Exhibit 10.5
CEO
EMPLOYMENT AGREEMENT
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This Agreement is made and entered into as of January 1, 2001 (the
"Effective Date"), by and between Xxxxx X. Xxxxx (the "Executive") and Bcom3
Group, Inc. ("BCOM3"), Xxx Xxxxxxx Worldwide, Inc. ("LBW"), and Xxx Xxxxxxx USA,
Inc. ("LBU"), on behalf of themselves and each of their respective predecessors,
successors, assigns, affiliates and subsidiaries (hereinafter sometimes
collectively referred to as the "Company").
The parties desire to enter into this Agreement pertaining to the
employment of the Executive as Chief Executive Officer of BCOM3. Therefore, in
consideration of the mutual covenants and agreements set forth below, it is
hereby covenanted and agreed by the Executive, LBU, LBW and BCOM3 as follows:
1. Employment
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(a) Subject to the terms of this Agreement and during the Employment Term (as
defined below), Executive agrees to serve as the Chief Executive Officer of
BCOM3 ("CEO").
(b) Subject to the terms of this Agreement, LBU agrees to employ the Executive
during the Employment Term, to make Executive's services available to BCOM3
to serve as CEO, and to provide such compensation and benefits to Executive
as are contained in this Agreement or later directed by the BCOM3 Board of
Directors.
(c) BCOM3 agrees to compensate LBU for the entire cost of Executive's services
during the Employment Term, including any costs that arise pursuant to this
Agreement pursuant to a Change in Control or otherwise.
2. Performance of Services.
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(a) During the Employment Term, the Executive shall devote his full time,
energies and talents to serving as BCOM3's Chief Executive Officer.
(b) The Executive agrees that he shall perform his duties faithfully and
efficiently subject to the directions of the Board of Directors of BCOM3
(the "Board"); provided, however, that the Executive shall not, without his
consent, be assigned tasks that would be inconsistent with those of CEO.
The Executive shall report to the Board but to no individual member or
committee of the Board, and shall have full authority, power,
responsibility and duties as are inherent in the position of CEO. In
particular (but not by way of limitation), the Executive shall have
authority and power to commit the Company and the funds of the Company,
except to the extent specifically limited by the Board, shall have
authority and power to hire and fire any individual employee, except in the
case of an employee who is also a member of the Board, and shall have
authority and power to manage the operations of the Company, including the
deployment of people and
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assets and the delivery of services (including the acceptance of new
clients, termination of existing clients, and service levels for clients).
(c) Notwithstanding the foregoing provisions of this paragraph 2, during the
Employment Term the Executive may devote reasonable time to activities
other than those required under this Agreement, including the supervision
of his personal investments, and activities involving professional,
charitable, community, educational, religious and similar types of
organizations, speaking engagements, membership on the boards of directors
of other organizations, and similar types of activities, to the extent that
such other activities do not, in the judgment of the Board, inhibit or
prohibit the performance of the Executive's duties under this Agreement, or
conflict in any material way with the business of the Company; provided
that any such judgment shall be communicated in writing to the Executive,
who shall thereafter have a reasonable period of time to terminate such
other activity; and further, that the Executive shall not serve on the
board of any business, or hold any other position with any other for-profit
business, without the prior consent of the Board.
(d) Subject to the terms of this Agreement, the Executive shall not be required
to perform services under this Agreement during any period that he is
Disabled. The Executive shall be considered "Disabled" during any period in
which he has a physical or mental disability which renders him incapable,
after reasonable accommodation, of performing his duties under this
Agreement. In the event of a dispute as to whether the Executive is
Disabled, the BCOM3 Board may refer the same to a licensed practicing
physician who is mutually acceptable to the Executive and the Board, and
the Executive agrees to submit to such tests and examinations as such
physician shall deem appropriate. It is expressly understood that the
Executive has ankylosing spondylitis and that such condition may at some
time in the future result in the Executive being Disabled. The pre-existing
nature of such condition shall not affect the Executive's rights, benefits
and obligations under this Agreement. During the period in which the
Executive is Disabled, the Company may appoint a temporary replacement to
assume the Executive's responsibilities.
(e) Except as provided in this Agreement, or as specifically authorized by the
Board with the Executive's express approval, the Executive will be subject
to Company policies, such as policies relating to conflict of interest,
professional practices, benefits, expense reimbursement, etc., that are
applicable to and consistently applied to BCOM3's other senior management
employees.
3. Compensation and Benefits.
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Subject to the terms of this Agreement, during the Employment Term, while the
Executive is employed by the Company, the Company shall compensate him for his
services as follows:
(a) The Executive shall receive, for each 12-consecutive month period an annual
base salary of not less than $950,000.00 (the "Salary"), paid in
substantially equal monthly or more frequent installments. The Executive's
Salary shall be reviewed by the BCOM3 Board
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Nominating and Compensation Committee no less than annually during the
Employment Term, to determine whether an increase in the amount of Salary
is appropriate. Any increase in the amount of Salary shall be approved by
the BCOM3 Board. In no event shall Executive's Salary be reduced to an
amount that is less than the amount specified in this paragraph (a). If
increased, the Executive's Salary shall not be reduced to an amount that is
less than the amount that he was previously receiving except to the extent
that reductions of the same percentage are being made at the same time to
the salaries of all other BCOM3 officers, and such Salary shall be restored
to its prior level when, and to the same extent, as the restoration that
applies to any other BCOM3 officers.
