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EXHIBIT 10.5
[TIMES MIRROR LETTERHEAD]
April 7, 2000
Xxxxx Xxxxxxxxx III
Dear Skip:
EMPLOYMENT AND SEVERANCE AGREEMENT
The Times Mirror Company ("Times Mirror") has entered into an agreement dated as
of March 13, 2000 with Tribune Company ("Tribune") under which Times Mirror will
merge into Tribune (the "Merger Agreement") and on the date of the completion of
the merger ("Effective Date"), Times Mirror will cease to exist as a corporate
entity. If, as provided below, your employment continues beyond the Effective
Date, you will be employed by Tribune or the Times Mirror subsidiary or division
by which you are now employed that will then be owned by Tribune. This agreement
(the "Agreement"), which is effective as of the date hereof, will set forth (i)
the terms of your employment; (ii) the enhanced severance benefits that you will
receive if your employment is terminated under the terms of, and within the
Severance Protection Period as defined in, the Severance Attachment to this
Agreement; (iii) certain compensation and benefits as set forth in the Certain
Compensation and Benefits attachment; and (iv) certain employee benefits to
which you are entitled as set forth in the Certain Employee Benefits attachment.
However, it is important that Times Mirror and Tribune retain your services as a
key employee in accordance with the terms and conditions contained in this
Agreement to ensure the continuing and orderly conduct of business affairs.
1. Continued Service.
(a) Subject to the provisions of paragraph 1 (d) of this Agreement, Times
Mirror agrees to continue your employment and you agree to remain in
your present position on the terms contained in this Agreement. If your
active employment status is terminated prior to the Effective Date for
any reason other than as set forth in paragraph 1 (d), you will remain
as an inactive employee on a paid leave of absence until, and
termination will become effective on, the Effective Date to enable you
to receive the benefits set forth in this Agreement.
(b) This Agreement and all the obligations of Times Mirror to you hereunder
will terminate if and at such time as Times Mirror informs you in
writing that the
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merger with Tribune will not take place. In the event of such
termination, you will remain in the employ of Times Mirror, or its
division or subsidiary, under those terms and conditions which presently
apply to your employment.
(c) Upon the Effective Date, this Agreement and all the obligations of Times
Mirror hereunder, shall be assigned to and assumed by Tribune.
(d) All rights and obligations of any party to this Agreement, including but
not limited to, those set forth in any Attachment to this Agreement
(except to the extent you are fully vested in or otherwise entitled to
any employee benefit after the termination of your employment in
accordance with the terms of the relevant benefit plan), will terminate
immediately in the event (i) you voluntarily resign from your position
prior to the Effective Date for any reason which is not within the terms
of paragraph (b) of the Severance Attachment or (ii) you are terminated
for cause. For the purpose of this Agreement, "cause" shall mean any
material breach of your obligations to Times Mirror or Tribune, the
commission by you of any criminal act (except for traffic or any other
minor offences), or any act of dishonesty or abuse of office.
2. Duties and Benefits.
(a) While you are employed under the terms of this Agreement during the
Severance Protection Period:
(i) You will continue to serve as a key employee and continue to fully
perform those functions, duties and responsibilities which are
assigned to you as of the date of this Agreement or which may
reasonably be assigned to you in the future;
(ii) There shall be no change in your salary or bonus opportunity and
no change in the employee benefit programs or perquisites in which
you now participate except to the extent that any such changes are
permitted under the provisions of Section 6.1 (p) of the Merger
Agreement, a copy of which section of said agreement is attached
to this Agreement, or are determined by Tribune after the
Effective Date. As of the Effective Date, the terms of your
employment with Tribune will be subject to the provisions of
Section 6.9 of the Merger Agreement, a copy of which section of
said agreement is attached to this Agreement. However, your
employment shall remain subject to the terms set forth in the
Severance Attachment and in the event of any conflict between the
terms of Section 6.9 of the Merger Agreement and the provisions of
the Severance Attachment, the provisions of the Severance
Attachment shall at all times control.
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(b) After the Effective Date, you will be entitled to a bonus incentive
award under the Executive Incentive Plan at the time and in accordance
with the terms of the attachment to this Agreement entitled "Certain
Compensation and Benefits".
