Exhibit 10.5
ACCESS WORLDWIDE COMMUNICATIONS, INC
0000 Xxxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
May 12, 1999
Xx. Xxxx Xxxxxxxx
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Re: Severance Arrangements/Closing Inducement
Dear Xxxx:
Effective as of the Effective Date, Access Worldwide Communications,
Inc., a Delaware corporation and you (the "Employee"), hereby agree as set forth
below in this agreement (this "Agreement"). No amount shall be payable hereunder
unless the Employee shall have released the Company from the obligation to pay
any other severance benefit payable upon a Change in Control.
1. Section 1 -- Definitions. As used herein, the following words and
phrases shall have the following respective meanings unless the context clearly
indicates otherwise.
1.1. Base Period. The period consisting of the most recent
five (5) taxable years ending on or before the date on which a Change in Control
occurs or such portion of such period during which the Employee performed
personal services for the Company.
1.2. Base Salary. The annual amount the Employee receives as
wages or salary from the Company.
1.3 Board. The Board of Directors of the Company.
1.4 Bonus. The annual bonus the Employee is entitled to receive
each year.
1.5 Cause. A termination for Cause is a termination evidenced by
a written notice specifying (i) that the Employee willfully and continually
failed to substantially perform the Employee's duties with the Company (other
than a failure resulting from the Employee's incapacity due to physical or
mental illness), which failure continued for a period of
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at least thirty (30) days after a written notice of demand for substantial
performance has been delivered to the Employee specifying the manner in which
the Employee has failed to substantially perform; or (ii) that the Employee, in
carrying out his employment duties, has been guilty of (A) willful or gross
neglect or (B) willful or gross misconduct, resulting in either case in material
harm to the Company; or (iii) that the Employee has been convicted of (A) a
felony or (B) any offense involving moral turpitude. No act, or failure to act,
on the Employee's part shall be considered "willful" unless the Employee has
acted, or failed to act, with an absence of good faith and without a reasonable
belief that the Employee's action or failure to act was in the best interests of
the Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Employee after Notice of Termination is
given by the Employee shall constitute Cause.
1.6. Change in Control. A "Change in Control" shall be deemed to
occur:
(a) on the effective date of any merger or consolidation which
results in the holders of the outstanding voting securities of the Company
(determined immediately prior to such merger or consolidation) owning less than
a majority of the outstanding voting securities of the surviving corporation
(determined immediately following such merger or consolidation), or any sale or
transfer by the Company of all or substantially all its assets; or
(b) on the date of closing of any tender offer or exchange offer
for or the acquisition, directly or indirectly, by any person or group of, all
or a majority of the then outstanding voting securities of the Company.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur if the Company either merges or consolidates with or into
another company or sells or disposes of all or substantially all of its assets
to another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least a majority of the combined voting power of all
outstanding classes of securities of the Company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
1.7. Company. The Company is Access Worldwide Communications,
Inc., a Delaware corporation.
1.8. Effective Date. The date this Agreement is approved by the
Board or the Compensation Committee of the Board, or such other date as the
Board or such Committee shall designate in its resolution approving this
Agreement, or any amendment or restatement thereof.
1.9. Good Reason. "Good Reason" shall mean:
(a) a reduction in the Employee's annual base salary or annual
bonus potential (i.e., percentage of annual salary) after April 12, 1999; or
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(b) a change in the Employee's responsibilities which, in the
Employee's reasonable judgment, represents a substantial reduction of
responsibilities as existed immediately prior thereto or the assignment to the
Employee of any duties or responsibilities which, in the Employee's reasonable
judgment, are inconsistent with the duties or responsibilities which existed
immediately prior thereto, except in connection with the termination of the
Employee's employment for Cause, Permanent Disability, as a result of the
Employee's death or by the Employee other than for Good Reason; or
(c) the requirement by the Company after a Change in Control that
the Employee (without the consent of the Employee) be based at any place outside
of the Employee's normal commuting distance, except for reasonably required
travel on the Company's business which is not materially greater than such
travel requests prior to the Change in Control.
1.10 Notice of Termination. "Notice of Termination" shall mean a
notice which indicates the specific provisions in this Agreement relied upon as
the basis for any termination of employment and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated. No purported
termination of employment shall be effective without such Notice of Termination.
1.11 Operating Companies. "Operating Companies" are the
subsidiaries of the Company.
1.12 Permanent Disability. The Employee shall be deemed to have
become permanently disabled for purposes of this Agreement if the Chief
Executive Officer of the Company finds, upon the basis of medical evidence
received from a physician reasonably satisfactory to the Chief Executive Officer
and the Employee, that the Employee is disabled, whether due to physical or
mental condition, so as to be prevented from performing the Employee's normal
duties for the Company with or without reasonable accommodation.
1.13 Severance Benefit. The benefit payable in accordance with
Section 3 of this Agreement.
