Exhibit 10.5
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "AGREEMENT")
effective as of June 1, 2001, between Dade Behring, Inc., a Delaware
corporation (the "COMPANY"), and Xxxxx Xxxx-Xxxxxxxx ("EXECUTIVE").
The Company and Executive have entered into an Employment
Agreement effective as of September 1, 2000 (the "ORIGINAL AGREEMENT") and
desire to amend and restate the Original Agreement in its entirety pursuant
to the terms and conditions set forth in this Agreement.
The Company is a wholly-owned subsidiary of Dade Behring
Holdings, Inc., a Delaware corporation ("HOLDING").
In consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree to amend and restated the
Original Agreement as follows:
1. EMPLOYMENT. The Company shall employ Executive, and
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on June 1,
2001 and ending as provided in paragraph 4 hereof (the "EMPLOYMENT PERIOD").
2. POSITION AND DUTIES.
(a) During the Employment Period, Executive shall serve as the
President and Chief Executive Officer of the Company and shall have the
normal duties, responsibilities and authority of the President and Chief
Executive Officer, subject to the overall direction and authority of the
Board of Directors. In addition, so long as he is Chief Executive Officer of
Holding, the Executive shall be appointed to the board of directors of
Holding and the board of directors of the Company (so long as the Company
remains the principal operating subsidiary of Holding). At the time he ceases
to be the Chief Executive Officer of Holding, Executive shall resign from the
board of directors of Holding.
(b) Executive shall report to the Board of Directors, and
Executive shall devote his best efforts and his full business time and
attention to the business and affairs of the Company and its Subsidiaries;
provided, that nothing in this paragraph 2(b) shall prohibit Executive from
devoting a reasonable amount of business time and attention to directorships
and charitable or other activities.
(c) For purposes of this Agreement, "SUBSIDIARIES" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, Executive's base salary shall
be $725,000 per annum and shall be subject to review by the Board of
Directors on an annual basis (the "BASE SALARY"), which salary shall be
payable in regular installments in accordance with the Company's general
payroll practices and shall be subject to customary withholding. In addition,
during the Employment Period, Executive shall be entitled to participate in
all of the Company's employee benefit programs for which senior executive
employees of the Company and its Subsidiaries are generally eligible;
provided, however, that for purposes of determining Executive's participation
in the Company's cash balance pension program, Executive's benefits shall be
accrued as though he had two years of service for every one year of total
service that otherwise would be included in the computation of such benefits.
(b) The Company shall reimburse Executive for all reasonable
expenses incurred by him in the course of performing his duties under this
Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business
expenses, subject to the Company's reasonable requirements with respect to
reporting and documentation of such expenses.
(c) In addition to the Base Salary, during each year during the
Employment Period commencing with the fiscal year ending December 31, 2001,
Executive will be eligible to earn an annual target bonus of 100% of his Base
Salary to be based upon specific bonus targets to be established on an annual
basis by the Board (with specific overachievement opportunities to be made
available in the sole discretion of the Board); provided that with respect to
the fiscal year ending December 31, 2001, Executive's bonus shall be a
minimum of $1,000,000. Such bonus targets will generally focus on EBITDA,
capital expenditure levels and working capital targets, as established on an
annual basis by the Board. Any bonus shall be payable in accordance with
normal Company policy, but in no event later than March 15 of any particular
year.
(d) In addition to Executive's participation in the Company's
current retention program, Executive will receive an incremental retention
bonus of $350,000 on the date of this Agreement and will be eligible for an
incremental retention bonus of $1,000,000, to be based upon the achievement
of specified objectives and to be paid at the times set forth in EXHIBIT A
attached hereto.
(e) In addition, Executive will be entitled to (i) four (4) weeks
paid vacation each year during the Employment Period, in accordance with
Company policy, (ii) an annual sum of $24,000, payable monthly, as an
allowance to cover expenses for the use of Executive's own automobile for
business purposes, and (iii) reimbursement (including an appropriate tax
gross-up) for business class family leave travel and personal financial and
legal consulting expense reimbursement in line with Company's senior
executive program.
(f) Executive will be considered for grants of stock options by
Holding for which senior executive employees of the Company and its
Subsidiaries are generally eligible, which grants will be at sole discretion
of the Board; provided, however, that the confirmed plan of reorganization
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(or consensual agreement in the case of an out of court reorganization) will
contain an equity incentive program for Executive, so long as Executive is
employed by the Company at the time of such reorganization (it being
understood that the sole remedy for breach of this Section 3(f) shall be
Executive's right to terminate the Employment Period for Good Reason).
