Document:

Exhibit
10.1

 

MUELLER
GROUP, INC.

 

EMPLOYMENT
AGREEMENT

 

This AGREEMENT (this “Agreement”)
is entered into as of February 18, 2005, by and between Darrell Jean (the “Employee”) and Mueller Group, Inc., a Delaware corporation (the
“Company”).

 

WHEREAS, the Employee is currently an
employee of the Company;

 

WHEREAS, the Company and the Employee desire
to modify and memorialize, as of the Effective Date (as defined below in
paragraph 1), certain aspects of such employment relationship;

 

NOW, THEREFORE, in consideration of the
covenants and conditions herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
each party, the parties hereto hereby agree as follows:

 

1.                                       Employment.  The
Employee’s employment with the Company under this Agreement shall have
commenced as of January 1, 2005 (the “Effective Date”)
and shall continue through December 31, 2007 (such three (3) year period, the
“Term”) (subject to paragraphs 3 and 4(f)),
and the Employee hereby accepts such employment, all upon the terms and
conditions set forth herein.

 

2.                                       Duties and Responsibilities. 
The Employee shall hold the position of Vice President of Business
Development of the Company and shall report to the Chief Executive Officer of
the Company.  The Employee shall have
those duties and responsibilities that are commensurate with his position and
assigned to him by the Chief Executive Officer of the Company.

 

3.                                       Termination of Employment. 
During the Term:

 

(a)                   The Company may
terminate the Employee’s employment for Cause (as defined below in paragraph 3(e))
at any time, effective immediately, or for any reason other than for Cause at
any time.

 

(b)                  The Employee may
terminate his employment with the Company at any time, by not less than thirty
(30) days prior written notice (which notice, the Company may waive in its sole
discretion).

 

(c)                   The Employee’s
employment may terminate due to his death or Disability (as defined below in
paragraph 3(f)).

 

(d)                  In the event of
termination of the Employee’s employment: (i) by the Company for Cause, or (ii)
by the Employee for whatever

 

1

 

reason, or (iii)
due to the death of the Employee, or (iv) due to the Disability of the Employee,
the Company shall continue to compensate the Employee in the normal course
through the effective date of termination, and the severance payment
obligations of paragraph 4(f) shall be inapplicable.

 

(e)                   For purposes of
this Agreement, “Cause” shall mean the Employee’s: (i)
failure to substantially perform his duties; (ii) conviction of a felony; (iii)
act of fraud, embezzlement or willful dishonesty in relation to the business or
affairs of the Company or any other felonious conduct on the part of the
Employee that is demonstratably detrimental to the best interests of the
Company; (iv) being repeatedly under the influence of illegal drugs or alcohol while
performing his duties; or (v) commission of any other willful act that is
demonstratably injurious to the financial condition or business reputation of
the Company.

 

(f)                     For purposes
of this Agreement, “Disability”
shall be deemed to have occurred if the Employee has been unable to perform the
duties of his employment due to mental or physical incapacity for a period of six
(6) consecutive months or for any twelve (12) months in any period of twenty-four
(24) consecutive months.

 

4.                                       Compensation.  In
return for his services hereunder, the Employee shall be entitled to (i) the
Salary and bonus opportunity as specified below and (ii) certain fringe
benefits to the extent provided below.

 

(a)                   Salary.  Starting with the Effective Date, the
Employee shall be paid a base salary (the “Salary”) at an
annual rate of not less than Two Hundred Thousand ($200,000) Dollars.  The Salary shall be reviewed no less
frequently than annually by the compensation committee of the board of
directors of Mueller Water Products, Inc. and shall be increased by an amount
that is at least equal to the greater of (i) four (4%) percent of the Employee’s
base salary in effect immediately prior to such adjustment or (ii) the product
of (A) the cost of living increase (as defined in the immediately subsequent
sentence) and (B) the Employee’s base salary in effect immediately prior to
such adjustment.  The “cost of living increase” shall mean the
difference, expressed as a percentage, between (i) the Consumer Price Index
most recently published by the Bureau of Labor Statistics of the U.S.
Department of Labor, Chicago-Gary-Kenosha, for urban wage earners and clerical
workers, prior to the date of such adjustment and (ii) such index as so
published for the immediately proceeding period.  Salary payments shall be made as customarily
disbursed by the Company.

 

(b)                  Annual Bonus.  The Employee shall receive an annual bonus,
payable at the conclusion of each fiscal year, equivalent to not less than five
(5%) percent of the bonus pool applicable to compensate senior

 

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executives of
the Company (currently, the Senior Executive Bonus Pool of the Mueller Water
Products, Inc. Management Incentive Plan).

 

(c)                   IPO Equity
Compensation.  In the event an
initial public offering of equity securities by Mueller Water Products, Inc. is
consummated during the Employee’s employment with the Company and if other
senior executives of the Company are entitled to receive equity compensation
awards in connection with such offering, the Employee shall be entitled to
participate in such awards in a manner similar to such other senior executives;
provided that the level of the Employee’s
participation will be subject to the sole discretion of the board of directors
of Mueller Water Products, Inc.

 

(d)                  Fringe
Benefits and Expenses.  The Employee
shall be entitled to participate from time to time in all fringe benefits of
the Company made available to employees generally, and employees of a class including
the Employee.  For purposes of this
paragraph 4(d), the Employee will be included in the class of senior executives
of the Company.  The Company shall
promptly reimburse the Employee for all ordinary and necessary expenses
incurred by the Employee on behalf of the Company.

 

(e)                   Insurance
and Indemnification.  The Employee
shall be entitled to such insurance coverage and indemnification, including
reimbursement of legal fees and expenses, as are maintained by the Company and
its affiliates from time to time for its senior executives in accordance with
and to the extent of the governing documents of the Company and its affiliates
and applicable law.  For the avoidance of
doubt, this paragraph 4(e) shall survive the expiration or termination of this
Agreement.

 

(f)                     Severance
Payment.  In the event the Employee
is terminated by the Company for any reason other than for Cause on or before December 31,
2006, the Employee shall be entitled to severance compensation in an amount
equal to the greater of (i) the sum of the unpaid Salary (as would have been in
effect) and annual bonus (only if and to the extent bonus is paid to other
senior executives of the Company) for the remainder of the Term, or (ii) the
sum of (A) eighteen (18) months Salary (at the rate then in effect), plus (B)
one hundred fifty (150%) percent of the annual bonus paid or payable to the
Employee for the fiscal year immediately preceding the fiscal year in which
such termination occurs, and in the event the Employee is terminated by the
Company for any reason other than for Cause after December 31, 2006 but
before the end of the Term, the Employee shall be entitled to severance compensation
in an amount as described in clause (ii) above. 
Such severance compensation shall be payable ratably in monthly
installments, commencing six (6) months from the effective date of such
termination.

 

3

 

In addition, in the event the Employee is
terminated by the Company for any reason other than for Cause at any time
before the end of the Term, Mueller Water Products, Inc. shall waive any right
to repurchase any of its equity securities then held by the Employee.  Notwithstanding anything set forth in this
paragraph 4(f) to the contrary, the Company’s obligation to make the severance
payments provided for herein is and shall be conditioned upon the execution by
the Employee, tender to the Company and non-revocation by the Employee of a
release of claims against the Company. 
Said release of claims shall be in a form conforming in all material
respects to the release attached hereto and incorporated herein as Exhibit #1
(the “Release”).

