EXHIBIT 10.12
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT (this "Agreement") dated as of July 30, 1997, by
and between TRUE NORTH COMMUNICATIONS INC., a Delaware corporation (the
"Company"), and XXXXXXX X. XXXXXXX, XX. (the "Executive").
WITNESSETH:
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WHEREAS, the Company is a global communications holding company which
owns companies engaged in the advertising agency business, the multimedia
production business, the business of planning and buying of media time and
space and related businesses;
WHEREAS, the Executive currently serves as President and Chief
Executive Officer of Bozell, Jacobs, Xxxxxx & Xxxxxxxx, Inc. ("Bozell"),
pursuant to an Employment Agreement dated as of April 1, 1992, between the
Executive and Bozell (the "Existing Employment Agreement");
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
July 30, 1997, among the Company, Cherokee Acquisition Corporation and Bozell
(the "Merger Agreement"), Bozell will become a wholly-owned subsidiary of the
Company (the "Merger");
WHEREAS, the Company has determined that it will further the long-term
strategy of the Company and Bozell, following the Merger, and is in the best
interest of the Company's stockholders, to secure the services of the Executive
pursuant to the terms and conditions hereof, and in order to induce the
Executive to provide such services and to secure the benefits that accrue from
his performance hereunder, the Company is willing to undertake its obligations
set forth herein; and
WHEREAS, the Company and the Executive desire to enter into this
Agreement, pursuant to which, effective upon the Effective Time (as such term
is defined in Section 1.2 of the Merger Agreement) the Executive will commence
employment with the Company upon the terms and conditions hereinafter set
forth, and, as of such commencement, to terminate the Existing Employment
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT; POSITION AND DUTIES; RESPONSIBILITIES.
1.1 Employment; Position and Duties. The Company hereby agrees to
employ the Executive, and the Executive hereby agrees to accept employment by
the Company, upon the terms and subject to the conditions contained in this
Agreement, as the Company's President, and as Chairman and Chief Executive
Officer of the True North Diversified Companies (hereinafter, the "True North
Diversified Companies"), comprising each of the Company's current direct
subsidiaries, or any successor to any thereof, other than the FCB Advertising
Entities (as hereinafter defined) and Bozell Worldwide, Inc., which direct
subsidiaries shall include, without limitation, Xxxxx Xxxxx, Temerlin XxXxxxx,
Bozell Xxxxxx Xxxxxx Group, XxXxxxxxx Xxxxxx, Bozell Wellness Worldwide, TN
Technologies, Xxxxxxxxx & Company, Xxxxxxx & Partners, Borders, Xxxxxx and
Xxxxxxxxx and Market Growth Resources and the separate media buying companies
of the Company and Bozell, or such superior position to which the Executive
may be elected or appointed. The FCB Advertising Entities shall mean
FCB/Xxxxx Xxxx Partners, Xxxxx, Cone & Xxxxxxx Advertising, Inc., Xxxxx, Cone
& Xxxxxxx, Inc., FCB Healthcare, FCB International, FCB Japan, Inc., Xxxxxxx
Group and other related Xxxxx, Cone & Xxxxxxx advertising agency entities. The
Executive, in his capacity as Chairman and Chief Executive Officer of the True
North Diversified Companies, shall report directly to the Board of Directors
of the Company (the "Board") and shall not be required to report and shall not
be directly responsible to any other person, entity, or committee. The
Executive's services hereunder shall be performed at the Company's offices
located in New York City except for travel reasonably required to perform such
services. During the Term of Employment (as hereinafter defined), the
Executive shall devote substantially all of his business time and efforts
during the Company's normal business hours to the performance of his duties
and responsibilities on behalf of the Company in accordance with this
Agreement, except for vacations, holidays and sickness; provided, however,
that it shall not be a violation of this Agreement for the Executive to manage
his personal finances, investments and business affairs, or to engage in or
serve such civic, community, charitable, educational, religious and similar
type activities and organizations as he may select, or to serve as a director
of a reasonable number of business corporations, so long as no such service as
a director is inconsistent with his positions and duties hereunder.
1.2 Responsibilities. Subject to the powers, authority and
responsibilities vested in the Board and the Chief Executive Officer of the
Company and in duly constituted committees of the Board, the Executive shall
have the authority and responsibility for the formulation and execution of the
corporate policy of the True North Diversified Companies and the Company. The
individual heads of the various business units which comprise the True North
Diversified Companies shall report directly to the Executive. The Executive
shall perform such duties (not inconsistent with the position of principal
executive officer of the True North Diversified Companies or the Company, as
applicable) on behalf of the Company and its subsidiaries as may from time to
time be authorized or directed by the Board and as are customarily exercisable
by a president and chief executive officer.
2. TERM.
2.1 Term of Employment. The Executive's term of employment under
this Agreement shall commence on the Effective Time, as such term is defined
in Section 1.2 of the Agreement and Plan of Merger, dated as of July 30, 1997,
among the Company, Cherokee Acquisition Corporation and Bozell, Jacobs, Xxxxxx
& Xxxxxxxx, Inc., and shall continue through the date which is four (4) years
from the date of the Effective Time (the "Term of Employment").
