Exhibit 10.14
EMPLOYMENT, CONFIDENTIALITY
AND NON-COMPETITION AGREEMENT
THIS AGREEMENT (the "Agreement") dated as of April 22, 1998, is made and
entered into by and between Affiliated Research Centers, Inc., a Delaware
corporation (the "Company"), and Xx. Xxxx Xxxxxx (the "Executive").
WHEREAS, the Executive is a senior executive of Pacific Coast Clinical
Coordinators, Inc., which on the date hereof is being merged with and into a
wholly-owned subsidiary of the Company which will change its name to "Pacific
Coast Clinical Coordinators Inc. ("PCCC") and the Executive is expected to
continue to make major contributions to the short- and long-term profitability,
growth and financial strength of the Company;
WHEREAS, the Executive acknowledges that in the course of her
employment by the Company, she will or may have access to and become
informed of the Company's confidential information and will frequently come into
contact with the Company's research affiliates and its customers and accounts
such that the Executive will influence the business and relationships between
the Company and its research affiliates and its customers and accounts;
WHEREAS, the Executive has agreed to certain confidentiality,
nonsolicitation and non-competition agreements, and in consideration for such
agreements, the Company has agreed to pay the Executive termination payments
upon severance of the Executive's employment hereunder; and
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to provide her services to the Company on the terms and conditions set
forth herein.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms. In addition to terms defined elsewhere herein,
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the following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "Cause" means
(i) intentional engagement by the Executive in misconduct
which is materially injurious to the Company or any subsidiary, monetarily
or otherwise,
(ii) intentional act by the Executive of fraud, embezzlement or
theft in connection with her duties or in the course of her employment with
the Company or any subsidiary,
(iii) intentional damage by the Executive to property of the
Company or any subsidiary, or
(iv) material breach of Section 10 or Section 11 hereof.
For purposes of this Agreement, no act or failure to act on the Executive's part
shall be deemed "intentional" if it was due primarily to an error in judgment or
negligence, but it shall be deemed "intentional" only if it was not in good
faith and without reasonable belief that her act or failure to act was in the
Company's best interest. Notwithstanding the foregoing, the Executive shall not
be deemed to have been terminated for "Cause" hereunder unless and until the
Executive receives a copy of a resolution duly adopted by the affirmative vote
of not less than two-thirds of the Board then in office, excluding the
Executive if she is a Director, at a meeting of the Board called and held for
such purpose, after reasonable notice to the Executive and an opportunity for
the Executive, together with her counsel (if the Executive chooses to have
counsel present at such meeting), to be heard before the Board, finding that, in
the good faith opinion of the Board, the Executive was guilty of conduct
constituting "Cause" as herein defined and specifying the particulars thereof.
Nothing herein will limit the right of the Executive or her beneficiaries to
contest the validity or propriety of any such determination.
(b) "Disabled" means the Executive's incapacity due to physical or mental
illness to substantially perform her duties on a full-time basis for six
consecutive months unless the Executive returns to the full-time performance of
the Executive's duties for a period of at least three consecutive months no
later than 30 days after the Company has given the Executive a notice of
termination. If the Executive disagrees with a determination to terminate her
because the Company believes she is Disabled, the Company and the Executive, or
in the event of the Executive's incapacity to designate a doctor, the
Executive's legal representative, together shall choose a qualified medical
doctor who shall determine whether the Executive is Disabled. If the Company and
the Executive cannot agree on the choice of a qualified medical doctor, then the
Company and the Executive each shall choose a qualified medical doctor and the
two doctors together shall choose a third qualified medical doctor, who shall
determine whether the Executive is Disabled. The determination of the chosen
qualified medical doctor as to whether the Executive is Disabled shall be
binding upon the Company and the Executive unless such determination is clearly
made in bad faith.
(c) "Involuntary Termination" means the occurrence of any of the
following: (i) the Company gives written notice to the Executive that the
Company intends to terminate the Employment Provisions (as defined below), (ii)
the Company reduces the Executive's base salary as set forth in Section 5,
unless such reduction in base salary is part of a reduction applicable generally
to senior executives of the Company or (iii) unless otherwise agreed by the
Executive, the Company relocates the Executive or her offices or the principal
place where she is required to perform her duties hereunder farther than 50
miles from Tacoma, Washington.
