CONSULTING AGREEMENT
AGREEMENT dated as of the 24th day of July, 2000 (the
"Agreement"), between ChiRex Inc., a Delaware corporation
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(the "Company"), and Michael A. Griffith (the "Consultant").
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W I T N E S S E T H
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WHEREAS, in connection with the transactions contemplated by that
certain Agreement and Plan of Merger, dated as of the date hereof, among Rhodia,
a French corporation ("Parent"), Cousin Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of Parent, and the Company (the "Merger
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Agreement"), the Company will become a wholly owned subsidiary of Parent; and
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WHEREAS, following the transactions contemplated by the Merger
Agreement, the Company and Parent wish to have Consultant provide services to
the Company and Parent for the period provided in this Agreement and Consultant
wishes to provide services to the Company and Parent for such period, on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Consultancy. The Company hereby agrees to retain the services of
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Consultant, and Consultant hereby agrees to provide consulting services to the
Company and Parent, subject to the terms and conditions of this Agreement,
during the period (the "Consulting Period") commencing on the date on which the
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consummation of the Offer (as defined in the Merger Agreement) occurs (the
"Effective Date") and ending on the expiration of the eighteen-month period
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immediately following the Effective Date or, if earlier, the date on which the
Consulting Period is terminated in accordance with this Agreement (the "Date of
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Termination"). Effective on the Effective Date, Consultant shall cease to be
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the Chief Executive Officer (or otherwise an employee) of the Company.
2. Services to be Provided. (a) During the first six (6) months of
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the Consulting Period (the "Transition Period"), Consultant shall provide
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consulting services on a full-time basis in connection with the business of the
Company as are reasonably requested of Consultant by Jean-Claude Bravard and
Michel Marien (or their respective successors) of Parent from time to time.
During the Transition Period, such consulting services shall be performed
primarily from Consultant's home in Connecticut or at the Company's principal
executive offices in Stamford, Connecticut; provided, that if such
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offices cease to be used by the Company, at such other suitable offices in the
Stamford/Greenwich, Connecticut area. During the Transition Period, the Company
shall provide (consistent with the preceding sentence) Consultant with an
office, office facilities and a secretary substantially comparable to those
provided to Consultant by the Company immediately prior to the Effective Date.
(b) During the period commencing on the expiration of the Transition
Period and ending on the expiration of the Consulting Period (the "Part-Time
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Consulting Period"), Consultant shall continue to provide consulting services to
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the Company and Parent as described in Section 2(a) hereof; provided, that (i)
Consultant shall not be required to devote more than ten (10) hours per month to
such consulting services, and (ii) such consulting services shall be performed
at such times and places as may be reasonably requested by the Company and
consistent with Consultant's other activities.
3. Compensation. (a) Consulting Fees. During the Transition
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Period, the Company shall pay Consultant, in cash, a total of $250,000 in
consulting fees, payable in equal monthly installments. During the Part-Time
Consulting Period, the Company shall pay Consultant, in cash, a total of
$200,000 in consulting fees, payable in equal monthly installments. All amounts
paid or payable under this Section 3(a) are referred to herein as the
"Consulting Fees".
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(b) Executive Retention Award. Consultant shall be entitled to
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receive an incentive payment (the "Executive Retention Payment") in an amount of
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$1,050,000, payable in cash on the Effective Date, in the event that (i) each of
Bruce Shutts, Ian Shott and Stuart Needleman signs an employment agreement with
the Company in accordance with the term sheets attached hereto as Exhibit A
(each, a "New Employment Agreement"), and each such New Employment Agreement
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remains in full force and effect on the Effective Date, and (ii) each of Eric N.
Jacobsen, Stephen Buchwald, Andrew Myers and K. Barry Sharpless signs a
consulting agreement (or an amendment to his consulting agreement in effect on
the date hereof, as the case may be) (each, a "New Consulting Agreement") with
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the Company in accordance with the term sheets attached as Exhibit A hereto, and
each such New Consulting Agreement remains in full force and effect on the
Effective Date. The Executive Retention Payment shall be reduced (i) by
$216,666 for each of Messrs. Shutts, Shott and Needleman who does not have a New
Employment Agreement in full force and effect on the Effective Date, and (ii)
by $100,000 for each of Messrs. Jacobsen, Buchwald, Myers and Sharpless who does
not have a New Consulting Agreement in full force and effect on the Effective
Date.
