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Exhibit 10.25    
    

         Edwards Lifesciences  

2004  

 Edwards Incentive Plan (EIP)  

 

PLAN OBJECTIVE  

        The Edwards Lifesciences Incentive Plan for 2004 (2004 EIP) is an annual cash bonus program designed to motivate eligible participants to achieve Edwards'
financial and strategic objectives. 

ELIGIBILITY  

        Edwards regular employees in all locations worldwide are eligible to participate in the 2004 EIP if they meet all
of the following criteria: 

	•
	Date
of hire is before October 1, 2004;

	•
	Not
a participant in any other commission or management incentive compensation plan intended to replace the 2004 EIP;

	•
	Full-time
employee, or part-time employee regularly scheduled to work at least 20 hours per week; and

	•
	Participation
has been submitted to and approved by the Plan Administrator or its designee; provided, however, participation by Edwards' executive officers may be approved
only by the Plan Administrator. 

        Employees
who are hired or are promoted into a 2004 EIP bonus-eligible position between January 1 and September 30, 2004, will be eligible for target bonuses based on their
actual eligible earnings for the year. 

        Part-time
employees regularly scheduled to work at least 20 hours per week will be eligible for target bonuses based on their actual eligible earnings for the year. 

        The
Plan Administrator or its designee will consider exceptions to these general eligibility criteria on a case-by-case basis. 

        Eligibility for and participation in this plan in no way constitutes a contract of employment between Edwards Lifesciences and the employee. Eligible positions
and target bonus levels will be evaluated and determined on an annual basis.  

        Edwards Lifesciences reserves the right to amend or terminate this plan in whole or in part at any time without any advance notification.  

 ELIGIBLE EARNINGS  

        "Eligible earnings" is defined in Exhibit A. 

PLAN YEAR  

        The 2004 EIP plan year corresponds with the calendar year beginning January 1 and ending December 31, 2004. 

PLAN ADMINISTRATOR  

        The 2004 EIP Plan Administrator is the Edwards Lifesciences Compensation and Governance Committee (or its successor). The Plan Administrator may delegate
responsibility for plan administration to a designee; provided, however, the Plan Administrator may not delegate its responsibility regarding the approval of target and actual bonus amounts for
Edwards' executive officers. 

2

 

BONUS FUNDING  

        The 2004 EIP will be funded based on a percentage of Edwards' financial performance as modified by the participant organization's achievement of its Key Operating
Drivers (KODs). 

Financial Performance

The Plan Administrator shall set the applicable financial performance targets and the method of determining attainment of such targets. For purposes of the initial funding of the 2004 EIP, Edwards'
financial performance will be measured on the following criteria, weighted as noted: 

	Net Income	 	40	%
	Free Cash Flow*	 	25	%
	Revenue Growth**	 	35	%

	*
	Defined
as cash flow from operations less capital expenditures.

	**
	Assumes
constant foreign exchange and excludes divested businesses. 

        Actual
funding levels for each category will be interpolated at 1% intervals. Performance resulting in below 50% funding will result in zero payout for that category. Results from 50% to
150% will be specified in 1% increments. Under no circumstances will a category achieve higher than 150% funding. The funding for each category will be weighted accordingly and added together to
achieve a total financial performance funding amount. 

        The
Plan Administrator shall have sole discretion to determine if, and to what extent, the financial performance targets have been satisfied. 

Key Operating Drivers (KODs)

2004 EIP bonus funding will be further modified by achievement of five Edwards Lifesciences Key Operating Drivers (KODs). The Plan Administrator shall set the five 2004 KODs that apply generally to
employees. The following regions or organizations, however, shall establish their own KODs: Asia, Europe, Japan, Latin America, North America, and PVT. 

        Each
Executive Leadership Team member responsible for a region/organization will: 

	•
	Identify
and communicate KODs for their respective business, region or function;

	•
	Track
and communicate progress on the KODs; and

	•
	Recommend
the number of KODs achieved for payout. 

        Where
applicable, regions/organizations should align KODs to corporate KODs established by the Plan Administrator. 

        At
the end of the plan year, each KOD will be assessed as either achieved or not achieved. 

        Exhibit B provides an example of how the bonus amount would be funded assuming
attainment of a certain level of financial performance (as determined by the Plan Administrator) and as modified by KOD achievement for an organization
with five KODs. 

TARGET BONUS LEVELS  

        Unless determined otherwise by the Plan Administrator or its designee, the target bonus amounts are expressed as a percentage of an employee's 2004 eligible
earnings. If a participant had a job change during the plan year that affected bonus level, the target bonus level for purposes of this EIP will be the target bonus applicable at the year end. 

3

 

        If
a participant transferred to another Edwards Lifesciences business, region or function during the plan year, the KOD achievement of the organization that the participant belonged to
at year-end will be used for calculating bonus funding. 

