SPECIAL TERMINATION AGREEMENT
Exhibit 10.94
THIS SPECIAL TERMINATION AGREEMENT (the “Agreement”) is made as of the 24th day of
February 2006, between BearingPoint, Inc., a Delaware corporation (the “Company”), and Xxxxxxx Xxxx
(the “Executive”) (collectively referred to as the “parties”).
WHEREAS, the Company wishes to retain the Executive as its General Counsel; and
WHEREAS, the Executive will develop an intimate knowledge of the business and affairs of the
Company, its policies, methods, personnel and plans for the future and has contacts of considerable
value to the Company; and
WHEREAS, the Board of Directors of the Company (the “Board”) recognizes that the Executive’s
contribution to the success of the Company will be substantial and wishes to offer an inducement to
the Executive to enter into and remain in the employ of the Company;
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of
the parties herein contained, the parties agree as follows:
1. Term. The term of this Agreement (the “Term”) shall continue until the earlier of (i)
the expiration of the third anniversary of this Agreement (or if a Change of Control occurs during
the Term, the second anniversary of the occurrence of a Change of Control), (ii) the Executive’s
death, or (iii) the Executive’s earlier voluntary termination (except for a termination as a result
of any of the events described in Section 3(a)(3)); provided, however, that, on each
anniversary date of this Agreement or any extension thereof, this Agreement, the Term and the
periods referenced in Section 3 shall automatically be extended for an additional year unless, not
later than 90 calendar days prior to such anniversary date, the Company shall have given written
notice to the Executive that it does not wish to have the Term extended.
2. Definitions.
(a) Acquiring Person: An “Acquiring Person” shall mean any person (as defined in
Section 2(d)(iv)) that, together with all Affiliates and Associates of such person (as defined
in Section 2(b)), is the beneficial owner of 20% or more of the outstanding common stock, par value
$.01 per share, of the Company (“Common Stock”). The term “Acquiring Person” shall not include the
Company, any subsidiary of the Company, any employee benefit plan of the Company or any subsidiary
of the Company, or any person holding Common Stock for or pursuant to the terms of any such plan.
For the purposes of this Agreement, a person who becomes an Acquiring Person by acquiring
beneficial ownership of 20% or more of the Common Stock at any time after
the date of this Agreement shall continue to be an Acquiring Person whether or not such
person continues to be the beneficial owner of 20% or more of the outstanding Common Stock.
(b) Affiliate and Associate. “Affiliate” and “Associate” shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), in effect on the date of this Agreement.
(c) Cause. For “Cause” shall mean that, during the Term, the Executive shall have:
| (i) | committed an intentional material act of fraud or embezzlement in connection with his duties or in the course of his employment with the Company; | ||
| (ii) | committed an intentional wrongful material damage to property of the Company; | ||
| (iii) | committed an intentional wrongful disclosure of material secret processes or material confidential information of the Company; or | ||
| (iv) | been convicted of a felony criminal offense. |
For the purposes of this Agreement, no act, or
failure to act, on the part of the Executive shall be deemed “intentional” unless done, or omitted
to be done, by the Executive in bad faith or with no reasonable belief that his act or omission was
in the best interests of the Company.
(d) Change of Control. A “Change of Control” of the Company shall have occurred if at any
time during the Term of this Agreement any of the following events shall occur:
| (i) | any consolidation, merger or other reorganization of the Company in which the Company is merged, consolidated or reorganized into or with another corporation or other legal person or pursuant to which shares of the Company’s stock are converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company’s Common Stock immediately prior to the merger own more than 50.1% of the common stock of the surviving corporation or its ultimate parent immediately after the merger; | ||
| (ii) | any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, and as a result of such transaction the holders of |
| the Company’s Common Stock immediately prior thereto own less than 50.1% of the common stock of such transferee or its ultimate parent immediately after such transaction; | |||
| (iii) | any liquidation or dissolution of the Company or any approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company; | ||
| (iv) | any person (including any “person” as such term is used in Section l3(d)(3) or Section l4(d)(2) of the Exchange Act) has become an Acquiring Person; | ||
| (v) | if at any time the Continuing Directors then serving on the Board cease for any reason to constitute at least a majority thereof; or | ||
| (vi) | any occurrence that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act, or any successor rule or regulation. |
provided,
however, that a Change of Control of the Company shall not be deemed to have occurred as the
result of any transaction having one or more of the effects specified in clauses (i)-(vi) above if
such transaction is proposed by, and includes a significant equity participation (i.e., an
aggregate of at least 25% of the outstanding common equity securities of the Company immediately
after such transaction which are entitled to vote to elect any class of Directors) of, the
executive officers of the Company as constituted immediately prior to the occurrence of such
transaction or any Company employee stock ownership plan or pension plan.
