EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is made as of the 1st day of
October, 1996 between IBAH, Inc., Delaware corporation ("IBAH"), and Sherrin H.
Baky (the "Employee").
Background
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IBAH desires to employ the Employee, and the Employee desires to become an
employee of IBAH, upon the terms and conditions hereinafter set forth.
This Agreement is one of the Employment Agreements that is referred to in
the Agreement and Plan of Merger, by and among IBAH, IBAH Acquisition Company,
HBG, Inc. and the stockholders of HBG, Inc. (the "Merger Agreement").
Witnesseth:
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NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment.
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IBAH hereby employs the Employee as Executive Vice President of The
Hardardt Group, Inc., a wholly-owned subsidiary of IBAH, and Executive Vice
President of IBAH, and the Employee hereby accepts such employment. During the
term of employment under this Agreement (the "Employment Term"), the Employee
shall continue to perform duties similar to those she has heretofore
performed as Executive Vice President of HGB, Inc., and such other similar
duties as are requested from time to time by the Chief Executive Officer of IBAH
and such other person(s) as may be mutually agreed upon by the Chief Executive
Officer and the Employee.
2. Performance.
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During the Employment Term, the Employee shall devote her entire business
efforts to the performance of her duties hereunder.
3. Term.
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The Employment Term shall be for the period commencing on the date of this
Agreement and ending on the two year anniversary of this Agreement, unless
terminated earlier pursuant to the terms of Section 5 or Section 6 of this
Agreement.
4. Compensation for Employment.
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(a) The basic annual compensation of the Employee for her employment
services to IBAH and to all of its affiliated companies during the Employment
Term shall be $175,000 (the "Salary"), which IBAH shall pay to the Employee in
accordance with its normal payroll policy. IBAH may adjust the salary upward on
an annual basis as the Board may determine, but the Salary shall not be
decreased.
(b) During the Employment Term, IBAH shall also provide the Employee with
those fringe benefits generally afforded to other executives of IBAH of
comparable levels of compensation and responsibility, including, without
limitation, option and bonus plans (at Level Grade 0 under the current IBAH
plans), health insurance benefits, disability benefits, life insurance benefits
and retirement benefits (the "Fringe Benefits") in accordance with Section 5.5
of the Merger Agreement. IBAH shall also reimburse the Employee for any
reasonable business expenses incurred on IBAH's behalf in connection with the
performance of her services during the Employment Term, provided, however, that
such benefits are being offered by IBAH to its other executives of comparable
levels of compensation and responsibility.
(c) The Employee shall be entitled to four (4) weeks of paid vacation each
year, plus a vacation bonus of two (2) weeks of paid vacation each year.
5. Termination Without Compensation.
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(a) Expiration of Employment Term. Upon expiration of the Employment
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Term, IBAH shall not have further liability or obligation to the Employee
hereunder except for any unpaid Salary and Fringe Benefits accrued to the date
of expiration.
(b) Partial or Total Disability. If the Employee is unable to perform her
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duties and responsibilities hereunder to the full extent required hereunder by
reason of illness, injury or incapacity for six months (during which time she
shall continue to be compensated hereunder), IBAH may terminate the Employment
Term, and IBAH shall not have any further liability or obligation to the
Employee hereunder except for any unpaid Salary and Fringe Benefits accrued to
the date of termination, and IBAH shall, through the two-year anniversary of
this Agreement, continue to provide to the Employee the same Fringe Benefits as
were provided prior to her termination to the maximum extent permissible under
the terms of the plans and policies governing those Fringe Benefits. In the
event of any dispute under this Section 6(b), the Employee shall submit to a
physical examination by a licensed physician mutually satisfactory to IBAH and
the Employee, the cost of such examination to be paid by IBAH, and the
determination of such physician shall be determinative. If, after termination
due to disability as provided herein, the Employee obtains, at her sole expense,
medical certification from a licensed physician reasonably satisfactory to IBAH
that such disability has ended, IBAH shall offer to employ the Employee pursuant
to the terms of this Agreement for the remainder of the Employment Term in
effect at the time of termination, except that IBAH shall not be required to
reemploy the Employee at the same officer position if IBAH shall have elected
another person
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to such position during the period of the Employee's disability and such other
person continues in such position at the time of the Employee's return to
employment.
