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Exhibit 10.2
ADMINISTRATION AND LIQUIDATION AGREEMENT
THIS ADMINISTRATION AND LIQUIDATION AGREEMENT (this
"Agreement") is entered into as of August [ ], 2000 by and between Calypso
Management LLC, a Delaware limited liability company ("Calypso"), and Harbor
Global Company Ltd., a Bermuda limited duration company (the "Company").
WHEREAS, prior to the consummation of the transaction contemplated by
the Agreement and Plan of Merger (the "Merger Agreement") dated as of May 14,
2000 by and between UniCredito Italiano S.p.A. and The Pioneer Group, Inc.
("Parent"), Parent intends to distribute to its stockholders all of the
outstanding shares of the Company (the "Distribution"); and
WHEREAS, as of the date of the Distribution, Parent will have
transferred the assets (the "Assets") described in Section 5.1 of the
Distribution Agreement by and among Parent, the Company and Harbor Global II
Ltd. attached as Exhibit A to the Merger Agreement (the "Distribution
Agreement"), which Assets the Company intends operate until they are sold or
otherwise liquidated and the proceeds distributed to its stockholders; and
WHEREAS, the officers and employees of Calypso are specially skilled in
the management, operation and disposition of the Assets and have previously
performed those functions with respect to the Assets as employees of Parent; and
WHEREAS, following the Distribution the Company will require Calypso's
special skills in connection with the liquidation of the Assets and the
operation of the Assets prior to their liquidation; and
WHEREAS, Calypso is willing to make such skills available and to
provide such services to the Company on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, and for other good and valuable
consideration, the Company and Calypso, intending to be legally bound, do hereby
agree as follows:
Section 1. Engagement. The Company hereby engages Calypso for
the Term (as hereinafter defined) and upon the terms and conditions herein set
forth to manage the sale or liquidation of the Assets and the operation of the
Assets as going concern businesses pending their sale or liquidation in
accordance with the directions of the Board of Directors of the Company (the
"Board"), to conduct all
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other aspects of the day to day operations of the Company, to provide the
services of certain of its employees or members to serve as officers and
employees of the Company (as described herein) and to perform other duties
related to the operation of the Company as may be reasonably requested by the
Board (collectively, the "Services"). In consideration of the compensation to
Calypso specified herein, Calypso accepts such engagement and agrees to perform
the Services.
Section 2. Term. Except as otherwise provided in Section 8,
the engagement hereunder shall be for a term commencing as of the "Time of
Distribution" (as such term is defined in the Distribution Agreement) and
expiring upon the date the Company is liquidated (the "Term").
Section 3. Services of Messrs. Kasnet and Hunter. During the
Term, Calypso shall provide the services of Xxxxxxx X. Xxxxxx to serve as the
President and Chief Executive Officer of the Company and of Xxxxxx X. Xxxxxx to
serve as the Chief Operating Officer and Chief Financial Officer of the Company.
The services of Messrs. Kasnet and Hunter shall be provided to the Company on a
full-time basis, and Calypso shall not permit Xx. Xxxxxx or Xx. Xxxxxx to render
services to, or be otherwise engaged by, other persons or entities, without the
express written consent of the Board. In addition, prior to the second
anniversary of the Time of Distribution, Calypso shall not terminate the
employment of Xx. Xxxxxx or Xx. Xxxxxx without the express written consent of
the Board. As compensation for the provision of such services, the Company will
pay to Calypso an amount sufficient to pay Xxxxxxx X. Xxxxxx an annual base
salary of $325,000 plus provide an annual bonus opportunity of up to $325,000
and an amount sufficient to pay Xxxxxx X. Xxxxxx an annual base salary of
$250,000 plus provide an annual bonus opportunity of up to $250,000, payable by
the Company in accordance with Section 6, provided, however, that amounts will
be paid to Calypso with respect to the bonuses described in the preceding
sentence only to the extent such bonuses are actually earned. The annual bonus
payments de scribed in the preceding sentence will be based upon the achievement
of performance goals, which will be established by the Board in consultation
with Xx. Xxxxxx.
Section 4. Services to be Performed; Exclusivity. Calypso
shall perform the Services through its members, employees or agents. Calypso
acknowledges that its provision of the Services to the Company shall be
exclusive and that Calypso will not render services to, or be otherwise engaged
by, other persons or entities without the express prior written consent of the
Board. Notwithstanding the foregoing, it shall not be a violation of Section 3,
this Section 4 or Section 5(b) for Xx. Xxxxxx to engage in the activities
described on Exhibit A hereto in a manner consistent with the performance of his
duties hereunder.
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Section 5. Confidentiality; Non-Competition.
