Exhibit 10.28
AMGEN INC.
CHANGE OF CONTROL SEVERANCE PLAN
AMGEN INC., a Delaware corporation (the "Company"), has adopted this Change
of Control Severance Plan (the "Plan"), effective as of October 20, 1998, for
the benefit of certain key employees of the Company.
The purposes of the Plan are as follows:
(1) To reinforce and encourage the continued attention and dedication of
members of the Company's management to their assigned duties without the
distraction arising from the possibility of a change of control of the Company;
(2) To enable and encourage the Company's management to focus their
attention on obtaining the best possible deal for the Company's shareholders and
to make an independent evaluation of all possible transactions, without being
influenced by their personal concerns regarding the possible impact of various
transactions on the security of their jobs and benefits; and
(3) To provide severance benefits to any Participant (as defined below)
who incurs a termination of employment under the circumstances described herein
within a certain period following a Change of Control (as defined below).
1. Defined Terms. For purposes of the Plan, the following terms shall
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have the meanings indicated below:
(A) "Administration Committee" shall mean the committee which is
responsible for administering the Plan, as described in Section 3 hereof.
(B) "Benefits Continuation Period" shall mean (i) with respect to each
Group I Participant, the thirty-six (36) month period immediately following the
Participant's Date of Termination (as defined below), (ii) with respect to each
Group II Participant, the twenty-four (24) month period immediately following
the Participant's Date of Termination, and (iii) with respect to each Group III
Participant, the twelve (12) month period immediately following the
Participant's Date of Termination.
(C) "Benefits Multiple" shall mean (i) with respect to each Group I
Participant, three (3), (ii) with respect to each Group II Participant, two (2),
and (iii) with respect to each Group III Participant, one (1).
(D) "Board" shall mean the Board of Directors of the Company.
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(E) "Cause," with respect to any Participant, shall mean (i) the
Participant's conviction of a felony, or (ii) the engaging by the Participant in
conduct that constitutes willful gross neglect or willful gross misconduct in
carrying out the Participant's duties, resulting, in either case, in material
economic harm to the Company, unless the Participant believed in good faith that
such conduct was in, or not contrary to, the best interests of the Company. For
purposes of clause (ii) above, no act, or failure to act, on the Participant's
part shall be deemed "willful" unless done, or omitted to be done, by the
Participant not in good faith.
(F) A "Change of Control" of the Company shall be deemed to have
occurred at any of the following times:
(i) upon the acquisition (other than from the Company) by any
person, entity or "group," within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (excluding, for this purpose, the Company or
its affiliates, or any employee benefit plan of the Company or its
affiliates which acquires beneficial ownership of voting securities of the
Company), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of fifty percent (50%) or more of
either the then outstanding shares of common stock, par value $.0001, of
the Company or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election of directors;
or
(ii) at the time individuals who, as of October 20, 1998,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person
becoming a director subsequent to December 9, 1997, whose election, or
nomination for election by the Company's stockholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) shall be, for purposes of the Plan, considered as though such
person were a member of the Incumbent Board; or
(iii) immediately prior to the consummation by the Company of a
reorganization, merger, consolidation, (in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter,
own more than fifty percent (50%) of the combined voting power entitled to
vote generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a liquidation
or dissolution of the Company or the sale of all or substantially all of
the assets of the Company; or
(iv) the occurrence of any other event which the Incumbent Board
in its sole discretion determines constitutes a Change of Control.
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(G) "Change of Control Period" shall mean the period beginning on the
date of a Change of Control and ending on the second anniversary of such Change
of Control.
(H) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(I) "Company" shall mean Amgen Inc., a Delaware corporation, and, except
in determining under Section 1(F) hereof whether or not any Change of Control of
the Company has occurred, shall include any successor to its business and/or
assets.
(J) "Disability" shall be determined in accordance with the Company's
long-term disability plan as in effect immediately prior to a Change of Control.
