EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 2nd
day of November, 2004, between SFBC International, Inc., a Delaware corporation
(the "Company") and Xxxxxxx X. XxXxxxxx (the "Executive").
WHEREAS, PharmaNet, Inc. ("PharmaNet") shall be a wholly-owned subsidiary
of the Company upon consummation of the merger (the "Merger") contemplated by
that certain Agreement and Plan of Merger among the Company, SFBC Sub 2004, Inc.
and PharmaNet, dated of even date herewith (the "Merger Agreement"); and
WHEREAS, in its business, PharmaNet has acquired and developed certain
trade secrets, including but not limited to proprietary processes, sales methods
and techniques, and other like confidential business and technical information,
including, but not limited to, technical information, design systems,
proprietary assays, pricing methods, pricing rates or discounts, process,
procedure, formula, design of computer software or improvement of any portion or
phase thereof, whether patented or not, that is of any value whatsoever to
PharmaNet, as well as certain unpatented information relating to the Services
(as defined below) information concerning proposed new services, market
feasibility studies, proposed or existing marketing techniques or plans (whether
developed or produced by PharmaNet or by any other entity for PharmaNet), other
Confidential Information (as defined below) and information about PharmaNet's
employees, officers, and directors, which necessarily will be communicated to
the Executive by reason of his employment with PharmaNet; and
WHEREAS, PharmaNet has strong and legitimate business interests in
preserving and protecting its investment in the Executive, its trade secrets and
Confidential Information, and its substantial relationships with suppliers, and
Clients (as defined below), actual and prospective; and
WHEREAS, the Company desires to preserve and protect its legitimate
business interests further by restricting competitive activities of the
Executive during the term of employment and following (for a reasonable time)
termination of employment; and
WHEREAS, the Company desires to employ the Executive and to ensure the
continued availability to PharmaNet of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth in this Agreement, and intending to be legally bound, the Company and
the Executive agree as follows:
1. REPRESENTATIONS AND WARRANTIES. The Executive hereby represents and
warrants to the Company that he (a) is not subject to any written
nonsolicitation or noncompetition agreement affecting his employment with the
Company (other than any prior agreement with PharmaNet or any Affiliate (as
defined below)), (b) is not subject to any written confidentiality or
nonuse/nondisclosure agreement affecting his employment with the Company (other
than any prior agreement with PharmaNet or any Affiliate), and (c) has not
brought to the Company any trade secrets, confidential business information,
documents, or other personal property of a prior employer.
2. TERM OF EMPLOYMENT.
(a) Term. Subject to Section 6 hereof, the Company hereby employs the
Executive, and the Executive hereby accepts employment with the Company, for a
period commencing on the Effective Date (as defined below) and ending three (3)
years from the Effective Date (the "Employment Term"). For the purposes of this
Agreement, the "Effective Date" shall be the effective date of the of the
Merger.
(b) Continuing Effect. Notwithstanding any termination of employment, at
the end of the Employment Term or otherwise, the provisions of Sections 7 and 8
shall remain in full force and effect and the provisions of Section 8 shall be
binding upon the legal representatives, successors and assigns of the Executive.
3. DUTIES.
(a) General Duties. The Executive shall serve as President and Chief
Executive Officer of PharmaNet, Inc. and PharmaNet, LLC, with duties and
responsibilities that are customary for such position. The Executive shall
report directly to Xxxxxx Xxxxxxx, the Chief Executive Officer of the Company,
or his successor (the "Company CEO"). The Executive shall use his best efforts
to perform his duties and discharge his responsibilities pursuant to this
Agreement competently, carefully and faithfully. Additionally, in the event
that, and so long as, the Executive is (or is acting as) either the Chief
Executive Officer, Chief Financial Officer or one of the Chief Clinical
Directors (i.e., in charge of clinical operations) of PharmaNet, the Executive
shall be required to execute and deliver to the Company, on a timely basis, the
quarterly sub-certifications provided by the Company to similarly situated
officers of its other subsidiaries in order to permit the Company to comply with
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002.
