EXHIBIT 10.24
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of November 15, 2002, by and between ICN
PHARMACEUTICALS, INC. (the "Company"), a Delaware corporation, and XXXX X.
XXXXXXXXX (the "Executive"), an individual resident of San Diego County,
California (hereinafter the Company and Executive collectively referred to as
"the parties").
RECITALS
WHEREAS, Executive has been employed by the Company as its Executive Vice
President Strategic Planning, is experienced in many phases of the business of
the Company and the Company desires to continue to retain the services of
Executive on the terms set forth herein;
WHEREAS, under the terms of Executive's current Employment Agreement with
the Company dated March 18, 1993 and amended as of January 16, 2002
(collectively, the "Initial Employment Agreement"), Executive is entitled to
receive certain severance benefits upon termination of his employment with the
Company without cause or by unilaterally terminating his employment relationship
with the Company at a future time; and
WHEREAS, to induce Executive to remain in the employ of the Company, the
Company desires by this Agreement to set forth the continued employment
relationship of Executive with the Company.
AGREEMENT
NOW, THEREFORE, for consideration, the value, sufficiency, and receipt of
which is hereby acknowledged, the parties agree as follows.
1. Term. The term of employment ("Term") under this Agreement will be
for an indefinite period commencing on the date hereof, and ending when
employment is terminated pursuant to the provisions of Section 8 (Termination)
hereof.
2. Employment.
(a) Positions and Duties. Executive shall be employed as Executive
Vice President Strategic Planning of the Company or in such other senior
executive capacity as may be mutually agreed upon in writing by the parties.
Executive shall perform the duties, undertake the responsibilities and exercise
the authority customarily performed, undertaken and exercised by persons
situated in a similar executive capacity. He shall also promote, by
entertainment or otherwise, the business of the Company.
(b) Time Commitment. Excluding periods of vacation and sick leave
to which Executive is entitled, Executive agrees to devote reasonable attention
and time during usual business hours to the business and affairs of the Company
to the extent necessary to discharge the responsibilities assigned to Executive
hereunder; provided, however, that Executive may elect at his option to reduce
his work schedule at any time after March 1, 2003 to a schedule of not less than
eighty percent (80%) of full-time employment. Further, Executive may (1) serve
on corporate, civic or charitable boards or committees, (2) manage personal
investments and (3) deliver lectures and teach at educational institutions, so
long as such activities do not significantly interfere with the performance of
Executive's responsibilities hereunder.
(c) Policies and Procedures. Executive agrees to comply with all
of the Company's standard policies and procedures.
3. Base Salary. The Company agrees to pay Executive during the term of
this Agreement a base salary at the rate of $400,000 per annum or such larger
amount as the Board of Directors of the Company (the "Board") may from time to
time determine (the "Base Salary"). The Base Salary will be payable in
accordance with the Company's customary practices applicable to its executives.
Such rate of salary, or increased rate of salary, if any, as the case may be,
will be reviewed at least annually by the Board and may be further increased
(but not decreased) in such amounts as the Board in its discretion may decide;
provided, however, that if Executive elects to reduce his work schedule as set
forth in Section 2(b), Executive's salary shall be prorated to reflect the
reduced work schedule.
4. Employee Benefits. Executive will be entitled to participate in all
employee benefit plans, practices and programs maintained by the Company and
made available to employees generally including, without limitation, all
pension, retirement, profit sharing, savings, medical, hospitalization,
disability, dental, life or travel accident insurance benefit plans. Executive's
participation in such plans, practices and programs will be on the same basis
and terms as are applicable to executives of the Company. To the extent the
amount of any benefit is directly related to Executive's salary, then in that
event only, such benefit shall be proportionately reduced in the event that
Executive elects to reduce his work schedule as provided in Section 2(b) above.
