SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 1995 1-6686
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-1024020
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1271 Avenue of the Americas 10020
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 399-8000
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No___.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. X .
PAGE
The aggregate market value of the registrant's voting stock
(exclusive of shares beneficially owned by persons referred to in
response to Item 12 hereof) was $3,476,599,515 as of March 25,
1996.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Common Stock outstanding at March 25, 1996: 79,128,246 shares.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for the year
ended December 31, 1995 are incorporated by reference in
Parts I and II.
2. Portions of the Proxy Statement for the 1996 Annual Meeting
of Stockholders are incorporated by reference in Parts I and
III.
PAGE
PART I
Item 1. Business
The Interpublic Group of Companies, Inc. was incorporated in
Delaware in September 1930 under the name of McCann-Erickson
Incorporated as the successor to the advertising agency
businesses founded in 1902 by A.W. Erickson and in 1911 by
Harrison K. McCann. It has operated under the Interpublic name
since January 1961. As used in this Annual Report, the
"Registrant" or "Interpublic" refers to The Interpublic Group of
Companies, Inc. while the "Company" refers to Interpublic and its
subsidiaries.
The advertising agency business is the primary business of
the Company. This business is conducted throughout the world
through three advertising agency systems, McCann-Erickson
Worldwide, Ammirati Puris Lintas and The Lowe Group. The Company
also offers advertising agency services through association
arrangements with local agencies in various parts of the world.
Other activities conducted by the Company within the area of
"marketing communications" include market research, sales
promotion, product development, product design, direct marketing,
telemarketing and other related services.
The principal functions of an advertising agency are to plan
and create advertising programs for its clients and to place
advertising in various media such as television, cable, radio,
magazines, newspapers, transit, direct response media and
outdoor. The planning function involves analysis of the market
for the particular product or service, evaluation of alternative
methods of distribution and choice of the appropriate media to
reach the desired market most efficiently. The advertising
agency then creates an advertising program, within the limits
imposed by the client's advertising budget, and places orders for
space or time with the media that have been selected.
Interpublic also carries on a media buying business through its
ownership of Western International Media and its affiliates.
The principal advertising agency subsidiaries of Interpublic
operating within the United States directly or through
subsidiaries and the locations of their respective corporate
headquarters are:
PAGE
McCann-Erickson USA, Inc.......... New York, New York
Campbell-Ewald
Company.......................... Detroit (Warren),
Michigan
Ammirati Puris Lintas Inc......... New York, New York
Dailey & Associates............... Los Angeles, California
Lowe & Partners Inc............... New York, New York
Campbell Mithun Esty LLC.......... Minneapolis, Minnesota
In addition to domestic operations, the Company provides
advertising services for clients whose business is international
in scope as well as for clients whose business is restricted to a
single country or a small number of countries. It has offices in
Canada as well as in one or more cities in each of the following
countries:
EUROPE, AFRICA AND THE MIDDLE EAST
Austria Germany Namibia South Africa
Belgium Greece Netherlands Spain
Croatia Hungary Norway Sweden
Czech Republic Ireland Poland Switzerland
Denmark Italy Portugal Turkey
Finland Ivory Coast Romania United Arab Emirates
France Kenya Russia United Kingdom
Malawi Slovak Zimbabwe
Republic
LATIN AMERICA AND THE CARIBBEAN
Argentina Costa Rica Honduras Peru
Barbados Dominican Republic Jamaica Puerto Rico
Bermuda Ecuador Mexico Trinidad
Brazil El Salvador Panama Uruguay
Chile Guatemala Paraguay Venezuela
Colombia
PAGE
ASIA AND THE PACIFIC
Australia Japan People's Republic South Korea
Hong Kong Malaysia of China Taiwan
India Nepal Philippines Thailand
New Zealand Singapore
Operations in the foregoing countries are carried on by one
or more operating companies, at least one of which is either
wholly owned by Interpublic or a subsidiary or is a company in
which Interpublic or a subsidiary owns a 51% interest or more,
except in Malawi and Nepal, where Interpublic or a subsidiary
holds a minority interest.
The Company also offers advertising agency services in
Aruba, the Bahamas, Bahrain, Belize, Bolivia, Bulgaria, Cambodia,
Cameroon, Egypt, Gabon, Ghana, Grand Cayman, Guadeloupe, Guam,
Guyana, Haiti, Reunion, Indonesia, Iran, Israel, Ivory Coast,
Jordan, Kuwait, Lebanon, Martinique, Mauritius, Morocco,
Nicaragua, Nigeria, Oman, Pakistan, Paraguay, Saudi Arabia,
Senegal, Sri Lanka, Surinam, Tunisia, Uganda, United Arab
Emirates (Dubai), Vietnam and Zaire through association
arrangements with local agencies operating in those countries.
For information concerning revenues, operating profits and
identifiable assets on a geographical basis for each of the last
three years, reference is made to Note 13: Geographic Areas of
the Notes to the Consolidated Financial Statements in the
Company's Annual Report to Stockholders for the year ended
December 31, 1995, which Note is hereby incorporated by
reference.
Developments in 1995
The Company completed several acquisitions within the United
States and abroad in 1995.
Effective November 10, 1995, Anderson & Lembke,Inc. was
acquired. Anderson & Lembke, Inc. is an advertising agency with
headquarters in New York City and San Francisco.
As of June 29, 1995, the Company acquired a 50% interest in
a limited liability company, Campbell Mithun Esty LLC. The other
50% is owned by former employees of Campbell Mithun Esty Inc.
which are employed by the LLC.
PAGE
In 1995, the Company completed its integration of Ammirati &
Puris (acquired in 1994) with its Lintas Agency System. In 1995,
Ammirati & Puris Holdings, Inc. and Ammirati & Puris Inc. were
merged into Lintas, Inc. and the name of the surviving
corporation has been changed to Ammirati Puris Lintas Inc.
Ammirati Puris Lintas Inc. continues to be headquartered in New
York City. The Company also is in the process of changing the
names of the corporations comprising the Lintas Worldwide Agency
System to reflect the "Ammirati Puris Lintas" name.
See Note 3 to the Consolidated Financial Statements
incorporated by reference in this Report on Form 10-K for
discussion of additional acquisitions.
Income from Commissions, Fees and Publications
The Company generates income from planning, creating and
placing advertising in various media. Historically, the
commission customary in the industry was 15% of the gross charge
("billings") for advertising space or time; more recently lower
commissions have been negotiated, but often with additional
incentives for better performance. For example, an incentive
component is frequently included in arrangements with clients
based on increases in a client's sales of the products or
services being advertised. Under commission arrangements, media
bill the Company at their gross rates. The Company bills these
amounts to its clients, remits the net charges to the media and
retains the balance as its commission. Some clients, however,
prefer to compensate the Company on a fee basis, under which the
Company bills its client for the net charges billed by the media
plus an agreed-upon fee. These fees usually are calculated to
reflect the Company's salary costs and out-of-pocket expenses
incurred on the client's behalf, plus proportional overhead and a
profit mark-up.
Normally, the Company, like other advertising agencies, is
primarily responsible for paying the media with respect to firm
contracts for advertising time or space. This is a problem only
if the client is unable to pay the Company because of insolvency
or bankruptcy. The Company makes serious efforts to reduce the
risk from a client's insolvency, including (1) carrying out
credit clearances, (2) requiring in some cases payment of media
in advance, or (3) agreeing with the media that the Company will
be solely liable to pay the media only after the client has paid
the Company for the media charges.
PAGE
The Company also receives commissions from clients for
planning and supervising work done by outside contractors in the
physical preparation of finished print advertisements and the
production of television and radio commercials and infomercials.
This commission is customarily 17.65% of the outside contractor's
net charge, which is the same as 15% of the outside contractor's
total charges including commission. With the spread of
negotiated fees, the terms on which outstanding contractors'
charges are billed are subject to wide variations and even
include in some instances the elimination of commissions entirely
provided that there are adequate negotiated fees.
The Company derives income in many other ways, including the
planning and placement in media of advertising produced by
unrelated advertising agencies; the maintenance of specialized
media placement facilities; the creation and publication of
brochures, billboards, point of sale materials and direct
marketing pieces for clients; the planning and carrying out of
specialized marketing research; managing special events at which
clients' products are featured; and designing and carrying out
interactive programs for special uses.
The five clients of the Company that made the largest
contribution in 1995 to income from commissions and fees
accounted individually for 2% to 11% of such income and in the
aggregate accounted for over 31% of such income. Twenty clients
of the Company accounted for approximately 45% of such income.
Based on income from commissions and fees, the three largest
clients of the Company are General Motors Corporation, Unilever
and The Coca-Cola Company. General Motors Corporation first
became a client of one of the Company's agencies in 1916 in the
United States. Predecessors of several of the Lintas agencies
have supplied advertising services to Unilever since 1893. The
client relationship with The Coca-Cola Company began in 1942 in
Brazil and in 1955 in the United States. While the loss of the
entire business of one of the Company's three largest clients
might have a material adverse effect upon the business of the
Company, the Company believes that it is very unlikely that the
entire business of any of these clients would be lost at the same
time, because it represents several different brands or divisions
of each of these clients in a number of geographical markets - in
each case through more than one of the Company's agency systems.
Representation of a client rarely means that the Company
handles advertising for all brands or product lines of the client
in all geographical locations. Any client may transfer its
PAGE
business from an advertising agency within the Company to a
competing agency, and a client may reduce its advertising budget
at any time. The Company's advertising agencies in many
instances have written contracts with their clients.
As is customary in the industry, these contracts provide for
termination by either party on relatively short notice, usually
90 days but sometimes shorter or longer. In 1995, however, 42%
of income from commissions and fees was derived from clients that
had been associated with one or more of the Company's agencies or
their predecessors for 20 or more years.
Personnel
As of January 1, 1996, the Company employed approximately
19,700 persons, of whom approximately 5,900 were employed in the
United States. Because of the personal service character of the
marketing communications business, the quality of personnel is of
crucial importance to continuing success. There is keen
competition for qualified employees. Interpublic considers its
employee relations to be satisfactory.
The Company has an active program for training personnel.
The program includes meetings and seminars throughout the world.
It also involves training personnel in its offices in New York
and in its larger offices worldwide.
Competition and Other Factors
The advertising agency and other marketing communications
businesses are highly competitive. The Company's agencies and
media services must compete with other agencies, both large and
small, and also with other providers of creative or media
services which are not themselves advertising agencies, in order
to maintain existing client relationships and to obtain new
clients. Competition in the advertising agency business depends
to a large extent on the client's perception of the quality of an
agency's "creative product". An agency's ability to serve
clients, particularly large international clients, on a broad
geographic basis is also an important competitive consideration.
On the other hand, because an advertising agency's principal
asset is its people, freedom of entry into the business is almost
unlimited and quite small agencies are, on occasion, able to take
all or some portion of a client's account from a much larger
competitor.
PAGE
Moreover, increasing size brings limitations to an agency's
potential for securing new business, because many clients prefer
not to be represented by an agency that represents a competitor.
Also, clients frequently wish to have different products
represented by different agencies. The fact that the Company
owns three separate worldwide agency systems and interests in
other advertising agencies gives it additional competitive
opportunities.
The advertising business is subject to government
regulation, both domestic and foreign. There has been an
increasing tendency in the United States on the part of
advertisers to resort to the courts to challenge comparative
advertising on the grounds that the advertising is false and
deceptive. Through the years, there has been a continuing
expansion of specific rules, prohibitions, media restrictions,
labeling disclosures and warning requirements with respect to the
advertising for certain products. Representatives within state
governments and the federal government as well as foreign
governments continue to initiate proposals to ban the advertising
of specific products and to impose taxes on or deny deductions
for advertising which, if successful, may have an adverse effect
on advertising expenditures.
Some countries are relaxing commercial restrictions as part
of their efforts to attract foreign investment. However, with
respect to other nations, the international operations of the
Company still remain exposed to certain risks which affect
foreign operations of all kinds, such as local legislation,
monetary devaluation, exchange control restrictions and unstable
political conditions. In addition, international advertising
agencies are from time to time exposed to the threat of forced
divestment in favor of local investors because they are
considered an integral factor in the communications process. A
provision of the present constitution in the Philippines is an
example.
Item 2. Properties
Most of the advertising operations of the Company are
conducted in leased premises, and its physical property consists
primarily of leasehold improvements, furniture, fixtures and
equipment. These facilities are located in various cities in
PAGE
which the Company does business throughout the world. However,
subsidiaries of the Company own office buildings in Louisville,
Kentucky; Warren, Michigan; Frankfurt, Germany; Sao Paulo,
Brazil; Lima, Peru; and Brussels, Belgium and own office
condominiums in Buenos Aires, Argentina; Bogota, Colombia;
Manila, the Philippines; in England, subsidiaries of the Company
own office buildings in London, Manchester, Birmingham and
Stoke-on-Trent.
The Company's ownership of the office building in Frankfurt
is subject to three mortgages which became effective on or about
February 1993. These mortgages terminate at different dates,
with the last to expire in February 2003. Reference is made to
Note 15: Commitments and Contingent Liabilities - of the Notes to
the Consolidated Financial Statements in the Company's Annual
Report to Stockholders for the year ended December 31, 1995,
which Note is hereby incorporated by reference.
Item 3. Legal Proceedings
Neither the Company nor any of its subsidiaries are subject
to any pending material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Executive Officers of the Registrant
There follows the information disclosed in accordance with
Item 401 of Regulation S-K of the Securities and Exchange
Commission (the "Commission") as required by Item 10 of Form 10-K
with respect to executive officers of the Registrant.
Name Age Office
Philip H. Geier, Jr. (1) 61 Chairman of the Board, President
and Chief Executive Officer
Eugene P. Beard (1) 60 Vice Chairman-Finance and
Operations, Chief Financial Officer
PAGE
John J. Dooner, Jr. (1) 47 Chairman of McCann-Erickson
Worldwide, Inc.
Nicholas J. Camera 49 Vice President, Secretary and
General Counsel
Frank B. Lowe (1) 54 Chairman of The Lowe Group
C. Kent Kroeber 57 Senior Vice President-Human
Resources
Martin F. Puris (1) 57 Chairman, Chief Executive Officer
and Chief Creative Officer of
Ammirati Puris Lintas Worldwide
Thomas J. Volpe 60 Senior Vice President-Financial
Operations
Joseph M. Studley 43 Vice President and Controller
(1) Also a Director
There is no family relationship among any of the executive
officers.
The employment histories for the past five years of Messrs.
Geier, Beard, Dooner, Puris and Lowe are incorporated by
reference to the Proxy Statement for Interpublic's 1996 Annual
Meeting of Stockholders.
Mr. Camera joined Interpublic on May 17, 1993. He was
elected Vice President, Assistant General Counsel and Assistant
Secretary on June 1, 1994 and Vice President, General Counsel and
Secretary on December 15, 1995.
Mr. Kroeber joined Interpublic in January 1966 as Manager of
Compensation and Training. He was elected a Vice President in
1970 and Senior Vice President in May 1980.
Mr. Volpe joined Interpublic on March 3, 1986. He was
appointed Senior Vice President-Financial Operations on March 18,
1986. He served as Treasurer from January 1, 1987 through May
17, 1988 and the Treasurer's office continues to report to him.
He was Vice President and Treasurer of Colgate-Palmolive Company
PAGE
from February 1981 to February 1986 and Assistant Corporate
Controller prior thereto.
Mr. Studley was elected as Vice President and Controller of
Interpublic effective as of April 1, 1994, formerly he was Senior
Vice President and Chief Financial Officer of E.C. Television, a
division of Interpublic, since January 1, 1990. He was a Vice
President of Lintas New York, a division of one of Interpublic's
subsidiaries, from August 1, 1987 until December 31, 1989.
PAGE
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1995. See Note 12: Results by Quarter (Unaudited),
of the Notes to the Consolidated Financial Statements and
information under the heading Transfer Agent and Registrar for
Common Stock.
Item 6. Selected Financial Data
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1995 under the heading Selected Financial Data for
Five Years.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The response to this Item is incorporated by reference to
the Registrant's Annual Report to Stockholders for the year ended
December 31, 1995 under the heading Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Item 8. Financial Statements and Supplementary Data
The response to this Item is incorporated in part by
reference to the Registrant's Annual Report to Stockholders for
the year ended December 31, 1995 under the headings Financial
Statements and Notes to the Consolidated Financial Statements.
Reference is also made to the Financial Statement Schedules
listed under Item 14(a) of this Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
PAGE
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item is incorporated by
reference to the Registrant's Proxy Statement for its 1996 Annual
Meeting of Stockholders (the "Proxy Statement"), to be filed not
later than 120 days after the end of the 1995 calendar year,
except for the description of Interpublic's Executive Officers
which appears in Part I of this Report on Form 10-K under the
heading Executive Officers of the Registrant.
Item 11. Executive Compensation
The information required by this Item is incorporated by
reference to the Proxy Statement. Such incorporation by
reference shall not be deemed to incorporate specifically by
reference the information referred to in Item 402(a)(8) of
Regulation S-K.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this Item is incorporated by
reference to the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by
reference to the Proxy Statement. Such incorporation by
reference shall not be deemed to incorporate specifically by
reference the information referred to in Item 402(a)(8) of
Regulation S-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
PAGE
(a) Listed below are all financial statements, financial
statement schedules and exhibits filed as part of this Report on
Form 10-K.
1. Financial Statements:
See the Index to Financial Statements on page F-1.
2. Financial Statement Schedules:
See the Index to Financial Statement Schedules on
page F-1.
3. Exhibits:
(Numbers used are the numbers assigned in Item 601 of
Regulation S-K and the EDGAR Filer Manual. An additional copy of
this exhibit index immediately precedes the exhibits filed with
this Report on Form 10-K and the exhibits transmitted to the
Commission as part of the electronic filing of the Report.)
Exhibit No. Description
3 (i) The Restated Certificate of Incorporation of the
Registrant, as amended is incorporated by reference to
its Report on Form 10-Q for the quarter ended June 30,
1995. See Commission file number 1-6686.
(ii) The By-Laws of the Registrant, amended as of February
19, 1991, are incorporated by reference to its Report
on Form 10-K for the year ended December 31, 1990. See
Commission file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
(i) Indenture, dated as of April 1, 1992, between
Interpublic and Morgan Guaranty Trust Company of New
York is not included as an Exhibit to this Report but
will be furnished to the Commission upon its request.
(ii) The Preferred Share Purchase Rights Plan as adopted on
July 18, 1989 is incorporated by reference to
Registrant's Registration Statement on Form 8-A dated
August 1, 1989 (No. 00017904) and, as amended, by
reference to Registrant's Registration Statement on
Form 8 dated October 3, 1989 (No. 00106686).
PAGE
10 Material Contracts.
(a) Underwriting Agreement, dated March 30, 1992, by and
between Interpublic and Goldman Sachs International
Limited is incorporated by reference to Registrant's
Report on Form 10-K for the year ended December 31,
1992. See Commission file number 1-6686.
(b) Employment, Consultancy and other Compensatory
Arrangements with Management.
Employment and Consultancy Agreements and any
amendments or supplements thereto and other
compensatory arrangements filed with the Registrant's
Reports on Form 10-K for the years ended December 31,
1980 through December 31, 1994, inclusive, or filed
with the Registrant's Reports on Form 10-Q for the
periods ended March 31, 1995, June 30, 1995 and
September 30, 1995 are incorporated by reference in
this Report on Form 10-K. See Commission file number
1-6686. Listed below are agreements or amendments to
agreements between the Registrant and its executive
officers which remain in effect on and after the date
hereof or were executed during the year ended December
31, 1995 and thereafter, unless previously submitted,
which are filed as exhibits to this Report on Form
10-K.
(i) John J. Dooner, Jr.
(a) Employment Agreement made as of August 1,
1984.
(b) Supplemental Agreement made as of June 1,
1985 to an Employment Agreement made as of
August 1, 1984.
(c) Supplemental Agreement made as of December 1,
1985 to an Employment Agreement made as of
August 1, 1984.
(d) Supplemental Agreement made as of June 1,
1986 to an Employment Agreement made as of
August 1, 1984.
PAGE
(e) Executive Special Benefit Agreement made as
of July 1, 1986.
(f) Deferred Bonus Agreement made as of November
12, 1986.
(g) Supplemental Agreement made as of June 1,
1987 to an Employment Agreement made as of
August 1, 1984.
(h) Executive Severance Agreement made as of
August 10, 1987.
(i) Supplemental Agreement made as of April 1,
1988 to an Employment Agreement made as of
August 1, 1984.
(j) Supplemental Agreement made as of November 1,
1988 to an Employment Agreement made as of
August 1, 1984.
(k) Supplemental Agreement made as of July 1,
1989 to an Employment Agreement made as of
August 1, 1984.
(l) Supplemental Agreement made as of May 23,
1990 to an Executive Special Benefit
Agreement made as of July 1, 1986.
(m) Supplemental Agreement made as of July 1,
1990 to an Employment Agreement made as of
August 1, 1984.
(n) Supplemental Agreement made as of October 1,
1991 to an Employment Agreement made as of
August 1, 1984.
(o) Supplemental Agreement made as of May 1, 1992
to an Employment Agreement made as of August
1, 1984.
(p) Supplemental Agreement made as of August 10,
1992 to an Executive Severance Agreement made
as of August 10, 1987.
PAGE
(q) Executive Special Benefit Agreement made as
of July 1, 1992.
(r) Employment Agreement made as of January 1,
1994.
(s) Executive Special Benefit Agreement made as
of June 1, 1994.
(t) Supplemental Agreement made as of July 1,
1995 to an Employment Agreement made as of
January 1, 1994.
(ii) Frank B. Lowe
(a) Employment Agreement made as of January
1,1996.
(b) Executive Special Benefit Agreement made as
of January 1, 1996.
(iii) Martin F. Puris
Employment Agreement made as of August 11,
1994.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between
The Interpublic Group of Companies, Inc., Lintas
Campbell-Ewald Company, McCann-Erickson USA, Inc.,
McCann-Erickson Marketing, Inc., Lintas, Inc. and
Chemical Bank, as Trustee, is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1990. See
Commission file number 1-6686.
(ii) The Stock Option Plan (1988) and the Achievement
Stock Award Plan of the Registrant are
incorporated by reference to Appendices C and D of
the Prospectus dated May 4, 1989 forming part of
its Registration Statement on Form S-8 (No.
33-28143).
PAGE
(iii) The Management Incentive Compensation Plan of the
Registrant is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter
ended June 30, 1995. See Commission file number
1-6686.
(iv) The 1986 Stock Incentive Plan of the Registrant is
incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1993. See Commission file number 1-6686.
(v) The 1986 United Kingdom Stock Option Plan of the
Registrant is incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992. See Commission file
number 1-6686.
(vi) The Employee Stock Purchase Plan (1985) of the
Registrant, as amended, is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1993. See
Commission file number 1-6686.
(vii) The Long-Term Performance Incentive Plan of the
Registrant is incorporated by reference to
Appendix A of the Prospectus dated December 12,
1988 forming part of its Registration Statement on
Form S-8 (No. 33-25555).
(viii) Resolution of the Board of Directors adopted on
February 16, 1993, amending the Long-Term
Performance Incentive Plan is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
(ix) Resolution of the Board of Directors adopted on
May 16, 1989 amending the Long-Term Performance
Incentive Plan is incorporated by reference to
Registrant's Report on Form 10-K for the year
ended December 31, 1989. See Commission file
number 1-6686.
PAGE
(d) Loan Agreements.
(i) Credit Agreement dated as of July 3, 1995, between
Interpublic and Lloyds Bank Plc.
(ii) Credit Agreement dated and effective December 21,
1995 between Interpublic and NBD Bank.
(iii)Note dated as of December 21, 1995 between
Interpublic and NBD Bank pursuant to the Credit
Agreement dated and effective as of December 21,
1995.
(iv) Other Loan and Guaranty Agreements filed with the
Registrant's Annual Report on Form 10-K for the
years ended December 31, 1988 and December 31,
1986 are incorporated by reference in this Report
on Form 10-K. Other Credit Agreements, amendments
to various Credit Agreements, Supplemental
Agreements, Termination Agreements, Loan
Agreements, a Note Purchase Agreement, dated
August 20, 1991, Guarantee, dated December 17,
1991, Notification dated March 14, 1991 by
Registrant and Intercreditor Agreements filed with
the Registrant's Report on Form
10-K for the years ended December 31, 1989 through
December 31, 1994, inclusive and filed with
Registrant's Reports on Form 10-Q for the periods
ended March 31, 1995, June 30, 1995 and September
30, 1995 are incorporated by reference into this
Report on Form 10-K. See Commission file number
1-6686.
(e) Leases.
Material leases of premises are incorporated by
reference to the Registrant's Annual Report on Form
10-K for the years ended December 31, 1980 and December
31, 1988. See Commission file number 1-6686.
PAGE
(f) Acquisition Agreement for Purchase of Real Estate.
(i) Acquisition Agreement (in German) between
Treuhandelsgesellschaft Aktiengesellschaft & Co.
Grundbesitz OHG and McCann-Erickson Deutschland
GmbH & Co. Management Property KG
("McCann-Erickson Deutschland") and the English
translation of the Acquisition Agreement are
incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1992. See Commission file number 1-6686.
(g) Mortgage Agreements and Encumbrances.
(i) Summaries In German and English of Mortgage
Agreements between McCann-Erickson Deutschland and
Frankfurter Hypothekenbank Aktiengesellschaft
("Frankfurter Hypothekenbank"), Mortgage
Agreement, dated January 22, 1993, between
McCann-Erickson Deutschland and Frankfurter
Hypothekenbank, Mortgage Agreement, dated January
22, 1993, between McCann-Erickson Deutschland and
Hypothekenbank are incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993. See Commission file
number 1-6686. Summaries In German and English of
Mortgage Agreement, between McCann-Erickson
Deutschland and Frankfurter Sparkasse and Mortgage
Agreement, dated January 7, 1993, between
McCann-Erickson Deutschland and Frankfurter
Sparkasse are incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992. See Commission file
number 1-6686.
(ii) Summaries In German and English of Documents
Creating Encumbrances In Favor of Frankfurter
Hypothekenbank and Frankfurter Sparkasse In
Connection With the Aforementioned Mortgage
Agreements, Encumbrance, dated January 15, 1993,
In Favor Of Frankfurter Hypothekenbank, and
Encumbrance, dated January 15, 1993, In Favor of
Frankfurter Sparkasse are incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
PAGE
(iii) Loan Agreement (in English and German), dated
January 29, 1993 between Lintas Deutschland GmbH
and McCann-Erickson Deutschland is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
11 Computation of Earnings Per Share.
13 This Exhibit includes: (a) those portions of the Annual
Report to Stockholders for the year ended December 31, 1995
which are included therein under the following headings:
Financial Highlights; Management's Discussion and Analysis
of Financial Condition and Results Of Operations;
Consolidated Balance Sheet; Consolidated Statement of
Income; Consolidated Statement of Cash Flows; Consolidated
Statement of Stockholders' Equity; Notes to Consolidated
Financial Statements (the aforementioned consolidated
financial statements together with the Notes to Consolidated
Financial Statements hereinafter shall be referred to as the
"Consolidated Financial Statements"); Report of Independent
Accountants; Selected Financial Data For Five Years; Report
of Management; and Stockholders' Information; and (b)
Appendix to Exhibit 13.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney to sign Form 10-K and resolution of Board
of Directors re Power of Attorney.
27 Financial Data Schedules
99 No reports on Form 8-K were filed during the quarter ended
December 31, 1995.
PAGE
SIGNATURES
Pursuant to the requirements of Section 13 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.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Registrant)
March 28, 1996 BY: Philip H. Geier, Jr.
Philip H. Geier, Jr.,
Chairman of the Board,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Name Title Date
Frank J. Borelli Director March 28, 1996
Frank J. Borelli
Philip H. Geier, Jr. Chairman of the Board, March 28, 1996
Philip H. Geier, Jr. President and Chief Executive
Officer (Principal Executive
Officer) and Director
Eugene P. Beard Vice Chairman March 28, 1996
Eugene P. Beard -Finance and Operations
(Principal Financial
Officer) and Director
John J. Dooner, Jr. Director March 28, 1996
John J. Dooner, Jr
Frank B. Lowe Director March 28, 1996
Frank B. Lowe
PAGE
Leif H. Olsen Director March 28, 1996
Leif H. Olsen
Martin F. Puris Director March 28, 1996
Martin F. Puris
J. Phillip Samper Director March 28, 1996
J. Phillip Samper
Joseph J. Sisco Director March 28, 1996
Joseph J. Sisco
Joseph M. Studley Vice President and March 28, 1996
Joseph M. Studley Controller (Principal
Accounting Officer)
Allen Questrom Director March 28, 1996
Allen Questrom
By Philip H. Geier, Jr.
Philip H. Geier, Jr.
Attorney-in-fact
PAGE
INDEX TO FINANCIAL STATEMENTS
The Financial Statements appearing under the headings: Financial
Highlights, Management's Discussion and Analysis of Financial
Condition and Results of Operations, Consolidated Financial
Statements, Notes to Consolidated Financial Statements, Report of
Independent Accountants, Selected Financial Data for Five Years
and Report of Management accompanying Annual Report to
Stockholders for the year ended December 31, 1995, together with
the report thereon of Price Waterhouse LLP dated February 13,
1996 appearing on page 40 thereof, are incorporated by reference
in this report on Form 10-K. With the exception of the
aforementioned information and the information incorporated in
Items 5, 6 and 7, no other data appearing in the Annual Report to
Stockholders for the year ended December 31, 1995 is deemed to be
filed as part of this report on Form 10-K.
The following financial statement schedule should be read in
conjunction with the financial statements in such Annual Report
to Stockholders for the year ended December 31, 1995. Financial
statement schedules not included in this report on Form 10-K have
been omitted because they are not applicable or the required
information is shown in the financial statements or the notes
thereto.
Separate financial statements for the companies which are 50% or
less owned and accounted for by the equity method have been
omitted because, considered in the aggregate as a single
subsidiary, they do not constitute a significant subsidiary.
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page
Report of Independent Accountants on
Financial Statement Schedules F-2
Consent of Independent Accountants F-2
Financial Statement Schedules Required to be filed by
Item 8 of this form:
VIII Valuation and Qualifying Accounts F-3
F-1
PAGE
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
The Interpublic Group of Companies, Inc.
Our audits of the consolidated financial statements referred to in
our report dated February 13, 1996 appearing in the 1995 Annual
Report to Stockholders of The Interpublic Group of Companies, Inc.
(which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also
included an audit of the Financial Statement Schedules listed in
Item 14 (a) of this Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.
PRICE WATERHOUSE LLP
New York, New York
February 13, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 of The Interpublic Group of
Companies, Inc. (the "Company"), of our report dated February 13,
1996, appearing in the 1995 Annual Report to Stockholders which is
incorporated in this Annual Report on Form 10-K: Registration
Statements No. 2-79071; No. 2-43811; No. 2-56269; No. 2-61346; No.
2-64338; No. 2-67560; No. 2-72093; No. 2-88165; No. 2-90878,
No. 2-97440 and No. 33-28143, relating variously to the Stock Option
Plan (1971), the Stock Option Plan (1981), the Stock Option Plan
(1988) and the Achievement Stock Award Plan of the Company;
Registration Statements No. 2-53544; No. 2-91564, No. 2-98324, No.
33-22008, No. 33-64062 and No. 33-61371, relating variously to the
Employee Stock Purchase Plan (1975), the Employee Stock Purchase
Plan (1985) and the Employee Stock Purchase Plan of the Company
(1995); Registration Statements No. 33-20291 and No. 33-2830
relating to the Management Incentive Compensation Plan of the
Company; Registration Statement No. 33-5352 and No. 33-21605
relating to the 1986 Stock Incentive Plan and 1986 United Kingdom
Stock Option Plan of the Company; and Registration Statement
No. 33-10087 and No. 33-25555 relating to the Long-Term Performance
Incentive Plan of the Company. We hereby consent to the
incorporation by reference in the Prospectus constituting part of
the Registration Statement on Form S-3
(No. 33-37346) of the Interpublic Group of Companies, Inc. of our
report dated February 13, 1996, appearing in the 1995 Annual Report
to Stockholders which is incorporated in this Annual Report on Form
10-K. We also consent to the incorporation by reference of our
report on the Financial Statement Schedules, which appears above.
PRICE WATERHOUSE LLP
New York, New York
March 28, 1996
F-2
PAGE
SCHEDULE VIII
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1995, 1994 and 1993
(Dollars in Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Balance Charged Charged
at to to Other Balance
Beginning Costs & Accounts- Deductions- at End
Description of Period Expenses Describe Describe of Period
Allowance for
Doubtful Accounts -
deducted from
Receivables in the
Consolidated
Balance Sheet:
1995 $22,656 $8,894 $1,324 $(9,619) $21,941
137 (819)
(632)
1994 $16,834 $6,522 $4,097 $ 6,109 $22,656
699
613
1993 $15,559 $5,600 $ 764 $ 3,823 $16,834
898 2,360
196
Allowance for doubtful accounts of acquired and newly consolidated
companies.
Foreign currency translation adjustment.
Principally amounts written off.
Reversal of previously written off accounts.
Miscellaneous.
F-3
PAGE
INDEX TO DOCUMENTS
Exhibit No. Description
3 (i) The Restated Certificate of Incorporation of the
Registrant, as amended is incorporated by reference to
its Report on Form 10-Q for the quarter ended June 30,
1995. See Commission file number 1-6686.
(ii) The By-Laws of the Registrant, amended as of February
19, 1991, are incorporated by reference to its Report
on Form
10-K for the year ended December 31, 1990. See
Commission file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
(i) Indenture, dated as of April 1, 1992, between
Interpublic and Morgan Guaranty Trust Company of New
York is not included as an Exhibit to this Report but
will be furnished to the Commission upon its request.
(ii) The Preferred Share Purchase Rights Plan as adopted on
July 18, 1989 is incorporated by reference to
Registrant's Registration Statement on Form 8-A dated
August 1, 1989 (No. 00017904) and, as amended, by
reference to Registrant's Registration Statement on
Form 8 dated October 3, 1989 (No. 00106686).
10 Material Contracts.
(a) Underwriting Agreement, dated March 30, 1992, by and
between Interpublic and Goldman Sachs International
Limited is incorporated by reference to Registrant's
Report on Form 10-K for the year ended December 31,
1992. See Commission file number 1-6686.
(b) Employment, Consultancy and other Compensatory
Arrangements with Management.
PAGE
Employment and Consultancy Agreements and any
amendments or supplements thereto and other
compensatory arrangements filed with the Registrant's
Reports on Form 10-K for the years ended December 31,
1980 through December 31, 1994, inclusive, or filed
with the Registrant's Reports on Form 10-Q for the
periods ended March 31, 1995, June 30, 1995 and
September 30, 1995 are incorporated by reference in
this Report on Form 10-K. See Commission file number
1-6686. Listed below are agreements or amendments to
agreements between the Registrant and its executive
officers which remain in effect on and after the date
hereof or were executed during the year ended December
31, 1995 and thereafter, unless previously submitted,
which are filed as exhibits to this Report on Form
10-K.
(i) John J. Dooner, Jr.
(a) Employment Agreement made as of August 1,
1984.
(b) Supplemental Agreement made as of June 1,
1985 to an Employment Agreement made as of
August 1, 1984.
(c) Supplemental Agreement made as of December 1,
1985 to an Employment Agreement made as of
August 1, 1984.
(d) Supplemental Agreement made as of June 1,
1986 to an Employment Agreement made as of
August 1, 1984.
(e) Executive Special Benefit Agreement made as
of July 1, 1986.
(f) Deferred Bonus Agreement made as of November
12, 1986.
(g) Supplemental Agreement made as of June 1,
1987 to an Employment Agreement made as of
August 1, 1984.
(h) Executive Severance Agreement made as of
August 10, 1987.
PAGE
(i) Supplemental Agreement made as of April 1,
1988 to an Employment Agreement made as of
August 1, 1984.
(j) Supplemental Agreement made as of November 1,
1988 to an Employment Agreement made as of
August 1, 1984.
(k) Supplemental Agreement made as of July 1,
1989 to an Employment Agreement made as of
August 1, 1984.
(l) Supplemental Agreement made as of May 23,
1990 to an Executive Special Benefit
Agreement made as of July 1, 1986.
(m) Supplemental Agreement made as of July 1,
1990 to an Employment Agreement made as of
August 1, 1984.
(n) Supplemental Agreement made as of October 1,
1991 to an Employment Agreement made as of
August 1, 1984.
(o) Supplemental Agreement made as of May 1, 1992
to an Employment Agreement made as of August
1, 1984.
(p) Supplemental Agreement made as of August 10,
1992 to an Executive Severance Agreement made
as of August 10, 1987.
(q) Executive Special Benefit Agreement made as
of July 1, 1992.
(r) Employment Agreement made as of January 1,
1994.
(s) Executive Special Benefit Agreement made as
of June 1, 1994.
(t) Supplemental Agreement made as of July 1,
1995 to an Employment Agreement made as of
January 1, 1994.
PAGE
(ii) Frank B. Lowe
(a) Employment Agreement made as of January
1,1996.
(b) Executive Special Benefit Agreement made as
of January 1, 1996.
(iii) Martin F. Puris
Employment Agreement made as of August 11, 1994.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between
The Interpublic Group of Companies, Inc., Lintas
Campbell-Ewald Company,
McCann-Erickson USA, Inc., McCann-Erickson
Marketing, Inc., Lintas, Inc. and Chemical Bank,
as Trustee, is incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990. See Commission file
number 1-6686.
(ii) The Stock Option Plan (1988) and the Achievement
Stock Award Plan of the Registrant are
incorporated by reference to Appendices C and D of
the Prospectus dated May 4, 1989 forming part of
its Registration Statement on Form S-8
(No. 33-28143).
(iii) The Management Incentive Compensation Plan of the
Registrant is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter
ended June 30, 1995. See Commission file number
1-6686.
(iv) The 1986 Stock Incentive Plan of the Registrant is
incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1993. See Commission file number 1-6686.
(v) The 1986 United Kingdom Stock Option Plan of the
Registrant is incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992. See Commission file
number 1-6686.
PAGE
(vi) The Employee Stock Purchase Plan (1985) of the
Registrant, as amended, is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1993. See
Commission file number 1-6686.
(vii) The Long-Term Performance Incentive Plan of the
Registrant is incorporated by reference to
Appendix A of the Prospectus dated December 12,
1988 forming part of its Registration Statement on
Form S-8 (No. 33-25555).
(viii) Resolution of the Board of Directors adopted on
February 16, 1993, amending the Long-Term
Performance Incentive Plan is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
(ix) Resolution of the Board of Directors adopted on
May 16, 1989 amending the Long-Term Performance
Incentive Plan is incorporated by reference to
Registrant's Report on Form 10-K for the year
ended December 31, 1989. See Commission file
number 1-6686.
(d) Loan Agreements.
(i) Credit Agreement dated as of July 3, 1995 between
Interpublic and Lloyds Bank Plc.
(ii) Credit Agreement dated and effective December 21,
1995 between Interpublic and NBD Bank.
(iii) Note dated as of December 21, 1995 between
Interpublic and NBD Bank pursuant to the Credit
Agreement dated and effective as of December 21,
1995.
(iv) Other Loan and Guaranty Agreements filed with
the Registrant's Annual Report on Form 10-K for
the years ended December 31, 1988 and December 31,
1986 are incorporated by reference in this Report
on Form 10-K. Other Credit Agreements, amendments
to various Credit Agreements, Supplemental
Agreements, Termination Agreements, Loan
PAGE
Agreements, a Note Purchase Agreement, dated
August 20, 1991, Guarantee, dated December 17,
1991, Notification dated March 14, 1991 by
Registrant and Intercreditor Agreements filed with
the Registrant's Report on Form 10-K for the years
ended December 31, 1989 through December 31, 1994,
inclusive and filed with Registrant's Reports on
Form 10-Q for the periods ended March 31, 1995,
June 30, 1995 and September 30, 1995 are
incorporated by reference into this Report on Form
10-K. See Commission file number 1-6686.
(e) Leases.
Material leases of premises are incorporated by
reference to the Registrant's Annual Report on Form
10-K for the years ended December 31, 1980 and December
31, 1988. See Commission file number 1-6686.
(f) Acquisition Agreement for Purchase of Real Estate.
Acquisition Agreement (in German) between
Treuhandelsgesellschaft Aktiengesellschaft & Co.
Grundbesitz OHG and McCann-Erickson Deutschland GmbH &
Co. Management Property KG ("McCann-Erickson
Deutschland") and the English translation of the
Acquisition Agreement are incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992. See Commission file number 1-6686.
(g) Mortgage Agreements and Encumbrances.
(i) Summaries In German and English of Mortgage
Agreements between McCann-Erickson Deutschland and
Frankfurter Hypothekenbank Aktiengesellschaft
("Frankfurter Hypothekenbank"), Mortgage
Agreement, dated January 22, 1993, between
McCann-Erickson Deutschland and Frankfurter
Hypothekenbank, Mortgage Agreement, dated January
22, 1993, between McCann-Erickson Deutschland and
Hypothekenbank are incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993.
PAGE
See Commission file number 1-6686. Summaries In
German and English of Mortgage Agreement, between
McCann-Erickson Deutschland and Frankfurter
Sparkasse and Mortgage Agreement, dated January 7,
1993, between McCann-Erickson Deutschland and
Frankfurter Sparkasse are incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
(ii) Summaries In German and English of Documents
Creating Encumbrances In Favor of Frankfurter
Hypothekenbank and Frankfurter Sparkasse In
Connection With the Aforementioned Mortgage
Agreements, Encumbrance, dated January 15, 1993,
In Favor Of Frankfurter Hypothekenbank, and
Encumbrance, dated January 15, 1993, In Favor of
Frankfurter Sparkasse are incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
(iii) Loan Agreement (in English and German), dated
January 29, 1993 between Lintas Deutschland GmbH
and McCann-Erickson Deutschland is incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992. See
Commission file number 1-6686.
11 Computation of Earnings Per Share.
13 This Exhibit includes: (a) those portions of the Annual
Report to Stockholders for the year ended December 31, 1995
which are included therein under the following headings:
Financial Highlights; Management's Discussion and Analysis
of Financial Condition and Results Of Operations;
Consolidated Balance Sheet; Consolidated Statement of
Income; Consolidated Statement of Cash Flows; Consolidated
Statement of Stockholders' Equity; Notes to Consolidated
Financial Statements (the aforementioned consolidated
financial Statements together with the Notes to Consolidated
Financial Statements hereinafter shall be referred to as the
"Consolidated Financial Statements"); Report of Independent
Accountants; Selected Financial Data For Five Years; Report
of Management; and Stockholders' Information; and (b)
Appendix to Exhibit 13.
PAGE
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney to sign Form 10-K and resolution of Board
of Directors re Power of Attorney.
27 Financial Data Schedules
99 No reports on Form 8-K were filed during the quarter ended
December 31, 1995.
EMPLOYMENT AGREEMENT
AGREEMENT made as of August 1, 1984 by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a Delaware corporation,
(hereinafter referred to as "Interpublic"), and JOHN J. DOONER,
JR. (hereinafter referred to as "Executive").
In consideration of the mutual promises set forth herein the
parties hereto agree as follows:
ARTICLE I
Term of Employment
1.01 Upon the terms and subject to the conditions set
forth herein, Interpublic or one of its subsidiaries will employ
Executive for the period beginning August 1, 1984 and ending on
July 31, 1989, or on such earlier date as the employment of
Executive shall terminate pursuant to Article IV or Article V.
(The period during which Executive is employed hereunder is
referred to herein as the "term of employment" and Interpublic or
whichever of its subsidiaries shall from time to time employ
Executive pursuant to this Agreement is referred to herein as the
"Corporation".) Executive will serve the Corporation during the
term of employment.
ARTICLE II
Duties
2.01 During the term of employment Executive will:
(i) use his best efforts to promote the interests of the
Corporation and devote his full time and efforts to its business
and affairs;
(ii) perform such duties as the Corporation may from time to time
assign to him; and
(iii) serve in such offices of the Corporation as he may be
elected or appointed to.
PAGE
ARTICLE III
Compensation
3.01 The Corporation will compensate Executive for
duties performed by him hereunder, including all services
rendered as an officer or director of the Corporation' by payment
of a salary at the rate of $112,000 per annum, payable in equal
installments, which the Corporation may pay at either monthly or
semi-monthly intervals.
3.02 For purposes of this Agreement, each period of 12
months beginning on August 1, 1984, or any anniversary thereof,
shall be referred to as a "Year". Thus the 12-month period
beginning on August 1, 1984 shall be the "First Year., the
12-month period beginning on August 1, 1985 shall be the "Second
Year", and so forth. Subject to the provisions of Section 3.03
hereof, the Corporation will further compensate Executive for the
duties specified in Section 2.01 hereof performed by Executive
during a full Year by payment, at the times and upon the
conditions specified in Section 3.03 hereof, of a sum ("Deferred
Compensation") computed at the rate of $5,000 for the First Year,
$10,000 for the Second Year, $15,000 for the Third Year, $20,000
for the Fourth Year and $25,000 for the Fifth Year, and a
proportionate amount of whichever of the foregoing sums is
applicable for any partial Year during which Executive actually
performs such duties (as well as for any period during which
Executive is receiving payments pursuant to subdivision (ii) of
Section 4.01). Deferred Compensation payable hereunder shall be
entitled to credits equivalent to interest in accordance with the
terms and conditions of the Plan for Credits Equivalent to
Interest on Balances of Deferred Compensation Owing under
Employment Agreements (hereinafter referred to as the "Interest
Plan.), a copy of which is attached hereto as Exhibit I.
