EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and
entered into as of January 18, 2002, by and between Advanced Medical Optics,
Inc., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxx
("Executive").
RECITALS
WHEREAS, prior to the date hereof, Executive has been employed
by Allergan, Inc., a Delaware corporation ("Allergan").
WHEREAS, the Company is a wholly owned subsidiary of Allergan.
WHEREAS, the parties anticipate the consummation of the
spinoff transaction approved by the Board of Directors of Allergan by
resolutions approved on January 18, 2002 (the consummation of such transaction
referred to herein as the "Spinoff").
WHEREAS, the Company desires to employ Executive, and
Executive desires to accept employment with the Company, on the terms and
conditions set forth in this Agreement in the event of, and effective upon, the
Spinoff.
NOW, THEREFORE, in consideration of the foregoing recitals and
the respective covenants and agreements of the parties contained herein, the
Company and Executive agree as follows:
ARTICLE 1.
EFFECTIVE DATE;
TERM OF EMPLOYMENT
1.1 Effective Date. This Agreement shall become effective upon the
Spinoff, and the "Effective Date" shall be the date on which the Spinoff occurs.
This Agreement shall govern the terms of Executive's employment hereunder on and
after the Effective Date. In the event the Spinoff does not occur on or before
December 31, 2002, this Agreement shall terminate and shall be of no force and
effect.
1.2 Term of Employment. Subject to extension in accordance with Section
1.3, the term of this Agreement shall commence on the Effective Date and shall
continue until the third anniversary of the Effective Date (the "Initial Term"),
unless terminated earlier in accordance with Article 5 of this Agreement. Upon
expiration of the Term (as defined below), Executive shall resign from all
positions with the Company and Executive's employment with the Company shall
terminate.
1.3 Extension of Term. The term of this Agreement shall be
automatically extended by one (1) year from the expiration of the Initial Term
and on each subsequent anniversary of the Effective Date, unless either party
elects not to so extend the term of the Agreement by notifying the other party,
in writing, of such election not less than six (6) months prior to the last day
of the
Term as then in effect. Any extension shall become effective immediately as of
the day following the date which is six (6) months prior to the last day of the
Term as then in effect. For purposes of this Agreement, the "Term" shall mean
the period commencing on the Effective Date and ending on the last day of the
Initial Term or, if applicable, the last day of the latest one-year extension of
this Agreement in accordance with this Section 1.3.
1.4 Termination of Prior Agreements. Effective as of the Effective
Date, Executive shall resign from her employment with Allergan and from any and
all positions with Allergan. Effective as of the Effective Date, the agreements
set forth in EXHIBIT A (the "Prior Agreements") and the rights and obligations
of Executive and any other party or parties thereunder shall terminate.
Executive agrees to execute and deliver to Allergan such amendments to the
agreements listed on Exhibit A as Allergan reasonably determines necessary to
terminate the Prior Agreements and release any and all of the obligations of
Allergan and its affiliates under the Prior Agreements effective as of the
Effective Date.
ARTICLE 2.
EMPLOYMENT; DUTIES
2.1 Employment. During the Term, the Company shall employ Executive,
and Executive shall accept employment with the Company, upon the terms and
subject to the conditions set forth in this Agreement.
2.2 Position. Executive shall be employed as Corporate Vice President,
General Counsel and Secretary of the Company, and shall, during the Term, serve
in such position or in such other position or positions as the Board of
Directors of the Company (the "Board") may reasonably request from time to time.
Executive shall report directly to the Chief Executive Officer . Upon the
termination of Executive's employment hereunder in accordance with Article 5,
Executive shall immediately resign from all positions with the Company.
2.3 Duties. During the Term, Executive shall devote her full business
time, attention and energies to the business of the Company and use her best
efforts to promote the interest of the Company. Executive shall perform such
duties, services and responsibilities incident to the Executive's positions
which are reasonably consistent with such positions and shall act in accordance
with the policies and directives of the Company as determined from time to time.
2.4 Other Activities. Except with the prior written approval of the
Board, which the Board may grant or withhold in its sole and absolute
discretion, Executive shall not, during the Term, be actively engaged in any
other business activity, including, but not limited to, activity as a
consultant, agent, partner, officer or director, or provide business services of
any nature directly or indirectly to a corporation or other business enterprise;
provided, however, that so long as the activities do not interfere with
Executive's duties and responsibilities hereunder, Executive may participate in
other business activities for non-profit institutions from time to time.
Notwithstanding the foregoing, it shall not be a breach of this Agreement for
Executive to serve on civic or charitable boards or committees, or to invest her
personal assets in other businesses or ventures to the extent that such other
activities, businesses or ventures do not materially interfere with the
performance of her duties under this Agreement. None of the foregoing shall in
any
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way modify Executive's responsibilities hereunder, including without limitation
Executive's responsibilities under Article 10.
ARTICLE 3.
