EXHIBIT 10.1


 


MEMORANDUM OF UNDERSTANDING


 


This
Memorandum of Understanding, effective as of January 22, 2008, is entered
into among the Special Litigation Committee of the Board of Directors of
Monster Worldwide, Inc. (the “Monster SLC”), Monster Worldwide, Inc.
(“Monster” or the “Company”), and Andrew J. McKelvey (“McKelvey”; each a “Party”
and collectively the “Parties”), by and through their respective undersigned
attorneys.


 


WHEREAS,
the Monster SLC has conducted an extensive investigation regarding the claims
and potential claims arising from or relating to the allegations contained in
two consolidated shareholder derivative actions, In re
Monster Worldwide, Inc. Derivative Litigation, 06-108700,
pending in the Supreme Court of the State of New York in New York County (the “State
Action”), and In re Monster Worldwide, Inc. Stock
Option Derivative Litigation, 06-cv-04622, pending in the U.S.
District Court for the Southern District of New York (the “Federal Action”;
collectively the “Derivative Actions”);


 


WHEREAS,
the Derivative Actions allege, inter alia,
that certain actions taken or not taken by current and former officers and
directors with respect to Monster’s historical stock option practices
constituted breaches of fiduciary duties and related state law causes of
action, violations of Sections 10(b) and 14(a) of the Securities
Exchange Act of 1934, and unjust enrichment;


 


WHEREAS,
Company has investigated claims other than those asserted in the Derivative
Actions that the Company may have against McKelvey arising out or


 

















 


relating to the litigations captioned In re Monster Worldwide, Inc. Securities Litigation, 07
CV 2237 (S.D.N.Y.) (JSR), and Taylor v. Monster Worldwide, Inc. et al., 06 CV 8322
(S.D.N.Y.)(AKH);


 


WHEREAS,
the Parties wish to resolve fully and finally, without further burden and
expense, all disputes and controversies between them relating to or arising
from the conduct alleged in the Derivative Actions, and wish to do so without
admitting the merits of any claim or allegation by any Party;


 


NOW
THEREFORE, the Parties have agreed in principle, as follows:


 


1.        The
Parties have reached an agreement providing for the settlement of the Company’s
claims and potential claims arising from or relating to the allegations
contained in the Derivative Actions and all other potential claims or causes of
action set forth in paragraph 11 herein on the terms and subject to the
conditions set forth below in this Memorandum of Understanding (“Memorandum of
Understanding”).


 


2.        The
Parties will act in good faith and use reasonable efforts to agree upon and
execute (a) a settlement agreement in accordance with the terms set forth
in this Memorandum of Understanding (the “Settlement Agreement”) and (b) such
other documentation as may be required to obtain Final Court Approval of the
Settlement Agreement, including any papers necessary to obtain dismissal of any
claims alleged against McKelvey in the Derivative Actions with prejudice on the
merits.  As used herein, “Final Court
Approval” means that the Court before which the State Action is pending has
entered any necessary approval order and that such order is finally affirmed on
appeal in all material respects or is no longer subject to appeal and the time
for any petition for reargument, appeal or review, by certiorari or otherwise,
has expired.


 


 


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3.        Subject
to any limitations imposed by agents of the United States Government, McKelvey
shall, to the extent of his knowledge and recollection and to the best of his
belief, provide the Monster SLC and Monster with full, complete, and truthful
cooperation, as reasonably required by the Monster SLC and the Company.  Nothing in this paragraph
shall be construed to limit any party from complying with legal obligations,
asserting any legal rights or privileges, or responding to any request for
information or inquiry as part of a legal proceeding or regulatory process in a
truthful manner.  The Monster SLC and Monster will adjourn
any request for cooperation if McKelvey provides a reasonable basis to believe
that the requested cooperation would interfere with his ability to defend
against any regulatory, civil, criminal, or any other proceeding, related to
the subject matter of the Derivative Actions.


