Exhibit 10.23

 

AGREEMENT

 

This Agreement is dated February 25, 2005 (the “Contract Date”), and is between
Gannett Co., Inc., a Delaware corporation (“Gannett”), and Gary L. Watson
(“Executive”). Executive is President of the Newspaper Division and has been
employed by Gannett for more than 35 years. As a key member of senior management
of Gannett, Executive has contributed substantially to the growth and success of
Gannett. Executive’s current responsibilities include supervision of the
Newspaper Division, which includes 100 daily newspapers and about 750 non-daily
and specialized publications and businesses, including Army Times Publishing
Company, USA WEEKEND magazine, Clipper magazine, Nursing Spectrum, GMTI and
Gannett Offset, which includes six commercial printing plants. The operations
are located in 42 states and Guam. He also coordinates the Division’s major
capital projects, including negotiations of multi-million dollar purchases from
international vendors. In addition, he also represents Gannett on the boards of
directors of Classified Ventures, Careerbuilder and Cross Media. He also has
other responsibilities as assigned by the chief executive officer, and
membership on the Gannett Management Committee. Gannett’s chief executive
officer, Douglas H. McCorkindale, is subject to an employment agreement the term
of which expires on June 30, 2006, and Gannett expects there will be a
transition to a new chief executive officer. In light of that transition, as
well as Executive’s exemplary contributions, Gannett desires to retain the
Executive’s services as set forth in this Agreement and to provide the necessary
consideration to assure such services.

 

Gannett and Executive therefore agree as follows:

 

1. Employment. Gannett hereby employs Executive as the President of the
Newspaper Division or in such other senior executive position as the Board of
Directors and Executive shall mutually agree upon. Executive hereby accepts the
employment specified herein, agrees to perform, in good faith, the duties,
consistent with Executive’s position, and as prescribed by Executive’s
supervisor, abide by the terms and conditions described in this Agreement and
devote Executive’s full working time and best efforts to Gannett. These
obligations shall not restrict Executive from engaging in Executive’s customary
activities as a director or trustee of other business and not-for-profit
organizations.

 

2. Term of Agreement. This Agreement shall become effective on the Contract
Date, provided that certain provisions herein shall apply only during the
eighteen-month period commencing on the date that Douglas H. McCorkindale no
longer holds all of the titles Chairman, President and Chief Executive Officer
(the “Transition Period”).

 

3. Compensation. During the term of this Agreement, Gannett shall pay Executive
a base salary at the rate of $765,000 per annum, or such greater amount as the
Executive Compensation Committee, in its sole discretion, shall determine. Such

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salary shall be payable in accordance with Gannett’s standard payroll practices
for senior executives. Gannett may pay Executive a bonus in such amount and at
such time or times as the Executive Compensation Committee, in its sole
discretion, shall determine.

 

4. Reimbursement for Expenses. It is anticipated that Executive will incur
various reasonable business expenses customarily incurred by persons holding
like positions, including but not limited to travel, entertainment and similar
expenses incurred for the benefit of Gannett. Gannett shall reimburse Executive
for such expenses from time to time, at Executive’s request, and Executive shall
account to Gannett for such expenses.

 

5. Termination of Employment by Gannett.

 

  (a) Termination Date. The date of any cessation of Executive’s employment is
referred to herein as the “Termination Date.”

 

  (b) Death. This Agreement shall automatically terminate upon the death of
Executive, and Gannett shall have no further obligations under this Agreement
except as set forth in Section 7(b) hereof.

 

  (c) Disability During the Transition Period. During the Transition Period, if
Gannett terminates Executive’s employment because Executive has an illness or
other disability that has incapacitated Executive from performing Executive’s
duties for six months, as determined by the Gannett Long Term Disability Plan’s
independent plan administrator, then, in addition to other applicable provisions
of this Agreement that are intended to survive termination of employment,
Executive shall be entitled to receive a cash payment equal to the present value
(based on Gannett’s then current all-in cost of borrowing) of (A) the sum of
Executive’s (1) annual salary at the then current rate, (2) most recent annual
bonus paid to Executive prior to the Termination Date, and (3) the deemed value
of all fringe benefits (prior to any elective deferrals or any other deductions
as to salary and bonus) multiplied by (B) a fraction, the numerator of which is
the number of months remaining in the Transition Period and the denominator of
which is the number 12. This cash payment shall be payable within 30 days of the
Termination Date. For this purpose, the deemed value of fringe benefits shall
equal five percent of Executive’s annual salary plus the aggregate amount of
club dues and home security charges paid by Gannett on Executive’s behalf in the
calendar year prior to the year of termination.

