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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
___________
Date of Report (Date of earliest event reported): May 19, 1997
TRUE NORTH COMMUNICATIONS INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 1-5029 36-1088161
(State or other (Commission) (I.R.S. Employer
jurisdiction of File Number) Identification No.)
organization)
101 East Erie Street
Chicago, Illinois 60611-2897
(Address of principal executive offices) (Zip Code)
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(312) 425-6500
(Registrant's telephone number, including area code:)
Not Applicable
(Former name or former address,
if changed since last report.)
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Certain statements made by executive officers of Registrant at
Registrant's 1997 Annual Meeting of Shareholders and in Registrant's press
release dated May 8, 1997 and which may be made in the future with respect to
Registrant's results in 1997 being expected to exceed those for 1996 constitute
"forward-looking statements" within the meaning of Section 21E(i)(1) of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results of Registrant to be materially different from any future
results expressed or implied by these statements. Such factors include, among
other things, the following: general economic and business conditions, changes
in demand for Registrant's services, changes in competition, the ability of
Registrant to integrate acquisitions or complete future acquisitions, interest
rate fluctuations, dependence upon and availability of qualified personnel, and
changes in governmental regulation. In light of these and other uncertainties,
the forward-looking statements included in this document should not be regarded
as a representation by Registrant that Registrant's plans and objectives will be
achieved.
Item 5. Other Events.
On May 19, 1997, Registrant and certain of its affiliates entered into
a definitive agreement with Publicis Communication and certain of its affiliates
as contemplated by the Memorandum of Agreement dated February 19, 1997 among
Publicis S.A., Publicis Communication and Publicis-FCB Europe B.V., on the one
hand, and Registrant and FCB International, Inc., on the other hand.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit 10.1 Agreement dated as of May 19, 1997 among Publicis S.A.,
a societe anonyme organized and existing under the laws of France ("Publicis"),
Publicis Communication, a societe anonyme organized and existing under the laws
of France ("Communication"), and Publicis FCB Europe B.V., a company organized
under the laws of the Netherlands ("PBV"), on the one hand, and Registrant, FCB
International, Inc., a Delaware corporation ("FCBI"), and True North Holdings
Netherlands B.V., a company organized under the laws of the Netherlands
("TNBV"), on the other hand.
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Exhibit 10.2 Pooling Agreement dated as of May 19, 1997 among
Publicis, Communication and Registrant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRUE NORTH COMMUNICATIONS INC.
DATE: May 28, 1997 By:/s/ John J. Rezich
---------------------
Name: John J. Rezich
Title: Controller
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INDEX TO EXHIBITS
-----------------
Exhibit No. Description
- ----------- -----------
10.1 Agreement dated as of May 19, 1997 among Publicis S.A., a societe
anonyme organized and existing under the laws of France
("Publicis"), Publicis Communication, a societe anonyme organized
and existing under the laws of France ("Communication"), and
Publicis.FCB Europe B.V., a company organized under the laws of
the Netherlands ("PBV"), on the one hand, and Registrant, FCB
International, Inc., a Delaware corporation ("FCBI"), and True
North Holdings Netherlands B.V., a company organized under the
laws of the Netherlands ("TNBV"), on the other hand
10.2 Pooling Agreement dated as of May 19, 1997 among Publicis,
Communication and Registrant.
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EXHIBIT 10.1
Execution Copy
AGREEMENT, dated as of May 19, 1997 (the "Agreement") among Publicis
S.A., a societe anonyme organized and existing under the laws of
France ("Publicis"), Publicis Communication, a societe anonyme
organized and existing under the laws of France ("Communication"), and
Publicis.FCB Europe B.V., a company organized under the laws of the
Netherlands ("PBV"), on the one hand, and True North Communications
Inc., a Delaware corporation ("True North"), FCB International, Inc.,
a Delaware corporation ("FCBI"), and TRUE NORTH HOLDINGS NETHERLANDS
B.V., a company organized under the laws of the Netherlands ("TNBV"),
on the other hand.
Introduction
------------
Publicis, Communication and PBV, on the one hand, and True North, FCBI and
TNBV, on the other hand, desire to create two separate worldwide agency
networks, one owned and controlled by Communication and one owned and controlled
by True North.
Publicis and True North desire to set forth the parties' agreement
concerning ownership of Communication and certain other agreements between them.
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement and other good and valuable
consideration, the parties agree as follows:
Article I
Equity and Governance of Communication
--------------------------------------
1.1. Put and Call of Communication Stock. At the times and under the
circumstances described below, True North shall have the right, in its sole
discretion and on one occasion, to require Publicis to purchase from True North
(the "Remainder Put"), and Publicis shall have the right, in its sole discretion
and on one occasion, to require True North to sell to Publicis (the "Remainder
Call") the number of shares of Communication Stock (as defined below) which is
equal to the percentage of the issued and outstanding shares of Communication
Stock owned by True North, less the Expiration Put Percentage (as defined
below). The applicable percentage of issued and outstanding shares of
Communication Stock subject to the Remainder Put and the Remainder Call is
referred to herein as the "Remainder Percentage" and in no event shall exceed
6.5%. The shares subject to the Remainder Call or the Remainder Put shall be
subject to appropriate adjustments for stock dividends, splits, combinations,
exchanges, or similar events,
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occurring subsequent to such date of exercise and prior to the consummation of
such Remainder Put or Call. True North may exercise the Remainder Put only if
(i) Communication Stock has not been listed on a major European stock exchange
on or prior to December 31, 1998 and (ii) True North has previously exercised
the Expiration Put (as defined below) and (iii) True North has given its notice
of exercise on or prior to March 31, 2000. Publicis may exercise the Remainder
Call only if (i) Communication Stock has not been listed on a major European
stock exchange and (ii) either (A) True North has exercised its Expiration Put
or (B) Publicis has given its notice of exercise on or after April 1, 2000 and
on or prior to June 30, 2000. The purchase price shall be a price per share
equal to the Put/Call Price, as determined pursuant to the terms of Section
1.1.1, and upon exercise of the Remainder Put, True North shall be bound to sell
such shares to Publicis and convey ownership of such shares to Publicis and
Publicis shall be bound to purchase such shares from True North and tender the
purchase price therefor, in accordance with Section 1.1.2, and upon exercise of
the Remainder Call, Publicis shall be bound to purchase such shares from True
North and tender the purchase price therefor and True North shall be bound to
sell such shares to Publicis and convey ownership of such shares to Publicis
pursuant to Section 1.1.2.
1.1.1. The Put/Call Price per share of Communication Stock shall be equal
to (X) the sum of (1) the average of (A) 60% of the average of the annual
revenue of Communication and its subsidiaries, on a consolidated basis, for each
of the two full calendar years ended immediately preceding the date of exercise
of the Remainder Put or the Remainder Call, as the case may be, and (B) 11 times
the average of the net income of Communication and its subsidiaries, on a
consolidated basis (after taxes and before amortization of goodwill), for each
of such two full calendar years (and if such average net income is negative,
then such average net income shall be deemed to be zero) and (2) the amount of
net tangible assets (net equity less intangible assets) of Communication as of
the last day of the calendar year immediately preceding the date of exercise
(less the amount of any dividends paid by Communication, and plus the amount of
any capital contributions made to Communication, in each case after such last
day of the calendar year immediately preceding the date of exercise and prior to
the date of the consummation of such Remainder Put or Remainder Call), divided
by (Y) the total number of shares of Communication Stock issued and outstanding
on the date of exercise, subject to appropriate adjustments for stock dividends,
splits, combinations, exchanges, or similar events, occurring subsequent to such
date of exercise and prior to the consummation of such Remainder Put or Call.
Subject to the last sentence of this Section 1.1.1, the calculations required to
be made pursuant to this Section 1.1.1 shall be made by reference to the annual
audited consolidated financial results of Communication determined in accordance
with French generally accepted accounting principles, consistently applied. The
annual audited consolidated financial results of Communication shall, for
purposes of the calculations required to be made pursuant to this Section 1.1.1,
be adjusted:
(i) on a pro forma basis with respect to revenue and net income and
any effect on net tangible assets or shares outstanding, to exclude from
such calculations the revenue and net income generated and any effect on
net tangible assets or shares outstanding during the second year of the two
full calendar years ended immediately
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preceding the date of such exercise by any agencies acquired during such
year by Communication from Publicis or a third party; provided that the
inclusion of any pro forma revenue shall give effect to minority interests
as set forth in clause (iii) of this Section 1.1.1 and provided further
that the pro forma calculations required by this clause (i) shall give
effect to Publicis' cost of financing any of the acquired agencies
transferred to Communication and shall also give effect to any capital
contributions made to finance such acquisition;
(ii) to exclude from net income any extraordinary and non-recurring
losses incurred or extraordinary and non-recurring gains realized, in each
case, only those losses or gains which are collectively in excess of US $5
million, during the relevant year;
(iii) for any subsidiary or equity investment that is not directly or
indirectly wholly-owned by Communication, to include in revenue that
percentage of such subsidiary's or investee's revenue which reflects that
percentage interest in such subsidiary or equity investment which is owned
by Communication but only if such percentage interest is equal to or
greater than 30%; and
(iv) with respect to any items of revenue or net income attributable
to True North and its subsidiaries which are included in the annual audited
consolidated financial results of Communication to (x) exclude any such
items of revenue and net income from the calculation of the Put/Call Price
and (y) include in the calculation of the Put/Call Price (after the
exclusion called for by clause (x) of this paragraph (iv)) an amount equal
to 10 times the average net income of True North and its consolidated
subsidiaries reflected in the annual audited consolidated financial results
of Communication for each of the two full calendar years ended immediately
preceding the date of exercise of the Remainder Put or the Remainder Call.
1.1.2. If either (i) True North wishes to exercise the Remainder Put or
(ii) Publicis wishes to exercise the Remainder Call, in either case, such party
shall give the other party written notice of such exercise, which notice shall
contain the number of shares of Communication Stock which is the subject of such
exercise together with the notifying party's estimated calculation of the
Put/Call Price. The purchase and sale of such shares shall be consummated within
10 Business Days (as defined below) following the receipt of the notice of
exercise or, in the event of exercise between January 1 and February 15 of any
year, within 10 Business Days of February 15 of such year. In exchange for the
payment by Publicis of the aggregate Put/Call Price determined pursuant to this
Section, which shall be payable by wire transfer of immediately available funds
in French Francs to a bank or other financial institution designated by True
North, True North shall convey ownership of the Communication Stock subject to
the Remainder Put or Remainder Call, as applicable, to Publicis, free of any
mortgage, pledge, lien, encumbrance, assessment, charge or adverse claim
affecting title to, or resulting in an encumbrance against, such Communication
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Stock, or a security interest of any kind (including any conditional sale or
other title retention agreement), any option or other agreement to sell and any
filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes of any U.S. or other jurisdiction)
excluding, however, Encumbrances solely in favor of Publicis or Communication
(collectively, "Encumbrances"). For purposes of this Agreement, "Business Day"
shall mean any day that is not a Saturday, Sunday or a day on which banks in
Chicago or Paris are permitted or required to be closed. After True North has
given written notice to Publicis of its exercise of the Remainder Put, or
Publicis has given written notice to True North of its exercise of the Remainder
Call, as the case may be, such notice shall be irrevocable, and True North shall
be bound to sell to Publicis and Publicis shall be bound to buy from True North
that number of shares of Communication Stock specified in such notice at the
Put/Call Price. Notwithstanding the immediately preceding sentence, in the event
that the Remainder Put or Remainder Call shall have been exercised but the
closing of such transaction shall not have occurred within 180 days of such
exercise, the exercising party, if not in breach of the provisions of such
Remainder Put or Remainder Call, may cancel such exercise by written notice to
the other party and upon such cancellation, neither party shall be required to
fulfill its obligation with respect to such Remainder Put or Remainder Call (but
otherwise without prejudicing the rights of any party with respect to a breach
of such provisions by any other party).
