MANAGEMENT EMPLOYMENT AGREEMENT
The following Agreement is hereby entered into this 7th day of
February, 2006, between, Joseph Esposito (hereinafter known as Employee) and
eResearchTechnology, Inc. (together with its affiliated corporations hereinafter
known as the "Company") and having its principal offices at 30 S. 17th Street,
Philadelphia, PA 19103.
1. DUTIES AND RESPONSIBILITIES
Employee agrees to hold the position of President and Chief
Executive Officer and shall be directly responsible and report to the Board of
Directors. Employee agrees that the Board of Directors may, at any time and from
time to time, without notice, assign him to perform other executive level duties
and may assign him a title other than President and Chief Executive Officer and
Employee agrees to accept such assignments or title changes during the balance
of the period of employment; provided, however, that Employee's compensation
(both annual salary and guaranteed bonus) shall not be reduced as the result of
any such assignment or title change.
2. BEST EFFORTS
Employee agrees to devote his best efforts to his employment
with the Company, on a full-time (no less than 40 hours/week) basis. He further
agrees not to use the facilities, personnel or property of the Company for
personal or private business benefit.
3. ETHICAL CONDUCT
Employee will conduct himself in a professional and ethical
manner at all times and will comply with all company policies as well as all
State and Federal regulations and laws as they may apply to the services,
products, and business of the Company.
4. TERM OF THE AGREEMENT
Employee's employment will end on December 31, 2006, unless
terminated earlier pursuant to Section 11 of this Agreement.
a. Annual salary for 2006 shall be $ 385,000 payable in equal installments
as per the Company's payroll policy.
b. 2006 guaranteed bonus shall be $195,000 ("Bonus") payable on the
earlier of the Termination Date (as hereinafter defined), subject to pro ration
in accordance with Section 11(d), or December 31, 2006, subject to appropriate
c. Benefits shall be the standard employee benefits of the Company as they
shall exist from time provided that they are not less than those Employee
currently enjoys including, without limitation, health, dental, life and
accident, disability, 401k company match ($.50 per dollar contributed up to a
maximum of $7,500 per annum), 5 week vacation, payment for unused vacation upon
termination, and car allowance of $1,000 per month.
Employee acknowledges that employment with the Company requires him/her
to have access to confidential information and material belonging to the
Company, including customer lists, contracts, proposals, operating procedures,
trade secrets and business methods and systems, which have been developed at
great expense by the Company and which Employee recognizes to be unique assets
of the Company's business. Upon termination of employment for any reason,
Employee agrees to return to the Company any such confidential information and
material in his possession with no copies thereof retained. Employee further
agrees, whether during employment with the Company or any time after the
termination thereof (regardless of the reason for such termination), he will not
disclose nor use in any manner, any confidential or proprietary material
relating to the business, operations, or prospects of the Company except as
authorized in writing by the Company or required during the performance of his
7. BUSINESS INTERFERENCE; NONCOMPETITION
a. During employment with the Company and for a period of one year (the
"Restrictive Period") thereafter (regardless of the reason for termination)
Employee agrees he will not, directly or indirectly, in any way for his own
account, as employee, stockholder, partner, or otherwise, or for the account of
any other person, corporation, or entity: (i) request or cause any of the
Company's suppliers, customers or vendors to cancel or terminate any existing or
continuing business relationship with the Company; (ii) solicit, entice,
persuade, induce or request any employee, officer or agent of the Company to
refrain from rendering services to the Company or to terminate his or her
relationship, contractual or otherwise, with the Company; or (iii) induce or
attempt to influence any customer or vendor to cease or refrain from doing
business or to decline to do business with the Company or any of its affiliated
distributors or vendors.
b. The Employee agrees that, during the Restrictive Period, the Employee
will not, directly or indirectly, accept employment with, provide services to or
consult with, or establish or acquire any interest in, any business, firm,
person, partnership, corporation or other entity which engages in any business
or activity that is the same as or competitive with the business conducted by
the Company in any state of the United States of America and in any foreign
country in which any customer to whom the Company is providing services or
technology is located.
