SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended February 4, 2003
Elan Corporation, plc
(Translation of registrant's name into English)
Lincoln House, Lincoln Place, Dublin 2, Ireland
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F /X/ Form 40-F / /
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes / / No /X/
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of this 7th day of January, 2003, by and among
Elan PharmaceuticalS, INC., a Delaware corporation (the "Employer"), and ELAN
CORPORATION, PLC, an Irish public limited company (the "Parent", together with
the Employer, the "Company") and G. KELLY MARTIN (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is willing to serve as the Chief Executive Officer
of the Parent and the Employer desires to retain the Executive in such capacity
on the terms and conditions herein set forth; and
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) General. Effective as of February 3, 2003 (the "Effective Date"), the
Employer hereby employs the Executive as the President and Chief Executive
Officer of the Parent, and the Executive agrees upon the terms and conditions
herein set forth to be employed by the Employer. In such capacity, the Executive
shall report directly to the Board of Directors of the Parent (the "Board"). The
Executive shall perform all of the duties normally accorded to such position, as
directed by the Employer or the Parent and shall have the full executive
authority to manage the Company, including the authority to manage the Company
in a manner consistent with applicable regulatory requirements and sound
business practices. During the Term, the Executive shall also serve as the
senior executive officer of such other subsidiaries of the Parent and the
Employer as designated by the Board and approved by the boards of directors of
such subsidiaries.
(b) Services. For so long as the Executive is employed by the Employer, the
Executive shall perform his duties faithfully and shall devote his full business
time, attention and energies to businesses of the Company, and while employed,
shall not engage in any other business activity that is in conflict with his
duties and obligations to the Company.
(c) No Other Employment. During the Term, the Executive shall not, directly
or indirectly, render services to any other person or organization for which he
receives compensation; provided, however, that upon the receipt of the Board's
prior written approval to be granted in its sole discretion, which approval
shall not unreasonably be withheld, the Executive may accept an election to the
board of directors of no more than two other companies without being deemed to
have violated Section 1(b) hereof, provided that such activities do not
otherwise conflict with his duties and obligations to the Company. No such
approval will
be required if the Executive seeks to perform services without direct
compensation therefore in connection with the management of personal investments
or in connection with the performance of charitable and civic activities,
provided that such activities do not contravene the provisions of Section 1(b)
and Section 5 thereof.
(d) Board Membership. The Executive shall be nominated for membership on
the Board as promptly as practicable following the Board's ratification of this
Agreement, and shall continue to be nominated for election to the Board for the
remainder of the Term.
2. TERM AND LOCATION OF EMPLOYMENT.
(a) Term. The term of the Executive's employment under this Agreement (the
"Term") shall commence on the Effective Date and continue until December 31,
2005, unless his employment is sooner terminated pursuant to the provisions of
Section 4 hereof; provided, however, that commencing on December 31, 2005 and on
each anniversary of that date thereafter, the Term shall be extended for an
additional one year period unless either party gives notice of the intention not
to extend the Term at least 90 days prior to such anniversary date.
(b) Location. As of the Effective Date, the Executive's principal place of
business shall be the Company's offices in New York, New York, however, the
parties acknowledge that the Executive shall be required to travel extensively
in connection with the business of the Company. The parties agree and
acknowledge that the Executive's principal place of business shall be moved to
the West Coast of the United States at the discretion of the Board. At that
time, the Executive shall be entitled to receive relocation benefits in
accordance with the Company's practices for senior executives.
3. COMPENSATION AND OTHER BENEFITS. Subject to the provisions of this
Agreement, the Employer shall pay and provide the following compensation and
other benefits to the Executive during the Term as compensation for all services
rendered hereunder:
(a) Salary. The Employer shall pay to the Executive a base salary (the
"Salary") at an initial annual rate of $798,000, payable to the Executive in
accordance with the normal payroll practices of the Employer as are in effect
from time to time. The amount of the Executive's Salary shall be reviewed
annually by the Employer in the same manner as other senior executives of the
Company and may be increased, but not decreased, during the Term.
(b) Annual Bonus. The Executive shall be eligible to participate in the
Company's annual bonus plan, performance based stock awards, and merit award
plans, pursuant to which he will be given the opportunity to earn additional
incentive compensation in a target amount equal to 100% of his Salary, depending
upon his achievement against performance goals that will be established in the
first quarter of each calendar year during the Term by the Compensation
Committee of the Board after consultation with the Executive. The Com-
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pensation Committee shall have the discretion to pay an annual bonus in excess
of the target amount.
