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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) January 22, 1997
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True North Communications Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-5029 36-1088161
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(Commission File Number (I.R.S. Employer Identification No.)
101 East Erie Street, Chicago, IL 60611-2897
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(Address of Principal Executive Offices) (Zip Code)
(312) 425-6500
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On January 22, 1997, the Compensation Committee of Registrant's Board
of Directors, comprised solely of outside Board members, negotiated and executed
severance agreements with John B. Balousek and Craig R. Wiggins, officers and
members of the Board of Directors of Registrant. These agreements, attached to
this Form 8-K as Exhibits 10.5 and 10.6, will result in a one-time charge to
1996 fourth quarter earnings of approximately $2,501,000 (or $.11 per share) in
excess of previously established retirement-related accruals.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT DESCRIPTION
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10.5 Separation Agreement between John B. Balousek and Registrant
10.6 Separation Agreement between Craig R. Wiggins and Registrant
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: February 14, 1997 By: /s/ John J. Rezich
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John J. Rezich
Vice President, Controller
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1/22/97
EXHIBIT 10.5
AGREEMENT
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AGREEMENT (the "Agreement") dated January 22, 1997 (the "Separation
Date"), by and between JOHN B. BALOUSEK (the "Executive") and TRUE NORTH
COMMUNICATIONS, INC., a Delaware corporation (the "Company").
WHEREAS, the Executive and the Company desire to provide for, among
other things, the termination of the Executive's employment with the Company and
the financial and other terms relating to such termination.
NOW, THEREFORE, it is agreed between the parties hereto as follows:
1. Termination of Employment; Resignation as an Officer and
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Director. Effective as of the Separation Date, (a) the Executive's employment
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with the Company is terminated by mutual agreement, and (b) the Executive hereby
resigns as an officer and director of the Company and as an officer, director,
trustee, agent, representative, fiduciary, partner, designee or the like, of any
and all affiliates of the Company. For purposes of this Agreement the term
"affiliate" includes (i) any entity controlled by, in control of, or under
common control with, the Company, (ii) any entity as to which the Company owns
beneficially, directly or indirectly, 10% or more of the total equity interests,
and (iii) any entity of which the Executive, in connection with his employment
with the Company, has been an officer, director, trustee, agent, representative,
fiduciary, partner, designee or the like.
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2. Payments to and Benefits for the Executive.
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(a) As soon as practicable after the Separation Date, the Company
shall pay the Executive the amount, if any, of the Executive's salary which has
not been paid as of the Separation Date.
(b) With respect to the period from the Separation Date until May
27, 2000 (the "Severance Payment Period"), the Company shall pay the Executive
or in the event of the Executive's death, to his beneficiary (subject to the
provisions of Sections 4 and 8 hereof) a severance benefit at the rate of
$180,000 per annum payable in installments in accordance with the normal payroll
practices of the Company from time to time in effect.
(c) During the period (the "Director's Part-Time Employment
Period") commencing on the Executive attaining age 55 and ending upon the
Executive attaining age 60 (or, in the event of the Executive's death, ending
upon the date the Executive would have attained age 60), the Company shall pay
the Executive (subject to the provisions of Sections 4 and 8 hereof), a
Director's Part-Time Employment Benefit at the rate of $323,464 per annum,
payable in installments in accordance with the normal payroll practices of the
Company from time to time in effect.
(d) At the times and in the manner and subject to the terms and
conditions provided for in the Company's Deferred Variable Incentive
Compensation Program as presently in effect (the "DVIC"), the Company shall pay
the Executive (subject to the provisions of Sections 4 and 8 hereof), the
aggregate amount of $647,687 (plus interest, since June 30, 1996 at the 5 year
Treasury Note Rate plus 1.5%, as
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determined as of January 1 and July 1 of each year, credited as of June 30 and
December 31 of each year), in 10 annual installments.
(e) All payments to be made under this Agreement shall be subject
to all applicable taxes and other applicable withholding.
(f) The Company agrees to provide the Executive (and his
dependents) with health, dental and life insurance coverage (i) during the
Severance Payment Period, comparable to that provided to its most senior
executives during such period under its Senior Executive plans and policies and
(ii) during the Director's Part-Time Employment Period, comparable to that
provided to non-executives during such period under its non-executive plans and
policies. After the end of the Director's Part-Time Employment Period, the
Executive shall be eligible to continued benefits as provided under the
Consolidated Omnibus Reconciliation Act of 1985, as amended ("COBRA").
(g) In lieu of any amounts payable under the agreement between the
Company and the Executive dated March 18, 1996, which agreement is hereby
terminated, the Company will pay to the Executive a lump sum relocation payment
of $10,332.
(h) The payments, benefits and obligations provided for in this
Agreement, the Company's charter and bylaws' provisions relating to
indemnification, the plans set forth on Schedule 9(a) hereto (to the extent the
Company has obligations to the Executive thereunder) and the obligations of the
Company under COBRA (including the Company's obligation for eighteen months to
provide the Executive, at the Executive's sole cost and expense, health
insurance on terms and conditions at least equal to that
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provided the Company's non-executives), constitute the only obligations of the
Company or its affiliates to the Executive.
