EXHIBIT 10.3
AMENDED AND
RESTATED CHANGE IN CONTROL AGREEMENT
This Agreement
(“Agreement”) dated as of
,
, is entered into by and between «Emply_NameFirst»
«Employee_Last_Name» (“Employee”), and
Allergan, Inc., a Delaware corporation (the
“Company”).
RECITALS
The Company
believes that because of its position in the industry, financial
resources and historical operating results there is a possibility
that the Company may become the subject of a Change in Control (as
defined below), either now or at some time in the
future.
The Company
believes that it is in the best interest of the Company and its
stockholders to foster Employee’s objectivity in making
decisions with respect to any pending or threatened Change in
Control of the Company and to assure that the Company will have the
continued dedication and availability of Employee as an employee of
the Company or one of its affiliates, notwithstanding the
possibility, threat or occurrence of a Change in Control. The
Company believes that these goals can be accomplished by
alleviating certain of the risks and uncertainties with regard to
Employee’s financial and professional security that would be
created by a pending or threatened Change in Control and that
inevitably would distract Employee and could impair his or her
ability to objectively perform his or her duties for and on behalf
of the Company. Accordingly, the Company believes that it is
appropriate and in the best interest of the Company and its
stockholders to provide to Employee compensation arrangements upon
a Change in Control that lessen Employee’s financial risks
and uncertainties and that are competitive with those of other
corporations.
With these and
other considerations in mind, the Board of Directors of the
Company, acting through its Organization and Compensation
Committee, has authorized the Company to enter into this Agreement
with Employee to provide the protections set forth herein for
Employee’s financial security following a Change in
Control.
NOW,
THEREFORE, in consideration of the foregoing, it is hereby agreed
as follows:
1.
Term of Agreement . This Agreement
shall be effective for the period commencing on the date first
written above and ending on the second anniversary of such date.
The Company may, in its sole discretion and for any reason, provide
written notice of termination (effective as of the then applicable
expiration date) to Employee no later than 60 days before the
expiration date of this Agreement. If written notice is not so
provided, this Agreement shall be automatically extended for an
additional period of 12 months past the expiration date. This
Agreement shall continue to be automatically extended for an
additional 12 months at the end of such 12-month period and each
succeeding 12-month period unless notice is given in the manner
described in this
1
Section. No
termination of this Agreement shall affect Employee’s rights
hereunder with respect to a Change in Control which has occurred
prior to such termination.
2.
Purpose of Agreement . The purpose
of this Agreement is to provide that, in the event of a
“Change in Control,” Employee may become entitled to
receive certain additional benefits, as described herein, in the
event of his or her termination.
3.
Change in Control . As used in this
Agreement, the phrase “Change in Control” shall mean
the following and shall be deemed to occur if any of the following
events occur:
(a)
Any “person,” as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (a “Person”),
is or becomes the “beneficial owner,” as defined in
Rule 13d-3 under the Exchange Act (a “Beneficial
Owner”), directly or indirectly, of securities of the Company
representing (i) 20% or more of the combined voting power of
the Company’s then outstanding voting securities, which
acquisition is not approved in advance of the acquisition or within
30 days after the acquisition by a majority of the Incumbent Board
(as hereinafter defined) or (ii) 33% or more of the combined
voting power of the Company’s then outstanding voting
securities, without regard to whether such acquisition is approved
by the Incumbent Board;
(b)
Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the “Incumbent
Board”), cease for any reason to constitute at least a
majority of the Board of Directors, provided that any person
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s stockholders, is
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 Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) shall, for the purposes of this Agreement, be
considered as though such person were a member of the Incumbent
Board of the Company;
(c)
The consummation of a merger, consolidation or
reorganization involving the Company, other than one which
satisfies both of the following conditions:
(1)
a merger, consolidation or reorganization which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of another entity) at least 55% of the combined voting power of the
voting securities of the Company or such other entity resulting
from the merger, consolidation or reorganization (the
“Surviving Corporation”) outstanding immediately after
such merger, consolidation or reorganization and being held in
substantially the same proportion as the ownership in the
Company’s voting securities immediately before such merger,
consolidation or reorganization, and
2
(2)
a merger, consolidation or reorganization in which no
Person is or becomes the Beneficial Owner directly or indirectly,
of securities of the Company representing 20% or more of the
combined voting power of the Company’s then outstanding
voting securities; or
(d)
The stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or other disposition by the Company of all or substantially
all of the Company’s assets.