(b) The Executive shall be entitled to receive bonuses from the Company as
recommended by the BCOM3 Board Nominating and Compensation Committee and
approved by the BCOM3 Board, in accordance with the executive bonus
program(s) which will be adopted by BCOM3 for executives of the Company and
which may be subject to periodic revision and modification.
(c) The Executive shall be eligible to participate in the Company's stock
option award program on terms that are determined by the BCOM3 Board
Nominating and Compensation Committee, provided, however, that after any
public offering of Company stock, Executive's participation in the
Company's stock option award program shall be on terms and in amounts that
are at least as advantageous as any other employee of the Company.
(d) Except as otherwise specifically provided in this Agreement, the Executive
shall be eligible to participate in all relevant benefits provided under
LBU's employee benefit scheme and executive perquisites as a "board
member." In general, all such benefits and perquisites are subject to
revision or revocation. However, (a) the Executive is a party to the Xxx
Xxxxxxx Company Executive Employment Consultancy Arrangement ("EECA") which
is related to the Executive's service as an LBU and LBW director, and which
may not be revised or revoked except with the Executive's express consent,
and (b) to the extent not included from time to time in the foregoing
benefits and perquisites, the Company shall provide the Executive with an
automobile or automobile allowance consistent with current Company policies
for its most senior executives, membership fees and related expenses in one
private eating club and one private athletic club, and reimbursement of
reasonable professional fees for tax return preparation and tax and estate
planning services. The Executive shall complete all forms and other
requirements to secure coverage and benefits described in this paragraph
(d), to the extent determined to be necessary or appropriate by the
Company.
(e) The Executive is authorized to incur reasonable expenses for entertainment,
travel, meals, lodging and similar items in promoting the Company's
business. The Company will reimburse the Executive for all such expenses as
Executive incurs directly. In particular, Executive's responsibilities will
require significant travel and Executive may charter private aircraft, or
otherwise arrange for travel at the Company's expense even if such travel
is not in accordance with general Company policy, provided, however, that
the
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BCOM3 Board must approve in advance any aircraft purchase. The Company will
also provide Company aircraft for reasonable personal use by the Executive
and, when accompanying him, his spouse. The benefit of such personal use
shall be included as taxable compensation in accordance with the
regulations of the Internal Revenue Service.
(f) (i) If, under any provision of the Federal income tax law, any payment to
the Executive under this Agreement (whether during the Employment Term or
upon Termination) gives rise to a excess tax charge on Executive, greater
than the highest regular tax rate applied to income (including, but not
limited to, an excise tax under Section 4999 of the U.S. Internal Revenue
Code relating to "golden parachute" payments), the Company will pay
Executive such additional amount as is required to offset such excess tax
(and any tax on such additional amount) (a "Gross-Up Payment"). To the
extent that payments not previously paid or committed to be paid under this
Agreement are discretionary or to be determined by the Board Nominating and
Compensation Committee, the Committee may take into account this gross-up
provision in determining the amounts to be paid to the Executive.
(ii) All determinations required under this section 3(f), including whether
and when a Gross-Up Payment is required, the amount of such Gross-Up
Payment, and the assumptions to be utilized in arrived at such
determination, shall be made by Xxxxxx Xxxxxxxx LLP ("AA") which shall
provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the
Executive that there has been a payment that could give rise to a Gross-Up
Payment. All related AA fees and expenses shall be borne solely by the
Company. Any Gross-Up Payment shall be paid by the Company to the Executive
within five days of receipt of AA's determination. Any determination by AA
shall be binding upon the Company and the Executive.
(iii) As a result of uncertainty in the application of Section 4999 or
other provisions of the U.S. Internal Revenue Code at the time of the
initial determination by AA, it is possible that the Gross-Up Payments
determined by AA will turn out to be less than should have been made (an
"Underpayment"). In the event that the Company exhausts its remedies
pursuant to section 3(f)(iv) below, and the Executive is required to make
an additional payment, AA shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(iv) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to the
Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is
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due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall (1) give the Company any information reasonably requested
by the Company relating to such claim, (2) take such action in connection
with contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by the Company, (3) cooperate with the Company in good faith in
order to effectively contest such claim, and (4) permit the Company to
participate in any proceedings relating to such claim. The Company shall
pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any income tax,
excise tax, interest and/or penalties imposed as a result of such
representation and payment of costs and expenses. The Company shall control
all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim, and may, at its sole option, either direct the Executive to
pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall advance
the amount of such payment to the Executive on an interest-free basis, and
shall indemnify and hold the Executive harmless, on an after-tax basis,
from any excise tax, income tax, interest and/or penalties related to such
advance or to any imputed income associated with such advance. The
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable, and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(v) If the Company advances any amount to pay a tax, and the Executive
receives any refund with respect to such claim, the Executive shall
promptly pay to the Company the amount of such refund (together with any
interest paid or credited, net of applicable taxes). If the Company
advances any amount to pay a tax, and a final determination is made that
the Executive is not entitled to any refund with respect to such claim,
then such advance shall be forgiven and treated (to the extent of the
refund) as an offset to the amount of Gross-Up Payment required.
(g) The Company shall maintain directors and officers liability insurance in
commercially reasonable amounts (as reasonably determined by the Board),
and the Executive shall be covered under such insurance to the same extent
as other senior management employees of the Company. The Executive shall be
eligible for indemnification by the Company under the Company by-laws as
currently in effect. The Company agrees that it shall not take any action
that would impair the Executive's rights to indemnification under the
Company by-laws, as currently in effect.
(h) It is recognized that the Executive has been an LBU or LBW employee for a
number of years. Nothing in this Agreement shall reduce or limit benefits
that have already accrued to the Executive by way of years of service as an
LBU or LBW employee.
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4. Health and Key-Man Insurance
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(a) The Company shall be permitted (but not obligated) to maintain "key man"
insurance that will provide benefit to the Company in the case of the
Executive's death or Disability. The Executive shall cooperate in all
reasonable ways to enable the Company to secure such insurance, including
(without limitation) providing personal health information (to be
maintained as confidentially as is possible in the circumstances) and
submitting to periodic physical examinations by a licensed practicing
physician, at the Company's expense.
(b) Whether or not the Company maintains key man insurance that requires a
periodic physical examination, the Executive shall have an annual physical
examination by a licensed practicing physician selected by the Executive,
including such tests and examinations as such physician shall deem
appropriate. The Company will pay the entire cost of such annual
examination. This is in lieu of, and not subject to the limits on cost or
coverage applicable to the annual physical examination benefit generally
provided to senior executives of LBU.
5. Termination of Employment
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For purposes of this Agreement, the "Employment Term" is the period from the
date of this Agreement until the Executive's employment with the Company is
terminated. The Executive's employment may be terminated only under the
circumstances described in paragraphs 5(a) through 5(g):
(a) Death. The Executive's employment hereunder will terminate upon his death.
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(b) Permanent Disability. The BCOM3 Board may terminate the Executive's
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employment upon a determination that he is Permanently Disabled. The
Executive shall not in any case be considered "Permanently Disabled" unless
(i) for a period of at least 90 consecutive days, the Executive, as a
result of a physical or mental disability, has been incapable, after
reasonable accommodation, of performing his duties under this Agreement on
a permanent, full-time basis, and (ii) at the Date of Termination the
Executive is eligible for income replacement benefits under the Company's
long-term disability plan. In the event of a dispute as to whether the
Executive is Permanently Disabled, the BCOM3 Board may refer the Executive
to a mutually acceptable licensed practicing physician, and the Executive
agrees to submit to such tests and examination as such physician shall deem
appropriate.
(c) Cause. The BCOM3 Board may terminate the Executive's employment hereunder
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at any time for Cause. For purposes of this Agreement, the term "Cause"
shall mean that both (1) one of the following conditions is met, and (2)
there is a formal resolution of two-thirds (2/3) of the Board to that
effect.
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(i) Executive's willful and continued failure to substantially perform
his duties with the Company under the Agreement (other than as a
result of total or partial incapacity due to Disability or as a
result of termination by Executive for Good Reason) within a
reasonable period of time after a written demand for substantial
performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that
the Executive has not substantially performed his duties;
(ii) any willful act or omission by Executive constituting dishonesty or
fraud, or any act or omission by Executive constituting immoral
conduct, which in any such case results in a material injury to the
financial condition or business reputation of the Company;
(iii) Executive's indictment of a felony under the laws of the United
States or any state thereof or any other jurisdiction in which the
Company conducts business; or
(iv) material breach by Executive of any restrictive covenant described in
paragraph 7(b), 7(c) or 8.
For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be deemed "willful" if it was done (or omitted to be
done) by the Executive in good faith with reasonable belief that the
Executive's action or omission was in the best interest of the Company.
Failure to attain financial or other business objectives shall not be
deemed a failure to perform duties. A knowing violation of the Company's
Conflict of Interest Policy shall be considered willful conduct.
(d) Good Reason. Executive may terminate his employment hereunder at any time
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after 30 days after giving the Board notice that there is Good Reason, if
the Good Reason has not been cured or resolved before the end of that 30
days. For purposes of this Agreement, the term "Good Reason" shall mean:
(i) Material diminution in Executive's title, position, duties or
responsibilities, or the assignment to Executive of duties that are
inconsistent, in a material respect, with the scope of duties and
responsibilities associated with the position as CEO of the ultimate
parent company of a group of operating companies;
(ii) a Fundamental Disagreement with the Board, where a "Fundamental
Disagreement" arises if (a) a proposal is made to the Board regarding
a "Fundamental Corporate Transaction" (meaning a sale of the Company
or of an effectively controlling interest in the Company, a merger or
combination of the Company with another private or public company
that will substantially alter the ownership of the Company, an
Initial Public Offering of Company stock, or some other corporate
transaction that will fundamentally and substantially alter the
governance and control of the Company), and (b) Executive identifies
the proposal in advance as a "Fundamental Corporate Transaction" and
expresses his
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position on the Transaction, and (c) in two consecutive Board
meetings (or one Board meeting if the Fundamental Corporate
Transaction is addressed in only one Board meeting) the Executive is
in the minority, meaning that the Board votes contrary to the
Executive's expressed position; PROVIDED, however, that if the
Executive identifies a Fundamental Corporate Transaction and the
Board and the Executive in fact agree to proceed with such
Transaction, then immediately upon consummation of such Fundamental
Corporate Transaction this paragraph 5(d)(ii) shall cease to have
any effect with respect to any further or subsequent Fundamental
Corporate Transaction;
(iii) removal from, or failure to be reelected to, the position as CEO of
BCOM3 (or its successor);
(iv) a reduction in salary, or a material reduction in benefits without a
reasonable substitution of additional cash salary or alternate
benefits;
(v) failure to continue Executive's participation in the annual bonus
plan and long-term incentive plan at the levels described in this
Agreement;
(vi) failure to continue any material perquisite without providing an
equivalent alternative perquisite;
(vii) relocation of Executive's principal workplace without his consent to
a location more than 25 miles distant from its current location;
(viii) a material breach by the Company of any of its obligations under the
Agreement.
