EMPLOYMENT AGREEMENT
AGREEMENT made this 10th day of July 1996 between SCIENCE MANAGEMENT
CORPORATION, a Delaware corporation having its principal offices at 000 Xxxxx
000-000, Xxxxxxxxxxx, Xxxxxx of Xxxxxxxx, Xxx Xxxxxx 00000 (hereinafter called
the "Corporation"), and XXXXX X. XXXXXXXX, XX., c/o SCIENCE MANAGEMENT
CORPORATION, 000 Xxxxx 000-000, Xxxxxxxxxxx, Xxxxxx of Xxxxxxxx, Xxx Xxxxxx
00000 (hereinafter called "Skidmore").
1. Employment and Terms
(a) Employment. The Corporation hereby employs Skidmore, and Skidmore
hereby accepts employment by the Corporation upon the terms and conditions
set forth in this Agreement.
(b) Term. The terms of employment hereunder is for a three (3) year
period from the effective date of the Corporation's confirmed Plan of
Reorganization, renewable by mutual agreement of both parties, and could
end earlier on the following dates:
(1) the date of termination of Xxxxxxxx'x employment in
accordance with Paragraph 4 hereof;
(2) the date which is six (6) months after Xxxxxxxx'x continuous
absence from active employment by the Corporation by reason
of his "total disability", as that term is defined in the
Corporation's long-term disability plan for all full-time
employees; or
(3) the date of Xxxxxxxx'x death.
2. Conditions of Employment
During the term of employment set forth in Paragraph 1(b) hereof, the
conditions of Xxxxxxxx'x employment by the Corporation shall be as set forth
hereinbelow.
(a) Duties. Skidmore shall be employed as President and Chief
Executive Officer of the Corporation, as well as in any additional
executive position of the Corporation and shall serve at the pleasure of
the Board of Directors. Subject to his election by the stockholders each
year, he shall be a member of the Board of Directors but in such event
shall not participate in any action of the Board which directly affects
Xxxxxxxx'x employment by the Corporation. In addition and at the pleasure
of the Board of Directors, he shall serve as Chairman of the Board of
Directors and Chairman of the Executive Committee of the Board of
Directors.
(b) Extent of Services. This Agreement shall not be construed as
preventing Xxxxxxxx'x investment of his personal assets in businesses which
do not compete with the Corporation, so long as such investments do not
require any services on the part of Skidmore in the operation of the
affairs of the companies in which such investments are made. Nor shall this
Agreement prevent Xxxxxxxx'x purchasing securities in any corporation whose
securities are regularly traded, provided that such purchases do not result
in his owning beneficially, individually or by the rules of attribution
provided for in the Internal Revenue Code, at any one time, one percent
(1%) or more of the equity securities of any corporation engaged in a
business competitive to that of the Corporation.
Skidmore shall be entitled to serve as a member of the board of
directors of one (1) or more companies engaged in businesses which do not
compete with the Corporation, so long as such membership activities do not
prevent Skidmore from fulfilling his duties and obligations as an executive
officer of the Corporation and with notice to the Board of Directors.
(c) Restrictive Covenants. The terms and conditions of a restrictive
and non-competitive agreement between the Corporation and Skidmore --
entitled "Employment Agreement", dated September 29, 1972 and a copy of
which is appended hereto as Attachment A -- are hereby incorporated into
this Agreement. Such terms of said "Employment Agreement" shall survive
termination of employment hereunder, in accordance with its terms.
Notwithstanding any provision of said "Employment Agreement" to the
contrary, Skidmore shall not, for a period of two years after termination
of his employment with the Corporation, solicit any clients or customers of
the Corporation or its subsidiaries.
3. Compensation
During the term of employment hereunder and in accordance with Paragraph 5
hereof, Skidmore shall receive, for all services rendered to the Corporation,
the following compensation:
(a) Salary. While Skidmore is an active employee -- and during the
first six (6) months of his absence from active employ by reason of "total
disability" (as defined herein), although offset by disability payments to
Skidmore from all sources -- the Corporation shall pay Skidmore a salary of
not less than $200,000 per annum. Such salary shall be subject to annual
review by the Board of Directors, to consider such increases, if any, as it
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may determine in its sole discretion. It shall be the responsibility of the
Secretary of the Corporation on or about October 1 of each year during
which this Agreement is in effect to notify the members of the Compensation
Committee of the Board of Directors of the forthcoming January 1 date for
the purposes of considering a salary increase for Skidmore; provided,
however, that nothing hereinabove shall preclude Xxxxxxxx'x participation
in any across-the-board salary increases to all employees when approved by
the Board of Directors.
