EXHIBIT 10.20
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 21,
1999, by and between TMP WORLDWIDE INC., a Delaware corporation (the "Company"),
and Steven B. Potter ("Executive").
PRELIMINARY RECITALS
A. Reference is made to that certain Amended and Restated
Purchase Agreement dated as of October 20, 1999 (the "Purchase Agreement"), by
and among the Company, Highland Search Group L.L.C. ("Highland"), and the
holders of membership interests in Highland set forth on SCHEDULE A attached
thereto.
B. Highland has been engaged in the executive search business
(the "Business").
C. Executive has been a long time executive of Highland, most
recently serving as Highland's Chief Executive Officer and has extensive
knowledge and a unique understanding of the Business and has longstanding
business relationships with many customers of Highland, who, subsequent to the
consummation of the transactions contemplated by the Purchase Agreement, will be
transacting business with the Company.
D. From and after the date hereof, the Company desires to employ
Executive, and Executive desires to be employed by the Company, as
President-North American Executive Search Operations of the Company, all under
the terms and conditions set forth herein.
E. Immediately prior to the closing of the transactions
contemplated by the Purchase Agreement, Executive owns 29% of the outstanding
membership interests of Highland and is consequently directly benefitting from
the transactions contemplated by the Purchase Agreement. It is a condition to
the consummation of the Purchase Agreement that the Company and Executive enter
into this Agreement and that Executive agree to the Restrictive Covenants (as
defined in SECTION 6 below).
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. EMPLOYMENT.
1.1 ENGAGEMENT OF EXECUTIVE. The Company agrees to employ
Executive and Executive agrees to accept employment as President-North American
Executive Search Operations of the Company and its successor or successors in
interest (which successor or successors may be a
separate corporation or corporations or become a division or unit of the
Company), in accordance with the terms and conditions of this Agreement.
1.2 DUTIES AND POWERS. During the Employment Period (as
defined in SECTION 1.3 below), Executive will serve in the position described in
SECTION 1.1 above and will have such responsibilities, duties and authorities,
and will render such services of an executive and administrative character as
shall be reasonably directed by the President of the Global Executive Search
Division of the Company (currently Michael Squires), the Company's Executive
Vice President-Mid-Market (currently Andrew Banks) or the Company's Chief
Executive Officer (currently Andrew McKelvey) (each, a "Senior Executive" and,
collectively, the "Senior Executives"). Executive shall devote Executive's best
efforts, energies and abilities and Executive's full business time, skill and
attention to the business and affairs of the Company. Executive shall perform
the duties and carry out the responsibilities assigned to Executive to the best
of Executive's ability, in a diligent, trustworthy, businesslike and efficient
manner for the purpose of advancing the business of the Company and shall adhere
to any and all of the written employment policies of the Company. Executive
acknowledges that Executive's duties and responsibilities will require
Executive's full-time business efforts and agrees that during the Employment
Period Executive will not engage in any other business activity or have any
business pursuits or interests which interfere or conflict with the performance
of Executive's duties hereunder, provided, that nothing in this SECTION 1.2
shall be deemed to prohibit Executive from making Permitted Investments (as
defined in SECTION 3.2 below).
1.3 EMPLOYMENT PERIOD. Executive's employment under this
Agreement shall begin on the date hereof and shall continue through and until
October 21, 2001 (the "Employment Period"). Notwithstanding anything herein to
the contrary, the Employment Period is subject to termination pursuant to
SECTIONS 1.4, 1.5 AND 1.6 below.
1.4 TERMINATION BY THE COMPANY. The Company has the right to
terminate the Employment Period (and, consequently, Executive's employment under
this Agreement), by notice to Executive in writing at any time, (i) for "Cause"
or (ii) without Cause for any or no reason, subject to the provisions of SECTION
2.2. Any such termination shall be effective upon the date specified in such
notice or, if no date is specified, on the date such notice is deemed served
pursuant to SECTION 8.6 below.