2.2 Termination of Employment. The Term of Employment shall be
terminated, in accordance with the applicable provisions of Sections 4 and 5,
upon the first to occur of: (a) the expiration thereof pursuant to Section
2.1; (b) the death of the Executive; (c) termination of the employment of the
Executive hereunder by the Company for "Cause" (as hereinafter defined), by
giving the Executive a "Notice of Termination" (as hereinafter defined) at
least ten (10) days prior to the date of such termination; (d) at the election
of the Executive for other than "Good Reason" (as hereinafter defined), by
giving the Company a Notice of Termination; (e) at the election of the Company
in the event of the Executive's disability, as provided in Section 4.4, by
giving the Executive a Notice of Termination; (f) at the election of the
Company, for reasons other than Cause or such death or disability, by giving
the Executive a Notice of Termination at least thirty (30) days prior to the
date of such termination; or (g) at the election of the Executive for Good
Reason or as provided in Section 4.2, by giving the Company a Notice of
Termination. Notwithstanding any other provision of this Agreement to the
contrary, if the Executive notifies the Company that a dispute exists
concerning any purported termination of his employment hereunder, the Term of
Employment shall not end prior to (and the calculation or determination of any
amount hereunder otherwise calculated with reference to or determined as of
the date on which the Notice of Termination is given shall instead be
calculated or determined by reference to) the date the dispute is finally
settled, whether by mutual agreement of the parties hereto, in accordance with
Section 11, or otherwise upon final judgment, order or decree of a court of
competent jurisdiction (the time for filing appeal therefrom having expired
and no appeal having been perfected), and prior to such date the Company shall
continue to be bound by, and shall continue to perform, in all respects, this
Agreement as if the Term of Employment had not been terminated.
2.3 Notice of Termination. Any purported termination of the Term
of Employment by the Company or by the Executive (other than by reason of the
Executive's death or expiration of the Term of Employment pursuant to Section
2.1) shall be communicated to the other party by a written Notice of
Termination of Employment (herein, a "Notice of Termination") in accordance
with this Section 2.3. For purposes of this Agreement, a Notice of
Termination means a written notice which (a) indicates the specific
termination provision of this Agreement relied upon and (b) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
3. COMPENSATION AND BENEFITS.
3.1 Base Salary and Incentive Compensation. The Company shall pay
to the Executive a base salary during the Term of Employment at the annual
rate of Six Hundred Thousand Dollars ($600,000) ("Base Salary"), payable in
accordance with the usual payroll practices of the Company, but not less often
than monthly, and incentive compensation in accordance with an incentive
compensation system recommended by the Compensation Committee of the Board and
approved by the Board ("Incentive Compensation"); provided that the aggregate
amount of such Base Salary and Incentive Compensation for each calendar year
during the Term of Employment shall be not less than the greater of (i) the
amount for such calendar year based on an annual rate of One Million Three
Hundred-Fifty Thousand Dollars ($1,350,000.00) and (ii) the aggregate amount
of salary and bonus for such calendar year paid to the Chief Executive Officer
of the Company (the "Calendar Year Minimum Compensation"), it being understood
that for purposes of determining Calendar Year Minimum Compensation for any
period of less than twelve calendar months Base Salary and Incentive
Compensation shall be prorated for such period, and that any payment required
to be made by this proviso shall be deemed to be Incentive Compensation. The
Board may increase the Base Salary (and Base Salary and Calendar Year Minimum
Compensation hereunder shall include all such increased amounts), but in no
event shall the Base Salary or Calendar Year Minimum Compensation in effect at
a particular time be reduced without the prior written consent of the
Executive (and any such purported reduction without such consent shall have no
effect for purposes of calculating any amounts payable to the Executive
hereunder).
3.2 Stock Options. During the Term of Employment, the Executive
shall be entitled to receive stock options in accordance with the Company's
Stock Option Plan and Performance Program (or any successor or similar plans)
at least equivalent to options received by the Company's Chief Executive
Officer. In addition, the Company covenants that the Compensation Committee
of the Board shall take such actions as may be necessary, including, where
required, to cause the approval of stock option agreements with respect to the
future grant of stock options to the Executive, so that upon the termination
or expiration of the Term of Employment, for any reason, or prior to the
occurrence of a Change in Control (as hereinafter defined), all of the stock
options theretofore granted to the Executive by the Company then held by the
Executive shall be fully exercisable until the end of the full term thereof.
3.3 Life Insurance. The Company agrees to continue to provide the
Executive throughout the Term of Employment and the Term of Consultancy (as
hereinafter defined) with split-dollar life insurance providing for a death
benefit of Two Million Dollars ($2,000,000.00), the annual premium for which
will be paid by the Company. This insurance is currently provided by Mutual
of Omaha under Policy No. 5237856. The Executive shall advise the Company in
writing of the name(s) of the beneficiary or beneficiaries of such policy.
3.4 Other Compensation and Benefits. The Executive shall be
entitled to participate in the most favorable compensation plans, programs and
arrangements (including any stock-related or incentive plans) maintained by,
or offered to senior executives of,
Bozell or its subsidiaries or affiliates from time to time, in accordance with
the terms thereof, and the Executive shall be entitled to participate in the
most favorable employee benefit plans, policies, programs, practices and
arrangements available to senior executives or employees of Bozell or its
subsidiaries or affiliates (or their respective successors), including group
health, life insurance, short-term disability, long-term disability, accident,
vacation, sick leave, holiday, pension, profit- sharing, stock purchase and
non-qualified deferred compensation and retirement plans, policies, programs,
practices and arrangements, and the plans or programs for the allowance for or
the reimbursement of financial planning expenses and club dues and other
fringe benefits and perquisites and any other plans of general application to
employees and senior executives of Bozell or its subsidiaries or affiliates on
the date hereof and such plans, policies, programs, practices and arrangements
adopted hereafter for the benefit of such employees and executives, and in the
case of plans, programs, practices, policies and arrangements in effect on the
date hereof on terms no less favorable than their terms on the date hereof and
applicable to the other senior executives of Bozell or its subsidiaries or
affiliates as of such date, as any such plans, programs, practices, policies
and arrangements may be amended after the Effective Time in accordance with
Section 5.15(a) of the Merger Agreement (all such compensation and benefits
being hereinafter referred to as the "Employee Benefits"). The Executive
shall be entitled to take time off for vacation or other illness in accordance
with the Company's policy for senior executives and to receive all other
fringe benefits as are from time to time made generally available to senior
executives of the Company.
