EXHIBIT 10.16
EMPLOYMENT AGREEMENT
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This Agreement is made and entered into as of August 17, 2001 (the
"Effective Date"), by and between Xxxxxx X. Xxxxxxxx (the "Executive") and BCOM3
Group, Inc. ("BCOM3") and Xxx Xxxxxxx USA, Inc. ("LBU"), on behalf of themselves
and each of their respective predecessors, successors, assigns, affiliates and
subsidiaries (hereinafter sometimes collectively referred to as the "Company").
The parties desire to enter into this Agreement pertaining to the
employment of the Executive as Chief Financial Officer of BCOM3. Therefore, in
consideration of the mutual covenants and agreements set forth below, it is
hereby covenanted and agreed by the Executive, LBU and BCOM3 as follows:
1. Employment
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(a) Subject to the terms of this Agreement and during the Employment Term,
Executive agrees to serve as the Chief Financial Officer of BCOM3 ("CFO").
(b) Subject to the terms of this Agreement, LBU agrees to employ the Executive
during the Employment Term, to make Executive's services available to
BCOM3 to serve as CFO, and to provide such compensation and benefits to
Executive as are contained in this Agreement or later directed by BCOM3.
(c) BCOM3 agrees to compensate LBU for the entire cost of Executive's services
during the Employment Term, including any costs that arise pursuant to
this Agreement pursuant to a Change in Control or otherwise.
2. Performance of Services.
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(a) During the Employment Term, the Executive shall devote her full time,
energies and talents to serving as BCOM3's Chief Financial Officer.
(b) The Executive agrees that she shall perform her duties faithfully and
efficiently subject to the directions of the Chief Executive Officer of
BCOM3 (the "CEO"); provided, however, that the Executive shall not,
without her consent, be assigned tasks that would be inconsistent with
those of a CFO.
(c) Notwithstanding the foregoing provisions of this paragraph 2, during the
Employment Term the Executive may devote reasonable time to activities
other than those required under this Agreement, including the supervision
of personal investments, and activities involving professional,
charitable, community, educational, religious and similar types of
organizations, speaking engagements, membership on the boards of directors
of other organizations, and similar types of activities, to the extent
that such other activities do not, in the judgment of the CEO, inhibit or
prohibit the performance of the Executive's duties under this Agreement,
or conflict in any material way with the business of the Company; provided
that Executive shall not serve on the board of any business, or hold
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any other position with any other for-profit business, without the prior
consent of the CEO.
(d) The Executive shall be considered one of BCOM3's "Senior Management
Employees," a group that includes other senior executives and officers,
but not including the BCOM3 CEO. Except as provided in this Agreement, or
as specifically authorized by the CEO with the Executive's approval, the
Executive will be subject to Company policies, such as policies relating
to conflict of interest, professional practices, benefits, expense
reimbursement, etc., that are applicable to and consistently applied to
BCOM3's other Senior Management Employees.
3. Compensation and Benefits.
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Subject to the terms of this Agreement, during the Employment Term, while the
Executive is employed by the Company, the Company shall compensate her for her
services as follows:
(a) Salary. The Executive shall receive, for each 12-consecutive month period
an annual base salary of not less than $500,000.00 (the "Salary"), paid in
substantially equal monthly or more frequent installments. The Salary
shall not be reduced unless the reduction is in connection with, and
proportionate to, a reduction for other BCOM3 Senior Management Employees,
and if reduced, shall be increased to at least $500,000.00 as quickly as
and on the same terms as for other BCOM3 Senior Management Employees.
(b) Bonus. The Executive shall be entitled to receive bonuses from the Company
pursuant to the BCOM3 Incentive Compensation Plan. The actual amount of
the bonus will be determined by the CEO, at the CEO's sole discretion.
However, the "target" bonus for each calendar year (the "Compensation
Year") is 60% of the Salary paid in the Compensation Year, with 80% of the
total bonus based on BCOM3 financial performance and 20% of the total
bonus based on personal performance. The actual bonus amount for each
Compensation Year is paid in the subsequent year, after financial results
for BCOM3 for the Compansation Year are finalized.
(c) Options. The Executive shall be granted an option to purchase 10,000
shares of BCOM3 stock, with an exercise price determined by the Board as
"fair value" at the time of grant, and a vesting schedule and other terms
in accordance with the BCOM3 2000 Long-Term Equity Incentive Plan.
(d) Health and Welfare Benefits. In general, BCOM3 benefit plans will apply to
the Executive as to other BCOM3 Senior Management Employees. Some of these
plans are being designed currently. In the absence of a "BCOM3 benefit
plan," the Executive shall immediately be eligible for participation in
LBU health and welfare plans at the level accorded an Executive Vice
President of LBU.