"Cause" as used herein means the occurrence of any of the
following events:
(a) the willful failure or gross negligence of Executive to
perform or in performing Executive's duties or to comply with reasonable
directions of a Senior Executive that continues unremedied for a period of
ten (10) days after such Senior Executive has given written notice to
Executive specifying in reasonable detail the manner in which Executive
has failed to perform such duties or comply with such directions;
(b) Executive's conviction of (i) a felony, (ii) criminal
dishonesty, (iii) any crime involving moral turpitude or (iv) fraud;
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(c) a breach by Executive of any of the Restrictive Covenants;
or
(d) a material breach by Executive of any of the terms or
conditions of this Agreement (other than the Restrictive Covenants),
PROVIDED, that if such breach is capable of being remedied, it continues
unremedied for a period of ten (10) business days after a Senior Executive
has given written notice to Executive specifying in reasonable detail the
manner in which Executive has breached the Agreement.
1.5 TERMINATION BY EXECUTIVE. Executive has the right to
terminate the Employment Period (and, consequently, Executive's employment under
this Agreement) (i) by sixty (60) days prior written notice to the Company for
any or no reason (a "Voluntary Termination") or (ii) for "Good Reason."
Notwithstanding anything to the contrary contained herein, the Company may
accelerate the effective date of a Voluntary Termination to any date including,
but not limited to, the date on which notice is received by the Company.
Following a notice of Voluntary Termination, Executive agrees to fulfill
Executive's duties hereunder and shall cooperate fully in completion and
turnover of all matters involving Executive until such termination becomes
effective, unless otherwise consented to by the Company.
"Good Reason" as defined herein shall mean the existence
(without Executive's express written consent) of any of the following
events which are not cured by the Company within 15 days after written
notice thereof (setting forth Executive's specific claims hereunder) is
given to the Company by Executive:
(a) any material diminution in Executive's position,
authority, duties, title or responsibilities described herein;
(b) the Company's reduction of Executive's Annual Draw,
Cash Bonus or Equity Bonus (each as defined in SECTION 2.1 below) or as
the same may be increased from time to time hereafter;
(c) the Company's failure to pay to Executive any
material portion of his current compensation or to pay to Executive any
portion of an installment of deferred compensation under any deferred
compensation program of the Company, within seven (7) days of the date
such compensation is due; or
(e) any other material breach of this Agreement by the
Company.
Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any event constituting Good Reason
hereunder.
1.6 AUTOMATIC TERMINATION. The Employment Period shall
automatically terminate upon Executive's death or Disability. Executive shall be
deemed to have a "Disability" for
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purposes of this Agreement if Executive is unable to perform, by reason of
physical or mental incapacity, Executive's duties or obligations under this
Agreement, for a total period of 100 days in any 360-day period. The Board of
Directors of the Company (the "Board") shall determine, according to the facts
then available, whether and when the Disability of Executive has occurred. Such
determination shall be made by the Board in the exercise of reasonable
discretion.
1.7 CORPORATE OFFICES. The Company shall not relocate its
offices where Executive is employed more than 30 miles from its current location
(I.E., 1633 Broadway, New York, New York 10019).
2. COMPENSATION AND BENEFITS.
2.1 CASH COMPENSATION
(a) ANNUAL DRAW. In consideration of Executive performing
Executive's duties under this Agreement and complying with the Restrictive
Covenants set forth herein, during the Employment Period and subject to
SECTION 2.2 BELOW, the Company will pay Executive an aggregate annual draw
of $400,000 (the "Annual Draw"), payable in accor dance with the Company's
regular payroll policy for salaried employees. If the Employment Period is
terminated pursuant to SECTION 1.4, SECTION 1.5 or SECTION 1.6 above, then
the Annual Draw for any partial year of the Employment Period will be
prorated based on the number of days elapsed in such year during which
services were actually performed by Executive.