3.5 Expense Reimbursement. (a) Expenses. The Company shall
reimburse the Executive for all proper expenses incurred by him in the
performance of his duties hereunder in accordance with the Company's policies
and procedures applicable to the other senior executives of the Company. The
Company shall pay or reimburse the Executive's costs (including, without
limitation, reasonable legal fees and reasonable expenses) incurred in
connection with this Agreement and any related documents promptly upon
submission to the Company of a detailed statement or statements therefor.
(b) Automobile. The Company shall pay the actual cost of (a)
the lease, rental or purchase of an automobile (selected by the
Executive) and a full-time driver therefor and (b) all insurance
premiums, gasoline, maintenance and a garage for such automobile, in
order to provide satisfactory transportation for the Executive in
connection with the performance of his duties on behalf of the Company
and its subsidiaries and affiliates.
3.6 Indemnification. The Company and its subsidiaries and
affiliates shall indemnify the Executive to the maximum extent permitted under
the laws of the state of incorporation of the Company or such subsidiary or
affiliate, and the organizational documents of the Company and such
subsidiaries and affiliates shall contain provisions permitting such
corporation to provide the Executive with such indemnity protection. The
Company shall at all times maintain a directors and officers liability
insurance policy covering the Executive in a sufficient amount to provide such
indemnification to the Executive. In the event that a claim for payment or
benefits under this Agreement is disputed, the Company shall pay or reimburse
the Executive, upon demand, for all costs and expenses (including, without
limitation, attorneys' fees) reasonably incurred by the
Executive in good faith in pursuing such claims or in connection with Section
11, including, without limitation, in connection with any application to a
court undertaken by the Executive in good faith, as well as for all such costs
and expenses reasonably incurred by the Executive in connection with entering
and/or enforcing the award rendered by the arbitrator.
4. TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN CAUSE, OR FOR
GOOD REASON.
4.1 Termination Not For Cause, or For Good Reason. If (A) the
Company terminates the Executive's employment hereunder, and such termination
of employment is not for Cause and not by reason of the Executive's death or
disability (pursuant to Section 4.3 or 4.4) or (B) the Executive terminates
his employment hereunder for Good Reason:
(a) the Executive shall be entitled to receive: (i) all Base
Salary payable with respect to the Term of Employment through the date
of the Notice of Termination, (ii) unpaid Incentive Compensation for
the calendar year prior to the date of the Notice of Termination,
(iii) Incentive Compensation for the calendar year of the date of the
Notice of Termination, prorated through the date of such Notice of
Termination based on actual results of operations for such full
calendar year and (iv) reimbursement, in accordance with Section 3.5,
of expenses incurred by him through the date of such Notice of
Termination; provided that in determining the aggregate amount of the
Base Salary payable pursuant to clause (i) of this Section 4.1(a) and
the Incentive Compensation payable pursuant to clause (iii) of this
Section 4.1(a), the Calendar Year Minimum Compensation shall be
prorated through the date of the Notice of Termination;
(b) each stock option granted to the Executive by the Company
after the Effective Time and then held by the Executive shall, on the
date of the Notice of Termination, be exercisable for the full term of
such option for all of the stock subject thereto in accordance with
the applicable stock option agreement in effect at the time of such
termination (giving effect to this provision);
(c) the Executive and his spouse shall be entitled to
continuation of medical insurance coverage, on the same basis
theretofore provided by the Company to the Executive and his spouse,
until his death, and, after his death, the Executive's spouse shall be
entitled to continuation of such medical insurance coverage until her
death; and
(d) the Company will pay to the Executive in a single cash
lump-sum an amount equal to three (3) times the Calendar Year Minimum
Compensation (at the annual rate in effect immediately prior to the
date of the Notice of Termination (or for the immediately preceding
calendar year, if higher)).
Any amounts payable to the Executive under this Section 4.1 (or under any
other Section by reference to this Section 4.1) shall be paid to him (or the
appropriate person) in full no later than thirty (30) business days after the
date of the applicable Notice of Termination; provided, however, that
Incentive Compensation so payable shall be paid to the Executive
(or the appropriate person) no later than thirty (30) business days after the
date on which the amount thereof has been determined or is reasonably
determinable by the Company.
4.2 Elective Termination. The Executive may elect to terminate
his employment hereunder, for any reason or no reason, at any time on or after
February 28, 1999, and before June 30, 1999, and, if the Executive so elects,
he shall become a consultant of the Company for the five-year period beginning
immediately following the date of his Notice of Termination specifying such
election (the "Term of Consultancy"), and the Executive shall be entitled to
receive:
(a) the payments and benefits provided for in Section 4.1(a),
(b) and (c);
(b) reimbursement, in accordance with Section 3.5, of expenses
incurred by him in the performance of his consulting duties hereunder
during the Term of Consultancy; and
(c) the compensation and benefits otherwise payable hereunder
during the remaining Term of Employment if no Notice of Termination
had been delivered, and for the balance of the Term of Consultancy,
cash compensation equal to sixty percent (60%) of the Calendar Year
Minimum Compensation (at the annual rate in effect immediately prior
to the date of the Notice of Termination (or for the immediately
preceding calendar year, if higher)), payable in accordance with the
usual payroll practices of the Company, but not less often than
monthly.
