EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June 21, 2002,
is made by and between Inveresk Research International Limited, a company
organized under the laws of Scotland under the Companies Acts (Company Number
91725) and having its registered office at Elphinstone Xxxxxxxx Xxxxxx, Xxxxxxx,
XX00 0XX (xxx "Company"), and Xx. Xxxxx Xxxxxxxx (the "Executive").
BACKGROUND
WHEREAS, the Executive currently serves as President-Pre-Clinical
Europe of the Company;
WHEREAS, Inveresk Research Group Limited, a company organized under the
laws of Scotland under the Companies Acts (Company Number SC091725) and having
its registered office at Elphinstone Research Centre, Tranent, EH33 2NE (the
"Parent"), owns all of the issued and outstanding shares of capital stock of the
Company;
WHEREAS, all of the shareholders of the Parent are parties to that
certain Exchange Agreement by Declaration of Trust, dated as of April 2, 2002
(as the same may be amended from time to time, the "Exchange Agreement"), among
such shareholders, D. J. Xxxx X. Xxxxx, as escrow agent, and Inveresk Research
Group, Inc., a Delaware corporation ("New Holdco");
WHEREAS, upon consummation of the transactions contemplated by the
Exchange Agreement, the Parent will be a direct wholly-owned subsidiary of New
Holdco and the Company will be an indirect wholly-owned subsidiary of New
Holdco;
WHEREAS, New Holdco intends to sell shares of its common stock by means
of an initial public offering (the "IPO");
WHEREAS, this Agreement is being executed in anticipation of the
consummation of the IPO;
WHEREAS, the Company and New Holdco desire that the Executive continue
to be employed by the Company and render services to the Company and New Holdco,
in accordance with the terms and conditions set forth in this Agreement;
WHEREAS, the Executive desires to be employed by the Company and to
render services to the Company and New Holdco pursuant to the terms of this
Agreement;
WHEREAS, the services of the Executive are of a special, unique and
unusual character which gives them distinctive value; and
WHEREAS, in consideration of the benefits to be derived by the
Executive under this Agreement, the Executive is willing to undertake certain
restrictions on the Executive's business activities from and after the effective
date of this Agreement upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties to this Agreement, intending to be legally bound, agree as follows:
Section 1. Term. The Company hereby employs the Executive
pursuant to the terms set forth in this Agreement and the Executive hereby
accepts employment with the Company pursuant to the terms set forth in this
Agreement. The Executive's employment with the Company pursuant to this
Agreement shall commence as of the date on which the IPO is consummated and
shall continue until this
Agreement is terminated in accordance with the provisions of Section 5 (the
"Term"). The date on which the Executive's period of continuous employment with
the Company began was August 5, 1991.
Section 2. Duties. The Executive shall continue to serve as
President-Pre-Clinical Europe of the Company and shall also serve as a Group
Executive Vice President of New Holdco and, in his capacity as such, shall
faithfully perform for the Company and New Holdco the duties normally associated
with said offices, unless otherwise specified by the Chief Executive Officer of
New Holdco (the "CEO"), and shall perform such other duties of an executive,
managerial or administrative nature as shall be specified and designated from
time to time by the CEO. The Executive shall devote substantially all of his
business time and effort to the performance of his duties under this Agreement.
The Executive's normal hours of work are from 9.00 a.m. to 5.00 p.m. (Monday to
Friday) inclusive of 45 minutes for lunch daily. The Executive is expected to
work reasonable overtime when necessary for the performance of his duties
without any entitlement to additional compensation. The Executive's principal
place of work will be at the Inveresk Research Tranent facility but the
Executive will be expected to travel, both within the U.K. and overseas, on
Company business (without any entitlement to additional compensation).
Section 3. Other Conditions.
3.1. Standard Conditions. The Executive's employment with the
Company shall be subject to the Company's Standard Conditions of Employment, as
in effect from time to time (the "Standard Conditions"), provided that if any
conflict arises between this Agreement and the Standard Conditions, this
Agreement shall control. The Standard Conditions may be modified from time to
time by the Company, provided that the Standard Conditions may not be modified
in any manner that would adversely affect the Executive without the consent of
the Executive.
3.2. Disciplinary/Grievance Procedure. The Company's grievance
procedure from time to time in effect and any disciplinary rules applicable to
the Executive will be set out in notices displayed at his place of work or will
otherwise be obtainable from the Company.
Section 4. Compensation.
