Employment Agreement - TMP Worldwide Inc. and John Mclaughlin
TMP WORLDWIDE INC.
622 THIRD AVENUE
NEW YORK, NY 10017
September 24, 2002
Mr. John Mclaughlin
Dear John:
This will confirm our understanding and agreement with respect to your
taking the position of Global Director, Search and Selection, of TMP Worldwide
Inc. (the "Company"). You and the Company hereby agree as follows:
1. The Company agrees to employ you and you agree to be employed by the
Company as Global Director, Search and Selection, with such duties and
responsibilities with respect to the Company and its affiliates as the Company's
Chief Executive Officer ("CEO") or such other person from time to time
designated by the CEO to deal with matters related to this agreement (the
"Designee") shall reasonably direct. You agree to devote your best efforts,
energies, abilities and full business time, skill and attention to your duties.
You agree to perform the duties and responsibilities assigned to you to the best
of your ability, in a diligent, trustworthy, businesslike and efficient manner
for the purpose of advancing the business of the Company and to adhere to any
and all of the employment policies of the Company. You acknowledge that your
duties will require you to be based in the Company's corporate headquarters in
New York. Your role in this new position will commence on a date within the next
two months selected by the Company.
2. In consideration for your services and other agreements hereunder,
during your employment the Company shall (a) pay you a base salary of $500,000
per year (prorated for periods of less than one year) in regular installments in
accordance with the Company's payroll practice for salaried employees, (b)
provide you with medical, dental and disability coverage, if any, and 401(k)
Plan, life insurance and other benefit plan eligibility, if any, comparable to
that regularly provided to other senior management in accordance with the
Company's policies, (c) provide you with 4 weeks vacation per year in accordance
with the Company's policies (prorated for periods of less than one year), (d)
provide you with annual bonuses of up to 100% of your base salary from time to
time on the basis of satisfaction of such EPS and/or other targets as are
determined by the CEO or the Designee with respect to each calendar year, (e)
provide you with reimbursement of business expenses in accordance with the
Company's policies subject to the presentation of appropriate receipts and
invoices therefore, and (f) provide you with reimbursement of all reasonable
moving and relocation expenses incurred in connection with (x) the relocation of
you and your family from New Zealand to New York and (y) the relocation of you
and your family back to New Zealand from New York, provided in the case of (y)
you
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Mr. John Mclaughlin
September 24, 2002
Page 2
relocate back to New Zealand within 6 months of the termination of this
agreement. Your base salary will be reviewed on an annual basis, it being
understood that any increases in compensation shall be subject to the sole
discretion of the Company's CEO or the Designee.
3. You may terminate this agreement at any time upon 60 days' prior
written notice. The Company may terminate this agreement at any time upon
written notice. This agreement shall also terminate automatically in the event
you should die or, in the reasonable determination of the Company, become unable
to perform by reason of physical or mental incompetency your obligations
hereunder for a period of 120 days in any 365 day period. It is understood and
agreed that in the event that this agreement is terminated by the Company in
accordance with the second sentence of this Section 3 other than for Cause (as
defined below), then subject to (i) your execution and delivery of the Company's
then current form of separation agreement and general release applicable to
similarly situated employees and (ii) the expiration of any rescission period
provided thereby (without the rescission having been exercised), you shall, as
your sole and exclusive remedy, be entitled to (i) receive as severance your
then applicable base salary hereunder for a period of twelve months (the
"Specified Period"), payable in regular installments in accordance with the
Company's applicable payroll practice for salaried employees and (ii) during the
Specified Period, have the Company make available to you (and/or pay COBRA
premiums on) medical and dental benefits on the same terms and conditions as
would have been made available to you had you remained employed by the Company
during such period. Except as expressly provided in the preceding sentence, or
elsewhere in this agreement or under the terms of any written option or stock
bonus agreement between the parties, in the event of the termination of this
agreement or your employment for any reason, the Company shall have no further
obligations to you hereunder or with respect to your employment from the
effective date of termination. "Cause" shall mean the occurrence of any one or
more of the following events: (i) your willful failure or gross negligence in
performance of your duties or compliance with the reasonable directions of the
CEO or the Designee that remains unremedied for a period of twenty (20) days
after the CEO or the Designee has given written notice specifying in reasonable
detail your failure to perform such duties or comply with such directions; (ii)
your failure to comply with a material employment policy of the Company that
remains unremedied for a period of twenty (20) days after the CEO or the
Designee has given written notice to you specifying in reasonable detail your
failure to comply; or (iii) your commission of (a) a felony, (b) criminal
dishonesty or (c) fraud.
4. You acknowledge that you have not relied on any representation not
set forth in this agreement. You represent that you are free to enter into this
employment arrangement and that you are not bound by any restrictive covenants
or similar provisions restricting the performance of your duties hereunder.
5. In the event of the termination of your employment by the Company
for reasons other than Cause, any options that have been or may be granted to
you by the Company from time to time pursuant to written option agreements shall
automatically and immediately become
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Mr. John Mclaughlin
September 24, 2002
Page 3
(i) fully vested and (ii) exercisable for the balance of the ten year term
provided by the applicable stock option agreement, subject to the other terms of
such option agreement, and (iii) in the event of any Change in Control (as
defined in Option Agreement dated September 11, 2002):
(a) any options which have been or may be granted to you by
the Company from time to time pursuant to written option agreements,
shall automatically and immediately become (i) fully vested and (ii)
exercisable for the balance of the ten year term provided by the
applicable stock option agreement, subject to the other terms of such
option agreement; and
(b) the shares of Company Common Stock covered by the Stock
Bonus Agreement dated September 11, 2002 shall automatically and
immediately become fully vested,
subject in each case of (a) and (b) to the provisions of Section 6 below.