(e) Retirement Benefits. BCOM3 retirement plans are being designed currently.
Such plans will apply to Executive as to other BCOM3 Senior Management
Employees.
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(f) Perquisites. The Executive shall be provided individual life insurance
coverage in the amount of $1.5 million. The Executive shall be reimbursed
for financial planning services in an amount up to $4,000 per year. The
Executive shall be provided parking in the garage at 00 X. Xxxxxx Xxxxx,
if available, or shall be reimbursed for parking at a nearby facility if
parking at 00 X. Xxxxxx Xxxxx is not available. The Executive shall be
entitled to reimbursement for up to $600 for an annual physical
examination.
(g) D&O Insurance. The Company shall maintain directors and officers liability
insurance in commercially reasonable amounts (as reasonably determined by
the Board), and the Executive shall be covered under such insurance to the
same extent as other BCOM3 Senior Management Employees.
(h) Signing Bonus. The Executive will be paid a one-time bonus of $125,000 to
be paid within 30 days of the start of Executive's employment.
(i) Change in Control. The Company is in the process of adopting Change in
Control benefits for key executives. The Change in Control benefit will be
the same for all key executives of the Company (including the Executive,
but not necessarily including the CEO). The terms of the Change in Control
benefit cannot be specified or guaranteed, and are, in any event, subject
to Board approval. However, the Change in Control benefit is expected to
provide for "market normal" compensation in the case that a key executive
is terminated or constructively terminated in connection with a Change in
Control.
The definition of a "Change in Control" for purposes of the general plan
for key executives is subject to further discussion and Board approval.
However, the following shall constitute a "Change in Control" for
Executive, even if some such event would not be a "Change in Control"
under the general plan for key executives:
"Change in Control" means the occurrence of one or more of the following
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events at any time on or before December 31, 2005:
(1) if any "person" or "group" (as those terms are used in Sections
13(d) and 14(d) of the Exchange Act), other than a Company employee
benefit plan or a trustee or other administrator or fiduciary
holding securities under a Company employee benefit plan or any
voting trustee under the Voting Trust Agreement (an "Exempt
Person"), is or becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Bcom3 representing one-third or more of
the combined voting power of Bcom3's then outstanding securities; or
(2) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new directors
whose election by the Board or nomination for election by Bcom3's
stockholders was approved by at least two-thirds of the directors
then still in office who either were directors at the beginning of
the period or whose election was previously so approved, or who were
elected by Dentsu, cease for any reason to constitute a majority
thereof; or
(3) the stockholders of Bcom3 approve a merger or consolidation of Bcom3
with any other corporation, other than a merger or consolidation (A)
which would result in all
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or a portion of the voting securities of Bcom3 outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or a direct or indirect parent of the
surviving entity) more than two-thirds of the combined voting power
of the voting securities of Bcom3 or such surviving entity (or
direct or indirect parent of such surviving entity) outstanding
immediately after such merger or consolidation or (B) by which the
corporate existence of Bcom3 is not affected and following which
Bcom3's directors retain their positions with Bcom3 (and constitute
at least a majority of the Board); or
(4) the stockholders of Bcom3 approve a plan of complete liquidation of
Bcom3 or an agreement for the sale or disposition by Bcom3 of all or
substantially all Bcom3's assets, other than a sale to an Exempt
Person.
(j) Taxes. All amounts paid to or provided for the benefit of Executive shall
be subject to Federal, State and local income tax and the respective
withholding and reporting requirements imposed by law. No provision of
this Agreement provides for or implies a "gross-up" for taxes due.
4 Key-Man Insurance
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The Company shall be permitted (but not obligated) to maintain "key man"
insurance that will provide benefit to the Company in the case of the
Executive's death or Disability. The Executive shall cooperate in all reasonable
ways to enable the Company to secure such insurance, including (without
limitation) providing personal health information (to be maintained as
confidentially as is possible in the circumstances) and submitting to periodic
physical examinations by a licensed practicing physician, at the Company's
expense.
5. Termination of Employment
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For purposes of this Agreement, the "Employment Term" is the period from the
date of this Agreement until the Executive's employment with the Company is
terminated. The Executive's employment may be terminated only under the
circumstances described in paragraphs 5(a) through 5(f):
(a) Death. The Executive's employment hereunder will terminate upon her death.
