EXHIBIT 10.5
SEVERANCE AGREEMENT
This Severance Agreement is entered as of August 2, 2000, by and
between Xxxxxx Half International Inc., a Delaware corporation (the "Company")
and Xxxx X. Xxxxxxxx (the "Employee").
WHEREAS, the Company and Employee have previously entered into a
Severance Agreement dated as of October 1, 1991 (the "1991 Agreement") and an
Agreement dated as of July 31, 1995 (the "1995 Agreement") (the 1991 Agreement
and the 1995 Agreement being collectively referred to herein is the "Previous
Agreements").
WHEREAS, the Previous Agreements were entered into because the Company
believed it to be in the best interest of the Company and its shareholders to
provide for stability in the management of the Company.
WHEREAS, effective as of the date hereof, the Employee has been elected
an Executive Officer of the Company.
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions set forth herein, the Company and the Employee hereby agree as
follows:
1. DEFINITIONS
"Change in Control" shall have the meaning specified in the Company's
Equity Incentive Plan.
"Continuation Period" means (a) 36 months following the Termination
Date, if Employee has served as a Director of the Company at any time prior to
the Termination Date, and (b) 24 months following the Termination Date in all
other cases.
"Future Equity Award" means a grant of options or restricted stock made
by the Company after the effective date of this Severance Agreement.
"Previous Equity Award" means a grant of options or restricted stock
made by the Company prior to the effective date of this Severance Agreement.
"Termination Date" means the date on which Employee's employment with
the Company is terminated.
"Termination For Cause" means termination by the Company of Employee's
employment by the Company by reason of Employee's willful dishonesty towards,
fraud
upon, or deliberate injury or attempted injury to the Company, or by reason of
Employee's willful material breach of any employment agreement with the Company,
which has resulted in material injury to the Company; provided, however, that
Employee's employment shall not be deemed to have terminated in a Termination
For Cause if such termination took place as a result of any act or omission
believed by Employee in good faith to have been in the interest of the Company.
"Termination Without Cause" means termination of Employee's employment
other than pursuant to a Termination For Cause. Termination Without Cause
includes a termination by Employee following (a) a reduction by more than 5% of
Employee's base salary per month, exclusive of bonus, fringe benefits and other
non-salary compensation, (the "Monthly Base Salary") or (b) a request by the
Company that Employee relocate more than 50 miles away from the current location
of the principal executive offices of the Company.
"Termination Following a Change in Control" means a voluntary
termination by Employee within one year following Change in Control.
2. PAYMENTS AND BENEFITS UPON TERMINATION WITHOUT CAUSE. In the
event of a Termination Without Cause, the Employee shall be entitled to receive
the following:
2.1. MONTHLY BASE SALARY. Commencing on the Termination Date,
Employee shall receive Monthly Base Salary, at a rate equal to the highest
Monthly Base Salary paid to Employee within the six (6) months preceding the
Termination Date, each month during the Continuation Period. At the option of
the Company, all or part of such Monthly Base Salary may be paid in a lump sum.
2.2. BONUS.
(a) If the Termination Date occurs within 12 months after a Change in Control,
then, commencing on the Termination Date, Employee shall receive, each month
during the Continuation Period, an amount equal to 1/12 of the annual cash bonus
paid (or to be paid) to Employee with respect to the last full calendar year
completed prior to the Change in Control. At the option of the Company, all or
part of such payments may be paid in a lump sum.
(b) If the Termination Date does not occur within 12 months after a Change in
Control, Employee shall be paid, when such bonus payments would otherwise
typically be made to Employee, the amount determined by multiplying (i) a
fraction, the numerator of which shall be the number of months that, as of the
last day of the month in which the Termination Date occurs, shall have passed
since the beginning of that calendar year, and the denominator of which shall be
twelve and (ii) the bonus to which Employee would have been entitled had such
termination not occurred. For purposes of the foregoing clause (ii), Employee
shall be not be entitled to a pro rata amount of bonus that is discretionary
unless such Employee is specifically awarded such discretionary amount in
accordance with the terms and conditions of the applicable bonus plan or
program.
2.3. BENEFITS. During the Continuation Period or until
Employee is reemployed, whichever first occurs, Employee also shall be entitled
to all employee benefits, including medical and life insurance, pension,
retirement and other benefits to which Employee was entitled on the Termination
Date.
2.4. VESTING.
(a) If, on the Termination Date, Employee holds any Future Equity Award which is
subject to restrictions or vesting based on continued employment with the
Company, such restrictions shall lapse and such vesting shall occur effective as
of the Termination Date. Each option that is a Future Equity Award held by
Employee shall remain outstanding and exercisable until the earlier of its
exercise or its original expiration date.
(b) If, on the Termination Date, Employee holds any Previous Equity Award which
is subject to restrictions or vesting based on continued employment with the
Company, the provisions of the Previous Agreements shall continue to apply to
such Previous Equity Award.
(c) If Employee is a participant in the Company's Deferred Compensation Plan or
any successor plan, all amounts credited under such plan to Employee shall
become fully vested and nonforfeitable.
2.5. OUTPLACEMENT SERVICES. The Company shall pay, on behalf
of Employee, expenses and fees relating to outplacement services utilized by
Employee, in an amount that is the usual and customary rate for such services
for an individual at Employee's level.
2.6. MULTIPLE BENEFITS. To the extent that any other agreement
("Other Agreement") between the Employee and the Company would provide for
salary continuation (or a lump sum payment in lieu of salary continuation) and
bonus payments under the same circumstances as such benefits would be provided
pursuant to Sections 2.1 and 2.2 hereof, then Employee shall not receive such
benefits under both the Other Agreement and Sections 2.1 and 2.2, but shall
instead receive the greater of the salary continuation benefit payable under
either Section 2.1 or the Other Agreement and the greater of the bonus benefit
payable under either Section 2.2 and the Other Agreement. Notwithstanding the
foregoing, the Benefits provided by Sections 2.1, 2.2 and 2.3 hereof shall
supersede the provisions of Sections 2.1 and 2.2 of the 1991 Agreement and
Sections 2(a), 2(b) and 2(c) of the 1995 Agreement, which superseded sections
are of no further force or effect.
3. TERMINATION FOLLOWING A CHANGE IN CONTROL. If Employee has
served as a Director of the Company at any time prior to the Termination
Date, Employee shall be entitled to the benefits described in Section 2
hereof in the event of a Termination Following a Change in Control.
4. ADDITIONAL MEDICAL BENEFITS. If Employee has served as a
Director of the Company at any time prior to the Termination Date, then, in
the event of any termination of Employee's employment on or after the first
January 1 occurring after the Employee's 53rd birthday, other than a
Termination For Cause, Employee and his then current wife shall each continue
to participate until his or her death, at the Company's expense, in whatever
healthcare plan may be maintained by the Company from time to time for its
then current employees as if Employee were still a full time employee of the
Company.
5. EMPLOYMENT. The sole purpose of this Agreement is to
provide Employee with severance benefits in the event Employee is Terminated
Without Cause. This Agreement is not an employment agreement. This Agreement
shall not affect any right of the Company to terminate Employee's employment
at any time.
6. HEADINGS. The headings used in this Agreement are for
convenience only, and shall not be used to construe the terms and conditions
of the Agreement.
7. GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of California. The terms of this
Agreement shall bind and shall inure to the benefit of the successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the date first set forth above.
XXXXXX HALF INTERNATIONAL INC.
XXXXXX X. XXXXXXX, XX.
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Xxxxxx X. Xxxxxxx, Xx.
Chairman, President and Chief Executive Officer
XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx
