INDUSTRIAL TRAINING CORPORATION
-------------------------------
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is made and entered
into effective as of the 18th day of October, 1994 (the "Effective Date")
by and between Industrial Training Corporation (the "Company") and Elaine
H. Babcock (the "Executive").
RECITALS
--------
A. The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of Maryland. The
Company is engaged in the business of developing, marketing and selling
training materials, primarily in multimedia platforms.
B. The Executive is presently in the employ of the Company
in the area of sales and marketing and has substantial experience in
connection with sales and marketing for companies selling training
materials.
C. The Company has offered to continue to employ the
Executive as a Senior Vice President of Sales for the Company. The
Executive has indicated her willingness to accept said offer for continued
employment.
D. The parties hereto believe that it is in their best
interests to provide for the specific terms and conditions of employment
and to impose restrictions upon the parties in the event of the
termination of the employment relationship.
NOW, THEREFORE, in consideration of the mutual promises and
covenants as hereinafter set forth, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Executive
as a Senior Vice President of Sales for the Company in accordance with the
terms and conditions set forth in this Agreement. The Executive shall
have such specific duties as may be reasonably assigned to her from time
to time by the Board of Directors of the Company or the President of the
Company then in office, or their designee.
2. Acceptance. The Executive hereby accepts employment with
the Company in accordance with the terms and conditions set forth in this
Agreement. During the term of this Agreement, and subject to the
provisions of Sections 5 and 6 of this Agreement, the Executive agrees to
devote her full business time and services and her best efforts to the
faithful performance of the duties which may be reasonably assigned to her
and which are consistent with her position under Section 1 of this
Agreement.
3. Compensation.
------------
a. In General. For all services rendered by the
Executive under this Agreement, the Company shall provide the Executive
with the various forms of compensation and benefits set forth in this
Section 3.
b. Basic Compensation. The Company shall, subject
to the approval of the Board of Directors of the Company, pay the
Executive a basic salary of $110,000 per year, payable in periodic
installments in accordance with the Company's normal payroll practices for
salaried employees.
c. Vehicle. The Executive shall receive the use of
a Company vehicle selected by the Company, in its sole discretion.
d. Reimbursements of Expenses. The Company agrees
to reimburse the Executive for all reasonable expenses (determined in the
sole discretion of the Company) incurred by the Executive in the course of
the pursuance of her duties hereunder in accordance with the Company's
then current reimbursement policy.
e. Working Facilities. The Company, at its own
cost, shall furnish the Executive with an office together with supplies,
equipment and such other facilities and services suitable to her position
and adequate for the performance of her duties hereunder.
f. Fringe Benefits. Nothing herein shall affect the
eligibility of the Executive to receive salary increases, bonus awards,
stock option grants, pension or profit-sharing arrangements, employee
benefits and the like which the Company may, in its sole discretion, from
time to time grant or make available to the Executive. The Executive may
participate in the Company's health and medical plan, dental plan, 401(k)
plan and Employee Stock Ownership Plan ("ESOP") if the Executive complies
with the eligibility requirements thereunder and otherwise in a manner
consistent with the Company's then current normal policies and procedures.
g. Discretionary Salary Increase and/or Bonus. Once
each year, consideration shall be given by the Board of Directors of the
Company, within its sole discretion, to a salary increase for the
Executive and whether to award a bonus to the Executive, and if so, in
what amount. The Executive shall, to the extent permitted by the Board of
Directors of the Company, also participate in the Company's Incentive
Compensation Plan commencing with the Company's fiscal year to end
December 31, 1995 if the Executive complies with the eligibility
requirements thereunder and otherwise in a manner consistent with the
Company's then current normal policies and procedures.
h. Non-Performance Based Stock Options. The Company
hereby grants (the "Non-Performance Grant") to the Executive the option to
acquire 30,000 shares of the common stock of the Company (the "Non-
Performance Shares") in accordance with the terms and conditions set forth
- 2 -
below. The terms of the Non-Performance Grant shall not be in accordance
with the terms and conditions of the Company's 1992 Key Employee Incentive
Stock Option Plan (the "ISO Plan"). The Non-Performance Grant shall be
subject to the following terms and conditions:
(i) The Non-Performance Shares are
subject to the following vesting schedule, such that the Executive must be
employed by the Company on the applicable vesting date (the "Vesting
Date") in order to be vested in and therefore fully entitled to acquire
the applicable Non-Performance Shares:
Number of Vested
Vesting Date Non-Performance Shares
------------ ----------------------
December 31, 1995 10,000
December 31, 1996 10,000
December 31, 1997 10,000
------
30,000
(ii) The purchase price for the Non-
Performance Shares shall be $7.50 per share (i.e., the fair market value
of a share of the common stock of the Company on October 18, 1994, the
date the Non-Performance Grant was approved by the Board of Directors of
the Company, which fair market value is the closing price of the Company's
common stock on the National Association of Securities Dealers, Inc.
("NASD") NASDAQ National Market System on such October 18, 1994 date).
None of the Non-Performance Shares will be issued to the Executive until
the purchase price for such Non-Performance Shares to be acquired by the
Executive are fully paid by the Executive to the Company.
(iii) The Executive's option to
acquire the Non-Performance Shares shall terminate five (5) years from the
Vesting Date set forth in Section 3.h.(i) of this Agreement (the "Non-
Performance Grant Termination Date").
(iv) The Executive must be employed
by the Company on the applicable Non-Performance Grant Vesting Date in
order to be fully entitled to acquire the applicable Non-Performance
Shares.
(v) The Non-Performance Shares shall
be issued from the unregistered and authorized but unissued common stock
of the Company and shall be "restricted securities" in accordance with
Rule 144 of the Securities Act of 1933.
4. Term. The initial term of this Agreement shall begin on
the Effective Date and shall continue thereafter for a period of two (2)
years. Either party may cause the initial term of this Agreement to
extend for a second term for a period of one (1) year by the giving of
written notice to the other party within 90 days of the end of the initial
term of this Agreement. At the end of the initial or second term of this
- 3 -
Agreement, as the case may be, the term of this Agreement shall
automatically renew on a month to month basis, until terminated in
accordance with the provisions of Section 5 of this Agreement. The
initial, second and renewal terms of this Agreement shall be subject to
termination in accordance with the provisions of Section 5 of this
Agreement.
5. Termination. Unless the parties otherwise agree in
writing, termination of this Agreement in accordance with the provisions
of this Section shall also constitute termination of the Executive's
employment with the Company without the need for further notice or action
by either party.
a. Incapacity. In the event the Executive shall be
unable to perform her duties owing to illness or other incapacity for a
period of more than 90 consecutive days or an aggregate of 120 days in any
12 month period, the Company may, at its option, by written notice
addressed to the Executive, and sent subsequent to such 90 days or 120
days, terminate this Agreement as of a date to be specified in such
notice, but not less than 30 days after the date of the sending of such
notice; provided, however, that if prior to the date specified in such
notice the Executive's illness or other incapacity shall have terminated
and she shall have satisfactorily taken up and performed her duties under
this Agreement, the notice of termination shall be disregarded, and this
Agreement shall continue in full force and effect. (See Sections 10 and
11 of this Agreement for medical, sick leave and disability benefits).
b. Death. In the event of the Executive's death
during the term of her employment hereunder, this Agreement shall
terminate as of the date of death, and the Executive's spouse, or such
other person whom the Executive shall have designated in writing to the
Company, shall be paid the unpaid portion, if any, of the Executive's then
prevailing salary prorated to the date of the Executive's death. The
Company shall also pay to such spouse, or such other designated person, a
death benefit consistent with the Company's then current normal policies.
c. Withdrawal from Business. The Company shall
terminate this Agreement upon 60 days written notice to the Executive of a
bona fide decision by the Company to wind up its business and liquidate
its assets (other than in connection with a merger, consolidation, or
other event specified in Section 7), and all rights and obligations of
both parties hereto (except those under Section 6.d. hereof) shall cease
upon such termination. In this event, the Executive shall be paid the
unpaid portion, if any, of her then prevailing salary prorated to the date
of termination.
d. Termination by the Company For Cause. The
Company may terminate this Agreement if, within the reasonable judgment of
the Company the Executive shall (i) fail to carry out her duties
hereunder, (ii) act in a manner inimical to the Company, (iii)
unsatisfactorily perform her duties hereunder or (iv) not be in compliance
with the Company employee handbook.
- 4 -
e. Termination by the Company With Notice. The
Company may terminate this Agreement for a reason not set forth in Section
5.a., 5.c. or 5.d. at any time upon 90 days written notice to the
Executive. In the event the Executive is terminated for any reason other
than that set forth in Section 5.d., the Company shall pay to the
Executive, the unpaid portion, if any, of her then prevailing salary
prorated to the date of termination, and, in addition the Company shall
pay to the Executive a termination allowance (the "Termination Allowance")
equal to 10 months' salary, based upon, her then prevailing annual salary
rate. The Termination Allowance may, at the option of the Company, be
paid in periodic installments over the first 10 months following
termination in accordance with the Company's regular payroll periods or
over such lessor period as the Company may determine with the concurrence
of the Executive.
f. Termination by the Executive with Notice. The
Executive may terminate this Agreement at any time upon 120 days written
notice to the Company, in which event the Executive shall be paid the
unpaid portion, if any, of her then prevailing salary prorated to the date
of termination. In the event the parties cannot agree as to whether the
termination was, in effect, a termination by the Company or by the
Executive, the parties shall submit such dispute for arbitration, as
provided for in Section 15 of this Agreement. During a period of 180 days
following any such termination by the Executive, the Executive agrees to
provide such consulting services to the Company as it may reasonably
request, at such time or times within such period as may be mutually
agreed upon between the Company and the Executive. The Executive shall be
compensated for any such consulting services at 120% of the daily rate
when last employed by the Company plus reimbursement for any reasonable
out-of-pocket expenses incurred by the Executive in rendering such
consulting services.
