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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACTS OF 1934
Date of Report (Date of earliest event reported): March 28, 2007
HEIDRICK & STRUGGLES INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-25837 36-2681268
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
233 South Wacker Drive, Suite 4200, Chicago, IL 60606-6303
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 496-1200
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
/ / Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
/ / Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
/ / Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
/ / Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On March 28, 2007, Heidrick & Struggles International, Inc. (the
"Company"), and L. Kevin Kelly entered into a new employment agreement
effective as of September 13, 2006 (the "Agreement") that replaces his
existing employment agreement. The Agreement runs for a term of three
years and automatically renews for successive one-year periods unless
written notice to the contrary is given by either the Company or Mr.
Kelly within ninety days prior to the expiration of the employment
term or of any subsequent one-year extension thereof. Pursuant to the
Agreement, Mr. Kelly serves as the Chief Executive Officer of the
Company, and he shall be nominated for election as a member of the
Board of Directors for each term of Board service during the term of
his employment. Mr. Kelly is entitled to an annual base salary of
$800,000 and an annual target bonus of $800,000 in 2007. Subsequent
to 2007, he will participate in the Company's senior-executive bonus
programs, per the terms in place from time to time or as may be
determined by the Board, in its sole discretion. In addition to his
base salary and target bonus, Mr. Kelly is eligible to participate
in the Company's other benefit programs at the same level as such
benefits are generally provided by the Company from time to time to
other senior executives of the Company. Additionally, pursuant to the
Agreement, on March 30, 2007, the Company caused certain grants of
restricted stock units and stock options (as specified in the Agreement)
to be granted to Mr. Kelly. Pursuant to the Agreement, Mr. Kelly will
be assigned to work in the Company's London, England office through
July 15, 2007, at which time he will be assigned to work in the
Company's Chicago headquarters. In connection with this assignment,
Mr. Kelly will receive certain expatriate benefits through July 15, 2007,
on a comparable basis as such benefits are provided to other senior
executives assigned to international offices. Mr. Kelly will also be
reimbursed for his relocation expenses in accordance with applicable
Company policies and terms of the Agreement. Pursuant to the Agreement
Mr. Kelly will also receive certain health and welfare and other benefits.
If Mr. Kelly resigns for good reason or is terminated other than for
cause, disability or death, the Company will provide Mr. Kelly with
certain additional payments and benefits as set forth in the Agreement.
The Agreement requires Mr. Kelly to refrain from competing with the
Company and soliciting the Company's customers during his employment
and, under defined circumstances, for 12 months after termination.
The Agreement also prohibits Mr. Kelly from soliciting any of the
Company's employees, under defined circumstances, for a period of 12
months following termination.
The foregoing description of the Agreement does not purport to be
complete and is qualified in its entirety by reference to the full
text of the Agreement, a copy of which is filed as Exhibit 10.1 to the
Company's Form 8-K dated April 3, 2007 and incorporated by reference
herein.
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS;
ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN
OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS.
On March 28, 2007, the Company entered into a new compensatory
contract with L. Kevin Kelly, its principal executive officer. A
brief description of the terms and conditions of the compensatory
contract is set forth in Item 1.01 of the Company's Form 8-K dated
April 3, 2007 and is incorporated by reference in this Item 5.02.
Such description does not purport to be complete and is qualified
in its entirety by reference to the full text of the Agreement, a
copy of which is filed as Exhibit 10.1 to the Company's Form 8-K
dated April 3, 2007 and incorporated by reference herein.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
Exhibit Number Description
-------------- -----------
10.1 Employment Agreement dated March 28, 2007
between L. Kevin Kelly and the Company
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 hereunto duly authorized.
Dated: April 3, 2007
HEIDRICK & STRUGGLES INTERNATIONAL, INC.
By: /s/ K. Steven Blake
--------------------------------------
K. Steven Blake, Executive Vice
President, General Counsel and
Secretary
EXHIBIT 10.1
HEIDRICK & STRUGGLES
March 28, 2007
Mr. L. Kevin Kelly
Woodcote House
14a Fairmile Avenue
Cobham
Surrey
KT11 2JB
Dear Kevin:
On behalf of Heidrick & Struggles International, Inc. (the "Company"),
I am pleased to confirm the terms of your employment arrangement in
this letter agreement (the "Agreement").
1. TERM OF EMPLOYMENT. Unless terminated earlier in accordance with
the provisions of Section 9, your employment under this Agreement
shall be effective for a term commencing on September 13, 2006
(the "Start Date") and ending on the three (3) year anniversary
of the Start Date (the "Employment Term"). Thereafter, the
Employment Term shall be automatically extended for subsequent
one (1)-year periods unless written notice to the contrary is
given by either the Company or you within ninety (90) days prior
to the expiration of the Employment Term or the expiration of any
subsequent one (1)-year extension thereof.
2. TITLE AND DUTIES. During the Employment Term, you will serve as
Chief Executive Officer of the Company, reporting to the Board of
Directors of the Company (the "Board"), with such duties and
responsibilities as are customarily assigned to such position,
and such other duties and responsibilities not inconsistent
therewith as may from time to time be assigned to you by the
Board. The Company shall nominate you for election as a member
of the Board for each term of Board service during the Employment
Term.