 

5.                                       Provisions Relating to Employee Conduct and Termination of Employment.

 

(a)                   Confidentiality.  The Employee recognizes and acknowledges that
certain assets of the Company constitute Confidential Information (as defined
below in paragraph 5(c)).  The Employee
agrees that at all times during his employment and thereafter for a period of
three (3) years following the termination of such employment, howsoever such
termination may occur, he will keep and maintain all Confidential Information
confidential.

 

(b)                  Return of
Materials.  The Employee agrees that
on the termination of his employment, howsoever such termination may occur, the
Employee will promptly return to the Company all materials and other property
from time to time held by the Employee and proprietary to the Company, that is,
all Confidential Information which had been reduced to written form.

 

(c)                   Confidential
Information.  For purposes of this
Agreement, “Confidential Information” shall
mean all trade secrets and other proprietary information of the Company not
within the public domain.

 

(d)                  Noncompetition.  The Employee agrees that at all times during
his employment and (subject to the payment and performance by the Company of
its obligations under paragraphs 3 and 4(f)) thereafter for a period of one (1)
year following the termination of such employment, howsoever such termination
may occur, the Employee will not, directly or indirectly, compete with the
Company anywhere in the United States or Canada.

 

6.                                       Release.

 

(a)                   Release.  As consideration and a material inducement to
the Company to enter into this Agreement and to provide to the Employee the
payments and benefits hereunder, the Employee hereby voluntarily,

 

4

 

irrevocably
and unconditionally releases and forever discharges the Company and its owners,
partners, predecessors, successors, assigns, subsidiaries and affiliates, and
their agents, insurers, auditors, attorneys, directors, officers, employees,
representatives and contractors, and all persons acting through, by, under or
in concert with any of the above (collectively, the “Releasees”),
from any and all complaints, claims, demands, liabilities or rights, whether
known or unknown and whether in law or in equity, that the Employee had, now has
or may claim to have in the future that arise in whole or in part from his
employment at the Company through the effective date of this Agreement (collectively,
the “Claims”).  This general release specifically includes
without limitation Claims for unpaid wages, Claims of discrimination under
Title VII of the Civil Rights Act of 1964 or any other prohibited basis
identified under any federal, state or local statute, regulation or ordinance
(including without limitation the Illinois Human Rights Act), Claims under the
Fair Labor Standards Act, Claims for work-related injury or illness, whether
physical in nature or manifested by psychological or emotional stress, Claims
of fraud, conspiracy, breach of employment contract, interference with
employment contract, breach of the implied covenant of good faith and fair
dealing, infliction (negligent or intentional) of emotional distress,
defamation or any other Claim arising out of the Employee’s employment with the
Company, including without limitation any Claims under any federal, state or
local statute, regulation, ordinance or common law.

 

(b)                  Understanding
of Release.  It is expressly
understood and intended that, except as otherwise set forth in this paragraph 6,
this is the Employee’s complete and final release of any and all Claims of
whatever nature as of the date of this Agreement against the Releasees.  The Employee further acknowledges and agrees
that the release contained in this paragraph 6 is an essential material
provision of the Agreement and that without this release, the Company would not
have entered into this Agreement with the Employee.

 

(c)                   The Company’s
Non-Admission of Liability.  The
Employee understands that the release contained in this paragraph 6 shall not
be understood or construed as an admission that the Company or any of the other
Releasees has violated the Employee’s rights in any manner whatsoever, or the
rights of anyone else.

 

7.                                       Miscellaneous.

 

(a)                   Tax
Withholding.  All payments under this
Agreement shall be subject to deduction and withholding authorized or required
by applicable law.

 

(b)                  Supersedes
Prior Agreements.  This Agreement
supersedes any and all other employment, change-in-control, severance or
similar

 

5

 

discussions,
negotiations, arrangements and agreements (proposed or otherwise, written or
oral) between or on behalf of the Employee and the Company, including without
limitation the discussion points contained in a memorandum dated January 29,
2005, the responsive letter from the Employee’s counsel to the Company dated February 8,
2005 and the Company’s Key Employee Severance Plan.

 

(c)                   Binding
Effect.  This Agreement shall be
binding upon and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the respective parties.

 

(d)                  Notices.  All notices and other communications
hereunder shall be in writing or by written telecommunication (i.e., facsimile), and shall be deemed to have been duly
given if delivered personally or if sent by overnight courier or by certified
mail, return receipt requested, postage prepaid, or sent by written
telecommunication, receipt confirmed, if to the Company, to its corporate
headquarters and, if to the Employee to his last residence as shown on the
records of the Company.

 

(e)                   Venue;
Jurisdiction.  The parties hereto
agree that any dispute hereunder, or otherwise relating to the Employee’s
employment relationship with the Company or the termination thereof, whether or
not arising during the Term, shall be submitted to the federal or appropriate
state court having jurisdiction and located in Illinois, and the parties consent
to the exclusive venue and jurisdiction of such courts.

 

(f)                     Governing
Law.  This Agreement is to be
governed and construed according to the internal substantive laws of Illinois,
without regard to its conflict of laws provisions, and is to take effect as an
instrument under seal.

 

(g)                  Conflicts.  To the extent that this Agreement conflicts
with any provision in any handbook, policy manual, rule or regulation of the
Company or its affiliates, the provisions of this Agreement shall take
precedence.

 

[
Remainder of Page Intentionally Left Blank ]

 

6

 

IN WITNESS WHEREOF, the parties have duly
executed this Agreement as of the date and year first above written.

 

 

	
   

  	
  MUELLER GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dale B.
  Smith

  
	
   

  	
   

  	
  Name:

  	
  Dale B. Smith

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Darrell
  Jean

  
	
   

  	
  Darrell Jean

  

 

7

 

Exhibit #1

To

Agreement
between Mueller Group, Inc. and Darrell Jean

Dated February 18,
2005

 

                   ,
2    

 

RELEASE

 

As consideration and a material inducement to
Mueller Group, Inc. (the “Company”) to
provide to me the severance payments and benefits ( the “Severance Payment”)
described in Paragraph 4(f) of a certain Agreement between me and the Company dated
February 18, 2005 (the “Agreement”), I,
Darrell Jean, hereby voluntarily, irrevocably and unconditionally release and
forever discharge the Company and its owners, partners, predecessors,
successors, assigns, subsidiaries and affiliates, and their agents, insurers, auditors,
attorneys, directors, officers, employees, representatives and contractors, and
all persons acting through, by, under or in concert with any of the above
(collectively, the “Releasees”),
from any and all complaints, claims, demands, liabilities or rights, whether
known or unknown and whether in law or in equity, that I had, now have or may
claim to have in the future that arise in whole or in part from my employment
at or termination from the Company (collectively, the “Claims”).  This general release specifically includes
without limitation Claims for unpaid wages, Claims of discrimination under
Title VII of the Civil Rights Act of 1964, the Age Discrimination In Employment
Act (“ADEA”) (see attached STATEMENT OF
RIGHTS UNDER ADEA) or any other prohibited basis identified under any federal,
state or local statute, regulation or ordinance (including without limitation
the Illinois Human Rights Act), Claims under the Fair Labor Standards Act, Claims
for work-related injury or illness, whether physical in nature or manifested by
psychological or emotional stress, Claims of fraud, conspiracy, breach of
employment contract, interference with employment contract, wrongful discharge
in violation of public policy, breach of the implied covenant of good faith and
fair dealing, infliction (negligent or intentional) of emotional distress, defamation
or any other Claim arising out of my employment or severance of my employment
with the Company, including without limitation any Claims under any federal,
state or local statute, regulation, ordinance or common law.

