Exhibit 10(iii)(A)(17)
EXECUTIVE CHANGE OF CONTROL AGREEMENT
This AGREEMENT (“
Agreement ”) dated as of September 12,
2007 (the “ Effective Date ”), by and
between The Interpublic Group of Companies, Inc. (“
Interpublic ”), a Delaware corporation, and
Timothy A. Sompolski (the “ Executive
”).
W I T
N E S S E T H:
WHEREAS, the Company (as hereinafter
defined) recognizes the valuable services that the Executive has
rendered to the Company and desires to be assured that the
Executive will continue to attend to the business and affairs of
the Company without regard to a Change of Control (as hereinafter
defined);
WHEREAS, the Executive is willing to
continue to serve the Company but desires a reasonable degree of
protection in the event of a Change of Control; and
WHEREAS, the Company is willing to
provide such protection in exchange for the Executive’s
agreement not to engage, during a specified period after his
employment with the Company is terminated, in certain activities
that could be detrimental to the Company;
NOW, THEREFORE, in consideration of
the Executive’s continued service to the Company, and the
mutual agreements herein contained, Interpublic and the Executive
hereby agree as follows:
ARTICLE 1
DEFINITIONS
When the initial letter or letters of
the following words and phrases are capitalized in this Agreement,
such words and phrases shall have the following meanings unless the
context clearly indicates that a different meaning is
intended:
Section 1.1. Base Amount
means the amounts, if any, that, if this Agreement did not exist,
would be payable to the Executive pursuant to the terms of an Other
Arrangement
by
reason of the Executive’s Qualifying Termination; provided,
however, that the Base Amount shall not include any non-cash
benefits or reimbursements or payments in lieu of such
benefits.
Section 1.2. Board of
Directors means the Board of Directors of Interpublic.
Section 1.3. Cause
means —
(a) a
material breach by the Executive of a provision in an employment
agreement with Interpublic or a Subsidiary that, if capable of
being cured, has not been cured within fifteen (15) days after the
Executive receives written notice from Interpublic or any
Subsidiary of such breach;
(b) misappropriation
by the Executive of funds or property of Interpublic or a
Subsidiary;
(c) any
attempt by the Executive to secure any personal profit related to
the business of Interpublic or a Subsidiary that is not approved in
writing by the Board of Directors or by the person to whom the
Executive reports directly;
(d) fraud,
material dishonesty, gross negligence, gross malfeasance or
insubordination by the Executive, or willful (i) failure by
the Executive to follow the code of conduct of Interpublic or a
Subsidiary or (ii) misconduct by the Executive in the
performance of his duties as an employee of Interpublic or a
Subsidiary, excluding in each case any act (or series of acts)
taken in good faith by the Executive that does not (and in the
aggregate do not) cause material harm to Interpublic or a
Subsidiary;
(e) refusal
or failure by the Executive to attempt in good faith to perform the
Executive’s duties as an employee or to follow a reasonable
good-faith direction of the Board of Directors or the person to
whom the Executive reports directly that has not been cured within
fifteen (15) days after the Executive receives written notice
from Interpublic of such refusal or failure;
(f) commission
by the Executive, or a formal charge or indictment alleging
commission by the Executive, of a felony or a crime involving
dishonesty, fraud, or moral turpitude; or
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(g) conduct
by the Executive that is clearly prohibited by the policy of
Interpublic or a Subsidiary prohibiting discrimination or
harassment based on age, gender, race, religion, disability,
national origin or any other protected category.
Section 1.4. Change of
Control means —
(a) subject
to subsections (b) and (c), below, the first to occur of the
following events:
(i) any
person (within the meaning of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “ 1934 Act
”)) becomes the beneficial owner (within the meaning of
Rule 13d-3 under the 1934 Act) of stock that, together with
other stock held by such person, possesses more than fifty percent
(50%) of the combined voting power of Interpublic’s
then-outstanding stock;
(ii)
any person (within the meaning of Sections 13(d) and 14(d) of the
1934 Act) acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person)
ownership of stock of Interpublic possessing thirty percent (30%)
or more of the combined voting power of Interpublic’s
then-outstanding stock;
(iii)
any person (within the meaning of Sections 13(d) and 14(d) of the
1934 Act) acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person)
assets from the Company that have a total gross fair market value
equal to forty percent (40%) or more of the total gross fair market
value of all of the assets of Interpublic immediately prior to such
acquisition or acquisitions (where gross fair market value is
determined without regard to any associated liabilities); or
(iv)
during any 12-month period, a majority of the members of the Board
of Directors is replaced by directors whose appointment or election
is not endorsed by a majority of the members of the Board of
Directors before the date of their appointment or election.