1.2. Listing of Communication Stock. Publicis and Communication agree to
use their respective best efforts to cause to be offered to the public and
listed on a major European stock exchange prior to December 31, 1998, shares of
the common stock, par value 100 French Francs, of Communication (including such
other equity or debt securities as Communication may hereafter issue in respect
of or in exchange for shares of such common stock in connection with any stock
dividend or distribution, stock split-up, recapitalization, recombination, or
exchange by Communication generally of shares of such common stock) (the
"Communication Stock"). Publicis and Communication each agree to seek to cause
such listing to occur in 1997. For the purposes of this Agreement, "major
European stock exchange" shall be deemed to be the Paris Bourse or the London
Stock Exchange. The intention of the parties is to provide True North with a
means of selling its stake in Communication in a public market. A merger of
Communication with an entity which is then publicly listed and which is the
surviving corporation in such merger shall be deemed to be a public listing for
all purposes under this Agreement.
1.3. Sale in Offering. Publicis and Communication shall give True North
at least 30 days prior written notice of their intention to commence the
offering and listing of Communication Stock. Upon True North's written request
to Communication, given within 15 days of the receipt of such notice, to include
in such offering shares of Communication Stock owned by True North, Publicis and
Communication shall cause such shares to be included in such offering to the
extent set forth below. True North's request shall include a schedule (the
"Schedule") which shall set forth the amount of shares of Communication Stock
which True North requests Communication to include in the offering assuming a
range of hypothetical offering prices, which shall include the prices, based on
a reasonable good faith estimate of market values, at which True North will
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request Communication to include 25%, 33 1/3% and 50% of its interests in the
offering. As set forth in such Schedule, True North may request that any amount
of its Communication Stock be included in such offering, provided, that it shall
be entitled to have offered in such offering up to, but no more than, 50% of the
Communication Stock owned by True North at the time True North requests that
such shares be included in such offering (or, if higher, up to, but no more
than, 50% of the Communication Stock owned by True North immediately prior to
the consummation of such offering (to the extent so requested by True North)) in
priority over any other shares so offered, until all of the shares which True
North is entitled to have offered (pursuant to the provisions of this sentence)
are sold. Subject to its rights to withdraw from such offering, as set forth
below in this Section, True North shall use all commercially reasonable efforts
to cooperate with Communication and its agents and advisors in effecting such
offering.
1.3.1 If the offering is to be made on a major European stock exchange and
the laws and regulations applicable to an offering thereon require that, prior
to such offering, offering documents which include a minimum offering price must
be lodged with a regulatory entity, not less than 5 days prior to the lodging of
the offering with the Commission des Operations de Bourse (the "COB") or other
regulatory entity, as the case may be, Communication shall furnish True North
with a written copy of the offering documents to be lodged with the COB or such
regulatory entity, as the case may be, which shall include a minimum offering
price per share. If the offering is to be made in a country which does not have
such a regulatory requirement, then Communication agrees to give True North
written notice not less than 5 days prior to the commencement of the offering,
which notice shall contain a minimum offering price per share. Within 2 Business
Days after its receipt of such documents or notice, as the case may be, True
North may give written notification to Communication that it wishes to withdraw
from the offering a portion or all of the shares it requested to be offered in
accordance with the Schedule. If True North fails to give such notice within
such time, it shall be deemed to have irrevocably committed to the offering all
of its shares which it requested be offered in accordance with the Schedule;
provided that the actual price at which shares are offered in such offering
equals or exceeds the minimum offering price specified in the documents lodged
with the COB or such regulatory entity or such notice, as the case may be. If
True North so withdraws any or all of its shares and Publicis or Communication
elects, each acting in its sole discretion, to offer and list any shares of
Communication Stock in such offering, such offering and listing shall constitute
the offering and listing of Communication Stock for all purposes under this
Agreement. For the avoidance of doubt, the parties agree that if, following True
North's election to withdraw some or all of its shares to be offered, the
managing underwriter of such offering determines, in its sole discretion, that
the number of shares remaining to be so offered shall be less than the number of
shares required for a successful offering, such managing underwriter may
terminate such offering and Publicis and Communication shall be deemed to have
used their respective best efforts to effect such offering and listing of the
Communication Stock for all purposes under this Agreement.
1.3.2. True North shall bear (i) its pro rata share of all underwriting
discounts and commissions, listing or other regulatory fees of an offering to
the extent incurred by Publicis and
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Communication and (ii) all costs and expenses incurred directly by True North in
connection with such offering, including, without limitation, the fees and
expenses of counsel, investment advisors or other professionals hired by True
North. Except as specifically provided in clause (i) of the immediately
preceding sentence, True North shall not be responsible for any expenses
incurred by Publicis or Communication in connection with the offering and
listing of the Communication Stock. True North's pro rata share of expenses
incurred under clause (i) of the second preceding sentence shall be the
percentage that the aggregate number of shares of Communication Stock to be sold
by True North constitutes of the aggregate number of shares to be sold in such
offering and listing.
1.3.3. In connection with any listing and offering of Communication Stock
pursuant to the terms of this Agreement, each of Publicis and Communication
agrees to indemnify and hold True North and its subsidiaries harmless, in
accordance with customary practice, against any and all losses, claims, damages
or liabilities to which they may become subject under any statute or common law
or otherwise and to reimburse them for any reasonable legal or other expenses
incurred by them in connection with defending any actions, insofar as any such
losses, claims, damages, liabilities or actions shall arise out of or shall be
based upon any untrue statement or alleged untrue statement of a material fact
contained in any offering documents or the omission or alleged omission to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing indemnification shall not apply to any losses, claims,
damages, liabilities or actions which shall arise from the sale of shares of
Communication Stock to any person if such losses, claims, damages, liabilities
or actions which shall arise out of or shall be based upon any such untrue
statement or alleged untrue statement, or any omission or alleged omission, if
such statement or omission shall have been made in reliance upon or in
conformity with information furnished in writing by True North. In connection
with any listing and offering of Communication Stock pursuant to the terms of
this Agreement, True North agrees to indemnify and hold Publicis and
Communication and each of their subsidiaries harmless, in accordance with
customary practice, against any and all losses, claims, damages or liabilities
to which they may become subject under any statute or common law or otherwise
and to reimburse them for any reasonable legal or other expenses incurred by
them in connection with defending any actions, insofar as any such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon any untrue statement or alleged untrue statement of a material fact
contained in any offering documents or the omission or alleged omission to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading if such statement or
omission shall have been made in reliance upon and in conformity with the
information furnished in writing by True North to Communication in connection
with the preparation of such registration or offering statement.
1.4. Put of Communication Stock if Not Listed. If Communication Stock has
not been listed on a major European stock exchange on or prior to December 31,
1998, then on or prior to March 31, 2000, True North shall have the right, in
its sole discretion and on one occasion, to
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require Publicis to purchase from True North (the "Expiration Put") up to, but
not more than, the number of shares of Communication Stock which is equal to 20%
(subject to adjustment) of the number of shares of Communication Stock issued
and outstanding as of the date of exercise of such Expiration Put, subject to
appropriate adjustments for stock dividends, splits, combinations, exchanges, or
similar events, occurring subsequent to such date of exercise and prior to the
consummation of such Expiration Put. The purchase price shall be a price equal
to the fair market value, as of the date of the notice of exercise of the
Expiration Put, of the block of Communication Stock sought to be sold by True
North ("Fair Market Value"), as determined by a panel of three investment banks
pursuant to the terms of Section 1.4.1, and upon exercise of the Expiration Put,
True North shall be bound to sell and convey ownership of such shares, free of
any Encumbrances, to Publicis and Publicis shall be bound to purchase such
shares from True North and tender the purchase price therefor in accordance with
Section 1.4.1. The 20% figure in the first sentence of this Section 1.4 shall be
reduced if True North shall fail to exercise any Percentage Purchase Right or
any True North Maintenance Right by multiplying 20 by a fraction, the numerator
of which is the percentage of the issued and outstanding shares of Communication
Stock owned by True North after such failure to exercise and the denominator of
which is the percentage of such shares which would have been owned had there
been an exercise. The applicable percentage of issued and outstanding shares of
Communication Stock subject to the Expiration Put is referred to herein as the
"Expiration Put Percentage." For the avoidance of doubt, the parties agree that
the existence of the Expiration Put shall not relieve Publicis or Communication
from their respective obligations pursuant to Section 1.2 to use their
respective best efforts to offer and list the Communication Stock.
1.4.1. If True North wishes to exercise the Expiration Put, it shall give
written notice to Publicis, subject to Section 1.4, at any time after December
31, 1998 and on or prior to March 31, 2000, which notice shall include the
number of shares of Communication Stock which it wishes Publicis to purchase and
True North's selection of a globally recognized investment bank. Within 5 days
of Publicis' receipt of such notice, Publicis shall give True North written
notice of its selection of a globally recognized investment bank. If Publicis
fails to select an investment bank within the allotted time, Publicis shall be
deemed to have selected Lazard Freres. The two selected banks shall, within 10
days, agree upon a third globally recognized investment bank. If the two
selected banks cannot agree on a third globally recognized investment bank, such
third bank shall be selected by lot from among four candidates, two to be
nominated by each of the selected banks. Each of True North and Publicis,
respectively, shall bear the fees and expenses of the investment bank selected
by it, and the fees and expenses of the third investment bank shall be shared
equally by True North and Publicis. The three selected banks shall be directed
by each party hereto to fully cooperate with one another and act in good faith
to arrive jointly at the Fair Market Value within 45 days of the selection of
the third bank. If the three selected banks cannot agree on a single
determination of the Fair Market Value within 45 days, the determination of Fair
Market Value shall be made by the Arbitral Tribunal (as defined below) in
accordance with Section 3.4.1 through 3.4.10 hereof. The Arbitral Tribunal shall
be given Terms of Reference (as defined below) which shall mandate a decision
within 180 days from the date of the Notice of Arbitration. The
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purchase and sale of such shares shall be consummated within 5 Business Days
following the determination of Fair Market Value. In exchange for the payment by
Publicis of the Fair Market Value determined pursuant to this Section 1.4.1,
which shall be payable by Publicis by wire transfer of immediately available
funds in French Francs to a bank or other financial institution designated by
True North, True North shall convey ownership of the Communication Stock subject
to such Expiration Put to Publicis, free of any Encumbrances. After True North
has given written notice to Publicis of its exercise of the Expiration Put, such
notice shall be irrevocable, and True North shall be bound to sell to Publicis
and Publicis shall be bound to buy from True North that number of shares of
Communication Stock specified in such notice at the price determined pursuant to
this Section 1.4.1. Notwithstanding the immediately preceding sentence, in the
event that the Expiration Put shall have been exercised but the closing of such
transaction shall not have occurred within 260 days of such exercise, the
exercising party, if not in breach of the provisions of such Expiration Put, may
cancel such exercise by written notice to the other party and upon such
cancellation neither party shall be required to fulfill its obligation with
respect to such Expiration Put (but otherwise without prejudicing the rights of
any party hereto with respect to a breach of such provisions by any other
party).
