1
Exhibit (10)(g)
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 15th day of March, 1995 (the
"Effective Date") by and between The Upjohn Company, a Delaware corporation
(the "Company"), and Name~ ("Executive").
W I T N E S S E T H
WHEREAS, Executive currently serves as a key employee of the Company and
his/her services and knowledge are valuable to the Company in connection with
the management of one or more of the Company's principal operating facilities,
divisions, or subsidiaries; and
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its shareholders; and
WHEREAS, the Board (as defined in Section 1(a)) has determined that it is
in the best interests of the Company and its stockholders to secure Executive's
continued services and to ensure Executive's continued dedication and
objectivity in the event of any threat or occurrence of, or negotiation or
other action that could lead to, or create the possibility of, a Change in
Control (as defined in Section 1(c)) of the Company, without concern as to
whether Executive might be hindered or distracted by personal uncertainties and
risks created by any such possible Change in Control, and to encourage
Executive's full attention and dedication to the Company, the Board has
authorized the Company to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means (1) a material breach by Executive of the duties and
responsibilities of Executive (other than as a result of incapacity due to
physical or mental illness) which is demonstrably willful and deliberate on
Executive's part, which is committed in bad faith or without reasonable belief
that such breach is in the best interests of the Company and which is not
remedied in a reasonable period of time after receipt of written notice from
the Company specifying such breach or (2) the willful commission by Executive
of illegal
2
conduct which is materially and demonstrably injurious to the Company. Cause
shall not exist unless and until the Company has delivered to Executive a copy
of a resolution duly adopted by three-quarters (3/4) of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice to
Executive and an opportunity for Executive, together with his/her counsel, to
be heard before the Board), finding that in the good faith opinion of the Board
the Executive was guilty of the conduct set forth in this Section 1(b) and
specifying the particulars thereof in detail. For the purposes of clause (1)
above, any act, or failure to act, by Executive based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted
to be done, by Executive in good faith and in the best interests of the
Company.
(c) "Change in Control" means:
(1) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section 13(d) (3) or
14(d) (2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), of beneficial ownership within the meaning of Rule 13d-3 promulgated
under the Exchange Act, of 33% or more of either (i) the then outstanding
shares of common stock of the Company (the "Outstanding Company Common Stock")
or (ii) the combined voting power of the then outstanding securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change in Control: (A) any acquisition by
the Company, (B) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, (C) any acquisition by any corporation pursuant to a reorganization,
merger or consolidation involving the Company, if, immediately after such
reorganization, merger or consolidation, each of the conditions described in
clauses (i), (ii) and (iii) of subsection (3) of this Section (1)(c) shall be
satisfied, or (D) any acquisition by the Executive or any group of persons
including the Executive; and provided further that, for purposes of clause (A),
if any Person (other than the Company or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company) shall become the beneficial owner of 33% or more of the
Outstanding Company Common Stock or 33% or more of the Outstanding Company
Voting Securities by reason of an acquisition by the Company and such Person
shall, after such acquisition by the Company, become the beneficial owner of
any additional shares of the Outstanding Company Common Stock or any additional
Outstanding Voting Securities and such beneficial ownership is publicly
announced, such additional beneficial ownership shall constitute a Change in
Control;
3
(2) individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of such Board; provided, however, that any individual who becomes a director of
the Company subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by the vote of at least
three-quarters of the directors then comprising the Incumbent Board (either by
a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be deemed to have been a member of the Incumbent Board; and
provided further, that no individual who was initially elected as a director of
the Company as a result of an actual or threatened election contest, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act, or any other actual or threatened solicitation of proxies or consents by
or on behalf of any Person other than the Board shall be deemed to have been a
member of the Incumbent Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation unless, in any such case, immediately
after such reorganization, merger or consolidation, (i) more than 50% of the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and more than 50% of the combined
voting power of the then outstanding securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals or
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior or such reorganization, merger or consolidation and in substantially the
same proportions relative to each other as their ownership, immediately prior
to such reorganization, merger or consolidation, of the Outstanding Company
Common stock and the Outstanding Company Voting Securities, as the case may be,
(ii) no Person (other than the Company, any employee benefit plan (or related
trust) sponsored or maintained by the Company or the corporation resulting from
such reorganization, merger or consolidation (or any corporation controlled by
the Company), or any Person which beneficially owned, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 33% or more of
the Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 33%
or more of the then outstanding shares of common stock of such corporation or
33% or more of the combined voting power of the then outstanding securities of
such corporation entitled to vote generally in the election of directors and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation were
members of the Incumbent Board at the time of the execution of the initial
4
agreement or action of the Board providing for such reorganization, merger or
consolidation; or
(4) approval by the stockholders of the Company of (i) a plan of
complete liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company other than
to a corporation with respect to which, immediately after such sale or other
disposition, (A) more than 50% of the then outstanding shares of common stock
thereof and more than 50% of the combined voting power of the then outstanding
securities thereof entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such sale or other disposition and in
substantially the same proportions relative to each other as their ownership,
immediately prior to such sale or other disposition, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(B) no Person (other than the Company, any employee benefit plan (or related
trust) sponsored or maintained by the Company or such corporation (or any
corporation controlled by the Company), or any Person which beneficially owned,
immediately prior to such sale or other disposition, directly or indirectly,
33% or more of the Outstanding Company Common Stock or the Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 33% or more of the then outstanding shares of Common stock thereof
or 33% or more of the combined voting power of the then outstanding securities
thereof entitled to vote generally in the election of directors and (C) at
least a majority of the members of the board of directors thereof were members
of the Incumbent Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition.
