Exhibit 10. 12
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated and effective as of December
1, 1997 between True North Communications Inc., a Delaware corporation (the
"Company"), and Xxxxx Xxxxx (the "Executive").
WHEREAS, the Company is a global communications holding company which owns
companies engaged in the advertising agency business, the multimedia production
business, the business of planning and buying of media time and space and
related businesses.
WHEREAS, the Executive currently serves as Chairman and Chief Executive
Officer of the Company pursuant to an Employment Agreement dated as of July 30,
1997 (the "Existing Employment Agreement").
WHEREAS, pursuant to the Existing Employment Agreement, such service is
scheduled to end on February 28, 1999.
WHEREAS, the Company desires that the Executive continue to serve as the
Chief Executive Officer of the Company for an additional month.
WHEREAS, the Company and the Executive desire to replace the Existing
Employment Agreement (insofar as it relates to periods from and after the date
hereof) with this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereby agree as follows:
1. Employment. The Company hereby employs the Executive and the
Executive hereby agrees to be employed by the Company upon the terms and subject
to the conditions contained in this Agreement. The term of full-time employment
of the Executive by the Company pursuant to this Agreement (the "Full-Time
Employment Period") shall commence on the date hereof and, unless extended by
mutual agreement of the Company and the Executive or earlier terminated pursuant
to Section 4, shall end sixteen months thereafter.
2. Position and Duties; Responsibilities.
(a) Position and Duties. The Company shall employ the Executive during
the Full-Time Employment Period as its principal executive officer, with the
title of Chief Executive Officer. During the Full-Time Employment Period, the
Executive shall perform faithfully and loyally and to the best of his abilities
the duties assigned to him hereunder, shall devote his full business time,
attention and effort to the affairs of the Company and shall use his reasonable
best efforts to promote the interests of the
Company. Notwithstanding the foregoing, the Executive may engage in charitable,
civic or community activities and, with the prior approval of the Board of
Directors of the Company (the "Board"), may serve as a director of any business
corporation, provided that such activities or service do not violate the terms
of any of the covenants contained in Section 10 or Section 11.
(b) Responsibilities. The Executive shall report directly to the Board.
Subject to the powers, authority and responsibilities vested in the Board and in
duly constituted committees of the Board, the Executive shall have all the
authority and responsibility of the principal executive officer of a
corporation, including without limitation authority and responsibility for the
formulation and execution of the corporate policy of the Company. Accordingly,
the chief executive of each company owned by the Company that is engaged in the
global advertising agency business shall report directly to the Executive. The
Executive shall also perform such other duties (not inconsistent with the
position of principal executive officer) on behalf of the Company and its
subsidiaries as may from time to time be authorized or directed by the Board and
as are customarily exercisable by a chief executive officer. Notwithstanding any
other provision of this Agreement, the Executive shall be permitted to express
to the Board and to the stockholders of the Company his views on any matter
presented to, considered by or raised by the Board or such stockholders.
3. Compensation.
(a) Salary, VIC and DVIC. With respect to the Full-Time Employment
Period, the Company shall pay to the Executive a salary at the annual rate of
$600,000 and variable incentive compensation ("VIC") and deferred variable
incentive compensation ("DVIC") in accordance with the Company's Performance
Program, provided that the aggregate amount of such salary, VIC and DVIC for the
remainder of calendar year 1997 and for each subsequent calendar year or portion
thereof during the Full-Time Employment Period shall be not less than the
greater of (i) the amount for such period based on an annual rate of not less
than $1,350,000 and (ii) the aggregate amount of salary and bonus for such
period paid to the President of the Company (such greater amount, annualized if
for a period of less than a full calendar year, being referred to as the
"Calendar Year Minimum Compensation") and that any payment required to be made
by this proviso shall be deemed to be VIC.
(b) Stock Options. During the Full-Time Employment Period, the Executive
shall be entitled to receive variable incentive stock options in accordance with
the Company's variable incentive stock option program, and in any event shall be
entitled to receive variable incentive stock options at least equivalent to
options received by the Company's President. In addition, the Company covenants
that the Compensation Committee shall take such actions as may be necessary,
including approval of stock option agreements with respect to the future grant
of stock options to the Executive, so that upon the termination of the Full-Time
Employment Period all of the stock options theretofore granted to the Executive
by the Company then held by the Executive shall be fully exercisable until the
end of the term thereof. The Company assumes no responsibility for any liability
of the Executive under Section 16 of the Securities Exchange Act of 1934
relating in any manner, directly or indirectly, to the amendment of such stock
options.
