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EXHIBIT 10.1
[TIMES MIRROR LETTERHEAD]
April 7, 2000
Xxxx X. Xxxxxx
c/o The Times Mirror Company
000 X. 0xx Xxxxxx
Xxx Xxxxxxx , XX 00000
Dear Xxxx:
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. This agreement (the "Agreement"), which is effective as of the date
hereof, will set forth (i) the terms of your employment as approved by the
Executive Subcommittee of the Compensation Committee at its meeting on March 2,
2000 and later approved by the Board of Directors at its meeting on March 11,
2000; (ii) the enhanced severance benefits that you will receive under the terms
of 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, including a special
retirement arrangement, as set forth in the Certain Employee Benefits
attachment.
1. Continued Service.
(a) Subject to the provisions of paragraph 1 (d) of this Agreement, Times
Mirror agrees to continue your employment until the Effective Date and
you agree to remain in your present position on the terms contained in
this Agreement. Your active employment status will not be terminated
prior to the Effective Date for any reason other than as set forth in
paragraph 1 (d), and you will remain an employee until, and termination
will become effective on, the day after 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 merger with Tribune will not take place. In such event,
you will remain in the employ of Times Mirror until your successor is
designated by the Board of Directors of Times Mirror, under those terms
and conditions which presently apply
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to your employment. Since you were informed prior to the merger that
your employment will be terminated as of the merger, you shall receive
the benefits set forth in this Agreement even in the event that it is
determined at a later date that the merger will not occur.
(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 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:
(i) You will perform those functions, duties and responsibilities which
are assigned to you;
(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. 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.
(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".
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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 (subject to the provisions
of paragraph 1 (b)), the following conditions must be satisfied: (i) the
merger of Times Mirror into Tribune must be completed; and either (ii)
you continue in employment through the Effective Date, (iii) you die or
become disabled before the Effective Date, or (iv) your employment must
be terminated by Times Mirror or Tribune at any time after the date of
this Agreement and prior to the end of the Severance Protection Period.
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) Your severance payments will be paid to you over a three year period
after the Effective Date as specified in the Severance Attachment.
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
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
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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 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.
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(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 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
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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.
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.
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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/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
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
XXXX X. XXXXXX
This attachment to your Employment and Severance Agreement describes the
Enhanced Severance Benefits and terms under which they will be paid if you
remain an employee of The Times Mirror Company until the Effective Date.
a) Enhanced Severance Payments. If your employment is terminated as of the
Effective Date or prior to the Effective Date by the company, 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).
The amount of your enhanced severance payment equals $9,243,750.
b) Eligibility for Severance. Enhanced severance payments will be paid in the
event that you continue in employment through the Effective Date, in the
event of your death or disability before the Effective Date or in the event
that the company terminates your employment before the Effective Date.
c) Severance Protection Period. Severance will be payable in event your
employment is terminated on account of the change of control during the
period of time prior to the Effective Date. The Severance Protection Period
ends on the Effective Date, when your employment will terminate.
d) Xxxxxx of Payment of Severance. Your enhanced severance payments will be
paid to you in approximately equal annual payments over the three year
period after the Effective Date, with the first payment to be made within 30
days after the Effective Date, the second payment in January 2001 and the
final payment in January 2002.
e) Executive Perquisites. After your termination of employment at or before the
Effective Date, the company will continue to reimburse you for one annual
physical exam per year for the three-year period after the Effective Date.
f) Other. Upon termination of employment for any reason, you may retain any
office equipment, including fax machine, cellular phone and personal
computer currently provided by the company. Upon termination of employment,
the company will cease to reimburse or provide you with a home security
system, company car and a personal security guard / driver.
g) 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 which amount shall equal
$2,250,000). However, no bonus award for 2000 will be payable in the event
of your voluntary termination of employment before the Effective Date 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, 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, but in
no event earlier than the Effective Date, 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 during
your active employment.
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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 and 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 and changes to
your SERP benefits approved over the past several years by the Compensation
Committee, your benefits under the SERP will be based on (i) the Times
Mirror benefit formula, (ii) your highest 5 year average salary plus your
highest 5 year average bonus awards earned up to your termination of
employment, and (iii) your benefit service earned with Times Mirror plus 15
years of service, which benefit will be reduced by Times Mirror early
retirement factors for a benefit commencement date before normal retirement,
$204,332/year (which we have agreed represents your benefit earned under the
General Xxxxx retirement plans) and 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) Special Retirement Benefit. Provided you remain an employee until the
Effective Date, in the event of your death or disability before the
Effective Date, or in the event that your employment is terminated by the
company for any reason before the Effective Date, you will be eligible to
receive a special retirement benefit of $970,000/year commencing on April 1,
2002 payable as a 50% joint and survivor annuity, with your wife as your
joint
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annuitant. This benefit represents the total pension benefits payable from
the qualified pension plan and the SERP. If you voluntarily leave Times
Mirror for any reason before the Effective Date, you shall not be entitled
to this special retirement benefit; instead you will be entitled to the SERP
benefit described in subparagraph (b).
d) 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 payable to you under the terms of the Agreement and its Attachments
will be deferred in accordance with your deferral election. 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 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.
e) Office Space and Secretarial Support. If you continue in employment through
the Effective Date or if your employment is terminated by the company for
any reason prior to the Effective Date, and in consideration of your
on-going advice and counsel to be provided to the company after your
termination of employment, you will be provided with company-paid furnished
and functional office space and secretarial support for seven years after
the termination of your employment. The seven-year period may commence at
any time after the Effective Date and in any city as you may select. The
company will reimburse for furnished and functional office space up to 500
square feet and for the salary and benefits of an executive secretary with a
compensation package approximately equal to the compensation package of your
current administrative assistant, adjusted for inflation over the seven-year
period.
f) Financial Counseling. If you continue in employment through the Effective
Date or if your employment is terminated by the company for any reason prior
to the Effective Date, you will be provided with reimbursement of financial
counseling expenses, up to $10,000/year for a period of seven years after
termination of employment.
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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 March 13, 2000
(p) 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.
15
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,
provide 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.
16
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.
