EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of July 1, 1998 between Total
Research Corporation, a Delaware corporation ("Company"), and Xxxxxx Xxxxxxxxx
("Executive").
BACKGROUND
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Executive is presently serving as the Chief Executive Officer
of the Company. Company desires to have Executive continue in that capacity with
the Company, and Executive wishes to remain in the employment of the Company, on
the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:
TERMS
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SECTION 1. CAPACITY AND DUTIES
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1.1 EMPLOYMENT; ACCEPTANCE OF EMPLOYMENT. Company hereby employs Executive
and Executive hereby accepts employment by Company for the period and upon the
terms and conditions hereinafter set forth.
1.2 CAPACITY AND DUTIES.
(a) Executive shall serve as the President and Chief Executive Officer of
Company. Executive shall perform such other duties and shall have such authority
consistent with Executive's position as may from time to time be specified by
the Board of Directors of Company (the "Board"). Executive shall report directly
to the Board, and shall perform Executive's duties for Company principally at
Company's principal executive offices, presently in Princeton, New Jersey,
except for periodic travel that may be necessary or appropriate in connection
with the performance of Executive's duties hereunder. Executive shall also serve
as a member of the Executive Committee so long as he shall be a member of the
Board. Company shall use its reasonable efforts to cause Executive to be elected
a member of the Board during the period this Agreement is in effect, but the
failure of the stockholders of Company to elect the Executive a member of the
Board shall not constitute a breach of this Agreement by Company.
(b) Executive shall devote sufficient working time, energy, skill and best
efforts to the performance of Executive's duties hereunder, in a manner that
will faithfully and diligently further the business and interests of Company.
Company acknowledges that Executive has interests in the management or operation
of other business enterprises and such participation will not constitute a
breach of this Agreement by Executive or constitute grounds for termination
for Cause (as defined herein) as long as (i) Executive is not an employee of any
other business enterprise during the Term (as defined below) and (ii)such
activities do not unreasonably interfere with the Executive's performance of
Executive's duties and responsibilities hereunder.
SECTION 2. TERM OF EMPLOYMENT
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2.1 TERM. The term of Executive's employment hereunder shall commence on
July 1, 1998 (the "Commencement Date") and continue until June 30, 2001, as
further extended or unless sooner terminated in accordance with the other
provisions hereof (the "Term"). Except as hereinafter provided, on June 30,
2001, the Term shall be automatically extended for one additional year unless
Company shall have given to Executive written notice of nonrenewal of this
Agreement on or before July 1, 2000. Executive shall notify the Company in
writing on or before December 31, 2000 if Executive elects nonrenewal of the
Agreement. After the initial Term, the written notice of nonrenewal by either
party must be given to the other party at least six months prior to the
expiration date of the current Term. If written notice of nonrenewal is given as
provided above, Executive's employment under this Agreement shall terminate on
the last day of the then-current Term.
SECTION 3. COMPENSATION
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3.1 BASE COMPENSATION. As compensation for Executive's services commencing
July 1, 1998, Company shall pay to Executive base compensation in the form of
salary of $175,000 per annum and "at risk" compensation in the amount of
$125,000 per annum. The salary shall be payable in periodic installments in
accordance with Company's regular payroll practices for its executive personnel
at the time of payment, but in no event less frequently than monthly. The "at
risk" component of compensation shall be payable in accordance with Executive's
Senior Management Compensation Plan, attached hereto and made a part hereof as
Exhibit A (the "Compensation Plan"). Executive's annual salary plus the "at
risk" compensation, as determined in accordance with this Section 3.1 in the
Compensation Plan, is hereinafter referred to as Executive's "Base
Compensation". The Executive Committee agrees to review Base Compensation for
fiscal years 2000 and 2001 for the purpose of determining whether Base
Compensation should be increased for such fiscal years.
3.2 PERFORMANCE BONUS. As additional compensation for the services rendered
by Executive to Company pursuant to this Agreement for fiscal periods commencing
July 1, 1998, Executive shall be entitled to participate in the Compensation
Plan. Executive shall be entitled to a performance bonus for the fiscal year
ending June 30, 1998 in accordance with the terms and conditions of the existing
Consulting Agreement with Company (the "Consulting Agreement").
3.3 EMPLOYEE BENEFITS. During the Term, Executive shall be entitled to
participate in such of Company's employee benefit plans and benefit programs,
including medical, hospitalization, dental, disability, accidental death and
dismemberment and travel accident plans and programs, as may from time to time
be provided by Company for its senior executives generally. In addition, during
the Term Executive shall be eligible to participate in all pension, retirement,
savings and other employee benefit plans and programs maintained from time to
time
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by Company for the benefit of its senior executives generally. Company shall
have no obligation, however, to maintain any particular program or level of
benefits referred to in this Section 3.3.
3.4 OTHER BENEFITS. During the Term, the Company shall provide Executive
with an automobile allowance of $1000.00 per month for the use of an automobile
owned or leased by him in accordance with the policies and procedures
established by the Company from time to time for executive employees.
