EXECUTION COPYExhibit 10.36EMPLOYMENT AGREEMENT     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of the 14thday of December, 2006, to be effective as of December 29, 2006 (the “Effective Date”), byand between Sun-Times Media Group, Inc., a Delaware corporation (the “Employer”), and JamesD. McDonough (the “Executive”).RECITALS     The Executive currently serves as Assistant General Counsel to the Employer. Effective as ofthe close of business on December 29, 2006, the Employer desires that the Executive continue toprovide services for the benefit of the Employer as its Vice President, General Counsel andSecretary and the Executive desires to accept such continued employment with the Employer.     NOW, THEREFORE, in consideration of the above premises and the following mutual covenants andconditions, the parties agree as follows:     1. Employment. This Agreement shall not become effective until the Effective Date.Effective as of the close of business on the Effective Date, the Employer shall employ theExecutive as its Vice President, General Counsel and Secretary and the Executive hereby acceptssuch employment on the following terms and conditions.     2. Duties. The Executive shall work for the Employer in a full-time capacity. Fromthe Effective Date through the expiration of this Agreement, the Executive shall have the duties,responsibilities, powers, and authority customarily associated with the positions of VicePresident, General Counsel and Secretary. The Executive shall report to, and follow the directionof, the President and Chief Executive Officer of the Employer. In addition to, or in lieu of, theforegoing, the Executive also shall perform such other duties as may be assigned to him from timeto time by the President and Chief Executive Officer. The Executive shall diligently, competently,and faithfully perform all duties, and shall devote his entire business time, energy, attention,and skill to the performance of duties for the Employer and will use his best efforts to promotethe interests of the Employer; provided the Executive shall be entitled to devote time to personalinvestments and professional activities to the extent such activities do not unduly interfere withhis duties hereunder.     3. Term of Employment. The initial term of employment hereunder shall commence on theEffective Date and end on December 31, 2007. The then current term of employment hereunder as ofany time is referred to herein as the “Current Term”. On December 31, 2007, and on eachsucceeding December 31, the term of employment shall be renewed for successiveperiods of one (1) year, unless the Board of Directors of the Employer (the “Board”)provides the Executive, or the Executive provides the Board, with written notice to the contrary atleast thirty (30) days prior to the end of the Current Term.
 

 
     4. Compensation.          A. Salary. As of the Effective Date, the Employer shall pay the Executive an annualsalary of US$275,000 (the “Base Salary”), payable in substantially equal installments inaccordance with the Employer’s payroll policy from time to time in effect. The Executive’s salaryshall be subject to any payroll or other deductions as may be required to be made pursuant to law,government order, or by agreement with, or consent of, the Executive. The Base Salary is subjectto increase at the discretion of the Board, or a Committee thereof acting under delegatedauthority, as appropriate.          B. Performance Bonus. Beginning with calendar year 2007, during the term of thisAgreement, the Executive shall be eligible for an annual bonus targeted at fifty percent (50%) ofthe Executive’s Base Salary (the “Target Bonus”), such bonus, if any, to be paid no laterthan the date which is two and one-half (2 1 ¤ 2 ) months followingthe end of each calendar year. The bonus shall be based upon an annual calendar year bonus plan,to be established by the Board prior to or as soon as reasonably practicable after each January 1.The actual bonus to be paid to Executive shall be determined by the Board, or by a committeethereof with delegated authority, based upon such criteria as are established by the Board or suchcommittee and communicated to Executive. The actual bonus to be paid to Executive may exceed or belower than the Target Bonus, based upon performance relative to the established criteria.          C. Long-Term Incentive Plan. Beginning with calendar year 2007, the Executive shallbe eligible to receive an annual award (the “Incentive Award”) under the Employer’sLong-Term Incentive Plan (the “LTIP”). The terms of any Incentive Award, including thoserelating to the vesting and payment thereof, are subject to the terms and conditions of the LTIP,which is incorporated herein by reference. The actual Incentive Award to be awarded to theExecutive shall be determined by the Board, or by a committee thereof with delegated authority, inits discretion.          D. Other Compensation. Executive shall be eligible to participate in any and allother incentive compensation programs established by Employer in which Employer’s senior executivesparticipate or with respect to which they are eligible. The Board, or a Committee thereof withdelegated authority, shall determine the amount of any such awards in its sole discretion.          E. Benefits and Perquisites. Executive shall be eligible to participate in allbenefit plans and programs for which other senior executives of Employer are eligible, and shall beentitled to such perquisites as are available to othersenior executives of Employer, and such additional perquisites as may be approved by the Boardor the Compensation Committee thereof.     5. Expenses. The Employer shall reimburse the Executive for expenses in accordancewith the Employer’s policies from time to time in effect.