(c) Customer Retention Award. Consultant agrees to use his reasonable
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best efforts to retain the business of the Company's Specified Customers (as
defined below) through the first anniversary of the Effective Date (the
"Retention Period"), subject to Parent using its reasonable best efforts to
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cause the Company to provide services to the Specified Customers of a
professional quality on a basis consistent with the past practice of the Company
prior to the Effective Date. For purposes of this Agreement, "Specified
Customers" means the customers that are anticipated to be the ten
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(10) largest customers of the Company during the 2001 calendar year, as
determined in accordance with the Company's 2001 business plan as provided to
Parent prior to the date hereof (the "2001 Business Plan"). Consultant shall be
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entitled to receive an additional incentive payment (the "Customer Retention
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Payment") up to a maximum amount of $2,200,000, payable in cash in the manner
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described below, based on Consultant's efforts to retain the Specified Customers
through the Retention Period, and the extent to which the business of the
Specified Customers (excluding for such purpose the impact of the contribution
of Parent's businesses to the Company) has actually been retained through
December 31, 2001. The aggregate Customer Retention Payment shall be reduced by
the sum of (i) an amount equal to $70,000 multiplied by the number of Specified
Customers, if any, with respect to which Consultant has not used his reasonable
best efforts to retain through the Retention Period (provided, however, that
Consultant shall be deemed to have used his reasonable best efforts in respect
of each retained Specified Customer), plus (ii) an amount equal to $1,500,000
multiplied by a fraction, the numerator of which is the amount by which the
actual gross revenues from all Specified Customers, taken as a whole, during
calendar years 2000 and 2001 (excluding for such purpose the impact of the
contribution of Parent's businesses to the Company), falls short of the
projected gross revenues from all Specified Customers, taken as a whole, during
calendar years 2000 and 2001 as specified in the Company's 2000 business plan as
provided to Parent prior to the date hereof (the "2000 Business Plan") and the
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2001 Business Plan, and the denominator of which is the projected gross revenues
from all Specified Customers, taken as a whole, during calendar years 2000 and
2001 as specified in the 2000 Business Plan and 2001 Business Plan; provided,
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however, that no reduction in the Customer Retention Payment shall be made
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under this clause (ii) in respect of a Specified Customer to the extent that any
reduction in the actual gross revenues from such Specified Customer during
calendar years 2000 and 2001 is attributable to the failure of Parent following
the Effective Date to use its reasonable best efforts to cause the Company to
provide services to such Specified Customer of a professional quality on a basis
consistent with the past practice of the Company prior to the Effective Date.
The Customer Retention Payment shall be payable as follows: an amount equal to
$700,000, less the amount of the reductions, if any, determined in accordance
with the immediately preceding clause (i), shall be payable as soon as
practicable following the first anniversary of the Effective Date; and an amount
equal to $1,500,000, less the amount of the reductions, if any, determined in
accordance with the immediately preceding clause (ii), shall be payable on the
first business day in January of 2002.
(d) Additional Consideration. Consultant shall be eligible to
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receive the Restrictive Covenant Consideration (as defined in Section 7(d)
hereof) in accordance with the terms and conditions provided therein.
(e) Retirement, Savings, Welfare and Fringe Benefit Plans. During
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the Consulting Period, Parent or the Company shall provide Consultant with
benefits (including, without limitation, retirement, savings, medical, dental,
disability and life insurance coverages), at the Company's expense (subject to
any cost sharing generally required immediately prior to the Effective Date by
Consultant to receive such coverages)
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that are no less favorable in the aggregate than the employee benefits provided
to Consultant immediately prior to the Effective Date; provided, that if such
coverages are not permitted to be provided under the terms of the Company's or
Parent's benefit plans, the Company shall provide Consultant with an additional
cash payment in an amount sufficient to provide such coverages outside the
Company's and Parent's benefit plans.
(f) Reimbursement of Expenses. During the Consulting Period, the
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Company shall reimburse Consultant for all expenses reasonably and actually
incurred by Consultant in the performance of Consultant's services hereunder.