 

Understanding of Release

 

It is expressly understood and intended that,
except as otherwise set forth herein, this is my complete and final release of
any and all Claims of whatever nature against the Releasees.  I further acknowledge and agree that this release
is an essential material provision of the Agreement and that without this release,
the Severance Payment provided for in the Agreement would not be made in

 

8

 

connection with my separation from the Company.  I understand, warrant and agree that I am
responsible for any federal, state and local taxes, which may be owed by me by
virtue of the receipt of the Severance Payment.

 

The Company’s Non-Admission of Liability

 

I understand that the Company shall tender to
me the Severance Payment provided for in the Agreement solely to ease the
impact of the loss of my employment and to effectuate a mutually acceptable
separation from my employment with the Company. 
The fact that the Company is making the Severance Payment to me shall not
be understood or construed as an admission that the Company or any of the other
Releasees has violated my rights in any manner whatsoever, or the rights of
anyone else.

 

Miscellaneous

 

This Release shall be governed by and
construed in accordance with the internal laws of Illinois without regard to
its conflicts of law principles.  The
Agreement and this Release shall be binding upon the respective heirs, legal
representatives, successors and assigns of me and the Company.

 

9

 

ACKNOWLEDGEMENT

 

I ACKNOWLEDGE THAT I HAVE THE RIGHT TO CONSULT MY FINANCIAL, TAX AND
LEGAL ADVISORS REGARDING THIS RELEASE BEFORE SIGNING AND THAT I AM ENCOURAGED
BY THE COMPANY TO CONSULT SUCH ADVISORS BEFORE SIGNING.  FURTHER I ACKNOWLEDGE THAT I HAVE HAD
SUFFICIENT TIME TO CONSIDER THE TERMS OF THIS RELEASE.

 

MY SIGNATURE BELOW IS EVIDENCE THAT I HAVE CAREFULLY READ AND FULLY
UNDERSTAND ALL OF THE PROVISIONS OF THIS RELEASE AND THAT I HAVE HAD SUFFICIENT
TIME AND OPPORTUNITY TO CONSIDER THE SEVERANCE PAYMENT AND RELEASE PROVISIONS CONTAINED
IN THE AGREEMENT AND/OR IN THIS RELEASE AND CONSULTED WITH MY FINANCIAL, TAX, AND
LEGAL ADVISORS BEFORE SIGNING THIS RELEASE. 
I VOLUNTARILY ACCEPT THE TERMS STATED IN THIS RELEASE.  I ACKNOWLEDGE THAT I AM NOT UNDER DURESS,
COERCION OR UNDUE INFLUENCE AND HAVE CHOSEN TO EXECUTE THIS RELEASE
VOLUNTARILY.

 

I ACKNOWLEDGE THAT I AM ENTITLED TO UP TO TWENTY-ONE (21) DAYS TO
CONSIDER WHETHER OR NOT TO SIGN THIS RELEASE. 
IF I DECIDE TO SIGN, THE EXECUTED RELEASE MUST BE RETURNED TO THE
GENERAL COUNSEL OF THE COMPANY NO LATER THAN 5:00 P.M. (EASTERN TIME),                             ,
2     .  I MAY SIGN
THIS RELEASE PRIOR TO THE END OF THE TWENTY-ONE (21) DAY PERIOD, BUT THE COMPANY
CANNOT REVOKE THIS OFFER BEFORE THEN.

 

I ACKNOWLEDGE THAT IF I DECIDE TO EXECUTE THIS RELEASE, I HAVE SEVEN
(7) DAYS AFTER DOING SO TO REVOKE THE SEVERANCE PAYMENT AND RELEASE PROVISIONS
OF THE AGREEMENT AND THIS RELEASE.  THAT
MEANS THAT IF, FOR ANY REASON, I DECIDE THAT SIGNING THIS RELEASE WAS NOT IN MY
BEST INTEREST, I HAVE SEVEN (7) DAYS AFTER SIGNING TO MAKE THAT DECISION.  SUCH REVOCATION MUST BE IN WRITING AND
RECEIVED BY THE GENERAL COUNSEL OF THE COMPANY NO LATER THEN 5:00 P.M. (EASTERN
TIME) ON THE SEVENTH (7TH) CALENDAR DAY (OR THE FIRST WORK DAY
THEREAFTER), BEGINNING WITH THE DAY AFTER I EXECUTE THIS AGREEMENT.

 

The terms of the Agreement and this Release constitute the entire
understanding concerning my employment, separation and all other subjects
addressed in the Agreement and this Release. 
Except as specifically provided therein and herein, the Agreement and
this Release supersede and replace all prior discussions, negotiations,
arrangements and agreements (proposed or otherwise, written or oral) concerning
the subject matter therein and herein.

 

10

 

Attachment

 

STATEMENT
OF RIGHTS UNDER ADEA

 

NOTE: THIS STATEMENT IS BEING FURNISHED TO YOU IN CONJUNCTION WITH AN OFFER
TO PROVIDE YOU WITH SEVERANCE PAYMENTS, TO WHICH YOU ARE NOT OTHERWISE
ENTITLED, IN EXCHANGE FOR YOUR AGREEMENT TO RELEASE OR WAIVE CLAIMS UNDER THE
FEDERAL AGE DISCRIMINATION IN EMPLOYMENT ACT AND CERTAIN OTHER LAWS (REFERRED
TO AS THE “RELEASE AGREEMENT”).  PLEASE READ THIS STATEMENT CAREFULLY AND ACKNOWLEDGE
BELOW.

 

The federal Age Discrimination in Employment Act (“ADEA”)
(29 U.S.C. ss. 621 et seq.) prohibits an employer from discriminating against
any employee age 40 or over because of that individual’s age.  The ADEA prohibits discrimination in all
terms and conditions of employment, including hiring, promotions, transfers,
demotions, salary or termination.

 

The ADEA also provides employees/former employees with certain rights in
connection with any release or waiver of claims under the ADEA.  Specifically, in order for such a release or
waiver to be valid, the following must occur:

 

11

 

1.                                       The release or
waiver must be part of an agreement between the individual and the employer
that is written in a manner that can be understood by the individual or by an
average individual eligible to participate (29 U.S.C. ss. 626(f)(1)(A)).

 

2.                                       The waiver must
specifically refer to rights or claims arising under the ADEA.  (29 U.S.C. ss. 626(f)(1)(B)).

 

3.                                       The individual
is not required to waive rights or claims that arise after the date the waiver is
executed.  (29 U.S.C. ss. 626(f)(1)(C)).

 

4.                                       The individual
may waive rights or claims only in exchange for consideration in addition to
anything of value to which he is already entitled.  (29 U.S.C. ss. 626(f)(1)(D)).

 

5.                                       THE INDIVIDUAL
MUST BE ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THE
RELEASE AGREEMENT.  (29 U.S.C. ss. 626(f)(1)(E)).