(b) Devotion of Time. The Executive shall devote the amount of time
and attention to the business and affairs of PharmaNet that are reasonably
necessary to competently perform his duties. The Executive shall not enter the
employ of or serve as a consultant to, or in any way perform any services with
or without compensation to, any other persons, business or organization without
the prior consent of the board of directors of the Parent. Notwithstanding the
foregoing, the Executive shall be permitted, subject to the first sentence of
this Section 3(b) and Sections 7, 8, 9 and 10 hereof, to (i) serve on corporate,
advisory, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, (iii) manage
personal investments and (iv) engage in any business or employment activity that
Executive is engaged in as of the date of this Agreement.
(c) Location of Office. The Executive's principal business office
shall be at PharmaNet's current headquarters in West Windsor, New Jersey, as it
may be changed from time to time by the senior management of PharmaNet;
provided, however, that the Executive's job responsibilities shall include all
business travel reasonably necessary to the performance of his job as set forth
in this Section 3. The Executive hereby acknowledges that his services shall be
supervised by the Company CEO, who performs his duties under the direction of
the Board of Directors of the Company (the "Board of Directors") at the
Company's headquarters in Miami-Dade County, Florida and, as such, Executive
shall regularly transact business in Miami-Dade County, Florida in furtherance
of his duties.
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(d) Adherence to Inside Information Policies. The Executive
acknowledges that the Company is publicly-held and, as a result, has implemented
inside information policies designed to preclude its employees and those of its
subsidiaries from violating the federal securities laws by trading on material,
non-public information or passing such information on to others in breach of any
duty owed to the Company, PharmaNet, or any third party. The Executive shall
promptly execute any agreements generally distributed by the Company or
PharmaNet to its employees requiring such employees to abide by its inside
information policies.
4. COMPENSATION AND EXPENSES.
(a) Annual Base Salary. For the services of the Executive to be
rendered under this Agreement, during the Employment Term the Company shall pay
the Executive an annual base salary of $475,000. The Annual Base Salary shall be
adjusted annually at the greater of (i) four (4%), (ii) an amount approved by
the Compensation Committee of the Parent's Board of Directors or (iii) the
Consumer Price Index in accordance with the formula attached hereto as Exhibit
A. The Annual Base Salary shall be payable in accordance with the Company's
normal payroll practices.
(b) Annual Cash Bonus. In addition to any other compensation
received pursuant to this Agreement and subject to continued employment at the
end of each calendar year beginning in 2005, the Executive shall receive a bonus
in an amount equal to one and one-half percent (1.5%) of PharmaNet's operating
income (which shall be calculated prior to any deductions for interest and tax
and shall be based on the corporate and financial structure of PharmaNet as of
the Effective Date as if such corporate and financial structure were in place at
the time of such calculation). In no event shall the bonus paid for any given
year exceed one hundred percent (100%) of the Executive's Annual Base Salary.
For the purposes of this Section 4(b), all compensation paid under this
Agreement or otherwise payable to Executive by the Company or any of its
subsidiaries shall be deemed paid by PharmaNet.
(c) Annual Option Grants. The Executive shall receive an annual
grant of options ("Annual Options") to purchase shares of common stock of the
Company (the "Common Stock") in an amount equal to the average of the aggregate
number of shares of Common Stock underlying the options granted by the Company
to Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, M.D., Xx. Xxxxxxx Xxxxxx and Dr. Marc Le Bel
(on the basis that each such individual maintains his or her current level of
employment and responsibility with the Company) (collectively, "Senior
Management") for that calendar year, and on terms equivalent to such options
granted to Senior Management. Options granted pursuant to this Section 4(c)
shall be granted in accordance with the terms and conditions of the Company's
standard form of option agreement and applicable option plan.
(d) Expenses. In addition to any compensation received pursuant to
this Section 4, the Company shall reimburse or advance funds to the Executive
for all first class travel, entertainment, professional dues and miscellaneous
expenses incurred in connection with the performance of his duties under this
Agreement, subject to receipt by the Company of evidence of such expenses.