4. Termination of Consulting Services during the Consulting Period.
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Subject to the terms of this Agreement, the Consulting Period may be terminated
as follows:
(a) Death. The Consulting Period shall terminate automatically upon
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Consultant's death.
(b) Cause. The Company may terminate the Consulting Period for
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Cause. For purposes of this Agreement, "Cause" shall mean:
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(i) the conviction of Consultant of a felony or conviction of a
misdemeanor if such misdemeanor involves moral turpitude; or; or
(ii) Consultant's voluntary engagement in conduct constituting
larceny, embezzlement, conversion or any other act involving the
misappropriation of Company funds in the course of his performance of
services hereunder; or
(iii) the willful refusal by Consultant to carry out specific
directions of Jean-Claude Bravard or Michel Marien (or their respective
successors) of Parent, which directions shall be consistent with the
provisions hereof; or
(iv) Consultant's committing any act of gross negligence or
intentional misconduct in the performance or non-performance of his
services hereunder; or
(v) any material breach by Consultant of any material provision of
this Agreement (other than for reasons related only to the business
performance of the Company or business results achieved by Consultant).
For purposes of this provision, no act or failure to act on
Consultant's part shall be considered to be reason for termination for Cause if
done, or omitted to be done, by Consultant in good faith and with the reasonable
belief that the action or omission was in the best interests of the Company.
Any termination of the Consulting Period by the Company for Cause shall be
communicated by advance written notice that sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Consulting Period and specifies the intended Date of Termination.
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(c) Other than for Cause. The Company may terminate the Consulting
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Period at any time other than for Cause.
(d) Voluntary Termination. Consultant may terminate the Consulting
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Period at any time after the expiration of the Transition Period, or on 30 days'
notice to the Company during the Transition Period; provided that such notice
shall not be given earlier than the consummation of the Merger (as such term is
defined in the Merger Agreement).
5. Obligations of the Company Upon Termination. Following any
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termination of the Consulting Period, in addition to any benefits described
below in this Section 5, the Company shall pay Consultant all Consulting Fees
through the Date of Termination and any amounts owed to Consultant pursuant to
the terms and conditions of the benefit plans and programs of the Company at the
time such payments are due.
(a) Other than for Cause. If the Company terminates the Consulting
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Period other than for Cause, then within ten (10) days of the Date of
Termination, the Company shall pay Consultant a lump sum payment in cash equal
to the sum of (x) $450,000, less any Consulting Fees already paid to Consultant,
plus (y) $2,200,000, less any portion of the Customer Retention Payment already
paid to Consultant, and no further amounts shall be payable under Sections 3(a)
and 3(c) hereof. Consultant shall remain eligible to receive the Restricted
Covenant Consideration without regard to the termination of the Consulting
Period. In addition, the Company shall continue to provide Consultant (and/or
Consultant's family) with the benefits described under Section 3(e) hereof (as
if the Consulting Period had not been terminated), through the expiration of the
eighteen-month period immediately following the Effective Date or, if earlier,
through the date on which Consultant becomes employed (other than self-employed)
on a full-time basis.
(b) Cause; Voluntary Termination. If the Consulting Period is
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terminated by the Company for Cause or voluntarily by Consultant, Consultant
shall not be entitled to receive any Consulting Fees in respect of any period
subsequent to the Date of Termination, or continuation of the benefits described
in Section 3(e) hereof. Consultant shall remain eligible to receive all other
payments in accordance with the terms and conditions of this Agreement
(including, without limitation, the Customer Retention Payment and the
Restrictive Covenant Consideration) without regard to the termination of the
Consulting Period.
(c) Death after Termination. In the event of Consultant's death
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following the Date of Termination, Consultant's designated beneficiary shall be
entitled to receive the balance of the payments under this Agreement; or in the
event there is no designated beneficiary, the remaining payments shall be made
to Consultant's estate.
