Exhibit 10.13
EMPLOYMENT, CONFIDENTIALITY,
NON-COMPETITION AND SEVERANCE AGREEMENT
THIS EMPLOYMENT, CONFIDENTIALITY, NON-COMPETITION AND SEVERANCE
AGREEMENT (the "Agreement") dated as of March 1, 2000 is made and entered into
by and between ▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company"),
and C. ▇▇▇ ▇▇▇▇▇ (the "Executive").
WHEREAS, the Company wishes to retain the services of Executive as a
senior executive of the Company who is expected to make major contributions to
the short- and long-term profitability, growth and financial strength of the
Company; and
WHEREAS, Company and Executive believe that it is in their respective
best interests to enter into and deliver this Agreement; and
WHEREAS, the Executive acknowledges that in the course of his
employment by the Company, he will or may have access to and become informed of
the Company's confidential information and will frequently come into contact
with the Company's customers (including, without limitation, its investigative
research sites) and accounts such that the Executive will influence the business
and relationships between the Company and its customers and accounts; and
WHEREAS, the Executive has agreed to certain confidentiality, non-
solicitation and non-competition agreements; and in consideration for such
agreements, the Company has agreed to pay the Executive termination payments
upon severance of the Executive's employment hereunder; and
WHEREAS, the Company recognizes that, as is the case for most
companies, the possibility of a Change in Control (as defined below) exists; and
WHEREAS, the Company desires to ensure both present and future
continuity of management and desires to establish certain minimum severance
benefits for certain of its senior executives, including the Executive,
applicable in the event of a Change in Control; and
WHEREAS, the Company desires to ensure that its senior executives are
not practically disabled from discharging their duties in respect of a proposed
or actual transaction involving a Change in Control.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms. In addition to terms defined elsewhere herein, the
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following terms have the following meanings when used in this Agreement
with initial capital letters:
(a) "Base Pay" means the Executive's annual base salary as provided
in Section 5 of this Agreement, at a rate not less than the
Executive's annual fixed or base compensation as in effect for
Executive immediately prior to the occurrence of a Change in
Control or such higher rate as may be determined from time to
time after a Change in Control by the Board or a committee
thereof.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means
(i) intentional engagement by the Executive in misconduct
which is materially injurious to the Company, monetarily or
otherwise;
(ii) intentional act by the Executive of fraud, embezzlement or
theft in connection with his duties or in the course of his
employment with the Company or any subsidiary;
(iii) intentional damage by the Executive to property of the
Company or any subsidiary;
(iv) material breach of Section 14 or Section 15 hereof;
(v) intentional engagement by the Executive in any Competitive
Activity; or
(vi) intentional wrongful disclosure by the Executive of secret
processes or confidential information of the Company or
any Subsidiary;
For purposes of this Agreement, no act or failure to act on the
Executive's part shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but it shall be
deemed "intentional" only if it was not in good faith and without
reasonable belief that his act or failure to act was in the
Company's best interest. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for "Cause"
hereunder unless and until the Executive receives a copy of a
resolution duly adopted by the affirmative vote of not less than
two-thirds of the Board then in office (excluding the Executive
if he is a Director) at a meeting of the Board called and held
for such purpose, after reasonable notice to the Executive and an
opportunity for the Executive, together with his counsel (if the
Executive chooses to have counsel present at such meeting), to be
heard before the Board, finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct constituting
"Cause" as herein defined and specifying the particulars thereof.
Nothing herein will limit the right of the Executive or his
beneficiaries to contest the validity or propriety of any such
determination.
(d) "Change in Control" means the occurrence during the term of this
Agreement of any of the following events:
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(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act)
of 15% or more of the combined voting power of the then
outstanding Voting Stock; provided, however, that for
purposes of this Section 1(d)(i), the following
acquisitions shall not constitute a Change in Control: (A)
any acquisition (including, without limitation, a
financing) directly from the Company that is approved by
the Incumbent Board (as defined below), (B) any acquisition
by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the
Company or any Subsidiary or (D) any acquisition by any
Person pursuant to a Business Combination (as defined
below) that complies with clauses (I), (II) and (III) of
subsection (iii) of this Section 1(d);
(ii) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board except that any
individual becoming a Director subsequent to the date
hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least
two-thirds of the Directors then comprising the Incumbent
Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is
named as a nominee for director, without objection to such
nomination) shall be deemed to have been a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (within
the meaning of Rule 14a-11 of the Exchange Act) with
respect to the election or removal of Directors or other
actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board;
(iii) consummation of (A) a reorganization, merger or
consolidation or (B) a sale or other disposition of all or
substantially all of the assets of the Company (each, a
"Business Combination"), unless, in each case, immediately
following such Business Combination, (I) all or
substantially all of the individuals and entities who were
the beneficial owners of Voting Stock of the Company
immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of Directors of the entity
resulting from such Business Combination (including,
without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions
relative to each other as their ownership, immediately
prior to such Business Combination, of the Voting Stock of
the Company, (II) no Person (other than the Company,
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such entity resulting from such Business Combination or any
employee benefit plan (or related trust) sponsored or
maintained by the Company, any Subsidiary or such entity
resulting from such Business Combination) beneficially
owns, directly or indirectly, 15% or more of the then
outstanding shares of common stock of the entity resulting
from such Business Combination or the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors of such entity and
(III) at least a majority of the members of the Board of
Directors of the entity resulting from such Business
Combination were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action
of the Board providing for such Business Combination; or
(iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant
to a Business Combination that complies with clauses (I),
(II) and (III) of subsection (iii) of this Section 1(d);
(e) "Competitive Activity" means the Executive's participation,
without the written consent of the Board of the Company, as an
employee, officer, consultant or director of any business enterprise if
such enterprise engages in substantial and direct competition with the
Company and such enterprise's sales of any product or service
competitive with any product or service of the Company amounted to 50%
of such enterprise's net sales for its most recently completely fiscal
year and if the Company's net sales of said product or service amounted
to 50% of the Company's net sales for its most recently completed
fiscal year. "Competitive Activity" will not include (i) the mere
ownership of securities in any such enterprise and the exercise of
rights appurtenant thereto or (ii) participation in the management of
any such enterprise other than in connection with the competitive
operations of such enterprise.