(c) Other Benefits. During the Full-Time Employment Period, the Executive
shall be entitled to participate in the Company's employee benefit plans
generally available to senior executives of the Company, including group health,
life, short-term disability, long-term disability, pension, profit sharing,
profit-sharing integration, stock purchase, stock purchase integration and
nonqualified deferred compensation and retirement plans and the plans or
programs for the allowance for or the reimbursement of automobile expenses,
financial planning expenses and club dues and any other plans of general
application to employees on the date hereof and such plans and programs adopted
hereafter for the benefit of senior executives of the Company (all such benefits
being hereinafter referred to as the "Employee Benefits"), in the case of plans
or programs in effect on the date hereof on terms no less favorable than their
terms on the date hereof; provided that all retirement benefits shall be based
upon plans in effect on the date hereof, subject to modifications of general
application to all employees. The Executive shall be entitled to take time off
for vacation or illness in accordance with the Company's policy for senior
executives and to receive all other fringe benefits as are from time to time
made generally available to senior executives of the Company.
(d) Expense Reimbursement. During the Full-Time Employment Period, the
Company shall reimburse the Executive for all proper expenses incurred by him in
the performance of his duties hereunder in accordance with the Company's
policies and procedures.
4. Termination of Full-Time Employment Period; Suspension.
(a) Termination. The Full-Time Employment Period shall be terminated upon
the first to occur of (i) the expiration thereof pursuant to Section 1, (ii)
termination by the Company at any time without Cause (as such term is defined in
Section 4(b)) upon written notice given to the Executive at least 30 days prior
to such termination, (iii) termination by the Company at any time for Cause upon
written notice given to the Executive at least 10 days prior to such
termination, (iv) termination by the Company on account of the Executive's
having become unable (as determined by the Board in good faith and certified by
a physician chosen by the Company and acceptable to the Executive) to regularly
perform his duties hereunder by reason of illness or incapacity for a period of
more than six consecutive months ("Termination for Disability"), or (v) the
Executive's death. Upon termination of the Full-Time Employment Period, the
Executive shall automatically and without further action on his part be deemed
to have resigned from all offices and directorships with the Company and its
subsidiaries and affiliates.
(b) Definition of Cause. For purposes of this Agreement, "Cause" shall
mean (i) the commission of a felony, (ii) the commission of any act which
involves both dishonesty with respect to the Company or any of its subsidiaries
and moral turpitude and causes the Company to be viewed in a materially
unfavorable light by its customers, employees or investors, (iii) material
willful misconduct with respect to the Company or any of its subsidiaries,
provided that if it reasonably could be concluded that such alleged material
willful misconduct did not occur or was not material or willful or misconduct
and if such alleged material willful misconduct is curable, the Executive shall
have 30 days following written notice thereof to the Executive to cure such
alleged material
willful misconduct unless the Company, in its good faith judgment, determines
that such cure period must be shorter to avoid harm to the Company, in which
case such cure period shall be such lesser number of days as shall be determined
in good faith by the Company and set forth in such written notice to the
Executive, commencing upon such written notice to the Executive, or (iv) breach
of any provision of Section 10, 11 or 12.
(c) Suspension. If the Company shall determine that the Executive has
committed any act or acts which constitute Cause and shall notify the Executive
thereof in writing and if the Executive shall deny that he committed such act or
acts or that such act or acts constitute Cause and shall notify the Company of
such denial in writing within seven days following the Company's written notice
to the Executive, the Board may, in its sole and absolute discretion, suspend
the Executive with full compensation and benefits during the pendency of any
investigation or arbitration with respect thereto.
