1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of March 15, 2000 between MediaNews
Services, Inc. (the "Company"), a corporation organized and existing under the
laws of the State of Delaware to provide management services to various entities
conducting the business of publishing newspapers and XXXXXX X. XXXXXXX, XX (the
"Executive").
WITNESSETH:
WHEREAS, the Company wishes to employ and retain the services of
Executive, and Executive wishes to be employed by the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and the Executive agree as follows:
1. Period of Employment and Compensation
Company shall employ the Executive to perform the services described
herein, with his principal office activities being situated in Denver, Colorado,
or such other location as the Executive and the Company's Chief Executive
Officer shall mutually agree upon, for the period commencing January 1, 2000,
and terminating at the close of business December 31, 2009, unless thereafter
extended as subsequently provided in this Section, during which period the
Executive shall:
2
(a) be paid a base salary, in equal monthly installments, on
the regular pay day established for executives of the Company, at the
annual rate of Five Hundred Four Thousand Dollars ($504,600.00)
commencing January 1, 2000, which salary shall be increased annually
thereafter, commencing January 1, 2001, at an annual rate of five
percent (5%), or such higher annual rate as the Company shall determine
appropriate; provided, that if the Company's Chief Executive Officer
determines that business conditions are such that all or a portion of
the foregoing increases should be deferred until such time as those
conditions improve, then concurrently with the Chief Executive
Officer's decision to defer or forego similar annual increases relative
to his own salary, such increases may appropriately be deferred;
(b) be reimbursed in a manner consistent with policies of the
Company established for executive personnel, for all reasonable
expenses of the Company incurred by the Executive in the discharge of
any duties hereunder;
(c) receive such fringe benefits including accident,
hospitalization, disability, medical and life insurance plans, as shall
be made generally available to the executive personnel or other
employees of the Company or as otherwise approved by the Company's
Chief Executive Officer; provided, however, that all payments made
payable to the Executive under this Agreement shall be subject to
withholding for any applicable taxes, social security or other
governmental levies and for insurance, savings or any other deductions
authorized by or for the benefit of the Executive under the programs
established for or made available to the executive personnel or other
employees of the Company.
-2-
3
(d) have an appropriate opportunity, commensurate with his
executive stature, to participate in all stock options or other forms
of equity ownership plans which may be established for executive
personnel of the Company, its affiliates or their subsidiaries.
(e) be eligible to receive a bonus for the Company's current
fiscal year and each subsequent fiscal year commencing on or before the
termination of this Agreement of up to $200,000 payable as soon as
practicable after the end of the Company's fiscal year, based on a
comparison of operating profits to budget of the Company during such
fiscal year as follows:
(i) If operating profits for such fiscal year are 100%
or more of budget, then the $200,000 bonus shall be
payable in full;
(ii) If operating profits for such fiscal year are 90%
or more (but under 100%) of budget, then the bonus
amount payable shall be $150,000;
(iii) If operating profits for such fiscal year are 80%
or more (but under 90%) of budget, then the bonus
amount payable shall be $100,000;
(iv) If operating profits for such fiscal year are less
than 80% of budget, or if no budget has been
adopted and approved for such fiscal year pursuant
to the Company's Certificate of Incorporation and
bylaws, then no bonus shall be payable.
The amount of the Executive's salary, fringe benefits and bonus
established hereunder shall constitute his entire compensation for all services
performed by him on
-3-
4
behalf of the Company, its affiliates, MediaNews Group, Inc. ("MNG"), their
subsidiaries and affiliates, except in so far as those entities may from time to
time elect, in their sole discretion, to pay to him such additional bonus or
other forms of additional compensation as may be deemed appropriate.
Effective January 1, 2010, this Agreement shall be automatically
renewed for additional periods of one year each; provided, however, that at
least one hundred and twenty (120) days prior to December 31, 2009 or the
expiration of any subsequent one-year term, either party may give notice to the
other, as provided for herein, terminating this Agreement as of December 31,
2009 or the next annual expiration date.
2. Duties.
The Executive shall perform such executive, managerial, business and
administrative duties as may be assigned to him by the Chief Executive Officer
or Board of Directors of the Company, it being presently intended that the
Executive will serve as Executive Vice President and Chief Financial Officer of
MediaNews Services, Inc., MNG and each of their affiliates and subsidiaries,
subject to the provisions of those entities' by-laws or other operative
documents, and in such capacities shall have financial oversight
responsibilities pertaining to the business of such entities, and otherwise
serve in an administrative capacity as a consultant with regard to the affairs
of such entities in a manner in accordance with his experience. All such
services shall be rendered in diligent, competent, efficient and faithful manner
commensurate with the responsibilities involved.
-4-
5
3. Acceptance
The Executive accepts the aforementioned responsibilities at the
compensation and upon the terms specified herein. During the term of this
Agreement, the Executive shall devote his best efforts principally to the
service of the Company, its affiliates and their subsidiaries and the
performance of the duties specified above, it being understood that the
preponderance of the Executive's time will be applied to furthering the interest
of such entities. The Executive shall not engage in any other business activity
or outside activity which is materially inconsistent with or an impediment to
the carrying out of his duties hereunder.