(e) Code. The “Code” shall mean the Internal Revenue Code of 1986, as amended.
(f) Continuing Director. A “Continuing Director” shall mean a Director of the Company who
(i) is not an Acquiring Person, an Affiliate or Associate of an Acquiring Person, a representative
of an Acquiring Person or a person who was nominated for election by an Acquiring Person, and (ii)
was either a member of the Board of Directors of the Company on the date of this Agreement or
subsequently became a Director of the Company and whose initial election or initial nomination for
election by the Company’s stockholders was approved by at least two-thirds of the Continuing
Directors then on the Board of Directors of the Company.
(g) Employment Term. The “Employment Term” shall be the period of employment under this
Agreement commencing on the day prior to a Change of Control and continuing until the expiration of
the Term of this Agreement.
(h) Severance Compensation. The “Severance Compensation” shall be a lump sum amount equal
to 299% of the sum of (A) the highest annual salary of the
Executive in effect at any time during the Employment Term or the salary of the Executive in
effect immediately prior to the Change of Control, whichever is the
larger amount, plus (B) the
bonus or incentive compensation of the Executive, based upon the dollar amount of the largest of
(i) the bonus or incentive compensation that the Executive received from the Company for the fiscal
year preceding the year in which the Change of Control occurred, (ii) the bonus or incentive
compensation that the Executive received from the Company for the fiscal year preceding the year in
which the Termination Date occurs, (iii) the bonus or incentive compensation that the Executive
could have received based on his maximum bonus or incentive compensation potential under the
applicable Company plan for the fiscal year preceding the year in which the Change of Control
occurred, (iv) the bonus or incentive compensation that the Executive could have received based on
his maximum bonus or incentive compensation potential under the applicable Company plan for the
fiscal year preceding the year in which the Termination Date occurs and (v) if the Executive was
not employed in the year prior to the Change of Control or the Termination Date, the “Target Bonus”
(as such term is defined in Employment Letter with the Company dated February 24, 2006 (the
“Employment Letter”)).
(i) Term. The “Term” shall have the meaning specified in Section 1.
(j) Termination Date. The “Termination Date” shall be the date upon which the Executive or
the Company terminates the employment of the Executive.
3. Rights of Executive Upon Change of Control.
(a) The Company shall provide the Executive, within 10 days following the Termination Date (or
within 10 days following a Change in Control, if later), Severance Compensation and any remaining
unpaid portion of the Retention Bonus under the Employment Letter in lieu of compensation to the
Executive for periods subsequent to the Termination Date, but without affecting any other rights of
the Executive at law or in equity, if any of the following events occur:
(1) the Company terminates the Executive’s employment within two years after a Change of Control
that occurs during the Term, other than for either of the following reasons:
| (i) | the Executive becomes permanently disabled and is unable to work for a period of 180 consecutive days; or | ||
| (ii) | for Cause; |
(2) within six months prior to a Change of Control and in anticipation of a Change of Control,
either (i) the Executive’s employment is involuntarily terminated by the Company (except for Cause)
(ii) the Executive is assigned duties inconsistent with his then current position, duties,
responsibilities and status with the Company (other than as a result of a promotion or
advancement),
or there is otherwise an adverse change in the Executive’s salary, bonus or incentive
compensation, the scope or value of the aggregate other monetary or non-monetary benefits to which
the Executive was entitled from the Company, the nature or scope of the authorities, functions or
duties attached to the position then held by the Executive and the Executive terminates his
employment, provided, however, that the Company may cure any matter referenced in this
clause (ii) within 15 days of receipt of Executive’s written notice to the Chief Executive Officer
of the Company that a matter referenced in this clause (ii) has occurred, which notice shall
include a detailed description of the claimed matter, or (iii) the Executive terminates his
employment with “Good Reason” as defined in and in accordance with the Employment Letter;
(3) if the Executive terminates his employment during the Term but after a Change of Control for
“Good Reason,” as defined in the Employment Letter, or terminates his employment during the Term
