Employment Agreement between GlobalOptions, Inc. and Dr. Harvey W. Schiller (Chairman)
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This agreement outlines the terms of employment for Dr. Harvey W. Schiller as Chairman and member of the Board of Directors of GlobalOptions, Inc., starting on or before February 1, 2004, for an initial term of three years. Dr. Schiller will receive a $200,000 annual salary, performance-based bonuses, stock options, and standard executive benefits. The agreement also covers responsibilities, office arrangements, and conditions for termination, including compensation in the event of death or disability. The contract automatically renews unless either party gives 60 days' notice before expiration.
EX-10.2 6 ex102to8k206282_06242005.htm sec document
Exhibit 10.2 GlobalOptions, Inc. 1615 L Street, N.W. Suite 300 Washington, DC 20036 January 29, 2004 Dr. Harvey W. Schiller 121 E. 64th Street Suite 55 New York, NY 10021 Dear Harvey: This letter sets forth our agreement on matters relating to your employment and becoming a member of the Board of Directors with GlobalOptions, Inc. (the "Company"). 1 . EMPLOYMENT, TERM. The Company agrees to employ you and you hereby agree to be employed as an executive officer with the specific title of Chairman and to serve as a member of the Board of Directors (the "Board") and Chairman of the Board. Your employment shall commence on or before February 1, 2004 (the "Commencement Date"), and you agree to accept the appointment to the Board and upon the vote of the shareholders, the appointment as the Chairman of the Board on about February 1, 2004 (the "Effective Date"). As Chairman of the Board, you shall report to the Board and shall have such responsibilities and perform such duties appropriate to such position as the Board shall determine. Your initial responsibilities shall be (i) to develop new business for the Company; (ii) to develop new sources of capital for the Company, (iii) to redevelop and reengineer the Company's business strategy; and (iv) to establish an office in 1 CONFIDENTIALthe city of New York for the Company, and it is agreed that the Company shall provide such office space within 90 days from the Commencement Date. You shall devote a substantial amount of your working time and efforts to the business of the Company, and the Company accepts and supports your continued participation in the non-Company activities set forth on Exhibit A attached hereto, as well as future non-competitive activities, subject to Board approval, which approval shall not unreasonably be withheld. The initial term of your employment with the Company shall be for a period of three (3) years (the "Term of Employment" or "Term"), commencing upon the Commencement Date. The Term of Employment shall be automatically renewed for successive one-year periods after the initial Term unless the Company or you give notice to the other at least 60 days prior to the otherwise scheduled expiration of the Term that it or you, as the case may be, do not want the Term to continue beyond such scheduled expiration. 2. SALARY. Your salary shall be at the annual rate of $200,000 payable in accordance with the normal payroll practices of the Company. Thereafter, you shall be entitled to an annual merit salary increase to be determined by the Compensation Committee of the Board (the "Compensation Committee"), based on annual reviews and Company performance. 3. INCENTIVES. A. ANNUAL BONUS. In addition to your salary, you shall have an annual performance bonus opportunity equal to at least [4] times your salary, payable in the form of cash, equity or a combination of cash and equity that will be competitive in the marketplace, as determined by the compensation committee of the Company. The annual performance bonus opportunity, after 2004, will be based on your achieving pre-determined target performance objectives, established by written agreement between you, the Compensation Committee and the Board of Directors at the beginning of each calendar year and assessed by the 2 CONFIDENTIAL Compensation Committee at the end of each calendar year. All bonuses shall be paid not later than sixty (60) days following the end of the applicable year in which such bonuses are earned. The performance bonus for 2004 shall be based upon achieving certain goals in raising, financing and generating revenues (as set forth in Schedule A to Exhibit B, attached hereto.) The performance bonus for 2004 shall be in the form of a grant of stock options effective on the Commencement Date, which is attached hereto as Exhibit B, representing the right to purchase up to seven hundred and fifty thousand shares of the common stock of the Company ("Common Stock") pursuant to the Global Options, Inc. 2002 Stock Option Plan ("Stock Option Plan"), which is attached hereto as Exhibit C, at a price of $0.35 per share (the "Performance Stock Options"). Subject to the terms and conditions of Sections 6, 7, 8, 9, and 10 of this Agreement, the vesting period for the Performance Stock Options shall have a vesting period of three (3) years, and on each monthly anniversary of the Commencement Date, one thirty-sixth of the Performance Stock Options shall vest, provided, however, the vesting period may be accelerated upon achieving certain goals set forth in Exhibit B, attached. B. LONG TERM INCENTIVES. You shall be entitled to participate in all long-term incentive plans and programs for executive officers of the Company, as determined by the Compensation Committee. 