Exhibit 10.37
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 8th day of December, 1999
by and between Infratest Xxxxx Aktiengesellschaft Holding ("Infratest Xxxxx"), a
wholly-owned subsidiary of the NFO Worldwide, Inc., a Delaware corporation (the
"Company") and Dr. Hartmut Kiock ("Executive").
W I T N E S S E T H
WHEREAS, the Company considers the establishment and maintenance of
a sound and vital management to be essential to protecting and enhancing the
best interests of the Company, and its stockholders;
WHEREAS, the Company recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control may arise and
that such possibility may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders;
WHEREAS, Infratest Xxxxx and Executive are party to a Contract of
Employment effective November 20, 1998 (the "Employment Agreement");
WHEREAS, the Board (as defined in Section 1) has determined that it
is in the best interests of the Company and its stockholders to provide
incentives to the Executive in addition to those in the Employment Agreement in
order to ensure Executive's continued and undivided dedication to his duties in
the event of any threat or occurrence of a Change in Control (as defined in
Section 1) of the Company; and
WHEREAS, the Board has authorized the Company to enter into this
Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, Infratest Xxxxx and the
Executive hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the respective meanings set forth below:
(a) "Annual Bonus" shall mean the Executive's annual bonus as
provided for in Section 5 of the Employment Agreement.
(b) "Board" means the Board of Directors of the Company.
(c) "Bonus Amount" means the highest Annual Bonus earned by
Executive from the Company (or its affiliates) and Infratest Xxxxx during the
last
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five (5) completed fiscal years of the Company immediately preceding Executive's
Date of Termination (annualized in the event Executive was not employed by the
Company (or its affiliates) or Infratest Xxxxx for the whole of any such fiscal
year). If the occasion arises, the determination of the highest Bonus Amount of
the last five fiscal years includes the bonus payments of Infratest Xxxxx or its
legal predecessors.
(d) "Cause" shall mean (i) the commission of a felony or a
crime involving moral turpitude or the commission of any other act involving
dishonesty, disloyalty or fraud with respect to the Company or any of its
subsidiaries, (ii) conduct tending to bring the Company or any of its
subsidiaries, including, but not limited to, Infratest Xxxxx, into substantial
public disgrace or disrepute, (iii) substantial and repeated failure to perform
duties as reasonably and lawfully directed by the Board or the Supervisory Board
of Infratest Xxxxx, (iv) xxxxx negligence or willful misconduct with respect to
the Company or any of its subsid iaries, including, but not limited to,
Infratest Xxxxx, or (v) any other material breach of this Agreement which is not
cured within 15 days after written notice thereof to the Executive.
(e) "Change in Control" shall mean the following and shall be
deemed to have occurred if any of the following events shall have occurred: (i)
any "person" or "group" (as such terms are used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act")) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act
as in effect on the date hereof, except that a person shall be deemed to be the
"beneficial owner" of all shares that any such person has the right to acquire
pursuant to any agreement or arrangement or upon exercise of conversion rights,
warrants, options or otherwise, without regard to the sixty-day period referred
to in such Rule), directly or indirectly, of securities representing 30% or more
of the combined voting power of the Company's then outstanding voting
securities; or (ii) at any time during any period of two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constituted the Board and any new directors,
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the Company
directors then still in office who either were the Company directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
merely by reason of an acquisition of Company securities by, or any
consolidation, merger or exchange of securities with, any entity that,
immediately prior to such acquisition, consolidation, merger or exchange of
securities, was a "subsidiary", as such term is defined below. For these
purposes, the term "subsidiary" means (i) any corporation of which 95% of the
capital stock of such corporation is owned, directly or indirectly, by the
Company and (ii) any unincorporated entity in respect of which the Company has,
directly or indirectly, an equivalent degree of ownership.
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(f) "Date of Termination" means (1) the effective date on
which Executive's employment by the Company and/or Infratest Xxxxx terminates as
specified in a prior written notice by the Company or Executive, as the case may
be, to the other, delivered pursuant to Section 9 or (2) if Executive's
employment by the Company and Infratest Xxxxx terminates by reason of death, the
date of death of Executive.
(g) "Disability" shall mean the Executive's inability to work
as determined pursuant to Section 2 of the Employment Agreement.
(h) "Fringe Benefits" shall mean the fringe benefits provided
to the Executive pursuant to Section 7 of the Employment Agreement.
