Employment Agreement
between
Xxxxxxxxxxx Xxxxxxx
&
Covance Inc.
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into between
COVANCE INC. (formerly Corning Pharmaceutical Services Inc.) (the "Company"), a
Delaware corporation having its principal place of business at 000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000- 6233, and XXXXXXXXXXX XXXXXXX (the "Executive"),
with a residence at 0 Xxxxxxxx Xxxx, Xxxxxxx, XX 00000 as of November 1, 1996
(the "Effective Date").
WHEREAS, Executive has been employed by the Company as President and
Chief Executive Officer; and
WHEREAS, the Company considers the services of the Executive to be
unique and essential to the success of the Company's business; and
WHEREAS, the Company and the Executive now wish to enter into an
agreement of employment that will constitute the sole and exclusive agreement
relating to the employment of Executive by the Company 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 Corporation and the Executive as follows:
I. Employment: The Company shall continue to employ the Executive in a
full-time capacity in the position set forth in this paragraph, and
the Executive shall continue to accept such employment upon the terms
and conditions set forth herein. Such
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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.
II. Term: 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").
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 as may be commensurate with
his position and title and 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. 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).
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IV. Cash Compensation: Executive shall be compensated for services
rendered during the Employment Term as follows:
(a) Base Salary: Effective from and after the consummation of the
spin-off described in Section XIX of this Agreement, Executive shall
be compensated at an annual base salary of no less than $450,000 for
the period during which he serves as President and Chief Executive
Officer of the Company. The Company's Board of Directors 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, 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, Executive shall
receive an annual incentive equal to 65% of Executive's annual base
salary in effect at the time the goals are established; provided,
however, that Executive's payout, if any, under the Bonus Plan for
1997 shall be computed using his salary specified in Section IV (a)
hereof.
The Bonus Plan also provides that Executive may earn up to 130% of
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. At the discretion of
the Company's Board of Directors, any annual incentive compensation
in excess of 65% of Executive's annual base salary may be paid to
Executive in 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
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of Directors after the end of the applicable performance year and
would be granted to Executive shortly thereafter. The annual
incentive percentage targets may be increased, but not decreased,
during the Employment Term.
V. Equity /Awards: 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 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.
In conjunction with the Executive's first year participation in the
Company's Employee Equity Participation Program, the Company shall
grant to the Executive, on the terms set forth below, that number of
shares of the Company's common stock, subject to certain restrictions
(the "Restricted Stock"), and options to purchase the Company's
common stock (the "Stock Options"), that have in the aggregate a
present value equal to not less than $1,619,982 (the "First Grant
Value"). The First Grant Value shall consist of Stock Options and
Restricted Stock in the ratio of three Stock Options for every share
of Restricted Stock. Each Stock Option shall be worth a present value
amount equal to the product of (i) the fair market value of the
Company's common stock and (ii) .33. The fair market value of the
Company's common stock shall be determined based on the weighted
average per share price of each trade of the Company's common stock
occurring during normal trading hours of the first five days of
"regular way" trading after completion of the spin-off described in
Section XIX hereof. The rights, obligations and other conditions of
the Restricted Stock and Stock
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Options shall be as specified in that certain Incentive Stock
Agreement and Stock Option Agreement, in each case, between Executive
and the Company.
VI. Employee Benefits:
(a) General Provisions: Except as expressly provided in this
Agreement, 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, Employee
Stock Ownership Plan, 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: Executive will be
eligible to participate in the Company's Supplemental Executive
Retirement Plan (SERP). Under the terms of the SERP, 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.
(c) Vacation and Sick Leave: 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
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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: 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 Executive's
outstanding housing loan arrangement with the Company.
(c) Automobile Expenses: The Company will provide 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.
(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
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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 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: Executive 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) 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; (iii) if 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 financial or reputational harm with respect
to the Company.
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For purposes of this section, no act or failure to act on Executive's
part shall be considered to be reason for termination for Cause if
done, or omitted to be done, by
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, Executive 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
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) Severance Benefits: Executive's employment may be terminated
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 the replacement of the Executive, provided that
in such event:
(i) 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
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(ii) 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) 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 Executive is covered by a successor employer's
benefit plans, whichever is sooner.
(d) Change-of-Control: Should Executive's employment be terminated by
the Company (for reasons other than Cause), or should Executive's
duties as President and Chief Executive Officer of the Company be
diminished in any respect (a "Constructive Termination") (either
event being referred to herein as an "Event of Termination"), within
twelve (12) months following a "Change-Of-Control" (as defined
below), Executive will be entitled to receive all of the "Severance
Benefits" described in paragraph (c) above, and, in addition:
(i) All stock options (including the Stock Options), restricted
stock (including the 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.
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For purposes of this Agreement, a Change-Of-Control is defined to be:
(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 then 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 offerer (other than the Company) purchases shares of the
Company's common stock pursuant to a tender or exchange offer for
such shares.
(e) Except as may be otherwise provided in applicable Company
compensation & benefit plans, the Company shall not be liable for any
salary or benefit payments to Executive beyond the date of
Executive's voluntary termination of employment with the Company. In
the event of a termination of employment under Sections IX(a) or
IX(b) above, the Executive shall not be entitled to any compensation
or other benefits
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not already earned and owing to the Executive on account of his
services on the date of such termination of employment.
(f) Outplacement Assistance: In the event Executive is involuntarily
terminated or Constructively Terminated as a result of a Change of
Control or for other reasons that do not constitute Cause, the
Company shall provide for 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 Executive for all expenses incurred by
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
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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
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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,
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
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outcomes or disease management studies (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 Executive has been dismissed by
the Company for Cause, or Executive has voluntarily terminated his
employment with Covance for any reason or no reason, 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 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 Executive to be
deemed a shareholder under this provision.
(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
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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 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
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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
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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. 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, 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.
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(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
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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: In the event Executive is terminated or Constructively
Terminated without Cause, the obligation of the Company to make to
Executive any or all of the payments specified under this Agreement
(including, without limitation, the payments specified in Section IX)
shall be subject to Executive's execution and delivery to the Company
of
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a release in form and substance reasonably satisfactory to the
Company of all claims, demands, suits or actions, whether in law or
at equity, Executive has or may have relating to or giving rise from
such termination or Constructive Termination.
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
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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;
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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.
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XIX. Condition Subsequent: This Agreement shall be null and void and of no
force or effect if the proposed spin-off of the Company from Corning
Incorporated described in the Company's Form F10 dated September 20,
1996 and filed with the Securities & Exchange Commission is not
consummated.
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: ________________________________
Van X. Xxxxxxxx
Chairman
ATTEST:
___________________________
Secretary
EXECUTIVE:
________________________________
Xxxxxxxxxxx Xxxxxxx
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