(f) "Disabled" means the Executive's incapacity due to physical or
mental illness to substantially perform his duties on a full-time basis
for six consecutive months unless the Executive returns to the full-
time performance of the Executive's duties for a period of at least
three consecutive months no later than 30 days after the Company has
given the Executive a notice of termination. If the Executive disagrees
with a determination to terminate him because the Company believes he
is Disabled, the Company and the Executive, or in the event of the
Executive's incapacity to designate a doctor, the Executive's legal
representative, together shall choose a qualified medical doctor who
shall determine whether the Executive is Disabled. If the Company and
the Executive cannot agree on the choice of a qualified medical doctor,
then the Company and the Executive each shall choose a qualified
medical doctor and the two doctors together shall choose a third
qualified medical doctor, who shall determine whether the Executive is
Disabled. The determination of the chosen qualified medical doctor as
to whether the Executive is Disabled shall be binding upon the Company
and the Executive unless such determination is clearly made in bad
faith.
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(g) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement
income and welfare benefit policies, plans, programs or arrangements in
which Executive is entitled to participate, including without
limitation any stock option, stock purchase, stock appreciation,
savings, pension, supplemental executive retirement, or other
retirement income or welfare benefit, deferred compensation, incentive
compensation, group or other life, health, medical/hospital or other
insurance (whether funded by actual insurance or self-insured by the
Company), disability, salary continuation, expense reimbursement and
other employee benefit policies, plans, programs or arrangements that
may now exist or any equivalent successor policies, plans, programs or
arrangements that may be adopted hereafter by the Company, providing
perquisites, benefits and service credit for benefits at least as great
in the aggregate as are payable thereunder prior to a Change in
Control.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(i) "Incentive Pay" means an annual amount equal to not less than the
highest aggregate annual bonus, incentive or other payments of cash
(or, if taken in lieu of cash, stock) compensation, in addition to Base
Pay, made or to be made in regard to services rendered in any calendar
year during the three calendar years immediately preceding the year in
which a Change in Control occurs pursuant to any bonus, incentive,
profit-sharing, performance, discretionary pay or similar agreement,
policy, plan, program or arrangement (whether or not funded) of the
Company, or any successor thereto providing benefits at least as great
as the benefits payable thereunder prior to a Change in Control.
(j) "Involuntary Termination" means the occurrence of any of the
following: (i) the Company gives written notice to the Executive that
the Company intends to terminate the Employment Provisions (as defined
below), (ii) the Company reduces the Executive's base salary as set
forth in Section 5, unless such reduction in base salary is part of a
reduction applicable generally to senior executives of the Company or
(iii) unless otherwise agreed by the Executive, the Company relocates
the Executive or his offices or the principal place where he is
required to perform his duties hereunder farther than 50 miles from
Gurnee, Illinois or such other place as the Company's principal
executive offices may, from time to time, be located.
(k) "Restricted Business" means (i) any business or division of a
business which consists of providing services to investigative sites
and to their customers in connection with clinical research and
development, (ii) any business or division of a business which operates
an interactive Internet healthcare information site for consumers,
(iii) any business of a kind in whole or in part similar to that
heretofore or hereafter engaged in by the Company or any of its
subsidiaries, and (iv) any other principal line of business developed
or acquired by the Company or its affiliates.
(l) "Severance Period" means the period commencing on the date of the
first occurrence of a Change in Control and expiring on the earliest of
(i) the second
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anniversary of the occurrence of the Change in Control, (ii) the
Executive's death or (iii) the Executive's attainment of age 65 except that
commencing on each anniversary of the Change in Control, the Severance
Period shall automatically be extended for an additional year unless, not
later than 60 calendar days prior to such anniversary date, either the
Company or the Executive shall have given written notice to the other that
the Severance Period is not to be so extended.
(m) "Subsidiary" means an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding Voting Stock.
(n) "Termination Date" means the date on which the Executive's employment
is terminated (the effective date of which shall be the date of
termination, or such other date that may be specified by the Executive if
the termination is pursuant to Section 10(b)).
(o) "Voluntary Termination" means the occurrence of any of the following:
(i) the date two weeks after the Executive gives written notice to the
Company that the Executive intends to terminate the Employment Provisions
or if later, the date specified in such written notice, (ii) the Executive
dies or (iii) the Executive becomes Disabled.
(p) "Voting Stock" means securities entitled to vote generally in the
election of directors.
