EXHIBIT 10.25
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of April 16, 1998 between True
North Communications Inc., a Delaware corporation (the "Company"), and Xxxxx X.
Xxxxx (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; 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 date hereof (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 60 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. The Company shall employ the Executive
during the Employment Period in the position of Executive Vice President in
charge of the TN Services operations. The Executive shall report directly to the
Company's Chief Executive Officer (the "Company CEO") and shall be a member of
the Management Board of the Company. Subject to the powers, authority and
responsibilities vested in the Board of Directors of the Company (the "Board"),
in duly constituted committees of the Board and in the Company CEO, the
Executive shall have responsibility for and shall oversee the operations of the
True North corporate entity and the diversified services companies. 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
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business time, attention and efforts to the affairs of the Company and shall use
his reasonable best efforts to promote the interests of the Company.
Notwithstanding the foregoing, the Executive may engage in charitable, civic or
community activities, 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 7
hereof.
3. Compensation.
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(a) Annual Base Salary. With respect to the Employment Period,
the Company shall pay to the Executive an annual base salary at the rate of
$250,000 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 Performance 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 that are generally available to senior executives of the Company from time
to time. All benefits referred to in this Section 3(c) are hereinafter referred
to as the "Employee Benefits."
(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. Termination of Employment Period.
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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 (as defined in subsection (b) below), (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 his
duties hereunder by reason of illness or incapacity for a period of more than
six 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 the occurrence, without
the Executive's express written consent, of any of the
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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, (3) a material breach of the Company's obligations set forth in this
Agreement, (4) a material decrease in the Executive's base salary, or (5) 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. For purposes of this Agreement,
"Cause" means (i) a material breach by the Executive of the duties and
responsibilities of the Executive hereunder (other than as a result of
incapacity due to physical or mental illness), which is not remedied within 30
days (or sooner, as specified in a written notice, if the Company, in its good
faith judgment, determines that the period must be shorter to avoid harm to the
Company) after receipt of written notice from the Company specifying such
breach, (ii) the willful engaging by the Executive in conduct that is
demonstrably and materially injurious to the business, reputation, character or
community standing of the Company, (iii) the willful and continued failure of
the Executive to perform substantially his duties under the Agreement, which
failure is not remedied within 60 days (or sooner, as specified in a written
notice, if the Company, in its good faith judgment, determines that the period
must be shorter to avoid harm to the Company) after receipt of written notice
from the Company specifying such failure, or (iv) the engaging by the Executive
in dishonest, fraudulent or unethical conduct or in other egregious conduct
involving serious moral turpitude to the extent that in the reasonable judgment
of the Board, the Executive's reputation and credibility no longer conform to
the standards expected of the Company's executives.
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5. Consequences of Termination of Employment Period.
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(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) salary payable through the date of termination of
employment, (2) unpaid annual incentive compensation and not yet
granted stock options 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) subject to and in accordance with the then existing terms
of the Company's Earnings Performance Plan, payment of
previously-granted earnings performance units, if any; 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 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 for a reason set forth 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:
(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 then held by the Executive shall on the date
of such termination be 100% vested;
(2) for a period of three years 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)
salary, at the rate payable on the date of such
termination, payable in accordance with the Company's
normal payroll policies and (B) within 30 days after
the amount in question is reasonably determinable,
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annual incentive compensation at the higher of (x)
the rate payable to the Executive for the calendar
year in which such termination shall have occurred or
(y) the average of the rates payable to the Executive
for the three calendar years immediately preceding
the year in which such termination shall have
occurred; and
(3) during the Severance Period, the Executive shall be
entitled to participate in life insurance, medical
and dental benefits and other Employee Benefits on
terms no less favorable than on the termination date,
subject to modifications of general application to
all similarly situated employees; and
(iii) provided that this Section 5(b)(iii) does not conflict
with the terms of the stock option grant, 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 a date 10 years following
the date of grant of such option.