SALARY, BONUS AND STOCK OPTIONS
3.1 Base Salary. During the Term, the Company shall pay Executive a
base salary ("Base Salary") at an annual rate of $215,000, subject to change as
provided in this Section 3.1, and payable in accordance with the Company's
executive compensation practices. Such annual rate shall be reviewed by the
Board or its designee at least annually and may be increased or reduced in such
amounts as the Board or its designee deems appropriate in its sole discretion;
provided, however, that during the Term the Base Salary shall not be less than
$215,000.
3.2 Bonus Programs. Executive shall be eligible to participate in such
bonus plans or programs as are generally available from time to time to
similarly situated executive employees of the Company, subject to and in
accordance with the terms, conditions and overall administration of such bonus
plans or programs. Nothing herein is intended or shall be construed to require
the institution or continuation of any bonus plan or program, or to entitle
Executive to receive any bonus.
3.3 Stock Options or Other Equity-Based Awards. Executive shall be
eligible to receive awards under such stock option or other equity award plans
or programs as are generally available from time to time to similarly situated
executive employees of the Company, subject to and in accordance with the terms,
conditions and overall administration of such plans or programs. Nothing herein
is intended or shall be construed to require the institution or continuation of
any stock option or other equity award plan or program, or to entitle Executive
to receive any stock option or other equity award.
3.4 Withholding. The Company shall deduct or withhold from the
compensation and benefits payable to Executive hereunder any and all sums
required for federal income and employment and other taxes and all state or
local income and other taxes now applicable or that may be enacted and become
applicable during the Term.
ARTICLE 4.
EMPLOYEE BENEFITS
4.1 Employee Benefits. During the Term, Executive shall be entitled to
participate in or receive such benefits and perquisites as are provided
generally from time to time to similarly situated executive employees of the
Company, subject to and in accordance with the terms, conditions and overall
administration of the benefit plans pertaining to such benefits. Nothing herein
is intended or shall be construed to require the institution or continuation of
any plan or benefits. The Company may, in its sole discretion, grant such
additional benefits to Executive from time to time as the Company deems proper
and desirable.
4.2 Office Support. Executive shall be entitled to receive secretarial
and other office support commensurate with Executive's position and consistent
with the general policies and practices of the Company.
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4.3 Vacation. During the Term, Executive shall be entitled to paid
vacation at the rate commensurate with Executive's position and consistent with
the general policies and practices of the Company, which, to the extent unused
in any given year, may be carried over to the following year to the extent
permitted by the policies of the Company then in effect.
4.4 Business Expenses.
(a) Reimbursement. The Company shall pay or reimburse
Executive for all reasonable and authorized business expenses incurred by
Executive during the Term.
(b) Business Travel. The Company shall reimburse Executive for
expenses incurred for business-related travel in accordance with the Company's
travel reimbursement policy.
(c) Documentation. As a condition to reimbursement under this
Section 4.4, Executive shall furnish to the Company adequate records and other
documentary evidence required by federal and state statutes and regulations for
the substantiation of each expenditure. Executive acknowledges and agrees that
failure to furnish the required documentation may result in the Company denying
all or part of the expense for which reimbursement is sought.
ARTICLE 5.
TERMINATION OF EMPLOYMENT
5.1 Termination of Employment. During the Term and notwithstanding the
provisions of Article 1, Executive's employment hereunder shall be terminated,
or may be terminated, as the case may be, under the following circumstances:
(a) Termination upon Death. Executive's employment hereunder
shall terminate upon her death.
(b) Termination upon Disability. Executive's employment
hereunder shall terminate upon a Notice of Termination (as defined in subsection
(g) below) to Executive (or Executive's legal representative, if applicable)
citing Executive's physical or mental disability or infirmity which, in the
opinion of a competent physician selected by the Board, renders Executive unable
to perform her duties under this Agreement for more than 120 days during any
180-day period.
(c) Discharge for Cause. The Company may terminate Executive's
employment hereunder for Cause (a "Discharge for Cause") upon at least fifteen
(15) days' written notice in the form of a Notice of Termination. For purposes
of this Agreement, "Cause" shall be limited to only three types of events:
(i) the willful and continued refusal of Executive to comply
with a lawful, written instruction of the Board so long as the
instruction is consistent with the scope and responsibilities of
Executive's position and Executive has failed to end such willful and
continued refusal within fifteen (15) business days of written notice
thereof from the Company;
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(ii) willful misconduct by Executive which results in a
material financial loss to the Company (or to any of its affiliated
companies) or material injury to its public reputation (or to the
public reputation of any of its affiliated companies); or
(iii) Executive's conviction of any felony.
Notwithstanding the foregoing, no act or failure to act on Executive's part
shall be deemed "willful" unless done, or omitted to be done, by Executive not
in good faith and without reasonable belief that the action or omission was in
the best interest of the Company.