4. SIGN-ON OPTION GRANT. Upon your execution of this Agreement (the "Effective Date"), the Company will grant to you options (the "Sign-on Options"), attached hereto as Exhibit D, to purchase seven hundred and fifty thousand (750,000) shares of Common Stock with an exercise price of $.35 per share pursuant to the Stock Option Plan, representing approximately 5% of the outstanding shares of Common Stock on a fully diluted basis, as of the Effective Date. Subject to the terms and conditions of Sections 6, 7, 8, 9 and 10 of this 3 CONFIDENTIAL Agreement, the Sign-on Options shall have a vesting period of three years, and on each monthly anniversary of the Effective Date, one thirty-sixth of the Sign-on Options shall vest. 5. EMPLOYEE BENEFITS- BUSINESS EXPENSES. You shall be entitled to participate in all employee benefit plans and programs offered by the Company to its senior management from time to time in effect, including reimbursement for parking in an amount not to exceed $500 per month, 401(k) plans and group insurance plans such as life, disability, health, medical and dental, subject to the provisions of such plans and programs from time to time in effect. You shall be entitled to four (4) weeks of paid vacation each year, accrued monthly. Unused vacation days at the end of a calendar year will not be accrued or rolled forward into subsequent years. The Company will reimburse you for all customary and reasonable travel and business expenses incurred by you in the performance of your duties according to normal corporate policy and agreed-upon budgets. 6. TERMINATION OF EMPLOYMENT. TERMINATION DUE TO DEATH AND DISABILITY. A. In the event that your employment with the Company is terminated by the Company by reason of death or disability (as hereinafter defined) during the Term, you (or, in case of your death, your estate) shall be entitled to the following: (i) in a lump sum within ninety (90) days of such termination (at your highest annualized rate of salary in effect during the one-year period ending on the effective date of termination), an amount equal to the salary accrued to the date of termination; (ii) a pro-rata bonus for the year in which tear iination occurs, based on the actual achievement of the predetermined objectives for the year of termination times a fraction which is the number of days from the 5 CONFIDENTIAL beginning of the applicable year to the date of termination of employment divided by 365 ("Pro-rata Annual Bonus") payable not later than ninety (90) days following the end of the year in which the termination occurred; (iii) if termination occurs prior to January 1, 2005, the Performance Stock Options will vest pro-rata based on attainment of the performance goals set forth in Exhibit B at the end of 2004, with all vested options remaining exercisable for a period of ninety(90) days from the date of termination of employment; (iv) all vested options, including Sign-on Options and in the case of termination following December 31, 2004, the Performance Stock Options, will remain exercisable for a period of ninety (90) days from the date of termination; and all unvested options shall be forfeited and (v) rights under the other benefit plans and programs of the Company in accordance with the terms of such plans and programs as then in effect. B. For purposes of this Agreement, "Disability" shall mean your failure by reason of sickness, accident or physical or mental disability to substantially perform the duties and responsibilities of your employment with the Company for a period of six (6) months in any period of twelve (12) consecutive months. 7. TERMINATION FOR CAUSE. A. The Company may terminate your employment at any time for Cause, effective upon the giving of written notice describing the Cause and providing you an opportunity to be heard before the Board, in which event, you shall be entitled to the following: (i) your salary at the then current rate through the date of termination; (ii) participation in employee benefit plans and programs shall cease upon the effective date of termination of employment; provided, however, that the Company shall assure that you receive after such termination all benefits provided by the terms of such plans and programs or required by law; (iii) unexercised Performance Stock Options and Options are forfeited on the date of termination, and (iv) if the Company's stock is not publicly traded on an established exchange on the date of your termination, the Company shall have an absolute right to buy back any stock purchased by you which you hold on the date of termination at the same purchase price of said stock paid by you or in the case of options, the exercise price . B. For purposes of this Agreement, "Cause" shall mean (i) you are convicted of a felony involving moral turpitude; or (ii) in carrying out your duties, you engage in conduct that constitutes willful gross neglect or willful gross misconduct resulting in either case, in material economic harm to the Company, unless you believed in good faith that such action or non-action was in, or not opposed to, the best interest of the Company. 