AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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AGREEMENT, dated June 5, 2000 and effective as of January 1, 2000 (the
"Effective Date") by and among ▇▇▇▇▇▇▇▇ & Struggles, Inc., a Delaware
corporation (together with its successors and assigns permitted under this
Agreement, the "Company"), ▇▇▇▇▇▇▇▇ & Struggles International, Inc., a Delaware
corporation (together with its successors and assigns permitted under this
Agreement, the "Parent"), and ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Executive").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to continue to employ the Executive and
the Executive desires to continue to be employed by the Company;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Parent, the Company and the Executive
(individually a "Party" and together the "Parties") hereby amend and restate in
its entirety the February 26, 1999 employment agreement between the Executive
and the Company and agree as follows:
1. Definitions.
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(a) "Affiliate" of a person or other entity shall mean a
person or other entity that directly or indirectly controls, is controlled by,
or is under common control with the person or other entity specified.
(b) "Base Salary" shall mean the salary provided for in
Section 4 below or any increased salary granted to the Executive pursuant to
Section 4.
(c) "Board" shall mean the Board of Directors of the
Parent.
(d) "Cause" shall mean:
(i) the embezzlement or misappropriation of
funds or property of the Company or its Affiliates by the Executive, the
conviction of, or the entrance of a plea of guilty or nolo contendere by, the
Executive to a felony which has the potential to have a negative impact upon the
company's reputation or otherwise bring the Company, any of its Affiliates, or
the CEO into disrepute, or the termination of the Executive's employment with
the Company pursuant to the Company's harassment policy; or
(ii) gross neglect or willful misconduct by the
Executive in carrying out his duties under this Agreement, resulting, in either
case, in material economic harm to the Company or its Affiliates; or
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(iii) breach by the Executive of the provisions of
Sections 12, 13 or 14 of this Agreement.
For purposes of this definition, no act, or failure to act, on
the Executive's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interests of the Company or its Affiliates.
(e) A "Change in Control" shall mean the occurrence of
any of the following events:
(i) any Person (other than the Parent or its
Affiliates, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Affiliates, or any company owned,
directly or indirectly, by the stockholders of the Parent in substantially the
same proportions as their ownership of stock of the Parent), becomes the
Beneficial Owner, directly or indirectly, of securities of the Parent
representing 20 percent or more of the combined voting power of the Parent's
then-outstanding securities;
(ii) during any period of 24 months, individuals
who, at the beginning of such period, constitute the Board, and any new director
(other than (A) a director nominated by a Person who has entered into an
agreement with the Parent to effect a transaction described in subsections
(e)(i), (iii) or (iv), (B) a director nominated by any Person (including the
Parent) who publicly announces an intention to take or to consider taking
actions (including, but not limited to, an actual or threatened proxy contest)
which, if consummated, would constitute a Change in Control, or (C) a director
nominated by any Person who is the Beneficial Owner, directly or indirectly, of
securities of the Parent representing 10 percent or more of the combined voting
power of the Parent's securities) whose election by the Board or nomination for
election by the Parent's stockholders was approved in advance by a vote of at
least two-thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Parent approve any
transaction or series of transactions under which the Parent is merged or
consolidated with any other company, other than a merger or consolidation (A)
which would result in the voting securities of the Parent outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or its parent corporation) more than 66-2/3 percent of the combined voting power
of the voting securities of the Parent or such surviving entity or its parent
corporation outstanding immediately after such merger or consolidation, and (B)
after which no Person holds 20 percent or more of the combined voting power of
the then-outstanding securities of the Parent or such surviving entity or its
parent corporation; or
(iv) the stockholders of the Parent approve a
plan of complete liquidation of the Parent or an agreement for the sale or
disposition by the Parent of all or substantially all of the assets of the
Parent.
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For purposes of this Change in Control definition, "Beneficial Owner" has the
meaning contained in Rule 13d-3 under the Securities Exchange Act of 1934 (the
"Act") and "Person" has the meaning contained in Section 3 of the Act or as such
term is used for purposes of Section 13(d) or 14(d) of the Act (or any successor
section thereto).
(f) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1986 and the regulations promulgated thereunder, as
amended from time to time.
(g) "Common Stock" shall mean the common stock, $0.01 par value,
of the Parent.
(h) "Constructive Termination without Cause" shall mean
termination by the Executive of his employment at his initiative within 30 days
following the occurrence of any of the following events without his consent:
(i) a reduction in the Executive's then current Base
Salary or target bonus opportunity;
(ii) a reduction in the aggregate value of the benefits
provided to the Executive under the Company's medical, health, accident,
disability, life insurance, thrift and retirement plans, other than any
reduction that occurs as a result of a modification or termination of such plans
and programs which affects all participants in such plans or programs;
(iii) the removal of the Executive from any of the
positions described in Section 3(a) below;
(iv) a material diminution in the Executive's duties as
described in Section 3(a) below;
(v) a change in the reporting structure so that the
Executive reports to someone other than the Board;
(vi) any purported termination of the Executive's
employment that is not effected for Cause or Disability; or
(vii) the failure of the Parent to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to all or
substantially all of the assets of the Parent within 15 days after a merger,
consolidation, sale or similar transaction.
Following written notice from the Executive of any of the events described
above, the Company or the Parent, as applicable, shall have 30 calendar days in
which to cure. If the Company or the Parent, as the case may be, fails to cure,
the Executive's termination shall become effective on the 31st calendar day
following the written notice.