(d) "Restricted Business" means (i) any business or division of a business
which consists of providing services to physicians performing clinical research
and development studies or providing services to investigative sites and their
customers in connection with clinical research and development, (ii) any
business of a kind in whole or in part similar to that heretofore or hereafter
engaged in by the Company or any of its subsidiaries and (iii) any other
principal line of business developed or acquired by the Company or its
affiliates.
(e) "Voluntary Termination" means the occurrence of any of the following:
(i) the date two weeks after the Executive gives written notice to the Company
that the Executive
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intends to terminate the Employment Provisions or if later, the date specified
in such written notice, (ii) the Executive dies or (iii) the Executive becomes
Disabled.
2. Term. The term of Section 1 through Section 9 of this Agreement (the
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"Employment Provisions") commences on the date hereof and, subject to any
benefit continuation requirements of applicable laws, expires on the earliest of
(a) an Involuntary Termination, (b) a Voluntary Termination or (c) two years
from the date hereof, except that the Employment Provisions shall automatically
renew for successive one-year periods upon the terms and conditions set forth
herein, commencing on the second anniversary of the date hereof, and on each
anniversary date thereafter, until an Involuntary Termination or Voluntary
Termination occurs. For purposes of this Agreement, any reference to the "term"
of the Employment Provisions includes the original term and any extension
thereof
3. Employment. The Company hereby agrees to employ the Executive, and the
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Executive hereby agrees to be employed by the Company, upon the terms and
conditions herein set forth.
4. Duties of the Executive. The Executive shall serve as Executive Vice
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President, Clinical Coordinator Division, of the Company and as President of
PCCC. The Executive shall report to the Chief Executive Officer of the Company.
The Executive shall devote her full time and best efforts to the Company's
business of providing services to investigative sites and to their customers in
connection with clinical research and development and any other related duties
and responsibilities that may from time to time be prescribed by the Board of
Directors of the Company and so long as it does not interfere with the
Executive's employment hereunder, the Executive may serve as an officer,
director or otherwise participate in educational, welfare, social, religious and
civic organizations. If elected or appointed, the Executive shall also serve as
a director or officer of any of the Company, its subsidiaries or affiliated
companies, without further compensation. The Board of Directors of the Company
will use reasonable efforts to increase the size of the Board of Directors
within a reasonable time after the date hereof and to appoint the Executive to
fill the vacancy created by such increase. Nothing contained herein shall be
construed as limiting any rights of the Company's stockholders to elect and
remove members of the Board of Directors.
5. Compensation. The Company shall pay the Executive a base salary of
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$150,000 per annum, which base salary the Company may adjust from time to time,
payable at the times and in the manner consistent with the Company's general
policies regarding compensation of senior executives. Such base salary includes
any salary reduction contributions to (i) any Company-sponsored plan that
includes a cash-or-deferred arrangement under Section 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) any other Company-sponsored
plan of deferred compensation or (iii) any Company-sponsored "cafeteria plan"
under Section 125 of the Code. The Executive may be eligible to be paid an
annual bonus in accordance with the Company's incentive compensation plan, in
effect as of the date hereof, as the same may be modified, terminated or
replaced by the Company from time to time and, to the extent the Executive is so
eligible, the maximum bonus for any one fiscal year shall not exceed 25% of the
Executive's base salary as of the beginning of such fiscal year. As of the date
hereof the Company has also granted to the Executive an option to purchase
10,000 shares of the Company's Class A Common Stock pursuant to the terms of the
Incentive Stock Option Agreement dated as of the date hereof.
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6. Benefits. The Company shall make available to the Executive,
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subject to the terms and conditions of the applicable plans, including without
limitation the eligibility rules, participation for the Executive and her
eligible dependents in the Company-sponsored employee benefit plans or
arrangements and such other usual and customary benefits now or hereafter
generally available to employees of the Company and such benefits and
perquisites as are made available to senior executives of the Company,
including, without limitation, equity and cash incentive programs and
supplemental retirement, deferred compensation and welfare plans.
7. Expenses. The Company shall pay or reimburse the Executive, in
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accordance with the general policies of the Company, for reasonable and
necessary expenses incurred by the Executive in connection with her duties on
behalf of the Company.
8. Place of Performance. In connection with her employment by the
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Company, unless otherwise agreed by the Executive, the Executive shall be based
at offices located in Tacoma, Washington, except for travel reasonably required
to the Company's Gurnee, Illinois office and for Company business.
9. Termination Payments, Vesting and Exercise of Stock Options upon
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Involuntary Termination other than for Cause.