3. Enhanced Severance Benefits.
(a) You will be entitled to receive the enhanced severance benefits upon the
satisfaction of certain conditions precedent as set forth in the
Severance Attachment to this Agreement. In order for you to be eligible
to receive these enhanced severance benefits, the following conditions
must be satisfied: (i) the merger of Times Mirror into Tribune must be
completed; and either (ii) your employment must be terminated by Times
Mirror or Tribune prior to the end of the Severance Protection Period;
or (iii) you terminate your employment after the Effective Date for the
limited good reasons included within the terms of the provisions of the
Severance Attachment. Upon the satisfaction of said conditions
precedent, you will receive the enhanced severance benefits set forth in
the Severance Attachment to this Agreement. However, (i) in the event
that the merger of Times Mirror into Tribune is completed but your
employment is not terminated in the manner set forth above within the
Severance Protection Period as defined in the Severance Attachment, or
(ii) your employment is terminated under the provisions of paragraph 1
(d), you will not receive the enhanced severance benefits.
(b) Since the occurrence of the merger of Times Mirror into Tribune, and the
resulting enhanced severance payments, were totally unexpected and
therefore you had no opportunity at any earlier date to make any
decision with respect to how such payments, in the event that the
conditions precedent which apply to them are satisfied, may be made to
you, the enhanced severance payments will be paid to you in cash or
deferred under the terms of the Times Mirror Deferred Compensation Plan
for Executives, or some combination thereof, in accordance with your
deferral election, made and delivered in accordance with instructions
sent to you.
4. Stock Options and Restricted Stock. The provisions relating to any Times
Mirror stock options or restricted stock, if any, are set forth in the
attachment to this Agreement entitled "Certain Compensation and Benefits".
5. Certain Employee Benefits. Certain other employee benefits for which you are
eligible and in which you are, or on the Effective Date will be, vested or
otherwise are entitled to receive are set forth in the Attachment to this
Agreement entitled "Certain Employee Benefits". You will be entitled to
receive such certain employee benefits in accordance with their respective
terms and provisions. However, if this Agreement is terminated under the
provisions of paragraphs 1 (b) or 1 (d), you will be entitled to receive
only those Certain Employee Benefits in which you are vested or would
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otherwise be entitled to receive in accordance with the terms and provisions
of said benefit plans.
6. Taxes and other Withholding. Except as provided in the Severance Attachment
with respect to payments to compensate you for any applicable excise taxes,
all payments made to you under this Agreement shall be subject to any and
all applicable withholdings, including all withholdings for any related
federal, state or local taxes. You shall be solely responsible for any and
all income taxes incurred by you as a result of your receipt of any payment
contemplated or described in this Agreement. Subject to limitations imposed
by Times Mirror employee benefit plans, these payments may also be reduced
by any withholdings, contributions or deductions previously authorized by
you.
7. Death. In the event of your death, when amounts or benefits owed to you by
Times Mirror or Tribune under this Agreement or any attachments to this
Agreement remain unpaid or unreceived, any such amount or benefit shall be
paid to your surviving spouse or, if said spouse does not survive you, to
your estate, in accordance with the provisions of this Agreement and in
accordance with the terms of any applicable employee benefit plan.
8. Company Information. You acknowledge that in the course of your employment
with Times Mirror and/or Tribune, certain information has been disclosed to
you in confidence that was for the use of Times Mirror and/or Tribune or any
of their respective subsidiaries or affiliates ("Company Information"). You
understand and agree that unless such Company Information is placed into the
public domain by a person other than yourself, you will keep such Company
Information confidential at all times during and, after your employment by
Times Mirror and/or Tribune, will not disclose or communicate Company
Information to any third party and will not make use of Company Information
on your own behalf or on behalf of any third party. The undertaking set
forth in this paragraph shall survive the termination of this Agreement.
9. Restrictive Covenants. In the event that the Enhanced Severance Benefits
described in paragraph 3 are payable to you, then:
(a) You agree that for a period of 24 months following the date on which
your employment with Times Mirror or Tribune is terminated by Times
Mirror or Tribune, you shall not become employed in a comparable or
higher level position of any entity or business which is engaged in any
business activity which constitutes direct competition with Times
Mirror, Tribune or any significant subsidiary or division of either of
them, without the prior express written consent of the Chief Executive
Officer of Times Mirror or Tribune, whichever is applicable.