(K) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(L) "Good Reason," with respect to any Participant, shall mean the
occurrence (without the Participant's express written consent) of any of the
following circumstances unless such circumstances are fully corrected (provided
such circumstances are capable of correction) prior to the Participant's Date of
Termination:
(i) any adverse and material alteration or diminution in the
Participant's position, title or responsibilities as they existed
immediately prior to the Change of Control or as the same may be increased
from time to time thereafter;
(ii) the Company's reduction of the Participant's annual base
salary or targeted bonus opportunity, in each case as in effect on the date
hereof or as the same may be increased from time to time;
(iii) relocation of the Company's offices at which the Participant
is employed which increases the Participant's daily commute by more than
100 miles on a round trip basis;
(iv) the Company's failure to pay to the Participant any portion
of his or her current compensation or to pay to the Participant any portion
of an installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such compensation
is due;
(v) the Company's failure to continue in effect any material
compensation or benefit plan (including, without limitation, the Management
Incentive Plan, the Amgen Retirement Savings Plan, the Amgen Supplemental
Retirement Plan, and the Company's medical and dental care plans,
disability income plans, stock option plans and other equity plans) in
which the Participant participates immediately prior to the Change of
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Control, unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the
Company's failure to continue the Participant's participation therein (or
in such substitute or alternative plan) on a basis not materially less
favorable, in terms of the amount of benefits provided, the cost to the
Participant and the level of the Participant's participation relative to
other participants, as existed immediately prior to the Change of Control;
(vi) the Company's failure to obtain a satisfactory agreement from
any successor to assume the Plan and the Company's obligations hereunder,
as contemplated by Section 7.1(A) hereof; or
(vii) any purported termination of the Participant's employment
that is not effected pursuant to a Notice of Termination satisfying the
requirements of the Plan, which purported termination shall not be
effective for purposes of the Plan.
A Participant's right to terminate his or her employment for Good Reason
shall not be affected by the Participant's incapacity due to physical or mental
illness. A Participant's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
(M) "Group I Participants" shall mean those senior executive-level staff
members of the Company whom the Company has designated as members of the Amgen
Operating Committee, as such committee shall be constituted immediately prior to
a Change of Control. At or before the occurrence of a Change of Control, the
Company shall notify the Group I Participants in writing of their status as
Participants in the Plan.
(N) "Group II Participants" shall mean those senior management-level
staff members of the Company at the level of Director or equivalent and above
(i.e., those employees of the Company whose positions have been designated as
Salary Grade E32 or Salary Grade EL4 and above) and who are not Group I
Participants, as such group shall be constituted immediately prior to a Change
of Control. At or before the occurrence of a Change of Control, the Company
shall notify the Group II Participants in writing of their status as
Participants in the Plan.
(O) "Group III Participants" shall mean those management-level staff
members of the Company at the level of Associate Director or equivalent (i.e.,
those employees of the Company whose positions have been designated as Salary
Grade E30, Salary Grade E31, Salary Grade EL2 or Salary Grade EL3), as such
group shall be constituted immediately prior to a Change of Control. At or
before the occurrence of a Change of Control, the Company shall notify the Group
III Participants in writing of their status as Participants in the Plan.
(P) "Participants" shall mean, collectively, the Group I Participants,
the Group II Participants, and the Group III Participants.
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2. Effective Date and Term of Plan. The Plan shall be effective as of
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October 20, 1998 and shall continue in effect through December 31, 2001;
provided, however, that commencing on December 31, 1999 and on each December 31
thereafter, the term of the Plan shall automatically be extended for one
additional year by adding one year to the last day of the term as then in effect
unless, not later than September 30 of such year, the Company shall have given
notice to the Participants that the term of the Plan will not be extended;
provided, further, that if a Change of Control occurs during the original or any
extended term of the Plan, the term of the Plan shall continue in effect for a
period of not less than thirty-six (36) months beyond the month in which such
Change of Control occurred.
3. Administration. (A) The Plan shall be interpreted, administered and
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operated by the Compensation Committee of the Board, except that if the
Compensation Committee determines that a Change of Control is likely to occur,
the Compensation Committee shall appoint a person or group of persons who shall
constitute the Administration Committee after the occurrence of the Change of
Control, which Administration Committee shall have the power to interpret,
administer and operate the Plan after the occurrence of the Change of Control.
The Administration Committee shall have complete authority, in its sole
discretion subject to the express provisions of the Plan, to determine who shall
be a Participant, to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to it, and to make all other determinations necessary
or advisable for the administration of the Plan. The Administration Committee
may delegate any of its duties hereunder to such person or persons from time to
time as it may designate.
