EXHIBIT 10.1
[PHARMACIA CORPORATION LETTERHEAD]
December 17, 2002
Mr. Xxxx Xxxxxx
Pharmacia Corporation
000 Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000
Dear Xxxx:
In order to implement the June 18, 2002 resolution of the Board of Directors
(the "Board") of Pharmacia Corporation (the "Company"), this letter agreement
(the "Agreement") is a restatement effective as of July 13, 2002 of your letter
dated November 15, 1999 with Pharmacia & Upjohn (the "Original Agreement"),
confirming the terms of your continuing employment as President and Chief
Executive Officer of the Company as follows:
1. This Agreement has been in effect since November 15, 1999 and will remain in
effect until November 30, 2004, and thereafter until terminated upon six months'
prior written notice by either party.
2. During the term of this Agreement, you will serve as President and Chief
Executive Officer of the Company. You assumed additional responsibility as
Chairman of the Board on February 21, 2001 and you continue to serve as a member
of the Board and on the Board's Executive Committee. As President and Chief
Executive Officer, you will report directly to the Board and are responsible for
the general management of the affairs of the Company in accordance with
customary practices for chief executive officers of comparable companies. You
will devote substantially all of your business
Mr. Xxxx Xxxxxx
December 17, 2002
Page 2
time to your duties and responsibilities with the Company. However, you are not
precluded from (i) serving on the board of directors of other companies (subject
to the reasonable approval of the Board) and boards of trade associations or
charitable organizations; (ii) engaging in charitable activities and community
affairs; and (iii) managing your personal investments and affairs provided that
such activities do not materially interfere with your duties and
responsibilities hereunder.
3. Your beginning annual base salary was $1,200,000, and is subject to annual
review for increases and approval by the Compensation Committee of the Board
based on your position, job performance and Company policy, as well as
consideration of comparable compensation paid by other major global
pharmaceutical companies.
4. You are entitled to participate in the Company's annual incentive plan
("Incentive Plan"), the Company's equity compensation plan(s) and any other
compensation plans offered to senior executive officers of the Company at a
level determined by the Compensation Committee of the Board to be appropriate
based on your position, job performance and Company policy, as well as
consideration of comparable compensation paid by other major global
pharmaceutical companies. Your annual stock option grant under the Company's
Long-Term Incentive Plan (the "Plan") will be not less than 250,000 shares of
Pharmacia & Upjohn's Common Stock (as set forth in the Original Agreement and as
subsequently modified or converted pursuant to the terms of the Plan), provided,
however, that this amount shall not imply a target for any such stock option
grant.
For the year 2000: (1) your target incentive award under the Incentive
Plan was 100% of your annual base salary, payable in accordance with the terms
of that plan;
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(2) your annual stock option grant under the Plan was 350,000 shares of
Pharmacia & Upjohn's Common Stock (as subsequently modified or converted
pursuant to the terms of the Plan) and was made at the same time as stock
options were granted to other executive officers and was in accordance with the
terms of the Plan; and (3) you received a special stock option grant under the
Plan on January 3, 2000, for 150,000 shares of Pharmacia & Upjohn's Common Stock
(as subsequently modified or converted pursuant to the terms of the Plan) at an
exercise price equal to the Fair Market Value (as defined in the Plan) of the
Company's Common Stock on the date of grant, which vest in accordance with the
schedule set forth below if the average closing price of the Company's Common
Stock on the New York Stock Exchange for any 90-day period during your
employment reaches the indicated price:
CUMULATIVE NUMBER OF
LEVEL SHARES VESTED AVERAGE 90-DAY PRICE
----- ------------- --------------------
Level 1 30,000 Grant date price plus 15%
Level 2 60,000 Level 1 price plus 15%
Level 3 90,000 Level 2 price plus 15%
Level 4 120,000 Level 3 price plus 15%
Level 5 150,000 Level 4 price plus 15%
The stock option grants for the year 2000 have already vested as a result of the
Change in Control that occurred on March 31, 2000 following the merger of
Pharmacia & Upjohn, Inc. with a subsidiary of the former Monsanto Company, now
known as Pharmacia.
Stock options will vest immediately upon your death or disability, a
Change in Control of the Company (as defined in the Plan), your involuntary
termination of employment other than for Cause (as defined below), or your
termination of employment
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December 17, 2002
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for Good Reason (as defined below), provided you do not enter into Competition
(as defined below) with the Company within two years after your employment is
terminated.