 

6.                                       THE INDIVIDUAL
MUST BE GIVEN A PERIOD OF AT LEAST TWENTY-ONE (21) DAYS IN WHICH TO CONSIDER
THE RELEASE AGREEMENT.  (29 U.S.C. ss.
626 (f)(1)(F)(i)).

 

7.                                       THE RELEASE
AGREEMENT MUST PROVIDE FOR A PERIOD OF AT LEAST SEVEN (7) DAYS AFTER THE
RELEASE AGREEMENT’S EXECUTION IN WHICH THE INDIVIDUAL MAY REVOKE THE RELEASE
AGREEMENT.

 

Furthermore, the Release Agreement must not
become effective or enforceable until this revocation period has passed.  (29 U.S.C. ss. 626(f)(1)(G)).  This statement has been provided to you in
conjunction with a request or offer to enter into an agreement that provides,
among other things, that you release or waive your right to make claims under
the ADEA.

 

In conformance with the requirements set
forth above, your employer hereby:

 

(a)                   ADVISES YOU TO
CONSULT AN ATTORNEY BEFORE YOU SIGN THE RELEASE AGREEMENT.

 

(b)                  OFFERS YOU AT
LEAST TWENTY-ONE (21) DAYS from your receipt of the proposed Release Agreement
and this statement to consider and sign the Release Agreement.  The Release Agreement should be returned to the
address below with your signature by 5:00 P.M. (Eastern time) on                            ,
2        in order to be accepted.

 

12

 

(c)                   Allows you
SEVEN (7) DAYS after the date you return the Release Agreement with your
signature to revoke the Release Agreement. 
If we receive no revocation within that period, the Release Agreement
will become effective and enforceable.  Your
revocation must be in writing, and sent by overnight courier or by certified
mail, return receipt requested, postage prepaid, or by written
telecommunication (i.e.,
facsimile), receipt confirmed, to:

 

Mueller Group, Inc.

110 Corporate Drive – Suite 10

Portsmouth, NH 03801

Attn: General Counsel

Telephone: (603) 422-8090

Facsimile: (603) 422-8035

 

IF YOU DO NOT UNDERSTAND ANYTHING IN OR ABOUT
THIS STATEMENT OF RIGHTS, THE PROPOSED RELEASE AGREEMENT, OR THE RELEASE OR
WAIVER OF RIGHTS CONTAINED IN THE PROPOSED RELEASE AGREEMENT, PLEASE LET US
KNOW SO THAT WE CAN PROVIDE CLARIFICATION. 
WE WILL ASSUME, AND ASK ANY COURT OR TRIER OF FACT TO ASSUME, THAT YOU
HAVE UNDERSTOOD EVERYTHING ON WHICH CLARIFICATION HAS NOT BEEN SOUGHT.

 

In order to document compliance with the
various legal requirements described above, we will need you to sign and date
the acknowledgment of receipt of this Statement and the proposed Release
Agreement in which the release/waiver of claims under the ADEA appears.  You will be provided with a copy of this
Statement and your acknowledgment of receipt for your records.

 

13

 

ACKNOWLEDGMENT
OF RECEIPT

 

I HEREBY ACKNOWLEDGE THAT ON THE DATE
INDICATED BELOW, I RECEIVED A COPY OF THE PROPOSED RELEASE AGREEMENT THAT
INCLUDES A WAIVER/RELEASE OF CLAIMS UNDER THE ADEA, AND OF THE STATEMENT OF
RIGHTS UNDER THE ADEA.

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Darrell Jean

  
	
   

  	
   

  	
   

  

 

14Exhibit
10.45

 

BIOSITE
INCORPORATED

 

CHANGE IN
CONTROL SEVERANCE BENEFIT PLAN

 

Section 1.                                                                                          INTRODUCTION.

 

The Biosite Incorporated Change in Control
Severance Benefit Plan (the “Plan”) was established effective October 22, 2004
(the “Effective Date”).  The purpose of the Plan is to provide
severance benefits to certain eligible employees and directors of the Company
and its Affiliates upon selected terminations of service in connection with a
Change in Control.  This Plan document is
also the Summary Plan Description for the Plan.

 

Section 2.                                                                                          DEFINITIONS.

 

The following shall be defined terms for
purposes of the Plan:

 

(a)                                  “Affiliate”
means a Parent Corporation or a Subsidiary Corporation.

 

(b)                                  “Base Salary” means a Participant’s
monthly base salary in effect immediately prior to the Employee Covered
Termination (including without limitation any compensation that is deferred by
Participant into a Company-sponsored retirement or deferred compensation plan,
exclusive of any employer matching contributions by the Company associated with
any such retirement or deferred compensation plan and exclusive of any other
Company contributions) and excludes all bonuses, commissions, expatriate
premiums, fringe benefits (including without limitation car allowances), option
grants, equity awards, employee benefits and other similar items of
compensation.

 

(c)                                  “Board” means the Board of Directors of
the Company.

 

(d)                                  “Cause” means, with respect to a
Participant, the occurrence of one or more of the following:

 

(1)                                 Such
Participant’s conviction of, or plea of guilty or no contest with respect to,
(i) any crime involving fraud, dishonesty or moral turpitude, (ii) any felony
under the laws of the United States or any state thereof, or (iii) any criminal
law of a foreign jurisdiction which could result in imprisonment for more than
one year;

 

(2)                                 Such
Participant’s attempted commission of, or participation in, a fraud or act of
dishonesty against the Company that results in (or might reasonably result in)
material harm to the Company;

 

(3)                                 Such
Participant’s intentional and material violation of any statutory duty owed to
the Company;

 

(4)                                 Such
Participant’s unauthorized use or disclosure of the Company’s material confidential information, material trade secrets or material proprietary
information; or

 

1

 

(5)                                 Such
Participant’s gross misconduct, gross negligence, intentional violation of a
written policy of the Company or intentional violation of a fiduciary duty to
the Company.

 

(e)                                  “Change in Control” means the first
occurrence of any of the following events prior to the automatic termination of
this Plan as provided in Section 6(b):

 

(1)                                 The
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if more than 50% of the combined
voting power of the continuing or surviving entity’s securities outstanding
immediately after such merger, consolidation or other reorganization is not
owned by persons who were stockholders of the Company immediately prior to such
merger, consolidation or other reorganization, in substantially the same
relative proportions as their ownership of the combined voting power of the
Company immediately prior to such merger, consolidation or other reorganization;

 

(2)                                 When
a majority of the Board shall change within any 24 month period, unless the
election or the nomination for election by the Company’s stockholders of each
new director has been approved by a vote of at least a majority of the directors
then still in office who were directors at the beginning of the period; or

 

(3)                                 Any
“person” (as such term is used in sections 13(d) and 14(d) of the Exchange
Act) by the acquisition or aggregation of securities is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s
then outstanding securities ordinarily (and apart from rights accruing under
special circumstances) having the right to vote at elections of directors (the “Base
Capital Stock”); except that any change in the relative beneficial ownership of
the Company’s securities by any person resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital Stock, and any decrease
thereafter in such person’s ownership of securities, shall be disregarded until
such person increases in any manner, directly or indirectly, such person’s
beneficial ownership of any securities of the Company.

 

The term “Change in Control” shall not include a
transaction, the sole purpose of which is to change the state of the Company’s
incorporation and once a Change in Control has occurred, no future events shall
constitute a Change in Control for purposes of the Plan.

