Exhibit 10.18
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of August 1, 1999 between True North
Communications Inc., a Delaware corporation (the "Company" or "True North") and
Xxx-Xxxxxx Xxxxxxxxx (the "Executive").
WHEREAS, the Company is a global communications holding company with
ownership interests in subsidiaries, affiliates and joint ventures that are
engaged in the advertising agency business, the multimedia production business,
the business of planning and buying of media time and space and related
businesses (the Company and the subsidiaries, affiliates and joint ventures in
which it from time to time has equity interests are hereinafter referred to
collectively as the "True North Group");
WHEREAS, the Executive currently serves the Company as the Chairman
and Chief Executive Officer of Bozell Worldwide, Inc. ("Bozell");
WHEREAS, the Executive and Bozell's direct parent company, Bozell,
Jacobs, Xxxxxx & Xxxxxxxx, Inc., have entered into an Employment Agreement dated
March 30, 1992 and subsequently amended from time to time (the "BJK&E
Agreement"); and
WHEREAS, the Company and the Executive desire to enter into this
Agreement to replace the BJK&E Agreement and to provide for the continued
employment of the Executive by the Company upon the terms and subject to the
conditions set forth herein. (Unless noted otherwise, all references herein to
the Company shall include Bozell.)
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 employment of the
Executive by the Company pursuant to this Agreement (the "Employment Period")
shall commence on the date hereof (the "Effective Date") and, unless earlier
terminated, shall expire on March 31, 2004; provided that the Employment Period
may be extended by mutual written agreement of the parties. In addition, the
Executive may choose at his sole discretion to retire after March 31, 2001 but
prior to the scheduled expiration of the Employment Period and thereby trigger
commencement of the four-year Consulting Period; provided that the Executive
must provide the Company with at least six months' advance written notice of
such retirement, unless the Executive's health condition is such that a shorter
notice period is necessary.
2. Position and Duties. The Company shall employ the Executive
during the Employment Period with the title of Chairman and Chief Executive
Officer of Bozell (or such other title as may be mutually agreed upon by the
Executive and the Company); provided that the Executive will agree to relinquish
the title of Chief Executive Officer of Bozell and will cooperate with the
transition to the successor chief executive officer if and when he or she is
named. The Executive shall report directly to the True North Chief Executive
Officer (the "True North CEO"). The Executive's principal place of business
during the Employment Period shall be in New York City. While the Executive is
in the full-time employment of the Company, Company management will recommend
that the Executive be slated for election as a member of the True North Board of
Directors (the "Board"). Subject to the powers, authority and responsibilities
vested in the Board, in duly constituted committees of the Board and in the True
North CEO, the Executive shall have the duties and responsibilities commensurate
with his position and title as are reasonably assigned to him from time to time
by the True North CEO or the Board. During the Employment Period, the Executive
shall perform faithfully and loyally and to the best of the Executive's
abilities his duties hereunder, shall devote his full business time, attention
and efforts to the affairs of the True North Group 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, provided that they do not interfere with the performance of the
Executive's duties hereunder, and, with the prior approval of the Board, may
serve as a director of any business corporation; provided that such service does
not violate the terms of any of the covenants contained in Section 8 hereof.
3. Compensation.
(a) Annual Base Salary. During the Employment Period, the Company
shall pay to the Executive an annual base salary at the rate of $1,024,800 per
annum in accordance with the Company's regular payroll practices. This annual
base salary shall be reviewed periodically in accordance with guidelines
applicable to the Company's senior executives generally.
(b) Incentive Compensation. During the Employment Period, the
Executive shall be entitled to participate in the True North Executive
Compensation Program, as such Program applies to similarly situated senior
executives and as such Program may be amended from time to time. As currently
in effect, such Program consists of annual incentive compensation and long-term
incentives in the form of Earnings Performance Units and stock options.
(c) Other Benefits. During the Employment Period, the Executive
shall be entitled to participate in the Company's employee benefit plans and
programs and fringe benefits that are generally available to senior executives
of the Company from time to time, subject to compliance with Company policies
and procedures; provided that the fringe benefits currently applicable to the
Executive under the BJK&E Agreement shall remain in place during the Employment
Period.
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(d) Expense Reimbursement. During the 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. Consulting Period and Benefits.
(a) Commencement. At the expiration of the Employment Period in
accordance with Section 1 above, the Executive shall become a consultant to the
Company for the four-year period beginning on the day following the last day of
the Employment Period (the "Consulting Period").
(b) Duties and Responsibilities. During the Consulting Period, the
Executive shall make himself available, upon reasonable notice, to perform
services for the Company that shall be related to such projects and matters as
the Board or the True North CEO may designate from time to time and that shall
be commensurate with the Executive's years of experience and level of skill.
