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EXHIBIT (10)(15)
EMPLOYMENT AGREEMENT
This Agreement is made by and between Pharmacia Corporation, a Delaware
Corporation (the "Company"), and Xxxxx Xxxx, M.D. (the "Executive").
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITION; DUTIES. During the Employment Term (as defined in paragraph 2),
the Company will employ Executive as Executive Vice President and President,
Research and Development of the Company or in such other substantially
equivalent position requested by the Company's Chief Executive Officer ("CEO")
for which the Executive is qualified by education, training, and experience.
Initially, Executive will also have responsibility for Global Supply,
Information Technology, Licensing, and Business Development. Executive will
serve as an Officer of the Company, and will initially report to the Chief
Scientific Officer with respect to Research and Development and to the CEO with
respect to other designated responsibilities.
(b) OBLIGATIONS. During the Employment Term, Executive will devote substantially
all of his business efforts and time to the Company. Executive agrees, during
the Employment Term, not to actively engage in any other employment, occupation
or consulting activity for any direct or indirect remuneration without the prior
approval of the CEO; provided, however, that Executive may (i) serve on the
board of directors of other companies (subject to the reasonable approval of the
CEO) and boards of trade associations or charitable organizations; (ii) engage
in charitable activities and community affairs; or (iii) manage Executive's
personal investments and affairs, as long as such activities do not materially
interfere with Executive's duties and responsibilities with the Company.
2. EMPLOYMENT TERM. The Company hereby agrees to employ Executive and Executive
hereby accepts employment, in accordance with the terms and conditions of this
Agreement, commencing on June 1, 2000 (the "Employment Commencement Date"). The
period of Executive's employment under this Agreement will be referred to as the
"Employment Term." Subject to the Company's obligation to provide severance
benefits as may be specified in this Agreement, Executive and the Company
acknowledge that this employment relationship may be terminated at any time and
for any or no cause or reason, at the option of either the Company or Executive.
3. CASH COMPENSATION. During the Employment Term, the Company will pay Executive
the following as cash compensation for services to the Company:
(a) BASE SALARY. As of the Employment Commencement Date, Executive's annualized
base salary will be $733,430 and will be subject to annual review pursuant to
the Company's normal review policy for other similarly situated senior
executives of the Company.
(b) VARIABLE COMPENSATION. Executive will also be eligible to participate in the
Company's annual incentive plan ("Incentive Plan") at a level determined by the
Compensation Committee of the Board of Directors ("Compensation Committee") to
be appropriate based on Executive's position, job performance and Company
policy. For the Year 2000, Executive's target under the Incentive Plan will be
70% of Executive's base salary. Payment of incentive compensation, if the
performance criteria determined by the Compensation Committee are met, will
generally be made in March of the year following the incentive plan year, unless
Executive elects to defer payment pursuant to an applicable plan of the Company.
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4. EQUITY COMPENSATION. During the Employment Term, Executive will be eligible
to participate in the Company's equity compensation plans, in accordance with
the terms of such plans and any applicable grants (except as provided herein),
at a level determined by the Compensation Committee to be appropriate based on
the Company's equity compensation policy. Executive will receive a grant of
125,000 stock options to purchase shares of the Company's common stock pursuant
to the Company's long-term incentive plan. The date of the stock option grant
will be June 1, 2000.
Executive will receive a grant of 100,000 restricted shares or share units under
the Company's Founders Performance Contingent Shares Program, which shall vest
according to the terms of the Program based on the Company's total shareholder
return ranking as compared to a designated peer group and the Company's targeted
five year compounded shareholder return. Except as otherwise provided in the
Founders Performance Contingent Shares Program, Executive must be employed by
the Company on December 31, 2004 in order for the restricted shares or share
units to vest.
Notwithstanding the terms of any specific grant, stock options not yet vested or
exercisable will nevertheless be fully vested and exercisable immediately upon
Executive's death, disability, involuntarily termination of employment by the
Company other than for Cause (as defined below), or voluntary termination of
employment for Good Reason within six months after learning of the event
constituting Good Reason (as defined below), provided, in the case of employment
termination, Executive does not enter into Competition (as defined below) with
the Company within two years after Executive's employment is terminated.
