Employment Agreement - ICN Pharmaceuticals Inc. and Clifford R. Saffron
January 18, 2001
Clifford R. Saffron, Esq.
Senior Vice President
Deputy General Counsel
ICN Pharmaceuticals, Inc.
780 Third Avenue
14th Floor
New York, NY 10017
EMPLOYMENT AGREEMENT
Dear Cliff:
This Employment Agreement (the "Agreement") contains the terms and conditions of
your employment with ICN Pharmaceuticals, Inc. ("ICN").
1. TERM: This Agreement shall commence on January 18, 2001 and shall end on
March 31, 2002.
2. POSITION: ICN hereby employs Saffron to manage, coordinate, supervise
and render legal services and advice in connection with the worldwide
litigation, arbitration and/or regulatory matters of ICN as currently in
existence or as may arise from time-to-time. It is expressly understood
that Saffron is not being hired to provide, and shall not be asked to
provide, corporate legal services or legal or other services of any
other kind or nature to ICN. Saffron's board elected title shall be
"Senior Vice President - Deputy General Counsel".
3. COMPENSATION:
A. ICN shall pay Saffron a guaranteed minimum year-end bonus (separate
from quarterly, performance or one-time bonuses) for calendar year
2000 in an amount no less than 75% of the 2000 year-end bonus granted
to David C. Watt ("Watt"), consistent with the terms of ICN's bonus
plan. If Watt is not employed by ICN (or any successor company or
entity) at the time 2000 year-end bonuses are awarded, Saffron's 2000
year-end bonus shall be no less than $100,000.00. ICN shall be
obligated to pay the 2000 guaranteed minimum year-end bonus even if
Saffron is not employed by ICN at the time the 2000 year-end bonuses
to other members of ICN's senior management are paid.
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B. The increase in Saffron's base salary for the period January 1, 2001
through March 31, 2002 shall be in accordance with ICN's executive
compensation plan and shall be consistent with increases for other
board elected officers of ICN. ICN shall pay Saffron a guaranteed
minimum year-end bonus (separate from quarterly or performance
bonuses) for calendar year 2001 in an amount no less than 75% of the
2001 year-end bonus granted to Watt, consistent with the terms of
ICN's bonus plan. If Watt is not employed by ICN (or any successor
company or entity) at the time 2001 year-end bonuses are awarded,
Saffron's 2001 year-end bonus shall be no less than $100,000.00. ICN
shall be obligated to pay the 2001 guaranteed minimum year-end bonus
if Saffron was employed by ICN for 9 months or more during 2001, and
even if Saffron is not employed by ICN at the time the 2001 year-end
bonuses are paid to other members of ICN's senior management.
C. ICN shall make quarterly bonus payments to Saffron of $6,000.00 each
on March 31, 2001, June 30, 2001, September 30, 2001, December 31,
2001 and March 1, 2002.
D. As referenced in ICN's public filings, there is an investigation
currently pending against ICN and certain of its officers, directors,
employees, and others being conducted by the U.S. Attorney for the
Central District of California (the "U.S. Attorney Investigation"),
and a civil lawsuit against ICN, Mr. Panic, Mr. Watt and Dr.
Johannesson which was filed by the United States Securities and
Exchange Commission (the "SEC Lawsuit"). Saffron's work in connection
with the U.S. Attorney Investigation and SEC Lawsuit has been
exceptional and has and will continue to significantly reduce outside
counsel fees. In consideration thereof, ICN agrees to the following
performance bonuses.
With respect to the SEC Lawsuit: (1) if the SEC Lawsuit with respect
to ICN is resolved on terms acceptable to ICN's Board of Directors,
if the SEC Lawsuit against ICN is dismissed for any reason, or if ICN
is the prevailing party after trial, Saffron shall within 30 days
thereafter be paid a bonus of $150,000.00; and/or (2) if the SEC
Lawsuit with respect to Panic, Watt and Johannesson is resolved on
terms acceptable to any of them, if it is dismissed against any of
them for any reason, or if any of them are prevailing party(ies)
after trial, Saffron shall within 30 days thereafter be paid a bonus
of $25,000.00 per individual. The bonuses pursuant to (1) and (2)
above shall be cumulative.
With respect to the U.S. Attorney Investigation: (a) if the U.S.