5. BENEFITS.
(a) Vacation. During each year of employment, the Executive shall be
entitled to twenty (20) business days of vacation without loss of compensation
or other benefits to which he is
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entitled under this Agreement, such vacation to be taken at such times as the
Executive may select and the affairs of the PharmaNet may permit.
(b) Employee Benefit Programs. The Executive is entitled to
participate in any pension, 401(k), medical insurance, disability insurance,
life insurance or other employee benefit plan that is maintained by the Company
or PharmaNet for its senior management, including reimbursement of membership
fees in professional organizations, subject to the eligibility requirements of
these specific plans.
(c) Insurance. Either the Company or PharmaNet shall pay the cost of
all insurance premiums in connection with the insurance or benefit programs
referred to in Section 5(b) in which the Executive chooses to participate,
except to the extent any benefit program is funded by deferrals from the
Executive's compensation.
(d) Death Benefit. In the event of the Executive's death prior to
the end of the Employment Term, the Executive's estate or his designated
beneficiary shall be entitled to receive the Executive's Annual Base Salary for
the balance of the Employment Term, such balance to paid in the ordinary course.
Upon the Executive's death, any restrictions imposed by the Company on
securities of the Company or an Affiliate of the Company held by the Executive
(or for the benefit of the Executive) shall be removed, except any applicable
federal and/or state securities laws.
(e) Transportation Benefit. The Executive shall be entitled to the
full use of a luxury motor vehicle of the Executive's choosing, with all costs
for such motor vehicle, including the cost of the motor vehicle, fuel costs,
insurance costs and maintenance costs, to be paid by PharmaNet or the Company;
provided that such benefit is provided in a manner whereby the Executive does
not incur any income tax liability.
(f) Membership Benefit. The Company or PharmaNet shall maintain
PharmaNet's membership at Tournament Players Club at Xxxxx Xxxxxx in Princeton,
New Jersey.
(g) Financial Planning Services. The Company or PharmaNet shall pay
the cost of financial planning services for the Executive in an amount up to
$3,000 per quarter.
6. TERMINATION.
(a) General Provisions. Either the Company or the Executive, in his or
its sole discretion, may terminate the Executive's employment without cause at
any time upon ninety (90) days written notice. Upon the effective date of any
termination, whether with or without cause (the "Effective Date of
Termination"), the Executive shall have no right to compensation or
reimbursement under Section 4 (except for compensation earned or reimbursable
expenses incurred prior to the Effective Date of Termination) or to participate
in any employee benefit programs under Section 5 for any period subsequent to
the effective date of termination, except as provided for by law. On or before
the Effective Date of Termination or prior to receiving any final compensation
or expenses due him, the Executive shall (a) return to PharmaNet's headquarters,
(b) participate in an exit interview, and (c) execute a Certificate of
Conclusion of Employment, certifying that he has complied with his obligations
and acknowledging his continuing obligations under this Agreement. The
Executive's failure to comply with the requirements of this Section 6 shall
constitute a material breach of this Agreement. If the Executive's employment is
terminated by the Company for any reason other than
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Cause (as defined below), he shall be entitled to ninety (90) days severance pay
from the Effective Date of Termination.