Notwithstanding anything contained in this Agreement to the contrary, if
Executive's employment is terminated prior to a Change in Control and Executive
reasonably demonstrates that such termination was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control (a "Third Party") who effectuates a Change in
Control, then for all purposes of this Agreement, the date of a Change of
Control shall mean the date immediately prior to the date of such termination
of Executive's employment.
(d) "Company" means The Upjohn Company, a Delaware corporation.
(e) "Date of Termination" means (1) the effective date on which
Executive's employment by the Company terminates as specified in a Notice of
Termination by the Company or Executive, as the case may be, or (2) if
Executive's employment
5
by the Company terminates by reason of death, the date of death of Executive.
Notwithstanding the previous sentence, (i) if the Executive's employment is
terminated for Disability (as defined in Section 1(f)), then such Date of
Termination shall be no earlier than thirty (30) days following the date on
which a Notice of Termination is received, and (ii) if the Executive's
employment is terminated by the Company other than for Cause, then such Date of
Termination shall be no earlier than thirty (30) days following the date on
which a Notice of Termination is received.
(f) "Disability" means Executive's absence from his/her duties with the
Company on a full-time basis for at least one hundred eighty (180) consecutive
days as a result of Executive's incapacity due to mental or physical illness.
(g) "Good Reason" means, without Executive's express written consent,
the occurrence of any of the following events after a Change in Control:
(1) (i) the assignment to Executive of any duties inconsistent in
any material adverse respect with Executive's position(s), duties,
responsibilities or status with the Company immediately prior to such Change in
Control, (ii) a material adverse change in Executive's reporting
responsibilities, titles or offices with the Company as in effect immediately
prior to such Change in Control or (iii) any removal or involuntary termination
of Executive by the Company otherwise than as expressly permitted by this
Agreement (including any purported termination of employment which is not
effected by a Notice of Termination), which termination shall not be effective,
or any failure to re-elect Executive to any position with the Company held by
Executive immediately prior to such Change in Control; provided, however, that
notwithstanding anything in this paragraph (1) to the contrary, clauses (i) and
(ii) shall not be applicable to any occurrence that is directly attributable to
the fact that the Company is no longer a publicly traded entity;
(2) a reduction by the Company in Executive's rate of annual base
salary as in effect immediately prior to such Change in Control or as the same
may be increased from time to time thereafter;
(3) any requirement of the Company that Executive (i) be based
anywhere other than the facility where Executive is located at the time of the
Change in Control or (ii) travel on Company business to an extent substantially
more burdensome than the travel obligations of Executive immediately prior to
such Change in Control;
(4) the failure of the Company to (i) continue in effect any
employee benefit plan or compensation plan in which Executive is participating
immediately prior to such Change in Control, unless Executive is permitted to
participate in other
6
plans providing Executive with substantially comparable benefits, or the taking
of any action by the Company which would adversely affect Executive's
participation in or materially reduce Executive's benefits under any such plan,
(ii) provide Executive and Executive's dependents with welfare benefits
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for Executive immediately prior to such Change in Control,
(iii) provide fringe benefits in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for Executive immediately prior to such Change in Control, or (iv)
provide Executive with paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its affiliated
companies as in effect for Executive immediately prior to such Change in
Control;
(5) the failure of the Company to obtain the assumption agreement
from any successor as contemplated in Section 9(b); or
(6) the refusal by the Company to continue to allow Executive to
attend to matters or engage in activities not directly related to the business
of the Company which were permitted by the Board immediately prior to such
Change in Control, including without limitation serving on the Boards of
Directors of other companies or entities.