(B) All expenses and liabilities which members of the Administration
Committee incur in connection with the administration of the Plan shall be borne
by the Company. The Administration Committee may employ attorneys, consultants,
accountants, appraisers, brokers, or other persons in connection with such
administration, and the Administration Committee, the Company and the Company's
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. No member of the Compensation Committee, the
Administration Committee or the Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan, and
all members of the Compensation Committee, the Administration Committee and the
Board shall be fully protected by the Company in respect of any such action,
determination or interpretation.
4. Benefits Provided.
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4.1 Termination After Change of Control. If a Participant's employment
is terminated during a Change of Control Period (a) by the Company other than
for Cause or Disability, or (b) by the Participant for Good Reason, the Company
shall pay the Participant the amounts, and provide the Participant with the
benefits, described in this Section 4.1:
(A) In lieu of any further salary payments to the Participant for
periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Participant (other than accrued vacation
and similar benefits otherwise
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payable upon termination of employment pursuant to Company policies and
programs), the Company shall pay to the Participant a lump sum cash payment
(the "Cash Severance Payment") in an amount equal to the excess, if any, of
(I) the product of (x) the Participant's Benefits Multiple,
and (y) the sum of (i) the Participant's annual base salary as in
effect immediately prior to the Date of Termination or, if higher, as
in effect immediately prior to the Change of Control, plus (ii) the
Participant's targeted annual bonus for the year in which such Date of
Termination occurs or, if higher, the Participant's average annual
bonus for the three (3) years immediately prior to the Change of
Control; over
(II) the aggregate value of the acceleration of vesting or
exercisability of any unvested stock options held by the Participant
under any of the Company's equity based plans as a result of or in
connection with the Change of Control as such value is determined by
the Accountants (as defined below) in accordance with the principles
of Sections 280G(d)(3) and 280G(d)(4) of the Code and Question and
Answer 24 of Proposed Treasury Regulation Section 1.280G-1 or any
successor section of any successor regulation or statute.
(B) During the Benefits Continuation Period, the Company shall
provide the Participant and his or her dependents with life, disability,
accident and health insurance benefits substantially similar to those
provided to the Participant and his or her dependents immediately prior to
the Date of Termination or the date of the Change of Control, whichever is
more favorable to the Participant; provided, however, that such benefits
shall be provided on substantially the same terms and conditions and at the
same cost to the Participant as in effect immediately prior to the Date of
Termination or the date of the Change of Control, whichever is more
favorable to the Participant; provided, further, that if the Participant
becomes reemployed with another employer and is eligible to receive such
benefits under another employer's plans, the Company's obligations under
its plans and this Section 4.1(B) shall be secondary to the coverage
provided by such other employer's plans during the Benefits Continuation
Period, and any such benefits actually received by the Participant shall be
reported to the Company. In the event that the Participant is ineligible
under the terms of the Company's benefit plans to continue to be so
covered, the Company shall provide the Participant with substantially
equivalent coverage through other sources or will provide the Participant
with a lump sum payment (determined on a present value basis using the
interest rate provided in Section 1274(b)(2)(B) of the Code on the Date of
Termination) in such amount that, after all income and employment taxes
(but not any excise taxes) on that amount, shall be equal to the cost to
the Participant of providing himself or herself such benefit coverage. At
the termination of the benefits coverage under the first sentence of this
Section 4.1(B), the Participant and his or her dependents shall be entitled
to continuation coverage pursuant to Section 4980B of the Code, Sections
601-608 of the Employee Retirement Income Security Act of 1974, as amended,
and under any other applicable law, to the extent
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required by such laws, as if the Participant had terminated employment with
the Company on the date such benefits coverage terminates.
(C) The Company shall pay to the Participant any earned but unpaid
portion of the Participant's base salary as of the Date of Termination at
the rate in effect at the time Notice of Termination is given, plus all
other amounts to which the Participant is entitled under any compensation
plan or practice of the Company at the time such payments are due.
(D) The Participant shall be fully vested in his or her accrued
benefits under the Amgen Retirement Savings Plan and the Amgen Supplemental
Retirement Plan, as applicable, and the Company shall provide the
Participant with additional fully vested benefits under such plans in an
amount equal to the benefits which the Participant would have accrued
(based upon the amount of the contributions thereto by the Participant and
the Company on the Participant's behalf, in each case immediately prior to
the Date of Termination or, if more favorable to the Participant,
immediately prior to the Change of Control) had he or she continued
employment with the Company following his or her Date of Termination for
that number of years equal to the Participant's Benefits Multiple;
provided, however, that to the extent that the acceleration of vesting or
enhanced accrual of such benefits would violate any applicable law or
require the Company to accelerate the vesting of the accrued benefits of
all participants in such plan or plans or to provide additional benefit
accruals to such participants, the Company shall pay the Participant a
lump-sum payment at the time specified in Section 4.3 hereof in an amount
equal to the value of such benefits.
