<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .
COMMISSION FILE NUMBER 1-13492
------------------------
THE TIMES MIRROR COMPANY
<TABLE>
<S> <C>
DELAWARE 95-4481525
STATE OF INCORPORATION I.R.S. EMPLOYER ID. NO.
</TABLE>
TIMES MIRROR SQUARE
LOS ANGELES, CALIFORNIA 90053
TELEPHONE: (213) 237-3700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Number of shares of Series A Common Stock outstanding at April 28, 2000:
44,308,448 excluding 18,237,864 shares held by subsidiaries of the Registrant;
4,001,067 shares held by TMCT, LLC, representing 80% of the shares held by TMCT,
LLC; 12,432,973 shares held by TMCT II, LLC, representing 80% of the shares held
by TMCT II, LLC; 16,230,026 shares held by Eagle New Media Investments, LLC and
1,039,078 shares held as treasury shares.
Number of shares of Series C Common Stock outstanding at April 28, 2000:
15,906,660.
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<PAGE> 2
THE TIMES MIRROR COMPANY
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Financial information herein, and management's discussion thereof, include
consolidated data for The Times Mirror Company ("Registrant" or "Times Mirror")
and its subsidiaries. Registrant and its subsidiaries are sometimes herein
referred to collectively as the "Company."
2
<PAGE> 3
THE TIMES MIRROR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
REVENUES:
Advertising............................................... $544,766 $501,166
Circulation............................................... 122,035 125,669
Other..................................................... 78,527 72,372
-------- --------
Total revenues.................................... 745,328 699,207
-------- --------
COSTS AND EXPENSES:
Cost of sales............................................. 395,328 391,037
Selling, general and administrative expenses.............. 230,870 215,869
-------- --------
Total costs and expenses.......................... 626,198 606,906
-------- --------
OPERATING PROFIT............................................ 119,130 92,301
Interest expense............................................ (29,727) (19,804)
Interest income............................................. 2,538 13,503
Gain on sale of The Sporting News........................... 85,037 --
Other, net.................................................. 15,788 1,035
-------- --------
Income from continuing operations before income taxes....... 192,766 87,035
Income tax provision........................................ 79,480 36,986
-------- --------
Income from continuing operations before extraordinary
item...................................................... 113,286 50,049
Discontinued operations:
Loss from operations, net of taxes........................ (1,058) (1,236)
Gain on disposal, net of taxes............................ 4,589 --
-------- --------
Total discontinued operations..................... 3,531 (1,236)
-------- --------
Extraordinary item, net of taxes -- Times Mirror merger
costs..................................................... (4,398) --
-------- --------
NET INCOME.................................................. $112,419 $ 48,813
======== ========
Preferred stock dividends................................... $ 2,014 $ 5,424
======== ========
Earnings applicable to common shareholders.................. $110,405 $ 43,389
======== ========
Basic earnings (loss) per common share:
Continuing operations..................................... $ 1.88 $ .61
Discontinued operations................................... .06 (.02)
Extraordinary item........................................ (.08) --
-------- --------
Basic earnings per share.................................... $ 1.86 $ .59
======== ========
Diluted earnings (loss) per common share:
Continuing operations..................................... $ 1.74 $ .60
Discontinued operations................................... .06 (.02)
Extraordinary item........................................ (.07) --
-------- --------
Diluted earnings per share.................................. $ 1.73 $ .58
======== ========
Weighted average shares:
Basic..................................................... 59,312 73,076
======== ========
Diluted................................................... 66,058 77,434
======== ========
Dividends declared per common share......................... $ .22 $ .20
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
THE TIMES MIRROR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 151,554 $ 144,319
Accounts receivable, less allowance for doubtful accounts
and returns of $38,701 and $34,721..................... 349,287 363,361
Inventories............................................... 38,466 35,082
Recoverable income taxes.................................. 14,134 43,477
Deferred income taxes..................................... 32,766 33,314
Prepaid expenses.......................................... 43,116 35,526
Net assets of discontinued operations..................... 70,986 173,090
Other current assets...................................... 19,896 58,479
---------- ----------
Total current assets.............................. 720,205 886,648
Property, plant and equipment, net of accumulated
depreciation and amortization of $1,038,545 and
$1,008,071................................................ 966,938 966,095
Goodwill, net of accumulated amortization of $133,092 and
$126,875.................................................. 618,408 602,148
Other intangibles, net of accumulated amortization of
$78,415 and $74,612....................................... 190,068 192,593
Equity investments in TMCT I, LLC and TMCT II, LLC.......... 334,531 332,846
Other investments........................................... 206,262 242,858
Prepaid pension costs....................................... 450,125 445,175
Other assets................................................ 246,591 229,008
---------- ----------
Total assets...................................... $3,733,128 $3,897,371
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
THE TIMES MIRROR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 180,543 $ 179,461
Short-term debt........................................... 136,086 254,834
Other current liabilities................................. 362,875 431,835
----------- -----------
Total current liabilities.......................... 679,504 866,130
Long-term debt.............................................. 1,538,795 1,562,240
Deferred income taxes....................................... 475,748 482,062
Postretirement benefits..................................... 219,889 221,111
Other liabilities........................................... 345,322 338,808
----------- -----------
Total liabilities.................................. 3,259,258 3,470,351
Common stock subject to put options......................... 12,540 27,291
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value; stated at liquidation
value; convertible to Series A common stock:
Series A: 900,000 shares authorized; 824,000 shares
issued and outstanding................................. 411,784 411,784
Series B: 8,439,000 shares authorized; no shares issued
or outstanding......................................... -- --
Series C-1: 381,000 shares authorized; none and 381,000
shares issued and outstanding.......................... -- 190,486
Series C-2: 245,000 shares authorized; none and 245,000
shares issued and outstanding.......................... -- 122,550
Series D-1: 381,000 shares authorized; 381,000 and no
shares issued and outstanding.......................... 190,486 --
Series D-2: 245,000 shares authorized; 245,000 and no
shares issued and outstanding.......................... 122,550 --
Preferred stock, $1 par value; 22,409,000 shares
authorized; no shares issued or outstanding............. -- --
Common stock, $1 par value:
Series A: 500,000,000 shares authorized; 94,290,000 and
93,879,000 shares issued and outstanding............... 94,290 93,879
Series B: 100,000,000 shares authorized; no shares
issued or outstanding.................................. -- --
Series C: Convertible to Series A common stock;
300,000,000 shares authorized; 17,865,000 and
18,246,000 shares issued and outstanding............... 17,865 18,246
Additional paid-in capital................................ 1,316,179 1,299,931
Retained earnings......................................... 1,869,999 1,784,793
Accumulated other comprehensive income.................... 13,606 26,879
Less treasury stock at cost:
Series A common stock: 52,896,000 and 52,387,000 shares,
Series A preferred stock: 735,000 shares, Series C-1
preferred stock: none and 305,000 shares, Series C-2
preferred stock: none and 196,000 shares, Series D-1
preferred stock: 305,000 and no shares and Series D-2
preferred stock: 196,000 and no shares................. (3,575,429) (3,548,819)
----------- -----------
Total shareholders' equity......................... 461,330 399,729
----------- -----------
Total liabilities and shareholders' equity......... $ 3,733,128 $ 3,897,371
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
THE TIMES MIRROR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
-----------------------
2000 1999
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by operating activities of continuing
operations............................................. $ 66,403 $ 8,010
Net cash provided by (used in) operating activities of
discontinued operations................................ 2,692 (5,188)
--------- ----------
Net cash provided by operating activities......... 69,095 2,822
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investments and other assets....... 200,723 9,139
Capital expenditures...................................... (27,496) (35,593)
Acquisitions, net of cash acquired........................ (24,255) (138,710)
Purchases of investments.................................. (14,040) (25,420)
Sale of marketable securities, net........................ -- 14,898
Increase in notes receivable, net......................... (6,900) --
--------- ----------
Net cash provided by (used in) investing activities of
continuing operations................................. 128,032 (175,686)
Net cash used in investing activities of discontinued
operations............................................ (876) (2,074)
--------- ----------
Net cash provided by (used in) investing
activities...................................... 127,156 (177,760)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds (repayments) of commercial paper and
short-term borrowings.................................. (118,662) 119,482
Purchases of Times Mirror common stock.................... (60,107) (94,639)
Principal repayments of other debt........................ (17,163) (10,847)
Dividends paid............................................ (15,056) (19,928)
Exercise of put options, net of premiums received......... (13,297) (11,361)
Proceeds from exercise of stock options................... 35,109 19,795
Other, net................................................ 160 44
--------- ----------
Net cash provided by (used in) financing
activities...................................... (189,016) 2,546
--------- ----------
Increase (decrease) in cash and cash equivalents............ 7,235 (172,392)
Cash and cash equivalents at beginning of year.............. 144,319 1,052,999
--------- ----------
Cash and cash equivalents at end of period.................. $ 151,554 $ 880,607
========= ==========
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE> 7
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PREPARATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. For financial reporting purposes, the condensed
consolidated financial statements include the accounts of the Company's
affiliated limited liability companies, Eagle New Media Investments, LLC (Eagle
New Media) and Eagle Publishing Investments, LLC (Eagle Publishing).