Notwithstanding
the preceding provisions of this Section, a Change in Control shall
not be deemed to have occurred if the Person described in the
preceding provisions of this Section is (1) an underwriter or
underwriting syndicate that has acquired the ownership of any of
the Company’s then outstanding voting securities solely in
connection with a public offering of the Company’s
securities, (2) the Company or any subsidiary of the Company
or (3) an employee stock ownership plan or other employee
benefit plan maintained by the Company (or any of its affiliated
companies) that is qualified under the provisions of the Internal
Revenue Code of 1986, as amended. In addition, notwithstanding the
preceding provisions of this Section, a Change in Control shall not
be deemed to have occurred if the Person described in the preceding
provisions of this Section becomes a Beneficial Owner of more than
the permitted amount of outstanding securities as a result of the
acquisition of voting securities by the Company which, by reducing
the number of voting securities outstanding, increases the
proportional number of shares beneficially owned by such Person,
provided, that if a Change in Control would occur but for the
operation of this sentence and such Person becomes the Beneficial
Owner of any additional voting securities (other than through the
exercise of options granted under any stock option plan of the
Company or through a stock dividend or stock split), then a Change
in Control shall occur.
4.
Effect of a Change in Control . In the event of
a Change in Control, Sections 6 through 10 of this Agreement shall
become applicable to Employee. These Sections shall continue to
remain applicable until the second anniversary of the date upon
which the Change in Control occurs. At that point, so long as the
employment of Employee has not been terminated on account of a
Qualifying Termination, as defined in Section 5, this
Agreement shall terminate and be of no further force. If
Employee’s employment with the Company and its affiliated
companies is terminated on account of a Qualifying Termination on
or before such date, this Agreement shall remain in effect until
Employee receives the various benefits to which he or she has
become entitled under the terms of this Agreement.
5.
Qualifying Termination . If, subsequent to a
Change in Control Employee’s employment with the Company and
its affiliated companies is terminated, such termination
shall be considered a Qualifying Termination
unless:
(a)
Employee
voluntarily terminates his or her employment with the Company and
its affiliated companies. Employee, however, shall not be
considered to have voluntarily terminated his or her employment
with the Company and its affiliated companies if, following the
Change in Control, Employee’s overall compensation is reduced
or adversely modified in any material respect or Employee’s
duties are materially changed, and subsequent to such reduction,
modification or change, Employee elects to terminate his or her
employment with the Company and its affiliated companies. For such
purposes,
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Employee’s
duties shall be considered to have been “materially
changed” if, without Employee’s express written
consent, there is any substantial diminution or adverse
modification in Employee’s overall position, responsibilities
or reporting relationship, or if, without Employee’s express
written consent, Employee’s job location is transferred to a
site more than 50 miles away from his or her place of employment
prior to the Change in Control.
(b)
The termination is on account of Employee’s death
or Disability. For such purposes, “Disability” shall
mean a physical or mental incapacity as a result of which Employee
becomes unable to continue the performance of his or her
responsibilities for the Company and its affiliated companies and
which, at least 26 weeks after its commencement, is determined to
be total and permanent by a physician agreed to by the Company and
Employee, or in the event of Employee’s inability to
designate a physician, Employee’s legal representative. In
the absence of agreement between the Company and Employee, each
party shall nominate a qualified physician and the two physicians
so nominated shall select a third physician who shall make the
determination as to Disability.
(c)
Employee is involuntarily terminated for
“cause.” For this purpose, “cause” shall be
limited to only three types of events:
(1)
the willful refusal of Employee to comply with a
lawful, written instruction of the Board so long as the instruction
is consistent with the scope and responsibilities of
Employee’s position prior to the Change in
Control;
(2)
dishonesty by Employee which results in a material
financial loss to the Company (or to any of its affiliated
companies) or material injury to its public reputation (or to the
public reputation of any of its affiliated companies);
or
(3)
Employee’s conviction of any felony involving an
act of moral turpitude.
