This Employment Agreement (this
“ Agreement ”), entered into on November 1,
2006, and made effective as of July 12, 2006, is by and among,
LIN TV Corp., a Delaware corporation (“ Parent
”), and LIN Television Corporation, a Delaware corporation
with its headquarters in Providence, Rhode Island, and a
wholly-owned subsidiary of the Parent (the “ Company
” and, together with Parent, the “ LIN Companies
”), and Vincent L. Sadusky, an individual residing in the
state of Rhode Island (the “ Executive
”).
Whereas , on July 12,
2006 (the “ Appointment Date ”), the board of
directors of Parent (the “ Board of Parent ”)
appointed Executive to the offices of director, President, and
Chief Executive Officer (“ CEO ”) of Parent and
the board of directors of the Company has appointed Executive to
the same offices in the Company;
Whereas , each of Parent and
the Company desire that the Company employ Executive as CEO and
President of the Company, and Executive desires to be employed by
the Company in such positions, in accordance with the terms and
subject to the conditions provided herein
Now, Therefore , in
consideration of the foregoing and of the respective covenants and
agreements of the parties herein contained, the parties hereto,
intending to be legally bound hereby, agree as follows:
1.
Employment. The Company shall employ Executive and
Executive hereby agrees to serve the LIN Companies on the terms and
conditions set forth herein.
2.
Service Period. The term of this Agreement and
Executive’s employment hereunder (the “ Service
Period ”) shall be deemed to have commenced as of the
Appointment Date and shall continue thereafter until the effective
date of termination pursuant to the terms and subject to the
conditions of this Agreement.
(a) During the Service Period, Executive shall serve
as the President and CEO of each of the LIN Companies, reporting
only to the Board of Parent in his capacity as President and CEO of
Parent and only to the board of directors of the Company in his
capacity as President and CEO of the Company and, subject to the
LIN Companies’ respective Certificates of Incorporation and
By-Laws, shall have such authority as may be granted from time to
time by the respective boards of directors and as otherwise is
inherent in such positions.
(b) At all times during the Service Period, Parent
shall ( i ) use its best efforts to have Executive nominated
for a seat on the Board of Parent as a member of the management
slate therefor, and ( ii ) cause Executive to be appointed
to the board of directors of the Company.
4.
Attention and Effort. Executive covenants and agrees, at
all times during the Service Period, to devote his full
business-time efforts, energies and skills to his duties as
President and CEO of each of the LIN Companies, to serve each of
the LIN Companies diligently and to the best of Executive’s
ability and at all times to act in compliance with the rules,
regulations, policies and procedures of the LIN Companies as shall
be in effect from time to time. Executive further covenants and
agrees that he will not, directly or indirectly, engage or
participate in any other business, profession or occupation for
compensation or otherwise at any time during the Service Period
which conflicts with the business of the LIN Companies, without the
prior written consent of the Board of Parent; provided, that
nothing herein shall preclude Executive from accepting appointment
to or continuing to serve on any board of directors or trustees of
any charitable or not-for-profit organization or from managing his
personal, financial or legal affairs; provided, in each case, and
in the aggregate, that such activities do not materially conflict
or interfere with the performance of Executive’s duties
hereunder or conflict with Sections 10, 11 or 12 of this
Agreement in any material respect.
5.
Compensation and Other Benefits.
(a) During the Service Period, Executive shall be paid
by the Company an annual base salary of Five Hundred Thousand
Dollars ($500,000) (“ Base Salary ”), payable in
accordance with the Company’s normal payroll practices. The
Base Salary shall be reviewed by the Compensation Committee of the
Board of Parent no less often than once each calendar year and may
be increased, but not decreased, based on such a review.
