EXHIBIT 99.2
EXECUTION COPY
AGREEMENT made as of this 11th day of September, 2004, between Grey
Global Group Inc., a Delaware corporation with principal offices at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Xxxxxx Xxxxxx of America ("Grey"), WPP Group
plc, an English public limited company with principal offices at 00 Xxxx Xxxxxx,
Xxxxxx, X0X 0XX, Xxxxxxx ("Parent"), and Xxxxxx X. Xxxxx, residing at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, Xxxxxx Xxxxxx of America (the "Executive")
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Parent, Abbey Merger Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub") and Grey are entering into an
Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which,
subject to the terms and conditions of the Merger Agreement, Grey shall merge
with and into Merger Sub (the "Merger"), with Merger Sub being the surviving
corporation of the Merger (the surviving corporation, "New Grey") and a
wholly-owned subsidiary of Parent;
WHEREAS, as of the date of this Agreement, the Executive beneficially
owns 149,158 shares of Common Stock, par value $.01 per share of Grey ("Common
Stock"), including options to acquire 50,000 shares of Common Stock ("Stock
Options"), and 135,617 shares of Limited Duration Class B Common Stock, par
value $.01 per share of Grey ("Class B Common Stock" and together with the
Common Stock and Stock Options, "Grey Securities");
WHEREAS, in accordance with the terms of the Merger Agreement, at the
effective time of the Merger (the "Effective Time"), each share of Common Stock
and Class B Common Stock then held by the Executive shall be converted into a
right to receive cash and/or American Depositary Shares of Parent ("Parent
ADR"), each of which represents five ordinary shares of nominal value 10p each
of Parent ("Parent Ordinary Shares") (or in lieu of each Parent ADR, five Parent
Ordinary Shares), and each Stock Option then held by the Executive shall become
an option to acquire Parent ADRs;
WHEREAS, Grey and the Executive are currently parties to an agreement
dated as of February 9, 1984, as amended (the "Original Agreement");
WHEREAS, under the Original Agreement, the Executive is Grey's
President, Chairman of the Board of Directors of Grey and Chief Executive
Officer of Grey;
WHEREAS, simultaneously herewith, the Executive, in his capacity as a
stockholder of Grey, is entering into a voting agreement with Parent (the
"Voting Agreement") pursuant to which the Executive is agreeing to vote all
shares of Common Stock and Class B Common Stock in favor of the adoption of the
Merger Agreement;
WHEREAS, as a condition to the willingness of Parent and Merger Sub to
enter into the Merger Agreement, and as an inducement and in consideration
therefore, Parent and Merger Sub have required that the Executive agree, and the
Executive has agreed, to execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, the parties hereto, intending legally to be bound,
hereby agree as follows:
1. Employment; Employment Term; Directorship. Subject to the terms and
conditions of this Agreement, for the period beginning on the Effective Time and
ending on December 31, 2006 (the "Initial Term"), New Grey shall employ the
Executive as its Chairman (the "Chairman") and Chief Executive Officer (the
"CEO"). Such term shall automatically be renewed for successive one (1) year
periods beginning on January 1, 2007, unless New Grey or the Executive gives
written notice of non-renewal at least ninety (90) days prior to any December 31
expiration. The Initial Term plus any renewal thereof shall constitute the
"Employment Term".
Subject to the terms and conditions of this Agreement, Executive shall also
serve as Chief Executive Officer of Grey Worldwide Global Operations ("CEO of
GWW") for the period beginning on the Effective Time until his successor is
appointed. As promptly as practicable after the appointment of a successor CEO
of GWW in accordance with Section 2, the Board of Directors of Parent (the
"Parent Board") shall, subject to applicable law and at the request of the
Executive, appoint the Executive as director of Parent.
2. Duties. As the Chairman and CEO, the Executive shall be responsible
for (a) overseeing and supervising the Chief Executive Officers of New Grey's
major agencies, all of whom, including the successor CEO of GWW appointed in
accordance with this Section 2, will report directly to the Executive, provided,
however, the Chief Executive Officer of Mediacom may not be required to report
to the Executive, (b) overseeing the client relationships of New Grey and its
subsidiaries, and (c) to the extent requested by the Group Chief Executive of
Parent, overseeing the integration and transition of New Grey and its
subsidiaries into Parent's group of companies. The Executive will report
directly to the Group Chief Executive of Parent. In addition, as CEO of GWW, the
Executive shall perform such duties in such manner, as are usual and customary
for a like officer to perform for advertising agencies of the size and nature of
GWW. Within six (6) months after the Effective Time, the Executive shall propose
for appointment a successor CEO of GWW. The appointment of such successor shall
be subject to the approval of the Group Chief Executive of Parent. If a
successor CEO of GWW has not been appointed within six (6) months after the
Effective Time, the Group Chief Executive of Parent shall have the right to
appoint the successor CEO of GWW. The Executive shall devote his full business
time and affairs to his duties hereunder, subject to his right to hold a
reasonable number of outside directorships, to manage and supervise his personal
investments, and to engage in a reasonable amount of communal or philanthropic
activities; provided that in the aggregate all of these activities do not
unreasonably interfere with the performance of his duties hereunder.
