EMPLOYMENT AGREEMENT
Exhibit 10(e)(vi)
This Agreement is made by and between Schering-Plough Corporation, a New Jersey Corporation
(the “Company”), and Xxxx Xxxxx (the “Executive”), as of the 19th day of December, 2006
(the “Commencement Date”). This Agreement is a restatement of and supersedes and replaces (i) the
letter from the Company to Executive dated October 31, 1990 describing the terms of your transfer
of employment to Kenilworth, New Jersey, and (ii) the change of control Employment Agreement
between the Company and the Executive dated as of September 27, 1994 (as amended).
Definitions applicable to capitalized terms not defined where first mentioned below are set
forth in Section 7 of this Agreement.
1. Employment Period.
Executive joined the Company on June 15, 1984. Beginning on the Commencement Date until the
fifth anniversary thereof and for successive one-year periods thereafter (the “Employment Period”),
the Company agrees to continue in its employ and the Executive hereby agrees to remain in the
employ of the Company in accordance with the terms and conditions of this Agreement, provided,
however, that either party may terminate the Employment Period by providing the other party with
written notice of such termination at least one-year prior to the fifth anniversary (or any
subsequent anniversary) of the Commencement Date on which such termination is to be effective.
Subject to the Company’s obligation to provide severance benefits as may be specified in this
Agreement and except as otherwise specifically provided 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.
2. Duties and Scope of Employment.
(a) Position. During the Employment Period, the Company shall continue to employ
Executive as President, Animal Health and Group Head GSO 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 shall continue
to serve as an officer of the Company, and be a member of the Executive Management Team (the
“EMT”).
(b) Duties. During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention
and time during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities and duties assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities
and duties. During the Employment Period it shall not be a violation of this Agreement for the
Executive to (i) serve on civic or charitable boards or committees, or with the
written approval of the CEO, on corporate boards or committees, (ii) deliver lectures, fulfill
speaking engagements or teach at educational institutions, and (iii) manage personal investments,
so long as such activities do not significantly interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with this Agreement.
3. Compensation.
During the Employment Period, the Company shall pay Executive the following as compensation
for services to the Company:
(a) Base Salary. Executive’s annualized base salary is currently $485,000 less
applicable deductions payable in accordance with the Company’s normal payroll practices as in
effect from time to time for its senior executives. From time to time and at least annually,
Executive’s base salary shall be subject to review and increase above Executive’s then current base
salary pursuant to the Company’s normal review policy for other similarly situated senior
executives of the Company. Executive’s base salary shall not be subject to any decrease without
Executive’s consent.
(b) Operations Management Team Incentive Plan. During the Employment Period,
Executive shall be eligible to participate in the Company’s Operations Management Team Incentive
Plan or any successor or replacement plan (the “Incentive Plan”) at a level determined by the
Compensation Committee of the Board of Directors or its delegate (the “Compensation Committee”) to
be appropriate based on Executive’s position, job performance and Company policy. Executive’s
current target annual incentive under the Incentive Plan is 60% of Executive’s annual base salary.
Executive’s target annual incentive as a percentage of base salary shall not be subject to any
decrease without Executive’s consent. Payment of incentive compensation, if the performance
criteria determined by the Compensation Committee are met, will be made by March 15 of the year
following the relevant Incentive Plan year, unless Executive elects to defer payment pursuant to an
applicable deferred compensation plan of the Company.
(c) Long Term Incentive Plans. Executive is, and shall remain, a participant at the
levels determined by the Compensation Committee, in the (i) Schering-Plough Corporation Cash Long
Term Incentive Plan and the Schering-Plough Corporation Long-Term Performance Share Unit Incentive
Plan for the performance period beginning January 1, 2004 and ending December 31, 2006, and (ii)
Schering-Plough Corporation Transformational Performance Contingent Shares Program for the
performance period beginning January 1, 2004 and ending December 31, 2008. Executive shall
participate in successor or replacement plans at a level determined by the Compensation Committee.
(d) Incentive Equity Awards. During the Employment Period, Executive shall be
eligible to participate in the Company’s 2006 Stock Incentive Plan and any successor or replacement
plan, in accordance with the terms of the Stock Plan and any applicable grants (except as provided
herein), at a level determined by the Compensation Committee.
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4. Enhanced Benefits and Perquisites.
(a) General Benefits. During the Employment Period, Executive shall, 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 shall be entitled to
post-retirement welfare benefits on the same terms as such benefits are made available by the
Company to its senior executives at the time of Executive’s retirement. If, however, Executive’s
participation in any such plan or program could result in adverse or unintended tax consequences to
any participant in such plan or program, the Company shall be entitled to pay to Executive the cost
of equivalent benefits outside such plan or program or provide Executive with substantially
equivalent benefits through a separate program without regard to the tax treatment applicable to
such payment or separate program in lieu of permitting the Executive to participate in such
program.
(b) Supplemental Executive Retirement Plan. Executive shall participate in the
Company’s SERP.
(c) Executive Life Insurance. During the Employment Period, Executive shall be
eligible for Executive Life Insurance coverage with a face amount of $1,750,000 in accordance with
the terms of the Company’s Executive Life Insurance program.
(d) Vacation. During the Employment Period, Executive shall be entitled to four weeks
paid vacation per annum, subject to adjustment in accordance with the Company’s normal vacation
policies applicable to senior executives.
(e) Relocation Benefits. Executive acknowledges that the Company may, at any time
during the Employment Period, relocate his place of employment to such location as may at that time
constitute the Company’s principal offices. Executive shall be entitled to relocation benefits
pursuant to the Company’s relocation benefit program.