(b) You agree that for a period of 12 months after the date on which your
employment is terminated, you will not directly or indirectly (either on
your own behalf or on
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behalf of any other person or entity) attempt to persuade or solicit any
current or prospective customer of Times Mirror or Tribune or any
subsidiary or division of either of them with whom you had contact
during your employment (i) to cease to do business or to reduce the
amount of business which any customer of Times Mirror or Tribune, or any
division or subsidiary of either of them, has customarily done or
contemplates doing with Times Mirror or Tribune, or (ii) to do or expand
business with a competitor of Times Mirror or Tribune, or any division
or subsidiary of either of them.
(c) You further agree that for a period of 12 months after the date on which
your employment is terminated, for any reason, you will not, directly or
indirectly, either on your own behalf or on behalf of any other person
or entity, solicit any person who is considered to be a management
employee of Times Mirror or Tribune, or any division or subsidiary
thereof, to terminate such employment, without the prior express written
consent of the Chief Executive Officer of Times Mirror or Tribune,
whichever is applicable.
10. Release. In exchange for the additional benefits to be provided to you under
this Agreement, you, or yourself and your heirs, executors, administrators
and assigns, hereby release Times Mirror, Tribune and their respective
affiliate and subsidiary companies, and their respective directors,
officers, associates, employees, partners and agents from any claims,
liabilities or causes of action whether known or unknown, which you ever had
or now have to the date of this Agreement, for or by reason of any matter or
cause arising out of or related to your employment by Times Mirror or
Tribune, or the termination thereof, including without limitation, any
claim, liability or cause of action arising under any federal, state or
local statute, rule or regulation, including any claim of discrimination
under the Age Discrimination in Employment Act, except that you do not
release Times Mirror or Tribune and their respective affiliate and
subsidiary companies from any obligation under the terms of this Agreement,
the Merger Agreement or from any vested benefit under the terms of any
employee benefit plan.
11. Revocation Period.
(a) You acknowledge that you have been given a period of at least twenty-one
(21) days to review and consider this Agreement before signing it. You
further understand that you may use as much of the 21-day period as you
wish before signing it.
(b) You also understand that you may revoke this release of your rights and
claims within seven (7) days after signing this Agreement. Revocation
may be made by delivering a written notice of revocation to Xxxxx X.
Xxxxxxx, Senior Vice President, Human Resources of Times Mirror. For
this revocation to be effective, Xx. Xxxxxxx must receive written notice
no later than the close of business on the
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seventh day after you have signed this Agreement. However, if you elect
to revoke this release, the rights and obligations of both you and Times
Mirror (and Tribune, if applicable) under this Agreement shall in all
respects terminate, it will not be effective or enforceable, and you
will not receive the benefits and payment described in this Agreement.
(c) Provided that you have complied with all of the terms and conditions of
this Agreement, and provided further that you have not exercised your
revocation rights, it shall become effective on the day which
immediately follows the expiration of the above seven-day revocation
period described in the preceding paragraph.
12. Disputes. In the event any disputes arise under the provisions of this
Agreement, which disputes cannot be amicably resolved between the parties,
either party may seek to resolve such dispute by filing a legal action in
any court having jurisdiction over the matter. In such event, Times Mirror
or Tribune, whichever is named as a party to such action, shall pay your
reasonable attorney's fees and costs incurred in such proceeding, provided
that any legal action commenced and/or defended by you was in good faith and
that you prevailed in any such legal action. In the event of any conflict
between the provisions of this paragraph 12 and the provisions of any other
document which may be involved in the subject matter of this Agreement, the
provisions of this paragraph shall control.
13. Assignment. In the event that any other person or entity shall acquire all
or substantially all of the assets or stock of Times Mirror or Tribune, or
any subsidiary or division of either of them, whether by a sale, merger,
consolidation, reorganization or any other means, the provisions of this
Agreement shall be assumed by and be fully binding upon any such successor
person or entity, unless such obligations are retained by Tribune. In the
absence of any such sale, merger, consolidation or reorganization, this
Agreement shall not otherwise be assignable by Times Mirror, Tribune, or any
such subsidiary, division or affiliate.