6. Notwithstanding anything in Section 5 to the contrary, you shall in
no event be entitled to any payment or acceleration of options or shares of
Company common stock that would cause any portion of the amount received by you
to constitute an "excess parachute payment" as defined under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"). In furtherance of the
provisions of this Section 6, the following provisions shall apply:
(1) Anything in this agreement to the contrary
notwithstanding, in the event that any payment or acceleration of options or
shares of Company common stock by the Company to or for your benefit
(collectively, a "Payment") would be nondeductible by the Company for federal
income tax purposes because of Section 280G of the Code, then the aggregate
present value of amounts payable or distributable to or for your benefit
pursuant to this agreement or any option or stock bonus agreement shall be
reduced to the Reduced Amount (as defined below). Any such reduction shall be
accomplished first by reducing the number of options to acquire Company common
stock and shares of Company common stock covered by stock bonus agreements which
otherwise would have immediately vested in full, as determined in the reasonable
discretion of the Board of Directors of the Company (the "Board"), provided that
any options and shares of Company common stock so reduced shall continue to vest
in accordance with the terms of the applicable agreements irrespective of your
continued employment or, if earlier, the date or dates on which such options or
shares can vest without being deemed nondeductible, as determined in the
reasonable discretion of the Board, and second, if necessary, by reducing cash
payments constituting part of the payments or other consideration to which you
become entitled (collectively, such cash payments, other consideration and the
aggregate present value of the immediate vesting of options and shares of
Company common stock (calculated in accordance with Section 280G of the Code and
any regulations promulgated thereunder) are referred to as the "Severance
Amount").
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Mr. John Mclaughlin
September 24, 2002
Page 4
(2) The "Reduced Amount" shall be the amount,
expressed in present value, which maximizes the aggregate present value of the
Severance Amount without causing any Payment to be nondeductible by the Company
because of Section 280G of the Code. For purposes of this clause (2), present
value shall be determined in accordance with Section 280(d)(4) of the Code.
(3) All determinations required to be made under this
Section 6 shall be made by the Company's independent public accountants (the
"Accounting Firm") which shall provide detailed supporting calculations to the
Company and you. Any such determination by the Accounting Firm shall be binding
upon the Company and you.
(4) It is possible that as a result of the
uncertainty in the application of Section 280G of the Code at the time of the
initial determination by the Accounting Firm, a portion of the Severance Amount
will have been made by the Company which should not have been made
("Overpayment") or that an amount in addition to the Severance Payment which
will not have been made could have been made ("Underpayment"), in each case,
consistent with the calculations required to be made hereunder.
(x) Overpayment. In the event that the
Accounting Firm, based upon the assertion of a
deficiency by the Internal Revenue Service against
you which the Accounting Firm believes has a high
probability of success, determines that an
Overpayment has been made, any such Overpayment paid
or distributed by the Company to or for your benefit
shall be treated for all purposes as a loan ab initio
(from the beginning) to you which you shall repay to
the Company together with interest at the applicable
federal rate provided for in Section 1274(d) of the
Code.
(y) Underpayment. If precedent or other
substantial authority indicates that an Underpayment
has occurred, any such Underpayment shall be promptly
paid by the Company to or for your benefit together
with interest at the applicable federal rate provided
for in Section 1274(d) of the Code.
7. All notices, demands or other communications to be given or
delivered under or by reason of this agreement shall be in writing and shall be
deemed to have been properly served if delivered personally, by courier, or by
certified or registered mail, return receipt requested and first class postage
prepaid, in case of notice to the Company, to the attention of the CEO at the
address set forth on the first page of this agreement (with a copy to Myron
Olesnyckyj, TMP Worldwide Inc., 622 Third Avenue, 39th Floor, New York, NY
10017) and in the case of notices to you to your office or residence address, or
such other addresses as the recipient party has
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Mr. John Mclaughlin
September 24, 2002
Page 5
specified by prior written notice to the sending party. All such notices and
communications shall be deemed received upon the actual delivery thereof in
accordance with the foregoing.
8. You may not assign or delegate this agreement or any of your rights
or obligations hereunder without the prior written consent of the Company. All
references in this agreement to practices or policies of the Company are
references to such practices or policies as may be in effect from time to time.
9. This agreement (i) constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes any previous
arrangements relating thereto, as well as any previous arrangements relating to
employment between you and any of the Company's affiliates, including but not
limited to the Employment Agreement between you and the Company dated February
7, 2002, (ii) may be signed in counterparts, (iii) shall be governed by the laws
of the state of New York (other than the conflicts of laws provisions thereof)
and (iv) may not be amended, terminated, extended or waived orally. Please
understand that while it is our hope that our relationship will be a long one,
your employment will be on at "at will" basis. Nothing in this letter should be
construed as creating any other type of employment relationship.
Please sign the additional originally executed copy of this letter in
the space provided for your signature below to indicate your acceptance and
agreement with the terms of this letter agreement and return one fully executed
original to me.
Very truly yours,
TMP WORLDWIDE INC.
By: /s/ Andrew J. McKelvey
---------------------------------
Name: Andrew J. McKelvey
Title: CEO
Accepted and agreed:
/s/ John Mclaughlin
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John Mclaughlin