Such services shall include consulting and advisory services with respect to the
operation of the Company's advertising business and the maintenance of
harmonious relations between the Company and those clients of the Company as may
be designated by the Board or the True North CEO. Without limiting the
generality of the foregoing, the Executive shall (i) cooperate fully with the
True North CEO and the other senior executive officers of the Company, (ii)
provide such assistance and information as may be reasonably requested by the
Board or the True North CEO, and (iii) be available, by telephone or in person,
at such times and places as may be reasonably requested by the Company and as
may be mutually convenient to the Company and the Executive. During the
Consulting Period, (1) the Executive shall not be required to devote more than
an average of six hours per week to such consulting and advisory services and
(2) the Executive may engage or participate in, or become employed by, or render
advisory or other services in connection with, any and all other business
activities which are not inconsistent with or otherwise in breach of the
Executive's duties and obligations to the Company (including, but not limited
to, the obligations set forth in Sections 8 and 9 of this Agreement).
(c) Consulting Benefits. During the Consulting Period, the Executive
shall be paid an annual cash benefit equal to $950,000. These consulting
payments shall be made no less frequently than monthly, and shall be subject to
any applicable tax withholding and tax reporting requirements. 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 and responsibilities during the Consulting Period. All stock options
granted to the Executive after the Effective Date shall, to the extent vested as
of the end of the Employment Period, be exercisable during the Consulting
Period, subject to expiration at the end of the specified term of each such
option. During the Consulting Period and for the remainder of their respective
lives, the Executive and his current spouse shall be entitled to continued
coverage under the Company's then existing retiree medical plan (subject to the
continued payment of the Executive's portion of the applicable cost).
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(d) Termination of Consulting Period. The Consulting Period shall
terminate prior to the end of the four-year period, and the benefits described
in subsection (c) above shall immediately cease, upon the occurrence of either
of the following: (i) the material failure by the Executive to perform the
reasonably requested duties and responsibilities described in subsection (b)
above (subject to written notice by the Company and a reasonable opportunity to
cure) or (ii) a material breach by the Executive of this Agreement or other
action by the Executive that constitutes "Cause" under Section 5(b) (subject to
written notice by the Company and a reasonable opportunity to remedy any
condition, conduct, action or inaction of the Executive giving rise to the
violation or breach if such violation or breach is remediable). Notwithstanding
the foregoing, if the Executive dies or becomes permanently disabled (see
"Disability" as defined in Section 5(a) below) during the Consulting Period,
then the consulting benefits shall continue to be paid to the Executive or his
estate or designated beneficiary, as applicable, for the remainder of the four-
year Consulting Period; provided that such consulting benefits shall be reduced
by any amounts received by the Executive through a disability policy maintained
by the Company. The Executive shall resume rendering the services described in
subsection (b) above if he should fully recover from any such Disability before
the end of the four-year Consulting Period. The foregoing shall not be
construed as limiting any other rights or remedies that may be available to the
Company upon the Executive's breach of any provision of this Agreement.
5. Termination of Employment Period.
(a) Qualifying Termination. For purposes of this Agreement,
"Qualifying Termination" means the occurrence of any of the following events
prior to the expiration of the Employment Period, as extended if applicable: (i)
termination of the Executive's employment by the Company without Cause (as
defined in subsection (b) below), (ii) termination of the Executive's employment
by the Company on account of the Executive having become unable (as determined
by the Company in good faith) to perform regularly his duties hereunder by
reason of illness or incapacity for a period of more than six consecutive months
(termination for "Disability"), (iii) termination of the Executive's employment
on account of the Executive's death, or (iv) termination of the Executive's
employment by the Executive due to the occurrence, without the Executive's
express written consent, of any of the following events: (1) the assignment to
the Executive of any duties that either (A) are inconsistent in any material
respect with the Executive's position, duties, responsibilities or status with
the Company at the date of this Agreement (or subsequent hereto if such new
position(s), duties, responsibilities or status are agreed to by the Executive)
or (B) result in a material diminution of the Executive's responsibilities, (2)
a material adverse change in the Executive's reporting responsibilities, titles
or offices with the Company (excluding the relinquishment of the Executive's
Chief Executive Officer title as provided in Section 2 above) (3) a material
breach of the Company's obligations set forth in this Agreement, (4) a decrease
in the Executive's base salary that is not agreed to by the Executive, or (5)
any requirement of the Company that the location where the Executive is based is
outside of New York City.
For purposes of this Agreement, an isolated, insubstantial and inadvertent
action taken by the Company in good faith and which is remedied by the Company
promptly (the later of 60 days or
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as soon as reasonably practicable) after receipt of written notice thereof given
by the Executive shall not constitute a basis for a Qualifying Termination.