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(b) Permanent Disability. The Company may terminate the Executive's employment
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upon a determination that she is Permanently Disabled. The Executive shall
not in any case be considered "Permanently Disabled" unless (i) for a
period of at least 90 consecutive days, the Executive, as a result of a
physical or mental disability, has been incapable, after reasonable
accommodation, of performing her duties under this Agreement on a
permanent, full-time basis, and (ii) at the Date of Termination the
Executive is eligible for income replacement benefits under the Company's
long-term disability plan.
(c) Cause. The CEO may terminate the Executive's employment hereunder at any
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time for Cause. For purposes of this Agreement, the term "Cause" shall
mean:
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(i) Executive's willful and continued failure to substantially perform
her duties with the Company under the Agreement (other than as a
result of total or partial incapacity due to Disability) within a
reasonable period of time after a written demand for substantial
performance is delivered to the Executive;
(ii) Any willful act or omission by Executive constituting dishonesty or
fraud, or any act or omission by Executive constituting immoral
conduct, which in any such case results in injury to the financial
condition or business reputation of the Company;
(iii) Executive's indictment of a felony under the laws of the United
States or any state thereof or any other jurisdiction in which the
Company conducts business; or
(iv) A material breach by Executive of the obligations described in
paragraph 7(b) or a material breach of the restrictive covenants
contained in section 8.
For purposes of this Agreement, failure to attain financial or other
business objectives shall not be deemed a failure to perform duties.
(d) Good Reason. Executive may terminate her employment hereunder at any time
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after 30 days after giving the CEO notice that there is Good Reason, if
the Good Reason has not been cured or resolved before the end of that 30
days. For purposes of this Agreement, the term "Good Reason" shall mean:
(i) Material diminution in Executive's title, position, duties or
responsibilities, or the assignment to Executive of duties that are
inconsistent, in a material respect, with the scope of duties and
responsibilities associated with the position as CFO of the Company;
(ii) Removal from the position as CFO of BCOM3 (or its successor);
(iii) A reduction in salary, or a material reduction in benefits, if
contrary to the provisions of this Agreement and without a
reasonable substitution of additional cash salary or alternate
benefits;
(iv) Relocation of Executive's principal workplace without her consent to
a location more than 50 miles distant from its current location.
(e) Termination by the Executive. The Executive may terminate her employment
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hereunder at any time with 90 days notice.
(f) Termination by the Company. The CEO may terminate the Executive's
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employment hereunder at any time by giving the Executive written Notice of
Termination, which Notice of Termination may be effective immediately. If
the Executive's employment is terminated by the CEO and within a
reasonable time period thereafter it is determined that circumstances
existed which would have constituted a basis for termination of the
Executive's employment for Cause (disregarding circumstances which could
have been
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remedied if notice had been given in accordance with paragraph 5(c)(i)),
the Executive's employment will be deemed to have been terminated for
Cause in accordance with paragraph 5(c).
(g) Date of Termination. "Date of Termination" means the last day the
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Executive is employed by the Company.
(h) Effect of Termination. If, on the Date of Termination, the Executive is a
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member of the BCOM3 Board or any Board of any BCOM3 subsidiary, or holds
any other position with BCOM3 or any BCOM3 subsidiary, the Executive shall
resign from all such positions as of the Date of Termination.
6. Rights Upon Termination.
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The Executive's right to payment and benefits under this Agreement for periods
after her Date of Termination shall be determined in accordance with the
following provisions of this paragraph 6. Except as specified, these rights are
in lieu of the LBU standard severance policy or practice:
(a) In the case of any termination of employment for any reason, the Company
will pay to the Executive:
(i) The Executive's accrued, unpaid Salary and unreimbursed expenses for
the period ending on the Date of Termination;
(ii) Any prior year annual incentive, earned but unpaid;
(iii) Payment for unused vacation days, as determined in accordance with
Company policy as in effect from time to time.
(b) In the case of termination by action of the CEO or the Company for any
reason other than Death, Permanent Disability, or Cause, or in the case of
termination by the Executive for Good Reason, the Company will pay
severance amounts as follows:
First 12 months: In addition to the payments described in (a) above,
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if the Date of Termination is during the first 12 months of the
Employment Term, the Company will pay to the Executive a total of
$800,000 (subject to applicable withholding taxes) in severance in
equal installments over the following 12 months.
After the first 12 months: In addition to the payments described in
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(a) above, if the Date of Termination is after the first 12 months
of the Employment Term, then BCOM3 standard severance policy shall
apply. Currently that policy provides for severance payments
computed on the basis of Salary continued for six months, and a
pro-rated portion of Bonus in some circumstances.
Any severance payments shall be reduced by any amount the Executive earns
or receives from other employment during the period over which the
payments are made. However,
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Executive shall have no obligation to seek other employment or otherwise
to mitigate the Company's payment obligations.