 

(f)                                    “Company” means Biosite Incorporated
or, following a Change in Control, the surviving entity resulting from such
transaction or the parent company of such surviving entity.

 

(g)                                 “Employee  Covered
Termination” means, with respect to a Participant who
immediately prior to a termination of employment was an employee of the
Company, such Participant’s termination of employment by the Company without
Cause or a voluntary resignation of employment by the Participant for Good
Reason; either of which occurring within two (2) months prior to, or thirteen
(13) months following, the
effective date of a Change in Control.

 

2

 

(h)                                 “Director Covered Termination” means
the resignation of a non-employee Board member or the termination of a
non-employee Board member’s service as a director of the Company; in either
case concurrently with or following the effective date of a Change in Control.

 

(i)                                    “Good Reason” means, with respect to a
Participant, the occurrence of one or more of the following events, if
applicable, without such Participant’s express written consent:

 

(1)                                 A
material reduction in such Participant’s authority, duties or responsibilities
(and not simply a change in title or reporting relationships); provided, however, that Good Reason shall
not be satisfied solely by reason of such Participant retaining the same
position held prior to a Change in Control, but in a distinct legal entity or
business unit of a larger entity following such Change in Control;

 

(2)                                 A
reduction by the Company in such Participant’s Base Salary or a reduction by
the Company of such Participant’s Target Bonus;

 

(3)                                 A
material adverse change to the criteria, milestones or objectives related to
such Participant’s Target Bonus that is reasonably likely to result in the
Participant earning less than his or her Target Bonus during the subsequent
applicable period;

 

(4)                                 Any
requirement, as a condition to continued service, that the Participant enter
into any agreement with the Company regarding confidentiality, non-competition,
non-solicitation or other similar restrictive covenant that is materially more
restrictive than the Participant’s written obligations with the Company under
which the Participant is then bound;

 

(5)                                 Any
Board action or assignment related to such Participant that (i) is contrary to
applicable law, regulatory guidelines, accounting standards or which
constitutes an unethical business practice and (ii) is not cured by the Board
with thirty (30) days of receipt of written notice concerning such action or assignment;
or

 

(6)                                 A
relocation of the Participant’s principal place of work in effect immediately
prior to the earlier of (i) the Participant’s Employee Covered Termination, or
(ii) the Change in Control,  to a
location more than thirty (30) miles from such location.

 

(j)                                    “Parent Corporation”
means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each corporation in the unbroken
chain (other than the Company) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

(k)                                “Participant”
means the Company’s Chief Executive Officer, the Company’s
President, the Company’s Vice-Presidents, members of the Company’s Board, and
all individuals hereafter designated by the Board, or the Compensation
Committee thereof, as Participants under this Plan at any time during its term;
provided that only persons
residing in the

 

3

 

United
States are eligible for participation under this Plan, unless specifically
provided otherwise by the Board.

 

(l)                                    “Plan Administrator” means
Biosite Incorporated.

 

(m)                              “Severance Period” means the period of
time following the Participant’s Employee Covered Termination for which a
Participant may be eligible to receive the benefits provided in Section 4
herein.  For the Company’s Chief
Executive Officer and President, the Severance Period shall be twenty-four (24)
months.  For the Company’s
Vice-Presidents, the Severance Period shall be eighteen (18) months.  For the Participants hereafter designated by
the Compensation Committee of the Board, the Severance Period shall be the
number of months as determined by the Compensation Committee for such
Participant, but not to exceed twenty-four (24) months.

 

(n)                                 “Subsidiary Corporation” means
any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

 

(o)                                  “Target Bonus” means
Participant’s target annual cash bonus (excluding Base Salary and excluding any
commissions, expatriate premiums, fringe benefits (including without limitation
car allowances), option grants, equity awards, employee benefits and other
similar items of compensation) in effect immediately prior to the Employee
Covered Termination.

 

Section 3.                                                                                          ELIGIBILITY
FOR BENEFITS.

 

Subject to the requirements set forth in this
Section, the Company shall provide severance benefits under the Plan to the
Participants. In order to be eligible to receive benefits under the Plan, a
Participant must (i) experience an Employee Covered Termination or a Director
Covered Termination, and (ii) with respect to a Participant who experiences an
Employee Covered Termination, execute a general waiver and release in
substantially the form attached hereto as Exhibit A (or as then may be required
by law to effect a release of claims), as appropriate, and such release must
become effective in accordance with its terms. The Company, in its sole
discretion, may at any time modify the forms of the required release and shall
determine the appropriate form of release.

 

Section 4.                                                                                          AMOUNT
OF BENEFIT.

 

Subject to the limitations and reductions
provided in this Plan, benefits under this Plan, if any, shall be
provided to the Participants described in Section 3 in the following
amounts:

 

(a)                                  Termination Benefits.

 

(1)                                 Employee Covered Termination Benefits.  Upon a Participant’s Employee Covered
Termination, such Participant shall receive the following severance package:

 

4

 

(i)                                    Cash Severance Benefits.  At the end of each month during the term of
the Participant’s Severance Period, the Participant will receive a cash payment
in an amount equal to the Participant’s Base Salary.

 

(ii)                                COBRA Benefits.  If such Participant timely elects to continue
coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”),
then for the term of the Participant’s Severance Period, the Company will
reimburse all premiums for group medical, dental and vision coverage paid by
such Participant under (a) COBRA and, to the extent applicable, any similar
applicable state statute, and (b) to the extent that such coverage under COBRA
and any such applicable state statute has been exhausted or is no longer
available, then under any individual policy providing group medical, dental and
vision benefits substantially similar to those provided to Participant
immediately prior to his or her termination of Service.

 

(iii)                            Stock Option Acceleration and Continued
Post-Termination Exercise Period. 
The Participant will receive immediate full vesting of all stock options
and other equity awards issued by the Company and held by such Participant.  In addition, with respect to stock options
issued to the Participant, the Participant shall be entitled to exercise all of
his or her stock options for 24 months beyond the original post-termination
exercise period provided in such Participant’s stock option agreement (but not
beyond the original contractual life of the option).

 

(2)                                 Director Covered Termination Benefits.  Upon a Participant’s Director Covered
Termination, such Participant shall receive immediate full vesting of all stock
options and other equity awards held by such Participant.  In addition, the Participant shall be
entitled to exercise all of his or her stock options for 24 months beyond the
original post-termination exercise period provided in such Participant’s stock
option agreement (but not beyond the original contractual life of the option).

 

All cash severance payment referenced in this Section 4
shall be subject to all applicable tax withholdings and deductions required by
law and shall be paid within ten (10) business days following the effective
date of the general waiver and release referenced in Section 3 of the
Plan.  Except as provided herein, all
terms, conditions and limitations applicable to a Participant’s options and/or
shares of common stock shall remain in full force and effect.

