President and Chief Executive Officer Employment Agreement - Martin G. Baum

Exhibit 10.26


FIRST AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT


THIS FIRST AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the " Agreement" ), is made and entered into as of February 20, 2003, by and between TEAMM Pharmaceuticals, Inc., a Florida corporation (the " Company" ), and Martin G. Baum, an individual resident of Wake County, North Carolina (the " Employee" ).


RECITALS


A. The Company is engaged in the marketing and sale of proprietary pharmaceutical products (the " Business" ).


B. The Company is the successor by merger to TEAMM Pharmaceuticals, Inc., a Delaware corporation (" TEAMM" ).

C. The Employee is currently employed by TEAMM under an Executive Employment Agreement, dated as of August 1, 2001 (the " Prior Employment Agreement" ).


D. The Company is a wholly-owned subsidiary of Accentia, Inc., a Florida corporation (" Accentia" ).


E. In connection with the merger of TEAMM with and into the Company, and Company and Employee desire to amend and restate the terms of the Employee' s employment as provided in this Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants of the Company and the Employee hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee hereby agree as follows:

1. EMPLOYMENT AND DUTIES

1.1 Employment of Employee . The Company hereby employs the Employee, and the Employee accepts such employment pursuant and subject to the terms and conditions of this Agreement.

1.2 Duties and Powers . During the Employment Period (as defined herein), the Employee shall serve as the President and Chief Executive Officer of the Company and shall have such responsibilities, duties and authority, and shall render such services for and in connection with the Company and its subsidiaries and affiliates as are customary in such position and as the Board of Directors of the Company (the " Board" ) shall from time to time reasonably direct. During the Employment Period, the Employee shall serve as a member of the Board of Directors of Accentia. The Employee shall


devote the Employee' s full business time and attention exclusively to the Business of the Company and shall use best efforts to faithfully carry out the Employee' s duties and responsibilities hereunder. The Employee shall comply with all personnel policies and procedures of the Company as the same now exist or may be hereafter implemented by the Company from time to time, including those policies contained in the Company' s employee manual or handbook which sets forth policies and procedures generally for employees of the Company (the " Handbook" ) to the extent not inconsistent with this Agreement.

2. TERM OF EMPLOYMENT . Unless earlier terminated as provided herein, the Employee' s employment under this Agreement shall be for a period of five (5) years beginning on March 7, 2003 and ending at 11:59 p.m. eastern time on March 6, 2008 (the " Initial Employment Period" ). This Agreement automatically shall renew for successive one-year periods, unless either the Company or the Employee provides written notice to the other at least ninety (90) days prior to the termination of any such period stating said party' s desire to terminate this Agreement, which termination shall be subject to the provisions of Section 4 hereof. The Initial Employment Period and any extension or renewal thereof shall be referred to herein together as the " Employment Period ." Notwithstanding anything to the contrary contained herein, the Employment Period is subject to termination pursuant to Section 4 hereof.

3. COMPENSATION AND BENEFITS

3.1 Compensation . The Company shall pay the Employee a base salary at a rate of Two Hundred Sixteen Thousand Dollars ($216,000) per year (the " Base Salary" ), payable in accordance with the Company' s regular payroll policy for salaried employees. The Base Salary of the Employee may be subject to increase annually by an amount of five percent (5%) each year during the Employment Period, or such greater increase as approved by the Board of the Company; provided that, the Employee' s base salary shall not be less than the base salary of the President and Chief Executive Officer of any other subsidiary of Accentia. If the Employment Period is terminated pursuant to Section 4 hereof, then the Base Salary for any partial year shall be prorated based on the number of days elapsed in such year during which services were actually performed by the Employee.


3.2 Benefits . During the Employment Period, the Employee shall be eligible to participate in and/or receive benefits under such employee and welfare benefit plans as may be established from time to time by the Company, including all profit-sharing, stock purchase, stock option, bonus, pension, disability, group-term life insurance, health insurance and flexible benefit payroll deduction plans, subject in each instance to the Employee meeting all eligibility and qualification requirements of such plans. The Company intends to adopt, subject to the approval of the Board of the Company, a bonus plan for the Employee that will provide that the Employee shall be eligible to receive an annual bonus in an amount equal to approximately fifty percent (50%) of the Employee' s then current annual Base Salary. In addition, during the Employment Period, the Company shall obtain, maintain and timely pay the premiums on a life insurance policy


2

on the life of the Employee with proceeds payable under such life insurance policy in the amount of at least three (3) times the Employee' s Base Salary payable hereunder (with the amount of such life insurance to be increased with each increase in the Base Salary).

