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EXHIBIT 10.38
PARTICIPATION AGREEMENT
AGREEMENT made and entered into as of May 25, 1998, by and between
PULITZER PUBLISHING COMPANY, a Delaware corporation (the "Company"), and XXXXXX
X. XXXXXXX ("Xxxxxxx").
1. Retention Award. The Company will pay Xxxxxxx a retention award
of $450,000 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 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 Xxxxxxx remains in the continuous
employ of the Company until such earlier date.
2. Transaction Incentives. If the Closing occurs and if Xxxxxxx
remains in the continuous employ of the Company until the date on which the
Closing occurs, then Xxxxxxx will be entitled to the payments and benefits
described in (a) and (b) below, in addition to the amount payable pursuant to
paragraph 1 above.
(a) Transaction Incentive Award. The Company will pay Xxxxxxx a
fixed transaction incentive award of $450,000. The Compensation Committee of the
Company's Board of Directors (the "Board"), acting in its sole discretion, may
increase the amount of the transaction incentive award. The amount of the
increase, if any, is expected to range from zero to $225,000.
(b) Cashout of Unexercised Options. The Company will make a cash
payment to Xxxxxxx in exchange for the cancellation of all of his 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.
(c) Payment. The amounts described in subparagraphs (a) and (b) of
this paragraph 2 will be payable to Xxxxxxx at the Closing. Notwithstanding the
foregoing, the Company will defer payment of any amount described in paragraph 1
and this paragraph 2 which constitutes "applicable employee remuneration"
(within the meaning of Section 162(m)(4) of the Code) to the extent that such
amount, when added to the "applicable employee remuneration" previously paid by
the Company to Xxxxxxx during the year in which the Closing occurs, exceeds
$1,000,000. The deferral amount, together with interest at a rate to be
determined by the Company, will be payable to Xxxxxxx as soon as practicable
following his termination of employment with the Company and its affiliates
(including, without limitation, Pulitzer Inc.) or following his earlier death.
Payment may be further deferred until the first day of the year following
Xxxxxxx'x termination of employment with the Company and its affiliates if and
to the extent necessary to avoid a loss of deduction by the Company or any of
its affiliates by reason of the application of the limitation of Section 162(m)
of
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the Code in the termination year. The Board of Directors of the Company,
acting in its sole discretion, may permit or require an accelerated payment of
the deferral amount and/or an installment payout (in lieu of a lump sum) on such
terms and conditions as it deems appropriate, provided, however, that, without
Xxxxxxx'x consent, the Board may not require an installment payout that is less
frequent than quarterly over a period of more than four years.
3. Death. If the Closing occurs and if Xxxxxxx dies before the
Closing and while he is still an employee of the Company, then, for the purpose
of this agreement, Xxxxxxx will be deemed to have lived and to have continued to
be employed by the Company through the date the Closing occurs. In such event,
Xxxxxxx'x estate will be entitled to receive the amounts that otherwise would
have been payable to him hereunder.
4. General Provisions.
(a) Nothing in this agreement is intended to create a contract of
employment between Xxxxxxx and the Company, or to interfere in any way with the
right of the Company to terminate Xxxxxxx'x employment at any time.
(b) In connection with the Closing, the Company may assign to
Pulitzer Inc., and Pulitzer Inc. may assume, the Company's obligations to
Xxxxxxx under this agreement, to the extent not previously satisfied. Xxxxxxx
will look solely to Pulitzer Inc. and will have no further claim against the
Company for payment of amounts that become due hereunder following any such
assignment and assumption. All payments made pursuant to this agreement will be
subject to applicable withholding taxes.
(c) No amounts paid or payable under this agreement will be treated
as compensation for purposes of calculating Xxxxxxx'x benefits, if any, under
any retirement/pension plan maintained by the Company and/or Pulitzer Inc. or
any of their affiliates (including, without limitation, the Company's
Supplemental Executive Benefit Pension Plan).
(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 Xxxxxxx.
(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
Xxxxxxx (or, if the Company or Pulitzer Inc., as the case may be, and Xxxxxxx
are unable to agree upon an arbitrator within ten days, then the Company or
Pulitzer Inc., as the case may be, and Xxxxxxx 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 St. Louis,
Missouri in accordance with the applicable rules of the American Arbitration
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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/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
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