8. TERMINATION WITHOUT CAUSE OR TERMINATION FOR GOOD REASON. A. The Company may terminate your employment without Cause or you may terminate your employment hereunder for Good Reason, effective upon the giving of written notice thereof and in the event you are terminating your employment for Good Reason, providing the Company 15 days to cure such Good Reason, in which event you shall be entitled to the following: (i) salary through the date of termination, payable within ninety (90) days of such termination; (ii) a Pro-rata Annual Bonus for the year of termination, payable not later than ninety (90) days following the end of the year; 6 CONFIDENTIAL (iii) fifty percent (50%) of the unvested Sign-on Options will vest and become exercisable on the date of termination with all vested options remaining exercisable for a period of ninety (90) days from the date of termination and all unvested options being forfeited; (iv) regardless of whether termination occurs prior to (or after) January 1, 2005, vesting of Performance Stock Options will be determined at the end of 2004 in accordance with attainment of the goals set forth in Schedule A to Exhibit B and (v) other benefits in accordance with applicable plan and programs of the Company. B. For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following events without your consent: (i) the Company demotes you from the officer or director positions referred to in Section 1 hereof or materially diminishes your duties, (ii) you are not elected or reelected to the position of Director and Chairman (iii) the Company fails to pay you your salary or bonuses as provided in Sections 2 and 3 after being given a reasonable opportunity to cure such failure; (iv) the Company fails to renew your employment agreement at the end of the Term; (v) a material reduction in your base Salary or annual bonus opportunity as a percentage of Salary; (vi) a change in the reporting structure as set forth in Section 1 of this Agreement; (vii) the relocation of your principal place of employment to a location other than metropolitan area of New York City; (viii) the failure of the Company to obtain the assumption in writing of its obligation to perform under this Agreement by any successor to all or substantially all of the assets of the Company within fifteen (15) days after the merger, consolidation, sale or similar transaction; (ix) a material breach by the Company of any provision of this Agreement; or (x) in the event of a Change of Control (as defined below) of 7 CONFIDENTIAL the Company (except an IPO), you are not offered the same position in the Company, subsequent to the Change of Control. 9. VOLUNTARY TERMINATION WITHOUT GOOD REASON OR NOTICE OF NON-RENEWAL. You may terminate your employment hereunder other than for Good Reason effective thirty (30) days after giving written notice to the Company or you may give Notice of Non-Renewal in accordance with Section 1 of this Agreement, in which event you shall be entitled to the following: (i) your salary at the then current rate, and (ii) participation in employee benefit plans shall cease upon the effective date of termination of employment; provided, however, that the Company shall assure that you receive after such termination all benefits provided by the terms of such plans or required by law. 10. CHANGE OF CONTROL. A. For purposes of this Agreement, the term "Change of Control" shall mean: (i) the sale, transfer, exchange, conveyance or other disposition (other than by way of merger, consolidation, recapitalization or reorganization), in one or a series of related transactions, of all or substantially all of the assets of the Company or more than fifty percent (50%) of the combined voting power of the outstanding securities of the Company held by persons who are stockholders of the Company on the date hereof to any person or entity; (ii) the adoption of a plan relating to the liquidation or dissolution of the Company; or (iii) a merger or consolidation of the Company with or into another corporation or entity or a recapitalization or reorganization of the Company if, immediately upon the consummation of such merger, consolidation, reorganization or recapitalization, the holders of the outstanding voting securities of the Company, determined immediately prior to such merger, consolidation, reorganization or recapitalization do not 8 CONFIDENTIAL immediately thereafter own more than fifty percent (50%) of the combined voting power