1
Exhibit 10.12
SELECT EXECUTIVE RETIREMENT INCOME PLAN
This agreement made December 31, 1994, by and between Young & Rubicam Inc., a
company organized under the laws of the State of New York (herein the Company)
and Xxxx X. XxXxxxx (the Employee).
In consideration of the agreement hereinafter contained, the parties agree as
follows:
1. The Employee agrees to serve the Company in such capacity as the Board of
Directors of the Company may designate from time to time during a period
commencing on the date hereof and continuing until terminated by
retirement or by either party on at least 60 days prior written notice.
Nothing contained herein shall be construed as conferring upon the
Employee the right to continue in the employ of the Company as an
executive or in any other capacity.
2. During the term of his employment, the Employee shall devote his full
business time, attention, skill and effort to the performance of his
duties for the Company.
3. During the term of his employment, the Company shall pay the Employee such
salary, other compensation and benefits payable as the Company may from
time to time determine. In addition, Employee shall be entitled to amounts
payable pursuant to the Select Executive Retirement Income Plan ("SERIP")
as provided below.
4. The benefits to be paid pursuant to SERIP (unless they are forfeited by
the occurrence of any of the events of forfeiture specified in paragraph 5
below) are as follows:
A. If the Employee's full-time employment hereunder is terminated on or
after three years from the date hereof, the Company shall pay to him
$50,000 per year each year for the rest of his life, as soon as
administratively feasible after January 1st of each year, commencing
either the year following the year his full-time employment ceases
or the January 1st following the date he reaches 60, whichever is
the last to occur (except in the event of death or disability as
described in subparagraphs 4.C. and 4.D. below); however, in no
event will payment commence prior to the January 1st following the
date on which the Employee ceases to be an active full-time employee
of the Company.
B. If the Employee's employment with the Company eases for any reason
other than death or disability prior to three years from the date
hereof, all rights hereunder shall be forfeited. If the Employee's
employment ceases by reason of death or disability as set forth
below, he shall be deemed to have been fully employed for three
years from the date hereof as required in subparagraph 4.A. above.
2
C. If the Employee should die before payments pursuant to SERIP
commence, ten annual payments shall be made to the Employee's
designated beneficiary commencing as soon as administratively
feasible after the Company has received notification of death. If
the Employee should die after payments pursuant to SERIP have
commenced but before he has received ten payments, the Company shall
continue to pay to the Employee's designated beneficiary annual
payments until the total number of payments to the Employee and his
designated beneficiary equals ten.
D. The Employee shall be deemed to become disabled for purposes of
subparagraph 4.B. above if the Company shall find, on the basis of
medical evidence satisfactory to the Company, that the Employee is
disabled, mentally or physically, so as to be prevented from
performing the duties he was performing for the Company at the time
of disability and such disability appears to be permanent or of
longstanding duration. If the Employee becomes disabled, annual
payments pursuant to SERIP shall begin as soon as administratively
feasible after a determination of disability has been made.
E. In the event that the Employee leaves the employ of the Company
prior to attaining age 60, whether voluntarily or involuntarily, the
amount payable pursuant to SERIP will be paid to the Employee in
annual installments commencing on or about the January 1st following
the date on which the Employee attains age 60.
5. Notwithstanding anything contained herein to the contrary, no payment of
any then unpaid SERIP installments shall be made and all rights under this
Agreement of the Employee, his designated beneficiary, executors,
administrators, heirs, or any other person, to receive payments thereof
shall be forfeited if there shall be a breach of the following conditions:
A. The Employee shall not, during the term of his employment or at any
time prior the second anniversary of the date of the termination of
his employment with the Company, directly or indirectly, (i) solicit
any of the clients who were or had been served by the Company or any
of its subsidiaries or affiliates at the time of such termination or
during the six months prior thereto, (ii) own, operate, join,
control, engage in, or participate in the ownership, management,
operation or control of, or be a director or an employee of, or a
business consultant to, any business, firm or corporation which is
similar to or competes with the business of the Company or any of
its subsidiaries or affiliates as conducted on the date of such
termination or during the six months prior thereto; provided,
however, that the provisions of this subparagraph shall not apply to
investments by the Employee in shares of stock traded on a national
market which shall have an
2
3
aggregate marked value, at the time of acquisition, of less than
$50,000 and which shall constitute less than one percent of the
outstanding shares of such stock, or (iii) solicit for purposes of
employment any employee of the Company, its subsidiaries or
affiliates, or induce any such employee to terminate his employment.
B. During the period commencing on the date of the termination of the
employment of the Employee with the Company and ending on the second
anniversary of the date of such termination, the Employee shall
perform such consulting and advisory services for the Company as
shall from time to time be reasonably assigned to him by the Board
of Directors of the Company; provided, however, that such services
shall be rendered at such place or places and at such time or times
as the Employee shall determine, and in no event shall the Company
require the Employee to devote more than three days per month in
performing such services. The Company shall give the Employee
reasonable notice of the times when it will require the Employee's
consulting or advisory services and the Employee will have
reasonable time after receipt of such notice to render such
services. The Company shall reimburse the Employee for reasonable
expenses incurred by the Employee in connection with the rendition
of such services in accordance with the Company's policies.
6. Nothing contained in this Agreement and no action taken pursuant to the
provisions of this Agreement shall create or be construed to create a
trust or any kind of fiduciary relationship between the Company and the
Employee, his designated beneficiary or any other person.
