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 Xxxxxxx Xxxxxxx Xxxxxx (the
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"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 six-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"). The Consulting Period may be extended for another consecutive
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six-month period (and future periods) by mutual agreement of the parties, in
which event the term "Consulting Period" shall include the duration of any such
extension. Effective on the Effective Date, Consultant shall cease to be an
employee of the Company.
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2. Services to be Provided.
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(a) During the Consulting Period, Consultant shall provide consulting
services on a part-time (half-time) basis in connection with the business of the
Company as are reasonably requested of Consultant by the senior executives of
the Company and Parent from time to time. During the Consulting Period, 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.
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(a) Consulting Fees. During the Consulting Period, the Company shall
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pay Consultant, in cash, a total of $105,000 in consulting fees, payable in
equal monthly installments; provided, that if the Consulting Period is extended
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for six months as provided in Section 1 hereof, the Company shall pay
Consultant, in cash, an additional amount of $105,000 in consulting fees during
such additional six-month period, payable in equal monthly installments;
provided, further, that if Consultant provides consulting services on a greater
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than half-time basis, the amount of the consulting fees during the Consulting
Period shall be increased on a pro-rata basis. All amounts paid or payable
under this Section 3(a) are referred to herein as the "Consulting Fees".
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(b) 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.
(c) 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) that are no less favorable in the
aggregate than the employee benefits provided to Consultant immediately prior to
the Effective Date; provided, that the Company's cost of providing such benefits
shall not exceed the Company's cost of providing such benefits immediately prior
to the Effective Date; provided, further, 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 (subject to the limitation on the Company's cost
described in the immediately preceding proviso).
(d) 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.
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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
(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 the senior executives of the Company and 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.
(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.
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
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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 total amount of Consulting Fees payable for the full Consulting Period
(taking into account any pro-rata increase under Section 3(a) hereof if
Consultant is providing services immediately prior to the Date of Termination on
a basis greater than half-time), less any Consulting Fees already paid to
Consultant. 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 health and other welfare benefits described under Section 3(c)
hereof (as if the Consulting Period had not been terminated), through the
expiration of the twelve-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(c) hereof. Consultant shall remain eligible to receive all other
payments in accordance with the terms and conditions of this Agreement
(including, without limitation, 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.
6. Gross-Up Payment.
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(a) Anything in this Agreement to the contrary 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
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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 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
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should not have been made ("Overpayment"), consistent with the calculations
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required 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
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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 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 three-year period immediately
following the Effective Date (or, if longer, the period commencing on the
Effective Date and ending two years after the expiration of the Consulting
Period) (the "Restricted Period"), he shall not, directly or indirectly, own
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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 Company's 2000 and 2001 business
plans as provided to Parent prior to the date hereof (the "Business Plans").
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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 Business Plans, so long as Consultant has no
active participation in the business of such corporation. For purposes 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
$808,500, with interest on amounts paid following the Effective Date at a rate
of 7% compounded annually (the "Restrictive Covenant Consideration"). The
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Restrictive Covenant Consideration shall be payable in two nonrefundable
installments as follows: $539,000 shall be paid on the Effective Date, and the
remaining $269,500 (plus interest as described above) 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 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).
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8. Arbitration; Fees and Expenses.
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(a) Any controversy or claim 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.
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(a) This Agreement is personal to Consultant and 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, "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
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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 andshall 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 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxxx 00000,
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.
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(a) This Agreement contains the entire 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.
(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.
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(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
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and effect upon the occurence 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CHIREX INC.
By: /s/ Xxxxxx Xxxxx
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Title: Vice President, General Counsel
and Secretary
/s/ Xxxxxxx Xxxxxxx Xxxxxx
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Acknowledged and agreed:
RHODIA
By: /s/ Xxxx-Xxxxxx Xxxxxxx
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Title: Deputy President
