<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _____ to _____
Commission File Number 0-22645
LAMALIE ASSOCIATES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Florida 59-2776441
- -------------------------------- ---------------------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
200 Park Avenue
New York, New York
10166-0136
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(212) 953-7900
-------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
At December 31, 1997, the Registrant had outstanding 5,352,161 shares
of $.01 par value common stock.
<PAGE> 2
LAMALIE ASSOCIATES, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Statements of Operations
for the three- and nine-month periods
ended November 30, 1997 and 1996 3
Condensed Balance Sheets at
November 30, 1997 and February 28, 1997 4
Condensed Statements of Cash Flows
for the nine-month periods ended
November 30, 1997 and 1996 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION 9
SIGNATURES 11
</TABLE>
2
<PAGE> 3
LAMALIE ASSOCIATES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
------------------------- ---------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Fee revenue, net $15,349 $11,706 $45,847 $34,319
Operating expenses:
Compensation and benefits 11,651 10,077 35,152 29,515
General and administrative expenses 1,997 1,829 5,872 4,657
------- ------- ------- -------
Total operating expenses 13,648 11,906 41,024 34,172
------- ------- ------- -------
Operating income 1,701 (200) 4,823 147
Interest income (expense), net 153 (106) 45 (252)
------- ------- ------- -------
Income (loss) before provision for
income taxes 1,854 (306) 4,868 (105)
Provision for income taxes 798 (62) 2,094 136
------- ------- ------- -------
Net income (loss) $ 1,056 $ (244) $ 2,774 $ (241)
======= ======= ======= =======
Net income (loss) per common and common
equivalent share $ .19 $ (.08) $ .63 $ (.07)
======= ======= ======= =======
Weighted average common and common
equivalent shares outstanding 5,538,000 3,112,000 4,413,000 3,239,000
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part
of these condensed financial statements.
3
<PAGE> 4
LAMALIE ASSOCIATES, INC.
CONDENSED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
(unaudited)
ASSETS November 30, February 28,
1997 1997
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $21,739 $ 1,662
Accounts receivable, less allowance of $1,300 and $890, respectively 14,920 14,392
Prepaid expenses 1,445 879
Refundable income taxes 1,419 58
Deferred tax assets 376 --
------- -------
Total current assets 39,899 16,991
------- -------
Property and equipment, net of accumulated depreciation and amortization of
$2,318 and $1,726, respectively 4,901 4,184
Non-current deferred tax assets 2,949 1,958
Other assets 3,878 2,428
------- -------
Total assets $51,627 $25,561
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,122 $ 1,914
Accrued compensation 11,740 13,255
Deferred tax liabilities -- 643
Current maturities of long-term debt 114 387
Other current liabilities 192 175
------- -------
Total current liabilities 13,168 16,374
------- -------
Accrued rent 1,015 1,038
Long-term debt, less current maturities 140 1,650
Deferred compensation 6,676 3,872
------- -------
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.01 par value; 3,000,000 shares authorized; no
shares issued and outstanding -- --
Common stock; $0.01 par value; 35,000,000 shares authorized;
5,352,161 and 3,075,000 shares issued and outstanding, respectively 54 31
Additional paid-in capital 29,138 4,087
Subscriptions receivable -- (153)
Retained earnings (accumulated deficit) 1,436 (1,338)
------- -------
Total stockholders' equity 30,628 2,627
------- -------
Total liabilities and stockholders' equity $51,627 $25,561
======= =======
</TABLE>
The accompanying notes are an integral part
of these condensed financial statements.
4
<PAGE> 5
LAMALIE ASSOCIATES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
November 30,
----------------------------------
1997 1996
---------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,774 $ (241)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 592 668
Changes in operating assets and liabilities (4,426) (4,516)
---------- ----------
Net cash used in operating activities (1,060) (4,089)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,308) (776)
Investment in whole life insurance (998) (759)
---------- ----------
Net cash used in investing activities (2,306) (1,535)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under long-term debt 4,576 3,995
Repayments of long-term debt (6,359) (1,853)
Proceeds from issuance of common stock 25,226 1,197
---------- ----------
Net cash provided by financing activities 23,443 3,339
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 20,077 (2,285)
CASH AND CASH EQUIVALENTS, at beginning of period 1,662 2,529
---------- ----------
CASH AND CASH EQUIVALENTS, at end of period $ 21,739 $ 244
========== ==========
</TABLE>
The accompanying notes are an integral part
of these condensed financial statements.
5
<PAGE> 6
LAMALIE ASSOCIATES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
Note 1. Condensed Financial Statements
In the opinion of the Company, the accompanying unaudited condensed financial
statements reflect all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position of the Company
as of November 30, 1997 and February 28, 1997, and the results of operations
for the three- and nine-month periods ended November 30, 1997 and 1996, and
cash flows for the nine-month periods ended November 30, 1997 and 1996.
These financial statements, including the condensed balance sheet as of
February 28, 1997, which has been derived from audited financial statements,
are presented in accordance with the requirements of Form 10-Q and consequently
may not include all disclosures normally required by generally accepted
accounting principles or those normally made in the Company's Annual Report on
Form 10-K. The accompanying condensed financial statements and related notes
should be read in conjunction with the Company's Registration Statement on Form
S-1 (File No. 333-26027) as declared effective by the Securities and Exchange
Commission on July 1, 1997.
Note 2. Net Income Per Common and Common Equivalent Share
Net income per common and common equivalent share is determined by dividing net
income by the weighted average number of shares of common stock outstanding and
dilutive common equivalent shares outstanding using the treasury stock method.
Common equivalent shares outstanding during the nine-month period ended
November 30, 1997, included options to purchase common stock. There were no
common equivalent shares outstanding during the nine-month period ended
November 30, 1996.
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
("SAB") No. 83, shares of common stock issued by the Company during the 12
months preceding the initial filing date have been included in the calculation
of weighted average shares of common stock outstanding, using the treasury
stock method, as if the shares were outstanding for all periods presented.
All share and per share information in the financial statements has been
adjusted to give effect to the 1,000 to one common stock split and par value
restatement which became effective June 3, 1997, in connection with the
reincorporation of the Company in Florida.
Note 3. Long-Term Debt
The Company has obtained a commitment letter from a bank to provide credit
facilities of approximately $15.0 million. Outstanding borrowings under these
facilities will bear interest at various rates based on either a LIBOR index or
the bank's prime lending rate, as determined at the Company's option. No
amounts were outstanding under these facilities as of November 30, 1997.
6
<PAGE> 7
Note 4. Newly Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS
130). SFAS 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. SFAS 130 is effective for financial statements for periods
beginning after December 15, 1997. Management believes the effect of adopting
SFAS 130 would not have a material impact on the accompanying financial
statements.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
FISCAL 1998 COMPARED TO FISCAL 1997
Fee revenue. The Company's fee revenue increased 31.1% and 33.6%,
respectively, to $15.3 million and $45.8 million for the three- and nine-month
periods ended November 30, 1997, as compared to $11.7 million and $34.3 million
for the same periods in fiscal 1997. The average fee revenue per consultant
employed for a full year for the nine-month period ended November 30, 1997,
increased 32.7%, to $759,000 from $572,000 for the same period in fiscal 1997.
As of November 30, 1997, the total number of consultants employed was 72, an
increase of 10 since the beginning of the fiscal year. The average first-year
cash compensation of positions for which the Company conducted searches
increased by 2.6%, to $233,000 from $227,000 for the nine-month period ended
November 30, 1997.
Compensation and benefits. Compensation and benefits increased 15.6% and
19.1%, respectively, to $11.7 million and $35.2 million for the three- and
nine-month periods ended November 30, 1997, as compared to $10.1 million and
$29.5 million for the same periods in fiscal 1997. As a percentage of fee
revenue, compensation and benefits decreased to 75.9% and 76.7%, respectively,
for the three- and nine-month periods ended November 30, 1997, as compared to
86.1% and 86.0% for the same periods in fiscal 1997. This decrease was
primarily the result of changes to the Company's compensation system for
consultants implemented effective March 1, 1997.
General and administrative expenses. General and administrative expenses
increased 9.2% and 26.1%, respectively, to $2.0 million and $5.9 million for
the three- and nine-month periods ended November 30, 1997, as compared to $1.8
million and $4.7 million for the same periods in fiscal 1997. As a percentage
of fee revenue, general and administrative expenses decreased to 13.0% and
12.8% for the three- and nine-month periods ended November 30, 1997, as
compared to 15.6% and 13.6% for the same periods in fiscal 1997. These
decreases were primarily due to revenues increasing faster than fixed overhead
expenses. Fiscal 1997 also included expenses related to new office openings in
Boston, Massachusetts and Stamford, Connecticut and certain technology-related
expenses which did not recur in fiscal 1998.
Operating income. Operating income increased $1.9 million and $4.7 million,
respectively, to $1.7 million and $4.8 million for the three- and nine-month
periods ended November 30, 1997, as compared to a loss of $200,000 and income
of $147,000 for the same periods in fiscal 1997. This change was primarily the
result of the decreases in compensation and benefits.
7
<PAGE> 8
Net interest income (expense). The Company received net interest income of
$153,000 and $45,000, respectively, for the three- and nine-month periods ended
November 30, 1997, as compared to net interest expense incurred of $106,000 and
$252,000 for the same periods in fiscal 1997. This decrease in interest expense
was the result of the Company repaying all outstanding indebtedness under its
credit facilities with proceeds from the issuance of its common stock during
its initial public offering, as well as investment earnings from the remaining
net proceeds.
Provision for income taxes. The effective income tax rate for the nine-month
period ended November 30, 1997, of 43% varied from the statutory rate of 34%
due to state and local income taxes and because certain expenses, including
premiums on keyperson life insurance policies, a portion of meals and
entertainment, and dues expense are non-deductible for income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
On July 8, 1997, the Company completed an initial public offering covering 2.3
million shares of its common stock. Net proceeds from the offering were
approximately $24.6 million of which $3.9 million was used to repay all
outstanding indebtedness under the Company's credit facilities.
The Company intends to use approximately $2.0 million of the offering proceeds
over the next 12 to 24 months for computer hardware and software purchases,
upgrades, and enhancements. The remaining proceeds will be used for general
corporate purposes, including expansion of the Company's client base, industry
coverage, and geographic reach through selective acquisitions.
The Company relies primarily upon cash flows from operations and available
borrowings under its credit facilities to finance its operations. During the
nine-month period ended November 30, 1997, cash used in operations was
approximately $1.1 million. To provide additional liquidity, the Company has
obtained a commitment letter from a bank to provide credit facilities of
approximately $15.0 million. Outstanding borrowings under these facilities
will bear interest at various rates based on either a LIBOR index or the bank's
prime lending rate, as determined at the Company's option.
Capital expenditures totaled approximately $1.3 million for the nine-month
period ended November 30, 1997. These expenditures consisted primarily of
purchases of office furniture and equipment, upgrades to information systems,
and leasehold improvements. Additionally, investments in whole life insurance
policies intended to fund the Company's deferred compensation plan were
approximately $1.0 million.
The Company believes that funds from operations, its expanded credit
facilities, and the net proceeds from the offering will be sufficient to meet
its anticipated working capital, capital expenditures, and general corporate
requirements for the foreseeable future.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this Quarterly Report on Form 10-Q contain
forward-looking statements that are based on the current beliefs and
expectations of the Company's management, as well as assumptions made by, and
information
8
<PAGE> 9
currently available to, the Company's management. Such statements
include those regarding general economic and executive search industry trends.
Because such statements involve risks and uncertainties, actual actions and
strategies and the timing and expected results thereof may differ materially
from those expressed or implied by such forward-looking statements, and the
Company's future results, performance, or achievements could differ materially
from those expressed in, or implied by, any such forward-looking statements.
Future events and actual results could differ materially from those set forth
in or underlying the forward-looking statements.
Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted. These potential risks and uncertainties
include dependence on attracting and retaining qualified executive search
consultants, portability of client relationships, restrictions imposed by
blocking arrangements, competition, relationship with Amrop International
alliance of executive search firms, implementation of acquisition strategy,
reliance on information processing systems, and employment liability risk. In
addition to the factors noted above, other risks, uncertainties, assumptions,
and factors that could affect the Company's financial results are described in
the Company's Registration Statement on Form S-1 (File No. 333-26027),
originally filed with the Securities and Exchange Commission April 29, 1997, as
amended and as effective July 1, 1997.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
On January 2, 1998, the Company completed the acquisition of substantially all
of the operating assets of Chartwell Partners International, Inc., a San
Francisco-based retained executive search firm ("Chartwell"). Since completion
of the acquisition, the Company has operated Chartwell's business as the
Company's San Francisco office. The assets acquired from Chartwell consisted
principally of certain intangible assets, including goodwill, software and
leasehold rights, and office equipment and computers. The Company and David
deWilde, Chartwell's sole stockholder, established the purchase price and other
terms of the acquisition as a result of arms' length negotiations. Prior to
this transaction, the Company and Mr. deWilde had no material relationship.
The purchase consideration was valued at approximately $3.1 million and
consisted of (1) approximately $1.4 million cash, (2) a convertible subordinated
promissory note of the Company in the principal amount of $1.2 million, payable
over three years, accruing interest on the unpaid balance at the rate of 6.75%
per annum and convertible into shares of the Company's common stock at each
anniversary date at prices specified in the asset purchase agreement, and (3)
25,707 shares of the Company's common stock. Approximately $1.4 million of the
purchase consideration was derived from the proceeds of the Company's initial
public offering which had been invested in short-term investment securities
since July 1997.