(c) Death. If the Employee dies, this Employment Agreement (except for
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the provisions of Sections 7, 8, 9, 10 and 11 hereof) shall terminate, and
thereafter IBAH shall not have any further liability or obligation to the
Employee, her executors, administrators, heirs, assigns or any other person
claiming under or through her except for unpaid Salary and Fringe Benefits
accrued to the date of her death.
(d) Cause. IBAH may terminate the Employment Term for "cause" (as defined
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below), and after the termination date, IBAH shall not have any further
liability or obligation to the Employee hereunder except for any unpaid Salary
and Fringe Benefits accrued to the date of termination and any other continuing
obligations arising out of this Agreement or other Agreements between IBAH and
the Employee. For purposes of this Agreement, "cause" shall mean breach of any
of the material terms or provisions of this Agreement other than by reason of
illness, injury or incapacity; habitual material neglect of her duties and
responsibilities hereunder; willful misconduct in performing her duties and
responsibilities hereunder; conviction of a felony or other crime involving
moral turpitude; or misappropriation of IBAH funds. Any breach of a material
term of this Agreement, habitual neglect of her duties, or willful misconduct
shall constitute "cause" only if the action or omission at issue shall be
continuing 30 days after IBAH gives the Employee written notice of the
termination date and the reasons for termination, and an opportunity to cure
such breach, neglect or misconduct. The Employee's conviction of a felony or
other crime involving moral turpitude or misappropriation of IBAH funds shall
constitute "cause" if IBAH gives the Employee ten days' written notice of
termination date.
6. Termination With Compensation.
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(a) By IBAH Without Cause. IBAH shall have the right to terminate the
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Employment Term without cause at any time by giving the Employee 30 days'
written notice of the termination date. Under such circumstances, IBAH shall
provide the Employee with the Termination Compensation specified in Section
6(c).
(b) By Employee. The Employee shall have the right to terminate the
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Employment Term by giving 12 months' written notice of the termination date.
Under such circumstances, IBAH shall provide the Employee with the Termination
Compensation specified in Section 6(c)
(c) Termination Compensation. The "Termination Compensation" shall
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consist of the payment of the Employee's Salary under Section 4(a), and the
continuation of the Fringe Benefits under Section 4(b) to the maximum extent
permissible under the terms of the plans and policies governing these Fringe
Benefits, at the level in effect at the date of termination, for any remaining
part of the Employment Term in effect at the date of termination. The Employee
shall not be entitled to any Termination Compensation under this Section 6
unless the Employee executes and delivers to IBAH after a notice of termination
a release in a form satisfactory to IBAH in its sole discretion by which the
Employee releases IBAH from any obligations and
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liabilities of any type whatsoever that arise out of this Agreement or her
employment by IBAH, except for IBAH's obligation to provide the Salary and
Fringe Benefits specified in this Section 6 and any other continuing obligations
arising out of this Agreement or other agreements between IBAH and the Employee.
The parties hereto acknowledge that the Salary to be provided under this Section
6 is to be provided in consideration for the above-specified release.
(d) Exclusivity. Upon any termination by IBAH under Section 6(a) or 6(b),
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IBAH shall not have any obligation under this Agreement to the Employee, her
executors, administrators, heirs, assigns or any other person claiming under or
through her other than to provide the Termination Compensation under the terms
and conditions of Section 6(c) and to fulfill any other continuing obligations
arising out of this Agreement.
