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EXHIBIT 10.2
[Conformed copy, including 4/1/92 Agreement, and 8/29/97 Amendment]
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of April, 1992, by and between
TEMERLIN MCCLAIN, INC., a Texas corporation (the "Company"), and DENNIS MCCLAIN
(the "Executive").
1. TERM OF AGREEMENT; POSITION.
(a) The Company hereby employs the Executive as President of the
Company for a term (the "Term") to begin on April 1, 1992, and which will end,
subject to the provisions of paragraph 19 hereof, on March 31, 2001, and the
Executive hereby accepts such employment. The Executive shall serve as President
of the Company throughout the Term.
(b) The Executive shall devote his full time, attention and
energies during regular business hours to the business and affairs and to
promote the interests and welfare of the Company and its subsidiaries. The
Company acknowledges that the Executive is involved in community activities, and
may engage in the activities described in Paragraph 1(d) below, subject to the
terms and conditions of said Paragraph 1(d), and the Company has no objection to
such involvement continuing or occurring provided it does not materially
interfere with the performance of the Executive's duties hereunder. The Company
will give written notice to the Executive in the event the Company believes the
Executive's community activities or such other activities described in paragraph
1(d) below are materially interfering with his duties hereunder, and the
Executive shall have a reasonable time within which to diminish or delete such
activities. The Executive shall perform, to the best of his abilities, as
President of the Company, such executive duties with managerial responsibility
as may, from time to time, be specified by the Board of Directors consistent
with his status as President of the Company. The parties acknowledge that the
Executive being President of the Company as hereinabove provided in subparagraph
(a) of this Paragraph 1 is a material term of this Agreement. The Company shall
cause the Executive to be elected to its Board of Directors during the Term. The
Executive's services shall be performed at the Company's offices in the Dallas
Metroplex area, subject to the reasonable travel requirements of his position
and duties hereunder. The parties acknowledge that the Executive's performance
of services in the Dallas Metroplex area as referred to in the preceding
sentence is a material term of this Agreement.
(c) The Executive shall not during the Term be interested
directly or indirectly, in any manner, as a partner, officer, director,
stockholder, advisor, employee or in any other capacity, in any other business
similar to any of the businesses of the Company or any of its subsidiaries or
affiliates; provided, however, that this clause shall not prevent or limit the
right of the Executive to own up to five percent (5%) of the
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issued and outstanding securities of any publicly-owned company whose securities
are traded on any securities exchange or in the over-the-counter market;
provided further however that this clause shall not apply to Executive from and
after the effectiveness of the Company's termination of Executive's employment
without Cause (as hereinafter defined) or Executive's termination of employment
for Good Reason (as hereinafter defined). In addition, the Company and Bozell,
Jacobs, Kenyon & Eckhardt, Inc. ("BJK&E"), the parent corporation of the
Company, agree that Section 9 of that certain Stockholders' Agreement dated as
of February 18, 1988, among BJK&E and certain of its stockholders shall have no
applicability to the Executive.
(d) Subject to the provisions of subparagraphs (b) and (c)
above, from and after April 1, 1992, the Executive may, in addition to the
community activities described in subparagraph b. above, engage in venture
capital transactions and other investments in businesses, other than the
advertising, public relations, radio, television or print media businesses,
provided that the Executive performs no services for remuneration in connection
with any such investments.
2. COMPENSATION.
2.1 BASE COMPENSATION.
(a) The Company shall compensate the Executive (as adjusted in
accordance herewith, his "Base Compensation") for the services to be rendered by
the Executive hereunder, including all services to be rendered as a director and
executive officer of the Company and a director of BJK&E and as a member of any
committee of the Board of Directors of the Company or BJK&E, at the rate of
$675,000 per annum.
The Executive's annual Base Compensation shall be payable
not less frequently than monthly in accordance with the regular executive salary
procedures from time to time adopted by the Company. The Company shall deduct
from all compensation paid to the Executive hereunder such sums, including but
without limitation, Social Security, income tax withholding, and unemployment
insurance, as the Company is by law obligated to deduct.
(b) On April 1, 1993 and on each April 1 thereafter during the
Term (the "Adjustment Date"), the Base Compensation shall be adjusted upward
based upon the Consumer Price Index for all Urban Consumer/United States City
Average, as published by the Bureau of Labor Statistics of the United States
Department of Labor (the "CPI"). Such compensation for the twelve (12) months
beginning on each Adjustment Date shall be equal to the Greater of (i) $675,000,
or (ii) $675,000, multiplied by a fraction, the numerator of which shall be the
CPI published most recently prior to the Adjustment Date and the denominator of
which shall be the CPI published most recently prior to April 1, 1992. In no
event, however, shall the Base Compensation for any such twelve (12) month
period exceed 106% of the Base Compensation payable in the previous twelve (12)
month period.
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2.2 FRINGE BENEFITS.
The Company agrees that the Executive's fringe benefits,
taken as a whole, will not be less than he received as an employee of BJK&E
and/or its affiliates as of April 1, 1992.