(f) Expenses. Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by Executive during the Employment Period for business purposes in
accordance with the policies, practices, and procedures of the Company and its Affiliated Companies
provided generally to other peer executives of the Company and its Affiliated Companies.
(g) Fringe Benefits. During the Employment Period, Executive shall be entitled to
fringe benefits as in effect generally with respect to senior executives of the Company and its
Affiliated Companies. As of the date of this Agreement, these fringe benefits include tax and
financial planning services. Executive shall be entitled to prompt reimbursement (in no event to
be made later than two and one half months after the year in which the costs were incurred) for (i)
financial planning services in an amount up to $8,000 in the first year of utilization and up to
$5,000 annually thereafter as needed, and (ii) tax preparation in an amount up to $2,500 annually.
Executive shall first submit invoices for such services to the Company for payment and seek
reimbursement if unpaid. To the extent required by applicable law, such fringe benefits
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shall result in imputed income which shall be subject to withholding from the Executive’s
wages in the amount and manner prescribed by such law.
(h) Office and Support Staff. During the Employment Period, Executive shall be
entitled to an office or offices of a size and with furnishings and other appointments, and to
personal secretarial and other assistance on the same or similar terms as those provided generally
to senior executives of the Company and its Affiliated Companies.
(i) Directors and Officers Insurance. The Company will not diminish the amount or
change the type of Directors and Officers Liability insurance coverage applicable to Executive (as
an executive during the Employment Period and as a former executive thereafter), as in effect on
the date of this Agreement, without his advance written consent.
5. Cause, Voluntary, Involuntary and Good Reason Terminations.
(a) Death, Disability, Cause and Voluntary Terminations without Good Reason. If,
during the Employment Period, Executive’s employment is terminated due to Executive’s death or
Disability, by the Executive without Good Reason or by the Company for Cause, the Company shall
have no obligation to the Executive other than the obligation to promptly pay to the Executive his
unpaid accrued base salary through the Termination Date and to pay or provide, promptly when due,
any Other Benefits, as well as payments or benefits required by applicable law.
(b) Involuntary and Good Reason Terminations. If, during the Employment Period,
Executive’s employment is terminated by the Company other than for Cause, Disability or by
non-renewal of the Employment Period pursuant to Section 1, or if the Executive terminates
employment for Good Reason, the Company shall provide the Executive with the Other Benefits
promptly when due. In addition, provided that the Executive signs a Satisfactory Release within 35
days following the Termination Date and the Executive and does not revoke it within 7 days after
the date he executes such Release, then Executive shall be entitled to:
(i) payment, within 30 days following the effective date of the Satisfactory Release, of a
severance benefit equal to the product of two multiplied by the sum of the Executive’s current base
salary plus the highest target incentive opportunity under the Incentive Plan for any of the past
three years (each as in effect immediately prior to the Executive’s Termination Date but without
regard for any reduction that constituted the grounds, or part of the grounds, for Executive’s Good
Reason termination);
(ii) during the 2-year period following Executive’s employment termination, continue to
participate in the Company’s health and welfare programs applicable to, and (to the extent
permissible under applicable law) on the same terms as, other senior executives of the Company at
the time of the termination of the Executive’s employment; provided, however that such benefits
shall cease on the date that Executive becomes eligible for similar benefits from a new employer
and Executive shall notify the Company in writing of such benefits eligibility within 30 days
following the effective date of Executive’s benefits eligibility from the new employer; and
provided further, that if Executive’s participation in any such program of the Company could result
in adverse or unintended tax consequences to any participant in such
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program (including the Executive), the Company shall be entitled to provide Executive with
substantially equivalent benefits through a separate program (including the provision of such
benefits through the purchase of insurance) without regard to the tax treatment applicable to such
separate program in lieu of permitting the Executive to participate in such program;
(iii) payment, within 30 days following the effective date of the Satisfactory Release, of the
Enhanced SERP Benefit; and
(iv) credit for two additional years of service and age for purposes of determining
eligibility for coverage and rate of contribution under the Company’s retiree medical plan or any
replacement or successor plan.
For purposes of this provision, “Satisfactory Release” shall mean a release of claims in a form
reasonably prescribed by the Company that (1) releases, and forever discharges, all claims that
Executive has or may have against the Company and its Affiliated Companies and its and their
employees, directors and agents (other than claims relating to Other Benefits), and (2) becomes
irrevocable if not revoked by Executive within seven (7) days after he signs it; provided that the
form of release shall not contain any post-employment covenants, including those covenants to which
the Executive may be subject pursuant to Subsection 5(c) below or otherwise.