During the Employment Term, you agree that you will devote
substantially all of your business time, energy, and skill to the
business of the Company and shall use your reasonable best
efforts to promote the Company's best interest. During the
Employment Term, you may:
(a) in addition to being a director of the Company and with the
prior written approval of the Chairman of the Board, serve
as a director, trustee or member of: (i) up to three (3)
corporate or charitable entities and (ii) trade or other
associations related to the Company's industry;
(b) manage your personal investments; and
Mr. L. Kevin Kelly
March 28, 2007
Page 2
(c) participate in civic, community, philanthropic and
educational endeavors;
to the extent that such activities do not materially inhibit or
materially interfere with the performance of your duties under
this Agreement.
3. COMPENSATION.
(a) BASE SALARY. Beginning on the Start Date, you will receive
an annual base salary of $800,000, payable in accordance
with the Company's usual payroll practices. Promptly after
your execution of this Agreement, you will receive a lump-
sum payment to reflect this rate of annual base salary back
to the Start Date. After twelve (12) months from the Start
Date, the Board shall review and may consider for increase
(but not decrease) your base salary, in its sole discretion.
Your base salary, as increased from time to time shall be
referred to herein as the "Base Salary."
(b) INCENTIVE COMPENSATION. For 2007, you will be eligible for
an annual Target Management Bonus of 100% of your Base
Salary ($800,000) and you will participate in the Company's
Management Incentive Plan (Tier I). Subsequent to 2007, you
will participate in the Company's senior-executive bonus
programs, per the terms in place from time to time or as may
be determined by the Board, in its sole discretion.
(c) GENERAL PROVISIONS REGARDING BONUSES. Except as explicitly
set forth herein (including with respect to 2006), all
bonuses, including the Target Management Bonus, are
discretionary and are not earned until approved by the Board
or the Compensation Committee of the Board. Bonuses will be
payable only if you are in the Company's employ on the
regular or specifically described bonus payment date.
(d) EQUITY GRANTS. On March 30, 2007 (the "Grant Date"), the
Company will cause to be issued to you the following equity
grants, which will vest at the rate of one-third on each of
the first, second and third anniversaries of the Grant Date,
subject to the approval by the Board and your execution of
the grant agreements.
(i) 3,125 - HSII Restricted Stock Units; and
(ii) 6,250 - HSII Stock Options.
Mr. L. Kevin Kelly
March 28, 2007
Page 3
In addition, as part of the Company's annual management
equity grants, on the Grant Date, the Company will cause to
be issued to you the following equity grants, which will
vest at the rate of one-third on each of the first, second
and third anniversaries of the Grant Date:
(iii) 12,500 - HSII Restricted Stock Units; and
(iv) 25,000 - HSII Stock Options.
Whenever equity awards are made to executives of the Company
generally, you will be considered to receive such awards.
4. BENEFITS. During the Employment Term, you will be eligible to
participate in the Company's benefit programs at the same level
as such benefits are generally provided by the Company from time
to time to the other senior executives of the Company. The
benefits program includes group health, dental, vision,
life/AD&D, long-term disability, short-term disability salary
continuation, paid holidays, Flexible Spending Account and the
Heidrick & Struggles, Inc. 401(k) Profit-Sharing and Retirement
Plan. During the Employment Term, you will also be eligible to
participate in the Company's Physical Examination and Financial
Planning Programs, as in place from time to time. Your
eligibility for all such programs and plans is determined under
the terms of those programs/plans as applied generally. Our
benefits program, compensation programs, and policies are
reviewed from time to time and may be modified, amended, or
terminated at any time.
5. EXPENSES AND OTHER BENEFITS.
(a) EXPENSES. During the Employment Term, the Company will
reimburse you for all reasonable business expenses incurred
by you in the performance of your duties hereunder, in
accordance with the Company's expense reimbursement
policies.
(b) VACATION. You will be entitled to four weeks of paid
vacation during each calendar year in the Employment Term.
Vacation will be earned ratably over the course of the
calendar year and must be used during such calendar year.
Unused vacation will not be banked or carried over to any
succeeding year.
(c) OTHER BENEFITS. During the Employment Term, you shall be
provided with the opportunity to receive or participate in
perquisites and other benefits on a comparable basis as such
perquisites are generally provided by the Company from time
Mr. L. Kevin Kelly
March 28, 2007
Page 4
to time to the Company's other senior executives. Without
limiting the generality of the foregoing, the Company shall
reimburse you for the monthly dues of one country club or
luncheon club and any initial membership costs. In
addition, you shall also receive other benefits, including
tax preparation services, in connection with your assignment
to the London office and your relocation to the Chicago
office, on a comparable basis as such benefits are provided
to other senior executives assigned to international
offices, and taking into account your relocation to the
United States.
