Exhibit 10.2
February 25, 2004
Xx. Xxxxxxx Cork
[address intentionally left blank]
RE: AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
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Dear Xxxx:
I am pleased to provide you with the following additional benefits of
employment. This letter will constitute Amendment No. 1 to the Employment
Agreement dated August 18, 2000 (the "Employment Agreement") and will amend the
Employment Agreement as follows (any capitalized terms used herein shall have
the meanings set forth in the Employment Agreement):
1. A supplemental executive retirement plan (as amended, modified or adopted
from time to time, the "SERP") has been adopted for the senior executives of
Covance Inc. in which you will participate. The SERP is a non-qualified,
unfunded retirement plan. A copy of the plan will be available upon request.
2. Section 2.1 of the Employment Agreement shall be deleted and you shall be
entitled to the following benefits in lieu thereof:
SEVERANCE
Except as provided below under the paragraph headed "CHANGE-OF-CONTROL", should
you be involuntarily terminated for reasons other than for Cause, the Company
shall pay you the following:
(i) an amount equal to the sum of (a) one year of base salary (payable on
the normal payroll cycle) determined at the time of termination and (b) one year
of the annual incentive bonus (payable on the normal bonus cycle) in an amount
equal for such year to the product of your base salary in effect at termination
and 70% (the sum of (a) and (b) being, collectively, the "Termination
Payments");
(ii) during the period between the first anniversary of the date of the
involuntary termination of your employment with the Company for reasons other
than Cause and the second anniversary of such event, your base salary (payable
on the normal payroll cycle) with the Company determined at the time of such
involuntary termination in the event that, after reasonable efforts by you, you
have been unable to obtain a suitable alternative vocation, as determined by
Company's Chief Executive Officer in his sole discretion;
(iii) your financial counseling and automobile allowance as in effect at
such time for the one year period starting on the date of your involuntary
termination from the Company for reasons other than Cause and the first
anniversary of the date of such event.
Please refer to that certain Confidentiality and Non-Competition Agreement
between you and the Company (the "Non-Competition Agreement"). You agree that
any of the severance payments under Section (i) or (ii) above shall constitute
the payment of your base salary under the Non-Competition Agreement. You agree
to promptly update the Vice President - Human Resources of the Company of any
change in your employment or benefits coverage status during any period you are
receiving benefits hereunder.
"CAUSE" shall mean (i) your convictions of a felony (or equivalent) or a
misdemeanor (or equivalent) if such misdemeanor (or equivalent) involves moral
turpitude; (ii) your committing any act of gross negligence or intentional
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misconduct in the performance or non-performance of your duties as an employee
of Covance or its affiliates, including, any actions which constitute sexual
harassment under applicable laws, rules or regulations; (iii) your failure to
perform your duties assigned for a period of thirty (30) or more days unless
such failure is caused by an Extended Disability; or (iv) misappropriation of
assets, personal dishonesty or intentional misrepresentation of facts which may
cause Covance or its affiliates financial or reputational harm.
Should your employment be terminated by Covance because of an Extended
Disability (as defined below), and not for any other reason that constitutes
Cause, for 180 consecutive days where you have not returned to your duties on a
full-time basis after the expiration of such 180 day period within 30 days after
written notice of termination is given to you, Covance shall pay to you an
amount equal to the sum of (a) two years base salary (payable on the normal
payroll cycle) determined at the time of termination, and (b) two years of the
annual incentive bonus (payable on the normal bonus cycles) in an amount equal
for each such year to the product of your base salary in effect at termination
and 70% (the sum of (a) and (b) being, collectively, the "Extended Disability
Payments").
EXTENDED DISABILITY shall (i) mean you are unable, as a result of a medically
determinable physical or mental impairment, to perform the duties and services
of your position, or (ii) have the meaning specified in any disability insurance
policy maintained by Covance, whichever is more favorable to you.
Except as may be otherwise provided in applicable Covance compensation and
benefit plans, Covance shall not be liable for any salary or benefit payments to
you beyond the date of your voluntary termination of employment with Covance. In
the event of a termination of employment for Cause or Extended Disability, you
shall not be entitled to any compensation or other benefits not already earned
and owing to you on account of your services on the date of such termination of
employment except as provided above with respect to a termination for Extended
Disability. The provision of any benefits pursuant to this Agreement shall be in
lieu of, and not in addition to, any payment or benefits you otherwise would
have been entitled to pursuant to any severance pay plan of Company, including,
without limitation, that certain Amended and Restated Severance Pay Plan.
