AMENDED AND RESTATED CHANGE OF CONTROL SEVERANCE AGREEMENT
Exhibit 10.1
AMENDED AND RESTATED
CHANGE OF CONTROL SEVERANCE AGREEMENT
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED CHANGE OF CONTROL SEVERANCE AGREEMENT, dated as of (the
“Agreement”), is between NATIONAL DENTEX CORPORATION, a Massachusetts corporation (the “Company”),
and (the “Employee”).
Whereas, the Employee is a key executive of the Company and an integral part of its
management.
Whereas, the Company recognizes that the possibility of a change of control of the Company may
result in the departure or distraction of management to the detriment of the Company and its
shareholders.
Whereas, the Company wishes to assure the Employee of fair severance should his employment
terminate in specified circumstances following a change of control, and to assure the Executive of
certain other benefits upon a change of control.
Whereas, the Company and Employee are party to a certain Change of Control Severance Agreement
dated [ ] (the “Original Agreement”) and the parties desire to amend and restate in its entirety
the Original Agreement to amend, among other provisions, certain definitions and payment
provisions.
Now Therefore, in consideration of the Executive’s continued employment with the Company and
other good and valuable consideration, the parties agree as follows:
1. Definitions. The following terms as used in this Agreement shall have the following
meanings:
“Base Salary” shall mean the Employee’s annual base salary, exclusive of any bonus or other
benefits he may receive.
“Bonus” shall mean the aggregate amounts payable to the Employee pursuant to one or more of
the Company’s incentive compensation plans as in effect prior to the occurrence of a Standstill
Period.
“Cause” shall have the meaning set forth in Section 2.03.
“Change of Control” shall mean the occurrence of any one of the following events:
(a) Change in Ownership. A change in ownership occurs if a person, or multiple persons
acting as a group, acquires more than 50% of the capital stock of the Company, measured by
voting power or value.
(b) Change in Effective Control. A change in effective control occurs if either:
(i) A Person (or group of persons) acquires 30% of the capital stock of
the Company measured by voting power over a 12-month period; or
(ii) A majority of the Board of Directors of the Company is replaced by
directors not endorsed by the prior members of the Board of Directors.
(c) Change in a Substantial Portion of the Company’s Assets. A Change of Control
based on the sale of assets occurs if a Person (or group of Persons) acquires 40% or more of
the gross fair market value of the assets of the Company over a 12-month period.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Common Stock” shall mean the then outstanding Common Stock of the Company plus, for purposes
of determining the stock ownership of any Person, the number of unissued shares of Common Stock
which such Person has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise.
“Current Title” shall mean the Employee’s title on the date one hundred eighty (180) days
prior to the commencement of a Stand Still Period.
“Date of Qualified Termination” shall mean the date on which the Employee’s employment is
terminated pursuant to Section 2.01(a) of this Agreement.
“Employee Related Party” shall mean any Affiliate or Associate of the Employee other than the
Company or a Subsidiary of the Company. The terms “Affiliate” and “Associate” shall have the
meanings ascribed thereto in Rule 12b-2 under the Exchange Act (the term “registrant” in the
definition of “Associate” meaning, in this case, the Company).
“Good Reason” shall have the meaning set forth in Section 2.04.
A Person shall be deemed to be the “owner” of any Common Stock:
| (a) | of which such Person would be the “beneficial owner”, as such term is defined in Rule 13d-3, as in effect on the date hereof, promulgated by the Securities and Exchange Commission (the “Commission”) under the Exchange Act; or | ||
| (b) | of which such Person would be the “beneficial owner”, as such term is used in Section 16 of the Exchange Act and the rules of the Commission promulgated thereunder, as in effect on the date hereof; or |
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| (c) | which such Person or any of its Affiliates or Associates (as such terms are defined in Rule 12b-2, as in effect on the date hereof, promulgated by the Commission under the Exchange Act), has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise. |
“Person” shall have the meaning used in Section 13(d) of the Exchange Act, as in effect on the
date hereof.
“Qualified Termination” shall have the meaning set forth in Section 2.01(a) of this Agreement.
“Specified Employee” shall mean the Employee if the Company’s stock is publicly traded on an
established securities market and the Employee:
(a) owns more than 5 percent (5%) of the stock of the Company or
any member of its “controlled group” as that term is defined under §1563 of the Code:
(b) owns more than 1 percent (1%) of the stock of the Company and has compensation from the
Company in excess of $150,000 per year; or
(c) is an officer of the Company with compensation in excess of $145,000 per year.
“Standstill Period” shall be the period commencing on the date of a Change of Control and
continuing until the close of business on the last business day of the 24th calendar month
following such Change of Control.