(d) INDEMNIFICATION. The Company shall: (a) during the
Employment Term and thereafter, indemnify you to the maximum
extent allowed under Delaware law and the Company's by-laws,
and (b) during the Employment Term and for a period of two
(2)-years after the termination of your employment with the
Company (or, if longer, for the post-termination period
generally provided to executives as of the date of your
termination of employment), maintain directors' and
officers' liability insurance for your benefit in a form at
least as comprehensive as, and in an amount that is at least
equal to, that maintained by the Company at such time for
any officer or director of the Company.
(e) ATTORNEY FEES. The Company will pay up to $10,000 in
reasonable attorneys' fees and related expenses incurred by
you in connection with the negotiation and review of this
Agreement.
6. SECONDMENT. You will be permitted to continue working out of the
Company's offices in London, England, from the Start Date through
July 15, 2007, at which time you will return to the United States
and work out of the Company's Chicago headquarters office.
During the time you work out of the Company's office in London,
England, you agree that you will spend a significant amount of
your time in the United States, working at the Company's U.S.
offices, including the Company's headquarters office in Chicago.
7. RELOCATION TO CHICAGO - RELATED EXPENSES. The Company will
reimburse you, according to its applicable policies on expense
reimbursement, for the reasonable and necessary expenses incurred
in connection with your relocation to Chicago, Illinois, subject
to the limitations set forth in and as more fully described in
EXHIBIT A to this Agreement (the "Covered Expenses").
8. COMPLIANCE WITH POLICIES. Subject to the terms of this
Agreement, you agree that you will comply in all material
respects with all policies and procedures applicable to similarly
Mr. L. Kevin Kelly
March 28, 2007
Page 5
situated employees of the Company, generally and specifically;
provided that any such failure to comply shall not be an event
constituting "Cause" for termination of employment except to the
extent specifically provided in Section 9(f) hereof.
9. TERMINATION OF EMPLOYMENT. Notwithstanding any other provision
of the Agreement:
(a) FOR CAUSE BY THE COMPANY OR VOLUNTARY RESIGNATION WITHOUT
GOOD REASON. If you are terminated by the Company for Cause
(as defined in Section 9(f) below) or if you voluntarily
resign without Good Reason (as defined in Section 9(g)), you
shall be entitled to receive as soon as reasonably
practicable after your date of termination (but in no event
later than 30 days following termination) or such earlier
time as may be required by applicable statute or regulation:
(i) your earned but unpaid Base Salary through the date of
termination; (ii) payment in respect of any vacation days
accrued but unused through the date of termination; (iii)
reimbursement for all business expenses properly incurred in
accordance with Company policy prior to the date of
termination and not yet reimbursed by the Company; and (iv)
any earned but unpaid annual bonus in respect of any of the
Company's fiscal years preceding the fiscal year in which
the termination occurs (provided, however that if your
termination is by the Company for Cause and such event(s)
and/or action(s) that constitute Cause are materially and
demonstrably injurious to the business or reputation of the
Company, then no payment will be made pursuant to this
clause (iv)) (the aggregate benefits payable pursuant to
clauses (i), (ii), (iii) and (iv) hereafter referred to as
the "Accrued Obligations"); and except as provided herein
you shall have no further rights to any compensation
(including any Base Salary or annual bonus, if any) or any
other benefits under this Agreement. All equity-based
awards shall be treated as set forth under the terms of the
applicable plan or agreement. All other accrued and vested
benefits, if any, due to you following your termination of
employment pursuant to this Section 9(a) shall be determined
and paid in accordance with the plans, policies, and
practices of the Company.
(b) DISABILITY OR DEATH. Following your termination of
employment for Disability (as defined in Section 9(h) below)
or death, you (or your estate) shall be entitled to receive:
(i) the Accrued Obligations; and (ii) subject to Section
9(l), (A) a pro-rata bonus, if any, for the year of your
termination of employment, based on the target bonus for
such year, and paid when bonuses under such applicable bonus
Mr. L. Kevin Kelly
March 28, 2007
Page 6
plans are normally paid (but no later than 2 1/2 months
after the end of the performance period), (B) treatment of
all equity-based awards per the terms of such applicable
plan or agreement, (C) all other benefits and payments per
the terms of the applicable plan or program, and (D) life
insurance and disability benefits paid per such applicable
plans. Except as provided herein, you (or your estate)
shall have no further rights to any compensation (including
any Base Salary) or any other benefits under this Agreement.
All other accrued and vested benefits, if any, due to you
following your termination of employment for Disability or
death shall be determined in accordance with the plans,
policies, and practices of the Company.
(c) WITHOUT CAUSE BY THE COMPANY OR VOLUNTARY RESIGNATION FOR
GOOD REASON.