Notwithstanding the foregoing, in no event will this provision cause any stock
options to become vested or exercisable prior to the first anniversary of the
stock option grant date.
5. EMPLOYEE BENEFITS. During the Employment Term, Executive will, to the extent
eligible, be entitled to participate in all employee welfare and retirement
benefit plans and programs provided by the Company to its senior executives in
accordance with the terms of those plans or programs as they may be modified
from time to time. Executive will be entitled to post-retirement welfare
benefits as are made available by the Company to its senior executive officers
at the time of Executive's retirement, provided that for this purpose
Executive's 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 Executive directly,
the Company will pay Executive the amount necessary to purchase the coverage,
adjusted for taxes, on an after-tax basis.
6. FINANCIAL PLANNING ASSISTANCE. During the Employment Term, Executive will be
eligible to participate in the Company's Financial Planning Assistance program
for senior executives. Executive will be entitled to up to $10,000 for the first
year of financial planning assistance, and $7,000 each year thereafter, except
that if Executive participated in this program at the time it was provided by
Pharmacia & Upjohn, Executive will receive $7,000 for each year of
participation.
7. BUSINESS EXPENSES. During the Employment Term, and upon submission of
appropriate documentation in accordance with its policies in effect from time to
time, the Company will pay or reimburse Executive for all reasonable business
expenses that Executive incurs in performing Executive's duties under this
Agreement, including, but not limited to, travel, entertainment, professional
dues and subscriptions.
8. RELOCATION. Executive acknowledges that the Company may at any time relocate
his place of employment to such location as may at that time constitute the
Company's principal offices.
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During the Employment Term, Executive will be entitled to relocation benefits
pursuant to the Company's relocation benefit program.
9. SUPPLEMENTAL RETIREMENT BENEFIT. During the Employment Term, Executive will
be eligible to participate in the Key Executive Pension Plan.
10. RELEASE.
(a) In consideration of the agreements and undertakings of the Company set forth
herein, and intending to be legally bound hereby, Executive, on behalf of
himself, his spouse and his dependents, heirs, executors, administrators and
assigns, past and present, and each of them (hereinafter collectively referred
to as "Releasors"), agrees to release and forever discharge the Company,
together with its Affiliates, and its or their officers, directors, employees,
agents, predecessors, partners, successors, assigns, heirs, executors, insurers
and administrators (hereinafter "Company Releasees") from any and all rights,
claims, actions and causes of action of any nature whatsoever, cognizable at law
or equity, which Releasors now have or claim, or might hereafter have or claim,
against the Company Releasees up to the date of this Agreement relating to
Executive's employment by the Company and its Affiliates, including, without
limitation, claims arising under the Age Discrimination in Employment Act, 29
U.S.C.ss.621 et seq.; the Older Workers Benefit Protection Act, 29 U.S.C.ss.621
et seq.; Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C.ss.2000e et seq.; the Employee Retirement Income Security Act of 1974, 29
U.S.C.ss.1001 et seq.; the Americans With Disabilities Act, 42 U.S.C.ss.12101 et
seq.; the Family and Medical Leave Act, 29 U.S.C.ss.2601 et seq.; any
anti-discrimination statutes; any claims for breach of express or implied
contract; any claims for wrongful discharge or violation of public policy; any
claims under any federal, state or local laws of any jurisdiction; and any
common law claims now or hereafter recognized; as well as all claims for counsel
fees and costs.
(b) Nothing herein shall be construed to negate the provisions of this Agreement
or Executive's right to enforce the provisions of this Agreement.