(c) Non-competition and Non-solicitation. In the event of voluntary termination of
the Executive’s employment during the Employment Period by the Executive without Good Reason (i)
the Executive shall not engage in Competition (as defined below) during the one-year period
immediately following Executive’s termination of employment, and (ii) the Executive shall not
engage in Solicitation (as defined below) during the two-year period immediately following
Executive’s termination of employment. For purposes of this Section 5, the term Competition shall
mean that Executive, without the written approval of the CEO, commences employment with, or
provides consulting services to, any pharmaceutical enterprise that is engaged in research,
development, and/or sales of human and/or pharmaceutical products (unless sales from pharmaceutical
products constitute less than 20% of total sales of the company conducting the enterprise and the
consolidated affiliates of that company); provided that service solely as a member of the Board of
Directors of a company whose annual sales are less than $100 million on a consolidated basis with
all affiliated companies shall not be considered Competition. Further, the term Competition
specifically excludes (i) companies whose primary purpose is to provide consulting and/or audit
services so long as those companies have revenues in excess of $100 million, and (ii) law firms
whose primary purpose is to provide legal services. For purposes of this Section 5, the term
Solicitation shall mean that without the written approval of the CEO or his delegate, the
Executive, directly or indirectly, solicits, encourages or participates in the solicitation or
hiring of, any person who is currently an employee of the Company or independent contractor doing
business with the Company or who was an employee of the Company at any time during the last three
(3) months of the Employment Period by any employer other than the Company for any position as an
employee, independent contractor, consultant or otherwise; provided that the Executive shall not be
considered to have engaged in Solicitation for purposes of this Section 5 if an employer other than
the Company solicits or hires, with no participation or involvement by the Executive, any current
or former employee, independent contractor or consultant of the Company who is not or was not
employed in, or providing direct services to, a business area of the Company for which Executive
(immediately
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prior to the termination of his employment) had no direct authority or responsibility; and
provided further that the term Solicitation shall not preclude Executive from giving references.
6. Change of Control.
(a) General. In the event of any Change of Control following the effective date of
this Agreement and during the Employment Period, Subsection 6(b) shall supersede Section 2;
Subsection 6(d) shall supersede Subsection 3(a); Subsection 6(e) shall supersede Subsections 3(b);
Subsections 6(f) through (i) shall supersede Section 5; and the other provisions of this Section 6
shall supplement the other provisions of Sections 3 and 4; in each case until the expiration of the
COC Employment Period triggered by such Change of Control. If the Executive’s employment is not
terminated before the end of the applicable COC Employment Period, immediately following such COC
Employment Period, the provisions of this Section 6 shall cease to apply unless and until another
Change of Control occurs during the Employment Period and the provisions of Sections 2, 3(a), 3(b)
and 5 shall again apply if the Employment Period has not yet expired. Effective upon the
termination of Executive’s employment for any reason during a COC Employment Period, any previous
restrictions imposed under this Agreement or any other agreement upon the Executive regarding
engaging in post-termination competitive activity against the Company or soliciting current or
former employees or independent contractors of the Company shall immediately cease to be
applicable.
For purposes of this Section 6, if (i) the Executive’s employment with the Company is
terminated prior to a Change of Control, (ii) the Executive reasonably demonstrates that such
termination of employment either (A) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or a Section 409A Change in Control Event or
(B) otherwise arose in connection with or in anticipation of a Change of Control or a Section 409A
Change in Control Event and (iii) a Section 409A Change in Control Event is actually consummated,
then such termination shall be deemed to have occurred during a COC Employment Period.
(b) Position and Duties. During a COC Employment Period, (i) the Executive’s position
(including status, offices, titles and reporting relationships and requirements), authority, duties
and areas and scope responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during the 120-day period
immediately preceding the COC Employment Period; and (ii) the Executive’s services shall be
performed at the location where the Executive was employed immediately preceding any such Change of
Control or any office or location less than 35 miles from such location and that is not in a
different state than such location. It is expressly understood and agreed that to the extent that
any activities have been conducted by the Executive during the three years immediately prior to a
Change of Control, the reinstatement or continued conduct of such activities (or the reinstatement
or conduct of activities similar in nature and scope thereto) subsequent to any related Change of
Control shall not thereafter be deemed to interfere with the performance of the Executive’s
responsibilities to the Company and its subsidiaries.
(c) Incentive Compensation, Employee Benefits and Fringe Benefits. Except as
otherwise set forth in this Agreement, during a COC Employment Period, the Executive (and eligible
family members or dependents, as applicable) shall be entitled to participate in all
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incentive, profit-sharing, stock option, stock award, savings and retirement, and health and
welfare benefit plans (including, without limitation, medical, prescription, dental, disability,
employee life, group life, accidental death and travel accident insurance plans and programs)
practices, policies and programs and to receive paid vacation, fringe benefits, and expense
reimbursement, all as applicable generally to other peer executives of the Company and its
Affiliated Companies, but in no event shall such plans, practices, policies, programs and benefits
provide the Executive with incentive opportunities (cash or equity), savings opportunities,
retirement benefit opportunities, health and welfare benefits, vacation pay, fringe benefits, and
expense reimbursement, which are, in each case, less favorable in the aggregate, than the most
favorable of those provided by the Company and its Affiliated Companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the 120-day period
immediately preceding the Change of Control, or if more favorable to the Executive, those provided
generally at any time thereafter to other senior executives of the Company and its Affiliated
Companies.
(d) Annual Base Salary. During a COC Employment Period, the Executive shall receive,
in accordance with the Company’s normal payroll practices in effect from time to time for its
senior executives, an Annual Base Salary which shall be reviewed no more than 12 months after the
last salary increase awarded to the Executive prior to the beginning of the COC Employment Period
and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be
reduced after such an increase and the term Annual Base Salary as used in this Section 6 shall
refer to Annual Base Salary as so increased.
(e) Annual Bonus. In addition to Annual Base Salary, for each fiscal year ending
during a COC Employment Period, Executive shall be awarded an annual bonus in cash at least equal
to the Executive’s highest target incentive opportunity under the Incentive Plan for any of the
past three years (the “Annual Bonus”). Each such Annual Bonus shall be paid no later than the
15th day of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall have elected to defer the receipt of such
Annual Bonus in accordance with an applicable deferred compensation plan of the Company.