(d) Discharge Without Cause. The Company may terminate
Executive's employment hereunder other than for Cause (a "Discharge Without
Cause") upon at least sixty (60) days' written notice in the form of a Notice of
Termination. Termination of Executive's employment hereunder due to Executive's
death or Executive's disability shall not be considered a Discharge Without
Cause.
(e) Voluntary Resignation for Good Reason. Executive may
terminate Executive's employment hereunder for Good Reason (a "Voluntary
Resignation for Good Reason") upon at least sixty (60) days' written notice to
the Company in the form of a notice of resignation (the "Notice of
Resignation"). The Notice of Resignation shall set forth the circumstances which
in Executive's view constitute Good Reason hereunder and shall be delivered to
the Company within sixty (60) days of the occurrence of the applicable Good
Reason event. For purposes of this subsection (e) and subsection (f), "Good
Reason" shall mean:
(i) Executive's overall compensation is reduced or adversely
modified in any material respect, or
(ii) Executive's duties are materially changed.
For purposes of subsection (ii), above, Executive's duties shall be considered
to have been "materially changed" if, without Executive's express written
consent, there is any substantial diminution or adverse modification in
Executive's overall position, responsibilities or reporting relationship, or if,
without Executive's express written consent, Executive's job location is
transferred to a site more than fifty (50) miles away from his or her then
current place of employment (except for a repatriation of Executive to the
United States in 2003). During the period of notice set forth above in this
subsection (e), the Company shall be afforded reasonable opportunity to
establish, to the reasonable satisfaction of Executive, that the Good Reason
circumstances cited in Executive's Notice of Resignation were not present on the
date of such Notice of Resignation, or are no longer present, in which case
Executive's employment hereunder shall not terminate under this subsection (e).
(f) Voluntary Resignation other than for Good Reason.
Executive may terminate Executive's employment hereunder other than for Good
Reason (a "Voluntary Resignation other than for Good Reason") upon at least
sixty (60) days' written notice to the Company in the form of a Notice of
Resignation.
(g) Notice of Termination. Any termination of Executive's
employment by the Company shall be communicated by written Notice of Termination
to Executive. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice that shall indicate the
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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 Executive's employment under the provision so indicated.
(h) Date of Termination. "Date of Termination" shall mean (i)
if Executive's employment is terminated by her death, the date of her death,
(ii) if Executive's employment is terminated by reason of her disability, the
date of the Notice of Termination citing the opinion of the physician referred
to in subsection (b), above, (iii) if the Executive's employment is terminated
pursuant to subsections (c) or (d), above, the date specified in the Notice of
Termination, and (iv) if the Executive's employment is terminated under
subsections (e) or (f), above, the date specified in the Notice of Resignation,
or, if no Notice of Resignation is provided, then the date Executive ceased to
provide services to the Company in the reasonable judgment of the Board, which
determination shall be final and conclusive.
ARTICLE 6.
PAYMENTS UPON TERMINATION OF
EMPLOYMENT; SEVERANCE PAYMENTS
6.1 Termination upon Death. In the event of the termination of
Executive's employment hereunder due to Executive's death, the Company shall pay
to Executive's estate or provide: (i) any unpaid amount of Base Salary earned
through the date of Executive's death, (ii) a lump sum equal to Executive's
bonus at target, pro-rated for the period from the beginning of the bonus plan
year through the date of Executive's death, (iii) a lump sum equal to
Executive's unused accrued vacation time, at her Base Salary rate, through the
date of Executive's death, (iv) her then current Base Salary until the earlier
of (A) twelve (12) months after the date of Executive's death and (B) the last
day of the Term as then in effect, (v) expenses incurred by Executive
reimbursable under Section 4.4, and (vi) continued medical and other welfare
plan coverage for Executive's eligible dependents (if any) for twelve (12)
months upon the same terms as are generally applied from time to time for
similarly situated executive employees.
6.2 Termination upon Disability. In the event of the termination of
Executive's employment hereunder due to Executive's disability, the Company
shall pay or provide to Executive: (i) any unpaid amount of Base Salary earned
through the Date of Termination, (ii) a lump sum equal to Executive's bonus at
target, pro-rated for the period from the beginning of the bonus plan year
through the Date of Termination, (iii) a lump sum equal to Executive's unused
accrued vacation time, at her Base Salary rate, through the Date of Termination,
(iv) her then current Base Salary (payable in accordance with the Company's
executive compensation practices) until Executive begins to receive benefits
under the long term disability insurance provided hereunder (if any), but in no
event following twelve (12) months after the Date of Termination, (v) expenses
incurred by Executive prior to the Date of Termination reimbursable under
Section 4.4, and (vi) continued medical and other welfare plan coverage for
Executive and Executive's eligible dependents (if any) for twelve (12) months
upon the same terms as are generally applied from time to time for similarly
situated executive employees.
