Employment Agreement - Interpublic Group of Companies Inc. and Frank B. Lowe
EMPLOYMENT AGREEMENT
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AGREEMENT made as of January 1, 2001 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a Delaware corporation ("Interpublic" or the
"Corporation"), and FRANK B. LOWE ("Executive").
In consideration of the mutual promises set forth herein the parties
hereto agree as follows:
ARTICLE I
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Term of Employment
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1.01 Subject to the provisions of Article VII and Article VIII, and
upon the terms and subject to the conditions set forth herein, the Corporation
will employ Executive for the period beginning January 1, 2001 ("Commencement
Date") and ending on December 31, 2005. (The period during which Executive is
employed hereunder is referred to herein as the "term of employment.") Executive
will serve the Corporation during the term of employment.
ARTICLE II
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Duties
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2.01 During the term of employment, Executive will:
(i) Serve as Chairman and Chief Executive Officer of The Lowe
Group, Lowe Lintas Worldwide, and Octagon Worldwide, wholly-owned
subsidiaries of Interpublic ("Lowe").
(ii) Use his best efforts to promote the interests of the
Corporation and Lowe and devote his full business time and efforts to
their business and affairs;
(iii) Perform such duties as the Corporation may from time to
time assign to him; (iv) Serve in such other offices of the
Corporation and/or Lowe as he may be elected or appointed to;
(v) No significant change in Executive's status or his nature or
scope of his duties shall be effected without his consent; and
(vi) Be proposed as a member of the Corporation's Board of
Directors.
ARTICLE III
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Regular Compensation
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3.01 The Corporation will compensate Executive for the duties
performed by him hereunder, by payment of a base salary at the rate of One
Million United States Dollars ($1,000,000) per annum, payable in equal
installments, which the Corporation shall pay at semi-monthly intervals, subject
to customary withholding for federal, state and local taxes. In addition, the
Corporation will make a payment of Two Hundred Thousand United States Dollars
($200,000) per year pursuant to an Executive Special Benefit Agreement to be
entered into between the Executive and Interpublic. In addition, the Executive
Severance Agreement, dated January 1, 1998 between the Executive and the
Corporation ("ESA") will remain in full force and effect during the term of
employment.
3.02 The Corporation may at any time increase the compensation paid to
Executive under this Article III if the Corporation in its sole discretion shall
deem it advisable so to do in order to compensate him fairly for services
rendered to the Corporation.
ARTICLE IV
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Bonuses
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4.01 Executive will be eligible during the term of employment to
participate in the Management Incentive Compensation Plan ("MICP"), in
accordance with the terms and conditions of the Plan established from time to
time, and appropriate for an executive holding such a position.
4.02 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Compensation
Committee of its Board of Directors ("Committee") grant Executive an additional
award for the 2000-2002 performance period under Interpublic's Long Term
Performance Incentive Plan ("LTPIP") equal to Two Thousand (2,000) performance
units tied to the cumulative compound profit growth of Lowe Lintas and options
under Interpublic's Stock Incentive Plan to purchase Twenty Thousand (20,000)
shares of Interpublic common stock which may not be exercised in any part prior
to the end of the performance period and thereafter shall be exercisable in
whole or in part.
4.03 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Committee grant
Executive an award for the 2001-2004 performance period under the LTPIP equal to
Eleven Thousand (11,000) performance units tied to the cumulative compound
profit growth of Lowe Lintas and Three Thousand (3,000) units tied to his
cumulative compound project growth of Octagon and options under Interpublic's
Stock Incentive Plan to purchase Sixty-Five Thousand (65,000) shares of
Interpublic common stock which may not be exercised in any part prior to the end
of the performance period and thereafter shall be exercisable in whole or in
part.
4.04 Executive has previously been granted an award under
Interpublic's 1999-2002 LTPIP equal to Three Thousand (3,000) units tied to the
cumulative compound profit growth of Octagon 2000.
ARTICLE V
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Interpublic Stock
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5.01 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Compensation
Committee of its Board of Directors ("Committee") grant to Executive One Hundred
Thirty-Five Thousand (135,000) shares of Interpublic Common Stock which will be
subject to a four year vesting restriction.
<PAGE>
5.02 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Committee grant to
Executive options to purchase One Hundred Fifty Thousand (150,000) shares of
Interpublic Common Stock, which will be subject to all the terms and conditions
of the Interpublic Stock Incentive Plan. Forty percent (40%) of the options will
be exercisable after the third anniversary of the date of grant, thirty percent
(30%) will be exercisable after the fourth anniversary and thirty percent (30%)
will be exercisable after the fifth anniversary of the date of grant through the
tenth anniversary of the date of grant.
