EXHIBIT 10.32
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of March 1, 2000 (the
"Effective Date") between True North Communications Inc., a Delaware
corporation (the "Company"), and Xxxxx Xxxxx (the "Executive").
WHEREAS, the Company is a global communications holding
company with ownership interests in subsidiaries, affiliates and joint
ventures that are engaged in the advertising agency business, the multimedia
production business, the business of planning and buying of media time and
space and related businesses (the Company and the subsidiaries, affiliates
and joint ventures in which it from time to time has equity interests are
hereinafter referred to collectively as the "True North Group"); and
WHEREAS, the Company and the Executive desire to enter into
this Agreement to provide for the employment of the Executive by the Company,
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive and
the Executive hereby agrees to be employed by the Company upon the terms and
subject to the conditions contained in this Agreement. The initial term of
employment of the Executive by the Company pursuant to this Agreement (the
"Initial Term") shall commence on the Effective Date and, unless earlier
terminated, shall end on December 31, 2002; provided that the term of this
Agreement shall automatically be extended for three additional years as of
the day immediately following the end of the Initial Term and as of the day
immediately following the end of each subsequent three-year extended term
hereof unless the Company shall have terminated the automatic extension
provisions of this sentence by giving written notice to the Executive at
least 30 days prior to the then applicable termination date. (The Initial
Term and any extension of the term of this Agreement pursuant to this Section
1 are collectively referred to herein as the "Employment Period.")
2. POSITION AND DUTIES. As of the Effective Date, the
Executive's title shall be Executive Vice President, Chief Financial Officer
and he shall report directly to the Company's Chief Executive Officer (the
"CEO"). The Executive shall have the authority, duties and responsibilities
commensurate with his position and title (at the relevant time) and such
other duties and responsibilities (not inconsistent with his position) as are
assigned to him from time to time by the CEO or the Board of Directors of the
Company (the "Board"). During the Employment Period, the Executive shall
perform faithfully and loyally and to the best of the Executive's abilities
his duties hereunder, shall devote his full business time, attention and
efforts to the affairs of the True North Group and shall use his reasonable
best efforts to promote the
interests of the Company. Notwithstanding the foregoing, the Executive may
engage in charitable, civic or community activities, provided that they do
not interfere with the performance of the Executive's duties hereunder.
3. COMPENSATION.
(a) ANNUAL BASE SALARY. The Company shall pay to the
Executive an annual base salary at the rate of $360,000 per annum in
accordance with the Company's regular payroll practices. The annual base
salary shall be reviewed periodically in accordance with guidelines
applicable to the Company's senior executives generally.
(b) INCENTIVE COMPENSATION. During the Employment Period, the
Executive shall be entitled to participate in the Company's Executive
Compensation Program, as such Program applies to similarly situated senior
executives and as such Program may be amended from time to time.
(c) OTHER BENEFITS. During the Employment Period, the
Executive shall be entitled to participate in the Company's employee benefit
plans and programs and fringe benefits that are generally available to senior
executives of the Company from time to time, including, but not to the extent
resulting in duplicative benefits, the benefit plans and programs and fringe
benefit arrangements generally made available to members of the Management
Executive Committee of the Company (or any successor management governing
committee).
(d) EXPENSE REIMBURSEMENT. During the Employment Period, 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 for senior executives. The Executive shall submit
appropriate invoices for all such expenses.
