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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): June 10, 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)
</TABLE>
(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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Item 5. Other Events.
On or about June 10, 1997, certain of the transactions contemplated by
the Agreement (the "Agreement"), dated as of May 19, 1997, among Publicis S.A.,
a societe anonyme organized and existing under the laws of France, 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 the Registrant, FCB
International, Inc., a Delaware corporation and a wholly owned subsidiary of the
Registrant ("FCBI"), and True North Holding Netherlands B.V., a company
organized under the laws of the Netherlands and a wholly owned subsidiary of
FCBI ("TNBV"), on the other hand, and by that certain Share Repurchase and Share
Exchange Agreement dated May 19, 1997, among FCBI, the Registrant, TNBV,
Communication and PBV, were consummated (the "Closing"). The Agreement was filed
as an exhibit to the Registrant's Current Report on Form 8-K dated May 19, 1997.
Transactions consummated at the Closing included the following:
(1) FCBI and TNBV transferred 49% of the outstanding share capital of
PBV to Communication and PBV in exchange for (i) 142,627 newly issued shares of
the capital stock of Communication, comprising 5.7% of the outstanding capital
stock of Communication after giving effect to such issuance and (ii) the
following: (1) 100% of the issued and outstanding share capital of the French
advertising agency FCB S.A.; (2) 100% of the issued and outstanding share
capital of the English advertising agency FCB Advertising Limited; (3) 83% of
the issued and outstanding share capital of the Portuguese advertising agency
FCB-Publicidade, Lda. (and TNBV separately purchased an additional 7% of the
share capital of this company from a minority shareholder); and (4) the
beneficial ownership of 2,000 shares of the Greek advertising agency GNOMI/FCB
S.A., including the right to demand the transfer of legal title to such shares
at any time;
(2) FCBI sold its 17.48% interest in the partnership capital of the
advertising agency Baums, Mang und Zimmermann Werbeagentur GmbH & Co, a German
limited partnership, and its 25.10% interest in the share capital of Baums, Mang
und Zimmermann Werbeagentur GmbH, a German company, to Publicis.FCB
Communication GmbH, for an aggregate purchase price of 3,795,811 Deutsche marks
(approximately $2.2 million at current exchange rates);
(3) TNBV purchased all of the share capital of FCB Publicis Direct, a
Belgian advertising agency, from PBV, for a purchase price of 19,479,000 Belgian
francs (approximately $545,000 at current exchange rates); and
(4) The Registrant and FCBI entered into agreements with Communication
and Publicis Worldwide B.V., a company organized under the laws of the
Netherlands ("PWBV"), pursuant to which FCBI has agreed to sell to PWBV the
entire share capital of the Australian companies Venice Holdings Pty Limited
(which, among other things, indirectly owns the entire share capital of the
Australian advertising agency Mojo Partners Pty Limited) and True North Services
Pty Limited (which owns, among other things, the entire share capital of the
Australian company TN Media Pty Limited) and the entire issued share capital of
the New Zealand advertising agency Mojo Partners Limited for an aggregate
purchase price of $5.2 million.
For additional information relating to the transactions contemplated
by the Agreement and the Registrant's relationship with Communication, please
refer to the Registrant's Report on Form 10-K for the year ended December 31,
1996.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
Exhibit 10.1 Share Repurchase and Share Exchange Agreement dated May 19, 1997
among FCB International, Inc., a Delaware corporation, Registrant,
True North Holding B.V., a company organized under the laws of the
Netherlands, Publicis Communication, a societe anonyme organized
and existing under the laws of France, and Publicis FCB Europe
B.V., a company organized under the laws of the Netherlands.
Exhibit 10.2 Certificate of Correction Filed By True North Communications Inc.
To Correct A Certain Error In The Restated Certificate Of
Incorporation.
Exhibit 10.3 Amended and Restated Employment Agreement Between Bruce Mason and
Registrant.
Exhibit 10.4 Employment Agreement Between J. Brendan Ryan and Registrant.
2
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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: June 25, 1997 By: /s/ John J. Rezich
------------------------------
Name: John J. Rezich
Title: Vice President, Controller
3
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INDEX TO EXHIBITS
-----------------
Exhibit No. Description
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10.1 Share Repurchase and Share Exchange Agreement dated May 19, 1997
among FCB International, Inc., a Delaware corporation,
Registrant, True North Holding B.V., a company organized under
the laws of the Netherlands, Publicis Communication, a societe
anonyme organized and existing under the laws of France, and
Publicis FCB Europe B.V., a company organized under the laws of
the Netherlands.
10.2 Certificate of Correction Filed By True North Communications Inc.
To Correct A Certain Error In The Restated Certificate Of
Incorporation.
10.3 Amended and Restated Employment Agreement Between Bruce Mason and
Registrant.
10.4 Employment Agreement Between J. Brendan Ryan and Registrant.
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Exhibit 10.1
19 May 1997
EUROPE
SHARE REPURCHASE AND SHARE EXCHANGE AGREEMENT
---------------------------------------------
The undersigned:
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FCB International Inc., a company incorporated under the laws of the state of
Delaware, having its principal office at Chicago, Illinois, United States of
America (hereinafter called "FCBI"); and
True North Communications Inc., a company incorporated under the laws of the
state of Delaware, having its principal office at Chicago, Illinois, United
States of America (hereinafter called "True North"); and
True North Holding Netherlands B.V., a company incorporated under the laws of
the Netherlands, having its principal office at Amsterdam, the Netherlands
(hereinafter called "DutchCo"); and
Publicis Communication, a company incorporated under the laws of France, having
its principal office at Paris, France (hereinafter called "Publicis"); and
Publicis FCB Europe B.V., a company incorporated under the laws of the
Netherlands, having its principal office at Amsterdam, the Netherlands
(hereinafter called "PBV").
WHEREAS:
a. FCBI, True North, DutchCo, Publicis, PBV and Publicis S.A., a company
incorporated under the laws of France, have entered into agreements dated
as of the date hereof pursuant to which, among other things, all formerly
existing differences between True North and FCBI on the one side and
Publicis, PBV and Publicis S.A. on the other side have been finally
resolved and settled; and
b. FCBI and Publicis have agreed that PBV will no longer be their joint
venture and will become a wholly owned subsidiary of Publicis.
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Have agreed as follows:
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The parties agree that DutchCo and/or FCBI shall exchange with and transfer to
PBV and/or Publicis 78,400 shares of the share capital of PBV (the "PBV
Shares"), representing 49% of the entire issued share capital of PBV, against
transfer and delivery to DutchCo and/or FCBI of (i) 142,627 shares of the
capital stock of Publicis (the "Publicis Shares") and (ii) the following: (1)
100% of the issued and outstanding share capital of the French company FCB
S.A., (2) 100% of the issued and outstanding share capital of FCB Advertising,
(3) 83% of the issued and outstanding share capital of the Portuguese company
FCB-Publicidade, Lda, and (4) the beneficial ownership of two thousand (2,000)
shares of Gnomi FCB SA, a company under Greek law, including the right to
demand the transfer of legal title to these shares at any time. After the
issuance by Publicis of the 142,627 shares referred to in this paragraph,
affiliates of True North will in the aggregate own no less than 26.5% of the
entire share capital of Publicis.
Prior to effecting the transactions contemplated by article 1 of this agreement:
a. FCBI will have transferred all or a portion of the PBV Shares to
DutchCo.
b. FCB Advertising Limited, a company incorporated in England and Wales
("FCB Advertising"), will have purchased from Paulo de Abreu 7% of the
share capital of the Portuguese company FCB-Publicidade, Lta.
("Publicidade"), and Mr. De Abreu will have waived any and all
preemptive rights that he may have with respect to the share capital
of Publicidade;
c. PBV will have caused Multi Market Services Limited ("MMS"), a company
under English law and a wholly owned subsidiary of PBV, to transfer to
PBV all of the shares of FCB Advertising held by MMS; and will have
caused Foote, Cone & Beldings MMS Limited to transfer to PBV all of
the shares of FCB Advertising held by such entity.
d. At True North's request, FCB Advertising shall have acquired the
minority interests in FCB S.A. from six minority shareholders for an
amount equal to U.S. $170,000 with funds loaned to FCB Advertising by
FCBI in such amount.
e. At True North's request, PBV shall have transferred its beneficial
ownership of 2,000 shares of Gnomi FCB S.A. to FCB S.A.
Each party will take, and will cause its direct and indirect subsidiaries to
take, such actions as are within its control to cause the transactions referred
to in this article 2.
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The transactions described in article 1 shall be carried out on June 10, 1997
pursuant to notarial deeds of transfer and other necessary legal
documentation. Each of Publicis, PBV, FCBI and DutchCo shall execute and
deliver any and all instruments, transfers or other documents necessary or
appropriate under any applicable law (including powers of attorney and
revocation of existing agencies and powers of attorney) to fully transfer
ownership of the shares of, and full control of, FCB S.A., FCB Advertising and
FCB-Publicidade, Lda. agreed to be transferred hereunder to DutchCo and/or
FCBI, and to fully transfer ownership of the PBV Shares agreed to be
transferred hereunder to PBV and/or Publicis.
True North, FCBI and DutchCo represent and warrant to and agree with Publicis
and PBV as of the date hereof and also as of the day of completion of the
transactions contemplated hereby that:
a. The authorized capital stock of PBV is 800,000 shares, nominal value
250 Dutch Guilders per share, of which 160,000 are issued and
outstanding (78,400, or 49%, of which are owned of record and
beneficially by FCBI and DutchCo in the aggregate). No options,
warrants, preemptive or subscription rights or other rights to
acquire, as a result of purchase, subscription, conversion, exchange
or otherwise, or agreements or commitments to issue or sell, shares of
the capital stock of PBV are outstanding as of the date hereof.
b. FCBI and/or DutchCo has, good and marketable title to the PBV Shares,
free and clear of all liens, security interests, claims, encumbrances
and restrictions of any kind whatsoever other than any thereof in
favor of Publicis or PBV.
c. DutchCo has the full power and authority to transfer the PBV Shares
contemplated to be transferred under article 1 hereof, and upon the
transfer of such shares pursuant to article 1 hereof, good and
marketable title to such shares will be transferred to PBV, and such
shares, when so transferred, shall be free and clear of all liens,
security interests, claims, encumbrances and restrictions of any kind
whatsoever (except for any thereof that may have been granted or
imposed by Publicis or PBV).
d. The PBV Shares have been paid up in full.
e. PBV is a company duly incorporated under the laws of the Netherlands,
and no resolution to dissolve PBV has been adopted.
f. Since December 31, 1996 FCBI and DutchCo have not caused PBV to engage
in any material transaction other than in the ordinary course of
business (except as contemplated by this agreement and related
agreements).