During the CEO Period, as described in Section 3(a) below, all subparagraphs (i)
through (vii) are applicable. During the Leave of Absence Period, as described
in Section 3(b) below, only
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subparagraphs (i), (ii) and (vii) are applicable and during the Return to
Employment Period, as described in Section 3(c) below, all subparagraphs except
(iii), (iv) and (v) are applicable.
(i) "Disability" shall mean the total and permanent disability of
the Executive as defined or described in the Company's long-term disability
benefit plan applicable to senior level executives as in effect at the time the
Executive's disability is incurred, or, if no such plan is in effect at the time
of the Executive's disability, then "Disability" shall mean the Executive's
inability, due to physical or mental incapacity, to substantially perform his
duties and responsibilities under this Agreement as determined by a medical
doctor selected by the Company and the Executive. If the Parties cannot agree on
a medical doctor, each Party shall select a medical doctor and the two doctors
shall select a third who shall be the approved medical doctor for this purpose.
(j) "Effective Period" shall mean the 24-month period following
any Change in Control.
(k) "Fair Market Value" shall mean, as of any date, the lesser of
the closing sales price or the average of the high and low prices of the Parent
Common Stock as reported on the New York Stock Exchange or any other stock
exchange on which the Parent Common Stock is traded on the date of grant, or, in
the event there is no public market for the Parent Common Stock, the fair market
value as determined, in good faith, by the Board or the Compensation Committee
of the Board ("Committee") in its sole discretion.
(l) "Paid Bonus" shall mean
(i) for any calendar year ending on or after December 31,
2000, the CEO Bonus paid for that calendar year,
(ii) for the calendar year ending on December 31, 1999,
80% of the annual bonus paid to the Executive for that year,
(iii) for the calendar year ending on December 31, 1998,
the annual bonus paid to the Executive for the period ending September 30, 1998,
and
(iv) for the calendar year ending on December 31, 1997,
the annual bonus paid to the Executive for the period ending September 30, 1997.
(m) "Pro Rata" shall mean a fraction, the numerator of which is
the number of days that the Executive was employed in the applicable performance
period (a calendar year in the case of an annual bonus and a performance cycle
in the case of an award under the Long-Term Incentive Plan) and the denominator
of which shall be the number of days in the applicable performance period.
(n) "Term of Employment" shall mean the period specified in
Section 2 below.
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2. Term of Employment. The Term of Employment shall begin on the
Effective Date, and shall extend until the fifth anniversary of the Effective
Date. Notwithstanding the foregoing, the Term of Employment may be earlier
terminated by either Party in accordance with the provisions of Section 11.
3. Position, Duties and Responsibilities.
(a) The CEO Period. Commencing on the Effective Date and
continuing until December 31, 2001 (the "CEO Period"), the Executive shall be
employed as the Chief Executive Officer of the Parent and the Company and be
responsible for the general management of the affairs of the Parent, the
Company, and their Affiliates. The Executive, in carrying out his duties under
this Agreement, shall report to the Board.
(b) The Leave of Absence Period. At the expiration of the
CEO Period, at his option and with the consent of the Board, the Executive may
have a paid leave of absence of up to 12 months (the "Leave of Absence Period").
The Board's consent may not be unreasonably withheld and shall be given provided
that the Parent, the Company and their Affiliates are doing well and there is no
pressing business reason to postpone or shorten the Leave of Absence Period.
During the Leave of Absence Period, the Executive shall receive his then current
monthly Base Salary for each month of the Leave of Absence Period (the "Leave of
Absence Compensation"). During the Executive's Leave of Absence Period, it is
the expectation and desire of the Parent and the Company that the Executive
continue to maintain business development related activities so that when he
returns to employment at the Company to continue his executive search practice
his business contacts and relationships will have been retained. The Company
will reimburse him (upon receipt of the customary expense report) for his
reasonable business development related expenses consistent with his past
activities, and will also continue to reimburse him during this period for any
company car expenses and club dues and expenses that were paid by the Company
prior to his leave of absence.
(c) The Return to Employment Period. Following his Leave
of Absence Period, the Executive may, at his option, return to the Company as a
search professional. For the 24-month period following his return to the firm
(the "Return to Employment Period"), his total compensation (base and bonus)(the
"Return to Employment Compensation") shall be guaranteed to be not less than
$1,000,000 for the first 12 months and $750,000 for the second 12 months, and
thereafter his base salary shall be not less than $562,500 per year during his
employment with the Company.
(d) Outside Interests. Nothing herein shall preclude the
Executive from (i) serving on the boards of directors of a reasonable number of
other corporations with the concurrence of the Board (which approval shall not
be unreasonably withheld), (ii) serving on the boards of a reasonable number of
trade associations and/or charitable organizations, (iii) engaging in charitable
activities and community affairs, and (iv) managing his personal investments and
affairs, provided that such activities do not conflict or materially interfere
with the effective discharge of his duties and responsibilities under Sections
3(a) or 3(c) above.
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4. Base Salary. The Executive shall be paid an annualized Base
Salary for the CEO Period, payable in accordance with the regular payroll
practices of the Company, of $700,000. The Base Salary shall be reviewed for
increase for the year 2001 in the discretion of the Board.