 

(b)                                  Certain
Reductions.  Notwithstanding any
other provision of the Plan to the contrary, any benefits payable to a
Participant under Sections 4(a)(1)(i) and 4(a)(1)(ii) of this Plan shall be
reduced (but not below zero) by any severance benefits payable by the Company
or an affiliate of the Company to such Participant under any other policy,
plan, program, agreement or arrangement, including, without limitation, a
contract between such Participant and any entity, covering such Participant.  In addition, to the extent that any federal,
state or local laws, including, without limitation the Worker Adjustment
Retraining Notification Act, 29 U.S.C. Section 2101 et seq., or any similar state statute,
require the Company to give advance notice or make a payment of any kind to a
Participant because of that Participant’s involuntary termination due to a
layoff, reduction in force, plant or facility closing, sale of business, change
of control, or any other similar event or reason, the benefits payable under
Sections 4(a)(1)(i) and 4(a)(1)(ii) of this Plan shall either be reduced or
eliminated by such required payments or notice. 
The benefits

 

5

 

provided
under this Plan are intended to satisfy any and all statutory obligations that
may arise out of a Participant’s involuntary termination of employment for the
foregoing reasons, and the Plan Administrator shall so construe and implement
the terms of the Plan.

 

Section 5.                                                                                          LIMITATIONS ON BENEFITS.

 

(a)                                  Mitigation.  Except as otherwise specifically provided
herein, a Participant shall not be required to mitigate damages or the amount
of any payment provided under the Plan by seeking other employment or
otherwise, nor shall the amount of any payment provided for under the Plan be
reduced by any compensation earned by a Participant as a result of employment
by another employer or any retirement benefits received by such Participant
after the date of service or employment termination.

 

(b)                                  Termination
of Benefits.  Benefits under the Plan
shall terminate immediately if the Participant, at any time, (i) engages in the
unauthorized use or disclosure of the Company’s material confidential information, material trade secrets or material proprietary
information under any written agreement under which the Participant has a such
an obligation to the Company that survives the Participant’s termination of
service to the Company, (ii) engages in any prohibited or unauthorized
competitive activities, or prohibited or unauthorized solicitation or
recruitment of employees, in violation of any written agreement under which
Participant has such an obligation to the Company that survives the Participant’s
termination of service to the Company; (iii) violates any term or condition of this
Plan or (iv) violates any term of the applicable general waiver and release
referenced in Section 3 above.

 

(c)                                  Non-Duplication
of Benefits.  No Participant is
eligible to receive benefits under this Plan more than one time.

 

(d)                                  Indebtedness
of Participants.  If a Participant is
indebted to the Company or an affiliate of the Company on the date of his or
her termination of employment or service, the Company reserves the right to
offset any severance benefits payable in cash under the Plan by the amount of
such indebtedness.

 

(e)                                  Parachute
Payments.  If any payment or benefit
a Participant would receive in connection with a Change in Control from the
Company or otherwise (a “Payment”)
would (i) constitute a “parachute payment” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but
for this sentence, be subject to the excise tax imposed by Section 4999 of
the Code (the “Excise
Tax”), then such Payment shall be equal to the Reduced Amount
(as defined below).  For the avoidance of doubt, a Payment shall
not be considered a parachute payment for purposes of this paragraph if such
Payment is approved by the stockholders of the Company in accordance with the
procedures set forth in Section 280G(b)(5)(A)(ii) and (B) of the Code, and
the regulations thereunder, and at the time of such shareholder approval, no
stock of the Company is readily tradable on an established securities market or
otherwise (within the meaning of Section 280G(b)(5)(A)(ii)(I) of the Code).  The “Reduced Amount” shall be either (x) the
largest portion of the Payment that would result in no portion of the Payment
being subject to the Excise Tax or (y) the largest portion of the

 

6

 

Payment,
up to and including the total Payment, whichever amount, after taking into
account all applicable federal, state and local employment taxes, income taxes,
and the Excise Tax (all computed at the highest applicable marginal rate),
results in the Participant’s receipt, on an after-tax basis, of the greater
amount of the Payment notwithstanding that all or some portion of the Payment
may be subject to the Excise Tax. If a reduction in payments or benefits
constituting “parachute payments” is necessary so that the Payment equals the
Reduced Amount, reduction shall occur in the following order unless the
Participant elects in writing a different order (provided,
however, that such election shall be subject to Company approval if
made on or after the date on which the event that triggers the Payment
occurs):  reduction of cash payments;
cancellation of accelerated vesting of stock awards; reduction of employee
benefits.  If acceleration of vesting of
stock award compensation is to be reduced, such acceleration of vesting shall
be cancelled in the reverse order of the date of grant of the Participant’s
stock awards unless the Participant elects in writing a different order for
cancellation.

 

The accounting firm engaged by the Company
for general audit purposes as of the day prior to the effective date of the
Change in Control shall perform the foregoing calculations, subject to the
necessary authorizations of the Company’s Audit Committee.  Alternatively, the Audit Committee may engage
a consulting firm with expertise in calculations under Section 280G of the
Code to perform such calculations.  If
any accounting firm so engaged by the Company is serving as accountant or
auditor for either the Participant or the entity or group that is effecting the
Change in Control, the Company shall appoint a nationally recognized accounting
or consulting firm to make the determinations required hereunder.  The Company shall bear all expenses with
respect to the determinations by such accounting or consulting firm required to
be made hereunder.

 

The accounting or consulting firm engaged to
make the determinations hereunder shall provide its calculations, together with
detailed supporting documentation, to the Company and the Participant within
ten (10) calendar days after the date on which the Participant’s right to a
Payment is triggered (if requested at that time by the Company or the
Participant) or such other time as requested by the Company or the
Participant.  If the accounting or
consulting firm determines that no Excise Tax is payable with respect to a
Payment, either before or after the application of the Reduced Amount, it shall
furnish the Company and the Participant with an opinion reasonably acceptable
to the Participant that no Excise Tax will be imposed with respect to such
Payment.  Any good faith determinations
of the accounting firm made hereunder shall be final, binding and conclusive
upon the Company and the Participant.

 

Section 6.                                                                                          RIGHT
TO INTERPRET PLAN; AMENDMENT AND TERMINATION.

 

(a)                                  Exclusive
Discretion.  The Plan Administrator
shall have the exclusive discretion and authority to establish rules, forms,
and procedures for the administration of the Plan and to construe and interpret
the Plan and to decide any and all questions of fact, interpretation,
definition, computation or administration arising in connection with the
operation of the Plan, including, but not limited to, the eligibility to
participate in the Plan and amount of benefits paid under the Plan.  The rules, interpretations, computations and
other actions of the Plan Administrator shall be binding and conclusive on all
persons. Unless otherwise determined by the Board, the Chairman of the
Compensation Committee of the Board shall perform the duties of the Plan
Administrator under this Plan.

 

7

 

(b)                                  Amendment
or Termination.  The Board, or the
Compensation Committee thereof, reserves the right to amend or terminate this
Plan or the benefits provided hereunder at any time; provided,
however, that no such amendment or termination shall impair or
reduce the rights of a Participant unless such Participant consents to such
amendment or termination of the Plan in writing.   Notwithstanding the foregoing, the Plan shall
automatically terminate on the tenth (10th) anniversary from the
date of its adoption by the Board, unless extended by the Board or the
Compensation Committee thereof.  Except
with respect to the automatic termination provided in the prior sentence, any
action amending, terminating or extending the Plan shall be in writing and
executed by the Board or the Compensation Committee thereof.

 

Section 7.                                                                                          CONTINUATION
OF CERTAIN EMPLOYEE BENEFITS.

