EXHIBIT 10.14
CHANGE IN CONTROL SEVERANCE AGREEMENT
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THIS AGREEMENT, dated August 2, 2001, is made by and between New England
Business Service, Inc., a Delaware corporation with its principal offices at 000
Xxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Company"), and Xxxxxx X. Xxxxxx
(the "Executive") residing in Xxxxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS, the Company considers the establishment and maintenance of a sound
and vital management to be essential to protecting and enhancing the best
interests of the Company and its stockholders; and
WHEREAS, the Executive has made and is expected to make, due to the
Executive's intimate knowledge of the business and affairs of the Company, its
policies, methods, personnel, and problems, a significant contribution to the
profitability, growth, and financial strength of the Company; and
WHEREAS, the Company, as a publicly-held corporation, recognizes that the
possibility of a Change in Control may exist, and that such possibility and the
uncertainty and questions which it may raise among management may result in the
departure or distraction of the Executive in the performance of the Executive's
duties, to the detriment of the Company and its stockholders; and
WHEREAS, it is in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of management
personnel, including the Executive, to their assigned duties without distraction
and to ensure the continued availability to the Company of the Executive in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the foregoing and other respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. Defined Terms. The definitions of capitalized terms used in this
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Agreement are provided in Section 15.
2. Term of Agreement. The term of this Agreement (the "Term") shall
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commence on the date hereof and shall continue in effect through June 30, 2004;
provided, however, that commencing on July 1, 2004 and each July 1 thereafter,
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the Term shall automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Company or the Executive
shall have given notice not to extend the Term; and further provided, however,
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that if a Change in Control shall have occurred during the Term, the Term shall
expire on the last day of the twenty-fourth (24/th/) month following the month
in which such Change in Control occurred.
3. Company's Covenants Summarized. In order to induce the Executive to
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remain in the employ of the Company and in consideration of the Executive's
covenants in Section 4, the Company, under the conditions described herein,
shall pay the Executive the Severance Payments and the other payments and
benefits described herein. Except as provided in Section 9.1, no Severance
Payments shall be payable under this Agreement unless there shall have been (or,
pursuant to the second sentence of Section 6.1, there shall be deemed to have
been) a
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termination of the Executive's employment with the Company following a Change in
Control and during the Term. This Agreement shall not be construed as creating
an express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
4. The Executive's Covenants. Subject to the terms and conditions of
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this Agreement, in the event of a Potential Change in Control, the Executive
shall remain in the employ of the Company until the earliest of (i) a date which
is six (6) months from the date of the first occurrence of a Potential Change in
Control, (ii) the date of a Change in Control, (iii) the date of termination by
the Executive of the Executive's employment for Good Reason or by reason of
death, Disability or Retirement, or (iv) the termination by the Company of the
Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
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5.1 If the Executive fails to perform the Executive's full-time
duties with the Company following a Change in Control as a result of incapacity
due to physical or mental illness, during any period when the Executive so fails
to perform the Company shall pay the Base Salary to the Executive, together with
all compensation and benefits payable to the Executive under the terms of any
compensation or benefit plan, program or arrangement (other than the Company's
short- or long-term disability plan, as applicable, but including any bonus or
incentive plan) maintained by the Company during such period, until the
Executive resumes the full time performance of such duties or the Executive's
employment is terminated by the Company for Disability.
5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Base Salary to the
Executive through the Date of Termination, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company's compensation and benefit plans, programs or arrangements
as in effect immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason.
5.3 Except as expressly provided herein, if the Executive's
employment shall be terminated for any reason following a Change in Control, the
Company shall pay to the Executive the Executive's normal post-termination
compensation and benefits as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
with, the Company's retirement, insurance and other compensation or benefit
plans, programs and arrangements as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as in effect immediately
prior to the occurrence of the first event or circumstance constituting Good
Reason.
6. Severance Payments.
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6.1 If the Executive's employment is terminated within twenty-four
(24) months following a Change in Control, other than (a) by the Company for
Cause, (b) by reason of death or Disability, or (c) by the Executive without
Good Reason, then the Company shall pay the Executive the amounts, and provide
the Executive the benefits, described in this Section 6.1
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("Severance Payments") and Section 6.2, in addition to any payments and benefits
to which the Executive is entitled under Section 5. For purposes of this
Agreement, the Executive's employment shall be deemed to have been terminated
within twenty-four (24) months following a Change in Control and during the Term
by the Company without Cause or by the Executive with Good Reason, if (i) the
Executive's employment is terminated by the Company without Cause during a
Potential Change in Control Period, or (ii) the Executive terminates his
employment for Good Reason during a Potential Change in Control Period. Except
as described above or in Section 9.1, the Executive shall not be entitled to
benefits pursuant to this Section 6.1 unless a Change in Control shall have
occurred during the Term.