2.3 AIR TRAVEL.
(a) It is understood that it will be necessary for business
purposes for the Executive's spouse to accompany the Executive on various
business trips from time to time, and whenever the Executive, in the exercise of
his reasonable judgment, determines that the presence of the Executive's spouse
on any business trip will serve the Company's best interests, the Company will
pay for all reasonable travel expenses incurred by the Executive's spouse on
such business trip.
(b) It is acknowledged that Company policy requires all
employees, including senior executives, to travel in Economy Class on domestic
flights and in Business Class on International flights. However, from time to
time the Executive may fly First Class on either a domestic or an international
flight whenever the Executive, in the exercise of his reasonable judgment,
determines that it is in the best interests of the Company for him to do so, as,
for example, and without limitation, when traveling with a client or with talent
appearing in a commercial produced by the Company.
(c) It is understood and agreed that the Chief Financial Officer
of BJK&E may from time to time review determinations made by the Executive with
regard to travel arrangements as provided in this Paragraph 2.3. If in the
reasonable determination of such officer any of such travel arrangements were
not in the best interests of the Company, the Executive agrees to conform to
such determination with regard to future travel arrangements, without any
adjustment of the costs of travel arrangements previously incurred.
2.4 PARTICIPATION IN CERTAIN BENEFIT PLANS.
The Executive shall be entitled to life insurance (in
addition to the life insurance hereinbelow provided in Paragraphs 2.5 and 3),
medical insurance, Profit Sharing Plan participation, Wealth Accumulation Plan
participation and other fringe benefits in accordance with BJK&E's standard
policy affecting senior BJK&E executives.
2.5 SPLIT-DOLLAR LIFE INSURANCE POLICY.
The Company will provide the Executive with a split-dollar
life insurance policy providing for death benefit in the event of the
Executive's death of Two Million Dollars ($2,000,000.00), the annual premium for
which will be paid by the
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Company, subject to a total annual premium cost to the Company of not more than
Thirty-Eight Thousand Five Hundred Dollars ($38,500.00). The Executive shall
advise the Company in writing of the name(s) of the beneficiary or beneficiaries
of such policy. In the event that the Executive's employment with the Company
terminates for any reason other than his death (any such termination being
hereinafter the "Termination") within the Term, the following percentage of the
cash surrender value shall be paid to the Executive upon such Termination:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
Year ending March 31, 1993 50
Year ending March 31, 1994 60
Year ending March 31, 1995 70
Year ending March 31, 1996 80
Year ending March 31, 1997 90
April 1, 1997 and thereafter 100
</TABLE>
The Company shall have the right during the period of the
Executive's employment with the Company to borrow against the cash surrender
value of such policy. If in the event of Termination, the amount of the cash
surrender value to which the Executive is entitled pursuant to the previous
paragraph exceeds the amount available to the Executive by reason of loans
against the cash surrender value made to the Company, the Company agrees to pay
the amount of such excess to the Executive, promptly after Termination.
2.6 BONUS PLAN.
(a) During the Executive's employment with the Company, the
Executive shall be entitled to participate in the BJK&E Bonus Plan (the "Bonus
Plan") duly adopted by BJK&E, a copy of which Plan is annexed hereto as Exhibit
1. An example of the operation of the Bonus Plan as it applies to the Company is
annexed hereto as Exhibit 2.
(b) The Executive and, if Liener Temerlin is employed by the
Company, Liener Temerlin shall constitute a committee which shall be responsible
for determining which employees of the Company are eligible to participate in
the Bonus Plan and the distribution each fiscal year of the Bonus Pool payable
under the Bonus Plan among the Company's eligible employees.
(c) BJK&E agrees, and acknowledges such agreement by its
execution of the Guaranty appearing at the end of this Agreement, that it will
not authorize or permit either the termination or amendment of the Bonus Plan at
any time within the Term without the specific written approval of the Executive,
unless, in the case of any amendment of the Bonus Plan, such amendment does not
adversely affect or diminish the Executive's rights and privileges under the
Bonus Plan.
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2.7 STOCK OPTION PLAN.
BJK&E agrees, and acknowledges such agreement by its
execution of the Guaranty appearing at the end of this Agreement, to give and
grant to the Executive an option to purchase 100,000 shares of the Class B
Common Stock of BJK&E pursuant to the terms and conditions of the Bozell,
Jacobs, Kenyon & Eckhardt, Inc. Stock Option Plan (the "Stock Option Plan"),
which plan was effective as of March 30, 1992, a copy of which Stock Option Plan
is attached hereto as Exhibit 3. The grant of such option shall be evidenced by
the execution by BJK&E and the Executive, simultaneously with the execution of
this Agreement, of a Stock Option Agreement, the form of which is annexed hereto
as Exhibit 4 (the "Stock Option Agreement").
2.8 EXPENSES.
The Executive shall be reimbursed for the reasonable and
actual out-of-pocket expenses incurred by him in the performance of his duties
and responsibilities hereunder, provided the Executive shall first furnish to
the Company proper vouchers and expense accounts in accordance with the Company
policy.
