THIS AGREEMENT dated as of
June 1, 1999, is made by and between XXXXXXX-
XXXXX SQUIBB COMPANY, a Delaware corporation
(the "Company"), (the "Executive").
WHEREAS the Company considers it essential to the
best interests of its shareholders to xxxxxx the continuous
employment of key management personnel;
WHEREAS the Board of Directors of the Company (the
"Board") recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control
(as defined in the last Section hereof) exists and that such
possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or
distraction of management personnel to the detriment of the
Company and its shareholders; and
WHEREAS the Board has determined that appropriate
steps should be taken to reinforce and encourage the
continued attention and dedication of members of the
Company's management, including the Executive, to their
assigned duties without distraction in the face of
potentially disturbing circumstances arising from the
possibility of a Change in Control.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants herein contained, the Company and
the Executive hereby agree as follows:
ARTICLE I
Defined Terms
The definition of capitalized terms used in this
Agreement is provided in the last Article hereof.
ARTICLE II
Term of Agreement
This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 2002;
provided, however, that commencing on January 1, 2003 and
each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless the
Company or the Executive shall have given at least 30 days'
prior notice not to extend this Agreement or a Change in
Control shall have occurred prior to such January 1;
provided, however, if a Change in Control shall have
occurred during the term of this Agreement, this Agreement
shall continue in effect for a period of not less than
36 months beyond the month in which such Change in Control
occurred. Notwithstanding the foregoing provisions of this
Article, this Agreement shall terminate upon the Executive's
attaining his Retirement Date.
ARTICLE III
Company's Covenants Summarized
In order to induce the Executive to remain in the
employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the
Company agrees, under the conditions described herein, to
pay the Executive the "Severance Payments" described in
Section 6.01 hereof and the other payments and benefits
described herein in the event the Executive's employment
with the Company is terminated following a Change in Control
and during the term of this Agreement. No amount or benefit
shall be payable under this Agreement unless there shall
have been (or, under the terms hereof, there shall be deemed
to have been) a termination of the Executive's employment
with the Company following a Change in Control. This
Agreement shall not be construed as creating an express or
implied contract of employment and, except as otherwise
agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the
employ of the Company.
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ARTICLE IV
The Executive's Covenants
The Executive agrees that, subject to the terms
and conditions of this Agreement, in the event of a
Potential Change in Control during the term of this
Agreement, the Executive will remain in the employ of the
Company until the earliest of (i) a date which is six months
from the date of such Potential Change of Control, (ii) the
date of a Change in Control, (iii) the date of termination
by the Executive of the Executive's employment for Good
Reason (determined by treating the Potential Change in
Control as a Change in Control in applying the definition of
Good Reason) or by reason of death or (iv) the termination
by the Company of the Executive's employment for any reason.
ARTICLE V
Compensation other than Severance Payments
SECTION 5.01. Following a Change in Control and
during the term of this Agreement, during any period that
the Executive fails to perform the Executive's full-time
duties with the Company as a result of Disability, the
Executive shall be compensated as provided pursuant to the
terms of the Company's short- and long-term disability plans
as in effect immediately prior to the Change in Control
together with all other compensation and benefits payable to
the Executive pursuant to the terms of any compensation or
benefit plan, program or arrangement maintained by the
Company during such period.
SECTION 5.02. If the Executive's employment shall
be terminated for any reason following a Change in Control
and during the term of this Agreement, the Company shall pay
the Executive's full salary to the Executive through the
Date of Termination at the rate in effect at the time the
Notice of Termination is given, together with all other
compensation and benefits payable to the Executive through
the Date of Termination (including, without limitation, all
incentive compensation amounts owed the Executive for a
completed calendar year to the extent not yet then paid)
under the terms of any compensation or benefit plan, program
or arrangement maintained by the Company during such period.
SECTION 5.03. If the Executive's employment shall
be terminated for any reason following a Change in Control
and during the term of this Agreement, the Company shall pay
the Executive such normal post-termination compensation and
benefits to the Executive as may be provided by the
Company's retirement, insurance and other compensation or
benefit plans, programs and arrangements, as in effect
immediately prior to a Change in Control.
