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EXHIBIT 10.39
PARTICIPATION AND SEVERANCE AGREEMENT
AGREEMENT, made and entered into as of May 25, 1998, by and between
PULITZER PUBLISHING COMPANY, a Delaware corporation (the "Company"), and C.
XXXXX XXXXXX (the "Xxxxxx").
1. Retention Award. The Company will pay $250,000 to Xxxxxx on the
earlier of (a) January 1, 2000, or (b) the date of the closing ("Closing") of
the acquisition of Pulitzer Broadcasting Company and its subsidiaries
(collectively, "PBC") by Hearst-Argyle Television, Inc. pursuant the Agreement
and Plan of Merger dated May 25, 1998, by and among the Company, Pulitzer Inc.
and Hearst-Argyle Television, Inc., PROVIDED that Xxxxxx remains in the
continuous employ of the Company or PBC until such earlier date.
2. Transaction Incentive Awards. If the Closing occurs and if Xxxxxx
remains in the continuous employ of the Company or PBC until the date on which
the Closing occurs, then Xxxxxx will be entitled to the payments and benefits
described in (a) - (d) below, in addition to the amount payable pursuant to
paragraph 1 above.
(a) Transaction Completion Award. The Company will pay to Xxxxxx a
transaction completion bonus of $375,000 on or as soon as practicable after the
date on which the Closing occurs. Xxxxxx will not be entitled to participate in
any discretionary bonus pool to be established for the benefit of certain
employees of the Company and PBC in connection with the Closing.
(b) Cashout of Unexercised Options. The Company will make a cash
payment to Xxxxxx in exchange for the cancellation of all of Xxxxxx'x options to
purchase Company stock that are outstanding immediately prior to the Closing,
whether or not vested. The amount of the cash payment for each such outstanding
option will be equal to the difference between the value and the exercise price
of the shares of Company stock covered by the option. For this purpose, unless
the Company, acting in a manner that is uniformly applicable to all option
holders, determines otherwise, the value of the shares of Company stock covered
by an outstanding option will be equal to the number of shares covered by the
option multiplied by the average daily closing price per share for the ten
trading days immediately prior to the date of the Closing. The aggregate option
cashout amount, as so determined, will be payable to Xxxxxx on or as soon as
practicable after the date the Closing occurs.
(c) Continued Benefits. Xxxxxx will be permitted to continue to
participate in the Company's group health (medical and dental) and life
insurance plans on the same contributory basis as active employees for the
period beginning on the date of the Closing and ending on the earliest of (1)
the second anniversary of the date of Closing, (2) the date of Xxxxxx'x death,
and (3) the date Xxxxxx becomes eligible to receive benefit coverage under
another employer plan. Xxxxxx'x right to receive COBRA continuation coverage
will not be affected by the continuing group health plan coverage afforded under
the preceding sentence.
(d) Severance Award. Xxxxxx'x employment with the Company and
PBC will terminate at the time of the Closing. At or as soon as practicable
after the Closing, the Company will make a separation payment to Xxxxxx in an
amount equal to X minus Y, where:
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X is equal to the lesser of $928,000, or an amount equal to 2.99
times Xxxxxx'x "base amount" (as defined in Section 280G(b)(3) of
the Internal Revenue Code of 1986); and
Y is equal to the total value (determined in accordance with
Section 280G of the Internal Revenue Code and regulations
thereunder) of all payments, accelerated vesting of stock options
and other benefits (other than the severance award payable under
this paragraph 2(d)) provided or to be provided to or for the
benefit of Xxxxxx that are considered to be contingent on the
change in ownership of the Company within the meaning and for the
purposes of Section 280G(b)(2)(A)(i) of the Internal Revenue Code
attributable to the transactions consummated as part of the
Closing.
The Company may cause payment of the severance award to be deferred if and to
the extent that (1) the amount thereof cannot be finally ascertained, or (2) the
deferral is necessary in order to avoid the loss of a deduction therefor by
reason of the executive compensation deduction limitation of Section 162(m) of
the Internal Revenue Code. The portion of the severance award that is deferred
(if any) will be payable to Xxxxxx as soon as practicable after the amount
thereof is ascertained or the section 162(m) deduction limitation no longer
applies, as the case may be.
3. Salary and Bonus. At or as soon as practicable after the Closing,
the Company will pay Xxxxxx the unpaid amount, if any, of Xxxxxx'x base salary
earned through the date of the Closing, plus the pro rata amount of his annual
bonus for the year in which the Closing occurs. Except as otherwise specifically
provided, nothing contained in this agreement will affect Xxxxxx'x rights to
receive any accrued and unpaid amounts or benefits to which he is or may become
entitled to receive under and in accordance with the terms and provisions of any
Company employee benefit plan in which Xxxxxx is a participant.
4. Death. If the Closing occurs and if Xxxxxx dies before the Closing
and while he is still an employee of the Company or PBC, then, for the purpose
of this agreement, Xxxxxx will be deemed to have lived and to have continued to
be employed by the Company or PBC through the date the Closing occurs. In such
event, Xxxxxx'x estate will be entitled to receive the amounts that otherwise
would have been payable to Xxxxxx hereunder.
5. General Provisions.
(a) Nothing in this agreement is intended to create a contract of
employment between Xxxxxx and the Company or PBC, or to interfere in any way
with the right of the Company or PBC to terminate Xxxxxx'x employment at any
time.
(b) In connection with the Closing, the Company may assign to
Pulitzer Inc., and Pulitzer Inc. may assume, all or part of the payment and
benefit obligations of the Company under this agreement. Xxxxxx will have no
further claim against the Company or PBC with respect to any such payment
obligation that is so assigned to and assumed by Pulitzer Inc. All payments made
pursuant to this agreement will be subject to applicable withholding taxes.
(c) No payments made pursuant to this agreement will be treated as
compensation for purposes of calculating Xxxxxx'x benefits, if any, under any
retirement/pension plan maintained
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by the Company and/or PBC (other than amounts payable under paragraph 3 that are
otherwise taken into account for purposes of such plan or plans).
(d) This agreement will be governed by and construed in accordance
with the laws of the State of Delaware without regard to its conflict of laws
provisions.
(e) No amendment or modification of this agreement may be made
except by a written instrument signed by the Company and Xxxxxx.
(f) All disputes arising under or related to this agreement will be
resolved by arbitration. Such arbitration will be conducted by an arbitrator
mutually selected by the Company (or Pulitzer Inc., if the dispute relates to an
obligation of the Company that is assumed by Pulitzer Inc. at the Closing) and
Xxxxxx (or, if the Company or Pulitzer Inc., as the case may be, and Xxxxxx are
unable to agree upon an arbitrator within ten days, then the Company or Pulitzer
Inc., as the case may be, and Xxxxxx will each select an arbitrator, and the
arbitrators so selected will mutually select a third arbitrator, who will
resolve such dispute). Such arbitration will be conducted in accordance with the
applicable rules of the American Arbitration Association. Any decision rendered
by an arbitrator pursuant hereto may be enforced by a court of competent
jurisdiction without review of such decision by such court. All attorneys' fees
and costs of the arbitration will in the first instance be borne by the
respective party incurring such costs and fees, but the arbitrator will award
costs and attorneys' fees to the prevailing party.
(g) This agreement constitutes the entire agreement between the
parties hereto relating to the matters encompassed hereby and supersedes any
prior oral or written agreements relating thereto.
IN WITNESS WHEREOF, the undersigned have executed this agreement as of
the date first written above.
PULITZER PUBLISHING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
/s/ C. Xxxxx Xxxxxx
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C. Xxxxx Xxxxxx
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