3. LIFE INSURANCE.
BJK&E or the Company may, in the sole discretion of either of
them, and at any time during the Term, apply for and procure as owner and for
its own benefit insurance on the life of the Executive, in such amounts and in
such form or forms as the Company may choose. The Executive shall have no
interest whatsoever in any such policy or policies, but he shall, at the request
of the Company, submit to such medical examinations, supply such information,
and execute such documents as may be reasonably required by the insurance
company or companies to whom the Company has applied for such insurance. Upon
the termination of Executive's employment by the Company, if BJK&E or the
Company owns any life insurance policy on the Executive's life, the Executive
shall have the option to acquire such life insurance from such owner at a price
equal to its cash surrender value, if any, at the date of the termination of the
Executive's employment, and if BJK&E or the Company owns any term life insurance
on the Executive's life, the Executive shall have the option to acquire such
life insurance from such owner at a price equal to the prepaid premium at the
date of the termination of the Executive's employment. However, the Executive
shall have no right to acquire any insurance covering his life maintained in
connection with the Wealth Accumulation Plan.
4. DISABILITY.
(a) If, on account of any physical or mental disability, the
Executive shall fail or be unable to perform under this Agreement for a
continuous period of one hundred twenty (120) days or an aggregate period of one
hundred eighty (180) days during any consecutive twelve (12) month period, then
the Company may, at its option, terminate this Agreement upon thirty (30) days
written notice. In such event, the
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Executive shall be entitled to receive, in addition to any and all disability
and other benefits that he may otherwise be entitled to receive:
(i) his Base Compensation and other benefits
under Paragraph 2.1, 2.2 and 2.4, for a period ending six months
following the date on which the Company terminates this Agreement
pursuant to the first sentence of this Paragraph 4 (the date of
such termination being called herein the "Termination Date"),
(ii) any and all accrued but unpaid bonuses
payable to the Executive under the Bonus Plan,
(iii) if the Termination Date occurs prior to
April 1, 1993, a bonus payable from the Company's Bonus Pool, if
any, which is established under the Bonus Plan, for BJK&E's 1993
fiscal year, in an amount determined in the sole discretion of
Liener Temerlin (or, if Liener Temerlin dies before making such
determination, in an amount determined in the reasonable
discretion of the Company's Board of Directors), and
(iv) if the Termination Date occurs on or after
April 1, 1993, a bonus payable from the Company's Bonus Pool, if
any, in an amount equal to one-half of the amount of the bonus
amount under the Bonus Plan that was payable to the Executive
during the fiscal year of BJK&E immediately preceding the fiscal
year in which the Termination Date occurs, subject to the Company
having earned a Bonus for such year pursuant to the provision of
the Bonus Plan.
The option on the part of the Company to terminate provided
in this Paragraph 4 is separate, distinct and additional to any right on the
part of the Company to terminate this Agreement pursuant to Paragraph 9 hereof.
(b) If there should be a dispute between the parties hereto as
to the Executive's physical or mental disability for purposes of this Agreement,
the question shall be settled by the opinion of an impartial reputable physician
or psychiatrist agreed upon for the purpose by the parties or their
representatives, or if the parties cannot agree within thirty (30) days after a
request for designation of such party, then each party shall designate a
physician or psychiatrist and the two of them shall designate a third
such-medical professional and the opinion of a majority of the three (3) of them
shall settle the question. The certification of such physician or psychiatrist
or the majority of the three (3) of them, as the case may be, as to the question
in dispute shall be final and binding upon the parties hereto.
5. DEATH.
This Agreement will terminate in the event that the Executive
should die during the Term. In such event, the Executive's personal
representative and/or family, as
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the case may be, shall be entitled to receive, in addition to any and all death
and other benefits that such representative and/or family may otherwise be
entitled to receive:
(i) the Executive's Base Compensation and other
benefits under Paragraphs 2.1, 2.2 and 2.4 for a period ending
six months following the date of his death, and
(ii) any and all accrued but unpaid bonuses
payable to the Executive under the Bonus Plan.
(iii) if the date of his death is prior to April 1,
1993, a bonus payable from the Company's Bonus Pool, if any, for
BJK&E's 1993 fiscal year representing a bonus payment under the
Bonus Plan for the portion of said fiscal year prior to the
Executive's date of death, in an amount determined in the sole
discretion of Liener Temerlin (or, if Liener Temerlin dies before
making such determination, in an amount determined in the
reasonable discretion of the Company's Board of Directors), and
(iv) if the date of his death is on or after
April 1, 1993, a bonus payable from the Company's Bonus Pool, if
any, in an amount equal to one-half of the amount of the bonus
under the Bonus Plan that was payable to the Executive during the
fiscal year of BJK&E immediately preceding the fiscal year during
which he dies, subject to the Company having earned a Bonus for
such year pursuant to the provisions of the Bonus Plan.
6. VACATION.
The Executive shall be entitled to four (4) weeks' vacation in
any twelve (12) month period or to such greater time that is determined by the
Company's Board of Directors to be the Company's vacation policy with respect to
its executive officers.
7. SERVICING ACCOUNTS; SOLICITATION OF THE COMPANY EMPLOYEES; DISCLOSURE
OF CONFIDENTIAL INFORMATION.
