Exhibit 10.30
AMENDMENT NO. 2 TO
WATSON PHARMACEUTICALS, INC.
KEY EMPLOYEE AGREEMENT
     This Amendment No. 2 to Key Employee Agreement (this “Amendment”) by and
between David Hsia, Ph.D. (“Executive”) and Watson Pharmaceuticals, Inc. (the
“Company”), a Nevada corporation is entered into as of February 21, 2008 (the
“Effective Date”), and, to the extent provided herein, amends that certain Key
Employee Agreement between Executive and the Company dated as of June 30, 1999,
as amended by that certain Amendment No. 1 to Watson Pharmaceuticals, Inc. Key
Employee Agreement dated November 15, 2000 (the “Agreement”).
     Whereas, the Company and Executive have entered into the Agreement,
pursuant to which Executive serves as Senior Vice President, Scientific Affairs
of the Company; and
     Whereas, the Company and Executive desire to amend the Agreement to the
extent provided herein.
     Now, Therefore, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
     1. Section 409A. New Section 10.12 shall be inserted immediately after
Section 10.11 of the Agreement to read in its entirety as follows:
     “This Agreement is intended to be interpreted and construed in a manner
that does not cause Executive to incur federal tax liability under Section 409A
of the Code.”
     2. Exhibit A. Exhibit A of the Agreement shall be deleted and replaced in
its entirety with the Exhibit A attached to this Amendment.
     3. Exhibit B. Exhibit B of the Agreement shall be deleted and replaced in
its entirety with the Exhibit B attached to this Amendment.
     4. No Other Changes. Except as provided in this Amendment, the Agreement
shall remain in full force and effect.
     5. Definitions. Unless otherwise defined herein, all capitalized terms
shall have the meaning as set forth in the Agreement.
(Signature Page Follows)

 

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     In Witness Whereof, the parties have executed this Agreement effective as
of the Effective Date above written.

          Watson Pharmaceuticals, Inc.
 
      By:           Name:           Title:           Executive:
 
      Name: David Hsia
             

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Exhibit A
COMPENSATION AND SEVERANCE TERMS SCHEDULE
1. BASE SALARY
     For services to be rendered under this Agreement, Executive shall receive
an annual base salary at an annualized rate of $343,121.00, payable in
accordance with the Company’s standard payroll practices, and subject to
increases as set forth in this Agreement.
2. BONUS
     Executive’s annual bonus, if granted, shall be at an annual target level of
at least 35% of Executive’s then current base salary, and shall be subject to
any bonus programs or bonus plans generally applicable to other senior
executives of the Company.
3. [INTENTIONALLY OMITTED]
4. SEVERANCE BENEFITS
     4.1 Executive’s Termination of Employment. Notwithstanding anything to the
contrary in the Agreement, if the Company terminates Executive’s employment or
if Executive terminates his employment voluntarily for any or no reason at any
time during the Employment Term (in either case other than in a Change in
Control Termination) such termination shall be deemed a resignation for Good
Reason and the Company shall provide to Executive, within thirty (30) days after
the Effective Date of the Release attached hereto as Exhibit B (as “Effective
Date” is defined in the Release) or such later date as may be required under
Section 4.4, as the only severance compensation and benefits all of the
following:
          (a) A lump sum severance payment, subject to standard withholdings or
deductions, in an amount equal to the sum of: (i) twenty-four (24) months of
Executive’s then base salary; (ii) two times Executive’s target bonus to be
earned for the year in which termination occurs or two times the bonus amount
paid to the Executive in the prior year, which is greater; and (iii) Executive’s
prorated bonus (based on Executive’s target bonus amount) for the year in which
the termination occurs.
          (b) Continued group health insurance benefits at the same rate
generally charged to Company employees for Executive and his current spouse (as
of the Effective Date) (“Spouse”) for the rest of their lives (“Coverage
Period”); provided, however, that once Executive or his Spouse becomes Medicare
eligible, the Company shall coordinate that individual’s medical insurance
benefits with Medicare, and such benefits shall be secondary to Medicare. During
the Coverage Period, the Company, at its election, shall either (i) arrange
commercial medical coverage for Executive and his Spouse (which is
(x) comparable to the medical benefits provided to Executive and his Spouse
immediately prior to commencement of such commercial medical care coverage,
(y) subject to change if such coverage is no longer available, and (z) mutually
agreeable to the Company and Executive), or (ii) provide Executive and his
Spouse continued coverage under the Company’s medical insurance plan. Executive

 