3.3 Stock Options . Accentia shall grant to the Employee options to purchase shares of the Company' s Common Stock (the " Common Stock" ) at such times, in such amounts, and at such exercise prices as determined by the Board of Accentia. Such stock options shall be granted under the terms of Accentia' s Stock Option Plan (the " Plan" ) and are subject to all of the terms and conditions of the Plan as more specifically evidenced by any such Stock Option Agreement entered into by Accentia, except that Employee' s right to exercise such options shall vest on no more than a two-year period from the date of grant, with vesting occurring over such period in equal monthly installments.

3.4 Expenses . The Company shall reimburse the Employee, in accordance with and subject to the Employee' s compliance with the Company' s policy, for the Employee' s necessary and reasonable out-of-pocket expenses incurred in the course of performance of the Employee' s duties hereunder. All reimbursement of expenses to the Employee hereunder shall be conditioned upon presentation of sufficient documentation evidencing such expenses.


3.5 Vacation and Leave . The Employee shall be entitled to the number of days of paid time off (" PTO" ) allotted for the other executives of the Company during each year of the Employment Period and other leave as may be established from time to time by the Company for the benefit of employees, subject to the Employee' s compliance with the guidelines set forth in the Handbook. During the Initial Employment Period, the Employee shall be entitled to at least twenty (20) days of PTO, with the ability to carry ten (10) days of such PTO which are unused in any year for use in the following year.

3.6 Car Allowance . The Company shall provide the Employee with a car allowance of Six Thousand Dollars ($6,000) per year, payable and adjusted annually based upon the Company' s policy.


3.7 Working Facilities . The Company shall furnish the Employee with such office space, equipment, technical, secretarial and clerical assistance and such other facilities, services and supplies as shall be reasonably necessary to enable the Employee to perform the duties required of the Employee hereunder in an efficient and professional manner.


4. TERMINATION OF EMPLOYMENT


4.1 Definitions .


a. " Change in Control" means, with respect to the Company or Accentia: (i) a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the " Exchange Act" ), provided that such


3

a Change in Control shall be deemed to have occurred if any " person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of securities of the Company or Accentia representing fifty percent (50%) or more of the combined voting power of the Company' s or Accentia' s then outstanding securities or (ii) the sale or other disposition of all or substantially all of the assets of the Company or Accentia.

b. " Constructive Termination" means a termination of the Employee' s employment by the Company initiated by the Employee after (i) a substantial diminution or alteration in the duties or responsibilities of the Employee; (ii) a change in the reporting structure for the Employee, including without limitation a change that results in the Employee directly or indirectly reporting to Scott Jones; (iii) a reduction by the Company in the Employee' s base salary in effect on the date of the Change in Control; or (iv) the relocation of the Employee' s primary work location to a location that is more than fifty (50) miles from the Employee' s primary work location. Constructive Termination specifically does not include termination of Employee by reason of death, Disability (as defined herein), or retirement at or after age sixty-five (65). The Employee shall give the Company written notice of a Constructive Termination, which notice shall provide a brief description of the circumstances which the Employee asserts gives rise to a right of Constructive Termination, and the Company shall have ten (10) days from receipt of said notice within which to remedy said circumstances.

c. " Disability" means the inability of the Employee to perform the Employee' s assigned duties for the Company for a period of three (3) months due to the Employee' s physical or mental illness as determined by a reputable medical doctor.

d. " Cause" means a determination by the Board of the Company, acting in good faith but made in the sole discretion of the Board of the Company, that the Employee: (i) has failed to substantially perform the Employee' s duties under or otherwise breached any of the terms of this Agreement; (ii) has demonstrated gross negligence or willful misconduct in the execution of the Employee' s duties; or (iii) has been convicted of a felony.


4.2 Basis for Termination . Notwithstanding any other provision in this Agreement to the contrary, the Employment Period and the Employee' s employment hereunder shall terminate effective on the date indicated:

a. Upon the death of the Employee, effective immediately on the date of death without any notice;


b. Upon the Disability of the Employee, effective upon written notice by the Company to the Employee of the determination of the Disability of the Employee;

c. For Cause, effective upon written notice by the Company to the Employee of the determination of Cause; or

4

d. The Constructive Termination by the Employee that is not remedied by the Company within ten (10) days from the receipt of notice by the Employee to the Company of Constructive Termination.

