EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 5th day of March, 2003 (this "Agreement"),
by and between Journal Register Company, a Delaware corporation (the "Company"),
and Xxxxxx X. Xxxxxxx (the "Executive").
WHEREAS, the Executive serves as Chairman, President and Chief
Executive Officer of the Company (the "Board"); and
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued services and dedication of
the Executive, and to establish the terms and conditions of the Executive's
continued employment.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
(A) CERTAIN DEFINITIONS. (a) "Affiliated Company" means any company
controlled by, controlling or under common control with the Company.
(b) "Change of Control" means:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person"),
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (A) the
then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power
of the then-outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, that, for purposes of this Section
1(b), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any Affiliated Company or (iv) any acquisition by any corporation
pursuant to a transaction that complies with Sections 1(b)(3)(A),
1(b)(3)(B) and 1(b)(3)(C).
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.
(3) Consummation of a reorganization, merger, statutory
share exchange or consolidation or similar corporate transaction
involving the Company or any of its subsidiaries, a sale or other
disposition of all or substantially all of the assets of the Company,
or the acquisition of assets or stock of another entity by the Company
or any of its subsidiaries (each, a "Business Combination"), in each
case unless, following such Business Combination, (A) all or
substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 60% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that, as a result of
such transaction, owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership immediately
prior to such Business Combination of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as the case may
be, (B) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust)
of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then-outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to
the Business Combination, and (C) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the
Board providing for such Business Combination; or
(4) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
SECTION 2. EMPLOYMENT PERIOD. The Company hereby agrees to continue
the Executive in its employ, subject to the terms and conditions of this
Agreement, for the Employment Period. The "Employment Period" means the period
commencing on the date hereof (the "Effective Date") and ending on December 31,
2006; provided, that that on December 31, 2003 and each December 31 thereafter,
the Employment Period shall be automatically extended so as to terminate three
years from such December 31, unless it has been previously terminated pursuant
to Section 4 or the Company or the Executive has given notice (a "Notice of
Nonrenewal") to the other, not later than the previous October 31, that the
Employment Period shall not be so extended; and provided, further, that the
Employment Period shall terminate upon the Executive's termination of employment
for any reason, as provided for
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in this Agreement; and provided, finally, that in any event the Employment
Period shall end on the Executive's 65th birthday.
SECTION 3. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (1) During
the Employment Period, the Executive shall serve as Chairman, President and
Chief Executive Officer of the Company, with such authority, duties and
responsibilities as are commensurate with such position and as may be consistent
with such position, reporting directly to the Board, and (B) the Executive's
services shall be performed in Trenton, New Jersey or such other location as the
Executive and the Company shall agree.
(2) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote his full attention and time during normal business hours to the business
and affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to him hereunder, to use his best efforts to perform
faithfully and efficiently such responsibilities. It shall not be a violation of
this Agreement for the Executive to serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking engagements or teach at
educational institutions and manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that, to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(B) COMPENSATION. (1) BASE SALARY. During the Employment Period, the
Executive shall receive a base salary (the "Base Salary") at an annual rate at
least equal to $950,000. The Base Salary shall be paid at such intervals as the
Company pays executive salaries generally. During the Employment Period, the
Base Salary shall be reviewed at least annually for possible increase effective
as of each January 1 during the Employment Period. Any increase in the Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. The Base Salary shall not be reduced after any such
increase and the term "Base Salary" shall refer to the Base Salary as so
increased.
(2) ANNUAL BONUS. In addition to the Base Salary, the Executive shall
be entitled to earn, for each fiscal year ending during the Employment Period,
an annual bonus (the "Annual Bonus") based on the achievement of performance
criteria as determined by the Board or an appropriate committee thereof, and
with the target amount of the Annual Bonus being not less than 30% of the annual
amount of the Base Salary. The Annual Bonus that is so earned shall be paid no
later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(3) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all cash incentive,
equity incentive, savings and retirement plans, practices, policies, and
programs applicable generally to other senior executives of the Company;
provided, that such incentive plans, practices, policies shall
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provide the Executive with compensation opportunities at least comparable to
those provided to him immediately before the Effective Date.
