EXHIBIT 10.4
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and entered into as
of the 1st day of January, 2005, by and between Xxxxxxxxx International Inc., a
Delaware corporation (the "EMPLOYER"), and Xxxx Xxxxxxxxxxx (the "EXECUTIVE").
RECITALS
A. The Employer desires that the Executive continue to provide
services for the benefit of the Employer and the Executive desires to accept
such continued employment with the Employer.
B. The Employer and the Executive acknowledge that the Executive
is, and will continue to be, a member of the senior management team of the
Employer and, as such, has participated in and will participate in implementing
the Employer's business plan.
NOW, THEREFORE, in consideration of the above premises and the
following mutual covenants and conditions, the parties agree as follows:
1. EMPLOYMENT. The Employer shall employ the Executive as the
Publisher of the Chicago Sun-Times, and Chief Operating Officer of the
Employer's Chicago Group, and the Executive hereby accepts such employment on
the following terms and conditions.
2. DUTIES. The Executive shall work for the Employer in a
full-time capacity. The Executive shall, during the term of this Agreement, have
the duties, responsibilities, powers, and authority customarily associated with
the positions of Publisher of the Chicago Sun-Times, and Chief Operating Officer
of the Employer's Chicago Group. The Executive shall report to, and follow the
direction of, the President and Chief Executive Officer of the Company. In
addition to, or in lieu of, the foregoing, the Executive also shall perform such
other duties as may be assigned to him from time to time by the President and
Chief Executive Officer. The Executive shall diligently, competently, and
faithfully perform all duties, and shall devote his entire business time,
energy, attention, and skill to the performance of duties for the Employer and
will use his best efforts to promote the interests of the Employer; provided the
Executive shall be entitled to devote time to outside boards of directors,
personal investments, and professional activities to the extent such activities
do not unduly interfere with his duties hereunder.
3. TERM OF EMPLOYMENT. This Agreement shall be entered into for a
period of one (1) year, commencing January 1, 2005 (the "INITIAL TERM"). The
term of employment shall be renewed for successive periods of one (1) year (a
"RENEWAL TERM") after the expiration of the Initial Term and any subsequent
Renewal Term, unless the Board of Directors provides the Executive, or the
Executive provides the Board of Directors, with written notice to the contrary
at least sixty (60) days prior to the end of the Initial Term or any Renewal
Term.
4. COMPENSATION.
A. SALARY. The Employer shall pay the Executive an annual
salary of US$360,000 (the "BASE SALARY"), payable in substantially
equal installments in accordance with the Employer's payroll policy
from time to time in effect. The Executive's salary shall be subject to
any payroll or other deductions as may be required to be made pursuant
to law, government order, or by agreement with, or consent of, the
Executive. The Base Salary is subject to increase at the discretion of
the Board of Directors, or a Committee thereof acting under delegated
authority, as appropriate.
B. PERFORMANCE BONUS. The Executive shall be eligible for
an annual bonus targeted at fifty percent (50%) of the Executive's Base
Salary (the "TARGET BONUS"), such bonus, if any, to be paid within
ninety (90) days following the end of each calendar year during the
term hereof, beginning with calendar year 2005. The bonus shall be
based upon an annual calendar year bonus plan, to be established by the
Board of Directors of Employer as soon as reasonably practicable after
the date hereof. The actual bonus to be paid to Executive shall be
determined by the Board of Directors, or by a Committee thereof with
delegated authority, based upon such criteria as are established by the
Board or such Committee and communicated to Executive. The actual bonus
to be paid to Executive may exceed or be lower than the Target Bonus,
based upon performance relative to the established criteria.
C. OTHER COMPENSATION. Executive shall be eligible to
participate in any and all other incentive compensation programs
established by Employer in which Employer's senior executives
participate or with respect to which they are eligible. The Board of
Directors, or a Committee thereof with delegated authority, shall
determine the amount of any such awards in its sole discretion.
D. BENEFITS AND PERQUISITES. Executive shall be eligible
to participate in all benefit plans and programs for which other senior
executives of Employer are eligible, and shall be entitled to such
perquisites as are available to other senior executives of Employer,
and such additional perquisites as may be approved by the Board of
Directors or the Compensation Committee thereof.