(b) Definition of Cause. The Company may terminate the Executive's
employment immediately for "Cause" if, in the reasonable determination of the
Board or the Compensation Committee of the Board, as set forth in an action of
the Board or such Committee setting forth in reasonable detail the reasons for
such termination, (i) the Executive engages in conduct that violates significant
policies of the Company after the Executive is notified by the Company that he
is engaging in conduct that violates such policies and that such conduct will be
deemed to be Cause; (ii) the Executive fails to perform the essential functions
of his job (except for a failure resulting from a bona fide illness or
incapacity) or fails to carry out the Board's reasonable directions with respect
to material duties after the Executive is notified by the Company that he is
failing to perform these essential functions or failing to carry out such
reasonable directions and that such conduct will be deemed to be Cause; (iii)
the Executive engages in embezzlement or misappropriation of corporate funds or
other acts of fraud, dishonesty or self-dealing, or commits a felony or any
significant violation of any material statutory or common law duty of loyalty to
the Company; or (iv) the Executive breaches a material provision of this
Agreement (including, but not limited to, the non-compete, non-solicitation,
confidentiality, or non-disparagement provisions in Sections 8 and 9), after the
Executive is notified by the Company that he has breached a material provision
of this Agreement and that such breach will be deemed to be Cause. Prior to any
termination of the Executive for Cause pursuant to clauses (i), (ii) or (iv) of
this Section 5(b), the Company shall give the Executive reasonable opportunity
to remedy any condition, conduct, action or inaction of the Executive giving
rise to the violation or breach of such clause if such violation or breach is
remediable.
6. Consequences of Termination of Employment Period.
(a) Benefits Upon Termination. If the Employment Period terminates
for any reason, the Executive (or the Executive's executor, administrator or
other legal representative, as the case may be) shall be entitled to receive the
following benefits:
(i) within 30 days after the amount in question is reasonably
determinable (1) base salary payable through the date of termination of
employment, (2) unpaid annual incentive compensation for the calendar year
immediately preceding the date of such termination, and (3) reimbursement
of proper expenses incurred through the date of such termination;
(ii) any previously-granted earnings performance units shall be
treated in accordance with the then existing terms of the Company's
Earnings Performance Plan; and
(iii) participation (by the Executive or the Executive's qualified
dependents, as the case may be) in all other applicable benefit plans or
programs in accordance with the
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provisions thereof applicable to terminated employees (or their qualified
dependents, as the case may be).
(b) Additional Benefits Upon Qualifying Termination. If the
Employment Period terminates prior to March 31, 2004 (or any mutually agreed-
upon extended expiration of the Employment Period) for a reason set forth in
Section 5(a), the Executive (or the Executive's executor, administrator or other
legal representative, as the case may be) shall be entitled to receive the
following additional benefits:
(i) within 30 days after the amount in question is reasonably
determinable, annual incentive compensation and stock options for the
calendar year in which such termination shall have occurred, prorated
through the date of such termination based on actual results of operations
for such full calendar year;
(ii) if the Qualifying Termination is for any reason other than death
or Disability:
(1) each stock option granted to the Executive by the Company on or
after the Effective Date then held by the Executive shall on the
date of such termination be 100% vested;
(2) for the lesser of 30 months or the remainder of the scheduled
term of the Employment Period, the Executive shall receive annual
base salary at the rate in effect as of the termination of the
Executive's employment; provided that (A) any agreed-upon
reduction in the Executive's base salary during the Employment
Period shall not be taken into account for purposes of
determining the base salary to be paid to the Executive under
this subparagraph (2), and (B) the Company shall pay this benefit
in one lump sum (without discount) within 90 days after the
Executive's termination of employment, and
(3) for the four-year period immediately following the Executive's
termination of employment, he shall become a consultant to the
Company under Section 4 above, with the corresponding benefits
described in that Section;
(iii) if the Qualifying Termination is due to the Executive's death
or Disability, the Executive or the Executive's executor, administrator or
other legal representative, as the case may be, shall receive the
consulting benefits described in Section 4(c) above for the four-year
Consulting Period; subject in the event of Disability to the same
conditions that would apply under Section 4(d) upon Disability during the
Consulting Period; and
(iv) if the Qualifying Termination is due to the Executive's death,
in addition to the consulting benefits described in Section 4(c) above, for
the six-month period immediately following the Executive's death, the
Executive's executor or administrator
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shall receive the Executive's base salary at the rate in effect at the time
of the Executive's death.
7. 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 and
Medicare taxes.