4. TERMINATION OF EMPLOYMENT PERIOD.
(a) QUALIFYING TERMINATION. For purposes of this Agreement,
"Qualifying Termination" means the occurrence of any of the following events:
(i) termination of the Executive's employment by the Company without Cause
(as defined in subsection (b) below) during the Employment Period, (ii)
expiration of this Agreement at the end of the Initial Term or at the end of
any extension of the term hereof pursuant to a written notice given by the
Company to the Executive in accordance with Section 1 hereof, (iii)
termination of the Executive's employment by the Company on account of the
Executive having become unable (as determined by the Company in good faith)
to perform regularly his duties hereunder by reason of illness or incapacity
for a period of more than three consecutive months (termination for
"Disability"), (iv) termination of the Executive's employment on account of
the Executive's death, or (v) termination of the Executive's employment by
the Executive due to and within 60 days of the occurrence, without the
Executive's consent, of any of the following events: (1) any change or
changes in the Executive's duties and responsibilities that, taken as a
whole, result in a material diminution of the Executive's duties and
responsibilities, (2) a material breach of the Company's obligations set
forth in this Agreement, (3) a decrease in the Executive's base salary, or
(4) any
-2-
requirement of the Company that the location where the Executive is based be
materially changed.
For purposes of this Agreement, an isolated, insubstantial and inadvertent
action taken by the Company in good faith and which is remedied by the
Company promptly (the later of 60 days or as soon as reasonably practicable)
after receipt of written notice thereof given by the Executive shall not
constitute a basis for a Qualifying Termination.
(b) DEFINITION OF CAUSE. The Company may terminate the
Executive's employment immediately for "Cause" if, in the reasonable
determination of the Board, the Compensation Committee of the Board, or the
CEO, as set forth in a writing setting forth in reasonable detail the reasons
for such termination, (i) the Executive engages in conduct that violates
significant policies of the Company; (ii) the Executive fails to perform the
essential functions of his job (except for a failure resulting from a bona
fide illness or incapacity) or fails to carry out the CEO's or the Board's
reasonable directions with respect to material duties; (iii) the Executive
engages in embezzlement or misappropriation of corporate funds or other acts
of fraud, dishonesty or self-dealing, or commits a felony or any significant
violation of any material statutory or common law duty of loyalty to the
Company; or (iv) the Executive breaches a material provision of this
Agreement (including, but not limited to, the non-compete, non-solicitation,
confidentiality, or non-disparagement provisions in Sections 7 and 8).
5. CONSEQUENCES OF TERMINATION OF EMPLOYMENT PERIOD.
(a) BENEFITS UPON TERMINATION. If the Employment Period
terminates for any reason, the Executive (or the Executive's executor,
administrator or other legal representative, as the case may be) shall be
entitled to receive the following benefits:
(i) within 30 days after the amount in question is reasonably
determinable (1) base salary payable through the date of termination of
employment, (2) unpaid annual incentive compensation for the calendar
year immediately preceding the date of such termination (unless such
termination is for Cause, as defined in Section 4(b) above), and (3)
reimbursement of proper expenses incurred through the date of such
termination; and
(ii) participation (by the Executive or the Executive's
qualified dependents, as the case may be) in all other applicable
benefit plans or programs in accordance with the provisions thereof
applicable to terminated employees (or their qualified dependents, as
the case may be).
(b) ADDITIONAL BENEFITS UPON QUALIFYING TERMINATION. If the
Employment Period terminates after the occurrence of a Qualifying Termination
(as defined in Section 4(a)), the Executive (or the Executive's executor,
administrator or other legal representative, as the case may be) shall be
entitled to receive the following additional benefits:
(i) within 30 days after the amount in question is reasonably
determinable, annual incentive compensation for the calendar year in
which such termination shall have
-3-
occurred, prorated through the date of such termination based on actual
results of operations for such full calendar year; and
(ii) if the Qualifying Termination is for any reason other
than death or Disability:
(A) all stock options and restricted stock granted to the
Executive by the Company on or after the Effective
Date then held by the Executive shall on the date of
such termination be 100% vested;
(B) subject to the last sentence of this Section 5(b),
for a period of 24 months commencing on the day
immediately following the date of termination of the
employment of the Executive (the "Severance Period"),
the Executive shall be entitled to receive (1) base
salary, at the rate payable as of the date of such
termination, payable in accordance with the Company's
normal payroll policies and (2) annual incentive
compensation at the rate of 50% of base salary; and
(C) subject to the last sentence of this Section 5(b),
during the Severance Period, the Executive shall be
entitled to participate in life insurance, medical
and dental benefits on terms no less favorable than
on the termination date, subject to legal
restrictions and to modifications of general
application to all similarly situated employees; and
(iii) each stock option granted to the Executive by the
Company on or after the Effective Date then held by the Executive shall
be exercisable to the extent it is vested at the date of termination by
the Executive or the Executive's executor, administrator or other legal
representative, as the case may be, for up to three years after the
date of termination, but in no case beyond a date 10 years following
the date of grant of such option.
