-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ex48jd9GjFi0sKAUnFpEirsFpKkjnDOl5nGTJSBuxWQHXdxEh7uCenZVh5S+g8/h 8OHsoCsZbP97aboKFoXnWA== 0000891092-03-002022.txt : 20030808 0000891092-03-002022.hdr.sgml : 20030808 20030808144039 ACCESSION NUMBER: 0000891092-03-002022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OMNICOM GROUP INC CENTRAL INDEX KEY: 0000029989 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 131514814 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10551 FILM NUMBER: 03831441 BUSINESS ADDRESS: STREET 1: 437 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2124153700 MAIL ADDRESS: STREET 1: 437 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: DOYLE DANE BERNBACH GROUP INC DATE OF NAME CHANGE: 19861117 FORMER COMPANY: FORMER CONFORMED NAME: DOYLE DANE BERNBACH INTERNATIONAL INC DATE OF NAME CHANGE: 19850604 FORMER COMPANY: FORMER CONFORMED NAME: DOYLE DANE BERNBACH INC DATE OF NAME CHANGE: 19781226 10-Q 1 e15387_10q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-Q ---------- (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: June 30, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ____________ Commission File Number: 1-10551 OMNICOM GROUP INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 13-1514814 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 437 Madison Avenue, New York, New York 10022 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 415-3600 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 whether the registrant is an accelerated filer (as defined in Rule 12 b-2 of the Exchange Act). YES X NO ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 190,036,900 (as of July 31, 2003) OMNICOM GROUP INC. AND SUBSIDIAIRES INDEX PART I. FINANCIAL INFORMATION Page No. -------- Item 1. Financial Statements Consolidated Condensed Balance Sheets - June 30, 2003 and December 31, 2002........................ 1 Consolidated Condensed Statements of Income - Three Months and Six Months Ended June 30, 2003 and 2002................ 2 Consolidated Condensed Statements of Cash Flows - Six Months Ended June 30, 2003 and 2002.................... 3 Notes to Consolidated Condensed Financial Statements............ 4 Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operations....................................... 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 20 Item 4. Controls and Procedures......................................... 21 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders............. 22 Item 6. Exhibits and Reports on Form 8-K................................ 22 Signatures...................................................... 24 Certifications of Senior Executive Officers..................... 25 OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands)
(Unaudited) June 30, December 31, 2003 2002 ---- ---- ASSETS CURRENT ASSETS: Cash and cash equivalents ..................................... $ 523,032 $ 666,951 Short-term investments at market, which approximates cost ..... 20,547 28,930 Accounts receivable, less allowance for doubtful accounts of $69,307 and $75,575 ..................................... 4,176,515 3,966,550 Billable production orders in process, at cost ................ 519,676 371,816 Prepaid expenses and other current assets ..................... 679,263 602,819 ------------ ------------ Total Current Assets ............................. 5,919,033 5,637,066 ------------ ------------ FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost, less accumulated depreciation and amortization of $770,449 and $717,294 ......................................... 569,110 557,735 INVESTMENTS IN AFFILIATES .......................................... 147,006 137,303 GOODWILL ........................................................... 5,462,458 4,850,829 INTANGIBLES, net of accumulated amortization of $106,044 and $88,132 99,832 97,730 DEFERRED TAX BENEFITS .............................................. 54,413 42,539 OTHER ASSETS ....................................................... 337,843 496,600 ------------ ------------ TOTAL ASSETS ..................................... $ 12,589,695 $ 11,819,802 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable .............................................. $ 4,543,047 $ 4,833,681 Advance billings .............................................. 678,551 648,577 Current portion of long-term debt ............................. 20,403 35,256 Bank loans .................................................... 64,889 50,394 Accrued taxes and other liabilities ........................... 1,262,638 1,271,616 ------------ ------------ Total Current Liabilities ........................ 6,569,528 6,839,524 ------------ ------------ LONG-TERM DEBT ..................................................... 184,430 197,861 CONVERTIBLE NOTES .................................................. 2,339,310 1,747,037 DEFERRED COMPENSATION AND OTHER LIABILITIES ........................ 326,895 293,638 MINORITY INTERESTS ................................................. 183,991 172,815 SHAREHOLDERS' EQUITY: Common stock .................................................. 29,790 29,790 Additional paid-in capital .................................... 1,384,244 1,419,910 Retained earnings ............................................. 2,359,122 2,114,506 Unamortized restricted stock .................................. (155,432) (136,357) Accumulated other comprehensive loss .......................... (23,311) (154,142) Treasury stock ................................................ (608,872) (704,780) ------------ ------------ Total Shareholders' Equity ....................... 2,985,541 2,568,927 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ....... $ 12,589,695 $ 11,819,802 ============ ============
The accompanying notes to consolidated condensed financial statements are an integral part of these statements. 1 OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in Thousands, Except Per Share Data) (Unaudited)
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2003 2002 2003 2002 ---- ---- ---- ---- REVENUE ........................... $ 2,149,508 $ 1,916,569 $ 4,086,753 $ 3,648,995 OPERATING EXPENSES: Salary and service costs ..... 1,409,367 1,221,850 2,748,764 2,394,388 Office and general expenses .. 403,496 364,229 777,989 695,258 ----------- ----------- ----------- ----------- 1,812,863 1,586,079 3,526,753 3,089,646 ----------- ----------- ----------- ----------- OPERATING PROFIT .................. 336,645 330,490 560,000 559,349 NET INTEREST EXPENSE: Interest expense ............. 16,164 10,658 27,385 24,510 Interest income .............. (3,212) (4,716) (6,164) (7,245) ----------- ----------- ----------- ----------- 12,952 5,942 21,221 17,265 ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES ........ 323,693 324,548 538,779 542,084 INCOME TAXES ...................... 110,555 122,014 185,766 201,872 ----------- ----------- ----------- ----------- INCOME AFTER INCOME TAXES ......... 213,138 202,534 353,013 340,212 EQUITY IN AFFILIATES .............. 1,865 3,454 4,351 5,976 MINORITY INTERESTS ................ (24,256) (18,673) (38,033) (30,307) ----------- ----------- ----------- ----------- NET INCOME ................ $ 190,747 $ 187,315 $ 319,331 $ 315,881 =========== =========== =========== =========== NET INCOME PER COMMON SHARE: Basic ..................... $1.02 $1.01 $1.71 $1.70 Diluted ................... $1.02 $1.00 $1.70 $1.67 DIVIDENDS DECLARED PER COMMON SHARE $0.20 $0.20 $0.40 $0.40
The accompanying notes to consolidated condensed financial statements are an integral part of these statements. 2 OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Six Months Ended June 30, ------------------------- 2003 2002 ---- ---- Cash flows from operating activities: Net income ............................................................... $ 319,331 $ 315,881 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation tangible assets ........................................ 60,233 59,866 Amortization of intangible assets ................................... 16,185 7,297 Minority interests .................................................. 38,033 30,307 Earnings of affiliates less than dividends received ................. 1,924 3,212 Tax benefit on employee stock plans ................................. 5,624 12,243 Provisions for losses on accounts receivable ........................ 2,251 2,892 Amortization of restricted shares ................................... 23,836 31,924 Increase in accounts receivable ..................................... (58,724) (161,371) Increase in billable production orders in process ................... (138,069) (101,347) Increase in prepaid expenses and other current assets ............... (60,969) (37,615) Increase in other assets, net ....................................... (1,680) (22,203) Net decrease in advance billings, accrued taxes and other liabilities (127,194) (432,662) Decrease in accounts payable ........................................ (444,050) (101,221) ----------- ----------- Net cash used for operating activities ........................... (363,269) (392,797) ----------- ----------- Cash flows from investing activities: Capital expenditures ................................................ (60,119) (62,011) Payments for purchases of equity interests in subsidiaries and affiliates, net of cash acquired ................................. (173,391) (278,938) Purchases of short-term investments ................................. (2,402) (10,849) Proceeds from sale of short-term investments ........................ 12,330 11,013 ----------- ----------- Net cash used in investing activities ............................ (223,582) (340,785) ----------- ----------- Cash flows from financing activities: Net increase (decrease) in short-term borrowings .................... 10,382 (73,708) Net proceeds from issuance of new convertibles and debt ............. 586,500 1,503,689 Repayments of principal of long-term debt obligations ............... (41,461) (309,073) Dividends paid ...................................................... (74,716) (73,964) Purchase of treasury shares ......................................... -- (368,819) Other, net .......................................................... (29,303) 14,611 ----------- ----------- Net cash provided by financing activities ........................ 451,402 692,736 ----------- ----------- Effect of exchange rate changes on cash and cash equivalents ............. (8,470) (21,334) ----------- ----------- Net Decrease in cash and cash equivalents ........................ (143,919) (62,180) Cash and cash equivalents at beginning of period ......................... 666,951 472,151 ----------- ----------- Cash and cash equivalents at end of period ............................... $ 523,032 $ 409,971 =========== =========== Supplemental disclosures: Income taxes paid ................................................... $ 130,186 $ 243,546 Interest paid ....................................................... $ 43,501 $ 24,379
The accompanying notes to consolidated condensed financial statements are an integral part of these statements. 3 OMNICOM GROUP INC. AND SUBSIDIAIRES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. We have prepared the consolidated condensed interim financial statements included herein without audit pursuant to Securities and Exchange Commission rules. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to these rules. 2. The accompanying financial statements reflect all adjustments, consisting of normally recurring accruals, which in the opinion of management are necessary for a fair presentation, in all material respects, of the information contained therein. Certain reclassifications have been made to the June 30, 2002 and December 31, 2002 reported amounts to conform them to the June 30, 2003 presentation. These statements should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2002. 3. Results of operations for interim periods are not necessarily indicative of annual results. 4. Basic earnings per share is based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share is based on the above, plus, if dilutive, common share equivalents which include outstanding options and restricted shares, some of which were not dilutive for the periods presented. No adjustments were made for our $2.3 billion aggregate principal amount of convertible notes because the conversion criteria have not been met. For purposes of computing diluted earnings per share, 953,000 and 2,414,000 common share equivalents were assumed to be outstanding for the three months ended June 30, 2003 and 2002, respectively, and 793,000 and 2,828,000 common share equivalents were assumed to be outstanding for the six months ended June 30, 2003 and 2002, respectively. The assumed increase in net income related to the after tax compensation expense related to dividends on restricted shares was $302,000 and $187,500 for the three months ended June 30, 2003 and 2002, respectively and $604,000 and $375,100 for the six months ended June 30, 2003 and 2002, respectively. The number of shares used in our EPS computations were: Three Months Six Months Ended June 30, Ended June 30, ------------------------- -------------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Basic EPS Computation 187,172,000 185,705,000 186,864,000 186,227,000 Diluted EPS Computation 188,125,000 188,119,000 187,658,000 189,056,000 4 OMNICOM GROUP INC. AND SUBSIDIAIRES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) 5. Total comprehensive income and its components were:
(in thousands of dollars) ------------------------------------------------ Three Months Ended Six Months Ended June 30, June 30, ------------------- --------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Net income for the period.................... $ 190,747 $ 187,315 $ 319,331 $ 315,881 Foreign currency translation adjustment, net of income taxes of $61,055 and $64,051 and $70,447 and $45,655 for the three months and six months ended June 30, 2003 and 2002, respectively................................. 113,388 106,297 130,831 77,073 --------- --------- --------- --------- Comprehensive income for the period.......... $ 304,135 $ 293,612 $ 450,162 $ 392,954 ========= ========= ========= =========
6. The following pronouncements were issued by the Financial Accounting Standards Board ("FASB") in 2002: Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146); Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB No. 123 (SFAS 148); Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liability and Equity (SFAS 150). SFAS 146 requires costs associated with exit or disposal activities be recognized and measured initially at fair value only when the liability is incurred. SFAS 146 is effective for exit or disposal costs that are initiated after December 31, 2002. We adopted SFAS 146 effective January 1, 2003. The adoption did not have an impact on our consolidated results of operations or financial position. SFAS 148 was issued as an amendment to FASB No. 123, Accounting for Stock-Based Compensation, and provides alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation (in accordance with SFAS 123). We have applied the accounting provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and we have made the annual pro forma disclosures of the effect of adopting the fair value method of accounting for employee stock options and similar instruments as required under SFAS 123 and SFAS 148. We have adopted the quarterly disclosure requirement as required under SFAS 148 as set forth in note 7 below. This disclosure requirement did not have an impact on our consolidated results of operations or financial position. The FASB recently indicated that they will issue a new accounting standard that will require stock-based employee compensation to be recorded as a charge to earnings beginning in 2004. We will continue to monitor the progress of the FASB with regard to the issuance of this standard. SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in 5 OMNICOM GROUP INC. AND SUBSIDIAIRES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) some circumstances). While adoption is not required until the third quarter of 2003, we believe that the application will not have an impact on, or result in additional disclosure in, our consolidated results of operations or financial position. The following FASB Interpretations ("FINs") were issued in 2002 and 2003: FIN No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness of Others - an Interpretation of FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34; and FIN 46, Consolidation of Variable Interest Entities - An Interpretation of ARB No. 51. FIN 45 sets forth the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. FIN 45 also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The application of FIN 45 did not have an impact on, or result in additional disclosure, in our June 30, 2003 consolidated results of operations or financial position. FIN 46 addresses the consolidation by business enterprises of variable interest entities, as defined in FIN 46 and is based on the concept that companies that control another entity through interests, other than voting interests, should consolidate the controlled entity. The consolidation requirements apply immediately to FIN 46 interests held in variable interest entities created after January 31, 2003, and to interests held in variable interest entities that existed prior to February 1, 2003 and remain in existence as of July 1, 2003. The application of FIN 46 did not have an impact on, or result in additional disclosure in, our June 30, 2003 consolidated results of operations or financial position. 7. The table below summarizes the quarterly pro forma effect of adopting the fair value method of accounting for employee stock options and similar instruments for the three months and six months ended June 30, 2003 and 2002.
Three Months Ended June 30, Six Months Ended June 30, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- (in thousands of dollars, except per share amounts) Net income, as reported.......................... $ 190,747 $ 187,315 $ 319,331 $ 315,881 Net income, pro forma............................ 180,081 171,856 295,235 274,297 Stock-based employee compensation cost, net of tax, as reported...................... 9,030 8,619 17,125 16,173 Additional stock-based employee compensation cost, net of tax, pro forma................. 10,666 15,459 24,096 41,584 Basic net income per share, as reported.......... 1.02 1.01 1.71 1.70 Basic net income per share, pro forma............ 0.96 0.93 1.58 1.47 Diluted net income per share, as reported........ 1.02 1.00 1.70 1.67 Diluted net income per share, pro forma.......... 0.96 0.92 1.58 1.47
6 OMNICOM GROUP INC. AND SUBSIDIAIRES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) 8. All of our wholly and partially owned businesses operate within the marketing and corporate communications services industry. These agencies are organized into strategic platforms, client centric networks, geographic regions and operating groups. Our businesses provide communications services to similar type clients on a global, pan-regional and national basis. We believe that the businesses have similar cost structures and are subject to the same general economic and competitive risks. Given these similarities, we aggregate their results into one reportable segment. A summary of our revenue and long-lived assets by geographic area as of June 30, 2003 and 2002 is set forth in the following table.