The Company is in the process of compiling financial statements and related
information to determine whether the assets acquired from Chartwell constitute
a "significant amount of assets" within the meaning of Item 2 of Form 8-K.
Once such determination has been made, any Chartwell financial statements
required to be filed under applicable regulations will be filed as soon as
practicable, but in any event, no later than 60 days after January 20, 1998,
the date on which a Current Report on Form 8-K would have been due to have been
filed in respect of the Chartwell acquisition.
9
<PAGE> 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
10.1 -Definitive 1997 Omnibus Stock and Incentive Plan
10.2 -Non-Employee Directors' Stock Option Plan*
10.3 -Profit Sharing Plan*
10.4 -1997 Employee Stock Purchase Plan*
10.5 -Form of Agreement for Deferred Compensation Plan*
10.6 -Managing Partners' Compensation Plan*
10.7 -Partners' Compensation Plan*
10.8 -Employment Agreement for Mr. Gow*
10.10 -Employment Agreement for Mr. Rothschild*
10.11 -Form of Indemnification Agreement entered into with Messrs. Philip R. Albright, Michael Brenner, Arthur J.
Davidson, Mark P. Elliott, David W. Gallagher, Joe D. Goodwin, Roderick C. Gow, Ray J. Groves, Harold
E. Johnson, John F. Johnson, Robert L. Pearson, Richard W. Pogue, John C. Pope, John S. Rothschild,
Thomas M. Watkins III, Jack P. Wissman**
10.12 -Directors' Deferral Plan*
10.13 -Employment Agreement with Robert L. Pearson dated October 8, 1997
27 -Financial Data Schedule (for SEC use only)
</TABLE>
* Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Registration Statement on Form S-1 (File No. 333-26027),
originally filed April 29, 1997, as amended and as effective July 1, 1997.
** Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's first quarter 10-Q filed on August 8, 1997.
10
<PAGE> 11
LAMALIE ASSOCIATES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, Registrant's principal financial officer, thereunto duly
authorized.
January 12, 1998 LAMALIE ASSOCIATES, INC.
-------------------------
(Registrant)
/s/ JACK P. WISSMAN
-------------------------
Jack P. Wissman
Executive Vice President
(Authorized officer of
Registrant and principal
financial officer)
11
<PAGE> 1
Exhibit 10.1
[LOGO]
LAMALIE ASSOCIATES, INC.
1997 OMNIBUS STOCK AND INCENTIVE PLAN
EFFECTIVE JULY 1, 1997
<PAGE> 2
TABLE OF CONTENTS
EFFECTIVE JULY 1, 1997
<TABLE>
<CAPTION>
Item Page
- ---- ----
<S> <C>
SECTION 1. Establishment; Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3. Types of Awards Under Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. Number of Shares Covered by Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8. Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 9. Performance Shares and Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 10. Restricted Stock, Restricted Stock Units, and Unrestricted Stock . . . . . . . . . . . . . . . . . . . . 12
SECTION 11. Adjustment of Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 12. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 13. Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 14. Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 15. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 16. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 17. Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 18. No Stockholder Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 19. Amendments; Termination or Suspension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 20. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
<PAGE> 3
LAMALIE ASSOCIATES, INC.
1997 OMNIBUS STOCK AND INCENTIVE PLAN
EFFECTIVE JULY 1, 1997
SECTION 1. ESTABLISHMENT; PURPOSE. Lamalie Associates, Inc.
(the "Company") hereby establishes the 1997 Omnibus Stock and Incentive Plan
(the "Plan"), pursuant to which key employees of the Company will be given the
ability to participate in increases in value of the Company. Under the Plan,
the Company may grant any one or more type of incentive awards to professional
and managerial employees who measurably impact the performance of the Company.
SECTION 2. DEFINITIONS. The following words and terms as used
herein shall have that meaning set forth therefor in this Section 2 unless a
different meaning is clearly required by the context.
(a) "AWARDS" shall mean any Options, SARs, Performance
Units, Performance Shares, Restricted Stock Units, Restricted Stock and
Unrestricted Stock granted or awarded under the Plan.
(b) "AWARD AGREEMENT(S)" shall mean any document,
agreement or certificate deemed by the Committee as necessary or advisable to
be entered into with or delivered to a Participant in connection with or as a
condition precedent to the valid completion of the grant of an Award under the
Plan. Award Agreements include Stock Option Agreements, Stock Appreciation
Right Agreements, Performance Agreements and Restriction Agreements.
(c) "BOARD" or "BOARD OF DIRECTORS" shall mean the Board
of Directors of the Company.
(d) "CHANGE IN CONTROL" shall mean:
(i) a change in control of the Company of a
nature that is required, pursuant to the
Securities Exchange Act of 1934 (the "1934
Act"), to be reported in response to Item
1(a) of a Current Report on Form 8-K or Item
6(e) of Schedule 14A, in each case as such
requirements are in effect on June 1, 1997;
(ii) the adoption by the Company of a plan of
dissolution or liquidation;
(iii) the closing of a sale of all or substantially
all of the assets of the Company;
(iv) the closing of a merger, reorganization or
similar transaction (a "Transaction")
involving the Company in which the Company is
not the surviving corporation or, if the
Company is the surviving corporation,
immediately following the closing of the
Transaction,
Effective July 1, 1997 Page 1
<PAGE> 4
persons who were shareholders of the Company
immediately prior to the Transaction own
less than 75% of the combined voting power of
the surviving corporation's voting securities;
(v) the acquisition of "Beneficial Ownership" (as
defined in Rule 13d-3 under the 1934 Act) of
the Company's securities comprising 25% or
more of the combined voting power of the
Company's outstanding securities by any
"person" (as that term is used in Sections
13(d) and 14(d)(2) of the 1934 Act and the
rules and regulations promulgated thereunder,
but not including any trustee or fiduciary
acting in that capacity for an employee
benefit plan sponsored by the Company) and
such person's "affiliates" and "associates"
(as those terms are defined under the 1934
Act); or
(vi) the failure of the "Incumbent Directors" (as
defined below) to constitute at least a
majority of all directors of the Company (for
these purposes, "Incumbent Directors" mean
individuals who were the directors of the
Company on June 1, 1997, and, after his or
her election, any individual becoming a
director subsequent to June 1, 1997, whose
election, or nomination for election by the
Company's shareholders, is approved by a vote
of at least two-thirds of the directors then
comprising the Incumbent Directors, except
that no individual shall be considered an
Incumbent Director whose initial assumption
of office as a director is in connection with
an actual or threatened "election contest"
relating to the "election of directors" of
the Company, as such terms are used in Rule
14a-11 of Regulation 14A under the 1934 Act).
Notwithstanding any provision above to the contrary, no Change in Control shall
be deemed to have occurred with respect to any particular Participant by virtue
of a transaction, or series of transactions, that results in the Participant,
or a group of persons that includes the Participant, acquiring the Beneficial
Ownership of more than 25% of the combined voting power of the Company's
outstanding securities.
(e) "CODE" shall mean the Internal Revenue Code of 1986,
as amended. Reference to a specific section of the Code shall include a
reference to any successor provision.
(f) "COMMITTEE" shall mean the Compensation Committee of
the Board of Directors, as defined in Section 6.
(g) "COMMON STOCK" shall mean the common stock of the
Company.
(h) "COMPANY" shall mean Lamalie Associates, Inc. and its
successors.
(i) "FAIR MARKET VALUE" of the Common Stock is defined in
Section 7(a).
Effective July 1, 1997 Page 2
<PAGE> 5
(j) "INCENTIVE STOCK OPTION" shall mean an Option
that is intended to qualify under Section 422 of the Code.
(k) "NON-INCENTIVE STOCK OPTION" shall mean an Option
that is not intended to qualify under Section 422 of the Code.
(l) "OPTION" shall mean an Incentive Stock Option or a
Non-Incentive Stock Option granted in accordance with the provisions of
Section 7.
(m) "OPTION PERIOD" is defined in Section 7(c).
(n) "PARTICIPANT" shall mean any individual employed by
the Company or any Subsidiary to whom the Committee grants an Award.
(o) "PERFORMANCE ACCOUNT" is defined in Section 9(b).
(p) "PERFORMANCE AWARD" shall mean an Award of
Performance Shares and/or Performance Units.
(q) "PERFORMANCE PERIOD" is defined in Section 9(c).
(r) "PERFORMANCE SHARES" shall mean shares of Common
Stock granted in accordance with the provisions of Section 9.
(s) "PERFORMANCE UNITS" shall mean an Award in a form
other than shares of Common Stock granted in accordance with the provisions of
Section 9.
(t) "PLAN" shall mean the Lamalie Associates, Inc. 1997
Omnibus Stock and Incentive Plan, as set forth herein and as amended from time
to time.
(u) "RESTRICTED STOCK" shall mean shares of Common Stock
subject to the provisions of Section 10 and such other terms and conditions as
the Committee may prescribe, and granted in accordance with the provisions of
Section 10.
(v) "RESTRICTED STOCK UNITS" shall mean the right to
receive shares of Common Stock or the cash equivalent thereof subject to the
provisions of Section 10 and such other terms and conditions as the Committee
may prescribe, and granted in accordance with the provisions of Section 10.
(w) "RESTRICTION PERIOD" is defined in Section 10(b).
(x) "SAR" shall mean a Stock Appreciation Right granted
in accordance with the provisions of Section 8.
(y) "STOCK APPRECIATION RIGHT" shall mean a SAR.
Effective July 1, 1997 Page 3
<PAGE> 6
(z) "SUBSIDIARY" shall mean any corporation that at the
time qualifies as a subsidiary of the Company under the definition of
"subsidiary corporation" contained in Section 424(f) of the Code.
(aa) "UNRESTRICTED STOCK" shall mean shares of Common
Stock granted in accordance with the provisions of Section 10 and not subject
to restrictions.
SECTION 3. TYPES OF AWARDS UNDER PLAN. The Company may grant
under this Plan Incentive Stock Options, Non-Incentive Stock Options, SARs,
Performance Units, Performance Shares, Restricted Stock, Restricted Stock
Units, and Unrestricted Stock.
SECTION 4. ELIGIBILITY. The Company may grant an Award to any
person, including any officer but not a person who is solely a director, who is
in the employ of the Company or any Subsidiary on the date of a grant of such
Award. Awards shall primarily be made to officers and other management and
professional employees of the Company. Any individual to whom the Committee
has granted an Award (a "Participant") shall be bound by the terms of this Plan
and the Award Agreement applicable to him or her.
SECTION 5. NUMBER OF SHARES COVERED BY AWARDS. The total number
of shares that may be issued and sold pursuant to Awards under this Plan shall
be Nine Hundred Fifty Thousand (950,000) shares of Common Stock (or the number
and kind of shares of common stock of the Company or other securities of the
Company which, in accordance with Section 11, shall be substituted for such
shares of Common Stock or to which said shares shall be adjusted; hereinafter,
all references to Common Stock includes references to said shares to which said
shares are adjusted). The issuance of shares of Common Stock pursuant to the
provisions of this Plan for Awards shall be free from any preemptive or
preferential right of subscription or purchase on the part of any stockholder.
If any outstanding Option or Restricted Stock granted or awarded under this
Plan expires, is terminated or is forfeited for any reason, the shares of
Common Stock subject to the unexercised portion of such Option or grant of
Restricted Stock will again be available for Awards under this Plan.
SECTION 6. ADMINISTRATION.
(a) This Plan shall be administered by the committee (the
"Committee") referred to in subsection (b) of this Section 6. However, until
such time as the Committee is appointed, the Board of Directors shall
administer the Plan pursuant to the provisions of this Section 6 as if it were
the Committee. Subject to the express provisions of this Plan, the Committee
shall have complete authority, in its discretion,
(i) to interpret this Plan, and to prescribe,
amend and rescind rules and regulations
relating to the Plan;
(ii) to determine the terms and provisions of
Awards granted hereunder and to make such
determinations as to the Participants to
receive Awards, the form, amount and timing
of such Awards, the terms and provisions of
such Awards, and the Award Agreements
evidencing
Effective July 1, 1997 Page 4
<PAGE> 7
the same, which need not be uniform and which
the Committee may make selectively
among Participants who receive, or who are to
receive, Awards under the Plan, whether or
not the Participants are similarly situated;
(iii) to determine to whom the Options shall be
granted, the times and the prices at which
Options are granted, the Option periods, the
number of shares of Common Stock to be
subject to each Option, whether each Option
shall be an Incentive Stock Option or a
Non-Incentive Stock Option, and to determine
the terms and provisions of each Option
(which need not be identical);
(iv) to determine to whom SARs shall be granted,
the times and duration of each SAR, the
number of shares of Common Stock to which
each SAR relates, whether an SAR is granted
with respect to Options or alone, without
reference to any related stock option, and to
determine the terms and provisions of each
SAR (which need not be identical);
(v) to determine to whom Performance Shares and
Performance Units shall be granted, the
applicable Performance Period, and the number
of shares of Common Stock represented by
Performance Shares and Performance Units, to
maintain Performance Accounts, and to
determine the terms and provisions of
Performance Awards (which need not be
identical);
(vi) to determine to whom Restricted Stock,
Restricted Stock Units and Unrestricted Stock
shall be granted, the Restriction Period (if
applicable), the number of shares of
Restricted Stock and/or Unrestricted Stock,
the terms and provisions (which need not be
identical) of awards of Restricted Stock and
Restricted Stock Units and whether the
Participant has met the goals on or before
the close of the Restriction Period;
(vii) to impose such limitations with respect to
Options and Restricted Stock, including
without limitation, any relating to the
application of federal or state securities
laws, as the Committee may deem necessary or
desirable;
(viii) to determine the dates of employment of any
employee of the Company, and the reasons for
termination of any Participant;
(ix) to determine whether any leave of absence
constitutes a termination of employment for
purposes of this Plan and the impact, if any,
of such leave of absence on awards
theretofore made under this Plan;
Effective July 1, 1997 Page 5
<PAGE> 8
(x) to determine when a person's change
of status with respect to the Company
constitutes a termination of such person's
employment for purposes of this Plan;
(xi) to make such determinations as it deems
equitable with respect to the impact, if any,
of leaves of absence from the Company upon
Awards hereunder;
(xii) to grant dividend equivalents upon Awards
(other than Restricted Stock or Unrestricted
Stock, for which Participants are entitled to
receive dividends and other distributions
paid with respect to shares of Common Stock
so held), provided that any such dividend
equivalents shall be subject to the terms and
conditions imposed by the Committee; and
(xiii) to make all other determinations necessary or
advisable for the administration of the Plan.