(f) Death. The Executive’s employment shall terminate automatically upon the
Executive’s death during a COC Employment Period without further obligation to the Executive’s
legal representative’s under this Agreement other than for payment of any Unpaid Accrued
Obligations and any Other Benefits which shall be at least equal to the most favorable benefits
provided by the Company and Affiliated Companies to the estates and beneficiaries of senior
executives of the Company and such affiliated companies under such plans, programs, and policies
relating to death benefits and survivor benefits as in effect at any time during the 120-day period
immediately prior to the COC Employment Period, or if more favorable to the Executive’s estate
and/or beneficiaries, as in effect on the date of the Executive’s death with respect to other peer
executives of the Company and their beneficiaries. Unpaid Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the
Termination Date, and the Other Benefits shall be provided promptly when due.
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(g) Disability. If the Company determines in good faith that the Disability of the
Executive has occurred during a COC Employment Period, it may give the Executive Notice of
Termination. In such event, the Executive’s employment with the Company shall terminate effective
on the Termination Date, provided that, within the 30 days after Executive’s receipt of the Notice
of Termination, the Executive shall not have returned to full-time performance of the Executive’s
duties. In the event of Executive’s termination of employment due to Disability, Unpaid Accrued
Obligations shall be paid in cash to the Executive within 30 days following the Termination Date,
and the Other Benefits shall be provided promptly when due.
(h) Termination for Cause or Voluntary Termination without Good Reason. If the
Executive’s employment shall be terminated by the Company for Cause or voluntarily by the Executive
without Good Reason during the COC Employment Period, the Employment Period shall terminate and the
Company shall have no further obligations to the Executive other than the obligation to pay the
Executive (i) his unpaid Annual Base Salary through the Termination Date, and (ii) any unpaid Other
Benefits. In such case, all Unpaid Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days following the Termination Date, and the Other Benefits shall be provided
promptly when due.
(i) Termination for Good Reason or without Cause. If, during the COC Employment
Period, the Executive’s employment shall be terminated by the Company other than for Cause or
Disability or by the Executive for Good Reason, the Company shall:
(1) within 30 days following the Executive’s Termination Date, pay the Executive a single sum
cash amount equal to the sum of (i) the Unpaid Accrued Obligations; (ii) the product of three (or
the number of whole and partial years from the Executive’s Termination Date until his
65th birthday, if less) multiplied by the sum of the Executive’s Annual Base Salary,
plus the Executive’s Annual Bonus, plus the greater of the Highest Profit Sharing Contribution or
the highest aggregate Company contribution to the Executive’s account under the Company’s
qualified and nonqualified defined contribution retirement plans for any of the three years
immediately preceding the Executive’s Termination Date; and (iii) the Executive’s Enhanced SERP
Benefit; and
(2) for the lesser of (x) three years after the Executive’s Termination Date and (y) the
period through the Executive’s 65th birthday, continue health and welfare benefits to
the Executive (and the Executive’s family, if applicable) at least equal to those which would have
been provided in accordance with Subsection 6(c) hereof had the Executive not been terminated or,
if more favorable to the Executive, as in effect generally at any time thereafter with respect to
other senior executives of the Company and its Affiliated Companies and their families; provided
that such benefits coverage shall be secondary to any health and welfare benefits coverage for
which the Executive becomes eligible under any plan or arrangement sponsored by a subsequent
employer of the Executive; and provided further, that if Executive’s participation in any such
program could result in adverse or unintended tax consequences to any participant in such program
(including the Executive), the Company shall be entitled to provide Executive with substantially
equivalent benefits through a separate program (including the provision of such benefits through
the purchase of insurance) without regard to the tax treatment applicable to such separate program
in lieu of permitting the Executive to participate in such program;
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(3) to the extent not theretofore paid or provided, pay or provide to the Executive all Other
Benefits promptly when due;
(4) waive any and all “reduction factors” imposed as a result of Executive’s age with respect
to the Executive’s nonqualified supplemental or excess employee pension benefit plan if the
Executive is at least age 50 as of the Termination Date; and
(5) if the Executive is age 50 or greater as of the Termination Date, provide the Executive
with coverage under the terms of the Company’s retiree medical plan (effective at the end of the
post-employment period of extended health coverage) without regard to years of service for
eligibility purposes but assuming the maximum Company-provided subsidy (if any) applies and
applying 3 additional years of service credit for purposes of rate of contribution under such plan
or any replacement or successor plan; provided, however that if the Executive is age 45 or older at
the end of the post-employment period of extended health coverage, provide the Executive, upon
reaching age 55 and upon reaching the end of the period of extended health coverage following
Executive’s Termination Date pursuant to Subsection 6(i)(2) hereof, with eligibility for the
Company’s retiree medical plan or any replacement or successor plan (including, without limitation,
any supplemental coverage applicable to executives) as if the Executive had, as of the Termination
Date, satisfied the age and service conditions for such plans and assuming the maximum
Company-provided subsidy (if any) applies.
7. Definitions.
(a) “Affiliated Company” shall mean any corporation or other entity controlled by, controlling
or under common control with the Company.
(b) “Annual Base Salary” shall mean an annual base salary at least equal to 24 times the
highest semi-monthly base salary paid or payable, including (without limitation) any base salary
which has been earned but deferred, to Executive by the Company and its Affiliated Companies in
respect of any month in the 12-month period immediately preceding the month in which a Change of
Control occurs.
(c) “Annual Bonus” shall have the meaning set forth in Subsection 6(e) of this Agreement.
(d) “Cause” shall mean termination initiated by the Company (with advance approval by the
Compensation Committee of the Board of Directors) or by the Executive incident to or connected
with (i) Executive’s conviction relating to charges that the Executive engaged in
misappropriation, theft, embezzlement, kick-backs, or bribery whether in connection with
Executive’s employment with the Company or otherwise, or (ii) the Company’s reasonable
determination that Executive has engaged in other deliberate, gross or willful misconduct or
dishonest acts or omissions (including, but not limited to, commission of a felony) resulting in
significant harm to the Company.