In
addition, notwithstanding anything contained in this Agreement to
the contrary, if Employee’s employment is terminated prior to
a Change in Control and it is determined that such termination
(i) was at the request of a third party who has indicated an
intention or taken steps reasonably calculated to effect a Change
in Control and who subsequently effectuates a Change in Control (a
“Third Party”) or (ii) otherwise occurred in
connection with, or in anticipation of, a Change in Control which
actually occurs, then, for all purposes of this Agreement, the date
of a Change in Control with respect to Employee shall mean the date
immediately prior to the date of such termination of
Employee’s employment.
6.
Severance Payment . If Employee’s
employment is terminated as a result of a Qualifying Termination,
the Company shall pay Employee within 30 days after the Qualifying
Termination, or such other period as may be required by the
applicable tax laws, a cash lump sum equal to «No»
[«Nu»] times Employee’s
“Compensation” (the “Severance
Payment”).
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(a)
For purposes of this Agreement, and subject to Sections
6 (c ), (d) and (e), below, Employee’s
“Compensation” shall equal the sum of
(i) Employee’s highest annual salary rate within the
five-year period ending on the date of Employee’s Qualifying
Termination plus (ii) a “Management Bonus
Increment.” The Management Bonus Increment shall equal the
average of the two highest of the last five bonuses paid to
Employee under the Management Bonus Plan or any successor
thereto.
(b)
In lieu of a cash lump sum, Employee may elect to
receive the Severance Payment provided by this Section in equal
annual installments over two (2) or three (3) years at
Employee’s election in accordance with the applicable tax
laws. Such installments shall be paid to Employee on each
anniversary of the date of Employee’s Qualifying Termination,
beginning with the first such anniversary and continuing on each
such anniversary thereafter until fully paid. Such election to
receive the Severance Payment in installments, and the number of
installments to receive, may be made and/or revoked by Employee at
any time prior to the occurrence of a Change in Control by written
notice to the Secretary of the Company. Upon the occurrence of a
Change in Control, any such election to receive the Severance
Payment in installments that has been made and not revoked prior to
the Change in Control shall be irrevocable and binding on both the
Company and Employee. In the event that at the time of a Change in
Control there is not in effect an election by Employee to receive
the Severance Payment in installments, such Severance Payment shall
be paid to Employee in a single cash lump sum as provided
above.
(c)
If Employee has not participated in the Management
Bonus Plan (including any successor thereto) for at least two full
plan years, then the missing bonus component(s) will be computed,
for purposes of calculating the Management Bonus Increment under
this Agreement, by reference to the guideline percentage for
officers at Employee’s grade level for the most recently
completed bonus period, assuming a 100% target bonus for both
corporate and individual objectives.
(d)
If Employee’s normal severance payment under the
Company’s applicable severance pay policies for a reduction
in force would be greater than the Compensation described in
Section 6(a), above, then Employee’s
“Compensation” for purposes of Section 6(a) shall
be such greater amount.
(e)
The Severance Payment hereunder is in lieu of any
severance payment that Employee might otherwise be entitled to from
the Company under the Company’s applicable severance pay
policies.
7.
Incentive Compensation Grants . Employee may
have received stock option grants, grants of restricted stock or
other incentive compensation awards under the Allergan, Inc. 1989
Incentive Compensation Plan or other incentive compensation plans
of the Company (collectively the “Incentive Plans”). In
the event of a Qualifying Termination, the Company agrees that any
and all such stock options, restricted stock and other incentive
compensation awards that are outstanding at the time of such
termination and that have not previously become exercisable,
payable or free from restrictions, as the case may be, shall
immediately become exercisable, payable or free from restrictions
(other than restrictions required by applicable law or any
national
5
securities
exchange upon which any securities of the Company are then listed),
as the case may be, in their entirety, and that the exercise period
of any stock option or other incentive award granted pursuant to
any of the Incentive Plans shall continue for the length of the
exercise period specified in the grant of the award determined
without regard to Employee’s termination of
employment.
8.
Retirement Plan . In addition to any retirement
benefits that might otherwise be due Employee under the Allergan,
Inc. Savings and Investment Plan or any successor qualified defined
contribution plan(s) maintained by the Company (the
“SIP”) or under the Allergan, Inc. Executive Deferred
Compensation Plan or any successor supplemental employee retirement
plan(s) maintained by the Company (the “EDCP”),
Employee shall receive additional payments from the Company
calculated as set forth in this Section if Employee is terminated
on account of a Qualifying Termination.
(a)
For another
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