14. Amendment. This Agreement may not be amended or modified except by a written
amendment executed by the parties.
15. Severability. Should any provision of this Agreement be found, held,
declared, determined, or deemed by any court of competent jurisdiction to be
void, illegal, invalid or unenforceable under any applicable statute or
controlling law, the legality, validity, and enforceability of the remaining
provisions will not be affected and the illegal, invalid, or unenforceable
provision will be deemed not to be a part of the Agreement.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
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Please execute both copies of this letter and return one signed original copy to
me. By signing this Agreement, you confirm and acknowledge that you have read,
understand and agree to the terms set forth herein. Further, you acknowledge
that you have been advised to seek legal and financial advice regarding these
terms.
If you have any questions or concerns, please do not hesitate to call me.
Sincerely,
/s/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ XXXXX XXXXXXXXX III
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Xxxxx Xxxxxxxxx III
Attachments
Severance Attachment
Certain Compensation and Benefits attachment
Certain Employee Benefits attachment
Section 3.4 of Merger Agreement
Section 6.1 (p) of Merger Agreement
Section 6.9 of Merger Agreement
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SEVERANCE ATTACHMENT
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
FOR TIMES MIRROR EXECUTIVE VICE PRESIDENTS
This attachment to your Employment and Severance Agreement describes the
Enhanced Severance Benefits and terms under which they will be paid if you are
an Executive Vice President of The Times Mirror Company as of the Effective
Date.
a) Enhanced Severance Payments. If your employment is terminated as of the
Effective Date or within the severance protection period after the
Effective Date, you will be eligible for the following amount of severance:
three times the sum of your current salary plus your highest bonus
within the last three years (not including any special bonus payments)
b) Eligibility For Severance. Enhanced severance payments will be paid, if,
during the severance protection period, you:
1) are involuntarily terminated on account of the change of control
for other than cause or
2) voluntarily terminate employment for good reason which includes
the following:
(a) experience a substantial reduction in the nature or scope of
the authorities, powers, functions of your current position
(which would not include changes in title or reporting
relationship);
(b) are required to relocate your principal office more than 50
miles from the current site; or
(c) suffer a reduction in either your base salary or bonus
opportunity or in the aggregate value of your long-term
incentives, benefits and executive perquisites during the
severance protection period which is not remedied within 30
days after receipt by Tribune Company of written notice from
you.
c) Severance Protection Period. Severance will be payable in event your
employment is terminated on account of the change of control during the
following period of time after the change of control in a manner so as to
cause severance to be paid:
24 months after change of control
d) Severance Deferral. You may elect to defer all or a portion of any
severance payments that may become payable under the provisions of the
Times Mirror Deferred Compensation Plan for Executives. You must complete
the special deferral election form and return it to Human Resources in
accordance with instructions sent to you.
e) Outplacement. If you are eligible for enhanced severance benefits, you will
receive outplacement as follows, or you may receive the indicated value in
a cash payment:
Receive outplacement for a period of one year after termination of
employment up to a maximum of $15,000
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Severance Attachment
For Times Mirror Executive Vice Presidents
Page 2
f) COBRA reimbursement payment. If your employment is terminated within the
severance protection period, you will receive a payment equal to 18 months
times the COBRA premium for the managed care program at the time of your
termination of employment.
g) Executive Perquisites. Any company-paid or reimbursed executive
perquisites for which you are currently eligible, including financial
counseling, executive physicals, and club dues and memberships, will be
continued by Tribune after your termination of employment for the period
represented by your severance payments, if any.
h) Excess Parachute Payments. To the extent that any payments, including any
bonus incentive payments, made to you are considered part of an excess
parachute payment subject to an excise tax, those payments will be fully
grossed up to compensate you for the amount of the excise tax. The company
will hire an independent accounting firm to determine the calculations for
all affected employees and will pay for the services provided by the
accounting firm. The accounting firm's calculations will be binding unless
an IRS ruling determines otherwise.
