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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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M/A/R/C INC.
(Name of Subject Company)
M/A/R/C INC.
(Name of Person Filing Statement)
Common Stock, Par Value $1.00
(Title of Class of Securities)
552914103
(CUSIP Number of Class of Securities)
Harold R. Curtis
Secretary and Chief Financial Officer
M/A/R/C Inc.
7850 North Belt Line Road
P.O. Box 650083
Irving, Texas 75063
(214) 506-3400
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of the Person Filing Statement)
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With copies to:
Scott Bradley, Esq.
Bradley Luce Bradley LLP
1256 Main Street, Suite 252
Southlake, Texas 76092
(817) 329-6626
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Item 1. Security and Subject Company.
The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (this "Schedule 14D-9") relates is M/A/R/C Inc., a
Texas corporation (the "Company"). The address of the principal executive
offices of the Company is 7850 North Belt Line Road, P.O. Box 650083, Irving,
Texas 75063. The class of equity securities to which this Schedule 14D-9 relates
is common stock, par value $1.00, of the Company (the "Company Common Stock" or
the "Shares").
Item 2. Tender Offer of Purchaser.
This Schedule 14D-9 relates to the tender offer disclosed in the Schedule
14D-1, dated October 4, 1999 (the "Schedule 14D-1"), of Armstrong Acquisition
Corp., a Texas corporation ("Purchaser") and a wholly owned subsidiary of
Omnicom Group Inc. ("Parent"), to purchase all of the issued and outstanding
Shares at a price of $20.00 per Share, net to the seller in cash, without
interest (the "Per Share Amount"), upon the terms and subject to the conditions
set forth in the Offer To Purchase, dated October 4, 1999 (the "Offer To
Purchase"), and the related Letter of Transmittal (which, together with any
amendments or supplements to the Offer To Purchase or Letter of Transmittal,
collectively constitute the "Offer"). Copies of the Offer To Purchase and the
related Letter of Transmittal are included as Exhibits (a)(1) and (a)(2) to the
Schedule 14D-1 and are incorporated herein by this reference.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 30, 1999 (the "Merger Agreement"), by and among the Company,
Parent and Purchaser. The Merger Agreement provides, among other things, that
Purchaser and Parent will commence the Offer for all of the Shares at a price of
$20.00 per Share, and that, provided the specified conditions to Purchaser's
obligations to purchase Shares in the Offer have been satisfied or waived,
Purchaser will acquire the Shares so tendered pursuant to the Offer. The Merger
Agreement also provides that, as soon as practicable after the satisfaction or
waiver of certain additional conditions set forth in the Merger Agreement,
Purchaser will be merged into the Company (the "Merger"). Pursuant to the
Merger, the Shares of non-tendering Shareholders who do not dissent from the
Merger will be converted into the right to receive $20.00 per Share in cash,
without interest. A copy of the Merger Agreement is included as Exhibit (c)(1)
to the Schedule 14D-1 and is incorporated herein by this reference.
At a meeting held on September 30, 1999 members of the Board of Directors
of the Company, (the "Company Board") (with one director abstaining) adopted the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, approved the Offer and the Merger and determined that the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger are fair to and in the best interests of the Shareholders. At that
meeting the Company Board also approved the Tender, Voting and Option Agreement
(as defined herein).
As set forth in the Schedule 14D-1, the principal executive offices of
Parent and Purchaser are located at 437 Madison Avenue, New York, New York
10022.
Item 3. Identity and Background.
(a) Name and Address of Filing Person. The name and address of the
Company, which is the person filing this statement, are set forth in Item 1
above.
(b) Material Contracts, Conflicts of Interest, Etc. Except as set forth in
this Item 3(b), to the knowledge of the Company, there are no material
contracts, agreements, arrangements or understandings and no actual or potential
conflicts of interest between the Company or its affiliates and (i) the
Company's executive officers, directors or affiliates or (ii) Parent or
Purchaser or their respective executive officers, directors or affiliates.
Agreements with Parent and Purchaser. A summary of the material provisions
of the Merger Agreement is included in Section 12 of the Offer To Purchase,
which is included as Exhibit (a)(1) to the Schedule 14D-1 and is incorporated
herein by this reference. Such summary does not purport to be complete and is
qualified in its entirety by reference to the complete text of the Merger
Agreement, a copy of which has been filed as Exhibit (c)(1) to the Schedule
14D-1 and is incorporated herein by this reference.
In connection with the execution of the Merger Agreement, the Company,
certain Shareholders of the Company, the spouses of certain of such
Shareholders, Purchaser and Parent have entered into a Tender, Voting and Option
Agreement, dated as of September 30, 1999 (the "Tender, Voting and Option
Agreement"), pursuant to which the Shareholders party thereto have agreed, among
other things, to tender in the Offer the Shares beneficially owned by them and
vote their Shares in favor of the Merger and against proposals adverse to or
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conflicting with the transactions contemplated by the Merger Agreement and have
granted an irrevocable proxy to that effect. The Shareholders party thereto have
also granted to Parent an option to purchase the Shares beneficially owned by
them at the Per Share Amount. The option is exercisable if, among other things,
(1) the Offer is consummated (but the Shares subject to the Tender, Voting and
Option Agreement were not purchased by Purchaser), (2) the Merger Agreement
becomes terminable under certain circumstances, or (3) another person or group
(a) discloses a tender or exchange offer, (b) announces an intent to acquire the
Company or acquires 10% or more of the Company's capital stock, or (c) as of
September 15, 1999, owned 10% or more of the Company's capital stock and
acquires or proposes to acquire an additional 5% or more of the Company's
capital stock. The Shareholders party to the Tender, Voting and Option Agreement
include executive officers and certain directors of the Company who beneficially
own 22.5% of the outstanding Shares and 21.9% of the Shares calculated on a
fully diluted basis (assuming exercise of Options and Warrants to purchase
95,000 Shares and 99,000 Shares, respectively, held by these Shareholders). A
summary of the material provisions of the Tender, Voting and Option Agreement is
included in Section 12 of the Offer To Purchase, which is included as Exhibit
(a)(1) to the Schedule 14D-1 and is incorporated herein by this reference. The
summary does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Tender, Voting and Option Agreement, a
copy of which has been filed as Exhibit (c)(2) to the Schedule 14D-1 and is
incorporated herein by this reference.
From time to time the Company has performed market research projects for
one or more of the Parent's affiliates but no ongoing business relationship
currently exists between the Company and the Parent or its affiliates at this
time.
Agreements with Executive Officers, Directors or Affiliates of the
Company; Interests of Directors and Executive Officers in the Offer and the
Merger. Certain agreements, arrangements or understandings between the Company
and certain of its directors, executive officers and affiliates are set forth in
the Company's Proxy Statement, dated March 30, 1999, for its 1999 Annual Meeting
of Stockholders (the "1999 Proxy Statement"). The relevant portions of the 1999
Proxy Statement, updated where applicable, are included in the Information
Statement attached hereto as Schedule II and incorporated herein by reference.
The Company Board and executive officers of the Company may have interests
in the Offer and the Merger that are different from or in addition to the
interests of Shareholders of the Company generally. These additional interests
relate to, among other things, the effect of the Offer and the Merger on certain
employment, benefit and other arrangements to which directors and executive
officers are parties or under which they have rights. These interests, to the
extent material, are described below. The Company Board was aware of these
interests and considered them, among other things, prior to adopting the Merger
Agreement. See Item 4 below.
Employment Agreements. At the request of Parent, the Company has entered
into new employment agreements with each of its three principal executive
officers. The agreements will become operative only upon the occurrence of the
effective time of the Merger (the "Effective Time"). A summary of certain
material provisions of each of the agreements follows.
Each of Ms. Sharon M. Munger, currently Chairman of the Board of Directors
of the Company and Chief Executive Officer of the Company, Mr. Jack D. Wolf,
currently President and Chief Operating Officer of the Company, and Mr. Harold
R. Curtis, currently Executive Vice President, Secretary and Chief Financial
Officer of the Company, has entered into an employment agreement that has an
initial term beginning on the Effective Time and ending on December 31, 2002.
The agreements provide (1) that the executive party thereto will continue to
serve in his or her present capacity with the Company during the term of the
employment agreement for an annual salary of $400,000 in the case of Ms. Munger,
$400,000 in the case of Mr. Wolf and $200,000 in the case of Mr. Curtis and (2)
for participation in all benefits offered by the Company (which, pursuant to the
Merger Agreement, must be, in the aggregate, substantially comparable to those
employee benefits provided immediately prior to the date of the Merger
Agreement, subject to certain limited exceptions). Under the employment
agreements, if the executive is terminated by the Company "without cause" (as
defined in the agreements) or the executive terminates his or her employment for
"good reason" (as defined in the agreements), the executive is entitled to
continue to receive from the Company his or her applicable salary compensation
and benefits through December 31, 2002 if the date of termination occurs on or
prior to September 30, 2002 or 90 days after the date of termination if such
date occurs after September 30, 2002. Each of these employment agreements
contains confidentiality and nonsolicitation covenants that require these
officers not to, directly or indirectly, solicit or service the Company's
clients or solicit or hire the Company's
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employees for a period of two years after termination of their employment
periods. Ms. Munger's, Mr. Wolf's and Mr. Curtis's cash compensation for 1998
was $325,000, $260,000 and $175,000, respectively.
The foregoing summary of the employment agreements does not purport to be
complete and is qualified in its entirety by reference to the complete text of
these agreements, which are filed as Exhibits 6 through 8 to this Schedule 14D-9
and incorporated herein by this reference.
Stock Options, Warrants and Restricted Stock. The Merger Agreement
provides that the Company will take all actions necessary to provide that, upon
consummation of the Merger, (1) subject to clause (2), each then outstanding
option to purchase Shares (the "Options") granted under any of the Company's
stock option plans and each then outstanding warrant to purchase Shares (the
"Warrants"), whether or not then exercisable or vested, will either (a) be
acquired by the Company for cancellation in consideration of payment to the
holders of such Options and Warrants of an amount in respect thereof equal to
the product of (x) the excess, if any, of the Per Share Amount over the per
share exercise price thereof and (y) the number of Shares subject thereto (such
payment to be net of applicable withholding taxes) or (b) be converted into an
Option or Warrant, as applicable, to purchase the number of shares of common
stock of Parent equal to the number of Shares subject to such Option or Warrant,
as applicable, in each case on terms which, giving effect to the Offer and the
Merger, preserve the existing terms of such Options and Warrants and (2) each
then outstanding Option that has been designated by the Company as an "Incentive
Stock Option" (an "ISO") will be converted into an option in accordance with
clause (b) above. In accordance with the terms of the Merger Agreement, any
Options (other than ISOs) and Warrants not exercised or exchanged prior to the
Effective Time will be converted by reason of the Merger into the right to
receive, upon payment of the exercise price thereunder, an amount in cash,
without interest, equal to the Per Share Amount times the number of Shares
subject thereto. As of September 30, 1999, 853,240 Shares were issuable pursuant
to the Options and 156,500 Shares were issuable pursuant to the Warrants.
Directors and executive officers of the Company collectively held Options to
purchase 95,000 Shares (including an Option to purchase 5,000 Shares held by Mr.
Curtis) and Warrants to purchase 121,500 Shares (including Warrants to purchase
99,000 Shares held by Ms. Munger and Mr. Wolf). A more detailed summary of these
provisions is contained in Section 12 of the Offer To Purchase (which is
attached as Exhibit (a)(1) to the Schedule 14D-1 and incorporated herein by this
reference) under the heading "Purpose of the Offer and the Merger; Plans for the
Company; the Merger Agreement; the Tender, Voting and Option Agreement; Other
Matters -- The Merger Agreement -- Treatment of Options and Warrants."
Parent has informed the Company that it is willing to offer the holders of
restricted Shares the opportunity to permit restricted Shares to be exchanged
for shares of Parent common stock on terms to be determined by the parties,
subject to compliance with the federal securities laws. As of September 30,
1999, 252,000 restricted Shares were issued and outstanding, all of which were
held by Ms. Munger and Mr. Wolf.
Indemnification. The Merger Agreement provides (1) for indemnification of
the Company's directors and executive officers in certain circumstances, (2)
that the existing indemnification of the Company's directors and executive
officers contained in its Articles of Incorporation and Bylaws will remain in
place for a period of seven years after the Merger closing, and (3) that
director and officer indemnity insurance coverage will be maintained for the
Company's directors and executive officers for a period of seven years after the
Merger closing. A more detailed summary of these provisions in the Merger
Agreement is contained in Section 12 of the Offer To Purchase (which is attached
as Exhibit (a)(1) to the Schedule 14D-1 and incorporated herein by this
reference) under the heading "Purpose of the Offer and the Merger; Plans for the
Company; the Merger Agreement; the Tender, Voting and Option Agreement; Other
Matters -- The Merger Agreement -- Agreement to Defend and Indemnify."
Item 4. The Solicitation or Recommendation.
Recommendation of the Board of Directors of the Company. At a meeting held
on September 30, 1999, the Company Board (with one director abstaining) adopted
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, approved the Offer and the Merger and determined that the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger are fair to and in the best interests of the Shareholders. At
that meeting the Company Board also approved the Tender, Voting and Option
Agreement.
The Company Board recommends that the Shareholders accept the Offer and
tender their Shares pursuant to the Offer.
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A letter to the Company's Shareholders communicating the Company Board's
recommendation and a press release announcing the execution of the Merger
Agreement are filed herewith as Exhibits 3 and 4, respectively, and are
incorporated herein by this reference.
Background of the Offer. From time to time, the Company has considered
possible strategic alternatives, including possible business combination
transactions. In 1998, Ms. Munger and other representatives of the Company had
informal discussions regarding possible strategic transactions with various
other companies in the information-based business, including Parent. In
connection therewith, in April 1998, the Company retained ING Barings LLC ("ING
Barings") to provide financial advice to the Company regarding its strategic
alternatives.
In late 1998, representatives of the management of one of Parent's
operating subsidiaries contacted senior management of the Company to determine
whether the Company would be interested in pursuing discussions regarding the
possible acquisition of the Company by Parent. Subsequent discussions were
conducted among representatives of the Company, including representatives of ING
Barings, on an intermittent basis during the first several months of 1999. In
addition, during this period, representatives of the Company, including ING
Barings, contacted a number of other companies (some of which had previously
contacted the Company) that were believed to be possibly interested in pursuing
discussions regarding a business combination transaction with the Company.
Except as described below, these discussions did not result in any business
combination or acquisition proposal that the Company believed should be pursued.
In early May 1999, representatives of Parent informed representatives of
the Company that Parent would be interested in pursuing the possible acquisition
of the Company at an indicated acquisition price of $18.50 per Share, payable in
cash. Representatives of the Company informed representatives of Parent that the
Company was not interested in pursuing discussions of a possible transaction at
the indicated price level.
Thereafter, representatives of the Company continued discussions with
other possible bidders for the Company. In June 1999, Parent indicated that it
would be willing to discuss a transaction at a price of $20.00 per Share,
payable in cash. Company representatives conducted meetings with other potential
acquirors during the next two months. One of the potential acquirors indicated
its willingness to pursue the possible acquisition of the Company at a price of
$18.25 per Share, payable in stock. Representatives of the Company informed
representatives of the other company that the Company was not interested in
pursuing discussions of a possible transaction at the indicated price level. In
response, the other company indicated a willingness to pursue the possible
acquisition of the Company at $20.00 per Share, payable in stock.
In September 1999, representatives of the Company renewed discussions of a
possible business combination transaction with representatives of Parent.
Parent's representatives reiterated to the Company's representatives that Parent
would be willing to pursue a possible acquisition of the Company at $20.00 per
Share, payable in cash. Representatives of Parent informed representatives of
the Company that Parent's proposal was subject to Parent's due diligence
examination of the Company and the negotiation of transactional documentation
that provided Parent with a high level of assurance that the transaction would
be completed. At approximately the same time, representatives of the other
company reiterated a willingness to pursue a possible stock-for-stock
transaction with the Company but no specific proposal was received.
In mid-September 1999, the Company Board members discussed the status of
the process. The presentations to and discussions by the Company Board included
a review of the possible strategic alternatives available to the Company and a
review by Company management of the discussions to date with representatives of
Parent and other possible strategic partners. Following discussion, the Company
Board directed that Company management and the legal and financial advisors
continue to explore a possible business combination transaction with Parent, as
well as pursue other possible strategic alternatives that might be available to
the Company.
Thereafter, representatives of the Company informed representatives of
Parent that the Company would be interested in pursuing discussions of a
possible transaction at the $20.00 per Share valuation previously indicated by
representatives of Parent. In addition, representatives of the Company informed
the other company which had indicated an interest in pursuing a stock-for-stock
transaction that the Company was pursuing a possible transaction with Parent and
requested that the other company submit a written proposal at a higher price
than the $20.00 per Share price indicated by Parent. The other company did not
respond to that request. Accordingly, and given the advanced state of the
discussions between the Company and Parent, the Company's representatives
determined that it was unlikely that the other company would propose a
transactional value superior to that being proposed by Parent and that there was
a substantial likelihood that Parent would terminate
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further pursuit of a possible business combination with the Company if the
Company continued to pursue possible transactions with other parties.
During the last two weeks of September, representatives of the parties
negotiated the final terms of the transaction and the related transactional
documentation and Parent completed its due diligence examination of the Company.
In addition, at the request of Parent, the parties discussed the terms of
employment arrangements with the Company's senior executive officers, including
Ms. Munger and Mr. Wolf, both of whom are also members of the Company Board, to
be effective for three-year periods following the Merger. The terms of these
agreements are described in Item 3(b) of this Schedule 14D-9.
On September 30, 1999, the Company Board met to discuss the terms of the
transaction. At the meeting the Company's senior management and representatives
of ING Barings and Bradley Luce Bradley LLP, counsel to the Company ("Bradley
Luce"), reported on the discussions with Parent. ING Barings reviewed the
financial terms of the transaction and Bradley Luce reviewed the material terms
of the transaction documents with the directors. The representatives of
ING Barings then presented the firm's financial analysis of the consideration to
be paid in the Offer and Merger and delivered its oral opinion, which oral
opinion was subsequently confirmed in writing, that, as of September 30, 1999,
in the opinion of ING Barings as investment bankers, the consideration payable
to Shareholders in the Offer and the Merger is fair to Shareholders (other than
Parent and its affiliates) from a financial point of view. Following discussion,
the Company Board, with one non-employee director abstaining, adopted the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger and approved the Offer and the Merger and the Tender, Voting and Option
Agreement. One director informed the Company Board that he would not vote in
favor of the transaction and subsequently abstained from voting.
Reasons for the Company Board's Recommendation. In adopting the Merger
Agreement and approving the transactions contemplated thereby, and recommending
that Shareholders accept the Offer and tender their Shares pursuant to the
Offer, the Company Board considered a number of factors, including in addition
to the factors mentioned in "Background of the Offer" above in this Item 4, the
following:
(1) The financial and other terms of the Offer, the Merger Agreement
and the related transaction agreements;
(2) The financial presentation of ING Barings at the September 30,
1999 Company Board meeting and the oral opinion of ING Barings, rendered
on September 30, 1999, to the effect that based upon and subject to
certain matters stated in its opinion, as of that date, the consideration
to be received by the Shareholders pursuant to the Offer and the Merger is
fair to the Shareholders (other than Parent and its affiliates) from a
financial point of view (the "Fairness Opinion"). (ING Barings confirmed
its opinion in writing following the Company Board meeting.) The full text
of the Fairness Opinion, which sets forth the matters considered and the
assumptions made by ING Barings, is attached hereto as Schedule I.
Shareholders are urged to read the Fairness Opinion in its entirety; ING
Barings' opinion is directed only to fairness, from a financial point of
view, of the $20.00 per Share cash consideration to be received by holders
of Shares (other than Parent and its affiliates) pursuant to the Offer and
the Merger, and is not intended to constitute, and does not constitute, a
recommendation as to whether any Shareholder should tender Shares pursuant
to the Offer.
(3) That the $20.00 Per Share Amount represents a premium of 41.6%
over the closing price of the Company's Common Stock ($14.13) on the
NASDAQ System on September 30, 1999, the last full trading day prior to
the execution of the Merger Agreement;
(4) The absence of a financing condition to the Offer and the
perceived ability of Parent to consummate the Offer, the Merger and the
transactions contemplated by the Merger Agreement;
(5) The Company's future prospects, financial resources, ability to
access the capital markets and alternatives available to the Company as a
stand-alone enterprise;
(6) Increased competition in all segments of the Company's businesses
from other companies, particularly those with substantially greater
financial resources and superior access to potential customers for
products similar to those offered by the Company;
(7) Consolidation trends within the market research and database
marketing businesses that have adversely affected, and are expected to
continue to adversely affect, the Company's relative competitive position
unless it becomes a part of a larger, more diversified company such as
Parent;
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(8) The strategic value of the Company's principal assets in the
hands of a larger, more diversified company such as Parent, with the
financial and other resources necessary to more optimally exploit those
assets;
(9) The Company Board's belief that the Offer and the Merger
represent an opportunity to reduce certain of the risks described in the
foregoing considerations by effecting a strategic business combination
with a larger, more diversified company and to enter into a transaction
which the Company Board believed was predicated on an attractive valuation
for the Shareholders; and
(10) The provisions of the Merger Agreement which permit the Company
Board to consider an unsolicited superior proposal in order to comply with
the Company Board's fiduciary duties to the Shareholders.
The foregoing discussion of the information and factors considered and given
weight by the Company Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation and approval of
the Offer, the Merger Agreement, the Tender, Voting and Option Agreement and the
transactions contemplated thereby, the Company Board did not find it practicable
to, and did not, quantify or otherwise assign relative weights to the specific
factors considered in reaching its determination. In addition, individual
members of the Company Board may have given different weights to different
factors.
The Company Board also considered three principal relative detriments of
the Offer and the Merger:
(1) The Offer and the Merger would be effected in highly competitive
and rapidly changing industry conditions which, among other factors, had
resulted in decreases in the market price for the Shares during 1998 and
1999;
(2) As a result of the Offer and the Merger, the benefits of the
Company's long-term prospects would not be realized by the existing
Shareholders; and
(3) The terms of the Merger Agreement limiting the Company's ability
to consider other acquisition proposals and requiring the Company to pay a
termination fee in certain circumstances make it more difficult for
another potential bidder to propose to acquire the Company on a basis that
would be superior to that contemplated by the Merger Agreement.
However, the Company Board as a whole determined that the foregoing detriments
were outweighed by the potential benefits of the transactions described above.
