EMPLOYMENT AGREEMENT AGREEMENT, by and between Schering-Plough Corporation, a New Jersey corporation (the "Company") and Carrie S. Cox (the "Executive"), dated as of the 12th day of May, 2003.
Exhibit 99.6
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AGREEMENT, by and between Schering-Plough Corporation, a New Jersey
corporation (the "Company") and Xxxxxx X. Xxx (the "Executive"), dated as of the
12th day of May, 2003.
1. EMPLOYMENT PERIOD. The Company agrees to employ the Executive and the
Executive agrees to remain in the employ of the Company, in accordance with the
terms and provisions of this Agreement, for the period (the "Employment Period")
beginning on May 15, 2003 (the "Commencement Date"), and ending as of the close
of business on May 31, 2008; PROVIDED, HOWEVER, that unless on or before the
90th day immediately preceding each May 31 on which the Employment Period would
otherwise end, either party delivers to the other party a written notice of its
election to terminate the Employment Period on such May 31, the Employment
Period shall be extended for an additional one-year period commencing on the
June 1 immediately succeeding such May 31 and ending as of the close of business
on the following May 31. In the event a Change of Control (as defined in Section
11(d)) occurs during the Employment Period, the Employment Period shall be a
period of not less than three years commencing on the Change of Control Date (as
defined in Section 11(b)). Notwithstanding anything else herein, the Employment
Period shall end upon the termination of the Executive's employment as provided
in Section 4; and if not previously terminated, the Employment Period shall
terminate in all events at the close of business on October 1, 2022.
2. Duties and Powers of Executive.
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(a) POSITION; LOCATION. During the Employment Period, the Executive shall be
employed as Executive Vice President, and President, Global Pharmaceuticals, of
the Company, or in such other substantially equivalent position requested by the
Chief Executive Officer of the Company (the "CEO") for which the Executive is
qualified by education, training and experience. The Executive will serve as an
officer of the Company, and will report directly to the CEO. The Executive's
services shall be performed at the Company's present campus in Kenilworth, New
Jersey or, subject to Section 4(c)(ii), any location at which the headquarters
of the Company is hereafter located.
(b) DUTIES. During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (i) serve,
with the approval of the CEO (which approval shall not be unreasonably withheld
or delayed), on corporate, civic or charitable boards or committees, (ii)
deliver lectures, fulfill speaking engagements or teach at educational
institutions, and (iii) manage personal investments, so long as such activities
do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement.
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3. Compensation. The Executive shall receive the following
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compensation for her services:
(a) SALARY. During the Employment Period, the Executive shall be paid a base
salary (the "Base Salary") at an annual rate of not less than $900,000, payable
in accordance with the Company's normal payroll practices as in effect from time
to time for its senior executives. From time to time and at least annually, the
CEO shall review and recommend to the Executive Compensation and Organization
Committee (the "Committee") of the Board of Directors of the Company (the
"Board") the annual rate of the Base Salary for appropriate upward adjustments
(such rate as in effect from time to time, the "Annual Base Salary"); PROVIDED,
HOWEVER, that during a Change of Control Period (as defined in Section 11(c)),
the Annual Base Salary shall be increased at any time and from time to time as
shall be substantially consistent with increases in base salary generally
awarded in the ordinary course of business to other senior executives of the
Company. Annual Base Salary shall not be reduced after any increase thereof
pursuant to this Section 3(a). Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation of the Company under this
Agreement.
(b) INCENTIVE CASH COMPENSATION. For each year during the Employment Period
beginning with 2003, the Executive shall be eligible for cash incentive awards
(each, an "Annual Bonus") under the Company's Executive Incentive Plan or any
successor or replacement plan (collectively, the "Cash Bonus Plans"), in
accordance with the terms thereof; provided, however, that, during the Change of
Control Period, the Executive shall be awarded, for each fiscal year ending
during the Change of Control Period, an Annual Bonus at least equal to the
greater of (i) the highest Annual Bonus (annualized for any fiscal year
consisting of less than twelve full months) earned by the Executive under the
Cash Bonus Plans in respect of the three most recent full fiscal years ending on
or prior to the Change of Control Date, or (ii) the Executive's target Annual
Bonus for the fiscal year during which the Change of Control Date occurs. The
Executive's target Annual Bonus for 2003 shall be 80% of her Base Salary, and
her maximum Annual Bonus for 2003 shall be 200% of the target Annual Bonus;
provided, that in no event shall her actual Annual Bonus for 2003 be less than
80% of the Base Salary paid in 2003. Thereafter, for each year during the
Employment Period, the Executive's target Annual Bonus shall be at least 80% of
her Base Salary and her maximum Annual Bonus shall be at least 200% of the
target Annual Bonus.
(c) EQUITY COMPENSATION.
(i) The Company shall grant to the Executive 100,000 restricted
shares of the Company's common stock (the "Shares"), on the
Commencement Date, in accordance with the form of grant
attached hereto as Exhibit A and which Shares shall be the
subject of a duly filed registration statement (Form S-8),
and options to purchase 450,000 shares of the Company's
common stock (the "Options") on May 14, 2003. Except as
otherwise provided in Sections 3(j), 5(a)(iv), 5(b)(ii),
and Exhibit A, the Shares shall vest on the third
anniversary of the Commencement Date, if the Executive
remains employed by the Company on that anniversary. The
Options shall be granted under the Schering-Plough
Corporation 2002 Stock Incentive Plan (the "2002 Stock
Plan"), effective May 14, 2003, but subject to forfeiture
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if the Executive fails for any reason to commence
employment hereunder on the Commencement Date. Except as
otherwise provided in Sections 3(j), 5(a)(iv), and
5(b)(ii), the Options (A) shall vest as to 150,000 shares
on May 14, 2004, as to an additional 150,000 shares on May
14, 2005, and as to the remaining 150,000 shares on May 14,
2006, if the Executive remains employed by the Company on
those anniversaries, (B) shall have a term of ten years
(subject to earlier expiration as provided in the 2002
Stock Plan), (C) shall have a per-share exercise price
equal to the fair market value of a Share, as determined
under the 2002 Stock Plan, on May 14, 2003, and (D) shall
otherwise be subject to the same terms and conditions as
the stock option grants to other senior executives of the
Company for 2003.