5. On the day following your acceptance of the Original Agreement, you received
a grant under the Plan of 200,000 restricted shares of Pharmacia & Upjohn's
Common Stock (as subsequently modified or converted pursuant to the terms of the
Plan), provided, however, that notwithstanding any provisions in the Plan, in
consideration of the grant of such restricted shares, you and the Company agree
to irrevocably waive the provision of the Plan providing that such restricted
stock shall be earned in the event of a Change in Control of the Company. You
shall receive all dividends paid on such restricted stock. Notwithstanding the
foregoing, such restricted stock will vest either (i) on the first day of the
month following your retirement provided such date is not prior to December 1,
2004, (ii) on the date your employment with the Company is terminated on account
of your death or disability or is involuntarily terminated by the Company other
than for Cause or you terminate your employment for Good Reason (within six
months after the event constituting Good Reason), or (iii) on such other date
before December 1, 2004, as the Board may elect in its sole discretion. If prior
to December 1, 2004, your employment is involuntarily terminated by the Company
for Cause or you voluntarily terminate your employment other than for Good
Reason, you will forfeit such restricted stock unless otherwise elected by the
Board in its sole discretion. However, you will not be required to repay any
dividends previously received on such restricted stock.
6. You will receive employee benefits and perquisites at least as favorable as
those provided to other similarly situated senior executive officers of the
Company, including,
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without limitation, if offered to such other senior executives, pension,
profit-sharing, savings, deferred compensation and other retirement plans or
programs, medical, dental, hospitalization, short-term and long-term disability,
life insurance, accidental death, travel accident, vacation and any other
benefit programs or plans that may be sponsored by the Company, including any
plans that supplement the above-listed plans, whether funded or unfunded. You
shall be entitled to post-retirement welfare benefits as are currently made
available by the Company to its senior executive officers, provided that for
this purpose your period of employment shall be deemed to be the period
necessary to obtain the maximum level of such benefits. In the event that
adverse tax consequences may result if medical benefits are provided to you
directly, the Company will pay you the amount necessary to purchase the
coverage, adjusted for taxes, on an after-tax basis.
7. Any termination by the Company or by you shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 28. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (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 your employment
under the provision so indicated and (iii) specifies the date of termination
which date shall not be less than fifteen (15) nor more than sixty (60) days
after the giving of such notice. The failure by you or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of you or the Company,
respectively, hereunder or preclude you or the Company, respectively, from
asserting such fact or circumstance in enforcing your or the Company's rights
hereunder.
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8. In the event that prior to November 30, 2004, or such later date prior to the
expiration of the term of this Agreement, your employment is involuntarily
terminated by the Company other than for Cause (as defined below) or you
terminate your employment for Good Reason (as defined below) within six months
after your learning of the event constituting Good Reason, provided (i) you do
not enter into Competition (as defined below) with the Company for a period of
two years following the termination of your employment, and (ii) you execute,
and do not revoke, a written release substantially in the form attached hereto,
although the Company reserves the right to make any changes required to make the
release fully effective under the then applicable law, except that the condition
specified in Clause (i) shall not apply if your termination occurs during the
two-year period after the consummation of a transaction approved by the
stockholders of the Company and described in Section 13(c) or (d) of Pharmacia
Corporation's 2001 Long-Term Incentive Plan, such event being hereafter referred
to as a "Section 13(c) Change in Control") (and such two-year period being
hereinafter referred to as the "CIC Period"), then, as liquidated damages and in
lieu of any other damages or compensation under this Agreement or otherwise:
(i) you shall receive a lump sum severance payment, payable within
60 days (or, if your termination occurs during a CIC Period, within 10 days)
after termination of your employment, equal to three years' base salary and
annual target incentive compensation (calculated using the amount of your
highest annual base salary and highest annual target incentive compensation
within three years prior to your date of termination);
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(ii) you shall have your period of employment service used to calculate
retirement and other employee benefits extended as if you had worked until
November 30, 2004 (or such later date when the term of this Agreement expires),
and the compensation used to calculate your retirement benefits will be
