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Advanced Medical Optics - Corporate VP International - Employment Agreement - Holger Heidrich
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as of June 28, 2002, by and between Advanced Medical Optics, Inc., a Delaware corporation (the "Company"), AMO Germany GmbH, a German entity ("AMO Germany"), and Holger Heidrich ("Executive").
RECITALS
WHEREAS, effective as of the date hereof, Executive is employed by Pharm-Allergan GmbH, a German entity.
WHEREAS, the Company and AMO Germany are wholly owned subsidiaries of Allergan.
WHEREAS, the parties anticipate the consummation of the spinoff transaction approved by the Board of Directors of Allergan by resolutions approved on January 18, 2002 (the consummation of such transaction referred to herein as the "Spinoff").
WHEREAS, AMO Germany and the Company desires to employ Executive, and Executive desires to accept such employment on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the respective covenants and agreements of the parties contained herein, the Company, AMO Germany and Executive agree as follows:
ARTICLE 1.
EFFECTIVE DATE;
TERM OF EMPLOYMENT
1.1 Effective Date. This Agreement shall become effective upon June 28,2002. This Agreement shall govern the terms of Executive's employment hereunder on and after the Effective Date.
1.2 Term of Employment. Subject to extension in accordance with Section 1.3, the term of this Agreement shall commence on the Effective Date and shall continue until the third anniversary of the Effective Date (the "Initial Term"), unless terminated earlier in accordance with Article 5 of this Agreement. Upon expiration of the Term (as defined below), Executive shall resign from all positions with the Company, AMO Germany and their affiliates and Executive's employment with the Company, AMO Germany and their affiliates shall terminate.
1.3 Extension of Term. The term of this Agreement shall be automatically extended by one (1) year from the expiration of the Initial Term and on each subsequent anniversary of the Effective Date, unless either party elects not to so extend the term of the Agreement by notifying the other parties, in writing, of such election not less than six (6) months prior to the last day of the Term as then in effect. Any extension shall become effective immediately as of the day following the
date which is six (6) months prior to the last day of the Term as then in effect. For purposes of this Agreement, the "Term" shall mean the period commencing on the Effective Date and ending on the last day of the Initial Term or, if applicable, the last day of the latest one-year extension of this Agreement in accordance with this Section 1.3.
1.4 Termination of Prior Agreements. Effective as of the Effective Date, Executive shall resign from his employment with Allergan and from any and all positions with Allergan. Effective as of the Effective Date, the agreements set forth in Exhibit A (the "Prior Agreements") and the rights and obligations of Executive and any other party or parties thereunder shall terminate. Executive agrees to execute and deliver to Allergan such amendments to the agreements listed on Exhibit A as Allergan reasonably determines necessary to terminate the Prior Agreements and release any and all of the obligations of Allergan and its affiliates under the Prior Agreements effective as of the Effective Date.
ARTICLE 2.
EMPLOYMENT; DUTIES
2.1 Employment. During the Term, AMO Germany and the Company shall employ Executive, and Executive shall accept such employment, upon the terms and subject to the conditions set forth in this Agreement.
2.2 Position. Executive shall be employed as Corporate Vice President and President, Europe, Africa, Asia Pacific Region of the Company, and as Managing Director ("Geschaftsfuhrer") of AMO Germany. His position is classified as "grade 13". The Executive shall, during the Term, serve in such position(s) or in such other position or positions as the Board of Directors of the Company (the "Board") may reasonably request from time to time. Executive shall report directly to the Chief Executive Officer of the Company. Upon the termination of Executive's employment hereunder in accordance with Article 5, Executive shall immediately resign from all positions with the Company, AMO Germany and their affiliates.
2.3 Duties. During the Term, Executive shall devote his full business time, attention and energies to the business of the Company, AMO Germany and their affiliates and use his best efforts to promote the interest of the Company, AMO Germany and its affiliates. Executive shall perform such duties, services and responsibilities incident to the Executive's positions which are reasonably consistent with such positions and shall act in accordance with the policies and directives of the Company and AMO Germany as determined from time to time.