5. Consequences of Termination of Full-Time Employment Period.
(a) Expiration or Termination Without Cause. If the Full-Time Employment
Period terminates for a reason set forth in clause (i) or (ii) of Section 4(a),
the commencement of the Company's Directors Part-Time Employment Agreement shall
be deferred until the end of the Initial Part-Time Employment Period (as such
term is defined in Section 6(a)) or until the end of the Vested Period (as such
term is defined in Section 5(a)(iv)), respectively, and in lieu of any severance
amounts which otherwise would be payable to the Executive:
(i) the Executive shall be entitled to receive (A) all salary payable
with respect to the period through the date of such termination, (B)
unpaid VIC and DVIC for the prior calendar year, (C) VIC and DVIC for the
then current calendar year, prorated through the date of such termination
based on actual results of operations for full calendar year and (D)
reimbursement of expenses incurred through the date of such termination;
provided, that in determining the aggregate amount of the salary payable
pursuant to clause (A) of this Section 5(a)(i) and the VIC and DVIC
payable pursuant to clause (C) of this Section 5(a)(i), the Calendar Year
Minimum Compensation shall be prorated through the date of such
termination;
(ii) each stock option theretofore granted to the Executive by the
Company then held by the Executive shall, on the date of such
termination, be exercisable for the full term of such option in
accordance with the applicable stock option agreement in effect at the
time of such termination (giving effect to this provision);
(iii) if the Full-Time Employment Period terminates for reason set forth
in clause (i) of Section 4(a), the Executive shall become a part-time
employee of the Company entitled to the compensation and benefits payable
during the Initial Part-Time Employment Period in accordance with Section
6(c); and
(iv) if the Full-Time Employment Period terminates for reason set forth
in clause (ii) of Section 4(a), (A) during the period of two and one-half
years following the termination of the Full-Time Employment Period (the
"Vested Period"), the Executive (or, in the event of his disability, his
legal representative, as applicable) shall receive the compensation and
benefits described in Section 6(c)(i) and Section 6(c)(ii) as if the
Vested Period were the Initial Part-Time Employment Period and such
Initial Part-Time Employment Period could neither be terminated early nor
suspended and (B) following the Vested Period, the Executive shall be
entitled to the compensation and benefits set forth in the Company's
Directors Part-Time Employment Agreement upon the terms set forth therein
on the date hereof, but with all age and service requirements deemed to
have been satisfied and with the benefit calculated at 45% of final
average annual compensation (as defined in such Agreement) regardless of
actual service, and payments thereunder shall be made for the period
commencing on the day following the expiration of the Vested Period and
continuing for five years thereafter. In the event of the Executive's
death during the Vested Period, his executor shall be entitled to the
compensation set forth in clause (A) of the previous sentence until the
expiration of the Vested Period and the Executive's spouse shall be
entitled to the continuation of medical insurance coverage on the same
basis as theretofore provided to the Executive until the expiration of
the Vested Period and following the Vested Period the compensation and
benefits set forth in the Company's Directors Part-Time Employment
Agreement shall become payable upon the terms set forth therein on the
date hereof, but with all age and service requirements deemed to have
been satisfied and with the benefit calculated at 45% of final average
annual compensation (as defined in such Agreement) regardless of actual
service, and payments thereunder shall be made for the period commencing
on the day following the expiration of the Vested Period and continuing
for five years thereafter.
(b) Termination for Cause. If the Full-Time Employment Period terminates
for any reason set forth in clause (iii) of Section 4(a), the Executive shall be
entitled to receive (i) all salary payable with respect to the period through
the date of such termination, (ii) unpaid VIC and DVIC for the prior calendar
year, (iii) VIC and DVIC for the then current calendar year, prorated through
the date of such termination based on actual results of operations for such full
calendar year, (iv) reimbursement of expenses incurred through the date of such
termination and (v) any other benefits accrued through the date of such
termination; provided that in determining the aggregate amount of the salary
payable pursuant to clause (i) of this Section 5(b) and the VIC and DVIC payable
pursuant to clause (iii) of this Section 5(b), the Calendar Year Minimum
Compensation shall be prorated through the date of such termination. In
addition, (A) during the Vested Period, the Executive (or, in the event of his
disability, his legal representative, as applicable) shall receive the
compensation and benefits described in Section 6(c)(i) and Section 6(c)(ii) as
if the Vested Period were the Initial Part-Time Employment Period and such
Initial Part-Time Employment Period could neither be terminated early nor
suspended and (B) following the Vested Period, unless the Cause that gave rise
to such termination would have permitted the Company to terminate the Initial
Part-Time
Employment Period had it occurred during the Initial Part-Time Employment
Period, the Executive shall be entitled to the compensation and benefits set
forth in the Company's Directors Part-Time Employment Agreement upon the terms
set forth therein on the date hereof, but as if such termination had been
without cause and with all age and service requirements deemed to have been
satisfied and with the benefit calculated at 45% of final average annual
compensation (as defined in such Agreement) regardless of actual service, and
payments thereunder shall be made for the period commencing on the day following
the expiration of the Vested Period and continuing for five years thereafter. In
the event of the Executive's death during the Vested Period, his executor shall
be entitled to the compensation set forth in clause (A) of the previous sentence
until the expiration of the Vested Period and the Executive's spouse shall be
entitled to the continuation of medical insurance coverage on the same basis as
theretofore provided to the Executive until the expiration of the Vested Period
and following the Vested Period, unless the Cause that gave rise to the
termination of the Full-Time Employment Period would have permitted the Company
to terminate the Initial Part-Time Employment Period had it occurred during the
Initial Part-Time Employment Period, the compensation and benefits set forth in
the Company's Directors Part-Time Employment Agreement shall become payable upon
the terms set forth therein on the date hereof, but as if the termination of the
Full-Time Employment Period had been without cause and with all age and service
requirements deemed to have been satisfied and with the benefit calculated at
45% of final average annual compensation (as defined in such Agreement)
regardless of actual service, and payments thereunder shall be made for the
period commencing on the day following the expiration of the Vested Period and
continuing for five years thereafter. Except as provided above in this Section
6(b), the Executive shall not be entitled to any compensation or benefits under
the Company's Directors Part-Time Employment Agreement or any other severance
payments.