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ARTICLE VI
Severance Payments
SECTION 6.01. In lieu of any other severance
compensation or benefits to which the Executive may
otherwise be entitled under any plan, program, policy or
arrangement of the Company (and which the Executive hereby
expressly waives), the Company shall pay the Executive the
payments described in this Section 6.01 (the "Severance
Payments") upon the termination of the Executive's
employment following a Change in Control and during the term
of this Agreement in addition to the payments and benefits
described in Article V hereof, unless such termination is
(i) by the Company for Cause, (ii) by reason of death, or
(iii) by the Executive without Good Reason. The Executive's
employment shall be deemed to have been terminated following
a Change in Control by the Company without Cause or by the
Executive with Good Reason if the Executive's employment is
terminated prior to a Change in Control without Cause at the
direction of a Person who has entered into an agreement with
the Company the consummation of which will constitute a
Change in Control or if the Executive terminates his
employment with Good Reason prior to a Change in Control
(determined by treating a Potential Change in Control as a
Change in Control in applying the definition of Good Reason)
if the circumstance or event which constitutes Good Reason
occurs at the direction of such Person.
(a) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination
and in lieu of any severance benefit otherwise payable to
the Executive, the Company shall pay to the Executive a lump
sum severance payment, in cash, equal to three or, if less,
the number of years, including fractions, from the Date of
Termination until the Executive reaches his Retirement Date,
times the sum of (i) the higher of the Executive's annual
base salary in effect immediately prior to the occurrence of
the event or circumstance upon which the Notice of
Termination is based or in effect immediately prior to the
Change in Control, and (ii) the aggregate amount of the
Executive's target annual bonus entitlement under the
Incentive Plan (or any other bonus plan of the Company then
in effect) as in effect immediately prior to the occurrence
of the circumstances giving rise to the Notice of
Termination given in respect thereof (provided that if it is
not practicable to determine the amount that the Executive's
aggregate target bonus would have been for the year in which
the Notice of Termination was given, then, for purposes of
this paragraph (a), the Executive's target annual bonus
entitlement shall be the amount of the largest aggregate
annual bonus paid to him with respect to the five years
immediately prior to the year in which the Notice of
Termination was given).
(b) Notwithstanding any provision of the
Incentive Plan or any other compensation or incentive plans
of the Company, the Company shall pay to the Executive a
lump sum amount, in cash, equal to the sum of (i) any
incentive compensation which has been allocated or awarded
to the Executive for a completed calendar year or other
measuring period preceding the Date of Termination but has
not yet been paid (pursuant to Section 5.02 hereof or
otherwise), and (ii) a pro rata portion to the Date of
Termination of the aggregate value of all contingent
incentive compensation awards to the Executive for the
current calendar year or other measuring period under the
Incentive Plan, the Award Plan or any other compensation or
incentive plans of the Company, calculated as to each such
award on a basis which assumes that at least 100% of any
performance target or goal was achieved, and otherwise on a
basis on which the Executive will receive a pro rata portion
(based on elapsed time) of the amounts he would have been
entitled to receive if he had continued to be employed by
the Company throughout the period contemplated with respect
to such award and if all other conditions for receiving the
maximum amount with respect to all such awards had been met.
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(c) All outstanding Options shall become
immediately vested and exercisable (to the extent not then
vested and exercisable). To the extent not otherwise
provided under the written agreement evidencing the grant of
any restricted Shares to the Executive, all outstanding
Shares which have been granted to the Executive subject to
restrictions which, as of the Date of Termination, have not
then lapsed shall lapse automatically upon the Date of
Termination and the Executive shall own such Shares free and
clear of all such restrictions.
