EMPLOYMENT AGREEMENT
Exhibit
99.2
This
EMPLOYMENT AGREEMENT dated as of May 18, 2007 (the "Agreement") is entered
into
by and among between etrials Worldwide, Inc., a Delaware corporation that
has a
principal place of business at 0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxxxxx, X.X. 00000 (the "COMPANY"), and Xxxxxx Xxxxxxxx, (the "EXECUTIVE").
This Agreement is effective as of May 21, 2007 (the “Effective
Time”).
1. EMPLOYMENT. The
COMPANY hereby employs the EXECUTIVE, and the EXECUTIVE hereby agrees to
accept
employment from the COMPANY as its President and Chief Executive Officer.
EXECUTIVE will begin work on June 1, 2007 at the COMPANY’s principal offices.
The EXECUTIVE shall also serve as the President and Chief Executive Officer
of
etrials, Inc. (“etrials”), a wholly-owned subsidiary of the COMPANY, and any
other subsidiaries and affiliated entities of the COMPANY, as determined
from
time to time by the Board of Directors of the COMPANY. The EXECUTIVE will
report
to the Board of Directors of the COMPANY, and he agrees during the terms
of his
employment under this Agreement to perform the duties and responsibilities
of
such position as may be assigned him from time to time by the Board of Directors
of the COMPANY. The Board of Directors has approved recommending to shareholders
that EXECUTIVE be elected to the Board at the next meeting of shareholders
of
the COMPANY. The EXECUTIVE shall perform his duties in a manner that is
consistent with the requirements of the Delaware General Corporation Law
and the
policies of the COMPANY and in accordance with all rules and regulations
of
NASDAQ or such other market on which securities of the COMPANY are traded
during
the term of this Agreement. The EXECUTIVE further agrees to use his best
efforts
to promote the interests of the COMPANY and to devote his full business time
and
energies to the business and affairs of the COMPANY. The EXECUTIVE may, however,
engage in civic and not-for-profit activities for which no compensation (other
than reimbursement of his actual expenses incurred in performance of such
activities) is paid to him, so long as such activities do not materially
interfere with the performance of his duties to the COMPANY hereunder. EXECUTIVE
acknowledges and agrees that his position requires him to live near the location
of the principal place of business of the COMPANY. EXECUTIVE agrees to cause
he
and his family to move their primary residence to a location in Wake, Durham
or
Orange counties of North Carolina on or before the first anniversary of the
Effective Time and to maintain the primary residence of EXECUTIVE and the
family
of EXECUTIVE in such geographic area during the term of this Agreement and
all
renewal periods. For these purposes, the term “primary residence” means the
location in which EXECUTIVE and the family of EXECUTIVE spends at least a
majority of his time, notwithstanding that the “primary residence” for tax
purposes may be a different location.
2. TERM
OF EMPLOYMENT.
The
employment under this Agreement shall commence on June 1, 2007 (the “Effective
Date”) and shall continue for a period of three (3) years thereafter, unless
earlier terminated pursuant to the provisions of this Agreement; and it shall
be
renewed for successive periods of one (1) year unless either party shall
give
written notice of non-renewal, within sixty (60) days of the expiration of
the
initial three-year term or any such one-year renewal term.
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3. COMPENSATION.
(a) BASE
SALARY. As
compensation for services provided to the COMPANY, the EXECUTIVE shall receive
a
salary at the annual rate of Three Hundred Twenty-Five Thousand Dollars
($325,000), (the "Base Salary") which shall begin to accrue from and after
the
Effective Time and shall be paid as and when other employees of the COMPANY
are
paid. The COMPANY may deduct such payroll and withholding taxes as required
by
law to be deducted and such other deductions as the EXECUTIVE shall authorize
in
writing from all compensation paid to EXECUTIVE (including, without limitation,
all cash or equity compensation pursuant to this Agreement as provided below).
The Base Salary shall be pro-rated for any partial month at either the
commencement or termination of the employment. Such Base Salary shall be
reviewed, and any increases in the amount thereof shall be determined, by
the
Board of Directors in its sole discretion at the end of each twelve-month
period
of employment during the term hereof. There shall be no decrease in the amount
of the Base Salary below the amount stated above.
(b) BONUS.
The
Executive’s target bonus will be fifty percent (50%) of Base Salary when the
COMPANY meets targets established in
writing
by
the
Board of Directors of the COMPANY or by the Compensation Committee of the
Board
of Directors, but the EXECUTIVE shall be eligible for a performance bonus
of up
to One Hundred Percent (100%) of Base Salary, based upon factors to be
determined, in writing, by the Compensation Committee of the COMPANY's Board
of
Directors. The Compensation Committee will determine the factors for the
performance bonus within forty-five (45) days after the Board of Directors
approves the budget for that year;
provided, however, that such determination shall in all events be made no
later
than ninety (90) days after the commencement of each calendar year, beginning
in
calendar year 2008.
It is
understood and agreed
for
calendar year 2007, ETRIALS shall pay the EXECUTIVE a bonus of ninety-five
thousand dollars ($95,000.00) in lieu of the performance bonus for 2007,
if
EXECUTIVE remains employed at year end or if EXECUTIVE is terminated prior
to
year end pursuant to Section 5(a).
All
bonuses will be paid as follows: (i) fifty percent (50%) in cash and (ii)
fifty
percent (50%) in shares of Common Stock of the COMPANY, which for these purposes
will be valued at the market price (determined by the Board of Directors
or the
Compensation Committee) of the Common Stock of the COMPANY at the close of
trading on the date the Compensation Committee determines the amount of the
bonus to be paid in Common Stock, or at the close of trading on the next
trading
day, if the Compensation Committee makes its determination on a day that
is not
a trading day. For example, if the Compensation Committee makes its
determination on March 1st
and
March 1st
is a
trading day, then the Common Stock issued in the bonus will be valued at
the
market price after the close of trading on March 1st.
