Amended And Restated Administration And Liquidation Agreement Between Calypso

Exhibit 10.5


EXECUTION COPY

AMENDED AND RESTATED

ADMINISTRATION AND LIQUIDATION AGREEMENT


THIS ADMINISTRATION AND LIQUIDATION AGREEMENT was originally entered into as of August 7, 2000 by and between Calypso Management LLC, a Delaware limited liability company (" Calypso" ), and Harbor Global Company Ltd., a Bermuda limited duration company (the " Company" ) and was subsequently amended effective as of October 30, 2000. It is hereby amended and restated in its entirety, effective as of July 10, 2003 (as amended and restated, the " Agreement" ).

WHEREAS, prior to the consummation of the transaction contemplated by the Agreement and Plan of Merger (the " Merger Agreement" ) dated as of May 14, 2000 by and between UniCredito Italiano S.p.A. and The Pioneer Group, Inc. (" Parent" ), Parent distributed to its shareholders all of the outstanding shares of the Company (the " Distribution" ); and


WHEREAS, as of the date of the Distribution, Parent transferred the assets (the " Assets" ) described in Section 5.1 of the Distribution Agreement by and among Parent, the Company and Harbor Global II Ltd. attached as Exhibit A to the Merger Agreement (the " Distribution Agreement" ), which Assets the Company has either sold or intends to operate until they are sold or otherwise liquidated and the proceeds distributed to its shareholders; and

WHEREAS, the officers and employees of Calypso are specially skilled in the management, operation and disposition of the Assets and have previously performed those functions with respect to the Assets as employees of Parent and for the benefit of the Company; and


WHEREAS, following the Distribution the Company continues to require Calypso' s special skills in connection with the liquidation of the Assets and the operation of the Assets prior to their liquidation; and


WHEREAS, Calypso is willing to make such skills available and to provide such services to the Company on the terms and conditions hereinafter set forth;


WHEREAS, the Company and Stephen G. Kasnet have mutually agreed that Mr. Kasnet will continue to be employed by Calypso and provide services to the Company as its President and Chief Executive Officer for the remainder of the Term (as defined herein); and

WHEREAS, each of the Company and Calypso wish to clarify and specify the consequences under this Agreement upon certain events affecting the operation of the Company.


NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, and for other good and valuable consideration, the Company and Calypso, intending to be legally bound, do hereby agree as follows:


Section 1. Engagement . The Company hereby engages Calypso for the Term (as hereinafter defined) and upon the terms and conditions herein set forth to manage the sale or liquidation of the Assets and the operation of the Assets as going concern businesses pending their sale or liquidation in accordance with the

directions of the Board of Directors of the Company (the " Board" ), to conduct all other aspects of the day to day operations of the Company, to provide the services of certain of its employees or members to serve as officers and employees of the Company (as described herein) and to perform other duties related to the operation of the Company as may be reasonably requested by the Board (collectively, the " Services" ). In consideration of the compensation to Calypso specified herein, Calypso accepts such engagement and agrees to perform the Services.


Section 2. Term . Except as otherwise provided in Section 8, the engagement hereunder shall be for a term commencing as of the " Time of Distribution" (as such term is defined in the Distribution Agreement) and expiring on October 24, 2005; provided , however , that the parties may by mutual agreement extend this Agreement upon 120 days prior written notice for additional one year terms but in no event beyond the date the Company is liquidated (the " Term" ).

Section 3. Services of Messrs. Kasnet and Hunter . During the Term, Calypso shall provide the services of Stephen G. Kasnet to serve as the President and Chief Executive Officer of the Company and of Donald H. Hunter to serve as the Chief Operating Officer and Chief Financial Officer of the Company. The services of Messrs. Kasnet and Hunter shall be provided to the Company on a full-time basis, and Calypso shall not permit Mr. Kasnet or Mr. Hunter to render services to, or be otherwise engaged by, other persons or entities, without the express written consent of the Board. As compensation for the provision of such services, the Company will pay to Calypso an amount sufficient to pay Stephen G. Kasnet an annual base salary of $325,000 plus provide an annual bonus opportunity of up to $325,000 and an amount sufficient to pay Donald H. Hunter an annual base salary of $250,000 plus provide an annual bonus opportunity of up to $250,000, payable by the Company in accordance with Section 6, provided, however, that except as set forth in Section 9, amounts will be paid to Calypso with respect to the bonuses described in the preceding sentence only to the extent such bonuses are actually earned. The annual bonus payments described in the preceding sentence will be based upon the achievement of performance goals, which will be established by the Board in consultation with Mr. Kasnet.


