<PAGE>
EXHIBIT (e)(5)
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made as of July 11, 2000, between CHIREX INC., a Delaware corporation (the
"Company"), and Jon E. Tropsa ("Executive").
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RECITALS
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Executive is currently the Vice President, Finance of the Company and
previously entered into an Employment Agreement dated as of January 1, 1998,
and an amended and restated employment agreement dated as of April 15, 1998.
The parties hereto desire to set forth in writing the current terms of the
Executive's employment relationship with the Company.
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 as follows:
1. Employment.
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(a) The Company hereby agrees to continue its employment of
Executive to render exclusive and full time services to the Company as its
Vice President, Finance and to perform such other duties commensurate with
such office as he shall reasonably be directed by the Chief Executive Officer
and/or Board of Directors of the Company, for the period specified in Section
2.
(b) Executive hereby accepts such employment and agrees to render
the services described above to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner. Executive further agrees to
accept election and to serve during all or any part of the term of this
Agreement as an officer or director of the Company and of any subsidiary or
affiliate of the Company, without any compensation therefor, other than that
specified in this Agreement or as otherwise determined by the Board of
Directors of the Company or of any subsidiary or affiliate, as the case may
be.
(c) The duties to be performed by Executive hereunder shall be
performed primarily at the principal office of the Company at 300 Atlantic
Street, Stamford, Connecticut, subject to reasonable travel requirements on
behalf of the Company.
2. Term of Employment. The employment period of Executive by the
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Company shall commence on July 11, 2000 and end on July 11, 2003 (the "Initial
Term") unless further extended or sooner terminated as hereinafter provided.
Executive may terminate his employment during the Initial Term with six months
written notice to the Company. Commencing on July 11, 2003, and each July 11
thereafter, the term of Executive's employment shall automatically be
extended for one additional year to, respectively, July 11, 2004, and each
July 11 thereafter, unless, not later than six months prior to the end of any
renewal term, either party hereunder shall have given notice to the other
party that it does not wish to extend this Agreement. If the Company gives
Executive notice that it does not wish to extend this Agreement during the
Initial
<PAGE>
Term or any renewal term, Executive shall be entitled to the severance
payments provided in Section 4(d) hereof. As used herein the "Employment
Period" shall refer to the Initial Term and any renewal term of Executive's
employment with the Company.
3. Base Salary and Benefits.
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(a) During the Employment Period, Executive's base salary shall be
$150,000 per annum or such higher rate as the Company may designate from time
to time (the "Base Salary"), which salary shall be payable in regular
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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.
(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 requirements with respect to reporting and
documentation of such expenses.
(c) In addition to the Base Salary, Executive shall be eligible to
receive a bonus payable at the end of each fiscal year during the Employment
Period, which bonus shall be based upon the Company's operating results during
such year and upon Executive achieving defined specific goals and objectives
during the twelve months prior to review.
(d) Executive may be awarded, from time to time, additional
compensation (such as stock options, stock appreciation rights, performance
shares, restricted stock or unrestricted stock) pursuant to the Company's 1997
Stock Incentive Plan or any additional or replacement incentive compensation
program established for the key employees of the Company. Any awards under
such programs shall be at such levels or in such amounts as the Board of
Directors deems, in its sole discretion, appropriate for the position occupied
by Executive and his performance therein. Subject to Section 4 herein, the
terms, conditions and rights with respect to any such grants will be subject
to the actual provisions and conditions applicable to such plans.
4. Termination and Change of Control
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(a) If the Executive shall die during the Employment Period, this
Agreement shall terminate, except that (i) Executive's surviving spouse or, if
none, his estate, shall be entitled to receive Executive's compensation
(including bonus) to the last day of the third calendar month following the
date of his death; and (ii) such termination shall not affect any rights
which Executive may have at the time of his death pursuant to any insurance or
other death benefit, retirement, stock option or other plans or arrangements
of the Company or of any subsidiary or affiliate of the Company, which rights
shall continue to be governed by the provisions of such plans and
arrangements.
