AGREEMENT REGARDING
CHANGE IN CONTROL
THIS AGREEMENT ("Agreement"), is made and entered into as of the 8th
day of December, 2000, by and between Xxxxxx Laboratories (the "Company") and
_____________(the "Executive") and amends and restates, in its entirety, an
Agreement regarding Change in Control dated as of the 1st day of January,
2000 (the "Effective Date") also by and between the Company and the Executive
(the "Original Agreement");
WITNESSETH THAT:
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continuous employment of key management
personnel, and the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, a change in control
might occur and that such possibility, and the uncertainty and questions which
it may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change in control of the Company;
NOW, THEREFORE, to induce the Executive to remain in the employ of the
Company and in consideration of the premises and mutual covenants set forth
herein, IT IS HEREBY AGREED by and between the parties as follows:
1. AGREEMENT TERM. The initial "Agreement Term" shall begin on the
Effective Date and shall continue through December 31, 2002. As of December 31,
2000, and as of each December 31 thereafter, the Agreement Term shall extend
automatically to the third anniversary thereof unless the Company gives notice
to the Executive prior to the date of such extension that the Agreement Term
will not be extended. Notwithstanding the foregoing, if a Change in Control (as
defined in Section 7 below), occurs during the Agreement Term, the Agreement
Term shall continue through and terminate on the second anniversary of the date
on which the Change in Control occurs.
2. ENTITLEMENT TO CHANGE IN CONTROL BENEFITS. The Executive shall be
entitled to the Change in Control Benefits described in Section 3 hereof if the
Executive's employment by the Company is terminated during the Agreement Term
but after a Change in Control (i) by the
Company for any reason other than Permanent Disability or Cause, or (ii) by the
Executive for Good Reason. For purposes of this Agreement:
(a) A termination of the Executive's employment shall be treated as a
termination by reason of "Permanent Disability" only if, due to a
mental or physical disability, the Executive is absent from the full
time performance of duties with the Company for a period of at least
twelve consecutive months and fails to return to the full time
performance of duties within 30 days after receipt of a demand by the
Company to do so.
(b) The term "Cause" shall mean the willful engaging by the Executive in
illegal conduct or gross misconduct which is demonstrably and
materially injurious to the Company. For purposes of this Agreement, no
act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated
for Cause unless and until the Company delivers to the Executive a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice to
the Executive and an opportunity for the Executive, together with
counsel, to be heard before the Board) finding that, in the good faith
opinion of the Board, the Executive was guilty of conduct set forth
above and specifying the particulars thereof in detail.
(c) The term "Good Reason" shall mean the occurrence of any of the
following circumstances without the Executive's express written
consent:
(i) a significant adverse change in the nature, scope or status of
the Executive's position, authorities or duties from those in
effect immediately prior to the Change in Control;
(ii) the failure by the Company to pay the Executive any portion of
the Executive's current compensation, or to pay the Executive
any portion of any installment of deferred compensation under
any deferred compensation program of the Company, within seven
days of the date such compensation is due;
(iii) a reduction in the Executive's annual base salary (or a
material change in the frequency of payment) as in effect
immediately prior to the Change in Control as the same may be
increased from time to time;
(iv) the failure by the Company to award the Executive an annual
bonus in any year which is at least equal to the annual bonus,
awarded to the Executive under the
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annual bonus plan of the Company for the year immediately
preceding the year of the Change in Control;
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(v) the failure by the Company to award the Executive equity-based
incentive compensation (such as stock options, shares of
restricted stock, or other equity-based compensation) on a
periodic basis consistent with the Company's practices with
respect to timing, value and terms prior to the Change in
Control;
(vi) the failure by the Company to continue to provide the
Executive with the welfare benefits, fringe benefits and
perquisites enjoyed by the Executive immediately prior to the
Change in Control under any of the Company's plans or
policies, including, but not limited to, those plans and
policies providing pension, life insurance, medical, health
and accident, disability, vacation, executive automobile,
executive tax or financial advice benefits or club dues;
(vii) the relocation of the Company's principal executive offices to
a location more than thirty-five miles from the location of
such offices immediately prior to the Change in Control or the
Company requiring the Executive to be based anywhere other
than the Company's principal executive offices except for
required travel to the Company's business to an extent
substantially consistent with the Executive's business travel
obligations immediately prior to the Change in Control; or
(viii) the failure of the Company to obtain a satisfactory agreement
from any successor to the Company to assume and agree to
perform this Agreement as contemplated by Section 16.