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     6. Termination. The Executive’s services under this Agreement shall terminate uponthe first to occur of the following events:          A. At the end of the then Current Term of this Agreement if not renewed in accordance with theprovisions of Paragraph 3 hereof.          B. Upon the Executive’s date of death or the date the Executive is given written notice fromthe Employer that he has been determined to be disabled. For purposes of this Agreement, theExecutive shall be deemed to be “disabled” if the Executive, as a result of illness or incapacity,shall be unable to perform substantially his required duties for a period of three (3) consecutivemonths or for any aggregate period of three (3) months in any six (6) month period.          C. On the date the Employer provides the Executive with written notice that he is beingterminated for “Cause.” For purposes of this Agreement, “Cause” means that Executive has:(i) been convicted of (or has pleaded guilty or no contest to) a felony, or (ii) engaged in conductthat constitutes willful gross neglect or willful gross misconduct with respect to his employmentduties; provided, no act or omission on Executive’s part shall be considered “willful” if conductedin good faith and with a reasonable belief that his conduct was in the best interests of Employer.Notwithstanding the foregoing, the Employer may not terminate Executive’s employment for Causeunder clause (ii) of this Paragraph 6C unless Executive is given at least thirty (30) days to cureany such conduct (if capable of cure), and only after Executive has received a certified copy of aresolution of the Board terminating his employment for Cause and stating specifically the conductthat the Board believes satisfies the definition of Cause.          D. On the date the Executive terminates his employment for any reason, provided that theExecutive shall give the Employer thirty (30) days written notice prior to such date of hisintention to terminate this Agreement.          E. On the date the Employer terminates the Executive’s employment for any reason other than inthe event of Executive’s death or disability or for Cause, provided that the Employer shall givethe Executive thirty (30) days written notice prior to such date of its intention to terminate thisAgreement.     7. Compensation upon Termination.          A. If the Executive’s services are terminated pursuant to Paragraph 6B, 6C or (except asprovided in Paragraph 7C) 6D, or the Executive elects to terminate this Agreement at the end of itsthen Current Term pursuant to Paragraph 6A, the Executive shall be entitled to his salary andhealth and welfare benefits through his final date of active employment, plus any accrued butunused vacation pay. The Executive shall also be entitled to any benefits mandated under theConsolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or required under theterms of any death, insurance, or retirement plan, program, or agreement, or any other plan orarrangement, provided by the Employer and to which the Executive is a party or in which
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theExecutive is a participant, including, but not limited to, any short-term or long-term disabilityplan or program, if applicable. All payments and benefits described in this Paragraph 7A arereferred to herein as “Accrued Obligations.”          B. If the Executive’s services are terminated pursuant to Paragraph 6E, or the Employer electsto terminate this Agreement at the end of its then Current Term pursuant to Paragraph 6A, in eithercase (x) prior to and not in connection with a Change in Control (as defined herein) or (y)following the twenty-four (24) month period following the occurrence of any such Change in Control,Executive shall receive (except as otherwise provided in Paragraph 7E) (i) a lump sum equal to (a)one times the sum of the final Base Salary plus Target Bonus plus (b) a pro-rata annual bonus forthe year in which termination of employment occurs, determined by multiplying the Target Bonus by afraction, the numerator of which is the number of days elapsed in the calendar year in whichtermination of employment occurs through the date of termination of Executive’s services under thisAgreement (such date, the “Final Date”), and the denominator of which is 365 (the“Pro-Rata Bonus”) plus (c) any bonus that was earned by Executive under Paragraph 4B withrespect to a prior calendar year but not paid as of the Final Date, (ii) continuation for a periodending one year from the Final Date (the “Continuation Period”) of medical, dental, visionand life insurance benefits provided to Executive immediately prior to termination of employment,subject to the Company’s continuation of such benefits for its employees and to Executive’s paymentof the cost of such benefits to the same extent that active employees of the Company are requiredto pay for such benefits from time to time, provided that such continuation coverage shall endearlier upon Executive’s becoming eligible for comparable coverage under another employer’s benefitplans and (iii) the Accrued Obligations. For purposes of COBRA, the date of