Welfare benefits (medical, long-term disability, etc.) will be continued
for the period over which severance payments are made. COBRA will continue
thereafter as provided by law.
Pension plans, stock options awards, and any other plan with a vesting
schedule shall vest according to the terms of those plans.
7. Duties on Termination.
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(a) Subject to the terms and conditions of this Agreement, during the period
beginning on the date of delivery of a Notice of Termination, and ending
on the Date of Termination, the Executive shall continue to perform her
duties as set forth in this Agreement, and shall also perform such
services for the Company as are necessary and appropriate for a smooth
transition to the Executive's successor, if any. Notwithstanding the
foregoing provisions of this paragraph 7, the CEO may suspend the
Executive from performing her duties under this Agreement following the
delivery of a Notice of Termination; provided, however, that during the
entire period from delivery of the Notice of Termination until the Date of
Termination, the Executive shall continue to be treated as employed by the
Company for other purposes, and her rights to compensation or benefits
shall not be reduced by reason of the suspension.
(b) Following the Date of Termination, the Executive agrees to return to the
Company any keys, credit cards, passes, confidential documents or
material, or other property belonging to the Company, and to return all
writings, files, records, correspondence, notebooks, notes and other
documents and things (including any copies thereof) containing any trade
secrets relating to the Company. For purposes of the preceding sentence,
the term "trade secrets" shall have the meaning ascribed to it under the
Illinois Trade Secrets Act or, if such act is repealed, the Uniform Trade
Secrets Act (on which the Illinois Trade Secrets Act is based). The
Executive agrees to represent in writing to the Company upon termination
of employment that she has complied with the foregoing provisions of this
paragraph 7(b) and that she will comply with paragraphs 8 and 9.
8. Confidential Information.
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The Executive agrees that:
(a) Except as may be required by the lawful order of a court or agency of
competent jurisdiction, except as necessary to carry out her duties to the
Company and its subsidiaries, or except to the extent that the Executive
has express authorization from the CEO, the Executive agrees to keep
secret and confidential indefinitely, all Confidential Information, and
not to disclose the same, either directly or indirectly, to any other
person, firm, or business entity, or to use it in any way.
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(b) To the extent that any court or agency seeks to have the Executive
disclose Confidential Information, she shall promptly inform the Company,
and shall take such reasonable steps to prevent disclosure of Confidential
Information until the Company has been informed of such requested
disclosure, and the Company has an opportunity to respond to such court or
agency. To the extent that the Executive obtains information on behalf of
the Company or any of the Subsidiaries that may be subject to
attorney-client privilege as to the Company's attorneys, the Executive
shall take reasonable steps to maintain the confidentiality of such
information and to preserve such privilege.
(c) Nothing in the foregoing provisions of this paragraph 8 shall be construed
so as to prevent the Executive from using, in connection with her
employment for herself or an employer other than the Company or any of the
Subsidiaries, knowledge which was acquired by her during the course of her
employment with the Company and the Subsidiaries, and which is generally
known to persons of her experience in other companies in the same
industry.
(d) For purposes of this Agreement, the term "Confidential Information" shall
include all non-public information (including, without limitation,
information regarding litigation and pending litigation) concerning the
Company and the Subsidiaries which was acquired by or disclosed to the
Executive during the course of her employment with the Company. For
purposes of this Agreement, the term "Confidential Information" shall also
include all non-public information concerning any other company that was
shared with the Company or a Subsidiary subject to an agreement to
maintain the confidentiality of such information.
(e) This paragraph 8 shall not be construed to unreasonably restrict the
Executive's ability to disclose confidential information in an arbitration
proceeding or a court proceeding in connection with the assertion of, or
defense against, any claim of breach of this Agreement in accordance with
paragraph 17. If there is a dispute between the Company and the Executive
as to whether information may be disclosed in accordance with this
paragraph (e), the matter shall be submitted to the arbitrators or the
court (whichever is applicable) for decision.
(f) The Executive acknowledges that the Company would be irreparably injured
by a violation of this paragraph 8 and she agrees that the Company, in
addition to any other remedies available to it for such breach or
threatened breach, shall be entitled to a preliminary injunction,
temporary restraining order, or other equivalent relief, restraining the
Executive from any actual or threatened breach of this paragraph 8. If a
bond is required to be posted in order for the Company to secure an
injunction or other equitable remedy, the parties agree that said bond
need not be more than a nominal sum.