In making determinations under this Section 6, the Committee may take into
account the nature of the services rendered by the respective employees, their
present and potential contributions to the success of the Company and such
other factors as the Committee, in its discretion, deems relevant. The
Committee's determination on all of the matters referred to in this Section 6
shall be conclusive.
(b) The Committee shall consist of the Compensation
Committee of the Board of Directors of the Company, which shall be comprised of
two (2) or more outside directors. The Committee shall be appointed by the
Board, which may at any time and from time to time, remove any member of the
Committee, with or without cause, appoint additional members to the Committee
and fill vacancies, however caused, in the Committee. A majority of members of
the Committee shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. Any decision or determination of
the Committee reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made at a meeting duly
called and held.
(c) No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan.
(d) Nothing contained in this Plan shall be deemed to
give any individual any right to be granted an Award except to the extent and
upon such terms and conditions as may be determined by the Committee.
SECTION 7. STOCK OPTIONS. Each Option granted under this Plan
shall be evidenced by a written agreement (the "Stock Option Agreement"), which
shall be executed by the Company and by the Participant, and shall be subject
to the following terms and conditions:
(a) The price at which shares of Common Stock covered by
each Option may be purchased pursuant thereto shall be determined in each case
on the date of grant by the Committee;
Effective July 1, 1997 Page 6
<PAGE> 9
provided, however, that with respect to Incentive Stock Options, the price
shall be an amount not less than the Fair Market Value of the shares of Common
Stock at the time the Incentive Stock Option is granted. The date on which the
Committee approves the grant of an Option shall be considered to be the date on
which such Option is granted. For purposes of this Section, the Fair Market
Value of shares of Common Stock on any day shall be:
(i) in the event the Common Stock is not publicly
traded, the fair market value of such shares
on such day as determined by the Committee in
good faith and based on all relevant factors;
or
(ii) in the event the Common Stock is publicly
traded, the closing price of such shares on
the date in question (or, if no shares are
traded on such day, on the next preceding day
on which shares were traded), of the Common
Stock on the principal securities exchange in
the United States on which such stock is
listed, or if such stock is not listed on a
securities exchange in the United States, the
closing price on such day on the Nasdaq Stock
Market ("Nasdaq"), or Nasdaq's successor, or
if not reported on Nasdaq, the fair market
value of such stock as determined by the
Committee in good faith and based on all
relevant factors or as otherwise determined
by the Committee in its discretion pursuant
to any reasonable method contemplated by
Section 422 of the Code and any Treasury
regulations issued pursuant to that Section.
(b) The option price of the shares to be purchased
pursuant to each Option shall be paid in full (i) in United States dollars in
cash or by check, bank draft or money order payable to the order of the
Company; (ii) in the discretion of and in the manner determined by the
Committee, by the delivery of shares of Common Stock already owned by the
Participant; (iii) by any other legally permissible means acceptable to the
Committee at the time of grant of the Option (including cashless exercise as
permitted under the Federal Reserve Board's Regulation T, subject to applicable
legal restrictions); or (iv) in the discretion of the Committee, through a
combination of (i), (ii) and (iii) of this subsection (b). Shares of Common
Stock delivered will be valued on the day of delivery for the purpose of
determining the extent to which the option price has been paid thereby, in the
same manner as provided for in the determination of Fair Market Value as set
forth in subsection (a) of this Section 7, or as otherwise determined by the
Committee in its discretion pursuant to any reasonable method contemplated by
Section 422 of the Code and any Treasury regulations issued pursuant to that
Section.
(c) Each Stock Option Agreement shall provide that such
Option may be exercised by the Participant, in such parts and at such times, as
may be specified in such Stock Option Agreement, within a period ending not
later than ten years after the date on which the Option is granted (the "Option
Period"); provided, however, that the Option Period shall end on the earlier of
the date specified in such Stock Option Agreement or the ending date of the
period specified in the next sentence. Options may be exercised only during
the Option Period and only
Effective July 1, 1997 Page 7
<PAGE> 10
(i) during the continuance of the Participant's
employment with the Company or a Subsidiary;
(ii) if the Participant terminates employment with
the Company or a Subsidiary other than by
reason of death, during the period ending
ninety (90) days after the date of
termination of employment, but only to the
extent that the right to exercise such
Options had accrued on or before the date of
termination and had not previously been
exercised; provided, that if the Participant
terminates such employment by reason of
disability (within the meaning of Section
22(e)(3) of the Code) or if the Participant
dies during the ninety (90) day period, the
ninety (90) day period shall be extended to
one (1) year; or
(iii) if the Participant dies while employed by the
Company or a Subsidiary, during the period
ending on the first anniversary of the
Participant's death, but only to the extent
that the right to exercise such Options had
accrued on or before the date of death and
had not previously been exercised.
Whether an authorized leave of absence or absence for military or governmental
service shall constitute termination of employment for purposes of the Plan
shall be determined by the Committee, whose determination shall be final and
conclusive. In the event of the death of a Participant, Options held by the
Participant may be exercised, to the extent specified in the Stock Option
Agreement and this subsection (c), by the person or persons entitled to do so
under the Participant's will, or, if the Participant fails to make testamentary
disposition of said Options, or dies intestate, by the Participant's legal
representative or representatives.
(d) Unless otherwise specified by the Committee, each
Option shall be exercisable, in whole or in part, only in accordance with the
following chart:
<TABLE>
<CAPTION>
Percentage of
Number of Years from Shares
Date Option is Granted Exercisable
---------------------- -----------
<S> <C>
Less than 1 year 0%
1 year but less than 2 years 25%
2 years but less than 3 years 50%
3 years but less than 4 years 75%
4 years or more 100%
</TABLE>
Notwithstanding the foregoing, a Participant shall be 100% vested in the number
of shares of Common Stock originally covered by an Option in the event
Participant dies or becomes totally and permanently disabled (as determined in
the sole discretion of the Committee) while still employed by the Company or
upon a Change in Control while the Participant is still so employed. When it
Effective July 1, 1997 Page 8
<PAGE> 11
deems special circumstances to exist, the Committee in its discretion may
accelerate the time at which an Option may be exercised if, under previously
established exercise terms, such Option was not immediately exercisable in full,
even if the acceleration would permit the Option to be exercised more rapidly
than the vesting set forth above in the chart, or as otherwise specified by the
Committee, would permit.
(e) In the discretion of the Committee, a single Stock
Option Agreement may include both Incentive Stock Options and Non-Incentive
Stock Options, or separate Stock Option Agreements may be set forth for
Incentive Stock Options and Non-Incentive Stock Options.
(f) Each Option granted under this Plan shall be
non-transferable, and its terms shall state that it is non-transferable and
that, during the lifetime of the Participant, shall be exercisable only by the
Participant; notwithstanding the foregoing, Options shall be transferable by
will or the laws of descent and distribution as set forth in subsection (c) of
this Section 7. However, a Participant may transfer a Non-Incentive Stock
Option to a trust, provided that the Committee may require that the Participant
submit an opinion of his or her legal counsel, satisfactory to the Committee,
that such holding has no adverse tax or securities law consequences for the
Company.
(g) Notwithstanding anything contained herein to the
contrary, if Options as to 100 or more shares of Common Stock are held by a
Participant, then the Participant may exercise such Options only with respect
to at least 100 shares at any one time, and if Options for less than 100 shares
are held by a Participant, then the Participant must exercise Options for all
shares at one time.
(h) The Stock Option Agreements under this Plan may
contain such other terms, provisions and conditions not inconsistent herewith
as shall be determined by the Committee, in its discretion, including, without
limitation, provisions (i) relating to the vesting and termination of Options;
(ii) restricting the transferability of such shares during a specified period;
and (iii) requiring the resale of such shares to the Company, at a price as
specified in the Stock Option Agreement, if the Participant's employment by the
Company terminates prior to a time specified in the Stock Option Agreement.
(i) All grants of Options made prior to the date on which
shareholders approve this Plan shall be contingent upon subsequent approval of
the shareholders of this Plan.
(j) This Section 7 shall terminate on, and no additional
Awards shall be granted after, ten years from the first to occur of (i) the
date on which the Plan is adopted or (ii) the date on which the shareholders of
the Company approve the Plan.
(k) Each Option that is intended to qualify as an
Incentive Stock Option pursuant to Section 422 of the Code, and each Option
that is intended to qualify as another type of incentive stock option that may
subsequently be authorized by law, shall comply with the applicable provisions
of the Code pertaining to such options. Accordingly, the provisions of this
Plan with respect to Incentive Stock Options shall be construed in a manner
consistent with such requirements, and no person shall be eligible to receive
any Incentive Stock Options under the Plan if such person would not be able
qualify for the benefits of incentive stock options under Section 422 of the
Code. Without limitation on the foregoing, and notwithstanding the foregoing
provisions of this Section
Effective July 1, 1997 Page 9
<PAGE> 12
7, if any Incentive Stock Option is granted to any person at a time when such
person owns, within the meaning of Section 424(d) of the Code, more than ten
percent (10%) of the total combined voting power of all classes of stock of the
employer corporation (or a parent or subsidiary of such corporation within the
meaning of Section 424 of the Code), the price at which each share of Common
Stock covered by such Option may be purchased pursuant to such Option shall not
be less than one hundred ten percent (110%) of the Fair Market Value of the
shares of Common Stock at the time the Option is granted, and such Option must
be exercised no event later than the fifth anniversary of the date on which the
Option was granted. Moreover, as long as and to the extent required by the
Code, the aggregate Fair Market Value (determined as of the time an Incentive
Stock Option is granted) of the shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Participant
in any calendar year under the Plan and under all other incentive stock option
plans of the Company and any parent and subsidiary corporations of the Company
(as those terms are defined in Section 424 of the Code) shall not exceed
$100,000.
SECTION 8. STOCK APPRECIATION RIGHTS.
(a) An SAR is a right to receive, without payment (except
for applicable withholding taxes) to the Company, a number of shares of Common
Stock, cash or a combination thereof, the amount of which is determined under
subsection (e) of this Section 8. An SAR may be granted (i) with respect to
any Option granted under this Plan, either concurrently with the grant of such
Option, or at such later time as determined by the Committee (as to all or any
portion of the shares of Common Stock subject to the Option), or (ii) alone,
without reference to any related Option. Each SAR granted by the Committee
under this Plan shall be subject to the terms and conditions of this Section 8.
(b) Each SAR granted to any Participant shall relate to
the number of shares of Common Stock as shall be determined by the Committee,
subject to adjustment as provided in Section 11. In the case of an SAR granted
with respect to an Option, the number of shares of Common Stock to which the
SAR relates shall be reduced in the same proportion that the holder of such
Option exercises with respect to such related Option, and the number of shares
subject to an Option shall be reduced in the same proportion that the holder of
the SAR exercises with respect to the related Option.
(c) The term of each SAR shall be determined by the
Committee. Unless otherwise provided by such Committee, an SAR granted in
connection with an Option shall be exercisable only at such time or times, to
such extent and by such persons as the Option to which it relates shall be
exercisable, provided that an SAR granted in connection with an Incentive Stock
Option shall not be exercisable on any date on which the Fair Market Value of a
share of Common Stock is less than or equal to the per share exercise price of
the Incentive Stock Option. An SAR shall be canceled when, and to the extent
that, any related Option is exercised, and an Option shall be canceled when,
and to the extent that, the Option is surrendered to the Company upon the
exercise of a related SAR. The Committee, in its discretion, may accelerate
the time within which a SAR may be exercised.
(d) An SAR may be exercised, in whole or in part, by
giving written notice to the Committee, specifying the number of SARs that the
holder wishes to exercise. Upon receipt of such
Effective July 1, 1997 Page 10
<PAGE> 13
written notice, the Committee shall direct the Company to deliver to the
exercising holder within ninety (90) days after receipt of the notice a
certificate for the shares of Common Stock or cash or both, as determined by
the Committee, to which the holder is entitled.
(e) Subject to the right of the Committee to deliver cash
in lieu of shares of Common Stock, the number of shares of Common Stock that
shall be issuable upon the exercise of an SAR shall be determined by dividing:
(i) the number of shares of Common Stock as to
which the SAR is exercised multiplied by the
amount of appreciation in such shares (for
this purpose, the "appreciation" shall be the
amount by which the Fair Market Value of the
shares of Common Stock subject to the SAR on
the exercise date exceeds (A) in the case of
an SAR related to an Option, the purchase
price of the shares of Common Stock under the
Option or (B) in the case of an SAR granted
alone, without reference to a related Option,
an amount that shall be determined by the
Committee at the time of the grant, subject
to adjustment under Section 11); by
(ii) the Fair Market Value of a share of Common
Stock on the exercise date.