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Publicis and PBV represent and warrant to and agree with True North, FCBI and
DutchCo as of the date hereof and also as of the day of completion of the
transactions contemplated hereby that, subject to the confirmation of counsel
in each jurisdiction as to technical local law matters:
a. After giving effect to the issuance of the shares of Publicis
contemplated to be transferred pursuant to article 1 of this agreement
(the "Communication Shares"), DutchCo, FCBI and True North will own of
record, in the aggregate, not less than 26.5% of the issued and
outstanding share capital and voting power of Publicis, all of which
will constitute fully paid and nonassessable shares. No options,
warrants, preemptive or subscription rights or other rights to
acquire, as a result of purchase, subscription, conversion, exchange
or otherwise, or agreements or commitments to issue or sell, shares of
the capital stock of Publicis are outstanding as of the date hereof.
b. The Communication Shares to be transferred to DutchCo and/or FCBI
hereunder have been duly authorized, and when issued as contemplated
herein, the Communication Shares will constitute validly issued and
outstanding, fully paid and non-assessable shares of capital stock of
Publicis.
c. Since December 31, 1996, Publicis has engaged in no material
transactions other than in the ordinary course of business (except as
contemplated by this agreement and related agreements).
d. Publicis is a company duly incorporated under the laws of France, and
no resolution to dissolve Publicis has been adopted.
e. Except as previously disclosed to True North, FCBI and DutchCo in
writing in connection with the preparation of this agreement and
related agreements, other than in the ordinary course of business
neither Publicis nor any of its subsidiaries or affiliates is a party
to any contract or other arrangement with any of FCB Advertising, FCB
S.A. or FCB-Publicidade, Lda. or any of their respective subsidiaries,
which calls for aggregate payments in excess of $150,000.
f. Immediately before giving effect to the completion of the transactions
described in article 1, PBV will be the only legal and beneficial
owner of 100% of the issued and outstanding share capital of each of
FCB S.A. (including indirect ownership) and FCB Advertising, and 83%
of the issued and outstanding share capital of FCB Publicidade, Lda;
and FCB S.A. shall have beneficial ownership of 2,000 shares of Gnomi
FCB S.A. and no options, warrants, preemptive or subscription rights
or other rights to acquire, as a result of purchase, subscription,
conversion, exchange or otherwise, or agreements or commitments to
issue or sell, such shares of capital stock are outstanding as of the
date hereof.
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g. PBV will have as of the completion of the transactions described in
article 1 hereof good and marketable title to the shares described as
owned by it in paragraph g above, free and clear of all liens,
security interests, claims, encumbrances and restrictions of any kind
whatsoever.
h. PBV has the full power and authority to transfer the shares of capital
stock of FCB Advertising, FCB-Publicidade, Lda. and FCB S.A. (the
"Compensation Shares") contemplated to be transferred under article 1
hereof, and upon the transfer of the Compensation Shares pursuant to
article 1 hereof, good and marketable title to such Compensation
Shares will be transferred to DutchCo and/or FCBI and such
Compensation Shares, when so transferred, shall be free and clear of
all liens, security interests, claims, encumbrances and restrictions
of any kind whatsoever (except for any thereof that may have been
granted or imposed by DutchCo and/or FCBI).
i. The shares to be transferred by PBV to DutchCo and/or FCBI under
article 1 hereof have been paid up in full.
j. Each of FCB Advertising, FCB-Publicidade, Lda. and FCB S.A. has been
duly organized under the laws of its jurisdiction of organization, and
no resolution to dissolve FCB Advertising, FCB-Publicidade, Lda. or
FCB S.A. has been adopted.
k. Since December 31, 1996, neither Publicis nor PBV has caused any of
FCB Advertising, FCB-Publicidade, Lda., FCB S.A. or Gnomi FCB S.A. or
any subsidiaries of any thereof to engage in any material transaction
other than in the ordinary course of business (except as contemplated
by this agreement and related agreements), and none of FCB S.A., FCB
Advertising or FCB-Publicidade, Lda. has or will at the closing have
declared, set aside or paid any dividends or other distributions,
directly or indirectly, in respect of such company's capital stock or
redeemed or repurchased any shares of its capital stock except for
dividends which shall not exceed FFr 20,000,000 in the aggregate.
l. Immediately before giving effect to the completion of the transactions
described in article 1, FCB S.A.'s beneficial ownership of 2,000
shares of Gnomi FCB S.A. will be free and clear of all liens, security
interests, claims, encumbrances and restrictions of any kind
whatsoever; and Gnomi FCB S.A. has not been liquidated.
(a) In recognition of the fact that Publicis and PBV are not in control of
Gnomi FCB S.A., their representations and warranties in Article 5, insofar as
they relate to Gnomi FCB S.A., are understood to be based upon the actual
knowledge of the executive officers of Publicis and, further, an error
therein shall not be a breach or otherwise give rise to a claim against
Publicis or PBV if such error was known or should have been known by the True
North or any of its affiliates.
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(b) In recognition of the fact that True North and its affiliates are not in
control of PBV, their representations and warranties in Article 4, insofar as
they relate to PBV, are understood to be based upon the actual knowledge of
the executive officers of True North and, further, an error therein shall not
be a breach or otherwise give rise to a claim against True North, FCBI or
DutchCo if such error was known or should have been known by Publicis or any
of its affiliates.
This agreement shall be governed by the laws of France except as provided in
applicable notarial deeds and other transfer documents.
The rights and remedies of the parties in respect of any breach of the
warranties in articles 4 or 5 shall not be affected by the transfer of any
shares or capital stock pursuant to this agreement or the notarial deeds
contemplated hereby.
Thus agreed and signed in five original copies in New York on 19 May 1997.
FCB International Inc. Publicis Communication
/s/ Theodore J. Theophilos /s/ Maurice Levy
- -------------------------------- ------------------------------------
By: Theodore J. Theophilos By: Maurice Levy
Title: Executive Vice President Title: Director General
Publicis FCB Europe B.V. True North Communications Inc.
/s/ Maurice Levy /s/ Stephen T. Vehslage
- -------------------------------- ------------------------------------
By: Maurice Levy By: Stephen T. Vehslage
Title: President Director Title: Director, Chairman of Special
Committee
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True North Holding
Netherlands B.V.
/s/ Theodore J. Theophilos
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By: Theodore J. Theophilos
Title: Executive Vice President
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EXHIBIT 10.2
CERTIFICATE OF CORRECTION
FILED BY TRUE NORTH COMMUNICATIONS INC.
TO CORRECT A CERTAIN ERROR
IN THE RESTATED CERTIFICATE OF INCORPORATION
FILED IN THE OFFICE OF THE SECRETARY OF STATE
OF DELAWARE ON AUGUST 27, 1991.
True North Communications Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, hereby
certifies that:
1. The name of the corporation is True North Communications Inc. (the
"Corporation").
2. A Restated Certificate of Incorporation of the Corporation was filed with
the Secretary of State of the State of Delaware on August 27, 1991, and
said Restated Certificate of Incorporation requires correction as permitted
by subsection (f) of Section 103 of the General Corporation Law of the
State of Delaware.
3. The inaccuracy or defect of said Restated Certificate of Incorporation to
be corrected was the inadvertent omission from Article Fourth of said
Restated Certificate of Incorporation of the provisions of the Certificate
of Designations of Series A Junior Participating Preferred Stock of the
Corporation, dated November 16, 1988, and filed with the Secretary of State
of the State of Delaware on November 22, 1988, which provides for the
designation and amount of Series A Junior Participating Preferred Stock of
the Corporation and the powers, preferences and relative, participating,
optional or other special rights of the shares of such series of Preferred
Stock, and the qualifications, limitations or restrictions thereof.
4. Article Fourth of said Restated Certificate of Incorporation is corrected
to add to the end of the existing text of said Article Fourth the
following:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Certificate of Incorporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), of the
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Corporation and hereby states the designation and number of shares, and
fixes the relative rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series
A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 30,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the holders of Common Stock,
par value $.33-1/3 per share (the "Common Stock"), of the Corporation, and
of any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the 1st day of January,
April, July and October in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $10 or (b)
subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
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share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$10 per share on the Series A Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record
date for determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated
pro rata on
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a share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
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Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
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(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $10 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of
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<PAGE>
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
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<PAGE>
IN WITNESS WHEREOF, said True North Communications Inc. has caused
this Certificate of Correction to be signed by Mitch Engel its Executive Vice
President, and attested by Dale F. Perona, its Secretary, this day of
November, 1996.
TRUE NORTH COMMUNICATIONS INC.
By:
-------------------------------
Name: Mitch Engel
Title: Executive Vice President
ATTEST:
- --------------------------------
Name: Dale F. Perona
Title: Secretary
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<PAGE>
EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") dated as
of July 17, 1996 between True North Communications Inc., a Delaware corporation
(the "Company"), and Bruce Mason (the "Executive").
WHEREAS, the Company is a global communications holding company which
owns companies engaged in the advertising agency business, the multimedia
production business, the business of planning and buying of media time and space
and related businesses.
WHEREAS, the Executive currently serves as Chairman and Chief
Executive Officer of the Company pursuant to an Employment Agreement dated as of
the date hereof (the "Existing Employment Agreement").
WHEREAS, the Company desires to extend the Full-Time Employment Period
(as defined in the Existing Employment Agreement) as of June 30, 1997 for one
additional year, and the Executive does not wish to reject such extension.
