EXHIBIT 10.1
[CONFORMED COPY OF JANUARY 1, 2000 AGREEMENT, AS AMENDED ON NOVEMBER 1, 2000]
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 1, 2000 (the "Effective
Date") between True North Communications Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxxx (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"); and
WHEREAS, the Company and the Executive desire to enter into this
Agreement to provide for the 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 initial term of employment of
the Executive by the Company pursuant to this Agreement (the "Initial Term")
shall commence on the Effective Date and, unless earlier terminated, shall end
on the third annual anniversary of the Effective Date; provided that the term of
this Agreement shall automatically be extended for three additional years as of
the day immediately following the end of the Initial Term and as of the day
immediately following the end of each subsequent three-year extended term hereof
unless the Company shall have terminated the automatic extension provisions of
this sentence by giving written notice to the Executive at least 30 days prior
to the then applicable termination date. (The Initial Term and any extension of
the term of this Agreement pursuant to this Section 1 are collectively referred
to herein as the "Employment Period.")
2. POSITION AND DUTIES. As of the Effective Date, the Executive's
title shall be Executive Vice President, General Counsel, and she shall report
directly to the Company's Chief Executive Officer (the "CEO"). The Executive
shall have the authority, duties and responsibilities commensurate with her
position and title (at the relevant time) and such other duties and
responsibilities (not inconsistent with her position) as are assigned to her
from time to time by the CEO or the Board of Directors of the Company (the
"Board"). During the Employment Period, the Executive shall perform faithfully
and loyally and to the best of the
Executive's abilities her duties hereunder, shall devote her full business time,
attention and efforts to the affairs of the True North Group and shall use her
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.
3. COMPENSATION.
(a) ANNUAL BASE SALARY. The Company shall pay to the Executive an
annual base salary at the rate of $260,000 per annum in accordance with the
Company's regular payroll practices. The 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 Company's Executive
Compensation Program, as such Program applies to similarly situated senior
executives and as such Program may be amended from time to time.
(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, including, but not to the extent resulting in
duplicative benefits, the benefit plans and programs and fringe benefit
arrangements generally made available to members of the Management Executive
Committee of the Company (or any successor management governing committee).
(d) EXPENSE REIMBURSEMENT. During the Employment Period, the Company
shall reimburse the Executive for all proper expenses incurred by her in the
performance of her duties hereunder in accordance with the Company's policies
and procedures for senior executives. The Executive shall submit appropriate
invoices for all such expenses.
4. TERMINATION OF EMPLOYMENT PERIOD.
(a) QUALIFYING TERMINATION. For purposes of this Agreement,
"Qualifying Termination" means the occurrence of any of the following events:
(i) termination of the Executive's employment by the Company without Cause (as
defined in subsection (b) below) during the Employment Period, (ii) expiration
of this Agreement at the end of the Initial Term or at the end of any extension
of the term hereof pursuant to a written notice given by the Company to the
Executive in accordance with Section 1 hereof, (iii) 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 her
duties hereunder by reason of illness or incapacity for a period of more than
four consecutive months (termination for "Disability"), (iv) termination of the
Executive's employment on account of the Executive's death, or (v) termination
of the Executive's employment by the Executive due to and within 60 days of the
occurrence, without the Executive's consent, of any of the following events: (1)
any change or changes in the Executive's duties and responsibilities that, taken
as a whole, result in a material
- 2 -
diminution of the Executive's duties and responsibilities, including, but not
limited to, and change resulting in the Executive no longer serving as the
General Counsel of the publicly-held parent company of the True North Group, (2)
a material breach of the Company's obligations set forth in this Agreement, (3)
a decrease in the Executive's base salary, or (4) any requirement of the Company
that the location where the Executive is based be materially changed.
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 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, the Compensation Committee of the Board, or the CEO, as set forth in a
writing setting forth in reasonable detail the reasons for such termination, (i)
the Executive engages in conduct that violates significant policies of the
Company; (ii) the Executive fails to perform the essential functions of her job
(except for a failure resulting from a bona fide illness or incapacity) or fails
to carry out the CEO's or the Board's reasonable directions with respect to
material duties; (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 7 and 8).