7. Agreement Not to Compete.
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(a) During the Non-Competition Period (defined below), the Employee shall
not, within the Restricted Area (defined below), directly or indirectly, in any
capacity, render her services, engage or have a financial interest in, any
business that is competitive with any business activities in which IBAH or any
of its affiliates (each an "IBAH Party") shall have been engaged and in which
the Employee was actively involved during her employment by IBAH. In addition,
during the Non-Competition Period, the Employee shall not directly or indirectly
solicit any employees of IBAH or any of its affiliates to terminate their
employment with the applicable IBAH Party. Any interest in a publicly-traded
corporation, even though such corporation may be a competitor of IBAH, that the
Employee holds as of the date hereof and has disclosed to IBAH, shall not be
deemed to violate the restrictions contained in this Section 7(a). It shall
also not be a violation of this Agreement for the Employee to invest in mutual
funds or otherwise, so long as the Employee has no investment or trading
discretion, even if such funds own securities of a competitor of IBAH.
(b) The "Non-Competition Period" means the Employment Term, any
period of time during which the Employee receives Termination Compensation
under Section 6(b) hereof, and for two years after the later of (i) the end of
the Employment Term and (ii) the last date on which the Employee receives
Termination Compensation, so long as IBAH continues to provide to the Employee
health insurance benefits at the level in affect at the date of her termination
for the duration of the Non-Competition Period.
(c) The "Restricted Area" means the entire world. The Employee hereby
acknowledges that the scope of the Restricted Area is not unreasonable given the
nature of IBAH's business.
(d) If a court determines that the foregoing restrictions are too broad or
otherwise unreasonable under applicable law, including with respect to time or
space, the court is hereby requested and authorized by the parties hereto to
review the foregoing restriction to include the maximum restrictions allowable
under applicable law.
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(e) The terms of this Section 7 shall apply to the Employee and any
person, partnership, association, corporation or other entity (a "Person")
controlled by the Employee, including any relative of the Employee, to the same
extent as if they were parties hereto, and the Employee shall take whatever
actions may be necessary to cause any such persons or entities to adhere to the
terms of this Section 7.
8. Inventions, Designs and Product Developments.
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If at any time or times during the Employment Term, the Employee shall
(either alone or with others), make, conceive, create, discover, invent or
reduce to practice any invention, modification, discovery, design, development,
improvement, process, software program, work of authorship, documentation,
formula data, whether or not patentable or registrable under copyright,
trademark or similar statutes (including but not limited to the Semiconductor
Chip Protection Act) or subject to analogous protection) (herein called
"Developments") that (a) relates to the business of IBAH or any customer of or
supplier to IBAH or any of the products or services being developed,
manufactured or sold by IBAH or which may be used in relation therewith, (b)
results from tasks assigned to the Employee by IBAH or (c) results from the use
of premises or personal property (whether tangible or intangible) owned, leased
or contracted for by IBAH, such Developments and the benefits thereof are and
shall immediately become the sole and absolute property of IBAH and its assigns,
as "Work made for hire" or otherwise, and the Employee shall promptly disclose
to IBAH (or any persons designated by it) each such Development and, as may be
necessary to ensure IBAH's ownership of such Developments, the Employee hereby
assigns any rights (including, but not limited to, any copyrights and
trademarks) the Employee may have or acquire in the Development and benefits
and/or rights resulting therefrom to IBAH and its assigns without further
compensation and shall communicate, without cost or delay, and without
disclosing to others the same, all available information relating thereto (with
all necessary plans and models) to IBAH.
The Employee will, during the Employment Term and at any time thereafter,
at the request and cost of IBAH, promptly sign, execute, make and do all such
deeds, documents, acts and things as IBAH and its duly authorized agents may
reasonably require:
(a) to apply for, obtain, register and vest in the name of IBAH
alone (unless IBAH otherwise directs) letters patent, copyrights,
trademarks or other analogous protection in any country throughout the
world and when so obtained or vested to renew and restore the same;
and
(b) to defend any judicial, opposition or other proceedings in
respect of such applications and any judicial, opposition or other
proceedings or petitions or applications for revocation of such
letters patent, copyright, trademark or other analogous protection.
