Exhibit 10.21
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
Ribapharm Inc., a Delaware corporation (the "Company"), and Xxxxx X.
Xxxxxx, Xx. ("Employee") and is entered into as of the effective date of
the initial public offering of the Company (the "Start Date").
RECITALS
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WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the threat of an unsolicited takeover of the Company or ICN
Pharmaceuticals, Inc., a Delaware corporation ("ICN"), may occur which can
result in significant distractions of its management personnel because of
the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of its
key management personnel in the event of a threat of a change in control
and to ensure their continued dedication and efforts in such event without
undue concern for their personal financial and employment security; and
WHEREAS, in order to induce Employee to remain in the employ of the
Company, particularly in the event of a threat of a change in control, the
Company desires by this writing to set forth the employment relationship of
Employee with the Company, and Employee is willing to enter into such
employment relationship on the terms and conditions set forth herein.
AGREEMENT
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NOW THEREFORE, for consideration, the value, sufficiency, and receipt
of which are hereby acknowledged, the parties hereto agree as follows.
1. Employment.
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(a) Position. The Company hereby employs Employee, and Employee
agrees to be employed by the Company, commencing on the Start Date and
continuing during the term (as defined in Section 2 below). Employee shall
hold the position of Senior Vice President, General Counsel and Secretary
of the Company and such other positions as the Board may designate.
Employee's duties and responsibilities hereunder shall include (a)
providing senior executive management services as the Company may designate
through its Board consistent with the position of Senior Vice President,
General Counsel and Secretary, and (b) such other duties and
responsibilities as are assigned to Employee from time to time by the Board
and accepted by Employee.
(b) Performance of Duties. Except as otherwise provided herein or
hereafter agreed upon in writing, Employee shall devote reasonable
attention and time during usual business hours to the performance of his
duties hereunder and shall, except as provided herein, render his services
solely and exclusively for the Company during the employment term and
agrees to serve the Company diligently, in good faith, and to the best of
his abilities. The Employee may (i) serve on corporate, civil or charitable
boards of committees, (ii) manage personal investments and (iii) deliver
lectures and teach at education institutions, so long as such activities do
not significantly interfere with the performance of the Employee's
responsibilities hereunder.
2. Term. The initial term of this Agreement shall be three (3) years
from the Start Date (the "Initial Term"); provided, however, that the term
of this Agreement shall be automatically extended for one (1) year on the
expiration of the Initial Term and on each anniversary thereof unless
either the Company or the Employee shall have given written notice to the
other not less than ninety (90) days prior thereto that the term of this
Agreement shall not be so extended; and provided, further, that,
notwithstanding any such notice by the Company given after a Change in
Control (as defined below) not to extend the term of this Agreement, the
term of this Agreement shall not expire prior to the expiration of the
third anniversary of a Change in Control.
3. Base Salary. The Company shall pay Employee during the term of this
Agreement a base salary at the rate of $250,000 per annum (hereinafter
referred to as the "Base Salary"). Such Base Salary shall be payable no
less frequently than monthly during the year in accordance with the
Company's customary payroll practices applicable to its executives.
Employee agrees that the Company may deduct and withhold from the payments
to be made to Employee hereunder amounts required to be deducted and
withheld by the Company under the provisions of any statute, law,
regulation, or ordinance heretofore or hereafter enacted.
4. Benefits.
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(a) Employee shall be eligible to participate in all stock
option, stock bonus, incentive compensation, retirement, savings, fringe
benefit, disability insurance, group health and group life, vacation, and
similar health and benefit plans maintained by the Company or ICN in
accordance with the terms and conditions thereof on a basis which is no
less favorable than that applicable to employees of the Company who are
similarly situated to Employee. No additional compensation provided under
any of such plans shall be deemed to modify or otherwise affect the terms
of this Agreement or any of Employee's entitlements hereunder, unless such
modification is explicitly required herein or by any of such plans.
(b) In the event that any outstanding stock options granted under
the ICN Pharmaceuticals, Inc. Amended and Restated 1998 Stock Option Plan
are adjusted pursuant to the terms of such plan and any additional
agreement between the Company and ICN by reason of the "Spin-Off" (as
defined below), Employee shall be entitled to receive the same treatment of
his unexercised options (whether vested or not vested) as any existing
employee of ICN who holds any such options on the date of the Spin-Off
(including, without limitation, the grant of additional options to purchase
ICN common stock, or the grant of additional options to purchase Ribapharm
common stock, or some combination of the foregoing, in each case subject to
the same terms as his existing ICN or Ribapharm options (as applicable));
provided, however, that Employee is employed by the Company, ICN or any
subsidiary or affiliate of ICN immediately prior to the Spin-Off. For
purposes of this Agreement, "Spin-Off" shall mean the distribution by ICN
of its remaining interest in the Company to ICN's shareholders in a
tax-free spin-off following the Company's initial public offering.