(a) Calypso will hold in confidence, and will cause its
members, employees, consultants and agents (including, without limitation,
Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx) to hold in confidence, all proprietary
and confidential information of the Company which comes into their possession
or knowledge as a result of their performance of the Services (the "Confidential
Information"). Calypso will use, and will cause its members, employees
consultants and agents to use, such Confidential Information only in connection
with performance of the Services.
(b) Subject to Sections 3 and 4, and until the earlier of (i)
two years following the termination of this Agreement or (ii) the sale of Assets
representing substantially all of the value of the Assets (as determined by the
Board in good faith), Calypso shall not, directly or indirectly, and will not
permit Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx to, directly or indirectly, in any
capacity, (x) provide services with respect to assets substantially similar to
Assets held by the Company at the time in question or (y) provide services with
respect to any Asset sold by the Company for two years following such
disposition, in each case without the express prior written consent of the
Board, which consent with respect to Xx. Xxxxxx and Xx. Xxxxxx shall not be
unreasonably withheld, delayed or conditioned.
Section 6. Expenses; Reporting. As soon as practicable
following the Time of Distribution, and annually thereafter during the Term,
Calypso shall present the Board with an annual business plan, budget request and
estimate of the aggregate amount of proceeds expected to be received by the
Company in connection with disposition of Assets in such year (the "Annual
Plan"), which Annual Plan shall be provided in such form, and with such
contents, as may be reasonably requested by the Board. Without limiting the
generality of the foregoing, the Annual Plan shall set forth with specificity
the amount of funds expected to be required in order to fund the operating
expenses (including the compensation payable with respect to Messrs. Kasnet and
Hunter pursuant to Section 3 and salaries and other remuneration of employees of
Manager, the "Operating Expenses") of the Company during the applicable calendar
year. Each Annual Plan following the initial Annual Plan shall account with
specificity for the expenditure of any such Operating Expenses provided to
Calypso by the Company with respect to the immediately preceding year. The Board
may modify the applicable Annual Plan, and Calypso shall take all reasonable
steps to timely comply with such modification. Calypso shall provide the Company
with quarterly updates to the Annual Plan during the course of the Term. The
Company shall reimburse Calypso, as incurred and in accordance with the Annual
Plan, for expenses incurred in the performance of the Services (including the
compensation payable with respect to Messrs. Kasnet and Hunter pursuant to
Section
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3 and salaries and other remuneration of employees of Manager serving with the
Company and, to the extent earned, including the Signing and Retention Bonus (as
defined in the employment agreement dated as of the date hereof by and between
Calypso and Xx. Xxxxxx (the "Employment Agreement")). Calypso shall submit for
the approval of the Board each transaction with a value of $2.5 million or more
and otherwise as the Board shall direct.
Calypso shall not permit any person or entity who does not provide or ceases to
provide services to Harbor Global on a full-time basis, whether pursuant to
this Agreement or otherwise, to (1) acquire or beneficially own any equity
interest, or any interest convertible or exchangeable into any equity interest,
in Calypso, or (2) receive or otherwise be entitled to receive any portion of
any Allocation (as defined below), except as provided by Xx. Xxxxxx'x
Employment Agreement and the employment agreement dated the date hereof by and
between Calypso and Xx. Xxxxxx.
Section 7. Allocation of Proceeds. Subject to Section 8,
Calypso shall receive a portion (each such portion an "Allocation") of the
amount of proceeds realized from the disposition of the Assets that are
ultimately distributed to the Company's stockholders (the "Distributable
Amounts"), as set forth in this Section 7. For purposes of this Agreement,
"Distributable Amounts" shall mean the net amount of any proceeds received from
the sale, exchange or other disposition of the Assets, after deducting any
applicable taxes, fees or other expenses incurred in connection with the
disposition of such Asset, as determined in good faith by the Board, and
excluding the distribution to stockholders of the unexpended portion of the $25
million contributed by Parent to the Company pursuant to the Distribution Agree-
ment (which amount shall be separately accounted for by the Company). For
purposes of the calculations set forth in this Section 7, no deduction shall be
made from the Distributable Amounts to reflect any Allocation to Calypso.
Calypso shall be deemed to be a stockholder of the Company for purposes of
Allocations, and each Allocation to Calypso shall reduce, dollar for dollar, the
amount of the Distributable Amounts to be distributed to the stockholders of the
Company. Calypso shall be entitled to Allocations according to the following
schedule:
(i) with respect to distributions to stockholders of the first
$36 mil lion in Distributable Amounts (or any lesser amount,
if the aggregate amount of available Distributable Amounts
does not exceed $36 million), Calypso shall receive an
Allocation equal to 10% of such Distributable Amounts;
(ii) with respect to distributions to stockholders of the next
$72 million in Distributable Amounts (if any), Calypso shall
receive an Allocation equal to 7.5% of such Distributable
Amounts; and
(iii) with respect to distributions to stockholders of any
additional Distributable Amounts, Calypso shall receive an
Allocation equal to 10% of such Distributable Amounts.