(c) Disability or Death. If the Full-Time Employment Period terminates
for a reason set forth in clause (iv) or (v) of Section 4(a), commencement of
the Company's Directors Part-Time Employment Agreement shall be deferred until
the end of the Vested Period and in lieu of any severance amounts which
otherwise would be payable to the Executive the Executive or his executor,
administrator or other legal representative, as the case may be, shall be
entitled to the payments and benefits set forth in Section 5(a)(i) and Section
5(a)(ii) and during the Vested Period the Executive or his executor,
administrator or other legal representative, as the case may be, shall be
entitled to the compensation set forth in Section 6(c)(i), and (A) in the case
of Termination for Disability, the Executive shall be entitled to the benefits
set forth in Section 6(c)(ii) (and in the event the Executive dies prior to the
end of the Vested Period, the Executive's spouse shall be entitled to the of
medical insurance coverage on the same basis as theretofore provided to the
Executive until the end of the Vested Period) or (B) in the case of termination
on account of the Executive's death, the Executive's spouse shall be entitled to
the continuation of medical insurance coverage on the same basis as theretofore
provided to the Executive until the end of the Vested Period and, in either
case, the compensation and benefits set forth in the Company's Directors Part-
Time Employment Agreement shall become payable upon the terms set forth therein
on the date hereof, but with all age and service requirements deemed to have
been satisfied and with the benefit calculated at 45% of final average annual
compensation (as defined in such Agreement) regardless of actual service, for
the
period commencing on the day following the expiration of the Vested Period and
continuing for five years thereafter.
6. Initial Part-Time Employment Period.
(a) Commencement. If the Full-Time Employment Period terminates for a
reason set forth in clause (i) of Section 4(a), the Executive shall become a
part-time employee of the Company for the period commencing upon termination of
the Full-Time Employment Period and ending on September 30, 2001 (the "Initial
Part-Time Employment Period").
(b) Position and Duties. During the Initial Part-Time Employment Period
the Executive shall be a part-time employee of the Company and shall make
himself available, upon reasonable notice (reasonableness to include, but not be
limited to, a good faith effort to accommodate the schedules and time needs of
the parties), to perform services for the Company which (i) shall be related to
such projects and matters as the Board or the Chief Executive Officer of the
Company may designate from time to time, (ii) are commensurate with the
Executive's years of experience and level of skill and (iii) are similar to the
services rendered by the Executive prior to the termination of the Full-Time
Employment Period, including, but not limited to, the duties set forth in
Section 12. The Executive shall not be required to devote more than 10 days
during any calendar quarter to the performance of such services.
(c) Compensation. As compensation for the services to be performed by the
Executive during the Initial Part-Time Employment Period, the Executive shall
receive the following compensation and benefits in accordance with the Company's
normal payroll policies:
(i) cash compensation shall be paid to the Executive during the Initial
Part-Time Employment Period at the rate of $1,350,000 per year;
(ii) the Employee Benefits shall continue to be paid to the Executive
during the Initial Part-Time Employment Period, in the case of Employee
Benefits in effect on the date hereof on terms no less favorable than
their terms on the date hereof; provided that coverage for the Executive
under the Company's long-term disability insurance plan shall cease upon
termination of the Full-Time Employment Period; provided further that all
retirement benefits shall be based upon plans in effect on the date
hereof, subject to modifications of general application to all employees;
and provided further that for the year in which the Full-Time Employment
Period terminates contributions shall be made to a supplemental
retirement plan for the benefit of the Executive in an amount which,
together with any contributions made for such year for the benefit of the
Executive under the Company's Profit Sharing Retirement Plan, Profit
Sharing Integration Plan, Stock Purchase Plan and Stock Purchase
Integration Plan, is equal to the contributions which would have been
made for such year for the benefit of the Executive under such plans
based upon compensation received by the Executive during such year
notwithstanding the hours of service conditions of such plans; and
(iii) the Company shall reimburse the Executive in accordance with the
Company's policies and procedures for all proper expenses incurred by him
in the performance of his duties during the Initial Part-Time Employment
Period.