2. Term.
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(a) The term of Sections 1 through 9 of this Agreement (the "Employment
Provisions") commences on the date this Agreement is approved by the
Board and, subject to any benefit continuation requirements of
applicable laws, expires on the earliest of (i) an Involuntary
Termination, (ii) a Voluntary Termination or (iii) one year from the
date hereof, except that the Employment Provisions shall
automatically renew for successive one-year periods upon the terms
and conditions set forth herein, commencing on the first anniversary
of the date hereof, and on each anniversary date thereafter, until an
Involuntary Termination or Voluntary Termination occurs. For purposes
of this Agreement, any reference to the "term" of the Employment
Provisions includes the original term and any extension thereof.
(b) The term of Sections 10 through 13 of this Agreement (the "Severance
Provisions") commences on the date this Agreement is approved by the
Board and expires on the later of (i) one year from the date hereof
or (ii) the expiration of the Severance Period except that (A)
commencing on each anniversary of the date hereof, such period shall
automatically be extended for an additional year until such date as
the Company or the Executive gives the other written notice not later
than 60 calendar days prior to such anniversary date that it or he,
as the case may be, does not wish to have the term extended and (B)
subject to the last sentence of Section 18, if, prior to a Change in
Control, the Executive ceases for any reason to
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be an employee of the Company, thereupon without further action the
term shall expire and this Agreement will immediately terminate and
be of no further effect.
(c) This Agreement will be effective and binding immediately upon
approval by the Board, but, anything in this Agreement to the
contrary notwithstanding, the Severance Provisions shall not be
operative unless and until a Change in Control occurs. Upon the
occurrence of a Change in Control at any time during the term of this
Agreement, without further action, the Severance Provisions shall
become immediately operative.
3. Employment. The Company hereby agrees to employ the Executive, and the
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Executive hereby agrees to be employed by the Company, upon the terms and
conditions herein set forth.
4. Duties of the Executive. The Executive shall serve as President of the
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Research Services Division of the Company. The Executive shall report
directly to the Chief Executive Officer. The Executive shall devote his
full time and best efforts to the Company's business of providing services
to investigative sites and to their customers in connection with clinical
research and development and providing services to sponsor hospitals and
consumers in connection with the Company's interactive Internet healthcare
information site and any other related duties and responsibilities that may
from time to time be prescribed by the Chief Executive Officer, and so long
as it does not interfere with the Executive's employment hereunder, the
Executive may serve as an officer, director or otherwise participate in
educational, welfare, social, religious and civic organizations.
5. Compensation.
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(a) The Company shall pay the Executive a base salary of $200,000.00 per
annum, which base salary the Board may adjust from time to time,
payable at the times and in the manner consistent with the Company's
general policies regarding compensation of senior executives. Such
base salary includes any salary reduction contributions to (i) any
Company-sponsored plan (the "401(k) Plan") that includes a cash-or-
deferred arrangement under Section 401(k) of the Internal Revenue Code
of 1986, as amended (the "Code"), (ii) any other Company-sponsored
plan of deferred compensation or (iii) any Company-sponsored
"cafeteria plan" under Section 125 of the Code.
(b) If the Board authorizes cash incentive compensation under the
Company's executive incentive compensation plan or such other
management incentive program or arrangement as may be approved by the
Board, Executive shall be eligible to participate in such plan,
program or arrangement on the most favorable terms and conditions
available to senior executive and management employees and shall be
eligible to receive an annual cash incentive bonus in an amount equal
to up to 50% of Executive's base salary for such fiscal year, or such
higher amount as the Board, in its sole discretion, may approve, which
cash incentive
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compensation shall be paid when incentive compensation is customarily
paid to the Company's senior executives. The target bonus for
achievement of Corporate objectives as approved by the Board of
Directors is 30% of base salary. The actual bonus may be higher of
lower based on the achievement of objectives. Pursuant to the
Company's applicable incentive or bonus plan as in effect from time to
time, Executive's cash incentive compensation for fiscal 2000 and
succeeding fiscal years during the term of this Agreement may be
determined according to criteria intended to qualify under Section
162(m) of the Code.
(c) The Company will grant to Executive under the Company's Amended and
Restated 1996 Employee Stock Option Plan (the "Plan") stock options
exercisable to purchase up to 92,500 shares of the Company's Class A
Common Stock, par value $.001 per share (the "Class A Common Stock")
at an exercise price per share of $10.00. Such options would become
exercisable to the extent of 25% of the shares covered by the option
on the first anniversary of the date of grant and the remaining 75% of
the shares covered by the option would vest in equal installments at
the end of each of the following twelve fiscal quarters of the
Company. To the extent permitted by applicable law and the terms and
conditions of the Plan, the above-referenced stock options shall be
"incentive stock options" as that term is defined under Section 422 of
the Code and any remaining stock options shall be non-qualified stock
options.
(d) The Company will grant to Executive under the Company's Amended and
Restated 1996 Employee Stock Option Plan (the "Plan") stock options
exercisable to purchase up to 50,000 shares of the Company's Class A
Common Stock, par value $.001 per share (the "Class A Common Stock")
at an exercise price per share of $10.00. Such options would become
exercisable in their entirety four years after the date of grant,
except that in the event of a successful initial public offering
(IPO), the options would become exercisable on the same schedule as
the options granted in 5(c) above. For example, if the Company
completed a successful IPO 18 months after the date of grant, 37.5% of
the options would become exercisable at that time, with the remainder
vesting in equal installments at the end of each of the following ten
fiscal quarters of the Company. To the extent permitted by applicable
law and the terms and conditions of the Plan, the above-referenced
stock options shall be "incentive stock options" as that term is
defined under Section 422 of the Code and any remaining stock options
shall be non-qualified stock options.