While the Executive is a consultant of the Company during the Term of
Consultancy pursuant to this Section 4.2, the Executive shall make himself
available, upon reasonable notice (reasonableness to include, but not be
limited to, a good faith effort to accommodate the schedules and time needs of
the parties), to perform services for the Company which (i) shall be related
to such projects and matters of the Company as the Board or the Chief
Executive Officer of the Company may designate from time to time, (ii) are
commensurate with the Executive's years of experience and level of skill and
(iii) are similar to the services rendered by the Executive prior to the
termination of the Term of Employment, including, but not limited to, upon
reasonable notice and at the expense of the Company, such actions by the
Executive as the Company shall reasonably request (reasonableness to include,
but not be limited to, a good faith effort to accommodate the schedules and
time needs of the parties) in furtherance of the client relationships of the
Company and its subsidiaries. The Executive shall not be required to devote
more than ten (10) days during any calendar quarter to the performance of such
consulting services.
4.3 Death. The Term of Employment shall end upon the Executive's
death, and the Executive's beneficiary, or his legatee or devisee, or the
legal representative of his estate, as the case may be, shall be entitled to
receive the payments and benefits set forth in Section 4.2(a), (b) and (c)
which would have been payable assuming that, on the date of his death, the
Executive had validly elected to terminate his employment and become a
consultant of the Company for the full Term of Consultancy, in accordance with
Section 4.2, provided, however, that all such cash payments shall be paid in a
single lump-sum not later than thirty (30) days after the date of the
Executive's death, and the Executive's spouse
shall be entitled to continuation of medical insurance coverage on the same
basis as theretofore provided by the Company to the Executive until her death.
4.4 Disability. The Company may terminate the Executive's
employment hereunder by reason his disability in accordance with this Section
4.4. For purposes of this Agreement, the Executive's employment hereunder
shall have been terminated by reason of his disability (a) if, as a result of
the Executive's incapacity due to physical or mental illness, as determined in
good faith by the Board, and certified by a physician chosen by the Company
and acceptable to the Executive, the Executive shall have been unable to
substantially perform his duties under this Agreement for a period of more
than six (6) consecutive months and (b) the Company shall have given the
Executive a Notice of Termination specifying such intended termination of
employment by reason of disability and (c) the Executive does not resume
substantially all of his duties hereunder before the expiration of thirty (30)
days following the date the Executive receives such Notice of Termination.
Upon termination of the Executive's employment pursuant to this Section 4.4,
the Executive or his legal representative shall be entitled to receive the
payments and benefits set forth in Section 4.2(a), (b) and (c) which would
have been payable assuming that, on the date of such termination of
employment, the Executive had validly elected to terminate his employment and
become a consultant of the Company for the full Term of Consultancy, in
accordance with Section 4.2; provided, however, that all such cash payments
shall be paid in a single lump-sum not later than thirty (30) days after the
date of termination of the Executive's employment hereunder by reason of his
disability, and provided further that the Executive shall be relieved of any
obligation during the Term of Consultancy to perform the consulting services
referred to in Section 4.2, and the Executive and his spouse shall be entitled
to continuation of medical insurance coverage, on the same basis theretofore
provided by the Company to the Executive and his spouse, until his death, and,
after his death, the Executive's spouse shall be entitled to continuation of
such medical insurance coverage until her death.
4.5 Expiration of Term of Employment. If the Term of Employment
shall expire as set forth in Section 2.2(a), (a) the Executive, or his legatee
or devisee, or his legal representative, shall be entitled to reimbursement,
in accordance with Section 3.5, of expenses incurred by him in the performance
of his duties hereunder through the date of such expiration or termination,
and (b) the Executive and his spouse shall be entitled to continuation of
medical insurance coverage, on the same basis as theretofore provided by the
Company to the Executive and his spouse, until his death, and, after his
death, the Executive's spouse shall be entitled to continuation of such
medical insurance coverage until her death.
4.6 Definition of Good Reason. For purposes of this Agreement,
"Good Reason" shall mean any of the following: (a) a breach by the Company of
any provision of this Agreement, including, but not limited to, any reduction
in the Base Salary and/or Calendar Year Minimum Compensation, failure to grant
the Executive stock options in accordance with Section 3.2 or any other
agreement between the Executive and the Company with respect thereto, failure
to appoint the Executive to the positions provided for in Section 1 hereof
(unless such failure would permit the Executive to exercise his rights under
Section 4.2, which failure shall not constitute "Good Reason"), assignment to
the
Executive of any duties inconsistent in any respect with the Executive's
position with the Company, an adverse alteration in the nature or status of
the Executive's responsibilities to the Company, or breach of the covenant
contained in Section 9.2, unless any such breach is fully corrected within
thirty (30) days following written notification by the Executive to the
Company thereof, if the breach is of such a nature that correction can be
effected; (b) the Company's requiring the Executive to be based at any office
or location other than the Company's offices located in New York, New York,
except for such travel away from such offices as is reasonably required for
the performance of the Executive's services hereunder; (c) any purported
termination of the Executive's employment by the Company not effected in
accordance herewith; or (d) the Executive shall have relinquished his position
with the Company hereunder within two (2) years after the occurrence of a
Change in Control.
