EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 18th of November 1998, between
CN Biosciences, Inc., a Delaware corporation (the "Company") and Xxxxxxx X.
Xxxxxxxxxxxx (the "Employee").
WHEREAS, the Company and EM Industries, Inc. ("Parent") and EM
Acquisition Corp. have entered into an Agreement and Plan of Merger ("Merger
Agreement") to acquire 100% of the outstanding stock of the Company;
WHEREAS, the Employee has been employed by the Company or one of its
subsidiaries prior to the date hereof;
WHEREAS, the Employee possesses unique knowledge of the business and
affairs of the Company, its policies, methods, personnel and operations and
the Parent recognizes that the continued service of the Employee is important
to the growth and success of the Company subsequent to the date of closing of
the transactions contemplated by the Merger Agreement ("Closing Date") and
desires to ensure such continued service;
WHEREAS, as an inducement for Parent to enter into the Merger
Agreement, Employee agrees to continue his employment with the Company after
the Closing Date on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter set forth, the Company and Employee agree
as follows:
1. Effective Date. This Employment Agreement shall become effective
on the Closing Date of the Merger Agreement (the "Effective Date"). If the
Merger Agreement is terminated, this Agreement shall be null and void.
Notwithstanding the foregoing, Employee agrees to continue to serve until the
Closing Date as an employee of the Company in the same capacity and in
accordance with the same terms and conditions as on the date immediately
preceding the date hereof.
2. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment all upon the terms and conditions herein
set forth.
3. Duties. The Employee is engaged as the Chief Executive Officer of
the Company and promises to perform and discharge well and faithfully the
duties, which may be assigned to him from time to time by the Company in
connection with the conduct of its business. If the Employee is elected as a
director or officer of any subsidiary or affiliate of the Company, the
Employee shall serve in such capacity or capacities without further
compensation.
4. Extent of Services. The Employee shall devote his entire time,
attention and energies to the business of the Company and shall not during the
term of this Agreement be engaged in any
other business activity whether or not such business activity is pursued for
gain, profit or other pecuniary advantage; but this shall not be construed as
preventing the Employee from investing his personal assets in businesses which
do not compete with the Company in such form or manner as will not require any
services on the part of the Employee in the operation of the affairs of the
companies in which such investments are made and in which his participation is
solely that of an investor, nor shall this be construed as preventing the
Employee from purchasing securities in any corporation whose securities are
regularly traded provided that such purchases shall not result in his
collectively owning beneficially at any time one percent (1%) or more of the
equity securities of any corporation engaged in a business competitive to that
of the Company, without the express prior written consent of the Company.
5. Compensation.
(a) For services rendered under this Employment Agreement, the
Company shall pay the Employee a salary at the rate determined annually by the
Compensation Committee of the Board of Directors (the "Base Salary"), payable
(after deduction of applicable payroll taxes as an employee in the State of
California) in equal bi-weekly installments. Employee's Base Salary as of the
Effective Date shall be $275,000. The Employee shall also be eligible for and
participate in such fringe benefits as shall be generally provided to executives
of the Company, including medical insurance and retirement programs which may be
adopted from time to time during the term hereof by the Company.
(b) The Compensation Committee shall review the Employee's
compensation at least once a year and award such bonuses and effect such
increases in the Base Salary as the Board of Directors, in its sole
discretion, determines are merited, based upon the Employee's performance and
consistent with the Company's compensation policies.
(c) In addition to his participation in any group life insurance
programs that the Company may provide to its employees, the Company shall, at
its sole expense, provide for the Employee term life insurance in the amount
of $150,000.
(d) The Company agrees that, effective as of the Effective Date,
it will establish, or cause to be established, a new long-term incentive
compensation plan (the "New Plan"). The Company further agrees that the
Employee shall be immediately entitled to participate in such New Plan and the
Employee shall receive an allocation of units under the New Plan effective as
of the Effective Date which allocation shall be commensurate with his position
and consistent in incentive opportunity with allocations to similarly situated
employees of the Company.