(A) The Company shall pay to the Executive a lump sum severance
payment, in cash, equal to two and one-half (2-1/2) times the sum of (i) the
Base Salary, and (ii) the target annual bonus available to the Executive
pursuant to the Company's annual executive bonus plan or any successor plan (but
excluding any special performance or incentive plan) in respect of the fiscal
year in which the Date of Termination occurs (without giving effect to any event
or circumstance constituting Good Reason), assuming for this purpose attainment
of 100% of any applicable target; provided, however, that if the applicable
target bonus would have been pro-rated for a partial fiscal year, such target
bonus shall be recalculated for purposes of this Section 6.1(A) to equal the
amount that for which the Executive would have been eligible for the entire
fiscal year.
(B) For the thirty (30) month period immediately following the
Date of Termination, the Company shall arrange to provide the Executive and his
dependents life, disability, accident and health insurance benefits
substantially similar to those provided to the Executive and his dependents
immediately prior to the Date of Termination or, if more favorable to the
Executive, those provided to the Executive and his dependents immediately prior
to the first occurrence of an event or circumstance constituting Good Reason, at
no greater after-tax cost to the Executive than the cost to the Executive
immediately prior to such date or occurrence. If, at the end of the 30-month
period following the Date of Termination, the Executive has not previously
become eligible to receive comparable benefits from a new employer or pursuant
to a government-sponsored health insurance or health care program, then the
Company shall arrange, at its sole cost and expense, to enable the Executive to
convert coverage for the Executive and the Executive's dependents being provided
hereunder to individual policies or program, if applicable, upon the same terms
as other former employees of the Company may apply for such conversion. The cost
of providing the benefits set forth in this Section 6.1(B) shall be in addition
to (and shall not reduce) the Severance Payments. Benefits otherwise receivable
by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent
the Executive becomes eligible to receive comparable benefits from a new
employer or pursuant to a government-sponsored health insurance or health care
program.
(C) Anything contained in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company or any
subsidiary of the Company is governed by a separate written employment agreement
that provides payments and/or other benefits upon a termination of employment,
then the aggregate of any payments or benefits payable under such employment
agreement shall offset and reduce the aggregate of payments and benefits under
this Agreement.
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(D) Anything contained in this Agreement to the contrary
notwithstanding, a termination of the Executive's employment by the Executive
for any reason during the forty-five (45) day period immediately following the
45th day after the occurrence of the first event constituting a Change in
Control shall be deemed to be a termination for Good Reason for purposes of this
Agreement.
6.2 Gross Up.
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(A) Whether or not the Executive becomes entitled to the
Severance Payments, if any of the payments or benefits received or to be
received by the Executive (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change in Control or any Person affiliated with the Company
or such Person) (all such payments and benefits, excluding the Gross-Up Payment,
being hereinafter referred to as the "Total Payments") will be subject to the
Excise Tax, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments and any federal, state and
local income and employment taxes and Excise Tax upon the Gross-Up Payment,
shall be equal to the Total Payments.
(B) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) all of the Total Payments shall be treated as "parachute payments" (within
the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax
counsel ("Tax Counsel") reasonably acceptable to the Executive and selected by
the accounting firm which was, immediately prior to the Change in Control, the
Company's independent auditor (the "Auditor"), such payments or benefits (in
whole or in part) do not constitute parachute payments, including by reason of
section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within
the meaning of section 280G(b)(l) of the Code shall be treated as subject to the
Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of
the Base Amount allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (iii) the value of any noncash benefits or any
deferred payment or benefit shall be determined by the Auditor in accordance
with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income tax at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of Termination (or if there is
no Date of Termination, then the date on which the Gross-Up Payment is
calculated for purposes of this Section 6.2), net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes. If there has not been a Date of Termination with respect to the
Executive, the Company shall cause the Gross-Up Payment to be calculated within
30 days of a written request to that effect from the Executive.