As a condition to the receipt of the severance benefits described in
subparagraphs (ii)(B) and (ii)(C) above, the Company reserves the right in
accordance with the standard Company severance policy to require the Executive
to sign a standard separation agreement, containing a general release of claims.
(c) TERMINATION AFTER A CHANGE IN CONTROL. If the Executive
incurs a Qualifying Termination within two years of the occurrence of a
"Change in Control" under and as defined in the Company's Asset Protection
Plan (or a similar replacement plan providing severance benefits to Company
employees after a change in control), then (i) the benefits payable to the
Executive pursuant to Section 5(b)(ii)(B)(1) and (2) above upon such
Qualifying Termination, if any, shall be paid to the Executive in one lump
sum within 60 days of such Qualifying Termination, and (ii) the benefits
payable to the Executive pursuant to Section 5(b)(i) above upon such
Qualifying Termination, if any, shall be paid to the Executive in one lump
sum within 30 days after the amount in question is reasonably determinable.
If mutually agreed upon between the Executive and the Company, these lump-sum
payments shall be reduced to the extent necessary to maximize the total
after-tax benefit to the Executive, after taking into account all applicable
local state, and federal income and excise taxes, including any applicable
excise tax imposed under Section 4999 of the Internal Revenue Code of 1986,
as amended.
6. 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 Form W-4 on file with the Company and all applicable social security
and Medicare taxes.
7. NONCOMPETITION; NONSOLICITATION; CONFIDENTIALITY.
(a) COVENANT NOT TO COMPETE. The Executive acknowledges that
in the course of employment with the Company pursuant to this Agreement, the
Executive will become
-4-
familiar with the Confidential Information (as defined below) of the Company
and its subsidiaries, affiliates and clients, and that the Executive's
services will be of special, unique and extraordinary value to the Company.
Except with the prior written consent of the Board:
(i) during the Employment Period the Executive
shall not engage in any activities, whether as employer,
proprietor, principal, partner, stockholder (other than the holder
of 1% or less of the stock of a corporation the securities of which
are traded on a securities exchange or in the over-the-counter
market), director, officer, employee or otherwise, in competition
with any business in which the True North Group is substantially
engaged or proposed to be engaged; and
(ii) during the Employment Period (including the remainder of
the then current three-year term of the Employment Period following the
Executive's resignation or termination for "Cause") and any Severance
Period the Executive shall not, directly or indirectly, either on the
Executive's behalf or on behalf of any other person, firm or
corporation:
(A) solicit, call on, service or otherwise do business
with, or interfere in any way with the Company's
relationship with any account that is a client of the
True North Group at the time of the Executive's
termination, or that was a client of the True North
Group at any time within 12 months prior to the date
of such termination; provided that the foregoing
shall apply only to accounts with whom the Executive
had responsibilities for or learned Confidential
Information relating to within the one-year period
preceding the Executive's termination of employment
with the Company;
(B) perform any services for any account described in (A)
above; or
(C) recruit or solicit, or attempt to recruit or solicit,
the employment or consulting services of or hire or
employ or retain the employment or consulting
services of any person who is at such time or who was
at any time within 12 months immediately prior to
such time, an employee of the True North Group.