Executive acknowledges that the Corporation has the right to
discontinue further credits equivalent to interest in accordance
with the terms and conditions of the Interest Plan. Payment of
Deferred Compensation shall be contingent on full performance by
Executive of all his obligations under Articles I, II and IV of
this Agreement.
3.03 The Deferred Compensation provided for in
Section 3.02 shall be payable at the times and upon the
conditions set forth below:
PAGE
(a) If the employment of Executive by the Corporation
terminates by reason of his voluntary resignation, he
shall be entitled to receive no Deferred Compensation
with respect to the Year in which such termination
occurs or with respect to the first, second, third or
fourth years preceding the Year in which such
termination occurs. Voluntary retirement pursuant to
the Interpublic Pension Plan shall not be deemed to be
voluntary resignation if such retirement occurs at or
after age 60 or occurs prior to age 60 with the consent
of the Corporation.
(b) Deferred Compensation earned by Executive with
respect to any Year and not forfeited pursuant to the
provisions of subparagraph (a) of this Paragraph 3.03
will be paid to him within 30 days after the
termination of his employment, together with the
credits equivalent to interest relating to such
payment.
(c) If Executive shall die while employed by the
Corporation or prior to receiving the payment specified
in subparagraph (b) of this Paragraph 3.03, any
Deferred Compensation payable in accordance with these
provisions shall be paid to the Executor of his Will or
the Administrator of his Estate.
(d) It is understood that none of the payments of
Deferred Compensation made in accordance with these
provisions shall be considered for the purposes of
determining Executive's benefits under the Interpublic
Pension Plan unless paid to him while he is in the
employ of a corporation which is a party to that
Pension Plan.
3.04 If at any time during the term of employment the
Corporation shall reduce the compensation of all its employees
receiving compensation at the rate of $25,000 per annum or more,
the compensation of Executive hereunder may be reduced in the
same proportion as the compensation of each such employee.
3.05 The Corporation may at any time increase the
compensation paid to Executive hereunder if the Corporation in
its discretion shall deem it advisable so to do in order to
compensate him fairly for services rendered to the Corporation.
PAGE
ARTICLE IV
Termination
4.01 Interpublic may terminate the employment of
Executive hereunder
(i) by giving Executive notice in writing at any time
specifying a termination date not less than six 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,
or
(ii) by giving him notice in writing at any time specifying
a termination date less than six months after the date on which
such notice is given. In this event his 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 six 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 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 month to be paid together with the last installment.
4.02 Executive may at any time give notice in writing
to Interpublic specifying a termination date not less than six
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.
4.03 If the employment of Executive hereunder is
terminated pursuant to this Article IV by either Interpublic or
Executive, Executive shall continue to perform his duties here-
under until the termination date at his salary in effect on the
date that notice of such termination is given.
4.04 If Executive dies before July 31, 1989, his
employment hereunder shall terminate on the date of his death.
PAGE
ARTICLE V
Covenants
5.01 While Executive is employed hereunder by the
Corporation he shall not without the prior written consent of the
Corporation 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.
5.02 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.
5.03 If Executive violates any provision of Section
5.01 or Section 5.02, Interpublic may, notwithstanding the
provisions of Section 4.01, terminate the employment of Executive
at any time by giving him notice in writing specifying a
termination date. In such event, his employment hereunder shall
terminate on the date specified in such notice.
5.04 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 anc remain
the property of the Corporation.
5.05 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, 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, without further compensation, upon notice to him
from the Corporation.
PAGE
5.06 Following the termination of Executive's employ-
ment hereunder, Executive shall not for a period of twelve months
from such termination either (a) solicit any employee of the
Corporation to leave such employ to enter the employ of Executive
or of any corporation or enterprise 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
advertising, public relations, sales promotion or market research
business of any advertiser which is a client of the Corporation
at the time of such termination.
ARTICLE VI
Bonus
6.01 In addition to the compensation specified in
Article III hereof, it is agreed that if Executive is in the
employ of the Corporation on December 31, 1984, he will receive
bonus with respect to his services in 1984 in an amount between
35% and 50% of the salary paid to, and deferred compensation
accrued for, him in 1984 by the Corporation and any other
subsidiary of Interpublic. The precise amount of the bonus will
be dependent upon an evaluation of Executive's performance during
1984, which evaluation shall be made by Interpublic, and upon the
financial performance in 1984 of such subsidiaries of Interpublic
as may have employed Executive during 1984. The bonus shall be
payable on or about February 15, 1985.
ARTICLE VII
Assignment
7.01 This Agreement shall be binding upon and enure to
the benefit of the successors and assigns of Interpublic. Neither
this Agreement or any rights hereunder shall be assignable by
Executive and any such purported assignment by him shall be void.
ARTICLE VIII
Agreement Entire
8.01 This Agreement constitutes the entire
understanding between Interpublic and Executive concerning his
employment by Interpublic or any of its subsidiaries and
supersedes any and all previous agreements between Executive and
Interpublic or any of its subsidiaries concerning such employment
This Agreement may not be changed orally.
ARTICLE IX
Applicable Law
9.01 This 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 Philip H. Geier, Jr.
John J. Dooner, Jr.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of June 1, 1985, by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporation"), and JOHN J. DOONER, JR. (hereinafter referred to as
"Executive"):
W I T T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement made as of August 1, 1984 (hereinafter referred to as the
("Employment Agreement"), and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein and
in the Employment Agreement set forth, the parties hereto, intending to be
legally bound, agree as follows:
1. Section 3.01 of the Employment is hereby amended effective
as of June 1, 1985, so as to delete "112,000" and to substitute
therefor "$127,000".
2. Except as hereinabove amended, the Employment Agreement shall
continue in full force and effect.
3. This Supplemental Agreement shall be governed by the laws of
the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. KENT KROEBER
John J. Dooner, Jr.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of December 1, 1985, by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporation"), and JOHN J. DOONER, JR. (hereinafter referred to
as "Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to
an Employment Agreement made as of August T, 1984 and a
Supplemental Agreement made as of June 1, 1985 thereinafter
referred to collectively as the "Employment Agreement.), and
WHEREAS, the Corporation and Executive desire to amend
the Employment Agreement:
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is hereby
amended, effective as of December 1, 1985, so as the
delete "$127,000". and to substitute therefor
"$150,000".
2. Section 3.02 of the Employment Agreement is hereby
amended, effective as of December 1, 1985, so as to
delete the first three sentences thereof and substitute
therefor the following: "Subject to the provisions of
Section 3.03 hereof, the Corporation will further
compensate Executive for the duties specified in
Section 2.01 hereof by payment at the times and upon
the conditions specified in Section 3.03, of sums
("Deferred Compensation") of $5,000 for the period
August 1, 1984 through July 31, 1985 and $3,333.33 for
the period August 1, 1985 through November 30, 1985."
3. Section 3.03(a) of the Employment Agreements hereby
amended, effective as of December 1, 1985, so as to
delete such Section in its entirety and substitute the
following therefor: n ( a) If the employment of Executive
PAGE
by the Corporation terminates by reason of his
voluntary resignation prior to August 1, 1989, he shall
be entitled to receive no Deferred Compensation. If the
employment of Executive by the Corporation terminates
by reason of his voluntary resignation between August
1, 1989 and November 30, 1989, he shall be entitled to
receive the Deferred Compensation accrued for the
period August 1, 1984 through July 31, 1985, but not
the Deferred Compensation accrued for the period August
1, 1985 through November 30, 1985."
4. Section 3.03(b) of the Employment Agreement is
hereby amended, effective as of December 1, 1985, so as
to delete the word "Year" therefrom and substitute
"period" therefor.
5. Except as hereinabove amended, the Employment
Agreement shall continue in full force and effect.
6. This Supplemental Agreement shall be governed by the
laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
John J. Dooner, Jr.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of June 1, 1986, by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporationn"), and JOHN J. DOONER, JR. (hereinafter referred to
as "Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to
an Employment Agreement made as of August 1, 1984 and
Supplemental Agreements made as of June 1, 1985 and December 1,
1985 (hereinafter referred to collectively as the "Employment
Agreementn"), and
WHEREAS, the Corporation and Executive desire to amend
the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is hereby
amended, effective as of June 1, 1986, so as to delete
"$150,000" and to substitute therefor "$160,000".
2. Except as hereinabove amended, the Employment
Agreement shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the
laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
John J.Dooner, Jr.
EXECUTIVE SPECIAL BENEFIT AGREEMENT
AGREEMENT made as of July 1, 1986, by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State
of Delaware (hereinafter referred to as "Interpublic"), and JOHN
J. DOONER, JR. (hereinafter referred to as "Executive"):
W I T N E S S E T H
WHEREAS, Executive is in the employ of Interpublic
and/or one or more of its subsidiaries (Interpublic and its
subsidiaries being hereinafter referred to collectively as the
"Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into
an Executive Special Benefit Agreement which shall be
supplementary to any employment agreement or arrangement which
Executive now or hereafter may have with respect to his
employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises
herein set forth, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
Death and Special Retirement Benefits
1.01 For purposes of this Agreement the "Accrual Term"
shall mean the period of seventy-two months beginning on the date
of this Agreement and ending on the day preceding the sixth
anniversary hereof or on such earlier date on which Executive
shall cease to be in the employ of the Corporation.
1.02 In lieu of accruing deferred compensation for the
benefit of Executive at the rate of Twenty Thousand Dollars
($20,000) per annum during the Accrual Term, the Corporation
shall provide Executive with the following benefits, using the
sums which would otherwise have been accrued as deferred
compensation to offset the costs of such benefits. Such benefits
shall be contingent upon Executive's compliance with all the
terms and conditions of this Agreement and Executive's
satisfactory completion of a physical examination in connection
with an insurance policy on the life of Executive which
Interpublic proposes to obtain and own.
PAGE
1.03 If, during the Accrual Term or thereafter during a
period of employment by the Corporation which is continuous from
the date of this Agreement, Executive shall die while in the
employ of the Corporation, the Corporation shall pay to such
beneficiary or beneficiaries as Executive shall have designated
pursuant to Section 1.07 (or in the absence of such designation,
shall pay to the Executor of the Will or the Administrator of the
Estate of Executive) survivor income payments of One Hundred
Fourteen Thousand Dollars ($114,000) per annum for fifteen years
following Executive's death, such payments to be made on January
15 of each of the fifteen years beginning with the year following
the year in which Executive dies.
1.04 If, after a continuous period of employment from
the date of this Agreement, Executive shall retire from the
employ of the Corporation so that the first day on which
Executive is no longer in the employ of the Corporation occurs on
or after Executive's sixtieth birthday, the Corporation shall pay
to Executive special retirement benefits at the rate of One
Hundred Fourteen Thousand Dollars ($114,000) per annum for
fifteen years beginning with the calendar month following
Executive's last day of employment, such payments to be made in
equal monthly installments.
1.05 If, after a continuous period of employment from
the date of this Agreement, Executive shall retire, resign,| or
be terminated from the employ of the Corporation so that the
first day on which Executive is no longer in the employ of the
Corporation occurs on or after August 3, 2003 but prior to
Executive's sixtieth birthday, the Corporation shall pay to
Executive special retirement benefits at the annual rates set
forth below for fifteen years beginning with the calendar month
following Executive's last day of employment, such payments to be
made in equal monthly installments:
Last Day of Employment Annual Rate
On or after August 3, 2003 but prior to 56th birthday $79,800
On or after 56th birthday but prior to 57th birthday $86,640
On or after 57th birthday but prior to 58th birthday $93,480
On or after 58th birthday but prior to 59th birthday $100,320
On or after 59th birthday but prior to 60th birthday $107,160
PAGE
1.06 If, following such termination of employment,
Executive shall die before payment of all of the installments
provided for in Section 1.04 or Section 1.05, any remaining
installments shall be paid to such beneficiary or beneficiaries
as Executive shall have designated pursuant to Section 1.07 or,
in the absence of such designation, to the Executor of the Will
or the Administrator of the Estate of Executive.
1.07 For purposes of Sections 1.03, 1.04 and 1.05, or
any of them, Executive may at any time designate a beneficiary or
beneficiaries by filing with the chief personnel officer of
Interpublic a Beneficiary Designation Form provided by such
officer. Executive may at any time, by filing a new Beneficiary
Designation Form, revoke or change any prior designation of
beneficiary.
1.08 If Executive shall die while in the employ of the
Corporation, no sum shall be payable pursuant to Sections 1.04,
1.05, 1.06, 2.01, 2.02 or 2.03.
1.09 In connection with the life insurance policy
referred to in Section 1.02, Interpublic has relied on written
representations made by Executive concerning his age and the
state of his health. If said representations are untrue in any
material respect, whether directly or by omission, and if the
Corporation is damaged by any such untrue representations, no sum
shall be payable pursuant to Sections 1.03, 1.04, 1.05, 1.06,
2.01, 2.02 or 2.03.
1.10 It is expressly agreed that Interpublic shall at
all times be the sole and complete owner and beneficiary of the
life insurance policy referred to in Sections 1.02 and 1.09,
shall have the unrestricted right to use all amounts and exercise
all options and privileges thereunder without the knowledge or
consent of the Executive or his designated beneficiary or any
other person, and that neither Executive nor his designated
beneficiary nor any other person shall have any right, title or
interest, legal or equitable, whatsoever in or to such policy.
PAGE
ARTICLE II
Alternative Deferred Compensation
2.01 If Executive shall, for any reason other than
death, cease to be employed by the Corporation on a date prior to
August 3, 2003, the Corporation shall, in lieu of any payment
pursuant to Article I of this Agreement, compensate Executive by
payment, at the times and in the manner specified in Section
2.02, of a sum computed at the rate of Twenty Thousand Dollars
($20,000) per annum for each full year and proportionate amount
for any part year from the date of this Agreement to the date of
such termination during which Executive is in the employ of the
Corporation. Such payment shall be conditional upon Executive's
compliance with all the terms and conditions of this Agreement.
2.02 The aggregate compensation payable under Section
2.01 shall be paid in equal consecutive monthly installments
commencing with the first month in which Executive is no longer
in the employ of the Corporation and continuing for a number of
months equal to the number of months which have elapsed from the
date of this Agreement to the commencement date of such payments.
2.03 If Executive dies while receiving payments in
accordance with the provisions of Section 2.02, any installments
payable in accordance with the provisions of .Section 2.02 less
any amounts previously Paid Executive in accordance therewith,
shall be paid to the Executor of the Will or the Administrator of
the Estate of Executive.
2.04 It is understood that none of the payments made in
accordance with Sections 2.01 and 2.02 shall be considered for
purposes of determining benefits under the Interpublic Pension
Plan, nor shall such sums be entitled to credits equivalent to
interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment
Agreements adopted effective as of January 1, 1974 by
Interpublic.
PAGE
ARTICLE III
Nonsolicitation of Clients or Employees
3.01 Following the termination of his employment with
the Corporation for any reason, Executive shall not for a period
of one year from such termination either (a) solicit any employee
of the Corporation to leave such employ to enter into the employ
of Executive or of any Corporation or other enterprise with which
Executive is then associated or (b) solicit or handle on his own
behalf or on behalf of any other person, firm or corporation, the
advertising, public relations, sales promotion or market research
business of any advertiser which is client of the Corporation at
the time of such termination.
ARTICLE IV
Assignment
4.01 This Agreement shall be binding upon and enure to
the benefit of the successors and assigns of Interpublic. Neither
this Agreement nor any rights hereunder shall be assignable by
Executive and any such purported assignment by him shall be void.
This Agreement may not be changed orally.
ARTICLE V
Applicable Law
5.01 This 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 C. Kent Kroeber
John J. Dooner.,Jr.
McCANN-ERICKSON
McCann-Erickson, Inc.
485 Lexington Avenue, New York, NY 10017
Phone 212-697-6000. Telex 620514
As of November 12, 1986
Mr. John J. Dooner, Jr.
McCann-Erickson, Inc.
485 Lexington Avenue
New York. N.Y. 10017
Dear Mr. Dooner:
This letter sets forth the terms and conditions under which
McCann-Erickson, Inc. ("McCann") will pay you a special bonus
("Bonus") with respect to your services during the calendar year
1986.
In addition to any salary or other compensation which may
be payable to you from time to time with respect to your
services for McCann during 1986, McCann will pay you a bonus in
the amount of $100,000 provided that you are in the employ of
McCann on December 31, 1986.
Payment of the Bonus will be deferred until January 15,
1988, at which time the Bonus will be paid to you together with
credits equivalent to interest payable in accordance with the
terms and conditions of the Plan for Credits Equivalent to
Interest on Balances of Deferred Compensation Owing under
Employment Agreements (the "Plan"), adopted effective January 1,
1974 by our parent company, The Interpublic Group of Companies,
Inc. A copy of the Plan is attached to this letter.
If you die prior to receiving the Bonus in accordance with
the provisions hereof, any amount payable in accordance with the
provisions hereof shall be paid to the Executor of your Will or
the Administrator of Your Estate.
Nothing in this letter shall obligate you to remain in
McCann's employ or obligate McCann to retain you in its employ.
This letter shall be supplementary to any Employment Agreement
you may have covering your employment by McCann or any affiliate
thereof.
It is understood that no payment made in accordance with
this letter shall be considered for purposes of determining your
benefits under the Interpublic Pension Plan unless made to you
while you are in the employ of McCann or any affiliate thereof.
PAGE
Mr. John J. Dooner, Jr.
As of November 12, 1986
This agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Will you please indicate your agreement to the foregoing by
signing the enclosed copy of this letter.
Very truly yours,
McCANN-ERICKSON, INC.
By Robert L. James
AGREED
John J. Dooner, Jr.
PAGE
Plan for Credits Equivalent to Interest
on
Balances of Deferred Compensation
Owing under Employment Agreements
Effective Date: January 1, 1974.
Balances Covered:
All deferred compensation, under Employment
Agreements to which the Corporation is a
party, owing (even though not yet payable and
even though subject to conditions) on January
1, 1974 or thereafter to persons who on
January 1, 1974 or thereafter are in the
employ of the Corporation or its
subsidiaries, including balances owing to
persons who cease to be employees after that
date; subject to the right of the Corporation
to discontinue further credits of sums
equivalent to interest effective at the
beginning of any calendar year on prior
notice to the employees or former employees
affected.
Date on Which
Sums Equivalent
to Interest Are
Credited:
Last day of each calendar quarter (hereafter
referred to as a "Crediting Date"), but in
the Year in which the final balance is paid
equivalents are also creditable on the date
of the last payment and shall be included in
the amounts so disbursed on that date.
Rates:
The prevailing rate payable on regular
savings accounts by New York City savings
banks on average for the year plus 1%, such
rate to be determined conclusively by the
Chief Financial Officer of the Corporation
and set forth by him in a certificate filed
with the Secretary of the Corporation;
provided, however, that the rate credited
under this plan shall not be less than 8% for
the calendar year 1980; not be less than 9%
for the calendar years 1981 and 1982: not be
less than 10% for the calendar years 1983,
1984 and 1985; not be less than 9% for the
calendar year 1986; and not be less than 6
1/2% for the calendar year 1987.
PAGE
Computation and
Compounding
Procedures:
On each Crediting Date, credits equivalent to
interest for the relevant period are to be
computed on the average balance of deferred
compensation owing by the Corporation under
each Employment Agreement including sums
equivalent to interest credited on prior
Crediting Dates, such average balance to be
computed pursuant to such method or methods
as shall be determined conclusively by the
Chief Financial Officer of the Corporation.
Terms of Payment
to employees and
Former employees:
Credits equivalent to interest shall be paid
out at the same times, in the same manner,
and on the same terms and conditions as other
items of deferred compensation accrued
pursuant to each Employment Agreement.
As amended through 11/86
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of June 1, 1987, by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporation"), and JOHN J. DOONER, JR. (hereinafter referred to
as "Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement dated as of August 1, 1984, and Supplemental
Agreements made as of June 1, 1985, December 1, 1985 and June 1,
1986 (hereinafter referred to collectively as the "Employment
Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is hereby
amended effective as of June 1, 1987, so as to delete "$160,000"
and substitute "$180,000" therefor.
2. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the law
of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES. INC.
By C. Kent Kroeber
John J. Dooner, Jr.
EXECUTIVE SEVERANCE AGREEMENT
This AGREEMENT ("Agreement") dated August 10, 1987, by and
between The Interpublic Group of Companies, Inc. ("Interpublic"),
a Delaware corporation (Interpublic and its subsidiaries being
referred to herein collectively as the "Company"), and John J.
Dooner, Jr. (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company recognizes the valuable services that
the Executive has rendered thereto and desires to be assured that
the Executive will continue to attend to the business and affairs
of the Company without regard to any potential or actual change
of control of Interpublic;
WHEREAS, the Executive is willing to continue to serve the
Company but desires assurance that he will not be materially
disadvantaged by a change of control of Interpublic; and
WHEREAS, the Company is willing to accord such assurance
provided that, should the Executive's employment be terminated
consequent to a change of control, he will not for a period
thereafter engage 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 I
RIGHT TO PAYMENTS
Section 1.1. Triggering Events. If Interpublic undergoes a
Change of Control, the Company shall make payments to the
Executive as provided in article II of this Agreement. If, within
two years following a Change of Control, either (a) the Company
terminates the Executive other than by means of a termination for
Cause or for death or (b) the Executive resigns for a Good Reason
(either of which events shall constitute a "Qualifying
Termination") r the Company shall make payments to the Executive
as provided in article III hereof.
PAGE
Section 1.2. Change of Control. A Change of Control of
Interpublic shall be deemed to have occurred if (a) any person
(within the meaning of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the "1934 Act")), other than Interpublic or
any of its majority-controlled subsidiaries, becomes the
beneficial owner (within the meaning of Rule 13d-3 under the 1934
Act) of 30 percent or more of the combined voting power of
Interpublic's then outstanding voting securities; (b) a tender
offer or exchange offer (other than an offer by Interpublic or a
majority-controlled subsidiary), pursuant to which 30 percent or
more of the combined voting power of Interpublic's then
outstanding voting securities was purchased, expires; (c) the
stockholders of Interpublic approve an agreement to merge or
consolidate with another corporation (other than a majority-con-
trolled subsidiary of Interpublic) unless Interpublic's
shareholders immediately before the merger or consolidation are
to own more than 70 percent of the combined voting power of the
resulting entity's voting securities; (d) Interpublic's
stockholders approve an agreement (including, without limitation,
a plan of liquidation) to sell or otherwise dispose of all or
substantially all of the business or assets of Interpublic; or
(e) during any period of two consecutive years, individuals who,
at the beginning of such period, constituted the Board of
Directors of Interpublic cease for any reason to constitute at
least a majority thereof, unless the election or the nomination
for election by Interpublic's stockholders of each new director
was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the
period. However, no Change of Control shall be deemed to have
occurred by reason of any transaction in which the Executive, or
a group of persons or entities with which the Executive acts in
concert, acquires, directly or indirectly, more than 30 percent
of the common stock or the business or assets of Interpublic.
Section 1.3. Termination for Cause. Interpublic shall have
Cause to terminate the Executive for purposes of section 1.1 Of
this Agreement only if, following the Change of Control, the
Executive (a) engages in conduct that constitutes a felony under
the laws of the United States or a state or country in which he
works or resides and that results or was intended to result,
directly or indirectly, in the personal enrichment of the
Executive at the Company's expense; (b) refuses (except by reason
PAGE
of incapacity due to illness or injury) to make a good faith
effort to substantially perform his duties with the Company on a
full-time basis and continues such refusal for 15 days following
receipt of notice from the Company that his effort is deficient;
or (c) deliberately and materially breaches any agreement between
himself and the Company and fails to remedy that breach within 30
days following notification thereof by the Company. If the
Company has Cause to terminate the Executive, it may in fact
terminate him for Cause for purposes of section 1.1 hereof if (a)
it notifies the Executive of such Cause, (b) it gives him
reasonable opportunity to appear before a majority of
Interpublic's Board of Directors to respond to the notice of
Cause and (c) a majority of the Board of Directors subsequently
votes to terminate him.
Section 1.4. Resignation for Good Reason. The Executive
shall have a Good Reason for resigning only if (a) the Company
fails to elect the Executive to, or removes him from, any office
of the Company, including without limitation membership on any
Board of Directors, that the Executive held immediately prior to
the Change of Control; (b) the Company reduces the Executive's
rate of regular cash and fully vested deferred base compensation
("Regular Compensation") from that which he earned immediately
prior to the Change of Control or fails to increase it within 12
months following the Change of Control by (in addition to any
increase pursuant to section 2.2 hereof) at least the average of
the rates of increase in his Regular Compensation during the four
consecutive 12-month periods immediately prior to the Change of
Control (or, if fewer, the number of 12-month periods immediately
prior to the Change of Control during which the Executive was
continuously employed by the Company); (c) the Company fails to
provide the Executive with fringe benefits and/or bonus plans,
such as stock option, stock purchase, restricted stock, life
insurance, health, accident, disability, incentive. bonus,
pension and profit sharing plans ("Benefit or Bonus Plans"),
that, in the aggregate, (except insofar as the Executive has
waived his rights thereunder pursuant to article II hereof) are
as valuable to him as those that he enjoyed immediately prior to
the Change of Control; (d) the Company fails to provide the
Executive with an annual number of paid vacation days at least
equal to that to which he was entitled immediately prior to the
Change of Control; (e) the Company breaches any agreement between
PAGE
it and the Executive (including this Agreement); (f) without
limitation of the foregoing clause (e), Interpublic fails to
obtain the express assumption of this Agreement by any successor
of Interpublic as provided in section 6.3 hereof; (g) the Company
attempts to terminate the Executive for Cause without complying
with the provisions of section 1.3 hereof; (h) the Company
requires the Executive, without his express written consent, to
be based in an office outside of New York City or to travel
substantially more extensively than he did prior to the Change of
Control; or (i) the Executive determines in good faith that the
Company has, without his consent, effected a significant change
in his status within, or the nature or scope of his duties or
responsibilities with, the Company that obtained immediately
prior to the Change of Control (including but not limited to,
subjecting the Executive's activities and exercise of authority
to greater immediate supervision than existed prior to the Change
of Control); provided, however, that no event designated in
clauses (a) through (i) of this sentence shall constitute a Good
Reason unless the Executive notifies Interpublic that the Company
has committed an action or inaction specified in clauses (a)
through (i) (a "Covered Action") and the Company does not cure
such Covered Action within 30 days after such notice, at which
time such Good Reason shall be deemed to have arisen.
Notwithstanding the immediately preceding sentence, no action by
the Company shall give rise to a Good Reason if it results from
the Executive's termination for Cause or death or from the
Executive's resignation for other than a Good Reason, and no
action by the Company specified in clauses (a) through (d) or (i)
of the preceding sentence shall give rise to a Good Reason if it
results from the Executive's Disability. If the Executive has a
Good Reason to resign, he may in fact resign for a Good Reason
for purposes of section 1.1 of this Agreement by, within 30 days
after the Good Reason arises, giving Interpublic a minimum of 30
and a maximum of 90 days advance notice of the date of his
resignation.
prior to the Change of Control; or (i) the Executive determines
in good faith that the Company has, without his consent, effected
a significant change in his status within, or the nature or scope
of his duties or responsibilities with, the Company that obtained
immediately prior to the Change of Control (including but not
limited to, subjecting the Executive's activities and exercise of
authority to greater immediate supervision than existed prior to
the Change of Control); provided, however, that no event
designated in clauses (a) through (i) of this sentence shall
constitute a Good Reason unless the Executive notifies
Interpublic that the Company has committed an action or inaction
specified in clauses (a) through (i) (a "Covered Action") and the
Company does not cure such Covered Action within 30 days after
such notice, at which time such Good Reason shall be deemed to
have arisen. Notwithstanding the immediately preceding sentence,
no action by the Company shall give rise to a Good Reason if it
results from the Executive's termination for Cause or death or
from the Executive's resignation for other than a Good Reason,
and no action by the Company specified in clauses (a) through (d)
or (i) of the preceding sentence shall give rise to a Good Reason
if it results from the Executive's Disability. If the Executive
has a Good Reason to resign, he may in fact resign for a Good
Reason for purposes of section 1.1 of this Agreement by, within
30 days after the Good Reason arises, giving Interpublic a
minimum of 30 and a maximum of 90 days advance notice of the date
of his resignation.
Section 1.5. Disability. For all purposes of this Agreement,
the term "Disability" shall have the same meaning as that term
has in the Interpublic Long-Term Disability Plan.
ARTICLE II
PAYMENTS UPON A CHANGE OF CONTROL
Section 2.1. Elections by the Executive. If the Executive so
elects prior to a Change of Control, the Company shall pay him,
within 30 days following the Change of Control, cash amounts in
respect of certain Benefit or Bonus Plans or deferred
compensation arrangements designated in sections 2.2 through 2.4
hereof ("Plan Amounts"). The Executive may make an election with
respect to the Benefit or Bonus Plans or deferred compensation
arrangements covered under any one or more of sections 2.2
through 2.4, but an election with respect to any such section
shall apply to all Plan Amounts that are specified therein. Each
election shall be made by notice to Interpublic on a form
satisfactory to Interpublic and, once made, may be revoked by
such notice on such form at any time prior to a Change of
Control. If the Executive elects to receive payments under a
section of this article II, he shall, upon receipt of such
payments, execute a waiver, on a form satisfactory to
PAGE
Interpublic, of such rights as are indicated in that section. If
the Executive does not make an election under this article with
respect to a Benefit or Bonus Plan or deferred compensation
arrangement, his rights to receive payments in respect thereof
shall be governed by the Plan or arrangement itself.
Section 2.2. ESBA. The Plan Amount in respect of all
Executive Special Benefit Agreements ("ESBA's") between the
Executive and Interpublic shall consist of an amount equal to the
present discounted values, using the Discount Rate designated in
section 5.8 hereof as of the date of the Change of Control, of
all payments that the Executive would have been entitled to
receive under the ESBA's if he had terminated employment with the
Company on the day immediately prior to the Change of Control.
Upon receipt of the Plan Amount in respect of the ESBA's, the
Executive shall waive any rights that he may have to payments
under the ESBA's. If the Executive makes an election pursuant to,
and executes the waiver required under, this section 2.2, his
Regular Compensation shall be increased as of the date of the
Change of Control at an annual rate equal to the sum of the
annual rates of deferred compensation in lieu of which benefits
are provided the Executive under any ESBA the Accrual Term for
which (as defined in the ESBA) includes the date of the Change of
Control.
Section 2.3. MICP. The Plan Amount in respect of the
Company's Management Incentive Compensation Plans ("MICP") shall
consist of an amount equal to the sum of all amounts awarded to
the Executive under, but deferred pursuant to, the MICP as of the
date of the Change of Control and all amounts equivalent to
interest creditable thereon up to the date that the Plan Amount
is paid. Upon receipt of that Plan Amount, the Executive shall
waive his rights to receive any amounts under the MICP that were
deferred prior to the Change of Control and any interest
equivalents thereon.
Section 2.4. Deferred Compensation. The Plan Amount in
respect of deferred compensation (other than amounts referred to
in other sections of this article II) shall be an amount equal to
all compensation from the Company that the Executive has earned
and agreed to defer (other than through the Interpublic Savings
Plan pursuant to Section 401(k) of the Internal Revenue Code (the
"Code")) but has not received as of the date of the Change of
PAGE
Control, together with all amounts equivalent to interest
creditable thereon through the date that the Plan Amount is paid.
Upon receipt of this Plan Amount, the Executive shall waive his
rights to receive any deferred compensation that he earned prior
to the date of the Change of Control and any interest equivalents
thereon.
Section 2.5. 1986 Stock Incentive Plan. The effect of a
Change of Control on the rights of the Executive with respect to
options and restricted shares awarded to him under the
Interpublic 1986 Stock Incentive Plan shall be governed by that
Plan and not by this Agreement.
ARTICLE III
PAYMENTS UPON QUALIFYING TERMINATION
Section 3.1. Basic Severance Payment. In the event that the
Executive is subjected to a Qualifying Termination within two
years after a Change of Control, the Company shall pay the
Executive within 30 days after the effective date of his
Qualifying Termination (his "Termination Date") a cash amount
equal to his Base Amount times the number designated in section
5.9 of this Agreement (the "Designated Number"). The Executive's
Base Amount shall equal the average of the Executive's
Includable Compensation for the two whole calendar years
immediately preceding the date of the Change of Control (or, if
the Executive was employed by the Company for only one of those
years, his Includable Compensation for that year). The
Executive's Includable Compensation for a calendar year shall
consist of (a) the compensation reported by the Company on the
Form W-2 that it filed with the Internal Revenue Service for
that year in respect of the Executive or which would have been
reported on such form but for the fact that Executive's services
were performed outside of the United States, plus (b) any
compensation payable to the Executive during that year the
receipt of which was deferred at the Executive's election or by
employment agreement to a subsequent year, minus (c) any amounts
included on the Form W2 (or which would have been included if
Executive had been employed in the United States) that
represented either (i) amounts in respect of a stock option or
restricted stock plan of the Company or (ii) payments during the
PAGE
year of amounts payable in prior years but deferred at the
Executive's election or by employment agreement to a subsequent
year. The compensation referred to in clause (b) of the
immediately preceding sentence shall include, without limitation,
amounts initially payable to the Executive under the MICP or a
Long-Term Performance Incentive Plan in that year but deferred to
a subsequent year, the amount of deferred compensation for the
year in lieu of which benefits are provided the Executive under
an ESBA and amounts of Regular Compensation earned by the
Executive during the year but deferred to a subsequent year
(including amounts deferred under Interpublic Savings Plan
pursuant to Section 401(k) of the Code); clause (c) of such
sentence shall include, without limitation, all amounts
equivalent to interest paid in respect of deferred amounts and
all amounts of Regular Compensation paid during the year but
earned in a prior year and deferred.
Section 3.2. MICP Supplement. The Company shall also pay the
Executive within 30 days after his Termination Date a cash amount
equal to (a) in the event that the Executive received an award
under the MICP (or the Incentive Award program applicable outside
the United States) in respect of the year immediately prior to
the year that includes the Termination Date (the latter year
constituting the "Termination Year"), the amount of that award
multiplied by the fraction of the Termination Year preceding the
Termination Date or (b) in the event that the Executive did not
receive an MICP award (or an Incentive Award) in respect of the
year immediately prior to the Termination Year, the amount of the
MICP award (or Incentive Award) that Executive received in
respect of the second year immediately prior to the Termination
Year multiplied by one plus the fraction of the Termination Year
preceding the Termination Date.
ARTICLE IV
TAX MATTERS
Section 4.1. Withholding. The Company may withhold from any
amounts payable to the Executive hereunder all federal, state,
city or other taxes that the Company may reasonably determine are
required to be withheld pursuant to any applicable law or
regulation, but, if the Executive has made the election provided
PAGE
in section 4.2 hereof, the Company shall not withhold amounts in
respect of the excise tax imposed by Section 4999 of the Code or
its successor.
Section 4.2. Disclaimer. If the Executive so agrees prior to
a Change of Control by notice to the Company in form satisfactory
to the Company, the amounts payable to the Executive under this
Agreement but not yet paid thereto shall be reduced to the
largest amounts in the aggregate that the Executive could
receive, in conjunction with any other payments received or to be
received by him from any source, without any part of such amounts
being subject to the excise tax imposed by Section 4999 of the
Code or its successor. The amount of such reductions and their
allocation among amounts otherwise payable to the Executive shall
be determined either by the Company or by the Executive in
consultation with counsel chosen (and compensated) by him,
whichever is designated by the Executive in the aforesaid notice
to the Company (the "Determining Party"). If, subsequent to the
payment to the Executive of amounts reduced pursuant to this
section 4.2, the Determining Party should reasonably determine,
or the Internal Revenue Service should assert against the party
other than the Determining Party, that the amount of such
reductions was insufficient to avoid the excise tax under Section
4999 (or the denial of a deduction under Section 280G of the Code
or its successor), the amount by which such reductions were
insufficient shall, upon notice to the other party, be deemed a
loan from the Company to the Executive that the Executive shall
repay to the Company within one year of such reasonable
determination or assertion, together with interest thereon at the
applicable federal rate provided in section 7872 of the Code or
its successor. However, such amount shall not be deemed a loan if
and to the extent that repayment thereof would not eliminate the
Executive's liability for any Section 4999 excise tax.
ARTICLE V
COLLATERAL MATTERS
Section 5.1. Nature of Payments. All payments to the
Executive under this Agreement shall be considered either
payments in consideration of his continued service to the
Company, severance payments in consideration of his past services
PAGE
thereto or payments in consideration of the covenant contained in
section 5.10 hereof. No payment hereunder shall be regarded as a
penalty to the Company.
Section 5.2. Legal Expenses. The Company shall pay all legal
fees and expenses that the Executive may incur as a result of the
Company's contesting the validity, the enforceability or the
Executive's interpretation of, or determinations under, this
Agreement. Without limitation of the foregoing, Interpublic
shall, prior to the earlier of (a) 30 days after notice from the
Executive to Interpublic so requesting or (b) the occurrence of a
Change of Control, provide the Executive with an irrevocable
letter of credit in the amount of $100,000 from a bank
satisfactory to the Executive against which the Executive may
draw to pay legal fees and expenses in connection with any
attempt to enforce any of his rights under this Agreement. Said
letter of credit shall not expire before lO years following the
date of this Agreement.
Section 5.3. Mitigation. The Executive shall not be required
to mitigate the amount of any payment provided for in this
Agreement either by seeking other employment or otherwise. The
amount of any payment provided for herein shall not be reduced by
any remuneration that the Executive may earn from employment with
another employer or otherwise following his Termination Date.
Section 5.4. Setoff for Debts. The Company may reduce the
amount of any payment due the Executive under article III of this
Agreement by the amount of any debt owed by the Executive to the
Company that is embodied in a written instrument, that is due to
be repaid as of the due date of the payment under this Agreement
and that the Company has not already recovered by setoff or
otherwise.
Section 5.5. Coordination with Employment Contract. Payments
to the Executive under article III of this Agreement shall be in
lieu of any payments for breach of any employment contract
between the Executive and the Company to which the Executive may
be entitled by reason of a Qualifying Termination, and, before
making the payments to the Executive provided under article III
hereof, the Company may require the Executive to execute a waiver
of any rights that he may have to recover payments in respect of
PAGE
a breach of such contract as a result of a Qualifying
Termination. [f the Executive has a Good Reason to resign and
does so by providing the notice specified in the last sentence of
section 1.4 of this Agreement, he shall be deemed to have
satisfied any notice requirement for resignation, and any service
requirement following such notice, under any employment contract
between the Executive and the Company.
Section 5.6. Benefit of Bonus Plans. Except as otherwise
provided in this Agreement or required by law, the Company shall
not be compelled to include the Executive in any of its Benefit
or Bonus Plans following the Executive's Termination Date, and
the Company may require the Executive, as a condition to
receiving the payments provided under article III hereof, to
execute a waiver of any such rights. However, said waiver shall
not affect any rights that the Executive may have in respect of
his participation in any Benefit or Bonus Plan prior to his
Termination Date.
Section 5.7. Funding. Except as provided in section 5.2 of
this Agreement, the Company shall not be required to set aside
any amounts that may be necessary to satisfy its obligations
hereunder. The Company's potential obligations to make payments
to the Executive under this Agreement are solely contractual
ones, and the Executive shall have no rights in respect of such
payments except as a general and unsecured creditor of the
Company.
Section 5.8. Discount Rate. For purposes of this Agreement,
the term "Discount Rate" shall mean the applicable Federal
short-term rate determined under Section 1274(d) of the Code or
its successor. If such rate is no longer determined, the Discount
Rate shall be the yield on 2-year Treasury notes for the most
recent period reported in the most recent issue of the Federal
Reserve Bulletin or its successor, or, if such rate is no longer
reported therein, such measure of the yield on 2-year Treasury
notes as the Company may reasonably determine.
Section 5.9. Designated Number. For purposes of this
Agreement, the Designated Number shall be two (2).
PAGE
Section 5.10. Covenant of Executive. In the event that the
Executive undergoes a Qualifying Termination that entitles him to
any payment under article III of this Agreement, he shall not,
for 18 months following his Termination Date, either (a) solicit
any employee of Interpublic or a majority-controlled subsidiary
thereof to leave such employ and enter into the employ of the
Executive or any person or entity with which the Executive is
associated or (b) solicit or handle on his own behalf or on
behalf of any person or entity with which he is associated the
advertising, public relations, sales promotion or market research
business of any advertiser that is a client of Interpublic or a
majority-controlled subsidiary thereof as of the Termination
Date. Without limitation of any other remedies that the Company
may pursue, the Company may enforce its rights under this section
5.10 by means of injunction. This section shall not limit any
other right or remedy that the Company may have under applicable
law or any other agreement between the Company and the Executive.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1. Term of Agreement. This Agreement shall
terminate upon the earliest of (a) the expiration of five years
from the date of this Agreement if no Change of Control has
occurred during that period; (b) the termination of the
Executive's employment with the Company for any reason prior to a
Change of Control; (c) the Company's termination of the
Executive's employment for Cause or death, the Executive's
compulsory retirement within the provisions of 29 U.S.C. Section
631(c) (or, if Executive is not a citizen or resident of the
United States, compulsory retirement under any applicable
procedure of the Company in effect immediately prior to the
change of control) or the Executive's resignation for other than
Good Reason, following a Change of Control and the Company's and
the Executive's fulfillment of all of their obligations under
this Agreement; and (d) the expiration following a Change of
Control of the Designated Number plus three years and the
fulfillment by the Company and the Executive of all of their
obligations hereunder.
Section 6.2. Governing Law. Except as otherwise expressly
provided herein, this Agreement and the rights and obligations
PAGE
hereunder shall be construed and enforced in accordance with the
laws of the State of New York.
Section 6.3. Successors to the Company. This Agreement shall
inure to the benefit of Interpublic and its subsidiaries and
shall be binding upon and enforceable by Interpublic and any
successor thereto, including, without limitation, any corporation
or corporations acquiring directly or indirectly all or
substantially all of the business or assets of Interpublic
whether by merger, consolidation, sale or otherwise, but shall
not otherwise be assignable by Interpublic. without limitation of
the foregoing sentence, Interpublic shall require any successor
(whether direct or indirect, by merger, consolidation, sale or
otherwise) to all or substantially all of the business or assets
of Interpublic, by agreement in form satisfactory to the
Executive, expressly, absolutely and unconditionally to assume
and agree to perform this Agreement in the same manner and to the
same extent as Interpublic would have been required to perform it
if no such succession had taken place. As used in this agreement,
"Interpublic" shall mean Interpublic as heretofore defined and
any successor to all or substantially all of its business or
assets that executes and delivers the agreement provided for in
this section 6.3 or that becomes bound by this Agreement either
pursuant to this Agreement or by operation of law.
Section 6.4. Successor to the Executive. This Agreement
shall inure to the benefit of and shall be binding upon and
enforceable by the Executive and his personal and legal
representatives, executors, administrators, heirs, distributees,
legatees and, subject to section 6.5 hereof, his designees
("Successors"). [f the Executive should die while amounts are or
may be payable to him under this Agreement, references hereunder
to the "Executive" shall, where appropriate, be deemed to refer
to his Successors.
Section 6.5. Nonalienability. No right of or amount payable
to the Executive under this Agreement shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, hypothecation, encumbrance, charge, execution,
attachment, levy or similar process or (except as provided in
section 5.4 hereof) to setoff against any obligations or to
assignment by operation of law. Any attempt, voluntary or
PAGE
involuntary, to effect any action specified in the immediately
preceding sentence shall be void. However, this section 6.5 shall
not prohibit the Executive from designating one or more persons,
on a form satisfactory to the Company, to receive amounts payable
to him under this Agreement in the event that he should die
before receiving them.
Section 6.6. Notices. All notices provided for in this
Agreement shall be in writing. Notices to Interpublic shall be
deemed given when personally delivered or sent by certified or
registered mail or overnight delivery service to The Interpublic
Group of Companies, Inc., 1271 Avenue of the Americas, New York,
New York 10020, attention: Corporate Secretary. Notices to the
Executive shall be deemed given when personally delivered or sent
by certified or registered mail or overnight delivery service to
the last address for the Executive shown on the records of the
Company. Either Interpublic or the Executive may, by notice to
the other, designate an address other than the foregoing for the
receipt of subsequent notices.
Section 6.7. Amendment. No amendment of this Agreement shall
be effective unless in writing and signed by both the Company and
the Executive.
Section 6.8. Waivers. No waiver of any provision of this
Agreement shall be valid unless approved in writing by the party
giving such waiver. No waiver of a breach under any provision of
this Agreement shall be deemed to be a waiver of such provision
or any other provision of this Agreement or any subsequent
breach. No failure on the part of either the Company or the
Executive to exercise, and no delay in exercising, any right or
remedy conferred by law or this Agreement shall operate as a
waiver of such right or remedy, and no exercise or waiver, in
whole or in part, of any right or remedy conferred by law or
herein shall operate as a waiver of any other right or remedy.
Section 6.09 Severability. If any provision of this Agreement
shall be held invalid or unenforceable in whole or in part, such
invalidity or unenforceability shall not affect any other
provision of this Agreement or part thereof, each of which shall
remain in full force and effect.
PAGE
Section 6.10. Captions. The captions to the respective
articles and sections of this Agreement are intended for
convenience of reference only and have no substantive
significance.
