Document:

exv10w1

 

EXHIBIT 10.1

October 12, 2004

Timothy J. Mondavi

P.O. Box 106

Oakville, CA 94562

Dear Tim:

     This letter summarizes the on-going arrangements established between you
and The Robert Mondavi Corporation (the “Company”) for the next stage of your
career. The letter confirms the concluding elements of your current
compensation as an employee, describes the terms for the end of your formal
employment with the Company, describes additional benefits and privileges
available to you, and outlines the terms of a personal services agreement. The
letter also confirms certain mutual understandings about your duties to the
Company.

     In terms of current compensation:

	 	1.	 	As we mutually agreed, you will depart the Company as an
employee effective September 30, 2004 (“your departure date”).
	 
	 	2.	 	Your FY04 salary will be continued to your date of departure.
During FY04 you received a salary of $477,360, which has been paid
during your six-month sabbatical.
	 
	 	3.	 	In keeping with the established compensation arrangements
with you, the Company has paid an FY04 life insurance payment of up
to $41,478 directly to Nationwide Provident. This amount was
grossed-up by 35% and added to your earnings to assist you with your
tax liability. This will be the Company’s final payment for life
insurance.
	 
	 	4.	 	You will receive a FY04 cash bonus of $50,000 as determined
by the Compensation Committee payable on your departure date.
	 
	 	5.	 	You will vest in 1,035 RSUs (valued at approximately $36,300)
as a participant in the FYO4 management incentive compensation plan

     In Terms of your departure from the Company:

	 	1.	 	A departure payment of $1,193,400 will be paid to you or your
estate over 30 months commencing on October 28, 2004. Subsequent
payments will be made the second pay period of each month subject to
the execution of and an offset for any damages suffered by the
Company in consequence of any breach of the termination agreement
between you and the Company (attached). The payment amount is in
recognition of your contributions during your time of service.
	 
	 	2.	 	The Company will pay the employer premium, assuming you pay
the employee premium, to continue your group health insurance
coverage for the maximum 18

 

 

	 	 	 	months allowable under our plan and pay the same employer premium
directly to you for an additional 12 months. Valerie Deitrick will
provide a description of your elections under the retirement and SERP
plans and will work with you to answer questions you may have.
	 
	 	3.	 	Your options granted during your employment will vest to
and including September 30, 2004; no additional options will
vest during the term of your personal services agreement. The
“tail period” during which you may exercise your vested
options will be 18 months from your September 30, 2004
departure date.
	 
	 	4.	 	Your auto allowance of $478.26 per pay period will end on
your departure date.
	 
	 	5.	 	As you have had no limitations for personal time off, you
have no unused Personal Time Off (PTO).
	 
	 	6.	 	In light of your departure as an employee and the policies of
the Company, you will resign from the Boards of Directors of
Ornellaia, LdV, and Viña Seña.

     In terms of additional benefits and privileges:

	 	1.	 	You may select up to 50 cases of wine, limited to 10 cases
per vintage, from the Company’s existing wine library of wines made
by Robert Mondavi Winery and our JV partners for your private
collection, subject to the execution of and an offset for any
damages suffered by the Company in consequence of any breach of the
termination agreement between you and the Company (attached). This
selection must be completed and the inventory moved to your premises
prior to October 31, 2004. (Please remember that the fair market
value of the wine is taxable to you and will be included in your W-2
for 2004.)
	 
	 	2.	 	You will remain a Director of the Company subject to the
normal nominating and election procedures of the Board. Effective
October 1, 2004 you will be eligible as a non-employee director for
compensation for your Board service in keeping with the existing
plan approved by the Board (except for the plan award to new
directors of the Company).
	 
	 	3.	 	The Company agrees that you may retain a copy of contact
information for your personal use and, of course, that you may
retain possession of files located at the Company relating strictly
to your personal affairs.

     In terms of your personal services agreement with the Company:

	 	1.	 	We mutually agree that you will provide personal services for
the Company as Consulting Winegrower for Robert Mondavi Winery. We
will execute a personal services agreement (attached) effective
October 1, 2004 for a term of one year. You will be compensated at
the rate of $2,400 per day for a minimum of 50 days and a maximum of
75 days. The minimum payment under this agreement will be $120,000
and the maximum payment under this agreement will be $180,000.
Payments will be made at the rate of at least $30,000 per fiscal
quarter. For the purposes of the

- 2 -

 

	 	 	 	personal services agreement you will report to the
Managing Director of Robert Mondavi Winery.
	 
