Exhibit 10B
Employment Agreement
between
Xxxxxxxxxxx Xxxxxxx
&
Covance Inc.
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into between
COVANCE INC. (the "Company"), a Delaware corporation having its principal place
of business at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000-0000, and XXXXXXXXXXX
XXXXXXX (the "Executive"), with a residence at [address], effective as of
May 13, 1999 (the "Effective Date").
WHEREAS, Executive has been employed by the Company as President and
Chief Executive Officer pursuant to an Employment Agreement (the "Old
Agreement") dated as of November 1, 1996, as amended by Amendment No. 1 thereto
dated November 10, 1998; and
WHEREAS, the term of the Executive's employment under the Old Agreement
is scheduled to expire on November 1, 1999, unless such agreement is renewed
between six and three months before such expiration date; and
WHEREAS, the Company and the Executive now wish to enter into an
agreement of employment to replace the imminently expiring Old Agreement that
will constitute the sole and exclusive agreement relating to the employment of
the Executive by the Company and its subsidiaries following the Effective Date
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants, terms and conditions set forth herein, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed between the Company and the Executive as follows:
I. EMPLOYMENT: The Company shall continue to employ the Executive
following the Effective Date in a full-time capacity in the positions set forth
in this paragraph, and the Executive shall continue to accept such employment
upon the terms and conditions set forth herein. Such employment shall be in the
capacity of President and Chief Executive Officer of the Company, and Chairman
of the Board of Directors of the Company. Notwithstanding the foregoing, the
Executive shall relinquish the office of President, shall continue as Chief
Executive Officer, and shall become Co-Chairman of the Board of Directors of the
Company, if
and only if the merger (the "Merger") contemplated in the Agreement and Plan of
Merger, dated as of April 28, 1999, among Parexel International Corporation
("Parexel"), the Company and CCJ Holding Corp., a wholly owned subsidiary of the
Company ("Merger Sub") is consummated. The duties, responsibilities and
capacities of the Co-Chairman shall be as set forth in the Company's Amended and
Restated By-Laws as in effect immediately following the Effective Date, as
hereinafter defined (the "Restated By-Laws"). The Company will form an office of
the Chairman which the two Co-Chairmen will occupy. Subject to the authority of
the Board of Directors, the office of the Chairman will have responsibility for
the overall strategic direction of the Company. In addition, all corporate staff
functions and the managers of the strategic business units ("Reporting Areas")
will report into the office of the Chairman. The Co-Chairmen will decide which
of them shall have management responsibility for each Reporting Area. In the
case of disagreement concerning who will have management responsibility for any
particular Reporting Area, the Chief Executive Officer of the Company shall make
the final decision. Such changes shall be effective as of the closing date (the
"Closing Date") of the Merger without any further act or action by either the
Executive or the Company except as may be required by the Delaware General
Corporation Law.
II. TERM; EFFECT ON THE OLD AGREEMENT: Unless earlier terminated
pursuant to Section IX hereof, the term of employment under the Agreement shall
commence on the Effective Date and shall continue through the third anniversary
of the Effective Date (such initial term, as it may be extended from time to
time in accordance with Section XVI or shortened pursuant to Section IX hereof,
being the "Employment Term"). Upon the Effective Date, the Old Agreement shall
be of no further force or effect and shall be rescinded without any further act
or action by Executive or the Company.
III. DUTIES: During the Employment Term, the Executive shall accept and
diligently perform to the reasonable satisfaction of the Company, those
executive services for the Company commensurate with his position and title as
may be designated from time to time by the Company's Board of Directors in
connection with any aspect of the Company's business. In his capacity as Chief
Executive Officer of the Company, the Executive shall report exclusively to the
Board of Directors of the Company, and, following the Closing Date, the
President of the Company shall report exclusively to the Executive. The
Executive agrees to devote his undivided time and attention to the business of
the Company. The Executive shall not, without the prior written consent of the
Company's Board of Directors, be directly or indirectly engaged in any other
trade, business or occupation for compensation requiring his personal services
during the Employment Term. Nothing in this Agreement shall preclude the
Executive from: (i) engaging in charitable and community activities or from
managing his personal investments, or (ii) serving as a member of the board of
directors of an unaffiliated company not in competition with the Company,
subject however in each such case of board membership, to approval by the
Company's Board of Directors (which approval shall not be unreasonably
withheld).
IV. CASH COMPENSATION: Executive shall be compensated for services
rendered during the Employment Term as follows:
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(a) BASE SALARY: The Executive shall be compensated at an annual base
salary rate of no less than $486,720 for the period from the Effective
Date to the Closing Date, and at an annual base salary rate of no less
than $500,000 following the Closing Date. The Company's Board of
Directors or the Compensation and Organization Committee of such Board
(the "Compensation Committee") shall review and may, if appropriate, at
its discretion, increase (but not decrease) this annual base salary
effective the first day of any future new year during the Employment
Term to reflect ordinary salary actions generally granted to other
Company employees.