Section 6.11. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to
be an original but all of which together shall constitute a
single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
John J. Dooner, Jr.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of April 1, 1988, by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred co as the
"Corporation"), and JOHN J. DOONER, JR. (hereinafter referred to
as "Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement dated as of August 1, 1984, and Supplemental
Agreements made as of June 1, 1985, December 1, 1985, June 1,
1986 and June 1, 1987 (hereinafter referred to collectively as
the "Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is hereby
amended effective as of April 1, 1988, so as to delete "$180,000"
and substitute "$230,000" therefor.
2. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the law
of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
John J. Dooner. Jr.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of November 1, 1988, by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporation"), and JOHN J. DOONER, JR. (hereinafter referred to
as "Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement dated as of August 1, 1984, and Supplemental
Agreements made as of June 1, 1985, December 1, 1985, June 1,
1986, June 1, 1987 and April 1, 1988 (hereinafter referred to
collectively as the "Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 4.01(i) of the Employment Agreement is hereby
amended effective as of November 1, 1988, so as to delete "six
months" and substitute "twelve months" therefor.
2. Section 4.01(ii) of the Employment Agreement is hereby
amended effective as of November 1, 1988, so as to delete "six
months" in the second and sixth lines thereof and substitute
"twelve months" therefor.
3. Section 4.02 of the Employment Agreement is hereby
amended effective as of November 1, 1988, so as to delete "six
months" and substitute "twelve months" therefor.
4. Section 5.06 of the Employment Agreement is hereby
amended effective as of November 1, 1988, so as to delete "twelve
months" and substitute "twenty-four months" therefor.
5. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
6. This Supplemental Agreement shall be governed by the law
of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
John J. Dooner, Jr.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of July 1, 1989, by and between
THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the
State of Delaware (hereinafter referred to as the "Corporation"),
and JOHN J. DOONER (hereinafter referred to as "Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement made as of August 1, 1984 and Supplemental
Aqreements made as of June 1, 1985, December 1, 1985, June 1,
1986, June 1, 1987, April 1, 1988 and November 1, 1988
(hereinafter referred to as the "Employment Agreement"), and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is hereby
amended effective as of July 1, 1989, by deleting "Two Hundred
Thirty Thousand Dollars ($230,000)" and substituting "Two Hundred
Sixty Thousand Dollars ($260,000)" therefor;
2. Sections 1.01 and 4.04 are hereby amended effective as
of July 1, 1989 so as to delete "July 31, 1989" therefrom and
substitute "July 31,1994" therefor;
3. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
4. This Supplemental Agreement shall be governed by the laws
of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
John J.Dooner, Jr.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of July 1, 1990 by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporation"), and JOHN J. DOONER (hereinafter referred to as
"Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement made as of August 1, 1984 and Supplemental
Agreements made as of June 1, 1985, December 1, 1985, June 1,
1986, June 1, 1987, April 1, 1988, November 1, 1988, and July 1,
1989 (hereinafter referred to collectively as the "Employment
Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is hereby
amended effective as of July 1, 1990, so as to delete "$260,000"
and to substitute "$330,000" therefor.
2. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the laws
of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES INC.
By C. Kent Kroeber
John J. Dooner, Jr.
SUPPLEMENTAL AGREEMENT
AGREEMENT made as of May 23, 1990, by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State
of Delaware (hereinafter referred to as "Interpublic"), and JOHN
J. DOONER, JR. (hereinafter referred to as "Executive").
W I T N E S S E T H
WHEREAS, Executive and Interpublic are parties to an
Executive Special Benefit Agreement made as of July 1, 1986
(hereinafter referred to as the "ESBA"); and
WHEREAS, the Corporation and Executive desire to amend
the ESBA;
NOW, THEREFORE, in consideration of the mutual promises
herein set forth, the parties hereto, intending to be legally
bound, agree as follows:
1. Section 1.02 of the ESBA is hereby amended to read
in its entirety as follows:
1.02. "The Corporation shall provide Executive with the
following benefits contingent upon Executive's compliance
with all the terms and conditions of this Agreement and
Executive's satisfactory completion of a physical
examination in connection with an insurance policy on the
life of Executive which Interpublic or its assignee (other
than Executive) proposes to obtain and own. Effective at the
end of the Accrual Term, Executive's annual compensation
will be increased by $20,000 if Executive is in the employ
of the Corporation at that time."
2. Section 1.10 of the ESBA is hereby amended so as to
add "or its assignee (other than Executive)" after "Interpublic"
in the first line thereof.
3. Section 4.01 of the ESBA is hereby amended to read
in its entirety as follows:
PAGE
4.01. "This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of Interpublic.
Neither this Agreement nor any rights hereunder shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by
Executive, and any such attempted action by Executive shall
be void. This Agreement may not be changed orally, nor may
this Agreement be amended to increase the amount of any
benefits that are payable pursuant to this Agreement or to
accelerate the payment of any such benefits."
4. Article V and Section 5.01 of the ESBA are hereby
amended by renumbering them as new Article VI and new Section
6.01, respectively.
5. New Article V and a new Section 5.01 of the ESBA are
hereby added to read in their entirety as follows:
"ARTICLE V
"Contractual Nature of Obligation
"5.01. The liabilities of the Corporation to Executive
pursuant to this Agreement shall be those of a debtor
pursuant to such contractual obligations as are created by
the Agreement. Executive's rights with respect to any
benefit to which he has become entitled under this
Agreement, but which he has not yet received, shall be
solely the rights of a general unsecured creditor of the
Corporation."
6. Except as hereinabove amended, the ESBA shall remain
in full force and effect.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
BY C. Kent Kroeber
John J. Dooner, Jr.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of October 1, 1991 by and
between THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporation"), and JOHN J. DOONER (hereinafter referred to as
"Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement made as of August 1, 1984 and Supplemental
Agreements made as of June 1, 1985, December 1, 1985, June 1,
1986, June 1, 1987, April 1, 1988, November 1, 1988, July 1, 1989
and July 1, 1990 (hereinafter referred to collectively as the
"Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is hereby
amended effective as of October 1, 1991, so as to delete
"330,000" and to substitute "$405,000" therefor.
2. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the laws
of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
C. KENT KROEBER
JOHN J. DOONER, JR.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of May 1, 1992 by and between
THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the
State of Delaware (hereinafter referred to as the "Corporation"),
and JOHN J. DOONER (hereinafter referred to as "Executive"):
W I T N E S S E T H:
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement made as of August 1, 1984 and Supplemental
Agreements made as of June 1, 1985, December 1, 1985, June 1,
1986, June 1, 1987, April 1, 1988, November 1, 1988, July 1,
1989, July 1, 1990 and October 1, 1991 (hereinafter referred
collectively as the "Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto, intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is hereby
amended effective as of May 1, 1992, so as to delete "$405,000"
and to substitute "$455,000" therefor.
2. Except as hereinabove amended, the Employment Agreement
shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the laws
of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
John J. Dooner, Jr.
EXECUTIVE SPECIAL BENEFIT AGREEMENT
AGREEMENT made as of July 1, 1992, by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State
of Delaware (hereinafter referred to as "Interpublic"), and JOHN
J. DOONER (hereinafter referred to as "Executive"):
W I T N E S S E T H
WHEREAS, Executive is in the employ of Interpublic
and/or one or more of its subsidiaries (Interpublic and its
subsidiaries being hereinafter referred to collectively as the
"Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into
an Executive Special Benefit Agreement which shall be
supplementary to any employment agreement or arrangement which
Executive now or hereafter may have with respect to Executive's
employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises
herein set forth, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
Death and Special Retirement Benefits
1.01 For purposes of this Agreement the "Accrual Term"
shall mean the period of seventy-two months beginning on the date
of this Agreement and ending on the day preceding the sixth
anniversary hereof or on such earlier date on which Executive
shall cease to be in the employ of the Corporation.
1.02 The Corporation shall provide Executive with the
following benefits contingent upon Executive's compliance with
all the terms and conditions of this Agreement and Executive's
satisfactory completion of a physical examination in connection
with an insurance policy on the life of Executive which
Interpublic or its assignee (other than Executive) proposes to
obtain and own. Effective at the end of the Accrual Term,
Executive's annual compensation will be increased by $20,000.00
if Executive is in the employ of the Corporation at that time.
PAGE
1.03 If, during the Accrual Term or thereafter during a
period of employment by the Corporation which is continuous from
the date of this Agreement, Executive shall die while in the
employ of the Corporation, the Corporation shall pay to such
beneficiary or beneficiaries as Executive shall have designated
pursuant to Section 1.07 (or in the absence of such designation,
shall pay to the Executor of the Will or the Administrator of the
Estate of Executive) survivor income payments of Seventy Two
Thousand Dollars ($72,000) per annum for fifteen years following
Executive's death, such payments to be made on January 15 of each
of the fifteen years beginning with the year following the year
in which Executive dies.
1.04 If, after a continuous period of employment from
the date of this Agreement, Executive shall retire from the
employ of the Corporation so that the first day on which
Executive is no longer in the employ of the Corporation occurs on
or after Executive's sixtieth birthday, the Corporation shall pay
to Executive special retirement benefits at the rate of Seventy
Two Thousand Dollars ($72,000) per annum for fifteen years
beginning with the calendar month following Executive's last day
of employment, such payments to be made in equal monthly
installments.
1.05 If, after a continuous period of employment from
the date of this Agreement, Executive shall retire, resign, or be
terminated from the employ of the Corporation so that the first
day on which Executive is no longer in the employ of the
Corporation occurs on or after Executive's fifty-fifth birthday
but prior to Executive's sixtieth birthday, the Corporation shall
pay to Executive special retirement benefits at the annual rates
set forth below for fifteen years beginning with the calendar
month following Executive's last day of employment, such payments
to be made in equal monthly installments:
Annual
Last Day of Employment Rate
On or after 55th birthday but prior to 56th birthday $50,400
On or after 56th birthday but prior to 57th birthday $54,720
On or after 57th birthday but prior to 58th birthday $59,040
On or after 58th birthday but prior to 59th birthday $63,360
On or after 59th birthday but prior to 60th birthday $67,680
PAGE
1.06 If, following such termination of employment,
Executive shall die before payment of all of the installments
provided for in Section 1.04 or Section 1.05, any remaining
installments shall be paid to such beneficiary or beneficiaries as
Executive shall have designated pursuant to Section 1.07 or, in the
absence of such designation, to the Executor of the Will or the
Administrator of the Estate of Executive.
1.07 For purposes of Sections 1.03, 1.04 and 1.05, or any
of them, Executive may at any time designate a beneficiary or
beneficiaries by filing with the chief personnel officer of
Interpublic a Beneficiary Designation Form provided by such officer.
Executive may at any time, by filing a new Beneficiary Designation
Form, revoke or change any prior designation of beneficiary.
1.08 If Executive shall die while in the employ of the
Corporation, no sum shall be payable pursuant to Sections 1.04, 1.05,
1.06, 2.01, 2.02 or 2.03.
1.09 In connection with the life insurance policy referred
to in Section 1.02, Interpublic has relied on written representations
made by Executive concerning Executive's age and the state of
Executive's health. If said representations are untrue in any
material respect, whether directly or by omission, and if the
Corporation is damaged by any such untrue representations, no sum
shall be payable pursuant to Sections 1.03, 1.04, 1.05, 1.06, 2.01,
2.02 or 2.03.
1.10 It is expressly agreed that Interpublic or its
assignee (other than Executive) shall at all times be the sole and
complete owner and beneficiary of the life insurance policy referred
to in Sections 1.02 and 1.09, shall have the unrestricted right to
use all amounts and exercise all options and privileges thereunder
without the knowledge or consent of Executive or Executive's
designated beneficiary or any other person and that neither Executive
nor Executive's designated beneficiary nor any other person shall
have any right, title or interest, legal or equitable, whatsoever in
or to such policy.
PAGE
ARTICLE II
Alternative Deferred Compensation
2.01 If Executive shall, for any reason other than death,
cease to be employed by the Corporation on a date prior to
Executive's fifty-fifth birthday, the Corporation shall, in lieu of
any payment pursuant to Article I of this Agreement, compensate
Executive by payment, at the times and in the manner specified in
Section 2.02, of a sum computed at the rate of Twenty Thousand
Dollars ($20,000) per annum for each full year and proportionate
amount for any part year from the date of this Agreement to the date
of such termination during which Executive is in the employ of the
Corporation. Such payment shall be conditional upon Executive's
compliance with all the terms and conditions of this Agreement.
2.02 The aggregate compensation payable under Section 2.01
shall be paid in equal consecutive monthly installments commencing
with the first month in which Executive is no longer in the employ of
the Corporation and continuing for a number of months equal to the
number of months which have elapsed from the date of this Agreement
to the commencement date of such payments.
2.03 If Executive dies while receiving payments in
accordance with the provisions of Section 2.02, any installments
payable in accordance with the provisions of Section 2.02 less any
amounts previously paid Executive in accordance therewith, shall be
paid to the Executor of the Will or the Administrator of the Estate
of Executive.
2.04 It is understood that none of the payments made in
accordance with this Agreement shall be considered for purposes of
determining benefits under the Interpublic Pension Plan, nor shall
such sums be entitled to credits equivalent to interest under the
Plan for Credits Equivalent to Interest on Balances of Deferred
Compensation Owing under Employment Agreements adopted effective as
of January 1, 1974 by Interpublic.
PAGE
ARTICLE III
Nonsolicitation of Clients or Employees
3.01 Following the termination of the employment of
Executive with the Corporation for any reason, Executive shall not
for a period of one year from such termination either (a) solicit any
employee of the Corporation to leave such employ to enter into the
employ of Executive or of any Corporation or other enterprise 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 advertising, public relations, sales promotion or
market research business of any advertiser which is a client of the
Corporation at the time of such termination.
ARTICLE IV
Assignment
4.01 This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of Interpublic. Neither this
Agreement nor any rights hereunder shall be subject in any matter to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge by Executive and any such attempted action by
Executive shall be void. This Agreement may not be changed orally,
nor may this Agreement be amended to increase the amount of any
benefits that are payable pursuant to this Agreement or to accelerate
the payment of any such benefit.
ARTICLE V
Contractual Nature of Obligation
5.01 The liabilities of the Corporation to Executive
pursuant to this Agreement shall be those of a debtor pursuant to
such contractual obligations as are created by the Agreement.
Executive's rights with respect to any benefit to which Executive has
become entitled under this Agreement, but which Executive has not yet
received, shall be solely the rights of a general unsecured creditor
of the Corporation.
PAGE
ARTICLE VI
Applicable Law
6.01 This 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 C. Kent Kroeber
John J. Dooner, Jr.
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT made as of August 10, 1992, by
and between THE INTERPUBLIC GROUP OF COMPANIES, INC., a
corporation of the State of Delaware (hereinafter referred to as
the "Corporation"), and John J. Dooner (hereinafter referred to
as "Executive"):
W I T N E S S E T H
WHEREAS, the Corporation and Executive are parties to
an Executive Severance Agreement made as of August 10, 1987
(hereinafter referred to as the "Agreement"); and
WHEREAS, the Corporation and Executive desire to amend
the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Agreement set forth, the parties hereto,
intending to be legally bound, agree as follows:
1. Section 6.01 of the Agreement is hereby amended
effective August 10, 1992, so as to delete "five"
and to substitute therefor "ten".
2. Except as hereinabove amended, the Agreement shall
continue in full force and effect
3. This Supplemental Agreement shall be governed by
the laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
John J. Dooner, Jr.
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 1, 1994 by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State
of Delaware (hereinafter referred to as "Interpublic"), and JOHN
J. DOONER (hereinafter referred to as "Executive").
In consideration of the mutual promises set forth
herein the parties hereto agree as follows:
ARTICLE I
Term of Employment
1.01 Upon the terms and subject to the conditions set
forth herein, Interpublic or one of its subsidiaries will employ
Executive for the period beginning January 1, 1994 and ending on
December 31, 1998, or on such earlier date as the employment of
Executive shall terminate pursuant to Article IV or Article V.
(The period during which Executive is employed hereunder is
referred to herein as the "term of employment" and Interpublic or
whichever of its subsidiaries shall from time to time employ
Executive pursuant to this Agreement is referred to herein as the
"Corporation".) Executive will serve the Corporation during the
term of employment.
ARTICLE II
Duties
2.01 During the term of employment Executive will:
(i) use his best efforts to promote the interests of
the Corporation and devote his full time and efforts to its
business and affairs;
(ii) perform such duties as the Corporation may from
time to time assign to him: and
(iii) serve in such offices of the Corporation as he
may be elected or appointed to.
PAGE
ARTICLE III
Compensation
3.01 The Corporation will compensate Executive for the
duties performed by him hereunder, including all services
rendered as an officer or director of the Corporation, by payment
of a salary at the rate of $580,000 per annum, payable in equal
installments, which the Corporation may pay at either monthly or
semi-monthly intervals.
3.02 The Corporation may at any time increase the
compensation paid to Executive hereunder if the Corporation in
its discretion shall deem it advisable so to do in order to
compensate him fairly for services rendered to the Corporation.
ARTICLE IV
Termination
4.01 Interpublic 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 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, or
(ii) by giving him notice in writing at any time
specifying a termination date less than twelve months after the
date on which such notice is given. In this event his 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 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 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 month to be paid together with the last
installment.
PAGE
4.02 Executive may at any time give notice in writing
to Interpublic specifying a termination date not less than twelve
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.
4.03 If the employment of Executive hereunder is
terminated pursuant to this Article IV by either Interpublic or
Executive, Executive shall continue to perform his duties
hereunder until the termination date at his salary in effect on
the date that notice of such termination is given.
4.04 If Executive dies before December 31, 1998, his
employment hereunder shall terminate on the date of his death.
ARTICLE V
Covenants
5.01 While Executive is employed hereunder by the
Corporation he shall not without the prior written consent of the
Corporation 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.
5.02 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.
5.03 If Executive violates any provision of Section
5.01 or Section 5.02, Interpublic may, notwithstanding the
provisions of Section 4.01, terminate the employment of Executive
at any time by giving him notice in writing specifying a
termination date. In such event, his employment hereunder shall
terminate on the date specified in such notice.
PAGE
5.04 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.
5.05 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, 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, without further compensation, upon notice to him
from the Corporation.
5.06 Following the termination of Executive's
employment hereunder for any reason, Executive shall not for a
period of twenty-four months from such termination either (a)
solicit any employee of the Corporation to leave such employ to
enter the employ of Executive or of any corporation or enterprise
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 advertising, public relations, sales
promotion or market research business of any advertiser which is
a client of the Corporation at the time of such termination.
ARTICLE VI
Assignment
6.01 This Agreement shall be binding upon and enure to
the benefit of the successors and assigns of Interpublic. Neither
this Agreement nor any rights hereunder shall be assignable by
Executive and any such purported assignment by him shall be void.
PAGE
ARTICLE VII
Agreement Entire
7.01 This Agreement constitutes the entire
understanding between Interpublic and Executive concerning his
employment by Interpublic or any of its subsidiaries and
supersedes any and all previous agreements between Executive and
Interpublic or any of its subsidiaries concerning such
employment. This Agreement may not be changed orally.
ARTICLE VIII
Applicable Law
8.01 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 C. Kent Kroeber
John J. Dooner, Jr.
EXECUTIVE SPECIAL BENEFIT AGREEMENT
AGREEMENT made as of June 1, 1994, by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State
of Delaware (hereinafter referred to as "Interpublic"), and JOHN
J. DOONER, JR. (hereinafter referred to as "Executive"):
W I T N E S S E T H
WHEREAS, Executive is in the employ of Interpublic
and/or one or more of its subsidiaries (Interpublic and its
subsidiaries being hereinafter referred to collectively as the
"Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into
an Executive Special Benefit Agreement which shall be
supplementary to any employment agreement or arrangement which
Executive now or hereafter may have with respect to Executive's
employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises
herein set forth, the parties hereto, intending to be legally
bound, agree as follows:
Article I
Death and Special Retirement Benefits
1.01 The Corporation shall provide Executive with
the following benefits contingent upon Executive's compliance
with all the terms and conditions of this Agreement and
Executive's satisfactory completion of a physical examination in
connection with an insurance policy on the life of Executive
which Interpublic or its assignee (other than Executive) proposes
to obtain and own.
1.02 If, during a period of employment by the
Corporation which is continuous from the date of this Agreement,
Executive shall die while in the employ of the Corporation, the
Corporation shall pay to such beneficiary or beneficiaries as
Executive shall have designated pursuant to Section 1.06 (or in
the absence of such designation, shall pay to the Executor of the
Will or the Administrator of the Estate of Executive) survivor
PAGE
income payments of Eighty Eight Thousand Five Hundred Dollars
($88,500) per annum for fifteen years following Executive's
death, such payments to be made on January 15 of each of the
fifteen years beginning with the year following the year in which
Executive dies.
1.03 If, after a continuous period of employment
from the date of this Agreement, Executive shall retire from the
employ of the Corporation so that the first day on which
Executive is no longer in the employ of the Corporation occurs on
or after July 18, 1998, the Corporation shall pay to Executive
special retirement benefits at the rate of Eighty Eight Thousand
Five Hundred Dollars ($88,500) per annum for fifteen years
beginning with the calendar month following Executive's last day
of employment, such payments to be made in equal monthly
installments.
1.04 If, after a continuous period of employment
from the date of this Agreement, Executive shall retire, resign,
or be terminated from the employ of the Corporation so that the
first day on which Executive is no longer in the employ of the
Corporation occurs prior to July 18, 1998, the Corporation shall
pay Executive no special retirement benefits unless (a) Executive
retires or resigns due to a Disability or (b) the Compensation
Committee of the Board of Directors of Interpublic determines in
its sole discretion that Executive should receive special
retirement benefits, in either of which cases the Corporation
shall pay to Executive the special retirement benefits provided
for in Section 1.03. For purposes of the preceding sentence
"Disability" means a condition that renders Executive completely
and presumably permanently unable to perform any or every duty of
his regular occupation.
1.05 If, following such termination of employment,
Executive shall die before payment of all of the installments, if
any, provided for in Section 1.03 or Section 1.04, any remaining
installments shall be paid to such beneficiary or beneficiaries
as Executive shall have designated pursuant to Section 1.06 or,
in the absence of such designation, to the Executor of the Will
or the Administrator of the Estate of Executive.
PAGE
1.06 For purposes of Sections 1.02, 1.03 and 1.04,
or any of them, Executive may at any time designate a beneficiary
or beneficiaries by filing with the chief personnel officer of
Interpublic a Beneficiary Designation Form provided by such
officer. Executive may at any time, by filing a new Beneficiary
Designation Form, revoke or change any prior designation of
beneficiary.
1.07 If Executive shall die while in the employ of
the Corporation, no sum shall be payable pursuant to Sections
1.03, 1.04 or 1.05.
1.08 In connection with the life insurance policy
referred to in Section 1.01, Interpublic has relied on written
representations made by Executive concerning Executive's age and
the state of Executive's health. If said representations are
untrue in any material respect, whether directly or by omission,
and if the Corporation is damaged by any such untrue
representations, no sum shall be payable pursuant to Sections
1.02, 1.03, 1.04 or 1.05.
1.09 It is expressly agreed that Interpublic or
its assignee (other than Executive) shall at all times be the
sole and complete owner and beneficiary of the life insurance
policy referred to in Sections 1.01 and 1.08, shall have the
unrestricted right to use all amounts and exercise all options
and privileges thereunder without the knowledge or consent of
Executive or Executive's designated beneficiary or any other
person and that neither Executive nor Executive's designated
beneficiary nor any other person shall have any right, title or
interest, legal or equitable, whatsoever in or to such policy.
ARTICLE II
Nonsolicitation of Clients or Employees
2.01 Following the termination of the employment
of Executive with the Corporation for any reason, Executive shall
not for a period of one year from such termination either (a)
solicit any employee of the Corporation to leave such employ to
enter into the employ of Executive or of any corporation or other
PAGE
enterprise 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 advertising, public relations,
sales promotion or market research business of any advertiser
which is a client of the Corporation at the time of such
termination.
ARTICLE III
Assignment
3.01 This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of
Interpublic. Neither this Agreement nor any rights hereunder
shall be subject in any matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive,
and any such attempted action by Executive shall be void. This
Agreement may not be changed orally, nor may this Agreement be
amended to increase the amount of any benefits that are payable
pursuant to this Agreement or to accelerate the payment of any
such benefits.
ARTICLE IV
Contractual Nature of Obligation
4.01 The liabilities of the Corporation to
Executive pursuant to this Agreement shall be those of a debtor
pursuant to such contractual obligations as are created by the
Agreement. Executive's rights with respect to any benefit to
which Executive has become entitled under this Agreement, but
which Executive has not yet received, shall be solely the rights
of a general unsecured creditor of the Corporation.
ARTICLE V
General Provisions
5.01 It is understood that none of the payments
made in accordance with this Agreement shall be considered for
PAGE
purposes of determining benefits under the Interpublic Pension
Plan, nor shall such sums be entitled to credits equivalent to
interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment
Agreements adopted effective as of January 1, 1974 by
Interpublic.
5.02 This 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 C. Kent Kroeber
John J. Dooner, Jr.
SUPPLEMENTAL AGREEMENT
Supplemental Agreement made as of July 1, 1995, by and
between The Interpublic Group of Companies, Inc., a corporation
of the State of Delaware (hereinafter referred to as the
"Corporation"), and JOHN J. DOONER (hereinafter referred to as
"Executive").
W I T N E S S E T H:
WHEREAS, the Corporation and Executive are parties to an
Employment Agreement made as of January 1, 1994 (hereinafter
referred to as the "Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises
herein and in the Employment Agreement set forth, the parties
hereto intending to be legally bound, agree as follows:
1. Section 3.01 of the Employment Agreement is hereby
amended, effective as of July 1, 1995, so as to delete "$580,000"
and to substitute "$750,000" therefore. The parties agree,
however, that $20,000 of the aforementioned salary increase will
be regarded as temporary and will be deleted as of June 30, 1998.
On July 1, 1998, $20,000 will be added to Executive's salary
pursuant to, and subject to, the terms of section 1.02 of an
Executive Special Benefit Agreement entered into between
Executive and the Corporation dated July 1, 1992.
2. Except as herein above amended, the Employment Agreement
shall continue in full force and effect.
3. This Supplemental Agreement shall be governed by the laws
of the State of New York.
The Interpublic Group of Companies, Inc.
By C. Kent Kroeber
John J. Dooner, Jr.
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 1, 1996 by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State
of Delaware (hereinafter referred to as "Interpublic"), and
FRANK B. LOWE (hereinafter referred to as "Executive").
In consideration of the mutual promises set forth
herein the parties hereto agree as follows:
ARTICLE I
Term of Employment
1.01 Upon the terms and subject to the conditions set
forth herein, Interpublic or one of its subsidiaries will employ
Executive for the period beginning January 1, 1996 and ending on
December 31, 2000, or on such earlier date as the employment of
Executive shall terminate pursuant to Article V or Article VI.
(The period during which Executive is employed hereunder is
referred to herein as the "term of employment" and Interpublic or
whichever of its subsidiaries shall from time to time employ
Executive pursuant to this Agreement is referred to herein as the
"Corporation"). Executive will serve the Corporation during the
term of employment.
ARTICLE II
Duties
2.01 During the term of employment Executive will:
(i) use his best efforts to promote the
interests of the Corporation and devote his full time and efforts
to its business and affairs;
(ii) perform such duties as the Corporation
may from time to time assign to him;
PAGE
(iii) serve as Chairman and Chief Executive
Officer at the Lowe Group plc and have responsibility for the
management of the Lowe Group Worldwide and in addition accept
appointments to such other positions in Interpublic as are
commensurate with his role and status. In these capacities
Executive shall report directly to the Chief Executive Officer
of Interpublic. No significant change in Executive's status in
Interpublic or the nature or scope of his duties shall be
effected without his consent.
(iv) be proposed as a member of the Corporation's
Board of Directors.
ARTICLE III
Compensation
3.01 The Corporation will compensate Executive for the
duties performed by him hereunder, including all services
rendered as an officer or director of the Corporation, by payment
of a salary at the rate of $750,000 per annum, payable in equal
installments, which the Corporation may pay at either monthly or
semi-monthly intervals.
3.02 The Corporation may at any time increase the
compensation paid to Executive hereunder if the Corporation in
its discretion shall deem it advisable so to do in order to
compensate him fairly for services rendered to the Corporation.
ARTICLE IV
BONUSES
4.01 Executive will be eligible during the term of
employment to participate in the Management Incentive
Compensation Plan ("MICP" or the "Plan") in accordance with the
terms and conditions of the Plan established from time to time,
and appropriate for an executive holding such a position.
PAGE
ARTICLE V
Termination
5.01 Interpublic may terminate the employment of
Executive hereunder:
(i) by giving Executive notice in writing at
any time specifying a termination date not less than the greater
of (a) twelve months or (b) the number of whole calendar months
remaining until February 28, 1997, after the date on which such
notice is given, in which event his employment hereunder shall
terminate on the date specified in such notice, or
(ii) Notwithstanding clause (i) above,
Interpublic may terminate the employment of Executive hereunder
by giving him notice in writing specifying any termination date
after February 28, 1997. In this event his 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 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 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 month to be paid together with the last installment.
(iii) However, with respect to any payments of
salary due to Executive after notice of termination shall have
been given pursuant to Sub-section 5.01 (i), should Executive
commence other employment during the period when payments
thereunder are being made, said payments shall cease forthwith.
Moreover, with respect to any payments of salary or salary
equivalents to Executive after notice of termination shall have
been given pursuant to Sub-section 5.01 (ii), should Executive
commence other employment prior to the last payment due under
that Sub-section, no further payments shall be made to Executive.
5.02 Executive may at any time give notice in writing
to the Corporation specifying a termination date not less than
twelve months after the date on which such notice is given, in
PAGE
which event his employment hereunder shall terminate on the date
specified in such notice.
5.03 If the employment of Executive hereunder is
terminated pursuant to this Article V by either the Corporation
or Executive, Executive shall continue to perform his duties
hereunder until the termination date at his salary in effect on
the date that notice of such termination is given.
5.04 If Executive dies before December 31, 2000, his
employment hereunder shall terminate on the date of his death.
ARTICLE VI
Covenants
6.01 While Executive is employed hereunder by the
Corporation he shall not without the prior written consent of the
Corporation 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 the part of Executive.
6.02 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.
6.03 If Executive deliberately and seriously violates
any provision of Section 6.01 or Section 6.02, the Corporation
may, notwithstanding the provisions of Section 5.01, terminate
PAGE
the employment of Executive at any time by giving him notice in
writing specifying a termination date. In such event, his
employment hereunder shall terminate on the date specified in
such notice.
6.04 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.
6.05 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, 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, provided that the Corporation shall bear any legal
or other costs reasonably incurred by Executive in connection
therewith.
6.06 Following the termination of Executive's employment
hereunder or otherwise for any reason, Executive shall not for a
period of twenty-four months from such termination either (a)
solicit any employee of the Corporation to leave such employ to
enter the employ of Executive or of any corporation or enterprise
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 advertising, public relations, sales
promotion or market research business of any advertiser which is
a client of the Corporation at the time of such termination.
ARTICLE VII
LONG TERM PERFORMANCE INCENTIVE PLAN; OTHER BENEFITS
7.01 As soon as practicable following execution of
this Agreement by both parties hereto, Interpublic will cause its
Compensation Committee to grant Executive an award of 8,885
performance units for the 1995-1998 performance period under
Interpublic's Long-Term Performance Incentive Plan tied to the
PAGE
cumulative compound profit growth of The Lowe Group plc and
options under Interpublic's 1986 Stock Incentive Plan to purchase
30,000 shares of Interpublic common stock, which options shall
not be exercisable until January 1, 1998, at which time they
shall become exercisable in full.
7.02 During the term of this Agreement, Executive
shall be entitled to a housing allowance of up to $200,000 per
year.
7.03 During the term of this Agreement, Executive
shall be entitled to an automobile allowance of up to $10,000 per
year.
7.04 Interpublic agrees to have its Management Human
Resources Committee elect Executive to membership in the
Development Council, and Executive shall be entitled to receive
all fringe benefits, vacation and perquisites given to
Interpublic executives of similar title and position.
7.05 During the term of this Agreement, Executive
shall be entitled to receive reimbursement for travel of his
spouse related to Lowe or Interpublic business of up to $30,000
per year.
ARTICLE VIII
Assignment
8.01 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.
ARTICLE IX
Arbitration
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
PAGE
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 11.01 hereof,
and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. The
arbitration shall take place in the city 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
Agreement Entire
10.01 This Agreement constitutes the entire
understanding between Interpublic and Executive concerning his
employment by Interpublic or any of its affiliates or
subsidiaries and supersedes any and all previous agreements
between Executive and Interpublic or any of its affiliates or
subsidiaries concerning such employment. This Agreement may not
be changed orally.
ARTICLE XI
Applicable Law
11.01 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 C. KENT KROEBER
FRANK B. LOWE
EXECUTIVE SPECIAL BENEFIT AGREEMENT
AGREEMENT made as of January 1, 1996, by and between
THE INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the
State of Delaware (hereinafter referred to as "Interpublic"), and
FRANK B. LOWE (hereinafter referred to as "Executive"):
W I T N E S S E T H
WHEREAS, Executive is in the employ of Interpublic
and/or one or more of its subsidiaries (Interpublic and its
subsidiaries being hereinafter referred to collectively as the
"Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into
an Executive Special Benefit Agreement which shall be
supplementary to any employment agreement or arrangement which
Executive now or hereinafter may have with respect to Executive's
employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises
herein set forth, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
Death and Special Retirement Benefits
1.01 For purposes of this Agreement the "Accrual
Term" shall mean the period of seventy-two months beginning on
the date of this Agreement and ending on the day preceding the
sixth anniversary hereof or on such earlier date on which
Executive shall cease to be in the employ of the Corporation.
1.02 The Corporation shall provide Executive with
the following benefits contingent upon Executive's compliance
with all the terms and conditions of this Agreement and
Executive's satisfactory completion of a physical examination in
connection with an insurance policy on the life of Executive
which Interpublic or its assignee (other than Executive) proposes
to obtain and own.
1.03 If, during the Accrual Term or thereafter
PAGE
during a period of employment by the Corporation which is
continuous from the date of this Agreement, Executive shall die
while in the employ of the Corporation, the Corporation shall pay
to such beneficiary or beneficiaries as Executive shall have
designated pursuant to Section 1.07 (or in the absence of such
designation, shall pay to the Executor of the Will or the
Administrator of the Estate of Executive) survivor income
payments of One Hundred Thirty-Three Thousand Two-Hundred Dollars
($133,200) per annum for fifteen years following Executive's
death, such payments to be made on January 15 of each of the
fifteen years beginning with the year following the year in which
Executive dies.
1.04 If, after a continuous period of employment
from the date of this Agreement, Executive shall retire from the
employ of the Corporation so that the first day on which
Executive is no longer in the employ of the Corporation occurs on
or after Executive's sixty-fourth birthday, the Corporation shall
pay to Executive special retirement benefits at the rate of One
Hundred Thirty-Three Thousand Two Hundred Dollars ($133,200) per
annum for fifteen years beginning with the calendar month
following Executive's last day of employment, such payments to be
made in equal monthly installments.
1.05 If, after a continuous period of employment
from the date of this Agreement, Executive shall retire, resign,
or be terminated from the employ of the Corporation so that the
first day on which Executive is no longer in the employ of the
Corporation occurs on or after Executive's sixtieth birthday but
prior to Executive's sixty-fourth birthday, the Corporation shall
pay to Executive special retirement benefits at the annual rates
set forth below for fifteen years beginning with the calendar
month following Executive's last day of employment, such payments
to be made in equal monthly installments:
Age At Retirement Annual Benefit
63 $117,216
62 $101,232
61 $ 85,248
60 $ 60,952
1.06 If, following such termination of employment,
Executive shall die before payment of all of the installments
provided for in Section 1.04 or Section 1.05, any remaining
PAGE
installments shall be paid to such beneficiary or beneficiaries
as Executive shall have designated pursuant to Section 1.07 or,
in the absence of such designation, to the Executor of the Will
or the Administrator of the Estate of Executive.
1.07 For purposes of Sections 1.03, 1.04 and 1.05,
or any of them, Executive may at any time designate a beneficiary
or beneficiaries by filing with the chief personnel officer of
Interpublic a Beneficiary Designation Form provided by such
officer. Executive may at any time, by filing a new Beneficiary
Designation Form, revoke or change any prior designation of
beneficiary.
1.08 If Executive shall die while in the employ of
the Corporation, no sum shall be payable pursuant to Sections
1.04, 1.05, 1.06, 2.01, 2.02, or 2.03.
1.09 In connection with the life insurance policy
referred to in Section 1.02, Interpublic has relied on written
representations made by Executive concerning Executive's age and
the state of Executive's health. If said representations are
untrue in any material respect, whether directly or by omission,
and if the Corporation is damaged by any such untrue
representations, no sum shall be payable pursuant to Sections
1.03, 1.04, 1.05, 1.06, 2.01, 2.02, or 2.03.
1.10 It is expressly agreed that Interpublic or
its assignee (other than Executive) shall at all times be the
sole and complete owner and beneficiary of the life insurance
policy referred to in Sections 1.02 and 1.09, shall have the
unrestricted right to use all amounts and exercise all options
and privileges thereunder without the knowledge or consent of
Executive or Executive's designated beneficiary or any other
person and that neither Executive nor Executive's designated
beneficiary nor any other person shall have any right, title or
interest, legal or equitable, whatsoever in or to such policy.
ARTICLE II
Nonsolicitation of Clients or Employees
2.01 Following the termination of Executive's
employment hereunder for any reason, Executive shall not for a
period of one year form such termination either (a) solicit any
PAGE
employee of the Corporation to leave such employ to enter the
employ of Executive or of any corporation or enterprise 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 advertising, public relations, sales promotion
or market research business of any advertiser which is a client
of the Corporation at the time of such termination.
ARTICLE III
Assignment
3.01 This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of
Interpublic. Neither this Agreement nor any rights hereunder
shall be subject in any matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive,
and any such attempted action by Executive shall be void. This
Agreement may not be changed orally, nor may this Agreement be
amended to increase the amount of any benefits that are payable
pursuant to this Agreement or to accelerate the payment of any
such benefits.
ARTICLE IV
Contractual Nature of Obligation
4.01 The liabilities of the Corporation to
Executive pursuant to this Agreement shall be those of a debtor
pursuant to such contractual obligations as are created by the
Agreement. Executive's rights with respect to any benefit to
which Executive has become entitled under this Agreement, but
which Executive has not yet received, shall be solely the rights
of a general unsecured creditor of the Corporation.
ARTICLE V
Applicable Law
5.01 This 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 C. KENT KROEBER
FRANK B. LOWE
EMPLOYMENT AGREEMENT
AGREEMENT made as of August 11, 1994 by and among THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State
of Delaware (hereinafter referred to as "Interpublic"), Ammirati
& Puris Inc., a corporation of the State of New York ("A & P")
and Martin Puris (hereinafter referred to as "Executive").
In consideration of the mutual promises set forth herein the
parties hereto agree as follows:
ARTICLE I
Term of Employment
1.01 Upon the terms and subject to the conditions set forth
herein A & P, or another subsidiary of Interpublic into which A &
P may be merged (A & P or such other subsidiary sometimes being
referred to herein as the "Corporation") will employ Executive
for the period beginning August 11, 1994 and ending on August 10,
1999 or on such earlier date as the employment of Executive shall
terminate pursuant to Article VI or Article VII. (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
Duties
2.01 During the term of employment Executive will:
(i) use his best efforts to promote the interests of the
Corporation and devote his full time and efforts to its
business and affairs;
(ii) perform such duties as the Corporation may from time to
time assign to him; and
(iii) serve in such offices of the Corporation or its
subsidiaries as he may be elected or appointed to, which
PAGE
initially shall be Chief Executive Officer of A & P, and Vice
Chairman of Lintas Worldwide. In addition, Executive will be
appointed or elected to the Oversight Committee, the Executive
Committee and the Board of Directors of Lintas Worldwide.
Executive will report exclusively to Interpublic's Chief
Executive Officer.
2.02 In connection with Executive's employment, he shall be
based at the offices of the Corporation at New York, New York
except for reasonable necessary travel on business for the
Corporation or Interpublic in connection with his duties
hereunder, or as otherwise specifically consented to by
Executive.
ARTICLE III
Compensation
3.01 The Corporation will compensate Executive for the
duties performed by him hereunder, including all services
rendered as an officer or director of the Corporation or
Interpublic, by payment of a salary at the rate of $600,000 per
annum, payable in equal installments, which the Corporation may
pay at either monthly or semi-monthly intervals.
3.02 Interpublic may at any time increase the compensation
paid to Executive hereunder if Interpublic in its discretion
shall deem it advisable so to do in order to compensate him
fairly for services rendered to the Corporation. In any event,
Executive's salary shall be reviewed no less often than every 24
months during the term of this Agreement, beginning 24 months
following the last such review prior to the effective date of
this Agreement.
ARTICLE IV
Bonuses
4.01 Executive shall, subject to full execution of this
Agreement, receive a sign-up bonus of $1.9 million, which shall
be paid within thirty days of the date hereof.
PAGE
4.02 Except as may be provided in Section 4.04 of this
Agreement, in addition to the bonus set forth in section 4.01
above, Executive shall receive an additional bonus of $1.9
million, which shall be paid in February, 1995.
4.03 Executive additionally shall be eligible to receive a
bonus of up to $1.5 million subject, however, to the attainment
of certain operating profit targets which will be determined by
the Oversight Committee of the Corporation and Interpublic, which
bonus, if any, will be paid in February, 1996.
4.04 In addition, Executive shall be entitled for calendar
year 1994 to share in an executive bonus pool of $1.5 million, of
which $661,348 has been paid as of the date hereof. Of the
remaining $838,652 available for distribution, there will be a
dollar for dollar reduction for any 1994 revenue shortfall from
$53.5 million. Should such revenue shortfall exceed the $838,652
remaining available for distribution pursuant to this Section
4.04, such additional shortfall will be deducted, dollar for
dollar from the bonus amount due pursuant to Section 4.02 hereof.
The portion of such bonus pool which Executive shall receive,
which shall be paid in January, 1995, shall be determined in the
sole discretion of Executive.
4.05 For calendar year 1995, and all subsequent calendar
years during the term of this Agreement, Executive will be
eligible to participate in Interpublic's Management Incentive
Compensation Plan ("MICP"), in accordance with the terms and
conditions of the MICP established from time to time. Executive
shall be eligible to receive MICP awards of up to fifty percent
of base salary, but the actual award. if any, shall be determined
by the Corporation and Interpublic and shall be based on profits
of the Corporation and Interpublic, Executive's individual
performance and management discretion.
4.06 The bonus described in Section 4.01 shall be paid
irrespective of whether Executive's employment with the
Corporation has terminated for any reason prior to payment.
Executive shall be eligible for the bonuses described in Sections
4.03 and 4.04, and shall be paid the bonus described in Section
4.02, only if Executive is employed by the Corporation on the
date of payment, or if Executive's employment has terminated
PAGE
earlier due to (i) death, (ii) disability, (iii) termination by
the Corporation for reasons other than a violation of Sections
7.01 or 7.02, or (iv) termination by Executive for "good reason"
as defined in Section 6.02.
ARTICLE V
Other Employment Benefits and Compensation
5.01 Executive shall participate in the Interpublic Long
Term Performance Incentive Plan ("LTPIP"), in accordance with the
terms of such plan. Executive shall participate in such other
employee benefits and executive compensation programs as are
available to senior executives of Interpublic generally, and as
are available from time to time to other Interpublic key
management executives in accordance with the then-current terms
and conditions established by Interpublic for eligibility and
employee contributions required for participation in such
benefits opportunities.
5.02 Executive shall be entitled to 6 weeks paid vacation
per year.
5.03 Executive shall be entitled to receive prompt
reimbursement from the Corporation of all reasonable expenses
incurred by Executive in promoting the business of the
Corporation and in performing services hereunder, including all
expenses of travel and entertainment and living expenses while
away from home on business or at the request of or in the service
of the Corporation, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures
established by Interpublic from time to time. Executive shall be
entitled to first class travel on business trips to the extent
that such class of services is available.
5.04 Executive shall be entitled to receive benefits
accorded to members of Interpublic's Development Council,
including up to $5,000 per annum reimbursement for financial
planning and tax preparation expenses, and 100% reimbursement for
medical expenses in accordance with the terms and conditions of
the Development Council Health Care Program, as they may exist
from time to time.
PAGE
5.05 The Corporation shall continue to provide Executive
with an automobile under the lease in effect with respect to
Executive on the date hereof, and pay related expenses to the
extent on the date hereof. Following the expiration of such
lease, the Corporation shall provide Executive with an automobile
allowance in an amount comparable to the cost of such lease for
the remainder of the term of this Agreement, or provide Executive
with the cash equivalent value thereof plus a gross up for tax
liability.
5.06 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 award for the
1995-1998 performance period under the LTPIP equal to 3,600
performance units tied to the cumulative compound profit growth
of the Corporation, and an option under Interpublic's 1986 Stock
Incentive Plan (the "Stock Plan") to purchase 14,400 shares of
Interpublic common stock at the fair market value of such stock
on January 1, 1995 (as determined in accordance with the terms of
the Stock Plan), which option may not be exercised in any part
prior to January 1, 1999 and thereafter shall be exercisable in
whole or part; provided, however, that in the event Executive's
employment is terminated for any reason other than in accordance
with Section 7.03 after December 31, 1996 but before January 1,
1999, Interpublic shall use its best efforts to have the
Committee (i) pay a pro-rata share of the compensation tied to
such performance units immediately following the end of the
performance period and (ii) vest a pro-rata portion of such stock
options, in either case based upon the number of calendar months
following December 31, 1994 but before January 1, 1999 in which
Executive was employed.