In lieu of issuing shares of Common Stock upon the exercise of an SAR, the
Committee may elect to pay the holder of an SAR cash equal to the Fair Market
Value on the exercise date of any or all of the shares that would otherwise be
issuable. No fractional shares of Common Stock shall be issued upon the
exercise of an SAR; instead, the holder of the SAR shall be entitled to receive
a cash adjustment equal to the same fraction of the Fair Market Value of a
share of Common Stock on the exercise date or to purchase the portion necessary
to make a whole share at its Fair Market Value on the date of exercise.
(f) SARs awarded under the Plan shall be evidenced by
either a Stock Option Agreement or a separate signed Stock Appreciation Right
Agreement between the Company and the Participant to whom the SAR is granted.
SECTION 9. PERFORMANCE SHARES AND UNITS.
(a) The Committee may award to any Participant
Performance Shares and/or Performance Units ("Performance Awards"). Each
Performance Share shall represent one share of Common Stock. Each Performance
Unit shall represent the right of a Participant to receive an amount equal to
the value to be determined in the manner established by the Committee at the
time of the award, which value may, without limitation, be equal to the Fair
Market Value of one share of Common Stock. Each Performance Award under the
Plan shall be evidenced by a signed written agreement containing such terms and
conditions as the Committee may from time to time determine (the "Performance
Agreement").
Effective July 1, 1997 Page 11
<PAGE> 14
(b) At the time of the Performance Award, the Committee
shall establish an account (the "Performance Account") for each Participant to
whom a Performance Award has been granted. Performance Units and Performance
Shares awarded to a Participant shall be credited to the Participant's
Performance Account.
(c) The performance period for each Performance Award
shall be of such duration as the Committee shall establish at the time of the
award (the "Performance Period"). There may be more than one Performance Award
in existence for a Participant at any time, and more than one Performance
Period applicable to a Participant, and the duration of Performance Periods may
differ.
(d) At the time of each Performance Award, the Committee
may, in its complete discretion, establish performance target(s) to be achieved
within the Performance Period(s). The performance target(s) shall be
determined by the Committee using such measures of performance of the Company
over the Performance Period as the Committee shall select. During any
Performance Period, the Committee may adjust the performance targets for such
Performance Period as it deems equitable in recognition of unusual or
non-recurring events affecting the Company, changes in applicable tax laws or
accounting principles or such other factors as the Committee may determine. If
the Committee determines that the Participant has failed to meet the
performance target(s), the Participant will not receive payment of the
Performance Award.
(e) Performance Awards will be earned as determined by
the Committee in respect of a Performance Period in relation to the degree of
attainment of performance target(s).
(f) Performance Awards shall be earned to the extent that
their terms and conditions are met. Notwithstanding the foregoing, Performance
Awards and any other amounts credited to the Participant's Performance Account
shall be payable to the Participant only in accordance with the Performance
Agreement. The Committee shall make all payment determinations during the
four-month period beginning on the first day following the close of the
Performance Period. Payment for Performance Awards may be made in a lump sum
or in installments, in cash, in shares of Common Stock or in a combination
thereof as the Committee may determine.
(g) In the event that a Participant's employment by the
Company terminates before the end of a Performance Period with the consent of
the Committee, or upon a Participant's death or disability before the end of a
Performance Period, the Committee, taking into consideration the performance of
such Participant and the performance of the Company over such portion of the
Performance Period, may authorize the payment to such Participant (or his or
her legal representative or designated beneficiary) of all or a portion of the
amount that would have been paid to the Participant had he or she continued
employment until the end of the Performance Period. In the event a Participant
ceases his or her employment for any other reason, any unpaid amounts for any
outstanding Performance Periods shall be forfeited.
SECTION 10. RESTRICTED STOCK, RESTRICTED STOCK UNITS, AND
UNRESTRICTED STOCK.
(a) The Committee may award to any Participant shares of
Common Stock subject to no restrictions ("Unrestricted Stock").
Effective July 1, 1997 Page 12
<PAGE> 15
(b) At the time of an Award under subsection (c) or (d)
below, there shall be established for each Participant a restriction period
(the "Restriction Period"), which shall lapse (i) upon the completion of a
period of time ("Time Goal") as shall be determined by the Committee, or (ii)
upon the achievement of stock price goals within certain time periods
("Price/Time Goal") as shall be determined by the Committee.
(c) The Committee may award to any Participant shares of
Common Stock, subject to this Section 10 and such other terms and conditions as
the Committee may prescribe ("Restricted Stock"). Each certificate for
Restricted Stock shall be registered in the name of the Participant and
deposited by the Participant, together with a stock power endorsed in blank,
with the Committee. Restricted Stock awarded under this Plan shall be
evidenced by a signed written agreement containing such terms and conditions as
the Committee may from time to time determine in its discretion (the
"Restriction Agreement"). Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as hereinafter provided,
during the Restriction Period. Except for such restrictions on transfer, the
Participant as owner of such Restricted Stock shall have all the rights of a
holder of such Common Stock. A Participant may transfer Restricted Stock to a
trust, provided that the Committee may require that the Participant submit an
opinion of his or her legal counsel, satisfactory to the Committee, that such
holding has no adverse tax or securities law consequences for the Company.
With respect to Restricted Stock that is issued
subject to a Time Goal, the Committee shall redeliver to the Participant (or
the Participant's legal representative or designated beneficiary) the
certificates deposited pursuant to this subsection (c) at the expiration of the
Restriction Period. With respect to Restricted Stock that is issued subject to
a Price/Time Goal, the Committee shall redeliver to the Participant (or the
Participant's legal representative or designated beneficiary) the certificates
deposited pursuant to this subsection (c) at the expiration of the Restriction
Period. Notwithstanding the foregoing, if Restricted Stock is issued subject
to a Price/Time Goal or Time Goal and the Committee determines that a
Participant has not achieved the Time Goal or Price/Time Goal before the end of
the Restriction Period, the Participant shall have no further rights with
respect to the Restricted Stock, all such shares shall be forfeited and the
Committee shall have the right to complete a blank stock power in order to
return such shares to the Company.
(d) The Committee may award to a Participant a right to
receive Common Stock or the cash equivalent of the Fair Market Value of the
Common Stock, in the Committee's discretion, at the end of the Restriction
Period ("Restricted Stock Units") subject to achievement of a Time Goal or
Price/Time Goal established by the Committee. Restricted Stock Units awarded
under this Plan shall be evidenced by a signed written agreement containing
such terms and conditions as the Committee may from time to time determine in
its discretion (the "Restriction Agreement"). With respect to Restricted Stock
Units that are subject to a Time Goal, the Committee shall deliver notice to
the Participant (or the Participant's legal representative or designated
beneficiary) at the end of the Restriction Period as to whether the Participant
has achieved the Time Goal. With respect to Restricted Stock Units that are
awarded subject to a Price/Time Goal, the Committee shall deliver notice to the
Participant (or the Participant's legal representative or designated
beneficiary) at the end of the Restriction Period as to whether the Participant
has achieved the Price/Time Goal. If the Committee determines that a
Participant has not achieved the Time Goal or Price/Time Goal before
Effective July 1, 1997 Page 13
<PAGE> 16
the end of the Restriction Period, the Participant shall have no further rights
with respect to the Restricted Stock Units.
(e) In the event a Participant ceases employment with the
Company with the consent of the Committee or upon the Participant's death or
disability before the end of the Restriction Period and the Participant has
received an Award subject to a Time Goal, the restrictions imposed under this
Section 10 shall lapse with respect to the number of those shares or units
subject to a Time Goal as shall be determined by the Committee. In no event,
however, shall the number of shares or units be less than a number equal to the
product of (i) a fraction, the numerator of which is the number of completed
months elapsed after the date of the Award subject to a Time Goal to the date
of termination and the denominator of which is the number of months in the
Restriction Agreement, multiplied by (ii) the number of shares of Restricted
Stock or Restricted Stock Units awarded to the Participant subject to the Time
Goal.
In the event a Participant ceases employment with the
Company with the consent of the Committee or upon the Participant's death or
disability before the end of the Restriction Period and the Participant has
received an Award subject to a Price/Time Goal, the restrictions imposed under
this Section 10 shall lapse upon the achievement of the Price/Time Goal within
two (2) years of the Participant's termination of employment with respect to
such number of shares or units subject to a Price/Time Goal as shall be
determined by the Committee. In no event, however, shall the number of shares
or units be less than a number equal to the product of (i) a fraction, the
numerator of which is the number of completed months elapsed after the date of
the Award subject to a Price/Time Goal to the date of termination and the
denominator of which is the number of months elapsed after the date of the
Award subject to a Price/Time Goal to the date of achievement of the Price/Time
Goal, multiplied by (ii) the number of shares of Restricted Stock or Restricted
Stock Units awarded to the Participant subject to the Price/Time Goal.
In the event a Participant ceases employment with the
Company for any other reason, all Restricted Stock or Restricted Stock Units
theretofore awarded to that Participant that are still subject to restrictions
shall be forfeited and the Committee shall have the right to complete the blank
stock power with respect to any such Restricted Stock.
SECTION 11. ADJUSTMENT OF NUMBER OF SHARES.
(a) In the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split or other
division or consolidation of shares or the payment of a stock dividend (but
only on Common Stock) or any other increase or decrease in the number of shares
of Common Stock effected without any receipt of consideration by the Company,
then, in any such event, the number of shares of Common Stock that remain
available under the Plan, the number of shares covered by each outstanding
Option, the exercise price per share covered by each outstanding Option, the
number of shares covered by each outstanding SAR and the exercise price per
share and the number and any purchase price for any other Award shares (or
equivalents) granted but not yet issued, in each case, shall be proportionately
and appropriately adjusted for any such increase or decrease.
Effective July 1, 1997 Page 14
<PAGE> 17
(b) Subject to any required action by the stockholders,
if any change occurs in the Common Stock by reason of any recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, or of any similar change affecting Common Stock, then, in any such
event, the number and type of shares of Common Stock then covered by each
outstanding Option, the purchase price per share covered by each outstanding
Option, the number of shares covered by each outstanding SAR and the exercise
price per share and the number and any purchase price for any other Award
shares (or equivalents) granted but not yet issued, in each case, shall be
proportionately and appropriately adjusted for any such change.
(c) In the event of a change in the Common Stock as
presently constituted that is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any change shall be deemed to
be Common Stock within the meaning of the Plan.
(d) To the extent that the foregoing adjustments relate
to stock or securities of the Company, such adjustments shall be made by, and
in the discretion of, the Board of Directors, whose determination in that
respect shall be final, binding and conclusive; provided, however, that any
Incentive Stock Option granted pursuant to Section 7 shall not be adjusted in a
manner that causes such Option to fail to continue to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
(e) Except as hereinabove expressly provided in this
Section 11, a Participant shall have no rights by reason of any division or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease the number of shares of stock of any
class or by reason of any dissolution, liquidation, merger or consolidation, or
spin-off of assets or stock of another corporation; and any issuance by the
Company of shares of stock of any class, securities convertible into shares of
stock of any class, or warrants or options for shares of stock of any class
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock, any Option, any SAR
or any other Award shares (or equivalents) granted but not yet issued.
(f) The existence of the Plan, or the grant of an Option,
SAR or other Award under the Plan, shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or to consolidate, or
to dissolve, to liquidate, to sell, or to transfer all or any part of its
business or assets.
SECTION 12. CHANGE OF CONTROL. In the event of a Change of Control,
any Option, SAR (whether or not granted with respect to an Option) or
Restricted Stock subject to a Time Goal shall immediately become fully vested
without regard to any other terms of the Award.
SECTION 13. BENEFICIARY DESIGNATION. Each Participant under the Plan
may name, from time to time, any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit (other than an Option) under
the Plan is to be paid in case of his or her death before the Participant
receives any or all of such benefit. Each designation will be effective only
with the written consent of the Participant's spouse and will revoke all prior
designations by that Participant, shall be in the form prescribed by the
Committee, and will be effective only when filed
Effective July 1, 1997 Page 15
<PAGE> 18
by the Participant in writing with the Committee during his or her lifetime.
In the absence of any such designation, benefits (other than those under
Options) that are vested and remain unpaid at the Participant's death shall be
paid to his or her estate.
SECTION 14. TAX WITHHOLDING.
(a) The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
any federal, state or local withholding or other tax due from the Company with
respect to any amount payable and/or shares issuable under the Plan, and the
Company may defer such payment or issuance unless indemnified to its
satisfaction. Whenever under the Plan payments are to be made in cash, such
payments shall be made net of an amount sufficient to satisfy any federal,
state or local withholding tax liability.
(b) Subject to the consent of the Committee, with respect
to (i) the exercise of a Non-Incentive Stock Option, (ii) the lapse of
restrictions on Restricted Stock, or (iii) the issuance of any other stock
Award under the Plan, a Participant may make an irrevocable election (an
"Election") to (A) have shares of Common Stock otherwise issuable under (i)
withheld, or (B) tender back to the Company shares of Common Stock received
pursuant to (i), (ii), or (iii), or (C) deliver back to the Company pursuant to
(i), (ii), or (iii) previously acquired shares of Common Stock having a Fair
Market Value sufficient to satisfy all or part of the Participant's estimated
tax obligations associated with the transaction. Such Election must be made by
a Participant prior to the date on which the relevant tax obligation arises.
The Committee may disapprove of any Election, may suspend or terminate the
right to make Elections, or may provide with respect to any Award under this
Plan that the right to make Elections shall not apply to such Awards.