2.4 Other Activities. Except with the prior written approval of the Board, which the Board may grant or withhold in its sole and absolute discretion, Executive shall not, during the Term, be actively engaged in any other business activity, including, but not limited to, activity as a consultant, agent, partner, officer or director, or provide business services of any nature directly or indirectly to a corporation or other business enterprise; provided, however, that so long as the activities do not interfere with Executive's duties and responsibilities hereunder, Executive may participate in other business activities for non-profit institutions from time to time. Notwithstanding the foregoing, it shall not be a breach of this Agreement for Executive to serve on civic or charitable boards or committees, or to invest his personal assets in other businesses or ventures to the extent that such other activities, businesses or ventures do not materially interfere
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with the performance of his duties under this Agreement. None of the foregoing shall in any way modify Executive's responsibilities hereunder, including without limitation Executive's responsibilities under Article 10.
ARTICLE 3.
SALARY, BONUS AND STOCK OPTIONS
3.1 Base Salary. During the Term, the Company and AMO Germany shall pay jointly and severally Executive a base salary ("Base Salary") at an annual rate of 300,468 Euro, subject to change as provided in this Section 3.1, and payable in twelve monthly rates due at the end of each calendar month. Such annual rate shall be reviewed by the Board or its designee at least annually and may be increased or reduced in such amounts as the Board or its designee deems appropriate in its sole discretion; provided, however, that during the Term the Base Salary shall not be less than 300,468 Euro. As used in this Agreement "jointly and severally" means that the Company and AMO Germany are each liable for the whole obligation, but Executive is entitled to one performance only.
3.2 Bonus Programs. Executive shall be eligible to participate in such bonus plans or programs as are generally available from time to time to similarly situated executive employees of the Company, subject to and in accordance with the terms, conditions and overall administration of such bonus plans or programs. Based on the new AMO Management Bonus Plan with effect of July 1/st/, 2002, the target bonus for Executives position (Grade 13) is 40% of the annualized base salary. Nothing herein is intended or shall be construed to require the institution or continuation of any bonus plan or program, or to entitle Executive to receive any bonus
3.3 Stock Options or Other Equity-Based Awards. Executive shall be eligible to receive awards under such stock option or other equity award plans or programs as are generally available from time to time to similarly situated executive employees of the Company and AMO Germany, subject to and in accordance with the terms, conditions and overall administration of such plans or programs. Nothing herein is intended or shall be construed to require the institution or continuation of any stock option or other equity award plan or program, or to entitle Executive to receive any stock option or other equity award.
3.4 Withholding. The Company and/or AMO Germany shall deduct or withhold from the compensation and benefits payable to Executive hereunder any and all sums required for federal income and employment and other taxes and all state or local income and other taxes now applicable or that may be enacted and become applicable during the Term.
ARTICLE 4.
EMPLOYEE BENEFITS
4.1 Employee Benefits. During the Term, Executive shall be entitled to participate in or receive such benefits and perquisites as are provided generally from time to time to similarly situated executive employees of the Company and AMO Germany, subject to and in accordance with the terms, conditions and overall administration of the benefit plans pertaining to such benefits. Nothing herein is intended or shall be construed to require the institution or continuation of any
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plan or benefits. The Company and/or AMO Germany may, in their sole discretion, grant such additional benefits to Executive from time to time as the Company and/or AMO Germany deems proper and desirable.
4.2 Car policy. The Company and AMO Germany shall provide Executive with a car according to the Car Policy of AMO Germany, which will not differ substantially from the Car Policy of Allergan. Executive and his dependents shall be entitle to use the car also for private purposes. The Company and AMO Germany shall bear jointly and severally the operating costs and the tax resulting from the monetary value benefit ("geldwerter Vorteil") of the car's private use by Executive.
4.3 Insurance: For the term of the employment the Company and AMO Germany shall undertake to conclude an insurance for the benefit of Executive with the following coverage sums:
Euro 512,000 invalidity
Euro 1,023,000 death
Euro 16,000 temporary allowance ("Ubergangsentschadigung")
Euro 39 daily benefit during hospitalization
Euro 7,670 travel insurance
4.4 Payment for health insurance: The Company and AMO Germany shall reimburse jointly and severally Executive 50% of his contributions to his voluntary heath insurance up to the amount of 50% of the contribution to the statutory health insurance.
4.5 Capital accumulation benefits: The Company and AMO Germany shall pay jointly and severally Executive capital accumulation benefits ("Vermogenswirksame Leistungen") of Euro 78 per month according to the German applicable provisions.
4.6 Payment in case of temporary disability: In case of temporary disability of Executive the Company and AMO Germany shall continue to pay the Executive's base salary up to a period of of his temporary disability, less any amounts Executive receives from insurance or disability benefits. Executive shall be entitle to bonus consideration during the period of his temporary disability based upon performance results.
