<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarter ended September 30, 1997 Commission file no. 1-5029
TRUE NORTH COMMUNICATIONS INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-1088161
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 EAST ERIE STREET, CHICAGO, ILLINOIS 60611
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number: (312) 425-6500
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ____
-----
There were 25,271,509 shares of the Registrant's 33 1/3 cents per share
par value Common Stock outstanding as of November 10, 1997.
<PAGE>
TRUE NORTH COMMUNICATIONS INC.
INDEX
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Exhibits
Consolidated Condensed Statements of Income for the
Three Months Ended September 30, 1996 and 1997 3
Consolidated Condensed Statements of Income for the
Nine Months Ended September 30, 1996 and 1997 4
Consolidated Condensed Balance Sheets as of September 30,
1996, December 31, 1996, and September 30, 1997 5
Consolidated Condensed Statements of Cash Flows for the
Nine Months Ended September 30, 1996 and 1997 6
Notes to Consolidated Condensed Financial
Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Operating Results 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
2
<PAGE>
TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three months ended September 30
1996 1997
------ ------
<S> <C> <C>
Revenues $125,803 $161,531
-------- --------
Costs and Expenses:
Salaries and employee benefits $ 77,716 $ 99,724
Office and general expenses 36,578 46,203
Other (income) expense 1,034 2,045
-------- --------
Total Costs and Expenses $115,328 $147,972
-------- --------
Income Before Provision for Taxes on Income $ 10,475 $ 13,559
Provision for Federal, Foreign & State
Income Taxes 5,048 6,480
-------- --------
$ 5,427 $ 7,079
Minority Interest Credit (Expense) (104) (328)
Equity in Earnings of Affiliated Companies 710 71
-------- --------
Net Income $ 6,033 $ 6,822
======== ========
Net Income Per Share $.26 $.28
======== ========
Average Number of Common and Common
Equivalent Shares Outstanding 23,384 24,618
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Nine months ended September 30
1996 1997
-------- --------
<S> <C> <C>
Revenues $350,166 $444,551
-------- --------
Costs and Expenses:
Salaries and employee benefits $230,623 $286,321
Office and general expenses 109,586 133,180
Other (income) expense 2,162 6,686
-------- --------
Total Costs and Expenses $342,371 $426,187
-------- --------
Income Before Provision for Taxes on Income $ 7,795 $ 18,364
Provision for Federal, Foreign & State
Income Taxes 3,914 8,778
-------- --------
$ 3,881 $ 9,586
Minority Interest Credit (Expense) 358 (786)
Equity in Earnings of Affiliated Companies 7,121 5,423
-------- --------
Net Income $ 11,360 $ 14,223
======== ========
Net Income Per Share $.49 $.58
======== ========
Average Number of Common and Common
Equivalent Shares Outstanding 23,228 24,397
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Sept. 30 Dec. 31 Sept. 30
1996 1996 1997
-------- -------- ----------
<S> <C> <C> <C>
ASSETS:
- -------
Cash and short-term investments $ 46,413 $ 56,996 $ 43,101
Accounts receivable, net 403,220 402,786 481,226
Other current assets 57,121 44,464 65,774
-------- -------- ----------
Total current assets $506,754 $504,246 $ 590,101
Property and equipment, net 58,853 61,369 63,699
Goodwill 107,621 151,640 230,543
Investment in affiliated companies 190,858 202,397 163,135
Other noncurrent assets 6,575 13,008 19,492
-------- -------- ----------
Total assets $870,661 $932,660 $1,066,970
======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
- -------------------------------------
Accounts payable and accruals $497,775 $473,223 $ 568,550
Short-term bank borrowings 52,002 79,698 67,015
Current portion of long-term debt 218 270 1,524
-------- -------- ----------
Total current liabilities $549,995 $553,191 $ 637,089
-------- -------- ----------
Long-term debt $ 29,244 $ 31,513 $ 65,885
-------- -------- ----------
Accrued future compensation exp. $ 37,819 $ 44,501 $ 41,837
-------- -------- ----------
Other noncurrent liabilities $ 21,696 $ 37,727 $ 47,004
-------- -------- ----------
Obligation to Modem Media Partners $ -- $ 24,387 $ --
-------- -------- ----------
Common stock $ 7,948 $ 7,957 $ 8,480
Paid-in capital 122,960 123,740 156,416
Retained earnings 106,490 119,399 122,368
Less-Treasury stock (284) (4,553) (5,155)
Cumulative translation adjustment (5,207) (5,202) (6,954)
-------- -------- ----------
Total stockholders' equity $231,907 $241,341 $ 275,155
-------- -------- ----------
Total liabilities and
stockholders' equity $870,661 $932,660 $1,066,970
======== ======== ==========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
5
<PAGE>
TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Nine months ended Sept. 30
1996 1997
-------- --------
<S> <C> <C>
Cash Flows From Operating Activities:
- -------------------------------------
Net income $ 11,360 $ 14,223
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 13,750 17,527
Deferred compensation expense 1,311 (2,664)
Equity earnings of affiliates, net of dividends
received (4,108) (4,003)
Accounts receivable (69,040) (42,953)
Accounts payable and accruals 42,000 44,626
Other current assets (17,151) (12,131)
Noncurrent liabilities (3,880) (3,247)
Other 1,025 3,696
-------- --------
$(24,733) $ 15,074
-------- --------
Cash Provided By (Used For) Financing Activities:
- -------------------------------------------------
Short-term investments and marketable securities $ (154) $ (6,442)
Increase in liability for cash overdrafts 29,464 17,320
Additions to long-term debt 25,019 40,119
Payments of long-term debt (1,772) (2,358)
Cash dividends paid (10,670) (11,254)
Common stock issuances 8,972 8,210
Short-term borrowings 2,020 (26,112)
-------- --------
$ 52,879 $ 19,483
-------- --------
Cash Provided By (Used For) Investment Activities:
- --------------------------------------------------
Purchase of subsidiaries $(25,655) $(39,609)
Capital expenditures (13,213) (9,790)
-------- --------
$(38,868) $(49,399)
-------- --------
Increase (Decrease) In Cash $(10,722) $(14,842)
Balance at beginning of period 48,408 45,946
-------- --------
Balance at end of period $ 37,686 $ 31,104
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
(UNAUDITED)
(1) The condensed financial statements included herein have been prepared by
the Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission, and include all adjustments (which
comprise only normal recurring items) which the Company considers necessary
for a fair presentation. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The consolidated condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's latest Annual Report
on Form 10-K.