Subject to the provisions of Paragraphs 9(d) and 19 hereof, the
Executive agrees that during the Term and for a period of one year thereafter,
whether or not the Executive is then employed by the Company, and if he is no
longer employed by the Company, regardless of the reasons why he is not then so
employed, he will not, directly or indirectly, (i) either on the Executive's own
behalf or on behalf of any other person, firm or corporation, without the prior
written consent of the Board of Directors of BJK&E, solicit or perform any
services for or on behalf of any entity or person which is a client of BJK&E or
any of its subsidiaries at any time within one year prior to the termination of
the Executive's employment with the Company; or (ii) solicit or otherwise
initiate any inducement of any persons who are employees of the Company or its
subsidiaries to terminate their employment with the Company or such subsidiary.
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The Executive also agrees that he will not at any time (whether
before or after the termination of his employment with the Company) disclose to
anyone any confidential information or trade secrets of the Company or of any
client of the Company, or utilize such confidential information or trade secrets
for his own benefit or the benefit of third parties. All records, memoranda,
notes and other documents compiled by him or made available to him during his
employment concerning the business of the Company or the business of any of its
clients shall be and remain the property of the Company, and shall be delivered
to the Company upon the termination of the Executive's employment or at any time
prior thereto upon request.
Notwithstanding the foregoing, upon the occurrence of an act of
Default (as hereinafter defined) and the failure of the Company to cure such act
of Default within the applicable 30 day cure period as provided in Paragraph
9(d) hereof, the Executive shall be entitled to disclose or utilize (for any
purpose or reason) any and all of such confidential information and trade
secrets (including, without limitation, Procedural Information), except that in
no event may the Executive disclose or utilize (i) confidential information or
trade secrets about the Company that do not constitute Procedural Information or
(ii) without the written consent of any client of the Company, any confidential
information or trade secrets of such client. As used herein, "Procedural
Information" means procedures, techniques, policies and programs developed by
the Executive at any time, and/or used by the Company or any of its affiliates
at any time, to operate the Company's business and/or manage its employees.
8. REMEDY FOR BREACH.
The Executive hereby represents and acknowledges that the
services to be performed by him under this Agreement are of a special, unique,
unusual, extraordinary and intellectual character, the loss of which cannot be
reasonably or adequately compensated for in damages. Accordingly, the Executive
agrees that, in the event (i) of any breach by him of the second or third
sentences of paragraph 1(b) or of paragraphs 1(c), 1(d), 7, 10 or the last
sentence of paragraph 19.1 of this Agreement to be performed or observed by him,
or (ii) the Executive shall, without the written consent of the Company, leave
its employment (except if the Executive leaves the employ of the Company for
Good Reason or is terminated by the Company without Cause) and thereafter
perform services within the Term for any person, firm, or corporation engaged in
competition with the Company, then in the case of either (i) or (ii) the Company
shall be entitled, if it so elects, to institute and prosecute proceedings in
any court of competent jurisdiction, either in law or in equity, to obtain
damages for any breach of this Agreement, or to enforce the specific performance
of any negative covenant made by the Executive hereunder, or to enjoin the
Executive from performing services for any such other person, firm, or
corporation, or from breaching any of the provisions of this Agreement referred
to in clause (i) of this Paragraph 8.
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9. TERMINATION FOR CAUSE OR GOOD REASON.
(a) TERMINATION BY THE COMPANY FOR "CAUSE". The Company shall
have the right at any time, by written notice to the Executive, to terminate
this Agreement forthwith and to discharge the Executive for Cause (herein so
called) if the following shall occur during the employment term: the Executive's
continued, willful failure or refusal to perform specific written directives of
the Board of Directors of BJK&E or of the Company or of the Chief Executive
Officer of BJK&E which directives involve material aspects of the Executive's
duties and responsibilities and which are consistent with the scope and nature
of the Executive's duties and responsibilities as set forth in Paragraph 1
hereof. The Company agrees, for the benefit of BJK&E, not to terminate this
Agreement and discharge the Executive pursuant to this Paragraph 9(a) without
the prior consent of the Board of Directors of BJK&E or the Chief Executive
Officer of BJK&E.
(b) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive
shall have the right at any time, within ninety (90) days following the later of
the date on which the occurrence of such event becomes known to the Executive or
the expiration of any "cure" period as provided below, by giving not less than
ten days prior written notice to the Company, to terminate his employment for
"Good Reason" which, for purposes of this Agreement, is hereby defined as the
occurrence, without the Executive's consent, of one or more of the following
events:
(i) the failure of BJK&E to make any payments to
the Company, or the failure of the Company to make any payments
to the employees of the Company, when due under the Bonus Plan
within thirty (30) days of BJK&E's receipt of written notice from
the Executive of such failure;
(ii) if the Executive is not appointed to or is
otherwise removed from the office of President of the Company for
any reason other than in connection with the termination of his
employment with the Company, and, if the Executive is not so
appointed, or is so removed, without the prior consent of the
Board of Directors of BJK&E or the Chief Executive Officer of
BJK&E, the foregoing is not cured within ten (10) days after
written notice thereof to the Company;
(iii) if the Executive's Base Compensation and/or
fringe benefits payable under Paragraph 2 hereof are reduced or,
in the case of fringe benefits, are materially reduced, for any
reason other than in connection with the termination of his
employment with the Company and the foregoing is not cured within
thirty (30) days after written notice thereof to the Company;
(iv) if the principle office of the Company is
moved to a location that is outside the Dallas Metroplex area; or
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(v) the commission by the Company or BJK&E of a
material breach of its obligations under this Agreement, the
Bonus Plan as it pertains to the Company or the Stock Option
Agreement (other than any breaches referred to in clauses (i) -
(iv) of this Paragraph 9(b)) which breach shall continue for
thirty (30) days after written notice thereof to the Company.