3. Compensation. The Executive shall be entitled to receive
compensation from New Grey ("Compensation") as set forth below:
3.1 Basic Salary.
So long as the Executive remains employed by New Grey
hereunder, New Grey shall pay and the Executive shall receive Basic Salary at
the rate of not less than $1,000,000 per annum, or such greater sum as may from
time to time be fixed in accordance with New Grey's
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salary review policy for senior executives then in effect. Payments of Basic
Salary to the Executive shall be subject to such payroll deductions as are
required by law. As used in this Agreement, the term "Basic Salary" shall mean
regular annual compensation payable in equal monthly installments, and, without
limitation, shall not include any bonus, deferred compensation, medical
reimbursements, insurance, profit sharing contributions, pension plan
contributions, Senior Management Incentive Plan payments or any other
supplementary fringe benefit or compensation payments, which are now existing or
hereafter established by Grey, New Grey, Parent or any affiliates of Parent.
3.2 Incentive Compensation.
(a) Short-Term Incentive Compensation. So long as the
Executive remains employed by New Grey hereunder, the Executive shall be
eligible to earn an annual bonus, beginning in respect of 2005, equal to 75% of
his Basic Salary for achieving target performance for the applicable year and
100% of Basic Salary as a maximum bonus for outstanding achievement above target
levels for the applicable year, in accordance with the terms and conditions of
the Short-Term Incentive Plan to be established for New Grey for each year after
the Effective Time (the "New Grey STIP"). The annual targets applicable to the
Executive under the New Grey STIP shall be determined in good faith by the Group
Chief Executive of Parent on a basis consistent with annual targets established
for other significant operating companies of Parent in the context of New Grey's
financial performance and the financial performance of the other significant
operating companies of Parent.
(b) Long-Term Incentive Compensation. Promptly after the
Effective Time, if the Executive is then employed by New Grey, Parent shall
award the Executive performance shares with a target value of $1,000,000
pursuant and subject to the terms and conditions of a Long Term Incentive Plan
(the "New Grey LTIP") to be established for New Grey as of the Effective Time
for the three (3) year period 2005-2007 (the "LTIP Period"). If the Executive
remains employed by New Grey through the end of the Initial Term, the Executive
shall be entitled to receive, after the completion of the LTIP Period, a payout
under the New Grey LTIP equal to the full value of his performance shares
(determined based on the extent to which targets for such period are achieved),
notwithstanding that the Executive may not be employed by New Grey through the
end of the LTIP Period. The performance targets applicable to the New Grey LTIP
shall be determined in good faith on a basis consistent with performance targets
established for other significant operating companies of Parent in the context
of New Grey's financial performance and the financial performance of the other
significant operating companies of Parent.
(c) Stock Options. On or before April 30, 2005, if the
Executive is then employed by New Grey, Parent shall grant to the Executive an
option to acquire Parent ADRs with a fair market value (as defined in Parent
Executive Stock Option Plan (the "Option Plan")) as of the date of such grant of
$1,000,000.
On or before April 30, 2006, if the Executive is then employed
by New Grey, Parent shall grant to the Executive an option to acquire Parent
ADRs with a fair market value as of the date of such grant of $1,000,000. The
options granted to the Executive pursuant to this Section 3.2(c) shall (1) have
an exercise price per Parent ADR equal to the fair market value
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of the Parent ADRs as of the time of the grant, (2) vest on the third
anniversary of the grant if the Executive remains employed by New Grey through
the end of the Initial Term, (3) be exercisable for a period of ninety (90) days
following the vesting if the Executive is no longer employed with New Grey and
(4) shall, subject to Sections 7(c), 9 and 12.1, otherwise be subject to the
terms and provisions of the Option Plan. Grants made in 2005 and 2006 to the
Executive shall be made at the same time as grants to other executives under
Parent Executive Stock Option Plan.
3.3 Benefits. The Executive shall be eligible to participate
in all insurance, pension and other fringe plans or benefits made available to
senior executives of New Grey, subject to the provisions of the various benefit
plans and programs in effect from time to time, including but not limited to,
medical, dental and life insurance plans and New Grey's 401(k) program.
4. Settlement Payment. The parties acknowledge that the execution,
delivery and performance of, and the consummation of transactions contemplated
by, the Merger Agreement and the Voting Agreement will constitute a "Change in
Control in Grey" (as defined in the Original Agreement) entitling the Executive
to elect to terminate his employment with Grey for "Good Reason" (for purposes
of this Sections 4 and 26(a), as defined in the Original Agreement) and to
receive significant severance payments and other rights and benefits under the
Original Agreement. In exchange for the Executive agreeing not to terminate his
employment with Grey and to terminate the Original Agreement pursuant to Section
15 of this Agreement and in part for agreeing to the non-competition provisions
of Section 9 and Schedule 1, New Grey agrees to pay to the Executive a
settlement payment in cash in an amount equal to the amount set forth in
Schedule 2 simultaneously with the Effective Time, subject to Section 26.