6. Outside Business Interests, Employee Solicitation and
Company Property.
a. Without the written consent of the Board of
Directors of the Company, which consent shall not be unreasonably
withheld, the Executive agrees that during the term of this Agreement she
will not be affiliated with any competitor, supplier or customer of the
Company, as an officer, director, partner, employee, agent, consultant (or
similar capacity) or more than a 1% stockholder.
b. The Executive further agrees that during the term
of this Agreement she will not, directly or indirectly, encourage
employees of ITC (hereinafter meaning the Company and/or any of its
subsidiary companies or divisions now existing or hereafter formed) to
leave the employ of ITC for the purpose of seeking or obtaining employment
in any other activity with which the Executive intends to become
affiliated.
c. The Executive further agrees that during a period
of two (2) years following the termination of employment, regardless of
- 5 -
the reasons for such termination, she will not, directly or indirectly,
solicit, attempt to hire or encourage employees of ITC to leave the employ
of ITC.
d. The Executive further agrees that during the term
of this Agreement and following the termination of her employment she will
not, other than in the normal and valid course of her employment with the
Company, directly or indirectly, take with her or use any ITC property,
such as drawings, reports, data or proposals, design or manufacturing
information, wage and salary information, records or the like relating or
peculiar to ITC's products, research or development or other activities,
nor disclose to any others information of a privileged nature, without
prior written consent of the President of the Company.
e. The Executive further agrees that during the term
of this Agreement and during a period of two (2) years following the
termination of her employment, she will not, directly or indirectly,
participate (on her own behalf or on behalf or any other corporation,
venture or enterprise engaged in commercial activities) in any proposals
which were the subject of outstanding bids or solicitations of ITC or of
bids or solicitations in preparation by ITC during her employment by the
Company.
f. The Executive further agrees that in the event
she terminates without giving notice as required by Section 5.f., for a
period of one (1) year following such termination of employment, she will
not engage, directly or indirectly, as proprietor, partner, shareholder,
director, officer, employee, agent, consultant, or in any other capacity
or manner whatsoever, in any business activity competitive with the
business of ITC, as constituted during her employment and on the date of
termination of her employment. If any court of competent jurisdiction
shall determine this covenant to be unenforceable as to either the term or
scope imposed above, then this covenant nevertheless shall be enforceable
by such court as to such shorter term or such lesser scope as may be
determined by the court to be reasonable and enforceable.
g. The Executive further agrees that the provisions
of this Section 6 are of vital importance to the Company and incorporate
crucial Company policies and a means of safeguarding valuable proprietary
rights and interests of ITC. Accordingly, the Executive agrees that the
Company shall be entitled to injunctive relief, in addition to all other
remedies permitted by law, to enforce the provisions of this Section 6.
7. Merger or Acquisition. In the event the Company should
consolidate with, or merge into another corporation, or transfer all or
substantially all of its assets to another entity, this Agreement shall
continue in full force and effect and be binding upon the Company's
successor or transferee.
8. Personnel Policies. To the extent not otherwise set
forth herein, the terms and conditions of the Executive's employment and
- 6 -
benefits shall be governed by the then prevailing operating and personnel
policies of the Company.
9. Vacations. The Executive shall be entitled to a
reasonable vacation during each year of her term of employment, as
approved by the Chief Executive Officer or the President of the Company.
10. Medical Expenses. Recognizing that the continued good
health of the Executive and her family is of vital concern to the Company,
since such good health is directly related to the services which the
Executive will be expected to render to the affairs of the Company, the
Executive agrees to undergo a thorough and complete medical examination at
least once during each year of her term of employment. The Executive
further agrees to have the examining physician report the findings of each
examination to the Company, if so requested. Moreover, in keeping with
the Company's objectives in this regard, the Company agrees to reimburse
the Executive up to $1,000 during each calendar year of this Agreement for
those reasonable medical (including the aforementioned annual medical
examination), dental and optical expenses incurred by the Executive during
each such year on behalf of herself and her immediate family if such
expenses are not otherwise reimbursed to the Executive through insurance.
The unused reimbursement in one calendar year will be carried forward up
to a maximum of $3,000; expenses not reimbursed in one calendar year can
be submitted for reimbursement in subsequent years. The Company, at its
own expense, shall also provide the Executive with medical insurance
coverage under its group medical insurance plan.
