EXHIBIT 16
GREY ADVERTISING INC.
STOCK OPTION AGREEMENT
AGREEMENT, dated as of January 23, 1998, by and between
GREY ADVERTISING INC., a Delaware corporation ("Company"), and XXXXXX
X. XXXXX, residing at 000 Xxxx Xxxxxx, Xxx Xxxx, X. Y. 10021 (such
individual or, as the context requires, his/her guardian, legal
representative, estate or other person to whom the rights hereunder
may be transferred by will or by the laws of descent and
distribution, being hereinafter referred to as the "Optionee").
Pursuant to the Grey Advertising Inc. 1994 Stock Incentive
Plan ("Plan"), the Board of Directors, or a committee thereof, of the
Company ("Board") has granted the Optionee, on the terms and
conditions set forth herein, an option to purchase 30,000 shares of
the Company's common stock, par value $1 per share ("Common Stock").
The Plan is hereby incorporated by reference and made a
part hereof, and this Agreement shall be subject to all terms and
conditions thereof.
NOW THEREFORE, the Company and the Optionee hereby agree as
follows:
1. Grant of Option.
(a) Number of Shares and Option Price.
In accordance with the allotment made by the
Committee and subject to the terms and conditions hereof, the Company
grants, as of the date hereof, to the Optionee a non-qualified option
to purchase ("Option") an aggregate of 30,000 shares of Common Stock
("Option Shares") at an option exercise price of $332.50 per share,
which price is subject to adjustment in accordance with Section 4 of
this Agreement. The option price, as adjusted from time to time, is
hereinafter referred to as the "Option Price".
(b) Term of Option; Conditions and Manner of Exercise.
(i) The term of the Option and of this
Agreement shall commence as of the date hereof ("Date of Grant") and,
unless earlier terminated as provided in this Agreement, shall
terminate upon the expiration of seven years from the Date of Grant.
Upon the termination of the Option, all rights of the Optionee
hereunder shall cease.
(ii) The Option, subject to the following
provisions of this paragraph, shall become exercisable in cumulative
installments as follows: one-third of the shares subject to the
Option from and after the Date of Grant; one-third of the shares
subject to the Option from and after the first anniversary of the
Date of Grant; and one-third of the shares subject to the Option from
and after the second anniversary of the Date of Grant; provided,
however, that the Option may be exercised only to purchase whole
shares, and in no case may a fraction of a share be purchased. The
right of the Optionee to purchase Option Shares with respect to which
the Option has become exercisable as herein provided may be exercised
in whole or in part at any time or from time to time prior to the
ninth anniversary of the Date of Grant.
(iii) The Option (or any portion thereof)
shall be exercised in the following manner: the Optionee shall
deliver to the Company written notice of the exercise of the Option
(or any portion thereof) in a form satisfactory to the Board,
specifying the number of Option Shares subject to the Option which
the Optionee elects to purchase, together with full payment of the
Option Price (w) in cash, (x) by delivery of a check payable to the
order of the Company, (y) in shares of Common Stock with a fair
market value equal to the Option Price or portion thereof being paid
with shares (provided, in each instance, that such shares of Common
Stock were owned by the Optionee for at least six months prior to the
exercise of the Option, unless such requirement is waived by the
Board), or (z) a combination thereof. The Company shall thereafter
cause certificates representing the Option Shares purchased to be
delivered as promptly as practicable, provided that the Optionee
shall pay to the Company at the time of exercise, or shall otherwise
make arrangements satisfactory to the Company regarding payment of,
any additional amount, if any, as the Company deems necessary to
satisfy the Company's liability to withhold Federal, state or local
income or other taxes incurred by the Company or the employer of the
Optionee by reason of the exercise of the Option, or any portion
thereof, or the transfer of the Option Shares thereupon. If
requested by the Company, the Optionee shall also deliver this
Agreement to the Secretary of the Company who shall endorse hereon a
notation of such exercise and return this Agreement to the Optionee.
The date of exercise of an Option that is validly exercised shall be
deemed to be the date on which there shall have been delivered to the
Company the instruments and payments referred to in the first
sentence of this paragraph (iii), provided that the Optionee has
satisfied or thereafter satisfies the other requirements of this
paragraph (iii). The Optionee shall be deemed to be the holder of
the Option Shares issued pursuant to the exercise of the Option as of
the date of exercise.
