EMPLOYMENT AGREEMENT
Exhibit 10.7
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of April 26, 2007, by and between
Cross Shore Acquisition Corporation t/b/k/a ReSearch Pharmaceutical Services, Inc., a Delaware
corporation (“Cross Shore”) and together with its affiliates, successors and assigns, the
“Company”), and Xxxxxx Xxxx (“Employee”). Any capitalized terms used herein and otherwise not
defined shall have the meanings assigned to them in Section 12 hereof.
In consideration of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Employment. The Company shall employ Employee, and Employee hereby accepts
employment with the Company, upon the terms and conditions set forth in this Agreement for the
period beginning on the Effective Date (as defined in Section 20 hereof) and ending as provided in
Section 4 hereof (the “Term”).
2. Position and Duties.
(a) Employee shall serve as Executive Vice President of Finance and Chief Financial Officer of
Longxia Acquisition, Inc., Cross Shore, ReSearch Pharmaceutical Services, LLC (“RPS”), and the
Company’s other subsidiaries, and shall have the normal duties, responsibilities and authority of
Executive Vice President of Finance and Chief Financial Officer subject to the overall discretion
and authority of the Chief Executive Officer. Executive shall be based in the Company’s corporate
headquarters in Fort Washington, PA but may be required to travel from time to time as part of his
employment.
(b) Employee shall report to the Chief Executive Officer of the Company, and Employee shall
devote his best efforts and his full business time and attention (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to the business and affairs of the
Company and its Subsidiaries. Employee shall perform his duties and responsibilities to the best
of his abilities in a diligent, trustworthy, businesslike and efficient manner.
3. Base Salary and Benefits.
(a) During the Term, Employee shall be entitled to (i) receive a base salary of $280,000 per
annum or such other higher rate as the Chief Executive Officer may designate from time to time (the
"Base Salary”), which shall be payable in regular installments in accordance with the Company’s
general payroll practices and shall be subject to customary withholding and (ii) participate in all
benefit plans, including medical, dental, retirement, short- and long-term disability, of which
premiums and fees will be fully paid by the Company, and stock incentive and other such plans
established by the Company from time to time for executives or employees of the Company generally
(“Benefits”). In addition, Employee shall be eligible to receive an annual bonus in such amount as
determined by the Board in its sole discretion. If the Company’s fiscal year is the calendar year,
such bonus shall be paid in the calendar year following the fiscal year to which the bonus relates,
and all such payments shall be completed by March 15 of the payment year. If the Company’s fiscal
year is other than a
calendar year, all such payments shall be completed by December 31 of the calendar year in
which the Company’s fiscal year ends.
(b) In addition to his Base Salary, on the Effective Date Employee shall be awarded a stock
option representing 180,000 shares (the “Options”), in addition to the incentive stock options that
will be granted as replacement options for the incentive stock options held by Employee under the
ReSearch Pharmaceuticals, Inc. 2002 Equity Incentive Plan. The Options (i) shall have an exercise
price equal to the fair market value of the Company’s common stock on the date of grant; (ii) shall
have a three-year vesting schedule including vesting of 33 1/3% of granted options after one year
of service and an additional 8 1/3% each 90 days thereafter; (iii) shall have an automatic vesting
of 33 1/3% of the then outstanding options in the event that Employee’s employment is terminated
during the first twelve (12) months of the Term; (iv) shall fully and immediately vest upon a
Change of Control (except as provided in Section 5 hereof); and (v) shall be treated to the maximum
extent possible as incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”).
(c) Employee shall also receive a monthly auto allowance of $750. Such amount shall be paid
in accordance with the Company’s general payroll practices.
(d) The Company shall also reimburse Employee for all reasonable expenses incurred by him in
the course of performing his duties under this Agreement which are consistent with the Company’s
policies in effect from time to time with respect to travel, entertainment and other business
expenses including reimbursement for continuing professional education, subject to the Company’s
requirements with respect to approval, reporting and documentation of such expenses. Such
reimbursements shall be made in accordance with the Company’s general payroll practices.