5. Vacation and Sick Leave. At such reasonable times as the Board
shall in its discretion permit, Employee shall be entitled, without loss of
pay, to absent himself voluntarily from the performance of his employment
under this Agreement, provided that:
(a) Employee shall be entitled to annual vacation in accordance
with the policies as periodically established by the Board for similarly
situated executives of the Company.
(b) The Board shall be entitled to grant to Employee a leave or
leaves of absence with or without pay at such time or times and upon such
terms and conditions as the Board in its discretion may determine.
(c) Employee shall be entitled to sick leave (without loss of
pay) in accordance with the Company's policies as in effect from time to
time.
6. Expenses. Employee shall be entitled to reimbursement for
reasonable expenses necessary for the performance of his duties hereunder
or for promoting, pursuing, or otherwise furthering the business or
interests of the Company. All claims for expenses shall be reasonable and
made on the basis of statements thereof (together with vouchers or other
documents evidencing such expenses) furnished by Employee to the Company at
monthly or more frequent intervals and in accordance with the Company's
expense reimbursement policy and standard procedures as they exist from
time to time.
7. Office and Facilities. Employee shall be provided with an
appropriate office in Costa Mesa, California, or such other place as may be
mutually agreed upon and with such secretarial and other support facilities
as are commensurate with Employee's status with the Company and adequate
for the performance of his duties hereunder.
8. Termination.
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(a) Employee's employment hereunder may be terminated under the
following circumstances:
(1) Death. Employee's employment by the Company shall
automatically terminate upon Employee's death.
(2) Disability. The Company may terminate Employee's
employment after having established Employee's Disability. For
purposes of this Agreement, "Disability" means a physical or mental
infirmity which impairs Employee's ability to substantially perform
his duties under this Agreement which continues for a period of at
least one hundred eighty (180) consecutive days. Employee shall be
entitled to the compensation and benefits provided for under this
Agreement for any period during the term of this Agreement and prior
to the establishment of Employee's Disability during which Employee's
ability to substantially perform his duties under this Agreement is
impaired due to a physical or mental infirmity. Notwithstanding
anything contained in this Agreement to the contrary, until the
Termination Date specified in a Notice of Termination (as each term is
hereinafter defined) relating to Employee's Disability, Employee shall
be entitled to return to his position with the Company as set forth in
this Agreement in which event no Disability of Employee will be deemed
to have occurred.
(3) Cause. The Company may terminate Employee's employment
for Cause. A termination for "Cause" is a termination evidenced by a
resolution adopted in good faith by two-thirds (2/3) of the Board that
Employee --
(i) willfully and continually failed to substantially
perform his duties with the Company (other than a failure
resulting from Employee's incapacity due to physical or mental
illness) which failure or breach continued for a period of at
least thirty (30) days after a written notice of demand for
substantial performance or other correction has been delivered to
Employee specifying the manner in which Employee has failed to
substantially perform,
(ii) willfully engaged in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise,
or
(iii) has been convicted of an act which is defined as
a felony under federal or state law;
provided, however, that no termination of Employee's employment shall
be for Cause as set forth in clause (ii) above until (x) there shall
have been delivered to Employee a copy of a written notice setting
forth that Employee was guilty of the conduct set forth in clause (ii)
and specifying the particulars thereof in detail, and (y) Employee
shall have been provided an opportunity to be heard by the Board (with
the assistance of Employee's counsel if Employee so desires). No act,
nor failure to act, on Employee's part, shall be considered "willful"
unless he has acted or failed to act, with an absence of good faith
and without a reasonable belief that his action or failure to act was
in the best interest of the Company. Notwithstanding anything
contained in this Agreement to the contrary, no failure to perform by
Employee after Notice of Termination is given by Employee shall
constitute Cause for purposes of this Agreement.
(4) Without Cause. The Company shall have the right and
option, exercisable by giving written notice to Employee, to terminate
Employee's employment by the Company without Cause and for any reason
or for no reason, if such decision to terminate Employee's employment
is evidenced by a resolution adopted in good faith by two-thirds (2/3)
of the Board. This right is not limited or restricted by, and shall
supersede, any policy of the Company requiring or favoring continued
employment of its executives during satisfactory performance, any
seniority system or any procedure governing the manner in which the
Company's discretion is to be exercised. No exercise by the Company of
this termination right shall, under any circumstances, be deemed to
constitute (i) a breach by the Company of any term of this Agreement,
express or implied (including without limitation a breach of any
implied covenant of good faith and fair dealing), (ii) a wrongful
discharge of Employee or a wrongful termination of Employee's
employment by the Company, (iii) a wrongful deprivation by the Company
of Employee's corporate office (or authority, opportunities or other
benefits relating thereto) or (iv) the breach by the Company of any
other duty or obligation, express or implied, which the Company may
owe to Employee pursuant to any principle or provision of law (whether
contract or tort); provided, however, that notwithstanding the
foregoing, a breach by the Company of its payment obligations pursuant
to Section 9 shall be deemed to be a breach of this Agreement.