(i) "Good Reason" shall mean the following and shall be deemed
to have occurred if any of the following events shall have occurred: (i) the
Executive is removed from any of the positions he holds as of the date hereof,
or is assigned duties and responsibilities that are inconsistent with the scope
of duties and responsibilities associated with such positions; (ii) Infratest
Xxxxx fails to pay the Executive any amounts otherwise due hereunder; (iii) the
Executive's Base Salary is reduced or his Fringe Benefits are reduced; (iv) the
Executive's principal office is relocated outside of Munich, Germany without his
consent; or (v) the failure of the Company to obtain the assumption (and, if
applicable, guarantee) agreement from any successor (and Parent, if applicable)
as contemplated in Section 8(b).
(j) "Qualifying Termination" means a termination of
Executive's employment (i) by the Company or Infratest Xxxxx other than for
Cause, (ii) by Executive for Good Reason, or (iii) on account of death or
Disability.
(k) "Subsidiary" means any corporation or other entity in
which the Company has a direct or indirect ownership interest of 50% or more of
the total combined voting power of the then outstanding securities or interests
of such corporation or other entity entitled to vote generally in the election
of directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% of the assets upon liquidation or dissolution.
(l) "Termination Period" means the period of time beginning
with a Change in Control and ending 30 months following such Change in Control.
Notwithstanding anything in this Agreement to the contrary, if (i) Executive's
employment is terminated prior to a Change in Control for reasons that would
have constituted a Qualifying Termination if they had occurred following a
Change in Control; (ii) Executive reasonably demonstrates that such termination
(or Good Reason event) was at the request of a third party who had indicated an
intention or taken steps reasonably calculated to effect a Change in Control;
and (iii) a Change in Control involving such third party (or a party competing
with such third party to effectuate a Change in Control) does occur, then for
purposes of this Agreement, the
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date immediately prior to the date of such termination of employment or event
constituting Good Reason shall be treated as a Change in Control. For purposes
of determining the timing of payments and benefits to Executive under Section 4,
the date of the actual Change in Control shall of treated as Executive's Date of
Termination under Section l(f).
2. OBLIGATION OF EXECUTIVE. In the event of a tender or exchange
offer, proxy contest, or the execution of any agreement which, if consummated,
would constitute a Change in Control, Executive agrees not to voluntarily leave
the employ of the Company or Infratest Xxxxx, other than as a result of
Disability, or an event which would constitute Good Reason if a Change in
Control had occurred, until the Change in Control occurs or, if earlier, such
tender or exchange offer, proxy contest, or agreement is terminated or
abandoned.
3. TERM OF AGREEMENT. This Agreement shall be effective on the date
hereof and shall continue in effect until Infratest Xxxxx shall have given three
(3) years' written notice of cancellation; provided, that, notwithstanding the
delivery of any such notice, this Agreement shall continue in effect for a
period of 30 months after a Change in Control, if such Change in Control shall
have occurred during the term of this Agreement. Notwithstanding anything in
this Section to the contrary, this Agreement shall terminate if Executive or
Infratest Xxxxx terminates Executive's employment prior to a Change in Control
except as provided in Section l(l).
4. PAYMENTS UPON QUALIFYING TERMINATION. If during the Termination
Period the employment of Executive shall terminate pursuant to a Qualifying
Termination, Infratest Xxxxx shall, subject to the last paragraph of this
Section:
(a) within ten (10) days following the Date of Termination
provide to Executive a lump-sum cash amount equal to the sum of (A) Executive's
Base Salary through the Date of Termination and any bonus amounts which have
become payable, to the extent not theretofore paid or deferred, (B) a pro rata
portion of Executive's Annual Bonus for the fiscal year in which Executive's
Date of Termination occurs in an amount at least equal to (1) Executive's Bonus
Amount, multiplied by (2) a fraction, the numerator of which is the number of
days in the fiscal year in which the Date of Termination occurs through the Date
of Termination and the denominator of which is three hundred sixty-five (365),
and (C) any compensation previously deferred by Executive other than pursuant to
a tax-qualified plan (together with any interest and earnings thereon) which
shall be fully vested as of the date of the Change of Control and any accrued
vacation pay, in each case to the extent not theretofore paid;
(b) within ten (10) days following the Date of Termination
provide to Executive a lump-sum cash amount equal to (i) 2.25 times Executive's
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highest annual rate of base salary during the 12-month period immediately prior
to Executive's Date of Termination, plus (ii) 2.25 times Executive's Bonus
Amount;
(c) continue to provide, for a period of two (2) years
following Executive's Date of Termination, Executive (and Executive's
dependents, if applicable) with the same level of Fringe Benefits upon
substantially the same terms and conditions (including contributions required by
Executive for such benefits) as existed immediately prior to Executive's Date of
Termination (or, if more favorable to Executive, as such benefits and terms and
conditions existed immediately prior to the Change in Control); provided, that,
if Executive cannot continue to participate in the plans providing such
benefits, Infratest Xxxxx shall otherwise provide such benefits on the same
after-tax basis as if continued participation had been permitted.