1.5. Maintenance of Percentage Ownership. If, at any time, or from time
to time, (i) True North shall own securities having 20% or more of the total
voting rights of all issued and outstanding equity of Communication (after
giving pro forma effect to any Expiration Put, True North Maintenance Right,
Remainder Put, Remainder Call or any prior exercise of the Percentage Purchase
Right (as defined below) in each case if then exercised but not yet
consummated), (ii) Communication issues or plans to issue a number of shares of
Communication Stock or other equity securities (whether a new issuance of
securities, securities issued upon the exercise of an option, warrant or
conversion or an exchange right or other similar dilutive event (other than a
repurchase by Communication or purchase by Publicis of Communication Stock from
True North or its subsidiaries)) which would result, upon the consummation of
the transaction giving rise to such issuance, in True North's owning securities
having less than 20% of the total voting rights of each class of issued and
outstanding equity securities of Communication (based on the number of
outstanding shares) all as determined in accordance with clause (i) above, and
(iii) the Communication Stock is not listed on a major European stock exchange
on the date of the consummation of such issuance (upon the occurrence of (i),
(ii) and (iii), the date of the consummation of such issuance being a "Dilution
Date"), True North shall have the right, in its sole discretion, to purchase
from Publicis and/or Communication (who shall determine in their sole discretion
which of whom shall sell such shares), and Publicis and/or Communication, as the
case may be, shall be obligated to sell to True North, a number of shares of
Communication Stock or other equity securities, as applicable, of Communication
(the "Percentage Purchase Right") such that, following the consummation of such
purchase and the consummation of the transaction giving rise to the occurrence
of such Dilution Date, True North shall own securities representing 20% of the
total voting rights of each class of issued and outstanding equity securities of
Communication, all as determined in accordance with clause (i) above. If either
Publicis or Communication is prohibited under applicable law to sell its shares
to True North pursuant to the
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preceding sentence, then the party not so prohibited shall sell such shares to
True North pursuant to the preceding sentence. The price per share of
Communication Stock or other equity securities to be purchased by True North
pursuant to the Percentage Purchase Right shall be the fair value of the per
share consideration received by Communication in connection with the transaction
giving rise to the occurrence of such Dilution Date (the "Transaction
Valuation"). Notwithstanding the foregoing, to the extent that Communication
issues options, warrants or purchase or subscription rights or any other non-
voting security which converts into or can be exchanged for shares of
Communication Stock or other voting security of Communication, the parties agree
that a Dilution Date shall not have occurred with respect to such securities,
until such time as the voting securities underlying such options, warrants,
rights or other securities are issued. In respect of an event which both gives
rise to a Dilution Date and constitutes a Publicis Acquisition, True North must
elect between exercising a Percentage Purchase Right under Section 1.5 and
exercising a True North Maintenance Right under Section 1.12. If either of such
rights is exercised and consummated, True North's rights to (a) request the
listing of Communication Stock pursuant to Section 1.6 and (b) exercise the
Dilution Put pursuant to Section 1.6.1 shall be extinguished in respect of such
event.
1.5.1. If Communication intends to issue additional shares of
Communication Stock or other securities in an amount which would give rise to
the occurrence of a Dilution Date, it shall give True North written notice not
less than 10 Business Days in advance of the consummation of such event, which
notice shall include the number of shares of Communication Stock or other
securities which would be subject to the Percentage Purchase Right, the
Transaction Valuation of such shares and sufficient information regarding such
issuance transaction in order to reasonably substantiate the Transaction
Valuation. So long as the Transaction Valuation has been approved by a majority
of the three Outside Directors (as defined below) and by the Board of Directors
of Communication, such Transaction Valuation shall be conclusive and binding
upon the parties. Upon receipt of such notice, True North shall have 5 Business
Days to give written notice to Communication that it wishes to exercise its
Percentage Purchase Right with respect to such transaction. After True North has
given written notice to Publicis of its exercise of the Percentage Purchase
Right, such notice shall be irrevocable, and True North shall be bound to buy
from Publicis and/or Communication and Publicis and/or Communication shall be
bound to sell to True North that number of shares of Communication Stock
specified in Communication's notice at the Transaction Valuation. The purchase
and sale of shares pursuant to the Percentage Purchase Right shall be
consummated simultaneously with the issuance transaction giving rise to such
right, payment to be made by True North by certified check payable to Publicis
and/or Communication, as the case may be.
1.6. Listing of Communication Stock if Ownership Diluted. Upon (i) True
North having received written notice of the anticipated occurrence of a Dilution
Date in accordance with Section 1.5.1, (ii) the occurrence of any Dilution Date
and (iii) True North's failure to elect to exercise its Percentage Purchase
Right with respect to such Dilution Date within the time period specified in
Section 1.5.1, and upon the written request of True North given to Communication
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within 5 Business Days following the Dilution Date, Publicis and Communication
agree to use their respective best efforts to cause to be offered to the public
and listed (within 120 days following the Dilution Date) on a major European
stock exchange the Communication Stock. True North may request in such notice
that any amount of its Communication Stock be included in such offering and
listing, but shall be entitled only to have offered in the offering up to, but
no more than, 50% of the Communication Stock owned by True North in the
aggregate at the time True North requests for its shares or, if higher, up to,
but not more than, 50% of the Communication Stock owned by True North
immediately prior to the consummation of such offering (to the extent so
requested by True North). True North's request shall include a schedule which
shall set forth the amount of shares of Communication Stock which True North
requests Communication to include in the offering assuming a range of
hypothetical offering prices. Subject to its rights to withdraw from such
offering, as set forth in this Section, True North shall use all commercially
reasonable efforts to cooperate with Communication and its agents and advisors
in effecting such offering. The obligations of the parties with respect to the
offering and listing shall be treated as set forth in Section 1.3.1. The
obligations of the parties with respect to indemnification and expenses of the
offering and listing shall be treated as set forth in Sections 1.3.2 and 1.3.3.,
respectively.
1.6.1. Put of Communication Stock if Ownership Diluted and Communication
Stock Not Listed. If True North makes a written request pursuant to Section 1.6
and the listing of the Communication Stock has not occurred within the 120 day
period specified in Section 1.6, True North shall have the right, in its sole
discretion and on one occasion per Dilution Date occurrence, which right shall
be exercisable by written notice to Publicis for 30 days immediately following
the expiration of such 120 day period, to require Publicis to purchase from True
North (the "Dilution Put") all, but not less than all, of the shares of
Communication Stock owned by True North on the date of such notice (the
"Dilution Notice Date"), at the Dilution Price, calculated pursuant to the terms
of Section 1.6.2, subject to appropriate adjustments for stock dividends,
splits, combinations, exchanges, or similar events, occurring subsequent to such
date but prior to the consummation of such Dilution Put, and upon exercise of
the Dilution Put, Publicis shall be bound to purchase such shares from True
North and tender the purchase price therefor, and True North shall be bound to
tender such shares and convey ownership of such shares to Publicis, free of all
Encumbrances, all in accordance with Section 1.6.3. For the avoidance of doubt,
the parties agree that neither the existence of the Percentage Purchase Right
nor the Dilution Put shall relieve Publicis or Communication from their
respective obligations pursuant to Section 1.6 to use their respective best
efforts to offer and list the Communication Stock.
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1.6.2. The Dilution Price shall be equal to (X) the number of shares of
Communication Stock owned by True North on the Dilution Notice Date multiplied
by (Y) the sum of (1)(A) 75% of the fair market value as of the Dilution Notice
Date of the block of Communication Stock owned by True North on the Dilution
Notice Date, as determined pursuant to the procedures set forth in Section
1.4.1, divided by (B) the number of shares of Communication Stock owned by True
North on the Dilution Notice Date, and (2) 25% of the Put/Call Price of
Communication Stock, as determined pursuant to Section 1.1.1 as appropriately
modified to replace all references to the Remainder Put with the Dilution Put.
1.6.3. Subject to the conditions set forth in Section 1.6.1, if True North
wishes to exercise the Dilution Put, it shall give Publicis written notice of
such exercise within 30 days of the expiration of the 120 day period referred to
in Section 1.6, together with True North's estimated calculation of Put/Call
Price (if then available) and True North's selection of a globally-recognized
investment bank. The purchase and sale of such shares shall be consummated
within 20 Business Days following the determination of the Dilution Price. In
exchange for the payment by Publicis of the aggregate Dilution Price determined
pursuant to Section 1.6.2, which shall be payable by Publicis by wire transfer
of immediately available funds in French Francs to a bank or other financial
institution designated by True North, True North shall convey ownership of all
of the Communication Stock owned by True North on the Dilution Notice Date to
Publicis, free of all Encumbrances. After True North has given written notice to
Publicis of its exercise of the Dilution Put, such notice shall be irrevocable,
and True North shall be bound to sell to Publicis and Publicis shall be bound to
buy from True North that number of shares of Communication Stock owned by True
North on the Dilution Notice Date.
1.6.4. Subsequent Dilutive Events. True North's rights under Sections 1.5
through 1.6.1 of this Agreement shall apply with respect to each successive
subsequent Dilution Date.
1.7. Transactions on Arm's Length Basis. So long as True North owns at
least 10% of the issued and outstanding shares of Communication Stock, any
significant transactions effected by Communication shall be effected on an arm's
length basis; provided, that this Section shall not apply to the merger or other
combination of PBV and Communication or acquisition of PBV by Communication.
1.8. Communication Directors. As soon as practicable, but no later than
60 days after the consummation of the transactions contemplated by this
Agreement and in all events prior to the consummation or corporate approval of
any transaction to transfer to Communication agencies owned by Publicis, and so
long thereafter as True North owns at least 10% of the issued and outstanding
shares of Communication Stock, Communication shall elect to its Board of
Directors three members who have no prior significant relationship with
Publicis, True North or the directors or senior officers of either (the "Outside
Directors"). Publicis and Communication shall consult with True North prior to
the appointment of the three Outside Directors. A majority of the three Outside
Directors and the Board of Directors of Communication must approve any
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transaction (other than those specifically contemplated by this Agreement or the
Memorandum of Agreement) of Communication, including transactions with Publicis
or any affiliates of Publicis, that a majority of the three Outside Directors
deem to be significant.
1.9. True North Director.
(a) If at any time or from time to time True North owns at least 18%
of the issued and outstanding shares of Communication Stock, True North shall
have the right to nominate and have elected one member of the Board of Directors
of Communication.
(b) If, as a result of the occurrence of a Dilution Date or Publicis
Acquisition, True North shall own less than 18% of the issued and outstanding
shares of Communication Stock and True North shall have given (and not
withdrawn) notice to Communication of its exercise of the Percentage Purchase
Right or the True North Maintenance Right, as the case may be, True North shall
retain its right to its directorship through the time of closing of such
Percentage Purchase Right or the True North Maintenance Right, as the case may
be.