If March 1st
is not a
trading day, but March 2nd
is a
trading day, then the Common Stock issued in the bonus will be valued at
the
market price after the close of trading on March 2nd. Notwithstanding the
foregoing, (i) the COMPANY may at its option pay cash in lieu of Common Stock,
if the Board of Directors or the Compensation Committee determines that issuance
of shares to EXECUTIVE would cause the number of shares approved by the
shareholders of the
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COMPANY
for compensation purposes to be insufficient for other officers, directors
and
employees of the COMPANY or its subsidiaries and (ii) the COMPANY must pay
all
the bonuses in cash if the exemption afforded by Rule 16b3 of the Securities
and
Exchange Commission (or a successor rule) is not available to cause the issuance
of shares to be exempt from Section 16(b) of the Securities Exchange Act
of
1934, as amended, or successor provisions.
Notwithstanding anything in this Agreement to the contrary, all bonuses
hereunder will be paid no later than two and one-half (2½ ) months after the end
of the calendar year to which the bonus relates.
(c) STOCK
OPTIONS. The
Board
of Directors or the Compensation Committee of the Board of Directors, at
its
first meeting following execution and delivery of this Agreement, shall grant
the EXECUTIVE non-qualified stock options to acquire three hundred seventy
thousand (370,000) shares of the COMPANY's common stock. Such options shall
be
governed by the terms of COMPANY's 2005 Performance Equity Plan, as amended
(the
“Performance Equity Plan”), if the options are granted pursuant to the
Performance Equity Plan, or if the Board of Directors of the COMPANY determines
the options should be governed by the Performance Equity Plan. The exercise
price for such options shall be the fair market value of the COMPANY's common
stock on the date of grant determined by the Board of Directors or the
Compensation Committee of the Board of Directors in accordance with the normal
procedures of the Company
and in
compliance with the requirements of Treasury Regulation §
1.409A-1(b)(5)(iv)(A).
Such
options shall vest quarterly in arrears over a four (4) year period from
the
date of grant. Such options shall be evidenced by a separate stock option
agreement in a form approved by the Compensation Committee or the Board of
Directors of the COMPANY and such options shall not be owned by EXECUTIVE
until
execution and delivery of such stock option agreement.
(d) RESTRICTED
STOCK. The
Board
of Directors or the Compensation Committee of the Board of Directors, at
its
first meeting following execution and delivery of this Agreement, shall grant
the EXECUTIVE Fifty Thousand (50,000) shares of restricted common stock of
the
COMPANY. EXECUTIVE shall pay all taxes resulting from the
grant
and/or vesting of such
restricted stock
and
shall be required to pay the amounts of all withholding due to the COMPANY
no
later than the time set forth in the restricted stock agreement referred
to
below.
The
COMPANY may, but shall not be required to, withhold such taxes
from
cash compensation otherwise payable to the EXECUTIVE.
Such
restricted stock shall be governed by the terms of the
COMPANY's
Performance Equity Plan then in effect, if the restricted stock is
granted
pursuant to the Performance Equity Plan, or if the Board or Directors of
the
COMPANY determines the restricted stock should be governed by the Performance
Equity Plan. The purchase price for such restricted stock shall be the par
value
of the COMPANY's common stock. Such restricted stock shall vest quarterly
in
arrears over a four (4) year period from the date of grant. Such restricted
stock grant shall be evidenced by a separate restricted stock agreement in
a
form approved by the Compensation Committee or the Board of Directors of
the
COMPANY and such restricted stock shall not be owned by EXECUTIVE until
execution and delivery of such restricted stock agreement.
(e) MATERIAL
TERMS TO INDUCEMENT OF EMPLOYMENT. EXECUTIVE
hereby represents that the options to be granted to EXECUTIVE pursuant to
Section 3(c) hereof and the restricted stock to be granted to EXECUTIVE pursuant
to Section 3(d) hereof are material terms of this Agreement, were a material
part of the inducement to become employed by the COMPANY and EXECUTIVE would
not
have accepted employment with the COMPANY but for such stock options and
restricted stock. All matters related to such options and restricted stock
must
be approved by a majority of the Directors of the COMPANY who are “Independent”
as defined in NASDAQ rules.
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(f) RELOCATION
EXPENSES AND ATTORNEYS FEES. The
COMPANY will reimburse EXECUTIVE for up to Five Thousand Dollars ($5,000)
of
legal fees paid by EXECUTIVE in connection with EXECUTIVE retaining an attorney
to advise EXECUTIVE with respect to this Agreement. The
COMPANY will reimburse EXECUTIVE for reasonable moving expenses related to
up to
three trips to purchase a home near the principal place of business of the
COMPANY, the cost of moving the possessions of EXECUTIVE and his family and
hotel expenses while such possessions are in transit, which reimbursement
will
not include closing costs, purchase and sales commissions or other relocation
expenses not referred to above. Reimbursement shall be subject to approval
by
the Compensation Committee of the Board of Directors of the COMPANY. To
encourage EXECUTIVE to complete the relocation expeditiously, the COMPANY
will
also pay EXECUTIVE Seventy Thousand ($70,000) upon completion of such
relocation, including sale and purchases of homes. Payments
under this Section 3(f) shall be made within the same time limitations as
set
forth in Section 4(b) with respect to expense reimbursements.
(g) PAYMENT.
Notwithstanding
anything in this Agreement to the contrary, the parties shall use commercially
reasonable efforts to make all terms of this Agreement consistent with and
all
payments made pursuant to this Agreement payable at such times as shall not
result in additional taxation to the EXECUTIVE pursuant to the provisions
of
Section 409A of the Internal Revenue Code of 1986, as amended
(the
“Code”).