(b) BONUS ELIGIBILITY. Executive shall be eligible for an
annual discretionary bonus based on fee revenue conversion, the
performance of the Company's North American executive search operations
and other criteria mutually determined by Executive and the Company, which
bonus shall be payable annually within 90 days after the end of the
Company's fiscal year. Notwithstanding the foregoing, during the
Employment Period and subject to SECTION 2.2 BELOW, Executive shall
receive (i) a cash bonus of $1,000,000 per annum (the "Cash Bonus"),
payable semi-annually, and (ii) an additional bonus of $600,000 per annum
(the "Equity Bonus"), payable annually. The minimum Equity Bonus shall be
paid in either cash, TMP Common Stock (as defined below), options to
purchase TMP Common Stock or any combination thereof, at the sole
discretion of the Board of Directors of the Company (the "Board"). Any
shares or options granted as part of the Equity Bonus shall be subject to
(x) a four-year vesting requirement (I.E., vesting in four equal annual
installments commencing on the first anniversary of the date of grant),
(y) Executive's continued employment during such vesting period and (z)
the terms of the then current form of option agreement applicable to
executive search employees, a current version of which has been previously
provided to Executive. In addition, any options constituting the Equity
Bonus shall be non-incentive stock options and will be valued in the same
manner that options are valued for other similarly situated executives of
the Company. The exercise price per share of such options shall be equal
to the fair market value of one share of TMP Common Stock on the date of
grant.
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As used herein, "TMP Common Stock" means shares of common stock, $.001 par
value per share, of the Company.
(c) Notwithstanding anything to the contrary contained herein,
Executive acknowledges and agrees that the Company may, at its option and
in its sole discretion, refuse to conduct any business with, or perform
any particular services for, any client or potential client of Executive
for credit reasons, blocking requirements or other reasonable business
purposes.
2.2 COMPENSATION AFTER TERMINATION.
(a) If the Employment Period or this Agreement is terminated
(i) by the Company for Cause, (ii) by Executive pursuant to a Voluntary
Termination, (iii) through expiration of the Employment Period, or (iv) by
virtue of Employee's death or Disability, then the Company shall have no
further obligations hereunder or otherwise (except as agreed to in
writing) with respect to Executive's employment from and after the
applicable termination or expiration date (except payment of Executive's
Annual Draw and provision of benefits described in SECTION 2.3 hereof, in
each case which have accrued through the date of termination or
expiration, and any Cash Bonus or Equity Bonus that was actually payable
but not paid prior to the effective date of termination), and the Company
shall continue to have all other rights available hereunder (including,
without limitation, all rights under SECTIONS 3 AND 4 at law or in
equity).
(b) If the Employment Period is terminated by the Company
without Cause pursuant to clause (ii) of the first sentence of SECTION 1.4
hereof or by Executive with Good Reason pursuant to clause (ii) of the
first sentence of SECTION 1.5 hereof, then, subject to Executive's
compliance with the Restrictive Covenants, as Executive's sole and
exclusive remedy, Executive shall be entitled to receive (i) as severance
pay the Annual Draw and the Cash Bonus hereunder for the period of time
which would have been remaining in the Employment Period had it not been
so terminated, payable in regular installments in accordance with the
Company's general payroll practices for salaried employees (or, in the
case of the Cash Bonus, in accordance with the terms set forth in SECTION
2.1(B) above), and (ii) provision of benefits described in SECTION 2.3
hereof which have accrued through the date of such termination. In the
event the Employment Period is terminated by the Company without Cause
pursuant to clause (ii) of the first sentence of SECTION 1.4 hereof or by
Executive with Good Reason pursuant to clause (ii) of the first sentence
of SECTION 1.5 hereof, then the Company shall have no further obligations
hereunder or otherwise (except as agreed to in writing) with respect to
Executive's employment from and after the termination date except and only
to the extent set forth in the immediately preceding sentence.
2.3 OTHER BENEFITS.
(a) VACATION AND INSURANCE. During the Employment Period, the
Company will provide Executive four (4) weeks vacation per year (prorated
for periods of less than a full
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year), and Executive will be eligible to participate in any life, health,
hospitalization, disability, 401(k), profit sharing, retirement, or other
fringe benefit program maintained by the Company for its executive
employees generally, in each case in accordance with the terms of such
policies, plans or programs.