determined as if you had continued to receive until November 30, 2004 (or such
later date when the term of this Agreement expires) base salary and incentive
compensation equal to the highest annual base salary and highest annual target
incentive compensation within three years prior to your date of termination
(such amounts to be payable from a non-qualified, supplemental retirement plan);
(iii) you will be entitled to exercise, in accordance with their terms,
any vested or unvested stock options that had been granted prior to your
termination (all of which will become vested under such circumstances) for the
maximum period permitted under the terms of the Plan;
(iv) the restrictions shall lapse on any remaining restricted shares
granted to you pursuant to paragraph 5 of this Agreement that are not yet
vested;
(v) you will receive a pro-rata annual incentive compensation award in or
around March of the year following your termination equal to the amount you
would have received if you had worked for the full year multiplied by a fraction
where the numerator is the number of months (rounded to the next highest number
for a partial month) of the year elapsed prior to your termination and the
denominator is 12, except that if your termination occurs during a CIC Period
any such awards which have become vested under the terms of the Annual Incentive
Plan or the Operating Committee Incentive Plan shall be payable within 10 days
after the termination of your employment;
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(vi) you and your dependents shall continue to participate (with the same
level of coverage) for three years in all medical, dental, hospitalization,
accident, disability, life insurance and any other benefit plans of the Company
on the same terms as in effect immediately prior to your termination unless
changed for senior executives generally; provided, however, that such benefits
will be offset to the extent that you or your dependents receive benefits from
another source; and, provided that in the event adverse tax consequences may
result if medical benefits are provided to you directly, the Company will pay
you the amount necessary to purchase the coverage, adjusted for taxes, on an
after-tax basis.
(vii) you shall be entitled to outplacement services, at the expense of
the Company, from a provider selected by you, subject to a maximum expense of
$100,000; and
(viii) you shall be entitled to participate in the Company's Financial
Planning Assistance program for three (3) consecutive years from the date of
termination in accordance with the policies of the Company as in effect
immediately prior to the Change in Control; and
(ix) you shall receive any other amounts earned, accrued or owing to you
under the plans and programs of the Company.
9. In addition to any other payments due to you under this Agreement, the
Company shall pay you any amounts due under the terms of the Company's Excess
Parachute Indemnity Plan.
10. In the event that, prior to November 30, 2004 or such later date when the
term of this Agreement expires, your employment is (a) involuntarily terminated
by the Company
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for Cause, or (b) you voluntarily terminate your employment other than (x) for
Good Reason or (y) due to permanent disability:
(i) you will forfeit your right to receive any salary, incentive
compensation, severance pay, restricted stock, or other compensation that has
not been fully earned at the time your employment terminates, provided, however,
you will be entitled to receive any benefits or amounts accrued but not yet paid
as of the date of termination;
(ii) you will not be able to exercise any remaining unexercised stock
options, all of which shall be cancelled upon such termination of your
employment; and
(iii) you shall receive any other amounts earned, accrued or owing to you
under the plans and programs of the Company.
11. (a) If your employment with the Company is terminated (i) at the expiration
of this Agreement, or (ii) on account of disability, the Company will pay you
the greater of (I) the amount of (A) qualified and non-qualified retirement
income you would have been entitled to receive under the American Home Products
Corporation ("AHP") retirement benefit formula in effect at the time you left
AHP if you had remained employed by AHP until the later of (x) your attainment
of age 55, or (y) the date your employment with the Company terminates, and if
AHP had paid you the same compensation as you received from the Company, less
(B) the amount of any qualified or non-qualified retirement income you are
actually entitled to receive from AHP; or (II) the amount of retirement income
you would be entitled to receive under the Company's Global Officer Pension Plan
(or any other retirement plan hereafter provided by the Company for its senior
executive officers) using your actual years of service and
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compensation with the Company and a straight line accrual rate from the date
your employment with the Company commenced until age 60 to provide a retirement
benefit at age 60 equal to 60% of the highest annual base salary and highest
annual target incentive compensation you received within the three prior years
("Highest Annual Total Compensation") and an annual 1% accrual rate from age 60
to age 65 to provide a retirement benefit at age 65 equal to 65% of your Highest
Annual Total Compensation, which will be your maximum retirement benefit under
the plan.