(b) At the sole discretion of the Board of Directors, Executive may
be terminated if the Executive is disabled (as defined below) and shall have
been absent from his duties with the Company on a full time basis for one
hundred and eighty (180) consecutive days,
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and, within thirty (30) days after written notice by the Company to do so, the
Executive shall not have returned to the performance of his duties hereunder
on a full time basis. In the event of such termination, the Company shall make
to Executive the payments specified in Section 4(d). As used herein, the term
"disabled" shall (i) mean that Executive is unable, as a result of a medically
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determinable physical or mental impairment, to perform the duties and services
of his position, or (ii) have the meaning specified in any disability
insurance policy maintained by the Company, whichever is more favorable to the
Executive.
(c) The Company may, by notice to Executive, terminate Executive's
employment hereunder for cause. As used herein, "cause" shall mean (i) the
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conviction of Executive of a felony or conviction of a misdemeanor if such
misdemeanor involves moral turpitude; or (ii) Executive's voluntary engagement
in conduct constituting larceny, embezzlement, conversion or any other act
involving the misappropriation of Company funds in the course of his
employment; or (iii) the willful refusal to carry out specific directions of
the Board of Directors, which directions shall be consistent with the
provisions hereof; or (iv) Executive's committing any act of gross negligence
or intentional misconduct in the performance or non-performance of his duties
as an employee of the Company; or (v) any material breach by the Executive of
any material provision of his Agreement (other than for reasons related only
to the business performance of the Company or business results achieved by
Executive). For purposes of this Section 4(c), no act or failure to act on
Executive's part shall be considered to be reason for termination for cause
if done, or omitted to be done, by Executive in good faith and with the
reasonable belief that the action or omission was in the best interests of the
Company.
(d) Executive's employment may be terminated at any time by the
Company without cause; provided, however, that in such event Executive shall
be entitled to receive (so long as he executes and delivers the Company's
standard form of release), (i) 140% of Executive's then effective annual Base
Salary, and (ii) a cash allowance for outplacement pursuant to the Company's
U.S Outplacement Policy; provided further, however, that if such termination
occurs within 90 days of a Change in Control (as defined below), Executive
shall instead be entitled to receive the amounts referred to in Section 4(e).
The foregoing amounts shall be payable in one lump sum payment within five
(5) days after Executive's last day of active employment. In addition,
Executive shall be entitled to continue participation in the Company's health
and other welfare benefit plans for a period of up to one year or until
Executive is covered by a successor employer's benefit plans, whichever is
sooner.
(e) If (i) Executive's employment is terminated pursuant to
subsections (a), (b), (d), (e) or (g) of this Section 4; or (ii) a "Change in
Control" of the Company (as defined in Section 4(f) below) occurs, then, in
either case, all stock options, restricted stock, deferred compensation and
similar benefits which have not yet become vested on the date of termination
or the date of a Change in Control, as the case shall be, will become vested
upon such event, and Executive shall be permitted to exercise all such rights
in accordance with the administrative provisions of those plans, and in the
case of a Change of Control, whether or not Executive remains employed with
the Company or terminates his employment in accordance with this subsection
(e). If a Change in Control event involves a tender offer for all or part of
the Company's shares, the vesting date for stock options and restricted stock
pursuant to this subsection (e) shall be a date which permits Executive to
participate in such tender offer with such stock options or restricted shares.
In addition, if a Change in Control occurs, Executive may, after such Change
in Control, terminate his employment with the Company for any reason within
the period prior to the expiry of ninety (90) days immediately following such
Change in Control,
<PAGE>
in which event Executive shall be entitled to receive the following: (i) a
lump sum payment within five days of such termination of employment, in the
amount of 2.5 times the sum of (x) the Executive's Base Salary and (y) 40% of
the Executive's Base Salary; and (ii) continuation, for a period of two years
after the date of such termination of employment, for the benefit of the
Executive and his immediate family, of all welfare benefits (including but not
limited to medical, health and hospitalization, dental, life and disability
insurance benefits) provided to the Executive and his immediate family on the
date immediately prior to the Change in Control. For purposes of clarity, in
the event that the Executive receives benefits pursuant to this Section 4(e),
he shall not be eligible to receive benefits under Section 4(d) or Section
4(g) of this Agreement (but he shall be eligible for such other rights as are
described elsewhere in this Agreement).