5. 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 (unless such termination
is for Cause, as defined in Section 4(b) above), and (3) reimbursement of
proper expenses incurred through the date of such termination; and
(ii) 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 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 after the occurrence of a Qualifying Termination
(as defined in Section 4(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:
- 3 -
(i) within 30 days after the amount in question is reasonably
determinable, annual incentive compensation 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; and
(ii) if the Qualifying Termination is for any reason other than death
or Disability:
(1) all stock options and restricted stock 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) subject to the last sentence of this Section 5(b), for a period
of 24 months commencing on the day immediately following the date
of termination of the employment of the Executive (the "Severance
Period"), the Executive shall be entitled to receive (A) base
salary, at the rate payable as of the date of such termination,
payable in accordance with the Company's normal payroll policies
and (B) annual incentive compensation at the rate of 50% of base
salary; and
(3) subject to the last sentence of this Section 5(b), during the
Severance Period, the Executive shall be entitled to participate
in life insurance, medical and dental benefits on terms no less
favorable than on the termination date, subject to legal
restrictions and to modifications of general application to all
similarly situated employees; and
(iii) each stock option granted to the Executive by the Company on or
after the Effective Date 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 a date 10 years following the date of grant of such option.
As a condition to the receipt of the severance benefits described in
subparagraphs (ii)(2) and (ii)(3) above, the Company reserves the right in
accordance with the standard Company severance policy to require the Executive
to sign a standard separation agreement, containing a general release of claims.
(c) TERMINATION AFTER A CHANGE IN CONTROL. If the Executive incurs a
Qualifying Termination (other than a Qualifying Termination due to death or
Disability) within two years of the occurrence of a "Change in Control" under
and as defined in the Company's Asset Protection Plan (or a similar replacement
plan providing severance benefits to Company employees after a change in
control), then (i) the benefits payable to the Executive pursuant to Section
5(b)(ii)(2) above upon such Qualifying Termination, if any, shall be paid to the
- 4 -
Executive in one lump sum within 60 days of such Qualifying Termination, (ii)
the benefits payable to the Executive pursuant to Section 5(b)(i) upon such
Qualifying Termination, if any, shall be paid to the Executive in one lump sum
within 30 days after the amount in question is reasonably determinable, and
(iii) the restrictions of Section 7(a)(i) shall not apply during the Severance
Period. If mutually agreed upon between the Executive and the Company, these
lump-sum payments shall be reduced to the extent necessary to maximize the total
after-tax benefit to the Executive, after taking into account all applicable
local, state, and federal income and excise taxes, including any applicable
excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended.
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 and
Medicare taxes.
7. NONCOMPETITION; NONSOLICITATION; CONFIDENTIALITY.
(a) COVENANT NOT TO COMPETE. The Executive acknowledges that in the
course of employment with the Company pursuant to this Agreement, the Executive
will become familiar with the Confidential Information (as defined below) of the
Company and its subsidiaries, affiliates and clients, and that the Executive's
services will be of special, unique and extraordinary value to the Company.
Except with the prior written consent of the Board (and subject to the last
sentence of this Section 7(a)):
(i) during the Employment Period and any Severance Period the
Executive shall not engage in any activities, whether as employer,
proprietor, principal, partner, stockholder (other than the holder of 1% or
less of the stock of a corporation the securities of which are traded on a
securities exchange or in the over-the-counter market), director, officer,
employee or otherwise, in competition with (A) the businesses conducted at
the date hereof by the True North Group or (B) any business in which the
True North Group is substantially engaged in or proposed to be engaged in
within the one year period preceding the termination of Executive's
employment with the Company; and
(ii) during the Employment Period (including the remainder of the then
current three-year term of the Employment Period following the Executive's
resignation or termination for "Cause") and any Severance Period the
Executive shall not, directly or indirectly, either on the Executive's
behalf or on behalf of any other person, firm or corporation:
(A) solicit, call on, service or otherwise do business with, or
interfere in any way with the Company's relationship with any
account that is a client of the True North Group at the time of
the Executive's termination, or that was a client of the True
North Group at any time within 12 months prior to the date of
such termination; provided that the foregoing shall apply only to
accounts with whom the Executive had responsibilities for or
learned
- 5 -
Confidential Information relating to within the one-year period
preceding the Executive's termination of employment with the
Company;
(B) perform any services for any account described in (A) above; or
(C) recruit or solicit, or attempt to recruit or solicit, the
employment or consulting services of or hire or employ or retain
the employment or consulting services of any person who is at
such time or who was at any time within 12 months immediately
prior to such time, an employee of the True North Group.