(E) In any situation where under applicable law the Company has the
power to indemnify (or advance expenses to) the Participant in respect of
any judgments, fines, settlements, loss, cost or expense (including
attorneys' fees) of any nature related to or arising out of the
Participant's activities as an agent, employee, officer or director of the
Company or in any other capacity on behalf of or at the request of the
Company, the Company shall promptly on written request, indemnify (and
advance expenses to) the Participant to the fullest extent permitted by
applicable law. Such agreement by the Company shall not be deemed to impair
any other obligation of the Company respecting the Participant's
indemnification otherwise arising out of this or any other agreement or
promise of the Company or under any statute.
(F) For the four (4) year period immediately following the Date of
Termination, the Company shall furnish each Participant who was a director
and/or officer of the Company at any time prior to the Date of Termination
with directors' and/or officers' liability insurance, as applicable,
insuring the Participant against insurable events which occur or have
occurred while the Participant was a director or officer of the Company,
such insurance to have policy limits aggregating not less than the amount
in effect immediately prior to the Change of Control, and otherwise to be
in substantially the same form and to contain substantially the same terms,
conditions and exceptions as the
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liability issuance policies provided for officers and directors of the
Company in force from time to time, provided, however, that if the
aggregate annual premiums for such insurance at any time during such period
exceed one hundred and fifty percent (150%) of the per annum rate of
premium currently paid by the Company for such insurance, then the Company
shall provide the maximum coverage that will then be available at an annual
premium equal to one hundred and fifty percent (150%) of such rate.
(G) If it shall be determined by the Accountants that any payment,
distribution or acceleration of vesting or exercisability of any stock
option or other right with respect to a Participant who is a "disqualified
individual" within the meaning of Section 280G(c) of the Code, whether
paid, distributed or accelerated pursuant to the terms of the Plan or
otherwise (the "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then the Participant shall be
entitled to receive from the Company an additional lump sum cash payment
(the "20% Payment") in an amount equal to twenty percent (20%) of the
amount of the Participant's "excess parachute payment" within the meaning
of Section 280G(b)(1) of the Code.
4.2 (A) All determinations required to be made under Section 4.1
hereof, including the valuation of the acceleration of the Participant's stock
options and whether the Cash Severance Payment and the 20% Payment are required
to be made and the amount of such payments, and the assumptions to be utilized
in arriving at such determinations shall be made by the Accountants (as defined
below). The Accountants shall provide the Participant and the Company with
detailed supporting calculations with respect to such determinations at least
fifteen (15) business days prior to the date of the Change of Control (or as
soon as practicable in the event that the Accountants have less than fifteen
(15) business days advance notice of the potential occurrence of the Change of
Control) with respect to the impact of any acceleration of vesting of stock
options and any payments which will be made to the Participant before, at or
immediately after the Change of Control and from time to time thereafter to the
extent that the Participant may become entitled to receive any additional
payments or benefits which would affect the amount of any "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code payable to the
Participant in order that the Participant may determine whether it is in the
best interest of the Participant to waive the receipt of any or all amounts
which may constitute "excess parachute payments." Any determination by the
Accountants shall be binding upon the Company and the Participant. For purposes
of the Plan, the "Accountants" shall mean the Company's independent certified
public accountants serving immediately prior to the Change of Control. In the
event that the Accountants are also serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Administration
Committee shall appoint another nationally recognized public accounting firm to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accountants hereunder). All fees and expenses of the
Accountants under this Section 4.2 shall be borne solely by the Company.
(B) For purposes of determining whether any of the Payments would be
subject to the Excise Tax, such Payments will be treated as "parachute payments"
within the meaning of
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Section 280G of the Code and all "parachute payments" in excess of the "base
amount" (within the meaning of Section 280G(b)(3) of the Code) shall be treated
as subject to the Excise Tax, unless and except to the extent that (i) the
Participant shall have waived the receipt or enjoyment of such Payments (in
whole or in part) at such time and in such manner so as not to constitute a
"payment" within the meaning of Section 280G(b) of the Code, or (ii) in the
opinion of the Accountants, such Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable compensation for
services actually rendered (within the meaning of Section 280G(b)(4) of the
Code) in excess of the "base amount," or such "parachute payments" are otherwise
not subject to such Excise Tax.