(c) Initial Option Grant. As soon as possible after the Effective Date, the
Parent shall grant the Executive an option to purchase 1,000,000 shares of the
Parent's common stock (the "Stock"), with an exercise price equal to the fair
market value of the Stock on the date of grant and vesting in three equal annual
installments on December 31, 2003, 2004 and 2005, and having post-termination
exercise periods and vesting provisions following termination of employment that
are no less favorable than those provided to other senior executives of the
Company.
(d) Subsequent Option Grants. As soon as practicable following the Parent's
2003 Annual General Meeting, the Parent shall grant the Executive an additional
option to purchase 1,000,000 shares of Stock, with an exercise price equal to
the fair market value of the Stock on the date of grant and vesting in three
equal installments on (i) December 31, 2003, (ii) December 31, 2004 and (iii)
December 31, 2005, and having post-termination exercise periods and vesting
provisions following termination of employment that are no less favorable than
those provided to other senior executives of the Company. Commencing in 2004,
the Executive shall be considered for additional option grants during the Term
consistent with the Company's annual option grant practices.
(e) Expenses. The Employer shall reimburse the Executive for all reasonable
out-of-pocket expenses incurred by the Executive in connection with his
employment hereunder upon submission of appropriate documentation or receipts in
accordance with the policies and procedures of the Employer as in effect from
time to time. In addition, the Executive shall be eligible to receive financial
planning, and tax support and advice from the provider of his choice, at a
reasonable and customary annual cost.
(f) Pension, Welfare and Fringe Benefits. During the Term, the Executive
shall be eligible to participate in the pension, medical, disability and life
insurance plans applicable to senior executives of the Company generally in
accordance with the terms of such plans as in effect from time to time. The
foregoing shall not be construed to limit the ability of the Employer or any of
its affiliates to amend, modify or terminate any such benefit plans, policies or
programs at any time and from time to time.
4. TERMINATION OF EMPLOYMENT. Subject to the notice and other provisions of
this Section 4, the Employer shall have the right to terminate the Executive's
employment hereunder, and the Executive shall have the right to resign, at any
time for any reason or for no stated reason.
(a) Termination for Cause; Resignation Without Good Reason. (i) If, prior
to the expiration of the Term, the Executive's employment is terminated by the
Employer for
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"Cause" (as defined below) or if the Executive resigns from his employment
hereunder other than for "Good Reason" (as defined below), the Executive shall
be entitled to the following amounts: (A) payment of his Salary accrued up to
and including the date of termination or resignation, (B) payment in lieu of any
accrued but unused vacation time, and (C) payment of any unreimbursed expenses
(collectively, the "Accrued Obligations"). Except to the extent required by the
terms of the programs described in Section 3(f) or applicable law, the Executive
shall have no further right under this Agreement or otherwise to receive any
other compensation or to participate in any other plan, program or arrangement
after such termination or resignation of employment.
(ii) "Cause" means that the Executive has (A) committed any act of willful
misconduct, including fraud, in connection with his employment by the Company;
(B) materially breached any provision of the Agreement, which breach has not
been cured within 10 days after receiving written notice of such breach; (C)
failed, refused or neglected, other than by reason of a Disability (as defined
below), to timely perform any material duty or obligation under the Agreement or
to comply with any lawful directive of the Board which is not tied to the
financial performance of the Company, which failure, refusal or neglect has not
been cured within 10 business days after receiving written notice thereof; (D)
been formally indicted for a crime involving moral turpitude, dishonesty, fraud
or unethical business conduct; or (E) been determined by a governmental body or
other appropriate authority to have violated any material law or regulation that
is applicable to the Company's businesses. Upon a cure of the acts set forth in
subsections (B) and (C) by the Executive within the 10 business day cure period
to the reasonable satisfaction of the Board, such event shall no longer
constitute Cause for purposes of this Agreement.