Notwithstanding the foregoing, the restrictions of Section 7(a)(i) and
7(a)(ii)(A-B) shall not apply to the Executive's practice of law following the
Employment Period.
(b) CONFIDENTIAL INFORMATION AND TRADE SECRETS. The Executive agrees
that the Company has a protectable interest in Company bidding information,
trade secrets, client information, computer programs, financial information and
other confidential information (collectively, the "Confidential Information").
The Executive shall not, at any time during the Employment Period (except for
the benefit of the Company within the scope of the Executive's duties) or
thereafter, make use of any nor divulge any Confidential Information, except to
the extent that such Confidential Information becomes a matter of public record,
is published in a newspaper, magazine or other periodical available to the
general public (other than as a result of disclosure by the Executive) 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 Company all
Confidential Information and records and other documents obtained by her or
entrusted to the Executive during the course of the Executive's employment
hereunder (together with all copies thereof) which pertain specifically to any
of the businesses covered by the covenants in Section 7(a)(i) or which were paid
for by the Company; provided, however, that the Executive may retain copies of
such documents as necessary for the Executive's personal records for federal
income tax purposes. The Executive also agrees that the Executive will not at
any time (whether before or after the termination of the Executive's employment
with the Company) disclose to anyone the economic terms of this Agreement,
except to the Executive's counsel, accountants and members of the Executive's
immediate family.
(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 7(a)(i) and 7(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) the Executive expressly agrees and acknowledges that the
covenants contained in Sections 7(a) and 7(b) are reasonable in all
respects (including subject matter, time period and geography) and
necessary because of the substantial and
- 6 -
irreparable harm that would be caused to the Company by the Executive
engaging in any of the prohibited activities contained in such Sections.
The Executive expressly agrees and acknowledges that the covenants
contained in this Agreement will not preclude the Executive from earning a
livelihood, nor unreasonably limit the Executive's ability to earn a
living, since the Executive has the ability and experience to engage in
employment that will not breach or violate the covenants contained in this
Agreement. 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 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 7(a) and 7(b) shall survive
the conclusion of the Executive's employment by the Company.
8. NONDISPARAGEMENT; COOPERATION. (a) The Executive shall not, at
any time during her 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 her duties pursuant to this
Agreement or, to the extent applicable, her 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 8(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,
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 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 8(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 which is required by any
law, regulation or order of any court or regulatory commission, department or
agency.
- 7 -
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 she or it will submit herself 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 her 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 or expiration of the Employment Period.
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 ("AAA") 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. Any arbitration shall be held
before a single arbitrator who shall be selected by mutual agreement of the
Company and the Executive, unless the parties are unable to agree to an
arbitrator, in which case the arbitrator will be selected under the procedures
of the AAA. 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, the Company may, at
its option without inconsistency with this arbitration provision, apply to any
court having jurisdiction over such dispute or controversy for the purpose of
seeking injunctive or other equitable relief to enforce Sections 7, 8 and 9 of
this Agreement. 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.
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 (a) if
to the Executive, to the most recent address then shown on the employment
records of the Company, and if to the Company, to True North Communications
Inc., 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, Attention: Chief
Financial Officer, or (b) to such other address as either party may have
furnished to the other in
- 8 -
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 understandings, 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, 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.
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.
- 9 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TRUE NORTH COMMUNICATIONS INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx,
Chairman of the Compensation
Committee of the Board of Directors
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Xxxxx X. Xxxx,
Chairman and Chief Executive Officer
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx
- 10 -