11. REVIEW AND CONSIDERATION OF RELEASE. Executive certifies and acknowledges:
(a) that he has read the terms of this Agreement, and he understands
its terms and effects, including the fact that he has agreed to RELEASE AND
FOREVER DISCHARGE Company Releasees from any legal or administrative action
arising out of his employment with the Company, and the terms and conditions of
that employment relationship, up to the date of this Agreement;
(b) that he has signed this Agreement voluntarily and knowingly in
exchange for the consideration provided to him and described herein. He
acknowledges that he would not otherwise be entitled to the consideration
provided and that the consideration provided as a result of signing this
Agreement is adequate and satisfactory;
(c) that he has been advised through this document that the signing of
this Agreement does not waive rights or claims that may arise after the date it
is executed;
(d) that he has been advised through this writing to consult with an
attorney concerning this Agreement prior to signing this Agreement;
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(e) that he has been advised that he has the right to consider this
Agreement for a period of 21 days from receipt, and that he has signed on the
date indicated below after concluding that this Agreement is satisfactory to
him;
(f) that neither the Company, nor any of its agents, representatives,
employees, or attorneys has made any representations to him concerning the terms
or effects of this Agreement other than those contained herein; and
(g) that he understands that he has the right to revoke this Agreement
within 7 days after its execution by giving written notice to the Company, and
that this Agreement will not become effective or enforceable until the
revocation period has expired.
12. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. Executive's employment will terminate automatically
upon Executive's death. The Company may terminate Executive's employment for
disability in the event Executive has been unable, due to physical or mental
incapacity, to perform Executive's material duties under this Agreement for six
consecutive months (or such longer period that may be required by applicable
law). In the event Executive's employment terminates as a result of death or
disability, then:
(i) Subject to subsection 12(e) below, all unvested or unexercisable
equity compensation will become fully vested and exercisable, and any stock
options may be exercised after Executive's termination of employment in
accordance with the terms and conditions of the applicable grant documentation;
(ii) Except as otherwise provided herein, Executive will forfeit
Executive's right to receive any salary, incentive compensation, equity
compensation, or other compensation that has not been fully earned at the time
Executive's employment terminates; provided, however, Executive will be entitled
to receive any benefits or amounts accrued but not yet paid as of the date of
termination;
(iii) Executive will receive any other amounts earned, accrued or owing
to Executive under the plans and programs of the Company.
(b) INVOLUNTARY TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION OTHER THAN FOR
GOOD REASON. If Executive is involuntarily terminated by the Company for Cause
or Executive voluntarily terminates his employment other than for Good Reason
within six months after learning of the event constituting Good Reason, then:
(i) All unvested or unexercisable equity compensation will be cancelled
upon Executive's termination of employment;
(ii) Executive will forfeit Executive's right to receive any salary,
incentive compensation, equity compensation, or other compensation that has not
been fully earned at the time Executive's employment terminates; provided,
however, Executive will be entitled to receive any benefits or amounts accrued
but not yet paid as of the date of termination; and
(iii) Executive will receive any other amounts earned, accrued or owing
to Executive under the plans and programs of the Company.
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(c) INVOLUNTARY TERMINATION OTHER THAN FOR CAUSE OR VOLUNTARY TERMINATION FOR
GOOD REASON. If Executive is involuntarily terminated by the Company other than
for Cause or Executive voluntarily terminates his employment for Good Reason
within six months after learning of the event constituting Good Reason; then, as
liquidated damages and in lieu of any other damages or compensation under this
Agreement or otherwise, Executive will receive the payments or other benefits
described in this paragraph; provided (A) Executive does not enter into
Competition (as defined below) with the Company for a period of two years
following the termination of Executive's employment, and (B) Executive executes,
and does not revoke, a written waiver and release, in a form prescribed by the
Company, of all claims against the Company and related parties arising out of
the Executive's employment or the termination of that employment:
(i) Executive will receive a lump sum severance payment, payable within
60 days after termination of Executive's employment, equal to three years' base
salary and annual target incentive compensation (calculated using the amount of
Executive's highest annual base salary and highest annual target incentive
compensation received by Executive within three years prior to Executive's date
of termination);
(ii) Executive will have Executive's period of employment service used
to calculate retirement extended as if Executive had worked an additional three
years, and the compensation used to calculate Executive's retirement benefits
will be determined as if Executive had continued to receive for an additional
three years salary and incentive compensation equal to the highest annual base
salary and highest annual incentive compensation Executive received within three
years prior to Executive's date of termination (such amounts to be payable from
a non-qualified, supplemental retirement plan);
(iii) Subject to subsection 12(e) below, Executive will be entitled to
exercise, in accordance with their terms, any remaining stock options that had
been granted prior to Executive's termination (all of which will become vested
under such circumstances) for the maximum period permitted under the terms of
the grant;
(iv) Executive will receive a pro-rated portion of his target annual
incentive compensation award in or around March of the year following
Executive's termination based on the number of months (rounded to the next
highest number for a partial month) of the year elapsed prior to Executive's
termination;
(v) Executive and Executive's dependents will 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
Executive's termination unless changed for senior executives generally;
provided, however, that such benefits will be offset to the extent that
Executive or Executive's dependents receive benefits from another source (in
such event, Executive agrees to provide reasonable notice of the receipt of
benefits from another source); and, provided that in the event adverse tax
consequences may result if medical benefits are provided to Executive directly,
the Company will pay Executive the amount necessary to purchase the coverage,
adjusted for taxes, on an after-tax basis.