Item 5. Persons Retained, Employed or to be Compensated.
Pursuant to an engagement letter, dated as of April 22, 1998 (the "ING
Barings' Engagement Letter"), the Company engaged ING Barings to act as its
financial advisor for the period through December 31, 1999 in connection with
various possible transactions, including transactions such as the Offer and
Merger. As part of its role as financial advisor, ING Barings delivered the
Fairness Opinion to the Company Board. Pursuant to the Barings' Engagement
Letter, ING Barings will receive from the Company total compensation equal to
approximately $1.6 million (the "Transaction Fee"). Of the Transaction Fee,
$150,000 was paid upon the execution of the ING Barings' Engagement Letter or as
quarterly retainers, $250,000 was payable upon delivery of ING Barings' oral
opinion as to the fairness, from a financial point of view, of the consideration
to be received by the Company's Shareholders and the balance becomes payable
upon consummation of the transactions.The Company also has agreed to reimburse
ING Barings for its reasonable out-of-pocket expenses, including the fees and
expenses of legal counsel and other advisors, and to indemnify ING Barings and
certain related persons or entities against certain liabilities, including
liabilities under the federal securities laws, relating to or arising out of its
engagement. In the ordinary course of its business, ING Barings may actively
trade the debt and equity securities of the Company and Parent for its own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities. Except as disclosed herein, neither
the Company nor any person acting on its behalf currently intends to employ,
retain or compensate any other person to make solicitations or recommendations
to Shareholders of the Company on its behalf concerning the Offer or the Merger.
Item 6. Recent Transactions and Intent With Respect to Securities.
(a) No transactions in the Shares have been effected during the past 60
days by the Company or, to the Company's knowledge, by any executive officer,
director, affiliate or subsidiary of the Company.
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(b) To the knowledge of the Company, all of its executive officers,
directors, affiliates and subsidiaries currently intend to tender pursuant to
the Offer all Shares held of record or beneficially owned by them (other than
Shares issuable upon exercise of stock options and Shares, if any, which if
tendered could cause such persons to incur liability under the provisions of
Section 16(b) of the Exchange Act). As described in Item 3 above, certain
Shareholders of the Company have agreed to tender their Shares in the Offer
pursuant to the Tender, Voting and Option Agreement.
Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company, (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company,
(iii) a tender offer for or other acquisition of securities by or of the
Company, or (iv) any material change in the present capitalization or dividend
policy of the Company.
(b) Except as described in Item 3(b) and Item 4 above (the provisions of
which are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in Item 7(a).
Item 8. Additional Information to be Furnished.
(a) The Information Statement attached as Schedule II hereto and
incorporated herein by this reference is being furnished pursuant to Rule 14f-1
under the Securities and Exchange Act of 1934 in connection with the potential
designation by Parent, pursuant to the Merger Agreement, of certain persons to
be appointed to the Company Board other than at a meeting of the Shareholders if
the Offer is completed.
(b) As a Texas company, the antitakeover provisions of Article 13 of the
Texas Business Corporation Act ("Texas Law") by their terms apply to the
Company. A description of these provisions and their applicability to the
Company is contained in the Offer To Purchase (which is attached as Exhibit
(a)(1) to the Schedule 14D-1 and incorporated herein by this reference) under
the caption "Certain Legal Matters and Regulatory Approvals -- State Takeover
Laws." At its meeting held on September 30, 1999, the Company Board adopted the
Merger Agreement and approved the transactions contemplated thereby and approved
the Tender, Voting and Option Agreement, which adoption and approval rendered
Article 13 of the Texas Law inapplicable to the Merger Agreement and the
transactions contemplated thereby including the Offer, the Merger and the
Tender, Voting and Option Agreement.
(c) For a description of dissenters' rights applicable to theMerger (such
rights not being applicable to the Offer), see the section captioned "Purpose of
the Offer and the Merger; Plans for the Company; the Merger Agreement; the
Tender, Voting and Option Agreement; Other Matters -- Other Matters --
Dissenters' Rights" of the Offer to Purchase, which is included as Exhibit(a)(1)
to the Schedule 14D-1 and is incorporated herein by this reference.
Item 9. Material to be Filed as Exhibits.
Exhibit 1. Agreement and Plan of Merger, dated as of September 30, 1999,
among Purchaser, Parent and the Company (incorporated by reference
to Exhibit (c)(1) to the Schedule 14D-1).
Exhibit 2. Tender, Voting and Option Agreement, dated as of September 30,
1999, among Parent, the Company, certain Shareholders of the Company
and certain of such Shareholders' spouses (incorporated by reference
to Exhibit (c)(2) to the Schedule 14D-1).
Exhibit 3. Letter to Shareholders of M/A/R/C Inc., dated October 4, 1999.*
Exhibit 4. Joint Press Release issued by the Company and Parent on October 1,
1999.
Exhibit 5. Opinion of ING Barings, dated September 30, 1999 (incorporated
herein as Schedule I).*
Exhibit 6. Employment Agreement, dated September 30, 1999, between the Company
and Sharon M. Munger.
Exhibit 7. Employment Agreement, dated September 30, 1999, between the Company
and Jack D. Wolf.
Exhibit 8. Employment Agreement, dated September 30, 1999, between the Company
and Harold R. Curtis.
- ----------
* Included in copies of Schedule 14D-9 mailed to Shareholders together with
information in Schedules I and II hereto.
8
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
M/A/R/C INC.
By: /s/ HAROLD R. CURTIS
------------------------------------
Mr. Harold R. Curtis
Executive Vice President, Secretary
and Chief Financial Officer
Dated: October 4, 1999
9
<PAGE>
Schedule I
[Letter head of ING BARINGS]
September 30, 1999
Board of Directors
M/A/R/C Inc.
7850 North Belt Line Road
Irving, TX 75063
Ladies and Gentlemen:
We understand that a newly formed subsidiary (the "Acquiror") of Omnicom
Group Inc. (the "Parent") has proposed to acquire all the outstanding stock of
M/A/R/C Inc. (the "Proposed Transaction"). In the Proposed Transaction, the
Acquiror will offer to purchase pursuant to a tender offer (the "Offer") any and
all of the outstanding shares of Common Stock, par value $1.00 per share (the
"Common Stock"), of M/A/R/C Inc. (the "Company") for $20.00 per share in cash.
Shares of Common Stock not acquired in the Proposed Transaction will be
converted into the right to receive $20.00 per share in cash pursuant to the
merger of the Acquiror into the Company. The terms and conditions of the Offer
and the merger are set forth in the Agreement and Plan of Merger, dated
September 30, 1999, by and among the Acquiror, the Parent, and the Company (the
"Merger Agreement").
You have requested our opinion, as investment bankers, as to the fairness,
from a financial point of view, to the holders (other than the Parent or its
affiliates) of the Common Stock of the Company, of the consideration to be
received in the Proposed Transaction.
We have acted as financial advisor to the Board of Directors of the
Company in connection with the Proposed Transaction and will receive a fee for
our services. As you are aware, ING Barings has previously rendered and
continues to render certain investment banking and financial advisory services
to the Company for customary fees. In addition, in the ordinary course of our
business, we trade or otherwise effect transactions in the securities of the
Company for our own account and for the account of our customers and,
accordingly, may at any time hold a long or short position in such securities.
In conducting our analysis and arriving at our opinion as expressed herein, we
have reviewed and analyzed, among other things, the following:
(i) drafts of the Merger Agreement and other tender offer materials dated
September 30 and September 27, respectively;
(ii) the Company's Annual Reports on Form 10-K for each of the fiscal
years in the period ended December 31, 1998 and the Company's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1999 and June 30, 1999;
(iii) certain other publicly available information concerning the Parent,
the Company and the trading market for the Company's Common Stock;
(iv) certain internal information and other data relating to the Company,
its business and prospects, including forecasts and projections, provided to us
by management of the Company;
<PAGE>
(v) certain publicly available information concerning certain other
companies engaged in businesses which we believe to be generally comparable to
the Company and the trading markets for certain of such other companies'
securities;
(vi) the financial terms of certain recent business combinations which we
believe to be relevant; and
(vii) certain other proposals and indications of interest received by the
Company relating to the acquisition of the Company.
We have also met with certain officers and employees of the Company concerning
its business and operations, assets, present condition and prospects and
undertook such other studies, analyses and investigations as we deemed
appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us and have not
attempted independently to verify such information, nor do we assume any
responsibility to do so. We have assumed that the Company's forecasts and
projections provided to or reviewed by us have been reasonably prepared based on
the best current estimates and judgment of the Company's management as to the
future financial condition and results of operations of the Company. We have
visited but have not conducted a physical inspection of the properties and
facilities of the Company, nor have we made or obtained any independent
evaluation or appraisal of such properties and facilities. We have also taken
into account our assessment of general economic, market and financial conditions
and our experience in similar transactions, as well as our experience in
securities valuation in general. Our opinion necessarily is based upon economic,
market, financial and other conditions as they exist and can be evaluated on the
date hereof and we assume no responsibility to update or revise our opinion
based upon events or circumstances occurring after the date hereof.
This letter and the opinion expressed herein are for the use of the Board
of Directors of the Company. This opinion does not address the Company's
underlying business decision to approve the Proposed Transaction or constitute a
recommendation to the shareholders of the Company as to whether such
shareholders should tender their shares in the Offer or as to any other action
such shareholders should take regarding the Proposed Transaction. This opinion
may not be reproduced, summarized, excerpted from or otherwise publicly referred
to or disclosed in any manner without our prior written consent provided that
this opinion may be included in any filing required under applicable securities
laws.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that the consideration to be received by the holders (other than the
Parent or its affiliates) of the Common Stock in the Proposed Transaction is
fair, from a financial point of view, to such holders.
Very truly yours,
/s/ ING Barings LLC
ING BARINGS LLC
<PAGE>
SCHEDULE II
M/A/R/C INC.
7850 North Belt Line Road
P.O. Box 650083
Irving, Texas 75063
Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 Thereunder This
Information Statement is being mailed on or about October 4, 1999 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of M/A/R/C Inc. (the "Company"). Capitalized terms used herein
and not otherwise defined shall have the meaning set forth in the Schedule
14D-9. You are receiving this Information Statement in connection with the
possible election of persons designated (the "Parent Designees") by Omnicom
Group Inc. ("Parent") to the Company's Board of Directors (the "Company Board").
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
promulgated thereunder. You are urged to read this Information Statement
carefully. You are not, however, required to take any action in connection with
this Information Statement.
The Offer commenced on October 4, 1999 and is scheduled to expire at 12:00
midnight New York City time, on November 1, 1999, unless extended upon the terms
set forth in the Offer To Purchase.
The information contained in this Information Statement concerning Parent
and Purchaser has been furnished to the Company by Parent. The Company assumes
no responsibility for the accuracy or completeness of that information.
Voting Securities of the Company
The Shares constitute the only class of voting securities of the Company
outstanding. Each Share has one vote. As of September 29, 1999, there were
5,240,185 Shares issued and outstanding.
Designation of Directors
The Merger Agreement provides that, promptly upon the payment by Purchaser
for Shares pursuant to the Offer, and from time to time thereafter as Shares are
acquired by Purchaser, Parent is entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board that will give Parent,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Company Board equal to at least the number of directors which equals the
product of the total number of directors on the Company Board (giving effect to
the directors appointed or elected pursuant to such provision and including
current directors serving as officers of the Company) multiplied by the
percentage that the aggregate number of Shares beneficially owned by Parent or
any affiliate of Parent (including for purposes of such provision such Shares as
are accepted for payment pursuant to the Offer, but excluding Shares held by the
Company) bears to the number of Shares outstanding. At such times, if requested
by Parent, the Company will also cause each committee of the Company Board to
include persons designated by Parent constituting the same percentage of each
such committee as Parent's designees are of the Company Board. The Merger
Agreement also provides that the Company shall, upon request by Parent, promptly
increase the size of the Company Board and/or exercise its best efforts to
secure the resignations of such number of directors as is necessary to enable
Parent's designees to be elected to the Company Board and shall cause Parent's
designees to be so elected. However, in the event that Parent's designees are
appointed or elected to the Company Board, until the effective time of the
Merger the Company Board is required to have at least two directors who are
directors on the date of the Merger Agreement and who are neither officers of
the Company nor designees, stockholders, affiliates or associates (within the
meaning of the federal securities laws) of Parent (one or more of such
directors, the "Independent Directors"), except that, if no Independent
Directors remain, the other directors are to designate two persons to fill the
vacancies, neither of whom shall be either an officer of the Company or a
designee, shareholder, affiliate or associate of Parent, and such persons shall
be deemed to be Independent Directors for purposes of the Merger Agreement.
II-1
<PAGE>
Purchaser Director Designees
Purchaser has informed the Company that it will choose the Purchaser
Designees from the individuals shown in the table below to serve on the Company
Board. Each of the following individuals has consented to serve as a director of
the Company if appointed or elected. None of the Purchaser Designees currently
is a director of, or holds any position with, the Company. To Purchaser's
knowledge, except as set forth below and in the Offer To Purchase, none of the
Purchaser Designees or any of their associates beneficially owns any equity
securities or rights to acquire securities of the Company, nor has any such
person been involved in any transaction with the Company or any of its
directors, executive officers or affiliates that are required to be disclosed
pursuant to the rules and regulations of the Commission. The name, age, present
principal occupation or employment and five-year employment history of each of
the following individuals are set forth below. Each person is a citizen of the
United States and the business address of each person is c/o Omnicom Group Inc.,
437 Madison Avenue, New York, New York 10022.
Principal Occupation
Name Age or Occupations and Directorships
----- --- --------------------------------------------
Philip J. Angelastro 34 Mr. Angelastro has been Controller of Parent
since February 1999, having previously
served as Vice President of Finance of
Parent's Diversified Agency Services ("DAS")
division. Prior to joining Parent in 1997,
Mr. Angelastro was a Partner at Coopers &
Lybrand LLP.
Michael Birkin 41 Mr. Birkin has been President of DAS since
1998. Mr. Birkin served as President, Europe
and Asia of DAS from 1997 to 1998. Mr.
Birkin joined DAS in 1995 as European
Managing Director, having been Group Chief
Executive of Interbrand, a subsidiary of
Parent, for several years prior.
Thomas L. Harrison 52 Mr. Harrison has served as Chairman and
Chief Executive Officer of DAS since May,
1998, having previously served as its
President since February, 1997. He also has
served as Chairman of the Diversified
Healthcare Communications Group since its
formation by Parent in 1994. From 1987 to
1994, Mr. Harrison served as Chairman and
Chief Executive Officer of the Harrison &
Star Business Group.
Dennis E. Hewitt 55 Mr. Hewitt has been Treasurer of Parent
since January 1994. Mr. Hewitt joined Parent
in 1988 as Assistant Treasurer.
Barry J. Wagner 59 Mr. Wagner was promoted to Secretary and
General Counsel of Parent in May 1995. Mr.
Wagner was previously Assistant Secretary of
Parent.
Thomas W. Watson 64 Mr. Watson has been Executive Vice President
of Parent since 1998. Prior to such time,
Mr. Watson served as Vice Chairman of DAS
for several years.
Randall J. Weisenburger 40 Mr. Weisenburger joined Parent in September
1998 and became its Executive Vice President
and Chief Financial Officer on January 1,
1999. Mr. Weisenburger was previously with
Wasserstein Perella & Co., where he was
President and Chief Executive Officer of
Wasserstein Perella Management Partners, its
merchant banking subsidiary.
II-2
<PAGE>
Security Ownership of Certain Beneficial Holders and Management
Security Ownership of Certain Beneficial Holders
The following table shows, as of September 30, 1999 (the "Measurement
Date"), certain information regarding those persons known to the Company to have
been the owners on such date of more than 5% of the Shares then outstanding
based on filings pursuant to Rule 13d of the Exchange Act.
Amount Percentage of
Name and Address Beneficially Common Stock
of Beneficial Owner Owned(1) Outstanding(2)
------------------- ---------- --------------
Lord, Abbett & Co 810,000(3) 13.0%
767 Fifth Avenue
New York, NY 10153
M/A/R/C Inc. Employee Stock Ownership Trust 696,289(4) 11.1%
c/o Scudder Trust Company
5 Industrial Way
Salem, NH 03079
Sharon M. Munger 466,190(5) 7.5%
7850 North Belt Line Road
Irving, Texas 75063
Brinson Partners, Inc. 463,000(6) 7.4%
209 South LaSalle Street
Chicago, Illinois 60604-1295
Cecil B. Phillips 368,318(4)(7) 5.9%
7850 North Belt Line Road
Irving, Texas 75063
Pequot Capital Management, Inc. 364,000(8) 5.8%
500 Nyala Farm Road
Westport, CT 06880
- ----------
(1) Unless otherwise indicated, each person or group has sole voting and
dispositive power with respect to all these Shares.
(2) Based on 6,249,925 fully diluted Shares as of September 29, 1999,
including 126,500 Shares issuable upon exercise of stock warrants and
853,240 Shares issuable upon exercise of stock options.
(3) Lord, Abbett & Co. is an investment adviser under Section 203 of the
Investment Advisors Act of 1940.
(4) The Trustee of the Employee Stock Ownership Trust (the "ESOT") votes the
Shares held by the ESOT as directed by the beneficiaries of the ESOT.
Except in certain limited circumstances, the Trustee may acquire and
dispose of the assets of the ESOT only as the ESOT's Administrative
Committee directs. The Administrative Committee presently consists of
Cecil B. Phillips, Sharon M. Munger, and Rolan G. Tucker. As members of
the Committee, these persons may be deemed to share investment power with
respect to the Shares held by the ESOT. The Shares held by the ESOT are
not included in the number of Shares reflected in the table as being owned
by these persons except to the extent of such person's own accounts with
the ESOT.
(5) Includes Ms. Munger's beneficial interest in 28,799 Shares allocated to
her accounts with the ESOT and 49,000 Shares subject to being acquired by
Ms. Munger under a warrant exercisable within 60 days of the Measurement
Date.
(6) BP1, an investment adviser registered under Section 203 of the Investment
Advisors Act of 1940, ia an indirect wholly owned subsidiary of UBS AG,
which is classified as a Bank as defined in Section 3(a)(b) of the
Exchange Act. BPI and UBS AG disclaim beneficial ownership of these
securities.
(7) Includes 175,413 Shares owned by Mr. Phillips' former spouse, Catherine
Cook Phillips. Mr. Phillips holds an irrevocable proxy on these Shares.
(8) Pequot Capital Management, Inc. is an investment adviser under Section 203
of the Investment Advisors Act of 1940.
II-3
<PAGE>
Security Ownership of Management
The following table contains information concerning the number of shares
of common stock owned beneficially as of the Measurement Date by all present
directors and executive officers of the Company as a group.
Amount Percentage of
Name and Address Beneficially Common Stock
of Beneficial Owner Owned(1) Outstanding(2)
------------------- ------------ --------------
M/A/R/C Inc. Employee
Stock Ownership Trust 696,289(3) 11.1%
Sharon M. Munger 466,190(4) 7.5%
Cecil B. Phillips 368,318(3)(5) 5.9%
Jack D. Wolf 292,140(6) 4.7%
Corinne F. Maginnis 55,351(7) *
Harold R. Curtis 45,754(8) *
Elmer L. Taylor, Jr. 27,168 *
Daniel J. Sutherland 12,175(9) *
Rolan G. Tucker 9,405(3) *
Edward R. Anderson 7,500(10) *
Thomas J. Vacchiano, Jr. 7,500(11) *
John H. Friedman 7,500(12) *
All directors and executive
officers as a group (11 persons) 1,299,001(13) 20.8%
- ----------
(1) Unless otherwise indicated, each person or group has sole voting and
dispositive power with respect to all these Shares.
(2) Based on 6,249,925 fully diluted Shares as of September 29, 1999,
including 126,500 Shares issuable upon exercise of stock warrants and
853,240 Shares issuable upon exercise of stock options.
(3) The Trustee of the ESOT votes the Shares held by the ESOT as directed by
the beneficiaries of the ESOT. Except in certain limited circumstances,
the Trustee may acquire and dispose of the assets of the ESOT only as the
ESOT's Administrative Committee directs. The Administrative Committee
presently consists of Cecil B. Phillips, Sharon M. Munger, and Rolan G.
Tucker. As members of the Committee, these persons may be deemed to share
investment power with respect to the Shares held by the ESOT. The Shares
held by the ESOT are not included in the number of Shares reflected in the
table as being owned by these persons except to the extent of such
person's own accounts with the ESOT.
(4) Includes Ms. Munger's beneficial interest in 28,799 Shares allocated to
her accounts with the ESOT and 49,000 shares subject to being acquired by
Ms. Munger under a warrant exercisable within 60 days of the Record Date.
(5) Includes 175,413 Shares owned by Mr. Phillips' former spouse, Catherine
Cook Phillips. Mr. Phillips holds an irrevocable proxy on these Shares.
(6) Includes Mr. Wolf's beneficial interest in 25,742 Shares allocated to his
ESOT accounts and 50,000 Shares subject to being acquired by Mr. Wolf
under a Warrant exercisable within 60 days of the Record Date.
(7) Includes Ms. Maginnis' beneficial interest in 12,813 Shares allocated to
her ESOT accounts.
(8) Includes Mr. Curtis' benefical interest in 7,754 Shares allocated to his
ESOT account and 1,000 Shares subject to being acquired by Mr. Curtis
under a stock option within 60 days of the Measurement Date, but does not
include 4,000 Shares not subject to being acquired by Mr. Curtis within 60
days of the Measurement Date.
(9) Includes Mr. Sutherland's benefical interest in 175 Shares allocated to
his ESOT accounts.
(10) Includes 7,500 Shares subject to being acquired by Mr. Anderson under a
Warrant exercisable within 60 days of the Measurement Date.
(11) Includes 7,500 Shares subject to being acquired by Mr. Vacchiano under a
Warrant exercisable within 60 days of the Measurement Date.
(12) Includes 7,500 Shares subject to being acquired by Mr. Friedman under a
Warrant exercisable within 60 days of the Measurement Date.
(13) Excludes Shares held by the ESOT, but includes the beneficial interests in
Shares allocated to each director's and executive officer's ESOT accounts.
Includes Shares subject to stock options or stock warrants exercisable
within 60 days of the Measurement Date.
* Less than 1%.
Information Concerning the Board of Directors and Executive Officers
Identification of Directors
The names, ages, and related information of the nominees and all directors
of the Company as of the Measurement Date appear below.
