Exhibit 10.42
News Communications, Inc.
Xxx Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
November 27, 2002
Xx. Xxxxxx Xxxxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxx Xxxxx Xxxx
Xxxx Xxxxxxx, XX 00000
Re: Employment and Shareholders' Agreement
Dear Xxx:
This Letter Agreement confirms our recent discussions concerning the
exercise of your option to require News Communications, Inc. ("NCI") to purchase
shares of common stock of Dan's Papers, Inc. (the "Company") owned by you,
pursuant to Section 12A of that certain Employment and Shareholders' Agreement
dated as of November 25, 1997, between and among you, NCI and the Company (the
"Agreement"), and the amendment of certain terms of the Agreement affecting your
employment with the Company and other matters. Terms used but not otherwise
defined herein shall have the meaning defined in the Agreement.
1. We acknowledge the receipt of the Put Notice, dated September 23, 2002,
pursuant to Section 12A of the Agreement, with respect to all of the shares
owned by you (the "Put Shares").
2. You and NCI agree that the purchase price for the Put Shares shall be
$1,600,000, of which amount $400,000 shall be paid at Closing (November 27,
2002, as defined in Section 14 of the Agreement), and the balance shall be paid,
with interest, at prime plus one percent in two equal installments (i.e.
$600,000 plus interest required hereunder) no later than on the first and second
anniversaries of the Closing or the first business day following that day.
Immediately before the Closing, you will deliver to an escrow agent mutually
agreed upon between you and NCI a certificate representing the ten (10) shares
you are transferring (which represents all of the shares owned by you at any
time in the Company), together with a stock power endorsed in blank. Xxxxxxx
X'Xxxxxx shall serve as the interim escrow agent until a permanent escrow agent
is agreed upon by you and NCI. Should you and NCI fail to agree upon on an
escrow agent during the thirty (30) day period following the Closing Date, XX
Xxxxxx Xxxxx shall serve as the escrow agent. The cost of the escrow agent shall
be shared equally by you and NCI. Upon final payment for the Put Shares by NCI,
the escrow agent shall deliver the Put Shares together with the stock power to
NCI. You shall give written notice to NCI's Chief Executive Officer via
certified mail in the event that NCI fails to make either of the aforementioned
installment payments when due. NCI shall have a
sixty (60) day grace period from receipt of such notice to make the required
installment payment. In the event that NCI fails to make such payment during the
sixty (60) day grace period, the escrow agent shall be entitled to follow your
instructions with respect to the Put Shares. Title to all of the Put Shares
shall be deemed to pass to NCI as of the Closing date and as of that date you
shall no longer have any rights as a shareholder of the Company other than upon
a default in payment by NCI as described in the immediately preceding sentence.
For avoidance of doubt, NCI shall have the right as of the Closing date, to
sell, pledge, transfer, encumber or otherwise dispose of the Put Shares, as well
as all other shares of the Company to which NCI has title, without any
restriction whatsoever and, except in the event of NCI's default of the payments
required under this paragraph, Rattiner shall have no rights under Section 24 of
the Agreement or any other provision of the Agreement with respect to the Put
Shares. In the event that (i) NCI sells more than fifty-one (51%) percent of the
shares or assets of the Company to a third party or (ii) NCI requires the escrow
agent to release the Put Shares prior to the second anniversary of the Closing
Date, then in the case of subsection (i), within 30 days after the closing of
such transaction, or in the case of subsection (ii), upon the escrow agent's
release of the Put Shares, either NCI or the buyer of such shares or assets
shall pay to you all payments provided for under this paragraph which remain
unpaid as of that date.