5. Executive Benefits and Bonus.
(a) General Benefits. Executive will be entitled to participate in
all executive benefit or incentive compensation plans now maintained or
hereafter established by the Company for the purpose of providing compensation
and/or benefits to executives of the Company including, but not limited to, the
Company's 401(k) and Deferred Compensation Plans and any supplemental
retirement, salary continuation, stock option, restricted stock, deferred
compensation, supplemental medical or life insurance or other bonus or incentive
compensation plans. Unless otherwise provided herein, Executive's participation
in such plans shall be on the same basis and terms as other senior executives of
the Company, but in no event on a basis less favorable in terms of benefit
levels applicable to Executive as in effect on the date hereof. To the extent
the amount of any benefit is directly related to Executive's salary, then in
that event only, such benefit shall be proportionately reduced in the event that
Executive elects to reduce his work schedule as provided in Section 2(b) above.
(b) Bonus. The Company agrees to pay to Executive a bonus in the
amount of one hundred twenty thousand dollars ($120,000) within five (5) days of
execution of this Agreement by Executive. Additionally, the Company agrees to
pay to Executive a guaranteed bonus in the amount of two million four hundred
fifty-seven thousand six hundred thirty-five dollars ($2,457,635) (the "Bonus")
as follows:
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(1) If Xxxxxx X. X'Xxxxx remains as Chief Executive Officer
of the Company up to and including January 15, 2003, the Company shall pay
Executive the Bonus in equal installments of one third (1/3) of the total amount
of the Bonus on the following dates: (a) January 15, 2003; (b) July 15, 2003;
and (c) January 15, 2004; provided, however, that if the employment of Xxxxxx X.
X'Xxxxx as Chief Executive Officer of the Company terminates before the second
payment of the Bonus is due to Executive on July 15, 2003, the Company shall pay
Executive the entire remainder of the Bonus on July 15, 2003.
(2) If the employment of Xxxxxx X. X'Xxxxx as Chief
Executive Officer of the Company terminates before the first payment of the
Bonus is due to Executive under Section 5(b)(1) on January 15, 2003, the Company
shall pay Executive the Bonus in equal installments of one-half (1/2) of the
total amount of the Bonus on the following dates: (a) January 15, 2003; and (b)
July 15, 2003.
(c) Parachute Excise Tax. In the event that any amount or benefit
paid or distributed to Executive pursuant to this Agreement, taken together with
any amounts or benefits otherwise paid or distributed to Executive by the
Company or any affiliated company (collectively, the "Covered Payments"),
including, without limitation any profit realized in respect of the stock
options and similar events, are or become subject to the tax (the "Excise Tax")
imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") or any similar tax that may hereafter be imposed, the Company shall pay
to Executive at the time specified below an additional amount (the "Tax
Reimbursement Payment") such that the net amount retained by Executive with
respect to such Covered Payments, after deduction of any Excise Tax on the
Covered Payments and any Federal, state and local income tax and Excise Tax on
the Tax Reimbursement Payment provided for by this Section 9(d), but before
deduction for any Federal, state or local income or employment tax withholding
on such Covered Payments, shall be equal to the amount of the Covered Payments.
(i) Determining Excise Tax. For purposes of
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax:
(A) such Covered Payments will be treated as "parachute payments"
within the meaning of Section 280G of the Code, and all "parachute
payments" in excess of the "base amount" (as defined under Section
280G(b)(3) of the Code) shall be treated as subject to the Excise Tax,
unless, and except to the extent that, in the good faith judgment of the
Company's independent certified public accountants appointed prior to the
date of this Agreement or tax counsel selected by such Accountants (the
"Accountants"), the Company has a reasonable basis to conclude that such
Covered Payments (in whole or in part) either do not constitute "parachute
payments" or represent reasonable compensation for personal services
actually rendered (within the meaning of Section 280G(b)(4)(B) of the
Code) in excess of the "base amount," or such "parachute payments" are
otherwise not subject to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Accountants in accordance with the
principles of Section 280G of the Code.
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(ii) Determining Tax Reimbursement Payment. For
purposes of determining the amount of the Tax Reimbursement Payment, Executive
shall be deemed to pay:
(A) Federal income taxes at the highest applicable marginal rate
of Federal income taxation for the calendar year in which the Tax
Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in which the
Tax Reimbursement Payment is to be made, net of the maximum reduction in
Federal incomes taxes which could be obtained from the deduction of such
state or local taxes if paid in such year.