4. TERM.
(a) The Employment Period (i) shall terminate upon Executive's
resignation without Good Reason (as defined below), death or Disability (as
defined below), (ii) may be terminated by the Company at any time for Cause
(as defined below) or without Cause and (iii) may be terminated upon
Executive's resignation for Good Reason.
(b) If the Employment Period is terminated by the Company without
Cause or by Executive for Good Reason during the term of this Agreement,
Executive shall be entitled to:
(i) an amount equal to (x) two times Executive's Base Salary described
in Section 3(a) above (as in effect at the time of such
termination), plus (y) two times Executive's target bonus for the
year in which Executive is terminated (provided that in the case of
calendar year 2001 the aggregate amount payable under clause (y)
shall be $1,725,000), in each case payable not later than 30 days
following the date of such termination; and
(ii) receive the benefits described in Sections 3(e)(ii) and 3(e)(iii)
above and participate in the Company's health program for which
senior executive employees of the Company and its Subsidiaries are
generally eligible, in each case, for 24 months after the date of
such termination.
If the Employment Period is terminated due to Executive's death or Disability
during the term of this Agreement, Executive shall be entitled to receive a
bonus equal to the bonus Executive would had received had he remained
employed for the entire bonus period (the amount to be determined by the
Board in good faith), pro rated based on the number of days that have elapsed
during the year through the date of termination (and payable in accordance
with normal Company policy). Notwithstanding anything in this Agreement to
the contrary, the Company shall have no obligation to provide the benefits
under Section 4(b)(ii) of this Agreement during such times as Executive is in
material breach of any provision of this Agreement (including, without
limitation, that certain Amended and Restated Employment Agreement Addendum
dated as of September 1, 2000 between the Company and Executive (the
"EMPLOYMENT AGREEMENT ADDENDUM")) or any provision of the Executive Agreement
dated as of October 1, 1997 between Holding and Executive (the "EXECUTIVE
AGREEMENT"). As a condition to the Company's obligations (if any) to make
severance payments pursuant to this paragraph 4(b), Executive will execute
and deliver a general release in form and substance satisfactory to the
Company, except that the Company shall be obligated to pay amounts due and
owing to Executive as expressly provided by this Agreement. In addition to
the amounts described above, in the event the Employment Period is terminated
by the Company without Cause, by Executive for Good Reason or due to
Executive's death or Disability, with respect to any time- based stock
options issued to Executive by Holding, the date of Executive's termination
for purposes
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of all vesting schedules shall be deemed to have occurred immediately after
the next succeeding vesting date. Notwithstanding anything in Holding's
option plans to the contrary, solely in the case of Executive's death or
Disability, the exercise period for each of Executive's options shall be
extended to the earlier of (x) the 12-month anniversary of the date of
termination of Executive's employment, and (y) the date on which each such
option otherwise would have expired had Executive remained employed with the
Company (including, without limitation, any acceleration event required by
the plan such as a change in control event).
(c) If the Employment Period is terminated by the Company for
Cause or is terminated pursuant to clause (a)(i) above, Executive shall be
entitled to receive his Base Salary through the date of termination.
(d) Except as otherwise provided in this Agreement, all of
Executive's rights to fringe benefits and bonuses hereunder (if any) which
accrue or become payable after the termination of the Employment Period shall
cease upon such termination; provided, however, that if the Employment Period
is terminated by the Company without Cause or by Executive for Good Reason
after December 31 of a particular year (and Executive was employed as of
December 31 of such year), but prior to the date on which the bonus described
in Section 3(c) of this Agreement for such year, if any, is payable, then
Executive shall be paid such bonus at the time set forth in Section 3(c) of
this Agreement (it being understood that the determination of whether a bonus
is payable shall be made in accordance with the provisions of Section 3(c) of
this Agreement), which bonus payment, if any, shall be in addition to any
severance payments otherwise payable under this Agreement. The Company may
offset any amounts Executive owes it or its Subsidiaries against any amounts
it owes Executive hereunder.
(e) For purposes of this Agreement, "DISABILITY" (i) shall mean
any physical or mental incapacitation which results in Executive's inability
to perform his duties and responsibilities for the Company for a total of 180
days during any twelve-month period, as determined by the Board in its good
faith judgment and (ii) shall be deemed to have occurred on the 180th day of
such inability to perform.
(f) For purposes of this Agreement, "CAUSE" shall mean (i) the
intentional disregard of a written direction from the Board of Directors to
Executive to which Executive has not objected within ten (10) business days
of receiving such written direction, which intentional disregard is
materially injurious to the Company or any of its affiliates, (ii) the
knowing and intentional theft by Executive of property of the Company or any
of its affiliates, which property has a substantial value, (iii) the
commission by Executive of an act of moral turpitude which is materially
injurious to the Company or any of its affiliates or (iv) any material breach
of this Agreement (including, without limitation, the Employment Agreement
Addendum) or any material breach of the Executive Agreement.