5.07 The terms of disability provisions under A & P's
policies existing on the date hereof, as applicable to Executive,
will remain in effect during the term of this Agreement.
5.08 The two split-dollar life insurance policies on
Executive's life in effect on the date hereof (Metropolitan Life
Insurance Company policy numbers 930750497A and 930750498A),
shall be maintained in effect by the Corporation in accordance
with their terms and conditions during the term of this
Agreement.
PAGE
5.9 The Corporation will continue to pay Executive's club
memberships which exist on the date of this Agreement.
5.10 The Corporation will continue to pay the premium on the
$5 million term life insurance policy on the life of Executive,
in effect on the date hereof, and such premium payments will
continue to be treated as compensation to Executive to the extent
required under applicable tax law.
5.11 Following Executive's retirement, Interpublic will
cause Executive to become eligible for retiree medical coverage
under the terms and conditions of its then existing clan.
ARTICLE VI
Termination
6.01 (i) Interpublic may terminate the employment of
Executive hereunder by giving Executive notice in writing at any
time specifying a termination date not earlier than the later of
(A) one year following the date of such notice or (B)
December 31, 1996.
(ii) Notwithstanding clause (i) above, Interpublic may
terminate the employment of Executive hereunder by giving him
notice in writing specifying any termination date after December
31, 1996, which date shall be no less than ten days following
such Executive's receipt of such notice. In this event, his
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 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 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 month to be paid together with the last
installment.
PAGE
6.02 Executive may at any time give notice in writing to the
Corporation specifying a termination date not less than six
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. Notwithstanding the above, Executive
may at any time give notice in writing to the Corporation
specifying a termination date not less than 10 days after the
date on which such notice is given, if Executive has "good
reason" to terminate his employment. In that case, and unless the
Corporation has undone to the reasonable satisfaction of
Executive the actions giving rise to such good reason prior to
the termination date set forth in such notice, such termination
shall be treated as termination by the Corporation pursuant to
Section 6.01 (ii), and Executive shall be entitled to an
extension of salary payments accordingly. For purposes of this
Agreement, Executive shall have "good reason" to terminate his
employment in the event of (i) a substantial breach by the
Corporation of any material provision of this Agreement,
including a reduction in salary, or (ii) a substantial diminution
in Executive's authority, duties or responsibilities, except with
respect to such assignment or diminution which is made on a
temporary basis (not more than 30 days).
6.03 If the employment of Executive hereunder is terminated
pursuant to this Article VI by either the Corporation or
Executive, Executive shall continue to perform his duties
hereunder until the termination date at his salary in effect on
the date that notice of such termination is given.
6.04 If Executive dies before the fifth anniversary of the
date hereof, his employment hereunder shall terminate on the date
of his death.
6.05 Executive shall be under no duty to mitigate, by
obtaining other employment or otherwise, any payments due him by
the Corporation pursuant to Sections 6.01 or 6.02 and the
Corporation shall have no right to offset any amounts earned by
Executive from other employment or other sources against such
payments.
PAGE
ARTICLE VII
Covenants
7.01 While Executive is employed hereunder by the
Corporation he shall not without the prior written consent of the
Corporation 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 (including
any publicly listed mutual fund), and provided further that he
may continue to serve as a member of the Board of Directors of
the Mystic Seaport Museum and the Upward Fund.
7.02 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.
7.03 If Executive violates any provision of Section 7.01 or
Section 7,02, the Corporation may, notwithstanding the provisions
of Section 6.01, terminate the employment of Executive at any
time by giving him notice in writing specifying a termination
date. In such event, his employment hereunder shall terminate on
the date specified in such notice.
7.04 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.
7.05 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
PAGE
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, 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, without further compensation, upon notice to him
from the Corporation.
7.06 Following the termination of Executive's employment
hereunder for any reason, Executive shall not for a period of
twenty-four months from such termination either (a) solicit any
employee of the Corporation or Interpublic to leave such employ
to enter the employ of Executive or of any corporation or
enterprise 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 advertising, public relations,
sales promotion or market research business of any advertiser for
which the Corporation had actively performed services for
compensation during the 180-day period immediately prior to
Executive's termination, or to whom the Corporation had made a
substantive presentation during such period seeking such
advertiser's business.
ARTICLE VIII
Assignment
8.01 This Agreement shall be binding upon and enure to the
benefit of the successors and assigns of the Corporation, and the
heirs, legatees, administrators and personal representatives of
Executive. Neither this Agreement nor any rights hereunder shall
be assignable by Executive and any such purported assignment by
him shall be void. Neither this Agreement nor any rights
hereunder shall be assignable by the Corporation without the
prior written consent of Executive.
PAGE
ARTICLE IX
Agreement Entire
9.01 This Agreement supersedes any and all previous
agreements between Executive and the Corporation concerning his
employment by the Corporation, and/or any compensation or
bonuses. This Agreement may not be amended except by an
instrument signed by both parties hereto.
ARTICLE X
Applicable Law
10.01 The Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard
to conflicts of law.
ARTICLE XI
Notices
11.01 All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, mailed by
certified mail (return receipt requested) or sent by overnight
delivery service or facsimile transmission to the parties at the
following addresses or at such other addresses as shall be
specified by the parties by like notice:
(a) If to A & P or the Corporation:
Ammirati & Puris Inc.
100 Fifth Avenue
New York, New York 10011
Attn: Chief Executive Officer
Facsimile: (212) 337-9481
(b) If to Interpublic:
The Interpublic Group of Companies, Inc.
1271 Avenue of the Americas
New York, New York 10020
Attn: C. Kent Kroeber
Senior Vice President, Human Resources
Facsimile: (212) 399-8130
PAGE
(c) If to Executive:
At Executive's last known address as listed with
Employer
ARTICLE XII
Counterparts
12.01 This Agreement may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, with the same effect as if all parties had signed
the same document. All such counterparts shall be deemed an
original, shall be construed together and shall constitute one
and the same instrument.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By C. Kent Kroeber
AMMIRATI & PURIS, INC.
By Philip Palazzo, Jr.
Employee: Martin F. Puris
CREDIT AGREEMENT
BETWEEN
THE INTERPUBLIC GROUP OF COMPANIES, INC.
AND
LLOYDS BANK Plc
____________________
US$15,000,000
____________________
Dated as of July 3, 1995
PAGE
TABLE OF CONTENTS
SECTION PAGE
SECTION 1
INTERPRETATIONS AND DEFINITIONS
1.1 Definitions 1
1.2 Accounting Terms and Determinations 6
SECTION 2
THE LOANS
2.1 Commitment 7
2.2 Method of Borrowing 7
2.3 The Note 8
2.4 Maturity of Loans 8
2.5 Interest Rates 8
2.6 Fees 11
2.7 Optional Termination or Reduction of Commitment 11
2.8 Mandatory Termination or Reduction of Commitment 11
2.9 Optional Prepayments 12
2.10 General Provisions as to Payments 12
2.11 Computation of Interest and Fees 12
2.12 Funding Losses 12
2.13 Extension of Commitment 13
2.14 Sterling Option 13
2.15 Subsidiary Borrowers 14
SECTION 3
CONDITIONS OF LENDING
3.1 All Loans 16
3.2 Initial Loan 16
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Basis for Determining Interest Rate Inadequate 18
4.2 Illegality 18
4.3 Increased Costs and Reduced Returns 18
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.1 Corporate Existence and Power 21
5.2 Corporate and Governmental Authorization;
Contravention 21
5.3 Binding Effect 21
5.4 Financial Information 21
PAGE
5.5 Litigation 21
5.6 Compliance with ERISA 22
5.7 Taxes 22
5.8 Subsidiaries 22
SECTION 6
COVENANTS
6.1 Information 23
6.2 Maintenance of Property; Insurance 24
6.3 Conduct of Business and Maintenance of Existence 25
6.4 Compliance with Laws 25
6.5 Inspection of Property, Books and Records 25
6.6 Cash Flow to Total Borrowed Funds 26
6.7 Total Borrowed Funds to Consolidated Net Worth 26
6.8 Minimum Consolidated Net Worth 26
6.9 Negative Pledge 26
6.10 Consolidations, Mergers and Sales of Assets 27
6.11 Use of Proceeds 27
SECTION 7
EVENTS OF DEFAULT
7.1 Events of Default 29
SECTION 8
MISCELLANEOUS
8.1 Notices 32
8.2 Amendments and Waivers; Cumulative Remedies 32
8.3 Successors and Assigns 33
8.4 Expenses; Documentary Taxes; Indemnification 33
8.5 Withholding Taxes 34
8.6 Counterparts 35
8.7 Headings; Table of Contents 35
8.8 Governing Law 35
PAGE
CREDIT AGREEMENT
AGREEMENT dated as of July 3, 1995 between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a Delaware corporation (the
"Borrower"), and LLOYDS BANK Plc (the "Bank").
SECTION I
INTERPRETATIONS AND DEFINITIONS
1.1 Definitions. The following terms, as used herein,
shall have the following respective meanings:
"Adjusted CD Rate" has the meaning set forth in Section
2.5(b) hereof.
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.5(c) hereof.
"Applicable Lending Office" means, with respect to the
Bank, (i) in the case of Domestic Loans, its Domestic
Lending Office and (ii) in the case of Eurodollar Loans, its
Eurodollar Lending Office.
"Assessment Rate" has the meaning set forth in Section
2.5(b) hereof.
"Base Rate" means, for any day, a rate per annum equal
to the higher of (i) the rate established from time to time
by the Bank in the United States as its prime or reference
rate of interest, changes in which are to be effective from
the opening of business on the day such change is made and
(ii) the sum of (A) .5% plus (B) the overnight federal funds
rate for such day as published in the weekly statistical
release designated by the Board of Governors of the Federal
Reserve System as "H.15(519)" (or any successor publication
thereto).
"Base Rate Loan" means a Loan which the Borrower
specifies pursuant to Section 2.2 hereof shall be a Base
Rate Loan.
"Benefit Arrangement" means, at any time, an employee
benefit plan within the meaning of Section 3(3) of ERISA
which is not a Plan or a Multiemployer Plan and which is
maintained or otherwise contributed to by any member of the
ERISA Group.
"Cash Flow" means the sum of net income of the Borrower
and its Consolidated Subsidiaries (plus any amount by which
net income has been reduced by reason of the recognition of
PAGE
post-retirement and post-employment benefit costs prior to
the period in which such benefits are paid), depreciation
expenses, amortization costs and changes in deferred taxes,
provided that such sum shall not be adjusted for any
increase or decrease in deferred taxes resulting from Quest
& Associates, Inc., a Subsidiary of the Borrower, investing
in a portfolio of computer equipment leases (it being
understood that such increase or decrease in deferred taxes
relating to such investment shall not exceed $25,000,000).
"CD Base Rate" has the meaning set forth in Section
2.5(b) hereof.
"CD Loan" means a Loan which the Borrower specifies
pursuant to Section 2.2 hereof shall be a CD Loan.
"CD Margin" has the meaning set forth in Section 2.5(b)
hereof.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto.
"Commitment" means the obligation of the Bank to lend
the amount set forth in Section 2.1 hereof, as such amount
may be reduced from time to time pursuant to Section 2.7
hereof.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Borrower in its consolidated
financial statements as of such date.
"Consolidated Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries as such appear on the financial
statements of the Borrower determined in accordance with
generally accepted accounting principles (plus any amount by
which retained earnings has been reduced by reason of the
recognition of post-retirement and post-employment benefit
costs prior to the period in which such benefits are paid
and without taking into account the effect of cumulative
currency translation adjustments).
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, including reimbursement obligations for letters of
credit, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable
PAGE
arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under capital leases,
(v) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such
Person, and (vi) all Debt of others Guaranteed by such
Person, but in each case specified in (i) through (vi)
excludes obligations arising in connection with securities
repurchase transactions.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time, or both, would become an Event of
Default.
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in
New York, New York are authorized by law to close.
"Domestic Lending Office" means the principal office of
the Bank located at the address set forth on the signature
pages hereof for its Domestic Lending Office, or such other
branch (or affiliate) located within the United States as
the Bank may hereafter designated as its Domestic Lending
Office.
"Domestic Loans" means CD Loans or Base Rate Loans or
both.
"Domestic Reserve Percentage" has the meaning set forth
in Section 2.5(b) hereof.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Group" means the Borrower and all members of a
controlled group of corporations and all trades or
businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a
single employer under Section 414(b) or (c) of the Code.
"Eurodollar Business Day" means any Domestic Business
Day on which commercial banks in London are open for
international business (including dealings in Dollar
deposits).
"Eurodollar Lending Office" means the office of the
Bank located at the address set forth on the signature pages
hereof for its Eurodollar Lending Office, or such other
branch (or affiliate) of the Bank as it may hereafter
designate as its Eurodollar Lending Office.
PAGE
"Eurodollar Loan" means a Loan which the Borrower
specifies pursuant to Section 2.2 hereof shall be a
Eurodollar Loan.
"Eurodollar Margin" has the meaning set forth in
Section 2.5(c) hereof.
"Eurodollar Reserve Percentage" has the meaning set
forth in Section 2.5(c) hereof.
"Event of Default" has the meaning set forth in Section
7 hereof.
"Fixed CD Rate" has the meaning set forth in Section
2.5(b) hereof.
"Fixed Rate Loans" means CD Loans, Eurodollar Loans or
Money Market Rate Loans.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, to maintain
financial statement conditions or otherwise) or (ii) entered
into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect
thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Interest Period" means: (1) with respect to each CD
Loan, at the Borrower's option, the period commencing on the
date of such Loan and ending 30, 60, 90 or 180 days
thereafter, (2) with respect to each Eurodollar Loan, at the
Borrower's option, the period commencing on the date of such
Loan and ending one, two, three or six months thereafter and
(3) with respect to each Base Rate Loan the period
commencing on the date of such Loan and ending 30 days
thereafter provided, that:
(a) any Interest Period which would otherwise end on a
PAGE
day which is not a Eurodollar Business Day shall be extended
to the next succeeding Eurodollar Business Day unless with
respect to a Eurodollar Loan such Eurodollar Business Day
falls in another calendar month, in which case such Interest
Period shall end on the next preceding Eurodollar Business
Day;
(b) with respect to a Eurodollar Loan, any Interest
Period which begins on the last Eurodollar Business Day of
the calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the
end of such Interest Period) shall, subject to clause (c)
below, end on the last Eurodollar Business Day of a calendar
month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
provided further, however, that if any such Interest Period
shall be less than 30 days, the Loan for such Interest
Period shall be a Base Rate Loan.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or other encumbrance
of any kind in respect of such asset. For purposes of this
Agreement, the Borrower or any subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan" and "Loans" means a Domestic Loan, a Eurodollar
Loan, or a Money Market Rate Loan, as the context may
require.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.5(c) hereof.
"Material Plan" means at any time a Plan or Plans
having aggregate unfunded benefit liabilities (within the
meaning of Section 4001(a)(18) of ERISA) in excess of
$25,000,000.
"Money Market Rate Loan" means a Loan made by the Bank
to the Borrower pursuant to Section 2.5(d) hereof.
"Multiemployer Plan" means at any time an employee
pension benefit plan that is a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA to which any
PAGE
member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding
five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Note" or "Notes" means the promissory note of the
Borrower, substantially in the form of Exhibits A and B
hereto evidencing the obligation of the Borrower to repay
the Loans.
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions
under ERISA.
"Participant" has the meaning set forth in Section 8.3.
"Person" means an individual, a corporation, a
partnership, an association, a business trust or any other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time a defined benefit pension plan
(other than a Multiemployer Plan) which is covered by Title
IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and either (i) is maintained,
or contributed to, by any member of the ERISA Group for
employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Significant Subsidiary" or "Significant Group of
Subsidiaries" at any time of determination means any
Consolidated Subsidiary or group of Consolidated
Subsidiaries, respectively, which, individually or in the
aggregate, together with its or their subsidiaries, accounts
or account for more than 10% of the consolidated gross
revenues of the Borrower and its Consolidated Subsidiaries
for the most recently ended fiscal year or for more than 10%
of the total assets of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year; provided
that in connection with any determination with respect to a
Significant Group of Subsidiaries under (x) Section 7(f),
there shall be a payment default, failure or other event
PAGE
(of the type described therein but without regard to the
principal amount of such obligation) of each Consolidated
Subsidiary included in such group, (y) Sections 7(g) and (h)
and the last sentence of Section 6.10, the condition or
event described therein shall exist with respect to each
Consolidated Subsidiary included in such group or (z)
Section 7(j), there shall be a final judgment (of the type
specified therein but without regard to the amount of such
judgment) rendered against each Consolidated Subsidiary
included in such group.
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions is
at the time directly or indirectly owned by the Borrower.
"Termination Date" means July 3, 1998 or such later
date to which the Commitment is extended in accordance with
Section 2.13 hereof.
"Total Borrowed Funds" means at any date, without
duplication, (i) all outstanding obligations of the Borrower
and its Consolidated Subsidiaries for borrowed money, (ii)
all outstanding obligations of the Borrower and its
Consolidated Subsidiaries evidenced by bonds, debentures,
notes or similar instruments and (iii) any outstanding
obligations of the type set forth in (i) or (ii) of any
other Person Guaranteed by the Borrower and its Consolidated
Subsidiaries, it being understood that the obligation to
repurchase securities transferred pursuant to a securities
repurchase agreement shall not be deemed to give rise to any
amount of Total Borrowed Funds pursuant to this definition.
1.2 Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be
delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants)
with the most recent audited consolidated financial statements of
the Borrower and its Consolidated Subsidiaries delivered to the
Bank.
PAGE
SECTION 2
THE LOANS
2.1 Commitment. At any time prior to the Termination
Date the Bank agrees, on the terms and conditions set forth in
this Agreement, to lend to the Borrower from time to time amounts
not exceeding in the aggregate at any one time outstanding the
principal amount of $15,000,000 (the "Commitment"). Each Loan
under this Section 2.1 shall be in the principal amount of
$1,000,000 (except that any such Loan may be in the amount of the
unused Commitment) or any larger multiple thereof. During such
period and within the foregoing limits, the Borrower may borrow
under this Section 2.1, repay or to the extent permitted by
Section 2.9 hereof prepay Loans and reborrow under this Section
2.1.
2.2 Method of Borrowing.
(a) With respect to each Loan made pursuant to Section
2.1 hereof, the Borrower shall give the Bank notice prior to
11:00 a.m. on the drawdown date in the case of a Base Rate
Loan, at least one Domestic Business Day's notice in the
case of a CD Loan, or at least three Eurodollar Business
Days' notice in the case of a Eurodollar Loan, specifying:
(i) the date of such Loan, which shall be a Domestic
Business Day in the case of a Domestic Loan and a
Eurodollar Business Day in the case of a Eurodollar
Loan;
(ii) the principal amount of such Loan;
whether the Loan is to be a Base Rate Loan, a CD Loan
or a Eurodollar Loan (and, if such Loan is to be a
Eurodollar Loan, whether Section 2.14 is to be
applicable thereto);
(iii) in the case of a Fixed Rate Loan, the duration of
the Interest Period applicable thereto, subject to the
definition of Interest Period; and
(iv) whether Section 2.15 is to be applicable to such
Loan.
(b) On the date of each Loan the Bank will make the
proceeds thereof available to the Borrower at the Domestic
Lending Office.
PAGE
(c) If the Bank makes a new Loan hereunder on a day
which the Borrower is to repay all or any part of an
outstanding Loan, the Bank shall apply the proceeds of its
new Loan to make such repayment and only an amount equal to
the difference (if any) between the amount being borrowed
and the amount being repaid shall be made available by the
Bank to the Borrower as provided in subsection (b) of this
Section or remitted by the Borrower to the Bank as provided
in Section 2.10 hereof, as the case may be.
2.3 The Note.
(a) The Loans shall be evidenced by a single Note
payable to the order of the Bank for the account of its
Applicable Lending Office in an amount equal to the
aggregate unpaid principal amount of the Loans. The Money
Market Rate Loans shall be evidenced by the Money Market
Rate Note, a form of which is attached hereto as Exhibit B.
(b) The Bank shall record and prior to any transfer,
if permitted, of its Note, shall endorse on the schedule
forming a part thereof appropriate notations evidencing the
date, the type, the amount and the maturity of each Loan to
be evidenced by the Note and the date and amount of each
payment of principal made by the Borrower with respect
thereto; provided that the failure of the Bank to make any
such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Note and,
further provided, the Bank shall make such additions and
deletions as the Borrower may request in order to correct
any mistakes. The Bank is hereby irrevocably authorized by
the Borrower so to endorse the Note and to attach to and
make a part of the Note a continuation of any such schedule
as and when required.
2.4 Maturity of Loans. Each Loan shall mature, and
the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Loan. Each
Money Market Rate Loan shall mature at such time as may be agreed
to by the Bank and the Borrower.
2.5 Interest Rates.
(a) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per
annum equal to the Base Rate. Such interest shall be
payable for each Interest Period on the last day thereof.
Any overdue principal of and, to the extent permitted by
law, overdue interest on the Base Rate Loans shall bear
PAGE
interest during such overdue period for each day until paid
at a rate per annum equal to the sum of 1% plus the
otherwise applicable rate for such day, payable on demand of
the Bank.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each Interest
Period applicable thereto, at a rate per annum equal to the
applicable Fixed CD Rate; provided that if any CD Loan or
any portion thereof shall, as a result of clause (c) of the
definition of Interest Period, have an Interest Period of
less than 30 days, such portion shall bear interest during
such Interest Period at the rate applicable to Base Rate
Loans during such Period. Such interest shall be payable for
each Interest Period on the last day thereof and, if such
Interest Period is longer than 90 days, at intervals of 90
days after the first day thereof. Any overdue principal of
and, to the extent permitted by law, overdue interest on the
CD Loans shall bear interest during such overdue period for
each day until paid at a rate per annum equal to the sum of
1% plus the higher of (i) the Fixed CD Rate applicable to
such Loan and (ii) the rate applicable to Base Rate Loans
for such day, payable on demand of the Bank.
The "Fixed CD Rate" applicable to any CD Loan for any
Interest Period means a rate per annum equal to the sum of
the CD Margin plus the applicable Adjusted CD Rate.
The "CD Margin" means (i) .4250%, if at the end of each
of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net
Worth was equal to or less than .40 to 1 and the Borrower's
ratio to Cash Flow to Total Borrowed Funds was equal to or
greater than .50 to 1; or (ii) .5250%, if (a) the conditions
of clause (i) have not been satisfied and (b) at the end of
each of the two most recently completed fiscal quarters the
Borrower's ratio of Total Borrowed Funds to Consolidated Net
Worth was equal to or less than .70 to 1 and the Borrower's
ratio of Cash Flow to Total Borrowed Funds was equal to or
greater than .35 to 1; or (iii) .6250%, if the conditions
set forth in both clauses (i) and (ii) are not satisfied.
PAGE
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
ACDR = CDBR + AR
________
1 - DRP
ACDR = Adjusted CD Rate for such Interest Period
CDBR = CD Base Rate for such Interest Period
AR = Assessment Rate
DRP = Domestic Reserve Percentage
The "CD Base Rate" means for any Interest Period the
prevailing per annum rate of interest as reasonably
determined by the Bank (rounded upward, if necessary, to the
next higher 1/100 of 1%) bid at 11:00 a.m. (New York time)
(or as soon thereafter as practicable) on the first day of
such Interest Period by two or more certificate of deposit
dealers of recognized standing selected by the Bank for the
purchase at face value of US dollar certificates of deposit
issued by major New York banks in an amount comparable to
the principal amount of the CD Loan to which such Interest
Period applies and with a maturity comparable to such
Interest Period.
The "Domestic Reserve Percentage" means for any day,
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without
limitation, any basic, supplemental or emergency reserves)
for a member bank of the Federal Reserve System with
deposits exceeding five billion Dollars in respect of new
non-personal time deposits in Dollars having a maturity
comparable to the related Interest Period and in an amount
of $100,000 or more. The Fixed CD Rate shall be adjusted
automatically on and as of the effective date of any change
in the Domestic Reserve Percentage.
"Assessment Rate" means for any Interest Period the net
annual assessment rate (rounded upwards, if necessary, to
PAGE
the next higher 1/100 of 1%) actually incurred by the Bank
to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's)
insuring time deposits at offices of the Bank in the United
States during the most recent period for which such rate has
been determined prior to the commencement of such Interest
Period.
(c) Each Eurodollar Loan shall bear interest on the
unpaid principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of
the Eurodollar Margin plus the applicable Adjusted London
Interbank Offered Rate. Such interest shall be payable for
each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of
three months after the first day thereof. Any overdue
principal of and, to the extent permitted by law, overdue
interest on the Eurodollar Loans shall bear interest for
each day until paid at a rate per annum equal to the sum of
1% plus the higher of (i) the rate of interest applicable to
such Loan and (ii) the rate applicable to Base Rate Loans
for such day, payable on demand of the Bank.
The "Adjusted London Interbank Offered Rate" applicable
to any Interest Period means a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the
next higher 1/100 of 1%) by dividing (i) the applicable
London Interbank Offered Rate by 1.00 minus the Eurodollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Interest Period means the rate per annum at which deposits
in Dollars are offered to the Bank in the London interbank
market at approximately 11:00 a.m. (London time) two
Eurodollar Business Days prior to the first day of such
Interest Period in an amount approximately equal to the
principal amount of the Eurodollar Loan to which such
Interest Period is to apply and for a period of time
comparable to such Interest Period.
The "Eurodollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement for a member bank of the
Federal Reserve System with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes
deposits by reference to which the interest rate on
Eurodollar Loans is determined or any category of
PAGE
extensions of credit or other assets which includes loans by
a non-United States office of the Bank to United States
residents). The Adjusted London Interbank Offered Rate
shall be adjusted automatically on and as of the effective
date of any change in the Eurodollar Reserve Percentage.
The "Eurodollar Margin" means (i) .30%, if at the end
of each of the two most recently completed fiscal quarters
the Borrower's ratio of Total Borrowed Funds to Consolidated
Net Worth was equal to or less than .40 to 1 and the
Borrower's ratio of Cash Flow to Total Borrowed Funds was
equal to or greater than .50 to 1; or (ii) .40%, if (a) the
conditions of clause (i) have not been satisfied and (b) at
the end of each of the two most recently completed fiscal
quarters the Borrower's ratio of Total Borrowed Funds to
Consolidated Net Worth was equal to or less than .70 to 1
and the Borrower's ratio of Cash Flow to Total Borrowed
Funds was equal to or greater than .35 to 1; or (iii) .50%,
if the conditions set forth in both clauses (i) and (ii) are
not satisfied.
(d) Each Money Market Rate Loan shall be made by the
Bank to the Borrower upon such terms and conditions and in
such amounts as may be agreed upon from time to time by the
Bank and the Borrower. Each Money Market Rate Loan shall be
evidenced by a Note in the form of Exhibit B hereto.
2.6 Fees. The Borrower shall pay to the Bank a
commitment fee computed on the unused portion of the Commitment.
The per annum commitment fee shall be on any date from and after
the date hereof (i) .125% of the unused portion of the
Commitment, if at the end of each of the two most recently
completed fiscal quarters the Borrower's ratio of Total Borrowed
Funds to Consolidated Net Worth was equal to or less than .40 to
1 and the Borrower's ratio of Cash Flow to Total Borrowed Funds
was equal to or greater than .50 to 1; or (ii) .15% of the unused
portion of the Commitment, if (a) the conditions of clause (i)
have not been satisfied and (b) at the end of each of the two
most recently completed fiscal quarters the Borrower's ratio of
Total Borrowed Funds to Consolidated Net Worth was equal to or
less than .70 to 1 and the Borrower's ratio of Cash Flow to Total
Borrowed Funds was equal to or greater than .35 to 1; or (iii)
.180% of the unused portion of the Commitment, if the conditions
set forth in clauses (i) and (ii) are not satisfied. Such fees
shall accrue from the date hereof to and including the
Termination Date and shall be payable quarterly in arrears on the
last day of each June, September, December and March and on any
date on which the Commitment is terminated or otherwise reduced.
PAGE
2.7 Optional Termination or Reduction of Commitment.
The Borrower may, upon at least three Domestic Business Days'
notice to the Bank, terminate at any time or reduce from time to
time the unused portion of the Commitment. Any such reduction of
the Commitment shall be in the amount of $1,000,000 or any larger
multiple thereof. If the Commitment is terminated in its
entirety, the accrued commitment fee shall be payable on the
effective date of such termination.
2.8 Mandatory Termination or Reduction of Commitment.
If not previously terminated by the Borrower pursuant to Section
2.7, the Commitment shall terminate on the Termination Date, and
any Loans then outstanding (together with accrued interest
thereon) shall be due and payable on such date.
2.9 Optional Prepayments.
(a) The Borrower may, upon at least one Domestic
Business Day's notice to the Bank, prepay the Base Rate
Loans without premium or penalty in whole at any time or
from time to time in part in an amount equal to $1,000,000
or any multiple of $1,000,000 in excess thereof (or such
lesser amount as applicable if less than $1,000,000 is
outstanding) by paying the principal amount being prepaid
together with accrued interest thereon to the date of
prepayment.
(b) Except as provided in Section 4.2 hereof, the
Borrower may not prepay all or any portion of the principal
amount of any Fixed Rate Loan prior to the maturity thereof.
2.10 General Provisions as to Payments. The Borrower
shall make each payment of principal of, and interest on, the
Loans and of commitment fees hereunder not later than 11:00 a.m.
(local time) on the date when due in funds immediately available
at the Applicable Lending Office for the account of (i) the
Domestic Lending Office in the case of Domestic Loans and Money
Market Rate Loans or (ii) the Eurodollar Lending Office in the
case of Eurodollar Loans. Whenever any payment of principal of,
or interest on, the Domestic Loans, the Money Market Rate Loans,
the commitment fee shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to
the next succeeding Domestic Business Day. Whenever any payment
of principal of, or interest on, the Eurodollar Loans shall be
due on a day which is not a Eurodollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Eurodollar Business Day unless as a result thereof it would fall
in the next calendar month, in which case it shall be advanced to
the next preceding Eurodollar Business Day. If the date for any
payment of principal is extended by operation of law or
otherwise, interest shall be payable for such extended time.
PAGE
2.11 Computation of Interest and Fees. Interest on
the Loans bearing interest based on clause (i) of the definition
of Base Rate shall be computed on the basis of a year of 365 or
366 days, as the case may be, and paid for actual days elapsed.
Interest on Loans bearing interest based on clause (ii) of the
definition of Base Rate, the CD Loans, the Eurodollar Loans, the
Money Market Rate Loans and the calculation of the commitment fee
shall be computed on the basis of a year of 360 days and paid for
actual days elapsed.
2.12 Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan
(pursuant to Section 4 or Section 7 or otherwise) on any day
other than the last day of an Interest Period applicable to such
Loan, or if the Borrower fails to borrow any Fixed Rate Loan
after notice has been given to the Bank in accordance with
Section 2.2 hereof, the Borrower shall reimburse the Bank on
demand for any resulting loss or expense incurred by it (or by
any existing or prospective Participant in the related Loan)
including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties; provided
that the Bank shall have delivered to the Borrower a certificate
by a Bank officer as to the amount of such loss.
2.13 Extension of Commitment. Not more than 60 nor
less than 45 days prior to each date which is either the second
or third anniversary of this Agreement, the Borrower may request
in writing that the Bank extend the Commitment for an additional
period of one year from the then current Termination Date. If
the Bank, in its sole discretion, decides to grant such request,
it shall so notify the Borrower not less than 30 days before the
then current Termination Date in writing, whereupon the
Commitment shall be extended for an additional period of one year
from the then current Termination Date, and the term "Termination
Date" shall thereafter refer to the date that the Commitment, as
so extended, will terminate. If not extended as provided in this
Section 2.13, the Commitment will automatically terminate on the
then current Termination Date without further action by the
Borrower or the Bank.
2.14 Sterling Option.
(a) Designation of Loan. Any notice of a Eurodollar
Loan borrowing pursuant to Section 2.2(a) may include, at
the option of the Borrower, a designation that the terms and
provisions of this Section 2.14 shall be applicable to such
Eurodollar Loan. Any Eurodollar Loan as to which such a
designation is made is referred to herein as a "Sterling
Loan". Except to the extent inconsistent with any term or
provision of this Section 2.14, the terms and provisions of
PAGE
this Agreement shall apply to each Sterling Loan to the same
extent as applicable to any other Eurodollar Loan.
(b) Payments. Each Sterling Loan shall be denominated
in pounds sterling, the lawful money of England ("Pounds
Sterling"), and on the date of each Sterling Loan the
proceeds thereof shall be made available to the Borrower in
Pounds Sterling at the Eurodollar Lending Office. All
payments on account of the principal of and interest on any
Sterling Loan shall be made exclusively in Pounds Sterling
at the Eurodollar Lending Office.
(c) Commitment. Each Sterling Loan shall be in the
principal amount of 1,000,000 Pounds Sterling (except that
any Sterling Loan may be in the amount of the unused
Commitment) or any larger multiple thereof. For purposes of
computing the amount from time to time of the unused
Commitment, the outstanding principal amount of a Sterling
Loan at any time shall be deemed to be equal to the amount
in Dollars that would be required to purchase Pounds
Sterling in the amount of such outstanding Sterling Loan, on
the date that the Borrower's notice was given pursuant to
Section 2.2(a) with respect to such Sterling Loan, based
upon the average spot buying rate at which the Bank offers
to exchange Dollars for Pounds Sterling at approximately
11:00 a.m. (London time) on such date.
(d) Interest. For purposes of the computation of the
interest rate applicable to any Interest Period for any
Sterling Loan, the London Interbank Offered Rate shall mean
the rate per annum at which deposits in Pounds Sterling are
offered to the Bank in the London Interbank market at
approximately 11:00 a.m. (London time) on the first day of
such Interest Period in an amount approximately equal to the
principal amount of the Sterling Loan to which such Interest
Period is to apply and for a period of time comparable to
such Interest Period.
2.15 Subsidiary Borrowers.
(a) Designation of Subsidiary Borrower. Any notice of
a borrowing pursuant to Section 2.2(a) may include, at the
option of the Borrower, a designation that (i) the terms and
provisions of this Section 2.15 shall be applicable to such
Loan, and (ii) one of Lowe International Limited, Lowe &
Partners Inc. or Interpublic Ltd. shall be the borrower with
respect to such Loan. Any Loan as to which such a
designation is made is referred to herein as a "Subsidiary
Loan" and any Subsidiary so designated as a borrower is
PAGE
referred to herein as a "Subsidiary Borrower". Except to
the extent inconsistent with any term or provision of this
Section 2.15, the terms and provisions of this Agreement
shall apply to each Subsidiary Loan (and to each promissory
note evidencing a Subsidiary Loan) to the same extent as
applicable to any other Loan (and any Note).
(b) Funding and Notes; Commitment. On the date of
each Subsidiary Loan, the Bank will make the proceeds
thereof available to the Subsidiary Borrower at the
Applicable Lending Office. Each Subsidiary Loan shall be
evidenced by a separate promissory note of the Subsidiary
Borrower, substantially in the form of Exhibit C hereto,
payable to the order of the Bank for the account of its
Applicable Lending Office ("Subsidiary Note"). For purposes
of computing the amount from time to time of the unused
Commitment, the outstanding principal amount of all
Subsidiary Loans at any time shall be deemed to constitute
outstanding Loans of like principal amount under this
Agreement.
(c) Payments, Prepayments, Sterling Option, Funding
Losses, Etc. The terms and provisions of Sections 2.9,
2.10, 2.12, 2.14, 4 and 8.3 of this Agreement are intended
to be applicable to Subsidiary Loans (and the Subsidiary
Notes), provided that references to the Borrower's rights
and obligations therein (including rights and obligations in
respect of notices) shall, in the case of any Subsidiary
Loan, be deemed to be references to the Subsidiary
Borrower's rights and obligations. Except as provided in
the preceding sentence, all references to the "Borrower" in
this Agreement shall be deemed to be references to The
Interpublic Group of Companies, Inc.
(d) Conditions to Subsidiary Loans. In addition to
the conditions set forth in Section 3, the obligation of the
Bank to make the initial Subsidiary Loan to any Subsidiary
Borrower shall be subject to the receipt by the Bank of the
following:
(i) a duly executed Subsidiary Note of such Subsidiary
Borrower, with the duly executed guaranty of Borrower
affixed thereto; and
(ii) an opinion of counsel to such Subsidiary Borrower
to the effect that (A) such Subsidiary Borrower is a
corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of
incorporation, (B) the execution, delivery and
performance by such Subsidiary Borrower of the
PAGE
Subsidiary Note are within the Subsidiary Borrower's
corporate powers and have been duly authorized by all
necessary corporate action, and (C) the Subsidiary Note of
such Subsidiary Borrower constitutes a valid and binding
obligation of the Subsidiary Borrower.
Each borrowing by a Subsidiary Borrower shall be deemed to
be a representation and warranty by the Borrower on the date
of such Subsidiary Loan as to the matters specified in
clause (ii)(A), (ii)(B) and (ii) (C) above.
(e) Notices. Notices, requests, demands or
communications to any Subsidiary Borrower shall be delivered
or addressed to the Borrower as provided in Section 8.1(a).
PAGE
SECTION 3
CONDITIONS OF LENDING
The obligation of the Bank to make each Loan hereunder
is subject to the performance by the Borrower of all its
obligations under this Agreement and to the satisfaction of the
following further conditions:
3.1 All Loans. In the case of each Loan hereunder,
including the initial Loan:
(a) receipt by the Bank of the notice from the
Borrower required by Section 2.2 hereof;
(b) the fact that immediately after the making of the
Loan no Default with respect to Sections 6.1(d), 6.6, 6.7,
6.8, 6.9 or 6.10 or Event of Default shall have occurred and
be continuing, except that in the case of any Loan which,
after the application of proceeds thereof, results in no net
increase in the outstanding principal amount of Loans made
by the Bank, the fact that immediately after the making of
the Loan, no Event of Default shall have occurred and be
continuing;
(c) the fact that the representations and warranties
contained in this Agreement shall be true on and as of the
date of the Loan (except, in the case of any Loan which,
after the application of the proceeds thereof, results in no
net increase in the outstanding principal amount of Loans
made by the Bank, the representations and warranties set
forth in Sections 5.4(B) and 5.5 so long as the Borrower has
disclosed to the Bank any matter which would cause any such
representation to be untrue on the date of such Loan); and
(d) receipt by the Bank of such other documents,
evidence, materials and information with respect to the
matters contemplated hereby as the Bank may reasonably
request.
Each borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of such
Loan as to the facts specified in (b) and (c) of this Section.
3.2 Initial Loan. In the case of the initial Loan:
(a) receipt by the Bank of a duly executed Note;
(b) receipt by the Bank of an opinion of counsel to
the Borrower as to the matters referred to in Sections 5.1,
PAGE
5.2, 5.3, 5.5 and 5.8 hereof, and covering such other
matters as the Bank may reasonably request, dated the date
of such Loan, satisfactory in form and substance to the
Bank;
(c) receipt by the Bank of certified copies of all
corporate action taken by the Borrower to authorize the
execution, delivery and performance of this Agreement and
the Note, and the Loans hereunder and such other corporate
documents and other papers as the Bank may reasonably
request;
(d) receipt by the Bank of a certificate of a duly
authorized officer of the Borrower as to the incumbency, and
setting forth a specimen signature, of each of the persons
(i) who has signed this Agreement on behalf of the Borrower;
(ii) who will sign the Note on behalf of the Borrower; and
(iii) who will, until replaced by other persons duly
authorized for that purpose, act as the representatives of
the Borrower for the purpose of signing documents in
connection with this Agreement and the transactions
contemplated hereby; and
(e) receipt by the Bank of a certificate of a duly
authorized officer of the Borrower to the effect set forth
in Sections 3.1(b) and 3.1(c) hereof.
PAGE
SECTION 4
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
4.1 Basis for Determining Interest Rate Inadequate.
If on or prior to the first day of any Interest Period deposits
in Dollars (in the applicable amounts) are not being offered to
the Bank in the relevant market for such Interest Period, the
Bank shall forthwith give notice thereof to the Borrower,
whereupon the obligations of the Bank to make CD Loans or
Eurodollar Loans, as the case may be, shall be suspended until
the Bank notifies the Borrower that the circumstances giving rise
to such suspension no longer exist. Unless the Borrower notifies
the Bank at least two Domestic Business Days before the date of
any Fixed Rate Loan for which a notice of borrowing has
previously been given that it elects not to borrow on such date,
such Loan shall instead be made as a Base Rate Loan or the notice
of borrowing may be withdrawn.
4.2 Illegality. If, after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank (or its
Eurodollar Lending Office) with any request or directive (whether
or not having the force of law) of any such authority, central
bank or comparable agency shall make it unlawful or impossible
for the Bank (or its Eurodollar Lending Office) to make, maintain
or fund its Eurodollar Loans, the Bank shall forthwith so notify
the Borrower, whereupon the Bank's obligation to make Eurodollar
Loans shall be suspended. Before giving any notice to the
Borrower pursuant to this Section 4.2, the Bank will designate a
different Eurodollar Lending Office if such designation will
avoid the need for giving such notice and will not, in the
judgment of the Bank, be otherwise disadvantageous to the Bank.
If the Bank shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Eurodollar Loans to
maturity and shall so specify in such notice, the Borrower shall
immediately prepay in full the then outstanding principal amount
of each such Eurodollar Loan, together with accrued interest
thereon.
4.3 Increased Costs and Reduced Returns.
(a) If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration
thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or
PAGE
administration thereof or compliance by the Bank (or its
Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such
authority, central bank or comparable agency:
(i) shall subject the Bank (or its Applicable Lending
Office) to any tax, duty or other charge with respect
to its obligation to make Fixed Rate Loans, its Fixed
Rate Loans, or its Note, or shall change the basis of
taxation of payments to the Bank (or its Applicable
Lending Office) of the principal of or interest on its
Fixed Rate Loans or in respect of any other amounts due
under this Agreement, in respect of its Fixed Rate
Loans or its obligation to make Fixed Rate Loans,
(except for changes in the rate of tax on the overall
net income of the Bank or its Applicable Lending Office
imposed by the jurisdiction in which the Bank's
principal executive office or Applicable Lending Office
is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement
(including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System, but
excluding (A) with respect to any CD Loan any such
requirement included in an applicable Domestic Reserve
Percentage and (B) with respect to any Eurodollar Loan
any such requirement included in an applicable
Eurodollar Reserve Percentage) against assets of,
deposits with or for the account of, or credit extended
by, the Bank (or its Applicable Lending Office) or
shall impose on the Bank (or its Applicable Lending
Office) or on the United States market for certificates
of deposit or the London interbank market any other
condition affecting its obligation to make Fixed Rate
Loans, its Fixed Rate Loans or its Note;
and the result of any of the foregoing is to increase the
cost to the Bank (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the
amount of any sum received or receivable by the Bank (or its
Applicable Lending Office) under this Agreement or under its
Note with respect thereto, by an amount deemed by the Bank
to be material, then, within 15 days after demand by the
Bank, the Borrower agrees to pay to the Bank such additional
amount or amounts as will compensate the Bank for such
increased cost or reduction.
PAGE
(b) If the Bank shall have determined that
theadoption, after the date hereof, of any applicable law,
rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or
administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
the Bank (or its Applicable Lending Office) with any request
or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank
or comparable agency, has or would have the effect of
reducing the rate of return on the Bank's capital as a
consequence of its obligations hereunder to a level below
that which the Bank could have achieved but for such
adoption, change or compliance (taking into consideration
the Bank's policies with respect to capital adequacy) by an
amount deemed by the Bank to be material, then from time to
time, within 15 days after demand by the Bank, the Borrower
shall pay to such Bank such additional amount or amounts as
will compensate the Bank for such reduction.
(c) The Bank will promptly notify the Borrower of any
event of which it has knowledge, occurring after the date
hereof, which will entitle the Bank to compensation pursuant
to this Section and will designate a different Applicable
Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in
the judgment of the Bank, be otherwise disadvantageous to
the Bank. A certificate by an officer of the Bank claiming
compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder
shall, in the absence of manifest error, constitute prima
facie evidence of such amount. In determining such amount,
the Bank may use any reasonable averaging and attribution
methods.
PAGE
SECTION 5
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Bank
that:
5.1 Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing
under the laws of the State of its incorporation, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
5.2 Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by the
Borrower of this Agreement and the Note are within the Borrower's
corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or
filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of
incorporation or by-laws of the Borrower or of any judgment,
injunction, order, decree, material agreement or other instrument
binding upon the Borrower or result in the creation or imposition
of any Lien on any asset of the Borrower or any of its
Consolidated Subsidiaries.
5.3 Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower and the Notes, when
executed and delivered in accordance with this Agreement, will
constitute a valid and binding obligation of the Borrower.