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Whenever compensation is payable to Executive hereunder during a time when
Executive is partially or totally disabled, and such disability (except for the
provisions hereof) would entitle Executive to disability income or to salary
continuation payments from Gannett or from its insurer under the terms of the
Gannett long-term disability plan, or any successor Gannett plan or policy in
effect at the time of such disability, the compensation payable to Executive
hereunder shall be inclusive of any such disability income or salary
continuation and shall not be in addition thereto.

 

  (d) Termination for Cause. Gannett may also terminate Executive’s employment
for Good Cause, upon written notice. For this purpose, “Good Cause” means (1)
any material misappropriation of funds or property of Gannett by Executive; (2)
persistent neglect or refusal by Executive to perform Executive’s duties as
provided in Section 1 hereof; (3) the breach by Executive of any provision of
Section 12; (4) conviction of Executive of a felony; or (5) Executive’s
voluntary resignation as an employee of Gannett without the prior written
consent of Gannett. If Gannett terminates Executive’s employment for Good Cause,
Gannett shall have no further obligations under this Agreement except as set
forth under Section 7(b) below.

 

  (e) Other Termination in the Transition Period. Gannett may terminate
Executive’s employment during the Transition Period without Good Cause, subject
to the applicable provisions of this Agreement that are intended to survive
termination of employment. A termination described in Section 5(c) shall not be
treated as a termination under this Section 5(e).

 

  (f) Employee Status. At any time before or after the Transition Period,
Executive shall have the status of an employee at will and either party may
terminate Executive’s employment at any time for any reason or for no reason at
all, subject to the applicable provisions of this Agreement that are intended to
survive termination of employment.

 

6. Termination of Employment by Executive.

 

  (a)

During the Transition Period, Executive shall have the right to terminate
employment under this Agreement for “Good Reason” upon 30 days’ notice to
Gannett given within 90 days following the occurrence of any of the following
events and specifying which event or events has occurred, each of which shall
constitute a “Good Reason” for such termination: (1) Executive is not elected

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or retained as President of the Newspaper Division (or such other senior
executive position as Executive may have agreed to serve in) of Gannett; (2)
Gannett acts to materially reduce Executive’s duties and responsibilities
hereunder including, without limitation, that Executive no longer directly
reports to any one of the Chairman, President or Chief Executive Officer; (3)
Gannett acts to change the geographic location of the performance of Executive’s
duties from the Washington, D.C. metropolitan area; or (4) Gannett otherwise
materially breaches this Agreement; provided that, none of the foregoing events
shall constitute Good Reason if the event is an isolated, insubstantial or
inadvertent event which is remedied by Gannett within 30 days after receipt of
notice given by Executive to Gannett specifying the event or events.

 

  (b) Executive may terminate his employment during the Transition Period
without Good Reason or at any time before or after the Transition Period for any
reason or for no reason at all, provided that Executive shall provide Gannett
with 30 days advance notice.

 

7. Benefits Upon Termination.

 

  (a) During the Transition Period. During the Transition Period, if Executive’s
employment is terminated by Executive pursuant to Section 6(a) hereof, or by
Gannett pursuant to Section 5(e) hereof, and conditioned upon and subject to
Executive executing a valid release agreement releasing Gannett, its affiliates,
and their respective employees, directors and agents, from any and all claims
which Executive has or may have against such parties arising out of Executive’s
employment (the “Release”), the following shall apply:

 

  (i) Executive shall be entitled to receive a cash severance payment equal to
1.5 times the sum of Executive’s (1) annual salary at the then current rate, and
(2) most recent annual bonus paid to Executive prior to the Termination Date
(both prior to any elective deferrals or any other deductions as to such salary
or bonus). Such cash payment shall be payable 30 days after the Termination
Date, provided that the Release has become effective on or before such date; and

 

  (ii)

All outstanding stock options granted to Executive on or prior to the
Termination Date shall vest in full on the Termination Date. In the event that
Gannett grants any stock-based awards to Executive that are subject to

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performance-based vesting, such awards granted to Executive on or prior to the
Termination Date shall be deemed to have been fully earned as of such date and
the value thereof shall be promptly paid to Executive; and

 

  (iii) Executive shall not be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise, nor will any payments hereunder be subject to offset in respect of
any claims which Gannett may have against Executive, nor shall the amount of any
payment or benefit provided for in this Section 7 be reduced by any compensation
earned as a result of Executive’s self-employment or employment with another
employer.

 

  (b) If Executive’s employment is terminated by Executive or by Gannett for any
reason, Executive shall be paid all earned but unpaid compensation, accrued
vacation and accrued but unreimbursed expenses required to be reimbursed under
this Agreement within 30 days of the Termination Date. For the avoidance of
doubt, if Gannett terminates Executive’s employment for any reason or for no
reason at all before or after the Transition Period, Executive shall only be
entitled to the payments described in this Section 7(b) and, to the extent
applicable, Sections 8(b) or 8(c) hereof. The preceding sentence is not intended
to preclude any severance arrangement that Gannett may agree to in the event
Executive is terminated before or after the Transition Period.