(vi) Executive will be entitled to outplacement services, at the
expense of the Company, from a provider selected by Executive, subject to a
maximum expense of $25,000; and
(vii) Executive will receive any other amounts earned, accrued or owing
to Executive under the plans and programs of the Company.
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(d) VOLUNTARY TERMINATION FOR ANY REASON PRIOR TO JUNE 1, 2002. If Executive
voluntarily terminates his employment for any reason (other than Good Reason
within six months after learning of the event constituting Good Reason); then,
as liquidated damages and in lieu of any other damages or compensation under
this Agreement or otherwise, Executive will receive the payments or other
benefits described in this paragraph; provided (A) Executive does not enter into
Competition (as defined below) with the Company for a period of two years
following the termination of Executive's employment, and (B) Executive executes,
and does not revoke, a written waiver and release, in a form prescribed by the
Company, of all claims against the Company and related parties arising out of
the Executive's employment or the termination of that employment:
(i) within sixty (60) days following the date of Executive's
termination, a lump-sum cash amount equal to the sum of Executive's unpaid base
salary through the date of termination, plus any unpaid bonus payments which
have been earned or become payable;
(ii) within sixty (60) days following the date of Executive's
termination, a lump-sum cash amount equal to two (2) times the sum of: (A)
Executive's annual rate of base salary as of June 1, 2000, plus (B) Executive's
target annual incentive bonus for the year 2000, provided, that any such amount
shall be offset by the present value (based upon the Applicable Federal Rate as
defined in the United States Internal Revenue Code of 1986, as amended) as of
the date of Executive's termination of any other amount of severance relating to
salary or bonus continuation to which Executive might be entitled upon
termination of employment under any other plan, policy, employment agreement or
arrangement of the Company or as otherwise required by applicable law, except to
the extent, if any, provided in any change-of-control severance plan or
agreement adopted by the Company hereafter under which Executive is entitled to
benefits;
(iii) for a period terminating on the earlier of (A) twenty-four (24)
months following the date of Executive's termination, or (B) the commencement
date of equivalent benefits from a new employer, the Company shall continue to
keep in full force and effect (or otherwise provide) all policies of medical,
accident, disability and life insurance with respect to Executive and his
dependents with the same level of coverage, upon the same terms and otherwise to
the same extent, as such policies shall have been in effect immediately prior to
the date of Executive's termination, and the Company and the Executive shall
share the costs of such continuation of coverage in the same proportion as such
costs were shared immediately prior to the date of termination.
(e) Notwithstanding the foregoing, in no event will this paragraph cause any
stock options to become vested or exercisable prior to the first anniversary of
the stock option grant.
13. CAUSE; GOOD REASON.
(a) For purposes of this Agreement, "Cause" means:
(i) a material breach by Executive of Executive's duties and
responsibilities (other than as a result of incapacity due to physical or mental
illness) which is demonstrably willful and deliberate on the part of Executive,
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 within 30 days
after receipt of written notice from the Company specifying such breach; or
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(ii) Executive's conviction of a felony which is materially and
demonstrably injurious to the Company as determined in the sole discretion of
the Board of Directors of the Company ("Board").
(b) For purposes of this Agreement, "Good Reason" means:
(i) Executive's rate of annual base salary or the target amount of
Executive's annual cash incentive bonus is reduced in a manner that is not
applied proportionately to all other senior executive officers of the Company,
including the Chief Executive Officer;
(ii) the Company fails to retain Executive as an Executive Vice
President of the Company;
(iii) the Company fails to retain Executive as President, Research and
Development or another substantially equivalent position for which the Executive
is qualified by education, training and experience; or
(iv) a successor to the Company fails to assume this Agreement.
