benefit to be provided by the Company to Executive pursuant to the terms of this Agreement or any other payments or benefits received or to be received by Executive (a “Payment”) in connection with or as a result of any event which is deemed by the U.S. Internal Revenue Service or any other taxing authority to constitute a change in the ownership or effective control of Parent or the Company, or in the ownership of a substantial portion of the assets of Parent or the Company and subject to the tax (the “Excise Tax”) imposed by Section 4999 (or any successor section) of the Code, the Payments, whether under this Agreement or otherwise, shall be reduced so that the Payment, in the aggregate, is reduced to the greatest amount that could be paid to Executive without giving rise to any Excise Tax; provided that in the event that Executive would be placed in a better after-tax position after receiving all Payments and not having any reduction of Payments as provided hereunder, Executive shall, notwithstanding the provisions of any other plan, program, arrangement or agreement to the contrary, receive all Payments and pay any applicable Excise Tax. All determinations under this Section 7 shall be made by a nationally recognized accounting firm selected by Parent or the Company (the “Accounting Firm”). Without limiting the generality of the foregoing, any determination by the Accounting Firm under this Section 7 shall take into account the value of any reasonable compensation for services to be rendered by Executive (or for holding oneself out as available to perform services and refraining from performing services (such as under a covenant not to compete)). If the Payments are to be reduced pursuant to this Section 7, the Payments shall be reduced in the following order: (a) Payments which do not
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constitute “nonqualified deferred compensation” subject to Section 409A of the Code shall be reduced first; and (b) all other Payments shall then be reduced, in each case as follows: (i) cash payments shall be reduced before non-cash payments and (ii) payments to be made on a later payment date shall be reduced before payments to be made on an earlier payment date.
8. Restrictive Covenants.
(a) Acknowledgements and Agreements. Executive hereby acknowledges and agrees that in the performance of Executive’s duties to the Company during Executive’s employment, Executive shall be brought into frequent contact with existing and potential customers of the Company throughout the continental Unites States. Executive also agrees that Executive will obtain knowledge and skill relevant to the Company’s industry, methods of doing business, and marketing strategies by virtue of Executive’s employment. Executive further agrees that trade secrets and confidential information of the Company, more fully described in Section 8(i), have been developed by the Company through substantial expenditures of time, effort and money and constitute valuable and unique property of the Company with great competitive importance and commercial value to the Company. Executive further understands and agrees that the foregoing makes it necessary for the protection of the Company’s legitimate business interests that Executive comply with the restrictive covenants, as further provided in the following sections. Executive acknowledges and agrees that the terms and conditions of this Section 8 are fair, reasonable, and not unduly restrictive on Executive and are reasonably necessary to protect the legitimate business interests of the Company and to prevent irreparable harm to the Company.
(b) Competitive Activity During Employment. Executive will not compete with the Company anywhere within the United States during Executive’s employment with the Company, including, without limitation:
(i) entering into or engaging in any business which competes with the Company’s Business;
(ii) soliciting customers, business, patronage or orders for, or selling, any products or services in competition with, or for any business that competes with, the Company’s Business;
(iii) diverting, enticing or otherwise taking away any customers, business, patronage, or orders of the Company or attempting to do so;
(iv) soliciting any employee, sales representative, agent or consultant of the Company to terminate their employment, relationship or other association with the Company or attempting to do so; or
(v) promoting or assisting, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the Company’s Business.
(c) Following Termination. For a period of two years following Executive’s termination of employment with the Company, for any reason, Executive shall not, on Executive’s own account or as a partner, joint venturer, employee, agent, contractor, salesperson, consultant, officer and/or director of any firm, association, partnership, corporation or other entity:
(i) Provide services the same or substantially similar to those duties performed by Executive as Executive Vice President and Chief Financial Officer for the Company for any person or entity that competes with the Company’s Business (as hereinafter defined) within the Restricted Territory (as hereinafter defined);
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(ii) Directly or indirectly, solicit or attempt to solicit business, patronage or orders for products or services in competition with those provided by the Company, on Executive’s own behalf or for any person or entity, wherever located, from any Company customers or actively sought prospective customers with whom Executive had Material Contact (as hereinafter defined). This Section 8(c)(ii) does not prohibit Executive from accepting as a customer any Company customer or actively sought prospective customer who: (A) responds to a general advertisement or solicitation, including but not limited to advertisements or solicitations through newspapers, trade publications, periodicals or internet databases, not specifically directed at customers or prospective customers of the Company; or (B) unilaterally contacts Executive in the absence of any violation of this Section 8(c)(ii) by Executive;
(iii) Directly or indirectly, within the Restricted Territory, solicit or recruit, or attempt to solicit or recruit, for purposes of terminating employment, relationship or other association with the Company, any employee, sales representative, agent or consultant of the Company with whom Executive worked or about whom Executive came to know confidential information as a result of Executive’s employment with the Company, and who has not prior thereto ceased to be employed or retained by the Company, to terminate their employment, relationship or other association with the Company. This Section 8(c)(iii) shall not prohibit Executive from soliciting or hiring any person who: (A) responds to a general advertisement or solicitation, including but not limited to advertisements or solicitations through newspapers, trade publications, periodicals, internet databases or recruiting or employment agencies, not specifically directed at employees, sales representatives, agents or consultants of the Company; or (B) unilaterally contacts Executive in the absence of any violation of this Section 8(c)(iii) by Executive.
(d) The “Company.” For the purposes of this Section 8, the “Company” shall include any and all direct and indirect subsidiaries, parents, and affiliated or related companies thereof or the Company for which Executive worked or had responsibility at the time of termination of Executive’s employment and at any time during the two year period prior to such termination.
(e) The Company’s “Business.” For the purposes of this Section 8, the Company’s Business is defined to mean owning, operating or providing business consulting services to pharmacies that offer pharmaceutical products and services to long-term care facilities, including skilled nursing facilities, assisted living facilities and behavioral health facilities, as such activities are conducted by the Company, or the provision of any other products or services conducted, authorized, offered or provided by the Company within the two year period prior to Executive’s termination.
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(f) “Material Contact.” For purposes of this Section 8, Material Contact is defined to be contact between Executive and each customer and prospective customer: (i) with whom or which the Executive dealt on behalf of the Company; (ii) whose dealings with the Company were coordinated or supervised by Executive; (iii) about whom Executive obtained Confidential Information in the ordinary course of business as a result of Executive’s association with the Company; or (iv) who received products or services authorized by the Company, the sale or provision of which results or resulted in compensation, commissions, or earnings for Executive within the two years prior to the Executive’s termination from the Company.
(g) “Restricted Territory.” For the purposes of Section 8, the Restricted Territory shall be defined as and limited to:
(i) (A) the geographic area(s) within a 100 mile radius of any and all of the Company’s location(s) in, to, or for which Executive worked, to which Executive was assigned or had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination; or (B) in the event that the foregoing definition of Restricted Territory in this Section 8(g)(i)(A) is deemed to be overbroad or otherwise enforceable even after judicial modification, then this Section 8(g)(i)(A) shall mean the geographic area(s) within a 50 mile radius of any and all of the Company’s location(s) in, to, or for which Executive worked, to which Executive was assigned or had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination; and
(ii) (A) the geographic areas(a) within a 100 mile radius of any and all of the specific customer accounts, whether within or outside of the geographic area described in (i) above, with which Executive had any contact or for which Executive had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination; (B) in the event that the foregoing definition of Restricted Territory in this Section 8(g)(ii)(B) is deemed to be overbroad or otherwise enforceable even after judicial modification, then this Section 8(g)(i) shall mean the geographic area(s) within a 50 mile radius of any and all of the Company’s location(s) in, to, or for which Executive worked, to which Executive was assigned or had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination.