4.1. Salary. As consideration for the services that the Executive
shall render to the Company and New Holdco under this Agreement, the Company
shall pay the Executive a salary of L95,000 per year (the "Annual Salary"),
which shall be payable in equal monthly installments in accordance with the
customary payroll practices of the Company applicable to executive officers. The
Annual Salary shall be reviewed no less frequently than annually by the Board of
Directors of New Holdco (the "Board"). The Annual Salary may, in the discretion
of the Board, be increased (but not decreased) at any time and from time to time
by action of the Board. Once increased, any reference to Annual Salary in this
Agreement shall be a reference to such increased amount.
4.2. Bonuses.
(a) For each fiscal year of the Company ending during the
Term, the Executive shall have the opportunity to receive an annual bonus in an
amount of up to 33 percent of Annual Salary, as determined by the Board. The
Executive's bonus for the Company's fiscal year ending December 31, 2002 shall
be calculated based on an Annual Salary of L95,000 for the entire fiscal year
ending December 31, 2002.
(b) For each fiscal year ending during the Term, the
Executive shall have the opportunity to receive an additional annual performance
bonus in an amount of between 1 and 67 percent of Annual Salary, as determined
by the Board.
(c) For each fiscal quarter of the Company ending during
the Term, the Executive shall have the opportunity to receive a quarterly bonus,
as determined by the Board in its sole discretion.
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4.3. Benefits. The Executive shall have the right to participate in
all benefit programs and/or plans granted to senior executives of the Group
Companies, in accordance with the actual programs or plans that the Board may
institute from time to time or as otherwise required under any applicable law.
Subject to the Company's pension policy as in effect from time to time, the
Executive shall be entitled to continue membership or become a member (as the
case may be), and during the Term remain a member of, the Company's pension
scheme, known as the Inveresk Research International Pension and Life Assurance
Plan, or any other executive, senior or other pension scheme in effect from time
to time in which the Executive would be eligible to participate (collectively,
the "Scheme"). The Company shall contribute to the Scheme at the rate required
to accrue for the Executive a pension entitlement of not less than 1/30th of
Annual Salary for each year of employment with the Company. The Company shall be
entitled at any time to amend or terminate the Scheme or the Executive's
membership of the Scheme subject to (i) providing the Executive with the benefit
of an equivalent pension scheme (the "New Scheme") which shall be, overall, no
less favorable to the Executive and (ii) ensuring that the Executive is in a
position, if he so elects, to transfer his accrued benefits in the Scheme into
the New Scheme, as if such pensionable service had been under the New Scheme.
Changes in the rules of any pension scheme from time to time in force will be
notified in writing to the Executive within one month of such change becoming
effective and copies of the rules of any such pension scheme will be made
available to the Executive on application by him to the Company's secretary.
Membership of the Scheme shall include a death benefit of four times annual
salary. Pension and life assurance benefits granted to the Executive under the
Scheme shall, where applicable, be subject to maximum limits imposed by the
Inland Revenue Earnings Cap Regulations in effect from time to time.
4.4. Vacation. In addition to four public holidays for each fiscal
year of the Company (other than the fiscal year ended December 31, 2002, for
which the Executive will be entitled to five public holidays), the Executive
shall be entitled to 33 days vacation (exclusive of Saturdays and Sundays) in
each fiscal year to be taken at such time or times as the Company may approve.
4.5. Sick Pay. Without prejudice to the Company's rights under
Section 5 below, during any period of absence from work due to sickness or
accident, the Executive shall (after giving the Company when required evidence
satisfactory to the Company of incapacity and continuing incapacity to work) be
entitled to receive all Annual Salary and other benefits due to such Employee
under this Agreement during the first twenty-eight weeks of such absence. The
Company shall offset against any such payments made by the Company to the
Executive all statutory sick pay or other similar government benefit to which
the Executive is entitled by virtue of his employment with the Company and any
payments made to the Executive pursuant to Section 4.9; provided, that after
twenty-eight weeks the payment of Annual Salary to the Executive shall be at the
discretion of the Company.
4.6. Expenses. The Executive shall be entitled to reimbursement for
all business expenses incurred by him in the performance of his duties under
this Agreement in accordance with the standard practices of the Company as in
effect from time to time.
4.7. Automobile. The Company will provide the Executive, at the
option of the Executive, either an automobile in accordance with the Company's
Company Car Policy, as in effect from time to time, or a yearly allowance of
L7,452 for the use of an automobile. Currently the Company Car Policy provides
that the automobile shall be replaced on the earlier of every four years or
after 80,000 miles and provides for payment by the Company of motor tax,
insurance, servicing, repairs and replacements. The Company's Company Car Policy
shall be reviewed annually by the Board. The Company will also provide the
Executive with a fuel card for payment of all fuel used by the Executive within
the United Kingdom (including fuel for private use).