Notwithstanding the foregoing, in the event Executive becomes reemployed with
another employer and becomes eligible to receive welfare benefits from such
employer, the welfare benefits described herein shall be secondary to such
benefits during the period of Executive's eligibility, but only to the extent
that Infratest Xxxxx reimburses Executive for any increased cost and provides
any additional benefits necessary to give Executive the benefits provided
hereunder; and
(d) cause the Company to accelerate the vesting and
exercisability of all options held by Executive and granted under the NFO
Research, Inc. Stock Option Plan (the "Option Plan") or any other stock option
plan or agreement of the Company or its affiliates. In addition, all options
shall remain exercisable for two years following such termination, except to the
extent the Committee (as defined in the Option Plan) permits exercise after such
date.
Notwithstanding anything to the contrary set forth herein, this
agreement shall in no way affect Executive's right to receive certain benefits
after giving three months notice following a Change in Control pursuant to
Section 2.2(b) of the Employment Agreement. To the extent the Executive is
entitled to, or has received benefits under, Section 2 of the Employment
Agreement from Infratest Xxxxx following a Change in Control, the amounts
provided for hereunder shall be offset by any such amounts received under the
Employment Agreement as a result of the Executive's termination of employment in
order to prevent any duplication of benefits.
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5. WITHHOLDING TAXES. Infratest Xxxxx may withhold from all payments
due to Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, Infratest Xxxxx is required to
withhold therefrom.
6. REIMBURSEMENT OF EXPENSES. If any contest or dispute shall arise
under this Agreement involving termination of Executive's employment with
Infratest Xxxxx or involving the failure or refusal of Infratest Xxxxx to
perform fully in accordance with the terms hereof, Infratest Xxxxx shall
reimburse Executive, on a current basis, for all reasonable legal fees and
expenses, if any, incurred by Executive in connection with such contest or
dispute (regardless of the result thereof), together with interest in an amount
equal to the prime rate from time to time in effect, but in no event higher than
the maximum legal rate permissible under applicable law, such interest to accrue
from the date Infratest Xxxxx receives Executive's statement for such fees and
expenses through the date of payment thereof, regardless of whether or not
Executive's claim is upheld by an arbitration panel; provided, however,
Executive shall be required to repay any such amounts to Infratest Xxxxx to the
extent that an arbitration panel issues a final and non-appealable order setting
forth the determination that the position taken by Executive was frivolous or
advanced by Executive in bad faith.
7. SCOPE OF AGREEMENT. Nothing in this Agreement shall be deemed to
entitle Executive to continued employment with the Company or its Subsidiaries,
and if Executive's employment with the Company or its Subsidiaries shall
terminate prior to a Change in Control, Executive shall have no further rights
under this Agreement (except as otherwise provided hereunder); provided,
however, that any termination of Executive's employment during the Termination
Period shall be subject to all of the provisions of this Agreement.
8. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by any business
combination. In the event of any business combination, the provisions of this
Agreement shall be binding upon the surviving corporation thereof, and such
surviving corporation shall be treated as Infratest Xxxxx hereunder.
(b) Infratest Xxxxx agrees that in connection with any
business combination, it will cause any successor entity to Infratest Xxxxx
unconditionally to assume (and for any parent corporation in such business
combination to guarantee), by written instrument delivered to Executive (or his
beneficiary or estate), all of the obligations of Infratest Xxxxx hereunder.
Failure of Infratest Xxxxx to obtain such assumption and guarantee prior to the
effectiveness of any such business combination that constitutes a Change in
Control, shall be a breach of this Agreement and shall constitute Good Reason
hereunder and shall entitle
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Executive to compensation and other benefits from Infratest Xxxxx in the same
amount and on the same terms as Executive would be entitled hereunder if
Executive's employment were terminated following a Change in Control other than
by reason of a Qualifying Termination. For purposes of implementing the
foregoing, the date on which any such business combination becomes effective
shall be deemed the date Good Reason occurs, and shall be the Date of
Termination if requested by Executive.