(iii) Refund Obligation. In the event that the Excise
Tax is subsequently determined by the Accountants or pursuant to any proceeding
or negotiations with the Internal Revenue Service to be less than the amount
taken into account hereunder in calculating the Tax Reimbursement Payment made,
Executive shall repay to the Company, at the time that the amount of such
reduction in the Excise Tax is finally determined, the portion of such prior Tax
Reimbursement Payment that would not have been paid if such Excise Tax had been
applied in initially calculating such Tax Reimbursement Payment, plus interest
on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. Notwithstanding the foregoing, in the event any portion of the Tax
Reimbursement Payment to be refunded to the Company has been paid to any
Federal, state or local tax authority, repayment thereof shall not be required
until actual refund or credit of such portion has been made to Executive, and
interest payable to the Company shall not exceed interest received or credited
to Executive by such tax authority for the period it held such portion.
Executive and the Company shall mutually agree upon the course of action to be
pursued (and the method of allocating the expenses thereof) if Executive's good
faith claim for refund or credit is denied.
(iv) Additional Tax Reimbursement Payment. In the event
that the Excise Tax is later determined by the Accountants or pursuant to any
proceeding or negotiations with the Internal Revenue Service to exceed the
amount taken into account hereunder at the time the Tax Reimbursement Payment is
made (including, but not limited to, by reason of any payment the existence or
amount of which cannot be determined at the time of the Tax Reimbursement
Payment), the Company shall make an additional Tax Reimbursement Payment in
respect of such excess (plus any interest or penalty payable with respect to
such excess) at the time that the amount of such excess is finally determined.
(v) Timing of Tax Reimbursement Payments. The Tax
Reimbursement Payment (or portion thereof) provided for in this Section 9(d)
shall be paid to Executive not later than ten (10) business days following the
payment of the Covered Payments; provided, however, that if the amount of such
Tax Reimbursement Payment (or portion thereof) cannot be finally determined on
or before the date on which payment is due, the Company shall pay to Executive
by such date an amount estimated in good faith by the Accountants to be the
minimum amount of such Tax Reimbursement Payment and shall pay the remainder of
such Tax Reimbursement Payment (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined, but in no event later than forty-five
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(45) calendar days after payment of the related Covered Payment. In the event
that the amount of the estimated Tax Reimbursement Payment exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan by
the Company to Executive, payable on the fifth business day after written demand
by the Company for payment (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
6. Other Benefits.
(a) Fringe Benefits and Perquisites. Executive will be entitled to
all fringe benefits and perquisites (e.g. Company car, club dues, physical
examinations, financial planning and tax preparation services) generally made
available by the Company to its executives. In addition, Executive may travel
business class for air travel on Company business trips at Company expense.
(b) Expenses. Executive will be entitled to receive prompt
reimbursement of all reasonable, documented expenses incurred by him in
connection with the performance of his duties hereunder or for promoting,
pursuing or otherwise furthering the business or interests of the Company.
(c) Office and Facilities. Executive will be provided with an
appropriate office in Costa Mesa, California, or such other place as may be
mutually agreed and with such secretarial and other support facilities as are
commensurate with Executive's status with the Company and adequate for the
performance of his duties hereunder.
7. Vacation and Sick Leave. At such reasonable times as the Board will
in its discretion permit, Executive will be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this
Agreement, under the following conditions:
(a) Executive will be entitled to annual vacation in accordance
with the policies as periodically established by the Board for executives of the
Company, which will in no event be less than four weeks per year. Executive's
vacation accrual balance as of November 15, 2002 shall carry over and be
available to Executive under the terms of this Agreement, and Executive shall
continue to accrue vacation in accordance with Company policies.
(b) In addition to the aforesaid paid vacations, the Board may
grant to Executive a leave or leaves of absence, with or without pay, at such
time or times and upon such terms and conditions as the Board in its discretion
may determine.