(C) In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating the Gross-Up
Payment, the Executive shall repay to the Company, within five (5) business days
following the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of the Gross-Up
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Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by the Executive,
to the extent that such repayment results in a reduction in the Excise Tax and a
dollar-for-dollar reduction in the Executive's taxable income and wages for
purposes of federal, state and local income and employment taxes), plus interest
on the amount of such repayment at 120% of the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Executive with respect to such
excess) within five (5) business days following the time that the amount of such
excess is finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for Excise
Tax with respect to the Total Payments.
6.3 The payments provided in subsection (A) of Section 6.1 and in
Section 6.2 shall be made not later than the fifth day following the Date of
Termination (or, in the case of Section 6.2, if there is no Date of Termination,
then the fifth day following date on which the Gross-Up Payment is calculated
for purposes of Section 6.2), provided, however, that if the amounts of such
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payments cannot be finally determined on or before such day, the Company shall
pay to the Executive on such day an estimate, as determined in good faith by the
Company or, in the case of payments under Section 6.2, in accordance with
Section 6.2, of the minimum amount of such payments to which the Executive is
clearly entitled and shall pay the remainder of such payments (together with
interest on the unpaid remainder (or on all such payments to the extent the
Company fails to make such payments when due) at 120% of the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after the
occurrence of a Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth (5th) business day after demand by the Company (together with interest
at 120% of the rate provided in section 1274(b)(2)(B) of the Code). At the time
that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement).
6.4 The Company shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive's employment, in seeking
in good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder. Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
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7. Termination Procedures and Compensation During Dispute.
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7.1 Notice of Termination. After a Change in Control, any purported
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termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail any facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than two-
thirds (2/3) of the entire membership of the Board at a meeting of the Board
which was called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth in clause (i), (ii) or (iii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination," with respect to any
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purported termination of the Executive's employment after a Change in Control,
shall mean (i) if the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by the Company,
shall not be less than ninety (90) days (except in the case of a termination for
Cause) and, in the case of a termination by the Executive, shall not be less
than fifteen (15) days nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within ten (10) days after
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any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice of
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dispute given by the Executive only if such notice is given in good faith and
the Executive pursues the resolution of such dispute with reasonable diligence.
7.4 Compensation During Dispute. If the Date of Termination is
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extended in accordance with Section 7.3, the Company shall continue to pay the
Executive the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, the Base Salary) and continue
the Executive as a participant in all compensation, benefit and insurance plans
in which the Executive was participating when the notice giving rise to the
dispute was given, until the Date of Termination, as determined in accordance
with Section 7.3. Amounts paid under this Section 7.4 are in addition to all
other amounts due under
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this Agreement (other than those due under Section 5.2) and shall not be offset
against or reduce any other amounts due under this Agreement.
8. No Mitigation. If the Executive's employment with the Company
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terminates following a Change in Control, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 or Section 7.4. Except as set
forth in Section 6.1(B), the amount of any payment or benefit provided for in
this Agreement shall not be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company, or
otherwise.
9. Successors; Binding Agreement.
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9.1 In addition to any obligations imposed by law upon any successor
to the Company, the Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control and during the Term, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.
10. Notices. For the purpose of this Agreement, notices and all other
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communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the last known residence address of the Executive or in the case of
the Company, to its principal office to the attention of the Chief Executive
Officer of the Company with a copy to its Secretary, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
11. Miscellaneous. No provision of this Agreement may be modified, waived
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or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at
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any prior or subsequent time. This Agreement supersedes any other agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party; provided, however,
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that this Agreement shall not supersede any agreement setting forth the terms
and conditions of the Executive's employment with the Company or any subsidiary
of the Company, except as expressly agreed to by the Executive and the Company
in writing. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Massachusetts.
All references to sections of the Exchange Act or the Code shall be deemed also
to refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law and any additional withholding to which the
Executive has agreed. The obligations of the Company under this Agreement which
by their nature may require either partial or total performance after the
expiration of the Term (including, without limitation, those under Sections 6
and 7) shall survive such expiration.
12. Validity. The invalidity or unenforceability of any provision of this
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Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several counterparts,
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each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration.
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14.1 All claims by the Executive for benefits under this Agreement
shall be directed to and determined by the Board and shall be in writing. Any
denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after notification by the
Board that the Executive's claim has been denied.
14.2 Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Boston, Massachusetts in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the evidentiary standards
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set forth in this Agreement shall apply. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to
seek specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
15.1 "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
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15.2 "Auditor" shall have the meaning set forth in Section 6.2.
15.3 "Base Amount" shall have the meaning set forth in section
280G(b)(3) of the Code.