8. FORFEITURE FOR BREACH; INJUNCTIVE RELIEF.
a. Any breach of the covenants made in Sections 6 and 7 hereof shall
result in the forfeiture of the Employee's right to any and all payments which
may be required to be made under this Agreement following such breach and shall
relieve the Company of any obligation to make such payments.
b. The Employee acknowledges that his compliance with the covenants in
Sections 6 and 7 hereof is necessary to protect the good will and other
proprietary interests of the Company and that, in the event of any violation by
the Employee of the provisions of Section 6 or 7 hereof, the Company will
sustain serious, irreparable and substantial harm to its business, the extent of
which will be difficult to determine and impossible to remedy by an action at
law for money damages. Accordingly, the Employee agrees that, in the event of
such violation or threatened violation by the Employee, the Company shall be
entitled to an injunction before trial from any court of competent jurisdiction
as a matter of course and upon the posting of not more than a nominal bond in
addition to all such other legal and equitable remedies as may be available to
c. The rights and remedies of the Company as provided in this Section 8
shall be cumulative and concurrent and may be pursued separately, successively
or together against Employee, at the sole discretion of the Company, and may be
exercised as often as occasion therefor shall arise. The failure to exercise any
right or remedy shall in no event be construed as a waiver or release thereof.
d. The Employee agrees to reimburse the Company for any expenses incurred
by it in enforcing the provisions of Sections 6 and 7 hereof if the Company
prevails in that enforcement.
Employee agrees to promptly disclose to the Company each discovery,
improvement, or invention conceived, made, or reduced to practice (whether
during working hours or otherwise) during the term of employment. Employee
agrees to grant to the Company the entire interest in all of such discoveries,
improvements, and inventions and to sign all patent/copyright applications or
other documents needed to implement the provisions of this paragraph without
additional consideration. Except the works created through Aspatore publishing
by the Employee, Employee further agrees that all works of authorship subject to
statutory copyright protection developed jointly or solely, while employed shall
be considered a work made for hire and any copyright thereon shall belong to the
Company. Any invention, discovery, or improvement conceived, made, or disclosed,
during the one year period following the termination of employment with the
Company shall be deemed to have been made, conceived, or discovered during
employment with the Company.
Employee acknowledges that the only discoveries, improvements,
and other inventions made prior to the date hereof which have not been filed in
the United States Patent Office are attached as Exhibit A.
10. NO CURRENT CONFLICT
Employee hereby assures the Company that he is not currently
restricted by any existing employment or non-compete agreement that would
conflict with the terms of this Agreement.
11. TERM; TERMINATION AND TERMINATION BENEFITS
a. The Company may terminate Employee's employment at any time with or
without cause and the Employee may terminate his employment hereunder at any
time upon a "change in control" (as hereinafter defined) or the material breach
of this Agreement by the Company (("Material Breach") the Employee must give the
Company written notice of the Company's breach and 15 days to cure), by, in all
cases, providing at least 90 days notice to the other pursuant to Section 14e of
this Agreement ("Termination Notice", and the date of Employee's actual
termination of employment with the Company (i.e., at the end of the 90 day
period) being the "Termination Date"). Employee acknowledges that Sections 6, 7,
8 and 9 of this Agreement will survive the termination of Employee's employment.
Company acknowledges Section 13 of this Agreement will survive the termination
of Employee's employment.
b. This Agreement shall terminate upon the death of the Employee. In
addition, if, as a result of a mental or physical condition which, in the
reasonable opinion of a medical doctor selected by the Company's board of
directors, can be expected to be permanent or to be of an indefinite duration
and which renders the Employee unable to carry out the job responsibilities held
by, or the tasks assigned to, the Employee immediately prior to the time the
disabling condition was incurred, or which entitles the Employee to receive
disability payments under any long-term disability insurance policy which covers
the Employee for which the premiums are reimbursed by the Company (a
"Disability"), the Employee shall have been absent from his duties hereunder on
a full-time basis for 120 consecutive days, or 180 days during any twelve month
period, and within thirty (30) days after written notice (which may occur before
or after the end of such 120 or 180 day period), by the Company to Employee of
the Company's intent to terminate the Employee's employment by reason of such
Disability, the Employee shall not have returned to the performance of his
duties hereunder, the Employee's employment hereunder shall, without further
notice, terminate at the end of said thirty-day notice.