(b) Termination for Cause. The Company may terminate the Executive's
employment pursuant to the terms of this Agreement at any time for Cause (as
defined below) by giving written notice of termination. The Executive shall have
ten (10) days from the date of the notice to provide the Company CEO with
evidence that the Company is mistaken as to Cause and that the Executive's
behavior does not meet the criteria for Cause. During such ten (10) day period,
the Executive shall be suspended without pay; provided, however, that if
employment is reinstated then the Executive shall be paid for such ten (10) day
period or if the termination is upheld, the Effective Date of Termination shall
de deemed to be the date of receipt by the Executive of the written notice of
termination. Upon any such termination for Cause, the Executive shall have no
right to compensation or reimbursement under Section 4 (except for compensation
earned or reimbursable expenses incurred through the Effective Date of
Termination), or to participate in any employee benefit programs under Section 5
for any period subsequent to the Effective Date of Termination, except as
provided by law. For purposes of this Section 6(b), "Cause" shall mean that the
Executive has: (i) been convicted of a felony involving any subject matter; (ii)
been charged with a felony relating to the business of PharmaNet or any
Affiliate; (iii) been convicted of a misdemeanor directly involving the
Executive's employment that directly affects the business of PharmaNet; (iv)
been found after an internal investigation to have engaged in sexual misconduct
which is related to the Executive's employment or the business of PharmaNet
and/or violated the Company's sexual harassment policy; (v) in carrying out his
duties hereunder, acted with gross negligence or intentional misconduct
resulting, in either case, in harm to PharmaNet; (vi) misappropriated PharmaNet
funds or otherwise defrauds PharmaNet; (vii) breached his fiduciary duty to
PharmaNet resulting in profit to him, directly or indirectly; (viii) been found
to have committed any act or failed to take any action which results in the
Common Stock being delisted for trading on its principal trading market or
exchange; (ix) been convicted of illegal possession or illegal use of a
controlled substance; (x) engaged in chronic drinking or the illegal use of
illegal drugs, chemicals or controlled substances or the abuse of otherwise
legal drugs or chemicals or controlled substances that affects the performance
of his duties as reasonably determined by the Company; (xi) failed or refused to
cooperate in any official investigation conducted by or on behalf of PharmaNet;
(xii) materially breached any provision of this Agreement, including Section
3(d), after notice and a reasonable opportunity to cure such behavior (if the
behavior is of the nature that it can be cured); (xiii) intentionally or
willfully failed to comply with the reasonable directives of the Board of
Directors; (xiv) committed an act or omission constituting gross negligence or
willful misconduct which causes, at least in part, the Parent to restate its
financial statements for a completed fiscal period after having filed such
financial statements with the Securities and Exchange Commission; or (xv) been
found by a court, the Securities and Exchange Commission or any state
governmental authority which regulates or enforces such state's securities laws,
in a final determination, to have violated any applicable securities laws,
whether such finding was after a hearing or trial or on consent without
admitting or denying any allegations of wrongdoing.
7. NON-COMPETITION AGREEMENT.
(a) Competition with PharmaNet. Until termination of his employment
and for a period of two (2) years after the Effective Date of Termination, the
Executive, directly or indirectly or, in association with or as a stockholder,
director, officer, consultant, employee, partner, joint venturer, member or
otherwise of or through any person, firm, corporation, partnership, association
or other
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entity (any of the foregoing, an "Affiliated Entity") shall not act as an
executive officer or provide Services to any entity which competes with
PharmaNet or its Affiliates, within any metropolitan area in the United States
or elsewhere in which PharmaNet or its subsidiaries or the Company or any of its
other subsidiaries (collectively, the "Affiliates"), if applicable, is then
engaged in the offer and sale of competitive Services; provided, however, that
the foregoing provisions shall not prevent the Executive from accepting
employment with an enterprise engaged in two or more lines of business, one of
which is the same or similar to PharmaNet's business (the "Prohibited Business")
if the Executive's employment is totally unrelated to the Prohibited Business;
provided, further, the foregoing shall not prohibit Executive from owning up to
five percent (5%) of the securities of any publicly-traded enterprise that
engages in the Prohibited Business provided the Executive is not an employee,
director, officer, consultant to such enterprise or otherwise reimbursed for
services rendered to such enterprise. In addition, the Executive may not,
directly or indirectly, including through any Affiliated Entity, obtain
employment with or perform services for any Client (as defined below) of the
Company during the period commencing on the Effective Date of Termination and
continuing for twelve (12) months thereafter.
(b) Solicitation of Clients. During the periods in which the
provisions of Section 7(a) shall be in effect, the Executive, directly or
indirectly, including through any Affiliated Entity, shall not seek Prohibited
Business from any Client on behalf of any enterprise or business other than
PharmaNet, refer Prohibited Business generated from any Client to any enterprise
or business other than PharmaNet or receive commissions based on sales or
otherwise relating to the Prohibited Business from any Client, enterprise or
business other than PharmaNet. For purposes of this Agreement, the term "Client"
means any person, firm, corporation, limited liability company, partnership,
association or other entity (i) to which PharmaNet sold or provided Services in
excess of $100,000 during the 24-month period prior to the time at which any
determination is required to be made as to whether any such person, firm,
corporation, partnership, association or other entity is a Client, or (ii) who
or which has been approached by an employee of PharmaNet for the purpose of
soliciting business for PharmaNet and which business was reasonably expected to
generate revenue in excess of $100,000.