7. Termination of Initial Part-Time Employment Period; Suspension.
(a) Termination. The Initial Part-Time Employment Period shall be
terminated on the first to occur, after the termination of the Full-Time
Employment Period, of (i) September 30, 2001, (ii) termination thereof by the
Company at any time for Cause upon written notice given to the Executive at
least 10 days prior to such termination, (iii) Termination for Disability or
(iv) the Executive's death.
(b) Suspension. If the Company shall determine that the Executive has
committed any act or acts which constitute Cause and shall notify the Executive
thereof in writing and if the Executive shall deny that he committed such act or
acts or that such act or acts constitute Cause and shall notify the Company of
such denial in writing within seven days following the Company's written notice
to the Executive, the Board may, in its sole and absolute discretion, suspend
the Executive with full compensation and benefits during the pendency of any
investigation or arbitration with respect thereto.
8. Consequences of Termination of Initial Part-Time Employment Period.
(a) Expiration. If the Initial Part-Time Employment Period terminates on
September 30, 2001, in lieu of any severance amounts which otherwise would be
payable to the Executive, the Executive shall thereafter be entitled to the
compensation and benefits set forth in the Company's Directors Part-Time
Employment Agreement upon the terms set forth therein on the date hereof, but
with all age and service requirements deemed to have been satisfied and with the
benefit calculated at 45% of final average annual compensation (as defined in
such Agreement) regardless of actual service, and payments thereunder shall be
made for the period commencing on October 1, 2001 and continuing for five years
thereafter.
(b) Termination for Cause. If the Initial Part-Time Employment Period is
terminated by the Company for Cause, during the remainder of the Vested Period
the Executive (or, in the event of his disability, his legal representative, as
applicable) shall receive the compensation and benefits described in Section
6(c)(i) and Section 6(c)(ii) as if the Initial Part-Time Employment Period had
not been terminated, but the Executive shall not be entitled to any compensation
or benefits under the Company's Directors Part-Time Employment Agreement or any
other severance payments. In the event of the Executive's death during the
Vested Period, his executor shall be entitled to such compensation until the
expiration of the Vested Period and the Executive's spouse shall be entitled to
the continuation of medical insurance coverage on the same basis as theretofore
provided to the Executive until the end of the Vested Period.
(c) Disability or Death. If the Initial Part-Time Employment Period
terminates as a result of a Termination for Disability or the Executive's death,
in lieu of any severance
amounts which otherwise would be payable to the Executive, the Executive or his
executor, administrator or other legal representative, as the case may be, shall
be entitled to the compensation set forth in Section 6(c)(i) until September 30,
2001 and (i) in the case of Termination for Disability, the Executive shall be
entitled to the benefits set forth in Section 6(c)(ii) until September 30, 2001
(and, in the event the Executive dies prior to September 30, 2001, the
Executive's spouse shall be entitled to the continuation of medical insurance
coverage on the same basis as theretofore provided to the Executive until
September 30, 2001) or (ii) in the case of termination on account of the
Executive's death, the Executive's spouse shall be entitled to the continuation
of medical insurance coverage on the same basis as theretofore provided to the
Executive until September 30, 2001 and, in either case, the compensation and
benefits set forth in the Company's Directors Part-Time Employment Agreement
shall become payable upon the terms set forth therein on the date hereof, but
with all age and service requirements deemed to have been satisfied and with the
benefit calculated at 45% of final average annual compensation (as defined in
such Agreement) regardless of actual service, for the period commencing on
October 1, 2001 and continuing for five years thereafter.
9. Federal and State Withholding. The Company shall deduct from the
amounts payable to the Executive pursuant to this Agreement the amount of all
required federal and state withholding taxes in accordance with the Executive's
Form W-4 on file with the Company and all applicable social security taxes.