(4) WELFARE BENEFIT PLANS. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, employee life, group
life, accidental death and travel accident insurance plans and programs) to the
extent applicable generally to other senior executives of the Company.
(5) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies, practices and procedures of the
Company in effect generally at any time after the Effective Date with respect to
senior executives of the Company.
(6) FRINGE BENEFITS. During the Employment Period, the Executive shall
be entitled to fringe benefits which are comparable in the aggregate to those
provided generally at any time after the Effective Date to other senior
executives of the Company.
(7) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
generally at any time after the Effective Date with respect to other senior
executives of the Company.
(8) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and the Affiliated Companies as in effect
generally at any time after the Effective Date with respect to other senior
executives of the Company; provided, that in no event shall the Executive be
entitled to less than five weeks' paid vacation per year.
SECTION 4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The
Executive's employment shall terminate automatically if the Executive dies
during the Employment Period. If the Company determines in good faith that the
Disability (as defined herein) of the Executive has occurred during the
Employment Period (pursuant to the definition of "Disability"), it may give to
the Executive written notice in accordance with Section 11(b) of its intention
to terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided, that within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive's duties. "Disability"
means the absence of the Executive from the Executive's duties with the Company
on a full-time basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness that is determined to be total and permanent
by a physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
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(b) BY THE COMPANY WITHOUT CAUSE OR FOR CAUSE. The Company may
terminate the Executive's employment during the Employment Period for Cause or
without Cause. "Cause" means:
(1) the willful and continued failure of the Executive to
perform substantially the Executive's duties hereunder (as
contemplated by Section 3(a)(1)(A)) (other than any such failure
resulting from incapacity due to physical or mental illness or
following the Executive's delivery of a Notice of Termination for Good
Reason), after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive Officer
of the Company that specifically identifies the manner in which the
Board or the Chief Executive Officer of the Company believes that the
Executive has not substantially performed the Executive's duties, or
(2) the willful engaging by the Executive in illegal conduct
or gross misconduct that is materially and demonstrably injurious to
the Company.
For purposes of this Section 4(b), no act, or failure to act, on the part of the
Executive shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership
of the Board (excluding the Executive, if the Executive is a member of the
Board) at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel for the Executive, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in Section 4(b)(1) or 4(b)(2), and specifying
the particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated by the
Executive for Good Reason or by the Executive voluntarily without Good Reason.
"Good Reason" means:
(1) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 3(a), or any other
diminution in such position, authority, duties or responsibilities
(including without limitation as a result of the Company's ceasing to
be a publicly traded entity as a result of a Change of Control),
excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and that is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
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(2) any failure by the Company to comply with any of the
terms of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(3) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(4) any failure by the Company to comply with and satisfy
Section 10(c).
For purposes of this Section 4(c), any good faith determination of Good Reason
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason pursuant
to a Notice of Termination given during the 30-day period immediately following
the first anniversary of the Effective Date shall be deemed to be a termination
for Good Reason for all purposes of this Agreement. The Executive's mental or
physical incapacity following the occurrence of an event described above in
clauses (1) through (4) shall not affect the Executive's ability to terminate
employment for Good Reason.
(d) NOTICE OF TERMINATION. Any termination by the Company without
Cause or for Cause, or by the Executive without Good Reason or for Good Reason,
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 11(b). "Notice of Termination" means a written notice
that (1) indicates the specific termination provision in this Agreement relied
upon, (2) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (3) if the Date of Termination
(as defined herein) is other than the date of receipt of such notice, specifies
the Date of Termination (which Date of Termination shall be not more than 30
days after the giving of such notice, except as provided in clause (3) of
Section 4(e) below). The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance that contributes to a showing
of Good Reason or Cause shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's respective rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (1) if the
Executive's employment is terminated by reason of the Executive's death, the
date of death, (2) if the Executive's employment is terminated by reason of
Disability, the Disability Effective Date, and (3) if the Executive's employment
is terminated under other circumstances, the date the Notice of Termination is
given or any later date specified in the Notice of Termination (which date shall
not be more than 30 days after the giving of such notice).