3. CHANGE IN CONTROL BENEFITS. In the event of a termination of
employment entitling the Executive to benefits in accordance with Section 2, the
Executive shall receive the following:
(a) The Executive shall be entitled to receive the following employee
welfare benefits: medical, accident, dental, prescription, and life
insurance coverage for the Executive (and, where applicable under the
Company's welfare benefit plans, the Executive's family) through the
third anniversary of the Executive's date of termination of employment,
or, if earlier, the date on which the Executive becomes employed by
another employer. The benefits provided by the Company shall be no less
favorable in terms of coverage and cost to the Executive than those
provided under the Company's welfare benefit plans applicable to the
Executive (and, where applicable, the Executive's family) prior to the
Change in Control, determined as if the Executive remained in the
employ of the Company through such third anniversary. For purposes of
determining eligibility of the Executive for retiree welfare benefits,
the Executive shall be considered to have remained in the employ of the
Company through such third anniversary.
(b) If the Executive's date of termination occurs after the end of a
performance period applicable to an annual incentive (bonus) award, and
prior to the payment of the award for the period, the Executive shall
be entitled to a lump sum payment in cash no later than
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twenty (20) business days after the date of termination equal to the
greatest of (i) the Executive's annual incentive (bonus) award for that
period, as determined under the terms of that incentive award
arrangement, (ii) the Executive's annual incentive (bonus) award for
that period, with the determination of the amount of such award based
on an assumption that the target level of performance had been achieved
or (iii) the Participant's average annual incentive (bonus) award for
the three annual performance periods preceding that period (provided
that if the Participant was not a participant in the incentive award
arrangement for any of those three prior years, the averaging period
shall be reduced from three years to the number of years during the
three year period in which the Participant was a participant; and
further provided that if the Participant's award for any such year was
reduced because the Participant was not a participant for the full
year, such amount shall be annualized for purposes of the computation
in this clause (iii)).
(c) For any annual incentive (bonus) plan or arrangement in which the
Executive participates for the performance period in which the
Executive's termination of employment occurs, the Executive shall be
entitled to a lump sum payment in cash no later than twenty (20)
business days after the date of termination equal to the greater of (i)
the Executive's annual incentive (bonus) award for the performance
period that includes the date of termination, with the determination of
the amount of such award based on an assumption that the target level
of performance has been achieved or (ii) the Executive's average annual
incentive (bonus) award for the three annual performance periods
preceding the performance period that includes the date of termination
(provided that if the Executive was not a participant in the incentive
award arrangement for any of those three prior years, the averaging
period shall be reduced from three years to the number of years during
the three year period in which the Executive was a participant; and
further provided that if the Executive's award for any such year was
reduced because the Executive was not a participant for the full year,
such amount shall be annualized for purposes of the computation in this
clause (ii)); provided that such payment shall be subject to a pro-rata
reduction to reflect the number of days in the performance period
following the date of termination. The amount payable under this
paragraph (c) shall be in lieu of any amounts that may otherwise be due
to the Executive with respect to any annual incentive (bonus) plan or
arrangement in which the Executive participates for the performance
period in which the Executive's date of termination occurs.