Directors Whose Terms Expire in 2002
<TABLE>
<CAPTION>
Name Age Present Offices Held in the Company Director Since
----- ---- -------------------------------- --------------
<S> <C> <C> <C>
Elmer L. Taylor, Jr. 72 Director and Vice Chairman of the Board 1981
John H. Friedman 45 Director 1998
Thomas J. Vacchiano, Jr. 46 Director 1999
</TABLE>
Mr.Elmer L. Taylor, Jr., serves as Vice Chairman of the Company Board, a
position he has held since his election in December 1984. Upon his retirement
from active employment with the Company in 1988,
II-4
<PAGE>
Mr. Taylor became a consultant to the Company and served in that capacity until
December 1997. Mr. Taylor served as President of Marketing And Research
Counselors, Inc., from May 1983 until its merger into the Company in December
1984 and as its Executive Vice President from 1968 to May 1983. Mr. Taylor was
Chief Operating Officer of Marketing And Research Counselors, Inc., from January
1982 until the merger of Marketing And Research Counselors, Inc. into the
Company in 1984.
Mr. Friedman has been Managing Director of Easton Capital Corporation, a
private investment firm, since 1991. From 1989 to 1991, he was the Managing
Partner of Security Pacific Capital Investors, a leveraged buyout and venture
capital firm. From 1981 to 1989, he was employed by E.M. Warburg Pincus & Co.
where his last position was Managing Director. Mr. Friedman graduated Magna Cum
Laude from Yale College in 1975 and received his J.D. degree from the Yale Law
School in 1978.
Thomas (Tom) J. Vacchiano, Jr. is Chief Executive Officer and President of
Xerox Engineering Systems, a Xerox New Enterprise company. Before joining Xerox
in September of 1997, Mr. Vacchiano was Vice President Worldwide Operations for
Digital Equipment Corporation. He was instrumental in the formation and
operation of Digital's Systems Business Unit. This business included product
development, marketing, sales, and support of Digital's high performance Alpha
systems around the world. Prior to joining Digital in 1994, Mr. Vacchiano spent
17 years with NCR Corporation and AT&T in a number of increasingly responsible
senior management positions. These assignments included Country Manager of
Mexico, Sales Vice President for Indirect Channels, Vice President of Marketing
for the PC line of business, and Vice President of Strategy and Business
Development.
Directors Whose Terms Expire in 2001
<TABLE>
<CAPTION>
Name Age Present Offices Held in the Company Director Since
----- ---- -------------------------------- --------------
<S> <C> <C> <C>
Cecil B. Phillips 75 Director and Chairman Emeritus 1981
Rolan G. Tucker 75 Director 1983
Jack D. Wolf 46 Director, President, and Chief Operating Officer 1995
</TABLE>
Mr. Cecil B. Phillips served as Director, Chairman of the Board and Chief
Executive Officer of the Company from May 1983 to August 1993 when he
relinquished the title of Chief Executive Officer. In January 1998, Mr. Phillips
also relinquished the title of Chairman of the Board and was elected to his
present position as Chairman Emeritus. Mr. Phillips also served as Chairman of
the Board of Marketing And Research Counselors, Inc., the Company's former
principal operating subsidiary, from May 1983 until its merger into M/A/R/C in
December 1984; President and Chief Operating Officer of the Company from
February 1982 to May 1983; and as resident and Chief Executive Officer of
Marketing And Research Counselors, Inc., from July 1965 to May 1983.
Mr. Rolan G. Tucker, a certified public accountant, is active in numerous
business and civic affairs. Until 1989, he served as Chairman of the Board of
Metropolitan Savings and Loan Association, Dallas, Texas, for a period in excess
of five years. From 1976 until 1986, he also was President and Chief Executive
Officer of Metropolitan Savings. At the request of federal regulators, Mr.
Tucker also served as Chairman of the Board of Horizon Federal Savings and Loan,
New Orleans, Louisiana, from May 1987 until February 1989. Mr. Tucker was a
member of the Dallas City Council from 1980 to 1983, and he served several terms
as a member of the Board of Directors of the Federal Home Loan Bank of Dallas.
Mr. Jack D. Wolf is President and Chief Operating Officer of the Company,
positions he assumed in January 1998. Prior to that, Mr. Wolf had advanced
through the ranks of the Company into progressively responsible positions.
Starting as a data processing manager in 1976, Mr. Wolf was named manager of the
Company's Greensboro, North Carolina office in 1978. He was elected Vice
President of the Company in 1981; Senior Vice President in 1984; Executive Vice
President in 1986 and President of the Targetbase Marketing division in 1990.
Mr. Wolf is active in several marketing organizations, including service on the
Advisory Council for the National Center for Database Marketing. In 1996, he was
elected to serve on the Direct Marketing Education Foundation Board of Trustees.
In 1997, he became a member of the Master of Science in Marketing Research
(MSMR) Advisory Board at The University of Texas at Arlington.
Directors Whose Terms Expire in 2000
<TABLE>
<CAPTION>
Name Age Present Offices Held in the Company Director Since
- ----- ---- -------------------------------- --------------
<S> <C> <C> <C>
Sharon M. Munger 53 Director, Chairman of the Board, 1983
and Chief Executive Officer
Edward R. Anderson 52 Director 1997
</TABLE>
II-5
<PAGE>
Ms. Sharon M. Munger, Chief Executive Officer of the Company since August
1993, assumed the additional duties of Chairman of the Board in January 1998.
She previously served as President and Chief Operating Officer from November
1986 to January 1998. Ms. Munger has served in various executive positions with
the Company and its subsidiaries since January 1978.
Mr. Edward R. Anderson is President and Chief Executive Officer of
E-Certify Corp. From January 1994, until he joined E-Certify Corp., he was
President and Chief Executive Officer of CompuCom Systems, Inc., a leading
provider of personal computer products and services to large and medium sized
businesses throughout the United States. Mr. Anderson served as CompuCom's Chief
Operating officer from August 1993 through December 1993. Prior to joining
CompuCom (NASDAQ -- "CMPC"), Mr. Anderson served from May 1988 to July 1993 as
President and Chief Operating Officer of Computerland Corporation (now known as
Vanstar), a computer reseller.
Executive Officers
Set forth below is certain information concerning the executive officers
of the Company, other than executive officers who are also members of the
Company Board:
Name Age Position with the Registrant
- ----- ---- ----------------------------
Corinne F. Maginnis 51 Executive Vice President of the Registrant
since November 1990; President of the
Registrant's Quality Strategies subsidiary
from January 1991 to November 1994; Senior
Vice President of the Registrant from
November 1986 to December 1990; Executive
Vice President from January 1985 to November
1986; Senior Vice President from July 1984
to January 1985; Vice President from January
1983 to July 1984; Research Associates
Manager from September 1982 to January 1983.
Ms. Maginnis is the sister of Sharon M.
Munger, President and Chief Executive
Officer of the Registrant.
Daniel J. Sutherland 46 President of M/A/R/C Research since
September 1998.
Harold R. Curtis 60 Executive Vice President of the Registrant
since April 1998; Senior Vice President from
November 1986 to April 1998; Chief Financial
Officer, Secretary and Treasurer of the
Registrant since 1982.
The executive officers of the Company were elected to hold office until
the annual meeting of the directors of the Company, which meeting immediately
follows the annual meeting of Shareholders, or until their respective successors
are elected and have qualified. Except as described in Item 3(b) of the
accompanying Schedule 14D-9, no arrangements or understandings exist between the
listed officers and other persons pursuant to which any of the individuals
listed above were to be selected as officers.
Meetings and Committees of the Board of Directors
The Company Board held four meetings during the fiscal year ended December 31,
1998, and took certain other action by unanimous consent. Every director
attended all of the meetings of the Company Board and committees of the Company
Board on which the director served, except that Ms. Munger and Mr. Anderson each
missed one Company Board meeting.
The Company Board has established three standing committees: an Executive
Committee, an Audit Committee, and a Compensation Committee.
The Executive Committee consists of Sharon M. Munger, Chair, Cecil B.
Phillips and Jack D. Wolf. The Executive Committee may exercise all the
authority of the Company Board in the management of the Company's business and
affairs except as prohibited by law. The Executive Committee held two meetings
during the fiscal year ended December 31, 1998.
The members of the Audit Committee in 1998 were Rolan G. Tucker, Chair,
and Elmer L. Taylor, Jr. The Audit Committee is responsible for recommending to
the Company Board an independent accounting firm and, on behalf of the Company
Board, reviewing the independent accountants' audit and their annual report to
management. Additionally, the Audit Committee establishes the Company's
investment policies and oversees its investment portfolio. The Audit Committee
held one meeting during the fiscal year ended December 31, 1998.
II-6
<PAGE>
The Compensation Committee in 1998 consisted of Sharon M. Munger, Chair,
Cecil B. Phillips and Rolan G. Tucker. The Compensation Committee is responsible
for reviewing and recommending the various compensation packages offered to the
Company's key executives and administering the Company's employee benefit plans.
The Compensation Committee also administers the Company's 1991 and 1997 stock
option plans. The Compensation Committee held two meetings during the fiscal
year ended December 31, 1998.
Compensation of Directors
Each director who is not an officer or employee of the Company is paid a
director's fee of $12,000 per annum. In addition, each outside director receives
$6,000 per year for each committee of the Company Board on which the director
serves. Officers and employees of the Company who serve as directors serve
without pay beyond their regular compensation. The Company reimburses all
directors and officers for their travel and other necessary business expenses
incurred in the performance of their services. Each director who is not an
officer or an employee of the Company and whose directorship began prior to
January 24, 1997, is entitled to certain benefits on retirement from the Company
Board. To be eligible for these benefits, an outside director must have
completed five years of service on the Company Board. Upon the director's
retirement from the Company Board and for a period equal to the total number of
years of the director's service on the Company Board, the Company will pay the
director annual compensation equal to the average of the annual compensation
paid to the director in the three highest years of service prior to the
director's retirement. These benefits are unfunded general obligations. The
Company accrues a portion of the cost of these benefits annually.
The aggregate amount expensed in 1998 was $72,000.
Executive Compensation and Compensation Committee Report
The Compensation Committee of the Company Board is responsible for
reviewing and recommending the various compensation packages offered to the
Company's key executives. The following report sets out the elements and
describes the basis on which 1998 compensation determinations were made by the
Committee with respect to the Company's executive officers.
Compensation Philosophy
The Committee follows a series of guidelines when making compensation
decisions. The Committee believes that executive compensation programs for the
Company should accomplish the following:
-- Attract, retain, and motivate highly talented individuals and offer
competitive levels of annual compensation for their expertise,
creativity, and leadership.
-- Provide annual incentive opportunities which focus the executive's
efforts and attention on the Company's annual and long-term business
objectives and strategies, and offer awards for meeting the
Company's business goals.
-- Align the executive's long-term vision and thinking with that of the
Company's owners by offering stock-based incentives which link the
executive's remuneration to returns experienced by shareholders.
In general, the Committee believes that it should set executive
compensation levels in the 75th percentile or higher of the Company's peer group
in order to attract and retain competent management. The Committee considers
information gleaned from public filings by other reporting companies engaged in
the marketing services industry, the compensation survey published each year by
the Council of American Survey Research Organizations (the primary trade
organization for the marketing research industry), and other available industry
information. The Committee believes that none of the companies it considered are
the companies that form either the S & P 500 composite or the DJ Other
Industrial Services composite as shown in the Comparison of Cumulative
Shareholder Return Chart below.
Compensation Programs and Policies
To meet the Company's objectives, the Committee administers three
components of the executive compensation program:
-- Base Salary
-- Annual Incentive Awards
-- Stock Ownership Programs
II-7
<PAGE>
The Committee reviews these programs annually to ensure that they meet the
Company's compensation goals and specifications. The various elements of the
compensation program for executive officers are further discussed below:
Base Salary
The Committee believes that in order to retain top talent, it is crucial
that the Company offer competitive levels of base salary to its executives. The
Committee sets salary levels by evaluating the performance of the executive and
by referencing the Company's competitive labor market. For the most part, the
Committee considers the competitive labor market to be other firms in related
segments of the marketing services industry and certain other business services
companies. The Committee reviews base salaries annually for competitiveness and
makes adjustments as it feels necessary.
In addition to using market data to set executive salaries, the Committee
also takes into consideration each executive's overall experience, expertise,
tenure with the Company, and length of service in the executive's current
position when setting appropriate salary levels. The Committee feels that this
policy provides stability and offers compensation that is commensurate with each
executive's relative position and contribution to the Company.
Annual Incentive Compensation
A professional services business is uniquely dependent upon the expertise
and motivation of its employees for success. The Committee strongly believes in
providing performance incentives that promote the achievement of shared and
individual performance goals. Such incentives allow employees to share in the
rewards of their collective and individual performance for the Company. The
Committee generally relies on the Chief Executive Officer's recommendations when
making awards to those who report to the Chief Executive Officer. Bonuses are
awarded at the discretion of the Committee and may vary depending upon
individual performance and the Company's overall performance.
The incentive program is intended to deliver annual cash awards from the
bonus pool to participants based on their individual contributions to the
Company and their operating unit. Normally, the Committee sets aside a bonus
pool each year equal to 18.5% of the Company's income before taxes after giving
effect to the bonus pool calculation. In past years, this bonus generally ranged
from 10% to 30% of base salary. Due to the Company's poor earnings performance,
no bonus pool was set up in 1998.
Stock Ownership Programs
The Committee believes that if key executives are given opportunities to
own significant levels of the Company's stock, they will have strong incentives
to enhance the value of the Company. The Committee feels that the best interests
of the Shareholders are served when there is a link between the executives'
compensation and the returns the Shareholders receive from ownership. Thus, the
Company favors stock-based programs which deliver stock incentives to executives
and allow the executives the opportunity to increase their personal holdings in
the Company. The 1991 Nonstatutory Executive Stock Plan allows for the issuance
of stock options. The 1997 Stock Option Plan provides for the issuance of
Incentive Stock Options, Nonincentive Stock Options, and Limited SARs. Under
these plans, the stock-based instrument will appreciate in value if and only if
the Company's stock appreciates in value from the time of grant. In this manner,
Shareholders are assured that participants will be motivated to act in a manner
that benefits Shareholders.
Discussion of the 1998 Compensation for the Chief Executive Officer
Sharon M. Munger was appointed Chief Executive Officer in August 1993, in
addition to her responsibilities as President. At Ms. Munger's request, the
Committee held Ms. Munger's salary at the 1993 level of $275,000 during the
years 1994 through 1997 and tied part of her compensation to increases in the
value of the Shareholders' equity. Ms. Munger disqualified herself from
eligibility for participation in the cash bonus pool in each of those years. In
1994, the Committee awarded a warrant entitling Ms. Munger to purchase 75,000
Shares of the Company's common stock at $7.17 per Share (the market price on the
date of grant). Ms. Munger purchased 26,000 Shares under this option in 1997. In
1996 the Committee issued 210,000 Shares of restricted common stock to Ms.
Munger. The restrictions lapse on 1/15th of the Shares for each year Ms. Munger
remains in the Company's employment. In 1998, Ms. Munger's base salary was
increased to $325,000. A substantial portion of the Chief Executive Officer's
compensation is still tied to increases in Shareholder value.
II-8
<PAGE>
Conclusion
The Committee believes that the Company's compensation programs are
reasonable and competitive and offer opportunities for executives to be rewarded
for enhancing results. The stock-based incentive programs continue to provide
the necessary link between executive performance and Shareholder returns.
Sharon M. Munger, Chair, and
Cecil B. Phillips, and
Rolan G. Tucker, members.
As of December 31, 1998.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee in 1998 was composed of one nonemployee
director and two employee directors -- Committee Chairman Sharon M. Munger and
Cecil B. Phillips. Ms. Munger's compensation as Chairman of the Board and Chief
Executive Officer is discussed above. Mr. Phillips, who is Chairman Emeritus,
has a base salary of $200,000 per year under an employment contract which
secures his exclusive services for the Company until February 15, 2008. The
payments under the contract continue regardless of Mr. Phillips' death or
disability prior to expiration. The Company also provides other benefits
including an automobile, health insurance and reimbursement of expenses incurred
on the Company's behalf. In addition, Mr. Phillips received the fifth annual
installment in 1998 under his supplemental executive retirement plan, as
discussed below.
Summary Table of Executive Compensation
The following table provides summary information concerning compensation
of the Company's Chief Executive Officer and each of the five other most highly
compensated executive officers for the periods indicated:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
--------------------
Annual Compensation Awards Payouts
-------------------------------- ------- ----------
Restricted
Other Annual Stock Options/ Long-Term All Other
Name and Salary Bonus Compensation Award(s) SARs Incentive Compensation
Principal Position Year ($) ($) ($)(1) ($)(2) (#) Payouts ($) ($)(3)
- ------------------- ---- ------ ----- ------------ -------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cecil B. Phillips 1998 200,000 0 200,000 0 0 0 0
Director and 1997 200,000 0 200,000 0 0 0 0
Chairman 1996 200,000 75,000 200,000 0 0 0 0
Emeritus
Sharon M. Munger 1998 325,000 0 0 0 0 0 4,699
Director, 1997 275,000 0 0 0 0 0 7,019
Chairman of the 1996 275,000 0 0 2,100,000 0 0 3,580
Board and Chief
Executive Officer
Jack D. Wolf 1998 260,000 0 0 0 0 0 4,699
Director, 1997 240,000 0 0 0 50,000 0 6,763
President and 1996 225,000 0 0 1,050,000 0 0 3,580
Chief Operating
Officer
Scott E. Bailey 1998 200,000 0 0 0 8,000 0 4,699
Executive Vice 1997 200,000 0 0 0 0 0 4,854
President 1996 180,000 18,000 0 0 30,000 0 3,580
Jeffrey S. Walters 1998 200,000 0 0 0 10,000 0 4,699
Executive Vice 1997 190,000 28,000 0 0 6,900 0 6,777
President 1996 178,000 21,800 0 0 15,000 0 3,580
Beth A. Kuykendall 1998 200,000 0 0 0 13,000 0 4,699
Executive Vice 1997 160,000 24,153 0 0 17,000 0 6,234
President 1996 110,000 20,000 0 0 15,000 0 2,795
</TABLE>
- ----------
(1) Payments under the Company's supplemental executive retirement plan.
(2) Market value of the restricted stock at the date of grant.
(3) All amounts in this column represent (i) Share allocations made under the
employee stock ownership plan and (ii) the Company's matching
contributions under the 401(k) plan.
II-9
<PAGE>
Family Relationships
Ms. Corinne F. Maginnis, the sister of Director, Chairman and Chief
Executive Officer Sharon M. Munger, is employed as an Executive Vice President
of the Company at an annual salary of $182,000.
Ms. Linda Kuykendall, the mother-in-law of Executive Vice President Beth
Kuykendall, is employed as the Company's Corporate Accounting Manager at an
annual salary of $75,012. In addition, Mr. Steve Kuykendall, husband of Ms. Beth
Kuykendall, is employed as Director of Financial Services in the Company's
Targetbase Marketing division at an annual salary of $58,300.
Options/SAR Exercises and Holdings
The following table sets out information with respect to the named
executive officers concerning the exercise of options during the last fiscal
year and unexercised options and SARs held as of the end of the fiscal year:
Aggregated Options/SAR Exercises in Last Fiscal Year
and FY-End Options/SAR Value
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-Money
Options/SARs at Options/SARs at
FY-End FY-End
------------- ----------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized($) Unexercisable Unexercisable($)
----- --------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C>
Cecil B. Phillips 0 0 0 0
0 0
Sharon M. Munger 0 0 49,000 169,295
0 0
Jack D. Wolf 0 0 50,000 0
0 0
Scott E. Bailey 0 0 18,600 28,380
29,300 14,190
Jeffrey S. Walters 0 0 19,200 56,760
29,200 14,190
Beth A. Kuykendall 0 0 12,000 25,800
40,500 6,450
</TABLE>
Comparison of Cumulative Shareholder Return
The following graph provides a comparison with the stated indices of the
yearly percentage change in the Company's cumulative total Shareholder return on
its common stock for a five-year period, as required by the Rules of the U.S.
Securities and Exchange Commission:
Comparison of Cumulative Shareholder Return 1993 - 1998
[The following information was depicted as a line graph in the printed material]
M/A/R/C Inc. S&P 500 Index Peer Group
------------ ------------- ----------
December 1993 100.00 100.00 100.00
December 1994 159.38 101.32 98.68
December 1995 186.75 139.40 120.55
December 1996 285.33 171.40 134.58
December 1997 358.38 228.59 163.34
December 1998 215.81 293.91 169.26
Data Source: S&P Compustat Services
II-10
<PAGE>
Compensation Under Plans
ESOP and 401(k) Plan
Substantially all salaried employees, including officers, are eligible to
participate in the Company's Employee Stock Ownership Plan and its related
Section 401(k) Plan (the "ESOP and 401(k) Plan"). There were 772 employees
participating in the ESOP and 401(k) Plan at December 31, 1998. The ESOP and
401(k) Plan may purchase Shares for the benefit of participating employees. The
ESOP and 401(k) Plan may be amended by the Board of Directors at any time. Any
amendment could have the effect of increasing the cost of the ESOP and 401(k)
Plan to M/A/R/C. No amendment, however, may divert any part of the trust fund
for the ESOP and 401(k) Plan to purposes other than the exclusive benefit of
participants in the ESOP and 401(k) Plan and their beneficiaries.
Participating employees may contribute up to the lesser of 10% of their
salary or $9,500 (or, if greater, the maximum amount permitted under the
applicable Internal Revenue Service regulations) to the ESOP and 401(k) Plan
through payroll deductions. The Company's matching contributions, if any, are
determined by the Compensation Committee of the Board of Directors based on the
Company's performance at the close of the fiscal year.
The ESOP and 401(k) Plan also affords additional investment options,
including an equity fund, a fixed income fund, and a bond fund in addition to a
stock fund of the Company.
When a participant in the ESOP and 401(k) Plan terminates employment, he
may have a vested benefit in the amounts allocated to his account. The employee
is eligible to participate after one year of employment, and vesting occurs at
the end of the fifth year of participation.