	 	2.	 	We agree that you may engage in activities associated with
potential investments in the wine industry, subject to the other
applicable provisions of this agreement.
	 
	 	3.	 	The Company will pay all reasonable expenses associated with
your activities as Consulting Winegrower, subject to the approval of
the Managing Director. You will be reimbursed for your reasonable
business-related meal and wine expenses while on assignments
approved by the Managing Director.
	 
	 	4.	 	The Company will provide part-time secretarial and
administrative support for your company-related activities. The
Company will not provide secretarial support for your personal
activities, investment activities or any other commercial ventures.
	 
	 	5.	 	You agree that you will not conduct non-Company business on
Company premises or while you are on assignment under your personal
services agreement.
	 
	 	6.	 	This personal services can be terminated at will by either
party.

     In terms of mutual understandings about your duties to the Company:

	 	1.	 	We mutually agree to keep confidential the terms and
conditions of the Termination of Employment Agreement and this
letter, subject to the public disclosure and filing requirements
that apply to RMC.
	 
	 	2.	 	The Company will retain ownership and control of all
documents, including notes, contact information and electronic
files, relating to the business of the Company. You may not make
copies of or retain for your future personal or commercial use any
document belonging to the Company except as noted above. As you
recognize, you cannot make use of any confidential information,
which was obtained in the course of your duties as an employee and
officer of the Company, in any commercial venture. Confidential
information shall not, however, include any information which (i) is
publicly known and made generally available in the public domain
without action by you; (ii) is already in the recipient’s possession
at the time of disclosure by you; (iii) is obtained by you from a
third party without a breach of such third party’s obligations of
confidentiality; (iv) is independently developed by you without use
of or reference to the confidential information obtained from the
Company, as shown by documents and other competent evidence your
possession; or (v) is required by law to be disclosed by you,
provided that you give the Company prompt written notice of such
requirement prior to such disclosure and assistance in obtaining an
order protecting the information from public disclosure.
	 
	 	3.	 	You agree not to solicit any employee for employment prior to
your departure date, and that you will not solicit any employee
during the term of your personal services agreement without
providing prior notice and obtaining approval, which will not be
unreasonably withheld, from the Company’s Chief Executive Officer.

- 3 -

 

     These arrangements were considered and recommended to the Board of
Directors by the Nominating & Governance and Compensation Committees and were
approved by the Board of Directors on October 6, 2004. Please
signify your agreement to the forgoing by signing and returning a
copy of this letter.

     Tim, on behalf of the entire Board, we sincerely thank you for your unique
contributions to the Company, for your lasting influence on the style of all of
the Company’s wines, and for your insightful and creative leadership. We are
pleased that you are continuing as Consulting Winegrower at Robert Mondavi
Winery and wish you every success as you move into the next
stage of your career. We look forward to our continuing our relationship
through our service together on the Board of Directors.

Very truly yours,

                        /s/ Ted W.
Hall                        

Ted W. Hall

Chairman of the Board

                    /s/
John
Thompson                    

John Thompson

Chairman of the Compensation Committee

                   /s/
Anthony
Greener                   
Anthony Greener

Chairman of the Nominating & Governance

Committee

Agreed:

/s/ Timothy J.
Mondavi                          

Timothy J. Mondavi

- 4 -

 

TERMINATION OF EMPLOYMENT AGREEMENT

 

     THIS AGREEMENT is entered into effective the 6th day of October, 2004,
between TIMOTHY J. MONDAVI (“Mondavi”) and THE ROBERT MONDAVI CORPORATION (the
“Company”), a California corporation.

R E C I T A L S:

     A. Mondavi’s employment with the Company is being concluded pursuant to
Mondavi’s resignation effective September 30, 2004.

     B. The Company has offered Mondavi certain benefits on the following terms
and conditions.

     NOW, THEREFORE, the parties agree as follows:

     1. The Company shall (i) pay Mondavi or his estate $1,193,400 in thirty
(30) equal monthly installments commencing on October 28, 2004 following
Mondavi’s employment termination. Company shall withhold applicable federal
and state amounts to the extent required by law; and (ii) continue Mondavi’s
participation in the Company’s health insurance plan on the terms outlined in
the parties’ letter agreement of this same date. Your options
granted during your employment will vest to and including
September 30, 2004; no additional options will vest during the
term of your personal services agreement. The “tail period”
during which you may exercise your vested options will be
18 months from your September 30, 2004 departure date.