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(b) A
Change of Control shall not be deemed to occur by reason of
—
(i) the
acquisition of additional control of Interpublic by any person or
persons acting as a group that is considered to “effectively
control” Interpublic (within the meaning of Section 409A
of the Code), or
(ii) a
transfer of assets to any entity controlled by the shareholders of
Interpublic immediately after such transfer, including a transfer
to (A) a shareholder of Interpublic (immediately before such
transfer) in exchange for or with respect to its stock; (B) an
entity, fifty percent (50%) or more of the total value or voting
power of which is owned (immediately after such transfer) directly
or indirectly by Interpublic; (C) a person or persons acting
as a group that owns (immediately after such transfer) directly or
indirectly fifty percent (50%) or more of the total value or voting
power of all outstanding stock of Interpublic; or (D) an
entity, at least fifty percent (50%) of the total value or voting
power of which is owned (immediately after such transfer) directly
or indirectly by a person described in clause (C), above.
(c) Notwithstanding
any provision in this Section 1.4 to the contrary, a Change of
Control shall not be deemed to have occurred unless the relevant
facts and circumstances give rise to a change in the ownership or
effective control of Interpublic, or in the ownership of a
substantial portion of the assets of Interpublic, within the
meaning of Section 409A(a)(2)(A)(v) of the Code.
Section 1.5. Code
means the Internal Revenue Code of 1986, as amended.
Section 1.6.
Company means Interpublic and its Subsidiaries.
Section 1.7. Designated
Number means two (2). The Designated Number of Months means a
number of calendar months equal to twelve (12) times the
Designated Number.
Section 1.8. Good Reason
.
(a) The
Executive shall be deemed to resign for Good Reason if and only if
(i) his Termination of Employment occurs within the two
(2) year period immediately
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following the date on which a Covered Action (as defined by
subsection (b), below) occurs and (ii) the conditions
specified by subsections (b), (c), and (d) of this
Section 1.8 are satisfied.
(b) The
Executive shall have Good Reason to resign from employment with the
Company only if at least one of the following events (each a
“ Covered Action ”) occurs within the two
(2) year period immediately following the effective date of a
Change of Control:
(i)
Interpublic or a Subsidiary materially reduces the
Executive’s annualized rate of base salary;
(ii) an
action by Interpublic or a Subsidiary results in a material
diminution of the Executive’s authority, duties or
responsibilities;
(iii)
an action by Interpublic or a Subsidiary results in a material
diminution in the authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report, including a
requirement that the Executive report to a corporate officer or
employee instead of reporting directly to the Board of
Directors;
(iv)
Interpublic or a Subsidiary materially diminishes the budget over
which the Executive retains authority;
(v)
Interpublic or a Subsidiary requires the Executive, without his
express written consent, to be based in an office more than fifty
(50) miles outside the city in which he is principally based,
unless (A) the relocation decision is made by the Executive or
(B) the Executive is notified in writing that Interpublic or
his employer is seriously considering such a relocation and the
Executive does not object in writing within ten (10) days
after he receives such written notice; or
(vi)
Interpublic or a Subsidiary materially breaches an employment
agreement between Interpublic or the Subsidiary and the
Executive.
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(c) The
Executive shall not have Good Reason to resign as a result of a
Covered Action unless —
(i)
within the ninety (90) day period immediately following the
date on which such Covered Action first occurs, the Executive
notifies Interpublic in writing that such Covered Action has
occurred; and
(ii)
such Covered Action is not remedied within the thirty (30) day
period immediately following the date on which Interpublic receives
a notice provided in accordance with paragraph (i), above.
(d) The
Executive shall not have Good Reason to resign as a result of a
Covered Action unless before the end of the thirty-one
(31) day period immediately following the end of the thirty
(30) day period specified by paragraph (c)(ii), above, the
Executive gives Interpublic a minimum of thirty
(30) days’, and a maximum of ninety
(90) days’, advance written notice of the effective date
of his resignation.
Section 1.9. Other
Arrangement means any other agreement, plan, program, policy,
or other arrangement involving or maintained by Interpublic or a
Subsidiary under which the Executive is or might be eligible to
receive compensation or benefits.
Section 1.10. Outside
Auditor means either (i) the outside auditor retained by
Interpublic in the last fiscal year ending before such Change of
Control or (ii) a national auditing firm acceptable to the
Executive.
Section 1.11. Qualifying
Termination means a Termination of Employment of the Executive
that —
(a) is
initiated by (a) Interpublic or a Subsidiary for a reason
other than Cause or (b) the Executive for Good Reason (as
defined in this Agreement), and
(b) occurs
during the period that begins upon a Change of Control and ends at
11:59:59 p.m. Eastern Time on the second anniversary of such
Change of Control.
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Section 1.12. Severance
Period means the period starting on the date of the
Executive’s Qualifying Termination and ending on the last day
of the calendar month that is the Designated Number of Months after
such date.
Section 1.13. Subsidiary
means any corporation or other entity that is required to be
combined with Interpublic as a single employer under Section 414(b)
or (c) of the Code.