(c) Following the offering and listing of Communication Stock,
Publicis's and Communication's obligation pursuant to subsection (a) of this
Section 1.9 shall be fulfilled by Publicis and Communication by (i) the
inclusion of the nominee proposed by True North in the slate of nominees
recommended by the Communication Board of Directors to stockholders for election
as directors at the next annual meeting of stockholders of Communication if True
North owns at least 18% of the issued and outstanding shares of Communication
Stock at the time of slating of such nominees, (ii) Communication using
reasonable efforts to cause the shares for which Communication's management or
Board of Directors holds proxies or is otherwise entitled to vote to be voted in
favor of such nominee and (iii) Publicis voting, or causing the vote of, shares
of Communication Stock owned by it or any of its affiliates in favor of such
nominee. Following the offering and listing of Communication Stock, if, as a
result of the issuance of shares of Communication Stock or similar dilutive
event affecting the Communication Stock, True North shall own less the 18% of
the issued and outstanding shares of Communication Stock at the time of slating
of the nominees recommended by the Communication Board of Directors to its
stockholders for election of directors at any annual meeting of stockholders of
Communication, Communication shall give True North written notice of the slating
of directors and that True North owns less than 18% of the issued and
outstanding shares of Communication and if, within 5 Business Days of receipt of
such notice, True North gives Communication written notice stating that True
North intends to purchase additional shares of Communication Stock such that
True North will own at least 18% of the issued and outstanding shares of
Communication Stock within six months of the date of such notice from True North
to Communication, Communication shall continue to fulfill its obligations under
clauses (i), (ii) and (iii) of the preceding sentence for such six month period;
provided, however, that if True North does not effect such purchases within such
six month period, True North, upon Communication's request, shall cause its
designee on the Communication Board of Directors to immediately resign.
Following such resignation, all of Communication's obligations with respect to
this Section 1.9 shall terminate. If at any time True North shall own less than
18% of the issued and outstanding shares of Communication Stock for any reason
other than the issuance of shares of Communication Stock or similar dilutive
event affecting the Communication Stock, True North, at the request of
Communication, shall cause its designee on the Communication Board of Directors
to immediately resign. Following such resignation, all of
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Communication's obligations with respect to this Section 1.9 shall terminate.
True North acknowledges that the Communication Board of Directors may form a
committee, which does not include the True North designee, to consider issues
involving a direct conflict between True North and Communication, provided that
the formation of any such committee shall be approved by a majority of the non-
management directors of Communication (excluding the True North designee). It is
further understood and agreed that True North's designee shall not be an officer
or director or employee of True North or any of its affiliates.
1.10. Financial Reports and Appraisals.
(a) So long as True North owns at least 10% of the issued and
outstanding shares of Communication Stock, Communication shall (i) provide all
financial and other information reasonably requested by True North for purposes
of True North's compliance with U.S. income tax laws and other U.S. regulatory
requirements, (ii) cause its independent auditors to complete their annual audit
and provide the results to True North before February 15 of each year, and shall
provide True North with unaudited quarterly consolidated financial results
before April 30, July 30, and October 30 of each year.
(b) The parties acknowledge that in connection with the transactions
contemplated in this Agreement, True North desires to obtain such independent
appraisals as are necessary to support the necessary or desirable accounting for
financial tax reporting purposes. Each of Publicis, Communication and PBV agrees
to use all commercially reasonable efforts to provide the assistance necessary
to enable True North to obtain such appraisals.
1.11. Transfer of Publicis Agency Network; True North Consent. Prior to
the earlier of (i) the offering and listing of Communication Stock on a major
European stock exchange or (ii) December 31, 1998, Publicis, Communication and
PBV agree to combine or merge Communication and PBV and to transfer for
consideration the Publicis global agency network owned by Publicis so that such
global network is owned by Communication. True North authorizes and consents to
any and all transactions designed to combine or merge Communication with PBV and
any and all transactions designed to transfer the Publicis global agency network
owned by Publicis so that such global network is owned by Communication.
Following such transactions, Communication and its subsidiaries will be the
holding company of the worldwide agency network for Publicis. It is understood
and agreed that all such material transactions between Communication and
Publicis will be effected on an arm's length basis.
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1.12. True North Maintenance Right. In the event that, prior to the
completion of an initial public offering of the Communication Stock,
Communication acquires any entity or interest from Publicis in a transaction
involving the issuance of Communication Stock or other equity of Communication
(a "Publicis Acquisition"), True North shall have the right, in its sole
discretion, to purchase from Publicis and/or Communication (who shall determine
in their sole discretion which of whom shall sell such shares), and Publicis
and/or Communication, as the case may be, shall be obligated to sell to True
North, a number of shares of Communication Stock or other securities (the "True
North Maintenance Right") such that, following the consummation of such purchase
and the consummation of such acquisition by Communication, True North shall own
the same percentage of shares of Communication Stock owned by True North
immediately prior to the Publicis Acquisition and to the extent of issuance of
any other class of equity securities, True North shall own the same percentage
of such other class as it owned of Communication Stock immediately prior to the
Publicis Acquisition (after giving effect to the consummation of any Liquidity
Right (as defined below) if such right was exercised and not withdrawn, but not
yet consummated). For purposes of this Agreement the term "Liquidity Right"
shall mean the Percentage Purchase Right, the listing of Communication Stock
pursuant to Section 1.4 or 1.6, the Dilution Put, the Remainder Put, the
Remainder Call and the Expiration Put. If either Publicis or Communication is
prohibited under applicable law to sell its shares to True North pursuant to the
preceding sentence, then the party not so prohibited shall sell such shares of
Communication Stock or other securities to True North pursuant to the preceding
sentence. The price per share of Communication Stock to be purchased by True
North pursuant to the True North Maintenance Right shall be the per share value
of the consideration received by Communication in connection with such Publicis
Acquisition. In respect of an event which both gives rise to a Dilution Date and
constitutes a Publicis Acquisition, True North must elect between exercising a
Percentage Purchase Right under Section 1.5 and exercising a True North
Maintenance Right under Section 1.12. If either of such rights is exercised and
consummated, True North's rights to (a) request the listing of Communication
Stock pursuant to Section 1.6 and (b) exercise the Dilution Put pursuant to
Section 1.6.1 shall be extinguished in respect of such event.
1.12.1. If Communication intends to consummate a Publicis Acquisition, it
shall give True North written notice not less than 10 Business Days in advance
of the consummation of such event, which notice shall include the number of
shares of Communication Stock or other securities subject to the True North
Maintenance Right, the price per share and sufficient information regarding such
issuance transaction in order to reasonably substantiate the price per share. So
long as the price per share has been approved by a majority the three Outside
Directors and by the Board of Directors of Communication, such price per share
shall be conclusive and binding on the parties. Upon receipt of such notice,
True North shall have 5 Business Days to give written notice to Communication
that it wishes to exercise its True North Maintenance Right with respect to such
transaction. After True North has given written notice to Publicis of its
exercise of the True North Maintenance Right, such notice shall be irrevocable,
and True North shall be bound to buy from Publicis and/or Communication and
Publicis and/or Communication shall be bound to sell to True North that number
of shares of Communication Stock specified in Communication's notice at
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such aggregate price. The purchase and sale of shares pursuant to the True North
Maintenance Right shall be consummated simultaneously with the issuance
transaction giving rise to such right, payment to be made by True North by
certified check payable to Publicis and/or Communication, as the case may be.
1.13. Communication May Act for Publicis; Guarantee. The parties agree
that Publicis shall have the right, acting in its sole discretion, to assign to
Communication Publicis's rights and/or obligations to purchase shares of
Communication Stock from True North, pay the purchase price therefor and fulfill
any or all of the obligations of Publicis in connection therewith in the event
of the exercise of any Remainder Put, Remainder Call, Expiration Put, Dilution
Put or rights pursuant to Section 1.16; provided, that in the event of any such
assignment, Publicis shall remain liable for the performance of any and all
obligations owing to True North in any such event. Publicis hereby guarantees
the performance of all obligations of Communication under this Agreement.
1.14. True North Equity Rights. For purposes of Article I, references to
shares of Communication Stock owned by True North shall be deemed to refer to
shares of Communication Stock owned by True North and its subsidiaries, in the
aggregate. In the event that True North shall acquire, upon exercise of a
Percentage Purchase Right or a True North Maintenance Right, any shares of a
class of equity securities other than Communication Stock, such shares shall be
includible in any other Liquidity Right (other than the obligation of
Communication to list equity securities pursuant to sections 1.4 or 1.6).
1.15. Currency. All references to French Francs shall be deemed to refer
to French Francs or any successor currency.
1.16. Publicis Maintenance of Majority Control of Communication.
(a) In the event that, following an acquisition by Communication of a
privately held advertising company, an exercise by True North of its Percentage
Purchase Right or its True North Maintenance Right, together with the issuance
of Communication Stock or other securities giving rise thereto, would result in
Publicis owning securities having less than 51% of the total voting rights of
each class of issued and outstanding equity securities of Communication (based
on the number of outstanding shares), Communication shall issue non-voting
securities to True North in lieu of voting securities to the extent required to
maintain such 51% control by Publicis. Such non-voting securities shall be
identical in all respects (other than voting rights) to the Communication Stock
or other securities otherwise issuable pursuant to the Percentage Purchase Right
or True North Maintenance Right, as applicable, and shall be issued upon the
same price and other terms. For purposes of the percentage threshold
requirements of Sections 1.9 and 1.10, such non-voting securities shall be
treated as if they had the same voting rights as the voting securities otherwise
issuable.
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(b) If (i) notwithstanding True North's exercise of its commercially
reasonable efforts to maintain equity accounting treatment for its investment in
Communication, it is unable to do so under United States generally accepted
accounting principles due solely to its receipt of non-voting securities in lieu
of voting securities pursuant to Section 1.16(a), and (ii) the Communication
Stock has not been listed on a major European stock exchange, then True North
shall promptly notify Publicis in writing of its inability to maintain equity
accounting treatment, and Publicis shall purchase from True North, and True
North shall sell to Publicis, all such non-voting securities at the same price
originally paid for them by True North. The purchase and sale of such shares
shall be consummated within 20 Business Days following the date of True North's
notice. In exchange for the payment by Publicis of the aggregate price for such
non-voting securities, which shall be payable by Publicis by wire transfer of
immediately available funds in French Francs to a bank or other financial
institution designated by True North, True North shall convey ownership of all
of such non-voting securities to Publicis, free of all Encumbrances.
(c) True North may elect in addition, in its notice given pursuant to
Section 1.16(b), to require Publicis to purchase from True North (the
"Accounting Put") all, but not less than all, of the shares of Communication
Stock owned by True North on the date of such notice (the "Accounting Notice
Date"), at the Accounting Price, as defined below, subject to appropriate
adjustments for stock dividends, splits, combinations, exchanges, or similar
events, occurring subsequent to such date but prior to the consummation of such
Accounting Put, and upon exercise of the Accounting Put, Publicis shall be bound
to purchase such shares from True North and tender the purchase price therefor,
and True North shall be bound to tender such shares and convey ownership of such
shares to Publicis, free of all Encumbrances, all in accordance with this
paragraph (c). True North shall specify in such notice its selection of a
globally-recognized investment bank. The Accounting Price will be determined as
follows: The percentage of voting shares of Communication owned by True North at
the time of the Accounting Notice Date multiplied by the fair market value of
the combined enterprise of Communication and the acquired or merged entity. The
fair market value of the combined enterprise will be established pursuant to the
procedures set forth in Section 1.4.1. The purchase and sale of such shares
shall be consummated within 20 Business Days following the determination of the
Accounting Price. In exchange for the payment by Publicis of the aggregate
Accounting Price, which shall be payable by Publicis by wire transfer of
immediately available funds in French Francs to a bank or other financial
institution designated by True North, True North shall convey ownership of all
of the Communication Stock owned by True North on the Accounting Notice Date to
Publicis, free of all Encumbrances.
Article II
Other Agreements
----------------
2.1. Covenants and Consents of True North with Respect to South Africa,
Thailand, Argentina and India.