Revenues and net income for the first nine months of the year should not be
considered reliable indicators of revenues or net income for the entire
year.
(2) The number of shares outstanding reflects the potential dilution of shares
expected to be earned through profit performance contracts and outstanding
stock options. Per share income amounts are not materially different on a
fully diluted basis.
7
<PAGE>
TRUE NORTH COMMUNICATIONS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
RESULTS OF OPERATIONS - QUARTER ENDED SEPTEMBER 30
- --------------------------------------------------
Revenues increased 28.4% to $161,531 in 1997 from $125,803 in 1996. North
American revenues increased 24.1% to $122,101 and International revenues
increased $44.0% to $39,430. Excluding the impact of acquisitions, consolidated
revenues increased 7.3% as a result of new business won during 1996 and 1997.
During the latter part of 1996 and in 1997, the Company acquired several
agencies in North America, Europe, Latin America and the Pacific Rim. These
acquisitions contributed $26,487 and $2,876 to the Company's revenues and pretax
income, respectively.
Salaries and benefits expenses increased 28.3% to $99,724 in 1997, compared to
the 28.4% increase in consolidated revenues. As a percent of revenues, this
category of expenses improved from 61.8% in 1996 to 61.7% in 1997. Excluding
the impact of acquisitions, salaries and benefits expenses increased 9.6%
compared to the Company's organic revenue growth rate of 7.3%.
Office and general expenses increased 26.3% to $46,203 in 1997, compared to the
28.4% increase in consolidated revenues. As a percent of revenues, this
category of expenses was 29.1% in 1996 and 28.6% in 1997. Excluding the impact
of acquisitions, office and general expenses increased 2.8% compared to the
Company's organic revenue growth rate of 7.3%.
The components of "Other Expenses" in both years are as follows:
<TABLE>
<CAPTION>
-----------------------------
1996 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
Interest expense $2,526 $3,013
- ----------------------------------------------------------------------------------
Interest (income) (1,544) (968)
- ----------------------------------------------------------------------------------
Unrealized loss on Shandwick investment 52 --
- ----------------------------------------------------------------------------------
$1,034 $2,045
------------------------------
</TABLE>
Net interest expense increased between years due to the fact that the Company is
carrying higher average debt levels in 1997 resulting from its acquisition
program.
Equity income declined from $710 in 1996 to $71 in 1997. The decline is
primarily attributable to a deterioration in the operations of the French
subsidiaries of Publicis.
8
<PAGE>
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30
- ------------------------------------------------------
Revenues increased 27.0% to $444,551 in 1997 from $350,166 in 1996. North
American revenues increased 21.5% to $341,569 and International revenues
increased 49.3% to $102,982. Excluding the impact of acquisitions, consolidated
revenues increased 10.7% as a result of new business won during 1996 and 1997.
During the latter part of 1996 and in 1997, the company acquired several
agencies in North America, Europe, Latin America and the Pacific Rim. These
acquisitions contributed $56,907 and $6,067 to the Company's revenues and pretax
income, respectively.
Salaries and benefits expenses increased 24.2% to $286,321 in 1997, compared to
the 27.0% increase in consolidated revenues. As a percent of revenues, this
category of expenses improved from 65.9% in 1996 to 64.4% in 1997. Excluding
the impact of acquisitions, salaries and benefits expenses increased 10.3%
compared to the Company's organic revenue growth rate of 10.7%.
Office and general expenses increased 21.5% to $133,180 in 1997, compared to the
27.0% increase in consolidated revenues. As a percent of revenues, this
category of expenses improved from 31.3% in 1996 to 30.0% in 1997. Excluding
the impact of acquisitions, office and general expenses increased 4.8% compared
to the Company's organic revenue growth rate of 10.7%.
The components of "Other Expenses" in both years are as follows:
<TABLE>
<CAPTION>
-----------------------------
1996 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
Interest expense $ 7,140 $ 9,818
- ----------------------------------------------------------------------------------
Interest (income) (3,553) (3,095)
- ----------------------------------------------------------------------------------
Unrealized (gain) on Shandwick investment (1,425) (37)
- ----------------------------------------------------------------------------------
$ 2,162 $ 6,686
------------------------------
</TABLE>
Net interest expense increased between years due to the fact that the Company is
carrying higher average debt levels in 1997 resulting from its acquisition
program.
Equity income declined from $7,121 in 1996 to $5,423 in 1997. Approximately two-
thirds of the decline is attributable to a deterioration in the operating
results of the French subsidiaries of Publicis. The remainder of the decline is
due to the impact of currency on True North's share of the results of Publicis.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As more fully explained below, the increases in "Accounts receivable, net",
"Other current assets", and "Accounts payable and accruals" from the beginning
of the year reflect the cyclical nature of the advertising business and are
inter-related.
The increase in "Other current assets" is primarily due to the production of
client commercials which will be shown during the fall and winter months. The
costs related to these commercials are billed to clients during the fourth
quarter when the commercials are completed. Commercial production activity
during the last month of the year is typically low.
The increase in "Accounts receivable, net" and "Accounts payable and accruals"
is due to the fact that media billings for the month of September 1997 were
higher than those of December 1996. During 1996, the increase in "Accounts
receivable" was higher than the increase in "Accounts payable and accruals".