     2. Nothing herein shall be interpreted to render Mondavi a “prevailing
party” for any purpose, including without limitation an award of counsel fees
under any statute or otherwise. No payment by the Company hereunder is or is
intended as an admission of liability or wrong doing by the Company.

     3. Mondavi acknowledges: (a) that the amounts payable hereunder by the
Company are valuable consideration for the promises and undertakings of Mondavi
set forth herein; and (b) Mondavi has been fully advised of all
employment-related COBRA, disability, and workers’ compensation insurance
rights he may have, if any. The Company has no obligation, contractual or
otherwise, to rehire Mondavi in the future.

     4. (a) In consideration of the payments called for by section 1, Mondavi,
his heirs, representatives, successors, and assigns, do hereby completely
release and forever discharge the Company, its parent, affiliated and
subsidiary corporations and related entities, and their shareholders, officers
and all other representatives, agents, directors, employees, attorneys,
predecessors, successors and assigns, from all claims, rights, demands,
actions, obligations, and causes of action of any kind, nature and character,
known or unknown, which Mondavi may now have, or has ever had, against them or
any of them arising from or in any way and only connected with the employment
relationship between the parties, any actions or failure to act during the
relationship, or the termination thereof, or on account of any other matter
related to his employment.

     (b) In consideration of Mondavi’s covenants herein, Company, its parent,
affiliated and subsidiary corporations and related entities, and their
shareholders, officers and all other representatives, agents, directors,
employees, attorneys, predecessors, successors do hereby completely release and
forever discharge Mondavi, his heirs, representatives, successors, and assigns,
assigns, from all claims,

 

 

rights, demands, actions,
obligations, and causes of action of any kind, nature and character, known or unknown, which Company may
now have, or has ever had, against them or any of them arising from or in any
way and only connected with the employment relationship between the parties,
any actions or failure to act during the relationship, or the termination
thereof, or on account of any other matter related to his employment.

     5. Each of Mondavi and the Company has read Section 1542 of the Civil Code
of the State of California, which provides 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.

Mondavi and the Company each understands that Section 1542 gives him or it the
right not to release existing claims of which he is not now aware, unless he
voluntarily chooses to waive this right. Having been afforded the opportunity
to consult counsel of his own selection, each of Mondavi and the Company
nevertheless hereby voluntarily elects to and does waive the rights described
in Section 1542, and elects to assume all risks for claims that now exist in
his favor, known or unknown, which are the subject of this Agreement.

     6. Each of Mondavi and the Company understands and agrees that in
consideration of the foregoing he is waiving any rights he may have to pursue
any and all remedies available to him under any legal theories whatsoever
related to employment, employment-related and employee benefit-related causes
of action, as well as all tort or injury claims, which include, without
limitation, claims of wrongful discharge, tortious breach of implied covenant
of good faith and fair dealing, breach of public policy, intentional and/or
negligent infliction of emotional distress, negligent or intentional
misrepresentation, fraud, detrimental reliance or promissory estoppel, bad
faith, personal injury, breach of contract (written, oral, express or implied),
harassment (sexual and/or otherwise), discrimination on the basis of sex,
handicap, medical condition or any other protected characteristic, claims under
title VII of the 1964 Civil Rights Act, as amended, the California Fair
Employment and Housing Act, the Equal Pay Act of 1963, California Labor Code
Section 1197.5, the Age Discrimination in Employment Act of 1967, the Civil
Rights Act of 1866, the Employment Retirement Income Security Act of 1974, the
Consolidated Omnibus Budget Reconciliation Act of 1986, and any other federal,
state, county or municipal laws and regulations relating to employment
termination, employment discrimination or any other employment or employee
benefit rights.

     7. Mondavi acknowledges that he has had reasonable and ample time to
review this Agreement. Mondavi acknowledges that the Company has advised him:
a) that he should consult with an attorney prior to signing this Agreement; b)
that he has twenty one (21) days in which to consider whether he should sign
this Agreement; and c) that if he signs this Agreement, he will be given seven
(7) days following the date on which he signs to revoke the Agreement. It is
understood that Mondavi may revoke his consent to this Agreement in the seven
day period following the date on which Mondavi signs the Agreement. This
Agreement shall become effective on the eighth (8th) day following the date on
which it is signed by Mondavi.