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2.1.1. True North, on its own behalf and to the extent of its ownership
interest in any direct or indirect subsidiaries and investees, hereby (i) waives
any and all pre-emptive or similar rights it has or may have with respect to the
shares of the Partnership agency in South Africa and (ii) consents to the sale
by Lindsay Smithers/FCB or any of its affiliates to Publicis or any of its
affiliates of 100% of the Partnership agency in South Africa, as agreed by the
parties.
2.1.2. At the Closing, True North agrees that it shall pay Publicis, by
certified check payable to Publicis, US $310,000. Such payment represents True
North's allocated portion of the purchase price to be paid by Publicis for the
Prakit-Publicis agency in Thailand. If Publicis has not acquired the Prakit-
Publicis agency as contemplated by the Thailand Agreement (as defined below)
prior to June 30, 1998, then Publicis shall pay True North, by certified check
payable to True North, US$310,000 within 30 days following such date; provided,
however, that Publicis shall not be required to pay such US $310,000 if the
failure to acquire the Prakit-Publicis agency results directly or indirectly
from the breach by True North or any of its affiliates of the obligations set
forth in the Agreement (Thailand) among the parties hereto dated as of the date
hereof (the "Thailand Agreement").
2.1.3. True North agrees to service the Nestle, L'Oreal and other Publicis
client accounts in Argentina through Pragma/FCB pursuant to the terms of Section
2.6 of this Agreement until such time as Publicis shall have established stand-
alone operations in Argentina. At such time as Publicis notifies True North that
it has established stand-alone operations in Argentina, True North shall,
pursuant to Section 2.7 of this Agreement, transfer the Nestle, L'Oreal and
other Publicis client accounts, if any, to Publicis' stand-alone agency.
2.1.4. True North agrees that until the consummation of the transactions
contemplated by the Thailand Agreement and the Agreement (India) among the
parties hereto dated as of the date hereof (the "India Agreement"), True North
will service the Nestle, L'Oreal and other Publicis client accounts, if any, in
Thailand and India through Prakit/FCB and FCB/Ulka, respectively, pursuant to
the terms of Section 2.6 of this Agreement. If, for any reason, the transactions
contemplated by either the Thailand Agreement and the India Agreement are not
consummated, True North agrees to continue to service the Nestle, L'Oreal and
other Publicis client accounts, if any, in Thailand and India pursuant to
Section 2.6. Pursuant to Section 2.7 of this Agreement, True North agrees to
transfer the Nestle, L'Oreal and other Publicis client accounts to Publicis
stand-alone agency.
2.2 Publicis Director.
(a) If at any time or from time to time Communication owns at least 18% of
the issued and outstanding shares of the Common Stock, par value $.33 1/3 per
share (the "True North Stock"), Communication shall have the right to nominate
and have elected one member of the Board of Directors of True North.
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(b) True North's obligation pursuant to the preceding sentence has been
fulfilled by True North by the nomination of Communication's designee for
election to the True North Board of Directors at the 1997 Annual Meeting (unless
such designee is then serving on such Board of Directors) and its commitment to
use its reasonable best efforts to cause the shares for which True North's
management or Board of Directors holds proxies or is otherwise entitled to vote
to be voted in favor of such nominee and thereafter by (i) the inclusion of the
nominee proposed by Communication in the slate of nominees recommended by the
True North Board of Directors to stockholders for election as directors at the
next annual meeting of stockholders of True North if Communication owns at least
18% of the issued and outstanding shares of True North stock at the time of
slating of such nominees, and (ii) True North's using reasonable best efforts to
cause the shares for which True North's management or Board of Directors holds
proxies or is otherwise entitled to vote to be voted in favor of such nominee.
If, as a result of the issuance of shares of True North Stock or similar
dilutive event affecting the True North Stock, Communication shall own less than
18% of the issued and outstanding shares of True North Stock at the time of
slating of the nominees recommended by the True North Board of Directors to its
stockholders for election of directors at any annual meeting of stockholders of
True North, True North shall give Communication written notice of the slating of
directors and that Communication owns less than 18% of the issued and
outstanding shares of True North and if, within 5 business days of receipt of
such notice, Communication gives written notice to True North stating that
Communication intends to purchase additional shares of True North Stock such
that Communication will own at least 18% of the issued and outstanding shares of
True North Stock within six months of the date of such notice from Communication
to True North, True North shall continue to fulfill its obligations under
clauses (i) and (ii) of the preceding sentence for such six month period;
provided, however, that if Communication does not effect such purchases within
such six month period, Communication, at the request of True North, shall cause
its designee on the True North Board of Directors to immediately resign.
Following such resignation, all of True North's obligations with respect to this
Section 2.2 shall terminate. If at any time Communication shall own less than
18% of the issued and outstanding shares of True North Stock for any reason
other than the issuance of shares of True North Stock or similar dilutive event
affecting the True North Stock, Communication shall cause its designee on the
True North Board of Directors to immediately resign. Following such resignation,
all of True North's obligations with respect to this Section 2.2 shall
terminate. Communication acknowledges that the True North Board of Directors may
form a committee, which does not include the Communication designee, to consider
issues involving a direct conflict between Communication and True North,
provided that the formation of any such committee shall be approved by a
majority of the non-management directors of True North (excluding the
Communication designee). It is further understood and agreed that
Communication's designee shall not be an officer or director or employee of
either Publicis or Communication or any of their affiliates.
2.3. Financial Reports. So long as Publicis and/or Communication owns at
least 10% of the issued and outstanding shares of True North Stock, True North
shall provide all financial and other information reasonably requested by
Publicis and/or Communication for purposes of their
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compliance with French and European income tax laws and other French and
European regulatory requirements, shall cause its independent auditors to
complete their annual audit and provide the results to Publicis and
Communication before February 15 of each year, and shall provide Publicis and
Communication with unaudited quarterly consolidated financial results before
April 30, July 30, and October 30 of each year.
2.4. Use of Names.
2.4.1. As between True North, FCBI and TNBV, on the one hand, and
Publicis, Communication and PBV on the other hand, True North and FCBI shall own
all right, title and interest in and to any trademark, service mark or trade
name (collectively "Trademarks") which comprises or incorporates any of the
following: Foote, Cone & Belding, FCB, True North, TN, Impact, Mind & Mood or
Ulka (collectively, the "True North Trademarks").
2.4.2. As between True North, FCBI and TNBV, on the one hand, and
Publicis, Communication and PBV on the other hand, Publicis, Communication and
PBV shall own all right, title and interest in and to any Trademark which
comprises or incorporates any of the following: Publicis, FCA/BMZ or Optimedia
(collectively, the "Publicis Trademarks").
2.4.3. Except as provided for herein, each of True North, FCBI and TNBV
agrees that it will not, and will not permit its subsidiaries to, use, adopt,
apply to register or register any Trademark which comprises or contains a
Publicis Trademark. Except as provided for herein, each of Publicis,
Communication and PBV agrees that it will not, and will not permit its
subsidiaries to, use, adopt, apply to register or register any Trademark which
comprises or contains a True North Trademark. The parties hereby agree that
neither will, nor permit any of their respective subsidiaries to, challenge the
use of the other party's Trademarks anywhere in the world.
2.4.4. As soon as reasonably practicable, but in no event later than 30
days after the consummation of the transactions contemplated by this Agreement,
each party, and each of its respective subsidiaries, shall cease to use any
Trademark owned by the other.
2.4.5. If True North, FCBI or TNBV, or any of their respective
subsidiaries, has obtained a Trademark registration in any country for any
Publicis Trademark or has applied to register a Publicis Trademark in any
country, each of True North, FCBI and TNBV agrees to assign, or cause its
subsidiaries to assign, such Trademark registrations or applications and all its
rights herein to Communication, except for Trademarks comprised of both a
Publicis Trademark and a non-Publicis Trademark, which (rather than being
assigned to Communication) shall be affirmatively abandoned or amended so as to
effectively eliminate all use or reference to the Publicis Trademark. If
Publicis, Communication or PBV or any of their respective subsidiaries has
obtained a Trademark registration in any country for any True North Trademark or
has applied to register a True North Trademark in any country, each of Publicis,
Communication and PBV agrees
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to assign, or cause its subsidiaries to assign, such Trademark registrations or
applications and all its rights therein to True North, except for Trademarks
comprised of both a True North Trademark and a non-True North Trademark, which
(rather than being assigned to True North) shall be affirmatively abandoned or
amended so as to effectively eliminate all use or reference to the True North
Trademark.
2.4.6. None of True North, FCBI or TNBV, nor any of their respective
subsidiaries, has granted nor is obligated to grant a license, assignment or
other right in respect of any Publicis Trademark nor has it sold or otherwise
encumbered any Publicis Trademark. None of Publicis, Communication nor PBV, nor
any of their respective subsidiaries, has granted nor is obligated to grant a
license, assignment or other right in respect of any True North Trademark nor
has it sold or otherwise encumbered any True North Trademark.
2.4.7. Each party agrees to work diligently to identify all Trademarks or
registrations or applications therefor worldwide which are subject to this
Agreement and to take those steps that may be necessary to effectuate the
purposes of this Agreement when and as any such Trademark or registration or
application therefor becomes known to it. Each party shall advise the other when
and as it learns of any information concerning any such Trademarks or
registrations or applications therefor. The parties further agree that they will
cooperate with each other in all reasonable respects regarding this Agreement
and each will promptly execute any document reasonably necessary to facilitate
the protection by the other party of its Trademarks anywhere in the world. The
parties further agree that they will cause any entity owned or controlled by
either of them to cooperate in effectuating the terms of this Agreement and to
execute any document necessary to facilitate the terms of this Agreement.
2.5. Coordination Fees. Each of True North, FCBI and TNBV, on the one
hand, and Publicis, Communication and PBV, on the other hand, shall pay to the
other coordination fees of 1% of capitalized billings for "qualified
international accounts" (as hereinafter defined), computed as being 6.67% of
revenue from such qualified international accounts. Such fees shall be payable
hereunder retroactively from January 1, 1996. Each of True North, FCBI and TNBV,
on the one hand, and Publicis, Communication and PBV, on the other hand, agree
to pay all such fees due in respect of billings during calendar year 1996 on or
prior to June 30, 1997, such payment to be made by certified check. All fees due
in respect of each succeeding calendar year, including 1997, shall be due and
payable on June 30 of the year immediately following such year, such payment to
be made by appropriate means. Each of True North, FCBI and TNBV, on the one
hand, and Publicis, Communication and PBV, on the other hand, agree to provide
the other party with such information requested by such party as is reasonably
required in order to substantiate such fee requests. "Qualified international
accounts" are clients which are (i) aligned on a worldwide basis with either
Publicis or True North, (ii) served by a worldwide coordination team working
with an agency consisting of agency employees located in proximity to the
client's headquarters and delivering services through local agencies and (iii)
coordinated on and administered by such team through a global network of local
agencies. Specific clients which will be "qualified international
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accounts" for 1996 and subsequent years, if any, will be jointly agreed upon by
the CEO of Communication and the CEO of FCB
2.6. Collaboration in Certain Countries. For a period of one year from
the date of this Agreement, each of Publicis, Communication and PBV, on the one
hand, and True North, FCBI and TNBV, on the other hand, shall, upon request,
service clients of the other in countries where the other has not established
operations. This covenant shall be renewable for additional one year terms by
either party upon the delivery of written notice to the other prior to the 60th
day prior to the expiration of such period. Each of the foregoing arrangements
shall be terminable on a country-by-country basis by either party upon 6 weeks
prior written notice.
