Exhibit 10.4

 

TMP WORLDWIDE INC.

622 THIRD AVENUE

NEW YORK, NY 10017

 

March 7, 2003

 

Mr. Richard W. Pehlke

850 Raintree Drive

Naperville, Illinois 60540

 

Dear Rich:

 

This will confirm our understanding with respect to your taking the position of
Executive Vice President and Chief Financial Officer of the Search and Selection
Operations (the “Specified Operations”) of TMP Worldwide Inc. (“TMP”) in
accordance with the terms of this agreement. You and the Company hereby agree as
follows:

 

1. The Company agrees to employ you and you agree to be employed by the Company
as Executive Vice President and Chief Financial Officer of the Specified
Operations, with such duties and responsibilities with respect to the Company
and its affiliates as the Company’s Chief Executive Officer of the Specified
Operations (“CEO”) or such other person from time to time designated by the CEO
to deal with matters related to this agreement (the “Designee”) shall reasonably
direct. You agree to devote your best efforts, energies, abilities and full
business time, skill and attention to your duties. You agree to perform the
duties and responsibilities assigned to you to the best of your ability, in a
diligent, trustworthy, businesslike and efficient manner for the purpose of
advancing the business of the Company and to adhere to any and all of the
employment policies of the Company. Your role in this position commenced on
February 24, 2003. [As you are aware, your role will require substantial amounts
of travel.]

 

2. In consideration for your services and other agreements hereunder, during
your employment the Company shall (a) pay you a base salary of $350,000 per year
(prorated for periods of less than a full year) in regular installments in
accordance with the Company’s payroll practice for salaried employees, (b)
provide you with medical, dental and disability coverage, if any, and life
insurance and other benefit plan eligibility, if any, comparable to that
regularly provided to other senior management in accordance with the Company’s
policies, (c) provide you with four (4) weeks vacation per year in accordance
with the Company’s policies (prorated for periods of less than a full year) and
(d) with respect to employment in calendar year 2003 and any calendar year
thereafter, provide you with annual performance based bonuses of up to $600,000
on the basis of satisfaction of such performance goals as are established by the
Compensation Committee of the Board of Directors of the Company within 90 days
of the commencement of the applicable calendar year period. In addition, the
Company will reimburse you for up to $25,000 in expenses you incur for personal
financial planning for which you

 

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Mr. Richard W. Pehlke

March 7, 2003

Page 2

 

submit receipts (or other reasonable evidence of payment of such expenses) on or
prior to February 24, 2006.

 

3. You may terminate this agreement at any time upon 60 days’ prior written
notice. The Company may terminate this agreement at any time upon written
notice. This agreement shall also terminate automatically in the event you
should die or, in the reasonable determination of the Company, become unable to
perform by reason of physical or mental incompetency your obligations hereunder
for a period of 120 days in any 365 day period. It is understood and agreed that
in the event that this agreement is terminated by the Company in accordance with
the second sentence of this Section 3 either (A) as a result of the
non-occurrence of the Disposition (as defined in Section 6 below) or (B)
following the Disposition other than for Cause (as defined below), then subject
to (i) your execution and delivery of the Company’s then current form of
separation agreement and general release applicable to similarly situated
employees and (ii) the expiration of any rescission period provided thereby
(without the rescission having been exercised), you shall, as your sole and
exclusive remedy, be entitled to (w) receive as severance your then applicable
base salary hereunder for a period of twelve (12) months following such
termination, payable in regular installments in accordance with the Company’s
applicable payroll practice for salaried employees, plus, solely in the event
such termination is following the Disposition other than for Cause (and not as a
result of the non-occurrence of the Disposition), an assumed bonus amount equal
to the greater of (1) $150,000 and (2) fifty percent (50%) of the largest single
calendar year bonus received by you from the Company with respect to any of the
five (5) full calendar years preceding the date of such termination, payable
over a period of twelve (12) months in regular installments in accordance with
the Company’s applicable payroll practice for salaried employees, (x) for a
period of twelve (12) months following such termination, have the Company make
available to you at no cost (and/or pay COBRA premiums on) medical and dental
benefits on the same terms and conditions as would have been made available to
you had you remained employed by the Company during such period, (y) for a
period of twelve (12) months following the end of the period set forth in clause
(x) of this sentence, have the Company make available to you at no cost basic
medical and dental benefits comparable to those (and on substantially similar
terms and conditions) that would have been available to you had you remained
employed by the Company during such period and (z) following the end of the
period set forth in clause (y) of this sentence through December 31, 2008, have
the Company make available to you, at your cost and expense, basic medical and
dental benefits comparable to those (and on substantially similar terms and
conditions, including but not limited to contribution terms) that would have
been available to you had you remained employed by the Company during such
period. Except as expressly provided in the preceding sentence, in the event of
the termination of this agreement or your employment for any reason, the Company
shall have no further obligations to you hereunder or with respect to your
employment from the effective date of termination. “Cause” shall mean the
occurrence of any one or more of the following events: (i) your willful failure
or gross negligence in performance of your duties or compliance with the
reasonable directions of the CEO or the Designee that remains unremedied for a
period of twenty (20) days after the CEO or the Designee has given written
notice specifying in reasonable detail your failure to perform such duties or
comply with such directions; (ii) your failure to comply with a material
employment policy of or contractual obligation to the Company that remains
unremedied for a period of twenty (20) days after the

 

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Mr. Richard W. Pehlke

March 7, 2003

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CEO or the Designee has given written notice to you specifying in reasonable
detail your failure to comply; or (iii) your commission of (a) a felony, (b)
criminal dishonesty or (c) fraud. For purposes of clarity, it is expressly
understood and agreed that any and all changes in the identity of the employer
from TMP to one or more of its subsidiaries, successors-in-interest or assignees
as described in Section 6 shall not be deemed a termination of employment by the
Company hereunder. You acknowledge that the Company may deduct from amounts
payable to you under this agreement any tax withholdings and payments, if any,
required by law to be so deducted.

