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EXHIBIT (10)(G)
[EMPLOYMENT AGREEMENT FOR XXXXXX XXXXX XXX]
August 26, 1997
Dear Candidate:
This letter confirms the terms of our offer for your employment as Senior Vice
President of Pharmacia & Upjohn, Inc. (the "Company") and as head of global
business management for the Company. I very much hope that you will find this
opportunity exciting and rewarding and will accept our offer. The principal
terms of your employment will be:
1. You will join the Company on August 27, 1997 (your "Employment
Commencement Date") as an employee of Pharmacia & Upjohn Management Company
Ltd., a wholly owned U.K. subsidiary of the Company that provides management
services to the Company under contract ("PUMCO"). The Company's Board of
Directors will elect you as a Senior Vice President of the Company. You will
report directly to the President and Chief Executive Officer of PUMCO and the
Company. If the Company appoints an Executive Vice President for global
pharmaceutical operations you will report to him.
The term of this agreement will be in effect from your Employment Commencement
Date until August 26, 2000 and will be automatically renewed for an indefinite
period thereafter (the "Term"), unless and until at least sixty (60) days' prior
written notice of termination is given by either party stating the date of
termination.
You will devote substantially all of your business time to your duties and
responsibilities with PUMCO and the Company. However, you will not be precluded
from (i) serving on the board of directors of other companies (subject to the
reasonable approval of the President and Chief Executive Officer of PUMCO and
the Company) and boards of trade associations or charitable organizations; (ii)
engaging in charitable activities and community affairs; or (iii) managing your
personal investments and affairs, provided that such activities do not
materially interfere with your duties and responsibilities with PUMCO and the
Company.
2. Your beginning annual base salary will be $450,000 and will be subject
to annual review for increases.
3. You will be included in the Company's Annual Incentive Plan at a level
determined by the Compensation Committee of the Board to be appropriate based on
your position, job performance
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and Company policy. Your 1997 incentive compensation target award will be set at
70% of your annual base salary or $315,000. Your actual award will be calculated
as if you had been employed by PUMCO for all of 1997 but will be subject to
adjustment following the end of the year by the performance criteria established
for the Company's other senior executive officers (the 1997 performance criteria
provide that 30% of targeted incentive compensation will be adjusted based on
external measures (total market return and earnings per share) compared to a
group of comparable global pharmaceutical companies, and the remaining 70% will
be adjusted based on relative growth in the Company's annual sales, earnings and
cash flow and on individual performance). However, you will be guaranteed a
minimum cash bonus equal to the pro rata amount (based on the portion of the
year elapsed prior to your joining the Company) of the bonus you would have
received from your current employer for 1997. The amount of your 1997 incentive
compensation from the Company (including the guaranteed minimum amount) will be
reduced by the amount of any annual bonus you receive from your current employer
for services rendered during 1997. Payment of your incentive compensation will
be made in March 1998 unless you elect to defer payment until after you retire.
Your ongoing annual incentive compensation target awards will be set at 70% of
your annual base salary, payable if the performance criteria determined by the
Compensation Committee are met. If the performance criteria are exceeded or not
fully met, you will receive such greater or lesser amount as the Compensation
Committee determines is appropriate.
4. To provide you with new long-term equity incentive compensation and to
replace the equity awards from your current employer that you will lose as a
result of joining the Company, the Board of Directors of the Company will grant
you, as of your Employment Commencement Date, a stock option for 150,000 shares
of the Company's Common Stock, vesting over a three year period at the rate of
50,000 shares per year and each of the first three annual anniversaries of your
Employment Commencement Date.
The exercise price of the stock options will be the fair market value (defined
in the Company's Long-Term Incentive Plan as the average of the daily high and
low) for Pharmacia & Upjohn Common Stock on the New York Stock Exchange on the
last trading day before your Employment Commencement Date. All stock options
will be "Incentive Stock Options" to the maximum extent permitted and the
remainder will be non-qualified stock options under the U.S. Internal Revenue
Code, will be subject to the terms of the Plan and will expire ten years from
the date of grant.
Beginning in 1998, you will be granted stock options pursuant to the Company's
Long-Term Incentive Plan at the same time as other senior executives of the
Company and at a level determined by the Compensation Committee of the Board to
be appropriate based on your position, job performance, competitive practices
and Company policy. If your performance is found to be satisfactory, you will be
granted stock options for at least 75,000 shares of the Company's Common Stock
in 1998 and 1999.