In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. The results of operations for interim periods are not necessarily
indicative of the results that may be expected for the fiscal year. The balance
sheet at December 31, 1999 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the consolidated
financial statements and accompanying notes included in the Company's Annual
Report on Form 10-K, as amended, for the year ended December 31, 1999.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB
101), which, among other guidance, clarifies certain conditions to be met in
order to recognize revenue. Management believes that the Company is in
substantial compliance with SAB 101 and anticipates that the effect on earnings
or the financial position of the Company would be immaterial.
Financial information in the accompanying notes to the Condensed
Consolidated Financial Statements exclude discontinued operations, except where
noted.
NOTE 2 -- COMPREHENSIVE INCOME
Total comprehensive income amounted to $99.1 million and $40.0 million for
the first quarters ended March 31, 2000 and 1999, respectively. Comprehensive
income differs from net income primarily due to the timing of recognizing
realized and unrealized gains or losses.
NOTE 3 -- MERGER AGREEMENT BETWEEN TIMES MIRROR AND TRIBUNE COMPANY
On March 13, 2000, Times Mirror and Tribune Company (Tribune) signed a
definitive agreement for the merger of Times Mirror into Tribune in a cash and
stock transaction. Under the terms of this agreement, Tribune completed a cash
tender offer and purchased 23.1 million shares of the Company's common stock,
which represents approximately 40% of the shares of common stock outstanding as
of March 31, 2000, at a price of $95 per share. When Times Mirror merges into
Tribune, each share of Times Mirror common stock will be converted into 2.5
shares of Tribune common stock, or $95 in cash subject to certain limitations.
The merger is subject to the approval of the shareholders of both companies and
other customary conditions. The Company expects the merger to be completed in
June 2000. The Company recorded extraordinary costs, net of applicable taxes of
$2.8 million, of $4.4 million in the 2000 first quarter. These costs were
incurred by Times Mirror and represent legal, investment banking and other
professional fees related to the merger with Tribune.
NOTE 4 -- DISCONTINUED OPERATIONS
In September 1999, Times Mirror announced its decision to sell
AchieveGlobal, Inc., a professional training company, Allen Communication, an
interactive software and training courseware developer, and The
7
<PAGE> 8
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
StayWell Company, a health improvement information company. The accompanying
financial statements reflect AchieveGlobal, Allen Communication and StayWell as
discontinued operations for all periods presented. In the first quarter of 2000,
the Company sold Allen Communication to Gilat Communication Ltd. and sold
StayWell to a subsidiary of Havas MediMedia, S.A. for a total gain, net of
taxes, of $4.6 million. The Company anticipates selling AchieveGlobal by the end
of 2000. Income from discontinued operations is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues................................................. $45,149 $49,731
Loss before income taxes................................. (1,087) (1,082)
Income tax provision (benefit)........................... (29) 154
------- -------
Loss from discontinued operations........................ $(1,058) $(1,236)
======= =======
</TABLE>
The assets and liabilities of discontinued operations have been classified
in the Condensed Consolidated Balance Sheets as net assets of discontinued
operations and consist of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Accounts receivable, net............................. $20,662 $ 33,373
Other current assets................................. 10,993 27,289
Property, plant and equipment, net................... 6,987 12,638
Goodwill, net........................................ 48,120 57,236
Other intangibles, net............................... 10 65,066
Other assets......................................... 9,630 18,213
------- --------
Total assets....................................... 96,402 213,815
------- --------
Current liabilities.................................. 23,026 32,922
Non-current liabilities.............................. 2,390 7,803
------- --------
Total liabilities.................................. 25,416 40,725
------- --------
Net assets of discontinued operations........... $70,986 $173,090
======= ========
</TABLE>
The major components of cash flow for discontinued operations are as
follows (in thousands):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Loss from discontinued operations........................ $(1,058) $(1,236)
Depreciation and amortization............................ 2,302 2,429
Amortization of product costs............................ 1,206 1,351
Income taxes............................................. 5,185 (5,723)
Other, net............................................... (4,943) (2,009)
------- -------
Net cash provided by (used in) operating activities of
discontinued operations............................. $ 2,692 $(5,188)
======= =======
Capitalization of product costs.......................... $ (470) $(1,280)
Capital expenditures..................................... (410) (799)
Other, net............................................... 4 5
------- -------
Net cash used in investing activities of discontinued
operations.......................................... $ (876) $(2,074)
======= =======
</TABLE>
8
<PAGE> 9
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 5 -- RESTRUCTURING LIABILITY
A summary of the activity in the restructuring liabilities is as follows
(in thousands):
<TABLE>
<CAPTION>
1998 1995
RESTRUCTURING RESTRUCTURING TOTAL
------------- ------------- -------
<S> <C> <C> <C>
Balance at December 31, 1999............. $26,763 $11,913 $38,676
Cash payments.......................... (4,371) (2,676) (7,047)
------- ------- -------
Balance at March 31, 2000................ $22,392 $ 9,237 $31,629
======= ======= =======
</TABLE>
During the first quarter ended March 31, 2000, cash spent on restructuring
efforts was primarily for severance payments of $2.9 million, contract
termination costs of $1.4 million, and lease payments of $2.7 million. At March
31, 2000, the remaining liability for severance costs aggregated $12.2 million.
The balance sheet classification of restructuring liabilities is as follows
(in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Current liabilities:
1995 Restructuring................................. $ 4,774 $ 7,555
1998 Restructuring................................. 14,041 18,240
Other liabilities:
1995 Restructuring................................. 4,463 4,358
1998 Restructuring................................. 8,351 8,523
------- -------
$31,629 $38,676
======= =======
</TABLE>
The current portion of restructuring is comprised primarily of severance
and lease payments while the non-current portion is comprised primarily of
contract termination payments and lease payments, which will be paid over lease
periods extending to 2010. The Company periodically assesses the adequacy of its
remaining restructuring liabilities and makes adjustments, if required. The net
change in the restructuring liabilities as a result of these reviews was not
significant.
9
<PAGE> 10
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 6 -- DEBT
Debt consists of the following (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- ------------
<S> <C> <C>
Short-term debt:
Commercial paper at weighted average interest rates of
5.9% and 5.9%......................................... $ 122,832 $ 241,381
Current maturities of long-term debt..................... 7,063 7,149
Other notes payable at interest rates of 6.4% and 6.4%... 6,191 6,304
---------- ----------
Total short-term debt............................ $ 136,086 $ 254,834
========== ==========
Long-term debt:
7.45% Notes due October 15, 2009, net of unamortized
discount of $500 and $513............................. $ 399,500 $ 399,487
6.61% Debentures due September 15, 2027, net of
unamortized discount of $94 and $95................... 249,906 249,905
4.75% Liquid Yield Option Notes due April 15, 2017, net
of unamortized discount of $275,335 and $277,946...... 224,665 222,054
6.65% Notes due October 15, 2001, net of unamortized
discount of $106 and $123............................. 199,894 199,877
7 1/4% Debentures due March 1, 2013...................... 148,215 148,215
7 1/4% Debentures due November 15, 2096, net of
unamortized discount of $552 and $553................. 147,448 147,447
7 1/2% Debentures due July 1, 2023....................... 98,750 98,750
4 1/4% PEPS due March 15, 2001; 374,050 and 512,050
securities stated at fair value....................... 39,650 64,006
Property financing obligation expiring on August 8, 2009,
net of unamortized discount of $147,747 and $149,932,
with an effective interest rate of 4.3%............... 37,830 39,648
---------- ----------
1,545,858 1,569,389
Less current maturities.................................. (7,063) (7,149)
---------- ----------
Total long-term debt............................. $1,538,795 $1,562,240
========== ==========
</TABLE>
Interest rate swaps converted the weighted average interest rate on the
Liquid Yield Option Notes (LYONs(TM)), the 6.65% Notes, the 7 1/4% Debentures
due 2096, and the 7 1/2% Debentures from 6.3% to 5.6% for the first quarter
ended March 31, 2000.
