EXHIBIT 10.23(f)
AMENDMENT
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") is made July 8,
2002 by and between Valassis Communications, Inc. (the "Corporation") and
Xxxxxxx X. Xxxx, Xx. (the "Executive").
WHEREAS, the Corporation and the Executive entered into that certain
Employment Agreement effective as of March 18, 1992, as amended on December 22,
1995, January 20, 1997, December 23, 1998, January 5, 2001 and January 11, 2002
(the "Employment Agreement"); and
WHEREAS, the Corporation and the Executive desire to amend the Employment
Agreement to, among other things, extend the term of employment and provide for
the grant of stock options to the Executive.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, the parties hereto agree as follows:
1. Section 1.(b) of the Employment Agreement shall be amended to read in
its entirety as follows:
"The Employment Period shall commence as of March 18, 1992 (the
"Effective Date") and shall continue until the close of business on
September 30, 2006."
2. The following sentence shall be added to Section 3.(a) of the
Employment Agreement:
"The Executive's Annual Base Salary, payable on a biweekly basis,
shall be at the annual rate of not less than $250,000 effective January 1,
2003."
3. Section 3. of the Employment Agreement shall be amended to add a new
subsection 3.(g) to read in its entirety as follows:
"(g). Stock Options. The Executive shall be eligible to receive
non-qualified options to purchase an aggregate of 350,000 shares of Common
Stock of the Corporation pursuant to the Corporation's 2002 Long-Term
Incentive Plan (or such other plan applicable to executives of the
Corporation in effect from time to time) (each, an "Option" and
collectively, the "Options"). The Options shall be granted by the
Corporation in eight (8) semi-annual installments consisting of 43,750
Options each on April 1 and October 1 (each April 1 and October 1 shall be
referred to herein as a "Date of Grant") commencing on October 1, 2002
through April 1, 2006. Each Option shall have a strike price equal to the
Fair Market Value (as defined in the Corporation's applicable stock option
plan) of the Corporation's Common Stock on the Date of Grant and shall
become fully vested five (5) years from such Date of Grant and exercisable
for two (2) years thereafter, with the same terms and conditions as the
Corporation's then current standard non-qualified stock option agreement
for executives, except as provided below. The Options shall also vest in
accordance with the following stock performance targets for the
Corporation's Common Stock: One third of each Option grant shall vest upon
the Corporation's Common Stock achieving
a market price of five dollars ($5.00) per share greater than the Fair
Market Value of the Corporation's Common Stock on the Date of Grant;
One-third of each Option grant shall vest upon the Corporation's Common
Stock achieving a market price of ten dollars ($10.00) per share greater
than the Fair Market Value of the Corporation's Common Stock on the Date of
Grant; and the remaining one third of each Option grant shall vest upon the
Corporation's Common Stock achieving a market price of fifteen dollars
($15.00) per share greater than the Fair Market Value of the Corporation's
Common Stock on the Date of Grant; provided, however, that in no event
shall an Option be exercised for the first six (6) months following a Date
of Grant. Notwithstanding the foregoing, (A) upon a Change of Control (as
defined in the Corporation's applicable stock option plan), (x) all shares
with respect to which any Option granted prior to the Change of Control
shall become fully exercisable and (y) any remaining Options not previously
granted shall be immediately granted and become vested and fully
exercisable with a strike price equal to the Fair Market Value of the
Corporation's Common Stock on the day that is ninety (90) days prior to the
public announcement of the Change of Control; and (B) upon termination of
Executive's employment by the Corporation other than for Cause, (x) all
shares with respect to which any Option granted shall become vested and
fully exercisable and (y) any remaining Options not previously granted
shall be immediately granted and become fully exercisable with a strike
price equal to the Fair Market Value on the applicable Date of
Termination."
4. An additional sentence to Section 3.(e) shall be added to read as
follows:
"The Corporation shall furnish to the Executive financial planning,
tax and estate preparation services."
5. The Employment Agreement shall be amended to add a new Section 7 to
read in its entirety as follows, and the subsequent Sections of the Agreement
shall be renumbered accordingly:
"7. Excise Taxes.
(a) In the event it shall be determined that any payment or benefit
provided under this Agreement, together with any other payments or benefits
Executive is entitled to receive by reason of a Change in Control of the
Company or a termination of his employment with the Company (collectively,
the "Payments") would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986 ("Code") or any successor provision,
or any interest or penalties are incurred by Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties,
hereinafter collectively referred to as the "Excise Tax"), the Company
shall pay Executive, at least 10 days prior to the time payment of any such
Excise Tax is due, an additional amount (the "Gross-Up Payment") such that
the net amount retained by Executive, after deduction of any Excise Tax and
any federal, state and local taxes imposed on the Gross-Up Payment, shall
be equal to the Excise Tax imposed on the Payments.
(b) For purposes of determining whether any of the Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (1) the
Payments shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute payments" within
the meaning of Section 280G(b)(1) of the Code shall be treated as subject
to the Excise Tax, unless in the opinion of tax counsel selected by the
Company and acceptable to Executive the Payments (in whole or in
part) do not constitute parachute payments or excess parachute payments or
are otherwise not subject to the Excise Tax, (2) the amount of the Payments
which shall be treated as subject to the Excise Tax shall be equal to the
amount of "excess parachute payments" within the meaning of Section
280G(b)(1) (after applying clause (1) above), and (3) the value of any
non-cash benefits or any deferred payment or benefit shall be determined by
the Company's independent auditors in accordance with the principles of
Section 280G(d)(3) and (4) of the Code. For purposes of determining the
amount of the Gross-Up Payment, Executive shall be deemed to pay federal
income taxes at the highest marginal rate in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate in the state and locality of Executive's residence on
the date of payment, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(c) In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time of
termination of employment, Executive shall repay to the Company at the time
that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax). In the
event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of employment (including
by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus any interest
and penalties payable with respect to such excess) at the time that the
amount of such excess is finally determined. Executive shall notify the
Company of any audit by the Internal Revenue Service of Executive's federal
income tax return for the year in which a payment under this Agreement is
made within ten (10) days of Executive's receipt of notification of such
audit. In addition, Executive shall also notify the Company of the final
resolution of such audit within ten (10) days of such resolution."
6. An additional sentence to renumbered Section 10.(a) shall be added to
read as follows:
"This Agreement shall be governed by and construed in accordance with
the laws of the State of Michigan, without reference to principles of
conflict of laws."
7. All other terms of the Employment Agreement shall remain in full force
and effect.
8. This instrument, together with the Employment Agreement, contains the
entire agreement of the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Executive and the Corporation have caused this
Agreement to be executed as of the day and year first above written.
/s/ Valassis Communications, Inc.
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/s/ Valassis Manufacturing Company
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/s/ Xxxxxxx X. Xxxx, Xx.
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