6.3 Discharge for Cause. In the event of the termination of Executive's
employment hereunder by a Discharge for Cause, the Company shall pay to
Executive: (i) her Base Salary
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through the Date of Termination, (ii) a lump sum equal to Executive's unused
accrued vacation time (at her Base Salary rate) through the Date of Termination,
and (iii) expenses incurred by Executive prior to the Date of Termination
reimbursable under Section 4.4.
6.4 Discharge Without Cause. In the event the Executive's employment
hereunder is terminated due to a Discharge Without Cause, the Company shall pay
or provide to Executive: (i) the Severance Payment, (ii) a lump sum equal to
Executive's bonus at target, pro-rated for the period from the beginning of the
bonus plan year through the Date of Termination, (iii) a lump sum equal to
Executive's unused accrued vacation time (at her Base Salary rate) through the
Date of Termination, (iv) expenses incurred by Executive prior to the Date of
Termination reimbursable under Section 4.4, and (v) continued medical and other
welfare plan coverage for Executive and Executive's eligible dependents (if any)
for twelve (12) months upon the same terms as are generally applied from time to
time for similarly situated executive employees.
6.5 Voluntary Resignation for Good Reason. In the event the Executive's
employment hereunder is terminated due to a Voluntary Resignation for Good
Reason, the Company shall pay or provide to Executive: (i) the Severance
Payment, (ii) a lump sum equal to Executive's bonus at target, pro-rated for the
period from the beginning of the bonus plan year through the Date of
Termination, (iii) a lump sum equal to Executive's unused accrued vacation time
(at her Base Salary rate) through the Date of Termination, (iv) expenses
incurred by Executive prior to the Date of Termination reimbursable under
Section 4.4, and (v) continued medical and other welfare plan coverage for
Executive and Executive's eligible dependents (if any) for twelve (12) months
upon the same terms as are generally applied from time to time for similarly
situated executive employees.
6.6 Voluntary Resignation other than for Good Reason. In the event the
Executive's employment hereunder is terminated due to a Voluntary Resignation
other than for Good Reason, the Company shall pay to Executive: (i) her Base
Salary through the Date of Termination, (ii) a lump sum equal to Executive's
unused accrued vacation time (at her Base Salary rate) through the Date of
Termination, and (iii) expenses incurred by Executive prior to the Date of
Termination reimbursable under Section 4.4.
6.7 Severance Payment. Except as provided in Section 6.8, the
"Severance Payment" payable to Executive shall be a lump sum payment equal to
two (2) times Executive's Compensation (as defined in Section 7.2, below), in
the event Executive's employment hereunder is terminated in a Qualifying
Termination (as defined in Section 7.3, below) at any time during the Term.
6.8 Severance Payment and Benefits Following a Change in Control.
Notwithstanding Section 6.7, the "Severance Payment" payable to Executive shall
be a lump sum payment in an amount equal to three (3) times Executive's
Compensation, in the event of:
(a) a Change in Control (as defined in Section 7.1, below),
and
(b) the termination of Executive's employment hereunder in a
Qualifying Termination within one hundred twenty (120) days prior to or within
two (2) years after a Change in Control, and, in such event, the Company agrees
that all stock options, restricted stock and other incentive compensation awards
of Executive that are outstanding at the time of the
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Qualifying Termination and that have not previously become exercisable, payable
or free from restrictions shall immediately become exerciseable, payable or free
from restrictions, as the case may be, in their entirety, and that the exercise
period of any stock option or other incentive award shall continue for the
length of the exercise period specified in the grant of the award determined
without regard to Executive's termination of employment. Notwithstanding any
other provisions in this Agreement to the contrary, in such event, Executive
shall also be entitled to continue to participate for three years following the
Qualifying Termination in all of the employee benefit programs of the Company
(including, but not limited to, group medical insurance, group dental insurance,
group-term life insurance, disability insurance, automobile allowance, gasoline
allowance, and a full allowance for club dues and tax and financial planning)
available to the Executive before the Qualifying Termination in the same way and
at the same level as immediately prior to the Qualifying Termination at no
additional cost to Executive, except to the extent tax rules require the
inclusion of the value of such benefits in Executive's income. Executive shall
also receive executive outplacement benefits of a type and duration generally
provided to executives at Executive's level.
6.9 Termination of Obligations. In the event of the termination of
Executive's employment hereunder pursuant to Article 5, the Company shall have
no further obligation to pay Executive any Base Salary, bonus or other
compensation or benefits, except as provided in this Article 6 or Article 8 or,
for benefits due to Executive (and her dependents), under the terms of the
Company's employee benefit plans. The payments under this Agreement are in lieu
of any severance payment that Executive might otherwise be entitled to from the
Company under the Company's applicable severance pay policies. However, if by
the terms of the Company's applicable severance pay policies for a reduction in
force the amount computed under the policy would be greater than the Severance
Payment described in this Agreement, then the Severance Payment shall be such
greater amount.
ARTICLE 7.