Stock options not yet vested will nevertheless vest immediately upon your death
or disability, a Change in Control of the Company (as defined in the Company's
Long-Term Incentive Plan), your
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involuntary termination of employment other than for Cause (as defined below),
or your termination of employment for Good Reason (as defined below) provided
you do not enter into Competition (as defined below) with the Company within two
years after your employment is terminated.
5. You will be eligible to receive employee benefits and perquisites at
least as favorable as those provided to any other similarly situated senior
executives of the Company, including, without limitation, if offered to such
other senior executives, pension, profit sharing, savings, deferred compensation
and other retirement plans or programs, private medical and dental,
hospitalization, short-term and long-term disability, life insurance, accidental
death, travel accident, vacation and any other benefit programs or plans that
may be sponsored by the Company, including any plans that supplement the
above-listed plans, whether funded or unfunded.
You shall be entitled to post-retirement welfare benefits, if any, as are made
available by the Company to its senior level executives, provided that for this
purpose your period of employment shall be deemed to be the period necessary to
obtain the maximum level of such benefits.
To the extent that there is a period of employment required as a condition for
full benefit coverage under any employee benefit plan, you shall be deemed to
have met such requirement, and to the extent that you and/or your dependents
will not be eligible to participate fully in any medical/dental plan because of
any exclusion for preexisting conditions, the Company will either, at its
option, waive any such exclusion for pre-existing conditions or reimburse you
for the cost of paying for the COBRA continuation coverage available under your
prior employer's medical plans.
6. In the event your employment is involuntarily terminated by the Company
other than for Cause (as defined below) or you terminate your employment for
Good Reason (as defined below), during the Term of this agreement, provided that
you do not enter into Competition (as defined below) with the Company, then, as
liquidated damages and in lieu of any other damages or compensation under this
agreement, (i) you shall be entitled to receive a lump sum severance payment,
payable within 60 days after termination, equal to twice the combined amount of
your base salary and annual target incentive compensation as in effect on your
date of termination (ii) you shall have your period of employment service used
to calculate retirement and other employee benefits, including eligibility for
post-retirement medical/dental coverage, extended until you reach age 55 and the
compensation used to calculate your retirement benefits will be determined as if
you had continued to receive your then current annual base salary and annual
target incentive compensation until you reach age 55, which retirement benefits
will be paid in a lump sum within 30 days after termination subject to
appropriate actuarial reductions consistent with those applied under the plan to
reflect your age when you terminate employment; (iii) you will receive a
pro-rata annual incentive compensation award in March of the year following your
termination equal to the amount you would have received if you had worked for
the full year multiplied by a fraction where the numerator is the number of
months (rounded to the next highest number for a partial month) of
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the year elapsed prior to your termination and the denominator is 12; (iv) you
will be entitled to exercise during a period of up to five years following your
termination, in accordance with their terms, any remaining stock options that
had been granted to you prior to your termination (all of which will become
vested under such circumstances); (v) you shall be entitled to payment of your
expenses in connection with the relocation of your family from the United
Kingdom to the United States on the same basis as your expenses were paid with
respect to your relocation from the United States to the United Kingdom in
connection with the commencement of your employment with PUMCO, including the
provisions of paragraph 8 relating to any loss incurred on the sale of your
principal U.S. residence shall apply to any loss incurred on the sale of your
principal U.K. residence (if any); (vi) you and your dependents shall continue
to participate (with the same level of coverage) for the period in respect to
which you receive salary and bonus payments in (i) above, in all medical/dental,
accident, disability and life insurance plans on the same terms as in effect
immediately prior to your termination, provided, however, that such benefits
will cease on the date of your receiving equivalent benefits from a new
employer, and, at your option, you may have such benefits determined as if you
had terminated employment from the Company's principal U.S. operating
subsidiary; (vii) you shall be entitled to outplacement services, at the expense
of the Company, from a provider selected by you, subject to a maximum expense of
$50,000, and (viii) you shall receive any other amounts earned, accrued or owing
to you under the plans and programs of the Company or PUMCO. In the event you
should die during the Term of this agreement, while still employed by the
Company or PUMCO, your spouse or other beneficiary shall receive a lump sum
payment equal to two years' base salary offset by any death benefits payable
under the Company's life insurance plans under which you are covered. In the
event you enter into Competition with the Company within two years after your
employment is terminated, and you have received severance payments under
subparagraph (i) above, or additional retirement or other employee benefits
under subparagraph (ii) above, you agree to promptly repay the amount of such
severance payments, additional retirement or other employee benefits and
restricted stock to the Company, and any remaining stock options will be
canceled.