11. Sick Leave Benefits and Disability Insurance. During her
absence owing to illness or other capacity, the Executive shall be paid
sick leave benefits at her then prevailing salary rate, reduced by the
amount, if any, of Worker's Compensation or disability benefits under the
Company's group disability insurance plan. The Company, at its own
expense, shall provide the Executive with disability benefits under its
group disability insurance plan.
12. Life Insurance. The Company, at its own expense, shall
provide the Executive with life insurance benefits under its group life
insurance plan.
13. Breach of Agreement. In addition to any other remedy
available to the Company in the event of a material breach by the
Executive of any of the covenants set forth in this Agreement, the
Company's obligation to pay the Executive any incentive payouts, deferred
compensation, termination allowance or other benefits accrued but unpaid
as of the date of such breach (except any vested rights the Executive may
have under a Company Profit Sharing Retirement Plan) shall terminate, as
will the Executive's right to exercise any unexercised stock options.
14. Change of Control.
-----------------
a. In General. For purposes of this Agreement, a
"Change Of Control" shall be the occurrence of any one or more of the
- 7 -
following events, and the effective date of a Change Of Control shall be
the effective date on which such event occurs:
(i) A merger of the Company into another
corporation in which the Company is not the surviving corporation, other
than a merger that manifestly does not affect control such as a merger to
change the state of incorporation.
(ii) A sale of substantially all of the
assets of the Company.
(iii) Any arrangement that gives to an entity
or person (or group of entities or persons acting in concert) the power to
name a majority of the Board of Directors of the Company.
(iv) Any other circumstance constituting an
effective change of ownership or control within the meaning of Section
280G of the Internal Revenue Code and Regulations promulgated thereunder.
b. Consequences of a Change Of Control. In the
event of a Change Of Control, the Executive shall be entitled to remain in
the employ of the Company, in a manner consistent with the terms of this
Agreement. If within one (1) year of the effective date of a Change Of
Control (i) the Executive's employment with the Company is terminated by
the Company for any reason other than that set forth in Section 5.d. above
or (ii) the Executive voluntarily terminates her employment with the
Company, the Company shall pay to the Executive, the unpaid portion, if
any, of her then prevailing salary prorated to the date of termination,
and in addition the Company shall pay to the Executive a Termination
Allowance equal to 12 months' salary, based upon, her then prevailing
annual salary rate, less such number of months salary that the Executive
actually received from the effective date of the Change Of Control through
the date of termination. The Termination Allowance may, at the option of
the Company, be paid in periodic installments over the number of months'
salary to be paid, in accordance with the Company's regular payroll
periods or over such lessor period as the Company may determine with the
concurrence of the Executive.
15. Disputes and Arbitration. Any dispute arising out of or
concerning this Agreement, which is not disposed of by agreement between
the two parties, shall be decided by an Arbitrator chosen by the parties.
Either party may initiate an arbitration action by a written notification
to the other. The parties agree to choose the Arbitrator within 15 days
thereafter. The Arbitrator will follow the rules for arbitrations of the
American Arbitration Association to the extent that said rules are not
inconsistent with the terms and conditions of this Section. The decision
of the Arbitrator shall be final and conclusive in the absence of
statutory grounds for setting it aside. Neither party shall be reimbursed
for the costs that she or it may sustain in connection with an arbitration
under this Agreement.
- 8 -
16. Alteration, Amendment, or Termination. No change or
modification of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any provision of
this Agreement shall be valid unless in writing and signed by the person
against whom it is sought to be enforced. The failure of any party at any
time to insist upon strict performance of any condition, promise,
agreement or understanding set forth herein shall not be construed as a
waiver or relinquishment of the right to insist upon strict performance of
the same condition, promise, agreement, or understanding at a future time.
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable
provisions were omitted.
17. Integration. This Agreement sets forth (and is intended
to be an integration of) all of the promises, agreements, conditions,
understandings, warranties and representations, oral or written, express
or implied, among them with respect to the terms of the employment
relationship and there are no promises, agreements, conditions,
understandings, warranties or representations, oral or written, express or
implied, among them with respect to the terms of the employment
relationship other than as set forth herein.
18. Conflicts of Law. This Agreement shall be subject to and
governed by the laws of the Commonwealth of Virginia irrespective of the
fact that one or more of the parties now is or may become a resident of a
different state.
19. Benefits and Burden. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their
respective successors, heirs, and personal representatives. This
Agreement shall not be assignable.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the date and year first above written.
WITNESS/ATTEST: COMPANY:
INDUSTRIAL TRAINING CORPORATION
________________________ By: _____________________________
Name:
Title:
EXECUTIVE:
________________________ ___________________________________
ELAINE H. BABCOCK
- 9 -