For purposes of this Agreement, any good faith determination of Good
Reason made by Executive shall be conclusive; provided, however, that an
isolated, insubstantial and inadvertent action taken in good faith and which is
remedied by the Company within ten (10) days after receipt of notice thereof
given by Executive shall not constitute Good Reason. Any event or condition
described in this Section 1(g) (1) through (6) which occurs prior to a Change
in Control, but was at the request of a Third Party who effectuates a Change in
Control, shall constitute Good Reason following a Change in Control for
purposes of this Agreement notwithstanding that it occurred prior to the Change
in Control.
(h) "Nonqualifying Termination" means a termination of Executive's
employment (1) by the Company for Cause, (2) by Executive for any reason other
than Good Reason, (3) as a result of Executive's death, (4) by the Company due
to Executive's Disability, unless within thirty (30) days after Notice of
Termination is provided to Executive pursuant to Section 10 following such
Disability Executive shall have returned to performance of Executive's duties
on a full-time basis, or (5) as a result of Executive's Retirement.
7
(i) "Notice of Termination" means notice of the Date of Termination as
described in Section 10(b).
(j) "Retirement" means termination of employment by either the
Executive or the Company on or after the Executive's normal retirement date
under the terms of the Retirement Plan.
(k) "Retirement Plan" means The Upjohn Retirement Plan or any successor
or substitute plan or plans of the Company put into effect prior to a Change in
Control.
(l) "Termination Period" means the period of time beginning with a
Change in Control and ending on the earliest to occur of (1) Executive's death
and (2) two (2) years following such Change in Control.
2. Term of Agreement. This Agreement shall commence on the Effective
Date and shall continue in effect until March 15, 1998; provided, however, that
commencing on March 15, 1998 and each following third anniversary of the
Effective Date, the term of this Agreement shall automatically be extended for
an additional three-year period, unless at least ninety (90) days prior to such
date, the Company or Executive shall have given notice not to extend this
Agreement; provided, however, that (i) no such action shall be taken by the
Company during any period of time when the Board has knowledge that any person
has taken steps reasonably calculated to effect a Change in Control until, in
the opinion of the Board, such person has abandoned or terminated its efforts
to effect a Change in Control, and (ii) this Agreement shall continue in effect
for at least twenty-four (24) months following the occurrence of a Change in
Control. Notwithstanding anything in this Section 2 to the contrary, this
Agreement shall terminate upon termination of Executive's employment with the
Company prior to a Change in Control (except as otherwise provided hereunder).
3. Obligations of Executive. Executive agrees that in the event any
person or group attempts a Change in Control, he/she shall not voluntarily
leave the employ of the Company (other than as a result of Disability or upon
Retirement) without Good Reason until the earlier of (a) the termination of
such attempted Change in Control or (b) the occurrence of a Change in Control.
For purposes of this Section 3, Good Reason shall be determined as if a Change
in Control had occurred when such attempted Change in Control became known to
the Board.
4. Payments Upon Termination of Employment.
(a) If during the Termination Period the employment of Executive shall
terminate, other than by reason of a Nonqualifying Termination, then the
Company shall pay to Executive (or Executive's beneficiary or estate) within
five (5) days following Date of Termination, as compensation for services
rendered to the Company:
8
(1) a lump-sum cash amount equal to the sum of Executive's unpaid
base salary from the Company and its affiliated companies through the Date of
Termination, (at the rate in effect (without taking into account any reduction
of base salary constituting Good Reason) just prior to the time a Notice of
Termination is given) plus any benefit awards (including both the cash and
stock components) and bonus payments which pursuant to the terms of any plans
have been earned or become payable, to the extent not theretofore paid;
(2) a lump-sum cash amount equal to 2.5 times (a) Executive's
highest annual rate of base salary from the Company and its affiliated
companies in effect during the 12-month period prior to the Date of Termination
plus (b) the highest amount earned (including any deferred amounts) by
Executive pursuant to any annual bonus plan of the Company during the
three-year period immediately preceding the year in which the Change in Control
occurs; provided, that any amount paid pursuant to this Section 4(a)(2) shall
offset any other amount of severance relating to salary or bonus continuation
to be received by Executive upon termination of employment of Executive under
any other severance plan, policy, employment agreement or arrangement of the
Company.
