EXHIBIT 10.3
September 13, 2006
VIA HAND DELIVERY
PERSONAL AND CONFIDENTIAL
Mr. Robert T. Smith
[address]
Re: Termination of Employment from Sun-Times Media Group, Inc.
Dear Bob:
     This letter agreement (this “Agreement”) sets forth certain terms and
conditions in connection with your termination of employment from Sun-Times
Media Group, Inc. (“Sun-Times”) and its subsidiaries and affiliates, effective
as of September 30, 2006 (the “Effective Date”). In consideration of the mutual
covenants set forth below and other valuable consideration, including
Sun-Times’s agreement to provide you with certain payments and benefits to which
you are not otherwise entitled, the receipt and sufficiency of which Sun-Times
(together with its parent corporations, affiliates, past and present officers,
directors, stockholders, agents, employees, publications, legal representatives,
successors, and assigns, hereinafter collectively referred to as, the “Company”)
and you hereby acknowledge, Sun-Times and you hereby agree as follows:
     1. Termination of Employment.
     As of the Effective Date, you will no longer be an employee of Sun-Times or
any of its subsidiaries or affiliates. You shall continue to perform your
regular duties and responsibilities through the Effective Date. Except as
otherwise agreed by Sun-Times, you shall relinquish all titles, positions and
authorities that you held during your employment, with respect to Sun-Times and
each and every subsidiary or affiliate of Sun-Times with which you have held
positions as an officer and/or director. You agree to provide execute any and
all documents necessary to effect your resignation from all such positions. It
is understood that there are some indirect subsidiaries of Sun-Times with
respect to which it may be difficult to effect a change in membership of the
board of directors by the Effective Date. In such circumstances, you agree to
remain as a member of the board of directors and to cooperate with Sun-Times and
each such subsidiary until such time as Sun-Times determines it appropriate for
you to resign from such position.
     2. Separation Benefits.
     You have the right to receive a lump sum payment for any accrued, unused
vacation time, reduced by all applicable withholding taxes, regardless of
whether you sign this Agreement. In addition, in consideration of your full
cooperation with Sun-Times and its subsidiaries and affiliates as described in
Paragraph 3, and your agreement to the terms of the Release (as defined in
Paragraph 6), and to the other obligations set forth in this Agreement,
Sun-Times shall provide you with the following:
     (a) Cash Severance Payments. (i) You shall receive a cash lump sum payment
in an amount equal to Two Hundred Thirty-Five Thousand Dollars ($235,000.00),
which shall be payable within 10 business days following the Effective Date,
subject to the last sentence of this Paragraph

 

--------------------------------------------------------------------------------

 