5. Deferred Compensation; Supplemental Pension. Simultaneously with the
Effective Time, the Executive shall receive a payout in cash of his compensation
deferred pursuant to the Annex to the Original Agreement (the "Deferred
Compensation Agreement") and his supplemental pension described in his Original
Agreement (pursuant to which (x) Grey has been required to credit to a
bookkeeping account for the benefit of the Executive (the "Pension Account"), as
of the beginning of each month, an amount equal to $61,716.67 (less any amounts
then required to be withheld by New Grey for Medicare or other taxes unless such
amounts are deducted by New Grey from amounts otherwise payable to the
Executive, which amounts shall be so deducted by New Grey to the extent
available) and (y) at the time, or as soon as practicable after, any such credit
has been made to the Pension Account, Grey has been required to transfer an
amount equal to the amount of such credits to a sub-account (the "Sub-Account")
created under a Trust established by Grey pursuant to the Trust Agreement
("Trust" and "Trust Agreement" shall have the meanings ascribed to such terms in
the Amendment and Extension Agreement dated as of March 22, 1995, between Grey
and the Executive). For illustrative purposes only, the amount of the payout
described in this Section 5 as of June 30, 2004 is set forth in Schedule 3. The
parties agree and acknowledge that, from and after the Effective Time, New Grey
shall not be required to permit any further deferrals under the Deferred
Compensation Agreement nor make any further credits to the Pension Account
(subject to the last sentence of this paragraph) and shall not be required to
transfer any further amounts to the Sub-Account. The Pension Account and the
Sub-Account shall be debited with amounts representing all losses
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of and distributions from the Trust attributable to such Sub-Account and shall
be credited with all earnings of and deposits to the Trust attributable to such
Sub-Account.
6. Life Insurance. New Grey agrees and acknowledges that the life
insurance purchased by Grey pursuant to Section 5 of the Original Agreement
shall be owned by the Executive or his assigns and shall be payable to a
beneficiary or beneficiaries designated by him. New Grey shall not be obligated
to make any premium or similar payments in respect of this life insurance.
7. Disability; Death; Retirement. (a) If, during the Employment Term,
the Executive should be unable regularly to perform his duties as required by
this Agreement because of Disability, New Grey shall nevertheless pay to him:
(1) his full Basic Salary for the lesser of (i) the remainder
of the Employment Term or (ii) one (1) year;
(2) on the fifth day following his Date of Disability (as
defined below), a lump sum payment in an amount equal to his target bonus under
the applicable New Grey STIP for the year in which such Disability occurs
multiplied by a fraction the numerator of which is the number of days in such
year through the Date of Disability and the denominator of which is 365 unless a
greater benefit is provided by the Compensation Committee of Parent;
(3) after the completion of the LTIP Period, a payout under
the New Grey LTIP in an amount equal to the value of the performance shares that
would be awarded to the Executive under the New Grey LTIP (determined in
accordance with the New Grey LTIP based on the extent to which the target for
the LTIP Period is achieved) multiplied by a fraction the numerator of which is
the number of days from the beginning of the LTIP Period through the Date of
Disability and the denominator of which is 730 unless a greater benefit is
provided by the Compensation Committee of Parent; and
(4) continued health benefits as provided under Section 23.
During the entire period of his incapacity, the Executive shall perform
such services hereunder as he is reasonably able to perform based upon the
nature and extent of his Disability. As used in this Agreement, "Disability"
shall mean the Executive's physical or mental incapacity so as to render him
incapable of carrying out his duties under this Agreement. To establish a status
of Disability as provided in the preceding sentence, there must first be issued
in writing a determination of Disability. A determination of Disability may be
issued at the initiation of Parent, the Executive or a legal representative of
the Executive. A determination of Disability shall be issued upon the written
certification of a qualified medical doctor agreed to by Parent and the
Executive or, in the event of the Executive's incapacity to designate a doctor,
the Executive's legal representative. The date of such written certification
shall be the "Date of Disability." In the absence of agreement between Parent or
New Grey and the Executive (or his legal representative), each party shall
nominate a qualified medical doctor and the two doctors shall select a third
doctor, who shall make the determination as to the Disability. In the event that
either the Executive or Parent shall desire to establish whether the Executive
is Disabled, the Executive (or his legal representative) and Parent shall use
their respective best efforts to
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cooperate so that a prompt determination can be reached and the Executive shall
make himself available, as reasonably requested by Parent, for examination by a
doctor in accordance with this paragraph.
(b) If, during the Employment Term, the Executive's employment is
terminated as a result of the Executive's death, New Grey shall nevertheless pay
to his estate or wife, as the case may be:
(1) promptly after his death, a lump sum payment in an amount
equal to his target bonus under the applicable New Grey STIP for the year in
which his death occurs multiplied by a fraction the numerator of which is the
number of days in such fiscal year through the date of death and the denominator
of which is 365 unless a greater benefit is provided by the Compensation
Committee of Parent;
(2) after the completion of the LTIP Period, a payout under
the New Grey LTIP in an amount equal to the value of the performance shares that
would be awarded to the Executive under the New Grey LTIP (determined in
accordance with the New Grey LTIP based on the extent to which the target for
the LTIP Period is achieved) multiplied by a fraction the numerator of which is
the number of days from the beginning of the LTIP Period through the date of
death and the denominator of which is 730 unless a greater benefit is provided
by the Compensation Committee of Parent;
(3) continued health benefits as provided under Section 23;
and
(4) promptly after his death, accrued to the date of death and
unpaid Basic Salary.
(c) If the Executive retires at any time on or after January 1, 2006
and prior to December 31, 2006, New Grey shall nevertheless pay to him:
(1) his full Basic Salary for the remainder of the Initial
Term (for the avoidance of doubt, if the Executive retired on January 31, 2006,
he would receive his Basic Salary for the remaining eleven (11) months of 2006);
(2) after the completion of the LTIP Period, a payout under
the New Grey LTIP in an amount equal to the value of the performance shares that
would be awarded to the Executive under the New Grey LTIP (determined in
accordance with the New Grey LTIP based on the extent to which the target for
the LTIP Period is achieved) multiplied by a fraction equal to one half (1/2);
(3) options previously granted to the Executive pursuant to
Section 3.2(c) will be exercisable for a period of ninety (90) days following
the vesting of such options; and
(4) continued health benefits as provided under Section 23.