(b) If during the Termination Period, the employment of Executive shall
terminate, other than by reason of a Nonqualifying Termination, then for a
period terminating on the earliest of (i) thirty (30) months following the Date
of Termination, (ii) the commencement date of equivalent benefits from a new
employer, or (iii) Executive's normal retirement date under the terms of the
Retirement Plan, the Company shall continue to keep in full force and effect
(or otherwise provide) all policies of medical, accident, disability and life
insurance with respect to Executive and his/her dependents with the same level
of coverage, upon the same terms and otherwise to the same extent as such
policies shall have been in effect immediately prior to the Date of Termination
(or, if more favorable to Executive, immediately prior to the Change in
Control), and the Company and Executive shall share the costs of the
continuation of such insurance coverage in the same proportion as such costs
were shared immediately prior to the Date of Termination (or, if more favorable
to Executive, immediately prior to the Change in Control). If, at the end of
thirty (30) months following the Date of Termination, Executive has not reached
his/her normal retirement date under the Retirement Plan, and has not
previously received or is not then receiving equivalent benefits from a new
employer, the Company shall arrange to enable Executive to convert Executive's
and his/her dependents' coverage under such policies to individual policies or
programs upon the same terms as employees of the Company may apply for such
conversions.
(c) If during the Termination Period the employment of Executive shall
terminate by reason of a Nonqualifying Termination, then the Company shall pay
to Executive within
9
five (5) days following the Date of Termination a lump sum cash amount equal to
the sum of Executive's unpaid base salary from the Company through the Date of
Termination (at the rate in effect just prior to the time a Notice of
Termination is given) plus any bonus payments which have been earned or become
payable, to the extent not theretofore paid.
5. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company or
its affiliated companies to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Section 5) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes) including, without limitation, any income and employment
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 5(c), all determinations
required to be made under this Section 5, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the public
accounting firm that is retained by the Company as of the date immediately
prior to the Change in Control (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and Executive within
fifteen (15) business days of the receipt of notice from Executive that there
has been a Payment, or such earlier time as is requested by the Company
(collectively, the "Determination"). In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group affecting
the Change in Control, Executive shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section 5, shall
be paid by the Company to Executive within five (5) days of the receipt of the
Determination. If the Accounting Firm determines that no Excise Tax is payable
by Executive, it shall furnish Executive with a written opinion
10
that failure to report the Excise Tax on Executive's applicable federal income
tax return would not result in the imposition of a negligence or similar
penalty. The Determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the Determination, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 5(c) and Executive thereafter is required to make payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of Executive.
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Executive is
informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order effectively
to contest such claim, and
(4) permit the Company to participate in any proceeding relating
to such claim; provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income or employment tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Section 5(c), the Company shall control all
proceedings taken in connection
11
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such
payment to Executive on an interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or income or
employment tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and provided further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive with
respect to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section 5(c), Executive becomes entitled to receive, and
receives, any refund with respect to such claim, Executive shall (subject to
the Company's complying with the requirements of Section 5(c) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to Section 5(c), a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
6. Withholding Taxes. The Company may withhold from all payments due
to Executive (or his/her beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
7. Reimbursement of Expenses. If any contest or dispute shall arise
under this Agreement involving termination of Executive's employment with the
Company or involving the failure or refusal of the Company to perform fully in
12
accordance with the terms hereof, the Company shall reimburse Executive, on a
current basis, for all legal fees and expenses, if any, incurred by Executive
in connection with such contest or dispute regardless of the result thereof.
8. Scope of Agreement. Nothing in this Agreement shall be deemed to
entitled Executive to continued employment with the Company or its
subsidiaries.
9. Successors; Binding Agreement.
(a) This Agreement shall not be terminated by any merger or
consolidation of the Company whereby the Company is or is not the surviving or
resulting corporation or as a result of any transfer of all or substantially
all of the assets of the Company. In the event of any such merger,
consolidation or transfer of assets, the provisions of this Agreement shall be
binding upon the surviving or resulting corporation or the person or entity to
which such assets are transferred.
