Exhibit 10(c)
EMPLOYMENT AGREEMENT
BY HAND
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Sotheby's Holdings, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇:
This letter sets forth our understanding and agreement with respect to
your employment by Sotheby's Holdings, Inc. together with all of its
subsidiaries and related entities ("Sotheby's" or the "Company"). This Agreement
is being provided to you because you are a key employee at the Company, perform
highly specialized and unique duties for the Company, and could do substantial
harm to the Company if you left its employment, particularly during this present
period of uncertainty for the Company. Consequently, Sotheby's is offering you
the following terms and financial enhancements to ensure your continued
employment with and loyalty to the Company, and so that you will focus fully and
exclusively on your job duties at Sotheby's during this period.
(1) TERM OF EMPLOYMENT.
a) You agree to continue as a full-time employee of Sotheby's and
Sotheby's agrees to continue to employ you full-time, subject to the
terms and conditions set forth herein (the "Agreement"), for the
period beginning as of January 1, 2001 and ending thirty-six (36)
months after that date or December 31, 2003, unless extended in
writing by both the Company and you or as otherwise provided in this
Agreement.
b) This Agreement may be terminated:
i) upon mutual written agreement of the Company and you;
ii) upon thirty (30) days' prior written notice by the Company for
Cause (as hereinafter defined) given within thirty (30) days
of the Chief Executive Officer of the Company becoming aware
of circumstances constituting cause, or without Cause;
iii) upon thirty (30) days' prior written notice by you for Good
Reason (as hereinafter defined) given within thirty (30) days
of your becoming aware of circumstances constituting Good
Reason;
iv) at the option of the Company in the event of your Permanent
Disability (as hereinafter defined); or
v) automatically upon your death.
c) As used herein, the term "Cause" shall mean and be limited to your:
i) conviction of a felony crime, or
ii) fraud, willful malfeasance or gross negligence in performance
of your duties which is materially injurious to the Company.
You shall have thirty (30) days following the receipt of notice from
the Company of the existence of circumstances constituting Cause to
correct such circumstances. Any notice of termination of Cause must
be given within sixty (60) days following the Chief Executive
Officer or the Board of Directors learning of circumstances
constituting Cause.
d) As used herein, the term "Good Reason" shall mean the occurrence of
any of the following events:
i) any material breaches of this Agreement by the Company without
your express consent;
ii) your being required to relocate to a principal place of
business more than thirty-five (35) miles outside New York,
New York without your express consent;
iii) any action by the Company that results in a material
diminution in your position without your express consent
(except in connection with the termination of your employment
for Cause or as a result of your death or Permanent Disability
or temporarily as a result of your illness or other absence);
iv) the failure of the Company's successor to assume this
Agreement in accordance with Paragraph 20 without your express
consent; or
v) termination of your employment within twelve (12) months of a
Change of Control (as defined in the Stock Option Plan) but
not earlier than six (6) months after the Change of Control;
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provided, however, that the Company shall have thirty (30)
days following the receipt of notice from you of the existence
of circumstances constituting Good Reason to correct such
circumstances.
e) As used herein, the term "Permanent Disability" shall mean a
determination by the Company in accordance with applicable law that,
as a result of a physical or mental illness, you have been unable to
perform the essential functions of the job with or without
reasonable accommodation that does not present an undue burden on
the Company for a period in excess of six (6) consecutive months.
(2) TITLE; RESPONSIBILITIES. You shall continue to serve as Chief Financial
Officer of Sotheby's. In addition to the foregoing, you agree to perform
such other functions and responsibilities as may be reasonably requested
by Sotheby's from time to time. During your employment with the Company,
you shall devote substantially all of your business time (excluding
periods of vacation and sick leave) and efforts to the performance of your
functions and responsibilities hereunder.
(3) COMPENSATION. In consideration for the services to be rendered by you to
Sotheby's, you shall receive during the 36-month period of employment by
Sotheby's after your execution of this Agreement, the following:
a) An annual base salary of $350,000, which shall be payable in
appropriate installments to conform with the regular payroll dates
for salaried personnel of Sotheby's. Your base salary shall be
reviewed thereafter on an annual basis and shall be subject to such
adjustment as the Chief Executive Officer shall determine upward but
not downward to reflect your performance and responsibilities; and
b) In addition to the annual base salary, you will be eligible for:
i) An annual bonus composed of a 25% worldwide corporate
financial performance target and a 75% individual performance
target. Your 2001 total bonus target is $200,000. Your annual
bonus target may be subject to such adjustment as the Chief
Executive Officer shall determine upward but not downward to
reflect your performance and responsibilities.
ii) A special cash bonus of $200,000 payable February 28, 2002 and
a leadership incentive bonus in the amount of $350,000 payable
on February 28, 2002 and $350,000 payable on September 30,
2002, as set forth in my letters to you of May 10, 2000 and
October 16, 2000 subject to the terms and conditions set forth
in those letters except that the Notice and Non-Compete
Agreement shall be superseded by Paragraph 13.