(e) Change in Control. The BCOM3 Board may terminate Executive's employment
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hereunder at any time in the three months before a Change in Control or the
two years following a Change in Control. If not otherwise terminated (by
Executive exercising rights under this Agreement, by the Board choosing to
terminate, or by Retirement), the Executive may terminate Executive's
employment hereunder at any time during the 30-day period that begins six
months after a Change in Control. For purposes of this Agreement, the term
"Change in Control" shall mean:
(i) any person or group holds, directly or indirectly, more than 33% of
the aggregate voting power of the Company or its successor by merger
or other business combination or reorganization (not including
ownership by employees and former employees of the Company and its
subsidiaries and affiliates);
(ii) a change in the BCOM3 Board such that the current Board members at
the date of this Agreement, together with any additional or
replacement members approved by such current directors or such
approved directors, no longer constitute a majority of the Board;
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(iii) a merger or other business combination involving the Company, other
than any such merger in which more than 50% of the voting control of
the surviving corporation immediately following the merger is
retained by the Company's shareholders immediately prior to the
merger;
(iv) the Company sells all or substantially all of the Company's assets
or business; or
(V) the shareholders of the Company adopt a plan of liquidation.
(f) Executive Choice/Company Choice. The Executive may terminate Executive's
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employment hereunder at any time at Executive's choice. The BCOM3 Board may
terminate Executive's employment hereunder at any time by formal decision
of the Board (which Board action requires Dentsu's prior approval if it
occurs prior to an Initial Public Offering of BCOM3 stock and Dentsu owns,
directly or indirectly, at least 15% of the total number of outstanding
shares of BCOM3 common stock).
(g) Retirement. Unless there is mutual agreement to continue this Agreement or
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enter into a new employment agreement, the Executive's employment shall end
at December 31, 2004 ("Retirement"). If the Executive wishes to continue
this Agreement or enter into a new employment agreement to extend beyond
December 31, 2004, the Executive shall give notice to that effect to the
Board no later than June 30, 2004. If the Board wishes to continue this
Agreement or enter into a new employment agreement with the Executive to
extend beyond December 31, 2004, the Board shall give notice to that effect
to the Executive no later than June 30, 2004.
(h) Mutual Agreement. By mutual agreement at any time, such as upon a mutually
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agreed retirement or selection of a new CEO, the Executive and the Board
may replace this Agreement in its entirety with a new agreement
representing a different set of responsibilities and consideration.
(i) Termination by Executive. The Executive may terminate his employment
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hereunder for the reasons set forth in paragraph 5(d) (Good Reason) by
giving the Company written Notice of Termination (as defined in paragraph
5(k)), which Notice of Termination shall be effective not less than three
months after it is given to the Company. The Executive may terminate his
employment hereunder for the reasons set forth in paragraph 5(e) (Change in
Control) by giving the Company written Notice of Termination (as defined in
paragraph 5(k) at any time during the 30-day period that begins three
months after a Change in Control, or at any time during the 30-day period
that begins six months after a Change in Control, which Notice of
Termination shall be effective not less than three months after it is given
to the Company. The Executive may terminate his employment hereunder for
any other reason (i.e., under paragraph 5(f)) by giving the Company written
Notice of Termination which Notice of Termination shall be effective not
less than six months after it is given to the Company.
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(j) Termination by Company. The BCOM3 Board may terminate the Executive's
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employment hereunder at any time by giving the Executive written Notice of
Termination, which Notice of Termination may be effective immediately. If
the Executive's employment is terminated by the Company and within a
reasonable time period thereafter it is determined by the Board that
circumstances existed which would have constituted a basis for termination
of the Executive's employment for Cause (disregarding circumstances which
could have been remedied if notice had been given in accordance with
paragraph 5(c)(i)), the Executive's employment will be deemed to have been
terminated for Cause in accordance with paragraph 5(c).
(k) Notice of Termination. Any termination of the Executive's employment by the
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Company or the Executive (other than a termination by reason of the
Executive's death)) must be communicated by a written Notice of Termination
to the other party hereto. A "Notice of Termination" means a dated notice
which indicates the Date of Termination (which in no event can be earlier
than the date on which the notice is provided), and which indicates the
specific termination provision in this Agreement relied on and which sets
forth in reasonable detail the facts and circumstances, if any, claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(l) Date of Termination. "Date of Termination" means the last day the Executive
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is employed by the Company.
(m) Effect of Termination. If, on the Date of Termination, the Executive is a
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member of the BCOM3 Board or any Board of any BCOM3 subsidiary, or holds
any other position with BCOM3 or any BCOM3 subsidiary, the Executive shall
resign from all such positions as of the Date of Termination.
6. Rights Upon Termination.
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The Executive's right to payment and benefits under this Agreement for periods
after his Date of Termination shall be determined in accordance with the
following provisions of this paragraph 6. These rights to payment and benefits
are in addition to any other contractual rights (including, without limitation,
the Xxx Xxxxxxx Company Executive Employment Consultancy Arrangement ("EECA")
and the BCOM3 Stock Purchase Agreement), but are in lieu of the LBU standard
severance policy or practice:
(a) In the case of any termination of employment for any reason, the Company
will pay to the Executive:
(i) The Executive's accrued, unpaid Salary and unreimbursed expenses for
the period ending on the Date of Termination;
(ii) Any prior year annual incentive, earned but unpaid;
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(iii) Payment for unused vacation days, as determined in accordance with
Company policy as in effect from time to time
(iv) Continued coverage under the Company's Retiree Medical policy in
effect at that time, after the end of any period covered by the
EECA.
In the event there is any difference between the policies of BCOM3 and LBU
with respect to unused vacation days and Retiree Medical, the policy that
is more advantageous to the Executive shall apply.
(b) In the case of termination because of Death or Permanent Disability or
Retirement:
Payments: In addition to the payments described in (a) above, the Company
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will pay to the Executive or to his estate a lump sum payment equal to 1
times the sum of Executive's current annual salary plus bonus (bonus
defined as the greater of the Executive's target bonus for the current
year, or the highest of the actual bonus paid in the three previous years).
Benefits: Welfare benefits (medical, long-term disability, REACH, etc.)
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will be continued for three years from the Termination Date, except that
any benefit that is continued after the Termination Date under the EECA
(generally for five years), will be continued for three additional years
from the end of the continuation under the EECA, in any event reduced to
the extent replaced by benefits from another employer during that period,
or by Medicare/Medicaid. COBRA will continue thereafter as provided by law.
Vesting: All profit sharing amounts, and all long-term incentive awards and
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other qualified and nonqualified benefit plans subject to vesting over a
period of employment, will vest or not according to the terms of such plans
and awards as applied in the case of Death or Permanent Disability or
Retirement, as appropriate.
Stock: Any BCOM3 stock held by Executive will be subject to repurchase by
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the Company upon the tenth anniversary of such termination in accordance
with the terms of the BCOM3 Stock Purchase Agreement (in the case of Death
or Permanent Disability), or by treating such termination as an "Agreed
Separation" (in the case of Retirement) (in any event subject to any
amendment of the BCOM3 Stock Purchase Agreement prior to the date of such
termination).
(c) In the case of termination by action of the BCOM3 Board for any reason
other than Death, Permanent Disability, or Cause, or in the case of
termination by the Executive for Good Reason or upon a Change in Control:
Payments: In addition to the payments described in (a) above, the Company
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will pay to the Executive within 10 days after the Termination Date the
largest of the following amounts that applies:
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(i) A lump sum payment equal to 3 times the sum of Executive's current
annual salary plus bonus (bonus defined as the greater of the
Executive's target bonus for the current year, or the highest of the
actual bonus paid in the three previous years), if the termination
is by action of the BCOM3 Board.
(ii) A lump sum payment equal to 3 times the sum of Executive's current
annual salary plus bonus (bonus defined as the greater of the
Executive's target bonus for the current year, or the highest of the
actual bonus paid in the three previous years), if the termination
is by the Executive for Good Reason.
(iii) A lump sum payment equal to 4 times the sum of Executive's current
annual salary plus bonus (bonus defined as the greater of the
Executive's target bonus for the current year, or the highest of the
actual bonus paid in the three previous years), if the termination
is by action of the BCOM3 Board or by the Executive pursuant to
paragraph 5(e) in connection with a Change in Control.
No such payment shall be reduced by any amount the Executive may earn or
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receive from employment or other source after the Termination Date.
Executive shall have no obligation to seek other employment or otherwise to
mitigate the Company's payment obligations.
Benefits: Welfare benefits (medical, long-term disability, REACH, etc.)
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will be continued for three years from the Termination Date, except that
any benefit that is continued after the Termination Date under the EECA
(generally for five years), will be continued for three additional years
from the end of the continuation under the EECA, in any event reduced to
the extent replaced by benefits from another employer during that period,
or by Medicare/Medicaid. COBRA will continue thereafter as provided by law.
Vesting: All profit sharing amounts, and all long-term incentive awards and
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other qualified and nonqualified benefit plans subject to vesting over a
period of employment, shall vest immediately.
Stock: The termination will be treated as an "Agreed Separation" for
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purposes of the BCOM3 Stock Purchase Agreement.
(d) To avoid any doubt, except as specifically provided in this Agreement, the
Executive continues to be subject to the BCOM3 Stock Purchase Agreement in
all respects. In particular (but without limitation) the transfer
restrictions and the restrictive covenants of the Stock Purchase Agreement
apply to the Executive, and, in the case of termination by the BCOM3 Board
because of Cause, or because the Executive quits (i.e., the Executive
chooses to terminate other than (i) with Good Reason, (ii) in connection
with a Change in Control pursuant to paragraph 5(e), or (iii) upon
termination of this Agreement as provided in paragraph 5(g)), the Company
will immediately repurchase any BCOM3 stock held by Executive.
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(e) In the event of a dispute as to the reason for termination, the Company
shall continue to provide Executive with compensation and benefits as
though Executive's employment had not been terminated, and shall make no
other payments, until such dispute is completely resolved.
(f) Although the Executive may continue to be treated as an employee after
termination under the provisions of the EECA, nothing in this Agreement
shall be construed as requiring the Executive to be treated as employed by
the Company for purposes of any employee benefit plan or arrangement
following the date of the Executive's Date of Termination. If the Executive
receives any payments or benefits after the Executive's Date of Termination
under any Company sponsored employee benefit plan or arrangement as though
Executive continued to be an employee, and if such payments or benefits are
in excess of those provided specifically by this Agreement, by the EECA,
and by any other contractual arrangement with the Company, the Executive
shall return such payments or benefits to the Company.
7. Duties on Termination.
---------------------
(a) Subject to the terms and conditions of this Agreement, during the period
beginning on the date of delivery of a Notice of Termination, and ending on
the Date of Termination, the Executive shall continue to perform his duties
as set forth in this Agreement, and shall also perform such services for
the Company as are necessary and appropriate for a smooth transition to the
Executive's successor, if any. Notwithstanding the foregoing provisions of
this paragraph 7, the Company may suspend the Executive from performing his
duties under this Agreement following the delivery of a Notice of
Termination; provided, however, that during the entire period from delivery
of the Notice of Termination until the Date of Termination, the Executive
shall continue to be treated as employed by the Company for other purposes,
and his rights to compensation or benefits shall not be reduced by reason
of the suspension.
(b) Following the Date of Termination, the Executive agrees to return to the
Company any keys, credit cards, passes, confidential documents or material,
or other property belonging to the Company, and to return all writings,
files, records, correspondence, notebooks, notes and other documents and
things (including any copies thereof) containing any trade secrets relating
to the Company. For purposes of the preceding sentence, the term "trade
secrets" shall have the meaning ascribed to it under the Illinois Trade
Secrets Act or, if such act is repealed, the Uniform Trade Secrets Act (on
which the Illinois Trade Secrets Act is based). The Executive agrees to
represent in writing to the Company upon termination of employment that he
has complied with the foregoing provisions of this paragraph 7(b) and that
he will comply with paragraphs 8 and 9.
(c) Following termination and until the fifth anniversary of the Executive's
termination of employment under this Agreement, the Executive covenants and
agrees that he will not:
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(i) Directly or indirectly, own, manage, operate, control, be employed
by or be connected with the ownership, management, operation or
control of:
(A) Any advertising agency (or holding company or subsidiary
thereof) other than the Company;
(B) Any client of the Company; or
(C) Any company or other entity selling products that compete with
products of clients of the Company;
unless the then Chief Executive Officer of BCOM3 gives prior written
consent upon such terms as the Chief Executive Officer shall deem
appropriate.
(ii) Directly or indirectly, for the Executive's own benefit or for the
benefit of any other person, firm or corporation:
(A) Solicit, for purposes of employment, either any employee of the
Company or any employee of any client of the Company;
(B) Induce either any employee of the Company or any employee of a
client of the Company to terminate such employment for purposes
of becoming employed elsewhere;
(C) Interfere with the relationship either between the Company and
its employees or between any client of the Company and its
employees; or
(D) Otherwise hire or induce others to hire either any employee of
the Company or of any client of the Company;
unless the then Chief Executive Officer of BCOM3 gives prior written
consent upon such terms as the Chief Executive Officer shall deem
appropriate.
(iii) The precise value of the covenants contained in this paragraph 7(c)
is so difficult to evaluate that no accurate measure of monetary
damages could possibly be established and, in the event of a breach
or threatened breach of such covenants, the Company's remedy at law
would be inadequate and the Company shall be entitled to temporary
and permanent injunctive relief restraining the Executive from such
breach or threatened breach. In the event that any covenant made in
this paragraph 7(c) shall be more restrictive than permitted by
applicable law, it shall be limited to the extent which is so
permitted. Nothing in this subsection (iii) shall be construed as
preventing the Company from pursuing any and all other remedies
available to it for breach of covenants made in this paragraph 7(c),
including the recovery of money damages from the Executive. It is
expressly understood and
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agreed that the Company's remedies for breach of these covenants
shall not be limited to damages in the amount of payments to be made
under the EECA.
(iv) This paragraph 7(c) is intended to reiterate the terms of the EECA,
without expanding or reducing the "Covenant Not to Compete"
contained in the EECA, except to make the terms apply to BCOM3 and
its subsidiaries and affiliates, rather than just Xxx Xxxxxxx and
its subsidiaries and affiliates.