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6. Gross-Up Payment. (a)Anything in this Agreement to the contrary
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notwithstanding, in the event it shall be determined that any payment, award,
benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) to or for the
benefit of Consultant (whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 6 (the "Payments") would be subject to the excise tax imposed
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by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
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or any interest or penalties are incurred by Consultant with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Company
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shall pay to Consultant an additional payment (a "Gross-Up Payment") in an
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amount such that after payment by Consultant of all taxes (including any Excise
Tax) imposed upon the Gross-Up Payment, Consultant retains an amount of the
Gross-Up Payment equal to the sum of (x) the Excise Tax imposed upon the
Payments and (y) the product of any deductions disallowed because of the
inclusion of the Gross-up Payment in Consultant's adjusted gross income and the
highest applicable marginal rate of federal income taxation for the calendar
year in which the Gross-up Payment is to be made. For purposes of determining
the amount of the Gross-up Payment, Consultant shall be deemed to (i) pay
federal income taxes at the highest marginal rates of federal income taxation
for the calendar year in which the Gross-up Payment is to be made, and (ii) pay
applicable state and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.
(b) Subject to the provisions of Section 6(a), all determinations
required to be made under this Section 6, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior
to the Effective Date (the "Accounting Firm") which shall provide detailed
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supporting calculations both to the Company and Consultant within fifteen (15)
business days of the receipt of notice from the Company or Consultant that there
has been a Payment, or such earlier time as is requested by the Company
(collectively, the "Determination"). In the event that the Accounting Firm is
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serving as accountant or auditor for Parent, Consultant may appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company and the Company shall enter into any agreement requested
by the Accounting Firm in connection with the performance of the services
hereunder. The Gross-up Payment under this Section 6 with respect to any
Payments shall be made no later than thirty (30) days following such Payment.
If the Accounting Firm determines that no Excise Tax is payable by Consultant,
it shall furnish Consultant with a written opinion to such effect, and to the
effect that failure to report the Excise Tax, if any, on Consultant's applicable
federal income tax return will not result in the imposition of a negligence or
similar penalty. The Determination by the Accounting Firm shall be binding upon
the
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Company and Consultant. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the Determination, it is possible that
Gross-up Payments which will not have been made by the Company should have been
made ("Underpayment") or Gross-up Payments are made by the Company which should
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not have been made ("Overpayment"), consistent with the calculations required
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to be made hereunder. In the event that Consultant thereafter is required to
make payment of any Excise Tax or additional Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the
benefit of Consultant. In the event the amount of the Gross-up Payment exceeds
the amount necessary to reimburse Consultant for his Excise Tax, the Accounting
Firm shall determine the amount of the Overpayment that has been made and any
such Overpayment (together with interest at the rate provided in Section
1274(b)(2) of the Code) shall be promptly paid by Consultant (to the extent he
has received a refund if the applicable Excise Tax has been paid to the Internal
Revenue Service) to or for the benefit of the Company. Consultant shall
cooperate, to the extent his expenses are reimbursed by the Company, with any
reasonable requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.
7. Confidential Information; Non-Competition; Non-Solicitation.
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(a) Consultant acknowledges and agrees that the information,
observations and data obtained by him while employed by the Company and its
subsidiaries concerning the business or affairs of the Company, Parent or any of
their subsidiaries ("Confidential Information") are the property of the Company,
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Parent or such subsidiary. Therefore, Consultant agrees to keep secret and
retain in the strictest confidence all Confidential Information, including
without limitation, trade "know-how" secrets, customer lists, pricing policies,
operational methods, technical processes, formulae, inventions and research
projects and other business affairs of the Company, Parent or any of their
subsidiaries learned by him in the course of his employment or consultancy prior
to or after the date of this Agreement, and not to disclose them to anyone
outside the Company, Parent or any of their subsidiaries, either during or after
his employment and consultancy with the Company, except (i) in the course of
performing his services hereunder; (ii) with the Company's express written
consent; (iii) to the extent that the Confidential Information becomes generally
known to and available for use by the public other than as a result of
Consultant's acts or omissions; or (iv) where required to be disclosed by court
order, subpoena or other government process. If Consultant shall be required to
make disclosure pursuant to the provisions of clause (iv) of the preceding
sentence, Consultant promptly, but in no event more than 48 hours after learning
of such subpoena, court order or other governmental process, shall notify the
Company, by personal delivery or fax (pursuant to Section 10 hereof), and, at
the Company's expense, shall take all reasonably necessary steps requested by
the Company to defend against the enforcement of such subpoena, court order or
other governmental process and permit the Company to intervene and participate
with counsel of its own choice in any related
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proceeding. Consultant shall deliver to the Company at the termination of the
Consulting Period, or at any other time the Company may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) relating to the Confidential Information
or the business of the Company, Parent or any of their subsidiaries which he may
then possess or have under his control.