(b) Additional Compensation. In addition to the salary provided for
under the provisions of Paragraph 3 (a) hereof, during the term of this
Agreement (including any extensions thereof) Skidmore shall receive as
additional compensation an amount equal to four percent (4%) of the
Corporation's "income before income taxes" (as hereinafter defined), if
any, for each calendar year. Said amount shall be paid in cash no later
than 30 days after the Corporation's receipt of its audited financial
statements. If the term of employment under this Agreement during a
calendar year is less than the full year of the Corporation because
Xxxxxxxx'x termination of employment occurs during such calendar year, then
Skidmore shall receive a pro rata amount of such additional compensation,
based upon the Corporation's next annual audited financial statements after
such termination -- except as provided in Paragraph 5 (b) (2) hereof. Any
pro rata amount due to Skidmore shall be paid in a single lump sum in cash,
within 30 days after the date such audited financial statements are
received by the Corporation.
The term "income before income taxes", as used herein, shall mean the
consolidated income before income taxes which the Corporation and its
subsidiaries shall earn from all sources. Such income before income taxes
shall be determined in accordance with generally accepted accounting
principles applied on a consistent basis. Notwithstanding anything
contained in this Paragraph 3 (a) or any other provision of this Agreement
to the contrary, no amount of additional compensation shall be payable to
Skidmore to the extent that any Creditor of the Corporation that is
entitled to receive a payment under a confirmed Plan of Reorganization is
due any amount from the Corporation at the time such payment is due. The
additional compensation that would otherwise have been payable to Skidmore
shall accrue and be paid as soon as practicable after no sums are past due
to such Creditors.
(c) Further Additional Compensation. Skidmore shall also be eligible
to participate in any perquisites, executive fringe benefits, director's
fees of employee directors and long-term incentive compensation plans
(whether stock option, stock appreciation right, restricted stock grant,
performance bonus or otherwise) available to officers and/or directors of
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the Corporation, in accordance with the terms thereof. This Agreement shall
not however, be deemed in any way to mandate that Skidmore receive any such
further additional compensation.
(d) Regular Group Benefit. Skidmore shall be entitled to participate
in all Corporation-sponsored regular group benefit plans and programs for
employees, including but not limited to tax-qualified pension,
tax-qualified profit-sharing, group life insurance and other group
insurance (medical, dental and disability benefit) plans, in accordance
with the terms thereof. This Agreement shall not; however, be deemed in any
way to mandate that Skidmore receive any such further additional
compensation.
(e) Other Supplemental Benefits. Skidmore shall also be entitled to
the following supplemental benefits:
(1) Disability Benefits. Provided Skidmore can pass the
insurer's required medical examination, the Corporation
shall obtain, at its sole cost and expense, a policy or
policies of long-term disability insurance which shall
provide Skidmore with total long-term disability benefits in
the event of Xxxxxxxx'x total disability (as defined
herein).Said benefits shall be payable monthly but not
beyond the term of this Agreement (without any renewals)
and, together with any benefits payable from the
Corporation's long-term disability plan for all full-time
employees and from Social Security, shall be fifty percent
(50%) of Xxxxxxxx'x salary as in effect on the first date of
absence from work by reason of total disability.
(2) Life Insurance. So long as Skidmore can pass the insurer's
medical examination without being rated for insurance
purposes, the Corporation shall provide Skidmore -- at its
own expense -- life insurance on his life, such that the
total death benefit payable to his beneficiary (including
benefits payable from the Corporation's basic group term
life insurance plan for all full-time salaried employees) is
not less than two (2) times his annual salary at date of
death.
In addition, an individual term life insurance policy shall
be issued, to Skidmore on Xxxxxxxx'x life, in the amount of
$100,000. At Xxxxxxxx'x discretion and provided he can pass
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the insurer's medical examination, Skidmore may convert this
policy to a whole life policy. In such event, Skidmore shall
pay the difference in premium between the cost of whole life
insurance and the cost of term life.