(b) CONFIDENTIAL INFORMATION AND TRADE SECRETS. The
Executive agrees that the Company has a protectable interest in Company
bidding information, trade secrets, client information, computer programs,
financial information and other confidential information (collectively, the
"Confidential Information"). The Executive shall not, at any time during the
Employment Period (except for the benefit of the Company within the scope of
the Executive's duties) or thereafter, make use of any nor divulge any
Confidential Information, except to the extent that such Confidential
Information becomes a matter of public record, is published in a newspaper,
magazine or other periodical available to the general public (other than as a
result of disclosure by the Executive) or as the Company may so authorize in
writing; and when the
-5-
Executive shall cease to be employed by the Company, the Executive shall
surrender to the Company all Confidential Information and records and other
documents obtained by him or entrusted to the Executive during the course of
the Executive's employment hereunder (together with all copies thereof) which
pertain specifically to any of the businesses covered by the covenants in
Section 7(a)(i) or which were paid for by the Company; provided, however,
that the Executive may retain copies of such documents as necessary for the
Executive's personal records for federal income tax purposes. The Executive
also agrees that the Executive will not at any time (whether before or after
the termination of the Executive's employment with the Company) disclose to
anyone the economic terms of this Agreement, except to the Executive's
counsel, accountants and members of the Executive's immediate family.
(c) SCOPE OF COVENANTS; REMEDIES. The following
provisions shall apply to the covenants of the Executive contained in this
Section:
(i) the covenants set forth in Sections 7(a)(i) and 7(a)(ii)
shall apply within all territories in which the True North Group is
actively engaged in the conduct of business during the Employment
Period, including, without limitation, the territories in which
customers are then being solicited;
(ii) the Executive expressly agrees and acknowledges that the
covenants contained in Sections 7(a) and 7(b) are reasonable in all
respects (including subject matter, time period and geography) and
necessary because of the substantial and irreparable harm that would be
caused to the Company by the Executive engaging in any of the
prohibited activities contained in such Sections. The Executive
expressly agrees and acknowledges that the covenants contained in this
Agreement will not preclude the Executive from earning a livelihood,
nor unreasonably limit the Executive's ability to earn a living, since
the Executive has the ability and experience to engage in employment
that will not breach or violate the covenants contained in this
Agreement. Each party intends and agrees that if in any action before
any court or agency legally empowered to enforce the covenants
contained in Sections 7(a) and 7(b) any term, restriction, covenant or
promise contained therein is found to be unreasonable and accordingly
unenforceable, then such term, restriction, covenant or promise shall
be deemed modified to the extent necessary to make it enforceable by
such court or agency; and
(iii) the covenants contained in Sections 7(a) and 7(b)
shall survive the conclusion of the Executive's employment by the
Company.
8. NONDISPARAGEMENT; COOPERATION. (a) The Executive shall
not, at any time during his employment with the Company or thereafter, make
any public or private statement to the news media, to any True North Group
competitor or client, or to any other individual or entity, if such statement
would disparage any of the True North Group, any of their respective
businesses or any director or officer of any of them or such businesses or
would have a deleterious effect upon the interests of any of such businesses
or the stockholders or other owners of any of them; provided, however, that
the Executive shall not be in breach of this restriction if such statements
consist solely of (i) private statements made to any officers, directors or
-6-
employees of any of the True North Group by the Executive in the course of
carrying out his duties pursuant to this Agreement or, to the extent
applicable, his duties as a director or officer, or (ii) private statements
made to persons other than clients or competitors of any of the True North
Group (or their representatives) or members of the press or the financial
community that do not have a material adverse effect upon any of the True
North Group; and provided further that nothing contained in this Section 8(a)
or in any other provision of this Agreement shall preclude the Executive from
making any statement in good faith that is required by law, regulation or
order of any court or regulatory commission, department or agency.