The 4 1/4% Premium Equity Participating Securities (PEPS) hedge the
Company's investment in the common stock of America Online, Inc. (AOL). The PEPS
are recorded at fair market value as determined in the open market and will
generally move in tandem with changes in the fair market value of AOL common
stock. The net unrealized loss on the PEPS at March 31, 2000 and December 31,
1999 is $14.8 million and $26.0 million, respectively, net of applicable income
taxes, and is included in "Accumulated other comprehensive income." During the
first quarter ended March 31, 2000, the Company sold approximately 248 thousand
shares of AOL stock and purchased a proportionate share of its PEPS in the open
market for a total pretax gain of $6.9 million. Holders of the PEPS bear the
full risk of a decline in the value of AOL. The Company is not obligated to hold
the AOL stock for any period or sell the AOL stock prior to the PEPS maturity or
redemption date.
10
<PAGE> 11
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 7 -- EARNINGS PER SHARE
The following table sets forth the calculation of basic and diluted
earnings per share (in thousands, except per share amounts):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
-------------------
2000 1999
-------- -------
<S> <C> <C>
Earnings:
Income from continuing operations......................... $113,286 $50,049
Preferred stock dividends................................. (2,014) (5,424)
-------- -------
Earnings applicable to common shareholders for basic
earnings per share..................................... 111,272 44,625
-------- -------
Effect of dilutive securities:
LYONs interest expense, net of taxes...................... 1,589 1,476
Series A, preferred dividends............................. 885 --
Series D-1, preferred dividends........................... 687 --
Series D-2, preferred dividends........................... 442 --
-------- -------
Subtotal............................................... 3,603 1,476
-------- -------
Earnings applicable to common shareholders for diluted
earnings per share..................................... $114,875 $46,101
======== =======
Shares:
Weighted average shares for basic earnings per share...... 59,312 73,076
Effect of convertible securities:
Stock options.......................................... 2,228 1,444
LYONs convertible debt................................. 2,914 2,914
Series A, convertible preferred dividends.............. 664 --
Series D-1, convertible preferred dividends............ 572 --
Series D-2, convertible preferred dividends............ 368 --
-------- -------
Subtotal............................................. 6,746 4,358
-------- -------
Adjusted weighted average shares and assumed conversions
for diluted earnings per share......................... 66,058 77,434
======== =======
Basic earnings per share from continuing operations....... $ 1.88 $ .61
======== =======
Diluted earnings per share from continuing operations..... $ 1.74 $ .60
======== =======
</TABLE>
NOTE 8 -- ISSUANCE AND PURCHASE OF SHARES
Share purchases of the Company's Series A common shares continued in the
first quarter of 2000 through a combination of open market purchases and put
options. The Company and Eagle New Media purchased 1.3 million shares of its
Series A common stock during the first quarter ended March 31, 2000, which more
than offset 800 thousand shares issued as a result of the exercise of stock
options.
At March 31, 2000, the Company had 200 thousand put options outstanding
with an average strike price of approximately $62.70. The put options, which
have expiration dates in the second quarter of 2000, entitle the holder to sell
shares of Times Mirror common stock to the Company at the strike price on the
expiration date of the put option. The potential obligation under these put
options has been transferred from shareholders' equity to "Common stock subject
to put options."
11
<PAGE> 12
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The Company has various stock option plans under which options may be
granted to key employees to purchase shares of Series A common stock at a price
equal to the fair market value at the date of grant. During the first quarter of
2000, the Company granted 2.3 million options under these plans. The Company
also granted each eligible employee 100 stock options on March 2, 2000. This
grant resulted in the issuance of approximately 1.5 million stock options at an
option price of $50.9688, which was equal to fair value at the date of grant.
These options will be fully vested on March 2, 2003 for employees still employed
by the Company at that date or upon a change in management control, whichever is
earlier.
In connection with a 1999 recapitalization, the Company replaced the Series
C-1 and C-2 preferred stocks with Series D-1 and D-2 preferred stocks effective
January 1, 2000. The Series D-1 and D-2 preferred stocks are identical to the
Series C-1 and C-2 preferred stocks except that the increases in the dividend
rate on the Series D-1 and D-2 preferred stocks are pursuant to a fixed and
certain schedule. For further information on the 1999 recapitalization, refer to
the consolidated financial statements and accompanying Note 2 included in the
Company's Annual Report on Form 10-K, as amended, for the year ended December
31, 1999.
NOTE 9 -- USE OF ESTIMATES
Financial statements prepared in accordance with generally accepted
accounting principles require management to make estimates and judgments that
affect amounts and disclosures reported in the financial statements. Actual
results could differ from those estimates.
NOTE 10 -- CONTINGENT LIABILITIES
The Company and its subsidiaries are defendants in actions for matters
arising out of their business operations. In addition, from time to time, the
Company and its subsidiaries are involved as parties in various governmental and
administrative proceedings. The Company does not believe that any such
proceedings currently pending will have a material adverse effect on its
consolidated financial position, although an adverse resolution in any reporting
period of one or more of these matters could have a material impact on results
of operations for that period.
In 1998, the Company divested Matthew Bender & Company, Incorporated and
Mosby, Inc. While the Company believes that these divestitures were completed on
a tax-free basis, this position may be subject to review by the Internal Revenue
Service. The Company estimated deferred taxes of $176.6 million based on its
assessment of the risks inherent in a contested challenge by the Internal
Revenue Service. To the extent that the estimate of such deferred taxes is
adjusted in the course of resolving such a challenge, the adjustment will be
recorded within discontinued operations. If it is ultimately determined that
these transactions were not completed on a tax-free basis, the Company's results
of operations, financial position and cash flow may be materially adversely
affected.
NOTE 11 -- ACQUISITIONS AND DISPOSITIONS
The Company made various acquisitions in the 2000 first quarter for an
aggregate consideration of $24.3 million. In March 2000, in addition to the
sales of Allen Communication and StayWell as previously discussed in Note 4, the
Company completed the sale of The Sporting News to Vulcan Ventures Inc. and
recorded a pretax gain of $85.0 million ($50.2 million, net of applicable
taxes).
NOTE 12 -- OTHER, NET
In the 2000 first quarter, the Company recorded a net pretax gain on the
sale of AOL shares and the purchase of the PEPS, of $6.9 million.
12
<PAGE> 13
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
During the 2000 first quarter, the Company recognized equity income of
$12.4 million from its investments in TMCT I and TMCT II. For further
information on the 1999 and 1997 recapitalization, refer to the consolidated
financial statements and accompanying Notes 2 and 3 included in the Company's
Annual Report on Form 10-K, as amended, for the year ended December 31, 1999.
Equity income from TMCT I and TMCT II are included in "Other, net", in the
Condensed Consolidated Statements of Income. For the 2000 first quarter, "Other,
net" included an $8.8 million pretax gain on the sale of one of the Company's
venture investments, of which $6.3 million was recorded as equity income from
its investment in TMCT II.
NOTE 13 -- SEGMENT INFORMATION
Financial data for the Company's segments is as follows (in thousands):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
REVENUES
Newspaper Publishing................................. $609,180 $573,546
Professional Information............................. 61,605 56,297
Magazine Publishing.................................. 74,543 68,839
-------- --------
Total Reportable Segments.................... 745,328 698,682
Corporate and Other.................................. -- 525
-------- --------
$745,328 $699,207
======== ========
OPERATING PROFIT (LOSS)
Newspaper Publishing................................. $114,894 $ 91,672
Professional Information............................. 16,268 15,733
Magazine Publishing.................................. 1,627 3
-------- --------
Total Reportable Segments.................... 132,789 107,408
Corporate and Other.................................. (13,659) (15,107)
-------- --------
$119,130 $ 92,301
======== ========
DEPRECIATION AND AMORTIZATION
Newspaper Publishing................................. $ 30,454 $ 31,632
Professional Information............................. 2,506 1,717
Magazine Publishing.................................. 2,518 1,992
-------- --------
Total Reportable Segments.................... 35,478 35,341
Corporate and Other.................................. 1,031 1,161
-------- --------
$ 36,509 $ 36,502
======== ========
CAPITAL EXPENDITURES
Newspaper Publishing................................. $ 24,351 $ 30,046
Professional Information............................. 2,666 2,863
Magazine Publishing.................................. 170 846
-------- --------
Total Reportable Segments.................... 27,187 33,755
Corporate and Other.................................. 309 1,838
-------- --------
$ 27,496 $ 35,593
======== ========
</TABLE>
A reconciliation of operating profit to income from continuing operations
before income taxes is set forth in the Company's Condensed Consolidated
Statements of Income.