The primary reason for this is that the Company's accounts receivable to
accounts payable ratio was at optimal levels during the last quarter of 1995 and
had shifted to levels that are typical of this period of the year. During 1997,
the increase in "Accounts receivable, net" and the increase in "Accounts payable
and accruals" more closely follow industry patterns.
As previously disclosed on a Form 8-K dated June 10, 1997, the Company
consummated certain transactions contemplated by the definitive agreement dated
May 19, 1997 between itself and Publicis Communication. These transactions were
recorded effective June 30, 1997. The impact of these transactions were not
material to the results of operations or financial condition of the Company.
As previously disclosed, the Company continues to contemplate strategic
acquisitions to enhance its worldwide network. During the first nine months of
1997, the Company completed the acquisitions of agencies in India, Singapore,
Venezuela, and Europe. In addition, it made contingent payments related to
acquisitions made in prior years. These payments were financed by the issuance
of long-term debt under its Revolving Credit Agreement.
OTHER MATTERS
- -------------
As previously announced, on July 31, 1997, True North entered into an Agreement
and Plan of Merger with Bozell, Jacobs, Kenyon & Eckhardt, Inc. ("Bozell"). In
connection therewith, True North has determined that it must end its
relationship with a client in the automotive industry due to a conflict with a
Bozell client. The client accounted for approximately 3.5% and 4.2% of True
North's consolidated revenues for the nine months ended September 30, 1997 and
twelve months ended December 31, 1996, respectively. True North anticipates that
this relationship will end during the fourth quarter of 1997, resulting in a
pre-tax charge to earnings of $8 million to $10 million related to employee
severance and the closure of a service office for this client.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
10.1 Employment Agreement between Donald L. Seeley and
Registrant
10.2 Asset Protection Plan between Donald L. Seeley and
Registrant
27. Financial Data Schedule
(b) Reports on Form 8-K -
In a report on Form 8-K dated July 31, 1997, Registrant announced
that Registrant and one of its affiliates entered into an
Agreement and Plan of Merger with Bozell, Jacobs, Kenyon &
Eckhardt, Inc.
11
<PAGE>
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 thereunto duly authorized.
TRUE NORTH COMMUNICATIONS INC.
(Registrant)
/S/ John J. Rezich
---------------------------------------------------
(Signature)
John J. Rezich
Controller and Chief Accounting Officer
Date: November 13, 1997
12
<PAGE>
EXHIBIT 10.1
[LOGO OF TRUE NORTH APPEARS HERE]
PERSONAL & STRICTLY CONFIDENTIAL
--------------------------------
DONALD L. SEELEY
----------------
FINANCIAL AND BENEFIT PACKAGE
-----------------------------
DATE
----
TRUE NORTH COMMUNICATIONS INC.
<PAGE>
PERSONAL
- --------
DONALD L. SEELEY
----------------
FINANCIAL AND BENEFIT PACKAGE
-----------------------------
KEY POINTS
- ----------
. Title
. Reporting Relationship
IMMEDIATE REMUNERATION
- ----------------------
. Base Salary
. Incentive Compensation
. Stock Options
. Contractual Obligations
ADDED/DEFERRED COMPENSATION
- ---------------------------
. True North Directors Part-Time Employment Agreement
. True North Profit Sharing/Profit Sharing Integration Plan
. True North Stock Purchase/Stock Purchase Integration Plan
. True North Employee Stock Incentive Plan
. Retirement Account Rollover
. Executive Insurance Investment Program
NON-FINANCIAL BENEFITS
- ----------------------
. Medical Coverage
. Dental Coverage
. Disability Plans
. Benefit Reimbursement
. Voluntary Life Insurance
MISCELLANEOUS
- -------------
. Company Car
. Vacation/Holidays
. Physical Examination
. Air Travel
. Financial Planning
. Foundation Contributions
. Relocation Expenses
ATTACHMENTS
- -----------
. Attachments 1 - 4
This material provides a brief summary of the compensation and benefit programs
of True North Communications. The plan documents govern the operation and will
control the interpretation of these plans.
1
<PAGE>
KEY POINTS
----------
. Title: Executive Vice President, Chief Financial
Officer of True North Communications Inc.
. Reporting Relationship: Bruce Mason, Chairman, Chief Executive Officer
----------------------
Member of the Company's Management Board.
2
<PAGE>
IMMEDIATE REMUNERATION
----------------------
Base Salary/Incentive Compensation
----------------------------------
. Base Salary: $380,000 per year.
-----------
. Incentive Compensation: As a senior executive of True North
----------------------
Communications Inc., you will participate in
the Company's Performance Program. (See
Attachment 1 for details.) This program
provides for three variable incentive
compensation components with payouts based on
the overall performance of the Company and
attainment of individual goals and
objectives.
The three components are:
Variable Incentive Compensation (VIC) is
-------------------------------------
based on a sliding scale as determined by the
yearly increase in Company net income. This
component can provide up to 105% of base
salary. For 1997, a minimum annualized bonus
of $300,000 will be guaranteed, with the
amount prorated based on the actual date of
hire.
Deferred Variable Incentive Compensation
----------------------------------------
(DVIC) is also based on the yearly net income
------
increase and can provide up to 50% of base
salary.
Variable Incentive Stock Options (VISO) are
---------------------------------------
also based on growth in net income with the
amount of shares determined as equivalent in
grant value up to 200% of the base salary on
a sliding scale. Upon arrival, a grant of
20,000 shares of True North common stock will
be awarded at the prevailing market rate.
3
<PAGE>
IMMEDIATE REMUNERATION
----------------------
Base Salary/Incentive Compensation
----------------------------------
(continued)
. Contractual Obligations: . If the Employer terminates employment
-----------------------
within the first 24 months from the date
of hire, base salary and benefits will
continue for the balance of the 24
months, subject to a minimum of 12
months. This payment guarantee is
renewable for 12 months each year after
its initial term.