COMPANY
agrees that for so long as it shall have any obligation to EXECUTIVE hereunder,
that it will reimburse EXECUTIVE for any excise tax paid by EXECUTIVE pursuant
to Section 409A which results from any unreasonable delay by the COMPANY
in
performing any action required to avoid excise tax liability for EXECUTIVE
pursuant to Section 409A. Any payment by the COMPANY of such excise tax shall
include a “gross-up” payment, which shall be the amount required to cause the
net amount retained by EXECUTIVE after payment of all taxes, including taxes
on
the “gross-up” payment, to equal the net amount EXECUTIVE would have retained if
no excise tax had been imposed and if no “gross up” payment had been made.
Any
such
payments shall be made no later than the end of the EXECUTIVE’s taxable year
next following the taxable year in which the EXECUTIVE remits the related
taxes
to the Internal Revenue Service and any applicable state taxing authorities,
as
specified in Treasury Regulations § 1.409A-3(i)(1)(v).
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4.
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PARTICIPATION
IN BENEFIT PLANS, REIMBURSEMENT OF BUSINESS
EXPENSES.
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(a) BENEFIT
PLANS. During
the term of this Agreement, the EXECUTIVE shall be provided with group health
insurance, life and disability insurance, five (5) weeks vacation, sick leave
benefits, holidays, car allowance of Five Hundred Dollars ($500) per month
and
other benefits which are not less than, and on terms no less favorable than,
those that the COMPANY and/or ETRIALS provides generally to its other executive
employees, if any. EXECUTIVE (and any dependents) must meet the eligibility
requirements of any such plans as a condition to his (and their) participation.
COMPANY shall permit EXECUTIVE to participate in any nonqualified employee
benefit, deferred compensation, excess benefit or other “Top Hat” plan offered
to its executives or any select group of management or highly compensated
employees on terms no less favorable than, those that the COMPANY and/or
ETRIALS
provides generally to its other executive employees, if any, and as set forth
in
such plan.
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(b) REIMBURSEMENT
OF BUSINESS EXPENSES. During
the term of this Agreement, the COMPANY shall reimburse the EXECUTIVE promptly
for all reasonable expenditures incurred
by the EXECUTIVE in the course of performing services pursuant to this
Agreement, which expenses may include, but are not limited to, travel (but
excluding expenses arising in connection with the use of EXECUTIVE's personal
automotive vehicles, which are intended to be covered by the allowance referred
to in paragraph (a), above), entertainment, meetings, parking, publications,
association dues, and conference, provided that the EXECUTIVE provides proper
evidence of such expenses and submits his requests for reimbursement in
accordance with the policies and procedures of the COMPANY then in
effect;
provided, however, that in all events the EXECUTIVE shall provide such proper
evidence no later than forty-five (45) days after the end of the calendar
year
in which the reimbursable expenditures were made, and the COMPANY shall
reimburse the EXECUTIVE no later than two and one-half (2½ ) months after the
end of the calendar year in which the reimbursable expenditures were
made.
5. TERMINATION
OF EMPLOYMENT. The
EXECUTIVE'S employment hereunder may be terminated only as follows:
(a) WITHOUT
CAUSE BY THE COMPANY. The
COMPANY may terminate the EXECUTIVE'S employment hereunder without Cause
(as
defined in Section 5 Paragraph (b), below), only upon action by the COMPANY's
Board of Directors, and upon not less than ten (10) business days prior written
notice to the EXECUTIVE.
(b) FOR
CAUSE, BY THE COMPANY. The
COMPANY (which for purposes of this paragraph (b) shall include ETRIALS)
may
terminate the EXECUTIVE'S employment hereunder for Cause immediately and
with
prompt notice to the EXECUTIVE, which Cause shall be determined in good faith
solely by the COMPANY's Board of Directors, after providing the EXECUTIVE
with
written notice and an opportunity to be heard. “Cause" for termination shall
include the following conduct of the EXECUTIVE:
(i)
Material
breach of this Agreement by the EXECUTIVE, which breach shall not have been
cured by the EXECUTIVE within thirty (30) days of receipt of written notice
of
the facts and circumstances of said breach as shall reasonably be required
to
permit EXECUTIVE to take action to cure such breach.
(ii)
Serious
violation of a Company Policy in any manner that the Board of Directors of
the
COMPANY, or a committee of the Board, determines either:
(x)
substantially undermines the ability of the Executive to effectively perform
his
duties under this Agreement, or
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(y)
involves bad faith or willful deceit by EXECUTIVE, provided that reliance
by
EXECUTIVE on the opinion of COMPANY legal counsel after full disclosure by
EXECUTIVE of the relevant fact and circumstances to such legal counsel, shall
preclude a finding of bad faith or deceit by the Board of Directors.
“Company
Policy” means a policy of the COMPANY intended to ensure compliance with
applicable laws, such as the ethics policy, conflicts of interest policy,
code
of conduct, xxxxxxx xxxxxxx policy or other similar material policy of the
COMPANY approved by the Board of Directors of the COMPANY, or a committee
of the
Board, from time to time in effect and which are known to EXECUTIVE, provided
that any policy communicated generally to employees of The COMPANY during
the
tenure of EXECUTIVE shall be irrefutably presumed to be known to
EXCUTIVE;
(i)
Refusal
by EXECUTIVE to accept any penalty not involving termination of employment
imposed by the Board of Directors for violation of a Company Policy (as defined
above), if such penalty is (a) not a material change to this Agreement and
(b)
consistent with penalties applied to other employees of the COMPANY, or if
no
comparable penalties have been imposed in the past, are reasonable in light
of
the nature of the violation;
(ii)
Intentionally
misappropriating funds or property of the COMPANY, provided that personal
use of
a computer or de
minimis
amounts
of office supplies of the COMPANY, or other similar minor events, which a
reasonable person would conclude were not an intentional misappropriation,
shall
not be covered by this provision);
(iii)
Intentional
neglect or unreasonable refusal to attempt to perform the material duties
and
responsibilities assigned to the EXECUTIVE by the Board of Directors or pursuant
to this Agreement after
written
warning from the COMPANY specifying the duties or responsibilities which
the
EXECUTIVE has refused to perform or delays performing for an unreasonable
period
of time;
(iv)
Any
failure to disclose a material fact about the COMPANY to the Board of Directors
which a reasonable person in EXECUTIVE’s position would conclude was pertinent
to the Board performing its duties, if such material fact is not already
known
or otherwise readily available to the Board of Directors, if the Board of
Directors determines the failure was intentional;
or
(v)
Conviction
of
a
felony.