(in thousands of dollars) --------------------------------------------------------------------------- United Euro United Other States Denominated Kingdom International Total ------ ----------- ------- ------------- ----- Revenue 3 Months Ended June 30, 2003 $1,182,273 $ 446,856 $ 232,093 $ 288,286 $2,149,508 2002 1,117,548 360,269 195,272 243,480 1,916,569 Revenue 6 Months Ended June 30, 2003 $2,281,848 $ 834,228 $ 443,683 $ 526,994 $4,086,753 2002 2,139,678 680,167 378,174 450,976 3,648,995 Long-lived Assets At June 30, 2003 $ 315,622 $ 82,657 $ 86,375 $ 84,456 $ 569,110 2002 317,293 72,595 93,388 74,625 557,901
9. At June 30, 2003, we had unsecured committed credit lines of $64.9 million, which were fully drawn and are reflected as short-term bank loans. These unsecured loans were comprised of domestic borrowings and bank overdrafts of our international subsidiaries. In addition, we had unsecured committed revolving credit facilities of $1,875.0 million. There were no drawings under the revolving credit facilities and no commercial paper outstanding as of June 30, 2003. 10. In June 2003, we issued $600.0 million aggregate principal amount of Zero Coupon Zero Yield Convertible Notes due 2033. The notes are senior unsecured obligations that are convertible into 5.8 million common shares, implying a conversion price of $103.00 per common share, subject to normal anti-dilution adjustments. These notes are convertible at the specified ratio only upon the occurrence of certain events, including if our common shares trade above certain levels, if we effect extraordinary transactions or if our long-term debt ratings are downgraded from their current level to Ba1 or lower by Moody's Investors Services, Inc. ("Moody's") or BBB- or lower by Standard & Poor's Ratings Services ("S&P"). The occurrence of these events will not result in an adjustment of the number of shares issuable upon conversion. Holders of these notes have the right to put the notes back to us for, at our election, cash, stock or a combination of both on June 15, 2006, 2008, 2010, 2013, 2018, 2023 and on each June 15 annually thereafter through June 15, 2032 and we have a right to redeem the notes for cash beginning on June 15, 2010. There are no 7 OMNICOM GROUP INC. AND SUBSIDIAIRES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) events that accelerate the noteholders' put rights. Beginning in June 2010, if the market price of our common shares exceeds certain thresholds, we may be required to pay contingent cash interest on the notes. The net proceeds of the issuance of these notes were $586.5 million which was used to pay down short-term bank loans and our outstanding commercial paper. 11. On February 21, 2003, we paid $25.4 million to qualified noteholders of our Liquid Yield Option Notes due in 2031, equal to $30 per $1,000 principal amount of notes as an incentive to the holders not to exercise their put right. This payment is being amortized ratably over a 12-month period. In addition, on February 7, 2003, we repurchased for cash, notes from holders who exercised their put right for $2.9 million, reducing the aggregate amount outstanding of the notes due 2031 to $847.0 million. 12. In June 2003, we acquired all of the common stock of AGENCY.COM from Seneca Investments LLC ("Seneca"). The transaction was effected by the redemption of our preferred stock in Seneca, including cumulative dividends, with a value of $181.0 million and the assumption of $15.8 million of liabilities. The redemption of the preferred stock was applied against our remaining carrying value in the preferred stock using the cost recovery method. The remaining shares of preferred stock are entitled to cumulative dividends at a rate of 8.5% compounded semiannually. Unpaid dividends accrue on a cumulative basis. No cash dividends have been paid by Seneca or accrued by the Company in 2003 and prior. Any future dividends will not be recognized until they are realized. At June 30, 2003, substantially all of the purchase price was allocated to goodwill. We are currently performing a valuation of the intangible assets of AGENCY.COM, and upon completion, some portion of the purchase price may be assigned to intangible assets other than goodwill. The transaction closed in June 2003 and we do not believe that any amounts that may be allocated to other intangibles will have a material impact on our June 30, 2003 interim results of operations and financial position had the allocation been completed at June 30, 2003. 13. On August 6, 2003, we paid $6.7 million to qualified noteholders holders of our Zero Coupon Zero Yield Convertible Notes due in 2032, equal to $7.50 per $1,000 principal amount of notes as an incentive to the holders not to exercise their put right. This payment is being amortized ratably over a 12-month period. In addition, on August 1, 2003, we repurchased for cash, notes from holders who exercised their put right for $7.7 million, reducing the aggregate amount outstanding of the notes due 2032 to $892.3 million. In addition, for those holders who did not exercise their put right the no call period on the notes has been extended for the period ended July 31, 2007 to July 31, 2009. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS Results of Operations Second Quarter 2003 Compared to Second Quarter 2002 Revenue: Our second quarter of 2003 consolidated worldwide revenue increased 12.2% to $2,149.5 million from $1,916.6 million in the second quarter of 2002. The effect of acquisitions, net of disposals, increased worldwide revenue by $56.7 million in the second quarter of 2003. Internal/organic growth increased worldwide revenue by $49.9 million, and foreign exchange impacts increased worldwide revenue by $126.3 million. The components of the second quarter 2003 revenue growth in the U.S. ("domestic") and the remainder of the world ("international") are summarized below ($ in millions):
Total Domestic International -------------------- ------------------- ------------------- $ % $ % $ % ----------- --- ---------- --- ----------- --- Second Quarter ended June 30, 2002... $ 1,916.6 -- $ 1,117.5 -- $ 799.1 -- Components of Revenue Changes: Foreign exchange impact.............. 126.3 6.6% -- -- 126.3 15.8% Acquisitions......................... 56.7 3.0% 32.1 2.9% 24.6 3.0% Organic.............................. 49.9 2.6% 32.7 2.9% 17.2 2.2% --------- ---- ---------- --- ---------- ---- Second Quarter ended June 30, 2003... $ 2,149.5 12.2% $ 1,182.3 5.8% $ 967.2 21.0% ========== ==== ========== === ========== ====
The components and percentages are calculated as follows: o The foreign exchange impact component shown in the table is calculated by first converting the current period's local currency revenue using the average exchange rates from the equivalent prior period to arrive at a constant currency revenue (in this case $2,023.2 million for the Total column in the table). The foreign exchange impact equals the difference between the current period revenue in U.S. dollars and the current period revenue in constant currency (in this case $2,149.5 million less $2,023.2 million for the Total column in the table). o The acquisition component shown in the table is calculated by aggregating the applicable prior period revenue of the acquired businesses. Netted against this number is the revenue of any business included in the prior period reported revenue that was disposed of subsequent to the prior period. o The organic component shown in the table is calculated by subtracting both the foreign exchange and acquisition revenue components from total revenue growth. o The percentage change shown in the table of each component is calculated by dividing the individual component amount by the prior period revenue base of that component (in this case $1,916.6 million for the Total column in the table). 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (Continued) The components of revenue and revenue growth for the second quarter of 2003 compared to the second quarter of 2002, in our primary geographic markets are summarized below ($ in millions): $ Revenue % Growth --------- -------- United States....................... $1,182.3 5.8% Euro Markets........................ 446.8 24.0% United Kingdom...................... 232.1 18.9% Other............................... 288.3 18.4% -------- ---- Total............................... $2,149.5 12.2% ======== ==== As indicated, foreign exchange impacts increased our international revenue by $126.3 million during the quarter ended June 30, 2003. The most significant impacts resulted from the continued strength of the Euro and the British Pound against the U.S. dollar, as our operations in these markets represented approximately 70.0% of our international revenue. Several long-term trends continue to positively affect our business, including our clients increasingly expanding the focus of their brand strategies from national markets to the global market. Additionally, in an effort to gain greater efficiency and effectiveness from their marketing dollars, clients are increasingly requiring greater coordination of their traditional advertising and marketing activities and concentrating these activities with a smaller number of service providers. Driven by clients' continuous demand for more effective and efficient branding activities, we strive to provide an extensive range of marketing and corporate communications services through various client centric networks that are organized to meet specific client objectives. These services include advertising, brand consultancy, crisis communications, custom publishing, database management, digital and interactive marketing, direct marketing, directory advertising, entertainment marketing, environmental design, experiential marketing, field marketing, financial/corporate business to business advertising, graphic arts, healthcare communications, instore design, investor relations, marketing research, media planning and buying, multi-cultural marketing, non-profit marketing, organizational communications, package design, product placement, promotional marketing, public affairs, public relations, real estate advertising and marketing, recruitment communications, reputation consulting, retail marketing and sports and event marketing. In an effort to monitor the changing needs of our clients and to further expand the scope of our services to key clients, we monitor revenue across a broad range of disciplines and group them into the following four categories: traditional media advertising, customer relationship management referred to as CRM, public relations and specialty communications as summarized below. 10
(Dollars in millions) ------------------------------------------------------------------------ Three Months Ended June 30, ------------------------------------------------------------------------ 2003 % of 2002 % of $ % Revenue Revenue Revenue Revenue Growth Growth ------- ------- ------- ------- ------ ------ Traditional media advertising $ 944.2 43.9% $ 821.8 42.9% $ 122.4 14.9% CRM 693.3 32.3% 589.0 30.7% 104.3 17.7% Public relations 249.3 11.6% 245.9 12.8% 3.4 1.4% Specialty communications 262.7 12.2% 259.9 13.6% 2.8 1.1% --------- --------- ------- $ 2,149.5 $ 1,916.6 $ 232.9 ========= ========= =======
Operating Expenses: Our second quarter of 2003 worldwide operating expense increased $226.8 million, or 14.3%, to $1,812.9 million from $1,586.1 million in the second quarter of 2002, as described below. Salary and service costs, which are comprised of direct service costs and salary and related costs, increased by $187.5 million, or 15.3%, and represented 77.7% of total operating expenses in the second quarter of 2003 versus 77.0% in the second quarter of 2002. These expenses increased as a percentage of revenue to 65.6% in the second quarter of 2003 from 63.8% in the second quarter of 2002. The increases were primarily the result of changes in the mix of our revenues, greater utilization of freelance labor, increased severance costs and increased investment in key personnel. This increase was offset by reductions in incentive compensation and bonuses and our continuing efforts to align permanent staffing with current work levels on a location-by-location basis, as well as our continued attempts to increase the variability of our cost structure. Office and general expenses increased by $39.3 million, or 10.8%, in the second quarter of 2003. Office and general expenses represented 22.3% of our total operating costs in the second quarter of 2003 versus 23.0% in the second quarter of 2002. Additionally, as a percentage of revenue, office and general expenses decreased marginally in the second quarter of 2003 to 18.8% from 19.0%. This relatively consistent year-over-year performance results from our continued efforts to better align costs with business levels on a location-by-location basis. For the foregoing reasons, our operating margin decreased to 15.7% in the second quarter of 2003, from 17.2% in the second quarter of 2002. Net Interest Expense: Our net interest expense increased in the second quarter of 2003 to $13.0 million as compared to $5.9 million in the same period in 2002. Our gross interest expense increased by $5.5 million to $16.2 million. This increase resulted from additional interest costs associated with our payment on February 21, 2003, of $30 per $1,000 principal amount of our Liquid Yield Option Notes due 2031 as an incentive to the holders not to exercise their put right. This payment to qualified noteholders amounted to $25.4 million which is being amortized ratably over a 12-month period. This was partially offset by generally lower short- 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (Continued) term interest rates and cash management efforts during the quarter and the issuance in June 2003 of the $600.0 million Zero Coupon Zero Yield Convertible Notes due 2033. In addition, on August 6, 2003 we paid $6.7 million to qualified noteholders of the Zero Coupon Zero Yield Convertible Notes dues 2032 as an incentive to the holders not to exercise their put right. This payment is being amortized ratably over a twelve-month period. As a result of the amortization of the February and August payments, we expect interest expense to increase by $23.3 million for the full-year 2003 compared to 2002. Income Taxes: Our consolidated effective income tax rate was 34.2% in the second quarter of 2003, which is less than the 37.6% rate in the second quarter of 2002 and is slightly less than our full year rate for 2002 of 35.0%. This reduction reflects the realization of our ongoing focus on tax planning. Earnings Per Share (EPS): For the foregoing reasons, our net income in the second quarter of 2003, increased to $190.7 million. Diluted earnings per share increased 2.0% to $1.02 in the second quarter of 2003, as compared to $1.00 in the prior year period. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (Continued) Six Months 2003 Compared to Six Months 2002 Revenue: Our consolidated worldwide revenue in the first six months of 2003 increased 12.0% to $4,086.8 million from $3,649.0 million in 2002. The effect of acquisitions, net of disposals, increased worldwide revenue by $109.5 million. Internal/organic growth increased worldwide revenue by $94.7 million, and foreign exchange impacts increased worldwide revenue by $233.6 million. The components of total 2003 revenue growth in the U.S. ("domestic") and the remainder of the world ("international") are summarized below ($ in millions):
Total Domestic International -------------------- ------------------- ------------------- $ % $ % $ % ----------- --- ---------- --- ----------- --- Six Months ended June 30, 2002....... $ 3,649.0 -- $ 2,139.6 -- $ 1,509.4 -- Components of Revenue Changes: Foreign exchange impact.............. 233.6 6.4% -- -- 233.6 15.5% Acquisitions......................... 109.5 3.0% 65.6 3.1% 43.9 2.9% Organic.............................. 94.7 2.6% 76.6 3.6% 18.1 1.2% --------- --- --------- --- ---------- --- Six Months ended June 30, 2003....... $ 4,086.8 12.0% $ 2,281.8 6.7% $ 1,805.0 19.6% ========== ==== ========== === ========== ====
The components and percentages are calculated as follows: o The foreign exchange impact component shown in the table is calculated by first converting the current period's local currency revenue using the average exchange rates from the equivalent prior period to arrive at a constant currency revenue (in this case $3,853.2 million for the Total column in the table). The foreign exchange impact equals the difference between the current period revenue in U.S. dollars and the current period revenue in constant currency (in this case $4,086.8 million less $3,853.2 million for the Total column in the table). o The acquisition component shown in the table is calculated by aggregating the applicable prior period revenue of the acquired businesses. Netted against this number is the revenue of any business included in the prior period reported revenue that was disposed of subsequent to the prior period. o The organic component shown in the table is calculated by subtracting both the foreign exchange and acquisition revenue components from total revenue growth. o The percentage change shown in the table of each component is calculated by dividing the individual component amount by the prior period revenue base of that component (in this case $3,649.0 million for the Total column in the table). 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (Continued) The components of total revenue and revenue growth for the six months ended June 30, 2003 compared to the six months ended June 30, 2002, in our primary geographic markets are summarized below ($ in millions): $ Revenue % Growth --------- -------- United States....................... $ 2,281.8 6.6% Euro Markets........................ 834.2 22.7% United Kingdom...................... 443.7 17.3% Other............................... 527.1 16.9% ---------- ---- Total............................... $ 4,086.8 12.0% ========== ==== As indicated, foreign exchange impacts increased our international revenue by $233.6 million during the six months ended June 30, 2003. The most significant impacts resulted from the continued strength of the Euro and the British Pound against the U.S. dollar, as our operations in these markets represented approximately 70.0% of our international revenue. Several long-term trends continue to positively affect our business, including our clients increasingly expanding the focus of their brand strategies from national markets to the global market. Additionally, in an effort to gain greater efficiency and effectiveness from their marketing dollars, clients are increasingly requiring greater coordination of their traditional advertising and marketing activities and concentrating these activities with a smaller number of service providers. Driven by clients' continuous demand for more effective and efficient branding activities, we strive to provide an extensive range of marketing and corporate communications services through various client centric networks that are organized to meet specific client objectives. These services include advertising, brand consultancy, crisis communications, custom publishing, database management, digital and interactive marketing, direct marketing, directory advertising, entertainment marketing, environmental design, experiential marketing, field marketing, financial/corporate business to business advertising, graphic arts, healthcare communications, instore design, investor relations, marketing research, media planning and buying, multi-cultural marketing, non-profit marketing, organizational communications, package design, product placement, promotional marketing, public affairs, public relations, real estate advertising and marketing, recruitment communications, reputation consulting, retail marketing and sports and event marketing. In an effort to monitor the changing needs of our clients and to further expand the scope of our services to key clients, we monitor revenue across a broad range of disciplines and group them into the following four categories: traditional media advertising, customer relationship management referred to as CRM, public relations and specialty communications as summarized below. 14 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (Continued)
