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EXHIBIT 10.23
COMPENSATION AGREEMENT
This Agreement is made this 24th day of January, 1996, between Xxxxx
Xxxxxxx ("Executive") and Biochem International Inc., a Delaware corporation
(the "Company").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure itself of continuity of
management in the event of any Change in the Control of the Company; and
WHEREAS, the Company believes it is important that Executive be able
to assess and advise the Company whether supporting a Change in Control would
be in the best interests of the Company and its shareholders without being
influenced by the uncertain effect of such a change upon Executive's role
within the Company; and
WHEREAS, Executive has been employed by the Company and the Company
wishes to demonstrate to Executive the Company's concern for his welfare; and
WHEREAS, the Company has or will deposit certain amounts (the "Trust
Funds" ) with Xxxxx Xxxxxxx, as trustee of the Katarow Employment Trust (the
"Trust"), to fund certain obligations to be herein entered into; and
WHEREAS, the Company wishes to insure that the Executive will continue
to advise and be an employee of the Company, and to provide such services as
are required in such position, for a period of at least one year following any
Change in Control of the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
ARTICLE I. OPERATION OF AGREEMENT
1.1. This Agreement will be binding immediately upon its execution by
the parties hereto, but will operate as an employment contract only during the
"Term of Employment" as described below. Notwithstanding the foregoing, if,
prior to any Change in Control, Executive resigns from the Company, is
dismissed for Cause, as defined in paragraph 4.3 below, or dies, this Agreement
shall terminate, and Executive shall not be entitled to any benefits hereunder.
1.2. The "Term of Employment" is the period beginning on the date of
a "Change of Control" and ending on the earliest of:
(a) One year following such Change of Control,
(b) Executive's death, or
(c) the date on which all rights and obligations of the parties
hereto have been satisfied in accordance with the terms of
this Agreement.
Except as provided in paragraph 1.1 of this Agreement, neither the
expiration of the Term of Employment nor the termination of this Agreement will
relieve the Company of the obligation to provide Executive, in accordance with
the terms hereof, the payments, benefits and coverage to which he has become
entitled under this Agreement.
1.3. "Change of Control" means a change of control of the Company of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act of 1934
(the "Act"),
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whether or not the Company is then subject to such reporting requirement;
provided, however, that, without limitation, such a Change of Control shall be
deemed to have occurred if:
(a) any person or group (as such terms are used in connection with
Sections 13(d) and 14(d) of the Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 and 13d-5 under
the Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the
Company's then outstanding securities; or
(b) the Company is a party to a merger, consolidation, sale of
assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in
office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors
thereafter.
Notwithstanding the foregoing provisions of this paragraph 1.3, a
"Change of Control" will not be deemed to have occurred solely because of the
acquisition of securities of the Company (or any reporting requirement under
the Act relating thereto) by an employee benefit plan maintained by the Company
for its employees.
ARTICLE II. EMPLOYMENT
2.1. The Company agrees to employ Executive throughout the Term of
Employment as an officer of the Company without reducing Executive's status and
without imposing on Executive travel requirements or other duties substantially
more onerous than those to which he was subject immediately prior to the Change
of Control. The Company agrees to provide Executive with an office and
executive secretarial support similar to those provided immediately before the
Change of Control and further agrees that Executive's situs of employment will
be in Waukesha, Wisconsin, or such other location in the Milwaukee, Wisconsin
vicinity to which the Company's executive headquarters may be moved.
2.2. Executive agrees, subject to paragraph 4.4 below, to remain in
the Company's employ during the Term of Employment, as described in paragraph
2.1.