(b) The Company shall not, at any time during the
Executive's employment with the Company or thereafter, authorize any person
to make, nor shall the Company 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 (i) private statements made to any officers, directors or
employees of the True North Group or (ii) private statements made to persons
other than clients or competitors of any of the True North Group (or their
representatives) or members of the press or the financial community that do
not have a material adverse effect upon the Executive; and provided further
that nothing contained in this Section 8(b) or in any other provision of this
Agreement shall preclude any officer, director, employee, agent or other
representative of any of the True North Group from making any statement in
good faith which is required by any law, regulation or order of any court or
regulatory commission, department or agency.
9. ENFORCEMENT. The parties hereto agree that the Company
would be damaged irreparably in the event that any provision of Section 7 or
8 of this Agreement were not performed in accordance with its terms or were
otherwise breached and that money damages would be an inadequate remedy for
any such nonperformance or breach. Accordingly, the Company and its
successors or permitted assigns shall be entitled, in addition to other
rights and remedies existing in their favor, to an injunction or injunctions
to prevent any breach or threatened breach of any of such provisions and to
enforce such provisions specifically (without posting a bond or other
security). Each of the parties agrees that she or it will submit himself or
itself to the personal jurisdiction of the courts of the State of Illinois in
any action by the other party to enforce an arbitration award against him or
it or to obtain interim injunctive or other relief pending an arbitration
decision.
10. SURVIVAL. Sections 7, 8 and 9 of this Agreement shall
survive and continue in full force and effect in accordance with their
respective terms, notwithstanding any termination or expiration of the
Employment Period.
11. ARBITRATION. Any dispute or controversy between the
Company and the Executive, whether arising out of or relating to this
Agreement, the breach of this Agreement, or otherwise, shall be settled by
arbitration administered by the American Arbitration Association ("AAA") in
accordance with its Commercial Rules then in effect and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Any arbitration shall be held before a single arbitrator who shall
be selected by mutual agreement of the Company and the Executive, unless the
parties are unable to agree to an arbitrator, in which
-7-
case the arbitrator will be selected under the procedures of the AAA. The
arbitrator shall have the authority to award any remedy or relief that a
court of competent jurisdiction could order or grant, including, without
limitation, the issuance of an injunction. However, the Company may, at its
option without inconsistency with this arbitration provision, apply to any
court having jurisdiction over such dispute or controversy for the purpose of
seeking injunctive or other equitable relief to enforce Sections 7, 8 and 9
of this Agreement. Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, or to obtain interim
relief, neither a party nor an arbitrator may disclose the existence, content
or results of any arbitration hereunder without the prior written consent of
the Company and the Executive. The Company and the Executive acknowledge that
this Agreement evidences a transaction involving interstate commerce.
Notwithstanding any choice of law provision included in this Agreement, the
United States Federal Arbitration Act shall govern the interpretation and
enforcement of this arbitration provision.
12. NOTICE. All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been
duly given when personally delivered or five days after deposit in the United
States mail, certified and return receipt requested, postage prepaid,
addressed (a) if to the Executive, to the most recent address then shown on
the employment records of the Company, and if to the Company, to True North
Communications Inc., 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000,
Attention: General Counsel, or (b) to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
13. 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 determined 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.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes and preempts any prior understandings,
agreements or representations by or between the parties, written or oral,
which may have related in any manner to the subject matter hereof.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be
enforceable by the Executive and the Executive's heirs, executors,
administrators and legal representatives, and by the Company and its
successors and permitted assigns. Any successor or permitted assign of the
Company shall assume by instrument delivered to the Executive the liabilities
of the Company hereunder. This Agreement shall not be assigned by the Company
other than to a successor pursuant to a merger, consolidation or transfer of
all or substantially all of the capital stock or assets of the Company.
-8-
16. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Illinois without regard to principles of conflict of laws.
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. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and both 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 above written.
TRUE NORTH COMMUNICATIONS INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxx,
Chairman of the Compensation
Committee of the Board of Directors
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Xxxxx X. Xxxx,
Chairman and Chief Executive Officer
EXECUTIVE
/s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx
-9-