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shall be responsible for any personal income taxes payable in connection with
the receipt of the benefits described in this paragraph 4.1(b).
          (c) Outplacement services for one year with a nationally recognized
service selected by the Company.
     4.2 Executive’s Resignation For Good Reason. If Executive terminates his
employment with the Company for Good Reason, the Company shall provide to
Executive, within thirty (30) days after the Effective Date of the Release
attached hereto as Exhibit B (as “Effective Date” is defined in the Release), as
the only severance compensation and benefits, the same severance compensation
and benefits provided in Section 4.1 hereof.
     4.3 Change of Control Termination. In the event of a Change of Control
Termination, the Company shall provide to Executive, within thirty (30) days
after the Effective Date of the Release attached hereto as Exhibit B (as
“Effective Date” is defined in the Release) or such later date as may be
required pursuant to Section 4.4, as the only severance compensation and
benefits: (a) the same severance compensation and benefits provided in
Section 4.1 hereof and, (b) any unvested Options and restricted stock awards
held by Executive shall have their vesting accelerated in full so as to become
one hundred percent (100%) vested and, if applicable, immediately exercisable in
full as of the date of such termination.
     4.4 Delayed Payments. Notwithstanding anything in this Section 4 to the
contrary, if the Company determines in good faith that any payment or benefit
under this Section 4, that is payable to Executive on account of a termination
of employment with the Company, constitutes a “deferral of compensation” under
Code Section 409A (as set forth in IRS Notice 2005-1, or the Final Treasury
Regulations), and that Executive is a “specified employee” within the meaning of
Code Section 409A(a)(2)(B)(i), then the Company shall delay commencement of any
such payment or benefit until six months after the Effective Date which
constitutes a “separation from Service” (as such term is used in Code
Section 409A) or, if later, the Effective Date of the Release attached hereto as
Exhibit B (as “Effective Date” is defined in the Release) (the “409A Suspension
Period”). With respect to any benefits to be provided by the Company (such as
continued medical benefits, if any), if necessary in order to avoid any
additional tax or interest under Code Section 409A, Executive shall pay for such
benefits directly during the 409A Suspension Period. Within 15 calendar days
after the end of the 409A Suspension Period, the Company shall pay to Executive
a lump sum payment in cash equal to any payments and benefits (including
interest on any such payments and benefits, at an interest rate equal to the
120-month rolling average yield to maturity of the index called the “Merrill
Lynch U.S. Corporate, A Rated, 15+ Years Index” as of December 31 of the year
preceding the year of termination, for the 409A Suspension Period) that the
Company would otherwise have been required to provide under this Section 4 but
for the imposition of the 409A Suspension Period. Thereafter, Executive shall
receive any remaining payments and benefits due under this Section 4 in
accordance with the terms of this Section 4 (as if there had not been any
suspension period). The provisions of this paragraph shall apply only to the
minimum extent required to avoid Executive’s incurrence of any additional tax or
interest under Code Section 409A.