(c) Solicitation of Employees. During the periods in which the
provisions of Section 7(a) shall be in effect, the Executive, directly or
indirectly, including through any Affiliated Entity, shall not solicit, hire or
contact any employee of PharmaNet for the purpose of hiring them or causing them
to terminate their employment relationship with PharmaNet.
(d) No Payment. The Executive acknowledges and agrees that no
separate or additional payment will be required to be made to him in
consideration of his undertakings in this Section 7; provided, however, that at
the Company's option, after the Effective Date of Termination the Company may
engage Executive as a consultant at an annual consulting fee of $50,000 (which
shall entitle the Company to receive no more than twenty (20) hours per month in
consulting services from the Executive) and provide Executive with office space
and secretarial services at the Company (or any subsidiary) office location of
the Executive's choosing during such time that Executive is a consultant of the
Company; provided, further, however, that nothing in this Section 7(d) shall be
interpreted as to require the Executive to accept any such consulting position
with the Company.
(e) References. References to PharmaNet in this Section 7 shall
include PharmaNet's Affiliates.
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8. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Confidential Information. "Confidential Information" includes,
but is not limited to, trade secrets (as defined by the common law and statute
in Florida or New Jersey or any future Florida or New Jersey statute),
processes, policies, procedures, techniques (including recruiting techniques),
designs, drawings, know-how, show-how, technical information, specifications,
computer software and source code, information and data relating to the
development, research, testing, costs, marketing and uses of the Services,
PharmaNet's budgets and strategic plans, and the identity and special needs of
Clients, databases, data, all technology relating to PharmaNet's businesses,
systems, methods of operation, Client lists, Client information, solicitation
leads, marketing and advertising materials, methods and manuals and forms, all
of which pertain to the activities or operations of PharmaNet, names, home
addresses and all telephone numbers and e-mail addresses of PharmaNet's
employees, former employees, clients and former clients. In addition,
Confidential Information also includes the identity of Clients and the identity
of and telephone numbers, e-mail addresses and other addresses of employees or
agents of Clients who are the persons with whom PharmaNet's employees and agents
communicate in the ordinary course of business. For purposes of this Agreement,
the following will not constitute Confidential Information: (i) information
which is or subsequently becomes generally available to the public through no
act of the Executive, (ii) information set forth in the written records of the
Executive prior to disclosure to the Executive by or on behalf of PharmaNet, and
(iii) information which is lawfully obtained by the Executive in writing from a
third party (excluding any Affiliates of the Company) who did not acquire such
confidential information or trade secret, directly or indirectly, from the
Executive or PharmaNet. As used herein, the term "Services" shall include the
providing of clinical trials management services and other services engaged in
by PharmaNet during the Employment Term.
(b) Legitimate Business Interests. The Executive recognizes that
PharmaNet has legitimate business interests to protect and, as a consequence,
the Executive agrees to the restrictions contained in this Agreement because
they further PharmaNet's legitimate business interests. These legitimate
business interests include, but are not limited to (i) trade secrets, (ii)
valuable confidential business or professional information that otherwise does
not qualify as trade secrets, including all Confidential Information, (iii)
substantial relationships with specific prospective or existing Clients or
clients, (iv) Client goodwill associated with the PharmaNet's business and (v)
specialized training relating to the Services and PharmaNet's technology,
methods and procedures.