3.5 VACATION. Executive shall be entitled to the normal and customary
amount of paid vacation provided to senior executive officers of the Company,
but in no event less than 20 days during each 12 month period, beginning on July
1, 1998. Any vacation days that are not taken in a given 12 month period shall
accrue and carry over from year to year up to a maximum of 20 days. The
Executive may be granted leaves of absence with or without pay for such valid
and legitimate reasons as the Board in its sole and absolute discretion may
determine, and is entitled to the same sick leave and holidays provided to other
senior executive officers of Company.
3.6 EXPENSE REIMBURSEMENT. Company shall reimburse Executive for all
reasonable and documented expenses incurred by him in connection with the
performance of Executive's duties hereunder in accordance with its regular
reimbursement policies as in effect from time to time.
3.7 STOCK OPTION AGREEMENT. Company acknowledges the prior grant to
Executive of 500,000 stock options (the "Option Shares") made pursuant to the
Consulting Agreement and various Stock Option Agreements (collectively the
"Option Agreement"). Under the Option Agreement, 250,000 Option Shares are
currently vested and 250,000 Option Shares are scheduled to vest on June 30,
1999 (the "Original Vesting Date"). Executive agrees to execute an amendment to
the Option Agreement relating to the Option Shares to extend the Original
Vesting Date and restructure the vesting and exercise schedules for the Option
Shares as follows: (i) all 500,000 Option Shares shall be forfeited if Executive
resigns prior to June 30, 2001 for other than Good Reason; (ii) 250,000 of the
Option Shares shall be forfeited by Executive if Executive's employment is
terminated by Company for Cause (as defined herein) prior to the Original
Vesting Date; (iii) 125,000 of the Option Shares shall be forfeited if
Executive's employment is terminated by the Company for Cause on or after the
Original Vesting Date but prior to June 30, 2000; (iv) 62,500 of the Option
Shares shall be forfeited if Executive's employment is terminated by the Company
for Cause on or after June 30, 2000 but prior to June 30, 2001; and (v) all
500,000 Option Shares shall vest on June 30, 2001, or earlier, if (x) the
Company terminates Executive's employment without Cause after the Commencement
Date; (y) Executive terminates employment for Good Reason or (z) employment is
terminated by the death of Executive. If Executive exercises any of the Option
Shares prior to June 30, 2001, the shares so purchased (the "Restricted Shares")
shall reflect the same forfeiture restrictions imposed upon the Option Shares.
Company and Executive shall execute such amendments to the Option Agreement as
may be reasonably necessary or appropriate to further clarify or reflect such
grant and the revised deferral of the vesting of the Option Shares and
Restricted Shares.
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SECTION 4. TERMINATION OF EMPLOYMENT
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4.1 DEATH OF EXECUTIVE. If Executive dies during the Term, Company shall
not thereafter be obligated to make any further payments hereunder other than
amounts for Base Compensation (including for this purpose the immediate accrual
of the "at risk" component, adjusted pro rata through the date of termination),
expense reimbursement, and other amounts which have accrued as of the date of
Executive's death in accordance with generally accepted accounting principles
(the "Accrued Obligations", which, for purposes of this Agreement in situations
other than death, shall reference the date of termination).
4.2 DISABILITY OF EXECUTIVE. If Executive is permanently disabled (as
defined in Company's long-term disability insurance policy then in effect), then
the Board shall have the right to terminate Executive's employment upon 30 days'
prior written notice to Executive at any time during the continuation of such
disability. In the event Executive's employment is terminated for disability in
accordance with this Section 4.2, Company shall not thereafter be obligated to
make any further payments hereunder other than (i) Accrued Obligations through
the date of such termination and (ii) continued Base Salary and benefits, until
the earlier of (x) such time as payments to Executive commence under Company's
long-term disability insurance policy then in effect, or (y) the expiration of
the then current Term.
4.3 TERMINATION FOR CAUSE. Executive's employment hereunder shall terminate
immediately upon notice that the Board is terminating Executive for Cause (as
defined herein), in which event Company shall not thereafter be obligated to
make any further payments hereunder other than Accrued Obligations. "Cause"
shall be limited to the following:
(i) willful failure to substantially perform Executive's duties as
described in Section 1.2 (other than such failure resulting from Executive's
physical or mental illness, or the failure of Executive to perform such duties
during the remedy period set forth in Section 4.4(b)(i) hereof following the
issuance of a Notice of Termination (as herein defined) by Executive for Good
Reason, unless an arbitrator acting pursuant to Section 6.2 hereof finds
Executive to have acted in bad faith in issuing such Notice of Termination),
after demand for substantial performance is delivered by Company in writing that
specifically identifies the manner in which Company believes Executive has not
substantially performed Executive's duties and Executive's failure to cure such
non-performance within ten days after receipt of the Company's written demand;
(ii) willful misconduct that is materially and demonstrably injurious
to Company or any of its subsidiaries; or
(iii) conviction or plea of guilty or nolo contendere to a felony or
to any other crime which involves moral turpitude or, if not including moral
turpitude, provided the act giving rise to such conviction or plea is materially
and demonstrably injurious to the Company or any of its subsidiaries;
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(iv) material violation of (x) Company's policies relating to sexual
harassment, substance or alcohol abuse or the disclosure or misuse of
Confidential Information (as hereinafter defined), or (y) other Company polices
set forth in Company manuals or written statements of policy provided in the
case of this clause (y) that such violation is materially and demonstrably
injurious to Company and continues for more then three (3) days after written
notice thereof is given to Executive by the Board; and
(v) material breach of any material provision of this Agreement by
Executive, which breach continues for more than ten days after written notice
thereof is given by the Board to Executive.
