Exhibit 10.14
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 00000-0000, 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:
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 2
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 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).
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 3
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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 4
Agreement entered into pursuant to the Company's Employee Equity
Participation Program. Actual awards would be determined by the
Company's Board 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,
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 5
obligations and other conditions of the Restricted Stock and Stock
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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 6
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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 7
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.
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 8
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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 9
(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.
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 10
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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 11
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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 12
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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 13
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 outcomes or disease management studies (collectively,
the "Company Services"); provided that the Executive shall not be
bound by the restrictions contained in this
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 14
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 means of obtaining
employees shall not be construed as solicitation, inducements or
encouragement unless the party utilizing such conventional means
specifically directs
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 15
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 with the Executive's employment
with the Company prior to the date of this Agreement.
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 16
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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 17
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.
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 18
(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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 19
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 Exeuctive's execution and delivery to the
Company of a release in form and substance reasonably satisfactory
to the Company of all claims,
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 20
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 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.
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 21
(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
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 22
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.
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.
Employment Agreement
Covance Inc. and Xxxxxxxxxxx Xxxxxxx
Page 23
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/ Van X. Xxxxxxxx
-----------------------------
Van X. Xxxxxxxx
Chairman
ATTEST:
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Secretary
EXECUTIVE:
/s/ Xxxxxxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxxxxxx X. Xxxxxxx