(f) EFFECT OF EXPIRATION OF EMPLOYMENT PERIOD. Section 5 below shall
not be applicable to the termination of the Executive's employment upon or after
the expiration of the Employment Period in accordance with Section 2 above,
whether as a result of the delivery of a Notice of Nonrenewal by either the
Company or the Executive, or as a result of the Executive's attainment of age
65.
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SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION DURING THE
EMPLOYMENT PERIOD. (A) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY.
If, during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason, then in addition to the Other Benefits provided for
in Section 6:
(1) the Company shall pay to the Executive, in a lump sum in
cash within 30 days after the Date of Termination, the aggregate of
the following amounts:
(A) the sum of (i) the Executive's Base Salary
through the Date of Termination to the extent not
theretofore paid, (ii) the product of (x) the average of the
Annual Bonuses earned by the Executive for each of the last
three full fiscal years prior to the Date of Termination
(the "Average Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current
fiscal year through the Date of Termination and the
denominator of which is 365, and (iii) any accrued vacation
pay, in each case, to the extent not theretofore paid (the
sum of the amounts described in subclauses (i), (ii) and
(iii), the "Accrued Obligations");
(B) the amount equal to the product of (i) three
and (ii) the sum of (x) the annual rate of the Base Salary,
(y) the Average Annual Bonus and (z) the aggregate of the
amounts contributed or required to be contributed by the
Company to the Executive's account under each defined
contribution plan (whether qualified or nonqualified) in
which the Executive was participating for the most recently
concluded plan year before the Date of Termination; and
(C) an amount equal to the excess of (i) the
actuarial equivalent of the benefit under any qualified
defined benefit retirement plan (the "Retirement Plan") and
any excess or supplemental retirement plans (collectively,
the "SERP") sponsored by the Company or any of the
Affiliated Companies in which the Executive is participating
immediately before the Date of Termination, computed
utilizing actuarial assumptions no less favorable to the
Executive than those in effect under the Retirement Plan
immediately prior to the Effective Date, that the Executive
would receive if the Executive's employment continued for
three years after the Date of Termination, assuming for this
purpose that all accrued benefits are fully vested and
assuming that the Executive's compensation in each of the
three years is that required by Sections 3(b)(1) and
3(b)(2), over (ii) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under
the Retirement Plan and the SERP as of the Date of
Termination;
(2) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms of
the appropriate plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or
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the Executive's family at least equal to those that would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 3(b)(4) and 3(b)(6) if the Executive's
employment had not been terminated, provided, that, if the Executive
becomes reemployed with another employer and is eligible to receive
such benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility (but not the time
of commencement of benefits) of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until three
years after the Date of Termination and to have retired on the last
day of such period;
(3) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and
provider of which shall be selected by the Executive in the
Executive's sole discretion, provided, that the cost of such
outplacement shall not exceed $50,000;
(4) at the conclusion of the period of three years from the
Date of Termination, the Company shall sell to the Executive, for
$1.00, any automobile that the Executive is provided pursuant to
Section 5(a)(2) above;
(5) as promptly as practicable following the Date of
Termination, the Company shall (i) sell to the Executive, for $1.00
each, the Company-owned personal computer, printer and fax machine
being used by the Executive immediately before the Date of
Termination, and (ii) transfer to the Executive, for $1.00, any club
memberships held by the Company for the Executive's use immediately
before the Date of Termination;
(6) for one year following the Date of Termination, the
Company shall provide the Executive with continued secretarial support
from the individual who was serving as the Executive's secretary
immediately before the Date of Termination, or from a suitable
replacement on the Company's payroll if such individual ceases to be
employed by the Company, in either case at no charge to the Executive;
and
(7) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any Other
Benefits (as defined in Section 6).