(e) “Change of Control” shall mean the happening of any of the following events:
(1) the acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning of Rule 00x 0
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xxxxxxxxxxx xxxxx xxx Xxxxxxxx Xxx) of securities of the Company where such acquisition
causes such Person to own 20% or more of either (x) the then outstanding shares of common stock of
the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of
this subsection (1), the following acquisitions shall not be deemed to result in a Change of
Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (3) of this
Section 7(e); and provided, further, that if any Person’s beneficial ownership of the Outstanding
Company Voting Securities reaches or exceeds 20% as a result of a transaction described in clause
(A) or (B) above, and such Person subsequently acquires beneficial ownership of additional voting
securities of the Company, such subsequent acquisition shall be treated as an acquisition that
causes such Person to own 20% or more of the Outstanding Company Voting Securities; or
(2) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(3) consummation of a reorganization, merger, statutory share exchange or consolidation or
similar corporate transaction involving the Company or any of its subsidiaries, or a sale or other
disposition of all or substantially all of the assets of the Company or the acquisition of assets
or stock of another entity by the Company or any of its subsidiaries (each, a “Business
Combination”), in each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (B) no Person (excluding any corporation resulting from such Business Combination
or any employee benefit plan (or related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting
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power of the then outstanding voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(4) approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
(f) “COC Employment Period” shall mean the period from the date on which a Change of Control
occurs until the earlier of the third anniversary of such date or the Executive’s 65th
birthday.
(g) “Confidential Information” shall mean information disclosed to the Executive or known to
the Executive as a result of employment by the Company, not generally known to the trade of
industry in which the Company is engaged, concerning the Company’s products, processes, machines,
services, and operations, including research, development, manufacturing, purchasing, finance,
data processing, engineering, marketing, merchandising and selling, and corresponding information
about the product, processes, machines, services and operations of any third party with which the
Company is in a technical or commercial cooperation, acquired by the Executive during employment
by the Company. Included in the foregoing by way of illustration and not limitation are such
items as research products, findings or reports, business plans, formulae, processes, methods of
manufacture, sales, costs, pricing data, new drug, cosmetic or device data, and lists of suppliers
and customers.
(h) “Disability” shall mean the absence of the Executive from the Executive’s duties with the
Company on a full-time basis for 180 consecutive days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the Executive’s legal representative.
(i) “Enhanced SERP Benefit” shall mean an amount equal to the excess of (i) the sum of (A) the
lump-sum actuarial equivalent (as of the date that the Enhanced SERP Benefit is paid to the
Executive or his beneficiaries (the “SERP Payout Date”)) of the normal retirement benefit under the
Company’s Retirement Plan (utilizing actuarial assumptions no less favorable to the Executive than
those in effect under the Retirement Plan immediately prior to the Executive’s Termination Date)
and (B) the lump-sum actuarial equivalent of the normal retirement benefit under the SERP (as of
the SERP Payout Date and utilizing actuarial assumptions no less favorable to the Executive than
those in effect under the SERP immediately prior to the Executive’s Termination Date) which the
Executive would have received if the Executive’s employment had continued for two years (or three
years if the Date of Termination occurs during a COC Employment Period) after the Executive’s
Termination Date or through age 65, if sooner, assuming for this purpose that all accrued benefits
were fully vested, and, if the Termination Date occurs during a COC Employment Period, assuming
that the Executive’s compensation in each of the three years (or the shorter period to age 65, if
applicable) would have been that required by Subsections 6(d) and 6(e) of this Agreement, over (ii)
the lump-sum actuarial equivalent (as of the SERP Payout Date) of the Executive’s actual normal
retirement
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benefit (paid or payable), if any, under the Retirement Plan and the SERP based on actual age,
service and compensation as of the Executive’s Termination Date.
(j) “Good Reason” shall mean any of the events described in (1)-(4) below if the Company fails
to cure such events within 20 business days after receiving notice thereof from the Executive:
(1) the assignment to the Executive of any duties that are materially inconsistent with the
Executive’s education, training and experience, or a significant diminution in the Executive’s
authorities, responsibilities, status or title (as described in Section 2 or Subsection 6(b) of
this Agreement, as applicable), it being understood that (x) a change in the person to whom the
Executive reports or (y) modifications to organizational responsibilities resulting in changes to
Executive’s functional areas of responsibility that do not significantly diminish Executive’s core
role in the Company would not constitute “Good Reason”;
(2) any significant reduction by the Company of the Executive’s total compensation in the
aggregate, unless such reduction was part of a reduction approved by the Company’s Board of
Directors (or a Committee thereof) for a group of senior executives in addition to the Executive;
(3) during a COC Employment Period, the Executive ceases to be subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934 with respect to a continuing
or successor company; or
(4) during a COC Employment Period, any failure by the Company to comply with any of the
provisions of Subsections 6(b) through 6(e) of this Agreement.
(k) “Highest Profit Sharing Contribution” shall mean the annual aggregate of the highest
contributions made under the Company’s Profit Sharing Incentive Plan and the highest hypothetical
contributions made under the Company’s Profit Sharing Benefits Equalization Plan or any successor
or replacement plans thereto, for any of the three calendar years preceding the Executive’s
Termination Date.