2. Benefits Upon Change of Control.
2.01 Benefits Following Termination of Employment.
(a) Upon the termination of the Employee’s employment by the Company without Cause or
by the Employee for Good Reason, during any Standstill Period following a Change of Control
(a “Qualified Termination”), the Company shall, within thirty (30) days following the Date
of Qualified Termination, pay to the Employee in a lump sum an amount equal to (x)
times the Employee’s Base Salary in effect immediately prior to the Date of Termination plus
(y) times the average amount of the Bonus payable to the Employee for the
fiscal years ending on or immediately prior to the Date of Termination.
(b) Until the anniversary of the Date of Qualified Termination, the Company
shall maintain in full force and effect for the continued benefit of Employee and his family
all life insurance, medical insurance and disability plans and programs in
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which Employee was entitled to participate immediately prior to the Change of Control,
provided that Employee’s continued participation is possible under the general terms and
provisions of such plans and programs or under other plans and programs providing
substantially comparable coverage and benefits. In the event that Employee is ineligible to
participate in such plans or programs, the Company shall arrange upon comparable terms to
provide Employee with benefits substantially similar to those which he is entitled to
receive under such plans and programs. Notwithstanding the foregoing, the Company’s
obligations hereunder with respect to life insurance, medical or disability coverage or
benefits shall be deemed satisfied to the extent (but only to the extent) of any such
coverage or benefits provided by another employer.
(c) Notwithstanding the foregoing, distributions to a Specified Employee may not be
made before the date that is six months after the date of separation from service, or, if
earlier, the date of death.
2.02 Coordination with Tax Rules. Payments under Section 2.01 shall be made without regard to
whether the deductibility of such payments (or any other “parachute payments,” as that term is
defined in Internal Revenue Code Section 280G, to or for the benefit of the Employee) would be
limited or precluded by Internal Revenue Code Section 280G and without regard to whether such
payments (or any other “parachute payments” as so defined) would subject the Employee to the
federal excise tax levied on certain “excess parachute payments” under Internal Revenue Code
Section 4999; provided, that if the total of all “parachute payments” to or for the benefit of the
Employee, after reduction for all federal taxes (including the tax described in Internal Revenue
Code Section 4999, if applicable), with respect to such payments (the “Employee’s total after tax
payments”), would be increased by the limitation or elimination of any payment under Section 2.01,
such amounts payable hereunder shall be reduced to the extent, and only to the extent, necessary to
maximize the Employee’s total after-tax payments. The determination as to whether and to what
extent payments under Section 2.01 are required to be reduced in accordance with the preceding
sentence shall be made at the Company’s expense by the Company’s regularly retained independent
public accounting firm (the “Accountants”). In the event of any underpayment or overpayment under
Section 2.01 as determined by the Accountants, the amount of such underpayment or overpayment shall
forthwith be paid to the Employee or refunded to the Company, as the case may be, with interest at
the applicable Federal rate provided for in Section 7872(f)(2) of the Internal Revenue Code.
2.03 Cause. Termination for “Cause” shall mean termination of the Employee’s employment by
the Company because of conviction of a felony, commission of an act of dishonesty or moral
turpitude in connection with his employment by the Company or gross neglect of duties (other than
as a result of disability, as determined under the Company’s long-term disability plan, or death)
which shall continue for thirty (30) days after the Company gives written notice to the Employee
thereof.
2.04 Good Reason. Termination for “Good Reason” shall mean a voluntary termination by the
Employee of his employment with the Company, after the occurrence of one or more of the following
without the consent of the Employee (each a “Good Reason Event”): (1) a
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material diminution in the Base Salary; (2) a material diminution in the Employee’s authority,
duties or responsibilities; (3) the relocation of the Employee’s principal place of business to
more than fifty (50) miles from the place where Employee was employed immediately prior to the
relocation; or (4) any other action of inaction that constitutes a material breach by the Company
of this Agreement, provided, (A) such Good Reason Event is not remedied or cured by the
Company within 30 days after the Company receives notice from the Employee of the occurrence of a
Good Reason Event; (B) such notice of the occurrence of a Good Reason Event is sent by the Employee
no later than 30 days after the occurrence of such Good Reason Event; and (C) in all events, the
Employee terminates his employment with the Company within 120 days of the occurrence of such Good
Reason Event.
3. No Mitigation of Damages; Other Severance Payments; Withholding.
3.01 No Duty to Mitigate Damages. The Employee’s benefits under Section 2.01(a) shall be
considered severance pay in consideration of his past service and his continued service from the
date of this Agreement, and his entitlement thereto shall neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any compensation which he may
receive from future employment.
3.02 Other Severance Payments. The benefits payable to the Employee hereunder following a
Change of Control, in accordance with the provisions of Section 2 above, are in lieu of any
severance payments due the Employee pursuant to the provisions of any employment agreement between
the Company and the Employee, except, however, that in all events the Company shall continue to pay
to the Employee in accordance with the provisions of any such employment agreement all Base Salary
and Bonus accrued to the effective date of termination of the Employee’s employment, in addition to
any amounts payable to the Employee pursuant to Section 2 of this Agreement.
