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EXHIBIT 10.22
[ALLERGAN LETTERHEAD]
September 25, 1997
Mr. William C. Shepherd
1206 E. Balboa Boulevard
Balboa, CA 92661-1420
Dear Bill,
This letter agreement and release of all claims will serve to set forth all
agreements and understandings relative to your termination from Allergan. The
reason for the termination of employment is Early Retirement by Mutual
Agreement.
1. TERMINATION DATE
Your last day as an active employee will be January 1, 1998, (your
"Termination Date").
2. FINAL PAY
You will be paid through your Termination Date.
In addition, you will be paid for any earned but unused vacation hours, up
to the maximum accrual of 13 weeks (520 hours) of pay at your base salary.
You will cease to accrue additional vacation benefits after your Termination
Date.
3. RESIGNATION AS DIRECTOR
You shall tender your resignation as a member of the Allergan, Inc. Board of
Directors and as a Director and/or officer of any Allergan subsidiary on
which you serve, effective on your Termination Date.
4. SEVERANCE PAY
You will receive severance pay over the next thirty six (36) months
following your Termination Date, payable semi-monthly. This payment is
contingent on your signing this letter agreement. The total severance value,
at the rate of $89,166.67 per month, is $3,210,000. This rate reflects three
times your highest annual salary in the last 5 year period plus three times
the average of your two highest bonuses in the last 5 year period. If you
elect not to sign this letter agreement, your severance will be equal to 3
months' base salary or $267,500. The 36-month period or the 3-month period
(depending on whether you sign this letter agreement) is referred to in this
letter as the "Severance Pay Period."
5. CONSULTING SUPPORT TO ALLERGAN
As part of the consideration for your severance pay, you agree to provide
consulting support to Allergan as requested by Allergan's CEO, up to a
maximum of 50 days per year, during the severance pay period.
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6. OFFICE
You will be provided with off site office and secretarial support, as
approved by the Allergan CEO, during the severance pay period.
7. BENEFITS
Normal benefits, i.e., vacation accrual, personal accident, and business
travel accident coverage, will end on your Termination Date. Medical,
dental, group term life, disability, and flexible spending account benefits
will continue beyond your Termination Date during the Severance Pay Period,
or until you become eligible for these healthcare benefits under another
employer group plan, whichever comes first. Standard employee premiums will
be deducted from each semi-monthly paycheck.
8. RETIREE MEDICAL
You are eligible for Retiree medical coverage.
9. EXECUTIVE PERQUISITES
On your Termination Date you will receive the cash value of your executive
perquisites for your Severance Pay Period, as listed below.
- Auto allowance: $750.00 per month x 36 months.
- Gasoline allowance: $1,500.00 per year x 3 years.
- Club allowance: $20,040.00 per year x 3 years.
- Tax and Financial Planning: $13,360.00 per year x 3 years.
Ownership of any club memberships to which you belong will be transferred to
you. All other perquisites and benefits not specifically noted will end on
your Termination Date.
10. EXPENSE REIMBURSEMENT AND ADVANCES
You may file an expense claim for business expenses and executive
perquisites entitled for reimbursement as incurred through your Termination
Date. Advances should be cleared by this date, as well.
11. PENSION, SIP, AND ESOP
Please refer to the attached information in the document titled, Benefits
Summary for Terminating Employees, for treatment of your balances or
eligibility in these plans. You will receive 3 years additional pension
benefit accrual under your Severance Pay Period. Your pension will be based
on your last highest salary in the last 5 years plus the average of your
last 2 highest bonuses. ESOP and SIP participation end on your Termination
Date.
12. BONUS
You are eligible for a bonus for 1997 as determined at the discretion of the
O&CC.
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13. STOCK AWARDS
The vesting of all your unvested stock options will be accelerated on your
Termination Date, upon agreement with the terms of this letter agreement.
You may exercise any vested stock options, at your choice, according to plan
documents.
Your stock option exercise period is the earlier of: A) 5 years from your
Termination Date; or B) the normal expiration date.
As has been past practice, you should not exercise stock options or trade in
stock of Allergan, directly or indirectly, without first consulting with
Frank Tunney or Susan Glass.
14. EXECUTIVE DEFERRED COMPENSATION PLAN
Your contributions under this plan will be treated as outlined under the
provisions of the plan.
15. COMPANY INFORMATION
You acknowledge that during the term of your employment you had, and that
during the Severance Pay Period and subsequent thereto you may have, access
to information confidential and/or proprietary to Allergan including, but
not limited to, trade secrets, technical data or know-how relating to
investigational or marketed products, research, or manufacturing processes,
or any information of a business, financial, or technical nature (not
already publicly available in a reasonably integrated form), and that such
information shall be and remain at all times the exclusive property of
Allergan. You shall maintain such information in confidence and shall not
disclose such information to anyone else, nor shall you use it for your own
benefit or for the benefit of others, except as expressly directed in
writing by Allergan during the term of this letter agreement or at any time
thereafter.