(Dollars in millions) ------------------------------------------------------------------------ Six Months Ended June 30, ------------------------------------------------------------------------ 2003 % of 2002 % of $ % Revenue Revenue Revenue Revenue Growth Growth ------- ------- ------- ------- ------ ------ Traditional media advertising $ 1,803.9 44.1% $ 1,599.6 43.8% $ 204.3 12.8% CRM 1,324.5 32.4% 1,111.6 30.5% 212.9 19.2% Public relations 474.4 11.6% 473.3 13.0% 1.1 0.2% Specialty communications 484.0 11.9% 464.5 12.7% 19.5 4.2% --------- --------- --------- $ 4,086.8 $ 3,649.0 $ 437.8 ========= ========= =========
Operating Expenses: Our first half of 2003 worldwide operating expense increased $437.2 million, or 14.2%, to $3,526.8 million from $3,089.6 million in the second quarter of 2002, as described below. Salary and service costs, which are comprised of direct service costs and salary and related costs, increased by $354.4 million, or 14.8%, and represented 77.9% of total operating expenses in the first half of 2003 versus 77.5% in the first half of 2002. These expenses increased, both in absolute terms and as a percentage of revenue to 67.3% in the first half of 2003 from 65.6% in the first half of 2002. The increases were primarily as a result of changes in the mix of our revenues, greater utilization of freelance labor, increased severance costs and increased investment in key personnel. This increase was offset by reductions in incentive compensation and bonuses and our continuing efforts to align permanent staffing with current work levels on a location by location basis, as well as our continued attempts to increase the variability of our cost structure. Office and general expenses increased by $82.7 million, or 11.9%, in the first half of 2003. Office and general expenses represented 22.1% of our total operating costs in the first half of 2003 versus 22.5% in the first half of 2002. Additionally, as a percentage of revenue office and general expenses decreased marginally in the first half of 2003 to 19.0% from 19.1%. This relatively consistent year-over-year performance results from our continued efforts to better align costs with business levels on a location-by-location basis. For the foregoing reasons, our operating margin decreased to 13.7% in the first half of 2003, from 15.3% in the first half of 2002. Net Interest Expense: Our net interest expense increased in the first half of 2003 to $21.2 million as compared to $17.3 million in the same period in 2002. Our gross interest expense increased by $2.9 million to $27.4 million. This increase resulted from the additional interest costs associated with our payment on February 21, 2003, of $30 per $1,000 principal amount of our Liquid Yield Option Notes due 2031 as an incentive to the holders not to exercise their put right. This payment to qualified noteholders amounted to $25.4 million and is being amortized ratably over the 12-month period. This was partially offset by generally lower short- 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (Continued) term interest rates and cash management efforts during the quarter and the issuance in June 2003 of the $600.0 million Zero Coupon Zero Yield Convertible Notes due 2033. In addition, on August 6, 2003 we paid $6.7 million to qualified noteholders of the Zero Coupon Zero Yield Convertible Notes dues 2032 as an incentive to the holders not to exercise their put right. This payment is being amortized ratably over a twelve-month period. As a result of the amortization of the February and August payments, we expect interest expense to increase by $23.3 million for the full-year 2003 compared to 2002. Income Taxes: Our consolidated effective income tax rate was 34.5% in the first half of 2003, which is less than the 37.2% rate in the first half of 2002 and which is slightly less than our full year rate for 2002 of 35.0%. This reduction reflects the realization of our ongoing focus on tax planning. Earnings Per Share (EPS): For the foregoing reasons, our net income in the first half of 2003, increased to $319.3 million. Diluted earnings per share increased 1.8% to $1.70 in the first half of 2003, as compared to $1.67 in the prior year period. Critical Accounting Policies and New Accounting Pronouncements To assist in better understanding our financial statements and the related management's discussion and analysis of those results, readers are encouraged to consider this information together with our discussion of critical accounting policies in the MD&A in our 2002 10-K, as well as our consolidated financial statements and the related notes included in our 2002 10-K for a more complete understanding of all of our accounting policies. 16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (Continued) Contingent Acquisition Obligations Certain of our acquisitions are structured with additional contingent purchase price obligations. We utilize contingent purchase price structures in an effort to minimize the risk to us associated with potential future negative changes in the performance of the acquired entity. The amount of future contingent purchase price payments that we would be required to pay for prior acquisitions, assuming that the acquired businesses perform over the relevant future periods at their current profit levels, is approximately $375 million as of June 30, 2003. The ultimate amounts payable cannot be predicted with reasonable certainty because they are dependent upon future results, are subject to changes in foreign currency exchange rates and, in accordance with GAAP, we have not recorded a liability for these items on our balance sheet since the definitive amount is not determinable or distributable. Actual results can differ from these estimates and the actual amounts that we pay are likely to be different from these estimates. Our obligations change from period to period as a result of payments made during the current period, changes in the previous estimate of the acquired entities' performance, changes in foreign currency exchange rates and other factors. These differences could be material. The contingent purchase price obligations as of June 30, 2003, calculated using the assumptions above, are as follows: ($ in millions) --------------------------------------------------------------------- Remainder There- 2003 2004 2005 2006 after Total ---- ---- ---- ---- ----- ----- $115 $104 $89 $37 $30 $375 In addition, owners of interests in certain of our subsidiaries or affiliates have the right in certain circumstances to require us to purchase additional ownership stakes in these subsidiaries or affiliates. Assuming that the subsidiaries and affiliates perform over the relevant periods at their current profit levels, the aggregate amount we could be required to pay in future periods is approximately $257 million, $129 million of which are currently exercisable. The ultimate amount payable in the future relating to these transactions will vary because it is dependent on the future results of operations of the subject businesses and the timing of when these rights are exercised. The actual amounts that we pay are likely to be different from these estimates. These differences could be material. The obligations that exist for these agreements as of June 30, 2003, calculated using the assumptions above, are as follows: ($ in millions) --------------------------------------- Currently Not Currently Exercisable Exercisable Total ----------- ----------- ----- Subsidiary agencies $ 114 $ 118 $ 232 Affiliated agencies 15 10 25 ---- ----- ----- Total $ 129 $ 128 $ 257 ==== ===== ===== If these rights were to be exercised, there would be an increase in our net income as a result of our increased ownership and the corresponding reduction in minority interest expense. 17 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources Liquidity: We had cash and cash equivalents totaling $523.0 million and $667.0 million and short-term investments totaling $20.5 million and $28.9 million at June 30, 2003 and December 31, 2002, respectively. Consistent with our historical trends in the first half of the year, we had negative cash flow from operations of $363.3 million, including tax payments and payments to vendors and to the media on behalf of clients. This resulted in a significant reduction to our year-end current liabilities. We funded these liabilities with cash on hand and by drawing down on available credit facilities. As discussed below, during June 2003 we issued $600.0 million of Zero Coupon Zero Yield Convertible Notes which were used to pay down our outstanding credit facilities prior to June 30, 2003. Capital Resources: We maintain two revolving credit facilities with two consortia of banks, a three-year revolving $835.0 million credit facility with a maturity date of November 14, 2005 and a $1,040.0 million 364-day revolving credit facility with a maturity date of November 13, 2003. We are also an active participant in the commercial paper market with a $1,500.0 million program. Each of our bank credit facilities provide credit support for issuances under this program. As of June 30, 2003, we had no borrowings outstanding under these credit facilities. The 364-day facility includes a provision which allows us to convert all amounts outstanding at expiration of the facility into a one-year term loan. The consortium of banks under the 364-day credit facility consists of 20 banks for which Citibank N.A. acts as agent. Other significant lending institutions include JPMorgan Chase Bank, HSBC Bank USA, San Paolo IMI S.p.A., Barclays, Wachovia and Societe Generale. A similar consortium of 16 banks provides support under the three-year revolving credit facility for which Citibank N.A. acts as administrative agent and ABN AMRO Bank acts as syndication agent. Other significant lending institutions include HSBC Bank USA, JPMorgan Chase Bank, Wachovia and Societe Generale. These facilities provide us with the ability to classify up to $1,875.0 million of our borrowings due within one year as long-term debt, as it is our intention to keep the borrowings outstanding on a long-term basis. We had short-term bank loans of $64.9 million and $50.4 million at June 30, 2003 and December 31, 2002, respectively, comprised of domestic borrowings and bank overdrafts of our international subsidiaries which are unsecured loans. At June 30, 2003, we had a total of $2,347.0 million aggregate principal amount of convertible notes outstanding, including $847.0 million Liquid Yield Option Convertible Notes due 2031, which were issued in February 2001, $900.0 million Zero Coupon Zero Yield Convertible Notes due 2032, which were issued in March 2002, and $600.0 million Zero Coupon Zero Yield Convertible Notes due 2033, which were issued in June 2003. The holders of our Liquid Yield Option Convertible Notes due 2031 have the right to cause us to repurchase up to the entire aggregate face amount of the notes then outstanding for par value in February of each year. The holders of our Zero Coupon Zero Yield Convertible Notes due 2032 have the right to cause us to repurchase up to the entire aggregate face amount of the notes then outstanding for par value in August of each year. The holders of our Zero Coupon Zero Yield Convertible Notes 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (Continued) due 2033 have the right to cause us to repurchase up to the entire aggregate face amount of the notes then outstanding for par value on June 15, 2006, 2008, 2010, 2013, 2018, 2023 and on each June 15 annually thereafter through June 15, 2032. The $847.0 million Liquid Yield Option Convertible Notes due 2031 and the $900.0 million Zero Coupon Zero Yield Convertible Notes due 2032 are convertible, at specified ratios, only upon the occurrence of certain events, including if our common shares trade above certain levels, if we effect extraordinary transactions or if our long-term debt ratings are downgraded to BBB or lower by S&P, and to Baa3 or lower by Moody's or to BBB- or lower by S&P and Ba1 or lower by Moody's for the $600.0 million Zero Coupon Zero Yield Convertible Notes due 2033. These events would not, however, result in an adjustment of the number of shares issuable upon conversion. On February 21, 2003, we paid $25.4 million to qualified noteholders of our Liquid Yield Option Notes due in 2031, equal to $30 per $1,000 principal amount of notes as an incentive to the holders not to exercise their put right. This payment is being amortized ratably over a 12-month period. In addition, on February 7, 2003, we repurchased for cash, notes from holders who exercised their put right for $2.9 million, reducing the aggregate amount outstanding of the notes due 2031 to $847.0 million. On August 6, 2003, we paid $6.7 million to qualified noteholders of our Zero Coupon Zero Yield Convertible Notes due 2032, equal to $7.50 per $1,000 principal amount of notes as an incentive to the holders not to exercise their put right. This payment is being amortized ratably over a 12-month period. At June 30, 2003, we had Euro-denominated bonds outstanding equal to $175.0 million. The bonds pay a fixed rate of 5.2% to maturity in June 2005. The bonds serve as a hedge of our investment in Euro-denominated net assets. While an increase in the value of the euro against the dollar will result in a greater liability for interest and principal, there will be a corresponding increase in the dollar value of our euro-denominated net assets. Below is a summary of our debt position as of June 30, 2003 ($ in millions): Debt: Bank loans (due in less than 1 year)......................... $ 64.9 $835.0 Million Revolver - due November 14, 2005............ 0.0 Commercial paper issued under 364-day Facility............... 0.0 5.20% Euro notes - due June 24, 2005....................... 175.0 Convertible notes - due February 7, 2031................... 847.0 Convertible notes - due July 31, 2032...................... 900.0 Convertible notes - due June 15, 2033...................... 600.0 Loan notes and sundry - various through 2012............... 22.1 -------- Total Debt....................................................... $2,609.0 ======== We believe that our operating cash flow combined with our available lines of credit and our access to the capital markets are sufficient to support our foreseeable cash requirements, including working capital, capital expenditures, dividends and acquisitions. 19 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market Risk Our operations are subject to the risk of currency exchange rate fluctuations related to our international operations. While our agencies conduct business in more than 70 different currencies, our major non-U.S. currency markets are the European Monetary Union (EMU), the United Kingdom, Japan, Brazil and Canada. Our net income is subject to risk from the translation of the revenue and expenses of our foreign operations, which are generally denominated in the local currency. The effects of currency exchange rate fluctuations on our first six months of operations were positive as discussed above. We do not hedge our exposure against the US dollar in the normal course of our business. We do, however, conduct global treasury operations to improve liquidity and manage third-party interest expense centrally. As an integral part of these operations, we enter into short-term forward foreign exchange contracts to hedge intercompany cash movements between subsidiaries operating in different currency markets. To the extent that our treasury centers require liquidity, they can access local currency lines of credit, our committed bank facilities or dollar-denominated commercial paper. A foreign treasury center borrowing U.S. dollar-denominated commercial paper will generally enter into a short-term exchange contract to hedge its position. Outside of major markets, our subsidiaries generally borrow funds directly in their local currency. In addition, we periodically enter into cross-currency interest rate swaps to hedge our net yen investments. Our Annual Report on Form 10-K for the year ended December 31, 2002 provides a more detailed discussion of the market risks affecting our operations. As of June 30, 2003, no material change had occurred in our market risks from the disclosure contained in that 10-K. Forward-Looking Statements "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk" set forth in this report contain disclosures which are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as "may," "will," "expect," "project," "estimate," "anticipate," "envisage," "plan" or "continue." These forward-looking statements are based upon our current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans and anticipated actions and our future financial condition and results. The uncertainties and risks include, but are not limited to, changes in general economic conditions, competitive factors, client communication requirements, the hiring and retention of human resources and other factors. In addition, our international operations are subject to the risk of currency fluctuations, exchange controls and similar risks discussed above. As a consequence, current plans, anticipated actions and future financial condition and results may differ from those expressed in any forward-looking statements made by us or on our behalf, and those differences could be material. 20 ITEM 4. CONTROLS AND PROCEDURES We maintain disclosure controls and procedures designed to ensure that information required to be included in our SEC reports is recorded, analyzed and reported within applicable time periods. During the 90-day period prior to the filing of this report, we conducted an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our CEO and CFO concluded that they believe that our disclosure controls and procedures are effective to ensure recording, analysis and reporting of information required to be included in our SEC reports on a timely basis. There have been no significant changes in our internal controls or other factors that could be reasonably expected to significantly affect the effectiveness of these controls since that evaluation was completed. 21 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders We held our annual shareholders' meeting on May 20, 2003. At the meeting, votes were cast for the following proposals as follows: To declassify Board of Director terms: Votes For Votes Against Votes Withheld --------- ------------- -------------- 155,562,355 972,930 1,322,865 To elect the following Directors: Votes For Votes Withheld --------- -------------- Errol M. Cook 157,088,153 769,997 Susan S. Denison 157,489,256 368,894 Michael A. Henning 157,506,709 351,441 John R. Murphy 157,510,278 347,872 John R. Purcell 157,474,176 383,974 Linda Johnson Rice 151,472,982 6,385,168 To approve an amendment to the Omnicom Group Inc. Equity Incentive Plan: Votes For Votes Against Votes Withheld --------- ------------- -------------- 139,264,143 16,939,074 1,654,933 To act upon a shareholder proposal to amend the Bylaws of Omnicom Group Inc.: Votes For Votes Against Votes Withheld --------- ------------- -------------- 8,416,412 129,460,491 19,981,250 Item 6. Exhibit and Reports on Form 8-K (a) Exhibits 3.1 Restated Certificate of Incorporation of Omnicom Group Inc. filed with the Secretary of State of New York on May 20, 2003. 3.2 Amended and Restated By-laws of Omnicom Group Inc. 10.1 Amendment to the Revolving Credit Agreement, dated April 30, 2003 among Omnicom Finance Inc., Omnicom Capital Inc., Omnicom Finance PLC, Omnicom Group Inc. and UBS AG. 22 10.2 Amendment to the 364-Day Credit Agreement, dated June 30, 2003 among Omnicom Finance Inc., Omnicom Capital Inc., Omnicom Finance plc, Omnicom Group Inc. and Fifth Third Center. 