4. Term.
(a) The Term shall end one (1) year from the Effective Date, except that the Term shall be
automatically renewed for successive one (1) year periods after the initial Term unless terminated
in writing by either the Company or Employee at least thirty (30) days prior to the end of the Term
or any renewal thereof; provided that (i) the Term and Employee’s employment shall
terminate prior to such date upon Employee’s death or permanent Disability and (ii) Employee’s
employment may be terminated by the Company or Employee at any time prior to such date.
(b) Employee’s employment may be terminated by the Company at any time for any reason. If
Employee’s employment is terminated by the Company without Cause during the Term of this Agreement,
Employee shall be entitled to Base Salary and Benefits for a period of eighteen (18) months
following the date of termination, and earned but unpaid bonuses, determined based on the partial
year in which the termination without Cause occurs, if Employee is not employed for the entire year
prior to the date of termination. In the event of a Change of Control, if Employee is terminated
without Cause at any time after the date which is three (3) months before the closing of the
transaction involving the Change of Control, or at any time thereafter, Employee shall receive
twenty four (24) months Base Salary and Benefits rather than the eighteen (18) months described
above, and earned but unpaid bonuses,
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calculated based on the partial year in which the termination without Cause occurs, if
Employee is not employed for the entire year prior to the date of termination. Any amount of Base
Salary and any bonus(es) the amount of which can be determined at the time Employee is terminated
that are payable under this Section 4(b) will be paid as follows: subject to applicable
withholding, (i) fifty percent (50%) of such amount shall be paid on the six (6) month anniversary
of Employee’s termination and (ii) the remaining fifty percent (50%) of such amount shall be paid
on the nine (9) month anniversary of Employee’s termination. If the Company’s fiscal year is the
calendar year, any bonus(es) that cannot be calculated at the time Employee is terminated that are
payable under this Section 4(b) will be paid in the calendar year following the fiscal year to
which the bonus(es) relate, and all such payments shall be completed by March 15 of the payment
year. If the Company’s fiscal year is other than a calendar year, all such bonus payments shall be
completed by December 31 of the calendar year in which the Company’s fiscal year ends.
Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to
pay any amounts payable under this Section 4(b) during such times as Employee is in breach of
Sections 6, 7, 8 or 9 hereof. As a condition to the Company’s obligations (if any) to make
severance payments pursuant to this Section 4(b), Employee will execute and deliver a general
release in form and substance reasonably satisfactory to the Company.
(c) If this Agreement is terminated pursuant to Section 4(a)(i) above, Employee shall be
entitled to receive his Base Salary through the date of termination. Any such amounts payable
under this Section 4(c) will be payable at such times as such amounts would have been payable had
Employee not been terminated.
(d) If this Agreement is terminated by the Company for Cause or by Employee, Employee shall be
entitled to receive his Base Salary through the date of termination. Any such amounts payable
under this Section 4(d) will be payable at such times as such amounts would have been payable had
Employee not been terminated.
(e) During the period that Employee is entitled to payment of his Base Salary or other
payments under Section 4(b) above, the Company shall pay and maintain for Employee’s benefit
Employee’s participation and/or rights under the Company’s health, life and disability insurance
plans, as well as any other benefits then in effect. The Company may offset any amounts Employee
owes it or its Subsidiaries for liquidated claims against any amounts it owes Employee hereunder.
(f) If Employee’s employment is terminated by, or if Employee resigns his employment with, the
Company or any entity that is in the same controlled group as the Company for purposes of Sections
414(b) or 414(c) of the Code, Employee’s employment shall also automatically be terminated by, or
Employee shall also automatically resign his employment with, the Company and all entities that are
in the same controlled group as the Company for purposes of Sections 414(b) or 414(c) of the Code.
(g) Notwithstanding the preceding subsections, if Employee is a “specified employee,” as
defined in Treas. Reg. Section 1.409A-1(i), on the date his employment is terminated, any lump sum
payments or bonus payments due to be paid under this Section 4
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during the first six months after Employee’s termination of employment will instead be paid on
the first day of the seventh month following the month of such termination.