5. TERMINATION FOR CAUSE OR FOR OTHER THAN GOOD REASON.
5.1 Compensation and Benefits. In the event the Company, in
accordance with this Agreement, terminates the Executive's employment
hereunder for Cause, or the Executive terminates his employment hereunder
other than for Good Reason and other than pursuant to Section 4.2, the
Executive shall be entitled to receive (a) all Base Salary payable with
respect to the Term of Employment through the date of termination of the
Executive's employment hereunder for Cause or the Notice of Termination given
by the Executive, as applicable; (b) unpaid Incentive Compensation for the
calendar year preceding the date of such termination for Cause or such Notice
of Termination, as applicable; (c) Incentive Compensation for the calendar
year of the date of such termination for Cause or such Notice of Termination,
as applicable, prorated through such date based on actual results of
operations for such full calendar year, (d) reimbursement, in accordance with
Section 3.5, of expenses incurred by him through the date of such termination
for Cause or such Notice of Termination, as applicable; and (e) any other
Employee Benefits accrued through the date of such termination for Cause or
such Notice of Termination, as applicable; provided that in determining the
aggregate amount of the Base Salary payable pursuant to clause (a) of this
Section 5.1 and the Incentive Compensation payable pursuant to clause (c) of
this Section 5.1, the Calendar Year Minimum Compensation shall be prorated
through the date of termination of the Executive's employment hereunder for
Cause or the Notice of Termination is given by the Executive, as applicable.
Any amounts payable to the Executive under this Section 5.1 shall be paid to
him in full no later than ten (10) business days after the date of termination
of the Executive's employment hereunder for Cause or a Notice of Termination
is given by the Executive, as applicable; provided, however, that Incentive
Compensation so payable shall be paid to the Executive no later than ten (10)
business days after the date on which the amount thereof has been determined
or is reasonably determinable by the Company.
5.2 Definition of Cause. For purposes of this Agreement,
termination of the Executive's employment for Cause shall mean termination for
one of the following reasons: (a) the conviction of the Executive of a felony
by a Federal or state court of competent jurisdiction; (b) the commission by
the Executive of any act which involves both dishonesty with respect to the
Company or any of its subsidiaries and moral turpitude and causes the Company
to be viewed in a materially unfavorable light by its customers, employees or
investors; or (c) the Executive's material willful failure to follow a direct
lawful written
order from the Board within the scope of the Executive's duties hereunder;
provided that if it reasonably could be concluded that such alleged material
willful failure did not occur or was not material or willful or a failure to
follow a direct lawful written order from the Board or such order was not
within the scope of the Executive's duties hereunder, the Executive shall have
thirty (30) days following the date on which the Executive receives the Notice
of Termination with respect thereto to cure such alleged material willful
failure. For purposes of this Section 5.2: (i) no act or failure to act by
the Executive shall be deemed "willful" if done or omitted to be done by the
Executive in good faith and in the reasonable belief that such action or
omission was in the best interest of the Company and/or permitted or required
by applicable law, and (ii) the Executive's employment shall not be deemed to
have been terminated for Cause hereunder unless and until there shall have
been delivered to the Executive a copy of the resolution duly adopted by the
affirmative vote of not less than three-fourths (3/4ths) of the entire
membership of the Board at a meeting of the Board validly called and held for
such purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive's counsel, to be heard before the
Board), finding in the good faith opinion of the Board that the Executive was
guilty of conduct set forth in clauses (a), (b) or (c) above and specifying
the particulars thereof in detail (the date of such finding shall constitute
the date of termination of the Executive's employment hereunder for Cause).
6. TAXES.
6.1 Federal and State Withholding. The Company shall deduct from
the amounts payable to the Executive pursuant to this Agreement the amount of
all required Federal and state withholding taxes in accordance with the
Executive's Internal Revenue Service Form W-4 on file with the Company and all
applicable social security taxes.
6.2 Parachute Payments. Notwithstanding anything in this
Agreement to the contrary, the amount of any cash payment to be received by
the Executive pursuant to this Agreement shall be reduced (but not below zero)
by the amount, if any, necessary to prevent any part of any payment or benefit
received or to be received by the Executive in connection with a Change in
Control, or the termination of the Executive's employment with the Company or
with any person whose actions result in a Change in Control (whether payable
or provided pursuant to this Agreement (but without regard to this Section
6.2) or any other agreement, contract, plan or arrangement with the Company,
any person whose action results in such Change in Control or any member of an
"affiliated group" (as defined in Section 280G(d)(5) of the Internal Revenue
Code of 1986, as amended (the "Code")) which includes the Company) (such
foregoing payments or benefits referred to collectively as the "Total
Payments"), from being treated as an "excess parachute payment" within the
meaning of Section 280G(b)(1) of the Code, but only if and to the extent such
reduction will also result in, after taking into account all applicable state
and Federal taxes (computed at the highest applicable marginal rate) including
any taxes payable pursuant to Section 4999 of the Code, a greater after-tax
benefit to the Executive than the after- tax benefit to the Executive of the
Total Payments computed without regard to any such reduction. For purposes of
the foregoing, (a) no portion of the Total Payments shall be taken into
account which in the opinion of nationally-recognized tax counsel selected by
the Executive ("Tax Counsel") does not constitute a "parachute payment" within
the meaning of Section 280G(b)(2) of the Code;
(b) any reduction in payments pursuant to this Agreement shall be computed by
taking into account, in accordance with Section 280G(b)(4) of the Code, that
portion of the Total Payments which is reasonable compensation, within the
meaning of Section 280G(b)(4) of the Code, in the opinion of Tax Counsel; (c)
the value of any non-cash benefits or of any deferred or accelerated payments
or benefits included in the Total Payments shall be determined by a
nationally-recognized public accounting firm, selected by the Executive, in
accordance with the principles of Section 280G(d)(3) and (4) of the Code and
the Treasury Regulations thereunder; and (d) in the event of any uncertainty
as to whether a reduction in Total Payments to the Executive is required
pursuant hereto, the Company shall initially make all payments otherwise
required to be paid to the Executive hereunder, and any amounts so paid which
are ultimately determined not to have been payable hereunder other than as a
loan to the Executive, either (x) upon mutual agreement of the Executive and
the Company, or (y) upon Tax Counsel furnishing the Executive with its written
opinion setting forth the amount of such payments not to have been so payable
other than as a loan to the Executive under this Section 6.2, or (z) in the
event a portion of the Total Payments shall be determined by a court or an
Internal Revenue Service proceeding to have otherwise been an "excess
parachute payment," the amount so determined in (x), (y) or (z) shall
constitute a loan by the Company to the Executive under this Section 6.2, and
the Executive shall repay to the Company within ten (10) business days after
the time of such mutual agreement, such opinion is so furnished to the
Executive, or of such determination, as applicable, the amount of such loan
plus interest thereon at the rate provided in Section 1274(b)(2)(B) of the
Code for the period from the date of the initial payments to the Executive to
the date of such repayment by the Executive. All fees and expenses of any Tax
Counsel or accounting firm selected under this Section 6.2 shall be borne
solely by the Company.