2.
     (ii) You shall receive cash payments in the aggregate amount of Three
Hundred Ten Thousand Dollars ($310,000.00), 25% of which shall be payable during
the period commencing on the Effective Date and ending on December 31, 2006, in
bi-weekly installments in accordance with Sun-Times’s customary payroll
practices, and the remaining 75% of which shall be payable on January 5, 2007,
subject in each case to the last sentence of this Paragraph 2.
     (b) Treatment of Outstanding Stock Options. Any and all unvested and
unexpired options to acquire common stock of Sun-Times that had been previously
granted to you shall terminate on the Effective Date, provided that your
outstanding options to purchase 6,536 shares of Sun-Times common stock at an
exercise price of $6.69 per share, that would otherwise have vested on
February 6, 2007, shall be deemed to have vested as of the Effective Date. Your
ability to exercise vested options shall expire on October 31, 2007, unless
otherwise agreed by Sun-Times.
     (c) Treatment of Outstanding Deferred Stock Units (“DSUs”). Your previously
granted DSUs with respect to 7,146 shares of Sun-Times common stock that have
not yet vested by reason of elapsed time from the date of grant shall be vested
as of the Effective Date in accordance with the plans under which the DSUs were
granted. In order to comply with Section 409A of the Internal Revenue Code of
1986, as amended, distribution of shares of Sun-Times common stock in
satisfaction of all of your vested DSUs shall not be made until immediately
following the expiration of the six-month period following the Effective Date
(i.e., on April 1, 2007).
     (d) Health and Dental Insurance. If you so elect, Sun-Times will continue
to provide you, at Sun-Times’s expense, subject to the last sentence of this
Paragraph 2, with health and dental insurance at a level consistent with that
provided to employees of Sun-Times until March 31, 2008 (the “COBRA Period”)
unless you earlier attain substantially comparable insurance coverage through a
new job position. You agree to notify Sun-Times upon the event that you obtain
such replacement insurance coverages. You will be responsible during the COBRA
Period for the amount that active employees are then required to contribute for
such health and dental insurance coverages. Subject to the last sentence of this
Paragraph 2, if you have not yet obtained such replacement insurance coverages
as of the expiration of the COBRA Period, Sun-Times shall extend such insurance
coverages, if permitted under the terms of its insurance plans, for up to an
additional 18 months; provided, however, that if such additional coverage is not
permitted under the terms of the applicable insurance plans, Sun-Times and you
shall negotiate in good faith a substantially equivalent arrangement (which may
include cash payments to you by Sun-Times in an amount equal to an amount
sufficient to permit to you acquire substantially comparable insurance coverage
(on a community-rated basis), less any amount that active employees are then
required to contribute for such health and dental insurance coverages).
     Notwithstanding the foregoing, payments under Paragraph 2(a) shall not be
payable (or otherwise commence) until this Agreement becomes fully effective and
enforceable in accordance with Paragraph 6 (i.e., upon the eighth day following
the date you have signed this Agreement so long as you have not previously
revoked this Agreement), and your entitlement to the benefits under Paragraphs
2(b), (c) and (d) shall be void ab initio if you revoke this Agreement before it
becomes fully effective and enforceable in accordance with Paragraph 6.
     3. Consulting; Cooperation.
     (a) During the 12-month period following the Effective Date, you agree to
provide to Sun-Times and its subsidiaries and affiliates, on an as-needed basis,
consulting services relating to their Treasury department activities. The
services that shall be required of you shall include, but not be limited to,
assisting your successor in the assumption of your prior responsibilities,
making introductions as needed for a successful transition, and providing such
additional reasonable

2

--------------------------------------------------------------------------------

 

assistance to ensure a smooth transition of responsibilities.
     (b) You further agree that, upon reasonable notice and without the
necessity of the Company obtaining a subpoena or court order, you shall provide
reasonable cooperation in connection with any suit, action or proceeding (or any
appeal from any suit, action or proceeding), and any investigation and/or
defense of any claims asserted against the Company, which relates to events
occurring during your employment with Sun-Times and its subsidiaries and
affiliates (and their predecessors and successors) as to which you may have
relevant information (including but not limited to furnishing relevant
information and materials to the Company or its designee and/or providing
testimony at depositions and at trial).
     (c) Sun-Times agrees to reimburse you for all reasonable out-of-pocket
expenses associated with the provision of these consulting services and such
reasonable cooperation, subject to the provision of detailed invoices for all
expenses so incurred. In requesting your services from time to time and such
reasonable cooperation, Sun-Times shall make reasonable efforts to accommodate
your schedule and the requirements of your employer.
     4. Return of Confidential Information; Nondisparagement; Return of Company
Property.
     (a) You agree to return to Sun-Times and its subsidiaries and affiliates
any and all confidential and proprietary information you have acquired regarding
Sun-Times and its subsidiaries and affiliates, including information about their
personnel, policies, publications, business practices, strategic plans,
advertisers, customers, suppliers, distributors, readers, financial forecasts,
production data, marketing techniques, promotional plans, and financial
information, and to hold in the strictest confidence, except as required by
applicable law, and not to disclose any of said information to anyone, and to
refrain from making any statements or representations to any employee of
Sun-Times and its subsidiaries and affiliates or to their customers, suppliers,
competitors or the public at large which might disparage or have a detrimental
effect on Sun-Times’s and its subsidiaries’s and affiliates’s business,
operations, public image, reputation or their relations with advertisers,
customers, suppliers, employees, lenders, competitors, or other business
associates.
     (b) Sun-Times agrees that you shall be entitled to retain any personal
computing equipment provided to you by Sun-Times and its subsidiaries and
affiliates, including any PCs and laptops, subject to the condition that
Sun-Times be permitted to remove from such equipment all proprietary software
and documents. You may also retain the Blackberry provided to you by Sun-Times
and its subsidiaries and affiliates, subject to the same condition set forth
immediately above. All other property of Sun-Times and its subsidiaries and
affiliates which you have in your possession including, but not limited to, all
access cards, facility keys and credit cards, shall be returned to Sun-Times and
its subsidiaries and affiliates by the Effective Date, except as otherwise
agreed to between you and Sun-Times.
     5. COBRA Generally.
     The Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”) requires that, in certain cases, terminated employees be allowed to
continue their medical and dental insurance beyond their separation date at
their own expense. An explanation of your rights under COBRA will be sent to you
under separate cover at a future date.
     6. Release.
     (a) You hereby agree to WAIVE any and all rights in connection with, and to
fully RELEASE and forever discharge the Company from, any and all torts,
contracts, claims, suits,