8. Vacation. The Executive shall not be limited to the general vacation
policy and program of New Grey, but, in view of his position and stature with
New Grey, shall be entitled to such additional vacation time as may be
reasonably appropriate to New Grey and its clients, and
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the proper performance of his duties and responsibilities; provided that the
Executive shall be allowed a minimum of thirty (30) days of paid vacation per
annum.
9. Non-Competition and Confidentiality Obligations. The Executive
agrees that the services he has previously performed for Grey and his services
hereunder are of a special, unique, extraordinary and intellectual character,
and the Executive's position with Grey has placed him, and his positions with
New Grey and Parent will place him, in a position of confidence and trust with
the clients (as hereinafter defined) and employees of Grey, New Grey and Parent.
The Executive also acknowledges that the clients of Grey, New Grey and Parent
are located throughout the world and, accordingly, it is reasonable that the
restrictive covenants set forth below are not limited by specific geographic
area but by the location of the clients and potential clients of Grey, New Grey
and Parent. The Executive further acknowledges that, in connection with his
rendering of services to Grey, New Grey and Parent and their respective clients,
he has and will obtain confidential information and trade secrets of Grey, New
Grey and Parent (such as marketing plans, budgets, designs, client preferences
and policies, and identity of appropriate personnel of clients with sufficient
authority to influence a shift in the level and scope of services such clients
have obtained and will obtain from Grey, New Grey and/or Parent).
The Executive acknowledges that he holds a very significant amount of
Grey Securities and will receive a very significant consideration in respect of
these securities in the sale of Grey to Parent pursuant to the Merger Agreement
and is receiving a settlement payment pursuant to Section 4.
The Executive further acknowledges that the Executive has and will
continue to develop a personal acquaintanceship and relationship with the
clients of Grey, New Grey, and Parent and a knowledge of those clients' affairs
and requirements which may constitute the primary or only contact of Grey, New
Grey and/or Parent with such clients. The Executive acknowledges that Grey's
relationships with its clients have been, and New Grey's and Parent's
relationships with their clients may be, placed in the Executive's hands in
confidence and trust.
For all of the above reasons, the Executive agrees that the Executive's
covenants contained in Schedule 1 (a) are reasonable and necessary for the
protection of the goodwill and business of Grey and New Grey, (b) are required
for the protection of the legitimate interests of Parent and New Grey and (c)
are a material and necessary part of the purchase by Parent of Grey pursuant to
the Merger Agreement. Accordingly, the Executive agrees to comply with the
provisions of Schedule 1 of this Agreement which will be considered a part of
this Section 9.
The Executive agrees that any violation of the covenants contained in
Schedule 1 will result in (x) no further payments to the Executive under Section
3 (including forfeiture of unexercised stock options, whether vested or not,
granted under Section 3.2(c)) (y) forfeiture of restricted shares granted
pursuant to Section 12.1 and (z) no further provision of arrangements in Section
14.
10. New Grey's Remedy for Breach. (a) If the Executive commits a breach
or New Grey or Parent has reasonable grounds to believe that the Executive is
about to commit a breach, of any of the provisions of this Agreement, including
Section 9 and Schedule 1, Parent or New
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Grey shall have the right to have the provisions of this Agreement, including
Section 9 and Schedule 1, specifically enforced by any court having equity
jurisdiction without being required to post bond or other security and without
having to prove the inadequacy of the available remedies at law, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to New Grey and Parent and that money damages will not
provide an adequate remedy to New Grey and Parent. (b) In addition, New Grey and
Parent may also take all such other actions and remedies available to them under
law or in equity and shall be entitled to such damages as it can show it has
sustained by reason of such breach. No breach by the Executive of any of the
provisions of this Agreement shall affect his right or the right of his wife to
the continued health benefits as provided under Section 23.
11. Termination by the Executive for Good Reason. The Executive may
terminate his employment hereunder for Good Reason (as defined in the
immediately subsequent sentence). For purposes of this Agreement, "Good Reason"
shall mean (a) any assignment to the Executive after the Effective Time of any
duties other than those contemplated by Sections 1 and 2, without his written
consent; (b) any removal of the Executive from or any failure to elect or
re-elect, as applicable, the Executive to any of the positions indicated in
Section 1 to the extent required by Section 1, except in connection with
termination of the Executive's employment for Cause and other than the
Executive's relinquishment of the position of CEO of GWW as provided in Section
2; (c) a reduction after the Effective Time in the Executive's compensation,
without his written consent; (d) a failure by New Grey after the Effective Time
to comply in any material respect with any of Sections 3 through 8 (provided
that any such failure shall not constitute Good Reason hereunder unless the
Executive shall have notified Parent in writing of such failure and given New
Grey reasonable opportunity thereafter to cure such failure); (e) failure of New
Grey after the Effective Time to obtain the assumption of the agreement to
perform this Agreement by any successor as contemplated in Section 16; (f) a
Change in Control of New Grey (as defined below), other than consummation of the
transactions contemplated by the Merger Agreement; or (g) any substantial
diminution of the Executive's position, including status, offices, titles or
reporting relationships, without his written consent (for the purposes of this
clause (g), a material reduction in the number of Chief Executive Officers of
New Grey's major agencies reporting to the Executive, other than the Chief
Executive Officer of Mediacom not reporting to the Executive, shall be deemed
Good Reason); provided, however, (1) a change in Grey's status from an
independent public company to a subsidiary of Parent at the Effective Time and
the corresponding change in the Executive's duties and responsibility, (2)
ceasing to serve as CEO of GWW as provided in Section 2, or (3) the Chief
Executive Officer of Mediacom not reporting to the Executive, in each case,
shall not constitute Good Reason under this Agreement. As of the Effective Time,
the Executive hereby waives any right to terminate his employment for Good
Reason based on facts, circumstances or events occurring prior to or as of the
Effective Time or changes to his terms of employment reflected in this
Agreement.