(d) The Executive shall be entitled to a lump sum payment in cash no later
than twenty business days after the Executive's date of termination
equal to the sum of:
(i) an amount equal to three times the Executive's annual salary
rate in effect on the date of the Change in Control or, or if
greater, as in effect immediately prior to the date of
termination; plus
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(ii) an amount equal to three times the greater of (x) the
Executive's annual incentive (bonus) award for the performance
period that includes the date of the Executive's termination
of employment, with the determination of the amount of such
award based on an assumption that the target level of
performance has been achieved or (y) the Executive's average
annual incentive (bonus) award for the three annual
performance periods preceding the performance period that
includes the date of termination (provided that if the
Executive was not a participant in the incentive award
arrangement for any of those three prior years, the averaging
period shall be reduced from three years to the number of
years during the three year period in which the Executive was
a participant; and further provided that if the Executive's
award for any such year was reduced because the Executive was
not a participant for the full year, such amount shall be
annualized for purposes of the computation in this
subparagraph (ii)).
The amount payable under this paragraph (d) shall be inclusive of the
amounts, if any, to which the Executive would otherwise be entitled as
severance pay under any severance pay plan, or by law and shall be in
addition to (and not inclusive of) any amount payable under any written
agreement(s) directly between the Executive and the Company or any of
its subsidiaries.
(e) The Executive shall be entitled to benefits under the Xxxxxx
Laboratories Supplemental Pension Plan (the "Supplemental Plan") which
shall be determined as if the Executive had been credited for benefit
accrual purposes with three additional years of service and three
additional years of eligible earnings at the higher of the Executive's
eligible earnings on the date of termination or the Executive's
eligible earnings on the date of the Change in Control and, for
purposes of determining the Executive's eligibility for subsidized
early retirement benefits, determined as if the Executive were three
years older than the Executive's actual age on the date of termination.
For purposes of this paragraph (e), "eligible earnings" shall include
salary, annual incentive (bonus) awards and all other forms of
compensation used to calculate benefits under the Supplemental Plan.
The amounts of the annual incentive (bonus) awards shall be calculated
in accordance with this paragraph (e) and, to the extent applicable,
paragraphs (b) and (c) above. The Executive's benefits under the
Supplemental Plan shall be determined, paid and administered without
regard to any termination or amendment (including any amendment
affecting actuarial factors) of such plan or of any other plan, which
is adopted on or after a Change in Control or in contemplation of a
Change in Control and, subject to paragraph (f) below, shall be paid in
accordance with the terms of that plan and the Executive's elections
under that plan. Within twenty (20) days of Executive's date of
termination, the Company shall provide the Executive with all forms,
elections and materials required in connection with the funding or
payment of the Executive's benefits under that plan. Within twenty (20)
days of the Company's receipt of properly executed and completed
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forms, elections and other required materials from the Executive, the
Company shall fund the additional benefits to the extent provided by
the terms of such plan.
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(f) The Executive shall be entitled to elect that all or any portion of the
amounts payable under paragraphs 3(b) and 3(c) and subparagraph
3(d)(ii) above (less applicable tax withholding) be paid directly to a
grantor trust established by the Executive to the same extent as
bonuses payable under the 1986 Xxxxxx Laboratories Management Incentive
Plan, the 1998 Xxxxxx Laboratories Performance Incentive Plan, or any
successor plans thereto with all of the rights and entitlements
attendant thereto.
If the Executive is a participant in the 1998 Xxxxxx Laboratories Performance
Incentive Plan or any successor thereto, the Executive's annual incentive
(bonus) award for the performance period which includes the date of termination
under paragraphs (c) and (d)(ii) above and, if applicable, for the period
preceding the date of termination under paragraph (b) shall, be determined under
the bonus levels communicated in writing to the Executive by the Company for
such year and shall not be the Executive's individual base award allocation as
defined in Section 4.2 of the 1998 Xxxxxx Laboratories Performance Incentive
Plan (or any corresponding provision of any successor plan).
4. MITIGATION. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise. Except as set forth in paragraph 3(a) with respect to benefits,
the Company shall not be entitled to set off against the amounts payable to the
Executive under this Agreement any amounts owed to the Company by the Executive,
any amounts earned by the Executive in other employment after the Executive's
termination of employment with the Company, or any amounts which might have been
earned by the Executive in other employment had the Executive sought such other
employment.