3

--------------------------------------------------------------------------------

 

actions, causes of action, demands, rights, damages, costs, expenses, attorneys
fees, and compensation in any form whatsoever, whether now known or unknown, in
law or in equity, which you have or ever had (from the beginning of time through
and including the date hereof) against the Company, including without limitation
on account of or in any way arising out of, relating to or in connection with
your employment by or separation of employment from Sun-Times and its
subsidiaries and affiliates (and their predecessors and successors), and any and
all claims for damages or injury to any entity, person, property or reputation
arising therefrom, claims for wages, employment benefits, tort claims and claims
under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Civil Rights Act of 1866, the Employee Retirement Income Security Act of
1974, the National Labor Relations Act, the Fair Labor Standards Act, the
Rehabilitation Act of 1973, the Family and Medical Leave Act of 1993, the
Americans with Disabilities Act of 1990, the Illinois Human Rights Act, the
Illinois Wage Payment and Collection Act, the Cook County Human Rights
Ordinance, the Chicago Human Rights Ordinance and any other federal, state or
local law, statute, ordinance, guideline, regulation, order or common-law
principle of any state relating to employment, employment contracts, wrongful
discharge or any other matter; provided, however, that the foregoing waiver and
release shall not apply to your rights in respect of any benefit or claim to
which you are entitled under employee pension or welfare benefit plans and
programs of Sun-Times and its subsidiaries and affiliates in which you are a
participant prior to the Effective Date, or to your rights to enforce this
Agreement.
     (b) Release of Age Discrimination Claims. In further consideration of the
promises made by the Company in this Agreement, you specifically WAIVE any and
all rights in connection with, and fully RELEASE and forever discharge the
Company from, any and all torts, contracts, claims, suits, actions, causes of
action, demands, rights, damages, costs, expenses, attorneys fees, and
compensation in any form whatsoever, whether now known or unknown, in law or in
equity, which you have or ever had (from the beginning of time through and
including the date hereof) against the Company, arising under the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C. Sec. 621, et
seq. (“ADEA”). You further agree that:

  (i)   your waiver of rights under this release is knowing and voluntary and in
compliance with the Older Workers Benefit Protection Act of 1990;     (ii)   you
understand the terms of this release;     (iii)   the consideration provided in
Paragraph 2 represents consideration over and above that to which you otherwise
would be entitled, that the consideration would not have been provided had you
not signed this release, and that the consideration is in exchange for the
signing of this release;     (iv)   the Company is hereby advising you in
writing to consult with your attorney prior to executing this release;     (v)  
the Company is giving you a period of twenty-one days within which to consider
this release;     (vi)   following your execution of this release you have seven
(7) days in which to revoke this release by written notice. To be effective, the
revocation must be made in writing and delivered to and received by Pamela A.
Davidson, Assistant Corporate Counsel, Sun-Times Media Group, Inc., 350 North
Orleans, 10 South, Chicago, Illinois 60654, no later than 4:00 p.m. on the
seventh day after you execute this release. An

4

--------------------------------------------------------------------------------

 

      attempted revocation not actually received by Ms. Davidson before the
revocation deadline will not be effective; and     (vii)   this entire Agreement
shall be void and of no force and effect if you choose to so revoke, and if you
choose not to so revoke this Agreement shall then become fully effective and
enforceable.