4.8. Business Clothing Allowance; Telephone Allowance. The Company
will provide the Executive with a business clothing allowance of L220, plus
Value Added Tax, per annum, subject to increase or decrease by the Board from
time to time in its sole discretion but no less than annually. In
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addition, the Company will provide the Executive with a telephone allowance of
L40 per month, subject to increase or decrease by the Board from time to time in
its sole discretion but no less than annually, payable simultaneously with the
payment of Annual Salary.
4.9. Permanent Health Insurance. If the Executive is absent from
work through illness or injury for a continuous period of more than 26 weeks,
the Executive will be entitled to receive a monthly payment (each, a "PHI
Payment") equal to 65% of his pre-disability pensionable salary, less the
monthly single person's long term state incapacity benefit to which the
Executive is entitled at such time. The Executive shall be entitled to receive
PHI Payments until the earlier of the Executive's return to work, retirement or
death and PHI Payments shall be increased by 5% each year during the period that
they are being paid to the Executive. While the Executive is receiving PHI
Payments the Executive will continue to be a member of the Scheme and the
Company will continue to make contributions to the Scheme on behalf of the
Executive. At any time that the Executive becomes entitled to receive PHI
Payments the Company shall determine a notional salary for the Executive for
pension plan purposes, which notional salary will be reviewed by the Board in
January of each year.
4.10. Private Medical Insurance. The Company shall pay the premiums
and other costs associated with the provision of private medical insurance for
the Executive and his immediate family at a level which is in accordance with
Company policy as in effect from time to time.
4.11. No Other Compensation. Except as provided in this Section 4,
the Executive shall be entitled to no other compensation for the services
provided by him to the Company and New Holdco under this Agreement.
Section 5. Termination.
(a) The Executive's employment under this Agreement may
be terminated at any time (i) by the Company or the Executive upon one year's
prior written notice (or any shorter period mutually agreed upon by the parties)
or (ii) by the Company upon payment of one year's Annual Salary in lieu of
notice and it is expressly agreed that payment in lieu of the applicable notice
period shall not constitute a repudiation of this Agreement by the Company.
(b) Upon termination of the Executive's employment, in
addition to Annual Salary which the Company may elect to pay in lieu of notice,
the Executive shall be entitled to receive any Annual Salary and other benefits
(including bonus) earned and accrued under this Agreement prior to the
expiration of the termination notice period and to be reimbursed, in accordance
with Section 4.6, for any business expenses incurred prior to such date. The
Executive shall have no further rights to any other compensation or benefits
under this Agreement on or after the termination of employment.
Section 6. Covenants of the Executive.
6.1. Nondisclosure. The Executive acknowledges that, by reason of
his employment by the Company, he will have access to confidential information
of the Group Companies, including, without limitation, information and knowledge
pertaining to trade know-how, proprietary computer programs, data, client lists,
marketing and other business strategies, methods of operation, sales and profit
figures, pricing information, personnel information, relationships between a
Group Company and those persons, entities and affiliates with which the Group
Companies have contracted and others who have business dealings with them and
other confidential property and information of the Group Companies
(collectively, the "Confidential Information"). The Executive acknowledges that
the Confidential Information is a valuable and unique asset of the Group
Companies and covenants that, during the period commencing on the date of this
Agreement and ending 36 months following the date on which the Executive shall
cease to be an employee of the Company, he will not use any Confidential
Information or disclose any Confidential Information to any person, firm or
corporation (except as his duties under this Agreement may require) and that all
such matters and properties shall be and shall remain the property of New
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Holdco, the Company and/or a Group Company, as applicable, and/or their
customers. The obligation of confidentiality imposed by this Section 6.1 shall
not apply to information that (i) is required by law or by a governmental and/or
regulatory authority to be disclosed, (ii) otherwise becomes generally known
without any breach by the Executive of this Agreement, or (iii) is disclosed by
the Executive in a court or other proceeding against New Holdco or the Company
because such disclosure is reasonably required in order to enforce the
Executive's rights under this Agreement; provided, that in any case described in
clause (i) or clause (iii), the Executive shall, at the expense of the Company,
cooperate, if requested by the Company, in seeking a protective order with
respect to, and otherwise preventing further disclosure of, such information.
6.2. Company Information. All memoranda, notes, lists, records,
property and any other tangible product and documents (and all copies thereof),
whether visually perceptible, machine-readable or otherwise, made, produced or
compiled by the Executive or made available to the Executive concerning the
business of the Company or its affiliates, (i) shall at all times be the
property of the Company (and, as applicable, any affiliates) and shall be
delivered to the Company at any time upon its request, and (ii) upon the
Executive's termination of employment, shall be immediately returned to the
Company.