 

(a)                                  COBRA
Continuation.  Each Participant who
is enrolled in a group medical, dental or vision plan sponsored by the Company
or an affiliate of the Company may be eligible to continue coverage under such
group medical, dental or vision plan (or to convert to an individual policy),
at the time of the Participant’s termination of employment under COBRA.  The Company will notify the Participant of
any such right to continue group medical coverage at the time of
termination.  No provision of this Plan
will affect the continuation coverage rules under COBRA.  Therefore, the period during which a
Participant may elect to continue the Company’s group medical, dental or vision
coverage at his or her own expense under COBRA, the length of time during which
COBRA coverage will be made available to the Participant, and all other rights
and obligations of the Participant under COBRA will be applied in the same
manner that such rules would apply in the absence of this Plan.  At the conclusion of the COBRA premium
reimbursements made by the Company, if any, the Participant will be responsible
for the entire payment of premiums required under COBRA for the duration, if
any, of the COBRA period.

 

(b)                                  Other
Employee Benefits.  All non-health
benefits (such as life insurance, disability and 401(k) plan coverage)
terminate as of an employee’s termination date (except to the extent that a conversion
privilege may be available thereunder).

 

Section 8.                                                                                          NO
IMPLIED EMPLOYMENT CONTRACT.

 

The Plan shall not be deemed (i) to give
any employee or other person any right to be retained in the employ or service
of the Company or (ii) to interfere with the right of the Company to
discharge any employee or other person at any time and for any reason, which
right is hereby reserved.

 

Section 9.                                                                                          LEGAL
CONSTRUCTION.

 

This Plan is intended to be governed by and
shall be construed in accordance with the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”)
and, to the extent not preempted by ERISA, the laws of the State of California.

 

8

 

Section 10.                                                                                   CLAIMS,
INQUIRIES AND APPEALS.

 

(a)                                  Applications
for Benefits and Inquiries.  Any
application for benefits, inquiries about the Plan or inquiries about present
or future rights under the Plan must be submitted to the Plan Administrator in
writing by an applicant (or his or her authorized representative).  The Plan Administrator is:

 

Biosite Incorporated

11030 Roselle Street

San Diego, CA 92121

Attn: Chief Executive Officer

 

(b)                                  Denial
of Claims.  In the event that any
application for benefits is denied in whole or in part, the Plan Administrator
must provide the applicant with written or electronic notice of the denial of
the application, and of the applicant’s right to review the denial.  Any electronic notice will comply with the
regulations of the U.S. Department of Labor. 
The written notice of denial will be set forth in a manner designed to
be understood by the employee and will include the following:

 

(1)                                 the
specific reason or reasons for the denial;

 

(2)                                 references
to the specific Plan provisions upon which the denial is based;

 

(3)                                 a
description of any additional information or material that the Plan
Administrator needs to complete the review and an explanation of why such
information or material is necessary; and

 

(4)                                 an
explanation of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the applicant’s right to bring a
civil action under section 502(a) of ERISA following a denial on review of
the claim, as described in Section 10(d) below.

 

This written notice will be given to the
applicant within ninety (90) days after the Plan Administrator receives the
application, unless special circumstances require an extension of time, in
which case, the Plan Administrator has up to an additional ninety (90) days for
processing the application.  If an extension
of time for processing is required, written notice of the extension will be
furnished to the applicant before the end of the initial ninety (90) day
period.

 

This notice of extension will describe the
special circumstances necessitating the additional time and the date by which
the Plan Administrator is to render its decision on the application.

 

(c)                                  Request
for a Review.  Any person (or that
person’s authorized representative) for whom an application for benefits is
denied, in whole or in part, may appeal the denial by submitting a request for
a review to the Plan Administrator within sixty (60) days

 

9

 

after
the application is denied.  A request for
a review shall be in writing and shall be addressed to:

 

Biosite Incorporated

11030 Roselle Street

San Diego, CA 92121

Attn: Chief Executive Officer

 

A request for review must set forth all of
the grounds on which it is based, all facts in support of the request and any
other matters that the applicant feels are pertinent.  The applicant (or his or her representative)
shall have the opportunity to submit (or the Plan Administrator may require the
applicant to submit) written comments, documents, records, and other information
relating to his or her claim.  The
applicant (or his or her representative) shall be provided, upon request and
free of charge, reasonable access to, and copies of, all documents, records and
other information relevant to his or her claim. 
The review shall take into account all comments, documents, records and
other information submitted by the applicant (or his or her representative)
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.

 

(d)                                  Decision
on Review.  The Plan Administrator
will act on each request for review within sixty (60) days after receipt of the
request, unless special circumstances require an extension of time (not to
exceed an additional sixty (60) days), for processing the request for a review.  If an extension for review is required,
written notice of the extension will be furnished to the applicant within the
initial sixty (60) day period.  This
notice of extension will describe the special circumstances necessitating the
additional time and the date by which the Plan Administrator is to render its
decision on the review.  The Plan
Administrator will give prompt, written or electronic notice of its decision to
the applicant. Any electronic notice will comply with the regulations of the
U.S. Department of Labor.  In the event
that the Plan Administrator confirms the denial of the application for benefits
in whole or in part, the notice will set forth, in a manner calculated to be
understood by the applicant, the following:

 

(1)                                 the
specific reason or reasons for the denial;

 

(2)                                 references
to the specific Plan provisions upon which the denial is based;

 

(3)                                 a
statement that the applicant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to his or her claim; and

 

(4)                                 a
statement of the applicant’s right to bring a civil action under section 502(a)
of ERISA.

 

(e)                                  Rules
and Procedures.  The Plan
Administrator will establish rules and procedures, consistent with the Plan and
with ERISA, as necessary and appropriate in carrying out its responsibilities
in reviewing benefit claims.  The Plan
Administrator may require an

 

10

 

applicant
who wishes to submit additional information in connection with an appeal from
the denial of benefits to do so at the applicant’s own expense.

 

(f)                                    Exhaustion
of Remedies.  No legal action for
benefits under the Plan may be brought until the claimant (i) has
submitted a written application for benefits in accordance with the procedures
described by Section 10(a) above, (ii) has been notified by the Plan
Administrator that the application is denied, (iii) has filed a written
request for a review of the application in accordance with the appeal procedure
described in Section 10(c) above, and (iv) has been notified in
writing that the Plan Administrator has denied the appeal.  Notwithstanding the foregoing, if the Plan
Administrator does not respond to a Participant’s claim or appeal within the
relevant time limits specified in this Section 10, then the Participant
may bring legal action for benefits under the Plan pursuant to Section 502(a)
of ERISA.

 

Section 11.                                                                                   BASIS
OF PAYMENTS TO AND FROM PLAN.

 

All benefits under the Plan shall be paid by
the Company.  The Plan shall be unfunded,
and benefits hereunder shall be paid only from the general assets of the
Company.

 

Section 12.                                                                                   OTHER
PLAN INFORMATION.

 

(a)                                  Employer
and Plan Identification Numbers.  The
Employer Identification Number assigned to the Company (which is the “Plan
Sponsor” as that term is used in ERISA) by the Internal Revenue Service is     -            .  The Plan Number assigned to the Plan by the
Plan Sponsor pursuant to the instructions of the Internal Revenue Service is 50  .

 

(b)                                  Ending
Date for Plan’s Fiscal Year.  The
date of the end of the fiscal year for the purpose of maintaining the Plan’s
records is December 31.