5. Possible Reduction in Payments. Following any Change of Control, if all or any
portion of the payments and other benefits provided to Employee under this Agreement, either alone
or together with other payments and benefits which Employee receives or is entitled to receive from
the Company, constitute an “excess parachute payment” within the meaning of Section 280G of the
Code and thus would result in the imposition of excise taxes on Employee under Section 4999 of the
Code, then (i) the Employee may, in his sole discretion, direct the Company not to vest his Options
under Section 3(b)(iv) hereof to the extent necessary to prevent any excess parachute payment to
him, and (ii) to the extent the amount of payments and benefits described above (after the action
described in (i) is taken or not taken by the Employee) would still result in an excess parachute
payment, such payments and benefits shall be reduced to the extent necessary to avoid the
imposition of any such excise taxes.
6. Confidential Information. Employee acknowledges that the information, observations
and data obtained by him while employed by the Company and its Subsidiaries concerning the business
or affairs of the Company or any Subsidiary (“Confidential Information”) are the property of the
Company or such Subsidiary. Therefore, Employee agrees that he shall not disclose to any
unauthorized person or use for his own purposes any Confidential Information without the prior
written consent of the Board, unless and to the extent that the aforementioned matters (i) become
generally known to and available for use by the public other than as a result of Employee’s acts or
omissions, or (ii) are disclosed by Employee in response to an order of any court, governmental
agency or adjudicative body, provided that Employee shall have promptly notified the Company prior
to any such disclosure and provided reasonable cooperation in the Company’s efforts, if any, to
contest or limit the scope of such disclosure, and provided further that if such disclosure is the
subject of any protective or similar order, such information will still be considered Confidential
Information, except for the limited purpose of disclosure to such court, governmental agency or
adjudicative body. Employee shall deliver to the Company at the termination or resignation of his
employment, or at any other time the Company may request, all memoranda, notes, plans, records,
reports, computer tapes, printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or the business of the
Company or any Subsidiary which he may then possess or have under his control.
7. Inventions and Patents. Employee acknowledges that all inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports and all similar or
related information (whether or not patentable) which relate to the Company’s or any of its
Subsidiaries’ actual or anticipated business, research and development or existing or future
products or services and which are conceived, developed or made by Employee while employed by the
Company and its Subsidiaries (“Work Product”) belong to the Company or such Subsidiary. Employee
shall promptly disclose such Work Product to the Board and perform all actions reasonably requested
by the Board (whether during or after Employee’s employment with the Company) to establish and
confirm such ownership (including, without limitation, assignments, consents, powers of attorney
and other instruments).
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8. Non-Compete. In further consideration of the compensation to be paid to Employee
hereunder, Employee acknowledges that in the course of his employment with the Company he shall
become familiar, and during his employment with the Company he has become familiar, with the
Company’s and its Subsidiaries’ trade secrets and with other Confidential Information concerning
the Company and its Subsidiaries and that his services have been and shall be of special, unique
and extraordinary value to the Company and its Subsidiaries. Therefore, Employee agrees that,
during the one (1) year period following Employee’s termination of employment (the “Non-Compete
Period”), he shall not directly or indirectly own any interest in, manage, control, participate in,
consult with, render services for, or in any manner engage in any business which is involved (or
has definite plans to get involved) in business activities that engage in the business of contract
research organization, recruiting, staffing and placement of personnel in the areas of clinical
research, medical writing, biostatistics and programming. Nothing herein shall prohibit Employee
from being a passive owner of not more than 3% of the outstanding stock of any class of a
corporation which is publicly traded, so long as Employee has no active participation in the
business of such corporation.
9. Non-Solicitation. During the one (1) year period immediately following the
termination of Employee’s employment (the “Non-Solicitation Period”), Employee shall not directly
or indirectly through another entity (i) induce or attempt to induce any employee of the Company or
any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way interfere with
the relationship between the Company or any Subsidiary and any employee thereof, (ii) hire any
person, who was an employee of the Company or any Subsidiary at any time during the four (4) years
immediately preceding Employee’s termination, (iii) induce or attempt to induce any customer,
supplier, licensee, licensor, franchisee or other business relation of the Company or any
Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interfere
with the relationship between any such customer, supplier, licensee or business, relation and the
Company or any Subsidiary (including, without limitation, making any negative statements or
communications about the Company or its Subsidiaries) or (iv) service (except in the capacity of an
employee) any customer, licensee, agent or franchisee of the Company or any Subsidiary who was a
customer, licensee, agent or franchisee of the Company or any Subsidiary at any time during the two
(2) years immediately preceding Employee’s termination or resignation.