(b) VARIABLE (BONUS) PAY: In addition to the Base Salary provided for
in Section IV(a) above, the Executive will participate in the Company's
Variable Compensation Plan (the "Bonus Plan"). The Bonus Plan provides
that upon satisfaction of certain goals for the Company established by
the Company's Board of Directors or the Compensation Committee, the
Executive shall receive an annual incentive equal to 65% of the
Executive's annual base salary earned for the relevant year.
The Bonus Plan also provides that the Executive may earn up to 130% of
the Executive's annual base salary in effect at the time the goals are
established if the Company has outstanding results, again as determined
by the Company's Board of Directors or the Compensation Committee. At
the discretion of the Company's Board of Directors or the Compensation
Committee, any annual incentive compensation in excess of 65% of the
Executive's annual base salary may be paid to the Executive in fully
vested non-qualified stock options, the terms of which would be
specified in a Stock Option Agreement entered into pursuant to the
Company's Employee Equity Participation Program. Actual awards would be
determined by the Company's Board of Directors or the Compensation
Committee after the end of the applicable performance year and would be
granted to the Executive shortly thereafter. The annual incentive
percentage targets may be increased, but not decreased, during the
Employment Term.
V. EQUITY /AWARDS: The Executive may be awarded, from time to time,
additional compensation (such as stock options or restricted stock) pursuant to
the Company's Employee Equity Participation Program or any additional or
replacement incentive compensation or long-term compensation program established
for the senior officers of the Company. Any awards under such programs, except
as provided below, shall be at such levels or in such amounts as the Company's
Board of Directors or the Compensation Committee deems, in its sole discretion,
appropriate for the position occupied by Executive and his performance therein.
The terms, conditions and rights with respect to any such grants will be subject
to the actual provisions and conditions applicable to such plans. For 1999, the
Executive acknowledges that he has been awarded 23,000 restricted shares and
52,600 options pursuant to the Company's Employee Equity Participation Program.
VI. EMPLOYEE BENEFITS:
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(a) GENERAL PROVISIONS: Except as expressly provided in this Agreement,
the Executive shall be eligible to participate in all employee benefit
plans offered by the Company (e.g. Life Insurance, Medical & Dental
Insurance, Travel Accident Insurance, Short Term Disability Insurance,
Long Term Disability Insurance, Flexible Spending Accounts, Regular and
Supplemental Accidental Death and Disability Insurance,
Optional/Supplemental Life Insurance, Stock Purchase Savings Plan
(401(k)), Employee Stock Purchase Program, and other personal benefit
plans of the Company) on a basis which is no less favorable to the
Executive than the Company may make available to other senior officers
of the Company; provided, however, that in all events the eligibility
and other terms of any such plans shall govern the participation of the
Executive therein.
(b) SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN: The Executive will be
eligible to participate in the Company's Supplemental Executive
Retirement Plan ("SERP"). Under the terms of the SERP, the Executive
will be entitled to receive a nonqualified retirement benefit in
accordance with the terms and provisions thereof, as administered by
the Company's Board of Directors or the Compensation Committee.
(c) VACATION AND SICK LEAVE: The Executive shall be entitled to
vacation and sick leave in accordance with the vacation and sick leave
policies adopted by the Company from time to time, provided that the
Executive shall be entitled to no less than five (5) weeks of vacation
each calendar year. Any vacation shall be at such times and for such
periods as shall be mutually agreed upon between the Executive and the
Company. The Executive shall be entitled to all public holidays
observed by the Company.
VII. APPLICABLE TAXES: There shall be deducted from any compensation
payments made under this Agreement any Federal, state and local taxes or other
amounts required to be withheld by any entity having jurisdiction over the
matter.
VIII. MISCELLANEOUS:
(a) BUSINESS TRAVEL AND EXPENSES: The Executive shall be reimbursed by
the Company for reasonable travel and other business expenses, as
approved by the Company, which are incurred and shall be accounted for
in accordance with the Company's normal practices and procedures for
reimbursement of expenses.
(b) HOUSING LOAN: There will be no change in the terms of the
Executive's outstanding housing loan arrangement with the Company.
(c) AUTOMOBILE EXPENSES: The Company will provide the Executive with a
gross automobile allowance of $1,070 per month (or other such monthly
amount as is provided to other senior executives of the Company in
accordance with the provisions of the Company's auto allowance
program). Such amounts will be
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disclosed for purposes of Securities and Exchange Commission filings as
appropriate or required.