Section 1.14. Termination of
Employment means the Executive’s “separation from
service” (within the meaning of Section 409A(a)(2)(A)(i)
of the Code) with the Company. For purposes of this
Agreement:
(a) If
the Executive is on a leave of absence and does not have a
statutory or contractual right to reemployment, he shall be deemed
to have had a Termination of Employment on the first date that is
more than six (6) months after the commencement of such leave
of absence. However, if the leave of absence is due to any
medically determinable physical or mental impairment that can be
expected to last for a continuous period of six (6) months or
more, and such impairment causes the Executive to be unable to
perform the duties of his position of employment or any
substantially similar position of employment, the preceding
sentence shall be deemed to refer to a twenty-nine (29) month
period rather than to a six (6) month period; and
(b) A
sale of assets by Interpublic or a Subsidiary to an unrelated buyer
that results in the Executive working for the buyer or one of its
affiliates shall not, by itself, constitute a Termination of
Employment unless Interpublic, with the buyer’s written
consent, so provides in writing 60 or fewer days before the closing
of such sale.
Section 1.15. Unsecured
Trust means a trust established pursuant to a trust agreement
or other written instrument that (a) states that the assets of
such trust are subject to claims of the Company’s creditors,
(b) states that such trust shall be irrevocable until all
claims for benefits under the plans, programs, agreements, and
other arrangements covered by such trust have been satisfied, and
(c) complies with the applicable provisions of
Section 409A of the Code.
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ARTICLE 2
PAYMENTS UPON QUALIFYING TERMINATION
Section 2.1. Severance
Payment . Subject to the requirements of Section 3.2
hereof, if the Executive’s employment terminates as a result
of a Qualifying Termination, Interpublic shall, within thirty
(30) days after the date of the Executive’s Qualifying
Termination (or such later date as required by Section 2.5
hereof), pay to the Executive a lump-sum amount (without any
discount to reflect the time value of money) equal to the
Designated Number multiplied by the sum of:
(a) The
greater of (i) the Executive’s annual base salary for
the calendar year in which the Qualifying Termination occurs
(determined on the basis of the Executive’s annual salary in
effect immediately prior to such Qualifying Termination) or
(ii) the Executive’s annual base salary for the calendar
year in which the Change of Control occurs (determined on the basis
of the Executive’s annual salary in effect immediately prior
to such Change of Control); plus
(b) The
greater of (i) the Executive’s target management
incentive compensation performance award under the 2006 Performance
Incentive Plan or any successor thereto (“ Target MICP
Award ”) for the calendar year in which the
Qualifying Termination occurs or (ii) the Executive’s
Target MICP Award for the calendar year in which the Change of
Control occurs, as such Target MICP Award is in effect immediately
prior to such Change of Control.
Section 2.2. Medical, Dental,
and Vision Benefits . If the Executive’s employment
terminates as a result of a Qualifying Termination, Interpublic
shall provide to the Executive medical, dental, and vision benefits
(or cash in lieu of such benefits) in accordance with Section 4.2
of the Interpublic Executive Severance Plan (including the
indemnification required by Section 4.2(b) of ESP) as in effect on
the Effective Date (“ ESP ”), subject to
the following provisions:
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(a) The
“designated number of months” for purposes of
determining the Executive’s “severance period”
and “COBRA period” under ESP shall be the Designated
Number of Months set forth in Section 1.7 hereof;
(b) Any
amendment, suspension, or termination of ESP after the date of this
Agreement that has the effect of reducing the level of benefits
required by this Section 2.2, shall be disregarded unless the
Executive expressly consents in writing to such amendment,
suspension, or termination; and
(c) The
Executive’s right to the level of benefits required by this
Section 2.2 shall not be conditioned on the Executive
executing the agreement required by Section 5 of ESP.
Section 2.3. CAP
Supplement .
(a) If
the Executive participates in the Interpublic Capital Accumulation
Plan (“ CAP ”), Interpublic shall, within
thirty (30) days after the date of the Executive’s
Qualifying Termination (or such later date as required by
Section 2.5 hereof), pay to the Executive a lump-sum amount
(without any discount to reflect the time value of money) equal to
the sum of (i) plus (ii) plus (iii), where:
(i)
equals the sum of the annual dollar credits that would have been
added to the Executive’s account under CAP on each
December 31st after the Executive’s Termination of
Employment if he had remained employed by the Company continuously
through the last day of the Severance Period (provided that this
paragraph (i) shall not require duplication of any amount that
is added to the Executive’s account under CAP in accordance
with the terms thereof);
(ii)
equals (A) the dollar credit that would have been added to the
Executive’s account under CAP on December 31st of the
calendar year in which the Severance Period ends if the Executive
had remained employed by the Company continuously through such
December 31st, multiplied by (B) a fraction the numerator
of which is the number of days from January 1st of such calendar
year through the last day
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of the
Severance Period and the denominator of which is three hundred
sixty-five (365); and
(iii)
equals (A) the interest crediting rate under CAP for the
calendar year in which the Executive’s account balance under
CAP is paid, multiplied by (B) the vested balance of the
Executive’s account under CAP as of January 1st of such year,
multiplied by (C) a fraction the numerator of which is the
number of days from January 1st of such year through the date on
which the Executive’s account balance under CAP is paid and
the denominator of which is three hundred sixty-five (365).
(b) Before
a Change of Control, Interpublic shall contribute to an Unsecured
Trust an amount that an Outside Auditor engaged by Interpublic, at
Interpublic’s expense, concludes, in its best judgment
(considering the information available to such Outside Auditor at
the time of the calculation and th
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