Executive’s“qualifying event” arising out of such termination of employment shall be the date of terminationof employment. Upon termination of the Executive’s services under this Agreement pursuant to thisParagraph 7B (except as otherwise provided in Paragraph 7E), (i) all unvested cash Incentive Awardsshall become immediately vested and payable (if applicable) as and to the extent provided in theLTIP, and (ii)(a) all unvested equity-based awards under the LTIP or otherwise that would havevested under the original vesting schedule for such awards at any time during the ContinuationPeriod shall become immediately fully vested and payable (if applicable) and (b) all other unvestedequity-based awards under the LTIP or otherwise shallimmediately terminate. Employer’s obligations to pay the amounts and furnish the benefits asprovided in this Paragraph 7B shall be conditioned upon receipt by Employer of Executive’s writtenwaiver and release of the Employer from all claims related to the Executive’s employment andtermination of employment, including without limitation for additional severance payments andbenefits and otherwise, which has become irrevocable and effective in accordance with its terms(the “Release”). All payments described in this Paragraph 7B shall be made to Executive ina single lump sum on the later of (A) the date on which the Release becomes irrevocable andeffective in accordance with its terms and (B) ten (10) business days following the date oftermination of the Executive’s services under this Agreement.          C. In the event of a Change in Control, and the subsequent termination, within twenty-four(24) months after the Change in Control, of Executive’s
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services under this Agreement by Employerwithout Cause (including pursuant to the Employer’s election to terminate this Agreement at the endof the then Current Term pursuant to Paragraph 6A) or by Executive for Good Reason, the Executiveshall receive (except as otherwise provided in Paragraph 7E) (i) a lump sum amount equal to (a) thePro-Rata Bonus, plus (b) Executive’s final Base Salary multiplied by two (2), plus (c) Executive’sTarget Bonus multiplied by two (2), plus (d) any bonus that was earned by Executive under Paragraph4B with respect to a prior calendar year but not paid as of the Final Date; (ii) continuation for aperiod ending two years from the Final Date of medical, dental, vision and life insurance benefitsprovided to Executive immediately prior to termination of employment, subject to the Company’scontinuation of such benefit plans for its employees and to Executive’s payment of the cost of suchbenefits to the same extent that active employees of the Company are required to pay for suchbenefits from time to time, provided that such continuation coverage shall end earlier uponExecutive’s becoming eligible for comparable coverage under another employer’s benefit plans; and(iii) the Accrued Obligations. For purposes of COBRA, the date of Executive’s “qualifying event”arising out of such termination of employment shall be the date of termination of employment. Inaddition, upon a Change in Control, all unvested Incentive Awards shall become immediately vestedand payable (if applicable) as and to the extent provided in the LTIP, and all other unvestedequity-based awards and grants previously made to Executive under the LTIP or otherwise shallbecome immediately fully vested and payable (if applicable). All payments described in thisParagraph 7C shall be made to Executive in a single lump sum on a date that is not later than ten(10) business days following the date of termination of Executive’s services under this Agreement.          For purposes of this Agreement, “Good Reason” for termination of Executive’semployment by Executive shall exist if a Change of Control has occurred and, at any time during thetwenty-four (24) months thereafter, any of the following has also occurred: (i) Executive’s title,authority, or principal duties are materially reduced, materially diminished or eliminated; (ii)Executive’s Base Salary is reduced or Executive’s benefits are diminished (except in connectionwith reduction of base salaries or benefits, as the case may be, on substantially an Employer-widebasis, so long as Executive’s reduction is not less favorable on a percentage basis than thereductions applicable to other members of senior management of the Employer; or (iii) Executive’sprincipal place of employment is relocated to a location that results in an increase in Executive’sone-way commute of more than thirty-five (35) road miles from the prior commuting distance.          For purposes of this Agreement, a “Change in Control” shall be deemed to have occurredupon:               (1) the acquisition after the date of this Agreement by any “person” (as defined inSections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the“Exchange Act”) (excluding for this purpose, (i) the Employer or any subsidiary ofthe Employer or (ii) any employee benefit plan of the Employer or of any subsidiary of theEmployer or any person or entity organized, appointed or established by the Employer for orpursuant to the terms