Attorney Investigation with respect to ICN is concluded without the
commencement of criminal proceedings against ICN, if a criminal
proceeding is commenced against ICN and then resolved on terms
acceptable to ICN's Board of Directors, if a criminal proceeding is
commenced against ICN and then dismissed for any reason, or if a
criminal proceeding is commenced against
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ICN and ICN is the prevailing party after trial, Saffron shall within
30 days thereafter be paid a bonus of $200,000.00; and/or (b) if the
U.S. Attorney Investigation is concluded without the commencement of
criminal proceedings against one or more of the seven (7) "targets"
of the investigation, if a criminal proceeding is commenced against
any of the "targets" and then resolved on terms acceptable to any of
the "targets", if a criminal proceeding is commenced against any of
the "targets" and then dismissed against any of the "targets" for any
reason, or if any of the "targets" are prevailing parties after
trial, Saffron shall within 30 days thereafter be paid a bonus of
$50,000.00 per target. The bonuses pursuant to (a) and (b) above
shall be cumulative.
The above bonuses with respect to the SEC Lawsuit and the U.S.
Attorney Investigation shall be cumulative. In consideration of the
work performed by Saffron over the last six (6) years, the
performance bonuses pursuant to the SEC Lawsuit and the U.S. Attorney
Investigation shall be paid to Saffron even if Saffron is not
employed by ICN at the time the events described in the above
paragraphs transpire.
E. No later than March 31, 2001, ICN shall pay Saffron a one-time
lump-sum bonus of $50,000.00. This is in addition to the
guaranteed minimum year-end bonus for the year 2000 as described
in paragraph 3.A. above.
F. Saffron shall be issued a one-time stock option grant to purchase
50,000 shares of ICN common stock at the lowest closing price of ICN
common stock between the date of this Agreement and February 15,
2001. In addition to this one-time stock option grant, Saffron shall
be granted options to purchase shares of ICN common stock on an
annual basis pursuant to the terms of ICN's stock option plan, and
said grant and the amount thereof shall be consistent with stock
option grants for similarly situated board elected officers of ICN.
G. Saffron and his family shall be entitled to, and shall be offered
participation in, all health insurance plans, pension plans,
disability insurance, life insurance, or other benefits or plans of
any kind or nature offered to similarly situated board elected
officers of ICN.
4. BUSINESS EXPENSES: ICN agrees to pay Saffron on or before January 31,
2001, $18,000.00, net of all applicable taxes, for business expenses to
be incurred by Saffron during 2001. Said business expenses (to be
documented by Saffron as requested by ICN) shall include, but not be
limited to, automobile lease payments, automobile insurance, automobile
repairs, cellular telephone charges, gasoline charges, parking charges,
entertainment expenses and other miscellaneous business related
expenses.
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5. TERMINATION:
A. If, for any reason whatsoever, Saffron and ICN (or any successor
company or entity) are unable to agree upon a written extension of
this Agreement during the period January 1, 2002 through March 1,
2002, then Saffron's employment with ICN shall automatically
terminate on March 31, 2002, and on March 31, 2002 ICN shall issue
to Saffron a payment equal to Saffron's 2000 W-2 compensation. In
addition, all stock options previously granted to Saffron shall be
accelerated, vested and deemed exercisable on March 31, 2002, and
Saffron shall then have until March 31, 2003 to exercise all said
options.
B. ICN may terminate this Agreement at any time prior to January 1,
2002, for cause or without cause, upon ninety (90) days written
notice from ICN to Saffron. During that ninety (90) day period
Saffron shall continue to receive the applicable payments pursuant
to paragraphs 3.A., 3.B., 3.C., 3.D. and 4, above. Upon the
expiration of said ninety (90) day period, ICN shall issue to
Saffron a payment equal to Saffron's 2000 W-2 compensation. In
addition, all stock options previously granted to Saffron shall be
accelerated, vested and deemed exercisable upon the expiration of
said ninety (90) day period, and Saffron shall have one (1) year
thereafter to exercise all said options.
C. Saffron may terminate this Agreement at any time prior to January 1,
2002, for any reason, said termination to become effective thirty
(30) days after written notice from Saffron to ICN. During that
thirty (30) day period, Saffron shall continue to receive the
applicable payments pursuant to paragraphs 3.A., 3.B., 3.C., 3.D.
and 4, above. Upon expiration of said thirty (30) day period, ICN
shall issue to Saffron a payment equal to 50% of Saffron's 2000 W-2
compensation. In addition, all stock options previously granted to
Saffron shall be accelerated, vested and deemed exercisable upon the
expiration of said thirty (30) day period, and Saffron shall have
one (1) year thereafter to exercise all said options.