but after a Change of Control, and at least one of the following events has occurred:
| (i) | the Executive is assigned duties inconsistent with his position, duties, responsibilities and status with the Company immediately prior to the Change of Control (other than as a result of a promotion or advancement), or there is otherwise an adverse change in the nature or scope of the authorities, functions or duties attached to the position that the Executive held immediately prior to the Change of Control; | ||
| (ii) | any reduction (a) in the Executive’s salary, bonus or incentive compensation (based upon the dollar amount of salary, bonus or incentive compensation that the Executive received from the Company for the fiscal year preceding the year in which the Change of Control occurred or for the fiscal year preceding the year in which the Termination Date occurs, whichever is the larger amount), (b) in the maximum bonus or incentive compensation potential of the Executive under the applicable Company plan for the fiscal year preceding the year in which the Change of Control occurred or for the fiscal year preceding the year in which the Termination Date occurs, whichever is larger or (c) in the scope or value of the aggregate other monetary or nonmonetary benefits to which the Executive was entitled from the Company immediately prior to the Change of Control; | ||
| (iii) | there is a significant or material change in the Executive’s reporting responsibilities (other than as a result of a promotion or advancement); or |
| (iv) | the Executive reasonably determines, in good faith, that as a result of a Change of Control, changes in the composition or policies of the Board, a change in circumstances affecting his position, or other events of material effect, he is unable, or has been rendered substantially unable, to carry out the duties and responsibilities that he had with the Company immediately prior to the Change of Control or has otherwise been substantially hindered in the performance of the authorities, functions or duties attached to his position immediately prior to the Change of Control. |
(b) Continued Benefits. If any of the events specified in Sections 3(a)(1)-(3) occur, then
until the earlier of the second anniversary of the Termination Date or the date on which the
Executive becomes employed by a new employer, the Company shall, at its expense,
provide the Executive with medical, dental, life insurance, disability, accidental death and
dismemberment benefits and other welfare benefits (“Insurance Benefits”) at the highest level
provided to the Executive immediately prior to the Change of Control, provided, however,
that if the Executive becomes employed by a new employer which maintains Insurance Benefits that
either (i) do not cover the Executive with respect to a pre-existing condition which was covered
under the Company’s Insurance Benefits, or (ii) do not cover the Executive for a designated waiting
period, the Executive’s coverage under the Company’s Insurance Benefits shall continue, without
limitation, until the earlier of the end of the applicable period of noncoverage under the new
employer’s Insurance Benefits or the second anniversary of the Termination Date.
(c) Outplacement Counseling. If any of the events specified in Sections 3(a)(1)-(3) occur,
the Company shall reimburse all reasonable expenses incurred by the Executive for professional
outplacement services by qualified consultants selected by the Executive.
(d) Payment of Earned But Unpaid Amounts. Within 10 days after any of the events specified
in Sections 3(a)(1)-(3) has occurred, the Company shall pay the Executive any earned but unpaid
portion of his salary, bonus or incentive compensation or other compensation.
(e) Other Rights and Benefits. The payment of Severance Compensation by the Company to the
Executive shall not affect any other rights and benefits of the Executive provided by the Company,
whether currently or in the future, prior to the Termination Date, which rights shall be governed
by the terms thereof.
(f) No Set-Off or Counterclaim. The Company shall have no right of set-off or counterclaim
in respect of any claim, debt or obligation against any payment or benefit to or for the benefit of
the Executive provided for in this Agreement.
(g) Interest on Payments. Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment required to be made hereunder on
a timely basis, the Company shall pay interest on the amount thereof on demand at an
annualized rate of interest equal to the Prime Rate as reported in the Money Rates section of The
Wall Street Journal (or in the successor to such section or, if there is no such successor section,
the most comparable Prime Rate), compounded daily (but in no event shall such interest exceed the
highest lawful rate).