WHEREAS, the Company and the Executive desire to amend and restate the
Existing Employment Agreement to reflect such extension and certain other
modifications.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereby agree as follows:
1. Employment. The Company hereby employs the Executive and the
Executive hereby agrees to be employed by the Company upon the terms and subject
to the conditions contained in this Agreement. The term of full-time employment
of the Executive by the Company pursuant to this Agreement (the "Full-Time
Employment Period") shall commence on the date hereof and, unless earlier
terminated pursuant to Section 4, shall end on June 30, 1998; provided that the
Full-Time Employment Period may be extended by the Company as of June 30, 1998
for one additional year and, if so extended, may be further extended by the
Company as of June 30, 1999 for the six month period ending on December 31,
1999, in each case upon written notice given to the Executive not less than 60
nor more than 90 days prior to such June 30; provided further that the Full-Time
Employment Period shall not be so extended if the Executive rejects such
extension by giving written notice to the Company within 15 days after the
Company shall have given such notice of extension.
<PAGE>
Company within 15 days after the Company shall have given such notice of
extension.
2. Position and Duties; Responsibilities.
--------------------------------------
(a) Position and Duties. The Company shall employ the Executive
during the Full-Time Employment Period as its principal executive officer, with
the title of Chairman and Chief Executive Officer. During the Full-Time
Employment Period, the Executive shall perform faithfully and loyally and to the
best of his abilities the duties assigned to him hereunder, shall devote his
full business time, attention and effort to the affairs of the Company and shall
use his reasonable best efforts to promote the interests of the Company.
Notwithstanding the foregoing, the Executive may engage in charitable, civic or
community activities and, with the prior approval of the Board of Directors of
the Company (the "Board"), may serve as a director of any business corporation,
provided that such activities or service do not violate the terms of any of the
covenants contained in Section 10 or Section 11.
(b) Responsibilities. Subject to the powers, authority and
responsibilities vested in the Board and in duly constituted committees of the
Board, the Executive shall have the authority and responsibility for the
formulation and execution of the corporate policy of the Company. The Executive
shall also perform such other duties (not inconsistent with the position of
principal executive officer) on behalf of the Company and its subsidiaries as
may from time to time be authorized or directed by the Board and as are
customarily exercisable by a chief executive officer. The Special Committee
designated by the Board, consisting solely of outside directors, has full
responsibility for the Company's relationship with Publicis S.A., Publicis
Communication and Publicis FCB B.V. and all subsidiaries, whether or not wholly-
owned, and all operating units, of Publicis Communication and Publicis FCB B.V.
(other than the Company and any of its subsidiaries or affiliates in which
Publicis S.A., Publicis Communication and Publicis FCB B.V. have no direct
ownership interest) (collectively, "Publicis") and for strategic acquisitions by
the Company. Notwithstanding the foregoing, the Executive, in his capacity as a
director of the Company, shall be advised of the status of any matter presented
to the full Board or to be voted on by the full Board, including any matter
relating to or affecting Publicis or any strategic acquisitions, in a manner
sufficient to enable him to cast his vote on such matter in an informed manner
as a director. For purposes of the preceding sentence, "full Board" means all
members of the Board acting in their capacities as such, except directors, if
any, who are absent from Board deliberations due to recusal or for any other
reason. Notwithstanding any other provision of this Agreement, the Executive
shall be permitted to express to the Board
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<PAGE>
and to the stockholders of the Company his views on any matter presented to,
considered by or raised by the Board or such stockholders.
3. Compensation.
------------
(a) Salary, VIC and DVIC. With respect to the Full-Time Employment
Period, the Company shall pay to the Executive an annual salary at the rate of
$600,000 and variable incentive compensation ("VIC") and deferred variable
incentive compensation ("DVIC") in accordance with the Company's Performance
Program, provided that the aggregate amount of such salary, VIC and DVIC for
each calendar year during the Full-Time Employment Period shall be paid at an
annual rate of not less than $1,000,000 (the "Calendar Year Minimum
Compensation") and that any payment required to be made by this proviso shall be
deemed to be VIC.
(b) Stock Options. During the Full-Time Employment Period, the
Executive shall be entitled to receive variable incentive stock options in
accordance with the Company's variable incentive stock option program. In
addition, the Company covenants that the Compensation Committee and the Special
Committee of the Board shall take such actions as may be necessary, including
(i) where required, to cause the amendment of the Company's Stock Option Plan,
(ii) amendment of the Executive's currently outstanding stock option agreements
and (iii) approval of stock option agreements with respect to the future grant
of stock options to the Executive, so that upon the termination of the Full-Time
Employment Period all of the stock options theretofore granted to the Executive
by the Company then held by the Executive shall be fully exercisable until the
end of the term thereof. The Company assumes no responsibility for any
liability of the Executive under Section 16 of the Securities Exchange Act of
1934 relating in any manner, directly or indirectly, to the amendment of such
stock options.
(c) Other Benefits. During the Full-Time Employment Period, the
Executive shall be entitled to participate in the Company's employee benefit
plans generally available to senior executives of the Company, including group
health, life, short-term disability, long-term disability, pension, profit
sharing, stock purchase and nonqualified deferred compensation and retirement
plans and the plans or programs for the allowance for or the reimbursement of
automobile expenses, financial planning expenses and club dues and any other
plans of general application to employees on the date hereof and such plans and
programs adopted hereafter for the benefit of senior executives of the Company
(all such benefits being hereinafter referred to as the "Employee Benefits"), in
the case of plans or programs in effect on the date
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<PAGE>
hereof on terms no less favorable than their terms on the date hereof; provided
that all retirement benefits shall be based upon plans in effect on the date
hereof, subject to modifications of general application to all employees. The
Executive shall be entitled to take time off for vacation or illness in
accordance with the Company's policy for senior executives and to receive all
other fringe benefits as are from time to time made generally available to
senior executives of the Company.
(d) Expense Reimbursement. During the Full-Time Employment Period,
the Company shall reimburse the Executive for all proper expenses incurred by
him in the performance of his duties hereunder in accordance with the Company's
policies and procedures.
4. Termination of Full-Time Employment Period; Suspension.
------------------------------------------------------
(a) Termination. The Full-Time Employment Period shall be terminated
upon the first to occur of (i) the expiration thereof pursuant to Section 1,
(ii) the expiration thereof on account of rejection by the Executive pursuant to
Section 1 of an extension notice given by the Company pursuant to Section
1,(iii) termination by the Company at any time without Cause (as such term is
defined in Section 4(b)) upon written notice given to the Executive at least 30
days prior to such termination, (iv) termination by the Company at any time for
Cause upon written notice given to the Executive at least 10 days prior to such
termination, (v) termination by the Company on account of the Executive's having
become unable (as determined by the Board in good faith) to regularly perform
his duties hereunder by reason of illness or incapacity for a period of more
than six consecutive months ("Termination for Disability"), (vi) the Executive's
death, (vii) termination by the Executive at any time on or before June 30, 1998
for an Acquisition-Related Reason (as such term is defined in Section 4(d)) upon
written notice given to the Company at least 10 days prior to such termination
or (viii) termination by the Executive at any time after June 30, 1997 but on or
before June 30, 1998 other than for an Acquisition-Related Reason upon written
notice given to the Company at least 30 days prior to such termination ("Other
Voluntary Termination"). Upon termination of the Full-Time Employment Period,
the Executive shall automatically and without further action on his part be
deemed to have resigned from all offices and directorships with the Company and
its subsidiaries and affiliates.
(b) Definition of Cause. For purposes of this Agreement, "Cause"
shall mean (i) the commission of a felony, (ii) the commission of any act which
involves both dishonesty with respect to the Company or any of its subsidiaries
and moral turpitude and
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<PAGE>
causes the Company to be viewed in a materially unfavorable light by its
customers, employees or investors, (iii) material willful misconduct with
respect to the Company or any of its subsidiaries, provided that if it
reasonably could be concluded that such alleged material willful misconduct did
not occur or was not material or willful or misconduct and if such alleged
material willful misconduct is curable, the Executive shall have 30 days
following written notice thereof to the Executive to cure such alleged material
willful misconduct unless the Company, in its good faith judgment, determines
that such cure period must be shorter to avoid harm to the Company, in which
case such cure period shall be such lesser number of days as shall be determined
in good faith by the Company and set forth in such written notice to the
Executive, commencing upon such written notice to the Executive, or (iv) breach
of any provision of Section 10, 11 or 12.
(c) Suspension. If the Company shall determine that the Executive has
committed any act or acts which constitute Cause and shall notify the Executive
thereof in writing and if the Executive shall deny that he committed such act or
acts or that such act or acts constitute Cause and shall notify the Company of
such denial in writing within seven days following the Company's written notice
to the Executive, the Board may, in its sole and absolute discretion, suspend
the Executive with full compensation and benefits during the pendency of any
investigation or arbitration with respect thereto.
(d) Definition of an Acquisition-Related Reason. For purposes of this
Agreement, an "Acquisition-Related Reason" shall mean that (i) the Company or
all or substantially all of its assets shall have been acquired by a third
party, or the Company shall have acquired a third party or all or substantially
all of a third party's assets, in each case either directly or indirectly by
merger or otherwise, and (ii) subsequent thereto, the Executive shall have
relinquished his position as the Company's principal executive officer.
5. Consequences of Termination of Full-Time Employment Period.
----------------------------------------------------------
(a) Expiration, Termination Without Cause, Termination for an
Acquisition-Related Reason or Other Voluntary Termination. If the Full-Time
Employment Period terminates for a reason set forth in clause (i), (iii), (vii)
or (viii) of Section 4(a), in lieu of the commencement of the Company's
Directors Part-Time Employment Agreement upon such termination and any severance
amounts which otherwise would be payable to the Executive:
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<PAGE>
(i) the Executive shall be entitled to receive (A) subject to
Section 5(e), all salary payable with respect to the period through
the date of such termination, (B) unpaid VIC and DVIC for the prior
calendar year, (C) VIC and DVIC for the then current calendar year,
prorated, subject to Section 5(e), through the date of such
termination based on actual results of operations for such full
calendar year and (D) reimbursement of expenses incurred through the
date of such termination; provided, that in determining the aggregate
amount of the salary payable pursuant to clause (A) of this Section
5(a)(i) and the VIC and DVIC payable pursuant to clause (C) of this
Section 5(a)(i), the Calendar Year Minimum Compensation shall, subject
to Section 5(e), be prorated through the date of such termination;
(ii) each stock option theretofore granted to the Executive by
the Company then held by the Executive shall, on the date of such
termination, be exercisable for the full term of such option in
accordance with the applicable stock option agreement in effect at the
time of such termination (giving effect to this provision); and
(iii) the Executive shall become a part-time employee of the
Company entitled to the compensation and benefits payable during the
Initial Part-Time Employment Period (as such term is defined in
Section 6(a)) in accordance with Section 6(c).