(4) ADDITIONAL COMPENSATION IN CONSIDERATION FOR SPECIAL UNDERTAKINGS DURING
THE 36-MONTH EMPLOYMENT PERIOD. In order to preserve stability and to
assure your continued employment during this period of uncertainty for the
Company, and because it is essential
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that during this period you focus fully and exclusively on your job
duties for the Company, you agree to the following undertakings
during the 36-month period of employment by Sotheby's, in exchange
for the Special Additional Consideration set forth in Subparagraph
4(b) below.
a) Employee Undertakings
i) You agree to reaffirm and abide by your acknowledged fiduciary
obligation to cooperate with the Company in the event of and
in connection with matters relating to the Company including,
without limitation, a restructuring (any business or capital
restructuring), refinancing or sale of the Company or a
significant interest therein (including, but not limited to,
an actual or potential change of control) including, but not
limited to, your obligations to:
(a) not disparage the Company or its assets to any third
party;
(b) maintain your loyalty to the Company in all respects,
including, without limitation, compliance with Paragraph
13;
(c) provide full and complete active cooperation and other
assistance in promoting the Company; and
(d) fully assist with any transition with respect to any
business or capital restructuring, refinancing or sale
of the Company or a significant interest therein.
ii) During the 36-month term of this Agreement or until the
termination of this Agreement if earlier than December 31,
2003 (for purposes of this Subparagraph 4(a)(ii), the "Term"),
you agree to refrain from any substantive discussions,
meetings or communications of any kind whatsoever with any
other potential employer, including, but not limited to, an
art auction house, art dealer or any other company,
organization or entity in which you would perform similar
duties and responsibilities to those you have performed at
Sotheby's, regarding prospective employment for yourself
during the Term. By entering into this Agreement, and agreeing
to the special undertakings set forth herein, you agree that
for this Term you are knowingly and voluntarily foregoing the
right to engage in such conduct in exchange for the
consideration set forth herein, and you acknowledge the vital
importance of these undertakings to the Company during the
Term.
b) Special Additional Consideration
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In consideration of the foregoing undertakings by you, the Company
shall (except as stated in Subparagraph 11(c)) provide the following
special additional consideration provided you do not breach this
Agreement:
i) You will receive a "retention bonus" in the amount of
$1,000,000, provided you do not breach this Agreement. This
payment will be made on December 31, 2002.
ii) Pursuant to the Sotheby's 1997 Stock Option Plan, an option to
purchase 150,000 shares will be provided to you upon your
execution of this Agreement.
c) Payments set forth in Subparagraphs 3(b)(ii) and 4(b) shall not be
included for benefit contribution purposes under any qualified or
non-qualified retirement plan including but not limited to the
401(k) plan or Benefit Equalization Plan. These special payments are
also not part of the bonus calculation in the event you are entitled
to benefits under the Sotheby's, Inc. Severance Plan.
d) If, at any time during the 36-month employment period, you breach
any of the undertakings set forth herein, you will return to the
Company all of the "Special Additional Consideration" you may have
received pursuant to Subparagraph 4(b) above, and will not
thereafter be entitled to any further "Special Additional
Consideration." In addition, payment of the "Special Additional
Consideration" pursuant to Subparagraph 4(b) will not be made if,
for any reason, you are not employed by the Company on the date such
payment would otherwise be made, except as otherwise provided in
Subparagraphs 11(a) or 11(b).
(5) STOCK OPTIONS. Your options will continue to vest pursuant to the
Sotheby's 1997 Stock Option Plan, and you will continue to be eligible for
further grants. The benefits provided in this Agreement are in addition to
any stock options you have already received.
(6) BENEFITS. You shall continue to be entitled, to the extent that your
position, title, tenure, salary, age, health and other qualifications make
you eligible, to participate in all employee benefit plans or programs now
in effect or hereafter adopted by Sotheby's, including the Sotheby's, Inc.