(b) Consultant acknowledges that during his employment and
consultancy with the Company he has become familiar with the Company's trade
secrets and with other Confidential Information concerning the Company and its
predecessors and its subsidiaries and that his services have been and shall be
of special, unique and extraordinary value to the Company and its subsidiaries.
Therefore, Consultant agrees that during the two-and-a-half-year period
immediately following the Effective Date (the "Restricted Period"), he shall
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not, directly or indirectly, own any interest in, manage, control, actively
participate in, consult with, render services for, or in any manner engage in
any business competing with the businesses of the Company or its subsidiaries,
as such businesses exist on the Effective Date or as are contemplated in the
2000 Business Plan and 2001 Business Plan. Nothing herein shall prohibit
Consultant from holding less than a 2% equity or voting interest in any publicly
traded company that competes with the businesses of the Company or its
subsidiaries, as such businesses exist on the Effective Date or as are
contemplated in the 2000 Business Plan and 2001 Business Plan, so long as
Consultant has no active participation in the business of such corporation. For
purposes of this Section 7(b), "active participation" includes, without
limitation, acting directly or indirectly as an officer, director, proprietor,
employee, partner, investor, lender, consultant, advisor, agent or
representative.
(c) Consultant further agrees that during the five-year period
immediately following the Effective Date, he shall not, directly or indirectly,
solicit any person who on the date hereof is an employee or consultant of the
Company or any subsidiary, to leave the employ or cease providing services to
the Company or such subsidiary.
(d) In consideration for Consultant's agreements under Section 7(b)
and (c) hereof, the Company shall pay Consultant an aggregate amount in cash of
$5,000,000 (the "Restrictive Covenant Consideration"). The Restrictive Covenant
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Consideration shall be payable in two nonrefundable installments as follows:
$3,000,000 shall be paid on the last day of the Transition Period, and the
remaining $2,000,000 shall be paid on the last day of the Restricted Period.
(e) If, at the time of enforcement of this Section 7, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover
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the maximum period, scope and area permitted by law. Consultant agrees that the
restrictions contained in this Section 7 are reasonable.
(f) In the event of the breach or a threatened breach by Consultant
of any of the provisions of this Section 7, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security).
8. Arbitration; Fees and Expenses. (a) Any controversy or claim
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arising out of or relating to this Agreement, including the making,
interpretation or the breach thereof (other than (i) a claim solely for
injunctive relief for any alleged breach of the provisions of Section 7, as to
which the parties shall have the right to apply for specific performance to any
court having equity jurisdiction, and (ii) all determinations pursuant to
Section 6 hereof), shall be settled by arbitration in New York City by one
arbitrator in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof and any party to the
arbitration may, if elected by such party, institute proceedings in any court
having jurisdiction for the specific performance of any such award. The powers
of the arbitrator shall include, but not be limited to, the awarding of
injunctive relief. Disputes described in clauses (i) and (ii) of this Section
8(a) shall be subject to the exclusive jurisdiction of any state or federal
court in New York City, New York.
(b) The Company agrees to pay for all arbitration costs and
Consultant's reasonable attorneys' fees and expenses in connection with any
dispute arising out of this Agreement, unless any such arbitrator or court
finally determines that Consultant's claim was frivolous and not brought in good
faith.