10. Noncompetition; Nonsolicitation.
(a) The Executive acknowledges that in the course of his employment with
the Company pursuant to his Agreement he will become familiar, and during the
course of his employment with the Company or any of its subsidiaries prior to
the date of this Agreement he has become familiar, with trade secrets and
customer lists of, and other confidential information concerning, the Company
and its subsidiaries, affiliates and clients and that his services have been and
will be of special, unique and extraordinary value to the Company.
(b) The Executive agrees that during the Full-Time Employment Period and
for a period of five years thereafter (the "Noncompetition Period") he shall not
in any manner, directly or indirectly, through any person, firm or corporation,
alone or as a member of a partnership or as an officer, director, stockholder,
investor or employee of or consultant to any other corporation or enterprise or
otherwise, engage or be engaged, or assist any other person, firm, corporation
or enterprise in engaging or being engaged, in any business being conducted by
the Company or any of its subsidiaries as of the termination of the Full-Time
Employment Period in any geographic area in which the Company or any of its
subsidiaries is then conducting such business. Within seven days following the
termination of the Full-Time Employment Period, the Company shall deliver to the
Executive a written description of the businesses being conducted by the Company
and its subsidiaries as of the date of such termination and the respective
geographic areas in which such businesses are then being conducted; provided,
however, that if the Company shall fail to deliver such written description
within such seven-day period, the Executive may deliver to the Company a written
demand therefor and the Company shall have seven days following the delivery of
such written demand to deliver such written
description to the Executive. The Executive shall have no liability for any
breach of the covenant contained in this Section 10(b) which may occur during
the period commencing on the termination of the Full-Time Employment Period and
ending on the date of the delivery of such written description to the Executive,
provided that the Executive shall have attempted in good faith to comply with
such covenant during such period. Notwithstanding the foregoing, subsequent to
the termination of the Full-Time Employment Period the Executive may engage or
be engaged, or assist any other person, firm, corporation or enterprise in
engaging or being engaged, in any business activity which is competitive with a
business activity being conducted by the Company or any of its subsidiaries at
the time of termination of the Full-Time Employment Period only if, at least 60
days prior to the commencement of such competitive activity, the Executive
delivers to the Company a written release, in form and substance satisfactory to
the Company, releasing the Company from all further obligations to the Executive
pursuant to this Agreement, pursuant to the Company's Directors Part-Time
Employment Agreement, pursuant to any other agreement or arrangement with the
Company or any subsidiary of the Company or otherwise, other than the right of
the Executive to receive benefits under any retirement plan of the Company; and
provided further, that nothing contained in this Section 10(b) shall release or
otherwise affect the obligations of the Executive contained in Section 11 of
this Agreement.
(c) The Executive further agrees that during the Non-competition Period he
shall not (i) in any manner, directly or indirectly, induce or attempt to induce
any employee of the Company or any of its subsidiaries or affiliates to
terminate or abandon his or her employment for any purpose whatsoever, or (ii)
in connection with any business to which Section 10(b) applies, call on,
service, solicit or otherwise do business with any client of the Company or any
of its subsidiaries; provided, however, that the restriction contained in clause
(i) of this Section 10(c) shall not apply to, or interfere with, the proper
performance by the Executive of his duties pursuant to Section 2 of this
Agreement.
(d) Nothing in this Section 10 shall prohibit the Executive from being (i)
a stockholder in a mutual fund or a diversified investment company or (ii) a
passive owner of not more than two percent of the outstanding stock of any class
of a corporation so long as the Executive has no active participation in the
business of such corporation.