(h) Non-Disclosure/Return of Company Property and Information.
(i) Confidential Information Defined. Executive acknowledges that, in the course of Executive’s employment with the Company, Executive has had and will have access to, and will be making use of, acquiring, and adding to the Company’s confidential and proprietary information, including, without limitation, any of the following: trade secrets; patent applications and invention disclosures; confidential business records;
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computer software programs or any portions or logic comprising said programs; technical or non-technical data, formulae or compilations; vendor and product information; customer and prospective customer lists; information about customers, prospective customers and consultants requirements; terms of contracts with customers and consultants; research, production, programming, development, engineering, and distribution processes or techniques; the Company’s unique selling, manufacturing and servicing methods and business techniques; training, service and business manuals; promotional materials; training courses and other training and instructional materials; methods of doing business; costs and pricing information; advertising, promotions, marketing information, or sales techniques; planning and financial information of the Company; business opportunities; business plans; target markets; pricing formulas; financial models; working methods; profit formulas; studies; servicing plans; portfolio management strategies; and any other proprietary and/or confidential business information of the Company (hereinafter referred to as the “Confidential Information”). Executive further understands that the term Confidential Information does not include any information that is in the public domain or becomes generally known or available from a source other than the Company without a breach of any agreement with the Company and without any restriction on disclosure.
(ii) Duty of Non-Disclosure and Non-Use. In consideration of employment by the Company, Executive agrees that Executive shall not, for any purpose whatsoever other than to the extent necessary to render services to the Company, directly or indirectly, divulge or disclose to any individual or entity, or use in any manner or allow others to use in any manner through Executive, any of the Confidential Information, but shall hold all of the same confidential for so long as such Confidential Information: (A) constitutes trade secrets; and/or (B) is not publicly and widely known or made generally available through no wrongful act of Executive in violation of this Agreement or others who were under confidentiality obligations as to the relevant Confidential Information.
(iii) Return of Information. Any Confidential Information furnished to Executive by the Company, used by Executive on the Company’s behalf, or generated or obtained by Executive during the course of Executive’s employment with the Company, is and shall at all times remain the property of the Company. Executive acknowledges that this property is confidential and is not readily accessible to the Company’s competitors. Upon termination of the employment relationship between Executive and the Company, or prior thereto at the Company’s request, Executive shall immediately deliver to the Company all such property, including all copies, remaining in Executive’s possession or control.
(iv) Notwithstanding the foregoing, nothing in this Agreement prohibits Executive from reporting possible violations of law or regulation to any governmental agency or entity, or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation. Likewise, nothing in this Agreement is intended to or shall prevent, impede or interfere with Executive from providing truthful testimony and information in the course of, or otherwise participating in, an investigation or proceeding conducted by a governmental agency or entity in connection with the lawful exercise of such agency’s or entity’s functions.
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(v) The U.S. Defend Trade Secrets Act of 2016 (“DTSA”) provides that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, the DTSA provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
(i) Discoveries and Inventions. Executive agrees that any discoveries, inventions, know-how, and improvements (collectively “Inventions”), whether patentable or not, made, conceived or suggested, either solely or jointly with others, by Executive while in the Company’s employ, whether in the course of Executive’s employment with the use of the Company’s time, material or facilities or that is in any way within or related to the existing or contemplated scope of the Company’s business, shall be solely the property of the Company. Any Inventions relating to any subject matter with which the Company was concerned during Executive’s employment and made, conceived or suggested by Executive, either solely or jointly with others, within one year following termination of Executive’s employment under this Agreement or any successor agreements shall be irrebuttably presumed to have been so made, conceived or suggested in the course of such employment with the use of the Company’s time, materials or facilities, and to be solely the property of the Company. Executive agrees, both during and after employment with the Company, to disclose promptly and in writing to the Company all Inventions that Executive, whether solely or jointly with others, makes, discovers, develops, conceives, and/or reduces to practice. Executive hereby assigns and agrees to assign to the Company or its designee, without further consideration, Executive’s entire right and interest in and to all such Inventions. Upon request by the Company with respect to any such Inventions, Executive will execute and deliver to the Company, at any time during or after Executive’s employment, all appropriate documents for use in applying for, obtaining and maintaining such domestic and foreign patents as the Company may desire, and all proper assignments therefor, when so requested, at the expense of the Company, but without further or additional consideration.
(j) Work Made For Hire. Executive acknowledges that, to the extent permitted by law, all work papers, reports, documentation, drawings, specifications, photographs, negatives, tapes and masters therefore, prototypes and other materials (hereinafter, “items”), including without limitation, any and all such items generated and maintained on any form of electronic media, authored or generated by Executive during Executive’s employment with the Company shall be considered a “work made for hire” and that ownership of any and all copyrights in any and all such items shall belong solely to the Company.
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(k) Remedies. The parties acknowledge and agree that any breach by Executive of the terms of this Agreement may cause the Company irreparable harm and injury for which money damages would be inadequate. Accordingly, the Company, in addition to any other remedies available at law or equity, shall be entitled, as a matter of right, to injunctive relief in any court of competent jurisdiction. The parties agree that such injunctive relief may be granted without the necessity of proving actual damages. Nothing in this Agreement shall limit the Company’s remedies under state for federal law or elsewhere.
(l) Reasonableness. Executive acknowledges and agrees that Executive’s obligations under this Section 8 are reasonable in the context of the nature of the Company’s Business and the competitive injuries likely to be sustained by the Company if Executive were to violate such obligations. Executive further acknowledges and agrees that this Agreement is made in consideration of, and is adequately supported by, the agreement of the Company to perform its obligations under this Agreement and by other consideration, which Executive acknowledges constitutes good, valuable and sufficient consideration. Executive further acknowledges and agrees that Executive’s obligations under this Section 8 will not prohibit Executive from engaging in other businesses or employment for the purpose of earning a livelihood following the termination of his employment with the Company.
(m) Modification/Reformation. If any restriction set forth in this Section 8 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time, or over too great a range of activities, or in too broad a geographic territory, it shall be interpreted to extend only over the maximum period of time, range of activities, or geographic territory as to which it would otherwise be enforceable. If any provision or covenant, or any part thereof, of this Section 8 should be held by any court to be invalid, illegal or unenforceable, either in whole or in part, such invalidity, illegality or unenforceability will not affect the validity, legality or enforceability of the remaining provisions or covenants, or any part thereof, of this Section 8 or this Agreement, all of which will remain in full force and effect.
(n) Additional Acknowledgements. Executive acknowledges and agrees that, in the event that Executive becomes subject to any other contractual arrangements with the Company regarding competition with the Company, the restrictive covenants set forth in this Agreement were executed first and shall be deemed supplemented, and in no event diminished or replaced, by such other contractual arrangements.
9. Successors.
(a) This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of, and be enforceable by, Executive’s legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
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10. Indemnification. The Company or an affiliate thereof shall indemnify Executive to the maximum extent permitted under applicable law for acts taken within the scope of Executive’s employment and Executive’s service as an officer or director of the Company or any of its subsidiaries or affiliates. To the extent that the Company or an affiliate thereof obtains coverage under a director and officer indemnification policy, Executive will be entitled to such coverage on a basis that is no less favorable than the coverage provided to any other officer or director of the Company or Parent.
11. Section 409A of the Code.
(a) The intent of the parties is that payments and benefits under this Agreement comply with, or be exempt from, Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.