 


4.        Within
ten (10) days of the execution of the Settlement Agreement, McKelvey will
transfer to the Company’s counsel, Dechert LLP (“Dechert”), by certified check
or wire transfer the sum of $8 million (Eight Million Dollars) (the “Settlement
Amount”) to be deposited into a Dechert attorney escrow account.  Within three (3) business days of Final
Court Approval, Dechert will transfer the $8 million (Eight Million Dollars),
plus all interest accrued thereon, to the Company by certified check or wire
transfer.  If Final Court Approval is denied,
the Company will return the $8 million and all accrued interest thereon to
McKelvey.


 


5.        Within
five (5) days of the execution of the Settlement Agreement, McKelvey will
execute a  conversion notice, in the form
of Exhibit A, to convert (the “Conversion”) all of the issued and outstanding
shares of Class B Common Stock, $.001 par value per share (the “Class B
Stock”) of the Company held by McKelvey into shares 


 


 


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of  Common Stock, $.001 par value per share (the “Common
Stock”), of the Company and will deliver such executed document (the “Executed
Conversion Document”) to Dechert as escrow agent.  The effect of the Conversion shall be the
extinguishment of any supervoting rights presently held by McKelvey pursuant to
his ownership of shares of Class B Stock. 
The Conversion shall be effective on the date on which the last of the
following has occurred (the “Effective Conversion Date”): (a) Final Court
Approval has been issued or granted; (b) the Executed Conversion Document
has been delivered to the Company; and (c) all of the certificates
representing the shares of Class B Stock have been delivered to the
Company.  Within three (3) business
days of Final Court Approval, Dechert shall release the Executed Conversion
Document from escrow and deliver it by hand to the Company.


 


6.        If, at
any time after the Settlement Agreement is executed, McKelvey is in possession
of the certificate(s) representing all of the shares of Class B Stock, he
shall promptly (and in any event within five (5) business days) surrender
and deliver such certificates to the Company in exchange for the simultaneous
delivery by the Company to him of certificates representing an equal number of
shares of Common Stock.  If, however, at
the time of Final Court Approval, the certificate(s) representing all of
the shares of Class B stock are in the possession of Morgan Stanley,
McKelvey will take all reasonable steps, including providing written
instruction to Morgan Stanley, to facilitate the immediate delivery by Morgan
Stanley of the Class B certificates to the Company in exchange for the
simultaneous delivery by the Company to Morgan Stanley of certificates
representing an equal number of shares of Common Stock.  To facilitate the exchange with Morgan
Stanley, McKelvey agrees that he shall, within five (5) days of 


 


 


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executing
the Settlement Agreement, execute written instruction to Morgan Stanley
authorizing the foregoing exchange in the form appearing as Exhibit B to
this Memorandum of Understanding. 
McKelvey will use good faith efforts and take all actions reasonably
necessary to obtain Morgan Stanley’s Acknowledgement and Agreement to the
written instruction and thereafter agrees that the written instruction shall be
held in escrow by Dechert pending Final Court Approval.  Upon Final Court Approval, Dechert shall
release the written instruction from escrow in order to fulfill the
requirements of this paragraph.


 


7.        From the date
hereof through the Effective Conversion Date, McKelvey hereby agrees that (a) he
shall be entitled to vote one-tenth of the shares of all of the Class B
Stock beneficially owned by him in any manner he desires and (b) the
remaining nine-tenths of the shares of Class B Stock  beneficially owned by him (the “Relinquished
Voting Shares”) shall be voted in the same percentage(s) as the aggregate
votes cast by the holders of shares of Common Stock  (other than McKelvey).  McKelvey’s entitlement to vote only one-tenth
of the shares of all of the Class B Stock beneficially owned by him shall
not be affected by McKelvey’s failure to surrender to the Company after Final
Court Approval the certificates representing each of the shares of Class B
Stock.  McKelvey’s entitlement to cast
only one-tenth of the shares of all of the Class B Stock beneficially
owned by him shall remain in effect until the Effective Conversion Date.  If the Company fails to act in good faith and use
reasonable efforts to agree upon and execute a Settlement Agreement in
accordance with the terms set forth in this Memorandum of Understanding or if
Final Court Approval is denied, and McKelvey has complied in good faith with
his obligations under this agreement, McKelvey’s 


 


 


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entitlement to cast only one-tenth of the shares of
all of the Class B Stock beneficially owned by him and the corresponding
proxy granted herein shall terminate.