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(a) If an Involuntary Termination occurs other than for Cause (as
defined below) and if the Executive enters into a release and settlement
agreement with the Company, then
(i) for a period of one year thereafter (the "Payment Period"), the
Company shall pay the Executive, in accordance with the Company's regular
payroll schedule, termination payments that in the aggregate equal the sum
of (A) the Executive's highest annual base salary during the three-year
period prior to the Executive's termination plus (B) the Executive's
average annual cash incentive compensation award during the three-year
period prior to the Executive's termination;
(ii) during the Payment Period, the Company shall, to the extent
permitted by its then-existing "401(k) Plan," if any, allow Executive to
continue making contributions into such Plan, and make matching
contributions under such Plan, both as if such Involuntary Termination had
not occurred; and
(iii) notwithstanding anything to the contrary in the Executive's
stock option agreement(s) or certificate(s) or in the stock option plan(s)
under which Executive's stock options were granted, Executive's stock
options shall continue to vest during the Payment Period at the times and
in the amounts that would apply if such Involuntary Termination had not
occurred, and Executive shall have the right to exercise any vested stock
options at any time no later than 30 days after the expiration of the
Payment Period.
(b) Notwithstanding anything to the contrary herein, any termination
payments which the Executive becomes entitled to receive under Section 9(a)
shall be reduced to the extent that the Executive receives payments of severance
compensation pursuant to Section 4(a)(i) of the Executive's Severance Agreement
dated as of even date herewith between the Company and the Executive as such
Severance Agreement may hereafter be supplemented, amended or replaced.
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(c) Any termination payments hereunder shall not be taken into
account for purposes of any retirement plan or other benefit plan sponsored by
the Company, except as otherwise set forth herein or as expressly required by
such plans or applicable law.
(d) If the Executive dies while any amounts are payable to her
hereunder, all such amounts, unless otherwise provided herein, shall be paid to
the Executive's designated beneficiary, or, if none, then to the Executive's
estate.
(e) The Executive is not obligated to mitigate damages or the amount
of any payment provided for under this Section 9 by seeking other employment or
otherwise.
(f) Notwithstanding the foregoing, if the Executive breaches
Sections 10, 11 or 12 hereof, any right of the Executive to receive termination
payments, to have the vesting of her options accelerated or to have the period
during which she may exercise her options extended under this Section 9 shall be
forfeited, but without prejudice to any exercise of options that may have
occurred prior to such forfeit, and the Executive shall reimburse the Company in
full for all termination payments made to the Executive under this Section 9 no
later than 30 days after the Company gives notice of such breach to the
Executive.
10. Confidentiality Agreement.
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(a) The Executive acknowledges that in the course of her employment
by the Company, she will or may have access to and become informed of
confidential and secret information that is a competitive asset of the Company
or any of its subsidiaries ("Confidential Information"), including, without
limitation, (i) the terms of agreements between the Company and its employees,
research affiliates, customers and suppliers, (ii) pricing strategy, (iii) sales
and marketing methods, (iv) product development ideas and strategies, (v)
personnel training and development programs, (vi) financial results, (vii)
strategic plans and demographic analyses, (viii) proprietary computer and
systems software and (ix) any non-public information concerning the Company, its
employees, research affiliates, suppliers and customers. Regardless of any
actual or alleged breach by the Company of this Agreement, the Executive shall
keep all Confidential Information in strict confidence and shall not directly or
indirectly make known, divulge, reveal, furnish, make available or use any
Confidential Information (except in the course of her regular authorized duties
on behalf of the Company and PCCC) until and unless (x) such Confidential
Information becomes, through no fault of the Executive, generally known to the
public or (y) the Executive is required by law to make disclosure (after giving
the Company reasonable notice and an opportunity to contest such requirement).
The Executive's obligations under this Section 10 are in addition to, and not in
limitation or preemption of, all other obligations of confidentiality which the
Executive may have to the Company under general legal or equitable principles.
(b) Except in the ordinary course of the Company's business, the
Executive shall never make or cause to be made, any copies, pictures,
duplicates, facsimiles or other reproductions or recordings or any abstracts or
summaries including or reflecting Confidential Information. All such documents
and other property furnished to the Executive by the Company or otherwise
acquired or developed by the Company shall at all times be the property of the
Company. Upon a Voluntary Termination or Involuntary Termination, the Executive
shall return to the Company any such documents or other property of the Company
which are in the possession, custody or control of the Executive.