5. MAKE-WHOLE PAYMENTS. If any payment or benefit to which the
Executive (or any person on account of the Executive) is entitled, whether under
this Agreement or otherwise, in connection with a Change in Control or the
Executive's termination of employment (a "Payment") constitutes a "parachute
payment" within the meaning of section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and as a result thereof the Executive is subject
to a tax under section 4999 of the Code, or any successor thereto, (an "Excise
Tax"), the Company shall pay to the Executive an additional amount (the
"Make-Whole Amount") which is intended to make the Executive whole for such
Excise Tax, other than the portion thereof that is attributable solely to
equity-based compensation. The Make-Whole Amount shall be equal to (x) minus (y)
where (x) is equal to (i) the amount of the Excise Tax, plus (ii) the aggregate
amount of any interest, penalties, fines or additions to any tax which are
imposed in connection with the imposition of such Excise Tax, plus (iii) all
income, excise and other applicable taxes imposed on the Executive under the
laws of any Federal, state or local government or taxing authority by reason of
the payments required under clauses (i) and (ii) and this clause (iii), and (y)
is the amount that would be determined under such clauses (i), (ii), and (iii)
if the only parachute payments received by the Executive were equity-based
Payments, including but not limited to
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the accelerated vesting of stock options, shares of restricted stock, or any
other equity based award.
(a) For purposes of determining the Make-Whole Amount, the Executive shall
be deemed to be taxed at the highest marginal rate under all applicable
local, state, federal and foreign income tax laws for the year in which
the Make-Whole Amount is paid. The Make-Whole Amount payable with
respect to an Excise Tax shall be paid by the Company coincident with
the Payment with respect to which such Excise Tax relates.
(b) All calculations under this Section 5 shall be made initially by the
Company and the Company shall provide prompt written notice thereof to
the Executive to enable the Executive to timely file all applicable tax
returns. Upon request of the Executive, the Company shall provide the
Executive with sufficient tax and compensation data to enable the
Executive or the Executive's tax advisor to independently make the
calculations described in subparagraph (a) above and the Company shall
reimburse the Executive for reasonable fees and expenses incurred for
any such verification.
(c) If the Executive gives written notice to the Company of any objection
to the results of the Company's calculations within 60 days of the
Executive's receipt of written notice thereof, the dispute shall be
referred for determination to independent tax counsel selected by the
Company and reasonably acceptable to the Executive ("Tax Counsel"). The
Company shall pay all fees and expenses of such Tax Counsel. Pending
such determination by Tax Counsel, the Company shall pay the Executive
the Make-Whole Amount as determined by it in good faith. The Company
shall pay the Executive any additional amount determined by Tax Counsel
to be due under this Section 5 (together with interest thereon at a
rate equal to 120% of the Federal short-term rate determined under
section 1274(d) of the Code) promptly after such determination.
(d) The determination by Tax Counsel shall be conclusive and binding upon
all parties unless the Internal Revenue Service, a court of competent
jurisdiction, or such other duly empowered governmental body or agency
(a "Tax Authority") determines that the Executive owes a greater or
lesser amount of Excise Tax with respect to any Payment than the amount
determined by Tax Counsel.
(e) If a Taxing Authority makes a claim against the Executive which, if
successful, would require the Company to make a payment under this
Section 5, the Executive agrees to contest the claim with counsel
reasonably satisfactory to the Company, on request of the Company
subject to the following conditions:
(i) The Executive shall notify the Company of any such claim
within 10 days of becoming aware thereof. In the event that
the Company desires the claim to be contested, it shall
promptly (but in no event more than 30 days after the notice
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from the Executive or such shorter time as the Taxing
Authority may specify for responding to such claim) request
the Executive to contest the claim. The Executive shall not
make any payment of any tax which is the subject of the claim
before the Executive has given the notice or during the 30-day
period thereafter unless the Executive receives written
instructions from the Company to make such payment together
with an advance of funds sufficient to make the requested
payment plus any amounts payable under this Section 5
determined as if such advance were an Excise Tax, in which
case the Executive will act promptly in accordance with such
instructions.