        Participants
may receive more or less than their target bonus amounts depending on bonus funding and PMO achievement. 

ACTUAL BONUS PAYOUTS  

        A participant's actual bonus payout amount will be based on individual achievement of 2004 Performance Management Objectives (PMOs). These PMOs must be
established with the participant's manager at the beginning of the year. PMOs should reflect a balance between team and individual goals, financial and non-financial goals, and be clearly
aligned with Edwards' business goals and the organization's Key Operating Drivers. 

        At
the end of the plan year, managers and EIP participants will evaluate and discuss individual PMO achievement levels. Achievement percentages may range from 0% to 200%. Unless
determined otherwise by the Plan Administrator or its designee, for every 1% awarded over 100%, a corresponding discount of 1% below 100% should be awarded to another participant so that the total PMO
pool adds up to approximately 100% (changes up or down must offset each other). Under no circumstances will a participant receive a payout greater than 200%. Actual bonus payouts will then be
calculated as follows: 

Payout = Target Bonus × EIP Bonus Funding % × PMO achievement %  

PAYMENT OF BONUSES  

        The Edwards Lifesciences Compensation and Governance Committee or its designee will review the bonus award recommendations in February 2005. 

        A
participant must be on the Edwards payroll with an "active" status when the bonus amount is paid except as provided in the Termination of Employment Section. EIP payouts will be issued
as soon as possible following the February Board of Directors meeting. 

        The
appropriate withholdings will be deducted from the bonus award including any withholding for employees subject to tax laws of other countries. EIP bonuses are also considered to be
part of benefit pay. Contributions to the Edwards 401(k) Savings and Investment Plan, 1165(e) Savings Plan and the Edwards Executive Option Plan will also be deducted where appropriate. Employee Stock
Purchase Plan payments will not be deducted from bonus pay. 

TERMINATION OF EMPLOYMENT  

        Participants who voluntarily sever their employment with Edwards or who are involuntarily terminated for reasons other than those listed below during the plan
year or in the following year before bonus payments are actually made are ineligible for 2004 EIP bonus payouts. 

        Participants
who: 

	1.
	are
involuntarily terminated due to a reduction in force, departmental restructuring or job redefinition;

	2.
	become
permanently disabled;

	3.
	retire;
or

	4.
	die 

after
at least six months of service during the plan year are eligible for bonus payouts based on their actual eligible earnings. The bonus amounts in these cases will be based on the full year of
business performance for funding purposes and the participant's actual level of PMO completion. 

EXCEPTIONS  

        The Plan Administrator or its designee must approve any exception to these guidelines. 

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EXHIBIT A  
    

Eligible Earnings  

        For purposes of the 2004 Edwards Lifesciences Incentive Plan eligible earnings shall include: 

	1.
	Payments
in lieu of salary increases;

	2.
	Call
in pay;

	3.
	Commission
pay;

	4.
	Double
time pay;

	5.
	Draws
toward commissions;

	6.
	Funeral
pay;

	7.
	Holiday
pay;

	8.
	Jury
duty pay;

	9.
	Lead
pay;

	10.
	Mileage
pay for long haul truckers;

	11.
	Military
pay;

	12.
	Overtime
pay;

	13.
	Paid
absences;

	14.
	Retroactive
pay;

	15.
	Salary
or other regular pay;

	16.
	Shift
differentials;

	17.
	Sick
pay or other short-term disability pay;

	18.
	Straight
time pay; and

	19.
	Vacation
pay. 

        For
purposes of the Edwards Lifesciences Incentive Plan (EIP) eligible earnings shall not include: 

	1.
	Bonuses
including incentive bonuses under any Edwards Incentive Plan, the Edwards Performance Bonus Plan and any other bonus plans;

	2.
	Amounts
constituting imputed income arising from any Edwards moving expense reimbursement policies, any Edwards life insurance plans or any other Edwards fringe benefit plans;

	3.
	Amounts
paid to replace benefits; and

	4.
	The
following amounts paid, accrued or imputed:

	a.
	attendance
awards;

	b.
	automobile
allowances;

	c.
	business
expense reimbursements;

	d.
	cash
prizes or awards;

	e.
	Christmas
gifts;

	f.
	Contest
pay;

	g.
	Deferred
compensation, including deferred bonuses;

	h.
	Discretionary
awards;

	i.
	Employee
referral awards;

	j.
	Executive
perquisite allowances;

	k.
	Hiring
bonuses;

	l.
	Income
from sale of stock;

	m.
	Income
from the exercise of stock options;

	n.
	Interest
earnings and deferred compensation, including deferred bonuses;

	o.
	Invention
fees and awards;

	p.
	Long-term
disability pay;

	q.
	Mortgage
differential payments;

	r.
	Non-cash
prizes or awards;

	s.
	Pay
for unused sick time;

	t.
	Performance
shares;

	u.
	Promotional
awards;

	v.
	Relocation
expense reimbursements;

	w.
	Restricted
stock rights;

	x.
	Retention
bonuses;

	y.
	Severance
pay;

	z.
	Stock
appreciation rights;

	aa.
	Tax
equalization payments to expatriates;

	bb.
	Technical
achievement awards;

	cc.
	Travel
allowances; and

	dd.
	Tuition
reimbursements; and workers' compensation benefits. 