9. Assistance with Claims.
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With reasonable consideration for and accommodation of the Executive's
employment or other commitments after the Termination Date, the Executive agrees
to assist the Company and the Subsidiaries in defense of any claims that may be
made against the Company and the Subsidiaries, and will assist the Company and
the Subsidiaries in the prosecution of any claims that may be made by the
Company or the Subsidiaries, to the extent that such claims may relate
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to services performed by the Executive for the Company and the Subsidiaries. The
Executive agrees to promptly inform the Company if she becomes aware of any
lawsuits involving such claims that may be filed against the Company or any
Subsidiary. The Company agrees to provide legal counsel to the Executive in
connection with such assistance (to the extent legally permitted), and to
reimburse the Executive for all of the Executive's reasonable out-of-pocket
expenses associated with such assistance, including travel expenses. The
Executive also agrees to promptly inform the Company if she is asked to assist
in any investigation of the Company or the Subsidiaries (or their actions) that
may relate to services performed by the Executive for the Company or the
Subsidiaries, regardless of whether a lawsuit has then been filed against the
Company or the Subsidiaries with respect to such investigation.
10. Nonalienation.
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The interests of the Executive under this Agreement are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Executive or the
Executive's beneficiary.
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11. Amendment.
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This Agreement may be amended or cancelled only by mutual agreement of the
parties in writing. So long as the Executive lives, no person, other than the
parties hereto, shall have any rights under or interest in this Agreement or the
subject matter hereof.
12. Applicable Law.
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The provisions of this Agreement shall be construed in accordance with the laws
of the State of Illinois, without regard to the conflict of law provisions of
any state. All disputes shall be arbitrated or litigated (whichever is
applicable) in Chicago, Illinois.
13. Severability.
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The invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable
provision were omitted (but only to the extent that such provision cannot be
appropriately reformed or modified).
14. Waiver of Breach.
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No waiver by any party hereto of a breach of any provision of this Agreement by
any other party, or of compliance with any condition or provision of this
Agreement to be performed by such other party, will operate or be construed as a
waiver of any subsequent breach by such other party of any similar or dissimilar
provisions and conditions at the same or any prior or subsequent time. The
failure of any party hereto to take any action by reason of such breach will not
deprive such party of the right to take action at any time while such breach
continues.
15. Successors.
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This Agreement shall be binding upon, and inure to the benefit of, the Company
and its successors and assigns and upon any person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or substantially all of the
Company's assets and business.
15. Notices.
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Notices and all other communications provided for in this Agreement shall be in
writing and shall be delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid (provided that international
mail shall be sent via overnight or two-day delivery), or sent by facsimile or
prepaid overnight courier to the parties at the addresses set forth below (or
such other addresses as shall be specified by the parties by like notice). Such
notices, demands, claims and other communications shall be deemed given:
(a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after deposit
in the U.S. mail; or
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(c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service or two-day delivery
service are to be delivered to the addresses set forth below:
to the Company:
BCOM3 Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
to the Executive:
Xxxxxx X. Xxxxxxxx
0000 X X Xxxxxxxxx
Xxxxxxx, XX 00000
All notices to the Company shall be directed to the attention of the Chief
Executive Officer of the Company, with a copy to the Chief Legal Officer of the
Company.
Each party, by written notice furnished to the other party, may modify the
applicable delivery address, except that notice of change of address shall be
effective only upon receipt.
16. Survival of Agreement.
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Except as otherwise expressly provided in this Agreement, the rights and
obligations of the parties to this Agreement shall survive the termination of
the Executive's employment with the Company.
17. Other Company Policies and Agreements.
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Executive is or shall become subject to all Company employee and executive plans
and agreements including, without limitation, the Conflict of Interest policy,
the BCOM3 Stock Purchase Agreement and BCOM3's Separation Pay Policy. To the
extent that a conflict exists between any of those agreements and any specific
provision of this Agreement, the terms of this Agreement shall govern.
18. Acknowledgment by Executive.
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The Executive represents and warrants that she is not, and will not become a
party to any agreement, contract, arrangement or understanding, whether of
employment or otherwise, that would in any way restrict or prohibit her from
undertaking or performing her duties in accordance with this Agreement.
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19. Obligation of the Company.
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Each of BCOM3 and LBU shall be jointly and severally liable to the Executive for
all obligations of the Company or any of BCOM3 or LBU under this Agreement.
IN WITNESS THEREOF, the Executive has hereunto set her hand, and the Company has
caused these presents to be executed in its name and on its behalf, all as of
the Effective Date.
XXX XXXXXXX USA, INC.
By /s/ Xxxxxxxxx X. Xxxxxxx
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Its Executive Vice President
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BCOM3 GROUP, INC.
By /s/ Xxxxxxxxx X. Xxxxxxx
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Its Chief Legal Officer and Corporate Secretary
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/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
ATTEST:
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