NEW ENGLAND BUSINESS SERVICE, INC.
STOCK COMPENSATION PLAN
SECTION 1. Purpose. The purpose of this Stock
Compensation Plan (the "Plan") of New England Business
Service, Inc. (the "Company") is to provide for the
mandatory or voluntary receipt of shares of the Company's
Common Stock, valued at full market value as of the date of
grant, in lieu of an equivalent amount of cash, in payment
(in whole or in part) of certain types of regular, bonus or
other special compensation payable to directors of the
Company and officers and other key employees of the Company
and its subsidiaries, thereby creating, encouraging and
facilitating increased ownership of Common Stock by such
directors and key employees and, through such ownership,
enhancing the identity of interest between them and the
Company's shareholders.
SECTION 2. Definitions. In addition to the terms
defined elsewhere in the Plan, the following shall be
defined terms under the Plan:
2.01. "Award" means any award of Stock granted to a
Participant under the Plan.
2.02. "Board" means the Board of Directors of the Company.
2.03. "Code" means the Internal Revenue Code of 1986,
as amended from time to time. Reference to any provision of
the Code shall be deemed to include successor provisions
thereto and regulations thereunder.
2.04. "Committee" means the Organization and
Compensation Committee of the Board, or such other Board
committee as may be designated by the Board to administer
the Plan, provided, however, that the Committee, shall
always consist of two or more directors, each of whom while
serving as such shall be a person who in the opinion of
counsel to the Company is (i) a "Disinterested Person," as
such term is used in Rule 16b-3 promulgated under the
Exchange Act, and (ii) an "Outside Director," as such term
is used in proposed Regulation 1.162-27(e)(3) under
Section 162(m) of the Code or a successor regulation. A
majority of the Committee members present at any meeting at
which a quorum is present, and any acts approved in writing
by all members without a meeting, shall constitute acts of
the Committee.
2.05. "Company" is defined in Section 1.
2.06. "Covered Employee" has the same meaning as set
forth in section 162(m) of the Code, and successor
provisions.
2.07. "Employee" means any salaried employee, including
officer-employees, of the Company or any Subsidiary.
2.08. "Exchange Act" means the Securities Exchange Act
of 1934, as amended from time to time. References to any
provision of the Exchange Act shall be deemed to include
successor provisions thereto and regulations thereunder.
2.09. "Participant" means a person who, as a director of
the Company or an Employee has been granted an Award under
the Plan.
2.10. "Plan" is defined in Section 1.
2.11. "Rule 16b-3" means Rule 16b-3, as from time to
time amended and applicable to Participants, promulgated by
the Securities and Exchange Commission under Section 16 of
the Exchange Act.
2.12. "Stock" means the Common Stock, $1.00 par value,
of the Company and such other securities of the Company as
may be substituted for Stock pursuant to Section 4 below.
2.13. "Subsidiary" means any corporation with respect to
which the Company owns, directly or indirectly, 50% or more
of the total combined voting power of all classes of stock.
In addition, any other related entity may be designated by
the Board as a Subsidiary, provided such entity's financial
statements would be consolidated with those of the Company
under generally accepted accounting principles.
2.14. "Year" means a fiscal year of the Company.
SECTION 3. Administration
3.01. Authority of the Committee. The Plan shall
be administered by the Committee. The Committee shall have
full and final authority to take the following actions, in
each case subject to and consistent with the provisions of
the Plan:
i. to select and designate Employees as Participants;
ii. to designate Subsidiaries;
iii. to determine the Awards to be granted to each
Employee-Participant;
iv. to determine whether, to what extent, and
under what circumstances an Award will be
deferred either automatically, at the
election of the Committee, or at the election
of the Participant;
v. to prescribe the form of any Award agreements
which need not be identical for each
Participant;
vi. to adopt, amend, suspend, waive, and rescind
such rules and regulations not inconsistent
with the specific terms of the Plan, and
appoint such agents, as the Committee may
deem necessary or advisable to administer the
Plan;
vii. to correct any defect or supply any omission
or reconcile any inconsistency in the Plan
and to construe and interpret the Plan and
any Award, rules and regulations, Award
Agreement, or other instrument hereunder; and
viii. to make all other decisions and
determinations as may be required under the
terms of the Plan or as the Committee may
deem necessary or advisable for the
administration of the Plan.
3.02 Manner of Exercise of Committee Authority. Unless
authority is otherwise reserved under the terms of the Plan,
or applicable law, the Committee shall have full and sole
discretion in exercising its authority under the Plan. Any
action of the Committee with respect to the Plan shall be
final, conclusive, and binding on all persons, including the
Company, Subsidiaries, Participants and any person claiming
any rights under the Plan from or through any Participant.
The express grant of any specific power to the Committee,
and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the
Committee. A consent signed by all members of the Committee
shall constitute the act of the Committee without the
necessity, in such event, of holding a meeting.