(d) FINANCIAL COUNSELING AND LEGAL SERVICES: The Company will provide
an annual allowance of $10,000 (grossed-up for tax purposes using an
incremental income tax rate of 45%) for the Executive to use for
financial counseling, tax preparation and legal services. Such amounts
will be disclosed for purposes of Securities and Exchange Commission
filings as appropriate or required.
(e) ONGOING NON-EXCLUSIVITY: Nothing in this Agreement shall prevent
the Executive from being entitled to receive any additional
compensation or benefits as approved by the Company's Board of
Directors or the Compensation Committee and which would amend or
supplement the compensation or benefits specified in this Agreement.
IX. TERMINATION OF EMPLOYMENT: Notwithstanding any other provision of
this Agreement, the employment of the Executive pursuant to this Agreement may
be terminated by the Company's Board of Directors as follows:
(a) TERMINATION FOR CAUSE: The Executive's employment hereunder may be
terminated at any time during the Employment Term for "Cause". As used
herein, the term "Cause" shall mean (i) conviction of the Executive of
a felony or conviction of a misdemeanor if such misdemeanor involves
moral turpitude; (ii) the Executive's committing any act of gross
negligence or intentional misconduct in the performance or
non-performance of his duties as an employee of the Company, including
any such actions which constitute sexual harassment under applicable
laws, rules or regulations, which causes material financial or material
reputational harm with respect to the Company; (iii) if the Executive
is not disabled (as defined below), a failure or refusal to perform the
duties and services specified herein for a period of not less than
thirty (30) days; (iv) any material breach by the Executive of any
material provision of this Agreement (other than for reasons related
only to the business performance of the Company or business results
achieved by the Executive); or (v) misappropriation of Company assets
or personal dishonesty which causes material financial or reputational
harm with respect to the Company. With respect to clauses (iii) and,
solely to the extent a material breach is susceptible of cure, (iv) of
the immediately preceding sentence, "Cause" shall not be deemed to
exist unless and until (x) the Company shall have given the Executive
written notice of such alleged basis for Cause under clause (iii) or
(iv), as applicable, and (y) the Executive shall have failed to cure
such alleged basis for Cause to the reasonable satisfaction of the
Company's Board of Directors within 30 days following the effective
date of such notice. For purposes of this section, no act or failure to
act on the Executive's part shall be considered to be reason for
termination for Cause if done, or omitted to be done, by the Executive
in good faith and with the reasonable belief that the action or
omission was in the best interests of the Company.
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(b) TERMINATION FOR DISABILITY: At the sole discretion of the Company's
Board of Directors, the Executive's employment hereunder may be
terminated if the Executive is disabled (as defined below) and shall
have been absent from his duties with the Company on a full-time basis
for one hundred and twenty (120) consecutive days, and within thirty
(30) days after written notice by the Company to do so, the Executive
shall not have returned to the performance of his duties hereunder on a
full-time basis. In the event of such termination, the Company shall
make to the Executive the payments specified in Section IX(c). As used
herein, the term "disabled" shall (i) mean that the Executive is
unable, as a result of a medically determinable physical or mental
impairment, to perform the duties and services of his position, or (ii)
have the meaning specified in any disability insurance policy
maintained by the Company, whichever is more favorable to the
Executive.
(c) TERMINATION WITHOUT CAUSE; SEVERANCE BENEFITS: The Company's Board
of Directors may relieve the Executive of his duties, responsibilities,
positions and capacities set forth in Sections I and III of this
Agreement without Cause if the Company's Board of Directors, upon
assessment of the general business performance of the Company and the
specific performance of the Executive, determines that the business
needs of the Company require relieving the Executive from such duties,
responsibilities, positions and capacities, provided that in such
event:
(i) The Executive shall be entitled to receive three (3) years
base salary (at the Executive's effective annual rate on the date
of termination) which amount shall be paid in a lump-sum (net of
appropriate withholdings) within sixty (60) days of the date of
termination; and
(ii) The Executive shall be entitled to receive an amount equal
to the product of (A) three (3), (B) the Executive's annual base
salary in effect at the time of termination, and (C) the higher
of 65% and the then applicable annual incentive percentage
specified in the Bonus Plan, which amount shall be paid in a
lump-sum (net of appropriate withholdings) within sixty (60) days
of the date of termination; and
(iii) The Executive shall be entitled to continue participation
in the Company's health and benefit plans (to the extent
allowable in accordance with the administrative provisions of
those plans and applicable federal and state law) for a period of
up to three (3) years or until the Executive is covered by a
successor employer's benefit plans, whichever is sooner.