Cause shall not exist under this Section 4.3 unless and until Company has
delivered to Executive a copy of a resolution duly adopted by a majority of the
Board at a meeting of the Board called and held for such purpose, or by written
consent, finding that such Cause exists in the good faith opinion of the Board.
This Section 4.3 shall not prevent Executive from challenging in any arbitration
proceeding or court of competent jurisdiction the Board's determination that
Cause exists or that Executive has failed to cure any act (or failure to act),
to the extent permitted by this Agreement that purportedly formed the basis for
the Board's determination. Company must provide written notice to Executive that
it is intending to terminate Executive's employment for Cause within one hundred
and twenty (120) days after the Board Company has actual knowledge of the
occurrence of the event it believes constitutes Cause.
4.4 TERMINATION WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON.
(a) If (i) Executive's employment is terminated by Company during the
initial Term for any reason (other than (x) Cause under Section 4.3, or (y)
disability of Executive), or (ii) Executive's employment is terminated by
Executive for Good Reason, then Company shall pay to Executive a lump sum cash
payment equal to one million dollars ($1,000,000.00)(the "Severance Payment"),
within ninety (90) days after expiration of the Term. Further, in the event of
termination by Company under such circumstances, or during any renewal Term,
Company shall maintain in full force and effect, for the continued benefit of
Executive, Executive's spouse and Executive's dependents for the remaining
balance of the unexpired Term as of the date of termination, the medical,
hospitalization, dental and life insurance programs in which Executive,
Executive's spouse and Executive's dependents were participating immediately
prior to the date of such termination at substantially the level in effect and
upon substantially the same terms and conditions (including without limitation
contributions required by Executive for such benefits) as existed immediately
prior to the date of termination (except to the extent thereafter reduced for
senior executives of Company generally); provided, that if Executive,
Executive's spouse or Executive's dependents cannot continue to participate in
the Company programs providing such benefits, the Company shall arrange to
provide Executive, Executive's spouse and Executive's dependents with the
economic equivalent of such benefits which they otherwise would have been
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entitled to receive under such plans and programs, provided that such benefits
shall terminate upon the date or dates Executive receives coverage and benefits
which are substantially similar, taken as a whole, without waiting period or
pre-existing condition limitations, under the plans and programs of a subsequent
employer. Upon making the payments described in this Section 4.4, Company shall
have no further obligation to Executive hereunder.
(b) "Good Reason" shall mean the following:
(i) material breach of Company's obligations hereunder, provided that
Executive shall have given reasonably specific written notice thereof to
Company, and Company shall have failed to remedy the circumstances within 60
days thereafter;
(ii) any decrease in Executive's salary as increased during the Term
(except for decreases that are in conjunction with decreases in salaries
generally) or any material reduction in the general nature of Executive's duties
or authority to a level inconsistent with a Chief Executive Officer, unless
previously agreed to in writing by Executive;
(iii) the failure of Executive to be elected to all of the positions
set forth in Section 1.2(a), ie., President, Chief Executive Officer, Executive
Committee and Board member, provided, however, the failure to be appointed to
the Board or Executive Committee shall not constitute Good Reason if such
failure is the result of the nonelection of Executive to the Board by a
shareholder vote at a duly convened meeting of the shareholders after nomination
of Executive to the Board by the Executive Committee and the Board and
submission of such nomination to a shareholder vote.
(iv) the relocation of Company's principal executive offices to a
location more than thirty (30) miles from Princeton, New Jersey;
(v) the failure of any successor in interest of Company to be bound by
the terms of this Agreement in accordance with Section 6.5 hereof;
(vi) substantial interference by the Board with Executive's
performance of Executive's duties, which interference results in the inability
of Executive to substantially perform Executive's duties hereunder; or
(vii) the appointment by the Board of a Chief Operating Officer or
Chief Financial Officer, or other offices or positions with duties substantially
similar to either, without first obtaining the prior written consent of
Executive, which consent will not be unreasonably withheld.