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11. Covenant not to Compete; No Inducement; No Solicitation. In
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consideration for the Executive's employment hereunder; the Company's providing
the Executive with confidential information and contacts with the Company's
research affiliates and their customers and accounts; and the Company's
agreement to make termination payments to the Executive,
(a) (i) during the term of the Employment Provisions and (i) (A)
after an Involuntary Termination for Cause, for a period of one year after such
Involuntary Termination, (B) after an Involuntary Termination other than for
Cause, during the Payment Period or (C) after a Voluntary Termination, if prior
to the date of the Voluntary Termination the Company agrees to pay Executive all
of the termination payments set forth in Section 9(a) hereof, for a period of
one year after such Voluntary Termination, the Executive shall not, without the
prior written consent of the Company (which consent may be withheld for any
reason or no reason), directly or indirectly or by action in concert with
others, own, manage, operate, join, control, perform consulting services for, be
employed by, participate in or be connected with any business, enterprise or
other entity (or the ownership, management, operation, or control of any such
business, enterprise or other entity) (a "Competing Enterprise") engaged
anywhere in the United States in the Restricted Business (it being understood
that the business conducted by Northwest Kinetics as of the date hereof will not
be deemed to be a Competing Enterprise). Notwithstanding the foregoing,
Executive may make purely passive investments on behalf of herself, her
immediate family or any trust in public companies engaged in a Competing
Enterprise so long as the aggregate interest represented by such investments
does not exceed 1% of any class of the outstanding debt or equity securities of
any Competing Enterprise.
(b) (i) during the term of the Employment Provisions and (i) (A)
after an Involuntary Termination for Cause, for a period of one year after such
Involuntary Termination, (B) after an Involuntary Termination other than for
Cause, during the Payment Period or (C) after a Voluntary Termination, if prior
to the date of the Voluntary Termination the Company agrees to pay Executive all
of the termination payments set forth in Section 9(a) hereof, for a period of
one year after such Voluntary Termination, the Executive shall not, directly or
indirectly, in any capacity, on her own behalf or on behalf of any other firm,
person or entity, induce or attempt to induce any research affiliate or customer
of the Company to cease doing business in whole or in part with the Company,
solicit the business of any such research affiliate or customer for any
Restricted Business or otherwise create any ill will or negative publicity with
respect to the Company.
(c) (i) during the term of the Employment Provisions and (i) (A)
after an Involuntary Termination for Cause, for a period of one year after such
Involuntary Termination, (B) after an Involuntary Termination other than for
Cause, during the Payment Period or (C) after a Voluntary Termination, if prior
to the date of the Voluntary Termination the Company agrees to pay Executive all
of the termination payments set forth in Section 9(a) hereof, for a period of
one year after such Voluntary Termination, the Executive shall not, directly or
indirectly, in any capacity, on her own behalf or on behalf of any other firm,
person or entity, undertake or assist in the solicitation of any Company
employee, including, without limitation, solicitation of any employee to
terminate his or her employment with the Company.
(d) For purposes of Sections 11(b) and 11(c), references to the
Company include any subsidiary of the Company, including PCCC.
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12. Post-termination Assistance. Executive shall provide such
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information and assistance to the Company as the Company may reasonably
request, upon reasonable notice, in connection with any litigation in
which it or any of its affiliates is or may become a party. The Company
shall reimburse the Executive for any expenses, including travel
expenses, incurred by the Executive in connection with providing such
information and assistance.
13. Withholding of Taxes. The Company may withhold from any
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amounts payable under this Agreement all federal, state, city or other
taxes as the Company is required to withhold pursuant to any law or
government regulation or ruling.
14. Legal Fees and Expenses. If the Executive prevails, in
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whole or in part, in connection with any dispute associated with the
interpretation, enforcement or defense of Executive's rights under this
Agreement, by litigation or otherwise, the Company shall reimburse
Executive and be financially responsible for 100% of any and all
reasonable attorneys' and related fees and expenses incurred by the
Executive in connection therewith.
15. Specific Enforcement. The Executive acknowledges and
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agrees that a violation of Sections 10, 11 or 12 hereof that results in
material detriment to the Company would cause irreparable harm to the
Company, and that the Company's remedy at law for any such violation
would be inadequate. In recognition of the foregoing, the Company shall
have the right, in addition to any other relief afforded by law or this
Agreement, including damages sustained by a breach of this Agreement and
any forfeitures under Section 9, and without any necessity or proof of
actual damages, to enforce this Agreement by specific remedies,
including, among other things, temporary and permanent injunctions, it
being the understanding of the Company and the Executive that damages,
the forfeitures described above and injunctions shall all be proper
modes of relief and shall not be considered alternative remedies.