(c) FOR
GOOD REASON BY THE EXECUTIVE. The
EXECUTIVE may terminate employment hereunder for Good Reason immediately
and
with prompt notice to the COMPANY, subject to Section 11 of this Agreement.
"Good Reason" for termination by the EXECUTIVE shall be limited to the following
conduct of the COMPANY:
(i)
Material
breach of any provision of this Agreement by the COMPANY, including any failure
to pay the compensation set forth in Section 3 hereto, which breach shall
not
have been cured by the COMPANY within thirty (30) days of receipt of written
notice of said breach; and
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(ii)
The
assignment to the EXECUTIVE of duties inconsistent with the EXECUTIVE'S
position, authority, duties or responsibilities as contemplated by Section
1 of
the Agreement, including the failure to appoint EXECUTIVE as an officer of
the
COMPANY, or any other action by the COMPANY which results in a material
diminution of such position, authority, duties or responsibilities, or which
materially impair the EXECUTIVE'S ability to function, excluding for this
purpose any isolated action not taken in bad faith and which is promptly
remedied by the COMPANY after
receipt
of written notice thereof given by the EXECUTIVE. Notwithstanding the foregoing,
suspension of the EXECUTIVE with pay while the Board of Directors conducts
any
investigation into conduct of the EXECUTIVE related to a determination of
an
ongoing violation of any law, rule or regulation, or related to a determination
of whether Cause for termination exists hereunder, or the removal of authority
or responsibility of the EXECUTIVE over any matter or person to avoid or
decrease liability exposure, taken on advice of legal counsel to the COMPANY
shall not constitute Good Reason.
(iii)
The
COMPANY requiring executive to relocate more than fifty (50) miles from his
residence (provided EXECUTIVE has relocated as required in Section 1) in
connection with a Change in Control
In
addition to any requirements set forth above, and in order of any of the
above
events or conditions to constitute “Good Reason”, the EXECUTIVE must inform the
COMPANY of the existence of the event or condition within ninety (90) days
of
the initial existence of the event or condition, after which date the COMPANY
will have thirty (30) days to cure the event or condition which otherwise
would
constitute “Good Reason” hereunder.
(d) DEATH.
The
period of employment of the EXECUTIVE hereunder shall terminate automatically
in
the event of his death.
(e) DISABILITY.
In
the
event that the EXECUTIVE shall be unable to perform the duties hereunder
with or
without reasonable accommodation (provided that any accommodation must be
consistent with the accommodation policies of the COMPANY generally) for
a
period of one hundred eighty (180) consecutive days by reason of disability
as a
result of illness, accident or other physical or mental incapacity or
disability, the COMPANY may, in its discretion, by giving written notice
to the
EXECUTIVE, terminate the EXECUTIVE'S employment hereunder as long as the
EXECUTIVE is still disabled on the effective date of such termination. In
interpreting the foregoing, it is agreed the “performance of duties hereunder”
requires a regular physical presence in the offices of the COMPANY, and travel
to meet with customers, investors, securities analysts and other people
important to the business of the COMPANY. Any such notice of termination
shall
include a finding that EXECUTIVE is unable to perform the material duties
of his
occupation and COMPANY shall provide a copy of such notice and all information
relevant to its determination to any long-term disability plan sponsored
by the
COMPANY in which EXECUTIVE is a participant. COMPANY will cooperate with
and
assist EXECUTIVE in obtaining long-term disability benefits in the event
of
termination for Disability.
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6. COMPENSATION
IN THE EVENT OF TERMINATION. In
the
event that the EXECUTIVE'S employment pursuant to this Agreement terminates
prior to the end of the Term of this Agreement for a reason provided in Section
5 hereof, or in the event the Term is not renewed pursuant to Section 2 hereto,
the COMPANY shall pay the EXECUTIVE compensation as set forth
below:
(a) TERMINATION
BY THE EXECUTIVE FOR GOOD REASON OR BY THE COMPANY WITHOUT CAUSE.
In
the
event that the EXECUTIVE'S employment hereunder is terminated (i) by the
COMPANY
without Cause, (ii) by the EXECUTIVE for Good Reason, (iii) by the EXECUTIVE
refusing to renew this Agreement for Good Reason, or (iv) by the COMPANY
refusing to renew this Agreement without Cause, provided
that the EXECUTIVE is then willing and able to renew the Agreement on similar
terms and conditions, then
the
COMPANY shall provide the EXECUTIVE the following severance benefits
(the
"Severance Benefits"):
(i)
Annual
Base Salary and other Compensation as set forth in Section 3 hereof that
was
earned up until the date of termination, as well as any unreimbursed
expenses
as
provided for in Section 4(b);
(ii)
Base
Salary at one hundred percent (100%) of the annualized rate in effect on
the
date of termination, for eighteen (18) months after termination of employment
(the "Salary Continuation Period") payable as and when employees of the COMPANY
are paid in accordance with normal payroll procedures;
provided, however, that if the aggregate payments under this clause (ii),
together with any other payments due upon the EXECUTIVE’s termination of service
which would provide for a deferral of compensation within the meaning of
Section
409A of the Code, would exceed the Cap Amount, then payment of the EXECUTIVE’s
Base Salary hereunder shall instead commence on the first normal payroll
date
that falls after the six month anniversary of the EXECUTIVE’s termination of
employment, with the amounts that would otherwise have been payable during
such
six (6) month period being payable in a single lump payment at the time the
first payment is made hereunder. For purposes of this Agreement, the term
“Cap
Amount” means two (2) times the lesser of (i) the sum of the EXECUTIVE’s
annualized compensation based upon the annual rate of pay for services provided
to the COMPANY during the EXECUTIVE’s taxable year preceding the taxable year in
which the EXECUTIVE’s termination of service occurred, or (ii) the maximum
amount which may be taken into account under a qualified plan pursuant to
Section 401(a)(17) of the Code for the taxable year in which the EXECUTIVE’s
termination of service occurred.