(iii) "Good Reason" means (A) a breach by the Company of a material
obligation under the Agreement, including, without limitation, a material
diminution in the Executive's title, duties, responsibilities or authority
without his consent, which breach has not been cured within 10 business days
after providing the Company with written notice of such breach, (B) failure to
provide the Executive with an annual cash bonus and additional option grants in
accordance with the Company's compensation guidelines for executive officers at
a level appropriate to the Executive's performance, as determined by the
Committee in good faith, or (C) the failure to nominate the Executive for
membership on the Board during the Term. Upon a cure of the acts set forth in
subsections (A) and (B) above within the 10 business day cure period, such event
shall no longer constitute Good Reason for purposes of this Agreement. For the
avoidance of doubt, the relocation of the Executive's principal place of
business to the West Coast of the United States will not constitute Good Reason
under this Agreement.
(iv) Termination of the Executive's employment for Cause shall be
communicated by delivery to the Executive of a written notice from the Employer
stating that the Executive will be terminated for Cause, specifying the
particulars thereof and the effective
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date of such termination; provided, however, that no such written notice shall
be effective unless the cure period specified in Section 4(a)(ii)(B) or (C) (if
applicable) has expired without the Executive having corrected the event or
events subject to cure. The date of a resignation by the Executive without Good
Reason shall be the date specified in a written notice of resignation from the
Executive to the Employer; provided, however, that the Executive shall provide
at least 30 days' advance written notice of resignation without Good Reason.
(b) Involuntary Termination.
(i) If, prior to the expiration of the Term, the Employer terminates the
Executive's employment for any reason other than Disability or Cause or the
Executive resigns from his employment hereunder for Good Reason (such a
resignation or termination being hereinafter referred to as an "Involuntary
Termination"), the Executive shall be entitled to payment of the Accrued
Obligations. In addition, in the event of the Executive's Involuntary
Termination, the Employer shall, conditioned upon the Executive's execution of a
customary release of all claims against the Company and its affiliates in a form
prescribed by the Company, continue to pay to the Executive as severance (the
"Severance Payments") his Salary and target bonus for a period of two years
following his Involuntary Termination (the "Severance Period"). Also in the
event of an Involuntary Termination, all of the Executive's outstanding options
shall immediately accelerate and remain outstanding for two years following the
Involuntary Termination. Anything in this Agreement to the contrary
notwithstanding, no Severance Payments shall be payable under this Section 4(b)
if the Executive's employment with the Employer ends at the expiration or
non-renewal of the Term in accordance with Section 2.
(ii) In the event of the Executive's Involuntary Termination, the Executive
shall continue to participate on the same terms and conditions as are in effect
immediately prior to such termination or resignation in the Employer's health
and medical plans provided to the Executive pursuant to Section 3(f) above at
the time of such Involuntary Termination until the end of the Severance Period,
or until the Executive obtains other employment, whichever occurs first.
Anything herein to the contrary notwithstanding, the Employer shall have no
obligation to continue to maintain during the Continuation Period any plan,
program or level of benefits solely as a result of this Agreement.
(iii) In the event of the Executive's death subsequent to his Involuntary
Termination, but prior to the end of the Severance Period, the balance of the
Severance Payments shall continue to be paid in periodic installments to the
Executive's Beneficiary (as hereinafter defined) for the balance of the
Severance Period; provided, however, that the Employer, in its sole discretion,
may at any time pay such Beneficiary the then remaining Severance Payments in a
cash lump sum.
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(iv) The date of termination of employment without Cause shall be the date
specified in a written notice of termination to the Executive. The date of
resignation for Good Reason shall be the date specified in a written notice of
resignation from the Executive to the Employer; provided, however, that no such
written notice shall be effective unless the cure period specified in Section
4(a)(iii)(A) (if applicable) above has expired without the Employer having
corrected the event or events subject to cure.
(c) Involuntary Termination in Connection with Certain Changes in Control.