5. EXPENSES. The Employer shall reimburse the Executive for
expenses in accordance with the Employer's policies from time to time in effect.
6. TERMINATION. The Executive's services shall terminate upon the
first to occur of the following events:
A. At the end of the term of this Agreement, including any
Renewal Terms.
B. Upon the Executive's date of death or the date the
Executive is given written notice from the Employer that he has been
determined to be disabled. For purposes of this Agreement, the
Executive shall be deemed to be "disabled" if the Executive, as a
result of illness or incapacity, shall be unable to perform
substantially his required duties for a period of three (3) consecutive
months or for any aggregate period of three (3) months in any six (6)
month period.
C. On the date the Employer provides the Executive with
written notice that he is being terminated for "cause." For purposes of
this Agreement, "cause" means that Executive has: (i) been convicted of
(or has pleaded guilty or no contest to) a felony, or (ii) engaged in
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conduct that constitutes willful gross neglect or willful gross
misconduct with respect to his employment duties; PROVIDED, no act or
omission on Executive's part shall be considered "willful" if conducted
in good faith and with a reasonable belief that his conduct was in the
best interests of Employer. Notwithstanding the foregoing, the Employer
may not terminate Executive's employment for cause under clause (ii) of
this Paragraph 6C unless Executive is given at least thirty (30) days
to cure any such conduct (if capable of cure), and only after Executive
has received a certified copy of a resolution of the Board of Directors
terminating his employment for cause and stating specifically the
conduct that the Board of Directors believes satisfies the definition
of cause.
D. On the date the Executive terminates his employment for
any reason, provided that the Executive shall give the Employer thirty
(30) days written notice prior to such date of his intention to
terminate this Agreement.
E. On the date the Employer terminates the Executive's
employment for any reason other than in the event of Executive's death
or disability or for cause, provided that the Employer shall give the
Executive sixty (60) days written notice prior to such date of its
intention to terminate this Agreement.
7. COMPENSATION UPON TERMINATION.
A. If the Executive's services are terminated pursuant to
Paragraph 6B, 6C or (except as provided in Paragraph 7C) 6D, or the
Executive elects to terminate this Agreement at the end of its term
pursuant to Paragraph 6A, the Executive shall be entitled to his salary
and health and welfare benefits through his final date of active
employment, plus any accrued but unused vacation pay. The Executive
shall also be entitled to any benefits mandated under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") or required under
the terms of any death, insurance, or retirement plan, program, or
agreement, or any other plan or arrangement, provided by the Employer
and to which the Executive is a party or in which the Executive is a
participant, including, but not limited to, any short-term or long-term
disability plan or program, if applicable.
B. If the Executive's services are terminated by the
Employer pursuant to Paragraph 6A or 6E prior to and not in connection
with a Change in Control (as defined herein), Executive shall receive
(i) continuation of his final Base Salary for a period ending one year
from the date upon which the term of this Agreement would have expired
absent the termination of Executive, (ii) continuation of health and
welfare benefits for such period, and (iii) an amount equal to
Executive's Target Bonus on all amounts paid pursuant to clause (i) of
this Paragraph 7B and all amounts paid to Executive as Base Salary
during the then-current term of this Agreement, to be paid within
ninety (90) days following the end of each calendar year during the
period of Executive's salary continuation under clause (i) of this
Paragraph 7B. Upon termination of Executive's employment pursuant to
this Paragraph 7B, all unvested equity-based awards shall become
immediately fully vested and payable (if applicable). Employer's
obligations to pay the amounts and furnish the benefits as provided in
this Paragraph 7B shall be conditioned upon receipt by Employer of
Executive's written release of the Employer from all claims for
additional severance payments and benefits and otherwise.