of the merged, consolidated, reorganized or recapitalized company's outstanding securities entitled to vote generally in the election of directors. B. Notwithstanding anything to the contrary in this Agreement, upon a Change of Control of the Company, all stock options shall vest immediately upon such Change of Control and all performance conditions for any performance stock options shall be deemed to be met. C. In the event that the aggregate of all payments or benefits made or provided to, or that may be made or provided to, you under this Agreement and under all other plans, programs and arrangements of the Company (the "AGGREGATE PAYMENT") is determined to constitute a "parachute payment," as such term is defined in Section 280G(b)(2) of the Internal Revenue Code, the Company shall pay you, prior to the time any excise tax imposed by Section 4999 of the Internal Revenue Code ("EXCISE TAX") is payable with respect to such Aggregate Payment, an additional amount which, after the imposition of all income and excise taxes thereon, is equal to the Excise Tax on the Aggregate Payment. 11. NO MITIGATION, NO OFFSET. In the event of any termination of your employment hereunder, you shall be under no obligation to seek other employment and except in the event of a termination by the Company for Cause there shall be no offset against amounts or benefits due you under this Agreement on account of any claims asserted by the Company or any remuneration or benefits attributable to any subsequent employment that you may obtain. 12. INDEMNIFICATION AND LIABILITY INSURANCE. The Company hereby agrees during, and after termination of your employment to indemnify you and hold you harmless, both during the Term and thereafter, to the fullest extent permitted 9 CONFIDENTIAL by law and under the certificate of incorporation and by-laws of the Company against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys' fees), losses, amounts paid in settlement to the extent approved by the Company, and damages resulting from your good faith performance of your duties as an officer or director of the Company or any affiliate. The Company shall reimburse you for expenses incurred by you in connection with any proceeding hereunder upon written request from you for such reimbursement and the submission by you of the appropriate documentation associated with these expenses. Such request shall include an undertaking by you to repay the amount of such advance or reimbursement if it shall ultimately be determined that you are not entitled to be indemnified hereunder against such costs and expenses. The Company shall use commercially reasonable efforts to obtain and maintain directors' and officers' liability insurance covering you to the same extent as the Company covers its other officers and directors. 13. CONFIDENTIALITY. You agree, during the term of this Agreement and at all times thereafter, to treat as confidential and not to intentionally disclose, publish or otherwise make available to the public or to any individual, firm or corporation (other than to an employee or professional advisor of the Company, or to your legal counsel for the purpose of securing personal advice), or use any confidential material (as hereinafter defined), except as required in the performance of your duties under this Agreement or except when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent or actual jurisdiction to order you to divulge, disclose or make accessible such information. You agree that all confidential material is the exclusive property of the Company, and you agree to return such material to the Company promptly 10 CONFIDENTIAL upon the termination of your service as an officer and director of the Company. For purposes hereof, the term "confidential material" shall mean all information concerning the products, projects, activities, business or affairs of the Company acquired by you in the course of providing services to the Company; provided, however, that the term "confidential material" shall not include information which (i) becomes generally available to the public other than as a result of an unauthorized disclosure by you, (ii) was available to you on a non-confidential basis prior to your service with the Company, (iii) becomes available to you on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with the Company, or (iv) pertains to your own compensation and payroll arrangements. 14. NONCOMPETITION. You agree that, in consideration of your employment with the Company, you will not, other than in the course of performing your duties hereunder or as agreed by the Company in writing, during the period of your employment with the Company and for a one (1) year period thereafter, engage, directly or indirectly, whether as principal, agent, distributor, representative, consultant, employee, partner, stockholder, limited partner or other investor (other than an investment of not more than (i) five percent (5%) of the stock or equity of any corporation the capital stock of which is publicly traded or (ii) five percent (5%) of the ownership interest of any limited partnership or other entity) or otherwise, with any company or entity (x) that renders any of the services provided by the company at the time your employment is terminated, (y) that is a customer or (z) that is targeted by the company to provide services pursuant to its written business plans as approved by the Board of Directors. 