ARTICLE VI
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Other Employment Benefits
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6.01 Executive shall be eligible to participate in such other employee
benefits as are available from time to time to other key management executives
of Interpublic in accordance with the then-current terms and conditions
established by Interpublic for eligibility and employee contributions required
for participation in such benefits opportunities.
6.02 Executive shall be entitled to an automobile allowance of Ten
Thousand Dollars ($10,000) per annum.
6.03 Executive shall remain a member of the Interpublic Development
Council.
ARTICLE VII
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Termination
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7.01 The Corporation may terminate the employment of Executive
hereunder:
(i) By giving Executive notice in writing at any time specifying
a termination date not less than twelve (12) months after the date on
which such notice is given, in which event Executive's employment
hereunder shall terminate on the date specified in such notice, or
(ii) By giving Executive notice in writing at any time specifying
a termination date less than twelve (12) months after the date on
which such notice is given. In this event Executive's employment
hereunder shall terminate on the date specified in such notice and the
Corporation shall thereafter pay him a sum equal to the amount by
which twelve (12) months salary at his then current rate exceeds the
salary paid to him for the period from the date on which such notice
is given to the termination date specified in such notice. Such
payment shall be made during the period immediately following the
termination date specified in such notice, in successive equal monthly
installments each of which shall be equal to one (1) month's salary at
the rate in effect at the time of such termination, with any residue
in respect of a period less than one (1) month to be paid together
with the last installment.
During the termination period provided in subsection (i), or in the
case of a termination under subsection (ii) providing for a termination period
of less than twelve (12) months, for a period of twelve (12) months after the
termination notice, Executive will be entitled to receive all employee benefits
accorded to him prior to termination which are made available to employees
generally; provided, that such benefits shall cease upon such date that
Executive accepts employment with another employer offering similar benefits. In
addition, in the event of a termination pursuant to subsection (i) or (ii),
Executive will be entitled to a pro-rata portion of his LTPIP entitlements,
restricted stock grants and stock option grants. Such pro-ration shall be in
accordance with Interpublic's standard policies and practices in such cases.
7.02 Notwithstanding the provisions of Section 7.01, during the period
of notice of termination, Executive will use reasonable, good faith efforts to
obtain other employment reasonably comparable to his employment under this
Agreement. Upon obtaining other employment (including work as a consultant,
independent contractor or establishing his own business), Executive will
promptly notify the Corporation, and (a) in the event that Executive's salary
and other non-contingent compensation ("new compensation") payable to Executive
in connection with his new employment shall equal or exceed the salary portion
of the amount payable by the Corporation under Section 7.01, the Corporation
shall be relieved of any obligation to make payments under Section 7.01, or (b)
in the event Executive's new compensation shall be less than the salary portion
of payments to be made under Section 7.01, the Corporation will pay Executive
the difference between such payments and the new compensation.
7.03 Executive may at any time give notice in writing to the
Corporation specifying a termination date not less than twelve (12) months after
the date on which such notice is given, in which event his employment hereunder
shall terminate on the date specified in such notice, and Executive shall
receive his salary until the termination date.
7.04 Notwithstanding the provisions of Section 7.01, the Corporation
may terminate the employment of Executive hereunder, at any time after the
Commencement Date, for Cause. For purposes of this Agreement, "Cause" means the
following:
(i) Any material breach by Executive of any provision of this
Agreement (including without limitation Sections 8.01 and 8.02 hereof)
upon notice of same by the Corporation which breach, if capable of
being cured, has not been cured within fifteen (15) days after such
notice (it being understood and agreed that a breach of Section 8.01
or 8.02 hereof, among others, shall be deemed not capable of being
cured);
(ii) Executive's absence from duty for a period of time exceeding
fifteen (15) consecutive business days or twenty (20) out of any
thirty (30) consecutive business days (other than on account of
permitted vacation or as permitted for illness, disability or
authorized leave in accordance with Interpublic's policies and
procedures) without the consent of the Board of Directors of the
Corporation;
(iii) The acceptance by Executive, prior to the effective date of
Executive's voluntary resignation from employment with the
Corporation, of a position with another employer, without the consent
of the Board of Directors;
(iv) Misappropriation by Executive of funds or property of the
Corporation or any attempt by Executive to secure any personal profit
related to the business of the Corporation (other than as permitted by
this Agreement) and not fairly disclosed to and approved by the Board
of Directors;
(v) Fraud, dishonesty, disloyalty, gross negligence or willful
misconduct on the part of Executive in the performance of his duties
as an employee of the Corporation;
<PAGE>
(vi) A felony conviction of Executive; or
(vii) Executive's engaging, during the term of employment, in
activities which are prohibited by state and/or federal laws
prohibiting discrimination based on age, sex, race, religion or
national origin, or engaging in conduct which is constituted as sexual
harassment.
Upon a termination for Cause, the Corporation shall pay Executive his
salary through the date of termination of employment, and Executive shall not be
entitled to any Special Bonus or Performance Bonus with respect to the year of
termination, or to any other payments hereunder.