(d) In addition to the retirement benefits to
which the Executive is entitled under the Retirement Plan
and BEP, or any successor plans thereto, the Company shall
pay the Executive an additional amount equal to the excess
of (x) the retirement pension (determined as a straight life
annuity commencing at Retirement Date) which the Executive
would have accrued under the terms of the Retirement Plan
and BEP (without regard to any amendment to the Retirement
Plan or BEP made subsequent to a Change in Control and on or
prior to the Date of Termination, which amendment adversely
affects in any manner the computation of retirement benefits
thereunder), determined as if the Executive (i) were fully
vested thereunder, and (ii) had accumulated (after the Date
of Termination) 36 additional months of age and service
credit thereunder at the Executive's highest annual rate of
compensation during the 12 months immediately preceding the
Date of Termination (but in no event shall the Executive be
deemed to have accumulated additional service credit in
excess of that provided pursuant to the Retirement Plan and
BEP) and (y) the retirement pension (determined as a
straight life annuity commencing at the Executive's
Retirement Date) which the Executive had then accrued
pursuant to the respective provisions of the Retirement Plan
and BEP, such additional amount to be paid, except as
provided in the last sentence of this Section 6.01(d), at
such time or times as the relevant benefits are payable to
the Executive under the Retirement Plan and BEP,
respectively, or any successor plans thereto; provided,
however, that if the transaction constituting the Change in
Control has not been approved by the Board prior to the
consummation thereof, the actuarial equivalent of such
additional benefits under this Section 6.01(d) shall be paid
in a cash lump sum. If the Executive has not attained
age 55 with ten years of service credit as of the Date of
Termination, the Executive may nevertheless elect to receive
(x) his vested benefit (after giving effect to the 36 months
of additional age and service credit provided in the first
sentence of this Section 6.01(d)) under the BEP
(notwithstanding any provision of the BEP to the contrary)
and (y) the incremental vested benefit which would be
accrued under the Retirement Plan (after giving effect to
the 36 months of additional age and service credit provided
in the first sentence of this Section 6.01(d)) over the
Executive's actual accrued benefit thereunder (without
giving effect to such additional credit), such amounts under
clauses (x) and (y) to be paid under the BEP either (i) in
an annuity (in the form provided under the BEP) commencing
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immediately following the Date of Termination, or (ii) in a
lump sum payment, the amount of which in either case shall
be the actuarial equivalent of the vested annual benefit
payable to the Executive assuming that the Executive had
attained age 55 with ten years of service credit as of the
Date of Termination (i.e., without actuarial reduction to
reflect the fact that the Executive has not attained age 55
with ten years of service as of the Date of Termination).
For purposes of this Section 6.01(d), "actuarial equivalent"
shall be determined using the same methods and assumptions
utilized under the Retirement Plan immediately prior to the
Date of Termination.
(e) For a 36-month period after the Date of
Termination, the Company shall arrange to provide the
Executive with life and health (including medical and
dental) insurance benefits and perquisites substantially
similar to those which the Executive is receiving
immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent
to a Change in Control). Benefits and perquisites otherwise
receivable by the Executive pursuant to this Section 6.01(e)
shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive
without greater cost to him than as provided by the Company
during the 36-month period following the Executive's
termination of employment (and any such benefits actually
received by the Executive shall be reported to the Company
by the Executive).
(f) Following the 36-month period described in the
first sentence of Section 6.01(e), the Executive shall be
immediately eligible to participate (although the Executive
may elect to defer commencement of such participation to
such later date as the Executive shall determine) in the
Company's retiree medical and dental plans, whether or not
the Executive has satisfied any age and service requirements
then applicable. For purposes of determining the level of
the Executive's participation thereunder, the Executive
shall be deemed to have accumulated 36 months of additional
age and service credit; it being understood that if the
Executive's age and service credit (as augmented hereunder)
do not satisfy the minimum requirements for eligibility, the
Executive shall be eligible to participate at the level
requiring the maximum contribution requirement by an
eligible retiree.
(g) In addition to the vested amounts, if any, to
which the Executive is entitled under the Savings Plan as of
the Date of Termination, the Company shall pay the Executive
a lump sum amount equal to the value of the unvested
portion, if any, of the employer matching contributions
credited to the Executive under the Savings Plan.
(h) The Company shall provide the Executive with
reasonable outplacement services consistent with past
practices of the Company prior to the Change in Control.
SECTION 6.02. Subject to the immediately
following paragraph of this Section 6.02, in the event that
the Executive becomes entitled to the Severance Payments, if
any of the Severance Payments or any other portion of the
Total Payments (as defined below) will be subject to the
Excise Tax, the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any
Excise Tax on the Severance Payments and such other Total
Payments and any Federal, state and local income tax (taking
into account the loss of itemized deductions) and employment
tax and Excise Tax upon the payment provided for by this
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Section 6.02, shall be equal to the present value of the
Severance Payments and such other Total Payments. For
purposes of determining whether any of the Severance
Payments or other Total Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by the
Executive in connection with a Change in Control or the
Executive's termination of employment, whether pursuant to
the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any Person whose actions
result in a change in control or any Person affiliated with
the Company or such Person (together with the Severance
Payments, the "Total Payments"), shall be treated as
"parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(l) of the
Code shall be treated as subject to the Excise Tax, unless,
in the opinion of tax counsel selected by the Company's
independent auditors and reasonably acceptable to the
Executive (the "Tax Counsel"), such other payments or
benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of
the Code, or such excess parachute payments (in whole or in
part) represent reasonable compensation for services
actually rendered, within the meaning of
Section 280G(b)(4)(B) of the Code, in excess of the Base
Amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, (ii) the amount of
the Severance Payments which shall be treated as subject to
the Excise Tax shall be equal to the lesser of (A) the total
amount of the Severance Payments and other Total Payments or
(B) the amount of excess parachute payments within the
meaning of Section 280G(b)(l) of the Code (after applying
clause (i), above), and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in
accordance with the principles of Sections 280G(d)(3) and
(4) of the Code. For purposes of determining the amount of
the Gross-Up Payment, the Executive shall be deemed to pay
Federal income taxes at the highest marginal rate of Federal
income taxation (taking into account the loss of itemized
deductions) in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of
Termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is
subsequently determined to be less than the amount taken
into account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the
Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-
Up Payment attributable to such reduction (plus that portion
of the Gross-Up Payment attributable to the Excise Tax and
Federal, state and local income tax imposed on the Gross-Up
Payment being repaid by the Executive to the extent that
such repayment results in a reduction in Excise Tax and/or a
Federal, state or local income tax deduction) plus interest
on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of the
Executive's employment (including by reason of any payment
the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the
Executive with respect to such excess) at the time that the
amount of such excess is finally determined. The Executive
and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability
for Excise Tax with respect to the Severance Payments and
other Total Payments.