The Company agrees for the benefit of BJK&E that it will not take
any action, or omit to take any action it should take, which results in the
Executive having the right to terminate his employment for Good Reason without
the prior consent of the Board of Directors of BJK&E or the Chief Executive
Officer of BJK&E.
(c) BENEFITS UPON TERMINATION WITHOUT CAUSE OR FOR GOOD REASON.
In the event that the Company terminates the Executive's employment with the
Company without Cause or the Executive terminates his employment with the
Company for Good Reason, the Executive shall be under absolutely no duty
whatsoever to mitigate damages and shall be entitled to receive throughout the
remainder of the Term:
(i) the Base Compensation payable to him under
section 2.1 hereof;
(ii) the benefits to which the Executive is
entitled under Sections 2.2 and 2.5 hereof;
(iii) annually, a dollar amount equal to the sum of
the amounts actually contributed annually to qualified plans that
would have been allocated to the Executive's account thereunder
if the Executive had continued to be employed by the Company for
the remainder of the Term; and
(iv) if such termination occurs prior to the
allocation of bonuses for the Company's employees under the Bonus
Plan for the fiscal year ending March 31, 1993, the bonuses that
would otherwise be payable to the Executive under the Bonus Plan
for the balance of the Term, with the Executive's bonus for that
fiscal year to be an amount equal to Twenty-five percent (25%)
(the "Percentage") of the Company's Bonus Pool, if any, for that
fiscal year and the Executive's bonus each remaining fiscal year
of the Term to be an amount equal to the greater of (A) the
dollar amount equal to the product of the Percentage multiplied
by the Company's Bonus Pool for the fiscal year ending March 31,
1993, and (B) the dollar amount equal to the product of the
Percentage multiplied by the Company's Bonus Pool for such
remaining fiscal year; amounts under this clause (iii) shall be
payable to the Executive at the same time as the Company Bonus
Pool to which it relates is paid to employees of the Company, but
no later than December 31 of the year in which it is to be paid
under the Bonus Plan; and the Company hereby agrees that any
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amount payable to the Executive under this clause (iv) shall
reduce the amounts due and owing to the Company and its Bonus
Plan participants under the Bonus Plan.
(v) if such termination occurs after the
allocation of bonuses for the Company's employees under the Bonus
Plan for the fiscal year ending March 31, 1993, the bonuses that
would otherwise be payable to the Executive under the Bonus Plan
for the balance of the Term (including earned but unpaid
bonuses), with the Executive's bonus each remaining fiscal year
of the Term to be an amount equal to the greater of (A) the last
annual bonus to which the Executive was entitled under the Bonus
Plan prior to his termination of employment with the Company, and
(B) a dollar amount equal to the Company's Bonus Pool for that
fiscal year multiplied by the average percentage of the
Executive's share of the Company's Bonus Pool for BJK&E's last
three fiscal years (or shorter period) prior to Executive's
termination of employment (but in no event shall such percentage
exceed the Percentage); amounts under this clause (v) shall be
payable to the Executive at the same time as the Company Bonus
Pool to which it relates is paid to employees of the Company, but
no later than December 31 of the year in which it is to be paid
under the Bonus Plan; and the Company hereby agrees that any
amount payable to the Executive under this clause (v) shall
reduce the amounts due and owing to the Company and its Bonus
Plan participants under the Bonus Plan.
Subject to the provisions of Paragraphs 9(d) and 19 hereof, the agreements and
representations of the Executive contained in Paragraphs 7 and 8 hereof shall
remain in effect in accordance with their terms for the remainder of the Term,
and if termination pursuant to this Paragraph 9(c) occurs after March 31, 1997,
then for a period of one year subsequent to the date of such termination.
BJK&E and the Company hereby agree that, in the event (i) BJK&E
terminates or amends the Bonus Plan in violation of the terms hereof or thereof,
(ii) the Company is liquidated or dissolved or merged or consolidated with or
into another corporation which does not continue the Bonus Plan and the
activities of which immediately after such merger or consolidation do not
consist substantially of the activities of the Company immediately prior to such
merger or consolidation, (iii) the Company's assets are sold and the buyer does
not continue the Bonus Plan and the buyer's assets immediately after such sale
do not consist substantially of the assets of the Company immediately prior to
such sale, or (iv) BJK&E, the Company or any successor thereto otherwise
materially curtails the Company's or such successor's operations, then in lieu
of a bonus formula in clauses (iv) and (v) above the Executive shall be entitled
to receive the greater of (A) the bonus he received in the prior year, and (B)
$500,000, which bonus amount shall be payable by June 30 following the end of
each fiscal year during the Term.