14. DIRECTORSHIPS, OTHER OFFICES. In the event of termination of employment,
Executive will immediately, unless otherwise requested by the Company's Board of
Directors, resign from all directorships, trusteeships, other offices and
employment held at that time with the Company or any of its Affiliates.
15. CONFIDENTIALITY. Executive recognizes and acknowledges that by reason of
Executive's employment by and service to the Company, Executive will have access
to proprietary or confidential information, technical data, trade secrets or
know-how relating to the Company, which may include, but is not limited to,
market and product research and plans, markets, products, services, customer
lists and customers, advertising, software, developments, inventions, processes,
formulas, technology, designs, drawings, engineering, marketing and sales
techniques, strategies and programs, distribution methods and systems, sales and
profit figures, pricing and discount plans, financial and other business
information (hereafter, "Confidential Information"). Executive acknowledges that
such Confidential Information is a valuable and unique asset of the Company and
covenants that Executive will not, either during employment or after the
termination of employment, disclose any such Confidential Information to any
person for any reason whatsoever (except as Executive's duties as an employee of
the Company may require) without the prior written authorization of the CEO,
unless such information is in the public domain through no fault of Executive or
except as may be required by law or in a judicial or administrative proceeding,
in which case Executive will promptly inform the Company in writing of such
required disclosure, but in any event at least two business days prior to the
disclosure. All written Confidential Information (including, without limitation,
in any computer or other electronic format) which comes into Executive's
possession during the course of Executive's employment will remain the property
of the Company. Unless expressly authorized in writing by the CEO, Executive
will not remove any written Confidential Information from the Company's
premises, except in connection with the performance of Executive's duties for
the Company and in a manner consistent with the Company's policies regarding
Confidential Information. Upon termination of employment, Executive agrees
immediately to return to the Company all written Confidential Information in
Executive's possession.
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For the purposes of this paragraph, the term "Company" will be deemed to include
the Company and its Affiliates. For purposes of this Agreement, "Affiliate" will
mean an "affiliate" as defined in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
16. NON-COMPETE; NON-SOLICIT.
(a) The Company hereby agrees to pay Executive the amounts described under this
Agreement as being expressly conditioned on Executive's undertakings under this
paragraph as well as under paragraph 15 above. In exchange for the consideration
provided in the preceding sentence, Executive agrees that during the term of
Executive's employment with the Company and for a period of two years after
Executive's termination of employment for any reason, Executive will not, except
with the prior written consent of the CEO, directly or indirectly, engage in
Competition. For purposes of this Agreement, Competition means that Executive
commences employment with, or provides substantial consulting services to, any
pharmaceutical company (except companies where sales from pharmaceutical
products constitute less than 20% of total sales). Notwithstanding anything to
the contrary herein, Executive's service solely as a member of the board of
directors of a company whose annual sales 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.
(b) The foregoing restrictions will not be construed to prohibit Executive's
ownership of less than five percent of any class of securities of any
corporation which is engaged in any business having a class of securities
registered pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"),
provided that such ownership represents a passive investment and that neither
Executive nor any group of persons including Executive in any way, either
directly or indirectly, manage or exercise control of any such corporation,
guarantee any of its financial obligations, otherwise take any part in its
business, other than exercising Executive's rights as a shareholder, or seek to
do any of the foregoing.
(c) Executive further covenants and agrees that during Executive's employment by
the Company and for the period of two years thereafter, Executive will not,
except with the prior written consent of the CEO, directly or indirectly,
solicit or hire, or encourage the solicitation or hiring of, any person who was
an employee of the Company at any time during the term of this Agreement by any
employer other than the Company for any position as an employee, independent
contractor, consultant or otherwise. This covenant will not prevent Executive
from giving references and will not preclude the solicitation or hiring of any
individual after 12 months have elapsed subsequent to the date on which such
individual's employment or engagement by the Company has terminated.
(d) For the purposes of this paragraph 16, the term "Company" will be deemed to
include the Company and its Affiliates.
