EXHIBIT 10.2
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
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Executive hereby accepts employment by Company for the period and upon the terms
and conditions hereinafter set forth.
1.2 CAPACITY AND DUTIES.
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(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
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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
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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
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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
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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
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time 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
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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
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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
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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
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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
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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
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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
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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
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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.
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(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 entitled
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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.
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(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
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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
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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
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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
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(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)
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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
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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
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(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,
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that the Executive shall, prior to any such disclosure, immediately notify
Company of such requirements and provided further, however, that the
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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
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(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 in
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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
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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
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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.
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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
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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.
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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.
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