AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This AMENDED
AND RESTATED EMPLOYMENT AGREEMENT (the “ Restated
Agreement ”) entered into as of December 31,
2008 (the “ Effective Date ”), by and
between Thomas J. Newman (the “ Executive
”) and PharmaNet Development Group, Inc., a Delaware
corporation (the “Company ”).
WHEREAS , in its business, the Company has acquired
and developed certain trade secrets, including, but not limited to,
proprietary processes, sales methods and techniques, and other like
confidential business and technical information, including, but not
limited to, technical information, design systems, proprietary
assays, pricing methods, pricing rates or discounts, process,
procedure, formula, design of computer software or improvement of
any portion or phase thereof, whether patented or not, that is of
any value whatsoever to the Company, as well as certain unpatented
information relating to the Services, information concerning
proposed new services, market feasibility studies, proposed or
existing marketing techniques or plans (whether developed or
produced by the Company or by any other entity for the Company),
other Confidential Information (as defined below) and information
about the Company’s employees, officers and directors, which
necessarily will be communicated to the Executive by reason of his
or her employment with the Company;
WHEREAS , the Company has strong and legitimate
business interests in preserving and protecting its investment in
the Executive, its trade secrets and Confidential Information, and
its substantial relationships with suppliers and Clients (as
defined below), actual and prospective;
WHEREAS , the Company desires to preserve and protect
its legitimate business interests further by restricting
competitive activities of the Executive during the term of his or
her employment with the Company and for a reasonable period of time
following such termination of employment;
WHEREAS , the Company’s Board of Directors (the
“ Board ”) considers it essential to and
in the best interests of the Company’s direct and indirect
holders of ownership interests (collectively, the “
Stockholders ”) to foster the continued
employment of the Executive and has approved the terms of
employment and severance arrangement set forth in this Restated
Agreement;
WHEREAS , the Company desires to continue the
Executive in its employ and to ensure the continued availability to
the Company of the Executive’s services, and the Executive is
willing to continue such employment and render such services, all
upon and subject to the terms and conditions contained in this
Restated Agreement;
WHEREAS , the Executive and the Company are currently
parties to that certain Employment Agreement dated January 10,
2007 (the “ Previous Employment Agreemen
t”) and desire to amend and restate the terms and conditions
of the Previous Employment Agreement so as to bring those terms and
conditions into documentary compliance with Section 409A of
the Internal Revenue Code of 1986, as amended (the “
Code ”), and the final Treasury Regulations
thereunder and to continue Executive’s employment with the
Company upon those amended and restated terms and conditions;
and
WHEREAS by executing this Restated Agreement, the
Executive and the Company hereby agree that this Restated Agreement
shall supersede any prior employment arrangement or severance
benefits set forth in the Previous Employment Agreement or in any
other earlier agreements referred to therein.
NOW
, THEREFORE , in consideration of the premises and
the mutual covenants set forth in this Restated Agreement, and
intending to be legally bound, the Company and the Executive hereby
agree as follows:
1.
Representations and Warranties . The Executive hereby
represents and warrants to the Company that he or she is not
subject to any written nonsolicitation or noncompetition agreement
affecting his or her employment with the Company (other than the
Previous Employment Agreement or any other prior agreement with the
Company or its Affiliates), (b) is not subject to any written
confidentiality or nonuse/nondisclosure agreement affecting his or
her employment with the Company (other than the Previous Employment
Agreement or any other prior agreement with the Company or its
Affiliates), and (c) has not brought to the Company any trade
secrets, confidential business information, documents or other
personal property of a prior employer.
(a)
Term . Subject to Section 6 hereof, the Company hereby
employs the Executive, and the Executive hereby accepts employment
with the Company, for a period commencing on the Effective Date and
ending on January 9, 2010 (the “ Employment
Term ”).
(b)
Continuing Effect . Notwithstanding any termination of the
Executive’s employment, at the end of the Employment Term or
otherwise, the provisions of Sections 7 and 8 of this Restated
Agreement shall remain in full force and effect, and the provisions
of Section 8 shall be binding upon the legal representatives,
successors and assigns of the Executive.
