EXHIBIT 10.2
June 23, 2006
Xxxx X. Xxxxxxx
State Street Square
00 Xxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Dear Xxxx,
This letter (the "LETTER AGREEMENT") memorializes our understanding
with respect to the implementation of the terms of the employment agreement (the
"EMPLOYMENT AGREEMENT") dated March 5, 2003 between you and Journal Register
Company (the "COMPANY") to your upcoming separation of employment with the
Company on June 30, 2006 (the "TERMINATION DATE"), and takes into account the
requirements of the recently enacted Section 409A ("SECTION 409A") of the
Internal Revenue Code (the "CODE").
SEPARATION PAYMENT. The Company shall, on January 2, 2007, pay you
a lump sum in cash of $2,806,865 (plus interest thereon from July 1, 2006
through January 2, 2007 at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Code (the "APPLICABLE FEDERAL RATE"), subject to applicable
tax withholding. For illustrative purposes only, the amount set forth in the
preceding sentence was determined pursuant to the formula set forth in Section
5(a)(1)(B) of the Employment Agreement ($2,684,781), plus $122,084 payable to
you pursuant to the formula set forth in Section 5(a)(1)(A)(ii) of the
Employment Agreement. Within 15 days following the Termination Date, the Company
shall pay you any accrued but unpaid base salary and vacation pay, and, within
30 days of the Termination Date (or, if later, of the date of submission of the
actual invoice), shall reimburse you in accordance with the Company's policies
for any reimbursable expenses incurred through the Termination Date. The Company
acknowledges that you will have 38 days of accrued but unpaid vacation as of the
Termination Date (less any vacation days used between the date hereof and the
Termination Date).
BENEFITS CONTINUATION. Until June 30, 2009, the Company shall
continue to provide you and your family with medical, prescription, dental,
vision, disability, employee life, group life, accidental death or dismemberment
and disability and travel accident insurance and other fringe benefits on the
same terms and conditions as that provided to the you as of the Termination Date
or as in effect from time to time, as if you had remained employed during that
period, subject to your payment of such employee contributions, copayments and
similar charges provided, however, in no event shall the amount of your medical
premium payments under this sentence be determined on terms less favorable than
the most favorable terms provided to any senior executive officer of the
Company; and, PROVIDED FURTHER, that such continued benefits shall become
secondary to the extent you become reemployed and become eligible for
substantially comparable benefits (i.e., medical, prescription, dental, vision,
disability, accidental death and dismemberment and/or life insurance benefits)
from another employer during such applicable period. You shall pay $804.69 per
quarter, in arrears, with respect to the period from July 1, 2006 through
December 31, 2006, and shall be reimbursed by the Company on January 2, 2007 for
all payments so made (plus interest thereon from the applicable payment date
through
January 2, 2007 at the Applicable Federal Rate). Until June 30, 2009, the
Company shall continue to (x) provide you with use of your Company-owned
automobile (the "CAR") on the same terms and conditions as provided to you as of
immediately prior to the Termination Date and related insurance coverage, and
(y) pay your dues payments at the two country clubs (the "CLUBS") with respect
to which it currently pays such dues, PROVIDED, that you shall pay all dues to
the Clubs with respect to the period from July 1, 2006 through December 30,
2006, and shall be reimbursed by the Company on January 2, 2007 for all payments
so made (plus interest thereon from the applicable payment date through January
2, 2007 at the Applicable Federal Rate), and, PROVIDED, FURTHER, that you shall
pay the Company a quarterly premium of $1,500 to lease the Car from July 1, 2006
through December 31, 2006, payable quarterly in arrears, and shall be reimbursed
by the Company on January 2, 2007 for all payments so made (plus interest
thereon from the applicable payment date through January 2, 2007 at the
Applicable Federal Rate).
OUTPLACEMENT. The Company will provide you with outplacement
services, the scope of and provider of which shall be selected by you in your
sole discretion (including but not limited to professional training, conferences
or education) and; PROVIDED, that in no event shall the cost of such services
exceed $50,000 and in no event shall any such services be provided or reimbursed
subsequent to December 31, 2008. For one year following the Termination Date,
the Company shall provide you with continued secretarial and information
technology support from the individuals who were serving as your secretary and
information technology support immediately before the Termination Date, or from
a suitable replacement(s) on the Company's payroll if such individual(s)
cease(s) to be employed by the Company or you and the Company agree to another
suitable replacement, in any case at no charge to you.
TRANSFERS OF OWNERSHIP. As soon as practicable following the
Termination Date, the Company shall (i) sell to you, for $1.00 each, the
Company-owned personal computer, printer and fax machine and other similar items
being used by you immediately before such date (provided that the Company may
arrange, at any time prior to 45 days following the conclusion of the Consulting
Period (as defined in the Noncompete, Consulting and Release Agreement being
entered into between you and the Company as of the date hereof) for removal from
the hard drive of said computer any of its proprietary software and confidential
and proprietary information), and (ii) transfer to you, for $1.00, the Club
memberships held by the Company. As soon as practicable following the third
anniversary of the Termination Date, the Company shall sell the Car to you for
$1.00.