10. Enforcement. If, at the time of enforcement of Sections 6, 7, 8 or 9 hereof, a
court holds that the restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area. The parties hereto agree
that money damages would not be an adequate remedy for any breach of this Agreement because the
services provided by Employee pursuant to this Agreement are unique and because Employee has access
to Confidential Information and Work Product. As such, in the event a breach or threatened breach
of this Agreement, the Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent any violations of,
the provisions hereof (without posting a bond or other security). In addition, in the event of an
actual breach or violation by Employee of Sections 8 or 9 hereof, the Non-Compete Period and the
Non-Solicitation Period shall be tolled
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until such breach or violation has been duly cured. Employee hereby acknowledges and agrees
that the restrictions contained in Sections 8 and 9 hereof are reasonable.
11. Employee’s Representations. Employee hereby represents and warrants to the
Company that (i) the execution, delivery and performance of this Agreement by Employee do not and
shall not conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Employee is a party or by which he is bound, (ii)
Employee is not a party to or bound by any employment agreement, non-compete agreement or
confidentiality agreement with any other person or entity except as disclosed to the Company by
Employee in writing (including a copy of such agreement), and (iii) upon the execution and delivery
of this Agreement by the Company, this Agreement shall be the valid and binding obligation of
Employee, enforceable in accordance with its terms.
12. Definitions.
“Board” shall mean the board of directors of the Company.
“Cause” shall mean (i) the conviction of a felony or the commission of any other act or
omission involving dishonesty or fraud, (ii) failure to perform duties as directed by the Board
(which failure is not cured within 30 days following written notice from the Board); provided such
duties are reasonable and consistent with the duties generally performed by an executive of the
same title, stature, duties and position as Employee or are otherwise consistent with this
Agreement, (iii) gross negligence or willful misconduct with respect to the Company or any of its
Subsidiaries, or (iv) any material breach (which failure is not cured within 30 days following
written notice from the Board) of this Agreement.
“Change of Control” shall mean the happening of an event, which shall be deemed to have
occurred upon the earliest to occur of the following events: (i) the acquisition in one or more
transactions by any “Person” (as the term person is used for purposes of Sections 13(d) or 14(d) of
the Exchange Act) of “Beneficial ownership” (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of the combined voting power of the Company’s then
outstanding voting securities (the “Voting Securities”), provided that for purposes of this clause
(i) Voting Securities acquired directly from the Company by any Person shall be excluded from the
determination of such Person’s Beneficial ownership of Voting Securities (but such Voting
Securities shall be included in the calculation of the total number of Voting Securities then
outstanding); or (ii) consummation by the Company of: a merger, reorganization or consolidation
involving the Company if the shareholders of the Company immediately before such merger,
reorganization or consolidation do not or will not own directly or indirectly immediately following
such merger, reorganization or consolidation, more than fifty percent (50%) of the combined voting
power of the outstanding voting securities of the company resulting from or surviving such merger,
reorganization or consolidation in substantially the same proportion as their ownership of the
Voting Securities outstanding immediately before such merger, reorganization or consolidation;
(iii) a complete liquidation or dissolution of the Company; or (iv) consummation by the Company of
a sale or other disposition of all or substantially all of the assets of the Company; or (v)
acceptance by shareholders of the Company of shares in a share exchange if the shareholders of the
Company immediately before such share exchange do not or will not own directly or indirectly
immediately following such
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share exchange more than fifty percent (50%) of the combined voting power of the outstanding
voting securities of the entity resulting from or surviving such share exchange in substantially
the same proportion as their ownership of the Voting Securities outstanding immediately before such
share exchange.
“Disability” shall mean any physical or mental incapacitation which results in Employee’s
inability to perform his duties and responsibilities for the Company for a total of 120 days during
any twelve-month period, as determined by an Independent Medical Doctor and (ii) shall be deemed to
have occurred on the later of either the 120th day of such inability to perform or the date on
which the benefits under the Company’s long term disability insurance become payable to Employee.