Notwithstanding the foregoing (including the payment of the amounts
provided above), in the event that the Executive is relieved of his
duties, responsibilities, positions and capacities without Cause prior
to a Change-of-Control as described
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in this Section IX(c), the Executive shall remain employed by the
Company for the remainder of the Employment Term in such capacity, and
on such terms (including compensation), as may be mutually agreed by
the Executive and the Company; PROVIDED that if the Executive and the
Company's Board of Directors (each of which shall act in good faith and
use their respective best efforts to reach such a mutual agreement) do
not reach such agreement within sixty (60) days of the date the
Executive has been relieved, as described in this Section IX(c), of his
duties, responsibilities, positions and capacities, the Executive's
employment with the Company in any capacity shall terminate on such
date without any further act or action by the Company or the Company's
Board of Directors, except for the preparation of the release specified
in Section XVII(i) of this Agreement. The preceding proviso shall not
be interpreted or construed to limit Executive's right to receive the
"Severance Benefits" described in this Section IX(c) provided that
Executive has complied with his obligations in Section XVII(i) of this
Agreement. In the event that, during any period of continued employment
pursuant to this subparagraph, a Change-of-Control occurs, the
Executive shall receive the additional amounts and benefits described
in Section IX(e) of this Agreement as if the occurrence of such
Change-of-Control were an Event of Termination.
(d) CONSTRUCTIVE TERMINATION: In the event the Executive resigns from
his duties, responsibilities, positions and capacities set forth in
Sections I and III of this Agreement following a Constructive
Termination (as defined in paragraph (e) below), the Executive will be
entitled to the "Severance Benefits" described in Section IX(c) of this
Agreement above, and shall continue to be employed by the Company in
the manner and on the terms and conditions specified in the last
subparagraph of Section IX(c) of this Agreement.
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(e) CHANGE-OF-CONTROL: In the event of an Event of Termination (as
defined below), the Executive will be entitled to receive all of the
"Severance Benefits" described in paragraph (c) above, and, in
addition:
(i) All 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.
(ii) The Executive shall be entitled to receive any payments
calculated pursuant to Section XVIII hereof.
(iii) In the event the Executive is involved in any dispute about
his rights or obligations under this Agreement arising on or
after a Change-of-Control, the Company shall pay all legal costs
and fees incurred by the Executive in connection with such
dispute promptly upon receipt of any invoice relating thereto.
(iv) The benefits set forth in Sections VIII(b) and VIII(c)
hereof and medical, dental, disability and life insurance will be
continued, to the extent they are not otherwise prohibited under
the respective plans, until the Executive finds other employment
but not longer than three years from the date of the Event of
Termination.
For the purposes of this Agreement, an Event of Termination is defined
to be a termination of the Executive's employment by the Company (for
reasons other than Cause) or the Executive's resignation following a
Constructive Termination (as defined below) of the Executive's
employment, in each case within 24 months following a Change-of-Control
(as defined below), or the Executive's voluntary termination of his
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, a Voluntary Termination shall not be
an Event of Termination if it arises from a Change-of-Control pursuant
to subsection (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 Company securities
representing 20% or more of the combined voting power of the
Company'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
8
aggregate), a majority of the individuals elected to serve on the
Company's Board of Directors are different than the individuals
who served on the Company'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; or
(iii) the Company's shareholders approve a merger or
consolidation (where in each case the Company is not the survivor
thereof), or a sale or disposition of all or substantially all of
the Company's assets or a plan of partial or complete
liquidation; or
(iv) an offeror (other than the Company) purchases shares of the
Company's 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 the Company of this Agreement,
including, without limitation, a reduction in the Executive's
then current salary or the percentage of base salary eligible for
incentive compensation;
(ii) a diminution of the Executive's responsibilities, status,
title or duties under this Agreement (including any amendment to
the Restated By-Laws that results in a material and adverse
change to the responsibilities, status or duties of the
Co-Chairman of the Company), or a removal of the Executive as
Co-Chairman (other than for Cause);
(iii) a relocation of the Executive's work place which increases
the distance between the Executive's principal residence and the
Executive's work place by more than 25 miles;
(iv) a failure by the Company to provide the Executive with
benefits (A) required hereunder or (B) on or following a
Change-of-Control, which are as favorable to the Executive in all
material respects as those provided immediately prior to the
Change-of-Control; or
(v) the failure of any acquirer or successor in interest to the
business of the Company to agree in writing to be bound by the
terms of this Agreement within four months of any
Change-of-Control.
(f) Except as may be otherwise provided herein or in applicable Company
compensation and benefit plans, the Company shall not be liable for any
salary or benefit payments to the Executive beyond the date of the
Executive's voluntary termination of employment with the Company. In
the event of a termination of employment under Section IX(a) above, the
Executive shall not be entitled to any
9
compensation or other benefits not already earned and owing to the
Executive on account of his services on the date of such termination of
employment.