(b) Executive shall be eligible to receive, in
addition to the Base Salary described above, annual bonus payments
to be determined by December 31 of each calendar year during
the Service Period, or as soon thereafter as practicable, but in no
event later than March 15 of the subsequent calendar year;
which bonus payments (if any), shall be determined as
follows:
(i) Executive
shall be eligible to receive a bonus payment calculated as set
forth in this paragraph (i) (the “ Results Bonus
”) using a baseline bonus amount equal to seventy-five
percent (75%) of the Base Salary in effect as of the last day of
the calendar year to which the Results Bonus relates (the “
Results Bonus Base Amount ”). The amount of the
Results Bonus awarded to Executive, if any, shall be an amount
calculated as a percentage of the Results Bonus Base Amount (the
“ Results Bonus Percentage ”). The Results Bonus
Percentage shall be the percentage set forth on
Schedule 5(b)(i)(A) hereto that corresponds to the
respective percentages by which Parent has achieved the EBITDA and
revenue targets established by the Board of Parent, with input from
Executive, for the applicable year, as determined by the
Compensation Committee of the Board of Parent (the “
Budget Target ”). For purposes of determining the
Results Bonus Percentage for 2006, the parties acknowledge and
agree that ( y ) any revenue or EBITDA attributable to any
assets of the LIN Companies that are divested prior to
January 1, 2007, or with respect to which a contract to divest
has been entered into prior to January 1, 2007, shall be
excluded from the calculation of actual revenue and EBITDA for such
year (and shall be subtracted from the corresponding amount
designated as the Budget Target); and ( z ) Special
Recruitment and Severance Expenses (as defined below in
Section 24) shall be added into the calculation of actual
EBITDA results for 2006. The parties acknowledge and agree that for
convenience of reference Schedule 5(b)(i)(B) shows
for
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illustrative
purposes the amount of the Results Bonus corresponding to each
Results Bonus Percentage reflected on
Schedule 5(b)(i)(A) , and the parties further
acknowledge that such figures shall be subject to adjustment in the
event of any change to the Results Bonus Base Amount and, in the
event of any conflict between Schedules 5(b)(i)(A) and
5(b)(i)(B) , Schedule 5(b)(i)(A) shall
control.
(ii) Executive
shall be eligible to receive a bonus payment of up to twenty-five
percent (25%) of the Base Salary in effect as of the last day of
the calendar year to which the foregoing bonus payment relates (the
“ Performance Bonus ”). The award, if any, of a
Performance Bonus and the amount thereof shall be determined by
Compensation Committee of the Board of Parent based upon its
assessment of such factors as it may determine to be relevant,
which may include the performance of the LIN Companies and
Executive, general business conditions, and the relative
achievement by Executive or the LIN Companies of any goals
established by the Board of Parent or the Compensation
Committee.
6.
Benefits and Expenses. Executive shall receive from the
Company such other benefits as may be granted to senior management
of the Company generally, including health, dental, life and
disability insurance and vacation benefits. In addition, Executive
shall be provided with an automobile allowance in accordance with
the Company’s then-current plan. The Company shall reimburse
Executive for all reasonable travel, entertainment and other
expenses which Executive may incur in regard to the business of
Company or Parent, in accordance with and subject to the
limitations of the Company’s standard practices and policies
and Executive’s presentation of such documents and records as
Company shall require to substantiate such expenses.
7.
Incentive Equity. The parties acknowledge that as of the
Appointment Date, Parent granted to Executive an option the
(“ Option Grant ”) to purchase five hundred
thousand (500,000) shares of Parent’s Class A Common
Stock, par value $0.01 per share pursuant to the terms and subject
to the conditions of the LIN TV Corp. Amended and Restated 2002
Stock Plan (the “ Option Plan ”) and as further
evidenced by that certain Nonqualified Stock Option Letter
Agreement, dated July 11, 2006, by and between Parent and
Executive (the “Option Agreement ”). The Option
Grant shall be on the terms and conditions of the Option Plan and
the Option Agreement; provided, however, that (a) for
purposes of the Option Grant, and notwithstanding anything to the
contrary contained in the Option Agreement, the term
“Cause” shall have the meaning ascribed to such term in
this Agreement; and (b) in the event of a Change in Control (as
hereinafter defined in Section 24) (and notwithstanding the
definition of such term in the Option Agreement) the vesting of the
Option Grant shall accelerate and shall be deemed fully vested as
of such Change in Control. For the avoidance of doubt, the vesting
of the Option Grant shall not accelerate in the event of any
termination of this Agreement, including upon a termination Without
Cause or with Good Reason; provided, however, that if
Executive is able to demonstrate that (i) he was terminated by
the LIN Companies Without Cause in anticipation of a Change in
Control and (ii) such anticipated Change in Control occurs,
then Executive will be deemed for purposes of the Option Grant, to
have remained employed through the consummation of the Change in
Control, and the vesting of the Option Grant shall accelerate as
described in the preceding sentence.