(l) “Invention(s)” shall mean any discovery, improvement, process, product, or device
conceived, discovered or made by the Executive during the Employment Term, or after the Employment
Term based on Confidential Information, either solely or jointly with others, whether patentable or
not, which is related to the actual or anticipated business or activities of the Company, or
related to its actual or anticipated research development, or suggested by or resulting from any
tasks assigned to the Executive or work performed by the Executive for or on behalf of the Company,
or with the use of Company facilities, materials or personnel.
(m) “Notice of Termination” shall mean a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and (iii) if the Termination Date (as
defined below) is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving of such notice). The failure by
the Executive or the Company to set forth in the Notice of Termination any fact or circumstance
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which contributes to a showing of Good Reason or Cause shall not waive any right of the
Executive or the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.
(n) “Other Benefits” shall mean all amounts or benefits other than Unpaid Accrued Obligations
required to be paid or provided or which the Executive (or his beneficiaries) is eligible to
receive under the applicable terms of any plan, program, agreement, corporate governance document,
or other arrangement of the Company or any Affiliated Company.
(o) “Retirement Plan” shall mean the Company’s defined benefit retirement plan.
(p) “Section 409A Change in Control Event” shall mean the happening of any of the following
events:
(1) the acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of securities of the Company where such
acquisition causes such Person to own more than 50% of either (x) the then outstanding Shares of
the Company (the “Outstanding Shares”) or (y) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Voting Securities”); provided, however, that for purposes of this subsection (1) the
following acquisitions will not constitute a Section 409A Change in Control Event: (A) any
acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection (3) below; and provided,
further, that if any Person’s beneficial ownership of the Outstanding Shares or Outstanding Voting
Securities reaches or exceeds 50% as a result of a prior transaction, and such Person subsequently
acquires beneficial ownership of additional Shares or additional voting securities of the Company,
such subsequent acquisition will not be treated as an acquisition that causes such Person to own
more than 50% of the Outstanding Shares or Outstanding Voting Securities;
(2) during any 12-month period, individuals who, as of the first day of such period,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director subsequent to the
beginning of such 12-month period whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board will be considered as though such individual were a member of the Incumbent Board;
(3) consummation of a reorganization, merger, statutory share exchange or consolidation or
similar corporate transaction involving the Company, or the acquisition of assets or stock of
another entity by the Company (each a “Business Combination”), in each case, unless, following such
Business Combination, (A) all or substantially all of the individuals and entities who were
beneficial owners, respectively, of the Outstanding Shares or Outstanding
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Voting Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectfully, the then outstanding shares of the common
stock and the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Shares and Outstanding Voting
Securities, as the case may be, (B) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns, directly or indirectly,
more than 50% of, respectfully, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the then outstanding
voting securities of such corporation, except to the extent that such ownership existed prior to
the Business Combination and (C) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were members of the Incumbent Board on the
later of (x) the time of the execution of the initial agreement, (y) the action of the Board
providing for such Business Combination or (z) the beginning of the 12-month period ending on the
effective date of the Business Combination;
(4) any one Person acquires (or has acquired during any 12-month period ending on the date of
the most recent acquisition by such Person) assets of the Company having a fair market value equal
to or more than 40% of the total gross fair market value of all of the assets of the Company
immediately prior to such sale, other than an acquisition by (A) a Person who was a shareholder of
the Company immediately before the asset acquisition in exchange for or with respect to such
Person’s Shares, (B) an entity whose total or voting power immediately after the transfer is at
least 50% owned, directly or indirectly, by the Company, (C) a person or group that, immediately
after the transfer, directly or indirectly owns at least 50% of the total value or voting power of
the outstanding stock of the Company or (D) an entity whose total value or voting power
immediately after the transfer is at least 50% owned, directly or indirectly, by a person described
in clause (C) above; or
(5) the complete liquidation of the Company.
The definition of Section 409A Change in Control Event for purposes of this Agreement is
intended to conform to the description of “Change in Control Events” in Treas. Prop. Reg.
1.409A-3(g)(5), or in subsequent IRS guidance describing what constitutes a Change in Control Event
for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
Accordingly, no Section 409A Change in Control Event will be deemed to occur with respect to a
transaction or event described in paragraphs (1) through (5) above unless the transaction or event
would constitute a “Change in Control Event” as described in Treas. Prop. Reg. 1.409A-3(g)(5), or
in subsequent IRS guidance under Code section 409A.
(q) “SERP” shall mean the Company’s Supplemental Executive Retirement Plan or any successor
thereto.
(r) “Termination Date” shall mean (i) if the Executive’s employment is terminated by the
Company for Cause, or by the Executive for Good Reason, the date of the other party’s
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receipt of the Notice of Termination or any later date specified therein, (ii) if the
Executive’s employment is terminated by the Company other than for Cause or Disability, or by the
Executive other than for Good Reason, the Termination Date shall be the date on which the Notice of
Termination is delivered or any later date as may be mutually agreed upon; (iii) if the Executive’s
employment is terminated by reason of death, the Termination Date shall be the date of the death;
and (iv) if the Executive’s employment is terminated by reason of Disability of the Executive, the
Termination Date shall be the 30th day after Executive’s receipt of the Notice of
Termination from the Company.
(s) “Unpaid Accrued Obligations” shall mean unpaid Annual Base Salary accrued through the
termination date, any unpaid accrued vacation pay, and the Executive’s Annual Bonus multiplied by a
fraction, the numerator of which is the number of days in the current fiscal year through the
Termination Date, and the denominator of which is 365.