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CERTAIN COMPENSATION AND BENEFITS
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
This attachment to your Employment and Severance Agreement describes how your
bonus incentive award for 2000 will be determined and describes how certain
benefits will be treated as a result of the merger.
a) 2000 Bonus Incentive Award. In the event that you remain employed through
the Effective Date (whether on active or inactive status as provided in the
Agreement), your bonus incentive award for 2000 under the Executive
Incentive Plan will be payable at the maximum level payable under the plan
(i.e., 225% of your 2000 bonus incentive target). However, no bonus award
for 2000 will be payable in the event of your voluntary termination of
employment before December 31, 2000 for reasons other than those included
within the scope of the provisions of the Severance Attachment. Your 2000
bonus award will be payable to you on the earlier of (i) the date on which
your employment is terminated by Times Mirror or Tribune or you terminate
your employment for the good reasons included within the scope of the
provisions of the Severance Attachment, or (ii) on December 31, 2000. In the
event that a bonus incentive award is payable under subparagraph (i) above,
the bonus award for 2000 will not be prorated. Any bonus award will be paid
or deferred in accordance with your prior election regarding your 2000 bonus
incentive award. Any amount to be deferred will be credited to your account
under the Times Mirror Deferred Compensation Plan for Executives ("Plan") as
of the earlier of (a) the first day of the month coinciding with or next
following the day your 2000 bonus award would be payable as described above
or (b) December 31, 2000 and will be paid from the Plan in accordance with
your prior election under said Plan.
b) Matching Bonus Restricted Stock Program. If you were eligible to and elected
to participate in the matching bonus restricted stock program for 2000, you
will receive an additional payment equal to 25% of your 2000 bonus award,
representing the value of an award under the matching bonus restricted stock
program, which amount will be aggregated with your 2000 bonus award. This
additional payment will be paid or deferred in accordance with your prior
deferral election for your 2000 bonus award under the provisions of the
Plan, as set forth above. There shall be no requirement for you to place on
deposit any personally owned shares of Times Mirror stock to receive this
additional payment.
c) Stock Options. Prior to the Effective Date, you may exercise any of your
options to purchase shares of Series A Common Stock of Times Mirror ("Stock
Options") which are vested. Upon the Effective Date, or upon any earlier
date which may be considered as a change of control as that term is defined
under the agreement(s) regarding your Stock Options ("Change of Control
Date"), and provided you are an employee as of such date, your Stock Options
will become fully vested.
In accordance with the provisions set forth in Section 3.4 of the Merger
Agreement (a copy of which section is attached to this Attachment), Tribune
will offer you the opportunity to cash out the value of each of your Stock
Options at $95 per share, reduced
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by the option price of each Stock Option, or to convert each of your Stock
Options into options to purchase 2.5 shares of Tribune common stock. In
accordance with the provisions of Section 3.4 of the Merger Agreement, you
will be required to decide which choice you wish to select for each Stock
Option and to proceed in accordance with the terms of the offer which will
be extended to you by Tribune.
d) Restricted Stock. Upon the Effective Date, or upon any earlier date which
may be considered as a change of control as that term is defined under the
provisions of the restricted stock program, and provided you are an employee
as of such date, to the extent shares of restricted stock are registered in
your name, all restrictions on such stock will lapse as of such date and
unrestricted ownership of such shares will vest in you at that time. Any
personal shares of stock held on deposit by Times Mirror under the Matching
Bonus Restricted Stock Program will be returned to you at that time.
e) Executive Perquisites. Any company-paid or reimbursed executive perquisites
for which you are currently eligible, including financial counseling,
executive physicals, and club dues and memberships, will be continued by
Tribune during your active employment for the severance protection period.
f) Mortgage Differential Payments. You will continue to receive mortgage
differential payments in accordance with the terms approved by the
Compensation Committee at its meeting on March 2, 2000.
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CERTAIN EMPLOYEE BENEFITS
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
This attachment to your Employment and Severance Agreement describes certain
employee benefits which will continue after your termination of employment.
a) Qualified Retirement Plans. While you are an employee of Times Mirror or any
of its divisions or subsidiaries (for purposes of this attachment "Times
Mirror"), you will continue to be eligible to participate in Times Mirror's
retirement plans in accordance with the respective terms and limitations of
each plan. Provided you are an employee of Times Mirror as of the Effective
Date, accrued benefits earned as of the Effective Date under Times Mirror's
retirement plans will become fully vested. Vesting will apply to any accrued
benefits under Times Mirror's pension plan(s) and your company matching
account under the Times Mirror Savings Plus Plan. The retirement plans
provide for a maximum of one year of benefit accrual service or salary
credit for severance payments (excluding any non-qualified deferrals),
subject to statutory limits in the Internal Revenue Code, including but not
limited to maximum deferrals, benefits or covered compensation. After your
termination of employment, you will be entitled to receive any vested
accrued benefits under Times Mirror's retirement plans in accordance with
the terms of the plans and any elections you make under the plans.