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of any such plan which acquires after the date of this Agreementbeneficial ownership of voting securities of the Employer, or (iii) RSM Richter Inc.(“Richter”), in its capacity (but solely in its capacity) as (x) interim receiver,receiver and manager of the assets, undertakings and properties of Ravelston CorporationLimited (“RCL”) and Ravelston Management Inc. (“RMI”) pursuant to theReceivership Order of the Ontario Superior Court of Justice dated April 20, 2005, and (y)monitor of RCL and RMI pursuant to the CCAA Initial Order of the Ontario Superior Court ofJustice dated April 20, 2005 (Richter, in its capacities as interim receiver, receiver,manager and monitor pursuant to the foregoing orders of the Ontario Superior Court ofJustice, is referred to as the “Receiver”), and any Person which as of April 20,2005 was a direct or indirect subsidiary of RCL or RMI (a “Ravelston Subsidiary”);provided, that each such Ravelston Subsidiary shall only be deemed to be covered by thisclause (iii) for so long as (A) it is and remains a Ravelston Subsidiary, (B) Richterremains Receiver, and (C) Richter, in its capacity as Receiver, beneficially owns no morevoting securities of Employer than were beneficially owned by RCL and RMI on April 20,2005) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), directlyor indirectly, of securities of the Employer representing more than fifty percent (50%) ofthe combined voting power of the Employer’s then outstanding securities; provided, however,that no Change in Control will be deemed to have occurred as a result of a change inownership percentage resulting solely from an acquisition of securities by the Employer; or          (2) the members of the Board as of the Effective Date (collectively, “IncumbentDirectors”) and any new directors whose election by the Board or nomination by theBoard for election by the Employer’s stockholders was approved by a vote of a leasttwo-thirds ( 2 ¤ 3 ) of the directors then still in officewho either are Incumbent Directors or whose election or nomination for election waspreviously so approved (such new directors being referred to as “Successor IncumbentDirectors”) ceasing for any reason to constitute at least a majority of the Board; or          (3) the adoption, enactment or effectiveness of any action (including, withoutlimitation, by resolution or by amendment to theEmployer’s charter or bylaws) that materially limits or diminishes the power orauthority of the Employer’s board of directors or any committee thereof, if such action hasnot been approved by a vote of a least two-thirds ( 2 ¤ 3 )of the directors then still in office who either are Incumbent Directors or SuccessorIncumbent Directors; or          (4) the consummation of a reorganization, merger or consolidation, or sale or otherdisposition of all or substantially all of the assets of the Employer (a “BusinessCombination”), in each case, unless, following such Business Combination, all orsubstantially all of the individuals and entities who were the beneficial owners ofoutstanding voting securities of the Employer immediately prior to such BusinessCombination beneficially own, directly or indirectly, more than fifty percent (50%) of thecombined voting power of the
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then outstanding voting securities entitled to vote generallyin the election of directors of the entity resulting from such Business Combination(including, without limitation, an entity which, as a result of such transaction, owns theEmployer, or all or substantially all of the Employer’s assets, either directly or throughone or more subsidiaries) in substantially the same proportions as their ownership,immediately prior to such Business Combination, of the outstanding voting securities of theEmployer; or               (5) the shareholder approval of a complete liquidation or dissolution of the Employer.          D. Anything in this Agreement to the contrary notwithstanding and except as set forth below,in the event it shall be determined that any Payment would be subject to the Excise Tax, then theamounts and benefits payable to the Executive under this Agreement or otherwise shall be reduced sothat the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, but onlyif the effect of such reduction would be to place Executive in a better after-tax economic positionthan Executive would have been in had no such reduction been effected. The reduction of theamounts payable hereunder, if applicable, shall be made by first reducing the cash severancepayments under Paragraph 7C or 7B, as applicable, unless an alternative method of reduction iselected by the Executive, and in any event shall be made in such a manner as to maximize the Valueof all Payments actually made to the Executive. All determinations required to be made under thisParagraph 7D, including the assumptions to be utilized in arriving at such determination, shall bemade by the Employer’s auditor in effect immediately prior to a Change of Control or such othernationally recognized certified public accounting firm as may be designated by the Employer (the“Accounting Firm”). In the event that the Accounting Firm is serving as accountant orauditor for the individual, entity or group effecting the Change in Control, the Employer mayappoint another nationally recognized accounting firm to make the determinations required hereunder(which accounting firm shall then be referred to as the Accounting Firm hereunder). The AccountingFirm shall provide detailed supporting calculations both to the Employer and the Executive within15 business days of the receipt of notice from the Executive that there has been a Payment or suchearlier time as is requested by the Employer. All fees and expenses of the Accounting Firm shall beborne solely by theEmployer. Any determination by the Accounting Firm shall be final and binding upon theEmployer and the Executive.          