(b) If prior to November 30, 2004, or such later date prior to the
expiration of the term of this Agreement, your employment is involuntarily
terminated by the Company other than for Cause or you terminate your employment
for Good Reason (within six months after your learning of the event constituting
Good Reason), the Company will pay you the greater of (i) the amount of (A)
qualified and non-qualified retirement income you would have been entitled to
receive under the AHP retirement benefit formula in effect at the time you left
AHP if you had remained employed by AHP until the later of (x) your attainment
of age 55, or (y) the date your employment with the Company terminates and if
AHP had paid you the same compensation as you received from the Company, less
(B) the amount of any qualified or non-qualified retirement income you are
actually entitled to receive from AHP; or (ii) the amount of retirement income
you would be entitled to receive under the Company's Global Officer Pension Plan
(or any other retirement plan hereafter provided by the Company for its senior
executive officers) computed using as your period of service the number of years
that you would have been employed by the Company had you remained employed by
the Company until November 30, 2004 (or such later date when the term of this
Agreement
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expires) and a straight line accrual rate from the date your employment with the
Company commenced until age 60 to provide a retirement benefit at age 60 equal
to 60% of your Highest Annual Total Compensation and an annual 1% accrual rate
from age 60 to age 65 to provide a retirement benefit at age 65 equal to 65% of
your Highest Annual Total Compensation, which will be your maximum retirement
benefit under the plan.
(c) If you voluntarily terminate your employment with the Company other
than for Good Reason, or if the Company terminates your employment for Cause,
the Company will pay you the greater of (i) the amount of (A) qualified and
non-qualified retirement income you would have been entitled to receive under
the AHP retirement benefit formula in effect at the time you left AHP if you had
remained employed by AHP until the date your employment with the Company
terminates and if your compensation in effect at the time you left AHP had
increased at a 5% compounded rate annually, less (B) the amount of any qualified
or non-qualified retirement income you are actually entitled to receive from
AHP; or (ii) the amount of retirement income you are entitled to receive under
the Company's Global Officer Pension Plan (or any other retirement plan
hereafter provided by the Company for its senior executive officers) using your
actual years of service and Highest Annual Total Compensation.
(d) The Company's Global Officer Pension Plan is not qualified under the
U.S. Internal Revenue Code. All references to the Global Officer Pension Plan
refer to provisions as they exist on the date of this Agreement. Modification to
the Global Officer Pension Plan may increase your entitlements, but shall not be
used to reduce or eliminate any entitlements. Your entitlement to pension
benefits remain contractual rights under this Agreement and exist independently
from the Global Officer Pension
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Plan. The benefits payable under the Company's Global Officer Pension Plan will
be offset for any retirement income from social security or other governmental
programs and for any retirement income from any prior employers, that you may be
entitled to receive.
(e) If you die while employed by the Company or thereafter under
circumstances in which (i) a spousal survivor's benefit would have been payable
under the AHP retirement plans had you continued employment with AHP, and/or
(ii) a spousal survivor's benefit becomes payable under the Company's Global
Officer Pension Plan or any other retirement plans of the Company under which
you are covered, then the benefit payable by the Company to your surviving
spouse shall be the greater of (i) the amount which would have been payable as a
spousal survivor's benefit under the AHP retirement plans had you continued
employment with your AHP, or (ii) the amount payable as a spousal survivor's
benefit under the Global Officer Pension Plan or any other retirement plans of
the Company, with each such amount being calculated in accordance with the
assumptions described in and offsets corresponding to those provided for in this
paragraph 11, whichever is applicable to the circumstances of the termination of
your employment with the Company.
(f) For the purpose of the foregoing calculations, alternative forms of
benefits will be made actuarially equivalent using the actuarial assumptions
then applied to all senior executive officers under the Company's Global Officer
Pension Plan (or any successor plan).
(g) Upon termination of your employment, the Company shall fund that
portion, if any, of the pension obligation that is then unfunded by establishing
a trust. Such trust shall be in a form that provides you with the most favorable
tax position that
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reasonably can be determined at the time it is established and funded. The
formation of such trust or funding thereof shall not cause the pension
obligation, it if is deemed to be a plan under ERISA, to lose its status as a
"top hat plan" thereunder. The trust shall provide for distribution of amounts
to you in order to pay taxes, if any, that become due prior to payment of
pension amounts pursuant to the trust. The amount of such fund shall equal the
then present value of the pension due as determined by a nationally recognized
firm qualified to provide actuarial services which has not rendered services to
the Company during the two years preceding such determination. The establishment
and funding of such trust shall not affect the obligation of the Company to
provide the pension hereunder.