31.1 Certification of Chief Executive Officer and President required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. 31.2 Certification of Executive Vice President and Chief Financial Officer required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. 32.1 Certification of the Chief Executive Officer and President and the Executive Vice President and Chief Financial Officer required by Rule 13a-14(b) under the Exchange Act of 1934, as amended, and 18 U.S.C.ss.1350. (b) Reports on Form 8-K On April 29, 2003, we filed a Current Report on Form 8-K to furnish under Item 9 (Regulation FD Disclosure) our press release announcing our operating results for the first quarter of 2003 and the text of materials used in the related call at which such results were discussed. On June 11, 2003, we filed a Current Report on Form 8-K to file under Item 5 our press release announcing the completion of the offering of the Zero Coupon Zero Yield Notes due 2033. 23 SIGNATURES Pursuant to the requirements 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. OMNICOM GROUP INC. August 8, 2003 /s/ Randall J. Weisenburger --------------------------------------- Randall J. Weisenburger Executive Vice President and Chief Financial Officer (on behalf of Omnicom Group Inc. and as Principal Financial Officer) 24 EX-3.1 3 e15387ex3_1.txt RESTATED CERTIFICATED OF INCORPORATION Exhibit 3.1 RESTATED CERTIFICATE OF INCORPORATION OF OMNICOM GROUP INC. Under Section 807 of the Business Corporation Law of the State of New York The undersigned, being an officer of the Corporation, hereby certifies as follows: 1. The name of the Corporation is Omnicom Group Inc. The name under which the corporation was formed is Maxwell Dane, Inc. 2. The certificate of incorporation was filed by the department of state on the 17th day of November, 1994. 3. The text of the certificate of incorporation is hereby amended to effect the following changes: Article EIGHTH of the Certificate of Incorporation respecting the directors of the corporation is amended to read: EIGHTH: The number of directors shall be fixed by the By-Laws, or by action of the shareholders or the Board of Directors under specific provisions of a By-Law adopted by the shareholders entitled to vote in an election for directors. If the shareholders are empowered by the By-Laws or by law to change the number of directors constituting the entire Board of Directors, the affirmative vote of holders of two-thirds in voting power of the outstanding shares of stock of the corporation shall be required for the shareholders to change the number of directors constituting the entire Board of Directors. Directors will be elected at each annual meeting of shareholders. If the shareholders are empowered by the By-Laws or by law to remove a director (for cause or otherwise), the exercise of that power will require the affirmative vote of holders of two-thirds in voting power of the outstanding shares of stock of the corporation. The text of the Certificate of Incorporation, as amended, is hereby restated as further amended to read as herein set forth in full: CERTIFICATE OF INCORPORATION OF OMNICOM GROUP INC. (AS AMENDED AND RESTATED MAY 20, 2003) FIRST: The name of the corporation is Omnicom Group Inc. SECOND: The purposes for which the corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the New York Business Corporation Law, provided that the corporation will not engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained. THIRD: The office of the corporation in the State of New York shall be located in the County of New York. FOURTH: The total number of shares of stock which the Corporation will have authority to issue is 1,007,500,000 shares. Of these, 1,000,000,000 shares are classified as Common Stock, par value $.15 per share, and 7,500,000 shares are classified as Preferred Stock, par value $1.00 per share. At the effective time of the amendment to this Article decreasing the par value of the Common Stock to $.15 per share, and without any further action on the part of the Corporation or its shareholders, each share of Common Stock with a par value of $.50 then issued and outstanding shall be changed and reclassified into a fully paid and nonassessable share of Common Stock with a par value of $.15. The Board of Directors is authorized to divide the 7,500,000 shares of Preferred Stock from time to time into one or more series, and to determine or change by resolution for each series its designation, the number of shares of the series and the powers, preferences and rights, and the qualifications, limitations or restrictions of the shares of the series. The resolution or resolutions of the Board of Directors providing for the division of Preferred Stock into series within a class may include the following provisions: (1) The distinctive designation of each series and the maximum number of shares of each series which may be issued, which number may be increased (except where otherwise provided by the Board of Directors in creating the series) or decreased (but not below the number of shares of the series then outstanding) from time to time by action of the Board of Directors; (2) Whether the holders of the shares of each series are entitled to vote and, if so, the matters on which they are entitled to vote, the number of votes to which the holder of each share is entitled, and whether the shares of the series are to be voted separately or together with shares of other series; (3) The dividends to which holders of shares of each series will be entitled; any restrictions, conditions or limitations upon the payment of those dividends; whether the dividends will be cumulative and, if cumulative, the date or dates from which the dividends will be cumulative; (4) Whether the shares of one or more series will be subject to redemption and, if so, whether redemption will be mandatory or optional and if optional, at whose option, the manner of selecting shares for redemption, the redemption price and the manner of redemption; (5) The amount payable on shares of each series if there is a liquidation, dissolution or winding up of the Corporation which amount may vary at different dates and depending upon whether the liquidation, dissolution or winding up is voluntary or involuntary; 2 (6) The obligation, if any, of the Corporation to maintain a purchase, retirement or sinking fund for shares of each series; (7) Whether the shares of one or more series will be convertible into, or exchangeable for, any other types of securities, either at the option of the holder or of the Corporation and, if so, the terms of the conversions or exchanges; (8) Any other provisions regarding the powers preferences and rights, and the qualifications limitations or restrictions, of each series which are not inconsistent with applicable law. All shares of a series of Preferred Stock will be identical with each other in all respects, except that shares of any one series issued at different times may differ as to the dates from which dividends on those shares, if cumulative, shall cumulate. FIFTH: No holder of any of the shares of any class of the corporation shall be entitled as of right to subscribe for, purchase, or otherwise acquire any shares of any class of the corporation which the corporation proposes to issue or any rights or options which the corporation proposes to grant for the purchase of shares of any class of the corporation or for the purchase of any shares, bonds, securities, or obligations of the corporation which are convertible into or exchangeable for, or which carry any rights, to subscribe for, purchase, or otherwise acquire shares of any class of the corporation; and any and all of such shares, bonds, securities or obligations of the corporation, whether now or hereafter authorized or created, may be issued, or may be reissued or transferred if the same have been reacquired and have treasury status, and any and all of such rights and options may be granted by the Board of Directors to such persons, firms, corporations and associations, and for such lawful consideration, and on such terms, as the Board of Directors in its discretion may determine, without first offering the same, or any part thereof, to any said holder. Without limiting the generality of the foregoing stated denial of any and all preemptive rights, no holder of shares of any class of the corporation shall have any preemptive rights in respect of the matters, proceedings or transactions specified in subparagraphs (1) to (6), inclusive, of paragraph (e) of Section 622 of the Business Corporation Law. SIXTH: The duration of the corporation shall be perpetual. SEVENTH: The Secretary of State is designated as the agent of the corporation upon whom process against the corporation may be served, and the address to which the Secretary of State shall mail a copy of any process against the corporation served upon him is: 437 Madison Avenue, New York, N.Y. 10022. EIGHTH: The number of directors shall be fixed by the By-Laws, or by action of the shareholders or the Board of Directors under specific provisions of a By-Law adopted by the shareholders entitled to vote in an election for directors. If the shareholders are empowered by the By-Laws or by law to change the number of directors constituting the entire Board of Directors, the affirmative vote of holders of two-thirds in voting power of the outstanding shares of stock of the corporation shall be required for the shareholders to change the number of directors constituting the entire Board of Directors. Directors will be elected at each annual 3 meeting of shareholders. If the shareholders are empowered by the By-Laws or by law to remove a director (for cause or otherwise), the exercise of that power will require the affirmative vote of holders of two-thirds in voting power of the outstanding shares of stock of the corporation. NINTH: A director of the corporation shall not be personally liable to the corporation or its shareholders for damages for breach of fiduciary duty as a director, except where a judgment or other final adjudication adverse to a director establishes that such director's acts or omissions were in bad faith or involved intentional misconduct or knowing violation of law or where such director personally gained in fact a financial profit or other advantage to which such director was not legally entitled or where such director's acts violated Section 719 of The New York Business Corporation Law. Any repeal or modification of this Article Ninth shall not adversely effect any right or protection of a director of the corporation under this Article Ninth in respect of any acts or omissions of such director which occurred prior to such repeal or modification. TENTH: The affirmative vote of holders of two-thirds in voting power of the outstanding shares of stock of the corporation shall be required to approve (a) the adoption, amendment or repeal of any provision of the By-Laws, or (b) the amendment or repeal of Article Eighth or Article Ninth of this Certificate of Incorporation. ELEVENTH: Except as may otherwise be specifically provided in this Certificate of Incorporation, no provision of this Certificate of Incorporation is intended by the corporation to be construed as limiting, prohibiting, denying or abrogating any of the general or specific powers or rights conferred under the Business Corporation Law upon the corporation, upon its shareholders, bondholders, and security holders, and upon its directors, officers, and other corporate personnel, including in particular, the power of the corporation to furnish indemnification to directors and officers in the capacities defined and prescribed by the Business Corporation Law and defined and prescribed rights of said persons to indemnification as the same are conferred by the Business Corporation Law. 4. The amendment to the Certificate of Incorporation was authorized by the vote of the board of directors followed by a vote of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders. /s/ Barry J. Wagner --------------------------------------- Barry J. Wagner, Secretary 4 EX-3.2 4 e15387ex3_2.txt BY-LAWS Exhibit 3.2 BY-LAWS OF OMNICOM GROUP INC. A NEW YORK CORPORATION (AS AMENDED AND RESTATED MAY 20, 2003) ARTICLE I MEETINGS OF SHAREHOLDERS Section 1. Place of Meetings. All meetings of the shareholders of the Corporation will be held at such places, within or outside of the State of New York, as may be fixed from time to time by the Board of Directors. Section 2. Annual Meeting. Commencing in the year 1988, the annual meeting of shareholders will be held on such date and at such time as may be fixed by the Board of Directors. At each annual meeting of shareholders the shareholders will elect directors and transact such other business as may properly be brought before the meeting. No shareholder shall have any right to bring a matter before the shareholders for a vote at the annual meeting of shareholders, unless such shareholder shall have given the Secretary of the Corporation written notice of his intention to do so not less than 60 days prior to the date set for the annual meeting. Such notice shall include the name and address of the shareholder proposing to bring such matter before such meeting, identify the matter proposed to be brought before the meeting and disclose the shareholder's interest in the proposed matter. No shareholder shall have any right to propose or nominate a nominee for election to the Board of Directors of the Corporation, unless such shareholder shall have given the Secretary of the Corporation written notice of his intention to do so not less than 60 days before the date set for the annual meeting. Such notice shall include as to each nominee and such shareholder (i) the information as to such nominee and shareholder that would be required to be included in a proxy statement under the proxy rules of the Securities and Exchange Commission if such shareholder were to solicit proxies from all shareholders of the Corporation for the election of such nominee as a director and such solicitation were one to which Rules 14a-3 to 14a-12 under the Securities Exchange Act of 1934, as amended, apply and (ii) the information as to such nominee and shareholder specified in Schedule 14B under the proxy rules of the Securities and Exchange Commission. If, at any such meeting, a shareholder gives notice of intention to propose that action be taken which would, if taken, entitle shareholders fulfilling the requirements of Section 623 of the Business Corporation Law of New York (relating to the procedure to enforce a shareholder's right to receive payment for his shares) to receive payment for their shares, such notice shall include a statement to that effect. Section 3. Notice of Annual Meeting. Written notice of each annual meeting of shareholders stating the place, date and hour of the melting, will be given in the manner set forth in Article IV of these By-Laws not less than ten nor more than fifty days before the date of the meeting to each shareholder entitled to vote at the meeting. Section 4. Special Meetings. Special meetings of shareholders may be called at any time for any purpose or purposes, by the Board of Directors, or by the President, and shall be called by the President or the Secretary upon the written request of a majority of the Board of Directors. A request shall state the purpose or purposes of the proposed meeting. Section 5. Notice of Special Meeting. Notice of each special meeting of shareholders will be given in the manner set forth in Article IV of these By-Laws not less than ten nor more than fifty days before the date of the meeting to each shareholder entitled to vote at 2 the meeting. Each notice will state the place, date and hour of the meeting, and the purpose or purposes for which the meeting is called and indicate by whom it is being called. Section 6. Quorum. Except as otherwise required by law or the Certificate of Incorporation, the presence in person or by proxy of the holders of record of a majority of the shares entitled to vote at a meeting of shareholders will be necessary, and will constitute a quorum, for the transaction of business at that meeting. If a quorum is not present or represented by proxy at any meeting of stockholders, the holders of a majority of the shares entitled to vote at the meeting who are present in person or represented by proxy may adjourn the meeting from time to time until a quorum is present. An adjourned meeting may be held later without notice other than announcement at the meeting, except that if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given in the manner set forth in Article IV to each stockholder entitled to vote at the adjourned meeting. At any adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally called. Section 7. Qualification of Voters. The only persons entitled to notice of or to vote at any meeting of shareholders will be the persons shown as shareholders of the Corporation on the stock records of the Corporation on the record date fixed by the Board of Directors, or, in the absence of a record date, at the close of business on the date the notice of the meeting is given. Section 8. Voting. At any meeting of shareholders each shareholder having the right to vote shall be entitled to vote in person or by proxy. Except as otherwise provided by law or the Certificate of Incorporation, each shareholder will be entitled to one vote for each share of stock entitled to vote standing in his name on the books of the Corporation. All 3 elections of directors will be determined by plurality votes. Except as otherwise provided by law or in the Certificate of Incorporation or these By-Laws, any other matter will be determined by the vote of the holders of a majority of the shares voting on it. Section 9. Action Without a Meeting. Except as otherwise provided by the Certificate of Incorporation, whenever the vote of shareholders is required or permitted in connection with any corporate action, that action may be taken without a meeting on written consent setting forth the action which is taken, signed by the holders of all the outstanding shares entitled to vote on it. ARTICLE II BOARD Of DIRECTORS Section 1. Function. The Board of Directors will manage the business of the Corporation, except as otherwise provided by law, the Certificate of Incorporation or these By-Laws. Section 2. Number and Term of Office. The number of directors constituting the entire Board of Directors will be such number, not less than three nor more than twenty, as is determined by resolution of the Board of Directors from time to time, unless all the shares are owned beneficially and of record by less than three shareholders, in which event the number of directors fixed by resolution of the Board may be less than three but not less than the number of shareholders. As used in these By-Laws, "entire Board of Directors" means the total number of directors which the Corporation would have if there were no vacancies. Except as provided in Section 4 of this Article, the directors will be elected at the annual meetings of shareholders. The directors will be divided into classes and elected for terms as provided in the Certificate of Incorporation. 4 Section 3. Removal of Directors. Except as otherwise provided by law no director shall be removed prior to the expiration date of his term of office, as such date is defined in the Certificate of Incorporation of the Corporation, except for cause and by the affirmative vote of a majority of the entire Board of Directors or of the holders of the percentage of outstanding stock of the Corporation entitled to vote as is set forth in the Certificate of Incorporation of the Corporation. Except as may otherwise be provided by law, cause for removal shall exist only if the director whose removal is proposed has been convicted of a felony by a court of competent jurisdiction to be liable for acts committed in bad faith or the result of active and deliberate dishonesty and such acts were material to the cause of action so adjudicated, or acts in which he personally gained a financial profit or other advantage to which he was not legally entitled, or has been adjudicated mentally incompetent by a court of competent jurisdiction. Section 4. Vacancies. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board may be filled by the vote of a majority of the directors then in office, even if less than a quorum exists. Each director so elected will hold office until the next annual meeting of shareholders. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board also may be filled by the shareholders of the Corporation at the next annual meeting or any special meeting called for the purpose, and each director so elected will hold office for the term provided in the Certificate of Incorporation. Section 5. Resignation. Any director of the Corporation may resign at any time by giving written notice of his or her resignation to the Board of Directors, the President or the Secretary of the Corporation. A resignation will take effect at the time specified in the notice 5 or, if no time is specified, at the time the notice is given, and the acceptance of a resignation will not be necessary to make it effective. Section 6. Executive Committee and Other Committees. By the affirmative vote of a majority of the entire Board, the Board of Directors may designate from among its members an Executive Committee and other committees, each consisting of at least three members. The Executive Committee will have all the authority of the Board of Directors except as otherwise provided by Section 712 of the New York Business Corporation Law or other applicable statutes. Any other committees will have such authority as the Board of Directors may provide. The Board of Directors may designate one or more directors as alternate members of the Executive Committee or any other committee to replace absent members. Members of all committees will serve at the pleasure of the Board of Directors. Section 7. Action by Unanimous Written Consent. Any action required or permitted to be taken by the Board of Directors or any committee of the Board of Directors may be taken without a meeting if all the members of the Board or the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents by the members of the Board or committee shall be filed with the minutes of the proceedings of the Board or committee. Section 8. Participation by Telephone. Any director may participate in a meeting of the Board of Directors or a committee by conference telephone or similar communications equipment which allows all persons participating in the meeting to hear each other at the same time. Participation by that means will constitute presence in person at the meeting. 6 ARTICLE III MEETINGS OF DIRECTORS Section 1. First Meeting. The first meeting of each newly elected Board of Directors will be held immediately following each annual meeting of shareholders. If the meeting is held at the place of the meeting of shareholders, no notice of the meeting need be given to the newly elected directors. If the first meeting is not so held, it shall be held at a time and place specified in a notice given in the manner provided for notice of special meetings of the Board of Directors. Section 2. Regular Meetings. Regular meetings of the Board of Directors may be held upon such notice, or without notice, at such places and at such times as may from time to time be designated by the Board of Directors. If any day fixed for a regular meeting is a legal holiday at the place where the meeting is to be held, the meeting will be held at that place at the same hour on the next day which is not a legal holiday. Section 3. Special Meetings; Notice. Special meetings of the Board of Directors will be held whenever called by the President, or by the Secretary at the written request of any two directors. Notice of each special meeting, stating the time and place of the meeting, shall be given in the manner set forth in Article IV of these By-Laws not less than forty-eight hours before the time the meeting is to be held. A notice need not specify the purpose of any meeting of the Board of Directors, unless otherwise provided by these By-Laws. Section 4. Place of Meeting. The Board of Directors may hold its meetings and keep the books and records of its proceedings at such place or places within or outside of the State of New York as the Board may from time to time determine. Section 5. Quorum; Action by the Board. A majority of the entire board will constitute a quorum for the transaction of business. Except as otherwise provided by these 7 By-Laws, or required by law, the affirmative vote of a majority of the directors present at any meeting at which a quorum is present will be required for the taking of an action by the Board of Directors. If a quorum is not present at a meeting of the Board of Directors, a majority of the directors present at the meeting may adjourn the meeting from time to time until a quorum is present, without notice of the adjourned meeting other than announcement at the meeting. ARTICLE IV NOTICES Section 1. Notice to a Shareholder. Any notice to a shareholder must be in writing and given personally, by telephone or by mail. If mailed, a notice will be deemed given when deposited in the United States mail, postage prepaid, directed to the shareholder at the address which appears on the Corporation's shareholder records or, if the shareholder filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, then addressed to him at that other address. Section 2. Notice to a Director. Any notice to a director may be given personally, by telephone or by mail, facsimile transmission, telegram, cable or similar instrumentality. A notice will be deemed given when actually given in person or by telephone or facsimile transmission, or three business days after having been deposited in the United States mails or with the communications company through which it is given, directed to the director at his business address or at such other address as the director may have designated to the Secretary of the Corporation as the address to which notices should be sent. Section 3. Waiver of Notice. Any person may waive notice of any meeting by signing a written waiver, whether before or after the meeting. In addition, attendance by a shareholder at a meeting in person or by proxy or attendance by a director at a meeting will be deemed a waiver of notice. A waiver of notice need not specify the purposes of the meeting. 8 ARTICLE V OFFICERS Section 1. Number. The officers of the Corporation will be a President, a Chief Financial Officer, a Secretary, and a Comptroller, and the Board of Directors may also elect a Chairman of the Board, a Vice Chairman of the Board, one or more Vice Presidents (some of whom may be designated Executive Vice Presidents or Senior Vice Presidents), a Treasurer, one or more Assistant Secretaries, Assistant Comptrollers or Assistant Treasurers and such other officers as it may from time to time deem advisable. Any two or more offices, except the offices of President and Secretary, may be held by the same person. No officers need be a director of the Corporation. Section 2. Election and Term of Office. Each officer will be elected by the Board of Directors and will hold office for such term, if any, as the Board of Directors may determine. Any officer may be removed at any time, either with or without cause, by the vote of a majority of the entire Board of Directors. Section 3. Resignation. Any officer may resign at any time by giving written notice to the Board of Directors or to the President. A resignation will take effect at the time specified in the notice or, if no time is specified, at the time the notice is given. Acceptance of a resignation will not be necessary to make it effective. Section 4. Powers and Duties. The President will be the Chief Executive Officer of the Corporation. The other officers will have the powers, responsibilities and duties which are customary with regard to the respective offices which they hold, as well as any other powers, responsibilities and duties, and subject to any limitations, which the Board of Directors may specify from time to time. 9 Section 5. Compensation. The Board of Directors will fix the compensation of the chief executive officer, and subject to the discretion of the Board of Directors, the chief executive officer shall have the right to fix the compensation of all other officers and all employees of the Corporation. ARTICLE VI SHARES AND THEIR TRANSFER Section 1. Certificates. The shares of stock of the Corporation will be represented by certificates, in such form as the Board of Directors may from time to time prescribe, except that the Board of Directors may provide that some or all of any class or series of shares will be uncertificated shares. No decision to have uncertificated shares will apply to shares represented by a certificate until that certificate has been surrendered to the Corporation. Section 2. Signatures on Certificates. Each certificate will be signed by the President or a Vice President and the Secretary, the Comptroller or the Treasurer or an Assistant Secretary, Assistant Comptroller or Assistant Treasurer and will be sealed with the seal of the Corporation. If certificates are countersigned by a transfer agent and registered by a registrar, the signatures of the officers and the seal of the Corporation may be in facsimile. If any officer who has signed or whose facsimile signature has been placed upon a certificate ceases to hold that office before the certificate is issued, it may nonetheless be issued by the Corporation with the same effect as if he held the office at the date of issue. Section 3. Lost or Destroyed Certificates. The Corporation may issue a new certificate in place of any certificate issued by the Corporation which is alleged to have been lost or destroyed. The Board of Directors may prescribe any conditions precedent to the issuance of the new certificate which it deems appropriate and may require a bond sufficient to indemnify 10 the Corporation against any claim that may be made against it with regard to the allegedly lost or destroyed certificate or because of the issuance of the new certificate. Section 4. Record Date. The Board of Directors may fix in advance a date as the record date for determination of the shareholders entitled to notice of or to vote at any meeting of shareholders, or to express consent to, or dissent from, any proposal without a meeting, or to receive payment of any dividend or allotment of any rights, or to take or be the subject of any other action. A record date, will be not less than ten nor more than fifty days before the date of the meeting to which it relates, nor more than fifty days before any other action. A determination of shareholders entitled to notice of or to vote at any meeting of shareholders which has been made as provided in this Section will apply to any adjournment of that meeting, unless the Board of Directors fixes a new record date for the adjourned meeting. Section 5. Ownership. The Corporation will be entitled to treat a person registered on its books as the owner of shares as the owner of those share for all purposes, including the right to receive dividends, to vote, or to exercise any other rights or privileges of an owner with regard to those shares. Section 6. Rules and Regulations. The Board of Directors may make such rules and regulations as it deems appropriate concerning the issue, transfer and registration of certificates representing shares of stock of the Corporation. ARTICLE VII CORPORATE SEAL The Board of Directors will provide a suitable seal containing the name of the Corporation. The seal will be in the charge of the Secretary. A duplicate seal may be kept and used. 11 ARTICLE VIII FISCAL YEAR The fiscal year of the Corporation will end at the close of business on the thirty-first day of December in each year. ARTICLE IX INDEMNIFICATION Section 1. Indemnification - Third Party and Derivative Actions. (a) The Corporation shall indemnify any person made, or threatened to be made, a party to an action or proceeding (including, without limitation, one by or in the right of the Corporation to procure a judgment in its favor), whether civil or criminal, including an action by or in the right of any other Corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Corporation served in any capacity at the request of the Corporation, by reason of the fact that he, his testator or intestate, was a director or officer of the Corporation, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise at the request of the Corporation in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, provided that no indemnification may be made to or on behalf of such person if (i) his or her acts were committed in bad faith or were the result of his or her active and deliberate dishonesty and were material to such action or proceedings or (ii) he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled. 12 (b) The termination of any such civil or criminal action or proceeding by judgment, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not in itself create a presumption that any such person did not act, in good faith, for a purpose which he or she reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the Corporation or that he or she had reasonable cause to believe that his or her conduct was unlawful. Section 2. Other Indemnification. The Corporation may, to the fullest extent permitted by law, indemnify or advance the expenses of any other person including agents and employees to whom the Corporation is permitted by law to provide indemnification or advancement of expenses. Section 3. Payment of Expenses in Advance. To the fullest extent permitted by the New York Business Corporation Law, the Corporation will advance to any person who may be entitled to indemnification under Sections 1 or 2 sums with which to pay expenses incurred by that person in defending against the claims, actions or proceedings for which such person may become entitled to indemnification, upon receipt of an undertaking by or on behalf of such person to repay the sums which are advanced if it is ultimately determined that such person is not entitled to indemnification under Sections 1 or 2 to the extent the sums which are advanced exceed the indemnification to which such person is entitled. Section 4. Enforcement; Defenses. The right to indemnification or advancement of expenses granted by this Article shall be enforceable by the person in any court of competent jurisdiction if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within 60 days. Such persons expenses incurred in connection with 13 successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advancement of expenses under Section 3 of this Article where the required undertaking has been received by the Corporation) that the claimant has conducted himself or herself in a manner which would preclude the Corporation from indemnifying him or her pursuant to Sections 1 or 2 of this Article, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its shareholders) to have made a determination that indemnification of the claimant is proper in the circumstances, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its shareholders) that indemnification of the claimant is not proper in the circumstances shall be a defense to the action or create a presumption that the claimant is not entitled to indemnification. Section 5. Survival; Savings Clause; Preservation of Other Rights. (a) The foregoing indemnification provisions shall be deemed to be a contract between the Corporation and each person who serves in such capacity at any time while these provisions are in effect, and any repeal or modification of the New York Business Corporation Law shall not affect any right or obligation then existing with respect to any state of facts then or previously existing or any action or proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts, except as provided by law. Such a contract right may not be modified retroactively without the consent of such person, except as provided by law. 14 (b) If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each person against judgments, fines, amounts paid in settlement and expenses (including attorneys' fees) incurred in connection with any actual or threatened action or proceeding, whether civil or criminal, including any actual or threatened action by or in the right of the Corporation, or any appeal therein, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the full extent permitted by applicable law. (c) The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any other by-law, agreement, vote of shareholders or directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. The Corporation is hereby authorized to provide further indemnification if it deems advisable by resolution of shareholders or directors, by amendment of these by-laws or by agreement. Section 6. New York Business Corporation Law. All references to the New York Business Corporation Law in this Article IX shall mean such Law as it may from time to time be amended. Section 7. Insurance. The Corporation may purchase and maintain insurance to indemnify officers, directors and others against costs or liabilities incurred by them in connection with the performance of their duties and any activities undertaken by them for, or at the request of, the Corporation, to the fullest extent permitted by the New York Business Corporation Law. 15 ARTICLE X SECURITY The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his or her duties. ARTICLE XI AMENDMENTS Any By-Law, including this Article XI, may be amended or repealed, in whole or in part, and new by-laws may be adopted, only (i) by the affirmative vote of the holders of record of 2/3rds in voting power of all issued and outstanding shares of stock of the Corporation entitled to vote, or (ii) by the affirmative vote of a majority of the entire Board of Directors. 