6. Paid Time Off. During the term of this Employment Agreement, the
Employee shall be entitled to twenty-nine (29) paid days off pursuant to the
Company's customary paid time off policy ("CalTime").
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7. Expenses. During the term of this Employment Agreement, the Company
shall reimburse the Employee for all reasonable out-of-pocket expenses incurred
by the Employee in connection with the business of the Company and in
performance of his duties under this Employment Agreement upon the Employee's
presentation to the Company of an itemized accounting of such expenses with
reasonable supporting data. The Employee shall be entitled to utilize business
(or club) class service for all international flights, and first-class service
for all transcontinental flights within the United States, in each case, in
connection with business-related travel.
8. Term.
(a) The Employee's employment under this Employment Agreement
shall commence on the Effective Date and shall expire on the three year
anniversary date thereof. The term of employment shall automatically be extended
for consecutive periods of one (1) year each unless notice of termination of
employment is given by either party hereto at least ninety (90) days prior to
the expiration of the initial or any renewal term, in which case, this Agreement
shall terminate at the end of such initial or renewal term, as the case may be.
In the case of a renewal and unless otherwise agreed to in writing by both
parties, the terms and conditions of this Employment Agreement shall apply to
any renewals or extensions thereto. Notwithstanding the foregoing, the Company
may, at its election, terminate the Employee's employment hereunder as follows:
(i) Upon thirty (30) days' notice if the Employee
becomes physically or mentally incapacitated or is injured
so that he is unable to perform the services required of him
hereunder and such inability to perform continues for a
period in excess of six months and is continuing at the time
of such notice; or
(ii) For "Cause" upon notice of such termination to
the Employee. For purposes of this Employment Agreement, the
Company shall have "Cause" to terminate its obligations
hereunder upon (A) the reasonable determination by the Board
of Directors that the Employee has failed substantially to
perform his duties hereunder (other than as a result of his
incapacity due to physical or mental illness or injury),
which failure amounts to an intentional and extended neglect
of his duties hereunder, (B) refusal to carry out any lawful
direction of the Board of Directors, (C) the Board of
Director's reasonable determination that the Employee has
engaged or is about to engage in conduct materially
injurious to the Company, (D) the Employee's having been
convicted of a felony, (E) a material breach by the Employee
of any of the other covenants or representations herein or
any other agreement between Employee and the Company, or (F)
theft, embezzlement or misappropriation of Company property;
or
(iii) Without Cause upon 30 days' notice of such
termination to the Employee; or
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(iv) Upon the death of the Employee.
In addition, the Employee shall have the right to terminate this Employment
Agreement upon notice to the Company if he shall have been assigned to duties
which are materially inconsistent with those specified in paragraph 3 hereof
(a "Material Demotion").
(b) (i) if this Employment Agreement is terminated pursuant
to paragraph 8(a)(i) above, the Employee shall receive
disability pay from the date of such termination until the
second anniversary of the Effective Date at the rate of 50%
of the Base Salary, reduced by applicable payroll taxes and
further reduced by the amount received by the Employee
during such period under any Company-maintained disability
insurance policy or plan or under Social Security or similar
laws. Such disability payments shall be paid periodically to
the Employee as provided in paragraph 5(a) for the payment
of salary.
(ii) If the Employment Agreement is terminated pursuant
to paragraph 8(a)(ii) or 8(a)(iv) above, the Employee shall
receive no salary continuation pay or severance pay.
(iii) If this Employment Agreement is terminated
pursuant to paragraph 8(a)(iii) above or as a result of the
Employee having terminated this Employment Agreement
following a Material Demotion, or if the Company does not
offer to continue the Employee's employment with the Company
at the expiration of the stated term of this Employment
Agreement at a Base Salary at least equal to his then most
recent Base Salary, the Employee shall receive salary
continuation pay for twelve (12) months from the date of
such termination (the "Salary Continuation Period") equal to
the Base Salary. Such salary continuation payments (less
applicable payroll taxes) shall be paid periodically to the
Employee as provided in paragraph 5(a) for the payment of
the Base Salary.
