Employment Agreement [Amendment No. 1] - Heidrick & Struggles Inc., Heidrick & Struggles International Inc. and Patrick S. Pittard
FIRST AMENDMENT TO
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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FIRST AMENDMENT to Amended and Restated Employment Agreement entered into as of
March 30, 2001 (the "First Amendment"), by and among Heidrick & Struggles, Inc.,
a Delaware corporation (the "Company"), Heidrick & Struggles International,
Inc., a Delaware corporation (the "Parent"), and Mr. Patrick S. Pittard (the
"Executive").
W I T N E S S E T H :
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WHEREAS, the Company, the Parent, and the Executive entered into an Amended and
Restated Employment Agreement as of January 1, 2000 (the "Agreement"); and
WHEREAS, the Company, the Parent, and the Executive desire to amend the
Agreement as provided in the First Amendment;
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 Company, the Parent and the Executive (individually a
"Party" and together the "Parties") hereby amend the Agreement as follows:
1. Subsection (h) of Section 1 is amended by deleting the word "or" at
the end of paragraph (vi), adding the word "or" at the end of
paragraph (vii), and adding the following new paragraph (viii)
following paragraph (vii):
"(viii) The failure of the Parent to recommend the Executive for
nomination for re-election to the Board of Directors of the Parent
when the Executive's current term as a Director expires in the year
2002, provided that the Executive is employed as the Chief Executive
Officer of the Parent and the Company at the time of such
recommendation."
2. Section 3. (a) of the Agreement is deleted in its entirety, and the
following new Section 3. (a) is substituted therefore:
"3. (a) The Chairman of the Board - CEO Period. The Executive shall
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continue through December 27, 2002 to be employed as the Chief
Executive Officer of the Parent and the Company, and shall have the
additional titles and positions of (a) President through December 27,
2002, (the "CEO Period"), and (b) Chairman of the Board through the
CEO Period or the end of the Executive's tenure as a member of the
Parent's Board of Directors, whichever first occurs. The Company
agrees to recommend the Executive for nomination for re-election to
the Board of Directors of the Parent when the Executive's current term
as a
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Director expires in the year 2002, provided that the Executive is
employed as the Chief Executive Officer of the Parent and the Company
at the time of such recommendation. The Executive agrees to resign his
position of Director of the Parent at the end of the CEO Period if
requested by the Board of Directors.
During the CEO Period the Executive shall 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 during the CEO Period, shall report to the Board. At the end
of the CEO Period and continuing through the Term of Employment, the
Executive shall no longer have the above titles and responsibilities,
and shall then have a title, which is consistent with a past
Chairman/CEO of a public company, and shall report to the CEO and/or
the Board, as the Board then determines."
3. The first sentence of Section 3. (b) is deleted in its entirety, and
the following new first sentence is substituted therefore:
"(b) The Leave of Absence Period: Following the CEO Period, at his
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option and with the consent of the Board, the Executive may have a
paid leave of absence of up to 12 months but not extending beyond the
Term of Employment (the "Leave of Absence Period")."
4. Section 3. (c) is deleted in its entirety, and the following new
Section 3. (c) is substituted therefore:
"(c) Post CEO Employment: Following the CEO Period, the Executive
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will continue with the Company as a search professional (and/or have
such other appropriate duties as may be defined by the then CEO and/or
the Board). For the period following the CEO Period during which the
Executive is working for the Company (the "Return to Employment
Period"), the Executive's 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. Notwithstanding the above in this Section 3. (c),
the Return to Employment Compensation shall be suspended during the
Leave of Absence Period, if any, and will continue thereafter for the
remainder of the Return to Employment Period, but not beyond the Term
of Employment."
5. Section 4 of the Agreement is deleted in its entirety, and the
following new Section 4 is substituted therefore:
"4. Base Salary. The Executive shall be paid an annualized Base
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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 2002 in the discretion of the
Board."