4.7 Office Support. Executive shall be entitled to receive secretarial and other office support commensurate with Executive's position and consistent with the general policies and practices of the Company and AMO Germany.
4.8 Vacation. During the Term, Executive shall be entitled to paid vacation for 30 working days. Saturday is not to be considered a working day. The paid vacation, to the extent unused in any given year, may be carried over to the following year to the extent permitted by the policies of the Company and AMO Germany then in effect. The Executive shall be entitle to vacation allowance of Euro 21 per each vacation day.
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4.9 Business Expenses.
(a) Reimbursement. The Company and AMO Germany shall pay or reimburse jointly and severally Executive for all reasonable and authorized business expenses incurred by Executive during the Term.
(b) Business Travel. The Company and AMO Germany shall reimburse jointly and severally Executive for expenses incurred for business-related travel in accordance with the AMO Germany's travel reimbursement policy and the commitment by Allergan dated October 26, 1998.
(c) Documentation. As a condition to reimbursement under this Section 4.4, Executive shall furnish to the Company and AMO Germany as the case may be adequate records and other documentary evidence required by federal and state statutes and regulations for the substantiation of each expenditure. Executive acknowledges and agrees that failure to furnish the required documentation may result in the Company or AMO Germany denying all or part of the expense for which reimbursement is sought.
ARTICLE 5.
TERMINATION OF EMPLOYMENT
5.1 Termination of Employment. During the Term and notwithstanding the provisions of Article 1, Executive's employment hereunder shall be terminated, or may be terminated, as the case may be, under the following circumstances:
(a) Termination upon Death. Executive's employment hereunder shall terminate upon his death.
(b) Termination upon Disability. Executive's employment hereunder shall terminate upon the receipt of a Notice of Termination (as defined in subsection (g) below) to Executive (or Executive's legal representative, if applicable) citing Executive's physical or mental disability or infirmity which, in the opinion of a competent physician selected by the Board, renders Executive unable to perform his duties under this Agreement for more than 120 days during any 180-day period.
(c) Discharge for Cause. The Company may terminate Executive's employment hereunder for Cause (a "Discharge for Cause") upon at least fifteen (15) days' written notice in the form of a Notice of Termination. For purposes of this Agreement, "Cause" shall be limited to only three types of events:
(i) the willful and continued refusal of Executive to comply with a lawful, written instruction of the Board so long as the instruction is consistent with the scope and responsibilities of Executive's position and Executive has failed to end such willful and continued refusal within fifteen (15) business days of written notice thereof from the Company;
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(ii) willful misconduct by Executive 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
(iii) Executive's conviction of any felony.
Notwithstanding the foregoing, no act or failure to act on Executive's part shall be deemed "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.
(d) Discharge Without Cause. The Company and AMO Germany may terminate Executive's employment hereunder before the end of the Term, other than for Cause (a "Discharge Without Cause") upon at least sixty (60) days' written notice in the form of a Notice of Termination. Termination of Executive's employment hereunder due to Executive's death or Executive's disability shall not be considered a Discharge Without Cause. However, termination of Executive's employment hereunder due to Company's or AMO Germany's decision not to renew this Agreement in accordance with Section 1.3 other than for Cause shall be considered a Discharge Without Cause.
(e) Voluntary Resignation for Good Reason. Executive may terminate Executive's employment hereunder for Good Reason (a "Voluntary Resignation for Good Reason") upon at least sixty (60) days' written notice to the Company in the form of a notice of resignation (the "Notice of Resignation"). The Notice of Resignation shall set forth the circumstances which in Executive's view constitute Good Reason hereunder and shall be delivered to the Company within sixty (60) days of the occurrence of the applicable Good Reason event. For purposes of this subsection (e) and subsection (f), "Good Reason" shall mean:
(i) Executive's overall compensation is reduced or adversely modified in any material respect, or
(ii) Executive's duties are materially changed.
For purposes of subsection (ii), above, Executive's duties shall be considered to have been "materially changed" if, without Executive's express written consent, there is any substantial diminution or adverse modification in Executive's overall position, responsibilities or reporting relationship, or if, without Executive's express written consent, Executive's job location is transferred to a site more than fifty (50) miles away from his then current place of employment. During the period of notice set forth above in this subsection (e), the Company shall be afforded reasonable opportunity to establish, to the reasonable satisfaction of Executive, that the Good Reason circumstances cited in Executive's Notice of Resignation were not present on the date of such Notice of Resignation, or are no longer present, in which case Executive's employment hereunder shall not terminate under this subsection (e).