DEFINITIONS APPLICABLE TO SEVERANCE OR RETENTION PAYMENTS
7.1 Change in Control. For purposes of this Agreement, "Change in
Control" shall mean the occurrence of any of the following transactions after
the Effective Date:
(a) Any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (a
"Person"), is or becomes the "beneficial owner," as defined in Rule 13d-3 under
the Exchange Act (a "Beneficial Owner"), directly or indirectly, of securities
of the Company representing (i) 20% or more of the combined voting power of the
Company's then outstanding voting securities, which acquisition is not approved
in advance of the acquisition or within 30 days after the acquisition by a
majority of the Incumbent Board (as defined below), or (ii) 33% or more of the
combined voting power of the Company's then outstanding voting securities,
without regard to whether such acquisition is approved by the Incumbent Board;
(b) Individuals who, as of the Effective Date, constitute the
Board of Directors of the Company (the "Incumbent Board"), cease for any reason
to constitute at least a
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majority of the Board of Directors, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall, for the purposes of this Agreement,
be considered as though such person were a member of the Incumbent Board of the
Company;
(c) The consummation of a merger, consolidation or
reorganization involving the Company, other than one which satisfies both of the
following conditions:
(i) a merger, consolidation or reorganization 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 another entity) at
least 55% of the combined voting power of the voting securities of the
Company or such other entity resulting from the merger, consolidation
or reorganization (the "Surviving Corporation") outstanding immediately
after such merger, consolidation or reorganization and being held in
substantially the same proportion as the ownership in the Company's
voting securities immediately before such merger, consolidation or
reorganization, and
(ii) a merger, consolidation or reorganization in which no
Person is or becomes the Beneficial Owner directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding voting securities; or
(d) The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or other disposition by
the Company of all or substantially all of the Company's assets;
provided, however, that in no event shall the Spinoff constitute a Change in
Control; provided, further, that notwithstanding the preceding provisions of
this Section 7.1, a Change in Control shall not be deemed to have occurred if
the Person described in the preceding provisions of this Section is (1) an
underwriter or underwriting syndicate that has acquired the ownership of any of
the Company's then outstanding voting securities solely in connection with a
public offering of the Company's securities, (2) the Company or any parent or
subsidiary of the Company, or (3) an employee stock ownership plan or other
employee benefit plan maintained by the Company (or any of its affiliated
companies) that is qualified under the provisions of the Internal Revenue Code
of 1986, as amended. In addition, notwithstanding the preceding provisions of
this Section 7.1, a Change in Control shall not be deemed to have occurred if
the Person described in the preceding provisions of this Section 7.1 becomes a
Beneficial Owner of more than the permitted amount of outstanding securities as
a result of the acquisition of voting securities by the Company which, by
reducing the number of voting securities outstanding, increases the proportional
number of shares beneficially owned by such Person, provided, that if a Change
in Control would occur but for the operation of this sentence and such Person
becomes the Beneficial Owner of any additional voting securities (other than
through the exercise of options
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granted under any stock option plan of the Company or through a stock dividend
or stock split), then a Change in Control shall occur.
7.2 Compensation. For purposes of this Agreement, Executive's
"Compensation" shall equal the sum of (i) the higher of Executive's current Base
Salary or Executive's highest annual salary rate within the five-year period
ending on Executive's Date of Termination due to a Qualifying Termination, plus
(ii) a Management Bonus Increment. The "Management Bonus Increment" shall equal
the higher of 100% of the target bonus rate in the year Executive's employment
terminates or the average of the two highest of the last five bonuses paid by
the Company to Executive under the management bonus plan or any successor
thereto. For purposes of the foregoing, Executive's salary and bonus while
employed with Allergan prior to the Effective Date hereof shall be taken into
account. In addition, for purposes of this Agreement, "management bonus plan"
refers to the primary bonus plan or program of the Company for determining
Executive's annual bonus, or, with respect to any applicable period of
employment with Allergan, the Management Bonus Plan of Allergan.
7.3 Qualifying Termination. For purposes of this Agreement, a
"Qualifying Termination" shall mean termination of Executive's employment
hereunder due to either a Discharge Without Cause or a Voluntary Resignation for
Good Reason.
ARTICLE 8.