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6. The first sentence of Section 5 of the Agreement is deleted in its
entirety, and the following new first sentence is substituted
therefore:
"5. Annual Bonus. For the years 2000, 2001, and 2002, the Executive
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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."
7. The title of Section 6 of the Agreement is deleted in its entirety,
and the following new title is substituted therefore, and the
following new sentence shall be added to the end of Section 6 of the
Agreement:
" 6. Stock Option and Restricted Stock Unit Grants. ....During the
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month of March 2001, the Parent shall grant to the Executive 35,000
Restricted Stock Units of the Parent to be issued at the Fair Market
Value of the Parent Common Stock on the date of the grant; and with
such Restricted Stock Units grant to vest in full on January 1, 2005,
if the Executive is then in the employ of the Company; provided
however, vesting shall accelerate to the later of (a) the first day
following the end of the CEO Period, or (b) January 2, 2003, provided
that the Executive is then in the employ of the Company."
8. Subsection (c) of Section 10 is amended by adding the following new
sentence at the end of Subsection (c):
"At any time during the Term of Employment, and provided that the
Executive's employment has not been terminated by the Company for
Cause, or has not been terminated by the Executive except for
Constructive Termination without Cause, any club memberships then
owned by the Company or the Parent which have been held for the
benefit of the Executive during the Term of Employment shall, at the
Executive's option exercised by written notice to the Company from the
Executive given prior to the end of the Term of Employment, shall be
transferred to the Executive as soon as practicable following the
Company's receipt of such notice. The Executive shall be responsible
for the income taxes, fees and other charges/expenses, if any,
incurred by the Company or the Executive as a result of any such
transfers."
9. The words "this Section 9" in Subsection (f) of Section 10 are deleted
in their entirety, and the following words are substituted therefore:
"this Section 10"
10. Section 11. (c)(ii)(B) is deleted in its entirety, and the following
new Section 11. (c)(ii)(B) is substituted therefore:
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"(B) all outstanding options and other equity instruments shall be
forfeited; and"
11. Section 11. (e)(ii)(C) is deleted in its entirety, and the following
new Section 11. (e)(ii)(C) is substituted therefore:
"(C) all outstanding options which are not then exercisable and other
equity instruments not then vested shall be forfeited; all exercisable
options shall continue to become exercisable in accordance with their
original schedules."
12. Section 11. (e)(iii)(C) is deleted in its entirety, and the following
new Section 11. (e)(iii)(C) is substituted therefore:
"(C) all outstanding options which are not then exercisable and other
equity instruments not then vested shall be forfeited; all exercisable
options shall continue to become exercisable in accordance with their
original schedules."
13. The defined term "Return to Employment Period" will be replaced with
the defined term "Post CEO Employment Period" wherever it occurs in
the Agreement.
14. Exhibit A is amended as follows:
A. The first sentence beginning with the words "Mercer was" on page
1 of Exhibit A is deleted in its entirety.
B. The following new sentence is added at the end of the sentence
beginning with the words "-A matrix of revenue" on page 1 of
Exhibit A:
"Any bonus amount resulting from computations made pursuant to
this matrix represents the maximum bonus payable for this
component, and shall be subject to reduction in the discretion of
the Compensation Committee"
C. The first sentence on page 3 of Exhibit A is deleted in its
entirety and the following new first sentence is substituted
therefore:
"H&S TSR performance in each year will be compared to a market
and industry benchmark"
15. The Company shall pay all reasonable legal fees and expenses incurred
by the Executive in connection with the documentation of this First
Amendment up to a maximum of $17,500.
16. Except as amended by this First Amendment, the Agreement shall remain
in full force and effect without change.
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IN WITNESS WHEREOF, the undersigned have executed this First Amendment as of the
date first written above.
Heidrick & Struggles, Inc.
By:/s/ Donald M. Kilinski
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Heidrick & Struggles International, Inc.
By:/s/ Donald M. Kilinski
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/s/ Patrick S. Pittard
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Patrick S. Pittard