Exhibit 10.5
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day
of March, 1998, by and among PROFESSIONAL DETAILING, INC., a New Jersey
corporation ("PDI-NJ"), PROFESSIONAL DETAILING, INC., a Delaware corporation
("PDI-Del"), both having their principal place of business at 000 XxxXxxxxx
Xxxx., Xxxxxx, Xxx Xxxxxx 00000, on the one hand, and XXXXXX X. XXXX, residing
at 0000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000 (the "Executive"), on the
other. PDI-NJ and PDI-Del are collectively referred to herein as the "Company".
WITNESSETH:
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WHEREAS, the Company believes that it would benefit from the
application of the Executive's particular and unique skill, experience and
background to the management and operation of the Company, and wishes to employ
the Executive as Chief Operating Officer ("COO") and Executive Vice-President of
the Company; and
WHEREAS, the parties desire by this Agreement to set forth the terms
and conditions of the employment relationship between the Company and the
Executive.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants in this Agreement, the Company and the Executive agree as follows:
1. Employment and Duties. The Company hereby employs the Executive as
COO and Executive Vice-President on the terms and conditions provided in this
Agreement and Executive agrees to accept such employment subject to the terms
and conditions of this Agreement. The Executive shall be responsible for
management of the day-to-day operations of the Company, shall
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perform the duties and responsibilities as are customary for the officer of a
corporation in such positions, and shall perform such other duties and
responsibilities as are reasonably determined from time to time by the Chief
Executive Officer of the Company. The Executive shall report to and be
supervised by the Company's Chief Executive Officer. The Executive shall be
based at the Company's offices in Mahwah, New Jersey or such other place that
shall constitute the Company's headquarters and, except for business travel
incident to his employment under this Agreement, the Company agrees the
Executive shall not be required to relocate.
2. Term. The term of this Agreement shall commence on March 1, 1998
(the "Commencement Date"), and shall terminate on March 31, 2001, unless
extended or earlier terminated in accordance with the terms of this Agreement
(the "Termination Date"). Such term of employment is herein sometimes referred
to as the "Employment Term". The Employment Term shall be extended for
successive one year periods unless either party notifies the other in writing at
least 180 days before the Termination Date, or any anniversary of the
Termination Date, as the case may be, that he or it chooses not to extend the
Employment Term.
3. Compensation. As compensation for performing the services required
by this Agreement, and during the term of this Agreement, the Executive shall be
compensated as follows:
(a) Base Compensation. The Company shall pay to the Executive
an annual salary ("Base Compensation") of $178,605, payable in equal
installments pursuant to the Company's customary payroll procedures in effect
for its executive personnel at the time of payment, but in no event less
frequently than monthly, subject to withholding for applicable federal, state,
and local taxes. The Executive may be entitled to such increases in Base
Compensation with respect to each calendar year during the term of this
Agreement, as shall be determined by the
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Company, in its sole and absolute discretion, based on periodic reviews of the
Executive's performance .
(b) Incentive Compensation. In addition to Base Compensation,
the Executive may be entitled to receive additional compensation ("Incentive
Compensation") in the discretion of the Company. The Incentive Compensation
shall be pursuant to short-term and/or long-term incentive compensation programs
which may be established by the Company. For purposes of this Agreement, the
Executive's "Pro Rata Share" of Incentive Compensation for any calendar of the
Company shall be a fraction whose numerator shall be equal to the number of
months (or parts of months) during which the Executive was actually employed by
the Company during any such calendar year and whose denominator shall be the
total number of months in such calendar year.
4. Employee Benefits. During the Employment Term and subject to the
limitations set forth in this Section 4, the Executive and his eligible
dependents shall have the right to participate in any retirement plans
(qualified and non-qualified), pension, insurance, health, disability or other
benefit plan or program that has been or is hereafter adopted by the Company (or
in which the Company participates), according to the terms of such plan or
program, on terms no less favorable than the most favorable terms granted to
senior executives of the Company.
5. Vacation and Leaves of Absence. The Executive shall be entitled to
the normal and customary amount of paid vacation provided to senior executive
officers of the Company, but in no event less than 20 days during each 12 month
period, beginning on the Effective Date of this Agreement. Any vacation days
that are not taken in a given 12 month period shall not accrue or carry-over
from year to year. Upon any termination of this Agreement for any reason
whatsoever, accrued and unused vacation for the year in which this Agreement
terminates will be paid to the Executive within 10 days of such termination
based on his annual rate of Base Compensation in
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effect on the date of such termination. In addition, the Executive may be
granted leaves of absence with or without pay for such valid and legitimate
reasons as the Company in its sole and absolute discretion may determine, and is
entitled to the same sick leave and holidays provided to other senior executive
officers of the Company.