7. A. The Employee, by acceptance of the benefits of SERIP, covenants and
agrees that anything herein to the contrary notwithstanding, any
payments due to such Employee hereunder shall be subordinate and
junior to the extent and manner hereinafter set forth, to the
principal of and premium (if any) and interest on any and all Senior
Indebtedness as defined in subparagraph 7.C. below whether now
outstanding or hereafter incurred or assumed:
1. In the event of any insolvency, bankruptcy, receivership,
liquidation, dissolution, reorganization or other similar
proceedings, whether voluntary or involuntary, relating to the
Company or to its creditors, as such, or to its property, then
the holders of Senior Indebtedness shall be entitled to
receive payment in full of all principal, premium (if any) and
interest on all Senior Indebtedness before any Employee is
entitled to receive any payment hereunder, and, accordingly,
the holders of Senior Indebtedness shall be entitled to
receive for application in payment thereof any payment or
distribution of any kind or character, whether in cash or
property or
3
4
securities, which may be payable or deliverable in any such
proceedings in respect hereof; and
2. Without in any way limiting the effect of the foregoing
provisions, during the continuance of any default on any
Senior Indebtedness, no payment hereunder shall be made if (A)
notice of such default in writing or by telegram has been
given to the Company by any holder or holders of any Senior
Indebtedness, (B) judicial proceedings shall be pending in
respect of such default or (C) judgment is obtained against
the Company by the holders of Senior Indebtedness or any one
of them if as a result of such default it shall remain
unsatisfied; and
3. Should any benefit hereunder be received by the Employee in
violation of the subordination provisions contained in this
paragraph 7, such Employee agrees to hold such benefits in
trust and as trustee for the account of the holders of Senior
Indebtedness.
B. The above provisions in regard to subordination are solely for the
purpose of defining the relative rights of the holders of Senior
Indebtedness on the one hand and the Employee on the other hand, and
nothing herein shall impair, as between the Company and the
Employee, the obligation of the Company, which is unconditional and
absolute, to pay to the Employee all amounts due hereunder in
accordance with its terms.
C. For purposes of this Agreement, "Senior Indebtedness" shall mean (i)
any Indebtedness (as hereinbelow defined) of the Company to any
bank, financial institution or third party lender, any guarantee by
the Company of any Indebtedness of an Affiliate (as hereinbelow
defined) to a bank, financial institution or other third party
lender and any guarantee by the Company of Indebtedness or other
obligations of an Affiliate to any person, firm or entity in respect
of advertisements placed by or on behalf of such Affiliate, whether
such Indebtedness, obligation or guarantee is now outstanding or
hereafter incurred or assumed, and any refinancing, extensions,
renewal or increases thereof, and (ii) the Company's Indebtedness or
other obligations (including any refinancing, extension, renewal or
increase thereof) to third parties in connection with or arising out
of the issuance by employees of the Company or any Affiliate of
promissory notes ("Employee Notes") in connection with financing of
the purchase by such employees of either limited partnership units
of Young & Rubicam L.P. or the common stock of the Company or the
financing of the purchase of Employees Notes, including, without
limitation, obligations of the Company to banks, financial
institutions or other third party lenders to purchase either (1)
limited
4
5
partnership units of Young & Rubicam L.P. or common stock of the
Company held as collateral by such parties; (2) Employee Notes; or
(3) promissory notes evidencing loans to the Company or any
Affiliate. For the purposes of this definition, Indebtedness or
other obligations of the Company (1) to affiliated or special
purpose entities formed for the purpose of facilitating the
obtaining or administration of financing (a) for the Company or an
Affiliate, (b) for the purchase by employees of the Company or an
Affiliate of either limited partnership units of Young & Rubicam
L.P. or the common stock of the Company, or (c) for the purchase of
Employee Notes or (2) to banks, financial institutions or other
third party lenders which provide financing for such affiliated or
special purpose entities, shall be deemed to be included within the
term Senior Indebtedness.
As used herein "Affiliate" shall mean Young & Rubicam L.P. and any
business entity at least 10% of the value of which is owned,
directly or indirectly, by the Company.
As used herein "Indebtedness" shall mean (i) any obligation or
indebtedness for borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property
originally financed on a long term basis (including pursuant to
capital leases), (ii) any obligation under any contract providing
for the making of loans or advances and (iii) guarantees (and other
obligations under any other contracts which are substantially
equivalent to guarantees), endorsements and other contingent
liabilities (whether direct or indirect) in connection with the
foregoing."
8. The beneficiary referred to in this Agreement may be designated or changed
by the Employee without the consent of any prior beneficiary on a form
provided by the Company and delivered to the Company at any time prior to
death. If no such beneficiary shall survive the Employee, the death
benefit payable under paragraph 4 above shall be payable to the Employee's
estate.
9. The right to the Employee or any other person to payment pursuant to SERIP
or other benefits under this Agreement shall not be assigned, transferred,
pledged or encumbered except by will or by the laws of descent and
distribution or by the Employee's designation of a beneficiary in the
manner provided for in this Agreement.
10. This Agreement shall be binding upon and inure to the benefit of the
Company, its successor and assigns, and the Employee and his heirs,
executors, administrators, and legal representatives and designated
beneficiaries under this Agreement.
5
6
11. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York.
YOUNG & RUBICAM INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
/s/ Xxxx X. XxXxxxx
--------------------------------
Employee
/s/ Xxxx X. Xxxxxxx
--------------------------------
Acting Secretary
6