SECTION 15. INDEMNIFICATION. To the fullest extent permitted by law,
each person who is or shall have been a member of the Committee shall be
indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit, or proceeding
to which he or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan and against and
from any and all amounts paid by him or her in settlement thereof, with the
Company's approval, or paid by him or her in satisfaction of any judgment in
any such action, suit, or proceeding against him or her, provided that the
person shall give the Company an opportunity, at its own expense, to handle and
defend the same before the person undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Certificate of Incorporation or Bylaws, as a matter of law,
or otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
SECTION 16. GENDER AND NUMBER. Except where otherwise indicated by
the context, words in the masculine gender when used in the Plan will include
the feminine gender, the singular shall include the plural, and the plural
shall include the singular.
SECTION 17. CONTROLLING LAW. This document shall be construed under
the laws of the State of Florida.
Effective July 1, 1997 Page 16
<PAGE> 19
SECTION 18. NO STOCKHOLDER RIGHTS. No Participant hereunder shall
have any rights of a stockholder of the Company by reason of being granted an
Award under this Plan until the date on which he or she becomes a record owner
of shares of Common Stock purchased upon the exercise of an Option or otherwise
received under this Plan (the "record ownership date"). No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions, or other rights for which the record date is
prior to the record ownership date.
SECTION 19. AMENDMENTS; TERMINATION OR SUSPENSION.
(a) This Plan may be amended from time to time by written
resolution of the Board of Directors of the Company; provided, however, that no
Participant's existing rights are adversely affected thereby without the
consent of such person, and provided further that, without approval of the
stockholders of the Company, no amendment shall (i) increase the total number
of shares of Common Stock that may be issued pursuant to Awards granted under
this Plan, (ii) change the designation of the class of employees eligible to
receive Incentive Stock Options or Non-Incentive Stock Options, (iii) decrease
the minimum Option price set forth in subsection (a) of Section 7 of this Plan,
(iv) extend the period during which an Option may be granted or exercised
beyond the maximum period specified in this Plan, (v) otherwise materially
modify the requirements as to eligibility for participation in the Plan, (vi)
otherwise materially increase the benefits under the Plan, or (vii) withdraw
the authority to administer this Plan from the Committee. Notwithstanding the
foregoing, the Board may amend the Plan to incorporate or conform to
requirements imposed by and amendments made to the Code or regulations
promulgated thereunder which the Board deems to be necessary or desirable to
preserve (A) incentive stock option status for outstanding Incentive Stock
Options and to preserve the ability to issue Incentive Stock Options pursuant
to this Plan, (B) the deductibility by the Company of amounts taxed to Plan
Participants as ordinary compensation income, and (C) the status of any Award
as exempt from registration requirements under any securities law for which the
Award was intended to be exempt. The foregoing prohibitions in this Section 19
shall not be affected by adjustments in shares and purchase price made in
accordance with the provisions of Section 11.
(b) The Board of Directors of the Company may terminate
the Plan or any portion thereof at any time by written resolution. No
suspension or termination shall impair the rights of Participants under
outstanding Awards without the consent of the Participants affected thereby.
SECTION 20. MISCELLANEOUS.
(a) LISTING AND REGISTRATION OF COMMON STOCK. Each
Award shall be subject to the requirement that if at any time the Board of
Directors shall determine, in its discretion, that the listing, registration or
qualification of the Common Stock that is the subject thereof or that is
covered thereby upon any securities exchange or under any state or federal
laws, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting
of such Award or the issuance or purchase of Common Stock thereunder, such
Award may not be exercised unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors. Notwithstanding
anything in the Plan to the contrary, if the provisions of this Section 20(a)
become operative, and if, as a result thereof, the exercise of an Award is
delayed, then
Effective July 1, 1997 Page 17
<PAGE> 20
and in that event, the term of the Award shall not be affected.
Notwithstanding the foregoing or any other provision in the Plan, the Company
shall have no obligation under the Plan to cause any shares of Common Stock to
be registered or qualified under any federal or state law or listed on any
stock exchange or admitted to any national marketing system.
(b) NO IMPLIED RIGHTS TO EMPLOYEES. The existence of the
Plan and the granting of Awards under the Plan shall in no way give any
employee the right to continued employment, give any employee the right to
receive any additional Awards or any additional compensation under the Plan, or
otherwise provide any employee any rights not specifically set forth in the
Plan or in any Award Agreement.
(c) CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan
shall become effective upon the satisfaction of all the following conditions,
with the effective date of the Plan being the date that the last such condition
is satisfied:
(i) the adoption of the Plan by the Board of
Directors;
(ii) the approval of the Plan by the stockholders
of the Company within twelve (12) months
after its adoption by the Board; and
(iii) the effectiveness of the Company's
Registration Statement on Form S-1 relating
to the Company's initial public offering, as
filed with the SEC (File No. 333-26027).
Effective July 1, 1997 Page 18
<PAGE> 1
Exhibit 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 8th day of
October, 1997, but is effective for certain compensation purposes as of the
date specified below in Section 2, by and between LAMALIE ASSOCIATES, INC., a
Florida corporation (the "Company"), and ROBERT L. PEARSON, residing at 3208
Beverly Drive, Dallas, Texas 75205 (the "Executive").
W I T N E S S E T H:
1. EMPLOYMENT
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. TERM
Subject to the provisions for termination as hereinafter provided, the
term of employment under this Agreement shall be effective as of the date first
above written (except with respect to the cash compensation provisions of
Section 3(a) and Section 3(b), which shall be given retroactive effect as of
March 1, 1997 as noted below) and shall continue through the last day of
February, 2000, provided, however, that beginning on the last day of February,
1998 and on the last day of February each year thereafter (each such last day
in February being referred to as a "Renewal Date"), the term of this Agreement
shall automatically be extended for an additional one year so that on each
Renewal Date the then remaining unexpired term of this Agreement shall be three
years, unless either party gives the other written notice of non-renewal at
least ninety (90) days prior to any such Renewal Date.
3. COMPENSATION
(a) Base Salary. The Company shall pay to the Executive as basic
compensation for all services rendered by the Executive during the term of this
Agreement a basic annualized salary of $525,000 per year, or such other sum in
excess of that amount as the parties may agree on from time to time (as in
effect from time to time, the "Base Salary"), payable monthly or in other more
frequent installments, as determined by the Company. In addition, the Board of
Directors of the Company (the "Board"), in its discretion, may award a bonus or
bonuses to the Executive in addition to the bonuses provided for in Section
3(b), provided, however, such discretionary bonus shall not be included in the
definition of "Base Salary."
(b) Bonuses. (i) In addition to the Base Salary to be paid pursuant
to Section 3(a) of this Agreement, during the term of this Agreement or any
renewal or extension, the Company shall pay to the Executive as incentive
compensation annual bonuses in accordance with the incentive bonus plan(s)
adopted from time to time by the Board or the Compensation Committee of the
Board (the "Committee"), as the case may be. Such plan for the Company's 1998
fiscal year ending February 28, 1998, among other things, shall establish a
"Target Bonus" equal to 80% of the Executive's Base Salary and a "Maximum
Bonus" equal to 160% of the Executive's Base Salary.
<PAGE> 2
For the Company's 1998 fiscal year, without regard to whether the Executive
satisfies the requirement of the bonus plan established for him, the Company
shall pay to the Executive as incentive compensation a cash bonus in an amount
equal to not less than the Target Bonus (the "1998 Minimum Bonus"). Certain
information regarding the bonuses to be paid under this Agreement is set forth
on Exhibit A.
(ii) The 1998 Minimum Bonus shall be deemed to be earned
proportionately throughout the year, and the Company shall pay to the Executive
monthly, in accordance with its customary practice for the payment of bonuses
to search consultants, a proportionate share of the 1998 Minimum Bonus for such
year. For all years after the Company's fiscal year ending February 28, 1998,
any annual bonus shall be due and payable as soon as practicable after there
has been a determination by the Committee of the amount of such bonus after the
close of the fiscal year, but in any event, such determination shall be made no
later than 60 days after the close of the fiscal year to which it relates and
shall after such determination be deemed to have been earned as of the last day
of the Company's fiscal year to which the bonus relates. Except as otherwise
provided herein, each annual bonus shall be paid no later than 60 days after
the close of the fiscal year to which it relates.
(iii) Promptly following the execution of this Agreement, the
Company shall pay to the Executive in cash the amount if any by which the
amount of Base Salary and proportionate share of the Minimum Bonus called for
to be paid under Section 3(a) and Section 3(b)(i) of this Agreement during the
period commencing March 1, 1997 and ending on the date on which this Agreement
is executed (the "Gap Period") exceeds the amount of salary and bonus actually
paid to the Executive during the Gap Period.
(c) Stock Option Award. The Company has adopted certain equity-based
incentive compensation plans, including an omnibus plan (the "Omnibus Plan"),
providing for annual or other periodic awards to key employees of, among other
things, options to purchase the Company's common stock. The Executive has
previously been granted under the Omnibus Plan options to purchase 15,000
shares of the Company's common stock at an initial exercise price of $12.00 per
share. This will confirm that the Committee on July 29, 1997 granted the
Executive under the Omnibus Plan options to purchase an additional 82,000
shares of the Company's common stock at an initial exercise price of $19 1/8,
on the terms and conditions described in Exhibit B to this Agreement (the
"Options").
(d) Reimbursement. The Company shall reimburse the Executive, in
accordance with the Company's policies and practices for senior management, for
all reasonable expenses incurred by the Executive in the performance of the
Executive's duties under this Agreement, provided, however, that the Executive
must furnish to the Company an itemized account, reasonably satisfactory to the
Company, in substantiation of such expenditures.
(e) Other Benefits. The Executive shall be entitled to such fringe
benefits including, but not limited to, medical and other insurance benefits as
may be provided from time to time by the Company to other members of senior
management of the Company.
2.
<PAGE> 3
(f) Other Incentive and Benefit Plans. The Executive shall be
eligible to participate, in accordance with the terms of such plans as they may
be adopted, amended and administered from time to time, in incentive, bonus,
benefit or similar plans, including without limitation, any stock option, bonus
or other equity ownership plan, any short, mid or long term incentive plan and
any other bonus, pension or profit sharing plans established by the Company
from time to time for its senior management.
(g) Deferral of Certain Compensation Payments. (i) Notwithstanding
any other provisions of this Agreement to the contrary, any portion of the cash
compensation otherwise payable to the Executive under this Agreement shall not
be paid currently in cash to the Executive hereunder if pursuant to the
provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended,
or any similar or successor provision ("Section 162(m)"), the Company would not
be entitled to a current deduction for federal income tax purposes in respect
of the payment of such portion of the cash compensation (any such compensation
being referred to as "Section 162(m) Non-Deductible Compensation"). The
payment of any such Section 162(m) Non-Deductible Compensation shall be
deferred and, in place of the current cash payment thereof, the Company shall
issue to the Executive no later than 90 days after the close of the fiscal year
to which such compensation relates phantom stock units ("Phantom Stock Units")
with an aggregate value equal to the Section 162(m) Non-Deductible Compensation
for such fiscal year (the "Deferred Compensation"). Certain information about
the Phantom Stock Units is set forth on Exhibit B to this Agreement. The
number of Phantom Stock Units shall be equal to closest whole number that is
the result of dividing the Deferred Compensation by the closing price for the
Company's stock on the last trading day of such fiscal year, which shall be
deemed the date of the grant for such award (a "Phantom Award"). Each Phantom
Award shall be recorded on the books of the Company and shall be evidenced by a
written agreement between the Executive and the Company including, among other
things, the terms and conditions specified on Exhibit B to this Agreement.
Under each Phantom Award, among other things, the Executive's right to receive
cash in payment of the value of such award shall arise automatically no later
than 30 days after the first time when the deduction for federal income taxes
by the Company in respect of the Section 162(m) Non-Deductible Compensation to
which of the Phantom Award relates would no longer be prohibited by Section
162(m).
(ii) The parties acknowledge that deduction limitation of
Section 162(m), as currently in effect, applies only to certain compensation in
excess of $1,000,000. If at any time in the future, the deduction limitation
of Section 162(m) is reduced below the current $1,000,000 level, the provisions
of Section 3(g)(i) shall apply only to that portion of the Executive's
compensation which exceeds $1,000,000 regardless of whether the application of
this Section 3(g)(ii) results in payment to the Executive of compensation with
respect to which the Company is not entitled to a current deduction for federal
income tax purposes.
4. DUTIES
(a) General. The Executive is engaged as the Chief Executive Officer
and President of the Company and initially shall be elected as a director of
the Company. During the term of this Agreement, the Company shall use its
good-faith efforts to cause the Board to include the Executive among its
nominees for the Board. In addition, at the request of the Board, the
Executive shall serve
3.
<PAGE> 4
in the same positions in any wholly owned subsidiary, joint venture or
affiliate of the Company, without any additional compensation. The Executive
shall report directly to the Board. The Executive's duties and
responsibilities shall be commensurate with those customarily associated with
the chief executive of a corporation comparable to the Company.
(b) Dallas Residence. The parties acknowledge that the Executive
resides in Dallas, Texas and that the Company currently maintains an office
located in Dallas in which the Executive's office is situated. The parties
recognize that the effective implementation of the Company's business plan and,
accordingly, the discharge of the Executive's job responsibilities have in the
past and will continue in the future to involve significant amounts of travel
away from Dallas. However, the Executive shall not be obligated to move his
residence from Dallas, Texas.