(i) If, during the first two years of the Term, the Parent undergoes a "Change
in Control" (as defined below), and either (x) the Executive's employment is
thereafter terminated under circumstances that would constitute an Involuntary
Termination or (y) the Executive undergoes an Involuntary Termination and within
90 days of the Involuntary Termination, the Parent executes a definitive
agreement to enter into a transaction the consummation of which would result in
a "Change in Control" and such transaction is actually consummated prior to the
second anniversary of the Effective Date, then the Executive shall receive,
conditioned upon his execution of a customary release of all claims against the
Company and its affiliates in a form prescribed by the Company, the Accrued
Obligations, the Severance Payments, and continuation of benefits in accordance
with the terms of Section 4(b)(ii). In addition, the Executive shall receive, to
the extent that all of the additional options to purchase 1,000,000 shares of
Stock have not previously been granted pursuant to Section 3(d) at the time of
the Involuntary Termination, a cash payment representing the hypothetical value
of the additional then-ungranted options, assuming such options were granted
with an exercise price equal to the average closing price of the Company's Stock
during the quarter preceding the announcement of the Change in Control. All of
the Executive's then-outstanding options shall be immediately vested and remain
outstanding for two years following the Involuntary Termination. Furthermore,
the Executive shall receive a lump-sum cash payment in the amount of $5 million
if the Change of Control occurs in the first year of the Term and $3 million if
the Change in Control occurs in the second year of the Term.
(ii) "Change in Control" means (A) the consummation of a merger or
consolidation of the Parent with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power of the continuing
or surviving entity's issued shares or securities outstanding immediately after
such merger, consolidation or other reorganization is owned by persons who were
not shareholders of the Parent immediately prior to such merger, consolidation
or other reorganization; (B) the sale, transfer or other disposition of all or
substantially all of the Parent's assets; (C) a change in the composition of the
Board, as a result of which fewer than 50% of the incumbent directors are
directors who either (i) had been directors of the Parent on the date 24 months
prior to the date of the event that may constitute a Change in Control (the
"original directors") or (ii) were elected, or nominated for election, to the
Parent with the affirmative votes of at least a majority of the aggregate of the
original directors who were still in office at the time of the election or
nomination and the directors whose election or nomination was previously so
approved; or (D) any transaction as a
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result of which any person is the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
directly or indirectly, of securities of the Parent representing at least 50% of
the total voting power represented by the Parent's then outstanding voting
securities (e.g., issued shares). The term "person" shall have the same meaning
as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude
(i) a trustee or other fiduciary holding securities under an employee benefit
plan of the Parent or of any subsidiary of the Parent and (ii) a company owned
directly or indirectly by the shareholders of the Parent in substantially the
same proportions as their ownership of the ordinary shares of the Parent.
(iii) In the event of the Executive's death subsequent to his Involuntary
Termination following a Change in Control, but prior to the end of the Severance
Period, the balance of the Severance Payments shall continue to be paid in
periodic installments to the Executive's Beneficiary (as hereinafter defined)
for the balance of the Severance Period; provided, however, that the Employer,
in its sole discretion, may at any time pay such Beneficiary the then remaining
Severance Payments in a cash lump sum.
(d) Termination Due to Disability. In the event of the Executive's
Disability, the Employer shall be entitled to terminate his employment. In the
case that the Employer terminates the Executive's employment due to Disability,
the Executive shall be entitled to payment of the Accrued Obligations and any
disability benefits that are provided under the terms of any plan, program or
arrangement referred to in Section 3(f) applicable to the Executive at the time
of his Disability. "Disability" shall mean a physical or mental impairment that
substantially prevents him from performing his duties hereunder and that has
continued for either (i) 180 consecutive days or (ii) any 180 days within a
consecutive 360 day period. Any dispute as to whether or not the Executive is
disabled within the meaning of the preceding sentence shall be resolved by a
physician reasonably satisfactory to the Executive and the Employer, and the
determination of such physician shall be final and binding upon both the
Executive and the Employer.
(e) Death. Except as provided in Sections 4(b)(iii), 4(c)(iii) and this
Section 4(e), no Salary or benefits shall be payable under this Agreement
following the date of the Executive's death. In the event of the Executive's
death, the Accrued Obligations shall be paid to the Executive's Beneficiary
within 30 days of such termination. The Executive's Beneficiary shall also be
entitled to any death benefits that are provided under the terms of any plan,
program or arrangement referred to in Section 3(f) applicable to the Executive
at the time of death.
(f) Beneficiary. For purposes of this Agreement, except as provided in
Section 3(f), "Beneficiary" shall mean the person or persons designated in
writing by the Executive to receive benefits under a plan, program or
arrangement or to receive the balance of the Severance Payments, if any, in the
event of the Executive's death, or, if no such person or
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persons are designated by the Executive, the Executive's estate. No Beneficiary
designation shall be effective unless it is in writing and received by the
Employer prior to the date of the Executive's death.