 

(c)                                  Agent
for the Service of Legal Process. 
The agent for the service of legal process with respect to the Plan is
Biosite Incorporated, Attn: Chief Financial Officer, 11030 Roselle Street, San
Diego, CA 92121.

 

(d)                                  Plan
Sponsor and Administrator.  The “Plan Sponsor” and the
“Plan Administrator”
of the Plan is Biosite Incorporated, 11030 Roselle Street, San Diego, CA 92121
The Plan Sponsor’s and Plan Administrator’s telephone number is (858)
455-4808.  The Plan Administrator is the
named fiduciary charged with the responsibility for administering the Plan.

 

Section 13.                                                                                   STATEMENT
OF ERISA RIGHTS.

 

Participants in this Plan (which is a welfare
benefit plan sponsored by the Company) are entitled to certain rights and
protections under ERISA.  If you are a
Participant in the Plan, under ERISA you are entitled to:

 

Receive
Information about the Plan and Your Benefits

 

(a)                                  Examine,
without charge, at the Plan Administrator’s office and at other specified
locations, such as work sites, all documents governing the Plan and a copy of
the latest annual report (Form 5500 Series) filed by the Plan Administrator
with the U.S. Department of

 

11

 

Labor
and available at the Public Disclosure Room of the Pension and Welfare Benefit
Administration;

 

(b)                                  Obtain,
upon written request to the Plan Administrator, copies of documents governing
the operation of the Plan and copies of the latest annual report (Form 5500
Series).  The Plan Administrator may make
a reasonable charge for the copies; and

 

(c)                                  Receive
a summary of the Plan’s annual financial report.  The Plan Administrator is required by law to
furnish each Participant with a copy of this summary annual report.

 

Prudent
Actions by Plan Fiduciaries

 

In addition to creating rights for Plan
participants, ERISA imposes duties upon the people who are responsible for the
operation of the employee benefit plan. 
The people who operate the Plan, called “fiduciaries” of the Plan, have
a duty to do so prudently and in the interest of you and other Plan
participants and beneficiaries.

 

Enforce
Your rights

 

No one, including your employer or any other
person, may fire you or otherwise discriminate against you in any way to
prevent you from obtaining a Plan benefit or exercising your rights under
ERISA.

 

Under ERISA, there are steps you can take to
enforce the above rights.  For instance,
if you request a copy of Plan documents or the latest annual report from the
Plan and do not receive them within 30 days, you may file suit in a
Federal court.  In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$110 a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator.

 

If you have a claim for benefits that is
denied or ignored, in whole or in part, you may file suit in a state or Federal
court.  In addition, if you disagree with
the Plan Administrator’s decision or lack thereof concerning the qualified
status of a domestic relations order or a medical child support order, you may
file suit in Federal court.

 

If it should happen that the Plan fiduciaries
misuse the Plan’s money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you
may file suit in a Federal court.  The
court will decide who should pay court costs and legal fees.  If you are successful, the court may order
the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous.

 

Assistance
with Your Questions

 

If you have any questions about the Plan, you
should contact the Plan Administrator. 
If you have any questions about this statement or about your rights
under ERISA, or if you need assistance in obtaining documents from the Plan Administrator,
you should

 

12

 

contact the nearest office of the Pension and Welfare Benefits
Administration, U.S. Department of Labor, listed in your telephone directory or
the Division of Technical Assistance and Inquiries, Pension and Welfare
Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue
N.W., Washington, D.C. 20210.  You may
also obtain certain publications about your rights and responsibilities under
ERISA by calling the publications hotline of the Pension and Welfare Benefits
Administration.

 

Section 14.                                                                                   EXECUTION.

 

To record the adoption of the Plan as set
forth herein, effective as of the Effective Date, Biosite
Incorporated has caused its duly authorized officer to execute the same this       
day of October, 2004.

 

	
   

  	
  Biosite Incorporated

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Kim D. Blickenstaff

  
	
   

  	
  Chief Executive Officer

  

 

13

 

EXHIBIT A

 

RELEASE
AGREEMENT

 

I understand and agree completely to the
terms set forth in the Biosite
Incorporated Severance Benefit Plan (the “Plan”). I understand that this release and waiver (the “Release”), together with the Plan,
constitutes the complete, final and exclusive embodiment of the entire
agreement between the Company and me with regard to the subject matter
hereof.  I am not relying on any promise
or representation by the Company that is not expressly stated herein.

 

In consideration of benefits I will receive
under the Plan, I hereby generally and completely release the Company and its
directors, officers, employees, shareholders, members, partners, agents,
attorneys, predecessors, successors, parent and subsidiary entities, insurers,
affiliates, and assigns from any and all claims, liabilities and obligations,
both known and unknown, that arise out of or are in any way related to events,
acts, conduct, or omissions occurring prior to my signing this Release.  This Release includes, but is not limited to:
(1) all claims arising out of or in any way related to my employment with the
Company or the termination of that employment; (2) all claims related to my
compensation or benefits from the Company, including, but not limited to,
salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership interests in
the Company; (3) all claims for breach of contract, wrongful termination,
and breach of the implied covenant of good faith and fair dealing; (4) all
tort claims, including, but not limited to, claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all
federal, state, and local statutory claims, including, but not limited to,
claims for discrimination, harassment, retaliation, attorneys’ fees, or other
claims arising under the federal Civil Rights Act of 1964 (as amended), the
federal Americans with Disabilities Act of 1990, the federal Age Discrimination
in Employment Act of 1967 (as amended) (“ADEA”), and the California Fair Employment
and Housing Act (as amended).

 

If I am over the age of 40 years at the time
of an Employee Covered Termination (as that term is defined in the Plan), I
acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the ADEA.  I also
acknowledge that the consideration given under the Release for the waiver and
release in the preceding paragraph hereof is in addition to anything of value
to which I was already entitled.  I
further acknowledge that I have been advised by this writing, as required by
the ADEA, that:  (A) my waiver and release do
not apply to any rights or claims that may arise on or after the date I execute
this Release; (B) I
should consult with an attorney prior to executing this Release; (C) I have twenty-one
(21) days to consider this Release (although I may choose to voluntarily
execute this Release earlier);
(D) I have seven (7) days following my execution of this Release
to revoke the Release; and (E)
this Release shall not be effective until the date upon which the revocation
period has expired, which shall be the eighth (8th) day after I
execute this Release.

 

If I am not over the age of 40 years at the
time of an Employee Covered Termination (as that term is defined in the Plan),
I understand and agree that I will have ten days to consider and execute this
release and that it shall be effective upon such execution.

 

 

I represent that I have not filed any claims
against the Company, and agree that, except as such waiver may be prohibited by
statute, I will not file any claim against the Company or seek any compensation
for any claim other than the payments and benefits referenced herein.  I agree to indemnify and hold the Company
harmless from and against any and all loss, cost, and expense, including, but
not limited to court costs and attorney’s fees, arising from or in connection
with any action which may be commenced, prosecuted, or threatened by me or for
my benefit, upon my initiative, or with my aid or approval, contrary to the
provisions of this Release.

 

I acknowledge that I have read and understand
Section 1542 of the California Civil Code which reads as follows:  “A general release does
not extend to claims which the creditor does not know or suspect to exist in
his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor.”  I hereby expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any claims I may have against the
Company, its affiliates, and the entities and persons specified above.

 

 

	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

2

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