c. The term "Change of Control", as utilized in this section shall
(a) A change of control of a nature that would be required to be
reported in the Company's proxy statement under the Securities Exchange Act of
1934, as amended;
(b) The approval of the Board of Directors of a sale, not in the
ordinary course of business, of all of the Company's assets and business to an
unrelated party and the consummation of such transaction; or
(c) The approval of the Board of Directors of any merger,
consolidation, or like business combination of which would result in the
occurrence of any event described in clause (i) or (ii) above, and the
consummation of such transaction.
d. Upon any termination of Employee's employment under this Agreement,
the Company shall have no further obligation to Employee other than for annual
salary earned through the Termination Date, and no severance pay or other
benefits of any kind shall be payable; provided, however, that if Employee's
employment terminates at the end of the term (December 31, 2006), Employee
terminates his employment due to a "change in control", or a Material Breach of
this Agreement by the Company, or in the event the Company terminates Employee's
employment under this Agreement for any reason whatsoever, the Employee, subject
to his execution of a Release in the form attached here as Exhibit B and the
expiration of seven days after such execution without the Employee's revocation
thereof, shall receive:
(a) bonus for 2006 equal to (i) if such Termination Date is on or
before October 1, 2006, the amount of the Bonus pro-rated based on the number of
days in 2006 through the Termination Date and (ii) if such Termination Date is
after October 1, 2006, the full Bonus, payable, in either event, in one lump
(b) severance equal to $1,160,000; and
(c) continuation of Benefits (as hereinafter defined) for two years
following the Termination Date or until Employee actually receives comparable
Benefits from an employer other than the Company; and
(d) accelerated vesting of all stock options granted to Employee
which were in effect on the Termination Date.
For purposes hereof, Benefits shall mean the employee insurance benefits which
the Employee currently enjoys including, without limitation, health, dental,
life and accident and disability. Any severance and Bonus payments shall be
subject to all applicable withholding.
12. DIRECTOR STATUS
Employee agrees that he will recuse himself from and not
participate in any discussion, vote or consent by the Board of Directors
regarding his employment status, terms, duties, titles or conditions and shall
abstain from any vote by the Board of Directors regarding such status, terms,
duties, titles or conditions. Upon the earlier of (i) Employee's removal from
the position of President and Chief Executive Officer or (ii) the termination of
Employee's employment under this Agreement, Employee will be deemed to have
resigned from the Board of Directors and from any and all other director
positions with the Company's subsidiaries, and will promptly deliver to the
Board of Directors a written confirmation thereof.
Company agrees to indemnify Employee from any acts or
omissions in his capacity as an officer, director or employee of the Company
prior to the termination of employment, to the fullest extent that such
indemnification is provided pursuant to the Articles of Incorporation or Bylaws
of the Company and/or applicable law.
(a) This Agreement and any disputes arising herefrom shall be
governed by Pennsylvania law without regard to the application of the principles
of conflicts of laws.
(b) In the event that any provision of this Agreement is held to be
invalid or unenforceable for any reason, including without limitation the
geographic or business scope or duration thereof, this Agreement shall be
construed as if such provision had been more narrowly drawn so as not to be
invalid or unenforceable.
(c) This Agreement supersedes all prior agreements, arrangements,
and understandings, written or oral, relating to the subject matter. The parties
hereby agree and acknowledge that the Employee's Management Employment Agreement
dated March 4, 2004, as amended, is terminated and no longer of any force or
(d) The failure of either party at any time or times to require
performance of any provision hereof shall in no way affect the right at a later
time to enforce the same. No waiver by either party of any condition or of the
breach by the other of any term or covenant contained in this Agreement shall be
effective unless in writing and signed by the aggrieved party. A waiver by a
party hereto in any one or more instances shall not be deemed or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition, or of the breach of any other term or covenant set forth in
(e) Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered in person, sent by certified mail, postage prepaid, or delivered by a
nationally recognized overnight delivery service addressed, if to the Company at
30 S. 17th Street, 8th Floor, Philadelphia, PA 19103 Attn: President and if to
the Employee, at the address of his personal residence as maintained in the
For the Employee: For the Company:
Name: ______________________ Name: _____________________
Joseph Esposito Bruce Johnson, CFO
Date: ______________________ Date: February ___, 2006
RELEASE AND NON-DISPARAGEMENT AGREEMENT
THIS RELEASE AND NON-DISPARAGEMENT AGREEMENT (this "Release")
is made as of the ___ day of ____________, _____ by and between Joseph Esposito
(the "Employee") and eResearchTechnology, Inc. (the "Company").