 
 

EXHIBIT B  
    

Example  

Funding and Payout Determination for 2004 EIP  

Assumptions Box  

	Eligible Earnings:	 	$	80,000	 
	Target Bonus Opportunity:	 	 	10	%
	Target Bonus Amount:	 	$	8,000	 

	Financial Performance
 
	 	% of Target

Earned1
	 	Weight
	 	Funding %

Per

Category
	 
	Net Income	 	100	%	40	%	40.00	%
	Free Cash Flow	 	125	%	25	%	31.00	%
	Revenue Growth	 	100	%	35	%	35.00	%
	Funding Based on Financial Measures	 	 	 	 	 	106.00	%
	KOD Achievement: 3 (100%)	 	 	 	 	 	 	 

EIP Funding Matrix  

	 
	 	KOD Modifiers
 
	 	Financial Performance Measures
 
	 
	 
	 	# KODs Achieved
	 	Modifier
	 	@80% of Target
	 	@100% of Target
	 	@106% of Target
	 	@125% of Target
	 
	5 KODs	 	5	 	150	%	120	%	150	%	159	%	188	%
	 	 	4	 	125	%	100	%	125	%	133	%	156	%
	 	 	3	 	100	%	80	%	100	%	106	%	125	%
	 	 	2	 	75	%	60	%	75	%	80	%	94	%
	 	 	1	 	50	%	40	%	50	%	53	%	63	%
	 	 	0	 	25	%	20	%	25	%	27	%	31	%

Payout (Assuming 106% Funding and 100% PMO Completion)  

	Target
	 	Funding @ 106%
	 	PMO%
	 	Payout

	8,000	 	$	8,480	 	100	%	$	8,480

	1
	The
Plan Administrator shall have sole discretion to determine if, and to what extent, the financial performance targets have been satisfied. 

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Exhibit 10.25

EXHIBIT A

EXHIBIT BExhibit 4.1  

 

WATSON
PHARMACEUTICALS, INC. 

as
Issuer 

71/8%
SENIOR NOTES DUE 2008 

SECOND
SUPPLEMENTAL INDENTURE

Dated as of February 20, 2004 

WACHOVIA
BANK, NATIONAL ASSOCIATION (formerly known as First Union National Bank) 

as
Trustee 

 

   
        SECOND SUPPLEMENTAL INDENTURE dated as of February 20, 2004, (the "Supplemental Indenture") between WATSON
PHARMACEUTICALS, INC., a Nevada corporation (the "Issuer") and Wachovia Bank, National Association, a national banking association (formerly
known as First Union National Bank), as trustee (the "Trustee"), to the indenture, dated as of May 18, 1998 among the Issuer and the Trustee, as
supplemented on May 18, 1998 (the "Indenture"). 

W I T N E S S E T H:  

        WHEREAS, the Issuer, the Guarantors and the Trustee have heretofore executed and delivered the Indenture providing for the issuance of 71/8% Senior
Notes due 2008 (the "Notes") of the Issuer; 

        WHEREAS,
there is currently outstanding under the Indenture $150,000,000 in aggregate principal amount of the Notes; 

        WHEREAS,
Section 902 of the Indenture provides that the Issuer and the Trustee may, with the written consent of the Holders of at least a majority in principal amount of the Notes
then outstanding voting as a single class, (i) enter into a supplemental indenture for the purpose of amending the Indenture or (ii) waive compliance with any provision of the Indenture
with the consent of the Holders of a majority in principal amount of the Notes then outstanding voting as a single class; 

        WHEREAS,
the Issuer has offered to purchase all of the outstanding Notes upon the terms and subject to the conditions set forth in the Offer to Purchase and Solicitation Statement dated
February 5, 2004 as the same may be further amended, supplemented or modified (the "Offer"); 

        WHEREAS,
the Offer is conditioned upon, among other things, the proposed amendments and waivers (the "Proposed Amendments") to the
Indenture set forth herein having been approved by the holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (and a supplemental indenture in
respect thereof having been executed and delivered), with the operativeness of such Proposed Amendments with respect to the Notes being subject to the acceptance by the Issuer of such Notes tendered
pursuant to the Offer; 