(i) If you are terminated by the Company other than for
Cause, Disability or death, or if you voluntarily resign for Good
Reason, you shall receive: (A) the Accrued Obligations; and (B)
subject to Section 9(l), (I) a pro-rata bonus, if any, for the
year of your termination of employment, based on the target bonus
for such year, and paid when bonuses under such applicable bonus
plans are normally paid (but no later than 2 1/2 months after the
end of the performance period), (II) contingent upon your
election of COBRA continuation coverage, the continuation of
medical benefits under COBRA at a cost to you no greater than the
cost to active employees for twelve (12) months following your
termination; provided, however, that such benefit shall be
reduced or eliminated to the extent you receive similar benefits
from a subsequent employer, and (III) a lump-sum amount equal to
one and one-half (1.5) times your Annual Cash Compensation (as
defined in Section 9(i) below). Except as provided herein, you
shall have no further rights to any compensation (including any
Base Salary) or any other benefits under this Agreement. All
other accrued and vested benefits, if any, due to you following
your termination of employment pursuant to this Section 9(c)
shall be determined in accordance with the plans, policies and
practices of the Company. Payments and benefits provided
pursuant to this Section 9(c) shall be subject to Section 9(e)
below, if applicable.
(ii) The payments and benefits provided in this Section 9(c)
are in lieu of payments and benefits under any other severance
arrangement of the Company, except that, to the extent the
aggregate payments and benefits under such other severance
arrangement would be more favorable to you, you will receive such
payments and benefits in lieu of what is provided in this Section
9(c).
Mr. L. Kevin Kelly
March 28, 2007
Page 7
(d) TERMINATION FOLLOWING A CHANGE IN CONTROL.
(i) If, during the period beginning on the date six (6)
months prior to a Change in Control (as defined in Section 9(j)
below) and ending on the date two (2) years after a Change in
Control, (A) you are terminated by the Company other than for
Cause, Disability or death, or (B) you voluntarily resign for
Good Reason, you shall receive: (I) the Accrued Obligations and
(II) subject to Section 9(l): the benefits and payments set
forth in Section 9(c) above; provided, however, the cash payment
provided in clause (III) of Section 9(c) shall equal two and one-
half (2.5) times your Annual Cash Compensation instead of one and
one-half (1.5) times your Annual Cash Compensation.
(ii) In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to you in
connection with a Change in Control (the "Total Payments")
constitute "parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the
"Code") and will be subject to the excise tax imposed by Section
4999 of the Code, then you shall receive (a) a payment from the
Company sufficient to pay such excise tax, and (b) an additional
payment from the Company sufficient to pay the excise tax and
federal and state income taxes arising from the payments made by
the Company to you pursuant to this sentence, which payment shall
not include any payments to cover taxes or interest that may
arise as a result of Section 409A of the Code; provided, however,
in the event the aggregate value of the Total Payments exceeds
three times your "base amount," as defined in Section 280G(b)(3)
of the Code, (the "Parachute Threshold") by less than 10% of the
Parachute Threshold, then one or more of the Total Payments, as
designated by you, shall be reduced so that the aggregate value
of the Total Payments is $1.00 less than the Parachute Threshold.
Unless you and the Company otherwise agree in writing, the
determination of your excise tax liability and the amount
required to be paid under this subsection (ii) shall be made in
writing by an independent national accounting firm selected by
you and the Company (the "Accountants"). In the event that the
excise tax incurred by you is determined by the Internal Revenue
Service to be greater or lesser than the amount so determined by
the Accountants, you and the Company agree to promptly make such
additional payment, including interest and any tax penalties, to
the other party as the Accountants reasonably determine is
appropriate to ensure that the net economic effect to you under
this subsection (ii), on an after-tax basis, is as if the Code
Section 4999 excise tax did not apply to you. For purposes of
making the calculations required by this subsection (ii), the
Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on interpretations of
Mr. L. Kevin Kelly
March 28, 2007
Page 8
the Code for which there is a "substantial authority" tax
reporting position. You and the Company shall furnish to the
Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this
subsection (ii). The Company shall bear all costs the
Accountants may reasonably incur in connection with any
calculations contemplated by this subsection (ii).
(iii) The payments and benefits provided in this Section
9(d) are in lieu of payments and benefits under any other
severance or change in control arrangement of the Company, except
that, to the extent the aggregate payments and benefits under
such other arrangement would be more favorable to you, you will
receive such payments and benefits in lieu of what is provided in
this Section 9(d).
(e) CODE SECTION 409A COMPLIANCE. Notwithstanding the above, if
necessary to avoid incurring penalties under Code Section
409A, payments and benefits due under this Section 9 shall
not be provided to you during the six (6) month period
immediately following your termination; provided, however,
that on the first business day following the date six (6)
months after your termination, a lump-sum catch-up payment
shall be made to you for amounts not paid during the six (6)
month delay.
(f) "CAUSE" for termination by the Company of your employment
with the Company shall be limited to the occurrence of any
of the following:
(i) your conviction of, or plea of guilty or no
contest to (A) a misdemeanor involving material
dishonesty in connection with your job duties,
fraud, or moral turpitude, or (B) a felony;
(ii) your willful malfeasance, willful misconduct or
gross negligence in connection with your duties;
(iii) your willful and continued failure to
substantially perform your duties to the Company
(other than any such failure resulting from
incapacity due to Disability), after a written
demand for substantial performance is delivered to
you by the Chairman of the Board which
specifically identifies the manner in which the
Board believes that you have not substantially
performed your duties;
Mr. L. Kevin Kelly
March 28, 2007
Page 9
(iv) your willful engaging in illegal conduct or gross
misconduct which is materially and demonstrably
injurious to the business or reputation of the
Company; or
(v) your willful or intentional material breach of any
of the restrictive covenants set forth in this
Agreement.