3. You agree that, notwithstanding anything in the Agreement to the
contrary, NCI, the Company, any purchaser of the Company or any other successor
in interest to the Company or NCI shall have the right at all times to terminate
your employment without proper Cause on 90 days prior notice without any further
liability to you provided that you receive severance in the form of a lump sum
or continuation payments as follows: (i) your salary payable under Section 8(a)
of the Agreement through October 18, 2007 (the "Term Date") (or continuation of
your salary paid on a regular payroll basis until the Term Date), (ii) a bonus
payment, if any, pursuant to Section 8(b) for the year in which the termination
occurs, pro rated to the date of the termination of your employment, (iii) the
value of your health insurance through the Term Date (or continuation coverage
and payment of premiums until the Term Date), (iv) reimbursement for unpaid
business travel and entertainment expenses, if any, that you have actually
incurred prior to the date of the termination of your employment, up to a
maximum amount of $15,000, pursuant to Section 8(c)(ii), and (v) the value of
the automobile lease benefit through the Term Date, pursuant to Section
8(c)(iii) (or continuation of the lease payments until the Term Date). In
addition, you shall continue to have your right under Section 8(c)(iv) of the
Agreement to purchase from the Company trade sales merchandise having a face
value of up to $15,000, at a purchase price of 70% of the face value of such
merchandise, for each year until the Term Date (and as pro rated for 2007). In
calculating the various amounts that constitute payment of the lump sum referred
to in this provision, the Company shall be required to pay only the present
value of the amounts payable in future years, using a discount rate that is
customarily used when calculating the value of benefits in executive employment
agreements, provided that, if the parties are unable to agree on an appropriate
discount rate, they shall request the auditors of NCI to recommend an
appropriate discount rate, and both parties agree to abide by such
recommendation. In the event that a third party
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acquires all or substantially all of the assets (or acquires control of such
assets through a stock purchase from NCI) of the Company and your employment is
terminated without proper cause, NCI shall either satisfy its obligations under
this paragraph to you or NCI shall cause such third party purchaser to assume
the obligations of this paragraph to pay you the aforementioned lump sum amount
or to provide you with the continuation payments or benefits provided for
hereunder.
4. In the event that you exercise your option under Section 8 of the
Agreement to reduce your duties, and thereby, your annual compensation is
reduced, (i) the amounts payable to you under Paragraph 3 above, if any, in
connection with your termination, shall be reduced proportionally; and (ii) the
provisions under Section 7 of the Agreement with respect to the scope of your
authority and responsibilities as editor and publisher and the content of the
Company's publications shall terminate and thereafter your duties and
responsibilities shall be as determined by the Company from time to time.
5. In addition to the rights provided to the Company in Section 21 of the
Agreement, as amended as of January 26, 1998, you agree that to the extent that
the copyrights for writings or other materials created by you and published by
the Company during your employment pass to your estate at the time of your
death, the Company has the irrevocable right to distribute such works
electronically (including but not limited to distribution via the World Wide Web
portion of the Internet or in any other format or media now known or hereinafter
invented), for archival and reference purposes (which shall include the right to
distribute prior editions of the Company's newspapers and magazines in
electronic form), without any hindrance from or any payment to your estate.
Further, neither you nor your estate has any right to use any such works at any
time in any manner which would compete or interfere with any business of NCI or
the Company. The Company, however, shall not have the right to publish or
sublicense for publication your works in anthology book form. The Company grants
you the right to publish such works in anthology book form prior to and during
your retirement from the Company.
6. So long as you are employed by the Company, you shall not provide
services to any other news organization or media company without the Company's
written permission. Further, in addition to the rights provided in Section 19 of
the Agreement, in the event that the Company, NCI or any of their successors
terminates your employment at any time without proper cause pursuant to
paragraph 3 hereof, the Company or its successor may, within 60 days of such
termination, elect to invoke the non-competition restrictions of Sections
19(a)(i)-(iii) and (b) of the Agreement for a period of 18 months after the
effective date of such termination, and during such period you shall not compete
with the Company, NCI or their affiliates, or any of their successors. If the
Company or its successor makes such an election, in consideration of your
compliance with such non-competition restrictions, it shall pay you the sum of
$125,000 (one hundred and twenty-five thousand dollars), in two installments as
follows: (i) the first installment, in the amount of $62,500, shall be paid to
you at the time
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of the election, and (ii) the second installment, in the amount of $62,500,
shall be paid on the one year anniversary of the date of election, along with
interest accrued on that amount, calculated at the prime rate plus one percent
from the date of such election.
7. In light of your sale of all of your shares to the Company, as of the
Closing date, you shall not have any rights and NCI and the Company shall not
have any obligations under Sections 1-6, 10-12, 13(a), 13(b), 15, 16, 23, 24, or
26 of the Agreement, or the October 13, 1988 Shareholders Agreement between you
and NCI, if any, except and upon a default by NCI of its obligations to make the
payments for the Put Shares as required under Section 2.
8. Except as modified by the terms of this Letter Agreement, the Agreement
shall remain in full force and effect and the terms thereof are incorporated
herein by reference and shall be applicable hereto.
9. You acknowledge the sufficiency of the consideration which is being
provided to in exchange for this Letter Agreement. This Letter Agreement may be
executed in counterparts.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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Please acknowledge your acceptance of the foregoing terms by signing where
indicated below.
Very truly yours,
News Communications, Inc.
By: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxxxx
President and CEO
Agreed and Accepted:
/s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx
cc: Xxxxxx X. Xxxxxxx, Esq.
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