5. EXTENT OF SERVICES; VACATIONS AND DAYS OFF
(a) Extent of Services. During the term of the Executive's
employment under this Agreement, except during customary vacation periods and
periods of illness, the Executive shall devote full-time energy and attention
during regular business hours to the benefit and business of the Company as may
be reasonably necessary in performing the Executive's duties pursuant to this
Agreement. Notwithstanding the foregoing, the Executive may (i) serve on
corporate, trade association, civic, religious or charitable boards or
committees, (ii) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (iii) manage personal investments, so long as such
activities do not interfere with the performance of the Executive's duties and
responsibilities and do not create a conflict of interest.
(b) Vacations. The Executive shall be entitled to vacations with pay
and to such personal and sick leave with pay in accordance with the policy of
the Company as may be established from time to time by the Company and applied
to other members of senior management of the Company.
6. FACILITIES
The Company shall provide the Executive with a fully furnished office
in Dallas, Texas. The facilities of the Company shall be generally available
to the Executive in the performance of the Executive's duties pursuant to this
Agreement, it being understood and contemplated by the parties that all
equipment, supplies and office personnel required in the performance of the
Executive's duties under this Agreement shall be provided by and at the sole
expense of the Company in Dallas, Texas, which shall be the location of the
Executive's principal office.
7. ILLNESS OR INCAPACITY, TERMINATION ON DEATH, ETC.
(a) Death. If the Executive dies during the term of the Executive's
employment, the Company shall pay to the estate of the Executive within 30 days
after the date of death such Base Salary and any cash bonus compensation earned
pursuant to the provisions of this Agreement or any incentive compensation plan
then in effect but not yet paid, as would otherwise have been payable
4.
<PAGE> 5
to the Executive up to the end of the month in which the Executive's death
occurs. After receiving the payments provided in this Section 7(a), the
Executive and the Executive's estate shall have no further rights under this
Agreement (other than those rights already accrued).
(b) Disability. (i) During any period of disability, illness or
incapacity during the term of this Agreement which renders the Executive at
least temporarily unable to perform the services required under this Agreement,
the Executive shall receive the Base Salary payable under Section 3(a) of this
Agreement plus any cash bonus compensation earned pursuant to the provisions of
this Agreement or any incentive compensation plan then in effect but not yet
paid, less any cash benefits received by him under any disability insurance
carried by, provided by or paid for by the Company. Upon the Executive's
"Permanent Disability" (as defined below), which Permanent Disability continues
during the payment periods specified herein, the Company shall pay to the
Executive for the period of time specified below an amount (the "Disability
Payment") equal to the (i) sum of (A) the Base Salary paid in the same monthly
or other period installments as in effect at the time of the Executive's
Permanent Disability plus (B) an amount equal to the Target Bonus payable to
the Executive under Section 3(b) of this Agreement or the minimum amount of any
similar bonus or incentive plans or programs then in effect if greater than the
Target Bonus in respect of the fiscal year during which the Executive's
Permanent Disability occurred, which amount, in any event, shall be paid in pro
rata equal monthly installments over the period of time specified below (ii)
reduced by the amount of any monthly payments under any policy of disability
income insurance paid for by the Company which payments are received during the
time when any Disability Payment is being made to the Executive following the
Executive's Permanent Disability. For so long as the Executive's Permanent
Disability continues, the Disability Payment shall be paid by the Company to
the Executive in equivalent installments at the same time or times as would
have been the case for payment of Base Salary over the unexpired term of this
Agreement if the Executive had not become permanently disabled and had remained
employed by the Company hereunder, but in no case shall such period exceed 24
months. The Executive may be entitled to receive payments under any disability
income insurance which may be carried by, provided by or paid for by the
Company from time to time. Upon "Permanent Disability" (as that term is
defined in Section 7(b)(ii) below) of the Executive, except as provided in this
Section 7(b), all rights of the Executive under this Agreement shall terminate
(other than rights already accrued).
(ii) The term "Permanent Disability" as used in this
Agreement shall mean, in the event a disability insurance policy is provided or
paid for by the Company covering the Executive at such time and is in full
force and effect, the definition of permanent disability set forth in such
policy. If no such disability policy is so maintained at such time and is then
in full force and effect, the term "Permanent Disability" shall mean the
inability of the Executive, as reasonably determined by the Board by reason of
physical or mental disability to perform the duties required of him under this
Agreement for a period of one hundred and eighty (180) days in any one-year
period. Successive periods of disability, illness or incapacity will be
considered separate periods unless the later period of disability, illness or
incapacity is due to the same or related cause and commences less than three
months from the ending of the previous period of disability. Upon such
determination, the Board may terminate the Executive's employment under this
Agreement upon ten (10) days' prior written notice. If any determination of
the Board with respect to permanent disability is disputed by the Executive,
the parties hereto agree to abide by the decision of a panel of three
physicians. The Executive and Company shall each appoint one member, and the
third member of
5.
<PAGE> 6
the panel shall be appointed by the other two members. The Executive agrees to
make himself available for and submit to examinations by such physicians as may
be directed by the Company. Failure to submit to any such examination shall
constitute a breach of a material part of this Agreement.
8. OTHER TERMINATIONS
(a) By the Executive. (i) The Executive may terminate the
Executive's employment hereunder upon giving at least ninety (90) days' prior
written notice. In addition, the Executive shall have the right to terminate
the Executive's employment hereunder on the conditions and at the times
provided for in Section 8(d) of this Agreement.
(ii) If the Executive gives notice pursuant to the first
sentence of Section 8(a)(i) above, the Company shall have the right (but not
the obligation) to relieve the Executive, in whole or in part, of the
Executive's duties under this Agreement, or direct the Executive to no longer
perform such duties, or direct that the Executive should no longer report to
work, or any combination of the foregoing (an "Early Termination"). In any
such event, the Executive shall be entitled to receive only the Base Salary not
yet paid, as would otherwise have been payable to the Executive up to date on
which the Company provides for Early Termination or, if there is no Early
Termination, the expiration of the 90 day notice period. If the Executive
gives notice pursuant to the first sentence of Section 8(a)(i), upon receiving
the payments provided for under this Section 8(a), all rights of the Executive
to receive compensation or other payments or benefits under this Agreement
(other than rights already accrued) shall terminate.
(b) Termination for "Good Cause". (i) Except as otherwise provided
in this Agreement, the Company may terminate the employment of the Executive
hereunder only for "Good Cause," which shall mean (a) the willful, substantial,
continued and unjustified refusal or failure of the Executive substantially to
perform his duties with the Company to the extent of his ability to do so
(other than any failure due to physical or mental incapacity) or (b) willful
misconduct materially and demonstrably injurious to the Company, financially or
otherwise, in each case, as determined in the reasonable discretion of the
Board, but with respect to each of the foregoing bases for termination
specified in the preceding clause, only if (1) the Executive has been provided
with written notice from the Board of any assertion that there is a basis for
termination for Good Cause which notice shall specify in reasonable detail
specific facts regarding any such assertion and the Executive has been given a
reasonable period of time within which to remedy or cure the problem or
complaint (which period of time shall in no event exceed 60 days after the
receipt of such notice), (2) an additional written notice is provided to the
Executive 10 days before the Board meets to consider making a determination
that this Agreement will be terminated for Good Cause, (3) at or prior to the
meeting of the Board to consider the matters described in the written notice
concerning the upcoming meeting of the Board, an opportunity is provided to the
Executive and his counsel to be heard by the Board with respect to the matters
described in the written notice, before it acts with respect to such matter,
(4) any resolution or other action by the Board with respect to any
deliberation regarding or decision to terminate the Executive for Good Cause is
duly adopted by a vote of a majority of the entire Board at a meeting of the
Board duly called and held and (5) the Executive is promptly provided with a
copy of the resolution or other corporate action taken with respect to such
6.
<PAGE> 7
termination. No act or failure to act by the Executive shall be considered
willful unless done or omitted to be done by him not in good faith and without
reasonable belief that his action or omission was in the best interests of the
Company.
(ii) If the employment of the Executive is terminated for
Good Cause under Section 8(b)(i) of this Agreement, the Company shall pay to
the Executive any Base Salary earned prior to the effective date of termination
specified by the Board but not yet paid and any cash bonus compensation earned
pursuant to the provisions of this Agreement or any incentive compensation plan
then in effect but not paid to the Executive prior to the effective date of
such termination. Under such circumstances, such payments shall be in full and
complete discharge of any and all liabilities or obligations of the Company to
the Executive hereunder, and the Executive shall be entitled to no further
benefits under this Agreement (other than rights already accrued).
(iii) Termination by the Company of the employment of the
Executive other than as expressly specified above in Section 8(b)(i) for Good
Cause shall be deemed to be a termination of employment by the Company "Without
Good Cause."
(c) Termination Without Good Cause. (i) Notwithstanding any other
provision of this Agreement, the Company shall have the right to terminate the
Executive's employment Without Good Cause pursuant to the provisions of this
Section 8(c). If the Company shall terminate the employment of the Executive
Without Good Cause effective on a date earlier than the termination date
provided for in Section 2 (with the effective date of termination as so
identified by the Company being referred to herein as the "Accelerated
Termination Date"), the Executive, until the end of the term of this Agreement
then in effect as provided for in Section 2, but in no case shall such period
exceed 36 months, or until the date which is 24 months after the Accelerated
Termination Date, whichever is greater, shall continue to receive (1) the Base
Salary, paid in the same monthly or other periodic installments as in effect
prior to the Accelerated Termination Date plus (2) an equal monthly pro rata
portion of an amount of cash equal to (x) the Target Bonus payable to the
Executive under Section 3(b) of this Agreement (subject to an upward adjustment
as provided in Section 8(c)(ii) of this Agreement, the "Termination Target
Bonus") or (y) the minimum amount of any similar bonus or incentive plans or
programs then in effect if greater than the Target Bonus in respect of the
fiscal year during which the Executive's termination Without Good Cause occurs,
multiplied times the number of years (or fractions thereof) remaining in the
then unexpired term of this Agreement or multiplied times two, whichever is
greater, and (3) any other cash or other bonus compensation earned prior to the
date of such termination pursuant to the terms of all incentive compensation
plans then in effect other than any such plan relating to annual incentive cash
bonuses as described on Exhibit A or any similar bonus or incentive plans or
programs then in effect; provided that, the Company shall have the right (but
not the obligation) to relieve the Executive, in whole or in part, of the
Executive's duties under this Agreement, or direct the Executive to no longer
perform such duties, or direct that the Executive no longer be required to
report to work, or any combination of the foregoing.
(ii) The Termination Target Bonus shall be increased to an
amount in excess of the Target Bonus for the year in which the Executive's
employment is terminated if such Target Bonus is less than the amount of the
bonus that otherwise would have been payable to the Executive in respect of the
Company's full fiscal year if the Executive had remained employed by the
Company
7.
<PAGE> 8
for the entire fiscal year. Any such increase shall be determined by the
Committee in its reasonable discretion no later than 90 days after the close of
the fiscal year during which the Executive's employment terminates. If the
Termination Target Bonus increases as a result of application of the first
sentence of this Section 8(c)(ii), the amount of such increase shall be paid
pro rata over the remaining period of time during which payments are to be made
to the Executive under Section 8(c).
(iii) The parties agree that, because there can be no exact
measure of the damage that would occur to the Executive as a result of a
termination by the Company of the Executive's employment Without Good Cause,
the payments and benefits paid and provided pursuant to this Section 8(c), in
addition to being consideration for the release required to be delivered
pursuant to Section 8(g) of this Agreement, also shall be deemed to constitute
full consideration for any such damages and shall be considered as liquidated
damages and not a penalty for the Company's termination of the Executive's
employment Without Good Cause.
(d) Termination Following Change of Control. (i) For purposes of
this Agreement, a "Change in Control" shall mean the first to occur of:
(1) a change in control of the Company of a nature that is
required, pursuant to the Securities Exchange Act of
1934 (the "1934 Act"), to be reported in
response to Item 1(a) of a Current Report on Form 8-K or
Item 6(e) of Schedule 14A under the 1934 Act (in each
case under this Agreement, references to provisions of
the 1934 Act and the rules and regulations promulgated
thereunder being understood to refer to such law, rules
and regulations as the same are in effect on April 1,
1997); or
(2) the acquisition of "beneficial ownership" (as defined
in Rule 13d-3 under the 1934 Act) of the Company's
securities comprising 35% or more of the combined voting
power of the Company's outstanding securities by any
"person" (as that term is used in Sections 13(d) and
14(d)(2) of the 1934 Act and the rules and regulations
promulgated thereunder, but not including the Company or
any trustee or fiduciary acting in that capacity for an
employee benefit plan sponsored by the Company) and such
person's "affiliates" and "associates" (as those terms
are defined under the 1934 Act), but excluding any
ownership by the Executive and his affiliates and
associates; or
(3) the failure of the "Incumbent Directors" (as defined
below) to constitute at least a majority of all
directors of the Company (for these purposes, "Incumbent
Directors" means individuals who were the directors of
the Company on June 1, 1997, and, after his or her
election, any individual becoming a director subsequent
to June 1, 1997, whose election, or nomination for
election by the Company's stockholders, is approved by a
vote of at least two-thirds of the directors then
comprising the Incumbent Directors, except that no
individual shall be considered an Incumbent Director who
is not recommended by management and whose initial
assumption of office as a director is in connection with
an actual or threatened "election contest" relating to
the "election of directors" of the
8.