6. Expenses.
(a) Business Expenses. The Executive shall be promptly
reimbursed against presentation of vouchers or receipts for all reasonable and
necessary expenses incurred by him in connection with the performance of
business-related duties.
(b) Automobile Expense. During the Employment Term, in order
to facilitate the performance of the Executive's duties hereunder, and otherwise
for the convenience of the Company, the Company shall provide the Executive with
an automobile, or shall reimburse the Executive for the cost of leasing an
automobile (provided that the lease payments with respect to such automobile
shall not exceed $1,000 per month) and shall pay or reimburse Executive (upon
presentation of vouchers or receipts) for the reasonable cost of all
maintenance, insurance, repairs, gas and other expenses related to such
automobile.
7. Indemnification. The Company shall (and is hereby obligated to)
indemnify (including advance payment of expenses, which such expenses shall
include, without limitation, attorneys' fees) the Executive for all actions
taken by Executive as an officer of the Company or the failure of Executive to
take any action in each and every situation where the Company is obligated to
make such indemnification pursuant to applicable law and the relevant portions
of the Company's Certificate of Incorporation and By-Laws.
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8. Termination and Termination Benefits.
(a) Termination by the Company.
(i) For Cause. Notwithstanding any provision
contained herein, the Company may terminate this Agreement at any time during
the Employment Term for "cause". For purposes of this subsection 8(a)(i),
"cause" shall mean (1) the continuing willful failure by the Executive to
substantially perform his duties hereunder for any reason other than total or
partial incapacity due to physical or mental illness, (2) gross negligence or
gross malfeasance on the part of the Executive in the performance of his duties
hereunder that causes material harm to the Company, and (3) the conviction of
the Executive, by a court of competent jurisdiction, of a felony or other
serious crime involving moral turpitude. Termination pursuant to this subsection
8(a)(i) shall be effective immediately upon giving the Executive written notice
thereof stating the reason or reasons therefor with respect to clauses (2) and
(3) above, and 15 days after written notice thereof from the Company to the
Executive specifying the acts or omissions constituting the failure and
requesting that they be remedied with respect to clause (1) above, but only if
the Executive has not cured such failure within such 15 day period. In the event
of a termination pursuant to this subsection 8(a)(i), the Executive shall be
entitled to payment of his Base Compensation and the benefits pursuant to
Section 4 hereof up to the effective date of such termination and it is also the
intention and agreement of the Company that Executive shall not be deprived by
reason of termination for cause of any payments, options or benefits which have
been vested or have been earned or to which Executive is entitled as of the
effective date of such termination.
(ii) Disability. If due to illness, physical or
mental disability, or other incapacity, the Executive shall fail, for a total of
any six consecutive months ("Disability"), to
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substantially perform the principal duties required by this Agreement, the
Company may terminate this Agreement upon 30 days' written notice to the
Executive. In such event, the Executive shall be (1) paid his Base Compensation
until the Termination Date and his Pro Rata Share of any Incentive Compensation
to which he would have been entitled for the year in which such termination
occurs, and (2) provided with employee benefits pursuant to Section 4, to the
extent available, for the remainder of the Employment Term; provided, however,
that any compensation to be paid to the Executive pursuant to this subsection
8(a)(ii) shall be offset against any payments received by the Executive pursuant
to any policy of disability insurance the premiums of which are paid for by the
Company.
(b) Termination by the Executive. The Executive may terminate
this Agreement at any time during the Employment Term for "good reason" upon 60
days' written notice to the Company (during which period the Executive shall, if
requested in writing by the Company, continue to perform his duties as specified
under this Agreement). "Good reason" shall mean: (1) if the Executive's
employment is terminated by the Company without "cause" (as such term is defined
in subsection 8(a)(i) above); (2) the Company's failure to make any of the
payments or provide any of the benefits to the Executive under this Agreement;
(3) the Company's material breach of any provision of this Agreement; (4) a
reduction in the Executive's responsibilities (provided, however, "good reason"
shall not include a reduction in Executive's responsibilities if such reduction
is a result of Executive's failure to perform his duties in a manner reasonably
satisfactory to the Company); or (5) a reduction in the Executive's Base
Compensation (other than a pro rata reduction in Base Compensation applicable to
all senior executives of the Company); provided, however, that the Company has
not cured, or commenced to cure, such failure or breach within the
aforementioned 60 day period.