(iii)
Any
unpaid bonus the Board of Directors previously determined was earned by the
EXECUTIVE, unless at the time of such determination the Board of Directors
was
not aware of facts related to the determination of whether EXECUTIVE met
financial objectives for earning the bonus which it reasonably would have
taken
into account had such facts been known;
(iv)
The
COMPANY shall pay a pro rata share (based on the number of days of that year
before and after termination) of any performance bonus based on performance
of
the COMPANY for the year in which employment terminates, if at the end of
the
year during which
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termination
of employment occurs, the COMPANY'S performance meets the bonus criteria
for
that year. The COMPANY shall pay a pro rata share (based on the number of
days
of that year before and after termination) of any performance bonus based
on the
individual performance of the EXECUTIVE, unless the Board of Directors in
good
faith concludes the EXECUTIVE would not have been able to achieve the
performance criteria had employment continued for the full year. Payment
pursuant
to clauses (iii) and (iv),
if any,
shall be made at the time the bonuses would have been paid had employment
not
terminated,
as
provided for in Section 3(b);
(v)
Continuing
coverage for the EXECUTIVE and his eligible dependents, under all of the
COMPANY'S or ETRIALS' group health plans, disability insurance, life insurance
and similar welfare benefits, programs and policies in effect as of the date
of
termination if permitted under the COMPANY'S or ETRIALS' plans until the
earlier
of the Salary Continuation Period or the date, or dates, that he becomes
eligible for equivalent coverage and benefits under the plans and programs
of a
subsequent employer, provided that if by the terms of such benefit plans,
the
EXECUTIVE or his family cannot be covered after termination of employment,
the
COMPANY shall make reasonable efforts to obtain or pay for equivalent coverage
for the EXECUTIVE, provided the EXECUTIVE and his family are insurable and
further provided that the COMPANY shall not be required to pay more than
Ten
Thousand Dollars ($10,000),
provided that in no event shall a payment be made hereunder after the end
of the
EXECUTIVE’s second taxable year following the year in which the EXECUTIVE’s
employment terminated;
(vi)
Notwithstanding
any COMPANY policy to the contrary, payment of up to sixty (60) days of accrued
but unused vacation time for the period from the commencement of his employment
with ETRIALS through the EXECUTIVE'S effective date of termination,
which
payment shall be made no later than the date that is two and one-half (2½)
months after the end of the calendar year in which the effective date of
termination occurs;
and
(vii)
All
unvested stock options and restricted stock granted to the EXECUTIVE that
are
scheduled to vest within an eighteen (18) month period after the termination
date shall immediately vest and remain exercisable for a period of eighteen
(18)
months from the termination date or,
if
less, until the original final termination date of such option as provided
for
in the stock option agreement between the EXECUTIVE and the COMPANY,
and
all
other unvested options
shall
immediately terminate and such option shall become a nonqualified stock option
for tax purposes if it was not already a nonqualified option. Any vested
options
shall be exercisable on a cashless basis for a period of ninety (90) days
following the termination date.
(b) TERMINATION
BY THE COMPANY IN EVENT OF A CHANGE IN CONTROL. In
the
event that during the period beginning three (3) months before the occurrence
of
a "Change in Control" (as such term is defined in Section 8 hereof) and ending
one (1) year after a Change in Control the EXECUTIVE'S employment is terminated:
(i) by the EXECUTIVE for Good Reason, (ii) by the COMPANY (or its successor
or
acquirer) without Cause, (iii) by expiration of this Agreement due to the
EXECUTIVE refusing to renew this Agreement for Good Reason, or (iv) by
expiration of this Agreement due to COMPANY (or its successor or acquirer)
refusing to renew this Agreement without Cause, then in addition to the
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benefits
provided for in Section 6(a) above, and notwithstanding any terms to the
contrary of applicable agreements pursuant to the Performance Equity Plan
executed by the COMPANY and the EXECUTIVE, all of the EXECUTIVE'S outstanding
stock options and restricted stock will immediately become vested and
exercisable, and any provision of such options which provides for termination
of
the option upon, or within a stated time after termination of employment,
shall
become void and such option shall become a nonqualified stock option for
tax
purposes, if it was not already a nonqualified option. The options shall
remain
exercisable for a period of eighteen (18) months from the termination
date
or, if
less, until the original final termination date of such option as provided
for
in the stock option agreement between the EXECUTIVE and the COMPANY;
any
such options shall be exercisable on a cashless basis for a period of ninety
(90) days following the termination date.
(c) TERMINATION
DUE TO THE EXECUTIVE'S DEATH, OR BY THE COMPANY UPON THE EXECUTIVE'S DISABILITY.
