Employment
Letter and Terms and Conditions of Employment
Full-Time, Salaried General Counsel and Managing
Director
On behalf of
BearingPoint, Inc. (the “Company”), by this letter (the
“Employment Letter”), I am pleased to offer you the
position of General Counsel and Managing Director of the Company in
our Chicago office, effective February 27, 2006 (the
“Effective Date”). Your annualized salary will be
$500,000, paid semi-monthly, subject to standard withholdings and
deductions. You will also be eligible to participate in the
Company’s 2000 Long-Term Incentive Plan, or any successor
program (the “LTIP”) and be eligible for future
compensation adjustments, but in no event will your annualized
salary be decreased below $500,000 unless the decrease is part of a
general reduction applicable to executive level personnel. You will
also be subject to the terms and conditions of any managing
director incentive compensation plan that has been approved by the
Compensation Committee of the Company’s Board of Directors.
You will report directly to the Chief Executive Officer (the
“CEO”) of the Company and your performance will be
reviewed by the CEO at least annually. You will have such duties
and responsibilities as are commensurate with your position. Your
employment shall be “at-will.” Your employment may be
terminated by the Company at any time and for any or no reason.
Your employment may be terminated by you with three months’
prior notice, as provided in your Managing Director
Agreement.
Equity. Effective on the first business day after the
earlier of (i) the date the Company ceases for any reason to
be a reporting company under the Securities Exchange Act of 1934
(the “Exchange Act”) or (ii) the date that an
effective Form S-8 is filed or is on file that covers the shares of
common stock of the Company issuable under the restricted stock
units to be granted to you (the “RSU Grant Date”), you
shall receive an award of the number of restricted stock units that
results from dividing $1,750,000 minus the amount of Cash Award
Payments (as defined below), if any, made to you prior to the RSU
Grant Date by the “Fair Market Value” (as such term is
defined in the Restricted Stock Unit Agreement attached hereto) of
one share of the Company’s common stock on the RSU Grant Date
and rounding up the result to the nearest number of whole shares
(the “Restricted Stock Units”). Subject to accelerated
vesting as provided herein and subject to appropriate modification
of the vesting schedule as set forth in Exhibit A
based
Laurent C.
Lutz, Esq.
February 24, 2006
Page 2
on the
Company’s payment of any Cash Award Payments described below,
60% of the Restricted Stock Units shall become vested on
June 30, 2006 (the “First RSU Vesting Date”) and
the remaining 40% will vest ratably (in 10% installments) beginning
on December 31, 2007 and each year thereafter, so that 100% of
the Restricted Stock Units shall be vested on December 31,
2010 (each date on which a portion of the Restricted Stock Units
becomes vested, a “Vesting Date”).
In the event
that the Company is a reporting company under the Exchange Act and
an effective Form S-8 has not been filed on or prior to the date(s)
set forth below, the Company shall, in lieu of the granting,
vesting and settlement of the Restricted Stock Units in accordance
with the Restricted Stock Unit Agreement on the applicable date(s),
make a payment to you in cash of the following amount(s) (the
“Cash Award Payments”) on the date(s) set forth
opposite such amount (the “Award Payment Dates”) to the
extent that you would have been vested in the corresponding
Restricted Stock Units:
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Cash Award Payment
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Award Payment Dates
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$525,000
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July 1, 2006
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$525,000
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June 30, 2007
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$175,000
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December 31, 2007 and on each
December
31 st
until and including
December 31, 2010
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On the RSU
Grant Date, you will receive a Restricted Stock Unit Agreement
substantially in the form attached hereto that details the various
terms of the grant of the Restricted Stock Units, including terms
and conditions related to the settlement of the Restricted Stock
Units, and requires your signature of acceptance; provided,
the vesting and settlement provisions of the Restricted Stock Unit
Agreement in the form attached hereto shall be modified to the
extent necessary to reflect any Cash Award Payments made prior to
the RSU Grant Date, in a manner consistent with
Exhibit A.
All unvested
Restricted Stock Units (and, if Restricted Stock Units have not
been granted, the Cash Award Payments) will immediately vest upon
the occurrence of a Change in Control of the Company, as such term
is defined in the LTIP on the date hereof, provided that, except as
set forth in Section 3(h) of your Special Termination Agreement
with the Company dated February 24, 2006 (the “Special
Termination Agreement”), you are employed on the date that
the Change in Control occurs; !provided however, in the
event that the Company has not granted Restricted Stock Units to
you in accordance with the terms hereof by the date of such Change
in Control of the Company, and if such Change in Control is also an
event described in Section 409A(a)(2)(A)(v) of the Internal
Revenue Code of 1986, as amended, you shall receive the following:
(i) 75% of the difference between $1,750,000 and the amount of
Cash Award Payments made to you prior to the Change in Control of
the Company, which shall be in the form of cash and securities in
the same proportion as the restricted stock units of
Company’s Chief Executive Officer settle in connection with
such Change in Control and (ii) 25% of the
Laurent C.