9. Successors. (a) This Agreement is personal to Consultant and
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without the prior written consent of the Company shall not be assignable by
Consultant otherwise than by will or the laws of descent and distribution, and
any assignment in violation of this Agreement shall be void. This Agreement
shall inure to the benefit of and be enforceable by Consultant's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company, its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, or any business
of the Company for which Consultant's services are principally performed, to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement,
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"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
10. Indemnification. The Company will indemnify Consultant and his
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legal representatives, to the fullest extent permitted by the laws of the State
of Delaware and the existing by-laws of the Company or any other applicable laws
or the provisions of any other corporate document of the Company, and Consultant
shall be entitled to the protection of any insurance policies the Company may
elect to obtain generally for the benefit of its directors and officers, against
all costs, charges and expenses whatsoever incurred or sustained by him or his
legal representatives in connection with any action, suit or proceeding to which
he or his legal representatives may be made a party by reason of his being or
having been a director or officer of the Company or of any of its subsidiaries
or affiliates or actions taken purportedly on behalf of the Company or of any of
its subsidiaries or affiliates.
11. Notices. Any notice provided for in this Agreement shall be in
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writing and shall be deemed to have been duly given if delivered personally with
receipt acknowledged or sent by registered or certified mail or equivalent, if
available, postage prepaid, or by fax (which shall be confirmed by a writing
sent by registered or certified mail or equivalent on the same day that such fax
was sent), addressed to the parties at the following addresses or to such other
address as such party shall hereafter specify by notice to the other: if to
Consultant, at the last known address on the books of the Company; if to the
Company, at 300 Atlantic Street, Suite 402, Stamford, Connecticut 06901,
Attention: Legal Department.
12. Severability. Whenever possible, each provision of this
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
13. Miscellaneous. (a) This Agreement contains the entire
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agreement of the parties with respect to the subject matter hereof, and except
as otherwise set forth herein, supersedes all prior agreements, promises,
covenants, arrangements, communications, representations and warranties between
them, whether written or oral, with respect to the subject matter hereof.
(b) No provisions of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is agreed to in writing
signed by the parties hereto.
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(c) The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any party.
(d) This Agreement may be executed in separate counterparts, each of
which is deemed to be an original and all of which taken together constitute one
and the same agreement.
(e) The provisions of this Agreement are not intended to, nor shall
they be construed to require that Consultant mitigate the amount of any payment
provided for in this Agreement by seeking or accepting other employment, nor
shall the amount of any payment provided for in this Agreement be reduced by any
compensation earned by Consultant as a result of his employment by another
employer or otherwise. The Company's obligations to make the payments to
Consultant required under this Agreement, and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that the Company may have
against Consultant.
14. Governing Law. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE
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OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLE
OF CONFLICTS OF LAWS.
15. Effectiveness. This Agreement is conditioned upon the
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consummation of the Offer and shall be void ab initio and of no force and effect
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upon the occurrence of the termination of the Merger Agreement prior to the
consummation of the Offer. From and after the consummation of the Offer, this
Agreement shall supersede that certain Amended and Restated Employment
Agreement, dated as of July 11, 2000, between Consultant and the Company (the
"Prior Agreement"). For the avoidance of doubt, the parties agree that none of
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the provisions included in the Prior Agreement (including any severance
provision) shall be triggered as a result of the consummation of the Offer.
16. Headings. The headings in this Agreement are for convenience
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only and shall not be used to interpret or construe its provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CHIREX INC.
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By: /s/ Thomas Dubin
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Title: Vice President, General
Counsel and Secretary
/s/ Michael A. Griffith
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Acknowledged and agreed:
RHODIA
By: /s/ Jean-Claude Bravard
Title: Deputy President
Exhibit A to Consulting Agreement dated July 24, 2000 among ChiRex Inc., Michael
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A. Griffith and Rhodia
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PROPOSED TERMS OF
EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS
Certain Other Executives
1. General Terms; Effectiveness Messrs. Shott, Shutts and Needleman
(the "Executives") will enter into new
employment agreements (the "Executive
Agreements") with ChiRex, which will
be executed prior to the execution of
the merger agreement and will become
effective on the date of consummation
of the Offer (the "Effective Date").
The Executive Agreements will
supersede the Executives' current
employment agreements.
2. Term; Duties Each of the Executives will continue
in a senior executive position with
ChiRex, with responsibilities and
reporting obligations modified as
appropriate to reflect the integration
of ChiRex into the Rhodia group, but
with the same title as prior to the
execution of the merger agreement. The
period of employment under the
Executive Agreements will be the
period commencing on the Effective
Date and ending on the third
anniversary thereof (the "Executive
Employment Term").