(a)
General Duties . The Executive shall continue to serve as
the President, Late Stage Development, with the duties and
responsibilities that are customary for such position. The
Executive shall use his or her best efforts to perform his or her
duties and discharge his or her responsibilities pursuant to this
Restated Agreement competently, carefully and faithfully. During
the Employment Term, the Executive shall be deemed an officer (but
not an executive officer) and a member of the Executive Committee
of the Company. In addition, Executive may be required to execute
and deliver to the Company, on a timely basis, quarterly
certifications or sub-certifications in order to permit the Company
to comply with its reporting obligations, including those under the
Sarbanes-Oxley Act of 2002.
(b)
Devotion of Time . The Executive shall devote the amount of
time and attention to the business and affairs of the Company that
are reasonably necessary to competently perform his or her duties.
The Executive shall not enter the employ of or serve as a
consultant to, or in any way perform any services (with or without
compensation) for, any other persons, business or organization
without the prior written consent of the Board. Notwithstanding
the
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foregoing, the
Executive shall be permitted, subject to the first sentence of this
Section 3(b) and Sections 7, 8, 9 and 10 hereof, to
(i) serve on corporate, advisory, civic or charitable boards
or committees, (ii) deliver lectures, fulfill speaking
engagements or teach at educational institutions and
(iii) manage personal investments.
(c)
Location of Office. The Executive’s principal business
office shall be at the Company’s office location in
Princeton, New Jersey, as that location may be changed from time to
time by the senior management of the Company; provided ,
however , that the Executive’s job responsibilities
shall include all business travel reasonably necessary to perform
such responsibilities.
(d)
Adherence to Inside Information Policies . The Executive
acknowledges that the Company is publicly-held and, as a result,
has implemented insider information policies designed to preclude
its employees and those of its subsidiaries from violating the
federal securities laws by trading on material, non-public
information or passing such information on to others in breach of
any duty owed to the Company or any third party. The Executive
shall promptly execute any agreements generally distributed by the
Company to its employees requiring such employees to abide by its
insider information policies and shall continue to be bound by any
such agreements to which the Executive is currently a
party.
4.
Compensation and Expenses .
(a)
Annual Base Salary . For the services of the Executive to be
rendered under this Restated Agreement during the remainder of the
Employment Term, the Company shall pay the Executive an annual base
salary of $535,844 (the “ Annual Base Salary
”), effective as of January 1, 2008. However, such
Annual Base Salary shall continue to be adjusted annually as of the
last day of each calendar year during the remainder of the
Employment Term, with the first such increase to be effected as of
December 31, 2008, by the greatest of (i) four (4%) of
the rate of Annual Base Salary in effect for the Executive at that
time, (ii) the salary increase approved by the Compensation
Committee of the Board (the “ Compensation
Committee ”) or (iii) the increase in the
Consumer Price Index determined in accordance with the formula
attached hereto as Exhibit A . The Annual Base Salary shall
be payable in accordance with the Company’s normal payroll
practices for salaried employees, subject to the Company’s
collection of all applicable federal, state and local income and
employment withholding taxes.
(b)
Annual (Cash) Incentive . In addition to any other
compensation received pursuant to this Restated Agreement, the
Executive shall be eligible to participate in the same Company cash
incentive plan or plans in which the members of the Company’s
Executive Committee are eligible to participate and shall be
subject to the terms and conditions of each such plan in which he
or she participates.
(c)
Long-Term Incentive . The Executive shall be eligible to
participate in all long-term incentive plan or plans in which the
members of the Company’s Executive Committee are eligible to
participate and shall be subject to the terms and conditions of
each such plan in which he or she participates.
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(d)
Expenses . In addition to any compensation paid to the
Executive pursuant to this Section 4, the Company shall
reimburse or advance funds to the Executive for reasonable travel,
entertainment, professional dues and miscellaneous expenses
incurred in connection with the performance of his or her duties
under this Restated Agreement and in accordance with the
Company’s policies relating to travel and expenses. The
Executive must submit appropriate receipts and documentation for
each such reimbursable expense within sixty (60) days after
the later or (i) the incurrence of that expense or
(ii) the receipt of the invoice or billing statement for such
expense, and the Company shall provide the Executive with the
requisite reimbursement within thirty (30) business days
thereafter.
(a)
Vacation . During each complete calendar year within the
Employment Term, the Executive shall be entitled to twenty
(20) business days of vacation (or such longer period as may
be provided for under the Company’s written policies) without
loss of compensation or other benefits to which he or she is
entitled under this Restated Agreement, with such vacation to be
taken at such times as the Executive may select and the affairs of
the Company may permit. Such vacation accrual shall be pro-rated
for any partial calendar year within the Employment
Term.