<PAGE> 9
Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the 1934 Act); or
(4) the closing of a sale of all or substantially all of
the assets of the Company;
(5) the Company's adoption of a plan of dissolution or
liquidation; or
(6) the closing of a merger or consolidation involving the
Company in which the Company is not the surviving
corporation or if, immediately following such merger or
consolidation, less than sixty-six and two-thirds (66
2/3%) of the surviving corporation's outstanding
voting stock is held or is anticipated to be held by
persons who are stockholders of the Company immediately
prior to such merger or consolidation.
(ii) Six months after the occurrence of a Change of Control,
the Executive shall have the right, exercisable for a period of 60 days
thereafter by delivering a written statement to that effect to the Company, to
immediately terminate this Agreement and, upon such delivery, the Executive
shall have the right to receive and the Company shall be obligated to pay to
the Executive in cash a lump sum payment in an amount equal to the sum of (1)
three times the annual Base Salary then in effect, (2) three times the Target
Bonus payable to the Executive under Section 3(b) of this Agreement or the
minimum amount of any similar bonus or incentive plans or programs then in
effect if greater than the Target Bonus in respect of the fiscal year during
which the Executive exercises his rights to terminate his employment under this
Section 8(d)(ii) and (3) the additional payments necessary to discharge certain
tax liabilities (the "Gross Up") as that term is defined in Section 13 of this
Agreement (the sum of the foregoing amounts other than the Gross Up being
referred to as the "Change of Control Termination Payment"). If the Executive
fails to exercise his rights under this Section 8(d)(ii) within the 60 day
period specified in the first sentence of this Section 8(d)(ii), such rights
shall expire and be of no further force or effect.
(e) Intentions Regarding Certain Stock and Benefit Plans. Except as
otherwise provided herein, upon any termination of the Executive's employment
other than a voluntary termination by the Executive or by the Board For Cause,
it is the intention of the parties that any and all vesting or performance
requirements or conditions affecting any outstanding restricted stock,
performance stock, stock option, stock appreciation right, phantom stock,
bonus, award, right, grant or any other incentive compensation right under the
Omnibus Plan or any other incentive plan similar to the Omnibus Plan or under
this Agreement shall be deemed to be fully satisfied or to have fully accrued
and any risk of forfeiture with respect thereto shall be deemed to have lapsed.
(f) Certain Rights Mutually Exclusive. The provisions of Section
8(c) and Section 8(d) are mutually exclusive, provided, however, that if within
one year following commencement of a payout under Section 8(c) or Section 8(d),
there shall be a Change in Control as defined in Section 8(d)(i), then the
Executive shall be entitled to the amount payable to the Executive under
Section 8(d)(ii) reduced by the amount that the Executive has received under
Section 8(c) up to the date of the Change in Control. The triggering of the
lump sum payment requirement of Section 8(d) shall cause the provisions of
Section 8(c) to become inoperative.
9.
<PAGE> 10
(g) Release. Payment of any compensation to the Executive under this
Section 8 following termination of employment shall be conditioned upon the
prior receipt by the Company of a release executed by the Executive in
substantially the form attached to this Agreement as Exhibit C.
(h) Effect on Certain Covenants. Notwithstanding any termination of
the Executive's employment, the Executive's covenants set forth in Section 10
and Section 11 are intended to and shall remain in full force and effect.
9. DISCLOSURE
The Executive agrees that during the term of the Executive's
employment by the Company, the Executive will disclose and disclose only to the
Company all ideas, methods, plans, developments or improvements known by him
which relate directly or indirectly to the business of the Company, whether
acquired by the Executive before or during the Executive's employment by the
Company. Nothing in this Section 9 shall be construed as requiring any such
communication where the idea, plan, method or development is lawfully protected
from disclosure as a trade secret of a third party or by any other lawful
prohibition against such communication. The covenants of this Section 9 shall
not be violated by ordinary and customary communications with reporters,
bankers and securities analysts and other members of the investment community.
10. CONFIDENTIALITY
The Executive agrees to keep in strict secrecy and confidence any and
all information the Executive assimilates or to which the Executive has access
during the Executive's employment by the Company and which has not been
publicly disclosed and is not a matter of common knowledge in the fields of
work of the Company, including but not limited to information regarding the
Company's focus account strategy both generally and as it may be directed at
particular existing and prospective clients, the Company's past, current and
future strategic plans and underlying data and confidential and proprietary
information regarding search candidates and companies, including but not
limited to that available on the Company's CMS system (collectively, the
"Confidential Information"). The Executive agrees that both during and after
the term of the Executive's employment by the Company, the Executive will not,
without the prior written consent of the Company, disclose any Confidential
Information to any third person, partnership, joint venture, company,
corporation or other organization. The foregoing covenants shall not be
breached to the extent that any such confidential information becomes a matter
of general knowledge other than through a breach by a person with an obligation
to the Company to maintain such confidentiality, including but not limited to
the Executive's obligations to the Company under this Section 10.
11. NONCOMPETITION; NONSOLICITATION
(a) General. The Executive hereby acknowledges that, during and
solely as a result of the Executive's employment by the Company, the Executive
has received and shall continue to receive: (1) special training and education
with respect to the operations of the Company's business and other
10.
<PAGE> 11
related matters, and (2) access to confidential information and business and
professional contacts. In consideration of the special and unique
opportunities afforded to the Executive by the Company as a result of the
Executive's employment, as outlined in the previous sentence, the Executive
hereby agrees to the restrictive covenants in this Section 11.
(b) Noncompetition. (i) During the term of the Executive's
employment, whether pursuant to this Agreement, any automatic or other renewal
hereof or otherwise, and, except as may be otherwise herein provided, during
the "Noncompetition Period" (as that term is defined in Section 11(b)(ii) of
this Agreement, , regardless of the reason for such termination, the Executive
shall not, directly or indirectly, enter into, engage in, be employed by or
consult with any business which competes with the Company's retained executive
search consulting business. The Executive shall not engage in such prohibited
activities, either as an individual, partner, officer, director, stockholder,
employee, advisor, independent contractor, joint venturer, consultant, agent,
or representative or salesman for any person, firm, partnership, corporation or
other entity so competing with the Company. The restrictions of this Section
11 shall not be violated by (i) the ownership of no more than 2% of the
outstanding securities of any company whose stock is traded on a national
securities exchange or is quoted on the Nasdaq Stock Market, or (ii) other
outside business investments that do not in any manner conflict with the
services to be rendered by the Executive for the Company and that do not
diminish or detract from the Executive's ability to render the Executive's
required attention to the business of the Company.
(ii) The Noncompetition Period shall be (1) any period of
time when the Company is obligated to make periodic payments under Section 8 to
the Executive following termination of the Executive's employment or (2) if the
Company is obligated to make payments of Base Salary or other compensation in a
lump sum, for the number of years or fractions thereof equal to the number of
years or fractions thereof of Base Salary or other compensation being paid in a
lump sum.
(c) Nonsolicitation. During the Executive's employment with the
Company and, except as may be otherwise herein provided, for a period of two
(2) years following the termination of the Executive's employment with the
Company, regardless of the reason for such termination, the Executive agrees
the Executive will refrain from and will not, directly or indirectly, as an
individual, partner, officer, director, stockholder, employee, advisor,
independent contractor, joint venturer, consultant, agent, representative,
salesman or otherwise solicit any of the employees of the Company to terminate
their employment.
(d) Term Extended or Suspended. The period of time during which the
Executive is prohibited from engaging in certain business practices pursuant to
Sections 11(b) or (c) shall be extended by any length of time during which the
Executive is in breach of such covenants.
(e) Essential Element. It is understood by and between the parties
hereto that the foregoing restrictive covenants set forth in Sections 11(a)
through (c) are essential elements of this Agreement, and that, but for the
agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Such covenants by the Executive
shall be construed as agreements independent of any other provision in this
Agreement. The existence of any claim or cause of action of the Executive
against the Company, whether predicated on this Agreement, or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants.
11.
<PAGE> 12
(f) Severability. It is agreed by the Company and Executive that if
any portion of the covenants set forth in this Section 11 are held to be
invalid, unreasonable, arbitrary or against public policy, then such portion of
such covenants shall be considered divisible both as to time and geographical
area. The Company and Executive agree that, if any court of competent
jurisdiction determines the specified time period or the specified geographical
area applicable to this Section 11 to be invalid, unreasonable, arbitrary or
against public policy, a lesser time period or geographical area which is
determined to be reasonable, non-arbitrary and not against public policy may be
enforced against the Executive. The Company and the Executive agree that the
foregoing covenants are appropriate and reasonable when considered in light of
the nature and extent of the business conducted by the Company.
12. SPECIFIC PERFORMANCE
The Executive agrees that damages at law will be an insufficient
remedy to the Company if the Executive violates the terms of Sections 9, 10 or
11 of this Agreement and that the Company would suffer irreparable damage as a
result of such violation. Accordingly, it is agreed that the Company shall be
entitled, upon application to a court of competent jurisdiction, to obtain
injunctive relief to enforce the provisions of such Sections, which injunctive
relief shall be in addition to any other rights or remedies available to the
Company.
13. PAYMENT OF EXCISE TAXES
(a) Payment of Excise Taxes. If the Executive is to receive any (1)
Change of Control Payment under Section 8(d) of this Agreement, (2) any benefit
or payment under Section 7 as a result of or following the death or Permanent
Disability of the Executive, or (3) any benefit or payment under Section 8(c)
as a result of or following any termination of employment hereunder Without
Good Cause (such sections being referred to as the "Covered Sections" and the
benefits and payments to be received thereunder being referred to as the
"Covered Payments"), the Executive shall be entitled to receive the amount
described below to the extent applicable: If any Covered Payment(s) under any
of the Covered Sections or by the Company under another plan or agreement
(collectively, the "Payments") are subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 (as amended from time to time, the
"Code"), or any successor or similar provision of the Code (the "Excise Tax"),
the Company shall pay the Executive an additional cash amount (the "Gross Up")
such that the net amount retained by the Executive after deduction of any
Excise Tax on the Payments (and other the federal income tax and Excise Tax on
any amounts paid as Gross Up under this Section 13) shall be equal to the
Payments.
(b) Certain Adjustment Payments. For purposes of determining the
Gross Up, the Executive shall be deemed to pay the federal income tax at the
highest marginal rate of taxation (currently 39.6%) in the calendar year in
which the payment to which the Gross Up applies is to be made. The
determination of whether such Excise Tax is payable and the amount thereof
shall be made upon the opinion of tax counsel selected by the Company and
reasonably acceptable to the Executive. The Gross Up, if any, that is due as a
result of such determination shall be paid to the Executive in cash in a lump
sum within thirty (30) days of such computation. If such opinion is not
finally accepted
12.
<PAGE> 13
by the Internal Revenue Service upon audit or otherwise, then appropriate
adjustments shall be computed (without interest but with additional Gross Up,
if applicable) by such tax counsel based upon the final amount of the Excise
Tax so determined; any additional amount due the Executive as a result of such
adjustment shall be paid to the Executive by the Company in cash in a lump sum
within thirty (30) days of such computation, or if less than the Gross Up any
amount due the Company as a result of such adjustment shall be paid to the
Company by the Executive in cash in a lump sum within thirty (30) days of such
computation.
14. ARBITRATION
(a) General. The parties agree that all actions, claims,
controversies or disputes of any kind (e.g. whether in contract or in tort,
statutory or common law) between them relating, directly or indirectly, to this
Agreement, whether now existing or thereafter arising ("Disputes"), are to be
resolved by arbitration as provided in this Agreement. This agreement to
arbitrate will survive the recission or termination of this Agreement. All
arbitration will be conducted pursuant to and in accordance with the following
order of priority (i) the terms of this Agreement, (ii) the Commercial
Arbitration Rules of the American Arbitration Association , (iii) the Federal
Arbitration Act and (iv) to the extent the foregoing are inapplicable,
unenforceable or invalid, the laws of the State of Florida. The arbitrator(s)
used will be selected from impartial arbitrators designated by the American
Arbitration Association who are familiar with the nature of the subject matter
of the Dispute. Any hearing regarding arbitration will be held in Atlanta,
Georgia or at another location mutually acceptable to the Company and the
Executive. The arbitrator(s) will use their best efforts to conduct the
arbitration hearing no later than three months from the service of the
statement of claim and demand for arbitration and will use best efforts to
render a decision within four months from the service of the statement of claim
and demand.
(b) Effect of Arbitration. An arbitration proceeding commenced
pursuant to this Section 14 is a condition precedent to and is a complete
defense to the commencement of any suit, action or proceeding in any court or
before any tribunal with respect to any Dispute. Either party may bring an
action in court to compel arbitration. Any party who fails or refuses to
submit to binding arbitration following demand by the other party shall, if the
Dispute is within the scope of this Section 14, bear all costs and expenses
incurred by the opposing party in compelling arbitration.
(c) Enforcement. Any judgement upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
decision of the arbitrator(s) will be enforceable in any court of competent
jurisdiction. For these purposes, the award and judgement entered by the
federal or state district court shall be considered to be the same as the award
and judgement of the arbitrator(s). To the extent permitted by applicable law,
the arbitrator(s) will have the power to award recovery of all costs and fees
(including attorneys' fees, administrative fees, and arbitrators' fees) to the
prevailing party.
(d) Selection of Arbitrators. The arbitrator(s) will be chosen by
mutual agreement of the Company and the Executive. If they cannot agree within
30 days upon a single arbitrator, each will, within 15 days thereafter, appoint
an arbitrator and such arbitrators will appoint a third impartial arbitrator.
If more than one arbitrator is appointed, the decision of a majority of such
arbitrators will
13.