Executive must provide notice to the Company that he is intending to
terminate Executive's employment for Good Reason within one hundred and twenty
(120) days after Executive has actual knowledge of the occurrence of an event he
believes constitutes Good Reason. Executive's right to terminate Executive's
employment hereunder for Good Reason shall not be affected by Executive's
Disability. Subject to compliance by Executive with the notice provisions of
this Section 4.4, Executive's continued employment prior to terminating
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employment for Good Reason shall not constitute consent to, or a waiver of
rights with respect to, any act or failure to act constituting Good Reason. In
the event Executive delivers to the Company a Notice of Termination for Good
Reason, Executive agrees to appear before a meeting of the Board called and held
for such purpose (after reasonable notice) and specify to the Board the
particulars as to why Executive believes adequate grounds for termination for
Good Reason exist. No action by the Board, other than the remedy of the
circumstances within the time periods specified in Section this 4.4, shall be
binding on Executive.
4.5 CHANGE IN CONTROL.
(a) If, during the Term, there should be a Change of Control (as defined
herein), and within one year thereafter either (i) Executive's employment should
be terminated for any reason other than for Cause or (ii) Executive terminates
Executive's employment for Good Reason, Company shall, on or before Executive's
last day of full-time employment hereunder, pay to Executive, the amounts set
forth in Section 4.4 above, provided that it is the intention of the parties
that the payments under this Section 4.5 shall not constitute "excess parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended. Accordingly, notwithstanding anything in this Agreement to the
contrary, if any of the amounts otherwise payable under this Section would
constitute "excess parachute payments," or if the independent accountants acting
as auditors for Company on the date of the Change in Control determine that such
payments may constitute "excess parachute payments," then the amounts otherwise
payable under this Agreement shall be reduced to the maximum amounts that may be
paid without any such payments constituting, or potentially constituting,
"excess parachute payments."
(b) Upon the occurrence of a Change in Control, any stock options
previously granted to Executive that are not then exercisable, ie. unvested,
shall immediately vest and become exercisable by Executive . The Company shall
execute all necessary amendments to the applicable stock option plans and
agreements provided such amendments are permitted by law and will not adversely
affect the tax status or qualification of the plan as an Incentive Stock Option
Plan or Non-qualified Stock Option Plan.
(c) Upon making the payments described in this Section 4.5, Company shall
have no further obligation to Executive hereunder.
(d) A "Change in Control" of Company shall be deemed to have occurred if:
(1) at any time after the date hereof, there shall occur (i) any
consolidation or merger of Company in which Company is not the continuing or
surviving corporation or pursuant to which the shares of common stock of Company
("Common Stock") would be converted into cash, securities or other property, or
(ii) any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of assets accounting for 50% or more of total assets or
50% or more of the total revenues of Company, other than, in case of either (i)
or (ii), a consolidation or merger with, or transfer to, a corporation or other
entity of which, or of the parent entity of which, immediately following such
consolidation, merger or transfer, (x) more than 50% of the combined voting
power of the then outstanding voting
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securities of such entity entitled to vote generally in the election of
directors (or other determination of governing body) is then beneficially owned
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) by
all or substantially all of the individuals and entities who were such owners of
Common Stock immediately prior to such consolidation, merger or transfer in
substantially the same proportion, as among themselves, as their ownership of
Common Stock immediately prior to such consolidation, merger or transfer, or (y)
a majority of the directors (or other governing body) consists of members of the
Board of Directors of Company in office on the date hereof for purposes of (2)
below or approved as provided in (2) below;
(2) at any time after the date hereof, (x) members of the Board
of Directors of Company in office on the date hereof (including any designated
as contemplated by Section 4.2 of the Stock Purchase Agreement made as of April
16, 1998 between Company and Xxxxx Xxxxxxx) plus (y) any new director (excluding
a director designated by a person or group who has entered into an agreement
with Company to effect a transaction described in Section 4.5(d)(1) whose
election by the Board of Directors of Company or nomination for election by
Company's stockholders was approved by (i) Executive (if a director) or (ii) a
vote of at least a majority of the directors then still in office who either
were directors on the date hereof or whose election or nomination for election
was previously so approved, shall cease for any reason to constitute a majority
of the Board; or
(3) at any time after the date hereof, the stockholders of
Company approve a complete liquidation or dissolution of Company, except in
connection with a recapitalization or other transaction which does not otherwise
constitute a Change of Control for purposes of Section 4.5(a)(1) above;
4.6 TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. In the event Executive's
employment is voluntarily terminated by Executive without Good Reason, Company
shall not be obligated to make any further payments to Executive hereunder other
than Accrued Obligations through the date of such termination.
4.7 FAILURE TO EXTEND. A failure by Company to extend Executive's Agreement
pursuant to Section 2.1 shall not be treated as a termination of Executive's
employment for purposes of this Agreement; provided, however, that if the
Company gives notice of nonrenewal of the initial Term in accordance with
Section 2.1, the Company shall continue to pay to Executive Base Compensation
for the twelve (12) month period after expiration of the initial Term. For this
purpose, the "at risk" component of Base Compensation shall be added to and paid
as part of Executive's salary.
4.8 MITIGATION. Executive shall not be required to mitigate amounts payable
under this Section 4 by seeking other employment or otherwise, and there shall
be no offset against amounts due Executive under this Agreement on account of
subsequent employment except as specifically provided herein.
