EXHIBIT 10.26
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of _________________ between
True North Communications Inc., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxx (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 the Company as
President, FCB Chicago; and
WHEREAS, the Company and the Executive desire to enter into
this Agreement to provide for the continued employment of the Executive by the
Company upon the terms and subject to the conditions set forth herein.
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 shall end
on December 31, 1999; provided that the Full-Time Employment Period may be
extended by the Company as of December 31, 1999 and each December 31 thereafter
for one additional year upon mutual consent of the Executive and the Company
provided written notice is given not less than six months prior to such December
31.
2. Position and Duties. The Company shall employ the Executive
during the Full-Time Employment Period, with the title of President, FCB Chicago
(or such other title as may be mutually agreed upon by the Executive and the
Company). During the Full-Time Employment Period, the Executive shall perform
faithfully and
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loyally and to the best of the Executive's abilities the duties assigned
hereunder, shall devote full business time, attention and effort to the affairs
of the Company and shall use 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 7.
3. Compensation.
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(a) Annual Base Salary. With respect to the Full-Time
Employment Period, the Company shall pay to the Executive an annual salary not
less than the rate of $350,000 in accordance with the Company's regular payroll
practices. The annual base salary will be reviewed periodically in accordance
with guidelines applicable to the Company's senior executives generally.
(b) Incentive Compensation. During the Full-Time Employment
Period, the Executive will participate in the VIC, DVIC and VISO components of
the Company's Executive Compensation Program, pursuant to the terms of such
plans as they may be amended from time to time.
(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
medical, dental, salary continuance, short-term disability, long-term
disability, employee life, group life, travel accident insurance plans, pension,
profit sharing, stock purchase 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, subject to
modifications of general application to senior executives or all other
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.
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(a) Qualifying Termination. For purposes of this Agreement,
"Qualifying Termination" means (i) termination of the Executive's employment by
the Company without cause, (ii) termination by the Company on account of the
Executive having become unable (as determined by the Company in good faith) to
regularly perform his duties hereunder by reason of illness or incapacity for a
period of more than six consecutive months ("Termination for Disability"), (iii)
the Executive's death or (iv) termination by the Executive due to the
occurrence, without the Executive's express written consent, of any of the
following events:
(1) any of (i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position(s), duties,
responsibilities or status with the Company at the effective date of this
Agreement, (ii) a change in the Executive's reporting responsibilities, titles
or offices with the Company, or (iii) any removal or involuntary termination of
the Executive from the Company otherwise than as expressly permitted by this
Agreement or any failure to re-elect the Executive to any position with the
Company held by the Executive at the effective date of this Agreement;
(2) a reduction by the Company in the Executive's rate of
annual base salary;
(3) any requirement of the Company that the Executive (i) be
based anywhere other than at the facility where the Executive is located at the
effective date of this Agreement or (ii) travel on Company business to an extent
substantially more burdensome than the travel obligations of the Executive at
the effective date of this Agreement;
(4) the failure of the Company to (i) continue in effect any
employee benefit plan, compensation plan or employee agreement (inclusive of
this Agreement) in which the Executive is participating, unless the Executive is
permitted to participate in other plans providing the Executive with
substantially comparable benefits, or the taking of any action by the Company
which would adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any such plan, (ii) provide the Executive
and the Executive's dependents welfare benefits including, without limitation,
medical, dental, disability, salary continuance, employee life, group life, and
travel accident insurance plans and programs in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer Executives of the Company and its affiliated companies, (iii) provide
fringe benefits in accordance with the most favorable plans, practices, programs
and policies of the Company and its affiliated companies in effect for the
Executive or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer Executives of the Company
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and its affiliated companies, (iv) provide an office or offices of a size and
with furnishings and other appointments, together with exclusive personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated companies
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer Executives of the Company and its
affiliated companies, (v) provide the Executive with paid vacation in accordance
with the most favorable plans, policies, programs and practices of the Company
and its affiliated companies or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer Executives of
the Company and its affiliated companies, or (vi) reimburse the Executive
promptly for all reasonable employment expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the
Company and its affiliated companies, or if more favorable to the Executive, as
in effect generally at any time thereafter with respect to other peer Executives
of the Company and its affiliated companies; or
(5) the failure of the Company to obtain the assumption
agreement from any successor as contemplated in Section 15.
For purposes of the Agreement, any good faith determination of
a Qualifying Termination made by the Executive shall be conclusive; provided,
however, that an isolated, insubstantial and inadvertent action taken by the
Company in good faith and which is remedied by such Company promptly (the latter
of 60 days or as soon as reasonably practicable) after receipt of written notice
thereof given by the Executive shall not constitute a Qualifying Termination.