In the event IBAH is unable, after reasonable effort, to secure the
Employee's signature on any application for letters patent, copyright or
trademark registration or other
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documents regarding any legal protection relation to a Development, whether
because of the Employee's physical or mental incapacity or for any other reason
whatsoever, the Employee hereby irrevocably designates and appoints IBAH and its
duly authorized officers and agents as her agent and attorney-in-fact, to act
for and in her behalf and stead to execute and file any such application or
applications or other documents and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent, copyright or trademark
registrations or any other legal protection thereon with the same legal force
and effect as if executed by the Employee.
The Employee represents that she has never been (i) debarred or convicted
of a crime for which a person can be barred under 21 U.S.C. (S) 335a ("(S)
335a") nor (ii) threatened to be debarred or indicated for a crime or otherwise
engaged in conduct for which a person can be debarred under (S) 335a. The
Employee will promptly notify IBAH in the event of any such debarment,
conviction, threat or indictment occurring during the Employment Term.
9. Confidential Information.
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The Employee will not at any time, whether during or after the Employment
Term, reveal to any person or entity any of the trade secrets or confidential
information concerning the organization, business or finances of IBAH.
Confidential information or trade secrets includes, but is not limited to,
operating procedures, salary structure/compensation information, pricing
strategies, investigator lists, budgets and other related data, computer
software, databases and programming, data files, client lists and related
information, financial information and projections, inventions, know-how,
products, services, techniques and any other information which, if divulged to a
third party could have an adverse impact on IBAH, or on any third party to which
IBAH owes a confidentiality obligation, except as may be required in the
ordinary course of performing the Employee's duties as an employee of IBAH.
Further, the Employee acknowledges that client companies disclose
confidential information to IBAH and that IBAH agrees, in writing, to maintain
the confidentiality of this information. The Employee will not at any time,
whether during or after the Employment Term, reveal to any person or entity any
trade secrets or confidential information concerning the organizations, business
or finances of any third party or client to which IBAH owes a confidentiality
obligation.
10. Remedies.
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The parties expressly acknowledge that a breach or evasion of any term of
this Agreement by either party may cause immediate and irreparable harm to the
other party and that the remedy at law for any breach will be inadequate. Upon
any such breach or threatened breach, IBAH (or the applicable IBAH Party), or
the Employee, as the case may be, shall be entitled as a matter of right to
injunctive relief in any court of competent
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jurisdiction, in equity or otherwise, and to enforce the specific performance of
the parties' obligations under these provisions without the necessity of proving
the actual damage or the inadequacy of a legal remedy. Subject to the remainder
of this Section 10, the rights conferred upon the parties by the preceding
sentence shall not be exclusive of, but shall be in addition to, any other
rights or remedies which the parties may have at law, in equity or otherwise.
11. Arbitration and Indemnification.
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(a) Except as set forth in Section 10 above, any claim or controversy
arising out of or relating to this Agreement, or any breach thereof, or
otherwise relating to Employee's employment, compensation and benefits with
IBAH, or the termination thereof, excluding unemployment and workers'
compensation, shall be settled by arbitration in Philadelphia, Pennsylvania in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association (AAA) then in effect to the extent provided herein, and
except as modified herein; provided, however, that the Employee and IBAH agree
that (1) the "panel" of arbitrators as used in the AAA Rules shall consist of a
single arbitrator; (2) the arbitrator shall be an attorney licensed to practice
law in Pennsylvania or New Jersey who has experience in employment matters; (3)
the arbitrator shall be prohibited from disregarding, adding to or modifying the
terms of this Agreement; (4) the arbitrator shall be required to follow
established principles of substantive law and the law governing burdens of
proof; (5) only legally protected rights may be enforced in arbitration; (6) the
arbitrator shall be without authority to award punitive or exemplary damages;
(7) any award must be supported by substantial record evidence and (8) any
demand for arbitration must be filed and served if at all, within 180 days of
the occurrence of the act or omission complained of. Any claim or controversy
not submitted to arbitration in accordance with this Section 11 shall be
considered waived and, thereafter, no arbitrator or tribunal or court shall have
the power to rule or make any award on any such claim or controversy. The award
rendered in any arbitration proceeding held under this Section 11 shall be final
and binding, and judgment upon the award may be entered in any court having
jurisdiction thereof, provided it conforms to established principles of law and
is supported by substantial record evidence.