(b) DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, the Company shall provide
the Executive's estate or beneficiaries with the Accrued Obligations and the
timely payment or delivery of the Other Benefits, and shall have no other
severance obligations under this Agreement. The Accrued Obligations shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination. With respect to the provision of
the Other Benefits, the term "Other Benefits" as utilized in this Section 5(b)
shall include,
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without limitation, and the Executive's estate and/or beneficiaries shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and the Affiliated Companies to the estates and
beneficiaries of senior executives of the Company and the Affiliated Companies
under such plans, programs, practices and policies relating to death benefits,
if any as in effect on the date of the Executive's death with respect to other
senior executives of the Company and the Affiliated Companies and their
beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, the Company shall
provide the Executive with the Accrued Obligations and the timely payment or
delivery of the Other Benefits, and shall have no other severance obligations
under this Agreement. The Accrued Obligations shall be paid to the Executive in
a lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of the Other Benefits, the term "Other Benefits" as utilized in
this Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and the
Affiliated Companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect at any time thereafter generally with respect to other senior
executives of the Company and the Affiliated Companies and their families.
(d) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR GOOD
REASON. If the Executive's employment is terminated by the Company for Cause
during the Employment Period, the Company shall pay the Executive any unpaid
Base Salary through the Date of Termination within 30 days of the Date of
Termination, and shall timely pay or provide the Other Benefits, and shall have
no other severance obligations under this Agreement. If the Executive
voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason, the Company shall pay the Executive the Accrued
Obligations in a lump sum in cash within 30 days of the Date of Termination, and
shall timely pay or provide the Other Benefits, and shall have no other
severance obligations under this Agreement.
SECTION 6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or the Affiliated Companies
and for which the Executive may qualify, nor, subject to Section 11(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any other contract or agreement with the Company or the Affiliated
Companies. Amounts that are vested benefits or that the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any other
contract or agreement with the Company or the Affiliated Companies at or
subsequent to the Date of Termination ("Other Benefits") shall be payable in
accordance with such plan, policy, practice or program or contract or agreement,
except as explicitly modified by this Agreement. Notwithstanding the foregoing,
if the Executive receives payments and benefits pursuant to Section 5(a) of this
Agreement, the Executive shall not be entitled to any severance pay or benefits
under any severance plan, program or policy of the Company and the Affiliated
Companies, unless otherwise specifically provided therein in a specific
reference to this Agreement.
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SECTION 7. FULL SETTLEMENT. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right or action that the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred (within 10 days following the Company's
receipt of an invoice from the Executive), to the full extent permitted by law,
all legal fees and expenses that the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof (including
as a result of any contest by the Executive about the amount of any payment
pursuant to this Agreement), plus, in each case, interest on any delayed payment
at the applicable federal rate provided for in Section 7872(f)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
SECTION 8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any Payment
would be subject to the Excise Tax, then the Executive shall be entitled to
receive an additional payment (the "Gross-Up Payment") in an amount such that,
after payment by the Executive of all taxes (and any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 8(a), if it shall be
determined that the Executive is entitled to the Gross-Up Payment, but that the
Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount,
then no Gross-Up Payment shall be made to the Executive and the amounts payable
under this Agreement shall be reduced so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the
amounts payable hereunder, if applicable, shall be made by first reducing the
payments under Section 5(a)(i)(B), unless an alternative method of reduction is
elected by the Executive, and in any event shall be made in such a manner as to
maximize the Value of all Payments actually made to the Executive. For purposes
of reducing the Payments to the Safe Harbor Amount, only amounts payable under
this Agreement (and no other Payments) shall be reduced. If the reduction of the
amount payable under this Agreement would not result in a reduction of the
Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable
under the Agreement shall be reduced pursuant to this Section 8(a). The
Company's obligation to make Gross-Up Payments under this Section 8 shall not be
conditioned upon the Executive's termination of employment.
(b) (i) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by the Company (the
"Accounting Firm"). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days
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of the receipt of notice from the Executive that there has been a Payment or
such earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Company to the
Executive within 5 days of the receipt of the Accounting Firm's determination.
Except as provided in subparagraph 8(b)(ii), any determination by the Accounting
Firm shall be binding upon the Company and the Executive.
