NYT limited layoffs to 200 employees in sale to Halifax
In its deal to sell 16 regional papers to Halifax Media, The New York Times Co. limited layoffs to 10 percent of employees, according to an SEC filing from Dec. 27, 2011. Since the New York Times Regional Group employed about 2,000 people at the time of the sale, according to the Times' Abbe Serphos, that means about 200 people could have lost their jobs when the sale was completed. Though the agreement required Halifax to provide the Times with a list of names of everyone it intended to let go, the Times is not commenting on whether Halifax laid off the maximum number.
In addition to the challenges they faced with a noncompete that has now been nullified, former NYTRG employees have been confused about whether they could work for The New York Times Co. after the sale of their papers to Halifax. The SEC filing reveals that they can be hired by the Times as long as they are not recruited by their former employer for the next two years. The filing also shows that for three years the Times cannot own or operate a local news business in the 15 markets it has just left. (You can read the relevant clause after the jump.)
The deal to sell the papers also guaranteed "comparable wage rates or base salary and bonus levels" for employees. It also continued all "eligibility, vesting and benefit entitlement under all compensation and benefit plans." || Related: Halifax noncompete will not apply to former New York Times Regional employees (Poynter)
From SEC filing:
6.16 Noncompetition and Related Covenants.
(a) For a period of three years after the Closing Date, no Seller or any Affiliate thereof will invest in, own, manage, operate, finance, control, advise or guarantee the obligations of any Person whose principal purpose is gathering and disseminating local news content that is targeted to those individual markets that the Business presently serves; provided, however, that in no event shall any of the following be deemed a breach or violation of this Section 6.16: (i) ownership of less than 10% of any publicly traded company; (ii) investing in, owning, managing, operating, financing, controlling, advising or guaranteeing the obligations of any Person whose business operates at a national level, even if a portion of that business competes in the individual markets that the Business presently serves; or (iii) any current activity of any Seller or any Affiliate other than the activities of the Business.
(b) For a period of two years after the Closing Date, no Seller or any Affiliate thereof will induce or attempt to induce any individual who is then an employee or independent contractor of the Purchaser to leave the employ or service, as applicable, of the Purchaser, or in any way knowingly interfere with the relationship between the Purchaser, on the one hand, and any such employee or independent contractor thereof, on the other hand; provided, however, that nothing in this Section 6.16 shall prohibit any Seller or any Affiliate thereof from engaging in any general employment solicitation (including solicitations through recruiting firms and the Internet), or from hiring any individual who responds to any such solicitations.
(c) If a final judgment of a court or tribunal of competent jurisdiction determines that any term or provision contained in this Section 6.16 is invalid or unenforceable, then the parties agree that the court or tribunal will have the power to reduce the scope, duration or geographic area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. This Section 6.16 will be enforceable as so modified after the expiration of the time within which the judgment may be appealed (provided, for the purpose of clarity, that in no event shall this Section 6.16 be binding upon any Seller or any Affiliate thereof following the third anniversary of the Closing Date in the case of Section 6.16(a), or the second anniversary of the Closing Date in the case of Section 6.16(b) (or, if the term of this Section 6.16 is reduced by such court or tribunal, following the expiration of such modified term). This Section 6.16 is reasonable and necessary to protect and preserve the Purchaser’s legitimate business interests and the value of the Business.
(a) Excluding employees who are part of a collective bargaining unit, all of whom shall be hired by the Purchaser, not less than five days prior to the Closing, the Purchaser will provide to the Sellers a list of Business Employees that the Purchaser does not intend to make offers of employment to. Such list will be prepared without any further access to individuals or personnel records than the Purchaser has had prior to the date hereof. The number of individuals on such list will not exceed 10% of the combined number of Business Employees as of the date of this Agreement and will not include a number of the combined number of Business Employees at any single or combined site of employment that would create any obligation or liability to any Business Employee under WARN.
(b) The Purchaser will make offers of employment to all of the Business Employees that are not on the list provided pursuant to Section 6.8(a) to commence effective upon the Closing. Such offer of employment shall be at comparable wage rates or base salary and bonus levels as are identified in Section 4.16(a), and, if at a location different from the Business Employee’s current location of employment with the applicable Seller, at a commuting distance no greater than 50 miles farther each way than the Business Employee’s current commuting distance. With respect to each Business Employee who accepts the Purchaser’s offer of employment (a “Transferred Employee”), the Purchaser shall credit periods of service prior to the Closing for purposes of determining eligibility, vesting and benefit entitlement under all compensation and benefit plans, programs and policies maintained by the Purchaser after the Closing. In determining which Business Employees will be offered employment, the Purchaser shall, and shall cause its employers and representatives to, comply with all applicable Laws. Within a reasonable time prior to the Closing, the Purchaser shall provide to the Sellers, in a manner and form satisfactory to the Sellers, the complete terms of offers of employment (including period of employment, location of employment, compensation, benefits, job title and responsibility) that the Purchaser has made or will make to any Business Employee, including copies of any writings directed to such Business Employee, transcripts of any oral presentations or discussions, as well as proof of any acceptance, and subsequent hiring and employment status, of any such Business Employee. Not later than the Closing Date, the Sellers will provide to the Purchaser such information with respect to each Transferred Employee as may be reasonably necessary to permit the Purchaser to comply with its covenants in this Section 6.8 with respect to the Transferred Employees.
(c) The Purchaser further agrees that it will not engage in any action within 90 days following the Closing that will create any obligation or liability under WARN to any Business Employee or Transferred Employee, including terminating in excess of 49 Transferred Employees at any single or combined site of employment, less the number of Business Employees terminated by any Seller at any such single or combined site of employment, other than for cause, in the 90-day period prior to the Closing.
