EXHIBIT 10.8
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 10th day of October, 2001 (this
"Agreement"), by and between Journal Register Company, a Delaware corporation
(the "Company"), and Xxxxxx X. Xxxxxxx (the "Executive").
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 dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined herein). The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the current Company and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
that ensure that the compensation and benefits expectations of the Executive
will be satisfied and that are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
SECTION 1. CERTAIN DEFINITIONS. (a) "Effective Date" means the
first date during the Change of Control Period (as defined herein) on which a
Change of Control occurs. Notwithstanding anything in this Agreement to the
contrary, if a Change of Control occurs and if the Executive's employment with
the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (1) was at the request of a third party that has taken
steps reasonably calculated to effect a Change of Control or (2) otherwise arose
in connection with or anticipation of a Change of Control, then "Effective Date"
means the date immediately prior to the date of such termination of employment.
(b) "Change of Control Period" means the period commencing on the
date hereof and ending on the third anniversary of the date hereof.
(c) "Affiliated Company" means any company controlled by,
controlling or under common control with the Company.
(d) "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"), other than X.X. Xxxxxxx,
Xxxxxx & Co., LLC, and its affiliates (collectively, "Warburg"), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 50.1% 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, HOWEVER, that, for purposes of this Section 1(d), 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(d)(3)(A) and 1(d)(3)(B).
(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, HOWEVER, 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) no
Person (excluding Warburg, 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, 50.1% 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 (B) 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 period commencing on the Effective Date and ending on
the third anniversary of the Effective Date (the "Employment Period"). The
Employment Period shall terminate upon the Executive's termination of employment
for any reason.
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SECTION 3. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (1)
During the Employment Period, (A) the Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the office where the Executive was
employed immediately preceding the Effective Date or at any other location less
than 35 miles from such office.
(2) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to 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 the Executive hereunder, to use the Executive's
best efforts to perform faithfully and efficiently such responsibilities.
(b) COMPENSATION. (1) BASE SALARY. During the Employment Period,
the Executive shall receive an annual base salary (the "Annual Base Salary") at
an annual rate at least equal to 12 times the highest monthly base salary paid
or payable, including any base salary that has been earned but deferred, to the
Executive by the Company and the Affiliated Companies in respect of the 12-month
period immediately preceding the month in which the Effective Date occurs. The
Annual Base Salary shall be paid at such intervals as the Company pays executive
salaries generally. During the Employment Period, the Annual Base Salary shall
be reviewed at least annually, beginning no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date. Any
increase in the Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. The Annual Base Salary shall
not be reduced after any such increase and the term "Annual Base Salary" shall
refer to the Annual Base Salary as so increased.
(2) ANNUAL BONUS. In addition to the Annual Base Salary, the
Executive shall be entitled to earn, for each fiscal year ending during the
Employment Period, a commercially reasonable annual bonus (the "Annual Bonus")
based on the achievement of commercially reasonable performance criteria as
determined by the Board. Each such Annual Bonus 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 peer executives of the Company and
the Affiliated Companies, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than
those provided generally at any time after the Effective Date to other peer
executives of the Company and the Affiliated Companies.
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(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 and the Affiliated
Companies (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 peer
executives of the Company and the Affiliated Companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
that are less favorable, in the aggregate, than those provided generally at any
time after the Effective Date to other peer executives of the Company and the
Affiliated Companies.
(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 most favorable policies, practices and
procedures of the Company and the Affiliated Companies in effect generally at
any time after the Effective Date with respect to other peer executives of the
Company and the Affiliated Companies.
(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 peer
executives of the Company and the Affiliated Companies.
(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 peer
executives of the Company and the Affiliated Companies.
(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
peer executives of the Company and the Affiliated Companies.
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
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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.
(b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. "Cause" means:
(1) the willful and continued failure of the Executive to
perform substantially the Executive's duties (as contemplated by
Section 3(a)(1)(A)) with the Company or any Affiliated Company
(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 upon the instructions of the Chief Executive Officer of
the Company or a senior officer of the Company 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, excluding
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for this purpose an isolated action not taken in bad faith and
that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(2) any material breach by the Company of the
terms of this Agreement other than an isolated breach not
occurring in bad faith and that is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(3) the Company's requiring the Executive (i) to
be based at any office or location other than as provided in
Section 3(a)(1)(B), (ii) to be based at a location other than the
principal executive offices of the Company if the Executive was
employed at such location immediately preceding the Effective
Date, or (iii) to travel on Company business to a substantially
greater extent than required immediately prior to the Effective
Date;
(4) any purported termination by the Company of
the Executive's employment otherwise than as expressly permitted
by this Agreement; or
(5) any failure by the Company to comply with and
satisfy Section 10(c).
The Executive's mental or physical incapacity following the occurrence of an
event described above in clauses (1) through (5) shall not affect the
Executive's ability to terminate employment for Good Reason.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive 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). 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 the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination 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), as the case may be, (2) if
the Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, and (3) if the Executive's
employment is
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terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (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:
(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 Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (ii) the product of (x) the average Annual Bonus paid or
payable to the Executive over the three most recently completed
fiscal years (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 Executive's Annual Base Salary and (y) the
Average Annual Bonus; 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 in which the Executive participates
(collectively, the "SERP"), 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 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 or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
the Affiliated Companies and their families, PROVIDED,
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HOWEVER, 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; and
(4) 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, 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 peer 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 peer 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 peer
executives of the Company and the Affiliated Companies and their families.
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(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment is terminated for Cause during the Employment Period, the Company
shall provide to the Executive (1) the Executive's Annual Base Salary through
the Date of Termination, (2) the amount of any compensation previously deferred
by the Executive, and (3) the Other Benefits, in each case, to the extent
theretofore unpaid, 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
provide to the Executive the Accrued Obligations and the timely payment or
delivery of the Other Benefits, and shall have no other severance obligations
under this Agreement. In such case, all the Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination.
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.
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").
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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
Ernst & Young, LLP, or such other nationally recognized certified public
accounting firm as may be designated by the Board (the "Accounting Firm"). The
Accounting Firm shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice from
the Executive that there has been a Payment or such earlier time as is requested
by the Company. In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting the Change of Control,
the Board may appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). 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.
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(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,
(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
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(4) permit the Company to participate in any proceedings relating
to such claim;
PROVIDED, HOWEVER, 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
direct the Executive to pay the tax claimed and 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, HOWEVER, that, if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and 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
advance or with respect to any imputed income in connection with such advance;
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 an amount advanced by the Company
pursuant to Section 8(c), the Executive becomes entitled to receive any refund
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
the receipt by the Executive of an amount advanced by the Company 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 such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
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.
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(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. CONFIDENTIAL INFORMATION. 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. 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.
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(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.
(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
14
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) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a), prior to the Effective Date, the Executive's
employment may be terminated by either the Executive or the Company at any time
prior to the Effective Date, in which case the Executive shall have no further
rights under this Agreement. This Agreement, upon its execution, supersedes the
Agreement between the Company and the Executive dated as of July 17, 2001. From
and after the Effective Date, except as specifically provided herein, this
Agreement shall supersede any other agreement between the parties with respect
to the subject matter hereof.
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/ Xxxx X. Xxxxxxx
________________________________
Name: Xxxx X. Xxxxxxx
Title: Executive Vice
President, Chief
Financial Officer and
Secretary
/s/ Xxxxxx X. Xxxxxxx
___________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman, President and
Chief Executive Officer
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