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(c) Termination Compensation. In the event of a termination of
this Agreement by the Executive for "good reason" pursuant to subsection 8(b)
above, the Executive shall be paid (1) his Base Compensation up to the effective
date of such termination; (2) his full share of any Incentive Compensation
payable to him for the year in which the termination occurs; and (3) a lump sum
payment (hereinafter "Termination Compensation") to the Executive equal to 100%
of the average cash compensation (including Base Compensation and Incentive
Compensation) paid to the Executive in the two calendar years immediately
preceding the calendar year in which the termination occurs. Payment of
Termination Compensation to the Executive shall occur no later than 14 days
following the effective date of the Executive's termination. For purposes of
this subsection 8(c), the date of termination of the Executive's employment
shall be date on which the Executive ceases to perform services for the Company.
(d) Stock Options and Other Benefits. In the event that the
Executive is terminated for reasons other than for "cause" or in the event the
Executive terminates this Agreement for "good reason", any stock options then
held by the Executive and/or any other benefits subject to specified vesting
criteria, shall immediately vest in the Executive; provided, however, all stock
options then held by the Executive and/or any other benefits subject to
specified vesting criteria shall expire and/or terminate 90 days after the date
this Agreement is terminated pursuant to subsections 8(a)(i) or 8(b). The
Company agrees to take such steps and to execute such documents as shall be
necessary to effectuate the foregoing.
(e) Death Benefit. Notwithstanding any other provision of this
Agreement, this Agreement shall terminate on the date of the Executive's death.
In such event the Company shall continue to pay Executive's Base Salary to his
wife, if she survives him, or, if she does not survive him, in equal shares to
his children who survive him, through the end of the third month following
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the month in which such death occurs. In addition, the Company shall pay to
Executive's wife, if she survives him, or, if she does not survive him, in equal
shares to his children who survive him, the Pro Rata Share of any Incentive
Compensation to which Executive would have been entitled for the year in which
such death occurs.
(f) No Mitigation. The Executive shall not be required to
mitigate the amount of any payments provided for by this Agreement by seeking
employment or otherwise, nor shall the amount of any payment or benefit provided
in this Agreement be reduced by any compensation or benefit earned by the
Executive after termination of his employment.
9. Company Property. All advertising, promotional, sales, suppliers,
manufacturers and other materials or articles or information, including without
limitation data processing reports, customer lists, customer sales analyses,
invoices, product lists, price lists or information, samples, or any other
materials or data of any kind furnished to the Executive by the Company or
developed by the Executive on behalf of the Company or at the Company's
direction or for the Company's use or otherwise in connection with the
Executive's employment hereunder, are and shall remain the sole and confidential
property of the Company; if the Company requests the return of such materials at
any time during or at or after the termination of the Executive's employment,
the Executive shall immediately deliver the same to the Company.
10. Covenant Not To Compete.
(a) No Solicitation or Competition. During the term of this
Agreement and for a period of one year after termination of the Executive's
employment with the Company for any reason, the Executive shall not, directly or
indirectly, solicit, induce, encourage or attempt to influence any client,
customer, employee, consultant, independent contractor, salesman or supplier
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of the Company to cease to do business or terminate his employment with the
Company, and shall not engage in (as a principal, partner, director, officer,
agent, employee, consultant or otherwise) or be financially interested in any
business competing with the Company anywhere in the United States, including,
but not limited to, in the case of the state of California, the counties listed
on Annex A attached hereto. Nothing contained in this Section 10 shall prevent
the Executive from holding for investment not more than five percent (5%) of any
class of equity securities of a company whose securities are publicly traded or
from engaging in any activities that are not in competition with the business
activities of the Company.
(b) Confidentiality of Company Property. During the
effectiveness of this Agreement and at all times thereafter, the Executive shall
not use for his personal benefit, or disclose, communicate or divulge to, or use
for the direct or indirect benefit of any person, firm, association or company
other than the Company, any material referred to in Section 9 above unless such
material has become otherwise publicly available.
(c) Saving Clause. If the period of time or the area specified
in subsection (a) above should be adjudged unreasonable in any proceeding, then
the period of time shall be reduced by such number of months or the area shall
be reduced by the elimination of such portion thereof or both so that such
restrictions may be enforced in such area and for such time as is adjudged to be
reasonable. If the Executive violates any of the restrictions contained in the
foregoing subsection (a), the restrictive period shall not run in favor of the
Executive from the time of the commencement of any such violation until such
time as such violation shall be cured by the Executive to the satisfaction of
Company.
11. Executive's Representation and Warranties. Executive represents and
warrants that he has the full right and authority to enter into this Agreement
and fully perform his obligations
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hereunder, that he is not subject to any non-competition agreement other than
with the Company, and that his past, present and anticipated future activities
have not and will not infringe on the proprietary rights of others. Executive
further represents and warrants that he is not obligated under any contract
(including, but not limited to, licenses, covenants or commitments of any
nature) or other agreement or subject to any judgment, decree or order of any
court or administrative agency which would conflict with his obligation to use
his best efforts to perform his duties hereunder or which would conflict with
the Company's business and operations as presently conducted or proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business as officer and employee by Executive will
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under any contract, covenant or instrument to which
Executive is currently a party.