3.03 Limitation of Liability. Each member of the
Committee shall be entitled, in good faith, to rely or act
upon any report or other information furnished to him by any
officer or other employee of the Company or any Subsidiary,
the Company's independent certified public accountants, or
any executive compensation consultant or other professional
retained by the Company to assist in the administration of
the Plan. No member of the Committee, nor any officer or
employee of the Company acting on behalf of the Committee,
shall be personally liable for any activity, determination,
or interpretation taken or made in good faith with respect
to the Plan and all members of the Committee and any officer
or employee of the Company acting on their behalf shall, to
the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action,
determination, or interpretation.
SECTION 4. Shares Subject to the Plan. The total
number of shares of Stock reserved and available for Awards
under the Plan shall be 300,000. If the Company shall
combine or split the Stock or shall declare thereon any
dividend payable in shares of Stock, or shall reclassify or
take any other action of a similar nature affecting the
Stock, then the number and class of shares of Stock which
shall thereafter be reserved and available for Awards under
the Plan shall be adjusted accordingly.
SECTION 5. Eligibility. Awards may be granted only to
individuals who are directors of the Company or Employees.
SECTION 6. Awards.
6.01. General.
All shares of Stock issued pursuant to Awards shall be
issued in lieu of cash compensation equal in value to the
Fair Market Value of such shares on the date of the Award.
The Fair Market Value of a share of Stock on the date of an
Award shall be the last sales price per share of the Stock
as reported on the NASDAQ National Market prior to the date
of the Award or, if the Stock is not then listed on the
NASDAQ National Market or if no price has been so reported
within one week prior to the date of such Award, such market
value shall be determined by a principal market maker for
the Stock designed by the Committee. Awards may be granted
on the terms and conditions set forth in this Section 6. In
addition, the Committee may impose on any Award to an
Employee, at the date of grant, such additional terms and
conditions, not inconsistent with the provisions of the
plan, as the Committee shall determine.
6.02. Performance Awards. The Committee is
authorized to grant Performance Awards to Employees on the
following terms and conditions:
i. Award and Conditions. Performance Awards to
Covered Employees are intended to be
"qualified performance-based compensation"
within the meaning of section 162(m) of the
Code and shall be paid solely on account of
the attainment of one or more pre-established
performance goals (within the meaning of
section 162(m) (4)(C) and any regulations
relating thereto) determined by the Committee.
ii. The payout of any such Award to a Covered
Employee may be reduced, but not increased,
based on the degree of attainment of other
performance criteria or otherwise at the
discretion of the Committee.
iii. Other Terms. Subject to Section 6.05 below,
a Performance Award shall be denominated and
payable in shares of Stock, and have such
other terms as shall be determined by the
Committee.
iv. The satisfaction of the performance goals on
account of which a Performance Award is to be
made, shall be certified by the Committee
before such Award is made.
6.03. Awards of Stock in Payment of Directors'
Compensation. The Committee is authorized to make awards of
Stock to non-employee Directors who elect to receive such
Stock in lieu of all or part of their retainers or fees on
the following terms and conditions: Awards of Stock in
payment or partial payment of Directors' compensation are
intended to be "participant directed transactions" within
the meaning of Section (d) of Rule 16b-3. All such awards
shall be made pursuant to irrevocable elections made by non-
employee Directors of the Company at least six months in
advance of the effective date of the award. Such elections
shall be made by a written notice of election signed by the
electing Director and delivered or mailed to the Chief
Financial Officer, Treasurer or Secretary of the Company and
shall specify either (a) the annual retainer or retainers or
meeting attendance fee or fees which shall be paid in whole
or in part in Stock, and the percentage of each such
retainer or fee which shall be paid in Stock; or (b) that
all or certain specified payments to be received within each
twelve-month period commencing on the first day of a
specified calendar month (or a specified portion of such
payments) shall continue to be paid in Stock until such
election is amended or revoked by another notice given in
the same manner at least six months prior to the effective
date of such amendment or revocation.
6.04. Other Awards. The Committee is authorized to
grant to Employees such other Awards as are deemed by the
Committee to be consistent with the purposes of the Plan,
including, without limitation, Stock issued to Employees in
lieu of cash bonuses or portions of bonuses.
6.05. Stand-Alone, Tandem, and Substitute Awards.
Awards to Employees granted under the Plan may, in the
discretion of the Committee, be granted either alone or, as
a part of or in tandem with, or in substitution for, any
award granted under any other plan of the Company, or any
Subsidiary, or any other right of a Participant to receive
payment from the Company or any Subsidiary. If an Award is
granted in substitution for another award, the Committee
shall require the surrender of such other award in
consideration for the grant of the new Award hereunder.
Awards granted in addition to or as a part of or in tandem
with other awards may be granted either as of the same time
as or a different time from the grant of such other awards.