3. Stock Options. Notwithstanding anything to the contrary
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contained in each of the option agreements between the Executive and the Company
(the "Option Agreements), the unexercised options (covering 242,800 shares)
subject to such Option Agreements (a) to the extent not vested as of the
Separation Date, shall vest at the times provided in such Option Agreements
notwithstanding the termination of the Executive's employment hereunder and (b)
once vested, shall remain exercisable for the term provided in the respective
Option Agreements. Any terms in the Option Agreements providing for accelerated
exercise of options upon termination shall be disregarded.
4. Company Loans and Company Property.
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(a) The Company loan[s] to the Executive in the aggregate
principal amount of $1,170, together with accrued and unpaid interest thereon to
the date of payment thereof (such principal and accrued and unpaid interest
being hereinafter referred to as the "Loan Amount"), shall be repaid by the
Executive. The Executive hereby authorizes the Company to deduct any payment he
is entitled to receive pursuant to Sections 2(b), 2(c) and 2(d) hereof an amount
equal to any then unpaid Loan Amount.
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(b) The Executive shall immediately return to the Company all
property of the Company or any of its affiliates; provided that, the Executive
may, if he so elects by written notice to the Company and the tender of payment
therefor within ten days after the Separation Date, purchase the Company owned
automobile in his possession at a purchase price equal to 75% of its wholesale
value and on such other terms and conditions as the Company may reasonably
require.
5. Nonsolicitation and Noncompetition.
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(a) The Executive acknowledges that during the course of his
employment with the Company or any of its affiliates prior to the Separation
Date he has become familiar with trade secrets and customer lists of, and other
confidential information concerning, the Company and its affiliates and clients
and that his services have been of special, unique and extraordinary value to
the Company.
(b) The Executive agrees that during the period commencing on the
Separation Date and ending on the termination of the Director's Part-Time
Employment Period (the "Company's Protected 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 person, firm, corporation or
enterprise in engaging or being engaged, in the solicitation of any entity which
is a client of the Company on the Separation Date ("Solicitation") for any
business of any kind being conducted by the Company or any of its affiliates as
of the Separation Date in any geographic area in which the Company or
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any of its affiliates is then conducting such business. Notwithstanding the
foregoing, the Executive may engage or be engaged, or assist any other person,
firm, corporation or enterprise in engaging or being engaged, in any
Solicitation only if, at least 60 days prior to the commencement of such
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 any other
agreement or arrangement with the Company or any affiliate of the Company or
otherwise; and provided further, that nothing contained in this Section 5(b)
shall release or otherwise affect the obligations of the Executive contained in
any other Section of this Agreement.
(c) The Executive further agrees that during the Company's
Protected Period he shall not in any manner, directly or indirectly, induce or
attempt to induce any employee of the Company or any of its affiliates to
terminate or abandon his or her employment for any purpose whatsoever.
(d) The Executive further agrees that if, during the Severance
Payment Period, he becomes 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, engaged, or assists any other
person, firm, corporation or enterprise in engaging or being engaged, in any
business being conducted by the Company or any of its affiliates as of the
Separation Date in any geographic area in which the Company or any of its
affiliates is then conducting such business, all payments or benefits under
Sections 2(b), (c) and (f) hereof shall automatically terminate.
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(e) Nothing in this Section 5 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.
(f) If, at any time of enforcement of this Section 5, a court
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.
6. Confidentiality. The Executive shall not, at any time during the
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Company's Protected Period 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 affiliates or clients or (ii) other technical,
business, proprietary or financial information of the Company or of any of its
affiliates or clients not available to the public generally, in each case that
the Executive obtained as a result of his employment by the Company or any of
its affiliates ("Confidential Information"), except to the extent that such
Confidential Information is required to be disclosed by any law, regulation or
order of any court or regulatory commission, department or agency. The term
"Company Information" shall in any event exclude information of any kind which
either: (i) is or becomes generally available to the public other than as a
direct result of a disclosure by
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the Executive; (ii) was known to the Executive on a nonconfidential basis prior
to its disclosure to him by the Company; or (iii) becomes available to the
Executive on a nonconfidential basis from a source (other than the Company)
which is entitled to disclose the same. The Executive represents and warrants
to the Company that the Executive has surrendered to the Company all records,
memoranda, notes, plans, reports, computer tapes and software and other
documents and data which constitute Confidential Information which he previously
possessed or had under his control (together with all copies thereof).
7. Nondisparagement; Cooperation. The Executive shall not, at any
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time, make any statement, publicly or privately, which would disparage the
Company, its business, any of its affiliates, or any director, officer or
employee of the Company or any of its affiliates or would have a deleterious
effect upon the interests of the Company's business or its stockholders;
provided that nothing in this Section 7 or in any other provision of this
Agreement shall preclude the Executive from making any truthful and accurate
communication to any proper authority or the Board of Directors of the Company
or any designee appointed by the Board. During the Company's Protected Period
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 to 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 affiliates.