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Exhibit B
RELEASE AGREEMENT
I understand that my position with Watson Pharmaceuticals, Inc. (the “Company”)
terminated effective                      (the “Separation Date”). The Company
has agreed that if I choose to sign this Release, the Company will, within
thirty (30) days after the Effective Date of this Release or such later date as
may be required by Internal Revenue Code Section 409A, pay me certain severance
benefits (minus the standard withholdings and deductions) pursuant to the terms
of the Key Employee Agreement entered into as of June 30, 1999, between myself
and the Company, as amended from time to time (the “Agreement”), and any
agreements incorporated therein by reference. I understand that I am not
entitled to such severance benefits unless I sign this Release. I further
understand that, regardless of whether I sign this Release, the Company will pay
me all of my accrued base salary and paid time off through the Separation Date,
to which I am entitled by law.
As a material inducement for the Company to enter into the Agreement, and in
exchange for the performance of the Company’s obligations under the Agreement
provided for therein, I knowingly and voluntarily waive and release all rights
and claims, known and unknown, which I may have against the Company and/or any
of the Company’s related or affiliated entities or successors, or any of their
current or former officers, directors, managers, employees, agents, insurance
carriers, auditors, accountants, attorneys or representatives, including any and
all charges, complaints, claims, liabilities, obligations, promises, agreements,
contracts, controversies, damages, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses of any kind. This includes, but is
not limited to, claims for employment discrimination, harassment, wrongful
termination, constructive termination, violation of public policy, breach of any
express or implied contract, breach of any implied covenant, fraud, intentional
or negligent misrepresentation, emotional distress, defamation, or any other
claims relating to my relationship with the Company. This also includes a
release of any claims under any federal, state or local laws or regulations,
including, but not limited to: (1) Title VII of the Civil Rights Act of 1964, 42
U.S.C. § 2000(e) et seq. (race, color, religion, sex, and national origin
discrimination); (2) the Age Discrimination in Employment Act, as amended, 29
U.S.C. § 621 et seq. (the “ADEA”) (age discrimination); (3) Section 1981 of the
Civil Rights Act of 1866, 42 U.S.C. 1981 (race discrimination); (4) the Equal
Pay Act of 1963, 29 U.S.C. § 206 (equal pay); (5) the Fair Labor Standards Act,
29 U.S.C. § 201, et seq. (wage and hour matters, including overtime pay);
(6) COBRA; (7) Executive Order 11141 (age discrimination); (8) Section 503 of
the Rehabilitation Act of 1973, 29 U.S.C. § 701, et seq. (disability
discrimination); (9) the Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. § 1001, et seq. (employee benefits); (10) Title I of the
Americans with Disabilities Act (disability discrimination); and (11) any
applicable state law counterpart of any of the foregoing, including, without
limitation, including the California Fair Employment and Housing Act, the
California Family Rights Act, claims for wages under the California Labor Code.
Notwithstanding the generality of the foregoing, I do not release (i) claims for
unemployment compensation or any state disability insurance benefits pursuant to
the terms of applicable state law; (ii) claims to continued participation in
certain of the Company’s group benefit plans pursuant to the terms and
conditions of COBRA; (iii) claims to any benefit entitlements vested as the date
of separation of my employment pursuant to written terms of any employee benefit
plan of the Company or any affiliate or subsidiary of the Company; (iv) claims
to any equity awards which continue to vest following the separation of my
employment, pursuant to the written terms of the applicable equity compensation
plan, the agreements evidencing such awards and the Agreement; (v) my right to
bring to the attention of the Equal Employment Opportunity Commission claims of
discrimination; provided, however, that I do release my right to secure any
damages for alleged discriminatory treatment; and (vi) my right under applicable
law and the Company’s D&O policy to seek indemnity for acts committed, or
omissions, within the course and scope of my employment duties. I ACKNOWLEDGE
THAT I HAVE

 

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BEEN ADVISED OF AND AM FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE
SECTION 1542, WHICH PROVIDES AS FOLLOWS: “A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” BEING AWARE OF SAID
CODE SECTION, I HEREBY EXPRESSLY WAIVE ANY RIGHTS I MAY HAVE THEREUNDER, AS WELL
AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
If I am forty (40) years of age or older as of the Separation Date, I
acknowledge that I am knowingly and voluntarily waiving and releasing any rights
I may have under the federal Age Discrimination in Employment Act of 1967, as
amended (“ADEA”). I also acknowledge that this paragraph, and this Release, are
written in a manner calculated to be understood by me, and the consideration
given for the waiver in the above paragraph is in addition to anything of value
to which I was already entitled. I have been advised by this writing, as
required by the ADEA that: (a) my waiver and release do not apply to any claims
that may arise after my signing of this Release; (b) I should consult with an
attorney prior to executing this Release; (c) I have twenty-one (21) days
(forty-five (45) days in the event of a group termination) within which to
consider this Release (although I may choose to voluntarily execute this Release
earlier); (d) I have seven (7) days following the execution of this release to
revoke the Release; and (e) this Release will not be effective until the eighth
day after this Release has been signed both by me and by the Company (“Effective
Date”).
I acknowledge that I remain bound by the Employee Proprietary Information and
Invention Agreement which I signed in connection with my employment (“Invention
Agreement”) and that the provisions of the Invention Agreement shall remain in
full force and effect. In accordance with my existing and continuing obligations
under the Invention Agreement, I have returned to the Company all materials
required to be returned pursuant to the Invention Agreement, as well as any
other Company property in my possession. In consideration for the severance
benefits I am receiving hereunder, I agree that I will reasonably cooperate with
the Company after the Separation Date to assure the smooth transition of pending
matters and to answer questions which may arise from time to time regarding my
former duties and responsibilities. Effective as of the Separation Date, I
resign any and all offices and directorships with the Company and any of its
affiliates except as otherwise provided in the Agreement, and will execute all
documents reasonably requested by the Company or its affiliates to effectuate
such resignations. Further, I agree that I will not hereafter disparage the
Company or any of the Releasees, either orally or in writing, to any person or
entity. The Company agrees that its officers and directors will not disparage
me, either orally or in writing, to any person or entity.

          Agreed:
 
            Date     DAVID C. HSIA                      Date     WATSON
PHARMACEUTICALS, INC.         

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