(c) Confidentiality. The Confidential Information shall be held by
the Executive in the strictest confidence and shall not, without the prior
written consent of PharmaNet, be disclosed to any person other than in
connection with the Executive's employment with PharmaNet. The Executive further
acknowledges that such Confidential Information as is acquired and used by
PharmaNet is a special, valuable and unique asset. The Executive shall exercise
all due and diligence precautions to protect the integrity of PharmaNet's
Confidential Information and to keep it confidential whether it is in written
form, on electronic media or oral. The Executive shall not copy any Confidential
Information except to the extent necessary to his employment nor remove any
Confidential Information or copies thereof from PharmaNet's premises except to
the extent necessary to his employment and then only with the authorization of
an officer of PharmaNet. All records, files, materials and other Confidential
Information obtained by the Executive in the course of his employment with
PharmaNet are confidential and proprietary and shall remain the exclusive
property of PharmaNet or its Clients, as the case may be. The Executive shall
not, except in connection with
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and as required by his performance of his duties under this Agreement, for any
reason use for his own benefit or the benefit of any person or entity with which
he may be associated or disclose any such Confidential Information to any
person, firm, corporation, association or other entity for any reason or purpose
whatsoever without the prior written consent of an officer of PharmaNet
(excluding the Executive, if applicable).
(d) References to PharmaNet in this Section 8 shall include
PharmaNet's Affiliates.
9. EQUITABLE RELIEF.
(a) The Company and the Executive recognize that the services to be
rendered under this Agreement by the Executive are special, unique and of
extraordinary character, and that in the event of the breach by the Executive of
the terms and conditions of this Agreement or if the Executive, shall cease to
be an employee of the Company for any reason and take any action in violation of
Section 7 and/or Section 8, the Company shall be entitled to institute and
prosecute proceedings in any court of competent jurisdiction referred to in
Section 9(b) below to enjoin the Executive from breaching the provisions of
Section 7 or Section 8. In such action, the Company shall not be required to
plead or prove irreparable harm or lack of an adequate remedy at law or post a
bond or any security.
(b) Any action must be commenced in Xxxxxx County, New Jersey. The
Executive and the Company irrevocably and unconditionally submit to the
exclusive jurisdiction of such courts and agree to take any and all future
action necessary to submit to the jurisdiction of such courts. The Executive and
the Company irrevocably waive any objection that they now have or hereafter
irrevocably waive any objection that they now have or hereafter may have to the
laying of venue of any suit, action or proceeding brought in any such court and
further irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Final
judgment against the Executive or the Company in any such suit shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment, a
certified or true copy of which shall be conclusive evidence of the fact and the
amount of any liability of the Executive or the Company therein described, or by
appropriate proceedings under any applicable treaty or otherwise.
10. CONFLICTS OF INTEREST. Except as otherwise set forth in Section 7(a),
while employed by the Company, the Executive shall not, directly or indirectly,
unless approved by the Board of Directors:
(a) participate as an individual in any way in the benefits of
transactions with any of Company's suppliers or Clients, including, without
limitation, having a financial interest in the Company's suppliers or Clients,
or making loans to, or receiving loans from, the Company's suppliers or Clients;
(b) realize a personal gain or advantage from a transaction in which
the Company has an interest or use information obtained in connection with the
Executive's employment with the Company for the Executive's personal advantage
or gain; or
(c) accept any offer to serve as an officer, director, partner,
consultant, manager with, or to be employed in a technical capacity by, a person
or entity that does business with the Company.
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As used in Section 10(a), (b) or (c), references to the Company also includes
its Affiliates.
11. INVENTIONS, IDEAS, PROCESSES, AND DESIGNS. All inventions, ideas,
processes, programs, software, and designs (including all improvements) (a)
conceived or made by the Executive during the course of his employment with
PharmaNet (whether or not actually conceived during regular business hours) and
for a period of six (6) months subsequent to the Effective Date of Termination
or expiration of such employment with PharmaNet and (b) related to the business
of PharmaNet, shall be disclosed in writing promptly to PharmaNet and shall be
the sole and exclusive property of PharmaNet. An invention, idea, process,
program, software, or design (including an improvement) shall be deemed related
to the business of PharmaNet if (x) it was made with PharmaNet's equipment,
supplies, facilities, or Confidential Information, (y) results from work
performed by the Executive for PharmaNet, or (z) pertains to the current
business or demonstrably anticipated research or development work of PharmaNet.