15.4 "Base Salary" shall mean the annual base salary in effect for
the Executive immediately prior to a Change in Control, as such salary may be
increased from time to time during the Term (in which case such increased amount
shall be the Base Salary for purposes hereof), but without giving effect to any
reduction thereto.
15.5 "Beneficial Owner" shall have the meaning set forth in Rule 13d-
3 under the Exchange Act.
15.6 "Board" shall mean the Board of Directors of the Company.
15.7 "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive
(other than any such failure resulting from (A) the Executive's incapacity due
to physical or mental illness, (B) any such actual or anticipated failure after
the issuance of a Notice of Termination by the Executive for Good Reason or (C)
the Company's active or passive obstruction of the performance of the
Executive's duties and responsibilities) to perform substantially the duties and
responsibilities of the Executive's position with the Company after a written
demand for substantial performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the Board believes that
the Executive has not substantially performed such duties or responsibilities;
(ii) the conviction of the Executive by a court of competent jurisdiction for
felony criminal conduct; or (iii) the willful engaging by the Executive in fraud
or dishonesty which is demonstrably and materially injurious to the Company or
its reputation, monetarily or otherwise. No act, or failure to act, on the
Executive's part shall be deemed "willful" unless committed, or omitted by the
Executive in bad faith and without reasonable belief that the Executive's act or
failure to act was in, or not opposed to, the best interest of the Company. It
is also expressly understood that the Executive's attention to matters not
directly related to the business of the Company shall not provide a basis for
termination for Cause so long as the Board has approved the Executive's
engagement in such activities.
15.8 A "Change in Control" shall be deemed to have occurred if any of
the events set forth in any one of the following paragraphs shall have occurred:
(A) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 35% or more of either the
then outstanding shares of common stock of the Company or the combined voting
power of the Company's then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
Section 15.8(C)(i);
(B) the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company's stockholders was approved
or
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recommended by a vote of at least two-thirds (2/3) of the directors then in
office who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or recommended;
(C) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) at least 60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (ii) a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in which
no Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities Beneficially Owned by
such Person any securities acquired directly from the Company or its Affiliates)
representing 35% or more of the combined voting power of the Company's then
outstanding securities; or
(D) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least 60% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
Anything contained in this Agreement to the contrary notwithstanding, no Change
in Control shall be deemed to have occurred for purposes of this Agreement by
virtue of any transaction which results in the Executive, or a "group" (as such
term is used in Section 13(d)(3) of the Exchange Act) which includes the
Executive, becoming the Beneficial Owner, directly or indirectly, of securities
of the Company representing 35% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the Company's then
outstanding securities.
15.9 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
15.10 "Company" shall mean New England Business Service, Inc. and,
except in determining under Section 15.8 whether or not any Change in Control of
the Company has occurred, shall include any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
15.11 "Date of Termination" shall have the meaning set forth in
Section 7.2.
15.12 "Disability" shall be deemed the reason for the termination by
the Company of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the Company
for a period of one hundred twenty (120), the Company shall have given the
Executive a Notice of Termination for Disability, and, within
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thirty (30) days after such Notice of Termination is given, the Executive shall
not have returned to the full-time performance of the Executive's duties. Any
question as to the existence of the Executive's Disability upon which the
Executive and the Company cannot agree shall be determined by a qualified
independent physician selected by the Executive (or, if the Executive is unable
to make such selection, it shall be made by any adult member of the Executive's
immediate family), and approved by the Company. The determination of such
physician made in writing to the Company and to the Executive shall be final and
conclusive for all purposes of this Agreement, absent fraud.
15.13 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
15.14 "Excise Tax" shall mean any excise tax imposed under section
4999 of the Code.
15.15 "Executive" shall mean the individual named in the first
paragraph of this Agreement.