In January 1993, the Company loaned $2,500,000 to the Employee Stock
Ownership Plan for the purpose of acquiring the Company's common stock in the
open market or in negotiated transactions. The loan is repayable over a 15-year
period with interest at 7.04% per annum. As of the Record Date, 458,277 Shares
had been acquired in open market transactions at an aggregate cost of
$2,446,000, or an average of $5.34 per share. As of December 31, 1998, a total
of 183,311 Shares had been allocated to the ESOP participants. The remaining
Shares are committed to be released ratably over the remaining life of the ESOP
loan. The Company made a cash contribution of $167,000 to the ESOP for the
fiscal year ended December 31, 1998. This contribution, together with the
dividends paid on unallocated Shares, provided the funds the ESOP needed to pay
the $259,000 installment due to the Company in 1998 on the loan. The Company
recorded an expense of $449,000 in connection with the release of 30,552 Shares
to the participants' accounts.
Pension Plan
Substantially all the Company's employees, including officers, are also
eligible for participation in the Company's pension plan (the "Pension Plan").
There were 950 persons participating in the Pension Plan as of January 1, 1998.
The Pension Plan provides that it may be amended by the Company Board at any
time. Any amendment could have the effect of increasing the cost of the Pension
Plan to the Company. No amendment, however, may divert any part of the trust
fund for the Pension Plan to purposes other than the exclusive benefit of
participants in the Pension Plan and their beneficiaries.
The cash compensation table does not include the accrual of contributions
to the Pension Plan for the account of specified persons, since the Pension Plan
is a defined benefit plan, and the accrual in respect of a specified person is
not separately or individually calculated by the actuaries for the Pension Plan.
The Pension Plan provides, in general, for monthly payments to, or on
behalf of, each covered employee upon the employee's retirement at his or her
social security retirement age, disability, or death, based upon years of
service, and the highest average monthly rate of compensation for the five
highest consecutive years preceding retirement. The compensation covered by the
Pension Plan includes all amounts paid to participants for performance of
personal services that are required to be reported as wages for federal income
tax purposes. Average monthly rate of compensation ("Average Monthly
Compensation") is determined by averaging pay in the five consecutive years of
employment that produce the highest average.
II-11
<PAGE>
The Pension Plan provides a lifetime monthly pension commencing at the
participant's social security retirement age which is equal to:
(a) 1.5% of Average Monthly Compensation, multiplied by the number of
years of benefit service, less
(b) 1.25% of the primary social security benefit payable to the
participant upon retirement, multiplied by the number of years of
benefit service (limited to a maximum of 35 years).
No participant receives a benefit less than $12.00 per month per year of benefit
service.
The amount of pension actually accrued under the pension formula is
payable as a life annuity. If the participant is married, the benefit is payable
in the form of an actuarially reduced benefit with 50% of the benefit then
payable to the surviving spouse upon the death of the retired participant.
The following table shows the estimated annual benefits payable at age 65
to persons in specified compensation and benefit service categories (assuming
the participant reaches normal retirement during 1998):
<TABLE>
<CAPTION>
Highest Estimated Annual Pension Benefit Upon
Consecutive Retirement With Indicated Years of Credited Service
Five-Year Average ----------------------------------------------------------------
Salary 15 20 25 30 35
---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 40,000 ................ $ 6,242 $ 8,322 $10,403 $12,483 $14,564
90,000 ................ 17,170 22,893 28,616 34,340 40,063
120,000 ................ 23,920 31,893 39,866 47,840 55,813
160,000 ................ 32,920 43,893 54,866 65,840 76,813
</TABLE>
In no event may the estimated benefit exceed the maximum benefit
limitation under Section 415 of the Internal Revenue Code. The maximum benefit
allowable under Section 415 during 1998 amounts to $130,000 unless, prior to
January 1, 1983, a higher benefit had been accrued under prior law. In that
case, the maximum benefit limitation will be the actual benefit accrued subject
to a maximum of $136,425. For 1998, earnings in excess of $160,000 were not
considered in determining plan benefits. Benefits accrued to December 31, 1988,
are protected.
The credited years of service under the Pension Plan and the current
yearly compensation covered by the Pension Plan for the Company's five most
highly compensated executive officers whose compensation during the fiscal year
ended December 31, 1998, exceeded $80,000, and who are eligible to participate
in the Pension Plan, are as follows:
Current
Credited Compensation
Years of Covered by
Name of Individual Service Plan
------------------ ------- ------------
Sharon M. Munger ................... 26 $160,000
Jack D. Wolf ....................... 23 $160,000
Scott E. Bailey .................... 16 $160,000
Jeffrey S. Walters ................. 15 $160,000
Beth A. Kuykendall ................. 11 $160,000
1997 Stock Option Plan
The Company's 1997 Stock Option Plan (the "1997 Plan") was adopted by the
Company's Shareholders on April 17, 1997. As of December 31, 1998, options to
acquire 471,150 Shares were outstanding at an average price of $14.68 per Share,
and none of these were exercisable. No options have been issued in tandem with
SARs as permitted by the 1997 Plan. The 1997 Plan was designed to serve as an
incentive for attracting and retaining qualified and competent employees.
The Compensation Committee of the Company Board administers and interprets
the 1997 Plan.
Each option is exercisable after the period or periods specified in the
option agreement, but no option is exercisable after the expiration of ten years
from the date of grant.
Three of the Company's five most highly compensated executive officers
were granted stock options under the 1997 Plan during the fiscal year ended
December 31, 1998.
II-12
<PAGE>
Nonstatutory Executive Stock Plan
In 1991, the Board adopted a Nonstatutory Executive Stock Plan (the
"NESP"), reserving 360,000 Shares for issuance upon the exercise of options
granted under the NESP. In September 1994, the NESP was amended to reserve an
additional 450,000 Shares for issuance. During 1998, no options to purchase
Shares were granted. No options were cancelled. Options on 44,100 Shares were
exercised. At December 31, 1998: options on 347,715 Shares were outstanding
under the NESP at an average price of $8.81 per Share; there were 183,405 Shares
still available for grant; and options on 200,496 Shares were exercisable. The
NESP is designed to attract, motivate, and retain highly competent management
level employees.
The Compensation Committee of the Company Board administers and interprets
the NESP. The NESP provides for the granting of nonstatutory stock options on
terms and at prices determined by the Committee; but the exercise price must not
be less than the greater of (i) the book value or (ii) the par value of the
common stock on the date of grant. Each option is exercisable after the period
or periods specified in the option agreement, but no option may be exercised
after the expiration of ten years from the date of grant. The options and the
shares issued under the NESP are restricted securities.
Supplemental Executive Retirement Plans
The Company maintains five supplemental executive retirement plans
("SERPs"). The SERPs are unfunded general obligations for which the Company
reserves each year. Subject to certain conditions, each of the SERPs vests over
a ten-year period from age 50 to age 60. The SERP becomes payable in ten annual
installments when the covered employee reaches his or her retirement age under
the Pension Plan. Four of the SERPs have fully vested and annual payments have
commenced on three of them. One of the beneficiaries is Cecil B. Phillips, one
of the Company's five most highly compensated executive officers. Mr. Phillips
received $200,000 in 1998 and will receive $200,000 in 1999 and in each of the
five years following. The Company has reserved an aggregate of $1,774,000 to
cover these SERPs.
If any key employee covered by a SERP dies or becomes disabled prior to
the expiration of benefits, the benefits will be paid to the disabled employee
or to a beneficiary named by the employee.
II-13
[Letter head of M/A/R/C Inc.]
October 4, 1999
To Our Shareholders:
We are pleased to inform you that M/A/R/C Inc. has entered into a
definitive merger agreement with Omnicom Group Inc. Under the agreement, a
subsidiary of Omnicom has commenced a cash tender offer for all the outstanding
common shares of M/A/R/C at a price of $20 per share. The merger agreement also
provides that M/A/R/C shares not purchased in the tender offer will be converted
into the right to receive $20 per share in cash.
Your Board of Directors has determined (one director abstaining) that the
terms of the tender offer and the merger are fair to and in the best interests
of M/A/R/C's shareholders and recommends that shareholders accept the Offer and
tender their shares pursuant to the Offer. In arriving at its recommendation,
the Board considered the factors described in the accompanying
solicitation/recommendation statement on Schedule 14D-9, including the written
opinion of our financial advisor, ING Barings LLC, to the effect that the
consideration to be received by M/A/R/C's shareholders pursuant to the Offer and
the merger is fair to the shareholders from a financial point of view. A copy of
ING Barings' written opinion is attached to the Schedule 14D-9 as Schedule I.
Omnicom's tender offer papers accompany this letter. These documents set
forth all of the terms of the tender offer and provide instructions as to how to
tender your shares. Additionally, the enclosed Schedule 14D-9 sets forth
additional information regarding the tender offer and the merger relevant to
making an informed decision. Included in the accompanying Schedule 14D-9 is a
discussion of the background and reasons considered by the Board in its decision
to approve the tender offer and the merger. I urge you to read all these
materials carefully and in their entirety.
As M/A/R/C begins a new chapter in its corporate history, I, personally,
along with your Board of Directors, management and the employees of the Company,
thank you most sincerely for your support over the years.
Very truly yours,
/s/ SHARON M. MUNGER
------------------------------------
Sharon M. Munger
Chairman and Chief Executive Officer
October 1, 1999
OMNICOM GROUP TO ACQUIRE M/A/R/C INC.
- -------------------------------------
NEW YORK, NEW YORK -- Omnicom Group Inc., (OMC:NYSE) and M/A/R/C Inc.
(NASDAQ:MARC) today announced a definitive merger agreement under which Omnicom
- -- through its Diversified Agency Services (DAS) Division -- will acquire
M/A/R/C, a leading integrated marketing services company headquartered in
Irving, Texas.
In the transaction, M/A/R/C shareholders will receive $20 per share in an all
cash tender offer to be commenced within a few days. The tender offer will be
subject to the condition that at least two-thirds of the outstanding M/A/R/C
shares are tendered and to other customary conditions. Holders of 20.5% of the
company's shares have agreed to tender their shares in the offer. The Boards of
Directors of both companies have approved the transaction.
ING Barings LLC has provided the Board of Directors of M/A/R/C with an opinion
as to the fairness, from a financial point of view, of the consideration to be
received by the common shareholders of M/A/R/C in the transaction. ING Barings
LLC also served as financial advisor to M/A/R/C in this transaction.
M/A/R/C has developed Customer Relationship Management (CRM) systems, primarily
using database marketing and market research technology. "Advances in computer
technology and the acceptance of the Internet as a global communications and
transactional medium is taking CRM to new levels," said M/A/R/C Chairperson
Sharon Munger. "With a technology landscape and marketplace undergoing such
radical transformation, the key will be to leverage technology, customer insight
and marketing resources into integrated solutions. The merger with Omnicom
offers an array of resources and capabilities to provide those integrated
solutions on a global scale for both existing and future clients."
DAS Chairman and Chief Executive Officer Tom Harrison said, "Attractive,
scalable business opportunities have developed as the concept of marketing
evolves from a mass approach to a one-to-one interactive approach. In a world of
brand proliferation, shorter product lifecycles and media fragmentation, M/A/R/C
fits very well within our overall strategy by offering a unique integration of
database, promotion and research capabilities."
M/A/R/C is one of the largest marketing intelligence firms in North America. The
company operates in two core businesses. Its M/A/R/C Research business provides
customer and brand marketing research for measuring and building a brand's
value. Targetbase is a customer relationship management agency specializing in
the delivery of the maximum return on the client's marketing communications
investment.
Omnicom, the leading marketing communications company in the world, consists of
advertising agency networks BBDO Worldwide, DDB Worldwide and TBWA Worldwide, as
well as Goodby, Silverstein & Partners; Diversified Agency Services (DAS), which
operates a number of leading, independently branded companies in marketing
services and specialty communications; and Communicade, a division of wholly
owned and significant minority investment interests in several leading
interactive and new media companies.
CONTACTS: M/A/R/C Inc.
Sharon Munger
(972) 506 - 3414
Jack D. Wolf
(972) 506 - 3412
Omnicom Group Inc.
Thomas L. Harrison
(212) 415 - 3064
* * *
EMPLOYMENT AGREEMENT
AGREEMENT dated as of this 30th day of September, 1999, but
effective as of the Effective Time of the Merger (as such terms are defined in
the Merger Agreement (as defined below)), by and between the surviving
corporation of the Merger, M/A/R/C INC., a Texas corporation (the "Company"),
and SHARON M. MUNGER (the "Executive").
W I T N E S S E T H:
WHEREAS, in order to induce Omnicom Group Inc. ("Omnicom"), to enter
into a certain Agreement and Plan of Merger of even date herewith (the "Merger
Agreement"), pursuant to which a wholly-owned subsidiary of Omnicom was merged
with and into the Company, the Executive is entering into this Agreement; and
WHEREAS, the Executive was employed by the Company, and the Company
wishes to ensure her continued employment with the Company and the Executive
wishes to accept such employment, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Employment
The Company agrees to employ the Executive during the Term specified
in paragraph 2, and the Executive agrees to accept such employment, upon the
terms and conditions hereinafter set forth.
2. Term
Subject to paragraphs 6 and 7, the Executive's employment by the
Company shall be for a term commencing on the date hereof and expiring on the
close of business on December 31, 2002 (the "Initial Term"); provided, however,
the term of the Executive's employment by the Company shall continue for an
indefinite period thereafter (also subject to paragraphs 6 and 7) unless and
until either party shall give to the other 90 days' advance written notice of
expiration of the term (a "Notice of Termination") (the Initial Term and the
period, if any, thereafter, during which the Executive's employment shall
continue are collectively referred to as the "Term"). Any Notice of Termination
given under this paragraph 2 shall specify the date of expiration (which may not
be earlier than the close of business on December 31, 2002) and may be given at
any time on or after September 30, 2002. The Company shall have the right at any
time during such 90-day notice period, to relieve the Executive of her offices,
duties and responsibilities and to place her on a paid leave-of-absence status,
provided that during such notice period the Executive shall remain a full-time
employee of the Company and shall continue to receive her salary compensation
and other benefits as provided in this Agreement. The
<PAGE>
effective date of the termination of the Executive's employment with the
Company, regardless of the reason therefor, is referred to in this Agreement as
the "Date of Termination".
3. Duties and Responsibilities
(a) During the Term, the Executive shall have the position of
Chairman of the Company. The Executive shall report directly to the Board of
Directors of the Company (the "Board") and the Chairman and Chief Executive
Officer of the Diversified Agency Services Division ("DAS") of Omnicom or his
designee (such Chairman and Chief Executive Officer or his designee being called
the "Designated Officer"), at such times and in such detail as it or they shall
reasonably require.
(b) The Executive shall perform such executive and managerial duties
and responsibilities customary to her office and as are reasonably necessary to
the operations of the Company and as may be assigned to her from time to time by
or under authority of the Board and/or the Designated Officer, consistent with
her position as designated in paragraph 3(a).
(c) The Executive (i) will use her reasonable best efforts to ensure
that the Company and its subsidiaries comply on a timely basis with all
budgetary and reporting requirements reasonably requested by the Board and/or
management of DAS, (ii) will, at all times, use all reasonable efforts to
perform her duties and responsibilities in a manner consistent with the policies
set forth in the "Grant of Authority" of Omnicom as from time to time in effect
and the parameters of the then-current profit plan and capital expenditure
budget of the Company as approved by the Chief Financial Officer of DAS, (iii)
will not take any action to prevent the Company from participating in Omnicom's
cash management program, (iv) will not incur obligations on behalf of the
Company other than in the ordinary course of business or enter into any
transaction on behalf of the Company not in the ordinary course of business
without the approval of the Board and/or the Designated Officer, and (v) will
not take any action to prevent the Company from abiding by the dividend,
management fee and other corporate policies of the Company, Omnicom and DAS as
from time to time in effect. The Executive acknowledges that current policy of
DAS is for every subsidiary to pay to its parent 90% of its profit after taxes
(before management fee deductions) for the year by way of dividends and/or
management fees on a quarterly basis, generally in arrears.
(d) The Executive's employment by the Company shall be full-time and
exclusive, and during the Term, the Executive agrees that she will (i) devote
all of her business time and attention, her best efforts, and all her skill and
ability to promote the interests of the Company and its subsidiaries, (ii) carry
out her duties in a competent and professional manner; and (iii) work with other
employees of the Company and its subsidiaries and DAS in a competent and
professional manner. Notwithstanding the foregoing, the Executive shall be
permitted to engage in charitable and civic activities and manage her personal
passive investments, provided that such passive investments are not in a company
which transacts business with the Company or any of its subsidiaries or engages
in business competitive with that conducted by the Company or any of its
subsidiaries (or, if such company does transact business with the Company or any
of its subsidiaries, or does engage in a competitive business, it is a publicly
held corporation and the
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Executive's participation is limited to owning less than 1/4 of 1% of its
outstanding shares), and further provided that such activities (individually or
collectively) do not materially interfere with the performance of her duties or
responsibilities under this Agreement.
(e) During the Term, the Executive's services hereunder shall be
performed at the offices of the Company in Irving, Texas, subject to necessary
travel requirements of her position and duties hereunder.
4. Compensation
(a) As compensation for her services hereunder and in consideration
of her non-solicitation/non-servicing and non-disclosure covenants as set forth
in paragraph 8, during the Term the Company shall pay the Executive, in
accordance with its normal payroll practices, an annualized base salary of
$400,000; provided, however, the then annual rate of direct salary compensation
may be increased by or under the authority of the Board or the Designated
Officer in accordance with the then salary review policy of the Company and
within the guidelines and budgetary procedures of DAS.
(b) During the Term, the Executive shall be eligible to participate
in Omnicom's 1998 Incentive Compensation Plan or any successor plan (the "ICP")
and to receive annual awards of cash bonuses and/or restricted shares of Omnicom
common stock thereunder. Under the ICP, upon recommendation by the Chairman and
Chief Executive Officer of DAS, the Compensation Committee of the Board of
Directors of Omnicom (the "Compensation Committee") will set an annual target
award for the Executive based on reaching performance goals established for the
Executive. The determination of the amount of the annual target that is actually
awarded shall be based on the Chairman and Chief Executive Officer of DAS's
evaluation of the success of the Executive in achieving the performance goals
established for her. Any incentive compensation payable pursuant to this
paragraph 4(b) shall be deemed earned only upon written notification by the
Chairman and Chief Executive Officer of DAS to the Executive of the amount of
her incentive compensation award and not any time before.
(c) During the Term, the Executive shall be eligible for
recommendation by the Chairman and Chief Executive Officer of DAS to the
Compensation Committee for grants of stock options under the ICP.
5. Expenses; Fringe Benefits
(a) The Company agrees to pay or to reimburse the Executive for all
reasonable, ordinary, necessary and documented business or entertainment
expenses incurred during the Term in the performance of her services hereunder
in accordance with the policy of the Company as from time to time in effect. The
Executive, as a condition precedent to obtaining such payment or reimbursement,
shall provide to the Company any and all statements, bills or receipts
evidencing the travel or out-of-pocket expenses for which the Executive seeks
payment or reimbursement, and any other information or materials, as the Company
may from time to time reasonably request.
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(b) During the Term, the Executive and, to the extent eligible, her
dependents shall be entitled to participate in and receive all benefits under
any welfare benefit plans and programs (including without limitation, medical,
disability, group life (including accidental death and dismemberment) and
business travel insurance plans and programs) provided by the Company to its
employees generally, subject, however, to the generally applicable eligibility
and other provisions of the various plans and programs in effect from time to
time. In addition, after the Date of Termination, provided that the Executive
has not been terminated for "cause" (as defined below), and until such time as
the Executive becomes eligible for medical benefits under Medicare, the
Executive shall be eligible to continue her participation (at the Executive's
own expense) in the Company's medical plan as in effect from time to time, in
accordance with the Company's policy regarding continued medical coverage for
certain senior executives, as is then in effect.
(c) During the Term, the Executive shall be entitled to participate
in all retirement plans and programs (including without limitation any profit
sharing/401(k) plan) provided by the Company to its employees generally,
subject, however, to the generally applicable eligibility and other provisions
of the various plans and programs in effect from time to time. In addition,
during the Term, the Executive shall be entitled to receive fringe benefits and
perquisites in accordance with the plans, practices, programs and policies of
the Company from time to time in effect which are made available to the senior
executives of the Company generally or to its employees generally.
(d) The Executive shall be entitled to paid vacation annually in
accordance with Company practice (with no right of carry-over), to be taken at
such time(s) as shall not, in the reasonable judgment of the Board, materially
interfere with the Executive's fulfillment of her duties hereunder, and shall be
entitled to as many holidays, sick days and personal days as are in accordance
with the Company's policy then in effect generally for its employees.
(e) During the Term, the Company will provide the Executive with an
automobile allowance of $1,200 per month to cover the costs of leasing,
insuring, garaging and maintaining an automobile for use in the business of the
Company.
6. Termination
(a) The Company, by direction of the Board or the Designated
Officer, shall be entitled to terminate the Term and to discharge the Executive
for cause effective upon the giving of written notice. The term "cause" shall be
limited to the following grounds:
(i) the Executive's failure or refusal to materially
perform her duties and responsibilities as set forth in
paragraph 3 hereof, or the failure of the Executive to devote
all of her business time and attention exclusively to the
business and affairs of the Company and its subsidiaries in
accordance with the terms hereof, in each case if such failure
or refusal is not cured (if curable) within 20 days after
written notice thereof to the Executive by the Company;
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(ii) the willful misappropriation of the funds
or property of the Company or any subsidiary;
(iii) the use of alcohol or illegal drugs,
interfering with the performance of the Executive's
obligations under this Agreement, continuing after written
warning;
(iv) the conviction in a court of law of, or entering
a plea of guilty or no contest to, any felony or any crime
involving moral turpitude, dishonesty or theft;
(v) the material nonconformance with the Company's
standard business practices and policies, including without
limitation, policies against racial or sexual discrimination
or harassment, made known to the Executive, which
nonconformance is not cured (if curable) within 10 days after
written notice to the Executive by the Company;
(vi) the commission in bad faith by the Executive of
any act which injures or could reasonably be expected to
injure the reputation, business or business relationships of
the Company or any subsidiary;
(vii) the resignation by the Executive on her own
initiative other than pursuant to a termination by the
Executive for "Good Reason" (as defined in paragraph 6(b)) or
pursuant to a Notice of Termination given by the Executive
under paragraph 2;
(viii) the gross misconduct or gross negligence by
the Executive in the performance of her duties or the habitual
misconduct or habitual negligence by the Executive in the
performance of her duties which habitual misconduct or
negligence is not cured (if curable) within 10 days after
written notice to the Executive by the Company; and
(ix) any material breach (not covered by any of the
clauses (i) through (viii) above) of any term, provision or
condition of this Agreement, if such breach is not cured (if
curable) within 20 days after written notice thereof to the
Executive by the Company.