(c) During the Salary Continuation Period, the Employee
shall be under no obligation to mitigate the costs to the
Company of the salary continuation payments, and, provided
that the Employee is not in breach of his obligations under
paragraph 12 hereof, no compensation that the Employee may
receive from another employer during the Salary Continuation
Period shall be offset against amounts owed to Employee
hereunder.
9. Representations. The Employee hereby represents to the Company
that (a) he is legally entitled to enter into this Employment Agreement and to
perform the services contemplated herein and is not bound under any employment
or consulting agreement to render services to any third party, (b) he has the
full right, power and authority, subject to no rights of third parties, to
grant to the Company the rights contemplated by paragraph 11 hereof, and (c)
he does not now have, nor
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within the last three years has he had, any ownership interest in any business
enterprise (other than interests in publicly traded corporations where his
ownership does not exceed one percent (1%) or more of the equity capital) which
is a customer of the Company, any of its subsidiaries, or from which the Company
or any of its subsidiaries purchases any goods or services or to whom such
corporations owe any financial obligations or are required or directed to make
any payments.
10. Disclosure of Information. The Employee recognizes and
acknowledges that the trade secrets, know-how and proprietary processes of the
Company and its affiliates as they may exist from time to time are valuable,
special and unique assets of the business of the Company and its affiliates,
access to and knowledge of which are essential to the performance of the
Employee's duties hereunder. The Employee will not, during or after the term
of his employment by the Company or any of its affiliates, in whole or in
part, disclose such secrets, know-how or processes to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
nor shall the Employee make use of any such property for his own purposes or
for the benefit of any person, firm, corporation or other entity (except the
Company and its affiliates) under any circumstances during or after the term
of his employment, provided that after the term of his employment these
restrictions shall not apply to such secrets, know-how and processes which are
then in the public domain (provided that the Employee was not responsible,
directly or indirectly, for such secrets, know-how or processes entering the
public domain without the Company's consent).
11. Inventions.
(a) The Employee hereby sells, transfers and assigns to the
Company or to any person or entity designated by the Company all of the entire
right, title and interest of the Employee in and to all inventions, ideas,
disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee, solely or jointly,
during the term hereof which relate to methods, apparatus, designs, products,
processes or devices, sold, leased, used or under consideration or development
by the Company or any of its affiliates or which otherwise relate to or
pertain to the business, functions or operations of the Company or any of its
affiliates or which arise from the efforts of the Employee during the course
of his employment for the Company or any of its affiliates. The Employee shall
communicate promptly and disclose to the Company, in such form as the Company
requests, all information, details and data pertaining to the aforementioned
inventions, ideas, disclosures and improvements; and the Employee shall
execute and deliver to the Company such formal transfers and assignments and
such other papers and documents as may be necessary or required of the
Employee to permit the Company or any person or entity designated by the
Company to file and prosecute the patent applications and, as to copyrightable
material, to obtain copyright thereof. Any invention relating to the business
of the Company and its affiliates and disclosed by the Employee within one
year following the termination of this Agreement shall be deemed to fall
within the provisions of this paragraph unless proved to have been first
conceived and made following such termination.
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(b) The Employee has been notified and understands that the
provisions of this paragraph 11 do not apply to any of the aforementioned
inventions, ideas, disclosures and improvements that qualify fully under the
provisions of Section 2870 of the California Labor Code, which states as
follows:
(i) Any provision in an employment agreement which
provides that an employee shall assign, or offer to assign, any of
his or her rights in an invention to his or her employer shall not
apply to an invention that the employee developed entirely on his or
her own time without using the employer's equipment, supplies,
facilities, or trade secret information except for those inventions
that either:
(a) Relate at the time of conception or
reduction to practice of the invention to the employer's business, or
actual or demonstrably anticipated research or development of the
employer.