(b) Rejection of Extension by Executive. If the Full-Time Employment
Period terminates for a reason set forth in clause (ii) of Section 4(a), in lieu
of commencement of the Company's Directors Part-Time Employment Agreement upon
such termination and any severance amounts which otherwise would be payable to
the Executive, the Executive shall be entitled to the compensation and benefits
set forth in Sections 5(a)(i) and 5(a)(ii) and the Executive shall become a
part-time employee of the Company during the Initial Part-Time Employment Period
and he shall be entitled to the compensation and benefits set forth in the
Company's Directors Part-Time Employment Agreement upon the terms set forth
therein on the date hereof, but with all age and service requirements deemed to
have been satisfied and with the benefit calculated at 45% of final average
annual compensation (as defined in such Agreement) regardless of actual service,
and payments thereunder shall be made for the period commencing upon termination
of the Initial Part-Time Employment Period.
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<PAGE>
(c) Termination for Cause. If the Full-Time Employment Period
terminates for any reason set forth in clause (iv) of Section 4(a), the
Executive shall be entitled to receive (i) all salary payable with respect to
the period through the date of such termination, (ii) unpaid VIC and DVIC for
the prior calendar year, (iii) VIC and DVIC for the then current calendar year,
prorated through the date of such termination based on actual results of
operations for such full calendar year, (iv) reimbursement of expenses incurred
through the date of such termination and (v) any other benefits accrued through
the date of such termination; provided that in determining the aggregate amount
of the salary payable pursuant to clause (i) of this Section 5(c) and the VIC
and DVIC payable pursuant to clause (iii) of this Section 5(c), the Calendar
Year Minimum Compensation shall be prorated through the date of such
termination. The Executive shall not be entitled to any compensation or benefits
under the Company's Directors Part-Time Employment Agreement or any other
severance payments.
(d) Disability or Death. If the Full-Time Employment Period
terminates for a reason set forth in clause (v) or (vi) of Section 4(a), in lieu
of commencement of the Company's Directors Part-Time Employment Agreement upon
such termination or any severance amounts which otherwise would be payable to
the Executive, the Executive or his executor, administrator or other legal
representative, as the case may be, shall be entitled to the payments and
benefits set forth in Section 5(a)(i) (subject to Section 5(e)) and Section
5(a)(ii) and for the period commencing on the date of such termination and
ending on December 31, 1999, the Executive or his executor, administrator or
other legal representative, as the case may be, shall be entitled to the
compensation set forth in Section 6(c)(i), and (A) in the case of Termination
for Disability, the Executive shall be entitled to the benefits set forth in
Section 6(c)(iii) (and in the event the Executive dies prior to December 31,
1999, the Executive's spouse shall be entitled to the continuation of medical
insurance coverage on the same basis as theretofore provided to the Executive
until December 31, 1999) or (B) in the case of termination on account of the
Executive's death, the Executive's spouse shall be entitled to the continuation
of medical insurance coverage on the same basis as theretofore provided to the
Executive until December 31, 1999 and, in either case, the compensation and
benefits set forth in the Company's Directors Part-Time Employment Agreement
shall become payable upon the terms set forth therein on the date hereof, but
with all age and service requirements deemed to have been satisfied and with the
benefit calculated at 45% of final average annual compensation (as defined in
such Agreement) regardless of actual service, for the period commencing on
January 1, 2000.
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<PAGE>
(e) Termination Without Cause. or for Disability or Death, on or
Prior to June 30, 1997. If the Full-Time Employment Period terminates on or
prior to June 30, 1997 for a reason set forth in clause (iii), (v) or (vi) of
Section 4(a), the salary specified by clause (A) of Section 5(a)(i) shall be
payable with respect to the period through June 30, 1997, the VIC and DVIC
specified by clause (C) of Section 5(a)(i) shall be prorated through June 30,
1997 and, in determining the aggregate amount of such salary, VIC and DVIC, the
Calendar Year Minimum Compensation shall be prorated through June 30, 1997. In
addition, any unpaid VIC and DVIC for calendar year 1996 shall be paid at the
time such compensation is normally paid to senior executives of the Company and,
if variable incentive stock options for calendar year 1997 are not awarded to
the Executive by the Company prior to the termination of the Full-Time
Employment Period pursuant to clause (i), (iii) or (v) of Section 4(a), the
Company shall grant to the Executive the stock options which the Executive would
have been granted for calendar year 1997 but for such termination, which stock
options shall be fully exercisable upon the date of grant for the full term of
such options.
6. Initial Part-Time Employment Period.
(a) Commencement. If the Full-Time Employment Period terminates for
a reason set forth in clause (i), clause (ii), clause (iii), clause (vii) or
clause (viii) of Section 4(a), the Executive shall become a part-time employee
of the Company for the period commencing upon termination of the Full-Time
Employment Period and ending on December 31, 1999 (the "Initial Part-Time
Employment Period").
(b) Position and Duties. During the Initial Part-Time Employment
Period the Executive shall be a part-time employee of the Company and shall make
himself available, upon reasonable notice (reasonableness to include, but not be
limited to, a good faith effort to accommodate the schedules and time needs of
the parties), to perform services for the Company which (i) shall be related to
such projects and matters as the Board or the Chief Executive Officer of the
Company may designate from time to time, (ii) are commensurate with the
Executive's years of experience and level of skill and (iii) are similar to the
services rendered by the Executive prior to the termination of the Full-Time
Employment Period, including, but not limited to, the duties set forth in
Section 12. The Executive shall not be required to devote more than 10 days
during any calendar quarter to the performance of such services.
(c) Compensation. As compensation for the services to be performed
by the Executive during the Initial Part-Time Employ-
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<PAGE>
ment Period, the Executive shall receive the following compensation and benefits
in accordance with the Company's normal payroll policies:
(i) cash compensation shall be paid to the Executive during the
Initial Part-Time Employment Period at the rate of $1,350,000 per
year, except as provided in Section 6(c)(ii);
(ii) if the Initial Part-Time Employment Period shall have
commenced as a result of an Other Voluntary Termination (as defined in
Section 4(a)(viii)), cash compensation shall be paid to the Executive
at the rate of $1,000,000 per year during the Initial Part-Time
Employment Period;
(iii) the Employee Benefits shall continue to be paid to the
Executive during the Initial Part-Time Employment Period, in the case
of Employee Benefits in effect on the date hereof on terms no less
favorable than their terms on the date hereof; provided that coverage
for the Executive under the Company's long-term disability insurance
plan shall cease upon termination of the Full-Time Employment Period;
provided further that all retirement benefits shall be based upon
plans in effect on the date hereof, subject to modifications of
general application to all employees; and provided further that for
the year ending on December 31, 1997 (and, in the event the Full-Time
Employment Period terminates during 1998, for the year ending on
December 31, 1998), contributions shall be made to a supplemental
retirement plan for the benefit of the Executive in an amount which,
together with any contributions made for such year for the benefit of
the Executive under the Company's Profit Sharing Retirement Plan,
Profit Sharing Integration Plan, Stock Purchase Plan and Stock
Purchase Integration Plan, is equal to the contributions which would
have been made for such year for the benefit of the Executive under
such plans based upon compensation received by the Executive during
such year notwithstanding the hours of service conditions of such
plans; and
(iv) the Company shall reimburse the Executive in accordance
with the Company's policies and procedures for all proper expenses
incurred by him in the performance of his duties during the Initial
Part-Time Employment Period.
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<PAGE>
7. Termination of Initial Part-Time Employment Period; Suspension.
(a) Termination. The Initial Part-Time Employment Period shall be
terminated on the first to occur, after the termination of the Full-Time
Employment Period, of (i) December 31, 1999, (ii) termination thereof by the
Company at any time for Cause upon written notice given to the Executive at
least 10 days prior to such termination, (iii) Termination for Disability or
(iv) the Executive's death.
(b) Suspension. If the Company shall determine that the Executive
has committed any act or acts which constitute Cause and shall notify the
Executive thereof in writing and if the Executive shall deny that he committed
such act or acts or that such act or acts constitute Cause and shall notify the
Company of such denial in writing within seven days following the Company's
written notice to the Executive, the Board may, in its sole and absolute
discretion, suspend the Executive with full compensation and benefits during the
pendency of any investigation or arbitration with respect thereto.
8. Consequences of Termination of Initial Part-Time Employment
Period.
(a) Expiration. If the Initial Part-Time Employment Period
terminates on December 31, 1999, in lieu of any severance amounts which
otherwise would be payable to the Executive, the Executive shall thereafter be
entitled to the compensation and benefits set forth in the Company's Directors
Part-Time Employment Agreement upon the terms set forth therein on the date
hereof, but with all age and service requirements deemed to have been satisfied
and with the benefit calculated at 45% of final average annual compensation (as
defined in such Agreement) regardless of actual service, and payments thereunder
shall be made for the period commencing on January 1, 2000.
(b) Termination for Cause. If the Initial Part-Time Employment
Period is terminated by the Company for Cause, the Executive shall be entitled
to receive (i) all cash compensation payable with respect to the period through
the date of such termination, (ii) reimbursement of expenses, if any, incurred
through the date of such termination and (iii) other benefits, if any, accrued
through the date of such termination. The Executive shall not be entitled to any
compensation or benefits under the Company's Directors Part-Time Employment
Agreement or any other severance payments.
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<PAGE>
(c) Disability or Death. If the Initial Part-Time Employment Period
terminates as a result of a Termination for Disability or the Executive's death,
in lieu of any severance amounts which otherwise would be payable to the
Executive, the Executive or his executor, administrator or other legal
representative, as the case may be, shall be entitled to the compensation set
forth in Section 6(c)(i) until December 31, 1999 and (i) in the case of
Termination for Disability, the Executive shall be entitled to the benefits set
forth in Section 6(c)(iii) until December 31, 1999 (and, in the event the
Executive dies prior to December 31, 1999, the Executive's spouse shall be
entitled to the continuation of medical insurance coverage on the same basis as
theretofore provided to the Executive until December 31, 1999) or (ii) in the
case of termination on account of the Executive's death, the Executive's spouse
shall be entitled to the continuation of medical insurance coverage on the same
basis as theretofore provided to the Executive until December 31, 1999 and, in
either case, the compensation and benefits set forth in the Company's Directors
Part-Time Employment Agreement shall become payable upon the terms set forth
therein on the date hereof, but with all age and service requirements deemed to
have been satisfied and with the benefit calculated at 45% of final average
annual compensation (as defined in such Agreement) regardless of actual service,
for the period commencing on January 1, 2000.