The Executive shall cooperate with PharmaNet and its attorneys in the
preparation of patent and copyright applications for such developments and, upon
request, shall promptly assign all such inventions, ideas, processes, and
designs to PharmaNet. The decision to file for patent or copyright protection or
to maintain such development as a trade secret shall be in the sole discretion
of PharmaNet, and the Executive shall be bound by such decision.
12. INDEBTEDNESS. If, during the course of the Executive's employment
under this Agreement, the Executive becomes indebted to PharmaNet for any
reason, the Company may, if it so elects, set off any sum due to PharmaNet from
the Executive and collect any remaining balance from the Executive.
13. PURCHASE OF COMMON STOCK.
(a) In conjunction with the closing of the Merger, the Executive
shall purchase from the Parent the number of shares of Common Stock equal to the
number of shares purchasable at the Closing Price (as defined below) with the
use of fifteen percent (15%) or twenty percent (20%) (at the Executive's sole
discretion) of his net after-tax proceeds received from the consummation of the
Merger (the "Restricted Shares"). The purchase price per share shall be 85% of
the closing price of the Common Stock on The NASDAQ Stock Market on the last
trading day before the closing of the Merger (the "Closing Price"). The
Executive shall execute a customary investment letter in connection with such
purchase and the Restricted Shares shall only be restricted pursuant to the
requirements of the Securities Act of 1933, as amended.
(b) For each Restricted Share purchased by the Executive pursuant to
Section 13(a), the Executive shall be granted an option to purchase one (1)
share (in the event the Executive chooses to reinvest fifteen percent (15%)
pursuant to Section 13(a)) or one and one-half (1.5) shares (in the event the
Executive chooses to reinvest twenty percent (20%) pursuant to Section 13(a)) of
Common Stock with an exercise price equal to the Closing Price. Options granted
pursuant to this Section 13(b) shall be granted in accordance with the terms and
conditions of the Parent's standard form of option agreement and applicable
option plan and vest ratably over a three-year period, each June 30th and
December 31st, commencing on June 30, 2005, subject to the continued employment
of Executive with PharmaNet, Company or any of Company's subsidiaries.
(c) At the Effective Date, the Executive shall be granted an option
to purchase 135,000 shares of Common Stock with an exercise price equal to 110%
of the Closing Price. The
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option granted pursuant to this Section 13(c) shall vest immediately and shall
otherwise be granted in accordance with the terms and conditions of the
Company's standard form of option agreement and applicable option plan.
14. BOARD OF DIRECTORS. As promptly as practicable after the Effective
Date, but in no event later than the next annual meeting of the Company's
stockholders after the Effective Date, the Company shall take all required
actions to have the Executive appointed to the Board of Directors. The Company
hereby agrees that it shall take all commercially reasonable actions (a) to
nominate the Executive for election to the Board of Directors at the Company's
first meeting of stockholders after the Effective Date (which in no event shall
be later than the first annual meeting of stockholders after the Effective Date)
and (b) have the Executive elected by the Company's stockholders to the Board of
Directors. From the Effective Date until the Executive becomes a member of the
Board of Directors, Executive shall have the right to receive notice of and
observe and participate in all meetings of the Board of Directors and, in this
respect, the Company shall give the Executive copies of all notices, minutes,
consents and other materials that it provides to the members of the Board of
Directors.
13. ASSIGNABILITY. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the securities (via merger or otherwise) or assets and
business of the Company. The Executive's obligations hereunder may not be
assigned or alienated and any attempt to do so by the Executive will be void.
14. SEVERABILITY.
(a) The Executive expressly agrees that the character, duration and
geographical scope of the non-competition provisions set forth in this Agreement
are reasonable in light of the circumstances as they exist on the date hereof.