16 EX-10.1 5 e15387ex10-1.txt REVOLVING CREDIT AGREEMENT Exhibit 10.1 REVOLVING CREDIT AGREEMENT dated as of April 30, 2003 (the "Agreement") among OMNICOM FINANCE INC., a Delaware corporation ("OFI"), OMNICOM CAPITAL INC., a Connecticut corporation ("OCI"), and OMNICOM FINANCE PLC, a corporation organized under the laws of England and Wales ("OFP"; OFI, OCI and OFP are each a "Borrower" and collectively, the "Borrowers"), OMNICOM GROUP INC., a New York corporation (the "Guarantor"), and UBS AG, Cayman Islands Branch (with its successors, the "Bank"). ARTICLE I DEFINITIONS Section 1.01. Definitions. The following terms, as used herein, have the following meanings: "Applicable Margin" means (a) for Base Rate Loans, 0% per annum and (b) for LIBOR Loans, as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below: ----------------------------------------------------------- Public Debt Rating Applicable Margin for S&P/Moody's LIBOR Loans ----------------------------------------------------------- Level 1 A+ or A1 or above 0.150% ----------------------------------------------------------- Level 2 A or A2 0.255% ----------------------------------------------------------- Level 3 A- or A3 0.370% ----------------------------------------------------------- Level 4 BBB+ or Baa1 0.475% ----------------------------------------------------------- Level 5 BBB or Baa2 0.700% ----------------------------------------------------------- Level 6 Lower than Level 5 0.750% ----------------------------------------------------------- "Applicable Percentage" means, as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below: ----------------------------------------------------------- Public Debt Rating Applicable S&P/Moody's Percentage ----------------------------------------------------------- Level 1 A+ or A1 or above 0.100% ----------------------------------------------------------- Level 2 A or A2 0.120% ----------------------------------------------------------- Level 3 A- or A3 0.130% ----------------------------------------------------------- Level 4 BBB+ or Baa1 0.150% ----------------------------------------------------------- Level 5 BBB or Baa2 0.175% ----------------------------------------------------------- Level 6 Lower than Level 5 0.250% ----------------------------------------------------------- "Applicable Utilization Fee" means, as of any date that the aggregate Loans under the Reference Credit Agreement plus the amount outstanding hereunder exceeds $417,500,000, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below: ---------------------------------------------------------- Public Debt Rating Applicable S&P/Moody's Utilization Fee ---------------------------------------------------------- Level 1 A+ or A1 or above 0.125% ---------------------------------------------------------- Level 2 A or A2 0.125% ---------------------------------------------------------- Level 3 A- or A3 0.125% ---------------------------------------------------------- Level 4 BBB+ or Baa1 0.125% ---------------------------------------------------------- Level 5 BBB or Baa2 0.125% ---------------------------------------------------------- Level 6 Lower than Level 5 0.250% ---------------------------------------------------------- "Base Rate" means, for any day, the higher of (x) the Prime Rate for such day and (y) 1/2 of 1% in excess of the Federal Funds Rate for such day. "Business Day" means any day that is not a Saturday or Sunday or a day on which banking institutions chartered by the State of New York or the United States are legally authorized to close and with respect to LIBOR Loans on which commercial banks are open for international business in London. "Commitment" means $35,000,000 or such lesser amount to which the Commitment shall be reduced from time to time in accordance with the terms of this Agreement. "Confidential Information" means information that any Borrower or the Guarantor furnishes to the Bank in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Bank from a source other than any Borrower or the Guarantor. "Debt" means all obligations to repay money or to pay the deferred purchase price of assets or services, all indebtedness evidenced by notes, bonds, debentures or similar obligations, all obligations (whether or not contingent) in respect of letters of credit, and all guarantees of obligations of others of the foregoing types. "Default" means any event or condition which with the giving of notice or the lapse of time or both would, unless cured or waived, become an Event of Default. "Eurocurrency Rate" means, for any Interest Period for each LIBOR Loan, an interest rate per annum equal to the rate (rounded upward to the nearest whole multiple of 1/16 of 1% per annum) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period or, if for any reason such rate is not available, the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. Dollars is offered by the principal office of UBS AG in London to 2 prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period. "Event of Default" means any of the events specified in Section 5.01. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Bank from three Federal funds brokers of recognized standing selected by it. "Loan" means any loan made by the Bank to the Borrowers pursuant to Section 2.01. "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance or properties of the Guarantor or the Guarantor and its subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance or properties of the Guarantor or the Guarantor and its subsidiaries taken as a whole, (b) the rights and remedies of the Bank under this Agreement or any Note or (c) the ability of any Borrower or the Guarantor to perform its obligations under this Agreement or any Note. "Prime Rate" means the rate announced from time to time by the Bank in Stamford, Connecticut as its prime rate, changing as and when such prime rate changes. "Public Debt Rating" means, as of any date, the rating that has been most recently announced by either Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or Moody's Investors Service, Inc. ("Moody's"), as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the Guarantor or, if either such rating agency shall have issued more than one such rating, the lowest such rating issued by such rating agency. For purposes of the foregoing, (a) if only one of S&P and Moody's shall have in effect a Public Debt Rating, the Applicable Margin, the Applicable Percentage and the Applicable Utilization Fee shall be determined by reference to the available rating; (b) if neither S&P nor Moody's shall have in effect a Public Debt Rating, the Applicable Margin, the Applicable Percentage and the Applicable Utilization Fee will be set in accordance with Level 6 under the definition of "Applicable Margin", "Applicable Percentage" or "Applicable Utilization Fee", as the case may be; (c) if the ratings established by S&P and Moody's shall fall within different levels, the Applicable Margin, the Applicable Percentage and the Applicable Utilization Fee shall be based upon the higher rating unless such rating differs by two or more levels, in which case the applicable level will be deemed to be one level above the lower of such levels; (d) if any rating established by S&P or Moody's shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; and (e) if S&P or Moody's shall change the basis on which ratings are established, each reference to the Public Debt Rating announced by S&P or Moody's, as the case may be, shall refer to the then equivalent rating by S&P or Moody's, as the case may be. "Reference Credit Agreement" shall mean that certain Credit Agreement, dated as of November 14, 2002, by and among, OFI, OCI, OFP, the Guarantor, the Lenders listed on the signature pages thereof, SALOMON SMITH BARNEY INC. and ABN AMRO INCORPORATED, as lead arrangers and book managers, ABN AMRO BANK N.V., as 3 syndication agent, HSBC BANK USA, WACHOVIA BANK, NATIONAL ASSOCIATION and SOCIETE GENERALE, as documentation agents, and CITIBANK, N.A. as administrative agent for the Lenders as in effect from time to time (including, without limitation, by reason of any waiver or consent given thereunder; provided that the Bank has received written notice thereof). "Termination Date" means April 29, 2004, or such earlier date when the Commitment hereunder is terminated in full. ARTICLE II THE LOANS Section 2.01. Loans. (a) At the request of any Borrower, the Bank, subject to the terms and conditions of this Agreement, shall on Business Days during the period from and including the date hereof to but excluding the Termination Date, make Loans to the Borrowers such that the aggregate principal amount of all Loans outstanding hereunder at no time exceeds the Commitment. (b) A Borrower may request a Loan by written notice to the Bank specifying the amount to be borrowed (which must be a minimum of $5,000,000 or a multiple of $1,000,000 in excess thereof) and the type, and in the case of a LIBOR Loan, the maturity of the proposed Loan (a "Borrowing Notice"). Such notice must be delivered to the Bank at or before 10:00 a.m., New York City time, on the date of the proposed borrowing (in the case of a Base Rate Loan) or the third Business Day before the date of the proposed borrowing (in the case of a LIBOR Loan). Loans may be either: (i) "Base Rate Loans", each of which shall be payable on the Termination Date, shall bear a floating per annum interest rate equal to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time plus (z) the Applicable Utilization Fee, if any, in effect from time to time and shall mature in any event no later than the Termination Date; or (ii) "LIBOR Loans", each of which shall have a maturity of one, two or three months (each an "Interest Period"), subject to standard market conventions as to adjustments for non-Business Days and month-ends (but in no event extending beyond the Termination Date), and shall bear a per annum interest rate equal to the sum of (x) the Eurocurrency Rate for such Interest Period for such Loan plus (y) the Applicable Margin in effect from time to time plus (z) the Applicable Utilization Fee, if any, in effect from time to time. On (A) the maturity date of each LIBOR Loan, such Loan may either be rolled forward (in whole or in part) into a new Loan at the LIBOR Rate or the Base Rate, or repaid in full, and (B) on any Business Day, all or any portion of a Base Rate Loan may be converted into a LIBOR Loan, in each case, as set forth in a notice to such effect, delivered as if it were a Borrowing Notice and as if the maturity date or date of conversion of such Loan, as applicable, were a borrowing date. If no such notice is received with respect to a maturing LIBOR Loan, then such Loan shall automatically roll forward into a new LIBOR Loan with an Interest Period of one month, provided that if a Default or Event of Default has occurred and is continuing on the maturity date of any LIBOR Loan that is not repaid thereon, such LIBOR Loan shall automatically roll forward into a Base Rate Loan. No Loan may be rolled forward as, or converted into, a LIBOR Loan if a Default has occurred and is continuing. Each Loan will bear interest from its date until maturity on the basis specified to the Borrower by the Bank (subject to paragraph (i) or (ii) above, as applicable) 4 contemporaneously with the making of such Loan, payable at maturity and in the case of Base Rate Loans, on the last Business Day of each calendar quarter during the effectiveness hereof. Overdue payments of principal, interest and other amounts payable hereunder shall bear interest, payable on demand, at a rate for each day equal to the Base Rate for such day plus 2%. Subject to Section 2.06(e) the Borrowers may prepay Loans at any time. All accrued and unpaid interest on any principal amount prepaid shall be due on the prepayment date. (c) All Loans shall be evidenced by a promissory note appropriately completed, executed and delivered by the respective Borrower in the form of Exhibit A hereto (each a "Note" and collectively the "Notes"). The Bank will endorse on the Notes or otherwise record in its internal records the amount of such Loan, the interest rate or rate basis applicable thereto and each payment of principal or interest made in respect thereof; provided that neither the failure of the Bank to do so nor any error by the Bank in doing so shall affect the obligations of such Borrower hereunder or under the Notes. Section 2.02. Conditions. The obligation of the Bank to make a Loan on any proposed borrowing date shall be subject to the satisfaction of the following conditions: (i) the representations and warranties of the Borrowers and the Guarantor herein (except, in the case of a Loan after the date of the initial Loan (the "Closing Date"), the representations set forth in the last sentence of subsection 3.02(c) thereof and in subsection 3.02(d)) shall be true and correct on the date of such borrowing as though made on and as of such date; (ii) no Default shall have occurred and be continuing on the date of such borrowing (either before or after giving effect to such borrowing); (iii) the representations and warranties contained in Section 4.01 of the Reference Credit Agreement (except, in the case of a Loan after the Closing Date, the representations set forth in the last sentence of subsection (e) thereof and in subsection (f) (i) thereof) are correct on and as of such date, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (iv) no event has occurred and is continuing, or would result from such Loan or from the application of the proceeds therefrom, that constitutes a Default (as such term is defined in the Reference Credit Agreement); (v) the Bank shall have received the properly completed and executed Notes and such corporate resolutions, certificates, opinions of counsel and other documents in connection herewith as the Bank may, in its reasonable discretion, require; and (vi) payment by the Borrowers to the Bank on the Closing Date of a cash fee in the amount of $43,750. The Borrowers shall be deemed to have made a representation and warranty on the date of each borrowing that the conditions specified in clauses (i), (ii), (iii) and (iv) above have been satisfied. Section 2.03. Fees. The Guarantor agrees to pay to the Bank a facility fee on the aggregate amount of the Commitment from the date hereof until the Termination Date at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing June 30, 2003, and on the Termination Date. 5 Section 2.04. Increased Costs; Illegality (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation after the date hereof, or (ii) the compliance with any guideline or request issued after the date hereof from any central bank or other governmental authority including, without limitation, any agency of the European Union or similar monetary or multinational authority (whether or not having the force of law), there shall be any increase in the cost to the Bank of agreeing to make or making, funding or maintaining LIBOR Loans (excluding for purposes of this Section 2.04 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.05 shall govern) and (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which the Bank is organized or any political subdivision thereof), then the Borrowers shall from time to time, upon demand by the Bank, pay to the Bank additional amounts sufficient to compensate the Bank for such increased cost; provided, however, that before making any such demand, the Bank agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different lending office if the making of such a designation would avoid the need for, or reduce the amount of, such increased cost and would not, in the reasonable judgment of the Bank, be otherwise disadvantageous to the Bank. A certificate as to the amount of such increased cost, submitted to the Borrowers by the Bank, shall be conclusive and binding for all purposes, absent manifest error. (b) If the Bank determines that compliance with any law or regulation or any guideline or request taking effect or issued after the date hereof from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by the Bank or any corporation controlling the Bank and that the amount of such capital is increased by or based upon the existence of the Bank's commitment to lend hereunder and other commitments of this type, then, upon demand by the Bank, the Borrowers shall pay to the Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank or such corporation in the light of such circumstances, to the extent that the Bank reasonably determines such increase in capital to be allocable to the existence of the Bank's commitment to lend hereunder. A certificate as to such amounts submitted to the Borrowers by the Bank shall be conclusive and binding for all purposes, absent manifest error. (c) Failure or delay on the part of the Bank to demand compensation pursuant to this Section shall not constitute a waiver of the Bank's right to demand such compensation; provided that the Borrowers shall not be required to compensate the Bank pursuant to this Section for any increased costs or reductions incurred more than six months prior to the date that the Bank notifies the Borrowers of the circumstances giving rise to such increased costs or reductions and of the Bank's intention to claim compensation therefor; provided further that, if the circumstances giving rise to such increased costs or reductions cause such increased costs or reductions to be retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof. (d) Notwithstanding any other provision of this Agreement, if the Bank shall notify the Borrowers that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for the Bank to perform its obligations hereunder to make LIBOR Loans or to fund or maintain LIBOR Loans hereunder, (i) such Loan shall be converted into a Base Rate Loan and (ii) the obligation of the Bank to make LIBOR Loans shall be suspended until the Bank shall notify the Borrowers that the circumstances causing such suspension no longer exist; provided, however, that before making any such demand, the Bank agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different lending office if the making of such a designation would allow the Bank to continue to perform its obligations to make such LIBOR Loans or to continue to fund or maintain such LIBOR Loans and would not, in the judgment of the Bank, be otherwise disadvantageous to the Bank. 6 SECTION 2.05. Taxes (a) Any and all payments by any Borrower or the Guarantor to or for the account of the Bank hereunder or under the Notes or any other documents to be delivered hereunder shall be made, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction under the laws of which the Bank is organized or any political subdivision thereof and excluding such taxes imposed by the United States or the United Kingdom that are payable as of the date hereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes"). If any Borrower or the Guarantor shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note or any other documents to be delivered hereunder to the Bank, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.05) the Bank receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower or the Guarantor shall make such deductions and (iii) such Borrower or the Guarantor shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, the Borrowers shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or any other documents to be delivered hereunder or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes or any other documents to be delivered hereunder (hereinafter referred to as "Other Taxes"). (c) The Borrowers or the Guarantor, as applicable, shall indemnify the Bank for and hold it harmless against the full amount of Taxes or Other Taxes (including, without limitation, taxes of any kind imposed or asserted by any jurisdiction on amounts payable under this Section 2.05) imposed on or paid by the Bank and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date the Bank makes written demand therefor. (d) Within 45 days after the date of any payment of Taxes, the applicable Borrower shall furnish to the Bank, at its address on the signature pages hereof, the original or a certified copy of a receipt evidencing such payment to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Bank. In the case of any payment hereunder or under the Notes or any other documents to be delivered hereunder by or on behalf of any Borrower or the Guarantor (other than OFP) through an account or branch outside the United States or by or on behalf of any Borrower or the Guarantor (other than OFP) by a payor that is not a United States person, if such Borrower or the Guarantor determines that no Taxes are payable in respect thereof, such Borrower or the Guarantor shall furnish, or shall cause such payor to furnish, to the Bank, at such address, an opinion of counsel acceptable to the Bank stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e) The Bank, on or prior to the date of its execution and delivery of this Agreement, and from time to time thereafter as reasonably requested in writing by OFI and OCI (but only so long as the Bank remains lawfully able to do so), shall provide each of OFI and OCI with two original Internal Revenue Service forms W-8BEN or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that the Bank is exempt from or entitled to a reduced rate of United States withholding tax on payments made by OFI and OCI pursuant to this Agreement or the Notes. If the form provided by the Bank indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until the Bank provides the appropriate forms 7 certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form W-8BEN or W-8ECI, that the Bank reasonably considers to be confidential, the Bank shall give notice thereof to OFI and OCI and shall not be obligated to include in such form or document such confidential information. (f) For any period with respect to which the Bank has failed to provide OFI and OCI with the appropriate form, certificate or other document described in Section 