(g) If there has been an Event of Termination or if there has been no
Change-of-Control but the Executive has been terminated without Cause
or has resigned following a Constructive Termination, the Company shall
provide for the Executive, at the Company's cost, executive
outplacement support for one year following such termination.
X. ARBITRATION: In the event of any difference of opinion or dispute
between the Executive and the Company with respect to the construction or
interpretation of this Agreement or the alleged breach thereof, which cannot be
settled amicably by agreement of the parties, then such dispute shall be
submitted to and determined by arbitration by a single arbiter in the city of
Trenton, New Jersey in accordance with the rules then in effect, of the AMERICAN
ARBITRATION ASSOCIATION, and judgment upon the award rendered shall be final,
binding and conclusive upon the parties and may be entered in the highest court,
state or federal, having jurisdiction.
The Company shall reimburse the Executive for all expenses incurred by
the Executive in connection with any arbitration, including the reasonable costs
and expenses of legal counsel, to the extent the arbitration is concluded in the
Executive's favor.
XI. CONFIDENTIALITY: The Company possesses and will continue to possess
trade secrets or other information which has been crafted, discovered, developed
by or otherwise become known to the Company, or in which property rights have
been assigned or otherwise conveyed to the Company, which information has
commercial value with respect to the business and operations of the Company or
the business and operations of its subsidiaries or its affiliates, including,
but not limited to, information regarding sales, costs, customers, employees,
products, services, apparatus, equipment, processes, formulae, marketing, or the
organization, business or finances of the Company or its subsidiaries or its
affiliates, or any information the Executive has reason to know the Company
would like to treat as confidential for any purpose, such as maintaining a
competitive advantage or avoiding undesirable publicity, whether or not
developed by the Executive ("Confidential Information"). Unless previously
authorized in writing or instructed in writing by the Company, the Executive
will not, from and after the date of employment with the Company, directly or
indirectly, use for his own benefit or purposes, or disclose to, or use for the
benefit or purposes of, anyone other than the Company or its subsidiaries or
affiliates, any Confidential Information, unless and until, and then only to the
extent that, such Confidential Information has (a) been or becomes published, or
is or becomes generally known in the trade through no fault of the Executive, or
(b) such information is made known and available to the Executive by a third
party, who, by such disclosure to the Executive does not breach any duty or
obligation to the Company or its subsidiaries or affiliates.
In the event the Executive become legally compelled to disclose any of
the Confidential Information, the Executive will provide the Company with prompt
notice so that the Company may seek a protective order or other appropriate
remedy and/or waive compliance with
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the provisions of this Agreement. If, in the absence of a protective order or
the receipt of a waiver hereunder, the Executive is nonetheless legally required
to disclose Confidential Information to any tribunal or else stand liable for
contempt or suffer other censure or penalty, the Executive may disclose such
Confidential Information to such tribunal without liability hereunder.
Upon termination of the Executive's employment with the Company, he
will deliver to the Company all written embodiments of the Confidential
Information, including all notes, drawings, records, and reports pertaining to
work done by the Executive during the Employment Term and all other matters of
secret or confidential nature relating to the Company's business.
XII. NON-COMPETITION. The Executive acknowledges that the services to
be rendered by the Executive to the Company are of a special and unusual
character, with a unique value to the Company, the loss of which cannot
adequately be compensated by damages or an action at law. In view of the unique
value to the Company of such services for which the Executive is employed at the
Company, because of the Confidential Information obtained by, or disclosed to
the Executive, and as a material inducement to the Company to compensate the
Executive as well as provide him with additional benefits and other good and
valuable consideration, the Executive covenants and agrees that:
(a) Unless authorized by the Company's Board of Directors in
writing, the Executive shall not, during the Employment Term and
for one year after the expiration of the Employment Term (the
"Post Employment Term", the Employment Term and the Post
Employment Term, being collectively, the "Period"), become
employed by, become a director, officer, shareholder or partner
of, or to otherwise enter into, conduct, or advise any business,
whether directly or indirectly, which offers services or products
in the United States and any other geographical regions where the
Company, or its subsidiaries or its affiliates, is then offering
its services or products in competition with services or products
sold by the Company, or its subsidiaries or its affiliates at any
time during the Period in the United States or such region,
including, without limitation, the conduct of contract
pre-clinical toxicology laboratory services, contract
biopharmaceutical clinical laboratory services, contract
bioprocessing or manufacturing services, contract drug packaging
services, Phase I, II, III or IV clinical studies or outcomes or
disease management studies or medical marketing or regulatory
consulting services (collectively, the "Company Services");
provided that the Executive shall not be bound by the
restrictions contained in this Section XII(a) unless the Company
has made all payments to the Executive which are due and owing to
the Executive under this Agreement or any plan of the Company,
including any equity incentive plan or bonus incentive plan of
the Company, or otherwise; provided, further, that if the
Executive has been dismissed by the Company for Cause, or the
Executive has voluntarily terminated his employment with the
Company for any reason or no reason, the Executive shall not be
bound by the provisions of this Section XII(a) during the Post
Employment Term unless the Company has made to the Executive the
payments specified in Section IX(c) of this Agreement. Nothing
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herein shall restrict the Executive in his employment in any
capacity by a corporation or entity engaged substantially in the
manufacture or sale of pharmaceuticals, or any other business
which does not offer the Company Services. Ownership of not more
than 1% of the issued and outstanding shares of any class of
securities of a corporation, the securities of which are traded
on a national securities exchange or in the over-the-counter
market, shall not cause the Executive to be deemed a shareholder
under this provision. Notwithstanding anything therein to
contrary, the non-competition covenant of this Section XII(a)
shall not apply following an Event of Termination, as defined in
Section IX(e)
(b) During the Period, the Executive shall not, directly or
indirectly, solicit, divert or accept any business from any
customer of the Company, its subsidiaries or affiliates to the
detriment of any of the foregoing or seek to cause any such
customers to refrain from doing business with or patronizing the
Company, its subsidiaries or its affiliates.