(ii) As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments that will not have been made by
the Company should have been made (the "Underpayment"), or that Gross-Up
Payments will have been made by the Company that should not have been made (the
"Overpayments"), in each case consistent with the calculations required to be
made hereunder. In the event the Company exhausts its remedies pursuant to
Section 8(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive. If subsequent to the making of
any Payments by the Company the Accounting Firm determines that an Overpayment
has been made (whether on the basis of previous error, erroneous facts, changes
in law or otherwise), then (i) the Executive shall promptly pay to the Company
the amount of such Overpayment, but only to the extent of the Gross-up Payments
that have been (A) paid by the Company directly to the Executive (as opposed to
paid to any taxing authority on behalf of the Executive) and not subsequently
paid by the Executive to any taxing authority or (B) refunded to the Executive
by any taxing authority to which they were previously paid by the Company or the
Executive; and (ii) if the amount of the Overpayment exceeds the amount (if any)
required to be repaid by the Executive to the Company pursuant to clause (i),
the Executive shall seek a refund of such excess and any such refund shall be
subject to the provisions of Section 8(d); provided, that the Company shall bear
and pay directly all costs and expenses incurred by the Executive in seeking
such a refund; and provided, further, that the obligation of the Executive to
repay any Overpayment pursuant to this sentence shall be contingent upon the
Company's making all required reports (including corrections to any previously
filed reports) to the applicable taxing authorities in a manner consistent with
the Accounting Firm's determination of the Overpayment.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable, but no later than 10 business days after the Executive is informed
in writing of such claim. The Executive shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that the Company desires to contest such claim,
the Executive shall:
(1) give the Company any information reasonably requested by
the Company relating to such claim,
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(2) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company,
(3) cooperate with the Company in good faith in order
effectively to contest such claim, and
(4) permit the Company to participate in any proceedings
relating to such claim;
provided, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest, and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 8(c), the Company
shall control all proceedings taken in connection with such contest, and, at its
sole discretion, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the applicable taxing authority in
respect of such claim and may, at its sole discretion, either pay the tax
claimed to the appropriate taxing authority on behalf of the Executive and
direct the Executive to xxx for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; provided, that, if
the Company pays such claim and directs the Executive to xxx for a refund, the
Company shall indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or penalties) imposed with
respect to such payment or with respect to any imputed income in connection with
such payment; and provided, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which the Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, as a result of the Executive's seeking a refund with respect
to any Overpayment or portion thereof as required by Section 8(b)(ii), or after
the receipt by the Executive of a Gross-Up Payment or payment by the Company of
an amount on the Executive's behalf pursuant to Section 8(c), the Executive
becomes entitled to receive any refund with respect to the Excise Tax to which
such Gross-Up Payment relates or with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 8(b)(ii) or
Section 8(c), as applicable) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after payment by the Company of an amount on the
Executive's behalf pursuant to Section 8(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then the amount of
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such payment shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
(e) Notwithstanding any other provision of this Section 8, the Company
may, in its sole discretion, withhold and pay over to the Internal Revenue
Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby
consents to such withholding.
(f) Definitions. The following terms shall have the following meanings
for purposes of this Section 8:
(i) "Excise Tax" shall mean the excise tax imposed by
Section 4999 of the Code, together with any interest or penalties
imposed with respect to such excise tax.
(ii) "Parachute Value" of a Payment shall mean the present
value as of the date of the change of control for purposes of Section
280G of the Code of the portion of such Payment that constitutes a
"parachute payment" under Section 280G(b)(2), as determined by the
Accounting Firm for purposes of determining whether and to what extent
the Excise Tax will apply to such Payment.
(iii) A "Payment" shall mean any payment or distribution in
the nature of compensation (within the meaning of Section 280G(b)(2)
of the Code) to or for the benefit of the Executive, whether paid or
payable pursuant to this Agreement or otherwise.
(iv) The "Safe Harbor Amount" means 2.99 times the
Executive's "base amount," within the meaning of Section 280G(b)(3) of
the Code.
(v) "Value" of a Payment shall mean the economic present
value of a Payment as of the date of the change of control for
purposes of Section 280G of the Code, as determined by the Accounting
Firm using the discount rate required by Section 280G(d)(4) of the
Code.
SECTION 9. COVENANTS. (a) The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or the Affiliated Companies, and their
respective businesses, which information, knowledge or data shall have been
obtained by the Executive during the Executive's employment by the Company or
the Affiliated Companies and which information, knowledge or data shall not be
or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those persons designated
by the Company.