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8.
Termination. This Agreement and the employment of
Executive hereunder may be terminated as follows:
(a) By the LIN Companies for
“Cause.” Subject to such other terms of this
Agreement, the LIN Companies may terminate this Agreement and the
employment of Executive hereunder for “ Cause ”
by action of the Board of Parent if the Executive:
(i) has
been convicted of, or entered a pleading of guilty or nolo
contendre (or its equivalent in the applicable jurisdiction) to
any criminal offense (whether or not in connection whether the
performance by Executive of his obligations and duties under this
Agreement), excluding offenses under road traffic laws, or
misdemeanor offenses, that are subject only to a fine or
non-custodial penalty;
(ii) has
committed an act or omission involving dishonesty or
fraud;
(iii) has
willfully refused or willfully failed to perform his obligations
and duties under this Agreement or the duties properly assigned to
him in accordance with the terms and conditions of this Agreement,
and Executive has the physical capacity to perform such obligations
or duties; or
(iv) has
engaged in gross negligence or willful misconduct with respect to
any of the LIN Companies or any of their affiliates or
subsidiaries.
(b) By the LIN Companies “Without
Cause.” The LIN Companies may terminate this Agreement
and the employment of Executive hereunder at any time, in
Parent’s sole discretion, for any reason whatsoever or for no
reason, which termination shall constitute a termination “
Without Cause .”
(c) By Executive for Good Reason. Executive may
terminate this Agreement and his employment hereunder in the event
of any of the following (each of which shall constitute “
Good Reason ”) and the LIN Companies shall have failed
to have reasonably remedied such condition within thirty (30) days
following written notice from Executive setting forth in reasonable
detail the condition giving rise to such Good Reason:
(i) either
of the LIN Companies fails to perform its respective obligations or
breaches any of its covenants or warranties under this
Agreement;
(ii) the
relocation of Executive’s primary office to a location that
is more than thirty-five (35) miles from both of ( A )
the Company’s headquarters in Rhode Island, unless such
office is moved closer to Executive’s primary residence at
the time of such relocation, and ( B ) Executive’s
residence at the time of such relocation; or
(iii) the
Board of Parent or the board of directors of the Company approves,
without Executive’s consent or for reasons other than those
set forth in Section 8(a), ( A ) a reduction in
Executive’s Base Salary, the Results Bonus Base Amount or the
target amount for the Performance Bonus, or ( B ) the
assignment to Executive of any duties inconsistent in any material
respect with, or effect a material diminution of, Executive’s
duties,
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titles,
offices, or responsibilities with the Parent or the Company, or any
demotion of Executive from, or any failure to reelect or reappoint
Executive to any of such positions (except in connection with the
termination of Executive’s employment for disability or Cause
or as a result of Executive’s death); provided,
however, that with respect to the foregoing clause (B) if
subsequent to a Change in Control (as hereinafter defined in
Section 24), Executive maintains over the business of the
Company substantially the same authority and responsibility with
respect thereto that he held prior to such Change in Control, the
requirement that the Executive report to officers or the board of
parent companies, or a change in the title of Executive, shall not
of itself constitute “Good Reason.” Notwithstanding the
foregoing, the foregoing clause (B) of this paragraph
(ii) shall not apply to Executive’s duties, title,
office, responsibilities or status as a director of the Company or
Parent.
(d) By Executive Without Good Reason. Executive
may terminate this Agreement and his employment hereunder at any
time, for any reason, upon giving to the LIN Companies thirty (30)
days’ written notice of termination of this Agreement and
Executive’s employment hereunder pursuant to this Section
8(d) (“ Notice of Resignation ”), during which
notice period Executive’s employment and performance of
services will continue; provided, however, that Parent may,
upon notice to Executive and without reducing Executive’s
compensation during such period, excuse Executive from any or all
of his duties during such period. The effective date of the
termination of Executive’s employment hereunder shall be the
date specified in the Notice of Resignation delivered in accordance
with this Section 8(d).