9. Federal and State Withholding. The Company shall deduct from the
amounts payable to the Executive pursuant to this Agreement the amount of all
required federal and state withholding taxes in accordance with the Executive's
Form W-4 on file with the Company and all applicable social security taxes.
10. Noncompetition; Nonsolicitation. (a) The Executive acknowledges
that in the course of his employment with the Company pursuant to this Agreement
he will become familiar, and during the course of his employment with the
Company or any of its subsidiaries prior to the date of this Agreement he has
become familiar, with trade secrets and customer lists of, and other
confidential information concerning, the Company and its subsidiaries,
affiliates and clients and that his services have been and will be of special,
unique and extraordinary value to the Company.
(b) The Executive agrees that during the Full-Time Employment Period
and for a period of five years thereafter (the "Noncompetition Period") he shall
not in any manner, directly or indirectly, through any person, firm or
corporation, alone or as a member of a partnership or as an officer, director,
stockholder, investor or employee of or consultant to any other corporation or
enterprise or otherwise, engage or be engaged, or assist any other
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person, firm, corporation or enterprise in engaging or being engaged, in any
business being conducted by the Company or any of its subsidiaries as of the
termination of the Full-Time Employment Period in any geographic area in which
the Company or any of its subsidiaries is then conducting such business. Within
seven days following the termination of the Full-Time Employment Period, the
Company shall deliver to the Executive a written description of the businesses
being conducted by the Company and its subsidiaries as of the date of such
termination and the respective geographic areas in which such businesses are
then being conducted; provided, however, that if the Company shall fail to
deliver such written description within such seven-day period, the Executive may
deliver to the Company a written demand therefor and the Company shall have
seven days following the delivery of such written demand to deliver such written
description to the Executive. The Executive shall have no liability for any
breach of the covenant contained in this Section 10(b) which may occur during
the period commencing on the termination of the Full-Time Employment Period and
ending on the date of the delivery of such written description to the Executive,
provided that the Executive shall have attempted in good faith to comply with
such covenant during such period. Notwithstanding the foregoing, subsequent to
the termination of the Full-Time Employment Period the Executive may engage or
be engaged, or assist any other person, firm, corporation or enterprise in
engaging or being engaged, in any business activity which is competitive with a
business activity being conducted by the Company or any of its subsidiaries at
the time of termination of the Full-Time Employment Period only if, at least 60
days prior to the commencement of such competitive activity, the Executive
delivers to the Company a written release, in form and substance satisfactory to
the Company, releasing the Company from all further obligations to the Executive
pursuant to this Agreement, pursuant to the Company's Directors Part-Time
Employment Agreement, pursuant to any other agreement or arrangement with the
Company or any subsidiary of the Company or otherwise, other than the right of
the Executive to receive benefits under any retirement plan of the Company; and
provided further, that nothing contained in this Section 10(b) shall release or
otherwise affect the obligations of the Executive contained in Section 11 of
this Agreement.
(c) The Executive further agrees that during the Non competition
Period he shall not (i) in any manner, directly or indirectly, induce or attempt
to induce any employee of the Company or any of its subsidiaries or affiliates
to terminate or abandon his or her employment for any purpose whatsoever, or
(ii) in connection with any business to which Section 10(b) applies, call on,
service, solicit or otherwise do business with any client of the Company or any
of its subsidiaries; provided, however, that the restriction contained in clause
(i) of this Section 10(c) shall not
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apply to, or interfere with, the proper performance by the Executive of his
duties pursuant to Section 2 of this Agreement.
(d) Nothing in this Section 10 shall prohibit the Executive from
being (i) a stockholder in a mutual fund or a diversified investment company or
(ii) a passive owner of not more than two percent of the outstanding stock of
any class of a corporation so long as the Executive has no active participation
in the business of such corporation.
(e) If, at any time of enforcement of this Section 10, a court or an
arbitrator holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
11. Confidentiality. The Executive shall not, at any time during the
Full-Time Employment Period, the Initial Part-Time Employment Period, the
duration of the Company's Directors Part-Time Employment Agreement or
thereafter, make use of or disclose, directly or indirectly, any (i) trade
secret or other confidential or secret information of the Company or of any of
its subsidiaries, affiliates or clients or (ii) other technical, business,
proprietary or financial information of the Company or of any of its
subsidiaries, affiliates or clients not available to the public generally or to
the competitors of the Company or to the competitors of any of its subsidiaries
or affiliates, in each case that the Executive obtained as a result of his
employment by the Company or any of its subsidiaries ("Confidential
Information"), except to the extent that such Confidential Information (a) is
used by the Executive during the Full-Time Employment Period in the proper
performance of his duties pursuant to this Agreement, (b) is disclosed by the
Executive to his legal counsel in connection with legal services performed by
such counsel for the Executive, provided that such disclosure is made on a
confidential basis, (c) becomes a matter of public record or is published in a
newspaper, magazine or other periodical available to the general public, other
than as a result of any act or omission of the Executive outside the proper
performance of his duties pursuant to this Agreement, or (d) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency. Promptly following the termination of the Full-Time
Employment Period, the Executive shall surrender to the Company all records,
memoranda, notes, plans, reports, computer tapes and software and other
documents and data which constitute Confidential Information which he may then
possess or have under
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his control (together with all copies thereof); provided, however, that the
Executive may retain copies of such documents as are necessary for the
preparation of his federal or state income tax returns; and provided further
that if the Company believes that not all Confidential Information which the
Executive may then possess or have under his control has been surrendered to the
Company, the Company shall request with specificity the Confidential Information
to be surrendered by the Executive. The Executive shall have a reasonable
period of time following such request to surrender such Confidential Information
which in no event shall be less than 15 or more than 30 days following such
request and, if the Executive makes a good faith effort to comply with such
request, his failure to surrender any Confidential Information shall not
constitute Cause for purposes of Section 4(b)(iv) hereof.
12. Nondisparagement; Cooperation. (a) The Executive shall not, at
any time during the Full-Time Employment Period, the Initial Part-Time
Employment Period or the duration of the Company's Directors Part-Time
Employment Agreement or thereafter, make any statement, publicly or privately,
which would disparage the Company, its business or any director or officer of
the Company or would have a deleterious effect upon the interests of the
Company's business or its stockholders; provided, however, that the Executive
shall not be in breach of this restriction if such statements consist solely of
(i) private statements made to any officers, directors or employees of the
Company by the Executive in the course of carrying out his duties pursuant to
this Agreement or (ii) private statements made to persons other than clients or
competitors of the Company or any of its subsidiaries or its affiliates (or
their representatives) or members of the press or the financial community that
do not have a material adverse effect upon the Company; and provided further
that nothing contained in this Section 12(a) or in any other provision of this
Agreement shall preclude the Executive from making any statement in good faith
which is required by law, regulation or order of any court or regulatory
commission, department or agency. During the Full-Time Employment Period, the
Initial Part-Time Employment Period and the duration of the Company's Directors
Part-Time Employment Agreement and upon reasonable notice and at the expense of
the Company, the Executive shall take such actions as the Company shall
reasonably request (reasonableness to include, but not be limited to, a good
faith effort to accommodate the schedules and time needs of the parties) in
furtherance of the client relationships of the Company and its subsidiaries.
Upon the termination of the Full-Time Employment Period, the Executive shall
urge the clients of the Company and its subsidiaries to maintain their
relationships with the Company and its subsidiaries, which action, together with
any other actions required under this Agreement, shall not require the Executive
to perform services (i) during the Initial Part-Time
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Employment Period in excess of the limit of 10 days of service during any
calendar quarter set forth in Section 6(b) or (ii) during the duration of the
Company's Directors Part-Time Employment Agreement in excess of 10 days during
any calendar quarter.
(b) The Company shall not, at any time during the Full-Time
Employment Period, the Initial Part-Time Employment Period or the duration of
the Company's Directors Part-Time Employment Agreement or thereafter, authorize
any person to make or allow, nor shall the Company condone the making of, any
statement, publicly or privately, which would disparage the Executive; provided,
however, that the Company shall not be in breach of this restriction if such
statements consist solely of (i) private statements made to any officers,
directors or employees of the Company or (ii) private statements made to persons
other than clients or competitors of the Company or any of its subsidiaries or
affiliates (or their representatives) or members of the press or the financial
community that do not have a materially adverse effect upon the Executive; and
provided further that nothing contained in this Section 12(b) shall preclude any
officer, director, employee, agent or other representative of the Company from
making any statement in good faith which is required by any law, regulation or
order of any court or regulatory commission, department or agency.
13. Enforcement. The parties hereto agree that the Company would be
damaged irreparably in the event that any pro vision of section 10, 11, or 12 of
this Agreement were not per formed in accordance with its terms or were
otherwise breached and that money damages would be an inadequate remedy for any
such nonperformance or breach. Accordingly, the Company and its suc cessors or
permitted assigns shall be entitled, in addition to other rights and remedies
existing in their favor, to an injunction or injunctions to prevent any breach
or threatened breach of any of such provisions and to enforce such provisions
specifically (without posting a bond or other security). Each of the parties
agrees that he or it will submit himself or itself to the personal jurisdiction
of the courts of the State of Illinois in any action by the other party to
enforce an arbitration award against him or it or to obtain interim injunctive
or other relief pending an arbitration decision.
14. Survival. Sections 10, 11, 12 and 13 of this Agreement shall
survive and continue in full force and effect in accordance with their
respective terms, notwithstanding any termi nation of the Full-Time Employment
Period, the Initial Part-Time Employment Period or the duration of the Company's
Directors Part-Time Employment Agreement.