(e) The Company shall purchase and maintain term life insurance coverage
on the life of Executive in an amount not less than $1,000,000, the
proceeds of which, in the event of Executive's death during the term
of the Agreement, shall be, at the sole discretion of Executive's
estate, used at any time during the 180-day period following
Executive's death to repurchase up to $1,000,000 of the equity
securities owned by Executive at the time of his death (or acquired
thereafter by his estate pursuant to Executive's stock options) at a
price per share equal to the
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fair market value of such shares on the date of repurchase, as
determined by the Board in good faith. Any remaining proceeds of such
insurance policy shall be retained by the Company.
(f) The Company shall purchase and maintain a long-term disability policy
that would entitle Executive, should he become Disabled during the
term of this Agreement, to receive 60% of Executive's then current
base salary, which policy shall be in addition to any disability
coverage obtained by the Executive on his own behalf.
6. Benefits. The Company shall make available to the Executive, subject to the
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terms and conditions of the applicable plans, including without limitation
the eligibility rules, participation for the Executive and his eligible
dependents in the Company-sponsored employee benefit plans or arrangements
and such other usual and customary benefits now or hereafter generally
available to employees of the Company and such benefits and perquisites as
are made available to senior executives of the Company, including, without
limitation, equity and cash incentive programs and supplemental retirement,
deferred compensation and welfare plans.
7. Expenses. The Company shall pay or reimburse the Executive, in accordance
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with the general policies of the Company, for reasonable and necessary
expenses incurred by the Executive in connection with his duties on behalf
of the Company.
8. Place of Performance. In connection with his employment by the Company,
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unless otherwise agreed by the Executive, the Executive shall be based at
offices located in Gurnee, Illinois or, at the Company's request, such
other place as the Company's principal executive offices may, from time to
time, be located, except for travel reasonably required for Company
business.
9. Termination Payments, Vesting and Exercise of Stock Options upon
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Involuntary Termination other than for Cause or Voluntary Termination due
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to Death or Disability.
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(a) If an Involuntary Termination occurs other than for Cause or pursuant
to Section 10 and if the Executive enters into a release and
settlement agreement with the Company, then
(i) for a period of one year thereafter (the "Payment Period"), the
Company shall pay the Executive, in accordance with the Company's
regular payroll schedule, termination payments that in the
aggregate equal the sum of (A) the Executive's highest annual
base salary during the three-year period prior to the Executive's
termination plus (B) the Executive's average annual cash and
equity incentive compensation award during the three-year period
prior to the Executive's termination;
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(ii) during the Payment Period, the Company shall (A) to the extent
permitted under the 401(k) Plan, permit the Executive to
continue to participate in the 401(k) Plan and receive the
maximum matching contribution thereunder as if such Involuntary
Termination had not occured, or (B) if continued participation
in the 401(k) Plan is not permitted under the 401(k) Plan, pay
to the Executive an amount equal to the maximum matching
contribution to which he would have been entitled under the
Company's 401(k) Plan as if such Involuntary Termination had not
occurred; and
(iii) Executive shall have the right to exercise any and all vested
stock options at any time not later than 90 days after the date
of the Involuntary Termination.
(b) Notwithstanding anything to the contrary herein, any termination
payments which the Executive becomes entitled to receive under Section
9(a) shall be reduced to the extent that the Executive receives
payments of severance compensation pursuant to Section 1
(c) Any termination payments hereunder shall not be taken into account for
purposes of any retirement plan or other benefit plan sponsored by the
Company, except as otherwise set forth herein or as expressly required
by such plans or applicable law.
(d) If a Voluntary Termination due to Executive's death during the term of
this Agreement occurs, then notwithstanding anything to the contrary
in the Executive's stock option agreement(s) or certificate(s) or in
the stock option plan(s) under which Executive's stock options were
granted, (i) one-third of the unvested portion of all stock options
granted to Executive shall become immediately exercisable as of the
date of Executive's death, and (ii) all other unvested stock options
held by Executive shall be immediately canceled. Executive's estate
shall have a period of one year following Executive's death to
exercise any vested stock options.
(e) If a Voluntary Termination due to Executive's becoming Disabled during
the term of this Agreement occurs, then notwithstanding anything to
the contrary in the Executive's stock option agreement(s) or
certificate(s) or in the stock option plan(s) under which Executive's
stock options were granted, (i) one-third of the unvested portion of
all stock options granted to Executive shall become immediately
exercisable as of the date of Disability, and (ii) all other unvested
stock options held by Executive shall be immediately canceled.
Executive shall have a period of one year following Executive's
Disability to exercise any vested stock options.
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(f) If the Executive dies while any amounts are payable to him hereunder,
all such amounts, unless otherwise provided herein, shall be paid to
the Executive's designated beneficiary, or, if none, then to the
Executive's estate.
(g) Notwithstanding the foregoing, if the Executive breaches Sections 14,
15 or 17 hereof, any right of the Executive to receive termination
payments, to have the vesting of his options accelerated or to have
the period during which he may exercise his options extended under
this Section 9 shall be forfeited, but without prejudice to any
exercise of options that may have occurred prior to such forfeit, and
the Executive shall reimburse the Company in full for all termination
payments made to the Executive under this Section 9 no later than 30
days after the Company gives notice of such breach to the Executive.