5. Annual Bonus. For the years 2000 and 2001, the Executive shall
have the opportunity to receive a performance-based bonus, determined in
accordance with the CEO Incentive Plan ( the "CEO Plan") attached hereto as
Exhibit A and incorporated herein by reference. Upon at least 15 days' prior
notice to the Company's Chief Financial Officer, the Executive may request an
advance of up to $1,000,000 against any annual bonus earned under the CEO Plan
for the calendar year 2000; provided, however, that if (a) the Executive and/or
the Company and its Affiliates fail to achieve the performance goals established
by the CEO Plan, then not later than thirty (30) days following the date (the
"Determination Date") on which the Committee determines achievement of the CEO
Plan 2000 performance goals by the Executive and/or the Company and its
Affiliates in accordance with the terms of the CEO Plan, the Executive shall
repay to the Company the amount by which such advance exceeds the bonus earned
for year 2000 under the terms of the CEO Plan, and (b) the Executive's
employment with the Company is terminated for any reason prior to the
Determination Date, then on the effective date of the termination of the
Executive's employment with the Company, the Company shall deduct such advance
from any amounts payable to the Executive under the provisions of Section 11 of
this Agreement.
6. Stock Option Grant. The Parent shall grant to the Executive an
option to purchase 100,000 shares of Parent Common Stock at the Fair Market
Value of the Parent Common Stock on the date of grant. Such option shall be
granted pursuant and subject to the terms and conditions of the 1998 ▇▇▇▇▇▇▇▇
and Struggles Global Share Program I within 30 days of the date of execution of
this Agreement by both Parties, and shall vest in increments of 25% a year over
the four year period following the date of grant.
7. Employee Benefit Programs. During the Term of Employment, the
Executive shall be entitled to participate in any employee pension and welfare
benefit plans and programs made available to the Company's senior level
executives or to its employees generally, to the extent permitted under the
terms of such plans and programs and as such plans or programs may be in effect
from time to time, including, without limitation, pension, profit sharing,
savings and other retirement plans or programs, 401(k), medical, dental,
hospitalization, short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection, travel accident insurance, and
any other employee benefit plans or programs that may be sponsored by the
Company from time to time. In addition, the Company shall use its best efforts
to provide the Executive with a minimum of $4 million term life insurance
coverage during the Term of Employment, subject to the ability of the Parent or
the Company to obtain such term life insurance at standard insurance rates. The
Executive shall be entitled to five weeks paid vacation per year of employment,
which shall accrue and otherwise be subject to the Company's vacation policy for
senior executives. Following the Term of Employment, the Executive shall be
entitled to participate as a retiree (at his own expense) in the group health
insurance plans of the Company as provided under COBRA.
8. Supplemental Pension. The Executive shall be provided with a
Supplemental Pension commencing at age 60. The Supplemental Pension shall be an
annuity for the life of the
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Executive with annual payments equal to the greater of (a) an amount equal to
50% of the average cash compensation earned by the Executive in respect of his
final three years as Chief Executive Officer of the Parent and the Company or
(b) $1 million. The standard form of benefit shall be a single life annuity for
the life of the Executive; however, prior to the commencement of the payment of
the Supplemental Pension hereunder, the Executive may elect to receive his
Supplemental Pension in any of the following alternative forms: (i) a 100% joint
and survivor annuity for his life and the life of his then spouse, or (ii) a 50%
joint and survivor annuity for his life and the life of his then spouse. In the
event that the Executive elects one of these alternative forms of payment, each
payment shall be actuarially reduced to compensate for the election of the
spousal benefit. The amount of the reduced payment shall be determined as of the
date of the commencement of the payment of such benefit, using the 1983 US GATT
(unisex) mortality table and an interest rate equal to the average yield of a
30-year treasury security for the month prior to the month in which the
Supplemental Pension payments commence, or in the event a 30-year treasury
security is unavailable at such time, then the next longest long-term U.S.
treasury security available. The Supplemental Pension benefit form elected by
the Executive shall be paid in monthly installments and shall commence on the
first day of the first month following the later to occur of (c) the Executive's
60th birthday, and (d) the Executive's termination of employment with the
Company. With the approval of the Committee, the Executive, upon termination of
employment, may elect to commence receipt of payment of the Supplemental Pension
benefit prior to his 60th birthday. In the event that the Executive elects to
commence receiving his Supplemental Pension benefits prior to age 60 and the
Committee approves such election, the monthly payments made to the Executive and
his spouse, if applicable, shall be reduced by 5% for each year by which the
Supplemental Pension payments commence prior to the date of the Executive's 60th
birthday. The Executive's entitlement to the Supplemental Pension shall vest on
the earliest to occur of (e) December 31, 2001, provided that the Executive is
employed by the Company on that date, (f) the Executive's termination of
employment by the Company without Cause, (g) the Executive's Constructive
Termination without Cause, or (h) the Executive's termination of employment on
account of Disability.
In the event that the Executive dies after termination of employment but prior
to the commencement of the receipt of payments of the Supplemental Pension
benefit, and is vested in the Supplemental Pension benefit, the Executive's
surviving spouse shall be entitled immediately to commence receiving monthly
payments for her lifetime which are equal to the amount she would have been
entitled to receive had the Executive terminated employment with the Company on
the day prior to his death, been vested in his Supplemental Pension benefit at
that time, had received any necessary approval with respect to the commencement
of benefits from the Committee, and had elected to receive his Supplemental
Pension benefit immediately in the form of a 100% joint and survivor annuity.