(b) Notwithstanding any provision of this Agreement to the contrary, in the event that Executive is a “specified employee” within the meaning of Section 409A (as determined in accordance with the methodology established by the Company as in effect on the Date of Termination) (a “Specified Employee”), any payments or benefits that are considered non-qualified deferred compensation under Section 409A payable under this Agreement on account of a “separation from service” during the six-month period immediately following the Date of Termination shall, to the extent necessary to comply with Section 409A, instead be paid, or provided, as the case may be, on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A. For purposes of Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement that is considered nonqualified deferred compensation, subject to Section 409A.
(c) With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits that are deferred compensation subject to Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.
12. Compensation Recoupment Policy. Notwithstanding anything in this Agreement to the contrary, Executive acknowledges and agrees that the terms and conditions set forth in Parent’s compensation recoupment policy as in effect from time to time, including specifically to implement Section 10D of the Exchange Act, and any applicable rules or regulations promulgated thereunder (including applicable rules and regulations of any national securities exchange on which the shares of Parent’s common stock may be traded) (the “Compensation Recovery Policy”) are incorporated into this Agreement by reference. To the extent the Compensation Recovery Policy is applicable to Executive, it creates additional rights
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for the Company and Parent with respect to certain compensation, including, without limitation, incentive-based compensation. Notwithstanding any provisions to the contrary, certain compensation will be subject to potential mandatory cancellation, forfeiture and/or repayment by Executive to the Company or Parent to the extent Executive is, or in the future becomes, subject to (a) any Parent clawback or recoupment policy, including the Compensation Recovery Policy, and any other policies that are adopted to comply with the requirements of any applicable laws, rules, regulations, stock exchange listing standards or otherwise, or (b) any applicable laws that impose mandatory clawback or recoupment requirements under the circumstances set forth in such laws, including as required by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or other applicable laws, rules, regulations or stock exchange listing standards, as may be in effect from time to time, and which may operate to create additional rights for the Company or Parent with respect to awards and the recovery of amounts relating thereto. Executive consents to be bound by the terms of the Compensation Recovery Policy, if applicable, and agrees and acknowledges that Executive is obligated to cooperate with, and provide any and all assistance necessary to, the Company and Parent in their efforts to recover or recoup an award, any gains or earnings related to an award, or any other applicable compensation or amounts, including, without limitation, annual cash incentive compensation, that is subject to clawback or recoupment pursuant to such laws, rules, regulations, stock exchange listing standards or Company or Parent policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the recovery or recoupment by the Company or Parent from Executive of any such amounts, including from Executive’s accounts or from any other compensation, to the extent permissible under Section 409A.
13. Complete Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein, and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of the subject matter contained herein, including any previous Employment Agreement between Guardian Pharmacy, LLC and Executive. Notwithstanding the foregoing, Executive acknowledges and agrees that he remains bound by the terms of that certain Restrictive Covenant Agreement entered into between Guardian Pharmacy, LLC and Executive (the “RCA”), and that the terms of the RCA are not superseded by this Agreement but are in addition to the terms of this Agreement.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia, without reference to principles of conflict of laws. Executive agrees that the state and federal courts located in the State of Georgia shall have jurisdiction in any action, suit or proceeding against Executive based on or arising out of this Agreement and Executive hereby: (a) submits to the personal jurisdiction of such courts; (b) consents to service of process in connection with any action, suit or proceeding against Executive; and (c) waives any other requirement (whether imposed by statute, rule of court or otherwise) with respect to personal jurisdiction, venue or service of process. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
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(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, or nationally-recognized overnight courier service, postage prepaid, addressed as follows:
| If to Executive: | At the most recent address | |
| on file at the Company. | ||
| If to the Company: | 300 Galleria Parkway SE | |
| Suite 800 | ||
| Atlanta, GA 30339 | ||
or to such other address as either party shall have furnished to the other in writing in accordance herewith (including via electronic mail). Notice and communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d) The Company, its subsidiaries and affiliates may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes or social security charges as shall be required to be withheld pursuant to any applicable law or regulation. None of the Company, its subsidiaries or affiliates guarantees any tax result with respect to payments or benefits provided hereunder. Executive is responsible for all taxes owed with respect to all such payments and benefits.
(e) Subject to any limits on applicability contained therein, Section 8 of this Agreement shall survive and continue in full force in accordance with its terms notwithstanding any termination or expiration of the Employment Period.
(f) This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(g) Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(h) With respect to any controversy or claim arising out of or relating to or concerning injunctive relief for Executive’s breach or purported breach of Section 8 of this Agreement, the Company shall have the right, in addition to any other remedies it may have, to seek specific performance and injunctive relief with a court of competent jurisdiction, without the need to post a bond or other security.
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15. Other Acknowledgements. Nothing in this Agreement prevents Executive from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Executive and the Company have executed this Agreement on the date first above written.
| EXECUTIVE |
| /s/ David K. Morris |
| DAVID K. MORRIS |
| GUARDIAN PHARMACY SERVICES |
| MANAGEMENT, LLC |
| By | /s/ Fred P. Burke | |
| Name: Fred P. Burke | ||
| Title: President and Chief Executive Officer | ||
Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT by and between Guardian Pharmacy Services Management, LLC, a Georgia limited liability company with its principal place of business located at 300 Galleria Parkway SE, Suite 800, Atlanta, GA 30339 (the “Company”) and a wholly owned subsidiary of Guardian Pharmacy Services, Inc. (“Parent”), and G. Kendall Forbes (“Executive”), is dated as of the 26th day of September, 2024 (the “Agreement”).
The Company wishes to employ Executive on the terms and conditions, and for the consideration, hereinafter set forth, and Executive desires to be employed by the Company on such terms and conditions and for such consideration.
In consideration of the promises provided for in this Agreement, the Company and Executive agree as follows:
1. Employment Period. This Agreement shall become effective as of September 27, 2024 (the “Effective Date”). The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, on an at-will basis on the terms and conditions set-forth herein for the period commencing on the Effective Date and ending as provided in Section 3 hereof (the “Employment Period”).
2. Terms of Employment.
(a) Position and Duties. (i) During the Employment Period, Executive shall (A) serve as Executive Vice President, Sales & Operations of the Parent with such duties and responsibilities as are customarily commensurate with or incident to such position for an entity similar in size to, and in a business similar to that of, Parent, (B) report to the Chief Executive Officer of Parent, and (C) perform Executive’s services at 300 Galleria Parkway SE, Suite 800, Atlanta, GA 30339, 5597 US Highway 98 West, Santa Rosa Beach, Florida 32459, or at such location as reasonably agreed to by the Chief Executive Officer of Parent (subject to reasonable travel requirements commensurate with Executive’s position).
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive agrees to devote Executive’s full business time and attention to the business and affairs of the Company, Parent and their affiliates. During the Employment Period, it will not be a violation of this Agreement for Executive to (A) serve on civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities described in clauses (A), (B) and (C) do not significantly interfere with the performance of Executive’s responsibilities as an employee of the Company in accordance with this Agreement.
(b) Compensation. (i) Base Salary. During the Employment Period, Executive shall receive an annual base salary (“Annual Base Salary”) of $400,000 paid in accordance with the normal payroll practices of the Company as may be in effect from time to time, which Annual Base Salary shall be reviewed for increase at least annually.