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Notwithstanding the provisions of the first
paragraph of this Section 6.02, (i) the Company shall have
no obligation to make the Gross-Up Payment unless the value
of the Total Payments for purposes of Section 280G of the
Code (and the regulations thereunder) equals or exceeds 110%
of the maximum amount of parachute payments which could be
paid to the Executive without any imposition of golden
parachute excise taxes under Sections 280G and 4999 of the
Code (the "110% Amount"), and (ii) if (x) any portion of the
Total Payments would be subject to the imposition of golden
parachute excise taxes under Sections 280G and 4999 of the
Code and (y) the value of the Total Payments is less than
the 110% Amount, then, to the extent necessary to make such
portion of the Total Payments not subject to such golden
parachute excise taxes (and after taking into account any
reduction in the Total Payments provided by reason of
Section 280G of the Code in any other plan, arrangement or
agreement), (A) the cash Severance Payments shall first be
reduced (if necessary, to zero), and (B) all other non-cash
Severance Payments shall next be reduced (if necessary, to
zero). For purposes of the limitation described in
clause (ii) of the preceding sentence, (i) no portion of the
Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to
the Date of Termination shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account
which, in the opinion of the Tax Counsel, does not
constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, including by reason of
section 280(b)(4)(A) of the Code, (iii) the Severance
Payments shall be reduced only to the extent necessary so
that the Total Payments (other than those referred to in
clauses (i) or (ii) of this sentence) in their entirety
constitute reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4)(B) of the
Code or are otherwise not subject to disallowance as
deductions, in the opinion of the Tax Counsel; and (iv) the
value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined
by the Company's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.
If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding that, notwithstanding the good faith of the
Executive and the Company in applying the terms of the
limitation described in clause (ii) of the first sentence of
the preceding paragraph of this Section 6.02, the aggregate
"parachute payments" paid to or for the Executive's benefit
are in an amount that would result in any portion of such
"parachute payments" not being deductible by reason of
section 280G of the Code, then the Executive shall have an
obligation to pay the Company upon demand an amount equal to
the sum of (i) the excess of the aggregate "parachute
payments" paid to or for the Executive's benefit over the
aggregate "parachute payments" that could have been paid to
or for the Executive's benefit without any portion of such
"parachute payments" not being deductible by reason of
section 280G of the Code; and (ii) interest on the amount
set forth in clause (i) of this sentence at the rate
provided in section 1274(b)(2)(B) of the Code from the date
of the Executive's receipt of such excess until the date of
such payment.
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SECTION 6.03. The payments provided for in
Section 6.01 (other than Section 6.01(e)) and 6.02 hereof
shall be made not later than the fifth day following the
Date of Termination; provided, however, that if the amounts
of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive on such day
an estimate, as determined in good faith by the Company, of
the minimum amount of such payments to which the Executive
is clearly entitled and shall pay the remainder of such
payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the
30th day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable
on the fifth business day after demand by the Company
(together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code). At the time that
payments are made under this Section, the Company shall
provide the Executive with a written statement setting forth
the manner in which such payments were calculated and the
basis for such calculations including, without limitation,
any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such
opinions or advice which are in writing shall be attached to
the statement).