The failure or refusal of the Company to renew or extend the
Employment Period shall not constitute a termination of Employee's
employment by the Company without Cause under this Agreement.
(5) Good Reason. Employee may terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean
the occurrence after a Change in Control of any of the events or
conditions described in subsections (i) through (viii) below:
(i) a change in Employee's status, title, position or
responsibilities (including reporting responsibilities) which, in
Employee's reasonable judgment, does not represent a promotion
from his status, title, position or responsibilities as in effect
immediately prior to the Change in Control; the assignment to
Employee of any duties or responsibilities which, in Employee's
reasonable judgment, are inconsistent with such status, title,
position or responsibilities immediately prior to the Change in
Control; or any removal of Employee from or failure to reappoint
or reelect him to any of such positions, except in connection
with the termination of his employment for Disability, Cause, as
a result of his death or by Employee other than for Good Reason;
(ii) a reduction in Employee's Base Salary;
(iii) the Company's requiring Employee to be based at
any place outside a 30-mile radius from Costa Mesa, California,
except for reasonably required travel on the Company's business
which is not materially greater than such travel requirements
prior to the Change in Control;
(iv) the failure by the Company to (A) continue in
effect any material compensation or benefit plan in which
Employee was participating at the time of the Change in Control,
or (B) provide Employee with compensation and benefits at least
equal (in terms of benefit levels and/or reward opportunities) to
those provided for under each other employee benefit plan,
program and practice as in effect immediately prior to the Change
in Control (or as in effect following the Change in Control, if
greater);
(v) the insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy of the
Company;
(vi) any material breach by the Company of any material
provision of this Agreement; and
(vii) any purported termination of Employee's
employment for Cause by the Company which does not comply with
the terms of Section 8 of this Agreement.
Any event or condition described in this Section 8(a)(5)(i) through
(vii) which occurs prior to a Change in Control but which (x) was at
the request of a third party who has taken steps reasonably calculated
to effect a Change in Control, or (y) otherwise arose in connection
with a Change in Control, shall (provided that a Change in Control
actually occurs) constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to a Change in Control.
Employee's right to terminate his employment pursuant to this Section
8(a) shall not be affected by his incapacity due to physical or mental
illness.
(b) For purposes of this Agreement, a "Change in Control" shall
mean any of the following:
(1) an acquisition (other than directly from the Company in
the case of voting securities of the Company or from the Parent (as defined
below) in the case of voting securities of the Parent) of any voting
securities (the "Voting Securities") of the Company or its Parent by any
"Person" (as the term person is used for purposes of Section 13(d) or 14(d)
of the Exchange Act) immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than twenty-five percent (25%) of the then outstanding shares
of common stock (the "Shares") of the Company or its Parent (as applicable)
or the combined voting power of the then-outstanding Voting Securities of
the Company or its Parent (as applicable). For purposes of this Agreement,
"Parent" shall mean an entity that owns, directly or indirectly, more than
fifty percent (50%) of the then-outstanding Shares of the Company or the
combined voting power of the then-outstanding Voting Securities of the
Company (including ICN prior to (but only prior to) the Spin-Off);
provided, however, in determining whether a Change in Control has occurred
pursuant to this Section 8(b)(1), Shares or Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A
"Non-Control Acquisition" shall mean an acquisition by (i) an employee
benefit plan (or a trust forming a part thereof) sponsored or maintained by
(A) the Company or its Parent or (B) any corporation or other Person of
which a majority of its voting power or its voting equity securities or
equity interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a "Company Subsidiary") or its Parent (for
purposes of this definition, a "Parent Subsidiary"), (ii) the Company, a
Parent, any Company Subsidiary, any Parent Subsidiary or any of their
affiliates, (iii) any underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined);
(2) The consummation of:
(i) a merger, consolidation or reorganization with or
into the Company or a Parent, as the case may be, or in which securities of
the Company or its Parent are issued (a "Merger"), unless such Merger is a
"Non-Control Transaction." A "Non-Control Transaction" shall mean a Merger
where:
(A) the stockholders of the Company or such Parent
immediately before such Merger own directly or indirectly immediately
following such Merger at least fifty percent (50%) of the combined voting
power of the outstanding voting securities of (x) the corporation resulting
from such Merger (the "Surviving Corporation"), if the Surviving