EXCISE TAXES
8.1 Indemnification for Excise Tax. In the event that Executive becomes
entitled to receive a Severance Payment hereunder, and such Severance Payment or
any other benefits or payments (including transfers of property, within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") (or any successor thereto) or the regulations thereunder) that Executive
receives, or is to receive, pursuant to this Agreement or any other agreement,
plan or arrangement with the Company in connection with a Change in Control of
the Company ("Other Benefits") shall be subject to the tax imposed pursuant to
Section 4999 of the Code (or any successor thereto) or any comparable provision
of state law (an "Excise Tax"), the following rules shall apply:
(a) The Company shall pay to Executive, within 30 days after a
Qualifying Termination, an additional amount (the "Gross-Up Payment") such that
the net amount retained by Executive, after deduction of any Excise Tax with
respect to the Severance Payments or the Other Benefits and any federal, state
and local income tax, employment tax and Excise Tax upon such Gross-Up Payment,
is equal to the amount that would have been retained by Executive if such Excise
Tax were not applicable, as determined by the accounting firm (the "Auditors")
serving as the Company's independent auditors immediately prior to the Change in
Control or the Pre-Spinoff Sale. It is intended that Executive shall not suffer
any loss or expense resulting from the assessment of any Excise Tax or the
Company's reimbursement of Executive for payment of any such Excise Tax.
(b) For purposes of determining whether any of the Severance
Payment or Other Benefits will be subject to an Excise Tax and the amount of
such Excise Tax, (i) any other payment or benefits received or to be received by
Executive in connection with a Change in
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Control of the Company or 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) shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code (or any successor thereto), and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code (or any successor thereto) shall be
treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by the Auditors and acceptable to Executive such other payments or
benefits (in whole or in part) do not constitute parachute payments, 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) of the Code (or any successor thereto), (ii) the amount of the
Severance Payments and Other Benefits 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 or Other Benefits or (B) the amount of excess parachute payments within
the meaning of Sections 280G(b)(1) and (4) of the Code (or any successor or
successors thereto), after applying clause (i), above, and (iii) the value of
any non-cash 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 (or any successor or successors thereto).
(c) For purposes of determining the amount of the Gross-Up
Payment, Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rates of taxation in the state and locality of Executive's residence on
the date of Executive's Qualifying Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes.
(d) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of Executive's Qualifying Termination, 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 interest
on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code (or any successor thereto) (the "Applicable Rate"). In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder
at the time of such Qualifying Termination (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 interest, determined at the Applicable Rate,
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
ARTICLE 9.
MITIGATION OR OFFSET; INSURANCE
9.1 Mitigation or Offset. Executive shall not be required to seek other
employment or to reduce any amount payable to her under Article 6 or 8 hereof,
and no such amount shall be reduced on account of any compensation received by
Executive from other employment. However, the Company's obligation to pay any
amount under this Agreement shall be reduced by any amount owed by the Executive
to the Company.
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9.2 Indemnification; Insurance.
(a) If Executive is a party or is threatened to be made a
party to any threatened, pending or completed claim, action, suit or proceeding,
or appeal therefrom, whether civil, criminal, administrative, investigative or
otherwise, because she is or was an officer of the Company, or at the express
request of the Company is or was serving, for purposes reasonably understood by
her to be for the Company, as a director, officer, partner, employee, agent or
trustee (or in any other capacity of an association, corporation, general or
limited partnership, joint venture, trust or other entity), the Company shall
indemnify Executive against any reasonable expenses (including attorneys' fees
and disbursements), and any judgments, fines and amounts paid in settlement
incurred by her in connection with such claim, action, suit, proceeding or
appeal therefrom to the extent such expenses, judgments, fines and amounts paid
in settlement were not advanced by the Company on her behalf pursuant to Section
8.2(b) below, to the fullest extent permitted under California law. The Company
shall provide Executive with directors and officers liability insurance coverage
at least as favorable to Executive as what the Company maintains as of the date
hereof or such greater coverage as the Company may maintain from time to time.
(b) Upon the written request of Executive specifying the
amount of a request advance and the intended use thereof, the Company shall
indemnify Executive for her expenses (including attorneys' fees and
disbursements), judgments, fines and amounts paid in settlement incurred by her
in connection with such claim, action, suit, proceeding or appeal whether civil,
criminal, administrative, investigative or otherwise, in advance of the final
disposition of any such claim, action, suit, proceeding or appeal therefrom to
the fullest extent permitted under California law.
ARTICLE 10.
RESTRICTIVE COVENANTS
10.1 Confidentiality Covenant. Executive hereby agrees that Executive
shall not, directly or indirectly, disclose or make available to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever, any Confidential Information (as hereinafter defined). For a period
of five (5) years after the termination of this Agreement, Executive agrees
that, upon termination of Executive's employment with the Company, all
Confidential Information in Executive's possession that is in written or other
tangible form (together with all copies or duplicates thereof, including
computer files) shall be returned to the Company and shall not be retained by
Executive or furnished to any third party, in any form except as provided
herein; provided, however, that Executive shall not be obligated to treat as
confidential, or return to the Company copies of any Confidential Information
that (i) was publicly known at the time of disclosure to Executive, (ii) becomes
publicly known or available thereafter other than by any means in violation of
this Agreement or any other duty owed to the Company by any person or entity, or
(iii) is lawfully disclosed to Executive by a third party. As used in this
Agreement, the term "Confidential Information" means: information disclosed to
Executive or known by Executive as a consequence of or through Executive's
relationship with the Company, about the products, research and development
efforts, regulatory efforts, manufacturing processes, customers, employees,
business methods, public relations methods, organization, procedures or
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finances, including, without limitation, information of or relating to
customer lists, of the Company and its affiliates.