(c) Termination after a Change in Control. If the Company's
Asset Protection Plan is in full force and effect on terms at least as favorable
to the Executive as in effect on the date hereof, then (i) in the event of a
Qualifying Termination, as defined in the Company's Asset Protection Plan, the
Executive shall be entitled to payments in accordance with the Company's Asset
Protection Plan, and (ii) the Asset Protection Plan shall supersede this
Agreement, and no payments shall be made under this Agreement, if termination
occurs after a Change in Control, as defined in the Company's Asset Protection
Plan, and payments are made pursuant to the terms of the Asset Protection Plan;
it being expressly understood, however, that the Executive's rights independent
of this Agreement under the applicable components of the Company's Performance
Program and under stock options held by the Executive shall not be affected.
(d) Option to Return to FCB Worldwide. During the Initial
Term, if the Executive is not permitted to continue in the position with the
Company provided for herein (as described in Section 2 above) for any reason
other than his death, Disability or termination for Cause, the Executive will be
offered a position with the Chicago office of Xxxxx, Cone & Xxxxxxx Worldwide,
LLC ("FCB") at materially the same compensation as described in Section 3 above
and with the corporate title of Executive Vice President. Absent his termination
for Cause, the Executive shall be permitted to remain in that position through
the end of the Initial Term. Thereafter, the employment of the Executive by FCB
and the
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terms thereof shall be subject to the discretion of FCB management. If the
circumstances under which the Executive's right to return to FCB would have
resulted in a Qualifying Termination (but for such return to FCB), the
Qualifying Termination benefits described in (b) above shall apply as of the
date the Executive is no longer employed by the Company or FCB and shall
continue through the three-year anniversary of the effective date of the
Executive's return to FCB (i.e., the date of his termination from the Company).
If such three-year anniversary precedes the date the Executive is no longer
employed by FCB, then no Qualifying Termination Benefits will apply.
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.
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(a) Covenant Not to Compete. Except with the prior written
consent of the Board:
(i) during the Employment Period, 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 Company or (2) any business in which the
Company is substantially engaged at any time during the Employment
Period;
(ii) during the Employment Period and during the Severance
Period, the Executive shall not solicit, directly or indirectly, any
existing business relationship of clients of the Company existing at
the end of the Employment Period in which the Company is substantially
engaged at any time during the Employment Period or the Severance
Period; and
(iii) during the Employment Period and during the Severance
Period, the Executive shall not induce or attempt to persuade any
employee of the Company to terminate the employee's employment
relationship with the Company.
(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 Company, nor
divulge any trade secrets or other confidential information of the Company,
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
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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)(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.
(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 Company 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) 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;
(iii) 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
(iv) 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 the Employment Period or the Severance Period or thereafter,
make any statement, publicly or privately, which would disparage the Company,
any of its businesses or any director or officer of the Company or such
businesses or would have a deleterious effect upon the interests of the Company
or 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 the Company by the Executive in the course of carrying
out his duties
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pursuant to this Agreement or, to the extent applicable, his duties as a
director or officer of the Company or (ii) private statements made to persons
other than clients or competitors of the Company (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(a) or in any other provision of this Agreement shall preclude the
Executive from making any statement in good faith which is required by law,
regulation or order of any court or regulatory commission, department or agency.
(b) The Company shall not, at any time during the Employment
Period or the Severance Period or thereafter, authorize any person to make or
allow, nor shall the Company condone the making of, any statement, publicly or
privately, which would disparage the Executive; provided, however, that the
Company shall not be in breach of this restriction if such statements consist
solely of (i) private statements made to any officers, directors or employees of
the Company or (ii) private statements made to persons other than clients or
competitors of the Company (or 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 the Company from making any statement
in good faith which is required by any law, regulation or order of any court or
regulatory commission, department or agency.
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 Employment Period.
11. Arbitration; Certain Costs. Any dispute or controversy
between the Company and the Executive, whether arising out of or relating to
this Agreement, the breach of this Agreement, or otherwise, shall be settled by
arbitration administered by the
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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.
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: Secretary,
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.
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.
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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.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
TRUE NORTH COMMUNICATIONS INC.
By:
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Xxxxx Xxxxx,
Chief Executive Officer
By:
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Xxxxxxx X. Xxxxx,
Chairman of the Compensation
Committee of the Board of Directors
EXECUTIVE:
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Xxxxx X. Xxxxx
Agreed and Approved as to
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Section 5(d)
XXXXX, CONE & XXXXXXX WORLDWIDE, LLC
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J. Xxxxxxx Xxxx,
Chairman and Chief Executive Officer
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