(ii) If the Company so requests, the Executive will contest the
claim by either paying the tax claimed and suing for a refund
in the appropriate court or contesting the claim in the United
States Tax Court or other appropriate court, as directed by
the Company; PROVIDED, HOWEVER, that any request by the
Company for the Executive to pay the tax shall be accompanied
by an advance from the Company to the Executive of funds
sufficient to make the requested payment plus any amounts
payable under this Section 5 determined as if such advance
were an Excise Tax. If directed by the Company in writing the
Executive will take all action necessary to compromise or
settle the claim, but in no event will the Executive
compromise or settle the claim or cease to contest the claim
without the written consent of the Company; PROVIDED, HOWEVER,
that the Executive may take any such action if the Executive
waives in writing the Executive's right to a payment under
this Section 5 for any amounts payable in connection with such
claim. The Executive agrees to cooperate in good faith with
the Company in contesting the claim and to comply with any
reasonable request from the Company concerning the contest of
the claim, including the pursuit of administrative remedies,
the appropriate forum for any judicial proceedings, and the
legal basis for contesting the claim. Upon request of the
Company, the Executive shall take appropriate appeals of any
judgment or decision that would require the Company to make
a payment under this Section 5. Provided that the Executive
is in compliance with the provisions of this section, the
Company shall be liable for and indemnify the Executive
against any loss in connection with, and all costs and
expenses, including attorneys' fees, which may be incurred
as a result of, contesting the claim, and shall provide to
the Executive within 30 days after each written request
therefor by the Executive cash advances or reimbursement for
all such costs and expenses actually incurred or reasonably
expected to be incurred by the Executive as a result of
contesting the claim.
(f) Should a Tax Authority finally determine that an additional Excise Tax
is owed, then the Company shall pay an additional Make-Whole Amount to
the Executive in a manner consistent with this Section 5 with respect
to any additional Excise Tax and any assessed interest, fines, or
penalties. If any Excise Tax as calculated by the Company or Tax
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Counsel, as the case may be, is finally determined by a Tax Authority
to exceed the amount required to be paid under applicable law, then the
Executive shall repay such excess to the Company within 30 days of such
determination; provided that such repayment shall be reduced by the
amount of any taxes paid by the Executive on such excess which is not
offset by the tax benefit attributable to the repayment.
6. TERMINATION DURING POTENTIAL CHANGE IN CONTROL. If a Potential
Change in Control (as defined in Section 8) occurs during the Agreement Term,
and the Company terminates the Executive's employment for reasons other than
Permanent Disability or Cause during such Potential Change in Control, the
Executive shall be entitled to receive the benefits that the Executive would
have received under Section 3, such benefits to be calculated based upon the
Executive's compensation prior to the actual termination of employment but paid
within 20 business days of the date of such termination.
7. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred on the earliest of the following
dates:
(a) the date any entity or person (including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange
Act")) shall have become the beneficial owner of, or shall have
obtained voting control over, twenty percent (20%) or more of the
outstanding common shares of the Company;
(b) the date on which the Company (i) merges or consolidates with or into
another corporation, or merges another corporation into the Company, in
which the Company is not the continuing or surviving corporation or
pursuant to which any common shares of the Company are converted into
cash, securities of another corporation, or other property, other than
a merger or consolidation of the Company in which holders of common
shares immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation or its parent
corporation immediately after the merger as immediately before, or (ii)
sells or otherwise disposes of substantially all of the assets of the
Company; or
(c) the date there shall have been a change in a majority of the Board of
Directors of the Company within a twelve (12) month period unless the
nomination for election by the Company's shareholders of each new
director was approved by the vote of two-thirds of the directors then
still in office who were in office at the beginning of the twelve (12)
month period.
8. POTENTIAL CHANGE IN CONTROL. A "Potential Change in Control" shall
exist during any period in which the circumstances described in paragraphs (a),
(b), (c) or (d), below, exist (provided, however, that a Potential Change in
Control shall cease to exist not later than the occurrence of a Change in
Control):
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(a) The Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control, provided that a
Potential Change in Control described in this paragraph (a) shall cease
to exist upon the expiration or other termination of all such
agreements.
