Exhibit 10.6
News America
Incorporated
1211 Avenue of the
Americas
New York, NY 10036
June 26, 2009
Peter Chernin
2327 La Mesa Drive
Santa Monica, CA 90402
Dear Peter:
As you know, the term of your
employment under your Amended and Restated Employment Agreement
with News America Incorporated (the “ Company
”), dated as of August 1, 2004, as amended (the “
Employment Agreement ”), will expire on June 30,
2009 (the “ Separation Date ”), and you will
terminate employment with the Company, News Corporation (“
News Corp. ”) and their respective affiliates on the
Separation Date. This letter agreement (the “ Letter
Agreement ”) is intended to clarify and memorialize the
timing and amounts of certain pension, deferred compensation and
other benefit payments to be provided to you pursuant to the
Employment Agreement in connection with your termination of
employment and the commencement of the Production Arrangements (as
defined below). Capitalized terms used herein without definition
have the meanings assigned to such terms under the Employment
Agreement.
1. Production Arrangements .
You and the Company hereby agree to certain production arrangements
with respect to film and television production as set forth in
Section 19 of the Employment Agreement. The specific terms and
conditions of the film and television production arrangements are
in the process of and will continue to be negotiated and agreed
between you and the Company (or one or more of your and the
Company’s affiliates) from time to time and will be set forth
as separate schedules to this Letter Agreement. The term of the
production arrangements described in this Paragraph 1 (the “
Production Arrangements ”) shall terminate at the
earlier of (i) July 1, 2015 or (ii) the date you
become a full-time employee of another company (other than a
company controlled by you which provides the services contemplated
under the Production Arrangements) that is engaged in, and derives
more than 10% of its revenue from film or television
production.
2. Separation from Service; Code
Section 409A . You and the Company agree that your
termination of employment on the Separation Date shall constitute
and be treated as a “separation from service” within
the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “ Code ”). Additionally,
based on the Company’s policies for determining its
“specified employees” in accordance with
Section 409A of the Code, you will be a “specified
employee” as of the Separation Date. Therefore, payments to
you of deferred compensation amounts subject to Section 409A
of the Code which are triggered based upon your separation from
service with the Company will be delayed until December 31,
2009 (i.e., 6 months following the Separation Date), in accordance
with Section 409A of the Code and pursuant to the
applicable terms of the deferred compensation
plans and Section 21 of the Employment Agreement, as more
fully set forth below. As set forth in Section 21 of the
Employment Agreement, you have agreed to notify the Company if you
believe that any provision of the Employment Agreement (or of any
award of compensation, including equity compensation, or benefits)
would cause you to incur any additional tax under Code
Section 409A and, if the Company concurs with such belief
after good faith review or the Company independently makes such
determination, then the Company shall, after consulting with you,
use reasonable best efforts to reform such provision to comply with
Code Section 409A through good faith modifications to the
minimum extent reasonably appropriate to conform with Code
Section 409A.
3. Accrued Compensation and
Vacation . Within 10 days following the Separation Date, the
Company shall pay to you in cash all of your accrued salary and
vacation pay earned through the Separation Date. Additionally, the
Company shall pay to you your annual Bonus earned with respect to
the fiscal year ending June 30, 2009 in a single lump sum cash
payment within 90 days following the Separation Date or, if sooner,
within 10 days after News Corp.’s earnings for such fiscal
year are announced.
4. Tax Qualified Pension Plan,
SERP and ISERA Benefits . Your accrued benefits under the Fox
Pension Plan and the News America Incorporated Employees’
Pension and Retirement Plan (collectively, the “ Tax
Qualified Plans ”) shall be paid to you in accordance
with the terms of such Tax Qualified Plans and your distribution
elections thereunder. Your accrued benefits under the News America
Incorporated Supplemental Executive Retirement Plan (the “
SERP ”) shall be paid to you in the form of an
annuity, as designated by you pursuant to the terms of the SERP,
with the annuity payments commencing 6 months following the
Separation Date (i.e., on December 31, 2009), as required
pursuant to Section 4.8 of the SERP. Pursuant to
Section 4.8 of the SERP a delayed annuity
“catchup” payment with interest thereon accruing from
the Separation Date at a rate equal to the 10-year Treasury rate in
effect on the Separation Date (the “ SERP Interest
Rate ”) shall be paid to you on December 31, 2009.
Your accrued benefits under your Individual Supplemental Executive
Retirement Agreement with News Corp. (the “ ISERA
”) shall be paid to you in a single lump on December 31,
2009, together with interest thereon accruing from the Separation
Date at the SERP Interest Rate. Current estimates of your accrued
benefits under the Tax Qualified Plans, the SERP and the ISERA have
been separately provided to you.
5. Special Pension and Savings
Account Payouts . Your pension account benefit pursuant to
Section 5(b) of the Employment Agreement (the “ Old
Deferred Compensation ”) was fully earned and vested
prior to December 31, 2004 and, as such, is a
“grandfathered” benefit not subject to
Section 409A of the Code. Therefore, pursuant to
Section 5(b) of the Employment Agreement, your Old Deferred
Compensation account balance will be paid to you in a single lump
sum cash payment on the Separation Date. Your Savings Account
benefit pursuant to Section 5(c) of the Employment Agreement
(the “ New Deferred Compensation ”) shall
continue to accrue investment earnings and losses through
December 31, 2009 pursuant to the terms of the Trust and such
amounts shall be paid to you in a single lump sum cash payment on
December 31, 2009. Current estimates of your Old Deferred
Compensation and New Deferred Compensatio