Section 4. Services to be Performed; Exclusivity . Calypso shall perform the Services through its members, employees or agents. Calypso acknowledges that its provision of the Services to the Company shall be exclusive and that Calypso will not render services to, or be otherwise engaged by, other persons or entities without the express prior written consent of the Board. Notwithstanding the foregoing, it shall not be a violation of Section 3, this Section 4 or Section 5(b) for Mr. Kasnet to engage in the activities described on Exhibit A hereto in a manner consistent with the performance of his duties hereunder.

Section 5. Confidentiality; Non-Competition .


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(a) Calypso will hold in confidence, and will cause its members, employees, consultants and agents (including, without limitation, Stephen G. Kasnet and Donald H. Hunter) to hold in confidence, all proprietary and confidential information of the Company which comes into their possession or knowledge as a result of their performance of the Services (the " Confidential Information" ). Calypso will use, and will cause its members, employees consultants and agents to use, such Confidential Information only in connection with performance of the Services.

(b) Subject to Sections 3 and 4, and until the earlier of (i) two years following the termination of this Agreement or (ii) the sale of Assets representing substantially all of the value of the Assets (as determined by the Board in good faith), Calypso shall not, directly or indirectly, and will not permit Stephen G. Kasnet and Donald H. Hunter to, directly or indirectly, in any capacity, (x) provide services with respect to assets substantially similar to Assets held by the Company at the time in question or (y) provide services with respect to any Asset sold by the Company for two years following such disposition, in each case without the express prior written consent of the Board, which consent with respect to Mr. Kasnet and Mr. Hunter shall not be unreasonably withheld, delayed or conditioned.


Section 6. Expenses; Reporting . As soon as practicable following the Time of Distribution, and annually thereafter during the Term, Calypso shall present the Board with an annual business plan, budget request and estimate of the aggregate amount of proceeds expected to be received by the Company in connection with disposition of Assets in such year (the " Annual Plan" ), which Annual Plan shall be provided in such form, and with such contents, as may be reasonably requested by the Board. Without limiting the generality of the foregoing, the Annual Plan shall set forth with specificity the amount of funds expected to be required in order to fund the operating expenses (including the compensation payable with respect to Messrs. Kasnet and Hunter pursuant to Section 3 and salaries and other remuneration of employees of Calypso, the " Operating Expenses" ) of the Company during the applicable calendar year. Each Annual Plan following the initial Annual Plan shall account with specificity for the expenditure of any such Operating Expenses provided to Calypso by the Company with respect to the immediately preceding year. The Board may modify the applicable Annual Plan, and Calypso shall take all reasonable steps to timely comply with such modification. Calypso shall provide the Company with quarterly updates to the Annual Plan during the course of the Term. The Company shall reimburse Calypso, as incurred and in accordance with the Annual Plan, for expenses incurred in the performance of the Services (including the compensation payable with respect to Messrs. Kasnet and Hunter pursuant to Section 3 and salaries and other remuneration of employees of Calypso serving with the Company and, to the extent earned, including the Signing and Retention Bonus (as defined in the Employment Agreement dated as of August


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8, 2000 by and between Calypso and Mr. Kasnet (the " Employment Agreement" )). Calypso shall submit for the approval of the Board each transaction with a value of $2.5 million or more and otherwise as the Board shall direct.


Calypso shall not permit any person or entity who does not provide or ceases to provide services to Harbor Global on a full-time basis, whether pursuant to this Agreement or otherwise, to (1) acquire or beneficially own any equity interest, or any interest convertible or exchangeable into any equity interest, in Calypso, or (2) receive or otherwise be entitled to receive any portion of any Allocation (as defined below), except as provided by Mr. Kasnet' s Employment Agreement and the employment agreement dated October 24, 2000 by and between Calypso and Mr. Hunter.

Section 7. Allocation of Proceeds . Subject to Sections 8 and 9, Calypso shall receive a portion (each such portion an " Allocation" ) of the amount of proceeds realized from the disposition of the Assets that are ultimately distributed to the Company' s shareholders or from a Deemed Sale (the " Distributable Amounts" ), as set forth in this Section 7. For purposes of this Agreement, " Distributable Amounts" shall mean the net amount of any proceeds received from the sale, exchange or other disposition of the Assets, after deducting any applicable taxes, fees or other expenses incurred in connection with the disposition of such Asset, as determined in good faith by the Board, and excluding the distribution to shareholders of the unexpended portion of the $22.6 million contributed by Parent to the Company pursuant to the Distribution Agreement (which amount shall be separately accounted for by the Company); provided , however , if the Company enters into a transact ...