(b)
Employee Benefit Programs . The Executive is entitled to
participate in any pension, 401(k), medical insurance, disability
insurance, life insurance or other employee benefit plan that is
maintained by the Company, including reimbursement of membership
fees in professional organizations, subject to the eligibility
requirements of those specific plans.
(c)
Insurance Premiums and Other Coverage Costs . The Company
shall pay all insurance premiums and other costs in connection with
the insurance or benefit programs referred to in Section 5(b) in
which the Executive participates, except to the extent any benefit
program is funded by deferrals from the Executive’s
compensation. All insurance premiums or other coverage costs
payable by the Company shall be paid by the Company within thirty
(30) business days after the due date, and the amount of
premiums or coverage costs paid by the Company in any one calendar
year during the Employment Term shall not affect the amount of
premiums or coverage costs payable by the Company in any other
calendar year. In addition, the Company shall include the Executive
in the Company’s D&O (director and officer) liability
insurance policy as an additional insured for the benefit of the
Executive.
(d)
Transportation Benefit . The Executive shall be paid on or
before the last business day of each month during the Employment
Term a motor vehicle allowance in the amount of one thousand
dollars ($1,000), subject to the Company’s collection of all
applicable withholding taxes. For the purposes of clarity, the
Company shall not reimburse the Executive for any applicable tax
liability the Executive may incur as a result of his or her receipt
of this monthly motor vehicle allowance.
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(e)
Conditions to Reimbursement. Any amounts to which the
Executive becomes entitled pursuant to this Section 5 (whether
by way of reimbursement or in-kind benefits) in each calendar year
within the Employment Term or any other reimbursement to which the
Executive becomes entitled pursuant to the provisions of this
Restated Agreement during such calendar year shall not reduce the
amounts (or in-kind benefits) to which the Executive may become
entitled hereunder in any other calendar year within the Employment
Term. In no event, however, will any expense be reimbursed after
the close of the calendar year following the calendar year in which
that expense was incurred. In addition, none of the
Executive’s rights to reimbursement or in-kind benefits
hereunder may be liquidated or exchanged for any other
benefit.
6.
Termination; Severance .
(a)
Certain Definitions . For purpose of this Restated
Agreement, the following definitions shall be in effect:
“
Cause ” means that the Executive has:
(i) been convicted of a felony involving any subject matter;
(ii) been charged by a government agency with a felony
relating to the business of the Company or any Affiliate;
(iii) been convicted of a misdemeanor directly involving the
Executive’s employment that directly affects the business of
the Company; (iv) been found after an internal investigation
to have engaged in sexual misconduct which is related to the
Executive’s employment or the business of the Company and/or
violated the Company’s sexual harassment policy;
(v) failed to carry out the duties and responsibilities
assigned to Executive which are consistent with the terms of this
Restated Agreement; (vi) misappropriated Company funds or
otherwise defrauded the Company; (vii) breached his or her
fiduciary duty to the Company resulting in profit to him or her,
directly or indirectly; (viii) been found to have committed
any act or failed to take any action which results in the common
stock of the Company (the “ Common Stock
”) being delisted for trading on its principal trading market
or exchange; (ix) been convicted of illegal possession or
illegal use of a controlled substance; (x) engaged in chronic
drinking or the use of illegal drugs, chemicals or controlled
substances or the abuse of otherwise legal drugs or chemicals or
controlled substances that affects the performance of his or her
duties as reasonably determined by the Company; (xi) failed or
refused to cooperate in any official investigation conducted by or
on behalf of the Company; (xii) breached any material
provision of this Restated Agreement, including Section 3(d)
herein, and failed to cure such breach after notice thereof and a
reasonable cure period (if such breach is of the nature that it can
be cured); (xiii) intentionally or willfully failed to comply
with the reasonable directives of the Board or the Chief Executive
Officer of the Company (the “ CEO ”);
(xiv) committed an act or omission constituting gross
negligence or willful misconduct which causes, at least in part,
the Company to restate its financial statements for a completed
fiscal period after having filed such financial statements with the
Securities and Exchange Commission; or (xv) been found by a
court, the Securities and Exchange Commission or any state
governmental authority which regulates or enforces such
state’s securities laws, in a final determination, to have
violated any applicable securities laws, whether such finding was
after a hearing or trial or on consent without admitting or denying
any allegations of wrongdoing.