Corporation has no Parent immediately following such Merger, or (y) the
ultimate Parent of the Surviving Corporation, if there is one or more
Parents of the Surviving Corporation immediately following such Merger; and
(B) the members of the "Incumbent Board" (as
defined below) or the "ICN Incumbent Board" (as defined below), as the case
may be, immediately prior to the execution of the agreement providing for
such Merger, constitute at least a majority of the members of the board of
directors of (x) the Surviving Corporation, if the Surviving Corporation
has no Parent immediately following such Merger, or (y) the ultimate Parent
of the Surviving Corporation, if there is one or more Parents of the
Surviving Corporation immediately following such Merger;
(ii) a complete liquidation or dissolution of the
Company or a Parent, as the case may be; or
(iii) the sale or other disposition of all or
substantially all of the assets of the Company or a Parent, as the case may
be, to any Person (other than (A) a transfer to a Company Subsidiary or
Parent Subsidiary or (B) a transfer under conditions that would constitute
a Non-Control Transaction (with the transfer of assets being regarded as a
Merger for this purpose), (C) the Spin-Off or (D) any other distribution to
the stockholders of the Company or a Parent of the stock of a Company
Subsidiary or a Parent Subsidiary or any other assets); or
(3) the individuals who, at the time of the initial public
offering of the Company, are members of the Board (the "Incumbent Board")
cease for any reason to constitute a majority of the members of the Board
or, following a Merger which results in a Parent, the board of directors of
the ultimate Parent; provided, however, that if the appointment or
election, or nomination for election by the Company's stockholders, of any
new director was approved by a vote of at least two-thirds (2/3) of the
Incumbent Board, such new director shall, for purposes of this Agreement,
be considered as a member of the Incumbent Board; provided further,
however, that no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(4) prior to (but only prior to) the Spin-Off, the
individuals who, as of May 1, 2001, are members of the board of directors
of ICN (the "ICN Incumbent Board") cease for any reason to constitute a
majority of the members of such board of directors or, following a merger,
consolidation or reorganization with or into ICN that results in a Person
owning, directly or indirectly, more than fifty percent (50%) of the
then-outstanding Shares of ICN or the combined voting power of the
then-outstanding Voting Securities of ICN (an "ICN Parent"), the board of
directors of the ultimate ICN Parent; provided, however, that if the
appointment or election, or nomination for election by ICN's stockholders,
of any new director was approved by a vote of at least two-thirds (2/3) of
the ICN Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the ICN Incumbent Board; provided
further, however, that no individual shall be considered a member of the
ICN Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened Election Contest or other actual or
threatened Proxy Contest, including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the
then-outstanding Shares or Voting Securities of the Company or a Parent as
a result of the acquisition by the Company or by a Parent of its Shares or
Voting Securities which, by reducing the number of Shares or Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person; provided, however, that, if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Shares or Voting Securities by the Company,
and after such share acquisition by the Company or by such Parent, the
Subject Person becomes the Beneficial Owner of any additional Shares or
Voting Securities which increases the percentage of the then-outstanding
Shares or Voting Securities of the Company or of such Parent Beneficially
Owned by the Subject Person, then a Change in Control shall occur. In no
event shall the Spin-Off, in and of itself, constitute a "Change in
Control" under this Agreement.
(c) Notice of Termination. Any purported termination by the
Company or by Employee shall be communicated by written Notice of
Termination to the other. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment under the provision so indicated. For
purposes of this Agreement, no such purported termination of employment
shall be effective without such Notice of Termination.
(d) Termination Date. "Termination Date" shall mean in the case
of Employee's death, his date of death, or in all other cases, the date
specified in the Notice of Termination subject to the following:
(1) if Employee's employment is terminated by the Company
for Cause or due to Disability, or voluntarily by Employee (other than for
Good Reason), the date specified in the Notice of Termination shall be at
least thirty (30) days from the date the Notice of Termination is given to
Employee, provided that in the case of Disability Employee shall not have
returned to the full-time performance of his duties during such period of
at least thirty (30) days; and
(2) if Employee's employment is terminated for Good Reason
or without Cause, the date specified in the Notice of Termination shall not
be more than sixty (60) days, and shall not be less than thirty (30) days,
from the date the Notice of Termination is given to the Company.
(e) Transfer of Employment.