(b) IBAH agrees to defend and indemnify the Employee and hold her harmless
from any and all claims, demands, suits, judgments, fines, penalties, and
charges, including without limitation attorneys' fees in any way arising
directly or indirectly out of her employment by IBAH or the performance of her
obligations pursuant to this Agreement. The Employee and IBAH will cooperate in
any defense, but IBAH will maintain complete control of the defense, including
any decisions as to settlement.
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12. Survival.
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Notwithstanding the termination of the Employment Term pursuant to Section
5 or 6, the obligations of the Employee under Sections 7, 8, 9, 10 and 11 and
the obligations of IBAH under Sections 5, 6, 7, 10 and 11 hereof shall survive
and remain in full force and effect.
13. General.
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(a) Interpretation. Unless the context of this Agreement clearly requires
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otherwise, (i) references to the plural include the singular, and to the
singular include the plural, (b) "or" has the inclusive meaning frequently
identified with the phrase "and/or" and (c) "including" has the inclusive
meaning frequently identified with the phrase "but not limited to." The section
and other headings contained in this Agreement are for reference purposes only
and shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection, schedule and exhibit
references are to this Agreement unless otherwise specified. Each accounting
term used herein that is not specifically defined herein shall have the meaning
given to it under GAAP.
(b) Binding Effect. All of the terms and provisions of this Agreement
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shall be binding upon and inure to the benefit and be enforceable by the
respective heirs, representatives, successors (including any successor as a
result of a merger or similar reorganization) and assigns of the parties hereto,
except that the duties and responsibilities of the Employee hereunder are of a
personal nature and shall not be assignable in whole or in part by the Employee.
Any IBAH Party other than IBAH is a third party beneficiary of this Agreement
and may enforce the provisions of this Agreement that pertain to such IBAH
Party, including Sections 7, 8 and 9, to the same extent as if a party hereto.
(c) Notices. All notices required to be given under this Agreement shall
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be in writing and shall be deemed to have been given when personally delivered
or when mailed by registered or certified mail, postage prepaid, return receipt
requested, or when sent by Federal Express or other overnight delivery service,
addressed as follows:
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TO EMPLOYEE:
Sherrin H. Baky
12 Jonathan Smith Road
Morristown, New Jersey 07960
TO IBAH:
Jane Hollingsworth
General Counsel
IBAH, Inc.
Four Valley Square
512 Township Line Road
Blue Bell, Pennsylvania 19422
(d) Entire Agreement; Termination of Prior Agreement; Modification. This
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Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof. This Agreement may not be modified or amended in any
way except in writing by the parties hereto. Upon execution of this Agreement,
the Employment Agreement, dated October 1, 1992, as amended October 25, 1994, by
and between the Employee and HGB, Inc., and any other agreements or
understandings relating to the subject matter contained herein, shall
immediately terminate, and each of IBAH and the Employee release the other from
any and all claims, obligations and liabilities of any type whatsoever that
arise out of such agreements or understandings, or Employee's employment
pursuant thereto.
(e) Duration. Notwithstanding the termination of the Employment Term and
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of the Employee's relationship with IBAH, this Agreement shall continue to bind
the parties for so long as any obligations remain under this Agreement.
(f) Waiver. No waiver of any breach of this Agreement shall be construed
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to be a waiver as to succeeding breaches.
(g) Severability. If any provision of this Agreement or application
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thereof to anyone under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or
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unenforceable provision or application and shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(h) Counterparts. This Agreement may be signed in any number of
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counterparts, each of which shall be an original, with the same effect as if the
signatures hereto were upon the same instrument.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto duly executed this Agreement the day and year first written above.
IBAH, INC.
By: /s/ Geraldine A. Henwood
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Name:
Title:
/s/ Sherrin H. Baky
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SHERRIN H. BAKY
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