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Exhibit 10.a
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of January 23, 2001, is between NATIONAL
DENTEX CORPORATION, a Massachusetts corporation (the "Company"), and Xxxxx X.
Xxxxx (the "Executive").
The Executive is a key executive of the Company and an integral part of
its management.
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.
The Company wishes to assure the Executive 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.
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 Executive's annual base salary, exclusive
of any bonus or other benefits he may receive.
"Bonus" shall mean the aggregate amounts payable to the Executive
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) there occurs a change of control of the Company of a
nature that would be required to be reported in response to Item 1(a)
of the Current Report on Form 8-K pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") or in any
other filing under the Exchange Act; provided, however, that no
transaction shall be deemed to be a Change of Control if the Executive
or an Executive Related Party is the Person or a member of a group
constituting the Person acquiring control; or
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(b) any Person other than an employee benefit plan of the
Company or of any wholly-owned subsidiary of the Company becomes the
owner of 33% or more of the Company's Common Stock and thereafter
individuals who were not directors of the Company prior to the date
such Person became a 33% owner are elected as directors pursuant to an
arrangement or understanding with, or upon the request of or nomination
by, such Person and constitute at least 1/3 of the Company's Board of
Directors; provided, however, such acquisition of ownership shall not
constitute a Change of Control if the Executive or an Executive Related
Party is the Person or a member of a group constituting the Person
acquiring such ownership; or
(c) there occurs any solicitation or series of solicitations
of proxies by or on behalf of any Person other than the Company's Board
of Directors and thereafter individuals who were not directors of the
Company prior to the commencement of such solicitation or series of
solicitations are elected as directors pursuant to an arrangement or
understanding with, or upon the request of or nomination by, such
Person and constitute at least 1/3 of the Company's Board of Directors;
or
(d) the Company executes an agreement of sale, merger or
consolidation which contemplates that (i) after the effective date
provided for in such agreement, all or substantially all of the
business and/or assets of the Company shall be owned, leased or
otherwise controlled by another Person and (ii) individuals who are
directors of the Company when such agreement is executed shall not
constitute at least two-thirds of the board of directors of the
survivor or successor entity immediately after the effective date
provided for in such agreement; provided, however, that for purposes of
this paragraph (d), if such agreement requires as a condition precedent
approval by the Company's shareholders of the agreement or transaction,
a Change of Control shall not be deemed to have taken place unless and
until such approval is secured (but upon any such approval, a Change of
Control shall be deemed to have occurred on the effective date of such
agreement).
"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 Executive'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
Executive's employment is terminated pursuant to Section 2.01(a) of this
Agreement.
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"Executive Related Party" shall mean any Affiliate or Associate of the
Executive 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
(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.
"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 Executive's employment by the
Company without Cause or by the Executive 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 Executive in a lump sum an
amount equal to (x) three (3) times the Executive's Base Salary in
effect immediately prior
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to the Date of Termination plus (y) three (3) times the average amount
of the Bonus payable to the Executive for the two (2) fiscal years
ending on or immediately prior to the Date of Termination.
(b) Until the third anniversary of the Date of Qualified
Termination, the Company shall maintain in full force and effect for
the continued benefit of Executive and his family all life insurance,
medical insurance and disability plans and programs in which Executive
was entitled to participate immediately prior to the Change of Control,
provided that Executive'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 Executive is ineligible to participate in
such plans or programs, the Company shall arrange upon comparable terms
to provide Executive 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.
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 Executive) 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 Executive 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 Executive, after reduction for
all federal taxes (including the tax described in Internal Revenue Code Section
4999, if applicable) provided, that if the total of all payments to or for the
benefit of Executive, after reduction for all federal taxes (including the tax
described in Internal Revenue Code Section 4999, if applicable, with respect to
such payments (the "Executive'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 Executive'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 Executive 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
Executive'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
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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 Executive thereof.