8. Enforcement. The parties hereto agree that the Company would be
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damaged irreparably in the event that any provision of Section 5, 6, 7 or 12 of
this Agreement were not performed in accordance with its terms or were otherwise
breached
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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, (i) 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), and (ii) to terminate, without any
further obligations to the Executive with respect thereto, the payments provided
for in Sections 2(b), (c) and (d) hereof. The Executive agrees that he will
submit himself to the personal jurisdiction of the courts of the State of
Illinois in any action by the Company to obtain injunctive relief in respect of
any such breach or threatened breach. The undertakings set forth in Sections 5,
6, 7 and 12 are continuing in nature and will survive the satisfaction of all of
the parties' other obligations under this Agreement.
9. The Executive Release.
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(a) As a material inducement to the Company to enter into this
Agreement, the Executive knowingly and voluntarily releases, acquits and forever
discharges the Company, its divisions and affiliates and each of their
predecessors, successors, assigns, agents, directors, officers, employees,
representatives, and all persons acting by, through, under or in concert with
any of them (hereinafter referred to collectively as the "Releasees"), from any
and all charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses of any nature whatsoever (upon any
legal or equitable theory, whether contractual, common-law, statutory, federal,
state, local
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or otherwise), known or unknown, suspected or unsuspected, which, from the
beginning of the world up to and including the Separation Date, exists, have
existed, or may hereafter arise, which and which the Executive or his heirs,
executors, administrators, successors and assigns ever had, now has or at any
time hereafter may have, own or hold against each or any of the Releasees;
provided, however, that the foregoing release does not extend to any obligations
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of the Releasees under this Agreement, any rights with respect to
indemnification under the Company's charter and bylaws and any rights with
respect to the plans listed on Schedule 9(a) hereto. Subject to the foregoing
proviso, by executing this Agreement, the claims the Executive is waiving
include, but are not limited to, all claims relating to the Executive's
employment by any of the Releasees, the terms and conditions of such employment
and/or the termination of such employment; all claims of alleged discrimination
on the basis of age or any other type of discrimination and/or retaliation
against the Releasees under federal, state or local statute or ordinance,
including without limitation the Americans With Disabilities Act; Title VII of
the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as
amended; the Civil Rights Act of 1866, as amended; the Age Discrimination in
Employment Act; the Older Workers Benefit Protection Act; the Family and Medical
Leave Act; the California Fair Employment and Housing Act; the California Labor
Code; and the Employee Retirement Income Security Act of 1974, as amended
(excluding accrued, vested benefits under any employee pension plan); all claims
of emotional distress, compensatory or punitive damages; and all claims for
attorneys' fees, costs, disbursements and the like.
(b) The Executive also hereby waives and releases any right he
has, has had or might have had to commence an action against the Releasees
involving
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any matter released hereby, including, without limitation, any matter relating
to his employment relationship or the termination of his employment relationship
with the Company, other than claims arising under this Agreement, any rights
with respect to indemnification under the Company's charter and bylaws and any
rights with respect to the plans listed on Schedule 9(a) hereto and the
Executive shall not bring any suit or claim or permit any such suit or claim to
be filed by any other person on his behalf. The Executive represents and
warrants to the Company that he has not filed or permitted to be filed with any
court, governmental or administrative agency, or arbitration tribunal, any
complaints, lawsuits, charges, or claims in any way related to his employment
with the Company or the termination thereof.
(c) This Agreement shall not in any way be construed as an
admission by the Company or the Executive that the Releasees, on the one hand,
or the Executive, on the other hand, has acted wrongfully against the other or
that the Releasees, on the one hand, or the Executive, on the other hand, has
any valid claims whatsoever against the other, and the Company, on the one hand,
and the Executive, on the other hand, specifically denies any liability to or
wrongful acts against the other.
(d) The Executive shall have a period of 21 days from the
Separation Date to review and consider the terms and conditions of this
Agreement, and may agree to its terms and execute this Agreement at any time
within that period. After executing this Agreement, the Executive shall have
seven days to revoke this Agreement; but he may only do so by delivering a
writing indicating this revocation and returning all sums paid pursuant to this
Agreement to the Company no later than the close of business
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on the seventh day following the date the Executive executes this Agreement. If
the Executive revokes this Agreement it shall not be effective or enforceable.
10. Legal Fees and Expenses. Promptly after the Separation Date the
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Company will pay the Executive $20,000 to reimburse him in part for his legal
fees and expenses in connection herewith.
11. The Company Release; Non-disparagement; Confidentiality.
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(a) As a material inducement to the Executive to enter into this
Agreement, the Company and each of its divisions, subsidiaries and affiliates
and each of their predecessors, successors and assigns (collectively the
"Releasors") knowingly and voluntarily release, acquit and forever discharge the
Executive, his heirs, executors, administrators, successors and assigns
(collectively the "Releasees") from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, debts and expenses of
any nature whatsoever (upon any legal or equitable theory, whether contractual,
common-law, statutory, federal, state, local or otherwise), to the extent known
by any member of the Company's Management Board, which, from the beginning of
the world up to and including the Separation Date, exists, have existed, or may
hereafter arise, which the Releasors ever had, now have or at any time hereafter
may have, own or hold against the Releasees (the "Released Claims"); provided,
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however, that the foregoing release and the term "Released Claims" do not extend
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to or include any obligations of the Executive under this Agreement.