     8. Mondavi hereby agrees that in the event of the commencement or
continuation of any suit, action, proceeding, review or investigation in
violation of this release, this release may be pleaded as a complete defense to
any such action, and may be asserted by way of counterclaim or cross-claim in
such action. Further, in case of any breach of this Agreement by Mondavi, the
Company shall have all legal

2

 

and equitable rights, including without limitation
the right to recover damages and to seek injunctive relief and recovery of the
Company’s legal fees and costs of enforcing this Agreement.

     9. Mondavi agrees that the terms and conditions of this Agreement are
strictly confidential and shall not be disclosed, except as may be required by
applicable laws and regulations, to any other persons except his legal counsel,
if any, and immediate family, or to financial advisors in order to comply with
income tax filing requirements. The parties agree that neither will defame,
disparage or detract from the other.

     10. In further consideration for the payments and other undertakings by
the Company described above, Mondavi agrees , subject to his rights as a
continuing director, not to use for himself or for the benefit of anyone other
than the Company or disclose to anyone outside the Company, except with the
Company’s prior written permission, any proprietary or confidential information
of the Company including, without limitation, financial, accounting or
budgetary information, marketing strategy, sales strategy, or other
confidential and proprietary information that relates in any manner to the
Company’s actual or anticipated business, research, development, product sales
or activities that was learned as a result of Mondavi’s employment with the
Company. Mondavi shall not take with him any property of the Company including
the originals or copies of any files, computer data bases or other similar
information that was generated in the course of his employment. The Company
agrees that you may retain a copy of contact information for your personal use
and that you may retain possession of files located at the Company relating
strictly to your personal affairs. This Agreement does not limit in any way
Mondavi’s rights and duties as a director so long as he remains a member of the
Company’s Board of Directors.

     11. If either party to this Agreement institutes legal action to enforce
any of the terms and conditions or provisions contained herein, or for any
breach of the Agreement, the prevailing party in such action shall be entitled
to costs and reasonable attorney’s fees.

     12. Should any of the provisions of this Agreement be determined to be
invalid by a court of competent jurisdiction, it is agreed that such
determination shall not affect the enforceability of the other provisions
herein. California law shall govern the validity and interpretation of this
Agreement.

     13. This Agreement and the parties’ letter agreement of even date
constitutes the entire and only understanding of the parties on the subjects
covered and may be amended only by a written agreement signed by both parties.
Mondavi expressly warrants that he has read and fully understands this
Agreement; that he has been represented by legal counsel of his own choosing;
that he will bear his own costs and attorney’s fees, if any, in regard to the
review, negotiation or consummation of this Agreement; that the preceding
paragraphs recite the full consideration for this Agreement and that he is not
executing this Agreement in reliance on any promises, representations or
inducements other than those contained herein; and that he is executing this
Agreement voluntarily, free of any duress or coercion, and after having been
afforded a reasonable period of time to review this Agreement and discuss it
with legal counsel.

	 	 	 	 	 
	

	 	THE ROBERT MONDAVI CORPORATION	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ Ted W. Hall	 	/s/ Timothy J. Mondavi
	

	 	
 
	 	
 
	

	 	 	 	Timothy J. Mondavi
	 
	 	 	 	 
	Its:

	 	Chairman	 	 
	

	 	
 	 	 

3

 

PERSONAL SERVICES

AGREEMENT BETWEEN

THE ROBERT MONDAVI CORPORATION

AND TIMOTHY J. MONDAVI

 

     This Agreement is entered into by and between The Robert Mondavi
Corporation, a California corporation (“Company”) and Timothy J. Mondavi
(“Mondavi”).

Recitals of Fact

Mondavi resigned his employment from Company effective September 30, 2004; the
Company wishes to engage Mondavi to provide services to the Company on an
independent contractor basis.

     NOW, THEREFORE, IT IS AGREED:

	 	1.	 	Independent Contractor Status: Effective October 1, 2004,
Mondavi shall provide services to Company on an independent
contractor basis under the terms and conditions of this Agreement.
	 
	 	2.	 	Non-Employee Status: Mondavi will not be an employee of
Company and will not have certification responsibilities under
Sarbanes-Oxley.
	 
	 	3.	 	Term: The term of this Agreement will be for one (1) year,
unless terminated early by either party on thirty (30) days notice
to the other.
	 
	 	4.	 	Duties: Mondavi shall perform such services as described on
Exhibit A on behalf of the Company as requested from time to time by
the Managing Director, Robert Mondavi Winery, and agreed by Mondavi.
The Company shall discuss with Mondavi the approximate time
commitment Mondavi estimates he will require to perform each
requested service or project.
	 