In
the
event of the EXECUTIVE'S death or if the COMPANY shall terminate the EXECUTIVE'S
employment hereunder for disability pursuant to Section 5 (d) hereof, the
COMPANY shall pay the EXECUTIVE, or his personal representative, as
applicable:
(i)
Annual
Base Salary and other compensation as set forth in Section 3 hereof that
was
earned up until the date of termination, as well as any unreimbursed
expenses
as
provided for in Section 4(b);
(ii)
Base
Salary at the annualized rate in effect on the date of termination for a
period
of three (3) months in the event of termination because of the EXECUTIVE'S
death, and the period between the date of termination as a result of the
EXECUTIVE'S disability until the effective date of the EXECUTIVE'S eligibility
for the benefits pursuant to any applicable long-term disability insurance
policy that may be in effect, up to a maximum of eighteen (18).
months;
provided, however, that if the aggregate payments under this clause (ii)
as a
result of the EXECUTIVE’s disability, together with any other payments due upon
the EXECUTIVE’s termination of service which would provide for a deferral of
compensation within the meaning of Section 409A of the Code, would exceed
the
Cap Amount, then payment of the EXECUTIVE’s Base Salary hereunder shall instead
commence on the first normal payroll date that falls after the six month
anniversary of the EXECUTIVE’s termination of employment, with the amounts that
would otherwise have been payable during such six (6) month period being
payable
in a single lump payment at the time the first payment is made
hereunder;
(iii)
The
COMPANY shall pay any bonus on the same conditions as if termination was
by the
COMPANY without cause pursuant to Section 6(a); and
(iv)
Notwithstanding
any COMPANY policy to the contrary, payment of up to sixty (60) days of accrued
but unused vacation time for the period from the commencement of his employment
with ETRIALS through the EXECUTIVE'S effective date of termination which
payment shall be made no later than the date that is two and one-half (2½)
months after the end of the calendar year in which the effective date of
termination occurs.
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(v)
All
unvested stock options and restricted stock granted to the EXECUTIVE that
are
scheduled to vest within a three (3) month period after the date of death,
or
within a six (6) month period after the date of disability, shall immediately
vest and remain exercisable for a period of three (3) months from the
termination date and all other unvested options shall immediately terminate
and
such option shall become a nonqualified stock option for tax purposes if
it was
not already a nonqualified option. Any vested options shall be exercisable
on a
cashless basis for a period of ninety (90) days following the termination
date.
(d) TERMINATION
BY THE COMPANY FOR CAUSE OR BY THE EXECUTIVE WITHOUT GOOD REASON.
In
the
event that the COMPANY shall terminate the EXECUTIVE'S employment hereunder
for
Cause, or the EXECUTIVE shall terminate employment hereunder without Good
Reason, the COMPANY shall pay the EXECUTIVE's Base Salary and other compensation
as set forth in Section 3 hereof that was earned up until the date of
termination, as well as any unreimbursed expenses, and accrued but unused
vacation time, up to the number of days afforded all employees under the
COMPANY's vacation policy in effect on the date of termination of employment.
(e) LIABILITY
RELEASE AND NON-DISPARAGEMENT. The
COMPANY may withhold any payment or other benefit following termination of
employment except for earned compensation, unused vacation time and unreimbursed
expenses, unless the EXECUTIVE executes and delivers to the COMPANY a written
mutual liability release and mutual non-disparagement agreement in form and
substance reasonably acceptable to the COMPANY and the EXECUTIVE.
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7.
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NON-COMPETITION,
CONFIDENTIALITY, AND CONFLICTS OF
INTEREST.
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(a) CONFIDENTIALITY.
The
EXECUTIVE acknowledges that as a result of his current and prior employment
with
the COMPANY and ETRIALS, (i) EXECUTIVE has obtained and will obtain secret
and
confidential information concerning the business of the COMPANY and its
subsidiaries and affiliates (referred to collectively in this paragraph (a)
as
the COMPANY), including, without limitation, financial information, proprietary
rights, trade secrets and "know-how," strategic plans and partners, customers
and sources ("Confidential Information"); (ii) the COMPANY will suffer
substantial damage which will be difficult to compute if, during the period
of
his employment with the COMPANY or thereafter, the EXECUTIVE should enter
a
business competitive with the COMPANY or divulge Confidential Information;
and
(iii) the provisions of this Section 7 are reasonable and necessary for the
protection of the business of the COMPANY.
Accordingly,
the EXECUTIVE agrees that he will not at any time, either during the term
of
this AGREEMENT or thereafter, divulge to any person or entity any CONFIDENTIAL
INFORMATION obtained or learned by him as a result of his employment with
the
COMPANY or ETRIALS, except: (i) in the course of performing his duties
hereunder; (ii) with the COMPANY's express written consent; (iii) to the
extent
that any such information is in the public domain other than as a result
of the
EXECUTIVE's breach of any of his obligations hereunder; or (iv) where required
to be disclosed by court order, subpoena or other government process. If
the
EXECUTIVE is required to make a disclosure pursuant to the provisions of
clause
11
(iv)
of
the preceding sentence, he shall promptly (but in no event more than seventy-two
(72) hours after learning of the same) notify the COMPANY of such court order,
subpoena or government process. At the COMPANY's expense, the EXECUTIVE shall:
(i) take all reasonably necessary and lawful steps required by the COMPANY
to
defend against the enforcement of such court order, subpoena or other government
process; and (ii) permit the COMPANY to intervene and participate with counsel
of its choice in any proceeding relating to the enforcement
thereof.
(b) RESTRICTIVE
COVENANT. During
the term of this Agreement and for twelve (12) months following the later
of (i)
the termination date of the EXECUTIVE'S employment under this Agreement,
and
(ii) if this Agreement is terminated by the COMPANY for Cause, the expiration
of
the then-current term of this Agreement, the EXECUTIVE shall not, without
first
obtaining
the prior written approval of the COMPANY, directly or indirectly engage
in any
activities in competition with the Business of the COMPANY, or accept employment
or establish a business relationship with a business engaged in competition
with
the Business of the COMPANY, in any geographical area in which the COMPANY,
as
of the termination date, either is conducting or has made known to the EXECUTIVE
prior to his termination that it has plans to conduct material business.