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(d) FAILURE OF THE COMPANY TO MAKE PAYMENTS AFTER TERMINATION BY
THE COMPANY WITHOUT CAUSE OR TERMINATION BY THE EXECUTIVE FOR GOOD REASON. If
after termination of the Executive's employment by the Company without Cause or
the Executive's termination of his employment with the Company for Good Reason,
the Company commits an act of Default, as hereinafter defined, the Executive may
advise the Company in writing of the occurrence of such Default and, if such act
of Default is not cured within thirty (30) days after receipt by the Company of
such notice from the Executive, then the Executive shall not thereafter be bound
by the agreements and representations contained in Paragraphs 7 and 8 hereof.
Therefore, and without limiting the generality of the foregoing, Executive shall
thereafter be fully entitled to (i) solicit or perform services for or on behalf
of any person or entity which is a client of BJK&E or any of its subsidiaries at
any time within one year prior to the termination of the Executive's employment
with the Company and (ii) solicit or otherwise initiate any inducement of any
persons who are employees of the Company or its subsidiaries to terminate their
employment with the Company or any such subsidiary.
(e) DEFAULT DEFINED. An act of Default, as referred to in
subparagraph (d) of this Paragraph 9, shall occur in the event that the Company
or BJK&E:
(i) shall fail to make any payment when due hereunder;
or
(ii) shall otherwise commit a material breach of its
obligations under this Agreement, the Bonus Plan or the Stock
Option Agreement.
10. USE OF THE EXECUTIVE'S NAME.
It is acknowledged that the Executive's surname (the "Surname") is
utilized in the Company's name, and the Executive acknowledges the importance to
the Company of its ability to continue to use the corporate name into the future
without the confusion to the general public and to its clientele which might be
occasioned by the use of the Surname by the Executive as the name of another
business entity. Accordingly, the Executive gives and grants to the Company the
right to use the Surname in the name of the Company in perpetuity; provided,
however, that
(a) the Surname shall only be used when preceded by the name
"Temerlin" and the name "Temerlin McClain" shall not be used in conjunction with
any other name, word or expression other than "Temerlin McClain, Inc.";
(b) the Surname shall only be used for advertising or public
relations purposes and shall not be licensed or sold (other than in connection
with the sale of the business but only if the purchaser agrees in writing to the
restrictions on the right to use the Surname contained in this Paragraph 10);
(c) the Surname shall not be used by other BJK&E subsidiaries (other
than subsidiaries of the Company), divisions or other affiliates as long as
either the
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Executive or Liener Temerlin is employed by, or is otherwise contractually
engaged to provide any services to, BJK&E or the Company;
(d) as long as the Company operates under the Surname, neither it nor
its subsidiaries shall accept accounts involving, or on behalf of, the
following:
(i) gambling (including, without limitation, lotteries,
horse racing and casinos);
(ii) tobacco;
(iii) alcohol other than beer or wine;
(iv) any country, institution, organization, association,
other entity or group or individual (but not an individual employee of
any such account) that conducts or promotes anti-Semitic practices or
policies; and
(v) politics.
(e) all rights to the Surname shall revert to the Executive or his
estate in the event that the Company or a permitted assignee ceases using the
Surname.
The parties acknowledge that any determination as to whether or not any
entity, country, institution, organization, association, group or individual
conducts or promotes anti-Semitism may be difficult to determine on an objective
basis. It is therefore acknowledged that if a dispute arises as to whether or
not the Company has in fact accepted an account of the type described in clause
(iv) above, the parties agree to resolve such dispute by arbitration under the
auspices of the Anti-Defamation League of the B'nai B'rith (the "ADL"). Such
arbitration shall be governed by the then current rules of the American
Arbitration Association. In this regard, the parties agree that (i) such
arbitration shall commence as promptly as possible after the 20th day following
service of notice of a dispute by one party on the other, (ii) the proceeding
shall be determined by one arbitrator (who shall be selected or approved by the
ADL), (iii) the arbitrator shall have authority to determine only the issue of
whether or not the entity, country, institution, organization, association,
group or individual in question conducts or promotes anti-Semitic activities,
and shall have no authority to order a modification or amendment of this
agreement, and (iv) the decision of the arbitrator shall be final and binding
upon the parties thereto. All reasonable legal and other fees and expenses,
including, without limitation, any arbitration expenses incurred by the
prevailing party, shall be paid to the prevailing party by the other party to
the extent permitted by law.
If the Executive is deceased and Liener Temerlin is living, the Liener
Temerlin shall have the right to waive compliance with clause (d) above, but if
both the Executive and Liener Temerlin are deceased, neither's representatives,
heirs or estate shall have the right to waive compliance with such clause (d).
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In addition, the Executive covenants and agrees that he will not at any
time use or authorize or permit the use of the Surname in connection with any
business entity in which the name "Temerlin" appears, and further, that for a
period of nine (9) years from the date hereof, he will not use or authorize or
permit the use of the Surname in the name of any business entity in which the
Executive has any interest of any kind or to any degree.