(f) For purposes of this Agreement, a "Change in Control" of the
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Company shall be deemed to have occurred if: (i) any person (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities and Exchange Act of
1934) becomes the beneficial owner, directly or indirectly, of Company
securities representing 30% or more of the capital stock of the Company; or
(ii) individuals who constitute the Company's Board of Directors as of the
date of this Agreement (the "Incumbent Board") cease for any reason to
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constitute at least a majority thereof, provided, however, that any person
becoming a director subsequent to the date of this Agreement whose election,
or nomination for election by the Company's stockholders, was approved by a
vote of at least 51% of the directors comprising the Incumbent Board (either
by a specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for director, without objection to
such nomination) shall be, for the purpose of this clause (ii), considered as
though such person were a member of the Incumbent Board; or (iii) the
Company's shareholders approve a merger or consolidation (where in either case
the Company is not the survivor thereof) in which shareholders of the Company
cease to own at least 80% of the surviving entity's voting power, or a sale
or disposition of all or substantially all of the Company's assets or a plan
of partial or complete liquidation of the Company.
(g) Executive's employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i)
the assignment to Executive of any duties inconsistent in any respect with
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties or responsibilities as contemplated by
Section 1(a) hereof, or any other action by the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company promptly after receipt of
notice thereof given by Executive; (ii) any failure by the Company to comply
with any of the provisions of Section 3 hereof, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive; (iii) the Company's requiring Executive to be based at any office
or location other than as provided in Section 1(c) hereof; (iv) any purported
termination by the Company of Executive's employment otherwise than as
expressly permitted by this Agreement; or (v) any failure by the Company to
obtain an express assumption of this Agreement by a successor as required
pursuant to Section 14 hereof. For purposes of this Section 4(g), any good
faith determination of "Good Reason" made by Executive shall be conclusive.
Upon any termination pursuant to this subsection (g), Executive shall be
entitled to the payment specified in Section 4(d) hereof and to the other
rights described therein (subject to his compliance therewith).
<PAGE>
(h) 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) or any entity
which effectuates a Change in Control (or any of its affiliated entities) to
or for the benefit of Executive (whether pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional
payments required under this Section 4(h) (the "Payments") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), or any interest or penalties are incurred by
Executive 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 shall pay to Executive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Executive of
all taxes (including any Excise Tax) imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the sum of (x)
the Excise Tax imposed upon the Payments and (y) the product of any deductions
disallowed because of the inclusion of the Gross-up Payment in Executive'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, the
Executive 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.
(i) Subject to the provisions of Section 4(h), all determinations
required to be made under this Section 4, 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 Change in Control (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and Executive
within fifteen (15) business days of the receipt of notice from the Company or
the Executive 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 serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, Executive 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 4 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 Executive, it shall furnish Executive with a written opinion
to such effect, and to the effect that failure to report the Excise Tax, if
any, on Executive'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 Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time
of the Determination, it is possible that Gross-up Payments which will not
have been made by the Company should have been made ("Underpayment") or Gross-
up Payments are made by the Company which should not have been made
("Overpayment"), consistent with the calculations required to be made
hereunder. In the event that the Executive 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
<PAGE>
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) shall be promptly paid by the Company to or for the benefit of
Executive. In the event the amount of the Gross-up Payment exceeds the amount
necessary to reimburse the Executive 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 Executive (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. Executive 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.
5. Confidential Information.
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(a) Executive 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 or any other
subsidiary ("Confidential Information") are the property of the Company or
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such subsidiary. Therefore, Executive 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, learned by him prior to or
after the date of this Agreement, and not to disclose them to anyone outside
the Company, either during or after his employment with the Company, except
(i) in the course of performing his duties 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 Executive's acts or omissions; or (iv) where required to be
disclosed by court order, subpoena or other government process. If Executive
shall be required to make disclosure pursuant to the provisions of clause (iv)
of the preceding sentence, Executive 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 9 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.