Lutz, Esq.
February 24, 2006
Page 3
difference
between $1,750,000 and the amount of Cash Award Payments made to
you prior to the Change in Control of the Company, which shall be
paid to you in cash.
On a
termination of your employment by the Company without Cause or by
you for Good Reason, the portion of the Restricted Stock Units
scheduled to vest on the next Vesting Date following your
termination shall vest on the date of your termination;
provided, however, in the event the Company has not granted
Restricted Stock Units to you in accordance with the terms hereof
by the date of any such termination, the Company shall pay you the
Cash Award Payment scheduled to be paid to you on the next Award
Payment Date (or, in the case of any such termination prior to
July 1, 2007, the next two Award Payment Dates) following the
date of your termination.
You are also
eligible to receive additional annual grants of stock options,
and/or other equity awards on at least the same basis as other
executives of the Company.
Forfeiture
of Cash Award Payments.
a. If you receive any Cash Award Payments and
you:
i. breach
any covenant concerning confidentiality or intellectual property or
concerning noncompetition or nonsolicitation of clients,
prospective clients or personnel of the Company and its Affiliates
to which you are or may become a party in the future;
ii. fail
(A) to complete on a timely basis all current and future
training relating to the Company’s policies and procedures,
including financial reporting and timekeeping training, as
communicated in writing to you, (B) to consistently follow all
Company policies and procedures and to “Confirm” (as
defined in Section 4(d) of the Restricted Stock Unit Agreement)
that the employees you supervise are following such Company
policies and procedures; provided that the foregoing provision
shall apply only after you have completed an initial detailed audit
of the Company’s Legal Department, the scope of which audit
shall be reasonably satisfactory to the Company’s Board of
Directors (or a Committee thereof), or (C) to participate in
the Company’s variable compensation program; or
iii. are
terminated for “Cause;”
then, in
addition to and without in any way limiting any remedies under any
of the covenants described above under this heading
“Forfeiture of Cash Award Payments” or
otherwise:
(A) any
unvested Cash Award Payments (i.e. Cash Award Payments for which
the Award Payment Date has not elapsed) shall be forfeited
automatically on the date you commit such breach as is specified in
clause (i) above, you fail to act as specified in clause
(ii) above or you are terminated for “Cause;”
and
Laurent C.
Lutz, Esq.
February 24, 2006
Page 4
(B) in
the event of a breach described in subsection (a)(i) under this
heading “Forfeiture of Cash Award Payments”, you shall
pay the Company, within five business days of your receipt of a
written demand therefor, an amount in cash equal to the aggregate
of all Cash Award Payments you received prior to the date of your
breach of such covenant; and
(C) in
the event of a breach described in subsection (a)(ii) of this
heading “Forfeiture of Cash Award Payments” or if you
are terminated for Cause other than for a breach referenced in
subsection (a)(i) of this heading “Forfeiture of Cash Award
Payments”, you shall pay the Company, within five business
days of your receipt of a written demand therefor, an amount in
cash equal to 50% of the aggregate of all Cash Award Payments you
received prior to the date of the breach described in subsection
(a)(ii) under this heading “Forfeiture of Cash Award
Payments” or the date you are terminated for Cause other than
for a breach referenced in subsection (a)(i) of this heading
“Forfeiture of Cash Award Payments”; and
(D) you
shall pay to the Company any direct damages in excess of the
amounts paid to the Company under clauses (B) or
(C) above or under Section 4(a)(B) or (C) of the
Restricted Stock Unit Agreement, if applicable.
b. You agree that by executing this Agreement, you
authorize the Company and its Affiliates to deduct any amount or
amounts owed by you pursuant to this heading “Forfeiture of
Cash Award Payments” from any amounts payable by the Company
or any Affiliate to you, including, without limitation, any amount
payable to you as salary, wages, vacation pay or bonus. This right
of setoff shall not be an exclusive remedy, and the Company’s
or an Affiliate’s election not to exercise this right of
setoff with respect to any amount payable to you shall not
constitute a waiver of this right of setoff with respect to any
other amount payable to you or any other remedy.
