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Exhibit 10.7
SELECT EXECUTIVE RETIREMENT INCOME PLAN
This agreement (this "Agreement") made December 19, 1997, by and
between Young & Rubicam Inc., a company organized under the laws of the State of
Delaware (herein the "Company") and Xxxxx X. Xxxxxxxxx (the "Employee").
In consideration of the agreement hereinafter contained, the
parties agree as follows:
1. The Employee agrees to serve the Company and each business
entity at least 10% of the value of which is owned, directly or indirectly, by
the Company ("Affiliates" and, together with the Company, "Y&R") in such
capacity as the Board of Directors of the Company may designate from time to
time during a period commencing on the date hereof and continuing until
terminated by either party in accordance with the terms of the Management Voting
Trust Agreement, dated as of December 12, 1996, executed by the Employee or, if
said agreement is no longer in effect, then on six months' notice. Nothing
contained herein shall be construed as conferring upon the Employee the right to
continue in the employ of Y&R as an executive or in any other capacity beyond
the notice period provided for above.
2. During the term of his employment, the Employee shall devote
his full business time, attention, skill and effort to the performance of his
duties for Y&R.
3. During the term of his employment, Y&R shall pay the Employee
such salary, other compensation and benefits payable as Y&R may from time to
time determine. In addition, the Employee shall be entitled to amounts payable
pursuant to the Select Executive Retirement Income Plan ("SERIP") as provided
below.
4. The benefits to be paid pursuant to SERIP (unless they are
forfeited by the occurrence of any of the events of forfeiture specified in
paragraph 5 below) are as follows:
A. The Company shall pay to the Employee a cash amount each
calendar year (an "Annual Payment") equal to the lesser of (x) 75% of
the average annualized cash compensation received by the Employee from
Y&R during the three calendar years preceding the calendar year in which
payment hereunder commences or (y) $650,000 each calendar year for the
rest of his life, as soon as administratively feasible after January 1st
of each such calendar year, commencing upon the later to occur of (i)
the January 1st of the calendar year following the calendar year in
which his active full-time employment with Y&R ceases or (ii) the
January 1st following the date he reaches 60 (except in the event of
death or disability as described in subparagraphs 4.B and 4.C below).
B. If the Employee should die before payment pursuant to SERIP
commences, ten Annual Payments shall be made to the Employee's
designated beneficiary, the first such payment commencing as soon as
administratively feasible after the Company has received notification of
death. If the Employee should die after payment pursuant to SERIP has
commenced but before he has received ten Annual Payments, the Company
shall continue to pay to the Employee's designated beneficiary Annual
Payments until the
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total number of Annual Payments to the Employee and his designated
beneficiary equals ten. The Employee shall designate his beneficiary
hereunder to the Company in writing; in the event the Employee does not
so designate a beneficiary hereunder, such designated beneficiary shall
be the Employee's estate.
C. If the Employee becomes disabled, Annual Payments pursuant to
SERIP shall begin as soon as administratively feasible after a
determination of disability has been made. The Employee shall be deemed
to become disabled for purposes hereof if the Company shall find, on the
basis of medical evidence satisfactory to the Company, that the Employee
is disabled, mentally or physically, so as to be prevented from
performing the duties he was performing for Y&R at the time of
disability and such disability appears to be permanent or of
long-standing duration.
5. Notwithstanding anything contained herein to the contrary, no
payment of any then unpaid Annual Payments pursuant to SERIP shall be made and
all rights under this Agreement of the Employee to receive payment thereof shall
be forfeited if there shall be a breach of the following conditions:
A. The Employee shall not, during the term of his employment or at
any time prior to the second anniversary of the date of the termination
of his employment with Y&R, directly or indirectly, (i) solicit any of
the clients who were or had been served by the Company or any of its
Affiliates at the time of such termination or during the six months
prior thereto, (ii) own, operate, join, control, engage in, or
participate in the ownership, management, operation or control of, or be
a director or an employee of, or a business consultant to, any business,
firm or corporation which is similar to or competes with the business of
the Company or any of its Affiliates as conducted on the date of such
termination of employment or during the six months prior thereto;
provided, however, that the provisions of this subparagraph shall not
apply to investments by the Employee in shares of stock traded on a
national market which shall constitute less than one percent of the
outstanding shares of such stock, or (iii) solicit for purposes of
employment any employee of the Company or its Affiliates, or induce any
such employee to terminate his or her employment.
B. During the period commencing on the date of the termination of
the employment of Employee with Y&R and ending on the second anniversary
of the date of such termination, the Employee shall perform such
consulting and advisory services for Y&R as shall from time to time be
reasonably assigned to him by the Board of Directors of the Company;
provided, however, that such services shall be rendered at such place or
places and at such time or times as the Employee shall determine, and in
no event shall the Company require the Employee to devote more than
three days per month in performing such services. The Company shall give
the Employee reasonable notice of the times when it will require the
Employee's consulting or advisory services and the Employee will have
reasonable time after receipt of such notice to render such services.
The Company shall reimburse the Employee for reasonable expenses
incurred by the Employee in connection with the rendition of such
services in accordance with the Company's policies.