(ii) Annual Cash Bonus. Executive shall be eligible, for each fiscal year of Parent (beginning with fiscal year 2025) ending during the Employment Period, for an annual incentive bonus in cash (the “Annual Bonus”), with a target Annual Bonus opportunity equal to no less than 60% of Annual Base Salary (“Target Bonus”) and a maximum Annual Bonus opportunity of no less than 150% of the Target Bonus. For each such fiscal year, Parent’s Board of Directors (the “Board”) (or an applicable committee of the Board) will establish the performance metrics and their relative weighting to be used in, and any specific performance goals applicable to, the determination of the Annual Bonus for Executive for such period. There is no guaranteed Annual Bonus under this Agreement, and for each applicable fiscal year, Executive’s Annual Bonus could be as low as zero or as high as the maximum percentage set forth in this paragraph. Notwithstanding anything in this Agreement to the contrary, each Annual Bonus shall be on the terms and subject to such conditions as are specified for the particular Company or Parent plans or programs pursuant to which the Annual Bonus is granted. Any Annual Bonus earned with respect to a particular fiscal year will be paid no later than March 15 following the end of the fiscal year to which the Annual Bonus relates.
(iii) Equity Compensation Program. During the Employment Period, subject to approval by the Board (or an applicable committee of the Board), Executive shall be eligible to participate in Parent’s long-term incentive compensation program as may be in effect from time to time for senior executives of Parent and the Company generally, with such participation occurring in accordance with the approval of the Board (or an applicable committee of the Board), Parent and the Company’s policies, and the applicable award agreement and incentive compensation plan under which such awards will be granted, as in effect from time to time.
(iv) Employee Benefits. During the Employment Period, Executive shall be eligible to participate in the employee benefit plans, programs, and policies, as may be in effect from time to time, for senior executives of Parent and the Company generally.
(v) Vacation. During the Employment Period, Executive shall be entitled to paid vacation during each calendar year, consistent with the Company’s policies then applicable to executive officers.
(vi) Expenses. During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the performance of Executive’s duties under this Agreement and in accordance with the Company’s business expense reimbursement policy.
3. Termination of Employment.
(a) Generally. Except as hereinafter provided, the Employment Period shall continue until, and shall end upon, the second anniversary of the Effective Date (the “Initial Employment Period”). At the end of the Initial Employment Period and on each anniversary thereafter, unless the Company shall have given Executive sixty (60) days written notice that the Employment Period will not be extended, the Employment Period shall be extended for an additional year. The term “Employment Period” as used in this Agreement shall refer to the Initial Employment Period or the Employment Period as so extended. If the Company gives Executive sixty (60) days written notice that the Employment Period will not be extended, then, unless otherwise agreed by the Company and Executive, Executive’s employment with the Company shall terminate immediately following the last day of the Employment Period. Notwithstanding the foregoing, the Employment Period (to the extent then in effect) will cease on the Date of Termination (as defined in Section 3(g)).
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(b) Death or Disability. Executive’s employment shall terminate automatically if Executive dies during the Employment Period. If the Company determines in good faith that the Disability (as defined herein) of Executive has occurred during the Employment Period (pursuant to the definition of “Disability” set forth below), it may give to Executive written notice in accordance with Section 14(b) of its intention to terminate Executive’s employment. In such event, Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, Executive shall not have returned to full-time performance of Executive’s duties. “Disability” means the absence of Executive from Executive’s duties with the Company on a full-time basis for 90 consecutive business days, or 90 business days during any period of 120 consecutive business days, as a result of incapacity due to mental or physical illness that is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to Executive or Executive’s legal representative (such agreement as to acceptability not to be unreasonably withheld).
(c) By the Company. The Company may terminate Executive’s employment during the Employment Period for any, or no reason, with or without Cause. For purposes of this Agreement, “Cause” will be deemed to exist upon:
(i) any use or misappropriation by Executive of the funds, assets or property of Parent, the Company, or their subsidiaries or affiliates for any personal or other improper purpose;
(ii) any act of moral turpitude, dishonesty, fraud by or felony conviction of Executive whether or not such acts were committed in connection with the business of the Company, an affiliate or a subsidiary, if such act or conviction, in the reasonable good faith judgment of the Board, could reasonably be expected to be materially injurious to the financial condition or business reputation of Parent, the Company, or their subsidiaries or affiliates;
(iii) any failure by Executive substantially to perform the lawful instructions of the person(s) to whom Executive reports (other than as a result of total or partial incapacity due to physical or mental illness) following written notice by the Company to Executive of such failure and 15 days within which to cure such failure;
(iv) any willful or gross misconduct by Executive in connection with Executive’s duties to the Company which, in the reasonable good faith judgment of the Board, could reasonably be expected to be materially injurious to the financial condition or business reputation of Parent, the Company or their subsidiaries or affiliates;
(v) any failure by Executive to follow a material Company or Parent policy; or
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(vi) any material breach by Executive of this Agreement.
The cessation of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding Executive, if Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel for Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, Executive has engaged in the conduct described in Section 3(c), and specifying the particulars thereof in detail.
(d) By Executive. Executive’s employment may be terminated during the Employment Period by Executive for Good Reason or by Executive without Good Reason. For purposes of this Agreement, “Good Reason” shall mean, in the absence of the prior written consent of Executive:
(i) a material diminution in Executive’s duties, authorities or responsibilities;
(ii) a material reduction of Executive’s Annual Base Salary or Target Bonus;
(iii) relocation of Executive’s primary workplace, as assigned to Executive by the Company in accordance with Section 2(a)(i), beyond a 50 mile radius from such workplace; or
(iv) any other material breach by the Company of this Agreement;
provided, however, that Executive’s termination of employment shall not be deemed to be for Good Reason unless (A) Executive has notified the Company in writing describing the occurrence of one or more Good Reason events within 90 days of such occurrence, (B) the Company fails to cure such Good Reason event within 30 days after its receipt of such written notice and (C) the termination of employment occurs within 180 days after the occurrence of the applicable Good Reason event.
(e) Notice of Termination; Expiration of Employment Period. Any termination of employment by the Company for Cause, or by Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 14(b) of this Agreement. “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company, respectively, hereunder or preclude Executive or the Company, respectively, from asserting such fact or circumstance in enforcing Executive’s or the Company’s respective rights hereunder.
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(f) Resignation. Upon any termination of Executive’s employment with the Company, Executive shall be deemed to resign from any position as an officer, director, or fiduciary of the Company, Parent and any related entity.
(g) Date of Termination. “Date of Termination” means (i) if Executive’s employment is terminated by the Company for Cause, or by Executive for Good Reason, the date of receipt of the Notice of Termination or such later date specified in the Notice of Termination, as the case may be, (ii) if Executive’s employment is terminated by the Company other than for Cause or Disability, the date on which the Company notifies Executive of such termination, (iii) if Executive resigns without Good Reason, the date on which Executive notifies the Company of such termination, and (iv) if Executive’s employment is terminated by reason of death or Disability, the date of Executive’s death or the Disability Effective Date, as the case may be. Notwithstanding the foregoing, in no event shall the Date of Termination occur until Executive experiences a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the date on which such separation from service takes place shall be the “Date of Termination.” Upon the expiration of the Employment Period and in the event Executive continues employment with the Company, Executive’s employment will be at-will and the terms of this Agreement (other than Section 8) will have no further effect.