If the Executive shall become entitled pursuant to the prior paragraph
to terminate his employment hereunder for Good Reason, the Executive shall have
a period of sixty (60) days from the date on which the Executive first becomes
entitled to so terminate his employment to elect to terminate his employment for
Good Reason. If the Executive elects to terminate his employment for Good
Reason, he shall provide New Grey with a written notice thereof.
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For purposes of this Agreement, a "Change in Control of New Grey" shall
be conclusively deemed to have occurred if any of the following shall have taken
place:
(i) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than the Executive, his designee(s) or "affiliate(s)"
(as defined in Rule 12b-2 under the Exchange Act) or any
combination thereof or any affiliate of New Grey, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly, or indirectly, of securities representing
forty percent (40%) or more of the combined voting power of New
Grey's then outstanding securities;
(ii) a merger or consolidation in which New Grey is not the surviving
entity, except for a transaction in which the holders of the
outstanding voting securities of New Grey immediately prior to
such merger or consolidation hold, in the aggregate, securities
possessing sixty percent (60%) or more of the total combined
voting power of all outstanding voting securities of the surviving
entity immediately after such merger or consolidation;
(iii) the sale, transfer or other disposition (in one transaction or a
series of related transactions) of all or substantially all of the
assets of New Grey (other than an internal corporate restructuring
of all or part of the Parent's group of companies); or
(iv) the approval by the stockholders of New Grey of a plan or proposal
for the liquidation or dissolution of New Grey (other than an
internal corporate restructuring of all or part of the Parent's
group of companies).
12. The Executive's Remedy for Termination Without Cause or for Good
Reason.
12.1 If, during the Employment Term, (a) the Executive's
employment as the Chairman shall be terminated by Parent or New Grey without
Cause or (b) the Executive should elect to terminate his employment for Good
Reason pursuant to Section 11, then:
(1) New Grey shall pay as liquidated damages to the Executive
on the fifth day following the Date of Termination, a lump sum amount equal to
the sum of (i) the Executive's full Basic Salary for the remainder of the
Employment Term; and (ii) his target bonus under the applicable New Grey STIP
for the year of such termination;
(2) after the LTIP Period, New Grey shall pay the Executive an
amount equal to the value of the performance shares that would be awarded to the
Executive under the New Grey LTIP multiplied by a fraction the numerator of
which is the number of days from the beginning of the applicable LTIP period
through the Date of Termination and the denominator of which is 730 unless a
greater benefit is provided by the Compensation Committee of Parent;
provided, however, that in no event will the Executive be required to offset
against such payment described in subsection (1) or (2) above, or to repay any
part of such payment on account of, any amounts earned by him from other
employment, in whatever capacity, following the Date of Termination;
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(3) in lieu of any stock option grant (i.e. stock option grant
for 2005 or 2006) that the Executive would have received pursuant to Section
3.2(c) and has not been previously granted, Parent shall grant to the Executive
the number of restricted shares of Parent ADRs with a fair market value (as
defined in the Option Plan) as of the Date of Termination of $250,000 which will
vest on the third anniversary of the grant;
(4) options previously granted to the Executive pursuant to
Section 3.2(c) will be exercisable for a period of ninety (90) days following
the vesting of such options; and
(5) New Grey shall provide the continued health benefits as
provided under Section 23.
For the purposes of this Agreement, "Date of Termination" shall mean either the
date New Grey terminates the Executive's employment hereunder without Cause or
the date that the Executive properly informs New Grey by written notice that he
is terminating his employment for Good Reason pursuant to Section 11, except as
is otherwise provided in Section 16.
12.2 In no event shall New Grey be required to pay, on account
of its termination of this Agreement, any liquidated or other damages to the
Executive if (a) the Executive's employment is validly terminated for Cause as
provided in Section 22, or (b) the Executive terminates his employment without
Good Reason. Notwithstanding the foregoing, and for the avoidance of doubt, if
the Executive is validly terminated for Cause as provided in Section 22, or the
Executive terminates his employment without Good Reason, then the Executive
shall receive the continued health benefits as provided under Section 23.
13. Treatment of Section 280G. In the event that the Executive is
required to pay an excise tax (the "Excise Tax") imposed by Section 4999 of the
of the Internal Revenue Code of 1986, as amended (the "Code"), on any "excess
parachute payments", as defined in Section 280G of the Code, at any time (and
regardless of the application of Section 27) by reason of the Executive's
receipt of any payment or benefit hereunder, New Grey shall promptly pay the
Executive the amount or amounts that are necessary to place him in the same
after-tax financial position that he would have been in had he not incurred any
tax liability under Section 4999 of the Code. The determination of whether the
amount or amounts shall be made at New Grey's expense by an accounting firm
selected by Parent from among the four largest accounting firms in the United
States (the "Accounting Firm"). The Accounting Firm shall provide its
determination, together with detailed supporting calculations and documentation
to Parent and the Executive within ten (10) days of the Effective Time or the
Executive's date of termination of employment, as applicable.