17. REMEDIES; INJUNCTION.
(a) Executive acknowledges and agrees that the restrictions contained in
paragraphs 15 and 16 are reasonable and necessary to protect and preserve the
legitimate interests, properties, goodwill and business of the Company, that the
Company would not have entered into this Agreement in the absence of such
restrictions and that irreparable injury will be suffered by the Company should
Executive breach any of the provisions of those paragraphs. Executive represents
and acknowledges that (i) Executive has been advised by the Company to consult
legal counsel with respect to this
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Agreement, and (ii) that Executive has had full opportunity, prior to execution
of this Agreement, to review thoroughly this Agreement with counsel.
(b) Executive further acknowledges and agrees that a breach of any of the
restrictions in paragraphs 15 and 16 cannot be adequately compensated by
monetary damages. Executive agrees that the Company will be entitled to a return
of the cash consideration set forth in this Agreement as being conditioned on
the covenants contained in paragraph 16 and that all remaining stock options
will be forfeited if Executive breaches the provisions of that paragraph and
that, in any event, the Company will be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well as
provable damages and an equitable accounting of all earnings, profits and other
benefits arising from any violation of paragraphs 15 or 16, which rights will be
cumulative and in addition to any other rights or remedies to which the Company
may be entitled. In the event that any of the provisions of paragraphs 15 or 16
should ever be adjudicated to exceed the time, geographic, service, or other
limitations permitted by applicable law in any jurisdiction, it is the intention
of the parties that the provision will be amended to the extent of the maximum
time, geographic, service, or other limitations permitted by applicable law,
that such amendment will apply only within the jurisdiction of the court that
made such adjudication and that the provision otherwise be enforced to the
maximum extent permitted by law.
(c) Executive irrevocably and unconditionally (i) agrees that any suit, action
or other legal proceeding arising out of paragraphs 15 or 16, including without
limitation, any action commenced by the Company for preliminary and permanent
injunctive relief and other equitable relief, may be brought in the United
States District Court for the District of New Jersey, or if such court does not
have jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in Somerset County, New Jersey, (ii) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (iii)
waives any objection which Executive may have to the laying of venue of any such
suit, action or proceeding in any such court.
(d) For the purposes of this paragraph 17, the term "Company" will be deemed to
include the Company and its Affiliates.
18. INTELLECTUAL PROPERTY. To the fullest extent permitted by applicable law,
all intellectual property (including patents, trademarks, and copyrights) which
are made, developed or acquired by Executive in the course of Executive's
employment with the Company will be and remain the absolute property of the
Company, and Executive shall assist the Company in perfecting and defending its
rights to such intellectual property.
19. INDEMNIFICATION. To the fullest extent permitted by applicable law, the
Company will, during and after termination of employment, indemnify Executive
(including providing advancement of expenses) for any judgments, fines, amounts
paid in settlement and reasonable expenses, including attorneys' fees, incurred
by Executive in connection with the defense of any lawsuit or other claim or
investigation to which Executive is made, or threatened to be made, a party or
witness by reason of being or having been an officer, director or employee of
the Company or any of its subsidiaries or affiliates. In addition, Executive
will be covered under any directors and officers' liability insurance policy for
his 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.
20. ARBITRATION. Unless other arrangements are agreed to by Executive and the
Company, any disputes arising under or in connection with this Agreement, other
than a dispute in which the primary relief sought is an equitable remedy such as
an injunction, will be resolved by binding
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arbitration to be conducted pursuant to the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association. Costs of the
arbitration, including (but not by way of limitation) reasonable attorney's fees
of both parties, will be borne by the party which does not prevail in the
proceedings. In the event that each party prevails as to certain aspects of the
proceedings, the arbitrator(s) or the court will determine an appropriate
allocation of costs between the parties.