The Executive shall have the right to terminate the license granted by this
section in the event that (i) the Company terminates this Agreement without
Cause, (ii) the Executive terminates this Agreement for Good Reason, (iii) after
120 days prior written notice by the Executive to the Company and the failure to
cure the same, any breach by the Company of this Paragraph 10, it being agreed
that, for purposes of this Agreement, the Company shall be deemed to have cured
any breach arising under this Section 10 by virtue of the Company having
accepted an account contrary to clause (d) of this Section 10 if the Company
resigns such account within such 120 day period. Without limiting the generality
of the foregoing, the Company shall, upon such termination of the license
granted by this section, change its name. Notwithstanding the foregoing, the
Executive shall have the right to terminate his obligations under the
immediately preceding paragraph in the event that said license is terminated
pursuant to the immediately preceding sentence and, pursuant to Paragraph 11(d),
the Executive is no longer bound by the agreements and representations contained
in Paragraphs 9 and 10 hereof and elects to compete with the Company as provided
in said paragraphs.
11. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, including, without
limitation, any corporation which may acquire all or substantially all of the
Company's assets and business or with or into which the Company may be
consolidated, merged or reorganized.
(b) The parties hereto agree that the Executive's services are
personal and that this Agreement is executed with respect thereto. Accordingly,
the Executive may not assign this Agreement nor any of his rights, duties or
obligations created hereunder.
12. NOTICES.
All notices, requests, demands and other communications provided for
by this Agreement shall be in writing and shall be deemed to have been given and
received forty-eight (48) hours after deposit thereof for mailing at any general
or branch United States Post Office enclosed in a registered or certified
postpaid envelope and addressed as follows:
To the Executive: Dennis McClain
201 East Carpenter Freeway
Dallas/Ft. Worth Airport, TX 75261-9200
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With Copy to: Johnson & Gibbs, P.C.
900 Jackson Street, Suite 100
Dallas, TX 75202-4499
Attn: Richard A. Freling, Esq.
To the Company: Temerlin McClain, Inc.
201 East Carpenter Freeway
Irving, Texas 75062
Attn: Liener Temerlin, Chairman of the Board
With Copies to: Bozell, Jacobs, Kenyon & Eckhardt, Inc.
40 West 23rd Street
New York, New York 10010
Attn: Valentine J. Zammit
Executive Vice President and
Chief Financial Officer
Loeb and Loeb
230 Park Avenue
New York, New York 10169
Attn: William J. Marlow, Esq.
The parties hereto may designate a different place at which notice shall be
given provided, however, that any such notice of change of address shall be
effective only upon receipt.
13. ENTIRE UNDERSTANDING.
This Agreement and the other agreements and instruments referenced
herein set forth the entire understanding of the parties hereto with respect to
the subject matter thereof and no other representations, warranties or
agreements whatsoever have been made to the Executive not herein or therein
contained. This Agreement shall not be modified, amended or terminated except by
another instrument in writing executed by the parties hereto. This Agreement
supersedes, effective April 1, 1992, any and all agreements entered into prior
thereto affecting the Executive's employment with BJK&E or any of its subsidiary
corporations, the provisions of any such prior agreements remaining in effect
only with regard to acts occurring prior to April 1, 1992.
14. SEVERABILITY.
Each of the parties hereto specifically acknowledges that it is the
desire and intent of the parties that the provisions of this Agreement,
specifically including, without limitation, Paragraphs 8 and 10, shall be
enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly, if any
particular portion of any provision of this Agreement shall
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be adjudicated to be invalid or unenforceable, then such provision shall be
deemed amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of the
applicable provision in the particular jurisdiction in which such adjudication
is made. The failure by either party hereto, at any time, to require performance
by the other party hereto of any of the provisions hereof, shall not be deemed a
waiver of any kind nor in any way affect the respective rights of such party, to
thereafter enforce the same.
15. INDEMNIFICATION RIGHTS.
(a) GENERALLY. BJK&E and the Company agree that, in addition to any
rights that the Executive may have under the certificates or articles of
incorporation and by-laws of BJK&E and the Company as the same may be in effect
from time to time hereafter as to indemnification and advancement of expenses,
the Executive shall hereby, as a matter of separate contract, be entitled and
continue to be entitled to all rights of indemnification and advancement of
expenses provided to directors, officers, employees or agents of BJK&E and the
Company or who serve or served at the request of BJK&E or the Company in any
capacity with any other corporation or other enterprise, under the certificates
or articles of incorporation and by-laws of BJK&E, the Company and such other
companies as in effect on the date hereof (the provisions of which are
incorporated herein by reference), regardless of any amendments thereto which
thereafter occur, which rights BJK&E and the company expressly agree shall apply
to the Executive as a director, officer, employee and agent of the Company, and
which rights shall continue indefinitely in the Executive's favor as to any
actions, suits, claims or proceedings now pending or threatened and as to any
actions, suits, claims or proceedings which may hereafter be brought or
threatened. Without limiting the terms of the immediately preceding provisions
of this Section 15, BJK&E and the Company shall also indemnify and hold harmless
the Executive to the fullest extent permitted by applicable law for any
liabilities that he might incur as a result of, or in connection with, his
service as a member of the boards of directors or other governing bodies of the
Dallas Symphony Orchestra or the Boy Scouts of America or any other
not-for-profit institution (provided that the Executive gives BJK&E prior
written notice that he is going to serve on the board or other governing body of
any other not-for-profit institution, in which case BJK&E hereby consents to
such service), which indemnification by the Company, however, shall apply only
to liability of the Executive remaining after application of the proceeds of any
policy of insurance maintained by any such not-for-profit institution and by the
Executive which is payable as a result of or in connection with such service by
the Executive. BJK&E and the company hereby acknowledge and agree that the
Executive's service on such boards and bodies is in the best interests of BJK&E
and the Company. BJK&E and the Company shall be subrogated to all of Executive's
rights of indemnification and/or contribution from any such not-for-profit
institution.