(c) Executive will be entitled to sick leave (without loss of pay)
in accordance with the Company's policies as in effect from time to time.
Executive's sick leave accrual balance as of November 15, 2002 shall carry over
and be available to Executive under the terms of this Agreement, and Executive
shall continue to accrue sick leave in accordance with Company policies.
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8. TERMINATION AND AT WILL RELATIONSHIP.
(a) At Will Relationship. Executive's employment relationship is
at will. Accordingly, it may be terminated by Executive or by the Company at any
time for any lawful reason, with or without cause or advance notice, effective
upon providing written notice.
(b) Termination Date. "Termination Date" will mean the date
specified in a Notice of Termination by either party, or, in the event of death,
the date of death.
(c) Notice of Termination. To be effective, any purported
termination by the Company or by the Executive shall be communicated by written
Notice of Termination to the other party. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which indicates the specific
termination provision in this Agreement relied upon, setting forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
9. Compensation Upon Termination. Upon termination of Executive's
employment, Executive will be entitled to the following benefits:
(a) Without Cause Termination, Voluntary Termination, Change in
Control, Termination for Disability or Death. If Executive's employment is
terminated by the Company without Cause (as defined in Section 9(f) herein) or
for Disability (as defined in Section 9(e) herein), if Executive voluntarily
terminates his employment relationship with the Company, if a Change in Control
(as defined in Section 9(g) herein) occurs, or if Executive should die while
employed by the Company, then Executive (or in the event of death, Executive's
beneficiaries) will be entitled to all benefits provided below:
(i) The Company will pay Executive all amounts earned
or accrued hereunder through the Termination Date but not paid as of the
Termination Date, including: (i) Base Salary, (ii) reimbursement for any and all
monies advanced or expenses incurred in connection with Executive's employment
for reasonable and necessary expenses incurred by Executive on behalf of the
Company for the period ending on the Termination Date, (iii) vacation pay, (iv)
any bonuses or incentive compensation, and (v) any previous compensation which
Executive has previously deferred (including any interest earned or credited
thereon and any amounts deferred pursuant to the Deferred Compensation Plan)
(collectively, "Accrued Compensation"). Accrued Compensation shall be paid to
Executive within five (5) days of Executive's Termination Date
(ii) The Company will pay Executive all amounts of the
Bonus that are unpaid as of Executive's Termination Date in a lump sum, which
amounts will be paid within five (5) days after Executive's Termination Date.
(iii) For a number of months equal to the lesser of (A)
thirty-six (36) or (B) the number of months remaining until Executive's 65th
birthday, the Company will at its expense continue on behalf of Executive and
his dependents and beneficiaries the life insurance, disability, medical, dental
and hospitalization benefits which were being provided to Executive and paid for
by the Company at the time Notice of Termination (or death if Executive's
employment is terminated by death) is given (or, if Executive is terminated
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following a Change in Control, the benefits provided to Executive at the time of
the Change in Control, if greater). The benefits provided in this Section
9(b)(iii) will be no less favorable to Executive, in terms of amounts and
deductibles and costs to him, than the coverage provided Executive under the
plans providing such benefits at the time Notice of Termination is given (or, if
Executive is terminated following a Change in Control, at the time of the Change
in Control if more favorable to Executive); provided, however, that life
insurance benefits shall not continue in the event that Executive's employment
is terminated by death. The Company's obligation hereunder with respect to the
foregoing benefits will be limited to the extent that Executive obtains any such
benefits pursuant to a subsequent employer's benefit plans, in which case the
Company may reduce the coverage of any benefits it is required to provide
Executive hereunder as long as the aggregate coverage of the combined benefit
plans is no less favorable to Executive, in terms of amounts and deductibles and
costs to him, than the coverage required to be provided hereunder. This
Subsection (iii) will not be interpreted so as to limit any benefits to which
Executive or his dependents may be entitled under any of the Company's employee
benefit plans, programs or practices following Executive's termination of
employment, including without limitation, retiree medical and life insurance
benefits. Executive agrees to cooperate with the Company in providing to the
Company or insurance carriers all information reasonably requested by the
Company to assist the Company in obtaining the requisite insurance coverage
benefits to Executive and his dependents at favorable rates and under reasonable
terms and conditions. Additionally, Executive agrees to: (a) elect continued
health coverage under the federal COBRA law for the maximum period permitted;
and (b) provide the Company's CEO with written notice within five (5) days of
obtaining benefits under another employee benefit plan.