(ii) Notwithstanding Section 3(c)(i), if before the Shares or
the Options are granted there occurs an event resulting in
an adjustment pursuant to Section 11 of the 2002 Stock
Plan, a corresponding adjustment shall be made to the
numbers of shares set forth in Section 3(c)(i). In
addition, any event resulting in an adjustment pursuant to
Section 11 of the 2002 Stock Plan shall result in a
corresponding adjustment to the number of Options that vest
on the dates specified in Section 3(c)(i).
(iii) The Executive shall also receive regular grants of stock
options and/or other equity awards in accordance with the
Company's practices as in effect from time to time during the
Employment Period; provided, however, that no such grants
shall be required to be made to the Executive before January
1, 2004.
(d) INCENTIVE, SAVINGS, AND RETIREMENT PLANS. In addition, the Executive shall
be entitled, during the Employment Period, to participate in all other
incentive, profit sharing, savings and deferred compensation plans, and
retirement plans, practices, policies and programs, that are applicable
generally to other senior executives of the Company, as in effect from time to
time. Without limiting the generality of the foregoing, it is acknowledged that
for purposes of the Schering-Plough Corporation Supplemental Executive
Retirement Plan (the "SERP"), the Executive shall accrue years of Service in
E-grade status (as defined in the SERP) beginning on the Commencement Date, and
her accrued benefit under the SERP shall be fully vested at all times.
(e) WELFARE BENEFIT PLANS. During the Employment Period, the Executive and, if
applicable, the Executive's family, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans, practices, policies and
programs provided by the Company (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other senior executives of the Company, as in effect
from time to time.
(f) EXPENSES. The Executive shall be entitled to receive prompt reimbursement
for all reasonable business expenses incurred by her during the Employment
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Period, in accordance with the policies, practices and procedures of the Company
from time to time in effect, commensurate with her position and on a basis at
least comparable to that provided to other senior executives actively employed
by the Company.
(g) FRINGE BENEFITS AND PERQUISITES. During the Employment Period, the Executive
shall be entitled to fringe benefits and perquisites in accordance with the
plans, practices, programs and policies of the Company from time to time in
effect, commensurate with her position and at least comparable to those provided
to other senior executives actively employed by the Company, including, without
limitation, tax and financial planning services. For the Executive's safety and
convenience, such benefits shall include transportation services for personal
travel, subject to reasonable notice and availability; provided, that to the
extent such services would result in imputed income to the Executive in excess
of $25,000 per year under applicable U.S. federal tax law, they shall be subject
to the prior consent of the CEO.
(h) OFFICE AND SUPPORT STAFF. During the Employment Period, the Executive shall
be entitled to an office of a size and with furnishings and other appointments,
and to an exclusive personal secretary of her own choosing, and other assistance
commensurate with her position and at least comparable to those provided to
other senior executives actively employed by the Company.
(i) VACATION AND OTHER ABSENCES. During the Employment Period, the Executive
shall be entitled to paid vacation of at least four weeks per year, and such
other paid absences whether for holidays, illness, personal time or any similar
purposes, in accordance with the plans, policies, programs and practices of the
Company in effect from time to time, commensurate with her position and at least
comparable to those provided to other senior executives actively employed by the
Company.
(j) DURING CHANGE OF CONTROL PERIOD. Without limiting the generality of the
foregoing, during a Change of Control Period, the incentive, savings and
retirement benefit opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such distinction is
applicable) and the other benefits provided to the Executive pursuant to
Sections 3(d), (e), (f), (g), (h) and (i) shall in no event be less than the
most favorable such opportunities and benefits provided to the Executive by the
Company and its affiliates at any time during the 120-day period immediately
preceding the Change of Control Date. In addition, notwithstanding anything
herein or in the 2002 Stock Plan to the contrary, upon the Change of Control
Date, the Shares and the Options shall immediately vest in full, and the Options
shall otherwise be treated in accordance with the terms and conditions of the
2002 Stock Plan.
4. Termination of Employment.
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(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death. Either the Executive or the Company,
upon a determination in good faith that the Disability (as defined below) of the
Executive has occurred, may give written notice in accordance with Section 13(b)
of this Agreement of her or its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
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Company or the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean, after reasonable accommodations have been provided to
the Executive, the absence of the Executive from the Executive's duties with the
Company on a full-time basis for six consecutive months as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) TERMINATION BY THE COMPANY. The Company may terminate the Executive's
employment for Cause or without Cause, in accordance with Section 4(d) below.
For purposes of this Agreement, "Cause" shall mean (i) the Executive's willful
and continued neglect of her duties under Section 2 of this Agreement (other
than as a result of incapacity due to physical or mental illness or injury) that
is not remedied within a reasonable period of time after a written demand for
substantial performance is delivered to the Executive by the Board or the CEO
which specifically identifies the manner in which the Board or the CEO believes
that the Executive has neglected her duties, (ii) willful misconduct by the
Executive that results, or could reasonably be expected to result, in material
harm to the business or reputation of the Company, or (iii) the Executive's
conviction of (or plea of nolo contendere to) a felony involving moral
turpitude. An act shall be considered "willful" if it is committed without
reasonable belief that such act is in the best interests of the Company.