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“
Disability ” or “ Disabled
” means the first to occur of the following events of
disability: (i) Executive is deemed disabled for purposes of any
long-term disability insurance policy paid for by the Company and
in effect at such time or (ii) due to accident, mental or
physical illness or any other reason, Executive has become
physically or mentally incapable of performing, with or without
reasonable accommodation, the essential functions of his employment
for a period of one hundred twenty (120) consecutive days or
for one hundred eighty (180) days within a three hundred and
sixty-five (365)-day period.
“
Effective Date of Termination ” means, with
respect to any purported termination of the Executive’s
employment, (i) if the Executive’s employment terminates
by reason of his or her death, the date of his or her death,
(ii) if the Executive’s employment is terminated for
Cause or without Cause, the date specified in the Notice of
Termination, (iii) if the Executive’s employment is
terminated as a result of a Disability, the date on which Executive
is determined, in the reasonable judgment of the Company, to be
Disabled in accordance with the definitional provisions of this
Restated Agreement, as such date is specified in the Notice of
Termination and (iv) if Executive terminates his or her
employment through a Resignation for Good Reason or otherwise
voluntarily terminates his or her employment, the date specified in
the Notice of Termination.
“
Employee ” means an individual who remains in
the employ of at least one member of the Employer Group, subject to
the control and direction of the employer entity as to both the
work to be performed and the manner and method of
performance.
“
Employer Group ” means the Company and each
member of the group of commonly controlled corporations or other
businesses that include the Company, as determined in accordance
with Sections 414(b) and (c) of the Code and the Treasury
Regulations thereunder, except that in applying
Sections 1563(1), (2) and (3) of the Code for
purposes of determining the controlled group of corporations under
Section 414(b), the phrase “at least
50 percent” shall be used instead of “at least
80 percent” each place the latter phrase appears in such
sections and in applying Section 1.414(c)-2 of the Treasury
Regulations for purposes of determining trades or businesses that
are under common control for purposes of Section 414(c), the
phrase “at least 50 percent” shall be used instead
of “at least 80 percent” each place the latter
phrase appears in Section 1.414(c)-2 of the Treasury
Regulations.
“
Notice of Termination ” means a notice
indicating 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 the
Executive’s employment with the Company under the provision
so indicated. The Notice of Termination shall specify the date on
which such termination shall be effective.
“
Person ” shall have the meaning ascribed
thereto in Section 3(a)(9) of the Securities Exchange Act of
1934, as amended, as modified, applied and used in Sections 13(d)
and 14(d) thereof; provided, however , a Person shall
not include (i) the Company, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporate entity owned, directly or
indirectly, by the Stockholders in substantially the same character
and proportions as their ownership of interests in the
Company.
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“
Resignation for Good Reason ” means the
Executive’s resignation from his or her employment with the
Company by reason of a material breach by the Company of any of the
material terms or provisions of this Restated Agreement.
“
Separation from Service ” means the
Executive’s cessation of Employee status and shall be deemed
to occur at such time as the level of bona fide services the
Executive is to render as an Employee (or non-employee consultant)
permanently decreases to a level that is not more than twenty
percent (20%) of the average level of services the Executive
rendered as an Employee during the immediately preceding thirty-six
(36) months (or such shorter period of time in which the
Executive has been in Employee status). Any such determination,
however, shall be made in accordance with the applicable standards
of the Treasury Regulations issued under Internal Revenue Code
Section 409A. In addition to the foregoing, a Separation from
Service will not be deemed to have occurred while the Executive is
on a sick leave or other bona fide leave of absence if the period
of such leave does not exceed six (6) months or any longer
period for which the Executive is provided with a right to
reemployment with the Company by either statute or contract;
provided, however , that in the event of a
leave of absence due to any medically determinable physical or
mental impairment that can be expected to result in death or to
last for a continuous period of not less than six (6) months
and that causes the Executive to be unable to perform his or her
duties as an Employee, no Separation from Service shall be deemed
to occur during the first twenty-nine (29) months of such leave. If
the period of leave exceeds six (6) months (or twenty-nine
(29) months in the event of disability as indicated above) and
the Executive is not provided with a right to reemployment by
either statute or contract, then the Executive will be deemed to
have Separated from Service on the first day immediately following
the expiration of the applicable six (6)-month or twenty-nine
(29)-month period.