12. In the event you should terminate employment due to disability prior to
November 30, 2004, you will be entitled to benefits in accordance with the
Company's disability program, provided, however, that notwithstanding any other
levels that may be provided under such program, you shall receive salary
continuation at the rate of at least 100% of base salary for three months, 75%
of base salary for the next three months, and 60% of base salary until age 65
and you shall receive any other amounts earned, accrued or owing to you under
the plans and programs of the Company, including any awards which become fully
vested upon your disability under the Company's Cash Long-Term Incentive Plan
and Long-Term Share Unit Performance Plan.
13. In the event you should die while still employed by the Company prior to
November 30, 2004, your spouse or other beneficiary shall receive a lump sum
payment equal to three years' base salary offset by any death benefits payable
under the Company's life insurance plans under which you are covered and any
other amounts
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earned, accrued or owing to you under the plans and programs of the Company,
including any awards which become fully vested upon your death under the
Company's Cash Long-Term Incentive Plan and Long-Term Share Unit Performance
Plan. If, however, your employment is terminated by reason of death after a
Notice of Termination has been given either by you for Good Reason or by the
Company other than for Cause, the Company shall, in lieu of the amounts set
forth in the preceding sentence, pay to your legal representatives in one lump
sum the amounts specified in Section 8(i),(v) and (vi) and any other amounts
earned, accrued or owing to you under the plans and programs of the Company.
14. You are authorized to incur reasonable expenses in carrying out your duties
and responsibilities with the Company, and the Company shall promptly reimburse
you for all business expenses in accordance with Company policy. The Company
shall pay your reasonable expenses for legal counsel and financial advice in
connection with the negotiation and documentation of this Agreement. In an
effort to make best use of your time and to insure your safety and security for
the benefit of the Company, you will be provided with use of the Company's
aircraft and a chauffeured automobile. You will receive annual assistance from
an independent accounting firm selected by the Company but acceptable to you, at
Company expense, for financial planning, including preparation of your income
tax returns.
15. To the fullest extent permitted by applicable law, all intellectual property
(including patents, trademarks, copyrights and trade secrets) which are made,
developed or acquired by you in the course of your employment with the Company
will be and remain the absolute property of the Company.
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16. During the period of your employment and thereafter, you will maintain the
confidentiality of all confidential or proprietary information relating to the
business of the Company or any of its subsidiaries or affiliates provided,
however, that you may disclose such information as (i) may be required or
appropriate in carrying out your duties at the Company, or (ii) may be required
for you to disclose by applicable law, governmental regulations or judicial or
regulatory process.
17. Without the written consent of the Board, you agree that during the period
of your employment with the Company and for a period of two years following the
termination of your employment, you will not enter into Competition with the
Company. "Competition" as used in this Agreement means that you commence
employment with, or provide substantial consulting services to, any
pharmaceutical company (except companies where sales from pharmaceutical
products constitute less than 20% of total sales). Anything herein to the
contrary notwithstanding, your service solely as a member of the board of
directors of a company whose annual sales, for its last fiscal year prior to
your becoming a member of its board of directors, are less than $100 million
shall not be deemed to be Competition for purposes of this Agreement. For
purposes of the preceding sentence, if a company is a subsidiary of another
company, the sales of both companies shall be taken into account.
Notwithstanding any other provision in this Agreement, in any equity grant
agreement or any other agreement or plan covering you, all of the
non-competition restrictions imposed on you under this Agreement, any equity
award agreement or any other agreement or plan covering you, including, but not
limited to, direct restrictions on employment with other companies and any
potential forfeiture of compensation or benefits (including, but not limited to,
separation benefits and equity compensation), shall
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cease to apply for all purposes upon your termination of employment for any
reason during a CIC Period.
18. Without the written consent of the Board, you agree that during the period
of two years following the termination of your employment for any reason(s)
other than by the Company without Cause or by you for Good Reason, you will not
knowingly solicit or encourage the solicitation of any person who was an elected
officer of the Company or a member of the Company's Operations Group (or its
equivalent successor) at any time during your employment with the Company by any
employer other than the Company for any position as an employee, independent
contractor, consultant or otherwise. This covenant will not preclude the
solicitation of any individual after 18 months have elapsed subsequent to the
date on which such individual's employment or engagement by the Company has
terminated and will not preclude your providing a standard reference for a
Company employee if requested to do so by a third party.