(b) Nonqualifying Termination. For purposes of this Agreement,
"Nonqualifying Termination" means a termination of the Executive's employment
(i) by the Company for Cause, or (ii) by the Executive for any reason other than
for a Qualifying Termination.
(c) Definition of Cause. For purposes of this Agreement,
"Cause" means (i) a material breach by an Executive of those duties and
responsibilities of the Executive which do not differ in any material respect
from the duties and responsibilities of the Executive (other than as a result of
incapacity due to physical or mental illness), which is demonstrably willful and
deliberate on the Executive's part, which is committed in bad faith or without
reasonable belief that such breach is in the best interests of the Company and
which is not remedied in a reasonable period of time after receipt of written
notice from the Company specifying such breach or (ii) the commission by the
Executive of a felony involving moral turpitude.
(d) 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
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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) Qualifying Termination, except for Death or Disability. If
the Full-Time Employment Period terminates for a reason set forth in clause (i)
or (iv) of Section 4(a):
(i) the Executive shall be entitled to receive (1) all
salary payable with respect to the period through the term of
the Agreement as specified in Section 1, hereinafter referred
to as the Severance Period, but in no instance, will such
salary payments be for a period less than 12 months, (2)
unpaid VIC and DVIC and VISO awarded, but not yet granted, for
the prior calendar year, (3) the larger amount of (x) or (y)
determined as follows: (x) 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 or (y) a cash incentive compensation payment equivalent
to the average of the three prior years' combined VIC and DVIC
amounts, and (4) reimbursement of expenses incurred through
the date of such termination;
(ii) each stock option granted to the Executive by the
Company then held by the Executive shall, on the date of such
termination be considered 100% vested, and be exercisable in
full by the Executive for up to three years after the date of
termination, but in no case beyond the term of such option in
accordance with the applicable stock option agreement in
effect at the time of such termination. The Company covenants
that the Compensation Committee of the Board shall take such
actions as necessary so that upon the termination of the
Executive's employment as provided in Section 5(a), all
current and future stock awards, are fully exercisable for the
three-year period, or until the end of the term of the option,
whichever occurs first;
(iii) the Executive shall be entitled to receive all
vested and unvested amounts, including all credited interest,
in the Executive's DVIC account. Such payment will be made
under the terms of the Executive's DVIC Agreement and commence
at the direction of the Executive but no sooner than at the
conclusion of payments under the Severance Period. The Company
covenants that the Compensation Committee of the Board shall
take such action as necessary so that upon termination of the
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Executive as provided in Section 5(a), all current and future
DVIC awards are fully vested.
(iv) during the Severance Period, the Executive shall
be entitled to participate in the Company's medical, dental
and life insurance plans on terms no less favorable than on
the termination date, subject to modifications of general
application to all similarly situated employees.
(b) Qualifying Termination Due to Death or Disability. If the
Full-Time Employment Period terminates for a reason set forth in clause (ii) or
(iii) of Section 4(a):
(i) the Executive or the Executive's executor,
administrator or other legal representative, as the case may
be, shall be entitled to receive (1) all salary payable
through the date of such termination, (2) unpaid VIC and DVIC
and VISO awarded, but not yet granted, for the prior calendar
year, (3) VIC and DVIC and VISO for the then current calendar
year, prorated through the date of such termination based on
actual results of operations for such full calendar year, and
(4) reimbursement of expenses incurred through the date of
such termination;
(ii) each stock option granted to the Executive by the
Company then held by the Executive shall be exercisable to the
extent it is vested at the date of termination by the
Executive or the Executive's executor, administrator or other
legal representative, as the case may be, for up to three
years after the date of termination, but in no case beyond the
term of such option in accordance with the applicable stock
option agreement in effect at the time of such termination.
The Company covenants that the Compensation Committee of the
Board shall take such actions as necessary so that upon the
termination of the Executive's employment as provided in
Section 5(b), all current and future stock awards, are
exercisable for the three-year period, or until the end of the
term of the option, whichever occurs first;
(iii) the Executive or the Executive's executor,
administrator or other legal representative, as the case may
be, shall be entitled to receive all vested and unvested
amounts, including all credited interest, in the Executive's
DVIC account. Such payment shall be made under the terms of
the Executive's DVIC Agreement and commence at the direction
of the Executive or the Executive's executor, administrator or
other legal representative, as the case may be. The Company
covenants that the Compensation Committee of the Board shall
take such actions as necessary so that upon the termination of
the Executive's employment as provided in Section 5(b), all
current and future DVIC awards, are fully vested.
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(iv) the Executive or the Executive's qualified
dependents, as the case may be, shall be entitled to
participate in all other applicable benefit plans or programs
in accordance with the provisions of such plans.