5. PROTECTION OF THE EMPLOYER'S INTERESTS.
(a) No Interference. For so long as the Executive is employed by the
Employer and for one year following his termination of employment for any reason
(such period being referred to hereinafter as the "Restricted Period"), the
Executive shall not, either himself or through any agent, whether for his own
account or for the account of any other individual, partnership, firm,
corporation or other business organization (other than the Company or its
affiliates), intentionally solicit, endeavor to entice away from the Company, or
otherwise interfere with the relationship of the Company with, any individual
who is employed by or otherwise engaged to perform services for the Company
(other than those individuals who are personally recruited by the Executive) or
any person or entity who is, or was within the then most recent twelve-month
period, a customer or client of the Company or its affiliates.
(b) Secrecy. As a condition of his employment, the Executive shall be
required to execute the Company's standard proprietary inventions and
confidentiality agreement. In addition, the Executive recognizes that the
services to be performed by him hereunder are special, unique and extraordinary
in that, by reason of his employment hereunder, he may acquire confidential
information and trade secrets concerning the operation of the Company or its
affiliates or subsidiaries, the use or disclosure of which could cause the
Company or its affiliates or subsidiaries substantial losses and damages which
could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, the Executive covenants and agrees that he will not at
any time, except in performance of his obligations hereunder or with the prior
written consent of the Board, directly or indirectly disclose to any person any
secret or confidential information that he may learn or has learned by reason of
his association with the Company, or any of its predecessors, subsidiaries and
affiliates. The term "confidential information" means any information not
previously disclosed or otherwise available to the public or to the trade with
respect to the Company's, or any of its predecessors', affiliates' or
subsidiaries', products, facilities and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information, business plans,
prospects or opportunities.
(c) Exclusive Property. The Executive confirms that all confidential
information is and shall remain the exclusive property of the Company, its
affiliates and subsidiaries. All business records, papers and documents kept or
made by the Executive relating to the business of the Company, its predecessors,
affiliates and subsidiaries shall be and remain the property of the Company.
Upon the termination of his employment with the Company or upon the request of
the Company at any time, the Executive shall promptly deliver to the Company,
and shall not without the consent of the Board retain copies of, any written
materi-
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als not made available to the public, or records and documents made by the
Executive or coming into his possession concerning the business or affairs of
the Company or any of its affiliates or subsidiaries.
(d) Injunctive Relief. Without intending to limit the remedies available to
the Company, the Executive acknowledges that a breach of any of the covenants
contained in this Section 5 may result in material irreparable injury to the
Company or its affiliates or subsidiaries for which there is no adequate remedy
at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat thereof, the
Company, its affiliates or subsidiaries, shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by this Section 5 or such other
relief as may be required to specifically enforce any of the covenants in this
Section 5.
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
(a) Gross-Up Payment. Anything in this Agreement to the contrary or any
termination of this Agreement notwithstanding, in the event it shall be
determined that any payment or distribution or benefit received or to be
received by the Executive pursuant to the terms of this Agreement or any other
payment or distribution or benefit made or provided by the Company or any of its
affiliates, to or for the benefit of the Executive (whether pursuant to this
Agreement or otherwise) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
or any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties, is
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the 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,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Gross-Up Payment Calculation. Subject to the provisions of Subsection
(c) below, all determinations required to be made under this Section 6,
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 such certified public accounting firm as may be
jointly designated by the Executive and the Company (the "Accounting Firm"),
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. 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 6,
shall be paid by the Company to the Ex-
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ecutive within five days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder it is possible that Gross-Up Payments that 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 Subsection (c) and the Executive thereafter is
required to make a 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 the
Executive.
(c) Claim by the IRS. The Executive shall notify the Company in writing of
any claim by the U.S. Internal Revenue Service (the "IRS") 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
business days after the 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. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which the 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 the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) 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; and
(iii) cooperate with the Company in good faith in order effectively to
contest 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 the Executive harmless, on an
after-tax basis, for any Excise Tax or income and 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 Subsection (c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo 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 the Executive to pay the tax
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claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive shall agree 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, however, that
if the Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income and 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 the 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 the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the IRS or any other taxing authority.