SECTION 6.04. The Company also shall pay to the
Executive all legal fees and expenses incurred by the
Executive as a result of a termination which entitles the
Executive to the Severance Payments (including all such fees
and expenses, if any, incurred in disputing any such
termination or in seeking in good faith to obtain or enforce
any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code
to any payment or benefit provided hereunder and including,
but not limited to, auditors' fees incurred in connection
therewith). Such payments shall be made within five
business days after delivery of the Executive's written
requests for payment accompanied with such evidence of fees
and expenses incurred as the Company reasonably may require.
ARTICLE VII
Termination Procedures and
Compensation During Dispute
SECTION 7.01. Notice of Termination. After a
Change in Control and during the term of this Agreement, any
purported termination of the Executive's employment (other
than by reason of death) shall be communicated by written
Notice of Termination from one party hereto to the other
party hereto in accordance with Article X hereof. For
purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate 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 the Executive's
employment under the provision so indicated. Further, a
Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board which was called and
held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in
clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
SECTION 7.02. Date of Termination. "Date of
Termination", with respect to any purported termination of
the Executive's employment after a Change in Control and
during the term of this Agreement, shall mean (i) if the
Executive's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time
performance of the Executive's duties during such 30 day
period), and (ii) if the Executive's employment is
terminated for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination
by the Company, shall not be less than 30 days (except in
the case of a termination for Cause) and, in the case of a
termination by the Executive, shall not be less than 15 days
nor more than 60 days, respectively, from the date such
Notice of Termination is given).
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SECTION 7.03. Dispute Concerning Termination. If
within 15 days after any Notice of Termination is given, or,
if later, prior to the Date of Termination (as determined
without regard to this Section 7.03), the party receiving
such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute
is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of a
court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provided further,
that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such
dispute with reasonable diligence.
SECTION 7.04. Compensation During Dispute. If a
purported termination occurs following a Change in Control
and during the term of this Agreement, and such termination
is disputed in accordance with Section 7.03 hereof, the
Company shall continue to pay the Executive the full
compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary)
or, if greater, the full compensation in effect immediately
prior to the Change in Control, and continue the Executive
as a participant (on a basis at least as favorable to the
Executive as in effect immediately prior to the Change in
Control) in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving
rise to the dispute was given, until the dispute is
finally resolved in accordance with Section 7.03 hereof.
Amounts paid under this Section 7.04 are in addition to all
other amounts due under this Agreement (other than those due
under Section 5.02 hereof) and shall not be offset against
or reduce any other amounts due under this Agreement.
ARTICLE VIII
No Mitigation
The Company agrees that, if the Executive's
employment by the Company is terminated during the term of
this Agreement, the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section
6 or Section 7.04. Further, the amount of any payment or
benefit provided for in Article VI (other than
Section 6.01(e)) or Section 7.04 shall not be reduced by any
compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.
ARTICLE IX
Noncompetition
In consideration for the payments and benefits
provided by the Company under this Agreement, the Executive
shall execute, concurrent with the execution of this
Agreement, a noncompetition agreement in the form attached
hereto as Exhibit A, which agreement provides that, for a
one-year period following the Executive termination of
employment with the Company or any of its subsidiaries or
affiliates, the Executive shall not engage in any
competitive activity with the Company or any of its
subsidiaries or affiliates.
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ARTICLE X
Successors; Binding Agreement
SECTION 10.01. In addition to any obligations
imposed by law upon any successor to the Company, the
Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
the Company 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 had taken place. Failure of the Company to
obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder
if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except
that, for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be
deemed the Date of Termination.
SECTION 10.02. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If
the Executive shall die while any amount would still be
payable to the Executive hereunder (other than amounts
which, by their terms, terminate upon the death of the
Executive) if the Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the
Executive's estate.
ARTICLE XI
Notices
For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other
address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change
of address shall be effective only upon actual receipt:
To the Company:
Xxxxxxx-Xxxxx Squibb Company
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Senior Vice President,
Human Resources
To the Executive:
[name]
[address]
E-10Q-10
ARTICLE XII
Miscellaneous
No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated
by the Board. 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. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by
either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws
of the State of New York. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to
any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable
withholding required under Federal, state or local law and
any additional withholding to which the Executive has
agreed. The obligations of the Company and the Executive
under Articles VI and VII shall survive the expiration of
the term of this Agreement.