Excluding periods of vacation and sick leave, Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company to the extent necessary to discharge
responsibilities assigned to Executive hereunder and to use reasonable efforts
to perform such responsibilities faithfully and efficiently. No greater time,
attention or effort to discharge responsibilities shall be required of
Executive than was required prior to the Change of Control. Executive may:
(a) serve on corporate, civic and charitable boards or committees,
(b) deliver lectures, fulfill speaking engagements and teach at
educational institutions and
(c) manage personal investments,
so long as such activities do not significantly interfere with the
performance of Executive's responsibilities. To the extent that any such
activities have been conducted by Executive prior to the Change of Control,
such prior conduct, and any subsequent conduct similar in nature and scope,
shall not be deemed to interfere with the performance of Executive's
responsibilities.
2.3. For purposes of this Agreement, employment by a subsidiary of
the Company will be deemed to be employment by the Company, and the Company may
cause its obligations hereunder to be discharged through such a subsidiary,
provided that the Company will remain liable for the discharge of all such
obligations and that the rights, benefits, authority and status of the
Executive are in no way
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diminished thereby. A subsidiary is any corporation more than 50% of the
voting stock of which is owned by the Company or another subsidiary of the
Company.
ARTICLE III. COMPENSATION
3.1. The Company will pay as compensation to Executive for his
services as an employee during the Term of Employment:
(a) base annual salary at a rate equal to or greater than the rate
of base salary in effect for Executive immediately prior to
the Change of Control; plus
(b) an annual bonus equal to the average bonus (as a percentage of
base salary) paid to the Executive for the three full fiscal
years of the Company immediately preceding the Change of
Control.
3.2. In addition, for his services as an employee during the Term
of Employment, Executive will:
(a) participate fully in the Company's stock option plan (and/or
any successor plan), if any;
(b) participate fully in all pension, profit sharing and similar
benefit plans of the Company, if any;
(c) participate fully, together with his dependents and
beneficiaries, in all life insurance plans, accident and
health plans and other welfare plans, maintained or sponsored
by the Company immediately prior to the Change of Control, or
receive substantially equivalent coverage (or the full value
thereof in cash) from the Company;
(d) participate fully in any additional benefit plans offered by
the Company to executives before or after the Change of
Control; and
(e) receive fringe benefits (which shall not include any benefit
referred to elsewhere in this Article III) substantially
equivalent to those provided to Executive immediately prior to
the Change of Control as well as reimbursement, upon proper
accounting, of reasonable expenses and disbursements incurred
by Executive in the course of his duties.
3.3. Amounts payable under this Article III for services rendered
by Executive during his employment constitute reasonable compensation for such
services. If any such amount (or, if by reason of such amount, any other
amount in the nature of compensation payable to Executive) is determined to be
subject to the excise tax imposed by section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any successor provision, the Company will
pay to Executive in cash an additional amount necessary to cause the total
payments (including the additional payment required by this paragraph 3.3) and
benefits received by him under this Article III (net of all federal and state
taxes, including all taxes payable under section 4999 of the Code) to be equal
to the total payments and benefits Executive would have received under this
Article III (net of all federal, state and local taxes) if section 4999 of the
Code had not applied. This paragraph 3.3 does not apply to amounts payable
under Article IV.
ARTICLE IV. ADDITIONAL BONUS PAYMENT
4.1. Unless Executive's employment is terminated by the Company
during the Term of Employment for "Cause" (as defined in paragraph 4.3 below)
the Company will pay Executive one year after the Change in Control a lump sum
cash payment, in the amount of the Trust Funds held by the Trust on the date
payment is due under this Article IV.
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4.2. (a) Upon the occurrence of any breach by the Company of
this Agreement within the meaning of paragraph 4.2(b), below, Executive may
give the Company written notice of his intention to resign effective the 30th
day following the date of such notice. If the Company does not fully remedy
such breach within 15 days of the date of such notice, Executive's resignation
will become effective on such 30th day. If Executive resigns in accordance
with this paragraph during the Term of Employment, his employment will be
deemed to have been terminated by the Company for reasons other than Cause (and
he will be deemed to have offered to continue to provide services to the
Company), and he will be entitled to all the payments and rights and benefits
described in paragraph 4.1; provided that such payments and rights and benefits
will in no event be less than they would have been had such termination taken
place on the date that the Company first breached this Agreement.