15.16 "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control, or prior to a Change in
Control under the circumstances described in the second sentence of Section 6.1
(treating all references in subsections (A) through (G) below to a "Change in
Control" as references to a "Potential Change in Control"), of any one of the
following acts by the Company, or failures by the Company to act, unless, in the
case of any act or failure to act described in subsection (A), (B), (C), (D),
(E) or (F) below, such act or failure to act is corrected prior to the Date of
Termination specified in the Notice of Termination given in respect thereof:
(A) an adverse change in the Executive's status or position(s)
as an officer of the Company as in effect immediately prior to the Change in
Control, including, without limitation, any adverse change in the Executive's
status or position as a result of a diminution of the Executive's duties or
responsibilities (other than, if applicable, any such change directly and solely
attributable to the fact that the Company is no longer publicly owned) or the
assignment to the Executive of any duties or responsibilities which are
inconsistent with such status or position(s), or any removal of the Executive
from, or any failure to reappoint or reelect the Executive to, such position(s);
(B) a reduction in the Executive's Base Salary; or
(C) the failure by the Company or any subsidiary of the Company
to continue in effect any Plan in which the Executive is participating at the
time of the Change in Control (or Plans providing the Executive with at least
substantially similar benefits) other than as a result of the normal expiration
of any such Plan in accordance with its terms as in effect at the time of the
Change in Control, or the taking of any action, or the failure to act, by the
Company which would adversely affect the Executive's continued participation in
any of such Plans on at least as favorable a basis to the Executive as is the
case on the date of the Change in Control or which would materially reduce the
Executive's benefits in the future under any of such Plans or deprive the
Executive of any material benefit enjoyed by the Executive at the time of the
Change in Control;
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(D) the failure of the Company to provide and credit the
Executive with the number of paid vacation days to which the Executive is then
entitled in accordance with the Company's normal vacation policy as in effect
immediately prior to the Change in Control;
(E) the Company requiring the Executive to be based at an
office that is greater than 50 miles from where the Executive's office is
located immediately prior to the Change in Control except for required travel on
the Company's business to an extent substantially consistent with the business
travel obligations which the Executive undertook on behalf of the Company prior
to the Change in Control;
(F) any refusal by the Company to continue to allow the
Executive to attend to matters or engage in activities not directly related to
the business of the Company which, prior to the Change in Control, the Executive
was permitted by the Board to attend to or engage in; or
(G) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
For purposes of any determination regarding the existence of Good
Reason, any claim by the Executive that Good Reason exists shall be presumed to
be correct unless the Company establishes to the Board by clear and convincing
evidence that Good Reason does not exist.
15.17 "Gross-Up Payment" shall have the meaning set forth in Section
6.2.
15.18 "Notice of Termination" shall have the meaning set forth in
Section 7.1.
15.19 "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities and (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
15.20 "Plan" shall mean any compensation plan such as an incentive
plan, or any employee benefit plan such as a thrift, pension, profit sharing,
medical, disability, accident, life insurance plan or a relocation plan or
policy or any other plan, program or policy of the Company or its subsidiaries
intended to benefit employees, but excluding following a Change in Control (but
not during a Potential Change in Control Period) any stock option, restricted
stock or other stock-based plan or benefit except with respect to any awards
outstanding under any such plan as of the date of the Change in Control.
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15.21 "Potential Change in Control" shall be deemed to have occurred
if the event set forth in any one of the following subsections shall have
occurred:
(A) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(B) the Company or any Person publicly announces an intention
to take or to consider taking actions which, if consummated, would constitute a
Change in Control;
(C) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 15% or more of either the
then outstanding shares of common stock of the Company or the combined voting
power of the Company's then outstanding securities; or
(D) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
15.22 "Potential Change in Control Period" shall commence upon the
occurrence of a Potential Change in Control and shall lapse upon the occurrence
of a Change in Control or, if earlier (i) with respect to a Potential Change in
Control occurring pursuant to Section 15.21(A), immediately upon the abandonment
or termination of the applicable agreement, (ii) with respect to a Potential
Change in Control occurring pursuant to Section 15.21(B), immediately upon a
public announcement by the applicable party that such party has abandoned its
intention to take or consider taking actions which if consummated would result
in a Change in Control or (iii) with respect to a Potential Change in Control
occurring pursuant to Section 15.21(C) or (D), upon the one year anniversary of
the occurrence of a Potential Change in Control (or such earlier date as may be
determined by the Board).
15.23 "Retirement" shall be deemed the reason for the termination by
the Executive of the Executive's employment if such employment is terminated in
accordance with the Company's retirement policy, including early retirement,
generally applicable to its salaried employees.
15.24 "Severance Payments" shall have the meaning set forth in
Section 6.1.
15.25 "Tax Counsel" shall have the meaning set forth in Section 6.2.
15.26 "Term" shall mean the period of time described in Section 2
(including any extension, continuation or termination described therein).
15.27 "Total Payments" shall mean those payments so described in
Section 6.2.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned officer, on behalf of New England
Business Service, Inc., and the Executive have hereunto set their hands as an
agreement under seal, all as of the date first above written.
NEW ENGLAND BUSINESS SERVICE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President, Human Resources
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
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