(c) TERMINATION BY THE EXECUTIVE. The Executive may terminate her employment for
Good Reason or without Good Reason, in accordance with Section 4(d) below. For
the avoidance of doubt, the Executive's voluntary resignation in accordance with
Section 4(d) below shall not constitute a breach of this Agreement. For purposes
of this Agreement, "Good Reason" shall mean the occurrence of any of the
following without the Executive's consent:
(i) the assignment to the Executive of any duties substantially
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2(a) of this Agreement, or any
other action by the Company which results in a diminution
in such position, authority, duties, or responsibilities or
in the Executive's title, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company within 15
days after receipt of notice thereof given by the Executive;
(ii) the Company's requiring the Executive (A) at any time
during the Employment Period, to be based at any office or
location that is 35 miles or further from the previous
office or location where the Executive was based, or (B)
during the Change of Control Period, to travel on Company
business to a substantially greater extent than required
prior to the Change of Control Date;
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(iii) any failure by the Company to comply with any of the
provisions of Section 3 of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement;
(v) notice by the Company at any time, pursuant to Section 1,
of its election to terminate or otherwise not extend the
Employment Period; or
(vi) any failure by the Company to comply with and satisfy Section
10(c) of this Agreement, provided that the successor has
received at least ten days' prior written notice from the
Company or the Executive of the requirements of Section 10(c)
of this Agreement.
For purposes of this Section 4(c): (I) during the Change of Control Period, any
good faith determination of Good Reason made by the Executive shall be
conclusive and binding on the Company; and (II) the Executive shall be
considered to have consented to an action or failure to act by the Company
described above if she consents to such action or failure to act in writing.
(d) PROCESS FOR TERMINATION. Any termination of the Executive's employment,
other than as a result of her death or Disability, shall be implemented by the
initiating party's giving a Notice of Termination to the other party, in
accordance with Section 13(b) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement (if any) relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined in Section 4(e)) is other than the date of receipt of such notice,
specifies the Date of Termination (which date shall be not more than thirty days
after the giving of such notice). The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. If the Executive's employment is terminated for any
reason other than the Executive's death or Disability, the "Date of Termination"
shall be the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be. If the Executive's employment is
terminated by reason of the Executive's death, the "Date of Termination" shall
be the date of death. If the Executive's employment is terminated by reason of
the Executive's Disability, the "Date of Termination" shall be the Disability
Effective Date.
(f) NOTICES OF NONRENEWAL. If the Company shall deliver to the Executive a
written notice of its election to terminate the Executive's employment at the
end of the Employment Period as provided in the proviso to Section 1, then the
Executive shall have the right to terminate her employment for Good Reason. If
the Executive shall deliver to the
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Company such a notice, then her employment shall be deemed to have been
terminated by her without Good Reason upon the expiration of the Employment Period.
5. Obligations of the Company upon Termination.
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(a) GOOD REASON OR DURING THE WINDOW PERIOD; OTHER THAN FOR CAUSE, DEATH OR
DISABILITY. If, during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause (and other than due to Disability),
the Executive shall terminate her employment for Good Reason at any time, or the
Executive shall terminate her employment for any reason during the 30-day period
(the "Window Period") immediately following the first anniversary of the Change
of Control Date:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of
the following amounts:
(A) the sum of (1) the Executive's Base Salary through the Date
of Termination to the extent not theretofore paid; (2) any
compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) to the
extent the Executive has elected to accelerate such
compensation on her termination; (3) any accrued vacation
pay; and (4) unreimbursed expenses due the Executive
pursuant to Section 3(f), in each case to the extent not
theretofore paid (the sum of the amounts described in
clauses (1)-(4) shall be hereinafter referred to as the
"Accrued Obligations");
(B) the product of (1) the greater of (I) the highest Annual
Bonus (annualized for any fiscal year consisting of less
than twelve full months) earned by the Executive under the
Cash Bonus Plans in respect of the three most recent full
fiscal years ending on or prior to the Date of Termination,
or (II) the Executive's target Annual Bonus for the fiscal
year during which the Date of Termination occurs (such
greater amount, the "Highest Annual Bonus") and (2) a
fraction, the numerator of which is the number of days in
the fiscal year of such termination through the Date of
Termination, and the denominator of which is 365 (such
fraction, the "Fraction," and such product, the "Pro-Rata
Bonus");
(C) the product of (1) the Multiple (as defined in Section
11(e) below) and (2) the sum of (x) the Executive's Annual
Base Salary (determined without regard to any reduction
constituting Good Reason), (y) the Highest Annual Bonus and
(z) the highest of the amounts contributed on behalf of the
Executive under the Schering Corporation Employee's Profit
Sharing Plan or any successor or replacement plan thereto
and the Schering Corporation Profit Sharing Excess Benefits
Plan or any successor or replacement plan thereto, for each
of the three most recently completed fiscal years preceding
the Date of Termination (and annualized for any fiscal year
consisting of less than twelve full months) or, if no such
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contributions have yet been made, the amounts (determined
on an annualized basis) that would have been so contributed
with respect to the year in which the Date of Termination
occurs (the "Highest Profit Sharing Contribution"); and
(D) the product of (I) the Highest Profit Sharing Contribution,
and (II) the Fraction;
(ii) for a number of years from and after the Date of
Termination equal to the Multiple, or such longer period as
any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have
been provided to them in accordance with the plans,
programs, practices and policies described in Section 3(e)
of this Agreement if the Executive's employment had not
been terminated, in accordance with the most favorable
plans, practices, programs or policies of the Company as in
effect and applicable generally to other senior executives