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C. In the event of a Change in Control, and the subsequent
termination, within thirty-six (36) months after the Change in Control,
of Executive's employment by Employer without cause or by Executive for
Good Reason, the Executive shall receive (i) a lump sum amount equal to
(a) the amount of Base Salary that would have been paid to Executive to
the end of the term of this Agreement, PLUS (b) the Executive's Target
Bonus on the amount paid to Executive pursuant to Clause 7C(i)(a), PLUS
(c) Executive's final Base Salary, multiplied by two (2), PLUS (d) the
higher of Executive's Target Bonus calculated with respect to the
amount paid pursuant to Clause 7C(i)(c) or the highest annual bonus
actually received by Executive during the two most recent years,
multiplied by two (2); and (ii) continuation of Executive's health and
welfare benefits for a period ending two years from the date upon which
the term of this Agreement would have expired absent the termination of
Executive. In addition, upon a Change in Control, all unvested awards
and grants previously made to Executive shall become immediately fully
vested and payable (if applicable). For purposes of this Xxxxxxxxx 0X,
"Xxxx Reason" for termination of Executive's employment by Executive
shall exist if a Change of Control has occurred and, at any time during
the thirty-six (36) months thereafter, any of the following has also
occurred: Executive's title, authority or principal duties are reduced,
diminished or eliminated; Executive's base salary is reduced;
Executive's benefits are diminished; Executive's principal place of
employment is relocated more than thirty-five (35) road miles from its
then-current location; or Executive's annual bonus opportunity is
reduced. For purposes of this Xxxxxxxxx 0X, a "CHANGE IN CONTROL" shall
be deemed to have occurred upon:
(1) the acquisition after the date of this Agreement by any
"person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") (excluding for this purpose, (i) the Employer or any
subsidiary of the Employer or (ii) any employee benefit plan
of the Employer or of any subsidiary of the Employer or any
person or entity organized, appointed or established by the
Employer for or pursuant to the terms of any such plan which
acquires after the date of this Agreement beneficial ownership
of voting securities of the Employer) of ownership of
securities of the Employer whereby such person becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly of securities of the
Employer representing more than fifty percent (50%) of the
combined voting power of the Employer's then outstanding
securities; provided, however, that no Change in Control will
be deemed to have occurred as a result of a change in
ownership percentage resulting solely from an acquisition of
securities by the Employer; or
(2) Xxxxxxx X. Xxxx, Xxxxx X. Xxxxxxxxx, Xxxxxx Xxxxxx,
Xxxxxx X. Paris, Xxxxxx X. Xxxxxx, Xxxxxxx X.X. Xxxxx, Xxxxx
X. Xxxxxxxx (collectively, "INCUMBENT DIRECTORS") and any new
directors whose election by the Board of Directors or
nomination by the Board of Directors for election by the
Employer's stockholders was approved by a vote of a least
two-thirds (2/3) of the directors then still in office who
either are Incumbent Directors or whose election or nomination
for election was previously so approved (such new directors
being referred to as "SUCCESSOR INCUMBENT DIRECTORS") ceasing
for any reason to constitute at least a majority of the Board
of Directors;
(3) the adoption, enactment or effectiveness of any action
(including, without limitation, by resolution or by amendment
to the Employer's charter or bylaws) that
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materially limits or diminishes the power or authority of the
Employer's board of directors or any committee thereof, if
such action has not been approved by a vote of a least
two-thirds (2/3) of the directors then still in office who
either are Incumbent Directors or Successor Incumbent
Directors; or
(4) the consummation of, or the execution of a definitive
agreement the consummation of which would result in, a
reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of the
Employer (a "BUSINESS COMBINATION"), in each case, unless,
following such Business Combination, all or substantially all
of the individuals and entities who were the beneficial owners
of outstanding voting securities of the Employer immediately
prior to such Business Combination beneficially own, directly
or indirectly, more than fifty percent (50%) of the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
entity resulting from such Business Combination (including,
without limitation, an entity which, as a result of such
transaction, owns the Employer, or all or substantially all of
the Employer'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 voting securities of the Employer; or
(5) the consummation of a complete liquidation or
dissolution of the Employer.
D. If the Executive is subject to a tax pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended (the
"CODE"), or any successor provision that may be in effect, as a result
of "parachute payments" (as that term is defined in Section
280G(b)(2)(A) and (d)(3) of the Code) made pursuant to this Agreement,
the Employer shall pay to Executive, in advance, all sums necessary to
pay any such tax, plus an amount necessary to gross-up such payments
for income and employment taxes relating to such payments and such
gross-up payments, plus any penalties and interest on such taxes (to
the extent caused by the Employer).