Any notice required to be given by the Company pursuant to clause (i), (v),
(viii) or (ix) above shall specify the specific nature of the claimed breach and
the manner in which the Company requires such breach to be cured (if curable).
In the event that the Executive is purportedly terminated for cause and the
arbitrator appointed pursuant to paragraph 19 determines that "cause" as defined
herein was not present, then such purported termination for cause shall be
deemed a termination "without cause" pursuant to paragraph 6(c) and the
Executive's rights and remedies will be governed by paragraph 6(e), in full
satisfaction and in lieu of any and all other or further remedies the Executive
may have.
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(b) Provided that the Executive is not then otherwise in breach of
this Agreement, the Executive shall be entitled to terminate this Agreement and
the Term hereunder for "Good Reason" at any time during the Term by written
notice to the Company not more than 30 days after the occurrence of the event
constituting such Good Reason. "Good Reason" shall be limited to a breach by the
Company of a material term of this Agreement, which breach remains uncured for a
period of 20 days after written notice of such breach from the Executive to the
Company (such notice to specify the specific nature of the claimed breach and
the manner in which the Executive requires such breach to be cured).
(c) The Company shall have the right at any time during the Term to
terminate the employment of the Executive "without cause" by giving written
notice to the Executive setting forth a Date of Termination.
(d) In the event of the termination of the employment of the
Executive with the Company for any reason (including without limitation, a
termination pursuant to a Notice of Termination under paragraph 2) other than by
virtue of a termination "without cause" by the Company under paragraph 6(c) or a
termination for "Good Reason" by the Executive under paragraph 6(b), the
Executive shall be entitled to the following payments and benefits, subject to
any appropriate offsets, as permitted by applicable law, for debts or money due
to the Company or an affiliate thereof (collectively, "Offsets"):
(i) unpaid salary compensation through, and
any unpaid reimbursable expenses outstanding as of, the Date
of Termination; and
(ii) all benefits, if any, that had accrued to the
Executive through the Date of Termination under the plans and
programs described in paragraphs 5(b) and (c), or any other
applicable plans and programs in which she participated as an
employee of the Company, in the manner and in accordance with
the terms of such plans and programs.
In the event of the termination of the Employee's employment other than by
virtue of a termination "without cause" or a termination for "Good Reason", the
Company shall have no further liability to the Executive or the Executive's
heirs, beneficiaries or estate for damages, compensation, benefits, severance,
indemnities or other amounts of whatever nature, directly or indirectly, arising
out of or otherwise related to this Agreement and the Executive's employment or
cessation of employment with the Company.
(e) In the event of a termination by the Company "without cause" or
a termination by the Executive for "Good Reason", the Executive shall be
entitled to continue to receive from the Company, as liquidated damages, subject
to any Offsets, the following:
(i) as severance compensation, her applicable salary
compensation when it would be payable to her if her employment
had continued hereunder through (x) December 31, 2002 if the
Date of Termination occurs on or prior to
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September 30, 2002, or (y) 90 days after the Date of
Termination, if the Date of Termination occurs after September
30, 2002;
(ii) any unpaid reimbursable expenses outstanding
as of the Date of Termination;
(iii) all benefits, if any, that had accrued to the
Executive through the Date of Termination under the plans and
programs described in paragraphs 5(b) and (c), or any other
applicable benefit plans and programs in which she
participated as an employee of the Company, in the manner and
in accordance with the terms of such plans and programs; and
(iv) continued participation on the same basis
(including, without limitation, cost contributions) as the
other senior executives of the Company in all medical, dental,
disability and life insurance coverage (such benefits
collectively called the "Continued Plans") in which she was
participating on the Date of Termination (as such Continued
Plans are from time to time in effect at the Company) until
the earlier of (x) the end of the period that she receives
severance compensation payments under clause (i) of this
paragraph 6(e) or (y) the date, or dates, she is entitled to
receive coverage and benefits under the same type of plan of a
subsequent employer; provided, however, if the Executive is
precluded from continuing her participation in any Continued
Plan, then the Company will be obligated to pay her the
economic equivalent of the benefits provided under the
Continued Plan in which she is unable to participate, for the
period specified above, plus an amount equal to the tax, if
any, payable by her thereon, it being understood that the
economic equivalent of a benefit foregone shall be deemed the
lowest cost in the State of Texas that would be incurred by
the Executive in obtaining such benefit himself on an
individual basis, and payment of such after-tax economic
benefit shall be made quarterly in advance.
In connection with a termination "without cause" or for "Good Reason", (x) the
Company shall have no further liability to the Executive or the Executive's
heirs, beneficiaries or estate for damages, compensation, benefits, severance,
indemnities or other amounts of whatever nature, directly or indirectly, arising
out of or otherwise related to this Agreement and the Executive's employment or
cessation of employment with the Company, and (y) the Executive shall be under
no obligation to mitigate her damages or to seek other employment, and if the
Executive obtains other employment, any compensation earned by the Executive
therefrom shall not reduce the Company's severance obligations under clause (i)
of this paragraph 6(e). The making of any severance payments and providing the
other benefits as provided in this paragraph 6(e) is conditioned upon the
Executive signing a general release (the "Release") in favor of the Company and
its subsidiaries and affiliates, and its and their respective successors and
assigns, officers directors, employees, agents, attorneys and representatives,
of any claims (including, without limitation, claims of discrimination) relating
to the Executive's employment with the Company or the termination thereof. In
the event the Executive breaches any provisions of the Release or the provisions
of paragraph 8 of this Agreement, in addition to any other remedies at law or in
equity
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available to it, the Company may cease making any further severance payments and
providing the other benefits provided for herein, without affecting its rights
under this Agreement or the Release.
7. Disability; Death
In the event the Executive shall be unable to perform her duties
hereunder by virtue of illness or physical or mental incapacity or disability
(from any cause or causes whatsoever) in substantially the manner and to the
extent required hereunder prior to the commencement of such disability (all such
causes being herein referred to as "disability") and the Executive shall fail to
perform such duties for periods aggregating 180 days, whether or not continuous,
in any continuous period of 270 days, the Company shall have the right to
terminate the Executive's employment hereunder as at the end of any calendar
month during the continuance of such disability upon at least 30 days' prior
written notice to her. In the event of the Executive's death, the Date of
Termination shall be the date of such death. In the event the Executive's
employment is terminated as a result of her disability or death, she shall be
entitled to the payments and benefits, subject to any Offsets, as provided in
paragraph 6(d).
8. Non-Solicitation/Non-Servicing Agreement and Protection of Confidential
Information
(a) The Executive acknowledges (i) that her position and employment
with the Company result from the transaction contemplated by the Merger
Agreement; (ii) the highly competitive nature of the business and the industry
in which the Company competes; (iii) that as a key executive of the Company and
its predecessor she has participated in and will continue to participate in the
servicing of current clients and/or the solicitation of prospective clients,
through which, among other things, the Executive has obtained and will continue
to obtain knowledge of the "know-how" and business practices of the Company, in
which matters the Company has a substantial proprietary interest; (iv) that her
employment hereunder requires the performance of services which are special,
unique, extraordinary and intellectual in character, and her position with the
Company and its predecessor placed and places her in a position of confidence
and trust with the clients and employees of the Company; and (v) that her
rendering of services to the clients of the Company necessarily requires the
disclosure to the Executive of, and the Company will so disclose to the
Executive, confidential information (as defined in paragraph 8(b)) of the
Company. In the course of the Executive's employment with the Company (and its
predecessor), the Executive has and will continue to develop a personal
relationship with the clients of the Company and a knowledge of those clients'
affairs and requirements, and the relationship of the Company with its
established clientele will therefore be placed in the Executive's hands in
confidence and trust. The Executive consequently agrees that it is a legitimate
interest of the Company, and reasonable and necessary for the protection of the
confidential information, goodwill and business of the Company, which is
valuable to the Company, that the Executive make the covenants contained herein
and that the Company would not have entered into this Agreement or the Merger
Agreement unless the covenants set forth in this paragraph 8 were contained in
this Agreement. Accordingly, the Executive agrees that during the period that
she is employed by the Company and thereafter through the later of (x) December
31, 2002 and (y) two
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years after the Date of Termination, she shall not, as an individual, employee,
consultant, independent contractor, partner, shareholder, member or in
association with any other person, business or enterprise, except on behalf of
the Company, directly or indirectly, and regardless of the reason for her
ceasing to be employed by the Company:
(i) attempt in any manner to solicit or accept from
any client business of the type performed by the Company or to
persuade any client to cease to do business or to reduce the
amount of business which any such client has customarily done
or is reasonably expected to do with the Company, whether or
not the relationship between the Company and such client was
originally established in whole or in part through her
efforts; or
(ii) employ as an employee or retain as a consultant
any person who is then or at any time during the preceding
twelve months was an employee of or exclusive consultant to
the Company, or persuade or attempt to persuade any employee
of or exclusive consultant to the Company to leave the employ
of the Company or to become employed as an employee or
retained as a consultant by anyone other than the Company; or
(iii) render to or for any client any services of the
type rendered by the Company.
As used in this paragraph 8, the term "client" shall mean (1) anyone who is a
client of the Company on the Date of Termination or, if the Executive's
employment shall not have terminated, at the time of the alleged prohibited
conduct (any such applicable date being called the "Determination Date"); (2)
anyone who was a client of the Company at any time during the one year period
immediately preceding the Determination Date; (3) any prospective client to whom
the Company had made a new business presentation (or similar offering of
services) at any time during the one year period immediately preceding the
Determination Date; and (4) any prospective client to whom the Company made a
new business presentation (or similar offering of services) at any time within
six months after the Date of Termination (but only if the initial discussions
between the Company and such prospective client relating to the rendering of
services occurred prior to the Date of Termination, and only if the Executive
actively participated in or supervised such discussions). For purposes of this
clause, it is agreed that a general mailing or an incidental contact shall not
be deemed a "new business presentation or similar offering of services" or a
"discussion". In addition, if the client is part of a group of companies which
conducts business through more than one entity, division or operating unit,
whether or not separately incorporated (a "Client Group"), the term "client" as
used herein shall also include each entity, division and operating unit of the
Client Group where the same management group of the Client Group has the
decision making authority or significant influence with respect to contracting
for services of the type rendered by the Company.
(b) In the course of the Executive's employment with the
Company she will acquire and have access to confidential or proprietary
information about the Company and/or its clients, including but not limited to,
trade secrets, methods, models, passwords, access to
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computer files, financial information and records, computer software programs,
agreements and/or contracts between the Company and its clients, client
contacts, the marketing and/or creative policies and ideas, advertising
campaigns, media plans and budgets, practices, concepts, strategies, and methods
of operations, financial or business projections of the Company, and information
about or received from clients and other companies with which the Company does
business. The foregoing shall be collectively referred to as "confidential
information". The Executive is aware that the confidential information is not
readily available to the public and accordingly, the Executive also agrees that
she will not at any time (whether during the Term or after termination of this
Agreement) disclose to anyone (other than her counsel in the course of a dispute
arising from the alleged disclosure of confidential information or as required
by law) any confidential information, or utilize such confidential information
for her own benefit, or for the benefit of third parties. The Executive agrees
that the foregoing restrictions shall apply whether or not any such information
is marked "confidential". The term "confidential information" does not include
information which (i) becomes generally available to the public other than by
breach of this provision or (ii) the Executive learns from a third party who is
not under an obligation of confidence to the Company or a client of the Company.
In the event that the Executive becomes legally required to disclose any
confidential information, she will provide the Company with prompt notice
thereof so that the Company may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this paragraph 8(b) to
permit a particular disclosure. In the event that such protective order or other
remedy is not obtained, or the Company waives compliance with the provisions of
this paragraph 8(b) to permit a particular disclosure, the Executive will
furnish only that portion of the confidential information which she is legally
required to disclose and, at the Company's expense, will cooperate with the
efforts of the Company to obtain a protective order or other reliable assurance
that confidential treatment will be accorded the confidential information. The
Executive further agrees that all memoranda, disks, files, notes, records or
other documents, whether in electronic form or hard copy (collectively, the
"material"), compiled by her or made available to her during her employment with
the Company and/or its predecessor (whether or not the material contains
confidential information) shall be the property of the Company and shall be
delivered to the Company on the termination of the Executive's employment with
the Company or at any other time upon request. Except in connection with the
Executive's employment with the Company, the Executive agrees that she will not
make or retain copies or excerpts of the material.
(c) If the Executive commits a breach or is about to commit a
breach, of any of the provisions of paragraphs 8(a) or (b), the Company shall
have the right to have the provisions of this Agreement specifically enforced by
the arbitrator appointed under paragraph 19 or by any court having equity
jurisdiction without being required to post bond or other security and without
having to prove the inadequacy of the available remedies at law, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company. In addition, the Company may take all such other
actions and remedies available to it under law or in equity and shall be
entitled to such damages as it can show it has sustained by reason of such
breach.
(d) The parties acknowledge that (i) the type and periods of
restriction imposed in the provisions of paragraphs 8(a) and (b) are fair and
reasonable and are reasonably
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required in order to protect and maintain the proprietary interests of the
Company described above, other legitimate business interests of Company and the
goodwill associated with the business of the Company, including without
limitation, the business acquired pursuant to the Merger Agreement, (ii) the
business of the Company currently extends throughout the United States, and the
Executive will engage in such business pursuant to the terms of this Agreement
throughout all areas in which the Company conducts its business, and (iii) the
time, scope, geographic area and other provisions of this paragraph 8 have been
specifically negotiated by sophisticated commercial parties, represented by
legal counsel, and are given as an integral part of the transactions
contemplated by the Merger Agreement. It is further understood and agreed that
the clients of the Company may be serviced from any location and accordingly it
is reasonable that the covenants set forth herein are not limited by narrow
geographic area but generally by the location of such clients and potential
clients. The Executive specifically acknowledges that her being restricted from
soliciting and servicing clients as contemplated by this Agreement will not
prevent her from being employed or earning a livelihood in the type of business
conducted by the Company. If any of the covenants contained in paragraphs 8(a)
or (b), or any part thereof, is held to be unenforceable by reason of it
extending for too great a period of time or over too great a geographic area or
by reason of it being too extensive in any other respect, the parties agree (x)
such covenant shall be interpreted to extend only over the maximum period of
time for which it may be enforceable and/or over the maximum geographic areas as
to which it may be enforceable and/or over the maximum extent in all other
respects as to which it may be enforceable, all as determined by the court or
arbitration panel making such determination and (y) in its reduced form, such
covenant shall then be enforceable, but such reduced form of covenant shall only
apply with respect to the operation of such covenant in the particular
jurisdiction in or for which such adjudication is made.
(f) The temporal duration of the non-solicitation/non-servicing
covenants set forth in this paragraph 8 shall not expire, and shall be tolled,
during any period in which Executive is in violation of any of the
non-solicitation/non-servicing covenants set forth in this paragraph 8; and all
restrictions shall automatically be extended by the period of Executive's
violation of any such restrictions.
9. Intellectual Property
During the Term, the Executive will disclose to the Company all
ideas, inventions and business plans developed by her during such period which
relate directly or indirectly to the business of the Company, including without
limitation, any design, logo, slogan, advertising campaign or any process,
operation, product or improvement which may be patentable or copyrightable. The
Executive agrees that all patents, licenses, copyrights, tradenames, trademarks,
service marks, planning, marketing and/or creative policies, advertising
campaigns, public relations or public affairs campaigns, promotional campaigns,
media campaigns, and budgets, practices, concepts, strategies, and methods of
operations, financial or business projections, designs, logos, slogans and
business plans developed or created by the Executive in the course of her
employment hereunder, either individually or in collaboration with others, will
be deemed works for hire and the sole and absolute property of the Company. The
Executive agrees, that at the Company's request and expense, she will assign all
rights thereto to the
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Company and take all such other steps necessary to secure the rights thereto to
the Company by patent, copyright or otherwise.
10. Enforceability
The failure of any party at any time to require performance by
another party of any provision hereunder shall in no way affect the right of
that party thereafter to enforce the same, nor shall it affect any other party's
right to enforce the same, or to enforce any of the other provisions in this
Agreement; nor shall the waiver by any party of the breach of any provision
hereof be taken or held to be a waiver of any subsequent breach of such
provision or as a waiver of the provision itself.
11. Assignment
The Company and the Executive agree that the Company shall have the
right to assign this Agreement, and, accordingly, this Agreement shall inure to
the benefit of, and may be enforced by, any and all successors and assigns of
the Company, including, without limitation, by asset assignment, stock sale,
merger, consolidation or other corporate reorganization, provided such successor
entity assumes the obligations of the Company. The Company and Executive agree
that Executive's rights and obligations under this Agreement are personal to the
Executive, and the Executive shall not have the right to assign or otherwise
transfer her rights or obligations under this Agreement. The rights and
obligations of the Company hereunder shall be binding upon and run in favor of
the successors and assigns of the Company.
12. Modification
This Agreement may not be orally canceled, changed, modified or
amended, and no cancellation, change, modification or amendment shall be
effective or binding unless in writing, signed by the parties to this Agreement,
and approved in writing by the Designated Officer.
13. Severability; Survival
In the event any provision or portion of this Agreement is
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall nevertheless be binding upon
the parties with the same effect as though the invalid or unenforceable part had
been severed and deleted or reformed to be enforceable. The respective rights
and obligations of the parties hereunder shall survive the termination of the
Executive's employment to the extent necessary to the intended preservation of
such rights and obligations.
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14. Life Insurance
The Executive agrees that the Company shall have the right to obtain
life insurance on the Executive's life, at the sole expense of the Company, as
the case may be, and with the Company as the sole beneficiary thereof. The
Executive shall (a) cooperate fully in obtaining such life insurance, (b) sign
any necessary consents, applications and other related forms or documents and
(c) at the Company's expense, take any reasonably required medical examinations.
15. Notice
Any notice, request, instruction or other document to be given
hereunder by any party hereto to another party shall be in writing and shall be
deemed effective (a) upon personal delivery, if delivered by hand or local
courier, or (b) three days after the date of deposit in the mails, postage
prepaid if mailed by certified or registered mail, or (c) on the next business
day, if sent by prepaid overnight courier service or facsimile transmission (if
electronically confirmed), and in each case, addressed as follows:
If to the Executive:
Sharon M. Munger
5334 West University Blvd.
Dallas, Texas 75209
If to the Company:
M/A/R/C Inc.
7850 Beltline Road
Irving, Texas 75063-6098
Attn: Secretary
Fax: 972-506-3416
with a copy to:
Omnicom Group Inc.
437 Madison Avenue
New York, New York 10022
Attention: Secretary
Fax: 212-415-3670
and
Davis & Gilbert LLP
1740 Broadway
New York, New York 10019
Attention: Michael D. Ditzian, Esq.
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Fax: 212-468-4888
Either party may change the address to which notices are to be sent by giving
notice of such change of address to the other party in the manner herein
provided for giving notice.
16. Applicable Law
This Agreement, and all issues and matters related to this
Agreement, shall be governed by, enforced under, and construed in accordance
with the laws of the State of Texas without regard to any conflicts or conflict
of laws principles in the State of Texas that would result in the application of
the law of any other jurisdiction.
17. No Conflict
The Executive represents and warrants that she is not subject to any
agreement, instrument, order, judgment or decree of any kind, or any other
restrictive agreement of any character, which would prevent her from entering
into this Agreement or which would be breached by the Executive upon her
performance of her duties pursuant to this Agreement.
18. Entire Agreement
This Agreement represents the entire agreement between the Company
and the Executive with respect to the employment of the Executive by the
Company, and all prior agreements, plans and arrangements relating to the
employment of the Executive by the Company are nullified and superseded hereby.
19. Arbitration
(a) The parties hereto agree that any dispute, controversy or claim
arising out of, relating to, or in connection with this Agreement (including,
without limitation, any claim regarding or related to the interpretation, scope,
effect, enforcement, termination, extension, breach, legality, remedies and
other aspects of this Agreement or the conduct and communications of the parties
regarding this Agreement and the subject matter of this Agreement) shall be
settled by arbitration at the offices of Judicial Arbitration and Mediation
Services, Inc. or successor organization for binding arbitration in Dallas,
Texas by a single arbitrator. The arbitrator may grant injunctions or other
relief in such dispute or controversy. All awards of the arbitrator shall be
binding and non-appealable, except as provided by the applicable rules of
arbitration and/or by applicable law. Judgment upon the award of the arbitrator
may be entered in any court having jurisdiction. The arbitrator shall apply
Texas law to the merits of any dispute or claims, without reference to any rules
of conflicts of law that might result in the application of any other state's
law. Suits to compel or enjoin arbitration or to determine the applicability or
legality of arbitration shall be brought in the United States District Court for
the Northern District of Texas, or if that court lacks jurisdiction, in a state
court located within the geographic boundaries thereof. Notwithstanding the
foregoing, no party to this Agreement shall be precluded from applying to a
proper court for injunctive relief by reason of the prior or subsequent
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commencement of an arbitration proceeding as herein provided. The prevailing
party in any arbitration shall be entitled to receive its reasonable attorneys'
fees and costs from the other party(ies) as awarded by the arbitrator.
(b) The Executive has read and understands this paragraph 19 which
discusses arbitration. The Executive understands that by signing this Agreement,
the Executive agrees to submit any claims arising out of, relating to, or in
connection with this Agreement, or the interpretation, validity, construction,
performance, breach or termination thereof, or her employment or the termination
thereof, to binding arbitration, and that this arbitration provision constitutes
a waiver of the Executive's right to a jury trial and relates to the resolution
of all disputes relating to all aspects of the employer/employee relationship,
including but not limited to the following:
(i) Any and all claims for wrongful discharge of
employment, breach of contract, both express and implied;
breach of the covenant of good faith and fair dealing, both
express and implied; negligent or intentional infliction of
emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with
contract or prospective economic advantage; and defamation;
(ii) Any and all claims for violation of any federal,
state or municipal statute, including, without limitation,
Title VII of the Civil Rights Act of 1964, as amended, the
Civil Rights Act of 1991, the Equal Pay Act, the Employee
Retirement Income Security Act, as amended, the Age
Discrimination in Employment Act of 1967, the Americans with
Disabilities Act of 1990, the Family and Medical Leave Act of
1993, the Fair Labor Standards Act and the Texas Employment
Discrimination Law; and
(iii) Any and all claims arising out of any other
federal, state or local laws or regulations relating to
employment or employment discrimination.
20. Headings
The headings contained in this Agreement are for reference purposes
only, and shall not affect the meaning or interpretation of this Agreement.