6. CHANGE IN CONTROL: If a "Change in Control" occurs at anytime during the
term of this Agreement, ICN shall pay Saffron, within thirty (30) days
of said "Change in Control", a lump sum amount equal to three (3) times
Saffron's 2000 W-2 compensation as severance benefits. In addition, all
stock options previously granted to Saffron shall be accelerated, vested
and deemed exercisable immediately upon said "Change in Control", and
Saffron shall then have one (1) year from the date of said "Change in
Control" to exercise all said options. It is expressly understood that
Saffron is under no obligation to mitigate the amounts payable pursuant
to this "Change in Control" provision. The definition of "Change in
Control" for purposes of this paragraph is attached hereto and made a
part hereof as Exhibit 1.
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7. CONDITIONS:
A. ICN expressly agrees that Saffron shall not be required to re-locate
or move to California or any other state or country, permanently or
temporarily, at any time during the term of this Agreement. ICN
agrees that Saffron shall continue to work out of ICN's office at
780 Third Avenue, New York, N.Y. (or at any other similar or
comparable office in Saffron's sole discretion) on a day-to-day
basis. ICN expressly agrees that Saffron shall not be required to
take the bar examination of California or any other state at any
time during the term of this Agreement.
B. ICN agrees to provide Saffron with Directors and Officers
Liability insurance and its corporate indemnification against
any and all liabilities, claims, causes of action, etc., arising
out of or relating to Saffron's employment that are comparable
to those of the General Counsel.
8. MISCELLANEOUS:
A. This Agreement and its terms shall be binding upon the parties
hereto and their heirs, legal representatives, executors,
administrators, successors and assigns.
B. This Agreement may be executed in any number of counterparts. All
executed counterparts shall constitute one Agreement,
notwithstanding that all parties may not be signatories to the
same counterpart.
C. This Agreement shall be construed and governed by the laws of the
State of New York.
D. Any controversy, disagreement or dispute arising out of, relating
to, or in connection with this Agreement or the breach thereof shall
be submitted to and be settled by arbitration, on an expedited
basis, under the Employment Dispute Resolution Rules of the American
Arbitration Association in New York, N.Y. The parties expressly
agree that any hearing(s) commenced in connection with this
paragraph shall be concluded within 60 days after the selection of
the arbitrator(s). The prevailing party in such an arbitration
proceeding shall be entitled to recover reasonable attorney's fees
and costs.
E. If Saffron dies during the term of this Agreement, his estate and/or
beneficiaries shall be entitled to all amounts due for the then
remaining term of this Agreement.
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F. This Agreement contains the entire agreement of the parties hereto
with respect to the subject matter hereof, and all prior
negotiations, agreements or understandings relating thereto, written
or oral, are superseded hereby. This Agreement may not be changed,
modified, extended, renewed or supplemented, and no provision hereof
may be waived, except by an instrument in writing signed by the
party against whom enforcement or any change, modification,
extension, renewal, supplement or waiver is sought.
This Agreement is subject to approval by the Compensation Committee of ICN's
Board of Directors. It shall be submitted for approval at the next meeting of
the Compensation Committee, whether that meeting is telephonic or in person.
Watt shall recommend to the Compensation Committee that the Agreement be
approved. Saffron shall be notified immediately if the Agreement is not
approved. If the Agreement, or any part thereof, is not approved by the
Compensation Committee, Saffron shall have the right, within seven (7) business
days after such notification to him from ICN, to terminate his employment with
ICN. If Saffron opts to terminate his employment with ICN due to the
Compensation Committee's failure to approve the Agreement, or any part thereof,
then within 7 business days after such notification of termination from Saffron
to ICN, ICN shall issue to Saffron a lump sum payment equal to Saffron's 2000
W-2 compensation. In addition, all stock options previously granted to Saffron
shall be accelerated, vested and deemed exercisable immediately, and Saffron
shall then have until March 31, 2002 to exercise all said options.
Very truly yours,
--------------------------
David C. Watt
Executive Vice President
General Counsel
Corporate Secretary
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, CA 92626
AGREED TO:
---------------------------
Clifford R. Saffron
120 Redwood Drive
Roslyn, NY 11576
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