Distributions under each plan shall be made in accordance with the terms and
procedures of each respective plan based on your participation under the
plans.
b) Supplemental Executive Retirement Plan. You are a participant of the Times
Mirror Company Executive Retirement Plan for Certain Times Mirror Officers
(SERP). In accordance with the current provisions of the SERP, your benefits
under the SERP will be based on your total benefit service with all Times
Mirror companies and the Times Mirror benefit formula (regardless of the
benefit formula of the division or subsidiary where you earned your benefit
service), less any benefits payable from Times Mirror's qualified pension
plan(s). Under the terms of the SERP and provided you are an employee of
Times Mirror as the Effective Date, the benefits that you have earned under
the SERP as of the Effective Date will become fully vested. In addition,
your benefits under the SERP will be calculated including your 2000 bonus
incentive award, if any, in the computation of your final average
compensation under the SERP. Further, you will receive credit under the SERP
for any severance payments which may be payable as a result of the change of
control.
c) Deferred Compensation Plan. Any amounts you have deferred into the Times
Mirror Deferred Compensation Plan for Executives will be paid to you in
accordance with your prior elections. In addition, your 2000 bonus incentive
award and your severance payments, if any, payable to you under the terms of
the Agreement and its Attachments will be deferred in accordance with your
deferral elections. With respect to amounts which are or will be credited to
your account in accordance with the terms of the Plan, Section 6.9(c) of the
Merger Agreement provides that Tribune shall credit 9% interest per annum
cumulative, from the date any amount is credited to your account under the
Plan effective with respect to all amounts credited under the Plan as of the
Effective Date and
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on all amounts which may be deferred under the Plan in connection with the
Merger or any termination of employment related thereto, whether credited
with respect to deferrals before or after the Effective Date until all such
amounts are paid under the Plan in accordance with it terms. If you wish to
withdraw any funds from the Plan on account of the change of control, the
Plan provides that you may elect to receive an immediate lump sum payment,
with a 10% penalty for the unscheduled withdrawal.
d) Retiree Medical. If you meet the eligibility requirements for retiree
medical benefits as of the Effective Date, other than the requirement to
commence pension payments, and your employment is terminated on account of
the change of control during the Severance Protection Period, you will be
eligible for Times Mirror's pre-age 65 retiree medical coverage and the
post-age 65 Medigap Reimbursement program, or an equivalent or better health
care plan provided by Tribune Company to retirees.
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SECTION 3.4
of The Agreement and Plan of Merger
Between Tribune Company and The Times Mirror Company
Dated as of March 13, 2000
SECTION 3.4. Options. (a) Each of the stock options, if any, to
purchase Company Common Shares (each, a "Company Option") issued by the Company
pursuant to any stock option or similar plan of the Company, and any non-plan
options to acquire Company Common Shares set forth in Section 4.3(a) of the
Company Disclosure Statement issued by the Company pursuant to an option
agreement or otherwise issued by the Company, which are outstanding as of the
Effective Time shall, whether or not then exercisable and vested, become fully
exercisable and vested immediately prior to the Effective Time. Each holder of a
Company Option shall be given the opportunity, prior to the Election Deadline,
to elect either (i) to cause such Company Option (a "Stock Electing Option") to
become and represent an option to purchase Tribune Common Shares (a "Tribune
Option"), in accordance with paragraph (b) of this Section 3.4, or (ii) to cause
such Company Option (a "Cash Electing Option") to be cancelled in exchange for a
single lump sum cash payment (less any applicable income or employment or other
Tax withholding), without interest (the "Company Option Cash Out Amount"), equal
to the product of (A) the number of Company Common Shares subject to such
Company Option immediately prior to the Effective Time and (B) the excess, if
any, of the Per Share Cash Amount over the exercise price per share of such
Company Option, in accordance with paragraph (c) of this Section 3.4. To the
extent any holder of a Company Option shall not have made an election with
respect to such Company Option prior to the Election Deadline, such Company
Option shall be deemed to be a Cash Electing Option.