For purposes of this Paragraph 7D, the following terms shall have the following meanings:(a) “Excise Tax” shall mean the excise tax imposed by Section 4999 of theCode, together with any interest or penalties imposed with respect to such excisetax.(b) “Parachute Value” of a Payment shall mean the present value as of thedate of the change of control for purposes of Section 280G of the Code of theportion of such Payment that constitutes a “parachute payment” under
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Section280G(b)(2), as determined by the Accounting Firm for purposes of determiningwhether and to what extent the Excise Tax will apply to such Payment.(c) “Payment” shall mean any payment or distribution in the nature ofcompensation (within the meaning of Section 280G(b)(2) of the Code) to or for thebenefit of the Executive, whether paid or payable pursuant to this Agreement orotherwise.(d) “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,”within the meaning of Section 280G(b)(3) of the Code.(e) “Value” of a Payment shall mean the economic present value of aPayment as of the date of the change of control for purposes of Section 280G of theCode, as deter-mined by the Accounting Firm using the discount rate required bySection 280G(d)(4) of the Code.          E. Notwithstanding the foregoing, the Employer may elect to terminate this Agreement at theend of its then Current Term pursuant to Paragraph 6A but not terminate Executive’s employment withthe Employer. If the Employer so elects, and if the Employer has Comparable Severance Policies (asdefined below) in effect as of the date on which this Agreement is so terminated, then theExecutive shall not be entitled to receive the payments and benefits described in Paragraph 7B or7C. For purposes of this Agreement, “Comparable Severance Policies” means one or morepolicies, programs or arrangements that have been approved by the Board (or its CompensationCommittee) which would entitle the Executive to receive (in the absence of an employment agreement)upon a subsequent termination of employment by the Employer under circumstances described inParagraph 6E, payments and benefits that are substantially identical to and no less favorable thanthose described in Paragraph 7B or 7C, as applicable. Following the termination of this Agreementpursuant to the Employer’s election under this Paragraph 7E, the Employer agrees that anysubsequent modification of the Comparable Severance Policies shall not be effective as to theExecutive if such modifications would result in the Executive receiving payments and benefits (upona subsequent termination of employment by the Employer undercircumstances described in Paragraph 6E) that are less favorable than those described inParagraph 7B or 7C, as applicable.          8. Confidential Information. Executive acknowledges that the Confidential Information(as defined herein) obtained by him concerning the business and affairs of the Employer and itsaffiliates and its and their predecessors during the course of his performance of services for, oremployment with, any of the foregoing persons (whether or not compensated for such services) arethe property of the Employer and its affiliates. Therefore, Executive agrees that he will not atany time (whether during
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or after his employment period) disclose to any unauthorized person or,directly or indirectly, use for his own account, any Confidential Information without the Board’sconsent. Executive agrees to deliver to the Employer at the termination of his employment, or atany other time the Employer may request in writing (whether during or after his employment period),all memoranda, notes, plans, records, reports and other documents, regardless of the format ormedia (and copies thereof), relating to the business of the Employer and its affiliates and its andtheir predecessors which he may then possess or have under his control and which containConfidential Information. As used herein, “Confidential Information” means information ormaterials of a confidential or proprietary nature and includes, but is not limited to, (a) mattersof a technical nature, such as trade secrets, methods, data and know-how, inventions, designs,machines, computer programs or printouts, and documentation and similar items or research projects,and (b) matters of a business nature, such as information about past, present, or future companyperformance, correspondence, notes, reports, files, financial information, sales figures andprojections, budgets, marketing plans, price lists, strategies, and lists of actual or potentialcustomers, partners, or investors. Notwithstanding the foregoing, Confidential Information shallnot include information that is generally ascertainable from public or published information ortrade sources.     