(e) Automatic Termination Upon Death or
Disability. This Agreement and Executive’s employment
hereunder shall terminate automatically upon the death or
“total disability” of Executive. The term “
total disability ” as used herein shall mean
Executive’s inability, with or without reasonable
accommodations, to perform the duties of Executive contemplated by
Section 3 hereof for a period of, or periods aggregating, six
(6) months in any twelve (12) month period as a result of
physical or mental illness, loss of legal capacity or any other
cause beyond Executive’s control, unless Executive is granted
a leave of absence by the Board of Parent. All determinations as to
whether Executive has suffered total disability due to physical or
mental illness, loss of capacity or any other medical cause shall
be made by a physician who is mutually agreed upon by Executive and
a majority of the members of the Nominating and Corporate
Governance Committees of the Board of Parent. Executive and the LIN
Companies hereby acknowledge that Executive’s ability to
perform the duties set forth in Section 3 hereof is of the
essence of this Agreement. Termination under this Section 8(e)
shall be deemed to be effective ( i ) as of the time of
Executive’s death or ( ii ) immediately upon
determination of Executive’s total disability, as defined
above, by a physician mutually agreeable to Executive and the Board
of Parent.
9.
Severance for Termination Without Cause or Resignation With Good
Reason .
(a) Subject to the terms and conditions of this
Section 9 set forth below, solely in the event that this
Agreement and Executive’s employment hereunder is terminated
( y ) by the LIN Companies Without Cause pursuant to the
terms and subject to the conditions of Section 8(b) hereof; or (
z ) by Executive with Good Reason pursuant to the terms and
subject to the conditions of Section 8(c) hereof, then:
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(i) The
Company shall pay to Executive a severance payment (the “
Severance Payment ”) in an amount equal to the sum of
( A ) Executive’s Base Salary in effect at the time of
such termination and ( B ) the aggregate amount, if any, of
the Results Bonus and Performance Bonus most recently awarded to
Executive prior to such termination; provided, however, that
if such termination occurs prior to the award of Executive’s
initial Results Bonus and Performance Bonus under this Agreement
(or the determination that no such award shall be made), the
payment under this clause (B) shall be the sum of the maximum
applicable Performance Bonus plus the Results Bonus that would
otherwise be due had Executive remained employed with the Company
(the “ Post-Termination Results Bonus ”). The
Severance Payment shall be due and payable in twenty-six
(26) substantially equal payments following such termination;
provided, however, that the portion of the Severance Payment
comprised of the Post-Termination Results Bonus, if applicable, may
be deferred as necessary until the Board of Parent has determined
the amount of such Post-Termination Results Bonus.
(ii) In
addition, during the twelve-month period following a termination
giving rise to the Severance Payment, the Company shall continue to
pay the employer’s normal portion of the costs of
Executive’s health and dental insurance premiums in an amount
consistent with that paid on the date of termination, provided that
Executive chooses to participate in COBRA or a similar health
insurance continuation program and provides the Company with proof
of such participation. If Executive chooses to receive COBRA
coverage from the Company’s group health plans during this
twelve-month period, such coverage shall count toward the maximum
coverage period permitted under such plan.
(b) The payment of the Severance Payment and the
provision of the benefits described in this Section 9 are
expressly contingent on Executive’s execution of a standard
severance and release agreement containing only a release of any
and all claims by him against the LIN Companies and all
predecessors, successors, affiliates and subsidiaries thereof,
except for claims relating to (i) the Severance Payment and other
post-employment payments and benefits due pursuant to the terms and
subject to the conditions of this Agreement; (ii) claims for
benefits under the employee benefit plans of the LIN Companies in
which Executive participates, and (iii) claims for
indemnification or insurance, if applicable, arising following his
employment). Notwithstanding anything to the contrary contained
herein, Employer retains the right to terminate the initiation or
continuation of the Severance Payment and other benefits described
in this Section 9 and to recover from Executive any and all
amounts previously paid (as well as to pursue any other remedies
available at law or in equity) if it discovers that Executive
engaged in any fraud, theft, embezzlement, serious or substantial
misconduct materially injuring the LIN Companies’ reputation,
or gross negligence while employed by the Company or if Executive
materially breaches this Agreement, including any breach by
Executive of his obligations and covenants under Sections 10,
11, or 12 hereof.
(c) Subject to such adjustments as may be
necessary
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