16. Arbitration. Any dispute between the parties under this
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Agreement shall be resolved (except as provided below) through informal
arbitration by an arbitrator selected under the rules of the American
Arbitration Association (located in Chicago, Illinois) and the
arbitration shall be conducted in that location under the rules of said
Association. Each party shall be entitled to present evidence and
argument to the arbitrator. The arbitrator shall have the right only to
interpret and apply the provisions of this Agreement and may not change
any of its provisions. The arbitrator shall permit reasonable pre-
hearing discovery of facts to the extent necessary to establish a claim
or a defense to a claim, subject to supervision by the arbitrator. The
determination of the arbitrator shall be conclusive and binding upon the
parties and judgment upon the same may be entered in any court having
jurisdiction thereof. The arbitrator shall give written notice to the
Company and the Executive stating its determination, and shall furnish
to each party a signed copy of such determination. The expenses of
arbitration shall be borne equally by the Executive and the Company or
as the arbitrator shall otherwise equitably determine.
Notwithstanding the foregoing, the Company shall not be
required to seek or participate in arbitration regarding any breach of
Sections 10, 11 or 12, but may pursue its remedies for such breach in
any court of competent jurisdiction in the State of Illinois. Any
arbitration or action pursuant to this Section 16 shall be governed by
and construed in accordance with the substantive laws of the State of
Illinois, without giving effect to the principles of conflict of laws of
such State.
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17. Notices. For all purposes of this Agreement, all
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communications, including without limitation notices, consents, requests
or approvals, required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when hand delivered
or dispatched by electronic facsimile transmission (with receipt thereof
confirmed), or five business days after having been mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, or three business days after having been sent by a nationally
recognized overnight courier service (such as Federal Express or UPS)
addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive office and to the Executive at her
principal residence, or to such other address as either party may have
furnished to the other in writing and in accordance herewith, except
that notices of changes of address shall be effective only upon receipt.
18. Governing Law. The validity, interpretation, construction
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and performance of this Agreement shall be governed by and construed in
accordance with the substantive laws of the State of Illinois, without
giving effect to the principles of conflict of laws of such State.
19. Agreement. This Agreement supersedes any and all other
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agreements, either oral or in writing, between the parties hereto with
respect to the subject matter hereof and contains all of the covenants
and agreements between the parties with respect to such subject matter.
Each party to this Agreement acknowledges that no representations,
inducements, promises, or other agreements, orally or otherwise, have
been made by any party, or anyone acting on behalf of any party,
pertaining to the subject matter hereof, that are not embodied herein,
and that no other agreement, statement or promise pertaining to the
subject matter hereof that is not contained in this Agreement shall be
valid or binding on either party.
20. Successors and Binding Agreement.
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(a) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the
Company, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any successor
to the Company, including without limitation any persons acquiring
directly or indirectly all or substantially all of the business or
assets of the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be
deemed the "Company" for the purposes of this Agreement), but will not
otherwise be assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither the
Company nor the Executive shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 20(a) and 20(b).
Without limiting the generality or effect of the foregoing, the
Executive's right to receive payments hereunder will not be assignable,
transferable or delegable, whether by pledge, creation of a security
interest, or otherwise other than by a transfer by the Executive's will
or by the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this Section 20(c),
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the Company shall have no liability to pay any amount so attempted to be
assigned, transferred or delegated.
21. Validity. If any provision of this Agreement or the
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application of any provision hereof to any person or circumstances is
held invalid, unenforceable or otherwise illegal, the remainder of this
Agreement and the application of such provision to any other person or
circumstances shall not be affected, and the provision so held to be
invalid, unenforceable or otherwise illegal shall be reformed to the
extent (and only to the extent) necessary to make it enforceable, valid
or legal.
22. Miscellaneous. No provision of this Agreement may be
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modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and the
Company. No waiver by either party hereto at any time of any breach by
the other party hereto or compliance with any condition or provision of
this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. Unless otherwise noted, references to
"Sections" are to sections of this Agreement. The captions used in this
Agreement are designed for convenient reference only and are not to be
used for the purpose of interpreting any provision of this Agreement.
23. Counterparts. This Agreement may be executed in one or
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more counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement as of the date first above written.
AFFILIATED RESEARCH CENTERS, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