. The Executive will participate in the
Company's Asset Protection Plan which
provides benefits equal to three times
compensation if termination occurs as a
result of a change-in-control. (See
Attachment 2 for details.)
4
<PAGE>
ADDED/DEFERRED COMPENSATION
---------------------------
TRUE NORTH COMMUNICATIONS DIRECTORS PART-TIME EMPLOYMENT AGREEMENT
- ------------------------------------------------------------------
. As a member of the Management Board, you will participate in this
Program. (See Attachment 3 for details.)
. The Plan provides an annual benefit of up to 45% of final five-year
average compensation (base plus bonus) payable for five years.
. The benefit is prorated for years of service less than 30 years,
however, the Executive receives an additional year of credited service
for each year served as a Management Board member.
. The benefit can begin at age 55 or later and attainment of 5 or more
years of service.
TRUE NORTH COMMUNICATIONS PROFIT SHARING*
- ----------------------------------------
. True North's primary retirement program is a qualified plan and
noncontributory on employee's part.
. Company contribution up to 15% of total compensation each year
depending on overall financial performance. (Recent history, 3-10%.)
. Enter plan in January or July following 2-year Anniversary.
Contributions begin after 2-year eligibility period. All
contributions are 100% vested.
. During the two-year eligibility waiting period, you will be provided
with a phantom profit sharing contribution equivalent to that which
you would have earned as a participant in this Plan. The amount
determined will be credited annually to an account established on your
behalf in the Stock Purchase Integration Plan (see below).
*Effective January 1, 1998, the Company is revising its Profit Sharing and Stock
Purchase Plans. The revisions will provide for greater investment flexibility
and more opportunities to save. See Attachment 4 for a summary of the changes.
5
<PAGE>
ADDED/DEFERRED COMPENSATION (cont'd)
-------------------------------------
TRUE NORTH COMMUNICATIONS PROFIT SHARING INTEGRATION PLAN
- ---------------------------------------------------------
. If the Profit Sharing Plan's contribution is limited by IRS salary or
contribution caps, this Plan will provide for the additional
contribution to which you are entitled.
. These funds are 100% vested immediately and accrue interest at the 5-
Year T-Note rate. All contributions and investment earnings are tax
deferred.
TRUE NORTH COMMUNICATIONS STOCK PURCHASE PLAN*
- ---------------------------------------------
. A qualified 401(k) savings plan.
. Immediate eligibility. Participation begins coincident with, or on
next calendar quarter after date of hire.
. Contributions up to 6-2/3% of total compensation through payroll
deduction up to IRS limit ($9,500 in 1997); contributions are on a
pretax basis.
. Immediate company matching contribution equal to 50% of employee's
contribution.
. All contributions are used to purchase True North stock and are
immediately 100% vested. All shares earn quarterly dividends which
are used to purchase additional shares.
. In-service loans and withdrawals are available under certain
circumstances.
TRUE NORTH COMMUNICATIONS STOCK PURCHASE INTEGRATION PLAN
- ---------------------------------------------------------
. Once the Stock Purchase Plan IRS contribution limit is achieved
($9,500 in 1997), senior executives are eligible for the Stock
Purchase Integration Plan. This Plan allows continued contributions
above the $9,500 limit with the company contributing 50c on each $1.00
invested.
. These funds are 100% vested immediately and accrue interest at the 5-
Year T-Note rate. All contributions and investment earnings are tax
deferred.
6
<PAGE>
ADDED/DEFERRED COMPENSATION (cont'd)
-------------------------------------
TRUE NORTH COMMUNICATIONS EMPLOYEE STOCK INCENTIVE PLAN
- -------------------------------------------------------
. An annual award of eight shares of True North common stock is made to
each employee if the company meets financial goals. The award is
credited to the employee's Stock Purchase Plan account.
RETIREMENT ACCOUNT ROLLOVER
- ---------------------------
. Funds from any qualified retirement plan may be rolled over to True
North's Profit Sharing Trust and will earn accrued interest based on
financial performance. Three investment options are available: a
Balanced Fund, a Fixed Fund and a Money Market Fund.
TRUE NORTH COMMUNICATIONS SELECT EXECUTIVE PLAN
- -----------------------------------------------
. Provided exclusively to our most senior management, this Plan combines
$1 million of company paid term Life Insurance and a 15-option
investment plan which can accept employee contributions of after-tax
dollars which earn tax-deferred interest.
. The $1 million coverage is guaranteed with no physical required.
Additional amounts above $1 million can be purchased by the Executive.
. Upon arrival, information will be provided by the Plan Consultant to
describe this unique Program.
7
<PAGE>
NON-FINANCIAL BENEFITS
----------------------
MEDICAL COVERAGE
- ----------------
. Provided to our most senior management, this comprehensive plan
provides reimbursement of 100% of all eligible medical expenses
including prescription drugs. The Employee shares in the cost of the
Plan on a pretax basis. All benefits paid by the Plan are tax free to
the individual.
. Coverage is available first day.
DENTAL COVERAGE
- ---------------
. Provided to our most senior management, this comprehensive plan
provides reimbursement of 100% of all eligible dental expenses. The
Employee shares in the cost of the Plan on a pretax basis. All
benefits paid by the Plan are tax free to the individual.
. Coverage is available first day.
DISABILITY PLANS
- ----------------
. Short-term disability coverage initially provides 100% of pay for
first four weeks, and 50% of pay for 22 weeks. The number of weeks
paid at 100% increase as years of service increase. Coverage is
completely Company paid.
. Long-term disability coverage provides 40% of pay up to $4,000 of
coverage per month, payable to age 65, paid for by the Company. The
employee can purchase an additional 20% up to a total of $10,000 of
coverage per month. Coverage is effective the first of the month
following date of hire.
BENEFIT REIMBURSEMENT
- ---------------------
. Allows up to $12,000 per year to be set aside on a pretax basis to
meet eligible expenses for medical and dependent care ($5,000 cap on
dependent care). Participation can start as of the first day of
employment.