10. Termination Following a Change in Control.
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(a) If at any time during the Severance Period following the occurrence
of a Change in Control the Company terminates Executive's employment,
the Executive shall be entitled to the benefits provided by Section
11 unless such termination is the result of the occurrence of one or
more of the following events:
(i) The Executive's death;
(ii) The Executive's permanent disability within the meaning of,
and actual receipt of disability benefits pursuant to, the
long-term disability plan in effect for, or applicable to,
Executive immediately prior to the Change in Control; or
(iii) Cause.
(b) If at any time during the Severance Period following the occurrence
of a Change in Control the Executive terminates his employment with the
Company, the Executive shall be entitled to the benefits provided by
Section 11 if one or more of the following events has occurred (regardless
of whether any other reason, other than Cause as hereinabove provided, for
such termination exists or has occurred, including without limitation other
employment):
(i) Failure to maintain the Executive in the office or the
position, or a substantially equivalent office or position, of
or with the Company, which the Executive held immediately prior
to a Change in Control;
(ii) a reduction in the aggregate of the Executive's Base Pay and
Incentive Pay received from the Company and any Subsidiary from
that earned immediately prior to the Change in Control or the
termination or denial of the Executive's rights to Employee
Benefits or a reduction in the scope or value thereof from that
earned immediately prior to the Change in Control, any of which
is not remedied by the Company no later than 10 calendar days
after receipt by the Company of written notice from the
Executive of such change, reduction or termination, as the case
may be;
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(iii) determination by the Executive (which determination will be
conclusive and binding upon the parties hereto if it was made
in good faith and in all events will be presumed to have been
made in good faith unless otherwise shown by the Company by
clear and convincing evidence) that a change in circumstances
has occurred following a Change in Control, including, without
limitation, a change in the scope of the business or other
activities for which the Executive was responsible immediately
prior to the Change in Control, which has rendered the
Executive substantially unable to carry out, has substantially
hindered Executive's performance of, or has caused Executive to
suffer a substantial reduction in, any of the authorities,
powers, functions, responsibilities or duties attached to the
position held by the Executive immediately prior to the Change
in Control, which situation is not remedied no later than 10
calendar days after receipt by the Company of written notice
from the Executive of such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or
substantially all of its business and/or assets, unless the
successor or successors (by liquidation, merger, consolidation,
reorganization, transfer or otherwise) to which all or
substantially all of its business and/or assets have been
transferred (directly or by operation of law) assumed all
duties and obligations of the Company under this Agreement
pursuant to Section 25(a);
(v) The Company relocates its principal executive offices, or
requires the Executive to have his principal location of work
changed, to any location that is in excess of 50 miles from the
location thereof immediately prior to the Change in Control, or
requires the Executive to travel away from his office in the
course of discharging his responsibilities or duties hereunder
at least 20% more (in terms of aggregate days in any calendar
year or in any calendar quarter when annualized for purposes of
comparison to any prior year) than was required of Executive in
any of the three full years immediately prior to the Change in
Control without, in either case, his prior written consent; or
(vi) Without limiting the generality or effect of the foregoing, any
material breach of this Agreement by the Company or any
successor thereto which is not remedied by the Company within
10 calendar days after receipt by the Company of written notice
from the Executive of such breach.
A termination by the Company pursuant to Section 10(a) or by the Executive
pursuant to Section 10(b) will not affect any rights that the Executive may have
pursuant to any agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the terms
thereof, except for any rights to severance compensation to which Executive may
be entitled upon termination of employment under Section 9.
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11. Severance Compensation.
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(a) If at any time during the Severance Period following the occurrence of
a Change in Control the Company terminates the Executive's employment other
than pursuant to Section 10(a) or the Executive terminates his employment
pursuant to Section 10(b),
(i) the Company shall, no later than five business days after the
Termination Date, pay to the Executive a lump sum payment in an
amount equal to one times the sum of (A) Base Pay (at the
highest rate in effect for any period prior to the Termination
Date), plus (B) Incentive Pay (determined in accordance with
the standards set forth in Section 1(i));
(ii) the Company shall, for a period of twelve months following the
Termination Date (the "Continuation Period"), arrange to
provide the Executive with Employee Benefits that are welfare
benefits (but not stock option, stock purchase, stock
appreciation or similar compensatory benefits) substantially
similar to those that the Executive was receiving or entitled
to receive immediately prior to the Termination Date (or, if
greater, immediately prior to the reduction, termination or
denial described in Section 10(b)(ii)), except that the level
of any such Employee Benefits to be provided to the Executive
may be reduced in the event of a corresponding reduction
generally applicable to all recipients of or participants in
such Employee Benefits, which Continuation Period will be
considered service with the Company for the purpose of
determining service credits and benefits due and payable to the
Executive under the Company's retirement income, supplemental
executive retirement and other benefit plans of the Company
applicable to the Executive, his dependents or his
beneficiaries immediately prior to the Termination Date;
(iii) the Company shall provide the Executive with outplacement
services by a firm selected by the Executive, at the expense of
the Company in an amount up to 20% of the Executive's Base Pay;
and
(iv) notwithstanding anything to the contrary in the Executive's
stock option agreement(s) or certificate(s) or in the stock
option plan(s) under which Executive's stock options were
granted, (A) (i) all of Executive's stock options that are
outstanding as of the date hereof and are not then exercisable
shall become immediately exercisable and shall terminate on the
date one year from the Termination Date, and not earlier, and
(2) all stock options that may be granted to Executive after
the date hereof and are not then exercisable shall terminate on
the Termination Date and (B) Executive may exercise all or any
of his options that are exercisable from time to time until the
date one year from the Termination Date.