2.7. Transfer of Certain Clients, Employees. Subject to the parties
understanding that the concurrence of a client to a transfer of its account from
one agency to another is the way the advertising business works (and it is the
parties' assumption that neither party will attempt to obstruct such
concurrence), each client of Publicis, Communication and PBV, on the one hand,
and True North, FCBI and TNBV, on the other hand, whose account was managed by
the other party because such client was located within the other party's "sphere
of influence" (within the meaning of such term under the Master Alliance
Agreement referred to below), shall be transferred to the party having the
worldwide agreement with such client. Such transfer shall be effected as soon as
possible after the party having such worldwide agreement has available to it, in
its sole judgment, agencies capable of serving such transferred client.
Employees of the transferring party responsible primarily for the servicing of
such transferred client shall be given the opportunity to leave the employ of
the transferring party and become employed by the agency to whom the client is
to be transferred.
2.8. Termination of Adversarial Proceedings; Releases. Each of Publicis,
Communication and PBV, and their respective subsidiaries, on the one hand and
True North, FCBI and TNBV, and their respective subsidiaries, on the other hand,
shall immediately and irrevocably terminate with prejudice any and all
adversarial proceedings now pending between them, of every nature and in every
forum, including all litigation or arbitration which arises out of events
occurring prior to the date of this Agreement.
2.8.1. Non-Assignment of Claims. Each of True North, FCBI and TNBV
represents and warrants, on behalf of themselves and their respective
subsidiaries, to Publicis, Communication and PBV that it has not assigned and
will not assign any claim it may have against the Publicis Released Parties, as
defined in paragraph 2.8.2 herein, to any other person or entity. Each of
Publicis, Communication and PBV, on behalf of themselves and their respective
subsidiaries, represent and warrant to True North, FCBI and TNBV that they have
not assigned and will not assign any claim they may have against the True North
Released Parties, as defined in paragraph 2.8.3 herein, to any other person or
entity.
2.8.2. True North Release of Publicis. Each of True North, FCBI and TNBV,
on behalf
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of themselves, their respective subsidiaries, and each of their respective
officers, directors, employees and affiliates, hereby releases, remises and
forever discharges Publicis, Communication, PBV, their respective subsidiaries
and each of their respective present and former officers, directors, employees,
shareholders, principals, affiliates, subsidiaries, consultants and agents
(collectively, the "Publicis Released Parties") from all actions, causes of
action, suits, debts, dues, sums of money, claims for unpaid remuneration,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, obligations, claims and demands whatsoever ("True North
Claims"), in contract or tort, in law or equity, whether known or unknown,
including without limitation, all True North Claims arising under or related in
any way to the Master Alliance Agreement and the other agreements and
undertakings contemplated thereby, which True North or True North's successors
and assigns ever had, now have or hereafter can, shall or may have against the
Publicis Released Parties for, upon, or by reason of any matter, cause or thing
whatsoever from the beginning of the world to the date hereof, but excluding any
True North Claims relating to or arising under this Agreement and the other
Operative Agreements (as hereinafter defined).
2.8.3. Publicis Release of True North. Each of Publicis, Communication
and PBV, on behalf of themselves, their respective subsidiaries, and each of
their respective officers, directors, employees and affiliates, hereby releases,
remises and forever discharges True North, FCBI, TNBV, their respective
subsidiaries and each of their respective present and former officers,
directors, employees, shareholders, principals, affiliates, subsidiaries,
consultants and agents (collectively, the "True North Released Parties") from
all actions, causes of action, suits, debts, dues, sums of money, claims for
unpaid remuneration, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, obligations, claims and demands whatsoever
("Publicis Claims"), in contract or tort, in law or equity, whether known or
unknown, including without limitation, all Publicis Claims arising under or
related in any way to the Master Alliance Agreement and the other agreements and
undertakings contemplated thereby, which Publicis or Publicis's successors and
assigns ever had, now have or hereafter can, shall or may have against the True
North Released Parties for, upon, or by reason of any matter, cause or thing
whatsoever from the beginning of the world to the date hereof, but excluding any
Publicis Claims relating to or arising under this Agreement and the other
Operative Agreements.
2.9. Publicis Consent to Certain Transactions. Subject to the provisions
of Section 2.4, each of Publicis, Communication and PBV authorizes and consents
to any and all transactions by True North and its subsidiaries in Europe
designed to establish an independent True North network in Europe; provided that
such authorization and consent shall not extend to the solicitation by any of
True North, FCBI, TNBV or any of their respective subsidiaries of employees or
clients of any of Publicis, Communication or PBV or their respective
subsidiaries.
2.10. Status of Alliance Agreements. The parties hereto hereby confirm
the status of the
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following agreements previously entered into between and among the parties
hereto:
a. The Master Alliance Agreement dated as of January 1, 1989 between
Communication and True North (then known as Foote, Cone & Belding
Communications, Inc.) has been terminated in its entirety and has no
current or further force or effect.
b. The Publicis Communication Shareholders Agreement dated as
January 1, 1989 among Communication, Publicis and True North (then
known as Foote, Cone & Belding Communications, Inc.) has been
terminated in its entirety and has no current or further force or
effect.
c. The FCB Stockholders Agreement dated as of January 1, 1989
between Communication and True North (then known as Foote, Cone &
Belding Communications, Inc.) has been terminated in its entirety and
has no current or further force or effect.
d. The PBV Stockholders Agreement dated as of January 1, 1989 among
Communication, FCBI and PBV has been terminated in its entirety and
has no current or further force or effect.
e. The Publicis Undertaking made and entered into as of January 1,
1989 by Publicis has been terminated in its entirety and has no
current or further force or effect.
f. The Multiparty Arbitration Agreement dated as of January 1, 1989
among Communication, Publicis, FCBI, True North and PBV has been
terminated in its entirety and has no current or further force or
effect.
g. The Registration Rights Agreement dated as of January 1, 1989
(the "Registration Rights Agreement") between Communication and True
North (then known as Foote, Cone & Belding Communications, Inc.) is,
as of the date hereof, in full force and effect and is hereby agreed
by the parties to be in all respects reaffirmed, remade and ratified;
provided, that the arbitration provisions contained in Sections 8(b)
and (c) thereof are agreed by the parties to be replaced with the
arbitration provisions contained in Sections 3.4.2 through 3.4.10
hereof.
In respect of each of the agreements referred to in this Section, each of the
parties hereto agrees to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable laws and
regulations to confirm the terminations provided for under clauses a through f,
and the reaffirmation provided for under clause g, of this Section.
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2.11. Right of Communication to Buy True North Stock. True North agrees
that it shall not on or before March 31, 2000 (i) amend the Rights Agreement,
dated as November 16, 1988, between True North (then known as Foote, Cone &
Belding Communications, Inc.) and Harris Trust and Savings Bank, to establish an
ownership threshold below 22% as it relates to Communication, (ii) adopt a new
rights agreement (or other device similar to a rights agreement) with an
ownership threshold below 22% as it relates to Communication; or (iii) amend its
bylaws, certificate of incorporation or fail to take an action under Section 203
of the Delaware General Corporation law (or the analogous statute in another
jurisdiction applicable to True North) which would limit Communication's ability
to beneficially own up to 22% of the outstanding shares of True North Stock.
2.12. Payment of Fees. Upon the consummation of the transactions
contemplated by this Agreement and as a condition to the transfers contemplated
by the Share Repurchase and Share Exchange Agreement (as hereinafter defined),
True North agrees that it shall pay Publicis, by certified check payable to
Publicis, US$2,300,000 in respect of coordination and development fees due for
the years 1992, 1993, 1994 and 1995.
2.13. Payment of Dividends. At the Closing, True North agrees that it
shall pay Publicis, by certified check payable to Publicis, FFr 8,500,000 (less
an agreed amount to provide for True North's anticipated tax burden, if any) in
respect of dividends of Gnomi FCB Athens for the years 1992, 1993, 1994 and
1995.
2.14. Closing of All Transactions. The Closing (as defined below) shall
take place on Tuesday, June 10, 1997 (the "Closing Date") at 10:00 a.m. U.S.
Eastern Daylight Time at the offices of Howard, Darby & Levin, 1330 Avenue of
the Americas, New York, NY USA. All of the actions to be taken and documents to
be executed and delivered at the closing shall be deemed to be taken, executed
and delivered simultaneously, and no such action, execution or delivery shall be
effective until all actions to be taken and execution and deliveries to be
effected at the closing are complete.
At the Closing:
(1) the transactions contemplated by the Share Purchase and Share
Exchange Agreement shall be consummated;
(2) the transactions contemplated by the Germany Agreement shall be
consummated;
(3) the parties shall execute and deliver the definitive agreement
contemplated by the Australian Agreement; and
(4) True North shall pay to Publicis:
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(i) U.S.$310,000 pursuant to Section 2.1.2.
(ii) U.S.$2,300,000 pursuant to Section 2.12.
(iii) FFr 8,500,000 (less an agreed amount to provide for True
North's anticipated tax burden, if any) pursuant to Section 2.13.
2.15. Effective Date of Transactions. The parties agree that the
effective date of the transactions contemplated by the Share Repurchase and
Share Exchange Agreement shall be January 1, 1997. Notwithstanding the
foregoing, the parties acknowledge that True North reserves the right to treat
the closing date of such transactions as the effective date for US financial and
tax reporting purposes.
Article III
Miscellaneous
3.1. Entire Agreement. This Agreement, the Memorandum of Agreement
dated February 19, 1997 (the "Memorandum of Agreement") among Publicis,
Communication, PBV, True North, Foote, Cone & Belding Communications Inc., FCBI,
the Registration Rights Agreement, the Share Repurchase and Share Exchange
Agreement, dated as of the date hereof (the "Share Repurchase and Share Exchange
Agreement"), the India Agreement, the Thailand Agreement, the Germany Agreement,
the Pooling Agreement and the Australian Agreement (collectively, the "Operative
Agreements") constitute the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and supersede all prior
agreements and understandings among the parties relating to the subject matter
hereof. With the exception of the Memorandum of Agreement and the Registration
Rights Agreement, no Operative Agreement will be of any force or effect until
all Operative Agreements have been executed and delivered by each party thereto.
To the extent that there is any conflict between the provisions of the
Memorandum of Agreement and the provisions of this Agreement or the other
Operative Agreement, dated as of the date hereof, the provisions of this
Agreement or the other Operative Agreement, dated as of the date hereof shall
govern.
3.2. Notices. Any notice, request or other demand to or upon the
parties hereto shall be in writing (including telex and telecopy communication
followed by registered mail with return receipt requested) and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or when telexed (answer-back received) or telecopied (with
receipt acknowledged) addressed to the party for which intended as provided
below (or as hereafter specified by such party by notice hereunder):
If to Communication, Publicis or PBV, to it at:
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133 avenue des Champs-Elysees
75380 Paris Cedex 08
France
Attention: President-Directeur General
Telecopy: 33-1-44-43-75-50
with a copy to:
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
United States of America
Attention: Thomas J. Kuhn, Esq.
Telecopy: 212-841-1010
If to True North, FCBI or TNBV, to it at:
101 East Erie Street
Chicago, Illinois 60611
United States of America
Attention: Chief Executive Officer
Telecopy: 1-312-425-5010
with a copy to:
General Counsel
True North Communications Inc.
101 East Erie Street
Chicago, Illinois 60611
United States of America
Telecopy: 1-312-425-6354
with a copy to:
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Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Unites States of America
Attention: Thomas A. Cole
Telecopy: 1-312-853-7036
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3.3. Survival. All representations and warranties, agreements and
covenants contained herein or in any document delivered pursuant hereto or in
connection herewith (unless otherwise expressly provided herein or therein)
shall survive the date of this Agreement and shall remain in full force and
effect.