VOLUNTARY LIFE INSURANCE
- ------------------------
. In addition to the Select Executive Plan, an additional $300,000 of
life insurance may be purchased by the Executive.
8
<PAGE>
MISCELLANEOUS
-------------
COMPANY CAR
- -----------
. True North will furnish, through purchase or lease, an automobile at a
value of up to $40,000, or an annual allowance of approximately
$10,750. True North will cover the cost of insurance, maintenance and
fuel for the car. In addition, the Company will provide in-building
parking.
VACATION/HOLIDAYS
- -----------------
. You will be entitled to four weeks' vacation, (however, extended
vacations are permitted if time and workload permit).
. True North typically honors 10 to 11 holidays per year, including one
personal holiday to be used at the Employee's discretion for a civic
or religious obligation.
PHYSICAL EXAMINATION
- --------------------
. Company paid comprehensive physical exam bi-annually to age 45, then
annually thereafter.
AIR TRAVEL
- ----------
. First-class air travel will be reimbursed.
FINANCIAL PLANNING
- ------------------
. An annual allowance of $4,000 for financial planning is provided.
Arrangements have been made with Arthur Andersen to provide this
service, but the Employee can utilize other individuals at their
discretion.
FOUNDATION CONTRIBUTIONS
- ------------------------
. An annual allowance of $2,000 is made available for charitable
contributions of your choice from the Company's Foundation budget.
9
<PAGE>
MISCELLANEOUS (cont'd)
-----------------------
RELOCATION EXPENSES
- -------------------
. Transportation of household goods.
. Closing costs for both the sale and purchase of a home. This includes
broker fees, points (maximum of 3 points) and attorney fees.
. Two househunting trips (more if required).
. Temporary housing for up to two months in the amount of $3,000 to
$4,000/month, depending on availability of suitable accommodations.
. A one-time payment of $25,000 to the Executive.
10
<PAGE>
I have reviewed and am in agreement with the contents of this financial and
benefit package.
In addition, I understand my employment is in an "at will" capacity, which means
that either I or True North may terminate the relationship at any time with or
without cause. It is understood that neither party has an obligation to base a
decision to terminate the employment relationship on any reason other than the
intent not to continue the relationship.
Agreed & Accepted:
/S/ Donald L. Seeley
- -------------------------------- ___________________________
Donald L. Seeley
6/20/97
- -------------------------------- ___________________________
Date
11
<PAGE>
Exhibit 10.2
[LOGO OF TRUE NORTH APPEARS HERE]
TRUE NORTH COMMUNICATIONS INC.
ASSET PROTECTION PLAN
1. PURPOSE. The purpose of this Asset Protection Plan (the "Plan") is to
-------
secure continued services, dedication and objectivity of certain executive
employees of True North Communications Inc. (the "Company") and its
subsidiaries in the event of any threat or occurrence of, or negotiation or
other hostile action that could lead to, or create the possibility of, a
hostile Change in Control (as defined in Section 2) of the Company, without
concern as to whether such employees might be hindered or distracted by
personal uncertainties and risks created by any such possible hostile
Change in Control.
2. DEFINITIONS. As used in this Agreement, the following terms, when
-----------
capitalized, shall have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means (1) a material breach by a Participant of those duties
and responsibilities of the Participant which do not differ in any material
respect from the duties and responsibilities of the Participant during the
90-day period immediately prior to a Change in Control (other than as a
result of incapacity due to physical or mental illness), which is
demonstrably willful and deliberate on the Participant'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 in a reasonable
period of time after receipt of written notice from the Company specifying
such breach or (2) the commission by the Participant of a felony involving
moral turpitude.
(c) "Change in Control" means (i) an acquisition (other than directly from
the Company) of 15% or more of the beneficial interest in the voting stock
of the Company by a party other than the Company or a Company sponsored
benefit plan; or (ii) a change in the Board of Directors as a result of
which the current directors (together with the successors they nominate or
approve for nomination) cease to be a majority of the Board of Directors of
the Company; or (iii) a merger, reorganization or consolidation whereby the
existing shareholders of the Company of the then outstanding shares
resulting from such merger, reorganization
-1-
<PAGE>
or consolidation, 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.
(d) "Company" means True North Communications Inc., a Delaware
corporation.
(e) "Compensation" means the Participant's annual rate of pay in effect
immediately before a Change in Control occurs, plus the amount of the
highest annual bonus awarded to the Participant in any of the three
calendar years preceding the year in which a Change in Control occurs.
(f) "Date of Termination" means (1) the effective date on which a
Participant's employment by the Company terminates or (2) if the
Participant's employment by the Company terminates by reason of death, the
date of death of the Participant.
(g) "Employee" means an individual whose relationship with an Employer is,
under common law, that of an employee and who performs services for one or
more Employers on a full-time basis.
(h) "Employer" means the Company and any of its affiliates which, with the
consent of the Company, has adopted this Plan.
(i) "Nonqualifying Termination" means a termination of the Participant's
employment (1) by the Participant's Employer for Cause, (2) as a result of
the Participant's death, (3) by the Company due to the Participant's
absence from his duties with the Company on a full-time basis for at least
180 consecutive days as a result of the Participant's incapacity due to
physical or mental illness as is consistent with Company policy and
programs or (4) by the Participant for any reason other than for a
Qualifying Termination.
(j) "Participant" shall mean an Employee who, at the time a Change in
Control occurs, is a member of the Company's Management Board.