13
<PAGE> 14
THE TIMES MIRROR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Identifiable assets of the Company's segments are as follows (in
thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- ------------
<S> <C> <C>
Newspaper Publishing................................. $2,308,457 $2,290,708
Professional Information............................. 115,266 125,670
Magazine Publishing.................................. 254,642 287,268
---------- ----------
Total Reportable Segments.................. 2,678,365 2,703,646
Corporate and Other.................................. 983,777 1,020,635
Discontinued Operations, net......................... 70,986 173,090
---------- ----------
$3,733,128 $3,897,371
========== ==========
</TABLE>
NOTE 14 -- SUBSEQUENT EVENT
In April 2000, Times Mirror announced that it is exploring strategic
alternatives, including a possible sale, for Jeppesen, the Company's flight
information provider. Jeppesen had revenues of $235 million, which represents
approximately 8% of consolidated revenues of the Company for the year ended
December 31, 1999.
14
<PAGE> 15
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
On March 13, 2000, Times Mirror and Tribune Company (Tribune) signed a
definitive agreement for the merger of Times Mirror into Tribune in a cash and
stock transaction. Under the terms of this agreement, Tribune completed a cash
tender offer and purchased 23.1 million shares of the Company's common stock,
which represents approximately 40% of the shares of common stock outstanding as
of March 31, 2000, at a price of $95 per share. When Times Mirror merges into
Tribune, each share of Times Mirror common stock will be converted into 2.5
shares of Tribune common stock, or $95 in cash subject to certain limitations.
The merger is subject to the approval of the shareholders of both companies and
other customary conditions. The Company expects to incur substantial merger
related costs in the 2000 second quarter, including investment banking, legal,
as well as severance expenses, and anticipates that the merger will be completed
in June 2000.
CONSOLIDATED RESULTS OF OPERATIONS
The following table summarizes the Company's consolidated financial results
(dollars in thousands, except per share amounts):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED MARCH 31,
------------------------------
2000 1999 CHANGE
-------- -------- ------
<S> <C> <C> <C>
Revenues.............................................. $745,328 $699,207 6.6%
Operating profit...................................... 119,130 92,301 29.1
Interest expense, net................................. 27,189 6,301
Gain on sale of The Sporting News..................... 85,037 --
Other, net............................................ 15,788 1,035
Income from continuing operations before extraordinary
item................................................ 113,286 50,049 126.4
Discontinued operations:
Gain on disposals, net of taxes.................. 4,589 --
Extraordinary item, net of taxes -- Times Mirror
merger costs........................................ (4,398) --
Net income............................................ 112,419 48,813 130.3
Preferred stock dividends............................. 2,014 5,424 (62.9)
Earnings applicable to common shareholders............ 110,405 43,389 154.5
Basic earnings (loss) per share:
Continuing operations............................... $ 1.88 $ .61 208.2
Discontinued operations............................. .06 (.02)
Extraordinary item.................................. (.08) --
-------- --------
Basic earnings per share.............................. $ 1.86 $ .59 215.3
======== ========
Diluted earnings (loss) per share:
Continuing operations............................... $ 1.74 $ .60 190.0
Discontinued operations............................. .06 (.02)
Extraordinary item.................................. (.07) --
-------- --------
Diluted earnings per share............................ $ 1.73 $ .58 198.3
======== ========
Weighted average shares:
Basic............................................... 59,312 73,076 (18.8)
======== ========
Diluted............................................. 66,058 77,434 (14.7)
======== ========
</TABLE>
15
<PAGE> 16
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Revenues and operating profit for the 2000 first quarter rose compared to
the prior year quarter due to improvements at each of the Company's business
segments (see further discussion of segment results under the caption "Analysis
by Segment").
Income from continuing operations for the 2000 first quarter, before an
extraordinary item and nonrecurring gains, was $57.9 million, or $.90 per share
on a diluted basis, an increase of 50% from last year's $.60 per share, on
income from continuing operations of $50.0 million. During the 2000 first
quarter, the Company recorded extraordinary costs, net of taxes, of $4.4 million
related to the merger with Tribune. These costs were incurred by Times Mirror
and represent investment banking, legal and other professional fees.
Additionally, in the 2000 first quarter, the Company had nonrecurring pretax
gains on the sale of The Sporting News of $85.0 million ($50.2 million, net of
applicable taxes), or $.76 per share, and on the sale of one of the Company's
venture investments of $8.8 million ($5.2 million, net of applicable taxes), or
$.08 per share.
Net interest expense increased for the 2000 first quarter compared to the
prior year quarter due primarily to higher debt levels and lower cash balances
resulting from the 1999 recapitalization.
Earnings per share for the 2000 first quarter increased compared to the
1999 first quarter due primarily to higher operating profit, lower weighted
average shares and a reduction in preferred stock dividends, which were
partially offset by a rise in net interest expense.
During the 2000 first quarter, the Company also completed the sales of
Allen Communication to Gilat Communication, Ltd. and The StayWell Company to a
subsidiary of Havas MediMedia, S.A. and recorded a total gain, net of taxes, of
$4.6 million, or $.07 per share.
ANALYSIS BY SEGMENT
NEWSPAPER PUBLISHING
Newspaper Publishing revenues and operating profit were as follows (dollars
in thousands):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED MARCH 31,
------------------------------
2000 1999 CHANGE
-------- -------- ------
<S> <C> <C> <C>
Revenues:
Advertising................................. $494,428 $455,850 8.5%
Circulation................................. 101,885 105,629 (3.5)
Other....................................... 12,867 12,067 6.6
-------- --------
$609,180 $573,546 6.2%
======== ========
Operating profit.............................. $114,894 $ 91,672 25.3%
======== ========
</TABLE>
Newspaper Publishing revenues rose in the 2000 first quarter compared to
the 1999 first quarter reflecting higher advertising revenues at each of the
newspapers with particular strength at the Los Angeles Times. During the 2000
first quarter, The Times achieved double-digit gains in both retail and national
advertising revenues.
Newspaper Publishing operating profit increased in the 2000 first quarter
compared to the prior year quarter due to strong performance at most of the
newspapers, particularly at The Times. Strong revenue growth at The Times,
coupled with expense reductions, primarily lower newsprint expense, led to an
increase in operating profit of 39.5% in the 2000 first quarter, however, the
current outlook for the 2000 second quarter is more cautious.
The Newspaper Publishing segment continued to achieve circulation volume
growth, as reported in publisher's statements to the Audit Bureau of
Circulations for the six-months ended March 31, 2000. Gains in
16
<PAGE> 17
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
both daily and Sunday average circulation totals were recorded at the Company's
four largest newspapers, The Times, Newsday, The Baltimore Sun and The Hartford
Courant, for the most recent six-month period. The biggest circulation gains
were recorded at The Times, where daily circulation increased more than 55,000,
or 5.0%, over the same period for the preceding year. Circulation revenue for
the newspaper publishing segment, however, declined as marketing strategies
involving pricing and promotional discounts helped stimulate circulation volume
gains but resulted in lower overall circulation revenues.
Newsprint expense for the 2000 first quarter declined 6.9% compared to the
prior year quarter, reflecting declines in both price and consumption, with
non-newsprint expenses up 4.5%. Consumption savings from the completion of the
50-inch web conversion at The Times more than offset consumption increases due
to higher circulation and advertising volumes.
PROFESSIONAL INFORMATION
Professional Information revenues and operating profit were as follows
(dollars in thousands):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED MARCH 31,
------------------------------
2000 1999 CHANGE
-------- -------- -------
<S> <C> <C> <C>
Revenues.......................................... $61,605 $56,297 9.4%
======= =======
Operating profit.................................. $16,268 $15,733 3.4%
======= =======
</TABLE>
The operating results for the Professional Information segment consist
entirely of Jeppesen, the Company's flight information provider. Revenues for
the 2000 first quarter increased compared to the prior year quarter due
primarily to higher revenues for charting and navigation services. Jeppesen's
operating profit for the 2000 first quarter was affected by higher chart
revision activities and expenses related to new contracts. Also, the 2000 first
quarter revenues and operating profit were adversely impacted by changes in
foreign currency translation of Jeppesen's German operations. This adverse
impact on operating profit was largely offset through the use of foreign
currency hedging strategies recorded in "Other, net".