7.05 If Executive dies before December 31, 2005, his employment
hereunder shall terminate on the date of his death.
ARTICLE VIII
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Covenants
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8.01 While Executive is employed hereunder by the Corporation he shall
not, without the prior written consent of the Corporation, which will not be
unreasonably withheld, engage, directly or indirectly, in any other trade,
business or employment, or have any interest, direct or indirect, in any other
business, firm or corporation; provided, however, that he may continue to own or
may hereafter acquire any securities of any class of any publicly-owned company
as well as investments in other entities that are held for investment purposes
only provided that such entities are not in competition with the Corporation and
that investment in such entities does not create a conflict of interest on his
part of Executive.
8.02 Executive shall treat as confidential and keep secret the affairs
of the Corporation and shall not at any time during the term of employment or
thereafter, without the prior written consent of the Corporation, divulge,
furnish or make known or accessible to, or use for the benefit of, anyone other
than the Corporation and its subsidiaries and affiliates any information of a
confidential nature relating in any way to the business of the Corporation or
its subsidiaries or affiliates or their clients and obtained by him in the
course of his employment hereunder.
8.03 All records, papers and documents kept or made by Executive
relating to the business of the Corporation or its subsidiaries or affiliates or
their clients shall be and remain the property of the Corporation.
8.04 All articles invented by Executive, processes discovered by him,
trademarks, designs, advertising copy and art work, display and promotion
materials and, in general, everything of value conceived or created by him
pertaining to the business of the Corporation or any of its subsidiaries or
affiliates during the term of employment, and any and all rights of every nature
whatever thereto and which are not in the public domain, shall immediately
become the property of the Corporation, and Executive will assign, transfer and
deliver all patents, copyrights, royalties, designs and copy, and any and all
interests and rights whatever thereto and thereunder to the Corporation.
8.05 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of two (2) years from such
termination, (a) solicit any employee of the Corporation, Interpublic or any
affiliated company of Interpublic to leave such employ to enter the employ of
Executive or of any person, firm or corporation with which Executive is then
associated or (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the event marketing, public relations,
advertising, sales promotion or market research business of any person or entity
which is a client of the Corporation at the time of termination of employment.
8.06 If at the time of enforcement of any provision of this Agreement,
a court shall hold that the duration, scope or area restriction of any provision
hereof is unreasonable under circumstances now or then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under the
circumstances shall be substituted by the court for the stated duration, scope
or area.
8.07 Executive acknowledges that a remedy at law for any breach or
attempted breach of Article VIII of this Agreement will be inadequate, and
agrees that the Corporation shall be entitled to specific performance and
injunctive and other equitable relief in the case of any such breach or
attempted breach.
8.08 Executive represents and warrants that neither the execution and
delivery of this Employment Agreement nor the performance of Executive's
services hereunder will conflict with, or result in a breach of, any agreement
to which Executive is a party or by which he may be bound or affected, in
particular the terms of any employment agreement to which Executive may be a
party. Executive further represents and warrants that he has full right, power
and authority to enter into and carry out the provisions of this Employment
Agreement.
ARTICLE IX
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Arbitration
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9.01 Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, including claims involving alleged legally
protected rights, such as claims for age discrimination in violation of the Age
Discrimination in Employment Act of 1967, as amended, Title VII of the Civil
Rights Act, as amended, and all other federal and state law claims for
defamation, breach of contract, wrongful termination and any other claim arising
because of Executive's employment, termination of employment or otherwise, shall
be settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association and Section 12.01 hereof, and judgement
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The arbitration shall take place in any of the cities
where Executive customarily renders services to the Corporation. The prevailing
party in any such arbitration shall be entitled to receive attorney's fees and
costs.
ARTICLE X
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Assignment
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10.01 This Agreement shall be binding upon and enure to the benefit of
the successors and assigns of the Corporation. Neither this Agreement nor any
rights hereunder shall be assignable by Executive and any such purported
assignment by him shall be void.
<PAGE>
ARTICLE XI
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Agreement Entire
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11.01 This Agreement (and the ESA) constitutes the entire
understanding between the Corporation and Executive concerning his employment by
the Corporation or any of its parents, affiliates or subsidiaries and supersedes
any and all previous agreements between Executive and the Corporation or any of
its parents, affiliates or subsidiaries concerning such employment, and/or any
compensation or bonuses. Each party hereto shall pay its own costs and expenses
(including legal fees) incurred in connection with the preparation, negotiation
and execution of this Agreement. This Agreement may not be changed orally.
ARTICLE XII
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Applicable Law
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12.01 The Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
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Name: C. KENT KROEBER
Title: Senior Vice President, Human
Resources
/s/ FRANK B. LOWE
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FRANK B. LOWE