EXHIBIT 10.3
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement"), dated as of this ____ day
of September, 2001, between XXXXX X. XXXXXXXXXXX, XX., an individual resident of
the State of Georgia ("Xxxxxxxxxxx"), and AHL SERVICES, INC., a Georgia
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Xxxxxxxxxxx and the Company are parties to that certain letter
agreement, dated December 28, 2000 (the "Securicor Bonus Letter"), relating to
certain bonuses arising out of the consummation of the transactions contemplated
by the Acquisition Agreement (as defined in the Securicor Bonus Letter);
WHEREAS, Xxxxxxxxxxx has been employed by the Company pursuant to that
certain Employment Agreement (the "Employment Agreement"), dated January 1,
2001, between Xxxxxxxxxxx and the Company;
WHEREAS, Xxxxxxxxxxx has pledged approximately 3,500,000 shares of
common stock par value $.01 per share, of the Company (the "Company Common
Stock") as collateral for personal margin loans currently outstanding to certain
lenders (the "Lenders"), including SunTrust Bank, Bank of America and Bank of
North Georgia;
WHEREAS, Xxxxxxxxxxx and the Company are parties to certain other
understandings relating to, among other things, loan guarantees and stock
repurchases; and
WHEREAS, Xxxxxxxxxxx and the Company desire to terminate the employment
of Xxxxxxxxxxx by the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
Section 1 Securicor Bonus Letter.
(a) Previous Payments. Xxxxxxxxxxx and the Company acknowledge
that the Company has previously paid to Xxxxxxxxxxx amounts totaling Two Million
Dollars ($2,000,000) pursuant to the Securicor Bonus Letter.
(b) Satisfaction and Termination. Xxxxxxxxxxx and the Company
agree to the satisfaction and termination of the Securicor Bonus Letter and any
further payments with respect thereto, in exchange for the payment to
Xxxxxxxxxxx by the Company of the additional sum of Two Million Dollars
($2,000,000). The Company agrees to make such payment to Xxxxxxxxxxx at the time
of the execution and delivery of this Agreement. Xxxxxxxxxxx agrees that,
upon payment by the Company in accordance with this Section 1(b), the Securicor
Bonus Letter shall be fully satisfied and terminated.
(c) Earn-Out. Xxxxxxxxxxx agrees to use his reasonable efforts to
assist the Company in its efforts to maximize the "Final Purchase Price" payable
to the Company pursuant to Schedule 2.01 of the Acquisition Agreement.
Section 2 Loan Guaranty; Lockups.
(a) Loan Guaranty. Upon the consummation of the sale of the
European staffing business of the Company or at such earlier time as the Company
is allowed to do so under its credit facilities, the Company agrees to guarantee
(the "Guaranty") up to Ten Million Dollars ($10,000,000) (the "Guaranty Amount")
of Xxxxxxxxxxx'x personal debt (whether or not such loans are from the Lenders)
for a period of three (3) years from the date of the Guaranty. Xxxxxxxxxxx
agrees to secure any obligations of the Company under the Guaranty by pledging
to the Company pursuant to a pledge agreement (the "Pledge Agreement") a
sufficient number of shares of Company Common Stock which will be maintained on
an ongoing basis at an aggregate value at least equal to the remaining
obligations of the Company, from time to time, under the Guaranty, which pledge
may be of a second lien in shares held as collateral by the Lenders to the
extent that, but only to the extent that, the Company will be entitled to
receive a first priority lien to such collateral upon the Company's payment with
respect to the Guaranty. The Guaranty first will apply to all debt secured by
shares of Company Common Stock before applying to debt not so secured. If any
Company Common Stock securing any loan to Xxxxxxxxxxx is sold by a lender on or
before March 31, 2002, the Guaranty Amount will be reduced by the sales proceeds
received by such lender on a dollar-for-dollar basis. The final form of the
Guaranty and the Pledge Agreement shall be approved by Xxxxxxxxxxx and the
Company.
(b) Lockups. Xxxxxxxxxxx hereby agrees not to sell, transfer,
pledge, hedge, hypothecate or otherwise dispose of (collectively, "Transfer")
any Company Common Stock for a period of three (3) years from the date of the
execution of this Agreement, except as set forth in Section 2(c) below.