(c) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive shall die while any amounts would be payable to Executive hereunder
had Executive continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to such
person or persons appointed in writing by Executive to receive such amounts or,
if no person is so appointed, to Executive's estate.
9. Notice. (a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five (5) days after deposit in
the United States mail, certified and return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxxxx Xxxxx
Xxxxxxxxxxxx 0X
X-00000 Xxxxxx
Germany
If to Infratest Xxxxx
Xxxxxxxxxxx Xxxxxxx 000
X-00000 Xxxxxx
Xxxxxxx
with a copy to:
NFO Worldwide, Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
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or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(b) A written notice of Executive's Date of Termination by
Infratest Xxxxx or Executive, as the case may be, to the other, shall (i)
indicate the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and (iii) specify the termination
date (which date shall be not less than fifteen (15) (thirty (30), if
termination is by Infratest Xxxxx for Disability) nor more than sixty (60) days
after the giving of such notice). The failure by Executive or Infratest Xxxxx to
set forth in such notice any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of Executive or Infratest
Xxxxx hereunder or preclude Executive or Infratest Xxxxx from asserting such
fact or circumstance in enforcing Executive's or Infratest Xxxxx'x rights
hereunder.
10. FULL SETTLEMENT; RESOLUTION OF DISPUTES. Other than as described
in the last subparagraph of Section 4, Infratest Xxxxx'x obligation to make any
payments provided for in this Agreement and otherwise to perform its obligations
hereunder in the event of a Qualifying Termination during the Termination Period
shall be in lieu and in full settlement of all other severance payments to
Executive under any other severance or employment agreement between Executive
and Infratest Xxxxx, and any severance plan of Infratest Xxxxx, including, but
not limited to, the Employment Agreement; provided, however, that the provisions
of the Employment Agreement shall remain in effect to the extent otherwise
applicable pursuant to its terms for all other purposes, including with respect
to any termination that is not a Qualifying Termination and any termination that
would have constituted a Qualifying Termination but is not covered by this
Agreement because it does not occur during the Termination Period. Infratest
Xxxxx'x obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which
Infratest Xxxxx may have against Executive or others. In no event shall
Executive be obligated to seek other employment or take other action by way of
mitigation of the amounts payable to Executive under any of the provisions of
this Agreement and, except as provided in Section 4(c), such amounts shall not
be reduced whether or not Executive obtains other employment. Any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Germany by three arbitrators. Judgment may be
entered on the arbitrators' award in any court having jurisdiction. Infratest
Xxxxx shall bear all costs and expenses arising in connection with any
arbitration proceeding pursuant to this Section.
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11. EMPLOYMENT WITH SUBSIDIARIES. Employment with Infratest Xxxxx
for purposes of this Agreement shall include employment with any Subsidiary or
parent.
12. SURVIVAL. The respective obligations and benefits afforded to
Infratest Xxxxx and the Executive as provided in Sections 4 (to the extent that
payments or benefits are owed as a result of a termination of employment that
occurs during the term of this Agreement), 5 (to the extent that Payments are
made to Executive as a result of a Change in Control that occurs during the term
of this Agreement), 6, 7, 9(c) and 11 shall survive the termination of this
Agreement.
13. GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF GERMANY WITHOUT REGARD TO THE PRINCIPLE OF
CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS
AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION
OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.
14. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
15. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and signed by
Executive and by a duly authorized officer of Infratest Xxxxx. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by Executive
or Infratest Xxxxx to insist upon strict compliance with any provision of this
Agreement or to assert any right Executive or Infratest Xxxxx may have
hereunder, including, without limitation, the right of Executive to terminate
employment for Good Reason, shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement. Except as otherwise
specifically provided herein, the rights of, and benefits payable to, Executive,
his estate or his beneficiaries pursuant to this Agreement are in addition to
any rights of, or benefits payable to, Executive, his estate or his
beneficiaries under any other employee benefit plan or compensation program of
Infratest Xxxxx.
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IN WITNESS WHEREOF, Infratest Xxxxx has caused this Agreement to be
executed by a duly authorized officer of Infratest Xxxxx and Executive has
executed this Agreement as of the day and year first above written.
INFRATEST XXXXX
AKTIENGESELLSCHAFT HOLDING
By: _________________________________
Title:__________________________________
/s/ Hartmut Kiock
----------------------------------------
Hartmut Kiock
