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Exhibit 10.7
EMPLOYMENT AGREEMENT
This Agreement is made by and between Pharmacia Corporation, a Delaware
Corporation (the "Company"), and Xxxxxx Xxxxxxxxx, Ph.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 Senior Executive Vice President and
Chief Scientific Officer and Chairman of 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. Executive will serve as an Officer of the
Company, and will initially report to the CEO.
(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 $750,000 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
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Incentive Plan will be 75% 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.
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.
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.
7. BUSINESS EXPENSES. During the Employment Term, 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.
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8. RELOCATION. The Company acknowledges and agrees that Executive's
business location will remain in St. Louis. However, in the event Executive
chooses to relocate 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 ("XXXX").
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. Section 621 et seq.; the Older Workers Benefit Protection Act, 29 U.S.C.
Section 621 et seq.; Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C. Section 2000e et seq.; the Employee Retirement Income Security Act of
1974, 29 U.S.C. Section 1001 et seq.; the Americans With Disabilities Act, 42
U.S.C. Section 12101 et seq.; the Family and Medical Leave Act, 29 U.S.C.
Section 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;
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(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;
(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, DISABILITY, OR TERMINATION FOR ANY REASON OTHER THAN CAUSE PRIOR
TO DECEMBER 31, 2004. 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). If Executive's employment is terminated as a result of death, disability,
by the Company for any reason other than Cause, or by the Executive for any
reason whatsoever, prior to December 31, 2004, 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 (it being understood that the duration of this
non-compete requirement shall not delay payment of any amounts otherwise due
hereunder), 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, in an amount corresponding
to the date of Executive's termination as set forth in the chart below:
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TERMINATION DATE SEVERANCE PAYMENT
1-1-00 xx 00-00-00 $4,764,006.00
1-1-03 xx 00-00-00 $3,176,004.00
1-1-04 xx 00-00-00 $1,588,002.00
(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 from the
Company or its Affiliates 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 shall be entitled to continue any and all current
individual life insurance and individual disability insurance plans at
Executive's own cost. Within twenty (20) days after Executive's termination
date, the Company's share of cash value under Policy #CUL0021952, determined in
accordance with the terms of the Split Dollar Life Insurance Plan and as of the
termination date, will be returned to the Company; the Company shall then
release the collateral assignment agreement. At that point, all ownership rights
in connection with Policy # CUL0021952 will be vested in the Executive or his
designee. The Executive or his designee will then have the option to maintain
the policy by paying the future premiums, use the remaining cash
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value (if any) to purchase paid-up life insurance, withdraw any remaining cash
value and cancel the policy, or exercise any other ownership rights in
accordance with the terms of the life insurance policy;
(vii) 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
(viii) Executive will receive any other amounts earned, accrued or owing
to Executive under the plans and programs of the Company.
(b) INVOLUNTARY TERMINATION OTHER THAN FOR CAUSE, OR VOLUNTARY TERMINATION
FOR GOOD REASON, ON OR AFTER JANUARY 1, 2003. Notwithstanding paragraph (a)
above, if, on or after January 1, 2003, Executive is involuntarily terminated by
the Company other than for Cause, or Executive voluntarily terminates his
employment for 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 the sum of (A)
that number of years of Executive's 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) corresponding to
the date of Executive's termination as set forth in the chart below, plus (B)
the severance payment, if any, corresponding to the date of Executive's
termination payable in accordance with subparagraph 12(a)(i) (such amounts
restated here for ease of reference):
TERMINATION DATE EMPLOYMENT SECURITY - YEARS (A) CASH PAYMENT (B)
---------------- ------------------------------- ----------------
1-1-03 xx 00-00-00 1 $3,176,004.00
1-1-04 xx 00-00-00 2 $1,588,002.00
After 12-30-04 3 0
(ii) Executive will receive the same compensation and benefits as
specified in subparagraphs 12(a)(ii)-(vii) above.
(C) DEATH OR DISABILITY ON OR AFTER DECEMBER 31, 2004. If Executive's
employment terminates as a result of death or disability on or after December
31, 2004, then:
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(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; and
(iv) Executive shall be entitled to continue any and all current
individual life insurance and individual disability insurance plans at
Executive's own cost. Within twenty (20) days after Executive's termination
date, the Company's share of cash value under Policy #CUL0021952, determined in
accordance with the terms of the Split Dollar Life Insurance Plan and as of the
termination date, will be returned to the Company; the Company shall then
release the collateral assignment agreement. At that point, all ownership rights
in connection with Policy #CUL0021952 will be vested in the Executive or his
designee. The Executive or his designee will then have the option to maintain
the policy by paying the future premiums, use the remaining cash value (if any)
to purchase paid-up life insurance, withdraw any remaining cash value and cancel
the policy, or exercise any other ownership rights in accordance with the terms
of the life insurance policy.
(d) INVOLUNTARY TERMINATION FOR CAUSE, OR VOLUNTARY TERMINATION OTHER THAN
FOR GOOD REASON ON OR AFTER DECEMBER 31, 2004. If Executive is involuntarily
terminated by the Company for Cause at any time, or if, on or after December 31,
2004, 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.
(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.
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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
(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 a Senior Executive Vice
President of the Company;
(iii) the Company fails to retain Executive as the Company's Chief
Scientific Officer and Chairman of 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
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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.
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.
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(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 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
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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 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 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 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 or its Affiliates
(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
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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 even 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 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.
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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.
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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.
PHARMACIA CORPORATION
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Xxxxxx Xxxxxxxxx, Ph.D. By: Xxxx Xxxxxx
Title: Chief Executive Officer
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Date Date
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