Notwithstanding the foregoing schedule of Allocations, to the extent that any
proceeds received by the Company are attributable to the Purchase Agreement
described in Section 6.8 of the Distribution Agreement (the "Xxxxxxx
Receivable"), (A) for purposes of clause (B) hereof, the Distributable Amounts
attributable to the
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Xxxxxxx Receivable shall be reduced by any applicable taxes, fees or other
expenses incurred in connection with the Xxxxxxx Receivable, including any
indemnification payments under the Purchase Agreement and the payment to Parent
required by Section 6.8 of the Distribution Agreement, (B) Calypso's Allocation
shall equal 5% of such Distributable Amounts, and (C) the distribution of such
Distributable Amounts shall be ignored for purposes of the application of
clauses (i) through (iii) of this Section 7.
The Company shall pay to Calypso each Allocation at the time at which the Com-
pany makes a distribution to its shareholders with respect to any Distributable
Amounts; however, any Allocation which otherwise would have been paid during the
two year period commencing at the Time of Distribution (each such Allocation,
hereinafter, a "Deferred Allocation") shall be paid on the second anniversary of
the Time of Distribution.
Section 8. Termination.
(a) Termination Events. Notwithstanding the provisions of
Section 2, this Agreement may be terminated as described in this Section 8(a):
(i) the Agreement may be terminated by the Company following
any termination of the employment of Xxxxxxx X. Xxxxxx with
Calypso or upon the disability of Xx. Xxxxxx (as defined in
the Employment Agreement);
(ii) the Agreement may be terminated by the Company following
any failure by Calypso to follow a reasonable direction of the
Board or a material breach of the Employment Agreement by Xx.
Xxxxxx, which is not cured by Calypso or Xx. Xxxxxx, as the
case may be, within 75 days following receipt by Calypso of
written notice from a director of the Company which describes
with specificity any such failure (such period, the "Cure
Period");
(iii) the Agreement may be terminated by the Company following
any act by Calypso in connection with the performance of the
Services constituting bad faith, fraud or willful misconduct;
(iv) following the second anniversary of the Time of
Distribution, the Agreement may be terminated by Calypso upon
not less than 120 days notice to the Company; or
(v) the Agreement may be terminated by the Company following
the second anniversary of the Time of Distribution upon not
less than 120
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days notice to Calypso, provided, however, that if, on or
prior to such second anniversary, Xx. Xxxxxx commits (in a
manner reasonably satisfactory to the Board) to continue his
employment with the Company pursuant to this Agreement and
the Employment Agreement for either (A) an additional one year
period or (B) such period in excess of one year which Xx.
Xxxxxx and the Board agree is necessary to sell substantially
all of the Company's assets (such period, the "Additional
Period"), then during the Additional Period, the Company may
not terminate this Agreement pursuant to this Section 8(a)(v).
(b) Termination Upon Full Disposition of Assets. This
Agreement shall terminate immediately upon a resolution by the Board confirming
the sale or other disposition by the Company of all of the Assets.
(c) Effect of Termination. The Company will cease to pay the
Operating Expenses to Calypso as of the Termination Date (as defined below),
provided, however, that in the event of a termination pursuant to Section
8(a)(ii) hereof, the Company will cease to pay the Operating Expenses as of the
expiration of the Cure Period (if no cure has occurred). Within sixty days
following the Termination Date, Calypso shall provide the Company with a final
accounting and report, in such form the Board may reasonably request.
(i) In the event of a termination pursuant to Section 8(a),
Calypso shall forfeit its right to any Allocation which occurs
following the Termination Date (including any Allocation which
would have been a Deferred Allocation); provided, however,
that if the termination occurs on account of the death or
disability of Xxxxxxx X. Xxxxxx, Calypso shall not forfeit its
right to any Deferred Allocation with respect to which there
has been a distribution to the Company's stockholders prior to
the Termination Date, which Deferred Allocation (if any)
shall be paid to Calypso within 30 days of the Termination
Date (as defined below).
(ii) Upon any termination of this Agreement pursuant to
Section 8(b), any Deferred Allocations shall be promptly paid
to Calypso, and Calypso shall receive any other unpaid
Allocation with respect to the disposition of any Asset at the
time proceeds from the sale of such Asset are distributed to
the Company's stockholders.