The
Business of the Company shall mean the
development and sale of eClinical software and services to pharmaceutical,
biotechnology and contract research organizations in connection with clinical
trials or other business: (i) which is actually conducted by the COMPANY
immediately prior to termination of employment, or (ii) which the COMPANY
took
active steps (including, without limitation, business planning, market research,
or product development efforts) prior to termination of employment to conduct
after
termination
of employment. The
EXECUTIVE hereby agrees that the COMPANY'S Business is Internet-based and
is
currently conducted via the Internet throughout the United States and in
many
countries of the world, notwithstanding that COMPANY does not have a physical
location in all these places. In the event that the EXECUTIVE undertakes
any
such activities without written permission from COMPANY, then in addition
to any
other remedy the COMPANY may otherwise have, COMPANY'S obligation to pay
EXECUTIVE severance compensation under this Agreement shall cease. For purposes
of interpreting the restrictive covenants set forth in this Section 7(b),
all
references to the COMPANY shall be deemed to include ETRIALS and any other
subsidiary of the COMPANY or ETRIALS.
(c) CONFLICTS
OF INTEREST. During
his employment, the EXECUTIVE agrees not to acquire, assume or participate
in,
directly or indirectly, any position or interest known by him to be adverse
or
antagonistic to the COMPANY, its business or prospects. If, after
a
position or interest is acquired or assumed or after
participation
therein commences, such position or interest becomes adverse or antagonistic
to
the COMPANY, the EXECUTIVE shall use reasonable commercial efforts to terminate
or dispose of such position or interest as promptly as practicable.
(d) NON-INTERFERENCE.
While
employed by the COMPANY, and for a period of twelve (12) months immediately
following the later of (i) the termination of his employment under this
Agreement, and (ii) if this Agreement is terminated by the COMPANY for Cause,
the expiration of the then-current term of this Agreement, the EXECUTIVE
will
not interfere with the business of the COMPANY by:
12
(i)
Soliciting,
attempting to solicit, inducing or otherwise causing any employee of the
COMPANY
to terminate his or her employment and accept employment ; or
(ii) Directly
or indirectly soliciting the business of any customer or prospective customer
of
the COMPANY which at the time of termination or one (1) year prior thereto
was
listed on the COMPANY'S customer list or records, which solicitation, if
successful, would result in the loss of business or potential business for
the
COMPANY so long as the potential business is within the COMPANY'S business
or is
a logical extension of such business as it exists at the time of the EXECUTIVE'S
termination.
In
the
event that the EXECUTIVE undertakes any such activities without written
permission from COMPANY, then in addition to any other remedy the COMPANY
may
otherwise have, COMPANY'S obligation to pay EXECUTIVE severance compensation
under this Agreement shall cease. For purposes of interpreting the restrictive
covenants set forth in this Section 7(d), all references to the COMPANY shall
be
deemed to include ETRIALS and any other subsidiary of the COMPANY or
ETRIALS.
(e) RETURN
OF MATERIALS. Upon
termination of his employment with the COMPANY, the EXECUTIVE shall promptly
deliver to the COMPANY all memoranda, notes, records, reports, manuals,
drawings, blueprints and other documents (and all copies thereof) relating
to
the business of the COMPANY and all property associated therewith, which
he may
then possess or have under his control; provided, however, that the EXECUTIVE
shall be entitled to retain copies of such documents reasonably necessary
to
document his financial
relationship
with the COMPANY.
(f) SPECIFIC
ENFORCEMENT. The
EXECUTIVE acknowledges that a remedy at law for any breach or threatened
breach
by him of the provisions of this Section 7 would be inadequate to protect
the
COMPANY against the consequences of such breach, and he therefore agrees
that
(i) the COMPANY shall be entitled to injunctive relief in case of any such
breach or threatened breach without posting any bond and (ii) the EXECUTIVE
shall account for and pay over to the COMPANY all monetary damages suffered
by
the COMPANY as established in a proper tribunal as the result of any
transactions constituting a breach of any of the provisions of this Section
7.
Nothing in this provision shall be construed to prevent the EXECUTIVE from
continuing to use the knowledge and information that he possessed prior to
commencing employment with the COMPANY or ETRIALS, or any non-Confidential
Information
he acquired during his employment, in any lawful manner following termination
of
his employment hereunder.
8. CHANGE
IN CONTROL.
The
term
"Change in Control" as used in the Agreement shall mean the first
to
occur,
after
the
Closing Date, of any of the following:
(a) The
effective date or date of consummation of any transaction or series of
transactions (other than a transaction to which only the COMPANY and one
or more
of its subsidiaries are parties) pursuant to which the COMPANY:
(i)
Becomes
a
subsidiary of another corporation;
13
(ii)
Is
merged
or consolidated with or into another corporation;
(iii)
Engages
in an exchange of shares with another corporation; or
Transfers,
sells or otherwise disposes of all or substantially all of its assets to
a
single purchaser (other than the EXECUTIVE) or a group of purchasers (none
of
whom is the EXECUTIVE); provided, however, that this Subsection (a) shall
not be
applicable to a transaction or series of transactions in which a majority
of the
capital stock of the other corporation, following such transaction or series
of
transactions, is owned or controlled by the holders of a majority of the
COMPANY'S outstanding capital stock immediately before such sale, transfer
or
disposition; or
(b) The
date
upon which any person (other than the EXECUTIVE), group of associated persons
acting in concert (none of whom is the EXECUTIVE) or corporation becomes
a
direct or indirect beneficial owner of shares of stock of the COMPANY
representing an aggregate of more than fifty percent (50%) of the votes then
entitled to be cast at an election of directors of the COMPANY; provided,
however, that this paragraph (b) shall not be applicable to a transaction
or
series of transactions in which the entity acquiring such ownership in excess
of
fifty percent (50%) is a person or entity who is eligible, pursuant to Rule
13d-1(b) under the Securities Exchange Act of 1934, as amended, to file a
statement on Schedule 13G with respect to its beneficial ownership of the
COMPANY'S capital stock, whether or not such person or entity shall have
filed a
Schedule 13G (unless such person or entity shall have filed a Schedule 13D
with
respect to beneficial ownership of fifteen percent (15%) or more of the
COMPANY'S capital stock); and provided, further, that the acquisition of
shares
in a bona fide public offering or private placement of securities by an investor
who is acquiring such shares for passive investment purposes only shall not
constitute a "Change in Control;" or
(c) The
date
upon which the persons who were members of the Board of Directors of the
COMPANY
immediately after the Closing (the "Current Directors") cease to constitute
a
majority of the Board of Directors; provided, however, that any new director
whose nomination or selection has been approved by the affirmative vote of
at
least a majority of the Current Directors then in office shall also be deemed
a
Current Director.