12. Miscellaneous.
(a) Integration; Amendment. This Agreement constitutes the
entire agreement between the parties hereto with respect to the matters set
forth herein and supersedes and renders of no force and effect all prior
understandings and agreements between the parties with respect to the matters
set forth herein. No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties.
(b) Severability. If any part of this Agreement is contrary
to, prohibited by, or deemed invalid under applicable law or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited, or invalid, but the remainder of this Agreement shall not be invalid
and shall be given full force and effect so far as possible.
(c) Waivers. The failure or delay of any party at any time to
require performance by the other party of any provision of this Agreement, even
if known, shall not affect the right of
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such party to require performance of that provision or to exercise any right,
power, or remedy hereunder, and any waiver by any party of any breach of any
provision of this Agreement shall not be construed as a waiver of any continuing
or succeeding breach of such provision, a waiver of the provision itself, or a
waiver of any right, power, or remedy under this Agreement. No notice to or
demand on any party in any case shall, of itself, entitle such party to other or
further notice or demand in similar or other circumstances.
(d) Power and Authority. The Company represents and warrants
to the Executive that it has the requisite corporate power to enter into this
Agreement and perform the terms hereof; that the execution, delivery and
performance of this Agreement by it has been duly authorized by all appropriate
corporate action; and that this Agreement represents the valid and legally
binding obligation of the Company and is enforceable against it in accordance
with its terms.
(e) Burden and Benefit; Survival. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, executors, personal and legal representatives, successors and assigns. In
addition to, and not in limitation of anything contained in this Agreement, it
is expressly understood and agreed that the Company's obligation to pay
Termination Compensation as set forth herein shall survive any termination of
this Agreement.
(f) Governing Law; Headings. This Agreement and its
construction, performance, and enforceability shall be governed by, and
construed in accordance with, the laws of the State of New Jersey. Headings and
titles herein are included solely for convenience and shall not affect, or be
used in connection with, the interpretation of this Agreement.
(g) Notices. All notices called for under this Agreement shall
be in writing and shall be deemed given upon receipt if delivered personally or
by confirmed facsimile transmission and followed promptly by mail, or mailed by
registered or certified mail (return receipt requested),
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postage prepaid, to the parties at their respective addresses (or at such other
address for a party as shall be specified by like notice; provided that notices
of a change of address shall be effective only upon receipt thereof) as set
forth in the preamble to this Agreement or to any other address or addressee as
any party entitled to receive notice under this Agreement shall designate, from
time to time, to others in the manner provided in this subsection 11(g) for the
service of Notices.
Any notice delivered to the party hereto to whom it is
addressed shall be deemed to have been given and received on the day it was
received; provided, however, that if such day is not a business day then the
notice shall be deemed to have been given and received on the business day next
following such day. Any notice sent by facsimile transmission shall be deemed to
have been given and received on the business day next following the day of
transmission.
(h) Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or holiday on which federal banks are or may
elect to be closed, then the final day shall be deemed to be the next day which
is not a Saturday, Sunday or such holiday.
THIS AGREEEMENT CONTAINS VERY IMPORTANT TERMS GOVERNING YOUR EMPLOYMENT. IN
PARTICULAR, PARAGRAPH 10 AFFECTS YOUR ABILITY TO TAKE CERTAIN ACTIONS FOLLOWING
THE TERMINATION OF THIS AGREEMENT. YOU SHOULD SEEK ADVICE FROM YOUR ATTORNEY
REGARDING ANY MATTER RELATING TO THIS AGREEMENT. BY EXECUTING THIS AGREEMENT,
YOU ARE AFFIRMING THAT YOU HAVE HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT AND
TO CONSULT WITH YOUR ATTORNEY IF YOU SO DESIRED, THAT YOU UNDERSTAND THE MEANING
AND SIGNIFICANCE OF ALL OF ITS
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PROVISIONS, THAT NO REPRESENTATIONS OR PROMISES HAVE BEEN MADE TO YOU REGARDING
YOUR EMPLOYMENT WHICH ARE NOT SET FORTH IN THIS AGREEMENT, AND THAT YOU ARE
FREELY SIGNING THIS AGREEMENT TO OBTAIN EMPLOYMENT WITH THE COMPANY.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
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XXXXXX X. XXXX
PROFESSIONAL DETAILING, INC.,
a New Jersey corporation
By:
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Xxxxxxx X. Xxxxxxxxx
Chief Executive Officer
PROFESSIONAL DETAILING, INC.,
a Delaware corporation
By:
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Xxxxxxx X. Xxxxxxxxx
Chief Executive Officer
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