16. COMPANY PROPERTY
You must return all company property on your Termination Date. This
includes, but is not limited to, credit and travel cards, building and card
keys, office equipment such as calculators, Dictaphones, modems, and all
other items which are Company property. This also includes any report,
customer list, price list, files, notebooks or other materials pertaining to
the Company's business which are in your possession or under your control.
You may purchase your Allergan computer at a mutually acceptable price, to
be determined.
17. INDEMNITY AGREEMENT
The provisions of the Indemnity Agreement between you and Allergan continue
to apply in accordance with its terms.
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18. RELEASE OF ALL CLAIMS
By executing this letter agreement you hereby release and discharge Allergan
from any and all claims, debts, wages, liabilities, promises, contracts,
agreements, obligations, undertakings and causes of action whatsoever,
whether known or unknown, arising out of, or in any way connected with, any
transaction, event, act or omission occurring on or prior to the date of
this Release Agreement regarding your employment with Allergan or your
separation therefrom.
You intend in executing this agreement to WAIVE AND RELINQUISH all rights
and benefits you have or may have pursuant to the provisions of Section 1542
of the California Civil Code, which provides as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor."
Without limiting the foregoing, you acknowledge and agree that the benefits
provided to you in this Agreement supersede and replace any benefits that
might be owed to you under California law as a result of your employment
relationship with Allergan and the termination of your employment.
Furthermore, you agree that if you are entitled to Workers' Compensation
benefits as a result of a work-related injury incurred during your
employment with Allergan, for which no claim presently is pending, Allergan
may offset from the above-quoted severance pay any such Workers'
Compensation benefits you are paid.
19.ACKNOWLEDGMENT OF UNDERSTANDING
You have read the foregoing letter agreement and understand, accept, and
agree to its contents and sign it voluntarily without coercion and with full
understanding that you are releasing and waiving any and all claims that you
have or might have against Allergan connected with your employment or
separation. You expressly understand that you are receiving the sum of
$2,942,500 as a portion of your severance pay because you have executed this
letter agreement.
You have 21 days to consider this letter agreement before you sign it; you
may sign it earlier if you so wish, but the decision is entirely yours. Once
you sign this letter agreement, you have 7 days after signing it to revoke
it. To revoke it, please contact Rick Hilles in writing.
You have the right to consult with an attorney regarding the consequences of
this letter agreement and release and you are encouraged to do so.
20. CONFIDENTIALITY
Neither party shall reveal or discuss the contents of this letter agreement,
unless compelled to do so in order to enforce the terms hereof or required
to do so by law. You may, however, disclose and discuss the contents of this
letter agreement to your financial advisor(s), your lawyer(s), and your
wife, provided they agree to keep the information confidential. You
understand and agree that unauthorized disclosure of the terms and
conditions of this letter agreement to a third party will result in the
termination of all non-ERISA benefits and payments contained herein.
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21. SAVINGS CLAUSE
If any term of this letter agreement is declared void or is otherwise
unenforceable, it shall not alter the enforceability or validity of the
remaining paragraphs and terms of this settlement and release, each of which
shall remain fully binding on the parties.
22. CONTROLLING LAW
Should any dispute arise as to the interpretation, application, or breach of
this letter agreement, the resolution of such dispute shall be governed by
the laws of California.
23. MEDIATION
Any future dispute related to this letter agreement, that cannot be
resolved, shall be resolved by reference pursuant to Section 638 of the
California Code of Civil Procedure and all disputes shall be resolved by the
Judicial Arbitration and Mediation Service (JAMS) in Orange County,
California. Attorney's fees and costs shall be awarded to the party
prevailing in the dispute and any resolution, opinion, or order of JAMS may
be entered as a judgment of the Superior Court and appealed to the
appropriate appellate court pursuant to Section 644 of the California Code
of Civil Procedure. JAMS will control any discovery, rights, privileges, the
hearing dates, and all other matters connected therewith.
24. ENTIRE AGREEMENT
This letter agreement is the entire agreement concerning the benefits and
obligations relating to the termination of your employment and supersedes
all prior writings and discussions; and there are no representations,
warranties, or commitments other than those set forth in this letter
agreement. This letter agreement may be amended only in writing.
Sincerely,
/s/ WILLIAM R. GRANT
William Grant
cc: Richard J. Hilles
Tamara J. Erickson
att: Benefits Summary for Terminating Employees
Executive Supplement for Terminating Employees
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AGREED TO AND ACCEPTED BY:
/s/ WILLIAM C. SHEPHERD 9/29/97
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William C. Shepherd Date
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