2. Section 2 - Duration and Eligibility.
2.1 This Agreement shall be effective as of the Effective Date.
2.2 Eligibility. The Employee shall not be entitled to the
Severance Benefit if the Employee ceases to be an employee at any time prior to
a Change in Control, or if his employment is terminated following a Change in
Control under circumstances where the Employee is not entitled to a Severance
Benefit under the terms of this Agreement; provided, however, that if the
Employee ceases to be an employee during the period commencing ninety (90) days
prior to a Change in Control by reason of termination by the Company without
"cause", then the Employee shall be entitled to a Severance Benefit under the
terms of this Agreement. For purposes hereof, "cause" shall mean (a) breach of
any of the Employee's employment obligations or (b) any material act of
dishonesty involving the Company or (c) repeated failure to follow the
instructions of the President of the Company in connection with the Employee's
duties or (d) repeated significant carelessness in the performance of duties or
(e)
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repeated unexcused absences during normal working hours or (f) repeated
insobriety at the work place or (g) that the Employee has been charged with
committing and has been convicted of (i) a felony or (ii) any crime or offense
involving moral turpitude. If the basis for cause is an act or acts described in
clause (a), (c) or (d) above, you shall be given thirty (30) days to cease or
correct the performance (or non performance) giving rise to such cause.
2.3. Six Month Transition Period. If following a Change in
Control, the Company requests in writing that the Employee remain as an employee
of the Company for a transition period, then to be eligible for a Severance
Benefit hereunder, the Employee shall be obligated to remain with the Company on
a transitional basis for up to six months following a Change in Control. In such
event, the Employee's Severance Benefit under Sections 3.2 (b) and (c) shall
commence following the end of the transition period. Notwithstanding the
foregoing, the Employee shall be entitled to terminate his employment for Good
Reason during the transition period and thereafter receive the applicable
Severance Benefit hereunder. The Company agrees to give the Employee sixty (60)
days' prior notice of the termination of transitional employment. During the
period that the Employee is employed on a transitional basis, the Company shall
not require him to be based at a location outside his current normal commuting
distance, but the Company may require him to travel on the Company's business
several days each week.
3. Section 3 - Severance Benefits.
3.1. Right to Severance Benefit.
(a) The Employee shall be entitled to receive from the Company a
Severance Benefit in the amount provided in Section 3.2 if (i) a Change in
Control has occurred and (ii) within two (2) years thereafter, the Employee's
employment with the Company terminates for any reason (for purposes hereof
employment shall be considered terminated if employment continues only on a
transitional basis) except that notwithstanding the provisions of this paragraph
(a), no benefits under this Agreement will be payable should the Employee's
termination of employment be (A) for Cause, (B) by reason of Permanent
Disability, (C) voluntarily initiated by the Employee for other than Good
Reason, or (D) by reason of the Employee's death.
(b) Notwithstanding any other provision of the Agreement, the sale,
divestiture or other disposition of an Operating Company (or part thereof),
shall not be deemed to be a termination of employment of employees employed by
such Operating Company, and such employees shall not be entitled to benefits
from the Company under this Agreement as a result of such sale, divestiture, or
other disposition, or as a result of any subsequent termination of employment,
provided the provisions of Section 5.2 have been satisfied.
3.2. Amount of Severance Benefit. If the Employee's employment is
terminated in circumstances entitling the Employee to a Severance Benefit as
provided in Section 3.1, the Employee shall be entitled to the following
benefits:
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(a) the Company shall pay to the Employee, as severance pay
and in lieu of any further salary or Bonus for periods subsequent to the
Termination Date, an amount in cash equal to the amount listed on Exhibit A;
(b) for the period specified on Exhibit A, subsequent to the
Employee's termination of employment, the Company shall at its expense continue
on behalf of the Employee and his dependents and beneficiaries, the medical and
dental benefits, life insurance, short term disability insurance and long-term
disability insurance which were being provided to the Employee at the time of
termination of employment. The benefits provided in this Subsection 3.2(b) shall
be no less favorable to the Employee, in terms of amounts and deductibles and
costs to the Employee, than the coverage provided the Employee under the plans
providing such benefits at the time Notice of Termination is given. The
Company's obligation hereunder to provide the foregoing benefits shall terminate
if the Employee obtains coverage under a subsequent employer's medical and
dental, life insurance, short-term disability insurance and or long-term
disability insurance benefit plans;
(c) the amounts provided for in Section 3.2(a) shall be paid
in the same periodic installment as the Employee's salary has been paid prior to
the Termination Date commencing on the Employee's Termination Date; provided,
however that the Company shall pay the balance of the Employee's Severance
Benefit then unpaid in a single lump sum payment within fifteen (15) days after
the Employee's commencement of employment with a new employer. Any pro rata
Bonus due and payable as specified in Exhibit A will be paid within thirty (30)
days after the Employee's termination of employment. No benefit payable
hereunder will be reduced if the Employee takes other employment.
Notwithstanding the foregoing, if any payment to or for the benefit
of the Employee under this Agreement either alone or together with other
payments to or for the benefit of the Employee would constitute a "parachute
payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code")), the payments under this Agreement shall be reduced to the
largest amount that will eliminate both the imposition of the excise tax imposed
by Section 4999 of the Code and the disallowance of deductions to the Company
under Section 280G of the Code for any such payments. The amount and method of
any reduction in the payments under this Agreement pursuant to this paragraph
shall be as reasonably determined by the Compensation Committee of the Board.