MAGAZINE PUBLISHING
Magazine Publishing revenues and operating profit were as follows (dollars
in thousands):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED MARCH 31,
-------------------------------
2000 1999 CHANGE
-------- -------- -------
<S> <C> <C> <C>
Revenues:
Advertising................................... $50,338 $45,316 11.1%
Circulation................................... 20,150 20,040 .5
Other......................................... 4,055 3,483 16.4
------- -------
$74,543 $68,839 8.3%
======= =======
Operating profit................................ $ 1,627 $ 3 N/M
======= =======
</TABLE>
Magazine Publishing achieved advertising revenue gains at most of the
magazines in the first quarter of 2000. The acquisition of Motor Boating &
Sailing in January 2000 also contributed to higher revenues. The Magazine
Publishing segment's first quarter operating profit improved from break-even in
the prior year due primarily to higher advertising and other revenues.
In the 2000 first quarter, the Company completed the sale of The Sporting
News to Vulcan Ventures Inc. Excluding The Sporting News, 2000 first quarter
revenues were $64.3 million compared to $60.3 million in the prior year and 2000
first quarter operating profit was $3.2 million compared to $2.6 million in the
prior year.
17
<PAGE> 18
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
CORPORATE AND OTHER
Corporate and Other revenues and operating loss were as follows (dollars in
thousands):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED MARCH 31,
------------------------------
2000 1999 CHANGE
-------- -------- ------
<S> <C> <C> <C>
Revenues..................................... $ -- $ 525 (100.0)%
======== ========
Operating loss............................... $(13,659) $(15,107) (9.6)%
======== ========
</TABLE>
Operating loss for the 2000 first quarter decreased from the 1999 first
quarter due primarily to substantial consolidation of the financial and human
resource applications at a central processing site, as well as lower
employee-related costs.
OTHER, NET
During the 2000 first quarter, the Company recorded a pretax gain of $8.8
million on the sale of one of its venture investments. Additionally, other
income in the 2000 first quarter included a net pretax gain on the sale of
America Online, Inc. (AOL) shares and the purchase of the related 4 1/4% Premium
Equity Participating Securities (PEPS), of $6.9 million. The 1999 first quarter
results included a net pretax gain on the sale of AOL shares and purchase of
PEPS of $3.1 million. The PEPS hedge the Company's investment in AOL. Such
transactions may continue from time to time in the future.
RESTRUCTURING LIABILITY
A summary of the activity in restructuring liabilities is as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 2000 CASH MARCH 31,
DESCRIPTION 1999 PAYMENTS 2000
----------- ------------ --------- ---------
<S> <C> <C> <C>
1998 Restructuring:
Termination benefits.................... $13,972 $(2,762) $11,210
Contract terminations................... 8,609 (1,412) 7,197
Lease termination costs................. 3,695 (178) 3,517
Technology asset costs.................. 77 (19) 58
Other costs............................. 410 -- 410
------- ------- -------
Total........................... $26,763 $(4,371) $22,392
======= ======= =======
1995 Restructuring........................ $11,913 $(2,676) $ 9,237
======= ======= =======
</TABLE>
Annual expense reductions resulting from the 1998 restructuring program are
in line with management's expectations. The 1995 remaining restructuring
liability relates primarily to lease payments on unoccupied properties. The
Company believes that cash flows from operations will be adequate to cover
future cash outflows under the restructuring programs.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating cash requirements are funded primarily by its
operations. Proceeds from dispositions of The Sporting News, StayWell, and Allen
Communication in 2000 were used primarily to repay debt and fund acquisitions.
18
<PAGE> 19
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
CASH FLOW
The following table sets forth certain items from the Condensed
Consolidated Statements of Cash Flows (in thousands):
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
----------------------
2000 1999
--------- ---------
<S> <C> <C>
Net cash provided by operating activities of
continuing operations.............................. $ 66,403 $ 8,010
Capital expenditures................................. (27,496) (35,593)
Acquisitions, net of cash acquired................... (24,255) (138,710)
Proceeds from sales of investments and other
assets............................................. 200,723 9,139
Net issuance (repayments) of short-term and other
debt............................................... (118,662) 119,482
Purchase of Times Mirror common stock, including
exercise of put options, net of premiums
received........................................... (73,404) (106,000)
</TABLE>
Cash generated by operating activities of continuing operations for the
2000 first quarter was higher compared to the 1999 first quarter due primarily
to higher earnings and lower payments related to the 1998 restructuring program.
Capital expenditures for the 2000 first quarter were lower compared to the
same period in 1999 due primarily to completion of the 50-inch web conversion at
The Times. Capital expenditures are currently expected to reach approximately
$180.0 million for 2000.
Total debt at March 31, 2000 decreased to $1.67 billion from $1.82 billion
at December 31, 1999 due primarily to repayments of debt with proceeds from the
dispositions of The Sporting News, StayWell and Allen Communication.
At March 31, 2000, the Company had a $400.0 million long-term revolving
line of credit through a group of domestic and international banks. This line of
credit is used to support a commercial paper program that is available for
short-term cash requirements. The Company had $122.8 million and $83.5 million
of commercial paper outstanding at March 31, 2000 and April 28, 2000,
respectively. At March 31, 2000, the Company had $400.0 million remaining under
shelf registration statements that had not been utilized. There is no assurance
that the Company will be able to utilize the amounts remaining under these shelf
registration statements on terms acceptable to the Company.
ACQUISITIONS AND DISPOSITIONS
The Company made various small acquisitions in the 2000 first quarter for
an aggregate consideration of $24.3 million. In the first quarter of 2000, the
Company completed the sales of Allen Communication to Gilat Communications Ltd.,
StayWell to a subsidiary of Havas MediMedia, S.A. and The Sporting News to
Vulcan Ventures Inc. Currently, the Company anticipates selling AchieveGlobal by
the end of 2000.
In April 2000, Times Mirror announced that it is exploring strategic
alternatives, including a possible sale, for Jeppesen, the Company's flight
information provider. Jeppesen had revenues of $235 million, which represents
approximately 8% of consolidated revenues of the Company for the year ended
December 31, 1999.
COMMON SHARE PURCHASES
Share purchases of the Company's Series A common shares continued in the
2000 first quarter through a combination of open market purchases and put
options. The Company and Eagle New Media purchased
19
<PAGE> 20
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
1.3 million shares of its Series A common stock during the 2000 first quarter,
which more than offset 800 thousand shares issued as a result of the exercise of
stock options.
CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS
In 1998, the Company divested Matthew Bender & Company, Incorporated and
Mosby, Inc. While the Company believes that these divestitures were completed on
a tax-free basis, this position may be subject to review by the Internal Revenue
Service. The Company estimated deferred taxes of $176.6 million based on its
assessment of the risks inherent in a contested challenge by the Internal
Revenue Service. To the extent that the estimate of such deferred taxes is
adjusted in the course of resolving such a challenge, the adjustment will be
recorded within discontinued operations. If it is ultimately determined that
these transactions were not completed on a tax-free basis, the Company's results
of operations, financial position and cash flow may be materially adversely
affected.
Certain statements set forth above and elsewhere in this Quarterly Report
on Form 10-Q are forward-looking in nature and related to trends and events that
may affect the Company's future financial position and operating results. Such
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The term "expect," "anticipate," and
"intend" and similar words or expressions are intended to identify
forward-looking statements. These statements speak only as of the date of this
report. These statements are based on current expectations, are inherently
uncertain, are subject to risks, and should be viewed with caution. For example,
there can be no assurances that the statements contained herein with respect to
the expected completion of the merger, capital expenditures or the satisfactory
resolution of contingent liabilities will be achieved.