19. To the fullest extent permitted by applicable law, the Company will, during
and after termination of your employment, indemnify you (including providing
advancement of reasonable expenses) for any judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees, incurred by you
in connection with the defense of any lawsuit or other claim to which you are
made, or threatened to be made, a party by reason of being or having been an
officer, director or employee of the Company or any of its subsidiaries or
affiliates. In addition, you will be covered under any directors and officers'
liability insurance policy for your acts (or non-acts) as an officer or director
of the Company or any of its subsidiaries or affiliates to the extent the
Company provides such coverage for its senior executive officers for a period of
5 years following
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any termination of your employment other than for Cause or for such longer
period of limitations that may apply to any claim.
20. Any disputes arising under or in connection with this Agreement shall,
unless other arrangements are agreed upon in writing by you and the Company, be
resolved by binding arbitration to be held in New York, New York, in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction. Each party shall
bear his or its own costs of the arbitration or litigation, including (but not
by way of limitation) his or its attorneys' fees. If, however, any dispute
arises relating to your rights or obligations as a result of the occurrence of a
Section 13(c) Change in Control, the Company shall pay you any such costs unless
the Company is determined to have substantially prevailed on all material
claims.
21. In the event of termination of your employment with the Company, you will
immediately, unless otherwise requested by the Board, resign from all
directorships, trusteeships, offices, employment and any other positions held at
that time with the Company or any of its subsidiaries or affiliates.
22. For purposes of this Agreement, "Cause" means (i) a material breach by you
of your duties and responsibilities (other than as a result of incapacity due to
physical or mental illness) which is demonstrably willful and deliberate on your
part, which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Company, and which is not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such breach; or (ii) your
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conviction of a felony which is materially and demonstrably injurious to the
Company as determined in the sole discretion of the Board. Furthermore, no
termination by the Company for Cause shall become effective without your being
given a written explanation of the basis for the termination and a hearing
before the Board. If your employment is terminated during a CIC Period the
cessation of your employment shall not be deemed for Cause unless and until the
Company has delivered to you a copy of a resolution duly adopted by not less
than 75% of the entire Board (excluding you if you are a Board member) at a
meeting of the Board called and held for such purpose (after reasonable notice
to you and an opportunity for you, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board an event set forth
above has occurred and specifying the particulars thereof in detail.
23. For purposes of this Agreement, "Good Reason" means that, without your
consent, (i) your rate of annual base salary, the target amount of your annual
cash incentive bonus or, if applicable, any other benefits under any long-term
incentive plan are reduced in a manner that is not applied proportionately to
all other senior executive officers of the Company, (ii) the Company (or such
successor to the Company following a Change in Control) fails to retain you as
President and Chief Executive Officer, (iii) there is a change in reporting so
that you no longer report to the Board, (iv) the Company fails to nominate you
for election to the Board, (v) the Board fails to elect you Chairman of the
Board by the date of the Annual Meeting of Shareholders in 2001, and at all
times subsequent thereto, provided, however, that this provision shall not apply
to a successor to the Company following a Change in Control unless the Chairman
of the Board of the successor company serves in an executive capacity, (vi)
there is a material
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diminution in your duties, or the assignment to you of duties which are
materially inconsistent with your duties or materially impair your ability to
function as the Chairman, President and Chief Executive Officer of the Company
or, during a CIC Period, the Company assigns to you any duties materially
inconsistent with your title, position, status, reporting relationships,
authority, duties or responsibilities as they existed immediately prior to such
CIC Period, or any other action by the Company which results in a diminution in
such title, position, status, reporting relationships, authority, duties or
responsibilities, other than an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by you, (vii) the Company terminates your
employment other than as expressly permitted by this Agreement, (viii) during a
CIC Period, the Company fails to keep in effect any employee benefit plan in
which you are participating immediately prior to such CIC Period or provide
benefits to you that are substantially equivalent, (ix) the relocation of the
Company's principal office, or your own office location as assigned to you by
the Company, to a location more than 75 miles from Peapack, New Jersey that has
not been approved by you in advance or during a CIC Period, you are required to
relocated more than fifty (50) miles within the state where you maintain your
office immediately prior to such relocation or your principal office is
relocated to a different state or you are required to materially increase your
business travel; or (xi) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor (or
subsidiary or affiliate thereof) to all or substantially all of the assets of
the Company within 15 days after a merger, consolidation, sale or similar
transaction.