     This Paragraph 6(b) does not waive rights or claims that may arise under
the ADEA after the date you sign this Agreement. In addition, nothing in this
Agreement shall in any way affect your right to the indemnification and expense
advancement to the extent provided by the Company’s bylaws and Articles of
Incorporation; provided, however, that the Company shall not be liable, and
shall not provide a defense and indemnification for any claim wherein you have
not satisfied the applicable standard of conduct set forth in such by-laws and
Articles, or wherein you have committed any acts of fraud, embezzlement or gross
misconduct.
     7. Proceedings; No Admissions.
     (a) You hereby represent and warrant that: (i) you have no pending claims
against the Company with any municipal, state, federal or other governmental or
nongovernmental entity; and (ii) you will not file any claims with respect to
any events occurring on or before the date hereof. You also acknowledge and
agree that by entering into this Agreement you can never make claim or demand
upon or sue the Company for any reason whatsoever relating to anything that has
happened through the date hereof. Notwithstanding the foregoing, this Agreement
shall not prevent you from (A) initiating or causing to be initiated on your
behalf any complaint, charge, claim or proceeding against Sun-Times or its
subsidiaries and affiliates before any local, state or federal agency, court or
other body challenging the validity of the waiver of your claims under the ADEA
contained in this Agreement (but no other portions of the Release); or
(B) initiating or participating in an investigation or proceeding conducted by
the Equal Employment Opportunity Commission with respect to the ADEA.
     (b) Both parties acknowledge and agree that this Agreement does not
constitute, is not intended to be, and shall not be construed, interpreted or
treated in any respect as, and shall not be admissible in any proceeding as, an
admission of liability, error, violation, omission or wrongdoing by either party
for any purpose whatsoever. Further, both parties acknowledge and agree that
there has been no determination that either party has violated any federal,
state or local law, statute, ordinance, guideline, regulation, order or
common-law principle. You further acknowledge that no precedent, practice,
policy or usage shall be established by this Agreement or the offer to you of
compensation and benefits herein.
     8. Continuing Obligations; Remedies.
     (a) Should you damage the reputation, goodwill or competitive position of
Sun-Times or its subsidiaries or affiliates, or if you cause, directly or
indirectly, any key executive employee of Sun-Times or its subsidiaries or
affiliates to terminate his or her employment with Sun-Times or its subsidiaries
or affiliates (except that you shall be permitted to respond to unsolicited
requests for references), then Sun-Times will be entitled to reimbursement from
you of the full amount of separation pay and other compensation and benefits
that you have received under this Agreement through the date of such action by
you, and Sun-Times will also be entitled to obtain injunctive relief against
your continuing any such action.
     (b) You also understand and agree that in the event you, your heirs,
spouse, family members, executors, or administrators attempt to institute or do
institute any charge, claim, suit or action against the Company in violation of
this Agreement, you shall be obligated, as an express condition of bringing such
action, to tender back to Sun-Times the full amount of separation pay and other
compensation and benefits that you have received under this Agreement; and you
further agree that

5

--------------------------------------------------------------------------------

 

you will pay all of the Company’s costs, expenses and fees of defending against
such action, including among other things, reasonable attorney’s fees. This
paragraph does not grant you an option to return the money and institute an
action. Instead this paragraph merely creates an additional term and condition
precedent to bringing an action regardless of the fact that such action is
expressly barred by this Agreement, and is without merit.
     (c) Should you breach any other term of this Agreement, including but not
limited to filing any claim which you have agreed to release and waive under
this Agreement or breaching any of the provisions of this Agreement, the Company
will be entitled to recover damages for such breach and also to obtain
injunctive relief against further breach by you. If Sun-Times or you at any time
believe that the other party has breached any term of this Agreement, the party
claiming a breach shall promptly notify the other in writing (if to you, at your
address set forth on page 1 hereof; if to Sun-Times, to the contact person at
the address specified in Paragraph 6(b)(vi)) of the specific basis for that
belief, and the other party will have a period of ten (10) days within which to
cure any breach (if cure is possible) or to otherwise respond to the claim of
breach.
     9. Arbitration of Disputes; Payment of Expenses.
     Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration proceedings conducted in
accordance with the commercial rules of the American Arbitration Association
(“AAA”) as then in effect. Any arbitration shall be held in Chicago, Illinois.
The arbitrator shall be selected by joint agreement of the Company and you, but
if such agreement is not reached within seven (7) days of the date of the
request for arbitration, the selection shall be made by the AAA in accordance
with its commercial rules. Judgment upon any award rendered by the arbitrator
may be entered in any court having jurisdiction. The costs and expenses of the
arbitrator and all costs and expenses of experts, attorneys, witnesses and other
parties reasonably incurred by the prevailing party shall be borne by the party
that does not prevail in such arbitration or in any court proceeding relating to
enforcement of this Agreement.
     10. Governing Law.
     This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York without regard to principles of conflicts
of laws.
     11. Acknowledgments; Revocation of Release.
     You hereby acknowledge (a) that the Company has given you a period of at
least twenty one (21) days in which to review and consider this Agreement;
(b) that the Company has advised, and does hereby in writing advise, you to
consult with an attorney before signing this Agreement; (c) that you have read
this Agreement in its entirety; (d) that you have had at least twenty one
(21) days in which to confer with your own attorney for assistance and advice
concerning this Agreement; (e) that you understand the terms of this Agreement;
(f) that you understand that the terms of this Agreement are legally
enforceable; (g) that you have entered into this Agreement freely, voluntarily,
knowingly and willingly and were in no manner coerced into signing it; (h) that
neither this Agreement nor the discussion and negotiation leading to it are or
were, in any manner, discriminatory; (i) that you were, and hereby are,
encouraged to discuss any questions, problems, or issues concerning this
Agreement with the Company before signing it; (j) that you are waiving rights
and claims you may have in exchange for consideration in addition to things of
value to which you are already entitled; and (k) that after signing this
Agreement you have a period of seven (7) days in which to revoke this Agreement,
however, any such revocation must be in writing and must be addressed to Pamela
A. Davidson, Assistant Corporate Counsel, Sun-Times Media Group, Inc., 350 North
Orleans, 10 South, Chicago, Illinois 60654.