2.05(e) (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring subsequent to the date on which a form, certificate or other document originally was required to be provided, or if such form, certificate or other document otherwise is not required under subsection (e) above), the Bank shall not be entitled to indemnification under Section 2.05(a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should the Bank become subject to Taxes because of its failure to deliver a form, certificate or other document required hereunder, the Borrowers shall take such steps as the Bank shall reasonably request to assist the Bank to recover such Taxes. (i) The Bank, at any time it is claiming any additional amounts payable pursuant to this Section 2.05, agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its lending office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of the Bank, be otherwise disadvantageous to the Bank. Section 2.06. Payments and Computations. (a) Each Borrower shall make or cause to be made each payment hereunder or under the Notes in lawful money of the United States of America by wire transfer of immediately available funds to the Bank at 677 Washington Blvd., Stamford CT 06901, ABA No. 026007993, Ref.: Omnicom. (b) Overdue payments of principal, interest, or fees and other amounts payable hereunder shall bear interest, payable on demand, at a rate for each day equal to the Base Rate for such day plus 2%. (c) Interest determined based upon the Prime Rate shall be computed based upon a year of 365 days (or 366 days in a leap year), for the actual number of days elapsed (including the first day but excluding the last day). All other computations of interest and fees 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). Notwithstanding anything to the contrary set forth herein, interest shall in no event accrue hereunder at a rate in excess of the maximum rate permitted under applicable law. (d) Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of payment of interest or fees, as the case may be. (e) If for any reason, including without limitation due to demand or due to acceleration following the occurrence of an Event of Default, the principal of any LIBOR Loan, or any portion thereof, is paid prior to the scheduled maturity date therefor, or if any LIBOR Loan is not borrowed after notice thereof shall have been received by the Bank, each Borrower will reimburse the Bank, on demand, for any resulting loss or expense incurred by the Bank, including 8 without limitation any loss or expense incurred in obtaining, liquidating or employing deposits from third parties. Section 2.07. Optional Reduction of Commitment. The Guarantor may reduce the unused portion of the Commitment at any time in whole, or in part by an amount equal to $5,000,000 or a multiple thereof, by delivering to the Bank written notice specifying the amount of such reduction and the date on which such reduction is to become effective (which date may not be earlier than the date of delivery of such notice). Any such reduction shall be irrevocable. ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.01. Representations and Warranties of the Borrowers. Each Borrower represents and warrants to the Bank as follows: (a) Such Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of its organization, and has all requisite power and authority, corporate and otherwise, to conduct its business as now conducted and to own its properties. Such Borrower has full power and authority to enter into this Agreement and the Notes and to incur its obligations provided for herein and therein, all of which have been duly authorized by all proper and necessary corporate action on the part of such Borrower. This Agreement has been duly executed and delivered by such Borrower and constitutes the valid and legally binding agreement of such Borrower, enforceable against such Borrower in accordance with its terms, except as enforceability may be affected by bankruptcy, insolvency and other laws relating to or affecting creditors' rights generally and by general principles of equity. Upon execution and delivery thereof, each of the Notes will constitute a valid and legally binding obligation of such Borrower, enforceable in accordance with their respective terms, except as enforceability may be affected by bankruptcy, insolvency and other laws relating to or affecting creditors' rights generally and by general principles of equity. (b) All consents and approvals of, and all notices to and filings with, any governmental entities or regulatory bodies required as a condition to the valid execution, delivery or performance by such Borrower of this Agreement and the Notes have been obtained or made. Neither the execution and delivery of this Agreement or the Notes nor compliance with the terms and provisions hereof and thereof will conflict with, result in a breach of or constitute a default under (i) any of the terms, conditions or provisions of the charter or by-laws of such Borrower, (ii) any law, regulation or order, writ, judgment, injunction, decree, determination or award of any court or governmental instrumentality or (iii) any agreement or instrument to which such Borrower is a party or by which it is bound. Such Borrower is not an "investment company" as defined in (or subject to regulation under) the Investment Company Act of 1940 or a "holding company" as defined in (or subject to regulation under) the Public Utility Holding Company Act of 1935. Each Borrower will be deemed to have made a representation and warranty, on each date on which a Loan is made that the foregoing representations are true and correct on and as of such date. Section 3.02. Representations and Warranties of the Guarantor. The Guarantor represents and warrants to the Bank as follows: (a) The Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the State of its organization, and has all requisite power and authority, corporate and otherwise, to conduct its business as now conducted and to own its properties. 9 The Guarantor has full power and authority to enter into this Agreement and to incur its obligations provided for herein, all of which have been duly authorized by all proper and necessary corporate action on the part of the Guarantor. This Agreement has been duly executed and delivered by the Guarantor and constitutes the valid and legally binding agreement of the Guarantor, enforceable against the Guarantor in accordance with its terms, except as enforceability may be affected by bankruptcy, insolvency and other laws relating to or affecting creditors' rights generally and by general principles of equity. (b) All consents and approvals of, and all notices to and filings with, any governmental entities or regulatory bodies required as a condition to the valid execution, delivery or performance by the Guarantor of this Agreement have been obtained or made. Neither the execution and delivery of this Agreement nor compliance with the terms and provisions hereof will conflict with, result in a breach of or constitute a default under (i) any of the terms, conditions or provisions of the charter or by-laws of the Guarantor, (ii) any law, regulation or order, writ, judgment, injunction, decree, determination or award of any court or governmental instrumentality or (iii) any agreement or instrument to which the Guarantor is a party or by which it is bound. The Guarantor is not an "investment company" as defined in (or subject to regulation under) the Investment Company Act of 1940 or a "holding company" as defined in (or subject to regulation under) the Public Utility Holding Company Act of 1935. (c) The consolidated balance sheet of the Guarantor and its subsidiaries as at December 31, 2001, and the related consolidated statements of income and cash flows of the Guarantor and its subsidiaries for the fiscal year then ended, accompanied by an opinion of Arthur Andersen LLP, independent public accountants, and the consolidated balance sheet of the Guarantor and its subsidiaries as at June 30, 2002, and the related consolidated statements of income and cash flows of the Guarantor and its subsidiaries for the six months then ended, duly certified by the chief financial officer of the Guarantor, copies of which have been furnished to the Bank, fairly present, subject, in the case of said balance sheet as at June 30, 2002, and said statements of income and cash flows for the six months then ended, to year-end audit adjustments, the consolidated financial condition of the Guarantor and its subsidiaries as at such dates and the consolidated results of the operations of the Guarantor and its subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles consistently applied. Since December 31, 2001, there has been no Material Adverse Change. (d) There is no action, suit or proceeding pending against, or to the Guarantor's knowledge threatened against or affecting, the Guarantor or any of its subsidiaries before any court or arbitrator or any governmental body, agency or official which, (i) could be reasonably likely to have a Material Adverse Effect other than the matters described on Schedule 3.02(d) hereto (the "Disclosed Litigation") or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby, and there shall have been no adverse change in the status, or financial effect on the Guarantor or any of its subsidiaries, of the Disclosed Litigation from that described on Schedule 3.02(d) hereto. The Guarantor will be deemed to have made a representation and warranty, on each date on which a Loan is made that the foregoing representations (except, in the case of a Loan after the Closing Date, the representations set forth in the last sentence of subsection 3.02(c) thereof and in subsection 3.02(d)) are true and correct on and as of such date. 10 ARTICLE IV COVENANTS Section 4.01. Covenants of the Borrowers. Each Borrower covenants and agrees that until the later to occur of (i) the Termination Date, and (ii) the performance of all obligations of such Borrower hereunder and under the Notes: (a) General Affirmative Covenants. Such Borrower will maintain its corporate existence in good standing, and will comply in all material respects with all applicable laws, rules, regulations and orders of any governmental authority noncompliance with which would have a material adverse effect on its financial condition or operations or on its ability to meet its obligations hereunder, and will continue to engage in business of the same general type as that engaged in by such Borrower on the date hereof. Such Borrower will pay and discharge, at or before maturity, all its obligations and liabilities, including, without limitation, tax liabilities, where failure to satisfy such obligations or liabilities in the aggregate would have a material adverse effect on its financial condition, operations or ability to meet its obligations hereunder. Such Borrower's obligations hereunder and under the Notes will rank pari passu with all other unsubordinated obligations of such Borrower (except as to rights in collateral). (b) Use of proceeds. Each Borrower will use the proceeds of the Loans for general corporate purposes. None of such proceeds will be used directly or indirectly for the purpose (whether immediate, incidental or ultimate) of buying or carrying any "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System. (c) Notice under the Reference Credit Agreement. Such Borrower shall cause to be delivered to the Bank a copy of each and every notice delivered to the Agent or any Lender in connection with the Reference Credit Agreement; and shall use commercially reasonable efforts to cause such delivery to be made to the Bank on the date such notice is delivered to the Agent or such Lender. In addition, the Bank shall be invited to participate in all bank meetings and conference calls conducted with the Lenders under the Reference Credit Agreement. Section 4.02. Covenants of the Guarantor. The Guarantor covenants and agrees that until the later to occur of (i) the Termination Date, and (ii) the performance of all obligations of each Borrower hereunder and under the Notes: (a) Incorporated Covenants. The Guarantor will comply with each of the covenants set forth in Article V of the Reference Credit Agreement. (b) Reporting Requirements. Furnish to the Bank: (i) 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 Guarantor, the consolidated balance sheet of the Guarantor and its subsidiaries as of the end of such quarter and consolidated statements of income and cash flows of the Guarantor and its subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer of the Guarantor as having been prepared in accordance with generally accepted accounting principles and certificates of the chief financial officer of the Guarantor as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03 of the Reference Credit Agreement, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Guarantor shall also provide, if necessary for the determination of compliance with Section 5.03 of the Reference 11 Credit Agreement, a statement of reconciliation conforming such financial statements to generally accepted accounting principles; (ii)as soon as available and in any event within 95 days after the end of each fiscal year of the Guarantor, a copy of the annual audit report for such year for the Guarantor and its subsidiaries, containing the consolidated balance sheet of the Guarantor and its subsidiaries as of the end of such fiscal year and consolidated statements of income and cash flows of the Guarantor and its subsidiaries for such fiscal year, in each case accompanied by an opinion acceptable to the Bank by KPMG LLP or other independent public accountants acceptable to the Bank and certificates of the chief financial officer of the Guarantor as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03 of the Reference Credit Agreement, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Guarantor shall also provide, if necessary for the determination of compliance with Section 5.03 of the Reference Credit Agreement, a statement of reconciliation conforming such financial statements to generally accepted accounting principles; (iii) as soon as possible and in any event within five days after any senior officer of the Guarantor or a Borrower becomes aware or should have become aware of the occurrence of any Default, the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer of the Guarantor setting forth details of such Default and the action that the Guarantor has taken and proposes to take with respect thereto; (iv)promptly after the sending or filing thereof, copies of all reports that the Guarantor sends to any of its securityholders, and copies of all reports and registration statements that the Guarantor or any subsidiary files with the Securities and Exchange Commission or any national securities exchange; (v) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Guarantor or any of its subsidiaries of the type described in Section 4.01(f) of the Reference Credit Agreement; and (vi)such other information respecting the Guarantor or any of its subsidiaries as the Bank may from time to time reasonably request. Reports and financial statements required to be delivered by the Guarantor pursuant to paragraphs (i), (ii), (iv) and (v) of this Section 4.02(b) shall be deemed to have been delivered on the date on which it posts such reports, or reports containing such financial statements, on its website on the Internet at www.omnicomgroup.com or when such reports, or reports containing such financial statements, are posted on the SEC's website at www.sec.gov; provided that the Guarantor shall deliver notice that such reports and financial statements are so available to the Bank. ARTICLE V EVENTS OF DEFAULT Section 5.01. Events of Default. (a) The following events constitute Events of Default hereunder: (i) The principal amount of any Loan shall not be paid when due; or 12 (ii) Any other amount payable under this Agreement, or the Notes (including interest) shall not be paid within two Business Days after the same shall become due; or (iii) A Default shall occur in the due observance or performance by any Borrower or the Guarantor of any other term, covenant or agreement contained in this Agreement (provided that, in the case of Guarantor's obligation under Section 4.02(a) hereof to perform its covenants under Article V of the Reference Credit Agreement, the same requirements of notice and cure applicable to any such covenant under Section 6.01(c) of the Reference Credit Agreement shall apply to the corresponding obligation of Guarantor under Section 4.02(a) hereof) or in the Notes or any Event of Default (as defined in the Reference Credit Agreement) shall have occurred and be continuing; or (iv) Any representation or warranty of the Guarantor or any Borrower (a) herein or any statement or representation made in any application, certificate, report or opinion delivered in connection herewith or (b) to the lenders in the Reference Credit Agreement or any document delivered in connection therewith, shall prove to have been incorrect or misleading in any material respect when made or deemed made; or (v) The Guarantor or any of its subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Guarantor or any of its subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Guarantor or any of its subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (v); (b) If an Event of Default occurs and is continuing, (A) the Bank may by notice to each Borrower and the Guarantor declare the Loans (together with accrued interest thereon) to be, and they shall thereupon become, immediately due without presentment, demand or other notice, all of which are hereby waived by the Borrowers (provided that, in the case of an Event of Default referred to in clause (v) of subsection (a) above with respect to such Borrower, the same shall occur with respect to all Loans automatically without any notice or any other act by the Bank) and/or (B) the Bank may exercise any other rights or remedies it may have under this Agreement or under the Notes and take such other action as is permitted at law or in equity. ARTICLE VI GUARANTY SECTION 6.01. Guaranty. The Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all obligations of the Borrowers now or hereafter existing under or in respect of the this Agreement and the Notes (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of 13 action, costs, expenses or otherwise (such obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses (including, without limitation, fees and expenses of outside counsel and the allocated costs and expenses of in-house counsel) incurred by the Bank in enforcing any rights under this Agreement. Without limiting the generality of the foregoing, the Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Borrower to the Bank under or in respect of this Agreement and the Notes but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such Borrower. SECTION 6.02. Guaranty Absolute. The Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of this Agreement and the Notes, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Bank with respect thereto. This Guaranty is an absolute and unconditional guaranty of payment when due, and not of collection, by the Guarantor of the Guaranteed Obligations. The obligations of the Guarantor under or in respect of this Guaranty are independent of the Guaranteed Obligations or any other obligations of any Borrower under or in respect of this Agreement and the Notes, and a separate action or actions may be brought and prosecuted against the Guarantor to enforce this Guaranty, irrespective of whether any action is brought against any Borrower or whether any Borrower is joined in any such action or actions. The liability of the Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and the Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following: (a) any lack of validity or enforceability of any provision of this Agreement or any Notes or any agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other obligations of any Borrower under or in respect of this Agreement or the Notes, or any other amendment or waiver of or any consent to departure from this Agreement or the Notes, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Borrower or any of its subsidiaries or otherwise; (c) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations; (d) any manner of application of collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any other obligations of any Borrower under this Agreement or the Notes or any other assets of any Borrower or any of its subsidiaries; (e) any change, restructuring or termination of the corporate structure or existence of any Borrower or any of its subsidiaries; (f) any failure of the Bank to disclose to the Guarantor any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any Borrower now or hereafter known to the Bank (the Guarantor waiving any duty on the part of the Bank to disclose such information); (g) the failure of any other person or entity to execute or deliver any other guaranty or agreement or the release or reduction of liability of the Guarantor or other guarantor or surety with respect to the Guaranteed Obligations; or 14 (h) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Bank that might otherwise constitute a defense available to, or a discharge of, any Borrower or the Guarantor or any other guarantor or surety. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Bank or any other person or entity upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise, all as though such payment had not been made. SECTION 6.03. Waivers and Acknowledgments. (a) The Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Bank protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Borrower or any other person or entity or any collateral. (b) The Guarantor hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. (c) The Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by the Bank that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of the Guarantor or other rights of the Guarantor to proceed against any of the Borrowers, any other guarantor or any other person or entity or any collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the obligations of the Guarantor hereunder. (d) The Guarantor hereby unconditionally and irrevocably waives any duty on the part of the Bank to disclose to the Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any Borrower or any of its subsidiaries now or hereafter known by the Bank. (e) The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by this Agreement and that the waivers set forth in Section 6.02 and this Section 6.03 are knowingly made in contemplation of such benefits. SECTION 6.04. Subrogation. The Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against any Borrower or any other insider guarantor that arise from the existence, payment, performance or enforcement of the Guarantor's obligations under or in respect of this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Bank against any Borrower or any other insider guarantor or any collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Borrower or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations 15 and all other amounts payable under this Guaranty shall have been paid in full in cash and the Commitments shall have expired or been terminated. If any amount shall be paid to the Guarantor in violation of the immediately preceding sentence at any time prior to the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and the Termination Date, such amount shall be received and held in trust for the benefit of the Bank, shall be segregated from other property and funds of the Guarantor and shall forthwith be paid or delivered to the Bank in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) the Guarantor shall make payment to the Bank of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash and (iii) the Termination Date shall have occurred, the Bank will, at the Guarantor's request and expense, execute and deliver to the Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by the Guarantor pursuant to this Guaranty. SECTION 6.05. Subordination. The Guarantor hereby subordinates any and all debts, liabilities and other obligations owed to the Guarantor by each Borrower (the "Subordinated Obligations") to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 6.05: (a) Prior Payment of Guaranteed Obligations. In any proceeding under any bankruptcy or insolvency law relating to any Borrower, the Guarantor agrees that the Bank shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the commencement of a proceeding under any bankruptcy or insolvency law, whether or not constituting an allowed claim in such proceeding ("Post Petition Interest")) before the Guarantor receives payment of any Subordinated Obligations. (b) Turn-Over. After the occurrence and during the continuance of any Event of Default under Section 6.01(e) of the Reference Credit Agreement, the Guarantor shall, if the Bank so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for the Bank and deliver such payments to the Bank on account of the Guaranteed Obligations (including all Post Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of the Guarantor under the other provisions of this Guaranty. (c) Authorization. After the occurrence and during the continuance of any Event of Default under Section 6.01(e) of the Reference Credit Agreement, the Bank is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of the Guarantor, to collect and enforce, and to submit claims in respect of, Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post Petition Interest), and (ii) to require the Guarantor (A) to collect and enforce, and to submit claims in respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to the Bank for application to the Guaranteed Obligations (including any and all Post Petition Interest). (d) Pari passu. The Guarantor's obligations under this Section 6.05 are pari passu with its obligations under Section 7.05 of the Reference Credit Agreement. Any payments under this Section 6.05 shall be applied to obligations under this Agreement and the Reference Credit Agreement on a pro-rata basis, based upon amounts outstanding under both agreements. SECTION 6.06. Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and the Termination Date, (b) be binding upon the Guarantor, its successors and assigns and (c) inure to 16 the benefit of and be enforceable by the Bank and their successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, the Bank may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, the Loans owing to it and the Note or Notes held by it) to any other person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to the Bank herein. The Guarantor shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. ARTICLE VII MISCELLANEOUS Section 7.01. Amendments and Waivers. No failure or delay on the part of the Bank in exercising any power or right hereunder or under the Notes shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power preclude any other or further exercise thereof or the exercise of any other right or power hereunder. No amendment or waiver of any provision of this Agreement or the Notes nor consent to any departure by each Borrower herefrom or therefrom shall in any event be effective unless the same shall be in writing and signed by the Bank and each Borrower, and such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on each Borrower in any case shall, of itself, entitle such Borrower to any other or further notice or demand in similar or other circumstances. Section 7.02. Notices. Any communication, demand, or notice to be given hereunder will be duly given and deemed to have been received when actually delivered (or 72 hours after having been deposited in the mails with first class postage prepaid) to such party at the address specified on the signature pages hereof (or at such other address as such party shall specify to the other parties in writing), including delivery by telex, telecopier or other telecommunication device capable of transmitting or creating a written record. The Bank may (but shall not be required to) accept and act upon oral, telephonic, faxed or other forms of notices or instructions hereunder that the Bank believes in good faith to have been given by a person authorized to do so on behalf of such Borrower. The Bank shall be fully protected and held harmless by each Borrower, and shall have no liability for, acting on any such notice or instruction that the Bank believes in good faith to have been given by a person authorized to do so on behalf of such Borrower. Section 7.03. Set-off. Each Borrower hereby grants to the Bank a right of set-off against any amounts due and payable by such Borrower (including any of its offices or divisions) with respect to this Agreement in any demand deposit or other account maintained with any office of UBS AG. Section 7.04 Successors and Assigns. This Agreement shall inure to the benefit of, and shall be enforceable by, the Bank and its successors and assigns. The Bank may assign any of its rights or obligations hereunder or under the Notes to any other office or affiliate of UBS AG or with the consent of the Guarantor (which consent shall not be unreasonably withheld) to any third party; provided that from and after the occurrence of an Event of Default, the Bank may assign any of its rights or obligations hereunder without the consent of the Guarantor. The Bank may assign the Notes or any portion thereof to any Federal Reserve Bank. Neither any Borrower nor the Guarantor may assign or otherwise transfer any of its rights or obligations under this Agreement or the Notes without the prior, written consent of the Bank. 17 Section 7.05. Costs, Expenses and Taxes. Each Borrower agrees to pay on demand all costs and expenses of the Bank, including reasonable fees and expenses of counsel, in connection with the enforcement against it of this Agreement and the Notes and the protection of the Bank's rights hereunder and thereunder, including any bankruptcy, insolvency, enforcement proceedings or restructuring with respect to such Borrower. In addition, each Borrower shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement and the Notes and agrees to save the Bank harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. Section 7.06. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES). Each Borrower hereby irrevocably submits to the non-exclusive jurisdiction of any U.S. federal or state court in the State of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement or the Notes. Each Borrower hereby consents to the laying of venue in any such suit, action or proceeding in New York County, New York, and hereby irrevocably waives any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. Any process in any such action shall be duly served if mailed by registered mail, postage prepaid, to such Borrower at its address designated pursuant to Section 6.02. Section 7.07. Counterparts; Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if all signatures thereon were upon the same instrument. This Agreement, and the Notes constitute the entire agreement and understanding between the Borrowers, the Guarantor and the Bank with respect to the subject matter hereof, and supersede any prior agreements and understandings with respect thereto. Section 7.08 Confidentiality. The Bank shall not disclose any Confidential Information to any other person or entity without the consent of the Guarantor, other than (a) to the Bank's affiliates and their officers, directors, employees, agents and advisors and to actual or prospective assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking and (d) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder. Notwithstanding anything in this Agreement to the contrary, any Information with respect to the "tax treatment" or "tax structure" (in each case, within the meaning of Treasury Regulation section 1.6011-4) of the transactions contemplated hereby shall not be confidential and the Bank and other parties hereto may disclose without limitation of any kind any Information that is provided to the parties hereto with respect to the "tax treatment" or "tax structure" (in each case, within the meaning of Treasury Regulation section 1.6011-4); provided, that to the extent any document contains Information that relates to the "tax treatment" or "tax structure" and contains other information, this paragraph shall only apply to the information regarding the "tax treatment" or "tax structure." Section 7.09. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE GUARANTOR AND THE BANK HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 18 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. OMNICOM FINANCE INC. 437 Madison Avenue New York, NY 10022 Attn.: Dennis E. Hewitt By /s/ Dennis E. Hewitt ----------------------------------- Title: Treasurer OMNICOM CAPITAL INC. 1 East Weaver Street Greenwich, Connecticut 06831 Attn.: Dennis E. Hewitt By /s/ Dennis E. Hewitt ----------------------------------- Title: President and CEO OMNICOM FINANCE PLC c/o Omnicom Group Inc. 437 Madison Avenue New York, New York 10022 Attn.: Dennis E. Hewitt By /s/ Dennis E. Hewitt ----------------------------------- Title: Director By /s/ Barry J. Wagner ----------------------------------- Title: Director 19 OMNICOM GROUP INC. 437 Madison Avenue New York, NY 10022 Attn.: Dennis E. Hewitt By /s/ Dennis E. Hewitt ----------------------------------- Title: Treasurer UBS AG Cayman Islands Branch C/o UBS 677 Washington Blvd., Stamford CT 06901 Attn.: Marie Haddad Phone: 203-719-5609 fax: 203-719-3888 By /s/ Wilfred V. Saint ----------------------------------- Title: Associate Director Banking Products Services, US By /s/ Thomas R. Salzano ----------------------------------- Title: Director Banking Product Services, US 20 Exhibit A Promissory Notes US$____________ _______________, 2003 ____________, a ______________ corporation (the "Borrower"), for value received, hereby promises to pay to the order of UBS AG, Cayman Islands Branch (including its successors and assigns, the "Bank"), c/o UBS, 677 Washington Blvd., Stamford CT 06901, in lawful money of the United States, the principal sum of ______________ U.S. Dollars or, if less, the aggregate unpaid principal amount of all loans ("Loans") made by the Bank to the Borrower pursuant to the Revolving Credit Agreement dated as of April 30, 2003 (as amended from time to time, the "Agreement") among OMNICOM FINANCE INC., OMNICOM CAPITAL INC., OMNICOM FINANCE PLC (as Borrowers), OMNICOM GROUP INC. (as Guarantor) and the Bank. Each Loan shall mature on the date specified in or pursuant to the Agreement, and such maturity shall be subject to acceleration in the circumstances specified therein. Each Loan shall bear interest at the rate or rates and such interest shall be payable on the date or dates specified in or pursuant to the Agreement. Loan and related information may be endorsed by the Bank hereon or upon a schedule that may be attached hereto and made a part hereof; provided that the failure of the Bank to make any such endorsement or any error in doing so shall not affect the obligations of the Borrower hereunder or under the Agreement. [Name of Borrower] By: ------------------------------- Title EX-10.2 6 e15387ex10-2.txt ASSUMPTION AGREEMENT Exhibit 10.2 ASSUMPTION AGREEMENT June 30, 2003 Omnicom Group Inc. One East Weaver Street Greenwich, Connecticut 06831 Attention: Eric Huttner Citibank, N.A., as Agent for the Lenders party to the Credit Agreement referred to below Two Penns Way New Castle, Delaware 19720 Attention: Bank Loan Syndications Ladies and Gentlemen: Reference is made to the 364-Day Credit Agreement dated as of November 14, 2002 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined) among Omnicom Finance Inc., Omnicom Capital Inc. and Omnicom Finance plc (the "Borrowers"), Omnicom Group Inc. (the "Guarantor"), the Lenders (as defined in the Credit Agreement), Salomon Smith Barney Inc., as lead arranger and book manager, and Citibank, N.A., as agent . FIFTH THIRD BANK (the "Assuming Lender") agrees as follows: 1. The Assuming Lender proposes to become an Assuming Lender pursuant to Section 2.17 of the Credit Agreement and, in that connection, hereby agrees with the Agent and the Guarantor that it shall become a Lender for all purposes of the Credit Agreement on the Effective Date (as defined below). After giving effect to the Effective Date, the Assuming Lender's Commitment will be U.S.$15,000,000. 2. The Assuming Lender (a) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01(e) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assumption Agreement; (b) agrees that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (c) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (d) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; (e) confirms that it is an Eligible Assignee; (f) specifies as its Applicable Lending Offices the offices set forth below its name on the signature page hereof; and (g) attaches any U.S. Internal Revenue Service forms or any certificates required to be provided by it under Section 2.13 of the Credit Agreement. 3. Following the execution of this Assumption Agreement, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assumption Agreement (the "Effective Date") shall be June 30, 2003 4. Upon satisfaction of the applicable conditions set forth in Section 2.17 and in Article III of the Credit Agreement and upon such acceptance and recording by the Agent, as of the 1 Effective Date, the Assuming Lender shall be a party to the Credit Agreement and have all of the rights and obligations of a Lender thereunder. 5. This Assumption Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 6. This Assumption Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Assumption Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Assumption Agreement. Very truly yours, FIFTH THIRD BANK By /s/ Anne Pierson --------------------------------- Title: Corporate Banking Officer, Commercial Division Date: June 30, 2003 Base Rate Lending Office: Fifth Third Center 38 Fountain Square Plaza Cincinnati, OH 45202 Eurodollar Lending Office Fifth Third Center 38 Fountain Square Plaza Cincinnati, OH 45202 Accepted and Approved this 30 day of June, 2003 CITIBANK, N.A., as Agent By /s/ Carolyn A. Kee ------------------------------ Title: Managing Director Approved this 30 day of June, 2003 OMNICOM GROUP INC. By /s/ Dennis E. Hewitt ------------------------------ Title: Treasurer 2 EX-31.1 7 e15387_ex31-1.txt CERTIFICATION Exhibit 31.1 CERTIFICATION I, John Wren, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2003 of Omnicom Group Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 8, 2003 /s/ John D. Wren ------------------------------------- John D. Wren Chief Executive Officer and President EX-31.2 8 e15387_ex31-2.txt CERTIFICATION Exhibit 31.2 CERTIFICATION I, Randall J. Weisenburger, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2003 of Omnicom Group Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 8, 2003 /s/ Randall J. Weisenburger -------------------------------- Randall J. Weisenburger Executive Vice President and Chief Financial Officer EX-32.1 9 e15387_ex32-1.txt CERTIFICATION Exhibit 32.1 CERTIFICATION OF QUARTERLY REPORT ON FORM 10-Q Pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of Omnicom Group Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of Omnicom certifies, that, to such officer's knowledge: o the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and o the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Omnicom as of the dates and for the periods expressed in the Report. Executed as of August 8, 2003. /s/ John D. Wren ---------------------------------------------- Name: John D. Wren Title: Chief Executive Officer and President /s/ Randall J. Weisenburger ---------------------------------------------- Name: Randall J. Weisenburger Title: Executive Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----