Severance Plan, medical, dental, disability, life insurance, stock options
and pension benefits. Your participation in such plans or programs shall
continue to be subject to the provisions, rules and regulations applicable
thereto. Any benefits that you may become eligible for under the
Sotheby's, Inc. Severance Plan shall be in addition to the other benefits
specified in this Agreement. In the event you are entitled to benefits
under the Sotheby's, Inc. Severance Plan, such benefits shall be paid
under the terms of that plan in effect on the execution date of this
Agreement regardless of whether that plan is modified during the term of
this Agreement unless the modification results in an enhanced benefit to
you in which case you would receive the enhanced benefit except if the
Severance Plan applies pursuant to the conditions stated in Paragraph 12
below.
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(7) VACATION. You shall continue to be entitled to annual vacation time, with
full pay, in accordance with the established policies of Sotheby's now or
hereafter in effect for similarly situated employees but in no event less
than the number of days to which you are presently entitled.
(8) EXPENSES. You shall be authorized to incur reasonable and necessary
expenses incurred in connection with Sotheby's business, including
expenses for entertainment, travel and similar items in accordance with
Sotheby's travel and entertainment policy. Sotheby's will reimburse you
for all such expenses upon presentation by you monthly of an itemized
account of such expenditures. Such expenditures, however, shall be subject
at all times to the approval of Sotheby's in accordance with Sotheby's
expense reimbursement policy.
(9) BUSINESS DEVELOPMENT ALLOWANCE. You will be eligible to continue your
current annual business development allowance of $25,000 for 2001, 2002,
and 2003.
(10) CONFIDENTIALITY AGREEMENT; SOTHEBY'S RULES AND POLICIES. As a condition to
your continued employment by the Company, you shall continue to be bound
by the Company's Confidentiality Agreement, Auction Rules, Compliance
Policy, and the Conflict of Interest Policy and House Rules (collectively,
the "Rules and Policies"). You acknowledge that you have read, understood
and signed each of the foregoing.
(11) COMPENSATION UPON TERMINATION DURING THE 36-MONTH EMPLOYMENT PERIOD.
a) If during the 36-month employment period your employment by the
Company is terminated by you for Good Reason in accordance with
Subparagraph 1(b)(iii) hereof or by the Company without Cause in
accordance with Subparagraph 1(b)(ii), the Company shall pay or
provide you with the following:
i) The sum of your base salary through the date of termination to
the extent not theretofore paid, any declared and earned but
unpaid bonus amount for the prior calendar year and
reimbursement for any unreimbursed expenses incurred through
the date of termination in accordance with Paragraph 8
("Accrued Obligations");
ii) Continued payment of your base salary on a semi-monthly basis
from the date of termination through the end of the 36-month
employment period;
iii) On, or within fifteen (15) days following the date of
termination, a pro-rated bonus equal to the product of (x) the
bonus payments set forth in Subparagraphs 3(b)(i) paid or
earned and payable for the most recently completed fiscal year
of the Company and (y) a fraction, the numerator of which is
the number of days in the current fiscal year through the date
of termination, and the denominator of which is 365 (the
"Pro-Rated Bonus"); and
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(iv) On, or within fifteen (15) days following the date of
termination, payment of any portion of the "retention bonus"
described in Subparagraph 4(b)(i) not paid as of the date of
termination; provided that, if such termination shall be for
the reasons set forth in Subparagraph 1(d)(v) at any time
prior to December 31, 2002, you shall only be entitled to be
paid a fraction of such "retention bonus" the numerator of
which is the number of full months from January 1, 2001
through the date of such termination and the denominator of
which is 36.
In addition, you will not be obligated to return to the Company any
portion of the "Special Additional Consideration" you may have
received pursuant to Subparagraph 4(b) above. Notwithstanding the
foregoing, if during the 36-month employment period your employment
by the Company is terminated and as a result of such termination you
become eligible to receive payments and/or benefits under the
Sotheby's, Inc. Severance Plan, then you shall not be entitled to
receive the Pro-Rated Bonus in accordance with the provisions of
Subparagraph 11(a)(iii).
Except as provided in Subparagraph 11(e), you will not be entitled
to receive benefits under the Sotheby's, Inc. Severance Plan if your
employment terminates pursuant to Subparagraph 11(a).
b) If during the 36-month employment period your employment by the
Company is terminated on account of your Permanent Disability or
your death, the Company shall pay or provide you (or, in the event
of your death, your estate) with the following:
i) Accrued Obligations;
ii) On, or within fifteen (15) days following the date of
termination, a Pro-Rated Bonus; and
iii) On, or within fifteen (15) days following the date of
termination, payment of any portion of the "retention bonus"
described in Subparagraph 4(b) not paid as of the date of
termination.