9. NOTICES. For
purposes of this Agreement, notices and other communications provided for
in the
Agreement shall be in writing (whether or not specifically required elsewhere
in
this Agreement to be in writing) and shall be deemed to have been duly given
when delivered or mailed by United States Registered or Certified Mail, return
receipt requested, postage prepaid, addressed as follows:
If
to the
EXECUTIVE: at the address on the signature page If to the COMPANY: etrials
Worldwide, Inc.
Attn:
Chief Financial Officer
0000
Xxxxxx Xxxxxx Xxxxxxx Xxxxxxxxxxx, X.X. 00000
14
or
at
such other address as any party may have furnished to the other in writing
subsequent to the execution of this Agreement.
10. APPLICABLE
LAW. This
Agreement is covered by the laws of the State of North Carolina.
11. SEVERABILITY
AND SECTION 7 SURVIVAL. The
provisions of Section 7 of this Agreement shall survive any termination or
expiration of this Agreement whether by the EXECUTIVE for Good Reason or
without
Good Reason or by the COMPANY for Cause or without Cause or otherwise. If
the
geographic scope of Section 7(b) is determined to be too broad, the geographic
scope shall be modified to be the smaller of (i) the United States, or (ii)
such
other geographic location as the court deems reasonable. If any provision
of
this Agreement is determined to be invalid or is in any way modified by any
governmental agency, tribunal or court of competent jurisdiction, such
determination shall be considered as relating only to a separate, distinct,
and
independent part of this Agreement and shall not affect the validity or
enforceability of any of the remaining provisions of this
Agreement.
12. SUCCESSOR
RIGHTS AND ASSIGNMENT. This
Agreement shall bind, inure to the benefit of and be enforceable by the
EXECUTIVE's personal or legal representatives, executors, administrators,
successors, heirs, distributees, and legatees. The rights and obligations
of the
COMPANY (including, without limitation, Section 7) under this Agreement may
be
assigned by the COMPANY, in which event it shall be binding upon, and inure
to
the benefit of, the person(s) or entity to whom it is assigned. The EXECUTIVE
may not assign his duties hereunder and he may not assign any of his rights
hereunder without the written consent of the COMPANY.
13. REPRESENTATIONS
OF THE EXECUTIVE. The
EXECUTIVE represents and warrants that his entry into and the performance
of the
duties and obligations called for herein do not breach or otherwise violate
any
legal obligation of the EXECUTIVE, whether common law, statutory or
contractual.
14. DISPUTES. Any
disputes related to this Agreement shall be resolved by binding arbitration to
be held in Raleigh, North Carolina under the rules of the American Arbitration
Association that pertain to commercial disputes, provided, however, that
nothing
herein shall prevent the COMPANY from seeking and obtaining remedies in the
courts for, or to prevent, any violation of Section 7 by the EXECUTIVE. The
decision of the arbitrators shall be final and binding and non-appealable.
If
Executive is the prevailing party in any legal action or arbitration related
to
this Agreement or his employment hereunder, he shall be entitled recover,
in
addition to attorneys’ fees and costs, pre-judgment and post-judgment interest
on the damages at prevailing market rates.
15. ENTIRE
AGREEMENT, AMENDMENTS; WAIVERS.
This
Agreement contains the entire agreement of the parties concerning the
EXECUTIVE'S employment and all promises, representation, understandings,
arrangements and prior agreements on such subject are merged herein and
superseded hereby. The provisions of this Agreement may not be amended,
15
modified,
repealed, waived, extended or discharged except by an agreement in writing
signed by the party against whom enforcement of any amendment, modification,
repeal, waiver, extension or discharge is sought. In the event of a conflict
between the terms of Section 6 of this Agreement only and the terms of any
stock
option agreement or plan relating to the vesting or exercise of options,
the
terms of Section 6 of this Agreement shall supercede and control over such
inconsistent provision. No person acting other than pursuant to a resolution
of
the Board of Directors of the COMPANY shall have authority on behalf of the
COMPANY to agree to, amend modify, repeal, waive, extend or discharge any
provision of this Agreement or anything in reference thereto or to exercise
any
of the COMPANY'S rights to terminate or fail to extend this Agreement.
Notwithstanding the foregoing, the approval by the EXECUTIVE shall not be
necessary for any amendment or waiver of any provision which upon advice
of
legal counsel is inconsistent with any existing or future law, rule or
regulation, including those of stock exchanges and other quotation services
on
which the COMPANY'S stock is traded, quoted or listed.
[Signatures
on following page.]
16
IN
WITNESS WHEREOF, the EXECUTIVE and the COMPANY have signed this Agreement
on the
dates indicated below.
Dated:
May 18,
2007
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EXECUTIVE:
/s/Xxxxxx
Xxxxxxxx
Xxxxxx
Xxxxxxxx
Address:
______________________
______________________
|
Dated:
May 18, 2007
|
ETRIALS
WORLDWIDE, INC.
By:
/s/ Xxxxx X. Xxxxx, Xx.
Xxxxx
X. Xxxxx, Xx.
Chief
Financial Officer
|
17