(b) Each Stock Electing Option shall, by virtue of the Merger, and
without any further action on the part of any holder thereof, be assumed by
Tribune and converted into a Tribune Option to purchase that number of Tribune
Common Shares determined by multiplying the number of Company Common Shares
subject to such Company Option immediately prior to the Effective Time by the
Common Exchange Ratio, at an exercise price per Tribune Common Share equal to
the exercise price per share of such Company Option immediately prior to the
Effective Time divided by the Common Exchange Ratio, rounded down to the
nearest whole cent. If the foregoing calculation results in an assumed Company
Option being exercisable for a fraction of a Tribune Common Share, then the
number of Tribune Common Shares subject to such option shall be rounded up to
the nearest whole number of shares. The terms and conditions of each Tribune
Option shall otherwise remain as set forth in the Company Option converted into
such Tribune Option.
(c) Each Cash Electing Option shall, by virtue of the Merger, and without
any further action on the part of any holder thereof, be cancelled in exchange
for a single lump sum cash payment (less any applicable income or employment or
other tax withholding), without interest, equal to the Company Option Cash Out
Amount.
(d) The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code), if any,
shall be and is intended to be effected in a manner which is consistent with
Section 424(a) of the Code.
(e) All restricted Company Series A Common Shares granted pursuant to any
equity plan or arrangements of the Company, and all individual awards of
restricted Company Series A Common Shares not granted pursuant to any such plan
or arrangement, shall become fully vested immediately prior to the Effective
Time and such Company Series A Common Shares shall be freed of restrictions and
issued to the relevant participant.
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SECTION 6.1(p)
of The Agreement and Plan of Merger
Between Tribune Company and The Times Mirror Company
Dated as of Xxxxx 00, 0000
(x) Employee Matters. Except as set forth in Section 6.1(p) of the Company
Disclosure Statement, except in connection with any employment offer outstanding
as of the date of this Agreement, the Company shall not, and shall not permit
any of its Subsidiaries to, (i) grant any increases in the compensation of any
of its directors, officers or employees, except for increases required under
employment agreements existing on the date of this Agreement and increases for
officers and employees in the ordinary course of business consistent with past
practice that, in any event, do not increase such officer's or employee's
aggregate cash compensation at target by more than 10% over his aggregate cash
compensation at target in effect on the date of this Agreement, (ii) pay or
agree to pay any pension retirement allowance or other employee benefit not
required or contemplated by any of the existing Company Benefit Plans as in
effect on the date of this Agreement, giving effect to any modification to any
Company Benefit Plan authorized by the Company's Board of Directors prior to the
date of this Agreement and previously delivered in writing to Tribune, to any
such director, officer or employee, whether past or present, or to any other
Person, (iii) pay or award or agree to pay or award any stock option or equity
incentive awards in excess of options to acquire 50,000 shares in the aggregate
or in a manner that is inconsistent with past practice, (iv) enter into any new,
or amend any existing, employment, severance or termination agreement with any
such director, officer or employee which, in the aggregate, would obligate the
Company or its Subsidiaries to pay in excess of $1 million or (v) except as
required to comply with applicable Law, become obligated under any new Company
Benefit Plan which was not in existence on the date of this Agreement, or amend
any such plan or arrangement in existence on the date of this Agreement if such
amendment would have the effect of enhancing any benefits thereunder. The
Company shall, as promptly as practicable, provide Tribune with copies of any
amendments to any Company Benefit Plan (which shall be in accordance with the
foregoing) made after the date of this Agreement and prior to the Effective
Time.
16
SECTION 6.9
of The Agreement and Plan of Merger
Between Tribune Company and The Times Mirror Company
Dated as of March 13, 2000
SECTION 6.9. Employee Benefits.