 


8.        To effectuate
Paragraph 7, McKelvey hereby grants to the Chief Executive Officer of the
Company a proxy to vote the Relinquished Voting Shares on any matter presented
to the holders of Common Stock for their vote, approval, waiver or consent
(other than matters to which the holders of Class B Stock are not entitled
to vote) in the same percentage(s) as the aggregate votes cast by the
holders of shares of Common Stock (other than McKelvey) on such matter.  Such proxy is coupled with an interest, is
perpetual and is irrevocable (unless terminated as set forth in paragraph 7
above), and bestows on the Chief Executive Officer of the Company full power to
vote and act for McKelvey with respect to the aforementioned matters.


 


9.        McKelvey
hereby revokes any and all previous proxies granted with respect to the
Relinquished Voting Shares.  McKelvey represents and
warrants that he has not entered into any voting agreement or voting trust, or
made any other agreement, or issued, granted or given a proxy with respect to
the Relinquished Voting Shares that is currently in effect (or upon the
happening of an event or the passage of time or both will be in effect).  McKelvey agrees, unless and until this
Memorandum of Understanding is terminated, not to: (a) grant any other
proxy or power of attorney, enter into or make any voting arrangements with
respect to the Relinquished Voting Shares, other than as provided for in this
Memorandum of Understanding; or (b) pledge, enter into any other forward
contract (including any amendment, restatement or modification of the existing
prepaid forward contract with Morgan Stanley) or otherwise convey any interest
in the Class B shares to any person, unless and until McKelvey
has provided the


 


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Company with a letter signed by the proposed
counterparty in a form substantially similar to Exhibit B hereto, in which
the proposed counterparty agrees, upon receipt of a written request from the
Company in accordance with the terms of the Settlement Agreement, to deliver
immediately the Class B certificates to the Company in exchange for the
simultaneous delivery by the Company to it of certificates representing an
equal number of shares of Common Stock.  McKelvey
represents and warrants that he has all necessary power, authority and capacity
to grant the proxy and undertake the other obligations set forth in this
Memorandum of Understanding.


 


10.      The
Monster SLC will use best efforts to seek prompt dismissal of the Federal
Action as against McKelvey consistent with the terms of this Memorandum of
Understanding (“Federal Dismissal”).  If
the Federal Action nonetheless proceeds, Monster will advance legal fees and
expenses in connection with McKelvey defending that Action to the extent
permissible by law, based on his undertaking to repay such amounts if it is
later determined that he is not legally entitled to be indemnified by the
Company.  Nothing herein alters any
rights that McKelvey may have for advancement of legal fees or indemnification
under Delaware law or other agreement, including but not limited to
any indemnity agreement with the Company, except that McKelvey hereby agrees to waive any
indemnification rights he may have with respect to fees and expenses incurred
in connection with his retention of any entity retained to provide him with
advice with respect to communications strategy or public relations.  In addition, McKelvey hereby acknowledges
that hereinafter he is not entitled to indemnification from the Company with
respect to legal and other fees and expenses incurred in connection with his September 2007
prepaid forward contracts relating to his shares of 


 


 


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Class B
Stock.  McKelvey further agrees to reduce
his indemnification demands by $10,000, which represents previously incurred
fees and expenses related to his prepaid forward contracts.


 


11.      The
Settlement Agreement shall include language as negotiated by the Parties
providing mutual releases of the claims and causes of action, or potential
claims or causes of action, arising from or relating to the allegations in the Derivative Actions,
whether such claims are known or unknown. 
In addition, the Company shall release any claims whatsoever that the
Company may have against McKelvey arising out of the grant, or the proposed
grant, by the Company of any stock options, including, but not limited to, the
following individuals: Ted Button, Gerard Roeting, Steve Szalczinger, and Jim
Wolfe.  The Company shall also covenant
not to seek from McKelvey any contribution or damages that the Company might
otherwise claim against McKelvey in connection with the litigations captioned In re Monster Worldwide, Inc. Securities Litigation, 07
CV 2237 (S.D.N.Y.) (JSR), and Taylor v. Monster Worldwide, Inc. et al., 06 CV 8322 (S.D.N.Y.)
(AKH), or any other action arising out of or relating to the allegations in
the Derivative Actions.  The Company shall release McKelvey from all
other potential claims or causes of action relating to any subject matter
whatsoever except for potential claims or causes of action currently unknown to
the Company’s Board of Directors that involve intentional, fraudulent, or
criminal conduct.