7. In the event that, during the Term of this agreement, you voluntarily
terminate your employment (other than for Good Reason or due to permanent
disability) or you are discharged by the Company for Cause, you will forfeit
your right to receive any salary, incentive compensation or severance pay that
has not been fully earned at the time your employment terminates, provided,
however, you will be entitled to receive any benefits or amounts accrued but not
yet paid as of the date of your termination, and you will be able to exercise
any remaining vested stock options only during the three months following
termination of your employment.
8. You will receive the Company's customary relocation benefits. You shall
be reimbursed for any loss incurred on the sale of your principal U.S. residence
(measured by the difference between the net sales price you receive after
deducting brokerage fees and closing costs and the original purchase price you
paid plus the reasonable cost of improvements made to your residence). If this
loss cannot be fully deducted for your U.S. income taxes, the amount not
deductible will be grossed-up for any resulting taxes. In lieu of selling your
home yourself, the Company will
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purchase your home for an amount equal to the average appraised value of your
home as determined by at least two independent real estate appraisers mutually
satisfactory to you and the Company, which amount will be deemed your net sales
price for the purpose of determining the amount of any loss to be reimbursed by
the Company. The Company will also reimburse you, grossed-up for any resulting
taxes, for reasonable house-hunting, personal transportation, moving expenses,
temporary living expenses and other related costs associated with your move to
Pharmacia & Upjohn's management center in Windsor, England. The Company will
also pay you $25,189, grossed up for any resulting taxes, for incidental
expenses incurred in establishing a residence in England.
9. (a) In order to provide comparable pension benefits to what you would
have been entitled to receive from your current employer, when your employment
with the Company terminates (whether with or without Good Reason or Cause), the
Company will pay you the greater of (i) the amount of (A) the retirement income
you would have been entitled to receive under the retirement benefit formula now
in effect with your current employer if you had remained employed by your
current employer until your employment with the Company or PUMCO terminates and
if your current employer compensation had increased at a 5% compounded rate
annually, less (B) the amount of any qualified or non-qualified retirement
income you are actually entitled to receive from your current employer; or (ii)
the amount of retirement income you are entitled to receive under the Company's
Global Officer Pension Plan (or any other retirement plan hereafter provided by
the Company for its senior executive officers) using your actual years of
service and compensation with the Company or PUMCO, as described in paragraph
(b) below.
(b) The Company's Global Officer Pension Plan, which is not qualified
under the U.S. Internal Revenue Code, supplements the officer's other sources of
retirement income to provide the officer with the actuarial value of an annual
life annuity of 65% of the officer's highest three-year average annual salary
and cash bonus compensation within the ten years prior to retirement from the
Company, provided the officer retires at age 65 with at least ten years of
service under the Plan. Appropriate actuarial adjustments consistent with those
applied under the Plan will be made if you have less than ten years of service
under the Plan or retire before age 65. Subject to such adjustments, you may
receive your retirement benefits in a lump sum within thirty days following your
termination of employment. The benefits payable under the Company's Global
Officer Pension Plan will be offset for any social security or other
governmental retirement income and any retirement income from any prior
employers that you may be entitled to receive.
(c) If you die while employed by the Company or thereafter under
circumstances in which a spousal survivor's benefit would have been payable
under the retirement plans of your current employer had you continued employment
with your current employer, and/or you elect the pre-retirement 60% spousal
survivor's benefit under the Company's Global Officer Pension Plan, or a spousal
survivor's benefit becomes payable under any other retirement plans of the
Company under which you are covered, then the benefit payable by the Company to
your surviving spouse shall be
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the greater of (i) the amount which would have been payable as a spousal
survivor's benefit under the retirement plans of your current employer had you
continued employment with your current employer or (ii) the amount payable as a
spousal survivor's benefit under the Global Officer Pension Plan or any other
retirement plans of the Company under which you are covered, with each such
amount being calculated in accordance with the assumptions described in and
offsets corresponding to those provided for in subparagraph (a) above,
subparagraph (b) above, and/or subparagraph (d) below, whichever are applicable
to the circumstances of the termination of your employment with the Company.