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SECTION 5. NON-COMPETITION AND CONFIDENTIALITY
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5.1 NON-COMPETITION
(a) During the Term, including any unexpired portion thereof, and for a
period of one year thereafter (the "Non-Competition Period"), Executive shall
not, directly or indirectly, own, manage, operate, join, control, participate
in, invest in or otherwise be connected or associated with, in any manner,
including, without limitation, as an officer, director, employee, distributor,
independent contractor, independent representative, partner, consultant,
advisor, agent, proprietor, trustee or investor, any Competing Business located
in any state or region (including foreign jurisdictions) where Company conducts
business; provided, however, that (i) ownership of 4.9% or less of the stock or
other securities of a corporation, the stock of which is listed on a national
securities exchange or is quoted on the NASDAQ Stock Market's National market,
shall not constitute a breach of this Section 5, so long as the Executive does
not in fact have the power to control, or direct the management of, or is not
otherwise engaged in activities with, such corporation and (ii) investment
banking and similar advisory services after the Term, even if provided to a
Competing Business, shall not constitute a breach of this Section 5.
(b) For purposes hereof, the term "Competing Business" shall mean any
business or venture which is substantially similar to the whole or any
significant part of the business conducted by Company.
(c) Notwithstanding the above, except as provided below, the
non-competition obligation in Section 5.1(a) shall not apply after the Term if
Executive's employment is terminated (i) by Company without Cause, (ii) by
Executive for Good Reason or (iii) as a result of nonrenewal of the Agreement by
Company; provided, however, in the event of any such termination, the
non-competition obligation shall continue after the Term for the remainder of
the Non-Competition period if (i) Executive is entitled to the Severance Payment
and payment thereof is made within 90 days after expiration of the Term or (ii)
Company has given written notice to Executive at least 12 months prior to the
expiration of the Term agreeing to continue payment of Base Compensation to
Executive after the Term and during the remainder of the Non-Competition Period.
For this purpose, the "at risk" component of Base Compensation shall be added to
and paid as part of Executive's salary.
5.2 NO SOLICITATION. During the Term, including any unexpired portion
thereof, and for a period of one year thereafter, the Executive shall not,
directly or indirectly, including on behalf of, for the benefit of, or in
conjunction with, any other person or entity, (i) solicit, assist, advise,
influence, induce or otherwise encourage in any way, any employee of Company to
terminate Executive's relationship with Company for any reason, or assist any
person or entity in doing so, or employ, engage or otherwise contract with any
employee or former employee of Company in a Competing Business or any other
business unless such former employee shall not have been employed by Company for
a period of at least one year, (ii) interfere in any manner with the
relationship between any employee and Company or (iii) contact, service or
solicit any existing clients, customers or accounts of Company on behalf of a
Competing Business, either as an individual on Executive's own account, as an
investor, or as an officer, director, partner, joint venturer, consultant,
employee, agent or sales man of any other person or entity.
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5.3 CONFIDENTIAL INFORMATION
(a) "Confidential Information" shall mean confidential records and
information, including, but not limited to, development, marketing, purchasing,
organizational, strategic, financial, managerial, administrative, manufacturing,
production, distribution and sales information, distribution methods, data,
specifications and processes (including the Transferred Property as hereinafter
defined) presently owned or at any time hereafter developed by Company or its
agents or consultants or used presently or at any time hereafter in the course
of the business of Company, that are not otherwise part of the public domain.
(b) Executive hereby sells, transfers and assigns to Company, or to any
person or entity designated by Company, all of Executive's entire right, title
and interest in and to all inventions, ideas, methods, developments, disclosures
and improvements (the "Inventions"), whether patented or unpatented, and
copyrightable material, and all trademarks, trade names, all goodwill associated
therewith and all federal and state registrations or applications thereof, made,
adopted or conceived by solely or jointly, in whole or in part (collectively,
the "Transferred Property"), prior to or during the Term which (i) relate to
methods, apparatus, designs, products, processes or devices sold, leased, used
or under construction or development by Company or (ii) otherwise relate to or
pertain to the business, products, services, functions or operations of the
Company. Executive shall make adequate written records of all Inventions, which
records shall be Company's property and shall communicate promptly and disclose
Company, in such forms Company requests, all information, details and data
pertaining to the aforementioned Inventions. Whether during the Term or
thereafter, Executive shall execute and deliver to Company such formal transfers
and assignments and such other papers and documents as may be required of
Executive to permit Company, or any person or entity designated by Company, to
file and prosecute patent applications (including, but not limited to, records,
memoranda or instruments deemed necessary by Company for the prosecution of the
patent application or the acquisition of letters patent in the United states,
foreign counties or otherwise) and, as to copyrightable material, to obtain
copyrights thereon, and as to trademarks, to record the transfer of ownership of
any federal or state registrations or applications.