(d) Because of Executive's highly visible position, upon termination of
employment the Executive agrees to reiterate and acknowledge in writing to
the Company the non-competition, non-solicitation and confidentiality
provisions that apply to the Executive, including (without limitation)
provisions of this Agreement, the BCOM3 Stock Purchase Agreement, and the
EECA.
8. Confidential Information.
------------------------
The Executive agrees that:
(a) Except as may be required by the lawful order of a court or agency of
competent jurisdiction, except as necessary to carry out his duties to the
Company and its subsidiaries, or except to the extent that the Executive
has express authorization from the Company, the Executive agrees to keep
secret and confidential indefinitely, all Confidential Information, and not
to disclose the same, either directly or indirectly, to any other person,
firm, or business entity, or to use it in any way.
(b) To the extent that any court or agency seeks to have the Executive disclose
Confidential Information, he shall promptly inform the Company, and he
shall take such reasonable steps to prevent disclosure of Confidential
Information until the Company has been informed of such requested
disclosure, and the Company has an opportunity to respond to such court or
agency. To the extent that the Executive obtains information on behalf of
the Company or any of the Subsidiaries that may be subject to attorney-
client privilege as to the Company's attorneys, the Executive shall take
reasonable steps to maintain the confidentiality of such information and to
preserve such privilege.
(c) Nothing in the foregoing provisions of this paragraph 8 shall be construed
so as to prevent the Executive from using, in connection with his
employment for himself or an employer other than the Company or any of the
Subsidiaries, knowledge which was acquired by him during the course of his
employment with the Company and the Subsidiaries, and which is generally
known to persons of his experience in other companies in the same industry.
(d) For purposes of this Agreement, the term "Confidential Information" shall
include all non-public information (including, without limitation,
information regarding litigation and pending litigation) concerning the
Company and the Subsidiaries which was acquired by or disclosed to the
Executive during the course of his employment with the Company,
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or during the course of his consultation with the Company following his
Date of Termination. For purposes of this Agreement, the term "Confidential
Information" shall also include all non-public information concerning any
other company that was shared with the Company or a Subsidiary subject to
an agreement to maintain the confidentiality of such information.
(e) This paragraph 8 shall not be construed to unreasonably restrict the
Executive's ability to disclose confidential information in an arbitration
proceeding or a court proceeding in connection with the assertion of, or
defense against, any claim of breach of this Agreement in accordance with
paragraph 17. If there is a dispute between the Company and the Executive
as to whether information may be disclosed in accordance with this
paragraph (e), the matter shall be submitted to the arbitrators or the
court (whichever is applicable) for decision.
(f) The Executive acknowledges that the Company would be irreparably injured by
a violation of this paragraph 8 and he agrees that the Company, in addition
to any other remedies available to it for such breach or threatened breach,
shall be entitled to a preliminary injunction, temporary restraining order,
or other equivalent relief, restraining the Executive from any actual or
threatened breach of this paragraph 8. If a bond is required to be posted
in order for the Company to secure an injunction or other equitable remedy,
the parties agree that said bond need not be more than a nominal sum.
9. Assistance with Claims.
----------------------
With reasonable consideration for and accommodation of the Executive's
employment or other commitments after the Termination Date, the Executive agrees
to assist the Company and the Subsidiaries in defense of any claims that may be
made against the Company and the Subsidiaries, and will assist the Company and
the Subsidiaries in the prosecution of any claims that may be made by the
Company or the Subsidiaries, to the extent that such claims may relate to
services performed by the Executive for the Company and the Subsidiaries. The
Executive agrees to promptly inform the Company if he becomes aware of any
lawsuits involving such claims that may be filed against the Company or any
Subsidiary. The Company agrees to provide legal counsel to the Executive in
connection with such assistance (to the extent legally permitted), and to
reimburse the Executive for all of the Executive's reasonable out-of-pocket
expenses associated with such assistance, including travel expenses. For periods
after the Executive's employment with the Company terminates, the Company agrees
to provide reasonable compensation to the Executive for such assistance. The
Executive also agrees to promptly inform the Company if he is asked to assist in
any investigation of the Company or the Subsidiaries (or their actions) that may
relate to services performed by the Executive for the Company or the
Subsidiaries, regardless of whether a lawsuit has then been filed against the
Company or the Subsidiaries with respect to such investigation.
10. Nonalienation.
-------------
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The interests of the Executive under this Agreement are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Executive or the
Executive's beneficiary.
11. Amendment.
---------
This Agreement may be amended or cancelled only by mutual agreement of the
parties in writing. So long as the Executive lives, no person, other than the
parties hereto, shall have any rights under or interest in this Agreement or the
subject matter hereof, except that under the Investment Agreement between
Dentsu, Inc. and BCOM3, Dentsu may have certain rights and obligations that will
affect this Agreement indirectly, by affecting the way Dentsu votes the BCOM3
shares it holds, and the way the Board members that Dentsu elects vote on
certain matters.
12. Applicable Law.
--------------
The provisions of this Agreement shall be construed in accordance with the laws
of the State of Illinois, without regard to the conflict of law provisions of
any state. All disputes shall be arbitrated or litigated (whichever is
applicable) in Chicago, Illinois.
13. Severability.
------------
The invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable
provision were omitted (but only to the extent that such provision cannot be
appropriately reformed or modified).