9. Reimbursement of Business and Other Expenses during the Term
of Employment. The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all reasonable business expenses
incurred in connection with carrying out the business of the Company and its
Affiliates, subject to documentation in accordance with the Company's policy.
The Company shall pay all reasonable legal fees and expenses incurred by the
Executive in connection with the documentation of the Executive's employment
arrangements with the Company, not to exceed $20,000.
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10. Perquisites during the Term of Employment. During the Term of
Employment, the Executive shall receive standard Company executive perquisites,
including, without limitation, the following:
(a) The Executive shall continue to be entitled to
first-class travel and spouse travel (on the same basis) when the Executive
determines there is a business need for such travel.
(b) The Executive shall continue to be provided a luxury
class automobile and to be reimbursed for related expenses.
(c) The Executive shall continue to be provided with dues
and memberships for certain clubs and country clubs, as determined by the Board
in its discretion.
(d) The Company shall reimburse the Executive for
financial planning and tax preparation fees.
(e) The Company shall pay for the Executive to have a
comprehensive annual physical.
(f) In the event that any of the perquisites provided
pursuant to this Section 9 result in tax to the Executive, they shall be
provided on a tax grossed-up basis.
11. Termination of Employment.
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(a) Termination Due to Death during the Term of
Employment. In the event that the Executive's employment is terminated due to
his death, his estate or his beneficiaries, as the case may be, shall be
entitled to the following benefits:
(i) During the CEO Period,
(A) Base Salary through the date of
termination, to the extent not theretofore
paid;
(B) a Pro Rata annual incentive award
for the calendar year in which the
Executive's death occurs, based on the
higher of (1) the Paid Bonus for the prior
year or (2) the average of the Paid Bonuses
for the prior three years, payable in a
single installment promptly after his death;
and
(C) all outstanding options or equity
instruments, whether or not then
exercisable, shall become exercisable and
shall remain exercisable for the remainder
of their originally scheduled terms.
(ii) During the Leave of Absence Period and the
Return to Employment Period, the same benefits as during the CEO Period, except
that Subsections (A)
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and (B) above shall not be applicable, and the Executive's estate or
beneficiaries shall be entitled to the Leave of Absence Compensation or Return
to Employment Compensation, as applicable on the date of termination, through
the date of termination, to the extent not theretofore paid.
(b) Termination Due to Disability during the Term of
Employment. In the event that the Executive's employment is terminated due to
his Disability, he shall be entitled to the following benefits:
(i) During the CEO Period,
(A) disability benefits in accordance
with any long-term disability program in
effect for senior executives of the Company
at the time the Executive's Disability is
incurred;
(B) Base Salary through the date of
termination, to the extent not theretofore
paid;
(C) a Pro Rata annual incentive award
for the calendar year in which the
Executive's termination occurs, based on the
higher of (1) the Paid Bonus for the prior
year or (2) the average of the Paid Bonuses
for the prior three years, payable in a
single installment promptly after his
termination;
(D) all outstanding options or equity
instruments, whether or not then
exercisable, shall become exercisable and
shall remain exercisable for the remainder
of their originally scheduled terms;
(E) immediate vesting of the
Supplemental Pension Benefit, with payments
reduced in accordance with Section 8 of this
Agreement to the extent such benefits
commence prior to age 60; and
(F) subject to the Executive's
continued compliance with Sections 12, 13
and 14 hereof, continued participation in
such employee welfare benefit plans and
programs made available to the Company's
senior level executives or to its employees
generally until the earlier to occur of (i)
the second anniversary of the Executive's
effective date of termination of employment
or (ii) such time as the Executive is
covered by comparable programs of a
subsequent employer; provided, however, that
in the event the Company is unable to
provide such benefits, the Company shall
make annual payments to the Executive in an
amount such that following the Executive's
payment of applicable taxes thereon, the
Executive retains an amount equal to the
cost of the Executive, net of any cost that
would otherwise be borne by the Executive,
of obtaining benefits equivalent to those in
effect on the date of termination of
employment. Benefits otherwise receivable by
the
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Executive pursuant to this Section
11(b)(i)(F) shall be reduced to the extent
comparable benefits are actually received
during the two year period following
termination, and any such benefits actually
received by the Executive shall be reported
to the Company.
(ii) During the Leave of Absence Period and the
Return to Employment Period, the same benefits as during the CEO Period, except
that Subsections (B) and (C) above shall not be applicable, and the Executive
shall be entitled to the Leave of Absence Compensation or Return to Employment
Compensation, as applicable on the date of termination, through the date of
termination, to the extent not theretofore paid.
In no event shall a termination of the Executive's employment for Disability
occur until the Party terminating his employment gives written notice to the
other Party in accordance with Section 25 below.
(c) Termination by the Company for Cause during the Term
of Employment.
(i) A termination for Cause shall not take
effect unless the provisions of this paragraph (i) are complied with. The
Executive shall be given written notice by the Board of the intention to
terminate him for Cause, such notice (A) to state in detail the particular act
or acts or failure or failures to act that constitute the grounds on which the
proposed termination for Cause is based and (B) to be given within six months of
the Board learning of such act or acts or failure or failures to act. The
Executive shall have ten calendar days after the date that such written notice
has been given to the Executive in which to cure such conduct, to the extent
such cure is possible. If he fails to cure such conduct or such cure is not
possible, the Executive shall then be entitled to a hearing before the Board.