15. NONSOLICITATION. You agree that for a period of one (1) year following the termination of your employment with the Company, you will not, without the prior written consent by the Company, solicit or entice away, or 11 CONFIDENTIAL endeavor to solicit or entice away, from the Company (i) any customer of the Company or (ii) any employee of the company or (iii) any corporation, individual or firm in which the Company is, or has been during the last twelve (12) months of your employment with the Company, in active negotiations in becoming a customer, either for your own account or for any individual, firm or corporation with which you are associated. 16. EQUITABLE RELIEF. In the event of a breach by you of any of the provisions of Sections 14 or 15 of this Agreement, you hereby consent and agree that the Company shall be entitled to seek an injunction or similar equitable relief from any court of competent jurisdiction restraining you from committing or continuing any such breach or granting specific performance of any act required to be performed by you under any of such provisions, without the necessity of showing any actual damage or that money damages would not afford an adequate remedy and without the necessity of posting any bond or other security. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies at law or in equity which it may have with respect to any such breach. 17. LEGAL FEES. The Company agrees to pay your personal legal fees relating to, and upon the execution of, this Agreement up to a maximum of $25,000. 18. LOCATION OF SERVICES. The Company's headquarters will be in Washington DC. The Company will be opening a New York City office. You will be expected to spend time in both offices as agreed by you and the Board of Directors. 19. STOCK PURCHASE. For a period of ninety (90) days from the Effective Date, you shall have a right to purchase up to two million (2,000,000) shares of common stock of the Company at a price of $0.50 per share. 12 CONFIDENTIAL 20. PUT/CALL RIGHTS. In the event your employment with the Company is terminated for any reason other than for Cause, and if the Company is not publicly traded on an established stock exchange at such time, you (or your estate) shall have a right to Put to the Company any stock of the Company you own at the date of termination, and the Company shall redeem such stock from you at a price equal to fair market value; or, in the event of such Termination, other than for Cause, the Company shall have a right to Call upon you (or your estate) and you (or your estate) shall sell to the Company the stock of the Company you own at the date of termination to the Company at a price equal to fair market value. The term fair market value for this Section shall mean the highest price at which the Company has sold its stock in a bona-fide transaction of more than $5 million dollars with an unaffiliated third party purchaser(s) in the twelve (12) months preceding the date of termination. If no such sale has taken place, the parties shall mutually agree upon an independent appraiser to determine such fair market value of the stock. Payment for the stock, under this Section, shall be made at the later of (i) one hundred and eighty (180) days from the date of termination or (ii) the date of final fair market value appraisal. In the event a Put is exercised by you (or your estate), under this Section, and if the Company is unable to make full payment at the date of such Put exercise due to an unreasonable financial burden to the Company, the Company shall have up to five years to make payments to you in equal quarterly installments with interest at the rate equal to prime rate announced from time to time by Citibank, N.A. ("Interest") Provided, further, the Company shall have a right, if it is unable to make such quarterly payment, to defer one quarter payment each year, until such time it has sufficient capital to make such payment, but in no event later than the expiration of the fifth year, with the deferred payment accruing Interest. 