(b) Any person (including the Company) publicly announces an intention to
take or to consider taking actions the consummation of which would
constitute a Change in Control; provided that a Potential Change in
Control described in this paragraph (b) shall cease to exist upon the
withdrawal of such intention, or upon a reasonable determination by the
Board that there is no reasonable chance that such actions would be
consummated.
(c) The acquisition by any person (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934) of beneficial
ownership of 10 percent or more of the then outstanding shares of
common stock of the Company; but excluding, for this purpose, any such
acquisition by:
(i) the Company, any subsidiary, any employee benefit plan (or
related trust, or a fiduciary of the plan or trust) maintained
by the Company or any Subsidiary, or any person who satisfies
the requirements set forth in Rule 13d-1(b)(1)(i) and (ii)
promulgated under the Securities Exchange Act of 1934; or
(ii) any corporation with respect to which, following such
acquisition, more than 50 percent of the then outstanding
shares of common stock of such corporation is then
beneficially owned by all or substantially all of the
individuals and entities who were the beneficial owners of
common stock of the Company immediately prior to such
acquisition, and in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the then
outstanding shares of common stock of the Company.
(d) The Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control exists; provided that a
Potential Change in Control described in this paragraph (d) shall cease
to exist upon a reasonable determination by the Board that the reasons
that gave rise to the resolution providing for the existence of a
Potential Change in Control have expired or no longer exist.
9. STOCK AND OPTION AWARDS. With respect to any award granted to the
Executive under the Company's 1996 Incentive Stock Program (the "Program"), any
Prior Program (as defined in the Program) or any successor program, the
following shall apply:
(a) if the award (other than incentive stock options granted pursuant to
Section 422 of the Internal Revenue Code [each an "Incentive Stock
Option"] prior to the date on which the Original Agreement was
executed) includes a provision substantially similar to the
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provision contained on Appendix A, then after a Change in Control no
forfeiture shall be effected pursuant to such provision unless the
Executive shall have been terminated for "Cause" within the meaning of
paragraph 2(b) above; and
(b) if the Executive becomes entitled to Change in Control Benefits under
Section 2 above, then in determining the Executive's rights with
respect to that award, other than Incentive Stock Options granted prior
to the later of:
(i) December 8, 2000, or
(ii) the date on which the Original Agreement was executed,
the Executive shall be treated as having incurred a termination of
employment due to retirement.
10. WITHHOLDING. All payments to the Executive under this Agreement
will be subject to withholding of applicable taxes. The Company shall withhold
the applicable taxes in an amount calculated at the minimum statutory rate and
shall pay the amount so withheld to the appropriate tax authority.
11. NONALIENATION. The interests of the Executive under this Agreement
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Executive or the Executive's beneficiary.
12. AMENDMENT. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing without the consent of any other person. So
long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
13. APPLICABLE LAW. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Illinois, without regard to the
conflict of law provisions of any state.
14. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).
15. WAIVER OF BREACH. No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party of any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
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reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.
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16. SUCCESSORS, ASSUMPTION OF CONTRACT. This Agreement shall be binding
upon and inure to the benefit of the Company and any successor of the Company.
The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no succession had taken place. This Agreement is
personal to the Executive and may not be assigned by the Executive without the
written consent of the Company. However, to the extent that rights or benefits
under this Agreement otherwise survive the Executive's death, the Executive's
heirs and estate shall succeed to such rights and benefits pursuant to the
Executive's will or the laws of descent and distribution; provided that the
Executive shall have the right at any time and from time to time, by notice
delivered to the Company, to designate or to change the beneficiary or
beneficiaries with respect to such benefits.
17. NOTICES. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid
(provided that international mail shall be sent via overnight or two-day
delivery), or sent by facsimile or prepaid overnight courier to the parties at
the addresses set forth below. Such notices, demands, claims and other
communications shall be deemed given:
(a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or
(c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service or two-day delivery
service are to be delivered to the addresses set forth below:
to the Company:
Senior Vice President, Human Resources
Xxxxxx Laboratories
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
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with a copy (which shall not constitute notice) to:
General Counsel and Secretary
Xxxxxx Laboratories
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
or to the Executive:
Name
Address
City, State Zip
Each party, by written notice furnished to the other party, may modify the
applicable delivery address, except that notice of change of address shall be
effective only upon receipt.