Such hearing shall be held within 15 calendar days of such notice to the
Executive, provided he requests such hearing within ten calendar days of the
written notice from the Board of the intention to terminate him for Cause. If,
within five calendar days following such hearing, the Executive is furnished
written notice by the Board confirming that, in its judgment, grounds for Cause
on the basis of the original notice exist, he shall thereupon be terminated for
Cause.
(ii) In the event the Company terminates the
Executive's employment for Cause:
(A) he shall be entitled to Base
Salary, Leave of Absence Compensation or
Return to Employment Compensation, as
applicable on the date of termination,
through the date of the termination to the
extent not theretofore paid; and
(B) all outstanding options shall be
forfeited; and
(C) the Supplemental Pension Benefit
shall be forfeited if such termination
occurs during the CEO Period.
(d) Termination without Cause or Constructive Termination
without Cause during the Term of Employment. In the
event the Executive's employment is terminated by the
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Company without Cause, other than due to Disability or death, or in the event
there is a Constructive Termination without Cause, the Executive shall be
entitled to the following benefits:
(i) During the CEO Period,
(A) Base Salary through the date of
termination to the extent not theretofore
paid;
(B) a lump sum amount equal to the
product of two (2) times the Executive's
Base Salary in effect on the date of
termination (or, if the Executive's Base
Salary has been reduced in breach of this
Agreement, the Executive's Base Salary
before such reduction), payable promptly
following the date of termination;
(C) a lump sum amount equal to two (2)
times the higher of (1) the Paid Bonus for
the prior year or (2) the average of the
Paid Bonuses for the prior three years,
payable promptly following his date of
termination;
(D) all outstanding options or equity
instruments shall immediately become
exercisable and shall remain exercisable for
the remainder of their originally scheduled
terms;
(E) immediate vesting of the
Supplemental Pension Benefit, with payments
reduced in accordance with Section 8 of this
Agreement to the extent such benefits
commence prior to age 60; and
(F) subject to the Executive's
continued compliance with Sections 12, 13
and 14 hereof, continued participation in
such employee welfare benefit plans and
programs made available to the Company's
senior level executives or to its employees
generally until the earlier to occur of (i)
the second anniversary of the Executive's
effective date of termination of employment
or (ii) such time as the Executive is
covered by comparable programs of a
subsequent employer; provided, however, that
in the event the Company is unable to
provide such benefits, the Company shall
make annual payments to the Executive in an
amount such that following the Executive's
payment of applicable taxes thereon, the
Executive retains an amount equal to the
cost of the Executive, net of any cost that
would otherwise be borne by the Executive,
of obtaining benefits equivalent to those in
effect on the date of termination of
employment. Benefits otherwise receivable by
the Executive pursuant to this Section
11(d)(i)(F) shall be reduced to the extent
comparable benefits are actually received
during the two
12
year period following termination, and any
such benefits actually received by the
Executive shall be reported to the Company.
(ii) During the Leave of Absence Period and the
Return to Employment Period,
(A) the Leave of Absence Compensation
for the number of months remaining of the
Leave of Absence Period as of the date of
termination, to the extent any months remain
of the Leave of Absence Period agreed to
between the Executive and the Company, and
the Return to Employment Compensation for
the remaining Term of Employment,
(B) the Supplemental Pension Benefit,
reduced in accordance with Section 8 of this
Agreement to the extent such benefits
commence prior to Age 60;
(C) all outstanding options or equity
instruments shall immediately become
exercisable and shall remain exercisable for
the remainder of their originally scheduled
terms;
(D) subject to the Executive's
continued compliance with Sections 12, 13
and 14 hereof, continued participation in
such employee welfare benefit plans and
programs made available to the Company's
senior level executives or to its employees
generally until the earlier to occur of (i)
the second anniversary of the Executive's
effective date of termination of employment
or (ii) such time as the Executive is
covered by comparable programs of a
subsequent employer; provided, however, that
in the event the Company is unable to
provide such benefits, the Company shall
make annual payments to the Executive in an
amount such that following the Executive's
payment of applicable taxes thereon, the
Executive retains an amount equal to the
cost of the Executive, net of any cost that
would otherwise be borne by the Executive,
of obtaining benefits equivalent to those in
effect on the date of termination of
employment. Benefits otherwise receivable by
the Executive pursuant to this Section
11(d)(ii)(D) shall be reduced to the extent
comparable benefits are actually received
during the two year period following
termination, and any such benefits actually
received by the Executive shall be reported
to the Company.
(e) Voluntary Termination during the Term of Employment. During
the Term of Employment, in the event of a termination of employment by the
Executive on his own initiative, other than a termination due to death or
Disability or a Constructive Termination without Cause, the Executive shall be
entitled to the following benefits:
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(i) During the CEO Period,
(A) Base Salary through the date of the
termination; and
(B) all outstanding options which are
not then exercisable shall be forfeited;
exercisable options shall remain exercisable
until the earlier of the thirtieth day after
the date of termination or the originally
scheduled expiration date of the options
unless the Committee determines otherwise.
(ii) During the Leave of Absence Period:
(A) the Executive shall be entitled to
retain an amount equal to one-half of all of
the monthly base compensation payments
received by the Executive prior to his
termination during the Leave of Absence
period; the Executive shall repay to the
Company an amount equal to one-half of all
of the monthly base compensation payments
received by the Executive during the Leave
of Absence period;
(B) the Executive shall be entitled to
receive the Supplemental Pension Benefit,
reduced in accordance with Section 8 of this
Agreement to the extent such benefits
commence prior to Age 60; and
(C) all outstanding options which are
not then exercisable shall be forfeited; all
exercisable options shall continue to become
exercisable in accordance with their
original schedules.