(iv) For the purposes of the preceding
paragraph (iii), "fair market value" per share of Common Stock, as of
a particular date, shall mean (x) the closing sales price per share
of Common Stock reported on NASDAQ or, if the shares are not so
reported, on the system or exchange on which the trading prices of
the shares are then reported or traded, (y) if there is no reported
closing sales prices per share on such date, the average of the
closing bid and asked prices for the shares on such date as reported
by NASDAQ or such other system, or (z) if the shares of Common Stock
are not then quoted by NASDAQ (or such other system) or traded on one
of the exchanges, such value as the Board, in its sole discretion,
shall determine.
2. Termination of Employment.
(a) Except as provided in this Section 2,
Options may not be exercised after the Optionee has ceased to be
employed by the Company or a subsidiary of the Company.
(b) If the Optionee's employment by the Company
or a subsidiary of the Company should terminate for any reason other
than death, disability (as defined in subparagraph (c) below) or
cause (as such term is defined in the Optionee's employment agreement
with the Company), the Option may be exercised, to the extent the
Optionee was entitled to exercise the Option on the date employment
was terminated, at any time within one year after such date, but in
no event later than nine years from the Date of Grant.
(c) If the Optionee's employment by the Company
or a subsidiary of the Company should terminate by reason of the
Optionee's death or disability (within the meaning of Section
105(d)(4) of the Internal Revenue Code of 1954, as amended), the
Option may be exercised, in its entirety at any time within one year
after such date, but in no event later than nine years from the Date
of Grant.
3. Non-transferability.
The Option granted hereunder shall not be transferable
other than by will or by the laws of descent and distribution, and
may be exercised, during the lifetime of the Optionee, only by the
Optionee or by his guardian or legal representative.
4. Effect of Certain Changes.
(a) If there is any change in the aggregate
number of issued and outstanding shares of the Common Stock and
Company's Limited Duration Class B Common Stock, par value $1 per
share ("Class B Stock"; the Common Stock and the Class B Stock are
collectively referred to herein as the "Common Equity") through the
declaration of stock dividends, or through a recapitalization
resulting in stock splits, or combinations or exchanges of such
shares, the number of Option Shares and the Option Price per share
shall be proportionately adjusted by the Board to reflect any
increase or decrease in the number of issued shares of Common Equity;
provided, however, that any fractional shares resulting from such
adjustment shall be eliminated.
(b) In the event of a proposed dissolution or
liquidation of the Company, or in the event of any corporate
separation or division, including, but not limited to, a split-up,
split-off or spin-off, the Board, in its sole discretion, may provide
(i) that the Optionee shall have the right to exercise the Option,
to the extent then exercisable, solely for the kind and amount of
shares of stock and other securities, property, cash or any
combination thereof receivable upon such dissolution, liquidation, or
corporate separation or division by a holder of the number of shares
of Common Stock for which the Option might have been exercised
immediately prior to such dissolution, liquidation, or corporate
separation or division, or (ii) that the Option shall terminate as
of a date to be fixed by the Board, provided however, that not less
than twenty days' prior written notice of the date so fixed shall be
given to the Optionee, who shall have the right, during the period of
twenty days preceding such termination, to exercise the Option as to
all or any part of the Option Shares covered thereby, including
shares as to which the Option would not otherwise be exercisable, or
(iii) for an equitable adjustment in the Option Price.
(c) The Board shall, in its sole discretion, in
the case of a merger or consolidation in which the Company is not the
surviving corporation (i) promptly make an appropriate adjustment to
the number and class of shares of Common Stock available pursuant to
the Option, to the amount and kind of shares or other securities or
property receivable upon the exercise of the Option after the
effective date of any such transaction, and/or to the Option Price,
or (ii) provide for the cancellation of the Option, or any portion
thereof then outstanding, in consideration for a cash payment equal
to the product of (x) the difference between the Option Price and the
fair market value of the consideration per share received or
receivable by holders of Common Equity in any such transaction
multiplied by (y) the number of Option Shares then subject to the
Option.
(d) Paragraphs (b) and (c) of this Section 4
shall not apply to a merger or consolidation in which the Company is
the surviving corporation and pursuant to which shares of Common
Stock are not converted into or exchanged for stock or securities of
any other corporation, cash or any other thing of value. In case of
any consolidation or merger of another corporation into the Company
in which the Company is the surviving corporation and in which there
is a reclassification or change (including a change in the right to
receive cash or other property) of the shares of Common Stock (other
than a change in par value, or from par value to no par value, or as
a result of a subdivision or combination, but including any change in
such shares into two or more classes or series of shares), the Board
may, in its sole discretion (i) make an appropriate adjustment to the
number and class of shares of Common Stock available pursuant to the
Option, to the amount and kind of shares or other securities or
property receivable upon the exercise of the Option after the
effective date of any such transaction, and/or to the Option Price or
(ii) provide for the cancellation of the Option, or any portion
thereof then outstanding, in consideration for a cash payment equal
to the product of (x) the difference between the Option Price and the
fair market value of the consideration per share received or
receivable by holders of Common Equity in any such transaction
multiplied by (y) the number of Option Shares then subject to the
Option.