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(b) The Releasors also hereby waive and release any right they
have, have had or might have had to commence an action against the Releasees
involving the Released Claims, and they further agree and covenant not to bring
any such suit or claim or to permit any such suit or claim to be filed by any
other person on their behalf. Releasors acknowledge that they have not filed or
permitted to be filed with any court, governmental or administrative agency, or
arbitration tribunal, any complaints, lawsuits, charges, or claims in any way
related to the Executive's employment with the Company or the termination
thereof.
(c) The members of the Company's Management Board shall not, at
any time, make any statement, publicly or privately, which would disparage the
Executive; provided that nothing in this Section 11 or any other provision of
this Agreement shall preclude any such member from making any truthful and
accurate statement which he believes in good faith the Company's best interests
require him to make and which is not made for the purpose of disparaging the
Executive.
(d) The Company shall not disclose the financial terms of this
Agreement except to the extent it believes in good faith that it is required to
do so as a public company or that the best interests of the Company require it
to do so.
12. Certain Additional Co-operation. Upon reasonable notice and at
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the pre-approved expense of the Company, the Executive shall co-operate fully
and provide accurate information in connection with any investigation or inquiry
the Board of Directors or its designees may from time to time make with respect
to any event occurring on or prior to the Separation Date. Without limiting the
generality of the foregoing, the
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Executive shall cooperate with any special counsel of the Board of Directors or
any committee thereof and shall make himself available for interview by said
special counsel, but with Executive's counsel present if he desires, at such
times and places as the special counsel reasonably requests.
13. Advice of Counsel. The Executive represents and warrants to the
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Company that he has conferred extensively with his own attorneys regarding the
provisions of this Agreement prior to entering into it, that he has carefully
read and fully understands all of the provisions of this Agreement, and that he
is entering into this Agreement voluntarily.
14. No Representations. The Executive and the Company represent and
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warrant to each other that in executing this Agreement they have not relied upon
any representation or statement not set forth herein, or made by any of the
parties hereto or by any of their respective agents, representatives, or
attorneys with regard to the subject matter, basis or effect of this Agreement
or otherwise.
15. Effectiveness. This Agreement shall become effective immediately
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upon execution by the parties.
16. Governing Law. This Agreement will be governed by and construed
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and enforced under the laws of the State of New York, without regard to its
conflict of laws rules.
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17. Severability. In the event that any one or more of the
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provisions of this Agreement is held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions will not
in any way be affected or impaired thereby. If any one or more of the
provisions contained in this Agreement is held to be excessively broad as to
duration, geographical scope, activity or subject, such provisions will be
construed by limiting and reducing them so as to be enforceable to the maximum
extent compatible with applicable law.
18. Entire Agreement; Amendments. This Agreement (a) sets forth the
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entire agreement between the parties hereto with respect to the subject matter
hereof, superseding any and all prior agreements, understandings or arrangements
with respect to the subject matter hereof, and (b) may not be amended or
modified in any respect other than by a writing executed by the parties hereto.
19. Binding Effect. This Agreement shall inure to the benefit of,
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and shall be binding upon, the parties hereto and their respective successors,
assigns, heirs, and legal representatives.
20. Notices. All notices and other communications which are required
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or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered or mailed, first class registered or certified
mail, return receipt requested, postage prepaid,
if to the Executive, to
John B. Balousek
100 East Huron, #3403
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Chicago, Illinois 60611
if to the Company, to
True North Communications, Inc.
FCB Center
101 East Erie
Chicago, Illinois 60611-2897
Attention: Chief Executive Officer
or to such other address as such party shall have specified by like notice in
writing to the other party hereto.
21. Headings. The headings of this Agreement are for convenience of
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reference only and shall not affect the construction or interpretation of any of
the provisions hereof.
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TRUE NORTH COMMUNICATIONS, INC.
By: /s/Mitchell T. Engel
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Authorized Signatory
/s/ John B. Balousek
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John B. Balousek
Sworn to before me this
_____ day of January 1997
_______________________________
Notary Public
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Chicago, Illinois 60611
if to the Company, to
True North Communications, Inc.
FCB Center
101 East Erie
Chicago, Illinois 60611-2897
Attention: Chief Executive Officer
or to such other address as such party shall have specified by like notice in
writing to the other party hereto.
21. Headings. The headings of this Agreement are for convenience of
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reference only and shall not affect the construction or interpretation of any of
the provisions hereof.
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TRUE NORTH COMMUNICATIONS, INC.
By: /s/ Mitchell T. Engel
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Authorized Signatory
/s/ John B. Balousek
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JOHN B. BALOUSEK
Sworn to before me this
23rd day of January 1997
- -------------------------------- [SEAL]
Notary Public
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SCHEDULE 9(A)
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True North Communications Inc. Profit Sharing-Retirement Plan
Foote, Cone & Belding Communications, Inc. Profit Sharing Integration Plan
True North Communications Inc. Stock Purchase Plan
Foote, Cone & Belding Communications, Inc. Stock Purchase Integration Plan
True North Communications Inc. Supplemental Pension Plan
<PAGE>
EXHIBIT 10.6
1/22/97
AGREEMENT
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AGREEMENT (the "Agreement") dated January 22, 1997 (the "Separation
Date"), by and between CRAIG R. WIGGINS (the "Executive") and TRUE NORTH
COMMUNICATIONS, INC., a Delaware corporation (the "Company").