(f) Voluntary Resignation other than for Good Reason. Executive may terminate Executive's employment hereunder other than for Good Reason (a "Voluntary Resignation other than for Good Reason") upon at least sixty (60) days' written notice to the Company in the form of a Notice of Resignation.
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(g) Notice of Termination. Any termination of Executive's employment by the Company or AMO Germany shall be communicated by written Notice of Termination to Executive. For purposes of this Agreement, a "Notice of Termination" shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall 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.
(h) Date of Termination. "Date of Termination" shall mean (i) if Executive's employment is terminated by his death, the date of his death, (ii) if Executive's employment is terminated by reason of his disability, the date of the Notice of Termination's receipt citing the opinion of the physician referred to in subsection (b), above, (iii) if the Executive's employment is terminated pursuant to subsections (c) or (d), above, the date specified in the Notice of Termination, however, no earlier than the receipt of it, and (iv) if the Executive's employment is terminated under subsections (e) or (f), above, the date specified in the Notice of Resignation, or, if no Notice of Resignation is provided, then the date Executive ceased to provide services to the Company in the reasonable judgment of the Board, which determination shall be final and conclusive.
ARTICLE 6.
PAYMENTS UPON TERMINATION OF
EMPLOYMENT; SEVERANCE PAYMENTS
6.1 Termination upon Death. In the event of the termination of Executive's employment hereunder due to Executive's death, the Company and AMO Germany shall pay jointly and severally to Executive's estate or provide: (i) any unpaid amount of Base Salary earned through the date of Executive's death, (ii) a lump sum equal to Executive's bonus at target, pro-rated for the period from the beginning of the bonus plan year through the date of Executive's death, (iii) a lump sum equal to Executive's unused accrued vacation time, at his Base Salary rate, through the date of Executive's death, (iv) his then current Base Salary until the earlier of (A) twelve (12) months after the date of Executive's death and (B) the last day of the Term as then in effect, (v) expenses incurred by Executive reimbursable under Section 4.4, and (vi) continued medical and other welfare plan coverage for Executive's eligible dependents (if any) for twelve (12) months upon the same terms as are generally applied from time to time for similarly situated executive employees.
6.2 Termination upon Disability. In the event of the termination of Executive's employment hereunder due to Executive's disability, the Company and AMO Germany shall pay or provide jointly and severally to Executive: (i) any unpaid amount of Base Salary earned through the Date of Termination, (ii) a lump sum equal to Executive's bonus at target, pro-rated for the period from the beginning of the bonus plan year through the Date of Termination, (iii) a lump sum equal to Executive's unused accrued vacation time, at his Base Salary rate, through the Date of Termination, (iv) his then current Base Salary (payable in accordance with the Company's and AMO Germany executive compensation practices) until Executive begins to receive benefits under the long term disability insurance provided hereunder (if any), but in no event following twelve (12) months after the Date of Termination, (v) expenses incurred by Executive prior to the Date of Termination reimbursable under Section 4.4, and (vi) continued medical and other welfare plan coverage for Executive and Executive's eligible dependents (if any) for twelve (12)
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months upon the same terms as are generally applied from time to time for similarly situated executive employees.
6.3 Discharge for Cause. In the event of the termination of Executive's employment hereunder by a Discharge for Cause, the Company and AMO Germany shall pay jointly and severally to Executive: (i) his Base Salary through the Date of Termination, (ii) a lump sum equal to Executive's unused accrued vacation time (at his Base Salary rate) through the Date of Termination, and (iii) expenses incurred by Executive prior to the Date of Termination reimbursable under Section 4.4.
6.4 Discharge Without Cause. In the event the Executive's employment hereunder is terminated due to a Discharge Without Cause, the Company and AMO Germany shall pay or provide jointly and severally to Executive: (i) the Severance Payment, (ii) a lump sum equal to Executive's bonus at target, pro-rated for the period from the beginning of the bonus plan year through the Date of Termination, (iii) a lump sum equal to Executive's unused accrued vacation time (at his Base Salary rate) through the Date of Termination, (iv) expenses incurred by Executive prior to the Date of Termination reimbursable under Section 4.4, and (v) continued medical and other welfare plan coverage for Executive and Executive's eligible dependents (if any) for twelve (12) months upon the same terms as are generally applied from time to time for similarly situated executive employees.