21. Withholdings
The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
M/A/R/C INC.
By:/s/ Harold R. Curtis
---------------------------------
Name: Harold R. Curtis
Title: Executive Vice President,
Secretary and Chief
Financial Officer
/s/ Sharon M. Munger
------------------------------------
SHARON M. MUNGER
EMPLOYMENT AGREEMENT
AGREEMENT dated as of this 30th day of September, 1999, but
effective as of the Effective Time of the Merger (as such terms are defined in
the Merger Agreement (as defined below)), by and between the surviving
corporation of the Merger, M/A/R/C INC., a Texas corporation (the "Company"),
and JACK D. WOLF (the "Executive").
W I T N E S S E T H:
WHEREAS, in order to induce Omnicom Group Inc. ("Omnicom"), to enter
into a certain Agreement and Plan of Merger of even date herewith (the "Merger
Agreement"), pursuant to which a wholly-owned subsidiary of Omnicom was merged
with and into the Company, the Executive is entering into this Agreement; and
WHEREAS, the Executive was employed by the Company, and the Company
wishes to ensure his continued employment with the Company and the Executive
wishes to accept such employment, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Employment
The Company agrees to employ the Executive during the Term specified
in paragraph 2, and the Executive agrees to accept such employment, upon the
terms and conditions hereinafter set forth.
2. Term
Subject to paragraphs 6 and 7, the Executive's employment by the
Company shall be for a term commencing on the date hereof and expiring on the
close of business on December 31, 2002 (the "Initial Term"); provided, however,
the term of the Executive's employment by the Company shall continue for an
indefinite period thereafter (also subject to paragraphs 6 and 7) unless and
until either party shall give to the other 90 days' advance written notice of
expiration of the term (a "Notice of Termination") (the Initial Term and the
period, if any, thereafter, during which the Executive's employment shall
continue are collectively referred to as the "Term"). Any Notice of Termination
given under this paragraph 2 shall specify the date of expiration (which may not
be earlier than the close of business on December 31, 2002) and may be given at
any time on or after September 30, 2002. The Company shall have the right at any
time during such 90-day notice period, to relieve the Executive of his offices,
duties and responsibilities and to place him on a paid leave-of-absence status,
provided that during such notice period the Executive shall remain a full-time
employee of the Company and shall continue to receive his salary compensation
and other benefits as provided in this Agreement. The effective
<PAGE>
date of the termination of the Executive's employment with the Company,
regardless of the reason therefor, is referred to in this Agreement as the "Date
of Termination".
3. Duties and Responsibilities
(a) During the Term, the Executive shall have the position of
President and Chief Operating Officer of the Company. The Executive shall report
directly to the Board of Directors of the Company (the "Board") and the Chairman
and Chief Executive Officer of the Diversified Agency Services Division ("DAS")
of Omnicom or his designee (such Chairman and Chief Executive Officer or his
designee being called the "Designated Officer"), at such times and in such
detail as it or they shall reasonably require.
(b) The Executive shall perform such executive and managerial duties
and responsibilities customary to his office and as are reasonably necessary to
the operations of the Company and as may be assigned to him from time to time by
or under authority of the Board and/or the Designated Officer, consistent with
his position as designated in paragraph 3(a).
(c) The Executive (i) will use his reasonable best efforts to ensure
that the Company and its subsidiaries comply on a timely basis with all
budgetary and reporting requirements reasonably requested by the Board and/or
management of DAS, (ii) will, at all times, use all reasonable efforts to
perform his duties and responsibilities in a manner consistent with the policies
set forth in the "Grant of Authority" of Omnicom as from time to time in effect
and the parameters of the then-current profit plan and capital expenditure
budget of the Company as approved by the Chief Financial Officer of DAS, (iii)
will not take any action to prevent the Company from participating in Omnicom's
cash management program, (iv) will not incur obligations on behalf of the
Company other than in the ordinary course of business or enter into any
transaction on behalf of the Company not in the ordinary course of business
without the approval of the Board and/or the Designated Officer, and (v) will
not take any action to prevent the Company from abiding by the dividend,
management fee and other corporate policies of the Company, Omnicom and DAS as
from time to time in effect. The Executive acknowledges that current policy of
DAS is for every subsidiary to pay to its parent 90% of its profit after taxes
(before management fee deductions) for the year by way of dividends and/or
management fees on a quarterly basis, generally in arrears.
(d) The Executive's employment by the Company shall be full-time and
exclusive, and during the Term, the Executive agrees that he will (i) devote all
of his business time and attention, his best efforts, and all his skill and
ability to promote the interests of the Company and its subsidiaries, (ii) carry
out his duties in a competent and professional manner; and (iii) work with other
employees of the Company and its subsidiaries and DAS in a competent and
professional manner. Notwithstanding the foregoing, the Executive shall be
permitted to engage in charitable and civic activities and manage his personal
passive investments, provided that such passive investments are not in a company
which transacts business with the Company or any of its subsidiaries or engages
in business competitive with that conducted by the Company or any of its
subsidiaries (or, if such company does transact business with the Company or any
of its subsidiaries, or does engage in a competitive business, it is a publicly
held corporation and the
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Executive's participation is limited to owning less than 1/4 of 1% of its
outstanding shares), and further provided that such activities (individually or
collectively) do not materially interfere with the performance of his duties or
responsibilities under this Agreement.
(e) During the Term, the Executive's services hereunder shall be
performed at the offices of the Company in Irving, Texas, subject to necessary
travel requirements of his position and duties hereunder.
4. Compensation
(a) As compensation for his services hereunder and in consideration
of his non-solicitation/non-servicing and non-disclosure covenants as set forth
in paragraph 8, during the Term the Company shall pay the Executive, in
accordance with its normal payroll practices, an annualized base salary of
$400,000; provided, however, the then annual rate of direct salary compensation
may be increased by or under the authority of the Board or the Designated
Officer in accordance with the then salary review policy of the Company and
within the guidelines and budgetary procedures of DAS.
(b) During the Term, the Executive shall be eligible to participate
in Omnicom's 1998 Incentive Compensation Plan or any successor plan (the "ICP")
and to receive annual awards of cash bonuses and/or restricted shares of Omnicom
common stock thereunder. Under the ICP, upon recommendation by the Chairman and
Chief Executive Officer of DAS, the Compensation Committee of the Board of
Directors of Omnicom (the "Compensation Committee") will set an annual target
award for the Executive based on reaching performance goals established for the
Executive. The determination of the amount of the annual target that is actually
awarded shall be based on the Chairman and Chief Executive Officer of DAS's
evaluation of the success of the Executive in achieving the performance goals
established for him. Any incentive compensation payable pursuant to this
paragraph 4(b) shall be deemed earned only upon written notification by the
Chairman and Chief Executive Officer of DAS to the Executive of the amount of
his incentive compensation award and not any time before.
(c) During the Term, the Executive shall be eligible for
recommendation by the Chairman and Chief Executive Officer of DAS to the
Compensation Committee for grants of stock options under the ICP.
5. Expenses; Fringe Benefits
(a) The Company agrees to pay or to reimburse the Executive for all
reasonable, ordinary, necessary and documented business or entertainment
expenses incurred during the Term in the performance of his services hereunder
in accordance with the policy of the Company as from time to time in effect. The
Executive, as a condition precedent to obtaining such payment or reimbursement,
shall provide to the Company any and all statements, bills or receipts
evidencing the travel or out-of-pocket expenses for which the Executive seeks
payment or reimbursement, and any other information or materials, as the Company
may from time to time reasonably request.
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(b) During the Term, the Executive and, to the extent eligible, his
dependents shall be entitled to participate in and receive all benefits under
any welfare benefit plans and programs (including without limitation, medical,
disability, group life (including accidental death and dismemberment) and
business travel insurance plans and programs) provided by the Company to its
employees generally, subject, however, to the generally applicable eligibility
and other provisions of the various plans and programs in effect from time to
time. In addition, after the Date of Termination, provided that the Executive
has not been terminated for "cause" (as defined below), and until such time as
the Executive becomes eligible for medical benefits under Medicare, the
Executive shall be eligible to continue his participation (at the Executive's
own expense) in the Company's medical plan as in effect from time to time, in
accordance with the Company's policy regarding continued medical coverage for
certain senior executives, as is then in effect.
(c) During the Term, the Executive shall be entitled to participate
in all retirement plans and programs (including without limitation any profit
sharing/401(k) plan) provided by the Company to its employees generally,
subject, however, to the generally applicable eligibility and other provisions
of the various plans and programs in effect from time to time. In addition,
during the Term, the Executive shall be entitled to receive fringe benefits and
perquisites in accordance with the plans, practices, programs and policies of
the Company from time to time in effect which are made available to the senior
executives of the Company generally or to its employees generally.
(d) The Executive shall be entitled to paid vacation annually in
accordance with Company practice (with no right of carry-over), to be taken at
such time(s) as shall not, in the reasonable judgment of the Board, materially
interfere with the Executive's fulfillment of his duties hereunder, and shall be
entitled to as many holidays, sick days and personal days as are in accordance
with the Company's policy then in effect generally for its employees.
(e) During the Term, the Company will provide the Executive with an
automobile allowance of $1,200 per month to cover the costs of leasing,
insuring, garaging and maintaining an automobile for use in the business of the
Company.
6. Termination
(a) The Company, by direction of the Board or the Designated
Officer, shall be entitled to terminate the Term and to discharge the Executive
for cause effective upon the giving of written notice. The term "cause" shall be
limited to the following grounds:
(i) the Executive's failure or refusal to materially perform
his duties and responsibilities as set forth in paragraph 3 hereof,
or the failure of the Executive to devote all of his business time
and attention exclusively to the business and affairs of the Company
and its subsidiaries in accordance with the terms hereof, in each
case if such failure or refusal is not cured (if curable) within 20
days after written notice thereof to the Executive by the Company;
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(ii) the willful misappropriation of the funds or property of
the Company or any subsidiary;
(iii) the use of alcohol or illegal drugs, interfering with
the performance of the Executive's obligations under this Agreement,
continuing after written warning;
(iv) the conviction in a court of law of, or entering a plea
of guilty or no contest to, any felony or any crime involving moral
turpitude, dishonesty or theft;
(v) the material nonconformance with the Company's standard
business practices and policies, including without limitation,
policies against racial or sexual discrimination or harassment, made
known to the Executive, which nonconformance is not cured (if
curable) within 10 days after written notice to the Executive by the
Company;
(vi) the commission in bad faith by the Executive of any act
which injures or could reasonably be expected to injure the
reputation, business or business relationships of the Company or any
subsidiary;
(vii) the resignation by the Executive on his own initiative
other than pursuant to a termination by the Executive for "Good
Reason" (as defined in paragraph 6(b)) or pursuant to a Notice of
Termination given by the Executive under paragraph 2;
(viii) the gross misconduct or gross negligence by the
Executive in the performance of his duties or the habitual
misconduct or habitual negligence by the Executive in the
performance of his duties which habitual misconduct or negligence is
not cured (if curable) within 10 days after written notice to the
Executive by the Company; and
(ix) any material breach (not covered by any of the clauses
(i) through (viii) above) of any term, provision or condition of
this Agreement, if such breach is not cured (if curable) within 20
days after written notice thereof to the Executive by the Company.
Any notice required to be given by the Company pursuant to clause (i), (v),
(viii) or (ix) above shall specify the specific nature of the claimed breach and
the manner in which the Company requires such breach to be cured (if curable).
In the event that the Executive is purportedly terminated for cause and the
arbitrator appointed pursuant to paragraph 19 determines that "cause" as defined
herein was not present, then such purported termination for cause shall be
deemed a termination "without cause" pursuant to paragraph 6(c) and the
Executive's rights and remedies will be governed by paragraph 6(e), in full
satisfaction and in lieu of any and all other or further remedies the Executive
may have.
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(b) Provided that the Executive is not then otherwise in breach of
this Agreement, the Executive shall be entitled to terminate this Agreement and
the Term hereunder for "Good Reason" at any time during the Term by written
notice to the Company not more than 30 days after the occurrence of the event
constituting such Good Reason. "Good Reason" shall be limited to a breach by the
Company of a material term of this Agreement, which breach remains uncured for a
period of 20 days after written notice of such breach from the Executive to the
Company (such notice to specify the specific nature of the claimed breach and
the manner in which the Executive requires such breach to be cured).
(c) The Company shall have the right at any time during the Term to
terminate the employment of the Executive "without cause" by giving written
notice to the Executive setting forth a Date of Termination.
(d) In the event of the termination of the employment of the
Executive with the Company for any reason (including without limitation, a
termination pursuant to a Notice of Termination under paragraph 2) other than by
virtue of a termination "without cause" by the Company under paragraph 6(c) or a
termination for "Good Reason" by the Executive under paragraph 6(b), the
Executive shall be entitled to the following payments and benefits, subject to
any appropriate offsets, as permitted by applicable law, for debts or money due
to the Company or an affiliate thereof (collectively, "Offsets"):
(i) unpaid salary compensation through, and any unpaid
reimbursable expenses outstanding as of, the Date of Termination;
and
(ii) all benefits, if any, that had accrued to the Executive
through the Date of Termination under the plans and programs
described in paragraphs 5(b) and (c), or any other applicable plans
and programs in which he participated as an employee of the Company,
in the manner and in accordance with the terms of such plans and
programs.
In the event of the termination of the Employee's employment other than by
virtue of a termination "without cause" or a termination for "Good Reason", the
Company shall have no further liability to the Executive or the Executive's
heirs, beneficiaries or estate for damages, compensation, benefits, severance,
indemnities or other amounts of whatever nature, directly or indirectly, arising
out of or otherwise related to this Agreement and the Executive's employment or
cessation of employment with the Company.
(e) In the event of a termination by the Company "without cause" or
a termination by the Executive for "Good Reason", the Executive shall be
entitled to continue to receive from the Company, as liquidated damages, subject
to any Offsets, the following:
(i) as severance compensation, his applicable salary
compensation when it would be payable to him if his employment had
continued hereunder through (x) December 31, 2002 if the Date of
Termination occurs on or prior to
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September 30, 2002, or (y) 90 days after the Date of Termination, if
the Date of Termination occurs after September 30, 2002;
(ii) any unpaid reimbursable expenses outstanding as of the
Date of Termination;
(iii) all benefits, if any, that had accrued to the Executive
through the Date of Termination under the plans and programs
described in paragraphs 5(b) and (c), or any other applicable
benefit plans and programs in which he participated as an employee
of the Company, in the manner and in accordance with the terms of
such plans and programs; and
(iv) continued participation on the same basis (including,
without limitation, cost contributions) as the other senior
executives of the Company in all medical, dental, disability and
life insurance coverage (such benefits collectively called the
"Continued Plans") in which he was participating on the Date of
Termination (as such Continued Plans are from time to time in effect
at the Company) until the earlier of (x) the end of the period that
he receives severance compensation payments under clause (i) of this
paragraph 6(e) or (y) the date, or dates, he is entitled to receive
coverage and benefits under the same type of plan of a subsequent
employer; provided, however, if the Executive is precluded from
continuing his participation in any Continued Plan, then the Company
will be obligated to pay him the economic equivalent of the benefits
provided under the Continued Plan in which he is unable to
participate, for the period specified above, plus an amount equal to
the tax, if any, payable by him thereon, it being understood that
the economic equivalent of a benefit foregone shall be deemed the
lowest cost in the State of Texas that would be incurred by the
Executive in obtaining such benefit himself on an individual basis,
and payment of such after-tax economic benefit shall be made
quarterly in advance.
In connection with a termination "without cause" or for "Good Reason", (x) the
Company shall have no further liability to the Executive or the Executive's
heirs, beneficiaries or estate for damages, compensation, benefits, severance,
indemnities or other amounts of whatever nature, directly or indirectly, arising
out of or otherwise related to this Agreement and the Executive's employment or
cessation of employment with the Company, and (y) the Executive shall be under
no obligation to mitigate his damages or to seek other employment, and if the
Executive obtains other employment, any compensation earned by the Executive
therefrom shall not reduce the Company's severance obligations under clause (i)
of this paragraph 6(e). The making of any severance payments and providing the
other benefits as provided in this paragraph 6(e) is conditioned upon the
Executive signing a general release (the "Release") in favor of the Company and
its subsidiaries and affiliates, and its and their respective successors and
assigns, officers directors, employees, agents, attorneys and representatives,
of any claims (including, without limitation, claims of discrimination) relating
to the Executive's employment with the Company or the termination thereof. In
the event the Executive breaches any provisions of the Release or the provisions
of paragraph 8 of this Agreement, in addition to any other remedies at law or in
equity
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available to it, the Company may cease making any further severance
payments and providing the other benefits provided for herein, without affecting
its rights under this Agreement or the Release.
7. Disability; Death
In the event the Executive shall be unable to perform his duties
hereunder by virtue of illness or physical or mental incapacity or disability
(from any cause or causes whatsoever) in substantially the manner and to the
extent required hereunder prior to the commencement of such disability (all such
causes being herein referred to as "disability") and the Executive shall fail to
perform such duties for periods aggregating 180 days, whether or not continuous,
in any continuous period of 270 days, the Company shall have the right to
terminate the Executive's employment hereunder as at the end of any calendar
month during the continuance of such disability upon at least 30 days' prior
written notice to him. In the event of the Executive's death, the Date of
Termination shall be the date of such death. In the event the Executive's
employment is terminated as a result of his disability or death, he shall be
entitled to the payments and benefits, subject to any Offsets, as provided in
paragraph 6(d).
8. Non-Solicitation/Non-Servicing Agreement and Protection of Confidential
Information
(a) The Executive acknowledges (i) that his position and employment
with the Company result from the transaction contemplated by the Merger
Agreement; (ii) the highly competitive nature of the business and the industry
in which the Company competes; (iii) that as a key executive of the Company and
its predecessor he has participated in and will continue to participate in the
servicing of current clients and/or the solicitation of prospective clients,
through which, among other things, the Executive has obtained and will continue
to obtain knowledge of the "know-how" and business practices of the Company, in
which matters the Company has a substantial proprietary interest; (iv) that his
employment hereunder requires the performance of services which are special,
unique, extraordinary and intellectual in character, and his position with the
Company and its predecessor placed and places him in a position of confidence
and trust with the clients and employees of the Company; and (v) that his
rendering of services to the clients of the Company necessarily requires the
disclosure to the Executive of, and the Company will so disclose to the
Executive, confidential information (as defined in paragraph 8(b)) of the
Company. In the course of the Executive's employment with the Company (and its
predecessor), the Executive has and will continue to develop a personal
relationship with the clients of the Company and a knowledge of those clients'
affairs and requirements, and the relationship of the Company with its
established clientele will therefore be placed in the Executive's hands in
confidence and trust. The Executive consequently agrees that it is a legitimate
interest of the Company, and reasonable and necessary for the protection of the
confidential information, goodwill and business of the Company, which is
valuable to the Company, that the Executive make the covenants contained herein
and that the Company would not have entered into this Agreement or the Merger
Agreement unless the covenants set forth in this paragraph 8 were contained in
this Agreement. Accordingly, the Executive agrees that during the period that he
is employed by the Company and thereafter through the later of (x) December 31,
2002 and (y) two
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years after the Date of Termination, he shall not, as an individual, employee,
consultant, independent contractor, partner, shareholder, member or in
association with any other person, business or enterprise, except on behalf of
the Company, directly or indirectly, and regardless of the reason for his
ceasing to be employed by the Company:
(i) attempt in any manner to solicit or accept from any client
business of the type performed by the Company or to persuade any
client to cease to do business or to reduce the amount of business
which any such client has customarily done or is reasonably expected
to do with the Company, whether or not the relationship between the
Company and such client was originally established in whole or in
part through his efforts; or
(ii) employ as an employee or retain as a consultant any
person who is then or at any time during the preceding twelve months
was an employee of or exclusive consultant to the Company, or
persuade or attempt to persuade any employee of or exclusive
consultant to the Company to leave the employ of the Company or to
become employed as an employee or retained as a consultant by anyone
other than the Company; or
(iii) render to or for any client any services of the type
rendered by the Company.
As used in this paragraph 8, the term "client" shall mean (1) anyone who is a
client of the Company on the Date of Termination or, if the Executive's
employment shall not have terminated, at the time of the alleged prohibited
conduct (any such applicable date being called the "Determination Date"); (2)
anyone who was a client of the Company at any time during the one year period
immediately preceding the Determination Date; (3) any prospective client to whom
the Company had made a new business presentation (or similar offering of
services) at any time during the one year period immediately preceding the
Determination Date; and (4) any prospective client to whom the Company made a
new business presentation (or similar offering of services) at any time within
six months after the Date of Termination (but only if the initial discussions
between the Company and such prospective client relating to the rendering of
services occurred prior to the Date of Termination, and only if the Executive
actively participated in or supervised such discussions). For purposes of this
clause, it is agreed that a general mailing or an incidental contact shall not
be deemed a "new business presentation or similar offering of services" or a
"discussion". In addition, if the client is part of a group of companies which
conducts business through more than one entity, division or operating unit,
whether or not separately incorporated (a "Client Group"), the term "client" as
used herein shall also include each entity, division and operating unit of the
Client Group where the same management group of the Client Group has the
decision making authority or significant influence with respect to contracting
for services of the type rendered by the Company.
(b) In the course of the Executive's employment with the Company he
will acquire and have access to confidential or proprietary information about
the Company and/or its clients, including but not limited to, trade secrets,
methods, models, passwords, access to
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computer files, financial information and records, computer software programs,
agreements and/or contracts between the Company and its clients, client
contacts, the marketing and/or creative policies and ideas, advertising
campaigns, media plans and budgets, practices, concepts, strategies, and methods
of operations, financial or business projections of the Company, and information
about or received from clients and other companies with which the Company does
business. The foregoing shall be collectively referred to as "confidential
information". The Executive is aware that the confidential information is not
readily available to the public and accordingly, the Executive also agrees that
he will not at any time (whether during the Term or after termination of this
Agreement) disclose to anyone (other than his counsel in the course of a dispute
arising from the alleged disclosure of confidential information or as required
by law) any confidential information, or utilize such confidential information
for his own benefit, or for the benefit of third parties. The Executive agrees
that the foregoing restrictions shall apply whether or not any such information
is marked "confidential". The term "confidential information" does not include
information which (i) becomes generally available to the public other than by
breach of this provision or (ii) the Executive learns from a third party who is
not under an obligation of confidence to the Company or a client of the Company.