9. Noncompetition and Nonsolicitation; Remedies.          A. The Executive covenants and agrees that, during the Executive’s employment with theEmployer and for the period of one (1) year after the effective date of the Executive’s terminationof employment for whatever reason (the “Restricted Term”), he will not (a) be employed inan executive or managerial capacity by, or (b) provide whether as an employee, independentcontractor, consultant, or otherwise, any services of an executive or managerial nature or anyservices similar to those provided by the Executive to the Employer during the Executive’semployment with the Employer to, any company or entity engaged in the production or sale ofnewspapers or news magazines in any market which is served by the Employer or which the Employer isactively preparing to serve at the time of the Executive’s termination of employment. TheExecutive acknowledges that the restrictions contained in this Paragraph 9A are necessary toprotect the Employer’s legitimate interests in its Confidential Information and customerrelationships.          B. The Executive covenants and agrees that during the Executive’s employment with the Employerand the Restricted Term, other than in the proper performance of the Executive’s duties whileemployed by the Employer, the Executive will not employ, retain, solicit, attempt to solicit,knowingly assist in the employment or retention of, or seek to influence or induce to leave theEmployer’s employment or service any individual who is employed or retained as an independentcontractor by the Employer at such time or who was employed or retained as an independentcontractor by the Employer at any time during the three (3) month period prior to the Executive’sdate of termination. The Executive acknowledges that the restrictions contained in this Paragraph9B are necessary to protect the Employer’s legitimate interests in its Confidential Information,customer relationships, and employee relationships.          C. The Executive acknowledges and agrees that any breach or threatened breach by the Executiveof Paragraphs 8 and 9 of this Agreement will cause irreparable harm and continuing damages to theEmployer and that the remedy at law for
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any such breach or threatened breach will be inadequate.Accordingly, in addition to any other remedies that may be available to the Employer at law or inequity in such event, the Employer shall be entitled to seek and obtain, from any court ofcompetent jurisdiction, an injunction or injunctions, without bond or other security and withouthaving to show that money damages will be inadequate or impossible to determine and without provingspecial damages or irreparable injury, enjoining and restricting the breach or threatened breach.If the Employer succeeds in securing any such relief, the Executive will pay all of the costs andexpenses, including reasonable attorneys’ fees, that the Employer incurs in obtaining such relief.     10. Notices. Any and all notices required in connection with this Agreement shall bedeemed adequately given only if in writing and (a) personally delivered, or sent by first class,registered, or certified mail, postage prepaid, return receipt requested or by recognized overnightcourier, (b) sent by facsimile, provided a hard copy is mailed on that date to the party for whomsuch notices are intended, or (c) sent by other means at least as fast and reliable as first classmail. A written notice shall be deemed to have been given to the recipient party on the earlier of(i) the date it shall be delivered to the address required by this Agreement; (ii) the datedelivery shall have been refused at the address required by this Agreement; (iii) with respect tonotices sent by mail or overnight courier, the date as of which the Postal Service or overnightcourier, as the case may be, shall have indicated such notice to be undeliverable at the addressrequired by this Agreement; or (iv) with respect to a facsimile, the date on which the facsimile issent and receipt of which is confirmed. Any and all notices referred to in this Agreement, or whicheither party desires to give to the other, shall be addressed to the Executive at 2300 WestArmitage Avenue, No. 7, Chicago, IL 60647, or to its principal office in the case of the Employer.The Executive and the Employer may change the applicable addresses for notice by providing to theother at least five (5) days advance written notice thereof in accordance with the foregoingprovisions of this Paragraph 10.     11. Waiver of Breach. A waiver by the Employer of a breach of any provision of thisAgreement by the Executive shall not operate or be construed as a waiver or estoppel of anysubsequent breach by the Executive. No waiver shall be valid unless in writing and signed by anauthorized officer of the Employer.     