SECTION 409A. If any compensation or benefits provided by this
letter would reasonably be expected to result in the application of Section
409A, the Company shall, in consultation with you, modify this letter in the
least restrictive manner necessary in order to, where applicable, (i) exclude
such compensation from the definition of "deferred compensation" within the
meaning of such Section 409A or (ii) comply with the provisions of Section 409A,
other applicable provisions of the Code and/or any rules, regulations or other
regulatory guidance issued under such statutory provisions and to make such
modifications, in each case, to the extent permissible, without any diminution
in the payments to you. In the event that it is mutually agreed by the parties
prior to June 30, 2006 that deletion of the provisos to the final sentence of
the paragraph above titled "Benefits Continuation" would not result in any
payments or benefits being treated as subject to Section 409A, such provisos
shall be so deleted. In the event that it is mutually agreed by the parties
prior to December 31, 2006 that the lump-sum payment described in the first
sentence of the paragraph above titled "Separation Payment" can
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be made prior to January 2, 2007 without resulting in imposition of any tax
under Section 409A, such payment shall be made as soon as practicable following
such mutual agreement (but in no event prior to the Termination Date), with the
interest adjusted to reflect the acceleration of payment from January 2, 2007 to
the date of such payment
ACKNOWLEDGEMENTS. This Letter Agreement and the Noncompetition,
Consulting and Release Agreement of even date herewith (collectively, the
"AGREEMENTS") constitute the full understanding of you and the Company with
respect to your relationship with the Company. Without limiting the generality
of the foregoing, you expressly acknowledge and agree that except as
specifically set forth in the Agreements (which incorporates by reference
Section 8 of the Employment Agreement), you are not entitled to receive any
separation pay or benefits from the Company and its affiliates, and the payments
described therein are in full satisfaction of your rights under the Employment
Agreement, which (except for Section 8 thereof) is superseded by the Agreements.
The Company acknowledges that its obligation to make the payments and provide
the benefits provided for in this Letter 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 you or others. In no event shall you be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to you under any of the provisions of this Letter Agreement, and such amounts
shall not be reduced whether or not you obtain other employment. Nothing in this
Agreement shall prevent or limit your continuing or future participation in any
plan, program, policy or practice provided by the Company and its affiliates and
for which you may qualify (including, without limitation, the Company's 401(k)
Savings and Retirement Plan for West State Street Employees and 401(k)
Excess/Deferred Compensation Plan), nor shall anything herein limit or otherwise
affect such rights as you may have under any other contract or agreement with
the Company and its affiliates, in each case, except to the extent modified by
the Agreements. Amounts that are vested benefits or that you are otherwise
entitled to receive under any plan, policy, practice or program of or any other
contract with the Company and its affiliates (including, without limitation, the
Company's 401(k) Savings and Retirement Plan for West State Street Employees and
401(k) Excess/Deferred Compensation Plan) at or subsequent to the Termination
Date shall be payable in accordance with such plan, policy, practice or program
or contract or agreement, except to the extent modified by the Agreements.
MISCELLANEOUS. This Letter Agreement is personal to you, and,
without the prior written consent of the Company, shall not be assignable by you
other than by will or the laws of descent and distribution. This Letter
Agreement shall inure to the benefit of and be enforceable by your heirs and
legal representatives. This letter shall inure to the benefit of and be
enforceable by your heirs and legal representatives. This letter shall inure to
the benefit of and be binding upon the Company and its successors and assigns.
Except as provided in the next sentence, without your prior written consent,
this Letter Agreement shall not be assignable by the Company. 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 Letter
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 Letter Agreement by
operation of law or otherwise. This letter may be amended, modified or changed
only by a written instrument executed by you and the Company. The captions of
this letter are not part of the provisions hereof and shall have no force or
effect. The Company agrees to pay as incurred
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(within 10 days following the Company's receipt of an invoice from you), to the
full extent permitted by law, all legal fees and expenses that you may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, you 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 you 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
Code. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement. This letter may be executed in several counterparts, each of which
shall be deemed an original and said counterparts shall constitute but one and
the same instrument.
GOVERNING LAW. This letter 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 parties hereto irrevocably consent to
jurisdiction in the courts of the state of New Jersey for resolution of any
claim or dispute arising hereunder, and such shall be the exclusive forum for
the resolution of such claim or dispute.
Sincerely,
/s/ Xxxxxx X. Xxxxxxx
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on behalf of Journal Register Company
Acknowledged and Agreed:
/s/ Xxxx X. Xxxxxxx
------------------------
Xxxx X. Xxxxxxx
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