(e) If, at any time of enforcement of this Section 10, a court or an
arbitrator holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
11. Confidentiality. The Executive shall not, at any time during the
Full-Time Employment Period, the Initial Part-Time Employment Period, the
duration of the Company's Directors Part-Time Employment Agreement or
thereafter, make use of or disclose, directly or indirectly, any (i) trade
secret or other confidential or secret information of the Company or of any of
its subsidiaries, affiliates or clients or (ii) other technical, business,
proprietary or financial information of the Company or of any of its
subsidiaries, affiliates or clients not available to the public generally or to
the competitors of the Company or to the competitors of any of its subsidiaries
or affiliates, in each case that the Executive obtained as a result of his
employment by the Company or any of its subsidiaries ("Confidential
Information"), except to the extent that such Confidential Information (a) is
used by the Executive during the Full-Time Employment Period in the proper
performance of his duties pursuant to this Agreement, (b) is disclosed by the
Executive to his legal counsel in connection with legal services performed by
such counsel for the Executive, provided that such disclosure is made on a
confidential basis, (c) becomes a matter of public record or is published in a
newspaper, magazine or other periodical available to the general public, other
than as a result of any act or omission of the Executive outside the proper
performance of his duties pursuant to this Agreement, or (d) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency. Promptly following the termination of the Full-Time
Employment Period, the Executive shall surrender to the Company all records,
memoranda, notes, plans, reports, computer tapes and software and other
documents and data which constitute Confidential Information which he may then
possess or have under his control (together with all copies thereof); provided,
however, that the Executive may retain copies of such documents as are necessary
for the preparation of his federal or state income tax returns; and provided
further that if the Company believes that not all Confidential Information which
the Executive may then possess or have under his control has been surrendered to
the Company, the Company shall request with specificity the Confidential
Information to be surrendered by the Executive. The Executive shall have a
reasonable period of time following such request to surrender such Confidential
Information which in no event shall be less than 15 or more than 30 days
following such request and, if the Executive makes a good faith effort to comply
with such request, his failure to surrender any Confidential Information shall
not constitute Cause for purposes of Section 4(b)(iv) hereof.
12. Nondisparagement; Cooperation.
(a) The Executive shall not, at any time during the Full-Time Employment
Period, the Initial Part-Time Employment Period or the duration of the Company's
Directors Part-Time Employment Agreement or thereafter, make any statement,
publicly or privately, which would disparage the Company, its business or any
director or officer of the Company or would have a deleterious effect upon the
interests of the Company's business or its stockholders; provided, however, that
the Executive shall not be in breach of this restriction if such statements
consist solely of (i) private statements made to any officers, directors or
employees of the Company by the Executive in the course of carrying out his
duties pursuant to this Agreement or (ii) private statements made to persons
other than clients or competitors of the Company or any of its subsidiaries or
its affiliates (or their representatives) or members of the press or the
financial community that do not have a material adverse effect upon the Company;
and provided further that nothing contained in this Section 12(a) or in any
other provision of this Agreement shall preclude the Executive from making any
statement in good faith which is required by law, regulation or order of any
court or regulatory commission, department or agency. During the Full-Time
Employment Period, the Initial Part-Time Employment Period and the duration of
the Company's Directors Part-Time Employment Agreement and upon
reasonable notice and at the expense of the Company, the Executive shall take
such actions as the Company shall reasonably request (reasonableness to include,
but not be limited to, a good faith effort to accommodate the schedules and time
needs of the parties) in furtherance of the client relationships of the Company
and its subsidiaries. Upon the termination of the Full-Time Employment Period,
the Executive shall urge the clients of the Company and its subsidiaries to
maintain their relationships with the Company and its subsidiaries, which
action, together with any other actions required under this Agreement, shall not
require the Executive to perform services (i) during the Initial Part-Time
Employment Period in excess of the limit of 10 days of service during any
calendar quarter set forth in Section 6(b) or (ii) during the duration of the
Company's Directors Part-Time Employment Agreement in excess of 10 days during
any calendar quarter.
(b) The Company shall not, at any time during the Full-Time Employment
Period, the Initial Part-Time Employment Period or the duration of the Company's
Directors Part-Time Employment Agreement or thereafter, authorize any person to
make or allow, nor shall the Company condone the making of, any statement,
publicly or privately, which would disparage the Executive; provided, however,
that the Company shall not be in breach of this restriction if such statements
consist solely of (i) private statements made to any officers, directors or
employees of the Company or (ii) private statements made to persons other than
clients or competitors of the Company or any of its subsidiaries or affiliates
(or their representatives) or members of the press or the financial community
that do not have a materially adverse effect upon the Executive; and provided
further that nothing contained in this Section 12(b) shall preclude any officer,
director, employee, agent or other representative of the Company from making any
statement in good faith which is required by any law, regulation or order of any
court or regulatory commission, department or agency.
13. Enforcement. The parties hereto agree that the Company would be damaged
irreparably in the event that any provision of section 10, 11, or 12 of this
Agreement were not performed in accordance with its terms or were otherwise
breached and that money damages would be an inadequate remedy for any such
nonperformance or breach. Accordingly, the Company and its successors or
permitted assigns shall be entitled, in addition to other rights and remedies
existing in their favor, to an injunction or injunctions to prevent any breach
or threatened breach of any of such provisions and to enforce such provisions
specifically (without posting a bond or other security). Each of the parties
agrees that he or it will submit himself or itself to the personal jurisdiction
of the courts of the State of Illinois in any action by the other party to
enforce an arbitration award against him or it or to obtain interim injunctive
or other relief pending an arbitration decision.