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(1) A transfer of Employee's employment between the Company
and the Parent, any subsidiaries or other affiliates of the Company, or
between any divisions of the Company, shall not be deemed a termination of
employment for purposes of this Agreement. In the event of any such
transfer of employment, this Agreement shall remain in full force and
effect, unless otherwise provided in another agreement between Employee and
the Company, the Parent or any of the subsidiaries or affiliates of the
Company to which Employee's employment is so transferred.
(2) Neither the Spin-Off, the Company's initial public
offering, nor the transfer of Employee's employment to the Company from ICN
at any time prior to or upon the Start Date, shall constitute a termination
of employment for purposes of the ICN Pharmaceuticals, Inc. Amended and
Restated 1998 Stock Option Plan or the ICN Pharmaceuticals, Inc. Long-Term
Incentive Plan, and any grants of options or other awards made thereunder
shall continue (whether vested or not vested) pursuant to the terms of such
plans and any of the agreements evidencing such grants.
9. Compensation Upon Termination. Upon termination of Employee's
employment during the term of this Agreement (including any extensions
thereof), Employee shall be entitled to the following benefits:
(a) Cause, Disability, Death or Voluntary Termination (Other Than
for Good Reason). If Employee's employment is terminated by the Company for
Cause or Disability or by Employee (other than for Good Reason), or by
reason of Employee's death, the Company shall pay Employee all amounts
earned or accrued hereunder through the Termination Date but not paid as of
the Termination Date, including (1) Base Salary, (2) reimbursement for any
and all monies advanced or expenses incurred in connection with Employee's
employment for reasonable and necessary expenses incurred by Employee on
behalf of the Company for the period ending on the Termination Date, (3)
vacation pay, (4) any bonuses or incentive compensation and (5) any
previous compensation which Employee has previously deferred (including any
interest earned or credited thereon) (collectively, "Accrued
Compensation"). In addition to the foregoing, if Employee's employment is
terminated by the Company for Disability or by reason of Employee's death,
the Company shall pay to Employee or his beneficiaries (as the case may be)
an amount equal to the annual bonus or incentive award that Employee would
have been entitled to receive in respect of the fiscal year in which
Employee's Termination Date occurs had he continued in employment until the
end of such fiscal year, calculated as if all performance targets and goals
(if applicable) had been fully met by the Company and by Employee, as
applicable, for such year, multiplied by a fraction the numerator of which
is the number of days in such fiscal year through the Termination Date and
the denominator of which is 365 (a "Pro Rata Bonus"). Employee's
entitlement to any other compensation or benefits shall be determined in
accordance with the Company's employee benefit plans and other applicable
programs and practices then in effect.
(b) Without Cause or Good Reason. If Employee's employment by the
Company shall be terminated by the Company other than for Cause, death or
Disability, or by Employee for Good Reason, then Employee shall be entitled
to the benefits provided below:
(i) the Company shall pay Employee all Accrued Compensation
and a Pro Rata Bonus;
(ii) the Company shall pay Employee as severance pay and in
lieu of any further salary for periods subsequent to the Termination Date,
in a single payment, an amount in cash equal to three (3) times the sum of
(A) Employee's Base Salary at the highest rate in effect at any time within
the ninety (90) day period ending on the date the Notice of Termination is
given (or if Employee's employment is terminated after a Change in Control,
Employee's Base Salary immediately prior to the Change in Control, if
greater) and (B) the "Bonus Amount" (as defined below). The term "Bonus
Amount" shall mean (x) the greatest amount of any annual cash bonus or
annual incentive compensation received by Employee during the three (3)
fiscal years immediately preceding the Termination Date or (y) if no such
bonus was received by Employee during any of such three (3) years, then an
amount equal to Employee's maximum annual bonus which could be awarded for
the fiscal year in which the Termination Date occurs had he continued in
employment until the end of such fiscal year, assuming all performance
targets and goals (if applicable) had been fully met by the Company and by
Employee, as applicable, for such year;
(iii) during the thirty-six (36) month period following the
Termination Date, the Company shall at its expense continue on behalf of
Employee and his dependents and beneficiaries the life insurance,
disability, medical, dental and hospitalization benefits which were being
provided to Employee at the time Notice of Termination is given (or, if
Employee is terminated following a Change in Control, the benefits provided
to Employee at the time of the Change in Control, if greater). The benefits
provided in this Section 9(b)(iii) shall be no less favorable to Employee,
in terms of amounts and deductibles and costs to him, than the coverage
provided Employee under the plans providing such benefits at the time
Notice of Termination is given (or, if Employee is terminated following a
Change in Control, at the time of the Change in Control if more favorable
to Employee). The Company's obligation hereunder with respect to the
foregoing benefits shall be limited to the extent that Employee obtains any