(c) Lockup Exceptions. The following Transfers shall not be
prohibited by Section 2(b) above:
(i) Transfers provided for in this Agreement or approved
in advance by a majority of the board of directors of
the Company; provided that Xxxxxxxxxxx shall abstain
from any such vote;
(ii) If the Company does not procure third parties willing
to purchase Company Common Stock from Xxxxxxxxxxx on
the terms described in subparagraph 3(a) below within
thirty (30) days from the date hereof, Xxxxxxxxxxx
shall have the right to Transfer Company Common Stock
in exchange for consideration of up to Five Million
Dollars ($5,000,000), as reduced by the amount of any
funds
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received by Xxxxxxxxxxx pursuant to transactions
described in Section 3(a) below;
(iii) If the Company does not procure third parties willing
to purchase Company Common Stock from Xxxxxxxxxxx on
the terms described in subparagraph 3(b) below within
eighteen (18) months of the date hereof, Xxxxxxxxxxx
shall have the right to Transfer Company Common Stock
in exchange for consideration of up to Five Million
Dollars ($5,000,000), as reduced by the amount of any
funds received by Xxxxxxxxxxx pursuant to
transactions described in Section 3(b) below;
(iv) Pledges of shares to secure debts of up to Two
Million Dollars ($2,000,000) incurred after the first
anniversary and through the second anniversary of the
date of this Agreement and pledges of shares to
secure additional debts of up to Two Million Dollars
($2,000,000) incurred after the second anniversary
and through the third anniversary of the date of this
Agreement; and
(v) No Transfers shall be prohibited by Section 2(b)
above after June 30, 2002 if the Guaranty is not
provided to Xxxxxxxxxxx by the Company on or before
such date.
(d) Changes in Capitalization. The number of shares of Company
Common Stock and the price per share of Company Common Stock referred to herein
shall be automatically adjusted to reflect any change in the capitalization of
the Company including, but not limited to, such changes as stock dividends,
stock splits, recapitalizations or extraordinary distributions or dividend on
its shares. The term "Company Common Stock" as used herein shall include not
only the common stock, par value $.01 per share, of the Company as constituted
on the date hereof, but also any other equity securities that may be issued by
the Company in substitution therefor.
Section 3 Covenants Regarding Sale of Xxxxxxxxxxx Shares.
(a) Current $5 Million Sale of Shares and Loan Arrangements. The
Company agrees to use its reasonable efforts to locate third parties who will
agree to make loans to Xxxxxxxxxxx in an aggregate amount of up to Five Million
Dollars ($5,000,000) in exchange for Xxxxxxxxxxx pledging up to 1,000,000 shares
of Company Common Stock, all on terms mutually agreeable to Xxxxxxxxxxx and such
third parties.
(b) Additional Sales at $7.50 per Share. The Company agrees to use
its reasonable efforts to locate within eighteen (18) months of the date hereof
third parties who will agree to purchase from Xxxxxxxxxxx Five Million Dollars
($5,000,000) of Company Common Stock at a price equal to or greater than $7.50
per share.
(c) Application of Certain Proceeds. If the Company locates third
parties who agree to purchase from Xxxxxxxxxxx Company Common Stock at a price
equal to or greater than $10.00 per share, Xxxxxxxxxxx agrees to sell Company
Common Stock at such price for aggregate
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sales of up to Thirteen Million Dollars ($13,000,000). Xxxxxxxxxxx agrees to
apply the net, after-tax proceeds of sales under this Section 3(c) to reduce the
obligations secured by the Guaranty and the amount of the Guaranty shall be
reduced accordingly.
Section 4 Termination of Employment.
(a) Termination. Xxxxxxxxxxx and the Company agree that the
employment of Xxxxxxxxxxx by the Company shall be terminated, effective as of
the date of the execution of this Agreement and the receipt by him of the $2
million payment provided for in Section 1(b) above (the "Termination Date"). As
of the Termination Date, Xxxxxxxxxxx'x employment with the Company and any other
employment positions which he holds with any subsidiaries of the Company shall
be terminated.
(b) No Additional Compensation. As of the Termination Date and
notwithstanding anything to the contrary contained in the Employment Agreement,
Xxxxxxxxxxx shall have no rights to any additional payments or compensation
under the Employment Agreement (including, without limitation, the Bonus (as
defined in the Employment Agreement) or any proration thereof) except that:
(i) Xxxxxxxxxxx shall be entitled to receive the Salary
(as defined in the Employment Agreement) otherwise
payable to him under the Employment Agreement through
and including the Termination Date;
(ii) Xxxxxxxxxxx shall be entitled to receive the car
allowance provided for in the Employment Agreement
through and including the Termination Date; and
(iii) Xxxxxxxxxxx shall be entitled to reimbursement of
reasonable and necessary expenses incurred by
Xxxxxxxxxxx on or prior to the Termination Date at
the request of and on behalf of the Company.
(c) Benefit Plans. As of the Termination Date and notwithstanding
anything to the contrary contained in the Employment Agreement, Xxxxxxxxxxx
shall have no rights to participate in any benefit plans of the Company except
as provided in Section 4(d) below and except as required by the Consolidated
Omnibus Budget Reconciliation Act of 1986, as amended ("COBRA"), or other
applicable law, and except that he may continue to participate at his own cost
in health insurance plans and programs of the Company so long as such
participation is not prohibited by such program.
(d) Stock Options. The stock options to purchase Company Common
Stock previously granted to Xxxxxxxxxxx shall all be relinquished on the
Termination Date.