4. Obligations of the Company upon Termination.
(a) By Executive for Good Reason or by the Company other than for Cause, Death or Disability Not During the Change in Control Period. If, during the Employment Period, the Company terminates Executive’s employment other than for Cause, death or Disability, including by providing notice to Executive pursuant to Section 3(a) that the Employment Period will not be extended and Executive’s employment is terminated, or Executive terminates employment for Good Reason, and, in each case, Executive is not entitled to any amounts or benefits pursuant to Section 4(b):
(i) The Company shall pay to Executive, in a lump sum in cash within 30 days after the Date of Termination (or earlier, if required by applicable law), the aggregate of the following amounts: the sum of (A) Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) Executive’s business expenses that are reimbursable pursuant to Section 2(b)(vi) of this Agreement but have not been reimbursed by the Company as of the Date of Termination; (C) Executive’s Annual Bonus for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs, if such Annual Bonus has been earned but not paid as of the Date of Termination; and (D) any accrued vacation pay to the extent not theretofore paid (the sum of the amounts described in subclauses (A), (B), (C) and (D), the “Accrued Obligations”);
(ii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) two by (B) the sum of (1) Executive’s Annual Base Salary (without regard to any reduction thereto) and (2) Executive’s Target Bonus (without regard to any reduction thereto);
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(iii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) Executive’s Target Bonus for the fiscal year in which the Date of Termination occurs, by (B) a fraction, the numerator of which is the total number of days that have elapsed during such fiscal year through the Date of Termination and the denominator of which is the total number of days in the applicable fiscal year;
(iv) If Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall reimburse Executive for the difference between the monthly COBRA premium paid by Executive for Executive and Executive’s dependents and the monthly premium amount paid by Executive for such coverage immediately prior to the Date of Termination. Such reimbursement shall be paid to Executive on the first of the month immediately following the month in which Executive timely remits the premium payment. Executive shall be eligible to receive such reimbursement until the earliest of (A) 24 months following the Date of Termination, (B) the time Executive is no longer eligible for such COBRA coverage, or (C) the date Executive becomes eligible for group health care insurance coverage from another employer; provided, that Executive shall promptly notify the Company of any such circumstances. For the avoidance of doubt, nothing in this Agreement (including Section 4(b)) shall prohibit the Company or any of its affiliates from amending or terminating any group health plan. Notwithstanding anything in this Agreement (including Section 4(b)) to the contrary, in the event that the payment of amounts payable under this clause (iv) or in Section 4(b)(iv), as applicable, shall result in adverse tax consequences under Chapter 100 of the Code, Code Section 4980D or otherwise to the Company or its affiliates, the parties shall undertake commercially reasonable efforts to restructure such benefit in an economically equivalent manner to avoid the imposition of such taxes on the Company or the affiliate, provided, however, that should the Company’s auditors determine in good faith that no such alternative arrangement is achievable, Executive shall not be entitled to his or her rights to payment under this clause (iv) or Section 4(b)(iv), as applicable. Further, neither the Company nor any of its employees, directors, managers, board members, affiliates, parents, stakeholders, equityholders, agents, successors, predecessors or related parties guarantees the tax treatment of any benefit under this clause (iv) or Section 4(b)(iv), as applicable, and no such party shall have liability to Executive or his or her beneficiaries with respect to the taxation of such benefits or amounts payable in respect thereof; and
(v) To the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any Other Benefits (as defined in Section 5) in accordance with the terms of the underlying plans or agreements.
Other than as set forth in this Section 4(a), in the event of a termination of Executive’s employment by the Company without Cause (other than due to death or Disability) or by Executive for Good Reason, the Company shall have no further obligation to Executive under this Agreement.
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(b) By Executive for Good Reason or By the Company Other than for Cause, Death, or Disability During the Change in Control Period. If, during the Employment Period, the Company terminates Executive’s employment other than for Cause, death or disability, including by providing notice to Executive pursuant to Section 3(a) that the Employment Period will not be extended and Executive’s employment is terminated, or Executive terminates employment for Good Reason, in each case, within a period of two years after a Change in Control (the “Change in Control Period”), the Company will pay and provide to Executive the amounts and benefits specified in Section 4(b)(i)-(vi) herein in lieu of the amounts and benefits provided in Section 4(a).
(i) The Company shall pay to Executive, in a lump sum in cash within 30 days after the Date of Termination (or earlier, if required by applicable law), the aggregate of the Accrued Obligations (as defined in Section 4(a)(i)).
(ii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) three by (B) the sum of (1) Executive’s Annual Base Salary (without regard to any reduction thereto) and (2) Executive’s Target Bonus (without regard to any reduction thereto);
(iii) Subject to Section 11(b), on the 61st day after the Date of Termination, the Company shall, subject to Section 4(e), pay to Executive a lump sum cash amount equal to the product obtained by multiplying (A) Executive’s Target Bonus for the fiscal year in which the Date of Termination occurs, by (B) a fraction, the numerator of which is the total number of days that have elapsed during such fiscal year through the Date of Termination and the denominator of which is the total number of days in the applicable fiscal year;
(iv) If Executive timely and properly elects health continuation coverage under COBRA, the Company shall reimburse Executive for the difference between the monthly COBRA premium paid by Executive for Executive and Executive’s dependents and the monthly premium amount paid by Executive for such coverage immediately prior to the Date of Termination. Such reimbursement shall be paid to Executive on the first of the month immediately following the month in which Executive timely remits the premium payment. Executive shall be eligible to receive such reimbursement until the earliest of (A) 36 months following the Date of Termination, (B) the time Executive is no longer eligible for such COBRA coverage, or (C) the date Executive becomes eligible for group health care insurance coverage from another employer; provided, that Executive shall promptly notify the Company of any such circumstances; and
(v) Any outstanding equity-based awards granted to Executive under Parent’s 2024 Equity and Incentive Compensation Plan (or any successor plan) (the “Equity Plan”) shall vest in full (with performance-based awards vesting at the greater of target performance and actual performance measured as of the Date of Termination) and shall be paid in accordance with the terms of the Equity Plan and the applicable equity award agreements; and
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(vi) To the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any Other Benefits (as defined in Section 5) in accordance with the terms of the underlying plans or agreements.
(c) Death or Disability. If Executive’s employment is terminated by reason of Executive’s death or Disability during the Employment Period, the Company shall provide Executive or, in the event of death, Executive’s estate or beneficiaries, with the Accrued Obligations and the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no further obligations under this Agreement. The Accrued Obligations shall be paid to Executive or, in the event of death, Executive’s estate or beneficiaries, in a lump sum in cash within 30 days of the applicable Date of Termination.
(d) Cause; Other than for Good Reason. If Executive’s employment is terminated for Cause during the Employment Period, the Company shall provide Executive with Executive’s Annual Base Salary through the Date of Termination, and the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no further obligations under this Agreement. If Executive voluntarily terminates employment other than for Good Reason during the Employment Period, the Company shall provide to Executive the Accrued Obligations and the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no further obligations under this Agreement. In such case, all the Accrued Obligations shall be paid to Executive in a lump sum in cash within 30 days of the Date of Termination.
(e) Release. Notwithstanding anything herein to the contrary, the Company shall not be obligated to make any payment under Sections 4(a) (ii)-(iv) or Sections 4(b)(ii)-(v) of this Agreement, as applicable, unless (i) prior to the 60th day following the Date of Termination, Executive executes a release of claims against the Company and its affiliates in a form provided by the Company (the “Release”), and (ii) any applicable revocation period has expired during such 60-day period without Executive revoking such Release.