4.3 Severance Upon Termination Without Cause . If the Company terminates the Employee' s employment for reason other than for Cause, the Employee shall be entitled to the following compensation and benefits:


a. The Company shall pay the Employee a lump sum equal to Employee' s W-2 compensation that would be payable hereunder but for such termination for the twenty-four (24) month period on the first day of the month of the Employee' s termination, said sum to be paid within thirty (30) days after the Employee' s termination of employment.

b. The Company shall pay the Employee all bonus or deferred compensation (whether in the form of cash, stock or otherwise) accrued but unpaid as of the Employee' s termination, said sum to be paid within thirty (30) days after the Employee' s termination of employment.

c. For a period of twenty-four (24) months after the Employee' s termination of employment with the Company, the Company shall continue to pay for and provide existing employee welfare benefits which the Employee is receiving as of the date of termination of employment, including life insurance, health, medical, dental, vision and wellness, accidental death and dismemberment and disability benefits; provided, however, that the Company' s obligations under this subsection shall terminate from the date that the Employee first becomes eligible after termination of employment with the Company for similar coverage under another employer' s plan.


d. Notwithstanding anything to the contrary in any Stock Option Agreement: (i) all unvested shares underlying stock options shall become fully vested as of the date of the Employee' s termination and (ii) the Employee shall continue to be treated under each Stock Option Agreement as if the Employee was an employee of the Company until the first to occur of (x) the twenty-four (24) month anniversary of the Employee' s termination of employment or (y) the expiration of the exercise period provided for therein; provided, however, in the event of the Employee' s death or Disability after the date of the Employee' s termination of employment hereunder, the time for exercise after death or Disability prescribed in the Stock Option Agreement shall apply. The provisions of this subsection shall also apply to all substitute stock options granted to Employee in exchange for the Employee' s Company stock options to which this subsection applies.

5

4.4 Severance Upon Constructive Termination or Change of Control . Upon Constructive Termination or a Change of Control, the Employee shall be entitled to the following compensation and benefits:

a. The Company shall pay the Employee a lump sum equal to Employee' s W-2 compensation that would be payable hereunder but for such termination for the greater of: (i) the remainder of the Initial Employment Period or (ii) twenty-four (24) month period beginning on the first day of the month of the Employee' s termination (such period is hereinafter referred to as the " Payment Period" ); said sum to be paid within thirty (30) days after the Employee' s termination of employment.

b. The Company shall pay the Employee all bonus or deferred compensation (whether in the form of cash, stock or otherwise) accrued but unpaid as of the Employee' s termination, said sum to be paid within thirty (30) days after the Employee' s termination of employment.

c. For the Payment Period after the Employee' s termination of employment with the Company, the Company shall continue to pay for and provide existing employee welfare benefits which the Employee is receiving as of the date of termination of employment, including life insurance, health, medical, dental, vision and wellness, accidental death and dismemberment and disability benefits; provided, however, that the Company' s obligations under this subsection shall terminate from the date that the Employee first becomes eligible after termination of employment with the Company for similar coverage under another employer' s plan.


d. Notwithstanding anything to the contrary in any Stock Option Agreement: (i) all unvested shares underlying stock options shall become fully vested as of the date of the Employee' s termination and (ii) the Employee shall continue to be treated under each Stock Option Agreement as if the Employee was an employee of the Company until the first to occur of (x) the twenty-four (24) month anniversary of the Employee' s termination of employment or (y) the expiration of the exercise period provided for therein; provided, however, in the event of the Employee' s death or Disability after the date of the Employee' s termination of employment hereunder, the time for exercise after death or Disability prescribed in the Stock Option Agreement shall apply. The provisions of this subsection shall also apply to all substitute stock options granted to Employee in exchange for the Employee' s Company stock options to which this subsection applies.