(b) Executive shall deliver to the Company at the termination of
his employment, 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, Work Product (as defined below) or the business of the Company or
any subsidiary which he may then possess or have under his control.
6. Inventions and Patents. Executive acknowledges that all
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inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information (whether or
not patentable) which relate to the Company's or any of its subsidiaries'
actual or anticipated business, research and development or existing or future
products or services and which are conceived, developed or made by Executive
while employed by the Company or its predecessor and its subsidiaries ("Work
----
Product") belong to the Company or such subsidiary. Executive shall promptly
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disclose such Work Product to the Board and perform all actions reasonably
requested by the Board (whether during or after his employment) to establish
and confirm such ownership (including, without limitation, assignments,
consents, powers of attorney and other instruments).
<PAGE>
7. Indemnification. The Company will indemnify Executive and his
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legal representatives, to the fullest extent permitted by the laws of the
State of Delaware and the existing by-laws of the Company or any other
applicable laws or the provisions of any other corporate document of the
Company, and Executive 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 him 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.
8. Executive's Representations. Executive hereby represents and
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warrants to the Company that (i) the execution, delivery and performance of
this Agreement by Executive do not and shall 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, and
(ii) 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.
<PAGE>
9. Notices. Any notice provided for in this Agreement shall be in
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writing and shall be deemed to have been duly given if delivered personally
with receipt acknowledged or sent by registered or certified mail or
equivalent, if available, postage prepaid, or by fax (which shall be confirmed
by a writing sent by registered or certified mail or equivalent on the same
day that such fax was sent), addressed to the parties at the following
addresses or to such other address as such party shall hereafter specify by
notice to the other:
Notices to Executive: Jon E. Tropsa
-------------------- [REDACTED]
Notices to the Company: ChiRex Inc.
---------------------- 300 Atlantic Street, Suite 402
Stamford, Connecticut 06901
(Phone) (203) 351-2300
(Fax) (203) 425-9996
Attention: Vice President, General Counsel
10. 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.
11. Complete Agreement. This Agreement constitutes the complete
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agreement and understanding among the parties and supersedes and preempts 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.
12. No Strict Construction. The language used in this Agreement
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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.
13. Counterparts. This Agreement may be executed in separate
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counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
14. Successors and Assigns. This Agreement is intended to bind and
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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. The Company will require any successor to all or
substantially all of the business and/or assets of the Company 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.
<PAGE>
15. Choice of Law. All issues and questions concerning the
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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 New York, without giving effect to
any choice of law or conflict of law rules or provisions that would cause the
application of the laws of any jurisdiction other than the State of New York.
16. Amendment and Waiver. The provisions of this Agreement may be
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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.
17. Arbitration. Any controversy or claim arising out of or
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relating to this Agreement, the making, interpretation or the breach thereof,
other than (a) a claim solely for injunctive relief for any alleged breach of
the provisions of Section 5 as to which the parties shall have the right to
apply for specific performance to any court having equity jurisdiction; and
(b) the determination of Excise Tax and Gross-Up Payment pursuant to Section 4
herein; 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 judgement upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof and any party to the
arbitration may, if he elects, 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.
18. Legal Fees and Expenses. The Company shall reimburse Executive
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for all reasonable legal fees and expenses incurred by Executive in connection
with (a) review and/or any claims made regarding the Company's determination
of Excise Tax and Gross-Up Amount pursuant to Section 4 herein, or (b) any
arbitration proceeding brought under this Agreement pursuant to Section 17,
where the arbitration is concluded in Executive's favor.
<PAGE>
19. No Mitigation or Set-Off. The provisions of this Agreement are
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not intended to, nor shall they be construed to require that Executive
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 Executive as a
result of his employment by another employer or otherwise. The Company's
obligations to make the payments to Executive 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 Executive.
* * * * * * * * * * * * * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CHIREX INC.
By: /s/ Michael A. Griffith
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Michael A. Griffith
Chairman and Chief Executive Officer
/s/ JON E. TROPSA
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JON E. TROPSA