Actual results and experience may differ materially from the
forward-looking statements and could be adversely affected by a number of
factors including (a) an increase in paper, printing and distribution costs over
the levels anticipated; (b) increased consolidation among major retailers or
other events depressing the level of display advertising; (c) an economic
downturn in the Company's principal newspaper markets or other occurrences
leading to decreased circulation and diminished revenues from both display and
classified advertising; (d) an increase in the use of alternate media such as
the Internet for classified and other advertising; (e) an increase in expenses
related to new initiatives and product improvement efforts in the flight
information operating units; (f) unfavorable foreign currency fluctuations; (g)
material changes in tax liability due to unfavorable reviews by taxing
authorities; and (h) a general economic downturn resulting in decreased consumer
or corporate spending on discretionary items such as magazines or newspapers. It
is not possible to foresee or identify all such factors. The Company makes no
commitment to update any forward-looking statement or to disclose any facts,
events, or circumstances after the date hereof that may affect the accuracy of
any forward-looking statement.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company enters into contractual agreements in the ordinary course of
business to hedge its exposure to changes in interest rates, the value of
foreign currencies relative to the U.S. dollar and newsprint prices.
Counterparties to these agreements are major institutions. Such agreements are
not entered into for trading purposes.
The Company's debt portfolio is managed to maintain a balance of fixed and
variable rate obligations. The Company utilizes interest rate swap agreements to
help maintain the overall interest rate parameters set by management. As such, a
hypothetical 10% change in interest rates would not have a material impact on
the Company's results of operations or fair values of its market risk sensitive
financial instruments.
20
<PAGE> 21
THE TIMES MIRROR COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company periodically enters into foreign exchange forward contracts or
uses other hedging strategies to substantially limit its exposure to changes in
foreign currency rates. As such, changes in currency rates would not have a
material impact on the Company's results of operations.
Newsprint expense represents a significant portion of the Company's
operating costs. To manage the Company's exposure to newsprint price
fluctuations, the Company has entered into newsprint hedging contracts not
exceeding five years. These hedging arrangements have the effect of locking in
for specified periods, the newsprint prices the Company will pay for the hedged
volumes. As a result, while these hedging arrangements are structured to reduce
the Company's exposure to increases in newsprint prices, they also limit the
benefit the Company might otherwise have received from any newsprint price
decreases. The Company's operating results typically can be adversely affected
to the extent that such historically volatile newsprint prices increase
materially.
21
<PAGE> 22
THE TIMES MIRROR COMPANY
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No material legal proceedings are pending.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
<TABLE>
<C> <S>
10.1 Letter Agreement dated as of April 7, 2000 between Times
Mirror and Mark H. Willes.
10.2 Letter Agreement dated as of April 7, 2000 between Times
Mirror and Kathryn M. Downing.
10.3 Letter Agreement dated as of April 7, 2000 between Times
Mirror and Raymond A. Jansen.
10.4 Letter Agreement dated as of April 7, 2000 between Times
Mirror and Horst A. Bergmann.
10.5 Letter Agreement dated as of April 7, 2000 between Times
Mirror and Efrem Zimbalist III.
10.6 Letter Agreement dated as of April 7, 2000 between Times
Mirror and Roger H. Molvar.
10.7 Letter Agreement dated as of April 7, 2000 between Times
Mirror and James R. Simpson.
10.8 Letter Agreement dated as of April 7, 2000 between Times
Mirror and Edward L. Blood.
10.9 Letter Agreement dated as of April 7, 2000 between Times
Mirror and Rajender K. Chandhok.
10.10 Letter Agreement dated as of April 7, 2000 between Times
Mirror and Debra A. Gastler.
10.11 Letter Agreement dated as of April 7, 2000 between Times
Mirror and William A. Niese.
27. Financial Data Schedule.
</TABLE>
(b) The Company filed a current report on Form 8-K on March 14, 2000
announcing that Times Mirror and Tribune Company had signed a definitive
agreement for a merger of the two companies in a cash and stock transaction
valued at approximately $8 billion.
22
<PAGE> 23
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE TIMES MIRROR COMPANY
By: /s/ EFREM ZIMBALIST III
------------------------------------
Efrem Zimbalist III
Executive Vice President
and Chief Financial Officer
Date: May 10, 2000
23
<PAGE> 1
EXHIBIT 10.1
[TIMES MIRROR LETTERHEAD]
April 7, 2000
Mark H. Willes
c/o The Times Mirror Company
220 W. 1st Street
Los Angeles , CA 90012
Dear Mark:
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
<PAGE> 2
Mark H. Willes
April 7, 2000
Page 2
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".
<PAGE> 3
Mark H. Willes
April 7, 2000
Page 3
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
<PAGE> 4
Mark H. Willes
April 7, 2000
Page 4
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.
<PAGE> 5
Mark H. Willes
April 7, 2000
Page 5
(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 James R.
Simpson, Senior Vice President, Human Resources of Times Mirror. For
this revocation to be effective, Mr. Simpson 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
<PAGE> 6
Mark H. Willes
April 7, 2000
Page 6
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.
<PAGE> 7
Mark H. Willes
April 7, 2000
Page 7
If you have any questions or concerns, please do not hesitate to call me.
Sincerely,
/s/ JAMES R. SIMPSON
James R. Simpson
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ MARK H. WILLES
- ------------------------------------------
Mark H. Willes
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
<PAGE> 8
SEVERANCE ATTACHMENT
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
MARK H. WILLES
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) Manner 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.
<PAGE> 9
Mark H. Willes
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
<PAGE> 10
Mark H. Willes
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.
<PAGE> 11
Mark H. Willes
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 Mills 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
<PAGE> 12
Mark H. Willes
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.
<PAGE> 13
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.
<PAGE> 14
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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.2
April 7, 2000 (revised)
Kathryn M. Downing
Dear Kathryn:
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. 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
<PAGE> 2
Kathryn M. Downing
April 7, 2000 (revised)
Page 2
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.
<PAGE> 3
Kathryn M. Downing
April 7, 2000 (revised)
Page 3
(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. 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 at any time after the date of this Agreement and
prior to the end of the Severance Protection Period; or (iii) you
voluntarily terminate your employment after the Effective Date for any
reason as provided in 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
in a lump sum payment within 30 days after the later of your termination of
employment or the Effective Date. 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.
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 also be reduced
by any withholdings, contributions or deductions previously authorized by
you.
<PAGE> 4
Kathryn M. Downing
April 7, 2000 (revised)
Page 4
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.
(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
<PAGE> 5
Kathryn M. Downing
April 7, 2000 (revised)
Page 5
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. This release shall not apply in the event your
employment is terminated by Times Mirror or Tribune prior to the Effective
Date.
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 James R.
Simpson, Senior Vice President, Human Resources of Times Mirror. For
this revocation to be effective, Mr. Simpson 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 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.
<PAGE> 6
Kathryn M. Downing
April 7, 2000 (revised)
Page 6
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.
<PAGE> 7
Kathryn M. Downing
April 7, 2000 (revised)
Page 7
If you have any questions or concerns, please do not hesitate to call me.
Sincerely,
Mark H. Willes
Chairman, President and CEO
ACCEPTED AND AGREED:
/s/ KATHRYN M. DOWNING
- -----------------------------------------------
Kathryn M. Downing
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
<PAGE> 8
SEVERANCE ATTACHMENT
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
FOR KATHRYN DOWNING
(4/7/2000 REVISED)
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 employee 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 any reason.
c) Payment of Severance. Your enhanced severance payment will be paid to you in
a lump sum payment within 30 days after the later of your termination of
employment or the Effective Date.
d) 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
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
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.
<PAGE> 9
Kathryn Downing
Severance Attachment
Page 2
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.
<PAGE> 10
Kathryn M. Downing
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 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 by Times Mirror or Tribune or you voluntarily
terminate your employment for any reason after the Effective Date as
provided in 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
<PAGE> 11
Kathryn M. Downing
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 of the agreement dated
July 15, 1998.
<PAGE> 12
Kathryn M. Downing
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, your benefits
under the SERP will be based on your total benefit service with all Times
Mirror companies (including your benefit service with Matthew Bender) 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 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
<PAGE> 13
Kathryn M. Downing
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.
<PAGE> 14
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.
<PAGE> 15
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.
<PAGE> 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,
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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.3
[TIMES MIRROR LETTERHEAD]
April 7, 2000
Raymond A. Jansen
Dear Ray:
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
<PAGE> 2
Raymond A. Jansen
April 7, 2000
Page 2
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.
<PAGE> 3
Raymond A. Jansen
April 7, 2000
Page 3
(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
<PAGE> 4
Raymond A. Jansen
April 7, 2000
Page 4
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
<PAGE> 5
Raymond A. Jansen
April 7, 2000
Page 5
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 James R.
