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EXHIBIT 10.36
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 XXX X.
XXXXXX ("Xxxxxx").
1. Retention Award. The Company will pay Xxxxxx a retention award of
$600,000 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 (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 Xxxxxx remains in the
continuous employ of the Company or PBC until such earlier date.
2. Transaction Incentives. 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. Xxxxxx' employment with the Company will terminate at the
time of the Closing.
(a) Base Transaction Incentive Award. The Company will pay to
Xxxxxx a transaction incentive award of $1,000,000. 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 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) Supplemental 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 basis as active senior executives for the two-year
period beginning on the date of the Closing. If Xxxxxx defers the beginning date
of his retirement pension under the Company's Supplemental Executive Benefit
Pension Plan ("SERP") until November 1, 2000 (or later), then (1) the Company
will waive the early retirement reduction adjustment to the amount of the
retirement income that then becomes payable to Xxxxxx under the SERP, and (2)
Xxxxxx will be entitled to SERP and continuing group health benefits as if he
had retired from active service with the Company after reaching his normal
retirement date.
(d) Supplemental Transaction Incentive Award. The Company will make
a supplemental transaction incentive payment to Xxxxxx in an amount equal to X
minus Y, where:
X is equal to the lesser of $2,476,000, or an amount equal to
2.99 times Xxxxxx' "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
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vesting of stock options and other benefits (other than the
supplemental transaction incentive 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 Code attributable to the
transactions consummated as part of the Closing.
(e) Payments. The amounts described in subparagraphs (a), (b) and
(d) of this paragraph 2 will be payable to Xxxxxx at the Closing or, in the case
of the amount described in subparagraph (d), as soon as practicable after the
Closing as and when such amount is ascertained. 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" paid or payable by the Company
to Xxxxxx 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 Xxxxxx as soon as practicable following his
termination of employment or service 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
Xxxxxx' termination of employment or service 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 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 Xxxxxx' consent, the Board may not require an installment payout
that is less frequent than quarterly over a period of more than four years.
3. Salary and Bonus. At or as soon as practicable after the Closing,
the Company will pay Xxxxxx the unpaid amount, if any, of his 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' 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' estate will be entitled to receive the amounts that otherwise
would have been payable to him hereunder.
5. General Provisions.
(a) Nothing in this agreement is intended to create a contract of
employment between Xxxxxx and the Company, or to interfere in any way with the
right of the Company to terminate Xxxxxx' 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 Xxxxxx
under this agreement, to the extent not previously satisfied. Xxxxxx 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
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and assumption. All payments made pursuant to this agreement will be subject to
applicable withholding taxes.
(c) No amounts paid or payable under paragraphs 1 and 2 of this
agreement will be treated as compensation for purposes of calculating Xxxxxx'
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). Subject to the
preceding sentence, the amount of Xxxxxx' SERP benefit will be determined on the
basis of his service and compensation as of the end of 1998 and without regard
to any service and compensation performed or earned, as the case may be, after
1998.
(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 St. Louis, Missouri
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.
(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' employment at any time.
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/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
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