6

--------------------------------------------------------------------------------

 

     12. Withholding.
     The Company may deduct and withhold from any amounts payable under this
Agreement such Federal, state, local, non-U.S. or other taxes as are required or
permitted to be withheld pursuant to any applicable law or regulation.
     13. Amendment; No Waiver; Interpretation.
     No provisions of this Agreement may be amended, modified, waived or
discharged except by a written document signed by you and a duly authorized
officer of Sun-Times (other than you). The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party’s rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. No failure or delay by either party in exercising any right or
power hereunder will operate as a waiver thereof, nor will any single or partial
exercise of any such right or power, or any abandonment of any steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. No provision of this Agreement or any
related document will be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or drafted such
provision.
     14. Severability.
     If any term or provision of this Agreement is invalid, illegal or incapable
of being enforced by any applicable law or public policy, all other conditions
and provisions of this Agreement shall nonetheless remain in full force and
effect to the fullest extent permitted by law. You agree that in the event that
any court of competent jurisdiction shall finally hold that any provision of
this Agreement (whether in whole or in part) is void or constitutes an
unreasonable restriction against you, such provision shall not be rendered void
but shall be deemed to be modified to the minimum extent necessary to make such
provision enforceable for the longest duration and the greatest scope as such
court may determine constitutes a reasonable restriction under the
circumstances.
     15. Entire Agreement.
     This Agreement constitutes the entire agreement and understanding between
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings (whether written or oral), between you and the
Company relating to such subject matter. None of the parties shall be liable or
bound to any other party in any manner by any representations and warranties or
covenants relating to such subject matter except as specifically set forth
herein.
     16. Binding on Successors.
     This Agreement shall be binding on, and shall inure to the benefit of, the
parties to it and their respective heirs, legal representatives, successors and
permitted assigns (including, without limitation, in the event of your death,
your estate and heirs in the case of any payments due to you hereunder).
     17. No Other Benefits.
     You agree that you are not entitled to any other compensation or benefits
in connection with your termination of employment (other than pursuant to the
terms of the employee benefit plans and programs of Sun-Times and its
subsidiaries and affiliates in which you participated prior

7

--------------------------------------------------------------------------------

 

to the Effective Date, provided that you explicitly waive any right to receive
any severance or similar benefits under such plans and programs (including
without limitation any benefits under the Key Employee Severance Plan)).
     18. Counterparts.
     This Agreement may be executed in one or more counterparts (including via
facsimile and electronic image scan (pdf)), each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.

8

--------------------------------------------------------------------------------

 

     Bob, please indicate your understanding and acceptance of this Agreement by
executing both copies below, and retaining one fully executed original for your
files and returning one fully executed original to me.

                  Very truly yours,
 
                    SUN-TIMES MEDIA GROUP, INC
 
           
 
      By:    
 
           
 
      Name:   Gordon Paris
 
      Title:   Chairman and CEO

I hereby accept the terms of this
Agreement and agree to abide by the
provisions hereof:

                   
Robert T. Smith
       
 
           
Date:
           
 
 
 
       

9