For the purposes of this definition, an “Independent Medical Doctor” shall be a medical doctor
chosen in the following manner: Employee and the Board shall each choose a medical doctor and such
medical doctors, together, shall choose a third medical doctor who shall be the Independent Medical
Doctor.
“Subsidiaries” shall mean any entity of which a majority of the securities or other ownership
interests are, at the time of determination, owned by the Company, directly or through one or more
Subsidiaries.
13. Survival. Sections 4, 5, 6, 7, 8, 9 and 10 hereof and Sections 12 through 22
hereof shall survive and continue in full force in accordance with their terms notwithstanding any
termination of Employee’s employment by, or resignation of Employee’s employment with, the Company.
14. Notices. Any notice provided for in this Agreement shall be in writing and shall
be either personally, delivered sent by facsimile (with hard copy to follow by regular mail), or
mailed by overnight courier (by a reputable courier service) or first class mail, return receipt
requested, to the recipient at the address below indicated:
Notices to Employee:
Xxxxxx Xxxx
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
Notices to the Company:
ReSearch Pharmaceutical Services, Inc.
000 Xxxxxxxx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
000 Xxxxxxxx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
or such other address or to the attention of such other person as the recipient party shall have
specified by prior written notice to the sending party. Any notice under this Agreement shall be
deemed to have been given when so delivered or mailed.
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15. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
16. Complete Agreement. This Agreement, those documents expressly referred to herein
and other documents of even date herewith embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or representations by or
among the parties, written or oral, which may have related to the subject matter hereof in any way
including, without limitation, that certain Employment Agreement dated as of December 2, 2003 by
and between the Company and the Employee.
17. No Strict Construction. The language used in this Agreement shall be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no rule of strict
construction shall be applied against any party.
18. Counterparts. This Agreement may be executed in separate counterparts (including
by facsimile signature pages), each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
19. Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Employee, the Company and their respective heirs, successors and
assigns, except that Employee may not assign his rights or delegate his duties or obligations
hereunder without the prior written consent of the Company.
20. Choice of Law; Consent to Jurisdiction. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania, without giving effect to any choice of law or conflict of law rules
or provisions (whether of the Commonwealth of Pennsylvania or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the Commonwealth of Pennsylvania.
In the case of any dispute under or in connection with this Agreement, Employee may only bring suit
against the Company in the Courts of the Commonwealth of Pennsylvania in and for the County of
Xxxxxxxxxx or in the Federal District Court for such geographic location. Employee hereby consents
to the jurisdiction and venue of the courts of the Commonwealth of Pennsylvania in and for the
County of Xxxxxxxxxx or the Federal District Court for such geographic location, provided that such
Federal Court has subject matter jurisdiction over such dispute, and Employee hereby waives any
claim he may have at any time as to forum non conveniens with respect to such venue. The Company
shall have the right to institute any legal action arising out of or relating to this Agreement in
any appropriate court and in any jurisdiction. Any judgment entered against either of the parties
in any proceeding hereunder may be entered and enforced by any court of competent jurisdiction.
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21. Effective Date. This Agreement will become effective on the date (the “Effective
Date”) on which the merger of Longxia Acquisition, Inc. (“Longxia”) with and into Research
Pharmaceutical Services, Inc. (“RPS”), pursuant to the Agreement and Plan of Merger by and among
Cross Shore, Longxia, RPS, the RPS Securityholders named therein, and Xxxxxx X. Xxxxxxx and Xxxxxx
Xxxxxx as the RPS Securityholders Committee (the “Merger”) is consummated. If for any reason the
Merger does not occur, then this Agreement will not be effective and will be of no force or effect.
22. Amendment and Waiver. The provisions of this Agreement may be amended or waived
only with the prior written consent of the Company and Employee, and no course of conduct or
failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding
effect or enforceability of this Agreement.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date
first written above.
| CROSS SHORE ACQUISITION CORPORATION |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Its: Chief Executive Officer | ||||
| /s/ Xxxxxx Xxxx | ||||
| Xxxxxx Xxxx | ||||
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