4.3 The payments provided in subsections (A), (C) and (G) of Section 4.1
hereof shall be made not later than the fifth (5th) day following the receipt by
the Participant of the Accountants' determination. As a result of uncertainty
in the application of Section 280G and Section 4999 of the Code at the time of
the initial determination by the Accountants hereunder, it is possible that the
Cash Severance Payment and/or the 20% Payment made by the Company will have been
less than the Company should have paid pursuant to Section 4.1(A) or (G) hereof,
as the case may be (the amount of any such deficiency, the "Underpayment") or
more than the Company should have paid pursuant to Section 4.1(A) or (G) hereof,
as the case may be (the amount of any such overage, the "Overpayment"). In the
event of an Underpayment, the Company shall pay the Participant the amount of
such Underpayment (together with interest at 120% of the rate provided in
Section 1274(b)(2)(B) of the Code) not later than five (5) business days after
the amount of such Underpayment is subsequently determined. In the event of an
Overpayment, the amount of such Overpayment shall constitute a loan by the
Company to the Participant, payable not later than five (5) business days after
the amount of such Overpayment is subsequently determined (together with
interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code).
4.4 At the time that any payments are made under the Plan, the Company
shall provide the Participant with a written statement setting forth the manner
in which such payments were calculated and the basis for such calculations
including, without limitation, any opinions or other advice the Company has
received from its counsel, the Accountants or other advisors or consultants (and
any such opinions or advice which are in writing shall be attached to the
statement).
5. Termination Procedures.
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5.1 Notice of Termination. Any purported termination of a Participant's
employment following a Change of Control (other than by reason of death) shall
be communicated by written Notice of Termination from one party to the other
party in accordance with Section 8 hereof. For purposes of the Plan, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in the Plan relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Participant's employment under the provision so indicated. Further, no
termination for Cause shall be effective without (a) reasonable notice to the
Participant setting forth the reasons for the
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Company's intention to terminate which specifies the particulars thereof in
detail, and (b) in the case of clause (ii) of the definition of Cause above, an
opportunity for the Participant to cure such Cause within twenty (20) days after
receipt of such notice. With respect to the Group I Participants, the Notice of
Termination must include a written statement that a majority of the entire
membership of the Board has determined that the Participant was guilty of the
conduct constituting Cause. With respect to Group II Participants and Group III
Participants, the Notice of Termination must include a written statement by one
of the Participant's direct or indirect supervisors that the supervisor has
determined that the Participant was guilty of conduct constituting Cause.
5.2 Date of Termination. "Date of Termination," with respect to any
purported termination of a Participant's employment (other than by reason of the
Participant's death), shall mean (i) if the Participant's employment is
terminated for Disability, the date upon which a Notice of Termination is given,
and (ii) if the Participant's employment is terminated for any other reason, the
date specified in the Notice of Termination (which shall be within sixty (60)
days from the date such Notice of Termination is given).
6. No Mitigation. The Company agrees that, in order for a Participant
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to be eligible to receive the payments and other benefits described herein, the
Participant is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Participant by the Company pursuant to Section
4 hereof. Further, the amount of any payment or benefit provided for in the Plan
(other than pursuant to Section 4.1(B) hereof) shall not be reduced by any
compensation earned by the Participant as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Participant to the Company, or otherwise.
7. Successors; Binding Agreement.
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7.1 (A) The Company shall 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 the Plan and all obligations of the Company hereunder in the same manner
and to the same extent that the Company would be so obligated if no such
succession had taken place.
(B) This Plan shall inure to the benefit of and shall be binding
upon the Company, its successors and assigns, but without the prior written
consent of the Participants the Plan may not be assigned other than in
connection with the merger or sale of any part of the business and/or assets of
the Company or similar transaction in which the successor or assignee assumes
(whether by operation of law or express assumption) all obligations of the
Company hereunder.
7.2 This Plan shall inure to the benefit of and be enforceable by the
Participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, legatees or other beneficiaries. If a
Participant shall die while any amount would still
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be payable to such Participant hereunder (other than amounts which, by their
terms, terminate upon the death of the Participant) if such Participant had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of the Plan to the executors, personal
representatives or administrators of such Participant's estate.