(b) The following events are breaches by the Company of this
Agreement within the meaning of this paragraph 4.2(b):
(i) any reduction of, or failure to pay, Executive's salary
or bonus as described in paragraph 3.1 above;
(ii) any failure to provide the benefits required by
paragraph 3.2 above or to make any payment which might be due
in accordance with paragraph 3.3 above;
(iii) assignment to Executive of any duties inconsistent in
any respect with his position (including status, offices and
titles), authority, duties or responsibilities as contemplated
by paragraph 2.1 above or any other action by the Company
which results in a diminution of such position, authority,
duties or responsibilities;
(iv) failure after a Change of Control to comply with and
satisfy paragraph 8.1 or 8.2 below;
(v) relocation of the Company's principal executive offices,
or any event that causes Executive to have his principal place
of work changed, to any location outside the Milwaukee,
Wisconsin area; and
(vi) without limiting the generality or effect of the
foregoing, any other material breach of this Agreement by the
Company or any successor thereto or transferee of
substantially all the assets thereof.
4.3. If Executive is dismissed by the Company for Cause, he will
not be entitled to payments or benefits provided under paragraph 4.1 above.
"Cause" means only the willful commission by Executive of theft, embezzlement
or other serious and substantial crimes against the Company. For purposes of
this definition, no act or omission shall be considered to have been "willful"
unless it was not in good faith and Executive had knowledge at the time that
the act or omission was not in the best interest of the Company.
4.4. If Executive's employment is alleged to be terminated for
Cause or if Executive's right to resign under paragraph 4.2 is disputed,
Executive may initiate binding arbitration in Milwaukee, Wisconsin, before the
American Arbitration Association by serving a notice to arbitrate upon the
Company or, at Executive's election, institute judicial proceedings, in either
case within 90 days of the effective date of his termination or, if later, his
receipt of notice of termination, or such longer period as may be reasonably
necessary for Executive to take such action if illness or incapacity should
impair his taking such action within the 90-day period. The Company agrees:
(i) to pay the costs and expenses (including fees of counsel
to Executive of any such arbitration and/or judicial
proceeding, including Executive's counsel fees), and
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(ii) to pay interest to Executive on any amounts ultimately
found to be due to Executive hereunder during any period of
time that such amounts are withheld pending arbitration and/or
judicial proceedings. Such interest will be at the "Prime
Rate" most recently announced by the First National Bank of
Chicago prior to the commencement of the arbitration.
4.5. Termination of employment during the Term of Employment due to
the death or total and permanent disability of Executive will not be considered
a termination for purposes of this Article IV.
4.6. If Executive dies following a termination of employment which
entitled him to benefits under this Article IV but prior to receipt of all such
benefits his beneficiary (as designated to the Company in writing) or, if none,
his estate, will be entitled to receive within 60 days of the date of the
Executive's death all unpaid amounts due hereunder.
ARTICLE V. NO OBLIGATION TO MITIGATE
There shall be no requirement on the Executive's part to seek other
employment or otherwise mitigate in order to be entitled to the full amount of
any payments or benefits hereunder.
ARTICLE VI. LIMITATION
Notwithstanding any other provision of this Agreement, the payments or
benefits to which Executive will be entitled under Article IV of this Agreement
will be reduced to the extent necessary so that none of the payments will (i)
be deemed "excess parachute payments" under sections 280G or 4999 of the Code,
or (ii) be treated as not deductible by the Company under section 162(m) of the
Code.