In addition, you (or, in the event of your death, your estate) will
not be obligated to return to the Company any portion of the
"Special Additional Consideration" you may have received pursuant to
Subparagraph 4(b) above.
c) If during the 36-month employment period your employment by the
Company is terminated by the Company for Cause, this Agreement shall
terminate without further obligation to you, except that the Company
shall pay or provide you with the sum of your base salary through
the date of termination to the extent not theretofore paid. You will
not be eligible for any bonus or special payments including those in
Subparagraphs 3(b) and 4(b) after the date of termination of
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your employment.
d) If during the 36-month employment period your employment by the
Company is terminated in accordance with Subparagraphs 1(b)(i)
hereof, the Company shall pay or provide you with the amounts
mutually agreed on by the Company and you.
e) If during the 36-month employment period your employment by the
Company is terminated by the Company without Cause within twelve
(12) months of a Change in Control (as defined in the Stock Option
Plan), the amounts set forth in Subparagraphs 11(a)(i)-(iv) shall be
paid to you as well as the benefits you would receive under the
Sotheby's, Inc. Severance Plan as if you were entitled to receive
such benefits under the terms of the Plan.
f) Any payments payable pursuant to this Paragraph 11 beyond Accrued
Obligations shall only be payable if you deliver to the Company a
release, as similarly required under the Sotheby's, Inc. Severance
Plan, of any and of all your claims (except with regard to claims
for payments or benefits specifically payable or providable
hereunder which are not yet paid as of the effective date of the
release, claims for vested accrued benefits, claims under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA") or claims relating to any rights of indemnification under
Paragraph 14) occurring up to the release date with regard to the
Company and its respective past or present officers, directors and
employees in such form as reasonably requested by the Company.
(12) EMPLOYMENT AFTER EXPIRATION OF THE 36-MONTH EMPLOYMENT PERIOD. If the
Company does not offer to renew this Agreement at least six (6) months
prior to the expiration of the 36-month employment period on terms at
least as favorable as those in the final year of your employment except
that its term need by no longer than one (1) year and such agreement need
not include the retention bonus in Paragraph 4(b). You shall, upon the
expiration of the 36-month employment period, be entitled to receive
benefits under the Company's Severance Plan as if you were entitled to
receive such benefits under the terms of the plan in effect at that time.
(13) NON-COMPETE AND NON-SOLICITATION AGREEMENT
a) Because of the importance of stability and confidentiality during
this time of uncertainty for the Company, and because you have
specialized, unique confidential knowledge vital to the Company, you
agree that during the "Restricted Period" (defined below), you will
not, without the consent of the Company, directly or indirectly, in
New York, California, England, France or Switzerland engage directly
or indirectly in the live or on-line "Art Auction Business" (defined
below) or in any other business in which the Company is engaged or
is actively seeking to be engaged as of the time that your
employment terminates, whether such engagement by you is as an
officer, director, proprietor,
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employee, partner, owner, consultant, advisor, agent, sales
representative or other participation. For purposes of this
Agreement, the "Art Auction Business" involves auctions of the
property in the collecting categories that the Company offers for
sale in its core business at the time of termination. For purposes
of this Agreement, the "Restricted Period" is during the course of
your employment and the earlier of (i) six months after the end of
the 36-month employment period under this Agreement or (ii) twelve
(12) months after the termination of your employment.
b) In addition to the foregoing, during the Restricted Period, you
agree that you will not, either alone or in concert with others, and
will not cause another to in any such case directly or indirectly,
recruit, solicit or induce any Sotheby's employees to terminate
their employment with Sotheby's.
c) If at any time there is a judicial determination by any court of
competent jurisdiction that the time period, geographical scope, or
any other restriction contained in this Paragraph 13 is
unenforceable against you, the provisions of this Paragraph 13 shall
not be deemed void but shall be deemed amended to apply as to such
maximum time period, geographical scope and to such other maximum
extent as the court may judicially determine or indicate to be
enforceable.