 


12.      The
Settlement Agreement contemplated by this Memorandum of Understanding will
become effective upon : (a) a final settlement between McKelvey and the
United States Securities and Exchange Commission (“SEC”) that resolves all SEC
claims against McKelvey arising out of the allegations made in the Derivative
Actions


 


 


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has
been approved by the Court or tribunal in which the proceeding has been filed;
and (b) Final Court Approval is obtained in the State Action, including
approval of the mutual releases described in Paragraph 11 above.


 


13.      The
Parties agree to act in good faith and use reasonable efforts to achieve Final
Court Approval, Federal Dismissal, and to cause the timely occurrence of all
events, transactions, or other circumstances described herein.  In addition, the Parties agree to make
good faith efforts to coordinate the public announcement or disclosure of this
Memorandum of Understanding and/or the Settlement Agreement contemplated by the
Memorandum of Understanding at a mutually agreeable date and time, except that
nothing herein shall preclude the Company from making whatever announcements it
concludes in good faith it is required to make by law.


 


14.      The
Parties represent and warrant that they, with the benefit of professional
advice from their attorneys, have fully informed themselves of the contents,
terms and conditions of this Memorandum of Understanding, and that each of the
attorneys executing this Memorandum of Understanding has been duly empowered
and authorized to do so.


 


15.      This
Memorandum of Understanding shall be governed by, construed, and interpreted in
accordance with the laws of the State of New York, without regard to conflict
of laws principles.


 


16.      Neither
the existence of this Memorandum of Understanding, nor the
Settlement Agreement contemplated herein, nor the provisions contained in either shall be
deemed a presumption, concession or admission by any Party, and shall not be


 


 


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interpreted,
construed, deemed, invoked, offered or received in evidence or otherwise used
by any person in any action or proceeding.


 


17.      This
Memorandum of Understanding constitutes the entire agreement between the
Parties as to the subject matter hereof, and may not be amended nor any of its
provisions waived except by a writing signed by all of the signatories hereto.


 


18.      This
Memorandum of Understanding shall be binding upon and inure to the benefit of
the Parties and their respective agents, executors, heirs, successors, and
assigns, subject to the conditions set forth herein.


 


19.      This
Memorandum of Understanding may be executed in one or more counterparts, all of
which taken together shall constitute one agreement.


 


IN
WITNESS WHEREOF, the parties have executed this Memorandum of Understanding
effective as of the date set forth below.


 


	
  DATED:

  	
  January 22, 2008

  
	
   

  	
  New York, New York

  	
   

  



 


 


	
  /s/ Steven F. Reich

  	
   

  	
  /s/ Gandolfo V. DiBlasi

  	
   

  
	
  Steven F. Reich

  	
  Gandolfo V. DiBlasi

  
	
  Manatt
  Phelps & Phillips, LLP

  	
  Stacey R. Friedman

  
	
  7 Times Square

  	
  SULLIVAN &
  CROMWELL LLP

  
	
  New York, New York
  10036

  	
  125 Broad Street

  
	
  (212) 830-7196

  	
  New York, New York
  10004

  
	
   

  	
  (212) 558-4000

  
	
  Counsel to Andrew J. McKelvey

  	
   

  
	
   

  	
  Counsel to the Special
  Litigation 

  
	
   

  	
  Committee of Monster Worldwide, Inc.

  
	
   

  	
   

  
	
  /s/ David S. Hoffner

  	
   

  	
   

  
	
  Andrew J. Levander

  	
   

  
	
  David S. Hoffner

  	
   

  
	
  DECHERT, LLP

  	
   

  
	
  30 Rockefeller Plaza

  	
   

  
	
  New York, New York 10112

  	
   

  
	
  (212) 698-3500

  	
   

  
	
   

  	
   

  
	
  Counsel to Monster Worldwide, Inc.

  	
   

  
					



 


 


 


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