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15. Arbitration; Certain Costs. Any dispute or controversy between
the Company and the Executive, whether arising out of or relating to this
Agreement, the breach of this Agreement, or otherwise, shall be settled by
arbitration administered by the American Arbitration Association in accordance
with its Commercial Rules then in effect and judgment on the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall have the authority to award any remedy or relief that a court
of competent jurisdiction could order or grant, including, without limitation,
the issuance of an injunction. However, either party may, without inconsistency
with this arbitration provision, apply to any court having jurisdiction over
such dispute or controversy and seek interim provisional, injunctive or other
equitable relief until the arbitration award is rendered or the controversy is
otherwise resolved. The Company shall reimburse the Executive, upon demand, for
all costs and expenses (including without limitation attorneys' fees) reasonably
incurred by the Executive in good faith in connection with this arbitration
provision, including without limitation in connection with any such application
undertaken by the Executive in good faith, as well as for all such costs and
expenses reasonably incurred by the Executive in connection with entering and/or
enforcing the award rendered by the arbitrator. Except as necessary in court
proceedings to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of the Company and the Executive. The Company and the
Executive acknowledge that this Agreement evidences a transaction involving
interstate commerce. Notwithstanding any choice of law provision included in
this Agreement, the United States Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision.
16. Expenses of this Agreement. The Company shall pay the Executive's
legal fees and expenses incurred in connection with this Agreement, in an amount
not to exceed $30,000, promptly upon submission to the Company of a detailed
statement therefor, subject to approval of the Company's General Counsel.
17. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when (a)
delivered personally or by overnight courier to the following addresses of the
other party hereto and his or its counsel (or such other address for such party
or his or its counsel as shall be specified by notice given pursuant to this
Section 17) or (b) sent by facsimile to the following facsimile numbers of the
other party hereto and his or its counsel (or such other facsimile number for
such party or his or its counsel as shall be specified
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by notice given pursuant to this Section 17), with the confirmatory copy
delivered by overnight courier to the addresses of such party and his or its
counsel pursuant to this Section 17:
(a) if to the Company, to:
Chief Human Resources Officer
True North Communications Inc.
101 East Erie Street
Chicago, Illinois 60611-2897
Facsimile No.: 312-425-6350
with a copy to:
Thomas A. Cole
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Facsimile No.: 312-853-7036
(b) if to the Executive, to:
Bruce Mason
618 Dock Drive
Barrington, Illinois 60010
Facsimile No.: 847-381-8416
with a copy to:
Melvin S. Adess
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Facsimile No.: 312-861-2200
18. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
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19. Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes and preempts any prior understanding, agreements or
representations by or between the parties, written or oral, which may have
related in any manner to the subject matter hereof, including without limitation
the Existing Employment Agreement.
20. Successors and Assigns. This Agreement shall be enforceable by
the Executive and his heirs, executors, administra tors and legal
representatives, and by the Company and its successors and permitted assigns.
Any successor of the Company shall assume the liabilities of the Company
hereunder. This Agreement shall not be assigned by the Company other than to a
successor pursuant to a merger, consolidation or transfer of all or
substantially all of the capital stock or assets of the Company. The Executive's
rights pursuant to this Agreement shall continue notwithstanding any change in
control (as defined in the Directors Part-Time Employment Agreement).
21. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Illinois
without regard to principles of conflict of laws.
22. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only by the written agreement of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
23. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
TRUE COMMUNICATIONS INC.
By: /s/ Stephen T. Vehslage
--------------------------------------------
Stephen T. Vehslage,
Chairman of the Special Committee, and
member of the Compensation Committee, of the
Board of Directors
/s/ Bruce Mason
--------------------------------------------
Bruce Mason
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EXHIBIT 10.4
[LETTERHEAD OF TRUE NORTH]
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT dated as of December 31, 1996 between True North
Communications Inc., a Delaware corporation (the "Company"), and J. Brendan Ryan
(the "Executive").
WHEREAS, the Company is a global communications holding company with
ownership interests in subsidiaries, affiliates and joint ventures that are
engaged in the advertising agency business, the multimedia production business,
the business of planning and buying of media time and space and related
businesses (the Company and the subsidiaries, affiliates and joint ventures in
which it from time to time has equity interests are hereinafter referred to
collectively as the "True North Group");
WHEREAS, the Executive currently serves the Company as Chairman/CEO,
Foote, Cone & Belding ("FCB"); and
WHEREAS, the Company and the Executive desire to enter into this
Agreement to provide for the continued employment of the Executive by the
Company upon the terms and subject to the conditions set forth herein. (Unless
expressly noted otherwise, all references to the Company shall include FCB.)
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereby agree as follows:
1. Employment. The Company hereby employs the Executive and the
Executive hereby agrees to be employed by the Company upon the terms and subject
to the conditions contained in this Agreement. The term of full-time employment
of the Executive by the Company pursuant to this Agreement (the "Full-Time
Employment Period") shall commence on the date hereof and shall end on December
31, 2001; provided that the Full-Time Employment Period may be extended by the
Company as of December 31, 2001 and each December 31 thereafter for one
additional year upon mutual consent of the Executive and the Company; and
further provided that the Full-Time Employment period may be terminated as
contemplated in Section 4.
<PAGE>
2. Position and Duties. The Company shall employ the Executive
during the Full-Time Employment Period, with the title of Chairman/CEO, Foote,
Cone & Belding (or such other title as may be mutually agreed upon by the
Executive and the Company) and shall report to the Chairman of the Company.
Executive shall be the most senior executive of FCB. The Executive's duties and
responsibilities shall be those existing as of the date of this Agreement and
any other duties and responsibilities existing subsequent hereto if agreed to in
writing by the Executive. During the Full-Time Employment Period, the Executive
shall perform faithfully and loyally and to the best of the Executive's
abilities his duties hereunder, shall devote full business time, attention and
effort to the affairs of the True North Group and shall use reasonable best
efforts to promote the interests of the True North Group. During the Full-Time
Employment Period, the Executive shall be a member of both the TNC and FCB
Management Boards and the Company agrees to nominate the Executive to the
Company's Board of Directors as of each annual election of directors. The
Executive's principal place of business during the Full-Time Employment Period
shall be in New York City. Notwithstanding the foregoing, the Executive may
engage in charitable, civic or community activities provided that they do not
interfere with the performance of the Executive's duties hereunder and, with the
prior approval of the Board of Directors of the Company (the "Board"), may serve
as a director of any business corporation provided that such service does not
violate the terms of any of the covenants contained in Section 7.
3. Compensation.
(a) Annual Base Salary. With respect to the Full-Time Employment
Period, the Company shall pay to the Executive an annual salary not less than
the rate of $600,000, as adjusted herewith, in accordance with the Company's
regular payroll practices. The annual base salary shall be reviewed periodically
in accordance with guidelines applicable to the Company's senior executives
generally, but such review will not be less frequent than an interval of 24
months with a guaranteed minimum salary increase of 10% in the 24-month
interval.
(b) Incentive Compensation. During the Full-Time Employment Period,
the Executive shall participate in the VIC, DVIC and VISO components of the
Company's Performance Program as defined for the Executive's position, pursuant
to the terms of such plans as they may be amended from time to time. If the
Performance Program is terminated, amended or modified during the Full-Time
Employment Period, a plan providing comparable compensation elements will be
instituted in its place on behalf of the Executive. However, regardless of the
terms of any incentive compensation program which may be in effect during the
Full-Time Employment Period, the Executive is guaranteed that the combination of
annual base salary and cash incentive compensation will be no less than
$1,000,000 in any calendar year during the Full-Time Employment Period.
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(c) Other Benefits. During the Full-Time Employment Period, the
Executive shall be entitled to participate in the Company's employee benefit
plans available to the five most senior executives of the Company, including
medical, dental, salary continuance, short-term disability, long-term
disability, employee life, group life, travel accident insurance plans, pension,
profit sharing, stock purchase and nonqualified deferred compensation and
retirement plans and the plans or programs for the allowance for or the
reimbursement of automobile expenses, financial planning expenses and club dues
and any other plans of general application to employees on the date hereof and
such plans and programs adopted hereafter for the benefit of the five most
senior executives of the Company (all such benefits being hereinafter referred
to as the "Employee Benefits"), in the case of plans or programs in effect on
the date hereof on terms no less favorable than their terms on the date hereof,
subject to modifications of general application to the five most senior
executives or all other employees. The Executive shall be entitled to take time
off for vacation or illness in accordance with the Company's policy for the five
most senior executives and to receive all other fringe benefits as are from time
to time made available to the five most senior executives of the Company.
(d) Expense Reimbursement. During the Full-Time Employment Period,
the Company shall reimburse the Executive for all proper expenses incurred by
him in the performance of his duties hereunder in accordance with the Company's
policies and procedures. In addition, the Executive shall be reimbursed for
legal and other professional expenses incurred in connection with the
negotiation and preparation of this Agreement.