 

4. You acknowledge that you have not relied on any representation not set forth
in this agreement. You represent that you are free to enter into this employment
arrangement and that you are not bound by any restrictive covenants or similar
provisions restricting the performance of your duties hereunder. You acknowledge
that the effectiveness of this agreement is expressly conditioned on your prompt
execution and delivery of the Confidentiality/Non-Solicitation Agreement and
Mutual Agreement to Arbitrate Claims in the forms provided by TMP.

 

5. If, and only if, during the term of your employment hereunder TMP consummates
the Distribution through a spin-off of the bulk of its Selection operations
creating a new and totally separate company (“Newco”) whose shares of common
stock commence being publicly traded promptly thereafter (the “Spin-off”), you
will be granted options to purchase the Specified Number (as defined below) of
shares of Newco common stock at the Specified Price (as defined below) per
share. The “Specified Number” is the number determined by multiplying 375,000 by
a fraction, the denominator of which is the minimum number of shares of common
stock of TMP which a TMP shareholder must own on the record date relating to the
Spin-off in order to be entitled to at least one whole share of Newco common
stock upon consummation of the Spin-off and the numerator of which is the number
of whole shares of Newco common stock to which a TMP shareholder would be
entitled by virtue of ownership of such minimum number of shares of common stock
of TMP. The “Specified Price” is the closing price of a share of Newco common
stock on the first trading day on or after the consummation of the Spin-off on
which shares of Newco common stock are traded on the principal national
securities exchange on which Newco common shares are listed or admitted to
trading. The options will vest in [three (3)] equal annual installments
commencing on the first anniversary of your first day of employment with the
Company, subject to continued employment and all other terms and conditions to
be set forth in an option plan and related option agreement to be provided to
you by the Company.

 

6. As you are aware, TMP is contemplating a disposition of one or more of its
Search and/or Selection operations through a spin-off or similar transaction
(“Disposition”). It is expressly understood and agreed that the rights and
obligations of TMP hereunder may be assigned and delegated by TMP from time to
time to one or more of its subsidiaries or to successors-in-interest to or
assignees of the bulk of its Selection operations, whether any such
successor-in-interest or assignee arises as a consequence of a spin-off or other
transaction or series of transactions. From and after the date, if any, that a
successor-in-interest or assignee of the bulk of TMP’s Selection division is not
a subsidiary of TMP, the term “Company” shall mean and be a reference to such
successor-in-interest or assignee and TMP shall have no further liabilities for
Company obligations hereunder; prior thereto, the term “Company” shall mean and

 

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Mr. Richard W. Pehlke

March 7, 2003

Page 4

 

be a reference to TMP. Nothing herein shall be deemed to require TMP to
consummate or endeavor to consummate a Disposition of its Selection division
through a spin-off or otherwise.

 

7. If, and only if, during the term of your employment hereunder TMP consummates
the Spin-off, the Company shall use reasonable efforts to implement a deferred
compensation program that would permit you to defer any portion of your base
salary or bonus and invest such deferred amounts in one of three (3) investment
options: (1) a money market mutual fund, (2) Newco stock or (3) options on Newco
stock.

 

8. All notices, demands or other communications to be given or delivered under
or by reason of this agreement shall be in writing and shall be deemed to have
been properly served if delivered personally, by courier, or by certified or
registered mail, return receipt requested and first class postage prepaid, in
case of notice to the Company, to the attention of the CEO at the address set
forth on the first page of this agreement (in case of notices to TMP, with a
copy to Myron Olesnyckyj, TMP Worldwide Inc., 622 Third Avenue, 39th Floor, New
York, NY 10017) and in the case of notices to you to your office or residence
address, or such other addresses as the recipient party has specified by prior
written notice to the sending party. All such notices and communications shall
be deemed received upon the actual delivery thereof in accordance with the
foregoing.

 

9. You may not assign or delegate this agreement or any of your rights or
obligations hereunder without the prior written consent of the Company. All
references in this agreement to practices or policies of the Company are
references to such practices or policies as may be in effect from time to time.
This agreement (i) constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes any previous arrangements
relating thereto, as well as any previous arrangements relating to employment
between you and any of the Company’s affiliates, including but not limited to
any consulting arrangement, (ii) may be signed in counterparts, (iii) shall be
governed by the laws of the State of Illinois (other than the conflicts of laws
provisions thereof) and (iv) may not be amended, terminated, extended or waived
orally. Please understand that while it is our hope that our relationship will
be a long one, your employment will be on an “at will” basis. Nothing in this
letter should be construed as creating any other type of employment
relationship.

 

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Mr. Richard W. Pehlke

March 7, 2003

Page 5

 

Please sign the additional originally executed copy of this letter in the space
provided for your signature below to indicate your acceptance and agreement with
the terms of this letter agreement and return one fully executed original to me.

 

Very truly yours,

 

TMP WORLDWIDE INC.

By:  

/s/    Margaretta Noonan        

   

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Name:

  Margaretta Noonan

Title:

  Senior Vice President – Global Human Resources

 

Accepted and agreed:

 

/s/    Richard W. Pehlke

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Richard W. Pehlke

 

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