(iii) During the Return to Employment Period,
(A) The Executive shall be entitled to
retain an amount equal to one-half of the
total Leave of Absence Compensation; the
Executive shall repay to the Company an
amount equal to one-half of the total Leave
of Absence Compensation multiplied by a
fraction the denominator of which is 24 and
the numerator of which is the number of full
or fractional calendar months remaining
between the effective date of the
Executive's termination of employment and
the end of the Return to Employment Period;
(B) the Executive shall be entitled to
receive the Supplemental Pension Benefit,
reduced in accordance with Section 8 of this
Agreement to the extent such benefits
commence prior to Age 60; and
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(C) all outstanding options which are
not then exercisable shall be forfeited; all
exercisable options shall continue to become
exercisable in accordance with their
original schedules.
A voluntary termination under this Section 11(e) shall be effective 30 calendar
days after prior written notice is received by the Company, unless the Company
elects to make it effective earlier, and shall not constitute a breach of this
Agreement.
Any amounts required to be paid by the Executive to the Company pursuant to
Subsections 11(e)(ii)(A) or 11(e)(iii)(A) above may be paid, at the election of
the Executive at the time of his termination of employment, either
(a) in cash in a lump sum, payable on the effective date of the
Executive's termination of employment, or
(b) in the form of a reduction in the annual Supplemental Pension
Benefit payment payable pursuant to Section 8 of this Agreement, the amount of
reduced Supplemental Pension Benefit to be determined as of the effective date
of the Executive's termination of employment with the Company, using the 1983 US
GATT (unisex) mortality table and an interest rate equal to the average yield of
a 30-year treasury security for the month prior to the month in which the
Executive's termination occurs, or in the event a 30-year treasury security is
unavailable at such time, then the next longest long-term U.S. treasury security
available.
(f) Consequences to Stock Options of Death Following
Termination of Employment. In the event the Executive dies following termination
of employment at a time when he has entitlements under outstanding stock
options, his estate or other beneficiary shall have the same entitlements as the
Executive had in respect of such stock options.
(g) Consequences of a Change in Control.
(i) If, during the Effective Period following a
Change in Control, the Executive's employment is terminated by the Company
without Cause, other than due to Disability or death, or there is a Constructive
Termination without Cause, the Executive shall receive the benefits provided in
Section 11(d) above, as well as in Section 11(g)(ii) below.
(ii) In the event that any amount or benefit
(collectively, the "Covered Payments") paid or distributed to the Executive by
the Company or any Affiliate incurs an excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") or any similar tax that
may hereafter be imposed ("Excise Tax"), the Company shall pay to the Executive
at the time specified below, the Tax Reimbursement Payment. The Tax
Reimbursement Payment is defined as an amount which, after imposition of all
income, employment and excise taxes thereon, is equal to the Excise Tax on the
Covered Payments. The determination of whether Covered Payments are subject to
Excise Tax and, if so, the amount of the Tax Reimbursement Payment to be paid to
the Executive shall be made by an independent auditor (the "Auditor") jointly
selected by the Company and the Executive and paid by the Company. The Auditor
shall be a nationally recognized United States public accounting firm which has
not, during the two years preceding the date of its selection, acted in any way
on behalf
15
of the Company. If the Executive and the Company cannot agree on the firm to
serve as the Auditor, then the Executive and the Company shall each select an
accounting firm and those two firms shall jointly select the accounting firm to
serve as the Auditor. The portion of the Tax Reimbursement Payment attributable
to a Covered Payment shall be paid to the Executive by the Company prior to the
date that the corresponding Excise Tax payment is due to be paid by the
Executive (through withholding or otherwise).
(h) Other Termination Benefits. In the case of any of the
foregoing terminations, the Executive or his estate shall also be entitled to:
(i) the balance of any incentive awards due for
performance periods which have been completed, but which have not yet been paid;
(ii) any expense reimbursements due the
Executive; and
(iii) other benefits, if any, in accordance with
applicable plans and programs of the Company, excluding any severance plan or
program or notice of termination policy now or hereinafter in effect at the
Company or any of its Affiliates.
(i) No Mitigation; No Offset. In the event of any
termination of employment under this Section 11, the Executive shall be under no
obligation to seek other employment and, except as provided by Sections 5,
11(b)(i)(F), 11(d)(i)(F), 11(d)(ii)(D), and 11(e) there shall be no offset
against amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that he may obtain or on
account of any claim the Company or any Affiliate of the Company might have
against him.
(j) Nature of Payments. Any amounts due under this
Section 11 are in the nature of severance payments considered to be reasonable
by the Company and the Parent and are not in the nature of a penalty.
12. Confidential Information. The Executive acknowledges that
certain letter agreement dated September 18, 1997 (the "Confidentiality
Agreement") between the Company and the Executive regarding the protection of
confidential information of the Company and its Affiliates. The terms and
conditions of the Confidentiality Agreement remain in full force and effect and
are incorporated by reference herein. Any breach of the Confidentiality
Agreement by the Executive shall constitute a breach of this Agreement, subject
to the rights and remedies of the Company and its Affiliates as provided by
Section 15 of this Agreement.