Should a decision, however, be made at a later date by a court of competent
jurisdiction that the character, duration or geographical scope of such
provisions is unreasonable, then it is the intention and the agreement of the
Executive and the Company that this Agreement shall be construed by the court in
such a manner as to impose only those restrictions on the Executive's conduct
that are reasonable in the light of the circumstances and as are necessary to
assure to the Company the benefits of this Agreement. If, in any judicial
proceeding, a court shall refuse to enforce all of the separate covenants deemed
included herein because taken together they are more extensive than necessary to
assure to the Company the intended benefits of this Agreement, it is expressly
understood and agreed by the parties hereto that the provisions of this
Agreement that, if eliminated, would permit the remaining separate provisions to
be enforced in such proceeding shall be deemed eliminated, for the purposes of
such proceeding, from this Agreement.
(b) If any provision of this Agreement otherwise is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from
either of the parties to the other. The remaining provisions of this Agreement
shall be valid and binding and of like effect as though such provision were not
included and the invalid or unenforceable provision shall be substituted with a
provision which most closely approximates the intent and the economic effect of
the invalid or unenforceable provision and which would be enforceable to the
maximum extent permitted in such jurisdiction or in such case.
10
15. NOTICES AND ADDRESSES. All notices, offers, acceptance and any other
acts under this Agreement (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressees in person, by Federal Express
or similar overnight delivery, or by facsimile delivery followed by Federal
Express or similar next business day delivery, as follows:
To the Company: SFBC International, Inc.
00000 Xxxxxxxx Xxxx.
Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxxxx
With a Copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxx, P.A.
0000 Xxxx Xxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Facsimile (000) 000-0000
To the Executive: Xx. Xxxxxxx X. XxXxxxxx
c/o PharmaNet, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Facsimile (000) 000-0000
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be evidence of successful facsimile delivery. Time shall
be counted to, or from, as the case may be, the delivery in person or by
mailing.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
17. ATTORNEY'S FEES. In the event that there is any controversy or claim
arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof, and any action or proceeding is commenced to enforce the
provisions of this Agreement, each party shall be responsible for its own
attorney's fee, costs and expenses.
18. GOVERNING LAW. This Agreement and any dispute, disagreement, or issue
of construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided therein or performance shall
be governed or interpreted according to the internal laws of the State of New
Jersey without regard to choice of law considerations.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived,
11
discharged or terminated orally, except by a statement in writing signed by the
party or parties against which enforcement or the change, waiver discharge or
termination is sought.
20. ADDITIONAL DOCUMENTS. The parties hereto shall execute such additional
instruments as may be reasonably required by their counsel in order to carry out
the purpose and intent of this Agreement and to fulfill the obligations of the
parties hereunder.
21. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
23. CLOSING CONDITION. This Agreement is subject to the consummation of
the Merger. If the Merger does not close, this Agreement shall be null and void.
[Remainder of Page Intentionally Left Blank]
12
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
SFBC INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx,
Chief Executive Officer
EXECUTIVE:
By: /s/ Xxxxxxx X. XxXxxxxx
------------------------------
Xxxxxxx X. XxXxxxxx
EXHIBIT A
Consumer Price Index Formula
Commencing with the one (1) year anniversary of the commencement of the
term and the beginning of each year thereafter during the term of this
Agreement, the Executive's annual salary shall be adjusted in accordance with
the Consumer Price Index, all Urban Consumers issued by the Bureau of Labor
Statistics of the U.S. Department of Labor using the years 1982-84 as a base of
100 (the "Index"). At the commencement of the second year, and of each year
thereafter, the Executive's adjusted Annual Base Salary shall be multiplied each
year by a fraction, the numerator of which shall be the published Index number
for the month preceding the commencement of the new year (i.e., December 2005)
and the denominator of which shall be the published Index number for the
preceding month of the preceding year (i.e., November 2004). The resulting
increase to the Executive's Annual Base Salary shall be added to the prior
year's Annual Base Salary and become a part thereof for the current year. In the
event that the Index herein referred to ceases to be published during the term
of this Agreement, or if a substantial change is made in the method of
establishing such Index, then the determination of the adjustment in the
Executive's compensation shall be made with the use of such conversion factor,
formula or table as may be published by the Bureau of Labor Statistics, or if
none is available, the parties shall accept comparable statistics on the cost of
living in the United States as shall then be computed and published by an agency
of the United States, or if not so computed or published, by a respected
financial periodical selected by the Company.