(f) Expenses and Automobile. The Corporation recognizes that Skidmore,
in rendering services hereunder, may be required to spend sums of money for
the entertainment of various persons and representatives of companies and
organizations with which the Corporation is having, or would like to have,
business relationships. The Corporation shall reimburse Skidmore for such
reasonable expenses incurred on behalf of the Corporation including, but
not limited to, entertainment and travel. The Corporation shall also
provide Skidmore with a suitable automobile, and provide for the
automobile's maintenance and storage and pay all reasonable expenses
related thereto. The Company shall pay Xxxxxxxx'x reasonable annual tax
preparation costs.
4. Termination of Employment
The parties to this Agreement may terminate Xxxxxxxx'x employment hereunder
as follows:
(a) Without Cause, by Corporation. The Corporation may terminate
Xxxxxxxx'x employment hereunder without cause only upon authorization from
the Board of Directors, and upon no less than sixty (60) days' written
notice to Skidmore; however, the Corporation shall be obligated hereunder
to pay Skidmore until the conclusion of this Agreement. The Corporation may
also terminate Xxxxxxxx'x employment hereunder by giving notice to Skidmore
of its intention to terminate the then existing term of Xxxxxxxx'x
employment at the end of the term.
Termination of employment by reason of Xxxxxxxx'x "total disability"
(as defined herein) in accordance with Paragraph 1 (b) (2) hereof, as well
as termination by reason of Xxxxxxxx'x death in accordance with Paragraph 1
(b) (3) hereof, shall be treated as termination by the Corporation without
cause.
(b) For Cause, by Skidmore. Skidmore may terminate employment
hereunder for cause upon no less than sixty (60) days' written notice to
the Corporation. "Cause" for termination by Skidmore shall mean the
following conduct of the Corporation.
(1) Material breach of any material provision of the Agreement,
which breach shall not have been cured by the Corporation
within thirty (30) days of written notice of said breach;
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(2) Substantial change in Xxxxxxxx'x duties (other than such
duties as are subject to shareholder vote or approval (but
only if Imperial Capital Worldwide Partners, L.P. does not
own a majority interest in the stock of the Company)) as set
forth in Paragraph 2 (a) of this Agreement, and including
the assumption of new and excessive travel duties or a
requirement that Skidmore relocate his principal place of
business so as reasonably to be expected to move his
principal residence -- as to all of the above, without
Xxxxxxxx'x prior written consent;
(3) Failure to maintain Skidmore at the level of officer set
forth in Paragraph 2 (a) of this Agreement; or
(4) The Corporation's merger with, or acquisition by another
corporation, after which Skidmore is not retained as Chief
Executive Officer of either the surviving corporation or the
subsidiary or division that carries on the business of the
Corporation, provided Skidmore gives notice of termination
of employment hereunder within six (6) months of said
merger/acquisition and failure to retain.
If termination of Skidmore for cause occurs, such
termination shall not adversely affect Xxxxxxxx'x rights
under the terms of the Corporation's tax-qualified pension
plan.
(c) Without Cause, by Skidmore. Skidmore may terminate employment
hereunder without cause upon no less than ninety (90) days' written notice
to the Corporation. If such termination occurs, such termination shall not
adversely affect Xxxxxxxx'x rights under the Corporation's tax-qualified
pension plan.
(d) For Cause, by Corporation. The Corporation may terminate
Xxxxxxxx'x employment hereunder for cause upon no less than thirty (30)
days' written notice to Skidmore which cause shall be determined in good
faith solely by the Board of Directors. "Cause" for termination by the
Corporation shall mean the following conduct of Skidmore:
(1) Material breach of any provision of the Agreement, which
breach shall not have been cured by Skidmore within thirty
(30) days of written notice of said breach; or
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(2) Engages in Malfeasance, willful misconduct, willful or gross
neglect, Fraud, or any other act or omission, of a similar
nature, otherwise to the material and demonstrable detriment
of the Corporation.
5. Severance Pay/Benefits Upon Termination of Employment
(a) In the event of termination of Xxxxxxxx'x employment pursuant to
Paragraph 4 (a) or 4 (b) hereof, Skidmore shall be entitled to the
following:
(1) any accrued but unpaid salary and vacation to the date of
the event of termination;
(2) the pro rata share of any additional compensation provided
for in Paragraph 3 (b) hereof, for the period of time during
the year up to the end of the month in which termination
occurs;
(3) pro rate payment for performance bonuses in mid- cycle, full
vesting in restricted stock grants, and reasonable allowance
for post-termination exercise of outstanding stock options
and stock appreciation rights to the extent permitted by
applicable law and the terms of any such plans.