(c) During the Period, the Executive shall not, directly or
indirectly, solicit or induce for employment any employee of the
Company, its subsidiaries or affiliates or otherwise encourage
any employee of the Company, its subsidiaries or affiliates to
leave the Company, or any of its subsidiaries or affiliates. For
purposes of this Agreement, advertisements in trade magazines,
use of executive search firms and other conventional means of
obtaining employees shall not be construed as solicitation,
inducements or encouragement unless the party utilizing such
conventional means specifically directs the efforts at
employee(s) with whom the party may not have contact pursuant to
the terms of this Agreement.
(d) For purposes of this Agreement, the term "directly or
indirectly" shall be construed in its broadest sense and shall
include the activities of the members of the Executive's
immediate family or any partnership, or as otherwise specified
above, and the term "customer" shall mean any person or entity to
which the Company has sold services during the one-year period
prior to the date the Executive ceased employment with the
Company or any persons or entities targeted by the Company or
contacted for the purpose of selling such services during such
one-year period which the Executive knew about or reasonably
should have known about.
XIII. OWNERSHIP OF KNOW-HOW, INVENTIONS AND OTHER INTELLECTUAL
PROPERTY: All the know-how, innovations, inventions, discoveries, improvements,
procedures, programs, formulae and specifications which have been or may be
either, directly or indirectly, developed, conceived or made by the Executive in
connection with the Executive's employment with the Company, whether or not in
concert with other employees or shown or delivered to the Company, or any of its
subsidiaries or its affiliates, and whether or not they are eligible for patent,
copyright, trademark, trade secret or other legal protection, shall be the
exclusive property of the Company and the Executive shall, at the Company's
request and expense, promptly
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execute any and all documents or instruments which may be necessary to evidence
such ownership.
Obligations of this Agreement cover any and all inventions, discoveries
or improvements, directly or indirectly, conceived or made by the Executive in
connection with the Executive's employment with the Company prior to the date of
this Agreement.
The Executive will communicate to the Company promptly and fully all
improvements and inventions he makes or conceives (either solely or jointly with
others) during the period of the Executive's employment with the Company and
conceived by the Executive, during the Post Employment Term if based on or
related to his employment at the Company.
XIV. PATENTS: The Executive will, during and after the Period at the
Company's request and expense but without additional compensation, assist the
Company and its nominees in every proper way to obtain and to vest in the
Company or its nominees, title to patents on such improvements and inventions in
all countries, by executing all necessary or desirable documents, including
applications for patents and assignments thereof.
XV. RECORDS AND DOCUMENTS: Except in the performance of his duties as
an Executive of the Company, the Executive will not at any time or in any manner
make or cause to be made any copies, pictures, duplicates, facsimiles, or other
reproductions, recordings, abstracts, or summaries of any reports, studies,
memoranda, correspondence, manuals, customer lists, software, records, formulae,
plans or other written, printed, or otherwise recorded material of any kind
whatever belonging to or in the possession of the Company or its subsidiaries or
affiliates, which may be produced or created by the Executive or others or which
may come into the Executive's possession in the course of his employment, or
which relate in any manner to the then current or prospective business of the
Company, its subsidiaries or its affiliates. The Executive shall have no right,
title or interest in any such materials, and the Executive agrees that he has
not removed and will not remove such materials without the prior written consent
of the Company or its subsidiaries or affiliates, and that he will surrender all
such material to the Company immediately upon expiration of the Employment Term,
or at any time prior thereto upon the request of the Company.