(e) Non-Competition. Section 5 of the Employment Agreement shall
remain in full force and effect after the Termination Date; provided that, the
definition of "Company
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Activities" in Section 5.1 of the Employment Agreement is hereby amended to read
in its entirety as follows: "the business of providing merchandising or
marketing services or the business of providing temporary staffing services in
Europe so long as the Company continues to conduct temporary staffing services
in Europe."
(f) Director. Xxxxxxxxxxx shall serve as a director of the Company
in accordance with the terms of the Bylaws of the Company. As of the Termination
Date, Xxxxxxxxxxx shall be classified as a non-executive, outside director and
shall be entitled to receive the same compensation package as other
non-executive, outside directors. At the election of the Board of Directors,
Xxxxxxxxxxx shall serve as the Chairman of the Board, which position shall not
be an officer or executive of the Company.
Section 5 Release.
Except as set forth in this Agreement, Xxxxxxxxxxx hereby
unconditionally releases and discharges the Company and its subsidiaries and
each of their respective directors, officers, employees, agents, and assigns
(collectively, the "Company Releasees") from any and all claims, damages,
obligations, promises, or liabilities whatsoever, whether known or unknown, both
at law and in equity, which Xxxxxxxxxxx, directly or indirectly, now has, has
ever had or may hereafter have against the respective Company Releasees arising
on or prior to the date hereof, including, but not limited to, any rights of
Xxxxxxxxxxx to receive payment in recognition of having foregone salary in the
past, rights of Xxxxxxxxxxx relating to stock repurchases by the Company and
rights of Xxxxxxxxxxx relating to loan guarantees by the Company; provided that
such release shall not relate to any rights of Xxxxxxxxxxx under this Agreement
or to any rights to indemnification contained in or provided by applicable law,
the Company articles of incorporation or bylaws, any agreement with the Company
or any insurance policy maintained by the Company.
Section 6 Miscellaneous.
(a) Tax Withholding. All taxes due on amounts paid to Xxxxxxxxxxx
under this Agreement shall be the responsibility of Xxxxxxxxxxx. The Company
shall be entitled to withhold all taxes that it determines it is legally
required to withhold.
(b) Future Cooperation. Xxxxxxxxxxx agrees and covenants that he
shall, to the extent reasonably requested in writing, cooperate with and assist
the Company in any pending or future litigation in which the Company is a party,
and regarding which Xxxxxxxxxxx, by virtue of his employment with the Company,
has factual knowledge or information relevant to said litigation. The Company
will reimburse Xxxxxxxxxxx for his reasonable out-of-pocket expenses in
complying with this Section 6(b).
(c) Notices. Any notice or other document to be given hereunder by
any party hereto to any other party hereto shall be in writing and delivered in
person or by courier, by telecopy transmission or sent by any express mail
service, postage or fees prepaid at the following addresses:
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The Company
AHL Services, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy No.:
Xxxxxxxxxxx
Xx. Xxxxx X. Xxxxxxxxxxx, Xx.
or at such other address or number for a party as shall be specified by like
notice. Any notice which is delivered in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or its agent.
(d) Binding Effect. This Agreement shall inure to the benefit of,
and shall be binding upon, the Company and its successors and assigns, and
Xxxxxxxxxxx and his assigns, executors, administrators, personal
representatives, heirs, and legatees.
(e) Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the subject
matter hereof and is the complete and exclusive statement of the terms thereof,
notwithstanding any representations, statements or agreements to the contrary
heretofore made. This Agreement may be modified only by a written instrument
signed by both of the parties hereto.
(f) Governing Law. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed, and governed by and in
accordance with, the laws of the State of Georgia. No provision of this
Agreement shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority or by any
board of arbitrators by reason of such party or its counsel having or being
deemed to have structured or drafted such provision.
(g) Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect any way the
meaning or interpretation of this Agreement. Unless otherwise specified to the
contrary, all references to sections and paragraph headings are references to
sections and paragraph headings of this Agreement.
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(h) Specific Performance. Each party hereto hereby agrees that any
remedy at law for any breach of the provisions contained in this Agreement shall
be inadequate and that the other parties hereto shall be entitled to specific
performance and any other appropriate injunctive relief in addition to any other
remedy such party might have under this Agreement or at law or in equity.
(i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(j) Understanding. Xxxxxxxxxxx acknowledges and agrees that he has
read and fully understands the contents and the effect of this Agreement.
Xxxxxxxxxxx acknowledges and agrees that he has had a reasonable opportunity and
been advised to seek the advice of an attorney as to such content and effect and
that he did so to the extent he deemed appropriate. Xxxxxxxxxxx accepts each and
all of the terms, provisions, and conditions of this Agreement, and does so
voluntarily and with full knowledge and understanding of the contents, nature,
and effect of this Agreement.
(k) Approval. The Company confirms that this Agreement has been
approved by the Compensation Committee of the Board of Directors of the Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
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XXXXX X. XXXXXXXXXXX, XX.
AHL SERVICES, INC.
By:
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Name:
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Title:
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