WHEREAS, the Executive and the Company desire to provide for, among
other things, the termination of the Executive's employment with the Company and
the financial and other terms relating to such termination.
NOW, THEREFORE, it is agreed between the parties hereto as follows:
1. Termination of Employment; Resignation as an Officer and
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Director. Effective as of the Separation Date, (a) the Executive's employment
- --------
with the Company is terminated by mutual agreement, and (b) the Executive hereby
resigns as an officer and director of the Company and as an officer, director,
trustee, agent, representative, fiduciary, partner, designee or the like, of any
and all affiliates of the Company. For purposes of this Agreement the term
"affiliate" includes (i) any entity controlled by, in control of, or under
common control with, the Company, (ii) any entity as to which the Company owns
beneficially, directly or indirectly, 10% or more of the total equity interests,
and (iii) any entity of which the Executive, in connection with his employment
with the Company, has been an officer, director, trustee, agent, representative,
fiduciary, partner, designee or the like.
<PAGE>
2. Payments to and Benefits for the Executive.
------------------------------------------
(a) As soon as practicable after the Separation Date, the Company
shall pay the Executive the amount, if any, of the Executive's salary which has
not been paid as of the Separation Date.
(b) With respect to the period from the Separation Date until May
8, 2000 (the "Severance Payment Period"), the Company shall pay the Executive or
in the event of the Executive's death, to his beneficiary (subject to the
provisions of Sections 4 and 8 hereof) a severance benefit at the rate of
$180,000 per annum payable in installments in accordance with the normal payroll
practices of the Company from time to time in effect.
(c) During the period (the "Director's Part-Time Employment
Period") commencing on the Executive attaining age 55 and ending upon the
Executive attaining age 60 (or, in the event of the Executive's death, ending
upon the date the Executive would have attained age 60), the Company shall pay
the Executive (subject to the provisions of Sections 4 and 8 hereof), a
Director's Part-Time Employment Benefit at the rate of $282,263 per annum,
payable in installments in accordance with the normal payroll practices of the
Company from time to time in effect.
(d) At the times and in the manner and subject to the terms and
conditions provided for in the Company's Deferred Variable Incentive
Compensation Program as presently in effect (the "DVIC"), the Company shall pay
the Executive (subject to the provisions of Sections 4 and 8 hereof), the
aggregate amount of $881,350 (plus interest, since June 30, 1996 at the 5 year
Treasury Note Rate plus 1.5%, as
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determined as of January 1 and July 1 of each year, credited as of June 30 and
December 31 of each year), in 10 annual installments.
(e) All payments to be made under this Agreement shall be subject
to all applicable taxes and other applicable withholding.
(f) The Company agrees to provide the Executive (and his
dependents) with health, dental and life insurance coverage (i) during the
Severance Payment Period, comparable to that provided to its most senior
executives during such period under its Senior Executive plans and policies and
(ii) during the Director's Part-Time Employment Period, comparable to that
provided to non-executives during such period under its non-executive plans and
policies. After the end of the Director's Part-Time Employment Period, the
Executive shall be eligible to continued benefits as provided under the
Consolidated Omnibus Reconciliation Act of 1985, as amended ("COBRA").
(g) The payments, benefits and obligations provided for in this
Agreement, the Company's charter and bylaws' provisions relating to
indemnification, the plans set forth on Schedule 9(a) hereto (to the extent the
Company has obligations to the Executive thereunder) and the obligations of the
Company under COBRA (including the Company's obligation for eighteen months to
provide the Executive, at the Executive's sole cost and expense, health
insurance on terms and conditions at least equal to that provided the Company's
non-executives), constitute the only obligations of the Company or its
affiliates to the Executive.
3
<PAGE>
3. Stock Options. Notwithstanding anything to the contrary
-------------
contained in each of the option agreements between the Executive and the Company
(the "Option Agreements"), the unexercised options (covering 143,280 shares)
subject to such Option Agreements (a) to the extent not vested as of the
Separation Date, shall vest at the times provided in such Option Agreements
notwithstanding the termination of the Executive's employment hereunder and (b)
once vested, shall remain exercisable for the term provided in the respective
Option Agreements. Any terms in the Option Agreements providing for accelerated
exercise of options upon termination shall be disregarded.
4. Company Loans and Company Property.
----------------------------------
(a) All obligations of the Executive under the Promissory Note
dated April 1, 1990 from the Executive to Foote, Cone & Belding in the original
principal amount of $480,000 (the "Note") (such obligations being hereinafter
referred to as the "Loan Amount"), shall be repaid by the Executive in
accordance with the terms of the Note. The Executive hereby authorizes the
Company to deduct, as and to the extent all or any portion of the Loan Amount
becomes due and owing, from any payment he is entitled to receive pursuant to
Section 2(b) hereof an amount equal to any then unpaid portion of the Loan
Amount due and owing.