If and to the extent that any benefit described in Section
11(a)(ii) or (iii) is not or cannot be paid or provided under
any policy, plan, program or arrangement of the Company or any
Subsidiary, as the case may be, then
13
the Company shall itself pay or provide for the payment to the
Executive, his dependents and beneficiaries, of such Employee
Benefits. Without otherwise limiting the purposes or effect of
Section 12, Employee Benefits otherwise receivable by the
Executive pursuant to Section 11(a)(ii) or (iii) shall be
reduced to the extent comparable welfare benefits are actually
received by the Executive from another employer during the
Continuation Period following the Executive's Termination
Date, and any such benefits actually received by the Executive
shall be reported by the Executive to the Company.
(b) Without limiting the rights of the Executive at law or in equity, if
the Company fails to make any payment or provide any benefit required
to be made or provided hereunder on a timely basis, the Company shall
pay interest on the amount or value thereof at an annualized rate of
interest equal to the so-called composite "prime rate" as quoted from
time to time during the relevant period in the Midwest Edition of The
Wall Street Journal. Such interest shall be payable as it accrues on
demand. Any change in such prime rate shall be effective on and as of
the date of such change.
(c) Notwithstanding any provision of this Agreement to the contrary, the
parties' respective rights and obligations under this Section 11 and
under Sections 12 and 16 shall survive any termination or expiration
of this Agreement or the termination of the Executive's employment
following a Change in Control for any reason whatsoever.
12. Limitation on Payments and Benefits. Notwithstanding any provision of this
-----------------------------------
Agreement to the contrary, if any amount or benefit to be paid or provided under
this Agreement would be an "Excess Parachute Payment," within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision thereto, but for the application of this sentence, then
the payments and benefits to be paid or provided under this Agreement shall be
reduced to the minimum extent necessary (but in no event to less than zero) so
that no portion of any such payment or benefit, as so reduced, constitutes an
Excess Parachute Payment except that the foregoing reduction shall be made only
if and to the extent that such reduction would result in an increase in the
aggregate payment and benefits to be provided, determined on an after-tax basis
(taking into account the excise tax imposed pursuant to Section 4999 of the
Code, or any successor provision thereto, any tax imposed by any comparable
provision of state law, and any applicable federal, state and local income
taxes). The determination of whether any reduction in such payments or benefits
to be provided under this Agreement or otherwise that is required pursuant to
the preceding sentence shall be made at the expense of the Company, if requested
by the Executive or the Company, by the Company's independent accountants. The
fact that the Executive's right to payments or benefits may be reduced by reason
of the limitations contained in this Section 12 shall not of itself limit or
otherwise affect any other rights of the Executive other than pursuant to this
Agreement. In the event that any payment or benefit intended to be provided
under this Agreement or otherwise is required to be reduced pursuant to this
Section 12, the Executive shall be entitled to designate the payments and/or
benefits to be so reduced in order to give effect to this Section 12. The
14
Company shall provide the Executive with all information reasonably requested by
the Executive to permit the Executive to make such designation. In the event
that the Executive fails to make such designation within 10 business days of the
Termination Date, the Company may effect such reduction in any manner it deems
appropriate.
13. No Mitigation Obligation. The Company hereby acknowledges that it will be
------------------------
difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date and that the non-
competition covenant contained in Section 15 will further limit the
employment opportunities for the Executive. Accordingly, the Company
acknowledges that the payment of the severance compensation by the Company
to the Executive in accordance with the terms of this Agreement is
reasonable and that the Executive will not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor will any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive hereunder or
otherwise, except as expressly provided in the last sentence of Section
11(a).
14. Confidentiality Agreement.
-------------------------
(a) The Executive acknowledges that in the course of his employment by the
Company, he will or may have access to and become informed of confidential
and secret information that is a competitive asset of the Company
("Confidential Information"), including, without limitation, (i) the terms
of agreements between the Company and its employees, customers (including,
without limitation, its investigative research sites) and suppliers, (ii)
pricing strategy, (iii) sales and marketing methods, (iv) product
development ideas and strategies, (v) personnel training and development
programs, (vi) financial results, (vii) strategic plans and demographic
analyses, (viii) proprietary computer and systems software and (ix) any
non-public information concerning the Company, its employees, suppliers and
customers. Regardless of any actual or alleged breach by the Company of
this Agreement, the Executive shall keep all Confidential Information in
strict confidence and shall not directly or indirectly make known, divulge,
reveal, furnish, make available or use any Confidential Information (except
in the course of his regular authorized duties on behalf of the Company)
until and unless such Confidential Information becomes, through no fault of
the Executive, generally known to the public or the Executive is required
by law to make disclosure (after giving the Company reasonable notice and
an opportunity to contest such requirement). The Executive's obligations
under this Section 14 are in addition to, and not in limitation or
preemption of, all other obligations of confidentiality which the Executive
may have to the Company under general legal or equitable principles.