8. Notices. For the purpose of the Plan, notices and all other
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communications provided for in the Plan shall be in writing and shall be deemed
to have been duly given when delivered or mailed by United States registered
mail, return receipt requested, postage prepaid, addressed, if to a Participant,
to the address on file with the Company and, if to the Company, to the address
set forth below, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon actual receipt:
To the Company:
One Amgen Center Drive
Thousand Oaks, California 91320-1799
Attention: Corporate Secretary
9. Claims Procedures; Arbitration; Expenses.
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9.1 Claim for Benefits. A Participant may file with the Administration
Committee a written claim for benefits under the Plan. The Administration
Committee shall, within a reasonable time not to exceed ninety (90) days, unless
special circumstances require an extension of time of not more than an
additional ninety (90) days (in which event a Participant will be notified of
the delay during the first ninety (90) day period), provide adequate notice in
writing to any Participant whose claim for benefits shall have been denied,
setting forth the following in a manner calculated to be understood by the
Participant: (i) the specific reason or reasons for the denial; (ii) specific
reference to the provision or provisions of the Plan on which the denial is
based; (iii) a description of any additional material or information required to
perfect the claim, and an explanation of why such material or information is
necessary; and (iv) information as to the steps to be taken in order that the
denial of the claim may be reviewed. If written notice of the denial of a claim
has not been furnished to a Participant, and such claim has not been granted
within the time prescribed in this Section 9.1 (including any applicable
extension), the claim for benefits shall be deemed denied.
9.2 Arbitration. Any dispute or controversy arising under or in
connection with the Plan that cannot be settled through the procedures set forth
in Section 9.1 hereof shall be settled by final and binding arbitration
administered by JAMS/Endispute, or its successor, in Los Angeles, California in
accordance with the then existing JAMS/Endispute Arbitration Rules and
Procedures for Employment Disputes or any successor rules and procedures. In the
event of such an arbitration proceeding, the Participant and the Company shall
select a mutually acceptable neutral arbitrator from among the JAMS/Endispute
panel of arbitrators. In the event the
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Participant and the Company cannot agree on an arbitrator, the Administrator of
JAMS/Endispute will appoint an arbitrator. Except as provided herein, the
Federal Arbitration Act shall govern the interpretation, enforcement and all
proceedings. The arbitrator shall apply the substantive law (and the law of
remedies, if applicable) of the state of California, or federal law, or both, as
applicable and the arbitrator is without jurisdiction to apply any different
substantive law. The arbitrator shall have the authority to entertain a motion
to dismiss and/or a motion for summary judgment by any party and shall apply the
standards governing such motions under the Federal Rules of Civil Procedure. The
arbitrator shall render an award and a written, reasoned opinion in support
thereof. Judgment upon the award may be entered in any court having jurisdiction
thereof.
9.3 Expenses, Legal Fees. The Company shall pay to the Participant all
reasonable expenses (including arbitration fees and reasonable attorneys' fees
and legal expenses) incurred by the Participant with respect to any dispute or
controversy arising under or in connection with the Plan (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any termination of the Participant's employment or in seeking to
obtain or enforce any right or benefit provided by the Plan, or in connection
with any tax audit or proceeding to the extent attributable to the application
of Section 4999 of the Code to any payment or benefit provided hereunder) if the
Participant prevails on any material issue which is in dispute with respect to
such dispute or controversy.
10. Confidentiality; Non-Solicitation.
---------------------------------
10.1 Confidentiality. With respect to each Participant, during the
Participant's Benefits Continuation Period, the Participant shall not directly
or indirectly disclose or make available to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, any
Confidential Information (as defined below). Upon termination of a
Participant's employment with the Company, all Confidential Information in the
Participant's possession that is in written or other tangible form (together
with all copies or duplicates thereof, including computer files) shall be
returned to the Company and shall not be retained by the Participant or
furnished to any third party, in any form except as provided herein; provided,
however, that the Participant shall not be obligated to treat as confidential,
or return to the Company copies of any Confidential Information that (i) was
publicly known at the time of disclosure to the Participant, (ii) becomes
publicly known or available thereafter other than by any means in violation of
the Plan or any other duty owed to the Company by any person or entity, or (iii)
is lawfully disclosed to the Participant by a third party. For purposes of the
Plan, the term "Confidential Information" shall mean information disclosed to
the Participant or known by the Participant as a consequence of or through his
or her relationship with the Company, about the customers, employees, business
methods, public relations methods, organization, procedures or finances,
including, without limitation, information of or relating to customer lists, of
the Company and its affiliates. In addition, each Participant shall be subject
to the Company's policies regarding proprietary information and inventions, as
set forth in the Company's form of Proprietary Information and Inventions
Agreement (the "Proprietary Information Agreement") in the form in effect
immediately prior to a Change of Control.