	 	5.	 	Authority: Mondavi shall have no authority to bind the
Company to any commitments or contracts other than as previously
approved by Company in writing.
	 
	 	6.	 	Time Commitment – Non Exclusive: The parties anticipate that
over the term of this Agreement, Mondavi will devote a minimum of 50
days and a maximum of 75 days of his professional time to the extent
requested by the Company, it being understood that during certain
periods, a greater or lesser amount of time may be utilized for the
performance of the services engaged hereunder. Mondavi shall be
free to perform consulting services for third parties, and Mondavi
may serve on other boards of directors.

 

 

	 	7.	 	Compensation and Other Consideration:

	 	(a)	 	Mondavi shall be paid a daily fee of $2,400 for
those days during which Mondavi devotes at least five hours of
his time to perform Company services under this Agreement.
Mondavi shall be paid at the rate of $500 per hour for those
days during which he devoted less than five hours of his time
to services under this Agreement. Total fees payable under
this Agreement shall not be less than $120,000 nor exceed
$180,000. Payments will be made at the rate of at least
$30,000 per fiscal quarter.
	 
	 	(b)	 	Mondavi shall have an office and part-time use of
an executive assistant at one of the Company’s offices as
Company shall designate.
	 
	 	(c)	 	All travel by Mondavi will be by first class,
commercial or private aircraft as appropriate to the travel
itinerary. You will be reimbursed for your reasonable
business-related meal and wine expenses while on assignments
approved by the Managing Director.
	 
	 	(d)	 	Mondavi shall be reimbursed for any business
expenses incurred in the performance of his duties in keeping
with Company policies and as approved by the Board.

	 	8.	 	Confidentiality: During the term of this Agreement, Mondavi
will have access to confidential proprietary information of Company
including financial, marketing, sales, product development, wine
making, research and other sensitive information. Mondavi agrees
that he will hold all such information in the strictest confidence
and will not divulge it to any third person or appropriate it for
any use or purpose other than as Company may expressly authorize.
Confidential information shall not, however, include any information
which (i) is publicly known and made generally available in the
public domain without action by Mondavi; (ii) is already in the
possession of the receiving party at the time of disclosure by
Mondavi; (iii) is obtained by Mondavi from a third party without a
breach of such third party’s obligations of confidentiality; (iv) is
independently developed by Mondavi without use of or reference to
the confidential information obtained from the Company, as shown by
documents and other competent evidence in Mondavi’s possession; or
(v) is required by law to be disclosed by Mondavi, provided that
Mondavi gives the Company prompt written notice of such requirement
prior to such disclosure and assistance in obtaining an order
protecting the information from public disclosure. All copies of
Company documents Mondavi may have obtained while working under this
Agreement will be returned to Company promptly upon request.
Company shall be entitled to

2

 

	 	 	 	injunctive relief, in addition to any other available legal remedy,
to enjoin a violation or threatened violation of any of these
restrictions.

     This Agreement shall be governed by California law and has been executed
by the parties this 6th day of October, 2004.

	 	 	 	 	 
	 
	 	 	 	 
	

	 	THE ROBERT MONDAVI CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	/s/ Ted W. Hall	 	/s/ Timothy J. Mondavi
	

	 	
 
	 	
 
	

	 	 	 	Timothy J. Mondavi
	 
	 	 	 	 
	Its:
	 	Chairman	 	 
	

	 	
 	 	 

3

 

CONSULTING WINEGROWER TO

ROBERT MONDAVI WINERY

 

	 	•	 	Recommend the appropriate quality and style of Robert Mondavi
Winery wines consistent with the winery’s strategy.
	 
	 	•	 	Provide ideas and recommendations to the winemakers in terms
of the quality and style appropriate for Robert Mondavi Winery
wines.
	 
	 	•	 	Teach and coach the winemakers to achieve high standards and
encourage their innovation so as to maintain a process of continuous
improvement and optimization.
	 
	 	•	 	Play a visible role with the key opinion formers; and at
major PR events in support of management marketing plans, as
mutually agreed, in support of Robert Mondavi Winery.<PAGE>

                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

            This Employment Agreement (this "Agreement") is entered into as of
October 15, 2004 between Bone Care International, Inc., a Wisconsin corporation
(the "Company"), and Paul L. Berns (the "Executive").

            WHEREAS, the Company desires to employ the Executive to serve as the
Chief Executive Officer of the Company, and the Executive desires to be employed
by the Company, upon the terms and subject to the conditions set forth herein.

            NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the Company and the Executive hereby agree as
follows:

            1. EMPLOYMENT. The Company hereby agrees to employ the Executive and
the Executive hereby agrees to be employed by the Company upon the terms and
subject to the conditions contained in this Agreement. The term of employment of
the Executive by the Company pursuant to this Agreement (the "Employment
Period") shall commence on the date hereof and shall continue until terminated
pursuant to Section 4 hereof.

            2. POSITION AND DUTIES; RESPONSIBILITIES. (a) Position and Duties.
The Company shall employ the Executive during the Employment Period as its Chief
Executive Officer. The Executive shall report to the Board of Directors of the
Company (the "Board"). During the Employment Period, the Executive shall perform
faithfully and loyally and to the best of the Executive's abilities the duties
assigned to the Executive hereunder and shall devote the Executive's full
business time, attention and effort to the affairs of the Company and its
subsidiaries and shall use the Executive's reasonable best efforts to promote
the interests of the Company and its subsidiaries. The Executive may engage in
charitable, civic or community activities and, with the prior approval of the
Board, may serve as a director of any other business corporation, provided that
such activities or service do not interfere with the Executive's duties
hereunder or violate the terms of any of the covenants contained in Sections 6
or 7 hereof.

            (b) Responsibilities. The Executive shall have the authority and
responsibility commensurate with the position of Chief Executive Officer. The
Executive shall also perform such other duties (not inconsistent with the
position of Chief Executive Officer) on behalf of the Company and its
subsidiaries as may from time to time be authorized or directed by the Board.

            3. COMPENSATION. (a) Base Salary. During the Employment Period, the
Company shall pay to the Executive a base salary at the rate of $420,000.00 per
annum ("Base Salary"), payable in accordance with the Company's normal payroll
practices. Such Base Salary shall be reviewed annually, and shall be subject to
such annual increases, if any, as determined by the Compensation Committee of
the Board.

            (b) Annual Bonus. The Executive shall, in the sole discretion of the
Compensation Committee of the Board, be eligible to receive an annual incentive
bonus for such fiscal year ("Annual Bonus"), based upon the achievement of goals
established by the

<PAGE>

Compensation Committee. The Compensation Committee of the Board shall determine,
in its sole discretion, whether such goals have been advised.

            (c) Other Benefits. During the Employment Period, the Executive
shall be entitled to participate in the Company's employee benefit plans
generally available to executives of the Company (such benefits being
hereinafter referred to as the "Employee Benefits"). The Executive shall be
entitled to take time off for vacation or illness in accordance with the
Company's policy for executives and to receive all other fringe benefits as are
from time to time made generally available to executives of the Company.

            (d) Expense Reimbursement. During the Employment Period, the Company
shall reimburse the Executive, in accordance with the Company's policies and
procedures, for all proper expenses incurred by the Executive in the performance
of the Executive's duties hereunder.

            4. TERMINATION. (a) Death. Upon the death of the Executive, this
Agreement shall automatically terminate and all rights of the Executive and the
Executive's heirs, executors and administrators to compensation and other
benefits under this Agreement shall cease immediately, except that the
Executive's heirs, executors or administrators, as the case may be, shall be
entitled to:

            (i) accrued Base Salary through and including the Executive's date
      of death;

            (ii) accrued Annual Bonus through and including the Executive's date
      of death; and

            (iii) other Employee Benefits to which the Executive was entitled on
      the date of death in accordance with the terms of the plans and programs
      of the Company.

            (b) Disability. The Company may, at its option, terminate this
Agreement upon written notice to the Executive if the Executive, because of
physical or mental incapacity or disability, fails to perform the essential
functions of the Executive's position, with or without reasonable accommodation,
required of the Executive hereunder for a continuous period of 180 days or any
240 days within any 12-month period. Upon such termination, all obligations of
the Company hereunder shall cease immediately, except that the Executive shall
be entitled to:

            (i) accrued Base Salary through and including the effective date of
      the Executive's termination of employment;

            (ii) accrued Annual Bonus through and including the effective date
      of the Executive's termination of employment; and

            (iii) other Employee Benefits to which the Executive is entitled
      upon termination of employment in accordance with the terms of the plans
      and programs of the Company.

In the event of any dispute regarding the existence of the Executive's
incapacity or disability hereunder, the matter shall be resolved by the
determination of a physician selected by the Board

<PAGE>

and reasonably acceptable to the Executive. The Executive shall submit to
appropriate medical examinations for purposes of such determination.

