UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event reported) — December 27, 2018 (December 21, 2018)
MDC PARTNERS INC.
(Exact name of registrant as specified in its charter)
|
Canada
(Jurisdiction of Incorporation) |
001-13718 (Commission File Number)
|
98-0364441
(IRS Employer Identification No.) |
745 Fifth Avenue, 19 th Floor, New York, NY 10151
(Address of principal executive offices and zip code)
(646) 429-1800
(Registrant’s Telephone Number)
Check the appropriate box below if the Form 8−K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a−12 under the Exchange Act (17 CFR 240.14a−12) |
| ¨ | Pre−commencement communications pursuant to Rule 14d−2(b) under the Exchange Act (17 CFR 240.14d−2(b)) |
| ¨ | Pre−commencement communications pursuant to Rule 13e−4(c) under the Exchange Act (17 CFR 240.13e− 4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Ongoing Review of Strategic Alternatives; CEO Succession
On September 20, 2018, MDC Partners Inc. (the “ Company ”) announced that the Company was exploring and evaluating potential strategic alternatives, which may result in, among other things, the possible sale of the Company. This ongoing review process is proceeding in parallel with the Company’s previously announced search to identify a successor Chief Executive Officer.
In connection with that search process, as previously disclosed, the Company entered into a Succession Agreement dated September 7, 2018 (the “ Succession Agreement ”) with Scott L. Kauffman, the Company’s current Chairman and Chief Executive Officer. Pursuant to the Succession Agreement, Mr. Kauffman’s term of employment with the Company will end on December 31, 2018. He is expected to continue to serve as a member of the Board through the remainder of his current term ending in June 2019.
During the current interim period in which the Company is evaluating strategic alternatives and assessing potential new CEO candidates, the Board of Directors has established an executive committee comprised of David Doft (EVP, Chief Financial Officer) and Mitchell Gendel (EVP, General Counsel), together with Stephanie Nerlich (EVP, Partner Development and Talent); and David Ross (EVP, Strategy & Corporate Development) (collectively, the “ Executive Committee ”). Effective January 1, 2019, the Executive Committee is expected to assume the role and responsibilities of the Chief Executive Officer until the appointment of a successor. The Board of Directors’ Strategic Alternatives Committee, comprised of three independent directors of the Board (Irwin Simon, Larry Kramer and Anne Marie O’Donovan), will provide oversight for the Executive Committee.
There can be no assurance that the Company will pursue or complete any specific action or transaction. The Company does not intend to disclose developments or comment further regarding its strategic review or CEO search until such time as its Board of Directors has determined the outcome of the process or otherwise has determined that further disclosure is appropriate or required.
Amendment to Terms of Senior Executive Retention Bonus Awards .
As previously disclosed, on December 14, 2018, the Human Resources and Compensation Committee of the Board of Directors (the “ Compensation Committee ”) of the Company approved a series of one-time retention incentive awards (the “ 2018 Retention Awards ”) for five (5) senior executives of the Company. The Compensation Committee subsequently determined on December 21, 2018, to modify the 2018 Retention Awards such that payment would be conditioned on continued employment through the successful closing of a significant transaction in 2019, including either a Change of Control of the Company (as defined in the Company’s 2016 Stock Incentive Plan) or the sale of assets with aggregate proceeds to the Company from any such transaction equal to not less than $100 million (each, a “ Payment Event ”). A capital markets offering would no longer trigger a Payment Event, as originally contemplated.
Each amended form of 2018 Retention Award will be evidenced by a separate written agreement to be entered into by the Company and the recipient of such award. This summary of the amendment to the 2018 Retention Awards is qualified by reference to the full text of the amended form of 2018 Retention Award, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits. The following exhibit is filed herewith:
|
Exhibit
No. |
Description | |
| 10.1 | Amended Form of Senior Executive Retention Award (December 2018). | |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned hereunto duly authorized.
| Date: December 27, 2018 | MDC Partners Inc. | |||
| By: |
/s/ Mitchell Gendel
Mitchell Gendel
|
|||
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Exhibit 10.1
December, 2018
PERSONAL AND CONFIDENTIAL
[ Insert Name ]
MDC Partners Inc.
745 Fifth Ave.
New York, NY 10151
Dear [ Insert Name ]:
MDC Partners Inc. (“ MDC ” or the “ Company ”) is pleased to provide you with this retention bonus agreement (the “ Agreement ”) in consideration for past performance as the Company’s [ Insert Title ]. Capitalized terms used but not defined herein shall have the applicable meanings set forth in your employment agreement with the Company.
1. Retention Bonus Amount; Payment Event. You will be eligible to receive a bonus in an aggregate amount equal to $[●] (the “ Retention Bonus ”), which bonus will be payable upon the earliest to occur of (i) a Change of Control (as defined in the Company’s 2016 Stock Incentive Plan) or (ii) the closing of the sale of one or more assets of the Company to a third party resulting in aggregate gross proceeds to the Company from any such transactions equal to not less than $100 million (each, a “ Payment Event ”), subject to your continued employment through the applicable Payment Event (except as provided below). The Payment Event must occur on or prior to December 31, 2019 in order for you to receive any Retention Bonus payment under this Agreement. The Retention Bonus will be paid by the Company in a cash lump sum on the first regularly scheduled payroll date immediately following the applicable Payment Event. In the event your employment is terminated by you for “Good Reason” or by the Company without “Cause” prior to a Payment Event, you will be entitled to receive the Retention Bonus on the first regularly scheduled payroll date immediately following the date of your termination of employment.
2.
No Assignment
. This Agreement, and all of our respective rights hereunder, shall not be assignable or delegable by either
of us. Any purported assignment or delegation by either of us in violation of the foregoing shall be null and void
ab initio
and of no force and effect.
3.
Successors; Binding Agreement
. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees.
4.
Withholding
. The Company will be authorized to withhold from the payment of your Retention Bonus the amount of any applicable
federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
5. No Right to Employment or Other Benefits . This Agreement will not be construed as giving you the right to be retained in the employ of the Company or any of its subsidiaries or affiliates.
6. Entire Agreement . This Agreement constitutes the entire agreement between the Company and you concerning the subject matter hereof.
7.
Unfunded Bonus
. The Bonus shall be unfunded. This Agreement will not be construed to create a trust or separate fund of
any kind or a fiduciary relationship between the Company and any of its affiliates and you or any other person or entity. Your
right to receive payments from the Company under this Agreement is no greater than the right of any unsecured general creditor
of the Company.
8. Section 409A of the Internal Revenue Code . The Company intends that this Agreement be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“ Section 409A ”), pursuant to the short term deferral exception under Treas. Reg. Section 1.409A - 1(b)(4). However, if any amount paid under this Agreement is determined to be “non-qualified deferred compensation” within the meaning of Section 409A, then this Agreement will be interpreted or reformed in the manner necessary to achieve compliance with Section 409A.
9. Governing Law; Counterparts . The validity, construction, and effect of this Agreement will be determined in accordance with the laws of the State of New York, without reference to principles of conflict of laws. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
We look forward to your acceptance of this letter agreement, which you can indicate by promptly signing and dating below.
|
MDC Partners Inc.
________________________________ By: Title: |
Acknowledged and Agreed:
____________________________
[Name]