8. Certain Additional Payments.
(a) Except as set forth below, in the event it shall be determined that any payment or
distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the “Code”)) made or provided to or for the benefit of
the Executive, whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (each, a “Payment”) would be subject to the excise tax imposed by
Section 4999 of the Code (together with any interest or penalties imposed with respect to such
excise tax, the “Excise Tax”), then the Executive shall be entitled to receive an additional
payment (“Gross-Up Payment”), at or before the time the Excise Tax is due (whether by withholding
or otherwise) in an amount such that after payment by the Executive of all taxes (and any interest
or penalties imposed with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. The Company’s obligation to make Gross-Up Payments under this Section 8
shall not be conditioned upon the Executive’s termination of employment.
(b) Subject to the provisions of Subsection 8(c), all determinations required to be made under
this Section 8, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by such nationally recognized certified public accounting firm that the Company may designate
(the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both
to the Company and the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment or such earlier time as is requested by the Company. In
the event that the Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a Change of Control, the Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Executive within ten days of the receipt of the Accounting
Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company
and the Executive.
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As a result of the uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. In the event the Company exhausts or does not seek to
pursue its remedies pursuant to Subsection 8(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit
of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which the Executive gives
such notice to the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company
relating to such claim,
(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to contest
such claim, and
(iv) permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest, and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any Excise Tax, income tax or other tax
(including interest and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this
Subsection 8(c), the Company shall control all proceedings taken in connection with such contest
and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the applicable taxing authority in respect of such claim and may, at
its sole discretion, either direct the Executive to pay the tax claimed and xxx for a refund or
contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Company shall determine; provided, however, that, if the Company
directs the Executive to pay such claim and xxx for a refund, the
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Company shall pay the amount of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and further provided, that any
extension of the statute of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder, and the Executive shall
be entitled to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of a Gross-Up Payment or an amount paid by the
Company pursuant to Subsection 8(c), the Executive becomes entitled to receive any refund with
respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Subsection 8(c), if
applicable) promptly pay to the Company the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an
amount paid by the Company pursuant to Subsection 8(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the expiration of 30
days after such determination, then such payment shall be forgiven and shall not be required to be
repaid and the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
(e) Notwithstanding any other provision of this Agreement, the Company may, in its sole
discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing
authority, for the benefit of the Executive, all or any portion of any Gross-Up Payment, and the
Executive hereby consents to such withholding.
9. Code Section 409A Provisions.
Notwithstanding anything in this Agreement or elsewhere to the contrary, if, based on Internal
Revenue Service guidance available as of the date the payment or provision of any amount or other
benefit is specified to be made under this Agreement or elsewhere, the Company reasonably
determines that the payment or provision of such amount or other benefit at such specified time may
potentially subject the Executive to “additional tax” under Section 409A(a)(1)(B) of the Code
(together with any interest or penalties imposed with respect to, or in connection with, such tax,
a “409A Tax”) with respect to the payment of such amount or the provision of such benefit, and if
payment or provision thereof at a later date would likely avoid any such 409A Tax, then the payment
or provision thereof shall be postponed to the earliest business day on which the Company
reasonably determines such amount or benefit can be paid or provided without incurring any such
409A Tax, but in no event later than the first business day after the six-month anniversary of the
Termination Date (the “Delayed Payment Date”). In addition, if the Company reasonably determines
that such 409A Tax with respect to the provision of a benefit can likely be avoided by replacing
the benefit with the payment of an amount in cash equal to the cost of a substantially equivalent
benefit then, in lieu providing such benefit, the
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Company may make such cash payment, subject to the preceding sentence. In the event a benefit
is to be provided during the period commencing on the Executive’s separation from service and
ending on the Delayed Payment Date and the provision of such benefit during that period would be
treated as a payment of nonqualified deferred compensation in violation of Section 409A(a)(2)(B)(i)
of the Code, then continuation of such benefit during that period shall be conditioned on payment
by the Executive of the full premium or other cost of coverage and as of the Delayed Payment Date
the Company shall reimburse the Executive for the premiums or other cost of coverage paid by the
Executive, which but for this paragraph would have been paid by the Company. Any such reimbursement
shall include interest at the rate set out in the last sentence of this paragraph. The Company and
the Executive may agree to take other actions to avoid the imposition of 409A Tax at such time and
in such manner as permitted under Section 409A. In the event that this Section 9 requires a delay
of any payment, such payment shall be accumulated and paid in a single lump sum on the Delayed
Payment Date together with interest for the period of delay, compounded monthly, equal to the prime
or base lending rate then used by CitiBank, N.A., in New York City and in effect as of the date the
payment would otherwise have been provided.
10. Directorships, Other Offices.
In the event of termination of employment, Executive shall 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 Affiliated Companies.
11. Confidentiality and Inventions.
(a) Disclosure of Confidential Information. The Executive acknowledges that
Confidential Information is a valuable asset of the Company and that unauthorized disclosure or
utilization thereof could be detrimental to the Company. Therefore, the Executive shall not,
either during of after the term of his employment by the Company, disclose to any person or
organization other than the Company, or utilize for the benefit or profit of himself or any other
person or organization other than the Company, any Confidential Information, except as may be
authorized in writing by the Company.
(b) Ownership of Inventions. The following shall be property of the Company
exclusively:
(i) Any Invention conceived, discovered or made by the Executive;
(ii) Any patent, patent application or record relating to any
Invention.
(c) Disclosure of Inventions. The Executive shall disclose to the Company and keep
adequate records of any Invention of the Executive.
