Exhibit
10.26
Angus
Russell
Subject: Amendment
of Service Agreement
Dear
Angus:
This
letter agreement sets forth amendments to the Service Agreement between you and
Shire Limited dated July 2, 2008 (the “Service Agreement”), effective
January 1, 2010. These amendments are intended to reflect the
relocation of your principal place of employment to the United
States.
Shire
Pharmaceutical Inc (the ‘Company’) shall replace Shire
Limited in the Service Agreement as the employing company.
The
Company will pay a US dollar equivalent salary. This will be
calculated using the average exchange rate between the USD and GBP for December
(1.62). After the 2009 Annual Review Process, a new salary will be
set in USD and no longer require an exchange rate calculation.
1. Amendments
to Clause 1 (Commencement and Term)
Clause 1.3.2(a) is hereby amended to
add the words “and, to the extent required, consistent with the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),” after the words
“Remuneration Committee”.
2. Amendments
to Clause 4 (Remuneration)
Clause 4 is hereby amended to add the
following text as Clause 4.4:
4.4 To
the extent necessary to permit the deductibility of the Executive’s compensation
under section 162 of the Code, the Company may pay the remuneration contemplated
under Clauses 4.1 to 4.3 in a manner that excludes that remuneration from the
definition of “applicable employee remuneration” as defined in section 162(m) of
the Code. In furtherance of this objective, and notwithstanding any
provisions of the EAIP to the contrary, the Company may set performance goals in
a manner and form consistent with section 162(m)(4)(C) of the Code.
3. Amendments
to Clause 6 (Pension Scheme)
Clause 6.1 is hereby amended by
replacing, in its entirety, the third sentence of Clause 6.1 with “Such
contributions shall be made from time to time to a 401(k) plan and one or more
non-qualified deferred compensation plans, in each case sponsored by the Company
or an Associated Company.”
4. Amendments
to Clause 7 (Insurances)
Clause 7 is hereby amended to number
the opening paragraph of that Clause “7.1”, and by adding the following text as
Clause 7.2:
7.2 Without
limiting the provisions of Clause 7.1, the Executive shall be entitled to
benefits required to be provided under the Consolidated Omnibus Reconciliation
Act of 1985, as amended, at the Executives expense. COBRA provides eligible
former employees and their eligible dependents (e.g., legal spouse, dependent
children) the right to temporary continuation of health insurance coverage at
group rates (e.g., under a corporate health plan). Continued group health
insurance coverage under COBRA is intended to ensure that eligible individuals
can maintain health insurance at group rates. In order for COBRA to apply
a “qualifying event” (such as termination of employment) must occur. COBRA
benefits due to termination of employment will be offered for up to a maximum of
18 months from termination.
5. Amendments
to Clause 8 (Other Benefits)
Clause 8
is hereby amended by deleting the current Clause 8 in its entirety and adding
the following text as the new Clause 8:
Executive shall be eligible for
Company’s employee benefit plans in accordance with the terms and conditions of
each plan as may be amended by Company in the future at the Company’s
discretion. Executive shall be provided with a cash benefit of US
$2,430.00 per calendar month, representing the cash alternative to providing
Executive with a company car. This amount shall be paid rateably
every pay period with salary and will be subject to applicable tax
withholdings. This payment is intended to enable the Executive to
purchase, maintain, comprehensively insure and tax a car for his use during the
continuance of his employment, together with the reimbursement of all business
and reasonable private petrol. All reimbursements which are subject
to Code Section 409A shall be paid to the Executive as soon as practicable after
submission of the required documentation, but no later than December 31 of the
year following the year during which such expense was incurred.
6. Amendments
to Clause 9 (Expenses)
Clause 9 is hereby amended by deleting
the current Clause 9.2 in its entirety and adding the following text as the new
Clause 9.2:
9.2 The
Company shall, under its Executive financial Services Reimbursement Programme,
provide the Executive with the sum of $10,000 per annum (less any deductions the
Company is required to make by law) towards the cost of legal expenses and
financial planning services.