(e) In the event of a change in the Common Stock
of the Company as presently constituted, which is limited to a change
of all of its authorized shares with par value into the same number
of shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the Common Stock
within the meaning of the Plan.
(f) To the extent that the foregoing adjustments
relate to stock or securities of the Company, such adjustments shall
be made by the Board, whose determination in that respect shall be
final, binding and conclusive.
(g) Except as otherwise expressly provided in
this Agreement or in the Plan, the Optionee shall have no rights by
reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger or consolidation or spin-off
of assets or stock of another corporation, and any issue by the
Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number or price of Option Shares. The grant of the Option does not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its
capital or business structures or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or part of its business
or assets.
5. Restrictions upon Option Shares.
(a) The Optionee, as a condition to the exercise
of the Option, by exercising the Option, or any portion thereof,
warrants, effective as of the date of exercise, but only to the
extent the Option Shares are not being issued pursuant to an
effective registration statement on Form S-8 (or any successor form),
that (i) the Option Shares are being acquired for investment, for
the Optionee's own account, and not with a view to the distribution
or resale thereof in violation of the Securities Act of 1933, as
amended ("1933 Act"), and (ii) he/she will not sell or transfer any
of such shares unless and until (A) a registration statement under
the 1933 Act is then in effect covering such shares and the purchaser
or transferee thereof has been furnished with a prospectus which
complies with the provisions of the 1933 Act, or (B) in the opinion
of counsel for the Company, registration under the 1933 Act is not
required in connection with the sale or transfer.
(b) The Option shall not be exercisable if its
exercise would violate any applicable state securities law, any
registration provisions or other requirements of the 1933 Act, the
Securities Exchange Act of 1934, as amended (or any rules or
regulations promulgated under either of such Acts), or any other
applicable law, ordinance, rule or regulation. In connection with
the foregoing, the Company shall not be obligated to prepare and file
(or cause to be prepared and filed), nor take any action to cause to
become effective, any registration statement required by applicable
law with respect to the issuance of the Option Shares subject to the
Option, or any portion thereof, or upon exercise thereof, nor shall
the Company be obligated to seek an exemption from any such
registration statement requirement.
(c) The Company may in its discretion place an
appropriate legend or notation on the certificates representing
Option Shares issued upon exercise of the Option, or any portion
thereof.
(d) The Company may instruct any transfer agent
for its Common Equity not to transfer any of the Option Shares unless
advised by the Company that the provisions of the Plan and this
Agreement have been complied with.
(e) The Optionee agrees to take any other action
which may reasonably be requested by the Company in order to ensure
that the Company, by allowing the Optionee to exercise the Option (in
whole or in part), will not be in violation of any law or regulation.
6. Agreement Not to Compete.
Anything in the Plan or the Agreement to the
contrary notwithstanding, if the Optionee, without the written
consent of the Company, engages either directly or indirectly, in any
manner or capacity, as principal, agent, partner, officer, director,
employee or otherwise, in any business or activity competitive with
the business conducted by the Company or any subsidiary of the
Company, the Option, to the extent not previously exercised, shall
expire forthwith.
7. No Employment Agreement.
This Agreement shall not be deemed or construed to
be an agreement by the Company to employ the Optionee for any
specific or non-specific period of time.
8. Notices.
Any notice required or permitted under this
Agreement shall be deemed given when delivered personally, or when
deposited in the United States postal system, postage prepaid,
addressed, as appropriate, to Optionee either at his address
hereinabove set forth or such other address as he may designate in
writing to the Company, or to the Company, at Grey Advertising Inc.,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate
Secretary; or such other address as the Company may designate in
writing to the Optionee.
9. Failure to Enforce Not a Waiver.
The failure of the Company to enforce at any time
any provision of this Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.
10. Governing Law.
This Agreement shall be governed by and construed
according to the laws of the State of Delaware, without regard to the
conflicts of law rules thereof.
11. Amendments.
This Agreement may be amended or modified at any
time by an instrument in writing signed by the parties hereto,
provided that no such amendment or modification shall be made which
would be inconsistent with the terms of the Plan.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year above written.
GREY ADVERTISING INC.
By _______________________________
Executive Vice President
XXXXXX X. XXXXX