such benefits pursuant to a subsequent employer's benefit plans, in which
case the Company may reduce the coverage of any benefits it is required to
provide Employee hereunder as long as the aggregate coverage of the
combined benefit plans is no less favorable to Employee, in terms of
amounts and deductibles and costs to him, than the coverage required to be
provided hereunder. This subsection (iii) shall not be interpreted so as to
limit any benefits to which Employee or his dependents may be entitled
under any of the Company's employee benefit plans, programs or practices
following Employee's termination of employment, including without
limitation, retiree medical and life insurance benefits;
(iv) the Company shall pay in a single payment an amount in
cash equal to the excess of (A) the actuarial equivalent of the aggregate
retirement benefit Employee would have been entitled to receive under the
Company's supplemental and excess retirement plans had (x) Employee
remained employed by the Company for an additional three (3) complete years
of credited service, (y) his annual compensation during such period been
equal to his Base Salary (at the rate used for purposes of subsection (ii))
and the Bonus Amount, and (z) he been fully (100%) vested in his benefit
under each such retirement plan, over (B) the actuarial equivalent of the
aggregate retirement benefit Employee is actually entitled to receive under
such retirement plans. For purposes of this subsection (iv), "actuarial
equivalent" shall be determined in accordance with the actuarial
assumptions used for the calculation of benefits under any retirement plan
as applied prior to the Termination Date in accordance with such plan's
past practices (but shall in any event take into account the value of any
subsidized early retirement benefit); and
(v) notwithstanding anything contained in the Ribapharm Inc.
2002 Stock Option and Award Plan, the ICN Pharmaceuticals, Inc. Amended and
Restated 1998 Stock Option Plan, the ICN Pharmaceuticals, Inc. Long-Term
Incentive Plan, or any grant agreement to the contrary, (A) all
restrictions on any outstanding awards (including restricted stock awards)
granted by ICN, the Company or any subsidiary of the Company to Employee
will lapse and such awards will become fully (100%) vested, and (B) all
stock options and stock appreciation rights granted by ICN, the Company or
any subsidiary of the Company to Employee will become fully (100%) vested
and will become immediately exercisable for the duration of the term
thereof; provided, however, that, except as otherwise provided in the next
sentence, in no event shall any such options or stock appreciation rights
granted by the Company be exercisable prior to the earlier of (x) the
Spin-Off and (y) September 30, 2003 (the "First Exercise Date"). The
restriction on exercise contained in the proviso in the preceding sentence
shall lapse if, prior to September 30, 2003, ICN abandons its plans to
proceed with or complete the Spin-Off (as such abandonment is described in
Section 3.4 of that certain Affiliation and Distribution Agreement by and
between ICN and the Company (the "Distribution Agreement")). In the event
of any such lapse, any option or stock appreciation right granted by the
Company shall become immediately exercisable upon the termination of the
Employee's employment as described in this Section 9(b) without regard to
any such restriction on exercise prior to the First Exercise Date. The
effective date of any such lapse of the restriction shall be the date of
the written notice provided by ICN to the Company indicating its
determination to abandon the Spin-Off, provided that no "Distribution Date"
(as defined in the Distribution Agreement) has occurred as of such date.
(c) The amounts provided for in Sections 9(a) and 9(b)(i), (ii)
and (iv) shall be paid within five (5) days after Employee's Termination
Date.
(d) Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of
any compensation or benefits provided to Employee in any subsequent
employment.
10. Effect of Section 280G of the Internal Revenue Code.
---------------------------------------------------
(a) Notwithstanding anything contained in this Agreement to the
contrary, to the extent that any payment or distribution of any type to or
for the benefit of Employee by the Company, any affiliate of the Company,
any person who acquires ownership or effective control of the Company or
ownership of a substantial portion of the Company's assets (within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations thereunder), or any affiliate of such
person, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (the "Payments") is or will be
subject to the excise tax imposed under Section 4999 of the Code (the
"Excise Tax"), then the Payments shall be reduced (but not below zero) if
and to the extent that a reduction in the Payments would result in Employee
retaining a larger amount, on an after-tax basis (taking into account
federal, state and local income taxes and the Excise Tax), than if Employee
received the entire amount of such Payments. Unless Employee shall have
given prior written notice specifying a different order to the Company to
effectuate the foregoing, the Company shall reduce or eliminate the
Payments, by first reducing or eliminating the portion of the Payments
which are not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination (as
hereinafter defined). Any notice given by Employee pursuant to the
preceding sentence shall take precedence over the provisions of any other
plan, arrangement or agreement governing Employee's rights and entitlements
to any benefits or compensation.