Annual
Bonus. You will be
eligible to receive an annual bonus with a target amount equal to
100% of your annual base salary (prorated for 2006) (the
“Target Bonus”) upon achievement of reasonable
pre-established performance goals. Subject to the sections below
titled “Severance” and “Termination by the
Company without Cause or by you with Good Reason,” your
annual bonus may be paid in cash or any other form in which (and at
such time as) annual bonuses are paid to the Chief Executive
Officer, the Chief Financial Officer, the Chief Operating Officer
and the Principal Accounting Officer, which shall be no later than
the end of the calendar year following the year in respect of which
such bonus is payable. Any such payment shall be subject to
standard withholdings and deductions.
Sign-On
Bonus. On the Effective
Date of your employment, the Company will make a cash lump sum
payment in the amount of Nine Hundred Thousand Dollars ($900,000),
less standard withholdings and deductions (the “Sign-On
Bonus”) to you by wire transfer
of immediately available funds to the account designated by you in
writing. The Sign-On Bonus shall be repaid to the Company within
30 days following termination of your employment by the
Company for Cause or by you for any reason (other than (i) by
you with Good Reason, (ii) by you under Section 3(a) of the
Special Termination Agreement,
Laurent C.
Lutz, Esq.
February 24, 2006
Page 5
(iii) upon
your Disability (as defined in Restricted Stock Unit Agreement) or
(iv) upon your death) prior to the first anniversary of the
Effective Date.
Retention
Bonus. Provided that you
remain employed on the payment dates specified below, you will
receive a cash lump sum payment in the amount of $375,000 on the
first anniversary of the Effective Date and a cash lump sum payment
in the amount of $375,000 on the second anniversary of the
Effective Date (together, the “Retention Bonus”).
Notwithstanding the foregoing, all or any portion of the Retention
Bonus remaining unpaid will be paid to you within 5 days of
any management-approved Change in Control that occurs while you are
still employed.
Benefits/Long-Term Incentives.
You will be entitled to participate
in all employee benefit (including long-term incentives), fringe
and perquisite plans, practices, programs policies and arrangements
generally provided to executives of the Company at a level
commensurate with your position.
Personal
Days/Holidays. You will
be entitled to 25 annual personal days, accrued monthly, to use for
vacation, illness or other personal absences. These personal days
are in addition to eight Company-designated holidays. As a
full-time employee, you will also be eligible to participate in our
Personal Benefits Program.
Business
Expenses. The Company
will reimburse you for the travel, entertainment and other business
expenses incurred by you in the performance of your duties in
accordance with the Company’s policies applicable to senior
executives as in effect from time to time.
Severance. Upon termination of your employment, the Company
will pay you: (i) any earned but unpaid base salary through
the date of termination and any earned but unpaid annual bonus for
any preceding year, provided, however, that your employment
terminates after the payment date for the annual bonus,
(ii) any unpaid accrued personal days or unreimbursed business
expenses, (iii) in the circumstances specified below in the
section titled “Termination by the Company without Cause or
by you with Good Reason” the payments specified in that
section, and (iv) any other amounts due under any of the
Company’s benefit plans. Payment of the amounts specified in
subsection (iii) above shall be conditioned upon your
execution of a full and binding unilateral Release of all claims
arising from or associated with your employment with the Company, a
form of which is attached hereto (the “Release
Agreement”). Severance shall be paid without duty to
mitigate.
Termination
by the Company without Cause or by you with Good Reason.
Upon your termination of employment
by the Company without Cause or by you with Good Reason, the
Company will pay you a lump sum cash amount equal to the sum of
(i) your annual base salary (or, solely in the case of your
termination of employment with Good Reason other than pursuant to
clause (iv) of the definition of Good Reason, one and one half
times your annual base salary) and (ii) your then current
Target Bonus. The lump
Laurent C.
Lutz, Esq.
February 24, 2006
Page 6
sum cash
payment shall be made within 30 days of the date of receipt by
the Company of your fully executed Release Agreement as specified
in the “Severance” section above assuming that you have
not revoked the Release Agreement. The Company will also pay your
premiums under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, on your behalf for 18 months after
termination of your employment without Cause or with Good
Reason.
Special
Termination Agreement. You shall be entitled to receive the payments
and other benefits specified in your Special Termination Agreement,
a copy of which is attached, and while eligible to receive such
payments and other benefits you shall not be eligible to receive
any payment or benefits under the above sections titled
“Severance” and “Termination by the Company
without Cause or by you with Good Reason.”
Indemnification and Employee
Representations. The
Company will indemnify you to the fullest extent permitted by law
and the Company’s Articles of Incorporation as in effect as
of the Effective Date (regardless of any subsequent changes to such
Articles) with respect to your activities on behalf of the
Company.
It is the
policy and practice of the Company to reasonably ensure that the
Company and all new employees honor the terms of any reasonable
post-employment restrictions contained in ag
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