(d) Entitlement to Refund. If, after the receipt by the Executive of an
amount paid by the Company pursuant to Subsection (c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Subsection (c)
promptly repay 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 the Executive of an amount paid by the Company pursuant to Subsection
(c), a determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the Executive
in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such payment shall be
forgiven and shall not be required to be repaid and the amount of such payment
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
7. INDEMNIFICATION. The Company shall furnish the Executive with coverage
under the Company's customary director and officer indemnification arrangements,
in accordance with the Company's by-laws and its D&O insurance policies, as in
effect from time to time.
8. NO MITIGATION OR OFFSET. The Executive shall not be required to mitigate
the amount of any payment provided for herein by seeking other employment or
otherwise, and any such payment will not be reduced in the event such other
employment is obtained.
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9. GENERAL PROVISIONS.
(a) No Other Severance Benefits. Except as specifically set forth in this
Agreement, the Executive covenants and agrees that he shall not be entitled to
any other form of severance benefits from the Employer, including, without
limitation, benefits otherwise payable under any of the Employer's regular
severance plans or policies, in the event his employment ends for any reason
and, except with respect to obligations of the Employer expressly provided for
herein, the Executive unconditionally releases the Employer and its subsidiaries
and affiliates, and their respective directors, officers, employees and
stockholders, or any of them, from any and all claims, liabilities or
obligations under any severance or termination arrangements of the Employer or
any of its subsidiaries or affiliates.
(b) Tax Withholding. All amounts paid to Employee hereunder shall be
subject to all applicable federal, state and local wage withholding.
(c) Notices. Any notice hereunder by either party to the other shall be
given in writing by personal delivery, or certified mail, return receipt
requested, or (if to the Employer) by telex or facsimile, in any case delivered
to the applicable address set forth below:
(i) To the Employer: Lincoln House
Lincoln Place
Dublin 2
Ireland
Attention: Secretary
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attn: Linda E. Rappaport, Esq.
(ii) To the Executive: G. Kelly Martin
1040 Fifth Avenue, Apt. 5B
New York, New York 10028
With a copy to:
Eckhaus & Olson
230 Park Avenue
New York, New York 10169
Attn: Steven Eckhaus, Esq.
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or to such other persons or other addresses as either party may specify to the
other in writing.
(d) Representation by the Executive. The Executive represents and warrants
that his entering into this Agreement does not, and that his performance under
this Agreement will not, violate the provisions of any agreement or instrument
to which the Executive is a party or any decree, judgment or order to which the
Executive is subject, and that this Agreement constitutes a valid and binding
obligation of the Executive in accordance with its terms. Breach of this
representation will render all of the Employer's obligations under this
Agreement void ab initio.
(e) Assignment; Assumption of Agreement. No right, benefit or interest
hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or setoff by the Executive in respect of any claim, debt,
obligation or similar process. The Employer will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Employer to assume expressly
and to agree to perform this Agreement in the same manner and to the same extent
that the Employer would be required to perform it if no such succession had
taken place.
(f) Amendment. No provision of this Agreement may be amended, modified,
waived or discharged unless such amendment, modification, waiver or discharge is
agreed to in writing and signed by the parties. No waiver by either party hereto
at any time of any 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.
(g) Severability. If any term or provision hereof is determined to be
invalid or unenforceable in a final court or arbitration proceeding, (i) the
remaining terms and provisions hereof shall be unimpaired and (ii) the invalid
or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (determined without regard to
the choice of law provisions thereof), and the parties consent to jurisdiction
in the United States District Court for the Southern District of New York.
(i) Entire Agreement. This Agreement contains the entire agreement of the
Executive, the Employer and any predecessors or affiliates thereof with respect
to the subject matter hereof and all prior agreements and term sheets are
superseded hereby.
(j) Counterparts. This Agreement may be executed by the parties hereto in
counterparts, each of which shall be deemed an original, but both such
counterparts shall together constitute one and the same document.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first written above.
ELAN PHARMACEUTICALS, INC.
By: /s/ Lisabeth F. Murphy
--------------------------------------------
Name: Lisabeth F. Murphy
Title: Vice President and Secretary
ELAN CORPORATION PLC
By: /s/ Liam Daniel
--------------------------------------------
Name: Liam Daniel
Title: Secretary
EXECUTIVE
/s/ G. Kelly Martin
---------------------------------------------------
G. KELLY MARTIN
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELAN CORPORATION, plc
By: /s/ William F. Daniel
-----------------------------------
William F. Daniel
Company Secretary
Date: February 4, 2003