14. Certain Post-Termination Arrangements.
14.1 Upon the termination of the Executive's employment at the
end of the Employment Term, or upon the termination of the Executive's
employment at any time for Good Reason, or by New Grey without Cause, or the
Executive's retirement pursuant to Section 7(c) then for five (5) years
thereafter (the "Continuation Period"), New Grey shall, at its expense, furnish
the Executive with:
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(a) such office accommodations (at New Grey or elsewhere) as
comparable in quality and floor location and no less than one-half the size of
those utilized by the Executive and his secretaries personally prior to his
termination of employment and located in the midtown Manhattan area;
(b) for the first two (2) years of the Continuation Period,
two secretaries having skill levels comparable to skill levels of the senior
secretaries utilized by the Executive immediately prior to his termination of
employment, with salary and benefits and office accommodations and facilities
comparable to those of the senior secretaries utilized by the Executive prior to
his termination of employment and, for the remainder of the Continuation Period,
access to a secretary having skill levels comparable to skill levels of the
senior secretary utilized by the Executive immediately prior to his termination
of employment;
(c) a car and a driver comparable to the car and driver
furnished him prior to his termination of employment, to be used by the
Executive as he sees fit, and New Grey shall pay all the associated expenses of
such car and driver on the same basis as it paid such expenses during the
Executive's employment hereunder;
(d) New Grey shall reimburse the Executive for all travel and
entertainment expenses incurred by him in performing services for New Grey
consistent with New Grey's policy for other senior executives of New Grey;
provided, that the Executive provides written documentation for such expenses in
a manner consistent with New Grey's policy; and
(e) New Grey shall provide the Executive access to the
executive dining rooms and kitchen facilities of New Grey on a basis comparable
to other senior executives of New Grey and to the extent executive dining rooms
and kitchen facilities exist.
14.2 Within one hundred twenty (120) days after commencement
of the Continuation Period, the Executive shall have the right to take
possession and ownership from New Grey of up to $100,000 worth of furnishings,
artwork and the like contained in his office immediately prior to the
Continuation Period (with furniture valued on the basis of depreciated book
value and artwork and the like being valued on the basis of fair market value).
15. Prior Agreements; Waiver. As of the Effective Time, the Original
Agreement (except to the extent expressly provided in this Agreement, including
the Schedules hereto, as applicable), and all other current and prior employment
agreements, oral or written, between New Grey or Grey or any of its
subsidiaries, on the one hand, and the Executive, on the other hand, shall
thereupon terminate and be void and of no further force or effect, and none of
Grey, New Grey, Parent or the Executive shall have any further rights or
obligations thereunder, and this Agreement (including the Schedules hereto, as
applicable) shall constitute the only employment agreement between the parties
until and unless otherwise modified in a writing signed by all parties hereto.
Any failure, omission, or delay on the part of a party hereof to enforce,
assert, or exercise any right conferred to such party under this Agreement or
otherwise shall not constitute a waiver of any such right.
16. Successors; Binding Agreement. New Grey (or, as applicable, Parent)
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or
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otherwise) to all or substantially all of the business and/or assets of New Grey
(or, as applicable, Parent) to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that New Grey (or, as
applicable, Parent) would be required to perform it if no such succession had
taken place. Failure of New Grey (or, as applicable, Parent) to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from New Grey
(or, as applicable, Parent) in the same amount and on the same terms as he would
be entitled to hereunder if he terminated his employment for Good Reason
pursuant to Section 11, except that for purposes of Section 12.1, the Date of
Termination shall be deemed to be the date on which any succession becomes
effective. As used in this Agreement, "New Grey" and "Parent" shall mean New
Grey and Parent, respectively, as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section 16 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law. For purposes of this
Section 16, "substantially all of the business and/or assets" of an entity shall
mean any portion of the relevant entity's business which shall have contributed
fifty percent (50%) of either the revenues or earnings before the taxes of such
entity and its subsidiaries as a whole during the last full fiscal year prior to
any sale, merger or consolidation, or which shall have comprised fifty percent
(50%) of the assets of such entity and its subsidiaries as a whole immediately
prior to any sale, merger or consolidation.
17. Notices. All notices or other communications under this Agreement
shall be duly given, if mailed, postage prepaid, Certified Mail, Return Receipt
Requested, or hand delivered against receipt therefor, if to the Executive, at
his residence address shown above, if to New Grey, to its principal office
address shown above, attention to the Secretary of New Grey and if to Parent, to
its principal office address shown above, attention to the Group Chief Executive
of Parent (or to such other addresses) as may be designated in writing by New
Grey, Parent or the Executive from time to time.
18. Severability; Survival. In the event any provision or portion of
this Agreement is determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall nevertheless
be binding upon the parties with the same effect as though the invalid or
unenforceable part had been severed and deleted. The respective rights and
obligations of the parties hereunder shall survive the termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
19. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely within New York.