(iv) All restrictions on any outstanding awards granted
by the Company or any other subsidiaries of the Company (including restricted
stock awards) to Executive shall lapse and such awards (the "Vested Awards")
shall become fully (100%) vested immediately, and all stock options and stock
appreciation rights granted to Executive shall become fully (100%) vested and
shall become immediately exercisable. Executive's rights to such Vested Awards
(e.g., exercise of vested shares) are governed by the terms and conditions of
the Company's 1998 Stock Option Plan (the "Option Plan") and the Long Term
Incentive Plan (the "LTIP") and the grant documents thereunder, provided that
all such awards, stock options, and stock appreciation rights approved on or
after January 16, 2002 by the Company will be exercisable for a period of
forty-eight (48) months after Executive's Termination Date (but in no event
longer than the maximum term of such award, option, or right specified in the
grant thereof and determined without regard to the termination of Executive's
employment). A schedule of the Vested Awards is set forth on the attached
Exhibit A.
(b) Cause Termination. If Executive's employment is terminated by
the Company for Cause (as defined in Section 9(f) herein), then Executive will
be entitled to all benefits provided in subsections 9(a)(i), (iii), and (iv)
hereinabove, and the Company will continue to pay the Bonus amounts that remain
unpaid as of Executive's Termination Date according to the payment schedule set
forth in Section 5(b).
(c) No Mitigation. Executive will not be required to mitigate the
amount of any payment provided in this Agreement by seeking other employment or
otherwise and no such
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payment will be offset or reduced by the amount of any compensation or benefits
provided to Executive in any subsequent employment, except as described in
Section 9(a)(iii).
(d) No Additional Benefits. Executive acknowledges and agrees
that, other than as provided for under this Agreement, he shall not be entitled
to or eligible for any additional benefits, under any Company severance plan or
program or otherwise, upon termination of employment.
(e) Definition of Disability. The Company may terminate
Executive's employment after having established Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or mental infirmity
which impairs Executive's ability to substantially perform his duties under this
Agreement and which continues for a period of at least one hundred eighty (180)
consecutive days. Executive will be entitled to the compensation and benefits
provided for under this Agreement for any period during the term of this
Agreement and prior to the establishment of Executive's Disability during which
Executive is unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the contrary, until the
Termination Date specified in a Notice of Termination relating to Executive's
Disability, Executive will be entitled to return to his position with the
Company as set forth in this Agreement, in which event no Disability of
Executive will be deemed to have occurred.
(f) Definition of Cause. The Company may terminate Executive's
employment for "Cause." A termination for Cause is a termination evidenced by a
resolution adopted in good faith by a majority of the Board (excluding
Executive) that Executive: (1) willfully and continually failed to substantially
perform his duties with the Company (other than a failure resulting from
Executive's incapacity due to physical or mental illness), which failure
continued for a period of at least thirty (30) days after a written notice of
demand for substantial performance has been delivered to Executive specifying
the manner in which Executive has failed to substantially perform; or (2)
willfully engaged in conduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise; provided, however that no termination of
Executive's employment will be for Cause as set forth in clause (2) above until
(i) there will have been delivered to Executive a copy of a written notice
setting forth that Executive engaged in the conduct set forth in clause (2) and
specifying the particulars thereof in detail and (ii) Executive will have been
provided an opportunity to be heard by the Board. No act, nor failure to act, on
Executive's part will be considered "willful" unless he has acted or failed to
act with an absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the contrary, no failure
to perform by Executive after Notice of Termination is given by Executive will
constitute cause for purposes of this Agreement.