(h) Vesting of Stock Awards. If within six months prior to a Change of Control and in
anticipation of a Change of Control, the Executive’s employment is involuntarily terminated by the
Company (except for Cause) or if any of the events in Section 3(a)(2)(ii) or (iii) of this
Agreement occur and Executive terminates his employment, all stock option grants, awards of
restricted stock or restricted stock units, and all other forms of stock
awards previously granted to the Executive shall be reinstated and shall vest immediately (as if
his employment were not terminated) and be nonforfeitable or the Executive shall receive an
equivalent vested award or cash payment.
4. Gross-up.
(a) If it is determined that any payment, benefit or distribution (or combination thereof) by the
Company, or by any trust established by the Company for the benefit of its employees, to or for the
benefit of the Executive (whether payable pursuant to the terms of this Agreement or otherwise (a
“Payment”)) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code, or any successor provision, and any interest or penalties are incurred by the Executive with
respect to such excise tax (the excise tax, together with interest and penalties thereon,
hereinafter collectively referred to as the “Excise Tax”), the Executive shall be entitled to
receive an additional payment (a “Gross-up Payment”) in an amount such that after payment by the
Executive of all taxes, including, without limitation, any income taxes and the Excise Tax imposed
upon the Gross-up Payment, the Executive shall retain an amount of the Gross-up Payment equal to
the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 4(c), all determinations required to be made under this
Section 4, including whether and when a Gross-up Payment is required and the amount of such
Gross-up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by such nationally recognized certified public accounting firm or law firm as may be
designated by the Executive (the “Firm”). All fees and expenses of the Firm shall be borne solely
by the Company. Any Gross-up Payment, as determined pursuant to this Section 4, shall be paid by
the Company to the Executive within five days after the receipt of the Firm’s determination. If the
Firm determines that no Excise Tax is payable by the Executive, it shall so indicate to the
Executive in writing. Any determination by the Firm shall be binding upon the Company and the
Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a Gross-up Payment. Such
notification shall be given no later than 10 business days after the Executive is informed in
writing of such claim and shall apprise the Company of the nature of the claim and the date of
requested payment. The Executive shall not pay
the claim prior to the expiration of the 30-day period following the date on which it
gives notice to the Company. If the Company notifies the Executive in writing prior to the
expiration of the period that it desires to contest such claim, the Executive shall:
(1) give the Company any information reasonably requested by the Company relating to such claim;
(2) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the Company;
(3) cooperate with the Company in good faith in order to effectively contest such claim; and
(4) permit the Company to participate in any proceedings relating to such claim.
Without limitation on the foregoing provisions of this Section 4(c), the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts as the Company shall direct, provided,
however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of the contest; and provided
further, that if the Company directs the Executive to pay any claim and xxx for a refund, the
Company shall advance the amount of the payment to the Executive, on an interest-free basis, and
shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with respect to the
advance or with respect to any imputed income with respect to the advance.
(d) If the Company exhausts its remedies pursuant to Section 4(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Firm shall determine the amount of the Gross-up
Payment required, and such payment shall be promptly paid by the Company to or for the benefit of
the Executive.
(e) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section
4(c), the Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall promptly pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 4(c), a determination is made that the Executive is not entitled to any refund
with respect to such claim, and the Company does not notify the Executive in writing of its intent
to contest such denial of refund within 30 days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of the Gross-up Payment required to be paid.
5. No Mitigation Required. In the event that this Agreement or the employment of the
Executive is terminated, the Executive shall not be obligated to mitigate his damages or the amount
of any payment provided for in this Agreement by seeking other employment or otherwise, and except
for the termination of benefits pursuant to Section 3(b), the
acceptance of employment elsewhere after termination shall in no way reduce the amount of Severance
Compensation payable hereunder.