Section 7. Compliance With Other Agreements. The Executive
represents and warrants to the Company that the execution of this Agreement by
the Executive and the Executive's performance of the Executive's obligations
hereunder will not, with or without the giving of notice and/or the passage of
time, conflict with, result in the breach of any provision of or the termination
of, or constitute a default under, any agreement to which the Executive is a
party or by which the Executive is or may be bound.
Section 8. Assignment. Neither party shall have the right to
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the other party; provided, that a merger or consolidation of
the Company or a sale or transfer of all or substantially all of the shares or
assets of the Company (and, in the case of such a sale of assets, a related
assignment of this Agreement) shall not be deemed an assignment in violation of
the terms of this Section 8.
Section 9. Miscellaneous.
9.1. Survival. Anything contained in this Agreement to the contrary
notwithstanding, the provisions of Sections 6.1, 6.2 and 9 shall survive
termination of this Agreement and any termination of the Executive's employment
hereunder for the periods indicated therein.
9.2. Notices. All notices or communications hereunder shall be in
writing (including by facsimile transmission), addressed as follows:
(i) If to the Company to:
Inveresk Research International Limited.
Elphinstone Xxxxxxxx Xxxxxx
Xxxxxxx XX00 0XX
Xxxxxxxx
Facsimile: 1875 614 555
Attention: Chief Executive
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With a copy to:
Inveresk Research Group, Inc.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Facsimile: (000) 000 0000
Attention: President and Chief Executive Officer
(ii) If to the Executive to him at the address set forth
on the signature page.
Any such notice shall be effective only if delivered personally, by facsimile or
if mailed (first class prepaid recorded delivery letter). All such notices,
requests and other communications will (i) if delivered by facsimile
transmission to the number as provided in this Section 9.2, be deemed given at
the time when the facsimile machine records delivery of such notice, (ii) if
delivered personally to the address as provided in this Section 9.2, be deemed
given upon delivery and (iii) if delivered by first class prepaid recorded
delivery letter to the address as provided in this Section 9.2, be deemed given
upon receipt. Any party from time to time may change its address or other
information for the purpose of notices to that party by giving notice specifying
such change to the other parties hereto.
9.3. Section Headings. The section and subsection headings used in
this Agreement are for reference and convenience only and shall not enter into
the interpretation of this Agreement.
9.4. No Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion.
9.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Scotland.
9.6. Entire Agreement. This Agreement and the Standard Conditions
supersede all prior discussions and agreements between the parties with respect
to the subject matter of this Agreement, and contain the sole and entire
agreement between the parties hereto with respect to the subject matter of this
Agreement.
9.7. Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of both
parties to this Agreement.
9.8. Withholding. The Company shall be entitled to withhold from
any payments or deemed payments any amount of tax withholding it determines to
be required by law.
9.9. No Third Party Beneficiaries. This Agreements is solely for
the benefit of the parties hereto and for the benefit of the Group Companies and
shall not be deemed to confer upon other third parties any remedy, claim,
liability, reimbursement, claim of action or other right, except as expressly
provided in this Agreement.
9.10. Gender and Person. Words used in this Agreement, regardless of
the number or gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context shall require.
9.11. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors, permitted
assigns, heirs, executors and legal representatives.
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9.12. Interpretation. In this Agreement, words and phrases defined
in Section 736 of the Companies Act 1985 (as amended) shall have the meanings
given to them in that Act. The term "Group Companies" means New Holdco and its
subsidiaries from time to time and "Group Company" means any ones of them.
9.13. Employment Rights Act. The information contained in this
Agreement constitutes a written statement of the terms of the Executive's
employment in compliance with the provisions of the Employment Rights Xxx 0000.
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IN WITNESS WHEREOF, these presents consisting of this and the
seven preceding pages are executed as follows:
SIGNED on behalf of Inveresk
Research International Limited by
Xxx X. Sword, a director, on the
21st day of June 2002 before this
witness:
/s/ Xxx X. Sword
----------------------------
/s/ Xxxx Xxxxxxxxx Director
--------------------------
Xxxx Xxxxxxxx Xxxxxxxxx Full Name
--------------------------
00 Xxxxxx Xxxxxx Address
--------------------------
Edinburgh
--------------------------
Solicitor Occupation
--------------------------
SIGNED by the said Xxxxx Xxxxxxxx
on the 21st day of June 2002
before this witness:
/s/ Xxxxx Xxxxxxx /s/ Xxxxx Xxxxxxxx
-------------------------- ----------------------------
Xxxxx Xxxxxxxx
Xxxxx Xxxxxxx Full Name
--------------------------
c/o Inveresk Research Address
--------------------------
Tranent EH33 2NE
--------------------------
HR Manager Occupation
--------------------------
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