(b) The determination of whether the Payments shall be reduced as
provided in Section 10(a) and the amount of such reduction shall be made at
the Company's expense by an accounting firm selected by the Company from
among the five largest accounting firms in the United States (the
"Accounting Firm"). The Accounting Firm shall provide its determination
(the "Determination"), together with detailed supporting calculations and
documentation to the Company and Employee within ten (10) days of the
Termination Date. If the Accounting Firm determines that no Excise Tax is
payable by Employee with respect to the Payments, it shall furnish Employee
with an opinion reasonably acceptable to Employee that no Excise Tax will
be imposed with respect to any such payments and, absent manifest error,
such Determination shall be binding, final and conclusive upon the Company
and Employee. If the Accounting Firm determines that an Excise Tax would be
payable, Employee shall have the right to accept the Determination of the
Accounting Firm as to the extent of the reduction, if any, pursuant to
Section 10(a), or to have such Determination reviewed by an accounting firm
selected by Employee, at the expense of the Company, in which case the
determination of such second accounting firm shall be binding, final and
conclusive upon the Company and Employee.
11. Employee Covenants.
------------------
(a) Non-Solicit. Employee will not, directly or indirectly
(whether for compensation or otherwise), alone or in concert with others,
for the Non-Solicit Period (defined below), (a) solicit for employment any
employee of the Company or any person who was an employee of the Company
during any part of the two (2) year period preceding Employee's termination
or otherwise encourage any employee to leave the Company's employ, or (b)
solicit any client or customer of the Company or any client or customer
which was a client or customer of the Company during any part of the two
(2) year period preceding Employee's termination. The "Non-Solicit Period"
means the term of this Agreement plus two (2) years from the end thereof.
(b) Non-Compete. During the term of the Agreement, Employee will
not, directly or indirectly (whether for compensation or otherwise), alone
or in concert with others, own, manage, operate, join, control, or
participate in the ownership, management, operation, or control of, or
furnish any capital to, or be connected in any manner with (whether alone
or as a partner, officer, director, employee, agent or shareholder), or
provide any advice or services as a consultant for, any business which
competes with the Company's business or that of any subsidiary,
partnership, corporation, joint venture, or other similar entity of which
the Company is a shareholder, partner, or member as such business may be
conducted from time to time. Notwithstanding the foregoing, Employee may be
a passive investor in a business which competes with the Company's
business, provided Employee's equity holding does not exceed 2% of such
business.
(c) Proprietary Information. Employee agrees to execute and
deliver simultaneously herewith a Proprietary Information and Inventions
Agreement in the form attached hereto as Exhibit A.
12. Settlement of Claims. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment,
defense or other right which the Company may have against Employee or
others.
13. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit Employee's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company
or any of its subsidiaries and for which Employee may qualify, nor shall
anything herein limit or reduce such rights as Employee may have under any
other agreements with the Company or any of its subsidiaries. Amounts which
are vested benefits or which Employee is otherwise entitled to receive
under any plan or program of the Company or any of its subsidiaries shall
be payable in accordance with such plan or program, except as explicitly
modified by this Agreement.
14. Arbitration.
-----------
(a) Procedure. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, will be settled by
arbitration in accordance with the Commercial Rules of the American
Arbitration Association ("AAA"), and those provisions of the AAA Employment
Arbitration Rules determined by the arbitrators as necessary under
applicable law. The arbitration will be binding and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. For controversies or claims involving employment matters only,
there will be one (1) arbitrator mutually selected by the parties within
ten (10) business days from the date of notification made to one of the
parties of the other party's request for arbitration. If the parties fail
to agree upon an arbitrator within such ten (10) days, the AAA will
promptly appoint the arbitrator in accordance with its rules. For all other
controversies or claims, there will be three (3) arbitrators, one
arbitrator selected by the Company and one arbitrator selected by Employee,
which arbitrators will then jointly select the third arbitrator. If any
party fails to nominate an arbitrator within thirty (30) days from the date
of notification made to it of a party's request for arbitration, then the
AAA will appoint the arbitrator in accordance with its rules. The place of
the arbitration will be Los Angeles, California. All arbitrators will have
at least ten (10) years experience in commercial or employment-related
transactions. The arbitration will commence within sixty (60) days after
appointment of the arbitrators and will continue uninterrupted, unless
otherwise suspended by the arbitrators for good cause, for not longer than
one hundred twenty (120) days (including without limitation any discovery
permitted by the arbitrators). The arbitrators will, within such one
hundred twenty (120) day period, render a written decision with findings of
fact and conclusions of law and deliver such decision to the parties.
(b) Judicial Relief. Notwithstanding Section 14(a), nothing
contained in this Agreement will prevent or be construed to prevent any
party from seeking a temporary restraining order, preliminary injunction,
other form of interim, provisional, or temporary equitable relief, or the
enforcement of any award delivered pursuant to Section 14(a) in any court
of competent jurisdiction.