4
<PAGE>
(b) The Executive shall repay to the Company (i) the amount of
$3,477.00 heretofore advanced to the Executive for travel and related expenses,
and (ii) the amount of $19,708.26 representing inadvertent overpayments in
respect of the Executive's car allowance; and the Executive shall immediately
return to the Company all property of the Company or any of its affiliates;
provided that, the Executive may, if he so elects by written notice to the
Company and the tender of payment therefor within ten days after the Separation
Date, purchase the Company owned automobile in his possession at a purchase
price equal to 75% of its wholesale value and on such other terms and conditions
as the Company may reasonably require.
5. Nonsolicitation and Noncompetition.
----------------------------------
(a) The Executive acknowledges that during the course of his
employment with the Company or any of its affiliates prior to the Separation
Date he has become familiar with trade secrets and customer lists of, and other
confidential information concerning, the Company and its affiliates and clients
and that his services have been of special, unique and extraordinary value to
the Company.
(b) The Executive agrees that during the period commencing on the
Separation Date and ending on the termination of the Director's Part-Time
Employment Period (the "Company's Protected 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 person, firm, corporation or
enterprise in engaging or being engaged, in the
5
<PAGE>
solicitation of any entity which is a client of the Company on the Separation
Date ("Solicitation") for any business of any kind being conducted by the
Company or any of its affiliates as of the Separation Date in any geographic
area in which the Company or any of its affiliates is then conducting such
business. Notwithstanding the foregoing, the Executive may engage or be
engaged, or assist any other person, firm, corporation or enterprise in engaging
or being engaged, in any Solicitation only if, at least 60 days prior to the
commencement of such 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 any other agreement or arrangement with the Company or
any affiliate of the Company or otherwise; and provided further, that nothing
contained in this Section 5(b) shall release or otherwise affect the obligations
of the Executive contained in any other Section of this Agreement.
(c) The Executive further agrees that during the Company's
Protected Period he shall not in any manner, directly or indirectly, induce or
attempt to induce any employee of the Company or any of its affiliates to
terminate or abandon his or her employment for any purpose whatsoever.
(d) The Executive further agrees that if, during the Severance
Payment Period, he becomes 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, engaged, or assists any other
person, firm, corporation or enterprise in engaging or being engaged, in any
business being conducted by the Company or any of
6
<PAGE>
its affiliates as of the Separation Date in any geographic area in which the
Company or any of its affiliates is then conducting such business, all payments
or benefits under Sections 2(b), (c) and (f) hereof shall automatically
terminate.
(e) Nothing in this Section 5 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.
(f) If, at any time of enforcement of this Section 5, a court
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.
6. Confidentiality. The Executive shall not, at any time during the
---------------
Company's Protected Period 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 affiliates or clients or (ii) other technical,
business, proprietary or financial information of the Company or of any of its
affiliates or clients not available to the public generally, in each case that
the Executive obtained as a result of his employment by the Company or any of
its affiliates ("Confidential Information"), except to the extent that such
Confidential Information is required to be disclosed by any law, regulation or
order
7
<PAGE>
of any court or regulatory commission, department or agency. The term "Company
Information" shall in any event exclude information of any kind which either:
(i) is or becomes generally available to the public other than as a direct
result of a disclosure by the Executive; (ii) was known to the Executive on a
nonconfidential basis prior to its disclosure to him by the Company; or (iii)
becomes available to the Executive on a nonconfidential basis from a source
(other than the Company) which is entitled to disclose the same. The Executive
represents and warrants to the Company that the Executive has surrendered to the
Company all records, memoranda, notes, plans, reports, computer tapes and
software and other documents and data which constitute Confidential Information
which he previously possessed or had under his control (together with all copies
thereof).
7. Nondisparagement; Cooperation. The Executive shall not, at any
-----------------------------
time, make any statement, publicly or privately, which would disparage the
Company, its business, any of its affiliates, or any director, officer or
employee of the Company or any of its affiliates or would have a deleterious
effect upon the interests of the Company's business or its stockholders;
provided that nothing in this Section 7 or in any other provision of this
Agreement shall preclude the Executive from making any truthful and accurate
communication to any proper authority or the Board of Directors of the Company
or any designee appointed by the Board. During the Company's Protected Period
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 to 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 affiliates.
8
<PAGE>
8. Enforcement. The parties hereto agree that the Company would be
-----------
damaged irreparably in the event that any provision of Section 5, 6, 7 or 12 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, (i) 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), and (ii) to
terminate, without any further obligations to the Executive with respect
thereto, the payments provided for in Sections 2(b), (c) and (d) hereof. The
Executive agrees that he will submit himself to the personal jurisdiction of the
courts of the State of Illinois in any action by the Company to obtain
injunctive relief in respect of any such breach or threatened breach. The
undertakings set forth in Sections 5, 6, 7 and 12 are continuing in nature and
will survive the satisfaction of all of the parties' other obligations under
this Agreement.