(b) Result from any work performed by
the employee for the employer.
(ii) To the extent a provision in an employment
agreement purports to require an employee to assign an invention
otherwise excluded from being required to be assigned under
subsection (i), the provision is against the public policy of this
state and is unenforceable.
12. Covenants Not to Compete or Interfere. In consideration for the
Parent's and the Company's promise to provide the compensation and benefits
set forth in this Employment Agreement and as an inducement for Parent to
enter into the Merger Agreement, for a period ending twelve (12) months from
and after the date of termination of the Employee's employment hereunder,
except for a termination of employment pursuant to paragraph 8(a) (i) or 8(a)
(iii) or a voluntary termination by the Employee following a Material
Demotion, the Employee shall not engage in any business (whether as an
officer, director, owner, employee, partner or other direct or indirect
participant) which is engaged in the manufacturing, distribution or research
and development of any products being sold by, or under development by, the
Company or its subsidiaries as of the date of such termination of employment,
in any geographic area where the Company or such subsidiaries are then so
manufacturing or distributing such products, nor shall the Employee interfere
with, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the Company and any customer, supplier, lessor, lessee or
employee of the Company.
It is the desire and intent of the parties that the
provisions of this paragraph 12 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought.
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Accordingly, if any particular portion of this paragraph 12 shall
be adjudicated to be invalid or unenforceable, this paragraph 12 shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of this
paragraph in the particular jurisdiction in which such adjudication is made.
13. Injunctive Relief. If there is a breach or threatened breach of
the provisions of paragraph 10, 11 or 12 of this Employment Agreement, the
Company shall be entitled to an injunction restraining the Employee from such
breach. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies for such breach or threatened breach.
14. Insurance. The Company may, at its election and for its benefit,
insure the Employee against accidental loss or death, and the Employee shall
submit to such physical examination and supply such information as may be
required in connection therewith.
15. Notices. Any notice required or permitted to be given under this
Employment Agreement shall be sufficient if in writing and if sent by
registered mail to Xxxxxxx X. Xxxxxxxxxxxx at his home address as reflected on
the records of the Company, in the case of the Employee, or, in the case of
the Company, to CN Biosciences, Inc., 00000 Xxxxxxx Xxxxxx Xxxxx, Xxx Xxxxx,
XX 00000, Attention: Chief Financial Officer, or to such other officer or
address as the Company shall notify Employee.
16. Waiver of Breach. A waiver by the Company or the Employee of a
breach of any provision of this Employment Agreement by the other party shall
not operate or be construed as a waiver of any subsequent breach by the other
party.
17. Governing Law. This Employment Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
without giving effect to the choice of law or conflict of law provisions
thereof.
18. Assignment. This Employment Agreement may be assigned, without
the consent of the Employee, by the Company to any affiliate of the Company,
or to any person, partnership, corporation, or other entity which has
purchased substantially all the assets of the Company, provided such assignee
assumes all the liabilities of the Company hereunder.
19. Prior Agreement. Effective as of the Effective Date, the
Employment Agreement between the Company and the Employee dated January 4,
1998 is hereby terminated and superseded in its entirety by this Employment
Agreement and Employee hereby waives any right which he may have under such
agreement to resign following the effective date of a "Change in Control" of
the Company (as defined in such agreement) and any and all other rights or
claims to severance benefits or other compensation or benefits under such
agreement following his termination of employment.
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20. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties and supersedes any and all agreements, letter of
intent or understandings between the Employee and (a) the Company, (b) the
Parent or (c) any of the Company's principal shareholders, affiliates or
subsidiaries. This Employment Agreement may be changed only by an agreement in
writing signed by a party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day first herein above written.
CN BIOSCIENCES, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: V.P.
EM INDUSTRIES, INC.
By: /s/Xxxxxx Xxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxx
Title: Group Vice President & CFO
EMPLOYEE
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxxxxxx
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