Exhibit 10.34
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 INTENTIONALLY LEFT
BLANK], effective as of November 7, 2001 (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 May 13, 1999; and
WHEREAS, the term of the Executive's employment under the Old Agreement
is scheduled to expire on May 13, 2002; 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 Chief Executive Officer of the Company, and Chairman of the Board of
Directors of the Company.
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Agreement shall be of no further force or effect and shall be rescinded without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. 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:
(a) Base Salary: The Executive shall be compensated at an annual
base salary rate of no less than $531,498. 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 established by the
Company's Board of Directors or the Compensation Committee, the
Executive shall receive an annual incentive targeted to equal to 65% of
the Executive's annual base salary earned for the relevant year. The
amount awarded may be increased or decreased pursuant to the Bonus
Plan, but the annual incentive percentage target cannot be decreased.
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.
VI. Employee Benefits:
(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) 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 disclosed for purposes of Securities and Exchange Commission filings
as appropriate or required.
(c) 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.
(d) 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.
(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 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.
(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 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 Chairman of the Company), or a removal of the Executive
as 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 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 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, 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 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 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:
(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.
(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 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 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.
(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.
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. XXXXXXXXX
------------------------------
Xxxxxxx X. Xxxxxxxxx
Chief Financial Officer
ATTEST:
/s/ XXXX X. XXXXX
------------------------------
Xxxx X. Xxxxx
Assistant Secretary
EXECUTIVE:
/s/ XXXXXXXXXXX X. XXXXXXX
------------------------------
Xxxxxxxxxxx X. Xxxxxxx
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 November
7, 2001 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.