15. Fees and Expenses. The Company shall pay all legal fees,
arbitration costs and related expenses (including the costs of experts,
evidence and counsel) incurred by Employee as they become due as a result
of (i) Employee's termination of employment (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination
of employment), (ii) Employee's hearing before the Board as contemplated in
Section 8(a)(3) of this Agreement, or (iii) Employee's seeking to obtain or
enforce any right or benefit provided by this Agreement or by any other
plan or arrangement maintained by the Company under which Employee is or
may be entitled to receive benefits.
16. Survival. In the event that Employee's employment by the
Company is terminated pursuant to the provisions set forth under Section 8
hereof or otherwise, this Agreement shall then also terminate; provided,
however, that the rights and obligations set forth under Sections 9, 10,
11, 14 and 15 of this Agreement shall survive until such rights and
obligations are fully satisfied in accordance with the terms set forth
herein.
17. Miscellaneous.
-------------
(a) Amendment; Waiver. This Agreement may not be amended or
otherwise modified or its provisions waived except by an instrument in
writing signed, in the case of an amendment or modification, by all parties
hereto and, in the case of waiver, by the party sought to be charged. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(b) Severability. In the event that any one or more of the
provisions of this Agreement are held to be invalid, illegal, or
unenforceable by a court of competent jurisdiction in a jurisdiction, such
invalidity, illegality, or unenforceability in such jurisdiction will not
affect any of the other provisions hereof, which will nevertheless remain
in full force and effect, this Agreement will be construed as if such
invalid, illegal, or unenforceable provision had never been contained
herein, and such determination will have no effect on this Agreement in any
other jurisdiction.
(c) Successors and Assigns.
----------------------
(1) Company. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns and the
Company shall require any successor or assign to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or
assignment had taken place. The term "the Company" as used herein shall
include such successors and assigns. The term "successors and assigns" as
used herein shall mean a corporation or other entity acquiring all or
substantially all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
(2) Employee. Neither this Agreement nor any right or
interest hereunder shall be assignable or transferable by Employee, his
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure to the benefit of and
be enforceable by Employee's legal personal representative.
(d) Third Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their respective successors-in-interest
and permitted assigns. No other person is entitled to rely upon or receive
any benefit from this Agreement.
(e) Entire Agreement. This Agreement, the Proprietary Information
and Inventions Agreement, and the other documents and certificates
delivered pursuant to the terms hereof, constitute the entire agreement of
the parties hereto in respect of the subject matter contemplated herein.
There are no restrictions, promises, representations, warranties,
covenants, or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior discussions,
negotiations, correspondence, agreements, and understandings between
Employee and the Company and/or any of its affiliates with respect to the
subject matter contemplated herein. Without limiting the generality of the
immediately foregoing sentence, as of the Start Date, the employment
agreement by and between Employee and ICN, dated November 16, 2001, shall
be terminated in all respects without any liability to the Company, ICN or
any of their affiliates therefore.
(f) Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last
given by each party to the other, provided that all notices to the Company
shall be directed to the attention of the Board with a copy to the
Secretary of the Company. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the third business
day after the mailing thereof, except that notice of change of address
shall be effective only upon receipt.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(h) Captions. The headings of the sections of this Agreement are
inserted for convenience of reference only, do not constitute a part
hereof, and do not affect in any way the meaning, interpretation, or
enforcement of this Agreement.
(i) Governing Law. This Agreement and the rights and obligations
of the parties hereunder will be governed by, and construed and interpreted
in accordance with, the laws of the State of California without giving
effect to the choice of law provisions thereof. Solely for purposes
relating to seeking equitable relief set forth in Section 14 hereof, each
party hereby submits to the non-exclusive jurisdiction of the federal or
state courts located in California with respect to any claim or matter
arising under this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and Employee has executed this
Agreement as of the Start Date.
RIBAPHARM INC.:
ATTEST: By: /s/ Xxxxxx Xxxxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxxxx
Title: SVP, Chief Financial Officer
/s/ Xxxxx X. Xxxxxx, Xx.
---------------------------
Xxxxx X. Xxxxxx, Xx.
Secretary
EMPLOYEE:
By: /s/ Xxxxx X. Xxxxxx, Xx.
------------------------------------
Xxxxx X. Xxxxxx, Xx.
ICN Pharmaceuticals, Inc. hereby agrees to be bound by the
provisions of Sections 4, 8(e), 9(b)(v) and 17(e) of the foregoing
Employment Agreement (but only to the extent such provisions impose
obligations upon ICN Pharmaceuticals, Inc.).
ICN PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