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10.2 Non-Solicitation. In addition to each Participant's obligations
under the Proprietary Information Agreement, during a Participant's Benefits
Continuation Period, the Participant shall not, either on the Participant's own
account or jointly with or as a manager, agent, officer, employee, consultant,
partner, joint venturer, owner or shareholder or otherwise on behalf of any
other person, firm or corporation, directly or indirectly solicit or attempt to
solicit away from the Company any of its officers or employees or offer
employment to any person who is an officer or employee of the Company; provided,
however, that a general advertisement to which an employee of the Company
responds shall in no event be deemed to result in a breach of this Section 10.2.
10.3 Breach; Violation. In the event that a Participant breaches or
violates any provision of Section 10.1 or 10.2 hereof, the Participant shall
thereupon forfeit any right and interest of the Participant to receive payments
or benefits hereunder, and the Company shall thereupon have no further
obligation to provide such payments or benefits to the Participant hereunder.
10.4 Survival of Provisions. The provisions of this Section 10 shall
survive the termination or expiration of the applicable Participant's employment
with the Company and shall be fully enforceable thereafter. If it is determined
by a court of competent jurisdiction in any state that any restriction in this
Section 10 is excessive in duration or scope or is unreasonable or unenforceable
under the laws of that state, it is the intention of the parties that such
restriction may be modified or amended by the court to render it enforceable to
the maximum extent permitted by the law of that state.
11. Miscellaneous.
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11.1 No Waiver. No waiver by the Company or any Participant, as the case
may be, at any time of any breach by the other party of, or of any lack of
compliance with, any condition or provision of the Plan to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. All other plans,
policies and arrangements of the Company in which the Participant participates
during the term of the Plan shall be interpreted so as to avoid the duplication
of benefits paid hereunder.
11.2 No Right to Employment. Nothing contained in the Plan or any
documents relating to the Plan shall (i) confer upon any Participant any right
to continue as a Participant or in the employ of the Company or a subsidiary,
(ii) constitute any contract or agreement of employment, or (iii) interfere in
any way with the at-will nature of the Participant's employment with the
Company.
11.3 Termination and Amendment of Plan. Subject to Section 2 hereof, the
Company shall have the right to terminate or amend the Plan at any time by
resolution of the Board and to amend or cancel any amendments; provided,
however, that after a Change of Control, the Company may not terminate the Plan
and no amendment to the Plan shall be made which
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removes any Participant from participation in the Plan, which amends subsection
(M), (N) or (O) of Section 1 or which adversely affects a Participant's
interests without the express written consent of the Participant(s) so affected.
Subject to Section 10.3 hereof, notwithstanding anything contained herein to the
contrary, all obligations accrued by Participants prior to any termination of
the Plan must be satisfied in full in accordance with the terms hereof.
11.4 Benefits not Assignable. Except as otherwise provided herein or by
law, no right or interest of any Participant under the Plan shall be assignable
or transferable, in whole or in part, either directly or by operation of law or
otherwise, including, without limitation, by execution, levy, garnishment,
attachment, pledge or in any manner; no attempted assignment or transfer thereof
shall be effective; and no right or interest of any Participant under the Plan
shall be liable for, or subject to, any obligation or liability of such
Participant. When a payment is due under the Plan to a Participant who is
unable to care for his or her affairs, payment may be made directly to his or
her legal guardian or personal representative.
11.5 Tax Withholding. All amounts payable hereunder shall be subject to
applicable federal, state and local tax withholding.
11.6 California Law. This Plan shall be construed, interpreted and the
rights of the parties determined in accordance with the laws of the State of
California, to the extent not preempted by federal law, which shall otherwise
control.
11.7. Validity. The invalidity or unenforceability of any provision of
the Plan shall not affect the validity or enforceability of any other provision
of the Plan, which shall remain in full force and effect. If the Plan shall for
any reason be or become unenforceable by either party, the Plan shall thereupon
terminate and become unenforceable by the other party as well.
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