3. Compensation
a. Base Salary During the Executive Employment Term,
each Executive will continue to be
paid base salary at no less than the
rate in effect on the Effective Date.
Such base salary shall be reviewed
annually and may be increased, but not
decreased.
b. Annual Bonus For each calendar year during the
Executive Employment Term, each
Executive will be eligible, under
Rhodia's plan, for an annual bonus of
38.5% of salary at target, with a 77%
of salary maximum bonus for superior
performance. In addition, Mr. Shutts
will receive a cash bonus of $250,000
on the Effective Date in recognition
of the 25 new customers he has brought
to ChiRex during the 2000 calendar
year.
c. Additional Mid-Term Incentive Subject to Rhodia Board approval, for
each calendar year during the
Executive Employment Term, an amount
of Rhodia stock equal to 30% of each
bonus calculated and paid in
accordance with (b) above will be
purchased by the Executive and vest
after three years if the Executive is
still employed by ChiRex (actual legal
structure is purchase with a third
party loan of up to 100% of the
purchase price with balloon principal
and market interest due on third
anniversary of stock purchase, and the
payment by Rhodia of a bonus to the
Executive on such third anniversary in
an amount equal to such principal and
interest if the Executive (i) remains
employed on such date and (ii)
continues to hold the shares
purchased). To the extent that Rhodia
Board approval is not obtained or such
Rhodia stock purchase is otherwise not
implemented, the Executives shall be
provided with alternative equity-based
(or stock appreciation rights ("SAR"))
awards that put the Executives as
nearly as reasonably possible in the
economic position that they would have
been in had they purchased the Rhodia
stock on the terms described above.
d. Long-Term Incentive Subject to Rhodia Board approval,
initial sign-on stock option grants
will be made to each Executive on the
Effective Date with respect to 50,000
Rhodia shares. Such options will have
a ten-year term and an exercise price
per share determined in the same
manner as for peer executives at
Rhodia (i.e., equal to the average
trading price of Rhodia stock for the
20 trading days preceding the date of
grant). Option grants in subsequent
years will be based on
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performance and contribution to
company success but shall in no event
be less than stock option grants made
to comparable peer executives at
Rhodia. All options will vest on the
third anniversary of the date of
grant. To the extent that Rhodia Board
approval is not obtained for the
initial stock option grants or the
initial option grants otherwise are
not implemented, the Executives shall
be provided with alternative equity-
based (or SAR) awards that put the
Executives as nearly as reasonably
possible in the economic position that
they would have been in had they
received such initial stock option
grants.
e. Retention Stay Bonus Each Executive will be eligible for a
retention bonus equal to 200% of the
severance amount he would have been
entitled to under his existing
employment agreement if his employment
with ChiRex were terminated without
cause as of the Effective Date. This
retention bonus will be paid in 20%,
30% and 50% installments on the first,
second and third anniversaries of the
Effective Date, respectively.
f. Benefits Rhodia benefit plans, including both a
defined contribution pension plan and
a defined benefit pension plan in the
U.S. and welfare plans (including,
without limitation, savings,
retirement, medical, dental,
disability and life insurance
coverages), at Rhodia's expense
(subject to any cost-sharing generally
required immediately prior to the
Effective Date of ChiRex's active
employees to receive such coverages)
that are no less favorable in the
aggregate than the benefits provided
to the Executives immediately prior to
the Effective Date.