Simpson, Senior Vice President, Human Resources of Times Mirror. For
this revocation to be effective, Mr. Simpson must receive written
notice no later than the close of business on the
<PAGE> 6
Raymond A. Jansen
April 7, 2000
Page 6
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.
<PAGE> 7
Raymond A. Jansen
April 7, 2000
Page 7
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,
James R. Simpson
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ RAYMOND A. JANSEN
- -----------------------------------------------
Raymond A. Jansen
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
<PAGE> 8
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 relocated 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
<PAGE> 9
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.
<PAGE> 10
Raymond A. Jansen
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
<PAGE> 11
Raymond A. Jansen
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.
<PAGE> 12
Raymond A. Jansen
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
<PAGE> 13
Raymond A. Jansen
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.
<PAGE> 14
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.
<PAGE> 15
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.
<PAGE> 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,
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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.4
[TIMES MIRROR LETTERHEAD]
April 7, 2000
Horst A. Bergmann
Dear Horst:
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
<PAGE> 2
Horst A. Bergmann
April 7, 2000
Page 2
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.
<PAGE> 3
Horst A. Bergmann
April 7, 2000
Page 3
(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
<PAGE> 4
Horst A. Bergmann
April 7, 2000
Page 4
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
<PAGE> 5
Horst A. Bergmann
April 7, 2000
Page 5
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 James R. Simpson, Senior Vice President, Human
Resources of Times Mirror. For this revocation to be effective,
Mr. Simpson must receive written notice no later than the close
of business on the
<PAGE> 6
Horst A. Bergmann
April 7, 2000
Page 6
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.
<PAGE> 7
Horst A. Bergmann
April 7, 2000
Page 7
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/ JAMES R. SIMPSON
James R. Simpson
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ HORST A. BERGMANN
- -----------------------------------------------
Horst A. Bergmann
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
<PAGE> 8
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 relocated 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
<PAGE> 9
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.
<PAGE> 10
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
<PAGE> 11
Horst A. Bergmann
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.
<PAGE> 12
Horst A. Bergmann
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.
The calculation of your SERP benefit will include your service with
Jeppesen GmbH, and will be offset by your unindexed vested pension from
the German plan, which amount is DM 51,742 payable at age 65 and which
will be converted to US dollars using the average conversion rate as
reported in the Wall Street Journal for the last three calendar months
prior to the commencement of your benefits.
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
<PAGE> 13
Horst A. Bergmann
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 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.
<PAGE> 14
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.
<PAGE> 15
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.
<PAGE> 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,
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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.5
[TIMES MIRROR LETTERHEAD]
April 7, 2000
Efrem Zimbalist 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
<PAGE> 2
Efrem Zimbalist III
April 7, 2000
Page 2
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.
<PAGE> 3
Efrem Zimbalist III
April 7, 2000
Page 3
(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
<PAGE> 4
Efrem Zimbalist III
April 7, 2000
Page 4
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
<PAGE> 5
Efrem Zimbalist III
April 7, 2000
Page 5
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 James R.
Simpson, Senior Vice President, Human Resources of Times Mirror. For
this revocation to be effective, Mr. Simpson must receive written notice
no later than the close of business on the
<PAGE> 6
Efrem Zimbalist III
April 7, 2000
Page 6
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.
<PAGE> 7
Efrem Zimbalist III
April 7, 2000
Page 7
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/ JAMES R. SIMPSON
James R. Simpson
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ EFREM ZIMBALIST III
- -----------------------------------------------
Efrem Zimbalist 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
<PAGE> 8
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
<PAGE> 9
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.
<PAGE> 10
Efrem Zimbalist III
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
<PAGE> 11
Efrem Zimbalist III
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.
<PAGE> 12
Efrem Zimbalist III
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
<PAGE> 13
Efrem Zimbalist III
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.
<PAGE> 14
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.
<PAGE> 15
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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.6
[Times Mirror Letterhead]
April 7, 2000
Roger H. Molvar
c/o Times Mirror Company
220 W. 1st Street
Los Angeles, CA 90012
Dear Roger:
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.
<PAGE> 2
Roger H. Molvar
April 7, 2000
Page 2
(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 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.
<PAGE> 3
Roger H. Molvar
April 7, 2000
Page 3
(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
<PAGE> 4
Roger H. Molvar
April 7, 2000
Page 4
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
<PAGE> 5
Roger H. Molvar
April 7, 2000
Page 5
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
James R. Simpson, Senior Vice President, Human Resources of Times
Mirror. For this revocation to be effective, Mr. Simpson must receive
written notice no later than the close of business on the
<PAGE> 6
Roger H. Molvar
April 7, 2000
Page 6
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.
<PAGE> 7
Roger H. Molvar
April 7, 2000
Page 7
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/ JAMES R. SIMPSON
- --------------------------------------
James R. Simpson
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ ROGER H. MOLVAR
- -------------------------------------
Roger H. Molvar
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
<PAGE> 8
SEVERANCE ATTACHMENT
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
FOR TIMES MIRROR SENIOR 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
a Senior 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:
two and one-half 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 relocated 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
<PAGE> 9
Severance Attachment
For Times Mirror Senior 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.
<PAGE> 10
Roger H. Molvar
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
<PAGE> 11
Roger H. Molvar
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.
<PAGE> 12
Roger H. Molvar
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
<PAGE> 13
Roger H. Molvar
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.
<PAGE> 14
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.
<PAGE> 15
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.
<PAGE> 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,
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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.7
[TIMES MIRROR LETTERHEAD]
April 7, 2000
James R. Simpson
Dear Jim:
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
<PAGE> 2
James R. Simpson
April 7, 2000
Page 2
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.
<PAGE> 3
James R. Simpson
April 7, 2000
Page 3
(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
<PAGE> 4
James R. Simpson
April 7, 2000
Page 4
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
<PAGE> 5
James R. Simpson
April 7, 2000
Page 5
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 James R.
Simpson, Senior Vice President, Human Resources of Times Mirror. For
this revocation to be effective, Mr. Simpson must receive written notice
no later than the close of business on the
<PAGE> 6
James R. Simpson
April 7, 2000
Page 6
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.
<PAGE> 7
James R. Simpson
April 7, 2000
Page 7
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/ MARK H. WILLES
Mark H. Willes
Chairman, President and CEO
ACCEPTED AND AGREED:
/s/ JAMES R. SIMPSON
- -----------------------------------------------
James R. Simpson
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
<PAGE> 8
SEVERANCE ATTACHMENT
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
FOR TIMES MIRROR SENIOR 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
a Senior 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:
two and one-half 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 relocated 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
<PAGE> 9
Severance Attachment
For Times Mirror Senior 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.
<PAGE> 10
James R. Simpson
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
<PAGE> 11
James R. Simpson
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.
<PAGE> 12
James R. Simpson
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) Special Retirement Agreement. The special deferral credited to the Times
Mirror Deferred Compensation Plan for Executives provided under the prior
agreement with you dated March 25, 1999 shall remain unchanged. However, all
further provisions of that agreement shall be superceded by the terms of
this Agreement.
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 and your severance payments, if any, payable to you under the terms of
the Agreement and its Attachments
<PAGE> 13
James R. Simpson
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 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) 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.
<PAGE> 14
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.
<PAGE> 15
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.
<PAGE> 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,
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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.8
[TIMES MIRROR LETTERHEAD]
Edward L. Blood
Dear Ted:
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
<PAGE> 2
Edward L. Blood
April 7, 2000
Page 2
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.
<PAGE> 3
Edward L. Blood
April 7, 2000
Page 3
(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
<PAGE> 4
Edward L. Blood
April 7, 2000
Page 4
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
<PAGE> 5
Edward L. Blood
April 7, 2000
Page 5
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 James R.
Simpson, Senior Vice President, Human Resources of Times Mirror. For
this revocation to be effective, Mr. Simpson must receive written notice
no later than the close of business on the
<PAGE> 6
Edward L. Blood
April 7, 2000
Page 6
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.
<PAGE> 7
Edward L. Blood
April 7, 2000
Page 7
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/ JAMES R. SIMPSON
James R. Simpson
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ EDWARD L. BLOOD
- --------------------------------------------
Edward L. Blood
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
<PAGE> 8
SEVERANCE ATTACHMENT
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
FOR TIMES MIRROR CORPORATE 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
a Corporate 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:
two 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
<PAGE> 9
Severance Attachment
For Times Mirror Corporate 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.