8. CONFIDENTIAL INFORMATION. Executive acknowledges that the
Confidential Information (as defined herein) obtained by him concerning the
business and affairs of the Employer and its affiliates and its and their
predecessors during the course of his performance of services for, or employment
with, any of the foregoing persons (whether or not compensated for such
services) are the property of the Employer and its affiliates. Therefore,
Executive agrees that he will not at any time (whether during or after his
employment period) disclose to any unauthorized person or, directly or
indirectly, use for his own account, any Confidential Information without the
Board of Directors' consent. Executive agrees to deliver to the Employer at the
termination of his employment, or at any other time the Employer may request in
writing (whether during or after his employment period), all memoranda, notes,
plans, records, reports and other documents, regardless of the format or media
(and copies thereof), relating to the business of the Employer and its
affiliates and its and their predecessors which he may then possess or have
under his control and which contain Confidential Information. As used herein,
"CONFIDENTIAL INFORMATION" means information or materials of a confidential or
proprietary nature and includes, but is not limited to, (a) matters of a
technical nature, such as trade secrets, methods, data and know-how, inventions,
designs, machines, computer programs or printouts, and documentation and similar
items or research projects, and (b) matters of a business nature, such as
information about past, present, or future company performance, correspondence,
notes, reports, files, financial information, sales figures and projections,
budgets, marketing plans, price lists, strategies, and lists of actual or
potential customers, partners, or investors. Notwithstanding the foregoing,
Confidential Information shall not include information that is generally
ascertainable from public or published information or trade sources.
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9. NONCOMPETITION AND NONSOLICITATION OF EMPLOYEES.
A. Executive covenants and agrees that, during Executive's
employment with the Employer and for the period of one (1) year after
the effective date of Executive's termination for whatever reason (the
"RESTRICTED TERM"), he will not (a) be employed in an executive or
managerial capacity by, or (b) provide whether as an employee,
independent contractor, consultant, or otherwise, any services of an
executive or managerial nature or any services similar to those
provided by Executive to the Employer during Executive's employment
with the Employer to, any company or entity engaged in the production
or sale of newspapers or news magazines in any market which is served
by the Employer or which the Employer is actively preparing to serve at
the time of Executive's termination of employment. Executive
acknowledges that the restrictions contained in this Paragraph 9A are
necessary to protect the Employer's legitimate interests in its
Confidential Information and customer relationships.
B. NONSOLICITATION OF EMPLOYEES. Executive covenants and
agrees that during Executive's employment with the Employer and the
Restricted Term, other than in the proper performance of Executive's
duties while employed by the Employer, Executive will not employ,
retain, solicit, attempt to solicit, knowingly assist in the employment
or retention of, or seek to influence or induce to leave the Employer's
employment or service any individual who is employed or retained as an
independent contractor by the Employer at any time during the two (2)
year period prior to Executive's date of termination. Executive
acknowledges that the restrictions contained in this Paragraph 9B are
necessary to protect the Employer's legitimate interests in its
Confidential Information, customer relationships, and employee
relationships.
C. INJUNCTIVE RELIEF. Executive acknowledges and agrees
that any breach or threatened breach by Executive of Paragraphs 8 and 9
of this Agreement will cause irreparable harm and continuing damages to
the Employer and that the remedy at law for any such breach or
threatened breach will be inadequate. Accordingly, in addition to any
other remedies that may be available to the Employer at law or in
equity in such event, the Employer shall be entitled to seek and
obtain, from any court of competent jurisdiction, an injunction or
injunctions, without bond or other security and without having to show
that money damages will be inadequate or impossible to determine and
without proving special damages or irreparable injury, enjoining and
restricting the breach or threatened breach. If the Employer succeeds
in securing any such relief, Executive will pay all of the costs and
expenses, including reasonable attorneys' fees, that the Employer
incurs in obtaining such relief.