18. RESOLUTION OF ALL DISPUTES. Any controversy or claim arising out of
or relating to this Agreement (or the breach thereof) shall be settled by
alternative dispute resolution procedures in accordance with Appendix B hereto.
19. LEGAL AND ENFORCEMENT COSTS. The provisions of this Section 19
shall apply if it becomes necessary or desirable for the Executive to retain
legal counsel or incur other costs and expenses in connection with enforcing any
and all rights under this Agreement:
(a) The Executive shall be entitled to recover from the Company reasonable
attorneys' fees, costs and expenses incurred in connection with such
enforcement or defense.
(b) Payments required under this Section 19 shall be made by the Company to
the Executive (or directly to the Executive's attorney) promptly
following submission to the Company of appropriate documentation
evidencing the incurrence of such attorneys' fees, costs, and expenses.
(c) The Executive shall be entitled to select legal counsel; provided,
however, that such right of selection shall not affect the requirement
that any costs and expenses reimbursable under this Section 19 be
reasonable.
(d) The Executive's rights to payments under this Section 19 shall not be
affected by the final outcome of any dispute with the Company.
20. SURVIVAL OF AGREEMENT. Except as otherwise expressly provided in
this Agreement, the rights and obligations of the parties to this Agreement
shall survive the termination of the Executive's employment with the Company.
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21. ENTIRE AGREEMENT. Except as otherwise provided herein, this
Agreement constitutes the entire agreement between the parties concerning the
subject matter hereof and supersedes all prior or contemporaneous agreements,
between the parties relating to the subject matter hereof including but not
limited to the Original Agreement; provided, however, that nothing in this
Agreement shall be construed to limit any policy or agreement that is otherwise
applicable relating to confidentiality, rights to inventions, copyrightable
material, business and/or technical information, trade secrets, solicitation of
employees, interference with relationships with other businesses, competition,
and other similar policies or agreement for the protection of the business and
operations of the Company and the subsidiaries.
22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which shall be deemed the original without reference to
the others.
IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
and its corporate seal to be hereunto affixed on this _____ day of ___________,
2001, all as of the Effective Date.
--------------------------------------
EXECUTIVE
XXXXXX LABORATORIES
By
------------------------------------------
Its
------------------------------------------
ATTEST:
------------------------------
(Seal)
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APPENDIX A
AGREEMENT REGARDING CHANGE IN CONTROL
FORFEITURE PROVISION REFERENCED IN SECTION 9
Notwithstanding paragraphs (x*), (y*) and (z*), these options (this restricted
stock award, etc.) shall immediately terminate (be forfeited), if in the sole
opinion and discretion of the Compensation Committee or its delegate, the
employee (a) engages in a material breach of the company's Code of Business
Conduct; (b) commits an act of fraud, embezzlement or theft in connection with
the employee's duties or in the course of employment; or (c) wrongfully
discloses secret processes or confidential information of the company or its
subsidiaries.
* Provisions contained in the agreements pertaining to nonforfeiture for death,
disability, etc.
00
XXXXXXXX X
AGREEMENT REGARDING CHANGE IN CONTROL
ALTERNATIVE DISPUTE RESOLUTION PROCEDURES
The parties to the Agreement Regarding Change in Control dated as of the 1st day
of January, 2000 (the "Agreement") recognize that a bona fide dispute as to
certain matters may arise from time to time during the term of the Agreement
which relates to either party's rights and/or obligations. To have such a
dispute resolved by this Alternative Dispute Resolution ("ADR") provision, a
party first must send written notice of the dispute to the other party for
attempted resolution by good faith negotiations between the Executive and the
Company within twenty-eight (28) days after such notice is received (all
references to "days" in the ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14)
days after its receipt of such notice, the other party may, by written
notice to the party initiating the ADR, add additional issues to be
resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to
preside in the resolution of any disputes in this ADR proceeding. If
the parties are unable to agree on a mutually acceptable neutral within
such period, either party may request the President of the CPR
Institute for Dispute Resolution ("CPR"), 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, to select a neutral pursuant to the
following procedures:
(a) The CPR shall submit to the parties a list of not less than
five (5) candidates within fourteen (14) days after receipt of
the request, along with a CURRICULUM VITAE for each candidate.