(g) Change in Control. For purposes of this Agreement, a "Change
in Control" is defined as the first to occur of the following:
(i) Acquisitions. The acquisition by any Person (as
such term is defined in Section 13(c) or 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the
combined voting power of the Company's then
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outstanding voting securities (a "25% Beneficial Owner"); provided, however,
that for purposes hereof, the following acquisitions shall not constitute or
give rise to a Change in Control: (A) any acquisition by the Company or any of
its subsidiaries; (B) any acquisition directly from the Company or any of its
subsidiaries; (C) any acquisition by any employee benefit plan (or related trust
or fiduciary) sponsored or maintained by the Company or any corporation
controlled by the Company; (D) any acquisition by any underwriter temporarily
holding securities pursuant to an offering of such securities; (E) any
acquisition by a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
in the Company; (F) any acquisition in connection with which, pursuant to Rule
13d-1 promulgated pursuant to the Exchange Act, the Person is permitted to, and
actually does, report its beneficial ownership on Schedule 13-G (or any
successor Schedule); provided, that, if any such Person subsequently becomes
required to or does report its beneficial ownership on Schedule 13D (or any
successor Schedule), then, for purposes of this paragraph, such Person shall be
deemed to have first acquired, on the first date on which such Person becomes
required to or does so report, beneficial ownership of all of the voting
securities of the Company beneficially owned by it on such date; and (G) any
acquisition in connection with a merger or consolidation which, pursuant to
Section 9(g)(ii)below, does not constitute a Change in Control; or
(ii) Merger. There is consummated a merger or
consolidation to which the Company or any direct or indirect subsidiary of the
Company is a party if the merger or consolidation would result in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or parent
thereof) less than 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation; or
(iii) Liquidation or Sale. The shareholders of the
Company have approved a complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or other disposition of all or
substantially all of the assets of the Company; provided, however, that a
transaction consisting solely of the initial public offering of common stock of
Ribapharm Inc., a substantial subsidiary of the Company, and the subsequent
distribution of all its shares to the stockholders of the Company for no
consideration will not, taken alone, constitute a sale of all or substantially
all the assets of the Company for purposes of this Section.
10. Proprietary Information. Executive shall continue to comply with all
proprietary information and inventions agreements he has previously executed
with the Company.
11. Successors and Assigns.
(a) Company's Successors and Assigns. This Agreement will be
binding upon and inure to the benefit of the Company, its successors and
assigns, and the Company shall require any successor or assign to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession or
assignment had taken place. The term "the Company" as used herein will include
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such successors and assigns. The term "successors and assigns" as used herein
will mean a corporation or other entity acquiring all or substantially all the
assets and business of the Company (including this Agreement) whether by
operation of law or otherwise.
(b) No Assignment by Executive. Neither this Agreement nor any
right or interest hereunder will be assignable or transferable by Executive, his
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement will inure to the benefit of and be enforceable
by Executive's legal personal representative.
12. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) as they become
due incurred by Executive as a result of (a) any claim or action brought by
Executive (pursuant to Section 13 hereof) to contest or dispute an involuntary
termination of Executive's employment or enforcement of any right or benefit
provided by this Agreement, (b) any hearing before the Board as contemplated in
Section 9(f) hereof, or (c) the Executive's seeking to obtain or enforce any
right or benefit provided by this Agreement or by any other plan or arrangement
maintained by the Company or any subsidiary under which the Executive is or may
be entitled to receive benefits, provided that Executive is the prevailing party
in any such dispute, or if not the prevailing party, provided that the Executive
is found to have brought any such claim or action against the Company in good
faith. In addition, the Company shall pay all reasonable legal fees and related
expenses, up to a maximum amount of $15,000, incurred by Executive in connection
with the negotiation and analysis of this Agreement.