(k) "Qualifying Termination" means a termination of the Participant's
employment due to the occurrence, without the Participant's expressed
written consent, of any of the following events after the occurrence of a
Change in Control:
(1) any of (i) the assignment to the Participant of any duties
inconsistent in any material respect with the Participant's position(s),
duties, responsibilities or status with the Company immediately prior to
such Change in Control, (ii) a change in the Participant's reporting
responsibilities, titles or offices with the Company as in effect
immediately prior to such Change in Control or (iii) any removal or
involuntary
-2-
<PAGE>
termination of the Participant from the Company otherwise than as expressly
permitted by this Agreement or any failure to re-elect the Participant to
any position with the Company held by the Participant immediately prior to
such Change in Control;
(2) a reduction by the Company in the Participant's rate of annual
base salary as in effect immediately prior to such Change in Control or as
the same may be increased from time to time thereafter;
(3) any requirement of the Company that the Participant (i) be based
anywhere other than at the facility where the Participant is located at the
time of the Change in Control or (ii) travel on Company business to an
extent substantially more burdensome than the travel obligations of the
Participant immediately prior to such Change in Control;
(4) the failure of any Employer to (i) continue in effect any
employee benefit plan or compensation plan in which the Participant is
participating immediately prior to such Change in Control, unless the
Participant is permitted to participate in other plans providing the
Participant with substantially comparable benefits, or the taking of any
action by the Company which would adversely affect the Participant's
participation in or materially reduce the Participant's benefits under any
such plan, (ii) provide the Participant and the Participant'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 Company and its affiliated
companies in effect for the Participant immediately prior to such Change in
Control or, if more favorable to the Participant, as in effect generally at
any time thereafter with respect to other peer Participants of the Company
and its affiliated companies, (iii) provide fringe benefits in accordance
with the most favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the Participant
immediately prior to such Change in Control or, if more favorable to the
Participant, as in effect generally at any time thereafter with respect to
other peer Participants of the Company and its affiliated companies, (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 Participant by the Company and its affiliated companies immediately
prior to such Change in Control or, if more favorable to the Participant,
as provided generally at any time thereafter with respect to other peer
Participants of the Company and its affiliated companies, (v) provide the
Participant with paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated
companies as in effect for the Participant immediately prior to such Change
in Control or, if more
-3-
<PAGE>
favorable to the Participant, as in effect generally at any time thereafter
with respect to other peer Participants of the Company and its affiliated
companies, or (vi) reimburse the Participant promptly for all reasonable
employment expenses incurred by the Participant in accordance with the most
favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Participant immediately prior to
such Change in Control, or if more favorable to the Participant, as in
effect generally at any time thereafter with respect to other peer
Participants of the Company and its affiliated companies; or
(5) the failure of the Company to obtain the assumption agreement
from any successor as contemplated in Section 11(b).
For purposes of the Agreement, any good faith determination of a
Qualifying Termination made by the Participant shall be conclusive;
provided, however, that an isolated, insubstantial and inadvertent action
taken by an Employer in good faith and which is remedied by such Employer
promptly after receipt of notice thereof given by the Participant shall not
constitute a Qualifying Termination.
(l) "Termination Period" means the period of time beginning with a Change
in Control and ending on the earliest to occur of (1) the Participant's
death, and (2) two years following such Change in Control.
3. PAYMENTS UPON TERMINATION OF EMPLOYMENT. (a) If during the Termination
---------------------------------------
Period the employment of a Participant shall terminate, by reason of a
Qualifying Termination, then the Company shall pay to the Participant (or
the Participant's beneficiary or estate) within 30 days following the Date
of Termination, as compensation for services rendered to one or more
Employers:
(1) a cash amount equal to the sum of (i) the Participant's full
annual base salary from the Employers through the Date of Termination, to
the extent not theretofore paid, (ii) the Participant's annual bonus in an
amount at least equal to the highest annualized (for any fiscal year
consisting of less than 12 full months or with respect to which the
Participant has been employed by the Employers for less than 12 full
months) bonus paid or payable, including by reason of any deferral, to the
Participant by the Employers in respect of the three fiscal years of the
Employers (or such portion thereof during which the Participant performed
services for the Employers if the Participant shall have been employed by
the Employers for less than such three fiscal year period) immediately
preceding the fiscal year in which the Change in Control occurs, multiplied
by a fraction, the numerator of which is the number of days in the fiscal
year in which the Change in Control occurs through the Date of Termination
and the denominator of which is 365 or 366, as
-4-
<PAGE>
applicable, and (iii) any compensation previously deferred by the
Participant (together with any interest and earnings thereon) to the extent
not theretofore paid; plus
(2) a lump-sum cash amount (subject to any applicable payroll or
other taxes required to be withheld pursuant to Section 4) in an amount
equal to three (3) times the Participant's Compensation.
(b) For a period of two years commencing on the Date of Termination, the
Company shall continue to keep in full force and effect all policies of
medical, dental, disability, salary continuance, employee life and group
life insurance with respect to the Participant and his dependents with the
same level of coverage, upon the same terms and otherwise to the same
extent as such policies shall have been in effect immediately prior to the
Date of Termination or, if more favorable to the Participant, as provided
generally with respect to other peer Participants of the Employers, and the
Employers and the Participant shall share the costs of the continuation of
such insurance coverage in the same proportion as such costs were shared
immediately prior to the Date of Termination. At the end of the two year
period, the Participant shall be eligible to continued benefits as provided
in the Consolidated Omnibus Budget Reconciliation Act. In addition, for
purposes of determining the Participant's eligibility for participation in
the Employer's retiree medical plan, the Participant shall upon the
Participant's Date of Termination be treated as if he or she is five years
older (but not older than age 55) than on such date and as if he or she had
five additional years of service.
(c) If during the Termination Period the employment of a Participant shall
terminate by reason of a Nonqualifying Termination, then no compensation is
payable nor are benefits extended for the two-year period as provided in
(a) and (b) above.