XVI. RENEWAL: At the expiration of the initial term or any subsequent
term, the term of the Agreement may be extended for a period as determined by
the mutual agreement of the Executive and the Company's Board of Directors or
the Compensation Committee. Notice of any such extension shall be provided to
the other party not earlier than six months and not later than three months
prior to the expiration of the existing term. The Company shall be under no
obligation to extend the term of this Agreement if the Executive has engaged in
actions or inactions which would constitute reasons to dismiss the Executive for
Cause. If the Company decides not to renew the term of this Agreement (including
any renewal after initial the term and any subsequent or successor term or
terms) for any reason other than Cause, the Company shall make to the Executive
all of the payments specified in Section IX(c) and on the terms of such Section.
XVII. OTHER MATTERS:
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(a) ENTIRE AGREEMENT: This Agreement constitutes the entire agreement
between the Company and the Executive relating to the subject matter
hereof, and supersedes any previous agreements (including the Old
Agreement), commitments and understandings, written or oral, with
respect to the matters provided herein, except as expressly provided in
Section XI hereof. As used in this Agreement, terms such as "herein",
"hereof", "hereto" and similar language shall be construed to refer to
this entire instrument and not merely the paragraph or sentence in
which they appear, unless so limited by express language.
(b) ASSIGNMENT: Except as set forth below, this Agreement and the
rights and obligations contained herein shall not be assignable or
otherwise transferable by either party to this Agreement without the
prior written consent of the other party to this Agreement.
Notwithstanding the foregoing, any amounts owing to the Executive upon
his death with respect to a portion of the Employment Term prior to the
executive's death shall inure to the benefit of his heirs, legatees,
personal representatives, executor or administrator.
(c) NOTICES: Any and all notices provided for under this Agreement
shall be in writing and hand delivered or sent by first class
registered or certified mail, postage prepaid, return receipt
requested, or by reputable overnight courier, or by telecopier (with
return telecopy), addressed to the Executive at his residence or to the
Company at its usual place of business or at any other address
specified in writing and provided to the other party hereto, and all
such notices shall be deemed effective at the time of delivery or at
the time delivery is refused by the addressee upon presentation.
14
(d) AMENDMENTS/WAIVER: No provision of this Agreement may be amended,
waived, modified, extended or discharged unless such amendment, waiver,
extension or discharge is agreed to in writing signed by both the
Company and the Executive.
(e) APPLICABLE LAW: This Agreement and the rights and obligations of
the parties hereunder shall be construed, interpreted, and enforced in
accordance with the laws of the State of New Jersey.
(f) SEVERABILITY: The Executive hereby expressly agrees that all of the
covenants in this Agreement are reasonable and necessary in order to
protect the Company and its business. If any provision or any part of
any provision of this Agreement shall be invalid or unenforceable under
applicable law, such part shall be ineffective only to the extent of
such invalidity or unenforceability and shall not affect in any way the
validity or enforceability of the remaining provisions of this
Agreement, or the remaining parts of such provision.
(g) SUCCESSOR OF INTERESTS: In the event the Company merges or
consolidates with or into any other corporation or corporations where
the Company is not the survivor thereof, or sells or otherwise
transfers substantially all its assets to another corporation, the
provisions of this Agreement shall be binding upon and inure to the
benefit of the corporation surviving or resulting from the merger or
consolidation or to which the assets are sold or transferred and, upon
any such event, the Company shall obtain the assumption of this
Agreement by the other corporation. All references herein to the
Company refer with equal force and effect to any corporate or other
successor of the corporation that acquires directly or indirectly by
merger, consolidation, purchase or otherwise, all or substantially all
of the assets of the Company.
(h) INJUNCTIVE RELIEF: The Executive agrees that the remedies available
to the Company at law for any breach of any of these obligations
hereunder may be inadequate, and the Executive accordingly agrees and
consents that temporary or permanent injunctive relief, and/or an order
of specific performance, may be granted in any proceeding which may be
brought to enforce any provision hereof, without the necessity of proof
of actual damage, in addition to any other remedies available to the
Company at law.
(i) RELEASE. Notwithstanding anything in this Agreement to the
contrary, if there has been an Event of Termination or if there has
been no Change-of-Control but the Executive has been terminated or
relieved of his duties, responsibilities, positions and capacities set
forth in Sections I and III of this Agreement, in each case without
Cause, or has resigned from his employment or resigned from or relieved
himself of his duties, responsibilities, positions, and capacities set
forth in Sections I and III hereof, in each case following a
Constructive Termination, the
15
obligation of the Company to make to the Executive any or all of the
payments specified under this Agreement (including, without limitation,
the payments specified in Section IX) shall be subject to (A) the
Executive's execution and delivery to the Company of a release in
substantially the form attached as Exhibit A hereto of all claims,
demands, suits, or actions, whether in law or at equity, the Executive
has or may have relating to or giving rise from such Event of
Termination or such non-Cause termination or relief or resignation or
relief following Constructive Termination and (B) the expiration of any
applicable revocation period set forth in such release without the
Executive having revoked such release..