        WHEREAS,
the Issuer has received and delivered to the Trustee the Consents (as defined in the Offer) to effect the Proposed Amendments under the Indenture; 

        WHEREAS,
the Issuer has been authorized by a resolution of its Board of Directors to enter into this Supplemental Indenture; and 

        WHEREAS,
all other acts and proceedings required by law, by the Indenture, by the articles of incorporation and by-laws of the Issuer, to make this Supplemental Indenture a
valid and binding agreement for the purposes expressed herein, in accordance with its terms, have been duly done and performed; 

        NOW,
THEREFORE, in consideration of the premises and the covenants and agreements contained herein, and for other good and valuable consideration the receipt of which is hereby
acknowledged, and for the equal and proportionate benefit of the Holders of the Notes, the Issuer and the Trustee hereby agree as follows: 

        Section 1.    Deletion of Certain Provisions

        Pursuant
to the terms of the Offer and the consent of Holders representing at least a majority in principal amount of the Notes then outstanding voting as a single class, the Indenture
is hereby amended to delete the following sections in their entirety and, in the case of each such section, insert in lieu thereof the phrase "Intentionally Omitted", and any and all references to
such sections, any and all obligations thereunder and any default, event of default or other consequence under the Indenture of failing to comply solely to the following sections are hereby deleted
throughout the Indenture, and such sections and references shall be of no further force or effect. 

1

 

	•
	Section 801
(Company May Consolidate, Etc., Only on Certain Terms)

	•
	Section 802
(Successor Substituted);

	•
	Section 501
(4) (Events of Default);

	•
	Section 501
(5) (Events of Default);

	•
	Section 501
(6) (Events of Default);

	•
	Section 1005
(Purchase of Securities by Company or Subsidiary);

	•
	Section 1006
(Statement by Officer as to Default);

	•
	Section 1008
(Limitation on Liens);

	•
	Section 1009
(Limitations on Sale and Leaseback Transactions);

	•
	Section 1010
(Subsidiary Guarantees);

	•
	Section 1011
(Additional Guarantors); and

	•
	Section 1012
(Restrictions on Subsidiary Indebtedness) (collectively, the "Amended Sections"). 

        Section 2.    Effectiveness; Operativeness

        This
Supplemental Indenture (other than Section 1 hereof) will become effective and binding upon the Issuer, the Guarantors, the Trustee and the Holders as of the date hereof and
will not become operative unless and until validly tendered Securities are purchased pursuant to the Offer on the early settlement date. 

        Section 3.    Reference to and Effect on the Indenture

        (a)   On
and after the effective date of this Supplemental Indenture, each reference in the Indenture to "this Indenture," "hereunder," "hereof," or "herein" shall mean and be
a reference to the Indenture as supplemented by this Supplemental Indenture unless the context otherwise requires. 

        (b)   Except
as specifically amended above, the Indenture shall remain in full force and effect and is hereby ratified and confirmed. 

        Section 4.    Governing Law

        THIS
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED AND CONSTRUED BY THE INTERNAL LAW OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 

        Section 5.    Defined Terms

        Unless
otherwise indicated, capitalized terms used herein and not defined shall have the respective meanings given such terms in the Indenture. 

        Section 6.    Trust Indenture Act Controls

        If
any provision of this Supplemental Indenture limits, qualifies or conflicts with another provision of this Supplemental Indenture or the Indenture that is required to be included by
the Trust Indenture Act of 1939, as amended (the "Act"), as in force at the date this First Supplemental Indenture is executed, the provision required
by said Act shall control. 

        Section 7.    Trustee Disclaimer

2

 

        The
recitals contained in this Supplemental Indenture shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to the validity or sufficiency of this Supplemental Indenture. 

        Section 8.    Counterparts and Method of Execution

        This
Supplemental Indenture may be executed in several counterparts, all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the
parties have not signed the same counterpart. 

        Section 9.    Titles

        Section
titles are for descriptive purposes only and shall not control or alter the meaning of this Supplemental Indenture as set forth in the text. 

        Section 10.    Severability

        In
case any provision of this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any
way be effected or impaired thereby. 

[Signature page follows]

3

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be executed as of the day and year first above written. 

	 	 	WATSON PHARMACEUTICALS, INC.
	

 	
 	

By:	
 	

/s/  DAVID A. BUCHEN      

	 	 	 	 	Name:	 	David A. Buchen
	 	 	 	 	Title:	 	Senior Vice President, General Counsel and Secretary
	

 	
 	

WACHOVIA BANK, NATIONAL ASSOCIATION, AS TRUSTEE
	

 	
 	

By:	
 	

/s/  PATRICK L. TEAGUE      

	 	 	 	 	Name:	 	Patrick L. Teague
	 	 	 	 	Title:	 	Vice President

4

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