13. Dispute Resolution. To ensure rapid and economical resolution of any
disputes which may arise under this Agreement, Executive and the Company agree
that any and all disputes, claims, or controversies of any nature whatsoever
arising from or regarding Executive's employment or the interpretation,
performance, enforcement or breach of this Agreement shall be resolved, to the
fullest extent allowed by law, by confidential, final and binding arbitration
conducted by Judicial Arbitration and Mediation Services, Inc. ("JAMS") in
Orange County, California, under the then-existing JAMS rules, using a single
arbitrator. In the event of an arbitration, Executive and the Company shall
first attempt to reach agreement upon a mutually agreeable arbitrator. In the
event the parties are unable to agree within two (2) weeks from the filing of a
demand for arbitration, JAMS will provide a list of nine available arbitrators
and an arbitrator will be selected from such nine-member panel provided by JAMS
by the parties alternately striking out one name of a potential arbitrator until
only one name remains. The party entitled to strike an arbitrator first shall be
selected by a toss of a coin. The parties acknowledge that by agreeing to this
arbitration procedure, they waive the right to resolve any such dispute through
a trial by jury, judge or administrative proceeding. The arbitration shall be
completed within three (3) months from the date the demand for arbitration is
filed with JAMS, provided that the arbitrator may extend such date for good
reason as determined in his sole discretion. The arbitrator shall: (a) have the
authority to compel adequate discovery for the resolution of the dispute and to
award such relief as would otherwise be permitted by law; (b) issue a written
arbitration decision including the arbitrator's essential findings and
conclusions and a statement of the award; and (c) have the authority to make a
determination as to whether Executive is the prevailing party and whether
Executive has initiated the dispute resolution process in good faith, for the
purpose of determining whether to award reimbursement of attorneys' fees and
costs pursuant to Section 12 hereof. The Company shall
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pay all JAMS' arbitration fees, including the fees and expenses of the
arbitrator and any filing fees. Nothing in this Agreement is intended to prevent
either Executive or the Company from obtaining injunctive relief in court to
prevent irreparable harm pending the conclusion of any such arbitration. The
arbitrator, and not a court, shall be authorized to determine whether the
provisions of this paragraph apply to a dispute, controversy or claim sought to
be resolved in accordance with these arbitration procedures. Notwithstanding the
foregoing, neither party shall be permitted to initiate a demand for arbitration
until it has participated in a non-binding mediation conducted by JAMS, after
providing notice to the other party. Both parties shall participate in such a
mediation within forty-five (45) days of delivery of such notice. In the event
of a mediation, Executive and the Company shall first attempt to reach agreement
upon a mutually agreeable mediator. In the event the parties are unable to agree
within two (2) weeks from the submission of a notice for mediation, JAMS will
provide a list of nine available mediators and a mediator will be selected from
such nine-member panel provided by JAMS by the parties alternately striking out
one name of a potential mediator until only one name remains. The party entitled
to strike a mediator first shall be selected by a toss of a coin. The Company
shall pay all mediation fees, including the fees and expenses of the mediator
and any filing fees.
14. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) will be in writing and will be deemed to have been duly given when
personally delivered (via messenger, express delivery service, or facsimile) or
on the third business day after the mailing thereof, by certified mail, return
receipt requested, postage prepaid, addressed to the respective addresses last
given by each party to the other; provided that all notices to the Company will
be directed to the attention of the Board with a copy to the Secretary of the
Company. During the Term of the Agreement, each party shall promptly provide
written notice to the other party of any change of address.
15. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company and for which the
Executive may qualify or any right or benefit provided under his Indemnity
Agreement with the Company dated September 4, 1986 ("Indemnity Agreement"). For
purposes of any Company benefit plan or program for which service is considered,
Executive's prior service with the Company shall be recognized. Compensation
(whether in the form of salary, bonus, options, or otherwise) pursuant to the
terms of this Agreement shall not be considered to be payments for personal
profit or advantage for purposes of the Indemnity Agreement.
16. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstance, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against Executive or others.