4. WITHHOLDING TAXES. The Company may withhold from all payments due to the
-----------------
Participant (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
5. REIMBURSEMENT OF EXPENSES. If any contest or dispute shall arise under
-------------------------
this Plan involving termination of a Participant's employment with the
Company or involving the failure or refusal of the Company to perform fully
in accordance with the terms hereof, the Company shall reimburse the
Participant, on a current basis, for all legal fees and expenses, if any,
incurred by the Participant in connection with such contest or dispute,
together with interest in an amount equal to the prime rate of Citibank,
N.A. from time to time in effect, but in no event higher than the maximum
legal rate permissible under applicable law, such interest to
-5-
<PAGE>
accrue from the date the Company receives the Participant's statement for
such fees and expenses through the date of payment thereof; provided,
however, that in the event the resolution of any such contest or dispute
includes a finding denying, in total, the Participant's claims in such
contest or dispute, the Participant shall be required to reimburse the
Company, over a period of 12 months from the date of such resolution, for
all sums advanced to the Participant pursuant to this Section 5.
6. OPERATIVE EVENT. Notwithstanding any provision herein to the contrary, no
---------------
amounts shall be payable hereunder unless and until there is a Change in
Control at a time when the Participant is employed by an Employer.
7. TERMINATION OF PLAN. This Plan shall be effective on the date hereof and
-------------------
shall continue until terminated by the Company as provided in this
paragraph. The Company shall have the right, prior to a Change in Control,
in its sole discretion, pursuant to action by the Board, to approve the
termination or amendment of this Plan; provided, however, that no such
action shall be taken by the Board during any period of time when the Board
has knowledge that any person has taken steps reasonably calculated to
effect a Change in Control until, in the opinion of the Board, such person
has abandoned or terminated its efforts to effect a Change in Control.
8. PROVISIONAL REDUCTION IN BENEFITS. (a) Notwithstanding anything in this
---------------------------------
Plan to the contrary, (i) if it shall be determined that any payment or
distribution by the Employers to or for the benefit of a Participant
(whether paid or payable or distributed or distributable pursuant to the
terms of this Plan or otherwise, but determined without regard to any
adjustment required under this Section 8) (in the aggregate, the "Total
Payments") would be subject to the excise tax imposed by Section 4999 of
the Code (the "Excise Tax"), and (ii) if after reduction by the amount of
such Excise Tax the amount of the Total Payments would be less than the
maximum amount that could be paid to the Participant without the imposition
of such Excise Tax, then the payments due hereunder shall be reduced so
that the Total Payments are One Dollar ($1) less than such maximum amount.
(b) All determinations required to be made under this Section 8, including
whether and when a reduction in the amount payable hereunder pursuant to
Section 3(a) is required and the amount of any such reduction and the
assumptions to be utilized in arriving at such determination, shall be made
by the Company's public accounting firm (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the
Employee within 15 business days of the receipt of notice from the
Participant that there has been a Payment, or such earlier time as is
requested by the Company or the Participant. In the event that the
Accounting Firm is serving as accountant or auditor for the individual,
-6-
<PAGE>
entity or group effecting the Change in Control, the Employee shall appoint
another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. If the Accounting
Firm determines that no Excise Tax is payable by the Participant, it shall
furnish the Employee with a written opinion that failure to report the
Excise Tax on the Employee's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. Any
determination by the Accounting Firm shall be binding upon the Company, the
Subsidiary and the Participant. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that the
reduction in the amount payable hereunder pursuant to Section 3(a) will not
have been made consistent with the calculations required to be made
hereunder. In that event the Participant thereafter shall promptly pay to
the Company the amount of the required reduction.
9. NONCOMPETITION. (a) Covenant Not to Compete. During the period of the
--------------
Participant's employment by the Company and for a period of one year
thereafter following a Qualifying Termination, except with the prior
written consent of the Board, a Participant:
(1) 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 businesses conducted at
the date hereof by the Company or any of its subsidiaries or affiliates
over which he shall have exercised, directly or indirectly, any
supervisory, management, fiscal or operating control during the Employment
Period (the "Managed Companies"), or (ii) any business in which the Managed
Companies are substantially engaged at any time during the Employment
Period;
(2) shall not solicit, in competition with the Managed Companies, any
person who is a customer of the businesses conducted by the Managed
Companies at the date hereof or of any business in which the Managed
Companies are substantially engaged at any time during the Employment
Period; and
(3) shall not induce or attempt to persuade any employee of the
Managed Companies to terminate his employment relationship in order to
enter into competitive employment.
(b) Trade Secrets. No Participant shall, at any time during the
Employment Period or thereafter, make use of any bidding information (or
-7-
<PAGE>
computer programs thereof) of any of the Managed Companies, nor divulge any
trade secrets or other confidential information of any of the Managed
Companies, except to the extent that such information becomes a matter of
public record, is published in a newspaper, magazine or other periodical
available to the general public or as the Company CEO may so authorize in
writing; and when a Participant shall cease to be employed by the Company,
the Participant shall surrender to the Company all records and other
documents obtained by him or entrusted to him during the course of his
employment hereunder (together with all copies thereof) which pertain
specifically to any of the businesses covered by the covenants in Section
4.01 or which were paid for by any of the Managed Companies; provided,
however, that the Participant may retain copies of such documents as
necessary for the Participant's personal records for federal income tax
purposes.
(c) Scope of Covenants; Remedies. The following provisions shall
apply to the covenants of the Participants contained in this Section:
(1) the covenants contained in paragraphs (1) and (2) of Section 10
(a) shall apply within all territories in which any of the Managed
Companies are actively engaged in the conduct of business during the
Employment Period, including, without limitation, the territories in which
customers are then being solicited;
(2) without limiting the right of the Company to pursue all other
legal and equitable remedies available for violation by a Participant of
the covenants contained in Sections 10 (a) and 10 (b), including the
cessation and recovery of payments and benefits paid and provided under
this Plan, 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 10 (a) and 10 (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 10 (a) and 10 (b) shall
survive the conclusion of the Participant's employment by the Company.