2.04 Good Reason. Termination for "Good Reason" shall mean the
voluntary termination by the Executive of his employment within ninety (90) days
after the occurrence of any of the following events without the Executive's
express written consent:
(a) the assignment to him of any duties materially
inconsistent with his position, duties, responsibilities, reporting
requirements and status with the Company immediately prior to a Change
of Control, or a substantive change in the Executive's titles or
offices as in effect immediately prior to a Change of Control, or
removal of the Executive from, or any failure to reelect him to such
positions, except in connection with the termination of the Executive's
employment by the Company for Cause, for disability or death of the
Executive or by the Executive other than for Good Reason; or any other
action by the Company which results in a diminishment in such position,
duties, responsibilities or status, other than an insubstantial and
inadvertent action which is remedied by the Company promptly after
receipt of notice thereof given by the Executive; or
(b) if the Executive's Base Salary for any fiscal year is less
than 100 percent of the Base Salary paid to the Executive in the
completed fiscal year immediately preceding the Change of Control, or
if the Executive's bonus opportunity for any fiscal year is less than
the average of the bonuses actually paid to the Executive for the two
completed fiscal years immediately preceding the Change of Control,
unless any such reduction represents an overall reduction in the Base
Salary paid or bonus opportunities made available, as the case may be,
to the five (5) highest paid executives of the Company (the "Comparable
Executives") (it being the Company's burden to establish this fact); or
(c) the failure of the Company to continue in effect any
benefits or perquisites, or any pension, life insurance, medical
insurance or disability plan in which the Executive was participating
immediately prior to a Change of Control, unless the Company provides
the Executive with a plan or plans that provide substantially similar
benefits, or the taking of any action by the Company that would
adversely affect the Executive's participation in or materially reduce
the Executive's benefits under any of such plans or deprive the
Executive of any material fringe benefit enjoyed by the Executive
immediately prior to a Change of Control, unless the elimination or
reduction of any such benefit, perquisite or plan affects all
Comparable Executives (it being the Company's burden to establish this
fact) or is solely as a result of Executive reaching a specified age so
as to make such coverage not available; or
(d) any relocation of the Executive's principal place of
business, without his consent, to more than fifty (50) miles from the
place where the Executive was employed at the time of the Change of
Control; or
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(e) any other breach by the Company of any provision of this
Agreement, provided that the same shall have the continued unremedied
for a period of thirty (30) days after the Executive gives notice to
the Company requesting that the Company remedy the same.
3. No Mitigation of Damages; Other Severance Payments; Withholding.
3.01 No Duty to Mitigate Damages. The Executive'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 Executive
hereunder following a Change of Control, in accordance with the provisions of
Section 2 above, are in lieu of any severance payments due the Executive
pursuant to the provisions of any employment agreement between the Company and
the Executive, except, however, that in all events the Company shall continue to
pay to the Executive in accordance with the provisions of any such employment
agreement all Base Salary and Bonus accrued to the effective date of termination
of the Executive's employment, in addition to any amounts payable to the
Executive 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 Executive 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 Executive, addressed to him at
the address set forth below, and if to the Company, addressed to it at 000
Xxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, Attention: President, with a
copy to Posternak, Xxxxxxxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxx Xxxxx, Xxxxxx,
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.
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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 Executive's personal or
legal representatives or successors. If the Executive 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 Executive's estate,
such benefits shall be provided to the Executive's family and such rights shall
remain exercisable by the Executive's estate in accordance with the terms of
this Agreement. This Agreement shall not otherwise be assignable by the
Executive. This Agreement supersedes and replaces a prior Change of Control
Severance Agreement between the Company and the Executive, dated as of April 1,
1995, which prior Agreement is hereby terminated.
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 Executive, to assume
expressly this Agreement. If the Company shall not obtain such agreement prior
to the effective date of any such succession, the Executive shall have all
rights resulting from termination by the Executive 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 Executive 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 Executive
any right of continued employment or any right to compensation or benefits from
the Company or any subsidiary except the right specifically state herein to
certain severance and other benefits, and shall not limit the Company's right to
change the terms of or to terminate the Executive'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 Executive.
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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 Executive'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
Executive 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 Executive 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NATIONAL DENTEX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
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EXECUTIVE:
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Address: _____________________
_____________________
_____________________
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