6.5 Voluntary Resignation for Good Reason. In the event the Executive's employment hereunder is terminated due to a Voluntary Resignation for Good Reason, the Company and AMO Germany shall pay or provide jointly and severally to Executive: (i) the Severance Payment, (ii) a lump sum equal to Executive's bonus at target, pro-rated for the period from the beginning of the bonus plan year through the Date of Termination, (iii) a lump sum equal to Executive's unused accrued vacation time (at his Base Salary rate) through the Date of Termination, (iv) expenses incurred by Executive prior to the Date of Termination reimbursable under Section 4.4, and (v) continued medical and other welfare plan coverage for Executive and Executive's eligible dependents (if any) for twelve (12) months upon the same terms as are generally applied from time to time for similarly situated executive employees.
6.6 Voluntary Resignation other than for Good Reason. In the event the Executive's employment hereunder is terminated due to a Voluntary Resignation other than for Good Reason, the Company and AMO Germany shall pay jointly and severally to Executive: (i) his Base Salary through the Date of Termination, (ii) a lump sum equal to Executive's unused accrued vacation time (at his Base Salary rate) through the Date of Termination, and (iii) expenses incurred by Executive prior to the Date of Termination reimbursable under Section 4.4.
6.7 Severance Payment. Except as provided in Section 6.8, the "Severance Payment" payable to Executive shall be a lump sum payment equal to two (2) times Executive's Compensation (as defined in Section 7.2, below), in the event Executive's employment hereunder is terminated in a Qualifying Termination (as defined in Section 7.3, below) at any time during the Term.
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6.8 Severance Payment and Benefits Following a Change in Control. Notwithstanding Section 6.7, the "Severance Payment" payable to Executive shall be a lump sum payment in an amount equal to three (3) times Executive's Compensation, in the event of:
(a) a Change in Control (as defined in Section 7.1, below), and
(b) the termination of Executive's employment hereunder in a Qualifying Termination within one hundred twenty (120) days prior to or within two (2) years after a Change in Control, and, in such event, the Company and AMO Germany agree that all stock options, restricted stock and other incentive compensation awards of Executive that are outstanding at the time of the Qualifying Termination and that have not previously become exercisable, payable or free from restrictions shall immediately become exerciseable, payable or free from restrictions, as the case may be, in their entirety, and that the exercise period of any stock option or other incentive award shall continue for the length of the exercise period specified in the grant of the award determined without regard to Executive's termination of employment. Notwithstanding any other provisions in this Agreement to the contrary, in such event, Executive shall also be entitled to continue to participate for three years following the Qualifying Termination in all of the employee benefit programs of the Company and AMO Germany (including, but not limited to, group medical insurance, group dental insurance, group-term life insurance, disability insurance, automobile allowance, gasoline allowance, and a full allowance for club dues and tax and financial planning) available to the Executive before the Qualifying Termination in the same way and at the same level as immediately prior to the Qualifying Termination at no additional cost to Executive, except to the extent tax rules require the inclusion of the value of such benefits in Executive's income. Executive shall also receive executive outplacement benefits of a type and duration generally provided to executives at Executive's level.
6.9 Termination of Obligations. In the event of the termination of Executive's employment hereunder pursuant to Article 5, the Company and AMO Germany shall have no further obligation to pay Executive any Base Salary, bonus or other compensation or benefits, except as provided in this Article 6 or Article 8 or, for benefits due to Executive (and his dependents), under the terms of the Company's and AMO Germany's employee benefit plans. The payments under this Agreement are in lieu of any severance payment that Executive might otherwise be entitled to from the Company or AMO Germany under the Company's or AMO Germany's applicable severance pay policies. However, if by the terms of the Company's or AMO Germany's applicable severance pay policies for a reduction in force the amount computed under the policy would be greater than the Severance Payment described in this Agreement, then the Severance Payment shall be such greater amount.
ARTICLE 7.
DEFINITIONS APPLICABLE TO SEVERANCE OR RETENTION PAYMENTS
7.1 Change in Control. For purposes of this Agreement, "Change in Control" shall mean the occurrence of any of the following transactions after the Effective Date:
(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
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the "beneficial owner," as defined in Rule 13d-3 under the Exchange Act (a "Benefic...
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