of the Company and their families during the 90-day period
immediately preceding the Date of Termination or, if more
favorable to the Executive, as in effect at any time
thereafter or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to
other senior executives of the Company and their families,
and for purposes of determining eligibility of the
Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be
considered to have remained employed for a number of years
after the Date of Termination equal to the Multiple;
provided, however, that if the Executive becomes reemployed
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with another employer and is eligible to receive medical or
other welfare benefits under another employer provided
plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such
other plan during such applicable period of eligibility;
and, provided, further, that to the extent that the
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Company's plans, programs and arrangements do not permit
such continuation of the Executive's participation
following her termination, the Company shall provide the
Executive, no less frequently than quarterly in advance
with an amount which, after taxes, is sufficient for her to
purchase equivalent benefits (the continuation of welfare
benefits for the applicable period set forth in this
Section 5(a)(ii) shall be hereinafter referred to as
"Welfare Benefit Continuation");
(iii) for purposes of calculating the Executive's benefits (and
benefits due to the Executive's beneficiaries) under the
SERP, the following special rules shall apply: (A) if the
Date of Termination occurs before the Executive's 60th
birthday, the Executive's Benefit (as that term is used in
the SERP) shall in no event be less than 26 percent of her
Average Final Earnings (as defined in the SERP, subject to
clause (B) of this sentence, and provided that if the
Executive has been employed by the Company for fewer than
sixty months, Average Final Earnings shall be based upon
her Earnings
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during the period of her employment with the Company), payable
in accordance with the payment provisions of the SERP, but
immediately in a lump sum or in the form of an annuity
commencing immediately, and without reduction for early
payment; and (B) no compensation paid pursuant to this Section
5(a), other than pursuant to Section 5(a)(i)(A)(1) and Section
5(a)(i)(B), shall be taken into account in determining the
Executive's Average Final Earnings;
(iv) notwithstanding any provision of the applicable plans and
agreements to the contrary, the Shares and the Options
shall immediately vest in full and the Executive shall be
treated for purposes of all equity awards (including
without limitation the Shares and the Options) granted to
her by the Company that she holds immediately before the
Date of Termination as if she had incurred a "Termination
of Employment by reason of retirement" within the coverage
of Section 6(f)(i) of the 2002 Stock Plan (if such awards
were granted under the 2002 Stock Plan) or as if she had
retired (if such awards were granted under any other plan);
and
(v) the Company shall timely provide the Executive with any Other
Benefits as provided in Section 6, and fulfill any
indemnification and insurance obligations it may have pursuant
to Section 13(h).
(b) DISABILITY OR DEATH. If the Executive's employment is terminated during the
Employment Period by reason of the Executive's Disability or death:
(i) the Company shall pay the Accrued Obligations and the
Pro-Rata Bonus to the Executive (or, in the event of
termination of employment due to the death of the
Executive, to the Executive's estate or beneficiary) in a
lump sum in cash within 30 days after the Date of
Termination;
(ii) notwithstanding any provision of the applicable plans and
agreements to the contrary, the Shares and the Options
shall immediately vest in full and the Executive shall be
treated for purposes of all equity awards (including
without limitation the Shares and the Options) granted to
her by the Company that she holds immediately before the
Date of Termination as if she had incurred a "Termination
of Employment by reason of retirement" within the coverage
of Section 6(f)(i) of the 2002 Stock Plan (if such awards
were granted under the 2002 Stock Plan) or as if she had
retired (if such awards were granted under any other plan);
(iii) if the Executive's termination of employment was by reason of
Disability, the Executive shall receive Welfare Benefit
Continuation under the same terms as if her termination of
employment had entitled her to such benefits pursuant to
Section 5(a)(ii); and
(iv) the Company shall have no further obligations to the Executive
or to the Executive's legal representatives under this
Agreement other than the
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timely payment or provision of Other Benefits, and any
indemnification and insurance obligations pursuant to Section
13(h).
(c) CAUSE; OTHER THAN FOR GOOD REASON. If, during the Employment Period, the
Executive's employment shall be terminated for Cause, the Company shall have no
further obligations to the Executive under this Agreement other than the
obligation to pay to the Executive the Accrued Obligations, the timely payment
or provision of Other Benefits, and any indemnification and insurance
obligations pursuant to Section 13(h). If the Executive terminates employment
during the Employment Period, excluding any termination for Good Reason, any
termination during the Window Period for any reason or a termination due to
Disability, the Company shall have no further obligations to the Executive,
other than to pay all Accrued Obligations and the Pro-Rata Bonus, the timely
payment or provision of Other Benefits, and any indemnification and insurance
obligations pursuant to Section 13(h). In either such case, the Accrued
Obligations and, if applicable, the Pro-Rata Bonus, shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
(d) RESOLUTION OF DISPUTES. If there shall be any dispute between the Company
and the Executive about (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or (ii) in
the event of any termination by the Executive of her employment, whether such
termination was for Good Reason or, if such termination occurs during the Change
of Control Period, whether the Executive determined in good faith that Good
Reason existed, then, unless and until there is a final, nonappealable judgment
by a court of competent jurisdiction declaring that such termination was for
Cause or that such termination was not for Good Reason or, if such termination
occurs during the Change of Control Period, that such determination of Good
Reason was not made in good faith, the Company shall pay all amounts, and
provide all benefits, to the Executive and/or her family or other beneficiaries,
as the case may be, that the Company would be required to pay or provide
pursuant to Section 5(a) as though such termination were by the Company without
Cause or by the Executive with Good Reason; provided, however, that the Company
shall not be required to pay any disputed amounts pursuant to this Section 5(d)
except upon receipt of an undertaking by or on behalf of the Executive to repay
all such amounts to which she is ultimately adjudged by such court not to be
entitled.