21. GROSS-UP PAYMENT.
(a) In the event that any amount or benefits made or provided to Executive above
and under all other plans and programs of the Company (the "Covered Payments")
is determined to constitute a Parachute Payment, as such term is defined in
Section 280G(b)(2) of the Internal Revenue Code, the Company shall pay to
Executive, prior to the time any Internal Revenue Code Section 4999 excise tax
("Excise Tax") is payable with respect to any such Covered Payment, an
additional amount which is equal to the Excise Tax on the Covered Payment (the
"Initial Gross-Up"), plus the amount of income tax and Excise Tax payable by
Executive with respect to the Initial Gross-Up (the "Second Gross-Up"), the
amount of income tax and Excise Tax payable by Executive with respect to the
Second Gross-Up (the "Third Gross-Up"), the amount of income tax and Excise Tax
payable by Executive with respect to the Third Gross-Up (the "Fourth Gross-Up"),
and the amount of income tax and Excise Tax payable by Executive with respect to
the Fourth Gross-Up.
(b) The determination of whether the Covered Payment constitutes a Parachute
Payment and, if so, the amount to be paid to Executive and the time of payment
pursuant to this paragraph 20 shall be made by an independent auditor (the
"Auditor") jointly selected by the Company and Executive and paid by the
Company. The Auditor shall be a nationally recognized United States public
accounting firm which has not, during the two years preceding the date of its
selection, acted in any way on behalf of the Company or any of its Affiliates.
If Executive and the Company cannot agree on the firm to serve as the Auditor,
then Executive and the Company shall each select one accounting firm and those
two firms shall jointly select the accounting firm to serve as the Auditor.
(c) In the event that upon any audit by the Internal Revenue Service, or by a
state or local taxing authority, of the Covered Payment or the Gross-Up
payments, a change is finally determined to be required in the amount of taxes
paid by the Executive, appropriate adjustments will be made under this Agreement
such that the net amount which is payable to Executive after taking into account
the provisions of section 4999 of the Code will reflect the intent of the
parties as expressed in subparagraph (a) above, in the manner determined by the
Auditor.
22. NO SET-OFF; NO MITIGATION REQUIRED. The obligation of the Company to make
any payments provided for hereunder and otherwise to perform its obligations
hereunder will not be affected by any set-off, counterclaim, recoupment, defense
or other claim, right or action which the Company may have against Executive or
others. In no event will Executive be obligated to seek other employment or take
other action by way of mitigation of the amounts payable to Executive under any
of the provisions of this Agreement, and such amounts will not be reduced
(except as otherwise specifically provided herein) whether or not Executive
obtain other employment.
23. PAYMENT OF LEGAL FEES. The Company will pay Executive's reasonable legal and
financial consulting fees and costs associated with entering into this Agreement
up to a maximum of $10,000.
24. CORPORATE TRANSACTIONS, IMPACT ON EQUITY COMPENSATION. In the event of any
change in the outstanding shares of the Company's Common Stock (including any
increase or decrease in such
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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 may make such
substitution or adjustment, if any, as it deems to be equitable, as to the
number or kind of shares of Common Stock provided for in this Agreement.
25. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New Jersey.
26. ASSIGNMENTS; TRANSFERS; EFFECT OF MERGER.
(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.
(b) This Agreement will not be terminated by any merger, consolidation or
transfer of assets of the Company referred to above. In the event of any such
merger, consolidation or transfer of assets, the provisions of this Agreement
will 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, all of
the obligations of the Company hereunder.
(d) This Agreement will inure to the benefit of, and be enforceable by or
against, Executive or Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributes, designees and legatees. None of
Executive's rights or obligations under this Agreement may be assigned or
transferred by Executive other than Executive's rights to compensation and
benefits, which may be transferred only by will or operation of law. If
Executive should die while any amounts or benefits have been accrued by
Executive but not yet paid as of the date of Executive's death and which would
be payable to Executive hereunder had Executive continued to live, all such
amounts and benefits unless otherwise provided herein will be paid or provided
in accordance with the terms of this Agreement to such person or persons
appointed in writing by Executive to receive such amounts or, if no such person
is so appointed, to Executive's estate.
27. MODIFICATION. No provisions of this Agreement may be waived, modified or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by both Executive and the CEO. 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 will be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
28. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto in respect of the subject matter contained
herein.
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PHARMACIA CORPORATION
-------------------------------- -----------------------------------
Xxxxx Xxxx By: Xxxx Xxxxxx
Title: Chief Executive Officer
September 7, 2000 September 29, 2000
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