(f) Change in Control. For purposes of this Agreement, “Change in Control” means the occurrence (after the date of the consummation of the initial public offering Parent’s common stock (the “IPO Date”)) of any of the following events; provided, that, for the avoidance of doubt, the initial public offering of Parent’s common stock shall not constitute a Change in Control for purposes of this Agreement:
(i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time (the “Exchange Act”), and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities of Parent where such acquisition causes such Person to own 50% or more of the combined voting power of the then outstanding voting securities of Parent entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not be deemed to result in a Change in Control: (A) any acquisition
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directly from Parent that is approved by the Incumbent Board (as defined in subsection (ii) below), (B) any acquisition by Parent, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Parent or any corporation controlled by Parent or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B) and (C) of subsection (iii) below; provided, further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds 50% as a result of a transaction described in clause (A) or (B) above, and such Person subsequently acquires beneficial ownership of additional voting securities of Parent, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 50% or more of the Outstanding Company Voting Securities; and provided, further, that if at least a majority of the members of the Incumbent Board determines in good faith that a Person has acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding Company Voting Securities inadvertently, and such Person divests as promptly as practicable a sufficient number of shares so that such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) less than 50% of the Outstanding Company Voting Securities, then no Change in Control shall have occurred as a result of such Person’s acquisition;
(ii) individuals who, as of the IPO Date, constitute the Board (the “Incumbent Board” as modified by this subsection (ii)) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the IPO Date whose election, or nomination for election by Parent’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by specific vote or by approval of the proxy statement of Parent in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(iii) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Parent or the acquisition of assets of another corporation or other transaction (“Business Combination”) excluding, however, such a Business Combination pursuant to which (A) the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction owns Parent or all or substantially all of Parent’s assets either directly or through one or more subsidiaries), (B) no Person (excluding any employee benefit plan (or related trust) of Parent, Parent or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 50% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
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(iv) approval by Parent’s stockholders of a complete liquidation or dissolution of Parent except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of subsection (iii) above.
5. Non-Exclusivity of Rights. Amounts that Executive is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company or its affiliates at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, Executive shall not be eligible to participate in any other severance plan, program or policy of the Company or its affiliates.
6. Set-off; No Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall be subject to set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company or its affiliates may have against Executive to the extent such set-off or other action does not violate Section 409A of the Code. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement.
7. Limitations on Payments Under Certain Circumstances. Notwithstanding any provision of any other plan, program, arrangement or agreement to the contrary, in the event that it shall be determined that any payment or benefit to be provided by the Company to Executive pursuant to the terms of this Agreement or any other payments or benefits received or to be received by Executive (a “Payment”) in connection with or as a result of any event which is deemed by the U.S. Internal Revenue Service or any other taxing authority to constitute a change in the ownership or effective control of Parent or the Company, or in the ownership of a substantial portion of the assets of Parent or the Company and subject to the tax (the “Excise Tax”) imposed by Section 4999 (or any successor section) of the Code, the Payments, whether under this Agreement or otherwise, shall be reduced so that the Payment, in the aggregate, is reduced to the greatest amount that could be paid to Executive without giving rise to any Excise Tax; provided that in the event that Executive would be placed in a better after-tax position after receiving all Payments and not having any reduction of Payments as provided hereunder, Executive shall, notwithstanding the provisions of any other plan, program, arrangement or agreement to the contrary, receive all Payments and pay any applicable Excise Tax. All determinations under this Section 7 shall be made by a nationally recognized accounting firm selected by Parent or the Company (the “Accounting Firm”). Without limiting the generality of the foregoing, any determination by the Accounting Firm under this Section 7 shall take into account the value of any reasonable compensation for services to be rendered by Executive (or for holding oneself out as available to perform services and refraining from performing services (such as under a covenant not to compete)). If the Payments are to be reduced pursuant to this Section 7, the Payments shall be reduced in the following order: (a) Payments which do not constitute “nonqualified deferred compensation” subject to Section 409A of the Code shall be reduced first; and (b) all other Payments shall then be reduced, in each case as follows: (i) cash payments shall be reduced before non-cash payments and (ii) payments to be made on a later payment date shall be reduced before payments to be made on an earlier payment date.
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8. Restrictive Covenants.
(a) Acknowledgements and Agreements. Executive hereby acknowledges and agrees that in the performance of Executive’s duties to the Company during Executive’s employment, Executive shall be brought into frequent contact with existing and potential customers of the Company throughout the continental Unites States. Executive also agrees that Executive will obtain knowledge and skill relevant to the Company’s industry, methods of doing business, and marketing strategies by virtue of Executive’s employment. Executive further agrees that trade secrets and confidential information of the Company, more fully described in Section 8(i), have been developed by the Company through substantial expenditures of time, effort and money and constitute valuable and unique property of the Company with great competitive importance and commercial value to the Company. Executive further understands and agrees that the foregoing makes it necessary for the protection of the Company’s legitimate business interests that Executive comply with the restrictive covenants, as further provided in the following sections. Executive acknowledges and agrees that the terms and conditions of this Section 8 are fair, reasonable, and not unduly restrictive on Executive and are reasonably necessary to protect the legitimate business interests of the Company and to prevent irreparable harm to the Company. Executive further acknowledges and agrees that: he is executing this Agreement in Atlanta, Georgia; he reports into and routinely works in the Company’s headquarters in Atlanta, Georgia and the Company’s office in Santa Rosa Beach, Florida; and he has responsibility for overseeing the Company’s key pharmacy management personnel and operations across the Company’s entire operations in the Restricted Territory.
(b) Competitive Activity During Employment. Executive will not compete with the Company anywhere within the United States during Executive’s employment with the Company, including, without limitation:
(i) entering into or engaging in any business which competes with the Company’s Business;
(ii) soliciting customers, business, patronage or orders for, or selling, any products or services in competition with, or for any business that competes with, the Company’s Business;
(iii) diverting, enticing or otherwise taking away any customers, business, patronage, or orders of the Company or attempting to do so;
(iv) soliciting any employee, sales representative, agent or consultant of the Company to terminate their employment, relationship or other association with the Company or attempting to do so; or
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(v) promoting or assisting, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the Company’s Business.
(c) Following Termination. For a period of two years following Executive’s termination of employment with the Company, for any reason, Executive shall not, on Executive’s own account or as a partner, joint venturer, employee, agent, contractor, salesperson, consultant, officer and/or director of any firm, association, partnership, corporation or other entity:
(i) Provide services the same or substantially similar to those duties performed by Executive as Executive Vice President, Sales & Operations for the Company for any person or entity that competes with the Company’s Business (as hereinafter defined) within the Restricted Territory (as hereinafter defined);
(ii) Directly or indirectly, solicit or attempt to solicit business, patronage or orders for products or services in competition with those provided by the Company, on Executive’s own behalf or for any person or entity, wherever located, from any Company customers or actively sought prospective customers with whom Executive had Material Contact (as hereinafter defined). This Section 8(c)(ii) does not prohibit Executive from accepting as a customer any Company customer or actively sought prospective customer who: (A) responds to a general advertisement or solicitation, including but not limited to advertisements or solicitations through newspapers, trade publications, periodicals or internet databases, not specifically directed at customers or prospective customers of the Company; or (B) unilaterally contacts Executive in the absence of any violation of this Section 8(c)(ii) by Executive;
(iii) Directly or indirectly, within the Restricted Territory, solicit or recruit, or attempt to solicit or recruit, for purposes of terminating employment, relationship or other association with the Company, any employee, sales representative, agent or consultant of the Company with whom Executive worked or about whom Executive came to know confidential information as a result of Executive’s employment with the Company, and who has not prior thereto ceased to be employed or retained by the Company, to terminate their employment, relationship or other association with the Company. This Section 8(c)(iii) shall not prohibit Executive from soliciting or hiring any person who: (A) responds to a general advertisement or solicitation, including but not limited to advertisements or solicitations through newspapers, trade publications, periodicals, internet databases or recruiting or employment agencies, not specifically directed at employees, sales representatives, agents or consultants of the Company; or (B) unilaterally contacts Executive in the absence of any violation of this Section 8(c)(iii) by Executive.