 

8. Miscellaneous Benefits.

 

  (a) During Employment. So long as Executive remains employed by Gannett,
Executive shall be entitled to receive all benefits, facilities or privileges,
in comparable amounts and under comparable terms and conditions, as are made
available during such period to any other member of the Gannett Management
Committee (other than the chief executive officer and other than sign-on bonuses
and similar one-time benefits).

 

  (b) Following Employment. If Executive terminates employment with Gannett for
any reason, or Gannett terminates Executive’s employment hereunder for any
reason other than the reasons specified in Section 5(b) or (d) hereof, Executive
shall receive all benefits afforded to retired Gannett Management Committee
members (other than Gannett’s chief executive officer) and, in accordance with
Gannett policies, to other retired executive officers generally, as described in
Exhibit A to this Agreement.

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  (c) Retirement Plan Credit. If Executive’s employment with Gannett terminates
before March 1, 2008, Executive shall receive additional service credit for
purposes of calculating Executive’s benefit under the Gannett Supplemental
Retirement Plan, or a similar plan adopted to replace such plan (the “SERP”),
equal to the difference between 36 months and the number of full months of
service credited to Executive between the Contract Date and Executive’s
Termination Date. In the event that the preceding sentence results in Executive
being credited with service for a period of time after Executive’s Termination
Date, benefits under the SERP shall be calculated as of Executive’s Termination
Date by assuming that Executive continued employment for the period of time for
which Executive is granted additional service credit and assuming Executive’s
compensation for such period is equal to Executive’s annual salary and most
recent annual bonus as of the Termination Date. Notwithstanding the foregoing,
in the event that Executive’s employment is terminated pursuant to Section 5(b)
or 5(d) above or by Executive for any reason other than those set forth in
Section 6(a) above, then Executive will not be credited with any additional
service beyond Executive’s Termination Date.

 

9. Change in Control. Upon a change in control, as defined below, the Executive
shall receive the greater of (i) any compensation and/or other benefits that
become due under the Gannett Transitional Compensation Plan, or (ii) any
compensation and/or other benefits that become due under this Agreement, but not
both. For purposes of this Agreement, the term “change in control” has the same
meaning given it under the Transitional Compensation Plan (or any successor
plan).

 

10. Certain Additional Payments by Gannett.

 

  (a)

Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by Gannett to or for the
benefit of Executive, whether paid or payable, pursuant to the terms of this
Agreement or otherwise (a “Payment”) would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code (“Code”) or similar section
(provided that Section 409A of the Code shall not be treated as a similar
section), or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then Executive shall be entitled
to receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by

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Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

 

  (b) All determinations required to be made under Section 10(a) (including
whether and when a Gross-Up Payment is required, the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination)
shall be made by the nationally recognized accounting firm serving as Gannett’s
independent accounting firm (the “Accounting Firm”). The Accounting Firm shall
provide detailed supporting calculations to both Gannett and Executive within 10
business days of Gannett’s receipt of notice from Executive that there has been
a Payment or at such earlier time as is requested by Gannett. All fees and
expenses of the Accounting Firm shall be borne solely by Gannett. Any Gross-Up
Payment, as determined pursuant to Section 10(a), shall be paid by Gannett to
Executive within 5 days of the receipt of the Accounting Firm’s determination.
Any determination by the Accounting Firm shall be binding upon the Company and
Executive.

 

  (c) As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments that will not have been made by Gannett
should have been made (the “Underpayment”) or that Gross-Up Payments will have
been made that should not have been made (“Overpayments”), consistent with the
calculations required to be made hereunder. In the event Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Gannett to or for the benefit of
Executive. If the Accounting Firm shall determine that an Overpayment has been
made, Executive shall promptly repay the amount of the Overpayment to Gannett.

 

11. Legal Expenses and Interest. If, with respect to any alleged failure by
Gannett to comply with any of the terms of this Agreement, Executive hires legal
counsel with respect to this Agreement or institutes any negotiations or
institutes or responds to legal action to assert or defend the validity of,
enforce Executive’s rights under, or recover damages for breach of this
Agreement and thereafter Gannett is found in a judgment no longer subject to
review or appeal to have breached this Agreement in any material respect, then
Gannett shall indemnify Executive for

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Executive’s actual expenses for attorneys’ fees and disbursements, together with
such additional payments, if any, as may be necessary so that the net after-tax
payments to Executive equal such fees and disbursements.