ARTICLE XIII
Validity/Pooling
The invalidity or unenforceability or any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement,
which shall remain in full force and effect. If (i) the
Board approves a merger or consolidation of the Company
which is intended by the Board to satisfy the accounting
rules related to the pooling of interest method of
accounting (the "Pooling Rules") and (ii) any provision of
this Agreement would violate the Pooling Rules, then such
provision shall be null and void ab initio. In such event,
the Company and Executive shall negotiate, in good faith, a
replacement provision of equivalent value which does not
cause such a violation, provided, and to the extent, that
the Company's outside auditors determine that any such
replacement provision is permissible without violating the
Pooling Rules.
ARTICLE XIV
Counterparts
This Agreement may be executed in several
counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and
the same instrument.
ARTICLE XV
Settlement of Disputes; Arbitration
All claims by the Executive for benefits under
this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered
to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this
Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision
denying a claim and shall further allow the Executive to
appeal to the Board a decision of the Board within 60 days
after notification by the Board that the Executive's claim
has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled
exclusively by arbitration in New York, New York in
accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction;
provided, however, that the Executive shall be entitled to
seek specific performance of the Executive's right to be
paid until the Date of Termination during the pendency of
any dispute or controversy arising under or in connection
with this Agreement.
E-10Q-11
ARTICLE XVI
Definitions
For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(a) "Award Plan" shall mean the 1983
Xxxxxxx-Xxxxx Squibb Stock Option Plan and the 1997 Stock
Incentive Plan.
(b) "Base Amount" shall have the meaning defined
in Section 280G(b)(3) of the Code.
(c) "Beneficial Owner" shall have the meaning
defined in Rule 13d-3 under the Exchange Act.
(d) "BEP" shall mean the Xxxxxxx-Xxxxx Squibb
Company Benefit Equalization Plan for the Retirement Income
Plan.
(e) "Board" shall mean the Board of Directors of
the Company.
(f) "Cause" for termination by the Company of the
Executive's employment, after any Change in Control, shall
mean (i) the wilful and continued failure by the Executive
to substantially perform the Executive's duties with the
Company (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or
any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Executive
pursuant to Section 7.01) for a period of at least
30 consecutive days after a written demand for substantial
performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the
Board believes that the Executive has not substantially
performed the Executive's duties, (ii) the wilful engaging
by the Executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries,
monetarily or otherwise, or (iii) the Executive is convicted
of, or has entered a plea of no lo contendere to, a felony.
For purposes of clauses (i) and (ii) of this definition, no
act, or failure to act, on the Executive's part shall be
deemed "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief
that the Executive's act, or failure to act, was in the best
interest of the Company.
(g) A "Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by
such Person any securities acquired directly from the
Company or its affiliates) representing 20% or more of
the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of two consecutive years
(not including any period prior to the execution of
this Agreement), individuals who at the beginning of
such period constitute the Board and any new director
(other than a director designated by a Person who has
entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of
this paragraph whose election by the Board or
nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity), in combination
with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of
the Company, at least 75% of the combined voting power
of the voting securities of the Company or such
surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no
Person acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of
all or substantially all the Company's assets.
E-10Q-12
Notwithstanding the foregoing, a Change in Control shall not
include any event, circumstance or transaction occurring
during the six-month period following a Potential Change in
Control which results from the action of any entity or group
which includes, is affiliated with or is wholly or partly
controlled by the Executive; provided, further, that such
action shall not be taken into account for this purpose if
it occurs within a six-month period following a Potential
Change in Control resulting from the action of any entity or
group which does not include the Executive.
(h) "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
(i) "Company" shall mean Xxxxxxx-Xxxxx Squibb
Company, a Delaware corporation, and any successor to its
business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in
determining, under Article XVI(e) hereof, whether or not any
Change in Control of the Company has occurred in connection
with such succession).
(j) "Company Shares" shall mean shares of common
stock of the Company or any equity securities into which
such shares have been converted.
(k) "Date of Termination" shall have the meaning
stated in Section 7.02 hereof.
(l) "Disability" shall have the meaning stated in
the Company's short- and long-term disability plans as in
effect immediately prior to a Change in Control.
(m) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(n) "Excise Tax" shall mean any excise tax
imposed under Section 4999 of the Code.
(o) "Executive" shall mean the individual named
in the first paragraph of this Agreement.