(g) For purposes of this Agreement, "GOOD REASON" shall mean (i)
any substantial reduction of Executive's duties, without Executive's written
consent, (ii) a reduction by the Company of Executive's Base Salary, as in
effect on the date hereof or as the same may be increased from time to time,
(iii) the Executive's removal (without his consent) from the board of
directors of
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Holding or the board of directors of the Company (so long as the Company
remains the principal operating subsidiary of Holding), (iv) the Executive
being required, without his consent, to move his primary place of business
outside of the greater Chicago area, (v) the Company shall have failed to
make a legitimate proposal to Executive on or before June 30, 2002 for an
equity incentive program for Executive to take effect upon the reorganization
of the Company, (vi) the Company and Executive are unable to reach agreement
(including complete documentation) regarding the terms of a satisfactory
equity incentive program for Executive to take effect upon the reorganization
of the Company prior to the earlier of (x) September 30, 2002; provided,
however that if the Company and Executive are actively negotiating the
documentation thereof at that time, then such September 30, 2002 date shall
be extended to December 31, 2002, and (y) 30 days after the effective date of
the confirmed plan of reorganization (or effective date of a consensual
agreement in the case of an out of court reorganization) (so long as
Executive has given serious consideration to any such proposals for an equity
incentive program), (vii) any breach of this Agreement (including the failure
to make available any of the benefits described in Section 3 of this
Agreement on the terms set forth therein, including bonuses) or the Company's
obligations to Executive under the Company's retention bonus program, other
than insignificant or immaterial breaches, (viii) the failure of the Company
to obtain promptly (but in any event on or prior to July 23, 2001) from its
senior lenders any consents required under the terms of its senior secured
credit facility by virtue of the Company's execution and delivery of this
Agreement, (ix) the failure of any final debtor-in-possession financing order
entered in a Chapter 11 case filed by or against the Company (the "Chapter 11
Case") or any of its affiliates to contain a "carve out" provision whereby
the financial obligations of the Company hereunder to Executive (whether or
not such obligations, but for such order, would be allowed obligations of the
estate) would have a priority over any liens, security interests and claims
of the debtor-in-possession lenders (regardless of whether this Agreement has
been assumed or not assumed by the debtor-in- possession), provided that
neither the carve out contemplated hereby nor the payments thereunder shall
effect a reduction of, or a deduction from, the dollar amount of the claims
of the debtor-in- possession lenders, or (x) the failure of an order to be
entered authorizing the assumption of this Agreement within 60 days after the
entry of an order for relief in the Chapter 11 Case.
(h) Executive shall have the benefit of indemnification for acts
undertaken on behalf of the Company to the fullest extent provided under the
Company's bylaws and the laws of the State of Delaware. In addition, the
Company agrees to maintain D&O insurance coverage during the Employment
Period for the benefit of Executive, in amounts not less than the coverage in
effect on the date hereof. In addition, the Company shall provide
supplemental disability coverage under the same co-payment conditions as the
Company's group plan for Executive such that his aggregate annual disability
benefit from the Company is equal to (x) 70% of his most recent base salary,
plus (y) his annual target bonus.
5. EMPLOYMENT AGREEMENT ADDENDUM. Each of the parties hereto
acknowledges and agrees that the Employment Agreement Addendum which is
attached hereto and is made a part hereof is an integral part of this
Agreement and that the Company would not be willing to enter into this
Agreement and provide Executive with the substantial benefits provided herein
without Executive's agreement to enter into and become bound by the terms and
conditions of the Employment Agreement Addendum, including the Conflict of
Interest, Confidentiality, Non- Competition and Intellectual Property Rights
provisions thereof.
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6. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents
and warrants to the Company that (i) the execution, delivery and performance
of this Agreement by Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which Executive is a party or by which he is bound,
(ii) Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any other person or
entity and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of
Executive, enforceable in accordance with its terms. Executive hereby
acknowledges and represents that he has consulted with independent legal
counsel regarding his rights and obligations under this Agreement and that he
fully understands the terms and conditions contained herein.
7. SURVIVAL. The terms and conditions of the Employment
Agreement Addendum shall survive and continue in full force in accordance
with their terms notwithstanding any termination of the Employment Period.