(d) Obtaining and Enforcement of Patents. Without further consideration from, or
charge to the Company, whenever requested to do so by the Company, the Executive shall
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execute any patent applications, assignments, or other instruments which the Company shall
consider necessary to apply for and obtain Letters Patent in the United States and any foreign
country and take all necessary action to protect the Company’s interests therein. These
obligations shall continue beyond the termination of the Executive’s employment with the Company.
Necessary expenses in connection with the foregoing, including a fee not to exceed $100 per day for
testifying if Executive is no longer employed by the Company, shall be borne by the Company.
(e) Disclaimer. The Executive represents that the Executive is under no obligation to
any former employer or third party which is in any way inconsistent with this Agreement or which
imposes any restrictions on the Executive’s activities with the Company, except as described in any
attachment to this Agreement.
(f) Confidential Information of Prior Employers. The Executive shall not disclose to
the Company or induce the Company to use any secret or confidential information or material
belonging to others, including former employers, if any. In case of doubt with respect to the
Executive’s obligations towards a prior employer, the Executive shall consult with appropriate
Associate General Counsel or designee.
(g) Removal and Return of Company Property. The Executive shall keep elsewhere than
on Company property, nor remove therefrom, any Company property, except and only so long as may be
required for the performance of duties for the Company. Upon termination of employment with the
Company, the Executive shall turn over to a designated individual employed by the Company, all
property then in the Executive’s possession or custody and belonging to the Company. The Executive
shall not retain any copies or reproductions of correspondence, memoranda, reports, notebooks,
drawings, photographs, or other documents relating in any way to the affairs of the Company which
are entrusted to the Executive at any time during employment with the Company.
12. Remedies; Injunction.
(a) Executive acknowledges and agrees that the restrictions contained in Sections 5 and 11 of
this Agreement are reasonable and necessary to protect and preserve the legitimate interests,
properties, goodwill and business of the Company and its Affiliated Companies, 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
sections. 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
Sections 5 or 11 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 Sections 5 and 11 and that all remaining stock options
will be forfeited if Executive breaches the provisions of either of those sections and that, in any
event, the Company will be entitled to preliminary and permanent injunctive relief,
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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 Sections 5 or
11, which rights will be cumulative and in addition to any other rights or remedies to which the
Company and/or its Affiliated Companies may be entitled. In the event that any of the provisions
of Sections 5 or 11 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 Sections 5 or 11, including without limitation, any action commenced by
the Company and/or its Affiliated Companies 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 competent jurisdiction, (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.
13. 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.
14. Non-Exclusivity.
Except as specifically expressed herein, nothing contained herein is intended to alter the
terms of any benefit plan or program. Notwithstanding anything in this Agreement, the Company or
its Affiliated Companies, as applicable, reserves the right to amend or terminate any of its or
their employee benefit plans at any time. In the event that an amendment to an employee benefit
plan adopted after the effective date of this Agreement specifically conflicts with an express
promise made in this Agreement, the Company shall have the right to honor the promise through
comparable means outside the affected employee benefit plan without regard to any differences in
the tax impact to the Executive. Nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any benefit plan provided by the Company or any of its
affiliates for which the Executive may qualify.
15. Full Settlement.
In no event shall the Executive be obligated to seek other employment or take any other action
by way of mitigation of the amounts and benefits (other than as required pursuant to Section
5(b)(ii)) payable to the Executive under any of the provisions of this Agreement and
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such amounts and benefits (other than as required pursuant to Section 5(b)(ii)) shall not be
reduced whether or not the Executive obtains other employment. In the event of a Change of
Control, the Company agrees to pay, to the full extent permitted by law and with respect to
disputes that arise out of events occurring during the applicable COC Employment Period, all legal
fees and expenses up to $25,000 which the Executive may reasonably incur as a result of any contest
by the Company, the Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof (including as a result of
any contest by the Executive about the amount of any payment pursuant to this Agreement); provided,
however, that if the Company ultimately prevails in a court of competent jurisdiction with regard
to any such contest, the Executive agrees to reimburse the Company for any and all legal fees and
expenses paid by the Company in accordance with this sentence. Such reimbursement shall become
payable within 30 days after the expiration of the applicable period to appeal such outcome or, if
an appeal is taken, 30 days after final resolution of such appeal. Interest shall accrue on any
delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.
16. Governing Law.
This Agreement will be governed by and construed in accordance with the laws of the State of
New Jersey.
17. 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
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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. In the event of Executive’s death or a judicial determination of his
incompetence, references in this Agreement to “Executive” shall be deemed to refer, as appropriate,
to his heirs, beneficiaries, estate, executor, or other legal representative.
18. 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.
19. Notices.
All notices and other communications hereunder shall be writing and shall be given delivery to
the other party in person or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Xxxx Xxxxx
[Address]
[Address]
If to the Company:
Schering-Plough Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
20. 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. There shall
be no contractual or similar restrictions on Executive’s right to terminate his employment with the
Company, or on his post-employment activities, other than those expressly set forth in this
Agreement or in the terms of grant of any Schering-Plough equity compensation award held by the
Executive. Except as otherwise set forth in this Agreement, the respective rights and obligations
of the parties under this Agreement shall survive any termination of Executive’s employment. This
Agreement may be executed in counterparts, each of which shall
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be deemed an original and all of which together shall be deemed to be one and the same
document. Signatures delivered by facsimile shall be effective for all purposes.
The undersigned hereby execute this Agreement as of the date first above written.
| SCHERING—PLOUGH CORPORATION |
||||
| Dated: 12/20/06 | By | |||
| C. Xxx Xxxxxxx | ||||
| Senior Vice President, Global Human Resources |
||||
| Dated: 12/20/06 | ||||
| Xxxx Xxxxx | ||||
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