(b) BUSINESS EXPENSES. During the Employment Period, the
Company will reimburse Executive in accordance with Company policy for
Executive's normal out-of- pocket expenses incurred in the course of
performing Executive's duties hereunder. Executive shall provide the
Company with all receipts and documentation supporting such expenses as
may reasonably be requested by the Company.
(c) POST-TERMINATION BENEFITS. Following termination of
Executive by the Company without Cause or by Executive for Good Reason,
for the shorter of one year after the date of such termination or the
period of time which would have been remaining in the Employment Period
had it not been so terminated, the Company shall make available to
Executive and his immediate family medical, dental, basic life, accidental
death and dismemberment, long-term disability, unreimbursed medical
expense, dependent day-care and AFLAC benefits, if any, to the same extent
and on the same terms and conditions as would have been made available to
Executive and his immediate family had he remained employed by the Company
or one of its affiliates during such period, except that Executive will
not be permitted to make any changes in coverage during any such period
except for the addition of new immediate family members and changes in
beneficiaries which are effected by Executive pursuant to the terms and
conditions of the applicable benefit program.
2.4 TAXES, ETC. All compensation payable to Executive
hereunder is stated in gross amount and shall be subject to all applicable
withholding taxes, other normal payroll deductions and any other amounts
required by law to be withheld.
3. COVENANT NOT TO COMPETE.
3.1 EXECUTIVE'S ACKNOWLEDGMENT. Executive agrees and
acknowledges that in order to assure the Company and the Company's affiliates
(as defined in SECTION 3.2 below) that they will retain their respective value
and that of the Business, it is necessary that Executive undertake not to
utilize the special knowledge of the Business Executive has or may acquire and
Executive's relationships with customers to compete with the Company and its
affiliates. Executive further acknowledges that:
(a) upon consummation of the transactions contemplated by the
Purchase Agreement, the Company and its affiliates will be engaged in the
Business;
(b) Executive is one of a limited number of persons who helped
develop the Business of Highland;
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(c) Executive has occupied a position of trust and confidence
with Highland prior to the date of this Agreement and, during such period
and Executive's employment under this Agreement, Executive has and will
continue to become familiar with the proprietary and confidential
information of Highland, the Company and the Company's other affiliates;
(d) the agreements and covenants contained in this SECTION 3
are essential to protect the Company, its affiliates and the goodwill of
the Business and are a condition precedent to the willingness of the
Company to consummate the transactions contemplated by the Purchase
Agreement;
(e) the Company and its affiliates would be irreparably
damaged if Executive were to provide services to any person or entity in
violation of the provisions of this Agreement; and
(f) the scope and duration of the Restrictive Covenants are
reasonably designed to protect a protectable interest of the Company and
its affiliates and are not excessive in light of the circumstances.
3.2 NON-COMPETE. Executive hereby agrees that during the
Employment Period and for a period beginning on the date hereof and ending on
the date which is the later of two years after the date hereof or six months
after Executive ceases to be employed by the Company or its affiliates for any
reason, except on behalf of the Company and its affiliates in accordance with
this Agreement, Executive shall not, directly or indirectly, as employee, agent,
consultant, stockholder, director, partner or in any other individual or
representative capacity, own, operate, manage, control, engage in, invest in or
participate in any manner in, act as a consultant or advisor to, render services
for (alone or in association with any person, firm, corporation or entity), or
otherwise assist any person or entity that engages in or owns, invests in,
operates, manages or controls any venture or enterprise that directly or
indirectly engages or proposes to engage in the Business anywhere in or into the
United States or the United Kingdom (the "Territory"); provided, however, that
nothing contained herein shall be construed to prevent Executive from owning,
directly or indirectly, not more than an aggregate of one percent (1%) of any
class of stock of any company which is listed on a national securities exchange
or traded in the over-the-counter market ("Permitted Investments"). As used in
this Agreement, the term "affiliate" shall have the meaning ascribed to that
term in Rule 405 of the Securities Act of 1933, as amended, and shall include
each past and present affiliate of such person or entity.
