EXHIBIT 10.14
DEFERRED COMPENSATION AGREEMENT
between
TBWA ADVERTISING INC.,
the Corporation,
and
WILLIAM G. TRAGOS,
the Employee.
Dated: October 12, 1984
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is entered into by and between TBWA ADVERTISING INC., a New
York corporation, having its principal office at 292 Madison Avenue, 11th Floor,
New York, New York 10017 (hereinafter referred to as the "Corporation") and
WILLIAM G. TRAGOS, residing at 44 Calhoun Drive, Greenwich, Connecticut
(hereinafter referred to as the "Employee").
WHEREAS:
A. The Employee is employed by the Corporation and renders valuable
services for the benefit of the Corporation; and
B. The Corporation desires to maintain and continue favorable relations
with the Employee in order to retain the services of the Employee; and
C. The Corporation wishes to enter into a deferred compensation agreement
in accordance with the terms set forth below with the Employee in order to
retain his services.
NOW, THEREFORE, in consideration of the mutual convenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. In addition to the normal compensation payable to the Employee,
deferred compensation shall accrue for the Employee in an amount equal to the
earnings from the Principal Amount, as hereinafter defined, for a period of
fifteen (15) years payable in accordance with the terms of this Agreement. The
"Principal Amount" shall be equal to the cumulative premium payments paid by the
Corporation pursuant to a certain Collateral Assignment Split Dollar Agreement
between the Corporation and the Employee dated as of October 12, 1984 with
respect to the initial policy subject to that Agreement issued by the Penn
Mutual Life Insurance Company from the date of this Agreement through the first
to occur of the events listed in Paragraph 2 below.
2. The deferred compensation accrued to the account of the Employee shall
become payable to the Employee or Employee's beneficiary or beneficiaries
designated in accordance with Paragraph 6 hereof in accordance with the terms of
this Agreement upon the happening of any of the following events:
(a) Termination of the Employee's employment by the Corporation for
any reason;
(b) By mutual consent of the parties hereto;
(c) Bankruptcy, insolvency or dissolution of the Corporation; or
(d) Death of the Employee.
3. (a) Within thirty days (30) of the first to occur of the events listed
in Paragraph 2 above, the Corporation shall set aside and invest the Principal
Amount in such one or more interest bearing funds (hereinafter collectively
referred to as the "Fund"), as may be from time to time mutually agreed upon by
the Corporation and the Employee, or if the Employee is not living, the
designated beneficiary or beneficiaries of the deferred compensation
(hereinafter referred to as the "Recipient").
(b) The Recipient shall be entitled to receive in the manner provided for
in Paragraph 4 below an amount equal to the net earnings from the Fund for a
period of fifteen (15) years.
(c) Notwithstanding Subparagraph (b) above, at any time when the Principal
Amount or any portion thereof is held in an investment the earnings of which or
any part thereof are exempt from federal income taxes, the Recipient shall be
entitled to receive an increased amount equal to the net earnings of such
investment multiplied by the following fraction:
1
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1- (top marginal rate of federal income tax which earnings of the
Corporation are subject to)
The intent of this adjustment is to give the benefit of the exemption from
federal income taxes that would otherwise inure to the benefit of the
Corporation (as a result of the deductibility of payments made hereunder) to the
Recipient.
4. The amount the Recipient is entitled to hereunder shall be paid in
monthly installments as follows:
(a) With respect to any portion of the Principal Amount which is
held in an investment, the income of which is subject to federal income
taxes, the Corporation shall pay the Recipient the net income generated by
such investment or investments on a monthly basis.
(b) With respect to any portion of the Principal Amount which is
held in an investment, the income of which is exempt from federal income
taxes, the Corporation shall pay the Recipient a good faith estimate of
the amount the Recipient is entitled to pursuant to Paragraph 3(c) above
on a monthly basis, provided, however, that in the last tax year of the
Corporation in which payments are to be made hereunder to the Recipient
(and in the next to the last tax year if less than six monthly payments
are to be made to the Recipient in such last tax year), the Corporation
shall pay the Recipient seventy percent (70%) of the amount of its good
faith estimate of the amount the Recipient is entitled to pursuant to
Paragraph 3(c) above on a monthly basis. At such time as the
Corporation's federal income tax return is filed, the Corporation shall
give written notice to the Recipient of the Corporation's marginal federal
income tax rate and the amount of any overpayment or underpayment
attributable to the prior tax year of the Corporation. Such overpayment or
underpayment shall be amortized over the period of the next twelve (12)
months or, if shorter, the remaining period of payments to be made
hereunder, by either subtracting or adding to each of the Recipient's
monthly payments, provided, however, that if no further payments are to be
made hereunder at the time a relevant return is filed, the amount of any
underpayment shall be paid in a lump sum to the Recipient, and the amount
any overpayment shall be paid by the Recipient to the Corporation in equal
monthly installments over the period of the next six months.
(c) The written certificates of the President or a Vice President of
the Corporation with respect to the Corporation's marginal federal income
tax rate shall be binding and conclusive on all persons.
(d) Unless otherwise agreed by the Corporation and the Recipient, no
adjustment shall be made to the amounts payable hereunder on account of
any change in the Corporation's marginal federal income tax rate as a
result of the filing of an amended return or any adjustment to any return
made on audit or otherwise.
5. The Employee understands and agrees that:
(a) Payments to be made by the Corporation to the Recipient
hereunder are unsecured obligations of the Corporation, and the Recipient
is only a general creditor of the Corporation in that respect.
(b) The Fund is available to meet claims of creditors of the
Corporation.
(c) The Corporation is not assuring the Employee of continued
employment by the Corporation.
6. The Employee may designate a beneficiary or beneficiaries entitled to
receive any of the payments to be made by the Corporation hereunder if the
Employee dies. The designation may be revoked or changed by the Employee at any
time. Any such designation, revocation or change shall be in writing, signed by
the Employee and delivered to the Corporation. If the Employee does not
designate a beneficiary to which payments are to be made after the death of the
Employee, or if any designated beneficiary for payments does not survive the
Employee, payments by the Corporation subsequent to the death of the Employee
shall be made as provided herein to the Employee's estate. If a designated
beneficiary survives the Employee but dies prior to the completion of the
payments contemplated to be made to that designated beneficiary by the
Corporation hereunder, the unpaid portion of those payments upon the death of
the designated beneficiary shall be paid by the Corporation as provided herein
to the designated beneficiary's estate.
7. This Agreement shall be binding upon the parties hereto and their
successors, assigns, executors or administrators and beneficiaries.
8. This Agreement shall be subject to and be construed in accordance with
the laws of the State of New York.
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In Witness Whereof, the Corporation has caused this Agreement to be duly
executed on its behalf and the Employee has hereunto set his hand as of the 12th
day of October, 1984.
TBWA ADVERTISING INC.
By: /s/ Richard N. Costello
---------------------------
Richard N. Costello
(Title)
ATTEST:
/s/ Stuart H. Loss
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Stuart H. Loss
Secretary
/s/ William G. Tragos
---------------------------
William G. Tragos
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