(b) The Executive agrees that he will not, at any time during the
Noncompetition Period (as defined in Section 9(c) below), without the prior
written consent of
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the Company or the applicable Affiliated Company, as applicable, directly or
indirectly employ, or solicit the employment of (whether as an employee,
officer, director, agent, consultant or independent contractor), any person who
was or is at any time during the previous twelve (12) months an employee,
representative, officer or director of the Company or any of the Affiliated
Companies (except for such employment by the Company or any of the Affiliated
Companies).
(c) During the Noncompetition Period (as defined below), the Executive
shall not, without the prior written consent of the Board, engage in or become
associated with a Competitive Activity. For purposes of this Section 9: (i) the
"Noncompetition Period" means the period during which the Executive is employed
by the Company, plus, if the Executive terminates his employment for Good Reason
before a Change of Control has occurred, the period ending on the first
anniversary of the Date of Termination; (ii) a "Competitive Activity" means any
business or other endeavor, in any county of any state of the United States or a
comparable jurisdiction in Canada or any other country, of a kind being
conducted by the Company or any of the Affiliated Companies in such jurisdiction
as of the Effective Time or at any time thereafter through the Date of
Termination; and (iii) the Executive shall be considered to have become
"associated with a Competitive Activity" if the Executive becomes directly or
indirectly involved as an owner, principal, employee, officer, director,
independent contractor, representative, stockholder, financial backer, agent,
partner, advisor, lender, or in any other individual or representative capacity
with any individual, partnership, corporation or other organization that is
engaged in a Competitive Activity. Notwithstanding the foregoing, the Executive
may make and retain investments during the Employment Period in less than one
percent of the equity of any entity engaged in a Competitive Activity, if such
equity is listed on a national securities exchange or regularly traded in an
over-the-counter market.
(d) The Executive acknowledges and agrees that: (i) the purpose of the
foregoing covenants, including without limitation the noncompetition covenant of
Section 9(c), is to protect the goodwill, trade secrets and other Confidential
Information of the Company; (ii) because of the nature of the business in which
the Company and the Affiliated Companies are engaged and because of the nature
of the Confidential Information to which the Executive has access, it would be
impractical and excessively difficult to determine the actual damages of the
Company and the Affiliated Companies in the event the Executive breached any of
the covenants of this Section 9; and (iii) remedies at law (such as monetary
damages) for any breach of the Executive's obligations under this Section 9
would be inadequate. The Executive therefore agrees and consents that if he
commits any breach of a covenant under this Section 9 or threatens to commit any
such breach, the Company shall have the right (in addition to, and not in lieu
of, any other right or remedy that may be available to it) to temporary and
permanent injunctive relief from a court of competent jurisdiction, without
posting any bond or other security and without the necessity of proof of actual
damage. With respect to any provision of this Section 9 finally determined by a
court of competent jurisdiction to be unenforceable, the Executive and the
Company hereby agree that such court shall have jurisdiction to reform this
Agreement or any provision hereof so that it is enforceable to the maximum
extent permitted by law, and the parties agree to abide by such court's
determination. If any of the covenants of this Section 9 are determined to be
wholly or partially unenforceable in any jurisdiction, such determination shall
not be a bar to or in any way diminish the Company's right to enforce any such
covenant in any other jurisdiction.
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(e) In no event shall an asserted violation of the provisions of this
Section 9 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
SECTION 10. SUCCESSORS. (a) This Agreement is personal to the
Executive, and, without the prior written consent of the Company, shall not be
assignable by the Executive other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns. Except as provided in Section 10(c),
without the prior written consent of the Executive this Agreement shall not be
assignable by the Company.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. "Company" means the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that assumes and agrees to
perform this Agreement by operation of law or otherwise.
SECTION 11. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified other than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
if to the Executive: At the home address for the Executive then shown
in the Company's records
if to the Company: State Street Square
00 Xxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
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(d) The Company may withhold from any amounts payable under this
Agreement such United States federal, state or local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(f) This Agreement, upon its execution, supersedes the Agreement
between the Company and the Executive dated as of July 17, 2001 and the
Agreement between the Company and the Executive dated as of October 10, 2001.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board, the Company has caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.
JOURNAL REGISTER COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman, Compensation Committee
/S/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx
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