For purposes of this definition, no act or failure to act on
your part shall be considered "willful" unless it is done,
or omitted to be done, by you in bad faith or without
reasonable belief that your action or omission was in the
best interests of the Company. The Company shall give
written notice to you of the termination for Cause, which
shall state in detail the particular act or acts or the
failure or failures to act that constitute the grounds on
which the Cause termination is based. You shall have thirty
(30) days upon receipt of the notice in which to cure such
conduct, to the extent such cure is possible.
(g) "GOOD REASON" for termination by you of your employment
means the occurrence (without your express written consent)
of any one of the following acts by the Company or failures
by the Company to act:
(i) a diminution in your title from Chief Executive
Officer or in your reporting relationship to the
Board;
(ii) the assignment to you of any duties inconsistent
in any material respect with the position of Chief
Executive Officer or any material diminution in
your authority, duties or responsibilities;
(iii) the Company's requiring you to be based at, or
perform your principal functions at, any office or
location other than a location within 35 miles of
the Company's Chicago headquarters office
(excluding, however, your work out of the
Company's London, England office prior to July 15,
2007);
(iv) a reduction in Base Salary;
(v) a reduction in your target bonus below 100% of
your Base Salary;
Mr. L. Kevin Kelly
March 28, 2007
Page 10
(vi) notice to you of the Company's non-renewal of the
Agreement; provided, however, that if such non-
renewal would cause this Agreement to expire on a
date on or after you attain age fifty-five (55),
then such notice shall not constitute "Good
Reason"; or
(vii) a material breach by the Company of this
Agreement.
Prior to your right to terminate this Agreement for Good
Reason, you shall give written notice to the Company of your
intention to terminate your employment on account of a Good
Reason. Such notice shall state in detail the particular
act or acts or the failure or failures to act that
constitute the grounds on which your Good Reason termination
is based and such notice shall be given within six (6)
months of the occurrence of the act or acts or the failure
or failures to act which constitute the grounds for Good
Reason. The Company shall have thirty (30) days upon
receipt of the notice in which to cure such conduct, to the
extent such cure is possible.
(h) "DISABILITY" means your inability to perform your normal
duties as a result of any physical or mental injury or
ailment for (i) any consecutive ninety (90)-day period or
(ii) any one hundred eighty (180) days (whether or not
consecutive) during any three hundred sixty-five (365)
calendar day period.
(i) "ANNUAL CASH COMPENSATION" means your annual Base Salary and
Target Management Bonus.
(j) "CHANGE IN CONTROL" means the same definition as set forth
in the Company's Change in Control Severance Plan as of the
Start Date, or, if more favorable to you, a later then-
applicable change-in-control severance plan adopted by the
Board.
(k) NO MITIGATION OR OFFSET. In no event shall the benefits set
forth in this Section 9 be subject to mitigation or offset.
(l) RELEASE. Notwithstanding any other provision of this
Agreement to the contrary, you acknowledge and agree that
any and all payments to which you are entitled under this
Section 9 which are described as being subject to this
Section 9(l) are conditioned upon and subject to your
execution of, and not having revoked within any applicable
revocation period, a general release and waiver, in such
Mr. L. Kevin Kelly
March 28, 2007
Page 11
reasonable and customary form as shall be prepared by the
Company and shall be substantially similar to the sample
attached hereto as EXHIBIT B, of all claims you may have
against the Company and its directors, officers,
subsidiaries and affiliates, except as to (i) matters
covered by provisions of this Agreement that expressly
survive the termination of this Agreement and (ii) rights to
which you are entitled by virtue of your participation in
the employee benefit plans, policies and arrangements of the
Company.
10. RETURN OF MATERIALS. Upon the termination of your employment,
you agree to return to the Company all Company property,
including all materials furnished to you during your employment
(including but not limited to keys, computers, automobiles,
electronic communication devices, files, electronic storage
devices and identification cards) and all materials created by
you during your employment. In addition, you agree that upon the
termination of your employment you will provide the Company with
all passwords and similar information which will be necessary for
the Company to access materials on which you worked or to
otherwise continue in its business.