<PAGE> 14
be binding. Subject to Section 14(c), each party will be responsible for the
expenses and fees of the arbitrator appointed by it and one-half of the fees
and expenses of the third arbitrator, if there is only one arbitrator
appointed, the Company and the Executive will each be responsible for one-half
of the fees and expenses of such arbitrator, and each party will bear its own
attorney's and expert's fees. If either party fails to timely appoint an
arbitrator, the decision of the arbitrator who is timely appointed will be
binding.
(e) Authority of Arbitrators. The arbitrator(s) will have the sole
authority to resolve issues regarding whether Disputes are subject to
arbitration, including the applicability of any statute of limitations. The
choice of law provisions of Section 15(g) shall be applicable to any
arbitration under this Agreement. The statute of limitations applicable to any
Dispute shall be tolled upon the initiation of arbitration under this Agreement
and shall remain tolled until the arbitration process is completed.
(f) Confidentiality of Arbitration. In order to maintain the
confidentiality of the dispute intended to be resolved by arbitration as
provided in this Agreement as well as the information adduced and contentions
asserted in any such arbitration, the parties agree to maintain in strict
confidence and agree to neither make nor suffer any public disclosure of the
fact of, contentions or evidence, discovered, developed or introduced in and
the result of any such arbitration; provided, however, the foregoing to the
contrary notwithstanding, the Company may make public disclosures regarding the
existence of the arbitration, the nature of the dispute and the results thereof
as may be necessary or appropriate to satisfy the Company's disclosure
obligations under applicable securities laws.
15. MISCELLANEOUS
(a) Waiver of Breach. The waiver by either party to this Agreement
of a breach of any of the provisions of this Agreement by the other party shall
not be construed as a waiver of any subsequent breach by such other party.
(b) Compliance With Other Agreements. The Executive represents and
warrants that the execution of this Agreement by him and the Executive's
performance of the Executive's obligations hereunder will not conflict with,
result in the breach of any provision of or the termination of or constitute a
default under any agreement to which the Executive is a party or by which the
Executive is or may be bound.
(c) Binding Effect; Assignment. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company. This Agreement is a personal
employment contract and the rights, obligations and interests of the Executive
hereunder may not be sold, assigned, transferred, pledged or hypothecated.
(d) Entire Agreement. This Agreement contains the entire agreement
and supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge is sought.
14.
<PAGE> 15
(e) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(f) No Duty to Mitigate. The Executive shall be under no duty to
mitigate any loss of income as result of the termination of his employment
hereunder and any payments due the Executive upon termination of employment
shall not be reduced in respect of any other employment compensation received
by the Executive following such termination.
(g) Florida Law. This Agreement shall be construed pursuant to and
governed by the substantive laws of the State of Florida (except that any
provision of Florida law shall not apply if the application of such provision
would result in the application of the law of a state or jurisdiction other
than Florida).
(h) Venue; Process. To the extent it is necessary to resolve any
disputes arising under this Agreement, and the agreements and instruments and
documents contemplated hereby in a court and resolution by a court is
consistent with the provisions of Section 14, the parties to this Agreement
agree that jurisdiction and venue in any action brought pursuant to this
Agreement to enforce its terms or otherwise with respect to the relationships
between the parties shall properly lie in the Circuit Court of the Thirteenth
Judicial Circuit of the State of Florida in and for Hillsborough County (the
"Circuit Court") or in the United States District Court for the Middle District
of Florida, Tampa Division. Such jurisdiction and venue are merely permissive;
jurisdiction and venue shall also continue to lie in any court where
jurisdiction and venue would otherwise be proper. The parties further agree
that the mailing by certified or registered mail, return receipt requested, of
any process required by any such court shall constitute valid and lawful
service of process against them, without the necessity for service by any other
means provided by statute or rule of court. The parties agree that they will
not object that any action commenced in the foregoing jurisdictions is
commenced in a forum non conveniens.
(i) Severability. Any provision of this Agreement which is
determined pursuant to arbitration under Section 14 of this Agreement (or to
the extent it is necessary to resolve any disputes arising under this
Agreement, and the agreements and instruments and documents contemplated hereby
in a court and resolution by a court is consistent with the provisions of
Section 14, by a court of competent jurisdiction) to be prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non- authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction. In any such case, such determination
shall not affect any other provision of this Agreement, and the remaining
provisions of this Agreement shall remain in full force and effect. If any
provision or term of this Agreement is susceptible to two or more constructions
or interpretations, one or more of which would render the provision or term
void or unenforceable, the parties agree that a construction or interpretation
which renders the term or provision valid shall be favored.
(j) Deduction for Tax Purposes. The Company's obligations to make
payments under this Agreement are independent of whether any or all of such
payments are deductible expenses of the Company for federal income tax
purposes.
15.
<PAGE> 16
(k) Enforcement. If, within 10 days after demand to comply with the
obligations of one of the parties to this Agreement served in writing on the
other, compliance or reasonable assurance of compliance is not forthcoming, and
the party demanding compliance engages the services of an attorney to enforce
rights under this Agreement, the prevailing party in any action shall be
entitled to recover all reasonable costs and expenses of enforcement (including
reasonable attorneys' fees and reasonable expenses during investigation, before
and at trial and in appellate proceedings). In addition, each of the parties
agrees to indemnify the other in respect of any and all claims, losses, costs,
liabilities and expenses, including reasonable fees and reasonable
disbursements of counsel (during investigation prior to initiation of
litigation and at trial and in appellate proceedings if litigation ensues),
directly or indirectly resulting from or arising out of a breach by the other
party of their respective obligations hereunder. The parties' costs of
enforcing this Agreement shall include prejudgment interest. Additionally, if
any party incurs any out-of- pocket expenses in connection with the enforcement
of this Agreement, all such amounts shall accrue interest at 10% per annum (or
such lower rate as may be required to avoid any limit imposed by applicable
law) commencing 30 days after any such expenses are incurred.
(l) Executive's Expenses. The Company shall pay the reasonable out
of pocket legal expenses incurred by the Executive in connection with the
negotiation and preparation of this Agreement.
(m) Notices. All notices which are required or may be given under
this Agreement shall be in writing and shall be deemed to have been duly given
when received if personally delivered; when transmitted if transmitted by
telecopy or similar electronic transmission method; one working day after it is
sent, if sent by recognized expedited delivery service; and three days after it
is sent, if mailed, first class mail, certified mail, return receipt requested,
with postage prepaid. In each case notice shall be sent to:
To the Company: LAMALIE ASSOCIATES, INC.
Suite 220E
3903 Northdale Boulevard
Tampa, FL 33624
Attn: Chief Financial Officer
Fax: (813) 962-2138
To the Executive at the Executive's address herein first above
written, or to such other address as either party may specify by written notice
to the other.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
ATTEST: LAMALIE ASSOCIATES, INC.
(Corporate Seal)
16.
<PAGE> 17
________________________________ By:____________________________________
Secretary Jack P. Wissman,
Executive Vice President
EXECUTIVE
Witnesses:
________________________________ ______________________________________
As to Executive ROBERT L. PEARSON
EXHIBIT A
TO
EMPLOYMENT AGREEMENT WITH ROBERT L. PEARSON
DATED OCTOBER 8, 1997
TARGET=80% OF BASE SALARY
MAXIMUM=160% OF BASE SALARY
[BONUS PLAN INFORMATION TO BE SUPPLIED]
Objective criteria to account for approximately 50% and subjective
criteria to account for approximately 50%, all criteria to be established by
the Committee. As discussed between Messrs. Pearson and Pope, both objective
and subjective criteria will be drawn from the Company's strategic plan adopted
in the spring. The Committee will retain discretion to determine the extent to
which bonus criteria have been achieved, such determination to be made within
60 days after the end of each fiscal year.
17.
<PAGE> 18
EXHIBIT B
TO
EMPLOYMENT AGREEMENT WITH ROBERT L. PEARSON
DATED OCTOBER 8, 1997
STOCK OPTIONS
[TO BE REPLACED BY AWARD AGREEMENT]
The initial per share exercise price for the Options shall be $19 1/8, the
closing price for the Company's common stock on July 29, 1997, the date of
grant.
The Options shall vest 100% on the sixth anniversary of their grant and shall
not vest at all prior to that time, provided that such 100% vesting shall be
accelerated if the closing price for the Company's Common Stock in the Nasdaq
Stock Market shall exceed $25 per share for a period of 60 or more consecutive
trading days.
The term of the Options shall be for a period of 10 years.
The Options shall be subject to the antidilution provisions included in the
Omnibus Plan.
The Executive may exercise the Options in a cashless manner, including by
delivering an appropriate number of unexercised Options equal to the exercise
price for the Options being exercised.
PHANTOM STOCK AWARDS
Phantom Stock Units will be evidenced by a Phantom Stock Award agreement which
will include specific terms and conditions.
18.
<PAGE> 19
EXHIBIT C
TO
EMPLOYMENT AGREEMENT WITH ROBERT L. PEARSON
DATED OCTOBER 8, 1997
RELEASE
WHEREAS, _______________________________ (the "Executive") is an
employee of Lamalie Associates, Inc., (the "Company") and is a party to the
Employment Agreement dated __________________ (the "Agreement");
WHEREAS, the Executive's employment has been terminated in accordance
with Section 8___ of the Agreement; and
WHEREAS, the Executive is required to sign this Release in order to
receive the payment of any compensation under Section 8 of the Agreement
following termination of employment.
NOW, THEREFORE, in consideration of the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound,
the Executive agrees as follows:
1. This Release is effective on the date hereof and will continue
in effect as provided herein.
2. In consideration of the payments to be made and the benefits to
be received by the Executive pursuant to the Agreement, which the Executive
acknowledges are in addition to payment and benefits to which the Executive
would be entitled to but for the Agreement, the Executive, for the Executive and
the Executive's dependents, successors, assigns, heirs, executors and
administrators (and the Executive and their legal representatives of every
kind), hereby releases, dismisses, remises and forever discharges the Company,
its predecessors, parents, subsidiaries, divisions, related or affiliated
companies, officers, directors, stockholders, members, employees, heirs,
successors, assigns, representatives, agents and counsel (collectively the
"Released Party") from any and all arbitrations, claims, including claims for
attorney's fees, demands, damages, suits, proceedings, actions and/or causes of
action of any kind and every description, whether known or unknown, which the
Executive now has or may have had for, upon, or by reason of any cause
whatsoever ("claims"), against the Released Party, including but not limited to:
(a) any and all claims arising out of or relating to
Executive's employment by or service with the Company and
the Executive's termination from the Company.
(b) any and all claims of discrimination, including but not
limited to claims of discrimination on the basis of sex,
race, age, national origin, marital status, religion or
handicap, including, specifically, but without limiting
the generality of the foregoing, any claims under the Age
Discrimination in Employment Act, as amended, Title VII of
the Civil Rights Act of 1964, as amended, the Americans
with Disabilities Act; and
19.
<PAGE> 20
(c) any and all claims of wrongful or unjust discharge or
breach of any contract or promise, express or implied.
3. The Executive understands and acknowledges that the Company
does not admit any violation of law, liability or invasion of any of the
Executive rights and that any such violation, liability or invasion is expressly
denied. The consideration provided for this Release is made for the purpose of
settling and extinguishing all claims and rights (and every other similar or
dissimilar matter) that the Executive ever had or now may have against the
Company to the extent provided in this Release. The Executive further agrees
and acknowledges that no representations, promises or inducements have been made
that the Company other than as appear in the Agreement.
4. The Executive further agrees and acknowledges that:
(a) The Release provided for herein releases claims to and
including the date of this Release;
(b) The Executive has been advised by the Company to
consult with legal counsel prior to executing this
Release, has had an opportunity to consult with and to
be advised by legal counsel of the Executive's choice,
fully understands the terms of this Release, and enters
into this Release freely, voluntarily and intending to
be found.
(c) The Executive has been given a period of 21 days to
review and consider the terms of this Release, prior to
its execution and that the Executive may use as much of
the 21 day period as the Executive desires; and
(d) The Executive may, within 7 days after execution,
revoke this Release. Revocation shall be made by
delivering a written notice of revocation to the Chief
Financial Officer at the Company. For such revocation
to be effective, written notice must be actually
received by the Chief Financial Officer at the Company
no later than the close of business on the 7th day
after the Executive executes this Release. If the
Executive does exercise the Executive's right to revoke
this Release, all of the terms and conditions of the
Release shall be of no force and effect and the Company
shall not have any obligation to make payments or
provide benefits to the Executive as set forth in
Sections 8 of the Agreement.
5. The Executive agrees that the Executive will never file a
lawsuit or other complaint asserting any claim that is released in this Release.
6. The Executive waives and releases any claim that the Executive
has or may have to reemployment after ______________________________.
IN WITNESS WHEREOF, the Executive has executed and delivered this
Release on the date set forth below.
Dated:_________________________________ _____________________________ Executive
20.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 21,739
<SECURITIES> 0
<RECEIVABLES> 16,220
<ALLOWANCES> 1,300
<INVENTORY> 0
<CURRENT-ASSETS> 39,899
<PP&E> 7,219
<DEPRECIATION> 2,318
<TOTAL-ASSETS> 51,627
<CURRENT-LIABILITIES> 13,168
<BONDS> 0
0
0
<COMMON> 54
<OTHER-SE> 30,574
<TOTAL-LIABILITY-AND-EQUITY> 51,627
<SALES> 0
<TOTAL-REVENUES> 45,847
<CGS> 0
<TOTAL-COSTS> 41,024
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (45)
<INCOME-PRETAX> 4,868
<INCOME-TAX> 2,094
<INCOME-CONTINUING> 2,774
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,774
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