5.4 Financial Information.
(a) The consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as at December 31, 1994 and
the related consolidated statements of income and retained
earnings and cash flows of the Borrower and its Consolidated
Subsidiaries for the fiscal year then ended, certified by
Price Waterhouse, certified public accountants, and set
forth in the Borrower's most recent Annual Report on Form
10-K, a copy of which has been delivered to the Bank, fairly
present in conformity with generally accepted accounting
principles, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries at such date and
the consolidated results of operations for such fiscal year;
(b) Since December 31, 1994 there has been no material
adverse change in the business, financial position or
results of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
PAGE
5.5 Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower
threatened against, the Borrower or any of its Consolidated
Subsidiaries before any court or arbitrator or any governmental
body, agency or official in which there is a significant
probability of an adverse decision which would materially
adversely affect the business, consolidated financial position or
consolidated results of operations of the Borrower and its
Consolidated Subsidiaries taken as a whole or which in any manner
draws into question the validity of this Agreement or the Notes.
5.6 Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and is
in compliance in all material respects with the presently
applicable provisions of ERISA and the Code except where the
failure to comply would not have a material adverse effect on the
Borrower and its Consolidated Subsidiaries taken as a whole. No
member of the ERISA Group has incurred any unsatisfied material
liability to the PBGC or a Plan under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of
ERISA.
5.7 Taxes. United States Federal income tax returns
of the Borrower and its Consolidated Subsidiaries have been
examined and closed through the fiscal year ended December 31,
1987. The Borrower and its Consolidated Subsidiaries have filed
all United States Federal income tax returns and all other
material tax returns which are required to be filed by them and
have paid all taxes due reported on such returns or pursuant to
any assessment received by the Borrower or any Consolidated
Subsidiary, to the extent that such assessment has become due.
The charges, accruals and reserves on the books of the Borrower
and its Consolidated Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower,
adequate except for those which are being contested in good faith
by the Borrower.
5.8 Subsidiaries. Each of the Borrower's Consolidated
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, all to the
extent material to the Borrower and its Subsidiaries taken as a
whole.
PAGE
SECTION 6
COVENANTS
So long as the Commitment shall be in effect or the
Note is outstanding, the Borrower agrees that:
6.1 Information. The Borrower will deliver to the
Bank:
(a) as soon as available and in any event within 95
days after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such year, and
consolidated statements of income and retained earnings and
statement of cash flows of the Borrower and its Consolidated
Subsidiaries for such year, setting forth in each case in
comparative form the figures for the preceding fiscal year,
all reported on by Price Waterhouse or other independent
certified public accountants of nationally recognized
standing;
(b) as soon as available and in any event within 50
days after the end of each of the first three quarters of
each fiscal year of the Borrower, an unaudited consolidated
balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained
earnings and statement of cash flows of the Borrower and its
Consolidated Subsidiaries for such quarter and for the
portion of the Borrower's fiscal year ended at the end of
such quarter setting forth in each case in comparative form
the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal
year, all certified (subject to changes resulting from
year-end adjustments) as to fairness of presentation, in
conformity with generally accepted accounting principles
(other than as to footnotes) and consistency (except to the
extent of any changes described therein and permitted by
generally accepted accounting principles) by the chief
financial officer or the chief accounting officer of the
Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b)
above, a certificate of the chief financial officer or the
chief accounting officer of the Borrower (i) setting forth
in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements
of Sections 6.6 to 6.8, inclusive, on the date of such
financial statements and (ii) stating whether any Default
has occurred and is continuing on the date of such
certificate and, if any Default then has occurred and is
PAGE
continuing, setting forth the details thereof and the action
which the Borrower is taking or proposes to take with
respect thereto;
(d) within 10 days of the chief executive officer,
chief operating officer, principal financial officer or
principal accounting officer of the Borrower obtaining
knowledge of any event or circumstance known by such person
to constitute a Default, if such Default is then continuing,
a certificate of the principal financial officer or the
principal accounting officer of the Borrower setting forth
the details thereof and within five days thereafter, a
certificate of either of such officers setting forth the
action which the Borrower is taking or proposes to take with
respect thereto;
(e) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so
mailed;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent)
and annual, quarterly or monthly reports which the Borrower
shall have filed with the Securities and Exchange
Commission;
(g) if and when the chief executive officer, chief
operating officer, principal financial officer or principal
accounting officer of the Borrower obtains knowledge that
any member of the ERISA Group (i) has given or is required
to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the
PBGC; (ii) has received notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; or (iii) has
received notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such
notice;
(h) if at any time the value of all "margin stock" (as
defined in Regulation U) owned by the Borrower and its
Consolidated Subsidiaries exceeds (or would, following
application of the proceeds of an intended Loan hereunder,
exceed) 25% of the value of the total assets of the Borrower
PAGE
and its Consolidated Subsidiaries, in each case as
reasonably determined by the Borrower, prompt notice of such
fact; and
(i) from time to time such additional information
regarding the financial position or business of the Borrower
as the Bank may reasonably request;
provided, however, that the Borrower shall be deemed to have
satisfied its obligations under clauses (a) and (b) above if and
to the extent that the Borrower has provided to the Bank pursuant
to clause (f) the periodic reports on Forms 10-Q and 10-K
required to be filed by the Borrower with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, for the quarterly and annual periods described
in such clauses (a) and (b).
6.2 Maintenance of Property; Insurance.
(a) The Borrower will maintain or cause to be
maintained in good repair, working order and condition all
properties used and useful in the business of the Borrower
and each Consolidated Subsidiary and from time to time will
make or cause to be made all appropriate repairs, renewals
and replacement thereof, except where the failure to do so
would not have a material adverse effect on the Borrower and
its Consolidated Subsidiaries taken as a whole.
(b) The Borrower will maintain or cause to be
maintained, for itself and its Consolidated Subsidiaries,
all to the extent material to the Borrower and its
Consolidated Subsidiaries taken as a whole, physical damage
insurance on all real and personal property on an all risks
basis, covering the repair and replacement cost of all such
property and consequential loss coverage for business
interruption and extra expense, public liability insurance
in an amount not less than $10,000,000 and such other
insurance against risks of the kinds customarily insured
against by corporations of established reputation engaged in
the same or similar business and similarly situated, of such
type and in such amounts as are customarily carried under
similar circumstances.
6.3 Conduct of Business and Maintenance of Existence.
The Borrower will continue, and will cause each Consolidated
Subsidiary to continue, to engage predominantly in business of
the same general type as now conducted by the Borrower and its
Consolidated Subsidiaries, and, except as otherwise permitted by
Section 6.10 hereof, will preserve, renew and keep in full force
and effect, and will cause each Consolidated Subsidiary to
preserve, renew and keep in full force and effect their
respective corporate existence and their respective rights and
franchises necessary in the normal conduct of business, all to
the extent material to the Borrower and its Consolidated
Subsidiaries taken as a whole.
6.4 Compliance with Laws. The Borrower will comply,
and cause each Consolidated Subsidiary to comply, in all material
respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities
(including, without limitation, ERISA and the rules and
regulations thereunder and all federal, state and local statutes,
laws or regulations or other governmental restrictions relating
to environmental protection, hazardous substances or the cleanup
or other remediation thereof) except where the necessity of
compliance therewith is contested in good faith by appropriate
proceedings or where the failure to comply would not have a
material adverse effect on the Borrower and its Consolidated
Subsidiaries taken as a whole.
6.5 Inspection of Property, Books and Records.
(a) The Borrower will keep, and will cause each
Consolidated Subsidiary to keep, proper books of record and
account in accordance with sound business practice so as to
permit its financial statements to be prepared in accordance
with generally accepted accounting principles; and will
permit representatives of the Bank at the Bank's expense to
visit and inspect any of the Borrower's properties, to
examine and make abstracts from any of the Borrower's
corporate books and financial records and to discuss the
Borrower's affairs, finances and accounts with the principal
officers of the Borrower and its independent public
accountants, all at such reasonable times and as often as
may reasonably be necessary to ensure compliance by the
Borrower with its obligations hereunder.
(b) With the consent of the Borrower (which consent
will not be unreasonably withheld) or, if an Event of
Default has occurred and is continuing, without the
requirement of any such consent, the Borrower will permit
representatives of the Bank, at the Bank's expense, to visit
and inspect any of the properties of and to examine the
corporate books and financial records of any Consolidated
Subsidiary and make copies thereof or extracts therefrom and
to discuss the affairs, finances and accounts of such
Consolidated Subsidiary with its and the Borrower's
principal officers and the Borrower's independent public
accountants, all at such reasonable times and as often as
the Bank may reasonably request.
6.6 Cash Flow to Total Borrowed Funds. The ratio of
Cash Flow to Total Borrowed Funds shall not be less than .30 for
any consecutive four quarters, such ratio to be calculated at the
end of each quarter on a trailing four quarter basis.
6.7 Total Borrowed Funds to Consolidated Net Worth.
Total Borrowed Funds will not exceed 85% of Consolidated Net
Worth at end of any quarter of any fiscal year.
6.8 Minimum Consolidated Net Worth. Consolidated Net
Worth will at no time be less than $550,000,000 plus 25% of the
consolidated net income of the Borrower at the end of each fiscal
quarter for each fiscal year commencing after the fiscal year
ending December 31, 1994.
6.9 Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist
any Lien on any asset now owned or hereafter acquired by it,
except for:
(a) Liens existing on the date hereof;
(b) any Lien existing on any asset of any corporation
at the time such corporation becomes a Consolidated
Subsidiary and not created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the
cost of acquiring such asset, provided that such Lien
attaches to such asset concurrently with or within 90 days
after the acquisition thereof;
(d) any Lien on any asset of any corporation existing
at the time such corporation is merged into or consolidated
with the Borrower or a Consolidated Subsidiary and not
created in contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Consolidated
Subsidiary and not created in contemplation of such
acquisition;
(f) any Lien created in connection with capitalized
lease obligations, but only to the extent that such Lien
encumbers property financed by such capital lease obligation
and the principal component of such capitalized lease
obligation is not increased;
(g) Liens arising in the ordinary course of its
business which (i) do not secure Debt and (ii) do not in the
aggregate materially impair the operation of the business of
the Borrower and its Consolidated Subsidiaries, taken as a
whole;
(h) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any
Lien permitted by any of the foregoing clauses of this
Section, provided that such Debt is not increased and is not
secured by any additional assets;
(i) Liens securing taxes, assessments, fees or other
governmental charges or levies, Liens securing the claims of
materialmen, mechanics, carriers, landlords, warehousemen
and similar Persons, Liens incurred in the ordinary course
of business in connection with workmen's compensation,
unemployment insurance and other similar laws, Liens to
secure surety, appeal and performance bonds and other
similar obligations not incurred in connection with the
PAGE
borrowing of money, and attachment, judgment and other
similar Liens arising in connection with court proceedings
so long as the enforcement of such Liens is effectively
stayed and the claims secured thereby are being contested in
good faith by appropriate proceedings;
(j) Liens not otherwise permitted by the foregoing
clauses of this Section securing Debt in an aggregate
principal amount at any time outstanding not to exceed 10%
of Consolidated Net Worth;
(k) any Liens on any asset of Quest & Associates,
Inc., a Subsidiary of Borrower, created in connection with
the August 1995 investment by Quest & Associates, Inc. in a
portfolio of computer equipment leases; and
(l) any Liens on property arising in connection with a
securities repurchase transaction.
6.10 Consolidations, Mergers and Sales of Assets. The
Borrower will not (i) consolidate or merge with or into any other
Person (other than a Subsidiary of the Borrower) unless the
Borrower's shareholders immediately before the merger or
consolidation are to own more than 70% of the combined voting
power of the resulting entity's voting securities or (ii) sell,
lease or otherwise transfer all or substantially all of the
Borrower's business or assets to any other Person (other than a
Subsidiary of the Borrower). The Borrower will not permit any
Significant Subsidiary or (in a series of related transactions)
any significant Group of Subsidiaries to consolidate with, merge
with or into or transfer all of any substantial part of its
assets to any Person other than the Borrower or a Subsidiary of
the Borrower.
6.11 Use of Proceeds. The proceeds of the Loans will
be used for general corporate purposes, including the making of
acquisitions. No part of the proceeds of any Loan hereunder will
be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate of buying or carrying any
"Margin stock" in violation of Regulation U. If requested by the
Bank, the Borrower will furnish to the Bank in connection with
any Loan hereunder a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in
Regulation U.
PAGE
SECTION 7
EVENTS OF DEFAULT
7.1 Events of Default. If any one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
(a) the Borrower shall fail to pay (i) any principal
of any Loan when due or (ii) interest on any Loan or any
commitment fee within four days after the same has become
due; or
(b) any Subsidiary Borrower shall fail to pay any
principal of or interest on any Subsidiary Loan when due and
such failure shall not be remedied by such Subsidiary
Borrower or the Borrower within four Domestic Business Days
after written notice thereof has been given to such
Subsidiary Borrower and the Borrower by the Bank; or
(c) the Borrower shall fail to observe or perform any
covenant contained in Section 6.1(d) or Sections 6.6 to 6.8
or 6.10 hereof; or
(d) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other
than those covered by clause (a) or (c) above) for 30 days
after written notice thereof has been given to the Borrower
by the Bank; or
(e) any representation, warranty or certification made
by the Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to
this Agreement shall prove to have been incorrect in any
material respect upon the date when made or deemed made; or
(f) (1) the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries defaults in any payment at
any stated maturity of principal of or interest on any other
obligation for money borrowed (or any capitalized lease
obligation, any obligation under a purchase money mortgage,
conditional sale or other title retention agreement or any
obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of
grace provided with respect thereto or (2) the Borrower or
any Significant Subsidiary or Significant Group of
Subsidiaries defaults in any payment other than at any
stated maturity of principal of or interest on any other
obligation for money borrowed (or any capitalized lease
obligation, any obligation under a purchase money mortgage,
conditional sale or other title retention agreement or any
obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of
grace provided with respect thereto, or the Borrower or any
Significant Subsidiary or Significant Group of Subsidiaries
fails to perform or observe any other agreement, term or
PAGE
condition contained in any agreement under which any such
obligation is created (or if any other event thereunder or
under any such agreement shall occur and be continuing), and
the effect of such default with respect to a payment other
than at any stated maturity, failure or other event is to
cause, or to permit the holder or holders of such obligation
(or a trustee on behalf of such holder or holders) to cause,
such obligation to become due or to require the purchase
thereof prior to any stated maturity; provided that the
aggregate amount of all obligations as to which any such
payment defaults (whether or not at stated maturity),
failures or other events shall have occurred and be
continuing exceeds $10,000,000 and provided, further, that
it is understood that the obligations referred to herein
exclude those obligations arising in connection with
securities repurchase transactions; or
(g) the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries shall commence a voluntary
case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under
any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
or
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or any Significant Subsidiary
or Significant Group of Subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an
order for relief shall be entered against the Borrower or
any Significant Subsidiary or Significant Group of
Subsidiaries under the federal bankruptcy laws as now or
hereafter in effect; or
(i) any member of the ERISA Group shall fail to pay
when due any amount or amounts aggregating in excess of
$1,000,000 which it shall have become liable to pay to the
PBGC or to a Plan under Title IV of ERISA (except where such
liability is contested in good faith by appropriate
PAGE
proceedings as permitted under Section 6.4); or notice of
intent to terminate a Material Plan (other than any multiple
employer plan within the meaning of Section 4063 of ERISA)
shall be filed under Title IV of ERISA by any member of the
ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability (other
than for premiums under Section 4007 of ERISA) in respect
of, or to cause a trustee to be appointed to administer any
such Material Plan; or
(j) judgments or orders for the payment of money in
excess of $10,000,000 in the aggregate shall be rendered
against the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries and such judgments or
orders shall continue unsatisfied and unstayed for a period
of 60 days; or
(k) any person or group of persons (within the meaning
of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")), other than the Borrower
or any of its Subsidiaries, becomes the beneficial owner
(within the meaning of Rule 13d-3 under the 1934 Act) of 30%
or more of the combined voting power of the Borrower's then
outstanding voting securities; or a tender offer or exchange
offer (other than an offer by the Borrower or a Subsidiary)
pursuant to which 30% or more of the combined voting power
of the Borrower's then outstanding voting securities was
purchased, expires; or during any period of two consecutive
years, individuals who, at the beginning of such period,
constituted the Board of Directors of the Borrower cease for
any reason to constitute at least a majority thereof, unless
the election or the nomination for the election by the
Borrower's stockholders of each new director was approved by
a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period;
then, and in every such event, (1) in the case of any of the
Events of Default specified in paragraphs (g) or (h) above, the
Commitment shall thereupon automatically be terminated and the
principal of and accrued interest on the Note shall automatically
become due and payable without presentment, demand, protest or
other notice or formality of any kind, all of which are hereby
expressly waived and (2) in the case of any other Event of
Default specified above, the Bank may, by notice in writing to
the Borrower, terminate the Commitment hereunder, if still in
existence, and it shall thereupon be terminated, and the Bank
may, by notice in writing to the Borrower, declare the Note and
all other sums payable under this Agreement to be, and the same
shall thereupon forthwith become, due and payable without
presentment, demand, protest or other notice or formality of any
kind, all of which are hereby expressly waived.
PAGE
SECTION 8
MISCELLANEOUS
8.1 Notices. Unless otherwise specified herein all
notices, requests, demands or other communications to or from the
parties hereto shall be sent by United States mail, certified,
return receipt requested, telegram, telex or facsimile, and shall
be deemed to have been duly given upon receipt thereof. In the
case of a telex, receipt of such communication shall be deemed to
occur when the sender receives its answer back. In the case of a
facsimile, receipt of such communication shall be deemed to occur
when the sender confirms such receipt by telephone. Any such
notice, request, demand or communication shall be delivered or
addressed as follows:
(a ) if to the Borrower, to it at 1271 Avenue of the
Americas, New York, New York 10020; Attention: Vice
President and Treasurer (with a copy at the same address to
the Senior Vice President and General Counsel);
(b) if to the Bank, communications relating to its
Eurodollar Loans (including without limitation any Sterling
Loans) shall be delivered or addressed to the address or
telex number set forth on the signature pages hereof for its
Eurodollar Lending Office and all other communications shall
be delivered or addressed to the address or telex number set
forth on the signature pages hereof for its Domestic Lending
Office;
or at such other address or telex number as any party hereto may
designate by written notice to the other party hereto.
8.2 Amendments and Waivers; Cumulative Remedies.
(a) None of the terms of this Agreement may be waived,
altered or amended except by an instrument in writing duly
executed by the Borrower and the Bank.
(b) No failure or delay by the Bank in exercising any
right, power or privilege hereunder or under the Note shall
operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies provided herein shall be
cumulative and not exclusive of any rights or remedies
provided by law.
8.3 Successors and Assigns.
(a) The provisions of this Agreement shall be binding
upon and shall inure to the benefit of the Borrower and the
Bank, except that the Borrower may not assign or otherwise
transfer any of its rights and obligations under this
Agreement except as provided in Section 2.15 and Section
6.10 hereof, without the prior written consent of the Bank
which the Bank shall not unreasonably delay or withhold.
PAGE
(b) The Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of
its Loans. In the event of any such grant by the Bank of a
participating interest to a Participant, whether or not upon
notice to the Borrower the Bank shall remain responsible for
the performance of its obligations hereunder, and the
Borrower shall continue to deal solely and directly with the
Bank in connection with the Bank's rights and obligations
under this Agreement. Any agreement pursuant to which the
Bank may grant such a participating interest shall provide
that the Bank shall retain the sole right and responsibility
to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may
provide that the Bank will not agree to any modification,
amendment or waiver of this Agreement (i) which increases or
decreases the Commitment of the Bank (ii) reduces the
principal of or rate of interest on any Loan or fees
hereunder or (iii) postpones the date fixed for any payment
of principal of or interest on any Loan or any fees
hereunder without the consent of the Participant. The
Borrower agrees that each Participant shall be entitled to
the benefits of Sections 2.12 and 4 with respect to its
participating interest.
(c) The Bank may at any time assign all or any portion
of its rights under this Agreement and the Note or Notes to
a Federal Reserve Bank. No such assignment shall release
the Bank from its obligations hereunder.
(d) No Participant or other transferee of the Bank's
rights shall be entitled to receive any greater payment
under Sections 2.12, 4.1 through 4.3 or 8.5 than the Bank
would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the
provisions of Section 4.3(c) or 8.5(c) requiring the Bank to
designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
8.4 Expenses; Documentary Taxes; Indemnification.
(a) The Borrower shall pay (i) all out-of-pocket
expenses and internal charges of the Bank (including
reasonable fees and disbursements of counsel) in connection
with any Default hereunder and (ii) if there is an Event of
Default, all out-of-pocket expenses incurred by the Bank
(including reasonable fees and disbursements of counsel) in
connection with such Event of Default and collection and
other enforcement proceedings resulting therefrom. The
PAGE
Borrower shall indemnify the Bank against any transfer
taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and
delivery of this Agreement or the Note.
(b) The Borrower agrees to indemnify the Bank and hold
the Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including,
without limitation, the reasonable fees and disbursements of
counsel for the Bank in connection with any investigative,
administrative or judicial proceeding, whether or not the
Bank shall be designated a party thereto) which may be
incurred by the Bank relating to or arising out of any
actual or proposed use of proceeds of Loans hereunder or any
merger or acquisition involving the Borrower; provided, that
the Bank shall not have the right to be indemnified
hereunder for its own gross negligence or willful misconduct
as determined by a court of competent jurisdiction.
8.5 Withholding Taxes.
(a) With respect to any Loan as to which the Bank's
Applicable Lending Office is located outside the United
States, all payments by the Borrower to the Bank under this
Agreement are to be made free and clear of any and all
taxes, duties, imposts, fees, withholdings or deductions
(the "Deductions") of any nature now or hereafter imposed by
the United States of America or any political subdivision or
taxing authority thereof or therein. If any Deduction is,
by law, required to be made from any payment hereunder, then
the Borrower shall (i) made such Deduction, (ii) pay the
amount of such Deduction to the relevant taxing authority
and (iii) pay to the Bank such additional amount as will
result in receipt by the Bank of a net amount equal to the
amount the Bank would have received hereunder had no such
Deduction been required, provided that the Borrower shall
not be required to pay any such additional amount (A) in
respect of any tax imposed on the net income of the Bank by
the jurisdiction under the laws of which the Bank is
organized or where its principal place of business or
Applicable Lending Office is located, or any political
subdivision or taxing authority thereof or therein, or (B)
to the extent such Deduction is required as a result of the
Bank's failure to comply with its obligations pursuant to
Section 8.5(b) hereof. In the event such Deduction is so
required to be made from any payment hereunder, the Borrower
shall, as soon as practicable, deliver to the Bank any
receipts issued by the relevant taxing authority evidencing
the amount of such Deduction and its payment.
(b) The Bank agrees to complete and deliver to the
Borrower, prior to the date on which the first payment to
the Bank is due under any Loan made hereunder and (so long
PAGE
as it remains eligible to do so) from time to time
thereafter, (i) with respect to any Loan as to which the
Bank's Applicable Lending Office is located outside the
United States, an Internal Revenue Service Form 1001
certifying that it is entitled to benefits under an income
tax treaty to which the United States is a party that
reduces the rate of withholding tax on payments of interest
to zero or (ii) with respect to any Loan as to which the
Bank's Applicable Lending Office is located in the United
States, an Internal Revenue Service Form 4224 in duplicate
certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a
trade or business in the United States. The Bank further
agrees to complete and deliver to the Borrower from time to
time, so long as it is eligible to do so, any successor or
additional form required by the Internal Revenue Service in
order to secure an exemption from, or reduction in the rate
of, U.S. withholding tax.
(c) The Bank agrees that if the Borrower is required
to pay any additional amounts pursuant to Section 8.5(a)
hereof in respect of any Loan, the Bank will, upon the
request of the Borrower, designate a different Applicable
Lending Office if such designation will reduce the amount of
the Deductions required to be made by the Borrower and will
not otherwise be materially disadvantageous to the Bank.
8.6 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument.
8.7 Headings; Table of Contents. The section and
subsection headings used herein and the Table of Contents have
been inserted for convenience of reference only and do not
constitute matters to be considered in interpreting this
Agreement.
8.8 Governing Law. This Agreement and the Note shall
be construed in accordance with and governed by the law of the
State of New York.
PAGE
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of July 3, 1995.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: ALAN M. FORSTER
Title: Vice President & Treasurer
LLOYDS BANK Plc
By: THEODORE WALSER
Title: Senior Vice President
By: STEPHEN J. ATTREE
Title: Assistant Vice Presient
Domestic Lending Office
Lloyds Bank
One Seaport Plaza
199 Water Street
New York, New York 10038
Attn.: Ms. Patricia Kilian
Tel #: 212-607-4501
Fax #: 212-607-4999
Fed Wire: ABA #021001033
Acct.: Lloyds Bank Plc
c/o Bankers Trust
One Bankers Trust Plaza
New York, New York 10006
Acct. No.: 042-009-15
Eurodollar Lending Office
Lloyds Bank Plc
Bank House
Wine Street
Bristol BS1 2AN
England
Attn.: Mr. Ted Roylance
Tel #: (0117) 923-3346
Fax #: (0117) 923-3317
Fed Wire: 30-15-57
Acct.: Loans Administration Dept.
Acct. No. 00002727
PAGE
EXHIBIT A
NOTE
_____________, 1995
New York, New York
FOR VALUE RECEIVED, THE INTERPUBLIC GROUP OF COMPANIES,
INC., a Delaware corporation (the "Borrower"), hereby promises to
pay to the order of LLOYDS BANK Plc (the "Bank"), for the account
of its Applicable Lending Office, the unpaid principal amount of
each Loan made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below on the last day of the Interest
Period relating to such Loan. The Borrower promises to pay
interest on the unpaid principal amount of each such Loan on the
dates and at the rate or rates provided for in the Credit
Agreement.
All such payments of principal and interest shall be
made in lawful money of the United States of America in Federal
or other immediately available funds at the office of the Bank
located at ___________________________________.
All Loans made by the Bank, the respective maturities
thereof and all repayments of the principal thereof shall be
recorded by the Bank and, prior to any transfer hereof, endorsed
by the Bank on the schedule attached hereto, or on a continuation
of such schedule attached to and made a part hereof; provided
that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is the Note referred to in the Credit
Agreement dated as of July 3, 1995 between the Borrower and the
Bank (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit
Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: ______________________________
Title:____________________________
PAGE
LOANS AND PAYMENTS OF PRINCIPAL
Amount of
Amount Type Principal Maturity Notation
Date of Loan of Loan Repaid Date Made By
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
PAGE
EXHIBIT B
MONEY MARKET NOTE
_____________, 1995
New York, New York
FOR VALUE RECEIVED, THE INTERPUBLIC GROUP OF COMPANIES,
INC., a Delaware corporation (the "Borrower"), hereby promises to
pay to the order of LLOYDS BANK Plc (the "Bank"), for the account
of its Domestic Lending Office, Money Market Rate Loans made by
the Bank to the Borrower pursuant to the Credit Agreement
referred to below upon such terms and conditions as may be agreed
upon pursuant to said Credit Agreement. The Borrower promises to
pay interest on the unpaid principal amount of each such Loan on
the dates and at the rate or rates provided for in the Credit
Agreement.
All such payments of principal and interest shall be
made in lawful money of the United States of America in Federal
or other immediately available funds at the office of the Bank
located at _________________________.
All Money Market Loans made by the Bank, the respective
maturities thereof and all repayments of the principal thereof
shall be recorded by the Bank and, prior to any transfer hereof,
endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof;
provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of
the Borrower hereunder or under the Credit Agreement.
This note is one of the Money Market Notes referred to
in the Credit Agreement dated as of July 3, 1995, between the
Borrower and the Bank (as the same may be amended from time to
time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is
made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: ________________________________
Title: _____________________________
PAGE
LOANS AND PAYMENTS OF PRINCIPAL
Amount of
Amount Type Principal Maturity Notation
Date of Loan of Loan Repaid Date Made By
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
PAGE
EXHIBIT C
NOTE
_____________, 1995
New York, New York
FOR VALUE RECEIVED, [name of Subsidiary Borrower] a
__________ corporation (the "Subsidiary Borrower"), hereby
promises to pay to the order of LLOYDS BANK Plc (the "Bank"), for
the account of its Applicable Lending Office, the unpaid
principal amount of each Subsidiary Loan made by the Bank to the
Subsidiary Borrower pursuant to Section 2.15 of the Credit
Agreement referred to below on the last day of the Interest
Period relating to such Subsidiary Loan. The Subsidiary Borrower
promises to pay interest on the unpaid principal amount of each
such Subsidiary Loan on the dates and at the rate or rates
provided for in the Credit Agreement.
All such payments of principal and interest shall be
made in lawful money of the United States of America in Federal
or other immediately available funds at the office of the Bank
located at ___________________________________.
All Subsidiary Loans made by the Bank, the respective
maturities thereof and all repayments of the principal thereof
shall be recorded by the Bank and, prior to any transfer hereof,
endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof;
provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of
the Subsidiary Borrower hereunder or under the Credit Agreement.
This note is the Subsidiary Note referred to in Section
2.15 of the Credit Agreement dated as of July 3, 1995 between The
Interpublic Group of Companies, Inc. and the Bank (as the same
may be amended from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the
maturity hereof.
[SUBSIDIARY BORROWER]
By: ________________________________
Title: _______________________________
PAGE
GUARANTY
The Interpublic Group of Companies, Inc. (the
"Guarantor") hereby unconditionally guarantees to the Bank the
due and punctual payment of the principal of, and interest on,
the Note upon which this Guaranty is endorsed (the "Note"). The
foregoing is an absolute, continuing and irrevocable guaranty of
payment and not of collectibility or performance. The Guarantor
hereby waives diligence, presentment and demand of payment
(except as provided in the Credit Agreement) and covenants that
this Guaranty will not be discharged except by payment as herein
provided. Until all amounts of principal of, and interest on,
the Note have been paid or otherwise satisfied in full, the
Guarantor will not exercise any rights that it may have acquired
by way of subrogation under this Guaranty, by any payment made
hereunder or otherwise, or accept any payment on account of such
subrogation rights. If any payment (or part thereof) of the
principal of, or interest on, the Note is rescinded or must
otherwise be returned by the Bank upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the
primary obligor under the Note, this Guaranty shall continue to
be effective, or be reinstated, as to said payment (or part
thereof) as if such payment (or part thereof) had not been made.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: ________________________________
Title: _____________________________
CREDIT AGREEMENT
BETWEEN
INTERPUBLIC GROUP OF COMPANIES, INC.
AND
NBD BANK
__________________________
US$25,000,000
___________________________
Dated as of December 21, 1995
PAGE
TABLE OF CONTENTS
SECTION PAGE
SECTION 1
INTERPRETATIONS AND DEFINITIONS
1.1 Definitions 1
1.2 Accounting Terms and Determinations 5
SECTION 2
TERMS OF THE LOAN
2.1 Commitment of the Bank 6
2.2 Termination and Reduction of Commitment 6
2.3 Disbursement of Term Loan 6
2.4 Principal Payments 6
2.5 Interest Rates 7
2.6 Payment Methods 7
2.7 No Setoff or Deduction 8
2.8 Payment on Non-Business Day; Payment Computations 8
2.9 Indemnification 8
2.10 Additional Costs 9
SECTION 3
CONDITIONS OF LENDING
3.1 Conditions of Lending 11
SECTION 4
REPRESENTATIONS AND WARRANTIES
4.1 Corporate Existence and Power 12
4.2 Corporate and Governmental Authorization:
Contravention 12
4.3 Binding Effect 12
4.4 Financial Information 12
4.5 Litigation 13
4.6 Compliance with ERISA 13
4.7 Taxes 13
4.8 Subsidiaries 13
PAGE
SECTION 5
COVENANTS
5.1 Information 14
5.2 Maintenance of Property; Insurance 16
5.3 Conduct of Business and Maintenance of Existence 16
5.4 Compliance with Laws 16
5.5 Inspection of Property, Books and Records 17
5.6 Cash Flow to Total Borrowed Funds 17
5.7 Total Borrowed Funds to Consolidated Net Worth 17
5.8 Minimum Consolidated Net Worth 17
5.9 Negative Pledge 18
5.10 Consolidations, Mergers and Sales of Asset 19
5.11 Use of Proceeds 19
SECTION 6
EVENTS OF DEFAULT
6.1 Events of Default 20
SECTION 7
MISCELLANEOUS
7.1 Notices 23
7.2 Amendments and Waivers; Cumulative Remedies 23
7.3 Successors and Assigns 23
7.4 Expenses; Documentary Taxes; Indemnification 24
7.5 Counterparts 25
7.6 Headings; Table of Contents 25
7.7 Governing Law 25
PAGE
CREDIT AGREEMENT
AGREEMENT dated as of December 21, 1995 between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a Delaware corporation (the "Borrower"),
and NBD BANK, a Michigan banking corporation (the "Bank").
SECTION 1
INTERPRETATIONS AND DEFINITIONS
1.1 Definitions. The following terms, as used herein, shall
have the following respective meanings:
"Benefit Arrangement" means, at any time, an employee
benefit plan within the meaning of Section 3(3) of ERISA which
is not a Plan or a Multiemployer Plan and which is maintained
or otherwise contributed to by any member of the ERISA Group.
"Business Day" means a day other than a Saturday, Sunday
or other day on which the Bank is not open to the public for
carrying on substantially all of its banking functions.
"Cash Flow" means the sum of net income of the Borrower
and its Consolidated Subsidiaries (plus any amount by which
net income has been reduced by reason of the recognition of
post-retirement and post-employment benefit costs prior to the
period in which such benefits are paid), depreciation
expenses, amortization costs and changes in deferred taxes,
provided that such sum shall not be adjusted for any increase
or decrease in deferred taxes resulting from Quest &
Associates, Inc., a Subsidiary of the Borrower, investing in
a portfolio of computer equipment leases (it being further
understood that such increase or decrease in deferred taxes
relating to such investment shall not exceed $25,000,000).
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto.
"Commitment" means the commitment of the Bank to make the
Term Loan pursuant to Section 2.1 in the principal amount of
$25,000,000.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Borrower in its consolidated
financial statements as of such date.
"Consolidated Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries as such appear on the financial
statements of the Borrower determined in accordance with
PAGE
generally accepted accounting principles (plus any amount by
which retained earnings has been reduced by reason of the
recognition of post-retirement and post-employment benefit
costs prior to the period in which such benefits are paid and
without taking into account the effect of cumulative currency
translation adjustments).
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, including reimbursement obligations for letters of
credit, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under capital leases, (v)
all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person,
and (vi) all Debt of others Guaranteed by such Person, but in
each case specified in (i) through (vi) excludes obligations
arising in connection with securities repurchase transactions.
"Default" means any condition or event which constitutes
an Event of Default or which with the giving of notice or
lapse of time, or both, would become an Event of Default.
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Group" means the Borrower and all members of a
controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which,
together with the Borrower, are treated as a single employer
under Section 414(b) or (c) of the Code.
"Event of Default" has the meaning set forth in Section
6 hereof.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, to maintain financial statement
PAGE
conditions or otherwise) or (ii) entered into for the purpose
of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Interest Payment Date" means subject to Section 2.4
hereof, the last day of each March, June, September and
December occurring after the date hereof, commencing with the
first such day occurring after the date of this Agreement,
except that an adjustment will be made if any Interest Payment
Date would otherwise fall on a day that is not a New York
Banking Day and a London Banking Day so that the Interest
Payment Date will be the first following day that is a New
York Banking Day and a London Banking Day, unless that day
falls in the next calender month, in which case the Interest
Payment Date will be the first preceding day that is a New
York Banking Day and a London Banking Day.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or other encumbrance
of any kind in respect of such asset. For purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"London Banking Day" means any day in which dealings and
deposits in U.S. dollars are transacted in the London
interbank market.
"Material Plan" means at any time a Plan or Plans having
aggregate unfunded benefit liabilities (within the meaning of
Section 4001(a)(18) of ERISA) in excess of $25,000,000.
"Maturity Date" means the Interest Payment Date occurring
on December 21, 2002.
"Multiemployer Plan" means at any time an employee
pension benefit plan that is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years
made contributions, including for these purposes any Person
which ceased to be a member of the ERISA Group during such
five year period.
PAGE
"New York Banking Day" means any day other than a
Saturday, a Sunday or a day on which commercial banks in New
York City are required or authorized to be closed.
"Overdue Rate" means a rate per annum that is equal to
the sum of three percent (3%) per annum plus the per annum
rate in effect under the Term Note.
"PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under
ERISA.
"Participant" has the meaning set forth in Section 7.3.
"Person" means an individual, a corporation, a
partnership, an association, a business trust or any other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time a defined benefit pension plan
(other than a Multiemployer Plan) which is covered by Title IV
of ERISA or subject to the minimum funding standards-under
Section 412 of the Code and either (i) is maintained, or
contributed to, by any member of the ERISA Group for employees
of any member of the ERISA Group or (ii) has at any time
within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member
of the ERISA Group for employees of any Person which was at
such time a member of the ERISA Group.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Significant Subsidiary" or "Significant Group of
Subsidiaries" at any time of determination means any
Consolidated Subsidiary or group of Consolidated Subsidiaries,
respectively, which, individually or in the aggregate,
together with its or their Subsidiaries, accounts or account
for more than 10% of the consolidated gross revenues of the
Borrower and its Consolidated Subsidiaries for the most
recently ended fiscal year or for more than 10% of the total
assets of the Borrower and its Consolidated Subsidiaries as of
the end of such fiscal year; provided that in connection with
any determination with respect to a Significant Group of
Subsidiaries under (x) Section 6.1.(e), there shall be a
payment default, failure or other event (of the type described
therein but without regard to the principal amount of such
obligation) of each Consolidated Subsidiary included in such
group, (y) Sections 6.1.(f) and (g) and the last sentence of
Section 5.10, the condition or event described therein shall
PAGE
exist with respect to each Consolidated Subsidiary included in
such group or (z) Section 6.1.(i), there shall be a final
judgment (of the type specified therein but without regard to
the amount of such judgment) rendered against each
Consolidated Subsidiary included in such group.
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions is at the time
directly or indirectly owned by the Borrower.
"Term Loan" means the borrowing under Section 2.3
evidenced by the Term Note and made pursuant to Section 2.1.
"Term Note" means any promissory note of the Borrower
evidencing the Term Loan, in substantially the form annexed
hereto as Exhibit A, as amended or modified from time to time
and together with any promissory note or notes issued in
exchange or replacement therefor.
"Total Borrowed Funds" means at any date, without
duplication, (i) all outstanding obligations of the Borrower
and its Consolidated Subsidiaries for borrowed money, (ii) all
outstanding obligations of the Borrower and its Consolidated
Subsidiaries evidenced by bonds, debentures, notes or similar
instruments and (iii) any outstanding obligations of the type
set forth in (i) or (ii) of any other Person Guaranteed by the
Borrower and its Consolidated Subsidiaries, it being
understood that the obligation to repurchase securities
transferred pursuant to a securities repurchase agreement
shall not be deemed to give rise to any amount of Total
Borrowed Funds pursuant to this definition.
1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder,
shall be prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Bank.
PAGE
SECTION 2
TERMS OF THE LOANS
2.1 Commitment of the Bank. The Bank agrees, subject to
the terms and conditions of this Agreement, to make a single
Term Loan to the Borrower, and the Borrower agrees to borrow
such Term Loan from the Bank, on December 21, 1995, in the
principal amount of $25,000,000.
2.2 Termination and Reduction of Commitment. Neither
the Borrower nor the Bank shall have the right to terminate or
reduce the Commitment.
2.3 Disbursement of Term Loan. (a) Subject to the terms
and conditions of this Agreement, the proceeds of the Term
Loan shall be made available to the Borrower by depositing the
proceeds thereof, in immediately available funds, in an
account maintained and designated by the Borrower at the Bank
or by wire transfer or otherwise as requested by the Borrower.
(b) The Term Loan made under this Section 2.3 shall be
evidenced by the Term Note, and the Term Loan shall be due and
payable and bear interest as provided in Sections 2.4 and 2.5.
The Bank is hereby authorized by the Borrower to record on the
schedule attached to the Term Note, or in its books and
records, the amount of each payment of principal thereon, and
the other information provided for on such schedule, which
schedule or books and records, as the case may be, shall
constitute prima facie evidence of the information so
recorded, provided, however, that failure of the Bank to
record, or any error in recording, any such information shall
not relieve the Borrower of its obligation to repay the
outstanding principal amount of the Term Loan, all accrued
interest thereon and other amounts payable with respect
thereto in accordance with the terms of this Agreement.
2.4. Principal Payments.
(a) Unless earlier payment is required under this
Agreement pursuant to Section 6.1, the Borrower shall pay to
the Bank the outstanding principal amount of the Term Loan in
the amount of $25,000,000 on the Maturity Date, when the
entire outstanding principal amount of, and accrued interest
on, the Term Loan shall be due and payable.
(b) The Borrower may prepay all (but not less than all)
of the outstanding principal amount of the Term Loan, on any
Interest Payment Date provided, that the Borrower shall have
paid to the Bank, together with such prepayment of principal,
all accrued interest on the principal amount prepaid to the
PAGE
date of prepayment and the amount, if any, of the prepayment
indemnity determined pursuant to Section 2.9 to be payable to
the Bank. The Borrower shall give the Bank not more than ten,
and not less than five, London Banking Days' notice of any
proposed prepayment specifying the prepayment date and the
person or persons authorized to notify the Bank of acceptance
of the terms of prepayment referred to in the next succeeding
sentence. The Bank shall provide oral notice to a person so
specified by the Borrower on the second London Banking Day
prior to the proposed prepayment date of the amount, if any,
of the prepayment indemnity which shall be paid in connection
with such proposed prepayment by the Borrower or the Bank, as
the case may be, pursuant to Section 2.9. At the time of such
oral notice, such person shall state whether the Borrower
elects to make such proposed prepayment on such terms. If the
Borrower so elects to make such prepayment, the notice of
prepayment given by the Borrower shall be irrevocable and the
entire outstanding principal amount of the Term Loan, together
with such accrued interest and any such additional sum payable
pursuant to Section 2.9, shall become due and payable on the
specified prepayment date. The Bank may, but shall not be
obligated to, provide written confirmation of such election to
the Borrower, but any failure of the Bank to provide such
confirmation shall not affect the obligation of the Borrower
to make such prepayment on the agreed terms.
2.5 Interest Payments. The Borrower shall pay interest
to the Bank on the unpaid principal amount of the Term Loan,
for the period commencing on the date such Term Loan is made
until such Term Loan is paid in full, on each Interest Payment
Date and at maturity (whether at stated maturity, by
acceleration or otherwise), at the per annum rate of six and
forty-five one-hundredths percent (6.45%). Notwithstanding
the foregoing, the Borrower shall pay interest on demand at
the Overdue Rate on the outstanding principal amount of the
Term Loan and any other amount payable by the Borrower
hereunder (other than interest) which is not paid in full when
due (whether at stated maturity, by acceleration or otherwise)
for the period commencing on the due date thereof until the
same is paid in full.
2.6 Payment Method. (a) All payments to be made by the
Borrower hereunder will be made in Dollars and in immediately
available funds to the Bank at its address set forth in
Section 7.1 not later than 3:00 p.m. Detroit time on the date
on which such payment shall become due. Payments received
after 3:00 p.m. Detroit time shall be deemed to be payments
made prior to 3:00 p.m. Detroit time on the next succeeding
Business Day.
(b) At the time of making each such payment, the
PAGE
Borrower shall, subject to the other terms and conditions of
this Agreement, specify to the Bank that obligation of the
Borrower hereunder to which such payment is to be applied. In
the event that the Borrower fails to so specify the relevant
obligation or if an Event of Default shall have occurred and
be continuing, the Bank may apply such payments as it may
determine in its sole discretion to obligations of the
Borrower to the Bank arising under this Agreement.
2.7 No Setoff or Deduction. All payments of principal
and interest on the Term Note and other amounts payable by the
Borrower hereunder shall be made by the Borrower without
setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or
future taxes, levies, imposts, duties, fees, or assessments
imposed by any governmental authority, or by any department,
agency or other political subdivision or taxing authority.
2.8 Payment on Non-Business Day; Payment Computations.
Except as otherwise provided in this Agreement to the
contrary, whenever any interest on the Term Loan or any other
amount due hereunder becomes due and payable on a day which is
not a Business Day, the maturity thereof shall be extended to
the next succeeding Business Day. Computations of interest
and other amounts due under this Agreement shall be made on
the basis of a year of 360 days for the actual number of days
elapsed, including the first day but excluding the last day of
the relevant period.
2.9 Indemnification.
(a) In the event that the Borrower shall make any
optional prepayment pursuant to Section 2.4 (b), the Borrower
will pay to the Bank, if a positive number, and the Bank will
pay to the Borrower, if a negative number, a prepayment
indemnity equal to the amount determined in accordance with
clause(c) below.
(b) In the event that the principal of, and accrued
interest on, the Term Loan shall become due and payable prior
to scheduled maturity under Section 6, the Borrower will pay
to the Bank a prepayment indemnity equal to the amount, if a
positive number, determined in accordance with clause (c)
below.