4. Section 4 - Termination of Employment.
4.1. Written Notice Required. Any purported termination of
employment, either by the Company or by the Employee, shall be communicated by
written Notice of Termination to the other.
4.2. Termination Date. In the case of the Employee's death, the
Employee's Termination Date shall be the Employee's date of death. In all other
cases, the Employee's Termination Date shall be the date specified in the Notice
of Termination subject to the following: (a) if the Employee's employment is
terminated by the Company due to Permanent Disability, the date specified in the
Notice of Termination shall be at least thirty (30) days from the date the
Notice of Termination is given to the Employee, provided that the
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Employee shall not have returned to the full-time performance of the Employee's
duties during such period of at least thirty (30) days; and (b) if the Employee
terminates the Employee's employment for Good Reason, the date specified in the
Notice of Termination shall not be more than thirty (30) days from the date the
Notice of Termination is given to the Company.
5. Section 5 - Successors to Company.
5.1. Successors. This Agreement shall bind any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, in the same
manner and to the same extent that the Company would be obligated under this
Agreement if no succession had taken place. In the case of any transaction in
which a successor would not by the foregoing provision or by operation of law be
bound by this Agreement, the Company shall require such successor expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place.
5.2. Sale of Operating Companies. In the event that one or more
Operating Companies (or part thereof) are sold, divested, or otherwise disposed
of by the Company subsequent to a Change in Control, the Company shall require
such purchaser or acquirer, as a condition precedent to such purchase or
acquisition, to assume, and agree to perform the Company's obligations under
this Agreement, in the same manner, and to the same extent that the Company
would be required to perform if no such acquisition or purchase had taken place.
In such circumstances, the purchaser or acquirer shall be solely responsible for
providing any benefits payable under this Agreement to such employees.
6. Section 6 - Amendment and Termination.
6.1. Amendment and Termination. This Agreement may be terminated
or amended in any respect by resolution adopted by the entire Board; provided,
however, that no such amendment or termination of this Agreement may be made if
such amendment or termination would adversely affect any benefit of the Employee
set forth herein and provided further, that this Agreement shall no longer be
subject to amendment, change, substitution, deletion, revocation or termination
in any respect whatsoever following a Change in Control.
6.2. Form of Amendment. The form of any amendment or termination
of this Agreement shall be a written instrument signed by a duly authorized
officer or officers of the Company, certifying that the amendment or termination
has been approved by the Board.
7. Section 7 - Closing Inducement. In consideration for the
Employee's continued employment with the Company, and for the services the
Employee may provide the Company in connection with a sale of all or
substantially all of the Company in a transaction closing in 1999 or pursuant to
a binding agreement executed in 1999 (a "Sale"), regardless of the form or
structure of such transaction, the Company will pay a cash payment (the "Closing
Payment") to the Employee at the closing of such transaction, according to the
following conditions:
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(a) No Closing Payment shall be due and payable unless the
Employee is employed by the Company on the date of closing.
(b) In the event that the condition set forth in (a) above shall
be satisfied, the Closing Payment shall be equal to $50,000.
8. Section 8 - Miscellaneous.
8.1. Indemnification. If, after a Change in Control, the Employee
institutes any legal action in seeking to obtain or enforce, or is required to
defend in any legal action the validity or enforceability of, any right or
benefit provided by this Agreement, the Company will pay for all actual legal
fees and expenses incurred by such Employee so long as the Employee is
successful on the merits in whole or in substantial part.
8.2. Employment Status. This Agreement does not constitute a
contract of employment or impose on the Company any obligation to retain the
Employee, to change the status of the Employee's employment, or to change any
employment policies of the Company.
8.3. Validity and Severability. 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 shall
remain in full force and effect, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.4. Governing Law; Choice of Forum. The validity,
interpretation, construction and performance of this Agreement shall in all
respects be governed by the laws of the Commonwealth of Virginia. The Employee
shall be entitled to enforce the provisions of this Agreement in any state or
federal court located in the Commonwealth of Virginia, in addition to any other
appropriate forum.
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By signing this letter, you agree to by bound by all of the terms
and conditions set forth herein.
Very truly yours,
ACCESS WORLDWIDE COMMUNICATIONS, INC.
By: /s/ Xxxx Xxxxxxxxxx
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Name:
Title: CEO
Accepted and Agreed To:
By: /s/ Xxxx Xxxxxxxx (Xxxx)
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Xxxx Xxxxxxxx
EXHIBIT A
BENEFITS
1.0 AMOUNT OF SEVERANCE BENEFIT:
(a) one (1.0) times the Employee's Base Salary in effect immediately prior
to the Change in Control; and
(b) a pro rata share of the Employee's Bonus if earned. For 1999, Bonus
will be based on bonus criteria consistent with the Chief Financial
Officer's directives. For years after 1999, Bonus will be based on
bonus criteria established by the Chief Executive Officer or the Chief
Financial Officer such subsequent year.
2.0 The period applicable for Section 3.2(b) is twelve (12) months.