(c) All such Confidential Information is considered secret and will be
disclosed to the Executive in confidence, and Executive acknowledges that, as a
consequence of Executive's employment and position with Company, Executive may
have access to and become acquainted with Confidential Information. Except in
the performance of Executive's duties as an employee of Company, Executive shall
not, during the term and at all times thereafter, directly or indirectly for any
reason whatsoever, discloser or use any such Confidential Information. All
records, files, drawings, documents, equipment and other tangible items,
wherever located, relating in any way to or containing Confidential Information,
which Executive has prepared, used or encountered or shall in the future
prepare, use or encounter, shall be and remain Company's sole and exclusive
property and shall be included in the Confidential Information. Upon termination
of this agreement, or whenever requested by Company, Executive shall promptly
deliver to Company any and all of the Confidential Information and copies
thereof, not previously delivered to Company, that may be in the possession or
under the control of the Executive. The foregoing restrictions shall not apply
to the use, divulgence, disclosure or grant
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of access to Confidential Information to the extent, but only to the extent, (i)
expressly permitted or required pursuant to any other written agreement between
Executive and Company, (ii) such Confidential Information has been publicly
disclosed (not due to a breach by the Executive of Executive's obligations
hereunder, or by breach of any other person, of a fiduciary or confidential
obligation to Company or (iii) the Executive is required to disclose
Confidential Information by or to any court of competent jurisdiction or any
governmental or quasi-governmental agency, authority or instrumentality of
competent jurisdiction, provided, however, that the Executive shall, prior to
any such disclosure, immediately notify Company of such requirements and
provided further, however, that the Company shall have the right, at its
expense, to object to such disclosures and to seek confidential treatment of any
Confidential Information to be so disclosed on such terms as it shall determine.
5.4 ACKNOWLEDGEMENT; REMEDIES; SURVIVAL OF THIS AGREEMENT
(a) Executive acknowledges that violation of any of the covenants and
provisions set forth in this Agreement would cause Company irreparable damage
and agrees that Company's remedies at law for a breach or threatened breach of
any of the provisions of this Agreement would be inadequate and, in recognition
of this fact, in the event of a breach or threatened breach by Executive of any
of the provisions of this Agreement, it is agreed that, in addition to the
remedies at law or in equity, Company shall be entitled, without the posting of
a bond, to equitable relief in the form of specific performance, a temporary
restraining order, temporary or permanent injunction, or any other equitable
remedy which may then be available for the purposes of restraining Executive
from any actual or threatened breach of such covenants. Without limiting the
generality of the foregoing, if Executive breaches or threatens to breach this
Section 5 hereof, such breach or threatened breach will entitle Company to
enjoin Executive from disclosing any Confidential Information to any Competing
Business, to enjoin any Competing Business from retaining Executive or using any
such Confidential Information, to enjoin Employee form rendering personal
services to or in connection with any Competing Business. The rights and
remedies of the parties hereto are cumulative and shall not be exclusive, and
each such party shall be entitled to pursue all legal and equitable rights and
remedies and to secure performance of the obligations and duties of the other
under this Agreement, and the enforcement of one or more of such rights and
remedies by a party shall in no way preclude such party from pursuing, at the
same time or subsequently, any and all other rights and remedies available to
it.
(b) The provisions of this Agreement shall survive the termination of
Executive's employment with Company.
SECTION 6. MISCELLANEOUS
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6.1 CANCELLATION OF CONSULTING AGREEMENT Except for the obligation to pay
the consulting fees and the 20% performance bonus (to the extent earned) through
June 30, 1998, the Consulting Agreement is hereby cancelled, provided, however,
that this shall not be construed to limit or terminate Executive's entitlement
to amounts accrued for periods through the date of this Agreement, including,
without limitation, the 250,000 stock options granted thereunder. Nothing
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in this Agreement or the Consulting Agreement shall be construed to entitle
Executive to any fee on other compensation relating to the Company's sale of
stock to Xxxxx Xxxxxxx and the Designees (as defined therein) pursuant to the
terms of an Amended and Restated Stock Purchase Agreement dated June 18, 1998.
6.2 ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Princeton,
New Jersey, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The parties consent to the
authority of the arbitrator, if the arbitrator so determines, to award fees and
expenses (including legal fees) to the prevailing party in the arbitration.
Notwithstanding the foregoing, Company shall be entitled to enforce the
provisions of Section 5 hereof through proceedings brought in a court of
competent jurisdiction as contemplated by Section 6.9 hereof.
6.3 SEVERABILITY; Reasonableness of Agreement. If any term, provision or
covenant of this Agreement or part thereof, or the application thereof to any
person, place or circumstance shall be held to be invalid, unenforceable or void
by a court of competent jurisdiction, the remainder of this Agreement and such
term, provision or covenant shall remain in full force and effect, and any such
invalid, unenforceable or void term, provision or covenant shall be deemed,
without further action on the part of the parties hereto, modified, amended and
limited, and the court shall have the power to modify, amend and limit any such
term, provision or covenant, to the extent necessary to render the same and the
remainder of the Agreement valid, enforceable and lawful. In this regard, the
Executive understands that the provisions of Section 5 may limit Executive's
ability to earn a livelihood in a business similar or related to the business of
Company, but nevertheless agrees and acknowledges that (i) the provisions of
Section 5 are reasonable and necessary for the protection of Company, and do not
impose a greater restraint than necessary to protect the goodwill or other
business interest of Company and (ii) such provisions contain reasonable
limitations as to the time and the scope of activity to be restrained. In
consideration of the foregoing and in light of Executive's education, skills and
abilities, Executive agrees that all defenses by Executive to the strict
enforcement of such provisions are hereby waived by Executive.