<PAGE> 10
Edward L. Blood
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 by the option price of each Stock Option,
or to convert each of your Stock Options into
<PAGE> 11
Edward L. Blood
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 special
mortgage differential payments in accordance with the terms of the agreement
dated June 6, 1997.
<PAGE> 12
Edward L. Blood
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) Excess Pension Plan. If your base salary is in excess of $170,000, you are a
participant in the Times Mirror Excess Pension Plan. Provided you are an
employee of Times Mirror at the Effective Date, accrued benefits earned as
of the Effective Date under the Excess Pension Plan will become fully
vested. Benefits under the Excess Pension Plan will be determined under the
same rules as the qualified pension plan and will include credit for any
severance payment received as a result of the change of control up to one
additional year credit for service and salary, that cannot be recognized
under the qualified pension plan.
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 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.
<PAGE> 13
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.
<PAGE> 14
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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.9
[TIMES MIRROR LETTERHEAD]
April 7, 2000
Rajender Chandhok
Dear Raj:
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
<PAGE> 2
Rajender Chandhok
April 7, 2000
Page 2
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.
<PAGE> 3
Rajender Chandhok
April 7, 2000
Page 3
(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
<PAGE> 4
Rajender Chandhok
April 7, 2000
Page 4
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
<PAGE> 5
Rajender Chandhok
April 7, 2000
Page 5
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 James R.
Simpson, Senior Vice President, Human Resources of Times Mirror. For
this revocation to be effective, Mr. Simpson must receive written notice
no later than the close of business on the
<PAGE> 6
Rajender Chandhok
April 7, 2000
Page 6
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.
<PAGE> 7
Rajender Chandhok
April 7, 2000
Page 7
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/ JAMES R. SIMPSON
James R. Simpson
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ RAJENDER CHANDHOK
- -----------------------------------------------
Rajender Chandhok
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
<PAGE> 8
SEVERANCE ATTACHMENT
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
FOR TIMES MIRROR CORPORATE 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
a Corporate 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:
two 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 relocated 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
<PAGE> 9
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.
<PAGE> 10
Rajender Chandhok
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 by the option price of each Stock Option,
or to convert each of your Stock Options into
<PAGE> 11
Rajender Chandhok
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.
<PAGE> 12
Rajender Chandhok
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) Excess Pension Plan. If your base salary is in excess of $170,000, you are a
participant in the Times Mirror Excess Pension Plan. Provided you are an
employee of Times Mirror at the Effective Date, accrued benefits earned as
of the Effective Date under the Excess Pension Plan will become fully
vested. Benefits under the Excess Pension Plan will be determined under the
same rules as the qualified pension plan and will include credit for any
severance payment received as a result of the change of control up to one
additional year credit for service and salary, that cannot be recognized
under the qualified pension plan.
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 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.
<PAGE> 13
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.
<PAGE> 14
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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.10
[TIMES MIRROR LETTERHEAD]
April 7, 2000
Debra A. Gastler
Dear Debbie:
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
<PAGE> 2
Debra A. Gastler
April 7, 2000
Page 2
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.
<PAGE> 3
Debra A. Gastler
April 7, 2000
Page 3
(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
<PAGE> 4
Debra A. Gastler
April 7, 2000
Page 4
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
<PAGE> 5
Debra A. Gastler
April 7, 2000
Page 5
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 James R. Simpson, Senior Vice President, Human
Resources of Times Mirror. For this revocation to be effective,
Mr. Simpson must receive written notice no later than the close
of business on the
<PAGE> 6
Debra A. Gastler
April 7, 2000
Page 6
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.
<PAGE> 7
Debra A. Gastler
April 7, 2000
Page 7
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/ JAMES R. SIMPSON
James R. Simpson
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ DEBRA A. GASTLER
- -----------------------------------------------
Debra A. Gastler
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
<PAGE> 8
SEVERANCE ATTACHMENT
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
FOR TIMES MIRROR CORPORATE 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
a Corporate 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:
two 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 relocated 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
<PAGE> 9
Severance Attachment
For Times Mirror Corporate 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.
<PAGE> 10
Debra A. Gastler
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 by the option price of each
Stock Option, or to convert each of your Stock Options into
<PAGE> 11
Debra A. Gastler
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.
<PAGE> 12
Debra A. Gastler
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) Excess Pension Plan. If your base salary is in excess of $170,000, you
are a participant in the Times Mirror Excess Pension Plan. Provided you
are an employee of Times Mirror at the Effective Date, accrued benefits
earned as of the Effective Date under the Excess Pension Plan will
become fully vested. Benefits under the Excess Pension Plan will be
determined under the same rules as the qualified pension plan and will
include credit for any severance payment received as a result of the
change of control up to one additional year credit for service and
salary, that cannot be recognized under the qualified pension plan.
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 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.
<PAGE> 13
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.
<PAGE> 14
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.
<PAGE> 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 Sections 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.
<PAGE> 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.
<PAGE> 1
EXHIBIT 10.11
[TIMES MIRROR LETTERHEAD]
April 7, 2000
William A. Niese
Dear Bill:
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
<PAGE> 2
William A. Niese
April 7, 2000
Page 2
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.
<PAGE> 3
William A. Niese
April 7, 2000
Page 3
(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
<PAGE> 4
William A. Niese
April 7, 2000
Page 4
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
<PAGE> 5
William A. Niese
April 7, 2000
Page 5
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 James R.
Simpson, Senior Vice President, Human Resources of Times Mirror. For
this revocation to be effective, Mr. Simpson must receive written notice
no later than the close of business on the
<PAGE> 6
William A. Niese
April 7, 2000
Page 6
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.
<PAGE> 7
William A. Niese
April 7, 2000
Page 7
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/ JAMES R. SIMPSON
James R. Simpson
Senior Vice President, Human Resources
ACCEPTED AND AGREED:
/s/ WILLIAM A. NIESE
- --------------------------------------------
William A. Niese
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
<PAGE> 8
SEVERANCE ATTACHMENT
ATTACHMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
FOR TIMES MIRROR CORPORATE 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 a
Corporate 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:
two 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 relocated 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
<PAGE> 9
Severance Attachment
For Times Mirror Corporate 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.
<PAGE> 10
William A. Niese
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
<PAGE> 11
William A. Niese
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.
<PAGE> 12
William A. Niese
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) Excess Pension Plan. If your base salary is in excess of $170,000, you are a
participant in the Times Mirror Excess Pension Plan. Provided you are an
employee of Times Mirror at the Effective Date, accrued benefits earned as
of the Effective Date under the Excess Pension Plan will become fully
vested. Benefits under the Excess Pension Plan will be determined under the
same rules as the qualified pension plan and will include credit for any
severance payment received as a result of the change of control up to one
additional year credit for service and salary, that cannot be recognized
under the qualified pension plan.
c) Special Retirement Agreement. On November 1, 1999 Times Mirror entered into
an agreement with you to provide you with a special supplemental retirement
benefit of $84,000/year commencing as of July 1, 2001 payable as a single
life annuity. Tribune Company will be the successor to that agreement and
will assume the obligation to make those special payments to you.
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 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
<PAGE> 13
William A. Niese
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) 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.
<PAGE> 14
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.
<PAGE> 15
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.
<PAGE> 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,
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.
<PAGE> 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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
2000 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 151,554
<SECURITIES> 0
<RECEIVABLES> 387,988
<ALLOWANCES> 38,701
<INVENTORY> 38,466
<CURRENT-ASSETS> 720,205
<PP&E> 2,005,483
<DEPRECIATION> 1,038,545
<TOTAL-ASSETS> 3,733,128
<CURRENT-LIABILITIES> 679,504
<BONDS> 1,538,795
0
724,820
<COMMON> 112,155
<OTHER-SE> (375,645)
<TOTAL-LIABILITY-AND-EQUITY> 3,733,128
<SALES> 745,328
<TOTAL-REVENUES> 745,328
<CGS> 395,328
<TOTAL-COSTS> 395,328
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,870
<INTEREST-EXPENSE> 29,727
<INCOME-PRETAX> 192,766
<INCOME-TAX> 79,480
<INCOME-CONTINUING> 113,286
<DISCONTINUED> 3,531
<EXTRAORDINARY> (4,398)
<CHANGES> 0
<NET-INCOME> 112,419
<EPS-BASIC> 1.86
<EPS-DILUTED> 1.73
</TABLE>