            (c) Cause. (i) The Company may, at its option, terminate the
      Executive's employment under this Agreement for Cause (as hereinafter
      defined) upon written notice to the Executive (the "Cause Notice"). The
      Cause Notice shall state the particular action(s) or inaction(s) giving
      rise to termination for Cause. The Executive shall have fifteen days after
      the Cause Notice is given to cure the particular action(s) or inaction(s),
      to the extent a cure is possible. If the Executive so effects a cure to
      the satisfaction of the Board, the Cause Notice shall be deemed rescinded
      and of no force or effect.

            (ii) As used in this Agreement, the term "Cause" shall mean any one
      or more of the following:

                  (A) a material breach by the Executive of the duties and
            responsibilities of the Executive which is demonstrably willful and
            deliberate on the Executive's part, which is committed in bad faith
            or without reasonable belief that such breach is in the best
            interest of the Company;

                  (B) the commission by the Executive of a felony involving
            moral turpitude;

                  (C) the commission by the Executive of theft, fraud, breach of
            trust or any significant act of dishonesty involving the Company or
            its subsidiaries;

                  (D) any breach by the Executive of any one or more of the
            covenants contained in Sections 6 or 7 hereof; or

                  (E) the significant violation by the Executive of the
            Company's code of business conduct and ethics or any statutory or
            common law duty of loyalty to the Company or its subsidiaries which
            is demonstrably willful and deliberate on the Executive's part.

            (iii) The exercise of the right of the Company to terminate this
      Agreement pursuant to this Section 4(c) shall not abrogate the rights or
      remedies of the Company in respect of the breach giving rise to such
      termination.

            (iv) If the Company terminates the Executive's employment for Cause,
      all obligations of the Company hereunder shall cease, except that the
      Executive shall be entitled to the payments and benefits specified in
      Sections 4(b)(i) and 4(b)(iii) hereof.

            (d) Termination Without Cause. The Company may, at its option,
terminate the Executive's employment under this Agreement upon written notice to
the Executive for a reason other than a reason set forth in Section 4(a), 4(b)
or 4(c). If the Company terminates the Executive's employment for any such
reason, all obligations of the Company hereunder shall cease immediately, except
that the Executive shall be entitled to:

<PAGE>

            (i) the payments and benefits specified in Sections 4(b)(i) through
      4(b)(iii) hereof, inclusive;

            (ii) the continuation of payment of amounts equal to the Base Salary
      which otherwise would have been payable hereunder had the Executive's
      employment hereunder not been terminated pursuant to this Section 4(d) for
      a period of twenty-four months;

            (iii) the Company shall pay the Executive's COBRA premiums for
      health care continuation coverage for a period ending on the earliest of
      (A) twelve months; (B) the time for which the Executive is entitled to
      COBRA continuation coverage by law; and (C) the time at which the
      Executive is eligible for health insurance benefits from any other
      employer;

            (iv) a lump sum cash amount payment in an amount equal to two times
      the Executive's Annual Bonus for the fiscal year in which the date of
      termination of the Executive's employment occurs; and

            (v) for a period of twelve months commencing on the date of
      termination of the Executive's employment, the Executive shall receive
      outplacement assistance services from an outplacement agency selected by
      the Executive and the Company shall pay all costs of such services;
      provided that such costs shall not exceed $15,000 in the aggregate.

Executive shall not be required to mitigate damages or the amount of any payment
provided under this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement be reduced by
any compensation earned by Executive as a result of employment by another
employer, except as provided in clause (iii) of this Section 4(d).

            (e) Voluntary Termination. Upon 30 days prior written notice to the
Company (or such shorter period as may be permitted by the Board), the Executive
may voluntarily terminate the Executive's employment with the Company for any
reason. If the Executive voluntarily terminates the Executive's employment
pursuant to this Section 4(e), all obligations of the Company hereunder shall
cease immediately, except that the Executive shall be entitled to the payments
and benefits specified in Sections 4(b)(i) and 4(b)(iii) hereof.

            5. FEDERAL AND STATE WITHHOLDING. The Company shall deduct from the
amounts payable to the Executive pursuant to this Agreement the amount of all
required federal, state and local withholding taxes in accordance with the
Executive's Form W-4 on file with the Company, and all applicable federal
employment taxes.

