EXHIBIT 21
[WPP Letterhead] December 20, 2004
Xxxxxx X. Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Grey Global Group Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X. 10017
Attn: Xxxxxx X. Xxxxxxx
Vice-Chairman
Dear Xx,
We refer to the employment agreement entered into as of the 11th day of
September, 2004, between Grey Global Group Inc. ("Grey"), WPP Group plc ("WPP"),
and you (the "Employment Agreement"). In section 27 of that agreement, you
agreed that, if the merger contemplated by the merger agreement, dated as of
September 11, 2004, as amended, between, WPP, Abbey Merger Corporation and Grey
(the "Merger Agreement") will not occur until 2005, prior to December 31, 2004,
you would exercise, at our request, Grey stock options you hold in a manner
sufficient to eliminate any "excess parachute payments" that you would otherwise
receive in connection with the merger. As you know, the merger will not be
completed until 2005. Terms not otherwise defined herein shall have the meanings
ascribed thereto in the Voting Agreement entered into as of the 11th day of
September 2004 among you, WPP and Abbey Merger Corporation (the "Voting
Agreement").
We understand that you anticipate exercising Grey stock options that you
currently own, in addition to the options you are required to exercise pursuant
to section 27. We also understand that you intend to use a portion of your
existing Grey shares to pay the exercise price and to satisfy your tax
withholding obligations in connection with the exercise of your Grey options.
Finally, we understand that you may wish to dispose of the Grey shares you
receive upon exercise of your Grey options prior to the completion of the
merger.
In that connection, you agree that, you will exercise, prior to the end of 2004,
all of your 30,000 stock options that expire on January 23, 2005. In that
connection, you and Grey agree to treat as compensation income to you in 2004 an
amount equal to the market value of 30,000 shares of Common Stock as of the date
of exercise less the aggregate exercise price of the 30,000 options
($9,975,000). WPP agrees that you may pay the aggregate exercise price of the
30,000 options and the tax withholding obligations associated with that option
exercise by delivering shares of Common Stock you hold with a market value as of
the date of exercise equal to the aggregate exercise price plus the total amount
of your tax withholding obligations arising in connection with the option
exercise. For purposes of foregoing, the market value of each share of Common
Stock will be determined as set forth in your option agreement with respect to
payment of the aggregate exercise price, or applicable provisions of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder with respect to payment of the total amount of tax withholding
obligations.
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The exercise of the 30,000 stock options will fulfill your obligations referred
to above under section 27 of the Employment Agreement. In addition, WPP has no
objection to your selling the shares you receive upon exercise of these options
in the market either prior to year end or in the first two weeks of January as
you requested. WPP also has no objection to your selling a number of Owned
Shares that is no greater than the number of Option Shares that are issued to
you upon exercise of your stock options and continue to be held by you at the
time of any such sale. You agree that, upon any sale of Owned Shares in
accordance with the prior sentence, an equal number of Option Shares issued to
you upon exercise of your stock options shall thereafter be deemed to be Owned
Shares for purposes of the Voting Agreement.
WPP hereby consents to you pledging up to 20,000 of your existing shares of
Common Stock to secure a bona fide loan to you in an amount not to exceed
$10,000,000.
We agree that your delivery to Grey of shares of Common Stock to pay the
aggregate exercise price of those options, the tax withholding obligations
associated with that exercise, and your pledge of shares of Common Stock, each
in accordance with the foregoing, shall not constitute a breach by you of the
Voting Agreement. In connection therewith, WPP hereby consents to Grey's
acquisition from you of shares of Common Stock as payment of the aggregate
exercise price of those 30,000 options and the tax withholding obligations
associated with the exercise of those options for purposes of Section 5.1(d) of
the Merger Agreement. Except as expressly set forth above, the Employment
Agreement, Voting Agreement and Merger Agreement remain in full force and
effect.
Please contact me once the exercise of your stock options as described above has
occurred and provide me with a copy of the notice provided to Grey to exercise
your stock options, the number of shares of Common Stock used to pay the
exercise price and your tax withholding obligations in connection with the
option exercise and the amount of compensation income to you generated in 2004
as a result of the option exercise. My contact numbers are 000 000-0000
(office), 000 000-0000 (fax) and 000 00 0000 000 000 (mobile).
If the foregoing reflects our agreement, please countersign this letter and
arrange for this letter to be countersigned on behalf of Grey in the spaces
indicated below.
Sincerely,
WPP GROUP PLC
/s/ Xxxx Xxxxxxxxxx
Xxxx Xxxxxxxxxx
Group Finance Director
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Xxxxxx and acknowledged as of the date referenced above
By: /s/ Xxxxxx X. Xxxxx
Xx. Xxxxxx X. Xxxxx
GREY GLOBAL GROUP INC.
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Vice Chairman
cc: Xxx Xxxxxx Xxxxxxx
Xxxxxx Xxxxxx
Xxxx Xxxxxx
Xxxxxx Xxxxxxxxx, Xx.
Xxxxxxx Xxxxxxxxxx
Xxxx Xxxxxxx
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