(b) Except in the ordinary course of the Company's business, the Executive
has not made and shall never make or cause to be made, any copies,
pictures, duplicates, facsimiles or other reproductions or recordings or
any abstracts or summaries including or reflecting Confidential
Information. All such documents and other property furnished
15
to the Executive by the Company or otherwise acquired or developed by the
Company shall at all times be the property of the Company. Upon a Voluntary
Termination or Involuntary Termination, the Executive shall return to the
Company any such documents or other property of the Company which are in
the possession, custody or control of the Executive.
15. Covenant not to Compete; No Inducement; No Solicitation. In
-------------------------------------------------------
consideration for the Executive's employment hereunder and the Company's
providing the Executive with confidential information and contacts with the
Company's customers and accounts,
(a) during the term of the Employment Provisions and (A) after an
Involuntary Termination for Cause, for a period of one year after such
Involuntary Termination, (B) after an Involuntary Termination other than
for Cause, during the Payment Period or (C) after a Voluntary Termination,
if prior to the date of the Voluntary Termination the Company agrees to pay
Executive all of the termination payments set forth in Section 9(a) hereof,
for a period of one year after such Voluntary Termination, the Executive
shall not, without the prior written consent of the Company (which consent
may be withheld for any reason or no reason), directly or indirectly or by
action in concert with others, own, manage, operate, join, control, perform
consulting services for, be employed by, participate in or be connected
with any business, enterprise or other entity (or the ownership,
management, operation, or control of any such business, enterprise or other
entity) (a "Competing Enterprise") engaged anywhere in the United States in
the Restricted Business. Notwithstanding the foregoing, Executive may make
purely passive investments on behalf of himself, his immediate family or
any trust in public companies engaged in a Competing Enterprise so long as
the aggregate interest represented by such investments does not exceed 1%
of any class of the outstanding debt or equity securities of any Competing
Enterprise.
(b) during the term of the Employment Provisions and (A) after an
Involuntary Termination for Cause, for a period of one year after such
Involuntary Termination, (B) after an Involuntary Termination other than
for Cause, during the Payment Period or (C) after a Voluntary Termination,
if prior to the date of the Voluntary Termination the Company agrees to pay
Executive all of the termination payments set forth in Section 9(a) hereof,
for a period of one year after such Voluntary Termination, the Executive
shall not, directly or indirectly, in any capacity, on his own behalf or on
behalf of any other firm, person or entity, induce or attempt to induce any
customer of the Company (including, without limitation, any investigative
research site) to cease doing business in whole or in part with the
Company, solicit the business of any such customer for any Restricted
Business or otherwise create any ill will or negative publicity with
respect to the Company.
(c) during the term of the Employment Provisions and (A) after an
Involuntary Termination for Cause, for a period of one year after such
Involuntary Termination, (B) after an Involuntary Termination other than
for Cause, during the Payment Period or (C) after a Voluntary Termination,
if prior to the date of the Voluntary Termination the Company agrees to pay
Executive all of the termination payments set forth in
16
Section 9(a) hereof, for a period of one year after such Voluntary
Termination, the Executive shall not, directly or indirectly, in any
capacity, on his own behalf or on behalf of any other firm, person or
entity, undertake or assist in the solicitation of any Company employee,
including, without limitation, solicitation of any employee to terminate
his or her employment with the Company.
d) during a period ending one year following the Termination Date, if the
Executive has received or is receiving benefits under Section 11, the
Executive shall not, without the prior written consent of the Company,
which consent shall not be unreasonably withheld, engage in any Competitive
Activity.
16. Legal Fees and Expenses. The Company intends that, except as set forth
-----------------------
below, the Executive shall not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense of
Executive's rights under this Agreement by litigation or otherwise because the
cost and expense thereof would substantially detract from the benefits intended
to be extended to the Executive hereunder. Accordingly, if the Executive
reasonably believes that the Company has failed to comply with any of its
obligations under this Agreement or the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be provided to
the Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. The Company will pay and be
solely financially responsible for any and all attorneys' and related fees and
expenses incurred by the Executive in connection with any of the foregoing up to
a maximum amount of $50,000 without respect to whether the Executive prevails,
in whole or in part, in connection with any of the foregoing (which payments
shall be made on a regular, periodic basis upon presentation to the Company of a
statement or statements prepared by such counsel in accordance with its
customary practices) and will reimburse the Executive and be financially
responsible for any and all attorneys' fees and related fees and expenses in
excess of such $50,000 amount incurred by the Executive in connection with any
of the foregoing thereafter if the Executive prevails in connection therewith.
17. Post-termination Assistance. Executive shall provide such information and
---------------------------
assistance to the Company as the Company may reasonably request, upon reasonable
notice, in connection with any litigation in which it or any of its affiliates
is or may become a party. The Company shall reimburse the Executive for any
expenses, including travel expenses, incurred by the Executive in connection
with providing such information and assistance.
17
18. Employment Rights. Nothing expressed or implied in this Agreement shall
-----------------
create any right or duty on the part of the Company or the Executive to have the
Executive remain in the employment of the Company prior to or following any
Change in Control. Any termination of employment of the Executive or the removal
of the Executive from the office or position in the Company following the
commencement of any discussion with a third person that ultimately results in a
Change in Control shall be deemed to be a termination or removal of the
Executive after a Change in Control for purposes of this Agreement.
19. Withholding of Taxes. The Company may withhold from any amounts payable
---------------------
under this Agreement all federal, state, city or other taxes as the Company is
required to withhold pursuant to any law or government regulation or ruling.