SECTION 7. General Restrictions Applicable to Awards.
7.01. Restrictions Under Rule 16b-3.
7.01.1. Six-Month Holding Period. Unless a
Participant could otherwise transfer Stock without incurring
liability under Section 16(b) of the Exchange Act, shares of
Stock issued under the Plan shall be held for at least six
months from the date of acquisition.
7.01.2. Compliance with Rule 16b-3. It is
the intent of the Company that this Plan comply in all
respects with Rule 16b-3 in connection with any Award
granted to a person who is subject to Section 16 of the
Exchange Act. Accordingly, if any provision of this Plan or
any Award Agreement does not comply with the requirements of
Rule 16b-3 as then applicable to any such person, such
provision shall be construed or deemed amended to the extent
necessary to conform to such requirements with respect to
such person.
7.02. Registration and Listing Compliance. The Company
shall not be obligated to distribute any Shares with respect
to any Award in a transaction subject to regulatory
approval, registration, or any other applicable requirement
of federal or state law, or subject to a listing requirement
under any listing or similar agreement between the Company
and any national securities exchange, until such laws,
regulations, and contractual obligations of the Company have
been complied with in full, although the Company shall be
obligated to use its best efforts to obtain any such
approval and comply with such requirements as promptly as
practicable.
7.03. Stock Certificates. All shares of Stock delivered
under the Plan pursuant to any Award shall be subject to
such stop-transfer order and other restrictions as the
Committee may deem advisable under applicable federal or
state laws, or rules and regulations thereunder, and the
rules of NASDAQ or any national securities exchange on which
the Stock is listed. The Committee may cause a legend or
legends to be placed on any certificates representing shares
of Stock to make appropriate reference to such restrictions
or any other restrictions that may be applicable to such
shares. In addition, during any period in which shares of
Stock are subject to restrictions under the terms of the
Plan or any Award Agreement the Committee may require the
Participant to enter into an agreement providing that
certificates representing any shares of Stock issuable or
issued pursuant to an Award shall remain in the physical
custody of the Company or such other person as the Committee
may designate.
SECTION 8. Amendments.
The Board may amend, alter, suspend, discontinue or
terminate the Plan without the consent of stockholders or
Participants, except that any such amendment, alteration,
suspension, discontinuation, or termination shall be subject
to the approval of the Company's stockholders within one
year after such Board action if such stockholder approval is
required by any federal or state law or regulation or the
rules of NASDAQ or any stock exchange on which the Shares
may be listed, or if the Board in its discretion determines
that obtaining such stockholder approval is for any reason
advisable.
SECTION 9. General Provisions.
9.01. No Stockholder Rights. No Award shall confer on
any Participant any of the rights of a stockholder of the
Company unless and until shares of Stock are duly issued or
transferred to the participant in accordance with the terms
of the Award.
9.02. Tax Withholding. The Company or any Subsidiary is
authorized to withhold from any Award granted, or any
payroll or other payment to a Participant, amounts of
withholding and other taxes due with respect thereto, and to
take such other action as the Committee may deem necessary
or advisable to enable the Company and Participants to
satisfy obligations for the payment of withholding taxes and
other tax liabilities relating to any Award. This authority
shall include authority to withhold or receive Shares or
other property and to make cash payments in respect thereof
in satisfaction of Participant's tax obligations.
9.03. No Right to Employment. Nothing contained in the
Plan or any Award Agreement shall confer, and no grant of an
Award shall be construed as conferring, upon any employee
any right to continue in the employ of the Company or any
Subsidiary or to interfere in any way with the right of the
Company or any Subsidiary to terminate his employment at any
time or increase or decrease his compensation from the rate
in existence at the time of granting of an Award.
9.04. Other Compensatory Arrangements. The Company or
any Subsidiary shall be permitted to adopt other or
additional compensation arrangements (which may include
arrangements which relate to Awards), and such arrangements
may be either generally applicable or applicable only in
specific cases.
9.05. Fractional Shares. No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any
Award. The Committee shall determine whether cash or other
property shall be issued or paid in lieu of fractional
shares or whether such fractional Shares or any rights
thereto shall be forfeited or otherwise eliminated.
9.06. Governing Law. The validity, construction, and
effect of the Plan, any rules and regulations relating to
the Plan, and any Award Agreement shall be determined in
accordance with the laws of the State of Delaware, without
giving effect to principles of conflicts of laws, and
applicable federal law.
SECTION 10. Effective Date and Duration. The Plan
shall become effective as of June 25, 1994, provided,
however, that within one year after such date, the Plan
shall have been approved by the affirmative vote of the
holders of a majority of the shares of Stock present or
represented and entitled to vote (and the affirmative vote
of a majority of the shares of Stock voting) at a meeting of
the Company's stockholders, or any adjournment thereof. If
so approved the Plan shall continue in force until June 24,
2004.