WHEREAS, Employee's employment with the Company has
WHEREAS, pursuant to Section 11 of the Employment Management
Agreement by and between the Company and the Employee dated February ___, 2006
(the "Agreement"), the Company has agreed to pay the Employee certain amounts
and to provide him with certain rights and benefits, subject to the execution of
NOW THEREFORE, in consideration of these premises and the
mutual promises contained herein, and intending to be legally bound hereby, the
parties agree as follows:
SECTION 1. Consideration. The Employee acknowledges that: (i) the
payments, rights and benefits set forth in Section 11 of the Agreement
constitute full settlement of all his rights under the Employment Agreement,
(ii) he has no entitlement under any other severance or similar arrangement
maintained by the Company, and (iii) except as otherwise provided specifically
in this Release, the Company does not and will not have any other liability or
obligation to the Employee. The Employee further acknowledges that, in the
absence of his execution of this Release, the benefits and payments specified in
Section 11 of the Employment Agreement would not otherwise be due to him.
SECTION 2. Release and Covenant Not to Sue.
a. Except for the Company's obligations set forth in Section 13 of that
certain Management Employment Agreement dated February [ ], 2006, between the
Employee and the Company, the Employee hereby fully and forever releases and
discharges the Company, and all predecessors and successors, assigns,
stockholders, affiliates, officers, directors, trustees, employees, agents and
attorneys, past and present (the Company and each such person or entity is
referred to as a "RELEASED PERSON") from any and all claims, demands, liens,
Agreements, contracts, covenants, actions, suits, causes of action, obligations,
controversies, debts, costs, expenses, damages, judgments, orders and
liabilities, of whatever kind or nature, direct or indirect, in law, equity or
otherwise, whether known or unknown, arising through the date of this Release,
out of the Employee's employment by the Company or the termination thereof,
including, but not limited to, any claims for relief or causes of action under
the Age Discrimination in Employment Act, 29 U.S.C. ss. 621 et seq., or any
other federal, state or local statute, ordinance or regulation regarding
discrimination in employment, and any claim for compensation or other benefits
(including without limitation salary, wages, vacation pay, stock, stock options,
health and welfare benefits and cash bonuses), and any claims, demands or
actions based upon alleged wrongful or retaliatory discharge or breach of
contract under any state or federal law.
b. The Employee expressly represents that he has not filed a lawsuit or
initiated any other administrative proceeding against a Released Person and that
he has not assigned any claim against a Released Person. The Employee further
promises not to initiate a lawsuit or to bring any other claim against the other
arising out of or in any way related to the Employee's employment by the Company
or the termination of that employment. This Release will not prevent the
Employee from filing a charge with the Equal Employment Opportunity Commission
(or similar state agency) or participating in any investigation conducted by the
Equal Employment Opportunity Commission (or similar state agency); provided,
however, that any claims by the Employee for personal relief in connection with
such a charge or investigation (such as reinstatement or monetary damages) would
c. The foregoing will not be deemed to release the Company from any
claims (i) to or for vested rights under the employment benefit plans of the
Company, in effect as of the date of Employee's employment termination and (ii)
to enforce the terms of this Release or Section 11 of the Agreement.
SECTION 3. Actual Knowledge of Claims. Except as set forth on Schedule I
to this Release and Non-Disparagement Agreement, the Company acknowledges that
it has no actual knowledge of any claims, actions, suits, or causes of action,
of whatever kind or nature, direct or indirect, in law, equity or otherwise,
which it has arising through the date of this Release ("Claim"), against
Employee whether or not arising out of the Employee's employment by the Company
or the termination thereof, and to the extent any Claim is actually known on the
date hereof and not set forth on Schedule I, the Company hereby fully and
forever releases and discharges the Employee and all of his legal
representatives from any and all such Claims. "Actual knowledge" for purposes of
this Section 3 shall only mean the actual knowledge of the members of the
Company's Board of Directors.