20. Arbitration. Any controversy or claim arising out of or relating to
this Agreement (other than Section 9 and Schedule 1 or Section 10), or any
breach of this Agreement (other than Section 9 and Schedule 1 or Section 10),
shall be resolved by final, binding and non-appealable arbitration in accordance
with the rules of the American Arbitration Association, and judgment upon any
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall be an arbitrator qualified to serve in accordance
with the rules of the American Arbitration Association who is approved by both
New Grey and Parent, on the one hand, and the Executive, on the other hand. In
the absence of such approval, each of New Grey
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and Parent, on the one hand, and the Executive, on the other hand, shall
designate a person qualified to serve as an arbitrator in accordance with the
rules of the American Arbitration Association and the two persons so designated
shall select the arbitrator from among those persons qualified to serve in
accordance with the rules of the American Arbitration Association. In the event
that New Grey or Parent, on the one hand, or the Executive, on the other hand,
fails to so designate, the arbitrator shall be selected in accordance with the
rules of the American Arbitration Association. The arbitration shall be held in
New York City, New York, or such other place as may be mutually agreed upon at
the time by the parties to the arbitration. In the event of a dispute as to the
basis of termination, or the right to terminate this Agreement for Cause, New
Grey shall continue to make all payments of salary and other compensation and to
meet all other financial obligations to the Executive as provided in this
Agreement for a period of up to three months from the Date of Termination,
pending resolution of the dispute by arbitration pursuant to this Section 20.
Such payment by New Grey shall be without prejudice to its right to claim
reimbursement of the amount so paid to or on behalf of the Executive and to
assert such claim by action against him, if the arbitrator shall resolve the
dispute in favor of Parent or New Grey, as applicable. If the Executive shall
prevail in whole or in part before the arbitrator, New Grey shall pay the
Executive actual and reasonable costs and attorney's fees at the conclusion of
any such proceeding before the arbitrator to the extent and in the proportion
that the arbitrator deems just and equitable. Notwithstanding the foregoing, New
Grey and/or Parent shall be entitled to seek injunctive relief in a court of
competent jurisdiction as provided in Section 10(a) pending the resolution by
arbitration of the dispute or controversy underlying New Grey's request for
injunctive relief. Similarly, the Executive shall be entitled to seek injunctive
relief to enforce the obligation of Parent or New Grey, as applicable, pursuant
to this Section 20 to continue to make payments for up to three months pending
resolution by arbitration of a dispute as to the basis of termination or the
right to terminate this Agreement for Cause.
21. Assignment. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, other than by operation of law or
in accordance with Section 16; provided, however, that New Grey and Parent shall
be permitted to assign this Agreement to an affiliate in connection with a
reorganization of New Grey's or Parent's business or assets for tax or financial
planning purposes. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
22. Resignation of the Executive as Director; Termination by New Grey
for Cause.
(a) At such time at which the Executive ceases to be the Chairman, if
he is then director of New Grey, Parent, or any of their subsidiaries, he shall
tender his resignation as a director of such entity.
(b) As used in this Agreement, "Cause" shall mean (1) (x) the willful
and continued failure by the Executive to substantially perform the Executive's
duties hereunder (other than any such failure resulting from the Executive's
incapacity due to physical or mental illness or any such actual or anticipated
failure resulting from the Executive's voluntary termination or termination for
Good Reason or other similar reason) or (y) a violation of the written policies
applicable to senior executives of New Grey or Parent, in each case such failure
or violation that is reasonably likely to result in demonstrable and material
injury to New Grey or Parent,
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monetarily or otherwise, or (2) the entry of an order and judgment of conviction
of the Executive in a court of law of a felony (within the meaning of 18 U.S.C.
Section 1) which substantially impairs the Executive's ability to perform his
duties hereunder; provided, in any event, the Executive shall be given written
notice by Parent Board or the Group Chief Executive of Parent that it or he
intends to terminate the Executive's employment for Cause under this Section 22,
which written notice shall specify the basis on which Parent Board or the Group
Chief Executive of Parent, as applicable, intends to terminate the Executive's
employment, and the Executive shall then be given the opportunity within fifteen
(15) days of his receipt of such notice, to have a meeting with Parent Board or
the Group Chief Executive of Parent, as applicable, to discuss such matter. The
Executive shall then be given seven (7) days after such meeting within which to
cease, or correct, the performance (or nonperformance) giving rise to such
written notice, or, if practicable under the circumstances, to demonstrate his
ability to perform his duties hereunder, and upon the Executive's failure within
seven (7) days to so perform, the Executive's employment shall automatically be
terminated hereunder for Cause. For purposes of this Section 22, no act, or
failure to act, on the Executive's part shall be considered "willful" unless
done or omitted to be done, by the Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of New
Grey or Parent.
23. Continuation of Health Benefits. Upon the termination of the
Executive's employment at the end of the Employment Term (or upon the
termination of the Executive's employment prior thereto for any reason other
than his death), New Grey shall continue to maintain and pay the premiums on all
employee health, medical and medical reimbursement plans presently in effect
with such changes made in the ordinary course to company wide plans during the
Employment Term hereunder (or otherwise provide substantially identical
coverage) for the remainder of the Executive's life. Premiums paid by New Grey
during the Executive's employment in accordance with the preceding sentence
shall be reported by New Grey or Parent, as applicable, as compensation on the
Executive's annual federal income tax Form W-2. In addition, following the
Executive's death, his wife, provided she shall be married to the Executive on
the date of his death, shall be provided by New Grey for the remainder of her
life with the same medical benefits provided to her by New Grey prior to his
death.
24. No Conflict. The Executive represents and warrants that he is not
subject to any agreement, instrument, obligations, order, judgment or decree of
any kind, or any other restrictive agreement or obligation of any character,
which would prevent him from entering into this Agreement or which would be
breached by him upon the performance of his duties pursuant to this Agreement.
25. Counterparts. This Agreement may be executed in counterparts, all
of which taken together shall constitute one instrument.