(14) INDEMNIFICATION. The Company shall maintain for your benefit director and
officer liability insurance in the same amount and to the same extent as
the Company covers similarly situated employees. In addition, to the
extent not covered by director and officer liability insurance, you shall
be indemnified by the Company against liability as an officer or director
of the Company to the maximum extent permitted by applicable law. Your
rights under this Paragraph 14 shall continue so long as you may be
subject to such liability, whether or not this Agreement may have
terminated prior thereto
(15) MISCELLANEOUS.
a) MISCELLANEOUS. ASSIGNMENTS. You may not assign your rights or
delegate your obligations under this Agreement.
b) WITHHOLDINGS. Sotheby's shall be entitled to withhold from any
payments or deemed payments under this Agreement any amount of
withholding required by law.
c) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between you and Sotheby's concerning the subject mater of your
employment, with the exception of letters and documents specifically
referenced herein, and it supersedes all prior agreements including,
but not limited to, any prior Notice and Non-Compete Agreements,
written or oral, discussions, and negations on that
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subject (other than the letters and documents specifically
referenced herein).
d) AMENDMENTS AND WAIVERS. Any waiver or amendment of any provision of
this Agreement must be done in writing and signed by both parties.
e) ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this agreement, or breach thereof (other than an action
or proceeding for an injunction or other equitable relief pursuant
to Paragraph 17 hereof), shall be settled by arbitration in New York
City in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association by a
single arbitrator. The arbitrator's award shall be final and binding
upon both parties, and judgment upon the award may be entered in any
court of competent jurisdiction in any state of the United States or
country or application may be made to such court for a judicial
acceptance of the award and an enforcement as the law of such
jurisdiction may require or allow.
f) ATTORNEYS' FEES. At your request, the Company shall pay your
reasonable attorney's fees incurred by you in connection with
preparation, execution and delivery of this Agreement.
(16) LEGAL AND EQUITABLE REMEDIES. Sotheby's shall be entitled to enjoin a
violation by you of any provision hereof. Moreover, the parties hereto
acknowledge that the damages suffered by Sotheby's as a result of any
violation of this Agreement may be difficult to ascertain. Accordingly,
the parties agree that in the event of a breach of this Agreement by you,
Sotheby's shall be entitled to specific enforcement by injunctive relief
of your obligations to Sotheby's. The remedies referred to above shall not
be deemed to be exclusive of any other remedies available to Sotheby's,
including to enforce the performance or observation of the covenants and
agreements contained in this Agreement.
(17) SEVERABILITY. If at any time there is a judicial determination by any
court of competent jurisdiction that any provision of this Agreement is
unenforceable against you, the other provisions of this Agreement shall
not be rendered void but shall be deemed amended to apply as to such
maximum extent as the court may judicially determine or indicate to be
enforceable under New York law.
(18) CONFIDENTIALITY. You shall not disclose this Agreement or the contents
thereof to anyone other than (i) your legal or financial advisor, provided
that you give to each such person to whom disclosure is made notice of the
confidentiality provisions of this Agreement and each agrees to keep the
existence, terms and conditions of this Agreement fully confidential or
(ii) except as required by law or with the prior written approval of
Sotheby's.
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(19) CHOICE OF LAW/CHOICE OF FORUM. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of New
York irrespective of the principles of conflicts of law, and you consent
to the jurisdiction of the state and federal courts situated in New York
City for the purpose of adjudicating any dispute relating to this
Agreement.
(20) BINDING ON SUCCESSOR COMPANY. This Agreement shall remain in effect and
binding upon any successor or assign of Sotheby's including any entity
that (whether directly or indirectly, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation or otherwise)
is the survivor of the Company or that acquires the Company and/or
substantially all the assets of the Company in accordance with the
operation of law, and such successor entity shall be deemed the "Company"
for purposes of this Agreement. In the situations set forth in this
Paragraph 20, if this Agreement is not assumed as a matter of law, the
Company will require its assumption by the successor entity.
(21) NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and
shall be delivered personally or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to
you at the address set forth on the initial page of this Agreement and to
the Company at Sotheby's Holdings, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, or to such other address as either
party may have furnished to the other in writing in accordance herewith.
Any such notice shall be deemed given when so delivered personally, or, if
mailed, five (5) days after the date of deposit in the United States mail,
except that notice of change of address shall be effective only upon
receipt.
(22) REPRESENTATION BY COUNSEL. The parties have each been represented by
counsel of their own choosing in negotiation this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Please review this Agreement carefully and, if it correctly states our
agreement, sign and return to me the enclosed copy.
Very truly yours,
SOTHEBY'S HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Executive Officer
Read, accepted and agreed to this
28th day of September, 2001
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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