(d) Termination Date. The effective date of any termination
of this Agreement (the "Termination Date") shall be:
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(i) in the event of a termination pursuant to Sections 8(a)(i)
through (iii), the date set forth in the notice of termination
with respect to any termination of this Agreement by the
Company following the occurrence of an event described in
Sections 8(a)(i) through (iii), which date, in the case of a
termination pursuant to Section 8(a)(ii) shall be 75 days
following the expiration of the Cure Period;
(ii) in the event of a termination pursuant to Section
8(a)(iv) or 8(a)(v) hereof, the date which is 120 days
following delivery of a notice of termination, provided,
however, in the event of such a termination by Calypso
pursuant to Section 8(a)(iv) hereof, the Company may, in its
sole discretion, choose to waive some or all of such notice
period (which waiver shall cause the Agreement to terminate on
such earlier date specified by the Company, and such earlier
date shall be the Termination Date); or
(iii) with respect to any termination of this Agreement
pursuant to Section 8(b) hereof, the date of the resolution by
the Board confirming the sale or other disposition by the
Company of all of the Assets.
Section 9. Notice. All notices hereunder, to be effective,
shall be in writing and shall be mailed by first class certified mail, postage
prepaid or sent via facsimile (with confirmation of receipt), as follows:
(i) If to Calypso, addressed to it at:
Calypso Management LLC
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx
with a copy to:
Hill & Xxxxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
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(ii) If to the Company:
Harbor Global Company Ltd.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
Notices sent in accordance with this Section 9 shall be deemed delivered (i)
four business days after deposit in the mail or (ii) on the date of confirmation
of the telecopy facsimile.
Section 10. Modifications. This Agreement together with the
Employment Agreement and the escrow agreement dated as of the date hereof by and
among Calypso, the Company, Xx. Xxxxxx and State Street Bank and Trust Company
executed by the parties as of the date hereof constitute the entire agreement
between the parties hereto with regard to the subject matter hereof, superseding
all prior understandings and agreements whether written or oral. This Agreement
may not be amended or revised except by a writing signed by both Calypso and by
the Company, which writing shall be duly authorized by the Company's Board.
Section 11. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns but may not be assigned by any party without the prior
written consent of the other party.
Section 12. Dispute Resolution. Any dispute, controversy or
claim arising out of or relating to this Agreement, or the breach, termination
or validity hereof, shall be finally settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then in
effect, as modified herein (the "Rules"). The place of arbitration shall be
Boston, Massachusetts. There shall be one arbitrator, who shall be appointed by
agreement of the parties within thirty days of receipt by the respondent(s) of
the Demand for Arbitration. If such arbitrator is not appointed within the time
limit provided herein, such arbitrator shall
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be appointed by the American Arbitration Association (the "AAA") in accordance
with the striking and ranking procedure contained in the Rules. Any arbitrator
appointed by the AAA shall be a retired judge or a practicing attorney with no
less than fifteen years of experience and an experienced arbitrator. The
arbitrator shall be required to follow the law of The Commonwealth of
Massachusetts. The arbitrator is not empowered to award damages in excess of
compensatory damages, and each party hereby irrevocably waives any right to
recover punitive, exemplary or similar damages with respect to any dispute. Any
arbitration proceedings, decision or award rendered hereunder and the validity,
effect and interpretation of this arbitration agreement shall be governed by the
Federal Arbitration Act, 9 U.S.C. Section 1 et seq. Any award rendered hereunder
shall be final and binding on the parties and judgment upon such award may be
entered in any court of competent jurisdiction. Notwithstanding anything to the
contrary contained herein, the provisions of this Section 12 shall not govern
any action for equitable relief hereunder.
Section 13. Captions. Captions have been inserted solely for
convenience of reference and in no way define, limit or describe the scope or
substance of any provision and shall not affect the validity of any other
provision.
Section 14. Governing Law. This Agreement shall be construed
under and governed by the laws of The Commonwealth of Massachusetts, without
giving effect to the provisions thereof relating to conflict of laws.
Section 15. Effectiveness. In the event that the transactions
contemplated by the Distribution Agreement are not consummated, this Agreement
shall be void and of no further force and effect.
Section 16. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as a sealed instrument as of the date first above written.
HARBOR GLOBAL COMPANY LTD.
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By:
Title:
CALYPSO MANAGEMENT LLC
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By: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
Signature Page to Administration
and Liquidation Agreement
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EXHIBIT A
Non-Executive Chairman of the Board of Directors, Xxxxxx Bancorp and Xxxxxx
Five Cents Savings Bank
Director, Xxxxxxx Real Estate, Inc. (or its successor)
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