26. Termination Prior to the Effective Time.
(a) The Executive agrees that, notwithstanding anything to the contrary
contained in this Agreement or the Original Agreement, in the event that, prior
to or as of the Effective Time, the Executive's employment with Grey is
terminated for any reason, this Agreement (other than this Section 26(a),
Sections 9 (including Schedule 1), 10, 15, 17, 18, 19, 20, 21, 24, 25 and 28)
shall thereupon terminate and the Executive shall forfeit, and not be
14
entitled to receive, any further payments, rights and benefits under the
Original Agreement or under any other plan or agreement of or with Grey or any
of its subsidiaries, regardless of whether such payments, rights or benefits are
otherwise vested other than: (i) continuation of health benefits in accordance
with Section 23 of the Original Agreement; (ii) to the extent applicable, the
payments and benefits provided in Section 26(b) and 26(c) if the Executive's
death or Disability (determined in accordance with Section 7 of this Agreement)
occurs after he is terminated by Grey without Cause or the Executive departed
for Good Reason (as defined in the Original Agreement, other than by reason of a
Change in Control of Grey); and (iii) payout in cash of his compensation
deferred pursuant to the Deferred Compensation Agreement and the balance in his
Sub-Account which he shall be entitled to receive in accordance with Section 4
of the Original Agreement immediately after the Effective Time unless at such
time he assumes his role hereunder. However, (1) in the event that the Merger
Agreement is terminated pursuant to Article VIII thereof, the foregoing
forfeiture shall not apply, and the Executive shall be entitled to receive from
Grey all such payments, rights and benefits in accordance with their terms, (2)
in the event that the Executive was terminated by Grey without Cause or the
Executive departed for Good Reason (as defined in the Original Agreement, other
than by reason of a Change in Control of Grey) prior to or as of the Effective
Time, the Executive will be provided an opportunity to assume his role hereunder
and if the Executive assumes his role hereunder immediately after the Effective
Time, this Agreement shall be deemed not to have been terminated and the
Executive shall thereupon be entitled to receive the salary and benefits that
the Executive would have been entitled to receive prior to the Effective Time
under Sections 3 and 4 of the Original Agreement or under any other plan of or
with Grey or any of its subsidiaries, in each case to the extent that the
Executive would have been entitled to receive such salary and benefits had no
Change in Control of Grey occurred and his employment with Grey not been
terminated prior to the Effective Time. For the avoidance of doubt, in the event
that the Executive was terminated by Grey without Cause or the Executive
departed for Good Reason (as defined in the Original Agreement, other than by
reason of a Change in Control of Grey) prior to or as of the Effective Time and
if the Executive is not afforded an opportunity to assume his role hereunder,
any forfeiture under this Section 26 shall not apply and the Executive shall be
entitled to receive from Grey all such payments, rights and benefits in
accordance with their terms.
(b) In the event that the Executive's employment with Grey is
terminated prior to the Effective Time as a result of the Executive's death or
if the Executive's death occurs after he is terminated by Grey without Cause or
the Executive departed for Good Reason (as defined in the Original Agreement,
other than by reason of a Change in Control of Grey) and prior to the Effective
Time, the Executive's estate and wife, as applicable, shall be entitled to
receive from Grey the payment and benefits that he was entitled to receive upon
death under his Original Agreement or under any other plan of Grey or any of its
subsidiaries in effect as of the date of this Agreement.
(c) In the event that the Executive's employment with Grey is
terminated prior to the Effective Time as a result of the Executive's Disability
(determined in accordance with Section 7 of this Agreement) or if the
Executive's Disability (determined in accordance with Section 7 of this
Agreement) occurs after he is terminated by Grey without Cause or the Executive
departed for Good Reason (as defined in the Original Agreement, other than by
reason of a Change in Control of Grey) and prior to the Effective Time, the
Executive and wife, as applicable, shall be entitled to receive from Grey the
payments and benefits that he would have
15
been entitled to receive upon Disability under the Original Agreement or under
any other plan of Grey or any of its subsidiaries in effect as of the date of
this Agreement.
27. Exercise of Stock Options. The Executive agrees that, if the
Effective Time will not occur until 2005, then prior to December 31, 2004 and
upon reasonably adequate written notice by Parent, the Executive will exercise
such stock options to purchase shares of the common stock of Grey in a manner
sufficient to eliminate any "excess parachute payments" that he would have
otherwise received in connection with the Merger. Such notice shall indicate the
aggregate intrinsic spread that would need to be achieved in connection with
such exercise to effect such elimination, as determined by Parent or its
accountants at Parent's expense. Upon the Executive's reasonable request, Parent
shall provide to the Executive detailed supporting calculations and
documentation relating to such determination as soon as reasonably practicable
following such request. To the extent permitted by the applicable equity
compensation plan(s) under which the stock option(s) were granted, the Executive
shall be permitted to use shares of Grey common stock previously owned by him or
acquired by him in connection with such exercise in order to pay the exercise
price and/or satisfy any tax withholding obligation relating to such exercise.
28. Termination of Merger Agreement. In the event that the Merger
Agreement is terminated pursuant to Article VIII thereof, this Agreement shall
thereupon terminate and be null and void ab initio and of no further force and
effect; none of Parent, New Grey, or the Executive shall have any rights or
obligations hereunder; and the Original Agreement will be in effect.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals as of the day and year first above written.
GREY GLOBAL GROUP INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice Chairman
/s/ Xxxxxx X. Xxxxx
-------------------------------------
XXXXXX X. XXXXX, the Executive
WPP GROUP PLC
By: Xxxx Xxxxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Group Finance Director
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