(p) "Good Reason" for termination by the
Executive of the Executive's employment shall mean the
occurrence (without the Executive's express written consent)
of any one of the following acts by the Company, or failures
by the Company to act, unless, in the case of any act or
failure to act described in paragraph (i), (v), (vi), (vii),
or (viii) below, such act or failure to act is corrected
prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's status as an
executive officer of the Company or a substantial
adverse alteration in the nature or status of the
Executive's responsibilities from those in effect
immediately prior to the Change in Control;
(ii) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or
as the same may be increased from time to time and/or
the level of the Executive's entitlement under the
Incentive Plan as in effect on the date hereof or as
the same may be increased from time to time;
(iii) the Company's requiring the Executive to be
based more than 50 miles from the Company's offices at
which the Executive is based immediately prior to a
Change in Control except for required travel on the
Company's business to an extent substantially
consistent with the Executive's business travel
obligations immediately prior to a Change in Control,
or, in the event the Executive consents to any such
relocation of his offices, the failure by the Company
to provide the Executive with all of the benefits of
the Company's relocation policy as in operation
immediately prior to a Change in Control;
(iv) the failure by the Company, without the
Executive's consent, to pay to the Executive any
portion of the Executive's current compensation (for
purposes of this paragraph (d), "current compensation"
shall mean the Executive's annual base salary as in
effect on the date hereof or as the same may be
increased from time to time and the awards earned
pursuant to the Incentive Plan) or to pay to the
Executive any portion of an installment of deferred
compensation under any deferred compensation program of
the Company, within seven days of the date such
compensation is due;
E-10Q-13
(v) the failure by the Company to continue in
effect any compensation plan in which the Executive
participates immediately prior to the Change in Control
which is material to the Executive's total
compensation, including, but not limited to, the
Incentive Plan, the Award Plan and the Xxxxxxx-Xxxxx
Squibb Restricted Stock Plan (the "Stock Option Plans")
or any substitute plans adopted prior to the Change in
Control, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the
Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of the
Executive's participation relative to other
participants as existed at the time of the Change in
Control;
(vi) the failure by the Company to continue to
provide the Executive with benefits substantially
similar to those enjoyed by the Executive under any of
the Company's pension (including, without limitation,
the Company's Retirement Plan, BEP and the Company's
Savings and Investment Program, including the Company's
Benefit Equalization Plan for the Savings and
Investment Program), life insurance, medical, health
and accident, or disability plans in which the
Executive was participating at the time of the Change
in Control, the taking of any action by the Company
which would directly or indirectly materially reduce
any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the
time of the Change in Control, or the failure by the
Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled
on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in
effect at the time of the Change in Control; or
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice
of Termination satisfying the requirements of
Section 7.01; for purposes of this Agreement, no such
purported termination shall be effective.
The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the
Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act
or failure to act constituting Good Reason hereunder.
Notwithstanding the foregoing, the occurrence of
an event that would otherwise constitute Good Reason
hereunder shall cease to be an event constituting Good
Reason if Notice of Termination is not timely provided to
the Company by the Executive within 120 days of the date
that the Executive first becomes aware (or reasonably should
have become aware) of the occurrence of such event.
(q) "Gross-Up Payment" shall have the meaning
given in Section 6.02 hereof.
(r) "Incentive Plan" shall mean the Company's
Executive Performance Incentive Plan.
(s) "Notice of Termination" shall have the
meaning stated in Section 7.01 hereof.
(t) "Options" shall mean options for Company
Shares granted to the Executive under the Company's Stock
Option Plans.
(u) "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person shall
not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its
subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
E-10Q-14
(v) "Potential Change in Control" shall be deemed
to have occurred if the conditions set forth in any one of
the following paragraphs shall have been satisfied:
(i) the Company enters into an agreement,
the consummation of which would result in the
occurrence of a Change in Control;
(ii) the Company or any Person publicly
announces an intention to take or to consider
taking actions which, if consummated, would
constitute a Change in Control;
(iii) any Person who is or becomes the
Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more
of the combined voting power of the Company's then
outstanding securities, increases such Person's
beneficial ownership of such securities by 5% or
more over the percentage so owned by such Person
on the date hereof; or
(iv) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(w) "Retirement Date" shall mean the later of
(i) the Executive's normal retirement date under the
Retirement Plan and (ii) such other date for retirement by
the Executive which has been approved by the Board at any
time prior to a Change in Control.
(x) "Retirement Plan" shall mean the Xxxxxxx-
Xxxxx Squibb Company Retirement Income Plan.
(y) "Savings Plan" shall mean the Xxxxxxx-Xxxxx
Squibb Company Savings and Investment Program and which, for
purposes of this Agreement, shall include the Company's
Benefit Equalization Plan for the Savings and Investment
Program.
(z) "Severance Payments" shall mean those
payments described in Section 6.01 hereof.