            6. NONSOLICITATION. (a) The Executive acknowledges that in the
course of the Executive's employment with the Company the Executive has and will
become familiar with trade secrets and other confidential information concerning
the Company and its subsidiaries and that the Executive's services will be of
special, unique and extraordinary value to the Company and its subsidiaries.

<PAGE>

            (b) The Executive further agrees that during the period of
Executive's employment with the Company and the period, if any, during which the
Executive is receiving payments from the Company pursuant to Section 4 the
Executive shall not in any manner, directly or indirectly, induce or attempt to
induce any employee of the Company or any of its subsidiaries to terminate or
abandon his or her employment for any purpose whatsoever.

            (c) If, at any time of enforcement of this Section 6, a court or an
arbitrator holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period or
scope reasonable under such circumstances shall be substituted for the stated
period or scope and that the court or arbitrator shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law. This Agreement shall not authorize a court or arbitrator to
increase or broaden any of the restrictions in this Section 6.

            7. EMPLOYEE AGREEMENT. The Executive has executed and has delivered
to the Company the Company's Employee Agreement, a copy of which is attached
hereto. The Executive agrees to perform all of Executive's obligations
thereunder.

            8. ENFORCEMENT. The parties hereto agree that the Company and its
subsidiaries would be damaged irreparably in the event that any provision of
Section 6 or 7 of this Agreement were not performed in accordance with its terms
or were otherwise breached and that money damages would be an inadequate remedy
for any such nonperformance or breach. Accordingly, the Company and its
successors and permitted assigns shall be entitled, in addition to other rights
and remedies existing in their favor, to an injunction or injunctions to prevent
any breach or threatened breach of any of such provisions and to enforce such
provisions specifically (without posting a bond or other security). The
Executive agrees that the Executive will submit to the personal jurisdiction of
the courts of the State of Wisconsin in any action by the Company to enforce
this Agreement or to obtain injunctive or other relief.

            9. REPRESENTATIONS. The Executive represents and warrants to the
Company that (a) the execution, delivery and performance of this Agreement by
the Executive does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which the Executive is a party or by which the Executive is bound, (b) the
Executive is not a party to or bound by any employment agreement, noncompetition
agreement or confidentiality agreement with any other person or entity and (c)
upon the execution and delivery of this Agreement by the Company, this Agreement
shall be the valid and binding obligation of the Executive, enforceable in
accordance with its terms.

            10. SURVIVAL. Sections 6, 7 and 8 of this Agreement shall survive
and continue in full force and effect in accordance with their respective terms,
notwithstanding any termination of the Employment Period.

            11. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when (a)
delivered personally or by overnight courier to the following address of the
other party hereto (or such other address for such party as shall be specified
by notice given pursuant to this Section) or (b) sent by facsimile to the
following facsimile number of the other party hereto (or such other facsimile
number for

<PAGE>

such party as shall be specified by notice given pursuant to this Section), with
the confirmatory copy delivered by overnight courier to the address of such
party pursuant to this Section 11:

            If to the Company, to:

                      Bone Care International, Inc.
                      1600 Aspen Commons
                      Middleton, Wisconsin 53562
                      Attention:  Chief Financial Officer

                      with a copy to

                      Steven Sutherland
                      Sidley Austin Brown & Wood LLP
                      10 S. Dearborn Street
                      Chicago, Illinois  60603

            If to the Executive, to:

                      Paul L. Berns
                      9534 Blue Heron Dr.
                      Middleton, WI 53562

            12. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in 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.

            13. ENTIRE AGREEMENT. This Agreement, including the attachments
hereto, constitutes the entire agreement and understanding between the parties
with respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related in any manner to the subject matter hereof.

            14. SUCCESSORS AND ASSIGNS. This Agreement shall be enforceable by
the Executive and the Executive's heirs, executors, administrators and legal
representatives, and by the Company and its successors and assigns. Executive
may not assign, pledge or encumber his interest in this Agreement or any part
thereof. The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by operation of law or by agreement in
form and substance reasonably satisfactory to Executive, to assume and agree to
perform this Agreement

<PAGE>

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.

            15. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Wisconsin
without regard to principles of conflict of laws.

            16. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended or waived only by the written agreement of the Company and the
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. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and both of which
together shall constitute one and the same instrument.

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

                                            BONE CARE INTERNATIONAL, INC.

                                            By: /S/ BRIAN J. HAYDEN
                                               ---------------------------------
                                            Title: Vice President, Finance

                                            PAUL L. BERNS

                                            /S/ PAUL L. BERNS
                                            ------------------------------------

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