(d) For the purpose of the foregoing calculations, alternative forms of
benefits will be made actuarially equivalent using the actuarial assumptions
then applied to all senior executive officers under the Company's Global Officer
Pension Plan (or any successor plan).
10. You are authorized to incur reasonable expenses in carrying out your
duties and responsibilities with the Company and PUMCO, and the Company shall
promptly reimburse you for all business expenses in accordance with Company
policy. The Company shall pay your reasonable expenses (up to a maximum amount
of $25,000) for legal counsel and financial advice in connection with the
negotiation and documentation of your employment arrangements with the Company
and PUMCO. You will be provided with an automobile at Company expense. You will
receive annual assistance from an independent accounting firm mutually
satisfactory to you and the Company, at Company expense, in preparing your
income tax returns. In the event tax protection or similar provisions are made
available to the President and Chief Executive Officer of the Company at any
time, the same provisions will be made available to you. You and your family
residing with you in the U.K. will be entitled to one Company-paid business
class trip to the United States each year. Your children will be entitled to
attend private school in the U.K. through high school at Company expense.
11. During the period of your employment and thereafter, you will maintain
the confidentiality of all confidential or proprietary information relating to
the business of the Company or any of its subsidiaries or affiliates provided,
however, you may disclose such information as (i) may be required or appropriate
in carrying out your duties at the Company or PUMCO or (ii) may be required for
you to disclose by applicable law, governmental regulations or judicial or
regulatory process.
12. To the fullest extent permitted by applicable law, all intellectual
property (including patents, trademarks, and copyrights) which are made,
developed or acquired by you in the course of your employment with the Company
will be and remain the absolute property of the Company.
13. Without the written consent of the Board of Directors of the Company,
you agree that during the period of your employment with the Company or PUMCO
and for a period of two years following the termination of your employment, you
will not enter into Competition with the
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Company. "Competition" as used in this agreement means that you commence
employment with, or provide substantial consulting services to, any
pharmaceutical company (except companies where sales from pharmaceutical
products constitute less than 20% of total sales). Anything herein to the
contrary notwithstanding, your service solely as a member of the Board of
Directors of a company whose annual sales are less than $100 million shall not
be deemed to be Competition for purposes of this agreement. For purposes of the
preceding sentence, if a company is a subsidiary of another company, the sales
of both companies shall be taken into account.
14. To the fullest extent permitted by applicable law, the Company will,
during and after termination of your employment, indemnify you (including
providing advancement of expenses) for any judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees, incurred by you
in connection with the defense of any lawsuit or other claim or investigation to
which you are made, or threatened to be made, a party or witness by reason of
being or having been an officer, director or employee of the Company or any of
its subsidiaries or affiliates. In addition, you will be covered under any
directors and officers' liability insurance policy for your acts (or non-acts)
as an officer or director of the Company or any of its subsidiaries or
affiliates to the extent the Company provides such coverage for its senior
executive officers.
15. Any disputes arising under or in connection with this agreement shall,
unless other arrangements are agreed to by you and the Company, be resolved by
binding arbitration to be held in London, England, in accordance with the rules
and procedures of the London Court of International Arbitration, and judgment
upon any award rendered by the arbitrator(s) may be entered in any court having
jurisdiction. Costs of the arbitration or litigation, including (but not by way
of limitation) reasonable attorney's fees of both parties, shall be borne by the
party which does not prevail in the proceedings. In the event that each party
prevails as to certain aspects of the proceedings, the arbitrator(s) or the
court shall determine an appropriate allocation of costs between the parties.
16. In the event of termination of your employment, you will immediately,
unless otherwise requested by the Company's Board of Directors, resign from all
directorships, trusteeships, other offices and employment held at that time with
the Company or any of its subsidiaries or affiliates.
17. For purposes of this agreement, "Cause" means (i) a material breach by
you of your duties and responsibilities (other than as a result of incapacity
due to physical or mental illness) which is demonstrably willful and deliberate
on your part, which is committed in bad faith or without reasonable belief that
such breach is in the best interests of the Company, and which is not remedied
in a reasonable period of time after receipt of written notice from the Company
specifying such breach; or (ii) your conviction of a felony which is materially
and demonstrably injurious to the Company as determined in the sole discretion
of the Board of Directors of the Company.