CHANGE-OF-CONTROL
In the event of an Event of Termination (as defined below), you will be entitled
to a lump sum payment equal to the sum of (1) the product of (a) 3 and (b) your
base annual salary in effect at the time of the Event of Termination and (2) the
product of (a) 3 and (b) number that is 70% of your base annual salary in effect
at the time of the Event of Termination. Such payment will be made within 60
days of the Event of Termination. In addition to, and as a result of, the
foregoing all of your stock options, restricted stock, deferred compensation and
similar benefits which have not become vested on the date of an Event of
Termination shall become vested upon such event.
For the purposes of this Agreement, an Event of Termination is defined to be a
termination of your employment by Covance (for reasons other than Cause) or a
Constructive Termination (as defined below) of your employment, in each case
within 24 months following a Change-of-Control (as defined below) of Covance
Inc., or your voluntary termination of your employment for any reason or no
reason during the one-month period commencing twelve months following a
Change-of-Control and ending thirteen months after such Change-of-Control (a
"Voluntary Termination"); PROVIDED, HOWEVER, that a Voluntary Termination shall
not be an Event of Termination if it arises from a Change-of-Control pursuant to
clause (iv) under the definition of Change-of-Control unless the tender offer or
exchange offer is a tender or exchange offer for securities representing 20% or
more of the combined voting power of Covance's then outstanding securities.
For purposes of this Agreement, a Change-of-Control is defined to occur when:
(i) any person (including as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes the beneficial owner,
directly or indirectly, of Covance Inc.'s securities representing 20% or more of
the combined voting power of Covance Inc.'s then outstanding securities; or
(ii) as a result of a proxy contest or contests or other forms of contested
shareholder votes (in each case either individually or in the aggregate), a
majority of the individuals elected to serve on Covance Inc.'s Board of
Directors are different than the individuals who served on Covance Inc.'s Board
of Directors at any time within the two years prior to such proxy contest or
contests or other forms of contested shareholder votes (in each case either
individually or in the aggregate); or
(iii) Covance Inc.'s shareholders approve a merger, or consolidation (where
in each case Covance Inc. is not the survivor thereof), or sale or disposition
of all or substantially all of Covance Inc.'s assets or a plan or partial or
complete liquidation; or
(iv) an offeror (other than Covance Inc.) purchases shares of Covance Inc.
common stock pursuant to a tender or exchange offer for such shares.
For purposes of this Agreement, a Constructive Termination is defined to be:
(i) a material breach by Covance of this Agreement, including, without
limitation, a reduction in your then current salary or the percentage of base
salary eligible for incentive compensation;
(ii) a diminution of your responsibilities, status, title or duties
hereunder;
(iii) a relocation of your work place which increases the distance between
your principal residence and your work place by more than 25 miles;
(iv) a failure by Covance to provide you with benefits which are as
favorable to you in all material respects as those provided immediately prior to
the Change-of- Control; or
(v) the failure of any acquiror or successor in interest to the business of
Covance to agree in writing to be bound by the terms of this Agreement within
four months of any Change-of-Control.
In the event you are involved in any dispute about your rights under this
Agreement arising on or after a Change-of-Control, Covance shall pay all legal
costs and fees incurred by you in connection with such dispute promptly upon
receipt of any invoice relating thereto.
With respect to an Event of Termination, your automobile and financial
counseling benefits and medical, dental, disability and life insurance will be
continued, to the extent they are not otherwise prohibited under the respective
plans, until you find other employment but not longer than three years from the
date of the Event of Termination.
3. The following section shall be added to the Agreement:
RELEASE
If there has been an Event of Termination or if there has been no
Change-of-Control but you have been terminated without Cause, the obligation of
Covance to make to you any or all of the payments specified under this Agreement
(including, without limitation, the Termination Payments, the salary
continuation payments described in Section (ii) of the section entitled
SEVERANCE of this Letter Agreement or the payments specified under the paragraph
headed "CHANGE OF CONTROL", as applicable) shall be subject to your execution
and delivery to Covance of a release in form and substance reasonably
satisfactory to Covance of all claims, demands, suits or actions, whether in law
or at equity, you have or may have relating to or giving rise from such Event of
Termination or non-Cause termination.
Except as expressly modified hereby, the Employment Agreement shall remain in
full force and effect. Please indicate your agreement with the terms and
conditions of this Agreement by signing two copies of this Agreement and
returning them to my attention.
Very truly yours,
COVANCE LABORATORIES LIMITED
By: /s/ Xxxxxxxxxxx Xxxxxxx
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Accepted as of the date first above specified:
By: /s/ Xxxxxxx Cork
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