4. Termination of Full-Time Employment Period; Suspension.
-------------------------------------------------------
(a) Qualifying Termination. For purposes of this Agreement,
"Qualifying Termination" means (i) termination of the Executive's employment by
the Company without Cause, (ii) termination by the Company on account of the
Executive having become unable (as set forth below in this paragraph (a)) to
regularly perform his duties hereunder by reason of illness or incapacity for a
period of more than six consecutive months (such disability being referred to as
"Disability" and such termination being a "Termination for Disability"), (iii)
termination on account of the Executive's death or (iv) termination by the
Executive due to the occurrence, without the Executive's express written
consent, of any of the following events:
(1) any of (i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position(s), duties,
responsibilities or status with the Company at the date of this Agreement (or
subsequent hereto if such new position(s), duties, responsibilities or status
were agreed to in writing by the Executive), (ii) an adverse change in the
Executive's reporting lines, titles or offices with the Company, or (iii) any
removal or involuntary termination of the Executive from the Company otherwise
than as
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expressly permitted by this Agreement or any failure to re-elect or re-appoint
the Executive to any position with the Company held by the Executive at the date
of this Agreement (or subsequent hereto if held pursuant to the written
agreement of the Executive); (iv) any material diminution in the Executive's
duties; or (v) any material change in the corporate organization or structure of
business of the Company;
(2) a reduction by the Company in the Executive's rate of annual base
salary in effect at the date of this Agreement, or, if greater, in effect at any
time subsequent hereto;
(3) any requirement of the Company that the Executive (i) be based
anywhere other than at the facility where the Executive is located at the date
of this Agreement (or subsequent hereto if agreed to by the Executive in
writing) or (ii) travel on Company business to an extent substantially more
burdensome than the extent of the Executive's travel during the twelve months
ending on the date of this Agreement;
(4) the failure of the Company to (i) continue in effect any employee
benefit plan, compensation plan or employee agreement (inclusive of this
Agreement) in which the Executive is participating, unless the Executive is
permitted to participate in other plans providing the Executive with
substantially comparable benefits, or the taking of any action by the Company
which would adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any such plan or agreement, (ii) provide
the Executive and the Executive's dependents welfare benefits including, without
limitation, medical, dental, disability, salary continuance, employee life,
group life, and travel accident insurance plans and programs in accordance with
the most favorable plans, practices, programs and policies of the True North
Group in effect for the Executive at the date of this Agreement or, if more
favorable to the Executive, as in effect generally at any time hereafter with
respect to the five most senior executives of the True North Group, (iii)
provide fringe benefits in accordance with the most favorable plans, practices,
programs and policies of the True North Group in effect for the Executive at the
date of this Agreement or, if more favorable to the Executive, as in effect
generally at any time hereafter with respect to the five most senior executives
of the True North Group, (iv) provide an office or offices of a size and with
furnishings and other appointments, together with exclusive personal secretarial
and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive at the date of this Agreement by the True North Group
or, if more favorable to the Executive, as provided generally at any time
hereafter with respect to the five most senior executives of the True North
Group, (v) provide the Executive with paid vacation in accordance with the most
favorable plans, policies, programs and practices of the True North Group in
effect for the Executive at the date of this Agreement or, if more favorable to
the Executive, as in effect generally at any time hereafter with respect to the
five most senior executives of the True North
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Group, or (vi) reimburse the Executive promptly for all reasonable employment
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the True North Group in effect for the
Executive at the date of this Agreement or, if more favorable to the Executive,
as in effect generally at any time hereafter with respect to the five most
senior executives of the True North Group;
(5) the failure of the Company to obtain an assumption agreement from
any successor or permitted assign as contemplated in Section 15; or
(6) any material breach of the Agreement by the Company.
In the case of a proposed Termination for Disability, the Company
shall provide the Executive with a notice of termination accompanied by the
written opinion of an independent and qualified medical doctor concluding (in
reasonable detail and based upon an examination of the Executive) that the
Executive has a Disability. The effective date of termination in such case shall
be the later of (i) the date that the Executive shall have had such Disability
for six consecutive months and (ii) sixty days after the date that such notice
is delivered to the Executive.
For purposes of this Agreement, (i) expiration of this Agreement at
the end of its stated term or any mutually consented to extension thereof shall
not constitute a Qualifying Termination and (ii) any good faith determination of
a Qualifying Termination made by the Executive shall be conclusive; provided,
however, that an isolated, insubstantial and inadvertent action taken by the
Company in good faith and which is remedied by the Company promptly (the earlier
of 60 days or as soon as reasonably practicable) after receipt of written notice
thereof given by the Executive shall not constitute a basis for a Qualifying
Termination.
(b) Nonqualifying Termination. For purposes of this Agreement,
"Nonqualifying Termination" means a termination of the Executive's employment
(i) by the Company for Cause, or (ii) by the Executive for any reason other than
for a Qualifying Termination.
(c) Definition of Cause. For purposes of this Agreement, "Cause"
means (i) material breach by the Executive of the duties and responsibilities of
the Executive hereunder as now in effect or as may hereafter be agreed to with
the Executive's written consent (other than as a result of incapacity due to
physical or mental illness), which is demonstrably willful and deliberate on the
Executive's part, which is committed in bad faith or without reasonable belief
that such breach is in the best interests of the Company and which is not
remedied within 30 days (or sooner, as specified in such written notice, if the
Company, in its good faith judgment, determines that the period must be shorter
to avoid harm to the
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Company) after receipt of written notice from the Company specifying such breach
or (ii) the commission by the Executive of a felony involving moral turpitude.
(d) Suspension. If the Company shall conclude that the Executive has
committed any act or acts which constitute Cause and shall notify the Executive
thereof in writing and if the Executive shall deny that he committed such act or
acts or that such act or acts constitute Cause and shall notify the Company of
such denial in writing within seven days following the Company's written notice
to the Executive, the Board may, in its sole and absolute discretion, suspend
the Executive with full compensation and benefits during the pendency of any
investigation by the Company or arbitration with respect thereto.
5. Consequences of Termination of Full-Time Employment Period.
(a) Qualifying Termination, except for Death or Disability. If the
Full-Time Employment Period terminates for a reason set forth in clause (i) or
(iv) of Section 4(a):
(i) the Executive shall be entitled to receive (1) all
compensation described in Sections 3(a) and 3(b) payable with respect
to the period through the term of this Agreement as specified in
Section 1 and any mutually consented to extension thereof or, if
longer, the period of twelve months following such termination
(hereinafter referred to as the "Severance Period"), in accordance
with the Company's regular payroll practices, and (2) reimbursement of
proper expenses incurred through the date of such termination;
(ii) notwithstanding anything to the contrary in the Stock Option
Agreement, each stock option granted to the Executive by the Company
then held by the Executive shall on the date of such termination be
100% vested, and shall thereafter be exercisable in full by the
Executive for up to three years after the date of termination, but in
no case beyond a date 10 years following the date of grant of such
option. The Company covenants that the Compensation Committee of the
Board shall take such actions as necessary so that upon the
termination of the Executive's employment as provided in the
introduction to this Section 5(a), all current and future stock awards
are fully exercisable for the three-year period, or if shorter until a
date 10 years following the date of grant of such option;
(iii) notwithstanding anything to the contrary in the Deferred
Variable Incentive Compensation Letter of Agreement, the Executive
shall be entitled to receive all vested and unvested amounts,
including all credited interest, in the Executive's DVIC account. Such
payment shall be made under the terms of the Executive's DVIC
Agreement and
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shall commence at the conclusion of the Severance Period. The Company
covenants that the Compensation Committee of the Board shall take
such action as necessary so that upon termination of the Executive's
employment as provided in the introduction to this Section 5(a), all
current and future DVIC awards are fully vested.
(iv) during the Severance Period and continuing through to the
Executive's age 65, the Executive and his dependents shall be entitled
to participate in life insurance, medical and dental benefits on terms
no less favorable than on the termination date, subject to
modifications of general application to the five most senior
executives of the Company.
(v) after expiration of the Severance Period, the Executive
shall be entitled to compensation and benefits payable under the
Directors Part-Time Employment Agreement, with all age and service
requirements deemed to have been satisfied and with the benefit
calculated at 45% of final average annual compensation and assuming 30
years of credited service regardless of actual service determined
under the Directors Part-Time Employment Agreement which is attached
hereto and the terms of which are incorporated herein.
(vi) the Executive shall be entitled to participate in all other
applicable benefit plans or programs in accordance with the provisions
thereof applicable to terminated employees.
(b) Qualifying Termination Due to Death or Disability. If the
Full-Time Employment Period terminates for a reason set forth in clause (ii) or
(iii) of Section 4(a):
(i) the Executive or the Executive's executor, administrator or
other legal representative, as the case may be, shall be entitled to
receive within 30 days after the amount in question is reasonably
determinable (1) all salary payable through the date of such
termination, (2) unpaid VIC and DVIC and VISO awarded, but not yet
granted, for the prior calendar year, (3) VIC and DVIC and VISO for
the then current calendar year, prorated through the date of such
termination based on actual results of operations for such full
calendar year, and (4) reimbursement of proper expenses incurred
through the date of such termination;
(ii) notwithstanding anything to the contrary in the Stock Option
Agreement, each stock option granted to the Executive by the Company
then held by the Executive shall be considered 100% vested, and
exercisable in full by the Executive or the Executive's executor,
administrator or other legal representative, as the case may be, for
up to
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three years after the date of termination, but in no case beyond a date 10
years following the date of grant of such option. The Company covenants
that the Compensation Committee of the Board shall take such actions as
necessary so that upon the termination of the Executive's employment as
provided in the introduction to this Section 5(b), all current and future
stock awards are fully exercisable to such extent for the three-year
period, or if shorter until a date 10 years following the date of grant of
such option;
(iii) notwithstanding anything to the contrary in the Deferred Variable
Incentive Compensation Letter of Agreement, the Executive or the
Executive's executor, administrator or other legal representative, as the
case may be, shall be entitled to receive all vested and unvested amounts,
including all credited interest, in the Executive's DVIC account. Such
payment shall be made under the terms of the Executive's DVIC Agreement.
The Company covenants that the Compensation Committee of the Board shall
take such actions as necessary so that upon the termination of the
Executive's employment as provided in the introduction to this Section
5(b), all current and future DVIC awards are fully vested.
(iv) the Executive (if alive) or the Executive's executor,
administrator or other legal representative, as the case may be, shall be
entitled to the compensation and benefits payable under the Directors Part-
Time Employment Agreement, with all age and service requirements deemed to
have been satisfied and with the benefit calculated at 45% of the final
average annual compensation, assuming 30 years of credited service.
(v) the Executive (or the Executive's qualified dependents, as the
case may be), shall be entitled to participate at the Company's expense in
all other applicable benefit plans or programs in accordance with the
provisions until such time as the Executive is (or would have been) 65
years of age or such later time as provided in such plans.
(c) Nonqualifying Termination. (i) If the Full-Time Employment Period
terminates for a reason set forth in clause (i) Section 4(b):
(1) the Executive shall be entitled to receive within 30 days after
the amount in question is reasonably determinable (1) all salary payable
through the date of such termination, (2) unpaid VIC and DVIC and VISO
awarded, but not yet granted, for the prior calendar year, and (3)
reimbursement of proper expenses incurred through the date of such
termination;
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(2) each stock option granted to the Executive by the Company
then held by the Executive shall be exercisable pursuant to the terms
of such option in accordance with the applicable stock option
agreement in effect at the time of such termination.
(3) the Executive shall be entitled to receive the vested
portion of the amounts in the Executive's DVIC account. Such payments
will be made in accordance with the terms of the Executive's DVIC
Agreement.
(4) the Executive shall be entitled to participate in all other
applicable benefit plans or programs in accordance with the provisions
thereof applicable to terminated employees.