8. Noncompetition; Nonsolicitation; Confidentiality.
(a) Covenant Not to Compete. The Executive acknowledges that in the
course of his employment with the Company pursuant to this Agreement and the
BJK&E Agreement, the Executive has and will become familiar with confidential
information of the Company and its subsidiaries, affiliates and clients, and
that the Executive's services are of special, unique and extraordinary value to
the Company. Except with the prior written consent of the Board, during the
Employment Period and the Consulting Period (including what would have been the
remaining scheduled terms of the Employment Period and the Consulting period but
for the Executive's resignation or termination for "Cause"):
(i) the Executive 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 (1) the
businesses conducted at the date hereof by the True North Group or (2) any
business in which the True North Group is substantially engaged at any time
during the Employment Period or the Consulting Period;
(ii) the Executive shall not directly or indirectly solicit, call
on, perform services for or otherwise do business with, or interfere in any
way with the Company's relationship with any customer, client or other
business relationship of the businesses conducted by the True North Group
as of the date hereof or of any business in which the True North Group is
substantially engaged at any time during the Employment Period or the
Consulting Period;
(iii) the Executive shall not induce or attempt to persuade any
employee of the True North Group to terminate the employee's employment
relationship with 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 the True North Group,
nor divulge any trade secrets or other confidential information 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 the Executive shall cease to be employed by the Company, the Executive
shall surrender to the
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Company all Company 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 8(a)(i) or which were paid for by 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:
(i) the covenants set forth in Sections 8(a)(i) and 8(a)(ii) shall
apply within all territories in which 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;
(ii) each party intends and agrees that if in any action before any
court or agency legally empowered to enforce the covenants contained in
Sections 8(a) and 8(b) any term, restriction, covenant or promise contained
therein is found to be 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
(iii) the covenants contained in Sections 8(a) and 8(b) shall survive
the conclusion of the Executive's employment by the Company.
9. Nondisparagement; Cooperation. (a) The Executive shall not, at
any time during his employment with the Company or thereafter, make any public
or private statement to the news media, to any True North Group competitor or
client, or to any other individual or entity, if such statement would disparage
any of the True North Group, any of their respective businesses or any director
or officer of any of them or such businesses or would have a deleterious effect
upon the interests of any of such businesses or the stockholders or other owners
of any of them; 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 any of the True North Group by
the Executive in the course of carrying out his duties pursuant to this
Agreement or his duties as a director or officer, or (ii) private statements
made to persons other than clients or competitors of any of the True North Group
(or their representatives) or members of the press or the financial community
that do not have a material adverse effect upon any of the True North Group; and
provided further that nothing contained in this Section 9(a) or in any other
provision of this Agreement shall preclude the Executive from making any
statement in good faith that is required by law, regulation or order of any
court or regulatory commission, department or agency.
(b) The Company shall not, at any time during the Executive's
employment with the Company or thereafter, authorize any person to make, nor
shall the Company condone the making of, any statement, publicly or privately,
that would disparage the Executive;
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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 True North Group or (ii) private
statements made to persons other than clients or competitors of any of the True
North Group (or their representatives) or members of the press or the financial
community that do not have a material adverse effect upon the Executive; and
provided further that nothing contained in this Section 9(b) or in any other
provision of this Agreement shall preclude any officer, director, employee,
agent or other representative of any of the True North Group from making any
statement in good faith that is required by any law, regulation or order of any
court or regulatory commission, department or agency.
10. Enforcement. The parties hereto agree that the Company would be
damaged irreparably in the event that any provision of Section 8 or 9 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 New York 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.
11. Survival. Sections 8, 9 and 10 of this Agreement shall survive
and continue in full force and effect in accordance with their respective terms,
notwithstanding any termination of the Employment Period.
12. 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 in New York, New York 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. 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.
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13. 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 faxed five days after deposit in the United
States mail, certified and return receipt requested, postage prepaid, addressed
(a) if to the Executive, to the most recent address then shown on the employment
records of the Company, with a copy to Xxxxx Xxxxxx, 000 Xxxx Xxxxxx Xxxxx., Xxx
Xxxx, XX 00000 (fax: 000-000-0000), and if to the Company, to True North
Communications Inc., 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000,
Attention: General Counsel, or (b) 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.
14. 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.
15. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes and preempts the BJK&E Agreement and any other
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related in any manner to the subject matter
hereof.
16. Successors and Assigns. This Agreement shall be enforceable by
the Executive and the Executive's heirs, executors, administrators and legal
representatives, and by the Company and its successors and permitted assigns.
Any successor or permitted assign 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.
17. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to principles of conflict of laws.
18. 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.
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19. 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 above written.
TRUE NORTH COMMUNICATIONS INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx,
Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx,
Chairman of the Compensation
Committee of the Board of
Directors
EXECUTIVE
/s/ Xxx-Xxxxxx Xxxxxxxxx
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Xxx-Xxxxxx Xxxxxxxxx
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