7. NON-COMPETITION; NON-SOLICITATION.
7.1 Recital. The Executive acknowledges that in the course of his
employment with the Company pursuant to this Agreement he will become familiar
with trade secrets and customer lists of, and other confidential information
concerning, the Company and its subsidiaries, affiliates and clients and that
his services have been and will be of special, unique and extraordinary value
to the Company.
7.2 Non-competition. The Executive agrees that during the Term of
Employment, and for the unexpired Term of Employment otherwise remaining but
for termination thereof in accordance with Section 5, and during any Term of
Consultancy (the "Non-competition Period") he shall not in any manner,
directly or indirectly, through any person, firm or corporation, alone or as a
member of a partnership or as an officer, director, stockholder, investor or
employee of or consultant to any other corporation or enterprise, engage or be
engaged in any business being conducted by the Company or any of its
subsidiaries as of the termination of the Term of Employment in any geographic
area in which the Company or any of its subsidiaries is then conducting such
business. Within seven (7) days following the termination of the Term of
Employment the Company shall deliver to the Executive a written description of
the businesses being conducted by the Company and its subsidiaries as of the
date of such termination and the respective geographic areas in which such
businesses are then being conducted. If the Company shall fail to deliver
such written description within such seven (7) day period, the Executive may
deliver to the Company a written demand therefor and the Company shall have
seven (7) days following the delivery of such written demand to deliver such
written description to the Executive, and the Executive shall have no
liability for any breach of the covenant contained in this Section 7.2 or
Section 7.3 which may occur during the period commencing on the termination of
the Term of Employment and ending on the date of the delivery of such written
description to the Executive, and, if the Company shall fail to deliver such
written description to the Executive by the end of the second seven-day period
specified above, the Executive shall thereupon be discharged from any
obligations or covenants under this Section 7.2 or Section 7.3 (and released
from any liability for any alleged breach thereof). Notwithstanding the
foregoing, subsequent to the termination of the Term of Employment the
Executive may engage or be engaged, or assist any other person, firm,
corporation or enterprise in engaging or being engaged, in any business
activity which is competitive with a business activity being conducted by the
Company or any of its subsidiaries as of the termination of the Term of
Employment if, at least sixty (60) days prior to the commencement of such
competitive activity, the Executive delivers to the Company a written release,
in form and substance satisfactory to the Company, releasing the Company from
all further obligations to the Executive pursuant to this Agreement, pursuant
to any other agreement or arrangement with the Company or any subsidiary of
the Company or otherwise, other than the right of the Executive to receive
benefits or payments under any retirement plan of the Company and/or its
subsidiaries, and/or as provided in Section 13; provided that nothing
contained in this Section 7.2 shall release or otherwise affect the
obligations of the Executive contained in Section 8.
7.3 Non-solicitation. The Executive agrees that during the
Non-competition Period he shall not (a) intentionally induce or attempt to
induce any officer or executive of the Company or any of its subsidiaries to
terminate or abandon his or her employment with the Company or such subsidiary
for employment with another organization with which the Executive is
affiliated, or (b) in connection with any business to which Section 7.2
applies, call on, service, solicit or otherwise do business with any client of
the Company or any of its subsidiaries.
7.4 Permitted Investments; Performance of Duties. Nothing in this
Section 7 shall (a) prohibit the Executive from being (i) a stockholder or
investor in a mutual fund, a diversified investment company or other
investment fund or (ii) an owner of not more than five percent (5%) of the
outstanding stock of any class of a corporation, or (b) apply to or interfere
with the proper performance by the Executive of his duties pursuant to Section
1 of this Agreement.
7.5 Blue Pencil Rule. If, at any time of enforcement of this
Section 7, a court of competent jurisdiction holds that the restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum period, scope or geographical area reasonable
under such circumstances shall be substituted for the stated period, scope or
area and that such court shall be allowed to revise the restrictions contained
herein to cover the maximum period, scope and area determined by such court to
be permitted by law.