14. Waiver of Breach.
----------------
No waiver by any party hereto of a breach of any provision of this Agreement by
any other party, or of compliance with any condition or provision of this
Agreement to be performed by such other party, will operate or be construed as a
waiver of any subsequent breach by such other party of any similar or dissimilar
provisions and conditions at the same or any prior or subsequent time. The
failure of any party hereto to take any action by reason of such breach will not
deprive such party of the right to take action at any time while such breach
continues.
15. Successors.
----------
This Agreement shall be binding upon, and inure to the benefit of, the Company
and its successors and assigns and upon any person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or substantially all of the
Company's assets and business.
15. Notices.
-------
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Notices and all other communications provided for in this Agreement shall be in
writing and shall be delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid (provided that international
mail shall be sent via overnight or two-day delivery), or sent by facsimile or
prepaid overnight courier to the parties at the addresses set forth below (or
such other addresses as shall be specified by the parties by like notice). Such
notices, demands, claims and other communications shall be deemed given:
(a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after deposit
in the U.S. mail; or
(c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service or two-day delivery
service are to be delivered to the addresses set forth below:
to the Company:
Bcom3 Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
to the Executive:
Xxxxx X. Xxxxx
0000 X. Xxxx Xxxxxx
Xxxxxxx, XX 00000
All notices to the Company shall be directed to the attention of the Chairman of
the BCOM3 Board, with a copy to the Chief Legal Officer and Secretary of BCOM3.
A copy of all notices to the Executive shall be provided to Xxxxxx Xxxxxx &
Xxxxx, 0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxxxx X.
Xxxxxxxx. Each party, by written notice furnished to the other party, may modify
the applicable delivery address, except that notice of change of address shall
be effective only upon receipt.
17. Arbitration of All Disputes.
---------------------------
Any controversy or claim arising out of or relating to this Agreement (or the
breach thereof) shall be settled by final, binding and non-appealable
arbitration in Chicago, Illinois by three arbitrators. Except as otherwise
expressly provided in this paragraph 17, the arbitration shall be conducted in
accordance with the rules of the American Arbitration Association (the
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"Association") then in effect. One of the arbitrators shall be appointed by the
Company, one shall be appointed by the Executive, and the third shall be
appointed by the first two arbitrators. If the first two arbitrators cannot
agree on the third arbitrator within 30 days of the appointment of the second
arbitrator, then the third arbitrator shall be appointed by the Association.
This paragraph 17 shall not be construed to limit the Company's right to obtain
relief under paragraph 8(f) with respect to any matter or controversy subject to
paragraph 8, and, pending a final determination by the arbitrator with respect
to any such matter or controversy, the Company shall be entitled to obtain any
such relief by direct application to state, federal, or other applicable court,
without being required to first arbitrate such matter or controversy.
18. Costs of Disputes.
-----------------
At the Executive's request, the Company will advance to the Executive the amount
of all reasonable legal fees and expenses associated with any controversy or
dispute arising out of or relating to this Agreement (or the breach thereof). If
the Executive prevails to a material degree in such controversy or dispute, the
Company will bear such costs by reimbursing the Executive or by canceling the
advance, as appropriate. If the Executive does not prevail to a material degree,
the Executive will repay any amounts advanced by the Company.
19. Survival of Agreement.
---------------------
Except as otherwise expressly provided in this Agreement, the rights and
obligations of the parties to this Agreement shall survive the termination of
the Executive's employment with the Company.
20. Other Company Policies and Agreements.
--------------------------------------
Executive is or shall become subject to all Company employee and executive plans
and agreements including, without limitation, the Conflict of Interest policy,
BCOM3's Stock Purchase Agreement and LBU's Separation Pay Policy. However, to
the extent that a conflict exists between any of those agreements and any
specific provision of this Agreement, the terms of this Agreement shall govern.
Notwithstanding the foregoing, the Executive's rights pursuant to the EECA shall
not be impaired by this Agreement.
21. Acknowledgment by Executive.
---------------------------
The Executive represents and warrants that he is not, and will not become a
party to any agreement, contract, arrangement or understanding, whether of
employment or otherwise, that would in any way restrict or prohibit him from
undertaking or performing his duties in accordance with this Agreement.
22. Obligation of the Company.
--------------------------
Each of BCOM3, LBW and LBU shall be jointly and severally liable to the
Executive for all obligations of the Company or any of BCOM3, LBW or LBU under
this Agreement.
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IN WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has
caused these presents to be executed in its name and on its behalf, all as of
the Effective Date.
XXX XXXXXXX USA, INC.
By /s/ Xxxxxxxxx X. Xxxxxxx
---------------------------
Its Executive Vice President
-------------------------
XXX XXXXXXX WORLDWIDE, INC.
By /s/ Xxxxxxxxx X. Xxxxxxx
--------------------------------
Its Chief Administrative Officer
-----------------------------
BCOM3 GROUP, INC.
By /s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------------
Its Secretary and Chief Legal Officer
----------------------------------
/s/ Xxxxx X. Xxxxx
---------------------
Xxxxx X. Xxxxx
ATTEST:
/s/ Xxxx Xxxx X. Xxxx
---------------------
(Seal)
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