10.2 Solicitation of Employees. Executive hereby agrees that during the Term and
for two (2) years thereafter, Executive shall not, either on Executive's own
account or jointly with or as a manager, agent, officer, employee, consultant,
partner, joint venturer, owner or stockholder or otherwise on behalf of any
other person, firm or corporation, directly or indirectly solicit or attempt to
solicit away from the Company any of its officers or employees or offer
employment to any person who, on or during the six (6) months immediately
preceding the date of such solicitation or offer, is or was an officer or
employee of the Company; provided, however, that a general advertisement to
which an employee of the Company responds shall in no event be deemed to result
in a breach of this Section 11.2.
10.3 Enforcement.
(a) The Company and Executive intend that the provisions of
this Article 10 shall be fully enforceable as set forth herein. To the extent
that any court of competent jurisdiction finds that any such provision is
enforceable by reason of its duration or scope, the Company and Executive agree
that it shall be enforced insofar as it may be enforced within the limits of the
law of that jurisdiction, but that the Agreement as a whole shall be unaffected
elsewhere.
(b) The Executive agrees that it would be difficult to
compensate Company fully for damages for any violation of the provisions of this
Agreement, including, without limitation, the provisions of this Article 10.
Accordingly, the Executive specifically agrees that the Company and its
successors and assigns shall be entitled to temporary and permanent injunctive
relief to enforce the provisions of this Agreement. This provision with respect
to injunctive relief shall not, however, diminish the right of the Company to
claim and recover damages in addition to injunctive relief.
(c) If Executive breaches any provision of Article 10, the
rights of Executive (or Executive's estate) to a benefit under the Agreement,
and the rights of a surviving spouse or any other person to a benefit under the
Agreement, shall be forfeited, unless the Board determines that such activity is
not detrimental to the best interests of the Company and its affiliates. Such
forfeiture shall be in addition to any other remedy of the Company under the
Agreement or at law and in equity with respect to such breach. However, if
Executive ceases such activity and notifies the Board of this action,
Executive's (or Executive's estate's) right to receive a benefit, and any right
of a surviving spouse or any other person to a benefit, may be restored within
sixty (60) days of said notification, unless the Board in its sole discretion
determines that the prior activity has caused serious injury to the Company and
its affiliates, which determination shall be final and conclusive.
ARTICLE 11.
GENERAL PROVISIONS
11.1 Release of Claims. Notwithstanding anything else in this
Agreement, the Company's obligation to provide any payments or other benefits to
Executive pursuant to
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Article 6 or 8 shall be conditioned on Executive's execution of a general
release of claims in the form required by the Company.
11.2 Entire Agreement and Modification. This Agreement constitutes the
entire agreement between the parties relating to the employment of the Executive
by the Company with respect to the Term, and there are no representations,
warranties or commitments, other than those set forth herein and in the Minutes
of the Company's Board, which relate to such subject matter. This Agreement may
be amended or modified only by an instrument in writing executed by all of the
parties hereto.
11.3 Successors.
(a) This Agreement is personal to Executive, and without the
prior written consent of the Company shall not be assignable by Executive other
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by Executive's legal representatives.
(b) The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company.
11.4 No Waiver. No waiver, by conduct or otherwise, by any party of any
term, provision, or condition of this Agreement, shall be deemed or construed as
a further or continuing waiver of any such term, provision, or condition nor as
a waiver of a similar or dissimilar condition or provision at the same time or
at any prior or subsequent time.
11.5 Remedies Not Exclusive. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
except as expressly provided in this Agreement, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing in law or in equity or by statute or otherwise. No
failure by any party to exercise, and no delay in exercising, any rights shall
be construed or deemed to be a waiver thereof, nor shall any single or partial
exercise by any party preclude any other or future exercise thereof or the
exercise of any other right.
11.6 Notices. Any notice or communications required or permitted to be
given to the parties hereto shall be delivered personally, sent via facsimile or
via an overnight courier service or be sent by United States registered or
certified mail, postage prepaid and return receipt requested, and addressed or
delivered as follows, or as such other addresses the party addressed may have
substituted by notice pursuant to this Section:
(a) If to the Company: Advanced Medical Optics, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
(b) If to Executive: Xxxxx X. Xxxxxxx
_______________________________
_______________________________
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Such notices or communications shall be deemed given upon delivery or, if
earlier, one (1) day after being sent by overnight courier or three (3) days
after being mailed by registered or certified mail, as provided above.
11.7 Governing Law. This Agreement is made and entered into in the
State of California, and shall be governed by the laws of California, without
giving effect to the principles of conflict of laws thereof.
11.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one Agreement.