XVIII. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY:
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by, to or
for the benefit of the Executive, whether made under this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this Section XVIII,
including whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by the accounting firm utilized by the
Company for the preparation of its annual external financial statements
(the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 30 days of
the Event of Termination, if applicable, or such earlier time as is
requested by the Company. The Gross-Up Payment, if any, as determined
pursuant to this Section XVIII(b), shall be paid to the Executive
within 10 days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding upon the
Company and the Executive. If subsequent final determinations of the
Excise Tax made by the Internal Revenue Service give rise to additional
Excise Tax, then additional Gross-Up Payments shall be made by the
Company to the Executive within 10 days after notice is received by the
Company of such final determination.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than 10 business days
after the Executive knows of such claim. The Executive shall not pay
such claim prior to the expiration of the thirty-day period following
the date on which he gives such notice to the
16
Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney selected
by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear all costs and expenses
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax imposed as a result of such contest or representation and
payment of costs and expenses. The Company shall control all
proceedings taken in connection with such contest. The Company may, at
its sole option, either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount
of such payment to the Executive on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax imposed with respect to such advance.
54(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to subsection (c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall
promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the
Company pursuant to subsection (c), a final determination is made that
the Executive shall not be entitled to any refund with respect to such
claim, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset the amount of
Gross-Up Payment required to be paid.
17
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its own behalf and has caused its corporate seal to be affixed, and
the Executive has executed this Agreement on his own behalf intending to be
legally bound, as of the date first written above.
COVANCE INC.
By:
/s/ XXXXXXX X. XXXXXXX, XX
--------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Chief Financial Officer
ATTEST:
/s/ XXXXXXX X. XXXXXXX
-------------------------
Xxxxxxx X. Xxxxxxx
Secretary
EXECUTIVE:
/s/ XXXXXXXXXXX X. XXXXXXX
---------------------------
Xxxxxxxxxxx X. Xxxxxxx
18
EXHIBIT A
RELEASE. The Executive, on behalf of himself, his heirs, executors,
administrators, successors and assigns, hereby releases and forever discharges
the Company and each and every subsidiary and affiliate of the Company, and all
of their successors and assigns, together with the officers, directors and
employees of the foregoing, from any and all actions, causes of action, suits,
damages, judgments, executions, claims and demands of any kind whatsoever
relating to the Executive's employment with the Company and its affiliates and
predecessors and the termination of such employment relationship (collectively,
hereinafter referred to as "Employee Claims"), in law or in equity, which the
Executive or his heirs, executors, administrators, successors and assigns had,
now have or hereafter may have against them or any of them the basis of which
arose on or prior to the date of the execution of this Release for any reason,
including by reason of his employment with the Company and the termination of
the employment relationship, including, without limiting the generality of the
foregoing, any Employee Claims arising out of, or in connection with any New
Jersey civil rights law, Title VII of the Civil Rights Act of 1964, as amended,
the Equal Employment Opportunity Act of 1972, as amended, the Rehabilitation
Act, as amended, the Equal Pay Act, as amended, the Age Discrimination and
Employment Act, as amended, any other federal, state or local law, rule,
regulation or ordinance, any common law Employee Claims under tort, contract or
any other theory now or hereafter recognized and any oral or written agreement,
including, without limitation, that certain Employment Agreement dated May 13,
1999 between the Company and the Executive (the "Agreement"). Notwithstanding
any breach of this Release by the Executive, this Release shall be binding upon
the Executive, his heirs, successors and assigns. In the event of a claim by the
Company or its affiliates asserted against the Executive following the date
hereof, this Release shall not operate as a waiver of any defenses that may be
raised by the Executive.
The Executive acknowledges that he makes this Release voluntarily and
with full understanding of its terms and conditions. The Executive has the right
to consult with an attorney of his own choice concerning this Release and hereby
acknowledges that he has been given 21 days from the date of receipt hereof in
which to execute this Release.
The Executive understands that he may revoke this Release, in writing,
within 7 days from the date of execution hereof. If revoked, the Executive
agrees to return to the Company any payments made to him under the Agreement as
a result of the termination of his employment with the Company prior to the date
of revocation, and understands that all future payments and benefits thereunder
will be canceled.