3.03 Withholding. Anything to the contrary notwithstanding, all payments required to be made
by the Company hereunder to the Employee shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may reasonably determine it should
withhold pursuant to any applicable law or regulation.
4. Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled exclusively by arbitration in Boston, Massachusetts in accordance
with the Commercial Arbitration Rules of the American Arbitration Association then in effect, and
judgment upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
5. Notices. Any notices or other communications required or permitted hereunder shall be
sufficiently given if in writing and delivered by hand or sent by registered mail, return receipt
requested, or by recognized overnight express courier, postage prepaid, and if to the Employee,
addressed to him at the address set forth below, and if to the Company, addressed to it at 0 Xxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Board of Directors, with a copy to Xxxxxxxxx
Xxxxxxxxxx & Xxxx LLP, Prudential Tower, 000 Xxxxxxxx Xxxxxx, Xxxxxx,
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Xxxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, P.C. or such other address as shall have been
specified in writing by either party to the other, and any such notice or communication shall be
deemed to have been given as of the date so mailed.
6. Severability. In the event that any provision of this Agreement shall be determined to be
invalid or unenforceable, such provision shall be enforceable in any other jurisdiction in which
valid and enforceable and in any event the remaining provisions shall remain in full force and
effect to the fullest extent permitted by law.
7. General Provisions.
7.01 Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the
parties and be enforceable by the Employee’s personal or legal representatives or successors. If
the Employee dies while any amounts would still be payable to him hereunder, benefits would still
be provided to his family hereunder or rights would still be exercisable by him hereunder as if he
had continued to live, such amounts shall be paid to the Employee’s estate, such benefits shall be
provided to the Employee’s family and such rights shall remain exercisable by the Employee’s estate
in accordance with the terms of this Agreement. This Agreement shall not otherwise be assignable by
the Employee. This Agreement supersedes and replaces the Original Agreement, which Original
Agreement shall be of no further force or effect.
7.02 Successors. This Agreement shall inure to and be binding upon the Company’s successors.
The Company will require any successor to all or substantially all of the business and/or assets of
the Company by sale, merger (where the Company is not the surviving corporation), lease or
otherwise, by agreement in form and substance satisfactory to the Employee, to assume expressly
this Agreement. If the Company shall not obtain such agreement prior to the effective date of any
such succession, the Employee shall have all rights resulting from termination by the Employee for
Good Reason under this Agreement. This Agreement shall not otherwise be assignable by the Company.
7.03 Amendment or Modification; Waiver. This Agreement may not be amended unless agreed to in
writing by the Employee and the Company. No waiver by either party of any breach of this Agreement
shall be deemed a waiver of a subsequent breach.
7.04 Titles. No provision of this Agreement is to be construed by reference to the title of
any section.
7.05 Continued Employment. This Agreement shall not give the Employee any right of continued
employment or any right to compensation or benefits from the Company or any subsidiary except the
right specifically stated herein to certain severance and other benefits, and shall not limit the
Company’s right to change the terms of or to terminate the Employee’s employment, with or without
Cause, at any time other than during a Standstill Period, except as may be otherwise provided in a
written employment agreement, if any, between the Company and the Employee.
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7.06 Termination of Agreement Outside of Standstill Period. This Agreement shall be
automatically terminated upon the first to occur of the termination of the Employee’s employment
for any reason, whether voluntary or involuntary, at any time other than during a Standstill
Period.
7.07 Governing Law. The validity, interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the Commonwealth of Massachusetts.
7.08 Legal Fees and Expenses. The Company shall pay all legal fees and expenses, including but
not limited to counsel fees, reasonably incurred by Employee in contesting or disputing that the
termination of his employment during a Standstill Period is for Cause or other than for Good Reason
or in obtaining any right or benefit to which Employee is entitled under this Agreement. Any amount
payable under this Agreement that is not paid when due shall accrue interest at the prime rate as
from time to time in effect as published in The Wall Street Journal, until paid in full.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
| NATIONAL DENTEX CORPORATION | ||||||||
| By: |
||||||||
| Name: | ||||||||
| Title: | ||||||||
| EMPLOYEE: | ||||||||
| Print Name: | ||||||||
| Address: | ||||||||
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SCHEDULE A
| Name | Base Salary / Bonus (2.01(A)) | Benefits (2.01(B)) | ||
Xxxxx X. Xxxxx
|
Three (3) times | Third anniversary | ||
Xxxxxxx X. Xxxxxx, Xx.
|
Two (2) times | Second anniversary | ||
Xxxxxx X. Xxxxxxxxx
|
Two (2) times | Second anniversary |
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