11. CONFIDENTIALITY. In the course of your employment with the
Company you will be given access to and otherwise obtain
knowledge of certain trade secrets and confidential and
proprietary information pertaining to the business of the Company
and its affiliates. Other than in the course of properly
performing your duties for the Company, during the Term of this
Agreement and thereafter, you will not, directly or indirectly,
without the prior written consent of the Company, disclose or use
for the benefit of any person, corporation or other entity,
including yourself, any trade secrets or other confidential or
proprietary information concerning the Company or its affiliates,
including, but not limited to, information pertaining to their
clients, services, products, earnings, finances, operations,
marketing, methods or other activities; provided, however, that
the foregoing shall not apply to information which is of public
record or is generally known, disclosed or available to the
general public or the industry generally (other than as a result
of your breach of this covenant or the breach by another employee
of his or her confidentiality obligations). Notwithstanding the
foregoing, you may disclose such information as is required by
law during any legal proceeding or to your personal
representatives and professional advisers as is required for
purposes of rendering tax or legal advice, and, with respect to
such personal representatives and professional advisers, you
shall inform them of your obligations hereunder and take all
reasonable steps to ensure that such professional advisers do not
Mr. L. Kevin Kelly
March 28, 2007
Page 12
disclose the existence or substance thereof. Further, other than
in the course of properly performing your duties for the Company,
you shall not, directly or indirectly, remove from the Company's
premises any records, computer disks or files, computer
printouts, business plans or any copies or reproductions thereof,
or any information or instruments derived therefrom, arising out
of or relating to the business of the Company and its affiliates
or obtained as a result of your employment by the Company.
12. NON-SOLICITATION/NON-COMPETITION.
(a) Without the prior written consent of the Company, during the
Employment Term and for a period of twelve (12) months after
the termination of your employment with the Company for any
reason, you shall not:
(i) become engaged in or otherwise become interested
in, directly or indirectly (whether as an owner, officer,
employee, consultant, director, stockholder, or otherwise), any
company, enterprise or entity that, in any market served by the
Company, provides, or has made substantial preparation to
provide, services or products that compete with any portion of
the "Business" (as defined below in Section 12(d));
(ii) for the purpose of providing services or products
similar to those provided by the Company in the conduct of the
Business, directly or indirectly solicit, or assist any other
person in soliciting, any client of the Company (x) with whom you
had contact during your employment with the Company, (y) about
which you learned non-public information during your employment
with the Company, or (z) whose account you oversaw during your
employment with the Company;
(iii) for purposes of employment with an entity other
than the Company, directly or indirectly solicit, or assist any
other person in soliciting, any person who was an employee of the
Company or its affiliates as of your termination of employment
with the Company, or any person who, as of such date, was in the
process of being recruited by the Company or its affiliates to
become an employee of the Company or its affiliates (each such
person, a "Protected Employee"), or induce any Protected Employee
to terminate his or her employment with the Company or its
affiliates; or
(iv) hire or assist another in hiring any Protected
Employee who potentially possesses the Company's or its
affiliate's confidential information (as described in Section 11
above) for a position where the Protected Employee's knowledge of
such information might be harmful the Company or its affiliates.
Mr. L. Kevin Kelly
March 28, 2007
Page 13
(b) You acknowledge that the protections of the Company set
forth in this Section 12 are fair and reasonable. You agree
that remedies at law for a breach or threatened breach of
the provisions of this Section 12 would be inadequate and,
therefore, the Company shall be entitled, in addition to any
other available remedies, without posting a bond, to
equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent
injunction, or any other equitable remedy that may be then
available.
(c) As used in this Section 12, the term "Business" shall mean
the business of the Company and its direct and indirect
parents and subsidiaries and shall include (I) executive
search, which includes facilitating the recruitment,
management and deployment of senior executives for executive
management and board director positions; (II) leadership
consulting services, which includes succession planning,
executive development and top team effectiveness; and (III)
as of the date of your termination of employment, any other
service or product provided by the Company or for which the
Company had made substantial preparation to enter into or
offer.
13. OTHER LEGAL MATTERS.
(a) NO OTHER AGREEMENTS/OBLIGATIONS. You have advised the
Company that your execution and performance of the terms of
this Agreement do not and will not violate any other
agreement binding on you or the rights of any third parties
and you understand that in the event this advice is not
accurate the Company will not have any obligation to you
under this Agreement.
(b) UNITED STATES EMPLOYMENT. You will be an employee of the
Company's United States operations and agree that your
employment with the Company shall be governed by the laws of
the United States of America and the State of Illinois.