20. Specific Enforcement. The Executive acknowledges and agrees that a
--------------------
violation of Sections 14, 15 or 17 hereof that results in material detriment to
the Company would cause irreparable harm to the Company, and that the Company's
remedy at law for any such violation would be inadequate. In recognition of the
foregoing, the Company shall have the right, in addition to any other relief
afforded by law or this Agreement, including damages sustained by a breach of
this Agreement and any forfeitures under Section 9, and without any necessity or
proof of actual damages, to enforce this Agreement by specific remedies,
including, among other things, temporary and permanent injunctions, it being the
understanding of the Company and the Executive that damages, the forfeitures
described above and injunctions shall all be proper modes of relief and shall
not be considered alternative remedies.
21. Arbitration. Any dispute between the parties under this Agreement shall be
-----------
resolved (except as provided below) through informal arbitration by an
arbitrator selected under the rules of the American Arbitration Association
(located in Chicago, Illinois) and the arbitration shall be conducted in that
location under the rules of said Association. Each party shall be entitled to
present evidence and argument to the arbitrator. The arbitrator shall have the
right only to interpret and apply the provisions of this Agreement and may not
change any of its provisions. The arbitrator shall permit reasonable pre-hearing
discovery of facts to the extent necessary to establish a claim or a defense to
a claim, subject to supervision by the arbitrator. The determination of the
arbitrator shall be conclusive and binding upon the parties and judgment upon
the same may be entered in any court having jurisdiction thereof. The arbitrator
shall give written notice to the Company and the Executive stating its
determination, and shall furnish to each party a signed copy of such
determination. The expenses of arbitration shall be borne equally by the
Executive and the Company or as the arbitrator shall otherwise equitably
determine.
Notwithstanding the foregoing, the Company shall not be required to seek or
participate in arbitration regarding any breach of Sections 14, 15 or 17, but
may pursue its remedies for such breach in any court of competent jurisdiction
in the State of Illinois. Any arbitration or action pursuant to this Section 21
shall be governed by and construed in accordance with the substantive laws of
the State of Illinois, without giving effect to the principles of conflict of
laws of such State.
18
22. Notices. For all purposes of this Agreement, all communications, including
-------
without limitation notices, consents, requests or approvals, required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service (such as Federal Express or UPS)
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Executive at his principal residence,
or to such other address as either party may have furnished to the other in
writing and in accordance herewith, except that notices of changes of address
shall be effective only upon receipt.
23. Governing Law. The validity, interpretation, construction and performance
-------------
governed by and construed in accordance with the substantive laws of the State
of Illinois, without giving effect to the principles of conflict of laws of such
State.
24. Agreement. This Agreement contains all of the covenants and agreements
---------
between the parties with respect to such subject matter. Each party to this
Agreement acknowledges that no representations, inducements, promises, or other
agreements, orally or otherwise, have been made by any party, or anyone acting
on behalf of any party, pertaining to the subject matter hereof, that are not
embodied herein, and that no other agreement, statement or promise pertaining to
the subject matter hereof that is not contained in this Agreement shall be valid
or binding on either party.
25. Successors and Binding Agreement.
--------------------------------
(a) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent
the Company would be required to perform if no such succession had taken
place. This Agreement shall be binding upon and inure to the benefit of the
Company and any successor to the Company, including without limitation any
persons acquiring directly or indirectly all or substantially all of the
business or assets of the Company whether by purchase, merger,
consolidation, reorganization or otherwise (and such successor shall
thereafter be deemed the "Company" for the purposes of this Agreement), but
will not otherwise be assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither the Company nor the
Executive shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 25(a) and 25(b).
19
Without limiting the generality or effect of the foregoing, the Executive's
right to receive payments hereunder will not be assignable, transferable or
delegable, whether by pledge, creation of a security interest, or otherwise
other than by a transfer by the Executive's will or by the laws of descent
and distribution and, in the event of any attempted assignment or transfer
contrary to this Section 25(c), the Company shall have no liability to pay
any amount so attempted to be assigned, transferred or delegated.
26. Validity. If any provision of this Agreement or the application of any
--------
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise illegal, the remainder of this Agreement and the application of
such provision to any other person or circumstances shall not be affected, and
the provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid or legal.
27. Miscellaneous. No provision of this Agreement may be modified, waived or
-------------
discharged unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and the Company. No waiver by either party hereto at any
time of any breach by the other party hereto or compliance with any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. Unless otherwise noted, references to "Sections" are
to sections of this Agreement. The captions used in this Agreement are designed
for convenient reference only and are not to be used for the purpose of
interpreting any provision of this Agreement.
28. Counterparts. This Agreement may be executed in one or more counterparts,
------------
each of which shall be deemed to be an original but all of which together shall
constitute one and the same agreement.
29. Effective Date. Notwithstanding anything to the contrary herein, this
---------------
Agreement shall not become effective unless and until the Board approves this
Agreement. Upon receipt of such approval, this Agreement shall become
immediately effective.
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20
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date first above written/1/.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc..
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Chief Executive Officer
/s/ C. ▇▇▇ ▇▇▇▇▇
--------------------------------------------
C. ▇▇▇ ▇▇▇▇▇
________________
/1/ The validity of execution of this Agreement on behalf of the Company is
subject to the approval of this Agreement by the Board.
21