10. NOTICES. Any and all notices required in connection with this
Agreement shall be deemed adequately given only if in writing and (a) personally
delivered, or sent by first class, registered, or certified mail, postage
prepaid, return receipt requested or by recognized overnight courier, (b) sent
by facsimile, provided a hard copy is mailed on that date to the party for whom
such notices are intended, or (c) sent by other means at least as fast and
reliable as first class mail. A written notice shall be deemed to have been
given to the recipient party on the earlier of (a) the date it shall be
delivered to the address required by this Agreement; (b) the date delivery shall
have been refused at the address required by this Agreement; (c) with respect to
notices sent by mail or overnight courier, the date as of which the Postal
Service or overnight courier, as the case may be, shall have indicated such
notice to be undeliverable at the address required by this Agreement; or (d)
with respect to a facsimile, the date on which the facsimile is sent and receipt
of which is confirmed. Any and all notices referred to in this Agreement, or
which either party desires to give to the other, shall be addressed to his
residence in the case of the Executive, or to its principal office in the case
of the Employer.
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11. WAIVER OF BREACH. A waiver by the Employer of a breach of any
provision of this Agreement by the Executive shall not operate or be construed
as a waiver or estoppel of any subsequent breach by the Executive. No waiver
shall be valid unless in writing and signed by an authorized officer of the
Employer.
12. ASSIGNMENT. The Executive acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Employer under this Agreement shall
inure to the benefit and shall be binding upon the successors and assigns of the
Employer. Employer covenants and agrees that it will secure the assumption by or
the agreement of any successor or assignee of this Agreement to the terms
hereof.
13. ENTIRE AGREEMENT. This Agreement sets forth the entire and
final agreement and understanding of the parties and contains all of the
agreements made between the parties with respect to the subject matter hereof.
This Agreement supersedes any and all other agreements, either oral or in
writing, between the parties hereto, with respect to the subject matter hereof;
provided, however, that this Agreement does not supersede any stock option or
other equity grants provided to the Executive under the terms of any stock
option or long-term incentive program or agreement. No change or modification of
this Agreement shall be valid unless in writing and signed by the Employer and
the Executive. If any provision of this Agreement shall be found invalid or
unenforceable for any reason, in whole or in part, then such provision shall be
deemed modified, restricted, or reformulated to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement, as the case may require, and this Agreement shall be
construed and enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified, restricted, or
reformulated or as if such provision had not been originally incorporated
herein, as the case may be. The parties further agree to seek a lawful
substitute for any provision found to be unlawful; provided, that, if the
parties are unable to agree upon a lawful substitute, the parties desire and
request that a court or other authority called upon to decide the enforceability
of this Agreement modify those restrictions in this Agreement that, once
modified, will result in an agreement that is enforceable to the maximum extent
permitted by the law in existence at the time of the requested enforcement.
14. HEADINGS. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the provisions
hereof.
15. EXECUTION OF AGREEMENT. This Agreement may be executed in
several counterparts, each of which shall be considered an original, but which
when taken together, shall constitute one agreement.
16. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without
reference to its conflict of law provisions.
17. LITIGATION EXPENSES. In the event Executive brings an action
seeking to enforce his rights under this Agreement, the Employer will pay, on a
regular and current basis, all of Executive's legal fees and expenses incurred
in connection with such action. Executive will be obligated to return all
amounts so advanced only in the event of a final judgment or arbitration
determination denying in full Executive's requested relief.
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18. INDEMNIFICATION. During and after the term hereof, Executive
shall be entitled to indemnification by Employer from and against any loss, cost
or expense incurred by Executive in connection with any threatened, pending or
completed action, suit or proceeding, by reason of the fact that Executive is or
was the Publisher of the Chicago Sun-Times, or Chief Operating Officer of the
Employer's Chicago Group of Employer to the fullest extent permitted under
applicable law. Executive shall be entitled to advancement of expenses to the
fullest extent permitted under applicable law.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have set their signatures on the date
first written above.
XXXXXXXXX INTERNATIONAL INC.
a Delaware corporation
By: /s/ Xxxxxx X. Paris /s/ Xxxx Xxxxxxxxxxx
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Its: President & CEO Xxxx Xxxxxxxxxxx
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