(c) The amount payable by the Borrower pursuant to
clauses (a) or (b) above, or by the Bank pursuant to clause
(a) above, shall be the amount (expressed as a positive
number) determined by the Bank in good faith to be necessary
to preserve the economic equivalent of the yield anticipated
to be earned by the Bank in connection with the Term Loan and
PAGE
to compensate the Bank for any other losses and costs
(including loss of bargain and loss of funding) that it may
incur as a result of such prepayment or acceleration of, the
Term Loan. If the Bank determines that it would gain or
benefit from such occurrence, the Bank's loss will be an
amount (expressed as a negative number) equal to the amount of
the gain or benefit as determined by the Bank. Unless such
quotations are not ascertainable, are not deemed by Bank to
reasonably preserve such economic equivalent or the
determination is being made due to an Event of Default
specified in Section 6.1 (g), the amount payable by the
Borrower or the Bank pursuant to this Section 2.9 shall be
determined by the Bank on the basis of quotations obtained by
the Bank in its discretion from one or more dealers or other
counterparties in the interest rate swap market for an
interest rate swap (i) with payment dates coincident with the
Interest Payment Dates hereunder after the date of such
occurrence, (ii) with a notional amount equal to the principal
amount of the Term Loan scheduled to be outstanding after such
date, and (iii) pursuant to which such dealer or other
counterparty is the fixed rate payor and the Bank is the
floating rate payor at the three-month London interbank
offered rate.
(d) The parties agree that the amounts payable under
this Section 2.9 are a reasonable pre-estimate of loss and not
a penalty. Such amounts are payable for the loss of bargain
and payment of such amounts shall not in any way reduce,
affect or impair the obligations of the Borrower under this
Agreement to pay the principal amount of, and interest on, the
Term Loan. The Bank shall provide a certificate by an officer
of the Bank to confirm the amounts payable under this Section
2.9 and such certificate of the Bank shall, in the absence of
manifest error, constitute prima facie evidence of such amount
payable under this Section 2.9.
2.10 Additional Costs. If the Bank shall have
determined that the adoption, after the date hereof, of any
applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any
request or directive regarding a capital adequacy (whether or
not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on the Bank's capital as a
consequence of its obligations hereunder to a level below that
which the Bank could have achieved but for such adoption,
change or compliance (taking into consideration the Bank's
policies with respect to capital adequacy) by an amount deemed
PAGE
by the Bank to be material, then from time to time, within 15
days after demand by the Bank, the Borrower shall pay to the
Bank such additional amount or amounts as will compensate the
Bank for such reduction. A certificate by an officer of the
Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it
hereunder shall, in the absence of manifest error, constitute
prima facie evidence of such amount. In determining such
amount, the Bank may use any reasonable averaging and
attribution methods.
PAGE
SECTION 3
CONDITIONS OF LENDING
3.1 Conditions of Lending. The obligation of the Bank to
make the Loan hereunder is subject to the performance by the
Borrower of all its obligations under this Agreement and to
the satisfaction of the following further conditions:
(a) receipt by the Bank of a duly executed Note;
(b) that on the date the Term Loan is made no Default or
Event of Default shall have occurred and be continuing;
(c) that the representations and warranties contained in
this Agreement shall be true on and as of the date of the Term
Loan;
(d) receipt by the Bank of an opinion of counsel to the
Borrower as to the matters referred to in Sections 4.1,4.2,
4.3, 4.5 and 4.8 hereof, and covering such other matters as
the Bank may reasonably request, dated the date of the Loan,
satisfactory in form and substance to the Bank;
(e) receipt by the Bank of certified copies of all
corporate action taken by the Borrower to authorize the
execution, delivery and performance of this Agreement and the
Note, and the Loan hereunder and such other corporate
documents and other papers as the Bank may reasonably request;
(f) receipt by the Bank of a certificate of a duly
authorized officer of the Borrower as to the incumbency, and
setting forth a specimen signature, of each of the persons (i)
who has signed this Agreement on behalf of the Borrower; (ii)
who will sign the Note on behalf of the Borrower; and (iii)
who will, until replaced by other persons duly authorized for
that purpose, act as the representatives of the Borrower for
the purpose of signing documents in connection with this
Agreement and the transactions contemplated hereby; and
(g) receipt by the Bank of such other documents,
evidence, materials and information with respect to the
matters contemplated hereby as the Bank may reasonably
request.
The Borrower shall be deemed to have made a representation and
warranty to the Bank at the time of the making of the Term Loan to
the effects set forth in clauses (b) and(c) of this Section 3.
PAGE
SECTION 4
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Bank that:
4.1 Corporate Existence and Power. The Borrower is a
corporation duly organized, incorporated, validly existing and in
good standing under the laws of the State of its incorporation, and
has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
4.2 Corporate and Governmental Authorization: Contravention.
The execution, delivery and performance by the Borrower of this
Agreement and the Note are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the
Borrower or of any judgment, injunction, order, decree, material
agreement or other instrument binding upon the Borrower or result
in the creation or imposition of any Lien on any asset of the
Borrower or any of its Consolidated Subsidiaries.
4.3 Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and the Note, when executed and
delivered in accordance with this Agreement, will constitute a
valid and binding obligation of the Borrower.
4.4 Financial Information.
(a) The consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as at December 31, 1994 and the
related consolidated statements of income and retained
earnings and cash flows of the Borrower and its Consolidated
Subsidiaries for the fiscal year then ended, certified by
Price Waterhouse, certified public accountants, and set forth
in the Borrower's most recent Annual Report on Form 10-K, a
copy of which has been delivered to the Bank, fairly present
in conformity with generally accepted accounting principles,
the consolidated financial position of the Borrower and its
Consolidated Subsidiaries at such date and the consolidated
results of operations for such fiscal year;
(b) Since December 31, 1994 there has been no material
adverse change in the business, financial position or results
of operations of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
PAGE
4.5 Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened
against, the Borrower or any of its Consolidated Subsidiaries
before any court or arbitrator or any governmental body, agency or
official in which there is a significant probability of an adverse
decision which would materially adversely affect the business,
consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries taken
as a whole or which in any manner draws into question the validity
of this Agreement or the Note.
4.6 Compliance with ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan and is in
compliance in all material respects with the presently applicable
provisions of ERISA and the Code except where the failure to comply
would not have a material adverse effect on the Borrower and its
Consolidated Subsidiaries taken as a whole. No member of the ERISA
Group has incurred any unsatisfied material liability to the PBGC
or a Plan under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
4.7 Taxes. United States Federal income tax returns of the
Borrower and its Consolidated Subsidiaries have been examined and
closed through the fiscal year ended December 31, 1987. The
Borrower and its Consolidated Subsidiaries have filed all United
States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all
taxes due reported on such returns or pursuant to any assessment
received by the Borrower or any Consolidated Subsidiary, to the
extent that such assessment has become due. The charges, accruals
and reserves on the books of the Borrower and its Consolidated
Subsidiaries in respect of taxes or other governmental charges are,
in the opinion of the Borrower, adequate except for those which are
being contested in good faith by the Borrower.
4.8 Subsidiaries. Each of the Borrower's Consolidated
Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, all to the
extent material to the Borrower and its Subsidiaries taken as a
whole.
PAGE
SECTION 5
COVENANTS
So long as the Term Loan shall be in effect, the Borrower
agrees that:
5.1 Information. The Borrower will deliver to the Bank:
(a) as soon as available and in any event within 95 days
after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such year, and
consolidated statements of income and retained earnings and
statement of cash flows of the Borrower and its Consolidated
Subsidiaries for such year, setting forth in each case in
comparative form the figures for the preceding fiscal year,
all reported on by Price Waterhouse or other independent
certified public accountants of nationally recognized
standing;
(b) as soon as available and in any event within 50 days
after the end of each of the first three quarters of each
fiscal year of the Borrower, an unaudited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as at
the end of such quarter and the related unaudited consolidated
statements of income and retained earnings and statement of
cash flows of the Borrower and its Consolidated Subsidiaries
for such quarter and for the portion of the Borrower's fiscal
year ended at the end of such quarter setting forth in each
case in comparative form the figures for the corresponding
quarter and the corresponding portion of the Borrower's
previous fiscal year, all certified (subject to changes
resulting from year-end adjustments) as to fairness of
presentation, in conformity with generally accepted accounting
principles (other than as to footnotes) and consistency
(except to the extent of any changes described therein and
permitted by generally accepted accounting principles) by the
chief financial officer or the chief accounting officer of the
Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above,
a certificate of the chief financial officer or the chief
accounting officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements
of Sections 5.6 to 5.8, inclusive, on the date of such
financial statements and (ii) stating whether any Default has
occurred and is continuing on the date of such certificate
and, if any Default then has occurred and is continuing,
PAGE
setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(d) within 10 days of the chief executive officer, chief
operating officer, principal financial officer or principal
accounting officer of the Borrower obtaining knowledge of any
event or circumstance known by such person to constitute a
Default, if such Default is then continuing, a certificate of
the principal financial officer or the principal accounting
officer of the Borrower setting forth the details thereof and
within five days thereafter, a certificate of either of such
officers setting forth the action which the Borrower is taking
or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent) and
annual, quarterly or monthly reports which the Borrower shall
have filed with the Securities and Exchange Commission;
(g) if and when the chief executive officer, chief
operating officer, principal financial officer or principal
accounting officer of the Borrower obtains knowledge that any
member of the ERISA Group (i) has given or is required to give
notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) has received notice of
complete or partial withdrawal liability under Title IV of
ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of
such notice; or (iii) has received notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer any Plan, a
copy of such notice;
(h) if at any time the value of all "margin stock" (as
defined in Regulation U) owned by the Borrower and its
Consolidated Subsidiaries exceeds (or would, following
application of the proceeds of the Term Loan hereunder,
exceed) 25% of the value of the total assets of the Borrower
and its Consolidated Subsidiaries, in each case as reasonably
determined by the Borrower, prompt notice of such fact; and
PAGE
(i) from time to time such additional information
regarding the financial position or business of the Borrower
as the Bank may reasonably request;
provided, however, that the Borrower shall be deemed to have
satisfied its obligations under clauses (a) and (b) above if and to
the extent that the Borrower has provided to the Bank pursuant to
clause (f) the periodic reports on Forms 10-Q and 10-K required to
be filed by the Borrower with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as
amended, for the quarterly and annual periods described in such
clauses (a) and (b).
5.2 Maintenance of Property; Insurance.
(a) The Borrower will maintain or cause to be maintained
in good repair, working order and condition all properties
used and useful in the business of the Borrower and each
Consolidated Subsidiary and from time to time will make or
cause to be made all appropriate repairs, renewals and
replacement thereof, except where the failure to do so would
not have a material adverse effect on the Borrower and its
Consolidated Subsidiaries taken as a whole.
(b) The Borrower will maintain or cause to be
maintained, for itself and its Consolidated Subsidiaries, all
to the extent material to the Borrower and its Consolidated
Subsidiaries taken as a whole, physical damage insurance on
all real and personal property on an all risks basis, covering
the repair and replacement cost of all such property and
consequential loss coverage for business interruption and
extra expense, public liability insurance in an amount not
less than $10,000,000 and such other insurance of the kinds
customarily insured against by corporations of established
reputation engaged in the same or similar business and
similarly situated, of such type and in such amounts as are
customarily carried under similar circumstances.
5.3 Conduct of Business and Maintenance of Existence. The
Borrower will continue, and will cause each Consolidated Subsidiary
to continue, to engage predominantly in business of the same
general type as now conducted by the Borrower and its Consolidated
Subsidiaries, and, except as otherwise permitted by Section 5.10
hereof, will preserve, renew and keep in full force and effect, and
will cause each Consolidated Subsidiary to preserve, renew and keep
in full force and effect their respective corporate existence and
their respective rights and franchises necessary in the normal
conduct of business, all to the extent material to the Borrower and
its Consolidated Subsidiaries taken as a whole.
PAGE
5.4 Compliance with Laws. The Borrower will comply, and
cause each Consolidated Subsidiary to comply, in all material
respects with all applicable laws, ordinances, rules, regulations,
and requirements of governmental authorities (including, without
limitation, ERISA and the rules and regulations thereunder and all
federal, state and local statutes laws or regulations or other
governmental restrictions relating to environmental protection,
hazardous substances or the cleanup or other remediation thereof)
except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings or where the failure to
comply would not have a material adverse effect on the Borrower and
its Consolidated Subsidiaries taken as a whole.
5.5 Inspection of Property, Books and Records.
(a) The Borrower will keep, and will cause each
Consolidated Subsidiary to keep, proper books of record and
account in accordance with sound business practice so as to
permit its financial statements to be prepared in accordance
with generally accepted accounting principles; and will permit
representatives of the Bank at the Bank's expense to visit and
inspect any of the Borrower's properties, to examine and make
abstracts from any of the Borrower's corporate books and
financial records and to discuss the Borrower's affairs,
finances and accounts with the principal officers of the
Borrower and its independent public accountants, all at such
reasonable times and as often as may reasonably be necessary
to ensure compliance by the Borrower with its obligations
hereunder.
(b) With the consent of the Borrower (which consent will
not be unreasonably withheld) or, if an Event of Default has
occurred and is continuing, without the requirement of any
such consent, the Borrower will permit representatives of the
Bank, at the Bank's expense, to visit and inspect any of the
properties of and to examine the corporate books and financial
records of any Consolidated Subsidiary and make copies thereof
or extracts therefrom and to discuss the affairs, finances and
accounts of such Consolidated Subsidiary with its and the
Borrower's principal officers and the Borrower's independent
public accountants, all at such reasonable times and as often
as the Bank may reasonably request.
5.6 Cash Flow to Total Borrowed Funds. The ratio of Cash
Flow to Total Borrowed Funds shall not be less than .30 for any
consecutive four quarters, such ratio to be calculated at the end
of each quarter on a trailing four quarter basis.
5.7 Total Borrowed Funds to Consolidated Net Worth. Total
Borrowed Funds will not exceed 85% of Consolidated Net Worth at the
end of any quarter of any fiscal year.
PAGE
5.8 Minimum Consolidated Net Worth. Consolidated Net Worth
will at no time be less than $550,000,000 plus 25% of the
consolidated net income of the Borrower at the end of each fiscal
quarter for each fiscal year commencing after the fiscal year
ending December 31, 1994.
5.9 Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by it, except
for:
(a) Liens existing on the date hereof;
(b) any Lien existing on any asset of any corporation at
the time such corporation becomes a Consolidated Subsidiary
and not created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the
cost of acquiring such asset, provided that such Lien attaches
to such asset concurrently with or within 90 days after the
acquisition thereof;
(d) any Lien on any asset of any corporation existing at
the time such corporation is merged into or consolidated with
the Borrower or a Consolidated Subsidiary and not created in
contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Consolidated
Subsidiary and not created in contemplation of such
acquisition;
(f) any Lien created in connection with capitalized
lease obligations, but only to the extent that such Lien
encumbers property financed by such capital lease obligation
and the principal component of such capitalized lease
obligation is not increased;
(g) Liens arising in the ordinary course of its business
which (i) do not secure Debt and (ii) do not in the aggregate
materially impair the operation of the business of the
Borrower and its Consolidated Subsidiaries, taken as a whole;
(h) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted
by any of the foregoing clauses of this Section, provided that
such Debt is not increased and is not secured by any
additional assets;
PAGE
(i) Liens securing taxes, assessments, fees or other
governmental charges or levies, Liens securing the claims of
materialmen, mechanics, carriers, landlords, warehousemen and
similar Persons, Liens incurred in the ordinary course of
business in connection with workmen's compensation,
unemployment insurance and other similar laws, Liens to secure
surety, appeal and performance bonds and other similar
obligations not incurred in connection with the borrowing of
money, and attachment, judgment and other similar Liens
arising in connection with court proceedings so long as the
enforcement of such Liens is effectively stayed and the claims
secured thereby are being contested in good faith by
appropriate proceedings;
(j) Liens not otherwise permitted by the foregoing
clauses of this Section securing Debt in an aggregate
principal amount at any time outstanding not to exceed 10% of
Consolidated Net Worth;
(k) any Lien(s) on any asset of Quest & Associates,
Inc., a Subsidiary of Borrower, created in connection with the
August 1995 investment by Quest & Associates, Inc., in a
portfolio of computer equipment leases; and
(l) any Liens on property arising in connection with a
securities repurchase transaction.
5.10 Consolidations, Mergers and Sales of Assets. The
Borrower will not (i) consolidate or merge with or into any other
Person (other than a Subsidiary of the Borrower) unless the
Borrower's shareholders immediately before the merger or
consolidation are to own more than 70% of the combined voting power
of the resulting entity's voting securities or (ii) sell, lease or
otherwise transfer all or substantially all of the Borrower's
business or assets to any other Person (other than a Subsidiary of
the Borrower). The Borrower will not permit any Significant
Subsidiary or (in a series of related transactions) any Significant
Group of Subsidiaries to consolidate with, merge with or into or
transfer all of any substantial part of its assets to any Person
other than the Borrower or a Subsidiary of the Borrower.
5.11 Use of Proceeds. The proceeds of the Term Loan will be
used for general corporate purposes, including the making of
acquisitions. No part of the proceeds of any Loan hereunder will
be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate of buying or carrying any "margin
stock" in violation of Regulation U. If requested by the Bank, the
Borrower will furnish to the Bank in connection with the Term Loan
hereunder a statement in conformity with the requirements of
Federal Reserve Form U-l referred to in Regulation U.
PAGE
SECTION 6
EVENTS OF DEFAULT
6.1 Events of Default. If any one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay (i) any principal of
any Note when due or (ii) interest on any Note within four
days after the same has become due; or
(b) the Borrower shall fail to observe or perform any
covenant contained in Section 5.1(d) or Sections 5.6 to 5.8 or
5.10 hereof; or
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than
those covered by clause (a) or (b) above) for 30 days after
written notice thereof has been given to the Borrower by the
Bank; or
(d) any representation, warranty or certification made
by the Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to
this Agreement shall prove to have been incorrect in any
material respect upon the date when made or deemed made; or
(e) (1) the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries defaults in any payment at
any stated maturity of principal of or interest on any other
obligation for money borrowed (or any capitalized lease
obligation, any obligation under a purchase money mortgage,
conditional sale or other title retention agreement or any
obligation under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided with
respect thereto or (2) the Borrower or any Significant
Subsidiary or Significant Group of Subsidiaries defaults in
any payment other than at any stated maturity of principal of
or interest on any other obligation for money borrowed (or any
capitalized lease obligation, any obligation under a purchase
money mortgage, conditional sale or other title retention
agreement or any obligation under notes payable or drafts
accepted representing extensions of credit) beyond any period
of grace provided with respect thereto, or the Borrower or any
Significant Subsidiary or Significant Group of Subsidiaries
fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such
obligation is created (or if any other event thereunder or
under any such agreement shall occur and be continuing), and
the effect of such default with respect to a payment other
than at any stated maturity, failure or other event is to
PAGE
cause, or to permit the holder or holders of such obligation
(or a trustee on behalf of such holder or holders) to cause,
such obligation to become due or to require the purchase
thereof prior to any stated maturity; Provided that the
aggregate amount of all obligations as to which any such
payment defaults (whether or not at stated maturity), failures
or other events shall have occurred and be continuing exceeds
$10,000,000 and provided, further, that it is understood that
the obligations referred to herein exclude those obligations
arising in connection with securities repurchase transactions;
or
(f) the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries shall commence a voluntary
case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any corporate action
to authorize any of the foregoing; or
(g) an involuntary case or other proceeding shall be
commenced against the Borrower or any Significant Subsidiary
or Significant Group of Subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed
and unstayed for a period of 60 days; or an order for relief
shall be entered against the Borrower or any Significant
Subsidiary or Significant Group of Subsidiaries under the
federal bankruptcy laws as now or hereafter in effect; or
(h) any member of the ERISA Group shall fail to pay when
due any amount or amounts aggregating in excess of $1,000,000
which it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA (except where such liability is
contested in good faith by appropriate proceedings as
permitted under Section 5.4); or notice of intent to terminate
a Material Plan (other than any multiple employer plan within
the meaning of Section 4063 of ERISA) shall be filed under
Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC
PAGE
shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to
be appointed to administer any such Material Plan; or
(i) judgments or orders for the payment of money in
excess of $10,000,000 in the aggregate shall be rendered
against the Borrower or any Significant Subsidiary or
Significant Group of Subsidiaries and such judgments or orders
shall continue unsatisfied and unstayed for a period of 60
days; or
(j) any person or group of persons (within the meaning
of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")), other than the Borrower or
any of its Subsidiaries, becomes the beneficial owner (within
the meaning of Rule 13d-3 under the 1934 Act) of 30% or more
of the combined voting power of the Borrower's then
outstanding voting securities; or a tender offer or exchange
offer (other than an offer by the Borrower or a Subsidiary)
pursuant to which 30% or more of the combined voting power of
the Borrower's then outstanding voting securities was
purchased, expires; or during any period of two consecutive
years, individuals who, at the beginning of such period,
constituted the Board of Directors of the Borrower cease for
any reason to constitute at least a majority thereof, unless
the election or the nomination for the election by the
Borrower's stockholders of each new director was approved by
a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period;
then, and in every such event, (1) in the case of any of the
Events of Default specified in paragraphs (f) or (g) above, the
principal of and accrued interest on the Note shall automatically
become due and payable without presentment, demand, protest or
other notice or formality of any kind, all of which are hereby
expressly waived and (2) in the case of any other Event of Default
specified above, the Bank may, by notice in writing to the
Borrower, declare the Note and all other sums payable under this
Agreement to be, and the same shall thereupon forthwith become, due
and payable without presentment, demand, protest or other notice or
formality of any kind, all of which are hereby expressly waived.
PAGE
SECTION 7
MISCELLANEOUS
7.1 Notices. Unless otherwise specified herein all notices,
requests, demands or other communications to or from the parties
hereto shall be sent by United States mail, certified, return
receipt requested, telegram, telex or facsimile, and shall be
deemed to have been duly given upon receipt thereof. In the case
of a telex, receipt of such communication shall be deemed to occur
when the sender receives its answer back. In the case of a
facsimile, receipt of such communication shall be deemed to occur
when the sender confirms such receipt by telephone. Any such
notice, request, demand or communication shall be delivered or
addressed as follows:
(a) if to the Borrower, to it at 1271 Avenue of the
Americas, New York, New York 10020; Attention: Vice President
and Treasurer (with a copy at the same address to the Vice
President and General Counsel);
(b) if to the Bank, to it at 611 Woodward Avenue,
Detroit, Michigan 48226; Attention: Carolyn J. Parks, National
Division;
or at such other address or telex number as any party hereto may
designate by written notice to the other party hereto.
7.2 Amendments and Waivers; Cumulative Remedies.
(a) None of the terms of this Agreement may be waived,
altered or amended except by an instrument in writing duly
executed by the Borrower and the Bank.
(b) No failure or delay by the Bank in exercising any
right, power or privilege hereunder or the Note shall operate
as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights
and remedies provided herein shall be cumulative and not
exclusive of any rights or remedies provided by law.
7.3 Successors and Assigns.
(a) The provisions of this Agreement shall be binding
upon and shall inure to the benefit of the Borrower and the
Bank, except that the Borrower may not assign or otherwise
transfer any of its rights and obligations under this
Agreement except as provided in Section 5.10 hereof, without
the prior written consent of the Bank which the Bank shall not
unreasonably delay or withhold.
PAGE
(b) The Bank may at any time grant to one or more banks
or other institutions (each a "Participant") participating
interests in the Loan. In the event of any such grant by the
Bank of a participating interest to a Participant, whether or
not upon notice to the Borrower the Bank shall remain
responsible for the performance of its obligations hereunder,
and the Borrower shall continue to deal solely and directly
with the Bank in connection with the Bank's rights and
obligations under this Agreement. Any agreement pursuant to
which the Bank may grant such a participating interest shall
provide that the Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower
hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may
provide that the Bank will not agree to any modification,
amendment or waiver of this Agreement which (i) reduces the
principal of or rate of interest on the Loan or (ii) postpones
the date fixed for any payment of principal of or interest on
the Loan without the consent of the Participant. The Borrower
agrees that each Participant shall be entitled to the benefits
of Section 2 with respect to its participating interest.
(c) No Participant or other transferee of the Bank's
rights shall be entitled to receive any greater payment under
Section 2 than the Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer
is made with the Borrower's prior written consent.
7.4 Expenses; Documentary Taxes; Indemnification.
(a) The Borrower shall pay (i) all out-of-pocket
expenses and internal charges of the Bank (including
reasonable fees and disbursements of counsel) in connection
with any Default hereunder and (ii) if there is an Event of
Default, all out-of-pocket expenses incurred by the Bank
(including reasonable fees and disbursements of counsel) in
connection with such Event of Default and collection and other
enforcement proceedings resulting therefrom. The Borrower
shall indemnify the Bank against any transfer taxes,
documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery
of this Agreement or the Note.
(b) The Borrower agrees to indemnify the Bank and hold
the Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including,
without limitation, the reasonable fees and disbursements of
counsel for the Bank in connection with any investigative,
administrative or judicial proceeding, whether or not the Bank
shall be designated a party thereto) which may be incurred by
PAGE
the Bank relating to or arising out of any actual or proposed
use of proceeds of the Term Loan hereunder or any merger or
acquisition involving the Borrower; provided, that the Bank
shall not have the right to be indemnified hereunder for its
own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
7.5 Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures thereto
and hereto were upon the same instrument.
7.6 Headings; Table of Contents. The section and subsection
headings used herein and the Table of Contents have been inserted
for convenience of reference only and do not constitute matters to
be considered in interpreting this Agreement.
7.7 Governing Law. This Agreement and the Note shall be
construed in accordance with and governed by the law of the State
of New York.
PAGE
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered by their proper and duly authorized
officers as of December 21, 1995.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: ALAN M. FORSTER
Vice President & Treasurer
NBD Bank
By: CAROLYN J. PARKS
Vice President
NOTE
U.S. $25,000,000
December 21, 1995
New York, New York
FOR VALUE RECEIVED, THE INTERPUBLIC GROUP OF COMPANIES, INC.,
a Delaware Corporation (the "Borrower"), hereby promises to pay to
the order of NBD BANK (the "Bank"), the principal sum of
TWENTY-FIVE MILLION AND NO/100 United States Dollars (U.S.
$25,000,000.), plus all accrued and unpaid interest thereon.
Principal shall be due and payable on December 21, 2002.
Interest shall be payable at the rate and on the dates
provided in the Credit Agreement.
All such payments of principal and interest shall be made in
lawful money of the United States of America in Federal or other
immediately available funds at the office of the Bank located at
611 Woodward Avenue, Detroit, Michigan 48226, or at such other
place as the holder hereof may designate.
This note is the Note referred to in the Credit Agreement
dated as of December 21, 1995, between the Borrower and the Bank,
as the same may be amended from time to time (the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein
with same meanings. Reference is made to the Credit Agreement for
provisions prohibiting prepayment hereof and providing for the
acceleration of the maturity hereof.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: ALAN M. FORSTER
Title: VICE PRESIDENT AND TREASURER
EXHIBIT 11
Page 1 of 2
THE INTERPUBLIC GROUP OF COMPANIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in Thousands Except Per Share Data)
Year Ended December 31
1995 1994 1993 1992 1991
PRIMARY:
Net Income before effect of
accounting changes $129,812 $115,247 $125,279 $111,913 $ 94,557
Effect of accounting changes - (21,780) (512) (24,640) -
Add: Dividends paid net
of related income tax
applicable to the
Restricted Stock Plan 427 349 311 365 282
Net income, as adjusted $130,239 $ 93,816 $125,078 $ 87,638 $ 94,839
Weighted average number of
common shares outstanding 75,756,630 73,363,084 72,607,363 72,168,964 70,440,108
Weighted average number of
incremental shares in
connection with assumued
exercise of stock options
based on the treasury stock
method using average market
price 1,141,532 1,010,179 1,088,155 1,321,447 631,682
Weighted average number of
incremental shares in
connection with the
Restricted Stock Plan
based on the treasury
stock method using average
unamortized deferred
compensation and average
market price 1,281,910 1,197,182 1,520,003 1,484,207 1,788,296
Total 78,180,072 75,570,445 75,215,521 74,974,618 72,860,086
Primary earnings per common
and common equivalent
share $1.66 $1.24 $1.66 $1.17 $1.30
________________________
Restated to reflect the two-for-one stock split effected in June 1992 in the form
of a 100% stock dividend.
EXHIBIT 11
Page 2 of 2
THE INTERPUBLIC GROUP OF COMPANIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in Thousands Except Per Share Data)
Year Ended December 31
1995 1994 1993 1992 1991
FULLY DILUTED:
Net Income before effect of
accounting changes $ 129,812 $ 115,247 $ 125,279 $ 111,913 $ 94,557
Effect of accounting changes - (21,780) (512) (24,640) -
After tax interest savings
on assumed conversion of
subordinated debentures 6,217 6,074 5,941 4,385 -
Add: Dividends paid net of
related income tax applicable
to the Restricted Stock
Plan 461 366 330 375 308
Net income, as adjusted $ 136,490 $ 99,907 $ 131,038 $ 92,033 $ 94,865
Weighted average number of
common shares outstanding 75,756,630 73,363,084 72,607,363 72,168,964 70,440,108
Assumed conversion of
subordinated debentures 3,002,130 3,002,130 3,002,130 2,251,598 -
Weighted average number of
incremental shares in connection
with assumed exercise of stock
options based on year-end market
price when higher than average
market prices and market prices
on dates of exercise and
termination 1,281,282 1,015,837 1,097,745 1,333,738 743,142
Weighted average number of
incremental shares in connection
with the Restricted Stock Plan
based on ending unamortized
deferred compensation and
ending or average market price,
whichever is higher 1,386,711 1,247,564 1,598,026 1,525,738 1,929,348
Total 81,426,753 78,628,615 78,305,264 77,280,038 73,112,598
Fully diluted earnings per common
common equivalent share $1.68 $1.27 $1.67 $1.19 $1.30
_________________________
Restated to reflect the two-for-one stock split effected in June 1992 in the form of a 100%
stock dividend.
EXHIBIT 13
THE INTERPUBLIC GROUP OF COMPANIES, INC.
The Interpublic Group of Companies is one of the largest
organizations of advertising agencies in the world. It includes
the parent company, The Interpublic Group of Companies, Inc.,
McCann-Erickson Worldwide, Ammirati Puris Lintas, The Lowe Group,
Western International Media and other affiliated companies. The
Interpublic Group employs more than 19,000 people and maintains
offices in over 100 countries.
TABLE OF CONTENTS
Financial Highlights
Chairman's Report to Stockholders
Financial Statements
Board of Directors and Executive Officers
Stockholders' Information
FINANCIAL HIGHLIGHTS
(Dollars in Thousands Except Per Share Data)
_________________________________________________________________________
Percent
1995 1994 Increase
(Decrease)
Operating Data
Gross income $ 2,179,739 $ 1,984,255 9.9%
Income before effect of
accounting change 129,812 115,247 12.6
Effect of accounting change:
Postemployment benefits - (21,780) -
Net Income 129,812 93,467 38.9
Per Share Data
Income before effect of
accounting change 1.66 1.53 8.5
Effect of accounting change:
Postemployment benefits - (.29) -
Net Income 1.66 1.24 33.9
Cash dividends $ .605 $ .545 11.0
Weighted average number
of shares 78,180,072 75,570,445 3.5
Financial Position
Working capital $ 147,701 $ 80,134 84.3
Total assets 4,259,766 3,793,418 12.3
Stockholders' equity per share:
Before effect of
accounting change 9.42 8.64 9.0
After effect of
accounting change $ 9.42 $ 8.36 12.7
Return on average stockholders' equity:
Before effect of
accounting change 18.4% 18.6% (1.1)
After effect of
accounting change 18.4% 15.5% 18.7%
Gross Income
1995 $2,179,739
1994 $1,984,255 1992 $1,855,971
1993 $1,793,856 1991 $1,677,498
________________________________________________________________________
Earnings Per Share
1995 $ 1.66
1994 $ 1.53/1.24 1992 $ 1.50/1.17
1993 $ 1.67/1.66 1991 $ 1.30
________________________________________________________________________
Cash Dividends Per Share
1995 $ .605
1994 $ .545 1992 $ .45
1993 $ .49 1991 $ .41
________________________________________________________________________
Return On Average Stockholders' Equity
1995 18.4%
1994 18.6/15.5% 1992 19.1/15.4%
1993 23.3/23.2% 1991 18.5%
Includes an after-tax charge of $21,780,000 or $.29 per share for the
cumulative effect of accounting change, FAS 112, "Employers' Accounting
for Postemployment Benefits".
Includes a charge of $512,000 or $.01 per share for the cumulative effect
of accounting change, FAS 109, "Accounting for Income Taxes."
Includes an after-tax charge of $24,640,000 or $.33 per share for
cumulative effect of accounting change, FAS 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions".
Note: All data are restated to reflect the two-for-one stock split
effected in June 1992 in the form of a 100% stock dividend.
-1-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Liquidity and Capital Resources
Working capital increased by $67.6 million in 1995, and decreased by $87.0
million and $57.4 million in 1994 and 1993, respectively. The increase in
working capital in 1995 primarily resulted from the growth in the Company's
business, and the long-term refinancing of short-term debt. The decline in
working capital in 1994 and 1993 was primarily due to acquisitions. The ratio
of current assets to current liabilities was approximately 1.1 to 1 in 1995,
and approximately 1.0 to 1 in 1994 and 1993.
The Company's principal source of working capital during the three years has
been from operations. The Company's solid financial position provides
flexibility in obtaining short and long-term financing on competitive terms.
The Company is not aware of any significant event or trend which would
potentially affect its liquidity. In the event such a trend develops, The
Company believes that there are sufficient funds available under the lines of
credit and from internal cash-generating capabilities to adequately manage its
liquidity requirements for the foreseeable future.
The principal use of the Company's working capital is to provide for the
operating needs of its advertising agencies, which includes payments for space
or time purchased from various media on behalf of clients. The Company's
practice is to bill and collect from its clients in sufficient time to pay the
amounts due media on a timely basis. Other uses of working capital include the
repurchase of the Company's stock, payment of cash dividends, capital
expenditures, and acquisitions.
-2- PAGE
During 1995, the Company acquired 1,910,555 shares ($69.7 million) of its own
common stock for purposes of fulfilling its obligations under various
compensation plans. During 1994 and 1993, 1,264,761 shares ($44.5 million) and
1,219,151 shares ($37.2 million), respectively, were acquired for similiar
purposes. Quarterly dividends paid to shareholders increased to $46.1 million
(15.5 cents per share) in 1995 from $40.4 million (14.0 cents per share) in
1994 and $35.9 million (12.5 cents per share) in 1993.
The Company's capital expenditures in 1995 were $69.6 million, an increase of
25% from 1994. Capital expenditures for 1994 were $55.9 million, an increase
of 38% from 1993. Additionally, the Company purchased a building and land in
Frankfurt, Germany during 1993 for a purchase price of approximately $41.5
million. The Company's capital expenditures are typically for furniture and
fixtures, leasehold improvements and computer and telecommunications equipment.
The Company's domestic subsidiaries had credit lines aggregating $199.5
million in 1995, $203.5 million in 1994 and $156.0 million in 1993. At
December 31, 1995, $36.2 million of these credit lines were utilized compared
with utilization of $11.5 million in 1994, and $17.6 million in 1993.
Subsidiaries outside the United States had credit lines totalling $229.1
million in 1995, $243.4 million in 1994, and $205.7 million in 1993. At
December 31, 1995, $73.5 million of these credit lines were utilized compared
with utilization of $86.5 million in 1994, and $93.0 million in 1993.
Approximately 57%, 59% and 66% of the Company's assets at December 31, 1995,
1994 and 1993, respectively, were outside the United States. Working capital
-3- PAGE
was not significantly affected by the fluctuation of foreign exchange rates
during 1995, 1994 and 1993, but the continuation of this trend is dependent
upon the future movement of the dollar in relation to foreign currencies. The
Company hedges currency exposure to mitigate any negative effect on working
capital.
During 1995, 1994 and 1993, the Company acquired several advertising agencies
and related companies with funds provided by existing cash balances and shares
of the Company's common stock. Some of these acquisitions provide for deferred
payments which are contingent upon future revenues or profits of the companies
acquired.
Return on average equity was 18.4%, 15.5% and 23.2% in 1995, 1994 and 1993,
respectively. The return on average equity in 1995 excluding the effect of the
write-down of goodwill and other related assets was 23.5%. The decrease in
1994 compared to 1993 is mainly due to the effects of adopting FAS 112,
"Employers' Accounting for Postemployment Benefits" and restructuring charges.
Excluding the effect of FAS 112, return on average equity was 18.6% in 1994.
The U.S. dollar weakened during 1995 and 1994, resulting in a credit to the
cumulative translation adjustment account of approximately $4.2 million and
$18.9 million, respectively. The overall strengthening of the U.S. dollar
beginning in the latter part of 1992 and continuing into 1993 resulted in a
charge of approximately $26 million to the cumulative translation adjustment
account in 1993.
-4- PAGE
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
Worldwide income from commissions and fees increased 9.3% in 1995 and 10.2% in
1994 after a decrease of 3.6% in 1993. The increase in 1995 was primarily due
to the acquisitions of Anderson & Lembke, and Bosch & Butz, coupled with net
new business gains. The increase in 1994 was mainly attributable to the
acquisitions of Western International Media and Ammirati & Puris. The decrease
in 1993 was primarily due to the unfavorable effect of foreign exchange rates
which had a negative impact on revenue of $105.3 million.
Revenue from outside the United States increased $136.4 million in 1995 and
$45.3 million in 1994. In 1993, revenue from outside the United States
decreased by $86.4 million. The decrease in 1993 was mainly due to the
unfavorable effects of foreign exchange. Foreign revenue accounted for 64%,
64% and 67% of worldwide revenue in 1995, 1994 and 1993, respectively.
Commissions and fees from domestic operations increased 5.8% in 1995, 22.0% in
1994 and 3.9% in 1993. The increases in 1995, 1994 and 1993 were largely
attributable to acquisitions of Anderson & Lembke coupled with net new business
gains in 1995, Western International Media and Ammirati & Puris in 1994 and
Scali, McCabe, Sloves in 1993.
Other income increased 26.6% in 1995, 25.5% in 1994 and 4.9% in 1993. The
increase in 1995 is attributable to investment income from non-core activities.
The 1994 and 1993 increases are primarily due to interest income from
international operations.
-5- PAGE
Total costs and expenses worldwide increased 8% and 14% in 1995 and 1994,
respectively, and decreased 5% in 1993. The 1995 increase is attributable to
the write-down of goodwill and other related assets, and operating costs of
acquired companies. The increase in 1994 is primarily due to restructuring
charges and operating costs of acquired companies. A significant portion of
the Company's expenses relate to compensation and various employee incentive
and benefit programs which are based principally upon operating results. Costs
and expenses outside the United States increased in 1995 primarily due to
operating costs of acquired companies following decreases in 1994 and 1993.
The decreases in 1994 and 1993 are attributable to the Company's continuing
cost containment efforts. Domestic costs increased 6% in 1995, 29% in 1994 and
1% in 1993. The increases in 1995 and 1994, are mainly due to the operating
costs of acquired companies.
The Company recorded restructuring charges of approximately $48.7 million in
the fourth quarter of 1994. The net effect of such charges on net income in
1994 was $25.7 million or $.34 per share. These restructuring charges, which
were of a one-time nature, related principally to terminations and office
consolidations resulting from the merger of the Lintas New York and Ammirati
& Puris agencies and various other international offices. These charges have
permitted the Company to operate effectively and efficiently in serving its
growing list of clients and to concentrate its resources on creative talent and
client service.
Restructuring charges included severance costs of $38.3 million for involuntary
terminations of approximately 600 employees. The Company realized a reduction
of approximately $18.2 million in salary costs in 1995 from these
-6- PAGE
terminations. As a direct result of the Lintas New York and Ammirati & Puris
merger, the Company sold its Fahlgren Martin and GS&B
operations, incurring charges of $6.7 million. Other costs related to the
consolidation of the Lintas New York and Ammirati & Puris agencies amounted to
$3.7 million.
At December 31, 1994, the liability related to these restructuring charges
amounted to $29.6 million, which consisted of $27.6 million for severance and
$2.0 million for the consolidation of facilities. The amount of cash payments
made during 1995 was approximately $27.8 million. At December 31, 1995, the
Company's liability related to these restructuring charges totalled $1.3
million for severance, and is expected to be paid in the first quarter of 1996.
Interest expense increased 15.5% and 24.5% in 1995 and 1994 and decreased 20.4%
in 1993. The increases in 1995 and 1994 are primarily attributable to
increases in borrowings and interest rates. The decrease in 1993 was due to
the effects of foreign exchange rates and the general decline in interest
rates worldwide.
Equity in net income of unconsolidated affiliates increased in both 1995 and
1994 after a decrease in 1993. The 1995 increase was due to the Company's
investment in Campbell Mithun Esty. The increase in 1994 resulted from the
Company's investment in All American Communications Inc. The decrease in 1993
was mainly due to the consolidation of additional subsidiaries as a result of
increased ownership. Income applicable to minority interests increased in 1995
after a decrease in 1994 and an increase in 1993. The increase in 1995 was
primarily attributable to acquisitions.
-7-
The decrease in 1994 was attributable to the sale of Fremantle in 1994 and
the purchase of the remaining interest in McCann Hakuhodo, Inc. in the
latter part of 1993.
In 1995, the Company wrote down goodwill and other related assets and
recorded a charge of $38.2 million or $.49 per share. On January 1, 1994,
the Company adopted FAS 112, "Employers' Accounting for Postemployment
Benefits" and recorded a net charge of $21.8 million or $.29 per share.
The Company's effective income tax rates were 48.3% in 1995, 43.0% in 1994
and 43.1% in 1993. The increase in 1995 is primarily attributable to the
impact of the write-down of goodwill and other related assets of $38.2
million. The reduction in the effective rate from 1993 to 1994 is due to a
decline in state and local taxes, partly offset by an increase in taxes in
foreign jurisdictions. The Company changed its accounting for income taxes
effective January 1, 1993, as required by FAS 109, "Accounting for Income
Taxes". The impact of adoption was a $.5 million reduction in net income in
1993.
-8-
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in Thousands Except Per Share Data)
ASSETS 1995 1994
Current Assets:
Cash and cash equivalents (includes
certificates of deposit: 1995-$114,182;
1994-$151,341) $ 418,448 $ 413,709
Marketable securities, at cost which
approximates market 38,926 27,893
Receivables (net of allowance for doubtful
accounts: 1995-$21,941; 1994-$22,656) 2,320,248 2,072,764
Expenditures billable to clients 108,165 104,787
Prepaid expenses and other current assets 88,611 56,154
Total current assets 2,974,398 2,675,307
Other Assets:
Investment in unconsolidated affiliates 119,473 63,824
Deferred taxes on income 103,497 84,788
Other investments and miscellaneous
assets 144,963 120,242
Total other assets 367,933 268,854
Fixed Assets, at cost:
Land and buildings 76,813 73,370
Furniture and equipment 360,653 320,164
437,466 393,534
Less accumulated depreciation 240,274 212,755
197,192 180,779
Unamortized leasehold improvements 82,075 67,348
Total fixed assets 279,267 248,127
Intangible Assets (net of accumulated
amortization: 1995-$157,673;
1994-$130,045) 638,168 601,130
Total Assets $4,259,766 $3,793,418
The notes on pages 25 to 39 are an integral part of these statements.
-9- PAGE
FINANCIAL STATEMENTS
INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in Thousands Except Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
Current Liabilities:
Payable to banks $ 162,524 $ 128,529
Accounts payable 2,291,208 2,090,406
Accrued expenses 256,408 292,436
Accrued income taxes 116,557 83,802
Total current liabilities 2,826,697 2,595,173
Noncurrent Liabilities:
Long-term debt 170,262 131,276
Convertible subordinated debentures 113,235 110,527
Deferred compensation and reserve
for termination allowances 235,325 215,893
Accrued postretirement benefits 46,461 45,751
Other noncurrent liabilities 102,909 32,886
Minority interests in consolidated
subsidiaries 15,171 12,485
Total noncurrent liabilities 683,363 548,818
Stockholders' Equity:
Preferred Stock, no par value
shares authorized: 20,000,000
shares issued: none
Common Stock, $.10 par value
shares authorized: 150,000,000
shares issued:
1995 - 89,630,568;
1994 - 87,705,760 8,963 8,771
Additional paid-in capital 446,931 383,678
Retained earnings 704,946 619,627
Adjustment for minimum pension liability (9,088) (6,422)
Cumulative translation adjustment (93,436) (97,587)
1,058,316 908,067
Less:
Treasury stock, at cost:
1995 - 10,002,567 shares;
1994 - 10,001,680 shares 268,946 222,698
Unamortized expense of restricted
stock grants 39,664 35,942
Total stockholders' equity 749,706 649,427
Commitments and Contingencies (see Note 15)
Total Liabilities and Stockholders'
Equity $4,259,766 $3,793,418
-10- PAGE
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31
(Dollars in Thousands Except Per Share Data)
1995 1994 1993
Income:
Commissions and fees $2,093,832 $1,916,376 $1,739,778
Other income 85,907 67,879 54,078
Gross income 2,179,739 1,984,255 1,793,856
Costs and Expenses:
Salaries and related expenses 1,149,964 1,040,579 917,185
Office and general expenses 699,423 661,238 618,466
Interest expense 38,020 32,924 26,445
Write-down of goodwill and other
related assets 38,177 - -
Restructuring charges - 48,715 -
Total costs and expenses 1,925,584 1,783,456 1,562,096
Income before provision for
income taxes and effect of
accounting changes 254,155 200,799 231,760
Provision for Income Taxes:
United States - federal 40,900 26,816 29,277
- state and local 12,366 9,862 14,289
Foreign 69,477 49,655 56,253
Total provision for income taxes 122,743 86,333 99,819
Income of consolidated
companies 131,412 114,466 131,941
Income applicable to minority
interests (7,686) (3,262) (7,606)
Equity in net income of
unconsolidated affiliates 6,086 4,043 944
Income before effect of
accounting changes 129,812 115,247 125,279
Effect of accounting changes:
Postemployment benefits - (21,780) -
Income taxes - - (512)
Net Income $ 129,812 $ 93,467 $ 124,767
Per Share Data:
Income before effect of
accounting changes $ 1.66 $ 1.53 $ 1.67
Effect of accounting changes:
Postemployment benefits - (.29) -
Income taxes - - (.01)
Net Income $ 1.66 $ 1.24 $ 1.66
The notes on pages 25 to 39 are an integral part of these statements.