3.4.1. Governing Laws; Arbitration. Sections 2.2, 2.3 and 2.11 of this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, United States of America. All other terms and conditions of
this Agreement and the Operative Agreements (except as specifically otherwise
provided in these Agreements), including, without limitation, the validity,
interpretation, performance or termination of such agreements, shall be governed
by and construed in accordance with the laws of France applicable to agreements
executed and delivered and to be performed in France, without regard to
conflicts of laws principles.
3.4.2. All disputes, differences, controversies or claims arising out of,
related to or in connection with this Agreement or the Operative Agreements
(other than the Pooling Agreement) or the transactions contemplated hereby and
thereby shall be submitted to and resolved by arbitration in London, England
conducted in accordance with UNCITRAL Arbitration Rules as then in force (the
"Rules"). The London Court of International Arbitration shall be the
administrative and appointing authority (the "Appointing Authority"). Each of
the parties hereto hereby submits to such jurisdiction, forum and rules and
irrevocably waives any and all objections to such jurisdiction, forum and rules.
3.4.3. Any such arbitration shall be initiated upon notice (the
"Notice of Arbitration") by any party (the "Initiating Party") to any other
party. Unless the Arbitral Tribunal (as defined in Section 3.4.5) directs
otherwise, all communications between the parties and the Arbitral Tribunal
(except at hearings and meetings) shall be made through the Appointing
Authority. When passed on by the Appointing Authority to any party, such notices
or communications shall be sent to the address of that party specified in
Section 3.2.
3.4.4. The Notice of Arbitration shall be signed by the chief executive
officer of the Initiating Party. A copy of the Notice of Arbitration shall
simultaneously be communicated by the Initiating Party to each and every other
party regardless of whether or not they are sought as respondents in the said
Notice of Arbitration.
3.4.5. An arbitral tribunal (the "Arbitral Tribunal") shall be created
which shall consist of three arbitrators all to be appointed by the Appointing
Authority pursuant to the procedure contemplated in Article 6(3) of the Rules,
except that the list procedure shall only be applied in re spect of the
presiding arbitrator and that Article 7 of the Rules shall not apply. All such
arbitrators shall be capable of participating in the proceedings in both French
and English. The presiding arbitrator of the Arbitral Tribunal shall be a lawyer
and shall not be a citizen or resident of France or the United States of
America. Contrary to the first phrase of Article 14 of the Rules,
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<PAGE>
if any arbitrator is replaced, including the presiding arbitrator, any hearings
held previously shall only be repeated if and to the extent deemed necessary by
the Arbitral Tribunal.
3.4.6. Subject to the Rules and the provisions hereof, the Arbitral
Tribunal shall conduct the arbitration in such manner as it considers
appropriate. The shall be no discovery or interrogatory proceedings unless and
to the extent deemed by the Arbitral Tribunal to be necessary for fairly
disposing of the matter or matters before it. All oral hearings shall be taped
recorded and copies made available to all parties. Each party can speak in
English or French and file any document in its own language with a translation
into the other language.
3.4.7. Any party hereto shall have the right within thirty days from the
Notice of Arbitration (or from joinder of a new party to the arbitration) to be
joined as a party in any arbitration initiated hereunder between other parties
hereto, regardless of whether or not they are parties to the same Operating
Agreement. Any party named as a Respondent in the Notice of Arbitration shall
have the right within thirty days from such Notice of Arbitration to join as a
party in the arbitration one or more other parties hereto. Any party jointed in
arbitration, pursuant to this Section, shall have the right within thirty days
from such joinder to join in its turn any other party hereto not yet a party to
the arbitration. All joinders pursuant to this Section shall be effected by
notice communicated to all parties hereto and to the Appointing Authority.
3.4.8. After submission of the statements of defense, or at any later
stage, if the Arbitral Tribunal so decides, the Arbitral Tribunal shall draw up
in the presence of the parties to the arbitration and in the light of their
submissions a document (the "Terms of Reference") which shall include the
following particulars:
. the names and addresses of the arbitrators;
. the full names and description of the parties to the arbitration;
. the addresses of the parties to the arbitration to which
notifications or communications arising in the course of the
arbitration may validly be made;
. a summary of the respective claims of the parties to the arbitration
and the issues on which the Arbitral Tribunal must decide; and
. any particular rules of the conduct of arbitration on which the
parties to the arbitration may agree or on which the Arbitral
Tribunal may decide without prejudice to the power of the
Arbitral Tribunal to make further procedural rulings as circumstances
may require.
The Terms of Reference shall be signed by a duly authorized representative
of each party to the arbitration who shall include the attorneys for any such
party and by the arbitrators. Should any party to the arbitration refuse to take
part in the drawing up of the Terms of Reference or refuse to sign the same, the
Terms of Reference shall be communicated to the Appointing Author ity, who shall
send a copy thereof to each party to the arbitration. The Arbitral Tribunal, if
it is satisfied prima facie that the Arbitration Agreement is binding on the
defaulting party and that this
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<PAGE>
party has been informed of the arbitral proceedings initiated shall set a fixed
limit for the signature of the Terms of Reference by the defaulting party and
on expiring of that time limit the arbitration shall proceed and the award to
be rendered shall be binding on the defaulting party.
The Terms of Reference, when signed, shall be sent by the Arbitral
Tribunal to all the Parties hereto who are not yet party to the arbitration and
any such party wishing to be joined in the arbitration may do so on notice
given within thirty days of such party's receipt of those Terms of Reference to
all other parties to the arbitration and the Arbitral Tribunal; the decision of
the Arbitral Tribunal on any matters therein included shall be binding on all
the Parties who received copies thereof whether or not they have joined the
arbitration proceedings.
3.4.9. In the event a matter is submitted to arbitration involving a
provision of an Operative Agreement which is invalid, illegal or unenforceable
and for which the parties to such agreement have failed to reach a negotiated
solution, the Arbitral Tribunal shall have the power to replace or remove such
provision as it deems necessary to most closely achieve the original intent
expressed by the replaced or removed provision.
3.4.10. Nothing herein shall limit the right of a party to seek
provisional or injunctive relief pending resolution of a dispute pursuant to
this Agreement. The arbitrators shall be entitled to consider the adequacy of
performance by the Parties under all the Agreements in considering any relief
requested hereunder and to award such relief including release of a party from
its obligations under any or all of the Agreements or requiring a party to
perform such obligations under any or all of the Agreements as they determine.
3.5. Enforceability. It is the desire and intent of the parties
hereto that the provisions of this Agreement and the Operative Agreements shall
be enforced to the fullest permissible extent under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement or the Operative
Agreements shall be adjudicated to be invalid or unenforceable, such provision
shall be deemed amended to delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such deletion to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
adjudication is made.
3.6. Expenses. Except as the parties may otherwise agree, all fees,
commissions and expenses incurred by True North, Publicis, or Communication in
connection with the negotiation of this Agreement shall be borne by the party
incurring such expenses. All fees, expenses, and costs incurred by True North,
Publicis or Communication in connection with the adversarial proceedings
referred to in Section 2.8 above shall be borne by the party incurring such
fees, expenses or costs.
3.7. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties thereto and their respective
successors and assigns. This Agreement may
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<PAGE>
not be assigned by a party hereto, whether by operation of law or otherwise,
without the prior written consent of the other party. Any purported assignment
in violation of this provision shall be void and of no force or effect.
3.8. Descriptive Headings. Section headings used in the Agreement are
used for convenience of reference only and shall in no event be used for
interpretation purposes.
3.9. Amendment; Waivers. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
3.10. Severability. It is the desire and intent of the parties that
this Agreement and the Operative Agreements shall be enforced to the fullest
extent permissible under the governing laws. Accordingly, if any provision of
this Agreement or the Operative Agreements shall be adjudicated to be invalid
or unenforceable, under French or Delaware law, as applicable, then such
provision shall be interpreted under Dutch law, and insofar as it is invalid or
unenforceable under Dutch law, such provision shall be interpreted under the
laws of France (in the case of Sections 2.2, 2.3 and 2.11) and as under the
laws of Delaware in the case of all other provisions.
3.11. Counterparts. This Agreement may be executed in one or more
counter-parts, each of which shall be considered an original instrument, but
all of which shall be considered one and the same agreement, and shall become
binding when one or more counterpart have been signed by each of the parties
and delivered to each of the other parties thereto.
3.12. Organization and Authority of Publicis, Communication and PBV.
Each of Publicis, Communication and PBV represents and warrants to True North
and FCBI as follows: Each of Publicis and Communication is a limited liability
entity similar to a corporation duly organized, validly existing and in good
standing under the laws of France. PBV is a Besloten Vennootschap duly
organized, validly existing and in good standing under the laws of the
Netherlands. Each of Publicis, Communication and PBV has full power and
authority to execute and deliver this Agreement and each other Operative
Agreement to which it is a party and to perform its obligations hereunder and
thereunder. All corporate action on the part of each of Publicis,
Communication and PBV and its officers, directors and shareholders necessary
for the authorization, execution, delivery and performance of all of the
obligations of each of Publicis, Communication and PBV under this Agreement and
each other Operative Agreement to which it is party has been taken prior to
closing except for certain corporate actions which will be taken prior to the
Closing, which actions are not required for this Agreement to be enforceable.
Each of this Agreement and each other Operative Agreement, when executed and
delivered, shall constitute the valid and legally binding obligation of each of
Publicis, Communication and PBV (assuming that they are parties thereto)
enforceable in accordance with its terms.
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3.13. Organization and Authority of True North and FCBI. Each of True
North and FCBI represents and warrants to Publicis, Communication and PBV as
follows: Each of True North and FCBI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to execute and deliver this Agreement and
each other Operative Agreement and to perform its obligations hereunder and
thereunder. All corporate action on the part of each of True North and FCBI
and its officers, directors and shareholders necessary for the authorization,
execution, delivery and performance of all of the obligations of each of True
North and FCBI under this Agreement has been taken prior to closing except for
certain corporate actions which will be taken prior to the Closing, which
actions are not required for this Agreement to be enforceable. Each of this
Agreement and each other Operative Agreement, when executed and delivered,
shall constitute the valid and legally binding obligation of each of True North
and FCBI (assuming that they are parties thereto) enforceable in accordance
with its terms.
3.14. Minor Disputes. Any dispute arising under this Agreement and
the Operative Agreements which involves a claim for the payment of money is an
amount not in excess of US $500,000 shall be referred in the first instance by
written notice to a committee consisting of an equal number of members to be
appointed by the Chief Executive Officer of each of True North and
Communication. If such dispute is not resolved by such committee within thirty
days, the dispute may be referred by either party to the Chief Executive
Officers or Chief Operating Officers of True North and Communication. Disputes
which are not resolved within thirty days after giving notice to the Chief
Executive or Chief Operating Officers shall be settled in accordance with
Section 3.4.1 through 3.4.10 hereof.
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In Witness Whereof, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized officers, effective
as of the date first written above.
Publicis S.A. True North Communications Inc.
By: /s/ Maurice Levy By: /s/ Stephen T. Vehslage
------------------ -------------------------
Name: Maurice Levy Name: Stephen T. Vehslage
Title: President of Directoire Title: Director, Chairman of
Special Committee
Publicis Communication FCB International, Inc.