(i) The
Company may, in its sole discretion, terminate the
Executive’s employment without Cause at any time upon thirty
(30) days prior written Notice of Termination. The Executive
may, in his or her sole discretion, terminate his or her employment
with the Company (other than by reason of a Resignation for Good
Reason) at any time upon thirty (30) days prior written Notice
of Termination. The Executive shall also have the right to
terminate his or her employment through a Resignation for Good
Reason in accordance with the requirements for such termination set
forth above. Executive’s employment under this Restated
Agreement shall also terminate upon his or her death or Disability.
Upon the Effective Date of Termination resulting from any of the
foregoing termination events, the Executive shall cease to have any
further right to compensation or reimbursement under Section 4
(except for any unpaid compensation earned or any reimbursable
expenses incurred through the Effective Date of Termination, which
shall be paid or reimbursed at that time to the extent not
otherwise in
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contravention
of any applicable Code Section 409A deferral requirement) or
to participate in any employee benefit programs under
Section 5 for any period subsequent to the Effective Date of
Termination, except as provided for by law or this Restated
Agreement. On or before the Effective Date of Termination, the
Executive shall (a) return to the Company’s
headquarters, (b) participate in an exit interview, and
(c) execute a “Certificate of Conclusion of
Employment,” certifying that he or she has complied with his
or her obligations and acknowledging his or her continuing
obligations under this Restated Agreement. The Executive’s
failure to comply with the requirements of this Section 6(b) shall
constitute a material breach of this Restated Agreement. For
clarity, if the Executive’s employment is terminated by the
Company for any reason other than Cause or if the Executive’s
employment terminates by reason of a Resignation for Good Reason,
he or she shall be entitled to the Severance Payments set forth
below.
(ii) The
Company may terminate the Executive’s employment pursuant to
the terms of this Agreement at any time for Cause (as defined
above) by giving written Notice of Termination. The Executive shall
have thirty (30) days from the date of the notice to provide
the CEO with evidence that the Company is mistaken as to Cause and
that the Executive’s behavior does not meet the criteria for
Cause. During such thirty (30) day period, the Executive shall
be suspended without pay; provided , however , that
if employment is reinstated, then the Executive shall be paid for
such thirty (30) day period, and if the termination is upheld,
the Effective Date of Termination shall be deemed to be the date of
receipt by the Executive of the written Notice of Termination. Upon
any such termination for Cause, the Executive shall cease to have
any further right to compensation or reimbursement under
Section 4 (except for any unpaid compensation earned or any
reimbursable expenses incurred through the Effective Date of
Termination, which shall be paid or reimbursed at that time to the
extent not otherwise in contravention of any applicable Code
Section 409A deferral requirement) or to participate in any
employee benefit programs under Section 5 for any period subsequent
to the Effective Date of Termination, except as provided by
law.
(c)
Severance . Provided (i) the Executive executes and
delivers to the Company, within twenty-one (21) days (or
forty-five (45) days if such longer period is required under
applicable law) after the Effective Date of Termination, a written
release in substantially the form attached hereto as
Exhibit B (the “ Release ”)
and (ii) the Executive does not revoke such Release during any
applicable revocation period, the Company shall cause the payments
and benefits described in this Section 6 (the “
Severance Payments ”) to be made in connection
with the termination of the Executive’s employment with the
Company during the Employment Term, unless such termination
(i) is by the Company for Cause, (ii) occurs by reason of
the Executive’s death or Disability or (iii) is by the
Executive under circumstances that do not constitute a Resignation
for Good Reason. Severance Payments due and payable to the
Executive by the Company in accordance with this Section 6
shall be determined as follows:
(i) In
lieu of any further salary payments to the Executive for periods
subsequent to the Effective Date of Termination, the Company shall
cause cash severance payment to be made to the Executive in an
aggregate amount equal to two (2) times such Executive’s
Annual Base Salary (the “ Cash Severance
Payments ”). Such Cash Severance Payments shall be
made in twenty-four (24) successive equal monthly installments on
the fifteenth day of each month beginning with the fifteenth day of
the first calendar month, within the sixty (60) day period
following the date of the Executive’s Separation from Service
by reason
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of such
termination of employment, that is coincident with or next
following the date on which the required Release first becomes
effective following the expiration of all applicable revocation
periods, but in no event shall such initial payment be made later
than the last business day of such sixty (60)-day period on which
the Release is so effective. Should the fifteenth day of any such
calendar month not be a business day, then the payment for that
month shall be made on the first business day thereafter. The
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