6.4 KEY EMPLOYEE INSURANCE. Company shall have the right at its expense to
purchase insurance on the life of Executive, in such amounts as it shall from
time to time determine, of which Company shall be the beneficiary. Executive
shall submit to such physical examinations as may reasonably be required and
shall otherwise cooperate with Company in obtaining such insurance.
6.5 ASSIGNMENT; BENEFIT. This Agreement shall not be assignable by
Executive, other than Executive's rights to payments or benefits hereunder,
which may be transferred only by will or the laws of descent and distribution.
Upon Executive's death, this Agreement and all rights of Executive hereunder
shall inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's interests under this Agreement. No rights or
obligations of Company under this Agreement may be assigned or transferred
except that Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all
12
or substantially all of the business and/or assets of Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean Company as
hereinbefore defined and any successor to its business and/or assets (by merger,
purchase or otherwise) which executes and delivers the agreement provided for in
this Section 5.4 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
6.6 NOTICES. All notices hereunder shall be in writing and shall be
sufficiently given if hand-delivered, sent by documented overnight delivery
service or registered or certified mail, postage prepaid, return receipt
requested or by telegram or telefax (confirmed by U.S. mail), receipt
acknowledged, addressed as set forth below or at such other address for either
party as may be specified in a notice given as provided herein by such party to
the other. Any such notice shall be deemed to have been given as of the date
received, in the case of personal delivery, or on the date shown on the receipt
or confirmation therefor, in all other cases. Any and all service of process and
any other notice in any such action, suit or proceeding shall be effective
against any party if given as provided in this Agreement; provided that nothing
herein shall be deemed to affect the right of any party to serve process in any
other manner permitted by law.
(a) If to Company:
Total Research Corporation
Princeton Corporate Center
0 Xxxxxxxxxxxx Xxx
Xxxxxxxxx, XX 00000
With Copies To:
Xxxxxx X. Xxxxxx, Esq.
Drinker Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxx, Esq.
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
If to Executive:
Xxxxxx Xxxxxxxxx
00 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
13
6.7 TERMINATION PROCEDURES. Any termination of Executive's employment by
the Company or by Executive during the Term (other than termination pursuant to
death) shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
6.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement constitutes the
entire agreement between the parties hereto with respect to the matters
contemplated herein and supersedes all prior agreements and understandings with
respect thereto. No amendment, modification, or waiver of this Agreement shall
be effective unless in writing. Neither the failure nor any delay on the part of
any party to exercise any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power, or privilege with respect to such
occurrence or with respect to any other occurrence.
6.9 GOVERNING LAW. This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the laws of the State of New Jersey
and the federal laws of the United States of America, to the extent applicable,
without giving effect to otherwise applicable principles of conflicts of law.
The parties hereto expressly consent to the jurisdiction of any state or federal
court located in New Jersey, and to venue therein, and consent to the service of
process in any such action or proceeding by certified or registered mailing of
the summons and complaint therein directed to Executive or Company, as the case
may be, at its address as provided in Section 6.6 hereof.
6.10 WITHHOLDING. All payments hereunder shall be subject to any required
withholding of Federal, state and local taxes pursuant to any applicable law or
regulation.
6.11 HEADINGS; COUNTERPARTS. The headings of paragraphs in this Agreement
are for convenience only and shall not affect its interpretation. This Agreement
may be executed in two or more counterparts, each of which shall be deemed to be
an original and all of which, when taken together, shall be deemed to constitute
the same Agreement.
6.12 FURTHER ASSURANCES. Each of the parties hereto shall execute such
further instruments and take such other actions as the other party shall
reasonably request in order to effectuate the purposes of this Agreement.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TOTAL RESEARCH CORPORATION
By: /s/ Xxxxx Xxxxxxx
-----------------
Xxxxx Xxxxxxx, Chairman of the Executive Committee
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx, Executive Committee
/s/ Xxxxxx Xxxxxxxxx
--------------------
Executive
15
Exhibit A
SENIOR MANAGEMENT COMPENSATION PLAN TERM SHEET
FISCAL YEAR 1999 THROUGH FISCAL YEAR 2001
Name: Xxxxxx Xxxxxxxxx
Title: President and Chief Executive Officer
A. COMPENSATION/SHORT-TERM
I. BASE COMPENSATION:
Base compensation for fiscal year 1999 will be $300,000; $175,000 of salary will
be paid on normally scheduled Company paydays, with the remaining $125,000
constituting "at risk" compensation to be paid within 90 days after the end of
the fiscal year if, and only if, at least ninety-five percent (95%) of Company's
Income Before Tax (as defined below) performance goal is achieved. Base
compensation increases beyond year one, will be based on individual performance
and contribution as set by the Executive Committee.