13 CONFIDENTIAL 21. REPRESENTATIONS AND COVENANTS. (a) You represent and warrant that you have the free and unfettered right to enter into this Agreement and to perform your obligations under it and that you know of no agreement between you and any other person, firm or organization, or any law or regulation, that would be violated by the performance of your obligations under this Agreement. You agree that you will not use or disclose any confidential or proprietary information of any prior employer in the course of performing your duties for the Company or any of its Affiliates. (b) The Company represents that (i) the execution of this Agreement and the granting of the benefits and awards hereunder have been authorized by the Company, including, where necessary, by the Board and its Shareholders, (ii) the execution, delivery and performance of this Agreement does not violate any law, regulation, order, decree, agreement, plan or corporate governance document of the Company and (iii) upon the execution and delivery of this Agreement, it shall be the valid and binding obligation of the Company enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 22. SEVERABILITY. Should any provision of this Agreement be held by a court or arbitration panel of competent jurisdiction to be enforceable only if modified, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties hereto with any such modification to become a part hereof and treated as though originally set forth in this Agreement. 23. ENTIRE AGREEMENT. This Agreement contains the entire agreement and all the understandings and representations between you and the Company pertaining to the subject matter hereof and supersedes prior undertakings and 14 CONFIDENTIAL agreements, whether oral or written, if any there be, previously entered into by you and the Company with respect thereto. 24. SURVIVORSHIP. The respective rights and obligations of the parties hereunder, including, without limitation, Section 12 (indemnification and liability insurance), Section 13 (confidentiality), Section 14 (non-competition); Section 15 (non-solicitation), Section 16 (equitable relief), and Section 29 (arbitration), shall survive any expiration of the Term, including expiration thereof upon your termination of employment for whatever reason, to the extent necessary to the intended preservation of such rights and obligations. 25. AMENDMENTS. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by you and by a duly authorized representative of the Company. 26. NOTICES. Any notice to be given hereunder shall be in writing, and delivered personally or sent by telecopier, by certified mail return receipt requested, or overnight courier addressed to the party concerned at the address indicated below or at such other address as such party may subsequently designate by like notice: If to the Company: GlobalOptions, Inc. 1615 L Street N.W. Suite 300 Washington, D.C. 20036 Attention: Dr. Neil Livingstone Telecopier No.: (202) 293-2406 15 CONFIDENTIAL If to you: Dr. Harvey W. Schiller 121 E. 64th Street Suite 500 New York, NY 10021 Telecopier No.: (212) 327-4716 27. WITHHOLDING. Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to you shall be subject to withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. 28. CONSTRUCTION. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the District of Columbia applicable in the case of agreements made and entirely performed in such jurisdiction, without regard to conflict of law principles. 29. ARBITRATION. Any controversy or claim arising out of or relating to this Agreement, your employment or termination thereof shall, except as provided in Section 16 hereof, be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect and judgment upon such award rendered by the arbitrator maybe entered in any court having jurisdiction thereof The arbitration shall be held in the District of Columbia. 30. ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs and assigns. For purposes of this Section 30, a successor to the Company shall be limited to an entity which shall have acquired all or substantially all 16 CONFIDENTIAL of the business and/or assets of the Company and shall have assumed (whether by agreement or operation of law) the Company's rights and obligations under this Agreement. None of your rights or obligations under this Agreement may be assigned or transferred by you other than your rights to compensation and benefits, which may be transferred only by will, operation of law or in accordance with Section 31 below. 31. BENEFICIARIES/REFERENCES. You shall be entitled, to the extent permitted under applicable plans, agreements or law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following your death by giving the Company written notice thereof. In the event of your death or a judicial determination of your incompetence, reference in this Agreement to you shall be deemed, where appropriate, to refer to your beneficiary, estate or legal representative. 32. COUNTERPARTS. This Agreement may be executed in counterparts, including by facsimile, all of WHICH together shall constitute one agreement binding on the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. * * * 17 CONFIDENTIAL If the foregoing accurately sets forth our agreement, please indicate your acceptance hereof by signing the enclosed counterpart of this letter and return such counterpart to the Company. Very truly yours, GlobalOptions, Inc. By: /s/ Neil C. Livingstone --------------------------------- Dr. Neil Livingstone CEO Agreed and Accepted on 1/29, 2004 By: /s/ Harvey W. Schiller ----------------------- Dr. harvey W. Schiller 18 CONFIDENTIAL