No candidate shall be an employee, director or shareholder of
either party or any of their subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her
impartiality.
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(c) Each party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference)
and shall deliver the list to the CPR within seven (7) days
following receipt of the list of candidates. If a party
believes a conflict of interest exists regarding any of the
candidates, that party shall provide a written explanation of
the conflict to the CPR along with its list showing its order
of preference for the candidates. Any party failing to return
a list of preferences on time shall be deemed to have no order
of preference.
(d) If the parties collectively have identified fewer than three
(3) candidates deemed to have conflicts, the CPR immediately
shall designate as the neutral the candidate for whom the
parties collectively have indicated the greatest preference.
If a tie should result between two candidates, the CPR may
designate either candidate. If the parties collectively have
identified three (3) or more candidates deemed to have
conflicts, the CPR shall review the explanations regarding
conflicts and, in its sole discretion, may either (i)
immediately designate as the neutral the candidate for whom
the parties collectively have indicated the greatest
preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set forth in
subparagraphs 2(a)-2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56)
days after selection, the neutral shall hold a hearing to resolve each
of the issues identified by the parties. The ADR proceeding shall take
place at a location agreed upon by the parties. If the parties cannot
agree, the neutral shall designate a location other than the principal
place of business of either party or any of the subsidiaries or
affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in
any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of
each witness;
(c) a proposed ruling on each issue to be resolved, together with
a request for a specific damage award or other remedy for each
issue. The proposed rulings and remedies shall not contain any
recitation of the facts or any legal arguments and shall not
exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20)
pages. This page limitation shall apply regardless of the
number of issues raised in the ADR proceeding.
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Except as expressly set forth in subparagraphs 4(a) - 4(d), no
discovery shall be required or permitted by any means, including
deposition, interrogatories, requests for admissions or production of
documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing time
to present its case. The neutral shall determine whether each
party has had the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular or rebuttal testimony,
documents or other evidence, to cross-examine witnesses and
to make a closing argument. Cross-examination of witnesses
shall occur immediately after their direct testimony, and
cross-examination time shall be charged against the party
conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if
it chooses to make an opening statement, shall address not
only issues it raised, but also any issues raised by the
responding party. The responding party, if it chooses to make
an opening statement, also shall address all issues raised in
the ADR. Thereafter, the presentation of regular and rebuttal
testimony and documents, other evidence and closing arguments
shall proceed in the same sequence.
(d) Except when testifying, witnesses shall be excluded from the
hearing until closing arguments.
(e) Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances.
Affidavits prepared for purposes of the ADR hearing also shall
not be admissible. As to all other matters, the neutral shall
have sole discretion regarding the admissibility of any
evidence.
6. Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a post-hearing brief in
support of its proposed rulings and remedies, provided that such brief
shall not contain or discuss any new evidence and shall not exceed ten
(10) pages. This page limitation shall apply regardless of the number
of issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed
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rulings and remedies on some issues and the other party's proposed
rulings and remedies on other issues. The neutral shall not issue any
written opinion or otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses by the
Company. The Company shall bear its own fees and expenses. The
Executive's fees and expenses shall be paid or reimbursed by the
Company to the extent provided by the Agreement.
9. The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non-appealable, and may be
entered as a final judgment in any court having jurisdiction.
10. Except as provided in Section 9 or as required by law, the existence of
the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and
briefs), and the rulings shall be deemed Confidential Information. The
neutral shall have the authority to impose sanctions for unauthorized
disclosure of Confidential Information.
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