12. Assignment. The Executive acknowledges that the services to be rendered by him areunique and personal. Accordingly, the Executive may not assign any of his rights or delegate anyof his duties or obligations under this Agreement. The rights and obligations of the Employerunder this Agreement shall inure to the benefit and shall be binding upon the successors andassigns of the Employer. Employer covenants and agrees that it will secure the assumption by orthe agreement of any successor or assignee of this Agreement to the terms hereof.     13. Entire Agreement; Amendment. This Agreement sets forth the entire and finalagreement and understanding of the parties and contains all of the agreements made between theparties with respect to the subject matter hereof. This
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Agreement supersedes any and all otheragreements, either oral or in writing, between the parties hereto, with respect to the subjectmatter hereof. No change or modification of this Agreement shall be valid unless in writing andsigned by the Employer and the Executive.     14. Severability. If any provision of this Agreement shall be found invalid orunenforceable for any reason, in whole or in part, then such provision shall be deemed modified,restricted, or reformulated to the extent and in the manner necessary to render the same valid andenforceable, or shall be deemed excised from this Agreement, as the case may require, and thisAgreement shall be construed and enforced to the maximum extent permitted by law, as if suchprovision had been originally incorporated herein as so modified, restricted, or reformulated or asif such provision had not been originally incorporated herein, as the case may be. The partiesfurther agree to seek a lawful substitute for any provision found to be unlawful; provided, that,if the parties are unable to agree upon a lawful substitute, the parties desire and request that acourt or other authority called upon to decide the enforceability of this Agreement modify thoserestrictions in this Agreement that, once modified, will result in an agreement that is enforceableto the maximum extent permitted by the law in existence at the time of the requested enforcement.     15. Headings. The headings in this Agreement are inserted for convenience only andare not to be considered a construction of the provisions hereof.     16. Counterparts. This Agreement may be executed in several counterparts, each ofwhich shall be considered an original, but which when taken together, shall constitute oneagreement.     17. Governing Law. This Agreement shall be governed by, and construed in accordancewith, the laws of the State of Illinois, without reference to its conflict of law provisions.     18. Litigation Expenses. In the event Executive brings an action seeking to enforcehis rights under this Agreement, the Employer will pay, on a regular and current basis, all ofExecutive’s reasonable legal fees and expenses incurred in connection with such action. Executivewill be obligated to return all amounts so advanced only in the event of a final judgment orarbitration determination denying in full Executive’s requested relief.     19. Indemnification. During and after the term hereof, Executive shall be entitled toindemnification by Employer from and against any loss, cost or expense incurred by Executive inconnection with any threatened, pending or completed action, suit or proceeding, by reason of thefact that Executive is or was a director, officer or employee of Employer to the fullest extentpermitted under applicable law. Executive shall be entitled to advancement of expenses to thefullest extent permitted under applicable law, subject to an undertaking by Executive to repay suchamounts if it is ultimately determined that Executive was not entitled to such advance or to anysuch indemnification.
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     20. Certain Waivers. The Executive hereby waives and disclaims any claim that theappointment of Richter as (i) interim receiver, receiver and manager of the assets, undertakingsand properties of RCL and RMI pursuant to the Receivership Order of the Ontario Superior Court ofJustice dated April 20, 2005, and (ii) monitor of RCL and RMI pursuant to the CCAA Initial Order ofthe Ontario Superior Court of Justice dated April 20, 2005, constitutes a Change in Control forpurposes of this Agreement. The Executive covenants and agrees that he will not bring, assert ormaintain any claim that the appointment of Richter as receiver and monitor or RCL and RMI asdescribed above constitutes a Change in Control for purposes of this Agreement.[SIGNATURE PAGE FOLLOWS]
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     IN WITNESS WHEREOF, the parties have set their signatures on the date first written above.       SUN-TIMES MEDIA GROUP, INC.,  a Delaware corporation       By: /s/ Cyrus F. Freidheim, Jr.         Its: President and Chief Executive Officer       JAMES D. MCDONOUGH         /s/ James D. McDonough     
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