(c) Nonqualifying Termination. If the Full-Time Employment
Period terminates for a reason set forth in Section 4(b):
(i) the Executive shall be entitled to receive (1) all
salary payable through the date of such termination, (2)
unpaid VIC and DVIC and VISO awarded, but not yet granted, for
the prior calendar year, and (3) reimbursement of expenses
incurred through the date of such termination;
(ii) each stock option granted to the Executive by the
Company then held by the Executive shall, on the date of
termination, is exercisable pursuant to the terms of such
option in accordance with the applicable stock option
agreement in effect at the time of such termination.
(iii) the Executive shall be entitled to receive the
vested portion of the amounts in the Executive's DVIC account.
Such payments will be made per terms of the Executive's DVIC
Agreement.
(iv) the Executive shall be entitled to participate in
all other applicable benefit plans or programs in accordance
with the provisions of such plans.
6. 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.
7. Noncompetition. (a) Covenant Not to Compete. During the
period of the Executive's employment by the Company and for a period of one year
thereafter following any termination, except with the prior written consent of
the Board, the Executive:
(1) shall not engage in any activities whether as employer,
proprietor, partner, stockholder (other than the holder of less than 5% of the
stock of a corporation the securities of which are traded on a national
securities exchange or in the over-the-counter market), director, officer,
employee or otherwise, in competition with (i) the businesses conducted at the
date hereof by the Company or any of its subsidiaries or affiliates ("True North
Group"), or (ii) any business in which the True North Group is substantially
engaged at any time during the Employment Period;
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(2) shall not solicit, in competition with the True North
Group, any person who is a customer of the businesses conducted by the True
North Group at the date hereof or of any business in which the True North Group
is substantially engaged at any time during the Employment Period; and
(3) shall not induce or attempt to persuade any employee of
the True North Group to terminate the employment relationship with any of the
True North Group.
(b) Confidential Information and Trade Secrets. The Executive
shall not, at any time during the Employment Period or thereafter, make use of
any bidding information (or computer programs thereof) of any of the True North
Group, nor divulge any trade secrets or other confidential information of any of
the True North Group, except to the extent that such information becomes a
matter of public record, is published in a newspaper, magazine or other
periodical available to the general public or as the Company may so authorize in
writing; and when an Executive shall cease to be employed by the Company, the
Executive shall surrender to the Company all records and other documents
obtained by him or entrusted to him during the course of his employment
hereunder (together with all copies thereof) which pertain specifically to any
of the businesses covered by the covenants in Section 7(a)(1) or which were paid
for by any of the True North Group; provided, however, that the Executive may
retain copies of such documents as necessary for the Executive's personal
records for federal income tax purposes.
(c) Scope of Covenants; Remedies. The following provisions
shall apply to the covenants of the Executive contained in this Section:
(1) the covenants covered in Section 7(a)(1) and 7(a)(2) shall
apply within all territories in which any of the True North Group is actively
engaged in the conduct of business during the Employment Period, including,
without limitation, the territories in which customers are then being solicited;
(2) without limiting the right of the Company to pursue all
other legal and equitable remedies available for violation by the Executive of
the covenants contained in Sections 7(a) and 7(b), including the cessation and
recovery of payments and benefits paid and provided under this Agreement, it is
expressly agreed that such other remedies cannot fully compensate the Company
for any such violation and that the Company shall be entitled to injunctive
relief to prevent any such violation or any continuing violation thereof;
(3) each party intends and agrees that if in any action before
any court or agency legally empowered to enforce the covenants contained in
Sections 7(a) and 7(b) any term, restriction, covenant or promise contained
therein is found to be
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unreasonable and accordingly unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency; and
(4) the covenants contained in Sections 7(a) and 7(b) shall
survive the conclusion of the Executive's employment by the Company.
8. Nondisparagement; Cooperation. The Executive shall not, at
any time during the Full-Time Employment Period 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 8 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.
9. Enforcement. The parties hereto agree that the Company
would be damaged irreparably in the event that any provision of Section 7 or 8
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.
10. Survival. Sections 7, 8 and 9 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.
11. Arbitration. 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
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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. 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 State Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision.
12. Notice. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when personally delivered or five days after deposit in the United States
mail, certified and return receipt requested, postage prepaid, addressed (1) if
to the Executive, to the most recent address then shown on the employment
records of the Executive's Employer, and if to the Company, to True North
Communications Inc., 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000,
Attention: Secretary, or (2) to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
13. 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 determined 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.
14. 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.
15. Successors and Assigns. This Agreement shall be
enforceable by the Executive and the Executive's heirs, executors,
administrators and legal representatives,
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and by the Company and its successors and permitted assigns. Any successor of
the Company shall assume by instrument delivered to the Executive 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.
16. 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.
17. 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.
18. 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:
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Xxxxxxx X. Xxxxxxxx
Chairman of the Compensation
Committee of the Board of Directors
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Xxxxxx X. Xxxx
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