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6. Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be construed to
create a trust or any kind of fiduciary relationship between the Company and the
Employee, or any other person. The Company's obligations under SERIP and this
Agreement shall be unfunded and any benefits to the Employee hereunder shall be
paid out of the general assets of the Company. The Company shall have no
obligation to set aside or segregate assets with respect to such benefits. The
Employee's rights to benefits hereunder shall be those of an unsecured general
creditor of the Company.
7. A. The Employee, by acceptance of the benefits of SERIP,
covenants and agrees that anything herein to the contrary notwithstanding, any
benefits due to such Employee hereunder shall be subordinate and junior to the
extent and manner hereinafter set forth, to the principal of and premium (if
any) and interest on any and all Senior Indebtedness as defined in subparagraph
7.C below whether now outstanding or hereafter incurred or assumed:
1. In the event of any insolvency, bankruptcy, receivership,
liquidation, dissolution, reorganization or other similar
proceedings, whether voluntary or involuntary, relating to the
Company or to its creditors, as such, or to its property, then the
holders of Senior Indebtedness shall be entitled to receive
payment in full of all principal, premium (if any) and interest on
all Senior Indebtedness before any Employee is entitled to receive
any payment hereunder, and, accordingly, the holders of Senior
Indebtedness shall be entitled to receive for application in
payment thereof any payment or distribution of any kind or
character, whether in cash or property or securities, which may be
payable or deliverable in any such proceedings in respect hereof;
and
2. Without in any way limiting the effect of the foregoing
provisions, during the continuance of any default on any Senior
Indebtedness, no payment hereunder shall be made if (A) notice of
such default in writing or by telegram or telefax has been given
to the Company by any holder or holders of any Senior
Indebtedness, (B) judicial proceedings shall be pending in respect
of such default or (C) judgment is obtained against the Company by
the holders of the Senior Indebtedness or any one of them if as a
result of such default it shall remain unsatisfied; and
3. Should any payment hereunder be received by the Employee in
violation of the subordination provisions contained in this
Paragraph 7, such Employee agrees to hold such payment in trust
and as trustee for the account of the holders of Senior
Indebtedness.
B. The above provisions in regard to subordination are solely for
the purpose of defining the relative rights of the holders of Senior
Indebtedness on the one hand and the Employee on the other hand, and
nothing herein shall impair, as between the Company and the Employee,
the obligation of the Company, which is unconditional and absolute, to
pay to the Employee all amounts due hereunder in accordance with its
terms.
C. For purposes of this Agreement, "Senior Indebtedness" shall
mean (i) any Indebtedness (as hereinbelow defined) of the Company to any
bank, financial institution
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or third party lender, any guarantee by the Company of any Indebtedness
of an Affiliate to a bank, financial institution or other third party
lender and any guarantee by the Company of Indebtedness or other
obligations of an Affiliate to any person, firm or entity in respect of
advertisements placed by or on behalf of such Affiliate, whether such
Indebtedness, obligation or guarantee is now outstanding or hereafter
incurred or assumed, and any refinancing, extensions, renewal or
increases thereof, and (ii) the Company's Indebtedness or other
obligations (including any refinancing, extension, renewal or increase
thereof) to third parties in connection with or arising out of the
issuance by employees of the Company or any Affiliate of promissory
notes ("Employee Notes") in connection with the financing of the
purchase by such employees of the common stock of the Company or the
financing of the purchase of Employee Notes, including without
limitation, obligations of the Company to banks, financial institutions
or other third party lenders to purchase either (1) common stock of the
Company held as collateral by such parties; (2) Employee Notes; or (3)
promissory notes evidencing loans to the Company or any Affiliate. For
the purposes of this definition, Indebtedness or other obligations of
the Company (1) to affiliated or special purpose entities formed for the
purpose of facilitating the obtaining or administration of financing (a)
for the Company or an Affiliate, (b) for the purchase by employees of
the Company or an Affiliate of the common stock of the Company, or (c)
for the purchase of Employee Notes or (2) to banks, financial
institutions or other third party lenders which provide financing for
such affiliated or special purpose entities, shall be deemed to be
included within the term Senior Indebtedness.
As used herein "Indebtedness" shall mean (i) any obligation or
indebtedness for borrowed money or evidenced by bonds, notes, debentures
or similar instruments or letters of credit (or reimbursement agreements
in respect thereof) or representing the balance deferred and unpaid of
the purchase price of any property originally financed on a long term
basis (including pursuant to capital leases), (ii) any obligation under
any contract providing for the making of loans or advances and (iii)
guarantees (and other obligations under any other contracts which are
substantially equivalent to guarantees), endorsements and other
contingent liabilities (whether direct or indirect) in connection with
the foregoing. In addition, the term "Indebtedness" shall be construed
to include any "indebtedness" as such term may be defined in any credit
facility or agreement to which the Company is a party from time to time.
8. The right of the Employee or any other person to Annual
Payments pursuant to SERIP or other benefits under the Agreement shall not be
assigned, transferred, pledged, or encumbered.
9. This Agreement shall be binding upon and inure to the benefit
of the Company, its successors and assigns, and the Employee.
10. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York.
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YOUNG & RUBICAM INC.
/s/ Xxxx X. Xxxxxxx
By: _____________________
/s/ Xxxxx X. Xxxxxxxxx
______________________
Employee
/s/ Xxxxxxxxx X. Xxxxxxxx
________________________________
Attest
Executive Vice President,
General Counsel
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