-11-
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31
(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES: 1995 1994 1993
Net Income $129,812 $ 93,467 $124,767
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization of fixed assets 49,967 45,565 42,537
Amortization of intangible assets 27,628 18,335 18,730
Amortization of restricted stock awards 13,558 11,694 8,837
Provision for deferred income taxes (18,535) (16,609) (524)
Equity in net income of unconsolidated affiliates (6,086) (4,043) (944)
Income applicable to minority interests 7,686 3,262 7,606
Translation losses 4,071 13,962 15,513
Effect of accounting changes - 21,780 512
Restructuring charges, non-cash - 14,001 -
Write-down of goodwill and other related assets 38,177 - -
Other (9,526) (8,272) (7,647)
Change in assets and liabilities, net of acquisitions
Receivables (243,109) (114,077) (66,374)
Expenditures billable to clients (2,107) (2,120) 15,570
Prepaid expenses and other assets (30,008) 3,207 (29,232)
Accounts payable and accrued expenses 182,580 192,600 59,363
Accrued income taxes 11,633 3,233 8,576
Deferred compensation and reserve for termination allowances 8,638 9,293 5,343
Net cash provided by operating activities 164,379 285,278 202,633
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions (64,224) (54,926) (76,528)
Capital expenditures (69,562) (55,925) (78,813)
Proceeds from sales of assets 1,722 34,057 1,513
(Net purchase of) net proceeds from sales of marketable
securities (8,524) 5,161 2,807
Investment in unconsolidated affiliates (14,044) - (9,490)
Net cash used in investing activities (154,632) (71,633) (160,511)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings 17,565 (44,007) 35,467
Proceeds from long-term debt 67,858 33,026 42,409
Payments of long-term debt (14,682) (24,528) (15,533)
Treasury stock acquired (69,720) (44,520) (37,153)
Issuance of common stock 31,206 12,977 19,413
Cash dividends (46,124) (40,360) (35,901)
Net cash (used in) provided by financing activities (13,897) (107,412) 8,702
Effect of exchange rates on cash and cash equivalents 8,889 15,208 (14,334)
Increase in cash and cash equivalents 4,739 121,441 36,490
Cash and cash equivalents at beginning of year 413,709 292,268 255,778
Cash and cash equivalents at end of year $418,448 $413,709 $292,268
The notes on pages 25 to 39 are an integral part of these statements.
-12-
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For The Three-Year Period Ended December 31, 1995
(Dollars in Thousands)
Unamortized
Additional Minimum Cumulative Expense
Common Paid-In Retained Pension Translation Treasury of Restricted
Stock Capital Earnings Liability Adjustment Stock Stock Grants
Balances, December 31, 1994 $8,771 $383,678 $619,627 $(6,422) $(97,587) $222,698 $35,942
Net income 129,812
Cash dividends (46,124)
Foreign currency translation
adjustment 4,151
Awards of common stock under Company
plans:
Achievement Stock Award Plan 167 (98)
1986 Stock Incentive
Plan - Restricted Stock 50 18,256 18,306
Employee Stock Purchase Plan 15 5,073
Exercise of stock options 127 28,849
Purchase of Company's own stock 75,229
Tax benefit relating to
exercise of stock options 5,809
Restricted Stock: Forfeitures 1,608 (1,026)
Amortization (13,558)
Issuance of shares for acquisitions
and poolings of interests 5,099 1,631 (30,491)
Adjustment for minimum pension
liability (2,666)
Balances, December 31, 1995 $8,963 $446,931 $704,946 $(9,088) $(93,436) $268,946 $39,664
The notes on pages 25 to 39 are an integral part of these statements.
-13-
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For The Three-Year Period Ended December 31, 1995
(Dollars in Thousands)
Unamortized
Additional Minimum Cumulative Expense
Common Paid-In Retained Pension Translation Treasury of Restricted
Stock Capital Earnings Liability Adjustment Stock Stock Grants
Balances, December 31, 1993 $8,630 $335,340 $570,267 $(704) $(116,432) $208,821 $24,265
Net income before effect of
accounting change 115,247
Effect of accounting change (21,780)
Cash dividends (40,360)
Foreign currency translation
adjustment 18,845
Awards of common stock under Company
plans:
Achievement Stock Award Plan 209 (119)
1986 Stock Incentive
Plan - Restricted Stock 63 23,386 (1,749) 25,087
Employee Stock Purchase Plan 15 3,910
Exercise of stock options 63 8,988
Purchase of Company's own stock 44,520
Tax benefit relating to
exercise of stock options 2,923
Restricted Stock: Forfeitures 2,283 (1,716)
Amortization (11,694)
Issuance of shares for acquisitions
and pooling of interests 8,922 (3,747) (31,058)
Adjustment for miniumum pension
liability (5,718)
Balances, December 31, 1994 $8,771 $383,678 $619,627 $(6,422) $(97,587) $222,698 $35,942
-14-
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1995
(Dollars in Thousands)
Unamortized
Additional Minimum Cumulative Expense
Common Paid-In Retained Pension Translation Treasury of Restricted
Stock Capital Earnings Liability Adjustment Stock Stock Grants
Balances, December 31, 1992 $8,518 $308,377 $481,401 $ - $(90,472) $169,374 $27,280
Net income before effect of
accounting change 125,279
Effect of accounting change (512)
Cash dividends (35,901)
Foreign currency translation
adjustment (25,960)
Awards of common stock under Company
plans:
Achievement Stock Award Plan 239 (96)
1986 Stock Incentive
Plan - Restricted Stock 14 6,548 (945) 7,507
Employee Stock Purchase Plan 17 4,359
Exercise of stock options 81 12,303
Purchase of Company's own stock 37,153
Tax benefit relating to
exercise of stock options 2,653
Restricted Stock: Forfeitures 3,739 (1,685)
Amortization (8,837)
Issuance of shares for acquisitions 861 (404)
Adjustment for minimum pension
liability (704)
Balances, December 31, 1993 $8,630 $335,340 $570,267 $(704) $(116,432) $208,821 $24,265
-15-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations: The Company is a worldwide provider of advertising
agency and media services. This business is conducted through three
advertising agency systems, (McCann-Erickson Worldwide, Ammirati Puris
Lintas, and The Lowe Group) and Western International Media. The Company
also offers advertising agency services through association arrangements
with local agencies in various parts of the world. Other activities
conducted by the Company within the area of "marketing communications"
include market research, sales promotion, product development, direct
marketing, telemarketing and other related services.
Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its subsidiaries, most of which are wholly
owned. The Company's investment in unconsolidated affiliates is carried on
the equity basis.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Translation of Foreign Currencies: Balance sheet accounts are translated
principally at rates of exchange prevailing at the end of the year except
for fixed assets and related depreciation in countries with highly
inflationary economies which are translated at rates in effect on dates of
acquisition. Revenue and expense accounts are translated at average rates
of exchange in effect during each year. Translation adjustments are
included as a separate component of stockholders' equity except for
countries with highly inflationary economies, which are included in current
operations.
-16-
Commissions, Fees and Costs: Commissions and fees are generally recognized
when media placements appear and production costs are incurred. Salaries
and other agency costs are generally expensed as incurred.
Depreciation and Amortization: Depreciation is computed principally using
the straight-line method over estimated useful lives of the related assets,
ranging generally from 3 to 20 years for furniture and equipment and from 10
to 45 years for various component parts of buildings.
Leasehold improvements and rights are amortized over the terms of related
leases. Company policy provides for the capitalization of all major
expenditures for renewal and improvements and for current charges to income
for repairs and maintenance.
Intangible Assets: The excess of purchase price over the value of net
tangible assets acquired is amortized on a straight-line basis over periods
not exceeding 40 years.
Recoverability of the carrying value of long-lived assets is evaluated
whenever events or changes in circumstances indicate that the net book value
may not be recoverable. If the sum of projected future undiscounted cash
flows is less than the carrying value, an impairment loss is recognized.
The impairment loss is measured by the excess of the carrying value over
fair value based on estimated discounted future cash flows or other
valuation measures.
Income Taxes: Deferred income taxes reflect the impact of temporary
differences between the amount of assets and liabilities recognized for
financial reporting purposes and such amounts recognized for income tax
purposes. The total amount of undistributed earnings of foreign subsidiaries
for income tax purposes was approximately $278.0 million at December 31,
1995. No provision has been made for foreign withholding taxes or United
States income taxes which may become payable if undistributed earnings of
foreign subsidiaries were paid as dividends to the Company, since a major
portion of these earnings has been reinvested in working capital and other
business needs.
-17-
The additional taxes on that portion of undistributed earnings which is
available for dividends are not practicably determinable.
Earnings per Common and Common Equivalent Share: Earnings per share are
based on the weighted average number of common shares outstanding during
each year and, if dilutive, common equivalent shares applicable to grants
under the stock incentive and stock option plans, and assumed conversion of
Convertible Subordinated Debentures.
Treasury Stock: Treasury stock is acquired at market value and is recorded
at cost. Issuances are accounted for on a first in, first out basis.
Concentrations of Credit Risk: The Company's clients are in various
businesses, located in North America, Latin America, Europe and the Pacific
Region. The Company performs ongoing credit evaluations of its clients.
Reserves for credit losses are maintained at levels considered adequate by
management. The Company invests its excess cash in deposits with major
banks and in money market securities. These securities typically mature
within 90 days and bear minimal risk.
-18-
NOTE 2: STOCKHOLDERS' EQUITY
In May 1995, the Company's certificate of incorporation was amended to
increase the number of authorized shares of common stock from 100,000,000 to
150,000,000.
In June 1992, a two-for-one stock split was effected by the payment of a 100
percent stock dividend. The number of shares of common stock reserved for
issuance pursuant to various plans under which stock is issued was increased
by 100 percent.
The Company has a Preferred Share Rights Plan designed to deter coercive
takeover tactics. Pursuant to this plan, common stockholders are entitled
to purchase 1/100 of a share of preferred stock at an exercise price of $100
if a person or group acquires or commences a tender offer for 15% or more of
Interpublic's Common Stock. Rights holders (other than the 15% stockholder)
will also be entitled to buy, for the $100 exercise price, shares of
Interpublic's Common Stock with a market value of $200 in the event a person
or group actually acquires 15% or more of Interpublic's Common Stock.
Rights may be redeemed at $.01 per right under certain circumstances.
-19-
NOTE 3: ACQUISITIONS AND RELATED COSTS
During 1995, the Company acquired several advertising agencies and related
companies for an aggregate purchase price of approximately $140.1 million.
This amount includes the acquisition of Anderson & Lembke effective October
1995 for 587,842 shares of the Company's common stock in exchange for all
the issued and outstanding common stock of Anderson & Lembke. The Company
issued 260,756 shares of the Company's common stock in exchange for all the
issued and outstanding common stock of Addison Whitney. These acquisitions
were accounted for as poolings of interests; however, the Company's
financial statements were not restated for the prior periods as the
Company's consolidated results would not have changed significantly. In
addition, the Company acquired all the outstanding stock of Hasan & Partners
for approximately $11.6 million which included cash payments of $6.9 million
and the issuance of 121,160 shares of the Company's common stock. The
Company acquired 80% of the outstanding stock of Bosch & Butz for 63,720
shares of the Company's common stock and a cash payment of $2.6 million.
During 1995, the Company purchased Newspaper Services of America Inc.
("NSA") and Kevin Morley Marketing ("KMM"). The purchase price for NSA was
comprised of cash payments of $5.3 million and 48,882 shares of the
Company's common stock. The purchase price of the KMM acquisition amounted
to cash payments of $8.0 million. The Company acquired 50% ownership in
Mark Goodson Productions for 656,167 shares of the Company's common stock.
Also, the Company acquired 50% ownership in Campbell Mithun Esty for a cash
payment of $3.2 million. Additionally, the Company acquired a 28% interest
in the CKS Group for cash payments totaling $9.6 million. During 1995, the
Company made deferred payments of $26.9 million related to prior year
acquisitions.
During 1994, the Company acquired several advertising agencies and related
companies for an aggregate purchase price of approximately $100.2 million.
The 1994 acquisitions included Ammirati & Puris, Alice France, Adam Turkey,
the minority interest in Fremantle International and a pooling of interests
with Western International Media. The Company acquired Ammirati & Puris
effective September 1994 for $56.0 million, which included cash
-20-
payments of $21.9 million and the issuance of $1,092,629 shares of the
Company's common stock. The Company acquired a 50% interest in Alice France
for $7.7 million. The Company purchased the remaining 20% ownership
interest in Fremantle for $6.3 million and the issuance of 112,000 shares of
the Company's Common Stock. The Company subsequently sold Fremantle for
$31.5 million in cash and a 39% ownership interest in All American
Communications Inc. valued at $31.5 million. In 1994, the Company issued
1,472,393 shares of common stock in exchange for all the issued and
outstanding common stock of Western International Media. This acquisition
was accounted for as a pooling of interests; however, the Company's
financial statements were not restated for prior periods as the Company's
consolidated results would not have changed significantly. During 1994, the
Company made deferred payments of $18.3 million relating to prior year
acquisitions.
During 1993, the Company acquired several advertising agencies and related
companies for an aggregate purchase price of approximately $88.6 million.
The 1993 acquisitions included Scali, McCabe, Sloves, Inc., the minority
interest in McCann-Erickson Hakuhodo, Inc. in Japan and an ownership
interest in Atlantis Communications, Inc. The Company acquired Scali,
McCabe, Sloves, Inc. effective September 1993 for $49.1 million, which
included cash payments of $37.8 million, the issuance of 37,625 shares of
the Company's Common Stock, and $10.1 million for deferred payments, of
which $4.7 million and $5.3 million were made in 1995 and 1994, respectively
with the remaining payments to be made thereafter. The Company acquired the
remaining 49% ownership interest in McCann-Erickson Hakuhodo, Inc. in Japan
for $23.6 million. The Company acquired a 20% interest in Atlantis
Communications, Inc., a Canadian television production company, through cash
payments, conversion of debt to equity and a transfer of Canadian
programming rights for a total of approximately $12.5 million. These
acquisitions were accounted for as purchases. During 1993, the Company made
deferred payments of $15.4 million relating to prior year acquisitions.
For each of the three years presented, the Company's consolidated results
would not have changed significantly had the revenue and net income of the
companies acquired as purchases been fully included in each year.
-21-
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (FAS) No 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of", which
establishes accounting standards for recognition and measurement of
impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets. Although the statement is not required to
be adopted until fiscal years beginning after December 15, 1995, the Company
has carried out a review for impairment in accordance with the statement
and, as encouraged in the statement, elected to adopt the statement in the
fourth quarter of 1995.
In the fourth quarter of 1995, the Company recorded a non-cash charge of
$38.2 million for impairment of assets (including investments in and
advances to certain unconsolidated companies) and related goodwill. This
write-down is comprised of goodwill of $25.8 million and investments and
advances of $12.4 million and is shown as the write-dwon of goodwill and
other related assets in the consolidated statement of income.
The write-down related primarily to a number of advertising and promotion
agencies, most of which are located in Europe. The amount of the write-down
was based on the excess of the carrying value of the assets over the fair
value of these operations based primarily on discounted projected cash
flows. In determining the fair values, among other factors, management
considered the profitability and trend in profitability of each of the
units, the effects of economic recessions in various markets, changes in
client relationships and spending patterns, the effects of the strong U.S.
dollar versus certain foreign currencies and other economic and legal
factors where applicable.
-22-
NOTE 4: PROVISION FOR INCOME TAXES
Effective January 1, 1993, the Company adopted FAS 109, "Accounting for
Income Taxes". This Statement applies an asset and liability approach that
requires the recognition of deferred tax assets and liabilities with respect
to the expected future tax consequences of events that have been recognized
in the consolidated financial statements and tax returns.
The components of income before taxes are as follows:
(Dollars in Thousands) 1995 1994 1993
Domestic $107,431 $ 70,135 $ 78,488
Foreign 146,724 130,664 153,272
Total $254,155 $200,799 $231,760
The provision for income taxes consisted of:
(Dollars in Thousands) 1995 1994 1993
Federal income taxes (including foreign
withholding taxes):
Current $ 37,149 $ 29,657 $ 28,071
Deferred 3,751 (2,841) 1,206
40,900 26,816 29,277
State and local income taxes:
Current 11,741 12,293 14,682
Deferred 625 (2,431) (393)
12,366 9,862 14,289
Foreign income taxes:
Current 61,255 60,992 57,590
Deferred 8,222 (11,337) (1,337)
69,477 49,655 56,253
Total $122,743 $ 86,333 $ 99,819
-23-
At December 31, 1995 and 1994 the deferred tax assets and (liabilities)
consisted of the following items:
1995 1994
Postretirement/postemployment benefits $ 36,695 $ 39,236
Deferred compensation 7,066 15,006
Pension costs 10,060 8,294
Depreciation (4,695) (1,775)
Rent 26,902 1,402
Interest 5,048 2,779
Accrued reserves 12,388 5,678
Tax loss/tax credit carryforwards 24,833 25,022
Other 4,279 9,195
Total deferred tax assets 122,576 104,837
Deferred tax valuation allowance 19,079 20,049
Net deferred tax assets $103,497 $ 84,788
The valuation allowance of $19,079,000 and $20,049,000 at December 31, 1995
and 1994, respectively, represents a provision for uncertainty as to the
realization of certain deferred tax assets, including U.S. tax credit
carryforwards and net operating loss carryforwards in certain jurisdictions.
At December 31, 1995, there were $11,290,000 of tax credit carryforwards
with expiration periods through 2000 and net operating loss carryforwards
with a tax effect of $13,543,000 with various expiration periods. The
Company has concluded that based upon expected future results, it is more
likely than not that the net deferred tax asset balance will be realized.
-24-
A reconciliation of the Company's effective income tax rate as shown in the
consolidated statement of income to the federal statutory rate is as
follows:
1995 1994 1993
Statutory federal income tax rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal income tax benefit 3.2 2.5 4.0
Impact of foreign operations, including
withholding taxes 3.8 5.4 3.3
Goodwill and intangible assets 7.3 3.1 2.7
Other (1.0) (3.0) (1.9)
Effective tax rate 48.3% 43.0% 43.1%
-25-
NOTE 5: LONG-TERM PERFORMANCE INCENTIVE PLAN
Under the Long-Term Performance Incentive Plan (the "Plan"), grants
consisting of performance units are awarded to certain key employees of the
Company and its subsidiaries. The ultimate value of these performance units
is contingent upon the annual growth of profit (as defined in the Plan) of
the Company, its operating components or both, over a four-year performance
period (1993-1996 Plan and the 1995-1998 Plan), and is generally payable in
cash. The projected value of these units is accrued by the Company and
charged to expense over the four-year performance period.
The Plan also provides that a portion of each participant's grant may be
issued as the equivalent of "phantom" shares of the Company's common stock,
at the rate of thirty-six phantom shares for each performance unit. The
value of phantom shares is a function of the amount, if any, by which the
market value of the Company's common stock increases during the performance
period and is payable either in cash or in shares of the Company's common
stock. The increase in the value of these units is accrued and expensed
over the four-year performance period. In addition, for the 1993-1996 Plan,
amounts of cash equivalent to the quarterly dividends paid on the Company's
common stock are paid to phantom share recipients and expensed pursuant to
the provisions of the Plan.
The Plan cost charged to income was $9.6 million in 1995, $8.5 million in
1994 and $10.0 million in 1993. As of December 31, 1995, the Company's
liability was $24.1 million, which represents the estimated amounts payable
for the 1993-1996 and 1995-1998 performance periods.
The Company's liability for the 1991-1994 performance period was $12.5
million as of December 31, 1994 and was paid in the first quarter of 1995.
-26-
NOTE 6: EMPLOYEE STOCK PLANS
The 1986 Stock Incentive Plan, 1986 United Kingdom Stock Option Plan and
1988 Stock Option Plan
The 1986 Stock Incentive Plan (the "Plan") incorporates both stock option
and restricted stock award features. Under the Plan, 20,000,000 shares of
common stock of the Company are reserved for issuance pursuant to the
exercise of nonqualified stock options granted during the period ending May
20, 1996. Key employees of the Company and its subsidiaries are eligible to
participate in the Plan. At December 31, 1995, there were unexercised
options under the Plan for 6,204,571 shares of the Company's common stock.
Stock options under the Plan have been awarded by the Compensation Committee
(the "Committee") at prices not less than 85 percent of the fair market
value of the Company's common stock on the date each option is granted.
Generally, stock options have been granted at 100% of market value on the
date of grant. The options become exercisable on the basis of a schedule
determined by the Committee. Those awarded prior to December 20, 1988 are
generally exercisable in increments of 25 percent per year commencing on the
first anniversary of the grant of the option. Awards issued on or after
December 20, 1988 generally become exercisable in three annual installments
of 40 percent in the first year and 30 percent in the succeeding two years,
commencing on the third anniversary of the grant of the option. All options
expire ten years from the grant date.
Shares of restricted stock awarded under the 1986 Stock Incentive Plan are
subject to certain restrictions and vesting requirements. No monetary
consideration is paid by a recipient for a restricted stock award. During
1995 and 1994, the Company awarded 497,228 shares and 810,517 shares,
respectively.
-27-
The Company recognized expenses of approximately $13.5 million, $11.6
million and $8.8 million for amortization related to all restricted awards
in 1995, 1994 and 1993, respectively. At December 31, 1995, under the Plan
2,348,962 shares of restricted stock awarded under this Plan were
outstanding. The cost of these shares is being amortized over the
restriction periods. The Plan also authorizes the Committee to direct that
discretionary tax assistance payments may be made to recipients when the
restrictions lapse. Such payments are expensed as awarded.
The 1986 United Kingdom Stock Option Plan ("UK Plan") is similar to the
stock option portion of the 1986 Stock Incentive Plan, except that the
exercise price of options granted under the UK Plan may not be less than the
fair market value of the Company's common stock at the date of grant. Stock
options awarded under the UK Plan are included in the 20,000,000 share limit
provided for in the 1986 Stock Incentive Plan. At December 31, 1995, there
were unexercised options for 366,211 shares of the Company's common stock
under the UK Plan.
Under the 1988 Stock Option Plan, the Company can grant, through 1998,
options to purchase 600,000 shares of the Company's common stock to key
employees employed outside the United States. Exercise requirements are
similar to those under the 1986 Stock Incentive Plan; however, grants may be
made at prices which are less than 85 percent of the fair market value of
the Company's common stock on the date the option is granted. At December
31, 1995, there were unexercised options under the 1988 Stock Option Plan
for 44,175 shares of the Company's common stock.
Under the IPG Outside Directors' Stock Option Plan, the Company can grant,
through 2004, options to purchase 75,000 shares of the Company's common
stock to outside directors who are not current employees. At December 31,
1995, there were unexercised options under this plan for 9,811 shares of the
Company's Common Stock. Stock options under this plan are awarded at the
fair market value of the Company's common stock on the date the option is
granted, generally become excercisable three years after the date of grant
and expire ten years from the date of grant. -28-
Following is a summary of stock option transactions during the three-year
period ended December 31, 1995:
_______________________________________________________________________
Number of Shares Option Price Range
Under Option Per Share
_______________________________________________________________________
Balances, December 31, 1992 7,136,722
New Awards:
1986 Stock Incentive Plan 667,820 $21.463 - $34.063
1986 United Kingdom Stock
Option Plan 33,720 28.688 - 31.938
Exercised (810,009) 6.951 - 24.172
Cancelled (301,033) 9.083 - 34.000
Balances, December 31, 1993 6,727,220
New Awards:
1986 Stock Incentive Plan 342,658 24.756 - 34.250
1986 United Kingdom Stock
Option Plan* 39,020 31.125 - 32.750
IPG Outside Directors Stock
Option Plan* 5,646 31.875 - 31.875
Exercised (627,374) 6.951 - 28.688
Cancelled (397,028) 6.951 - 34.000
Balances, December 31, 1994 6,090,142
New Awards:
1986 Stock Incentive Plan 1,910,442 32.063 - 40.500
1986 United Kingdom Stock
Option Plan 162,190 32.063 - 40.500
IPG Outside Directors Stock
Option Plan 4,165 36.000 - 36.000
Exercised (1,269,033) 6.951 - 34.000
Cancelled (273,138) 6.951 - 33.063
Balances, December 31, 1995 6,624,768 6.951 - 40.500
Exercisable, December 31, 1995 3,025,655 $6.951 -$40.500
* Disaggregated for comparative purposes.
-29-
Under the Company's Achievement Stock Award Plan, awards may be made up to
an aggregate of 1,248,000 shares of common stock together with cash awards
to cover any applicable withholding taxes. As of December 31,
1995, 1,170,617 shares had been awarded, with 7,185 shares awarded during
1995.
The Employee Stock Purchase Plan (the "1995 Plan") was adopted by the
stockholders, effective July 1, 1995. It replaced the 1985 Employee Stock
Purchase Plan (the "1985 Plan") which was in effect from July 1, 1985
through June 30, 1995. The essential features of both the 1985 Plan and the
1995 Plan are the same. Employees may purchase common stock of the Company
through one or more consecutive annual offerings. Employees may purchase
common stock of the Company through payroll deductions not exceeding 10
percent of their compensation. The price an employee pays for a share of
the Company's common stock is 85 percent of the average market price on the
last business day of the month. During 1995, 158,547 shares were issued
(69,953 shares under the 1985 Plan and 88,594 shares under the 1995 Plan).
At December 31, 1995, an additional 5,911,406 shares were reserved for
issuance under the 1995 Plan.
FAS 123, "Accounting for Stock-Based Compensation" is effective for
financial statements for fiscal years beginning after December 15, 1995.
The Company will adopt this Statement in 1996. As permitted by this
Statement, the Company intends to continue to apply Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees", in
accounting for its stock-based employee compensation arrangements.
Accordingly, the adoption of FAS 123 will only impact the Company's
disclosure requirements.
-30-
NOTE 7: RETIREMENT PLANS
Domestic Retirement Plan
The Company and certain of its domestic subsidiaries have a defined benefit
plan ("Domestic Plan") which covers substantially all regular employees.
The Company's policy is to fund pension costs as permitted by applicable tax
regulations. Pension costs are determined by the projected unit credit
method based upon career average pay. Funding requirements for the Domestic
Plan are determined using the accrued benefit unit credit method. The
Domestic Plan was amended as of January 1, 1992 to provide that pension
benefits accrued after that date would be calculated under a new "cash
balance" formula. Under the cash balance formula, the participant's account
balance is credited each year with an amount equal to a percentage of that
year's annual compensation, plus interest credits. Participants in the
Domestic Plan on December 31, 1991 who continued to work for the Company
after that date had their normal retirement benefits under the plan as of
that date converted on an actuarial basis into an opening account balance as
of January 1, 1992.
In accordance with FAS 87, "Employers' Accounting for Pensions", the Company
recorded an additional minimum pension liability for the Domestic Plan of
$19.5 million and $17.2 million at December 31, 1995 and 1994, respectively,
representing the excess of unfunded accumulated benefit obligation over
previously recorded pension cost liabilities. A corresponding amount was
recognized as an intangible asset to the extent of unrecognized prior
service cost and net transition obligation, with the balance recorded as a
separate reduction of stockholders' equity. In 1995 and 1994, the Company
recorded an intangible asset of $10.5 million and $10.8 million and a
reduction charge to stockholders' equity of $9.0 million and $6.4 million,
respectively.
-31-
Net pension costs for the Domestic Plan for 1995, 1994 and 1993 included the
following components:
(Dollars in Thousands) 1995 1994* 1993*
Service cost-benefits earned
during the year $ 3,322 $ 3,688 $ 3,735
Interest cost on projected benefit
obligation 10,398 9,768 9,943
Actual return on plan assets (20,622) 2,457 (10,831)
Amortization of unrecognized
transition obligation - asset 1,887 1,887 1,887
Amortization of unrecognized
prior service cost (1,769) (1,738) (1,522)
Amortization of unrecognized
losses 309 - -
Deferred investment loss (gain) 10,874 (13,174) 685
Total pension cost $ 4,399 $ 2,888 $ 3,897
* Disaggregated Reclassified for comparative purposes.
The following table sets forth the funded status and amounts recognized for
the Domestic Plan in the Company's consolidated balance sheet at December
31, 1995 and 1994:
(Dollars in Thousands) 1995 1994
Actuarial present value of accumulated
benefit obligation (including vested
benefits of $124,701 in 1995 and
$112,251 in 1994) $127,964 $115,675
Actuarial present value of projected benefit
obligation 135,458 121,111
Plan assets at fair value 110,730 99,819
Projected benefit obligation in excess of
plan assets (24,728) (21,292)
Unrecognized net losses 16,582 11,858
Unrecognized prior service cost (867) (2,411)
Unrecognized net transtion obligation 11,324 13,211
Additional minimum liability (19,545) (17,222)
Accrued pension liability
$(17,234) $(15,856)
-32-
At December 31, 1995, Domestic Plan assets were primarily invested in fixed
income and equity securities. Prior service costs are being amortized over
the estimated average remaining service period of active employees. The
initial net transition obligation is being amortized over 15 years.
A discount rate of 7.25% in 1995, 8.5% in 1994 and 7.5% in 1993 and a salary
increase assumption of 6% in 1995, 1994, and 1993 were used in determining
the actuarial present value of the projected benefit obligation. The
expected return on assets was 10% in 1995, 1994 and 1993.
Foreign Retirement Plans
The Company has several foreign pension plans in which benefits are based
primarily on years of service and employee compensation. It is the
Company's policy to fund these plans in accordance with local laws and
income tax regulations.
Net pension costs for foreign pension plans for 1995, 1994 and 1993
included the following components:
(Dollars in Thousands) 1995 1994* 1993*
Service cost-benefits earned during
the year $ 5,276 $ 6,215 $ 5,117
Interest cost on projected benefit
obligation 11,054 9,726 10,204
Actual return on plan assets (8,738) 5,109 (21,029)
Net amortization and deferral 1,372 (12,690) 13,604
Unrecognized net(gain)/loss (1,367) 23 -
Other - 59 339
Total pension cost $ 7,597 $ 8,442 $ 8,235
* Disaggregated for comparative purposes.
-33-
The following table sets forth the funded status and amounts recognized for the
foreign pension plans in the Company's consolidated balance sheet at December 31, 1995 and 1994:
(Dollars in Thousands) 1995 1994
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
Actuarial present value of
accumulated benefit obligation
(including vested benefits of:
1995 - $57,723 and $70,747;
1994 - $51,978 and $69,315) $57,806 $77,075 $52,093 $ 76,929
Actuarial present value of
projected benefit obligation 64,974 89,844 58,949 87,499
Plan assets at fair value 103,438 11,440 87,998 10,047
Projected benefit obligation
less than (in excess of)
plan assets 38,464 (78,404) 29,049 (77,452)
Unrecognized net loss (27,370) (4,745) (22,383) (2,495)
Unrecognized prior service
cost 4,174 46 4,944 -
Unrecognized net (asset)/
obligation (1,807) 7,171 (2,239) 8,746
Prepaid (accrued) pension cost at
December 31, 1995 and 1994 $13,461 $(75,932) $ 9,371 $(71,201)
-34-
Foreign plans utilized discount rates ranging from 5.5% to 12.0% and
4.0% to 12.0% in 1995 and 1994, respectively, and salary increase
assumptions ranging from 2.0% to 10.0% in both 1995 and 1994, to
determine the actuarial present value of the projected benefit
obligation. The expected rates of return on assets of foreign plans
ranged from 4.0% to 12.0% in 1995 and 5.5% to 12.0% in 1994.
The Company also has Special Deferred Benefit Arrangements with certain
key employees. Vesting is based upon the age of the employee and the
terms of the employee's contract. Life insurance contracts have been
purchased in amounts which may be used to fund these arrangements.
-35-
NOTE 8: POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
Postretirement Benefit Plans
The Company and its subsidiaries provide certain postretirement health
care benefits for employees who were in the employ of the Company as of
January 1, 1988, and life insurance benefits for employees who were in
the employ of the Company as of December 1, 1961. The plans cover
employees in the United States and certain key employees in foreign
countries. Effective January 1, 1993, the Company's plan covering
postretirement medical benefits was amended to place a cap on annual
benefits payable to retirees. Such coverage is self-insured, but is
administered by an insurance company.
The Company accrues the expected cost of postretirement benefits other
than pensions over the period in which the active employees become
eligible for such postretirement benefits.
The components of periodic expense for these postretirement benefits
for 1995 and 1994 were as follows:
(Dollars in Thousands) 1995 1994
Service cost - benefits earned during the year $ 583 $ 653
Interest cost on accumulated postretirement
benefit obligation 3,047 2,714
Amortization of prior service cost (934) (463)
Total periodic expense $2,696 $2,904
-36-
The following table sets forth the funded status and amounts recognized
for the Company's postretirement benefit plans in the consolidated
balance sheet at December 31, 1995 and 1994:
(Dollars in Thousands)
1995 1994*
Accumulated postretirement benefit
obligation:
Retirees $ 28,505 $ 24,392
Fully eligible active plan participants 5,614 4,764
Other active plan participants 8,133 6,914
Total accumulated postretirement
benefit obligation 42,252 36,070
Plan assets at fair value - -
Accumulated postretirement benefit
obligation in excess of plan assets (42,252) (36,070)
Unrecognized net loss/(gain) 1,423 (3,115)
Unrecognized prior service cost (5,632) (6,566)
Accrued postretirement benefit liability $(46,461) $(45,751)
* Disaggregated for comparative purposes.
A discount rate of 7.25% in 1995 and 8.5% in 1994 and a salary increase
assumption of 6% in both 1995 and 1994, were used in determining the
accumulated postretirement benefit obligation. A 9.5% and a 11%
increase in the cost of covered health care benefits were assumed for
1995 and 1994,respectively. This rate is assumed to decrease
incrementally to 6% in the year 2002 and remain at that level
thereafter. The health care cost trend rate assumption does not have a
significant effect on the amounts reported. For example, a 1% increase
in the health care cost trend rate would increase the accumulated
postretirement benefit obligation at December 31, 1995 by approximately
$1.8 million, and the net periodic cost for 1995 by approximately $.2
million.
Postemployment Benefits
Effective January 1, 1994, the Company adopted FAS 112, "Employer's
Accounting for Postemployment Benefits", and recognized a one-time
after-tax charge of $21.8 million. This Statement requires the Company
to accrue the costs of certain benefits, including severance, worker's
compensation and health care coverage over an employee's service life.
The Company's liability for postemployment benefits totalled $36.2
million and $34.6 million at December 31, 1995 and 1994, respectively,
and is included in deferred compensation and reserve for termination
allowances. The net periodic expense recognized in 1995 and 1994 was
$8.8 million and $5.9 million, respectively.
-37-
NOTE 9: SHORT-TERM BORROWINGS AND FINANCIAL INSTRUMENTS
The Company and its domestic subsidiaries have lines of credit with
various banks. These credit lines permit borrowings at fluctuating
interest rates determined by the banks. Short-term borrowings by
subsidiaries outside the United States principally consist of drawings
against bank overdraft facilities and lines of credit. These
borrowings bear interest at the prevailing local rates. Where
required, the Company has guaranteed the repayment of the borrowings.
Unused lines of credit by the Company and its subsidiaries at December
31, 1995 and 1994 aggregated $319 million and $349 million,
respectively. The weighted average interest rate on outstanding
balances at December 31, 1995 was 8.4%. Included in payable to banks
are current maturities of long-term debt.
The Company occasionally uses forwards and options to hedge a portion
of its net investment in foreign subsidiaries and certain intercompany
transactions in order to mitigate any impact of changes in foreign
exchange rates on working capital. The amount of such hedges at the
end of the year was not significant.
-38-
NOTE 10: LONG-TERM DEBT
Long-term debt at December 31 consisted of the following:
(Dollars in Thousands) 1995 1994
Convertible Subordinated Debentures - 3.75% $113,235 $110,527
Term loans-5.5% to 14.0%.(5.5% to 14.0%
in 1994) 158,333 106,667
Mortgage notes payable and other long-term loans-
7.5% to 9.0% (7.6% to 9.7% in 1994) 44,604 39,507
316,172 256,701
Less: current portion 32,675 14,899
Long-term debt $283,497 $241,802
The increase in long-term debt during 1995 primarily resulted from an
additional private placement with the Prudential Insurance Company
(Prudential) of $25.0 million at 7.9%, and additional term loans of
$25.0 million at 6.5% with National Bank of Detroit and $15.0 million
at 7.8% with Trust Company Bank. This debt represents long-term
refinancing of short-term debt.
The Convertible Subordinated Debentures were issued in April 1992 and
mature on April 1, 2002 with a face value of $135 million. The terms
of the bond offering included an issuance price equal to 77% of the
face value with a coupon of 3.75%. The debentures are convertible into
common stock of the Company at a rate of 22.238 shares per each U.S.
$1,000 principal amount. Most of the proceeds were used to pay down
existing debt.
Additional long-term debt at December 31, 1995 consisted of $100
million of private placements with Prudential, $30 million in term
loans with National Bank of Detroit, $23 million in term loans with
Trust Company Bank and a $5 million private placement loan with
Massachusetts Mutual. The private placements with Prudential have
payments due in 1996 through 1998 and 2002 through 2005. The other
term loans have payments due in 1996 through 1998 and 2000 through
2002.
Mortgage notes payable and other long-term loans at December 31, 1995
primarily related to a $38.4 million mortgage which was used to finance
-39-
the purchase of a building and land by one of the Company's
subsidiaries during 1993. The terms of the mortgage call for payments
of approximately $.6 million from 1996-2001 with a balloon payment of
$34.7 million thereafter.
Under various loan agreements, the Company must maintain specified
levels of net worth and meet certain cash flow requirements, and is
limited in the level of indebtedness. The Company has complied with
the limitations under the terms of these loan agreements.
Long-term debt maturing over the next five years is as follows: 1996:
$32.7 million; 1997: $19.3 million; 1998: $19.0 million; 1999: $.7
million; and 2000: $5.7 million. Of the remaining debt of $233.7
million, $199.0 million matures during the years 2001-2005 while $34.7
million matures in subsequent years.
All material financial instruments are carried in the consolidated
balance sheet at amounts which approximate fair values. The fair value
was estimated by obtaining quotes from brokers.
-40-
NOTE 11: DISCLOSURES UNDER FAS 95
This Statement requires disclosures of specific cash payments and
non-cash investing and financing activities. The Company considers all
highly liquid investments with a maturity of three months or less to be
cash equivalents.
Cash paid for income taxes was $80.8 million, $67.1 million, $78.5
million, in 1995, 1994 and 1993, respectively. Interest payments were
$25.0 million in 1995, $23.0 million in 1994 and $24.1 million in 1993.
As more fully described in Note 3, in 1995 the Company issued 587,842
and 260,756 shares of its common stock in exchange for all the issued
and outstanding stock of Anderson & Lembke and Addison Whitney,
respectively. Additionally, the Company issued in conjunction with the
acquisitions of Hasan & Partners, Bosch & Butz, and Newspaper Services
of America, Inc., 121,160, 63,720, and 48,882 shares of its common
stock, respectively. In 1994, the Company issued 1,092,629 shares of
its common stock in conjunction with the acquisition of Ammirati &
Puris and a total of 1,472,393 shares of it common stock in connection
with the pooling of interest with Western International Media. During
1993, the Company issued 37,625 shares in conjunction with the
acquisition of Scali, McCabe, Sloves, Inc.
Details of businesses acquired in transaction accounted for as
purchases were as follows:
(Dollars in Thousands) 1995 1994 1993
Fair value of assets acquired $ 73,142 $163,423 $172,166
Liabilities assumed 11,170 64,998 91,736
Net assets acquired 61,972 98,425 80,430
Less: non-cash consideration 9,637 38,525 1,135
Less: cash acquired 5,481 4,974 2,767
Net cash paid for acquisitions $ 46,854 $ 54,926 $ 76,528
-41-
The 1995 amounts shown above exclude deferred payments of $3.2 million
in connection with the acquisitions of various advertising agencies,
which are payable in 1996 and thereafter, but includes $26.9 million of
deferred payments made during 1995 relating to various prior year
acquisitions.
The 1994 amounts shown above exclude deferred payments of $9.5 million
in connection with the acquisition of various advertising agencies,
which are payable in future years, but include $18.3 million of
deferred payments made during 1994 relating to various acquisitions.
The 1993 amounts shown above exclude deferred payments of $10.1 million
in connection with the Scali, McCabe, Sloves, Inc. acquisition, which
were paid in 1994 and 1995, but include $15.4 million of deferred
payments made during 1993 relating to various prior year acquisitions.
-42-
NOTE 12: RESULTS BY QUARTER (UNAUDITED)
___________________________________________________________________________________________________________________
(Dollars in Thousands 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Except Per Share Data) 1995 1994 1995 1994 1995 1994 1995 1994
Gross income $460,420 $420,962 $557,154 $497,505 $492,486 $440,508 $669,679 $625,280
Operating expenses 425,592 389,688 435,588 396,331 444,909 400,591 543,298 515,207
Restructuring charges - - - - - - - 48,715
Write-down of goodwill and
Other related assets - - - - - - 38,177 -
Provision for income
taxes 11,567 10,367 47,390 39,268 15,953 14,279 47,833 22,419
Net income before effect of
accounting change 15,176 12,990 63,768 54,099 22,181 17,404 28,687 30,754
Effect of accounting change:
Postemployment benefits - (21,780) - - - - - -
Net income/(loss) 15,176 (8,790) 63,768 54,099 22,181 17,404 28,687 30,754
Per Share Data:
Before effect of accounting
change .20 .17 .82 .72 .28 .23 .36 .40
Effect of accounting change:
Postemployment benefits - (.29) - - - - - -
Net income/(loss) .20 (.12) .82 .72 .28 .23 .36 .40
Cash dividends per share .140 .125 .155 .140 .155 .140 .155 .140
Price range per share:
High 37 3/8 34 39 33 40 34 3/4 43 3/8 35 3/8
Low $32 3/8 $29 5/8 $35 1/4 $27 7/8 $36 $30 1/2 $37 3/8 $29 1/2
-43-
NOTE 13: GEOGRAPHIC AREAS
Total assets, income from commissions and fees and income before
provision for income taxes are presented below by major geographic
area:
(Dollars in Thousands) 1995 1994 1993
Total Assets:
United States $1,864,095 $1,559,768 $ 970,242
International
Europe 1,554,283 1,372,466 1,133,057
Asia Pacific 515,219 560,965 457,444
Latin America 193,592 183,701 171,826
Other 132,577 116,518 137,248
Total International 2,395,671 2,233,650 1,899,575
Total Consolidated $4,259,766 $3,793,418 $2,869,817
Income From Commissions and Fees:
United States $ 754,576 $ 713,497 $ 582,183
International
Europe 837,006 719,881 710,386
Asia Pacific 281,961 268,124 242,255
Latin America 152,503 153,469 136,509
Other 67,786 61,405 68,445
Total International 1,339,256 1,202,879 1,157,595
Total Consolidated $2,093,832 $1,916,376 $1,739,778
-44-
(Dollars in Thousands) 1995 1994 1993
Income Before Provision for Income Taxes:
Operating income:
United States $ 131,194 $ 88,208 $ 94,475
International
Europe 73,424 56,281 80,139
Asia Pacific 48,292 43,376 44,193
Latin America 31,626 40,975 34,021
Other 7,638 4,884 5,376
Total International 160,980 145,516 163,729
Items not allocated to operations,
principally interest expense:
United States (23,763) (18,073) (15,987)
International (14,256) (14,852) (10,457)
Total Consolidated $ 254,155 $ 200,799 $ 231,760
The largest client of the Company contributed approximately 11% in
1995, and 10% in both 1994 and 1993 to income from commissions and
fees. The Company's second largest client contributed approximately 8%
in both 1995 and 1994, and 10% in 1993 to income from commissions and
fees.
Dividends received from foreign subsidiaries were $31.8 million in
1995, $43.6 million in 1994 and $40.1 million in 1993. Net assets of
foreign subsidiaries were approximately $584 million, $558 million and
$512 million at December 31, 1995, 1994 and 1993, respectively.
-45-
Consolidated net income includes losses from exchange and translation
of foreign currencies of $4.7 million, $10.6 million and $13.9 million
in 1995, 1994 and 1993, respectively.
-46-
NOTE 14: RESTRUCTURING CHARGES
In the fourth quarter of 1994, the Company recorded restructuring
charges of $48.7 million in connection with the elimination of
duplicate facilities and excess personnel resulting primarily from the
merger of Lintas New York and Ammirati & Puris agencies and certain
international offices. This amount included $38.3 million of severance
charges for involuntary terminations of approximately 600 employees,
$6.7 million related to the abandonment of operations and $3.7 million
for the consolidation of facilities. At December 31, 1995, the
Company's liability related to these restructuring charges totalled
$1.3 million for severance, and is included in accrued expenses. The
amount of cash payments made during 1995 was approximately $27.8
million. The remaining liability is expected to be paid in the first
quarter of 1996.