14. Survival. Sections 10, 11, 12 and 13 of this Agreement shall survive and
continue in full force and effect in accordance with their respective terms,
notwithstanding any termination of the Full-Time Employment Period, the Initial
Part-Time Employment Period or the duration of the Company's Directors Part-Time
Employment Agreement.
15. Arbitration; Certain Costs. Any dispute or controversy between the
Company and the Executive, whether arising out of or relating to this Agreement,
the breach of this Agreement, or otherwise, shall be settled by arbitration
administered by the American Arbitration Association in accordance with its
Commercial Rules then in effect and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall have the authority to award any remedy or relief that a court
of competent jurisdiction could order or grant, including, without limitation,
the issuance of an injunction. However, either party may, without inconsistency
with this arbitration provision, apply to any court having jurisdiction over
such dispute or controversy and seek interim provisional, injunctive or other
equitable relief until the arbitration award is rendered or the controversy is
otherwise resolved. The Company shall reimburse the Executive, upon demand, for
all costs and expenses (including without limitation attorneys' fees) reasonably
incurred by the Executive in good faith in connection with this arbitration
provision, including without limitation in connection with any such application
undertaken by the Executive in good faith, as well as for all such by the
Executive in connection with entering and/or enforcing the award rendered by the
arbitrator. Except as necessary in court proceedings to enforce this arbitration
provision or an award rendered hereunder, or to obtain interim relief, neither a
party nor an arbitrator may disclose the existence, content or results of any
arbitration hereunder without the prior written consent of the Company and the
Executive. The Company and the Executive acknowledge that this Agreement
evidences a transaction involving interstate commerce. Notwithstanding any
choice of law provision included in this Agreement, the United States Federal
Arbitration Act shall govern the interpretation and enforcement of this
arbitration provision.
16. Expenses of this Agreement. The Company shall pay the Executive's legal
fees and expenses incurred in connection with this Agreement, in an amount not
to exceed $30,000, promptly upon submission to the Company of a detailed
statement therefor, subject to approval of the Company's General Counsel.
17. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed given when (a) delivered
personally or by overnight courier to the following addresses of the other party
hereto and his or its counsel (or such other address for such party or his or
its counsel as shall be specified by notice given pursuant to this Section 17)
or (b) sent by facsimile to the following facsimile numbers of the other party
hereto and his or its counsel (or such other facsimile number for such party or
his or its counsel as shall be specified by notice given pursuant to this
Section 17), with the confirmatory copy delivered by overnight courier to the
addresses of such party and his or its counsel pursuant to this Section 17:
(a) if to the Company, to:
Chief Human Resources Officer
True North Communications Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxx X. Xxxx
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: 312-853-7036
(b) if to the Executive, to:
Xxxxx Xxxxx
000 Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxx
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: 000-000-0000
18. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under applicable law or rule in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Agreement or the
validity, legality or enforceability of such provision in any other
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
19. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes and preempts any prior understanding, agreements or representations
by or between the parties, written or oral, which may have related in any manner
to the subject matter hereof; it being understood that this Agreement relates to
the terms of the Executive's employment from and after the date hereof and
nothing herein supersedes or preempts the Existing Employment Agreement insofar
as it applies to periods prior to the date hereof.
20. Successors and Assigns. This Agreement shall be enforceable by the
Executive and his heirs, executors, administrators and legal representatives,
and by the Company and its successors and permitted assigns. Any successor of
the Company shall assume the liabilities of the Company hereunder. This
Agreement shall not be assigned by the Company other than to a successor
pursuant to a merger, consolidation or transfer
of all or substantially all of the capital stock or assets of the Company. The
Executive's rights pursuant to this Agreement shall continue notwithstanding any
change in control (as defined in the Directors Part-Time Employment Agreement).
21. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Illinois without
regard to principles of conflict of laws.
22. Amendment and Waiver. The provisions of this Agreement may be amended or
waived only by the written agreement of the Company and the Executive, and no
course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
23. Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
TRUE NORTH COMMUNICATIONS INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx
Chairman of the Compensation
Committee of the Board of
Directors
/s/ Xxxxx Xxxxx
---------------
Xxxxx Xxxxx