3.3 NON-SOLICITATION. Without limiting the generality of the
provisions of SECTION 3.2 above, Executive hereby agrees that for a period
beginning on the date hereof and ending on the date which is the later of four
years after the date hereof or two years after the date Executive ceases to be
employed by the Company or its affiliates for any reason, except on behalf of
the Company and its affiliates in accordance with this Agreement, Executive will
not, directly or indirectly, as employee, agent, consultant, principal or
otherwise, (i) solicit any Business from, provide any services related to the
Business
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to, in any way transact or seek to transact any Business with or otherwise seek
to influence or alter the relationship between the Company or any of its
affiliates with any person or entity both (x) to whom Highland, the Company or
any of their respective affiliates provided services at any time during the one
year period preceding the date Executive ceases to be employed the Company or
its affiliates, or to whom Highland, the Company or any of their respective
affiliates made a presentation at any time during the six month period preceding
such date, and (y) with whom Executive or any employee or consultant reporting
to Executive has or had any involvement or interaction while an employee of
Highland, the Company or any of their respective affiliates, including, without
limitation, in the context of marketing, recruiting, client development or
provision of services, or (ii) employ or solicit for employment or other
services or otherwise seek to influence or alter the relationship between
Highland, the Company or any of their respective affiliates with any person who
is or was an employee of Highland, the Company or any of their respective
affiliates at any time during the one year period preceding the date Executive
ceases to be employed by the Company or its affiliates.
3.4 BLUE-PENCIL. If any court of competent jurisdiction shall
at any time deem the term of this Agreement or any particular Restrictive
Covenant too lengthy or the Territory too extensive, the other provisions of
this SECTION 3 shall nevertheless stand, the period of restriction shall be
deemed to be the longest period permissible by law under the circumstances and
the Territory shall be deemed to comprise the largest territory permissible by
law under the circumstances. The court in each case shall reduce the period of
restriction and/or Territory to permissible duration or size.
4. CONFIDENTIAL INFORMATION. During the term of this Agreement
and thereafter, Executive shall keep secret and retain in strictest confidence,
and shall not, without the prior written consent of the Board or any Senior
Executive, furnish, make available or disclose to any third party or use for the
benefit of Executive or any third party (other than in accordance with his
employment with the Company or its affiliates hereunder), any Confidential
Information. As used in this SECTION 4, "Confidential Information" shall mean
any trade secret, proprietary or confidential information relating to the
business or affairs of the Company or the Company's affiliates, including but
not limited to information relating to financial statements, customer
identities, potential customers, employees, suppliers, servicing methods,
equipment, programs, strategies and information, analyses, profit margins,
computer, software, hardware and related information; provided, however, that
Confidential Information shall not include any information which is in the
public domain or becomes known in the industry through no wrongful act on the
part of Executive. Executive acknowledges that the Confidential Information is
vital, sensitive, confidential and proprietary to the Company and/or its
affiliates.
5. EFFECT ON TERMINATION. If this Agreement or the Employment
Period expires or is terminated for any reason, then, notwithstanding such
termination, those provisions contained in SECTIONS 2.2(B), 3, 4, 5 AND 6 hereof
shall remain in full force and effect.
6. REMEDIES. Executive acknowledges and agrees that the covenants
set forth in SECTIONS 3 AND 4 of this Agreement (collectively, the "Restrictive
Covenants") are reasonable and
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necessary for the protection of the business interests of the Company and its
affiliates, that irreparable injury will result to the Company and its
affiliates if Executive breaches any of the terms of the Restrictive Covenants,
and that in the event of Executive's actual or threatened breach of any such
Restrictive Covenants, the Company and its affiliates will have no adequate
remedy at law. Executive accordingly agrees that in the event of any actual or
threatened breach by Executive of any of the Restrictive Covenants, the Company
and its affiliates shall be entitled to injunctive relief, specific performance
and other equitable relief, without the necessity of showing actual monetary
damages, subject to hearing as soon thereafter as possible. Nothing contained
herein shall be construed as prohibiting the Company and its affiliates from
pursuing any other remedies available to them for such breach or threatened
breach, including but not limited to the recovery of damages.