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Mr. Xxxx Xxxxxx
December 17, 2002
Page 20
24. The obligation of the Company to make any payments provided for hereunder
and otherwise to perform their obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim, right or action
which the Company may have against you or others. In no event shall you be
obligated to seek other employment or take other action by way of mitigation of
the amounts payable to you under any of the provisions of this Agreement, and
such amounts shall not be reduced (except as otherwise specifically provided
herein) whether or not you obtain other employment.
25. In the event of any change in the outstanding shares of the Company's Common
Stock (including any increase or decrease in such shares) by reason of any stock
dividend or split, recapitalization, merger, consolidation, spinoff, combination
or exchange of shares or other similar corporate change, or any distributions to
common stockholders other than regular cash dividends, the Compensation
Committee of the Board shall make such substitution or adjustment, if any, as it
reasonably deems to be equitable to the number or kind of shares of Common Stock
provided for in this Agreement.
26. This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey, U.S.A.
27. (a) No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or pursuant to the sale or transfer of
all or substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of the
assets of the Company.
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Mr. Xxxx Xxxxxx
December 17, 2002
Page 21
(b) This Agreement shall not be terminated by any merger, consolidation,
or transfer of assets referred to above. In the event of any such merger,
consolidation or transfer of assets, the provisions of this Agreement shall be
binding upon the surviving or resulting corporation or the person or entity to
which such assets are transferred.
(c) The Company agrees that concurrently with any merger, consolidation or
transfer of assets referred to above, it will cause any successor or transferee
unconditionally to assume, either contractually or as a matter of law, the
liabilities, obligations, and duties of the Company hereunder.
(d) This Agreement shall inure to the benefit of, and be enforceable by or
against, you or your personal or legal representatives, executors,
administrators, successors, heirs, distributees, designees and legatees. None of
your rights or obligations under this Agreement may be assigned or transferred
by you other than your rights to compensation and benefits, which may be
transferred only by will or operation of law. If you should die while any
amounts or benefits have been accrued by you but not yet paid as of the date of
your death and which would be payable to you hereunder had you continued to
live, all such amounts and benefits unless otherwise provided herein shall be
paid or provided in accordance with the terms of this Agreement to such person
or persons appointed in writing by you to receive such amounts or, if no such
person is so appointed, to your estate.
28. 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, postage prepaid, addressed as follows:
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Mr. Xxxx Xxxxxx
December 17, 2002
Page 22
If to you:
Pharmacia Corporation
000 Xxxxx 000 Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxx Xxxxxx
If to the Company:
Pharmacia Corporation
000 Xxxxx 000 Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Senior Vice President Human Resources
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
29. No provisions of this Agreement may be waived, modified or discharged unless
such waiver, modification or discharge is specifically agreed to in writing
signed by both you and an authorized officer of the Company. No waiver by any
party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which are not set forth
expressly in this Agreement.
30. This Agreement may be executed by the parties in two or more counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
constitute one
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Mr. Xxxx Xxxxxx
December 17, 2002
Page 23
and the same instrument, and all signatures need not appear on any one
counterpart. A faxed signature of a party which is a reproduction of a genuine
signature of that party shall be conclusive evidence of execution of this
Agreement by that party.
31. 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, other than prior written interpretations of provisions of this Agreement
that have been in effect since November 15, 1999 and have not been subsequently
modified.
32. You acknowledge that you have been advised to review the terms of this
Agreement with an attorney of your choosing, and that you have had full
opportunity, prior to execution of this Agreement, to review thoroughly this
Agreement with your counsel, the reasonable expenses of which will be reimbursed
by the Company.
Very truly yours,
/s/ Xxxxx X. Xxxxxxxx
---------------------
Xxxxx X. Xxxxxxxx
I accept the terms set forth in this letter and will serve in the capacity, for
the duration and under the conditions stated herein:
/s/ Xxxx Xxxxxx
--------------------------
Xxxx Xxxxxx
Date: December 17, 2002
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