8. NOTICES. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered, sent by reputable
overnight courier or mailed by first class mail, return receipt requested, to
the recipient at the address below indicated:
NOTICES TO EXECUTIVE:
Xxxxx Xxxx-Xxxxxxxx
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
WITH A COPY TO:
Altheimer & Xxxx
Suite 4000, 00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
NOTICES TO THE COMPANY:
Dade Behring, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
Xxxx Xxxxxxxxxxx
Xxxxxx Xxxx
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WITH A COPY TO:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party. Any notice under this Agreement shall be deemed to have been given
when so delivered, deposited with such courier or mailed.
9. SEVERABILITY. Whenever possible, each provision of this
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.
10. COMPLETE AGREEMENT. This Agreement, those documents
expressly referred to herein (including the Employment Agreement Addendum)
and other documents of even date herewith embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.
11. NO STRICT CONSTRUCTION. 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.
12. COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which may be by facsimile and each of which is
deemed to be an original and all of which taken together constitute one and
the same agreement.
13. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive, the Company and
their respective heirs, successors and assigns, except that Executive may not
assign his rights or delegate his obligations hereunder without the prior
written consent of the Company.
14. CHOICE OF LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE
STATE OF ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
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15. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement or the Employment Agreement Addendum shall be
settled exclusively by binding arbitration in Chicago, Illinois in accordance
with the Rules of Endispute/JAMS then in effect. An arbitrator reasonably
acceptable to the Company and the Executive shall preside over any
arbitration; PROVIDED that if the Company and the Executive are unable, in
good faith, to agree on an arbitrator, each will nominate an arbitrator and
such nominated arbitrators will elect a third arbitrator. If Executive brings
an action and successfully enforces his rights under this Agreement or the
Company brings an action and successfully enforces its rights under the
Employment Agreement Addendum, such party shall be entitled to its reasonable
attorneys' fees and costs, as determined by the arbitrator. In any event, the
Company shall bear the costs of the arbitrators. In addition, Executive shall
be entitled to reimbursement for reasonable attorneys' fees associated with
the preparation and negotiation of this Agreement and the other agreements
contemplated hereby.
16. FURTHER ASSURANCES. The Company and Executive,
respectively, will execute and deliver such further documents and take such
additional actions as the other party may reasonably request to effect,
consummate, confirm or evidence the matters contemplated by this Agreement.
17. AMENDMENT AND WAIVER. The provisions of this Agreement may
be amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
DADE BEHRING, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Its: Vice President & Assistant Secretary
------------------------------------
By: /s/ Xxxxxxxx X. Xxxxx
------------------------------------
Its: Authorized Representative
------------------------------------
/s/ Xxxxx Xxxx-Xxxxxxxx
---------------------------------
XXXXX XXXX-XXXXXXXX
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EXHIBIT A
Terms of Incremental $1,000,000 Retention Bonus
Executive shall be entitled to receive the following incremental retention
payments, so long as Executive is actively employed by the Company on the
date the payment is to be made:
Eligible Portion of $333,333 will be paid to Executive at the time
of a successful financial restructuring of the Company or December
1, 2001, whichever is earlier.
Eligible Portion of $333,333 will be paid to Executive six months
after the successful financial restructuring of the Company but,
consistent with the existing retention program, no later than April
1, 2003.
Eligible Portion of $333,334 will be paid to Executive on April 1,
2003.
"Eligible Portion" shall mean the sum of the following percentages:
33-1/3%, so long as:
(x) in the case of the first scheduled payment, the Company
has as of the date of such payment begun implementation
of a cost reduction program with an annual run rate
savings potential totaling $30 million (i.e., Monarch
II); provided, however, that if as of the date of such
payment the Company has not yet launched the Monarch II
program, then in the case of the first scheduled
payment, the Eligible Portion shall be determined
solely on the basis of achievement of the EBITDA
targets set forth in the Company's DIP forecast and
Long- Term Business Plan delivered to the Company's
senior bank group dated April 2001, respectively, with
each measurement weighted 50%,
(y) in the case of the second scheduled payment, the
Company has as of the date of such payment begun
implementation of the Monarch II program, or
(z) in the case of the third scheduled payment, the Company
has as of the date of such payment completed
implementation of the Monarch II program and has
realized cost savings at an annual run rate of $30
million.
33-1/3%, so long as the Company has achieved the EBITDA targets set
forth in the Company's DIP forecast.
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33-1/3%, so long as the Company has achieved the EBITDA targets set
forth in the Company's Long-Term Business Plan delivered to the
Company's senior bank group dated April 2001.
The percentages above that relate to the achievement of EBITDA targets shall
be based upon the Company's performance for the four calendar quarters ending
as of the last day of the calendar quarter immediately preceding the date a
retention bonus is to be paid.
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