7. Amendments
to Clause 15 (Termination of Employment)
Clause 15 is hereby amended to add the
following text as Clause 15.6:
15.6 In
the event it shall be determined that any payment or benefit the Executive
receives from the Company (a “Payment”) would be subject to
the excise tax imposed by Section 4999 of the Code, or any interest or penalties
are incurred by the Executive with respect to such excise tax (together, the
“Excise Tax”), the
Executive shall be entitled to receive an additional payment (the “Additional 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 any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Additional Payment, the Executive retains an amount on an
after-tax basis of the Additional Payment equal to the Excise Tax imposed upon
all such Payments.
8 Amendments
to Clause 18 (Taxation)
Clause 18 is hereby amended by deleting
the current Clauses 18.1 and 18.2 in their entirety and adding the following
text as new Clauses 18.1 and 18.2:
18.1 During
the continuance of his employment the Executive may be required to work in the
UK or such other jurisdiction as the Company may request from time to time (the
‘Foreign
Jurisdiction’). The provisions of this paragraph will only
apply if and to the extent required to avoid the imposition of taxes, interest
and penalties on the Executive under Section 409A of the Code (“Section 409A”) or under
Section 457A of the Code (“Section 457A”). Section 409A
and Section 457A apply to nonqualified deferred compensation which exists if an
individual has a “legally binding right” to compensation that is or may be
payable in a later year. In furtherance of the objective of this
paragraph, to the extent that any regulations or other guidance issued under
Section 409A or Section 457A would result in the Executive being subject to
payment of taxes, interest or penalties under Section 409A or Section 457A, the
Executive and the Company agree to use their best efforts to amend the Service
Agreement in order to avoid or limit the imposition of any such taxes, interest
or penalties, while maintaining to the maximum extent practicable the original
intent of the applicable provisions. This Clause 18.1 does not
guarantee that the Executive will not be subject to taxes, interest or penalties
under Section 409A or under Section 457A with respect to compensation or
benefits described or referenced in this Agreement.
18.2 The
Company shall ensure that the Executive is covered by a tax equalization
programme so that, if for any reason the Executive is subject to tax (as a
direct result of business duties) in the Foreign Jurisdiction in respect of his
remuneration under this Agreement which is not credible in the US, then a
reconciliation will be undertaken to ensure that, so far as practicable, the net
tax position of the Executive is no worse than it would have been had he only
been subject to US tax in respect of such earnings. Furthermore and
notwithstanding any provision of this Agreement to the contrary, to the extent
necessary to avoid the imposition of taxes, interest and penalties on the
Executive under Section 409A, if at the time of the termination of the
Executive’s employment the Executive is a “specified employee” (as defined in
Section 409A), the Executive will not be entitled to any payments upon
termination of employment until the first day of the seventh month after the
termination of employment and any such payments to which the Executive would
otherwise be entitled during the first six months following the Executive’s
termination of employment will be accumulated and paid without interest on the
first day of the seventh month after the termination of employment.
9. Clause
24 (Definitions and Interpretation)
Clause 24.9 is hereby amended to
replace the words “laws of Jersey” with “laws of the Commonwealth of
Pennsylvania”, and the words “of the Jersey courts” with “of the courts of the
Commonwealth of Pennsylvania”.
Clause 3.1 is hereby amended to add
“(UK)” following the words “Financial Services and Markets Act
2000”.
Clause 15.1(e) is hereby amended to add
“(UK)” following the words “Insolvency Act 1986”.
Clause 15.1(f) is hereby amended to add
“(UK)” following the words “Mental Health Act 1983”.
Clause 15.2(e) is hereby amended to add
“(UK)” following the words “Employment Rights Act 1996”.
Clause 17.1(b) is hereby amended to add
“(UK)” following the words “Income and Corporate Taxes Act 1988”.
Clause 24.1 is hereby amended to add
“(UK)” following the words “Companies Act 1985” in the definition of Associated
Company.
Please
acknowledge your agreement with the terms of this letter agreement by signing
and dating the enclosed copy and returning it to me on or before January 15,
2009.
Sincerely,
Scott
Applebaum
SVP,
Associate General Counsel
Accepted
and Agreed:
(signature)