10. SCOPE OF PLAN. Nothing in this Plan shall be deemed to entitle the
-------------
Participant to continued employment with any Employer, and if the
-8-
<PAGE>
Participant's employment with the Employers shall terminate prior to a
Change in Control, then the Participant shall have no further rights under
this Plan; provided, however, that any termination of the Participant's
employment following a Change in Control shall be subject to all of the
provisions of this Plan.
11. SUCCESSORS; BINDING PLAN. (a) This Plan shall not be terminated by any
-------------------------
merger or consolidation of the Company whereby the Company is or is not the
surviving or resulting corporation or as a result of any transfer of all or
substantially all of the assets of the Company. In the event of any such
merger, consolidation or transfer of assets, the provisions of this Plan
shall be binding upon the surviving or resulting corporation or the person
or entity to which such assets are transferred.
(b) The Company agrees that concurrently with any merger, consolidation or
transfer of assets referred to in paragraph (a) of this Section 11, it will
cause any successor or transferee unconditionally to assume, by written
instrument delivered to the Participant (or his beneficiary or estate), all
of the obligations of the Company hereunder. Failure of the Company to
obtain such assumption prior to the effectiveness of any such merger,
consolidation or transfer of assets shall be a breach of this Plan and
shall entitle the Participant to compensation and other benefits from the
Company in the same amount and on the same terms as the Participant would
be entitled hereunder if the Participant's employment were terminated
following a Change in Control other than by reason of a Nonqualifying
Termination. For purposes of implementing the foregoing, the date on which
any such merger, consolidation or transfer becomes effective shall be
deemed the Date of Termination.
(c) This Plan shall inure to the benefit of and be enforceable by the
Participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Participant
shall die while any amounts would be payable to the Participant hereunder
had the Participant continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Plan to
such person or persons appointed in writing by the Participant to receive
such amounts or, if no person is so appointed, to the Participant's estate.
12. NOTICE. For purposes of the Plan, all notices and other communications
------
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered or five days after deposit in the
United States mail, certified and return receipt requested, postage
prepaid, addressed (1) if to the Participant, to the most recent address
then shown on the employment records of the Participant's Employer, 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
-9-
<PAGE>
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. FULL SETTLEMENT; RESOLUTION OF DISPUTES. (a) The Company's obligation
----------------------------------------
to make any payments provided for in this Plan and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Employers may
have against the Participant or others. In no event shall the Participant
be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Participant under any of the
provisions of this Plan and, such amounts shall not be reduced whether or
not the Participant obtains other employment.
(b) If there shall be any dispute between the Employers and the
Participant in the event of any termination of the Participant's
employment, then, unless and until there is a final, nonappealable judgment
by a court of competent jurisdiction declaring that such termination was
for Cause, that the determination by the Participant of the existence of a
Qualifying Termination was not made in good faith, or that the Company is
not otherwise obligated to pay any amount or provide any benefit to the
Participant and his dependents or other beneficiaries, as the case may be,
under paragraphs (a) and (b) of Section 3, the Company shall pay all
amounts, and provide all benefits, to the Participant and his dependents or
other beneficiaries, as the case may be, that the Company would be required
to pay or provide pursuant to paragraphs (a) and (b) of Section 3 as though
such termination were by the Company without Cause or by the Participant as
a Qualifying Termination.
14. EMPLOYMENT WITH SUBSIDIARIES. Employment with the Company for purposes of
----------------------------
this Plan shall include employment with any corporation or other entity in
which the Company has direct or indirect ownership interest of 50% or more
of the total combined voting power of the then outstanding securities of
such corporation or other entity entitled to vote generally in the election
of directors.
15. GOVERNING LAW; VALIDITY. The interpretation, construction and
------------------------
performance of this Plan shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard
to the principle of conflicts of laws. The invalidity or unenforceability
of any provision of this Plan shall not affect the validity or
enforceability of any other provision of this Plan, which other provisions
shall remain in full force and effect.
16. MISCELLANEOUS. Subject to the Company's power of amendment contained in
-------------
Section 7, no provision of this Plan may be modified or waived unless
-10-
<PAGE>
such modification or waiver is agreed to in writing and signed by the
Participant and by a duly authorized officer of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Plan to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
Failure by the Participant or the Company to insist upon strict compliance
with any provision of this Plan or to assert any right the Participant or
the Company may have hereunder, including, without limitation, the right of
the Participant to terminate employment for a Qualifying Termination, shall
not be deemed to be a waiver of such provision or right or any other
provision or right of this Plan. The rights of, and benefits payable to,
the Participant, his estate or his beneficiaries pursuant to this Plan are
in addition to any rights of, or benefits payable to, the Participant, his
estate or his beneficiaries under any other employee benefit plan or
compensation program of the Company, except benefits payable under the
Company's Severance Policy or for any payments that may be required by
statute by reason of termination of employment, except for Unemployment
Compensation, which are inclusive of the payments required under this Plan.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer of the Company on this 1ST day of JULY, 1997.
TRUE NORTH COMMUNICATIONS INC.
By: /S/ THEODORE J. THEOPHILOS
---------------------------
Title: EVP, General Counsel
------------------------
Employee:
/S/ Donald L. Seeley
------------------------------
-11-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 31,104
<SECURITIES> 11,997
<RECEIVABLES> 487,625
<ALLOWANCES> 6,399
<INVENTORY> 0
<CURRENT-ASSETS> 590,101
<PP&E> 176,733
<DEPRECIATION> 113,034
<TOTAL-ASSETS> 1,066,970
<CURRENT-LIABILITIES> 637,089
<BONDS> 65,885
0
0
<COMMON> 159,741
<OTHER-SE> 115,414
<TOTAL-LIABILITY-AND-EQUITY> 1,066,970
<SALES> 0
<TOTAL-REVENUES> 444,551
<CGS> 0
<TOTAL-COSTS> 416,369
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,818
<INCOME-PRETAX> 18,364
<INCOME-TAX> 8,778
<INCOME-CONTINUING> 14,223
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,223
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.58
</TABLE>