4. Vacation.
The Executive shall be entitled to an annual paid vacation of five
weeks, such vacation to be taken at such times as he may select.
5. Death or Incapacity.
In the event of death of the Executive during the term hereof, this
Agreement shall terminate, and, except for the rights of the Executive and his
beneficiaries under the benefit plans described in Section 1(c) of this
Agreement, the Company shall not be subject to any further obligation to such
deceased Executive hereunder, except that the estate of said Executive shall be
entitled to receive the unpaid compensation due for service prior to his death,
and through and including the last day of the month in which the Executive died,
including any deferred compensation and/or bonuses which then may have accrued
in full or pro rata.
-5-
6
If, on account of physical or mental disability, the Executive shall
fail or be unable to perform the duties contemplated by this Agreement for a
period of 180 consecutive days, the Company may, at any time thereafter upon 30
days' notice to the Executive, terminate this Agreement. In such event, this
Agreement shall terminate and come to an end on the date set forth in such
notice as if such date were the termination date of this Agreement, but said
Executive shall be entitled to receive his salary, benefits and any other
applicable compensation or reimbursement for expenses through the effective date
of the termination of this Agreement, as set forth in such notice.
6. Covenant Not To Compete.
The Executive agrees during the term of this Agreement and for a period
of five (5) years after any termination hereof, that he will not, within any
geographical areas in which newspapers owned or managed by the Company, its
affiliates and/or their subsidiaries are now or may hereafter be circulated in
material quantities, unless acting as an officer or employee of the Company, its
affiliates or their subsidiaries, or with the prior written consent of the
boards of directors thereof, directly or indirectly, own, manage, operate, join,
control, or participate in, or be connected as an officer, employee, partner,
independent contractor or otherwise with, any business enterprise which directly
or indirectly materially competes with such entities as the latter then conduct
its business. The Executive acknowledges that the remedy at law for any breach
by him of this covenant will be inadequate and that the Company shall be
entitled to injunctive relief for the same.
-6-
7
7. Obligations of MNG Upon Termination of Executive's Employment
Following the termination of Executive's employment (a) at or after the
end of the initial term of employment specified in Section 1 hereof (i.e.,
December 31, 2009) or (b) such earlier date as may be occasioned by (I) the
Executive's death (ii) the mutual agreement of the executive or the Company,
other than for cause on the part of the Company within the meaning of Section 8
hereof or (iii) Executive's unilateral determination, as a consequence of the
Company's determination to diminish materially his current responsibilities and
stature as a senior executive of the Company or the Company's material breach of
one or more of its material obligations hereunder (after having afforded the
Company an appropriate opportunity to cure the same and the Company having
failed to do so in a timely manner), the Executive, or his estate, shall have a
put to the Company's affiliate MNG, which shall be exercisable upon written
notice during the thirty (30) day period commencing one hundred eighty (180)
days following such termination, with respect to all shares of common stock (or
rights to acquire the same) of MNG which Executive may acquire during the term
of his employment by the Company, for 100% of fair market value thereof
(determined as hereinafter provided); provided, that prior to the date of such
termination there shall not previously have occurred an initial public offering
with respect to such shares on a recognized national or international securities
exchange (an "IPO").
As a consequence of any termination of Executive's employment other
than that described in the preceding paragraph, MNG shall have a call, which may
be exercised by MNG upon written notice within the thirty (30) day period
commencing one hundred eighty (180) days following such termination and the
Executive shall have a put, which may be
-7-
8
exercised by the Executive upon written notice within the 30 day period
commencing June 30, 2010, with respect to all shares of common stock of MNG (or
rights to acquire the same) which may be owned by the Executive as of the date
of termination of his employment, at the following stated percentages of fair
market value (determined as hereinafter provided as of the date of exercise of
such put or call): For termination on or after December 31, 2008, 95%; for
termination on or after December 31, 2007, 90%; for termination on or after
December 31, 2006, 85%; for termination on or after December 31, 2005, 80%; for
termination on or after December 31, 2004, 75%; for termination on or after
December 31, 2003, 70%; for termination on or after December 31, 2002, 65%; for
termination on or after December 31, 2001, 60%; for termination on or after
December 31, 2000, 55%; for termination prior to December 31, 2000, 50%.
With regard to any exercise of any put or the call described in this
Section 7, the Company may, upon written notice to the Executive within ten (10)
days of such exercise, elect to consummate the same in up to ten (10) equal
separate purchases of ten percent (10%) of the total number of shares subject
thereto, the first of which purchase shall occur not later than the thirtieth
(30th) day following the initial notice of such exercise, and the remainder of
which purchase shall occur on the first through ninth anniversaries of the
initial purchase. For purposes of the foregoing, the purchase price for each
separate purchase shall be separately calculated with respect to the fair market
value of the shares being purchased at the time of each separate purchase.