9. The Executive Release.
---------------------
(a) As a material inducement to the Company to enter into this
Agreement, the Executive knowingly and voluntarily releases, acquits and forever
discharges the Company, its divisions and affiliates and each of their
predecessors, successors, assigns, agents, directors, officers, employees,
representatives, and all persons acting by, through, under or in concert with
any of them (hereinafter referred to collectively as the "Releasees"), from any
and all charges, complaints, claims, liabilities,
9
<PAGE>
obligations, promises, agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses of any nature
whatsoever (upon any legal or equitable theory, whether contractual, common-law,
statutory, federal, state, local or otherwise), known or unknown, suspected or
unsuspected, which, from the beginning of the world up to and including the
Separation Date, exists, have existed, or may hereafter arise, which and which
the Executive or his heirs, executors, administrators, successors and assigns
ever had, now has or at any time hereafter may have, own or hold against each or
any of the Releasees; provided, however, that the foregoing release does not
-------- -------
extend to any obligations of the Releasees under this Agreement, any rights with
respect to indemnification under the Company's charter and bylaws and any rights
with respect to the plans listed on Schedule 9(a) hereto. Subject to the
foregoing proviso, by executing this Agreement, the claims the Executive is
waiving include, but are not limited to, all claims relating to the Executive's
employment by any of the Releasees, the terms and conditions of such employment
and/or the termination of such employment; all claims of alleged discrimination
on the basis of age or any other type of discrimination and/or retaliation
against the Releasees under federal, state or local statute or ordinance,
including without limitation the Americans With Disabilities Act; Title VII of
the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as
amended; the Civil Rights Act of 1866, as amended; the Age Discrimination in
Employment Act; the Older Workers Benefit Protection Act; the Family and Medical
Leave Act; the New York State Executive Law; and the Administrative Code of the
City of New York; the New York State Labor Law; and the Employee Retirement
Income Security Act of 1974, as amended (excluding accrued, vested benefits
under any employee pension plan); all claims of emotional
10
<PAGE>
distress, compensatory or punitive damages; and all claims for attorneys' fees,
costs, disbursements and the like.
(b) The Executive also hereby waives and releases any right he
has, has had or might have had to commence an action against the Releasees
involving any matter released hereby, including, without limitation, any matter
relating to his employment relationship or the termination of his employment
relationship with the Company, other than claims arising under this Agreement,
any rights with respect to indemnification under the Company's charter and
bylaws and any rights with respect to the plans listed on Schedule 9(a) hereto
and the Executive shall not bring any suit or claim or permit any such suit or
claim to be filed by any other person on his behalf. The Executive represents
and warrants to the Company that he has not filed or permitted to be filed with
any court, governmental or administrative agency, or arbitration tribunal, any
complaints, lawsuits, charges, or claims in any way related to his employment
with the Company or the termination thereof.
(c) This Agreement shall not in any way be construed as an
admission by the Company or the Executive that the Releasees, on the one hand,
or the Executive, on the other hand, has acted wrongfully against the other or
that the Releases, on the one hand, or the Executive, on the other hand, has any
valid claims whatsoever against the other, and the Company, on the one hand, and
the Executive, on the other hand, specifically denies any liability to or
wrongful acts against the other.
(d) The Executive shall have a period of 21 days from the
Separation Date to review and consider the terms and conditions of this
Agreement, and may agree to its terms and execute this Agreement at any time
within that period. After
11
<PAGE>
executing this Agreement, the Executive shall have seven days to revoke this
Agreement; but he may only do so by delivering a writing indicating this
revocation and returning all sums paid pursuant to this Agreement to the Company
no later than the close of business on the seventh day following the date the
Executive executes this Agreement. If the Executive revokes this Agreement it
shall not be effective or enforceable.
10. Legal Fees and Expenses. Promptly after the Separation Date the
-----------------------
Company will pay the Executive $20,000 to reimburse him in part for his legal
fees and expenses in connection herewith.
11. The Company Release; Non-disparagement; Confidentiality.
-------------------------------------------------------
(a) As a material inducement to the Executive to enter into this
Agreement, the Company and each of its divisions, subsidiaries and affiliates
and each of their predecessors, successors and assigns (collectively the
"Releasors") knowingly and voluntarily release, acquit and forever discharge the
Executive, his heirs, executors, administrators, successors and assigns
(collectively the "Releasees") from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, debts and expenses of
any nature whatsoever (upon any legal or equitable theory, whether contractual,
common-law, statutory, federal, state, local or otherwise), to the extent known
by any member of the Company's Management Board, which, from the beginning of
the world up to and including the Separation Date, exists, have existed, or may
hereafter arise, which the Releasors ever had, now have or at any time hereafter
may have, own or hold against the Releasees (the "Released Claims"); provided,
--------
however, that the foregoing
- -------
12
<PAGE>
release and the term "Released Claims" do not extend to or include any
obligations of the Executive under this Agreement.
(b) The Releasors also hereby waive and release any right they
have, have had or might have had to commence an action against the Releasees
involving the Released Claims, and they further agree and covenant not to bring
any such suit or claim or to permit any such suit or claim to be filed by any
other person on their behalf. Releasors acknowledge that they have not filed or
permitted to be filed with any court, governmental or administrative agency, or
arbitration tribunal, any complaints, lawsuits, charges, or claims in any way
related to the Executive's employment with the Company or the termination
thereof.