(d) Without limiting the scope of Section 6.8(b), the Purchaser shall cause each Transferred Employee (and his or her eligible dependents) to be covered on the first day of the calendar month following the Closing by a group health plan (within the meaning of section 5000(b)(1) of the Code) that (i) does not limit or exclude coverage on the basis of any pre-existing condition of such Transferred Employee or dependent, (ii) provides each Transferred Employee full credit, for the year during which the Closing occurs, with any deductible already incurred by a Transferred Employee under the Sellers’ group health plan and with any other out-of-pocket expenses that count against any maximum out-of-pocket expense provision of the Sellers’ or the Purchaser’s group health plan, and (iii) except as set forth in Section 6.8(d) of the Seller Disclosure Schedule, provides health benefits that are comparable to the benefits identified in Section 4.15(a). The Sellers shall remain responsible for all claims incurred by Transferred Employees prior to the first day of the calendar month following Closing under the Sellers’ group health plans and the Purchaser shall be responsible for all claims incurred on and after the Closing under its group health plans. For purposes of clarity, a claim shall be considered incurred when the treatment for a given condition is provided, and not when the condition arose.
(e) Effective as of the Closing Date, the Purchaser shall establish a health flexible spending arrangement under Section 125 of the Code (the “Health FSA”) or shall amend its existing Health FSA, to provide coverage to any Transferred Employee who participated in the Sellers’ Health FSA immediately prior to the Closing Date. The Purchaser’s Health FSA will provide the same level of coverage as under the Sellers’ Health FSA, will treat each such Transferred Employee as if his or her participation had been continuous from the beginning of the Seller’s Health FSA’s plan year, will apply such Transferred Employee’s existing salary reduction elections to the Purchaser’s Health FSA and will provide for reimbursement of expenses incurred at any time during the remainder of the Sellers’ Health FSA’s plan year (including with respect to claims incurred prior to the Closing Date) up to the amount of the Transferred Employee’s election and reduced by amounts previously reimbursed by the Sellers. In the event that, as of the Closing Date, the aggregate amount withheld from the Transferred Employees’ compensation with respect to the Sellers’ Health FSA exceeds the amount reimbursed to the Transferred Employees, such excess amount shall be treated as a current liability in the determination of Closing Working Capital and reduce the amount of the Closing Working Capital. In the event that, as of the Closing Date, the aggregate amount withheld from the Transferred Employees’ compensation with respect to the Sellers’ Health FSA is less than the amount reimbursed to the Transferred Employees, the amount of such deficit shall be treated as a current asset in the determination of Closing Working Capital and increase the amount of the Closing Working Capital. The Sellers will provide the Purchaser with all information reasonably necessary to enable the Purchaser to treat such Transferred Employees as if they participated continuously in the Purchaser’s Health FSA for the calendar year in which the Closing takes place. Notwithstanding the foregoing, this subsection shall not apply to any Transferred Employee who elects to continue coverage under the Sellers’ Health FSA pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(f) Effective as of the Closing, the Purchaser shall establish a defined contribution plan with a 401(k) feature, or cause an existing defined contribution plan with a 401(k) feature, to cover the Transferred Employees who are not subject to a collective bargaining agreement. The Purchaser shall permit such Transferred Employees to rollover any distribution from the Sellers’ defined contribution plan to its defined contribution plan. The Purchaser shall permit any Transferred Employee who is a participant in the Sellers’ defined contribution plan and who has a loan outstanding as of the date of the Closing to rollover the note evidencing the loan in-kind, provided that such rollover is made within 60 days following the Closing.
(g) With respect to Transferred Employees who are included in any collective bargaining unit covered by a collective bargaining agreement that is set forth in Section 6.8(g) of the Sellers Disclosure Schedule (the “Collective Bargaining Agreements”), on the Closing Date, the Purchaser shall assume the Collective Bargaining Agreements as they relate to such Transferred Employees and shall (or, if applicable, shall cause one of its Subsidiaries to) agree and become party to and be bound by the terms and conditions, including existing seniority dates, of the Collective Bargaining Agreements, including the obligation of the Purchaser to recognize the relevant organization as a collective bargaining agent, the obligation to apply the terms and conditions of the Collective Bargaining Agreements to the Transferred Employees regardless of the number of hours the Transferred Employees are scheduled to work, the duty to continue existing wages, hours and terms and conditions of employment consistent with Sections 8(a)(5) and 8(d) of the National Labor Relations Act, as amended, 29 U.S.C. Sections 158(a)(5) and 158(d), including the obligation to contribute to the Benefit Plans set forth on Section 4.15(a) of the Sellers Disclosure Schedule.
(h) The provisions of this Section 6.8 are solely for the benefit of the respective parties to this Agreement and nothing in this Section 6.8, express or implied, shall confer upon any Business Employee, or legal representative or beneficiary thereof, any rights or remedies, including any right to employment or continued employment for any specified period, or compensation or benefits of any nature or kind whatsoever under this Agreement.
(i) If the Sellers as of the Closing Date incur Liability for NYT Severance Benefits of less than $3,000,000 (the “Severance Cap”) with respect to Business Employees to whom the Purchaser does not make an offer of employment in accordance with Section 6.8(b) (collectively, “Severance Costs”), the Cash Consideration shall be reduced at Closing as set forth in Section 2.5 by the difference between the Severance Cap and the amount of such severance costs (such difference, if any, the “Severance Adjustment”). Not fewer than two days prior to Closing, the Sellers will provide the Purchaser with a schedule detailing their calculation of the Severance Adjustment.