 

12. Trade Secrets. Executive agrees that unless duly authorized in writing by
Gannett, Executive will neither during Executive’s employment by Gannett nor at
any time thereafter divulge or use in any manner that is injurious to Gannett
any trade secrets or confidential information first acquired by Executive during
and by virtue of Executive’s employment with Gannett.

 

13. Notice. Any and all notices referred to herein shall be sufficient if
furnished in writing and sent by registered mail to the parties.

 

14. Transferability. The rights, benefits and obligations of Gannett under this
Agreement shall be transferable and all covenants and agreements hereunder shall
inure to the benefit of and be enforceable by or against its successors and
assigns. Whenever the term “Gannett” is used in this Agreement, such term shall
mean and include Gannett Co., Inc. and its successors and assigns. The rights
and benefits of Executive under this Agreement shall not be transferable other
than rights to property or compensation that may pass on Executive’s death to
Executive’s estate or beneficiaries through Executive’s will or the laws of
descent and distribution and the terms of any Gannett compensation or benefit
plan.

 

15. Severability. If any provision of this Agreement or the application thereof
is held invalid or unenforceable, the invalidity or unenforceability thereof
shall not affect any other provisions of this Agreement which can be given
effect without the invalid or unenforceable provision, and to this end the
provisions of this Agreement are to be severable.

 

16. Amendment; Waiver. This Agreement contains the entire agreement of the
parties with respect to the employment of Executive by Gannett. Notwithstanding
the foregoing, except as expressly provided herein, nothing in this Agreement is
intended to abrogate or modify any benefits to which Executive may now or
hereafter be entitled under Gannett’s various employee benefit plans. No
amendment or modification of this Agreement shall be valid unless evidenced by a
written instrument executed by the parties hereto. No waiver by either party of
any breach by the other party of any provision or conditions of this Agreement
shall be deemed a waiver of any similar or dissimilar provision or condition at
the same or any prior or subsequent time.

 

17. Tax Withholding. Gannett may withhold from any payments due to Executive
hereunder, such amounts as its independent public accountants may determine are
required to be withheld under applicable federal, state and local tax laws.

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18. Section 409A. Notwithstanding anything to the contrary contained herein, in
the event that Gannett determines that payments under this Agreement are subject
to Section 409A of the Code (or Executive makes such determination and informs
Gannett of such determination by December 1, 2005): (i) payments under this
Agreement shall not commence until six months after the Termination Date (or, if
earlier, the date Executive dies); and (ii) Gannett may unilaterally amend the
Agreement to make such other changes it reasonably determines are required to
comply with Section 409A of the Code.

 

19. Governing Law. This Agreement shall be governed by and construed under and
in accordance with the laws of the State of Delaware without regard to
principles of conflicts of laws.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

 

GANNETT CO., INC. By  

/s/ Douglas H. McCorkindale

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    Douglas H. McCorkindale         Chairman, President and         Chief
Executive Officer    

/s/ Gary L. Watson

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    Gary L. Watson

 

Agreed on behalf of the

Executive Compensation Committee

/s/ James A. Johnson

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James A. Johnson, Chair

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Exhibit A

 

EXECUTIVE RETIREMENT BENEFITS APPLICABLE TO CURRENT MEMBERS OF THE

GANNETT MANAGEMENT COMMITTEE*

 

Life Insurance: Active GMC members own a whole life insurance policy in an
amount equal to 2 times salary and last bonus plus $200,000. The Company pays
the policy premium. Upon retirement, the policy’s face amount reduces 10%, and
10% each year thereafter, to a minimum benefit of $350,000.

 

Travel Accident Insurance: Active GMC members receive insurance equal to 3 times
salary and last bonus on a 24-hour business or pleasure basis. (This is in
addition to the regular employee travel accident insurance benefit of 3 times
salary and last bonus.) Upon retirement, the benefit ceases. However, if a
retired GMC member is asked to represent Gannett at a function or event and
receives prior approval from the CEO, travel accident insurance coverage of
$1,000,000 will be provided while on business travel status.

 

Executive Health Insurance: Active GMC members receive supplemental health
coverage with a maximum annual benefit of $25,000 per executive family. (This is
in addition to the regular employee health insurance coverage.) Upon retirement,
the maximum annual benefit remains unchanged. Upon death, the maximum annual
family benefit for eligible dependents becomes $12,500 per year for life.

 

Company Automobile: Upon retirement, the company automobile is offered to a GMC
member at the fair market value.

 

Legal and Financial Services: Upon retirement, this benefit ceases on April 15
of the year of retirement or the year following retirement, depending on the
actual retirement date.

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* Gannett reserves the right, in its sole discretion, to amend or terminate
these benefits from time-to-time, provided that any changes made with respect to
the benefits provided to Executive shall also apply to similarly situated
Gannett executives.