(c) The members of the Company's Management Board shall not, at
any time, make any statement, publicly or privately, which would disparage the
Executive; provided that nothing in this Section 11 or any other provision of
this Agreement shall preclude any such member from making any truthful and
accurate statement which he believes in good faith the Company's best interests
require him to make and which is not made for the purpose of disparaging the
Executive.
(d) The Company shall not disclose the financial terms of this
Agreement except to the extent it believes in good faith that it is required to
do so as a public company or that the best interests of the Company require it
to do so.
12. Certain Additional Co-operation. Upon reasonable notice and at
-------------------------------
the pre-approved expense of the Company, the Executive shall co-operate fully
and provide accurate information in connection with any investigation or inquiry
the Board of
13
<PAGE>
Directors or its designees may from time to time make with respect to any event
occurring on or prior to the Separation Date. Without limiting the generality of
the foregoing, the Executive shall cooperate with any special counsel of the
Board of Directors or any committee thereof and shall make himself available for
interview by said special counsel, but with Executive's counsel present if he
desires, at such times and places as the special counsel reasonably requests.
13. Advice of Counsel. The Executive represents and warrants to the
-----------------
Company that he has conferred extensively with his own attorneys regarding the
provisions of this Agreement prior to entering into it, that he has carefully
read and fully understands all of the provisions of this Agreement, and that he
is entering into this Agreement voluntarily.
14. No Representations. The Executive and the Company represent and
------------------
warrant to each other that in executing this Agreement they have not relied upon
any representation or statement not set forth herein, or made by any of the
parties hereto or by any of their respective agents, representatives, or
attorneys with regard to the subject matter, basis or effect of this Agreement
or otherwise.
15. Effectiveness. This Agreement shall become effective immediately
-------------
upon execution by the parties.
16. Governing Law. This Agreement will be governed by and construed
-------------
and enforced under the laws of the State of New York, without regard to its
conflict of laws rules.
14
<PAGE>
17. Severability. In the event that any one or more of the
------------
provisions of this Agreement is held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions will not
in any way be affected or impaired thereby. If any one or more of the provisions
contained in this Agreement is held to be excessively broad as to duration,
geographical scope, activity or subject, such provisions will be construed by
limiting and reducing them so as to be enforceable to the maximum extent
compatible with applicable law.
18. Entire Agreement; Amendments. This Agreement (a) sets forth the
----------------------------
entire agreement between the parties hereto with respect to the subject matter
hereof, superseding any and all prior agreements, understandings or arrangements
with respect to the subject matter hereof, and (b) may not be amended or
modified in any respect other than by a writing executed by the parties hereto.
19. Binding Effect. This Agreement shall inure to the benefit of,
--------------
and shall be binding upon, the parties hereto and their respective successors,
assigns, heirs, and legal representatives.
20. Notices. All notices and other communications which are required
-------
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered or mailed, first class registered or certified
mail, return receipt requested, postage prepaid,
if to the Executive, to
Craig R. Wiggins
1088 Park Avenue
New York, New York 10128
15
<PAGE>
if to the Company, to
True North Communications, Inc.
FCB Center
101 East Erie
Chicago, Illinois 60611-2897
Attention: Chief Executive Officer
or to such other address as such party shall have specified by like notice in
writing to the other party hereto.
21. Headings. The headings of this Agreement are for convenience of
--------
reference only and shall not affect the construction or interpretation of any of
the provisions hereof.
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TRUE NORTH COMMUNICATIONS, INC.
By: /s/ Mitchell T. Engel
----------------------------
Authorized Signatory
/s/ Craig R. Wiggins
-------------------------------
CRAIG R. WIGGINS
Sworn to before me this
_____ day of January 1997
______________________________
Notary Public
16
<PAGE>
if to the Company, to
True North Communications, Inc.
FCB Center
101 East Erie
Chicago, Illinois 60611-2897
Attention: Chief Executive Officer
or to such other address as such party shall have specified by like notice in
writing to the other party hereto.
21. Headings. The headings of this Agreement are for convenience of
--------
reference only and shall not affect the construction or interpretation of any of
the provisions hereof.
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TRUE NORTH COMMUNICATIONS, INC.
By: /s/ Mitchell T. Engel
----------------------------
Authorized Signatory
/s/ Craig R. Wiggings
-------------------------------
CRAIG R. WIGGINS
Sworn to before me this
23 day of January 1997
- --
- -----------------------------
Notary Public, State of New York
No.015C 5070400
Qualified in Westchester County.
Commission Expires 12/16/98
17
<PAGE>
SCHEDULE 9(A)
-------------
True North Communications Inc. Profit Sharing-Retirement Plan
Foote, Cone & Belding Communications, Inc. Profit Sharing Integration Plan
True North Communications Inc. Stock Purchase Plan
Foote, Cone & Belding Communications, Inc. Stock Purchase Integration Plan
True North Communications Inc. Supplemental Pension Plan
Foote, Cone & Belding Communications, Inc. Executive Employee Deferred
Compensation Plan and Agreement