(ii) If the Full-Time Employment Period terminates for a reason
set forth in clause (ii) of Section 4(b), in addition to the
entitlements specified in Section 5(c)(i), the Executive shall be
entitled to the compensation and benefits payable under the Directors
Part-time Employment Agreement, with all age and service requirements
deemed to have been satisfied and with the benefit calculated at 45%
of the final average annual compensation, assuming 30 years of
credited service.
(d) After a Change in Control. In the event of a Qualifying
Termination as defined in the Company's Asset Protection Plan (which is attached
hereto and the terms of which are hereby incorporated except as otherwise
provided herein) after a "Change in Control" (as hereinafter defined), the
Executive shall be entitled to payments in accordance with the Company's Asset
Protection Plan, plus any applicable payments and benefits set forth in this
Section 5, provided that such payments and benefits are not duplicative, if any,
of the payments or benefits provided in the Asset Protection Plan. This
Agreement supersedes the Asset Protection Plan in the case of any conflicts or
inconsistency between such Agreements. Without limiting the foregoing, for
purposes hereof, a "Change in Control" shall have the meaning set forth in the
Asset Protection Plan except that the proviso thereto (", provided, however,
that none of the foregoing shall be considered a Change in Control if it is a
result of a direct action initiated by the Company") shall be deleted in its
entirety.
6. Federal and State Withholding. The Company shall deduct from the
amounts payable to the Executive pursuant to this Agreement the amount of all
required federal and state withholding taxes in accordance with the Executive's
Form W-4 on file with the Company and all applicable social security taxes.
7. Noncompetition; Nonsolicitation; Confidentiality. (a) Covenant Not
to Compete. Notwithstanding any provision of the Asset Protection Plan to the
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contrary, during the Full-Time Employment Period and during the Severance
Period, except with the prior written consent of the Board:
(1) the Executive shall not engage in any activities whether as
employer, proprietor, partner, stockholder (other than the holder of less than
5% of the stock of a corporation the securities of which are traded on a
national securities exchange or in the over-the-counter market), director,
officer, employee or otherwise, in competition with (i) the business conducted
at the date hereof by the True North Group, or (ii) any business in which the
True North Group is substantially engaged at any time during the Full-Time
Employment Period;
(2) the Executive shall not solicit, directly or indirectly, any
existing business relationship of clients of the True North Group existing at
the end of the Full-Time Employment Period in which the True North Group is
substantially engaged at any time during the Full-Time Employment Period, the
Severance Period or the period during which the Executive is receiving all
payments when due under the Directors Part-Time Employment Agreement; and
(3) the Executive shall not induce or attempt to persuade any
employee of the True North Group to terminate the employment relationship with
any of the True North Group except for the Executive's executive assistant.
(b) Confidential Information and Trade Secrets. The Executive shall
not, at any time during the Full-Time Employment Period or thereafter, make use
of any bidding information (or computer programs thereof) of any of the True
North Group, nor divulge any trade secrets or other confidential information
("Confidential Information") of any of the True North Group, except to the
extent that such Confidential Information is publicly available, is published in
a newspaper, magazine or other periodical available to the general public or as
the Company may so authorize in writing; and when the Executive shall cease to
be employed by the Company, the Executive shall surrender to the Company all
records and other documents obtained by him during the course of his employment
hereunder (together with all copies thereof constituting Confidential
Information) which pertain specifically to any of the businesses covered by the
covenants in Section 7(a)(1) or which were paid for by any of the True North
Group; provided, however, that the Executive may retain copies of such documents
as necessary for the Executive's personal records for federal income tax
purposes.
(c) Scope of Covenants; Remedies. The following provisions shall
apply to the covenants of the Executive contained in this Section:
(1) the covenants covered in Section 7(a)(1) and 7(a)(2) shall apply
within all territories in which any of the True North Group is actively engaged
in the conduct of business during the Full-Time Employment Period, including,
without limitation, the territories in which customers are then being solicited;
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(2) without limiting the right of the Company to pursue all other legal
and equitable remedies available for violation by the Executive of the covenants
contained in Sections 7(a) and 7(b), it is expressly agreed that such other
remedies cannot fully compensate the Company for any such violation and that the
Company shall be entitled to injunctive relief to prevent any such violation or
any continuing violation thereof;
(3) each party intends and agrees that if in any action before any court
or agency legally empowered to enforce the covenants contained in Sections 7(a)
and 7(b) any term, restriction, covenant or promise contained therein is found
to be unreasonable and accordingly unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency; and
(4) the covenants contained in Sections 7(a) and 7(b) shall survive the
conclusion of the Executive's employment by the Company.
8. Nondisparagement; Cooperation. (a) The Executive shall not, at any
time during the Full-Time Employment Period or the Severance Period or the
duration of the Company's Directors Part-Time Employment Agreement or
thereafter, make any statement, publicly or privately, which would disparage and
of the True North Group, any of their respective business or any director or
officer of any of them or would have a deleterious effect upon the interests of
any of such businesses or the stockholders or other owners of any of them;
provided, however, that the Executive shall not be in breach of this restriction
if such statements consist solely of (i) private statements made to any
officers, directors or employees of any of the True North Group by the Executive
in the course of carrying out his duties pursuant to this Agreement or, to the
extent applicable, his duties as a director or officer of any of the True North
Group or (ii) private statements made to persons other than clients or
competitors of any of the True North Group (or their representatives) or members
of the press or the financial community that do not have a material adverse
effect upon any of the True North Group; and provided further that nothing
contained in this Section 8(a) or in any other provision of this Agreement shall
preclude the Executive from making any statement in good faith which is required
by law, regulation or order of any court or regulatory commission, department or
agency.
(b) The Company shall not, at any time during the Full-Time Employment
Period or the Severance Period or the duration of the Company's Directors
Part-Time Employment Agreement or thereafter, authorize any person to make or
allow, nor shall the Company condone the making of, any statement, publicly or
privately, which would disparage the Executive; provided, however, that the
Company shall not be in breach of this restriction if such statements consist
solely of (i) private statements made to any officers, directors or employees of
any of
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the True North Group or (ii) private statements made to persons other than
clients or competitors of any of the True North Group (or their representatives)
or members of the press or the financial community that do not have a materially
adverse effect upon the Executive; and provided further that nothing contained
in this Section 8(b) or in any other provision of this Agreement shall preclude
any officer, director, employee, agent or other representative of any of the
True North Group from making any statement in good faith which is required by
any law, regulation or order of any court or regulatory commission, department
or agency.
9. Enforcement. The parties hereto agree that the Company would be
damaged irreparably in the event that any provision of Section 7 or 8 of this
Agreement were not performed in accordance with its terms or were otherwise
breached and that money damages would be an inadequate remedy for any such
nonperformance or breach. Accordingly, the Company and its successors or
permitted assigns shall be entitled, in addition to other rights and remedies
existing in their favor, to an injunction or injunctions to prevent any breach
or threatened breach of any such provisions and to enforce such provisions
specifically (without posting a bond or other security). Each of the parties
agrees that he or it will submit himself or itself to the personal jurisdiction
of the courts of the State of New York in any action by the other party to
enforce an arbitration award against him or it or to obtain interim injunctive
or other relief pending an arbitration decision.
10. Survival. Sections 7, 8 and 9 of this Agreement shall survive and
continue in full force and effect in accordance with their respective terms,
notwithstanding any termination of the Full-Time Employment Period.
11. Arbitration; Certain Costs. Any dispute or controversy between the
Company and the Executive, arising out of or relating to this Agreement, the
breach of this Agreement, or otherwise, shall be settled by arbitration in New
York, New York administered by the American Arbitration Association in
accordance with its Commercial Rules then in effect and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall have the authority to award any remedy or relief
that a court of competent jurisdiction could order or grant, including, without
limitation, the issuance of an injunction. However, either party may, without
inconsistency with this arbitration provision, apply to any court having
jurisdiction over such dispute or controversy and seek interim provisional,
injunctive or other equitable relief until the arbitration award is rendered or
the controversy is otherwise resolved. The Company shall reimburse the
Executive, upon demand, for all costs and expenses (including without limitation
attorneys' fees) reasonably incurred by the Executive in connection with any
arbitration initiated pursuant to this section, as well as for all such costs
and expenses reasonably incurred by the Executive in connection with entering
and/or enforcing the award rendered by the arbitrator. Except as necessary in
court proceedings to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim relief, neither a party nor an
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arbitrator may disclose the existence, content or results of any arbitration
hereunder without the prior written consent of the Company and the Executive.
The Company and the Executive acknowledge that this Agreement evidences a
transaction involving interstate commerce. Notwithstanding any choice of law
provision included in this Agreement, the United States Federal Arbitration Act
shall govern the interpretation and enforcement of this arbitration provision.
12. Notice. All notice and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered or five days after deposit in the United States mail,
certified and return receipt requested, postage prepaid, addressed (1) if to the
Executive, to the most recent address then shown on the employment records of
the Company, and if to the Company, to True North Communications Inc., 101 East
Erie Street, Chicago, Illinois 60611-2897, Attention: Secretary, or (2) to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
13. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is determined to be
invalid, illegal or unenforceable in any respect under applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
14. Entire Agreement. This Agreement, together with the Asset Protection
Plan and the Directors Part-Time Employment Agreement, to the extent applicable,
constitute the entire agreement and understanding between the parties with
respect to the subject matter hereof and supersedes and preempts any prior
understanding, agreements or representations by or between the parties, written
or oral, which may have related in any manner to the subject matter hereof.
15. Successors and Assigns. This Agreement shall be enforceable by the
Executive and the Executive's heirs, executors, administrators and legal
representatives, and by the Company and its successors and permitted assigns.
Any successor or permitted assign of the Company shall assume by instrument in
form and substance satisfactory to the Executive delivered to the Executive the
liabilities of the Company hereunder. This Agreement shall not be assigned by
the Company other than to a successor pursuant to a merger, consolidation or
transfer of all or substantially all of the capital stock or assets of the
Company.
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16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to principles of conflict of laws.
17. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only by the written agreement of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
18. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
TRUE NORTH COMMUNICATIONS INC.
By: /s/ William A. Schreyer
------------------------------------
William A. Schreyer
Chairman of the Compensation
Committee of the Board of Directors
/s/ J. Brendan Ryan
---------------------------------------
J. Brendan Ryan
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