(d) The “Company.” For the purposes of this Section 8, the “Company” shall include any and all direct and indirect subsidiaries, parents, and affiliated or related companies thereof or the Company for which Executive worked or had responsibility at the time of termination of Executive’s employment and at any time during the two year period prior to such termination.
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(e) The Company’s “Business.” For the purposes of this Section 8, the Company’s Business is defined to mean owning, operating or providing business consulting services to pharmacies that offer pharmaceutical products and services to long-term care facilities, including skilled nursing facilities, assisted living facilities and behavioral health facilities, as such activities are conducted by the Company, or the provision of any other products or services conducted, authorized, offered or provided by the Company within the two year period prior to Executive’s termination.
(f) “Material Contact.” For purposes of this Section 8, Material Contact is defined to be contact between Executive and each customer and prospective customer: (i) with whom or which the Executive dealt on behalf of the Company; (ii) whose dealings with the Company were coordinated or supervised by Executive; (iii) about whom Executive obtained Confidential Information in the ordinary course of business as a result of Executive’s association with the Company; or (iv) who received products or services authorized by the Company, the sale or provision of which results or resulted in compensation, commissions, or earnings for Executive within the two years prior to the Executive’s termination from the Company.
(g) “Restricted Territory.” For the purposes of Section 8, the Restricted Territory shall be defined as and limited to:
(i) (A) the geographic area(s) within a 100 mile radius of any and all of the Company’s location(s) in, to, or for which Executive worked, to which Executive was assigned or had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination; or (B) in the event that the foregoing definition of Restricted Territory in this Section 8(g)(i)(A) is deemed to be overbroad or otherwise enforceable even after judicial modification, then this Section 8(g)(i)(A) shall mean the geographic area(s) within a 50 mile radius of any and all of the Company’s location(s) in, to, or for which Executive worked, to which Executive was assigned or had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination; and
(ii) (A) the geographic areas(a) within a 100 mile radius of any and all of the specific customer accounts, whether within or outside of the geographic area described in (i) above, with which Executive had any contact or for which Executive had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination; (B) in the event that the foregoing definition of Restricted Territory in this Section 8(g)(ii)(B) is deemed to be overbroad or otherwise enforceable even after judicial modification, then this Section 8(g)(i) shall mean the geographic area(s) within a 50 mile radius of any and all of the Company’s location(s) in, to, or for which Executive worked, to which Executive was assigned or had any responsibility (either direct or supervisory) at the time of termination of Executive’s employment and at any time during the two-year period prior to such termination.
(h) Non-Disclosure/Return of Company Property and Information.
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(i) Confidential Information Defined. Executive acknowledges that, in the course of Executive’s employment with the Company, Executive has had and will have access to, and will be making use of, acquiring, and adding to the Company’s confidential and proprietary information, including, without limitation, any of the following: trade secrets; patent applications and invention disclosures; confidential business records; computer software programs or any portions or logic comprising said programs; technical or non-technical data, formulae or compilations; vendor and product information; customer and prospective customer lists; information about customers, prospective customers and consultants requirements; terms of contracts with customers and consultants; research, production, programming, development, engineering, and distribution processes or techniques; the Company’s unique selling, manufacturing and servicing methods and business techniques; training, service and business manuals; promotional materials; training courses and other training and instructional materials; methods of doing business; costs and pricing information; advertising, promotions, marketing information, or sales techniques; planning and financial information of the Company; business opportunities; business plans; target markets; pricing formulas; financial models; working methods; profit formulas; studies; servicing plans; portfolio management strategies; and any other proprietary and/or confidential business information of the Company (hereinafter referred to as the “Confidential Information”). Executive further understands that the term Confidential Information does not include any information that is in the public domain or becomes generally known or available from a source other than the Company without a breach of any agreement with the Company and without any restriction on disclosure.
(ii) Duty of Non-Disclosure and Non-Use. In consideration of employment by the Company, Executive agrees that Executive shall not, for any purpose whatsoever other than to the extent necessary to render services to the Company, directly or indirectly, divulge or disclose to any individual or entity, or use in any manner or allow others to use in any manner through Executive, any of the Confidential Information, but shall hold all of the same confidential for so long as such Confidential Information: (A) constitutes trade secrets; and/or (B) is not publicly and widely known or made generally available through no wrongful act of Executive in violation of this Agreement or others who were under confidentiality obligations as to the relevant Confidential Information.
(iii) Return of Information. Any Confidential Information furnished to Executive by the Company, used by Executive on the Company’s behalf, or generated or obtained by Executive during the course of Executive’s employment with the Company, is and shall at all times remain the property of the Company. Executive acknowledges that this property is confidential and is not readily accessible to the Company’s competitors. Upon termination of the employment relationship between Executive and the Company, or prior thereto at the Company’s request, Executive shall immediately deliver to the Company all such property, including all copies, remaining in Executive’s possession or control.
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(iv) Notwithstanding the foregoing, nothing in this Agreement prohibits Executive from reporting possible violations of law or regulation to any governmental agency or entity, or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation. Likewise, nothing in this Agreement is intended to or shall prevent, impede or interfere with Executive from providing truthful testimony and information in the course of, or otherwise participating in, an investigation or proceeding conducted by a governmental agency or entity in connection with the lawful exercise of such agency’s or entity’s functions.
(v) The U.S. Defend Trade Secrets Act of 2016 (“DTSA”) provides that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, the DTSA provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
(i) Discoveries and Inventions. Executive agrees that any discoveries, inventions, know-how, and improvements (collectively “Inventions”), whether patentable or not, made, conceived or suggested, either solely or jointly with others, by Executive while in the Company’s employ, whether in the course of Executive’s employment with the use of the Company’s time, material or facilities or that is in any way within or related to the existing or contemplated scope of the Company’s business, shall be solely the property of the Company. Any Inventions relating to any subject matter with which the Company was concerned during Executive’s employment and made, conceived or suggested by Executive, either solely or jointly with others, within one year following termination of Executive’s employment under this Agreement or any successor agreements shall be irrebuttably presumed to have been so made, conceived or suggested in the course of such employment with the use of the Company’s time, materials or facilities, and to be solely the property of the Company. Executive agrees, both during and after employment with the Company, to disclose promptly and in writing to the Company all Inventions that Executive, whether solely or jointly with others, makes, discovers, develops, conceives, and/or reduces to practice. Executive hereby assigns and agrees to assign to the Company or its designee, without further consideration, Executive’s entire right and interest in and to all such Inventions. Upon request by the Company with respect to any such Inventions, Executive will execute and deliver to the Company, at any time during or after Executive’s employment, all appropriate documents for use in applying for, obtaining and maintaining such domestic and foreign patents as the Company may desire, and all proper assignments therefor, when so requested, at the expense of the Company, but without further or additional consideration.
(j) Work Made For Hire. Executive acknowledges that, to the extent permitted by law, all work papers, reports, documentation, drawings, specifications, photographs, negatives, tapes and masters therefore, prototypes and other materials (hereinafter, “items”), including without limitation, any and all such items generated and maintained on any form of electronic media, authored or generated by Executive during Executive’s employment with the Company shall be considered a “work made for hire” and that ownership of any and all copyrights in any and all such items shall belong solely to the Company.
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(k) Remedies. The parties acknowledge and agree that any breach by Executive of the terms of this Agreement may cause the Company irreparable harm and injury for which money damages would be inadequate. Accordingly, the Company, in addition to any other remedies available at law or equity, shall be entitled, as a matter of right, to injunctive relief in any court of competent jurisdiction. The parties agree that such injunctive relief may be granted without the necessity of proving actual damages. Nothing in this Agreement shall limit the Company’s remedies under state for federal law or elsewhere.