II. BONUS COMPENSATION:
Compensates the Executive if either the established Company Income Before Tax
(IBT) or Net Income (NI) performance goal is achieved. These corporate goals (
the "Performance Goals"), as identified in the attached exhibit title Three Year
Performance Goals, Fiscal Years 1999-2001, have been approved by the Executive
Committee at time of signing. The Performance Goals include certain assumptions
regarding revenue and expenses that are fundamental to the attainment of the
Bonus Compensation. If the Executive Committee or the Board initiates and
approves any material changes to these assumptions or projections that have not
been approved in advance in writing by the CEO, such change (a "Nonbudget Item")
, and the resulting direct effect on revenue and expenses, shall be disregarded
in calculating IBT or NI. Executive and Company shall mutually agree as to the
effect on revenue and expenses of the Nonbudget Item ( a "Nonbudget Item
Effect") within 10 days after Executive's or Company's written proposal as to
the effect of the Nonbudget Item Effect. If the parties fail to agree in writing
within such 10 day period, the Nonbudget Item Effect shall be determined by an
arbitrator mutually agreeable to the Company and Executive. By way of
illustration of a Nonbudget Item, changes that would require a CEO approval
include (I) material increases in discretionary expense items or new expense
line items, (ii) material changes in budgets and allocations that alter the
revenue or expense allocation or mix of the four divisions of the company, (iii)
material changes in the overhead or expense structure of the four divisions or
(iv) expenditures or reallocations of internally generated cash flow to
acquisitions of new business or lines of business.
16
IBT and NI shall be adjusted to add back any compensation expense item resulting
from the exercise, cancellation, repurchase or conversion of any Stock Option,
or the issuance of any Company stock, after June 30, 1998.
This Bonus Compensation represents a bonus of 20% of the total Base Compensation
for the applicable fiscal year and will be paid as follows:
If either the IBT or NI goals have been reached, the Executive will be issued
20% of his annual Base Compensation for the applicable fiscal year in the form
of restricted shares of Company stock (the "Bonus Shares", including for this
purpose any additions as a results of a stock dividend or split). The valuation
of the Bonus Shares will be based on the average of the closing bid price of the
Company stock on the NASDAQ exchange for a period of 90 calendar days ending on
the last day of the week prior to the determination of such stock bonus. The
amount of the stock bonus will be determined within 90 days after the end of the
fiscal year. Additionally, the Executive agrees that he will hold the Bonus
shares and forfeit the Bonus Shares if he voluntarily elects to leave the
Company prior to the expiration of the Term of his Employment Agreement or is
terminated for Cause under such Agreement.
Should the IBT and NI performance fall below the Performance Goals but one is at
least 95% thereof, the Executive will be entitled to a reduced bonus in the form
of Bonus Shares of ten percent (10%) of Base Compensation. The method of payment
for this performance level is indicated in the preceding paragraph.
The Income Before Tax (IBT) goal referenced above and in the Excess Performance
Bonus Opportunity, excludes any extra ordinary expenses that may result from the
cancellation, repurchase, conversion or reissuing of stock options.
B. EXCESS PERFORMANCE BONUS OPPORTUNITY:
Payment under this portion of the Compensation Plan is for performance in excess
of established Performance Goals. The Executive will be paid 15% of all NI in
excess of the NI Performance Goal if, and only if IBT performance is 10% greater
than the IBT Performance Goal. This payment will be made in the form of Bonus
Shares based on the same provisions covered in the bonus section of A of this
Plan. For purposes of this Paragraph B only, NI, IBT, and NI and IBT Performance
Goals will be based only on revenue and expenses allocable to the existing lines
of the Company's business, sometimes referred to as the "Core Business", unless
the Executive and Company otherwise agree in writing. (e.g. results from
acquisitions will not be included in NI or IBT unless the Executive and Company
agree first in writing). Core Business NI and IBT calculations shall be made by
the CFO, the Executive, subject to approval by the Executive Committee.
C. LOAN
The Executive will be offered a non-collaterialized loan provision from the
Company, which provides the Executive with three annual loans of $100,000 each,
to be made separately on
17
August 1, 1998, August 1,1999 and August 1, 2000. Interest will be at minimum
applicable federal rate for IRS purposes. The term of the loan will be as
follows. The entire principal and interest due under the loan will be due on
June 30, 2001 provided, however, the entire amount will be forgiven if (i) the
price of the Company stock is at least $10 per share (after adjustments for
stock dividend ,stock splits and similar recapitalization), determined by
averaging the closing price on the NASDAQ exchange for the 90 calendar day
period preceding June 30, 2001 or (ii) the Executive's Employment Agreement is
terminated prior to June 30, 2001 in a manner that requires a Severance Payment
(as defined in such Agreement) to Executive. This provision shall survive
termination of Executive's employment.