4.5 Severance Upon Death or Disability . Upon the death or Disability of the Employee, the Employee shall be entitled to the following compensation and benefits:

a. The Company shall pay the Employee a lump sum equal to Employee' s W-2 compensation that would be payable for the remainder of the Initial Employment Period but for such death or Disability (and assuming no termination would occur), said sum to be paid within thirty (30) days after the Employee' s death or the date upon which a Disability is determined to have occurred by a reputable medical doctor (the " Determination Date" ).


b. The Company shall pay the Employee all bonus or deferred compensation (whether in the form of cash, stock or otherwise) accrued but unpaid as of


6

the Employee' s termination, said sum to be paid within thirty (30) days after the Determination Date.

c. For the remainder of the Initial Employment Period, and to the extent possible, the Company shall continue to pay for and provide existing employee welfare benefits which the Employee (or dependents or family members of the Employee) is receiving as of the Determination Date, including life insurance, health, medical, dental, vision and wellness, accidental death and dismemberment and disability benefits; provided, however, that the Company' s obligations under this subsection shall terminate from the date that the Employee first becomes eligible after termination of employment with the Company for similar coverage under another employer' s plan.

d. In the event of the Employee' s death, all rights and benefits granted hereunder shall transfer to and be exercised or enforced, as the case may be, by the estate or personal representative of the Employee.


5. NON-INTERFERENCE; NONCOMPETITION . For purposes of this Section 5 and Section 6, the term " Full Employment Period" shall include the Employment Period and the period during which the Employee was employed by TEAMM, and the term " Company" shall specifically include the Company and TEAMM, to whom the Company is a successor by merger. During the Employment Period and for a period of twenty-four (24) months thereafter, the Employee shall not:


a. interfere with any of the Company' s relationships with, or endeavor to employ or entice away from the Company, any person who at any time on or after the date hereof, is or becomes an employee of the Company or interfere with or seek to alter the Company' s relationship with, or divert any customer, supplier, licensor, or distributor of the Company;

b. directly or indirectly, engage in or facilitate or support others to engage in the Business of the Company or any other business in which the Company or any successor thereof (only to the extent of the products and services of the Company immediately prior to the successor succeeding to the Company' s Business) is then actively engaged or any successor thereof anywhere in the United States or, directly or indirectly, solicit or attempt to solicit for business in a manner which could reasonably be expected to result in a detriment to the Company, in competition with the Company or any successor thereof, any customer, supplier, licensor, or distributor with whom the Company or any successor thereof shall have done business; or

c. seek or obtain employment with or provide services to any customer, supplier, licensor, or distributor of the Company with whom the Employee interacted during the Full Employment Period which employment or services could reasonably be expected to result in a detriment to the Company.

6. PROPERTY RIGHTS . With respect to information, inventions, and discoveries developed, made or conceived of by the Employee, either alone or with others, at any time during the Full Employment Period and whether or not within working hours,


7

arising out of such employment or pertinent to any business in which, during the Full Employment Period, the Company is engaged or (if such is known to or ascertainable by the Employee) is considering engaging, the Employee agrees:


a. that all such information, inventions, and discoveries, whether or not patented or patentable, shall be and remain the exclusive property of the Company;

b. to disclose promptly to an authorized representative of the Company all such information, inventions, and discoveries and all information in the Employee' s possession as to possible applications and uses thereof;


c. not to file any patent application relating to any such invention or discovery except with the prior written consent of an authorized officer of the Company;


d. that the Employee hereby waives and releases all rights the Employee may have in and to such information, inventions, and discoveries, and hereby assigns to the Company and/or its nominees all of the Employee' s right, title and interest in them, and all the Employee' s right, title and interest in any patent, patent application, copyright or other property right based thereon. The Employee hereby irrevocably designates and appoints the Company and each of its duly authorized officers and agents as the Employee' s agent and attomey-in-fact to act for the Employee and on the Employee' s behalf and stead to execute and file any document and to do all other lawfully permitted acts to further the prosecution, issuance and enforcement of any such patent, patent application, copyright or other property right with the same force and effect as if executed and delivered by the Employee; and

e. at the request of the Company, and without expense to the Employee, to execute such documents and perform such other acts as the Company deems necessary or appropriate, for the Company to obtain patents on such inventions in a jurisdiction or jurisdictions designated by the Company, and to assign to the Company or its designee such inventions and any and all patent applications and patents relating thereto.

7. CONFIDENTIALITY . With respect to the information, inventions, and discoveries referred to in Section 6 hereof, and also with respect to all other information, whatever its nature and form and whether obtained orally, by observation, from graphic materials, or otherwise (except such as is generally available through publication), obtained by the Employee during or as a result of the Employee' s employment by the Company and relating to any invention, improvement, enhancement, product, know-how, formula, software, process, apparatus, design, concept, or other creation, or to any use of any of them, or to any plans of the Company, or to any other trade secret or proprietary information of the Company, the Employee agrees:

a. to hold all such information, inventions, and discoveries which have not otherwise become public knowledge in strict confidence and not to publish or otherwise d ...