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18. For purposes of this agreement, "Good Reason" means that, without your
consent, (i) your rate of annual base salary or the target amount of your annual
cash incentive bonus are reduced in a manner that is not applied proportionately
to all other senior executive officers of the Company, including the President
and Chief Executive Officer; (ii) the Company fails to retain you as Senior Vice
President of the Company; (iii) there is a material diminution in your duties,
or the assignment to you of duties which are materially inconsistent with your
duties or which materially impair your ability to perform your duties with the
Company and PUMCO, provided, however, that in the event PUMCO ceases to provide
senior management services to the Company under contract, any changes related
solely to PUMCO shall not be deemed Good Reason; (iv) there is a change in your
reporting so that you no longer report directly to an Executive Vice President
or higher ranking officer of the Company and PUMCO; provided, however, that in
the event PUMCO ceases to provide senior management services to the Company
under contract, any changes related solely to PUMCO shall not be deemed Good
Reason unless you no longer report directly to the Executive Vice President or
higher ranking officer of the Company; or (v) there is a material breach of this
agreement by the Company which is not remedied in a reasonable period of time
after receipt of written notice from you specifying such breach.
19. The obligation of the Company and PUMCO to make any payments provided
for hereunder and otherwise to perform their obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company or PUMCO may have against you or others. In no event
shall you be obligated to seek other employment or take other action by way of
mitigation of the amounts payable to you under any of the provisions of this
agreement, and such amounts shall not be reduced (except as otherwise
specifically provided herein) whether or not you obtain other employment.
20. In the event of any change in the outstanding shares of the Company's
Common Stock (including any increase or decrease in such shares) by reason of
any stock dividend or split, recapitalization, merger, consolidation, spinoff,
combination or exchange of shares or other similar corporate change, or any
distributions to common stockholders other than regular cash dividends, the
Compensation Committee of the Board may make such substitution or adjustment, if
any, as it deems to be equitable, as to the number or kind of shares of Common
Stock provided for in this agreement.
21. As with all prospective employees, a recent medical examination
evidencing general good health must be completed prior to employment. Your
physician should send the results of such examination to the Company's Chief
Medical Officer at the management center in Windsor, England.
22. This agreement will be governed by and construed in accordance with the
laws of the State of Delaware, U.S.A.
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23. (a) No rights or obligations of the Company under this agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or pursuant to the sale or transfer of
all or substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of the
assets of the Company.
(b) This agreement shall not be terminated by any merger, consolidation
or transfer of assets of the Company referred to above. In the event of any such
merger, consolidation or transfer of assets, the provisions of this agreement
shall be binding upon the surviving or resulting corporation or the person or
entity to which such assets are transferred.
(c) The Company agrees that concurrently with any merger, consolidation
or transfer of assets referred to above, it will cause any successor or
transferee unconditionally to assume, either contractually or as a matter of
law, all of the obligations of the Company hereunder.
(d) This agreement shall inure to the benefit of, and be enforceable by
or against, you or your personal or legal representatives, executors,
administrators, successors, heirs, distributes, designees and legatees. None of
your rights or obligations under this agreement may be assigned or transferred
by you other than your rights to compensation and benefits, which may be
transferred only by will or operation of law. If you should die while any
amounts or benefits have been accrued by you but not yet paid as of the date of
your death and which would be payable to you hereunder had you continued to
live, all such amounts and benefits unless otherwise provided herein shall be
paid or provided in accordance with the terms of this agreement to such person
or persons appointed in writing by you to receive such amounts or, if no such
person is so appointed, to your estate.
24. No provisions of this agreement may be waived, modified or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
both you and an authorized officer of the Company. No waiver by any party hereto
at any time of any breach by any other party hereto of, or compliance with, any
condition or provision of this agreement to be performed by such other party
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 any party which are not set forth expressly in this agreement.
25. This agreement sets forth the entire agreement of the parties hereto in
respect of the subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto in respect of the subject matter contained
herein.
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26. This agreement may be executed by the parties in two or more
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall constitute one and the same instrument, and all signatures
need not appear on any one counterpart. A faxed signature of a party which is a
reproduction of a genuine signature of that party shall be conclusive evidence
of execution of this agreement by that party.
Very truly yours,
XXXX XXXXXX
President and Chief Executive Officer
I accept the terms set forth in this letter and will serve in the capacity
stated:
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Dated: August _________, 1997