8. CONFIDENTIALITY.
The Executive shall not, at any time during the Term of Employment,
the Term of Consultancy or thereafter make use of or disclose, directly or
indirectly, any trade secret or other confidential or secret information of
the Company or of any of its subsidiaries or affiliates not available to the
general public or to the competitors of the Company or to the competitors of
any of its subsidiaries or affiliates, in each case that the Executive
obtained as a result of his employment by the Company or any of its
subsidiaries or affiliates ("Confidential Information") except to the extent
that such Confidential Information (a) is used by the Executive during the
Term of Employment or the Term of Consultancy in the proper performance of his
duties pursuant to this Agreement, (b) is disclosed by the Executive to his
legal counsel in connection with legal services performed by such counsel for
the Executive, provided that such disclosure is made on a confidential basis,
(c) becomes a matter of public record or is published in a newspaper, magazine
or other periodical or media available to the general public, other than as a
result of any act or omission of the Executive outside the proper performance
of his duties pursuant to this Agreement, or (d) is required to be disclosed
by any law, regulation or order of any court or regulatory commission,
department or agency. Promptly following the termination of the Term of
Employment, or any Term of Consultancy, the Executive shall surrender to the
Company any records, memoranda, notes, plans, reports, computer tapes and
software and other documents and data which constitute Confidential
Information which he then possesses (together with all copies thereof then in
his possession); provided, however, that the Executive may retain copies of
such documents as are necessary for the preparation of his Federal or state
income tax returns and may retain his personal rolodex, phone book and similar
items (whether in hard-copy or computer-readable format).
9. NON-DISPARAGEMENT.
9.1 By the Executive. The Executive shall not, at any time during
the Term of Employment, the Term of Consultancy or thereafter, make any
statement, publicly or privately, which would disparage the Company, its
business or any director or officer of the Company; provided, however, that
the Executive shall not be in breach of this restriction if such statements
consist solely of (a) private statements made to any officers, directors or
employees of the Company or any subsidiary of the Company by the Executive in
the course of carrying out his duties pursuant to this Agreement or (b)
private statements made to persons other than clients or competitors of the
Company or any of its subsidiaries or its affiliates (or their
representatives) or members of the press or the financial community that do
not have a material adverse effect upon the Company; and provided further that
nothing contained in this Section 9.1 or in any other provision of this
Agreement shall preclude the Executive from making any statement in good faith
which is required by any applicable law, regulation or valid order of any
court or governmental regulatory commission, department or agency.
9.2 By the Company. The Company and/or its subsidiaries and/or
their respective directors, officers, and/or employees shall not, at any time
during the Term of Employment, the Term of Consultancy or thereafter, make or
authorize any person to make or allow, nor shall the Company or any such other
person condone the making of, any
statement, publicly or privately, which would disparage the Executive;
provided, however, that the Company shall not be in breach of this restriction
if such statements consist solely of (a) private statements made to any
officers, directors or employees of the Company or (b) private statements made
to persons other than clients or potential clients or competitors of the
Company or any of its subsidiaries or affiliates (or their representatives) or
members of the press or the financial community that do not have a materially
adverse effect upon the Executive; and provided further that nothing contained
in this Section 9.2 shall preclude any officer, director, or employee of the
Company from making any statement in good faith which is required by any
applicable law, regulation or valid order of any court or governmental
regulatory commission, department or agency.
10. NO REDUCTIONS OR MITIGATION. In no event shall an asserted
violation of Section 7, 8 or 9.1 constitute a basis for reducing, deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement. The Executive shall not be required to mitigate damages or other
amounts payable to him hereunder by seeking other employment, and the amount
of any payment or benefit provided under this Agreement, including Employee
Benefits, shall not be reduced by any compensation or benefits earned by or
provided to the Executive as a result of employment by another employer.
11. ARBITRATION. The parties shall use their best efforts and good
will to settle all disputes by amicable negotiations. The Company and the
Executive agree that any dispute, controversy or claim arising out of,
relating to or in connection with this Agreement, or the termination of this
Agreement or the termination of the Executive's employment hereunder that is
not amicably resolved by negotiation (the "Dispute") shall be finally settled
by arbitration, as set forth below, in New York, New York, or such other place
agreed to by the parties, and each of the parties hereto accepts the exclusive
jurisdiction of the arbitrator or arbitral panel appointed in accordance
herewith, and irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Agreement.
(a) Any such arbitration shall be heard before a panel consisting of
one (1) to three (3) arbitrators, each of whom shall be impartial. All
arbitrators shall be appointed in the first instance by agreement between the
parties hereto. If the parties cannot agree upon a single arbitrator, each of
the Company and the Executive shall be entitled to appoint one arbitrator.
These two appointed arbitrators shall then appoint a third arbitrator by their
mutual agreement.
(b) The arbitrator or arbitrators shall decide the Dispute by applying
the governing law as stated in Section 15. The arbitration proceedings shall
be governed by such other procedural rules as the arbitrator or arbitrators
shall determine.
(c) An arbitration may be commenced by either party to this Agreement
by the service of a written request for arbitration (the "Request for
Arbitration") upon the other party. The Request for Arbitration shall
summarize the Dispute to be arbitrated. If the panel of arbitrators is not
appointed, in accordance with paragraph (a) above, within thirty (30) days
following such service, either party may apply to any court within the State
of New York for an order appointing a single qualified arbitrator. No Request
for Arbitration
shall be valid if it relates to a Dispute that would have been time barred
under the applicable statute of limitations had such Dispute been submitted to
the courts of the State of New York.
(d) Judgment on the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof, or application may be made to such
court for a judicial acceptance of the award and an order of enforcement.
(e) This arbitration clause, including its enforceability and
application, shall be governed by the Federal Arbitration Act, 9 U.S.C.,
Section 1, et seq., and any dispute as to its enforceability, application or
interpretation shall be presented to the United States District Court for the
Southern District of New York.
