EXHIBIT 10.9
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of April 1, 1995, is between NATIONAL DENTEX
CORPORATION, a Massachusetts corporation (the "Company"), and XXXXXXX X. XXXXXX,
XX. (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 amount 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 l(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
(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 lest 1/3 of the Company's Board of
Directors; or
(d) the Company executes an agreement of acquisition,
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 Standstill 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 (except termination pursuant to a mandatory
retirement policy applied by the Company to all its senior executives),
or by the Executive for Good Reason,
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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 (i) two (2) times the Executive's Base
Salary in effect immediately prior to the Date of Termination plus (ii)
two (2) 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 second 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. 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 this 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 this Section 2.01
are required to be reduced in accordance with the preceding sentence shall be
made at the
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Company's expense by the Company's regularly retained independent public
accounting firm (the "Accountants"). In the event of any underpayment or
overpayment under this 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 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 inconsistent with
his positions, 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 any 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 or by the Executive other than for Good Reason; or
any other action by the Company which results in a diminishment in such
position, authority, duties or responsibilities, 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
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(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
(d) any relocation of the Executive's principal place of
business to more than fifty (50) miles from the place where the
Executive was employed at the time of the Change of Control; or
(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.
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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 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: President, with a
copy to Posternak, Xxxxxxxxxx & Xxxx, 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.
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.
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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.
7.06 Termination of Agreement Outside of Standstill Period. This
Agreement shall be automatically terminated upon the first to occur of (i) the
termination of the Executive's employment for any reason, whether voluntary or
involuntary, at any time other than during a Standstill Period or (ii) the 180th
day after a change in the Executive's title to a level below that of the
Executive's Current Title unless a Standstill Period was in effect on the date
of such change or within one hundred eighty (180) days thereafter.
7.07 Governing Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the Commonwealth
of Massachusetts.
7.09 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 base rate as from time to time in effect at State
Street Bank and Trust Company, until paid in full.
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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: Xxxxxxx Xxxxxxx
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxx, Xx.
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Xxxxxxx X. Xxxxxx, Xx.
Address: 00 XXXXX XX.
XXXXXX, XX 00000
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