(l) Reasonableness. Executive acknowledges and agrees that Executive’s obligations under this Section 8 are reasonable in the context of the nature of the Company’s Business and the competitive injuries likely to be sustained by the Company if Executive were to violate such obligations. Executive further acknowledges and agrees that this Agreement is made in consideration of, and is adequately supported by, the agreement of the Company to perform its obligations under this Agreement and by other consideration, which Executive acknowledges constitutes good, valuable and sufficient consideration. Executive further acknowledges and agrees that Executive’s obligations under this Section 8 will not prohibit Executive from engaging in other businesses or employment for the purpose of earning a livelihood following the termination of his employment with the Company.
(m) Modification/Reformation. If any restriction set forth in this Section 8 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time, or over too great a range of activities, or in too broad a geographic territory, it shall be interpreted to extend only over the maximum period of time, range of activities, or geographic territory as to which it would otherwise be enforceable. If any provision or covenant, or any part thereof, of this Section 8 should be held by any court to be invalid, illegal or unenforceable, either in whole or in part, such invalidity, illegality or unenforceability will not affect the validity, legality or enforceability of the remaining provisions or covenants, or any part thereof, of this Section 8 or this Agreement, all of which will remain in full force and effect.
(n) Additional Acknowledgements. Executive acknowledges and agrees that, in the event that Executive becomes subject to any other contractual arrangements with the Company regarding competition with the Company, the restrictive covenants set forth in this Agreement were executed first and shall be deemed supplemented, and in no event diminished or replaced, by such other contractual arrangements.
9. Successors.
(a) This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of, and be enforceable by, Executive’s legal representatives.
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(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
10. Indemnification. The Company or an affiliate thereof shall indemnify Executive to the maximum extent permitted under applicable law for acts taken within the scope of Executive’s employment and Executive’s service as an officer or director of the Company or any of its subsidiaries or affiliates. To the extent that the Company or an affiliate thereof obtains coverage under a director and officer indemnification policy, Executive will be entitled to such coverage on a basis that is no less favorable than the coverage provided to any other officer or director of the Company or Parent.
11. Section 409A of the Code.
(a) The intent of the parties is that payments and benefits under this Agreement comply with, or be exempt from, Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.
(b) Notwithstanding any provision of this Agreement to the contrary, in the event that Executive is a “specified employee” within the meaning of Section 409A (as determined in accordance with the methodology established by the Company as in effect on the Date of Termination) (a “Specified Employee”), any payments or benefits that are considered non-qualified deferred compensation under Section 409A payable under this Agreement on account of a “separation from service” during the six-month period immediately following the Date of Termination shall, to the extent necessary to comply with Section 409A, instead be paid, or provided, as the case may be, on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A. For purposes of Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement that is considered nonqualified deferred compensation, subject to Section 409A.
(c) With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits that are deferred compensation subject to Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.
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12. Compensation Recoupment Policy. Notwithstanding anything in this Agreement to the contrary, Executive acknowledges and agrees that the terms and conditions set forth in Parent’s compensation recoupment policy as in effect from time to time, including specifically to implement Section 10D of the Exchange Act, and any applicable rules or regulations promulgated thereunder (including applicable rules and regulations of any national securities exchange on which the shares of Parent’s common stock may be traded) (the “Compensation Recovery Policy”) are incorporated into this Agreement by reference. To the extent the Compensation Recovery Policy is applicable to Executive, it creates additional rights for the Company and Parent with respect to certain compensation, including, without limitation, incentive-based compensation. Notwithstanding any provisions to the contrary, certain compensation will be subject to potential mandatory cancellation, forfeiture and/or repayment by Executive to the Company or Parent to the extent Executive is, or in the future becomes, subject to (a) any Parent clawback or recoupment policy, including the Compensation Recovery Policy, and any other policies that are adopted to comply with the requirements of any applicable laws, rules, regulations, stock exchange listing standards or otherwise, or (b) any applicable laws that impose mandatory clawback or recoupment requirements under the circumstances set forth in such laws, including as required by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or other applicable laws, rules, regulations or stock exchange listing standards, as may be in effect from time to time, and which may operate to create additional rights for the Company or Parent with respect to awards and the recovery of amounts relating thereto. Executive consents to be bound by the terms of the Compensation Recovery Policy, if applicable, and agrees and acknowledges that Executive is obligated to cooperate with, and provide any and all assistance necessary to, the Company and Parent in their efforts to recover or recoup an award, any gains or earnings related to an award, or any other applicable compensation or amounts, including, without limitation, annual cash incentive compensation, that is subject to clawback or recoupment pursuant to such laws, rules, regulations, stock exchange listing standards or Company or Parent policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the recovery or recoupment by the Company or Parent from Executive of any such amounts, including from Executive’s accounts or from any other compensation, to the extent permissible under Section 409A.
13. Complete Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein, and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of the subject matter contained herein, including any previous Employment Agreement between Guardian Pharmacy, LLC and Executive. Notwithstanding the foregoing, Executive acknowledges and agrees that he remains bound by the terms of that certain Restrictive Covenant Agreement entered into between Guardian Pharmacy, LLC and Executive (the “RCA”), and that the terms of the RCA are not superseded by this Agreement but are in addition to the terms of this Agreement.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia, without reference to principles of conflict of laws. Executive agrees that the state and federal courts located in the State of Georgia shall have jurisdiction in any action, suit or proceeding against Executive based on or arising out of this Agreement and Executive hereby: (a) submits to the personal jurisdiction of such courts; (b) consents to service
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of process in connection with any action, suit or proceeding against Executive; and (c) waives any other requirement (whether imposed by statute, rule of court or otherwise) with respect to personal jurisdiction, venue or service of process. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, or nationally-recognized overnight courier service, postage prepaid, addressed as follows:
| If to Executive: | At the most recent address on file at the Company. | |
| If to the Company: | 300 Galleria Parkway SE | |
| Suite 800 | ||
| Atlanta, GA 30339 | ||
or to such other address as either party shall have furnished to the other in writing in accordance herewith (including via electronic mail). Notice and communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d) The Company, its subsidiaries and affiliates may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes or social security charges as shall be required to be withheld pursuant to any applicable law or regulation. None of the Company, its subsidiaries or affiliates guarantees any tax result with respect to payments or benefits provided hereunder. Executive is responsible for all taxes owed with respect to all such payments and benefits.
(e) Subject to any limits on applicability contained therein, Section 8 of this Agreement shall survive and continue in full force in accordance with its terms notwithstanding any termination or expiration of the Employment Period.
(f) This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(g) Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
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(h) With respect to any controversy or claim arising out of or relating to or concerning injunctive relief for Executive’s breach or purported breach of Section 8 of this Agreement, the Company shall have the right, in addition to any other remedies it may have, to seek specific performance and injunctive relief with a court of competent jurisdiction, without the need to post a bond or other security.
15. Other Acknowledgements. Nothing in this Agreement prevents Executive from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations.
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IN WITNESS WHEREOF, Executive and the Company have executed this Agreement on the date first above written.
| EXECUTIVE | ||
| /s/ G. Kendall Forbes | ||
| G. KENDALL FORBES | ||
| GUARDIAN PHARMACY SERVICES | ||
| MANAGEMENT, LLC | ||
| By | /s/ Fred P. Burke | |
| Name: | Fred P. Burke | |
| Title: | President and Chief Executive Officer | |