12. SUCCESSORS AND BINDING EFFECT.
12.1 Successors of the Company. The Company will require any
acquiror of, or successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to, all or substantially all of the capital stock,
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company
would be required to perform this Agreement if no such acquisition or
succession had taken place, and this Agreement shall inure to the benefit of
and shall be binding upon any such acquiror of, or successor to, the Company,
subject to the other terms and conditions hereof. If the Company fails to
obtain such assumption and agreement prior to the effectiveness of any such
acquisition or succession, this Agreement shall nevertheless continue to
determine the Executive's rights and entitlement to receive the compensation,
remuneration and benefits provided for herein or hereunder. As used in this
Agreement, "Company" shall mean the Company, as hereinabove defined, and any
successor to the Company and/or its business and/or assets, as described in
the first sentence of this Section 12.1.
12.2 Assignment. This Agreement is personal in nature and, except
as provided in Section 12.1, neither of the parties to this Agreement shall,
without the prior written consent of the other, assign or transfer this
Agreement or any right or obligation under this Agreement to any other person;
provided, however, that nothing herein shall preclude the heirs, executors,
administrators or legal representatives of the Executive or his estate from
enforcing this Agreement and receiving any amount or benefit that may be
payable or provided to or in respect of the Executive hereunder following his
death or legal incompetency.
12.3 Representation. The Company represents and warrants that it
is fully authorized and empowered to enter into this Agreement, and that the
performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or organization.
13. EMPLOYEE BENEFIT PLANS. Notwithstanding any other provision of
this Agreement to the contrary, the Company and its subsidiaries shall pay or
provide to the Executive and his dependents and beneficiaries such rights and
benefits of participation
under the employee benefit plans, programs and arrangements in which the
Executive is a participant immediately prior to the date his employment
hereunder terminates for any reason as the Executive and such dependents and
beneficiaries are entitled, following such termination (including, without
limitation, the Employee Benefits), under the terms and provisions of such
plans, programs and arrangements as in effect from time to time.
14. DEFINITION OF CHANGE IN CONTROL. For purposes of this
Agreement, a "Change in Control" shall be deemed to have occurred upon the
occurrence of one or more of the following events:
(a) the stockholders of the Company approve a merger,
consolidation, combination, reorganization or other transaction that
would result in less than fifty percent (50%) of the combined voting
power of the surviving or resulting entity being owned by the former
stockholders of the Company, or the liquidation or dissolution of the
Company or the sale or other disposition of all or substantially all
of the assets or business of the Company;
(b) an offer is made to the holders of the Company's common
stock to sell or exchange such common stock for cash, securities or
stock of another corporation and such offer, if accepted, would result
in the offeror becoming the owner of at least fifty percent (50%) of
the then outstanding common stock of the Company;
(c) any person or group of persons directly or indirectly
purchases or otherwise becomes the beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), or has the right to acquire such beneficial ownership
(whether or not such right is exercisable immediately, with the
passage of time, or subject to any condition) of, other than from the
Company, twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities; or
(d) during any period of two (2) consecutive years individuals
who at the beginning of such period constituted the Board cease for
any reason to constitute at least a majority thereof, unless the
election, or nomination for the election by the shareholders of the
Company, of each new director was approved by at least two-thirds
(2/3rds) of the directors then still in office who were directors at
the beginning of such period.
15. GOVERNING LAW. This Agreement has been executed and delivered
in the State of New York and shall be governed by and construed and enforced
in accordance with the laws of such State, without regard to the principles of
conflict of laws.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes and preempts any prior understandings,
agreements or representations by or between the parties hereto, whether
written or oral, which may have related in any manner to the subject matter
hereof, including, without limitation, the Existing Employment Agreement.
Without limiting the foregoing, upon the Effective Time, as specified in
Section 2.1, the Existing Employment Agreement will be mutually cancelled
without any payments, penalties or costs being incurred by either party
hereto.
17. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended or waived only by the written agreement of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
18. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to be given when
(a) delivered personally or by certified or registered mail or reputable
overnight courier, postage prepaid, addressed to the other party and his or
its counsel at the addresses respectively set forth below or (b) sent by
facsimile to the facsimile numbers of the other party hereto and his or its
counsel respectively set forth below with a confirmatory copy thereof
delivered by reputable overnight courier to such party and his or its counsel
at the addresses respectively set forth below, pursuant to this Section 18:
(a) if to the Company, to:
Chief Human Resources Officer
True North Communications Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxx X. Xxxx
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: 312-853-7036
(b) if to the Executive, to:
Xxxxxxx X. Xxxxxxx, Xx.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: ______________
with a copy to:
Xxxxx Xxxxx
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
or to such other address or facsimile number as either party hereto or his or
its counsel may specify, in writing, from time to time in the manner set forth
above to the other party (provided that such notice of another address or
facsimile number shall be effective only when actually received by such other
party).
19. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under applicable law or rule
in any jurisdiction, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
20. SURVIVAL. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the
extent necessary to the intended preservation of such rights and obligations.
21. HEADINGS. Except as otherwise provided herein, the words
"Section," "paragraph," and "clause" as used herein shall refer to provisions
of this Agreement, and headings of the Sections of this Agreement are intended
solely for convenience of reference and no provision of this Agreement is to
be construed by reference to the title of any Section.
22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
TRUE NORTH COMMUNICATIONS INC.
Dated: July 30, 1997 By /s/ Xxxxxxxx X. Xxxxxxxxxx
---------------- ------------------------------
Name: Xxxxxxxx X. Xxxxxxxxxx
Title: Executive Vice President
and General Counsel
XXXXXXX X. XXXXXXX, XX.
Dated: July 30, 1997 /s/ Xxxxxxx X. Xxxxxxx, Xx.
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