(aa) "Shares" shall mean shares of the common
stock, $0.10 par value, of the Company.
(bb) "Total Payments" shall mean those payments
described in Section 6.02 hereof.
XXXXXXX-XXXXX SQUIBB COMPANY,
by
[Name]
[Title]
[Name of Executive]
E-10Q-15
Schedule A
Non-Compete/Non Solicitation Agreement and General Release
Xxxxxxx-Xxxxx Squibb Company has offered me an Executive
Severance Agreement.
In consideration of the above-referenced Executive Severance
Agreement, I agree as follows:
1. For a one-year period commencing upon my termination, I
will not in any way, directly or indirectly, own, manage,
operate, control, accept employment or a consulting position
with or otherwise advise or assist or be actively connected
with, or have any financial interest in, directly or
indirectly, any enterprise which engages in, or otherwise
carries on, any business activity in competition with the
businesses of Xxxxxxx-Xxxxx Squibb Company and its
subsidiaries and affiliates (referred to collectively as the
"Company"), in any geographic area in which it engages in
such business (including, without limitation, the United
States and each county in the State of California in which
the Company from time to time sells or offers its products
for sale), without the prior written consent of the Company.
I recognize that the Company's business is worldwide in
scope in that it directly advertises and solicits business
from customers wherever they may be found. It is understood
that ownership of not more than one percent (1%) of the
equity securities of a public company shall in no way be
prohibited pursuant to the foregoing provisions. I further
agree that I shall not take any action which might divert
from the Company or any of its successors or assigns any
opportunity which would be within the scope of its or their
respective present or future operations or business. I
understand that this paragraph supersedes the Non-
competition provision set forth in my Restricted Stock Award
Agreement, however in no way modifies the other provisions
of that agreement which remain in full force and effect.
2. For a one-year period commencing upon my termination, I
will not in any way, directly or indirectly, employ, solicit
for employment, or advise or recommend to any other person
that they employ or solicit for employment, any person
employed at the time by the Company.
3. I hereby waive any and all rights to xxx the Company
and its past, present and future officers, directors,
employees and agents (referred to collectively as the
"Released Parties") based upon any act or event occurring
prior to my signing this Agreement. Without limitation, I
specifically release the Released Parties from any and all
claims arising out of my employment and separation from the
Company, including claims based on discrimination under
federal anti-discrimination laws such as Title VII of the
Civil Rights Act, Age Discrimination in Employment Act, The
Americans with Disabilities Act, claims for interference
E-10Q-16
Agreement and Release
with my rights to benefits under section 510 of the
Employee Retirement Income Security Act and any and all
federal, state and local laws.
However, I am not giving up my right to appeal a denial
of a claim for benefits submitted under my medical or
dental coverage, life insurance or disability income
program maintained by the Company. Further, I am not
giving up my right to file for unemployment insurance
benefits at the appropriate time if I so choose, and my
signing of this release will not affect my rights, if
any, to coverage by Workers' Compensation insurance.
Nothing herein shall affect any benefits to which I am
entitled under the terms of the Executive Severance
Agreement or any claim arising out of the enforcement
of the Executive Severance Agreement.
4. I acknowledge that I have been given at least twenty-
one (21) days to consider and sign this release. I further
acknowledge that it will not be effective for a period of
seven (7) days, during which time I can change my mind and
revoke my signature. To revoke my signature, I must notify
the Company in writing, within seven days of the date I
signed this release. In the event that I revoke my
signature I will not be entitled to the consideration
described above.
Finally, I acknowledge the continuing nature of my
obligation to maintain in confidence and not to make use of
confidential information concerning the Company's business
or affairs of any nature that is not otherwise a matter of
public record. This obligation continues after the
termination of my employment.
MY SIGNATURE BELOW ACKNOWLEDGES THAT I HAVE READ THE ABOVE,
UNDERSTAND WHAT I AM SIGNING, AND AM ACTING OF MY OWN FREE
WILL. I UNDERSTAND THAT IF ANY PROVISION OF THIS AGREEMENT
IS FOUND TO BE INVALID OR UNENFORCEABLE, IT WILL NOT AFFECT
THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION. I
FURTHER AGREE THAT THIS AGREEMENT WILL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK. THE COMPANY HAS ADVISED ME
TO CONSULT WITH AN ATTORNEY, AND I HAVE DONE SO, PRIOR TO
SIGNING THIS DOCUMENT.
SIGNATURE_____________________________
DATE__________________
E-10Q-17