13. Noncompetition. The Executive agrees that he will not, at any
time during the Term of Employment and for a period of twenty-four months after
any voluntary or involuntary termination of the Executive's employment with the
Company ( together, the "Restricted Period"), directly or indirectly, acting
with others or alone, manage, operate or control, engage or become interested in
as an owner (other than as an owner of less than 5% of the stock of a publicly
owned company), stockholder, partner, director, officer, employee (in an
executive capacity), consultant or otherwise (the "Executive's Employment") in
any business that is a "Competitive Business" with the Company or any of its
Affiliates in any geographic location in which the Company or any of its
Affiliates conducts its business. For purposes of this Section, a
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business operation shall be considered a "Competitive Business" with the Company
or its Affiliates if such business operation (a) provides services in the
executive search business during the Restrictive Period or (b) provides any
product or service competitive with any product or service provided by the
Company or any of its Affiliates, the sales of which amount to 5% or more of the
total gross revenues of the Company and its Affiliates at the time of the
Executive's Employment.
14. Nonsolicitation. For the twenty-four month period following
the Term of Employment, the Executive shall not directly or indirectly solicit
or induce or attempt to solicit or induce any employee, current or future, of
the Company or any of its Affiliates to terminate employment with the Company or
any of its Affiliates for any reason, or hire any individual who was an employee
of the Company or any of its Affiliates within one (1) year of being hired by
the Executive, except for those individuals released or terminated by the
Company or any of its Affiliates, and shall not solicit any client or customer
of the Company or any of its Affiliates as of the date of termination of the
Executive's employment with the Company, for purposes of doing business with any
business or operation which is a "Competitive Business" of the Company or any of
its Affiliates as defined in Section 13 above.
15. Rights and Remedies Upon Breach. If the Executive breaches, or
threatens to commit a breach of, any of the provisions contained in Sections
12,13 or 14 of this Agreement (the "Restrictive Covenants"), the Company and its
Affiliates will have the following rights and remedies, each of which rights and
remedies will be independent of the others and severally enforceable, and each
of which is in addition to, and not in lieu of, any other rights and remedies
available to the Company and its Affiliates under law or in equity:
(a) Injunctive Relief and Specific Performance. The right
and remedy to have the Restrictive Covenants specifically enforced by any court
of competent jurisdiction, it being agreed that any breach or threatened breach
of the Restrictive Covenants would cause irreparable injury to the Company and
its Affiliates and that monetary damages would not provide an adequate remedy.
(b) Accounting. The right and remedy to require the
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits derived or received by the
Executive as the result of any action constituting a breach of the Restrictive
Covenants.
(c) Cessation of Severance Benefits. The right and remedy
to cease any further severance, benefit or other compensation payments under
this Agreement to the Executive or his estate or beneficiary from and after the
commencement of such breach by the Executive, including without limitation the
Supplemental Pension, regardless of whether the Restrictive Covenants are found
by a court of competent jurisdiction to be enforceable or not.
The Executive hereby acknowledges and agrees that the Restrictive Covenants are
reasonable and valid in duration, geographic scope and in all other respects. If
any court determines that any of the Restrictive Covenants, or any part thereof,
is invalid or unenforceable, the remainder of the Restrictive Covenants will not
thereby be affected and will be given full effect without regard to the invalid
portions. In the event the Executive breaches the Restrictive Covenants during
the
17
periods of time in which the Restrictive Covenants are enforceable, then, in
such event, such violation shall toll the running of such time period from the
date of such violation until such violation shall cease.
16. Arbitration of Disputes and Reimbursement of Legal Costs.
Except as otherwise provided in Section 16 hereof, the Parties agree that any
dispute, claim or controversy based on common law, equity, or any federal, state
or local statute, ordinance, or regulation (other than workers' compensation
claims) arising out of or relating in any way to the Executive's employment, the
terms, benefits, and conditions of employment, or concerning this Agreement or
its termination and any resulting termination of employment, including whether
such dispute is arbitrable, shall be settled by arbitration. This agreement to
arbitrate includes but is not limited to all claims for any form of illegal
discrimination, improper or unfair treatment or dismissal, and all tort claims.
The Executive shall still have a right to file a discrimination charge with a
federal or state agency, but the final resolution of any discrimination claim
shall be submitted to arbitration instead of a court or jury. Subject to the
following provisions, the arbitration shall be conducted in accordance with the
rules of the American Arbitration Association (the "Association") then in effect
in Chicago, Illinois by three arbitrators. One of the arbitrators shall be
appointed by the Company, one shall be appointed by the Executive, and the third
shall be appointed by the first two arbitrators. If the first two arbitrators
cannot agree on the third arbitrator within 30 days of the appointment of the
second arbitrator, then the third arbitrator shall be appointed by the
Association. The decision of the arbitrators, including determination of the
amount of any damages suffered, shall be final, nonappealable and binding on all
Parties, their heirs, executors, administrators, successors and assigns, and
judgment may be entered thereon by either Party in accordance with applicable
law in any court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify any
provision of this Agreement or to award a remedy for a dispute involving this
Agreement other than a benefit specifically provided under or by virtue of the
Agreement. If the Executive prevails on any material issue which is the subject
of such arbitration or lawsuit, the Company shall be responsible for all of the
fees of the American Arbitration Association and the arbitrators and any
expenses relating to the conduct of the arbitration (including the Company's and
the Executive's reasonable attorneys' fees and expenses). Otherwise, each party
shall be responsible for its own expenses relating to the conduct of the
arbitration (including reasonable attorneys' fees and expenses) and shall share
the fees of the American Arbitration Association equally. Pending the resolution
of the arbitration, all payments and benefits otherwise due to the Executive
hereunder shall continue.