(a) Obligations of Tribune; Continuance of Benefits. For a period of one
year immediately following the Effective Time, the coverage and benefits
provided to employees and former employees of the Company and its Subsidiaries
("Company Employees") pursuant to employee benefits plans or arrangements
maintained by Tribune or any of its Subsidiaries shall be no less favorable, in
the aggregate, than those provided to such employees immediately prior to the
Effective Time. Except as provided in Section 3.4 and 6.9(c), notwithstanding
the foregoing, nothing herein shall require (i) the continuation of any
particular benefit plan or prevent the amendment or termination thereof (subject
to the maintenance, in the aggregate, of the benefits, or (ii) Tribune to
continue or maintain any stock option, stock purchase or other incentive plan
related to the equity of the Company.
(b) Pre-Existing Limitations; Deductible; Service Credit. With respect to
any incentive, benefits and perquisite plans and programs ("Benefit Plans") of
Tribune or any Subsidiary of Tribune in which the Company Employees participate
effective as of the Effective Time or thereafter, Tribune shall: (i) waive any
limitations as to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Company
Employees under any Benefit Plan that is an employee welfare benefit within the
meaning of Section 3(1) of ERISA ("Welfare Plan") in which such Company
Employees may be eligible to participate after the Effective Time (provided,
however, that no such waiver shall apply to a pre-existing condition, exclusion
or waiting period applicable to any Company Employee to the extent that he or
she was, as of the Effective Time, excluded from participation in a Company
Benefit Plan by reason of such pre-existing condition, exclusion or waiting
period, and provided, further, that no such waiver shall apply to a pre-existing
condition, exclusion or waiting period of any Company Employee unless the
Company Employee enrolls in the applicable Welfare Plan when first eligible to
do so), (ii) in the event Company Employees are transferred to a new Welfare
Plan within the plan year beginning January 1, 2000, for purposes of
accumulating annual deductibles, co-payments and out-of-pocket requirements,
provided each Company Employee with credit for any co-payments and deductibles
paid prior to the Effective Time, but within such plan year, for purposes of
satisfying any applicable deductible or out-of-pocket requirements under any
Welfare Plan in which such employees may be eligible to participate after the
Effective Time, and (iii) recognize all service of the Company Employees with
the Company, for all purposes other than benefit accrual, in any Benefit Plan in
which such Company Employees may be eligible to participate after the Effective
Time. Prior to the Effective Time, the Board of Directors of Tribune, or an
appropriate committee of non-employee directors thereof, shall adopt a
resolution consistent with the interpretive guidance of the SEC so that the
acquisition by any officer or director of the Company who may become a covered
person of Tribune for purposes of Section 16 of the Exchange Act and the rules
and regulations thereunder ("Section 16") of Tribune Common Shares or options to
acquire Tribune Common Shares pursuant to this Agreement and the Merger shall be
an exempt transaction for purposes of Section 16.
17
SECTION 6.9 (CONT.)
of The Agreement and Plan of Merger
Between Tribune Company and The Times Mirror Company
Dated as of March 13, 2000
(c) Employment and Severance Arrangements. As of the Effective Time,
Tribune shall assume, honor and perform in accordance with their terms all
employment, severance, change in control and other such agreements of the
Company and its Subsidiaries and Affiliates, giving effect to any amendment or
modification to any such agreement authorized by the Company's Board of
Directors prior to the date of this Agreement (the "Employment Arrangements").
With respect to the Times Mirror Deferred Compensation Plan For Executives and
the Deferred Plan for Directors Fees, Tribune shall credit 9% interest per
annum, cumulative, from the date any amount is credited to a participant under
any such plans effective with respect to all amounts credited under such plans
as of the Effective Time, and on all amounts which may be deferred under such
plans in connection with the Merger or any termination of any employment
related thereto, whether credited with respect to deferrals before or after the
Effective Time until all such amounts are paid under the plan in accordance
with its terms. Tribune shall pay the reasonable attorney's fees of the
individual party to the applicable Employment Arrangement in the event such
individual party files a claim in good faith to enforce Tribune's obligations
and prevails in such action. Such individual parties are hereby specifically
made a third party beneficiary of this Section 6.9(c).
(d) Successor Obligations. Notwithstanding any other provision of this
Agreement, in the event Tribune sells or otherwise disposes of any Subsidiary
of the Company coincident with or within one year after the Effective Time,
Tribune shall require as a condition of such sale or disposition that the buyer
shall assume all obligations of Tribune under this Section 6.9. In the
alternative, Tribune may elect to guarantee the payment of such obligations.