In the event that the Executive becomes legally required to disclose any
confidential information, he will provide the Company with prompt notice thereof
so that the Company may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this paragraph 8(b) to permit a
particular disclosure. In the event that such protective order or other remedy
is not obtained, or the Company waives compliance with the provisions of this
paragraph 8(b) to permit a particular disclosure, the Executive will furnish
only that portion of the confidential information which he is legally required
to disclose and, at the Company's expense, will cooperate with the efforts of
the Company to obtain a protective order or other reliable assurance that
confidential treatment will be accorded the confidential information. The
Executive further agrees that all memoranda, disks, files, notes, records or
other documents, whether in electronic form or hard copy (collectively, the
"material"), compiled by him or made available to him during his employment with
the Company and/or its predecessor (whether or not the material contains
confidential information) shall be the property of the Company and shall be
delivered to the Company on the termination of the Executive's employment with
the Company or at any other time upon request. Except in connection with the
Executive's employment with the Company, the Executive agrees that he will not
make or retain copies or excerpts of the material.
(c) If the Executive commits a breach or is about to commit a
breach, of any of the provisions of paragraphs 8(a) or (b), the Company shall
have the right to have the provisions of this Agreement specifically enforced by
the arbitrator appointed under paragraph 19 or by any court having equity
jurisdiction without being required to post bond or other security and without
having to prove the inadequacy of the available remedies at law, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company. In addition, the Company may take all such other
actions and remedies available to it under law or in equity and shall be
entitled to such damages as it can show it has sustained by reason of such
breach.
(d) The parties acknowledge that (i) the type and periods of
restriction imposed in the provisions of paragraphs 8(a) and (b) are fair and
reasonable and are reasonably
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required in order to protect and maintain the proprietary interests of the
Company described above, other legitimate business interests of Company and the
goodwill associated with the business of the Company, including without
limitation, the business acquired pursuant to the Merger Agreement, (ii) the
business of the Company currently extends throughout the United States, and the
Executive will engage in such business pursuant to the terms of this Agreement
throughout all areas in which the Company conducts its business, and (iii) the
time, scope, geographic area and other provisions of this paragraph 8 have been
specifically negotiated by sophisticated commercial parties, represented by
legal counsel, and are given as an integral part of the transactions
contemplated by the Merger Agreement. It is further understood and agreed that
the clients of the Company may be serviced from any location and accordingly it
is reasonable that the covenants set forth herein are not limited by narrow
geographic area but generally by the location of such clients and potential
clients. The Executive specifically acknowledges that his being restricted from
soliciting and servicing clients as contemplated by this Agreement will not
prevent him from being employed or earning a livelihood in the type of business
conducted by the Company. If any of the covenants contained in paragraphs 8(a)
or (b), or any part thereof, is held to be unenforceable by reason of it
extending for too great a period of time or over too great a geographic area or
by reason of it being too extensive in any other respect, the parties agree (x)
such covenant shall be interpreted to extend only over the maximum period of
time for which it may be enforceable and/or over the maximum geographic areas as
to which it may be enforceable and/or over the maximum extent in all other
respects as to which it may be enforceable, all as determined by the court or
arbitration panel making such determination and (y) in its reduced form, such
covenant shall then be enforceable, but such reduced form of covenant shall only
apply with respect to the operation of such covenant in the particular
jurisdiction in or for which such adjudication is made.
(f) The temporal duration of the non-solicitation/non-servicing
covenants set forth in this paragraph 8 shall not expire, and shall be tolled,
during any period in which Executive is in violation of any of the
non-solicitation/non-servicing covenants set forth in this paragraph 8; and all
restrictions shall automatically be extended by the period of Executive's
violation of any such restrictions.
9. Intellectual Property
During the Term, the Executive will disclose to the Company all
ideas, inventions and business plans developed by him during such period which
relate directly or indirectly to the business of the Company, including without
limitation, any design, logo, slogan, advertising campaign or any process,
operation, product or improvement which may be patentable or copyrightable. The
Executive agrees that all patents, licenses, copyrights, tradenames, trademarks,
service marks, planning, marketing and/or creative policies, advertising
campaigns, public relations or public affairs campaigns, promotional campaigns,
media campaigns, and budgets, practices, concepts, strategies, and methods of
operations, financial or business projections, designs, logos, slogans and
business plans developed or created by the Executive in the course of his
employment hereunder, either individually or in collaboration with others, will
be deemed works for hire and the sole and absolute property of the Company. The
Executive agrees, that at the Company's request and expense, he will assign all
rights thereto to the
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Company and take all such other steps necessary to secure the rights thereto to
the Company by patent, copyright or otherwise.
10. Enforceability
The failure of any party at any time to require performance by
another party of any provision hereunder shall in no way affect the right of
that party thereafter to enforce the same, nor shall it affect any other party's
right to enforce the same, or to enforce any of the other provisions in this
Agreement; nor shall the waiver by any party of the breach of any provision
hereof be taken or held to be a waiver of any subsequent breach of such
provision or as a waiver of the provision itself.
11. Assignment
The Company and the Executive agree that the Company shall have the
right to assign this Agreement, and, accordingly, this Agreement shall inure to
the benefit of, and may be enforced by, any and all successors and assigns of
the Company, including, without limitation, by asset assignment, stock sale,
merger, consolidation or other corporate reorganization, provided such successor
entity assumes the obligations of the Company. The Company and Executive agree
that Executive's rights and obligations under this Agreement are personal to the
Executive, and the Executive shall not have the right to assign or otherwise
transfer his rights or obligations under this Agreement. The rights and
obligations of the Company hereunder shall be binding upon and run in favor of
the successors and assigns of the Company.
12. Modification
This Agreement may not be orally canceled, changed, modified or
amended, and no cancellation, change, modification or amendment shall be
effective or binding unless in writing, signed by the parties to this Agreement,
and approved in writing by the Designated Officer.
13. Severability; Survival
In the event any provision or portion of this Agreement is
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall nevertheless be binding upon
the parties with the same effect as though the invalid or unenforceable part had
been severed and deleted or reformed to be enforceable. The respective rights
and obligations of the parties hereunder shall survive the termination of the
Executive's employment to the extent necessary to the intended preservation of
such rights and obligations.
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14. Life Insurance
The Executive agrees that the Company shall have the right to obtain
life insurance on the Executive's life, at the sole expense of the Company, as
the case may be, and with the Company as the sole beneficiary thereof. The
Executive shall (a) cooperate fully in obtaining such life insurance, (b) sign
any necessary consents, applications and other related forms or documents and
(c) at the Company's expense, take any reasonably required medical examinations.
15. Notice
Any notice, request, instruction or other document to be given
hereunder by any party hereto to another party shall be in writing and shall be
deemed effective (a) upon personal delivery, if delivered by hand or local
courier, or (b) three days after the date of deposit in the mails, postage
prepaid if mailed by certified or registered mail, or (c) on the next business
day, if sent by prepaid overnight courier service or facsimile transmission (if
electronically confirmed), and in each case, addressed as follows:
If to the Executive:
Jack D. Wolf
8410 Bluebonnet Road
Dallas, Texas 75209
If to the Company:
M/A/R/C Inc.
7850 Beltline Road
Irving, Texas 75063-6098
Attn: Secretary
Fax: 972-506-3416
with a copy to:
Omnicom Group Inc.
437 Madison Avenue
New York, New York 10022
Attention: Secretary
Fax: 212-415-3670
and
Davis & Gilbert LLP
1740 Broadway
New York, New York 10019
Attention: Michael D. Ditzian, Esq.
Fax: 212-468-4888
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Either party may change the address to which notices are to be sent by giving
notice of such change of address to the other party in the manner herein
provided for giving notice.
16. Applicable Law
This Agreement, and all issues and matters related to this
Agreement, shall be governed by, enforced under, and construed in accordance
with the laws of the State of Texas without regard to any conflicts or conflict
of laws principles in the State of Texas that would result in the application of
the law of any other jurisdiction.
17. No Conflict
The Executive represents and warrants that he is not subject to any
agreement, instrument, order, judgment or decree of any kind, or any other
restrictive agreement of any character, which would prevent him from entering
into this Agreement or which would be breached by the Executive upon his
performance of his duties pursuant to this Agreement.
18. Entire Agreement
This Agreement represents the entire agreement between the Company
and the Executive with respect to the employment of the Executive by the
Company, and all prior agreements, plans and arrangements relating to the
employment of the Executive by the Company are nullified and superseded hereby.
19. Arbitration
(a) The parties hereto agree that any dispute, controversy or claim
arising out of, relating to, or in connection with this Agreement (including,
without limitation, any claim regarding or related to the interpretation, scope,
effect, enforcement, termination, extension, breach, legality, remedies and
other aspects of this Agreement or the conduct and communications of the parties
regarding this Agreement and the subject matter of this Agreement) shall be
settled by arbitration at the offices of Judicial Arbitration and Mediation
Services, Inc. or successor organization for binding arbitration in Dallas,
Texas by a single arbitrator. The arbitrator may grant injunctions or other
relief in such dispute or controversy. All awards of the arbitrator shall be
binding and non-appealable, except as provided by the applicable rules of
arbitration and/or by applicable law. Judgment upon the award of the arbitrator
may be entered in any court having jurisdiction. The arbitrator shall apply
Texas law to the merits of any dispute or claims, without reference to any rules
of conflicts of law that might result in the application of any other state's
law. Suits to compel or enjoin arbitration or to determine the applicability or
legality of arbitration shall be brought in the United States District Court for
the Northern District of Texas, or if that court lacks jurisdiction, in a state
court located within the geographic boundaries thereof. Notwithstanding the
foregoing, no party to this Agreement shall be precluded from applying to a
proper court for injunctive relief by reason of the prior or subsequent
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commencement of an arbitration proceeding as herein provided. The prevailing
party in any arbitration shall be entitled to receive its reasonable attorneys'
fees and costs from the other party(ies) as awarded by the arbitrator.
(b) The Executive has read and understands this paragraph 19 which
discusses arbitration. The Executive understands that by signing this Agreement,
the Executive agrees to submit any claims arising out of, relating to, or in
connection with this Agreement, or the interpretation, validity, construction,
performance, breach or termination thereof, or his employment or the termination
thereof, to binding arbitration, and that this arbitration provision constitutes
a waiver of the Executive's right to a jury trial and relates to the resolution
of all disputes relating to all aspects of the employer/employee relationship,
including but not limited to the following:
(i) Any and all claims for wrongful discharge of employment,
breach of contract, both express and implied; breach of the covenant
of good faith and fair dealing, both express and implied; negligent
or intentional infliction of emotional distress; negligent or
intentional misrepresentation; negligent or intentional interference
with contract or prospective economic advantage; and defamation;
(ii) Any and all claims for violation of any federal, state or
municipal statute, including, without limitation, Title VII of the
Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991,
the Equal Pay Act, the Employee Retirement Income Security Act, as
amended, the Age Discrimination in Employment Act of 1967, the
Americans with Disabilities Act of 1990, the Family and Medical
Leave Act of 1993, the Fair Labor Standards Act and the Texas
Employment Discrimination Law; and
(iii) Any and all claims arising out of any other federal,
state or local laws or regulations relating to employment or
employment discrimination.
20. Headings
The headings contained in this Agreement are for reference purposes
only, and shall not affect the meaning or interpretation of this Agreement.
21. Withholdings
The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
M/A/R/C INC.
By: /s/ Harold R. Curtis
---------------------------------
Name: Harold R. Curtis
Title: Executive Vice President,
Secretary and Chief
Financial Officer
/s/ Jack D. Wolf
------------------------------------
JACK D. WOLF
16
EMPLOYMENT AGREEMENT
AGREEMENT dated as of this 30th day of September, 1999, but
effective as of the Effective Time of the Merger (as such terms are defined in
the Merger Agreement (as defined below)), by and between the surviving
corporation of the Merger, M/A/R/C INC., a Texas corporation (the "Company"),
and HAROLD R. CURTIS (the "Executive").
W I T N E S S E T H:
WHEREAS, in order to induce Omnicom Group Inc. ("Omnicom"), to enter
into a certain Agreement and Plan of Merger of even date herewith (the "Merger
Agreement"), pursuant to which a wholly-owned subsidiary of Omnicom was merged
with and into the Company, the Executive is entering into this Agreement; and
WHEREAS, the Executive was employed by the Company, and the Company
wishes to ensure his continued employment with the Company and the Executive
wishes to accept such employment, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Employment
The Company agrees to employ the Executive during the Term specified
in paragraph 2, and the Executive agrees to accept such employment, upon the
terms and conditions hereinafter set forth.
2. Term
Subject to paragraphs 6 and 7, the Executive's employment by the
Company shall be for a term commencing on the date hereof and expiring on the
close of business on December 31, 2002 (the "Initial Term"); provided, however,
the term of the Executive's employment by the Company shall continue for an
indefinite period thereafter (also subject to paragraphs 6 and 7) unless and
until either party shall give to the other 90 days' advance written notice of
expiration of the term (a "Notice of Termination") (the Initial Term and the
period, if any, thereafter, during which the Executive's employment shall
continue are collectively referred to as the "Term"). Any Notice of Termination
given under this paragraph 2 shall specify the date of expiration (which may not
be earlier than the close of business on December 31, 2002) and may be given at
any time on or after September 30, 2002. The Company shall have the right at any
time during such 90-day notice period, to relieve the Executive of his offices,
duties and responsibilities and to place him on a paid leave-of-absence status,
provided that during such notice period the Executive shall remain a full-time
employee of the Company and shall continue to receive his salary compensation
and other benefits as provided in this Agreement. The effective
<PAGE>
date of the termination of the Executive's employment with the Company,
regardless of the reason therefor, is referred to in this Agreement as the "Date
of Termination".
3. Duties and Responsibilities
(a) During the Term, the Executive shall have the position of Chief
Financial Officer of the Company. The Executive shall report directly to the
Chairman of the Company (currently SM) or her designee (such Chairman or her
designee being called the "Designated Officer"), at such times and in such
detail as she or he shall reasonably require.
(b) The Executive shall perform such executive and managerial duties
and responsibilities customary to his office and as are reasonably necessary to
the operations of the Company and as may be assigned to him from time to time by
or under authority of the Board of Directors of the Company (the "Board") and/or
the Designated Officer, consistent with his position as designated in paragraph
3(a).
(c) The Executive (i) will use his reasonable best efforts to ensure
that the Company and its subsidiaries comply on a timely basis with all
budgetary and reporting requirements reasonably requested by the Board and/or
management of the Diversified Agency Services Division ("DAS") of Omnicom, (ii)
will, at all times, use all reasonable efforts to perform his duties and
responsibilities in a manner consistent with the policies set forth in the
"Grant of Authority" of Omnicom as from time to time in effect and the
parameters of the then-current profit plan and capital expenditure budget of the
Company as approved by the Chief Financial Officer of DAS, (iii) will not take
any action to prevent the Company from participating in Omnicom's cash
management program, (iv) will not incur obligations on behalf of the Company
other than in the ordinary course of business or enter into any transaction on
behalf of the Company not in the ordinary course of business without the
approval of the Board and/or the Designated Officer, and (v) will not take any
action to prevent the Company from abiding by the dividend, management fee and
other corporate policies of the Company, Omnicom and DAS as from time to time in
effect. The Executive acknowledges that current policy of DAS is for every
subsidiary to pay to its parent 90% of its profit after taxes (before management
fee deductions) for the year by way of dividends and/or management fees on a
quarterly basis, generally in arrears.
(d) The Executive's employment by the Company shall be full-time and
exclusive, and during the Term, the Executive agrees that he will (i) devote all
of his business time and attention, his best efforts, and all his skill and
ability to promote the interests of the Company and its subsidiaries, (ii) carry
out his duties in a competent and professional manner; and (iii) work with other
employees of the Company and its subsidiaries and DAS in a competent and
professional manner. Notwithstanding the foregoing, the Executive shall be
permitted to engage in charitable and civic activities and manage his personal
passive investments, provided that such passive investments are not in a company
which transacts business with the Company or any of its subsidiaries or engages
in business competitive with that conducted by the Company or any of its
subsidiaries (or, if such company does transact business with the Company or any
of its subsidiaries, or does engage in a competitive business, it is a publicly
held corporation and the Executive's participation is limited to owning less
than 1/4 of 1% of its outstanding shares), and
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further provided that such activities (individually or collectively) do not
materially interfere with the performance of his duties or responsibilities
under this Agreement.
(e) During the Term, the Executive's services hereunder shall be
performed at the offices of the Company in Irving, Texas, subject to necessary
travel requirements of his position and duties hereunder.
4. Compensation
(a) As compensation for his services hereunder and in consideration
of his non-solicitation/non-servicing and non-disclosure covenants as set forth
in paragraph 8, during the Term the Company shall pay the Executive, in
accordance with its normal payroll practices, an annualized base salary of
$200,000; provided, however, the then annual rate of direct salary compensation
may be increased by or under the authority of the Board or the Designated
Officer in accordance with the then salary review policy of the Company and
within the guidelines and budgetary procedures of DAS.
(b) During the Term, the Executive shall be eligible to participate
in Omnicom's 1998 Incentive Compensation Plan or any successor plan (the "ICP")
and to receive annual awards of cash bonuses and/or restricted shares of Omnicom
common stock thereunder. Under the ICP, upon recommendation by the Chairman and
Chief Executive Officer of DAS, the Compensation Committee of the Board of
Directors of Omnicom (the "Compensation Committee") will set an annual target
award for the Executive based on reaching performance goals established for the
Executive. The determination of the amount of the annual target that is actually
awarded shall be based on the Chairman and Chief Executive Officer of DAS's
evaluation of the success of the Executive in achieving the performance goals
established for him. Any incentive compensation payable pursuant to this
paragraph 4(b) shall be deemed earned only upon written notification by the
Chairman and Chief Executive Officer of DAS to the Executive of the amount of
his incentive compensation award and not any time before.
(c) The Supplemental Executive Retirement Plan contract dated
December 14, 1989 between the Company and the Executive shall be continued in
effect according to its terms.
5. Expenses; Fringe Benefits
(a) The Company agrees to pay or to reimburse the Executive for all
reasonable, ordinary, necessary and documented business or entertainment
expenses incurred during the Term in the performance of his services hereunder
in accordance with the policy of the Company as from time to time in effect. The
Executive, as a condition precedent to obtaining such payment or reimbursement,
shall provide to the Company any and all statements, bills or receipts
evidencing the travel or out-of-pocket expenses for which the Executive seeks
payment or reimbursement, and any other information or materials, as the Company
may from time to time reasonably request.
(b) During the Term, the Executive and, to the extent eligible, his
dependents
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shall be entitled to participate in and receive all benefits under any welfare
benefit plans and programs (including without limitation, medical, disability,
group life (including accidental death and dismemberment) and business travel
insurance plans and programs) provided by the Company to its employees
generally, subject, however, to the generally applicable eligibility and other
provisions of the various plans and programs in effect from time to time. In
addition, after the Date of Termination, provided that the Executive has not
been terminated for "cause" (as defined below), and until such time as the
Executive becomes eligible for medical benefits under Medicare, the Executive
shall be eligible to continue his participation (at the Executive's own expense)
in the Company's medical plan as in effect from time to time, in accordance with
the Company's policy regarding continued medical coverage for certain senior
executives, as is then in effect.
(c) During the Term, the Executive shall be entitled to participate
in all retirement plans and programs (including without limitation any profit
sharing/401(k) plan) provided by the Company to its employees generally,
subject, however, to the generally applicable eligibility and other provisions
of the various plans and programs in effect from time to time. In addition,
during the Term, the Executive shall be entitled to receive fringe benefits and
perquisites in accordance with the plans, practices, programs and policies of
the Company from time to time in effect which are made available to the senior
executives of the Company generally or to its employees generally.
(d) The Executive shall be entitled to paid vacation annually in
accordance with Company practice (with no right of carry-over), to be taken at
such time(s) as shall not, in the reasonable judgment of the Board, materially
interfere with the Executive's fulfillment of his duties hereunder, and shall be
entitled to as many holidays, sick days and personal days as are in accordance
with the Company's policy then in effect generally for its employees.
(e) During the Term, the Company will provide the Executive with an
automobile allowance of $1,200 per month to cover the costs of leasing,
insuring, garaging and maintaining an automobile for use in the business of the
Company.
6. Termination
(a) The Company, by direction of the Board or the Designated
Officer, shall be entitled to terminate the Term and to discharge the Executive
for cause effective upon the giving of written notice. The term "cause" shall be
limited to the following grounds:
(i) the Executive's failure or refusal to materially perform
his duties and responsibilities as set forth in paragraph 3 hereof,
or the failure of the Executive to devote all of his business time
and attention exclusively to the business and affairs of the Company
and its subsidiaries in accordance with the terms hereof, in each
case if such failure or refusal is not cured (if curable) within 20
days after written notice thereof to the Executive by the Company;
(ii) the willful misappropriation of the funds or property of
the
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Company or any subsidiary;
(iii) the use of alcohol or illegal drugs, interfering with
the performance of the Executive's obligations under this Agreement,
continuing after written warning;
(iv) the conviction in a court of law of, or entering a plea
of guilty or no contest to, any felony or any crime involving moral
turpitude, dishonesty or theft;
(v) the material nonconformance with the Company's standard
business practices and policies, including without limitation,
policies against racial or sexual discrimination or harassment, made
known to the Executive, which nonconformance is not cured (if
curable) within 10 days after written notice to the Executive by the
Company;
(vi) the commission in bad faith by the Executive of any act
which injures or could reasonably be expected to injure the
reputation, business or business relationships of the Company or any
subsidiary;
(vii) the resignation by the Executive on his own initiative
other than pursuant to a termination by the Executive for "Good
Reason" (as defined in paragraph 6(b)) or pursuant to a Notice of
Termination given by the Executive under paragraph 2;
(viii) the gross misconduct or gross negligence by the
Executive in the performance of his duties or the habitual
misconduct or habitual negligence by the Executive in the
performance of his duties which habitual misconduct or negligence is
not cured (if curable) within 10 days after written notice to the
Executive by the Company; and
(ix) any material breach (not covered by any of the clauses
(i) through (viii) above) of any term, provision or condition of
this Agreement, if such breach is not cured (if curable) within 20
days after written notice thereof to the Executive by the Company.
Any notice required to be given by the Company pursuant to clause (i), (v),
(viii) or (ix) above shall specify the specific nature of the claimed breach and
the manner in which the Company requires such breach to be cured (if curable).