ARTICLE VII. EXPENSES
It is the intent of the Company that the Executive not be required to
incur any expenses associated with the enforcement of his rights under this
Agreement by legal action or arbitration proceeding because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Executive hereunder. Accordingly, if Executive determines in
good faith that the Company has failed to comply with any of its obligations
under this Agreement, or if the Company or any other person takes any action to
declare this Agreement void or unenforceable, or institutes any legal action or
arbitration proceeding designed to deny Executive, or to recover from him, the
benefits intended to be provided hereunder, or in the event of actions
instituted as contemplated by paragraph 4.4 above, the Company irrevocably
authorizes Executive from time to time to retain counsel of his choice, at the
expense of the Company as hereafter provided, to represent Executive in
connection with any and all actions and proceedings, whether by or against the
Company or any director, officer, stockholder or other person affiliated with
the Company, which may adversely affect Executive's rights under this
Agreement. In addition, notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Executive's entering into an attorney-client relationship with such
counsel and agrees that a confidential relationship shall exist between
Executive and such counsel. Without limiting the effect of paragraph 4.4 above
or of the foregoing provisions of this Article VII, the Company shall pay or
cause to be paid and shall be solely responsible for any and all attorneys' and
related fees and expenses incurred by Executive as a result of the Company's
failure to perform under this Agreement.
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ARTICLE VIII. MERGER OR ACQUISITION
8.1. If the Company is at any time before or after a Change of
Control merged with or consolidated into or with any other corporation or other
entity (whether or not the Company is the surviving entity), or if
substantially all of the assets of the Company are transferred to another
corporation or other entity, the corporation or other entity resulting from
such merger or consolidation, or the acquirer of such assets, shall (by
agreement in form and substance satisfactory to Executive) expressly assume the
obligations of the Company under this Agreement. In any event, however, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the corporation or other entity resulting from such merger or consolidation or
the acquirer of such assets, and this Article VIII will apply in the event of
any subsequent merger or consolidation or transfer of assets.
8.2. In the event of any merger, consolidation or sale of assets
described above, nothing contained in this Agreement will detract from or
otherwise limit Executive's right to or privilege of participation in any stock
option or purchase plan or any bonus, profit sharing, pension, group insurance,
hospitalization or other incentive or benefit plan or arrangement which may be
or become applicable to executives of the corporation resulting from such
merger or consolidation or the corporation acquiring such assets of the
Company.
8.3. In the event of any merger, consolidation or sale of assets
described above, references to the Company in this Agreement shall unless the
context suggests otherwise be deemed to include the entity resulting from such
merger or consolidation or the acquirer of such assets of the Company.
ARTICLE IX. WITHHOLDING
All payments required to be made by the Company hereunder to Executive
or his dependents, beneficiaries or estate will be subject to the withholding
of such amounts relating to tax and/or other payroll deductions as may be
required by law.
ARTICLE X. AMENDMENT
No amendment, change or modification of this Agreement may be made
except in writing, signed by both parties.
ARTICLE XI. GENERAL
11.1. The provisions of this Agreement shall be binding upon and
shall inure to the benefit of Executive, his executors, administrators, legal
representatives and assigns, and the Company and its successors.
11.2. The validity, interpretation and effect of this Agreement
shall be governed by the laws of the State of Wisconsin.
11.3. There shall be no right of set-off or counterclaim, in respect
of any claim, debt or obligation, against any payments to Executive, his
dependents, beneficiaries or estate provided for in this Agreement.
11.4. No right or interest to or in any payments shall be assignable
by Executive; provided, however, that this provision shall not preclude him
from designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The
term "beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount, or if no beneficiary
has been so designated, the legal representative of the Executive's estate.
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11.5. No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
11.6. Beginning on the date of a Change of Control, this Agreement
shall govern Executive's employment and compensation by the Company and the
other matters referred to herein, and any other employment or severance
agreement, arrangement or policy otherwise applicable to the Executive shall be
superseded by this Agreement.
11.7. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision.
IN WITNESS WHEREOF, the Company and Executive have each caused this
Agreement to be duly executed and delivered as of the date set forth above.
Biochem International Inc.
By
ATTEST: -------------------------------
--------------------------
----------------------------------
Xxxxx X. Xxxxxxx
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