17. Release of Claims. In exchange for the consideration provided under
this Agreement, and except for obligations undertaken in this Agreement,
Executive hereby generally and completely releases the Company and its
directors, officers, employees, shareholders, partners, agents, attorneys,
predecessors, successors, parent and subsidiary entities, insurers, affiliates,
and assigns from any and all claims, liabilities, and obligations, both known
and
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unknown, that arise out of or are in any way related to events, acts, conduct,
or omissions occurring at any time prior to and including the date Executive
executes this Agreement. This general release includes, but is not limited to:
(a) all claims arising out of or in any way related to Executive's employment
with the Company; (b) all claims related to Executive's compensation or benefits
from the Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options
(specifically including, but not limited to, any claim related to payment of the
amount of $151,250 (before taxes), as a result of his Election to Surrender
Stock Options dated July 23, 2002 with respect to 31,250 option shares of the
Company's stock), or any other ownership interests in the Company, provided,
however, that any Vested Awards, and any other vested right under a written
employee benefit plan, shall continue in full force and effect subject to their
terms and conditions; (c) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing;
(d) all tort claims, including claims for fraud, defamation, emotional distress,
and discharge in violation of public policy; and (e) all federal, state, and
local statutory claims, including claims for discrimination, harassment,
retaliation, attorneys' fees, or other claims arising under the federal Civil
Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of
1990, the federal Age Discrimination in Employment Act of 1967, as amended
("ADEA"), and the California Fair Employment and Housing Act (as amended).
Notwithstanding the release in the preceding sentence, Executive shall not
hereby surrender any right or claim he may have to indemnification by the
Company or its insurers pursuant to the Company's certificate of incorporation,
by-laws, written indemnification agreements, or insurance policies, or
applicable law, and Executive shall continue to have all such rights and
benefits for the remainder of the Term of his employment by the Company and
thereafter. As of the date of this Agreement, the Company's Chairman and Chief
Executive Officer has no actual knowledge of any claims against Executive.
18. Waiver of Unknown Claims. In granting the release herein, which
includes claims that may be unknown at present, Executive acknowledges that he
has read and understands Section 1542 of the California Code: "A general release
does not extend to claims which the creditor does not know or suspect to exist
in his favor at the time of executing the release, which if known by him must
have materially affected his settlement with the debtor." Executive hereby
releases any claims under this section or any similar law or legal principle in
any jurisdiction, including but not limited to claims which may be unknown at
present.
19. Miscellaneous. No provision of this Agreement may be amended,
modified, or changed unless such amendment, modification or change is agreed to
in writing by Executive and the Company's Chief Executive Officer or the Board
of the Company. Either party may waive any breach or non-compliance with any
provision or condition in favor of the waiving party under this Agreement in a
writing signed by the party to be charged. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of such provision or condition, nor a waiver of any
similar provision or condition, at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. For purposes of construction of this Agreement, any
ambiguity shall not be construed against either party as the drafter. Whenever
possible, each provision of this
12
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, and such invalid, illegal or
unenforceable provision will be reformed, construed and enforced in such
jurisdiction so as to render it valid, legal, and enforceable consistent with
the general intent of the parties insofar as possible.
20. Governing Law. This Agreement will be governed by and construed and
enforced in accordance with the laws of the State of California without giving
effect to the conflict of law principles thereof.
21. Severability. The provisions of this Agreement will be deemed
severable and the invalidity or unenforceability of any provision will not
affect the validity or enforceability of the other provisions hereof.
22. Entire Agreement. Except as reflected in this Agreement, this
Agreement, including Exhibit A attached hereto, constitutes the final, complete,
and exclusive embodiment of the entire agreement between the parties hereto with
respect to the subject matter hereof, and supersedes all prior negotiations,
agreements (including the Initial Employment Agreement), understandings,
promises, representations, and arrangements, oral or written, between the
parties hereto, including but not limited to the provisions of the Initial
Employment Agreement; provided, however, this Agreement shall not supercede the
Indemnity Agreement with the Company dated September 4, 1986 or any other plan,
program or agreement as provided in Section 15 hereof.
* * *
[signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and Executive has executed this Agreement as of
the day and year first above written.
ICN PHARMACEUTICALS, INC.
By:
--------------------------------------------
Xxxxxx X. X'Xxxxx
Chairman and Chief Executive Officer
Dated:
-----------------------------------------
EXECUTIVE
By:
--------------------------------------------
Xxxx X. XxxXxxxxx
14
EXHIBIT A
VESTED AWARDS