(c) ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement or for the breach thereof, or
your employment, including without limitation any statutory
claims (for example, claims for discrimination including but
not limited to discrimination based on race, sex, sexual
orientation, religion, national origin, age, marital status,
handicap or disability; and claims relating to leaves of
absence mandated by state or federal law), breach of any
contract or covenant (express or implied), tort claims,
violation of public policy or any other alleged violation of
Mr. L. Kevin Kelly
March 28, 2007
Page 14
statutory, contractual or common law rights (and including
claims against the Company's officers, directors, employees
or agents) if not otherwise settled between the parties,
shall be conclusively settled by arbitration to be held in
Chicago, Illinois, in accordance with the American
Arbitration Association's Employment Arbitration Rules and
Mediation Procedures (the "Rules"). Arbitration shall be
the parties' exclusive remedy for any such controversies,
claims or breaches. The parties also consent to personal
jurisdiction in Chicago, Illinois with respect to such
arbitration. The award resulting from such arbitration
shall be final and binding upon both parties. This
Agreement shall be governed by the laws of the United States
of America and the State of Illinois without regard to any
conflict of law provisions of any jurisdiction. You and the
Company hereby waive the right to pursue any claims,
including but not limited to employment related claims,
through civil litigation outside the arbitration procedures
of this provision, unless otherwise required by law. You
and the Company each have the right to be represented by
counsel with respect to arbitration of any dispute pursuant
to this paragraph. The arbitrator shall be selected by
agreement between the parties, but if they do not agree on
the selection of an arbitrator within thirty (30) days after
the date of the request for arbitration, the arbitrator
shall be selected pursuant to the Rules. With respect to
any claim brought to arbitration hereunder, both you and the
Company shall be entitled to recover whatever damages would
otherwise be available to you/it in any legal proceeding
based upon the federal and/or state law applicable to the
claim, except that parties agree they shall not seek any
award for punitive damages for any claims they may have
under this Agreement. The decision of the arbitrator may be
entered and enforced in any court of competent jurisdiction
by either you or the Company. Each party shall pay the fees
of their respective attorneys (except as otherwise awarded
by the arbitrator), the expenses of their witnesses and any
other expenses connected with presenting their cases, other
costs, including the fees of the mediator, the arbitrator,
the cost of any record or transcript of the arbitration, and
administrative fees, shall be borne equally by the parties,
one-half by you, and one-half by the Company. Should you
pursue any dispute or matter covered by this paragraph by
any method other than said arbitration, the Company shall be
entitled to recover from you all damages, costs, expenses,
and attorneys' fees incurred as a result of such action.
The provisions contained in this paragraph shall survive
termination of your employment with the Company and the
termination and/or expiration of this Agreement.
Mr. L. Kevin Kelly
March 28, 2007
Page 15
(d) NOTICE. All notices and other communications under this
Agreement shall be in writing to you at such address as most
currently appears in the records of the Company and, if to
the Company, at its Chicago headquarters, directed to the
attention of the General Counsel.
(e) FULL AND COMPLETE AGREEMENT. This letter Agreement contains
our entire understanding and can be amended only in writing
and signed by the Chairman of the Compensation Committee of
the Board or the General Counsel of the Company. This
Agreement supersedes any and all prior agreements, whether
written or oral, between you and the Company, that are not
specifically incorporated by reference herein. You
specifically acknowledge that no promises or commitments
have been made to you that are not set forth in this letter.
(f) SEVERABILITY. If any provision of this Agreement or the
application thereof is held invalid, such invalidity shall
not affect other provisions or applications of this
Agreement that can be given effect without the invalid
provision or application and, to such end, the provisions of
this Agreement are declared to be severable.
(g) SURVIVAL OF PROVISIONS. The provisions of Sections 9
through 11 of this Agreement shall survive the termination
of your employment with the Company and the expiration or
termination of this Agreement.
(h) NEUTRAL INTERPRETATION. This Agreement constitutes the
product of the negotiation of the parties hereto and the
enforcement of this Agreement shall be interpreted in a
neutral manner, and not more strongly for or against any
party based upon the source of the draftsmanship of the
Agreement. Each party has been provided ample time and
opportunity to review and negotiate the terms of this
Agreement and consult with legal counsel regarding the
Agreement.
(i) NO WAIVER. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion
shall not be considered a waiver of such party's rights or
deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this
Agreement.
Mr. L. Kevin Kelly
March 28, 2007
Page 16
(j) COUNTERPARTS AND SIGNATURES. This Agreement may be signed
in counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were
upon the same instrument. Signatures delivered by facsimile
or PDF file shall constitute original signatures.
(k) WITHHOLDING. All payments to be made to you by the Company
shall be subject to withholding as reasonably determined by
the Company pursuant to applicable law and regulation.
(l) CODE SECTION 409A. It is intended that any amounts payable
under this Agreement and the Company's and your exercise of
authority or discretion hereunder shall comply with Code
Section 409A (including the Treasury regulations and other
published guidance relating thereto) so as not to subject
you to the payment of any interest or additional tax imposed
under Code Section 409A. To the extent any amount payable
to you from the Company, per this Agreement or otherwise,
would trigger the additional tax imposed by Code Section
409A, the payment arrangements shall be modified to avoid
such additional tax. This provision includes, but is not
limited to, Treasury Regulation Section 1.409A-3(g)(2),
relating to a six-month delay in payment of deferred
compensation to a "specified employee" (as defined in the
Treasury Regulations under Section 409A) upon a separation
from service, to the extent applicable.
We look forward to your continued employment with the Company.
Yours sincerely,
/s/ Jill Kanin-Lovers
-------------------------------
Jill Kanin-Lovers
Director and Chair, HSII Compensation Committee
I hereby accept the terms and conditions of employment as outlined
above:
/s/ L. Kevin Kelly March 29, 2007
------------------------------------ ------------------------
L. Kevin Kelly Date
EXHIBIT A
RELOCATION TERM SHEET
L. KEVIN KELLY
Covered Expenses:
-----------------
RELOCATION EXPENSES
1. Move household goods
2. Stipend for fit-out costs of new home
3. One way business class flight for family move
4. Hotel, meal and ground transportation expenses in connection
with family move
CAP = $100,000
TRANSITIONAL HOUSING
1. Temporary housing for up to 90 days, in reasonable
accommodations (to be approved in advance by HR) as provided
for under the Company's Relocation Policy
2. Storage of household goods for up to 90 days
HOUSE HUNTING
1. Two roundtrip business class flights for Kevin and/or his
family to find permanent housing
2. Hotel, meal and rental car expenses for 10 days total
(combined total across two trips)
BROKER/REALTOR COSTS
l. Broker Fees in connection with sale of home
2. Closing Costs, excluding mortgage points
CAP = $ 5,000
CANCELLATION FEES
Expenses related to timing of move (E.G., COST OF BREAKING LEASE,
CAR LEASE PENALTIES, ETC.)