11.9 Captions. The captions of this Agreement are inserted for
convenience and do not constitute a part hereof.
11.10 Severability. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein and there shall be deemed substituted for such invalid,
illegal or unenforceable provision such other provision as will most nearly
accomplish the intent of the parties to the extent permitted by the applicable
law. In case this Agreement, or any one or more of the provisions hereof, shall
be held to be invalid, illegal or unenforceable within any governmental
jurisdiction or subdivision thereof, this Agreement or any such provision
thereof shall not as a consequence thereof be deemed to be invalid, illegal or
unenforceable in any other governmental jurisdiction or subdivision thereof.
11.11 Survival. The representations and warranties contained herein and
the Executive's obligations under Article 10 shall survive termination of the
Term and of the Agreement as provided herein.
11.12 Dispute Resolution.
(a) Any controversy or dispute between the parties involving
the construction, interpretation, application or performance of the terms,
covenants, or conditions of this Agreement or in any way arising under this
Agreement (a "Covered Dispute") shall, on demand by either of the parties by
written notice served on the other party in the manner prescribed in Section 20
hereof, be referenced pursuant to the procedures described in California Code of
Civil Procedure ("CCP") Sections 638, et seq., as they may be amended from time
to time (the "Reference Procedures"), to a retired Judge from the Superior Court
for the County of Los Angeles or the County of Orange for a decision.
(b) The Reference Procedures shall be commenced by either
party by the filing in the Superior Court of the State of California for the
County of Orange of a petition pursuant to CCP Section 638(1) (a "Petition").
Said Petition shall designate as a referee a Judge from the list of retired Los
Angeles County and Orange County Superior Court Judges who have made themselves
available for trial or settlement of civil litigation under said Reference
Procedures. If the parties hereto are unable to agree on the designation of a
particular retired Los Angeles County or Orange County Superior Court Judge or
the designated Judge is unavailable
15
or unable to serve in such capacity, request shall be made in said Petition that
the Presiding or Assistant Presiding Judge of the Orange County Superior Court
appoint as referee a retired Los Angeles County or Orange County Superior Court
Judge from the aforementioned list.
(c) Except as hereafter agreed by the parties, the referee
shall apply the law of California in deciding the issues submitted hereunder.
Unless formal pleadings are waived by agreement among the parties and the
referee, the moving party shall file and serve its complaint within 15 days from
the date a referee is designated as provided herein, and the other party shall
have 15 days thereafter in which to plead to said complaint. Each of the parties
reserves its respective rights to allege and assert in such pleadings all
claims, causes of action, contentions and defenses which it may have arising out
of or relating to the general subject matter of the Covered Dispute that is
being determined pursuant to the Reference Procedures. Reasonable notice of any
motions before the referee shall be given, and all matters shall be set at the
convenience of the referee. Discovery shall be conducted as the parties agree or
as allowed by the referee. Unless waived by each of the parties, a reporter
shall be present at all proceedings before the referee.
(d) It is the parties' intention by this Section 11.12 that
all issues of fact and law and all matters of a legal and equitable nature
related to any Covered Dispute will be submitted for determination by a referee
designated as provided herein. Accordingly, the parties hereby stipulate that a
referee designated as provided herein shall have all powers of a Judge of the
Superior Court including, without limitation, the power to grant equitable and
interlocutory and permanent injunctive relief.
(e) Each of the parties specifically (i) consents to the
exercise of jurisdiction over his or her person by a referee designated as
provided herein with respect to any and all Covered Disputes; and (ii) consents
to the personal jurisdiction of the California courts with respect to any appeal
or review of the decision of any such referee.
(f) Each of the parties acknowledges that the decision by a
referee designated as provided herein shall be a basis for a judgment as
provided in CCP Section 644 and shall be subject to exception and review as
provided in CCP Section 645.
11.13 Attorneys' Fees. If any legal action or other proceeding is
brought for the enforcement of the Agreement, or because of an alleged dispute,
breach or default in connection with any of the provisions of the Agreement, the
successful or prevailing party shall be entitled to recover attorneys' fees and
other expenses and costs incurred in that action or proceeding, in addition to
any other relief that may be granted.
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11.14 Executive's Acknowledgment. Executive acknowledges (a) that she
has consulted with or has had the opportunity to consult with independent
counsel of her own choice concerning this Agreement and has been advised to do
so by the Company, and (b) that she has read and understands the Agreement, is
fully aware of its legal effect, and has entered into it freely based on her own
judgment.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
"COMPANY"
Advanced Medical Optics, Inc., a Delaware corporation
By:
-------------------------------------------------
Title: Chairman of the Board
-------------------------------------------
Date: January 18, 2002
"EXECUTIVE"
By:
------------------------------------------------
Xxxxx X. Xxxxxxx
------------------------------------------------
Signature
Date: January 18, 2002
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EXHIBIT A
Retention Agreement among the Company, Allergan and Executive dated January 18,
2002
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