-47-
NOTE 15: COMMITMENTS AND CONTINGENT LIABILITIES
At December 31, 1995, the Company's subsidiaries operating outside the
United States were contingently liable for discounted notes receivable
of approximately $12.0 million.
The Company and its subsidiaries lease certain facilities and
equipment. Gross rental expense amounted to approximately $164 million
for 1995, $141 million for 1994 and $135 million for 1993, which was
reduced by sublease income of $19.5 million, $10.8 million and $15.4
million in 1995, 1994 and 1993, respectively. During 1995, the Company
entered into a transaction whereby it acquired the leasing operations
of a third party at a cost of approximately $7 million. These leasing
operations include equipment leased from the equipment owner (the
"Owner"), which has in turn been leased to a third party (the
"Sublessee"). Both leases are accounted for by the Company as
operating leases. The Sublessee has prepaid $46.6 million of it's
obligations under the sublease agreement. This prepayment is held in
an interest-bearing escrow account and is to be used to meet the
Company's lease obligations to the Owner. At December 31, 1995, the
escrow amount of $44.9 million is reflected in prepaid expenses and
miscellaneous assets and the unearned sublease income amount of $41.3
million is reflected in other noncurrent liabilities. The deferred tax
asset attributable to the prepaid sublease obligation amounts to $31.1
million at December 31, 1995.
-48-
Minimum rental commitments for the rental of office premises and
equipment under noncancellable leases, some of which provide for rental
adjustments due to increased property taxes and operating costs for
1995 and thereafter, are as follows:
(Dollars in Thousands)
Gross Sublease
Period Amount Income
1996 $143,464 $25,659
1997 118,398 22,420
1998 93,087 12,580
1999 74,349 5,836
2000 68,366 4,664
2001 and thereafter 200,810 8,589
Certain of the Company's acquisition agreements provide for the payment
by the Company of future contingent consideration based upon future
revenues or profits of the companies acquired.
The Company and certain of its subsidiaries are party to various tax
examinations, some of which have resulted in assessments. The Company
intends to vigorously defend any and all assessments and believes that
additional taxes (if any) that may ultimately result from the
settlement of such assessments and open examinations would not have a
material adverse effect on the consolidated financial statements.
-49-
REPORT OF INDEPENDENT ACCOUNTANTS
_______________________________________________________________________
1177 Avenue of the Americas
New York, New York 10036
To the Board of Directors and Stockholders of
The Interpublic Group of Companies, Inc. February 13, 1996
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of stockholders' equity and
of cash flows present fairly, in all material respects, the financial
position of The Interpublic Group of Companies, Inc. and its
subsidiaries (the "Company") at December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. These financial statements
are the responsibility of the Company's management; our responsibility
is to express an opinion on these financial statements based on our
audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Notes 3, 8 and 4 to the consolidated financial
statements, during 1995, the Company changed its method of accounting
for long-lived assets in accordance with Statement of Financial
Accounting Standards No. 121, effective January 1, 1994, the Company
changed its method of accounting for postemployment benefits as
required by Statement of Financial Accounting Standards No. 112, and
effective January 1, 1993, the Company changed its method of accounting
for income taxes as required by Statement of Financial Accounting
Standards No. 109.
Price Waterhouse LLP
-50-
SELECTED FINANCIAL DATA FOR FIVE YEARS
__________________________________________________________________________________________________
(Dollars in Thousands
Except Per Share Data) 1995 1994 1993 1992 1991
Operating Data
Gross income $ 2,179,739 $ 1,984,255 $ 1,793,856 $ 1,855,971 $ 1,677,498
Operating expenses 1,849,387 1,701,817 1,535,651 1,615,592 1,458,716
Restructuring charges - 48,715 - - -
Write-down of goodwill and other
related assets 38,177 - - - -
Interest expense 38,020 32,924 26,445 33,221 33,499
Provision for income taxes:
United States - federal 40,900 26,816 29,277 23,719 24,740
- state and local 12,366 9,862 14,289 12,181 11,451
Foreign 69,477 49,655 56,253 55,435 51,493
Total provision for income taxes 122,743 86,333 99,819 91,335 87,684
Income before effect of accounting
changes 129,812 115,247 125,279 111,913 94,557
Effect of accounting changes:
Postemployment benefits - (21,780) - - -
Income taxes - - (512) - -
Postretirement benefits - - - (24,640) -
Net Income 129,812 93,467 124,767 87,273 94,557
Cash dividends 46,124 40,360 35,901 32,483 29,265
Per Share Data
Income before effect of accounting
changes 1.66 1.53 1.67 1.50 1.30
Effect of accounting changes:
Postemployment benefits - (.29) - - -
Income taxes - - (.01) - -
Postretirement benefits - - - (.33) -
Net Income 1.66 1.24 1.66 1.17 1.30
Cash dividends .605 .545 .49 .45 .41
Financial Position
Working capital 147,701 80,134 167,175 224,534 178,004
Total assets 4,259,766 3,793,418 2,869,817 2,623,345 2,784,300
Long-term debt 283,497 241,803 226,085 200,237 170,458
Stockholders' equity per share $ 9.42 $ 8.36 $ 7.54 $ 6.81 $ 7.78
Other Data
Weighted average number
of shares 78,180,072 75,570,445 75,215,521 74,974,618 72,860,086
Number of employees 19,700 18,100 17,600 16,800 16,800
Reflects the cumulative effect of adopting FAS 112, "Employers' Accounting for Postemployment Benefits.
<55> Reflects the cumulative effect of FAS 109, "Accounting for Income Taxes"
Reflects the cumulative effect of FAS 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions"
Note: All data are restated to reflect the two-for-one stock split effected in June 1992 in the form of
a 100% stock dividend.
-51-
REPORT OF MANAGEMENT
The financial statements, including the financial analyses and all
other information in this Annual Report, were prepared by management,
who is responsible for their integrity and objectivity. Management
believes the financial statements, which require the use of certain
estimates and judgements, reflect the Company's financial position and
operating results in conformity with generally accepted accounting
principles. All financial information in this Annual Report is
consistent with the financial statements.
Management maintains a system of internal accounting controls which
provides reasonable assurance that, in all material respects, assets
are maintained and accounted for in accordance with management's
authorization and transactions are recorded accurately in the books and
records. To assure the effectiveness of the internal control system,
the organizational structure provides for defined lines of
responsibility and delegation of authority. The Company has formally
stated and communicated policies requiring of employees high ethical
standards in their conduct of its business. As a further enhancement
of the above, the Company's comprehensive internal audit program is
designed for continual evaluation of the adequacy and effectiveness of
its internal controls and measures adherence to established policies
and procedures.
The Audit Committee of the Board of Directors is comprised of three
directors who are not employees of the Company. The Committee reviews
audit plans, internal controls, financial reports and related matters,
and meets regularly with management, internal auditors and independent
accountants. The independent accountants and the internal auditors
have free access to the Audit Committee, without management being
present, to discuss the results of their audits or any other matters.
-52-
The independent accountants, Price Waterhouse LLP, are recommended by
the Audit Committee of the Board of Directors and selected by the Board
of Directors, and their appointment is ratified by the shareholders.
The independent accountants have examined the financial statements of
the Company and their opinion is presented on page 40.
-53-
EXHIBIT 21
March 25, 1996
PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
NAME ORGANIZED PARENT (%) IMMEDIATE PARENT
Domestic:
The Interpublic Group of Companies, Inc. Delaware - -
(Registrant)
Campbell Mithun Esty Inc. Minnesota 50 Registrant
Casablanca Productions California 100 Registrant
The Fulfillment House California 100 Registrant
Dailey & Associates California 100 Registrant
International Business Services, Inc. California 100 Infoplan International, Inc.
NRG Vitamins California 100 Registrant
North Light, Ltd. California 100 Dailey & Associates
Radio Home Shopping Network California 100 Registrant
Specialized Media/Marketing Services, Inc. California 100 Registrant
Sports Call, Inc. California 100 Registrant
Spotlink Incorporated California 100 Registrant
Television Marketing Group, Inc. California 100 Registrant
The Phillips-Ramsey Co. California 100 Registrant
University Sports Connection California 100 Registrant
US Yellow Pages, Inc. California 100 Registrant
Western International Media Corporation California 100 Registrant
Western International Entertainment California 100 Registrant
Corporation
Western International Premiums Corporation California 100 Registrant
PAGE
Western International Syndication Corporation California 100 Registrant
Western Media Associates, Inc. California 100 Registrant
McCann-Erickson Event Marketing, Inc. Colorado 100 McCann-Erickson USA, Inc.
Ammirati Puris Lintas Inc. Delaware 100 Registrant
Asian Media Corporation Delaware 100 Registrant
Asset Recovery Group, Inc. Delaware 100 Registrant
Broadcast Audit Bureau Delaware 100 Registrant
Business Science Research Corporation, Inc. Delaware 100 Registrant
Healthcare Capital, Inc. Delaware 100 McCann Healthcare, Inc.
Infoplan International, Inc. Delaware 100 Registrant
Interpublic Television, Inc. Delaware 100 Registrant
LFS, Inc. Delaware 100 Registrant
Lintas Campbell-Ewald Company Delaware 100 Registrant
Lintas USA, Inc. Delaware 100 Registrant
Jack Tinker Advertising, Inc. Delaware 100 Registrant
McCann-Erickson USA, Inc. Delaware 100 Registrant
McCann-Erickson Corporation (International) Delaware 100 Registrant
McCann-Erickson Corporation (S.A.) Delaware 100 Registrant
McCann-Erickson (Paraguay) Co. Delaware 100 Registrant
McCann-Erickson Worldwide, Inc. Delaware 100 Registrant
McCann Healthcare, Inc. Delaware 100 McCann-Erickson USA, Inc.
The Lowe Group, Inc. Delaware 100 Deo Nederland B.V.
Time Machine, Inc. Delaware 100 Registrant
Benito Advertising, Inc. Florida 100 LFS, Inc.
Quest & Associates, Inc. Kansas 100 Registrant
Adware Systems, Inc. Kentucky 100 McCann-Erickson USA, Inc.
Lintas Marketing Communications, Inc. Michigan 100 Registrant
Western International Media Corporation of Michigan 100 Registrant
Michigan
Interpublic, Inc. New Jersey 100 Registrant
Ammirati & Puris, Inc. New York 100 Registrant
McCann Direct, Inc. New York 100 Registrant
Western International Media Corporation of New York 100 Registrant
New York
PAGE
The Gotham Group, Inc. New York 100 Registrant
Momentum IMC Company New York 100 Registrant
Lowe & Partners Inc. New York 100 Lowe International Limited (80%) and
Lowe Worldwide Holdings B.V. (20%)
LCF&L, Inc. New York The Lowe Group, Inc. (99.9%) and
GDL, Inc. (.1%)
Goldschmidt Dunst & Lawson Corp. New York 100 The Lowe Group, Inc.
GDL, Inc. New York 100 The Lowe Group, Inc.(100% of Common
Stock) and Goldschmidt Dunst &
Lawson Corp. (100% of Preferred Stock)
Scali, McCabe, Sloves, Inc. New York 100 Registrant
Long Haymes Carr Lintas, Inc. North Carolina 100 Registrant
The Martin Agency, Inc. Virginia 91 Scali, McCabe, Sloves, Inc.
Alan S. Newman Associates, Inc. Virginia 100 The Martin Agency, Inc.
The Stenrich Group Inc. Virginia 100 The Martin Agency, Inc.
Cabell Eanes, Inc. Virginia 100 The Martin Agency, Inc.
FOREIGN:
Interpublic S.A. de Publicidad Argentina 100 Registrant
Lintas Proprietary Limited Australia
(New South Wales) 100 Registrant
Lintas Communications Pty. Limited Australia
(New South Wales) 100 Lintas Proprietary Limited
Underline Design Group Pty. Limited Australia 51 Lintas Communications Pty. Limited
McCann-Erickson Advertising Pty. Limited Australia
(New South Wales) 100 Registrant
Sales Communications International Pty. Limited Australia
(New South Wales) 100 McCann Erickson Advertising Pty. Ltd.
Merchant and Partners (Sydney) Pty. Ltd. Australia 100 Merchant and Partners Australia Pty.
Limited
PAGE
Merchant and Partners Australia Pty. Limited Australia 100 Registrant
Lintas Melbourne Proprietary Limited Australia
(Victoria) 100 Lintas Proprietary Limited
Initiatives Media Werbemittlung Ges. m.b.H. Austria 100 Lintas Werbeagentur Gesellschaft m.b.H.
Lintas Werbeagentur Gesellschaft m.b.H. Austria 100 Registrant
McCann-Erickson Gesellschaft m.b.H. Austria 100 Registrant
PCS Werbeagentur Ges. m.b.H. Austria 100 Lintas Werbeagentur Gesellschaft m.b.H.
Campbell Ewald Werbeagentur Ges.m.b.H. Austria 100 Lowe Worldwide Holdings B.V.
Initiative Media Brussels S.A. Belgium 100 Lintas Brussels S.A. (96%) and
Initiatives Media (a French
corporation) (4%)
Programming Media International-PMI S.A. Belgium 100 Registrant
Initiative Media International S.A. Belgium 100 Lintas Holding B.V.
McCann-Erickson Co. S.A. Belgium 100 Registrant
Lintas Brussels S.A. Belgium 100 Lintas Holding B.V.
Universal Media, S.A. Belgium 100 McCann Belgium (50%)
Lowe Troost S.A. (50%)
A.C.E. Advertising Creation Marketing N.V. Belgium 100 Lintas Brussels S.A.
De Roeck En Heering P.R. Consultants N.V. Belgium 100 Lintas Brussels S.A.
Lowe Troost S.A. Belgium 100 Lowe Worldwide Holdings B.V.
Direct Creations S.A. Belgium 100 Lowe Troost S.A.
Triad Assurance Limited Bermuda 100 Registrant
Interpublic Publicidade e Pesquisas Brazil 100 International Business Services, Inc.
Sociedade Limitada
McCann-Erickson Publicidade Ltda. Brazil 100 Registrant
MPM Lintas Communicacoes Ltda. Brazil 98.75 Registrant
PPA Profissionais de Promocao Associados Ltda. Brazil 100 MPM Lintas Communicacoes Ltda.
Universal Publicidade Ltda Brazil 100 Interpublic Publicidate
E Pesquisas Sociedade Ltda.
Harrod & Mirlin, Inc. Canada 100 Registrant (61.5%) and McCann-Erickson
Advertising of Canada Ltd. (38.5%)
McCann-Erickson Advertising of Canada Ltd. Canada (Federal) 100 Registrant
MacLaren Lintas Inc. Canada (Federal) 100 Registrant
Promaction Corporation Canada 100 McCann-Erickson Advertising of Canada
PAGE
Lowe SMS Ltd. Canada 100 Lowe Worldwide Holdings B.V. (43%)
and Scali, McCabe, Sloves, Inc. (57%)
McCann-Erickson S.A. de Publicidad Chile 100 Registrant
Lintas Chile S.A. Chile 100 Lintas Holding B.V.
Harrison Publicidad De Colombia S.A. Colombia 100 Registrant
McCann-Epoca S.A. Colombia 60 Registrant
McCann-Erickson Centroamericana Costa Rica 100 Registrant
(Costa Rica) Ltda.
McCann-Erickson Zagreb Croatia 100 McCann-Erickson International GmbH
McCann-Erickson Prague Czech Republic 100 McCann-Erickson International GmbH
Lintas Praha Spol. s.r.o. Czech Republic 100 Lintas Deutschland GmbH
Milvang/GR2 A/S Denmark 100 Lintas Danmark A/S
Signatur APS Denmark 100 Lintas Danmark A/S
Lintas Danmark A/S Denmark 100 Lintas Holding B.V.
McCann-Erickson A/S Denmark 100 Registrant
Pool Media International Aps Denmark 100 Registrant
McCann-Erickson Dominicana, S.A. Dominican Republic 100 Registrant
McCann-Erickson (Ecuador) Publicidad S.A. Ecuador 96 McCann-Erickson Corporation
(International)
McCann-Erickson Centro Americana El Salvador 100 Registrant
(El Salvador) S.A.
Artel Studios Limited England 100 Stowe, Bowden, Wilson Limited
The Below the Line Agency Limited England 100 Interpublic Limited
Bureau of Commercial Information Limited England 100 Registrant
Bureau of Commercial Research Limited England 100 Registrant
CM Lintas International Ltd. England 100 Interpublic Limited
Epic (Events & Programming International England 100 Interpublic Limited
Consultancy) Limited
H.K. McCann Limited England 100 McCann Erickson Advertising Limited
Initiative Media Limited England 100 Interpublic Limited
Interpublic Limited England 100 Registrant
Fieldplan Ltd. England 100 Interpublic Limited
PAGE
Interpublic Pension Fund Trustee England 100 Interpublic Limited
Company Limited
Lintas International Limited England 100 Interpublic Limited
Lintas Overseas Limited England 100 Interpublic Limited
Lintas Superannuation Trustees Limited England 100 Lintas International Limited
Talbot Television Limited England 100 Fremantle International Inc.
Lintas W.A. Limited England 100 Interpublic Limited
Still Price Court Twivy D'Souza England 100 Interpublic Limited
Lintas Group Limited
Still Price Court Twivy D'Souza Lintas England 100 Still Price Court Twivy D'Souza
Limited Lintas Group Limited
Initiative Media London Limited England 99.5 Still Price Court Twivy D'Souza
Lintas Group Limited
Brilliant Pictures Limited England 100 Still Price Court Twivy D'Souza
Lintas Group Limited
Lintas Supplementary Pension Trustees Limited England 100 Lintas International Limited
Matter of Fact Communications Limited England 100 McCann-Erickson Bristol Limited
Orkestra Ltd. England 100 Interpublic Limited
Adware Systems Limited England 100 Orkestra Limited
McCann Communications Limited England 100 Interpublic Limited
McCann-Erickson Advertising Limited England 100 Interpublic Limited
McCann-Erickson Bristol Limited England 100 McCann-Erickson United Kingdom Limited
McCann-Erickson Central Limited England 100 McCann-Erickson United Kingdom Limited
McCann-Erickson United Kingdom Limited England 100 Interpublic Limited
McCann-Erickson Manchester Limited England 100 McCann-Erickson United Kingdom Limited
McCann Properties Limited England 100 McCann-Erickson United Kingdom Limited
The Howland Street Studio Ltd. England 100 Interpublic Limited
Coachouse Ltd. England 100 McCann-Erickson Manchester Limited
Salesdesk Limited England 100 Orkestra Ltd.
Stowe, Bowden, Wilson Limited England 100 McCann-Erickson United Kingdom Limited
Universal McCann Limited England 100 Interpublic Limited
Lowe International Limited England 100 Interpublic Limited
The Brompton Group Ltd. England 100 Lowe International Limited
Brompton Advertising Ltd. England 100 The Brompton Group Ltd.
PAGE
Brompton Promotions Ltd. England 100 The Brompton Group Ltd.
Orbit International (1990) Ltd. England 100 Lowe International Limited
Lowe Howard-Spink Ltd. England 100 Lowe International Limited
International Poster Management Ltd. England 100 Interpublic Limited
Tavistock Advertising Limited England 100 Lowe International Limited
Allen Brady & Marsh Ltd. England 100 Tavistock Advertising Limited
Poundhold Ltd. England 100 Lowe International Limited
Colourwatch Ltd. England 100 Lowe International Limited
Lowe Direct Limited England 100 Lowe International Limited
S.C. Advertising (UK) Limited England 100 Lowe International Limited
Colourwheel Limited England 100 Lighthold Limited
Face Photosetting Ltd. England 100 Smithfield Lease Limited
Smithfield Lease Limited England 100 Lowe International Limited
Two Six Seven Limited England 100 Lowe International Limited
Lighthold Limited England 100 Lowe International Limited
ABM Kershaw Limited England 100 Lowe International Limited
The Lowe Group Limited England 100 Lowe International Limited
Gotham Limited England 100 Lowe International Limited
The Results Machine Limited England 100 Lowe International Limited
LHSB Management Services Ltd. England 100 Lowe International Limited
Lowe & Howard-Spink Media Limited England 100 Lighthold Limited
The Lowe Group Nominees Ltd. England 100 Lowe International Limited
Hasan Oy Finland 100 Registrant
Impulse International Oy Finland 100 Lintas Oy
Lintas Oy Finland 100 Lintas Holding B.V.
Lintas Make Direct Oy Finland 100 Lintas Oy
Lintas Service Oy Finland 100 Lintas Oy
Womena-Myynninvauhdittajat Oy Finland 100 Oy Liikemainonta-McCann AB
Oy Liikemainonta-McCann AB Finland 100 Registrant
McCann-Pro Oy Finland 100 Oy Liikemainonta-McCann AB
Mainostoinisto Womena - McCann Oy Finland 100 Registrant
PMI - Mediaporssi Oy Finland 66 Oy Liikemainonta-McCann AB (33%) and
Lintas Oy (33%)
Lowe Brindfors Oy Finland 100 Lowe Scandinavia AB
PAGE
Brindfors Production Oy Finland 100 Lowe Brindfors Oy
E.C. Television/Paris, S.A. France 100 France C.C.P.M.
France C.C.P.M. France 100 Lintas Holding B.V.
Initiatives Media Paris France 100 France C.C.P.M.
Initiative Media International S.A. France 100 Lintas Holding B.V.
McCann Communications France 75 McCann-Erickson (France)
McCann - Promotion S.A. France 99.8 McCann-Erickson (France)
Lintas-Paris France 100 France C.C.P.M.
McCann-Erickson (France) France 100 Registrant
McCann-Erickson (Paris) S.A. France 100 McCann-Erickson (France)
SP3 Conseil S.A. France 100 SP3 S.A.
Creation Sarl France 97.5 SP3 S.A.
Fab + S.A. France 99.4 SP3 S.A.
Infernal Sarl France 100 SP3 S.A.
SP3 Conseils Paris S.A. France 99.8 SP3 S.A.
SP3 Lyon S.A. France 95 SP3 S.A.
SP3 S.A. France 100 McCann-Erickson (France)
Delacroix et Gervasi S.A. France 100 SP3
McCann Rhone Alpes S.A. France 100 McCann-Erickson (France)
Delacroix S.A. France 60.1 McCann-Erickson (France)
Publi Media Service France 50 Owned in quarters by McCann,
Lintas agencies in France,
Publicis and Idemedia
Sprint S.A. France 100 France C.C.P.M.
Universal Media S.A. France 100 McCann-Erickson (France)
Lowe Alice S.A. France 100 Lowe Worldwide Holdings B.V.
Audour, Soum, Larue/Scali, McCabe, Sloves, S.A. France 60 Scali, McCabe, Sloves, Inc.
Alice SNC France France 50 Vibalm S.A. France
Initiativ Media GmbH Germany 100 Lintas Deutschland GmbH
Initiativ Verkaufsforderung GmbH Germany 100 Lintas Hamburg GmbH
Interpublic GmbH Germany 100 Registrant
Krakow McCann-Erickson GmbH Germany 100 McCann-Erickson Deutschland GmbH
Lintas Deutschland GmbH Germany 100 Registrant
Lintas Direct GmbH Germany 100 Lintas Deutschland GmbH
PAGE
Lintas Frankfurt GmbH Germany 100 Lintas Hamburg GmbH
Lintas Hamburg GmbH Germany 100 Lintas Deutschland GmbH
Lintas S Sales Communications GmbH Germany 100 Lintas Deutschland GmbH
Max W.A. Kamer GmbH Germany 100 Lintas Deutschland GmbH
Baader-Lang-Behnken GmbH Germany 75 Lintas Deutschland GmbH
Creative Media Services GmbH Germany 100 Lintas Deutschland GmbH
McCann Direct GmbH Agentur fuer Direktmarketing Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson (International) GmbH Germany 100 Registrant
McCann-Erickson Deutschland GmbH Germany 100 McCann-Erickson(International)GmbH
McCann-Erickson Scope GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Frankfurt GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Hamburg GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Nurnberg GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Service GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Promotion GmbH Germany 100 McCann-Erickson Deutschland GmbH
Universalcommunication Media Intensiv GmbH Germany 100 Interpublic GmbH
McCann Healthcare Pharma Kommunikation GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Management Property GmbH Germany 100 McCann-Erickson Deutschland GmbH (80%)
Interpublic GmbH (20%)
Typo-Wenz Artwork GmbH Germany 100 Interpublic GmbH
Unterstuetzungskasse der H.K. Germany 100 McCann-Erickson (International) GmbH
McCann Company mbH
Lowe & Partners GmbH Dusseldorf Germany 100 Lowe Worldwide Holdings B.V. (75%)
and Registrant (25%)
Heinrich Hoffman & Partner GmbH Germany 100 Lowe & Partners GmbH Frankfurt
Lowe & Partners GmbH Frankfurt Germany 100 Lowe & Partners GmbH Dusseldorf
Adplus GmbH Germany 100 Lowe & Partners GmbH Frankfurt
K&S Werbeagentur Marketing und Consulting GmbH Germany 100 Adplus GmbH
Lowe & Partners GmbH Hamburg Germany 100 Lowe & Partners GmbH Dusseldorf
Fremantle (Deutschland) Fernsehproduktions GmbH Germany 100 Fremantle International, Inc.
McCann-Erickson (Hellas) E.P.E. Greece 100 Registrant
Universal Media Greece Greece 100 McCann-Erickson (International) GmbH
Lintas Worldwide Advertising (Hellas) L.L.C. Greece 100 Interpublic Limited
Sprint Advertising S.A. Greece 51 Fieldplan Limited
PAGE
Initiative Media Advertising S.A. Greece 100 Fieldplan Limited
Fremantle Hellas Greece 95 Talbot Television Limited
Publicidad McCann-Erickson Centroamericana Guatemala 100 Registrant
(Guatemala), S.A.
McCann-Erickson Centroamericana S. de R.L. Honduras 100 Registrant
(Honduras)
Interpublic (China) Limited Hong Kong 100 Registrant
Lintas Hong Kong Limited Hong Kong 100 Lintas Holding B.V.
Infoplan (Hong Kong) Limited Hong Kong 100 McCann-Erickson (HK) Limited
McCann-Erickson (HK) Limited Hong Kong 100 Registrant
McCann-Erickson Interpress International Hungary 100 Registrant
Advertising Agency Ltd.
Lintas Budapest Reklam es Marketing Hungary 90 Lintas Deutschland GmbH
Kommunicacios Kft
McCann-Erickson (India) Pvt. India 60 McCann-Erickson Worldwide Inc.
Centro Media Planning-Buying-Booking S.r.l. Italy 100 Lintas Milano S.p.A.
Harrison McCann S.r.l. Italy 100 McCann-Erickson Italiana S.p.A.
Lintas Milano S.p.A. Italy 100 Lintas Holding B.V.
McCann-Erickson Italiana S.p.A. Italy 100 Registrant
McCann Marketing Communications S.p.A. Italy 100 McCann-Erickson Italiana S.p.A.
Pool Media International (P.M.I.) S.r.l. Italy 100 Registrant (95%) and Business Science
Research Corp (5%)
Universal Media S.r.l. Italy 100 McCann-Erickson Italiana S.p.A. (50%)
Pirella Gottsche Lowe S.p.A. (50%)
Universal S.r.l. Italy 100 McCann-Erickson Italiana S.p.A.
Pirella Gottsche Lowe S.p.A. Italy 95 Lowe Worldwide Holdings B.V.
De Toffel & PG S.r.l. Italy 100 Pirella Gottsche Lowe S.p.A.
Europa Immagine & Comunicazione Srl Italy 90 Pirella Gottsche Lowe S.p.A.
Lintas - Abidjan Ivory Coast 67 France C.C.P.M.
McCann-Erickson (Jamaica) Limited Jamaica 100 Registrant
Hakuhodo Lintas K.K. Japan 50 Registrant
McCann-Erickson Inc. Japan 100 Registrant
Lintas Japan K.K. Japan 100 Lintas Nederland B.V.
McCann-Erickson (Kenya) Limited Kenya 73 Registrant
PAGE
McCann-Erickson (Malaysia) Sdn. Bhd. Malaysia 100 Registrant
Mutiara-McCann (Malaysia) Sdn. Bhd. Malaysia 83.50 Registrant
Lintas Worldwide (Malaysia) Sdn. Bhd. Malaysia 100 Registrant
Initiative Media (M) Sdn. Bhd. Malaysia 100 Lintas Worldwide (Malaysia) Sdn. Bhd.
Universal Communication Sdn. Bhd. Malaysia 100 McCann-Erickson (Malaysia) Sdn. Bhd.
Lintas Direct S.A. de C.V. Mexico 100 Registrant
Corporacion Interpublic Mexicana, S.A. de C.V. Mexico 100 Registrant and Inversionistas Asociados,
S.A. de C.V.
Inversionistas Asociados, S.A. de C.V. Mexico 100 Registrant
Lintas Mexico S.A. de C.V. Mexico 100 Registrant
Lintas Worldwide Namibia (Pty) Limited Namibia 100 Fieldplan Ltd.
Data Gold B.V. Netherlands 100 IPG Nederland B.V.
Initiative Media B.V. Netherlands 100 Lintas Nederland B.V.
IPG Nederland B.V. Netherlands 100 Registrant
Lintas Direct B.V. Netherlands 80 Lintas Nederland B.V.
Lintas Holding B.V. Netherlands 100 Registrant
Lintas Nederland B.V. Netherlands 100 IPG Nederland B.V.
McCann-Direct B.V. Netherlands 100 McCann-Erickson (Nederland) B.V.
McCann-Erickson (Nederland) B.V. Netherlands 100 IPG Nederland B.V.
McCann-Erickson Industrieel B.V. Netherlands 100 McCann-Erickson (Nederland) B.V.
P. Strating Promotion B.V. Netherlands 100 IPG Nederland B.V.
Reclame-Adviesbureau Via B.V. Netherlands 100 IPG Nederland B.V.
Programming Media International B.V. Netherlands 100 Registrant
Universal Media B.V. Netherlands 100 IPG Nederland B.V.
Zet Zet B.V. Netherlands 100 Data Gold B.V.
Lowe Worldwide Holdings B.V. Netherlands 100 Poundhold Ltd.
Lowe International Holdings B.V. Netherlands 100 Registrant
Deo Nederland B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lowe Kuiper & Schouten B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lowe Europa B.V. Netherlands 100 Lowe Worldwide Holdings B.V.
Lintas (NZ) Limited New Zealand 100 Registrant
McCann-Erickson Limited New Zealand 100 Registrant
Universal Media Limited New Zealand 100 McCann-Erickson Limited
McCann-Erickson Belfast Limited Northern Ireland 100 McCann-Erickson United Kingdom Limited
PAGE
McCann-Erickson A/S Norway 100 Registrant
Universal Media A/S Norway 100 McCann-Erickson A/S
McCann Production A/S Norway 100 McCann-Erickson A/S
JBR Reklamebyra A/S Norway 100 McCann-Erickson A/S
JBR Filialen A/S Norway 100 JBR Reklamebyra A/S
JBR Film A/S Norway 100 JBR Reklamebyra A/S
JBR Invest A/S Norway 100 JBR Reklamebyra A/S
Lowe Brindfors A/S Norway 100 Lowe Scandinavia AB
McCann-Erickson de Panama, S.A. Panama 100 Registrant
Universal Ideas S.A. Panama 100 McCann-Erickson de Panama, S.A.
Conte/McCann-Erickson de Panama S.A. Panama 51 McCann-Erickson de Panama, S.A.
McCann-Erickson (Paraguay) Company Paraguay 100 McCann-Erickson (Paraguay) Co.
(Delaware)
McCann-Erickson Guangming Advertising Limited People's Republic 51 McCann-Erickson Worldwide
of China
McCann-Erickson Corporacion Publicidad S.A. Peru 100 Registrant
McCann Group of Companies, Inc. Philippines 100 Registrant
ITI McCann-Erickson International Advertising Poland 50 McCann-Erickson International GmbH
Lintas Warszawa Poland 100 Lintas Deutschland GmbH
Lintas, Agencia Internacional de Portugal 100 Lintas Holding B.V.
Publicidade, Ltda.
Inciativas De Meios-Actividades Publicitarias, Portugal 98 Lintas, Agencia Internacional de
Limitada Publicidade, Ltda.
McCann-Erickson/Portugal Limitada Portugal 100 Business Science Research Corporation
Universal Media Publicidade, Limitada Portugal 100 McCann-Erickson/Portugal Limitada
Lowe Portuguesa Publicidade a Estudios de
Mercado, S.A. Portugal 100 Lowe Worldwide Holdings B.V.
Fremantle Portugal, Producoes Televisas, LDA Portugal 100 Talbot Television Limited (95%) and
Lintas Puerto Rico, Inc. Puerto Rico 100 Lintas, Inc.
McCann-Erickson, Limited Republic of Ireland 100 Registrant
McCann-Erickson Moscow Russia 100 McCann-Erickson International GmbH
McCann-Erickson Scotland Limited Scotland 100 McCann-Erickson United Kingdom Limited
McCann-Erickson (Singapore) Private Limited Singapore 100 Registrant
PAGE
Lintas Worldwide (Singapore) Private Limited Singapore 100 Registrant
Fremantle International Inc. (5%)
McCann-Erickson South Africa (Pty.) South Africa 100 Registrant
Ltd. ("McCann Group")
McCann Cape Town (Proprietary) Limited South Africa 100 McCann Group
McCann Durban (Proprietary) Limited South Africa 100 McCann Group
McCann International (Proprietary) Limited South Africa 100 McCann Group
Media Solutions (Proprietary) Limited South Africa 100 McCann Group
Universal Media (Proprietary) Limited South Africa 100 McCann Group
McCannix Proprietary Limited South Africa 100 McCann-Erickson Johannesburg
(Proprietary) Limited
McCann South Africa Proprietary Limited South Africa 100 McCann-Erickson Johannesburg
(Proprietary) Limited
McCann-Erickson Johannesburg (Proprietary) South Africa 100 McCann-Erickson South Africa
Limited (Proprietary) Limited
Media Initiative (Proprietary) Limited South Africa 100 Lintas (Proprietary) Limited
Lintas (Proprietary) Limited South Africa 100 Lintas Holding B.V. (76%)
Registrant (24%)
McCann-Erickson, Inc. South Korea 51 McCann-Erickson Marketing, Inc.
Lintas Korea, Inc. South Korea 100 Registrant
Clarin, S.A. Spain 100 McCann-Erickson S.A.
Events & Programming International Spain 100 Registrant
Consultancy, S.A. (EPIC)
Cinestar S.A. Spain 100 Clarin, S.A.
Encuadre S.A. Spain 67 Clarin, S.A.
Iniciativas de Medios, S.A. Spain 100 Lintas, S.A.
Lintas S.A. Spain 100 Lintas Holding B.V.
McCann-Erickson S.A. Spain 100 Registrant
McCann-Erickson Barcelona S.A. Spain 100 Registrant
Pool Media International S.A. Spain 100 Registrant
Universal Media S.A. Spain 100 McCann-Erickson S.A.
Lowe Dospordos S.A. Spain 83.7 Lowe Worldwide Holdings B.V.
Lowe RZR S.A. Spain 80 Lowe International Holdings B.V.
Lowe MBAC S.A. Spain 100 Lowe Worldwide Holdings B.V.
PAGE
Fremantle de Espana S.L. Spain 100 Fremantle International Inc.
AB Lintas Shoppen Sweden 100 Lintas AB
McCann-Erickson AB Sweden 100 Registrant
Lintas AB Sweden 100 Lintas Holding B.V.
Werne & Co. Annonsbyra I Malmoe AB Sweden 100 McCann-Erickson AB
Werne & Co. Annonsbyra AB Sweden 100 McCann-Erickson AB
Ronnberg & Co. A.B. Sweden 100 McCann-Erickson AB
PMI Initiative Universal Media AB Sweden 100 Lintas AB (50%)
McCann-Erickson AB (50%)
Lowe Scandinavia AB Sweden 100 Interpublic Svenska AB (66.9%)
and Brindfors Intressenter Invest AB
(33.1%)
Brindfors Intressenter Invest AB Sweden 100 Interpublic Svenska AB
Interpublic Svenska AB Sweden 100 Lowe International Holdings B.V.
Lowe Brindfors AB Sweden 100 Lowe Scandinavia AB
Lowe Brindfors Annonsbyra AB Sweden 100 Lowe Scandinavia AB
Boxer Film Produktion AB Sweden 100 Lowe Scandinavia AB
Ulla Andersson Mediaaktiebolag Sweden 85 Lowe Scandinavia AB
Message Mediaformedling AB Sweden 100 Lowe Scandinavia AB
Boisen & Partners Annonsbyra AB Sweden 100 Lowe Scandinavia AB
Bosch & Butz Werbeagenker Switzerland 80 Lowe International Holdings B.V.
Lintas A.G. Switzerland 100 Lintas Holding B.V.
Max W.A. Kamer AG Switzerland 100 Lintas Deutschland GmbH
McCann-Erickson S.A. Switzerland 100 Registrant
McCann-Erickson Services S.A. Switzerland 100 Registrant
P.C.M. Marketing AG Switzerland 100 Lintas Deutschland GmbH
Pool Media-PMI S.A. Switzerland 100 Registrant
Unimedia S.A. Switzerland 100 Registrant
Lintas Taiwan Limited Taiwan 100 Registrant
McCann-Erickson Communications Group Co.Ltd. Taiwan 100 Registrant
McCann-Erickson (Thailand) Ltd. Thailand 100 Registrant
PAGE
Lintas (Thailand) Ltd. Thailand 80 Registrant
Lintas Gulf Limited Tortola 51 Lintas International Limited
McCann-Erickson (Trinidad) Limited Trinidad 100 Registrant
PARS McCann-Erickson Reklamcilik A.S.("PARS") Turkey 100 Registrant
Link Ajams Limited Sirketi Turkey 100 PARS
Universal Media Planlama Ve Dagitim Turkey 100 PARS
McCann-Direct Reklam Tanitama Servisleri A.S. Turkey 100 PARS
Grafika Lintas Reklamcilik A.S. Turkey 51 Registrant
McCann-Erickson Publicidad De Venezuela, S.A. Venezuela 99.67 Registrant
McCann-Erickson Payne, Golley Ltd. Wales 75.9 McCann-Erickson United Kingdon Limited
Lintas (Private) Limited Zimbabwe 85 Fieldplan Ltd.
A number of inactive subsidiaries and other subsidiaries, all of which considered in the aggregate as a single
subsidiary would not constitute a significant subsidiary, are omitted from the above list.
These subsidiaries normally do business under their official corporate names. International Business Services, Inc.
does business in Michigan under the name "McCann-I.B.S., Inc." and in New York under the name "McCann International
Business Services". Lintas, Inc. conducts business through its Lintas New York division. McCann-Erickson conducts
some of its business in the states of Kentucky and Michigan under the name "McGraphics". McCann-Erickson USA, Inc. does
business in Michigan under the name SAS and does business in Indiana, Michigan, New York, Pennsylvania and Wisconsin
under the name of McCann-Erickson Universal Group.
EXHIBIT 23
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
The Interpublic Group of Companies, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 13, 1996 appearing in the 1995 Annual Report to
Stockholders of The Interpublic Group of Companies, Inc. (which report
and consolidated financial statements are incorporated by reference in
this Annual Report on Form 10-K) also included an audit of the
Financial Statement Schedules listed in Item 14 (a) of this Form 10-K.
In our opinion, these Financial Statement Schedules present fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
New York, New York
February 13, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 of The Interpublic Group of Companies, Inc. (the
"Company"), of our report dated February 13, 1996, appearing in the
1995 Annual Report to Stockholders which is incorporated in this Annual
Report on Form 10-K: Registration Statements No. 2-79071; No. 2-43811;
No. 2-56269; No. 2-61346; No. 2-64338; No. 2-67560; No. 2-72093;
No. 2-88165; No. 2-90878, No. 2-97440 and No. 33-28143, relating
variously to the Stock Option Plan (1971), the Stock Option Plan
(1981), the Stock Option Plan (1988) and the Achievement Stock Award
Plan of the Company; Registration Statements No. 2-53544; No. 2-91564,
No. 2-98324, No. 33-22008, No. 33-64062 and No. 33-61371, relating
variously to the Employee Stock Purchase Plan (1975), the Employee
Stock Purchase Plan (1985) and the Employee Stock Purchase Plan of the
Company (1995); Registration Statements No. 33-20291 and No. 33-2830
relating to the Management Incentive Compensation Plan of the Company;
Registration Statement No. 33-5352 and No. 33-21605 relating to the
1986 Stock Incentive Plan and 1986 United Kingdom Stock Option Plan of
the Company; and Registration Statement No. 33-10087 and No. 33-25555
relating to the Long-Term Performance Incentive Plan of the Company.
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3
(No. 33-37346) of the Interpublic Group of Companies, Inc. of our
report dated February 13, 1996, appearing in the 1995 Annual Report to
Stockholders which is incorporated in this Annual Report on Form 10-K.
We also consent to the incorporation by reference of our report on the
Financial Statement Schedules, which appears above.
PRICE WATERHOUSE LLP
New York, New York
March 28, 1996
POWER OF ATTORNEY Exhibit No. 24
KNOW ALL MEN BY THESE PRESENTS, that each individual
whose signature appears below constitutes and appoints PHILIP H.
GEIER, JR., EUGENE P. BEARD, JOSEPH STUDLEY and NICHOLAS J.
CAMERA, and each of them, as true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution,
for him, and in his name, place and stead, in any and all
capacities, to sign the Report on Form 10-K for the year ended
December 31, 1995, for The Interpublic Group of Companies, Inc.,
S.E.C. File No. 1-6686, and any and all amendments and
supplements thereto and all other instruments necessary or
desirable in connection therewith, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with
the Securities and Exchange Commission and the New York Stock
Exchange, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requested and necessary to be done in and
about the premises as fully to all intents and purposes as he
might do or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agents or any of them or their
or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Dated: March 18, 1996
Philip H. Geier, Jr. Martin F. Puris
Eugene P. Beard Allen Questrom
Frank J. Borelli J. Phillip Samper
John J. Dooner, Jr. Joseph J. Sisco
Frank B. Lowe Joseph Studley
Leif H. Olsen
PAGE
THE INTERPUBLIC GROUP OF COMPANIES, INC.
Certified Resolutions
I, Nicholas J. Camera, Secretary of The Interpublic
Group of Companies, Inc. (the "Corporation"), hereby certify that
the resolutions attached hereto were duly adopted on March 18,
1996 by the Board of Directors of the Corporation and that such
resolutions have not been amended or revoked.
WITNESS my hand and the seal of the Corporation this
18th day of March, 1996.
Nicholas J. Camera
PAGE
THE INTERPUBLIC GROUP OF COMPANIES, INC.
MEETING OF THE BOARD OF DIRECTORS
Resolutions re Form 10-K
RESOLVED, that the Chairman of the Board and President
and the Vice Chairman-Finance and Operations of the Corporation
be, and each of them hereby is, authorized to execute and deliver
on behalf of the Corporation an annual report on Form 10-K for
the year ended December 31, 1995, in the form presented to this
meeting with such changes therein as either of them with the
advice of the General Counsel shall approve; and further
RESOLVED, that the Chairman of the Board and President
in his capacity as Chief Executive Officer, the Vice
Chairman-Finance and Operations in his capacity as Chief
Financial Officer, and the Vice President and Controller in his
capacity as Chief Accounting Officer of the Corporation be, and
each of them hereby is, authorized to execute such annual report
on Form 10-K; and further
RESOLVED, that the officers of the Corporation be, and
each of them hereby is, authorized and directed to file such
annual report on Form 10-K, with all the exhibits thereto and any
other documents that may be necessary or desirable in connection
therewith, after its execution by the foregoing officers and by a
majority of this Board of Directors, with the Securities and
Exchange Commission and the New York Stock Exchange; and further
RESOLVED, that the officers and directors of the
Corporation who may be required to execute such annual report on
Form 10-K be, and each of them hereby is, authorized to execute a
power of attorney in the form submitted to this meeting
appointing Philip H. Geier, Jr., Eugene P. Beard, Joseph Studley
and Nicholas J. Camera, and each of them, severally, his or her
true and lawful attorneys and agents to act in his or her name,
place and stead, to execute said annual report on Form 10-K and
any and all amendments and supplements thereto and all other
instruments necessary or desirable in connection therewith; and
further
RESOLVED, that the signature of any officer of the
Corporation required by law to affix his signature to such annual
report on Form 10-K or to any amendment or supplement thereto and
such additional documents as they may deem necessary or advisable
in connection therewith, may be affixed by said officer
personally or by any attorney-in-fact duly constituted in writing
by said officer to sign his name thereto; and further
RESOLVED, that the officers of the Corporation be, and
each of them hereby is, authorized to execute such amendments or
supplements to such annual report on Form 10-K and such
additional documents as they may deem necessary or advisable in
connection with any such amendment or supplement and to file the
foregoing with the Securities and Exchange Commission and the New
York Stock Exchange; and further
RESOLVED, that the officers of the Corporation be, and
each of them hereby is, authorized to take such actions and to
execute such other documents, agreements or instruments as may be
necessary or desirable in connection with the foregoing.
5
1,000
YEAR
DEC-31-1995
DEC-31-1995
418,448
38,926
2,320,248
21,941
0
2,974,398
437,466
240,274
4,259,766
2,826,697
113,235
8,963
0
0
749,706
4,259,766
0
2,179,739
0
1,925,584
0
0
38,020
254,155
122,743
129,812
0
0
0
129,812
1.66
0
