1
EXHIBIT No. 10.45
January 2, 1996
Carol P. Hanna
Controller and Director - Corporate Taxation
Applied Bioscience International Inc.
4350 North Fairfax Drive, Suite 300
Arlington, Virginia 22203
Re: Key Employee Appreciation Plan
Dear Carol:
As you are aware, on December 11, 1995, Applied Bioscience
International Inc. ("APBI") announced the engagement of Lehman Brothers to
assist in a strategic evaluation of whether shareholder value could be enhanced
through the separation of APBI's two core businesses, Pharmaco International
and ENVIRON. As I have indicated to you, this evaluation is at a very
preliminary stage and at this point the separation of the business units is by
no means a foregone conclusion. Having said this, it is clear that APBI is
going through a major transitional period which will include an ongoing
restructuring and reevaluation of APBI's corporate/finance function. Because
of the uncertainty related to any transition of this nature, and APBI's
recognition of both your past contribution to the company, as well as the
importance of your continuing assistance during this transitional period, APBI
would like to continue your employment on the terms set forth herein.
1. Terms of Continuing Employment.
Set forth below are the terms and conditions of your continuing
employment with APBI:
A. Employment and Duties. APBI agrees to continue to employ you
and you agree to remain in the employ of APBI for the
Employment Term (as herein defined). Unless otherwise agreed,
you will be employed in your current position with
substantially the same duties and responsibilities that you
are currently performing in such position.
B. Compensation.
(i) Your base salary and current bonus opportunities
during the Employment Term will remain at least as
high as their current level and will be subject to
periodic review and possible upward adjustment.
(ii) In addition, if APBI is subject to a change of
control (as herein defined) you will receive a
one-time bonus equal to 35% of your annual base
salary. This bonus would be paid to you within 30
days subsequent to a change of control.
2
C. Employment Term. The "Employment Term" shall mean the period
of your continuing employment with APBI commencing with the
date hereof and ending on the second anniversary of such date.
The Employment Term shall automatically be extended for
successive periods of one year each unless you notify APBI or
APBI notifies you by written notice delivered at least six
months prior to the end of the then current Employment Term
that the Employment Term is not to be extended.
Notwithstanding the foregoing, in the event of a change in
control you may elect to terminate your employment at any time
following the date 90 days subsequent to such change of
control.
D. Compensation Protection.
(i) APBI reserves the right to terminate your employment
but, subject to subsection 1.D (ii) below, in the
event APBI exercises such right during the Employment
Term, APBI shall be obligated to continue to pay or
provide to you as severance the following:
(a) your full base salary in accordance with
APBI's normal payroll practices for the
twelve-month period following your
termination; provided that APBI's obligation
to make such payment during the last six
months of such period shall be mitigated on a
dollar-for-dollar basis by any compensation
you receive from your new employer, if any,
during such period;
(b) all employee benefits which you are receiving
as of the date of your termination, including
health and disability coverage for the
twelve-month period following your
termination; and
(c) all stock options previously granted to you
will vest as of the date of your termination.
(ii) As we have previously discussed, in the event APBI's
two business units are separated there may be a
possibility that you will be offered comparable
employment (including comparable compensation and
benefits) in Arlington with either Pharmaco
International, ENVIRON or another successor entity.
If this occurs, and you elect to accept such
employment, the severance protection set forth in
Section 1.D(i) above will continue to apply for the
one-year period commencing with your employment with
such successor entity. If you are offered such
comparable employment and you elect not to accept
such employment but are subsequently terminated by
APBI, your severance would be limited to your full
base salary for six months and you would only be
eligible to continue to receive employee benefits for
such six-month period. Also, if you decide to
terminate your employment following a change of
control (as contemplated by Section 1C hereof) or if
you are terminated for cause, with cause being
defined as an act of fraud, embezzlement or theft in
connection with your duties, or a repeated failure to
follow the directions of APBI's Board of Directors or
APBI's Chief Executive Officer or Chief Financial
Officer, you would not
3
be eligible to receive any severance or other
benefits otherwise contemplated herein.
E. Change of Control. As used herein, "change of control" shall
have occurred if at any time during the Employment Term any of
the following events shall occur:
(i) Any person, corporation, partnership or other similar
entity becomes the beneficial owner, directly or
indirectly, of securities of APBI representing fifty
percent or more of the combined voting power of
APBI's then outstanding securities;
(ii) As a result of merger, consolidation, reorganization,
spin-off, stock sale or otherwise, APBI (or an
affiliate) owns less than 51% of the combined voting
power of the then-outstanding securities or other
equity interests of either Pharmaco LSR International
Inc. (i.e., Pharmaco International) or APBI
Environmental Sciences Group Inc. (i.e., ENVIRON); or
(iii) Either Pharmaco LSR International Inc. or APBI
Environmental Sciences Group Inc. sells all or
substantially all of their respective assets to a
company in which APBI (or an affiliate) owns less
than 51% of the combined voting power of the
then-outstanding voting stock or equity interests.
2. Miscellaneous.
A. Entire Agreement/Modification. This agreement supersedes any
prior plans, agreements or understandings that have been given
to you. No provision of this agreement may be modified,
waived or discharged except in writing signed by you and an
appropriate officer of APBI.
B. Governing Law. This agreement shall be governed by the laws
of the Commonwealth of Virginia.
Since very few individuals are being offered ongoing employment on terms
similar to those contained herein, I expect you to keep this information
private and confidential. Again, we appreciate your ongoing efforts on behalf
of APBI and hope that you find the employment terms offered hereby attractive.
We are requesting that you indicate your acceptance of such terms by
4
signing two counterparts of this letter in the space provided below, with one
original to be returned to APBI and the other original retained in your
permanent records.
Sincerely,
APPLIED BIOSCIENCE INTERNATIONAL INC.
By: /s/ Stephen Waechter
------------------------
Stephen Waechter
Senior Vice President
Chief Financial Officer
Accepted and Agreed to:
Signature: /s/ Carol P. Hanna
-------------------------
Print Name: Carol P. Hanna
------------------------