6. Successors; Binding Agreement.
(a) The Company will require any successor and any corporation or other legal person (including any
“person” as defined in Section 2(d)(iv) of this Agreement) which is in control of such successor
(as “control” is defined in Regulation 230.405 or any successor rule or regulation promulgated
under the Securities Act of 1933, as amended) to all or substantially all of the business and/or
assets of the Company (by purchase, merger, consolidation or otherwise), by agreement in form and
substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such agreement prior to
the effectiveness of any such succession shall be a material breach of this Agreement by the
Company. Notwithstanding the foregoing, any such assumption shall not in any way affect or limit
the liability of the Company under the terms of this Agreement or release the Company from any
obligation hereunder. As used in this Section 6, “Company” shall mean the Company and any successor
to its business and/or all or substantially all of its assets which executes and delivers the
agreement provided for in this Section 6 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
7. Indemnification; Director’s and Officer’s Liability Insurance. The Executive shall,
after a Change of Control, retain all rights to indemnification under the Employment Letter,
applicable law or under the Company’s Certificate of Incorporation or Bylaws, as they may be
amended or restated from time to time. In addition, the Company shall maintain director’s and
officer’s liability insurance on behalf of the Executive, at the level in effect immediately prior
to the Change of Control, for the five years following the Change of Control.
8. Notice. For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or received after being mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Company:
|
BearingPoint, Inc. | |
| 0000 Xxxxxxxxxxxxx Xxxxx | ||
| XxXxxx, Xxxxxxxx 00000 | ||
| Attn: Chief Executive Officer | ||
If to the Executive:
|
Xxxxxxx Xxxx |
or to such other address as any 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.
9. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in a writing signed by the Executive and
the Company. No waiver by either party 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. No agreements or
representations, oral or otherwise, express or implied, unless specifically referred to herein with
respect to the subject matter of this Agreement have been made by either party which are not set
forth expressly in this Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the substantive laws of the State of Delaware, without regard
to its principles of conflicts of law.
10. Validity. The invalidity or unenforceability of any provision or provisions 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.
11. Counterparts. This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute one and the same
instrument.
12. Employment Rights. Nothing in this Agreement shall create any express or implied right
or duty on the part of the Company or the Executive to have the Executive remain in the employment
of the Company prior to or after any Change of Control.
13. Withholding of Taxes. The Company may withhold from any amounts payable under this
Agreement all federal, state, local or other taxes as shall be required by law.
14. Disputes. Any dispute or controversy arising under or in connection with this
Agreement shall be resolved, at the sole option of the Executive, either by litigation or by
arbitration in accordance with the Rules of the American Arbitration Association then in effect.
Judgment may be entered on an arbitrator’s award relating to this Agreement in any court having
jurisdiction. The exclusive venue for such litigation or arbitration shall, at the sole option of
the Executive, be in McLean, Virginia or the county where the Executive then resides.
15. Legal Fees and Expenses. It is the intent of the Company that the Executive not be
required to incur the expenses associated with the enforcement of his rights under this Agreement
by litigation or other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive in this Agreement. Accordingly,
if it should appear to the Executive that the Company has failed to comply with any of its
obligations under the Agreement or in the event that the
Company or any other person takes any action to declare the Agreement void or unenforceable, or
institutes any litigation designed to deny, or to recover from, the Executive the benefits intended
to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of his choice, at the expense of the Company as hereafter provided,
to represent the Executive in connection with the initiation or defense of any litigation or other
legal action, whether by or against the Company or any director, officer, stockholder or any other
person, in any jurisdiction. The Company shall pay, within 10 days of a written request by the
Executive, and be solely responsible for, any and all attorneys’ and related fees and expenses
incurred by the Executive as a result of any actual or threatened litigation or other legal action
relating to this Agreement or any provision thereof or as a result of the Company or any person
raising any issue with respect to this Agreement or any provision thereof, including without
limitation, contesting the validity or enforceability of this Agreement or any provision thereof.
16. Rights and Remedies Cumulative. No right or remedy conferred upon or reserved to the
Executive is intended to be exclusive of any other right or remedy, and every right and remedy
shall, to the extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion
or employment of any right or remedy under this Agreement, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement effective on the day and
year first above written.
| BEARINGPOINT, INC. |
||||
| By: | ||||
| Xxxxx X. You | ||||
| Its: Chairman and Chief Executive Officer EXECUTIVE: | ||||
| Xxxxxxx Xxxx | ||||