(b) The Company agrees that concurrently with any merger, consolidation
or transfer of assets referred to in paragraph (a) of this Section 9, it will
cause any successor or transferee unconditionally to assume, by written
instrument delivered to Executive (or his/her beneficiary or estate), all of
the obligations of the Company hereunder. Failure of the Company to obtain
such assumption prior to the effectiveness of any such merger, consolidation or
transfer of assets shall be a breach of this Agreement and shall constitute
Good Reason hereunder and shall entitle Executive to compensation and other
benefits from the Company in the same amount and on the same terms as Executive
would be entitled hereunder if Executive's employment were terminated following
a Change in Control other than by reason of a Nonqualifying Termination. For
purposes of implementing the foregoing, the date on which any such merger,
consolidation or transfer becomes effective shall be deemed the date Good
Reason occurs, and shall be the Date of Termination if requested by Executive.
(c) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed in writing by Executive to receive such amounts or, if no person is
so appointed, to Executive's estate.
10. Notice.
(a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when
13
delivered or five (5) days after deposit in the United States mail, certified
and return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
name~
address~
If to the Company:
General Counsel
The Upjohn Company
7000 Portage Road
Kalamazoo, MI 49001
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(b) A written notice (a "Notice of Termination") of Executive's Date of
Termination by the Company or Executive, as the case may be, to the other,
shall (i) indicate the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and (iii) specify the termination
date. The failure by Executive or the Company to set forth in such notice any
fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of Executive or the Company hereunder or preclude
Executive or the Company from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
11. Full Settlement; Resolution of Disputes.
(a) The Company's obligation to make any payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against Executive or others. In no
event shall Executive be obligated to seek other employment or take other
action by way of mitigation of the amounts payable to Executive under any of
the provisions of this Agreement and, such amounts shall not be reduced whether
or not Executive obtains other employment.
(b) If there shall be any dispute between the Company and Executive in
the event of any termination of Executive's employment then, until there is a
final, nonappealable, determination pursuant to arbitration declaring that such
termination was for Cause, that the determination by Executive
14
of the existence of Good Reason was not made in good faith, or that the Company
is not otherwise obligated to pay any amount or provide any benefit to
Executive and his/her dependents or other beneficiaries, as the case may be,
under paragraphs (a) and (b) of Section 4, the Company shall pay all amounts,
and provide all benefits, to Executive and his/her dependents or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to paragraphs (a) and (b) of Section 4 as though such
termination were by the Company without Cause or by Executive with Good Reason;
provided, however, that the Company shall not be required to pay any disputed
amounts pursuant to this paragraph except upon receipt of an undertaking by or
on behalf of Executive to repay all such amounts to which Executive is
ultimately determined by the arbitrator not to be entitled.
12. Employment with Subsidiaries. Employment with the Company for
purposes of this Agreement shall include employment with any corporation or
other entity in which the Company has a direct or indirect ownership interest
of 50% or more of the total combined voting power of the then outstanding
securities of such corporation or other entity entitled to vote generally in
the election of directors.
13. Governing Law; Validity. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of Michigan without regard to
the principle of conflicts of laws. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which other provisions shall remain in
full force and effect.
14. Arbitration. Any dispute or controversy under this Agreement shall
be settled exclusively by arbitration in Kalamazoo, Michigan by three (3)
arbitrators in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that Executive shall be entitled
to seek specific performance of his/her right to be paid pursuant to Section
11(b) during a dispute. Judgment may be entered on the arbitration award in
any court having jurisdiction. The Company shall bear all costs and expenses
arising in connection with any arbitration proceeding pursuant to this Section
14.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
16. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification is agreed to in writing and signed by Executive
and by a duly authorized officer of the Company, or such waiver is signed by
the waiving party. No waiver by either party hereto at any time of any
15
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. Failure by Executive or the Company or insist
upon strict compliance with any provision of this Agreement or to assert any
right Executive or the Company may have hereunder, including without
limitation, the right of Executive to terminate employment for Good Reason,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement. The rights of, and benefits payable to,
Executive, his/her estate or his/her beneficiaries pursuant to this Agreement
are in addition to any rights of, or benefits payable to, Executive, his/her
estate or his/her beneficiaries under any other employee benefit plan or
compensation program of the Company. This Agreement supersedes the Agreement
between Executive and the Company dated agt. date~, and such agreement shall be
of no further force or effect. No agreements or representations, oral or
otherwise, express or implied, with regard to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by a duly authorized officer of the Company. Executive has executed this
Agreement as of the day and written below.
THE UPJOHN COMPANY
By:______________________________________
Agreed to this ______ day of March, 1995.
________________________________________
name~