6. Non-exclusivity of Rights; Other Benefits. Except as provided in
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Sections 5(a)(ii), 5(b) and 5(c) of this Agreement and in the last sentence of
this Section 6, nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan provided by the Company or any of
its Affiliated Companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement entered into after the date hereof with the
Company or any of its Affiliated Companies. Amounts which are vested (or earned)
benefits or incentive compensation or which the Executive (or her family) is
otherwise entitled to receive under any plan of, or any contract or agreement
entered into after the date hereof with, the Company or any of its Affiliated
Companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan, contract or agreement except as explicitly modified
by this Agreement ("Other Benefits"). Without limiting the generality of the
foregoing, if the Executive's employment is terminated by reason of the
Executive's Disability or death during the Employment Period, the Executive
and/or the Executive's legal representatives and beneficiaries shall be entitled
to
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receive all disability, death and/or other benefits provided for under the
Company's employee benefit plans in which the Executive was a participant before
such termination (which also are considered "Other Benefits"). Notwithstanding
the foregoing, the term "Other Benefits" shall not include, and in no event
shall the Executive be entitled to receive, any severance pay or severance
benefits under any plan, policy, practice or program of the Company or any of
its Affiliated Companies, it being understood and agreed that this Agreement
contains the sole and exclusive provisions for the Executive's severance pay and
severance benefits.
7. No Offset. The Company's obligation to make the payments provided
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for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, except as provided
in Section 5(a)(ii) of this Agreement, such amounts shall not be reduced whether
or not the Executive obtains other employment.
8. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment (within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") or any successor
provision) or distribution by the Company or any of the Affiliated Companies to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
8) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code (or any successor provision) or any interest or penalties are incurred
by the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, all income taxes, employment
taxes and Excise Tax, imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. The Company's obligations to make Gross-Up Payments under this Section
8 shall not be conditioned upon the Executive's termination of employment.
(b) Subject to the provisions of Section 8(c), all determinations required to be
made under this Section 8, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a nationally
recognized accounting firm designated by the Company and reasonably acceptable
to the Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
notice from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 8, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting
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<PAGE>
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a written opinion
that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence,
substantial understatement or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which she gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim; PROVIDED, HOWEVER, that the Company
shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section
8(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect
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<PAGE>
of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and xxx for a refund or to
contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall
determine; PROVIDED, HOWEVER, that if the Company directs the
Executive to pay such Claim and xxx for a refund, the Company
shall advance the amount of such payment to the Executive, on
an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise
Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance;
and PROVIDED FURTHER that any extension of the statute of
limitations relating to payment of taxes for the taxable year
of the Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 8(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
9. Confidential Information and Competitive Conduct.
------------------------------------------------
(a) The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its Affiliated Companies and their respective businesses,
which shall have been obtained by the Executive during the Executive's
employment by the Company or any of its Affiliated Companies and which shall not
be or become public knowledge or generally known within the pharmaceutical
industry (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than to the Executive's attorneys or to the Company and to those designated by
the Company.
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<PAGE>
(b) During the Noncompetition Period (as defined below), the Executive shall
not, without the prior written consent of the Board (which consent shall not be
unreasonably withheld), engage in or become associated with a Competitive
Activity. For purposes of this Section 9(b): (i) the "Noncompetition Period"
means (A) the period during which the Executive is employed by the Company, plus
(B) one year following the termination of such employment only (I) in a
Specified Termination as defined in the last sentence of this Section 9(b), or
(II) if by the Company for Cause; (ii) a "Competitive Activity" means any
venture, enterprise, company, business or endeavor which is in competition with
the Company or any of its Affiliated Companies in fields in which the Company
and its Affiliated Companies have annual sales of more than $10,000,000; and
(iii) the Executive shall be considered to have become "associated with a
Competitive Activity" if the Executive becomes directly or indirectly involved
as an owner, principal, employee, officer, director, independent contractor,
representative, stockholder, financial backer, agent, partner, advisor, lender,
or in any other individual or representative capacity with any individual,
partnership, corporation or other organization that is engaged in a Competitive
Activity. Notwithstanding the foregoing: (x) the Executive may make and retain
investments during the Noncompetition Period which do not constitute a
controlling interest of any entity engaged in a Competitive Activity, if such
investment is made on a passive basis and the Executive does not act as an
employee, officer, director, independent contractor, representative, agent or
advisor with respect to such entity, and so long as the making or retaining of
such investment is not contrary to the best interests of the Company, as
determined in good faith by a majority of the Board (excluding the Executive);
and (y) the Executive shall not be considered to violate this Section 9(b) as a
result of her complying with law or legal process or as a result of her
cooperating with any of her prior employers in connection with litigation
relating to matters in which she was substantially involved, provided that (A)
the Executive does not receive any compensation for such cooperation, other than
reimbursement of her expenses, (B) neither the Company nor any of its Affiliated
Companies is a party adverse to such prior employer in such litigation, and (C)
the Executive notifies the CEO and the General Counsel of the Company before
beginning such cooperation and provides them with any information they may
reasonably request, from time to time, regarding such cooperation. A "Specified
Termination" means a termination of the Executive's employment by the Executive
without Good Reason that occurs before the earlier of a Change of Control or the
second anniversary of the Commencement Date (a "Specified Termination"), but
only if, within fifteen days after the date that the Company receives the
Executive's Notice of Termination, the Company notifies the Executive that it
elects for this Section 9(b) to continue to be applicable and that it agrees to
pay the Executive, within 30 days after the Date of Termination, in addition to
any other amounts or benefits to which she may be entitled under Section 5(c),
the amount determined under Section 5(a)(i)(C) assuming the Multiple equals one,
and to continue providing benefits to the Executive as described in Section
5(a)(ii) assuming the Multiple equals one.