Notwithstanding the provisions of this Section, either Party may seek injunctive
relief in a court of competent jurisdiction, whether or not the case is then
pending before the panel of arbitrators. Following the court's determination of
the injunction issue, the case shall continue in arbitration as provided herein.
18
17. Indemnification.
(a) The Company and the Parent agree that if the
Executive is made a party, or is threatened to be made a party, to any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was a director, officer or
employee of the Company or any of its Affiliates or is or was serving at the
request of the Company or the Parent as a director, officer, member, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether or
not the basis of such Proceeding is the Executive's alleged action in an
official capacity while serving as a director, officer, member, employee or
agent, the Executive shall be indemnified and held harmless by the Company to
the fullest extent legally permitted or authorized by the certificate of
incorporation or bylaws of the Parent or the Company or resolutions of the Board
of Directors of the Parent or the Company or, if greater, by the laws of the
State of Delaware, against all cost, expense, liability and loss (including,
without limitation, attorney's fees, judgments, fines, ERISA excise taxes or
other liabilities or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Executive in connection therewith, and
such indemnification shall continue as to the Executive even if he has ceased to
be a director, member, employee or agent of the Company or any of its Affiliates
and shall inure to the benefit of the Executive's heirs, executors and
administrators. The Company shall advance to the Executive all reasonable costs
and expenses incurred by him in connection with a Proceeding within 20 calendar
days after receipt by the Company of a written request for such advance. Such
request shall include an undertaking by the Executive to repay the amount of
such advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.
(b) Neither the failure of the Parent or the Company
(including their board of directors, independent legal counsel or stockholders)
to have made a determination prior to the commencement of any proceeding
concerning payment of amounts claimed by the Executive under Section 17(a) above
that indemnification of the Executive is proper because he has met the
applicable standard of conduct, nor a determination by the Parent or the Company
(including their board of directors, independent legal counsel or stockholders)
that the Executive has not met such applicable standard of conduct, shall create
a presumption that the Executive has not met the applicable standard of conduct.
(c) The Company and Parent agree to continue and maintain
a directors' and officers' liability insurance policy covering the Executive to
the extent the Company and Parent provide such coverage for its other executive
officers.
18. Assignability; Binding Nature. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
heirs (in the case of the Executive) and assigns. Rights or obligations of the
Parent or the Company under this Agreement may be assigned or transferred by the
Parent or the Company pursuant to a merger or consolidation in which the Parent
or the Company is not the continuing entity, or the sale or liquidation of all
or substantially all of the assets of the Parent or the Company, provided that
the assignee or transferee is the successor to all or substantially all of the
assets of the Parent or the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Parent and the Company, as contained
in this Agreement, either contractually or as a matter of law. The
19
Parent and the Company further agree that, in the event of a sale of assets or
liquidation as described in the preceding sentence, they shall take whatever
action they reasonably can in order to cause such assignee or transferee to
expressly assume the liabilities, obligations and duties of the Parent and the
Company hereunder. No rights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive other than his rights
to compensation and benefits, which may be transferred only by will or operation
of law.
19. Entire Agreement. This Agreement contains the entire
understanding and agreement among the Parties concerning the subject matter
hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, among the Parties with
respect thereto.
20. Amendment or Waiver. No provision in this Agreement may be
amended unless such amendment is agreed to in writing and signed by the
Executive and an authorized officer of the Company and the Parent. No waiver by
any Party of any breach by any other Party of any condition or provision
contained in this Agreement to be performed by such other Party shall be deemed
a waiver of a similar or dissimilar condition or provision at the same or any
prior or subsequent time. Any waiver must be in writing and signed by the
Executive or an authorized officer of the Company and the Parent, as the case
may be.
21. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law so as to achieve the purposes of this Agreement.
22 Survivorship. Except as otherwise expressly set forth in this
Agreement, the respective rights and obligations of the Parties hereunder shall
survive any termination of the Executive's employment. This Agreement itself (as
distinguished from the Executive's employment) may not be terminated by either
Party without the written consent of the other Party. Upon the expiration of the
term of the Agreement, the respective rights and obligations of the Parties
shall survive such expiration to the extent necessary to carry out the
intentions of the Parties as embodied in the rights (such as vested rights) and
obligations of the Parties under this Agreement.
23 References. In the event of the Executive's death or a
judicial determination of his incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative.
24 Governing Law. This Agreement shall be governed in accordance
with the laws of Illinois without reference to principles of conflict of laws.
25 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when (a)
delivered personally, (b) delivered by certified or registered mail, postage
prepaid, return receipt requested or (c) delivered by overnight courier
(provided that a written acknowledgment of receipt is obtained by the overnight
courier) to the Party concerned at the address indicated below or to such
changed address as such Party may subsequently give such notice of:
20
If to the Company or the Parent: ▇▇▇▇▇▇▇▇ and Struggles, Inc.
Sears Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Legal Counsel
If to the Executive: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
20 ▇▇▇▇▇ Ridge
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
26 Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
27 Counterparts. This Agreement may be executed in two or more
counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
▇▇▇▇▇▇▇▇ and Struggles, Inc.
By: /s / ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
▇▇▇▇▇▇▇▇ and Struggles International, Inc.
By: /s / ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
/s / ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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