4. Termination In the event an Executive resigns
(other than for Good Reason) or his
employment is terminated for Cause, he
will forfeit all unpaid compensation
(other than accrued but unpaid base
salary), including unpaid installments
of the retention bonus. If the
Executive's employment is terminated
by ChiRex or
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Rhodia other than for Cause or by the
Executive for Good Reason, (A) the
Executive will receive within ten days
of his date of termination a lump sum
cash payment equal to the sum of (i)
the base salary and maximum bonuses
that could have been payable during
the remainder of the Executive
Employment Term, (ii) any unpaid
retention stay bonus installments
described in Section 3(e) above, and
(iii) an amount equal to the amount of
the loan (plus accrued interest
thereon) taken by the Executive to
purchase the Rhodia stock referred to
in Section 3(c) above to the extent
such amount has not already been paid,
(B) all stock options (or stock
appreciation rights issued in lieu
thereof) shall become fully vested and
immediately exercisable, and (C) the
Executive shall continue to be
provided with all health and other
welfare benefits (as described in
Section 3(f) above) through the
remainder of the Executive Employment
Term or until the Executive is covered
by a new employer's medical and dental
plans, if sooner; provided that if
such benefits are not permitted to be
provided under the terms of ChiRex's
or Rhodia's benefit plans, ChiRex
shall provide the Executives with an
additional cash payment in an amount
sufficient to provide such coverages
outside ChiRex's or Rhodia's benefit
plans. Except as described above, the
effect of a termination of employment
upon stock and option awards will be
governed by the terms of the relevant
plans.
5. Other The Executive Agreements will contain
customary provisions regarding, among
other things, non-competition and non-
solicitation for one year following
the termination of their Executive
Agreements and confidentiality
covenants, and will retain a golden
parachute tax gross-up and
indemnification and arbitration
provisions substantially similar to
those contained in each Executive's
current employment agreement. The
Executive Agreements shall be governed
by New York law. Any disputes arising
out of the Executive Agreements that
are not required to be
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arbitrated shall be subject to the
exclusive jurisdiction of any state or
federal court in New York City
(London, England, in the case of Mr.
Shott). ChiRex shall pay all
arbitration costs and the Executives'
reasonable attorney's fees in
connection with any dispute arising
out of the Executive Agreements,
unless any such arbitrator or court
finally determines that an Executive's
claim was frivolous and not brought in
good faith. Except as provided above,
the Executives shall not be required
to mitigate any payments or benefits
received under the Executive
Agreements. The definitions of "Cause"
and "Good Reason" will be
substantially similar to the
definitions set forth in Mr. Shott's
current employment agreement except
that the existence of "Good Reason"
shall be determined objectively.
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Scientific Consultants
Each of Each of Messrs. Jacobsen, Buchwald, Myers and Sharpless (each, a
"Scientific Consultant") will enter into a new consulting agreement with ChiRex
(or amend its current consulting agreement with ChiRex, as appropriate) prior to
the execution of the merger agreement for the sole purpose of extending the term
of each such Scientific Consultant's current agreement with ChiRex until
December 31, 2001. Each such new agreement (or amendment, as the case may be)
will become effective on the Effective Date.
Rhodia will grant Mr. Jacobsen 10,000 SAR, 2,500 of which will become
exercisable on each of December 31, 2001 and 2002 and 5,000 of which will become
exercisable on December 31, 2003 if Mr. Jacobsen's consulting agreement with
ChiRex (or any amendment or replacement thereto) is in full force and effect on
such dates. Such SAR will have a ten-year term. In the event Mr. Jacobsen
voluntarily terminates his consulting services or his consulting services are
terminated by ChiRex or Rhodia for Cause prior to any such dates, he will
forfeit all SAR not exercisable prior to the date of termination. If Mr.
Jacobsen consulting services are terminated by ChiRex or Rhodia other than for
Cause, all SAR will become immediately exercisable. The definition of "Cause"
will be as provided in Mr. Jacobsen's current consulting agreement with ChiRex.
Rhodia will grant each of Messrs. Buchwald, Myers and Sharpless 5,000 SAR,
2,500 of which will become exercisable on each of December 31, 2001 and December
31, 2002 if each of Mr. Buchwald, Myers or Sharpless' consulting agreement with
ChiRex (or any amendment or replacement thereto) is in full force and effect on
such dates. Such SAR will have a ten-year term. In the event Mr. Buchwald, Myers
or Sharpless voluntarily terminates his consulting services or his consulting
services are terminated by ChiRex or Rhodia for Cause prior to any such dates,
he will forfeit all SAR not exercisable prior to the date of termination. If Mr.
Buchwald, Myers or Sharpless consulting services are terminated by ChiRex or
Rhodia other than for Cause, all SAR will become immediately exercisable. The
definition of "Cause" will be as provided in Mr. Jacobsen's current consulting
agreement with ChiRex.
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