SECTION 4. Restrictive Covenants. The Employee acknowledges that Sections
6, 7, 8, and 9 of the Agreement will survive the termination of his employment.
The Employee affirms that those restrictive covenants are reasonable and
necessary to protect the legitimate interests of the Company, that he received
adequate consideration in exchange for agreeing to those restrictions and that
he will abide by those restrictions.
SECTION 5. Non-Disparagement. The Employee will not disparage any
Released Person or otherwise take any action that could reasonably be expected
to adversely affect the personal or professional reputation of any Released
Person. Similarly, the Company (meaning, solely for this purpose, the Company's
officers, directors and agents specifically authorized to communicate on its
behalf) will not disparage the Employee or otherwise take any action that could
reasonably be expected to adversely affect his personal or professional
SECTION 6. Cooperation. The Employee further agrees that, subject to
reimbursement of his reasonable expenses in advance, he will cooperate fully
with the Company and its counsel with respect to any matter (including
litigation, investigations, or governmental proceedings) in which the Employee
was in any way involved during his employment with the Company. The Employee
shall render such cooperation in a timely manner on reasonable notice from the
SECTION 7. Rescission Right. The Employee expressly acknowledges and
recites that (a) he has read and understands the terms of this Release in its
entirety, (b) he has entered into this Release knowingly and voluntarily,
without any duress or coercion; (c) he has been advised orally and is hereby
advised in writing to consult with an attorney with respect to this Release
before signing it; (d) he was provided twenty-one (21) calendar days after
receipt of the Release to consider its terms before signing it; and (e) he is
provided seven (7) calendar days from the date of signing to terminate and
revoke this Release, in which case this Release shall be unenforceable, null and
void. The Employee may revoke this Release during those seven (7) days by
providing written notice of revocation to the Company at the address specified
in Section 14(e) of the Agreement.
SECTION 8. Challenge. If the Employee violates or challenges the
enforceability of any provisions of this Release or Section 11 of the Agreement,
no further payments, rights or benefits under Section 11 of the Agreement will
be due to the Employee.
SECTION 9. Miscellaneous.
a. No Admission of Liability. This Release is not to be construed as an
admission of any violation of any federal, state or local statute, ordinance or
regulation or of any duty owed by the Company to the Employee. There have been
no such violations, and the Company specifically denies any such violations.
b. No Reinstatement. The Employee agrees that he will not apply for
reinstatement with the Company or seek in any way to be reinstated, re-employed
or hired by the Company in the future.
c. Successors and Assigns. This Release shall inure to the benefit of
and be binding upon the Company and the Employee and their respective
successors, permitted assigns, executors, administrators and heirs. The Employee
not may make any assignment of this Release or any interest herein, by operation
of law or otherwise. The Company may assign this Release to any successor to all
or substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise.
d. Severability. Whenever possible, each provision of this Release will
be interpreted in such manner as to be effective and valid under applicable law.
However, if any provision of this Release is held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
will not affect any other provision, and this Release will be reformed,
construed and enforced as though the invalid, illegal or unenforceable provision
had never been herein contained.
e. Entire Agreement; Amendments. Except as otherwise provided herein,
this Release contains the entire Agreement and understanding of the parties
hereto relating to the subject matter hereof, and merges and supersedes all
prior and contemporaneous discussions, agreements and understandings of every
nature relating to the subject matter hereof. This Release may not be changed or
modified, except by an agreement in writing signed by each of the parties
f. Governing Law. This Release shall be governed by, and enforced in
accordance with, the laws of the Commonwealth of Pennsylvania, without regard to
the application of the principles of conflicts of laws.
g. Counterparts and Facsimiles. This Release may be executed, including
execution by facsimile signature, in multiple counterparts, each of which shall
be deemed an original, and all of which together shall be deemed to be one and
the same instrument.
IN WITNESS WHEREOF, the Company has caused this Release to be
executed by its duly authorized officer, and the Employee has executed this
Release, in each case as of the date first above written.
Joseph Esposito eResearchTechnology, Inc.