(c) The Executive acknowledges and agrees that: (i) the purpose of the foregoing
covenants is to protect the goodwill, trade secrets and other confidential
information of the Company; (ii) because of the nature of the business in which
the Company and its Affiliated Companies are engaged and because of the nature
of the confidential information to which the Executive has access, it would be
impractical and excessively difficult to determine the actual damages of the
Company and its Affiliated Companies in the event the Executive breached any of
the covenants of this Section 9; and (iii) remedies at law (such as monetary
damages) for any breach of the Executive's obligations under this Section 9
would be inadequate. The Executive
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<PAGE>
therefore agrees and consents that if she commits any breach of a covenant under
this Section 9 or threatens to commit any such breach, the Company shall have
the right (in addition to, and not in lieu of, any other right or remedy that
may be available to it) to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting any bond or other security and
without the necessity of proof of actual damage. With respect to any provision
of this Section 9 finally determined by a court of competent jurisdiction to be
unenforceable, the Executive and the Company hereby agree that such court shall
have jurisdiction to reform this Agreement or any provision hereof so that it is
enforceable to the maximum extent permitted by law, and the parties agree to
abide by such court's determination. If any of the covenants of this Section 9
are determined to be wholly or partially unenforceable in any jurisdiction, such
determination shall not be a bar to or in any way diminish the Company's right
to enforce any such covenant in any other jurisdiction.
(d) It is acknowledged that during the course of her employment with Pharmacia
Corporation ("Pharmacia"), the Executive was granted options (the "Prior
Options") to acquire Pharmacia stock, which have now been converted into options
to acquire stock of Pfizer Inc. ("Pfizer") as a result of the merger of
Pharmacia and Pfizer. The Executive agrees that (1) before the third anniversary
of the Commencement Date, all of the Prior Options shall either be exercised or
shall expire, (2) if the market price of the securities underlying any Prior
Option is, at any time before the third anniversary of the Commencement Date,
greater than twice the exercise price of such Prior Option, then the Executive
shall, as promptly as practicable thereafter, exercise such Prior Option, and
(3) she shall dispose of all securities acquired by exercise of any Prior Option
as promptly as practicable following such exercise. If the Executive complies
with the foregoing provisions of this Section 9(d), then her retention of the
Prior Options shall not be deemed to violate Section 9(b).
(e) In no event shall an asserted violation of the provisions of this Section 9
constitute a basis for deferring or withholding any amount otherwise payable to
the Executive under this Agreement.
10. Successors and Assignability.
----------------------------
(a) This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal representatives.
(b) 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 the sale or liquidation 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 business and
assets of the Company and such assignee or transferee assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns.
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<PAGE>
(c) The Company will cause 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 assume expressly 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. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
11. Certain Definitions. The following defined terms used in this
-------------------
Agreement shall have the meanings indicated:
(a) "Affiliated Company" of the Company shall mean any company controlled by,
controlling or under common control with the Company.
(b) The "Change of Control Date" shall mean the first date on which a Change of
Control occurs. Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated or any event constituting Good Reason occurs prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination or event (i) was at the request of a third party
who has taken steps reasonably calculated to effect the Change of Control or
(ii) otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Change of Control Date"
shall mean the date immediately prior to the date of such termination or
cessation.
(c) The "Change of Control Period" shall mean the period commencing on the
Change of Control Date and ending on the third anniversary thereof.
(d) "Change of Control" shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")) (a "PERSON") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act)
of securities of the Company where such acquisition causes
such Person to own 20% or more of either (A) the then
outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this Section
11(d)(i), the following acquisitions shall not be deemed to
result in a Change of Control: (1) any acquisition
directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (4) any
acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B), and (C) of Section
11(d)(iii); and provided, further, that if any Person's
beneficial ownership of the Outstanding Company
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<PAGE>
Voting Securities reaches or exceeds 20% as a result of a
transaction described in clause (A) or (B) above, and such
Person subsequently acquires beneficial ownership of
additional voting securities of the Company, such
subsequent acquisition shall be treated as an acquisition
that causes such Person to own 20% or more of the
Outstanding Company Voting Securities; or
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; PROVIDED,
HOWEVER, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board; or
(iii) Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction
involving the Company or any of its subsidiaries, or a sale
or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets or stock
of another entity by the Company or any of its subsidiaries
(each, a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding
voting securities entitled to vote generally in the
election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Company or all or
substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the
case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock
of the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting
securities of such corporation
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<PAGE>
except to the extent that such ownership existed prior to the
Business Combination, and (C) at least a majority of the
members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business
Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(e) The "Multiple" shall mean (1) if the Date of Termination is during the
Change of Control Period, three, and (2) otherwise, two.
12. Legal Fees.
----------
(a) The Company shall reimburse the Executive for all legal fees and expenses
which the Executive may reasonably incur in connection with negotiation of this
Agreement, but not in excess of $25,000. If any payment made to the Executive
pursuant to this Section 12(a) results in the Executive being subject to any
federal, state, or local income tax, the Company shall pay to the Executive an
additional amount (the "Additional Amount") such that the net amount that the
Executive receives from payments (including the Additional Amount) pursuant to
this Section 12(a) after paying all applicable federal, state, and local income
and employment taxes thereon (including on the Additional Amount) equals the
amount that she would have received from payments pursuant to this Section 12(a)
if no federal, state, or local income or employment taxes applied to any such
payments.
(b) The Company shall pay the Executive promptly as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may reasonably
incur (together with interest thereon at the prime rate from time to time
published in The Wall Street Journal, minus one percentage point, for any amount
incurred and not paid within sixty days after Executive's request therefor) as a
result of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), unless the trier of fact in such contest
determines that the Executive's position in such contest was frivolous or not
maintained in good faith; provided, however, that in no event shall the Company
be required to make reimbursements pursuant to this Section 12(b) that exceed
$125,000 in the aggregate, other than for any such contest by the Company unless
the Company prevails as asserted on all material claims forming the basis for
the Company's contest.
13. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended, modified,
repealed, waived, extended or discharged except by an agreement in writing
signed by the party against whom enforcement of such
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<PAGE>
amendment, modification, repeal, waiver, extension or discharge is sought. No
person, other than pursuant to a resolution of the Board or a committee thereof,
shall have authority on behalf of the Company to agree to amend, modify, repeal,
waive, extend or discharge any provision of this Agreement or anything in reference thereto.
(b) All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other party, by registered or certified mail,
return receipt requested, postage prepaid, or by reputable overnight courier,
addressed as follows:
If to the Executive:
-------------------
Xxxxxx X. Xxx
c/o Schering-Plough Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
If to the Company:
-----------------
Schering-Plough Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement such
federal, state or local taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict compliance
with any provision hereof or any other provision of this Agreement or the
failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 4(c) of this Agreement, shall not
be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
(f) When used herein in connection with plans, programs and policies relating to
the Executive, employees, compensation, benefits, perquisites, executive
benefits, services and similar words and phrases, the word "Company" shall be
deemed to include Schering Corporation, a wholly-owned subsidiary of the
Company.
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<PAGE>
(g) This instrument contains the entire agreement of the parties, and all
promises, representations, understandings, arrangements and prior agreements are
merged herein and superseded hereby.
(h) The Company shall indemnify the Executive and hold her harmless to the
fullest extent provided under the Certificate of Incorporation of the Company
and its Bylaws, and shall maintain one or more policies of officers liability
insurance insuring the Executive, in each case to the fullest extent as
similarly situated statutory officers or former statutory officers of the
Company; provided, however, that for the avoidance of doubt, if at any point no
such policies are in place for the applicable similarly situated individuals,
the Company shall have no obligation to provide any such policies to the
Executive. The obligations of the Company to the Executive under this Section
13(h) shall continue to be valid, binding and enforceable both before and after
the Executive has ceased to be an officer, employee or agent of the Company and
its Affiliated Companies and a director, officer, employee or agent of all other
corporations, partnerships, joint ventures, trusts and other enterprises for
which the Executive served in such capacity at the Company's request for as long
as the Executive may be subject to the claims for which such indemnification
applies.
(i) The Company represents and warrants that (i) it is fully authorized by
action of its Board or a duly authorized committee thereof (and of any other
person, entity or body whose action is required) to enter into this Agreement
and to perform its obligations under it; (ii) the execution, delivery and
performance of this Agreement by it will not violate any applicable law,
regulation, order, judgment or decree or any agreement, plan or corporate
governance document to which it is a party or by which it is bound; and (iii)
upon the execution and delivery of this Agreement by the parties, this Agreement
shall be a valid and binding obligation of the Company, enforceable against it
in accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally. The Executive represents and
warrants that (x) she has the free and unfettered right to enter into this
Agreement and to perform her obligations under it; (y) the execution, delivery
and performance of this Agreement by her will not violate any contract or
agreement to which she is a party or by which she is bound, and (z) upon the
execution and delivery of this Agreement by the parties, this Agreement shall be
a valid and binding obligation of the Executive, enforceable against her in
accordance with its terms.
(j) This Agreement may be executed in counterparts, which together
shall constitute one and the same original.
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<PAGE>
IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from
its Board of Directors, the Company have caused this Agreement to be executed as
of the day and year first above written.
/s/ Xxxxxx X. Xxx
------------------------------------
Xxxxxx X. Xxx
SCHERING-PLOUGH CORPORATION
By: /s/ Xxxx Xxxxxx
-------------------------------
Xxxx Xxxxxx
Chairman and Chief Executive Officer
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EXHIBIT A
RESTRICTED SHARES AGREEMENT
THIS AGREEMENT, dated as of May 12, 2003, between Schering-Plough
Corporation, a New Jersey corporation (the "Company"), and Xxxxxx X. Xxx (the
"Executive").
WHEREAS, the parties hereto have entered into an Employment Agreement, dated May 12, 2003 (the "Employment Agreement") (all capitalized terms used in this Agreement but not defined herein shall have the meanings given to them in the Employment Agreement");
WHEREAS, pursuant to Section 3(c) of the Employment Agreement, the
Company has promised to grant restricted Common Shares of the Company to the
Executive;
NOW, THEREFORE, in order to effectuate such grant, the parties
hereto agree as follows:
1. Grant and Vesting of Restricted Shares.
--------------------------------------
(a) Subject to the provisions of this Agreement, the Company hereby
grants to the Executive, as of May 15, 2003 (the "Grant Date"), 100,000 of the
Common Shares, par value $.50 per share, of the Company (the "Restricted
Shares").
(b) The Restricted Shares, if not forfeited earlier pursuant to Section 1(c), shall vest upon the first to occur of (i) the termination of the Executive's employment by the Company other than for Cause, (ii) the termination of the Executive's employment with the Company as a result of the death or Disability of the Executive, (iii) the termination of the Executive's employment by the Executive for Good Reason, (iv) the Change of Control Date, and (v) the
third anniversary of the Grant Date.
(c) If the Executive terminates her employment with the Company without Good Reason or the Company terminates the Executive's employment for Cause, in either case before the Restricted Shares vest, the Executive shall forfeit the Restricted Shares, effective on the Date of Termination.
(d) The period from the Grant Date until the Restricted Shares vest or are forfeited, as applicable, is referred to below as the "Restriction Period."
(e) The Company represents and warrants that the grant and issuance of the Restricted Shares have been duly authorized by the Board of Directors of the Company, and that upon the issuance thereof, the Restricted Shares shall be fully paid, validly issued and non-assessable.