In the event that the Executive is purportedly terminated for cause and the
arbitrator appointed pursuant to paragraph 19 determines that "cause" as defined
herein was not present, then such purported termination for cause shall be
deemed a termination "without cause" pursuant to paragraph 6(c) and the
Executive's rights and remedies will be governed by paragraph 6(e), in full
satisfaction and in lieu of any and all other or further remedies the Executive
may have.
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(b) Provided that the Executive is not then otherwise in breach of
this Agreement, the Executive shall be entitled to terminate this Agreement and
the Term hereunder for "Good Reason" at any time during the Term by written
notice to the Company not more than 30 days after the occurrence of the event
constituting such Good Reason. "Good Reason" shall be limited to a breach by the
Company of a material term of this Agreement, which breach remains uncured for a
period of 20 days after written notice of such breach from the Executive to the
Company (such notice to specify the specific nature of the claimed breach and
the manner in which the Executive requires such breach to be cured).
(c) The Company shall have the right at any time during the Term to
terminate the employment of the Executive "without cause" by giving written
notice to the Executive setting forth a Date of Termination.
(d) In the event of the termination of the employment of the
Executive with the Company for any reason (including without limitation, a
termination pursuant to a Notice of Termination under paragraph 2) other than by
virtue of a termination "without cause" by the Company under paragraph 6(c) or a
termination for "Good Reason" by the Executive under paragraph 6(b), the
Executive shall be entitled to the following payments and benefits, subject to
any appropriate offsets, as permitted by applicable law, for debts or money due
to the Company or an affiliate thereof (collectively, "Offsets"):
(i) unpaid salary compensation through, and any unpaid
reimbursable expenses outstanding as of, the Date of Termination;
and
(ii) all benefits, if any, that had accrued to the Executive
through the Date of Termination under the plans and programs
described in paragraphs 5(b) and (c), or any other applicable plans
and programs in which he participated as an employee of the Company,
in the manner and in accordance with the terms of such plans and
programs.
In the event of the termination of the Employee's employment other than by
virtue of a termination "without cause" or a termination for "Good Reason", the
Company shall have no further liability to the Executive or the Executive's
heirs, beneficiaries or estate for damages, compensation, benefits, severance,
indemnities or other amounts of whatever nature, directly or indirectly, arising
out of or otherwise related to this Agreement and the Executive's employment or
cessation of employment with the Company.
(e) In the event of a termination by the Company "without cause" or
a termination by the Executive for "Good Reason", the Executive shall be
entitled to continue to receive from the Company, as liquidated damages, subject
to any Offsets, the following:
(i) as severance compensation, his applicable salary
compensation when it would be payable to him if his employment had
continued hereunder through (x) December 31, 2002 if the Date of
Termination occurs on or prior to
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September 30, 2002, or (y) 90 days after the Date of Termination, if
the Date of Termination occurs after September 30, 2002;
(ii) any unpaid reimbursable expenses outstanding as of the
Date of Termination;
(iii) all benefits, if any, that had accrued to the Executive
through the Date of Termination under the plans and programs
described in paragraphs 5(b) and (c), or any other applicable
benefit plans and programs in which he participated as an employee
of the Company, in the manner and in accordance with the terms of
such plans and programs; and
(iv) continued participation on the same basis (including,
without limitation, cost contributions) as the other senior
executives of the Company in all medical, dental, disability and
life insurance coverage (such benefits collectively called the
"Continued Plans") in which he was participating on the Date of
Termination (as such Continued Plans are from time to time in effect
at the Company) until the earlier of (x) the end of the period that
he receives severance compensation payments under clause (i) of this
paragraph 6(e) or (y) the date, or dates, he is entitled to receive
coverage and benefits under the same type of plan of a subsequent
employer; provided, however, if the Executive is precluded from
continuing his participation in any Continued Plan, then the Company
will be obligated to pay him the economic equivalent of the benefits
provided under the Continued Plan in which he is unable to
participate, for the period specified above, plus an amount equal to
the tax, if any, payable by him thereon, it being understood that
the economic equivalent of a benefit foregone shall be deemed the
lowest cost in the State of Texas that would be incurred by the
Executive in obtaining such benefit himself on an individual basis,
and payment of such after-tax economic benefit shall be made
quarterly in advance.
In connection with a termination "without cause" or for "Good Reason", (x) the
Company shall have no further liability to the Executive or the Executive's
heirs, beneficiaries or estate for damages, compensation, benefits, severance,
indemnities or other amounts of whatever nature, directly or indirectly, arising
out of or otherwise related to this Agreement and the Executive's employment or
cessation of employment with the Company, and (y) the Executive shall be under
no obligation to mitigate his damages or to seek other employment, and if the
Executive obtains other employment, any compensation earned by the Executive
therefrom shall not reduce the Company's severance obligations under clause (i)
of this paragraph 6(e). The making of any severance payments and providing the
other benefits as provided in this paragraph 6(e) is conditioned upon the
Executive signing a general release (the "Release") in favor of the Company and
its subsidiaries and affiliates, and its and their respective successors and
assigns, officers directors, employees, agents, attorneys and representatives,
of any claims (including, without limitation, claims of discrimination) relating
to the Executive's employment with the Company or the termination thereof. In
the event the Executive breaches any provisions of the Release or the provisions
of paragraph 8 of this Agreement, in addition to any other remedies at law or in
equity
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available to it, the Company may cease making any further severance payments and
providing the other benefits provided for herein, without affecting its rights
under this Agreement or the Release.
7. Disability; Death
In the event the Executive shall be unable to perform his duties
hereunder by virtue of illness or physical or mental incapacity or disability
(from any cause or causes whatsoever) in substantially the manner and to the
extent required hereunder prior to the commencement of such disability (all such
causes being herein referred to as "disability") and the Executive shall fail to
perform such duties for periods aggregating 180 days, whether or not continuous,
in any continuous period of 270 days, the Company shall have the right to
terminate the Executive's employment hereunder as at the end of any calendar
month during the continuance of such disability upon at least 30 days' prior
written notice to him. In the event of the Executive's death, the Date of
Termination shall be the date of such death. In the event the Executive's
employment is terminated as a result of his disability or death, he shall be
entitled to the payments and benefits, subject to any Offsets, as provided in
paragraph 6(d).
8. Non-Solicitation/Non-Servicing Agreement and Protection of Confidential
Information
(a) The Executive acknowledges (i) that his position and employment
with the Company result from the transaction contemplated by the Merger
Agreement; (ii) the highly competitive nature of the business and the industry
in which the Company competes; (iii) that as a key executive of the Company and
its predecessor he has participated in and will continue to participate in the
servicing of current clients and/or the solicitation of prospective clients,
through which, among other things, the Executive has obtained and will continue
to obtain knowledge of the "know-how" and business practices of the Company, in
which matters the Company has a substantial proprietary interest; (iv) that his
employment hereunder requires the performance of services which are special,
unique, extraordinary and intellectual in character, and his position with the
Company and its predecessor placed and places him in a position of confidence
and trust with the clients and employees of the Company; and (v) that his
rendering of services to the clients of the Company necessarily requires the
disclosure to the Executive of, and the Company will so disclose to the
Executive, confidential information (as defined in paragraph 8(b)) of the
Company. In the course of the Executive's employment with the Company (and its
predecessor), the Executive has and will continue to develop a personal
relationship with the clients of the Company and a knowledge of those clients'
affairs and requirements, and the relationship of the Company with its
established clientele will therefore be placed in the Executive's hands in
confidence and trust. The Executive consequently agrees that it is a legitimate
interest of the Company, and reasonable and necessary for the protection of the
confidential information, goodwill and business of the Company, which is
valuable to the Company, that the Executive make the covenants contained herein
and that the Company would not have entered into this Agreement or the Merger
Agreement unless the covenants set forth in this paragraph 8 were contained in
this Agreement. Accordingly, the Executive agrees that during the period that he
is employed by the Company and thereafter through the later of (x) December 31,
2002 and (y) two
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years after the Date of Termination, he shall not, as an individual, employee,
consultant, independent contractor, partner, shareholder, member or in
association with any other person, business or enterprise, except on behalf of
the Company, directly or indirectly, and regardless of the reason for his
ceasing to be employed by the Company:
(i) attempt in any manner to solicit or accept from any client
business of the type performed by the Company or to persuade any
client to cease to do business or to reduce the amount of business
which any such client has customarily done or is reasonably expected
to do with the Company, whether or not the relationship between the
Company and such client was originally established in whole or in
part through his efforts; or
(ii) employ as an employee or retain as a consultant any
person who is then or at any time during the preceding twelve months
was an employee of or exclusive consultant to the Company, or
persuade or attempt to persuade any employee of or exclusive
consultant to the Company to leave the employ of the Company or to
become employed as an employee or retained as a consultant by anyone
other than the Company; or
(iii) render to or for any client any services of the type
rendered by the Company.
As used in this paragraph 8, the term "client" shall mean (1) anyone who is a
client of the Company on the Date of Termination or, if the Executive's
employment shall not have terminated, at the time of the alleged prohibited
conduct (any such applicable date being called the "Determination Date"); (2)
anyone who was a client of the Company at any time during the one year period
immediately preceding the Determination Date; (3) any prospective client to whom
the Company had made a new business presentation (or similar offering of
services) at any time during the one year period immediately preceding the
Determination Date; and (4) any prospective client to whom the Company made a
new business presentation (or similar offering of services) at any time within
six months after the Date of Termination (but only if the initial discussions
between the Company and such prospective client relating to the rendering of
services occurred prior to the Date of Termination, and only if the Executive
actively participated in or supervised such discussions). For purposes of this
clause, it is agreed that a general mailing or an incidental contact shall not
be deemed a "new business presentation or similar offering of services" or a
"discussion". In addition, if the client is part of a group of companies which
conducts business through more than one entity, division or operating unit,
whether or not separately incorporated (a "Client Group"), the term "client" as
used herein shall also include each entity, division and operating unit of the
Client Group where the same management group of the Client Group has the
decision making authority or significant influence with respect to contracting
for services of the type rendered by the Company.
(b) In the course of the Executive's employment with the Company he
will acquire and have access to confidential or proprietary information about
the Company and/or its clients, including but not limited to, trade secrets,
methods, models, passwords, access to
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computer files, financial information and records, computer software programs,
agreements and/or contracts between the Company and its clients, client
contacts, the marketing and/or creative policies and ideas, advertising
campaigns, media plans and budgets, practices, concepts, strategies, and methods
of operations, financial or business projections of the Company, and information
about or received from clients and other companies with which the Company does
business. The foregoing shall be collectively referred to as "confidential
information". The Executive is aware that the confidential information is not
readily available to the public and accordingly, the Executive also agrees that
he will not at any time (whether during the Term or after termination of this
Agreement) disclose to anyone (other than his counsel in the course of a dispute
arising from the alleged disclosure of confidential information or as required
by law) any confidential information, or utilize such confidential information
for his own benefit, or for the benefit of third parties. The Executive agrees
that the foregoing restrictions shall apply whether or not any such information
is marked "confidential". The term "confidential information" does not include
information which (i) becomes generally available to the public other than by
breach of this provision or (ii) the Executive learns from a third party who is
not under an obligation of confidence to the Company or a client of the Company.
In the event that the Executive becomes legally required to disclose any
confidential information, he will provide the Company with prompt notice thereof
so that the Company may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this paragraph 8(b) to permit a
particular disclosure. In the event that such protective order or other remedy
is not obtained, or the Company waives compliance with the provisions of this
paragraph 8(b) to permit a particular disclosure, the Executive will furnish
only that portion of the confidential information which he is legally required
to disclose and, at the Company's expense, will cooperate with the efforts of
the Company to obtain a protective order or other reliable assurance that
confidential treatment will be accorded the confidential information. The
Executive further agrees that all memoranda, disks, files, notes, records or
other documents, whether in electronic form or hard copy (collectively, the
"material"), compiled by him or made available to him during his employment with
the Company and/or its predecessor (whether or not the material contains
confidential information) shall be the property of the Company and shall be
delivered to the Company on the termination of the Executive's employment with
the Company or at any other time upon request. Except in connection with the
Executive's employment with the Company, the Executive agrees that he will not
make or retain copies or excerpts of the material.
(c) If the Executive commits a breach or is about to commit a
breach, of any of the provisions of paragraphs 8(a) or (b), the Company shall
have the right to have the provisions of this Agreement specifically enforced by
the arbitrator appointed under paragraph 19 or by any court having equity
jurisdiction without being required to post bond or other security and without
having to prove the inadequacy of the available remedies at law, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company. In addition, the Company may take all such other
actions and remedies available to it under law or in equity and shall be
entitled to such damages as it can show it has sustained by reason of such
breach.
(d) The parties acknowledge that (i) the type and periods of
restriction imposed in the provisions of paragraphs 8(a) and (b) are fair and
reasonable and are reasonably
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required in order to protect and maintain the proprietary interests of the
Company described above, other legitimate business interests of Company and the
goodwill associated with the business of the Company, including without
limitation, the business acquired pursuant to the Merger Agreement, (ii) the
business of the Company currently extends throughout the United States, and the
Executive will engage in such business pursuant to the terms of this Agreement
throughout all areas in which the Company conducts its business, and (iii) the
time, scope, geographic area and other provisions of this paragraph 8 have been
specifically negotiated by sophisticated commercial parties, represented by
legal counsel, and are given as an integral part of the transactions
contemplated by the Merger Agreement. It is further understood and agreed that
the clients of the Company may be serviced from any location and accordingly it
is reasonable that the covenants set forth herein are not limited by narrow
geographic area but generally by the location of such clients and potential
clients. The Executive specifically acknowledges that his being restricted from
soliciting and servicing clients as contemplated by this Agreement will not
prevent him from being employed or earning a livelihood in the type of business
conducted by the Company. If any of the covenants contained in paragraphs 8(a)
or (b), or any part thereof, is held to be unenforceable by reason of it
extending for too great a period of time or over too great a geographic area or
by reason of it being too extensive in any other respect, the parties agree (x)
such covenant shall be interpreted to extend only over the maximum period of
time for which it may be enforceable and/or over the maximum geographic areas as
to which it may be enforceable and/or over the maximum extent in all other
respects as to which it may be enforceable, all as determined by the court or
arbitration panel making such determination and (y) in its reduced form, such
covenant shall then be enforceable, but such reduced form of covenant shall only
apply with respect to the operation of such covenant in the particular
jurisdiction in or for which such adjudication is made.
(f) The temporal duration of the non-solicitation/non-servicing
covenants set forth in this paragraph 8 shall not expire, and shall be tolled,
during any period in which Executive is in violation of any of the
non-solicitation/non-servicing covenants set forth in this paragraph 8; and all
restrictions shall automatically be extended by the period of Executive's
violation of any such restrictions.
9. Intellectual Property
During the Term, the Executive will disclose to the Company all
ideas, inventions and business plans developed by him during such period which
relate directly or indirectly to the business of the Company, including without
limitation, any design, logo, slogan, advertising campaign or any process,
operation, product or improvement which may be patentable or copyrightable. The
Executive agrees that all patents, licenses, copyrights, tradenames, trademarks,
service marks, planning, marketing and/or creative policies, advertising
campaigns, public relations or public affairs campaigns, promotional campaigns,
media campaigns, and budgets, practices, concepts, strategies, and methods of
operations, financial or business projections, designs, logos, slogans and
business plans developed or created by the Executive in the course of his
employment hereunder, either individually or in collaboration with others, will
be deemed works for hire and the sole and absolute property of the Company. The
Executive agrees, that at the Company's request and expense, he will assign all
rights thereto to the
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Company and take all such other steps necessary to secure the rights thereto to
the Company by patent, copyright or otherwise.
10. Enforceability
The failure of any party at any time to require performance by
another party of any provision hereunder shall in no way affect the right of
that party thereafter to enforce the same, nor shall it affect any other party's
right to enforce the same, or to enforce any of the other provisions in this
Agreement; nor shall the waiver by any party of the breach of any provision
hereof be taken or held to be a waiver of any subsequent breach of such
provision or as a waiver of the provision itself.
11. Assignment
The Company and the Executive agree that the Company shall have the
right to assign this Agreement, and, accordingly, this Agreement shall inure to
the benefit of, and may be enforced by, any and all successors and assigns of
the Company, including, without limitation, by asset assignment, stock sale,
merger, consolidation or other corporate reorganization, provided such successor
entity assumes the obligations of the Company. The Company and Executive agree
that Executive's rights and obligations under this Agreement are personal to the
Executive, and the Executive shall not have the right to assign or otherwise
transfer his rights or obligations under this Agreement. The rights and
obligations of the Company hereunder shall be binding upon and run in favor of
the successors and assigns of the Company.
12. Modification
This Agreement may not be orally canceled, changed, modified or
amended, and no cancellation, change, modification or amendment shall be
effective or binding unless in writing, signed by the parties to this Agreement,
and approved in writing by the Designated Officer.
13. Severability; Survival
In the event any provision or portion of this Agreement is
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall nevertheless be binding upon
the parties with the same effect as though the invalid or unenforceable part had
been severed and deleted or reformed to be enforceable. The respective rights
and obligations of the parties hereunder shall survive the termination of the
Executive's employment to the extent necessary to the intended preservation of
such rights and obligations.
14. Life Insurance
The Executive agrees that the Company shall have the right to obtain
life insurance on the Executive's life, at the sole expense of the Company, as
the case may be, and with the Company as the sole beneficiary thereof. The
Executive shall (a) cooperate fully in obtaining such life insurance, (b) sign
any necessary consents, applications and other related forms or documents
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and (c) at the Company's expense, take any reasonably required medical
examinations.
15. Notice
Any notice, request, instruction or other document to be given
hereunder by any party hereto to another party shall be in writing and shall be
deemed effective (a) upon personal delivery, if delivered by hand or local
courier, or (b) three days after the date of deposit in the mails, postage
prepaid if mailed by certified or registered mail, or (c) on the next business
day, if sent by prepaid overnight courier service or facsimile transmission (if
electronically confirmed), and in each case, addressed as follows:
If to the Executive:
Harold R. Curtis
7330 Blairview Drive
Dallas, Texas 75230
If to the Company:
M/A/R/C Inc.
7850 Beltline Road
Irving, Texas 75063-6098
Attn: Secretary
Fax: 972-506-3416
with a copy to:
Omnicom Group Inc.
437 Madison Avenue
New York, New York 10022
Attention: Secretary
Fax: 212-415-3670
and
Davis & Gilbert LLP
1740 Broadway
New York, New York 10019
Attention: Michael D. Ditzian, Esq.
Fax: 212-468-4888
Either party may change the address to which notices are to be sent by giving
notice of such change of address to the other party in the manner herein
provided for giving notice.
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16. Applicable Law
This Agreement, and all issues and matters related to this
Agreement, shall be governed by, enforced under, and construed in accordance
with the laws of the State of Texas without regard to any conflicts or conflict
of laws principles in the State of Texas that would result in the application of
the law of any other jurisdiction.
17. No Conflict
The Executive represents and warrants that he is not subject to any
agreement, instrument, order, judgment or decree of any kind, or any other
restrictive agreement of any character, which would prevent him from entering
into this Agreement or which would be breached by the Executive upon his
performance of his duties pursuant to this Agreement.
18. Entire Agreement
This Agreement represents the entire agreement between the Company
and the Executive with respect to the employment of the Executive by the
Company, and all prior agreements, plans and arrangements relating to the
employment of the Executive by the Company are nullified and superseded hereby.
19. Arbitration
(a) The parties hereto agree that any dispute, controversy or claim
arising out of, relating to, or in connection with this Agreement (including,
without limitation, any claim regarding or related to the interpretation, scope,
effect, enforcement, termination, extension, breach, legality, remedies and
other aspects of this Agreement or the conduct and communications of the parties
regarding this Agreement and the subject matter of this Agreement) shall be
settled by arbitration at the offices of Judicial Arbitration and Mediation
Services, Inc. or successor organization for binding arbitration in Dallas,
Texas by a single arbitrator. The arbitrator may grant injunctions or other
relief in such dispute or controversy. All awards of the arbitrator shall be
binding and non-appealable, except as provided by the applicable rules of
arbitration and/or by applicable law. Judgment upon the award of the arbitrator
may be entered in any court having jurisdiction. The arbitrator shall apply
Texas law to the merits of any dispute or claims, without reference to any rules
of conflicts of law that might result in the application of any other state's
law. Suits to compel or enjoin arbitration or to determine the applicability or
legality of arbitration shall be brought in the United States District Court for
the Northern District of Texas, or if that court lacks jurisdiction, in a state
court located within the geographic boundaries thereof. Notwithstanding the
foregoing, no party to this Agreement shall be precluded from applying to a
proper court for injunctive relief by reason of the prior or subsequent
commencement of an arbitration proceeding as herein provided. The prevailing
party in any arbitration shall be entitled to receive its reasonable attorneys'
fees and costs from the other party(ies) as awarded by the arbitrator.
(b) The Executive has read and understands this paragraph 19 which
discusses arbitration. The Executive understands that by signing this Agreement,
the
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Executive agrees to submit any claims arising out of, relating to, or in
connection with this Agreement, or the interpretation, validity, construction,
performance, breach or termination thereof, or his employment or the termination
thereof, to binding arbitration, and that this arbitration provision constitutes
a waiver of the Executive's right to a jury trial and relates to the resolution
of all disputes relating to all aspects of the employer/employee relationship,
including but not limited to the following:
(i) Any and all claims for wrongful discharge of employment,
breach of contract, both express and implied; breach of the covenant
of good faith and fair dealing, both express and implied; negligent
or intentional infliction of emotional distress; negligent or
intentional misrepresentation; negligent or intentional interference
with contract or prospective economic advantage; and defamation;
(ii) Any and all claims for violation of any federal, state or
municipal statute, including, without limitation, Title VII of the
Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991,
the Equal Pay Act, the Employee Retirement Income Security Act, as
amended, the Age Discrimination in Employment Act of 1967, the
Americans with Disabilities Act of 1990, the Family and Medical
Leave Act of 1993, the Fair Labor Standards Act and the Texas
Employment Discrimination Law; and
(iii) Any and all claims arising out of any other federal,
state or local laws or regulations relating to employment or
employment discrimination.
20. Headings
The headings contained in this Agreement are for reference purposes
only, and shall not affect the meaning or interpretation of this Agreement.
21. Withholdings
The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
M/A/R/C INC.
By: /s/ Sharon M. Munger
---------------------------------
Name: Sharon M. Munger
Title: Chairman and Chief
Executive Officer
/s/ Harold R. Curtis
------------------------------------
HAROLD R. CURTIS
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