EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AGREEMENT, dated as of the 27th day of September, 2006 (this
"Agreement"), by and between Journal Register Company, a Delaware corporation
(the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Executive"), amends and restates
the Employment Agreement dated as of March 5, 2003 between the Company and the
Executive, as amended by the First Amendment thereto dated as of May 3, 2006
(such agreement, as so amended, the "Prior Agreement").
WHEREAS, the Executive serves as Chairman and Chief Executive Officer of
the Company; 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:
SECTION 1. 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 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
2
the Executive's termination of employment for any reason, as provided for 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 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
3
senior executives of the Company; PROVIDED, that such incentive plans,
practices, policies shall 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. In
addition, from the date the Employment Period ends for any reason and/or the
Executive's employment terminates for any reason, other than a termination by
the Company for Cause or by the Executive without Good Reason (as those terms
are defined below), the Company shall provide the Executive and his spouse with
the Post-Retirement Health Benefits. The "Post-Retirement Health Benefits" means
the following benefits during the remaining lifetime of the Executive and the
remaining lifetime of the Executive's surviving spouse (if he has a surviving
spouse): (x) health benefits (including medical, prescription, dental and vision
coverage, if and to the extent applicable) under the plans provided to the
Company's executive officers, as in effect from time to time, or (y) benefits
under separate arrangements that are similar to the health benefits described in
clause (x), taking into account in determining similarly the benefits provided
and the costs and tax consequences to the Executive and his wife (in either
case, such benefits are referred to as the "Post-Retirement Health Benefits"),
PROVIDED, that the Post-Retirement Health Benefits may be made secondary to any
other benefits to which the Executive and his wife may be entitled under another
employer provided plan or a governmental plan such as Medicare.
(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.
4
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.
(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.
5
(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;
(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 a Change of Control 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,
6
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.
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
7
(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) the Company shall provide the Post-Retirement Health Benefits as
set forth above;
(3) 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 (other
than the medical, prescription and dental benefits included in the
Post-Retirement Health 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, PROVIDED, that, if the Executive becomes reemployed with
another employer and is eligible to receive such benefits under another
employer provided plan, the 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;
(4) 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;
(5) 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;
(6) 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,
8
for $1.00, any club memberships held by the Company for the Executive's use
immediately before the Date of Termination;
(7) for three years 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
(8) 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
Post-Retirement Health Benefits to his surviving spouse, if any, 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 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, but without duplication of the Post-Retirement Health Benefits.
(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, the Post-Retirement Health
Benefits, 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, but without duplication of the
Post-Retirement Health Benefits.
(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
9
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.
(e) SECTION 409A DELAY. Notwithstanding the foregoing provisions of this
Agreement, to the extent required in order to comply with Section 409A of the
Code (as defined in Section 7), amounts and benefits to be paid or provided
under this Section 5 and the Post-Retirement Health Benefits provided pursuant
to Section 3(b)(4) of this Agreement shall be paid (with interest on any delayed
payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code) or provided to the Executive on the first business day after the date
that is six months following the Date of Termination, PROVIDED, that if the
foregoing requires delay of the Post-Retirement Health Benefits by six months,
then to the extent permissible under Section 409A, the Post-Retirement Health
Benefits shall be provided without interruption of coverage, but at the
Executive's expense during the first six months following 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
10
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 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
11
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
(4) permit the Company to participate in any proceedings relating to
such claim;
12
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 ▇▇▇ 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 ▇▇▇ 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 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:
13
(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 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
14
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.
(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.
15
(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
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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 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.
16
(f) This Agreement, upon its execution, supersedes the Prior Agreement,
which in turn superseded 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.
(g) If any compensation or benefits provided by this Agreement may result
in the application of Section 409A of the Code, the Company shall, in
consultation with the Executive, modify the Agreement in the least restrictive
manner necessary in order to exclude such compensation from the definition of
"deferred compensation" within the meaning of such Section 409A or in order to
otherwise 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 without any diminution in
the value of the payments to the Executive.
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman of the
Compensation Committee
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