<page>
2. Issuance of Shares.
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The Restricted Shares shall be evidenced by a stock certificate or by book entry, as the Company may determine, in the Executive's name. If the Restricted Shares are evidenced by a stock certificate, then during the Restriction Period, such certificate may be issued to the Executive with such customary legends as the Company may deem appropriate, or held in escrow by the Company on behalf of the Executive. Upon the vesting of the Restricted Shares, the Company shall promptly deliver to the Executive a certificate evidencing the
Restricted Shares, free of all legends, or shall promptly cause any restrictions noted in the book entry to be removed.
3. Nontransferability of the Restricted Shares.
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During the Restriction Period, the Restricted Shares shall not be transferable by the Executive by means of sale, assignment, exchange, encumbrance, hypothecation, pledge or otherwise.
4. Changes in Capital.
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If the Common Shares of the Company shall at any time be changed or exchanged by declaration of a stock dividend, stock split, combination of shares, spin-off, recapitalization, merger, consolidation or other corporate reorganization in which the Company is the surviving corporation, or if the Company shall pay an extraordinary dividend on its Common Shares, or in the event of a similar corporate event (each, a "Corporate Event"), the number and/or kind of shares represented by the Restricted Shares may be appropriately adjusted, at the discretion of the Company; provided, however, that no adjustment or failure to adjust pursuant to this Section 4 may cause a diminution (measured immediately following such adjustment or failure to adjust) in the market value of the Restricted Shares.
5. Dividends and Distributions.
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The Executive shall be entitled to receive all dividends and distributions made with respect to the Restricted Shares, the record dates for which occur during the Restriction Period, and that do not result in an adjustment pursuant to Section 4, in the same form, and at the same time, as holders of the Company's Common Shares generally.
6. Other Rights as a Stockholder.
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Except as otherwise specifically provided in this Agreement, during the Restriction Period the Executive shall have all the rights of a stockholder with respect to the Restricted Shares, including without limitation the right to vote the Restricted Shares.
7. Miscellaneous.
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(a) The Executive acknowledges and agrees that the Restricted Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), and accordingly, the Restricted Shares may not be transferred except pursuant to a valid registration statement under the Act and applicable state securities laws or pursuant to an exemption therefrom.
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(b) The Company agrees that:
(i) no later than the six-month anniversary of the issuance of the Restricted Shares (or if earlier, as promptly as is practicable following the vesting of the Restricted Shares), it shall file with the Securities and Exchange Commission (the "SEC") and applicable state securities commissioners a registration statement on Form S-8 (or such applicable successor form) under the Act registering the resale of the Restricted Shares;
(ii) the Company will use all reasonable efforts and will cooperate with the SEC in order to cause the SEC to declare the registration statement including the Restricted Shares to be effective within a reasonable period of time after the filing thereof;
(iii) the Company will maintain the effectiveness of the registration statement including the Restricted Shares through (A) if the Restricted Shares vest pursuant to Section 1(b), the first anniversary of the conclusion of the Restriction Period or (B) if the Restricted Shares are forfeited pursuant to Section 1(c), the conclusion of the Restriction
Period;
(iv) simultaneously with the filing with the SEC of the registration statement that includes the Restricted Shares, the Company will apply to list the Restricted Shares for trading on the national securities exchange on which the Company's Common Shares are traded; and
(v) the Company will bear all costs of the registration and the listing of the Restricted Shares.
(c) The Executive acknowledges and agrees that notwithstanding the registration of the Restricted Shares with the SEC, the Restricted Shares shall not be transferable during the Restriction Period.
(d) No later than the date as of which an amount first becomes includible in the gross income of the Executive for federal income tax purposes with respect to any Restricted Share, the Executive shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, all federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld with respect to such amount. To the extent the Executive does not pay to the Company the required withholding taxes with respect to the Restricted Shares, the Company shall, to the extent permitted by law and upon notice to Executive, have the right to deduct any such taxes from any payment otherwise due to the Executive, including by withholding the distribution of some of the Restricted Shares.
(e) The Company agrees to pay any and all original issue taxes and share transfer taxes that may be imposed on the issuance of the Restricted Shares received by the Executive, together with any and all other fees and expenses necessarily incurred by the Company in connection therewith.
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(f) All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by facsimile, overnight courier, or registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxxxx X. Xxx
c/o Schering-Plough Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
If to the Company:
Schering-Plough Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
or to such other address or facsimile number as any party shall have furnished to the other in writing in accordance with this Section 7(f). Notice and communications shall be effective when actually received by the addressee.
(g) Except as otherwise provided hereunder, this Agreement shall be binding upon and shall inure to the benefit of any successor or successors of the Company.
(h) The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of New Jersey without reference to principles of conflict of laws, as applied to contracts executed in and performed wholly within the State of New Jersey.
(i) For purposes of this Agreement, employment with the Company shall include employment with any of the Company's affiliates, predecessors, or successors. This Agreement is not an
employment agreement, and nothing in this Agreement shall confer upon the Executive any right to continue in the employ of the Company or any of its affiliates, predecessors, or successors, or interfere in any way with the right of the Company or any such entities to terminate the Executive's employment at any time.
(j) The invalidity or enforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(k) This Agreement may not be modified, amended or waived except by
an instrument in writing signed by both parties hereto. The waiver by either party of compliance with any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.
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(l) The headings of paragraphs herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any of the provisions of this Agreement.
(m) This Agreement may be executed in counterparts, which together shall constitute one and the same original.
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IN WITNESS WHEREOF, as of the date first above written, the Company
has caused this Agreement to be executed on its behalf by a duly authorized
officer and the Executive has hereunto set the Executive's hand.
SCHERING-PLOUGH CORPORATION
By: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
Chairman and Chief Executive Officer
/s/ Xxxxxx X. Xxx
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Xxxxxx X. Xxx
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