7. REPRESENTATIONS OF EXECUTIVE. Executive represents and
warrants that Executive is free to enter into this Agreement and to perform the
duties required under this Agreement, and that there are no employment or
consulting contracts, restrictive covenants or other restrictions preventing the
performance of Executive's duties hereunder.
8. MISCELLANEOUS.
8.1 ASSIGNMENT; REMEDIES. Neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned or delegated by
Executive in any manner whatsoever, whether directly or by operation of law or
otherwise. It is understood that the rights and remedies of the parties under
this Agreement, including but not limited to the rights and remedies the Company
may have upon any breach or threatened breach by Executive of the Restrictive
Covenants, shall in no way be limited by the provisions of the Purchase
Agreement, including without limitation the provisions of Article IX thereof.
8.2 ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement sets forth the entire understanding of the parties, and
supersedes and preempts all prior oral or written understandings and agreements
with respect to the subject matter hereof.
8.3 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
8.4 AMENDMENT; MODIFICATION. No amendment or modification of
this Agreement and no waiver by any party of the breach of any covenant
contained herein shall be binding unless executed in writing by the party
against whom enforcement of such amendment, modification or waiver is sought. No
waiver shall be deemed a continuing waiver or a waiver in respect of any
subsequent breach or default, either of a similar or different nature, unless
expressly so stated in writing.
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8.5 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Agreement shall be governed by,
the laws of the State of New York without giving effect to provisions thereof
regarding conflict of laws.
8.6 NOTICES, CONSENTS, ETC. Any notice, consent or other
communication required to be sent or given hereunder by any of the parties shall
in every case be in writing and shall be deemed properly served if (a) delivered
personally, (b) delivered by registered or certified mail, in all such cases
with first class postage prepaid, return receipt requested, (c) delivered by
courier, or (d) delivered by facsimile transmission, at the addresses and/or
facsimile numbers as set forth below or at such other addresses and/or facsimile
numbers as may be furnished in writing. All such notices and communications
shall be deemed received upon the actual delivery thereof in accordance with the
foregoing, except in the case of notice given by facsimile transmission, which
shall be deemed received upon the next business day following the date of
transmission thereof by the sender and issuance by the transmitting machine of a
confirmation slip confirming that the number of pages constituting the notice
have been transmitted without error to the addressee's telecopy number. In the
case of notices sent by facsimile transmission, the sender shall within one
business day also mail a copy of the notice to the addressee's address for
notices, together with a copy of the confirmation slip; however, such mailing
shall in no way affect the time at which the facsimile notice is deemed
received.
(a) If to Executive:
95 Grumman Hill Road
Wilton, CT 06897
Telecopy:
with a copy to:
Latham & Watkins
885 Third Avenue, Suite 100
New York, NY 10022
Attn: William Voge, Esq.
Denise Ben-Attar, Esq.
Telecopy: (212) 751-4864
(b) If to the Company:
TMP Worldwide Inc.
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1633 Broadway, 33rd Floor
New York, New York 10019
Attention: Mr. Andrew J. McKelvey
Telecopy: (212) 940-3987
with a copy to:
TMP Worldwide Inc.
1633 Broadway, 33rd Floor
New York, New York 10019
Attention: Myron F. Olesnyckyj, Esq.
Telecopy: (212) 940-3987
8.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
8.8 DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive
headings in this Agreement are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement. The use of the word "including" in this Agreement shall be by
way of example rather than by limitation. The Preliminary Recitals set forth
above are incorporated by reference into this Agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
COMPANY:
TMP WORLDWIDE INC.
By: /s/ Thomas G. Collison
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Name: Thomas G. Collison
Title: Vice Chairman
EXECUTIVE:
/s/ Steven B. Potter
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Steven B. Potter