By: /s/ Maurice Levy By: /s/ Theodore J. Theophilos
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Name: Maurice Levy Name: Theodore J. Theophilos
Title: Director General Title: Executive Vice President
Publicis-FCB Europe B.V. True North Holdings Netherlands B.V.
By: /s/ Maurice Levy By: /s/ Theodore J. Theophilos
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Name: Maurice Levy Name: Theodore J. Theophilos
Title: President Director Title: Executive Vice President
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EXHIBIT 10.2
POOLING AGREEMENT
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Agreement dated as of May 19, 1997 (this "Agreement") by and among
Publicis S.A., a societe anonyme organized and existing under the laws of France
("Publicis"), Publicis Communication, a societe anonyme organized and existing
under the laws of France ("Communication") and True North Communications Inc., a
Delaware corporation ("True North").
In consideration of the representations, warranties, covenants and
agreements set forth in this Agreement and other good and valuable
consideration, and independently and unconditionally with respect to any and all
other agreements between the parties, the parties agree as follows:
Article I
Agreements
1.1. Obligation of Publicis and Communication to Deliver Pooling
Letter. So long as Communication or any of its affiliates owns at least 10% of
the issued and outstanding shares of True North Stock (as hereinafter defined),
within 30 days after receiving a written request from True North delivered
before the third anniversary of this Agreement, Publicis and Communication shall
(a) furnish True North, and shall cause any designee of Communication serving on
the Board of Directors of True North to furnish True North, with a "pooling
letter", in substantially the form attached hereto as Exhibit A, or upon the
request of True North, in such other form as is conventional for a transaction
accounted for as a pooling of interests under generally accepted accounting
principles applied in the United States, and, (b) if reasonably requested, take
such other action in support of the transaction (other than a commitment to vote
for such transaction) as would be customary with respect to an acquisition or
other similar business transaction in which True North may participate; provided
that Publicis and Communication may withdraw such pooling letter if any of the
following conditions is not met within 90 days after Publicis and Communication
shall have furnished such pooling letter.
(i) True North has obtained a fairness opinion from a
nationally recognized investment bank with regard to the contemplated
transaction;
(ii) A majority of the non-management directors of True North
has voted to approve the terms and conditions of the contemplated
transaction; and
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(iii) True North has obtained pooling letters (or similar
action) by all other non-de minimis affiliates of True North.
1.1.1. Not later than 90 days after Publicis and Communication shall
have furnished the pooling letter, True North shall call a meeting of the
shareholders of True North, to be held within a further 60 days, to vote on the
contemplated transaction. If a majority vote of the outstanding shares of True
North in favor of the contemplated transaction is not obtained at such meeting
(or at an adjournment thereof within such 60 day period), Publicis and
Communication may withdraw their pooling letter.
1.1.2. The obligation of Publicis and Communication to furnish a
pooling letter pursuant to this Section 1.1 shall expire at the end of the
earlier of (a) True North's successful completion of a significant transaction
involving the pooling method of accounting or (b) three years after the date of
this Agreement.
1.2. Obligations of True North to Deliver Pooling Letter. So long as
True North and its subsidiaries own in the aggregate at least 10% of the issued
and outstanding shares of Communication Stock, within 30 days after receiving a
written request from Communication delivered before the third anniversary of
this Agreement, True North shall (a) furnish Communication, and shall cause any
designee of True North serving on the Board of Directors of Communication to
furnish Communication, with a pooling letter, in a form as is conventional for a
transaction accounted for as a pooling of interests under generally accepted
accounting principles applied in France, and, (b) if reasonably requested, take
such other action in support of the transaction (other than a commitment to vote
for such transaction) as would be customary with respect to an acquisition or
other similar business transaction in which Communication may participate;
provided that True North may withdraw such pooling letter if any of the
following conditions is not met within 90 days after True North shall have
furnished such pooling letter.
(i) Communication has obtained a fairness opinion from a
nationally recognized investment bank with regard to the contemplated
transaction;
(ii) A majority of the outside Directors of Communication has
voted to approve the terms and conditions of the contemplated transaction;
and
(iii) Communication has obtained pooling letters (or similar
action) by all other non-de minimis affiliates of Communication.
1.2.1. Not later than 90 days after True North shall have furnished
the pooling letter, Communication shall call a meeting of the shareholders of
Communication, to be held within a further 60 days, to vote on the contemplated
transaction. If a majority vote of the outstanding shares of Communication in
favor of the contemplated transaction is not obtained at such meeting, True
North may withdraw its pooling letter.
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1.2.2. The obligation of True North to furnish a pooling letter
pursuant to this Section 1.2 shall expire at the end of the earlier of (a)
Communication's successful completion of a significant transaction involving the
pooling method of accounting or (b) three years after the date of this
Agreement.
Article II
Miscellaneous
2.1. Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement among the parties with regard to the subject
matter hereof and supersedes all prior agreements and understandings among the
parties relating to the subject matter hereof. This Agreement shall be of no
force or effect until the Agreement dated as of the date hereof by and among the
parties hereto, Publicis-FCB Europe B.V. ("PBV"), FCB International Inc.
("FCBI") and True North Holdings Netherlands B.V. ("TNBV") (the "Main
Agreement") has been executed and delivered by each party thereto.
2.2. Notices. Any notice, request or other demand to or upon the
parties hereto shall be in writing (including telex and telecopy communication
followed by registered mail with return receipt requested) and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or when telexed (answer-back received) or telecopied (with
receipt acknowledged) addressed to the party for which intended as provided
below (or as hereinafter specified by such party by notice hereunder):
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If to Communication or Publicis, to it at:
133 avenue des Champs-Elysees
75380 Paris Cedex 08
France
Attention: President-Directeur General
Telecopy: 33-1-44-43-75-50
with a copy to:
Thomas Kuhn, Esq.
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
United States of America
Telecopy: 1-212-841-1010
If to True North, to it at:
101 East Erie Street
Chicago, Illinois 60611
United States of America
Attention: Chief Executive Officer
Telecopy: 1-312-425-5010
with a copy to:
General Counsel
True North Communications Inc.
101 East Erie Street
Chicago, Illinois 60611
United States of America
Telecopy: 1-312-425-6354
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2.3. Survival. Sections 2.4.1, 2.4.2, 2.4.3, and 2.5 and agreements
and covenants contained in any document delivered pursuant hereto or in
connection herewith (unless otherwise expressly provided herein or therein)
shall survive the termination of this Agreement and shall remain in full force
and effect.
2.4.1. Governing Laws. The provisions of this Agreement, including,
without limitation, the validity, interpretation, performance or termination of
them, shall be governed by and construed in accordance with (a) to the extent
relating to a request under Section 1.1, the laws of the State of Delaware,
United States of America, excluding its choice of law rules and (b) to the
extent relating to a request under Section 1.2, the laws of France applicable to
agreements executed and delivered and to be performed in France, without regard
to conflicts of laws principles.
2.4.2. Any claim arising out of a request under Section 1.1 of this
Agreement shall be brought only in a court of the State of Delaware or in a
United States District Court located within the State of Delaware. This
provision shall be enforceable by any party even if another party has related
disputes with persons who are not parties to this Agreement. Each of the parties
hereto irrevocably consents and submits to the jurisdiction of such courts in
any action within the scope of this provision. Each of the parties to this
Agreement agrees to the sufficiency of service of process if made by hand
delivery pursuant to Section 2.2 of this Agreement. Each of the parties to this
Agreement hereby irrevocably waives any objections to jurisdiction or venue in
such courts, including but not limited to objections based on the common law
doctrine or forum non coveniens or its statutory counterparts. Without limiting
the rights of True North to pursue any other legal and equitable remedies
available to it for any breach by Publicis and Communication of this Agreement
arising out of a request under Section 1.1, Publicis and Communication
acknowledge that such a breach would cause a loss to True North which could not
be reasonably or adequately compensated in damages in an action at law, that
remedies other than injunctive relief could not fully compensate True North for
a breach of said covenants and that, accordingly, True North shall be entitled
to injunctive relief to prevent any breach or continuing breaches of this
Agreement arising out of a request under Section 1.1. It is the intention of the
parties hereto that if any term, restriction, covenant or promise is found to be
unenforceable and for that reason is unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court.
2.4.3. Any claim arising out of a request under Section 1.2 shall be
brought only in a court of France located in Paris, France. This provision shall
be enforceable by any party even if another party has related disputes with
persons who are not parties to this Agreement. Each of the parties hereto
irrevocably consents and submits to the jurisdiction of such courts in any
action within the scope of this provision. Each of the parties to this Agreement
agrees to the sufficiency of service of process if made by hand delivery
pursuant to Section 2.2 of this Agreement. Each of the parties to this Agreement
hereby irrevocably waives any objections to jurisdiction or venue in such
courts, including but not limited to objections based on the common law doctrine
of forum non
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conveniens or its statutory counterparts. Without limited the rights of
Communication to pursue any other legal and equitable remedies available to it
for any breach by True North of this Agreement arising out of a request under
Section 1.2, True North acknowledges that such a breach would cause a loss to
Communication which could not be reasonably or adequately compensated in damages
in an action at law, that remedies other than injunctive relief could not fully
compensate Communication for a breach of said covenants and that, accordingly,
Communication shall be entitled to injunctive relief to prevent any breach or
continuing breaches of this Agreement arising out of a request under Section
1.2. It is the intention of the parties hereto that if any term, restriction,
covenant or promise is found to be unenforceable and for that reason is
unenforceable, then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such court.
2.5. Enforceability; Severability. It is the desire and intent of
the parties that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the governing laws. Accordingly, if any
provision of this Agreement is or becomes invalid or unenforceable, is held by
any competent court or arbitral tribunal to be invalid or unenforceable, or is
challenged by either party hereto as being invalid or unenforceable under French
or Delaware law, respectively, then such provision shall be interpreted under
laws of the State of Delaware or France, respectively, and insofar as it is
invalid or unenforceable under Delaware or French law, respectively, be given no
effect and shall be deemed not be included in this Agreement, but without
invalidating any of the remaining provisions of this Agreement, which other
provisions shall remain in full force and effect. The parties shall then
negotiate in good faith and shall be bound to replace without delay the invalid
or unenforceable provision by a valid provision the effect of which is as close
as possible to the intended effect of the invalid or unenforceable provision.
2.6. Expenses. Except as the parties may otherwise agree, all fees,
commissions and expenses incurred by True North, Publicis, or Communication in
connection with the negotiation, execution, delivery or performance of this
Agreement shall be borne by the party incurring such expenses.
2.7. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties thereto and their respective
successors and assigns. This Agreement may not be assigned by a party hereto,
whether by operation of law or otherwise, without the prior written consent of
the other party. Any purported assignment in violation of this provision shall
be void and of no force or effect.
2.8. Descriptive Headings. Section headings used in the Agreement
are used for convenience of reference only and shall in no event be used for
interpretation purposes.
2.9. Amendment; Waivers. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
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2.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered an original instrument, but all
of which shall be considered one and the same agreement, and shall become
binding when one or more counterpart shall have been signed by each of the
parties and delivered to each of the other parties thereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their respective duly authorized officers, effective as of the
date first written above.
PUBLICIS S.A. TRUE NORTH COMMUNICATIONS, INC.
By: /s/ Maurice Levy By: /s/ Stephen T. Vehslage
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Name: Maurice Levy Name: Stephen T. Vehslage
Title: President of Directoire Title: Director, Chairman of Special
Committee
PUBLICIS COMMUNICATION
By: /s/ Maurice Levy
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Name: Maurice Levy
Title: Director General
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