(b) BJK&E and the Company agree to include the Executive as an
insured beneficiary of, and to furnish the Executive with coverage under, any
and all director and officer liability insurance policies now or hereafter
maintained by BJK&E or the Company or its affiliates to the same extent other
current and/or former officers and
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directors of BJK&E or the Company are provided coverage thereunder. Such
coverage shall be furnished to the Executive until the expiration of the
statutes of limitations applicable to the liabilities for which indemnification
is provided herein. BJK&E and the Company agree to furnish the Executive with
evidence of such coverage upon the Executive's written request.
16. GOVERNING LAW; JURISDICTION.
The federal and state courts located in Dallas, Texas shall have
exclusive jurisdiction regarding the interpretation and enforcement of this
Agreement.
This Agreement and all rights, obligations and liabilities arising
hereunder shall be construed and enforced in accordance with the laws of the
State of Texas, without regard to conflict of law principles.
17. LEGAL FEES.
In the event suit is brought to enforce or interpret any part of this
Agreement or the rights or obligations of any party to this Agreement, the
prevailing party shall be entitled to recover, in addition to such other relief
as to which it may be entitled, its reasonable attorney's fees and costs to be
fixed by the court.
18. BY-LAWS.
Paragraph 6 of the By-laws of the Company are attached hereto as
Exhibit 5. The Company hereby agrees (on its behalf and on behalf of BJK&E) not
to amend such paragraph during the Term without the prior written consent of the
Executive and of BJK&E.
19. CERTAIN NOTICES OF RENEWAL OR NON-RENEWAL.
19.1 THE COMPANY'S WILLINGNESS OR THE EXECUTIVE'S UNWILLINGNESS TO
RENEW.
If either (a) the Company offers, at any time after September 30,
1996, and prior to March 1, 1998, by written notice to the Executive, to renew
this Employment Agreement at the end of the Term, and the Executive does not
accept such offer in writing within thirty (30) days of his receipt of such
notice, or (b) the Executive at any time after September 30, 1996, and prior to
March 1, 1998, notifies the Company in writing that he is unwilling to renew
this Employment Agreement at the end of the Term, then the Executive's
employment will be continued on all of the terms and conditions contained in
this Employment Agreement for a period ending on the later of (x) March 31,
1998, and (y) one year after the date of the first receipt of either such notice
by the Executive or by the Company, whichever is applicable (such date of
termination being the "Actual Termination Date"). In the event of the occurrence
of either (a) or (b) above, the agreements and representations of the Executive
contained in
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paragraphs 7 and 8 hereof shall, subject to paragraph 9(d) hereof, remain in
effect in accordance with their terms for a period of one year subsequent to the
Actual Termination Date and thereafter shall have no applicability to the
Executive.
19.2 THE EXECUTIVE'S WILLINGNESS OR THE COMPANY'S UNWILLINGNESS TO
RENEW.
If either (a) the Executive offers, at any time after September
30, 1996, and prior to March 1, 1998, by written notice to the Company, to renew
this Employment Agreement at the end of the Term, and the Company does not
accept such offer in writing within thirty (30) days of its receipt of such
notice, or (b) the Company at any time after September 30, 1996, and prior to
March 1, 1998, notifies the Executive in writing that it is unwilling to renew
this Employment Agreement at the end of the Term, then the Executive's
employment will be continued on all of the terms and conditions contained in
this Employment Agreement for a period ending on the later of (x) March 31,
1998, and (y) one year after the date of the first receipt of either such notice
by the Executive or by the Company, whichever is applicable (such date of
termination being the "Actual Termination Date"). In the event of the occurrence
of either (a) or (b) above, the agreements and representations of the Executive
contained in paragraphs of 7 and 8 hereof shall, subject to paragraph 9(d)
hereof, cease on the Actual Termination Date and thereafter shall have no
applicability to the Executive.
19.3 NONAPPLICABILITY OF THIS PARAGRAPH.
This paragraph 19 shall be of no force or effect if the
Executive's employment hereunder is terminated prior to April 1, 1998 without
Cause or for Good Reason.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TEMERLIN MCCLAIN, INC.
A Texas Corporation
By: /s/ Liener Temerlin
---------------------------------------
"EXECUTIVE"
/s/ Dennis McClain
---------------------------------------
DENNIS McCLAIN
The payment and performance by the Company of its obligations set forth in
this Agreement are hereby guaranteed by Bozell, Jacobs, Kenyon & Eckhardt, Inc.
BOZELL, JACOBS, KENYON & ECKHARDT, INC.
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By /s/ Charles D. Peebler, Jr.
-----------------------------
Chief Executive Officer