(4) except in the event of termination by reason of "total"
disability or death, liquidated damages equal to the
aggregate salary (at the then-current rate) as determined
pursuant to Paragraph 3 (a) hereof to become due during the
remaining term of this Agreement plus an additional amount
of $100,000 payable at termination.)
In no event shall this payment be offset by any retirement
pay, post-termination salary or other compensation for
Xxxxxxxx'x personal employment or as a consultant other than
from the Corporation pursuant to an agreement post-dating
this Agreement.
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(5) During the remainder of the term of this Agreement, he shall
continue to participate in the benefits described in
Paragraphs 3 (d), 3 (e) and 3 (f) hereof (other than tax
qualified pension and profit sharing plans) sponsored by the
Corporation -- but only to the extent that such continued
participation is permissible under the general terms and
provisions of such benefit arrangements. To the extent that
continued participation is not permissible but for which
Skidmore would otherwise qualify if he continued to be an
employee, in any all-employee medical, dental, long-term
disability or group term life insurance plan, then the
Corporation shall provide Skidmore with comparable benefits,
either on an insured or self- insured basis. Any continuing
benefits described herein shall be offset by comparable
benefits which Skidmore might be entitled by a prior or
successor employer.
(b) In the event of termination of Xxxxxxxx'x employment pursuant to
Paragraph 4 (c) or 4 (d) hereof, Skidmore shall not be entitled to any
compensation or benefit hereunder after the date of such termination, other
than the following:
(1) except with respect to payments described in Paragraph 3 (b)
any unpaid salary, accrued vacation and other benefits
earned and accrued under this Agreement, and reimbursement
for expenses incurred (to the extent otherwise payable
hereunder), prior to such termination; and
(2) the pro rata share of any additional compensation provided
for in Paragraph 3 (b), for the period of time during the
year up to the end of the month in which termination
occurs--but only if termination is pursuant to Paragraph 4
(c).
6. Other Provisions
(a) Resolution of Difference Over Agreement.
Any controversy or claim arising out of, or relating to this
Agreement, or the breach thereof, shall be settled by recourse -- including
for temporary or preliminary injunctive relief -- to the courts having
jurisdiction thereof.
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(b) Waiver of Breach. The waiver by the Corporation or Skidmore of a
breach of any provision of this Agreement by the other party, shall not
operate nor be construed as a waiver of any subsequent breach by such other
party.
(c) Assignment. The rights and obligations of the Corporation under
this Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Corporation.
(d) Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered mail
-- in the case of Skidmore, to his residence; and in the case of the
Corporation, to the "Board of Directors, in care of the Secretary, Science
Management Corporation, 000 Xxxxx 000-000, Xxxxxxxxxxx, Xxx Xxxxxx 00000,"
and to Imperial Capital Worldwide Partners, L.P., at 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx -- or at such other address with respect to each party as
such party shall notify the other in writing. Such notice shall be deemed
effective when so addressed and mailed.
(e) Construction of Agreement.
(1) Applicable Law This Agreement shall be governed by and
construed under the laws of the State of New Jersey.
(2) Severability. In the event that any one or more of the
provisions of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
(3) Headings. The descriptive headings of the several paragraphs
of this Agreement are inserted for convenience of reference
only and shall not constitute a part of this Agreement.
(f) Entire Agreement. This instrument contains the entire agreement of
the parties, and all promises, representations, understandings,
arrangements and prior agreements merged herein and superseded hereby --
except the restrictive and non-competition agreement, entitled "Employment
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Agreement", which is a part of this Agreement. The provisions of this
Agreement may not be amended, 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. No person, other than pursuant to a resolution of
the Board of Directors or a committee thereof, shall have authority on
behalf of the Corporation to agree to amend, modify, repeal, waive, extend
or discharge any provision of this Agreement or anything in reference
thereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
effective date of the Corporation's confirmed Plan of Reorganization.
SCIENCE MANAGEMENT CORPORATION
By: _______________________________
Xxxxxx X. Xxxxxxxx
Secretary
Accepted on ________________
_____________________________
Xxxxx X. Xxxxxxxx, Xx.
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