For purposes of this Section 7, the fair market value of the shares of
common stock of MNG subject to the above described put or call shall be
determined (without any discount for lack of marketability or the minority
nature of such shares) by independent
-8-
9
appraisal in the manner set forth in Section 5.05 of the MNG Shareholders
Agreement dated as of January 31, 2000.
Notwithstanding any foregoing provisions of this Section, if as of the
date of (a) any exercise of any put or call described in this Section 7 the
Company's performance of any of its obligations hereunder with respect thereto
would violate the terms of any indenture or agreement with respect to borrowed
money then applicable to the Company, or (b) any exercise before January 1, 2010
of any put or call described in this Section 7, the Company's leverage ratio as
defined in the Indenture dated October 1, 1997 by and between the Company and
the Bank of New York is greater than 3:1, then the performance by the Company of
any such obligation shall automatically be deferred until the earliest date upon
which such performance would no longer violate such indenture or agreement, or
(as appropriate) the Company's leverage ratio is no longer greater than 3:1.
8. Termination Of This Agreement For Cause.
Either party may terminate this Agreement prior to its stated term for
cause or in the event of a material breach thereof by the other. Such
termination shall be by notice in writing specifying such cause or material
breach and shall be effective on the date of said notice, without prejudice to
the rights of the party upon whom such notice is served to contest such
termination by any judicial means at such party's disposal.
For purposes of termination of this Agreement by the Company, the
following events shall, by way of illustration, and without any limitation, be
considered as cause:
(a) failure by the Executive to faithfully or diligently perform
any of his material obligations under this contract in the
manner provided, after he has received
-9-
10
written notice from the Company or MNG of his alleged failure
to perform the same, and has failed within a reasonable period
of time substantively to cure such failure;
(b) theft, embezzlement or misappropriation by the Executive of
any funds or other property of the Company, its affiliates or
their subsidiaries;
(c) any material act of self-dealing between the Executive and the
business of the Company, its affiliates or their subsidiaries
which is not disclosed in full to, and approved by, the boards
of directors of the Company and MNG;
(d) intentional falsification by the Executive of any material
records or reports pertaining to the Company, its affiliates
or their subsidiaries;
(e) fraud or similar misconduct on the part of the Executive
pertaining to the Company, its affiliates or their
subsidiaries;
(f) failure to adhere to the normal and customary duties and
ethics within the newspaper industry attendant to the
positions which he may from time to time hold at the
newspapers owned by the Company, its affiliates or their
subsidiaries, promptly after he has received notice from the
Company or MNG of his alleged failure to adhere to the same;
or
(g) any conviction or a plea of nolo contendere with respect to
any felony or any other serious crime which causes the
Executive, or his continued employment by the Company, to
become a source of material embarrassment, disgrace or
ridicule to the Company, its affiliates or any of their
newspapers.
-10-
11
In the event of such termination the Executive shall be entitled to
receive compensation only through the date of his termination, and the Company
shall reserve all rights, if any, which it may have against the Executive under
this Agreement or otherwise, in connection with the termination or otherwise.
9. Notices.
All communications and notices made pursuant to this Agreement shall be
in writing and delivered by hand or sent by certified mail or telegram as
follows:
(a) If to Company, to:
MediaNews Services, Inc.
c/o MediaNews Group, Inc.
Attn: Xxxxxxx Xxxx Xxxxxxxxx
Vice Chairman, President
and Chief Executive Officer
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
With a copy to:
Verner, Liipfert, Bernhard,
XxXxxxxxx and Hand, Chartered
Attn: Xxxxxx X. Xxxxx, Xx., Esq.
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
(b) If to the Executive, addressed to:
Xxxxxx X. Xxxxxxx, XX
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
or to such other address as either of the foregoing may from time to time
specify in writing.
-11-
12
10. Interpretation.
No provision of this Agreement may be altered, waived, discharged or
terminated except in writing, executed by the party against whom enforcement of
any alteration, waiver, discharge or termination is sought. No waiver of any
breach by either party to this Agreement shall operate or be construed as a
waiver of any subsequent breach by any party. This Agreement constitutes the
entire contract between the parties hereto with respect to employment, and no
party shall be bound in any manner related to employment by any warranties,
representations or guarantees, except as specifically set forth in this
Agreement. This Agreement shall be interpreted under the laws of the State of
Delaware.
11. Successors and Assigns.
This Agreement shall be binding upon the parties hereto, their
respective heirs, legal representatives, successors and assigns, but may not be
assigned by either party without the prior written consent of the other party,
and any assignment without such consent shall be void and of no effect.
-12-
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
MediaNews Services, Inc.
By: /s/ W. Xxxx Xxxxxxxxx
----------------------------------
W. Xxxx Xxxxxxxxx
Vice Chairman, President
and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx, XX
-------------------------------------
Xxxxxx X. Xxxxxxx, XX
(WITH RESPECT TO THE PUT OBLIGATIONS SET
FORTH IN SECTION 7 OF THIS AGREEMENT
ONLY.)
MediaNews Group, Inc.
By: /s/ W. Xxxx Xxxxxxxxx
----------------------------------
W. Xxxx Xxxxxxxxx
Vice Chairman, President
and Chief Executive Officer
-13-