TAX GROSS-UP
The Company will provide you tax gross-up payments to the extent
the above covered expenses are income to you and cannot be deducted by
you on your tax return.
A-1
Expenses NOT covered:
--------------------
1. Education expenses: school fees for children
2. Ongoing housing expenses beyond assistance related to
purchasing a home
A-2
EXHIBIT B
GENERAL RELEASE AND WAIVER
--------------------------
1. For valuable consideration, the adequacy of which is hereby
acknowledged, the undersigned ("Employee") on behalf of himself and
the other Employee Releasors (as defined below) releases and forever
discharges Heidrick & Struggles International, Inc. (the "Company")
and the other Company Releasees (as defined below) from any and all
Claims (as defined below) which the Employee now has or claims, or
might hereafter have or claim, whether known or unknown, suspected or
unsuspected (or the other Employee Releasors may have, to the extent
that it is derived from a Claim which the Employee may have), against
the Company Releasees based upon or arising out of any matter or thing
whatsoever, from the beginning of time to the date affixed beneath the
Employee's signature on this General Release and Waiver and shall
include, without limitation, Claims arising out of or related to the
letter agreement between the Company and Employee dated [INSERT DATE]
(the "Letter Agreement") and Claims arising under (or alleged to have
arisen under) (a) the Age Discrimination in Employment Act of 1967, as
amended; (b) Title VII of the Civil Rights Act of 1964, as amended;
(c) The Civil Rights Act of 1991; (d) Section 1981 through 1988 of
Title 42 of the United States Code, as amended; (e) the Employee
Retirement Income Security Act of 1974, as amended; (f) The
Immigration Reform Control Act, as amended; (g) The Americans with
Disabilities Act of 1990, as amended; (h) The National Labor Relations
Act, as amended; (i) The Occupational Safety and Health Act, as
amended; (j) any state or local anti-discrimination law; (k) any other
local, state or federal law, regulation or ordinance; (l) any public
policy, contract, tort, or common law; or (m) any allegation for
costs, fees, or other expenses including attorneys' fees incurred in
these matters. The Employee further releases any rights to recover
damages or other personal relief based on any claim or cause of action
filed on the Employee's behalf in court or any agency.
Notwithstanding the above, the Employee Releasors do not release any
claim duly filed pursuant to the group welfare and retirement plans of
the Company or a claim filed pursuant to any policy of liability
insurance or the Company's by-laws.
2. For purposes of this General Release and Waiver, the terms
set forth below shall have the following meanings:
(a) The term "Claims" shall include any and all rights,
claims, demands, debts, dues, sums of money, accounts, attorneys'
fees, experts' fees, complaints, judgments, executions, actions
and causes of action of any nature whatsoever, cognizable at law
or equity.
B-1
(b) The term "Company Releasees" shall include the Company
and its affiliates and their current, former and future officers,
directors, trustees, members, employees, shareholders, partners,
assigns and administrators and fiduciaries under any employee
benefit plan of the Company and of any affiliate, and insurers,
and their predecessors and successors.
(c) The term "Employee Releasors" shall include the
Employee, and his family, heirs, executors, representatives,
agents, insurers, administrators, successors, assigns, and any
other person claiming through the Employee.
3. The Employee acknowledges that: (a) the Employee has read
and understands this General Release and Waiver in its entirety; (b)
the severance payments and other benefits provided to the Employee
under the Letter Agreement exceed the nature and scope of that to
which the Employee would otherwise have been entitled to receive from
the Company; (c) the Employee has been advised in writing to consult
with an attorney about this General Release and Waiver before signing
and has had ample opportunity to do so; (d) the Employee has been
given twenty-one (21) days to consider this General Release and Waiver
before signing; (e) the Employee has the right to revoke this General
Release and Waiver in full within seven (7) calendar days of signing
it by providing written notice to the Company addressed as follows:
Heidrick & Struggles International, Inc. 233 South Wacker Drive, Suite
4200 Sears Tower, Chicago, IL 60606-6303, Attn: General Counsel, and
that this General Release and Waiver shall not become effective until
that seven-day revocation period has expired; and (f) the Employee
enters into this General Release and Waiver knowingly and voluntarily,
without duress or reservation of any kind, and after having given the
matter full and careful consideration.
****
[Exhibit only. To be signed at termination
of employment in connection with severance
benefits.]
---------------------------------------------
L. KEVIN KELLY
Date:
--------------------------------
B-2